17. Editorial Note

On January 23, Ambassador Thompson reported that Austrian Finance Minister Kamitz thought that the Soviet loan proposal was a closed issue. (Telegram 1756 from Vienna; Department of State, Central Files, 863.10/1’2356) The Socialists never wavered in their opposition to financial assistance from the Soviet Union and defeated the [Page 32] loan proposal a third and final time within the Austrian Cabinet February 16–18.

The position of the Socialists was strong because of support from the World Bank, the United States, and pro-Western Austrians. First, the World Bank notified Austria that it would be reluctant to participate in Soviet-funded projects. Then, on February 7, the United States concluded a P.L. 480 agreement with Austria for economic development. Finally, Chancellor Raab decided against pushing for the loan so as not to antagonize his pro-West voters.

Deputy Chief of Mission Thomas K. Penfield observed that the defeat of the Soviet loan was important to the shaping of a pro-West Austrian image. Penfield further noted that the defeat was one of the first signals that Austria intended to interpret its neutrality in a strictly military sense rather than beyond the stipulations of the State Treaty. (Despatch 749 from Vienna, March 6; ibid., 863.10/3–656)