740.0011 EW (Peace)/5–2047
The Adviser to the United States Delegation at the Austrian Treaty Commission (Williamson) to the Chief of the Division of Central European Affairs (Riddleberger)
Dear Jimmy: We have just completed the first week of the Treaty Commission. There is little to point to in tangible results and there is still no agreement on the terms of reference for the work of the Committee of Experts. You are aware of the issues involved from the telegrams. Various members of the Commission express various [Page 583] degrees of pessimism about the rate of progress. I am so encouraged about the manner in which the negotiations have been conducted that I am not discouraged about the lack of tangible results. Dodge has done a magnificent job during the first week. He is firm and always has a clear and intelligent reason for being so. The conduct of the negotiations has aroused a good deal of talk, particularly among the French and British Delegations. In terms of my experience, this is the first time that our policy in Austria has been clearly stated and discussed intelligently with the other nations involved. It is too early to give any judgment on the prospects of agreement. At the present time it looks like a long grind and if terms of reference are agreed on, the Committee of Experts will probably settle down to a long wrangle over the admission of facts on German assets.
. . . . . . . . . . . . . .
The Austrian situation at the present time is in a delicate balance and we are faced with the necessity of altering our policy on the treaty or coming across with definite assistance. As usual, we do not have the initiative and the decision lies with the Soviets. The Soviets can stall the work of the Commission and intensify their propaganda line in Austria that the US is responsible because of its uncompromising attitude towards German assets. There are many opportunities both in the Commission and in the Committee of Experts for delay. The Soviets can obviously use that delay to strengthen the groups in the government proposing a bilateral settlement. Gruber believes that the Soviets wish to withdraw without loss of face and that the Austrians can get along economically and politically with the Soviets in the future. He is willing to accept the Molotov formula and to go down the line on the oil question and DDSG admitting Soviet participation in or control of the operating countries [companies?].
Our difficulty in combatting this move is in finding an alternative to present to the Austrian Government. I do not believe that under any circumstances we should accept Gruber’s formula and relax our position on the assets question. The Soviet position is so weak and we have all the force of law and international agreement on our side. Any appeasement by us on this question either in the Commission or in the Committee of Experts would be widely interpreted as a sellout and would endanger our whole policy in Europe.
. . . . . . . . . . . . . .
Any action in this regard, however, does not touch the fundamental economic question.5 The basic situation is worse than it was last year. [Page 584] If I may be alarmed again, I am alarmed at the lack of consistency in our economic policy. It does not follow our diplomatic policy and certainly does not carry out the great promises made by General Clark. The most pressing problem at the present time is coal. If there is to be a choice between food and coal in the immediate future, many Austrians believe that we should send them coal. The Austrians fared badly in the Ruhr allocations and obviously the situation in Western Europe does not admit any tampering with these allocations. That leaves only the possibility of obtaining Polish coal. I certainly hope that some deal can be worked out in connection with the relief bill in order to obtain Polish coal, either by making it a specific commitment by the Poles or by turning over an appropriate share of the Austrian relief to the Poles. The Polish decision to abstain from delivering coal from [to?] Austria is obviously a political decision. There is no reason, therefore, why we should not play politics to obtain Polish coal for Austria. Any policy, however, in tying Austria to the Polish coal fields should be recognized as transitional pending the clarification of the Ruhr situation.
In addition to coal, the second most pressing need is hard currency for raw material imports. I have no idea how this may be obtained, but if it does become available it seems to me it should be used for rebuilding Austrian economic connections with the Western states. I would like to report that there is a story in the Vienna Coffee Houses about the Export Import Bank loan. It is said that the Austrian representative was told by the Export Import Bank not to go near the State Department and if the State Department had anything to do with it Austria would not get the loan. This story involves a brash young man by the name of Erwin Schueller who is working independently of Kleinwaechter in Washington. You might suggest to Kleinwaechter that he either be muzzled or sent back here to a 1550 calorie ration because he is doing a great deal to injure the Austrian chances for a loan.
I realize that there can never be a great bilateral trade between Austria and the US. In last analysis, Austria can furnish us only with certain quaint handicraft products which would never solve their foreign exchange problems. It seems to me possible on the other hand to work out a system of multilateral trade between Austria and the Western European states including Germany to replace the former Austrian dependence on the Danubian area. This would not preclude small trade with Czechoslovakia and Hungary but would enable Austria to survive economically without tying its political independence to an area which will always be opposed to Austrian political independence under a non-Communistic Government. A reorientation of [Page 585] Austrian economic life in this regard could only take place under our good offices and with hard currency made available by us.
I hope some definite plan can be worked out or tangible results announced as soon as possible. Any letdown in our policy here or any shift in our position would simply strengthen the Soviet position and put them in an excellent position to make ineffective our whole German policy.
There are many other aspects of the Austrian question about which I will report to you in further letters. Please give my best regards to all the members of CE.