Foreign Relations of the United States, 1952–1954, East Asia and the Pacific, Volume XII, Part 1

S/S–NSC files, lot 63 D 351, NSC 148

Note to the National Security Council by the Executive Secretary (Lay)

top secret
NSC 148

Washington, April 6, 1953.

References:

• A. NSC 146 and Annex to NSC 146¹
• B. NSC 147²
• C. NSC 125/4³
• D. NSC 48/5
• E. NIE-47⁴

United States Policies in the Far East

The enclosed draft statement of policy on the subject, prepared by the NSC Planning Board,⁵ is transmitted herewith for consideration by the National Security Council at its meeting on April 8. Enclosed for Council information is a Far East Financial Summary which incorporates the information in the separate financial appendices on Formosa and the National Government of China, and on Japan which have been circulated separately with the reports on those areas. Also enclosed for Council information is an Annex constituting a staff study on Communist China.

In addition to the enclosed general policy statement, individual reports have previously been submitted by the Planning Board on Korea (NSC 147), on Formosa and the National Government of China (NSC 146 and Annex), and on Japan (NSC 125/4), for consideration by the Council at its meeting on April 8.

The enclosed statement of policy is intended to supersede those portions of NSC 48/5 not previously superseded.

It is recommended that if the enclosed statement of policy is adopted, it be submitted to the President with the recommendation that he approve it and direct its implementation by all appropriate executive departments and agencies of the U.S. Government under the coordination of the Secretaries of State and Defense.

James S. Lay, Jr.

[Enclosure]

Draft

Statement of Policy Proposed by the National Security Council on United States Policies in the Far East^*

general considerations

1. United States policy in the Far East should carry out in that area our basic security policies as most recently stated in NSC 135/3.⁶ In the Far East we should assist in strengthening the free world vis-à-vis the Soviet orbit, having due regard for United States capabilities and commitments throughout the world. In view of Communist resort to armed force in the Far East, we must act in that area on the basis that the most immediate overt threats to United States security are currently presented in that area.

2. Soviet aims in the Far East appear to concentrate on bringing the mainland of Eastern Asia, and eventually Japan and the offshore islands in the Western Pacific, under Soviet control, primarily through Sino-Soviet development of the resources of Communist China. The attainment of this objective on the mainland of Eastern Asia would substantially enhance the global position of the USSR at the expense of the United States, by securing the eastern flank of the USSR and permitting the USSR to concentrate its offensive power in other areas. Soviet bloc control of the off-shore islands in the Western Pacific, particularly Japan, would present an unacceptable threat to the security of the United States.

3. In the Far East substantial forces of the United States and the French are tied down in Korea and Indo-China respectively by indigenous communist forces. In neither case are the forces or the prestige of the USSR directly committed. This continual drain on American and French resources has a deleterious effect on the build-up of European defense forces and the strengthening of other areas of the free world, such as the Middle East. As long as such a situation continues, there will be less incentive for the USSR to use its influence to bring about a cessation of these hostilities. The situation of the free world would be greatly improved by a use of increased indigenous forces in the Far East which would permit less extensive use of Western forces.

basic general objectives

4. a. As an ultimate objective, the development by the nations and peoples of the Far East, through self-help and mutual aid, of stable and self-sustaining non-communist governments, friendly to the United States, acting in accordance with the purposes and principles of the United Nations Charter, and having the will and ability to maintain internal security, to withstand communist influence, and to prevent aggression.

b. As an intermediate objective, reduction of the power and influence of the USSR in the area, primarily through detachment of China as an effective instrument of Soviet policy.

c. As an immediate objective, cessation of hostilities and stabilization of the situation in the area, on terms acceptable to the United States.

d. In any case, maintenance of the off-shore defense positions (Japan, Ryukyus, Formosa, Philippines, Australia and New Zealand), even at the grave risk of general war.

e. Promotion of a strong, expanding and viable economy in the Far East, free of dependence on Communist China and the USSR, or on artificial forms of any outside support to continue its growth.

f. Maximizing the availability, through mutually advantageous arrangements, of the material resources of the Far Eastern area to the United States and the free world generally, and at the same time denial of these resources to the Communist world.

specific objectives

5. Off-Shore Positions. The United States should take appropriate military action to maintain the off-shore defense positions of Japan, Ryukyus, Formosa, Philippines, Australia and New Zealand.

6. Regional.

a. When and where appropriate, the United States should develop further regional security relationships in the Far East.

b. In promoting a strong, expanding and viable economy in the Far East (paragraph 4–e), food supplies, raw materials and general productivity of the area should be materially increased by greater, continuing investment, development and trade within all parts of the free Asian-Pacific area, and greater investment from and trade with other free world regions.

7. Japan. See NSC 125/2, August 7, 1952,⁷ and NSC 125/4, March 30, 1953.

8. Philippines. See NSC 84/2, Novembers, 1950,⁸ which is hereby reaffirmed.

9. Korea. See NSC 147, April 2, 1953, which analyzes possible courses of action in Korea.

10. Formosa and the Nationalist Government of China. See NSC 146, March 27, 1953.

11. Southeast Asia. The objectives and courses of action set forth in NSC 124/2, June 25, 1952,⁹ are hereby reaffirmed. They should be carried out in recognition that real military progress must be made before the end of 1954 in reducing the organized forces of the Viet Minh. To this end, the United States should:

a. Induce the French and the Vietnamese to take the necessary political and other measures to increase the effectiveness and morale of the Vietnamese people and forces.

b. Give increased aid to the French and Vietnamese in order that they may at once, under an over-all French strategic plan acceptable to the United States and related to UN strategy in Korea, develop the necessary political and military strength.

12. Communist China. In addition to the specific objectives of the above-mentioned policies affecting Communist China, the United States should:

a. Continue to support the exclusive right of the Chinese National Government to represent China in the United Nations and other international bodies, and intensify efforts to persuade other nations to adopt similar positions.

b. Continue to seek our immediate limited objective of cessation of hostilities and stabilization of the situation in the area, on terms acceptable to the United States (paragraph 4–c).

c. Both in support of our immediate objective (paragraph 4–c) and in preparation for the contingency of its being unattainable, expand and intensify by all available means efforts to achieve our intermediate or ultimate objectives (cf. paragraphs 4–a and -b), i.e., the reorientation of the Peiping regime, by:

(1) Applying such political, military and economic pressures against Communist China as are determined to be in furtherance of U.S. immediate and intermediate objectives.

(2) Developing non-communist Chinese leaderships.

(3) Influencing the leaders and people in China to oppose the Peiping regime.

(4) Fostering and supporting anti-communist Chinese elements both outside and within China, with a view to developing and expanding resistance in China to the Peiping regime’s control.

(5) Stimulating differences between the Peiping and Moscow regimes and creating cleavages within the Peiping regime itself by every practicable means.

13. Hong Kong. In the event that Communist Chinese aggression is directed against Hong Kong, the United States should:

a. Furnish relief and evacuation assistance to the British.

b. Consider such military assistance for the defense of Hong Kong as may be appropriate in the light of our own commitments and capabilities at the time.

c. Consider what further action should be taken against Communist China.

[Enclosure]

Far East Financial Summary

Costs of Approved and Projected United States Economic and Military Programs in the Far East

	Actual		Estimates
	1951	1952	1953	1954	1955†	1956†
	(millions of dollars)
Japan	269	154	300	143	1,574‡
Formosa	190	238	236	395	370	190
South East Asia	434	345	364	542
Philippines	43	76	54	35
Korea§	356	387	323	270
Sub-total	1,292	1,200	1,277	1,385
Korea (military courses A–F:10 additional costs)				1,500 to 2,100 to
				4,200	5,100

The Secretary of the Treasury believes that, before the proposed policies for the Far East are finally approved, the proposed levels of military and economic programs should be reviewed in the light of (a) the priority of financing the present and proposed programs for the Far East in relation to programs for other foreign areas and to programs for domestic security, and (b) the over-all objective of achieving a balanced budget.

Japan

	Appropriations				Estimated Deficit|| 1955 and 1956
	1951	1952	1953	1954
	(millions of dollars)
Army Navy	78.6	150.0	300.0	40.0	1099.3
				¶30.0	45.7
Air				73.4	429.4
Total Military	78.6	150.0	300.0	143.4
Economic**	190.5	4.4
Total Assistance	269.1	154.4	300.0	††143.4

Southeast Asia

Fiscal Years	Indo-China‡‡	Thailand	Burma	Indonesia	Total
	(millions of dollars)
1951
Military Assistance	274.3	41.7	§§3.4		319.4
Economic Assistance	21.7	8.9	§§10.4	8.0	49.0
Export-Import Bank				65.8	65.8
Total	296.0	50.6	13.8	73.8	434.2
1952
Military Assistance	249.1	37.8			286.9
Economic Assistance	25.0	7.0	14.0	8.0	54.0
Export-Import Bank		1.0		3.4	4.4
Total	274.1	45.8	14.0	11.4	345.3
1953
Military Assistance	263.7	27.5			291.2
Economic Assistance	||||55.5	7.0	7.0	3.5	73.0
Total	319.2	34.5	7.0	3.5	364.2
1954¶¶
Military Assistance	465.1	29.8			494.9
Economic Assistance	23.0	6.0	14.0	4.1	47.1
Total	488.1	35.8	14.0	4.1	542.0

Formosa

Appropriations
	1951	1952	1953	1954	1955	1956
	(millions of dollars)
Army			98.2	110	200	40
Navy			23.9	28	10	10
Air			11.8	150	60	60
Common use items				30	30	30
Total Military	91.8	157.2	133.9	*318	*300	†140
Economic	98.4	81.1	102.3	‡77	‡70	‡50
Total Assistance	190.2	238.3	236.2	395	370	190

Philippines

	1951	1952	1953	1954
	(millions of dollars)
Economic	15	32	30	17
Military	28	44	24	18
Total	43	76	54	35

Korea

After the outbreak of hostilities in Korea the United States Army assumed part of the burden of supporting the economy of the Republic of Korea. Consumption goods and capital construction were furnished by the Army to the Korean civilian population and this has been considered a part of the cost of military operations. Details are given below.

Future plans for, and estimates of the cost of, economic support of the Republic of Korea must await basic decisions as to the size of the ROK forces, the scale of military operations undertaken, and the recommendation of the economic adviser.

Actual and Estimated Expenditures for Grant Aid to Korea

	1951	1952	1953	1954
	(millions of dollars)
Assistance to ROK (ECA)	28	27	8
CRIK§ (Army)	7	75	110	110
Military Funds for relief (Army)	21	81	5	5
Military Funds for reconstruction (Army)	300	200	175	125
UNKRA		4	25	30
Total	356	387	323	270

Estimates of Costs of the Possible Courses of Action in Korea Set Forth in NSC 147

(Prepared in Department of Defense)

The following estimates of costs of Courses of Action A through F include only the extra identifiable expenditures for the Department of Defense in FY 1954 and FY 1955 above the cost of maintaining the present forces on a non-combat basis. They do not include any costs of materiel which would not be replaced or would be produced in any case to effectuate the policy of production to maintain a mobilization base after peacetime requirements and a substantial portion of net mobilization reserves have been accumulated. In addition to these amounts there would probably be expenditures for aircraft in FY 1956 and FY 1957 to replace aircraft which would be lost under the various courses of action. An estimate of this additional cost is not feasible at this time.

Order of Magnitude of Additional Cost

(in billions of dollars)

		F.Y. 1954	F.Y. 1955
	Course A	$1.5–1.7	$2.1–2.3
	Course B	$2.2–2.4	$3.8–4.0
	Course C	$3.0–3.3	$4.0–4.4
	Course D	$2.4–3	$3.2–3.5
	Course E	$3.2	$4.2
	Course F	$4.2	$5.1

[Annex]

Staff Study on Basic U.S. Objective Toward Communist China

1. The central problem facing the United States in the Far East is the threat to U.S. and Free World security resulting from the establishment of control over China by an aggressive and dynamic Communist regime closely aligned with and supported by the Soviet Union. A basic objective of U.S. policy in the Far East, therefore, must be to bring about changes in China which will eliminate the threat from that country to Free World security.

2. Achievement of this objective, however, would not satisfy U.S. long-range aspirations with respect to China. As an ultimate objective the U.S. must seek the development in China of an independent, stable, self-sustaining, non-Communist Government, which is friendly to the United States and acts in accordance with the purposes and principles of the U.N. Charter. Attainment of this objective is subordinate, however, to the solution of the immediate problem of the threat from Communist China.

3. It is highly improbable that a satisfactory solution of this problem can be obtained so long as the regime controlling China is closely aligned with the Soviet Union. Thus the most effective means of resolving the problem is through the disruption of this alignment and the detachment of China from the Soviet orbit.

4. There are two ways in which detachment of China from the Soviet orbit could occur: (a) by defection of the Peiping regime from Moscow, and (b) by the overthrow of the Peiping regime and its replacement by a Chinese Government hostile to Moscow. Present U.S. policy towards China has been in theory at least, to encourage both of these possibilities simultaneously. There is in this policy an inherent dilemma; obviously (a) and (b) cannot both occur at the same time. Thus it may be argued that the two courses are mutually exclusive and can not be pursued simultaneously. A choice must be made now, according to this argument, as to which course the U.S. will foster and the other must be abandoned.

5. The argument for selecting course (a) and abandoning course (b) may be summed up as follows: Tito¹¹ demonstrated the possibility of successful defection by foreign Communist leaders from the Kremlin: the Chinese Communist dictator¹² resembles Tito in that he acquired power largely on his own and his country has never been occupied by Soviet troops so that he retains the capability of independent action; conflicts of national interest between China and Russia will eventually lead to a break between Peiping and Moscow; on the other hand, to accept course (b) is tantamount to declaring war on Communist China; there is no likelihood within the foreseeable future of the Peiping regime’s being overthrown without direct U.S. intervention and even then it is problematical as the Soviet Union would undoubtedly come to Peiping’s aid; course (b) is inconsistent with U.S. declarations that it has no aggressive intent.

6. The argument for selecting course (b) now and abandoning course (a) may be summed up as follows: The Peiping leaders are died-in-the-wool Communists who have deliberately chosen the side of the Kremlin and there is no indication that they have any desire to change their orientation, while it is at least doubtful that they could change if they wanted to; to abandon course (b) would be to abandon the Chinese Nationalists and others fighting the Chinese Communists, which would result in seriously weakening the current Free World effort to stem Communist aggression; so long as Chinese Communist aggression persists the U.S. cannot afford to overlook any means of exerting pressure against them; on the other hand, to try to pursue course (a) while continuing to support the Chinese National Government, for example, makes (a)’s accomplishment impossible; retaining (a) as a course hampers and limits the effective implementation of course (b).

7. There are strong arguments, however, against a decision now to commit the U.S. exclusively to either course (a) or (b). There is good reason to believe that at this stage of developments these courses are not mutually exclusive. A policy of increasing pressure on Communist China short of outright U.S. intervention in China promotes both courses; it does not render the eventual detachment of China from the Soviet orbit impossible by way of either course. Thus the dilemma at this stage is only a potential dilemma, and while it may well have to be resolved one way or the other in the long run, it is neither possible to make a wise resolution of it now, nor necessary to do so.

8. It is only a potential dilemma for several reasons:

(1) The stage has not been reached yet, nor, according to the intelligence estimates of this Government, will that stage be reached in the near future wherein the Peiping regime is desirous of altering its pro-Soviet, anti-U.S. orientation, which it deliberately chose months before the outbreak of the Korean war, at a time when the National Government appeared to be on the verge of final extinction and the U.S. had adopted an attitude of wait-and-see with respect to China. In other words, the question of providing an “avenue of escape” from the Soviet relationship is academic when there is no evidence that the Peiping regime is looking for one, and especially when its provision would severely handicap, if not nullify, the accomplishment of other important U.S. objectives.

(2) The U.S. objective of altering the status quo in China in a manner satisfactory to the U.S. is only partially dependent upon U.S. and Free World actions. Soviet dealings with the Chinese Communist regime may in the end prove more decisive in determining whether a change in the status quo occurs in China. Within the framework of Free World capabilities to affect the situation, short of direct attack on the mainland, it seems essential that U.S. actions be directed toward demonstrating to the Chinese that the pro-Soviet posture of the Peiping regime does not pay off but in fact causes them increasing hardships and sacrifices. Courses of action directed to this end are inconsistent with the provision of an avenue of escape; they are rather directed toward the achievement of a situation which will stimulate a desire for an avenue of escape. When such a situation is brought about, courses of action with respect to China may be reexamined.

(3) But such a situation may never be brought about; the Peiping regime may well stick to the Soviets regarding [regardless?] of how badly things go. In such a case nothing less than complete obliteration of the regime would satisfy U.S. objectives. Moreover, it is conceivable that a Chinese Communist regime detached from the Soviets would continue to pose a security threat to the U.S. Having broken with the Soviets it could pose as a purely Asian power and as such might attract far more Asian support than it does now. In short, the circumstances which will cause the Peiping regime to seek “escape” from its Soviet relationship do not exist now, nor can it be accurately forecast when or how they will come about, or what the implications will be for the solution of the China problem. For these reasons it is impractical to determine now on courses of action to meet this eventuality.

(4) The problem posed by U.S. support of the Chinese National Government whose objectives go beyond those of the U.S. with respect to China is also largely academic at this stage, and will remain so (a) until the status quo on the mainland is altered in such a way as to provide the Chinese Government with an opportunity of re-establishing itself on the mainland, or (b) changes take place in the Peiping regime of such magnitude that it is no longer a threat to U.S. security interests. These circumstances do not exist now nor will they within the foreseeable future; and when they do come into being they may occur in one of several possible forms, which should be handled in different ways. Meanwhile the U.S. shares with the Nationalists a common purpose of altering the status quo on the mainland through the exertion of pressure. The achievement of this purpose is advanced by political, military and economic support of the Nationalists and is not significantly hindered by failure to commit the U.S. to the Chinese Nationalists’ ultimate objectives on the mainland.

9. Another factor which underlies the belief that the U.S. must immediately resolve the apparent dilemma in its policy towards China may be an over-emphasis on the importance of its policy with respect to the Chinese National Government as a solution of the China problem as a whole. The advocates of an immediate resolution of the dilemma, whether they favor courses (a) or (b), assume that U.S. policy toward Formosa has a decisive bearing on the problem of Communist China. It is important to bear in mind, however, that our policies elsewhere in the Far East are also directed to this problem and may in the long run prove more decisive in its solution than our policies with respect to the Chinese Nationalists. For example, it is probable that the Peiping regime is considerably more concerned with the potential threat to its power of a resurgent Japan than with the possible danger to it of a fully armed Formosa. Thus our policy towards Japan may well be more important in determining Chinese Communist courses of action and even in influencing their estimates of U.S. intentions towards them than our policies toward Formosa. The disparity in military potential between the Chinese Communist regime and the Chinese Government is so great that it is safe to assume that as long as the former remains intact and maintains its hold on the mainland (and there is no evidence that it will not do so in the foreseeable future) it will never view the Chinese National Government of itself as a serious military threat. It constitutes a threat to Peiping (other than of a local nature) only in so far as it is an adjunct of U.S. power in the Far East. As U.S. power in the Far East also manifests itself in our policies towards the ROK, Japan, and Vietnam, there may be reason to doubt that the Peiping regime measures U.S. intentions or estimates U.S. courses of action toward it primarily by U.S. policy towards Formosa, or that what the U.S. does on Formosa is decisive in determining Chinese Communist attitudes or its courses of action with respect to the U.S.

10. Perhaps the most important reason for the futility of attempting now to resolve the potential dilemma of our China policy, however, is the strong possibility that before either (a) or (b) could occur the Peiping regime would abandon, at least temporarily, its aggressive tactics. Such a development would probably postpone even further the detachment of China from the Soviet orbit by means of either (a) or (b).

11. A shift in Communist tactics of this kind would logically begin with the acceptance of UN armistice terms in Korea, the conclusion of an armistice and exchange of prisoners. This might be followed by such moves as agreeing to a diplomatic exchange with the British and other western governments which have recognized Communist China but have not secured its recognition, renewed efforts to gain a seat in the UN, and serious attempts to revive trade with Free World countries, particularly those which could supply capital equipment. By such tactics the Peiping regime would hope to obtain a breathing spell in which it could concentrate on industralization and further buildup of its armed forces. In the meantime, it might hope to sow discord among the Western nations and increase its influence over neutral Asian nations at the expense of the U.S. Such a shift in tactics, however, would not cause the Peiping regime to abandon its Communist ideology, to give up its ruthless police state rule over China, nor to alter its close alignment with Moscow. It would not mean the abandonment of the regime’s long-range objective in the Far East, i.e., the elimination of Western power and influence from the area and extension of its own.

12. A development of this nature would mitigate the current threat to security in the Far East by ending the shooting war in Korea. Thus it would be welcomed. It would not achieve our basic objective in the Far East, however, as Communist China would continue to pose a serious potential threat to Free World security in the area. Yet the means by which the U.S. could bring direct pressure to bear against the Peiping regime would be substantially curtailed following the cessation of open hostilities with the Chinese Communists. For this reason U.S. capabilities of promoting the detachment of China from the Soviet orbit would be reduced. In these circumstances, present courses of action with respect to China would have to be re-examined.

1. NSC 146 is a report entitled “U.S. Objectives and Courses of Action With Respect to Formosa and the National Government of China”, dated Mar. 27, 1953. The Annex to it is a staff study of the same title dated Mar. 30. (S/S–NSC files, lot 63 D 351, NSC 146 Series) For text of NSC 146/2, see volume xiv.
2. NSC 147, Apr. 2, 1953, is a report entitled “Analysis of Possible Courses of Action in Korea”. For text, see vol. xv, Part 1, p. 838.
3. NSC 125/4 is a report entitled “United States Objectives and Courses of Action With Respect to Japan”, dated Mar. 30, 1953. For documentation on the NSC 125 Series, see volume xiv.
4. Dated Oct. 31, 1952, not printed; a copy is in INR–NIE files.
5. The Planning Board formulated policy recommendations for the consideration of the National Security Council; the function of the Operations Coordinating Board was to coordinate the implementation of NSC policy. For documentation concerning their establishment, see volume ii.
6. For the purpose of this paper, the following countries are included: Communist China, Korea, Hong Kong, Indo-China, Indonesia, the off-shore island chain (Japan, Ryukyus, Formosa, Philippines, Australia and New Zealand), Malaya, Thailand and Burma. [Footnote in the source text.]
6. NSC 135/3, a report entitled “Reappraisal of U.S. Objectives and Strategy for National Security”, dated Sept. 25, 1952. For text, see volume ii.
7. For text, see volume xiv.
8. For text, see Foreign Relations, 1950, vol. vi, p. 1514.
9. Ante, p. 125.
10. Comparable estimates not available for these years. [Footnote in the source text.]
11. Comparable estimates not available for these years. [Footnote in the source text.]
12. Cost of estimated deficit in military program remaining after 1954 financing. [Footnote in the source text.]
13. Army relief and reconstruction expenditures. See separate Korea sheet for detail. Decision about economic aid to Korea in connection with the ROK military build-up will await the economic adviser’s recommendations. [Footnote in the source text.]
10. Reference is to the options presented in NSC 147.
11. Figures show indicated deficits in financing to reach force goals. Army figure will be subject to adjustment depending upon availability of surplus equipment in the Far East. [Footnote in the source text.]
12. In addition to the Army figures, Public Law 467, 82nd Congress, authorized the loan to Japan of 18 U.S. Navy frigates and 50 landing craft for the Japanese Coastal Safety Force. All but 8 of the frigates have been delivered to the Japanese. [Footnote in the source text.]
13. Government and Relief in Occupied Areas (GARIOA). Includes administrative costs and reorientation program. [Footnote in the source text.]
14. Special Review of F.Y. 1954 MDA Program submitted to the Bureau of the Budget, March 5, 1953. [Footnote in the source text.]
15. Direct aid only. [Footnote in the source text.]
16. 1950–1952. [Footnote in the source text.]
17. 1950–1952. [Footnote in the source text.]
18. Includes $30.5 million common use. [Footnote in the source text.]
19. Estimates of Office of the Director for Mutual Security. [Footnote in the source text.]
20. Current Department of Defense estimates. [Footnote in the source text.]
21. Current Department of Defense estimates. [Footnote in the source text.]
22. U.S. cost on maintenance basis. [Footnote in the source text.]
23. Office of Director for Mutual Security tentative estimates. [Footnote in the source text.]
24. Office of Director for Mutual Security tentative estimates. [Footnote in the source text.]
25. Office of Director for Mutual Security tentative estimates. [Footnote in the source text.]
26. Civilian Relief in Korea. [Footnote in the source text.]
11. Marshal Josip Broz Tito, President of the Federal People’s Republic of Yugoslavia.
12. Mao Tse-tung, Chairman of the Central People’s Government Council of the People’s Republic of China.