840.50 Recovery/4–248: Telegram
The Ambassador in the United Kingdom (Douglas) to the Secretary of State
1331. 1. Embassy fully concurs with main points in analysis British trade and financial policy and British attitude toward European economic cooperation outlined Paris telegram 1633 March 281 but believes [Page 1080] economic issues raised Paris telegram involve questions major political policy.
2. British policy toward Western European Union and toward European cooperative economic arrangements has been pragmatic, ad hoc, and frequently undefined. It has been characterized by an empirical approach to economic and political problems as they arise, and by the absence of blueprints or what might be termed constitutional or institutional proposals. This approach has been evident in practically all phases of British policy toward Western Europe, from the Labour Party’s cautious attitude at the International Socialist Conference on ERP (Embtel 1197, March 232) to the thinking of the Foreign Office on the powers of the continuing CEEC organization (Embtel 1012, March 123).
3. In the political field, Bevin defined Western European Union in different ways in his January 22 speech to the House of Commons. It is now clear that Bevin’s varied definitions actually throw light upon, rather than obscure, the intent of British policy toward Europe. British have concluded formal defense treaties where immediately practicable (Benelux and France), will concentrate only on economic ties in other cases (Scandinavia), and will await further developments in still other instances (Italy). In spite of variety of techniques British are employing in “consolidating Western Europe”, two elements appear to be fundamental. First, British apparently do not now intend to go beyond traditional means of cooperation between governments in creating Western European Union, and do not now envisage any transfer of sovereignty to a supra-national body. Second, British policy in defense field in Western Europe is of course dependent upon and limited by US defense policy since British themselves are not in position to implement a Western European Union through effective military guarantees to their European neighbors.
4. In economic field, British policy is similarly pragmatic, and guided by consistent efforts to conclude most favorable economic deal for UK, more often than not regardless of economic pattern involved (a practice in which British could hardly be called exceptional to other European countries). British Government officials are extremely conscious that they are nearing end of margin of safety in their gold and dollar reserves and feel they must closely calculate every action to meet minimum needs of UK economy. Government officials are also aware that with continuing dollar drain by sterling area, ERP will at best be tight fit, and they are uncertain whether a viable British economy can in fact be achieved by 1951. As short-term necessity, [Page 1081] British have negotiated an elaborate array of bilateral trade agreements in order to insure essential imports and conserve dollars. Nevertheless, Embassy believes British consider multilateral trade pattern as basic long-term objective.
5. With respect to specific European cooperative arrangements collateral to ERP, i.e. continuing CEEC organization, European Customs Union, and multilateral clearing agreement, British seem torn between advantages of independent action and demands of other European countries. Although never officially admitted, we suspect British may feel that they would retain stronger position by dealing bilaterally with US regarding ERP program rather than dealing through multilateral organization where UK programs would be subject to comparison and scrutiny by all European CEEC participants. However, British attitude toward continuing CEEC organization also rests on firm British sense of “the practical”, experience with combined boards, UNRRA, and ECE, and on implicit assumption that no transfer of sovereignty will be made to CEEC organization. Regarding European Customs Union, we believe British are still uncommitted and will decide whether they wish to pursue active steps to realize Customs Union only after careful analysis of effects union would have on British economy. Because of strong popular feelings on question of imperial preferences, British will doubtless also insist that Customs Union would have no adverse effects on British economic relations with the Dominions and Empire. British have been cool toward multilateral clearing agreement because of a desire to maintain maximum freedom of action.
6. Embassy believes British consider political unification would eventually be a necessary complement to economic integration of Western Europe, but are reluctant to agree to principle of political unification because of complex and difficult adjustments that would be involved in UK–Commonwealth relations.
7. It seems to us British have not yet decided whether they should throw in their lot with Western Europe and work unremittingly for complete economic integration of Western Europe or whether they will continue luke-warm attitude toward cooperative measures while making every effort to retain ties with Empire–Commonwealth and attempting to deal bilaterally with US and other countries. If economic unification (which Embassy suggests can only be effectively achieved with political unification) of Western Europe is fundamental US objective, Embassy agrees with suggestion Paris telegram 1633 March 28 that high-level US–UK discussions are desirable (see Embtel 465 February 64). Such discussions might result in stimulating more [Page 1082] cooperative British attitude, especially as government is already under heavy pressure from public and many MPs of all parties to take more far-reaching steps with respect to Western European Union. Over 150 influential back-bench MPs of all parties have signed resolution calling upon government to propose immediate creation of a council of Western Europe with formation of an organic federation in Western Europe as ultimate objective.
8. Although British economic weakness is well known, we believe that she is the strongest of all the Western European countries, and is therefore the only one among them which can play a dominant role in pressing toward Western European integration. Should she play this role, as we believe she must, she may, however, need the influence of the US as a reinforcement. Accordingly, the Department and the administrator, when appointed may wish to reconsider former position with a view to the US becoming more actively engaged in the CEEC organization and in other measures designed to unify Western Europe.
Sent Department 1331; repeated Paris 130; airmailed Rome, Brussels, The Hague and Stockholm.