740.00119 Council/4–1847: Telegram
The Secretary of State to the Acting Secretary of State
urgent
1445. Delsec 1440. For the President, Vandenberg, Connally and Acheson from Marshall. Thirty-fourth CFM meeting, April 18, p.m., Bidault presiding discussed German assets in Austria.84 Marshall pointed out that agreement on the Austrian treaty depends upon agreement on the German assets question. He asked the Council to make a determined effort to find some middle ground upon which to settle the controversy over this vitally important article in the treaty. He introduced a new US proposal85 which reaffirms the Potsdam commitment giving the USSR German assets in eastern Austria; defines these assets; seeks to avoid controversy over whether title of these assets has or has not passed to the USSR by agreeing to authorize Austria to transfer immediately all assets included under the new definition; stated that the properties will be subject to Austrian law but prohibits Austria from nationalizing any of these properties during a period to be fixed. Disputes as to the application of this clause would be arbitrated under the terms of the general arbitration clause of the treaty rather than by a special agency.
Bidault accepted most of the US proposals but suggested several additions.
Molotov said that Soviet delegation was studying US proposal because the differences in points of view needed to be overcome. He then proceeded to disagree with almost every paragraph of the proposal. He said the Soviet definition on assets is preferable to the US one which is too limited. He added that a special procedure for arbitrating disputes over assets is essential. He repeated one time more the usual Soviet arguments.
Bevin agreed with Marshall’s statement that the important task of the Council is to define these assets. He said the Soviet definition gave [Page 356] a much wider interpretation to the term than was intended at Potsdam.
Marshall said his proposal was offered in the hope of reaching a reasonable compromise but that after hearing Molotov it appeared “we are further apart than ever”. He said the clauses proposed by Molotov would make of Austria a mere puppet of those foreign states owning German assets in Austria. He said such clauses were not contained in any of the satellite treaties and that the US could not accept any Austrian treaty which contained them.
Molotov replied that only a small part of the Austrian economy would be affected by the transfers and thus the transfers would not affect Austria’s economic independence. He said the transferred properties would be subject to Austrian law but repeated that the output of the transferred properties could not be controlled by the Austrian Govt.
Bevin contradicted Molotov and said a very large part of the Austrian economy would be affected. He said he did not see how Austria could ever achieve a balanced economy if the Soviet clauses were adopted. Marshall also disagreed with Molotov’s statement and cited estimates to prove that the transfers would affect a major part of the Austrian economy. Since no agreement was reached, the Council began discussing the draft article covering the restitution of property removed from the territory of any of the United Nations.86 The article was referred to the deputies when agreement was not reached. Two additional economic clauses were discussed and although parts of each were accepted, full agreement was reached on none. Marshall proposed that in view of the hour and the “state of our minds” the Council adjourn. It was agreed to hold two meetings tomorrow to continue work on the Austrian treaty.
Department please pass to Vienna as 44, Rome as 39, and Paris as 152.
Repeated London 166, Berlin 290.