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

740.00119 Council/4–2346: Telegram

The Acting Secretary of State to the Ambassador in France (Caffery)

secret

Washington, April 29, 1946—8 p.m.

1969. Urgency of issue of German assets in Aus is again underlined by Vienna’s 588 to Dept of Apr 23⁹⁵ repeated to you as 1963 from Dept.

Dept regards it as highly desirable that a settlement be reached in Paris on this issue, regardless of progress made on Austrian treaty as a whole.

Background of recent exchanges between Dept, London and Vienna is included in Delsec File.

For quick settlement Dept proposed the following:

A Maximum Position, based on frank recognition that Potsdam provisions on reparations from Ger foreign assets, as applied to Aus, must be ameliorated in order to achieve purpose of Moscow Agreement guaranteeing Aus economic independence. Main provisions of this pos are as follows:

1. Four Power agreement that all removals of equipment from Aus under reparations provisions of Potsdam shall cease immediately.

2. Four Power agreement to renounce all claims on account of reparations to Ger assets in Aus, except the following:

a) an element of German ownership in the oil industry;

b) an element of German ownership in the Danube Shipping companies.

3. Establishment of a 4-power commission to determine the extent of Ger ownership in the categories specified in 2 a) and b), above, in accordance with the provisions of the United Nations Declaration on Forced Transfers,⁹⁶ and to agree by unanimous vote to the disposition of these assets, in accordance with the zonal principle established at Potsdam.

4. Four Power agreement that all foreign ownership rights within Aus arising from this settlement shall be in all respects subject to Aus law.

5. Specific renunciation by the Four Powers of all claims on account of reparations to non-industrial and non-commercial land in Aus and to ownership rights or shares of participation in banking, insurance and other financial institutions.

6. Four Power agreement that removals of equipment up to the present, plus ownership rights which arise from negotiations under 3, above, shall constitute full satisfaction of claims to Ger assets in Aus under the reparations clauses of the Potsdam Agreement.

A Minimum Position, based upon the letter of Potsdam interpreted in strict conformity to the United Nations Declaration on Forced Transfer. Main provisions of this position follow:

1. The provisions of paras. 1, 4, and 6 above, shall be maintained.

2. Para. 2, above, may be modified to include other categories of assets, by the addition of subpara c), as follows: “c) other assets to which claims on account of reparations have been formally presented to ACA on or before the date of the signing of this agreement, (or some other early cut-off date).” All claims thus presented will come under review by the Four Power commission established under 3, above.

3. Para. 3, above, may be modified to provide decision by majority vote within proposed commission.

Dept appreciates reasons for Brit and Erhardt support (Vienna’s 553 to Dept of Apr 17⁹⁷) for proposal less strict than Maximum Position above. Dept nevertheless feels that Moscow Declaration, quadripartite occupation of Aus, and distinction at Potsdam of German assets in Aus, East and West, all implied agreed neutrality of Aus with respect to USSR and Western influence. Western Powers will, presumably, be prepared to forego ownership rights to Ger assets in Aus. It is, therefore, just in our view that USSR limit severely ownership rights in Aus that it assumes under Potsdam. Partial ownership of Austrian oil and shipping on Danube represent both significant material interests in Austria and powerful potential levers of economic control. Concession of this measure of permanent influence in Austrian economy to USSR represents in itself substantial departure from Moscow Declaration.

Sent to Paris as Dept’s 1969, repeated for info to London as 3615 and Moscow as 798 and Vienna as 424. Repeat with following additional para to Vienna:

Above constitutes answer to your 579 of Apr 20,⁹⁸ with respect to position of land under Potsdam. We can find no grounds for exclusion of land on basis of Potsdam. Major possibility of exclusion appears to lie in reciprocal renunciation of legal rights under Potsdam as is involved in maximum position stated above. Should that position fail, application of Forced Transfer Declaration appears main instrument for effecting limitation.

Acheson

95. In telegram 588, Mr. Erhardt reported in detail the take-over of some 10 important factories in lower Austria and Soviet districts of Vienna by Soviet military authorities (740.00119 EW/4–2346).
96. For text of the “Declaration of Certain of the United Nations Regarding Forced Transfer of Property in Enemy-Controlled Territory, January 5, 1943”, see L. M. Goodrich and M. J. Carroll, Documents on American Foreign Relations, vol. v. July 1942–June 1943 (World Peace Foundation, Boston, 1944), p. 208.
97. Not printed.
98. Not printed.