Foreign Relations of the United States, 1949, The Near East, South Asia, and Africa, Volume VI

890.00/4–449

Memorandum of Conversation, by the Secretary of State²

top secret

[Washington,] April 4, 1949.

Subject: Talk with Mr. Bevin³ about the Middle East and Southeast Asia, April 2, 3:00 p. m.

Participants:	Secretary of State
	Mr. Bevin
	The British Ambassador
	Dr. Jessup,4 State
	Mr. Barclay, British Embassy5
	Mr. Beam, State

Mr. Bevin outlined his concept of present world geographical-political factors. Since 1945 he had been thinking along the following lines. It was to be expected that Soviet Russia would succeed in expanding in the agricultural areas of the world. The Western world must hold the “outer crust” extending from Scandinavia to Turkey and including the Middle East. At Potsdam⁶ he had opposed Four-Powered Ruhr control since this was an industrial resource which must be preempted for the West. The presence of U.S. troops in Europe was an additional reassurance. So far we have done well in Europe. Some day Western Europe will overcome the obstacles of Nationalism and will develop a multilateral system. This was the concept the British Cabinet approved in 1945 by taking the “terrific decision” to get the UK into Europe.

Mr. Bevin said we should now look ahead to the primary producing countries. He had nothing against the Jews but he was trying to hold the Arabs in line, since he was convinced that the 100 million Moslems were one of the biggest potential forces in the world. The UK was the best window toward this area. Mr. Bevin did not favor the elaboration of joint military pacts for this sphere, but thought the US and UK should adopt a common line for the development of the great potential resources needed for our defense, particularly oil. Moreover, he foresaw an industrial recession may eventually occur and it was advisable now to plan for the creation of new capital goods.

Mr. Bevin said that once the Palestine question is out of the way, he hoped to concentrate on two or three great potential developments in the Middle East, which he proceeded to enumerate. There were the Lake Victoria and Lake Tana water schemes and furthermore a project for the growing of jute in southern Egypt. The Euphrates, scheme offered the possibility of establishing, under good living conditions, a five or six million population who could withstand Soviet pressure. Afghanistan, and particularly Persia, also offered many possibilities and it was desirable to finish the oil pipeline south of Aqbar. The Arab refugees from Palestine were a problem, however, which was being studied. Some 40,000 could be resettled on the slopes of the Jordan and he was putting pressure on the Syrian government for the settlement of between 200,000 and 300,000 in northern Syria. He hoped the rest could be absorbed in Transjordan.

As regards Arabia and this general area, Mr. Bevin favored an economic drive by the Western countries which would not be military in character, nor even primarily political. Development was important for the capital goods market and also for the production of food. On the whole, the Moslems were sensible people and he hoped that we can hold these 100 million for the West. He would like a US/UK working party set up for the coordination of plans.

With respect to India, Mr. Bevin mentioned that the Prime Minister had written the President. Coordination was necessary here also, since haphazard planning could lead to needless irritations.

With respect to Southeast Asia, Mr. Bevin mentioned the Dutch seemed to be coming into line but we must tell the Republicans they must play, too. He was upset by a proposal made in New York that the Republican government and Army return to Jogjakarta. The government had no civil service and chaos might result if the situation is not rightly handled. It is time for us to tell the other side, namely the Republicans, what we want.

According to Mr. Bevin, 60 percent of the people in Southeast Asia are Moslems and Russia has an opening here. The UK could exercise influence through Pakistan but hoped for U.S. help. The UK was moving slowly in Malaya but was broadening the basis of self government. With general reference to Indonesia, Burma, and Malaya, he would like to see a sort of Southeast Asian conference arrangement in which the US, UK, Australia, and New Zealand could cooperate for economic and political purposes, as distinct from a military understanding or pact for this area which should not be considered now. I interposed we might like to set up a kind of “Caribbean Commission” for Southeast Asia.

Mr. Bevin said that China seemed to be lost to us. He had furnished the U.S. with a documentary survey and would like to exchange opinions with us. As regards Hong Kong, he said the UK intended to stand firm, making it, if necessary, a sort of “Berlin of the East”, which could be used to influence the Chinese situation whatever might eventuate. The UK would assert its rights and he doubted if they would be challenged. (In reply to Mr. Bevin’s question, I said that the thought of another Berlin, if this involved another airlift, filled me with considerable distaste.)

Summing up, Mr. Bevin said the next big step was to proceed vigorously with economic, as distinct from military, development of the Middle East. India should be helped to reduce famine. Southeast Asia should be cleaned up in a kind of “conference arrangement”. He wished to be informed about U.S. policy in Japan and he would like to examine the Chinese situation with us so that there might be joint understanding.

In reply, I told Mr. Bevin that the President was greatly interested in the development of the Middle East which he regarded as the other side of the medal of Western European recovery.

As the President sees the problem, if no new markets are developed after the termination of ERP in 1952, friction will occur and an unbalance will take place in the bargaining position of the West with the East. The Eastern countries would be in a strong position to exploit barter arrangements by their rigid production controls, but if there are other places than Europe to which the Western European countries can look, they will be in a better position vis-à-vis the East. The President was extremely interested in the Euphrates scheme. He wished, however, to concentrate oil development problems and not diffuse our energies.

I said we wished to proceed on an international front and would like to find some instrumentality, such as the International Bank or other agency, through which we could act. Because of budgetary deficits, we did not see our way clear to using U.S. Government financing for the development of Point IV of the President’s Program, and we thought the International Bank is the appropriate and competent organization for this purpose. Mr. Bevin said he will examine the list of international agencies which might be of help, but he pointed out that some of the schemes may not be sufficiently definite to be handled in this way at this time.

I said we were doubtful about India and that so far our thinking had only been along vague lines. Mr. Bevin suggested we send experts to get in touch with planning groups who have been working on India and Africa under Sir Stafford Cripps.⁷

With respect to Indonesia, I recognized the situation could go to pieces. The Dutch had stupidly delayed many obvious decisions. I had urged the earliest dispatch of Van Roijen⁸ to that area and had assured the Dutch that Cochran⁹ will work with him. The main thing is to get the Dutch and the Republicans talking together.

I said we had given a great deal of thought to China. The Nationalists seem to be washed up and the Communists able to go where they wished. The Chinese are tired and disillusioned. Help to the Nationalists can have a contrary effect, since the Chinese might take the view it is only prolonging a war which must end. We had abandoned the idea of supporting the regime and were only extending to June 2 a further 58 million dollars under the China Aid Act. We thought the Moscow-trained Communists will be diluted, and that Chinese inertia and the corruption of the civil service will overcome them. After all the Chinese Communists must deal with the West to a certain extent, since Russia has no resources to offer. It had been difficult in this country publicly to withdraw support from the Nationalists, but the extreme supporters of Chiang Kai-shek in Congress were gaining a better appreciation of realities. The U.S. henceforth will pursue a more realistic policy respecting China.

As regards Japan, I said the Far Eastern Commission had become useless, since it had, become a forum for Soviet complaints. However, we will let it go its way. Since the U.S. is spending about 900 million dollars a year in Japan, MacArthur¹⁰ has been told to take more vigorous steps toward recovery. While reparations in themselves are not much of a drain, they are a confusing factor in the Japanese economy and we shall let them fall into oblivion. There was small chance of a treaty being concluded, and as far as I knew, no work was being done along these lines at present.

As regards the parts of the world we have discussed, Mr. Bevin said we seem to agree we should try to clean things up, leaving Japan out of account for the time being and also China, which appeared to be lost. While we had suffered a terrible blow in China, he was not too pessimistic and thought we could get along without it. Many of the Chinese would still be on our side, and after all, Great Britain had got along by letting the U.S. go its own way in earlier times.

At the end of our talk, which lasted an hour, Mr. Bevin left with me a Top Secret memorandum on Southeast Asia.¹¹

2. Drafted by Jacob D. Beam, Acting Special Assistant in the Office of German and Austrian Affairs.
3. Ernest Bevin, British Secretary of State for Foreign Affairs.
4. Philip C. Jessup, Ambassador at Large.
5. Roderick E. Barclay was Private Secretary to Mr. Bevin; he was not attached to the British Embassy.
6. For documentation on the Potsdam Conference of 1945, see Foreign Relations, The Conference of Berlin (The Potsdam Conference), 1945, volumes i and ii .
7. British Chancellor of the Exchequer.
8. J. H. Van Roijen, Netherlands Representative at the United Nations.
9. J. Merle Cochran, United States Representative on the United Nations Good Offices Committee in Indonesia.
10. General of the Army Douglas MacArthur, Supreme Commander, Allied Powers, Japan.
11. Dated April 2; for text, see vol. vii, Part 2, p. 1135.