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

611.56/8–2250

Policy Statement Prepared in the Department of State¹

secret

[Washington,] August 25, 1950.

The Netherlands and Possessions

a. objectives

The principal objective of United States policy toward the Netherlands is to ensure the continuance of the present effective participation by the Netherlands in the cooperative effort of the Western European nations to achieve economic recovery and mutual defense against totalitarian aggression. In line with this major objective, we seek to encourage the existing democratic regime in the Netherlands and to strengthen the Netherlands economy.

As regards the Netherlands West Indies and Surinam, our main objective is to ensure political stability in these possessions; a related objective is to ensure that the flow of strategic materials from this area to the United States continues without interruption. It is equally important that the cooperation between the Dutch military authorities in Curaçao and the United States Caribbean Command based in Panama be continued since these Netherlands possessions lie within the strategic area of the Panama Canal.

b. policy issues

Political. The major concern of the Netherlands Government at present is the integration of the Netherlands into a closer association with Western European democracies. Dutch policy aims at strengthening the Benelux Customs Union, active participation in the Brussels Treaty System and the OEEC, closest cooperation in the North Atlantic Pact, and expanding commercial relationships with Western Germany.² The United States considers that these objectives of the Netherlands Government should be encouraged.

The attitude of the Dutch people toward the US, influenced by historical ties and more recently by such foreign policy programs as ERP, NAT, etc., is cordial. In the present tense international situation, the Dutch Government is cooperating closely with the United States Government. Dutch friendliness toward the US, however, has been affected in certain quarters by our policy with regard to Indonesia.³ The Dutch feel deeply their loss of Indonesia which has reduced them from a wealthy empire of 80 million people to a small nation of 10 million. There are some in the Netherlands who feel that the United States was responsible, through the role played by its representative on the United Nations Commission for Indonesia, for the loss of these rich islands. While such a feeling is, of course, ridiculous as a means of correcting such misinformation and supporting traditional friendship and cooperation, now more necessary than ever, we must continue to intensify our program of information and educational exchange in the Netherlands. The signing of the Fulbright Agreement with the Netherlands in May 1949 with the subsequent educational-exchange plans, and the opening of a USIE operation in Amsterdam will constitute an important part of this program.

Since 1945, the United States has pressed for a settlement of the struggle between the Indonesian Republic and the Netherlands and has been a member, together with Belgium and Australia, of the United Nations Commission for Indonesia. In late 1949, a Round Table Conference in The Hague⁴ transferred sovereignty to Indonesia and established the Netherlands-Indonesian Union, a voluntary association which offers opportunities for cooperation between the two nations in every field. While Indonesia was a dollar earner for the Netherlands prior to the war, the Netherlands is making a net contribution to the recovery of the Indonesian Republic at the present time.

It is in our interest to endeavor to maintain and strengthen the Netherlands-Indonesian Union. In Indonesia the Dutch have much to offer. They can exert a very stabilizing influence on the new nation and do a great deal to place it on a sound economic footing. We should assure the Dutch that the United States has no desire to replace them in Indonesia. On the contrary, we desire them to maintain as friendly and profitable a relationship with the new Republic as is possible.

As regards Netherlands New Guinea, we hope that an amicable settlement of the dispute over the sovereignty of that area can be reached by the two Union partners under the terms of the Round Table Conference. If negotiations do break down, as it possible, we favor a continuation of Dutch administration in some form such as a UN trusteeship over the area with the Netherlands as the trustee.

Economic. As a result of decisions taken at the London Conference on Germany in June 1948,⁵ ways have been found, or are being found, to consider the views of the Netherlands regarding the German settlement in general, and certain specific Dutch problems such as those relating to matters of trade and economic interests between Holland and Germany and to Dutch claims for frontier rectification. Holland’s economic prosperity has traditionally been dependent upon a large volume of trade with Germany. Long-range Dutch recovery must be similarly geared.

As a favorable influence on the economic and commercial policy of the Netherlands Government and a concrete example of western European economic cooperation, the United States has encouraged and should continue to encourage Netherlands participation with Belgium and Luxembourg in the Benelux Union. Under Benelux ordinary customs duties on trade among the three countries were abolished and a common tariff on imports from outside the Union adopted on January 1, 1948. While a full customs union as defined in the ITO Charter has not yet been achieved, the participating countries set July 1950 as the date for arriving at a substantially complete economic union. However, this date was not met principally because of the resignation of the Belgian Government in April of this year and the dissolution of the Belgian Parliament over the troublesome royal question.

Particularly because the Benelux Union is often cited as an example for wider European unions, we should observe closely the potentially restrictive aspects of the Union and their effects on the European Recovery program. For example, in determining their future course of industrial development, countries of the Benelux group have agreed that expansion of productive capacity in 23 major industries, as well as the establishment of new industries, would be made subject to consultation between the member governments with the apparent purpose of eliminating “undesirable” competition. There is strong reason to suspect that the intra-industry discussions to implement this intergovernmental agreement have extended to subjects other than non-expansion of productive facilities, e.g., limitations on production and division of markets. We should keep constantly informed with respect to such private restrictive arrangements. We should endeavor to persuade the Netherlands Government that the employment of private producer agreements as a substitute for the governmental trade barriers being removed within Benelux could frustrate the basic objectives of the Union and also prove detrimental to the European Recovery Program. The Netherlands Government should be encouraged to take appropriate measures to prevent or eliminate agreements among industries not to enter fields of production reserved for other producers, division of markets or other restrictive arrangements which would eliminate the competitive stimulus to lowered costs and prices and increase efficiency. The removal of governmental trade barriers would have failed of their purpose if they did not place inefficient enterprises under great pressure to increase efficiency, reduce costs or shift into lines of production in which they could be more efficient.

The Netherlands Government has stated that it is now willing to proceed to the negotiation of a proposed treaty of friendship, commerce and navigation, the treaty to contain an escape clause in case there are certain provisions which conflict with the Benelux agreement. It has indicated that it hopes to set a date for resuming active discussions on or about the first of October. We should continue to encourage the Netherlands to open actual negotiations as soon as possible.

While nearly all of the OEEC countries, plus Canada and the United States, have combined in an informal but permanent group known as the Paris Consultative Group for the purpose of coordinating a multilateral program of security export controls, the Netherlands Government has insisted that it cannot formally join this informal body and prefers to continue to discuss its own problems bilaterally with the United States. Nevertheless, Netherlands representatives have attended all of the meetings of the Consultative Group and its Coordinating Committee and participated in the discussions; and while the Netherlands has refused to be bound formally by the decisions reached in these groups, to date it has abided by such decisions as faithfully as the other countries. Since the Consultative Group is still in its formative stages this ‘observer’ status has not posed any insurmountable difficulties and Netherlands cooperation has proved satisfactory. However, if present US desires for the Consultative Group are realized and it becomes a relatively important organization capable of resolving most export control problems without excessive referrals to Foreign Offices, lack of membership on the part of the Netherlands Government would be a handicap for all concerned. It is felt that when such a stage has been reached, the United States will be able to prevail upon the Netherlands to review its policy toward the group and become a full member.

Aviation. The negotiations which this Government has been carrying on intermittently with the Netherlands Government for an air transport agreement over the past four years have come to a head. The Dutch seek commercial rights for KLM at New York on the Amsterdam–Curaçao run. Since KLM is one of the major dollar earners of the Netherlands, it would be in line with our commercial policy, in endeavoring to reduce the dollar gap, to grant these rights. The Department in a letter from the Under Secretary has urged the Civil Aeronautics Board to agree to such a grant. It may finally be necessary to carry this matter to the White House for a decision.⁶

c. relations with other states

Indonesia. Harmonious and genuine cooperation between the Union partners is hampered by a residue of Indonesian distrust of Dutch motives and intentions. Some Dutch military, civil service and business groups have found it difficult to adjust to Indonesian independence. On the other hand, certain Indonesian elements have led even the most sympathetic Dutch leaders to believe on occasion that there is no real intention on the part of Indonesia to live up to its commitments under the Round Table Conference Agreements.

The question of sovereignty over Netherlands New Guinea will probably come to a head this year. Under the terms of the Round Table Conference this issue was to be settled by consultation within the year. Since the RTC, the Indonesians have stated that they are going to take over Netherlands New Guinea. The Dutch, goaded by such statements, have now informed us by note that they do not intend to release their sovereignty over this area. In this they are supported by the Australians who have no desire to see such a change of sovereignty.

United Kingdom. While the Netherlands places great reliance on Great Britain, minor differences of opinion do exist. The UN embargo on arms shipment to Dutch East Indies, the apparent reluctance of the British to commit themselves more fully to a policy of European economic collaboration, and the arrangements made by the British with Royal Dutch Shell by which the dollar earnings of the oil company, including those from the Curaçao refineries, are placed under the control of the British Government, are constant points of irritation. However, these points are relatively minor and essentially Dutch relations with the United Kingdom are excellent.

Belgium. The cornerstone of Dutch foreign policy is close economic and political association with Belgium and Luxembourg. Belgium has consistently supported the Dutch position in the Caribbean and in Indonesia and has served as the Netherlands appointee to the United Nations Commission for Indonesia. When the Benelux Union is fully operative, the two countries will be one economic unit. Negotiations are proceeding at the present time looking toward the integration of the financial policies of the two countries. It is axiomatic that Belgium and Holland will be drawn closer together on the political side because of their very close economic collaboration.

France. The relations of the Netherlands with France are now conducted largely within the framework of the Brussels Treaty System, the OEEC, and the North Atlantic Treaty. The Dutch, when their own particular interests are not at stake, often devote their efforts in attempts to reconcile the divergent and conflicting points of view of the British and French in the two organizations. They are not inclined to count too heavily on French support in a crises and tend to look with disfavor on what they consider to be political and economic instability in France.

Germany. The Dutch believe that an economically viable Germany is essential not only to their own well being but to the general prosperity of western Europe. Since their own economic welfare is so dependent on conditions in Germany, they are probably foremost among the European nations in advocating the integration of Germany into the western European economic community. They fear and hate German aggressiveness but are advocating, together with the United States, a rebuilding of Germany. They are convinced, however, that proper safeguards should be taken to prevent the resurgence of German armed might.

USSR. Holland fears and distrusts Russia probably even more than she feared and distrusted Germany. The Dutch believe that a strong stand is the only possible course at this time, and have therefore cooperated thus far in placing controls on exports to satellite nations and in all plans for the rearmament and economic strengthening of western Europe.

d. policy evaluation

The Netherlands has consistently supported US policies and procedures, especially in relation to European economic recovery, western European defense, and international cooperation for the maintenance of peace and for economic and social advancement. At times hostile propaganda has succeeded in creating in certain quarters in Holland the impression that US policy in Indonesia at least is governed chiefly by an antagonism to the Soviet Union and by considerations of US business interests which result in a lack of proper concern on our part for the vital interests of the Dutch. However, it is believed that Dutch dissatisfaction has been somewhat ameliorated by the successful conclusion of the Round Table Conference at The Hague, which resulted in independence for Indonesia and for which the Dutch themselves must accept responsibility along with the Indonesians. A strong USIE program in the Netherlands and its possessions to explain and to interpret US policy with respect to controversial issues is nevertheless essential to help rach and to keep informed Dutch public opinion, as well as to counteract adverse propaganda being spread from the east.

1. Policy statements on various countries were prepared periodically in the Department of State and updated every year or two. The previous study on the Netherlands was dated November 15, 1948, but apparently all copies were destroyed upon receipt of this revision. Copies of the source text were sent to London, Paris, Brussels, Moscow, Frankfort, Copenhagen, Luxembourg, The Hague, Curaçao, Canberra, Singapore, Hong Kong, Djakarta, and the United States Mission at the United Nations in September and October.
2. For further documentation on the participation of the Netherlands in the North Atlantic Treaty Organization and the Organization of European Economic Cooperation, see pp. 611 ff.
3. For documentation on United States policy toward Indonesia, see vol. vi, pp. 964 ff.
4. For documentation relating to the Round Table Conference in The Hague, see Foreign Relations, 1949, vol. vii, Part 1, pp. 119 ff.
5. For documentation on the London Conference on Germany, February 23–June 1, 1948, see Foreign Relations, 1948, vol. ii, pp. 81–312.
6. Documentation on the negotiations for an air transport agreement with the Netherlands, including the text of Under Secretary Webb’s letter of August 4 to the Civil Aeronautics Board, is in file 611.5694.