The news, which I communicated to you the day before yesterday, that the Austrian Government would proclaim its intention to arm through an autonomous act and simultaneously on 2 June would announce a Starhemberg regency becomes more and more likely.

I suggest that we take an active part in this game. The fundamental idea should be to pit Schuschnig and his Christian-social Forces, who are opposed to a home front dictatorship, against Starhemberg. The possibility of thwarting the measures arranged between Mussolini and Starhemberg should be afforded to him, in such way that he would submit the offer to the government of a definitive German-Austrian compromise of interests. According to the convincing opinion of the leader of the NSDAP in Austria, Capt. Leopold, the totalitarian principle of the NSDAP in Austria must be replaced in the beginning by a combination of that part of the Christian-elements which favors the Greater Germany idea and the NSDAP. If Germany recognizes the national independence of Austria and guarantees full freedom to the Austrian national opposition, then as a result of such a compromise the Austrian government would be formed in the beginning by a coalition of these forces.

There should follow a gradual disintegration of the barriers erected between the two countries. The rearmament of the army would have to be effected in close cooperation with the German army even if material aid from Germany would be limited.

A further consequence of this step would be the possibility of the participation of Germany in the Danube pact, which would take the sting out of its acuteness due to the settlement of relations between Germany and Austria. such a measure would have a most beneficial influence on the European situation and especially on our relationship with England.

One may object, that Mr. Schuschnig will hardly be determined to follow such a pattern, that he will rather in all probability immediately communicate our offer to our opponents.

Of course, one should first of all explore the possibility of setting Schuschnig against Starhemberg through the use of "Go-betweens". The possibility exists. If Mr. Schuschnig will finally say "no" and makes our offer known in Rome, then the situation would not be any worse by that; but, on the contrary, the efforts of the Reich government to make peace with Austria would be revealed-without prejudice to other interests. Therefore even in the case of refusal this last attempt would be an asset. I consider it completely possible, that in view of the far spread dislike of the Alpine countries of the pro-Italian course and in view of the sharp tensions within the federal government [Bundesregierung], Mr. Schuschnig will grasp this last straw-always under the supposition that the offer could not be interpreted as a trap by the opponents, but that it bears all the mark of an actually honest compromise with Austria.

Assuming success of this step, we would again establish our active intervention in Central European politics, which, as opposed to the French-Czech and Russian political maneuvers, would be a tremendous success, both morally and practically.

Since there are 2 weeks left to accomplish very much work in the way of explorations and Conferences, an immediate decision is necessary.

The Reich Army Minister shares the opinion presented above and the Reich Foreign Minister wanted to discuss it with you, my Fuehrer.