Foreign Relations of the United States, 1958–1960, Berlin Crisis, 1959–1960; Germany; Austria, Volume IX

324. Memorandum of Conversation⁰

Washington, April 5, 1960.

SUBJECT

• Counterpart Release and Counterpart Settlement

PARTICIPANTS

• Dr. Fritz Bock, Austrian Minister of Trade¹
• Ambassador Wilfred Platzer, Austrian Embassy
• Dr. Johanna Augenthaler, Austrian Ministry of Trade
• Dr. Edgar Plan, Financial Counselor, Austrian Embassy
• The Under Secretary
• Mr. Robert H. McBride—WE
• Mr. Emerson Brown—CPT
• Mr. Harry M. Phelan, Jr.—WE

Minister Bock said that one of the current primary concerns of the Austrian Government was the question of the release of the blocked counterpart funds and the arrangement of a final counterpart settlement. He was sure the Under Secretary would appreciate the planning problems connected with the future management of the funds both in the period immediately after the funds were released and subsequent to the final settlement. After asserting that effective planning could not be carried out in the absence of a time schedule, the Minister posed two direct questions: (1) Precisely when could Austria expect the release of the “blocked” counterpart funds?, the next ten days?, the next month?, or when?, and (2) When did the U.S. expect to reach a final counterpart settlement? In commenting on his questions, the Minister said that the Austrian economy needed the blocked funds right now. However, from a monetary standpoint, a sudden unplanned release of the funds might be undesirable and, therefore, Austria must know our intentions in order that they could plan the absorption of the funds so as to insure a minimum monetary impact. With regard to his second question, the Minister held that any acceptable final settlement should leave the subsequent disposition of funds solely at the discretion and control of the Austrian Government. Austria would, however, be prepared to consider entering certain agreements with the United States prior to final settlement regarding subsequent uses of the funds.

The Under Secretary replied that he understood the Minister had already discussed these questions with ICA Director Riddleberger (Bock had talked to Riddleberger in the morning prior to his meeting with the Under Secretary)² who was the competent official in this matter. He did know, however, that we had not yet been able to overcome all the administrative difficulties which we had encountered in connection with the counterpart releases. The Under Secretary pointed out that certain releases had been made in recent months and that this would indicate that other releases could be expected to follow. As regarded a precise time schedule, the Under Secretary felt that Mr. Riddleberger would be better informed than he was. In response to the question on the final settlement, the Under Secretary assured Bock that we too wanted to reach a final settlement as expeditiously as possible. We understood that informal talks between our Embassy in Vienna and the appropriate Austrian officials had already started and we hoped that these talks would be the preface to a general agreement. Certainly, with the good will that existed on both sides it would be possible to reach a mutually satisfactory agreement in the not too distant future.

Minister Bock replied that, after talking to Mr. Riddleberger, he still had no precise idea when the release of counterpart would be effected. Mr. Riddleberger had, in fact, replied to his questions by stating that the U.S. was still trying to overcome administrative problems connected with the releases and that it was, therefore, impossible to give him (Bock) a precise answer as to the timing of the releases. He hoped the Under Secretary would appreciate Austria’s need to know when, under existing conditions, it could expect to have the overall funds available and on what principles. Long–range planning was impossible without this information.

The Under Secretary replied that he was glad to know that Austria’s main interest was in long–range planning rather than in what would happen in the next ten days. We have made substantial progress in solving the various administrative problems connected with release and we are simultaneously studying the problems connected with a final settlement. We hope that all these problems can be solved in the coming months and that a mutually satisfactory agreement on the way the funds will be released can be reached. The Under Secretary pointed out that these problems had been present when he took up his duties here in 1957 and he most earnestly hoped they would be solved before he finished at the end of this year.

Minister Bock said he felt some alarm at the Under Secretary’s last statement in that he and the rest of the Europeans hoped that his term of office would be much longer than the Under Secretary had indicated and, therefore, that tying the solution of this problem to his term of office might put it far into the future. The Minister then asked if there was anything Austria could do to speed up the solution adding that “the Vienna Memorandum problem has been solved and that the Article 26 enabling legislation was in draft form before the Parliament.” “What else could the Austrians do?”

The Under Secretary said he didn’t think there was anything the Austrians could do since the administrative problems were ours; they were ones which we alone could solve. After emphasizing that we do not and have never connected the counterpart problem with the Vienna Memorandum claims, the Under Secretary said, in connection with the latter, that we had been pleased with the agreement reached in December between the claimant companies and the Austrian authorities.³ On the other hand, we had been disappointed with the slow progress toward settlement since then. We understood that some details remained to be worked out and that the terms of a final agreement were still subject to cabinet approval. The Under Secretary, observing that the Vienna

Memorandum problem was also a very old one, added that he was hoping to visit Vienna in the summer after the ECOSOC meetings in Geneva, and he sincerely hoped that both the counterpart and Vienna

Memorandum problems would be out of the way and that he would not have to discuss them again at that time.

Bock replied that he fully shared the Under Secretary’s hope and said that the Austrians had had a bad conscience about the Vienna Memorandum and would welcome the day when the burden thereon would be lifted. He expressed his gratification over the Under Secretary’s intent to visit Vienna and expressed the hope that he would agree to be a State guest.⁴

0. Source: Department of State, Central Files, 763.5–MSP/4–560. Confidential. Drafted by Phelan and approved in U on April 22.
1. Bock was in the United States March 31–April 7, beginning in New York, then traveling to New England and Detroit before arriving in Washington on April 4. He left Washington for Vienna via New York on April 7.
2. No record of the conversation with Riddleberger has been found in Department of State files.
3. See Document 323.
4. See footnote 8, Document 327, and Document 328