763.00/4–1752

No. 797
Memorandum of Conversation, by the Director of the Office of Western European Affairs (Byington)

confidential

Subject:

  • Austrian Comments on Zablocki Committee Report on Austria

Participants:

  • Dr. Max Loewenthal, Austrian Ambassador
  • Homer M. Byington, Jr.

The Austrian Ambassador said that while he had been very favorably impressed by the Zablocki Committee Report on Austria1 as a whole, there were nevertheless certain comments that he felt it his duty to make for the record. He wished to point out the following:

On page 1, paragraph one, last sentence, appeared the phrase “a large portion of which (Austria) is geographically behind the iron curtain”. The Ambassador stated that the inference of that phrase was that Austrian industry in the Soviet Zone was under Soviet domination and that it would contribute almost its entire production to the Soviet Union and satellites. The facts were the opposite, however. Austrian industry in the Soviet Zone, with the exception of those concerns taken over by the Russians as German assets under “USIA” organization, sent its production to the west rather than the east.

The Ambassador then referred to page 16 of the Report—the last two paragraphs, and the first five paragraphs on page 17 under “Conclusion”. He said that the conclusion one would have to draw from these paragraphs was that United States aid to Austria should be confined to a sort of dole and should avoid any assistance in the way of raw materials and equipment to Austrian industry in the Soviet Zone because: (1) there was a risk that the industries would be taken over by the Soviet Union, and (2) in any event, the production of these industries went to the east rather than to the west.

The Austrian Ambassador pointed out that according to Soviet propaganda Austrian industry in the Soviet Zone has only one chance for survival—to trade with the east. If the Soviet press in Austria brought out the points made by the Committee, it would have a disheartening public effect and tend to confirm the Soviet [Page 1748]line that industry in the Soviet Zone of Austria has no future other than to collaborate with the Soviet Union.

The Austrian Ambassador said that he did not know what action we would wish to take in this matter, but in any event, he hoped that the Austrian view could be made available to the appropriate officers in the Department having to do with East-West trade, and to officials in the Department of Commerce. I said that as far as communicating with members of the Committee, I questioned whether it would be desirable for the Department to take any such action. Nevertheless, I would refer the matter to Mr. McFall for his advice. The report of the Committee was, as a whole favorable, and we would not want to take any action which might have a harmful rather than beneficial effect on the attitude of the Committee itself. I assured the Ambassador that his views would be made available to the appropriate economic officers in the Department and in Commerce.

  1. Reference to the 96-page House Report 1834, “Report on Austria, Yugoslavia, Italy, Spain, by the Special Study Mission to Germany and Certain Other Countries …,” 82d Cong., 2d sess. (Washington, Government Printing Office, 1952).