Foreign Relations of the United States, 1950, Central and Eastern Europe; The Soviet Union, Volume IV

450.6031/5–150: Telegram

The Ambassador in the United Kingdom (Douglas) to the Secretary of State

top secret   niact

London, May 1, 1950—8 p. m.

2363. Reference Tosec 36 April 28 repeated Paris 1898.¹

1. Ambassador Jessup, Bohlen and Bonesteel² concur in this message.

2. Irrespective desirability extending east-west strategic export controls, I am seriously concerned over underlying philosophy Commerce memo, and strongly convinced any US attempt dragoon European partners into reluctantly paralleling US strategic trade controls would seriously jeopardize our efforts attain real unity in political, military, economic fields based upon mutually agreed definition of aims and determination best means to reach them. I believe such US effort would fail and hamper present attempts tighten up western European controls within attainable limits. This most inappropriate time to take unilateral line on what must realistically be considered a secondary issue. If US should suddenly drop previous approach outlined Repto [ Torep ] 816, August 27, 1948³ and inject much stronger line into FonMin and NAT meetings on this issue, success meetings might be jeopardized. Furthermore, strong new US line with implications to Europeans of embarking on aggressive economic warfare, if pushed at this particular time, might encourage rather than discourage feeling among certain groups in NAT countries whose active cooperation we endeavoring secure that attempt to create basis for “neutral” bloc preferable to tightening US-European partnership in opposition Soviet and satellites.

3. Whether justified or not, Europeans, especially British with general agreement French, feel that extension of controls proposed by US over 1B exports goes beyond strictly security considerations into field economic warfare (Paris Embtel 1838, April 21 repeated London 517). They are not prepared this time adopt criteria essential to latter type of action. Until this difference in approach reconciled and compromise reached, I agree with Paris, re specific issue 1B controls, that in absence tripartite agreement, CG or CoCom debates “would be useless and might even jeopardize US objectives”. (Paris Embtel 1862, April 24 repeated London 523.) British attitude described Embtel 2128, April 19 repeated Paris 606 and Embtels 2328 and 2332 April 28 repeated Paris 679 and 681.⁴

4. Re use of “sanctions” involving withholding ERP and MDAP assistance, such action would threaten entire MDAP objective in order force through tangential strategic export control objective. Europeans would certainly resent and sense inconsistency of US actions which on one hand were aimed at recreating positive military and economic strength in Europe through ERP and MDAP–NAT while on other hand seriously disrupting these programs through the application of sanctions to attain a negative and perhaps tangential result. For example, ECC staff point out that prohibition export from US of single strategic items, such as engineer air compressors, might destroy balance of carefully planned end item programs and affect total military effectiveness of forces in being. The Russian menace to our national security can be met best by recreating a balance of relative military power which would reduce the possibilities of overt aggression, while maintaining economic health.

5. I feel that if Germany, particularly, not allowed trade with Eastern Europe, except in framework of full restrictive policy re 1B items, Germany will not be able “pay its own way” in foreseeable future and that more restrictions may, among other adverse results aggravate, through chain reactions, unemployment in Germany which is already impressive thus creating attitude of mind ultimately more susceptible to blandishments of communism or alternatively less subservient to the imposed restrictions on both. (See Drew Middleton article page 2 New York Times international edition April 27.) More generally, West Europe may not be able maintain present economic leverage, such as it is, over Soviet and satellites.

6. It should also be noted that effectiveness adoption US controls over 1B items depend some extent on cooperation Sweden and Switzerland whose cooperation obtainable only by persuasion not by sanctions.

7. It is clear that even under present circumstances UK willing participate 1B controls on partial basis, i.e., willing transfer some items from US 1B list to complete international embargo list I, and willing as in past supply information on exports all other items so that subsequent review by CoCom of total quantities shipped could result in transferring at least temporarily additional items to embargo list. I stress again that British do not have closed mind such adjustments.

8. Reply to Ecato cirtel April 25,⁵ will discuss extent 1B cutback on UK economy. Although for UK alone its total 1949 trade with EE approximated less than two percent of British foreign trade, effect drastic 1B export curtailment might encourage USSR, Poland and Czechoslovakia cut down shipments on annual basis of 1 million or more tons coarse grain, 400,000 standards softwood and 30,000 tons bacon. These all marginal goods whose embargo from EE for sterling might require alternative dollar purchases with consequent adverse effect on bridging dollar gap. More basically, however, UK convinced its present trade arrangements confer net advantage to west. These provide Czechoslovakia and Poland must export more than they import in order discharge sterling obligations and, since there is no formal UK/USSR trade agreement, require USSR use earned sterling within full limitations imposed by British export controls. Should be noted, incidentally, this trade pattern forces Poland and Czechoslovakia divert labor and raw materials to providing unrequited exports to UK which might otherwise be used to build up basic economic potentials those countries.

9. I am fully aware justified concern that West Europe’s exports should not assist EE, on net balance, build up war potential while all NAT partners attempting strengthening military defenses and maintain present advantage over Soviet bloc in basic economic potential (FMDB–28a, April 20⁶), but feel strongly US should approach this objective by persuasion, negotiation rather than duress, which, if even partially effective, would produce half-hearted cooperation and, on balance, do more harm than good. In cooperation with French and British, time can be expected strengthen rather than weaken our position.

10. I strongly support Department’s position that NSC re-appraise US policy in this field and recommend German problem be given high priority. In this cable I have generally concentrated upon reasons for feeling that immediate adoption of a rigid, and in my view unworkable, unilateral line on 1B controls would be most unfortunate at this particular time regardless of ultimate desirability such approach. I hope in another cable to submit considerations which may be helpful to Department in its suggested re-appraisal of basic US policy in this field.

11. Pending complete re-examination of entire question, I assume that previous US policy will govern approach taken by our negotiators at US/UK talks on 1B controls prior May 8 meeting Paris, at tripartite discussions then, and finally at CG or CoCom meetings Paris May 25.

Sent Department 2363; repeated Paris 698 for Embassy and Harriman.

Douglas

1. Supra.
2. The Ambassador in the United Kingdom Lewis E. Douglas, Ambassador at Large Philip C. Jessup, Minister in the Embassy in France Charles E. Bohlen, and Lt. Col. Charles H. Bonesteel, Executive Director, European Coordinating Committee, Mutual Defense Assistance Program, were members of the United States Delegation at the conversations in London with British and French officials preliminary to the Tripartite Foreign Ministers Meetings, May 11–13.
3. Foreign Relations, 1948, vol. iv, p. 564.
4. None of the telegrams under reference in this paragraph are printed. They reported on growing American-British differences in the Coordinating Committee on various aspects of the East-West trade control program, particularly on the problem of quantitative export controls (International List II) which the Committee was scheduled to take up on May 4 and May 10. The Embassies urged an immediate high-level American-British review of East-West trade policy. In the light of the comments from the Embassies in London and Paris, the Department of State instructed that discussions be held with British and French representatives aimed at achieving a greater measure of agreement on the problem of limitative controls. Regarding these meetings, held in Paris May 8 and 9, see Armstrong’s undated memorandum, p. 116. The exchanges of messages leading to the convening of the meetings are included in the Department of State files under 450.6031.
5. Not printed. It asked for information on the likely impact upon Western European market outlets in Eastern Europe resulting from the expected imposition of quantitative export controls based on the American 1–B list (London Embassy Files, Lot 59 F 59, 500 Marshall Plan).
6. Not printed.