Foreign Relations of the United States: Diplomatic Papers, 1945, European Advisory Commission, Austria, Germany, Volume III

740.00119 E. W./11–2445: Telegram

The United States Political Adviser for Austrian Affairs (Erhardt) to the Secretary of State

Vienna, November 24, 1945—noon.
[Received 1:53 p.m.]

476. In general the proposed note transmitted in Dept’s 271, November 17¹³ seems to us an excellent statement.

Three general comments. First, is it impossible to include in note the unpublished Berlin agreement that reparations would not be exacted from Austria?¹⁴ It obviously adds substantial support to US position.

Second, Dept will appreciate that difficulty may be encountered in obtaining Soviet agreement to formation of board with satisfactorily defined functions. In Allied Council meeting October 30 (my despatches 405, November 1 and 411, November 2¹⁵) Koniev flatly rejected McCreery proposal to have Executive Committee investigate and report on interpretation of “German external assets in Eastern Austria.” Koniev’s position was that only the Govts are able to interpret Potsdam decisions. He strongly reaffirmed this position in AC meeting November 10 (my P 5568, November 12) when question of oil arose.

Third, Dept may wish to consider the alternative of establishing proposed board outside of AC machinery though it would obviously have to do its work in Austria. Considerations are as follows:

(a) It is conceivable that Soviet resistance to proposed board might be somewhat less if it were to be established on a level above that of an Allied Commission subdivision or agency.

(b) If created at a high level by direct intergovernmental agreement proposed board would have more prestige and its determinations would be less subject to challenge by dissatisfied claimants.

(c) Some of board’s functions may continue after final dissolution of AC.

(d) If board is established in AC the logical members will be chiefs of reparations deliveries and restitution division. Some of these men are either not available for prolonged service or else not qualified. They are already overburdened.

(e) The complex questions of property rights should if possible be examined and settled on their own merits and kept separate from negotiations and bargaining over general problems of AC.

If board is under AC, US contribution to its funds would presumably have to come out of War Dept appropriation which might have result of limiting its personnel or facilities. Separate appropriation for an independent board might be preferable.

On the other hand it is appreciated that some functions of board notably determination of appropriateness for reparation purposes under paragraph 6 (d) would be intimately related to AC responsibilities. Consequently it would at least be necessary to have close and carefully defined relationship between board and AC.

Particular comments follow: Paragraph 3 last two sentences appear to enable Austrian Govt to make unilateral declaration that a given asset is not German with such declaration binding on all claimants. Presumably it is intended that proposed board would make final determination paragraph 3, it might be desirable to indicate here or elsewhere the principles to govern treatment of property additions subsequent to German acquisition. It might also be desirable to indicate that when transfers to German ownership are reversed the former owners would be expected to surrender whatever compensation had been received from the Germans with appropriate adjustments for changes and transactions in the meantime. Principles to govern the disposition of such refunds might also be indicated. Presumably all of these matters would be subjects for determination by proposed board.¹⁶ Paragraph 4: In second sentence the important words “or Austrian” appear to be lacking immediately following fourth “Allied.”¹⁷ Paragraph 5 a: It may be anticipated that if there is a 50% German interest in a company 50% of whose property is located in Soviet zone, Soviets will insist on acquiring all of such property in Soviet zone.¹⁸ Paragraph 5 n [b]: It is respectfully suggested that the second sentence be either eliminated or rewritten and clarified. The meaning of “deposits” and “shares” as bank assets is not clear and the statements about bank liabilities appear to us a little too sweeping.¹⁹ Paragraph 5 b: In first sentence of second paragraph is there any reason for not including Austrian claims against Reich Govt?²⁰ Paragraph 5[b]: The last sentence regarding freedom from foreign control is very broadly qualified. It would seem desirable either to omit it or to make it more definite.²¹ Paragraph 7: In cases where removal is permissible under Paragraph 7 d should removal always follow automatically or should 7 b procedure be used in some cases? If the latter is intended this might be an additional matter for proposed board to determine.

Sent SecState as 476 repeated to Paris for Angell^21a as 48 from Erhardt.

Erhardt

13. In this telegram, not printed, the Secretary of State submitted for the Political Adviser’s comment the draft of a note to be presented to the British, French, and Soviet Governments. The final version of this note is printed as telegram 10380, November 29, to London, p. 668.
14. Reference is to the final sentence of chapter VIII of the Protocol of the Proceedings of the Berlin Conference: “It was agreed that reparations should not be exacted from Austria.” See Conference of Berlin (Potsdam), vol. ii, p. 1490.
15. Neither printed; these despatches transmitted to the Department the unofficial U.S. minutes and the official minutes of the Allied Council meeting: of October 30.
16. The last two sentences of paragraph 3 of telegram 10380, November 29, to London, p. 668, represent an alteration of the original text as submitted to Mr. Erhardt in telegram 271, November 17, not printed. In the original they read: “Accordingly, any transfer of property in Austria owned by nationals of the United Nations or Austria to German interests, by unilateral action of the German government, on request or at the instigation of the German government, including ‘transactions apparently legal in form, even when they purport to be voluntarily effected,’ can be declared invalid by the governments concerned. Such property would then revert to Allied or Austrian ownership and not be subject to reparation claims by the occupying authority.”
17. Change made in final version as suggested, p. 671.
18. Last sentence of paragraph 5 a. of the original draft read: “Thus, if a company in which Germans have a fifty percent interest owns a plant in the Russian zone and other plants in the American, British or French zones of Austria, the U.S.S.R. would be entitled to claim a half interest in the plant in their zone.” Cf. same sentence in telegram 10880 to London, p. 671.
19. Second sentence in paragraph 5 b. of original read: “The assets of such enterprises consist of deposits, claims, shares, etc., and their liabilities refer to commercial transactions or represent titles which either do not lend themselves to a division by zones or would, if so divided, prejudice the independence of Austria’s economic survival.” Cf. same sentence in telegram 10380 to London, p. 672.
20. Change made in final version, p. 672.
21. Last sentence omitted in final version, p. 672. It read: “On the contrary, to the maximum compatible with a just reparations settlement and legitimate non-German property interests, the Austrian post-war economy should be left free of foreign control.”
22. James W. Angell, Chief of the U.S. Delegation to the meeting of the Inter-Allied Reparation Agency in Paris.