Foreign Relations of the United States, 1952–1954, Germany and Austria, Volume VII, Part 2

740.5 MSP/4–2653: Telegram

No. 862
The United States High Commissioner for Austria (Thompson) to the Department of State

secret

Vienna, April 26, 1953—11 a.m.

3038. Joint Embassy/MSA message. Cotel. Attention: Arth, IMS. Reference Vienna 3038.¹ Subject: Austrian contribution west defense.

Lettered paragraphs correspond reftel.

a. Austria physically capable making substantial contribution west defense program in materials, components, and end-items not having specific military character although supply strictly military items precluded by occupation control agreement. Such contribution would greatly facilitate Battle Act enforcement, as well as strengthen Austrian B/P. However, factors described paragraph h below and danger provoking adverse Soviet reactions possibly impeding resumption state treaty negotiations dictates development of special type of limited program minimizing these risks. Therefore mission believes such program should: (1) not attempt direct procurement from Soviet zone or Vienna, but limit program to west zones; (2) possibly establish new office under auspices business cooperative export agency to channel information, contacts, negotiation between Austrian businesses and NATO or US prime contractors or procurement centers, thus minimizing dangers Soviet retaliation.

b. Mission aware only one Austrian company (Boehler Brothers-Steel) which controls subsidiary in Germany. Controls do not affect subsidiary’s eventual defense production program.

c. Austria has filled army procurement contracts for lumber, paper, prefabs, steel for railroad car repairs.

d. Attitude of Austrian Government towards acceleration participation Austrian firms in MDAP/OSP programs remains cautious. Various Austrian Government agencies concerned refuse open support program fearing possible Soviet reprisal against officials responsible policy. Interest Austrian business considerable and growing. Need find new export outlets major problem Austrian business now. Increasing number firms seeking establish contact with military procurement agencies with mission as intermediary.

e. Austrian experience supplying US Forces Austria limited to contracting jobs for construction military housing.

f. Uncertainties Austrian situations do not permit adequate predictions.

g. Austria can furnish the following items on sub-contracting basis to holders OSP-financed prime contracts: aluminum-pig and sheet, extruded shapes and wires; steel-sheet and plates, hot and cold rolled, hot coiled strips; forgings—large and small; castings—up to 70 tons; ball bearings—all types; magnesite—sinter bricks and caustic powdered metallurgy items; lumber and lumber products including prefabs; machine tools—nuts, screws, and bolts; electro power machinery and transformers; railroad cars and locomotives; diesel engines; trucks; pneumatic drills; textile materials or end items. Mission will forward despatch estimate available quantities. Quality items listed above recognized good by international standards. Prices competitive, delivery terms reasonable and adjustable in accordance requirement.

h. Terms control agreement constitute most significant legal restriction imposed on full Austrian participation MDAP/OSP program. Allied mail censorship greatly hampers effective communications potential Austrian suppliers, military procurement agencies. Soviet-imposed travel restrictions (Enns, Semmering checkpoints) considered further serious deterrents. Opinion prevails among businessmen steady contact military procurement agencies abroad could lead to Soviet kidnapping at above indicated points.

i. Mission attaches greatest importance program as one of few concrete possibilities for badly needed outlets. Export situation numerous firms seriously deteriorating in view imposed Battle Act restrictions (Gebus, Steyr, Plansee; reference Embassy despatch 809, November 12,² Embassy despatch 1391, February 10³). Situation considered particularly bad in view business pressure on Austrian Government to expand East European trade. In light Austrian potential contribution west defense program, on one hand, and probability, on other hand, serious consequences if US element unable to indicate alternate outlets in nearest future for blocked eastward exports, mission would highly appreciate MSA/W close consideration establishment procurement policy facilitating Austrian participation more extensive scale than heretofore.

Thompson

1. Telegram 3038 to Vienna, Apr. 16, requested information from the Embassy for the fiscal year 1954 Congressional presentation on U.S. objectives concerning European defense production. (740.5 MSP/4–1653)
2. Not printed. (764.00/10–3152)
3. Despatch 1391 reported on the capacity and delivery possibilities of the Steyr–Daimler–Puch Ball Bearing Works, which was seeking new markets in the West and other non-Soviet bloc countries. (863.3313/2–1253)