740.00119 Council/3–3148: Telegram
The Acting Secretary of State to the Legation in Austria
295. For Keyes and Erhardt only. Following is main part of text of message by telecon from USDel, London:
“At this morning session Soviet Delegation made a major concession on lump sum reducing amount to 150 million payable in six years. It is evident that we cannot immediately pass to consideration of other articles of treaty without further negotiations on Article 35 which will demonstrate especially to Austrian people willingness of other three delegations to make concessions essential to conclusion of Austrian treaty. In our opinion Soviet proposal, which is intended to Strengthen Soviet position in Austria will make it impossible for US to break off treaty discussions on German assets issuer. In our opinion it is important for us to recapture the initiative lost to the Soviets today and we urged this course of action with the French and British this afternoon. Both of them are reluctant however to make any real concession at this stage from previously announced positions. Marjoribanks in particular insisting that our present tactics have proved successful in eliciting a real concession from Soviets and we have only to stay firm in order to obtain more. We feel in order to regain initiative we should make some rather spectacular counter proposal of our own and are considering proposal along following lines:
- 1.
- Acceptance in principle of 150 million lump sum on condition
- a.
- Further lengthening period of payment.
- b.
- Waiver by Soviet Union of all other claims such as Gosbank claims and German creditor claims against enterprises transferred to Austria.
- c.
- Clarification and definition of Austrian obligation to transfer net profits and other income of Soviet oil and shipping enterprises in Austria.
- d.
- Abandonment of all reparation claims against Austria in accordance with Article 34.
- e.
- Waiver of all claims to interest on outstanding part of lump sum.
- f.
- Transfer to Austria of all enterprises other than retained oil and shipping properties on day treaty enters into force.
- 2.
- Offer to transfer to Soviets 58 percent oil production, together with approximately sufficient existing (note that this would mean refining capacity as increased by Soviets since 1945) capacity to refine this amount, and 50 percent exploration areas.
Such offer would in our opinion have effect of either (1) forcing Soviets to make further concessions leading to agreement in principle on Article 35 with agreement that details be worked out by Allied Commission in Austria, or (2) showing up Soviet unwillingness to make further concessions, in which case we would have made most [Page 1483] convincing demonstration to Austrian people of our willingness to reach agreement and free them from burden of occupation. In case of (1) we would proceed to discussion of other articles of treaty, maintaining our position on Article 2 (territorial integrity) and Article 5 (frontiers), Article 17 and 27 (restrictions on armament) and Article 34 (reparation). Insistence on our position on these Articles would be generally understood in Austria and will create firmer basis for suspension of negotiations whereas failure to yield on Article 35 would impair US position in Austria.
In discussing some such form of initiative with British and French this afternoon British propose without making significant concessions of their own to prolong negotiations to elicit more Soviet concessions.
They argue against propaganda value of Russian proposal and fail to appreciate unlikelihood of Soviets after scoring this success, making another concession in the near future. French appreciate force of our arguments, but inclined to sound out willingness of Soviets to make concessions on other parts of Article 35 before making any concessions on our part and even then disposed to make more cautions and limited concessions. We consider, however, that piddling concessions now would create bad impression and that unwillingness on our part to take dramatic step forward would be exploited by Soviets in Austria. Moreover, we believe delay in making concessions on our part would deprive such concessions of major part of their propaganda value and would in end serve no useful purpose.”
“Request your comments soonest repeating same to USDel London.2
- Legation Vienna in telegram 413, April 2, not printed (740.00119 Council/4–248), suggested that if the Russians really wanted the Treaty they would concede more, but advised that some concrete gesture be made by the United States on Article 35.↩