4. Letter From the Secretary of State to the Chairman of the Senate Foreign Relations Committee (George)1

Dear Mr. Chairman: Anticipating my testimony before the Senate Foreign Relations Committee in connection with the Austrian State Treaty, I take this opportunity to inform you concerning a number of classified matters on which I will be unable to give adequate answers in open hearings. Should the Committee require information additional to that given below, I will of course be glad to provide it under any arrangements that will insure the maintenance of the various security classifications involved.

1. Military Implications for the Defense of Western Europe.

This, of course, is a subject on which testimony would more appropriately be given by a military representative, and you may wish to take advantage of the presence in Washington of General Gruenthert for this purpose.

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2. Redeployment of United States Forces From Austria (Secret).

Secretary Wilson and I have concurred in a recommendation by the Joint Chiefs of Staff that approximately 5,000 of the 17,000 troops now assigned to the Commanding General, United States Forces in Austria should be redeployed to Northeastern Italy. There has not as yet been discussion of this matter with either the Italian Government or the NATO authorities. I consider it extremely important that we complete our arrangements for the redeployment to be made upon the request of the Italians and NATO before any public announcement is made.

3. Military Assistance to Austria (Secret).

Austrian neutrality will be an armed neutrality and the Austrian Parliament has passed a resolution that states that Austria is resolved to defend its territory with all of the resources at its command. Such a policy is, I believe, in the interest of the United States. The Administration wishes to avoid a military vacuum in that country. There is in formation an Austrian gendarmérie which will be the nucleus of the Austrian Army once the Treaty enters into force. We have, with congressional approval, stockpiled equipment for an initial force of 28,000 men. Finally, we have received official Austrian Government secret requests for equipment for their army,2 equipment which there are indications the Soviets might gladly furnish. We are now studying the ways and means by which to satisfy the Austrian requests under existing legislation.

4. Protection of US and UN Interests (Confidential).

A general provision for restoration of United Nations property, rights and interests is provided in Article 24 of the Treaty. It is deficient in two respects because of the negotiating history: 1) the date as of which United Nations property should be restored is the date on which hostilities commenced, and 2) property indirectly held is not covered. The date in the Article is partially unsatisfactory to the United States because the German authorities after annexing Austria enacted legislation in 1940 (Bitumen Law) which had the effect of confiscating certain oil properties in which United States business firms (Socony–Vacuum and Standard Oil Company of New Jersey) had property interests. Accordingly, if restoration were made only to December 7, 1941, that would find the Germans in possession of the property. To meet this problem an understanding was arrived at with Austrian officials by which they have undertaken to negotiate with the firms concerned regarding a settlement satisfactory to the parties concerned which will in effect restore the property interests of the firms as they existed in 1940.

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The difficulty concerning restoration of United Nations property indirectly owned in Austria through German companies was also covered in the understanding reached with the Austrian officials by providing for appropriate satisfaction to the parties concerned.

Finally, a point which was a political issue in Austria concerns certain United Nations property indirectly owned in the Soviet Zone of Austria which was nationalized by the Austrian Government in 1946. The Austrian officials have undertaken to see to it that the shares in the property in question are returned to the United Nations owner (i.e., to denationalize the foreign owned interests in the property).

The principal United States property interests concerned in the foregoing understanding have been informed on a confidential basis of the action taken to protect their property and they are satisfied with the situation. From the standpoint of United States interests involved, there is no reason why the additional undertakings of the Austrian officials could not be made public, but as suggested above, they would be politically embarrassing to the Austrian Government since the understanding expands the Treaty coverage, and publicity at this time might conceivably result in some delay in ratification of the Treaty by others. Secondly, it creates some difficulty for the Austrian Socialists. The understanding is being made known to the Austrian Parliamentary committee concerned on a confidential basis and we are therefore seeking to cooperate with the Austrians in handling the matter in the United States on a basis of confidence as they have requested. Upon entry into force of the Treaty the understandings will be made public.

The pertinent documents are attached.3

5. East-West Trade (Secret).

The delivery to the Soviets by the Austrians of $150 million worth of goods under Article 22 of the State Treaty and the provisions of Article 29 could theoretically involve shipment of strategic materials from Austria to the Soviet bloc. It is expected, however, that the Austrians will be obliged to furnish only such materials or products as are normally produced in Austria, and Austria neither produces weapons nor does she produce many strategic goods in significant quantities. In addition, we have reason to believe the Austrian Government will continue to cooperate, as they have in the past, in controlling exports in conformity with the international standards set by COCOM. I should add that we and our COCOM partners have at our disposal means of controlling shipments of strategic goods into Austria, so as to avoid transit shipments to the Soviet bloc.

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6. Claims of Nazi Persecutees (Confidential).

The Committee on Jewish Claims against Austria, which represents persons or their families who were persecuted during the Nazi regime in Austria, including many United States citizens who are former Austrian nationals, has received an Austrian Government offer of a settlement in broad terms. The Committee has informed us that it considers the offer a satisfactory one and will send representatives to Vienna later this month to negotiate the details of a final settlement. Both parties to the negotiations have kept us informed, but at the same time have requested that the offer and response be kept confidential. It may interest you to know that when I was in Vienna last month I discussed this problem twice with the Austrian Chancellor. It is heartening to note that for the first time agreement on a basis for settlement has been reached and that a final agreement at an early date on a basis satisfactory to both sides seems likely.4

Sincerely yours,

John Foster Dulles
  1. Source: Department of State, Central Files, 663.001/6–Drafted by Freund on June 8.
  2. The Embassy in Vienna reported these requests in telegrams 2803, May 18, and 2858, May 24. (Ibid., 663.001/5–1855 and 663.001/5–2455, respectively)
  3. None printed.
  4. In telegram 3522 to Vienna, June 10, the Department of State informed the Embassy that Secretary Dulles had testified publicly that day to a friendly and cooperative committee. (Department of State, Central Files, 663.001/6–1055)
  5. Printed from a copy that bears this stamped signature.