663.119/5–1148: Telegram

The Secretary of State to the Legation in Austria

top secret   us urgent

429. For Erhardt. On Export License Screening for Austria (Dept Army cable to Keyes 7 May1) following paper proposed by interdepartmental [Page 1397] committee for Secy Commerce for purpose of Cabinet discussion. Sawyer, Marshall to examine matter together soonest.

“The Secy Comm requests Cabinet review of the policy to be followed in processing of export license application for Aus from a national security standpoint.

The Advisory Committee to the Secy of Comm. under the Second Decontrol Act has agreed that there are certain contingencies of which account must be taken in the interest of U.S. security: (1) to the extent that U.S. exports to Aus find their way to the Sov Zone they contribute to the economic strength of an area under Sov military control, (2) removals of facilities from Sov controlled plants to Eastern European countries can be made clandestinely, without payment, and in disregard of Aus regulations, and (3) the exposed geographical position of Aus would in the case of war make the Sov seizure of the entire country relatively easy.

On the other hand, U.S. foreign policy objectives require that Aus remain united and within the Western orbit. To be united Aus must be treated as an economic unit. While a certain portion of U.S. exports to Aus must go to the Sov Zone in the interest of a balanced development of the Austrian economy, the amount has been kept to a minimum by the Aus Govt because of the Sov occupation of this area. While unauthorized exports from the Sov Zone to the Eastern European countries are possible, and a Sov seizure of Aus cannot be excluded from consideration, the risks involved seem appreciably less than those which would be incurred if the Aust Govt received the impression that the U.S. Govt is discriminating against Aus as compared with other ERP countries. An Aus Govt which did not feel that it had the full confidence and support of the U.S. would be an easy target for Sov political attack. For foreign policy considerations, it is, therefore, essential that shipments to Aus should be licensed on the same basis as to other ERP countries.

It is recognized that a problem of leakage exists, not only in Aus but in other ‘Border’ countries. This problem may be serious in the case of a limited list of highly strategic items.

It is recommended, as a matter of policy, (1) for the purpose of export control, Aus should be treated like other ERP countries; (it is understood that until review in Aus is established as recommended in (3) below, more careful review in Wash is necessary); (2) that the security aspects of export control to all ERP countries, including Aus, be met without discrimination, by specifying a very limited list of items whose export to all ERP countries would be subject to review by interested Wash agencies; (3) informal, but effective screening of Aus programs shall be made in advance by the appropriate U.S. authorities in Austria in the light of security and foreign policy factors (This review should be made at top levels); (4) a continuous survey of the distribution of imports from the U.S. should be made in Aus by the appropriate authorities.

The question is raised as to whether export licenses for materials and equipt financed for Aus by the Export-Import Bank shall be issued on the basis of the screening given by the Export-Import Bank and other agencies concerned with this loan, or whether selected strategic items should be further screened by this Committee.”

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For your info export controls vested in Commerce, therefore Secy Commerce has responsibility for establishing effective controls.

In case Austria as result pressure Dept other interested agencies agreed to informal screening industrial programs (as distinguished from individual export shipments) in theater rather than formal review Wash as believed here this method would avoid raising apprehension Austrians that they were to be afforded unequal treatment with other participating countries in ERP.

Not certain whether better for High Commissioner to undertake responsibility for security screening or to have joint action High Commissioner US Minister and Chief ECA Mission Austria. Request your comments.

State view is that while screening program would tend to channel new capital investment to Western zones, it shld not be used prevent most efficient economic development of Austria as a whole.

  1. Not found in Department files.