Foreign Relations of the United States, 1950, Western Europe, Volume III

740.5/3–2450

Summary Record of a Meeting of Ambassadors at Rome, March 22–24, 1950¹

top secret

[Rome,] undated.

[Here follows page 1 of the record, which identifies the 11 principal participants: Charles E. Bohlen, Minister, Embassy Paris; Colonel C. H. Bonesteel, Executive Director of the ECC; Philip W. Bonsal, Political Adviser to the ECA Special Representative in Europe; David K. E. Bruce, Ambassador to France; Lewis W. Douglas, Ambassador to the United Kingdom; James C. Dunn, Ambassador to Italy; W. A. Harriman, ECA Special Representative in Europe; Admiral Alan G. Kirk, Ambassador to the Soviet Union; John J. McCloy, High Commissioner for Germany; George W. Perkins, Assistant Secretary of State for European Affairs; James W. Riddleberger, Director of Political Affairs, Office of the U.S. High Commissioner for Germany.]

Order of Discussion

I. Closer association with Western Europe

A. Political

B. Economic

II. United Kingdom relation to European problems

III. Germany

IV. North Atlantic Treaty

V. Appraisal of Soviet objectives and tactics in Europe

[Here follow several pages of introductory remarks by Dunn, Perkins, Douglas, Harriman, and McCloy.]

I. Closer Association in Western Europe²

a. political

Ambassador Bruce introduced the subject of closer association of the European countries by outlining certain basic problems. The fundamental fact in Western Europe today is that without extraordinary assistance from the United States free nations there could not survive in their present form by their own efforts. The fragmentation of Europe, instanced after the first World War, for example, by the division of the Austro-Hungarian Empire, makes it as uncoordinated as were the Italian City States before a United Italy came into being. There exists today no unified economic or political power, no security vis-à-vis the Soviet Union, nor any ability to compete in the commercial world with the U.S.

Such attempts as we have seen to weld European unity have been chiefly successful on the economic side. Four organizations do, however, exist that could be used as vehicles for a closer association of European states; the OEEC, the Brussels Pact, the Council of Europe, and the North Atlantic Treaty organization. It has been suggested that the OEEC be expanded into the political field. This, however, has met with little or no response. In similar fashion, the expansion of the Brussels Pact organization has been suggested, but this was established as a security mechanism and is obviously not broadly enough based to be converted to more ambitious purposes.

In the Council of Europe, however, we find the nucleus of an interesting system. In this organism there exist definite limitations in that the Council of Ministers has been reluctant to grant real powers to the Consultative Assembly, which today possesses little more than debating privileges. Furthermore, the membership in neither committee represents an expression of popular impulses.

The number of countries participating in the Council of Europe is fewer than those adhering to the North Atlantic Treaty, but obviously can be increased if deemed desirable. The question arises, “Is the will for political federation potent in this group?” The answer is that it exists and is becoming stronger.

There are two approaches to Western European unity, which may generally be called the “Federalist” and the “Functionalist.” No sharp distinction separates these two approaches, but, broadly speaking, the continental states, particularly France and Italy, favor the Federalist point of view, whereas the insular bloc, namely the United Kingdom and Scandinavia, are advocates of the Functionalist philosophy. The Federalists generally found themselves in a weakened position after long occupation by the enemy and still faced with the problem of domestic security due to internal Communist pressures, react most favorably to the advantages of early unity. The Functionalists, however, regard the problem as one of institutional evolution and an attitude of “let’s see if things will work,” prevails. Notwithstanding these differences, it is felt that if additional authority is granted to the Consultative Assembly the differences between the two schools can be easily reconciled.

In general, the functionaries of Western European countries, particularly in foreign offices, are acutely aware of the difficulties of any movement toward unity and favor gradual evolution. Lay supporters are more enthusiastic and in their advocacy of the creation of a supranational body stress their belief that if the peoples themselves should be consulted it would be found that they would be willing to go far beyond their governments in the partial surrender of national sovereignty.

Without making any recommendations, two questions should be posed, the first being, could the Council of Europe be of practical security value to its participants, and the second, could the Council of Europe be politically operative? Furthermore, from the American point of view we must decide whether we should merely encourage such a movement or should we actually try to force it into being. In the latter connection, we must bear in mind that any persuasion that we might apply will diminish in effectiveness as the end of ECA approaches.

At this point the Ambassador said he would like to discuss the North Atlantic Treaty organization and refer to the fact that some French officials are keenly interested in clothing it with considerable political powers, since they feel that the Council of Europe will never become truly operative unless Germany and the United Kingdom are enthusiastic supporters of it. The big problem is, of course, how far the United Kingdom will go beyond its step-by-step approach, for if the United Kingdom limits its cooperation within an European organization, the continental powers will continue to fear a resurgence of Germany. In expanding the political scope of the North Atlantic Treaty institution, this fear of a half-hearted U.K. participation and of a resuscitated Germany would be largely banished since the continental powers would be reassured by the commitments of the United States and Canada to the NAT. The extent of these commitments however is something that the United States for its part would have to clarify, and such action immediately raises internal American political problems. In this connection, the Ambassador alluded to a recent paper from the Department relating to the “Justice Roberts” Resolution on Federal Union which presented the pros and cons on this subject in a way that makes clear the many complications of American participation in a supranational organization.

If we turn for the time being to the Council of Europe as the unifying body, we would avoid the question of U.S. domestic political problems, and therefore we should support and give strong moral support to suggestions for strengthening and widening the activities of this Council. We should, however, remember that the Council may be only a step toward a larger and stronger confederation.

Obvious difficulties keep us from advocating at present an expanded political North Atlantic Treaty organization to which we would surrender a portion of our sovereignty. Nevertheless, we should support its development in every practicable way and should immediately stress its need for civilian leadership and direction and not permit it to be only military in nature and intention. This leads one to a consideration of a strong permanent committee or staff located probably in Washington. The members of this group must be able to speak with considerable authority for their governments, and, if the NAT is to expand its functions, this permanent committee must give the entire organization continuity of leadership, which is now lacking in the Council of Europe, because of the many other preoccupations of Foreign Ministries.

For the time being the Ambassador did not wish to present any recommendations. He merely wanted to raise two further questions, namely, does the United States wish to expand the powers of the North Atlantic Treaty organization in the political field, and does the United States want to encourage the Council of Europe as the point of focus of further European association?

Mr. Perkins expressed the opinion that the Council of Europe is developing too slowly, whereas the framework of the NAT would permit more rapid evolution. In this connection he said it was generally agreed in Washington that while we are already involved in the military aspects of the NAT we must expand our assistance to other fields. There is even some thought being given to the possibility that the NAT will take over certain of the political functions of the Council of Europe and of the OEEC, but others feel that we should limit our involvement in the NAT to the economic and military aspects.

At this point, Ambassador Douglas remarked that he questioned the efficiency of further organizational development until it was clearly understood, not only by the European countries but also by our own government, as to what these organizations should achieve and the role that each should play in further development of western European unity. For example, whereas the NAT has for the moment concerned itself almost exclusively with defense problems, its future expansion should be carefully studied, for unless there is a clear understanding on this point we will be faced with a confusing interrelation of various organizations which might even result in impairment of the military efficiency of the NAT. Ambassador Douglas nevertheless agreed that unity should be encouraged in every possible way.

Ambassador Kirk alluded to the firm direction that the Allies enjoyed during the war but which now was totally lacking. Its present need is evident but the Ambassador questioned how it could be achieved in peace and agreed that a more forceful NAT is essential.

Ambassador Dunn pointed out that we are presently losing an opportunity for leadership by not calling a meeting of the North Atlantic Council. He pointed out that Europeans in general appear desirous of leaving to the United States the question of running the North Atlantic Treaty organization, and that unless a Council is called in the near future we will risk losing popular support for this organization. He agreed that if the next Council meeting could result in the announcement of a broad outline for peace this would increase the organization’s effectiveness and support. It would also help European governments in showing their people that we were all participating without reservation. The American people would also accept the NAT more readily were they convinced that it had broad popular support in Europe.

Ambassador Douglas concurred with the foregoing and referred to the question of establishing a permanent organization. While he agreed that such action is necessary, he raised the question as to the terms of reference of the permanent organization and expressed the opinion that they must go far beyond those of defense. While admitting that the NAT should be strengthened, he questions whether it is the most effective body and whether we should concentrate upon and permit it to assume other functions than those of military security? It was generally agreed that we must not be placed in the position of choosing between the Council of Europe and the NAT, and that while considerable overlap may exist we should support and work for the development of both of these institutions. Ambassador Douglas again called for a clear-cut definition of the objectives of the NAT lest confusion result from its expansion.

Mr. Bohlen said that he felt that the psychological factors of the problem should be not overlooked, and that the feeling of urgency in the Department for action in the NATO might be due to the discrepancy existing between the results the treaty has achieved and the hope it engendered. Basically, the NAT was devised to constitute a deterrent to Soviet aggression by indicating to the Kremlin that an attack against one of the signatories would be considered as an attack upon all twelve. It was not devised as the vehicle to assure automatic and physical security by creating at once in the western European countries a sufficient number of well-equipped divisions in the field. This basic understanding must not be overlooked, and the political direction of the treaty must be expanded and strengthened. Any extension of its military aspects immediately raises the question of Germany, and what is now needed is political policy direction and not military planning. In other words, although considerable progress has been made on the military side, we now need a political staff or standing group for no body presently exists to determine and establish the political common denominators between the signatory powers.

Ambassador Douglas concurred and added that there seemed to be some confusion in the use of the adjective “political”, in that Mr. Bohlen was referring to political directives and coordination between members of the NAT whereas, when previously referred to, Ambassador Douglas was thinking of the political aspects of the North Atlantic Treaty as involving surrender of sovereignty to a closer knit political organization.

b. economic

Notes on Ambassador Harriman’s remarks

The Marshall Plan was essentially a fire-fighting operation. The fires in Europe have been put out but embers are still smoldering. The economic strength of the West is growing and industrial production as well as access to raw materials are favorable factors compared to the other side, providing we hold that access to raw materials.

We had hoped the Marshall Plan would facilitate a contribution to the organization of Europe. The brave words of the OEEC Convention contained concepts such as the pooling of economic forces. Unfortunately, little has been done in that direction. There has been confusion in the United States as to what to expect and fear in Europe of the American use of broad words—unification and integration. Therefore, with State Department approval, Hoffman defined our meaning of economic integration in a speech to the OEEC Council at the end of October last year.³ Paul Hoffman’s definition was generally accepted by the OEEC and incorporated in a resolution dated November 2 (copy attached).⁴ We are now in the position of asking the OEEC to implement effectively its program. That resolution sets up certain limited objectives. There is doubt whether even these objectives will be attained.

Nevertheless, the OEEC has been extremely useful on a step-by-step basis. It is showing vitality and is most valuable in the analysis of problems and in concerting policies. The staff and international committees do very effective work when they get the proper terms of reference from the political level.

In all countries and between countries there are pressures operating against integration. Particularly in Britain, Cripps and the doctrinaire socialist group of the Labor Party are primarily interested in the social experiment in the United Kingdom. They fear the effect of trade liberalization on their own doctrinaire concept of planning. The interests of the Commonwealth are not really a motive with them. Bevin is more favorable to our concepts.

Even applying a maximum of safe pressure we should not expect the OEEC to go very fast. Too much pressure would lead to disintegration.

Recent developments on the European payments scheme are more favorable in the sense that the British have receded from their recent proposal as an ultimatum and we understand they are prepared to enter into discussions of their basic problems and how to deal with them. Nevertheless, our expectations of progress are less than they were in early January.

Progress on the political side is discouraging because of the lack of decisions. A tie-in within N.A.T. of the security aspects with other aspects is strongly recommended with the United States’ participation in all phases (Article 2 of the North Atlantic Treaty).

If we want to continue developing the military potential of Europe we should consider giving economic aid to Europe after 1952 as part of the rearmament program under N.A.T. This presents a political problem in the United States and we must evolve a well worked out plan which can obtain public approval.

Once we have decided what we want to accomplish, the question of how we use the OEEC comes up. In the OEEC there are Western Germany and Sweden and Switzerland, which are not in N.A.T. We might consider Canada and the United States taking some form of participation in the OEEC.

Recent indications are that the French favor United States and Canadian direct participation in the OEEC and are also thinking along the lines of a broader development of N.A.T. possibilities along other than direct security lines (article 2).

The need for improved executive direction must be stressed. The committee formula is not sufficient. The experience of the OEEC and the Stikker appointment may be usefully borne in mind.

We are confronted with total cold war. We must somehow reach and inspire people’s minds. The flames which we have put out are still smoldering. In some countries, notably France and Italy, we are not making as fast progress as we should in reducing Communist strength. We need an aggressive program—black and white.

Finally, as far as ECA objectives are concerned, the prospects for 1952 that Europe will be on a self-sustaining basis are not unfavorable. The estimated dollar gap of between $300 million–$l billion will presumably be manageable through normal financial channels including the International Bank.

Except for special countries like Austria and Greece and special problems like over-population in West Germany and Italy, there will be a need for continuing economic assistance for the military program and here there will continue to be a startling gap between requirements and existing matériel. In this connection the position of Germany is most important. The attraction of Eastern Europe and the eastern world in general as a source of raw materials and as an outlet for German manufactures is very great.

There is also the factor of competition between Germany and the United Kingdom. We need a thorough-going study of potential world trade patterns viewed from the aspect of cold war. It is essential that the East be more dependent than the West. This, of course, ties in with Point IV.

Notes on discussion following Ambassador Harriman’s presentation

Matters of interest and related to ERP, ECA, and OEEC were, of course, brought up at many other times during the meeting.

Both Ambassador Douglas and Mr. McCloy stressed the immediacy of the problems confronting the free world. They agreed as to the importance of taking prompt, effective steps to bolster our defenses in all directions.

Ambassador Douglas said that he envisaged OEEC eventually as an instrumentality of NATO and that he saw no conflict between that concept and the Council of Europe.

Ambassador Douglas remarked that he considered 1950 to be in many ways a more critical year from our point of view than was 1947. He said that we must endeavor to evaluate realistically our prospects for the next five or ten years. He pointed out that, while on the asset side we have the progress of the Marshall Plan and the defection of Tito, the current is in many ways running against us. There is every evidence that the Soviets are stepping up the cold war on all fronts. Can we arrest or reverse the adverse trend? That is our problem. We can win if we show determination and an ability adequately to mobilize the industrial capacity of the Western world.

Ambassador Kirk noted that recently Soviet propaganda had been increasingly concentrated on the theme of the allegedly imminent economic depression in the capitalist area and the over-production with which that area is soon to be plagued.

Before Ambassador Douglas began his remarks on the British situation, Ambassador Harriman took occasion to state the view that nothing broadly constructive in Europe could be based on any other concept than that of full UK participation in Europe.

Decision of the Council of the OEEC regarding further measures of cooperation

(Adopted at its 75th Meeting, on November 2nd, 1949)

The Council

Having noted the declarations and suggestions formulated by the various delegations and the Economic Cooperation Administrator;

Recognizing the need to form a single large market in Europe in which goods and services could move freely;

Re-affirms its intention, in conformity with the Convention for European Economic Cooperation of 16th April, 1948,⁵ to work wholeheartedly for the abolition as soon as possible of restrictions to trade and payments between the Member countries and to achieve as soon as possible a high and stable level of economic activity and employment without extraordinary outside assistance;

Re-emphasizes the importance it attaches to the decisions of 4th July, 13th August, and 8th October, 1949;⁶

While recognizing the great urgency of the problem, realizes that further progress will have to be by stages whether for the Member countries as a whole or for regional groups;

Recognizes that it may be desirable to provide for a closer economic and monetary association on a regional basis between some of the Member countries, where the requisite conditions already exist; such arrangements to be compatible with the wider possibilities that may be offered by the collective action of all Member countries;

Recognizes further that the need may arise for the Governments concerned to compare their financial, economic, social, tariff, and investment policies, with the object of achieving such harmonization as may appear necessary for arriving at closer economic and monetary associations between them;

On the proposal of the Chairman:

Hereby decides upon the following further steps towards the general objective set forth above:

I. Liberalization of trade

1. That Member countries shall now adopt the objective of removing quantitative restrictions before 15th December 1949, at latest, on at least 50% of their total imports on private account from the other Member countries as a group, in the respective fields of food and feeding stuffs, raw materials and manufactured goods counted separately.

2. That Member countries shall to the fullest extent of their executive authority, provide for import trade which is handled by a monopoly under government control to be conducted, in respect of other Member countries, in accordance with the general principles of Section D of Chapter IV of the Havana Charter for an International Trade Organization.

3. That if any Member country considers that the action taken by another Member country, in pursuance of paragraph 1 above, is being frustrated by tariffs or domestic arrangements likely to restrict the capacity of private importers to obtain the freed goods, it may ask the Organization to decide whether the goods affected should properly be counted towards the 50% proportion prescribed.

4. With the object of increasing as much as possible the volume of invisible trade, the Member countries shall submit before the 15th December returns setting out the greatest measure of relaxation they are able to make in the restrictions of transfers on account of current invisible trade, including, in particular, tourism and emigrants remittances; and the Organization shall report upon such relaxations with any suggestions for their further extension that it may think proper.

5. If any Member country feels unable, in the light of its economic and financial situation, to implement this decision fully, it shall report its reasons to the Organization before 15th December 1949.

6. That the Organization shall decide, before the end of January 1950, what further steps should be taken both to ensure continuing progress towards achieving the aims set out in paragraph 1 of the Council Decision of 4th July, 1949 (C(49) 88 Final) and to facilitate such progress.

II. Intra-European Payments

To widen the area of transferability of currencies among the Member countries by suitable measures in the next intra-European payments scheme and by such additional arrangements and central institutions as may be appropriate to this end.

III. Dual Prices

To instruct the Executive Committee to enquire into ways and means to eliminate in intra-European trade, dual prices, and to submit a report on the problem at the earliest possible date.

IV. Closer Economic Cooperation

To invite those Member countries which have under consideration, or may evolve plans for closer economic arrangements with one or more other Member countries, to report to the Organization on progress already made and any specific further proposals to that end. Where possible a first report on this subject should be submitted to the Organization not later than December 15, 1949.

V. Manpower

To instruct the Executive Committee to re-examine the problems relating to the absorption either in Europe or elsewhere of the persistent surplus of manpower in certain Member countries.

VI. General

In examining reports submitted by Member countries and in preparing its report upon the programme of action for the coming year, the Executive Committee shall bear in mind this Decision and the Decisions referred to above, and the suggestions contained in the statements made by Delegates at the present session of the Council.

II. UK Relation to European Problems⁷

Ambassador Douglas stated that the critical element in the organization of the West was Britain’s relationship thereto and their willingness to participate in such an organization. He noted that US/UK relations were at a very low ebb. There were seven or eight critical issues on which we were not in accord although he was happy to report that one of these looked to be at the point of settlement. The question of British preparedness to participate had two aspects, one political and the other economic. With respect to the Commonwealth, Ambassador Douglas pointed out that its structure had changed profoundly during the course of the last few years. No legal ties remained beyond the common Crown and even that had been dropped in the case of one or two newly added dominions. There were new members of the Commonwealth of different race, religion and philosophic outlook who lacked the common traditions. Although the Commonwealth was no longer the same institution, London still retained many obligations, but it was becoming more responsive to the wishes of the Dominions and less the leader of the group. This was clearly the result; of the decline of British strength. By reason of these obligations and limitations England was restrained in the degree to which she could participate in the conflict but she could and should give leadership and encouragement. In this regard the Conservative Party had been the prodder and the Labor Party had been the laggard. In 1947 Bevin had behaved with alacrity and courage when he picked up the ball thrown by General Marshall but since that time had lagged. England’s freedom of action was further limited by her other overseas commitments such as the colonies and by what she conceived to be her special relationship to the U.S.

Ambassador Douglas thought that the studies which had been made of this problem did not place sufficient emphasis on the basic conflict between the requirements of a Socialist society and of an international society as we conceived it. The Socialist was a planner and could not tolerate any external influences. Because of this conflict the British had been led to renege on commitments they have made in 1947, 1948 and 1949. They probably did not realize at the time the essential dilemma which was to confront them. Their principal motivation was their pursuit of a form of society they believed to be good.

Ambassador Harriman referred to the differences in the leadership of the British Government and the conflicts within the Labor Party itself. Ambassador Douglas pointed to Bevin and Bevan⁸ as good examples of this phenomenon. He said that Cripps⁹ and Bevan appeared to occupy the extreme left position in the Cabinet. The determination of the Labor Party to remain in power was such that they would not permit themselves to be seriously divided and the Eight always made concessions to the Left when necessary. He believed this situation would continue and it might also offer an explanation of the appointments of Strachey and Shin well¹⁰ at this critical time. In general the situation in England was one in which neither Labor nor the Conservative Party could take any aggressive position.

An additional; consideration limiting British participation in Western organization was British fear of being burned. They had been burned once badly and were not going to expose themselves again, but Ambassador Douglas believed that the primary problem was the fundamental conflict between Socialism and internationalism.

In economic matters the same contradictions presented themselves. The British went much further in controlling sterling than they had to. Their financial position had improved recently and their reserves were now just under two billion pounds. This was, however, in part the result of seasonal phenomenon and the resumption of their ancient economic relationship with South Africa. It would not have a lasting effect. For the moment, however, their finances were in balance without ECA assistance, but this rested on a restriction rather than an expansion of trade and there would be adverse results.

Ambassador Douglas said we should respect British sterling area obligations. They were intricate and far reaching relationships which if they collapsed would bring about consequences we were not prepared to meet. The British had never balanced their account with the West with manufactures, even when we had relatively free trade. It was rather the raw materials from India, South East Asia, and to a lesser extent from Africa channeled through London to the New World which had provided dollars. He would not suggest for a moment that we should derange or suppress economic development in those areas. But the problem did pose itself how without losing the political situation we could prevent the development there of the kind of economic nationalism which would cut off the areas from Western Europe.

Ambassador Douglas said that perhaps we had been a little tender with the British. The time might come when we should tell them that we would have to review our whole policy unless they would do their part in maintaining the principle of US/UK cooperation in prosecution of the cold war. Britain was after all the only other power in the West and unless they could go down the same road with us it would be highly serious and we would have to confront them with the issue. Ambassador Douglas stated that although the idea of neutrality did exist in certain segments of the Labor Party it did not represent a force in British policy.

Ambassador Dunn pointed to the important influence the British still exercised in Italy in demonstration of the fact Britain had not completely lost her role as a great power. Ambassador Harriman commented on the ruthlessness of British trade policy on the continent and to the fact that in contrast to ourselves they were not playing square in this respect. High Commissioner McCloy referred to the historic influence of British diplomacy and its present residual effectiveness. Ambassador Douglas said that Bevin had recently suggested that in order to make possible a European payment scheme certain countries be permitted to join with reservations. Ambassador Harriman felt such a solution would be unworkable since the British would turn it on and off at will. Ambassador Douglas pointed out that until the present the British had not been in a position to assume the risks involved in such an undertaking. He added that in the same conversation Bevin had stated that he hoped the Spender plan with respect to South East Asia¹¹ could be put in effect by July.

Ambassador Douglas said the British people in general realized the need for and indeed desired close cooperation with the US. The Labor Party itself was not too friendly but this lack of friendliness derived from their doctrinaire views that the American economy was unstable and subject to violent fluctuations. That if they were too closely bound to it they might be injured. The Conservative Party was firmly convinced that the UK and US would have to develop and maintain a very close association. At the same time they wanted to preserve the structure of the Empire. Some trouble might be forthcoming on the subject of Empire preferences but it would not be important.

Apart from the occasional depressions, of which only one had been of serious proportions, the American economy had in fact been relatively stable for the past 150 years.

Finally, Ambassador Douglas pointed out that the discriminations which arose out of the non-convertibility of sterling were in part the automatic unescapable discriminations which arose from the adoption of any system of currency control. Others, however, were escapable.

Ambassador Harriman stated that the British EPU proposal was unacceptable. Although there had to be enthusiastic British participation to make such an undertaking effective, the Continent was not going to accept British domination in this matter.

With respect to our treatment of the British, he felt it important that we be tender with the British people and be sure not arouse their resentment. In England politics stopped with important foreign issues. The British Government itself was also subject to pressures from the extreme Left. He felt we could encourage the Continent to take up issues with the UK which we believed to be sound. The Continent had vitality and there were many issues better made by them than by us.

Assistant Secretary Perkins asked how this could be done and cited the recent shipping case in which the British succeeded in obtaining uniform European support in opposition to our point of view. Ambassador Harriman said it was of course clear that certain European countries were in a sort of satellite relationship to the UK but that in the given case Norway which had vital shipping interests might have been willing to cooperate with the US point of view. He pointed out that the British tended to mobilize European opinion whenever they were in disagreement with us. In appropriate issues we could use the same technique, but of course the nature of the issue must be carefully considered. Ambassador Douglas agreed and said there was an additional noteworthy development in England. The Labor Government was now briefing the Conservatives on certain important issues. They had succeeded in getting Conservative support for the Government’s payments scheme. He felt we would have to do the same. Careful briefing of Conservative members would make it possible for us to get decisions on important matters in this period of finely balanced power. Ambassador Harriman felt that the recent elections had revealed a residual desire on the part of the British people to reassume an honorable role in international affairs. Ambassador Douglas agreed and said that an equally important fact in the swing against the Socialists had been the nationalization issue. Labor had played it down and the Conservatives had not played it up.

In connection with the importance of using the opportunity to brief Conservatives and make our own point of view understood by the opposition in England, Ambassador Harriman pointed out that this was of course done on the Continent where it was easier. He emphasized the high importance of close coordination between the Ambassadors gathered at this meeting. With respect to the British he pointed out that one subject which must be dealt with most discreetly was that of full employment. The Labor Party was in power on that platform and would automatically dig in if pressed on the subject. Ambassador Douglas said the subject of sterling balances was of similar sensitivity since it was by these balances that they were able to maintain full employment in England. In reply to a question he stated he did not believe there would be an election until something happened. In the absence of startling events the present stalemate might go on for quite a while.

Ambassador Harriman believed it was important we not let the British get the idea that their failure to go along would necessarily preclude us from going ahead with plans for Europe. There might be cases where we would in fact wish to go ahead even without them. Ambassador Douglas reiterated that the basic background of the British problem was to be found in the changed nature and structure of the Commonwealth. Ambassador Harriman pointed out that Cripps had wanted to keep himself the role of middleman between the US and the OEEC and no doubt there would be a disposition to play the same role in our relations with the Dominion[s]. Assistant Secretary Perkins stated that there was discussion in Washington as to what extent the US could replace the UK in the Commonwealth and that there was considerable doubt as to the desirability of our pushing in that direction. Ambassador Douglas agreed with the reservation that if Socialism became permanently fastened to the UK the Commonwealth would disintegrate in any event and we would be confronted with the decision as to what role the US should play in those circumstances. Ambassador Harriman affirmed the importance of the US being always in a position to pass on its attitude to members of the Commonwealth directly and not through the British, thus permitting them to use the Commonwealth as an exclusive instrument of British foreign policy.

III. Germany¹²

High Commissioner McCloy remarked that although he was concerned with the problem of eventual European Integration he was faced in Germany with problems requiring immediate action.

Germany is always in ferment and is subject to terrific pressure from the East. The situation might be outlined as follows:

1. Soviet pressure is growing stronger continuously and is ably assisted by an efficient and effective propaganda machine in the Eastern Zone.

2. The German Government is developing more slowly than originally hoped for, and while he deplores the right wing nationalists he feels that they are receiving more publicity than the actual situation merits. Although the press is inclined to play up the extremist elements, there are at present basically sound democratic elements that are quietly working successfully.

3. The internal political situation is uncertain due to the government’s slender majority. Nevertheless, the right and left wing extremes are weak and do not give rise to serious concern.

4. There is a growing sense of fear that has been permeating the country for the last six months or so due largely to the obviously increasing Soviet propaganda and to what the Germans consider a lack of power in the West and the prevalence of equivocation in the democratic camp.

5. The concept of Western union or membership in the Council of Europe has paled and does not hold the same degree of exciting attraction it previously enjoyed in the German mind. The failure to evolve effective military policy in the Western camp is unfortunate and the recent mention of the possibility of German remilitarization has been interpreted by the Germans to indicate basic Western European weakness. Although this talk of remilitarization has appealed to certain small groups of the former Wehrmacht class, it is generally poorly received. Along the same line, the Germans interpreted the British reticence to have Spaak appointed Secretary-General of the OEEC¹³ and recent French action on the Saar as another indication of the lack of coordination between the democracies and a lack of British enthusiasm for a strong European organization.

6. The prisoners of war returning from the Soviet Union are helpful to the democratic forces in Germany for their tales of Soviet horror and conditions in that country are a constant reminder of a fate that Germany might suffer. Nevertheless, among these prisoners there are a few fanatic agents who are constantly increasing in number, but who are not well received except by the small hard core of Communists.

7. Eastern propaganda is generally better than ours. It minimizes the ideological differences between the East and the West but plays up the theme of U.S.-British opposition to German economic development, claiming that the West is blocking German efforts to reach her natural markets whereas trade can flow freely eastward. In the latter connection it stresses the theme that there is no competition in the East and that this is the natural outlet for German surpluses. This propaganda, therefore, has had some effect among conservative and industrial groups in the West. Eastern propaganda also describes in considerable detail the East German satellite government and elaborates its organizations and all the trappings that Germans generally associate with a central government. It cleverly implies that its capital is in Berlin and emphasizes that the Eastern government operates from that city which has become symbolic of unified Germany.

8. We anticipate a concerted effort to take over Berlin, and Eastern propaganda keeps hammering at this point. A para-military trained infantry army exists in the East Zone and is described as the instrument to overcome opposition in the West. This army now includes between 45 and 500,000 men, who are equipped with light and heavy machine guns, artillery, and even is given tanks for use in training. It is presently a good pre-World War II fighting force. The existence of this body gives further substance to the East German Government and coupled with the obvious threat to the Western Sectors of Berlin keeps the Germans uneasy.

9. Although the German is attracted Westward by many things, material, political, psychological, he cannot help but be aware that the concept of unity comes only from the East. This was one of the reasons for the High Commissioner’s recent proposal for free all-German elections.

10. Although the Berliners are the strongest element in the Western Zone, they nevertheless eat, sleep, and drink fear. The Deutschlandtreffen. May 28¹⁴ or the May 1 celebration may be considered as the first of a series of pressures on Berlin and may lead to street fighting and bloodshed. Although counter-demonstrations can probably be staged and sufficient troops are available to contain the attack, it will be a spectacular demonstration of Eastern force and requires immediate action. The counter forces are undoubtedly known to the East and the possibility, of course, exists that the May 28 demonstration will be postponed. The High Commissioner feels that the Communists can be thwarted and by so doing Western morale will increase. Western Berlin is a miniature of Western Germany. All the problems of the Tri-Zone are present in this reduced area. Nevertheless, were we to lose Western Berlin it would mean the loss of all the rest of the country. It must be held. The High Commissioner hopes that the Russians do not postpone or call off the May 28 demonstrations for he feels that this first possible all-out attack is concentrated in a city where we have the situation in hand and the west has the opportunity of administering a sound defeat to the Soviet, which will boost Western influence throughout Europe.

11. Notwithstanding its courage and general good political morale, West Berlin lacks the feeling that it has the all-out support of Western Europe. Mayor Reuter¹⁵ told the High Commissioner a while ago that although he is confident of United States support and knows exactly where we stand, he occasionally experiences doubts regarding France and Western Germany. He feels that Adenauer¹⁶ might look with disinterest on the loss of Berlin, and he is aware that François-Poncet¹⁷ minimizes the weight of Soviet pressure and expresses doubts as to Soviet intentions. The High Commissioner feels that It will require a frank discussion with the French to impress upon them the seriousness of the situation and to “smoke out” French policy with regard to the former German capital. In recent conversations with the French High Commissioner Mr. McCloy has pointed out that if Berlin goes, so goes all Germany, and François-Poncet appeared impressed and took action which led to the return to Berlin of an appreciable number of French gendarmes who had been recalled to Metropolitan France.

12. 300,000 Berliners are now unemployed and are receptive subjects to Soviet propaganda. Mr. McCloy has recently suggested that all ECA countries send procurement agencies to Berlin to endeavor to ascertain if purchases could not be effected in that city. While realizing that there is little to offer, such action should be taken for articles do exist that could be bought, and even small purchases would have beneficial results. Such action on the part of ECA countries would also serve as a strong stimulant to West Berlin morale for it would indicate that other European countries are behind them in their fight against the East. It was stressed that any change downward in the curve of unemployment would help, no matter how small, for the ECA money that was recently allocated to Berlin has not yet had its effect. The High Commissioner recommended that the Ambassadors present endeavor to do everything possible with the governments to which they are accredited to have procurement agencies sent to Berlin for only with the development of normal trade patterns will Western Berlin get off to a healthy and peaceful start.

Recently General Taylor¹⁸ sought 250,000,000 DM’s for a public works program in an effort to combat unemployment. It is felt that if this sum were available it might reduce the unemployed by a small amount, say, 60,000, but even if this small advance were made it would turn the trend and move the unemployment figures downward, which might get the Berliners through this coming summer when the Soviet pressure will be the greatest. In this connection Mr. McCloy said that he was convinced that a public works program could be justified to the ECA countries, and as Berlin is the key to Germany it should be stressed to the United Kingdom and the French that ECA funds destined elsewhere could be justifiably used in the former capital.

The High Commissioner also recommends that the Western powers set up a committee to study not only the procurement of goods from Berlin for Africa, South America, and the Western European countries, but also the expeditious handling of the Eastern German refugees. At present the mechanism for handling these refugees is cumbersome, legalistic, and completely submerged in red tape. If some expeditious manner could be determined to handle these people it would be of great assistance. If the Committee for Berlin aid could be formed immediately, it would help the Berliners in that it would counteract the concept of Western weakness as compared to the obvious Soviet gains in the Far East and the consolidation of their position in the Satellite countries. It would also tend to nullify the Soviet advocacy of united Germany and would indicate to the Berliners that they are not alone in their fight against the East.

On the domestic political scene, the possibility exists that there may be a swing toward the right, particularly among the refugees from the East and former ardent Nazis. The High Commission does not at present have powers to offset it, and this lack of power is occasionally distressing but for the moment must be accepted. With regard to the government at Bonn, the High Commissioner said that recent debates in the parliament have been gratifying, particularly those conducted by Schumacher¹⁹ and Adenauer on the Saar.

Democratization is proceeding slowly, but the High Commissioner is convinced that good elements are gradually emerging. The government as a whole is still controlled by older men of the Weimar era. If the C.D.U. can overcome certain of the economic problems, the center would be strengthened and votes would be won from both the right and left. The extreme left is not considered dangerous as long as the present situation remains unchanged.

The French in Germany under François-Poncet are cooperative, but remain adversaries of a strong central government. Although they render lip service to Germany’s participating in international organizations, they continuously attach strings to such participation and surround it with administrative delays. The timing of the recent discussions on the Saar obviously could not have been worse, but does not seem to have caused irreparable damage.²⁰ The French and also the British maintain approximately the same attitude on democratization. Although we are against restrictions on individual economic liberty and trade restrictions, neither the British nor the French are too interested in these subjects, nor do they attach much importance to educational reforms. Their views on decartelization are flexible and depend largely on who owns the cartel. In a similar vein, they do not concern themselves actively with restrictive trade practices or labor unions. In general, it might be said that if the French could be sure that a Comité de Forges man were to head up an organization they would be willing to accept it no matter what were its economic or social objectives.

A reorientation of the German mind is essential. Until there is an acceptance of the rights of the individual against those of the state, there will be no basic security in Germany. As an example, the school system should be drastically improved to put over the basic democratic fundamentals.

The conflict with the French attitude has recently become evident in the Military Security Board, where the Americans feel that the board should not act in a manner unnecessarily to obstruct economic development and establish cumbersome mechanics and procedure. If the board continues as presently proposed it obviously will not be able to exist after the Occupation Forces are withdrawn, and real security will not be secured for the West. The United States policy is that the board should constitute an alert and well-informed body that should be in a position to examine and review broad economic security problems, without becoming enmeshed in a mass of detail and paperwork. By such action true security might be achieved, and not merely frustration of objectives as now seems to be the case.

The British seem to accept the inclusion of Germany in various world organizations. They are disposed to extend to the Germans broader authority on questions of production and economic capacity in most items except in the security field, of which an outstanding example is shipping. With regard to possible modification of the Occupation Statute, Mr. McCloy did not feel that such should be undertaken at present, although the British might adopt an extremely liberal attitude on this subject and might even go so far as to suggest the abolition of the High Commission.

Mr. McCloy again reverted to the immediate action necessary in Germany in relation to the forthcoming summer battle with the East. Such action is not only necessary in Berlin but throughout the Western zones, in that the United States stands alone in the German eyes as their ally and bulwark against the Soviets. The Commissioner again called for a declaration by the Western powers on the maintenance of the Western Sectors in Berlin and action on the problems of the refugees and the sale of West Berlin production. He also said that an international fair and auto show or other forms of interest in Western Berlin would be helpful, and ended up with the remark, “Time can be bought cheaply in Berlin.”

Mr. Churchill’s recent speech during which he advocated the rearmament of Germany had no particular reaction in the Western Zone, for Germans as a whole do not desire to be constituted into a foreign legion, and they considered it as another sign of Western European weakness.

In reply to a question by Ambassador Douglas, Mr. McCloy stated that the concept of neutrality is not taking root in Western Germany. The Germans are, he said, a forceful and vigorous people. They cannot conceive of their country remaining neutral in any European conflict. If the West shows it has the strength and the leadership, there is no question that it would be on our side. This lead the High Commissioner to call the meeting’s attention to the “dynamite” paper in the documents he had given the meetings, in which was advocated that Germany’s manpower and industrial capabilities might be used in rearming Europe. In this connection, a Western German army is not called for but we should do everything possible to assure their adherence to our side without an army for then the chances would be better for political evolution. One must not forget that once an army is formed the civil government is likely to become subservient to the military. Any announcement of the formation of a German army would be critical and dangerous, for not only would it strengthen the dangerous rightist elements but would jeopardize healthy political evolution. Although Western Germany is fearful and concerned over the Eastern para-military organizations, it merely wants its own police backed up by a forceful Western European organization and policy. As long as Allied troops are present in Germany, its military security is assured to the extent that the West is strong.

Mr. Bohlen then examined the individual attitudes of the various Western European countries, leaving aside for the moment the U.K., and indicated that in almost every case there are two conflicting and contradictory currents of thought in regard to Germany. One is the traditional fear and distrust, in some cases amounting to an absolute certainty that, unless definitely controlled in certain areas, Germany will revert to her previous policies of aggressive nationalism with eventually a revival of German militarism. This feeling, as indicated above, is the result of past experience and is occasionally augmented by fears of the economic strength of Germany. These views might be summed up as the negative approach towards the German problem. However, along with this sentiment there are signs of a growing realization that without West Germany as a member, the community of Western Europe, whether politically, economically or militarily, has little real substance and therefore chance of success. With the possible exception of Norway, the direction and development is definitely towards the latter or more realistic concept. This can be attributed primarily to the growth of the Soviet and Communist menace, the recognition of its implacable nature, which will not respond to the normal process of international affairs, and consequently the essentiality of having Germany with her potential power in the Western camp as against the Eastern camp.

Indeed, at the present time it is safe to say that the fear of Germany is less of a repetition of an individual German attempt to rule Europe by force and more a fear of a Soviet-German combination. The distrust of Germany is reflected in the belief that as soon as Germany recaptures her freedom of maneuver she will inevitably begin to play the West off against the East with the very real danger of coming to rest on the side of the Soviet Union. This is the nightmare of Western European nations and it should be ours as well.

There is widespread recognition that this danger would be materially enhanced by the growth of unemployment in Germany and the vital importance to the West German republic of finding markets for their industrial products. Almost all Western European countries are on record as favoring German admission into the international organizations of Western Europe. The chief obstacles would appear to be one of speed of such integration and in particular the type of safeguards and controls which are to be maintained for a long period over Germany. Very often under closer examination what appears to be a difference in policy is in reality a difference in method based upon a different evaluation of the best method of dealing with the Germans. In France, particularly, it is firmly believed, even by stronger supporters of German integration, that German good behavior will not be won by concessions and favor but only if certain limits are definitely set and adamantly maintained by the Allied powers will the possibility of future German good behavior be enhanced. They believe in this respect that the important thing in Allied dealing with Germany is clarity and that the position once taken should not be abandoned because of German pressure.

If a generalization is to be made concerning the continental nations it is that their past experiences with Germany are still too fresh to permit them to act wholeheartedly upon policies which rationally they recognize are necessary. There has already been considerable evolution in this respect and the most that we can do is to encourage the trend to develop as quickly as possible, without, however, falling into the attitude of denouncing and castigating national sentiments which would be held by any people who have had the treatment that most Europeans have had from Germany. Mr. McCloy then stressed that Germany must be accepted not as a concession to German agitation but rather as a logical evolution in the development of an integrated European system.

Ambassador Dunn stated that the Italians recognize the need for Germany’s inclusion in the European community in order to have the Germans assume their responsibilities and lest, if not included, she turn Eastward.

The discussion again reverted to the question of German rearmament and it was pointed out that the Germans presently benefit from the absence of a military budget and are fully aware of this advantage. Mr. McCloy replied, however, that roughly 25 per cent of the present budget is devoted to occupation costs, which approximates the military budgets of leading Western European powers.

Mr. Perkins then posed the question of exactly what were the mechanics of including Germany in a closer association of European states, and it was generally agreed that little need be done at present in that she is already a full member of the OEEC and her associate membership in the Council of Europe has been agreed to by all members of that body.

Mr. McCloy added, however, that Germany’s economic position must be improved before she can become an active member in the Western European organization. She is presently in an unfavorable debtor position vis-à-vis most of the Western European countries, and he hopes that this situation may change for the better. Already Germany’s position vis-à-vis Holland appears to be satisfactory, and shipping orders have been received which will be felt in the politically important north German ports.

On the general question of the mechanics of German integration, Mr. McCloy said he favored a policy of getting Germany “enmeshed” into every possible international organization. He again reverted to the fact that such action should not be regarded as a concession, as the French appear to feel, but rather as a normal step in the country’s evolution. Mr. Bohlen agreed with Mr. McCloy’s views but, in regard to the French attitude that any German inclusion in an international organization is a concession to that country, said he did not see when or how this French attitude would change for it was a natural pathologic Gallic reaction.

Ambassador Douglas then added that it is of paramount importance to include the United Kingdom in such European groups for unless she participates wholeheartedly Germany would, within the next five years, dominate the Western European economy. The Ambassador then reverted to Mr. Bohlen’s exposé of the United Kingdom’s attitude toward Germany and said that he felt that the London Embassy’s opinions might have been a bit charitable toward the United Kingdom in that she is keenly concerned with German economic competition. The United Kingdom is prepared to go so far in this respect as to seek to write into the final peace treaty a permanent limitation on German steel production. The recent changed British attitude on dismantling was due not to ideology but rather to a deep-rooted fear of serious disorder were the dismantling program to continue. Although the United Kingdom would welcome Germany into Western European organizations, it would not go so far as to accept her in the North Atlantic Treaty.

Mr. McCloy said that he desired to emphasize the delicate balance that exists in Germany today. Presently the problem is one of whether the better younger elements will be able to prevail, and they must be given something constructive to work with. Although the arrest and suppression of former Nazi elements makes good newspaper copy, it also tends to keep the better elements down and gives rise to the attitude of “Let’s not stick our necks out.” Although the natural French instinct is to suppress any German evolution, the Americans feel that if the truly democratic forces are to prevail they must be given a feeling of self-respect and recognize the role that they must play in the country’s future.

There then followed considerable discussion between Ambassador Bruce, Mr. Riddleberger, and Mr. McCloy relating to the French tactics on the lower level in Germany. Mr. Riddleberger expressed the opinion that notwithstanding repeated high level French assurance that Germany would not be kept out of international organizations, the low level French officials in that country do everything possible to block such action. It was then suggested that each of these cases be documented and sent to Paris for the personal attention of Foreign Minister Schuman. Mr. McCloy said he did not believe said procedure was advisable in that it would be tantamount to by-passing the French High Commissioner of Germany. He also described the French tendency to refer every case to the Department and to seek the Department’s reversal of the stand taken by the Americans in Germany. Such action had not been successful but nevertheless constituted a serious delay in any constructive program. Ambassador Bruce offered to raise any points with Mr. Schuman that the High Commissioner desired. The High Commissioner felt that it would be preferable for him to endeavor to work them out in Frankfort with Mr. François-Poncet, and only to resort to a “demarche” in Paris when Mr. François-Poncet so suggested, as was the case with the devaluation last year.²¹

Mr. McCloy then said that in general the Allied policy in Germany should be one of fairness and not niggardliness. The Security Board should not be used as a dragnet over the economy of the country and, for example, with regard to trade with China we should be certain that we are treating trade originating in Germany in the same manner as trade originating with other countries.

Although the French have accepted on the Security Board the principle of fairness, they nevertheless remain touchy and have taken some extreme positions. At this point Ambassador Douglas suggested that Hervé Alphand and Couve de Murville might be behind this French attitude, and suggested that perhaps Ambassadors Bruce or Harriman might speak to Mr. Schuman.

Mr. McCloy again mentioned the Council of Europe and said that Germany is likely to seek admission thereto some time in the future, for they would realize the advantages accruing from such action and might even feel that it would be a means of again bringing up the question of the Saar. At present, Adenauer could not obtain sufficient votes favoring German admission to the Council, but such might not be the case in a few months.

Ambassador Bruce then said he would like to have it understood that the Paris Embassy should not be considered partisan on German matters, which is not the case. One must bear in mind, however, the fact that Mr. Schuman is following a very difficult and narrow road on Germany and were it not for him French policy would not have advanced as far as it has. He is presently balanced on a needle, and thanks to his own internal political problems he cannot be pushed too far. Although sabotage may exist within Mr. Schuman’s own ministry, this could be rectified and the Ambassador expressed the hope that his Embassy be informed of each instance of French delaying tactics. In reply to a question, Ambassador Bruce stated that he had been informed by Mr. Schuman recently that the French liberal policy on Germany would continue, and that Mr. Schuman had even raised this question in the cabinet and had received a definite commitment from that group.

With regard to the French attitude on Berlin, the Ambassador pointed out that the French are scared lest Berlin touch off war, and are therefore extremely worried, for it would be difficult to have Frenchmen march off to a war for the former German capital.

Mr. McCloy then summed up his suggestions to win the battle of Berlin, namely,

1. A tripartite declaration on support of Berlin.

2. Procurement agencies in Berlin.

3. A meeting of French, United Kingdom, United States, and other Western European officials regarding immigration.

Mr. Perkins remarked that we could probably proceed rapidly on the first and third points, but that the question of procurement agencies in Berlin would have to be carefully studied lest it backfire. Mr. McCloy agreed that this danger existed, but said that it would be minimized if the agencies proceeded to Berlin with no publicity and quietly studied the possibilities of purchasing goods in that city.

IV. NAT²²

Assistant Secretary Perkins referred to the document on this subject²³ submitted to the meeting which he believed fairly well covered the present situation. He added that the United States Military had reports on the regional requirements for both troops and equipment but they had as yet no lists as to how the troop requirements were to be achieved. The British so far had told nothing. At the outset the American Military attitude had been similar but they had recently come a long way and had fixed availabilities Eastward. They had not, however, revealed any data with respect to estimated strength at home. The British had revealed nothing although there was some indication that they might be prepared to pass some information privately to the United States. Ambassador Harriman agreed that the paper submitted sized up the situation very well. He remarked that Cripps’ attitude on the subject was simply that the Finance Ministers should get together and among themselves decide how much money was available for this purpose. It was Mr. Harriman’s opinion that the Finance Ministers were not very keen on this subject, being fully occupied with their own internal problems, and that although their future activities might be interesting they would not be very important. Colonel Bonesteel remarked that there was a coming moment of disillusionment. Figures developed on the subject were so far apart from reality that the element of discouragement was becoming apparent. By way of example he stated that by January 1, 1951 the probabilities were that only about 30 percent of Army, 20 percent of Navy, and 5 percent of Tactical Air Force programming would be fulfilled. This was clearly not a satisfactory picture. Mr. Perkins asked whether there was general agreement on the need for central direction in NAT matters. Ambassador Harriman agreed but emphasized that the first and immediate requirement was for a military and economic estimate on our side in order to clarify our own thinking. Mr. Perkins asked Colonel Bonesteel what, if any, thinking was being done along the lines of developing unorthodox defense measures. Colonel Bonesteel replied that in general there was very little since it would not be very effective. It was true, however, that both Norway and Denmark with our support were thinking along these lines. They were not planning in terms of holding Scandinavian Peninsula and were developing an approach similar to that of the Swiss. Ambassador Harriman remarked that there was a great deal of work to be done and an aggressive start should be made immediately and that it would be a mistake to wait for the definitive planning.

V. Appraisal op Soviet Objectives and Tactics in Europe on Short Term Basis²⁴

Ambassador Kirk began his remarks by referring to the difficulty of obtaining accurate information on Soviet capabilities and objectives. One thing, however, was increasingly apparent and that was the note of confidence which characterized Soviet pronunciamentos in recent months. The Russians gave every evidence of feeling that the tide was running in their favor. A direct result of this attitude was the expanding wave of worldwide revolutionary movements. He cited the mounting intensity of Soviet vituperation against the capitalist world in general and the United States in particular, as well as the UK, and noted the increased tension which the Soviet Government was developing among its own people. It was the view of the Moscow Embassy that Soviet pressure would be felt in all directions but that the two areas of particular interest were Germany and South East Asia. It was apparent that the Soviet Government would endeavor to strengthen its position in its own areas in Europe and its general position in Germany but he believed that the European operation as a whole was probably secondary, in Soviet planning for the next six months, to the achievement of their primary objectives in South East Asia.

With respect to Soviet methods it was probable they would continue to stall in treaty making matters, proceed with their process of sealing off all satellite areas including China, and as last year continue to dangle peace bait before public opinion. Their objectives in Europe will be to try to get us out of Berlin, Vienna and Eastern Europe and to encourage the development of the German Democratic Republic. Their activities will manifest themselves in peace movements, operations against the social democracy, strikes, opposition to arms shipments, and they will continue to use their parties for sabotage and subversive activities, particularly in France, Italy and Germany. In Yugoslavia there will probably be real activity although there is no evidence of pending Soviet overt military aggression, but they might well indulge in troop movements to invoke war scares and increase political tension.

In the economic sphere they would continue to orient their satellites and China more and more in the Soviet direction. The early announcements of a ruble bloc was not to be excluded. During the past six months in [sic] practically all trade negotiations by Western countries with Moscow have failed. The general trend of Soviet economic policy was to create a large self-sufficient area. They disposed of certain economic weapons of their own which they would no doubt use in a selective manner against individual non-Communist countries in the pursuit of their objectives, and especially in order to probe for weak spots in the West’s united front on trade restrictions. There had not yet been sufficient time to note effects of Western restrictions on essential materials, except for some outbursts by Soviet political leaders. It is also for consideration whether we should not control export of new trade practices and manufacturing processes.

With respect to Germany, Admiral Kirk believed they would press forward with the idea of unity and might even make their own peace treaty with the GDR and withdraw their troops to lay a basis for demanding the withdrawal of Western troops as well. The Ruhr loomed large in Soviet thinking about Germany. In France and Italy their immediate interests would be interference with arms shipments and in the latter country they would continue to exploit the land reform problem. The Austrian treaty would be delayed. Possibly the Russians expected Austria to fall into their hands as a ripe plum.²⁵ In any event it would cost but little to stall in that country. One should not exclude the possibility that they envisage a split Austria as the eventual solution of that problem. It was the Ambassador’s personal belief in view of the Soviet lack of adequate petroleum reserves that petroleum was a primary Soviet objective in Austria. The personal conflict between Stalin and Tito would continue though there was evidence of its having become a little less sharp recently, and the Cominform anti-Tito mouthings had somewhat subsided. There was some indication that Moscow was gradually sealing off Yugoslavia for disposition at a later date.²⁶ Finland continued under pressure but would probably stand up. The Ambassador raised the question whether the United States had been as generous with Finland as it might have been.²⁷ He pointed to Soviet interests in the problems of the Middle East, particularly in Kashmir, Persia and Afghanistan, and noted that the Russians were active everywhere.

Ambassador Kirk emphasized the importance of South East Asia both as a source of highly strategic raw materials such as petroleum, tin, raw rubber, bauxite, and rice, the addition of which to the Soviet economy was as important as would be its resulting denial to its present users. He believed that the importance of this area and its products was such that for the immediate future the area would be the principal target of Soviet pressure although Berlin would no doubt continue to be tense.

Ambassador Kirk remarked that possibly the Soviets might be moving a little too fast. He referred to their continual insistence on the imminence of Western economic crisis and pointed out that no one knew to what extent their own propaganda might induce miscalculation on the part of the Kremlin. In any event, one could not close one’s eyes to the fact that the Soviet Union had an armed force of over 4 million ready and equipped to fight; although the present employment of the Ground Forces appeared to be essentially defensive they could obviously go over to the offensive very quickly. It could be a fatal error to base one’s calculations entirely on the assumption that since the Soviet Union have never started an aggressive war they would not do so in the future.

There were certain weaknesses in the Soviet Union which should be considered. The two basic shortages in terms of raw materials were those of rubber and petroleum. It was generally believed that there were no more large unexploited oil reserves available to the Russians. The other important weakness was that of the transportation system which in all respects, rail, highway and water, was not highly developed in a modern sense.

In conclusion Admiral Kirk stated that it was his estimate that at the present time the Soviet power complex was stronger than we in a temporary sense but not in terms of long-term strength. An index of this was of course industrial production. The Western world had no alternative but to be firm in its attitudes and policies and redress the balance of power.

Mr. Bohlen described the thinly veiled Cominform operations against the impending arms shipment to France and Italy. They had all the standard features of a controlled Communist operation but with one additional important factor. This was the evidence that they might be prepared to use the illegal apparatus in this connection. To do so would be contrary to traditional Leninist teaching and practice which reserved the illegal apparatus for an actual take-over of power. In the Communist operation against the Marshall Plan they did not do this but now in France the illegal cadres were alerted. This was clearly under orders from Moscow and contrary to the wishes of the local party leaders who believed it a fatal tactic. The complete subservience of the FCP had been demonstrated in the recent sudden change of Communist tactics in the French Assembly. In the labor field Communists had already lost the support of the non-Communist Unions and were losing even some of their own supporters. This operation which appeared to be impending made no sense locally and could, if carried through to the end, only result in the destruction and demoralization of the local Communist cadres.

Assuming that these present indications proved to be correct and the Communists do in fact go all out to sabotage the arms deliveries, three hypotheses could be advanced in explanation. The first, and most optimistic, was that this operation represented evidence of extreme miscalculation on the part of the Politburo in believing that by such action they could in fact bring to a halt the arms shipments and disrupt the Atlantic Pact. The second hypothesis was that the Kremlin had some very important political move on the cards for this Spring for which they considered it worth expending their Communist cadres in Western Europe. The third hypothesis, while still unlikely, could not be completely ignored—namely, that the Kremlin intended to force a showdown this Spring, even involving war.

If the second hypothesis were correct the probable target was Berlin. It was Mr. Bohlen’s definite feeling that the phenomenon he described in France and apparently in all Western Europe countries, if carried out by the Communists, was geared to a larger Soviet operation.

Ambassador Dunn stated that the Modena incident²⁸ was an example of the recent Communist use of strongarm squads brought from other areas. He also observed that the organization of Italian ports was being carried on by French Communists.

Ambassador Harriman stated that his only comment on Ambassador Kirk’s presentation was with respect to Finland. It was his view that Finland had become a very dangerous point and that it was a subject we should be concerned with as a matter of urgency.

1. A series of 11 “notes,” or minutes, on the various meetings in the 3–day session, identified as RAM/PWB–1 through 11, is in a hard-cover binder in the CMF Files, Lot M–88, Box 148. Lot M–88 is a consolidated master collection of the records of the conferences of Heads of State and Foreign Ministers meetings for the years 1943–1955 prepared by the Department of State Records Service Center.
2. For further documentation on Western European integration, see pp. 611 ff.
3. For text of Hoffman’s speech of October 31, 1949, see the New York Times, November 1, 1949, p. 22.
4. See below.
5. For the text of the European Economic Cooperation Convention, see Documents On International Affairs, 1947–1948 (London, Oxford University Press, 1952), p. 178.
6. For documentation on the OEEC in 1949, see Foreign Relations, 1949, vol. iv, pp. 367 ff.
7. For further documentation on the British relationship to European problems, see pp. 611 ff.; regarding United States relations with the United Kingdom, see pp. 1598 ff.
8. Aneurin Bevan, Minister of Health.
9. Sir Stafford Cripps, Chancellor of the Exchequer.
10. John Strachey, Secretary of State for War, and Emanuel Shinwell, Minister of Defense.
11. For documentation on the Spender Plan for South East Asia, see vol. vi, pp. 1 ff.
12. For further documentation on United States policy toward Germany and the status of Berlin, see pp. 913 ff., herein, and volume iv .
13. For documentation on the question of Spaak’s appointment as Secretary-General of the OEEC, see Foreign Relations, 1949, vol. iv, pp. 462 ff., and pp. 611 ff., herein.
14. Further documentation on the Deutschlandtreffen is scheduled for publication in volume iv.
15. Ernst Reuter, Mayor of West Berlin.
16. Konrad Adenauer, Chancellor of the Federal Republic of Germany.
17. Andre François-Poncet, French High Commissioner for Germany.
18. Gen. Maxwell D. Taylor, United States Commandant for Berlin.
19. Kurt Schumacher, Head of the German SPD.
20. Documentation on the Franco-Saar negotiations is scheduled for publication in volume iv.
21. For documentation on the devaluation of the German mark in September 1949, see Foreign Relations, 1949, vol. iii, pp. 448 ff.
22. For further documentation on the North Atlantic Treaty, see pp. 1 ff.
23. Not identified in Department of State files.
24. Further documentation on the Soviet Union’s relations with other countries is scheduled for publication in volume iv.
25. Documentation on the Austrian treaty negotiations is scheduled for publication in volume iv .
26. Documentation on the Soviet-Yugoslav dispute is scheduled for publication in ibid.
27. Documentation on United States policy toward Finland is scheduled for publication in ibid.
28. Presumably Dunn was referring to the clash between police and foundry workers at Modena, Italy, on January 9, in which several workers were killed and wounded and which resulted in widespread strikes.