The reduction in the conduct-of-relations activity is due to the elimination of the civilian supply program during fiscal 1955, the elimination of the special briefing and survey staff which is being absorbed within the organization, and the reduction of one position in the domestic staff. The reduction in the consular activity results from elimination of one American position in the Vienna consulate. The reduction in the administration activity results from the elimination of the civilian supply program and the elimination of 4 American and 14 local positions in general services activities. Overall reductions would have been greater were it not for the rent and utility rate increases on properties still under requisition, which went into effect, on the average, in December 1954. GENERAL STATEMENT Mr. THOMPSON. Since the budget was presented to you last year, the situation in Austria politically was highlighted by the developments in the Berlin conference early last year, in which the Russians made clear that they would not agree to an Austrian treaty unless the arrangements were made to leave their troops there, which the Austrians would not accept. I may say that since that time there has been nothing to indicate that they are disposed to agree to the treaty. Therefore, this budget is based on the assumption of the continuation of the occupation. On the economic side, the Austrians have had an exceptionally good year. They have balanced their budget, and their balance of payments is favorable at this time. They have reduced unemployment about 20 percent over the year before. They have generally been in the best shape that they have since the war. As far as their internal political situation is concerned, the government has remained stable, with the same coalition that has operated ever since the war. The Communists have never succeeded in getting over a 5-percent vote in Austria. The Austrians have stood up to the Soviet pressure. Senator KILGORE. Could I interrupt for a question there? Is there any possibility that the settlement of the Trieste question may affect their exports adversely? Mr. THOMPSON. No, sir. I think that a good bit of their traffic has been going through Bremen in increasing amounts. The amount that will go through Trieste will depend on two things. One is the freight rate to Trieste, and the other is the shipping available there. Now, some traffic might be diverted if the shipping available in Trieste should increase. But there is no way of knowing how that will be handled. As I point out in my statement, the favorable economic situation does have some uncertainties. Austria is very dependent on foreign trade, and in the closing months of the year the trade balance went rather heavily against them. We think that it is a little too early to tell what that means. In general, as I say, they have had an exceptionally good year. We have not given them any direct aid since 1953 and they have been able to build up a small reserve. QUESTION OF SOVIET POLICY Senator KILGORE. Are there any particular problems you have there? Mr. THOMPSON. Our main problem is the uncertainty as to what the Soviet policy will be. The Austrian Government does not operate like Germany, but operates throughout all of Austria as one country. In the last 6 months the Soviets have been following a tougher line and making some difficulties there. We are never quite sure of what their policy is going to be. Senator KILGORE. What is the attitude in Austria with reference to the troops we have there? Mr. THOMPSON. I think at the present time it is excellent. Particularly in the last few years, General Arnold, our commanding general there has been at great pains to improve relations and the main problem that we have is the one of housing. Apart from that, I think a remarkable job has been done. HOUSING SITUATION Senator KILGORE. What is the status now of the housing situation there? Mr. THOMPSON. The Army still has a large number of requisitioned housing. They have a building program and they are just finishing a number of units. They are releasing some requisitioned houses. Senator KILGORE. We had $1 million for staff housing in fiscal 1955, and what has that accomplished? Mr. THOMPSON. It is in the process of being built, and construction will start this summer. That is civilian houses and not military. Senator KILGORE. Who is building that, local contractors or American contractors? Mr. INGRAM. Under the foreign buildings operations procedures, there will be an American contractor who will be appointed. As a rule an American contractor will ally himself with a local contractor for the actual on-the-spot work. JUSTIFICATION OF INCREASED HOME LEAVE AND REPRESENTATION ALLOWANCES Senator KILGORE. For instance, I notice here in the 1956 estimate $1,900,000 for Austria, of which 2 items show an increase over 1955 allowances. There is home leave travel $100,000 or $33,500 greater than in 1955, and representation expenses $19,000 or $6,500 more than in 1955. What is the explanation of that last item? Mr. THOMPSON. You are speaking there of travel. I think that is the same explanation. Senator KILGORE. The change from the 3-year rotation to the 2 years. Mr. INGRAM. Yes, sir, for the home leave. |