317. Telegram From the Embassy in Austria to the Department of State0

155. Department pass Defense (for OASD/ISA).

Negotiations for formation of new Austrian Govt indicate possibility of cuts in present and future defense budgets. According to press, Socialist Party at one point proposed $8 million cut in this year’s budget [Page 808] and informed sources from Austrian General Staff predict Socialists will demand cut in next year’s budget up to 50 per cent. Country team considers heavy US investment in creation effective military posture in Austria justifies expression of US views on any action which will seriously adversely affect creation such posture.

Country team recommends adoption following US position on these possible developments:

Any significant reduction in Austrian defense budget will preclude attainment of jointly agreed upon build-up of Austrian Army and therefore will be tantamount to abrogation by Austrian Govt of informal agreement reached by the two govts in 1955–56 which led to establishment of military assistance program for Austria. Should this occur, additional military equipment cannot be effectively utilized by Austrian Army and further equipment deliveries will be re-examined with view to prompt and orderly termination.

I recommend that I be given discretionary authority to communicate this US position to leading members both political parties in event major reductions in Austrian defense budget appear likely to materialize.1
  1. Source: Department of State, Central Files, 763.5–MSP/7–1559. Secret. Also sent to USCINCEUR.
  2. The requested authorization was granted in telegram 205 to Vienna, July 17. (Ibid.) Over the next few weeks, Matthews expressed his concern about the proposed reduction to various Austrian officials, generally eliciting the reply that the reductions were not really intended and that talk thereof was only the result of political bargaining in the attempt to form a new government. Documentation on this subject is ibid., 763.5–MSP.