863.5151/5–1548: Telegram
The Minister in Austria (Erhardt) to the Secretary of State
630. Legation strongly supports Department’s position (Deptel 434, May 131) that it is undesirable completely exclude plants located in Soviet zone from participating in limited Eximbank credits. This considered important here both to minimize effect of Soviet charges that American aid is being denied to Soviet zone and to avoid increasing the risk of partition.
None of four firms listed first part Deptel 434 are under direct or indirect Soviet control, though 2 or more have in past been threatened with seizure. Unavoidably all have transacted some business with USIA or Soviet personnel, but volume of such business has been relatively small and generally within requirements of Austrian law, and compensation has always been received in money or goods.
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Guntramsdorfer is reputable small firm about which no adverse information has been obtained re dealings with Soviets; it does not [Page 1401] normally acquire raw materials but merely processes fabrics furnished by others. AGA Sauerstoffwerke is well managed efficient firm whose output is distributed equitably throughout Austria, no significant amount of output being diverted illegally to Soviets. Production figures of Klinger firm show all production is available to Austrian economy.
For all four of above cases Legation confirms Department’s judgment no objection from security standpoint should be made to contemplated exports.
As for Semperit, its two factories are both located in Soviet zone and were seized by Soviets in 1945 without any apparent legal basis. After holding plants several months and removing most of equipment Soviets turned firm back to Austrian Government which placed it under public administration. From time to time suspicions have been heard expressed that Soviets still control firm, but repeated careful investigations by G–2 and economics-finance divisions USACA have so far failed to uncover any real evidence to substantiate them. Instead investigations by G–2 and economics-finance divisions USACA have fact be considered German asset and that it is not under Soviet control or domination. Substantially all of output in 1947 is officially reported to have been distributed in accordance with orders of Trade Ministry. Legation has obtained from USACA industrial experts confirmation that cord production machinery is urgently required for manufacture of tires. Also well established that Austrian economy urgently needs substantial quantities of new tires for essential transportation. At best Semperit will be able to cover only most critical portion of requirements.
Legation therefore recommends approval soon as possible advances and exports to Semperit also under Eximbank agreement. In view of size of aggregate Eximbank credit for this firm and past suspicions mentioned above, this firm will be continuously watched with special care by screening committee being established here and in event any objectionable activities are discovered strong corrective action will be taken immediately. If necessary further advances and exports could be discontinued at once.