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

S/S–NSC files, lot 63 D 351, NSC 164 Series

No. 895
Statement of Policy by the National Security Council¹

top secret
NSC 164/1

Washington, October 14, 1953.

U.S. Objectives and Policies with Respect to Austria

general considerations

1. Austria derives its strategic importance from its pivotal position controlling important approaches to Western Europe and the Danubian gateway to the satellites. It has world-wide psychological importance as a symbol of resistance to Soviet subversion. In view of extensive Western support of Austria in this struggle, its capitulation to the Soviets would be a dangerous defeat for the free world. Moreover, a weakening of Austria’s internal political and economic stability which would augment Soviet potential for infiltration and subversion would constitute a serious setback for U.S. security and political objectives.

2. Refusal of the USSR to conclude an Austrian Treaty during the course of 374 Four-Power meetings since 1946 has prolonged the occupation and preserved Soviet opportunities to subvert democratic Austria. By the end of 1949, Four-Power agreement had been reached on all but five articles of the long draft treaty. Since then the Soviets have shown no willingness to conclude an Austrian settlement, even on terms so favorable to them as the long-draft treaty, and have demanded withdrawal of the Western proposal of March 1952 for an abbreviated treaty. Despite British, French and Austrian willingness to withdraw support of the abbreviated treaty, and our readiness at their insistence to do likewise on the understanding that a treaty will be completed which is tolerable to Austria, no progress has been made.

3. Additional concessions to the Soviets beyond those already offered in the long draft treaty would seriously prejudice Austria’s independence; and indeed revision of Article 35 (German assets) under which the Soviets might maintain a strong extraterritorial position and thereby exercise a substantial economic influence in Austria after a treaty, is highly desirable. It is unlikely, however, that the Soviets would agree to a treaty (1) which did not substantially compensate them in some form for the German assets which they claim under Potsdam or (2) without Four-Power agreement to negotiate on other East–West differences, in particular on Germany.

4. On September 23, 1953 the Austrian Government delivered a note² to the Soviets abandoning the short draft treaty, expressing a willingness to accept the long draft without revision of Article 35 (although making a weak plea for alleviation of it) and attempting to obtain from the Soviets a settlement of any further conditions precedent to a treaty. On September 28 the Soviets showed their disinclination to conclude a treaty in refusing the Western invitation to Foreign Ministers discussion. The combination of Austrian anxiety to conclude a treaty and the apparent Soviet view that it has nothing to gain from doing so offers opportunities for Western propaganda aimed at making clear to world opinion the insincerity of the Soviet peace offensive. It also highlights the danger that Austria will continue to give the Soviets opportunity to demand additional concessions in their favor.

5. Should treaty negotiations be resumed, the Soviets may propose Austria’s neutralization. In their anxiety for a treaty, the Austrians are probably prepared to accept some form of military neutralization, provided Austria’s economic, and possibly political, association with Western Europe is not precluded. It is improbable that the British and French would long support U.S. efforts to resist such a limited neutralization of Austria.

6. The Soviets have in general adhered to the 1946 Control Agreement by permitting the Austrian Government to exercise the essentials of sovereignty throughout Austria. The Soviets have not exercised the capabilities which they possess to the point of forcing the partition of Austria or preventing Western access to Vienna. They recently have adopted a more conciliatory occupation policy which has encouraged the Austrian Government to act with increasing independence of the West and to seek additional Soviet concessions through bilateral negotiations.

7. Austrian resistance to the Soviet danger and more than one billion dollars of U.S. aid in various forms since 1945 have thus far produced a substantial degree of political and economic stability in Austria. A coalition of the two major parties, now representing 83 percent of the vote, has been in power since 1945 despite strong ideological and historical differences between the parties. Tensions still exist, however, primarily because of coalition disputes on economic questions. The coalition has generally supported Western objectives in Austria.

8. In view of the marked improvement in economic conditions, there now appears to be little economic justification for additional U.S. economic aid to Austria in the foreseeable future. However, maintenance of economic stability in Austria will depend, in the long run, upon such factors as: Austria’s vulnerability to Soviet pressure, the maintenance of favorable foreign trade conditions, long-term reform of the Austrian economy, and Austria’s ability to meet the demands of Article 35 if adopted. Moreover, it is of great political as well as economic importance that Austria avoid excessive dependence on trade with the Soviet bloc. In view of uncertainty regarding these factors, there may be a need for future resumption of economic aid.

9. The maintenance of adequate Austrian internal security involves the following concurrent and interdependent problems:

a. Internal Security Prior to a Treaty. Barring Soviet interference or an internal crisis which might substantially increase Communist strength, present Austrian internal security forces totalling 34,000 men, … are probably adequate to maintain order in view of the overwhelmingly pro-Western orientation of the people and the presence of Western military contingents in Austria at least at their present strengths. However, substantial reductions in Western military contingents would require substantial increases in the Austrian gendarmérie.

b. Establishment of Austrian Armed Forces Adequate to Maintain Internal Security After a Treaty.… the Austrian Government cannot, under the terms of the Agreement on Control Machinery in Austria (June 28, 1946) openly take effective action toward the creation of armed forces prior to ratification of a treaty authorizing such action. The long draft treaty authorizes a maximum force of 58,000. Austria would require in the post-Treaty period following withdrawal of occupation forces, an initial minimum armed force of 28,000^* immediately available to suppress Communist attempts to subvert the Government.… it is estimated that the Austrian Government could assemble about 15,000 lightly armed and partially trained men by the end of the 90-day period following ratification of the Treaty, the period specified in the Treaty for the withdrawal of all occupation forces. The Austrian Government may, therefore, be faced with a critical situation in this early post-Treaty period.

. . . . . . .

11. Unilateral decisions have been made by the British and French to reduce their troop strength in Austria by the end of the year. Steps are being taken on both diplomatic and military levels to postpone implementation of the British and French decisions.

12. A similar partial Soviet withdrawal is not impossible and the Soviets could conceivably propose the withdrawal of all occupation forces prior to conclusion of a treaty with the intent of handicapping Western defense plans and detaching Austria from the West. For them withdrawal would be only a small sacrifice since their garrison would remain in the same command by moving a few miles east into Hungary, leaving behind Soviet administrative personnel to operate the oil fields and other enterprises controlled by them. Withdrawal of Western forces, particularly U.S., would be highly disadvantageous so long as formation of Austrian security forces was not complete, and Austria’s jurisdiction over ex-German assets (oil, Danube shipping, et cetera) was not recognized.

objectives

13. To sustain Austria’s resistance to communism and foster Austria’s further orientation to the West, and in any event to prevent the incorporation of Austria into the Soviet bloc.

14. To re-establish Austria’s full political and economic independence by conclusion of an equitable four-power treaty and to increase Austrian political, social and economic stability and authority both before and after a treaty.

15. To obtain the maximum Austrian contribution to its own defense and Austrian cooperation with the West against aggression by the Soviet bloc.

courses of action

16. The United States position on the Austrian Treaty should be based on the following:

a. Continue efforts to conclude a four-power treaty providing for the re-establishment of Austria’s freedom and independence.

b. Seize upon continued Soviet unwillingness to discuss an Austrian Treaty in conference or refusal in a conference to accept Western minimum terms as a basis for propaganda that makes clear to world opinion the insincerity of the Soviet peace offensive.

c. In concert with the British and French, seek to discourage the Austrian Government from carrying on such bilateral negotiations with the Soviets as might unfavorably affect the Treaty or Austria’s relations with Western Europe.

d. Vigorously resist the neutralization of Austria as contrary to the U.S. interest. However, should the Austrians, British and French press strongly for accepting some degree of neutralization, the United States may be required to make some concession to avoid the onus of unilaterally blocking a Treaty. Nevertheless the United States should refuse to sign a Treaty which would preclude Austria’s association with the economic community of Western Europe, which would prejudice Austria’s capacity to preserve internal order, or which would restrict the Western Powers in giving aid to Austria in the establishment of adequate internal security forces.³…

e. Seek to obtain a Treaty on terms less onerous than those contained in the long draft, particularly in Article 35 under which the Soviets would retain control over properties held or claimed by them as German assets. Only as a last resort and only if no more favorable basis of settlement seems possible, should the long-draft Treaty, including the Soviet versions of the five unagreed articles and Article 35 as agreed by the Deputies in 1949, be accepted.

17. In the absence of a Treaty:

a. Continue efforts to induce the Soviets to alleviate the burdens and pressures on Austria with a view to extending the authority and jurisdiction of the Austrian Government and to assure that the Soviets respect the rights of the other occupying powers as established in existing agreements.

b. Encourage elimination of the complex of restrictive and monopolistic devices which restrain Austria’s production and keep prices unnecessarily high.

c. Continue, in cooperation with other friendly countries, to work for the reduction of barriers to Austria’s international trade with the free countries, thereby, in particular, reducing the relative importance of Austria’s traditional dependence on substantial trade in areas within the Soviet bloc. At the same time, give appropriate recognition within the framework of NSC 152/2,⁴ to Austria’s special requirements for non-strategic trade with the Soviet bloc.

d. Recognize that, while additional economic aid to Austria is not required at this time, it may be necessary to make limited U.S. or other resources available to Austria, should the need therefor arise, in view of the set-back to U.S. security and political objectives in Austria that would arise from a critical deterioration of the economic situation.

e. Make decisions regarding any proposal for four-power withdrawal of troops from Austria prior to a Treaty dependent upon all pertinent factors and conditions at the time such a proposal is made. Consideration should be given, in this connection, to seeking (a) Four-power agreement for expansion of Austria’s security forces and (b) Soviet agreement to reduce its jurisdiction over economic enterprises in Austria now controlled by them as alleged German assets.

f. In cooperation with the British and French, make every effort to forestall by appropriate means unilateral Soviet action designed to bring about a Western withdrawal from Vienna or a partition of Austria.

g. In the event of the illegal Soviet use of armed force, the decision whether to attempt to localize counteraction or to treat the matter as initiating a general war should be taken in the light of circumstances existing at the time.

h. In the event of a blockade of Vienna, the U.S. authorities in Austria should be guided by the directive set forth in the Annex hereto, as approved February 17, 1950.

18. In cooperation with the British, French and Austrian Governments, and bearing in mind the desirability that the following military activities not provide justification for Soviet retaliation detrimental to United States interests, take such measures as may be appropriate to:

a. Insure that Austrian internal security forces are reasonably adequate in the pre-Treaty period taking into account security requirements and possible changes in the strength of occupation forces.

b. Insure, prior to the withdrawal of occupation forces, that Austrian armed forces are reasonably adequate to maintain internal security in the post-Treaty period. This includes continuation of the existing program to provide essential equipment for an initial Austrian army of 28,000 in the period immediately following a Treaty, and planning for the creation as rapidly as possible of the forces authorized in Article 17 of the long draft Treaty.

. . . . . . .

d. Seek the retention of Western garrisons in Austria, at least at their present strength in the absence of four-power agreement for troop withdrawal, and consider such forces in defense plans relating to Southern Europe.

. . . . . . .

19. Seek to persuade the British and French Governments of the desirability of a tripartite declaration supporting Austria’s political and territorial integrity, to be issued at the time of the withdrawal of troops from Austria.⁵

20. Seek to obtain, in addition to the tripartite declaration, an Austrian commitment to raise and maintain forces adequate for the internal security and integrity of the Austrian state and the acceptance of Western assistance in the formation of these forces.

. . . . . . .

Annex

U.S. Policy in the Event of a Blockade of Vienna Issued to the Commanding General, U.S. Forces in Austria

a. All United States personnel in Austria should act with utmost correctness in order to give no pretext to the USSR for imposing a blockade;

b. The United States authorities should make full and frequent use of all existing United States rights in the Soviet Zone of Austria in order to detect the earliest possible evidence of imposition of Soviet restrictions, and in order to preclude any possibility of forfeiture of these rights through disuse. Where such rights are not already being regularly used, they should be resumed by steps in order not to excite special comment or attention;

c. United States authorities in Austria should protest vigorously against any Soviet notification or administrative orders limiting, interrupting, or discontinuing United States traffic or other rights;

d. Traffic between Vienna and the zones of the western powers in Austria should not be limited, interrupted, or halted on a mere administrative order or notification by the Soviets that movements will not be permitted;

e. Vehicles should continue to attempt to transit the corridor and each airport access road. If definitely confronted by a military road block, elements of the Soviet Army, or other evidence of Soviet determination to use force as necessary, they will stop;

f. The United States authorities in Austria should make no threat of force such as mounting an armed convoy on the highway;

g. Prior to acting along the above lines, the situation should be discussed fully with the British and French military authorities in Austria and implementing action should as far as practicable be coordinated with them; and

h. Caution must be taken in preserving the security of these instructions and no steps should be taken which would lead the Soviet authorities or the Austrian population to believe that we are taking precautionary measures in anticipation of their action, thereby providing a pretext for aggressive or probing measures on their part. U.S. authorities are requested to report immediately any action which might be interpreted as a progressive restriction on our access to Vienna.

Financial Appendix

Costs of U.S. Forces in Austria

U.S. forces in Austria consist of one infantry regiment and one AAA battalion, plus administrative and supporting military personnel. Average U.S. military strength in Austria (almost entirely Army) and annual costs to the Department of Defense are as follows:

Fiscal Year	Average Strength	Total Costs
1952	13,400	$80 million
1953	14,700	$83 million
1954 (Est.)	14,200	$77 million

The total cost of maintaining U.S. forces in Austria since 1947 has been borne by the United States from dollar appropriations for the Department of Defense. Maintenance of U.S. forces at current levels in Austria after fiscal year 1954 would involve cost of approximately $75 to $80 million per year, including military personnel costs. The withdrawal and redeployment of U.S. forces now in Austria would not have any significant impact on U.S. defense expenditures, but would deprive Austria of approximately $25 million per year in dollar exchange currently derived from U.S. military expenditures in Austria.

. . . . . . .

U.S. Economic Aid Expenditures in Austria

Fiscal Year	Expenditures
1948–1949 (15 months)	$216.0 million
1950	161.6 million
1951	113.6 million
1952	148.2 million
1953	60.1 million
1954 (Est.)	25.0 million†

1. Attached to the source text was a covering memorandum by the Executive Secretary of the National Security Council, James S. Lay, Jr., to the members of the Council informing them that the President had approved the statement of policy on Oct. 14. It also noted that NSC 38/4, NSC 38/6, and NSC 63/1 were hereby superseded. A 14-page NSC Staff Study was also appended to the source text, as well as a table of contents, neither printed.

   The first identifiable draft of this NSC paper was prepared by Peter Rutter of the Office of Western European Affairs and circulated to various offices of the Department of State as well as other agencies for their comments in July 1953. Once these comments had been received and the early draft revised, it was forwarded to the NSC Planning Board for consideration. After review by the Planning Board, the paper was circulated to members of the NSC as NSC 164 and placed on the agenda for the Council’s Oct. 13 meeting. A copy of Rutter’s early undated draft is in S/S–NSC files, lot 63 D 351, NSC 38 Series; a copy of NSC 164 is in S/S–NSC files, lot 63 D 351, NSC 164 Series.

   For the comments by the various interested offices and agencies regarding Rutter’s early draft of this NSC paper, see the following: Office of Eastern European Affairs—memorandum by Walter J. Stoessel, Jr., July 20 (763.00/7–2053); Office of Economic Defense and Trade Policy—memorandum by Raymond Vernon, July 21 (763.00/7–2153); Office of the Assistant Legal Adviser for German Affairs—memorandum by Hans A. Land, July 23 (763.00/7–2353); Policy Planning Staff—memorandum by Leon W. Fuller, July 23 (763.00/7–2353); Office of German Political Affairs—memorandum by Coburn Kidd, July 23 (763.00/7–2353); Office of British Commonwealth and Northern European Affairs—memorandum by William L. Hamilton, July 23 (763.00/7–2353); Office of the Assistant Secretary of Defense—memorandum by Col. William M. Connor, July 24 (763.00/7–2453); Central Intelligence Agency-memorandum by William P. Bundy, July 24 (763.00/7–2453); and the Embassy in Vienna—letters by Thompson, Aug. 6 and Sept. 3 (763.00/8–653 and/9–353).

2. The text of the draft Austrian note was transmitted to the Department of State in telegram 627 from Vienna, Sept. 10, and was amended as indicated in telegram 630, Sept. 10. (Both in 663.001/9–1053) The three Western High Commissioners were shown the text of the final note before it was delivered to the Soviet Government. Documentation concerning the drafting and delivery of this Austrian note is in file 663.001.
3. This is in addition to the regular gendarmérie, border customs guards, and police as currently organized. [Footnote in the source text.]
3. Paragraph 16–d in NSC 164 reads as follows: “Vigorously resist the neutralization of Austria as contrary to the U.S. interest, particularly as a possible precedent for a German settlement. However, should the Austrians, British and French press strongly for accepting some degree of neutralization, the United States may be required to make some concession to avoid the onus of unilaterally blocking a Treaty. Nevertheless the United States should refuse to sign a Treaty which would preclude Austria’s association with the economic community of Western Europe or which would prejudice Austria’s capacity to preserve internal order.” (S/S–NSC files, lot 63 D 351, NSC 164 Series)
4. For text of NSC 152/2, “Economic Defense,” July 31, 1953, see vol. i, Part 2, p. 1009.
5. A second sentence appeared in this paragraph in NSC 164 which reads as follows: “It is desirable that such a declaration be accompanied by an Austrian commitment to raise and maintain forces adequate for the internal security and integrity of the Austrian State, …” (S/S–NSC files, lot 63 D 351, NSC 164 Series)
6. Estimated on the basis of no additional economic aid appropriations for Austria. [Footnote in the source text.]