OUTLOOK FOR AN INDEPENDENT AUSTRIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP98-00979R000200730001-9
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 23, 2016
• Document Release Date: January 15, 2014
• Sequence Number: 1
• Publication Date: August 23, 1955
• Content Type: NIE

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Nit 20-33
23 August 1955
SECRET
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 25-55
(Supersedes NIE 25-54)
OUTLOOK FOR AN INDEPENDENT AUSTRIA
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 23 August 1955. Concurring were the Special Assistant,
Intelligence, Department of State; the Assistant Chief of
Staff, G-2, Department of the Army; the Director of Naval
Intelligence; the Director of Intelligence, USAF; and the
Deputy Director for Intelligence, The Joint Staff. The Atomic
Energy Commission Representative to the IAC, and the
Assistant Director, Federal Bureau of Investigation, abstained,
the subject being outside of their jurisdiction.
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CENTRAL INTELLIGENCE AGENCY
DISSEMINATION NOTICE
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June 1953.
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
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to an unauthorized person is prohibited by law.
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OUTLOOK FOR AN INDEPENDENT AUSTRIA
THE PROBLEM
To estimate post-treaty Austria's probable policies and courses of action, and its
ability to maintain internal stability and independence.
CONCLUSIONS
1. After 17 years of foreign occupation,
Austria is regaining sovereignty with a
high degree of confidence in its future.
Despite markedly different views and mu-
tual antagonisms, the conservative Peo-
ple's Party and the Socialists have main-
tained a stable postwar coalition govern-
ment. However, the end of the occupa-
tion will remove a powerful cohesive
force, and give rise to complex problems
which will strain coalition unity. (Paras.
7, 13-14)
2. Nevertheless, the coalition will prob-
ably maintain its unity at least until the
next general election, to be held not later
than February 1957. The persistence of
party loyalties and the fairly rigid social
pattern in Austria will militate against
either major party winning a parlia-
mentary majority in the election. In the
event that either party should gain an ab-
solute majority of seats, it could probably
not resist the natural temptation to gov-
ern alone. However, as long as relatively
favorable economic and international
conditions prevail, moderate forces in
Austria will remain vigorous enough to
insure the maintenance of political de-
mocracy and stability. As a consequence
of the Soviet withdrawal, Communist
Party strength ? already low ? will al-
most certainly decline. (Paras. 15-18)
3. Austria has favorable economic pros-
pects though it remains highly vulner-
able to adverse conditions of world trade.
The restoration of independence will have
a stimulating effect on investment, pro-
duction, and exports. Provided inflation-
ary pressures are checked, we believe that
Austria can probably overcome its short-
run balance of payments difficulties and
liquidate its sizeable economic obligations
under the State Treaty. Under such cir-
cumstances, and barring a marked de-
crease in world demand for Austrian
products, over the longer term Austria's
rate of economic growth will probably
exceed the Western European average.
(Paras. 19, 28)
4. The proportion of Austrian trade with
the Bloc is not .likely to increase substan-
tially unless: (a) the Bloc is able to sat-
isfy Austrian import requirements far
more adequately than in the past; (b) in-
flation makes Austrian goods noncompet-
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itive in Western markets; or (c) Western
demand for Austria's products declines
for other reasons. (Para. 27)
5. Most Austrian political leaders agree
that their country needs a military es-
tablishment adequate to support a policy
of genuine neutrality. Austria will prob-
ably hold to its program of building up
the army to the level of 55,000 men, but
political and economic considerations al-
most certainly will prevent this from be-
ing accomplished within the presently
contemplated two-year period. (Paras.
31-32)
6. The Austrians face the problem of try-
ing to retain the moral and political sup-
port of the Western Powers while avoid-
ing actions which might dangerously an-
tagonize the Soviet Bloc. Therefore, in
foreign policy they will seek to maintain
a delicately balanced position between the
two great power blocs, and to exploit their
independent role for whatever advantage
can be gained from either side. Concern
for its neutrality and fear of provoking
the USSR will inhibit Austria's military
cooperation with the West. (Paras. 35,
37)
DISCUSSION
7. After 17 years of foreign occupation, Aus-
tria is regaining sovereignty with a high de-
gree of confidence in its future. Nearly 10
years of stable coalition government, con-
tinuous economic improvement, and bitter
experience with political extremism have given
Austrians a new faith in democratic processes.
The Nazi and Soviet occupations have con-
tributed to a marked reduction in pan-Ger-
man sentiment and to a vigorous dislike of
Communism.
8. Austria has natural affinities with the
West and is anxious to participate in Western
European-economic and political institutions.
However, Austria is also eager to improve its
relations with the Succession States of the
Hapsburg Empire, all of which are now domi-
nated by Communist regimes. Austria avoids
taking sides in the international conflict, not
only because of the State Treaty, but also
from inclination. Austrians regard the end-
ing of their occupied status as due in large
measure to their moderation and ability to
compromise, and believe that their independ-
ence can best be preserved through continu-
ing conciliatory and flexible policies toward
their neighbors and the great powers.
I. POLITICAL TRENDS
The Current Political Scene
9. Since 1945, Austria has been governed by
a moderate coalition composed of the two
major political parties, the conservative Peo-
ple's Party and the Socialist Party. Approx-
imately equal in strength, these parties won
83 percent of the vote in the 1953 national
election, and they control 147 of the 165 seats
in the Nationalrat.
10. The People's Party. In the 1953 election
the People's Party gained 41 percent of the
vote and 74 seats in the Nationalrat. Chan-
cellor Raab, Foreign Minister Figl, and five
other cabinet members are the party's lead-
ing representatives in the government. The
People's Party derives its strength from the
farmers, big business, and practicing Cath-
olics of all social classes. In effect, the party
stands for state-regulated capitalism. It op-
poses public investment, advocates higher
prices for farm products, and favors partial
denationalization of heavy industry. The high
prestige of Raab and Figl resulting from their
successful negotiations on the State Treaty
may have checked the moderate decline in
the party's strength since 1949.
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11. The Socialist Party. The Socialists won
42 percent of the vote and 73 Nationalrat
seats in the 1953 election. President Koerner
and six cabinet ministers, including Vice
Chancellor Schaerf, are Socialists. The So-
cialist Party represents the vast majority of
Austrian labor and segments of the lower
middle class. The party advocates social and
labor legislation and a high level of public
investment. The political militancy of the
workers has declined as they have moved clos-
er to the middle class in economic status.
Moreover, the party has in practice aban-
doned Marxism and has adopted moderate
programs designed to attract a wider segment
of the population. The Socialists nevertheless
retain their highly disciplined organization.
Recent local elections, as well as national elec-
tions since 1949, have demonstrated a small
upward trend in Socialist strength.
12. The extremist parties. The parties of the
extreme right and left have been ineffective
in postwar Austria. The rightist Independ-
ent Party, composed of political malcontents
and pan-German nationalists of the upper
middle class, received 11 percent of the vote
and 14 seats in the Nationalrat in 1953. How-
ever, as a result of its negative policies and
weak leadership, the party now appears to be
on the verge of disintegration. Austria's Com-
munist Party is one of the least effective in
Europe. Its proportion of the national vote
has remained static at about five percent since
1945, and it had an estimated membership of
60,000 in 1954. The party has four seats in
the Nationalrat. Communism has suffered
in Austria from the excesses of the Red Army,
from prolonged Soviet obstruction of the State
Treaty, and from the traditional preference of
the workers for the Socialist Party. The pend-
ing withdrawal of Soviet occupation forces
is already having a demoralizing effect on
the party, especially on those persons in East-
ern Austria for whom party membership was
a matter of political expediency.
13. The coalition. The People's Party and the
Socialists have maintained their coalition over
a decade, both because they were virtually
equal in strength and because the delicate
task of governing an occupied country im-
posed a special need for presenting a united
front in bargaining with the occupying pow-
ers. Although the two parties differ mark-
edly in their basic social and economic views,
they have successfully surmounted serious
policy clashes and have preserved a moderate
government. The parties have maintained a
balance of power within the coalition by shar-
ing evenly in the distribution of the posts at
the disposal of the government.
The Short-Term Political Outlook
14. The end of the occupation will not only
remove a powerful cohesive force, but will pre-
sent the Austrian government with some com-
plex problems which will strain coalition
unity. The People's Party and the Socialist
Party will continue to disagree fundamen-
tally on the problem of financing and control-
ling investment. The People's Party will advo-
cate conservative policies designed to attract
foreign capital and to restore the domestic
capital market. The Socialists will press for
a high level of public investment financed by
taxation. The specific issue most likely to
strain coalition unity is the handling of the
vast complex of properties which the USSR
has agreed to restore to Austria. The People's
Party is strongly opposed to placing them
under the Socialist Minister of Nationalized
Industries, lest the Socialists thereby gain a
dominant influence on the economy and ob-
tain political advantages from patronage.
However, because these firms will be in need
of substantial public capital investment, some
form of state control appears to be inevitable.
This dispute may be solved by a compromise;
e.g., by giving the Socialists control over the
oil properties through the Ministry of Nation-
alized Industries and giving the People's Party
control of most of the remaining enterprises
through the Ministry of Finance.
15. The approach of the next general election,
which is to be held not later than February
1957, will almost certainly generate intense
rivalry as both the major parties strain to
achieve a parliamentary majority. However,
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the widespread satisfaction with the present
division of political power, the eagerness of
both major parties to share in the advantages
of government positions, and the experience of
collaboration and compromise through the
past decade indicate that Austria's present
moderate leaders probably will not permit
party competitive differences to go so far as
to lead to dissolution of the coalition prior to
the election.
Longer-Term Prospects
16. Strong competition between the People's
Party and the Socialists will continue to char-
acterize Austrian political life for the foresee-
able future. The Socialists may continue their
slow but steady gains in the next election,
although their rate of progress may be re-
duced by the great personal popularity which
People's Party leaders Raab and Figl attained
as a result of the conclusion of the State
Treaty. The persistence of party loyalties and
the fairly rigid social pattern in Austria will
militate against either major party winning
an absolute parliamentary majority. If the
Socialists were to win a plurality, their subse-
quent efforts to gain the chancellorship prob-
ably would result in heated and prolonged
negotiations. However, despite the theoretical
possibility of an alternate coalition between
the People's Party and the remnants of the
Independents, we believe that both major par-
ties would agree to reconstitute the coalition
government.
17. In the event that either party should gain
an absolute majority of seats, it could prob-
ably not resist the natural temptation to gov-
ern alone. However, as long as relatively fav-
orable economic and international conditions
prevail, moderate forces in Austria will re-
main vigorous enough to insure the mainte-
nance of political democracy and stability.
18. As long as Austria maintains its economic
health the small parties of the extreme right
and left appear to have virtually no chance
of increasing their present limited political
effectiveness or popular support. The next
general election will almost certainly result
4
in a further decline of Independent Party
strength. Many of the conditions that once
fostered right-wing extremism have been elim-
inated, and the fragmented Independents will
probably drift to both major parties. The
outlook for the Communist Party following
the Soviet withdrawal is bleak; its strength
will almost certainly decline at the next gen-
eral election. However, in the event of mark-
edly deteriorating economic conditions in the
post-election period there would be a substan-
tial increase in the number of Austrians who
would be willing to adhere to an extremist
political organization with pan-German ten-
dencies. Under those conditions, Communist
strength might also increase.
II. ECONOMIC TRENDS
19. As a result of extraordinary recovery and
industrial expansion, assisted by over one bil-
lion dollars in US aid, the Austrian economy
is in a much stronger position than it was in
1937. The prewar conviction of the Austrians
that their country did not form a viable eco-
nomic unit has been largely dispelled. How-
ever, even more than most Western European
countries, Austria is highly vulnerable to
shifts in world economic conditions.
20. Current conditions. Austria's GNP in US
FY 1955 (converted at the official exchange
rate) is estimated to have been about $3,350,-
000,000. Although this represents an increase
of 40 percent over 1937 in real terms, per cap-
ita GNP is still below the Western European
average. Industrial production has doubled
since 1937, while agricultural production is
only slightly above prewar levels. Employ-
ment in the inflated services sector of the
economy has been sharply reduced, while in-
dustrial employment has been expanded. At
present about 40 percent of the labor force
is employed in industry and about 32 percent
in agriculture. Wartime investments by Ger-
many, postwar US aid, and additional govern-
ment expenditures have brought about a
marked shift from the manufacture of con-
sumer goods to that of capital goods. Aus-
tria's substantial resources of timber, ores,
fuel, and hydroelectric power have been de-
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veloped. Two major new industries, petro-
leum and aluminum, were also developed dur-
ing World War II. These large investments
and new enterprises have laid the basis for
further gains in productivity and general eco-
nomic growth.
21. On the other hand, Austria's economic
growth and stability remain subject to certain
handicaps: (a) industrial, agricultural, and
labor elements seek to protect themselves with
rigid regulatory systems which hamper ad-
justment to new conditions and render the
economy vulnerable to inflation; (b) low in-
comes and fear of currency depreciation make
it difficult to mobilize investment funds with-
out recourse to inflationary financing; and (c)
Austria's heavy dependence on foreign trade
makes it extremely vulnerable to any decline
in world economic activity or to any retro-
gression in the trade liberalization policies of
the West.
22. Heavily dependent on imports of indus-
trial raw materials and food, Austria at the
close of World War II faced serious problems
due to unfavorable terms of trade and the
shrinkage in its traditional Eastern European
markets. With the help of US aid, Austria
has adjusted to these problems. The volume
of all exports in 1954 was 77 percent greater
than in 1937, while imports had risen by only
21 percent. Austrian trade has been redirect-
ed toward the West. Trade with Eastern Eu-
rope has declined from 33 percent of the total
in 1937 to about 9 percent. However, Austria
still receives a significant proportion (about
20 percent) of its coal imports from the Satel-
lites.
23. Growth in purchasing power, combined
with relaxed import restrictions and 1954 flood
damage, resulted in a greatly increased level
of imports in late 1954 and early 1955. Ex-
ports have not expanded enough to prevent a
substantial trade deficit, currently running at
an annual rate of about $200 million. As a
consequence, Austria's small 1954 surplus in
its European Payments Union cumulative net
position has been replaced by a growing defi-
cit, amounting to $86 million by May 1955.
Although prices have remained stable since
1952, the trade deficit, sharply expanded bank
credit, and the appearance of labor and ma-
terial bottlenecks recently caused the govern-
ment to raise the discount rate, to increase re-
serve requirements, and to defer certain pub-
lic investments in an attempt to contain in-
flationary pressures.
24. Economic effects of the end of Occupation.
Under the provisions of the State Treaty, Aus-
tria must pay the USSR ? either in goods or
in cash ? $25 million annually for six years
as compensation for the Soviet-controlled
(USIA) enterprises. Austria is also to de-
liver one million tons of petroleum annual-
ly to the USSR during the next ten years in
payment for the Soviet-held oil fields.' More-
over, the removal of occupation forces will
probably cause an annual loss of $45 million
in foreign exchange after allowance is made
for transfer of properties to productive pur-
poses. Additional imports of about $5 to 10
million may be required during the establish-
ment of a national army. This figure would
have to be substantially higher if Austria does
not receive grants of basic military equipment
from external sources.
25. Austria will therefore have a gross loss of
foreign exchange on the order of $80 million
annually. On the other hand, Austria gains
control over two-thirds of the present petro-
leum output and over the entire USIA output,
estimated at about 10 percent of total net
production of manufactured goods. There are
no concrete data on the profits or present con-
dition of the USIA and oil properties being
returned to Austria. However, the net accre-
tion of foreign exchange to Austria from the
oil properties may amount to as much as $15
million in the first year of independence, pro-
vided that oil production can be maintained
at the estimated present level of 3.4 million
tons annually. A roughly similar return will
be possible in succeeding years if production
keeps pace with growing domestic require-
ments. The total net accrual of foreign ex-
change to Austria from the USIA enterprises
Austria also is to make lump payments of $20
million for USIA inventories and of $2 million for
the assets of the Danube Steamship Company.
e
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may be about $12 million. Consequently, the
net adverse impact of the end of occupation on
Austria's balance of payments will probably be
roughly $50 million annually over the next
few years. However, this loss will probably
gradually be offset by expanded exports re-
sulting from economic growth, and by new
foreign investments which have been withheld
during the Soviet occupation. Meanwhile,
Austria's cushion of gold and dollar reserves
of about $330 million should be sufficient to
protect Austria's balance of payments, provid-
ed that domestic inflationary forces are kept
under control.
26. The restoration of Austria's independence
in itself will have only limited adverse effects
on internal financial stability. On an annual
basis, payments to the USSR probably will be
less than the estimated Soviet profits ex-
tracted from Austria in the recent past. The
creation of an Austrian Army on the scale now
planned may constitute an additional burden
of about $28 million in the first year and about
twice that amount in the second year. There
will also be capital requirements for the re-
habilitation of the oil and USIA properties;
but these expenditures will be small in relation
to Austria's total resources, and the invest-
ments probably will yield relatively quick re-
turns. However, since this additional effort is
required at a time when Austria's resources
are already strained by an economic boom, the
danger of a renewed inflationary spiral cannot
be excluded.
27. The predominately westward direction of
Austria's foreign trade is not likely to be sig-
nificantly altered by the nondiscrimination
provisions of the State Treaty. On the other
hand, Austrian cooperation with the West's
strategic trade controls will probably deteri-
orate. Austria's attempts to expand the over-
all volume of its trade will almost certainly be
accompanied by a special effort to increase its
trade with Eastern Europe. Nevertheless, the
proportion of Austrian trade with the Bloc is
not likely to increase substantially unless: (a)
the Bloc is able to satisfy Austrian import re-
quirements far more adequately than in the
past; (b) inflation makes Austrian goods non-
competitive in Western markets; or (c) West-
em demands for Austria's products declines
for other reasons.
28. Economic prospects. Austria's postwar
recovery has provided a strong base for fur-
ther economic growth. The restoration of
independence will have a stimulating effect on
investment, production, and exports. Provid-
ed inflationary pressures are checked, we be-
lieve that Austria can probably overcome its
short-run balance of payments difficulties and
liquidate its obligations under the State Trea-
ty. Under such circumstances, and barring a
marked decrease in world demand for Austrian
products, over the longer term Austria's rate
of economic growth will probably exceed the
Western European average.
III. MILITARY DEVELOPMENTS
29. The State Treaty does not limit the size
of the Austrian military forces, but does pro-
hibit the manufacture or possession of weap-
ons of mass destruction, guided missiles, and
certain other categories of arms. Austria is
committed not to join any military alliance
and not to permit the establishment of foreign
military bases on its territory.
30. Austria's security forces at present con-
sist of the Federal Police (16,500 men) in the
major cities, of the Gendarmerie (10,200) in
the rural areas, and of the Special Gendarm-
erie, a 6,500-man force trained in the Western
occupation zones. The Austrian government
plans to use the Special Gendarmerie as the
cadre for the new army. Its state of training
is excellent, although little training in infan-
try heavy weapons has been undertaken. Most
of its officers and many of its NCO's have had
extensive combat experience, in many cases
against the Soviet Army. Its loyalty is un-
questioned, and Communist penetration has
been negligible.
31. The creation of an army will probably
cause some dissension within the coalition
government. However, both major parties are
mindful of Austria's dangerous experiences
under similar conditions after World War I
and are attempting to minimize their differ-
ences. Austria's armed forces have been
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placed directly under the Chancellery. Basic
policy questions thus will be reviewed by
leaders of both major parties. There is also
coalition agreement on such issues as term of
military service, creation of a professional offi-
cer corps, establishment of reserves, and in-
troduction of a volunteer system. Most polit-
ical leaders agree that Austria needs an ef-
fective military establishment in order to pur-
sue a policy of genuine neutrality. Therefore,
we believe that the military issue of itself prob-
ably will not cause serious strains on coalition
unity.
32. The speed with which the army is created
will be limited by political and economic con-
siderations. The Socialists will insist on ex-
tensive political and parliamentary controls,
especially on army personnel policies. Both
parties will be influenced by budgetary con-
siderations and will be reluctant to endanger
economic expansion by diverting financial and
manpower resources to the army. Problems
involving parliamentary controls and the
army's organization also remain to be resolved.
Thus, while Austria will probably hold to its
program of building up the army to the level
of 55,000 men, this almost certainly will not
be accomplished within the scheduled two-
year period.
33. Present plans call initially for an army of
25-30,000 men. Organizational plans have
not yet been firmly established. Planned mili-
tary appropriations for the first year of the
build-up will barely cover the maintenance of
30,000 men. Government authorities have ac-
cepted the US stockpile of weapons and basic
equipment which has been held in readiness.
Further expansion will depend on the receipt
of foreign assistance. Although Austria would
prefer to rely on Western aid, it will be careful
to avoid any appearance of violating its neu-
trality, and therefore might be prepared to aC-
cept at least token Soviet military aid provid-
ed no strings were attached, and provided it
did not introduce too great an element of het-
erogeneity into the army's equipment.
34. The Austrian Army probably will not ex-
ceed a strength of 55,000 men in the foresee-
able future. The forces available after the
7
first year of independence probably will be
able to do no more than maintain internal
security. However, at its planned full strength
the army probably will be able to carry out
limited delaying actions in the event of inva-
sion.
IV. PROBABLE FOREIGN POLICY
35. Austria will seek to maintain a delicately
balanced position between the two great power
blocs, and to exploit its independent role for
whatever advantage can be gained from either
side. Austrians are vigorously pro-Western
but they face the problem of trying to retain
the moral and political support of the Western
Powers while avoiding actions which might
dangerously antagonize the Soviet Bloc. Aus-
tria believes that the present world balance of
power will enable it to maintain its neutral
position. Most Austrians believe that the de-
terrent power of the US will provide continued
protection, even though they hold to a strictly
neutral position on cold war issues, provided
only that Austria maintains its domestic anti-
Communist policy. Austria thus probably
hopes to be able to remain aloof in the cold
war and to benefit from Western protection
without paying the price either of an arms
contribution to NATO or of a strong military
effort of its own.
36. Under existing world conditions, Austria
will almost certainly remain alert toward the
internal Communist threat and will resist
subversive attempts by its Satellite neighbors.
Nevertheless, the Austrians may be especially
vulnerable to Bloc protests in connection with
granting asylum to future Iron Curtain refu-
gees. Without abandoning the principle of
asylum, the Austrian authorities will be likely
to make it increasingly difficult for new refu-
gees to reach or to remain in Austria. They
will, however, probably continue to cooperate
with Western agencies in supporting and re-
settling refugees now in the country. In keep-
ing with its policy of neutrality, Austria will
permit international Communist organiza-
tions to maintain headquarters or hold meet-
ings in Vienna so long as they do not endanger
internal security or governmental stability.
In order to offset this, Austria may encourage
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the establishment of international non-Com-
munist organizations in Vienna.
37. Concern for its neutrality and fear of pro-
voking the USSR will inhibit Austria's mili-
tary cooperation with the West. While a few
top-ranking officials may covertly discuss mil-
itary plans and dispositions with the West, it
is unlikely that any specific commitments will
be contemplated. The Austrians would prob-
ably calculate that: (a) substantial military
contacts with the West would involve an un-
necessary risk of antagonizing the Soviets; (b)
such contacts would not aid in halting a Bloc
invasion at the borders or in saving the large
population centers in the eastern half of the
country; and (c) the main weight of the
West's protective value lies in its deterrent
power which would operate regardless of any
Austrian military commitment.
38. Austria's relations with its non-Bloc neigh-
bors are likely to develop favorably despite oc-
casional disturbances stemming from such is-
sues as Italy's administration of the South
Tyrol. The State Treaty bans the return of as-
sets in Austria to former German owners. The
West Germans appear to be grudgingly aban-
doning hope of obtaining a satisfactory set-
8
tlement from, the Austrians for wartime Ger-
man capital investments. However, since Aus-
tria needs new investments and tourists, it
will seek to improve relations with West Ger-
many and probably will compensate many
Germans, especially those who made pre-Ans-
chluss investments.
39. Austria has indicated its intention of ap-
plying for membership in the United Nations
and in the Council of Europe, in addition to
maintaining membership in international
agencies such as OEEC and EPU. If the USSR
should oppose a policy of association with
Western organizations as being incompatible
with Austria's neutrality policy, the Austrians
nevertheless would probably feel safe in join-
ing, wherever they could point to the fact of
Swiss or Swedish membership. Austria may
also seek associate membership in the Coal
and Steel Community (CSC) . However, we
believe that it would not join the CSC in the
face of strong Soviet objection. Austria will
probably apply for membership in the East
Danube Commission in order to gain access
to the entire river and thus . make progress
toward restoring the Austrian prewar ship-
ping position.
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