Foreign Relations of the United States, 1952–1954, Germany and Austria, Volume VII, Part 2

663.001/5–1653: Telegram

No. 866
The Acting Secretary of State to the Embassy in the United Kingdom¹

secret

Washington, May 16, 1953—2:56 p.m.

7438. London for Dowling. Following for your guidance in seeking tripartite agreement on tactics to be followed meeting Austrian Treaty Deputies, assuming Soviets attend:

1. Primary objective is test sincerity Soviet peaceful intentions in Europe by ascertaining whether or not they are willing conclude Austrian settlement on any basis. Accordingly effort should be made prevent breakdown meeting until Soviet obstructionism revealed even more clearly than in past. If breakdown negotiations unavoidable goal should be place onus on Soviets. Important avoid giving any indication that US or West stalling on Treaty or that Western Powers not in complete agreement.

2. Abbreviated text should not be withdrawn unless West forced to do so. If circumstances force withdrawal abbreviated text we should emphasize its virtues and concession involved to West and stress Western expectations that Soviets will respond by serious negotiation and conclusion equitable treaty.

3. There should be general discussion obstacles to settlement. Aim would be to make Soviets show hand on extraneous issues without appearing to provoke them. If they condition treaty on issues deputies not competent to handle, West should take note of Soviet position and proceed to treaty issues. Care should be exercised not admit principle extraneous issues pertinent to treaty. If demilitarization or denazification raised on grounds Soviets dissatisfied with Allied Council action it may be advisable ask how they would propose amending pertinent treaty clauses. Similarly if they raise neutralization, ask how issue would be expressed in treaty. Such action would provide justification for reopening other articles, notably 35.

4. Through passage time some agreed articles obviously require changes (e.g., reference to Allied Control Council in Article 16 bis). As further means probing Soviet position and of possibly establishing precedent for reopening agreed articles, West should inquire how Soviets propose deal with these necessary changes.

5. Immediately thereafter, West should develop its case for modification of Article 35. Form of introducing case will of course depend on Soviet answer to point raised in Paragraph 4 and on their general attitude at meeting. West should point out:

1) Fact that basic agreement CFM, June 1949, was made in stated anticipation that Deputies would reach agreement entire Treaty not later than September 1, 1949.

2) Importance of Soviet takings from Austria since 1945, and in particular since Article 35 agreed (see summaries prepared American Embassy, Vienna, as basis Arbeiter Zeitung articles and Austrian Government memorandum July 1952²).

3) That according our calculations Soviets would actually receive from oil exploration and production areas allotted to them under Article 35 at least 90% of Austrian total current oil production and not 60% of 1947 production which implied 60–40 continuing ratio.

Western Deputies should agree that at this point specific proposal should be made to return all “German assets” to Austria against appropriate payment. With regard this payment definitely preferable form would be by delivery of oil and possibly other Austrian goods in view acute Austrian dollar shortage. Total value these payments in kind should only be decided after we have received views of Austrian Government and Western High Commissioners, Vienna. An alternative would be fixed percentage of Austrian oil output. Finally, another formula would be lump-sum payment, preferably payable over course of several years. Amount will have to be carefully studied on basis views of interested parties, but should be definitely less than in case of goods payment because Austrian foreign exchange shortage. Some combination of both formulae could also be considered. As Secretary informed Ambassador Loewenthal, Austria’s cannot count on US aid to compensate for any payments called for under Austrian Treaty and therefore Austrians capacity to pay should be most carefully considered.

6. If unagreed articles reached we wish maximum effort to be placed on obtaining Western version of all unagreed articles with major emphasis on Article 37. This does not mean West cannot take firm attitude on its versions Articles 16 and 42 in return for compromises on 48 and 48 bis. Western Deputies should at this point refer back to their Governments for further instructions.

7. Western Deputies should submit to their Governments for consideration their agreed recommendations on tactics to be followed at meeting in sufficient time permit Governments to act thereon and resolve any differences prior meeting. Addressees requested comment to Dowling London.

Smith

1. Drafted by E. P. Allen, Collins, and Knight, and cleared by Bonbright. Repeated to Paris, Vienna, and Moscow.
2. Reference to the Austrian memorandum circulated to U.N. members on July 31, 1952. For text of this memorandum, see Department of State Bulletin, Aug. 11, 1952, pp. 221–223.