Memorandum by the Director of the Office of European Affairs (Matthews) to the Under Secretary of State (Lovett)1
top secret

i. problem

To determine the probable course of developments in France and possible action by the United States in regard thereto.

[Page 718]

ii. discussion

Since the conclusion of the Bidault-Bevin-Molotov2 discussions in Paris which strengthened the anti-Communist forces in France, there have been two developments which have enabled the Ramadier Government to survive the immediate crisis arising from discussions of the Government’s economic program. The Prime Minister received his vote of confidence in the Assembly on July 4 of 331 to 247. The opposition was composed of the Communists and factions of the right-wing parties which are opposed to directed economy. This vote of confidence was followed by a similar vote in the Socialist National Council where Ramadier obtained a majority of 518 votes in his own party as compared with his previous party majority of 404 on May 7th. Even more significant, however, than this vote of confidence in Ramadier was the categorical position taken by the Socialist Council of opposing Communist reentry in the government. Socialists who had heretofore favored agreement with the Communists then stated that the attitudes of the Communist party and of the Soviet Union made the return of the Communists to the government impossible in present circumstances. The MRP has taken a similar stand against Communist participation in the government.
These developments have definitely strengthened the position of the present non-Communist government in France and it seems likely that it will hold together until after the parliamentary vacation commences, thus insuring its continuance in office until the municipal elections in September. Nevertheless the basic economic questions which brought on the crisis have not yet been solved and a way must be found to deal with threatened strikes and the chaotic state of wages and price levels. Furthermore, in spite of their setback in France and in the light of current general Communist offensive, it seems likely that the French Communist Party will continue its efforts to demonstrate that no economic stability is possible unless the party forms part of the Government and can utilize its presence there to achieve its ends. The foremost among these will surely be to sabotage the Bidault-Bevin program. Individual strikes in essential industries and services will no doubt continue to be encouraged by the party with little likelihood as yet, however, that they will resort to a general strike. Another possibility might be civil strife resulting from direct action on the part of either the Communists or the extreme Eight to seize power. In present conditions these extreme measures are not yet considered likely but they cannot be precluded.
Although as stated above the Ramadier Government will probably survive for the next few months it has not yet been able to assure economic stability for the country. It was able to weather the recent crisis largely because of the Soviet refusal to participate in the plan for European rehabilitation. This however, was somewhat fortuitous and Ramadier cannot count on other such circumstances in the future. In the event that the Communists are able through their utilization of strikes and similar tactics to bring on another crisis, it cannot be excluded that they would be successful the next time. In such circumstances their aim is clear and they would insist upon joining the government under conditions acceptable to them.
Although for the purpose of returning to the government they might be willing to accept fewer Ministries than they held previously, the fact that they would be able to force their return would give them increased power. Regardless of the individual portfolios they would demand, their influence would be exercised on national and foreign affairs not directly related to the Ministries they would hold. We can anticipate, however, that they will wish in particular to control the field of Industrial Production, Labor, Veterans, Agriculture and to have a voice in national defense, whether by claiming the Ministry itself or by seeking one or more of its components, such as War, Navy or Air. Further in accordance with the traditional Communist policy they will seek to obtain Interior and/or Foreign Affairs. In any event their influence within the government would constitute a veto over the conduct of foreign affairs insuring that France does not align itself in major foreign policy issues with the U.S. and Great Britain.
In such an eventuality, as previously, we would be confronted with a government in which Communist influence would be so strong as successfully to prevent the French Government not only from adopting an independent foreign policy, but from implementing the initiative which Bidault has taken in the plan for European rehabilitation.
This will mean that at international conferences France will be forced to assume positions which in the circumstances will be most advantageous to the Soviet Union. It would certainly restrict France’s position and prevent it from participating in any constructive application of any plan in Western Europe. Under these conditions, it is obvious that any program of European reconstruction would be doomed to failure and a policy of piece-meal assistance to individual countries still free from Communist control might have to be followed.

iii. recommendations as to u.s. action

A. Measures to support a non-Communist Government.

Faced with the economic difficulties outlined in this and previous memoranda, in addition to receiving its present allocations of bread [Page 720] grain from the (this?] country, the Ramadier Government may well require further external assistance even before an overall European program can be formulated and implemented by action on the part of the United States. During the critical period of the summer months there are two possible steps which might be taken in support of the non-Communist forces in France. As regards both of these, however, the U.S. Government is not in a position to act alone but should use its influence to secure their approval. The first of these relates to the second installment on the World Bank loan. When the first installment of $250 million was made available to France, the bank agreed to consider in October whether conditions in France would make possible the grant of an additional similar sum. These funds are urgently required by France and it would immeasurably strengthen the position of the government and enable it to withstand many attacks if the U.S. could assist France to obtain some assurance from the World Bank prior to September that its needs in this respect would be met before the winter.
The second relates to the question of coal and increased production in the Ruhr and particularly in the Saar coal fields. France has now proposed that Saar coal production be incorporated into the domestic production in France as a preliminary to the definitive incorporation of the territory. The details of this proposal and its relation to the supply of German coal both inside Germany and to other areas are not yet clear and we are endeavoring to ascertain in talks with the French and British experts the full effects of the present proposal. It is clear that no plan which would give France preferential treatment at the expense of other countries can be accepted by this country. It is to be anticipated that the minimum of any French proposal would be to increase the amount of coal France would take from the Saar, thereby reducing its share of Ruhr coal for which it pays dollars. Such an arrangement might cost the bizonal area $20 million a year in export proceeds. Although this might mean a heavy charge upon one administrative budget, on the other hand far more dollars may have to be found by this government in its own interests to support non-Communist elements in France. Furthermore, conversations looking toward the level of increase in German industry are about to result in an agreement between the British and ourselves with benefit to the economy of Germany and may result in decreased coal exports. If France cannot derive some compensating advantage in the reorganization of German economy, it will become a serious political problem for the present government and in this respect add to the difficulties facing it.
In another field, U.S. action can be most helpful. In view of the increased distortion by the Communist propaganda machine of the principal motives and objectives of the U.S., it will be necessary to contemplate a highly selective American information program coordinated with a long-range information program from the U.S. by radio. This must be accomplished by intensive cultivation of French newspapers by direct or indirect means.

B. Action in face of Communist participation in the government:

Should the situation in France develop in such a way that in an effort to reduce economic pressure upon the Government and weaken the Communist hold over the trade unions, the Socialist and MRP Parties might reverse their present stand and agree to a limited Communist participation in the Government. In our opinion this would be a dangerous admission of weakness on the part of the non-Communist elements; but if it is accomplished in such a way as not to give the Communists the control they seek and a virtual veto over French policy, we would not necessarily be obliged to write off France completely just because one or two Communists were in the Government. The situation would however require constant watching and the extent to which our present program of aid should be continued would depend upon developing circumstances.
The U.S. would have great difficulty in taking any vigorous course of action since the reentry of the Communists into the government would be substantially a French internal matter and any positive action on the part of this country at that time would no doubt serve to raise the cry of direct interference in French internal affairs and turn large sections of French public opinion against the U.S. In short, the situation created in France, as serious as it would be for U.S. interests, would not be one that would be susceptible of treatment by open official U.S. governmental action. It is a very good illustration of the difficulties we face at present in dealing with the tactics of invisible penetration and eventual capture of a modern democratic state by a resolute and well organized minority.
. . . . . . .
On the other hand, should the Communists achieve their end and return to the government in such a way as to exercise complete control over its policies, the U.S. could not continue to afford assistance to a French Government which would be in a position to sabotage any coordinated plan of European recovery. It would in all likelihood be necessary to recommend to the President that no further funds or additional material aid from this country should be forthcoming to assist any such government.

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C. Action in the event of civil strife or complete breakdown of French economy

There are two other possibilities which have not been covered in the foregoing discussions, namely, what should the U.S. do if the government by refusing to admit the Communists is faced with a complete breakdown of French economy induced by increased efforts on the part of the Communists to break the French parliamentary system and render any government incapable of exercising its authority, either through civil strife or complete collapse of French economy. It would be dangerous to state categorically in advance what should be the position of this government in such an eventuality. Should civil strife break out in France, however, as a result of direct action by the Communists in order to gain control of the government the degree of support and effective aid which the U.S. might afford the non-Communist faction would have to be governed by the circumstances existing at that time both in France and abroad. Whether we could afford to give a non-Communist government arms or military assistance which it might request can only be determined by the situation at the particular moment. Such aid should however not be precluded in advance.
The reverse of this situation might also occur if a Communist controlled government should be attacked directly by non-Communist elements probably under the leadership of General de Gaulle in a struggle to control France. The question of whether we should aid such a group and [to] what extent will similarly depend upon the circumstances of the conflict, the strength of the movement and popular support both in France and in this country.
In any event, consultation with the President, the Joint Chiefs of Staff and Congressional leaders, and in all likelihood, with the British Government should be undertaken immediately upon any such outbreak.
  1. A routing slip from Matthews to Assistant Secretary Armour and to Mr. Lovett, who became Under Secretary of State on July 1, bore the following notations: ‘Is this the sort of paper you wanted[?] H. F[reeman] M[atthews].” “Yes L[ovett].” “U—Mr. Lovett: It seems to me this covers the field very well and it is an excellent paper to have on record and for discussion. N[orman] A[rmour].”

    The paper was based in part on a memorandum of June 28 by Charles E. Bohlen, Special Assistant to the Secretary of State (851.00/6–2847).

  2. Georges Bidault, French Minister for Foreign Affairs, Ernest Bevin, British Secretary of State for Foreign Affairs, and Vyacheslav Mikhailovich Molotov, Minister of Foreign Affairs of the Soviet Union, met in Paris for discussions relating to the European Recovery Plan on June 27, 28, and 30, and July 1 and 2, 1947. For documentation, see pp. 296308.