863.51/9–1746
Memorandum of Conversation, by the Acting Director of the Office of Economic Security Policy (Kindleberger)
| Participants: | Acting Secretary Clayton |
| Assistant Secretary, General Hilldring | |
| US High Commissioner to Austria, General Mark W. Clark | |
| Minister to Austria, Mr. Erhardt | |
| EUR—Mr. Culbertson55 | |
| ESP—Mr. Kindleberger | |
| A–C—Mr. McGhee | |
| A–C—Mr. Howe |
The discussion turned almost entirely on two subjects:
- (a)
- US financial aid to Austria in 1947.
- (b)
- Negotiation with the USSR on the question of German assets in Austria.
On the first of these topics, General Clark stated that his estimates showed that Austria needed approximately $150,000,000 in 1947. He was aware of the War Department proposals for an appropriation meeting the requirements of the US zone for “disease and unrest”. In his view, however, a larger amount was required which should be spent for Austria as a whole. The US, UK and if other countries such as Canada were willing to contribute, should be prepared to make up the entire amount. If this were the case, he thought he could elicit [Page 370] contributions from the USSR and France. The funds should be made available to the High Commissioner, who could cut off their expenditure in any one zone where domestic resources were drawn off by an occupying power. He agreed with the view that it might be desirable to handle procurement from the United States and the US zone of Germany through the War Department; some free funds should be made available as such to the Austria government for expenditure in Eastern Europe to enable Austria to obtain better bargains there.
The Acting Secretary agreed that the Department would make an effort to obtain a deficiency appropriation from Congress for the purposes indicated. This effort would commence when Congress met at the end of November, and might even be preceded by individual discussions with members of important congressional committees. General Hilldring agreed to raise the matter with Representative Cannon of the House Appropriations Subcommittee during the course of his rail trip to San Francisco at the end of the month.56
General Clark asked whether the Department had a view as to new steps which might be taken by USACA or the Department regarding the problem of German assets in Austria. He confessed that he had exhausted every avenue for negotiation on this topic which he thought was open without success. General Hilldring suggested that a further announcement might be made to the effect that the US, UK and France renounced their claims to German assets in Austria, possibly excepting such assets as those of DDSG in western Austria and the prewar US oil interests in eastern Austria. Mr. Kindleberger suggested that in addition to this suggestion three possible courses lay open: to withdraw our earlier objections to bilateral negotiations between the Austrian government and the USSR; to postpone the whole issue until the treaty with Austria; to propose a new ad hoc solution to the USSR, based on equities, rather than on past interpretations of the Potsdam Agreement. It was agreed that Mr. Erhardt and Mr. Kindleberger, together with other interested divisions in the Department, would explore these various possibilities. General Clark made, the point that provision of a loan or grant-in-aid to cover the 1947 deficit in Austria would strengthen his hand in dealing with the USSR element of ACA on German assets.
The point was made that the US aim of creating an economically and politically independent Austria could probably not be achieved by itself and irrespective of other outstanding European problems, due to the fact that Austria lies partly in eastern and partly in western Europe. The US therefore had a choice between backing out of [Page 371] Austria now, or attempting to keep the position in Austria open for a few years in the hope of reaching a more satisfactory solution later as part of a general settlement.
General Clark mentioned that he was preparing to negotiate in ACA a further reduction in the USSR share in Austrian occupation costs—reducing the proportion of total occupation costs from 25% to 20% of the government budget, and putting the USSR on the basis of equality with the other forces, as contrasted with 3:1:1:1. He had tried and failed to use occupation costs as a lever to bargain with the USSR on German assets in Austria in July, where the Soviet answer to his initiative was to refuse US forces the opportunity to repair their communications into Vienna from the US zone, and to give an indication of their readiness to shut off supply lines of food.