800.515/4–948: Telegram
The Chargé in Austria ( Yost ) to the Secretary of State
urgent
448. Gruber has asked us to transmit urgently to Secretary of State formal note dated April 81 setting forth latest views of Austrian Government on lump sum payment for German assets. Following is summary translation of note.
US Government is requested to review stand it has hitherto taken on lump sum with following considerations in kind:
- (1)
- Austrian Government continues to hope sum will be as small as possible.
- (2)
- Though American proposal for payment in goods is useful bargaining position it is questionable whether agreement on this basis would be compatible with Austrian independence.
- (3)
- Experience of Hungary and Finland with reparations payments in kind has shown that difficulties constantly arise over prices and rates of exchange and that political concessions are often exacted from debtor states.
- (4)
- Soviets would seek from Austria materials for armament industry (steel, machines, tools, oil, and so on) which they will have increasing difficulty in obtaining from other western states.
- (5)
- Dollar payments required Austria would only be between 12½ million (French proposal) and 25 million (Soviet proposal) annually commencing in 1949 or 1950.
- (6)
- Production of USIA industries restored to Austria represents substantial asset which can be “commercialized”.
- (7)
- Payment in goods would be contrary to US policy of making Austria independent of Soviet influence since it would result in tying Austria into Russian economy.
Austrian Government realizes difficulties of obtaining supplementary credits to permit payments to Soviets but believes that with US support it should be possible to commercialize restored assets in such way as to permit dollar payments in installments to Soviets. From point of view rehabilitation of western Europe it would be preferable that Austria deliver goods therefrom rather than to Soviets. Only by freeing Austria from Soviet “reparations nexus” can US aim of independent Austria be achieved and aid already extended to Austria be given lasting effect.
Although Austrian Government for reasons stated above attaches greatest importance to suggested change in stand of USDel Austria could nevertheless agree to payment in currency only if it were certain that it could count on American help in this matter. In any case it hopes that treaty will at least allow Austria possibility of choosing between payment in currency and payment in goods so that if at later [Page 1492] time US should decide in favor of Austrian standpoint way would not be barred to relieving Austria from undesirable pressure. End of summary.
In response to our query as to exactly what sort of “American help” was contemplated by first sentence of final paragraph above Gruber replied assistance in obtaining commercial credits in US and other western countries with which installments to Soviets could be paid and which would be secured by deliveries to west of Austrian goods. US acceptance of Austrian point of view would also imply, he stated, that these deliveries of goods to west and currency payments to Soviets would not affect volume of ERP assistance to Austria. If it should prove impossible for US to give any assurance at this time in regard to “help” of sort specified (which he recognized might well be the case) Gruber believed that most desirable solution would be for treaty to give Austrian Government option of paying lump sum either in currency or in goods or combination of two. We pointed out that latter position was that already taken by USDel in current negotiations.
Full text of Austrian note being transmitted by pouch but will be telegraphed if either USDel or Department so desire. Gruber expects to be in London briefly middle of next week before proceeding to Paris for signature of CEEC statute.
Sent Department 448, repeated London USDel 102.
- Not printed.↩