740.00119 Control (Austria)/3–3049: Telegram

The Secretary of State to the Legation in Austria

secret

376. Re Legtel 336 March 30, rptd Paris 16 for Harriman 1 Repto 254 rptd Washington Repto 36432 and occupation costs. Dept plans immediate approach UK and French urging that (a) further imposition occupation costs on Austria hampers reconstruction increases financial difficulties and counter to basic objectives; (b) stating that US does not wish to agree quadripartite demands until matter explored [Page 1275]governmental level; (c) asking that they consider favorably pay as you go arrangement aimed to relieve Austria of burden and isolate Soviet in any further demands.3 Meanwhile careful study 336 Vienna March 30 leads to view that it affords no real relief in terms of goods and services or financial strain, and that substitution of franc and sterling purchasing power for existing drawing rights gives mere appearance of pay as you go for UK and France. Although this plan might have propaganda advantage, Aust imports would remain unchanged and occupying forces demands for goods and services not be diminished. Thus result might in fact be adverse public reaction and Soviet attack.

Since real objective to reduce diversion products from Aust uses and to lessen inflationary pressure through spending by Military hope to persuade UK and Fr on new policy. ECA concurs.

Acheson
  1. Not printed.
  2. Not printed; in it Harriman stated that he considered the proposal for Austrian occupation costs to be included as part of an intra-European payments scheme to be improper, and would in no way alleviate the fiscal burden of occupation costs in Austria. (863.50/4–1249)
  3. For the details of this approach see the note to the British and French Embassies, infra.