Vienna Mission 59A543 PL9, Box 256
Memorandum of Conversation, by Mr. S. L. W. Mellen, Senior Economic Analyst in the Office of the United States Political Adviser for Austria (Erhardt)
| Present: | Mr. J. G. Erhardt |
| Mr. Philip Mosely—Council of Foreign Ministers, London | |
| Mr. Llewellyn Thompson—Council of Foreign Ministers, London | |
| Mr. S.L.W. Mellen |
1. German Foreign Assets in Austria
It was brought out that Mr. Byrnes was unable to secure discussion and agreement on this problem at the Moscow Conference,1 and that it would, therefore, be left to Ambassador Harriman to try to obtain from the Soviet Government sufficient agreement as to general principles so as to enable the Allied Commission in Austria to work out the detailed execution of the Potsdam provisions.2 Mr. Mosely was asked for his views as to the most effective arguments to use with the Soviets, at all levels, in order to secure their agreement to the United States policies and procedures. Mr. Mosely suggested focusing all discussion on the question—“what are German assets?”3 He also suggested having the Austrian Government present to the Allied Council a note outlining from the point of view of the Austrian economy the need for obtaining a prompt settlement of the questions raised by the Potsdam agreement—with emphasis upon the impossibility of any comprehensive plan for economic rehabilitation and reconstruction until it is known what industrial equipment and other resources are [Page 284] available to Austria. He also suggested that the Soviets might be impressed by an argument that it is essential for Austria to get on its own feet economically during 1946, since UNRRA aid is expected to come to an end this year.
2. Austria’s Economic Relations with Other Countries
Mr. Mosely was asked for his views on the desirability of having Austria develop close economic relations with the other countries in the Danube Basin, in an economic confederation or otherwise. It was understood that a Danubian economic community would doubtless be strongly influenced by the USSR, certainly in an economic sense, and probably in a political sense also. Mr. Mosely pointed out that because of the difficult economic situation of Hungary and Rumania, and the relatively heavy reparations obligations imposed on those countries, they would be able to contribute little for several years to a Danubian economic community. He expressed the opinion that only Czechoslovakia would be in a position to contribute materially. He and Mr. Thompson also emphasized the fact that the economic and political differences existing among the various Danube countries (including differences in respect of nationalization) would make it difficult to develop an integrated cooperative association.
At the same time Mr. Mosely brought out that in a 1937 trade agreement the United States Government conceded the principle that it would not consider Danube tariff preferences a violation of the most-favored-nation clause.
Messrs. Mosely and Thompson expressed the view that basically the great powers are not yet ready to reach agreement on a long-term basis concerning the economic disposition of Austria. Mr. Thompson thought it likely that the Soviet Government would be willing to enter into some sort of understanding as to a division of Europe into spheres of interest, under which Hungary and Rumania, among others, would fall in the Soviet sphere, and under which Austria should pass to the western sphere. However, he pointed out that the United States Government wishes to avoid any such settlement, and this was, of course, agreed.
Mr. Mosely suggested that some study be given to the possibility of trade between Austria and Italy. He conceded that Italy is poor in exportable surpluses and, therefore, in foreign exchange, and will probably remain so for some time. There is, however, a possibility of financial aid to Italy from abroad. In any case, Mr. Mosely felt that some small but worthwhile volume of trade might be developed. Both Mr. Mosely and Mr. Thompson referred to Austria’s ability to export lumber and leather products, and to Austria’s potential tourist trade.
[Page 285]Mr. Thompson suggested asking the State Department to send a special economic mission to Austria to make a study of the country’s resources and potentialities with a view to drawing up a long-term plan of reconstruction and development.
3. International Control of the Danube
Messrs. Mosely and Thompson were unable to suggest any means of securing international agreement on this subject. It was pointed out that the Soviets have advocated having the military authorities in control of the various countries in the Danube Basin exercise control over the corresponding portions of the river. This naturally would result in Soviet control over the lower Danube. Mr. Mosely pointed out that the Soviets would not be willing to agree to a Danube commission unless it were dominated by them. Reference was made to the fact that the Soviets have shown no desire to participate in control of the Rhine,4 and it was suggested that they might use this as a reason why the western powers should not concern themselves with the Danube.
4. Austrian Peace Treaty
It was explained to Messrs. Mosely and Thompson that in the Allied Commission here the Soviets have indicated that they look to a peace treaty with Austria as the event which will officially terminate Allied control. It was also brought out that General Clark has within the last few days expressed the intention of withdrawing his Headquarters from Austria by July. In view of these two circumstances it seems most urgent that the Peace Conference in May should include in its work a definitive settlement of Austrian questions.
There was a brief discussion of the need for a peace treaty with Austria, in the light of the fact that the Allied powers have not been at war with Austria as a separate nation. Mr. Mosely pointed out that there could nevertheless be a treaty reaffirming Austria’s independence and defining its relations with other countries.
Mr. Mosely was asked how arrangements should be made to secure a settlement of the Austrian questions at the May Conference. He suggested that efforts should be made to have the Conference of Foreign Ministers in Washington in March put this subject on the agenda for the May Conference. In order to get the matter before the March Conference, he agreed that it would be desirable for Mr. Erhardt to send a message to the Department, indicating the need for early action on Austria, and suggesting some of the topics which should be included in a treaty with Austria.
[Page 286]There was a brief discussion of the subjects which might appropriately be covered in a treaty with Austria. It was agreed that the following should be included: sovereignty, boundaries, maintenance of civil liberties, specification of continuing obligations under former treaties, prohibition of Anschluss with Germany, and prohibition or limitation of a military establishment.
With reference to the last point, Mr. Mosely suggested that there are some reasons for having a small army separate from the gendarmerie; one reason is that if the country’s entire armed personnel is concentrated in the gendarmerie there would be a possibility that the Government ministry controlling it might at some future time become undemocratic or irresponsible. If there were a small army in addition, control of armed personnel would be divided between two ministries.
Mr. Mosely stated that the treaty need contain nothing on reparations since if it were silent it would follow that Austria had no reparations obligations.
The question was raised whether the treaty should be used as a means of finally settling the difficult problems of German foreign assets. Messrs. Mosely and Thompson thought it essential that these matters should be settled separately and beforehand.
- For discussions at the meetings of the Foreign Ministers on December 21 and 24, 1945, see Foreign Relations, 1945, vol. ii, pp. 716 and 766, respectively.↩
- See Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, vol. ii, p. 1604, entries in Index under “Austria: German assets in Austria”.↩
- For a comprehensive view and interpretation of German assets in Austria, as expressed at the Potsdam Conference, see telegram 10380, November 29, 1945, to London, Foreign Relations, 1945, vol. iii, p. 668.↩
- See memorandum of October 22, 1945, by Mr. Norman J. Padelford, Foreign Relations, 1945, vol. ii, p. 1373.↩