168. Memorandum of Conversation0


  • Austrian Request for Arms Credit


  • Dr. Wilfried Platzer, Ambassador, Austrian Embassy
  • Dr. Robert Ladner, Counselor, Austrian Embassy
  • WE—Mr. Knight
  • WE—Mr. Sulser

The Ambassador inquired about the prospects for approval of Minister Schleinzer’s request for a $50 million credit to purchase US military equipment. Mr. Sulser replied that a further meeting of representatives [Page 367] of interested offices had taken place on April 3, and we were proceeding to clarify some of the problems involved. We hoped to be in a position to meet with Dr. Plan and Colonel Rainer soon. We were somewhat concerned that the Minister might have gotten the impression from the sympathy and encouragement which he encountered on all of his calls that the matter was simpler than in fact it would be. The discussion on April 3 had revealed that there were several substantial problems to be solved.

The Export-Import Bank appeared to be willing in principle to act as a “front” or go-between to give the transaction a commercial appearance. This might be relatively uncomplicated as far as items such as new tanks and communications equipment, which could be procured directly from the manufacturers. Certain items, however, such as ammunition, which could probably be procured only from the Defense Department, would present a problem of documentation. The Export-Import Bank would probably be unable to accept title to any of the items involved in the transaction. Therefore, if Ex-Im is to serve as the channel, some means of “commercial” documentation will have to be found for items procured directly from the Defense Department.

The problem of financing, of course, is the major hurdle. If Ex-Im and/or private sources are to be used, the total cost, including guarantee charges, would probably not be much under 6%. Military assistance funds which would bear lower interest rates are extremely scarce.

Therefore, it seems likely that the transaction could not be realized in one piece with a single source of financing and a single agreement. Particularly because of the financing problem, it might even be necessary to space the various pieces of a “package deal” over a period of time.

Provided that the total cost could be held to a reasonable figure and the commercial appearance maintained only through several apparently separate transactions, the Ambassador said he thought this would be acceptable to the Austrian Government. Furthermore, since delivery of the equipment was desired only over a three-year period, he also thought it would be acceptable to have the various agreements spread over a similar period of time. He said the Austrian Government sincerely appreciated the obvious desire of the U.S. Government to meet the Austrian request.

  1. Source: Department of State, Central Files, 763.56/4–562. Confidential. Drafted by Sulser.