No. 472

763.0221/1–551: Telegram

The Secretary of State to the Legation in Austria 1


1333. Dept has given further consideration to various points raised in previous cables including Paris’ 3802 Jan 4,2 3805 Jan 4,3 3836 Jan 5.4 Consideration has also been given to the relation of question of occupation costs in Austria and comparable US policy with respect Germany and Japan. For urinfo only, arrangements in Ger may in the next few months require pressure on UK and France to assume portion of occupation costs. With respect Jap, arrangements still secret being considered for partial pay-as-u-go with Jap meeting a portion which wld be similar to Aust civ occupation costs. Both polit and econ consequences these changes must be taken into acct in formulating policy for Austria.

Dept believes therefore that a decision on Jan 12 to return to cash allocations inconsistent with anticipated elimination occupation costs in various theatres wld discourage pro-West Austs, exert inflationary pressure, increase disunity among West Powers and unnecessarily aid Sovs. In view these considerations and Aust expectation lighter burdens as result of assurances May 1950, Dept considers cash allocation undesirable.

However, in order to satisfy immediate Fr schilling requirements and prevent possibility of future Sov claims you are authorized at ur discretion to support Brit proposal (Paris’ 3836 Jan 5) under fol conditions:

That quadripartite agreement be reached on para one of proposal stating that occupation costs for 1949–1950 have already been settled.
That total occupation costs expenditures for 1951 including cash allocation not exceed 150 million schillings for each occupying power.
That cash allocation for 1951 not exceed 30 million schillings.

If Fr and Sovs reject this proposal and no agreement is reached present system of “civilian” occupation costs will presumably continue. Dept considers this procedure best solution which can be reached as long as Fr and Brit continue to require occupation costs [Page 1016] unless agreement can be obtained on moderate sum proposed by Brit.

  1. Drafted by Kimpel and Dulles and cleared with Williamson, McCormick of GEA, and Hemmendinger of NA. Repeated to Paris and London.
  2. Not printed, but see footnote 2, Document 470.
  3. Ibid.
  4. Not printed, but see footnote 3, ibid.