CFM Files: Lot M–88: Box 180: GNSC Documents

Paper Prepared in the Division of Research for Europe of the Office of Intelligence Research 1

secret

DRE SP–2

Effects of Postponement of the Western German State

Postponement of the establishment of the Western German state envisaged by present tripartite commitments must be assumed to be [Page 195]linked with the holding of a Four-Power conference on Germany. It must further be presumed that postponement would have the effect of stopping the present discussions at Bonn, the elections and referenda to follow the promulgation of that constitution, and the organization of the legislature and government under it. On the Allied side, it is assumed that postponement would involve the ending of the current negotiations on the occupation statute. The carrying on of any of these German or Allied functions after the announcement of postponement would almost certainly involve Soviet allegations of breach of faith. Should the drafting of the German constitution and the negotiations among the Western Allies be completed before the postponement was announced, then only the promulgation and implementation of these instruments would be affected.

Postponement would also mean that the present bizonal German and Allied institutions would remain in operation and that consideration of tighter integration of the French and Anglo-American Zones would have to be deferred. The only agencies now common to all three zones are the JEIA and the Allied Banking Control.

On the economic side the direct effect of a six-months maximum postponement would be negligible. Economic affairs in the bizonal area would continue to be administered by the German bureaucracy and its Allied supervisors and ERP aid would go on according to present schedule. Were the lifting of the Berlin blockade and the elimination of trade barriers between Eastern and Western Germany a preliminary to the assumed Four-Power conference, economic difficulties in all parts of Germany would be eased, but a postponement of a maximum of six months would be likely to have only slight long-range effect in Western Germany.

Although the direct effects of a short postponement are demonstrably small, the indirect effects would be substantial unless the announcement of the postponement were to clearly and unequivocally indicate the intent of the Western Allies to maintain their position in Western Germany should the conference be unproductive and to indicate precisely that a unified German regime would not be considered unless its democratic character were guaranteed.

Without such assurances damage to American prestige and that of the West generally would be so great in Germany as to jeopardize the whole Allied position. The announcement of the postponement would shake German confidence in the stability of Western policy and would lead to a serious deterioration of economic and fiscal control and to increasing distrust in the stability of the new currency. This in turn would discourage savings and long-term investment, increase the tendency to hoard goods, reduce controlled deliveries of foodstuffs and increase black marketing, and put further pressure on prices, wages, [Page 196]and the exchange rate, with the possibility of an inflationary spiral of major proportions. Increased tax evasion would create budgetary deficits that would add to the inflationary pressure.

On the political side there would be equal difficulty. Western Germany has been gradually prepared for the acceptance of a Western German state. Leading political figures, government officials, the press, the public generally, has become convinced over the months and years since the end of the war that Western German unification is preferable to a unification of all Germany under Soviet domination. The large majority in Western Germany have come to the view that the Soviet authorities will only participate in an all-German government which they can control.

It is assumed that postponement of the establishment of the Western German state would be in the interest of American policy if thereby the democratic organization of all Germany might be assured or if the Eastern occupation zone could be removed from Soviet control. The risk involved in postponement is small enough if there is evidence that either of these objectives can be obtained through a Four-Power conference and if it is understood by all that the policy of the Western Allies is so firm that they will never consent to an all-German state which is also not all-democratic, that the Western Allies remain steadfast in their intent to protect Western Germany from outside aggression and that the postponement represents not an abandonment of Western Germany but a willingness to extend its principle to all of Germany.

That Communist circles would herald postponement as a triumph of Soviet diplomacy and power is obvious. The approach of the Western Allies to the preliminaries of postponement (for example—the Berlin blockade) and the strength of will indicated in the announcement of the postponement can do much to counteract this propaganda line. Strongly developed, the postponement announcement might even be of considerable value in bolstering up the morale of anti-Soviet elements in the Eastern Zone, but primary emphasis must be given to reaction in Western Germany. It might be appropriate, should the constitutional document and the occupation statute be completed, to schedule the official promulgation of these instruments with specific effective dates if no agreement develops from the proposed conference. In this connection, it may be advantageous for this purpose to complete constitution and occupation statute before negotiations for a conference are begun.

  1. Attached to the source text was a memorandum by Bradley Patterson, February 21, not printed, which indicated that this paper was being circulated to members of the Subcommittee on Germany of the National Security Council as GNSC D–2/9.