740.00119 Council/4–548: Telegram

The United States Deputy for Austria at the Council of Foreign Ministers (Reber) to the Secretary of State

secret

urgent niact

1362. Delsec 1658. Following is conference material scheduled for April 5, 11:50 a. m. Subject: Austrian treaty negotiations.

Today we were hit by a flying saucer.

1.
In meeting today British opened by making previously agreed [Page 1489] concession on oil exploration. Soviets immediately took initiative by making series of concessions as follows:
a.
Oil production, claim reduced from 64 percent to 60 percent of total production.
b.
Oil exploration, claim reduced from ⅔ (66 percent) to 60 percent.
c.
Oil refining, claim reduced from 450,000 tons annually to 420,000, accepting US and French figures without making clear however whether 1945 or 47 capacities govern.
d.
Duration of contracts, from 50 years to acceptance of last French proposal. (See Delsec 1641, March 181)
e.
DDSG, in addition to DDSG assets in Hungary, Bulgaria, and Rumania, all (assets in eastern Austria, which is equivalent to 15 percent as against 25 percent of DDSG assets in Austria as a whole.
2.
Other deputies agreed to modify their positions in general terms as envisaged Delsec 1656.2
3.
Soviets are now endeavoring to concentrate discussion on three areas of disagreement in this article,3 i.e., exploration, DDSG, and lump sum, particularly the latter. As to first, we will not move to ultimate position until further advance is made by Soviets. We will continue to insist at this stage that Soviets accept utilization of port facilities in Austria in lieu of specific DDSG assets in Austria. Both of these positions are agreed with British and French.
4.
With respect to lump sum, instructions contained in Ausdel 114 represent in effect a retrogression from position previously taken with respect to French position by USDel. In accordance with Department’s instructions, we agreed to French suggestion first two payments aggregating 50 million be paid in currency. Increase of 15 million derived from Austrian assets in ex-enemy satellites had also been approved USDel. We therefore urge reconsideration of proposal Delsec 1656 which asked for authority to insert specific figure, thus Austria would pay in goods or services on Italian formula all or part of any amount other than first two payments in cash and value of Austrian assets abroad.
5.
With respect to conditions to be attached to lump sum payment Soviets have agreed to consider these when agreement on figure reached in principle.
6.
In this general connection, what reply will be made to Delsec 1654, April 2,5 concerning relationship between lump sum payments and ERP.
7.
Soviet move today which speeds up discussions may presage establishment of definite timetable for them in Austria. We cannot here judge full implications. It does, however, result in virtually blocking any break over Article 35.

It seems reasonably clear now that Soviets either genuinely desire conclusion of treaty or are willing to take calculated risk that treaty conclusion will be blocked by western powers and give Soviets propaganda advantage. If area of agreement on Article 35 narrows further, we will make renewed effort to divert discussion to other articles while details of 35 are being ironed out by experts either here or in Vienna. The possibility of Soviets yielding on all other disagreed articles of treaty must be envisaged. On other articles we will remain firm because our position there is favorable.

8.
We feel the $64 question still remains unanswered, i.e., do you want a treaty in the present situation in Europe? If not, what is your advice on best tactics to be employed in breaking off negotiations? We should have done so before Easter if we could only have persuaded the French and British to come along.
9.
We are agreed with British and French on course of action for tomorrow morning’s deputies meeting, but should meet with them afterward for further plans. Could we hear your views by cable tonight?
[
Reber
]
  1. Not printed; the French proposed thirty years for the duration of the contracts (740.00119 Council/3–1848).
  2. Supra.
  3. Article 35.
  4. Not printed; it suggested that Austria be allowed to pay any or all of the total lump sum in goods and services (740.00119 Council/4–348).
  5. Not printed.