Foreign Relations of the United States, 1946, The British Commonwealth, Western and Central Europe, Volume V

840.50 UNRRA/1–1246

Memorandum of Conversation, by Mr. George C. McGhee, Special Assistant to the Deputy to the Assistant Secretary of State for Economic Affairs ( Thorp )

[ Washington ,] January 12, 1946.

Subject: UNRRA Program for Austria

Participants:	Mr. Roger Makins, British Embassy15
	Mr. Eric Barthoud, British Embassy16
	Mr. Thorp, A–C
	Mr. Dort, LA17
	Mr. Kindleberger, GA 18
	Mr. Riddleberger, CE
	Mr. Williamson, CE 19
	Mr. deWilde, GA 20
	Mr. McGhee, A–C

Problem:

The purpose of the meeting was to arrive at a tentative agreement between the U.S. and U.K. with regard to a basis for an UNRRA program in Austria and for solution of problems involved in transition from the present system of aid through military channels.²¹

Discussion:

Mr. Thorp stated that a basic problem was whether or not Austria could be treated on the same basis as surrounding countries currently receiving relief through UNRRA. It was generally agreed that Austria should be so treated.

Mr. Dort stated that one of the principal points of disagreement in adopting an UNRRA program for Austria had been the question of its relationship to the distribution of relief supplies by the military authorities in their respective zones. The U.S. had taken the position that UNRRA relief should be supplementary to supplies furnished by the military, however, the U.K. had insisted on discontinuing supplies through the military with the initiation of the UNRRA program. The U.S. had now conceded this point.

Mr. Makins stated that the U.K. had made proposals to the U.S. Government on the question under discussion and that a reply from the U.S. was expected. Mr. Thorp stated that the U.S. was now in agreement as to the necessity for the UNRRA program in Austria. He asked for a definition of the relationship between the UNRRA program and the military authorities in Austria. Mr. Barthoud stated that the UNRRA contract would be with the new Austrian Central Government. The ACA would exercise only general supervision and would furnish the necessary transportation, although it still had final control. Since the UNRRA program would be an agreed program, following recommendations by the Central Austrian Government, the ACA and the four governments involved, Mr. Barthoud felt certain that the ACA would not interfere with the program, although there would unquestionably be some bargaining in ACA on particular points. He felt that a fairer distribution of critical items, such as seeds, for example, would be assured.

Mr. deWilde asked what internal barriers to distribution would remain after initiation of the UNRRA program. Mr. Barthoud stated that the UNRRA program constituted a basis for doing away with such barriers and for bringing about the economic unification of Austria.

He stated that if the responsibility for relief had been left to the military, the Russians and the French would probably not have fulfilled their share of the responsibilities. The U.K. had advocated the initiation of an UNRRA program and had agreed to continue relief through the military to the end of February. At this time the U.K. would expect UNRRA to take over existing relief stocks as well as imports under way. Control of resources would be handed over on a “phase” basis to the Central Austrian Government.

In answering a question from Mr. Dort as to whether other members of the ACA would agree to the UNRRA program, Mr. Barthoud stated that the Russians had advocated pooling before the recent elections. Due to their low level of supplies, they had stood to gain from such pooling. Since that time, however, the Russians have withdrawn from this position. In all probability they would not consent easily to pooling the petroleum production in their zone, which they consider their property. The placing of this production into the pool may be expedited by tying it in with the pooling of coal by the U.K., U.S. and France.

Mr. deWilde asked what the UNRRA principle would be with regard to the use of indigenous resources, i.e., oil. Mr. Barthoud stated that the UNRRA working team in Austria had placed emphasis on the full use of indigenous resources and planned no imports of petroleum. If the Russians do not permit pooling of indigenous petroleum the entire UNRRA program will break down.

Mr. Barthoud stated that the first impact of the UNRRA program would be a shortage of supplies in the U.S. and U.K. zones. He assumed that this would be a matter of concern to General Clark. The Austrians recognize this danger but would prefer to risk it in order to regain their sovereignty.

Mr. Dort asked whether or not undue drain of supplies into the Russian zone could be expected. Mr. Barthoud replied that the Russians had agreed that their military forces will not live off the country. He stated that exceptions would probably represent examples of indiscipline. If evidence existed that the Russians were removing equipment beyond that included in the definition of German assets, an appeal could be made by the U.S. and U.K. in the ACA.

Mr. Makins stated that in his opinion the situation was basically quite simple. We now have a satisfactory General Austrian Government which is still under the control of the ACA, and any UNRRA program initiated would have prior approval of both these organizations and the governments involved. The only question remaining appeared to be the degree to which the ACA in practice would interfere with the administration of the UNRRA program. It was agreed that this was up to the U.S. and U.K. representatives in the ACA.

Mr. Thorp asked whether the UNRRA program would move ahead automatically unless changed by the ACA, or whether the ACA would exercise positive control over the program. Mr. Makins stated that after Russian approval of the program in UNRRA, approval by the Russian representative on ACA should be automatic. Following this approval, the Austrian Government should be able to move on with the program without hindrance.

Mr. Dort questioned whether Russia would use control of its transportation as a method of imposing changes in the UNRRA program. Mr. Thorp replied that the only results the Russians could achieve in withholding transportation would appear to be to their disadvantage. Mr. Barthoud replied that a possible disadvantage to the other zones was in transportation of coal from Poland, which must cross the Russian zone. He pointed out that total imports of coal from all sources aggregated 700,000 tons yearly.

Mr. Thorp asked whether General Clark had been advised of the proposal. Mr. deWilde replied that General Clark had been advised of the proposal made by the U.K. Mr. deWilde stated that in his opinion the most immediate problem was in securing an adequate UNRRA program for Austria.

Mr. Barthoud stated that if Austria was to be treated on a basis comparable to surrounding UNRRA countries, the U.K. had estimated an UNRRA appropriation of 80 million dollars. Mr. deWilde and Mr. Dort agreed that Austria should be considered on the same basis as surrounding UNRRA countries, but would not commit themselves to U.K. figure. Mr. Barthoud stated that the original figure had been 150 million dollars (FAS), which would actually represent 200 million dollars on a landed basis, and which did not include any provision for displaced persons. Mr. Dort stated that the 80 million figure would represent 100 million dollars on the landed basis.

Mr. Barthoud inquired what the U.S. would do if the appropriation on a comparable basis meant a cut in Austrian rations below the agreed 1,550 calorie standard. Mr. Dort replied that a shift should then be made in the program from non-food to food items and from expensive to high calorie foods. Mr. Barthoud stated that the 80 million figure had assumed that farmers would retain approximately 2,800 calories, which may result in lowering of standards in Vienna to as low as 1,000 calories. It was pointed out by Mr. Dort that this was a technical problem for UNRRA and that experience had shown it possible to effect adequate distribution in cities under similar conditions.

Mr. Makins stated that in order to achieve economic unity in Austria, the UNRRA program should be initiated on March 1, even though there is a temporary lowering of the level of supplies in the U.S. and U.K. zones. In the meantime, he believed that military supplies should be pooled between the zones insofar as possible. Mr. Thorp replied that pooling before March 1 seemed improbable, since it may result in the U.S. failing to meet its responsibility in its own zone. He suggested as an alternative that the military commanders initiate closer collaboration with officials of the Central Austrian Government in their zone, and agreed that pooling may be started prior to March 1 if agreeable to the zone commanders. All agreed that any surplus military supplies remaining after March 1 should be sold to UNRRA.

Conclusion:

It was agreed that a draft of the proposed agreement arrived at in this meeting be drawn up before Mr. Barthoud’s departure on January 14, and that the proposal be submitted to the appropriate authorities on both the U.S. and U.K. sides before final decision was reached.

15. Roger Makins, British Minister in Washington.
16. Eric Alfred Barthoud, Director, Economic Division, British Element, Allied Command, Austria, 1944–46; Under Secretary, Ministry of Fuel and Power, 1946.
17. Dallas W. Dort, Adviser, War Areas Economic Division.
18. Charles P. Kindleberger, Chief, Division of German and Austrian Economic Affairs.
19. Francis T. Williamson, Acting Assistant Chief, Division of Central European Affairs.
20. John C. deWilde, Associate Chief, Division of German and Austrian Economic Affairs.
21. For previous documentation on this subject, see telegrams P 7627, December 8, and 561, December 12, 1945, Foreign Relations, 1945, vol. iii, pp. 675 and 681, respectively.