48. Telegram From the Delegation at the Vienna Ambassadorial Conference to the Department of State1

2620. Article 35 discussed only in restricted session2 (five representatives with one or two advisors) May 5, where Soviet Ambassador opened with firm reiteration his rejection French proposal of previous day (paragraph 1 text Embassy telegram 24623). Declared Moscow agreement should not be linked to Article 35 since it only represented right of U.S.S.R. to dispose of property belonging to it. Ilyichev asserted Moscow agreement entirely outside competence Ambassadorial Conference. Charged Western arguments aimed at delaying [Page 82] and complicating treaty. Concluded that Article 35 must remain without modification.

U.S. Ambassador stressed importance U.S. attached to Austrian decision neutrality, a status which U.S. would accept, and tabled following two proposals. First would become paragraph 1(d) to reference telegram:

“D. The above provision for transfer shall be supplemented by the agreement reached between the Governments of Austria and the U.S.S.R. as set forth in annex (blank) to the treaty.”

Second U.S. proposal to become paragraph 2 would read:

“2. Austria, for its part, undertakes that, except in the case of educational, cultural, charitable and religious property, rights and interests, none of the properties, rights and interests transferred to it as German assets shall be returned to ownership of German juridical persons or, where the value of the property, right or interest exceeds (260,000) schillings, to the ownership of German natural persons”.

Purpose of latter amendment, he explained, would be to protect Austria from strong German pressure for return large industrial properties which would arise under present version Article 35. At same time, Austria should have discretionary powers to restore small private holding in order to avoid political friction. U.S. Ambassador explained adoption of second U.S. amendment conditional upon acceptance of first, and that it would be understood to replace the bilateral no foreign ownership clause covering east zone, with no German ownership prohibition applicable to all of Austria. U.S. Ambassador stressed desirability nationally uniform treatment recovered assets thereby eliminating all vestiges of zones. Both British and U.S. mentioned new arrangements on Article 35 would ease otherwise likely difficult ratification problems.

British and French thought U.S. amendments acceptable after study, while Austrians undertook examination but expressed preference that four powers should reach agreement amongst themselves. Soviet Ambassador modified his attitude to extent of agreeing to take under study combined French and U.S. proposals with further discussion tomorrow.

  1. Source: Department of State, Central Files, 396.1–VI/5–555. Secret; Niact. Repeated to London, Paris, Moscow, and Bonn.
  2. The restricted session was held from 4:58 to 6:30 p.m.; for a report on the discussion of other topics besides Article 35, see telegram 2617, infra.
  3. Not printed, but see footnote 3, Document 45, for the text of this proposal.