Repeated attempts to reach a peace settlement for Austria failed because of Soviet and Yugoslav demands against Austria. To facilitate negotiations, the Western Allies renounced their own claims for German assets in Austria and made far-reaching concessions to Soviet claims for such assets, but the deadlock continued through 1949 and 1950.
General elections brought losses to both the People's Party and the Socialists, as many former Nazis rallied behind the new Union of Independents. Communist strength remained negligible. The coalition government of People's Party and Socialists remained substantially unchanged, despite their basic disagreement on economic questions.
The three Western powers withdrew their proposal for a short Austrian treaty and proposed a London meeting, Aug. 31, to prepare a full peace treaty for Austria, but the USSR rejected the invitation (Aug. 29).