740.0011 EW (Peace)/7–147: Telegram

The Minister in Austria (Erhardt) to the Secretary of State


561. From Erhardt and Dodge. Discussions to date in ATC do not permit definitive reply to Depts 450 June 25.22 Soviets have given no indication of ultimate intentions regarding satisfactory conclusion of treaty. Although situation has been clarified to extent that discussions are being held on oil industry to be followed by consideration of other categories of German assets (Legtel 520 June 19)23 on basis of agreement at 21st meeting, such clarification was not achieved by any substantial measure of Soviet willingness to cooperate or compromise. Future procedure will remain unclear until present preliminary discussions on various categories German assets, particularly current discussions on oil, are completed and Soviets attitude with regard to consideration factual material on other categories of assets is ascertained. Similarly, future procedure will remain unclear until Soviets have definitely accepted or rejected references to Committee of Experts as agreed in 21st meeting.

While definitive reply to Dept’s recommendations must be withheld pending completion of present phase of discussions, following preliminary comments may be made on work of ATC and future tactics:

Excellent opportunities for obstructive tactics are inherent in current discussions. ATC may assemble vast quantities of facts on various categories without arriving either at any clear-cut decision on treaty definition of assets or on list of properties to be regarded as German. Soviets may in addition dispute concrete facts or pick unimportant facts for disputation and thus prolong discussions indefinitely, blaming Western powers. If Soviets wish to delay, machinery of ATC will permit them to do so.

Soviets have not altered firm position on basic question of lists of properties to be regarded as German (Deptel 320 May 1424) and continue to insist that Potsdam transferred title of German property in Eastern Zone to Soviet Union. U.S. position has been reserved on lists (Legtel 494, June 12; 520 June 19).24a Difficult to see how present trend of discussions will cause Soviets to modify fundamental position on title unless far-reaching changes are made in Soviet policy regarding German assets as reparations in areas outside of Austria.

We agree that any concessions on Article 35 must be contingent on resolution of other chief issues in treaty. Discussions so far have [Page 604] centered on Arts 35 and 42 and no consideration has been given to other unagreed arts. British willing to proceed to other arts (Legtel 498, June 13)24b but Fr and Sovs apparently prefer to complete discussions on 35. Doubtful whether Sov Del in a position to reach agreement on other unagreed arts on basis of concessions on 35. For this reason, no firm concessions can be offered on Art 35 until preliminary discussion held on other arts. Fr reluctant to request Foreign Office for modification of position on Art 2 and military clauses until agreement on 35 in sight. It is probable that final survey and decision on all unagreed arts can take place only at CFM level.

Recommendations for future tactics regarding treaty can not be given until slow development of discussions has revealed Soviet intentions. Regarding specific points in Deptel 450:

We consider that discussions should be continued in ATC for time being and will make recommendations for termination later. Future Sov intransigence may make further discussion impossible. Will CFM meet in September? It should be borne in mind that tangible and periodic measures of friendliness as well as press campaign, will be necessary to allay Austrian feeling of hopelessness although such measures may not entirely prevent adverse political tendencies which may result from protracted and fruitless negotiations.
USDel has from first planned to have U.S. report based on concrete facts ready for next CFM meeting. If ATC should not obtain agreed reports, USDel proposes to seek UK and Fr concurrence with majority report. Should ATC break down, USDel will seek concurrent US, UK, Fr reports to respective ministers. Cooperation with UK Del and Austrian Gov in obtaining factual material has been informal but extensive. French Del prefers to operate alone.
As long as current discussions continue on basis of compromise proposal (Legtel 520 June 19) diplomatic approach outside of ATC machinery is not advisable. Diplomatic approach to Molotov would be desirable if Soviets give us clear and definite basis to charge that CFM decision of April 24 has been violated by refusing to discuss actual cases and concrete facts. In present discussions Sovs may drag out meeting by differing on facts or conclusions drawn from facts without giving foregoing basis for protest to Molotov. Presidential appeal to Stalin should be reserved until decision is made to refer case to UN.
Approach so far in ATC has been to examine factual situation with view to demonstrating fairness of US definition and that such terms as “duress” for example, do not conceal an intention to deprive Sovs of Potsdam rights. Conversely we wish to test scope of Sov definition both for possible agreement on Art 35 and for obtaining clue to future Sov objectives in Austria. Proposal outlined by Dept would be marked variation from present approach and if made here would probably not result in agreement, but would seriously impair use of USDel’s factual conclusions at next CFM meeting. In event CFM agreement not obtained on basis of ATC factual material, such a last ditch proposal as Dept suggests might then be introduced in [Page 605] CFM. Re Dept’s plan USDel preparing material on Austria’s capacity to meet claims to German assets by other means than transfer of title to particular assets. In this regard Gruber has proposed an Austrian study of volume of goods or profits which might be exported to Sovs without impairing Austria’s credit with US.
In view of foregoing we do not consider that Austrian case should be submitted to UN unless next CFM meeting fails to obtain agreement. Moreover, since April 24 CFM agreement established ATC and CE to report to CFM at next meeting, we do not understand how Austrian case can be referred to UNGA in September.

USDel will transmit a more definite estimate of situation after completion of present discussions on basic types of German assets.

Pass to War.

  1. Supra.
  2. Not printed; it reported upon agreement on document CFM (ATC) (47) 15, June 19 reached at the 21st Meeting of the Austrian Treaty Commission; see pp. 598600 for the text of the document and the Record of Decisions of the meeting.
  3. Not printed.
  4. Neither printed.
  5. Not printed.