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. 908
Memorandum Prepared by the Operations Coordinating Board¹

top secret

Washington, January 20, 1954.

Progress Report on NSC 164/1, “U.S. Objectives and Policies With Respect to Austria”²

a. summary

1. In preparation for the forthcoming Four-Power Conference at Berlin, tripartite positions on most essentials of the Austrian Treaty question have been arrived at with the British and French, consistent with paragraph 16 of NSC 164/1. Preparations are also in progress to meet the contingency of a Soviet proposal for pre-treaty withdrawal of occupation forces.

2. As a result of British and French reduction of their garrisons in Austria to token size (from 9,000 French to 460, and from 4,000 British to about 1,800)—an action taken over U.S. protest—concern over Austria’s defense has increased… .

3. The military impact of the British and French troop reductions is still under study. It will entail a reassessment of U.S. allocation of forces in Austria and a re-study by SHAPE of the defenses of northern Italy.

4. The UK and French have agreed in principle to the idea of a tripartite declaration on Austria’s post-treaty integrity, to be issued in connection with a treaty or troop withdrawal. Discussions are continuing.

5. The Soviets ended their occupation costs in October, the British and French following suit effective January 1. The Soviets also joined in Allied Council action ending censorship in Austria and relaxing travel controls. Lightening of the burden on Austria of requisitioned housing is expected from progress on housing construction for U.S. personnel.

6. After consulting with the Austrian Government, and in view of Austria’s improved balance of payments, the U.S. has announced that there will be no economic aid to Austria in FY 1954. Meanwhile Austria shows continued restiveness over restrictions on East-West trade.

7. In the opinion of the Operations Coordinating Board, NSC 164/1 remains effective, timely, and capable of continuing implementation.

b. progress by paragraphs

Austrian State Treaty (Paragraph 16.)

Paragraph 16–a; “Continue efforts to conclude a four-power treaty …”³

Progress: The Soviet Government, having refused invitations to two Foreign Ministers’ meetings and two meetings of their deputies proposed by the West since last May, has agreed to a Foreign Ministers’ meeting in Berlin. It has not specifically agreed to discuss Austria at this meeting; but its reply of January 16 to an Austrian request on this point, while avoiding commitment, intimates willingness to do so.

There are many indications that the Soviets will prevent significant progress at Berlin on an Austrian State Treaty by insisting on a satisfactory German settlement before Austria can have her independence. But the possibility remains that they will make a gesture on Austria as a show of peaceful intentions.

Although some minor differences exist, there is general tripartite agreement on positions to be taken on Austria at Berlin, in line with NSC 164/1.

Highlights of these positions not covered below are:

(1) We will seek prompt conclusion of a treaty, consisting of the long draft appropriately revised so as to ensure the political and economic independence of Austria. (The short draft was officially withdrawn in November.)

(2) We will refuse to link the treaty in any way with a German settlement.

(3) We would agree to full Austrian participation in any negotiations on the treaty.

(4) If the Soviets obstruct progress we will make clear their sole responsibility for failure.

The three Western High Commissioners in Vienna have obtained the necessary assurances from the Austrian Government that the line its representatives will take at Berlin will be consistent with the tripartite position.

Paragraph 16–b: Propaganda exploiting Soviet intransigence on Austrian Treaty.

Progress: USIA in Austria has exploited Soviet intransigence in Vienna in connection with the following events: the 1953 diplomatic exchanges on this subject; the 10th anniversary of the Moscow Declaration in November; and, finally, the forthcoming Berlin Conference.

Output has included broadcasts from London on the Austrian network; two special supplements in May and November of the U.S. daily Wiener Kurier, about 250,000 copies each; an official Embassy statement in November; and two posters, one currently being distributed non-attributably through trade unions to 8,500 factories and union halls throughout Austria.

In this output stress has been laid on the continuing Soviet economic drain on Austria in the absence of a treaty. The campaign has coincided with a series of Soviet concessions and gestures, and may have been effective in reducing their impact.

Paragraph 16–c and 16–d: Tripartite discouragement of prejudicial Austrian-Soviet negotiations, and position with respect to the neutralization of Austria.

Progress: The Austrian Government has given the West assurances that it will not encourage Soviet efforts to obtain Austrian neutrality and opposes inclusion of a neutrality clause in the treaty. The Austrian Parliament on December 16 approved in Committee a resolution favoring full Austrian participation in the Council of Europe. However, the resolution clearly implied that Austria will join no military alliance. Nevertheless, the Communist press in Austria stated that even this resolution would end prospects for a treaty.

The British and French have shown that they will be firm in resisting the neutralization of Austria. The U.S. position remains consistent with NSC 164/1.

Paragraph 16–e: Favorable revision of the long draft treaty, especially on Soviet control of so-called “German assets” (Article 35).

Progress: The tripartite position for Berlin includes plans for an Austrian request to alleviate Article 35 of the Treaty, with Western support to follow. The Austrian Government has confirmed its intention to make such a request and a working group of the three Western Powers and Austrian representatives is developing suggested revisions of the Article for use at Berlin.

Actions in the absence of a treaty (Paragraph 17)

Paragraph 17–a: Efforts to obtain alleviation of Soviet burdens and pressures.

Progress: The Allied Council has ended censorship in Austria and has relaxed travel restrictions.

The Soviets ended their Austrian occupation costs in October, and the British and French followed suit effective January 1. Thus, all four occupying powers are now on a pay-as-you-go basis (the U.S. has been on this basis since 1947), ending the burden of occupation costs for Austria, but not the major Soviet drain on the Austrian economy.

Several actions by the U.S. have further contributed to alleviation of burdens on Austria. Military dependents’ housing construction at Camp Roeder near Salzburg is going forward with joint U.S.-Austrian financing. In addition proceeds from proposed liquidation of the Vienna food stock-pile, if approved (see under paragraph 17–f below) would be used for additional housing construction in both Vienna and the U.S. Zone. These actions together will make possible the return of substantial requisitioned housing.

Paragraph 17–b: Encouraging the elimination of restrictive economic devices in Austria.

Progress: Early in December a labor-management compromise ended a six-month deadlock which had stalled implementation of the productivity program. The local currency counterpart of $10 million is reserved for this program under the so-called Moody Amendment.

The FY 1954 Technical Assistance Program is proceeding satisfactorily except for activities in the labor field. Labor participation is temporarily suspended over the unions’ refusal to share local currency costs of the program. FOA is giving top priority to resolution of this issue. Meanwhile a TA program for FY 1955 is being drawn up for submission to the Bureau of the Budget.

Paragraph 17–c: Promotion of Austria’s international trade and the reduction of Austria’s dependence on Soviet bloc trade.

Progress: Austria continues restive concerning restrictions on its trade with the East. With respect to EPU trade, Austria argues that increased liberalization of trade would weaken East-West trade controls. Nevertheless, Austria has announced its intention to put 60 per cent of its EPU trade on a liberalized basis (the figure hitherto has been 50 per cent).

Paragraph 17–d: Possible necessity for U.S. economic aid to Austria.

Progress: On January 4, 1954, FOA announced that Austria would require no economic aid during FY 1954. This decision, which was reached after consultation with the Austrian Government, was made possible by the sharp recovery in the Austrian balance of payments during 1953. However, Austria will continue to benefit from the pipeline of previous allotments (about $18 million). No budget request for aid to Austria is being made for FY 1955.

Paragraph 17–e: U.S. position on Four-Power troop withdrawal in advance of a treaty.

Progress: The Austrian Chancellor stated publicly on January 6 that if there is no agreement on a treaty at Berlin, he will demand Four-Power troop withdrawal. Should the Soviets at Berlin propose Four-Power troop withdrawal prior to a treaty, or accept an Austrian demand, the West will insist that a treaty and nothing less is our objective and again press the Soviets to carry out their commitment to restore Austrian freedom. Even so, such a Soviet proposal, if refused by the West, could place us in a seriously adverse propaganda position. Accordingly, a further negotiating position is being developed on this point, designed to safeguard U.S. security interests in accordance with NSC 164/1 while presenting the best possible propaganda position.

Paragraph 17–f and 17–h: Action in event of a Soviet blockade of Vienna.

Progress: There have been no indications that the Soviets are planning to force the West out of Vienna or to partition Austria. Accordingly, the U.S. High Commissioner and the Commanding General, U.S. Forces, have proposed final liquidation of the food stockpile developed in previous years against this contingency. This proposal is under active consideration in the Departments of State and Defense. If approved, it will eliminate costly administrative and rotational expenses.

Military and Security Provisions (Paragraphs 18 through 21)

Paragraphs 18–a, b, and c: Austrian forces, pre-treaty and post-treaty.

Progress: covered under 18–e below.

Paragraph 18–d: Retention of Western garrisons in Austria.

Progress: Despite a protest made by the Secretary of State to their Ambassadors in Washington, the British and French Governments did not modify their unilateral decisions to withdraw the major portion of their occupation forces from the Western zones of Austria. The units remaining in Austria are of token size only: approximately 1,800 British and 460 French, including their Vienna garrisons, reduced from 4,000 British and 9,000 French. Soviet troop strength remains approximately 55,000.

The military implications of these withdrawals were discussed on a tripartite basis in Paris in December 1953. The U.S. representative, General Collins, stated that the U.S. would have to reassess the allocation of its forces in Austria. General Gruenther, a participant in the meeting, indicated that SHAPE would undertake a restudy of the defenses of Northern Italy. Both subjects will be pursued after a final decision has been taken on redeployment of TRUST forces following completion of their mission in Trieste. Department of the Army budget plans for FY 1955, not yet approved, authorize a personnel strength for U.S. forces in Austria of approximately 19,000. The present level is 17,000.

Paragraph 18–e: Planning and equipment for additional pre-treaty Austrian forces.

Progress: In consequence of the British and French withdrawals (see under 18–d above), concern for Austria’s defense has increased… .

. . . . . . .

Paragraph 19: Tripartite declaration at time of troop withdrawal.

Progress: The British and French were initially cool to a U.S. suggestion for a tripartite declaration on Austria’s post-treaty integrity, but they have now agreed in principle. There will be a tripartite ministerial discussion before Berlin on this point. This discussion will explore further British objections, which carried disturbing implications as to the British attitude toward commitments on the Continent. Such a declaration would, of course, not be made until after ratification of a treaty by all signatories, although it may be discussed with the Austrians and NATO in advance.

. . . . . . .

c. appraisal of nsc 164/1

In the opinion of the Operations Coordinating Board, NSC 164/1 remains effective, timely and capable of continuing implementation.

1. Following the National Security Council’s adoption of NSC 164/1 on Oct. 13, 1953, and the President’s approval the following day, the Operations Coordinating Board (OCB) was designated as the coordinating agency for the policies stated in this document. In a memorandum by Byron K. Enyart, the Acting Deputy Executive Officer of the OCB, dated Oct. 30, 1953, the Board was informed that an Austrian Working Group would be established chaired by a representative of the Department of State and aided by an Executive Secretary from the staff of the OCB. The Executive Officer of the OCB was informed in a memorandum of Nov. 19 by Walter A. Radius that the Department of State designated Richard B. Freund to serve as chairman of the Working Group.

   Once the Working Group had drafted the progress report, it was sent to the OCB Board Assistants for their review. During their meeting on Jan. 29, 1954, the Board Assistants approved several minor changes in the text and agreed to present it to the OCB at the next meeting. The OCB approved the report at its meeting on Feb. 3 and directed that it be forwarded to the NSC for the Council’s information. According to a cover sheet attached to the source text, this progress report was sent to the NSC on Feb. 4, 1954, with the notation that it covered the period from mid-October 1953 to Jan. 20, 1954. Copies of the OCB memoranda summarized above are in OCB files, lot 62 D 430, “Austria”.

2. Document 895.
3. Ellipsis in the source text.