8. Memorandum of Discussion at the 266th Meeting of the National Security Council, Washington, November 15, 19551
[Here follows a paragraph listing the participants at the meeting. The Vice President presided.]
1. Significant World Developments Affecting U.S. Security
[Here follows discussion of unrelated subjects.]
With respect to his next subject, Mr. [Allen] Dulles said that the Central Intelligence Agency had been piecing together and collating all available information from all available sources on moves by the Soviet Bloc to move in on the underdeveloped areas of the free world, notably in the Near East and Southeast Asia. When all these Soviet Bloc moves were listed, they indicated a pattern of coordinated long-term and high-level operations designed to advance Communist influence in all these areas. Thereafter Mr. Dulles listed actual measures of assistance or offers of assistance made by the Soviet Bloc to the following countries: India, Afghanistan, Indonesia, Turkey, Iran, Syria, Lebanon, and Burma.
At the conclusion of Mr. Dulles’ report, the Vice President inquired as to the specific nature of the acts or promises of assistance to these countries offered by the Soviet Union. Did they consist of loans or gifts? Mr. Dulles replied that mostly they consisted of loans at low interest in return for local currencies or local exports. Secretary Wilson commented that the United States seemed to have no equivalent to match these Soviet techniques. U.S. assistance [Page 29] either took the form of outright gifts or else constituted loans in return for hard currencies. The Vice President expressed considerable concern over this point.
The Under Secretary of the Treasury, Mr. Rose, asked Mr. Dulles if he had any notion of the over-all magnitude of this Soviet Bloc effort in terms of dollars. Mr. Dulles replied that of course you could add up all the individual items which he had listed for all the individual countries; but the matter was complicated by the fact that many of these assistance programs were still in the offer stage. On the other hand, even Soviet Bloc offers of assistance had a very considerable impact on the position of the United States in these underdeveloped areas of the world.
The Vice President stated that Mr. Dulles’ report indicated to him that the Administration must give very serious thought to the question whether or not it held adequate cards to play against the Soviet Bloc. The United States might presently be faced with some very painful alternatives if it was effectively to meet the situation to which the Soviet aid program had given rise. The Vice President asked if Mr. Dulles shared this opinion.
Mr. Dulles replied that the situation was one which certainly deserved most careful study. Obviously the United States had the capability to match or outstrip any Soviet program. He pointed out that all these underdeveloped countries were very deeply impressed with what the Soviet Union had been able to accomplish, from an industrial and economic point of view, in the course of the last fifteen or twenty years. This seemed more impressive than the accomplishments of the United States, which had had such a long history of industrial development and which was essentially so rich. Comparison of the U.S. and the USSR assistance had convinced many officials of the underdeveloped countries that, for their countries at least, the Soviet system might have more to offer in the way of quick results than the U.S. system.
Secretary Wilson commented that programs of economic assistance to underdeveloped countries posed a very difficult problem for the United States. If we went in and spent our money building industrial plants and other installations for some backward country, who was going to have title and ownership over these plants which had been built with U.S. funds? If the ultimate owner was the state, we would be helping these countries to proceed down the road which led to state socialism or to Communism. Was it not possible, therefore, to see that ownership of some of the plants and installations built by U.S. assistance programs ultimately got into the hands of some small native capitalists? If this could be done we might counter the evident socialist trend in many of these areas.
[Page 30]Mr. Allen Dulles answered Secretary Wilson by saying that there could be very little doubt that the state would end up owning most of the plants and facilities constructed in an underdeveloped country as a result of U.S. assistance programs.
The Chairman of the Atomic Energy Commission expressed great sympathy for Secretary Wilson’s point of view, and said that the problem he had raised also affected the AEC very directly. The AEC was on the verge of constructing small power reactors for various countries overseas. In so far as we continued to deal on a government-to-government basis with respect to such programs, we were in effect simply encouraging TVA projects in the countries for which we provided power reactors. Admiral Strauss said that he would appreciate an expression of the Council’s views on the wisdom of this course of action before he went ahead with carrying out programs for constructing power reactors to be sent abroad.
The Vice President then suggested that this was perhaps a good point at which to terminate discussion of the report which Mr. Dulles had made, but he hoped that the NSC Planning Board2 would take account of Mr. Dulles’ report and come up to the National Security Council with a suggested U.S. program to counter the program of the Soviet Bloc so carefully outlined by Mr. Dulles.
Mr. Dillon Anderson indicated that at two forthcoming meetings of the National Security Council an opportunity would be presented to the Planning Board to carry out The Vice President’s suggestion. The problem would certainly come up in the forthcoming Council review of the military assistance programs world-wide. A second opportunity would be presented to the Planning Board to make recommendations when the Planning Board produced for Council consideration its revision of the basic national security policy (NSC 5501).
Mr. Allen Dulles said that it was none too soon to start right now to develop hard information which would indicate to the countries who would receive Soviet aid that in point of fact receiving this aid constituted the first step which ultimately led to a Communist take-over. The Soviet Bloc program which he had described was not genuine economic assistance to underdeveloped countries, but political penetration in disguise. Secretary Wilson added that the Soviet program actually constituted a new form of colonialism.
[Page 31]The Vice President suggested that the essentials of Mr. Dulles’ report might usefully be given to the President at the earliest opportunity. To The Vice President, at least, Mr. Dulles’ report had been “an eye-opener”.
The Acting Secretary of State expressed the opinion that the total cost of the Soviet Bloc assistance program wouldn’t amount to very much in comparison with comparable U.S. programs. If you dealt in terms of what was actually being done, as opposed to offers which were dangled before the underdeveloped countries, the program was quite small. Accordingly, Secretary Hoover suggested the advisability of putting a price tag on each of the items which made up the Soviet Bloc program of assistance to the underdeveloped countries. Mr. Allen Dulles suggested that the picture would not be complete without the addition of the recent Soviet Bloc arms deal, and Secretary Wilson wished to have incorporated in the revised report some reference to the problem of the ultimate ownership of factories and installations provided to the underdeveloped countries through U.S. economic assistance programs. Secretary Hoover endorsed Secretary Wilson’s suggestion, and added his own opinion that in many instances our assistance programs were actually subsidizing state socialism in the underdeveloped areas.
Admiral Radford raised the question of the desirability of having a study as to why the Soviet Union seemed to gain so much influence with so small an outlay of resources, as compared to the United States. For example, we have been assisting India to overcome its economic problems for a number of years and with quite considerable funds, and yet we received absolutely no credit in India for the assistance which we had been rendering.
The Vice President wondered whether Mr. Hollister might not have something to say on this problem after he returned from his trip to the Far East.
The National Security Council:3
Noted and discussed an oral briefing by the Director of Central Intelligence on the subject, with specific reference to the French political situation; the Philippine election results; the situations in Brazil and Argentina; and a summary of the apparently coordinated program of Soviet Bloc assistance to underdeveloped areas, particularly in the Middle East and South and Southeast Asia.
[Here follow items 2–4.]
- Source: Eisenhower Library, Whitman File, NSC Records. Top Secret. Prepared on November 16 by Gleason.↩
- The principal policy formulating body of the NSC whose voting membership consisted of the Special Assistant to the President for National Security Affairs (chairman) and representatives from the Office of Civil and Defense Mobilization, the Bureau of the Budget, and the Departments of State, Defense, and the Treasury.↩
- The paragraph that follows constitutes NSC Action No. 1475. (Department of State, S/S–NSC (Miscellaneous) Files: Lot 66 D 95, Records of Action by the National Security Council, 1955)↩