Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

740.00119 Council/6–249: Telegram

The Acting Secretary of State to the United States Delegation at the Council of Foreign Ministers

secret
priority
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Washington, June 17, 1949—8 p.m.

Secdel 1702.¹ Our comments on Delsec 1909 June 17² as follows: We consider Vishinsky’s counterproposal must be judged both in terms of Sov tactics in present negots and its ultimate effect on our policy respecting Aust in post-treaty period as affecting entire US position in Central Europe. Since US objective is to maintain Aust in Western orbit after completion treaty utmost care must be taken in settlement to provide that a basis is not created for exercise undue pressure by Sovs against Aust Govt. Means shld be provided making possible continuous Western support in Aust efforts oppose Sov demands and encroachments arising from property settlement. We realize under compromise solution for Ger assets question certain property rights wld be given to Sovs and such rights will constitute a future risk. We consider, therefore, any concession beyond settlement envisaged in original compromise proposal³ and recent Western offer⁴ must be judged in terms its ultimate effect on Aust relations with Western Europe. We cannot afford put Aust in position of dealing directly with Sov Union on all disputed questions in Treaty without providing some means for Western support.

We believe Vishinsky’s counterproposal shld be considered as Sov bargaining tactic rather than a substantive step toward a mutual agreement on Aust Treaty. There are no concessions on Sov side affecting either Sov material interests in Aust or their possible dipl objectives in Aust. While Sovs have agreed on frontiers and reparations, thus acceding to major Western position, this is concession made at Yugo expense. There is no concession in Sov position on Ger assets question. Counterproposal thus leaves Vishinsky in position of transferring onus for any delay in Treaty settlement to Western states through inability agree on Ger assets and removes frontier question as basic issue. This will strengthen Sov propaganda position in Aust and will weaken position of Western States. We consider therefore in ensuing negots emphasis must be placed upon implications of specific points concerning Ger assets settlement affecting future Aust independence.

In reviewing all remaining unagreed articles in Treaty we consider that on many points West could modify position without sacrificing basic objectives in an effort obtain agreement. Such concession on Western part, however, can be made only if there is assurance in final treaty Aust independence and Western orientation can be maintained in future. This objective requires we do not give to Sovs means in Aust whereby they could take measures vitally affecting the econ and polit situations in that country.

Our comments on specific points in Delsec 1909 are:

1. On para i we assume any provisions concerning minority protection wld be based on Aust proposals summarized Paris 2259 June 2⁵ and wld not apply to any specific part of disputed area. We do not consider we can agree to establishment of autonomous province or creation of specific rights in any specific area as such action wld nullify the gains made in Vishinsky’s agreement on the frontiers by permitting; continued agitation in areas formerly constituting basis for Yugo territorial claims.

2. On paragraph c we can accept Sov position as constituting recognition of an accomplished fact.

3. On para d we assume Sovs mean 60 percent of oil exploration as well as exploitation area equivalent to 60 percent 1947 production areas. Do Brit agree on this point? Previous Dept instrs to Deputy have covered our position.

4. Para e raises many questions both of principle and clarification. On reciprocal waiver of claims and charges we shld seek clarification whether such waiver is all inclusive and in particular includes Gosbank claims and taxes now held in special accounts by Sovs. We realize acceptance of this proposal wld present additional charges on Aust for compensation of UN interests but that it shld not be a question holding up final agreement. It shld, however, be subject to negot in order to obtain complete clarification.

The question of war booty involves a definition by Sovs of term “industrial enterprises of military character”. Does Sov position mean enterprises such as Hirtenberg Patronen Fabrik and Nibelungenwerke, St. Valentin, wld be merely subject to removal of machinery or wld they continue to be operated by Sovs in Aust after conclusion of Treaty? Clarification shld also be obtained on precise intentions concerning return of transport equipment.

On DDSG we suggest that Sovs be queried on their various changes of position on this point and an effort be made to return to intermediate position of transfer of a percentage of DDSG assets in all Aust. This wld permit agreement on specific properties and provide transfer some DDSG ships from Western zones as well as a portion of dock facilities in Vienna. Such agreement wld not give Sovs complete control of dock facilities in Vienna which we consider wld be dangerous. Gruber shld be asked what “other facilities” at Vienna are possessed by Aust to maintain river traffic with West. If such facilities exist we wld have bargaining room on this question.

Does Sov position on export of profits mean the Sov Union will have the option to demand payment in output or freely convertible currency or that Aust will have option? We consider that Aust must have this option and if such power were exercised by Sov Union it would involve ultimate and complete econ control.

Does Sov position on lump sum payment “150 million dollars” mean such payment will be made in “dollars” or in “freely convertible currency” or in “goods”? If the latter, at whose option? We consider that clarification of this point is vital.

Sov demand for nationalization without a time limit must be judged in terms of the entire settlement of assets question. As far as oil properties are concerned agreement on this point wld not vitally affect our interests or Aust position in future in view of agreement already reached on transfer of oil properties and rights and eventual termination Sov interest in oil properties. However, if this includes “industrial establishments of mil character” and Vienna docks Sovs wld be given long term vested position in Aust which in our opinion is not called for in Ger assets settlement and is not desirable for policy considerations.

We consider Sov demand for bilateral settlement of disputes as a basic factor in settlement. This device is a consistent feature of Sov Fon policy and has served well in Eastern Europe in obtaining Sov dipl objectives. It is not clear from Delsec 1909 whether Vishinsky regards bilateral settlement as fixed Sov position. Agreement on this point must be judged in terms of extent of property holdings and agreement on methods of lump sum payments. Regardless of Gruber’s views we do not consider that Aust and Sov Union would be equal partners in any bilateral settlement of disputes and consider therefore this issue must be made one of the key points in the final settlement.

We realize of course the implications of our position if Brit, Fr and Aust all take position that treaty shld be accepted under these conditions and we alone were to oppose. We believe it wld be desirable to present the Aust Govt frankly with the implications of possible agreement on the basis of Vishinsky’s counter-proposal. If agreement were to be reached on the basis of Vishinsky’s counter-proposal the Aust Govt shld be made completely aware of its possible consequences.

Our position here is somewhat similar to our position in Yalta negots concerning China and Russia. We consider Aust shld properly share in the responsibilities of this decision and Aust views shld be given full consideration. We feel further Aust views, particularly if they are such as to influence the decision of the Western Powers, be a matter of record.

Altho many details in this mesg are subjects for Deputies negot, we considered full expression of views might be helpful in formulating final position on treaty.⁶

Webb

1. Repeated to London as 2096, Moscow as 456, and Vienna as 600.
2. Ante, p. 1020.
3. Under reference here is the Tripartite memorandum on Austria, June 12, p. 1053.
4. For the text of the Western proposal on Austria June 14, see footnote 1 to the minutes of the second part of the 20th meeting of the Council, p. 1001.
5. Not printed; it explained that the creation of an autonomous regime for Carinthia would involve no changes in the existing district areas, or amendment to the constitution and that the powers granted to such districts would be strictly in line with constitutional provisions. (740.00119 Council/6–249)
6. In Delsec 1924, June 18, from Paris, not printed, the United States Delegation indicated that Delsec 1910, supra; Delsec 1915, not printed (740.0011EW (Peace)/6–1749), which transmitted the text of the tripartite memorandum on the Austrian Treaty, June 17 (p. 1058); and the Soviet memorandum discussed at the 21st meeting of the Council (p. 1057) would clarify some of the points raised in this telegram. (740.00119 Council /6–1849)