'Freeborn' (ii) was the Allied overall plan for the occupation of Austria (1945).

Austria had been annexed by Germany in 1938, with the approval of most Austrians, but in 1943 the Allied powers agreed in the Declaration of Moscow that it would be regarded as the first victim of Nazi aggression, and treated as a liberated and independent country after the war.

Immediately after the end of hostilities, Austria, like Germany, was divided into four occupation zones and jointly occupied by the USA, UK, France and USSR and, like Berlin, Vienna was also subdivided and the central district administered jointly by the Allied Control Council.

Whereas Germany was formally divided into East and West Germany in 1949, Austria remained under joint occupation until 1955 when, following Austrian promises of perpetual neutrality, the country was accorded full independence on 12 May of that year, the last occupation troops departing the country on 25 October of the same year.

It was on 29 March 1945 that the first Soviet forces crossed the former Austrian border at Klostermarienberg in Burgenland, and on 3 April, at the beginning of the Soviet 'Vienna Offensive Operation' that the Austrian politician Karl Renner, then living in the southern part of Lower Austria, established contact with the Soviets. The Soviet premier, Iosif Stalin, had already assembled a future puppet government of Austrian communists in exile, but news of Renner’s availability changed Stalin’s mind in favour of the man already on the spot. On 20 April, and without any consultation with the Western Allies, the Soviets told Renner to form the provisional government of Austria. Seven days later Renner’s cabinet took office, declared the independence of Austria from Germany, and called for the creation of a democratic state along the lines of the Austrian First Republic (1919/38). One-third of Renner’s cabinet, including the secretaries of the interior and of education, were Austrian communists.

The Western Allies suspected that the Soviets were seeking to perpetrate what had by now become their standard political tactic of establishing a puppet regime, and did not recognise Renner’s administration. The British were particularly hostile, and President Harry S Truman of the USA, who believed that Renner was a trustworthy politician rather than a front for Soviet control, also denied him recognition. But Renner had secured inter-party control.

Meanwhile, as soon as the German forces had been expelled from any part of Austria, the Soviets used army troops and NKVD security personnel to comb the captured territories. By 23 May they reported arrests of 268 former Soviet army soldiers, 1,208 German troops and 1,655 civilians. In July and August the Soviets brought in four regiments of NKVD troops to tighten their control of Vienna and seal the frontier with Czechoslovakia. The replacement of combat units with the permanent occupation force only marginally improved the lot of the Austrians, who had suffered mightily under the control of the Soviets troops who had conquered their country.

Throughout 1945 and 1946, all levels of Soviet command tried, in vain, to contain desertion from and plunder by their forces. According to Austrian police records for 1946, 'men in Soviet uniform', usually drunk, accounted for more than 90% of registered crimes during a period in which men in US uniform accounted for between 5 and 7%.

French troops crossed the Austrian border on 29 April 1945, followed by the Americans and finally the British on 8 May. Until the end of July 1945 none of the Western Allies had first-hand intelligence from eastern Austria, where the Soviets ruled supreme. On 9 July the Allies agreed on the borders of their occupation zones in Austria: the Vorarlberg and North Tyrol were assigned to the French; Salzburg and Upper Austria to the south of the Danube river to the Americans; East Tyrol, Carinthia and Styria to the British; and Burgenland, Lower Austria, and the Mühlviertel area of Upper Austria to the north of the Danube river to the Soviets. The occupation zones were assigned so that the French and US zones bordered those countries' respective zones in Germany, and the Soviet zone bordered future Warsaw Pact states.

While Vienna was divided among the four Allies, the city centre was declared an international zone, in which the occupation forces changed every month. The movement of occupation troops in the so-called 'zone swap' lasted to the end of July. The first US forces reached Vienna at the end of July, at a time when the Soviets were pressing Renner to surrender the Austrian oilfields. The Americans objected and blocked the deal, but ultimately the Soviets seized control over all the Austrian oil in their zone. The British arrived in Vienna only in September. The Allied Council of four military governors thus convened for its first meeting in Vienna on 12 September and refused to recognise Renner’s claims for a national government, but did not prevent him from extending influence into the Western zones.

Renner appointed the vocally anti-communist Karl Gruber to represent Austria as its foreign secretary, and tried to reduce communist influence. On 20 October the Western Allies recognised Renner’s reformed cabinet, and authorised the first legislative election. The resulting vote took place on 25 November, and was a blow for the Austrian communist party, which received less than 5% of the vote. A coalition of the Christian Democrats (ÖVP) and Social Democrats (SPÖ), backed by 90% of the votes, assumed control over the cabinet and offered the federal chancellorship to Julius Raab, a Christian Democrat. The Soviets vetoed Raab, however, and President Karl Renner, with the consent of parliament, then appointed Leopold Figl, who was marginally acceptable to the Soviets.

The Soviet response was a massive and extensively co-ordinated expropriation of Austrian economic potential. The Allies' Potsdam Agreement of August 1945 allowed confiscation of 'German external assets' in Austria, and the Soviets used the vague nature of this definition to the full. In less than a year they dismantled and shipped to the east industrial equipment valued at around US$500 million. The US high commissioner, General Mark W. Clark, vocally resisted Soviet expansionist intentions, and his reports to Washington, together with the so-called 'Long Telegram' of George F. Kennan, a US foreign policy 'elder', supported Truman’s tough stance against the Soviets.

On 28 June 1946 the Allies signed the 2^nd Control Agreement, which loosened their control over the Austrian government. The Austrian parliament was de facto relieved of Allied control, and from this time onward its decisions could be overturned only by a unanimous vote of all four Allied powers, and thus the Soviet vetoes of Austrian laws were routinely voided by the Western opposition.

For the next nine years the country was gradually emancipated from foreign control, and evolved from a 'nation under tutelage' to full independence.

By a time early in 1946, the Allied occupation forces in Austria peaked at around 150,000 Soviet troops under the command of Marshal Sovetskogo Soyuza Ivan S. Konev, 55,000 British troops under Lieutenant General Sir Richard McCreery, 40,000 US troops under Clark, and 15,000 French troops under Général de Corps d’Armée Marie Emile Antoine Béthouart. The whole of the cost of keeping these troops was initially levied from the Austrian government, but in 1946 the occupation costs were capped at 35% of Austrian state expenditures, the yield equally split between the Soviets and the Western Allies.

At the time of the 2^nd Control Agreement, the Soviets changed their economic policy from outright plunder to running expropriated Austrian businesses for a profit, despite the advice of the Austrian communists to Stalin that the entire economy should be nationalised. Between February and June 1946, the Soviets expropriated hundreds of businesses left in their zone, and on 27 June 1946 amalgamated these into the USIA (Administration for Soviet Property in Austria), a conglomerate of more than 400 enterprises. This controlled no more than 5% of the Austrian economic output, but possessed substantial, or even monopolistic, share in the glass, steel, oil and transportation industries. The USIA was weakly integrated with the rest of Austrian economy: its products were primarily shipped to the east, its profits de facto confiscated and its taxes left unpaid by the Soviets. The Austrian government refused to recognise the USIA’s legal title over its possessions, and in retaliation the USIA refused to pay Austrian taxes and tariffs. This competitive advantage helped to keep USIA enterprises afloat despite their mounting obsolescence. The Soviets had no intention of reinvesting profits, however, and USIA’s assets thus gradually decayed and lost their competitive edge.

The economy of the Soviet zone was eventually reunited with that of the rest of the country. South Tyrol, a disputed territory in the Alps, was returned to Italy. The 'thirty-second decision' of the Council of Foreign Ministers to grant South Tyrol to Italy on 4 September 1945 disregarded popular opinion in Austria and the possible effects of a forced repatriation of 200,000 German-speaking Tyroleans. The decision was motivated largely by the British desire to reward Italy, a country far more important for the containment of world communism. Renner’s objections were too late and carried too little weight to have any effect. Popular and official protests continued through 1946, and the signatures of 150,000 South Tyroleans did not alter the decision.

In 1947, the Austrian economy, including USIA enterprises, reached 61% of its pre-war level, but its population had survived 1945 and 1946 on 'a near-starvation diet', and daily rations remained below 2,000 calories until the end of 1947. Some two-thirds of Austrian agricultural output and nearly all oil was concentrated in the Soviet zone, complicating the Western Allies' task of feeding the population in their own zones. From March 1946 to June 1947, 64% of these rations were provided by the United Nations Relief and Rehabilitation Administration, and heating depended on supplies of German coal shipped by the USA on easy credit terms. The drought of 1946 further depressed farm output and hydroelectric power generation. The severe winter of 1946/47 was followed by the disastrous summer of 1947, when potato harvest barely made 30% of pre-war output. Food shortages of 1947 were aggravated by the withdrawal of UNRRA aid, the spiralling inflation and the demoralising failure of state treaty talks. In April 1947, the government was unable to distribute any rations at all, and on 5 May Vienna was shaken by a violent food riot though, unlike earlier popular protests, on this occasion the demonstrators, led by the communists, called for the curbing of the westernisation of Austrian politics. In June 1947, the month in which the UNRRA stopped food shipments to Austria, the extent of the food crisis compelled the US government to issue US$300 million in food aid.

In the same month Austria was invited to discuss its participation in the Marshall Plan. Direct aid and subsidies helped Austria to survive the hunger of 1947. On the other hand, they depressed food prices and thus discouraged local farmers, delaying the rebirth of Austrian agriculture. Austria finalised its Marshall Plan programme toward the end of 1947 and received the first tranche of Marshall Plan aid in March 1948. What was left of Austrian heavy industry was concentrated around Linz in the US zone, and Styria in the British zone. Their products were in high demand in post-war Europe. Quite naturally, the administrators of the Marshall Plan channeled available financial aid into heavy industry controlled by the US and British forces. US military and political leaders made no secret of their intentions, and the Marshall Plan was deployed primarily against the Soviet zone, though this was not completely excluded as it received 8% of Marshall plan investments (compared to 25% of food and other physical commodities).

The Marshall Plan was not universally popular, especially in its initial phase. It benefited some trades, such as metallurgy, but depressed others, such as agriculture. Heavy industries quickly recovered, from 74.7% of pre-war output in 1948 to 150.7% in 1951. US planners deliberately neglected consumer goods industries, construction trades and small business. Their workers, almost half of Austrian industrial workforce, suffered from rising unemployment. In 1948/49, a substantial share of Marshall Plan funds allocated to Austria was used to subsidise food imports. US money in effect raised real wages of Austrian workers: grain price in Austria was at about one-third of the world price, while local agriculture remained in ruin. Marshall Plan aid gradually removed many of the causes of popular unrest that shook the country in 1947, but Austria remained dependent on food imports.

The second stage of the Marshall Plan, which began in 1950, concentrated on economic productivity. The programme, as ordained by US lawmakers, targeted improvement in factory-level productivity, labour/management relations, free trade unions and the introduction of modern business practices. The Economic Co-Operation Administration, which operated until December 1951, distributed some US$300 million in technical assistance and attempted steering the Austrian social partnership (political parties, labour unions, business associations and executive government) in favour of productivity and growth instead of redistribution and consumption, but these efforts were largely thwarted by the Austrian practice of making decisions behind closed doors. The Americans struggled to change it in favour of open, public discussion. They took a strong anti-cartel stance, and pressed the Austrian government to remove anti-competition legislation. But ultimately they were responsible for the creation of the vast monopolistic public sector of Austrian economy. Austria received nearly US$1 billion through Marshall Plan, and US$500 million in humanitarian aid. The USA also refunded to Austria all occupation costs charged in 1945/46, about US$300 million. In 1948/49 Marshall Plan aid contributed 14% of Austrian national income, the highest ratio of all involved countries. Per capita, aid amounted to US$132 compared to US$19 for each German. On the other hand, Austria also paid more war reparations per capita than any other Axis state or territory: the total of war reparations taken by the USSR, including withdrawn USIA profits, looted property and the final settlement agreed in 1955, are estimated between US$1.54 and US$2.65 billion.

The British had been quietly arming Austrian gendarmes since 1945 and discussed creation of a proper military with Austrians in 1947. The Americans meanwhile feared that Vienna could be the scene of another Berlin Blockade. They set up and filled emergency food dumps, and prepared to airlift supplies to Vienna, while the Austrian government created a back-up base in Salzburg. The US command secretly trained the soldiers of underground Austrian military at a rate of 200 men per week. The Gendarmerie knowingly hired Wehrmacht veterans and German members of the Verband der Unabhängigen (federation of independents), and the denazification of Austria’s 537,000 registered Nazis had largely ended in 1948.

The Austrian communists appealed to Stalin to partition their country along the German pattern, but in February 1948 Andrei Zhdanov vetoed the idea: Austria had greater value as a bargaining chip than as another unstable client state. The continuing talks on Austrian independence stalled in 1948 but advanced to a 'near breakthrough' in 1949: the Soviets lifted most of their objections, and the Americans suspected foul play. The Pentagon was convinced that the withdrawal of Western troops would leave the country open to Soviet invasion of the Czechoslovak model.

Clark insisted that before departure the USA must secretly train and arm the core of a future Austrian military. Serious secret training of the Austrian forces (the B-Gendarmerie) began in 1950 but soon stalled as a result of US defence budget cuts in 1951. Austrian gendarmes were trained primarily as an anti-coup police force, but they also studied Soviet combat practice and counted on co-operation with the Yugoslavs in case of an open Soviet invasion. Although in the autumn of 1950 the Western powers replaced their military representatives with civilian diplomats, the strategic situation became gloomier than ever.

The Korean War experience persuaded the USA that Austria might become 'Europe’s Korea', and accelerated the rearmament of the 'secret ally'. International tension was coincident with a severe internal economic and social crisis. The planned withdrawal of US food subsidies spelled a sharp drop in real wages for all Austrians. The government and the unions were deadlocked in negotiations, and this offered the Austrian communists the opportunity to organise the 1950 Austrian general strikes which became the gravest threat to Austria since the 1947 food riots. The communists disrupted railway traffic but failed to recruit sufficient public support and had to admit defeat. Neither the Soviets nor the Western Allies dared any active interference in the strikes. The strike intensified the militarisation of western Austria, this time with active input from France and the CIA.

Despite the strain of Korean War, by the end of 1952 the American 'Stockpile A' (A for Austria) in France and Germany totalled 227,000 tons of matériel earmarked for the Austrian armed forces.

The end of the Korean War and the death of Stalin defused the stand-off in Austria, and the country was rapidly, but not completely, demilitarised. After the USSR had relieved Austria of the need to pay for the cost of their reduced army of 40,000 men, the British and French followed suit and reduced their forces to a token presence. Finally, the Soviets replaced their military governor with a civilian ambassador. The former border between eastern and western Austria became a mere demarcation line.

Chancellor Raab, elected in April 1953, removed pro-western foreign minister Gruber and steered Austria to a more neutral policy. Raab carefully probed the Soviets about resuming the talks on Austrian independence, but until February 1955 it remained contingent on a solution to the larger German problem. The western strategy of rearming West Germany, formulated in the Paris Agreement, was unacceptable to the Soviets. They responded with a counter-proposal for a pan-European security system that, they said, could speed reunification of Germany, and again the West suspected foul play. President Dwight D. Eisenhower, in particular, had 'an utter lack of confidence in the reliability and integrity of the men in the Kremlin… the Kremlin is pre-empting the right to speak for the small nations of the world.'

In January 1955 the Soviet diplomats Andrei Gromyko, Vladimir Semenov and Georgi Pushkin secretly advised Vyacheslav Molotov to unlink the Austrian and German issues, expecting that the new talks on Austria would delay ratification of the Paris Agreement. Molotov publicly announced the new Soviet initiative on 8 February. He put forward three conditions for Austrian independence: neutrality, no foreign military bases and guarantees against any new Anschluss. In March, Molotov clarified his plan through a series of consultations with ambassador Norbert Bischoff: Austria was no longer a hostage of the German issue. Molotov invited Raab to Moscow for bilateral negotiations that, if successful, had to be followed by a conference of the 'Four Powers'.

By the time the Paris Agreements were ratified by France and Germany, yet again the British and Americans suspected a trap of the same sort that Hitler had set for Schuschnigg in 1938. Sir Anthony Eden and others wrote that the Moscow initiative was merely a cover-up for another incursion into German matters. The West erroneously thought that the Soviets valued Austria primarily as a military asset, when in reality it was a purely political issue. Austria’s military significance has been largely devalued by the end of the Soviet-Yugoslav conflict and the upcoming signing of the Warsaw Pact. These fears did not materialise, and Raab’s 12/15 April visit to Moscow was a breakthrough. Moscow agreed that Austria would be free not later than 31 December.

The Austrians agreed to pay for the 'German assets' and oilfields left by the Soviets, mostly in kind. Molotov also promised release and repatriation of Austrians imprisoned in the USSR. The Western powers were stunned, but the independence effort proceeded as agreed in Moscow. and on 15 May 1955 Antoine Pinay, Harold MacMillan, Molotov, John Foster Dulles and Figl signed the Austrian State Treaty. This came into force on July 27 and on 25 October the country was free of occupying troops.

The Soviets left to the new Austrian government a symbolic cache of small arms, artillery and T-34 tanks; the Americans left a far greater gift of 'Stockpile A' assets. The only person upset about the outcome was Konrad Adenauer, the West German chancellor, who called the affair 'die ganze Österreichische Schweinerei' (the whole Austrian scandal) and threatened the Austrians with 'sending Hitler’s remains home to Austria'.