Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

763.0221/12–1350: Telegram

The Acting Secretary of State to the Legation in Austria

secret

Washington, December 20, 1950—8 p. m.

1205. Legtel 1200 Dec 14, Legtel 1216 Dec 18.¹ Dept review experience occupation costs since liberation leads to conclusion that whereas for first two years the principle of equal distribution and declining amts cash allocations served policy western powers in Aust, even this period, US retained bargaining power by postponement of decisions since Aust refused to make unilateral allocation to Sov.

In 1948 and 1949 new situation with no cash allocations greatly reduced burden on Aust. During this later period Civilian OCC costs of the four occupying powers have differed in amt but because of this method of securing OCC costs, the effect has been substantial saving in schilling cost to Aust economy, probably 400 million schillings in two years. During period of no cash allocation, Sov appear to have used no more supplies and services than during earlier period. Since Sov have never repaid Austs any part of civ OCC costs, schillings allocated to them were net advantage in early period. In the case of the other occupying powers, these schillings were source of funds for partial or complete repayment.

Dept believes that if cash allocations were to be made now even though limited to 1950, the following would result. (1) Brit wld request approx 186 mil schillings. (2) Other three powers wld call for similar amts. (3) US wld return schillings and buy needed sums with dollars. (4) Brit wld repay Aust, probably with some time-lag. (5) Fr wld get schillings possibly 146 mil in excess of needs for civ OCC costs. (6) Sov wld receive 186 million net of civ OCC costs since in spite of agreements they have always found ways to get facilities and not repay. Additional burden to Aust economy wld thus probably be above 186 mil. Moreover, western powers wld lose virtually only area of negotiations where Sov make request and western powers agree or deny request.

On Dec 19 a representative of the Fr Emb called to present Aide-Mémoire with info similar to that in Paristel 3469 Dec 16² (see also Deptel 1163 Dec 13³ and Legtel 1216).

Dept still uncertain why 30 or 40 million are important to Fr. Apparently would offset past payment by Fr for Aust services or rentals but wld probably constitute a small schilling reserve for future needs. If Dept interpretation correct some arrangement whereby Austs wld merge small past obligations with current Fr civ OCC costs payments without any conspicuous new agreement shld be possible. Such an arrangement would parallel payment of OCC costs for Sov and Brit and have been met by the Aust for Fr throughout most of this period. Thus no new precedent and no new controversial issue wld be raised even if facts shld leak. Dept sees no reason why such an arrangement need be opposed by US on the other hand, US shld not take initiative.

Re Deptel 1216 continued consideration will be given to inducing UK and Fr to adopt US Principle of pay-as-you-go but representation to the Govts cannot be made unless some new element enters into situation. For your info question of Fr payment part of Ger OCC costs will soon be raised in interim Ger settlement, thus premature or definitive action re Aust in Vienna or Washington might complicate other issues.

Any Sov effort to press point of allocation shld be basis for western insistence that Sov have never fulfilled AC agreements re purpose of cash allocations and never met obligation to repay Aust advances civ OCC costs to Austs. In view of fact that Sov have not used schillings to meet OCC costs but for other purposes, further allocations of cash wld revive unagreed and illegal exploitation of Aust economy and cld not properly be considered a continuation of policy adopted in earlier years which Sov have consistently thwarted. Sent Vienna repeated to Paris and London.

Webb

1. Neither printed; the former reported Legation Vienna’s “complete sympathy” with the aims “of reducing occupation costs to minimum and denying additional cash funds to Soviets”, but stated its view that abandonment of the principle of equal allocations would “seriously impair achievement of these aims”. The latter reported that Legation Vienna felt any accommodation scheme for the French before quadripartite agreement was reached on the allocation of occupation funds “would immediately become known to Soviets through leaks from interested Austrian Ministries,” and would result in similar demands from the Soviet Element. (763.0221/12–1450 and 1850)
2. Not printed; it reported that the French Foreign Ministry was instructing its Embassy in Washington to request an interim procedure on occupation costs which would have the French High Commission submit bills to the Austrian Government. An estimated 30 to 40 million schillings in “advances” would cover their expenses. (763.0221/12–1650) A copy of the French aide-mémoire and a memorandum of conversation with Christian de Margerie, Counselor of the French Embassy, neither printed, are in file 763.0221/12–1950.
3. Not printed; it reported the substance of a conversation with Kenneth D. Jamieson, Second Secretary of the British Embassy, and reiterated the Department’s view that Legation Vienna should delay an Allied Council decision on occupation costs indefinitely (763.0221/12–1350). A memorandum of the conversation with Jamieson and a copy of the aide-mémoire which he left at the Department of State on December 8, neither printed, are in file 763.0221/12–850.