Created: 5/19/1955

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Th* following intelligence organisations participated in the preparation of this aslimate. The Central intelligence Agency and the intelligence organizations of the Departments of State, the Army, the Save, the Air Force, and The Joint Staff.

Concurred in bg the

INTELLIGENCE ADVISORY COMMITTEE onS. Concurring acre the Special Aalslant.Department of Slite; the Assistant Chief ofepartment of lhe Army; the Director ol Navalthe Director of VSaF; Vie Deputafor intelligence. The Joint Slalf. The AtomicCommission Representative to Ihe IAC and theto the Direcior, Fedcal Bureau of Investigation,the subject being oztside thetr jarisdiclian.


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To estimate the implications of the Austrian treaty settlement for the policies of the USSR and other states.

terms which the USSR hasin the Austrian treaty involveconcessions as compared with positions previously held. While thereumber of compensating factors which probably reduce the scope and significance of these concessions from the Soviet point of view, they do notexplain Soviet motives inreaty at this time. (Paras.

We believe that it was the development of the German question, and in particul-lar the progress toward West Germany's rearmament and inclusion in NATO, which led to the Soviet decision toan Austrian treaty at this time. We believe that the reversal of policy on Austria is intended to convey thethat the USSR has receded from the rigidity of its former positions and is prepared to approach discussions onissuesew flexibility. The immediate objective is to encourage hope in the West, and particularly in Germany, that renewed opportunities existettlement of the German question.

he USSR cannot expect, however, that the example of an Austrian treaty alone, unaccompanied by concrete Soviet proposals on Germany, will sustainhopes for reunification indefinitely. The acceptance of an Austrian treaty on terms more generous than thc West had expected, together with the recent Soviet move on disarmament, Is thereforedesigned toeceptivefor proposals which thc USSR will wish to advanceour Power conference. These proposals mightanyumber of variations on Molotov's plan advanced at thc Berlin Conference4 for an all-European system of collective security. The plan could be presented In more attractive guise and contrived to appeal to various elements in the West, but essentially it would probably callecognition of the status quo in Germany with the issue of unification being left for solution by two neutralized German regimes, even though the Soviet leaders might estimate that thc Wesl, Including West Germany, would not agree to any proposal for two

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neutralized Germanics. If the Soviet leaders come to believe duringFour Power talks that these tactics are unlikely to be successful inor delaying West Germanthey may finallyenuine offer, satisfactory to West Germany, for reunification on thc basis of its severance of NATO ties and acceptance ofWe believe that the chances of such an offer are less than)

he Austrian settlement will probably be widely regarded as an indication of Soviet intent toetente with the

West. In NATO countries and elsewhere final judgment regarding Sovietparticularly among responsible statesmen, will probably be suspended until Soviet attitudes regarding other outstanding issues become known. We believe that the Austrian settlement alone will not alter the conviction of theWest German government that it must maintain its alliance with the West. It would be extremely difficult, however,est German government toona fide offer from the USSRenuinely democratic, unified Germany at the price of neutralization in the event it were made. )



POSTWAR POUCYhe USSR's policy in Austria5 has been keyed to its policy in Easterngenerally, and to the larger issues of the struggle for Europe, particularly the question of Germany's future orientation.hort period after World War Tl. Austria was probably not regarded seriously by Soviet leaders as an objective of territorial expansion. The presence of Western forces in Austria servedarrier to Sovietbut the military occupation of its zone in Austria nevertheless offered the USSRpractical advantages with respect to the Satellites and Yugoslavia, and also afforded political leverage for the advancement of its objectives elsewhere in Europe, Morethe Soviet leaders apparently haveAustria primarilyargaining

1 The Special Assistant, Intelligence. Department of State, believes that the last sentence of this paragraph should read as follows: "We believe that the likelihood of such aIs small, primarily because It seems lo us that Its uncertain ties and disadvantages, from the Soviet point of view, would farltd advantages."

counter In their effort to prevent theof West Oermany.

he occupation Itself has provided thc USSR with certain economic, military, and political advantages. Soviet takings from the Austrian economy, although constitutinginor factor ln the economy of the USSRhole, were probably highly valued during thc USSR's postwar recovery.the military and political advantages were far more Important. The USSR wasan advanced strategic position lnEurope and domination of the important rail and water networks in that areaime when the Soviet leaders apparenUy stillin Uie possibility of further Communist gains in Western Europe. Vienna has been an important center for internationalfront organisations, and thehas afforded protection for Communist agents and facilitated control of Communist activiUes elsewhere In Europe. Moreover, Uie staUonlng of Soviet forces in Austria shielded southern Czechoslovakia andHungary from Weslorn Influence and thus enhanced the security of the newregimes In those countries.


Thc terms which thc USSR has accepted in the Austrian treaty Involve Importantas compared with positionsheld. In the economic sphere, the most significant concession is the liquidation of Soviet property rights in Austria. Thepolitical concession is the Sovietto withdraw occupation troops priorerman settlement.

Taking only economic factors intothe terms of thc treaty are lessto the USSR than cither theof thc occupationreaty which included the economic terms of the draftaccepted by the Western Powers. Under the terms ofhc USSR would have gained permanent ownership rights in certain oil refineries and shipping properties, and long-term exploitation rights in Austrian oil fields. In the present treaty the USSR has agreed to thc followingof property held by lt as formerassets: (a) to returnto Austria for payment0 million in goods Instead of dollars; (b) to acceptof one million tons of crude oil annually forears In placeyear rights to oil fields which have been producing between two and three million tons annually; (c) toto Austria oil refineries and oilenterprises which the USSR would have obtained outright undernd (d) to return, forillion, all assets of the Danube Shipping Company located inassigned by Articleo thc USSR.

The poUtical and military implications of the present agreement on troop withdrawal from Austria can also be viewed as giving less advantage to the USSR than the terms which the Western Powers had previously indicated they might accept. At the4 the West signified willingness to extend the period for troop withdrawal toonths after the signaturereaty, and Premier Mendes-France subsequentlyextending thc period to two years.the terms of the treaty, the USSR has

agreed to withdraw its troops5 at the latest. Most significantly, the USSR agreed to separate the question of troop withdrawal from any prior agreement among the four powers regarding Germany. By so doing, it hasargaining counter It might have been able to employ Inevision of Western policies in

Thereumber of compensatingwhich probably reduce the scope and significance of these concessions from thepoint of view. From the economic standpoint, the value of the enterprises now to be returned to Austria has deterioratedthe occupation, and there are indications that profits of these enterprises have beenMoreover, Austrian oil resources have been reduced under Soviet exploitation; thc extent of the concession Involved in their return to Austria Is uncertain. In addition, the provisions for redemption payments,forears in the case of oiland six years for other enterprises, will continue to give the USSR some influence over Austrian economic policy.

ilitary standpoint, theof Western troops from Austria, and the denial to NATO of any possible use it might have made of Western Austria in its defense planning may be regarded by the USSR as more than offsetting anyentailed In Its own withdrawal from Eastern Austria. The neutrality of Austria, combined with Uiat of Switzerland, willto NATO the most direct route through the Alpine passes from Germany to Italy, and thus interrupt Uie continuous Western front from Norway to Italy. The presence of Soviet troops in Eastern Austria to assure border security and Soviet control In Hungary and Czechoslovakia is probably less important to the USSR now than ln the early years after the war when Communist control had not been fully consolidated. Thc legal requirement In Uie Hungarian andpeace treaties that Soviet forces befrom those countries after theof the Austrian treaty can be clrcum-

iiu. v

by other arrangements, such as the recently concluded Eastern Europeanpact.


there are some advantages Inof thc Austrian treaty to thedo hot adequately explain Sovietlnrealy at this time.they fail to explain why thcwilling toreaty on terms lessthan those it might havepreviously. The answer to thesemust be sought elsewhere than Inof the treaty itself. We believewas the development of the Germanand in particular the progressGermany's rearmament and Inclusionwhich led to the Soviel decision toan Austrian treaty at this time.other factors may haveolepattern of mixed motivation.

policy, even prior to Stalin'sapparently recognized the need forof International tensions, partlythe growing cohesion of Westernand partly to slow thc pace andthe burden of the arms race. Wcthat Soviet policy, for an interimprobably continue this attempt totensions in check. Thean Austrian treaty, taken in thethe progress toward Germanthe threatening crisis in the Farbe viewed as part of this effort Onhand, it Is also possible that thetreaty is the first stepcriesdesigned toubstantialrelaxation in internationalorder not only to prevent West Germanbut to further other SovietIncluding US withdrawal frombases,eduction of thethe West to maintain its presentWe believe that the USSR placesemphasis upon aggressive as uponattitudes, and lhat aggressiveare unlikely to be abandoned overperiod. At present. Soviet policy

appears to be showing ils conciliatory face, and the fact that the Austrian treaty move would document this may have beenby the Soviet leaders as anctor in its favor.

has also been suggested that thean increase of tensions In thoand possibly even hostilitiesUS and Communist China, and ispreparing to exploit the advantagesconciliatory posture In Europe. Suchit is argued, would not onlyUSSRavorable position toown involvement in such hostilities,also increase its ability to Influencepowers to try to restrain USCommunist China. We believepossible that in the present stage ofin the Formosa Strait the USSRsome such motivation, but we thinkthat this would have been anfactor in the Soviet move for antreaty. Another important Sovietin the Far East Is to detachits present alliance with the US. Itpossible that the Soviet leaderson the eve of the Soviet-Japaneseit would be useful toase in which Sovietwere obtainable at the price ofneutrality.

A further hypothesis on Soviet motives In moving for an Austrian treaty ls that the USSR desires toloc of neutral stales in Central Europe.loc wouldInclude Austria, Switzerland.and the Scandinavian states. It would also necessarily include Germany, either unified or divided, as an essentialThe likelihood that this may haveole in Soviet moUvations, therefore, must be examined in the context of the Qcr-ninn problemhole.

We believe that the only developmentSoviet security interests soas adequately to explain the reversalong-established Soviet policy at this time is the culmination of European defensein the agreement to rearm West


and include It in NATO. German rearmament and association with NATO has long been regarded by the USSRerious potential threat to the security of the Soviet Bloc- The development of the German issue over the last tew years, particularly at the Berlin Foreign Ministers meeting of4 and subsequently, demonstrated that the USSR could no longer merely byon negotiations delay Western plans toearmed West Germany In the Western alliance. The swift negotiation and ratification of the Paris Accords, subsequent to the failure of EDC, apparently cameurprise to the Soviet leaders, and convinced them that unless Soviet policy departed from some of its rigid positions. West Germanand association with the West would go forward unchecked. We believe, therefore, that the reversal of policy onis designed to regain the initiative for the USSR. Along with other moves, it isto convey the impression that the USSR has receded from the rigidity of its former positions and is prepared lo approachon international IssuesewThe immediate objective is tohope in thc West, and particularly in Germany, that renewed opportunities existettlement of the German question. The USSR will attempt to convince the West Germans that they must abandonIf they are to obtain Soviet agreement to reunification. It will also portray the success of the Austrian negotiations as anof the results that the West Germans could expect from direct dealings with the USSR.

eyond this, the USSR almost certainly regards the Austrian treaty as an urgentstep for another Four PowerIt is unlikely that the USSR would expend the valuable diplomatic andleverage which its position ln Austria has given lt simply toemporaryon Western opinion. The USSRexpect that the example of an Austrian treaty alone, unaccompanied by concreteproposals on Germany, will sustainhopes for reunification indefinitely.

The Soviet leaders probably believe thatplausible efforts on their part toerman settlement must be made if theantirearmamcnt sentiment in West Germany is to be turned to account. The acceptance of an Austrian treaty on terms more generous than the West had expected, together with the recent Soviet move onis therefore probably designed toeceptive atmosphere for proposals which the USSR will wish to advanceour Power conference.

A principal objective of Soviet policyour Power conference will probably be to fix the responsibility for the continuedof Germany upon Western rearmament policy. The Soviet leaders would hopeto encourage West German opposition to Adenauer's policy of finh alignment with the West. Proposals designed to effect this aim might Include anyumber of variations on Molotovs plan advanced at the4 for an all-European system of collective security. The plan could bein more attractive guise and contrived to appeal to various elements in the West, but essentially It would probably call for aof the status quo in Germany with the Issue of unification being left for solution by two neutralized German regimes. Theobjective inaneuver would be to present an alternative solution of thequestion so attractive as to offset theWestern demand that agreement on free elections must precede any decisionsGermany's status in Europe. The Soviet leaders would count upon the effect of the Austrian treaty on Western opinion to lend plausibility to their proposal.

We believe it unlikely that the Soviet leaders estimate that the West, including West Germany, would agree to any proposal involving two neutralized Germanies. In makingroposal, the Soviet aim would be to shift the focus of attention from the Issue of free elections to the issue ofas the principal obstacleerman settlement, and thus toropaganda advantage over the West which the USSR could exploit in its dealings wtth West Ger-

ii t

They will hope at least lo promote divisions and confusion In West Germanand thus to retard and perhaps prevent the Bonn government's progress towardof the Paris Agreements.

Is possible that, It the Sovietto believe during forthcomingtalks that these tactics are unlikelysuccessful ln preventing or delayingrearmament, they will finallyoffer satisfactory to West Germany foron the basis of Its severanceties and acceptance ofthis would require the sacrifice ofpolitical, military, and economicderived from thc Soviet controlGermany, it would be compensatedfact that the US would be required toits forces from Germany andbe unable to maintain itsstrength in Europe, thusNATO. The Soviet leadersthatolution would openpossibility of growing distrustGermans and the Western Powers,exacerbated by the factor ofbetween them, and togetherpolitical changes which couldin Germany, ultimately leadneutral" GermanyBloc. Whileoviet proposalwe believe that the chances thatproposal will be made are less than even.*



Austrian settlement will probablyregarded as an indication of Soviettoetente with the West. Itbeen welcomed by thc Tito regimeits assessment of post-Stalinpolicy, as specifically tending toand as encouraging his regimea policy of achieving beneficial re-

lations with both big power camps withof Yugoslav commitment toNATO countries and elsewhere,regarding Soviet Intentions,among responsible statesmen,be suspended until Sovietother outstanding issuesIn Iheewrolonged casing oftensions will exist, and may givefrictions between the US and its alliesto employ inorewith the USSR- The positiveof an Austrian settlement onwill probably be short-lived,Soviet attitudes in thePower meetings arc considerablythan they have been in

lthough the Austrian settlement will have an impact in West Germany, in the final analysis It will be the character of Sovieton the German question, rather than thc psychological backwash of an Austrian treaty, that will determine German public opinion. Wc believe that thc Austrianalone will not alter the conviction of the present West German government that it must maintain Its alliance with the West. In the absenceona fide offer from the USSR which wouldenuinelyunified Germany at the price ofwe believe that West Gennany will stand firm in its alliance with thc West, it would be extremely difficult, however,est German government to reject such an offer In thc event It were made.

Trie Special Assistant. Intelligence. Department of State, believes that the last sentence of Mils paragraph should read as follows: "We believe that the likelihood of such als small, primarily because It seems lo us that Ils uncertainties and disadvantages, from thc Soviet point of view, would farIts advantages."


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