Office of the Historian
No. 502

ECA message files, FRC 53A278, Vienna: Telegram

The Acting Economic Cooperation Administrator ( Porter) to the ECA Mission in Austria 1

secret
Washington, August 3, 1951—9 p.m.

Ecato 444. Subject—ECA Policy Toward Austria. Reference—Mission and OSR cables re (a) level of 1952 aid (b) increase in grain prices (c) 1951 counterpart program (d) U.S. coal import program. Part II of IV Parts.

In view foregoing considerations Mission requested explain problem to Aust Govt along fol lines:

(1)
Level aid probabilities and impossibility any special increase aid.
(2)
Reduced aid level will require advance planning and vigorous action Aust Govt counteract effects decreased aid.
(3)
ECA intention review periodical basis performance all PC’s before aid for period allotted. It shld be made perfectly clear to Aust Govt this Govt prepared follow through with cuts annual aid shld a country fail to demonstrate doing utmost help itself and no exception will be made for Aust.
(4)
Fields in which performance considered unsatisfactory and further progress expected are:
a.
Adjustment wheat prices to maximize future grain production and collections
b.
Administration foreign exchange
c.
Abolition trade practices resulting in loss foreign exchange
d.
Export drive
e.
Productivity drive
f.
Banking reform
g.
Elimination restrictive business practices
h.
Tax collections
i.
Credit control

FYI since interests this Govt maintaining political stability Aust wld make it impossible withhold aid entirely and since knowledge this fact Austs has undermined ECA’s bargaining power to date, ECA suggests fol technique be used convince Aust Govt it not completely immune and therefore proposed periodic review system will be more than pro forma exercise. Aust aid figure both direct and EPU, however large wld be, wld be divided three portions. First portion, $26 mil, covering cost of 850,000 tons U.S. coal wld go into coal utilization fund. Second portion (say 2/3 remainder) wld be given to Austs to keep most critical items their program flowing. [Page 1058] Last portion wld be allotted Austs quarterly or semi-annual basis in accordance Aust performance in fulfilling commitments re special measures to be undertaken by Aust Govt. At time quarterly review current econ picture cld be reviewed order determine extent to which this Govt can limit aid without adverse repercussions. This technique wld have advantage preventing serious gaps Aust program from occurring while ECA, OSR, and Mission conducts discussions on what ECA attitude shld be for quarter in question. Aust wld also be enabled adopt program within minimum aid figure far enough in advance cushion impact event it shld be necessary U.S. Govt make further reductions aid. Furthermore responsibility for any hardship Aust people wld rest squarely with Aust Govt if only minimum aid forthcoming as result failure Austs to adopt appropriate measures.

Porter
  1. Repeated to Paris for OSR.↩