863.6363/10–1845: Telegram
The United States Political Adviser for Austrian Affairs (Erhardt) to the Secretary of State
[Received October 23—9:46 a.m.]
357. Member of Renner Cabinet has reported to us confidentially (my 323, Oct 1155) that deliveries of gasoline supplies to Provincial [Provisional?] Govt from Zistersdorf have been cut off by Soviet authorities on basis of technical excuses. Such supplies stated to amount to 10,000 liters monthly, none of which received in Oct. As result Govt is seriously short of gasoline and Renner reported extremely nervous about situation. Inquiry was unofficially [made?] if gasoline could be obtained from other sources.
Informant believes purpose of Soviet pressure is to secure signature of Soviet-Austrian oil contract. Although negotiations on contract have not yet been resumed he expects they will be as soon as Provincial [Provisional?] Govt is recognized. Others share this opinion. Since Soviet pressure can be exerted in many ways we must seriously reckon with probability Renner will not be able to resist indefinitely signing contract.
Meanwhile situation American oil companies here rapidly deteriorating (my 324, Oct 1156). Vacuum Oil Company and British controlled Shell Floridsdorfer Mineral Oel Fabrik A.G, have addressed joint letter to Provisional Govt’s Ministry of Trade and Commerce with copies to us and to British stating that refineries owned by them have recently been subjected to stringent control by Soviet Oil Administration. Every order received for large quantities of oil products must now be approved by Soviet control officers acting on orders of Soviet Oil Administration and deliveries have already been held up. (Griffa of Socony Vacuum reports refining will stop Oct 20 because [Page 631] of limited storage capacity.) Letter expresses urgent desire for Allied Commission control of all production and distribution of oil products in interests of all zones of Austria and with due regard for US and British property.
Feldman of Standard Oil reports that certain regular deliveries from Socony Vacuum and other normal sources have been refused and that their distribution operations are consequently confined to stocks on hand which are extremely limited.
Part II.57 Quadripartite Committee on Petroleum Resources whose formation was ordered by Executive Committee on Oct 4 (my 323, Oct 11) has been organized as oil subcommittee of an existing fuel and power committee. Although it should be helpful in securing information, General Gruenther and I feel that a technical working committee at that level cannot be expected to achieve a solution of oil problem as it is now developing.
We hope this problem can soon be taken up directly with Soviet officials here at a higher level. However, since Soviets point to agreements reached at Potsdam as justifying their recent actions with respect to oil industry in Austria, satisfactory solution will depend upon an agreed interpretation of Potsdam agreements.58 The two fundamental questions are (1) whether “German foreign assets in western [eastern?] Austria” have actually become Soviet property already, as Soviets seem to assume and (2) whether “German foreign assets” include all property whose ownership was claimed by German nationals or German Govt at time of Soviet occupation of eastern Austria regardless of the time and circumstances of German acquisition.
- 1.
- We assume that the agreements reached at Potsdam did not establish Soviet ownership of German foreign assets and that before Soviet claims to such assets reparations account can be realized, further procedures or formalities of some kind must be carried out.
- 2.
- We assume that under United States interpretation “German foreign assets” means property of bona fide German ownership. In case of oil properties in Austria, the transfers to German ownership effected after Anschluss were in general executed in technically legal ways and with fair or at least not demonstrably unfair compensation. There was apparently not much haggling over price. What the Nazis wanted was to get control of the properties. However, the transfers after that date were in most cases made under pressure of one kind or another. Consequently, the most workable formula would be to treat as not binding all transfers of property to German ownership effected after March 13, 1938 except in cases where an appropriate [Page 632] judicial body finds after hearings that the transfers were agreed to by the former owners without pressure. Soviets would doubtless object to such a formula on ground that realization of many of their just claims would be tied up in judicial proceedings for a long time. Possible compromise would be a proviso that in cases where there is prima facie evidence that the transfer to German ownership was effected without substantial pressure, the property involved should be treated as “German foreign assets” subject to the right of the former owners to establish later that the transfers were made under pressure to recover their property.
In cases where the transfers were considered or determined to have been made under pressure, it would seem proper to restore the former owners or to the Austrian Provisional Govt or other govts in their behalf against refund of the consideration received with equitable adjustments for changes and transactions since the dates of transfer. The money or property so refunded would then presumably be considered German foreign assets and subject to reparations claims by the Soviets.
It would be helpful if Dept could send me urgently any background information or guidance bearing on these questions, including both substantive and procedural aspects.