309. Telegram From the Embassy in Austria to the Department of State 0

1466. Chancellor Raab asked me to call yesterday afternoon. Preglau was present. (As Department is aware, while Preglau as Chief of Section V Federal Chancellery is not concerned with Vienna Memorandum or Article 26 problem, he deals with all counterpart program, release and PL 480 loan matters on Austrian side.) Chancellor began by reading from one-page memorandum, reminding me (a) of Austrian release 100 million schillings for Hilfsfond (Embtel 1435);1 (b) that Cabinet had approved proposal by Kamitz ad hoc basis settlement Article 26; and (c) while Vienna Memorandum negotiations not yet successful owing to unwillingness of Socialists to accept proposal for company participation in new refinery they were making progress and a new proposal is in course of preparation. In view of foregoing Chancellor said with a smile he hoped I would be able to give him a Christmas present in form of release of pending counterpart payments.

I told Chancellor I was pleased with Hilfsfond release and progress being made in other fields but unfortunately I could not play role of Santa Claus with a sack of gifts. I said I would promptly inform my government of what he had said to me and felt sure his views would be given careful consideration. Preglau asked whether I thought favorable action would be forthcoming. Replied that I could not honestly be optimistic. I said that I was well aware of Chancellor’s problems within the coalition. Washington felt this was basically an Austrian internal problem and in view of Chancellor’s great prestige and authority2 it was difficult to understand why these Austrian Treaty obligations had not been met. I added this was all the more so since as far as Vienna Memorandum was concerned it bore signatures of former Socialist Vice Chancellor and now President of the Republic Schaerf and State Secretary Kreisky on Socialist side. I then drew from my pocket a paper listing, with dates and participants, 13 occasions since March 1957 on which these two matters had been raised with high-ranking Austrian Government officials visiting Washington including Chancellor himself, on each of which assurances had been given of early settlement. In addition [Page 798] I noted that on no less than seven occasions the matter had been raised with Ambassadors Gruber and Platzer. I said in light of foregoing it was only understandable that Washington was somewhat skeptical whether “progress” would turn into agreement. Preglau indicated his full understanding, took no exception to my presentation but said, as he has on previous recent occasions, that he is under growing pressure to obtain counterpart releases and PL 480 loans. Chancellor merely repeated that fault lay with the Socialists.

I said very real progress had been made on Article 26 and we had hoped it could be settled before Christmas. Then at my request Wainhouse, who accompanied me, spoke of our efforts to continue negotiations at a faster pace only to be told that holiday season makes it inconvenient to hold meetings (Embtel 1456).3 We reiterated our readiness and willingness to continue negotiations at any time, holiday or no holiday, and our belief that gap had considerably narrowed. I asked Chancellor whether he was hopeful that the new proposals on Vienna Memorandum which now being drafted would meet with acceptance on Socialist side. He replied he was hopeful but not overly so.

Conversation was quite cordial and relaxed throughout, Chancellor being in genial pre-holiday mood. It seemed obvious to us he had arranged meeting at urgent request of Preglau who bears brunt of counterpart delays. I feel reasonably hopeful that as pressure here mounts solutions of both problems will be forthcoming—though not of course until after holidays.

  1. Source: Department of State, Central Files, 763.5-MSP/12–2358. Confidential.
  2. Dated December 18, telegram 1435 from Vienna reported that Austria had agreed to release 100 million schillings in two installments for the benefit of the Hilfsfond. (Ibid., 763.5–MSP/12–1858)
  3. In the margin next to this phrase are written, probably in Chapin’s hand, the words: “has waned badly lately.”
  4. Dated December 22, telegram 1456 from Vienna reported a conversation between an officer of the Embassy and Secretary General of the Foreign Office Fuchs. (Department of State, Central Files, 263.1141–A/12–2258)