863.5018/2–1749: Telegram

The United States High Commissioner for Austria (Keyes) to the Department of the Army

secret
priority

P 3040. From USFA Vienna signed Keyes action to Department of Army for JCS pass to State.

1. I am still of the opinion that the local situation confirms the recommendations expressed in my letter to Mr. Voorhees of 11 January 1949.1 Strongly urge reconsideration of proposed decision to turn over responsibility for food procurement and shipment to Austrians as stated in Deptel 107, February 8.2

2. In addition to views in my letter, the following points should be considered:

(a)
Turnover of procurement and shipping to Austrians would mean the surrender of US controls over ECA imports within Austria. At present, although Austrians assume possession of imported food supplies at border, their release for consumption is still controlled and determined by the High Commissioner. These releases are made only for specific foods, for consumption in specific provinces and city of Vienna, to cover specific ration periods.
(b)
Only by continued control by the High Commissioner can a reserve supply of essential commodities be ensured and blocked storage maintained and inspected.
(c)
It should be noted that under the Allied Council agreement of 13 December 1946, all food both indigenous and imported is pooled and distributed according to the 28-day food plan, which must be approved by the Allied Council. The quotas for indigenous production available for the food plan are made up on a yearly basis, and are submitted to the Allied Council for approval. The only workable plan by which we have been able to obtain unanimous Allied Council agreement has been the utilization of one-thirteenth of the annual indigenous harvest from each province for each ration period. Therefore, any shortage of imports due to procurement failures, shipping interruptions, or strikes in the United States or Trieste, et cetera, cannot be made up by borrowing from indigenous stocks allocated for future food plans. [Page 1265]
(d)
By giving up control of the release of ECA imports, the United States High Commissioner could no longer guarantee that the Austrian Government would adhere to any particular ration scale; neither could an effective check be maintained as to whether or not the Austrians were following the monthly food plans.
(e)
If the Austrians take procurement and shipping responsibility, ultimate control of these supplies will pass from the United States High Commissioner to the Allied Council; thus giving the Soviets an equal influence in the use and disposition of ECA supplies. It must be kept in mind that Austria is the only ECA area over which the USSR exercise a degree of direct control.
(f)
Relinquishment of US procurement and shipping controls would leave the Austrians free to manipulate the ration scale and deration certain commodities for political purposes, the likelihood of which is increased by the approach of national elections this autumn. Unanimous agreement of the Allied Council is required to approve or disapprove a ration increase, and agreement has been made possible in the past [because?] the US element held the controlling voice.
(g)
During the past three years the Austrians have consistently failed to collect the established harvest quota, particularly bread grains, potatoes and cereals, and this has resulted in food shortages during June, July and August. Heretofore, the deficit has been met by emergency United States imports and the use of United States reserves. Despite present indications that a similar shortage will occur this coming summer, the Austrian Government could not be depended upon to maintain a reserve to meet such an emergency if United States controls were withdrawn.

3. Contacts with Trieste indicate that at present 70 to 75 percent of its shipping is sustained by Austrian civilian supply imports. Austrian control of shipping may result in the competition of other ports offering more favorable terms, to the serious detriment of the economy of Trieste. As long as Austrian food is a military shipment, the Communist labor unions of Trieste cannot interfere with unloading operations since cargoes could be unloaded by United States troops in an emergency. If imported supplies were Austrian shipments, no such alternative would be possible.

4. Should the Austrians be entrusted with procurement and shipment, the Soviet capabilities towards gaining control of the food supply are greatly increased, since:

(a)
They would be in a position to dictate the interruption of shipments through Communist-led strikes at Trieste,
(b)
Through pressure on the Austrian Government, imported reserve stocks could be diverted to storage locations in the Soviet Zone, and to USIA (Soviet administration of properties in Austria) operated factories and processing plants.
(c)
65 percent of the indigenous food supply is produced in the Soviet Zone. [Page 1266]
(d)
By distribution manipulations and intimidation, imported food reserves, now stored in the Western zones, could be dissipated if United States controls were withdrawn,
(e)
Soviet control of the bulk of indigenous produce could no longer be neutralized by US control of imports. This would give the Soviets a controlling voice in quadripartite consideration of the monthly food plans, whereas at present their position is weak, and the US element is dominant. This advantageous US position has resulted in quadripartite agreement on 28 consecutive food plans since the initial food-pooling agreement of 13 December 1946.
(f)
The Soviets would gain veto power over all those food supply operations now controlled by the United States.

5. It is our position that supervision and control of the food situation can be exercised to the best interests of the United States and Austria through the present system of releases based on Allied Council approved food plans, for definite commodities, covering definite periods, for definite provinces, with strict control of imported stocks. In an interview with the Chancellor on 15 February, he stated that as long as quadripartite decisions are required, he did not wish to see the United States relinquish its control of procurement and shipping. We cannot see any real political advantages in turning over to Austrians these functions, and there are dangerous economic disadvantages in giving up the High Commissioner’s most powerful weapon in the struggle for Austria. I am convinced that the proposed turnover is premature, and would be advantageous only to the Soviet element.

6. Following are answers to specific questions in Deptel 107, 8 February:

(a)
It is considered that the surrender of these functions is not in keeping with the High Commissioner’s responsibilities under current JCS directives. Control of imported food in Austria is regarded as a principal means for insuring the proper discharge of these responsibilities.
(b)
It will be necessary for Austria to establish purchasing and contracting organizations in the United States, as well as in Trieste—the latter to handle contracts for unloading, storing, warehousing, and railway transportation outside Austria.
(c)
ECA control of purse strings and counterpart schillings would have little effect in obtaining Austrian cooperation regarding utilization of food, and will have no effect on the controlling occupying powers, particularly the Soviet.
(d)
Serious political and economic disadvantages would arise should the Austrians prove even temporarily unable to maintain a steady flow of essential supplies. Austrian political stability is dependent on the socialist control of labor movement, and this control, in turn, to a large extent is dependent on an uninterrupted and adequate food supply. Political advantage of turnover would be further [Page 1267]tangible evidence of our intention to treat Austria on the same plane of authority and independence as other OEEC countries, but this is unrealistic until Four-Power control of Austria is terminated.
(e)
Only backlog of supplies would be army emergency stocks in Vienna, which are not considered available to cover blocks in the pipeline or shortfalls in domestic deliveries, and are not a reserve in that sense. The Austrians would then be responsible for reserves, and past experience indicates that they cannot be depended upon to maintain them.

7. I wish to re-emphasize that because of quadripartite control, exercised over Austrian Federal Government,

(a)
ECA and other matters cannot be envisaged and implemented in Austria under same formula applicable in other sovereign OEEC countries, and
(b)
That the proposed decision to turn over to the Austrians responsibility for food procurement and shipment would, if implemented, result in passing the controlling voice here, in this vitally important field, from the US to the USSR.3
[
Keyes
]
  1. Not printed; in it Keyes expressed his opinion that it would be unwise to transfer contracting of food supplies to the Austrian Government. According to the United States High Commissioner,

    “Control of food supplies is the most powerful weapon that the High Commissioner has to force cooperation of recalcitrant occupying powers, to further the objectives of U.S. policy in Austria and to insure cooperation by the Austrian Government in implementation of ERP and other U.S. sponsored programs, to carry out quadripartite functions of the U.S. as one of the Occupying Powers and to protect the Austrian Government from intimidation and undue influence on the part of one of the Occupying Powers.” (863.5018/1–2649)

  2. Not printed; it asked for further information regarding the timing and effect of an Austrian takeover of food supplies’ procurement (863.5018/2–849).
  3. In telegram 138, February 18, from Vienna, not printed, Erhardt reported that this message represented only Keyes’ views. Erhardt and King, Head of the ECA Mission in Austria, were in accord with their general substance, and believed that the period after the national elections, October 9 would be the first possible time for any transfer. (740.00119 Control (Austria)/2–1849)