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

1580. Reference: Mytel 1551.1 As Department will observe from Embed 1570,2 with Christmas euphoria prevailing in Austrian coalition, Cabinet yesterday gave tacit approval to Vienna Memorandum settlement basis presented by Kreisky. Much credit is due latter for drive and energy he displayed these last ten days, particularly in pressure exercised upon OMV to stop haggling and sign up with companies. Of course final govt approval is still contingent upon further steps, notably the definitive detailed contract between companies and OMV, and while Austrians indicate this is largely formality, my experience here leads me to avoid discounting possibility of further delaying snags. On other hand, Arnold and Hecht who called this morning have assured me that both they and Mobil Oil fully satisfied with agreement reached and with outlook for final settlement. Arnold again expressed his deep appreciation of advice and assistance rendered over these past months by Embassy.

I think we can safely say we are approaching end of this problem as important element bearing on Austro-American relations. I believe that our policy and tactics have borne good fruit and I am completely convinced 1) had we not withheld action on counterpart and PL 480 releases, any settlement would have been delayed for years and served as a continuing irritant; and 2) any failure on our part to press Austrian Govt to meet its treaty obligations to United States as they have done to Soviet Union would have been in long run definitely harmful to our relations and objectives in Austria as well as to Austria’s attitudes toward the West in general, its neutrality policy and its general future orientation. A natural Austrian tendency to take the United States and the West for granted which has been growing since 1956 and a corollary reluctance to offend the East, tinted by this country’s ever latent urge toward bridge-building, would, I firmly believe, have been result.

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Now Austrians realize that our support will not be automatic in the absence of reciprocal understanding and cooperation on their part. Furthermore this has been accomplished without generating resentment or any feeling that U.S. is unfair or unjust.

I wish to express my personal appreciation of Department’s and CIA’s understanding and support in face of logical pressures to liquidate our ICA holdings in this little remaining European outpost. Merry Christmas.3

Matthews
  1. Source: Department of State, Central Files, 263.0041–A/12–2359. Confidential.
  2. Dated December 21, telegram 1551 from Vienna reported that the oil companies and the central Austrian oil administration had come to a preliminary agreement under the terms of the Vienna Memorandum and that Kreisky intended to submit the agreement to the Cabinet for approval. (Ibid., 263.0041–A/12–2159)
  3. Dated December 23, telegram 1570 from Vienna reported that a meeting attended by Kreisky, representatives of the Austrian oil administration, and the oil companies with an interest in settlement of the negotiations under the Vienna Memorandum had taken place on December 22. Kreisky reported at that time that the preliminary settlement had been submitted to the Cabinet. (Ibid., 263.0041–A/12–2359)
  4. Negotiations between the Austrian Government and Socony–Mobil under the terms of the Vienna Memorandum were finally concluded in June 1960.