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

740.00119 Council/7–1449: Telegram

The United States Deputy for Austria at the Council of Foreign Ministers (Reber) to the Secretary of State

secret

London, July 14, 1949—7 p.m.

2763. Delau 159. From Reber. I had opportunity today for discussion with Zarubin on outstanding issues connected with Article 35. We agreed to leave any consideration of oil properties and DDSG assets until experts reports could be studied.¹

Although Zarubin gave me definite assurances that Soviet Union would not raise any difficulties in respect to satisfactory settlement of war booty question including industrial and transportation equipment, he said his final instructions in this respect would depend to some extent upon agreement on all other outstanding points of Article 35, and avoided discussion in substance of this question.

As regards schedule of payments, Zarubin spoke of both Austrian and Soviet interests in this matter which gave me impression that he was aware of the Austrian Government’s willingness to assume obligation in many small payments. He also indicated that it might be easier for Soviet Union to accept agreement for payments every 6 months as proposed by British. I should appreciate Department’s instructions in this connection in light of considerations set forth in Austrian note (see Delau 152²).

In discussing paragraph 7, Soviet draft,³ Zarubin urged acceptance of Soviet draft stating his Government had accepted this language as representing Ministers’ decisions in Paris and that he was unable to effect any changes without specific authorization from Moscow. Apparently he attaches less importance to additions to Soviet draft than to alterations in its language as he said our new paragraphs 1 and 7 bis⁴ did not present great difficulties. I pointed out that Soviet draft did not make it clear that “as the general rule” the properties, rights, etc., received by Soviet Union should remain subject to Austrian jurisdiction and operate in accordance with Austrian legislation. If this point could be made clear, I was of opinion that fewer changes would then be required in Soviet draft, although expression “other income” did not in my opinion represent a satisfactory description of what had been agreed. Zarubin conceded that words “in general” were vague and reiterated that only exceptions to Austrian jurisdiction were provisions relating to non-alienation and export of profits and other income, i.e., rents. He said that as it was clear that profits and rents were to be determined in accordance with Austrian law, there was no need to add the word “net” in describing them.

Although Zarubin argued against inclusion of our requirement that Secretary General should make appointment of third arbiter, I did not get impression that clause would provide a serious stumbling block. I am, however, informed by my British and French colleagues that they will not insist upon this addition if agreement is achieved in respect of other points.

Zarubin seems most anxious to conclude negotiations early in August and said that once Article 35 had been settled he foresaw no further obstacles to speedy conclusion of treaty draft. I agreed that we should make every effort to expedite progress if clear understandings could be reached and to support only those alterations or additions to the Soviet draft that were essential provided that in so doing a satisfactory solution of war booty question could be achieved.

Sent Department 2763, repeated Vienna 150.

[

Reber

]

1. The reference here is to the two Committees of Experts which were established by the Deputies at their 166th meeting July 5. One Committee was to prepare the lists of oil producing, exploration, refining, and distribution properties that were to be transferred to the Soviet Union, while the second Committee prepared a similar list for DDSG properties. The Committees were given two weeks to prepare their reports, but were unable to agree on what properties should be transferred to the Soviet Union.
2. Not printed; it transmitted the text of an Austrian communication which stated that the Austrian Government did not object to the promissory notes being issued by the Austrian National Bank as long as it was clearly understood that such notes were not transferable. (740.00119 Council/7–1149)
3. Ante, p. 1099.
4. The reference here is to paragraphs 1 and 7 bis of an alternate draft of Article 35 submitted by the British Deputy on July 9. The text of this draft (C.F.M./D/L/49/A/52) is in CFM Files: Lot M–88: Box 115.