Foreign Relations of the United States, 1949, Council of Foreign Ministers; Germany and Austria, Volume III

CFM Files: Lot M–88: Box 247

Instructions to the United States Deputy for Austria at the Council of Foreign Ministers (Reber)¹

secret

[Washington, January 14, 1949.]

The US Deputy will be guided by the following general considerations in the negotiations on the Austrian Treaty at the London Conference of the Deputies of the Council of Foreign Ministers in February, 1949.

1. The US Government considers that the fulfillment of the international obligations respecting Austria is long overdue and that the Treaty should be concluded at the earliest possible date terminating military occupation and restoring to Austria its sovereignty and independence.

2. In accordance with the intent of the international agreements respecting Austria and the basic objectives of US policy, an acceptable treaty must establish conditions under which Austria may reasonably expect to survive as a viable, independent state without serious risk of alien domination. No obligation can be imposed by the Treaty which is beyond the Austrian ability to discharge, or which jeopardizes the present rate of economic recovery, or which permits the exercise of undue political or economic pressure by any foreign state on Austrian national life.

3. The frontiers of 1937 shall be recognized. Within these frontiers the Austrian Government shall have the right stipulated by the Treaty to organize and equip its security forces in such a way to assure the maintenance of internal security and to discharge of the responsibilities envisaged by the Charter of the United Nations.

In seeking to fulfill these general objectives by the conclusion of an acceptable Treaty the remaining unagreed portions of the Treaty² can not be regarded as a narrow gap which can be closed by negotiations but as involving the fundamental basis of Austrian national independence and the ability to survive economically without extensive foreign assistance. The primary objective of the Conference, therefore, will be to reduce the demands of the Soviet Union in order that the obligation assumed by Austria in the settlement of the German assets question is consistent with Austrian capabilities and that no privileged position is created for the Soviet interests remaining in Austria. Any modification in the present US position to meet the Soviet demands should be examined in the light of its ultimate effect on Austrian independence and economic well-being. Consequently, it will be necessary to consult with the British and French representatives prior to the Conference in order to reach agreement to the fullest possible extent on the position to be taken by the Western Powers on the basic issues of the Treaty in the ‘light of developments since the suspension of discussions last May.

In the discussions with the British and French, and in the subsequent four power negotiations, the US Deputy will seek agreement on the basic issues along the following lines:

1. The Guarantee of Austrian Independence (Article 2).

In previous negotiations it has been considered desirable to include an article binding the four powers to respect Austrian independence and territorial integrity and to consult with one another concerning appropriate steps to be taken in the event of any threat to Austria’s status as established by the Treaty. Such an article, however, might be interpreted as authorizing the establishment of a procedure outside the jurisdiction of the United Nations in the event of a threat to Austrian security and might complicate or make difficult any action by the United Nations. The US Deputy, therefore, is authorized, first, to drop support of the second paragraph of this article regarding consultation and, secondly, not to insist on the inclusion of any article of this type if a particular and valuable negotiating advantage can be secured by its elimination and if the British and French agree that the objective of this article can be obtained by other means. Prior to its elimination, however, the Austrian authorities should be consulted concerning the effect of such action on Austrian public opinion. The Western Powers likewise should be in full agreement on the possible lines of action which might be taken in the event of a threat to Austria after the conclusion of the Treaty.

2. Frontiers (Article 5).

No change can be made in the US position concerning the reestablishment of the 1937 frontier. Consideration can be given to a bilateral agreement between Austria and Yugoslavia resolving outstanding economic issues including the question of the Drava River water power. Agreement should not be given in the course of negotiations to any proposal for a bilateral settlement of ethnic issues unless the Austrian Government states that it has no objection and assurance can be given that such an agreement would not involve frontier changes. The US Deputy should reject any suggestion that Austria and Yugoslavia settle the frontier question on a bilateral basis similar to the Czechoslovak-Austrian negotiations approved by the CFM in 1947.

3. Reparations (Article 34).

The US Deputy is instructed to reject any proposal that Austria pay reparations to any state for damages arising from the war.

4. Displaced Persons (Article 16).

If no agreement can be reached on the inclusion of the principle of voluntary repatriation of displaced persons in Austria, consideration should be given to the elimination of this article from the Treaty. No compromise can be accepted on the principle of voluntary repatriation and an article which does not guarantee this principle should not be included in the Treaty. If this article is eliminated some³ assurance should be obtained from the Austrian Government that the principle of voluntary repatriation will be observed as the fundamental basis for the settlement of the displaced persons problem.

5. German Assets (Article 35).

In previous negotiations, the German assets question has presented serious difficulties in terms of the fulfillment of Western policy objectives. In an effort to break the deadlock of previous conferences, the US has agreed to consider a compromise proposal originally introduced by the French Delegation. This compromise would obtain the release of German assets now under Soviet control. The maximum price which the US would consider reasonable in view of the contribution which these assets could make to the Austrian economy if returned to Austrian control is summarized below; detailed instructions on the several points will be transmitted separately:

a. Transfer of specific assets to the Soviets

1. Petroleum

(a) exploration—a maximum of 60% of rights to Austrian oil exploration lands for an agreed period of time.

(b) production—a maximum of 58–60% of present oil producing territories for an agreed period of time.

(c) Refineries and distribution are agreed in principle subject to agreement on the transfer of specific properties.

(d) In connection with the allocation of specific petroleum properties to the USSR, it may be that United Nations interests will be affected. The US Deputy should endeavor to keep transfers of UN properties to the USSR at a minimum and not to agree to the transfer of US properties except as authorized in each case by the Department. The US Deputy should consider the possibilities for substitutions in kind for UN properties transferred to the USSR and in connection with Article 42⁴ should insist upon provision for prompt, adequate and effective compensation by Austria for such interests not otherwise provided for.

2. Danube Shipping

DDSG assets in Hungary, Rumania and Bulgaria to be transferred to the Soviet Union. Transfer of DDSG assets in Austria which will not affect Austrian minimum requirements or provide a permanent base for the Soviets.

3. Properties transferred to the Soviet Union under Article 35 will be exempt from nationalization for a period of 10 years, except with the consent of the Soviet Union. Similarly, the Soviet Union should not be permitted to sell or otherwise dispose of such properties except with the consent of Austria.

b. Lump sum settlement for all other assets returned to Austrian control

In return for a waiver of all other Soviet claims to assets in Austria or for payment from Austria, Austria will undertake to pay a maximum of $125 million in goods or convertible foreign exchange, at the option of Austria. Provisions regarding the time, method and conditions whereby Austria may pay this sum without impairing her ability to achieve economic independence and to become a self supporting nation will be included in the Treaty. The detailed instructions on this matter are annexed as Tab A.⁵

c. German Assets in Western Austria

The US Deputy should continue to support vis-à-vis his British and French colleagues the previous US position that German assets in Western Austria should be relinquished 100% to Austria, subject to an undertaking by Austria to eliminate all German ownership or control of such assets and to take steps to ensure against the resumption of such ownership or control. The time at which the common intention of the Three Powers regarding German assets in Western Austria is announced to the USSR should be discussed with the British and French and reported to the Department. A detailed paper on this matter will be supplied to the Delegation later.

6. Military Clauses (detailed instructions have been prepared by the Department of the Army⁶).

Specific instructions have been prepared on the remaining unagreed articles. In as much as agreement should be sought on the foregoing basic issues, it is not likely that the remaining unagreed articles will be the immediate subject of negotiations.

1. The source text was included as an attachment to a letter from Hickerson to Reber dated January 24, 1949.
2. For the texts of the unagreed articles as they stood following the meetings of the Austrian Deputies in 1948, see Foreign Relations, 1948, vol. ii, pp. 1514 ff.
3. At this point in the source text Hickerson had circled the word “some” and written in the margin “firm”.
4. Article 42 dealt with the restitution of allied property in Austria. For the text of this unagreed article, see Foreign Relations, 1948, vol. ii, p. 1525.
5. Not printed.
6. Not found in Department of State files.