740.0011 EW (Peace)/9–1547: Telegram

The Acting Secretary of State to the Legation in Austria


782. Discussions have been held in Dept and with Dodge on procedure re Austrian treaty. Following steps have been agreed until meeting CFM Nov:

ATC discussions should be terminated at reasonable date. In view info urtel 863 Sept 15,37 ATC work apparently will be concluded without diplomatic action. If any difficulties arise US will send notes to Brit, French and Soviets requesting termination discussions to prepare report for CFM in sufficient time for consideration prior to Nov meeting. If ATC ends of own volition Sept 23 sufficient time will be provided. Any agreement, however, for termination negotiations must be made in such a way as to prevent propaganda by Soviets against Western powers for breaking up discussions.
Between termination ATC and meeting CFM an offer will be made to Soviets to settle German assets question (Deptel 450 June 2538). Present discussions in Dept envisage tripartite offer, in substance acceptable to Austrian Govt, through diplomatic channels with request that offer be considered and discussed at CFM meeting. In view of history of Soviet demands in four-power negotiations and actions in Austria it is not likely that Soviets will consider or accept any offer for lump-sum settlement which will involve complete withdrawal from their present controls over certain Austrian enterprises. Urgency of reaching agreement to permit withdrawal of occupation forces requires that any offer to Soviets be made on realistic basis in terms of their current policy. Dept is prepared to recommend to Brit and French that Soviets receive certain percentages in major enterprises which in tripartite view are indisputably German, taking into account for purposes of evaluation tripartite position on Aryanization, UN property, beneficial ownership, and physical distribution of assets. “Major enterprises” may be defined in course of negotiations as those contained in final categories discussed in ATC, but with agreed limitations as to value and extent of German ownership. Precise plan can be worked out after ATC factual material is available to Dept and after preliminary discussions with Brit and French. Soviets would be asked to guarantee in return that any interests transferred to Soviet ownership would be subject to Austrian law except for an agreed exemption from nationalization for a limited period of time. In addition, as part of offer provision would be made for lump-sum settlement with Soviets at specified amount in final satisfaction of remaining claims to German assets not covered in foregoing transfer of title provided methods of settlement are consistent with Austria’s economic capacities to pay and safeguards are provided similar to those contained in the Italian Treaty concerning the payment of reparations. It will of course be made clear that any agreement on basis of this offer is contingent on satisfactory settlement other treaty issues.
If Soviets agree to discussion foregoing offer, Dept would be prepared in CFM to recommend that present form Art 35 be replaced by a general Art which would recognize rights of Potsdam claimants to German property in Austria; would provide that a special quadripartite protocol be concluded in satisfaction of these rights as annex to treaty, and that any properties or property interests allocated to signatory powers will be subject to Austrian law. Dept has further agreed to recommend that Austrian treaty be placed among first items CFM agenda.
In view of foregoing, consideration should be given to operations [Page 618] possible in Vienna prior to and following termination ATC. In addition to ATC report to CFM, you are requested to obtain a tripartite report or maximum tripartite approval for a US report, with Austrian concurrence, on which foregoing offer can be based. It is recommended that tripartite agreement be reached as far as possible on percentages in major Austrian enterprises which are indisputably German and eligible for transfer to Soviets, and that all other legitimate Soviet claims to indisputably German property be assessed in terms of their value. In addition, tripartite agreement and Austrian concurrence should be sought on Austria’s capacity to pay such lump-sum settlement and means of satisfying Soviet claims without impairing Austrian economic security.
USDel’s report to Dept should take into account possible lines of negotiation in CFM. It is suggested that USDel report should list and evaluate the following: German assets in Austria; shares of such assets to which each of four powers has a legitimate claim; list of enterprises or categories of enterprises in which concessions can be made with least damage to Austrian economy capacity and independence; what percentages of such enterpises might be transferred to satisfy Soviet claims without impairment Austria’s economic or political position; an estimate of what the minimum and maximum Soviet demands are likely to be. It is assumed that USDel report will also include the voluminous factual material collected since May 12 which has not been presented in ATC papers.
The security aspects of this approach must be emphasized. In discussions with Brit and French extreme caution must be taken to prevent any leaks to the Soviets, particularly on maximum amount which may be offered. Any prior information which the Soviets may obtain would undoubtedly increase their demands or strengthen their determination to deal only on a bilateral basis with Austrians.
Dept. considers that foregoing approach has advantage in that it will retain for Western States initiative on treaty and will not enable Soviets to claim that ATC or any other body is arbitrating Soviet claims. This approach seems only one which in view of past negotiations may possibly elicit some favorable Soviet response. If response is not forthcoming, offer can be publicized as a reasonable and fair effort to obtain Soviet agreement, and Soviet refusal to consider would prove they are utilizing Potsdam to gain political control of Austria rather than German assets as reparations, thus strengthening case in possible future submission to UNGA.

  1. Not printed; it read in part as follows:

    “Firm time table termination ATC meetings not yet possible. ATC began redrafting Article 35 today and will probably require four additional meetings this subject. Thereafter Article 42 and other disagreed articles remain to be considered. Do not now anticipate more than five meetings other articles. Rendel and Burin des Roziers leaving this weekend and all others restive. Hence, possible that ATC will end sessions during week of September 23.” (740.0011 EW (Peace)/9–1547)

  2. Ante, p. 600.