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

740.00119 Council/6–2149

Memorandum of Conversation, by the United States Deputy for Austria at the Council of Foreign Ministers (Reber)¹

secret

Paris, June 19, 1949.

• Participants: The Austrian Foreign Minister, Dr. Gruber
• Mr. S. Reber

I explained to Dr. Gruber that I wished to be certain that the U.S. Delegation clearly understood the position of the Austrian Government with respect to the various treaty issues now under discussion by the Council of Foreign Ministers. It was agreed that I should send Dr. Gruber a copy of this memorandum of conversation, which he could confirm as representing a correct understanding of the position of his Government.

I then said that I understood that:

(1) In return for the Soviet agreement that Austria’s frontiers shall be those of January, 1, 1938 and that reparations should not be exacted from Austria, the Austrian Government agrees that the Treaty shall provide that Austria shall guarantee the protection of Slovene and Croat minorities, which does not, however, involve the creation of a special autonomous area, and that Yugoslavia shall have the right to retain Austrian assets within Yugoslav territory.

(2) Provided that the settlement includes the relinquishment to Austria of all property, rights or interests held or claimed as German assets and the relinquishment of war booty, except the specific oil assets and Danube Shipping properties, Austria is prepared to pay $150 million to the Soviet Union in convertible currency in six years. It would further be understood that property transferred to the Soviet Union as well as property relinquished to Austria shall be transferred without charges or claims accruing during the period from May 1945 to the date of transfer.

(3) Austria is prepared to accept the cession to the Soviet Union of the percentages of oil production and exploration rights now claimed by the Soviet Union on the understanding that agreement shall be reached upon the specific properties involved.

(4) Austria is prepared to relinquish to the Soviet Union the assets of the Danube Shipping Company in the Soviet Zone of occupation. If the Soviet Government insists that this transfer shall include ownership of the docks without any limitation as to the period of non-alienation, the Austrian Government would agree if non-compliance stood in the way of a treaty. Austria would, however, prefer that the Danube Shipping properties be granted the Soviet Union for the same period as the oil concession rights.

(5) With regard to the apparent Soviet refusal to relinquish to the Austrian Government war booty other than industrial enterprises, Dr. Gruber said his Government was aware the Soviet Union was claiming a large number of locomotives, some of which were still in Austria, as war booty. If this number is limited and if Austria is entitled to keep its own locomotives rather than those assigned to it by the Allies after the war, he thought this should not raise serious difficulties. He further considered that the Soviet proposal might leave some latitude to the Deputies to work it out. With regard to Soviet refusal to relinquish industrial equipment claimed as war booty, Dr. Gruber was of the opinion that the Soviets merely wished to eliminate any claim on the part of Austria for equipment already removed as war booty and suggested that an effort be made to obtain Soviet agreement to the relinquishment of industrial enterprises of military character, including “industrial equipment now in Austria”.

(6) Dr. Gruber said that the Soviet proposal with regard to the export of profits must be clarified as Austria must be allowed to determine whether profits can be exported in dollars or kind. This, in his opinion, was a very important requirement as otherwise Austria would be subjected to obligations which might be impossible to fulfill in the future. In the calculation of profits Austria must insist that these be calculated after payment of production costs and taxes, in accordance with Austrian law, and that it is essential that the Soviet Government be required to pay future taxes on these properties. The Austrian Government considers that the present Soviet proposal relates only to “profits and other income” derived exclusively from the operation of the specific oil and shipping properties transferred to the Soviet Union by this article.

(7) The Austrian Government does not consider that the clause relating to the settlement of bilateral disputes is of sufficient importance to block progress on the Treaty if the Soviet Government refuses to concede that, in the event of a disagreement in the bilateral negotiations, recourse should be had to the machinery provided in Articles 50 or 57.²

1. The source text was sent as enclosure 1 to a despatch from the United States Delegation at the Council of Foreign Ministers, June 21, not printed (740.00119 Council/6–2149).
2. In his reply, June 19, not printed, Gruber confirmed the points of this conversation with the exception of point 5 on which he stated that the correct meaning of his declaration was that Austria should be entitled to keep the railroad equipment allocated to it by the Allied Commission, establishing an Austrian railroad park of pre-Anschluss or postwar origin. (740.00119 Council/6–2149 Enclosure 3)