740.5/4–2953
No. 863
Memorandum by the Counselor of the
Department of State (MacArthur) to the Under Secretary of State
(Smith)1
When the Secretary appeared before the Foreign Relations Committee of the Senate this morning, primarily to report on the [Page 1855] recent NATO meeting in Paris, he brought up with the Committee the subject of the Austrian Treaty. He gave an excellent historical resume of the negotiations beginning in 1946, during the course of which he explained the substance of the long and short draft treaties. In describing the long treaty he outlined the provisions of Article 35, including the rights which the Soviets would retain in connection with oil exploitation in Danube shipping as well as the Austrian time-phased payments to the Soviets of $150 million. The Secretary explained that serious consideration was being given to taking initiative with the Soviets with respect to the Austrian Treaty. Among other things, he explained that if initiative were taken promptly, it might forestall or at least occur prior to some Soviet initiative with respect to Germany. This would mean that if the Soviets subsequently put forth a proposition on Germany, we would be in a position to say that it must be considered after the Austrian question. The Secretary then said to the Committee that, despite the concessions which the long draft gave to the Soviets, we had the impression that the Austrians wished a treaty so badly that they would willingly buy it. The British and French seem to share this view. Therefore, if initiative were taken with respect to the Austrian Treaty and if we were not willing to buy the long draft, we would thence find ourselves isolated. Our position would be further complicated by the fact that we were apparently blocking a treaty which the Austrians themselves were willing and, indeed, anxious to accept, in other words, a treaty with which they thought they could live. The Secretary said that he was mentioning this matter to the Committee in line with the administration’s policy of consultation with the Foreign Relations Committee in order to obtain their views prior to reaching a final decision. The Secretary also explained that from the purely military point of view, there was the question of whether or not an Austrian Treaty was at this time a desirable thing when it would mean the withdrawal of Western forces. The President will be examining all aspects of this matter in the very near future in order to make his decision.
Several of the Committee members raised questions. One inquired whether if, in the Secretary’s opinion, the treaty were signed, the Soviets would withdraw not only from Austria but from Hungary and Rumania. The Secretary replied that he believed the Soviets could find the pretext to remain in Rumania and Hungary [Page 1856] either by request of the satellite governments concerned or by treaty but that they would no longer have the pretext of being there to insure their lines of communication to Austria and it would not make them any more popular with the Rumanian and Hungarian people. Another Committee member asked whether the Austrians had the capacity for paying off the $150 million to the Soviets. The Secretary replied that no categoric answer could be given to this. Much depended on the condition in which the Soviets left the Eastern zone of Austria. If extensive capital investment were required to rehabilitate Austrian industry which the Soviets had worn out or removed, the Austrians would not be able to make the necessary capital investment required by the over-all Austrian economy and at the same time pay the reparations. There were also other factors. However, if the industry in the Eastern zone were left in good shape and with the lift of the burden of occupation costs to the British, French and Soviets and in the absence of unknown developments, the Austrians would probably be in a position to meet a substantial part of the payments to the Soviets. This, however, was a question on which no accurate predictions could be made.
Senator Taft said that he had the impression from what the Secretary had said that the Secretary’s mind was running along the lines that if the Austrians, French and British all strongly support the long draft of the treaty, we should not oppose it but should also agree to it. The Secretary responded affirmatively that, while no decision had been taken, tentatively, he was thinking along these lines. No member of the Committee challenged this possible course of action and discussion on the treaty terminated on this note.
Copies of this memorandum were also sent to Matthews, Morton, Bonbright, and Byington.
In a brief memorandum to the President dated Apr. 29, Dulles noted the following: “I had a very satisfactory meeting with the Foreign Relations Committee this morning dealing primarily with NATO and also the Austrian Treaty. With respect to the latter, there was no formal decision taken or sought by me, but from the various expressions of views I believe that: 1—The Foreign Relations Committee appreciated being informed of the problem at this early stage, and 2—Will not seriously object if we go along with the long-form treaty.”
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