Foreign Relations of the United States, 1952–1954, Western European Security, Volume V, Part 1

740.5/6–553

The United States Special Representative in Europe (Draper) to the President ¹

secret

Paris, June 5, 1953.

My Dear Mr. President: Attached is a study by our Plans and Policy Staff in Paris,² discussing the political, economic, and defense problems that face the United States in Europe. I hope this planning paper may be helpful to the interested Washington Departments and to the National Security Council.

As I relinquish my responsibilities as Special Representative in Europe,³ it seems to me that three objectives should largely govern US policy thinking in relation to Europe. These objectives are easy to state, but hard to accomplish. If they can be even reasonably achieved during the next three years, the results will go far to maintain world peace. The three objectives are:

Political Unity—A unified philosophy and action program in NATO.

Economic Equilibrium—A balanced trade between Europe and America.

Defense Posture—A military strategy and force supportable by NATO but sufficient to deter or defeat Soviet aggression.

I personally believe that all three aims can be realized if their overriding importance is accepted as valid, and if an adequate program for their accomplishment is carefully explained to Congress and the people of the United States, and to other Governments and the peoples of our NATO alliance. I do not believe that the Soviet has abandoned its plans for communist world domination. The death of Stalin may give us a longer breathing space, while internal power is being consolidated, before total political or military pressure is applied. So long as the Soviet’s vast military capabilities continue to increase, any appearance of friendly intention must be fully discounted. However any communist proposals or willingness to settle outstanding issues should be met halfway in the hope and belief that a peaceful overall solution will eventually be found.

On the premise that measurable progress toward the three objectives mentioned above would improve our chances for reaching an acceptable solution with Russia, and that such progress is even more vitally necessary if the cold war continues indefinitely, I comment below on each of these objectives.

Political Unity

A unified philosophy and action program in NATO.

The initiative you so boldly took in your address in April⁴ outlining the free world’s peaceful aims, and the unity and solid achievements of the NATO Meeting⁵ that followed, have been somewhat clouded by the recent arguments back and forth across the Atlantic and by the fall of the French Government. The position can be quickly restored at Bermuda⁶ if the US, the UK, and France can wholeheartedly agree there on any reasonably constructive program, and if the conclusions reached can be quickly communicated to the other NATO powers and receive their general approval. United support for any projected program by the fourteen NATO governments and by Western Germany is almost more important than the program itself.

Because of the natural suspicion with which the other NATO members regard any Big Three Meeting, it would pay big dividends to acquaint the Permanent Council in Paris with the proposed agenda before the Bermuda meeting. The views and general comments of other members might well be invited for information and background, without in any way binding the three delegations. I dwell on this illustrative suggestion because I believe that unified Western backing for an acceptable political, military and economic program should be our number one national objective, and because experience in the Council has shown that early consultation almost invariably brings general support for proposals that otherwise would be criticized if not opposed.

During the past eighteen months the United States has moved appreciably in the direction of making its agreements and reaching its understandings with Canada and the Western European countries on a multilateral basis. Bilateral discussions continue to take place in the various Capitals but more and more in preparation for the broader agreements reached in the NATO Council, in the EDC, or in the OEEC. US military officers in many key posts in the Standing Group, in SHAPE and in SACLANT, and the incentive of US military and economic assistance have encouraged this trend during the lengthy Annual Review of NATO Force Goals, and in other military, political, economic, and production problems coming before the NATO Permanent Council.

This trend is a good one, and should be encouraged in the interest of the United States and of NATO. The power of final decision for the US should remain in Washington, but broad authority to develop, discuss and recommend US policy positions should be allowed our Ambassadors and our Regional Representatives. A reasonable degree of decentralization by the US and the other members is essential to a successful multilateral organization.

The advertised down-grading of our Regional Representation has raised fears in European countries that the United States’ interest in NATO and in OEEC is decreasing. This false impression should be combatted vigorously. If the power of the purse—represented by military end-item assistance, off-shore procurement, and economic defense support—is disassociated from, the US Permanent Representative in NATO, his influence in multilateral NATO discussions will greatly decline. Whatever scope and organization is now given to US regional representation, should be carefully reviewed and reconsidered after six months or a year.

The authority and responsibility exercised by the US Permanent Representative will largely determine the importance ascribed by other NATO members to Council deliberations. Therefore the test of future US effectiveness will be the degree to which the Permanent Council has continued to develop as a political cabinet of the fourteen powers, in which questions of mutual concern are discussed and agreed after reference to governments, but without the need for crash decisions by NATO Ministerial Meetings reached in an atmosphere of crisis. Unity of purpose and of program in NATO can best be achieved by decisions taken after frank and open discussion in a strong Permanent Council.

The immediate political battle to be won is obviously ratification of the EDC Treaty.⁷ France, burdened financially by the Indo-Chinese War, politically by an unworkable Constitution, and psychologically by fear of German revival, is the obstacle.

Despite French hesitation and probable Soviet blocking proposals for German neutralization, I fully expect that ratification will be actually completed this year, together with real progress toward solutions of both the Saar and Trieste problems.⁸ For all of this to happen quickly requires a large measure of unity and good will among all NATO members—this in turn depends largely on US leadership, US diplomacy, and US faith. Great progress toward ratification has been made since our Secretary of State emphasized its importance last January.⁹ The Administration is now fully justified in advocating that the Congress approve the proposed foreign aid appropriations without requiring prior ratification. Such a condition would cause confusion and delay and might well defeat its own purpose. Just as there is no good alternative to EDC for Western Europe, there is no good alternative for the US to continued political and military support for NATO.

Economic Equilibrium

A balanced trade between Europe and America.

Until a reasonable trade balance prevails between the dollar area and Europe, the threat of economic warfare predicted by Stalin last October¹⁰ will lurk dangerously in the background, even if political and military unity has been achieved. Huge annual grants of economic aid have closed the gap during and since the war. Economic assistance is properly being decreased and soon will be eliminated. Unless our imports from Europe and our foreign investments increase substantially as an offset, our own export industries will suffer, and reduced defense effort and lower living standards will be inevitable in Europe. Our own national interest requires that we encourage increased foreign trade to replace grants of aid.

The protectionist philosophy is a relic of the days when we feared cheap European labor. Now the United States has the most efficient, competitive and productive economy in the world, and as a nation should advocate and adopt sharply lowered tariffs and reduce other barriers to stimulate freer foreign trade. We can far better indemnify the individual hardships of particular industries and labor groups than continue to maintain an archaic protectionism contrary to the best interest of our country as a whole.

Free convertibility of sterling and other European currencies would stimulate trade, investment, and production but could only be safely attempted if the “dollar gap” is nearly closed. Five years ago commercial exports and services from the dollar area exceeded imports of goods and services from the European Payments Union Area (including the sterling bloc) by over five billion dollars. This commercial dollar gap has been greatly reduced, and is currently not over two billions a year. However, it is only held at this level by existing European restrictions against much larger purchases in the United States which Europeans would like to make. During this calendar year extraordinary dollar expenditures in Europe by the United States (nearly one billion of military and construction spending by our troops, another billion of economic aid expenditures, and a half billion in payments for off-shore procurement deliveries) will more than close the 1953 commercial gap and increase European gold and dollar reserves by roughly a half billion dollars. The same general result should hold true in calendar year 1954, when increased off-shore expenditures will offset decreased economic aid. The total extraordinary dollar expenditures will probably decline in 1955. This means that the United States and Canada on the one hand, and Europe and the sterling bloc on the other, have about two years in which to find a more normal and permanent solution.

Europe must make much the greater effort if trade between the old world and the new is to balance at an acceptably high level. She must produce the commercial goods to earn two billions of dollars more a year in addition to her present production, or any increases in export sales will simply reduce her own consumption. To sell this much more abroad Europe must become more efficient and more competitive in price and type and style.

But the United States in its own interest and as leader of the free world must show the way to balanced trade, or face the danger—as Stalin has predicted—that cut-throat competition for trade and dollar payments would cause a dangerous rift among our partners. In many ways the “dollar gap” is the most serious future free-world issue. Europe is asking a chance to earn its own way. If we cut off aid and do not drop the barriers that prevent increased trade the impact, both practical and psychological, will be damaging indeed.

The Marshall Plan and the Mutual Security Program were both developed and supported on a bipartisan basis. A bold and aggressive bipartisan program for “trade not aid”, actively championed by the Administration, could overcome the remaining protectionist sentiment and the arguments of those who understandably clamor to hold their protected markets. Educational studies and discussions are already underway, and could be extended to include a public campaign of education up and down and across the country. A broad and basic program could be developed on a bipartisan basis this fall for presentation to Congress in January, if a special session this year is considered impracticable.

Temporary tax or other benefits for those actually injured by loss of markets would be equitable and would represent a small cost to the US compared to the national and world objective involved. Comparable studies and practical legislation to encourage American private investment abroad could also be undertaken as part of the “dollar gap” solution. European countries should be asked to take complementary steps and to pass necessary legislation in both the trade and investment fields as part of a combined attack.

Europe’s production has been steadily increasing for five years but is now holding on dead center. Nothing could stimulate Europe’s millions to increased effort, and to new hope for the future, more than measures opening the American market more widely to Europe’s products. These measures could include, in addition to extension of the Reciprocal Trade Agreements Act and passage of the Customs Simplification Act, (a) repeal of the “Buy American” Act, (b) unilateral reduction of specified tariffs, (c) removal of quantitive restrictions and quotas, (d) free entry for small percentages of our total consumption of many products, and finally, (e) an agreement by treaty, requiring confirmation by the Senate, that for a period of say ten years tariff rates would not be increased by either party to the treaty.

Such a treaty agreement, by preventing tariff increases, would greatly encourage the import of products which could compete under existing tariff rates, but for which the market development expense would not be undertaken if higher tariff rates might be anticipated as soon as sales became appreciable.

However, it is not these specific suggestions, but the principle that I wish to stress. We cannot permanently sell more to other countries than we buy from them or loan to them, unless we want to continue giving them free dollars. We can use more of their products and increase our own standard of living. At the same time we can permit them to buy more from us, and balance their accounts by trade rather than aid.

Defense Posture

A military strategy and force supportable by NATO but sufficient to deter or defeat Soviet aggression.

On March 8th I wrote you¹¹ enclosing Chapter IV of the study attached to this letter and pointing out that the foreseeable economic resources of the NATO countries would fall far short of providing the minimum defense forces considered necessary by NATO military authorities. It seemed to me that this fact would become apparent to all NATO members during the next few months, and that a major issue would arise in the NATO Council this fall or next spring. I suggested that the National Security Council might wish to reconsider this problem including the present strategy and mission.

Since my letter was written the problem has come into sharper focus. As you know, the NATO Meeting in April gave priority to improving the combat effectiveness of present forces and adopted force goals for 1953 and 1954 involving only very moderate increases. The United States put forward the thesis of the long term Soviet threat, with lower peak years of preparedness but with a longer and more supportable plateau of defense. Most NATO countries indicated they were at or close to the maximum feasible defense expenditure ceiling. The French Government has since fallen in attempting to bring its expenditures (including defense expenditures) more nearly within its receipts.

The British Undersecretary for Defense, Mr. Richard Powell, informed me just before the NATO Ministers’ Meeting that the British Government was greatly concerned over the problem that would arise at the October NATO Meeting when the continental countries generally realized that the combined defense forces would fall far short of minimum military requirements for the foreseeable future. The British fear that this realization, combined with our own stretchout and reduced appropriations for foreign military and economic assistance, might induce not merely a leveling off but a sharp decline in the defense preparations of certain NATO members.

The basic question, and one that may well be asked in October, is whether the United States and its NATO allies with their greater industry and resources, as compared with the Soviet, are able and willing to provide the forces needed to deter Soviet aggression or to meet it successfully if necessary on the field of battle. A second question is whether the resources presently available for Western defense are being put to the best use, for the best weapons, under the best strategy, and for a mission which can be successfully carried out.

The SHAPE study on 1956 requirements, taking into account atomic and other new weapons, should soon be available and will unquestionably bring the basic issue into bold relief.

I assume that the National Security Council is dealing with this and related problems and that the newly appointed Joint Chiefs of Staff will be considering the military aspects of this question as a matter of urgency. I only raise it again because we in Europe have seen no good answer, and the question is being raised by other countries.

It is clear that we have been making substantial progress in building NATO forces during the past two years. Just as clearly the Soviets’ strength has also been increasing. There is no sign that their build-up is slowing down. Their progress in building a strategic bombing force and their undoubted progress in atomic weapons now poses the threat of a second Pearl Harbor which might lay waste many of our own industrial centers. The opening blow may be aimed at America and not at Europe.

I realize that military requirements are always set high and that national treasuries might all be bankrupt if the military’s requests in all countries were actually granted. It is for this reason that I urge—and it may already be fully underway—the concentration of our best civilian and military minds on the overall NATO strategy, both defense and attack, with access to all available information, to reexamine NATO requirements and to be sure that the best use and division of resources is being made.

It may be that a careful assessment of the facts will show that some new strategy or use of weapons, or some rearrangement of the present strategy can provide adequate security for the United States and for other NATO countries within the presently foreseeable resources. But if not, if the only reasonable conclusion, to avoid being second best in the race, requires a greater effort, higher taxes, and a larger proportion of US and NATO national wealth each year for defense, I firmly believe that such a program, properly explained and justified, could be and would be supported by the governments and peoples concerned. Otherwise we should have to conclude that the Soviet system of dictatorship can pose a sustained and superior military threat to the more powerful democratic nations of the world to which they have neither the will nor the capacity to adequately respond. This conclusion is unthinkable and cannot be accepted, when our own national survival is at stake.

These three objectives are neither original nor novel, but their substantial achievement appears essential if US policy in Europe is to succeed. The American people look to you as their great leader. They recognize your unparalleled knowledge of Europe and of things military. If, after full consideration, you decide these things need to be done in our national interest, I am confident the American people will accept your judgment and follow your leadership, no matter what the cost.

With sincere appreciation for your many courtesies and great consideration, and with all good wishes, I am

Respectfully yours,

William H. Draper, Jr.

1. The source text does not indicate how this message was delivered to President Eisenhower.
2. No copy of the study was found attached to the source text; however, a message from Draper to Dulles, dated June 8, states that it was entitled “Certain European Issues Affecting the United States” and was dated May 15. (PPS files, lot 64 D 563, “Europe, 1952–53”)
3. President Eisenhower accepted Draper’s resignation on May 11, to be effective June 30.
4. Regarding President Eisenhower’s address, see footnote 4, p. 372.
5. For documentation on the North Atlantic Council meeting at Paris, Apr. 23–25, see pp. 368 ff.
6. For documentation on the Bermuda Conference of the Heads of Government of the United States, the United Kingdom, and France, see pp. 1710 ff.
7. For documentation on the efforts of the United States to secure the ratification of the EDC Treaty, see pp. 571 ff.
8. For documentation on the Saar and on events leading to the membership of the Federal Republic of Germany in NATO, see pp. 1370 ff. and 251 ff., respectively. For documentation on Trieste, see volume viii .
9. Presumably, Draper is referring to Dulles’ statement on Feb. 9 voicing strong support for the EDC; for text, see Department of State Bulletin, Feb. 23, 1953, pp. 289–290.
10. Presumably, Draper is referring to Stalin’s article in Bol’shevik, #18, September 1952, pp. 1–25, on the economic problems of socialism in the USSR, point 5 of which dealt with the deepening of the crisis of the world capitalist system. For an extract, see Documents (R.I.I.A.) for 1952, pp. 224–229.
11. A copy of Draper’s letter is in file 740.5/3–853, but no copy of the enclosed chapter IV was found attached to that copy.