The Minister in Austria (Erhardt) to the Secretary of State
1236. Negotiations in regard to Allied approval of Austrian currency conversion law have thrown significant light on both Soviet and Austrian policies and trends.
In regard to Soviets:
- Soviet willingness to approve law indicates that they were not prepared to promote economic partition of Austria at this time even though relatively favorable opportunity was offered to exploit an issue on which Austrian population was divided.
- Soviet readiness to leave in lurch Austrian Communists who have bitterly opposed law provides another example of cynical treatment of their foreign followers.
- Fact that Austrian Communists were permitted to campaign against law and that Altmann resigned from cabinet on this issue 10 days ago, suggests that Soviet decision may have been made at last moment.
- Soviet policy of exerting pressure on Austrians to obtain last ounce of economic advantage is once more confirmed. It appears from statement made to US by Figl that Soviets, perhaps in order to obtain final Austrian approval of bargain, threatened to refuse to deliver 9,000 tons of grain expected from Soviet zone.
In regard to Austria:
- Austrian Government continues to show willingness to make substantial economic concessions to Soviets in order to obtain their consent to measures which Austrians consider to be of domestic political importance. While experts differ as to seriousness of effects of currency bargain on Austrian economy, there is no doubt that Austrians conceded considerably more than they had originally intended.
- Austrians are manifesting tendency to take US support for granted even in regard to bilateral deals worked out with Soviets. In present instance Austrians signed agreement with Soviets61 even though Figl had been advised to delay in order to give USFA opportunity to study final terms which had been submitted to US element only several hours before.
We draw following conclusions from above considerations:
- Soviets may be satisfied, at least for immediate future, to continue to entrench themselves economically in Austria along lines pursued up to present rather than either to promote an economic partition or to endeavor to disrupt present government coalition by fostering Communist offensive. Question arises whether or not this indicated line of policy will also govern Soviet tactics in London.
- It may prove necessary for the US element in Austria, both in the interest of protecting the Austrian people themselves and with a view to forestalling concessions which might jeopardize Congressional approval of continued US aid to Austria, to insist upon exercising more active restraint upon the Austrian Government whenever the latter is confronted by Soviet pressures to which, standing alone, it might feel obliged to yield.
Sent Department 1236, repeated London for USDel 104.