Office of the Historian

763.00/9–452

No. 818
Memorandum by the Deputy Assistant Secretary of State for European Affairs (Bonbright) to the Secretary of State1

secret
[Washington,] September 4, 1952.

Subject:

  • Status of Soviet held property in Eastern Austria.

With reference to your oral inquiry yesterday concerning the status of Soviet held property in Eastern Austria if our present plans for the development of the Austrian question materialize, there are three possibilities:

1.
The abbreviated treaty contains one new clause which has not been agreed by the Four Powers. It calls for the renunciation of all claims to German property and war booty now held in Austria. If the Soviets accept the abbreviated treaty, which is unlikely, the problem of their present hold on property in Eastern Austria would be solved by their renunciation of claims in favor of the Austrians.
2.
If we are forced to abandon the plans for the abbreviated treaty and return to a negotiation of the old draft, the settlement of the German property question is contained in Article 35 which was agreed by all Four Powers in 1949. By the terms of this article, the Soviet Government would receive the Danube Shipping Company properties in Eastern Austria and sixty percent of the Austrian petroleum industry, including producing fields, exploratory rights, production and distribution facilities, for a period of 30 years. The Austrian Government would also pay the Soviet Government a lump sum settlement of $150 million for the return of the approximately 300 industrial plants now held by the Soviet authorities. We do not wish to be forced into the position of negotiating the old draft or accepting Article 35 and are making every effort to avoid this possibility.
3.
The discussion of the Austrian case in the UN this fall would raise a serious question if the Assembly should adopt a resolution calling for the immediate evacuation of Austria by the occupying powers. We do not see how the US could evacuate Austria until a definite settlement is reached on the question of Soviet control of the former German assets in Eastern Austria. If we were forced to withdraw without the establishment of certain conditions, the Soviet Government would be left in full control of the basic economic resources of the Eastern Zone which would not be the case even if we were forced to accept Article 35 of the long draft.

We are, therefore, making every effort to head off any such proposal in the UN and are discussing this question with the Brazilian delegation which will sponsor the Austrian item. Our instructions [Page 1784] to New York have made it clear that any resolution calling for evacuation must also call for the relinquishment of all property claims.

In addition, there is the problem of having sufficient time to create an Austrian security force prior to the withdrawal of US troops. While this question will not be discussed with the Brazilian delegation, or any other sponsor, we will endeavor to obtain a time limit in any possible resolution calling for evacuation which will permit us to carry out the agreed tripartite plan for the creation of an Austrian security force.

  1. This memorandum, drafted by Williamson with a copy for Sandifer, bears the marginal notation: “Sec saw.”↩