Austria 805



316. Memorandum From the Assistant Secretary of State for
     European Affairs (Merchant) to the Under Secretary of State
     for Economic Affairs (Dillon)


                                      Washington, March 19, 1959.

SUBJECT
    The 1958 Annual Release of ICA Counterpart in Austria
Background:
    On November 7,1958 Ambassador Matthews wrote to you (Tab B)l
that he had been holding up the annual counterpart release for 1958. The
1958 annual release level requested by the Austrian Government in July
1955 was 550 million schillings. The National Advisory Council ap-
proved this level on October 17 and authorized the Embassy to release
an additional 500 million schillings of reflows if it considered it appro-
priate. In addition, Ambassador Matthews has also not approved ar-
rangements for PL-480 loans totalling 150 million schillings and has
been holding up all PL-480 loans since August. He believed that his ac-
tion would encourage the Austrian Government to reach settlements on
the pending negotiations under the Vienna Memorandum and Article
26 of the Austrian State Treaty. Ambassador Matthews asked for your
support in obtaining the concurrence of ICA that the funds should con-
tinue to be withheld until after Christmas. By your letter of November
15,1958 (Tab C),2 you concurred, and ICA instructed its representatives
in Vienna to cooperate with the Ambassador (Tab D).3
    On January 21 [271, 1959 Mr. Smith of ICA requested your concur-
rence in proceeding with a release of counterpart and negotiation of a
provisional counterpart settlement, a long standing objective of United
States policy in Austria.4 In my memorandum of February 2, I suggested
that you await the results of your conversation with Vice-Chancellor Pit-
termann.5 You accepted my recommendation, and by a memorandum
from Mr. Bell of W/MSC dated February 5,6 ICA was asked to continue
to hold up the counterpart for two additional months.


    Source: Department of State, Central Files, 763.5-MSP/3-1959. Confidential.
Drafted by Cameron and Chapin and concurred in by McBride. None of the tabs
was at-
tached to the source text.
    1 Document 306.
    2 See footnote 2, Document 306.
    3Not found.
    4See Document 311.
    5See footnote 4, Document 311.
    6Not found.