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external evidences of Communist strength, particularly in Italy. Moreover, the prob-
lems raised by virtual encirclement of Austria by aggressive Soviet satellite nations are
beginning to take precedence in the minds of Austrian leaders over their concern
with obtaining withdrawal of the occupation troops. In order, however, to counter
Communist propaganda, it is likely that both Parties will continue to agitate publicly
for a treaty, although on a reduced scale and with reservations. Under present con-
ditions, the present coalition government will continue unchanged. Although the
Socialists are now believed to have sufficient support to win a narrow majority in a
new national election, they could not gain a practical working majority in the lower
house, and hence are most unlikely in the near future to precipitate a collapse of the
government which would call for elections. The negligible role of the Austrian Com-
munists is expected to continue unchanged.
While the USSR would be capable of communizing its zone of occupation by vio-
lence or by a forced partition of the country, such moves are unlikely in the near future.
From the Soviet point of view a putsch would seem undesirable because it would forfeit
western Austria to the US, UK, and France. On the other hand, it is probable that
a breakdown of the present treaty negotiations would cause the USSR to increase sub-
stantially its economic and political pressure on the government.
Under the circumstances, no drastic change in the Austrian economic situation
is anticipated, although in the event that shipments of food are interrupted, a major
crisis will arise in the food supply position in late May. The slow rise in the level of
industry is expected to continue, but Austrian industry cannot be expected to become
stable in less than four years.
7
SECRET
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"ocrText": "external evidences of Communist strength, particularly in Italy. Moreover, the prob-\nlems raised by virtual encirclement of Austria by aggressive Soviet satellite nations are\nbeginning to take precedence in the minds of Austrian leaders over their concern\nwith obtaining withdrawal of the occupation troops. In order, however, to counter\nCommunist propaganda, it is likely that both Parties will continue to agitate publicly\nfor a treaty, although on a reduced scale and with reservations. Under present con-\nditions, the present coalition government will continue unchanged. Although the\nSocialists are now believed to have sufficient support to win a narrow majority in a\nnew national election, they could not gain a practical working majority in the lower\nhouse, and hence are most unlikely in the near future to precipitate a collapse of the\ngovernment which would call for elections. The negligible role of the Austrian Com-\nmunists is expected to continue unchanged.\nWhile the USSR would be capable of communizing its zone of occupation by vio-\nlence or by a forced partition of the country, such moves are unlikely in the near future.\nFrom the Soviet point of view a putsch would seem undesirable because it would forfeit\nwestern Austria to the US, UK, and France. On the other hand, it is probable that\na breakdown of the present treaty negotiations would cause the USSR to increase sub-\nstantially its economic and political pressure on the government.\nUnder the circumstances, no drastic change in the Austrian economic situation\nis anticipated, although in the event that shipments of food are interrupted, a major\ncrisis will arise in the food supply position in late May. The slow rise in the level of\nindustry is expected to continue, but Austrian industry cannot be expected to become\nstable in less than four years.\n7\nSECRET"
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