Administration for Soviet Property in Austria
Encyclopedia
The Administration for Soviet Property in Austria, or the USIA was formed in the Soviet zone of Allied-occupied Austria in June 1946 and operated until the withdrawal of Soviet troops in 1955. USIA operated as a de-facto state corporation
and controlled over four hundred expropriated Austrian factories, transportation and trading companies. USIA assets included formerly independent Austrian companies (ÖAF
), factories once owned by German corporations (AEG
) and former SS
enterprises (DEST
). At its peak in 1951 the conglomerate
employed around 60 thousand people, or 10% of Austrian industrial labor. USIA was exempt from Austrian tariffs, disregarded Austrian taxation, and could easily trade with Eastern Europe despite the Iron Curtain
and Western trade embargo
es. The extraterritorial corporation attempted to be self-sufficient and was very weakly integrated with the rest of Austrian economy
.
. Austria lost, in 1951 dollars, 200 million dollars worth of German industrial properties (out of total 1.5 billion). Plunder continued until the early summer of 1946, when the Soviet policy changed from taking Austrian assets to managing them for a profit. The Soviet Department for Investigation of German Properties compiled an inventory of remaining industrial assets in the Soviet zone (Lower Austria
, Burgenland
and eastern districts of Upper Austria
). June 27, 1945 the Soviet command transformed this Department into the Administration for Soviet Property in Eastern Austria (USIVA) and placed all industrial assets under its control. In 1947 the name was shortened to USIA. Its internal structure mimicked that of the Soviet cabinet, with nine divisions paralleling nine ministries of industries. No less than eleven ministries in Moscow had a say in USIA affairs.
Only one-tenth of USIA assets were, indeed, German. Others were historically Austrian properties, expropriated with ludicrous explanations or with no explanations at all. Expropriation of lands of the House of Esterházy was "justified" because, according to the Soviets, the knighthood of the Holy Roman Empire
conferred in 1806 qualified Esterházy as Germans rather than Austrians. Austrian government was forced to accept the fact but refused to legalize the expropriations through records in land and corporate registers. The Soviets used this refusal as a pretext for not paying Austrian taxes. Exact number of businesses under USIA control is subject to different interpretations. According to Austrian 1955 sources, there were 419 enterprises, of them 300 in the industry. A different source named 160 enterprises in 1954 (excluding the oil fields, transportation companies and trading outlets). The Soviets also operated Soviet Military Bank (SMB) which evolved from the Red Army field treasury. It tried to obtain an Austrian banking license but the government denied it in fear of Soviet influence over Austrian finances.
The number of employees varied from 22 thousand in 1946 to a peak of 60 thousand in 1951 and down to 36 thousand in 1955. A disproportionately high share of USIA staff were Austrian Communists
, especially after the 1950 Austrian general strikes
, when communists were fired en masse from non-USIA businesses. The strikes of 1950s were powered by organized pro-communist workers of the USIA factories in the Soviet sector of Vienna. The Soviets, however, placed business interests above "class unity" with Austrian Communists. According to Hugo Portisch, Soviet representatives in Austria were split over the 1950 strikes: some saw an opportunity to suppress the Western influence, while the USIA management had to meet production targets and opposed any disruption in the Soviet zone. Portisch wrote that Moscow intervened to defuse the situation and denied support to Austrian Communist.
USIA accounted for only 5% of national Austrian output and 30% of the Soviet zone output, but possessed significant or even monopolistic share is some industries: 60% in glass making, 43% in leather, 40% in iron and steel etc. The governments of Austria and the United States, anxious about Soviet influence, invested Marshall Plan
funds into competing businesses outside of the Soviet zone and the USIA monopolists gradually lost their advantage. The Soviets had no intention to invest their own funds into Austria, the sole exception being the oil field
s in Lower Austria
. As a result, Soviet-occupied territories lagged behind the rest of Austria in economic growth, their plant and equipment soon became "very much substandard for Austria". Some USIA-ran Austrian companies, fed up with Soviet control, simply moved their personnel and operations to the West, leaving the Soviets with empty shells (as was the case of Porr AG).
According to an investigation of USIA business in 1946–1955, 20% of its products were traded and consumed within USIA, 38% sold to Eastern Europe, 42% sold to non-USIA Austrian customers, and only 1% to Western European customers. The United States
suppressed USIA operations through a "neutralization plan" devised in 1947. An embargo
imposed by the United States on exports behind the Iron Curtain prohibited other Austrian businesses from selling their products to USIA, unless it guaranteed that the finished products will stay in Austria. Dealing with USIA, when allowed by the West, was problematic because valid legal title could not be enforced. Vienna City Hall informally banned municipal purchases of USIA products. Marshall Plan
money was deliberately deployed against USIA interests. Despite these problems USIA had a crucial and unfair competitive advantage. It was exempt of Austrian customs and foreign trade regulations. It routinely disregarded and evaded Austrian taxes and its trucking arm engaged in outright smuggling
. USIA products easily moved across the Iron Curtain, and could be sold at a profit and below fair market prices inside Austria. USIA retail shops in Vienna traded below market and were frequented by many Americans of modest means.
USIA operations declined since 1951. Between 1951 and 1955, over a hundred of its enterprises were shut down or merged. In 1955 Austria became an independent state
and the Soviet Union withdrew its troops. The assets of USIA were sold to the Austrian government for 150 million US dollars, paid with goods over six years. The oil fields were subject to a separate agreement, which cost the Austrians around 200 million dollars. All written documentation of USIA disappeared.
USIA profits withdrawn by the Soviets from Austrian economy, including the final payment agreed in the Austrian State Treaty
, are estimated at 1.072 billion U.S. dollars. Estimates of Soviet reparations in total range from 1.547 to 2.647 billion U.S. dollars. Per capita, Austria paid more reparations than any other Axis state
or territory. Soviet rule over the economy of Eastern Austria left a deep and lasting impression on the Austrians. The 1958 "Final Report" on USIA activities concluded that the sole purpose of USIA was "to exploit Austria's natural and human resources as possibly and systematically as possible ... exploitation in colonial style amid a highly developed European economy, the extent and economic success of which are astounding ... This economic enclave of the occupation economy in Austria was used to fortify the economic potential of its bloc
, to pursue its political objectives and, finally, to function as an economic bridge positioned directly opposite Western Austria and the Western World as a whole."
Government-owned corporation
A government-owned corporation, state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, or parastatal is a legal entity created by a government to undertake commercial activities on behalf of an owner government...
and controlled over four hundred expropriated Austrian factories, transportation and trading companies. USIA assets included formerly independent Austrian companies (ÖAF
ÖAF
ÖAF is an initialism for Österreichische Automobil-Fabrik, previously known as Österreichische Austro-Fiat, an Austrian car and truck manufacturer.-Austro-Fiat:...
), factories once owned by German corporations (AEG
AEG
Allgemeine Elektricitäts-Gesellschaft was a German producer of electrical equipment founded in 1883 by Emil Rathenau....
) and former SS
Schutzstaffel
The Schutzstaffel |Sig runes]]) was a major paramilitary organization under Adolf Hitler and the Nazi Party. Built upon the Nazi ideology, the SS under Heinrich Himmler's command was responsible for many of the crimes against humanity during World War II...
enterprises (DEST
DEST
The D. E. S. T. , was an SS owned company originally created to procure and manufacture building materials for state construction projects in Nazi Germany DEST was a subsidiary company of Amtsgruppe W of SS-Wirtschafts- und Verwaltungshauptamt...
). At its peak in 1951 the conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...
employed around 60 thousand people, or 10% of Austrian industrial labor. USIA was exempt from Austrian tariffs, disregarded Austrian taxation, and could easily trade with Eastern Europe despite the Iron Curtain
Iron Curtain
The concept of the Iron Curtain symbolized the ideological fighting and physical boundary dividing Europe into two separate areas from the end of World War II in 1945 until the end of the Cold War in 1989...
and Western trade embargo
Embargo
An embargo is the partial or complete prohibition of commerce and trade with a particular country, in order to isolate it. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, to elicit a given national-interest result from the country on which it is...
es. The extraterritorial corporation attempted to be self-sufficient and was very weakly integrated with the rest of Austrian economy
Economy of Austria
Austria is one of the 12 richest countries in the world in terms of GDP per capita, has a well-developed social market economy, and a high standard of living. Until the 1980s, many of Austria's largest industry firms were nationalised; in recent years, however, privatisation has reduced state...
.
Establishment
Occupation of Germany and Austria by the Soviet troops was followed by large-scale dismantling of former German equipment which was shipped to the Soviet Union as war reparationsWar reparations
War reparations are payments intended to cover damage or injury during a war. Generally, the term war reparations refers to money or goods changing hands, rather than such property transfers as the annexation of land.- History :...
. Austria lost, in 1951 dollars, 200 million dollars worth of German industrial properties (out of total 1.5 billion). Plunder continued until the early summer of 1946, when the Soviet policy changed from taking Austrian assets to managing them for a profit. The Soviet Department for Investigation of German Properties compiled an inventory of remaining industrial assets in the Soviet zone (Lower Austria
Lower Austria
Lower Austria is the northeasternmost state of the nine states in Austria. The capital of Lower Austria since 1986 is Sankt Pölten, the most recently designated capital town in Austria. The capital of Lower Austria had formerly been Vienna, even though Vienna is not officially part of Lower Austria...
, Burgenland
Burgenland
Burgenland is the easternmost and least populous state or Land of Austria. It consists of two Statutarstädte and seven districts with in total 171 municipalities. It is 166 km long from north to south but much narrower from west to east...
and eastern districts of Upper Austria
Upper Austria
Upper Austria is one of the nine states or Bundesländer of Austria. Its capital is Linz. Upper Austria borders on Germany and the Czech Republic, as well as on the other Austrian states of Lower Austria, Styria, and Salzburg...
). June 27, 1945 the Soviet command transformed this Department into the Administration for Soviet Property in Eastern Austria (USIVA) and placed all industrial assets under its control. In 1947 the name was shortened to USIA. Its internal structure mimicked that of the Soviet cabinet, with nine divisions paralleling nine ministries of industries. No less than eleven ministries in Moscow had a say in USIA affairs.
Only one-tenth of USIA assets were, indeed, German. Others were historically Austrian properties, expropriated with ludicrous explanations or with no explanations at all. Expropriation of lands of the House of Esterházy was "justified" because, according to the Soviets, the knighthood of the Holy Roman Empire
Holy Roman Empire
The Holy Roman Empire was a realm that existed from 962 to 1806 in Central Europe.It was ruled by the Holy Roman Emperor. Its character changed during the Middle Ages and the Early Modern period, when the power of the emperor gradually weakened in favour of the princes...
conferred in 1806 qualified Esterházy as Germans rather than Austrians. Austrian government was forced to accept the fact but refused to legalize the expropriations through records in land and corporate registers. The Soviets used this refusal as a pretext for not paying Austrian taxes. Exact number of businesses under USIA control is subject to different interpretations. According to Austrian 1955 sources, there were 419 enterprises, of them 300 in the industry. A different source named 160 enterprises in 1954 (excluding the oil fields, transportation companies and trading outlets). The Soviets also operated Soviet Military Bank (SMB) which evolved from the Red Army field treasury. It tried to obtain an Austrian banking license but the government denied it in fear of Soviet influence over Austrian finances.
The number of employees varied from 22 thousand in 1946 to a peak of 60 thousand in 1951 and down to 36 thousand in 1955. A disproportionately high share of USIA staff were Austrian Communists
Communist Party of Austria
The Communist Party of Austria is a communist party based in Austria. Established in 1918, it was banned between 1933 and 1945 under both the Austrofascist regime, and German control of Austria during World War II...
, especially after the 1950 Austrian general strikes
1950 Austrian general strikes
The Austrian General Strikes of 1950 were masterminded by the Communist Party of Austria with half-hearted support of the Soviet occupation authorities. In August–October of 1950 Austria faced a severe social and economic crisis caused by anticipated withdrawal of American financial aid and a sharp...
, when communists were fired en masse from non-USIA businesses. The strikes of 1950s were powered by organized pro-communist workers of the USIA factories in the Soviet sector of Vienna. The Soviets, however, placed business interests above "class unity" with Austrian Communists. According to Hugo Portisch, Soviet representatives in Austria were split over the 1950 strikes: some saw an opportunity to suppress the Western influence, while the USIA management had to meet production targets and opposed any disruption in the Soviet zone. Portisch wrote that Moscow intervened to defuse the situation and denied support to Austrian Communist.
Operations
USIA was initially managed by Red Army staff; since 1949 they were replaced by trained industrial managers. The organization was governed by a chief executive with three assistants for political, personnel, and commercial matters. USIA chiefs, on average, served two years before replacement. Over nine years of its history USIA had five chiefs, SMV (Soviet oil enterprise) had four chairmen, etc. At first the Soviets intended to integrate USIA enterprises into their own economy, but the futility of such and exercise soom became evident and they admitted the need to cooperate with the rest of Austrian economy.USIA accounted for only 5% of national Austrian output and 30% of the Soviet zone output, but possessed significant or even monopolistic share is some industries: 60% in glass making, 43% in leather, 40% in iron and steel etc. The governments of Austria and the United States, anxious about Soviet influence, invested Marshall Plan
Marshall Plan
The Marshall Plan was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to combat the spread of Soviet communism. The plan was in operation for four years beginning in April 1948...
funds into competing businesses outside of the Soviet zone and the USIA monopolists gradually lost their advantage. The Soviets had no intention to invest their own funds into Austria, the sole exception being the oil field
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...
s in Lower Austria
Lower Austria
Lower Austria is the northeasternmost state of the nine states in Austria. The capital of Lower Austria since 1986 is Sankt Pölten, the most recently designated capital town in Austria. The capital of Lower Austria had formerly been Vienna, even though Vienna is not officially part of Lower Austria...
. As a result, Soviet-occupied territories lagged behind the rest of Austria in economic growth, their plant and equipment soon became "very much substandard for Austria". Some USIA-ran Austrian companies, fed up with Soviet control, simply moved their personnel and operations to the West, leaving the Soviets with empty shells (as was the case of Porr AG).
According to an investigation of USIA business in 1946–1955, 20% of its products were traded and consumed within USIA, 38% sold to Eastern Europe, 42% sold to non-USIA Austrian customers, and only 1% to Western European customers. The United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
suppressed USIA operations through a "neutralization plan" devised in 1947. An embargo
Embargo
An embargo is the partial or complete prohibition of commerce and trade with a particular country, in order to isolate it. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, to elicit a given national-interest result from the country on which it is...
imposed by the United States on exports behind the Iron Curtain prohibited other Austrian businesses from selling their products to USIA, unless it guaranteed that the finished products will stay in Austria. Dealing with USIA, when allowed by the West, was problematic because valid legal title could not be enforced. Vienna City Hall informally banned municipal purchases of USIA products. Marshall Plan
Marshall Plan
The Marshall Plan was the large-scale American program to aid Europe where the United States gave monetary support to help rebuild European economies after the end of World War II in order to combat the spread of Soviet communism. The plan was in operation for four years beginning in April 1948...
money was deliberately deployed against USIA interests. Despite these problems USIA had a crucial and unfair competitive advantage. It was exempt of Austrian customs and foreign trade regulations. It routinely disregarded and evaded Austrian taxes and its trucking arm engaged in outright smuggling
Smuggling
Smuggling is the clandestine transportation of goods or persons, such as out of a building, into a prison, or across an international border, in violation of applicable laws or other regulations.There are various motivations to smuggle...
. USIA products easily moved across the Iron Curtain, and could be sold at a profit and below fair market prices inside Austria. USIA retail shops in Vienna traded below market and were frequented by many Americans of modest means.
USIA operations declined since 1951. Between 1951 and 1955, over a hundred of its enterprises were shut down or merged. In 1955 Austria became an independent state
Austrian State Treaty
The Austrian State Treaty or Austrian Independence Treaty re-established Austria as a sovereign state. It was signed on May 15, 1955, in Vienna at the Schloss Belvedere among the Allied occupying powers and the Austrian government...
and the Soviet Union withdrew its troops. The assets of USIA were sold to the Austrian government for 150 million US dollars, paid with goods over six years. The oil fields were subject to a separate agreement, which cost the Austrians around 200 million dollars. All written documentation of USIA disappeared.
USIA profits withdrawn by the Soviets from Austrian economy, including the final payment agreed in the Austrian State Treaty
Austrian State Treaty
The Austrian State Treaty or Austrian Independence Treaty re-established Austria as a sovereign state. It was signed on May 15, 1955, in Vienna at the Schloss Belvedere among the Allied occupying powers and the Austrian government...
, are estimated at 1.072 billion U.S. dollars. Estimates of Soviet reparations in total range from 1.547 to 2.647 billion U.S. dollars. Per capita, Austria paid more reparations than any other Axis state
Axis Powers
The Axis powers , also known as the Axis alliance, Axis nations, Axis countries, or just the Axis, was an alignment of great powers during the mid-20th century that fought World War II against the Allies. It began in 1936 with treaties of friendship between Germany and Italy and between Germany and...
or territory. Soviet rule over the economy of Eastern Austria left a deep and lasting impression on the Austrians. The 1958 "Final Report" on USIA activities concluded that the sole purpose of USIA was "to exploit Austria's natural and human resources as possibly and systematically as possible ... exploitation in colonial style amid a highly developed European economy, the extent and economic success of which are astounding ... This economic enclave of the occupation economy in Austria was used to fortify the economic potential of its bloc
Eastern bloc
The term Eastern Bloc or Communist Bloc refers to the former communist states of Eastern and Central Europe, generally the Soviet Union and the countries of the Warsaw Pact...
, to pursue its political objectives and, finally, to function as an economic bridge positioned directly opposite Western Austria and the Western World as a whole."