No. 473

763.0221/1–1351: Telegram

The United States High Commissioner for Austria ( Donnelly) to the Secretary of State 1


1431. Following the Allied Council meeting of 12 January,2 the High Commissioners convened to discuss occupation costs which commenced with introduction of the British proposal reported in Paris telegram 3836, January 5 to Department.3 The Soviet HICOM, Sviridov, stated his displeasure with the British proposal unless its effect would be to balance off the amounts received by the occupying powers for the years 1949, 1950 and 1951 to an equal figure. For example, the Soviet and French elements should obtain for 1949 and 1950 the difference between the amount expended by the Austrian Government on their behalf and the amount spent on the British element, plus an equal split of 150 million per element for 1951. The Soviet member could not agree to write off the years 1949–1950. Sviridov placed great emphasis on maintaining the principle of equal split for the 3 years, although the British HICOM pointed to the absence of equality for the years 1945–48. Re the disproportionate amounts received by the Soviets in these earlier periods, the Soviet member stated that it had been accomplished by unanimous agreement of all elements. As discussion progressed, Sviridov leaned toward the French proposal below, suggesting equality for 1949–1950 to be achieved through a compensating deduction from the British amount for 1951. The concluding Soviet proposal visualized the achievement of equal shares over the 3 year period 1949–1951 by fixing varying amounts for each element in 1951 to achieve this. Therefore, he agreed to a decision covering all 3 years which would produce an equal balance for each element.

The French HICOM could not accept the British proposal because of its departure from the principle of quadripartite settlement and equal split. He stated his inability to abandon the commitments [Page 1017] already reached on the 1949 costs during April 1949 unless the amount for 1951 was sufficient to at least partially cover additional expenses incurred in 1949. He then circulated the following draft resolution:

The Allied Council decides:

That sum charged Austrian Government for occupation costs for 1949 will be equal to 9 percent of the 1949 civil budget. The amount resulting from this percentage will be divided in equal shares between the 4 elements.
To take note that the US element renounces its share; that the French element renounces of their share a sum of (blank) million schillings; that the Soviet element renounces of their share a sum of (blank) million schillings.
To authorize, on other hand, the Austrian Government, after deduction of the amounts relinquished by each element on their shares, to charge upon the balance the amount of the sums paid in 1949 for civil expenditures amounting respectively to 96 million schillings for the British element.
To consider that, taking into account the sums relinquished by certain elements, the actual expenses incumbent upon the Austrian Government for the occupation costs for the year 1949, amounts to (blank) million schillings, which represent (blank) percent of the Austrian civil budget for the year 1949.

At one point the French HICOM stated that he would be satisfied with 135 million schillings for 1951.

In regard to Soviet and French insistence upon equality, the British HICOM emphasized that the discussion concerned actual occupation costs and not a tribute levied upon the Austrian Government. He pointed out that the other elements had acknowledged exceptional Soviet expenses in the years 1945–1947, and requested a similar consideration for the British element in the years 1949–1950, returning once more to an equal split in the year 1951. He flatly declared that he had no proposals to make for 1949–1950.

The US chairman stressed that the US had given up occupation costs and retained the hope that the other powers would soon follow suit. In his opinion this should be the continuing aim of each element. He was prepared to give consideration to any proposals which would provide agreement on a quadripartite basis, lighten the burden on the Austrian Government, and reflect only documented occupation costs. He considered that both the French and British proposals merited serious consideration. After an inconclusive discussion, it was decided to instruct the deputy HICOMs to meet on 16 January to continue the talks.

Following are remarks of particular interest. Sviridov insisted that all Soviet expenditures could be accounted for by vouchers in the hands of Austrian authorities. At another point, the US [Page 1018] HICOM remarked that he could go much further towards meeting the proposals at hand if assurance existed of the conclusion of a treaty during 1951. Sviridov replied that there would be a treaty, but when questioned, was vague as to when it would occur. Most significant was the Soviet statement, perhaps a veiled threat, that the British principle of unequal and unlimited unilateral expenditures was very dangerous and could destroy the Austrian economy as well as the financial plans of the Austrian Government.

  1. Repeated to London, Paris, and Moscow.
  2. The minutes of the 138th meeting of the Allied Council on January 12 are in ALCO records, lot 62F9, box 114.
  3. Not printed, but see footnote 3, Document 470.