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United States Department of State / Foreign relations of the United States, 1948. Germany and Austria

IX. United States participation in the negotiations for an Austrian treaty,   pp. 1447-1535 ff. PDF (34.1 MB)

Page 1452

   Proposals do not clearly reveal whether Soviets (1) have funda-
 mentally altered their policy regarding Austrian treaty and now wish
 to reach early settlement or (2) merely wish to prolong negotiations
 and shift onus to US for failure to reach settlement, though we feel
 balance of present evidence lies slightly on the side of (1).
   Following signs point to (1) Adoption of horse trading approach
rather than that of defining German assets should accelerate nego-
tiations; most of Soviet proposals are for first time precise, and there-
fore helpful for real exchange of views; carrying out of provisions
along these general lines, if once agreed to, should be relatively simple;
and above all abrupt relinquishment of all share in Austrian industry
except oil and shipping is important substantive concession. Reality
of concession made is indicated by fact Ginsburg estimated admissible
German assets eastern Austria had aggregate value around $700,000,-
000 as compared with value of oil and DDSG assets now demanded
amounting to possibly $200,000,000 and a $200,000,000 lump sum pay-
ment, totaling in all $400,000,000.
  Principal sign pointing to (2) is that payment of $200,000,000 ob-
viously impossible without US assistance, and it is realized here US
Congress will be reluctant to appropriate large sum for payment to
USSR, especially in view dispute over reparations out of current pro-
duction in Germany. However if Soviets intended to have agreement
on Austrian treaty breakdown because of US unwillingness to advance
dollar payment, they should have asked higher price than $200,000,-
000 since, according to certain allied diplomats here, Soviets run sub-
stantial risk that US Congress may be willing to aldvance $150,000,000
to $200,000,000 to push back Soviet sphere of influence or that other
solutions will be devised.
  It is conspicuous Soviets have held to former positions on acquiring
assets free of outstanding ,debts, freedom to export profits or output
of enterprises acquired, on bilateral settlement of disputes, and on
safeguards against nationalization. However these points are of sec-
ondary importance in a proposal of this limited type, and assuming
some concessions or limitations obtained in negotiation, e.g., cel1ig
on export of profits or output, they would in themselves create no
danger of crippling or undermining Austrian economy or jeopardiz-
ing political sovereignty.
  Department will note that by these proposals Soviets recover tacti-
cal advantage in part. Even if these purely econoomic proposals should
be agreed upon, treaty could still be blocked 'on questions of Yugoslav
border, demilitarization, denazification or other matters.
  'Clear here that $200,000,000 'demand crucial issue, since agreement
will depend on Soviets' willingness to negotiate on amount and specific
terms and on US willingness to seek workable solution. Austrian and
world opinion it is said 'here will judge Soviet and US aims by their

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