Foreign Relations of the United States, 1947, Council of Foreign Ministers; Germany and Austria, Volume II

CFM Files: Lot M–88: Box 61: CFM/ATC(47) Documents

Statement by the French Delegation to the Austrian Treaty Commission ⁴⁰

secret
CFM/ATC (47) 76

[ Vienna ,] 8th October, 1947.

1. The French Delegation desires to submit to the Commission some observations on the lessons which they draw from discussion of Article 35 and on the attempts which could be made at a later date with a view to dissipating the differences of opinion.

2. The French Delegation regrets to state that the texts which we have decided to submit to the Council of Ministers do not, in relation to the texts studied at Moscow, represent an appreciable lessening in the differences in the points of view held on the definition of German property. On the contrary it appears that the study of concrete facts has led the various Delegations not only to strengthen their initial position in general but has led them further to adopt conflicting attitudes on the points raised in the course of such study and which were not mentioned in the texts at Moscow.

3. However, all the Delegations certainly desire, as does the French Delegation, to respect the Potsdam decisions and to find a solution which will recognise the extensive rights which this Agreement wished to award their Governments. But the main reason why our disagrements have persisted seems to be because the various Delegations based themselves on overall juridical principles which are in conflict the ones with the others and on which they can only with difficulty admit of compromise. It is also to be feared that renewed discussions in the Council of Foreign Ministers will not permit of a practical solution being found if discussions continue to be based on principles.

4. At the beginning of our meeting the proposal had been made that our difficulties should be solved by drawing up lists of German property subject to transfer rather than by drawing up defining principles. This suggestion was not accepted by the Commission and experience over the first three months seems to prove, in our opinion, that even if no procedural objection had been raised, the drawing up of agreed lists would have been rendered impossible by the fact that the various Delegations would, in taking a decision in each practical case, have had no other course open to them than to base themselves on principles which were themselves contested.

5. In the opinion of the French Delegation there still remains one possibility which should be explored in order to put the discussion on a different basis from that of either principles or lists. This possibility would consist in seeking agreement on the basis of figures, that is to say on the basis of the total value of German property up to the sum to which the Allied Powers are respectively entitled in the eastern and western zones of Austria. The experience of the peace treaties already signed in fact shows that figures may more easily lead to unanimous solutions.

6. Moreover, the most appropriate method of receiving reparations from Germany in accordance with the decisions taken at the Crimean and Potsdam conferences consists in receiving in kind products or equipment which may best contribute to the reconstructions of Allied countries impoverished by enemy occupation and by their own war efforts. This purpose would be better accomplished by the delivery of products from the Austrian economy than by making a levy on German property in their present form and situated in Austria which may not correspond to the reparations requirements of Allied countries.

7. The French Delegation does not intend, however, to make a total estimate of German property in Austria nor to convert such property in toto into a claim which Austria would settle through trade deliveries made free of charge. In fact three reasons lead to employment of this method being limited:

(a) there may be undertakings or property which correspond exactly to the requirements of countries entitled to reparations;

(b) It is not certain that the economic situation of Austria during the next years will allow her to have at her disposal an export surplus corresponding to the total value of German property;

(c) finally the facts of making a direct levy on a certain amount of property in Austria may represent a useful guarantee that Austria will implement her obligations.

8. The French Delegation suggest, therefore, that the overall settlement of the question of German property could be based on a division of German property into two parts each of which would be treated differently: the first lot would form the subject of a direct allocation of property in Austria and the second would be the subject of a total evaluation and conversion into an Allied claim on Austria.

9. In the first lot oil undertakings and Danube shipping could be included. In the case of each of these two categories the French Delegation contemplate a special settlement which would consist in awarding to the Allies clearly defined property or rights thus leaving aside the relevant disputed questions—on the one hand the question of making a levy of shares or assets and on the other hand the question of debts attaching to such property.

10. As far as oil is concerned the special settlement offers an additional advantage because of the fact that the rights of exploitation possessed by German companies whatever one’s opinion as to their validity may be were granted for a limited period of time, in general for five years, a period of time which in any case must already have expired or must soon expire. In order that reparations may be substantial there would be an advantage in obliging the Austrian Government to grant further concessions for a longer period. Leaving aside any question of retrospective discussions both the contribution made by Germany to the development of the oil industry and the possibilities offered by possession of the plant could be taken into account when laying down the scope of such concessions.

The French Delegation therefore contemplate a solution on the following lines:

(a) The Soviet Union would receive full possession of the plant and boring and extracting equipment which belonged to German companies at the end of the war;

(b) Concession rights to prospect and exploit bituminous products would be granted to the Soviet Union, taking into account in particular old or new rights to the equipment and plant. The duration of such concessions would be laid down according to the precedents employed in similar cases, and the undertakings created to exploit such concessions would, of course, be guaranteed against nationalisation during the whole period of such concessions;

(c) The provisions concerning the oil rights of other United Nations would be the subject in Article 35 or in Article 42 or in a special appendix of additional provisions dealing with the oil question in general.

11. As far as the D.D.S.G. is concerned the settlement could be based on the geographical situation. The Soviet Union would receive its share out of the holdings of the Company in Hungary and out of the ships which were on the Lower Danube at the time of Germany’s capitulation. The claims of the other Allies would be satisfied out of the remainder of the D.D.S.G. property: This company would be obliged to cede a certain number of ships to powers whose river fleets have suffered losses as a result of the D.D.S.G. using their ships during the war.

12. The second big lot of German property to be treated in a different manner would correspond to all other categories of German property, that is to say to claims, state property and all undertakings which would not be the subject of the special settlements contemplated above. As regards this second lot, the settlement would be based on an ad hoc principle and on the principle that the Allied claim would be commercialized. It could with profit be based on the provisions laid down for the settlement of reparations owed by Hungary, Italy, and Germany’s other satellite powers. Separate ad hoc settlements would, of course be laid down for the two parts of Austria mentioned in the Potsdam Agreement.

13. The amount of the ad hoc settlement should, in the case of the Soviet Union on the one hand, of the United Kingdom, United States and France on the other, correspond in principle to the value of German property in the second lot and situated in the relevant part of Austria; more precisely, in order to take into account the fact that the special settlements provided for above in the case of oil and the D.D.S.G. may include awards higher than the value of rights recognised as being validly German, it would correspond to the total value of German property in the said zone, less the value of property and rights forming the subject of direct awards to interested powers or groups of powers under the heading of oil and D.D.S.G.

The French Delegation does not intend to estimate the value of such an ad hoc settlement by means of analysis, by adding up the value of German property of each type, for such a procedure would inevitably cause to re-appear those differences of definition which it is intended precisely to avoid. They propose rather that a figure should be taken for Austria’s total debt which would be comparable to those figures which were written in to the other treaties as reparations and that claims already satisfied by the special solutions for oil and the D.D.S.G. should be taken into account. They consider that such a figure represents a solution which would be acceptable as a basis for discussion as compared to the figures which would result from the application of our various formulae.

14. The method by which Austria will pay off her debt should then be laid down: The French Delegation consider that the two following methods of delivery could be contemplated:

(a) Products taken from Austria’s current production, the types and amounts of which would be laid down by means of agreements concluded between the interested governments and Austria.

(b) Plant, industrial equipment designed for the manufacture of war material in excess of the requirements of the Austrian Army, as deriving from the military clauses of the treaty. Article 26 could, if necessary, be renewed in order to permit of these awards being made.

The time limit laid down for such deliveries could be from 8 to 10 years and the question may be asked whether it would not be appropriate to provide that deliveries of articles from current production should commence only on the elapse of a certain period of time after the coming into force of the treaty so that the Austrian economy may have recovered its normal stability.

15. It goes without saying that the eliminations of all German influence in Austrian economy remains one of our prime objectives. The Treaty should therefore impose on Austria the obligation of terminating within a fixed period of time the liquidation of all German property not directly seized as reparations. A quadripartite commission should, in our opinion, control the discharge by Austria of this obligation.

16. The French Delegation consider that if the previous solutions are upheld it should be easy to reach an agreement on the disputed points of Articles 35 and 42 of the Treaty.

(a) it would no longer be necessary to lay down an overall definition of German property;

(b) the problem of transfer and of the application of Law No. 5 would lose all importance and a simple reference to the decisions of the Berlin conference would suffice;

(c) possible disputes at the time of the coming into force of the Treaty would be so restricted that it would be unnecessary to lay down or to exclude an arbitration provision;

(d) the problems as to the status and application of Austrian law instead of being theoretical in character would easily be settled by means of hard and fast solutions adapted to the oil undertakings and to the D.D.S.G.;

(e) finally all conflict between entitlement to reparations and the interests of United Nations or of minority groups would disappear and an argeement should easily be reached on the clauses of Articles 42 and 44 which lay upon Austria the obligation to re-establish the legitimate interests of each.

17. The French Delegation desire to stress the fact that in their opinion the solution they propose is a single entity, the various parts of which are inter-dependent and balance each other. Without excluding the possibility of introducing modifications which the other Delegations might propose, they consider that such modifications should not be of such a kind as to upset the balance of the proposal on a whole.

18. If the proposal of the French Delegation is accepted in principle, the wording of Article 35 could be discussed on the basis of the text which is given as an appendix⁴¹ to this statement.

19. The French Delegation do not conceal the fact that since their proposals approach the problem of German property from a new angle, it may be necessary for the other Delegations to undertake studies which would exceed the time remaining to the Treaty Commission for the accomplishment of its task. They do not request, therefore, that the Commission should discuss these suggestions; they only desire that the present statement should be included in the official documents of the Commission and take the liberty of requesting the other Delegations to draw the attention of their Governments to these proposals so that they may be able to determine their decision before the meeting of the Council of Ministers.

40. This statement was made to the Commission at its 83rd Meeting, October 8.
41. The French Delegation’s draft text for article 35 of the Austrian Treaty is not printed.