No. 474

763.0221/1–3051: Telegram

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


1611. Deptel 1451, January 25.1 With view to overcoming US objections to high figure involved in joint arrangement (Legtel 1565, January 242), British and French now propose that AC allocations for 1949, 1950 and 1951 be fixed at actual French requirements, with private understanding between Austria and western powers that former will not require British to repay that portion of their civilian costs for 1949 and 1950 in excess of AC allocations. On this basis, British and French propose AC allocations of 140 million schillings for 1949, 135 for 1950 and 120 for 1951.

Austrian Government has not yet been approached re this new plan, but its acceptance is regarded as assured, since Finance Ministry officials themselves suggested some such solution informally some time ago, at same time pointing out Austrian Government could undertake such arrangement only under cover and protection of quadripartite decision on occupation costs. Although Finance Ministry officials were purposely vague, it was implied that British excess costs could be charged against a tenuous “British credit” for CEM.

As will be seen, new scheme would give French about 45 million schillings in cash for 1949 and 1950, after deduction of civilian costs from proposed AC allocations. Soviets would similarly receive [Page 1019] about 112 million schillings in cash for 2 year period. We regard these figures as too high for both elements, but at same time recognize great advantage for Austrian economy which would result from reduction of occupation costs for 1951 to no more than 120 million schillings per element.

On balance, therefore, and having particularly in mind Austrian anxiety that AC establish low figure for 1951, we are prepared to accept new British-French proposal, provided AC allocations can be brought down to something like 130 million schillings for 1949, 127.5 for 1950, and 120 for 1951. We believe we can persuade British and French to accept these lower figures, and recommend strongly that Department approve proposal with understanding we shall endeavor, in discussions with British and French, as well as in subsequent quadripartite negotiations, to reduce allocations even further if at all possible.

Re points raised in Deptel 1451, January 25, we feel we must recognize that cash allocations for 1949 and 1950 will be necessary, as in previous years, if we are to have quadripartite agreement, since both French and Soviets insist on this point, and British also desire cash allocation for 1951. Austrian Government strongly desires protection of quadripartite agreement, and three western elements here share Austrian Government’s estimate of importance of this protection. As we see it, therefore, our aim should be to hold cash allocations for 1949 and 1950 to minimum essential for agreement, while at same time bringing about progressive, substantial reduction in occupation costs. If, for instance, we could obtain quadripartite agreement which would give Soviets no more than some 100 million schillings in cash for 1949 and 1950, while bringing about reduction in total costs in 1951 to 120 million schillings per element, we should regard it as major step towards achievement of Department’s ultimate objective of eliminating occupation costs entirely.

  1. Telegram 1451 concurred with Donnelly’s recommendation contained in telegram 1565 from Vienna, January 24, that the British-French compromise not be supported on the basis that any cash allocation for 1949 and 1950 was unjustifiable. (763.0221/1–2451)
  2. Telegram 1565 described the British-French compromise which was 149 million schillings per element for 1949, 145 for 1950, and 135 for 1951. (763.0221/1–2451)