740.00119 Council/6–546: Telegram
The Acting Secretary of State to the Ambassador in the United Kingdom (Harriman)
4807. Urtels 5725 June 5 and 5736 June 5.19 Brit support of draft Austrian treaty appreciated by Dept. Aide-mémoire presented June 320 by Brit Embassy requested inclusion German assets and withdrawal occupation forces on agenda of CFM. Dept has replied that all efforts should be made to push draft treaty which contains general provisions concerning these items. If no agreement on draft treaty, US will support Brit proposal to include items on agenda.
US approval for new control machinery agreement in Austria withheld pending decision to include treaty on agenda of CFM. Gen Clark authorized to state in AC, Vienna, that US has circulated draft treaty and is anxious to reach final settlement making new control machinery agreement unnecessary. If no immediate prospect of successful negotiation draft treaty, US will in all probability approve new control machinery agreement.
Dept concurs in FonOff’s conclusion that something should be done to bolster Austrian morale and strengthen ties with Western states. Position Austrian Govt at present apparently not secure and whole orientation Austrian Govt policy may be changed to accord with [Page 350] physical presence of Soviet troops and Soviet objectives in Danubian area. You may wish to discuss following program with FonOff and inform Dept of Brit reaction:
- 1.
- Settlement of South Tyrol question with regard to Austrian claims is essential to future of Allied policy in Austria. Austrian claim for Pusterthal and Brixen should be seriously considered by deputies, both within framework of formula of minor rectification and in light of Allied objectives to create a viable state in Austria. Dept concurs that direct conversation between Gruber and de Gasperi21 on frontier rectification and on mutual economic concessions and guarantees of minority rights would be desirable in aiding solution of difficult situation. Such negotiation should be carried out in light of findings of Committee of Hydro-Electric experts proposed in Paris’ 2782 June 8 Delsec 561.22
- 2.
- A program for immediate economic assistance to solve problem of employment and to initiate production for foreign trade should be formulated and carried out as soon as possible. Such assistance might possibly take the form of a loan for reconstruction.
- 3.
- All possible efforts should be made to reach four-power agreement on draft treaty which includes Articles on such problems as German assets and occupation forces. If no agreement on draft treaty, control machinery agreement should be adopted immediately following CFM meeting.
Austrian position is now precarious in view of rapidly deteriorating economic situation and political situation arising from Communist victory in Zecho elections. It is obvious that Austrian economic future will have to be based either on close economic relations with neighboring states or continuous economic assistance from Western states. Most desirable solution would be integration of Austrian economy with Danubian area, but political developments in surrounding areas may not make such solution possible unless fundamental changes are made in Austrian Govt and social structure. Inclusion of Austria, moreover, in closed economic bloc of Danubian states is not necessarily consistent with Allied objectives concerning independence.
Dept would appreciate any suggestions which FonOff may care to make regarding immediate program for Austrian reconstruction.
Sent to London as 4807; repeated to Paris as 2931 Secdel 294; to Vienna as 570.