740.0011 EW (Peace)/8–647

Memorandum by the Director of the Office of European Affairs ( Hickerson ) to the Under Secretary of State ( Lovett )26

Subject: Austrian treaty negotiations and US action in connection Soviet seizures of United Nations property in Austria.

Discussion:

The Austrian Treaty Commission, established on April 24, 1947 by the Moscow session of the Council of Foreign Ministers, has been in session in Vienna since May 12. Its instructions were to examine the unagreed articles of the Austrian Treaty and to ascertain the concrete [Page 607] facts relating to the problem of German assets and United Nations property in Austria. The fulfillment of the instructions of the Council of Foreign Ministers has been made impossible by the policy of the Soviet representative who has consistently refused to consider the factual material presented by the other delegations as having any bearing on the rigid Soviet position that the Potsdam Agreement gave the Soviet Union the sole right to determine the nature and extent of German ownership and to dispose of German assets without the participation of the other occupation powers. The inability of the Treaty Commission to reach after protracted negotiations any form of agreement on a factual report to the CFM is adversely affecting the Austrian political situation and will in time threaten the entire structure of four power relationships in Austria.

The Soviet disregard for the Treaty Commission has now been emphasized by a seizure of industrial plants on the basis of claims on the Creditanstalt and the Lobau refinery while the status of these properties and the extent of United Nations ownership was being discussed by the Commission. This unilateral action can be interpreted only as a complete disregard of the CFM decision of April 24 and the entire purpose of the Treaty Commission.

Since continuation of the Treaty Commission in the face of the Soviet unilateral action would be on terms humiliating to the other participants and would contribute to the deterioration of the Austrian situation, action should be taken by the US to register its disapproval and to enable it to explore new means of solving the Austrian question.

A suggested program is as follows:

1.
The recall for consultation of Joseph Dodge, the US representative, and the dispatch of a note of protest through diplomatic channels to Molotov.
2.
After discussions with Mr. Dodge, to arrive at a decision as to the future course of US action, for which the following alternatives are possible:
a.
Resumption of the discussions in the Treaty Commission if a satisfactory answer to the US note of protest is received from the Soviets.
b.
Reference of entire question back to the CFM as unagreed. The Austrian question would have to be placed on the CFM’s agenda by interchange of notes through diplomatic channels.
c.
A tripartite diplomatic approach to the Soviets offering recognition of their title to a list of indisputably German properties in return for a guarantee that all Soviet owned enterprises will be fully subject to the operation of Austrian law. In addition, tripartite approval may be given to Soviet-Austrian negotiations on the status of disputed cases as well as consideration of a proposal for a lump sum settlement to be made by the [Page 608] Austrians for all properties recognized as transferable. Such an alternative presupposes a successful completion of the work of the Treaty Commission in reaching an agreed report on the relevant factual material.
d.
Reference by US, and possibly other states, of Austrian question to the General Assembly of the UN.
3.
Discussion through diplomatic channels with the British and French concerning the next steps to be taken in the Austrian question in order to obtain concurrence prior to any announcement of a change in US policy.

Recommendations:

It is recommended that the Under Secretary approve the first step in the foregoing program and sign the attached telegram to Vienna27 recalling Dodge for consultation and the attached note28 to the Soviet Foreign Office protesting the Soviet unilateral action. A public announcement may be made on this incident after the arrival of Dodge and the delivery of the US note to the Soviet Foreign Office.

  1. The source text is initialled by Under Secretary Lovett.
  2. Telegram 615, August 8, to Vienna, infra.
  3. The note under reference is included in telegram 615.