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

1027. There are increasing indications that speculative stories on US $50 million defense loan to Austria may begin appear local press. Defense Ministry request for bids for construction flatbed rail tank transporters has stimulated speculation in Austrian industrial circles. Friendly military attaches, Swiss in particular, have been querying US MA on subject.

While it is GOA intent to keep matter confidential it will probably be most difficult do so. Should story break, Embassy plans refer inquiries to GOA, taking line that Austria has from time to time procured military equipment in US as well as from other countries. If GOA wishes, we will add that US would be pleased assist in any new procurement efforts she may wish initiate.

Disclosure of loan arrangements at time when Austria target of persistent campaign by Soviets against Austria’s efforts associate with EEC would unquestionably intensify Soviet efforts prove Austria not really neutral but member NATO bloc.

Department may wish to alert interested agencies of disclosure possibility to ensure coordinated replies to inquiries. Recommend no official US comment without prior approval GOA.

Austrians are continuing their effort secure loans for purchase military equipment from Swedes and Swiss. Austria’s hope is that there would be no disclosure US loan prior to announcement successful completion Swiss and Swedish arrangements.1

  1. Source: Department of State, Central Files, 763.56/12–762. Confidential. Repeated to Bern and Stockholm.
  2. In telegram 1369, December 12, the Department of State instructed the Embassy to inform the Austrian Government that it would have no objection to making the loan public. (Ibid.) In telegram 1383, December 13, the Department of State instructed the Embassy to avoid the use of the term “US defense loan” in any publicity, suggesting instead the phrase military procurement program extending over a period of years. (Ibid.)