19. National Security Council Report1

NSC 5603


General Considerations

1. The Austrian State Treaty, which came into force on July 27, 1955, ending the occupation and reestablishing Austria’s independence and sovereignty, marked the achievement of the major U.S. objective in Austria for the past ten years. The price, however, which Austria paid for Soviet willingness to conclude the Treaty was a policy of perpetual military neutrality and heavy economic obligations to the Soviet Union payable over 6 to 10 years.

2. Austria, an integral part of free Europe, is a symbol of resistance to the Soviets. Austria is strategically important because of its position controlling important approaches to Western and Southern Europe, and the Danube gateway to the satellites.

3. Soviet aims in Austria today are primarily to prevent close alignment with the West and to draw Austria as much as possible into the political and economic orbit of the USSR. Moreover, the Soviet Union hopes to use the Austrian example as an incentive to develop neutralism elsewhere. A weakening of Austria’s stability and pro-Western ties would constitute a serious setback for the United States.

4. Austria’s post-Treaty neutrality as defined by law prevents it from entering military alliances or allowing the establishment of foreign military bases on Austrian territory. Austrian political leaders have interpreted this neutrality to mean that Austria is free to cooperate with the West in political, economic and cultural fields and to accept outside assistance in the establishment of its armed forces. The United States has encouraged Austria to adopt and maintain this interpretation of its neutrality to ensure Austria’s Western orientation and minimize the adverse influence on Austria and other nations of Soviet pressures to broaden Austria’s neutrality.

5. Under the Austro-Soviet Memorandum of April, 1955, Austria is to seek a joint four-power guarantee of Austrian territorial integrity. In view of U.S. constitutional and political considerations, the [Page 35] United States has adopted the policy “that the United States should be prepared to treat any violation of the integrity of Austrian territory or neutrality as a grave threat to the peace, without however guaranteeing its territory or neutrality, except within the framework of the UN” (NSC Action No. 1388).

6. United in resistance to the Soviets, a coalition of government of the equally powerful Socialist and conservative People’s parties, representing 83 per cent of the vote, has maintained political stability in Austria since the war. Removal of the common bond of opposition to Soviet occupation policies and the emergence of difficult problems, primarily economic, raised by the State Treaty, have exacerbated the basic differences between the two parties. However, as long as relatively favorable economic and international conditions prevail, moderate forces in Austria will remain vigorous enough to insure the maintenance of political democracy and stability.

7. Austria, with the help of nearly $1.4 billion of U.S. aid since 1945, is relatively stable and prosperous, though inflationary pressures and balance of payments problems are present. Economic grant aid, last authorized in FY 1953, is not now necessary. U.S. interests still warrant such continued economic cooperation as transactions under Public Law 480, and loans for sound projects through established lending institutions. [3 lines of source text not declassified] Potential Austrian dependence on Soviet bloc trade warrants continuing attention.

8. After the State Treaty became effective, the Austrian Government established an Army [2 lines of source text not declassified]. Volunteers, and the first draft call anticipated for early 1957, will expand the present 7,000-man Army toward the goal of about 40,000 men. The Army is now capable of maintaining internal security, [2-½ lines of source text not declassified]. Bipartisan civilian control of the Army is a serious Austrian political issue.

9. The United States has provided post-Treaty Austria with $22 million of military installations and, from a stockpile in Europe, $40 million of end-items. A balance of $17.4 million in end-items remains to be delivered from the stockpile; packing, transportation, etc., brings the remaining cost of delivering the stockpile to $20.2 million. [9-½ lines of source text not declassified]

10. While the Austrian Government, now completely responsible for refugees, has publicly stated its intention to provide adequate protection and care for them, continued Austrian cooperation in this program will probably require continued U.S. and international assistance and advice.

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11. Maintenance of an independent and stable Austria, and encouragement of its continued pro-Western orientation and resistance to Communist pressures and subversion.

Courses of Action

12. Make all feasible attempts to influence Austria to interpret its military neutrality in such a way as to minimize its restrictions and permit (a) continuance of its Western orientation, [1 line of source text not declassified], (c) its close cooperation with Western powers in all non-military fields, and (d) its participation in non-military organizations of the free world community.

13. Minimize the influence of Austria’s neutrality on the defense and foreign policies of other free nations.

14. Seek to discourage Austria from requesting a four-power guarantee of Austria’s territorial integrity; and failing that, limit any guarantee in which the United States will participate to one within the framework of the UN, without excluding, however, the possibility that conditions may warrant a tripartite Western declaration supporting Austria’s political and territorial integrity.

15. Be prepared to treat any violation of the integrity of Austrian territory or neutrality as a grave threat to the peace.

16. Encourage the continuance of coalition governments at least until a single party is capable of providing a stable and democratic government.

17. Encourage Austria to raise and maintain armed forces adequate for internal security [2 lines of source text not declassified].

18. Be prepared to grant or sell to Austria military end-items and other appropriate forms of military assistance, keeping in mind Austria’s interpretation of its military neutrality, the importance of avoiding Austrian dependence upon Soviet sources of supply, and the need for Austria’s economic stability and growth.

19. Support Austrian efforts to insure that the armed forces are subordinate to national, bipartisan control and thus are not allowed to become a weapon which can be used by either party against the other.

[Numbered paragraph 20 (3-½ lines of source text) not declassified]

21. Seek to maintain Austria’s close economic ties with the West through continued participation in such organizations as the Organization for European Economic Cooperation and through such measures, where appropriate, as loans for sound projects through established lending institutions, transactions under both Public Law 480 and triangular transactions under Section 402 of the Mutual Security [Page 37] Act, and a limited technical assistance program. To this end, encourage Austria to eliminate restrictions which hamper foreign investment and trade with the West [2-½ lines of source text not declassified].

22. Continue the exchange-of-persons program and an active foreign information program.

23. Protect the rights of American citizens under the State Treaty and other agreements between the two governments, including settlement of claims and restitution of property in Austria or provision for adequate compensation.

24. Use all feasible measures to secure Austria’s continued acceptance of responsibility in granting asylum and protection to political refugees from the Soviet bloc, and integration into the Austrian economy or Austrian cooperation in resettlement of refugees and displaced persons. Continue as appropriate in U.S. interests to assist in the resettlement of refugees through U.S. or international agencies.

[Numbered paragraph 25 (2 lines of source text) not declassified]

  1. Source: Department of State, S/SNSC Files: Lot 60 D 661, Austrian Documents. Top Secret. A cover sheet; a March 23 memorandum by James S. Lay, Jr., transmitting the Report to the Council for consideration; an April 7 memorandum by Lay informing the Council that the President had approved NSC 5603 on that day; an eight-page NSC Staff Study; a financial appendix; and a table of contents are not printed.