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

740.0011 EW (Peace)/10–1547: Telegram

The Acting Secretary of State to the Embassy in the United Kingdom ²⁰

secret

Washington, October 15, 1947—7 p.m.

4452. Substance of memo on Austrian treaty given BritEmb for transmission to FonOff follows:²¹

Begin summary: Austrian Treaty Commission has now completed its proceedings without reaching agreement on any unagreed Articles in treaty.²² Dept is concerned no agreement reached on definition German assets Art 35 and considers solution German assets problem one of key points involved in completion treaty and termination military occupation. Dept notes proposal made by French Rep ATC Oct 8²³ for solution German assets problem on basis concrete values was received with appreciation by other Delegations for transmittal to their respective Govts. In effort to break deadlock, proposal is made that efforts to reach agreed definition Art 35 be suspended temporarily after termination ATC, and prior to convening CFM Nov, US, UK, and France, after consultation Austrian Govt, approach Soviet Govt for direct settlement German assets along following lines:

1. Govts US, UK, and France recognize Soviet Govt has right to keep certain percentages ownership in major Austrian enterprises which are indisputably German.

2. Austrian Govt be urged to offer Soviets lump-sum settlement at specified amount in final satisfaction remaining claims German assets not covered by foregoing transfer of title. Lump-sum settlement must be consistent with Austria’s capacity to pay and protected by safeguards similar to those in Italian Treaty.

3. Soviets to guarantee any interests transferred to Soviet Union to be subject to Austrian law except for agreed limitation on nationalization.

4. Any settlement on basis of foregoing to be contingent on completion of treaty. If Soviets agree to discuss proposal US would recommend that present form Art 35 be replaced by general Art to include three items; recognition rights Potsdam claimants to German property in Austria; a special quadripartite protocol in satisfaction of these rights to be attached as annex to treaty; and provision that any properties or property interests allocated to signatory powers be subject to Austrian law.

5. If Soviets agree to discuss proposal, to place Austrian treaty among first items CFM agenda.

No recommendations made at this time for precise content or manner in which proposal should be presented to Soviets. Preliminary discussions should be undertaken by three govts on basis of factual material collected by delegations to Treaty Commission in order to agree on fair, reasonable, and precise offer which may be calculated in monetary terms. Since foregoing proposal conforms in general with approach French Del Vienna Oct 8, such discussions of three govts should be facilitated. Dept has recommended that exact offer be made to Soviets approximately Nov 6 when Deputies convene. Govts asked to express their views and suggest most expeditious means for formulation precise offer. End summary.

You are requested to discuss this proposal with FonOff and urge interchange of views at earliest possible time.

Dept recognizes that in order to obtain Soviet agreement to a definitive proposal for disposition of German assets in Eastern Austria it may be necessary to propose plan for disposition of German assets in Western Austria. Dept would be willing to discuss this topic.

Sent mutatis mutandis to London and Paris; repeated for information to Moscow and Vienna.

Lovett

20. This telegram was sent mutatis mutandis to London as 4452 and to Paris as 3944; the telegram was repeated to Moscow as 1846 and to Vienna as 848.
21. Copies of the memorandum under reference here were delivered to the British and French Embassies on October 16 (740.0011 EW (Peace)/10–647). Telegram 849, October 15, to Vienna, not printed, asked that the proposal summarized here be brought to the attention of Chancellor Gruber to secure his endorsement and cooperation in any technical assistance which might be necessary (740.0011 EW (Peace)/10–1547).
22. For documentation regarding the Austrian Treaty Commission and its meetings in Vienna, May 12–October 11, 1947, see pp. 577 ff.
23. Document CFM/ATC (47) 76, October 8, 1947, p. 620.