THE WORLD BANK GROUP ARCHIVES PUBLIC DISCLOSURE AUTHORIZED

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1 THE WORLD BANK GROUP ARCHIVES PUBLIC DISCLOSURE AUTHORIZED Folder Title: Contacts with member countries: Austria - Correspondence 01 Folder ID: ISAD(G) Reference Code: WB IBRD/IDA 03 EXC S Series: Contacts - Member Countries files Sub-Fonds: Records of President Robert S. McNamara Fonds: Records of the Office of the President Digitized: February 15, 2013 To cite materials from this archival folder, please follow the following format: [Descriptive name of item], [Folder Title], Folder ID [Folder ID], ISAD(G) Reference Code [Reference Code], [Each Level Label as applicable], World Bank Group Archives, Washington, D.C., United States. The records in this folder were created or received by The World Bank in the course of its business. The records that were created by the staff of The World Bank are subject to the Bank s copyright. Please refer to for full copyright terms of use and disclaimers. THE WORLD BANK Washington, D.C International Bank for Reconstruction and Development / International Development Association or The World Bank 1818 H Street NW Washington DC Telephone: Internet: PUBLIC DISCLOSURE AUTHORIZED

2 I i!ill\: II\ II!II li \Il l\ ill 1\ Ill!I ill 1\11\ \I\\ II \ A Other#: contacts with member countries : Austria - Correspondence 01

3 AUSTRIA

4 AUSTRIA 4/26-28/68 (Mont Tremblant Conference) 5/9-11/69 (Bilderberg) " 7/18/69 (Aspen - Eisen. Ex.) 5/20-22/70 (Paris) Paul Lendvai, Columnist "Financial Times", London, "die Tat", Zurich, "die Presse", Vienna Karl Czernetz, Member of Parliament and Chairman of the Foreign Affairs Committee Paul Lendvai, Columnist (see above) Anton Rauter, Principal, Cooperative College, the Training Institute of Konsumverband; Deputy Director, Cooperative Union, Vienna Representatives and Observers at OECD Meeting: Ernst Veselsky, Secretary of State, Federal Chancery Carl H. Bobleter, Head of the Permanent Delegation Guido Preglau, Director, General, Federal Chancery Georg Zuk, Director of the Federal Chancery Mme. Erna Sailer, Director of the Federal Ministry of Foreign Affairs Rudolf Willenpart, Director of the Federal Ministry of Commerce and Industry Permanent Delegation: Walter Gehr Michael Fi tz Franz Troji Herbert Traxl 1. 9/27/ /16/ /26/73 1/14/75 4/25-27/75 (Cesme, Turkey) 6/12-13/75 (Paris-Dev. Cte.) Dr. Hannes Androsch, Federal Minister of Finance Dr. Walter Neudoerfer, Director General, Ministry of Finance Franz Vranitzky, Adviser, Ministry of Finance Arno Halusa, Austrian Ambassador to the U.S. finance Minister Androsch Arno Halusa, Austrian Ambassador to the U.S. Dr. Walter Neudoerfer, Section Chief, Ministry of Finance Mr. Vranitzky, Adviser to the Minister Hannes Androsch, Finance Minister Walter Neudorfer, Ministry of Finance (Alternate Governor for the Bank) Franz Vranitzky, Adviser to the Minister of Finance Bilderberg: Alfons Dalma, ORF-Zentrum - Vienna Hans Igler, Federation of Austrian Industrialists - Vienna Franz Vranitzky, Ministry of Finance Hannes Androsch, Minister of Finance

5 /2/7~ H~nne~ And~osch, ~eder~l X!n~Ster of Finance Walter Neudoerter; Director General, Federal Ministry of Finance Gerhard Loidolt, Secretary, Federal Ministry of Finance 1/6-10/76 Hannes Androsch, Minister of Finance (Dev. Cte., Kingston) J 5. 10/5/76 (Manila) 5/10/78 1/30/80 Hannes Androsch, Federal Minister of Finance Karl Herbert Schober, Ambassador to the U.S. Amb. and Mrs. Schober, Dinner at the Embassy 6. 6/12/80 Hannes Androsch, Vice Chancellor and Finance Minister Messrs. Grasser, Menhofer, Schober, Sutter

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7 MEMORANDUM FOR THE RECORD SUBJECT: Austria Herr Dr. Hannes Androsch, Federal Minister of Finance for Austria called on Mr. McNamara at the Sheraton Park Hotel on Monday, September 27, 1971, at 2:50 p.m. The Minister had with him Dr. Neudoerfer, Mr. Vranitzky, and Mr. Victor Wolf. Sir Denis Rickett and Mr. Christoffersen were also present. J The Minister began by telling Mr. McNamara that the Austrian Government had taken all the action necessary to authorize the additional subscription of 437 shares in accordance with paragraph 2 of Resolution No. 258 of the Board of Governor~ entitled "Special Increases in the Subscription Capital Stock of the Bank". Mr. McNamara said that this was excellent news and thanked the Minister for his governme~t's action. Mr. McNamara then referred to the proposal that the World Bank might make a public issue in the Austrian market next year. There was some discussion about the timing of the issue. This would depend on the liquidity position of the Austrian banks which might be difficult in the first three months of the year. It should, in any case, be possible to fix a date for sometime in the first half of the year. Mr. McNamara said that while the Bank might have some preference for an early date, they would be quite ready to fall in with the wishes of the Austrian Government. The most important consideration was that the issue should be a success. We should not like t o repeat the experience of the Asian Development Bank where only some 11 or 12 per cent of the issue had been sold to the public. If this seemed likely to be the outcome, a private placement would be preferable. The Minister then asked Mr. McNamara for his views on the international monetary situation. He felt some anxiety that there would be too long a delay in finding a solution to the present difficulties. He had discussed this with Mr. Samuels at the State Department who had not held out much hope of early concessions from the United States, e.g. on the gold price or on the lifting of the surcharge. Mr. McNamara said that while this question was naturally not his responsibility, his own judgment was that progress was being made. The communique of the Group of Ten Ministers and Governors and the recent declarations of the U.S. Secretary of t he Treasury certainly gave the impression that the situation had improved since the London meeting. D. H. Rickett September 27, 1971

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9 MEMORANDUM FOR THE RECORD Subject: Visit of the Austrian Ambassador The Austrian Ambassador, Mr. Arno Halusa, who took up his appointment in Washington on August 31st last, called to see Mr. McNamara this afternoon at 5 p.m. Mr. Viktor Wolf, Alternate Executive Director for Austria, and I were also present. The Ambassador said that he was glad to have this opportunity of calling on Mr. McNamara. As Austrian Ambassador to the OECD, he had known many of his colleagues and predecessors. He said it was a pity that Mr. Wolf would be leaving so soon and that Austria would not, in future, be directly represented on the Bank Board. He would do what he could to maintain the link between his government and the Bank. Mr. McNamara said that he would be glad to see the Ambassador whenever he wished. He, also, was sorry that Mr. Wolf was leaving and felt that in many ways a two-year term for members of the Board was too short. The Ambassador then told Mr. McNamara of the decision of his government to borrow Sl billion from the National Bank of Austria to lend the equivalent, amounting to $45 million, to the World Bank, the Inter-American Development Bank, and the Asian Development Bank. The precise terms of the loan, including the rate of interest, remained to be settled. The amount involved was, however, a very considerable sum for the Austrian Government. Mr. McNamara said such a sum would be important to the World Bank but still more important was the evidence of support for the Bank's aims which it gave. He would be delighted to arrange for members of the Bank staf-f to discuss the details with the Austrian Government. Mr. Wolf said that the transaction would not need the approval of the Austrian Parliament. It was, however, necessary to treat the three banks on a common footing. There would be certain regulations which would have to be complied with. The Ambassador then raised the question of the future of interest rates. Mr. McNamara said that the Bank did not feel able to forecast the future of longterm rates and did not base its policies on any forecast of that kind. He did not feel able to predict what the future course of U.S. rates would be. While the rate was, to some extent, under the control of the Federal Reserve, the basic economic factors relating to prices, employment, etc., of which the Board's policy had to take account, were necessarily unpredictable. Mr. Wolf then referred to the application of Romania to join the Fund and the Bank and asked whether other Eastern European countries were likely to follow suit. Mr. McNamara said that the Romanians had first raised the question of membership with him in At that time it had looked as if there might be a possibility of a similar interest on the part of other Eastern Bloc countries such pres\ ent a

10 - 2 - as Hungary. He was not able to say whether that was the case now. It could not be assumed that the Romanian application had been made with the tacit consent of the U.S.S.R. In the long run, the Soviet Union, as well as other Eastern Bloc countries, would be bound to move closer to the West. He agreed with Mr. Wolf that for many countries the benefit of membership with the Bank lay in the field of technical advice and support in getting the right policies adopted. He thought that the Bank would need to become increasingly active in the field of non-project advice covering, for example, such matters as population control and income distribution, including taxation and the social services. J This led to a discussion of income distribution in India and Thailand in both of which countries the Ambassador had previously served. t. Mr. McNamara concluded by emphasizing once more the satisfaction of the Bank at the offer made by the Austrian Government and his willingness to send a Bank staff member to Vienna at any time to discus:, -~ ~ I D. H. F. Rickett October 16, 1972 cc: Mr. McNamara Mr. Aldewereld

11 TERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION Ci'..-""ICE OF THE PRESIDENT October 16, 1972 Mr. McNamara: Mr. Wolf and the Austrian Ambassador, Mr. Arno Halusa, will visit you.today at 5:00 pm. Mr. Wolf has indicated that they would like to discuss the upcoming borrowing in Austria (see attached note from Sir Denis). The Ambassador has just taken up his assignment and will be handling much of the contacts with the Bank after Mr. Wolf leaves. A brief biographical note is attached. AL

12 ARNO HALUSA Austrian Ambassador Over 60 Before coming to Washington, he was the Deputy Secretary-General, Foreign Office, in Vienna J Has held Ambassadorial posts in India, Thailand and other Asian countries. He was also Ambassador to the OECD in Paris. Mrs. Halusa is Thai.

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14 MEMORANDUM FOR THE RECORD March 28, 1973 AUSTRIA - IDA Discussions with Part I Countries Dr. Hannes Androsch; Minister of Finance of the Republic of Austria, called to see Mr. McNamara at 6:00 p.m. on Monday, March 26, The Minister had with him Austrian Ambassador Arno Halusa, Dr. Walter Neudoerf.er, Section Chief in the Ministry of Finance, and Mr. Vranitzky, Adviser to the Minister. Sir Denis Rickett was also present. The Minister said that there were three matters which he would like to discuss. The first was the p~oposal which his government had made to lend Sch 600 million _(equivalent- at present rates to $30. million) at a rate of interest of 4% and with. a final maturity of 15 years. This matter had already been settled in.principle. There were cer tain technical details to be settled with the Bank. This could be done.as soon as the Austrian Parliament had approved the necessary legislation which it.was hoped would be done sometime before the summer. Mr. McNamara said that we were extremely grateful to the Austrian Government for this.offer. He had informed the Board.of it. He would be quite ready to go ahead and to arrange for the necessary technical details to be settled at arty time which would be convenient to the Austrian Government. It was agreed that the.minister would send a message through the Ambassador as soon as legislation had been approved by the Austrian Parliament. The Minister said that his idea in mak~ng this proposal had been that this method might be used _by other governments also as a means of dealing with the dollar overhang. There had been much discussion of a link between development finance and reserve creation.. Given, however,.the size of the reserve currency balances already in existence, it seemed unlikely that additional reserves would need to be created for some time to come. It would be more logical, therefore, to try to find a link between development.finance and existing reserve currency balances, i.e. the dollar overhang. Central banks could not, of course, invest their reserves in concessionary loans. Joint action would therefore be needed by central banks and governments. Mr. McNamara said that he did not wish to anticipate the discussions which would be taking place at the meeting of the Deputies of the Committee of Twenty in May. He agreed with the Minister that the prospects for a link arrangement seemed doubtful given the uncertainties that existed about the uture exchange rate system and the probable future rate of SDR creation. On the other hand, he was doubtful to what extept it would prove po.ssible,. to find a link between development finance and existing reserve holdings. He,. himself,. had been in favor of accepting the offer made by the Austrian Government partly because of.the great value which it would have in setting an example to.other governments. It remained to be seen, of course, whether they would follow it.,.at any- rate precisely in that form. Undoubtedly, the size of present central ~ank reserves had made them more willing to subscribe to the World Bank's two-:year bond issues and we had: been able to borrow 'very large sums from the Bank of Japan. We had also found it easier to obtain permission from the German and Japanese Governments to borrow in their markets because of their large balanceof-payments surpluses. The borrowings from the Bank of Japan had been at a negotiated rate which was certainly favorable to the World Bank. The Minister then raised the question of economic assistance to North and South Vietnam. President has seen

15 r MEMORANDUM FOR THE RECORD March 28, 1973 l Mr. McNamara said that the Wo.rld Bank Group was ready to do whatever its members wished in regard to this question. They could, for example, make available technical assistance and, in cooperation with the Asian Development Bank, could organize a consultative group. There were, however, certain obstacles to be overcome. North Vietnam was.not a member of the Bank nor was it clea.r whether the Government of North Vietnam would wel.co"iii~. any. form of multilateral assistance. At present they.appeared.>to be unwtlling to accept economic aid except from the United States and from. Japan. The sitaat.ion might.be easier in relation to South. Vietnam. The. World Bank Group had not been active there while.the war was going on and while US economic assistance h.ad. been so large. In,the case of South Vietnam, ~ however, it would be_easy. to arrange for f;:echnical assistance and the formation of a consultative group if this was. generally.accep.t-able both. to the Vietnamese Government and to the prospective donor governlll~nts _. _,. The Minister said that _what. M~. McNamara had told him about the present attitude of North Vietnam confirmed what he had already heard through the Austrian Embassy in Peking. The third subj-ect raised by the Minister was a possible visit by Mr. McNamara to Vienna ~ - Wouid.he not pay such a visit wi.thin the next few months both for the purpose of discussions with the Austrian Government and to make a public speech~ Thi~ would help to win public support for the legislation which the Austrian Government would.be. submitting to Parliament. Mr. McNamara said, that he would very much welcome an opportunity to come to Vienna. Unfortunately, the period from now until the next Annual Meeting was for him the most.crowded part of the year. In. the last quarter-of the fiscal year there was always a v:ery. heavy load of lending op~ra.tions to. be approved by the Board. There were also.important discussions on the financial policy of.the Bank and the approval of.the budget for the coming fiscal year. He did not see how he could under~ake any fur.ther connnitments to travel in this p.eriod over and above the visits which he had promised sometime ago to make to Japan and to Tunisia. He :would, however, be.glad. to discuss the matter further w.ith the Minister at the time of the Annual Meeting in Nairobi.. After some further discussion,.the Minister accepted this. arrangement and agreed to keep in touch with Mr. McNamara through the Austrian Ambassador., D. H. F. Rickett Vice President cc: Mr. McNamara's Office (2) Mr. Aldewereld, VP - Finance Mr. Benjenk, VP - EMENA Mr. Rotberg, Treasurer DHFRickett:emcc

16 TO: FROM: SUBJECT: INTERNATIONAL DEVELOPMENT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCTION AND DEVELOPMENT OFFICE MEMORANDUM Mr. Robert s. McNamara 11 c -,\ ~. t1.a Denis Rickett ~ Meeting with Austrian Finance Minister INTERNATIONAL FINANCE CORPORATION DATE: March 23, 1973 I understand that you will be seeing Mr. Androsch, Austrian Minister of Finance, on Monday n~xt at 6 p.m. 2. I attach a note prepared by Mr. Hittmair showing the present position of our discussions with the Austrian Government about the loan which they have agreed to make to us amounting to the equivalent of S600 million ($30 million at current rates). The rate of interest is to be 4% and the final maturity 15 years. It has been agreed that the IBRD will be the borrower. A number of minor technical points are st ill outstanding but these will be settled as soon as the Austrian Parliament has passed the necessary legislation which is expected to take place either this month or next. 3. You, yourself, may like to raise with Mr. Androsch the question of the Fourth Replenishment of IDA. You might express appreciation for the helpful and cooperative attitude taken by the Austrian representative at the recent meeting of Deputies in London. You will have seen from the sunnnary which I sent you yesterday that Dr. Pilz said that her government would consider taking the same proportional share as in the previous replenishment and that, while she could not connnit her government at that meeting to the amount proposed of 1.5 billion Smithsonian dollars, she thought that when she had reported to her government they might be in a positio~ to accept this amount. 4. You might say to Mr. Androsch how useful the support and cooperation of his government will be and how much we hope that they will join in supporting a replenishment at a high level. Attachment (as stated) cc: Mr. Aldewereld, Vice President - Finance Mr. Benjenk, Vice President - EMENA as seen

17 INTERNATIONAL DEVELOPMENT I INTERNATIONAL BANK FOR ASSOCIATION RECONSTRUCTION AND DEVELOPMENT I OFFICE MEMORANDUM INTERNATIONAL FINANCE CORPORATION TO: Sir Denis Rickett - Vice President DATE: March 22, 1973 FROM: H.C. Hittmair - Deputy Treasurer1f- SUBJECT: AUSTRIA - Proposed loan from Government of Austria During the 1972 Annual Meeting in Washington the Austrian Minister of Finance, Dr. Androsch, mentioned the possibility that Austria would make a U.S. dollar loan to the World Bank at concessionary terms. The Austrian Government would purchase dollars from the Austrian National Bank for the equivalent of S 1 billion (dollar equivalent at current rates about $59 million) and would then lend these dollars to the World Bank, the Inter-American Development Bank and the Asian Development Bank at an interest rate of 4% and for final maturity of 15 years. The stated purpose for this offer was "to devote part of the dollar overhang to low cost development financing". The specific reason, however, probably was the poor showing of Austria in her official development assistance efforts. The terms offered by Dr. Androsch would meet the requirements of the DAC formula for official development aid which requires a minimum grant element of 25%. After Dr. Androsch returned to Austria his offer received wide publicity in the Austrian press. The idea was discussed and approved in the Council of Ministers; Austria's Minister for Foreign Affairs mentioned it in his speech to the U.N. General Assembly; and the Austrian Ambassador, Dr. Halusa, confirmed these developments during a visit with Mr. McNamara on October 16. On November 20 I visited Vienna on the suggestion of the Ministry of Finance to discuss some further points regarding the financing offer. In mid-december we received from the Ministry of Finance a formal written offer confirming the 4% interest rate and the 15 years final maturity and adding, further: (a) (b) (c) That the IBRD would receive the equivalent of S600 million (equivalent to about $30 million at current rates); That repayments of the loan in annual installments would start after 3 or 5 years resulting in an average life of 8 to 10 years, and that half of the loan amount would be made available in calendar year 1973 and the other half in Since the loan from the Austrian Government would be denominated in U.S. dollars we informed the U.S. Treasury about it after we had received the formal offer and obtained from them an approval in principle for the transaction.

18 Sir Denis Rickett March 22, 1973 On January 2, 1973 we cabled the acceptance of the offer subject to Board approval and informed the Austrian Ministry of Finance about the response from the U.S. Treasury. ) In order to go forward with the operation a law has to be passed by the Austrian Parliament authorizing the Minister of Finance to increase the national debt ceiling by S 1 billion. It was pointed out that due to a heavy legislative calendar there was little chance for passage of this law before March or April At this point we are waiting for notification that the law has been passed and for an invitation to complete the discussion about various technical details concerning the operation. HCHittmair:mb cc: Mr. Aldewereld Mr. Rotberg

19 SHORT CURRICULUM VITAE OF DR. HANNES ANDROSCH, FEDERAL MINISTER OF FINANCE OF AUSTRIA Born in Vienna, April 18, Studied at the Hochschule fur Welthandel (commercial -university) in Vienna from which he holds the degrees of Diplomkaufmann equivalent of Master's degree) and a doctorate. He is by training and profession an economic expert and tax adviser. Active in the youth movement of the Socialist Party in Austria, Chairman of the Organization of Socialist Students of Austria worked as an Economic Adviser for the Socialist Party in Parliament elected Member of Parliament from a Vienna district after election victory of the Socialist Party he was appointed Minister of Finance by the Federal Chancellor, Dr. Kreisky 1 (at 32 years old, the youngest man to hold this position in the history of the Republic). Dr. Androsch is married.

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21 MEMORANDUM FOR THE RECORD Meeting with Austrian Delegation, September 2, 1975 Present: Messrs. McNamara, Knapp, Androsch, Federal Minister of Finance, Neudoerfer, Director General Ministry of Finance, Loidolt, Secretary Ministry of Finance, and Friedrich Krieger, Alternate ED Mr. McNamara asked whether Austria supported the Third Window. said that it would. Mr. Androsch Mr. McNamara asked for Austrian support to VIDA. Mr. Androsch asked what the amounts would be. Mr. McNamara said that he would rather not give amounts at this stage but he foresaw that the VIDA should have the same proportion to donor GNP as originally envisaged for 4IDA. The Minister said that Austria was definitely interested in supporting VIDA. Mr. Androsch would also support the selective increase in capital. Mr. Androsch enquired about recent events in commodity financing. Mr. McNamara said that the Lome Convention was a step forward. The U.S. was now willing to establish a negotiation group on every major commodity and also to look into stabilization of export earnings. Mr. Androsch said that the Germans were still hesitant towards these proposals. Mr. McNamara agreed but said that there had been a major change in U.S. attitude. SB September 8, 1975

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23 MEMORANDUM FOR THE RECORD Meeting with Austrian Delegation October 5, 1976 Present: Messrs. McNamara Hannes Androsch (Federal Minister of Finance of Austria) Friedrich T. Krieger, (Alternate Executive Director for Austria) Mr. Androsch extended an invitation for Mr. McNamara to visit Austria. Mr. McNamara said that he would be delighted to come but that he would probably have to remain in Washington until the present financial crisis of the Bank was solved. Mr. McNamara said that Austrian support for IDA 5 replenishment above the $6.9-B earlier mentioned by Austria would be required next week in Kyoto. Mr. Androsch said that legislation for IDA 5 could not be passed by the Austrian Parliament before February or March 77. Mr. McNamara stressed that at this stage, Austrian support for the executive agreement was more important than legislative agreement, and that he hoped that Mr. Krieger could give such support next week. Mr. McNamara urged the Austrians to support the capital increase of the Bank. Mr. Androsch said that the Austrians were interested in co-financing arrangements with the IBRD and would like to send a small delegation to Washington for discussions of this matter. Mr. McNamara said that the Bank would be happy to enter into co-financing arrangements with Austria and would be delighted to receive the delegation. SB October 5, 1976

24 OFFICE OF THE PRESIDENT Meeting with Finance Minister Hannes Androsch, Austria, Jme 12, 1980 Present: Messrs. MCNamara, Androsch, Grasser, Menhofer, Schober, Sutter, stern, Benjenk Mr. Androsch said that he regretted Mr. MCNamara's decision to resign next year. He then enquired about follow-up action to the recommendations of the Brandt Commission Report. Mr. McNamara pointed to the Bank's work on the recommendations pertaining to the Bank. He expressed his concern about the very difficult aid situation in the UK and the U.S. and mentioned that Austria also seemed to have severe problems in increasing its aid; Austria's ODA/GNP ratio was only 0.19%, despite the strong support for aid provided by Messrs. Kreisky and Androsch. He said that on the whole the. Bank was moving ahead reasonably well. However, the institution would have to re-examine in the. near future whether it had set its sights high enough. Expansion of lending for energy, structural adjustment and China had to be considered. A number of difficult issues lay ahead for the 80s and it was time for a change in Bank leadership. Mr. Androsch enquired about possibilities for increasing Bank lending. Mr. MCNamara said that it would not be possible to obtain additional IDA arnomts over and above the $12 billion negotiated or IBRD amomts over and above the level of the general capital increase; however, there were several other possibilities; for example, a change in the Bank's extremely conservative gearing ratio should be considered as recommended by the Brandt Report. Mr. Androsch pointed to the practice of setting over-ambitious goals at international meetings. Mr. McNamara agreed that the setting of over-ambitious goals was rather counterproductive. Mr. Androsch enquired about Mr. McNamara's views on the Common Fund negotiations. Mr. MCNamara replied that no progress could be expected because both commodity agreements and the funding of such a fund were running into difficulties. In response to a question by Mr. Androsch, Mr. MCNamara said that there were no problems in finding a sufficient number of projects with high rates of return in developing countries. In other words, there was no limit of absorptive capacity in those countries. Mr. Androsch said that his Govennnent had no problem in finding the necessary public support in Austria for its strong commitment to IBRD and IDA; however, as Mr. MCNamara had pointed out, Austria had to improve its over-all aid perfonnance, particularly in view of the fact that Chancellor Kreisky had made a number of farreaching North/South proposals; naturally, critics were asking why Austria's own efforts were so limited. Mr. MCNamara said that the Bank was plaiuling to set a fund for energy financing in LDCs; Austria might be able to support such an undertaking. Mr. Androsch agreed; nrutual benefits of energy development might be more easily mderstood by the Austrian voters. Mr. Androsch agreed. CKW Jme 19, 1980

25 Biographical Information Hannes Androsch Vice Chancellor and Federal Minister of Finance Born: Status: Education: April 18, 1938, Vienna Married, two children Ph.D., University of Economics and Business Administration, Vienna Work Experience: Audit Assistant. Self-employed as a certified auditor and tax consultant. Secretary for economic issues of the Social Democratic Party's Upper and Lower House Caucus Elected member of the National Assembly Elected Federal Finance Minister Appointed as Vice Chancellor June 1980

26 BRIEFING PAPER UPDATE AUSTRIA I. BANK ISSUES (i) General Capital Increase Austria communicated its approval of the GCI by letter of October 15, Assuming a GCI of $40 billion, 7.5% paid in and an Austrian share of 0.82%, Austria's paid-in contribution to the GCI will be $22.8 million. After the GCI, Austria's share in the voting power will be 0.80%. (ii) IDA6 Austria increased its share from 0.65% in IDA5 to 0.68% in the $12 billion IDA6 replenishment. II. AID PERFORMANCE AND POLICIES Aid Performance Preliminary 1979 OECD information suggests that Austria's bilateral grants and multilateral contributions rose, while its official export credits at concessional terms fell in 1979 to onefourth of their 1978 level. As a consequence, the ODA/GNP ratio fell from 0.27% in 1978 to 0.19% in 1979 (on a note-deposit basis).

27 - 2 - Attitudes Towards Aid Notwithstanding Austria's disappointing aid performance, the country continues to play an active role in development politics as a constructive leader in conceptualizing aid. Chancellor Kreisky proposed at the UNIDO Conference, held in New Delhi in February 1980, that a new "Marshall Plan" be created whereby developed countries could help build infrastructure in the Third World. He said the plan would be similar to the large-scale aid plan under which the US helped the recovery of the ruined economies of Europe after World War II, "I agree that the conditions prevailing today are quite different, but the basic idea could be the same, namely, that counterpart funds generated by payments in the national currency of the recipient state for goods and services would accumulate and would then be available to that state for other economic purposes."

28 - 3 - III. POLITICAL AND ECONOMIC SITUATION Political Situation Mr. Kreisky's interest in international affairs has been especially focused on the Middle East. In March, he and several Cabinet officials, including Vice Chancellor Androsch, completed a trip to the Middle East; early in that same month, he announced that Austria had granted full diplomatic recognition to the Palestine Liberation Organization (PLO), a move that stirred indignation among conservatives because they had not been consulted -- an established practice in Austrian politics, notably in matters of foreign affairs and defense. Economic Situation The hitherto bouncy growth of Austria's economy seems to be slowing down. Since the last annual meeting brief (attached), Austria's economic situation seems to be worsening. The annual report on the Austrian economy, issued by OECD in February warned of "risks and uncertainties" in the 1980 outlook. Among other things, it predicted a slowdown in the growth of GNP, rising inflation, unemployment, plus t rade and budge t deficits.