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MAJOR PROBLEMS OF 
UNITED STATES FOREIGN POLICY 



THE BROOKINGS INSTITUTION 

Washington, D.C. 

The Brookings Institution is devoted to public service through research and 
education in the Social Sciences. Broadly speaking, its purposes are: to aid 
constructively in the development of sound public policies and to provide ad- 
vanced training for students of the social sciences. 

The responsibility for the final determination of the Institution's policies and 
programs ol woik and for the administration of its financial resources is vested 
ii, a self-perpetuating Board of Trustees. It is the function of the trustees to 
make possible the conduct of scientific research under the most favorable con- 
ditions and to safeguard the independence of the research staff in the pursuit 
of their studies and in the publication of the results of such studies. It is not 
a part of their function to determine, control, or influence the conduct of par- 
ticular investigations or the conclusions reached, but only to approve the princi- 
pal fields of investigation to which the available funds arc to be allocated and 
to satisfy themselves with reference to the intellectual competence and scientific 
integrity of the Staff. The Board and officers are as follows: 

BOARD OF TRUSTEES 
WILLIAM R. BIGGS, Chairman HAROJD W. DODDS 

HlJNTINGTON GlLCIIRIST, JOHN W. HANKS 

Vice-Chairman JOHN E. LOCKWOOD 

ROBERT PERKINS BASS LEVERETT LYON 

DANIEL W. BELL HAROLD G. MOIJLTON 

MRS. ROBERT S. BROOKINGS JOHN LLE PRATT 

DAVID K. E. BRUCE LEWIS L. STRAUSS 

COLGATE W. DARDEN, JR. HARRY BROOKINGS WALLACE 

JOHN S. DICKEY DONALD B, WOODWARD 

HAROLD G. MOULTON. President 
LEWIS MFRIAAT, V ice-President 

Major responsibility for "formulating general policies and coordinating the 
activities of the Institution" is vested in the President. The by-laws provide also 
that "there shall be an Advisory Council selected by the President from among the 
scientific staff of the Institution." The Institution, in publishing a study prepared 
by members of its staff, assumes the responsibility that it meets reasonable tests of 
scholarship and presents data and conclusions worthy of public consideration. In 
manuscripts accepted lor publication, the author or authors have freedom to 
present their final interpretations and conclusions, although these may not neces- 
sarily be concurred in by other members of the staff. 



MAJOR PROBLEMS OF 

UNITED STATES FOREIGN POLICY 

1950-1951 




Prepared by the Staff of 

THE INTERNATIONAL STUDIES GROUP OF 

THE BROOKINGS INSTITUTION 

WASHINGTON, D.C. 

1950 



COPYRIGHT 1950 BY 
THE BROOKINCS INSTITUTION 



Set up and printed 
Published September 1950 



Printed in the United States of America 

George Banta Publishing Company 

Menasha, Wisconsin 



Foreword 

IN 1946 the Brookings Institution inaugurated a broad program of re- 
search and education in the field of international relations, focused on 
the study of the current foreign policies of the United States. The general 
approach is the analysis and interpretation of the main developments in 
world affairs that give rise to these policies and of the major problems 
that confront the United States in connection with them. The program 
constitutes an expansion of the Institution's earlier eiiorts in the inter- 
national field and is based on a continuing policy of selecting for investiga- 
tion and study problems that have a direct bearing on the national in- 
terests of the United States. 

In undertaking the program, the Institution has two primary objec- 
tives: to aid in the development of an informed and responsible American 
public opinion on foreign policy; and to contribute toward a more realistic 
training of the increasing number of American specialists in international 
relations that arc required today in the Goveinmcnt, in business, and in 
other agencies operating abroad. The Institution hopes to play a part in 
meeting these objectives by providing in its publications a type of analysis 
of major problems of United States foreign policy that is not usually 
found in specialized textbooks and general treatises on the subject, and 
by arranging conferences designed to stimulate discussion based on this 
type of analysis. 

For the purpose of carrying out the program, the Institution has or- 
ganized a part of its staff into an International Studies Ciroup, composed of 
specialists in various fields of international relations in general and of 
United States foreign policy in particular. The Group, which is directed 
by Leo Pasvolsky, is engaged in a series of investigations on major develop- 
ments in the field of foreign affairs, the results of which are made available 
in the form of books and pamphlets. In addition, the Group prepares an 
annual analytical survey of the major problems of United States foreign 
policy, of which the present volume is the fourth, and a monthly summary 
of current developments in United States foreign policy. It also conducts 
in various parts of the country annual seminars and other conferences 
for teachers of international relations. 

The scope of the program is made possible by special grants of funds 
from the Rockefeller Foundation and the Carnegie Corporation of New 
York, which supplement the Institution's own resources available for this 
purpose. Grateful acknowledgment is made of the assistance generously 
given by these foundations. 

HAROLD G. Moui/roN 
President 



Director's Preface 

THE present volume is the fourth in a series of annual analytical surveys 
of the major problems of United States foreign policy. In these surveys, 
an attempt is made to present an over-all view of the world situation and 
of the position of the United States in world affairs, and to examine the 
main problems of foreign policy that loom ahead. The method of presen- 
tation has a twofold purpose: to illustrate a technique for the study of the 
foreign relations of the United States closely approximating that used by 
government officials in the formulation of foreign policies; and to fur- 
nish working materials as an aid to the reader in acquiring a knowledge 
of the nature of the policy-making process. It is hoped that the surveys 
may be useful in the teaching of international relations and, more particu- 
larly, in the training of competent American specialists in foreign affairs. 
It is also hoped that they may contribute to the achievement ol a better 
understanding by the general public of the foreign policy of the United 
States, which is necessary for a more effective participation by the Ameri- 
can people in the conduct of the foreign relations of the nation. 

The complexity of the international problems that the United States 
must face, the development within the government of new facilities for 
research and analysis, and the necessity of staffing an increasing number 
of agencies dealing with foreign policy problems, have all created a de- 
mand in this country for greater numbers of specialists in international 
relations. Since such specialists must come primarily from the colleges 
and universities of the country, it is clear that if students are given some 
training in the policy-making process while they are perfecting their gen- 
eral and specialized knowledge, they will be more adequately prepared for 
participation in the conduct of foreign relations. 

The primary responsibility lor this training rests, of course, with the 
members of the college and university faculties. Many members of these 
faculties have served in the Government and have had an opportunity 
to familiarize themselves with the polic) -making process. But there are a 
great many others who have not had this experience. It is highly important, 
therefore, to develop some forms of continuing collaboration between the 
teachers and the government officials and other practitioners dealing with 
foreign affairs. It is also important that materials should be available for 
studying the problems of foreign policy in a manner similar to that used 
by the Government in dealing with current issues of foreign relations. A 
knowledge of the policy-making process is necessary for teachers of inter- 
national relations whether they offer courses to students who intend to 



viii Alajor Problems 1950- 

make foreign affairs their vocation or to those who do not, but who, as 
responsible citi/cns, must nevertheless be concerned with the foreign 
policies of their country. 

In order to provide one means of contact between the teachers and 
the practitioners of international relations, the Institution has conducted 
a scries of seminars on problems of United States foreign policy, held in 
different parts of the country in co-operation with various universities and 
colleges. Since 1947, meetings have been held at Dartmouth and Lake 
Forest Colleges and at Duke, Harvard, Princeton, and Stanford Universi- 
ties. The participants in each case included teachers of various phases of 
international relations, government officials, officers of the armed services, 
and businessmen, labor leaders, and others from private life who are 
professionally concerned with international affairs. 

The variety of background and experience of the participants made 
possible constructive and fruitful discussions of current problems of Ameri- 
can foreign relations. The meetings also served as a test of the feasibility 
of reproducing, outside the government, the type of discussion that takes 
place within the Government in connection with the making of policy 
decisions. 

The discussions at the seminars have been conducted largely on the 
basis of "problem papers" prepared by the staff of the International Studies 
Group of the Institution. These papers, revised in the light of such dis- 
cussions, have hitherto been published in the annual surveys. Beginning 
with this year's edition, however, there will be only one problem paper 
in each survey, but several others will be published during the year as 
separate pamphlets. These survey volumes and the supplementary pam- 
phlets are intended to serve as guides to the study of international relations 
in general and of United States foreign policy in particular. They are not 
textbooks in the usual sense of the term, although they may be used as 
such. They are designed mainly to help to focus on the essentials of the 
policy-making process knowledge that has already been or is being acquired 
from other sources. 

While the materials presented in these publications arc primarily in- 
tended for use in college and university training, they may also prove to 
be useful outside the classroom. Study and discussion groups may derive 
from them ideas or methods for stimulating a greater awareness on the 
part of the general public of the policy-making process and of the problems 
of foreign relations. 

The technique employed in the preparation of the annual volumes 
and the supplementary publications is based on what may be termed the 
"problem approach." This consists primarily in placing the authors and 
the users in the position of government officials who, in discharging their 



Director's Preface ix 

responsibilities in the solution of specific problems, must keep in mind 
the entire field of international relations, the interests and objectives of 
the United States, the various factors at home and abroad that condition 
American policy decisions, and the alternative courses of action that are 
open to the United States in the solution of a particular problem. 

Accordingly, the present volume opens, in Part One, with a brief ac- 
count of the key developments in United States foreign policy from July 
1949 to June 1950; an analysis of the pattern of international relations 
since the end of the Second World War; an examination of the longer- 
range factors that affect American action in world aflairs; and an indica- 
tion of some of the tasks ahead. Part Two comprises a review of some of 
the main problems of foreign policy that confront the United States at 
midsummer 1950. The nature of these problems, the basis of selection, and 
the manner of treatment are described in the Introductory Note to that 
part of the volume. Finally, the volume contains a problem paper on the 
security and stability of southeast Asia, which is presented as a sample of 
the type of material prepared in the Government as a basis for policy 
decisions. The character of the paper and the nature of the treatment given 
to the problem involved are indicated in the Introductory Note to Part 
Three. 

In order to facilitate the use of this volume a certain amount of 
bibliographical material has been included, consisting of a general bibli- 
ography at the end of the volume and lists of selected references following 
the problem statements in Parts Two and Three. Particular emphasis is 
placed on official documents which constitute the primary sources in 
studying the current foreign policies of the United States. There is also a 
general index. 

It should be noted that the volume deals primarily with United States 
foreign policy. Hence the subject matter and the bibliographical ma- 
terial are focused largely on American action and on the American view- 
point. The policies, actions, and viewpoints of other countries, however, 
are brought into the discussion wherever they condition American policy 
and action. 

The materials contained in the volume were prepared as of July i, 
1950, and the problems are treated as they confronted the Government of 
the United States on that date. As time goes on, however, the relative im- 
portance of the problems in Part Two and the issues they present may 
change. There are also bound to be occasions on which some of the more 
basic considerations of policy treated in Part One undergo modifications 
in the light of changing world events. In utilizing these materials in uni- 
versity teaching or in other study or discussion groups, periodical revision 
in the light of events may be necessary. This would call for a fresh applica- 
tion of the technique exemplified in the volume. The reformulation of the 



x Major Problems 7950-7957 

problem selected for special treatment in Part Three or in one of the sup- 
plementary pamphlets, therefore, might be as suitable a task for class or 
seminar work in this field as the detailed treatment of some of the other 
problems in Part Two or of entirely new problems that were not an im- 
mediate preoccupation of the Goveinmem in the summer of 1950. 

Many other methods of using the volume will doubtless suggest them- 
selves in the course of experience. Whatever the method adopted, however, 
and whether the book is used in colleges and universities or in study or 
discussion groups, much ot its value will depend on the extent to which 
it enables tho^e who use it to place themselves in the position of responsible 
government officials who are actually dealing with matters of foreign 
policy. Only by so doing is it possible to acquire an understanding of the 
technique emplo>ed in the formulation of the general and specific policies 
involved in the conduct of foreign lelations. c 

The volume is the joint product of the staff of the International Stud- 
ios Group and of outside consultants. William Reitzel was primarily re- 
sponsible for the general planning and preparation of the material. The 
following staff members contributed in their various fields of speciali/a- 
tion: Robert W. Hartley, Redvers Opie, William Adams Brown, Jr., 
Joseph W. Italian tine, Charles J. Moore, Thomas R. Phillips, Ruth 
Russell, A. Mason Harlow, Suzanne Gieen, Don R. Harris, Clarence E. 
Thurber, and Helen Eilts. The bibliographies and the index were pre- 
pared by Jeannette E. Muther; and the maps and charts, by Louise Bebb. 
A. Evelyn Breck prepared the manuscript lor the printer. The annual 
survey will continue to be supplemented, as heretofore, by a monthly sum- 
mary of events, entitled Cmient Developments in United States Foreign 
Policy. 

LEO PASVOLSKY 

Director 

International Studies Gwu() 
Washington, IXC. 
July i, ijf>o 



Contents 



PAGE 

FOREWORD v 

DIRECTOR'S PREFACE vii 

LIST OF MAPS AND CHARTS xiii 

PART ONE: THE PRESENT POSITION OF THE UNITED STATES 
IN WORLD AFFAIRS 

CHAPTER I 

KEY DEVELOPMENTS FROM JULY 1949 TO JULY 1950 .... 3 

CHAPTER II 

THE POSTWAR PATTERN OF INTERNATIONAL RELATIONS 12 

The Effort to Project Wartime Unity 12 

Political and Economic Realities of the Postwar Era 16 

CHAPTER III 

INTERESTS AND OBJECTIVES OF THE UNITED STATES 23 

Prewar Evolution 24 

Modifications During and After the War 33 

CHAPTER IV 

OniFR FACTORS CONDITIONING UNITED STATES Poi ICY AND ACTION 39 

Domestic Factors 39 

The Interests and Objectives of Other Nations 46 

CHAPTER V 

Tin: OUTI OOK 63 

PART TWO: CURRENT PROBLEMS 

Introductory Note 71 

CHAPTER VI 

THE POLITICAL PROBI EM FIEI D 73 

The Doctrine of Recognition 81 

The Effectiveness of Economic Means in Countering Communism .... 90 

CHAPTER VII 

THE ECONOMIC PROBLEM FIELD 97 

Commercial. Policies and the Balance of Payments 114 

Foreign Investment 1 20 

CHAPTER VIII 

THE MILITARY SECURITY PROBLEM FIELD 130 

National Military Strength as a Factor in Military Security 134 

Regional Defense Arrangements in Relation to National Military 

Security 137 

xi 



xii Major Problems 1950-1951 

PAGE 

CHAPTER IX 

THE UNITED NATIONS PROBLEM FIELD 149 

United States Operations Within the United Nations System 162 

The Revision of the Charter 168 

The International Control of Atomic Energy 175 

CHAPTER X 

THE SOVIET UNION AND ITS PERIPHERY 181 

Diplomatic Strategy in United States-Soviet Relations 188 

Diplomatic Strategy in Relations with Soviet-Dominated States 195 

CHAPTER XI 

GREAT BRITAIN AND THE COMMONWEALTH 200 

Conflicts of Objective Between Great Britain and the United States 206 

Exchange Control and the Sterling Area t, 211 

CHAPTER XII 

THE EUROPEAN PROBLEM AREA 219 

The United States and European Integration 226 

Germany 236 

France 243 

Support for Yugoslavia 249 

The European Payments Union 255 

CHAPTER XIII 

THE MEDITERRANEAN-MIDDLE EAST PROBLEM AREA 262 

The Stabilization of the Middle East 270 

The Status of Jerusalem 277 

CHAPTER XIV 

THE AFRICAN PROBLEM AREA 282 

CHAPTER XV 

THE ASIAN PROBLEM AREA 287 

China 294 

The Future of Japan 304 

United States Commitments in Indo-China 311 

CHAPTER XVI 

THE WESTERN HEMISPHERE 316 

Political Stability 324 

Economic Development 329 

PART THREE: A PROBLEM PAPER ON THE SECURITY 
AND STABILITY OF SOUTHEAST ASIA 

Introductory Note 337 

I. Statement of the Problem 339 

II. The Development of the Problem 343 

III. Main Issues and Alternative Courses of Action 363 



Contents xiii 

PAGE 
APPENDIXES 

I. DEFINITION OF TERMS 383 

II. BIBLIOGRAPHICAL NOTE 385 

INDEX 403 

LIST OF MAPS AND CHARTS 

Western Hemisphere 138 

North Atlantic Area 139 

The United Nations 152 

Structure of the Security Council 157 

Structure of the Economic and Social Council 161 

Soviet Union and Orbit 182 

Great Britain and the Commonwealth 302 

Europe 220 

The Organization of Western Europe 227 

Mediterranean and Middle East 264 

South and East Asia 288 

Organization of American States 320 

Southeast Asia 340 



PART ONE 

THE PRESENT POSITION OF THE UNITED STATES 
IN WORLD AFFAIRS 



Chapter I 

Key Developments from July 1949 to July 1950 

MONO the many major problems of foreign relations that confronted 



A 



the United States at the beginning of July 1949, the following were 
of special significance in determining the course of American policy and 
action during the twelve months here under review: (i) the organization 
of the power of Western Europe; (2) the financial position of Great 
Britain; (3) the creation of the Western and Eastern German states; and 
(4) the upheaval in China. In one form or another, all these as well as 
numerous other, less comprehensive developments, were involved in the 
over-all problem of United States foreign policythe state of relations 
between the United States and the rest of the Western world on the one 
hand, and the Soviet Union on the other. 

On July 2, 1949, the Senate gave its consent to the ratification of the 
North Atlantic Treaty, after extensive hearings before its Committee on 
Foreign Relations. In recommending that the treaty be ratified, the Com- 
mittee expressed the view that, as a result, the determination of the North 
Atlantic states to resist aggression would be increased, substantial savings 
in the European Recovery Program and in the outlays for the national 
military establishment might become possible, and the North Atlantic 
states would be stimulated to help themselves and each other and to 
co-ordinate their efforts to do so. The treaty was proclaimed as being in 
force by President Truman on August 24. 

This event, though prepared by earlier action, was the foundation of 
an extensive major development in the succeeding twelve months. On the 
heels of the Senate ratification, the Congress was presented with a bill 
that would authorize military assistance to other nations. In September 
the North Atlantic Council called for by the North Atlantic Treaty met 
in Washington and set up the Defense Committee, instructing it to draw 
up "unified defense plans for the North Atlantic area." By the end of 
the same month the Mutual Defense Assistance Act of 1949 was passed. 

But the Congress wrote two important limitations into the act: the 
use of 900 million dollars of the funds appropriated was contingent on 
the formulation of an integrated defense plan by the North Atlantic 
Council; and it was expressly stated that the economic recovery of West- 
ern Europe, because it was essential to international peace and security, 
was to have clear priority over the demands of rearmament. By early 
January 1950 an integrated defense plan had been prepared by the De- 
fense Committee and approved by the North Atlantic Council. 

These steps underlined the military alliance features of the North 



4 Major Problems 1950-1951 

Atlantic Treaty. Other of its aspects remained undeveloped. Questions 
of its effect on the United Nations and of its relation to the program 
for the economic recovery of Europe were momentarily left to one side. 

In July 1949 the European Recovery Program had been in operation 
for a little over a year, and its course for the second year had been set. 
However, on July 6 the seriousness of the British financial position was 
revealed, and consultations were started with the Commonwealth finance 
ministers and with the governments of the United States and Canada. 
The problem was discussed in the Organization for European Economic 
Cooperation, and it overflowed into journalistic debates between the 
British and American publics on the underlying causes and the possible 
remedies for the situation. Americans tended to blame the policies of the 
British Labour Government or the improvident use of the American loan, 
and the British tended to put much of the blame on the alleged Ameri- 
can failure to act as the major creditor nation of the world should have 
acted. On September 18, with no official previous indication, the British 
pound was devalued by 30 per cent. The economic and political adjust- 
ments that followed were world-wide. 

Jn August 1949 the Economic Committee of the newly formed Coun- 
cil of Europe looked at the European economy and proposed as remedies 
for its condition a union of the member nations into one preferential 
tariff area, the free convertibility of European currencies, and reductions 
in the United States tariffs. Later the Consultative Assembly agreed that 
the goal of the council was "the creation of a European political authority 
with limited functions but real power." The integration of Western 
Europe, formally proposed by the United States as an objective in the 
European Recovery Program, now became an even more active topic. 

On October 31 the administrator of the Economic Cooperation Ad- 
ministration declared that "nothing less than the integration of Western 
European economy" would suffice, and he visualized a single large market 
in which goods moved freely and monetary barriers disappeared. Under 
considerable pressure from American officials, who were, in turn, under 
heavy pressure from American opinion, the Organization for European 
Economic Cooperation attempted to satisfy this demand. The British, 
however, in view of their responsibilities to the Commonwealth and 
the sterling area declared that they could not enter into any integration 
that would prejudice these responsibilities. By the end of January 1950 
two initial steps were taken in the purely economic aspects of integra- 
tion: the reduction of import quotas, and the formulation of a plan for 
a European payments union. 

Another basic factor that played an important role in some of these 
developments in Western Europe was Germany. The year 1948-49 had 
seen the partitioning of Germany grow from a possibility to a de facto 



Developments July T 94 p- July 1950 5 

accomplishment. A high point of tension was reached in the Berlin 
blockade. On May 12, 1949 the blockade was lifted, but the subsequent 
meeting of the American, British, French, and Soviet foreign ministers 
failed to reach agreement on the German question. Just before this 
meeting, however, the basic law for a West German state was adopted, 
and on May 23 the Federal Republic of Germany was proclaimed. Almost 
simultaneously, a People's Congress in the Soviet zone adopted a con- 
stitution for a German Democratic Republic. The situation was at this 
point of stalemate from July until October, when the Eastern German 
Democratic Republic was proclaimed. 

This event, which was preceded on October 2 by a Soviet note to 
the other three occupying powers denouncing the Federal Republic in 
the West, was the opening step in a development that is still going on. 
The new state in the East called for the restoration of German political 
and economic unity, the establishment of an all-German government, an 
early peace treaty, and the withdrawal of occupation troops. The Western 
powers asserted, for their part, that the Democratic Republic was without 
legal basis and was subservient to, and controlled by, the Soviet Union. 
Early in November the United States, Great Britain, and France, after 
consultation, agreed that the Federal Republic should be admitted to the 
Council of Europe, to promote German participation in international life, 
and to relax certain restrictions on the economy of the new state. Although 
the revival of at least Western Germany was initiated by these first steps 
toward giving the Federal Republic sovereign authority, France made it 
clear that it would oppose any German rearmament or the inclusion of 
the Federal Republic among the North Atlantic Treaty states. With the 
simultaneous creation of the East German state, the country was in 
effect partitioned. 

In another part of the world, another highly significant development 
was taking form. The Chinese Communists began in the summer of 1949 
to move into south China, and the United States Government issued a 
"white paper" on the Chinese situation. The essential conclusion of this 
document was that no further aid would be given the National Gov- 
ernment. Nationalist resistance disintegrated rapidly. On October i the 
Chinese People's Republic was proclaimed and was immediately recog- 
nized by the Soviet Union; on October 17 the new Government claimed 
that it controlled the whole coast from Korea to Hong Kong; by Decem- 
ber 10 the National Government had retired to Formosa; and by 
December 16 the People's Republic and the Soviet Union had begun to 
negotiate a treaty of alliance. 

These events had widespread repercussions throughout Asia. Com- 
munism and national movements against foreign control were not clearly 



6 Major Problems 1950-1951 

distinguished. Burma, though torn by civil strife, some of which was 
fomented by Communists, recognized the new regime. Indian recognition 
followed. The People's Republic of China, for its part, recognized the 
Ho Chi Minh regime in Indo-China and thus encouraged it in its struggle 
with French authority. From the point of view of Great Britain and 
France, the whole of southeast Asia was suddenly and dangerously ex- 
posed to attack from Soviet-directed Chinese Communists. 

This point of view was shared by the United States Government. In 
addition, public feeling was deeply stirred by the debacle in China and 
by what it considered the total failure of American policy. There were 
many facets in the debate that followed. There was a strong demand for 
the United States to do something to keep Formosa out of Communist 
hands. There was an equally strong feeling against recognizing the Chinese 
Communist Government, although Great Britain had announced on Janu- 
ary 6, 1950, that it was ready to do so. The" Department of State came in 
for violent criticism. 

Secretary of State Acheson replied to the critics, saying that there was 
a revolutionary force let loose in Asia which the Communists had ridden 
to power, that the susceptibility of many states in the region to a force 
thus controlled could not be stopped by military means, and that Ameri- 
can aid would have to be fitted to these facts. He acknowledged the threat 
to American interests and defined an American defensive perimeter that 
ran from Alaska to Japan and thence to the Ryukyus and the Philippines. 
The Secretary then added: "So far as the military security of other areas 
in the Pacific is concerned, it must be clear that no person can guarantee 
these areas against military attack. . . . Should such an attack occur, . . . 
the initial reliance must be on the people attacked to resist it and then 
upon the commitments of the entire civilized world under the Charter of 
the United Nations." 

Meanwhile, Great Britain and the other members of the Common- 
wealth conferred at Colombo, Ceylon, in the middle of January. It was 
concluded that the economic development of south and southeast Asia 
was necessary to meet the challenge, and appropriate steps were recom- 
mended. The United States Government expressed its willingness to 
adapt its own efforts of economic assistance to the British Commonwealth 
plan. In the same month France, still heavily engaged against the forces 
of Ho Chi Minh, took steps to satisfy some of the nationalist aspirations 
of Indo-China. Three independent states Viet-Nam, Cambodia, and 
Laos were set up within the French Union. On January 31, however, 
the Soviet Union recognized the revolutionary regime of Ho Chi Minh. 
Within a week the United States and Great Britain recognized the three 
new states and thus identified themselves with the French-supported 
regime of Bao Dai. On February 14, 1950, the negotiations between the 



Developments July 1949- July 1950 7 

People's Republic of China and the Soviet Union were completed, and 
a treaty of alliance was concluded. With this the lines were clearly drawn 
in southeast Asia. India, however, remained unmoved by these rapid 
developments and continued to keep an officially neutral and open mind 
about the future of China. 

The adjustments of the West to the situation were, however, still 
far from complete. The Australian Minister for External Affairs pro- 
posed in March a defensive military arrangement for the area, based on 
the Commonwealth but with other countries, especially the United 
States, invited to associate themselves. The United States warned the 
People's Republic of China against "aggressive or subversive adventures" 
beyond its borders. A special economic aid program for Indo-China was 
recommended, and the existing program for Nationalist China was ex- 
tended. The interests of the United States in the future of Japan under- 
went re-examination in terms of a "defensive perimeter," the Soviet suc- 
cess in China, and the possibility and requirements of a peace settlement 
with Japan without Soviet participation. 

A quick glance back at the unfinished pieces of business noted above 
and at the new forms into which they developed after July 1949, will 
make it clear that they became linked in a new and more tense pattern 
of relations between the West and the Soviet Union. This must be kept 
in mind in order to understand the full significance of President Tru- 
man's announcement on September 23, 1949: "We have evidence that 
within recent months an atomic explosion occurred within the U.S.S.R." 
Insofar as it was the case that the United States and Western Europe had 
been basing their defense plans on the restraining influence of a unique 
American possession of atomic weapons, these plans had to be revised. 
The question of international control was reactivated, but it did not 
lead to any new developments. On October 26 the five major powers and 
Canada reported to the Atomic Energy Commission of the United Na- 
tions that a "fundamental difference not only on methods but also on 
aims" made further discussions useless until the character of international 
relations was basically improved. 

In January 1950 President Truman announced that he had directed 
work to be continued "on all forms of atomic weapons, including the 
so-called hydrogen or super-bomb." A public debate was precipitated in 
the United States on the broad question of armaments. "A moral crusade 
for peace" was proposed, in which the United States would use two 
thirds of its annual defense appropriations to underwrite a "global 
Marshall Plan," contingent upon an international acceptance of a pro- 
gram to control atomic energy and an agreement by all nations to allo- 
cate two thirds of their arms expenditures to the same purpose. Another 



8 Major Problems 7950-7957 

proposal was made to call a world conference for disarmament and to 
"end the world's nightmare of fear." The official United States view was 
that such proposals dealt "with the end rather than the means to the 
end" and that agreements with the Soviet Union were of little real mean- 
ing unless they recorded "an existing situation of fact." By March 1950 
the discussion had moved beyond the particular question of the atomic 
bomb to include the entire range of relations between the United States 
and the Soviet Union. 

The defection of Yugoslavia from the Soviet orbit proved to be a fac- 
tor of increasing importance. On the one hand, Yugoslavia announced that 
it had withdrawn its moral and political support from the Greek guer- 
rillas. From that moment the Greek Government began to get the upper 
hand, and United States policy began to achieve its objectives in Greece. 
On the other hand, the Soviet Union moved to repair the damage done 
to its control over the satellite states. By August Yugoslavia was being 
diplomatically threatened, and there were rumors of preparations for 
war. Concurrently, the United States supported the election of Yugoslavia 
to the United Nations Security Council in opposition to Czechoslovakia, 
which had Soviet backing. The Soviet Union began vigorously to con- 
solidate its position in the satellite states. There were mass arrests on 
political charges in Czechoslovakia. There were purges in the Polish 
Communist party, and a Soviet marshal was appointed Polish Minister of 
Defense. In Bulgaria a former Deputy Premier and other former Gov- 
ernment officials were indicted for espionage and conspiracy. By the 
end of December, Soviet Foreign Minister Molotov was saying: "The 
time is not far off when the treacherous Tito gang . . . will be overcome 
by the shameful fate of dishonest hirelings of imperialist reaction"; and 
the new United States ambassador to Yugoslavia was saying: "The United 
States is unalterably opposed to aggression wherever it occurs or ... 
threatens." 

Since January 1950 it has become increasingly difficult for the United 
States to maintain diplomatic relations with the satellite states. Ameri- 
can officials were named in treason trials. American nationals were 
arrested. Bulgaria requested the recall of the United States minister. 
Other states demanded reductions in the numbers of American diplo- 
matic personnel. Satellite consulates in the United States were ordered 
closed in retaliation. The American assets of Bulgarian, Hungarian, and 
Rumanian citizens were frozen in February. 

Thus relations between the Soviet Union and its satellites con- 
tributed to the growth of deteriorating relations between the United 
States and the Soviet Union. The keynote for this development was set 
in September 1949, when foreign Minister Vyshinsky presented a resolu- 



Developments July ipjp-July 1950 9 

tion to the General Assembly of the United Nations calling on the Gen- 
eral Assembly to condemn American and British preparations for a new 
war, to endorse plans for the unconditional prohibition ol atomic 
weapons, and to call upon the five major powers to conclude a peace pact 
among themselves. The United States and Great Britain introduced an 
alternative resolution, entitled "Essentials of Peace/' that called on every 
nation "to carry out in good laith its international agreements." After 
a prolonged debate in the Political and Security Committee, the Soviet 
resolution was overwhelmingly defeated, and the Anglo-American one 
was adopted by a vote of 53 to 5. 

In January 1950 the Soviet Union began to boycott meetings of the 
organs and agencies of the United Nations. When on January 12 the 
Security Council refused, at the request of the Soviet Union, to expel the 
representative of the Chinese National Government, the Soviet repre- 
sentative walked out of the meeting. After this, Soviet representatives 
withdrew from all meetings at which there was a representative of the 
Chinese National Government. 

By the end ol March 1950 the major lines along which international 
questions had developed from the previous July had all converged on 
relations between the West and the Soviet Union. On March 9 Secre- 
tary ol State Acheson slated that the demands of a struggle that was 
"crucial from the point of \iew ol the continued existence of our way pi 
life" required ol the United States a "total diplomacy." This phrase, 
coined by analogy with "total war," was intended to convey a sense of 
urgency, compelling the country to support a policy of concentrating on 
measures short of war for resisting Soviet aggression. In April he said that 
the United States was the "principal target" of Soviet communism and 
that it was obligatory to organize the free world for common action 
through the United Nations and such regional arrangements as the 
North Atlantic Treaty. 

The months of April, May, and June were marked by rapid develop- 
ments in these efforts, but the key point of activity was the North Atlantic 
Treaty and Western Europe. The events oi the year had unquestionably 
moved faster than the machinery of co-ordination set up by the treaty 
had operated. In Germany, in the field of European economy, in the Far 
East, and in American and British politics, new circumstances were de- 
manding new decisions. 

Important action to meet these demands came with the meeting of 
the foreign ministers of the United States, Great Britain, and France on 
May 11. It was agreed then that Germany would be progressively incor- 
porated in the community of free peoples, and that co-ordinated efforts 
would be undertaken to combat communism and to raise living stand- 



io Major Problems 1050-1051 

ards in southeast Asia. It was also agreed to employ joint resources to 
maintain "social and material standards as well as the adequate develop- 
ment of the necessary defense measures." 

Specific actions followed with some speed. A French proposal, 
originally made on May 9, to place the coal and steel industries of 
France and Germany under a single international authority went into 
the negotiating stage. The West German Federal Republic accepted 
an invitation to join the Council of Europe. The United States an- 
nounced that it would extend economic aid and provide military equip- 
ment to Indo-China and France for use in "restoring stability and per- 
mitting these states to pursue their peaceful and democratic develop- 
ment." A committee of the British Commonwealth met at Sydney and 
called for a six-year program of basic economic development for south 
and southeast Asia. 

The meeting of the three foreign minhters was followed on May 15 
by a meeting of the Council of the North Atlantic Treaty organiza- 
tion. The problem before the council was in essence another form of 
the problem considered by the three ministers the strengthening of 
free nations under the pressure of time and circumstances. The solu- 
tion agreed upon was a combined military, economic, and political one. 
As Secretary of State Acheson reported to Congress on May 31, the pur- 
pose was "to build a common defense, to create a successfully function- 
ing economic system, and to achieve unity of action on the major prob- 
lems of foreign policy." He added that "this task will require close, 
cohesive, and sustained efforts on a partnership basis in all these fields." 
The methods proposed were: (i) the establishment of a body of work- 
ing deputies under a permanent chairman; (2) the treatment of military 
forces and economic costs as a single problem; and (3) the creation of 
"balanced collective forces" for the defense of the North Atlantic area. 

On June 25 a new factor was dramatically injected into the situa- 
tion. Communist forces from North Korea made a planned, prepared, 
and well-directed attack on the Korean Republic. While it had long 
been known that the Communist regime in North Korea was using every 
possible subversive method to break down the government of the Re- 
public, this attack represented a deliberate and open aggression against 
a legitimate authority. Furthermore, this authority had been demo- 
cratically established under the aegis of the United Nations. 

The Security Council of the United Nations met at once and 
adopted a resolution proposed by the United States calling on the North 
Korean forces to cease hostilities and to withdraw north of the 38th 
parallel. In addition, the member states were asked to render every 
assistance to the United Nations in the execution of the resolution. 

On the basis of this resolution, President Truman announced on 



Developments July 1949- July 7950 1 1 

June 27 that United States air and naval forces had been ordered to act 
in Korea "to give Korean Government troops cover and support." As 
a supporting action, United States naval forces were ordered to screen 
Formosa from any Communist attack, and the Chinese National Govern- 
ment was called upon to cease operations against the mainland of China. 
At the same time, directions were issued for increased military aid to 
the Philippines and Indo-China. 

A further resolution was adopted by the Security Council within a 
few hours after the President's action. In it, the Council recommended 
that members of the United Nations furnish assistance to the Korean 
Republic to repel "armed attack and to restore peace and security." The 
Soviet Union continued to boycott both meetings of the Council and has 
since called the actions taken in its absence illegal. By the end of June 
the situation in Korea had developed to the point where a majority of 
the members of the United Nations had approved the use of military 
action in principle, and several had provided naval and air forces. The 
United States, in addition, had committed ground forces to the military 
operation. 

As the period from July 1949 to July 1950 came to an end, the full 
implications of the new context in which international relations would 
develop became unmistakable. The United States was more deeply com- 
mitted than ever before to take vigorous and effective action, in com- 
pany with other members of the United Nations, to maintain the in- 
tegrity of all free nations "in a common defense against aggression and 
in providing greater opportunities for advancement." 

The developments that have just been described indicate the efforts 
of the United States over the period of a year to achieve its national 
objectives. These efforts have been limited by the means currently at the 
disposal of the Government and by the interests, objectives, and actions 
of other powers. An account of where the United States now finds itself 
is not, however, adequate for understanding the problems of foreign 
policy that confront the Government at midsummer in 1950 or that 
are likely to be presented for decision and action in the near future. 
Before an attempt is made to draw a balance sheet of the foreign policy 
operations during the preceding twelve months and to indicate the 
tasks ahead, which is done in Chapter V, it is necessary to look briefly 
at how and why the present position has been reached. This is done 
in the three chapters that follow. 



Chapter II 

The Postwar Pattern of International Relations 

THE DECISIONS and actions taken by the Government of the United 
States in the conduct of the foreign relations of the nation during 
the twelve months reviewed in the preceding chapter must be considered, 
first of all, against the background of the pattern of international rela- 
tions that had developed since the end of hostilities in the Second World 
War. Like all the major armed conflicts in history, the Second World War 
produced far-reaching modifications in the distribution of power and 
resulted in a concentration of that power in the hands of fewer nations 
than was the case before war broke out.., The United States emerged 
from the war as the strongest national state, with vast and inescapable 
responsibilities of world leadership. It began to exercise this role of 
leadership while hostilities were still in progress, in a vigorous attempt 
to set a pattern of international relations for the postwar era that would 
offer a greater hope of peace and well-being for the whole world than had 
ever been attained before. The events of the postwar period have so far 
not vindicated this hope, and the pattern of international relations 
projected during the war has undergone many essential shifts, which 
have posed for the United States and for the whole world the vast and 
complicated problems with which the nations are grappling today. 

THE EFFORT TO PROJECT WARTIME UNITY 

It was recognized during the Second World War that the essential 
attributes of power raw materials, industrial capacity, skilled man 
power, energy resources, and the control of strategic areas would tend 
to become concentrated in the hands of the principal allies the United 
States, Great Britain, the Soviet Union and, to a lesser extent, China 
and France. It was further realized that the defeat of the Axis states 
and the other effects of the prolonged war might create power vacuums 
in some parts of the world. Finally, there was a realization that the new 
concentrations of power, when considered in terms of the relative 
strengths and particular attitudes of the major nations, could impede 
the peace settlement, and could make difficult the long-run maintenance 
of peace. The concept of an international organization growing out of 
the wartime unity of the principal allies was projected as a means of 
guarding against these dangers. 

It was not expected that the resulting organization, the United 
Nations, would be able to control major states with so much concen- 
trated power at their disposal. But it was hoped that power would be 

12 



Postwar Pattern of International Relations 13 

so distributed that an equilibrium would emerge and that the national 
use of power would accordingly be capable of being harmonised. It was 
further hoped that the major possessors of power would exercise re- 
straint in using it as an arm of national policy, and that the obliga- 
tions they would assume as members of the United Nations would serve 
a regulatory purpose. 

Unity of purpose and action was forced upon the principal allies 
during the war by the necessity of checking the bid that the Axis was 
making for world domination. The unity, however, was never complete. 
The Soviet Union was, at best, a suspicious and cantankerous co-opera- 
tor. The Western powers had their reservations also, but the fatal lesson 
of their own prewar failures to achieve collective security led them to 
make conscious efforts to dispel suspicion. By and large, the Western 
allies took a generous view of Soviet susceptibilities and hoped that a 
structure of postwar collaboration could be built on a foundation ol war- 
time unity. 

No efforts were spared to convince Soviet leaders that the security of 
the Soviet Union and the well-being of its citizens could best be achieved 
in international co-operation. No opportunity was lost to kindle Soviet 
interest in the new political and economic machinery that was en- 
visaged for international action to establish and maintain the peace and 
to promote economic well-being. The initiative in every case came from 
the West; the leader of the West was the United States. 

Officially, the Soviet Union joined the United States and Great 
Britain in expressing an intent to carry the unity of their military alli- 
ance over into the period following victory. Beginning with the Atlantic 
Charter in 1941 and the Declaration by United Nations in 1942, the 
allied nations pledged themselves in a series of agreements to follow 
certain rules of international conduct and to construct an international 
organization for the maintenance of peace and security. 

These pledges were first discussed by the United States, Great 
Britain, and the Soviet Union at a formal conference in Moscow at the 
end of 1943. At the end of the conference, China joined the other three 
powers in the Moscow Declaration, which stated that the four powers 
were "conscious of their responsibility . . . [and] that their united action, 
pledged for the prosecution of the war against their respective enemies, 
[would] be continued for the organization and maintenance of peace 
and security." They further agreed to act together in making the tran- 
sition from war to peace and recognized "the necessity of establishing 
at the earliest practicable date a general international organization, 
based on the principle of the sovereign equality of all peace-loving states, 
and open to membership by all such states, large and small, for the 
maintenance of international peace and security." 



14 Major Problems 

During the conference, plans were worked out for continuing tripar- 
tite consultations through diplomatic channels, and final arrangements 
were made for a meeting of the heads of government at Teheran. There, a 
month later, the United States, Great Britain, and the Soviet Union 
recorded their determination to continue to work together, convinced 
that their accord would result in enduring peace. They recognized that 
it was their responsibility to make a peace that would "command the 
good will of the overwhelming mass of the peoples of the world" and 
looked forward with "confidence to the day when all peoples of the 
world may live free lives, untouched by tyranny, and according to their 
varying desires and their own consciences." 

The consideration of the formal structure of an international or- 
ganization was begun at Dumbarton Oaks in 1944, where agreement 
was reached on its basic principles and general framework. It was recog- 
nized that the heart of the matter lay in concerted action on the part 
of the major powers. They would largely determine the future course 
of events, not only with respect to a future war and peace but also with 
respect to the peace settlements of the war still in process, the immediate 
problems of rehabilitation after the war, and the first steps in establish- 
ing stable international political and economic relations. It was further 
assumed that the major powers would recognize, with increasing clarity, 
their underlying community of interest in peace as well as in war and 
that, from this, the necessary unifying force would come. 

Official resolves were repeated with some extensions at the Yalta 
Conference in February 1945. It was agreed there that a United Nations 
organization should be established as soon as possible. The general intent 
to co-operate was applied to a particular transitional situation in a spe- 
cial Declaration on Liberated Europe, in which it was agreed "to con- 
cert during the temporary period of instability in liberated Europe the 
policies of their three governments in assisting the peoples ... to solve 
by democratic means their pressing political and economic problems." 
Machinery for regular consultations among the foreign secretaries of the 
three governments was set up. Later in 1945 at the Potsdam Conference, 
the Council of Foreign Ministers was created to provide a formal body 
for consultation among all five powers France having been admitted 
to the inner circle. Between the Yalta and Potsdam conferences, the Char- 
ter of the United Nations organization was negotiated at San Francisco. 

Before and during the San Francisco Conference doubt existed about 
the seriousness of the Soviet interest in international co-operation. During 
the conference lines of cleavage appeared between the larger and smaller 
nations present. Before and during the conference, press, public relations, 
and information activities were developed on a grandiose scale that 



Postwar Pattern of International Relations 15 

tended to oversell both the purposes and progress of the meeting. In 
spite of these difficulties, a charter was agreed upon. 

The conference recognized that differences existed among the major 
powers. The problem was to accept this fact and to devise a realistic way 
of preventing it from disrupting the new international organization. Al- 
though the smaller powers acknowledged their inability to settle basic 
issues without the concurrence of the major powers, they resisted pro- 
posals that provided no restraints, beyond the obligations common to 
all, on the exercise of power. The major nations asserted that the ulti- 
mate responsibility for the maintenance of peace and security rested 
with them because they alone possessed the means of enforcement, and 
that therefore the entire structure rested upon their unanimity of judg- 
ment and action. The principle of unanimity, which subsequent events 
have made known under the popular name of the right of veto, simul- 
taneously acknowledged the facts of power and the fundamental im- 
portance of unity among the major nations. Exclusive privileges, essen- 
tially concerned with maintaining a right to protect vital interests, were 
claimed by the five major powers and at last reluctantly accepted by 
the smaller nations. These privileges consisted of permanent representa- 
tion on the Security Council and of special voting rights. The belief 
was expressed that the principle of unanimity would put the major 
powers under pressure from world opinion to resolve their own differ- 
ences within the United Nations system, for the alternative was that the 
system would cease to function. Conversely, and by formal statement, 
the major powers solemnly undertook to use their privileges with modera- 
tion and restraint. 

It is important to appreciate that these efforts to project wartime 
unity were not confined to the establishment of the United Nations, which 
was only one of several lines of action. Another was the search for meth- 
ods of dealing with the problems of relief and rehabilitation that the de- 
feat of the enemy would make pressing. Still another was concerned with 
such problems as economic revival and internal political adjustments in 
states disrupted by war. A very fundamental line was that which sought 
to anticipate the difficulties of effecting peace settlements between victors 
and vanquished by checking premature unilateral action until conflicting 
interests could be comprehensively considered and harmonized. And 
finally, because there were questions of the security of the major powers 
with respect to each other, methods designed to adjust them by con- 
sultation were initiated. Implicit in all these courses of action were 
two assumptions that concerted action by the major powers was the 
key to success, and that a wish to co-operate existed and could be trans- 
lated into a solid body of practice. 



i6 Major Problems 



POLITICAL AND ECONOMIC REALITIES 
OF THE POSTWAR ERA 

When the war ended, the condition of Europe and the Far East was 
without precedent in modern history. The loss of material capital was 
enormous. The effects of the dislocation of traditional social forms, of the 
dispersal of populations, and of the disruption of industry and trade 
were profound and widespread. 

Jn Europe a dearth of consumer goods was further aggravated in 
1946 and again in 1947 by severe weather and poor crops. For millions 
of people the immediate preoccupation was survival. Governments were 
chiefly preoccupied with providing food, shelter, and clothing, and they 
were judged on this basis rather than on their willingness to provide 
political liberties. There was on the continent no remnant left of 
that older balance of power by which intervals of peace had been 
achieved and a semblance of security produced. The defeat of Germany 
was so conclusive that central Europe was a potential power vacuum. 
French power was practically nonexistent. Great Britain, though it 
strained its depleted resources to maintain a larger peacetime armed 
force than ever before in its history, was a relatively weakened power. 
The bulk of American forces was withdrawn and demobilized, and the 
United States returned the American industrial plant to peacetime uses. 
Only Soviet forces remained in Germany and in eastern Europe in great 
strength and in a state of wartime readiness. In western Europe, local 
Communist parties made political capital out of their wartime resistance 
records and out of the confused situation. 

Postwar Asia bore very little resemblance to the pattern that had 
existed before 1940. In addition to the patent fact that Japan was re- 
moved for the time being as a significant power, that European influence 
was diminished, and that the United States and the Soviet Union were 
the centers of power with reference to which the political and eco- 
nomic adjustments of the region would be made, the entire area was 
swept into a violent process of political and social change. This process 
was nationalistic in the sense that it aimed at altering the colonial 
status in which the peoples of the region believed themselves held cap- 
tive. It was also revolutionary in that it sought to shift political au- 
thority within the individual states of the region. Finally, the end of 
the war also revealed the extent to which the industrial plant of the 
region had been destroyed, its agricultural production disorganized and 
diminished, and its channels of trade dislocated. In consequence, the 
previously low standard of subsistence of Far Eastern populations was 
further reduced beyond the point of endurance and played a part in the 
insistent demands for economic and social change. 



Postwar Pattern of International Relations 17 

Within this framework China, with a weak government and con- 
fused by the shifting judgments of the United States, proved unable to 
exert the stabilizing authority of a major power, a role in which it had 
been theoretically cast by American policy. In addition, Great Britain, 
called on to implement its earlier promises on the political status of 
India, was drawn into a process that ended only with the establishment 
of the independent states of India, Pakistan, Burma, and Ceylon. British 
authority was reasserted, however, in Hong Kong and Malaya. France 
attempted a similar restoration in Indo-China and the Netherlands in the 
East Indies, but in these two cases the situation was more difficult. It was 
complicated by British action in the absence of Dutch forces in Indo- 
nesia, by the strong nationalist sentiment in both areas, and by American 
official and private sympathy for the aspirations of the native peoples. 1 
In brief, the general situation was such that another power vacuum, 
more extensive if less immediately significant than that in central Europe, 
developed in the Far East. 

The Far Eastern situation was also affected by the fact that the 
United States and the Soviet Union came face to face in Korea. The 
traditional definition of American security, which had long included 
the idea of a defensive frontier in the western Pacific, was affected by 
the new projection of Soviet influence into the area. 

The situation in Asia and the situation in Western Europe mutually 
affected each other in ways that made it difficult for either to be stabil- 
ized. The economy of Western Europe had become linked in a hundred 
ways with that of the Far East, and these links could not be restored 
under the conditions that prevailed. The prolongation of unresolved 
tension in the Far East either delayed the economic recovery of Europe 
or forced it into new and artificial channels. 

The Middle East, except insofar as it had experienced a war boom, 
suffered no significant economic dislocations. But the political unrest 
and the social instabilities of the region, which had been checked by 
the firm use of allied authority during the war, came quickly to the 
surface after the war ended. An important factor in both the political 
unrest and the social instabilities was the fact that satisfactory adjust- 
ments had not been reached between Arab nationalism and the West 
after the First World War. No solution had then been found that simul- 
taneously satisfied the nationalist aspirations of the new Arab states 
and the strategic and economic interests that Great Britain defined as 

1 Although the political situation in the Netherlands East Indies has been resolved 
by the formation of the Republic of Indonesia, the situation in Indo-China has become 
progressively moie acute. From the French and Dutch points of view, it is possible that 
the policy of the United States with respect to colonial peoples may have served to pre- 
vent a more vigorous effort to settle the problem by military means. See "United States 
Commitments in Indo-China" below, pp. 311-15, and "Indonesia," Major Problems of 
United States Foreign Policy 1940-1950, pp. 352 ff. 



i8 Major Problems 

vital. During the Second World War, the United States came to share 
these British interests. At the end of the war, there was a general re- 
surgence of Arab nationalism. Basically the movement sought to re- 
orient relations with Great Britain and to move from a semidependent 
position to one of complete independence, but in view of the organized 
force of Zionism, it began to concentrate its attention more and more 
on the question of Palestine. Finally, the region quickly became the focus 
of competition between three major powers. Soviet pressure was early 
felt in the Balkans, in Turkey and in Iran, and the Anglo-American 
reaction was quick and sharp. In consequence, the adjustment of local 
aspirations and demands to the strategic and economic interests of 
Great Britain and the United States remained as far from basic solu- 
tion as ever. 

The situation throughout the world was such that ample oppor- 
tunity was provided for every variety of disruptive force, and the prob- 
lems of stabilization were immense and endlessly ramified. The prob- 
able existence of disruptive forces and the need for a policy of stabiliza- 
tion were, however, recognized before the war ended. UNRRA (the 
United Nations Relief and Rehabilitation Administration) was set up 
to deal with emergency relief and to provide the minimum basis for 
the restoration of economic activity. American policy attempted to fore- 
stall political disruption by insisting that territorial claims should not 
be settled by "sudden unilateral action taken in the flush of victory." 2 
General economic problems were given consideration by a series of con- 
ferences. It was assumed that the many political and economic problems 
created by the war would be solved by agreement among the major 
powers. But the ability as well as the willingness of the major powers 
to work together proved to be less than had been hoped for. Over and 
beyond the internal political conflicts that the end of the war induced 
in individual states, the efforts of local Communist parties and of the 
Soviet Union to take advantage of fluid and unstable situations became 
increasingly apparent. The customary race between the forces of re- 
organization and the forces of disorganization, with which human his- 
tory is so familiar, became a clearly defined conflict of interest between 
the major powers. 

Even before the end of hostilities the Western democracies began 
to make serious reservations about the intentions of the Soviet Union. 
Evidence accumulated rapidly to the effect that the Soviet Union could 
not be relied upon to keep its pledges. Previous disagreements about eastern 
Europe and the Balkans, which had presumably been settled at Yalta 
by the Declaration on Liberated Europe, reappeared as fundamental 

2 Department of State Bulletin Vol. 12 (May 13, 1945), p. 902. 



Postwar Pattern of International Relations 19 

divergences. The Soviet Union stood on the position that eastern Europe 
was its security zone and hence was within its sphere of influence and 
control. It began to convert the countries of this region into satellite states, 
guiding local Communist parties into seats of political control and using 
the threat of Soviet force as an authoritative lever for the purpose. Pro- 
tests from the United States and Great Britain were unavailing. 

In both Italy and France the Communist groups that had played 
active parts in resistance movements during the war made their way 
into coalition governments. Their influence was on the whole exerted 
in the direction of weakening the governments of which they were 
members rather than in co-operating to solve pressing economic and 
social problems. The Chinese Communists, aided by the ineptness and 
weakness of the National Government and by the lack of decisive- 
ness in the policy of the United States, prevented internal stabilization. 
And in other parts of the Far East nationalist movements were con- 
sistently supported against "Western capitalist imperialism/' 

In the face of these unpromising developments, the assumptions 
that underlay the efforts to convert the wartime alliance into a har- 
monious postwar association became increasingly questionable. Nothing 
showed this with more certainty than the forms of conflict that arose 
in connection with attempts to effect the peace settlements. Negotia- 
tions were begun late in 1945 on peace treaties with Italy and the de- 
feated states of eastern Europe. They continued for over a year and we're 
conducted in an atmosphere of bitter controversy. Although the drafts 
were finally completed and the treaties were eventually ratified, the 
negotiations made the United States and Great Britain acutely aware 
that they were involved in a genuine power conflict. In the attempts 
to negotiate treaties for Germany and Austria, the Soviet Union was 
intransigent, and Western suspicions were confirmed. The negotiations 
on Germany broke down at the London meeting of the Council of For- 
eign Ministers in December 1947, and were not renewed at the Paris meet- 
ing of May 1949. Similarly, no progress was made in agreeing even on a 
procedure for negotiating a peace settlement for Japan, nor could a previ- 
ous agreement to establish an independent and united Korea be made 
effective. 

Because the operations of the United Nations organization can do 
no more than reflect the general state of the world, these have also been 
conditioned by the character of existing relations among the major 
powers. The fundamental assumption, when the Charter was drafted, 
was that the major allied powers of 1945 would rapidly work out peace 
settlements and restore normal peacetime conditions throughout the 
world. The United Nations would then begin its work in the atmosphere 
of peace and stability that the concert of major powers had created 



20 Major Problems 

and would be able to function as the agent o adjustment, which was 
the principal role it was designed to fill. 

The realities of international relations have not supported these 
assumptions, and the United Nations has in consequence been called 
upon on occasion to deal with situations that were beyond its capacity 
to handle satisfactorily and for which its machinery was never designed. 
Although it has been possible to use this machinery to adjust such 
differences as those arising in connection with Syria and Lebanon, Iran, 
Indonesia, Greece, Palestine, and Kashmir, the machinery of collective 
enforcement envisaged in the Charter has proved impossible to set up. 

The Security Council in February 1946 directed its Military Staff 
Committee to examine the question ol determining the forces, facilities, 
and other types of assistance that were to be made available to the Coun- 
cil to enforce the decisions of the United Nations. But in August 1948 
the committee reported that it was essentially deadlocked, and no further 
reports have been made public. 

The stalemate at this initial point was paralleled by developments 
in the regulation of armaments. In addition, it opened the way to a 
search for alternative methods of achieving security. This latter develop- 
ment has led on the one hand to various proposals for scrapping the 
present United Nations organi/ation in favor of some form of super- 
national authority, and on the other to regional security arrangements at 
a level below that aimed at by a universal system of collective security. 

Several regional security arrangements now exist. The Soviet orbit, 
welded together by force and not by agreement, is one such. The Rio 
Treaty, the Brussels Pact, and the North Atlantic Treaty, freely agreed 
choices of their signatories, represent other forms. In general, the latter 
were brought within the framework of the United Nations system by 
being referred cither to Article 51 of the Charter, which authori/es 
arrangements for collective self-defense, to Article 52, which explicitly 
provides for regional arrangements as compatible with obligations undei 
the Charter, or to both. The outlines of similar arrangements are be- 
ginning to emerge in the Middle East and Far East. 

The close relation between the United Nations in practice and the 
state of the world is further shown by the tendency of states to use the 
organization as an extension of the "cold war" front. The Soviet Union 
was the first to do this, by using international machinery to create con- 
fusion and doubt in public opinion and to inhibit effective action on 
specific issues. The techniques of frustration were quickly developed. 
The veto was employed to obstruct collective action. Debates, which 
lent themselves to the techniques of propaganda, aimed not at the im- 
mediate audience, but at remote peoples groups with nationalist aspira- 
tions, colonial dependents, domestic opinion, and discontented fringe 



Postwar Pattern of International Relations 21 

groups in all countries. The extension of these techniques produced 
reactions from the United States and Great Britain, forcing them, too, 
to use the structure of the United Nations as an adjunct of major power 
conflicts. 

The year 1947 marked a turning point in postwar international 
relations. By that time, the Soviet Union was establishing its power in 
Eastern Europe; it had openly threatened Greece, Turkey, and Iran; and 
it had intensified Communist propaganda and activities throughout the 
world. It had identified itself, in the judgment of the non-Communist 
world, as the major disruptive force, contributing deliberately to the 
creation of fear and uncertainty and handicapping economic reconstruc- 
tion and the establishment of social and political stability. The step 
from this judgment to a conviction that Soviet policy was aggressive 
and expansionist was a short one. The United States reacted to a Com- 
munist threat in Greece with the Truman Doctrine, "... a frank recog- 
nition that totalitarian regimes imposed on free peoples, by direct or in- 
direct aggressions, undermine the foundations oi international peace and 
hence the security of the United States." The reaction developed within 
a few months into a broad and comprehensive plan to restore the 
economy of Europe, the Marshall Plan. Between these actions and re- 
actions, the pattern of international relations envisaged by the wartime 
agreements of the United Nations was replaced by a more or less frankly 
acknowledged conflict between major powers. The growth of regional 
groupings within the United Nations organization followed speedily 
from this situation. 

The clangers that were anticipated in wartime planning for the post- 
war era have so lar become in large measure the realities of the present 
moment. With some of its basic assumptions still unfulfilled, the ma- 
chinery for guarding against these possible clangers has not proved to be 
adequate. Although there is a United Nations system that in many im- 
portant respects functions, there has also been an increasingly definite 
organization of force in relation to the conflicting interests, objectives, 
and policies ol the major possessors of power. 

The intensification of conflict since 19/17 has resulted in a greater 
emphasis on security considerations in the policies of both major and 
smaller states. In the case of the major states, policy has adjusted more 
and more to the hard facts of the international situation. In the case ol 
the smaller states, adjustments have taken the form of testing the possi- 
bilities ol neutrality, of entering into partial alignment with individual 
major states, of seeking security in regional association preferably with 
a major state participating and of attempting to use the machinery of 
the United Nations to (heck the growth of conflict. 



22 Major Problems 1950-1951 

The more significant adjustments of the major states have been those 
that represented shifts from one established policy position to another. 
The Soviet Union, after taking part in the effort to continue the war- 
time alliance into the postwar period, decided instead to exploit a 
uniquely favorable power situation in order to defend its security inter- 
ests, extend its sovereign authority and influence, and disrupt the non- 
Communist world. Great Britain accepted the necessity of reducing its 
commitments to correspond to a decline in its power resources. The 
United States shifted to a policy of "containing" Soviet expansion and of 
countering Communist activities. 



T 



Chapter III 

Interests and Objectives of the United States 

HE INTERNATIONAL situation as it existed at the end of the Second 

World War and as it has developed since then has roots deeper than 
the events that have taken place since 1945. Behind these events lie the 
historical interests and objectives of the major as well as the smaller 
powers involved in them. 

Until recently the national interests of the United States were tradi- 
tionally defined in terms of a fortunate geographical location, remote- 
ness from the power conflicts of Europe, the natural resources of the 
continent, and the philosophy of political and economic freedom for 
the individual. The security of the nation, which lay between two 
oceans, with friendly or weak states to the north and south, with its 
dominating position in the Western Hemisphere beyond practicable 
testing, was considered to require only the defense of an isolated con- 
tinental position. Well-being was taken to consist of the development 
of the resources of the continent and the maintenance of an equality of 
commercial and economic opportunity elsewhere in the world. 

Two wars in the twentieth century, in both of which the United 
States initially relied on a neutral position only to find itself mili- 
tarily committed in regions far removed from its homeland, brought 
these traditional formulations of national interests into question. The 
formulation of the national interests has been demonstrably broadened. 
The security and well-being of the nation are now increasingly inter- 
preted as being dependent on two sets of circumstances, neither of which 
was considered essential in earlier interpretations. The first is that the 
strategic frontiers of the United States He in central Europe, the Middle 
East, south and southeast Asia, and the offshore fringe of Pacific islands. 
The second is that the well-being of the United States cannot be sepa- 
rated from the maintenance of peace and the development of well-being 
throughout the world. 

This shift in focus, and its accompanying restatement of objectives 
and reformulation of policies, is drawing the United States into a power 
position not unlike that occupied by Great Britain for over a century. 
It still remains, however, for time to test this development against the 
general understanding that the American people have of what con- 
stitutes their national interests. An examination of the evolution of this 
understanding down to the Second World War, of the modifications 



24 Major Problems 7950-7957 

that were made during and since the war, and of the present objectives 
and principles of American action in world affairs constitutes the 
content of the sections that immediately follow. 1 

PREWAR EVOLUTION 

The evolution of American foreign policy to its present form is 
marked by three stages that correspond to major periods in the evolution 
of the international position of the United States. The first, extending 
from the beginnings of colonial settlement to the year 1823, was marked 
by a struggle for power in that part of the North American continent 
which reaches from the Mississippi Valley to the Atlantic. This struggle 
represented one aspect of the perennial European power conflict, but 
the principal ultimate victor was a non-European nation, the United 
States, which secured its hold on the best part of the territory. The 
second period was marked by the expansion of the United States to 
the position of the dominant power in the entire Western Hemisphere. 
The third and unfinished period is that in which the United States has 
exerted the influence of a major world power. The third period has 
been marked by adjustments and by failures to adjust to the implica- 
tions and demands of the position in the world that the United States 
is assuming. 

The national history of the United States began in a network of 
great power relationships that involved competing European nations 

1 An attempt to generali/c material of this kind laces the same difficulties that arise 
in all analytical work in international relations. As in the social sciences generally, the 
absence of an exact tciminology becomes quickly apparent. The need for such a termi- 
nology, however, must be balanced against the equal need to communicate effectively in 
the idiom of the day on matters of concern, not to the specialist alone, but to everyone. 
It is believed that greater clarity of analysis can be achieved if certain basic teims at 
least as they arc used in this volume are defined and explained. There are five such 
terms: "interests," "objectives," "policies," "commitments," and "principles." 

Stated broadly, interests are what a nation feels to be necessary to its security and 
well-being; objectives arc interests sharpened to meet particular international situations; 
policies are thought-out ways of attaining objectives; and commitments are specific un- 
dertakings in support of policy. By way of example, the underlying (though by no means 
exclusive) interest animating the Truman Doctrine was the defense of national security. 
This interest was sharpened to a specific objective, that is, checking the expansionist 
policy of the Soviet Union. 1 he policy that was designed to attain this objective was one 
of support and aid for irec nations, and this in turn was implemented by specific torn- 
mit merits to aid Greece and Turkey financially and with militaiy equipment. 

Principles connote those rules of decent conduct that guide the actions of a nation 
or that a nation believes should guide its actions as well as the actions of other nations. 
In the example above, the attainment of our interests and objectives through designated 
policies and commitments was accomplished with the consent of the governments, and 
presumably of the peoples, of Greece and Turkey. Had the policies and commitments 
been thrust on them arbitrarily, a principle conditioning the conduct of our foreign 
policy would have been violated, namely, the principle that our objectives should be 
sought within the framework of international law and accepted diplomatic practice. For 
a detailed definition of these terms, sec App. i. 



Interests and Objectives of U.S. 25 

Great Britain, France, Spain, Austria, Prussia, and Russia. Three of 
these states Great Britain, France, and Spain had for over a century 
been especially concerned with the North American continent, and 
general European wars were invariably carried over to the Western 
Hemisphere. By the middle of the eighteenth century, Great Britain had 
become not only the dominant power in North America but a predomi- 
nant influence throughout the world. The policy of the European powers, 
at whose expense this had been achieved, was directed to breaking down 
this superior position. 

The rebellion of the thirteen British North American colonies in 
1776 was not in itself related to European situations, but the achieve- 
ment of independence in 1783 was made possible only by the assistance 
of European countries, especially France, which saw an opportunity of 
profiting from the British emergency. The newly freed United States 
of America, a very weak confederation in 1783, remained a minor factor 
in the game of European power politics. This fact was fully rccogni/ed 
by American leaders, who faced grave problems of national security for 
several decades after their achievement of formal independence. The 
United States, surrounded by the territories of the great powers of 
Europe, was helpless against their navies and ill-united against their in- 
trigues. Yet it was still somewhat protected by their rivalries, which 
continued until they were merged in the French Revolution and the Na- 
poleonic wars. 

For the security of the United States, and even for its prosperity, 
this development was a godsend. The European wars were no longer 
primarily struggles for colonial territories in North America. For the 
most part none of the protagonists could spare the time or attention for 
aggrandizement at the expense of the United States. The power elements 
shifted in the course of the long struggle, and Great Britain became 
the head of an anti-French coalition. With the defeat of Napoleon, 
France ceased to be a dominant power in Europe and was reduced to 
being merely one factor in the continental balance of power. A con- 
tinuing objective of British policy in Europe to prevent any single 
power from achieving continental dominance was accordingly reaffirmed. 
Elsewhere, British policy was concerned with organizing and maintaining 
the world-wide commercial and financial influence that opened before 
it. Sea power, unchallenged for the next hundred years, was the chief 
instrument of both courses. The success with which these policies were 
followed in the first half of the nineteenth century gave the United States 
the opportunity to develop, practically without opposition, into a con- 
tinental American power. The development of a strong nation from 
a free but comparatively weak federation of states would have been in 



26 Major Problems 1950-1051 

continual doubt but for the favorable circumstances created by basic 
British policy. 

EARLY POLICY FORMULATIONS 

The early policy formulations of the United States Government 
generally took clear cognizance of the over-all power situation in Europe. 
Chief among these formulations was neutrality in the power struggle 
in Europe. The classic statement of this policy is that of President 
Washington in his Farewell Address: "Europe has a set of primary in- 
terests which to us have none or a very remote relation. Hence she must 
be engaged in frequent controversies, the causes of which are essentially 
foreign to our concerns." This statement touched upon a very deep- 
seated American feeling the colonial desire to escape from Europe, 
then to cut ties with it, and finally to remain isolated from it. A policy 
formulation admirably suited to prevailing circumstances gradually be- 
came a traditional description of a national interest of the United States. 

A second interest, concerned with national well-being, was soon 
added. The prosperity of the United States was defined as depending 
upon the promotion of American trade. British efforts to monopolize 
this trade had been among the causes of the Revolution. Treaties of 
commerce and friendship with reciprocal privileges, firm insistence on 
the freedom of the seas and neutral trading rights, and tariffs to en- 
courage and protect infant industries became the triple devices by which 
this objective was sought. 

Concurrently with the development of these two concepts of the 
national interests, a principle of conduct was established. When Presi- 
dent Washington, also in his Farewell Address, sketched a picture of 
peaceful relations and of good faith and justice among nations, his 
words met with general appreciation, for he spoke with a voice pitched 
to a widely acceptable code and to a general desire to live alone in peace 
with freedom under law. The conversion of this into a set of principles 
was rapid, and in the American conduct of foreign affairs, these prin- 
ciples have been more often acted upon than departed from. Constant 
reference to them has colored the American view of international re- 
lations. 

Cardinal points were thus early defined. The security of the United 
States did not require permanent foreign alliances, though it did re- 
quire a firm defensive posture and protective territorial expansion. The 
well-being of the United States required freedom of commercial inter- 
course and the means to develop national resources. Finally, both the 
security and the well-being of the United States could best be main- 
tained if other nations shared and acted upon the moral principles 
that guided American action. 



Interests and Objectives of U.S. 27 

These interests, stated as objectives, were pursued with success dur- 
ing and immediately following the Napoleonic wars. They led to the 
development of policies that supported the southward and westward 
expansion of the United States and justified such actions as the Louisiana 
Purchase and the "no- transfer" formula with respect to Spanish terri- 
tories. But in 1823 a new formulation of objectives was made. It re- 
affirmed that security depended upon detachment from Europe, and 
it simultaneously expressed the continental ambitions of the American 
nation. This reformulation was made in the Monroe Doctrine. 2 

Great Britain, concerned with maintaining the balance of power 
that had been achieved in Europe and interested in the commercial 
possibilities of a free Latin American market, firmly supported the 
intent of the United States to stand against intervention from Europe. 
In fact a joint Anglo-American declaration on this point had been 
proposed, but it was rejected by the United States. Some of the new 
Latin American republics also proposed that the doctrine be converted 
into a system of mutual alliances. This proposal was also rejected. The 
doctrine was a unilaterally declared objective of the United States and 
carried no commitment to act on behalf of, or with, any other na- 
tion. British support made the doctrine effective, and for seventy-five 
years the United States was free to complete its continental expansion, 
to organize its continental resources, to develop its foreign trade, and 
to consider the possibility of there being a "manifest destiny" toward 
which the nation was moving. 

The growth of American foreign trade that accompanied con- 
tinental expansion was phenomenal. With it came an accumulation oi 
foreign interests and the problems of projecting national power in sup- 
port of such interests. Traditional foreign commercial policy was the 
basis of continuing operations in this field. In the Far East the objective 
was to secure equality of treatment in the face of efforts of other states 
to obtain or retain exclusive trading privileges, a principle that was later 
formulated as the Open-Door Policy. Other proposals related to these 
interests were, however, less obviously derived from a traditional national 
interest. They concerned such matters as the acquisition of territory 
beyond the continental United States. The reasons advanced usually 
blended a commercial advantage with a vaguely expressed strategic 
consideration. Pressures in this direction, though they expressed the 
latent "imperialism" that had developed toward the end of the period 
of continental expansion, generally met with public and congressional 
apathy. 

"The significant points were (a) no extension of territory or further colonization 
of either of the American continents by non-American powers; (b) no European inter- 
ference in the affairs of the new states of these continents; (c) a firm intention on the 
part of the United States to stay out of European affairs. 



28 Major Problems 

By 1898, however, the tone of public feeling had perceptibly 
changed. There was a sense that the American destiny now consisted 
of more than a continental position; it consisted of being a world power 
as well. But this destiny led west across the Pacific and south toward 
Latin America, not east to Europe. It was accompanied by an appre- 
ciation of the significance of sea power. The blend of commercial and 
strategic considerations became less vague and was soon followed by 
plans for an isthmian canal and the description of the Caribbean and 
Hawaiian islands as its defensive outposts. 

The policies that were developed in response to this feeling led in 
an inevitable progression into the existing network of world power 
relations. Germany was seeking footholds in the Pacific and Far East. 
Participation in great power rivalries in China was begun, and follow- 
ing from this, Japanese expansion in the .Pacific was defined as a threat 
to both the security and the well-being of the United States. Yet none 
of the objectives of these policies was generally felt to fall outside the 
traditional framework of national interest, although actually, as will 
appear later, they laid the groundwork for the development of signifi- 
cant contradictions. 

The power relations in which the United States now took part were 
\ery different from the network of power relations in which the United 
States had begun its existence as a nation. Great Britain, France, and 
Russia alone remained of the original contenders. Spanish power had 
declined, and the decay of the Austro-Hungarian Empire was apparent. 
A united Germany and a modernized Japan had emerged as vigorous 
claimants to places in the front rank. These alterations upset the balance 
of power in Europe and, by initiating a race for territorial possessions and 
commercial advantages throughout the world, made it increasingly diffi- 
cult for Great Britain single-handed to maintain its Pax Britannica. 
Consequently, though the United States could still stand upon the ob- 
jectives of its continental period as far as the Western Hemisphere was 
concerned, it could not effectively pursue these objectives on a world 
scale. Although the Monroe Doctrine might stand because the power of 
the United States was preponderant in the region to which it referred 
and because Great Britain was a silent partner in its maintenance, 
American commercial aspirations and principles of international conduct 
were more difficult to achieve; for the power of the United States could 
be projected in support of them only by the methods of power politics. 3 

3 This was the period, 1890-1910, of the expansion of the United States into the 
Pacific and Caribbean islands, of intervention and political loans in the Caribbean re- 
gion, of the development of a power position in the Far Kast, and ot tentative excursions 
into European affairs as at the Conference of Algeciras. 



Interests and Objectives of U.S. 29 

THE FIRST WORLD WAR 

Neither American opinion nor United States policy was brought 
face to face with the implications of the country's position until the 
First World War. Then the necessity for action was so pressing that the 
real meaning of that position could not be quickly grasped. The prob- 
lem presented in 1914 was to understand what the imminent changes in 
the world structure of power meant to the interests of the United States. 
The entire historical context of American foreign relations was called 
into question, not clearly and sharply, but dimly and in such a manner 
as to produce uncertainty rather than decision. 

Initially a neutral position was proclaimed, but it was then steadily 
undermined by events and by the fact that the scale of the war auto- 
matically involved American interests. By 1917 German action was cut- 
ting at an interest that was generally understood the freedom of the 
seas and neutral trading rights and the United States declared war. But 
after the American decision to go to war had been made, it was pre- 
sented and generally accepted as the defense of the principle of good faith 
and justice as the basis for international relations. President Wilson, ask- 
ing the Congress for a declaration of war, spoke of 

. . . the menace ... to peace and freedom ... in the existence of autocratic 
governments backed by organized torce . . . accepting this . . . gauge of battle 
... for the ultimate peace of the world and for the liberation of its peoples. 
We have no selfish ends to serve. . . . We are but one of the champions of the 
rights of mankind. . . . 

It will be well to recognize in these words a restatement of the 
moral conviction underlying the passage quoted above from the Farewell 
Address. The essence of the restatement is, however, that only by assur- 
ing the rights of all nations and all men to choose their way of life 
freely can a pattern of international relations be shaped to ensure the 
security and well-being of the United States. 

The development of this principle of conduct into a group of ob- 
jectives came in President Wilson's "Fourteen Points." These objectives 
were defined as the reduction of armaments, the removal of economic 
barriers between nations, the transformation of colonial dependencies 
into self-governing states, and the establishment of an international or- 
ganization to maintain world peace and security. The United States 
Government undertook to lead the Paris Peace Conference to an inter- 
national acceptance of these objectives. The peace conference, however, 
was primarily concerned with adjusting a new network of power re- 
lations, especially among the principal victorious Allied and Associated 
Powers. A League of Nations based on the idealism of President Wilson's 



30 Major Problems 1950*1 95 1 

"Fourteen Points" and a peace settlement based on considerations of 
power simultaneously emerged from the conference. The relation be- 
tween the two was never clarified tor American opinion, and in conse- 
quence the unresolved oppositions in American feeling and policy led 
to a political crisis and to a reaction against the principle of inter- 
national co-operation that President Wilson had formulated. 

On the one hand, it was feared that an international organization 
would interfere with the freedom of action of the United States in the 
Western Hemisphere, that the Monroe Doctrine would be implicitly 
abrogated, and that the United States would no longer be the sole judge 
of what constituted its security in a region where such unilateral decision 
was a fixed tradition. On the other hand, the economic and territorial 
settlements of the peace conference had been demonstrably made in terms 
of major power interests and not as a basis .for international co-operation 
and universal peace as contemplated by the League. The danger of fresh 
entanglement in European disputes was accordingly felt to exist, and the 
fear was widely voiced that American power could be committed to these 
disputes by an international body. The simplest possible description of 
this critical stage in American opinion and foreign policy is to say that 
the principle of international co-operation was rejected and that the 
rejection was rationalized as a return to the first principles of American 
foreign policy. 

The United States after 1920 was in the ambiguous position of being 
a major power, unwilling to act as such, yet inevitably exerting on inter- 
national relations the influence of a major power.* The initially pros- 
perous condition of the country and the subsequent shock of a de- 
pression contributed equally to support this ambiguity the first by 
seeming to justify a conviction of security and well-being, the second 
by concentrating attention on domestic affairs. Traditional national inter- 
ests and traditional principles were vigorously reasserted in both these 
contexts. The practical difficulties, in relation to the actual power situa- 
tion of the interwar period, of conducting a foreign policy derived from 
these premises were not, however, generally understood. The policy line 
consequently fluctuated between an avoidance of commitments, an in- 
sistence on freedom of action, and an effort to establish universal prin- 
ciples of international conduct. In conjunction with this last purpose, 

4 The industrial and commercial attributes of a modern major power, even when 
the possessor of them does not deliberately apply them to foreign policy ends, are a 
central element in international situations. Even if such a power holds itself isolated, its 
unilateral actions both permit and require adjustments in the power system from which 
it remains aloof, weakening the relative position of some components, strengthening that 
of others. Such adjustments ultimately have considerable bearing on the security of the 
isolated power. By 1940 the allied powers of 1920 were regrouped as Great Britain and 
France; Italy and Japan; and an isolated United States. A resurgent Germany and a 
reorganized Russia were placed to take advantage of the situation thus opened. 



Interests and Objectives of U.S. 31 

the United States often attempted to universalize its national interests 
and even some of its long-standing objectives, ignoring the fact that these 
were in part the product of its unique continental and hemispheric 
position. 

THE INTERWAR YEARS 

Against this background, the interwar years break into two periods. 
In the first, which lasted until the early thirties, the effort to secure uni- 
versal acceptance of the American formula for achieving world peace and 
security was devoted to setting a good example rather than to participat- 
ing in an international organization. The United States ignored its power 
position and pressed for a moral repudiation of "power politics," and it 
expressed a willingness to support programs that would lead to similar 
repudiations by other powers. It renounced war as an instrument of 
policy. It disarmed beyond treaty requirements. It pointed out that the 
real interests of the United States lay in being surrounded by a politically 
stable world and in conserving, not extending, the national territory. 
But although the United States sometimes followed courses of action 
identical with those undertaken co-operatively through the League of Na- 
tions, it did so in parallel and not in conjunction. 

At the same time, the United States tended, in its international eco- 
nomic relations, to pursue policies that were fundamentally contradictory 
within themselves and in relation to its own political desires. On the one 
hand, this country, while insisting upon the repayment of the war debts, 
led the world in the growth of tariff protectionism, climaxing successive 
increases of its customs duties by the enactment of the Smoot-Hawley 
Tariff Act. On the other hand, vast sums of American capital went abroad 
in loans and investments of various types. These financial operations 
tended for a time to obscure not only the inherent discordance of Ameri- 
can commercial and debt-collection policies, but also the pressing need 
everywhere for dealing with the basic economic maladjustments of the 
postwar era. These maladjustments became fully revealed when foreign 
lending ceased with the onset of the depression at the end of 1929. 

Under the impact of the depression, which was world-wide, economic 
difficulties rapidly accumulated in all countries, and social unrest and 
political fermentation began to appear in some. All this produced a 
rapidly growing disintegration of international political and economic 
relations. The growth of expansionist policies in Nazi Germany, Fascist 
Italy, and militarist Japan, combined with lack of unity and energy in 
the peace-seeking states, set into motion the forces that at the end of the 
thirties plunged mankind into the Second World War. 

Face-to-face with this situation, American political leaders began the 
slow and laborious task of shifting the emphasis of basic national policy 
in international relations. The essence of the shift was clearly illustrated 



gs Major Problems 1050-1051 

in Secretary of State Hull's address to the nation shortly before the 
Munich Pact of 1938: 

. . . All nations have a primary interest in peace with justice, in economic 
well-being with stability, and in conditions of order under law. . . . Each of 
these objectives is today seriously jeopardized . . . appalling manifestations of 
disintegration seriously threaten the very foundations of our civilisation . . . 
the reestablishment of order under law in relations among nations has become 
imperatively necessary. 

The Secretary then listed the objectives of the United States, noting 
that they formed a program in which international co-operation was 
urgently needed and in which the United States should join. These ob- 
jectives were the maintenance of the basic principles of international 
law, of respect for treaties and observance of them; co-operation to abstain 
from force as an arm of policy and to limit and progressively to reduce 
armaments; co-operation to reconstruct wo*ld economic activity; and the 
attainment of the freest possible intellectual interchange between peoples. 

The new note here was international co-operation in the re-establish- 
ment and maintenance of certain principles of international behavior. 
This feature of policy had been developed, slowly and in specific in- 
stances, by the United States before the Secretary made the gencrali/ed 
statement quoted above. It substituted organized co-operation under the 
inter- American system for unilateral action and dominance in Latin 
America. It was implicit in the commercial policy that led to the Trade 
Agreements Act of 1934.* 

The change, however, was too late to "check and reverse the present 
ominous drift toward international anarchy." The concept of continuous 
international co-operation was not firmly enough rooted to meet the in- 
creasingly severe tests of the years immediately preceding the war. Imme- 
diate objectives and short-tpmi courses of action could not be clearly 
derived from it in the presence of a continuing and widespread isolation- 
ist sentiment. Around this slowly developing policy, opinion II actuated 
between isolation, pacifism, continental defense, and the recapitulation of 
principles. It found a brief point of rest in the Neutrality Acts of 1935 
and 1937, with their clauses forbidding loans, credits, and the sale of arms 
to belligerents. The Neutrality Acts were indicative of the total with- 
drawal of opinion from realistic contact with circumstances. They pro- 
vided no objectives, they led to no adequate formulations of policy, and 
in the judgment of the officials who were obliged to conduct under their 

6 Secretary Hull had no doubts on this matter: "To me, unhampered trade dove- 
tailed with peace; high tariffs, trade barriers, and unfair economic competition with 
war ... if we could get a freer flow of trade so that one country would not be deadly 
jealous of another and the living standards of all countries might rise, thereby eliminat- 
ing the economic dissatisfaction that breeds war, we might have a reasonable chance 
for lasting peace." The Memoirs of Cordell Hull, Vol. i (1948), p. 81. 



Interests and Objectives of U.S. 33 

terms the iorcign relations ot the United States, they were more likely 
to negate than to protect national interests. In consequence, they checked 
effective action without resolving public uncertainties. 

MODIFICATIONS DURING AND AFTER THE WAR 

With the fall oi France in 1940, though public opinion continued to 
be confused and to fluctuate in the ways already described, official think- 
ing and action became focused on assistance to other nations, on self- 
defense, and on the strategy, the industrial organization, and the general 
preparations for a possible involvement in the conflict. Although the na- 
tional interest and the major objectives of United States policy were still 
caught up in an unresolved debate, war plans moved from their tradi- 
tional emphasis on hemispheric defense to a form that envisaged a 
global war conducted far from American shores. The attack on Pearl 
Harbor checked the public debate, imposed an objective to win the 
war and initiated action within a strategic design already set. 

It is always an open question what changes a war will make in the 
accepted formulation of the objectives of the foreign policy of a nation. 
Unanticipated international positions arc established by military action, 
and objectives tend to become limited and subject to rapid change. In 
addition, the retention or rejection of the objectives and positions that 
remain at the end of the war depends on the working of obscure factors 
in public feeling. There may be an irresistible urge to revert to safe and 
traditional definitions ot the national interest, or the new configuration 
of power that the end of a war usually reveals may be so striking that it 
produces exac tly the opposite effect. 

THE BROAD OUTLINES 

As far as changes in the historical understanding of the interests 
and objectives of the United States are concerned, certain basic docu- 
ments siand out after 1940 the Lend-Leasc Act, the Atlantic Charter, 
the Declaration by United Nations, and the Four-Nation Declaration. 
These contain assertions of principle and imply basic: objectives. They 
were drafted in terms oL the effort to universalize at least some of the 
fundamental aspirations of American policy, and in them certain general 
principles were projected as objectives of enough importance to provide 
the taking-off point for any formulation of war aims or for any postwar 
policy planning. 

In the Atlantic Charter and again in the Declaration by United 
Nations, the political and economic objectives set up conformed with the 
statements of Secretary Hull that were quoted in the preceding section. 
Essentially they were "peace with justice," "order under law," and "eco- 
nomic well-being with stability." They were elaborated as (i) the right of 



34 Major Problems 19501951 

all peoples to choose the form of government under which they will live; 
(2) the access of all states, on equal terms, to the trade and raw materials 
of the world; (3) the fullest co-operation in the economic field to secure 
economic advancement and social security; (4) the establishment of a 
peace that would give all nations the means of living safely within their 
boundaries and all men the assurance that their lives might be lived in 
freedom from fear and want; and (5) the abandonment of the use of 
force, and pending the establishment of a permanent system of general 
security, the disarmament of aggressor nations. 

The economic objectives of the Atlantic Charter were worked out 
in still greater detail in the master Lend-Lease Agreement with Great 
Britain. In the crucial Article VII, it was agreed that 

the terms and conditions . . . shall be such . . . [as] to promote . . . the betterment 
of world- wide economic relations . . . open to participation by all other countries 
of like mind, directed to the expansion ... of production, employment, and the 
exchange and consumption of goods, which are the material foundations of the 
liberty and welfare of all peoples; to the elimination of all forms of discrimina- 
tory treatment in international commerce, and to the reduction of tariffs and 
other trade barriers; and, in general, to the attainment of all the economic 
objectives set forth in [the Atlantic Charter]. 

By the spring of 1943, the United States had taken the initiative in 
urging the planning of postwar co-operation in the economic and social 
fields. Problems of food, relief, and finance were considered less contro- 
versial for initial international consideration than problems of security. 
Early American proposals were formulated in terms of separate functional 
agencies. The first conference was that on food and agriculture. Another, 
held at Bretton Woods, dealt with the creation of international financial 
institutions. Still another was devoted to co-ordinating relief activities in 
the immediate postwar period. The thread that linked these proposals 
was the American judgment that it was not too soon to consider jointly 
the basic economic problems that would confront the world nor to give 
"practical application to the principles of the Atlantic Charter." 

In August 1943, during the Anglo-American conference at Quebec, 
Secretary Hull presented a draft of a four-nation declaration on postwar 
arrangements for peace and security. This document, which later became 
the Moscow Declaration, asserted the intent to co-operate for the mainte- 
nance of peace and security and to establish a general international 
organization for this purpose. It thus supplemented the Atlantic Charter 
with a specific commitment on the part of the United States to assume 
the responsibilities of continuous international co-operation. Until this 
commitment was made, there had been no significant extension beyond 
well-established principles of policy. At this point, however, a funda- 
mental addition was made. 



Interests and Objectives of U.S. 35 

It is possible to sum up developments at this point by noting that 
the following positions had been formulated by the United States: 
(i) Certain principles of political rights and international behavior were 
postulated in universalized forms; (2) certain objectives of economic and 
social well-being, also in universalized forms, were defined; and (3) an 
intent to enter into an organized international system was stated. But 
although these represented guide posts for policy decisions, they did not 
always correspond with the decisions and actions taken in accordance 
with military necessity. 

Military operations in the Mediterranean Theater led, in the ordinary 
course of events, to military government. The economic and political 
administration of large areas became the responsibility of the United 
States and Great Britain, and it required every variety of governmental 
policy and decision. The same process was repeated in connection with 
the liberation of the rest of Europe and still again in the defeat and 
occupation of Germany and Japan. An equivalent extension of economic 
and political control accompanied the movement of Soviet armies in 
both Europe and Manchuria. In fact, United States policy, however un- 
willingly, found itself concerned with territorial questions, with prob- 
lems of controlling the political actions of other states, and with inter- 
allied negotiations of immediate and practical significance. 

The broad outlines of policy in such matters were clear. Enemy 
states were to be jointly occupied by the major powers in accordance 
with principles previously agreed upon. Friendly states were to be free 
to re-establish their political, economic, and social structures with the 
joint help and guidance of the major powers. Territorial issues were to 
be frozen in their prewar patterns until solutions could be freely nego- 
tiated. And essential relief and the revival of economic activity were to be 
jointly directed in the interest of preventing social disorganization and 
political change by force. 

These positions were affirmed unilaterally by the United States on 
many separate occasions. They formed the basis of the American position 
in many tripartite negotiations. They appeared in various forms at the 
Moscow, Teheran, Yalta, and Potsdam conferences, in the discussions of 
the European Advisory Commission, and in bilateral relations with Great 
Britain, the Soviet Union, France, and the smaller states. 

But the strategy of the war inevitably resulted in Soviet control 
of Eastern Europe, Anglo-American control of the Mediterranean and 
the Middle East, Soviet control of Manchuria, and American control of 
Japan. Only in occupied Germany and liberated Austria was authority 
divided and shared. 

Thus from 1943 through 1946, two lines can be noted in American 
policy. One tended to follow the daily demands of the war, the immediate 



s)6 Major Problems 1950-1951 

impact of the war on the national interest, and the shifting conflicts of 
allies within a military alliance. The other led in the direction of develop- 
ing methods for harmonizing the interests and actions of major powers in 
a system of continuous international co-operation. The second line was 
designed to fit two anticipated periods in postwar relations: an initial 
period in which co-operation would be immediately aimed at reconstruc- 
tion and peace settlements, and a subsequent period in which stability 
and security and peace would be organized on a long-term basis. The 
interweaving of the lines in the actual conduct of policy became cxtiemely 
complex. Generally, however, the detailed postwar plans of the Govern- 
ment tended to develop separately from the ad hoc decisions of the opera- 
tional agencies, and their functions of mutual support became at times 
tenuous. 

The broadest and most apparent progress was along the line of seek- 
ing to harmonize the actions of the major powers. Negotiations and con- 
ferences proceeded from Dumbarton Oaks to the drafting of the United 
Nations Charter on the one hand, and through a series of meetings oi 
the foreign ministers of the major powers on the other. In addition, the 
United States conducted bilateral negotiations, especially with Great 
Britain. One of the major lines of action was the formulation of a com- 
prehensive United States foreign economic policy, designed to free world 
trade from the accumulated restrictions and controls of the past thirty 
years and to provide a foundation for carrying out the economic and so- 
cial purposes of the Atlantic Charter. In effect, this policy proposed to 
continue the prewar Hull program of bilateral trade agreements in a 
multilateral form. The intent of this policy was written into the British 
Loan Agreement of 1945 and fully expounded in the American "Pro- 
posals for Consideration by an International Conference on Trade and 
Employment." 

IMPACT OF SOVIET POLICIES 

While the line that sought to harmonize the actions of the major 
nations was being followed, and perhaps being overpublicizcd, the opera- 
tional line increasingly reflected certain detailed disharmonies. After 
the end of the war, serious questions began to arise in connection with 
divergent estimates of relations between the United States and the Soviet 
Union. Earlier adjustments, such as those made at Yalta, came more and 
more to be viewed as concessions, as weakenings of important policy posi- 
tions, as departures from fundamental principles. Early in 1946, as 
divisions of interest and purpose became increasingly sharp, the terms 
"Western bloc" and "Soviet bloc" began to be used. In spite of the mount- 
ing evidence of basic divergence, the United States continued to make 
it clear that it still considered adjustments worth making if an essential 



Interests and Objectives of U.S. 37 

harmony of major power interests could be maintained. The reality of 
continuous and profitable international co-operation depended upon its 
maintenance. 

Finally, however, the inference was drawn that Soviet actions were 
a deliberate implementation of Soviet policy and that this policy was not 
aimed at harmony but at the national aggrandizement of the Soviet 
Union and at supporting the political growth of communism. At this 
point, the actual disparity of power between the Soviet Union and the 
Western democracies became painfully apparent. The restraining force 
that the United States had in Europe in 1945 had been withdrawn and 
dispersed while the Soviet army was still mobilized. The relation between 
national power ready for use and national policy was never more clearly 
illustrated. 

Within a short time Senator Vandenberg broke out the "tough line," 
stating that "there is a line beyond which compromise cannot go even 
if we once crossed that line under the exigencies of war." Secretary of 
State Byrnes, under the pressure of the opinion to which Senator Van- 
denberg had given sharp expression, immediately brought the official 
American view into conformity and specified the situations in which the 
United States would maintain a firm position. They were (i) when force 
or the threat of force was used contrary to the United Nations Charter; 
(2) when troops were retained in sovereign states without the free con- 
sent of the states affected; and (3) when the methods of a war of nerves 
were used to gain strategic ends. And finally, Churchill ntade his "Iron 
Curtain" speech at Fulton, Missouri. 

The full implications of the new reading of Soviet purposes were 
gradually brought to bear on American policy. Although the United 
States was obliged to accept many Soviet actions as accomplished facts 
because it lacked the power either to prevent or alter them, there were 
no further instances in which the United States accepted Soviet proposals 
in the interest of adjusting differences to maintain harmony. Areas of 
international organization continued to be explored, and broad economic 
objectives continued to be pursued, but a more deliberate use of avail- 
able national power in the interests of national security came to the fore 
in the policy formulations and action decisions of 1947. 

As the major sources of disagreement about the control of Germany 
were revealed, as the situation in China deteriorated, as the unsatisfac- 
tory treaties in Eastern Europe became practically meaningless, as dead- 
locks were reached in the Atomic Energy Commission of the United Na- 
tions, United States policy concentrated more and more on immediate 
power problems. Prior to June 27, 1950 the so-called "cold-war" de- 
veloped steadily from the Truman Doctrine, through the Marshall Plan, 
the Brussels Pact, the Berlin Blockade, and the North Alantic Treaty, 



38 Major Problems 1950-1051 

to the Mutual Defense Assistance Act. The actions and reactions between 
a Soviet pattern of aggressive expansion and a United States pattern of 
defensive containment, appeared to be leading to a comprehensive re- 
direction of American policy. Co-operation in an international organiza- 
tion seemed to have become secondary, a deferred, limited, and con- 
tingent objective, or one that was followed mainly in order to use the 
United Nations to organize world opinion against the Soviet Union. 

This apparent tendency was dramatically reversed when, in response 
to open communist aggression in Korea, the United States ordered its 
military forces to be used in support of resolutions of the Security Coun- 
cil of the United Nations. Operating jointly with a majority of the mem- 
bers of the United Nations in this action, the United States is again 
placing its principal emphasis on maintaining international peace and 
security by collective action taken under the United Nations. 



Chapter IV 

Other Factors Conditioning United States 
Policy and Action 

ATFION by the Government of the United States in the conduct of for- 
eign relations takes place within a framework of national interests, 
defined objectives, and accepted principles. The nature and development 
of these bases of current American action were reviewed in the preceding 
chapter and will be examined in greater detail in the chapters in Part Two. 
But action is also conditioned by a large variety of other domestic and 
external factors. Of the purely domestic factors, the most important are 
the national power of the United States relative to that of other nations 
and the character of the American political and social system. In particu- 
lar, the power position of the United States is frequently a decisive fac- 
tor in determining its ability to carry out its policies successfully. Sub- 
ordinate, though also important, are some of the characteristics of the 
internal political and social system, including the governmental mecha- 
nisms for formulating and executing foreign policy and the influences 
exerted by the racial, national, and cultural diversities of the American 
people. Of the purely external factors, the most important are the inter- 
ests, objectives, and policies of other countries, especially those of the 
other major states, as well as the internal factors that condition the 
ability of these states to accomplish their purposes. 

All these continuing domestic and external factors bear on the free- 
dom of action of the United States in carrying out its policies, and they 
therefore condition the formulation of policy and even the determination 
of the objectives sought. They are frequently interrelated. Some of them 
are discussed in this chapter. 

DOMESTIC FACTORS 

The concept of national power, which is relevant to both the domes- 
tic and external conditioning factors, is used to express the sum of the 
social, moral, and political forces of a state, its actual and potential eco- 
nomic capacity, and its existing and potential military strength. The 
significance of national power in any one state depends on the world dis- 
tribution of power and on the relations among states possessing some 
form of power. Each state, large or small, seeks to develop and use na- 
tional power in relation to an estimate of what is required for its national 
security and other objectives. The conscious and deliberate use of power 
is, however, most striking among the major nations. 

39 



40 Major Problems 



POWER POSITION 

With its enormous industrial capacity, its vast natural wealth, and 
its large body of highly trained man power, the United States has no equal 
in economic resources, which are an essential element in national power. 
By mobilizing its economic resources during World War II, the United 
States was able to create the greatest military establishment that the world 
lias ever seen and at the same time to act as the "arsenal of democracy" 
in extending material assistance to its allies in the struggle against the 
Axis. 

The United States was the only major nation to emerge from the war 
with its economic resources not only intact but on the whole increased 
because of the expansion of much of its physical facilities for production. 
As soon as the war ended, the productive capacity of the nation was 
turned to civilian uses, and national production soon rose to an all-time 
high. American economic resources that had sustained the "arsenal of 
democracy" during the war were now available for the processes of recon- 
struction. This favorable position has given the United States much 
greater freedom to maneuver diplomatically than would otherwise have 
been the case. It has enabled the nation to exert considerable influence 
in support of objectives other than the purely economic. 

In contrast to maintaining and even increasing its economic strength, 
the United States permitted its wartime military strength to decline 
abruptly soon after the end of hostilities. At the same time, except for 
the Soviet Union, the other principal victors in the war, weakened by 
their war effort, were compelled to bring their current strength down to 
somewhere near their own reduced capacity to maintain it. The Soviet 
Union, on the other hand, retained much of its wartime military strength. 
The result of these changes was that a striking disparity of national mili- 
tary strengths occurred in favor of the Soviet Union at the time when the 
major nations were just beginning to put into effect the arrangements 
made during the war for their joint assumption of responsibility for the 
maintenance of international peace and security. 

The disparity of military strengths would have been of less conse- 
quence if it had occurred without disunity among the major powers. In 
the absence of unity the disparity in armed strength was a great source 
of danger to world peace. 

The first and by far the most important step to be taken in restoring 
a world equilibrium of power was to reconstitute the current military 
strength of the United States. This process has now been going on for 
more than three years. In view of the state of tension prevailing today 
and of the current military strength of the Soviet Union, however, the 
reconstitution of some measure of current military strength in at least 



Factors Conditioning U. S. Policy and Action 41 

some of the countries now allied with the United States is of equal 
importance. This is the second important step in restoring an equilibrium 
of power, and economic and military aid from the United States is essen- 
tial to enable it to be taken. The willingness of the United States to bear 
the burden of assistance to its allies is an important factor in determining 
its own relative power position. At this point, the strain on the domestic 
economy introduces an additional internal factor conditioning United 
States action. 

Important though military and economic strengths may be, they 
are far from being sole components in the power position of the United 
States. Moral factors must also be taken into account. 

American foreign policy has always carried a strong flavor of moral 
conviction regarding the benefits of the democratic way of life. In advo- 
cating the cause of personal liberty, political freedom, and equality of 
economic and social opportunity, the United States increases its prestige 
among like-minded nations and thus adds to its own over-all power. But 
in supporting its views in dealings with other nations, it has to contend 
with the tactics of the Soviet Union in condemning, with a complete dis- 
regard for truth, existing democratic institutions and in blaming them 
for all the economic and social misfortunes of peoples with low standards 
of living. Among such peoples the Soviet Union may gain in power and 
prestige by appearing as the champion of a new form of society in which 
it alleges these misfortunes no longer exist; or at least it may infect a 
sufficient body of opinion to create social unrest and political instability, 
which are powerful aids of the Communist fifth column. 

The Western powers therefore cannot afford to take the Soviet 
propagandist effort lightly. They must be prepared to bear the cost not 
only of countering Communist propaganda and fifth column activities, 
but of more positive action in explaining the moral values in the Western 
philosophy to the whole world. The strength of the moral position of the 
United States in world affairs depends on its ability to demonstrate con- 
vincingly that personal liberty, political freedom, and equality of oppor- 
tunity are likely to contribute more to human welfare than the tenets 
of the totalitarian or authoritarian systems that deny these fundamental 
rights. It depends also on demonstrating that the democratic tradition 
is capable of development and of orderly adaptation to changes in social 
values and is therefore a force making for progress. Success in this ideo- 
logical struggle is essential to the exercise of political influence by the 
United States in countries where authoritarian regimes have not yet 
been established and to the strengthening of the belief in democracy in 
countries where they are already entrenched. 

Another aspect of the moral factor in national strength is equally 
important. The United States has accepted an idea that it had con- 



42 Major Problems 19501951 

sistently rejected throughout its history the desirability of peacetime 
alliances with like-minded nations when faced with danger to its own 
and world security. The new conception is derived from the moral con- 
viction that the preservation of international peace and security, based 
on justice and good will, is the greatest common interest that binds all 
nations together, and that it must be the common and joint responsibility 
of all nations, irrespective of their size and strength. By steadfastly ad- 
hering to this conception, and by giving proof of its determination to 
make its full contribution to realizing it, the United States can exercise 
a great moral influence in the world. This may well prove to be a decisive 
factor in convincing the Soviet Union of the wisdom, in its own best 
interests, of returning to the rules of international behavior that it 
solemnly accepted when it ratified the Charter of the United Nations. 
Insofar as the example of the United States inspires other nations to 
adhere fully to this conception, it will greatly enhance its own security 
and its ability to play an increasingly important role in the establishment 
of a peaceful world order. 

INTERNAL POLITICAL AND SOCIAL SYSTEM 

The internal political and social system of the United States contains 
elements of both strength and weakness from the point of view of formu- 
lating and implementing American foreign policies and of determining 
the role that the United States plays in world affairs. An important in- 
fluence is exercised by the diverse racial and cultural groups within the 
United States. Common bonds of race, religion, and culture form a basis 
for organized minority pressures in the interest of a particular course of 
action in foreign relations. Pressure groups may cause the United States 
to assume a certain position in foreign affairs, even at the cost of incon- 
sistency with other policy objectives, or to refrain from taking a position 
that might arouse opposition. 

Another conditioning factor is introduced by the difficulty of getting 
the public to understand that foreign policy is continually subject to 
the processes of change. Although policies represent the crystallization 
of national interest at a given time, they evolve in response to changing 
events and forces, and they require restatement and re-evaluation as they 
arc applied in specific cases. When a change is required, particularly 
in major policies or in those that have become surrounded with an aura 
of tradition, public opinion may not respond as rapidly as the circum- 
stances require. On the other hand, public opinion may perversely 
react very rapidly to a new complex of circumstances and demand imme- 
diately a policy that it will not support in the long run. There is thus 
a gap between governmental decision and public support that often gives 



Factors Conditioning U. S. Policy and Action 43 

rise to uncertainty abroad and causes reluctance on the part of foreign 
governments to give full support to American actions. 

The nature of the American two-party system is such that it is not 
always possible to distinguish significant doctrinal differences, particu- 
larly on foreign issues. In the past, foreign policies have often been the 
subject of partisan differences; but except on economic issues, which 
may be an important reservation, there is little choice between the two 
parties today. The prospect of continuity in policy is now much greater 
in the United States than it has been for some time. The so-called bi- 
partisan approach, although a temporary expedient, may indicate basic 
party agreement on most foreign issues. 

Certain other features of the American political system, however, 
make foreign policy formulation and execution difficult at times, such as 
in a presidential election year. At these times, domestic political activity 
is intensified, and great maneuvering for political advantage takes place. 
In the Congress this means closer attention to domestic minutiae and a 
general reluctance to act on highly controversial matters. Among the 
public at large it means a concentration on domestic issues and person- 
alities and relatively less attention to foreign relations, except as they 
may become involved in campaign issues. For the President it means 
greater emphasis on the partisan aspects of his office to the detriment of 
his functions as the acknowledged spokesman of the nation in foreign 
affairs. The result may be a kind of national paralysis at a time when 
swift and decisive action would best serve the national interest. It is at 
such times that special-interest groups assume an importance out of all 
proportion to the influence they normally exert on political processes. 
Public opinion and political influence become strongly localized in an 
election period. The system for electing either the President or a new 
Congress makes electoral victory in a few large states a matter of crucial 
importance, and increases the influence of special groups whose voting 
power may be decisive. 

Quite apart from the effects of the forces indicated above, there is 
one factor that persistently conditions the formulation and execution of 
foreign policy in the United States, no matter what the content of the 
policy may be. This is the operation of the governmental mechanism for 
the formulation and execution of policy, including its relation to inter- 
national organizations in which the United States participates. 

The United States must operate under the handicap that the govern- 
mental mechanism leaves final authority in policy determination on many 
questions diffused and uncertain. The constitutional structure divides 
responsibility and authority for the conduct of foreign relations to an 
extent that hampers the efficient handling of foreign policy problems. 



44 Major Problems /p 50-7957 

Moreover, the executive branch has developed in a way that multiplies 
the possibilities for confusion and uncertainty in the policy-making proc- 
ess. Only some of its main features are considered here. 1 

The President has much of the responsibility and authority for 
policy formulation; but in certain specific matters the Congress has final 
authority. Congressional authority is increasing, at least at present, as 
United States foreign policies come to depend more and more on appro- 
priations of funds and to touch on matters where congressional legislative 
authority is clear. The President, however, is the sole channel of contact 
with foreign nations, and the Congress for the most part exerts its 
authority after the President has taken a position. But the Congress may 
also act independently, either to give the President a wider authority or 
to restrict the area in which he may make policy decisions. 

The sole responsibility of the President in the executive branch and 
the nature of his office in relation to the American governmental scheme 
do not make for close co-operation within this vast establishment. Policy 
decisions may be made by the President himself or by units in the execu- 
tive branch without the knowledge or advice of all who have a legitimate 
interest in the decisions. To avoid confusion, a co-ordinating structure 
has been developed, but this is now expanding to the point of possibly 
defeating its own purpose. The relations of the President and the whole 
executive branch with the Congress are vital in the formulation and 
execution of foreign policy, but they rest on constitutional arrangements 
that make them dependent at any given time on the extent of party unity 
within the Government and the personal standing of the President with 
the Congress. 

The foregoing factors make the formulation of consistent foreign 
policies difficult and subsequent action uncertain. This situation leads 
friendly nations to discount to some extent American power and influ- 
ence in foreign relations, and it gives unfriendly nations an important 
potential advantage in negotiations. 

The entrance of the United States into the United Nations system 
introduced a new element into the policy-making process, and one that 
restricts the limits within which national policy can operate. There is 
nothing new in the idea of restrictions on national policy, for they have 
been imposed by treaties, by traditional policies, and by the limitations of 
national power in any given situation. The new element is the broad 
commitment to a set of internationally accepted principles and to a 
method of operation for formulating international policy with other 
nations. The effect is to carry the policy-making process one step above 

1 This subject is treated in detail in a pamphlet entitled Governmental Mechanism 
for the Conduct of United States Foreign Relations, by the International Studies Group 
of The Brookings Institution (1949). 



Factors Conditioning U. S. Policy and Action 45 

the national level. On occasion this may profoundly affect national policy 
determination by introducing into the process elements arising from con- 
tinuing commitments, thus placing a greater responsibility on the national 
policy-making authorities. It is also much more difficult to change a 
policy that is formulated through an international organization than one 
formulated at the purely national level. However, as the counteraction 
to Communist aggression in Korea showed, there is also a factor of ad- 
vantage in conducting policy through an international organization. In 
this instance, the United States, by acting in response to a call by the 
United Nations, was enabled to act with great speed and with the assur- 
ance that its action was being accepted as a contribution to collective 
security. 

Apart from influences on common action in formal international 
organization, foreign governments may also affect in other ways the 
domestic factors that condition action by the Government of the United 
States in the pursuit of its own policy. This happens, for example, when 
they abandon policies that have been of significant value in creating 
world conditions favorable from the American point of view. The United 
States Government must then re-evaluate its own policies in the light 
of the new situation to see if its interests require a new policy. Actions or 
statements of other governments may also indirectly affect American 
policies through their effects on American public opinion. A striking 
illustration is the resumption by the Soviet Union of its prewar role 
as the spearhead of a world Communist revolution. 

The freedom of action of the American Government may also be 
curtailed by its own previous actions and commitments. Sometimes 
changed conditions point to a change in policy that requires the reversal 
of or release from previous commitments. In such circumstances the 
obstacles to change are likely to be especially great, with consequent 
delays before the Government is free to take action in a new direction. 

One such obstacle to rapid change arises from the fact that often, 
in attempting to gain public support for its programs, the Government 
indulges in overstatement, promising too much from certain measures. 
The result is an excess of public enthusiasm, followed by disillusionment 
when performance fails to equal promise and difficulties continue de- 
spite the policies that had been expected to eliminate them. This some- 
times causes a loss of public support and magnifies the difficulties of 
the Government in exercising American influence in international re- 
lations. 

On the other hand, the opposite tendency sometimes creates difficul- 
ties. When the Government understates problems until they reach the 
point of urgency, or fails to state at all problems that should be seen 
approaching, the failure to build advance support by developing ade- 



46 Major Problems 

quate congressional and public appreciation of the difficulties involved 
may cause unnecessary delay in obtaining action in the application of 
policies. At the same time, even when all essential facts are fully and 
forcefully presented by the Government, native American skepticism 
and the well-known reluctance to face unpleasant or disturbing facts 
often prevent people from believing what they read or hear. The result 
has frequently been failure to appreciate the broad significance of a 
foreign policy that was evolved from the steady march of international 
events. 

All these factors constitute important limitations on the ability 
of the Government of the United States to act effectively in foreign 
affairs. On occasion they impede the attainment of basic objectives. 
Perhaps their greatest danger, however, lies in the fact that they may 
mislead aggressive foreign powers to assume that the United States, 
with all its actual and potential power, will not take decisive counter- 
action even under the greatest provocation. This grave error was made 
by Germany during the First World War and by both Germany and 
Japan during the Second World War. It is of the utmost significance 
to the position of the United States in world affairs to make unmistak- 
ably clear to the outside world that the fundamental principles and ob- 
jectives of American foreign policy command the support of the nation, 
no matter how imperfectly they may on occasion be applied. 

One of the most significant advantages that the United States enjoys 
in international relations is political stability and a constant devotion to 
democratic principles at home. Although divisions of opinion resulting 
from normal political activities abound, there is no substantial disagree- 
ment on the fundamentals on which the democratic system is based. The 
widespread and enduring faith of the American people in the demo- 
cratic ideal provides a solid foundation for policy decisions and offers 
the best hope of developing internally an increasing awareness of the 
role of the United States in world affairs. 

THE INTERESTS AND OBJECTIVES OF OTHER NATIONS 

The fundamental reason for the existence of external limitations on 
action by the United States is that national power, which is the chief 
support of action, is always relative, never absolute or unlimited. An 
American course of action cannot, therefore, follow a straight line from 
decision to achievement, because of the modifying effect of the action 
that other states, particularly the major powers, are similarly taking 
in their own interests and toward their own objectives. The actions that 
others take may support or impede the implementation of United States 
policy. They may at times constitute limitations on the actions of the 



Factors Conditioning U. S. Policy and Action 47 

United States. This truism, though familiar to policy-makers, is often 
overlooked by public opinion. Behind the actions of other states can 
be found a structure of interests, objectives, policies, and principles, as 
complex as that described above for the United States, including the 
limitations imposed by American action. 

During the period that includes the rise of the United States to its 
present position as the most powerful single state, history records con- 
tinual and at times violent fluctuations in the distribution of power. 
These changes are indicated by the rise of states to positions of relative 
eminence and by their relative decline. With each change the United 
States has found its position modifiedfrequently to its advantage, some- 
times to its disadvantage. But in general, the success of the United 
States in conducting its international relations has depended on the 
accuracy with which its policy-makers have estimated the distribution of 
power in the world and have understood the limitations of that share of 
power available to the United States. 2 

Within this shifting pattern, certain focuses of power were grad- 
ually defined. The first of these to develop was in western Europe and 
the British Isles. It was based on the maritime expansion of this region 
and then on its industrialization. The powers of this region contested 
repeatedly either for the domination of Europe or the control of over- 
seas territories. Of these contestants, Britain, France, and later Germany 
were powers with world-wide interests, and their conflicts had exten- 
sive repercussions. 

The second focus of power was the Russian Empire. Russia and the 
states of western Europe came into conflict on the border that ran from the 
Baltic Sea to the Dardanelles, in the Middle East and central Asia, and 
finally in Manchuria, where Russian power also came into a conflict 
with that of Japan. The resources of the old Empire have been reorgan- 
ized under the Soviet regime into a modern focus of power. 

The third focus of power was defined in the Western Hemisphere 
at a later date, when the United States completed its continental ex- 
pansion and began the full-scale exploitation of continental resources. 

2 A possible evaluation of the position of the major powcis that were effective in 
international relations during the past 250 years would be as follows: 

1700 France, Great Britain (rising); Holland, Spain, Turkey (declining). 

1750 Great Britain (established); France (declining); Russia (rising). 

1800 Great Britain (established) ; France (revived); Russia (rising). 

1850 Great Britain, Russia (established); Germany (rising); France (declining). 

1900 Great Britain, Germany (established); United States, Japan (rising); France, 

Russia (declining). 

1920 Great Britain, United States, Japan (established); France (declining). 
1940 United States, Great Britain, Japan (established); Germany (revived); Soviet 

Union (rising). 
1945-United States, Soviet Union (established); Great Britain, France (declining). 



48 Major Problems 7950-7957 

By the opening of the twentieth century, the strength of the United 
States began to make itself felt outside the Western Hemisphere. The 
Spanish-American War, which began in a hemispheric interest of the 
United States, ended by bringing American power into the Far East and 
into conflict with that of Japan and of Russia. 

At the end of the nineteenth century, the meeting point of all three 
of these power complexes was China, and especially Manchuria. Al- 
though their mutual pressures were felt at the time, the possible long- 
term implications of their conjunction in this area were not fully grasped. 
On the contrary, attention was diverted for the following forty years 
to preventing Germany and Japan from establishing threatening new 
centers of power between those already established. The anticipated 
consequences of such a development were sufficient to draw the United 
States, Great Britain, and Russia together for the express purpose of 
countering so fundamental a challenge. 8 * Thus, without any change in 
the basic relations of the three focuses of power, they came together to 
defeat Germany twice and Japan once. But with the removal of the 
threat, the essential pattern of an increasing concentration of power 
was in each instance reverted to. 

The salient features of the present-day objectives of the two powers 
most important for United States foreign relations Great Britain and 
the Soviet Union and of some of the factors conditioning their action 
are discussed below. Consideration is also given to the capacity of 
smaller states to exert an influence in current international relations. 

GREAT BRITAIN 

Great Britain early reached the position of a "satisfied" power. This 
position consisted of a relatively superior productive capacity, the con- 
trol of sources of raw material, an easy access to markets in selling its 
products, and the means to counter threats to its security. The position 
was fully developed by the close of the nineteenth century. From that 
time the interest of Great Britain has been to maintain that fully de- 
veloped position. British policy, like United States policy and for similar 
reasons, has been based on the conviction that its abiding interest lies 
in the maintenance of peace. In British thinking, peaceful relations be- 
tween states and the negotiated adjustment of differences have long been 
identified with security. The over-all success, between 1815 and 1914, 
of the actions that followed from this broad policy was based in large 
measure on the police power of the British Navy and resulted in what 
has become known as Pax Britannica. 

The British position was made up of economic, strategic, and po- 
litical elements, some of which were geographically dispersed; and the 
maintenance of it called for continual adjustments in a very wide func- 



Factors Conditioning U. S. Policy and Action 49 

tional and geographical field. Consequently, within the framework of 
the over-all objective, limited objectives have always bulked large and 
have sometimes seemed to replace the continuing objective to which 
they were in reality subordinate. 

Two of these limited objectives have had a life sufficiently long to 
be described by well-worn phrases: the maintenance of a balance of 
power in Europe and the defense of imperial communications. For 
centuries British policy has been concerned with preventing any single 
power from dominating the Continent of Europe. Success in this policy 
was the measure of national security, and it was, in addition, regarded 
as the necessary basis of peaceful international relations. If such domina- 
tion were ever achieved, not only would a direct and powerful threat 
develop to the security of the British Isles, but the British imperial 
system and its economy would be endangered. British policy conse- 
quently sought to preserve a freedom of action in relation to Europe 
that would permit British power to be used to check the development of 
a serious unbalance in the distribution of continental power. 

The other limited objective, the maintenance of strategic and com- 
mercial communications, though linked with the maintenance of a bal- 
ance of power in Europe, also had a separate existence. In itself, it was 
concerned with the whole problem of ensuring the movement of food 
and raw materials into the British Isles and the movement of goods and 
the projection of power beyond the British Isles, a problem that would 
have existed even in the absence of an overseas empire. Diverse policies 
developed in relation to this objective, and their form and emphasis 
shifted in accordance with the particular situations they were designed 
to meet. The most familiar and persistent form has been that which 
defined the Mediterranean and the Middle East as an area of vital im- 
portance. In accordance with this formulation, Great Britain steadily 
sought to keep any other major power from securing a firm foothold 
in the area. 3 

Less familiar forms of policy were developed with respect to other 
parts of the world-India, Africa, the Far East, and Latin America. The 
element common to all, however, was the definition of British interests 
as requiring the exercise of influence in those areas to create political 
and economic stability as a contribution to the security and well-being 
of the British people. The smooth operation of this influence was a com- 
plex process and called for fluid policies. It covered the interests of the 
states and territories included in the British Empire and Commonwealth. 
It covered an empire won by conquest and by commercial activities. 
It operated in regions like Latin America, where earlier strategic and 

J Imperial Russia was checked by the Crimean War and again by the Congress of 
Berlin. German attacks were twice beaten off. Italian claims were resisted to the utmost. 



5<> Major Problems 1950-19*)! 

colonial interests had been converted into financial and commercial in- 
fluence, and in regions like China, where the maintenance of trade 
was inseparable from the diplomacy of power. 

The situation of Great Britain at the end of the Second World War 
did not require a fundamental re-examination of the basic objectives 
of British policy. Even before the First World War, British thinking 
had applied the concept of a balance of power indivisibly to the world 
as a whole. The bid for world domination by the Soviet Union, how- 
ever, is now alleged to present Great Britain with the choice of identify- 
ing itself more closely with the Continent or with the globally dis- 
persed members of the Commonwealth. British relations with the Con- 
tinent have traditionally included an isolationist in this case, an insular 
element. In the case of military defense, the choice has already been 
made; but in other spheres of association with Western Europe, new 
British objectives have not yet been clearly defined. 

It has been easier to redefine or to modify specific British objectives 
in other parts of the world. The decisive fact here has been the decline 
of British power resources relative to the accumulated commitments of 
Great Britain and to the power resources of the United States and the 
Soviet Union. In the Mediterranean and Middle East British policy now 
works in terms of a joint responsibility with the United States for main- 
taining the security and improving the stability of the region. In south 
Asia nationalist aspirations and the new political structures to which they 
led have been accepted, and British policy now seeks to realize its basic 
objective of peace and the maintenance of the British position by co-op- 
erating in a common interest rather than directing the activities of depend- 
encies. In the Far East, the concentration of policy on the preservation 
of financial and commercial interests puts this region on the same level 
of interest to Britain that South America was on in the nineteenth cen- 
tury. Strategic interests have been deliberately left to the United States 
and Australia. Only in Malaya has an effort been made to maintain un- 
changed a position and a commitment. 

The acceptance of the assumption that a rough identity exists be- 
tween the basic objectives and the global security interests of Great 
Britain and the United States is the essential reason for these modifica- 
tions. Without this assumption, the modifications, if they had occurred 
at all, would have represented a series of forced withdrawals. With it, 
they represent a process of adjustment to new concentrations of power. 
The most important objective of British policy is consequently to secure 
Anglo-American co-operation on the broadest possible scale. These 
changes, however, imply no reformulation of the national interest. They 



Factors Conditioning U. S. Policy and Action 51 

are realistic adjustments on an intermediate level of policy, not funda- 
mental shifts. Thus, although Great Britain accepts the influence of the 
United States as a force for maintaining peace and security in the world, 
British policy remains unconditionally directed to the maintenance of 
an international position that will ensure the vitally necessary importa- 
tion of food and raw materials and that will permit the equally vital 
exportation of manufactured goods and services. 

There are many similarities between the methods of conducting 
foreign affairs in the United States and Great Britain. In both states 
foreign policy is formulated and carried out in terms of a freely ex- 
pressed public opinion; political interests are democratically organized 
in a pattern of majority responsibility and minority opposition; appro- 
priation of public funds for the execution of policy is a legislative func- 
tion; and in both states and within a given administration, departmental 
interests are competitive and personalities exercise shifting degrees of 
influence over the policy-making process. In Great Britain, however, 
both the Government and the political party from which it derives are 
relatively compact and unified, and both operate within a political sys- 
tem so traditionalized that many of its features are beyond controversy. 

The main differences in the British system are that (i) the Cabinet 
has joint responsibility for the total operation of government; (2) a 
minister, though individually responsible for the policy of his depart- 
ment, must either convince the Cabinet of the rightness of his policy, 
accept a collective Cabinet decision, or resign; (3) the executive and 
legislative functions of an administration are an organic whole, in which 
the same individuals play double parts; and (4) a system of close party 
discipline has been developed. To these should probably be added a funda- 
mentally different view of the role and power of legislative committees 
a view that does not see such committees as devices by which a minority 
can cut into the authority of a government. 

Central control over the formulation of policy is concentrated in 
the Cabinet. The composition of the Cabinet, however, which is deter- 
mined only by the judgment of party leaders of what is necessary to 
ensure political effectiveness, reflects the balance of political opinion and 
power within the party in office. It is therefore the party that establishes 
the broad framework of policy. This concentrated influence is kept 
effective by joint Cabinet responsibility for all Cabinet decisions and for 
all administrative actions. 

Further practical effectiveness is gained from the fact that Cabinet 
members and other ministers have a legislative as well as an administra- 



52 Major Problems 

tive function, for they are elected members of Parliament in addition 
to being appointed departmental heads. Consequently, executive pro- 
posals are legislatively supported by a disciplined party under the leader- 
ship of the directing group that had approved them originally. 

By and large, the British system gives the Government control over 
all aspects of policy as long as it has the confidence of the electorate. 
The relation of foreign policy decisions to public opinion does not create 
the same difficult problem of adjustment in Great Britain that it does in 
the United States. The conduct of British foreign policy is less suscep- 
tible to minor fluctuations of public feeling, and it is traditionally con- 
sidered as a matter of nonpolitical administration. Consequently, only 
basic differences of opinion, usually reflected in a shift of public confi- 
dence, become politically significant. Nor is the problem of organizing 
public opinion in support of foreign policy a major one in Great Britain. 
It is simplified by the existence of a smaller, more compact, and more cul- 
turally uniform population. Public relations can therefore be conducted 
with greater emphasis on informing the public and less on persuasion 
and special pleading. 

The combined operation of the mechanisms, the political system, 
and public feeling serves to give a high degree of continuity lo British 
policy. The same factors that produce continuity, however, can also work 
to slow down the rate of adjustment to new situations, and the general 
outlines of British policy consequently may at times become difficult to 
redraw. 

THE SOVIET UNION 

It is difficult for the outside world to understand the basic objectives 
of Soviet foreign policy. In the almost complete absence of free inter- 
course with the Soviet Union, surmises cannot be easily checked. A few 
essential points, nevertheless, can be noted. 

The Soviet Government appears to follow two sets of objectives: 
the aims of Russian nationalism, and the aspirations of international 
communism. The Government is, on the one hand, a Russian authority, 
inheriting some of the aspirations of preceding regimes. It is, at the same 
time, the major exponent of an international ideology with a rigid 
formula for interpreting events, a fixed pattern of expectations with 
respect to the future, and a fanatical and disciplined body of adherents. 

Where Russian aims end and Communist aspirations begin, or the 
point at which Communist ideology becomes subordinate to Russian 
national interests, cannot be stated with certainty. It can be said, how- 
ever, that the Soviet Government, by using international communism to 
protect and add to the power of the Communist mother state, simul- 
taneously advances the interests of the Russian national state. Con- 



Factors Conditioning U. S. Policy and Action 53 

versely, the growing power of the Russian national state serves to in- 
crease the strength, influence, and appeal of the international Com- 
munist movement. 

There is little doubt that when the Communist regime was estab- 
lished in Russia in 1917, its leaders assumed that world revolution was 
imminent. Some, in tact, argued that the new regime could survive only 
in relation to an expanding revolutionary movement and that it was 
essential for Communist Russia to be the spearhead of an international 
seizure of power and the directing influence in it. An effective world 
revolution did not develop, yet the revolution in Russia was consoli- 
dated as the Soviet Union. 

Soviet leaders were thereafter committed to a dual principle of 
ac tion by the doctrine that underlay the argument and by the conditions 
under which they perpetuated their regime. On the one hand, there 
was the national need to reorganize and then build up the internal 
power of Russia. On the other hand, Russian policy needed to maintain 
outside Russia the revolutionary dynamic of communism as a check to 
the growing threat of counter-revolution inside Russia. 

The first objective was given a policy form in a series of five-year 
plans, beginning in 1928. Its pursuit required the establishment of rela- 
tively normal relations with non-Communist states in the interest of 
getting economic aid ior the success of the plans. The second objective 
was sought by sharpening the Communist International (the Comin- 
tern) into an instrument, not for the normal conduct of foreign relations 
but for the implementation ol another aspect of a dual purpose. Al- 
though the concept of world revolution as imminent was laid aside, the 
use made of this instrument suggests that the concept of world revolu- 
tion as inevitable was retained. These dual principles of action and dual 
objectives of policy operated for the next decade in spite of the practical 
difficulties and contradictions to which they often led dissensions within 
the Soviet Government, purges, and tactical zig-zags in relations with 
other countries. 

In the thirties, with the rise of the Nazi party in Germany and the 
stepping up of Japanese aggression in the Far East, a threat to the 
security of the Soviet Union was felt, and the relative emphasis given 
to the two elements of a dual purpose apparently underwent a change. 
Policy took the single form of seeking joint action with non-Communist 
states, of advocating collective security through the machinery of the 
League of Nations, of playing down world revolution, and of directing 
Communist parties to participate in a united front against political re- 
action and dictatorship. 

Soon after collective security failed with the Munich Agreement in 



54 Major Problems 1950-1951 

1938, this policy came to an end. A more decided shift of emphasis was 
made, and policy was focused even more exclusively on the security of the 
Soviet Union. Calculated bargains were made with both Germany and 
Japan, often at the expense of the doctrine and discipline of interna- 
tional communism. The only element of earlier purpose left was the con- 
cept that Soviet neutrality would lead to a long and exhausting war 
between capitalist states and that this war would end in social upheavals 
favorable to the renewal of a revolutionary advance on a global front. 
This policy failed too, when the Germans attacked the Soviet Union in 
1941. Then, in self-defense the Soviet Government joined the anti-Axis 
coalition, officially dissolved the Comintern that is, ostensibly abandoned 
one of its objectives and even took part in planning a postwar world 
in which Communist and non-Communist states would collaborate in 
the maintenance of peace and security. 

Opinions differ and will continue Ho differ about the degree of 
sincerity with which the policy of collaboration was developed. The line 
between the inherently suspicious character of Russian leaders and the 
deliberate tactic of deceit used by Communist authorities cannot be 
clearly drawn. It is a fact, however, that at the end of the war, the Soviet 
Union found its international position unusually favorable. Communist 
parties in Eastern Europe, helped and guided by Soviet intervention, 
rapidly achieved political control and, by providing subservient regimes, 
protected Soviet security interests. Soviet-guided Communists were operat- 
ing with some success against established governments in Greece, Iran, 
and China. In Western Europe Communists had emerged from local 
resistance movements organized and ready for vigorous political action. 
In addition, the Soviet Union alone of all the victorious powers kept 
its wartime military strength fully mobilized and strategically disposed. 

Consequently, instead of being committed by necessity to continuing 
a policy of joint action with non-Communist states, the Soviet Union was 
free to choose between that course and returning to the older dual pur- 
pose of building up Soviet power and restoring the dynamic of inter- 
national communism in deliberate opposition to its non-Communist 
allies. That the latter course was chosen has been made clear by events. 

The return to the dual purpose was reflected in a series of overt 
threats against Greece, Turkey, and Iran; in the uncompromising posi- 
tion taken while negotiating peace treaties with Italy and the Axis satel- 
lites; in obstructing the agreed principles of occupation and control 
in Germany, Austria, Japan, and Korea; and in the use of the procedures 
of the United Nations to prevent adjustments rather than to secure them. 
Fundamental differences between the purposes of the Soviet Government 
and the aims of capitalist states were rediscovered and insisted on. A cul- 
tural intolerance of the "decadent" West was officially developed, and all 



5J; 



avenues of cultural interchange were abruptly closed. In 1947 some of 
the features of the Comintern were revived in the Communist Informa- 
tion Bureau (the Cominform) for the purpose of planning and co-ordinat- 
ing an attack on the efforts of the United States and Western Europe 
to improve economic and to stabilize political conditions in the non- 
Communist world. 

In short, the dynamism of world revolution was again positively 
joined with the national power of Russia. It is no easier than it formerly 
was to distinguish with finality the comparative weight of the two ob- 
jectives in any particular situation or to decide which objective is being 
most consistently pursued. It is possible that no clear distinction is made 
by Soviet leaders. There are indications, however, that the security of 
the Soviet Union as a national state and the development of its power 
in relation to a possible combination of non-Communist states takes 
precedence whenever a choice has to be made. 

In addition, many of the actions that the Soviet Government has 
taken since the war can be described as following naturally from objec- 
tives whose roots were deep in the interests of imperial Russia. They 
are the actions of a national state eager to protect what it holds and 
ready to expand in directions marked out by the aspirations of previous 
regimes. Thus the territorial interests of the Soviet Union in the Baltic 
states, in Eastern Europe and the Balkans, in the Middle East, and in 
central Asia, Mongolia, and Manchuria can be taken entirely out of a 
context of communism and world revolution and seen as the routine 
continuation of a policy of strengthening Russia against traditional op- 
ponentsGermany in Europe, Great Britain in the Middle East, and 
Japan in the Far East. 

But the existence of the dual purpose makes judgment difficult. 
The satisfaction of national territorial interests is also presented as the 
triumphant advance of world communism. The Soviet Government can 
take a purely national pride in achieving traditional Russian aims; it 
can also take a prophetic pride in advancing Communist aspirations. 
Thus it can work toward multiple objectives with a single motion. Im- 
perial Russia, restrained by the concerted opposition of European powers 
and lacking a world-wide ideological instrument, never approached the 
potentially dominating position on the continent of Eurasia that the 
Soviet Union is now creating. 

So far as can be determined, the policy-making aspects of foreign 
affairs cannot be clearly separated from the policy-making aspects of 
internal affairs in the Soviet Union. The same set of mechanisms deals 
with both. Essentially, Communist leadership appears to recognize no 
valid difference between external and internal goals except that im- 
posed by timing and comparative importance. On the contrary, it is 



56 Major Problems 1950-1951 

considered that a mechanical separation of functions is politically artifi- 
cial. The central directing authority considers itself committed to watch- 
ing the interplay of internal and external forces and to adjusting the 
balance between them in terms of domestic requirements, the power and 
intentions of the outside world, and the objectives of the Soviet state. 
Foreign policy decisions and actions emerge merely as part of a total 
process. The mechanisms used for this purpose were developed, not by 
long historical evolution, but by trial and error and conscious and de- 
liberate choice over a short period of thirty years. They arc part of the 
Communist concept of the exercise of political authority. The only special 
context that marks off foreign affairs as a field of state activity is still 
that given by Stalin in 1938: "We live not on an island but in a system ol 
states, a considerable number of which are hostile." 

Structurally, the Soviet Union is organi/ed into two socio-political 
hierarchies a Communist party hierarchy, which has a monopoly of 
political authority; and a hierarchy of Soviets, which are primarily execu- 
tive, administrative, and policy-ratifying bodies. These hierarchies are 
pyramidal and parallel. The apex of the party structure is the Secretariat 
and the Politbureau; that of the Soviets is the Presidium of the Central 
Executive Committee and the Council of Ministers. Theoretically, the 
two summits are separate organs. Actually, and by a process of amalgama- 
tion completed in 1941, they are one and the same body in all essential 
respects. In addition, there is a high degree of interpenetration at all 
levels of the parallel structures: The party exerts direct guidance and in- 
fluence in the Soviets, and the Soviets, as channels of public feeling, exer- 
cise indirect influence on the decisions and actions of the party. 

The party appears to be the supreme political authority and to regu- 
late the balance of all other forces within the state as well as the posi- 
tion of the state in a world system. It has deliberately developed an 
elaborate network of governmental links and organs for the express pur- 
pose of tapping opinion, finding facts, adjusting differences, promulgat- 
ing patterns of action, and drawing wide sections of the nation into some 
form of public activity. The whole, however, is controlled by the fairly 
stationary peak of the party structure the managerial directorates, the 
Politbureau, the Orgbureau, and the Secretariat. 

The entire Soviet mechanism of government can, if required, be 
brought to function in relation to foreign policy. Usually, however, for- 
eign policy and the conduct of foreign relations employ only a small 
segment of the machine. The Central Committee of the Communist party 
and its working organs, the Politbureau and the Secretariat, are the 
initiators of policy unless policy is initiated by Stalin himself. The Polit- 
bureau maintains a close, direct and continual relation with the Ministry 
of Foreign Affairs (an organ of the Supreme Soviet) in controlling implc- 



Factors Conditioning U. S. Policy and Action 57 

mentation. The lower levels of the party and the Soviets, though theo- 
retically free to question the reports on foreign policy submitted to them 
from above, normally do no more than note and accept such reports and 
thus ratify decisions already taken. 

The more mechanical aspects of foreign relations conduct of diplo- 
matic intercourse, conclusion of treaties, public representation of the 
Soviet Union remain in the hands of the Supreme Soviet and its organs, 
as do questions of the execution of foreign financial and commercial 
policy. The Council of Ministers is formally in charge of supervising 
current work. At this highest level, however, it is improbable that any 
distinction exists between the party policy-maker and the Soviet ad- 
ministrator. Decision and action must be in very close conjunction, for 
policy and execution are inseparable. 

It must be at this highest level that objectives are defined, relevant 
policy is formulated, and the essential pattern of executing it is laid out. 
Decision emerges in the form of instructions to executive organs at all 
levels involved. There are no detailed reports on policy either to the 
All-Union Party Congress or to the Supreme Soviet. Only the general 
pattern, usually in the form of a description of the world situation, the 
position of the Soviet Union in that situation, and a general statement 
of what is being done to guard that position, is presented. If the occasion 
requires, this accounting can be publicized through controlled opinion- 
forming channels until it reaches the lowest and broadest levels of both 
the party and the Soviets and calls forth a calculated, standardized re- 
sponse. 

The Communist leaders of Russia also have at their disposal an 
equivalent set of mechanisms that operate throughout the whole structure 
of world communism. The top organ of international communism 
formerly the Comintern, now the Cominform is the visible focus of an- 
other system of centralized control. Its mechanisms of policy formula- 
tion and execution are likewise available to the Russian Communist 
Politburcau and Secretariat for the development of policies to further 
world communism, to supplement the foreign policy objectives of the 
Soviet Union, or to advance on both lines simultaneously. 

In pursuing its objectives, the Soviet Union has developed an au- 
thoritarian organization, which is designed to control human beings but 
places no value on the freedom and security of the individual. Decision 
is confined to a small group. Implementation proceeds through controls 
that combine a tight chain of command with a state apparatus for form- 
ing opinion at home and influencing opinion abroad. The system has 
significant general weaknesses. As in all highly centralized systems, a hard 
drive toward an agreed end can be developed and maintained, but mis- 
takes at the policy-making level cannot be quickly uncovered and cor- 



58 Major Problems 

rected. Tight control in a few hands prevents the valuable corrective 
effects of critical discussion from coming into play and makes the pattern 
of execution inflexible. 

THE POSITION AND INFLUENCE OF SMALLER STATES 

It has been common usage since 1947 to speak of the "polarization" 
of world power. Insofar as this is a catch-phrase meaning that the United 
States and the Soviet Union are the two strongest nation-states at the pres- 
ent time, it can be accepted. But if it implies that either of these states 
is so powerful that its freedom of action is unrestricted, then the phrase 
conveys a mistaken notion of the world power structure. There are great 
sources of power at the disposal of Great Britain and the Commonwealth. 
France remains a significant element in the power constellation of Europe. 
Both Germany and Japan remain important repositories of potential 
power. In addition, there are many middle and small states with resources 
and capabilities the disposition of which might be of decisive importance 
in altering the relative strength of the major powers. For this reason, even 
the smaller states, however precarious their security may appear to be 
and however inadequate their national power may be in relation to their 
aspirations, occupy positions in the international scene from which they 
exert significant influence. 

It is more accurate to regard the present power situation as consisting 
of several major and still amorphous complexes of power, in geographical 
contact with each other only at a limited number of points. Chief among 
them are, of course, the United States, with an industrial base on the 
North American continent; the Soviet Union, with an industrial base in 
almost the middle of the Eurasian continent; and Great Britain and the 
rest of the Commonwealth. The relative strength of the United States, 
the Soviet Union, and the British Commonwealth is markedly affected 
by the comparative influence that each is able to exert elsewhere in the 
world. 

Latin America, which includes two locally superior powers Argen- 
tina and Brazilis an important factor in the United States concept of 
hemispheric defense, and it is intimately tied in with the economy of the 
United States. These facts, especially in view of the concerted action 
that defense agreements imply, have given the states of the region, either 
individually or in combination, a marked capacity to influence United 
States objectives and to force modifications of United States policy. This 
influence is exerted through commercial and diplomatic channels, through 
a variety of technical and cultural organizations, and through such inter- 
national systems as the Organization of American States and the United 
Nations. It is not always easily observed, but its accumulative weight 
cannot be ignored. 



Factors Conditioning U. S. Policy and Action 59 

Africa, north of the Sahara, is still a projection of Europe, though 
this condition may be in process of changing as the spirit of Arab na- 
tionalism makes itself more generally felt in Tripolitania, Tunis, Algeria, 
and Morocco. South of the Sahara the continent is, except for the Union 
of South Africa, Ethiopia, and Liberia, a colonial area. In this sense 
Africa has a double claim on Great Britain and on those states of Western 
Europe that control its resources. As a source of raw materials it becomes 
economically essential. As a problem in government it makes demands 
on the financial, the political, and the moral resources of the mother 
states. Many of their objectives and many of their policies are inevitably 
conditioned by these two basic requirements. Mention should also be 
made of the fact that Africa occupies a strategic position in world com- 
munications, a position that was defined in the Second World War and 
has become even more significant since. This serves to make it more 
essential for the interested states to meet the requirements noted above. 

But obviously, in view of the present distribution and concentration 
of power in the world, it is the countries of Europe, the Mediterranean, 
the Middle East, and south and southeast Asia that are most capable 
of influencing the actions of the major nations. Many of these countries 
are in strategically significant locations, many are important sources of 
raw materials that are essential to the maintenance of the great power 
complexes, and many command important human resources. As single 
states or as combinations of states, they are an inevitable focus of inter- 
est, and consequently "it will be the vital interest of each stronger power 
to prevent the other from controlling . . . and each will pursue this inter- 
est in one of two ways, according to its strength: either by seeking to 
establish its own control . . . , transforming it [the region] into a pro- 
tectorate or a frontier province, or by maintaining its neutrality and inde- 
pendence." 4 

Fifty years ago, the "in-between" belt was more effectively organized 
than it is now. What was then an effective projection of the industrial, 
military, and political power of Great Britain and Western Europe into 
spheres of influence, protectorates, colonies, and empires, is now diversified 
into the three regions of Western Europe, the Middle East, and south and 
southeast Asia. Each of these regions and each of the individual states in 
each region now stands as a separate and often contradictory claimant 

4 M. Wight, Power Politics, Royal Institute of International Affairs (1949), p. 50. 
Attention is called to the fact that the Soviet Union has converted the states of Eastern 
Europe into what is essentially a group of frontier provinces, and is apparently engaged 
in a similar development in Mongolia and Manchuria in the Far East. Simultaneously, 
the United States has worked to ensure the independence of Greece, Turkey, Iran, and 
the nations of Western Europe and is presumably engaged in a similar development in 
southeast Asia. 



60 Major Problems 1950-1951 

on the objectives, policies, and commitments of the United States, Great 
Britain and the Commonwealth, and the Soviet Union. When it is further 
remembered that these regions, in spite of their present diversification, are 
still linked to each other by older economic, political, military, and cul- 
tural practices, the complexity of the influence that is brought to bear 
on the major powers almost defies analysis. 

Although the "in-between" states may often overestimate the degree 
of influence that they can exert in any situation, a general and entirely 
valid sense of having influence exists. This feeling has been a source of 
various ideas about neutralizing certain sectors of the "in-between" area 
or about reorganizing them into self-sufficient power systems. Certainly 
the human resources of the "in-between" area are great; its raw material 
resources are enormous, varied, and in some respects petroleum, vege- 
table oils, and non-ferrous metals of essential strategic significance; and 
its industrial resources and resources of ^mechanical energy, though un- 
equally developed, represent an item of present importance and of con- 
siderable potential value. 

Politically, however, these resources are now extremely difficult to 
concentrate. Not only have the aspirations of the formerly subject-peoples 
of this belt developed into conflicts of interest between the new and 
emerging states in the east and their former colonial authorities in the 
west, but the growth of political independence has tended to outrun their 
economic means of maintaining independence. If to these difficulties is 
added the strategic considerations that arise from the fact that external 
power complexes compete for position and influence in the region, the 
possibility of organi/ing its resources into a secure and stable power com- 
plex in its own right recedes into the remote future. 

Yet in spite of these signs of weakness, the "in-between" states arc 
able to play a positive role in international relations. The bases oi their 
capacity to exert influence arc many ancf varied. In some instances, the 
basis consists of a manifest local superiority of power, as in the case of 
India. In others, it is the result of the cohesive effect of a common cul- 
ture, as in the Moslem states. In still other instances, it is as producers 
of essential materials or food that they may exert a maximum effect with 
a minimum of power. And finally, by virtue of having sovereign authority 
in strategically important regions, small and even weak states find them- 
selves in a valuable bargaining position when there is more than one- 
bidder for their favors. 

Although small states act on these grounds with considerable effect, 
each is conscious of its individual weakness and hence is sensitive in 
matters of security. A general question is constantly before them the 
question of whether or not the elements of power, now dispersed through 
u number of sovereign states, can be brought together and effectively cm- 



Factors Conditioning U. S. Policy and Action 61 

ployed for a common purpose. They have become so sensitive to their 
"in-between" position that certain patterns of action are beginning slowly 
to show in their policies. These can be noted first, as seeking to enhance 
individually inferior power resources by entering into regional groupings 
for mutual defense; second, as seeking to link such regional groupings by 
treaty arrangement with the superior power resources of the United 
States, Great Britain, or the Soviet Union; third, as exploring a wide range 
of functional agreements financial, commercial, and social; and fourth, 
as developing minor power blocs in the United Nations and its specialized 
agencies. Indications of these patterns can be seen in the Benelux agree- 
ment, in the Brussels Pact, in the Council of Europe, in proposals for an 
integration of national economies within the Arab League in the Middle 
East, and in a host of tentative proposals for a Mediterranean pact, a 
Moslem bloc, an Asiatic bloc centered on India, and a Pacific pact. 

The United States has entered only one of these regional groupings, 
that covered by the North Atlantic Treaty. 5 It is, however, encouraging 
such developments and is exploring vigorously the co-ordinating and se- 
curity value of foreign economic aid programs, military assistance pro- 
grams, and direct grants. From the American point of view, these devices 
for pulling together the diffused resources of the region are all on the 
credit side of the ledger. 

The Soviet Union for its part is equally alert to the implications of 
these tendencies, and its policy reflects the characteristic reactions of a 
major power to unfavorable developments in a region of vital interest. 
It has entered into various types of relations, ranging from overt and 
covert threat (in Turkey, Iran, and Afghanistan) through protectorates 
(in the satellite states of Eastern Europe), to alliances (in the People's 
Republic of China). In addition, it has used local Communist parties (in 
France, Italy, Greece, and southeast Asia) to create economic and political 
impotence in states of the "in-between" belt. 

There is one other respect in which smaller states have a modifying 
effect on the policies of major states: in international organizations of 
all kinds. The principle of the sovereign equality of all members of the 
United Nations, with the concomitant of one vote for each member in 
the General Assembly, has made it possible for smaller states to form vot- 
ing blocs and, in this way, to bring the pressure of their opinion to bear 
with at least some effect. In other kinds of international organization, as 
in the Inter-American system or the North Atlantic Treaty Council, the 
influence of smaller states is felt differently but no less importantly. 

Enough has been said to indicate that any significant shift in the rela- 
tive positions of the major powers, or any stabilization of power between 

The Western Hemisphere grouping under the Rio Treaty is not considered here, 
It has a different historical origin. 



62 Major Problems 1050-1951 

them, will probably depend for the next few decades primarily on de- 
velopments in the "in-between" area. It is also indicated that the "in- 
between" states will continue to play an important part in determining 
the comparative strength of major states. These conclusions mean that 
smaller states have a far from negligible role in conditioning the objec- 
tives and actions of the United States, the Soviet Union, and Great 
Britain. 



Chapter V 

The Outlook 

IN THE LIGHT of the events, developments, and factors discussed up to 
this point, the position of the United States in world affairs in the 
midsummer of 1950 and the tasks that lie ahead need to be reckoned in 
relation to the objectives that the country has been pursuing and to the 
progress that it has achieved in attaining the ends sought. During the 
past twelve months, the Government of the United States repeatedly 
stated and restated the basic objectives of American foreign policy. These 
are (i) to develop a world of sovereign states, each one of which is politi- 
cally stable, and all of which are able and willing to harmonize their 
interests by continuous co-ordination and co-operation through an inter- 
national system, and (2) to prevent the Soviet Union and its adjuncts 
the satellite states, the Soviet-allied nations, and the apparatus of inter- 
national communism from defeating this purpose by aggression, sub- 
version, and sabotage. 

The comprehensive methods, or policies, by which these objectives 
have been pursued can be identified as (i) the rapid re-creation of na- 
tional military strength for the double purpose of meeting unilaterally 
the threat of Soviet aggression and of supporting collective security 
arrangements; (2) the encouragement of the growth of regional defense 
arrangements, designed to build up a maximum capacity for self-defense 
in regions directly exposed to the threat of Soviet Communist aggression; 
(3) a foreign economic and commercial policy, designed to increase pro- 
duction, liberalize trade, and improve standards of living; and (4) the 
maintenance and even expansion of the national economy for the double 
purpose of keeping the well-being of the nation at the level required by 
American expectations and of providing the means for carrying out the 
three preceding policies. 

The first three of these comprehensive policies are by their nature 
concerned with foreign relations and not domestic problems. The 
development of all of four, however, has been conditioned by the 
Communist challenge. Consequently, security considerations have been 
prominent in their development. This emphasis has in the large been 
dictated by circumstances over which the United States has had little or 
no control, namely, the actions of the Soviet Union. These actions have 
taken the form of pressures applied in western Europe, in the Far East, 
and in the Middle East, as Soviet choice has decided. In each instance the 

63 



64 Major Problems 

United States has been committed to carrying on an immediate holding 
operation against Soviet Communist pressure in order to provide the 
minimum basis for developing a stable free world with an expanding 
economy. 

In western Europe positive advances were made in industrial produc- 
tion and in laying the basis for a greater co-ordination of economic and 
military efforts. The political stability of the region was also improved 
in the particular sense that the influence of Communist parties was re- 
duced. However, the general objective of liberalizing trade and establish- 
ing an expanding economy was less perceptibly advanced. Restrictive 
practices were only slightly relaxed, less than was expected a year ago, 
and delays occurred in the liberalization of trade by breaking down the 
European system of bilateral payments. It was not yet clear that American 
economic objectives were firmly regarded^ as desirable in the long run or 
safely acceptable in the present. 

Throughout the year Great Britain and France shared with the 
United States the anxiety and the material consequences of increasing 
Soviet pressure in Germany and in the Far East. Consequently, there was 
a more rapid development of the military aspects of the North Atlantic 
Treaty than might otherwise have been the case. The problems of co- 
ordinating and maintaining the power needed to put Western Europe in 
a stronger position of self-defense are more generally grasped by the 
American public than they were twelve months ago. Furthermore, the 
machinery now exists for handling the military and economic aspects of 
these problems in a unified way. The consequences of the understanding 
and agreement thus achieved have been felt in other regions. 

In the Mediterranean and the Middle East, in spite of obviously un- 
settled issues such as Arab restlessness in French North Africa and Arab- 
Israeli relations, there is evidence of a more co-ordinated approach to the 
region on the part of the United States, Great Britain, and France. The 
states that lie on the borders of the Soviet orbit are, with the exception of 
Iran, more settled than at any time since the war. But although Soviet 
pressures have been effectively resisted in the Middle East, the more per- 
manent objective of the United States has scarcely been forwarded at all 
in this region. It continues underdeveloped, financially weak, and po- 
litically unstable. 

In south Asia, after a long period during which relations between 
India and Pakistan remained tense, their differences have been brought 
under control. The United States, Great Britain, and the United Nations 
all contributed to bring about this result, but the major effort was made 
by the Indians and the Pakistani themselves. Although political relations 
appear to be more stable, both nations are so deeply committed to na- 



The Outlook 65 

tional solutions of their economic and financial problems that the next 
stage in their relations remains uncertain. Their economic requirements 
are so extensive, however, especially when cast in terms of social improve- 
ments, that they are claimants on United States assistance for their eco- 
nomic development. 

In the Far East the establishment of a Communist regime in China 
fundamentally changed the position of the United States. The major 
initial adjustment was for the United States, Great Britain, and France 
to draw together and to co-ordinate their actions and resources in order 
to keep communism out of southeast Asia and in order to develop plans 
for strengthening the region politically and economically. It also forced 
a reconsideration of United States policy with respect to Japan, drew the 
United States into more precise commitments in southeast Asia than had 
been previously thought of, and obliged the United States to re-examine 
extensively its military security. The slow process of adjustment was 
brought to an abrupt conclusion by the Communist attack in Korea, for 
this imposed the necessity for making new comprehensive policy decisions. 
The basic decision was to resist this aggression to the full within a frame- 
work of joint action under the auspices of the United Nations and in the 
interest of a collective maintenance of international peace and security. 

The position of the United States in the Western Hemisphere has 
perceptibly improved. The collective machinery of the inter-American 
system, when tested by threats of aggression in the Caribbean area, worked 
quickly and effectively; and there was a general feeling of satisfaction. 
But the economic difficulties of the South American countries have not 
been solved, and the expectation of economic assistance has again come 
to the fore. 

In general, the objective of checking the extension of Soviet influence 
is given precedence over the objective of achieving economic stability in 
an expanding world economy. The long-range economic policies, and 
particularly the specific programs that have been developed from them, 
have been more and more tailored to meet the needs of worsening rela- 
tions with the Soviet Union. Nevertheless, the more comprehensive objec- 
tive has not been abandoned. On the contrary it has been increasingly em- 
phasized because it is still considered to be the only permanent basis for 
stable peace and security. 

This review of the position of the United States is not complete 
without looking at the internal condition of the country. Productive 
capacity has again surpassed the estimates. The national income has re- 
mained high, and the claims of foreign programs on that income have 
been met without reducing American consumption or imposing controls. 
Politically, however, instabilities have developed, especially in public at- 
titudes. They appear to have been traceable to the unaccustomed strains of 



66 Major Problems 

the so-called "cold war." The Soviet atomic bomb and the collapse of the 
National Government of China were read as Soviet victories. Four debates 
developed from these circumstances: on the national military strength of 
the country; on the weaknesses of the official foreign policy; on Com- 
munist sympathizers and their alleged influence on policy; and on whether 
the country could stand the cost of its foreign policy. All were conducted 
bitterly, and one with astonishing vituperation. The over-all appearance 
was of a public opinion confused, alarmed, and uncertain about the 
courses that should be followed. Agreement was general on only one 
point of policy; that of the necessity for meeting any threat of Soviet 
aggression. There was, however, no agreement on a method for meeting 
such a threat or even on how to prepare to meet it. These debates were 
suddenly resolved by the decisive action taken on June 27, 1950 to deal 
with a deliberate Communist aggression in Korea. 

Looking ahead, the long-run task of United States foreign policy still 
remains as it was described by Secretary of State Acheson on June 13, 
1950. He began with the question, "What is the objective of our foreign 
policy?" and gave the answer, "We want a peaceful world." He defined 
peace as "a condition of fruitful and harmonious relationship among the 
people of this world," and the American objective was accordingly re- 
stated as follows: "to help establish the conditions necessary to this kind 
of peaceful world." 

The Secretary listed the obstacles that stand in the way. They were 
(i) the destruction of older economic, political, and social patterns by 
the war; (2) the existence of large areas where "people are in rebellion 
against hunger, poverty, and illiteracy," and which were consequently 
"breeding grounds of conflict"; (3) the emergence of nationalism in Asia, 
with the consequent need to direct this force into "constructive and crea- 
tive channels"; and finally, (4) the difficulties imposed by the Soviet 
Union, which manipulated and intensified these problems for its own 
purposes. 

This last obstacle presented a double challenge. The vast expansion 
of Soviet armed forces and military capacity was a threat to the world. 
The international communist movement, subverting the capacity and de- 
stroying the will of non-Soviet nations to resist Soviet ambitions, was 
likewise a threat to the world. This did not, however, imply an imme- 
diate danger of war, the Secretary said, although the possibility of war 
could not be excluded. 

Various methods were available for dealing with this situation, he 
added: isolation, appeasement, preventive war, peaceful negotiation of 
differences, and co-operation with other nations. He ruled out isolation 



The Outlook 67 

and appeasement. Preventive war "would not solve problems; it would 
multiply them." It was, in fact, the task as well as the consistent policy 
of the United States to solve problems in co-operation with other nations. 

The situation was, however, wholly changed by the attack on Korea. 
In his pronouncement on June 27 President Truman said: "The attack 
upon Korea makes it plain beyond all doubt that Communism has passed 
beyond the use of subversion to conquer independent nations and will 
now use armed invasion and war." 

The President, in these circumstances, ordered the air and sea forces 
of the United States to support the troops of the Korean Republic. No- 
tice was thus formally served that priority of attention and effort would be 
committed to dealing with the obstacles that the Soviet Union put in the 
way of achieving a "condition of fruitful and harmonious relationship 
among the people of this world." 

Furthermore, the effort was being made within the framework of a 
policy of co-operation with other nations to solve a problem. The action 
of the United States was made part of a design of collective security 
operating through the United Nations, and was not part of a unilateral 
United States policy of "containing" the Soviet Union. 

Thus, although an immediate task of the utmost gravity has been 
interposed that of meeting armed aggression in the name of interna- 
tional peace and security, the long-run task of United States foreign 
policy remains the same. The context in which this long-run task must 
now be carried on has plainly been altered; but when the pressing prob- 
lem has been dealt with, the basic objective of United States foreign 
policy will still remain to be accomplished. 

With this in mind, the general task can be defined. It is to supple- 
ment the principle of international co-operation by "a program for 
strengthening the free world." This program involves the development 
of the military strength of the free world to the extent necessary "to deter 
Soviet leaders from any rash adventures." But it equally involves the 
development of other elements of strengtheconomic, political, and 
moral, for "a continued improvement in living standards, and continued 
progress in social gains in the free world," are essential to resisting both 
an external military threat and an internal communist threat. 

The general task involves many specific ones. These correspond 
very closely to the items of unfinished business as of July 1949, which 
were listed in Chapter I and which in modified forms are still the main 
items of unfinished business in July 1950. These specific tasks, however, 
now have a common focus in the immediate threat to international peace 
and security that has been posed in the Far East. At the same time the 
necessity remains of co-ordinating these specific tasks with the over-all 



68 Major Problems 1950-1951 

objectives of establishing and maintaining a peaceful world. 

The organization of the power of Western Europe requires the iul- 
iillment of the military, economic, and political agreements of the May 
meeting of the three Western foreign ministers and of the subsequent 
meeting of the North Atlantic Treaty Council. This, in turn, means the 
development of a detailed defensive strategy, the provision of the military 
means to execute it, and the modification of the European Recovery 
Program into a plan of economic support and the preparation of an 
agreed program that will take up where the Marshall Plan ends. These 
two aspects develop into still more specific requirements: to persuade 
Great Britain to adjust its policies to the demands of the general task; 
to adjust the development of the West German state to the demands ot 
the general task and to persuade Western Europe to incorporate such 
a state; to secure the maximum integration of Western Europe without 
pressing for unrealistic solutions and without accepting proposals that 
may lead to further restrictions on an expanding tree world economy. 

The achievement of security and stability for the free nations ot the 
world outside Western Europe comes down to the two-fold task of check- 
ing further Soviet and Communist expansion while developing economic 
and social programs whose beneficial effects can be ieit only in the long 
run. This breaks down into three specific undertakings: the provision of 
military assistance, including the use ot United States forces; the estab- 
lishment of immediate programs of economic assistance; and the imple- 
mentation of developmental programs. The way has now been opened for 
many of these to be carried out under the aegis of the United Nations 
and its agencies, and with the particular support of Great Britain, France, 
and the governments of the countries requiring assistance. 

Finally, and perhaps the most important of all, is the domestic task. 
This is to persuade the American people of the validity of the objectives 
that have been defined and ot the necessity as well as the effectiveness of 
the methods that are being used to achieve these objectives. This task is 
very closely linked with the question of costs, with the efficiency and re- 
liability of governmental agencies, and with judgments about the capacity 
of the American economy to support the policies that have been initiated. 



PART TWO 
CURRENT PROBLEMS 



INTRODUCTORY NOTE 

IN THE DAY-TO-DAY conduct of foreign relations, the Government of the 
United States is confronted with a continuous stream of problems 
great and small. These problems vary in importance and urgency. 

Decisions on all types of problems must generally conform to the 
broad national interests that American foreign policy is designed to ad- 
vance. Unless they do so they do not carry conviction to the American 
people, and they will ultimately lose the popular support that is needed 
to carry them out. They must also conform to the objectives that par- 
ticular policies are seeking to achieve, or alternatively they must at least 
be clearly recognized as modifying such objectives. Both requirements are 
essential to efficient operation, and the second is also essential to the 
achievement of fluidity in the conduct of foreign relations without creat- 
ing confusion and uncertainty. 

Finally, decisions are limited by checks on the absolute freedom of 
action of the United States Government in world affairs. These consist, 
in practice, of domestic political and other considerations, of obligations 
assumed in international organizations, of commitments entered into by 
treaty, and of the fact that the interests, objectives, and policies of even 
friendly states cannot be wholly squared with those of the United States. 
These limiting factors have been generally described in Part One of this 
volume and are given more detailed illustration in Part Two. In addition, 
Part Two takes up the major problems of foreign policy that either con- 
front the United States in the summer of 1950 or are likely to come up for 
consideration in the ensuing year. 

These problems are here considered as arising out of broad functional 
problem fields or in geographic problem areas. Four functional fields 
have been defined: the political, the economic, the military security, and 
the field of international organization. Five geographic problem areas 
have been defined: Europe, the Mediterranean and Middle East, east and 
south Asia, Africa, and the Western Hemisphere. In addition, it is recog- 
nized that there are groups of problems that are closely linked in funda- 
mental respects though their occurrence is geographically dispersed. These 
have been defined as problems of the Soviet Union and its periphery and 
as problems of Great Britain and the Commonwealth. 

In each case, the problem field or area is described in the introduc- 
tory section of the chapter dealing with it. In the course of this introduc- 
tion, the range of problems is indicated, though by no means all the 
problems noted are later examined in detail. After the introduction, 
selected problems are stated and briefly analyzed. The problems that have 
been chosen for analysis have been selected by the International Studies 



72 Major Problems 1950-1057 

Group of The Brookings Institution because they are under public con- 
sideration at the present moment, because it is judged that they are likely 
to require consideration within the term of the present volume, or be- 
cause they are valuable as case histories. 

There will be disagreement about the particular problems chosen. 
Readers may believe that some problems have been excluded that are 
more urgent and important than the ones that have been given a place. 
There may also be di iterances of opinion about the particular form in 
which the selected problems have been stated. It was recognized that the 
statement of a problem represents an estimate of the probable context in 
which the problem will arise. Thus the problem statements also repre- 
sent a judgment by the International Studies Group. Furthermore, the 
problem statements have been deliberately phrased to emphasize the fact 
that they are being analyzed entirely in relation to the national interests 
and objectives of the United States; for the problems are viewed as aris- 
ing in the particular forms noted, cither because policies of the United 
States impinge on the objectives of other states, or because the policies of 
other states impinge on the objectives oi the United States. 

Specific problems come up for decision under conditions which de- 
serve noting: 

(1) Problems do not arise spontaneously and cannot be solved inde- 
pendently. They develop out of a background of previous decision and 
action. 

(2) A full range of existing problems cannot be given orderly and 
complete decision. Attention is focused as urgency demands or as circum- 
stances permit. 

(3) The conduct of foreign relations is a comprehensive activity car- 
ried out in a multiplicity of dynamic situations. It does not permit iso- 
lated or absolute decisions. 

The problems discussed below have a significant feature in common. 
They are essentially problems of adjustment to the redistribution of power 
in the world during and since the war. Considerations of national se- 
curity bulk large in many of them and are close to the surface of nearly 
all. This emphasis on national security may seem undue, but it is one 
that has been imposed by the prevailing tone of the international situa- 
tion. It has been accepted by the International Studies Group in the 
interest of giving full reality to its survey. 



Chapter VI 

The Political Problem Field 

THE political problem field comprises a special type of policy prob- 
lems that are comprehensive and impose over-all considerations 
on a wide range of particular functional and regional problems. Two 
kinds of situations seem to give rise to this all-inclusive type of policy 
problem. One is the situation in which all interests and objectives appear 
to be centered on a particular aspect of international relations. A con- 
spicuous example is the situation that has been produced by the break- 
down of co-operation between the United States and Great Britain on 
the one side and the Soviet Union on the other. From this has developed 
a relationship so comprehensive in its effects on policy that many distinc- 
tions between security, economic, and social objectives are wiped out and 
geographic boundaries become of secondary importance. 

The other type of situation is one in which a traditional body of 
doctrine or an established principle of action has to be applied in such a 
wide variety ot actual circumstances that inconsistencies develop and 
judgment becomes uncertain and confused. This is illustrated by the diffi- 
culty experienced in applying the doctrine of recognition in circum- 
stances as different as those prevailing in South America, in the satellite 
states of Eastern Europe, and in China and the Far East. Another is the 
difficulty that develops in tr)ing to maintain the principle of the right of 
all peoples to govern themselves while at the same time trying to main- 
tain stability in the colonial areas oi the world where the assertion of 
this right is oiten a major source ol instability. 

The essential characteristic ol political problems is that they are con- 
stantly concerned with choices ol ways and means and that they tend to 
arise from the difficulty ol coordinating a large number of actions taken 
in particular situations functional or regional and ior specific short- 
term purposes, in order to progress toward a comprehensive, remote ob- 
jective. The objective of organi/ing and strengthening the free world 
as a defense against the Soviet Union and communism calls for an im- 
mense range of particular decisions, economic, security, and regional. All 
these decisions are complexly related to the over-all objective, and each 
of them can bring the attainment of that objective nearer or can check it. 

THE OVER-ALL PROBLEM 

Most of the significant current political problems confronting United 
States foreign policy can be traced to the breakdown of relations between 

73 



74 Major Problems 

the United States and the Soviet Union. It cannot be concluded that if 
harmony and co-operation were restored among the major powers, peace, 
security, and prosperity would immediately prevail in the world. But it 
is true that harmony and co-operation would make it easier to deal with 
political, social, and economic problems. Instead, a situation has devel- 
oped that is widely described and accepted as a "cold war" and that the 
Secretary of State has bluntly characterized as one "where we could lose 
without ever firing a shot/' A fundamental conflict has consequently been 
defined between two opposing systems. 

Insofar as the American people are concerned, there can be no com- 
promise between their way of life and the contrary theses of communism. 
Internationally, however, the possibility has not been excluded that the two 
systems may be able to exist side by side, although it is clear that from 
the point of view of the United States their peaceful coexistence depends 
almost wholly on the policies and actions of the Soviet Union. 

On this basis, it has been officially declared that the United States 
must have a foreign policy with two interrelated branches. First, it must 
be prepared "to meet wherever possible all thrusts of the Soviet Union." 
Second, it must attempt to establish in the areas of the world that are 
not under Soviet domination "those economic, political, social and psy- 
chological conditions that strengthen and create confidence in the demo- 
cratic way of life." The objective is to rebuild the strength of the free 
nations and to create unity and determination on their part. Both lines 
of action are designed to persuade the Soviet Union that its power is 
not adequate to achieve its objectives. This gained, the United States 
and the other free nations will then be able to evolve with the Soviet 
Union "working agreements" that will permit the two systems to coexist 
peacefully. 

This is essentially a peace-seeking policy on the part of the United 
States and the other free nations. In the United States the requirements 
of this policy are viewed as a mobilization and a focusing of our resources 
in a "total diplomacy" comparable to the conduct of a "total war." The 
ultimate aim, however, is to avoid the cataclysm that would ensue if the 
cold war turned into a hot one. There is nevertheless the possibility that 
in spite of all the efforts of the free nations to avoid it, a third world war 
might occur in which the United States and the Soviet Union would be 
the leading protagonists. Official thinking in the United States does not 
nor can it rule out this possibility. Neither, however, does this thinking 
regard such a conflict as inevitable. 

The broad alternative to this policy has been succinctly described 
by Secretary of State Acheson as "to allow the free nations to succumb 
one by one to the erosive and encroaching processes of Soviet expansion." 



The Political Field 75 

The end product of such a process, Communist control of the population 
and resources of Europe and Asia, would menace the peace and security 
of the American people just as surely as a direct attack tomorrow on 
American territory. The American people have already fought two wars 
in this century to prevent a comparable concentration of power from 
being arrayed against them. 

The foregoing is the over-all political problem of United States for- 
eign policy. Its ramifications extend into the economic and security fields, 
into the United Nations system, and into every geographic area of the 
globe. Only one of its features is taken up in this chapter, the question 
of the adequacy of economic programs as the basic support for the total 
diplomacy envisaged. It comes up again specifically in connection with the 
broad United States economic objective of breaking down the barriers 
to international trade and of generating an international pattern of ex- 
panding economy in connection with American military security, in con- 
nection with the United States position in the United Nations, and in 
every geographical problem area. 

In pursuing a course of total diplomacy, the United States bases 
its actions in the political field on the objectives and principles that are 
rooted deep in American history. The most important of these objectives, 
and indeed the supreme goal of all United States foreign policy, is the 
attainment of a world order in which all nations, large and small, will 
live in peace and security, and under which their peoples will enjoy a 
growing measure of well-being. This objective is one that the United 
States seeks in its own self-interest, for it is only in such a world order 
that the United States itself will be free and safe and will enjoy peace 
and prosperity. This objective also corresponds with the expectations of 
a society based on democratic institutions. 

The goal of a peaceful world order can, in the American view, best 
be attained if all nations accept certain rules of conduct in their inter- 
national relations. These rules recognize both the rights of nations and 
their duties and obligations to each other and to their individual citizens. 
They contemplate an international community of nations that lives and 
acts on the same principles of mutual respect, self-restraint, tair and equal 
treatment, adherence to the pledged word, and peaceful co-operation that 
enable individuals to live and work together in a democratic community. 
The attempts of the United States and the other free nations to uphold 
and enforce respect for such rules have led to the most profound and 
irreconcilable of their current clashes of interest with the Soviet Union. 
On the other hand, if working agreements are to be evolved so that the 
free nations and the Soviet Union can coexist peacefully, it is mandatory 
for the Soviet Union not only to accept such rules but also to demonstrate 



76 Major Problems 1950-1051 

its willingness to abide by them. A brief review of the principles that the 
United States holds to be indispensable to political relations among na- 
tions is therefore necessary in the discussion of the broad political prob- 
lems now confronting United States foreign policy. 

BASIC PRINCIPLES OF ACTION 

The right of each nation to govern itself has been the most tradi- 
tional of all principles in American thinking. It embodies two others of 
equal importance. The first is that every nation has the inherent right 
of both individual and collective self-defense in the event of attack. In- 
sistence on this principle has been consistent from the outbreak of the 
American Revolution, through the evolution of the Monroe Doctrine, the 
adoption of the Lcnd-Lease Act during the Second World War, 1 and the 
reservation made under Article 51 of the Charter of the United Nations. 
The second traditional principle is that independence or self-government 
should be granted to all dependent peoples who are qualified to govern 
themselves. In accordance with this principle, American sympathies have 
always run strongly in favor of the aspirations of colonial peoples for in- 
dependence. 

A corollary to these principles is that sovereign rights and self- 
government should be restored to peoples who have been forcibly de- 
prived of them. The modern application of this principle in United 
States foreign policy dates from the First World War and President Wil- 
son's "Fourteen Points." During the Second World War, it was again pro- 
claimed in the Atlantic Charter and in the Declaration by United Na- 
tions. 2 

Another corollary is that diplomatic recognition should not be ex- 
tended to a government forcibly imposed upon a nation by a foreign 
power, a principle formulated in 1932 by Secretary of State Stimson. It 
is clear that it might be impossible at times for the United States to pre- 
vent such forceful impositions, but it is the declared policy that the 
United States will not extend diplomatic recognition to any such gov- 
ernment. 

The right of a nation to govern itself carries with it the concomitant 

1 The philosophy underlying the act, as stated by Secretary of State Hull, was 
"As an important means of strengthening our own defense . . . this country is affording 
all feasible facilities for obtaining of supplies by nations which, while defending them- 
selves ... are thus reducing the danger to us. ... Any contention, no matter from 
what source, that this country should not take such action is equivalent ... to a 
denying of the inalienable right of self-defense." Department of State Bulletin, Vo\ 3, 
Oct. 26, 1940, p. 336. 

2 For future reference in this connection, it should be noted that several nations 
lost their independence during the war and have not yet regained it, and that many 
of those that were freed from enemy control have since lost their right to govern them- 
selves by becoming satellites of the Soviet Union. 



The Political Field 77 

right of its people to choose freely the form of government under which 
they wish to live. This principle is also basic in the American tradition, 
and American feeling has historically interpreted it as "a right to revolu- 
tion" in order to establish free and republican forms of government. The 
modern official interpretation is more in keeping with the concept of a 
stable world order and peaceful change, which the United States now 
advocates, and the contemporary form of the principle is that the choice 
should be freely and, if at all possible, peacefully made by democratic 
processes. Nevertheless, the assumption still is that if given a liee choice, 
no people would willingly vote itself into servitude. 

It is also the American view that the rights of a state are not un- 
limited, but carry with them certain obligations toward other states and, 
currently, to an international community of states. It is basic in the 
American view, moreover, that such obligations are in the first instance 
a. series of self-denying ordinances that a state imposes upon itself. These 
are generally considered as analogous to the golden rule for individuals 
a fundamental precept of Christian ethics. The application of them to 
international relations represents a moral principle that, though basic 
to Western civili/ation, is not nee essarily universal. 

The minimum obligations that the United States believes states 
should accept rest on another principle: each nation, large or small, must 
recogni/e the sovereign equality ol all other nations. Two major obliga- 
tions are involved, and they have been set forth in the Charter of the 
United Nations. First, each nation must settle its disputes with evciy 
other nation by peaceful means and in such a manner that international 
peace, security, and justice are not endangered. Second, all nations must 
refrain Irom the threat or use ol forrc against the territorial integrity 
or political independence of any nation. Both imply that all nations will 
live by a code of international morality and law under which all obliga- 
tions they may undertake will be carried out in good laith. 

It is obvious, however, that certain courses of action must be spe- 
cifically renounced if these minimum obligations are to be reflected in 
national actions taken in the international field. All states will have to 
give up any turther territorial ambitions, a renunciation that the United 
States made early in the twentieth century. Future territorial changes 
will have to follow only the freely expressed wishes of the peoples con- 
cerned. All nations must renounce war as an instrument of national 
policy, a step the United States took in the Kellogg-Briand Pact of 1927. 
More recently, as a result of the war crimes trials, aggressive war and its 
planning have been decreed a crime against humanity. Finally, all states 
will have to agree not to intervene in the affairs of other states. This 
principle of nonintervention was slow to be accepted even by the United 
States, but today it has no stauncher advocate. And it may be that the 



78 Major Problems 1950-1951 

American refusal to retreat from this one principle, coupled with the 
refusal of Soviet communism to abide by it, will in the end provoke the 
armed conflict that United States policy seeks to avoid. 

In the American view states have duties and obligations to indi- 
viduals as well as to each other. Americans believe that the guarantee 
of human rights and freedoms contained in the Constitution of the United 
States should serve as a model for similar undertakings on the part of 
other governments toward their people. These rights derive from a belief 
in the fundamental worth of the individual and in the social value of a 
free interchange of ideas. Although they are the product of a religious, 
social, and political tradition that is far from universal, acceptance of 
them by all states is considered by the United States to be the essential 
foundation for a free and peaceful world order. 

The United States has been active since the Second World War in 
encouraging respect for human rights and freedom, especially freedom of 
expression and freedom of religion. The support of these freedoms by 
the United States, particularly in Eastern Europe, has been linked to its 
support of the right of peoples freely to choose the form of government 
under which they wish to live. This is in line with traditional United 
States policy, for the American people firmly believe that the very basis 
of democracy, the right of opposition, depends on the right to question 
and to expound ideas even when they differ from those of the govern- 
ment in power. Confronted by a violent and hostile campaign of Com- 
munist propaganda, the United States has also been a leading supporter 
of the principle of full and free exchange of information internationally. 
Freedom to obtain and publish information is one of the most cherished 
rights in the United States, and conversely it is the one most firmly 
denied by all totalitarian governments. 

The existence of these principles in American thinking and the 
projection of them into the international field have gradually resulted in 
a comprehensive conviction about the conduct of international relations. 
It is that the establishment of the rights of all states and the acceptance 
of the mutual obligations necessary to maintain these rights depend upon 
continuous and habitual international co-operation. The development of 
such international co-operation consequently tends to be asserted as the 
ultimate objective of United States foreign policy. 

This was not always an objective generally acceptable to American 
opinion. The isolationist elements in American thinking had deep roots, 
and the desire to avoid "foreign entanglements" is one of the oldest in 
the American tradition. Even after the First World War, the most that 
American opinion would admit was that a peaceful world order could be 
created if every nation accepted the necessity of restraining itself in the 
exercise of its absolute sovereignty without accepting the principle of con- 



The Political Field 79 

tinuous international co-operation. Although in specific situations the 
United States frequently adopted policies parallel with those of the 
League of Nations, the feeling against "entanglement" remained strong 
among the American people. 

The Second World War convinced the overwhelming majority of the 
American people that a peaceful world order was possible only if it were 
based on constant co-operation among the peace-loving states, preferably 
through a world organization of all states. Under the leadership of Presi- 
dent Franklin D. Roosevelt and Secretary of State Cordell Hull, the 
United States Government therefore became one of the foremost pro- 
ponents of an organized system of international relations for maintaining 
world peace and security. Support of the United Nations system and of 
international co-operation is today the cornerstone of United States for- 
eign policy. 

The principle of international co-operation, for which the American 
people now stand so wholeheartedly, implies a willingness on the part of 
major nations to assume the special responsibilities for world leadership 
that their great power and resources have brought to them. These special 
responsibilities the American people have also assumed, and the United 
States has been a leading participant in all endeavors during and since the 
Second World War to bring about the peaceful world order that the 
American people desire. The United States has also applied the principle 
of international co-operation with new vigor in the Western Hemisphere 
and has even extended the application of it to Europe, an area that here- 
tofore was regarded as peculiarly suitable for the application of the old 
American principle of nonentanglemcnt. 

MAIN CURRENT PROBLEMS 

The course of events since the end of the Second World War has 
not been such as to make it possible to apply completely the underlying 
principles of United States foreign policy. The situation created by Soviet 
actions made it inevitable that some of these principles would be given 
a new application. In the countries of Eastern Europe, for example, it 
became plainly impossible to restore sovereign rights and self-government 
to people who had been forcibly deprived of both by Soviet influence. 
It was equally impossible to ensure that these peoples would have the 
opportunity to choose their form of government free from foreign inter- 
ference. Consequently, the United States could do no more than reaffirm 
its principles. When, however, Soviet policy threatened to create similar 
situations elsewhere in the world, the Truman Doctrine was announced. 
Proclaimed with special reference to Greece and Turkey and later ex- 
tended to cover all comparable situations, the doctrine stated that free 
peoples, resisting subversion by armed minorities or subjugation by outside 



8o Major Problems 1950- 1951 

force, would be supported by the United States. The implications of this 
doctrine ramified so rapidly, especially in the Far East prior to the attack 
on Korea, that it was given a limiting restatement to the effect that Ameri- 
can aid would be furnished only when it provided "the missing compo- 
nent" in a situation in which other components, such as the will to 
resist, were already present. 

Out of this type of situation and this form of reaction has grown 
the most comprehensive of all the political problems confronting the 
United States: to decide the strategy and tactics of conducting the cold 
war into which the breakdown of universal international co-operation 
had developed. The essence of the problem was to formulate policies 
that were firm and consistent enough to convince Soviet leaders that, 
although the continuing objective of the United States was peace and 
stability, there were clear limits to the price that would be paid to achieve 
this objective. On the other hand, the same policies had to be flexible 
enough to convince relatively weak and insecure free nations that they 
were not being drawn into an avoidable conflict by hasty and demanding 
United States courses of action. Furthermore, these policies would have 
to be conducted within the framework of co-operation between like- 
minded nations. And, finally, these policies could not close the door to 
negotiations if the Soviet Union should at any time satisfy the necessary 
conditions for such negotiations. 

This comprehensive political problem has been made more compli- 
cated by the fact that Soviet policy was also being projected through 
organized international communism. Thus the strategy and tactics of 
countering Communist subversive activities came into the picture on a 
world-wide scale. The United States relied heavily on economic aid and 
political support as countermeasures, but the success of the Communists 
in China threw doubt on their efficacy. It was obviously more costly lor 
the United States to improve the living conditions of large masses of 
people than it was for the Soviet Union to disrupt conditions and use 
disorder as a basis for revolutionary agitation. Growing demands for 
United States aid raised the very pointed question whether even the re- 
sources of the United States could stand the strain of indefinitely con- 
ducting a cold war by the provision of economic assistance. 

Some of the problems that have here been mentioned are examined 
in later chapters, and an examination of economic measures as a counter 
to communism is made below. These particular problems are illustrative 
of one of the two types of political problems described at the beginning 
of this chapter. 

The other type of political problem, that in which a traditional body 
of doctrine has to be applied in a wide variety of actual circumstances, 
is illustrated by the difficulties attending the application of the doctrine 



The Political Field 81 

of recognition. Although this kind of problem often appears in forms 
that seem needlessly technical, it is no less important than the all-inclu- 
sive type, for it invariably introduces new complexities and unexpected 
contradictions. The problem of applying the general doctrine of recog- 
nition in the context of the all-inclusive problem of United States-Soviet 
relations is examined below both because it involves matters of urgency 
and because it is an excellent illustration of a particular type of political 
problem. Other examples of this type of problem, such as American 
attitudes toward colonial peoples or the United States doctrine of inter- 
vention, have not been singled out for analysis. They will, however, come 
into play in various of the problems that are discussed in later chapters. 

THE DOCTRINE OF RECOGNITION 

From the historical standpoint, it was at the time of the French Revo- 
lution that the United States was first confronted by the problem of deter- 
mining the general policy it would follow in recognizing new govern- 
ments. As first stated by Thomas Jefferson, who was Secretary of State 
at that time, the general doctrine started from the premise that the United 
States "cannot deny to any nation that right whereon our own Govern- 
ment is founded." That right was declared to be that every nation "may 
govern itself according to whatever form it pleases, and change these forms 
at its own will." It followed, therefore, that a nation "may transact its 
business with foreign nations through whatever organ it thinks proper, 
whether king, convention, assembly, committee, president, or anything 
else it may choose." Emphasis was placed on the principle that "the will 
of the nation is the only thing essential to be regarded." 

During the century and a half that has since passed, the problem 
of applying this doctrine has frequently recurred in the foreign relations 
of the United States. The doctrine has been refined, reinterpreted, and 
supplemented in the light of new conditions and situations encountered 
by the United States. The most important supplement evolved late in the 
nineteenth century, when the American decision to recognize a new gov- 
ernment began to be based more and more on another consideration 
the ability of the government to respect the foreign obligations of the 
state that it claimed to represent. 

Much of the reinterpretation of the doctrine, especially during the 
past hundred years, has revolved around the method of determining 
when the will of a nation has been truly expressed. Must that will be ex- 
pressed through democratic institutions that provide a free choice of the 
people concerned, or is any type of revolt overthrowing the existing gov- 
ernmenteven if an authoritarian regime should come into powerto be 
regarded as expressing the will of a nation? On this point there have been 
wide fluctuations in United States policy, particularly in respect to Latin 
America. 



82 Major Problems 

Yet much of the basic doctrine still stands. This is well illustrated by 
Secretary of State Acheson's statement in September 1949. Although the 
Secretary spoke in the context of inter-American relations, it was clear 
that a general application was intended: 

We maintain diplomatic relations with other countries primarily because 
we are all on the same planet and must do business with each other. We do 
not establish an embassy or legation in a foreign country to show approval of 
its government. We do so to have a channel through which to conduct essen- 
tial governmental relations and to protect legitimate United States interests. 

When a freely elected government is overthrown and a new and perhaps 
militaristic government takes over, we do not need to recognize the new govern- 
ment automatically and immediately. We can wait to see if it really controls 
its territory and intends to live up to its international commitments. We can 
consult with other governments, as we have often done. 

But if and when we do recognize a government under these circumstances, 
our act of recognition need not be taken to imply approval of it or its policies. 
It is a recognition of a set of facts, nothing more. . . . Since recognition is not 
synonymous with approval . . . our act of recognition need not necessarily be 
understood as the forerunner of a policy of intimate cooperation with the gov- 
ernment concerned. 

Since this statement was made, several events have occurred that 
bring into question the universal applicability of the doctrine that was 
outlined. 

The problem is to re-examine the United States doctrine of recogni- 
tion and its applicability in the present world situation. 

During the winter and spring of 1950 there has been a great public 
debate in the United States on the question whether diplomatic recogni- 
tion should be withdrawn from the Chinese National Government and 
extended to the Chinese Communist Government. This special feature 
of the general recognition problem was brought forward by the com- 
plete collapse late in 1949 of Nationalist resistance on the Chinese main- 
land and, simultaneously, the establishment of a Communist Govern- 
ment at Peking. The latter is now competing with the remnant of the 
National Government on Formosa for international recognition as the 
government of China. 

Those Americans who oppose the recognition of the Chinese Com- 
munist regime base their arguments generally on two allegations: The 
Communists represent a minority group that seized power illegally and 
by force of arms; and, because the Soviet Union actively supported the 
Chinese Communists in their fight for power, the latter are and will 
continue to be a puppet regime that lacks any of the essential attributes 
of a sovereign and independent state. Opponents of recognition also re- 



The Political Field 83 

peatedly stress their belief that the Soviet Union will interpret American 
recognition of the new Chinese Communist regime as a sign of weak- 
ness and as an invitation to undertake similar interventions in the Far 
East or other parts of the world. 

Americans who support recognition of the Chinese Communist 
Government argue that such an act would be in line with traditional 
American policy and would not imply approval of the Communists or 
of the methods by which they came to power. The proponents of recogni- 
tion also claim that if the United States refuses at the outset to recognize 
the Chinese Communists, and thus fails to adopt a friendly, correct at- 
titude toward them, it runs the risk of ruining chances that might later 
occur for encouraging any Titoism that is latent in the Chinese situation. 

So far, the United States has not taken direct official action. Nor 
has France recognized the Peking regime, primarily because of the 
situation in Indo-China, where France is fighting a Communist insurrec- 
tion not unlike the one the National Government faced in China. Great 
Britain has offered diplomatic recognition to the Chinese Communist 
Government, but the offer has not yet been accepted. If an irreconcil- 
able split should develop among the three major Western democracies 
on the Chinese recognition problem, their division might have reper- 
cussions elsewhere, particularly in the North Atlantic area, and would 
give the Soviet Union a situation to exploit. For its part, the Soviet 
Government has not only recognized the Chinese Communists, but in 
February 1950 it also entered into a treaty of friendship and alliance 
with them. 

The United States and other nations that have not yet recognized 
the Chinese Communists have refused to assent to their representing 
China in the United Nations, and the Soviet Union and its satellites have 
boycotted the various agencies of the organization, beginning with the 
Security Council in January 1950. The Communist-dominated states 
have moreover declared they will maintain their boycott until the 
Chinese Nationalist representatives are unseated and replaced by the 
Chinese Communist representatives. The increasingly intransigent So- 
viet attitude in this and similar situations both inside and outside the 
organization has also caused demands to be made, most notably by 
former President Hoover, for a reorganization of the United Nations 
that would exclude the Soviet Union and its satellites. 

In the Security Council, the United States has taken the position 
that although it opposes the seating of the Communist representatives, 
it will abide by an affirmative decision of any seven members, primarily 
on the grounds that the question is a procedural one involving creden- 
tials. This official American attitude raises, however, the vital issue 
whether a decision by the Security Council on the question is, in fact, a 



84 Major Problems 1950-1951 

procedural matter or whether, because of the vast political implications of 
the problem, it is a substantive matter of the highest importance. Whether 
the United States should use its veto power in this instance depends upon 
the policy it intends to follow later regarding recognition of the Chinese 
Communists. 

If, despite the opposition of the United States, the Chinese Com- 
munist representatives are seated in the United Nations, the United 
States will face the problem of determining whether it should adjust its 
recognition policy accordingly and transfer diplomatic recognition from 
the National Government to the Communist Government. A major fac- 
tor influencing such a decision might be the foreseeable consequences of 
an interpretation that could be placed on the provisions of Article 23 
of the United Nations Charter. That article specifies that one of the 
five permanent members of the Security Council shall be the "Republic 
of China/' If, therefore, the Communist representatives replace the Na- 
tionalist representatives on the Council, the United Nations organization 
will, by that act, give international recognition to the Communist re- 
gime as the legal government of the Republic of China. The National 
Government will then be placed in the international status of rebels. 
Any members of the United Nations, such as the United States, that 
might continue to recognize and aid the National Government could 
then be put in the uncomfortable position of being charged with sup- 
porting aggression against a fellow-member. 

The American decision on the specific problem of Chinese recogni- 
tion is being influenced by the difficulties the United States is now 
encountering in maintaining normal diplomatic relations with the 
Soviet Union and its satellites. The Kasenkina incident in New York in 
the summer of 1948 led to a closing of Soviet consulates in the United 
States and of American consulates in the Soviet Union. Unfounded 
Hungarian charges of American espionage and Hungarian persecution of 
American citizens led to a retaliatory closing of the Hungarian con- 
sulates in the United States in January 1950. Similarly, unwarranted 
charges of American intervention in Bulgarian internal affairs caused 
a complete break in relations between the United States and Bulgaria 
in February 1950. During the ensuing months Czechoslovakia and Ru- 
mania have been demanding a reduction in the United States diplomatic 
personnel and activities in these countries because of alleged espionage 
activities. As a retaliatory measure, the United States has closed Czecho- 
slovak and Rumanian consulates in this country. 

In the background of these controversies is the fact that although 
the United States had maintained diplomatic relations with Bulgaria, 
Rumania, and Hungary, it has successfully opposed the admission of 
these three countries as members of the United Nations, on the grounds 



The Political Field 85 

that it doubted their ability and willingness to carry out the obliga- 
tions of the Charter. On the other hand, the United States has never 
offered to maintain separate diplomatic missions in the Byelorussian and 
Ukrainian Soviet Socialist Republics, despite the fact that both were 
admitted with American consent as separate members of the United 
Nations and thus were accorded international recognition as independent 
and sovereign states. 

The United States has continued to recognize the diplomatic repre- 
sentatives accredited to it by the old governments of Lithuania, Latvia, 
and Esthonia, even though these three countries were forcibly absorbed 
by Soviet Russia and were constituted as separate republics in the Soviet 
Union. Formal relations do not exist between the United States and 
either Albania or the Mongolian Peoples Republic, although the Com- 
munist regimes in both these countries claim that they represent inde- 
pendent and sovereign states. The United States has refused to recognize 
the Communist-dominated Democratic Peoples Republic of Korea, recog- 
nizing instead the Republic of Korea, which was established under the 
auspices of the United Nations. The United States has also refused to 
recognize the Communist-inspired regime of Ho Chi Minh, which is fight- 
ing for control in French Indo-China, but it has recently recognized 
the three states of Laos, Cambodia, and Viet-Nam, which were created 
under French tutelage as self-governing members of the French Union. 

Some sectors of American public opinion now demand that the 
United States break relations completely with the Soviet Union and 
its satellites as a mark of disapproval of communism and all its works. 
Such an action would, in effect, be a repetition of that pursued by the 
United States in respect to Russia from the end of the First World War 
until 1933. During that time, the continuing policy of not recognizing 
the Soviet Union was based on two grounds: (i) The Soviet regime was 
not in power by reason of the will or consent of the majority of the 
Russian people but represented only a minority that, by means of ruth- 
less oppression, remained in control; and (2) the Soviet regime was 
"based upon the negation of every principle of honor and good faith and 
every usage and convention underlying the whole structure of interna- 
tional law; the negation, in short, of every principle upon which it is 
possible to base harmonious and trustful relations, whether of nations 
or individuals." 

At the present time the United States pursues a policy in respect 
to Latin American nations in which diplomatic recognition does not 
imply approval of a government or of its policies. This was not always 
the case, for in the past the United States often refused to recognize 
a Latin American regime that had attained power by force and in de- 



86 Major Problems 1950-1951 

fiance of local laws and constitutions. President Wilson's application 
of this form of the doctrine produced the imbroglio with Mexico in 
1913. Many jurists and statesmen contended, however, that to make recog- 
nition conditional upon approval of a new government or its methods 
constitutes an act of intervention, and starting in 1933, United States recog- 
nition policy in Latin America began to shift. This country accepted 
the principle formulated at the Montevideo Conference that "no state 
has the right to intervene in the internal or external affairs of another." 
This shift became complete when the United States accepted Resolution 
35 of the Inter-American Conference at Bogotd in 1948. That resolution 
stated that "the establishment or maintenance of diplomatic relations 
with a government does not imply an opinion on the domestic policy 
of that government." 

In line with this policy, the United States has recently recognized 
several new governments in Latin America, which came into power by 
coups d'etat, even though, in some instances, notably in Venezuela and 
Panama, authoritarian regimes have supplanted democratic and popu- 
larly elected ones. In some of these instances, however, the United States 
has emphasized that it did not find the matter coming under Resolution 
32 of the Bogota Conference, by which outside intervention or other 
interference to bring about internal changes in an American state was 
condemned. It should be noted that although there is an established 
procedure for consultation among the American states prior to the 
recognition of a new government in any one of them, such consultation 
does not bind each state to follow a course of action preferred by a ma- 
jority. It should be further noted that the recognition of a new govern- 
ment by some American states but not by others does not interfere with 
the continued representation of that new government in the Council 
of the Organization of American States. 3 

A recognition policy similar to that in Latin America is now being 
advocated in the case of Spain. Many of the other American republics, 
along with the United States, are currently proposing the repeal of 
the United Nations General Assembly resolution of 1946, which recom- 
mended that members of the United Nations withdraw their chiefs of 
missions from Spain as a mark of their disapproval of the Franco regime. 
Not only did the political pressure contemplated by the United Nations 
resolution fail to bring about the desired result the downfall of Franco 
but also the United Nations action was represented in Spain as an un- 
warranted interference in Spanish internal affairs. This was publicly ad- 
mitted by Secretary of State Acheson in January 1950, when he called 
for a reversal of the United Nations action. Such a reversal is certain 
to be vigorously opposed in the General Assembly by Communist- 

See "Political Stability/' pp. 324-28 below. 



The Political Field 87 

dominated states. It may also be resisted by many of the socialist govern- 
ments in Western Europe that are now allied with the United States in 
the North Atlantic Treaty. 

The experience of the United Nations in the Spanish situation has 
brought forward once again the whole question of whether diplomatic 
sanctions are effective means to coerce a recalcitrant nation into follow- 
ing an accepted pattern of international or national behavior. The 
United States is currently a party to not only one but two international 
instrumentsthe United Nations Charter and the Rio Treaty that 
contemplate the use of diplomatic sanctions in this way. The provisions 
of these treaties must be taken into account in any re-examination of the 
position of the United States in respect to its doctrine of recognition. 
Under both treaties it is conceivable that collective diplomatic sanctions 
could be applied against a new government that came into power in any 
country if, through the procedures established by the two treaties, the 
government was deemed, by the very fact of its existence and for no 
other reason, to be a threat to international peace and security. 4 Under 
the United Nations Charter, however, the United States could not be 
bound, because of its veto power in the Security Council, against its 
will to apply such sanctions and thus, in effect, to withhold or with- 
draw recognition from a government. But under the Rio Treaty, the 
United States can be bound by a two-thirds vote of the parties to the 
treaty to take such action even though it is opposed to it. 

The United States has had little opportunity to test the collective 
use of diplomatic sanctions, but it has had experience in the use of 
diplomatic sanctions by an individual nation. The refusal of the United 
States to recognize the Communist regime in Russia between 1917 and 
1933 did not lead to the overthrow or collapse of the Soviet Government. 
Nor was the prestige of the United States sufficient to keep other nations 
from resuming normal relations with the Soviet Union. 

The Stimson Doctrine of 1932, which refused recognition to a 
government forcibly imposed by a foreign power, provided another set 
of experiences. The next decade of American refusals and warnings not 
to recognize territorial conquests did not check the expansionist poli- 
cies of Japan in the Far East, Italy in Africa, Germany in central 
Europe, or the Soviet Union in eastern Europe. On the other hand, after 
the war started in Europe in 1939, the American practice of continuing 
to accord diplomatic recognition to governments-in-exile was undoubted- 
ly of great moral and political value in maintaining the spirit and hopes 
of conquered peoples. The value was even greater after the United States 

4 The obligations under the North Atlantic Treaty would not apply in such a 
hypothetical situation because they do not become operative until an armed attack 



88 Major Problems 1950-1951 

became involved in the war in 1941, for the governments-in-exile proved 
useful in fostering and aiding resistance movements, and in many cases 
they were essential to the rapid restoration of normal political and eco- 
nomic life after liberation. The basic elements of the Stimson Doctrine 
were reaffirmed by President Truman in October 1945: "We shall refuse 
to recognize any goverment imposed upon any nation by the force of 
any foreign power. In some cases it may be impossible to prevent the 
forceful imposition of such a government. But the United States will 
not recognize any such government." Since there has been no official 
indication that this policy has been changed, the current situation in 
China poses the question whether the Stimson Doctrine should be applied 
when American economic aid under the Truman Doctrine has proved 
ineffective. That is to say, when American aid fails and free peoples are 
subjugated, as many argue has been the case in China, does the situation 
fall automatically under the Stimson Doctrine of recognition? Thus, con- 
sideration of the general political problem of recognition is brought back 
to the specific problem of Chinese recognition. 

The general problem currently appears to have four principal issues, 
with several subsidiary ones. The central principal issue is that of de- 
termining the fundamental basis for a United States recognition policy. 

One alternative would be for the United States not even to con- 
sider recognizing a government unless the form and policies of that 
government generally meet with American approval. This alternative 
raises, in turn, the subsidiary issue of what form of government and 
what policies would meet with the approval of the United States. One 
position that could be taken would be to require a republican form of 
government, with adequate guarantees of human rights and freedoms to 
the individual. Another position that could be taken is that the exact 
form of government does not matter as long as it is freely chosen by the 
people it governs. A third position would be to deny recognition to all 
Communist-dominated governments on the ground that peaceful co- 
existence with such governments is out of the question. 

A second alternative would be to follow the traditional American 
doctrine, based on the right of each nation to govern itself as it sees 
fit. A subsidiary issue raised by this alternative is, Under what conditions 
should the United States recognize a government? Any one or a com- 
bination of several tests provides alternatives under this subsidiary issue. 
Obviously, one test would be whether sufficient United States political, 
economic, or cultural interests are involved to warrant entering into and 
maintaining diplomatic relations with the state in question. Another 
would be to determine whether the government actually controls the 
territory and people it claims to represent. Another would be to determine 
whether the government can live up to its international obligations. 

Closely related to the central issue is the question of whether the 



The Political Field 89 

United States should, as a general policy, continue the use of diplo- 
matic sanctions as a form of political pressure against another nation. 
There appear to be three alternatives under this issue. One would be 
for the United States to abandon altogether the use of diplomatic sanc- 
tions unless they are a prelude to, or a concomitant of, the application 
of more stringent measures, such as economic sanctions or armed force. 
This alternative implies that diplomatic sanctions are by themselves not 
only an ineffective means of coercion but also a form of intervention. 
The second alternative would be for the United States not to use 
diplomatic sanctions unilaterally but to support their collective applica- 
tion gn the grounds that a diplomatic quarantine by the community of 
nations has great moral and political value. The third alternative would 
be for the United States to use diplomatic sanctions both individually 
and in concert with other nations, as it has done. 

The next two principal issues are inextricably linked. The first is 
the degree to which the United States should bind itself by consultation 
with other interested governments to follow a particular recognition 
policy in respect to a particular state. One alternative of course would be 
for the United States not to consult at all. This would, however, be 
an unrealistic course in view of the current position of the United States 
in the world and of its existing international commitments. A second 
alternative is for the United States to consult with other governments, 
but not to bind itself to an agreed course of action that is not acceptable 
to it. The third alternative would be for the United States not only to 
consult but also to accept a decision of some specified majority. 

The final principal issue is the extent to which the recognition 
policy of the United States should be interrelated with its policy regard- 
ing membership in various international organizations of which the 
United States is a member. One alternative is to keep the two policies 
completely separated and thus to retain the maximum freedom of action 
for the United States under both policies. If the United States should 
extend diplomatic recognition to a government, it would not under this 
alternative be committed to supporting the applications of that govern- 
ment for membership in various international organizations. And con- 
versely, if the United States did not recognize a government, it would 
not be committed to opposing the membership applications of that 
government. The second alternative is to tie the two policies together. 
Under this alternative, the diplomatic recognition of a government by 
the United States would imply that it was of the opinion that the govern- 
ment in question should be accepted as a member of the community 
of nations and thus be eligible for membership in international organi- 
zations. And conversely, if the United States refused to recognize a gov- 
ernment, it would oppose the admission of that government into an inter- 
national organization of which the United States was a member. 



go Major Problems 

Selected References 

"British Government's Statement on Recognition of Chinese Communist 
Regime," Jan. 6, 1950, New York Times (Jan. 7, 1950). Hoover, Herbert, "Text 
of Address . . . Proposing a Reorganization of U.N., Apr. 27, 1950." New York 
Times (Apr. 28, 1950). Jefferson, Thomas, Writings of Thomas Jefferson, Paul 
L. Ford, ed.; Communication to Mr. Morris, Mar. 12, 1793, Vol. VI (1895), p. 199. 
United Nations, Letter from C/JV. Secretary-General to President of Security 
Council Transmitting Memorandum on Legal Aspects of Problem of Represen- 
tation in United Nations, Mar. 8, 1950, U.N. Doc. 8/1466 (Mar. 9, 1950). U.S. 
Department of State, "Accepted Diplomatic Standards Disregarded by Soviet 
Satellites," statement by Secretary Acheson, Feb. 24, 1950, Bulletin, Vol. XXII 
(Mar. 6, 1950), pp. 377-78. U.S. Department of State, "Czechoslovak Demand to 
Cut U.S. Staff Follows Isolation Pattern," Bulletin, Vol. XXII (June 12, 1950), pp. 
974"75- U.S. Department of State, Establishment of Diplomatic Relations with 
the Union of Soviet Socialist Republics, European and British Commonwealth 
Series 2, Publ. 528 (1948). U.S. Department of State, "Recognition of de facto 
Governments" and "The Preservation and Defense of Democracy in America," 
Ninth International Conference of American States, Bogotd, Colombia, Mar. 30- 
May 2, 1948, International Organization and Conference Series II, American 
Republics 3, Publ. 3263 (1948), pp. 82-83, 271, and 83-84, 266-67, respectively. 
U.S. Department of State, Peace and War: U.S. Foreign Policy, 1931-1941, Letter 
of Feb. 23, 1932 from Secretary Stimson to Chairman of the Committee on 
Foreign Relations, Publ. 1983 (1943), pp. 6, 168-73. U.S. Department of State, 
"Restatement of Foreign Policy of the United States," address by President 
Truman, Oct. 27, 1945, Bulletin, Vol. XIII (Oct. 28, 1945), pp. 653-56. U.S. 
Department of State, "Return to Normal Exchange of Diplomatic Representation 
with Spain Urged Amendment of U.N. Resolution Favored," Bulletin, Vol. 
XXII (Jan. 30, 1950), pp. 156-59. U.S. Department of State, "Soviet Methods 
Cannot Delay Security Council/' Statement by Deputy U.S. Representative 
Gross of Jan. 13, 1950, Bulletin, Vol. XXII (Jan. 30, 1950), p. 166. U.S. Depart- 
ment of State, Tensions Between the United States and the Soviet Union, address 
by Secretary Acheson, Mar. 16, 1950, General Foreign Policy Scries 22, Publ. 
3810 (1950). U.S. Department of State, "Threats to Democracy and Its Way of 
Life," address by Secretary Acheson, Apr. 22, 1950, Bulletin, Vol. XXII (May i, 
1 95) PP- 673-77. U.S. Department of State, "U.S. Recognized Viet Nam, Laos, 
and Cambodia," Bulletin, Vol. XXII (Feb. 20, 1950), pp. 291-92. U.S. Department 
of State, "U.S. Rejects Soviet Charges Concerning Refusal of Two Russian Teach- 
ers to Return to Soviet Union," including Exchange of Communications on 
Diplomatic Relations between the U.S. and U.S.S.R., Bulletin, Vol. XIX (Aug. 
29, 1948), pp. 251-62. U.S. Department of State, "Waging Peace in the Americas," 
address by Secretary Acheson, Sept. 19, 1949, Bulletin, Vol. XXI (Sept. 26, 1949), 
pp. 462-66. 

THE EFFECTIVENESS OF ECONOMIC MEANS 
IN COUNTERING COMMUNISM 

It is the view of the Government of the United States that the 
Soviet Union and the international Communist movement have selected 
the United States as "the principal target of their attack." Secretary of 
State Acheson has declared, moreover, that "the Soviet authorities would 
use, and gladly use, any means at their command to weaken and to 



The Political Field 91 

harm us." One of the principal methods used by the Soviet Union for 
this purpose has been to try to pick off, one by one, the individual 
members of the free community of nations, particularly those whose 
political and economic instabilities make them especially vulnerable 
to the Communist tactics of infiltration, subversion, and seizure. These 
efforts, if successful, produce a variety of interim results favorable to 
the Soviet Union, but the major long-term result would be to alter the 
distribution of power between the Soviet Union and the United States 
in favor of the former. The ultimately disastrous consequences of such 
a change have, in the American view, justified the United States deter- 
mination to assist in countering communism in unstable and disorgan- 
ized countries throughout the world. 

Since the declaration of the Truman Doctrine in March 1947, it 
has been the policy of the United States to rely heavily on economic 
means for this purpose. This method has, in some cases, also served to 
contain Soviet territorial ambitions. In doing so, the United States has 
acted on the principle of the right of both individual and collective self- 
defense, just as it did prior to American entry into the Second World 
War, when under the Lend-Lease Act, the United States supplied eco- 
nomic aid to nations whose defense was deemed "vital to the defense 
of the United States." The principle has been extended in recent years 
to include American aid to such regional groupings of nations as are 
organized on the basis of self-help and mutual aid to defend themselves 
against Soviet threats all this short of an armed attack. 

American economic aid has been used in two ways: first, to provide 
the weapons, military supplies, and other equipment needed to combat 
Communist-led insurrectionary movements or threatened thrusts of 
Soviet imperialism; and second, to assist in the restoration and recon- 
struction of national economies by furnishing commodities, raw ma- 
terials, machinery, and equipment. In some cases, notably those of 
Greece and Turkey, the two forms of assistance were initially combined 
in one program. In other cases in Western Europe, for example, United 
States assistance for economic recovery constituted the primary program, 
to which a program of military assistance was added two years later. 

Three years of experience with the use of economic aid have raised 
some general questions about its feasibility for the intended purpose. 
It has obviously been relatively more costly for the United States to 
provide such aid in order to restore and maintain stability and security 
in Western Europe, the Middle East, and the Far East, than it has been 
for the Soviet Union to foster instability and insecurity by Communist 
subversive tactics and bellicose diplomatic threats. A growing realiza- 
tion of this fact has led many Americans to argue that the United 
States, in view of the limits to even its great power and resources, can- 



g2 Major Problems 

not rely primarily or indefinitely on economic means to conduct a cold 
war. At the same time, however, it is realized that the over-all demand 
for American aid may actually be increased by the development of un- 
favorable situations, as in southeast Asia. 

The problem is to review the experience in using economic means 
to counteract communism in politically unstable and economically dis- 
organized regions and to examine the other means that the United States 
might use for the same purpose. 

The economic aid programs that have been undertaken by the 
United States during the past three years have met with varying suc- 
cess. By reason of the nature of the situation they were designed to meet, 
these programs have been primarily developed in areas on the periphery 
of the Soviet orbit. 

There appears to be no doubt that United States aid has been a 
major factor in the economic recovery of Western Europe, and that 
without such recovery the region would have remained susceptible to 
Communist exploitation. This is true especially in France and Italy, 
where, as economic recovery has progressed, the strength of communism 
has measurably waned. But American contributions to the European 
Recovery Program are scheduled to end in 1952, and no one can foresee 
with assurance whether the economies of Western Europe will then be 
strong enough to maintain the level of recovery that has been achieved. 
United States economic aid under the European Recovery Program was 
not enough in itself to give the peoples of Western Europe that sense 
of security and confidence that they needed in order to withstand the 
threat of Soviet communism. The United States in 1949 consequently 
entered into the political and military commitments of the North At- 
lantic Treaty by agreeing to aid in the defense of Western Europe against 
an armed attack. The United States also agreed to provide assistance in 
order to rebuild the military strength of the Western European nations 
to the point where a direct aggression against them would be a risky 
undertaking. The number of years the United States may have to con- 
tinue the military assistance program is not yet definitely known. Some 
observers believe it will be a relatively long period. 

In the eastern Mediterranean, American aid to Turkey has un- 
doubtedly been a major factor in increasing the ability of that nation 
to resist Soviet aggression and thus to deter Soviet ambitions in the Tur- 
kish Straits. Aid to Greece also undoubtedly saved that nation from suc- 
cumbing to the Communists, although the defection in 1948 of Yugo- 
slavia from the Soviet orbit may also have been a powerful factor. With 
the Greek civil war ended, however, the United States found it neces- 



The Political Field 93 

sary to threaten to discontinue its aid unless the Greek Government took 
basic steps toward the real economic reconstruction needed to prevent a 
resurgence of communism. At the same time, both Turkey and Greece 
have been contending, by implication, that American economic aid has 
not been enough to check the Communist threat. Both have been ad- 
vocating a politico-military arrangement for the eastern Mediterranean 
similar to that in the North Atlantic area. 

By way of contrast with the situation in Western Europe and the 
eastern Mediterranean, United States aid to counter communism in the 
Far East has not been marked by success. In spite of assistance, the 
Nationalist regime in China was decisively defeated by the Communists 
in a long civil war. There are, of course, many Americans who maintain 
that United States aid was too little and too late, and that with proper 
amounts of aid given at the right time, this defeat could have been pre- 
vented. But the official attitude of the United States Government has 
been that no amount of economic aid could have saved the National 
Government because the Chinese people had lost confidence in Chiang- 
Kai-shek and with it their will to resist the Communists. It is moreover 
asserted that only direct American military intervention in the civil war 
could have saved the situation. 

An internal situation, not unlike that which existed in China, has 
now developed in French Indo-China. The United States decided in 
May 1950 to extend economic aid to the country in order to help France 
and the new states of Laos, Cambodia, and Viet-Nam suppress a Com- 
munist insurrection led by Ho Chi Minh. Many observers also fear a 
similar situation in the Philippines, where the large amounts of Ameri- 
can aid given since the Second World War have not yet produced politi- 
cal and economic stability nor successfully put down the Communist- 
supported Hukbalahap rebellion. And in Korea, where an armed attack 
from the outside was recently launched, United States economic and mili- 
tary assistance had not created a capacity to withstand the initial assault. 

Because American economic aid was not an entirely successful in- 
strument for countering communism, the formula of the Truman Doc- 
trine by which it was granted was officially modified in the past year. 
Economic assistance will now be given only when it is "the missing com- 
ponent in a problem which might otherwise be solved." Unless it ap- 
pears that there is a reasonable expectation that economic aid will be 
of direct use in checking communism in a given country, it will not be 
given. Even with this modification, the demands confronting United 
States policy are enormous. In the Far East alone, for example, Com- 
munist China poses a threat to a vast arc of nations in Asia beginning 
with Japan and Korea in the northeast and swinging southward and 
westward to Pakistan and Afganistan. 



94 Major Problems 1950-1951 

The mixed record to date of success and failure raises the issue of 
whether, even under the modified Truman Doctrine and its corollary 
policies, aid for countering communism should be given wherever there 
is a Communist threat, or whether it should be reserved for nations 
whose strategic locations are absolutely vital to the defense of the United 
States. Hitherto, under the general theory of containing Soviet com- 
munism, it has been generally assumed that American aid would be 
given everywhere. If it is to be given only to selected strategic areas, 
which areas should be selected? For example, if a choice must be made 
between Western Europe and southeast Asia, by what yardstick is their 
comparative importance to the defense of the United States to be 
measured? Are there key points within these areas that should be se- 
lected to the exclusion of others? If so, what are they? Is the defense 
of Great Britain, for example, more important than the defense of 
Western Germany? And if it should come to pass, as it did in China, 
that more than economic aid is necessary in such strategic areas, what 
other means are available to the United States? In fact, whether the 
policy is a universal countering of communism or resistance to com- 
munism in selected areas, there is still the question of what means other 
than economic aid can and should be used. 

A wide variety of means other than economic aid are available to 
the United States for carrying out this policy in situations where ex- 
ternal armed aggression has not taken place. They range from propa- 
ganda and psychological warfare to the direct use of military means. 
It must be borne in mind that, even in the absence of external ag- 
gression, the use of American armed forces may in the end be the only 
alternative that will be effective. 

A greater use of psychological weapons is being strongly supported 
by those who believe that the battle with communism begins in men's 
minds. These means have the advantage of being much less costly than 
direct economic aid. On the other hand, it is argued, they are not 
effective in areas where the rate of literacy is low or where the standard 
of living is such that media of mass communication radio receivers, 
newspapers, and motion pictures are not widely available. 

There are also political means that can be used. These include dip- 
lomatic sanctions, commitments on the use of armed force or the pro- 
vision of military assistance, and intervention. The advantages and dis- 
advantages of using diplomatic recognition as a weapon against com- 
munism are discussed elsewhere in this chapter. 5 Commitments, involv- 
ing a threat to use armed force, are of several kinds. Some are less 

"See "The Doctrine of Recognition/' pp. 81-89 above. 



The Political Field 95 

expensive than direct economic aid provided it is never necessary to carry 
them out. It is argued, however, that the political effectiveness of such 
commitments, especially when a potential aggressor like the Soviet Union 
is involved, depends on a military force in being. The cost of main- 
taining such forces is no less in the long run than the short-term cost 
of direct economic aid. Political intervention, if undertaken by the 
United States alone, would be contrary to the United Nations Charter 
and to other international obligations that the United States has under- 
taken. Collective intervention is possible under several existing inter- 
national arrangements, but unless it is accompanied by a show of armed 
force, it is arguable whether it will be successful. 

There are several forms of economic action other than direct aid 
that can be used. For example, the United States could employ eco- 
nomic sanctions to counter communism, provided that the actions were 
supported by the other free nations. In Europe, however, this would 
mean a complete cessation of East-West trade, and the United States 
would probably have to assume the economic burdens that this would 
impose on the Western European economy. Another type of economic 
action is embodied in the Point IV Program of providing technical 
assistance to underdeveloped areas. Help in improving economic and 
social conditions in such areas, so it is argued, will work to eliminate 
the hunger, misery, and despair that provide a political climate for 
communism. A program of technical assistance has the advantage of cost- 
ing less than a program of direct economic aid. But whether any signifi- 
cant economic improvement could be achieved without the investment 
of capital on a large scale is questionable. 

Technical military assistance, involving the dispatch of American 
missions to foreign nations or the training of foreign nations in the 
United States, also has the advantage of costing less than military assist- 
ance in the form of weapons and other military equipment. But even 
a well-trained and disciplined national army cannot, without modern 
weapons, resist long against a well-armed Communist minority. Nor can 
technical military assistance ever adequately replace American command 
of, and responsibility for, military operations that ultimately may affect 
vitally the security of the United States. This last especially is argued 
by some who believe that American direction and control of the Chinese 
Nationalist armies would have prevented the debacle that occurred. 

The choice of the means that should be used in countering com- 
munism in unstable and disorganized areas is clearly a general political 
decision of the greatest importance for United States foreign policy. It 
is also evident that the determination of whether economic aid alone 
will be successful in general or in a particular situation cannot be made 
without an evaluation of the possible effectiveness of the other means 



96 Major Problems 

available. Nor can that determination be made by the United States 
alone, for the very nature of the problem and its world-wide scope 
involve at one stage or another practically every one of the free nations. 

Selected References 

U.S. Congress, "Congressional Debates on United States Policy Toward Formosa 
and the Far East in General," Congressional Record, Vol. 96, Nos. 5, 7, 8, 9, 
11, 16, and 17 (January 1950). U.S. Congress, Senate Foreign Relations Com- 
mittee, Documents Relating to the North Atlantic Treaty, S. Doc. 48, 81 Cong, 
i sess. (Apr. 12, 1949), pp. 4-5. U.S. Department of State, "Going Forward With 
a Campaign of Truth," address by President Truman, Apr. 20, 1950, Bulletin, 
Vol. XXII (May i, 1950), pp. 669-72. U.S. Department of State, The Military 
Assistance Program, General Foreign Policy Series 13, Publ. 3563 (1949). U.S. 
Department of State, The Military Assistance Program, message of the President 
to the Congress and statements of the Secretary of State and ambassadors 
Douglas and Grady before the House Foreign Affairs Committee, July-August 
1949, General Foreign Policy Series 16, Publ. 3606 (1949). U.S. Department of 
State, Point Four, Economic Cooperation Series 24, Publ. 3719 (1950). U.S. 
Department of State, Recommendations on Greece and Turkey, the President's 
Message to the Congress, Mar. 12, 1947, Near Eastern Series 6, Publ. 2785 (1947). 
U.S. Department of State, Threats to Democracy and Its Way of Life; Address 
by Secretary Acheson, Apr. 22, 1950, General Foreign Series 29, Publ. 3859 (1950). 
U.S. Department of State, "Truman Doctrine's Third Anniversary Shows Greek- 
Turkish Progress," Bulletin, Vol. XXII (June 12, 1950), pp. 975-76. U.S. De- 
partment of State, "U.S. Concerned Over Korea's Mounting Inflation," Bulletin, 
Vol. XXII (Apr. 17, 1950), p. 602. U.S. Department of State, "United States 
Policy Toward Formosa," statements by President Truman and Secretary 
Acheson, Jan. 5, 1950, Bulletin, Vol. XXII (Jan. 16, 1950), pp. 79-81. U.S. Na- 
tional Commission for UNESCO, " 'Point Five' of Democratic Ideas Urged," 
address by U.S. Senator William Benton, Department of State Wireless Bulletin 
(Apr. 13, 1950)- 



Chapter VII 

The Economic Problem Field 

THREE elements enter into any fruitful consideration of the major 
problems of foreign economic policy of 1950-51: first, a review of the 
progress already made toward basic objectives; second, an examination 
of the impediments that have limited that progress and introduced in- 
consistencies into over-all policy; and third, an identification of the new 
circumstances that have to be taken into account and of the still un- 
resolved conflicts between different aspects of economic policy. By the 
middle of 1950, the foreign economic policies of the United States were 
being subjected to comprehensive re-examination. Although one of the 
most pressing objectives, that of restoring the productive capacity of 
Western Europe, was being achieved, international trade in most of the 
world remained subject to the quantitative restrictions and exchange 
controls that it was a general objective of United States policy to reduce. 
The network of multilateral trade that was essential to this reduction 
had not been restored. The United States consequently was continuing 
by transactions with other countries to build up claims that could not 
be met by the existing mechanisms of international financial settlement, 
and a large part of its export trade continued to be financed by gifts 
and grants. Under these circumstances, the review of foreign economic 
policy became increasingly concerned with the problem of balancing 
the international accounts of the United States. 

The international economic and political situation added to the 
difficulty of solving this central problem. Large segments of international 
relations had, for two years, been conducted in a cold war. Political 
disorders in the Far East hindered the renewal of production in that 
part of the world. It was impossible, both economically and politically, 
for the Far East to resume the important part it had played in a world 
system of multilateral trade. 1 Many other links in the multilateral system 
were still missing, and the necessary adjustments in production, price 
relationships, investment, and marketing that were needed to forge 
these links were as yet only partially made. 

The magnitude of the balance of payments problem is indicated by 
the following table: 

1 See Chap. 15, "The Asiatic Problem Area." 

97 



98 Major Problems 1950-1951 

1942-45 194* *947 W 8 *949 
(Average) (In millions of dollars) 

Export of U. S. goods and services 16,566 14,146 18,667 15,528 14,586 

Imports of foreign goods and services 7,805 6,951 8,236 10,190 9,535 



Balance 8,761 7,195 10431 5,338 5,051 

Investment Income (net) 377 604 847 972 1,032 

Total to be settled 9,138 7,799 11,278 6,310 6,083 

The net claims on foreign countries shown in this table have been met 
by a series of foreign aid programs, by public and private credits, by 
drawing on the gold and dollar assets of foreign countries, and by gold 
purchases on the part of the United States Government. The choice 
and use of these various methods of settlement have been conditioned 
not only by such basic factors as the waste and destruction of war, the 
limitations of available resources and man power, and the vagaries of 
nature, but by the political, social, and economic aspirations and inten- 
tions of the governments concerned. The large question is whether the 
methods adopted to obtain a balance will be likely to lead to a large 
volume of transactions, or whether, in order to balance the accounts, re- 
strictionist methods will be accepted. 

The over-all objective of American foreign economic policy is to 
achieve this balance with as large a volume of transactions as possible. 
Policy has consequently sought to expand trade by reducing trade bar- 
riers and by eliminating discriminatory practices. It has also sought to re- 
establish a maximum degree of exchange stability, to return as soon as 
possible to freely convertible currencies, and to revive the processes of 
international lending. It has emphasized that trade and investment 
should be returned to private hands. These precise objectives of com- 
mercial and financial policy have from the beginning of the Second 
World War been implicit in the pattern of American economic policy 
and have colored many aspects of the policy of foreign economic as- 
sistance. 

The foreign economic policy of the United States has gained con- 
tinuity from the steady pursuit of these objectives. At every stage, how- 
ever, it has been necessary to take account of other policy objectives, to 
reconcile the competing claims of various domestic interests, and to 
accept necessary modifications in order to meet changing circumstances 
and the often conflicting needs, policies, and attitudes of its principal 
trading partners. This is the soil in which the main problems of foreign 
economic policy have developed from year to year and in which the current 
problems are rooted. 



The Economic Field 99 

SITUATION BEFORE AND DURING THE WAR 

The structure of the trading and investment system of the nine- 
teenth century was badly shaken during the First World War. For the 
next decade a sustained effort was made to restore some of its char- 
acteristic features. In the field of finance, the effort was directed to re- 
creating a system of stable, freely convertible currencies linked together 
by the international gold standard, and to reviving private foreign 
investments. In the field of trade it was directed toward the stabiliza- 
tion of tariff rates and their progressive reduction, the rehabilitation 
of the most-favored-nation clause, and the elimination of prohibitions 
and quotas. The depression of 1929 brought new factors into the pic- 
ture and significantly modified policies and attitudes. 

Hardly had the international gold standard been re-established 
than it began to disintegrate. After the pound sterling had been de- 
tached from gold in 1931, it was followed by other currencies that were 
in more or less stable relation with it. There was thus formed a monetary 
group known as the "sterling bloc/' It included countries that had for 
many years kept their bank reserves in London and a few other coun- 
tries with close economic ties with Great Britain. In 1933 and 1934 
the United States further disturbed international exchange rates, first 
by going off the gold standard itself, and then by returning to it in a 
way that created severe deflationary pressures in European countries. 
It became fashionable to attribute unemployment to the deflationary 
forces to which a country was compelled to submit when it was rigidly 
tied by fixed international exchange rates. Governments sought to free 
their internal economic and social policies from the restrictions imposed 
by having regard to the stability of the exchanges, even if this meant 
indifference to the international consequences of domestic policies. Some 
countries questioned the desirability of a freely convertible currency 
and favored national systems of exchange control as instruments of 
policy. 

The prospect of unstable exchange rates and inconvertible curren- 
cies, combined with political instability, caused large movements of 
"hot money" and flights of capital that further disrupted the exchange 
markets and made the spread of exchange control inevitable. These 
abnormal capital movements confused the regular processes of inter- 
national investment, which were already disturbed by the wave of de- 
faults that followed reckless foreign lending. 

After the failure of the London Economic Conference in 1933, 
regionalism, discrimination, and bilateralism became the order of the 
day. In many countries economic nationalism and self-sufficiency became 
the accepted objectives of trade policy. Under German and Italian 



ioo Major Problems 1950-1951 

leadership, or in retaliation, these objectives were increasingly pursued 
through new administrative techniques of clearing, payments, and com- 
pensation agreements; through the use of quotas as bargaining instru- 
ments; and through the manipulation of exchange rates. 

The recovery of the mid- 1930*5 led to a flicker of hope that a more 
rational economic system might be re-created. This was encouraged by 
a change in United States commercial policy, symbolized by the passage 
of the Reciprocal Trade Agreements Act of 1934. Twenty-one agreements 
were negotiated under this act before the Second World War. The 
United States thus undertook to counteract a world trend toward trade 
restrictions. The leadership that was then assumed has been continued. 
From the beginning, however, this leadership was exercised under two 
substantial handicaps. In the first place, the Trade Agreements Act was 
not permanent legislation, and the executive procedures that were 
developed under it were attacked whenever the act came up for renewal. 
In the second place, the policy of supporting domestic agricultural prices 
was formally established. As a result, tariff reductions on agricultural 
products were difficult to negotiate, and in addition, import quotas, 
subsidies, and surplus-disposal programs were used as the adjuncts of 
domestic agricultural policy. 

Policies were also being developed in the field of shipping, to assure 
that a greater portion of American commerce would be carried in Ameri- 
can vessels. This had been the aim of the merchant marine acts of 1920 
and 1928. Security considerations, and in particular the desire to pre- 
serve a minimum continuous flow of work through American shipyards to 
preserve shipbuilding skills against a future emergency, greatly influenced 
this legislation. Moreover, during the depression, ship construction in 
the United States had virtually ceased. In 1936 therefore a new mer- 
chant marine act was passed that included subsidies both for the con- 
struction and operation of ships. These were intended to absorb within 
certain limits the differences between American and foreign costs. 

The successful pursuit of a liberal commercial policy by the United 
States therefore ran into restrictive practices already created by domestic 
policies. Although the contradictions and conflicts inherent in this situa- 
tion appeared before the Second World War, they have carried over 
and still impede the achievement of the objectives of postwar economic 
policy. Finally, the financial policies of foreign governments further 
impeded the success of a liberal commercial policy. Of these impedi- 
ments, a critical attitude toward fixed exchange rates and free con- 
vertibility was the most significant. Although an attempt was made 
in the late 1930*5 to attack monetary and financial problems, the trend 
toward exchange control was so generally developed that it could not be 
easily reversed. With the outbreak of war, a regime of generalized ex- 



The Economic Field 101 

change controls appeared. It was made up of four distinct monetary 
groups the United States dollar, the British pound, the German mark, 
and the Japanese yen. 

During the war the United States continued to express a strong 
interest in a postwar return to liberal trading principles. These were 
proclaimed in the Havana Resolution of 1940, in the Atlantic Charter 
of August 1941, and in the Declaration by United Nations of 1942. 
The trade agreements program was also expanded. It was, however, 
through agreements with countries receiving lend-lease assistance for 
the prosecution of the war that the real foundations were laid for a 
new and effective multilateral approach to commercial policy problems. 

Beginning with the period of its neutrality, the United States ex- 
tended aid to the whole allied world. Well remembering the disturbing 
effects of the war debts left by the First World War, it wished this time 
to avoid as far as possible the creation of comparable debts as a result 
of its assistance. Aid was therefore given on a lend-lease basis, and in 
February 1942 a mutual aid agreement to govern the granting of it was 
negotiated with Great Britain under the Lend-Lease Act. This became 
the prototype of similar agreements with the other countries. Article 
VII of these agreements provided that in the final settlement: 

. . . the terms and conditions thereof shall be such as not to burden commerce 
between the two countries, but to promote mutually advantageous relations 
between them and the betterment of world-wide economic relations. To that 
end they shall include provisions for agreed action [by the United States and 
the United Kingdom] open to participation of all other countries of like mind, 
directed to the expansion by appropriate international and domestic measures, 
of production, employment and the exchange and consumption of goods ... to 
the elimination of all forms of discriminatory treatment in international com- 
merce, and to the reduction of tariffs and other trade barriers. . . . 

By the end of the war, the policy commitments of the mutual aid 
agreements were already bearing fruit. In the spring of 1943 a conference 
on food and agriculture, which led to the establishment of the Food 
and Agriculture Organization (FAO), was held under the aegis of Article 
VII. In the autumn of the same year, American and British representa- 
tives met to determine the means of attaining the broad commercial 
policy objectives of Article VII. The first step toward achieving the 
closely related financial policy objectives was taken at the Bretton Woods 
Conference of July 1944, where the Articles of Agreement of the Inter- 
national Monetary Fund and of the International Bank for Reconstruc- 
tion and Development were drafted. 

It was recognized that a period of transition was inevitable, and 
one feature of that transition was of particular importance for postwar 
policy. At the outbreak of the war Great Britain had established a sys- 



IDS Major Problems 1950-1 951 

tern of exchange control that formalized the relations of the members 
of the sterling bloc, and Great Britain became the holder of a central 
pool of dollars on behalf of the whole group, which was then called 
the "sterling area." During the war, countries of the sterling area, as 
well as some other countries, built up huge sterling balances in London, 
which were in the nature of quasi-compulsory loans to finance the 
British war effort. 

As the war against Germany drew to a close, important courses of 
action were developed to ease the immediate shock of transition to 
peacetime conditions. The United Nations Relief and Rehabilitation 
Administration (UNRRA) was established, beginning its period of 
active operation in 1945. The support thus given to the civilian popula- 
tions of liberated countries was supplemented by a large-scale distribu- 
tion of civilian supplies by the United States armed forces. A tentative 
agreement was reached in 1944 with the British concerning a readjust- 
ment of mutual aid during the period between the end of the war in 
Germany and the end of the war against Japan. It was expected that 
this period might last eighteen months, and the time was to be used to 
modify lend-lease arrangements in a way that would give Great Britain 
reasonable opportunities to restore nonmilitary production and recover 
its export trade. 

In March 1945 the inter- American system was reorganized at the 
Mexico City Conference, and on June 26, 1945 the Charter of the United 
Nations was signed at San Francisco. These two instruments greatly 
broadened the area in which the United States committed itself to a 
multilateral consideration of international economic problems. In July 
1945 just before V-J Day further specific steps were taken to complete 
the wartime preparations for the implementation of a postwar economic 
policy. The Export-Import Bank was for the first time made a permanent 
independent agency of the Government, and its lending powers were 
increased to 31^ billion dollars. The Bretton Woods Agreement Act was 
passed, and the United States adhered to the fund and the bank. In 
addition, the National Advisory Council on International Monetary and 
Financial Problems (NAG) was set up to co-ordinate the lending and 
foreign exchange policies of the Government. 

POSTWAR SITUATION FIRST PHASE 

Although the economic costs of war did not cease at the moment 
of victory, the Congress had been repeatedly assured that lend-lease 
would not continue into the postwar period. Accordingly, the President 
felt compelled to proclaim on August 21, 1945 that it would cease im- 
mediately. The shock of this sudden termination imposed a great strain 
on European countries and particularly on Great Britain, for the plan 



The Economic Field 103 

to taper off lend-lease had to be abandoned. For some countries the strain 
was eased by the United States contribution to UNRRA, which rose 
from 589 million dollars in 1945 to 1,589 millions in 1946. Early in 
1946, however, the administration of UNRRA in Eastern Europe came 
under fire, and in December President Truman informed the Congress 
that with the completion of the first half of the 1947 program, future 
relief would be given unilaterally by the United States and other assist- 
ing countries. The strain of transition was also eased by the distribution 
of civilian supplies by the armed forces (871 million dollars in 1945 
a nd 539 millions in 1946) and by credits extended in connection with 
the settlement of lend-lease accounts. 

The first and most important of these settlements was incorporated 
into the Anglo-American Financial Agreement of 1945. As part of this 
agreement, a loan of 3,750 million dollars was granted to Great Britain. 
This was regarded as a special case by NAG, and similar loans were not 
linked with other lend-lease settlements. It was expected that all further 
aid for international reconstruction would be through the Export- 
Import Bank and the International Bank. 

The Anglo-American Financial Agreement provided for more than 
a loan and a settlement of lend-lease and surplus property accounts. It 
also obligated Great Britain to begin the dissolution of the sterling 
area by abandoning the dollar pooling system, to make arrangements 
for the gradual release of wartime sterling balances, to avoid discrimi- 
nation in the application of quotas, and to make sterling convertible for 
current transactions. In addition, Great Britain gave its full approval 
to the main points of a document largely American drafted entitled 
"Proposals for the Expansion of World Trade and Employment." These 
proposals were designed by the United States to give effect to the com- 
mercial policy objectives of Article VII of the mutual aid agreements. 

In October and November 1946 the Preparatory Committee for the 
World Conference on Trade and Employment, established by the Eco- 
nomic and Social Council of the United Nations, began drafting the 
charter for the International Trade Organization (ITO) on the general 
lines of these proposals. Its sixteen members were invited by the United 
States to enter into multilateral tariff negotiations at the second session 
of the committee, which began in April 1947 to complete the drafting 
of the charter. 

While the United States in co-operation with other countries was 
devising these new methods of advancing its long-term economic ob- 
jectives, the true nature and extent of the economic dislocations of the 
war were only gradually being realized. The International Bank had 
begun to make loans for reconstruction, the fund was making substan- 
tial amounts of foreign exchange available to its members, and Great 



104 Major Problems 1950-1951 

Britain was not drawing excessively on its loan. The assumption was 
made that no further special assistance would be needed to assure a 
successful transition to a peacetime economy. This proved to be over- 
optimistic. The winter of 1946-47 was extraordinarily severe in Europe, 
and the essential economic weakness of many European countries was 
for the first time clearly disclosed. Many of them began to experience 
serious difficulties with their recovery programs. Great Britain was com- 
pelled to reduce its foreign political commitments and to announce in 
February 1947 the cessation of its assistance to Greece. Political con- 
siderations consequently cut into economic policy, and in March Presi- 
dent Truman made the statement on aid to Greece and Turkey that 
pledged the United States to assist countries threatened by totalitarian 
aggression. By the spring of 1947 it had become clear that a reappraisal 
of the whole foreign aid program was required, and in June Secretary 
Marshall proposed a new basis for future assistance to Europe. The key 
was European co-operation in a joint recovery effort. 

POSTWAR SITUATION SECOND PHASE 
SPRING 1947 TO SPRING 1948 

Plans for such an effort were drawn up by the Committee of Euro- 
pean Economic Cooperation (CEEC), which was formed in response to 
the Marshall proposals. The Soviet Union, however, refused to partici- 
pate or to allow its satellites to participate. Aid did not begin to flow 
to Europe under this recovery program until April 1948, but meanwhile 
assistance continued to be furnished through other channels. The United 
States contribution to the final UNRRA operations in the first half 
of 1947 amounted to 543 million dollars, and this was followed by post- 
UNRRA aid amounting to 218 millions. The distribution of civilian 
supplies by the armed fprces in 1947 amounted to 980 million dollars. 
Interim aid was extended to France, Italy, and Austria in the amount of 
546 millions to tide these countries over until March 1948. The total 
of this assistance was 2,287 million dollars, a figure that represented only 
a fraction of the deficit of 22,400 millions that the CEEC report esti- 
mated for the participating countries at the end of a four-year joint 
recovery effort. 

While the CEEC report was being prepared, new problems of cur- 
rency convertibility arose in Europe. The assumptions on which the 
British had undertaken to make sterling convertible proved to be 
wrong. British industrial recovery was insufficient. The bilateral agree- 
ments made by Great Britain could not be administered in a way that 
would distinguish between sterling deposits arising from present and 
from past transactions, or that would adequately control capital move- 
ments. Great Britain was, therefore, compelled to suspend the convert!- 



The Economic Field 105 

bility of sterling in August 1947. Later, in October 1947, a subcommittee 
of CEEC reached the conclusion that the system of bilateral payments 
used in intra-European trade could no longer finance expansion or even 
maintain the levels already attained. A program was therefore developed 
for restoring the interconvertibility of European currencies by stages. 
As a first step an agreement on multilateral monetary compensation was 
negotiated in November 1947, but this was subject to so many technical 
limitations that it had very little practical effect. 

In December 1947 the President presented to the Congress a European 
Recovery Program (ERP). After extensive debate the omnibus Foreign 
Assistance Act of 1948 was passed. Title I, known as the Economic Co- 
operation Act, governed aid to Europe and established the Economic 
Cooperation Administration (ECA). The other titles governed grants to 
the Children's Fund of the United Nations and aid to Greece, Turkey, 
and China. 

The objectives defined in the Economic Cooperation Act were both 
political and economic. They were to restore and maintain "principles 
of individual liberty, free institutions and genuine independence," which, 
it was recogni/ed, depended "largely upon the establishment of sound 
economic conditions, stable international relationships, and the achieve- 
ment by the countries of Europe of a healthy economy independent of 
extraordinary outside assistance." It was the judgment of the Congress 
that concerted European efforts were necessary to achieve these objec- 
tives. Each participating country, in addition to adhering to a multi- 
lateral convention to guarantee the joint action of the recovery effort, was 
required to conclude a bilateral agreement with the United States in 
which certain undertakings were entered into. Among these were under- 
takings to increase domestic production, to restore monetary stability, and 
to co-operate in reducing trade barriers. In addition, the agreements con- 
tained pledges to make effective use of all resources, to help the United 
States in its stockpiling program, and to establish local currency accounts 
equivalent to the aid received as grants and to use these funds as grants 
for purposes agreed with the United States authorities. 

While the debate in Congress was proceeding, the governments of 
sixteen participating countries and the commanders of the Western zones 
of Germany signed a convention for European Economic Cooperation 
containing the required multilateral pledges. In addition, they established 
the Organization for European Economic Cooperation (OEEC) to carry 
them out. 

The passage of the Foreign Assistance Act of 1948 coincided almost 
exactly with the signature of the Charter of the International Trade Or- 
ganization (ITO) at Havana, by the representatives of fifty-three coun- 
tries. Three months earlier, nine countries, including the United States, 
had put into provisional effect the General Agreement on Tariffs and 



io6 Major Problems 1950-1951 

Trade (GATT), which had been signed in Geneva on October 30, 1947. 
This agreement contained schedules of tariff concessions covering about 
45,000 items that accounted for roughly one half of world trade and two 
thirds of the import trade of the signatory countries. This first major 
step toward the reduction of trade barriers was linked with the code of 
international commercial conduct defined in the charter. It was hoped 
that all the principal trading countries of the world would co-operate 
under these two instruments to achieve a multilateral, nondiscriminatory 
world trading system. 

The negotiation of both instruments was influenced by the same 
circumstances that had required a substantial reinterpretation of the 
foreign exchange and commercial* policy commitments of the Anglo- 
American Financial Agreement and that had led to the European Re- 
covery Program. The major principles and objectives of the charter were, 
in various ways, written into the principal documents governing the 
European Recovery Program. Some of the requirements of American 
agricultural and shipping policy were also specifically reflected in the 
Economic Cooperation Act, and the influence of American agricultural 
policy was directly reflected in important parts of the charter. 

A new set of relationships between the different segments of Ameri- 
can foreign economic policy developed between the spring of 1947 and 
the spring of 1948. The issues that came to a head in the negotiation of 
the Havana Charter had appeared in one form or another in all recent 
phases of that policy. At Havana the United States, striving to assert 
general principles of multilateralism and nondiscrimination, sought to 
keep the use of restrictions other than tariffs to a minimum. The American 
negotiators found it necessary, however, to insist on provisions that would 
safeguard the subsidies and import quotas required by the domestic agri- 
cultural policy. A large group of the so-called underdeveloped countries 
strongly urged that they be given special rights to introduce new prefer- 
ential arrangements and import quotas in the interests of economic de- 
velopment. The European countries, in general more accustomed than 
the United States to governmental controls and to the regulation of for- 
eign trade, insisted that provision should be made for enabling them to 
deal with their balance-of-payments difficulties. All of them, especially 
Great Britain, were preoccupied with immediate problems that they did 
not always dearly distinguish from long-term problems. Many were also 
concerned with the maintenance of special-preference systems in their 
imperial and colonial relations. In addition, the attitudes of governments 
conducting state trading operations had to be reconciled with the Ameri- 
can support of free enterprise. 

The final text of the Havana Charter therefore contained many 
escape clauses, reserved rights, and transitional arrangements, and re- 



The Economic Field 107 

fleeted the dislocations not only of the Second World War but of a whole 
generation. Its major commitments, however, covered an extraordinarily 
wide range. In addition to a general undertaking to consult on all matters 
of international concern in the area covered by the charter, the members 
of ITO made significant commitments in respect to employment policies, 
co-operation for economic development, the negotiation of tariff reduc- 
tions and the avoidance of restrictive practices, state trading, and proce- 
dures of investigation and recommendation. 2 

Parallel to the development of a liberal commercial policy and the 
negotiation of the trade charter was the United States effort to apply 
analogous principles in the fields of international commercial shipping 
and civil aviation. 3 In both cases, there was a clash between protectionist 
principles and limited free trade principles. In the field of civil aviation 
the United States was able to take the liberal side. Its young aviation 
industry had emerged from the war predominant in the construction of 
long-range aircraft and, for a time at least, in the operation of long-range 
flights. Its shipping industry, however, enjoyed no such advantages, and 
the freedom of action of the United States was limited by conflicting 
policy considerations. 

It is the policy of the United States to maintain an adequate mer- 
chant marine. The measure of adequacy is generally considered to be 
sufficient American flag shipping to handle fifty per cent of the sea-borne 
trade of the United States. The policy is based primarily, however, on 
the requirements of national defense for the transportation of troops and 
supplies and the importation of raw materials in a major war. It in- 
cludes the maintenance of an American shipbuilding industry capable 
of expanding to meet emergency requirements. 

The situation facing American shipping at the end of the war, in- 
volving as it did high costs, international competition, and security con- 
siderations, called for continuing the policy of protection under which 
the shipping industry had expanded in the years immediately preceding 
the war. This policy was not in accord with the more liberal commercial 
policy pursued by the Government in related fields, and conflict between 
the two policy lines has resulted. Prior to March 1948, the Maritime 
Commission had sold eleven hundred ships to foreign purchasers as part 
of a broad effort to revive world trade. Supporters of the merchant marine 
policy objected strongly to this action, and though the Secretary of State 

"See William Adams Brown, Jr., The United States and the Restoration of World 
Trade (1950). 

8 The development of United States policy in these fields and the special problems 
that arise in consequence of the international and domestic factors involved, were treated 
in Major Problems of United States Foreign Policy 1949-1950, pp. 55x9-39. They will not 
be considered here in detail. 



io8 Major Problems 19501951 

urged its continuation, the authority to make such sales was allowed to 
lapse by the Congress. A later executive proposal to transfer American 
ships to European ownership, made in connection with the Foreign As- 
sistance Act of 1948, was also rejected, in spite of the fact that it would 
have contributed directly to an accepted policy of economic aid. 

The United States also participated in a conference called by the 
Economic and Social Council of the United Nations in February 1948 to 
draw up a constitution for the International Maritime Consultative Or- 
ganization, one purpose of which would be to encourage the removal of 
discriminatory measures by governments and of restrictive practice by 
shipping concerns. But the United States was itself using government- 
owned ships in private operations, operating them as governmental proj- 
ects, subsidizing both the construction and operation of privately owned 
ships, and controlling the allocation of cargoes. 

There is certainly a conflict between foreign aid policy, general 
commercial policy, and shipping policy that cannot be overlooked in an 
account of the economic problem field. A similar conflict exists in agri- 
cultural policy, and even more significant ones can develop between for- 
eign and domestic economic policies generally. It will be interesting to 
see if a pattern of restrictive policy also develops in the field of civil 
aviation if that industry begins to lose its present international pre- 
dominance. 

DEVELOPMENTS OF THE LAST TWO YEARS 

By March 1950 the European Recovery Program had reached its half- 
way point. In its first two years, American aid to Western Europe includ- 
ing Germany had amounted to about 10 billion dollars (about 5,800 
millions for 1948-49 and 4,200 millions for 1949-50). The record of re- 
covery to which this assistance made an essential contribution was sub- 
stantial. The total industrial production of the sixteen participating coun- 
tries was one third higher than it had been at the beginning of the pro- 
gram, and it was well above the prewar level. Agricultural production 
was nearly at its prewar level, but population had increased by one tenth, 
and agricultural imports from Eastern Europe had not been revived. 
The situation in agriculture was therefore still unsatisfactory. Inflation- 
ary tendencies, which had been very strong in 1947-48, appeared to have 
been generally checked. On the other hand, the gap between dollar 
receipts and expenditures was still so wide that there seemed to be little 
hope of closing it by 1952 without resort to radical measures. Though this 
unbalance was reduced from 7.4 billion dollars in 1947 to slightly over 
4 billions in 1949-50, the rate of reduction was uneven, and in the second 
and third quarters of 1 949 some of the earlier gains were lost. 

These over-all figures conceal the differing positions, of individual 
countries, some of which still had serious fiscal problems and others of 



The Economic Field 109 

which were already finding it hard to maintain full employment. The 
figures do, however, indicate that the central problems of ERP were no 
longer those of rehabilitation, in the sense of restoring production, 
but of marketing, distribution, and exchange. In view of this change, the 
competitive position of European industry in dollar markets, the expan- 
sion of production that would save or earn dollars, and the expansion 
of nondollar sources of supply took on a new urgency. Bilateralism in 
Europe and the persistence of intra-European trade and payments re- 
strictions came to be regarded by the United States as among the major 
obstacles to the solution of these problems. Increasing pressure was 
consequently brought to bear on the European countries for removing 
them. 

The question of how far and how rapidly the sixteen participating 
countries should be asked to move in the direction of an "integrated" 
European economy had influenced EGA policy from the beginning, even 
though no precise definition of the concept of integration had been given. 
In July 1948 the Council of the OEEG had met to consider how the 
funds provided by EGA should be allocated to the individual partici- 
pating countries. Although Great Britain strongly favored bilateral 
negotiations between each country and the United States, the United 
States equally strongly urged allocation by the OEEC. Agreement was 
finally reached that each OEEC country, with the advice of the EGA 
missions, would submit a specific annual program and a four-year pro- 
gram of broad objectives, and that these would be sent to Washington 
for final approval. At the same time, the OEEC took steps that later re- 
sulted in the negotiation of the Intra-European Multilateral Payments 
and Compensation Agreement. 

Under this agreement forecasts were made of the prospective trade 
surplus and deficits between each pair of OEEC countries. The debtor 
countries were then given the right to draw on their respective creditors, 
and the creditors in turn were granted "conditional aid" by the United 
States equal to these drawings. Both the drawing rights and the condi- 
tional aid were in effect gifts. In addition, the limited multilateral com- 
pensation features of the earlier agreement of 1947 were retained. These 
arrangements made possible a slight increase in multilateral payments in 
Europe. 

In the spring of 1948 after hard bargaining the OEEC made its first 
allocation on the assumption that the payments agreement would make 
settlements in dollars between the participating countries unnecessary. 
On October 16, 1948, the day on which the payments agreement was 
signed, priority was given to a study for consolidating national plans in a 
single master plan. This proved to be extremely difficult, partly because 
basic differences of opinion had developed between Great Britain and 
most of the continental countries. Great Britain urged extreme austerity 



no Major Problems 19501951 

and drastic import cuts. The continental countries, led by France and 
Belgium, insisted that such measures would reduce the productivity of 
labor, create political and social difficulties, and destroy the tourist trade. 
They argued that the dollar deficit could be reduced by increased intra- 
European trade, by a more extensive use of colonial resources, and by a 
co-ordinated investment program; and that drastic cuts in imports were 
not required. It became apparent that numerous adjustments in national 
policy would be necessary to arrive at an over-all plan, and in February 
1949 steps were taken to secure the participation of senior ministers 
in the work of OEEC. 

These developments within OEEC illustrated the extreme difficulties 
of economic integration in Europe on the basis of national plans, espe- 
cially because these plans showed a strong tendency away from the con- 
cept of a regional division of labor and toward national self-sufficiency. 
These difficulties were accentuated by the special position of Germany in 
the joint recovery effort. The first OEEC discussions of allocations had for 
a time deadlocked over the amount to be assigned to the Bizonal Ad- 
ministration, and it was not until April 1949 that the decision was taken 
to admit Germany as a full member. In view of the concern expressed 
in Europe at reviving German competition and of the security considera- 
tions involved in all major economic decisions about Germany, it is un- 
derstandable why the role of OEEC has continued to raise special 
problems. 

In the spring of 1949 EGA indicated to the OEEC that it was dissatis- 
fied with the progress made under the payments agreement and that the 
United States was reluctant to continue financing intra-European trade 
on a narrow bilateral basis. It proposed that at least 50 per cent of the 
drawing rights and conditional aid that were not actually used to settle 
bilateral trade deficits should be transferable from one OEEC country 
to another, and that some proportion of the transferable drawing rights 
should be convertible into dollars. The issue of greater convertibility 
under the payments agreement became extremely acute. A compromise 
solution was finally reached on June 30, 1949, but only after the United 
States had dropped its principal demands. The new payments agreement 
fell short of providing intra-European currency convertibility. 

In the meanwhile, many specific problems that required United States 
decision were being considered. One of these concerned the release of the 
"counterpart" funds, the equivalent value of commodity assistance that 
participating countries had deposited in local currency. Another was the 
negotiations of loan agreements to see that the i billion dollars of loans 
provided under the 1948 act was fully utilized. Another concerned the 



The Economic Field in 

principle of "off shore" purchases, particularly those in which EGA 
dollars were used to finance purchases in Eastern Europe, and elsewhere, 
of commodities in short supply in the United States. As agricultural sur- 
pluses developed in the United States, the scale of such purchases became 
more and more limited, for the EGA act required that agricultural prod- 
ucts which the Secretary of Agriculture declared to be in surplus had to 
be purchased in the United States. There was strong pressure to require 
that a large proportion of EGA funds be specifically earmarked for the 
purchase of such surpluses. 

In the autumn of 1949 these specific problems were overshadowed 
by fresh attempts to eliminate intra-European trade barriers and by the 
devaluation of sterling and other currencies. In July 1949 the OEEC 
recommended that each OEEC country should submit to the council a 
list of the imports on which it was prepared unilaterally to relax import 
restrictions and another list of imports on which it was prepared to accept 
reciprocal relaxations. Before these lists were submitted, however, the 
whole situation was changed by the development of a British foreign 
exchange crisis. 

In September 1949 measures to meet this crisis were discussed in 
Washington, and a joint Anglo-American-Canadian communique was 
then issued. This communique illustrated again the close relationship 
of the different aspects of United States foreign economic policy. It 
stated that "the objectives and general course of action agreed upon" had 
"already been set forth in the United Nations Charter, the Bretton 
Woods Agreements, and the Havana Charter" and mentioned various 
specific courses of action that had been considered. Two of these, the 
simplification of United States customs procedures and the negotiation 
of further tariff reductions, were in the direct line of established United 
States commercial policy. Legislation on customs procedures was already 
in preparation and would have been required in any event by an ac- 
ceptance of the ITO Charter. In the preceding months a second round of 
multilateral tariff negotiations had been completed at Annecy, and the 
concessions granted were to go into effect early in 1950. In the following 
month the President announced that a third round of tariff negotiations 
was to be held in September 1950. A third course of action was the negotia- 
tion of commodity agreements on certain products important for the British 
balance of payments. Another United States objective that was adopted 
as a matter of joint policy was the encouragement of international invest- 
ment. 

Finally, though neither the United States nor Canada agreed to the 
formal abrogation of the provisions in its financial agreements with Great 
Britain that required a nondiscriminatory application of import restric- 



112 Major Problems 1950-1951 

tions, they did agree that the British shortage of dollars should not in 
itself force Great Britain to reduce its purchases from areas where pay- 
ment in dollars was not necessary. They accepted the kind of discrimina- 
tion that was permitted both by the Articles of Agreement of the Inter- 
national Monetary Fund and by the Havana Charter to countries in 
balance-of -payments difficulties during a transitional period. 

The original postwar position of the United States with respect to 
discrimination was thus substantially modified, and a still further modifi- 
cation was implicit in the acceptance of measures to relax restrictions 
among OEEC countries while maintaining them against the United 
States. One of the important questions emerging is whether or not such 
discrimination will lead merely to the perpetuation of sterling area ar- 
rangements and to a preferential treatment of one another's trade by 
European countries, or whether it will represent a transitional stage in 
the process of arriving at multilateralism and currency convertibility. 
This question arises in various forms in several of the problems discussed 
below. 

A part of the solution of the foreign trade problems of Europe lies in 
the underdeveloped areas. The course of their economic development will 
affect their capacity to absorb European goods and to supply products 
that Europe is now obliged to buy from the dollar area. This is only one 
of the many ways in which the problem of economic development has 
affected postwar economic policy. It is one of the main preoccupations of 
the United Nations, and it is a major concern of the International Bank. 
It was also a dominant issue in the negotiation of the ITO Charter. As- 
sistance to underdeveloped countries by a program of technical assistance 
and by stimulating the flow of private American investment was made 
an objective of United States policy in Point IV of President Truman's 
Inaugural Address of January 20, 1949. The general issues involved in 
this objective were discussed in Major Problems of United States Foreign 
Policy 1949-1950. The special investment problems involved are ex- 
amined below. 

By the end of 1949 both OEEC and EGA were pressing forward 
with specific plans of action for achieving genuine multilateralism in 
Europe. On October 31 the steering committee of OEEC recommended 
that participating countries should by December 15 remove half of their 
quantitative restrictions on goods imported from each other through 
private trade channels. On the same day the administrator of EGA indi- 
cated clearly that the United States would press for drastic action 
amounting to "nothing less than an integration of the Western European 
economy." This was followed early in 1950 by the appointment of the 
Dutch Foreign Minister as political conciliator for OEEC and by the 



The Economic Field 113 

presentation to OEEC of an American plan for a European Payments 
Union. 

The negotiation of such a payments union proved to be extremely 
difficult. It involved not only the fundamental problems of European 
integration, an objective to which both EGA and the Congress had be- 
come firmly committed, but also the problems connected with deter- 
mining the position of the pound sterling in the arrangement. 

In the spring of 1950 many of the major foreign economic policies 
of the United States were in the status of proposals awaiting final action. 
Action on the Havana Charter was still pending before the Congress. 
This was true also of the important legislation on customs procedures. 
The Congress had before it measures for the imposition of import quotas 
on petroleum and an amendment to the Commodity Credit Corporation 
appropriation act that would in effect have required the renegotiation 
of the General Agreement on Tariffs and Trade in order to prohibit any 
imports that would interfere with domestic agricultural adjustment pro- 
grams. The legislation providing for a co-ordinated Point IV technical 
assistance program had been made part of the 1950 omnibus foreign aid 
bill, but the proposed appropriation of 45 million dollars had been re- 
duced to 35 millions. The General Agreement on Tariffs and Trade was 
still only provisionally in effect. 

In addition, certain new problems were developing. One of these 
was the need for economic assistance in southeast Asia, made acute by the 
Communist advance in China and by serious internal difficulties in the 
newly formed regimes in that area. Another was the possibility of conflict 
between the economic aims of EGA and the economic requirements of 
the military assistance program under the Atlantic Pact. There was de- 
veloping within the United States a conflict of group interests that were 
affected by foreign economic policy. Within industry there was a cleavage 
between mass production industries with export markets and the indus- 
tries that were subject to competition from imports. 

Very difficult policy problems had also arisen from discriminatory 
trade restrictions against United States products imposed on the ground 
that they were necessary to conserve dollars. An outstanding example was 
the restriction of "dollar oil" imports by Great Britain. Serious domestic 
problems were also in prospect as a result of declining exports of agri- 
cultural products heretofore financed by EGA dollars. 

In one way or another each of these problems was a part of the over- 
all problem of the United States balance of payments. As part of the re- 
view of foreign economic policy by the Government, the President in 
March 1950 asked Mr. Gordon Gray, formerly Secretary of the Army, 



ii4 Major Problems 1950-1951 

to make a comprehensive survey of all the elements that enter into this 
over-all problem. Such a survey raises the basic issue whether the 
United States will be able for the first time to develop and put into effect 
a consciously co-ordinated balance-of-payments program, involving funda- 
mental problems of both commercial and investment policies. The prin- 
cipal features of both these aspects of the main problem are examined 
in some detail in the two sections that follow. 

COMMERCIAL POLICIES AND THE 
BALANCE OF PAYMENTS 

The continuing disequilibrium in the balance of payments of the 
United States described earlier in this chapter is the most important single 
economic problem in the postwar world. It will remain unsolved as long 
as a substantial volume of international trade is directly or indirectly 
dependent upon large-scale American grants to other countries. Its con- 
structive solution will depend, in part, on the extent to which American 
imports and the outflow of American capital can be increased enough to 
sustain a high level of American exports. 

During the past two years a decline in American exports has been a 
more important factor in reducing the abnormal postwar export surplus 
than an increase in imports and foreign investment. To a considerable 
extent this has been the result of discriminatory quantitative restrictions. 
Such restrictions reduce the over-all volume of trade and divert its flow 
from the most advantageous channels, though they may for a time be so 
administered that they increase trade between bilateral trading partners 
or within regional groups of countries. If chief reliance were to be placed 
on a further drastic curtailment of exports from the United States to 
solve the American balance-of-payments problem, these restrictions would 
in all probability have to be continued indefinitely. Such a solution would 
have many undesirable consequences. The contribution that American 
resources now make to maintaining standards of living, and to increasing 
the productive capacity and the general economic strength of many other 
countries, would be reduced. Many American interests would be injured 
and serious problems of adjustment within the American economy would 
be created. 

The United States Government holds that a permanent solution is 
not to be found in measures that contract trade or in the reorganization 
of the world economy into groups of trading partners with common 
policies of discrimination against the outside world. It is rather to be 
found, in the American view, in the adoption of measures that will allow 
trade to expand and to come into balance, not on a bilateral or a regional 
basis supported by discriminatory barriers, but on a world-wide basis. 



The Economic Field 115 

The United States Government has also taken the position that all trading 
countries, whether debtor or creditor, have a responsibility for reducing 
obstacles to an expansion of international trade. It has been unwilling to 
accept the view, often advanced by other countries, that the primary, if 
not the sole, responsibility rests on the United States. The practical prob- 
lems of United States commercial policy are therefore concerned with the 
way in which these responsibilities are to be discharged. 

If the obstacles to the trade expansion desired by the United States 
are to be removed, serious problems of the allocation of resources, of the 
utilization of man power, and of the investment of capital must arise in 
almost every country. A substantial beginning has been made in dealing 
with these problems through United States foreign-aid programs, and 
the stage has now been set for further progress. Such progress is impeded, 
however, by the reservations that many other countries hold regarding 
the stability of the American economy, by the uncertainty whether the 
necessary flow of American foreign investment will follow when the 
foreign-aid programs are completed, and by a disposition to believe that 
the United States is not yet willing to "behave like a creditor country." 
There is also considerable doubt in many countries whether the United 
States will make foreign loans without requiring that the proceeds be 
spent in America, will refrain from dumping its surplus agricultural 
products abroad, will accept a substantial increase in imports, or will be 
moderate in its subsidies for shipping and international aviation. 

In developing its policies for re-establishing a multilateral world 
trading system, the United States has had to take these fears into account 
and to consider how to remove inconsistencies created by some of its 
other economic policies. It has also had to take into account any of its 
own objectives, and those of other countries, that have led to courses of 
action that were discriminatory and restrictive in their effects. In some 
cases commercial considerations have been subordinated to the demands 
of security. In others, policies of planned economic development have 
called for special protective measures. In still others, policies of full- 
employment have called for controls that would reduce the impact of 
international competitive pressures. 

In general, the countries of Western Europe agree as to the desira- 
bility of an expanding world trading system, which would enable them to 
export to the best markets rather than to be committed to compensatory 
trade with countries from which they import. However, trade barriers 
and discriminatory measures, which were introduced as emergency meas- 
ures to cope with the maladjustments of the 1930*5, and which were re- 
tained to cope with the dislocations of the war, have greatly increased the 
difficulty of returning to such a system. These "temporary" measures have 



n6 Major Problems 1950-1951 

continued for so long that they have resulted in a reallocation of resources 
to fit a bilateral trade pattern. They have also created economic groups 
with interest in retaining them. 

Within the limitations set by all these factors, the United States has 
attempted to secure international agreement to a program that accepts 
the general principle of multilateral, nondiscriminatory trade. The United 
States in negotiating such agreements with other countries has acknowl- 
edged that exceptions must be made in the application of these principles. 
Such exceptions were included, for example, in the Articles of Agree- 
ment of the International Monetary Fund, in the Charter for the Inter- 
national Trade Organization, and most recently in the Economic Co- 
operation Act of 1950. The latter provides that EGA aid shall be used 
to reduce the amount of dollar purchases of the participating countries 
to the greatest possible extent consistent with maintaining an adequate 
supply of the essentials for the functioning of their economies and for 
their continued recovery. It also records that it is the sense of the Con- 
gress that no participating country shall maintain or impose exchange 
or trade restrictions in discrimination against the United States which 
are not reasonably required to meet a deficiency in its balance of pay- 
ments or in the requirements of its national security, or which are not 
authorized under international agreements to which the participating 
country and the United States are parties. 

The problem is to co-ordinate specific economic and commercial deci- 
sions in international affairs in relation to the general policy of promoting 
multilateral trade and of establishing equilibrium in the balance of pay- 
ments. 

In its relations with other countries the United States must weigh 
the advantages of requiring strict adherence to the letter of its general 
commercial policy against the advantages of achieving the fullest possible 
agreement and mutual understanding. Many countries advance valid 
objections to the implementation of this policy in full, or they cannot go 
beyond acceptance in principle pending the solution of other pressing 
problems. A multilateral trading system, to be successful, must include 
the major trading nations of the world. If in its negotiations the United 
States fails to create the wide measure of understanding and confidence 
needed to restore such a system, it may be forced to adopt a unilateral 
commercial policy in a world of discriminatory practices. 

In dealing with concrete problems the United States must decide 
in each particular case whether a rigid insistence on even agreed principles 
will advance or retard the achievement of its long-run objectives. The 
necessity for such decisions can arise in connection with the interpreta- 



The Economic Field 117 

tion and application of undertakings or agreements already in effect or 
in connection with differences that are not specifically governed by such 
agreements. Broadly speaking, there are only two alternatives. 

The first is to reach agreement on mutually acceptable conditions 
that will limit, define, or control deviations from the general principles 
of multilateralism and nondiscrimination. The United States has been 
firmly committed to this alternative. If, however, it should find itself 
consistently in a minority position in international economic organiza- 
tions or confronted by policies that it believed were incompatible with its 
long-run objectives, the second alternative might have to be considered. 
This would be to resume full freedom of action by withdrawing from 
international economic organizations and to take unilateral action to 
meet specific problems. 

The first alternative cannot be effectively followed unless (i) the 
broad objectives of a liberal commercial policy are explicitly accepted; 
(2) the temporarily accepted discriminatory practices are applied in a way 
that will minimize their harmful effects; (3) such practices are ended 
when the circumstances justifying them are corrected; and (4) efforts 
are made to bring about these corrections. 

In negotiating the General Agreement on Tariffs and Trade and the 
Charter of the ITO, the United States Government acted in accordance 
with these requirements, but the agreement has not yet been definitively 
put into force by the Congress, and the charter has not yet been ratified. 
Even if the charter is rejected, it will be possible to follow the first 
alternative in many respects. The General Agreement can be accepted 
and its scope enlarged to include provisions such as the proposed cartel 
and commodity agreements taken from the charter. 

The operation of the sterling area under sterling inconvertibility 
constitutes a general problem of discrimination. Although the United 
States has appreciated the practical difficulties that Great Britain would 
face in suddenly and comprehensively removing such features, it has 
nevertheless steadily tried to bring British financial and commercial 
policy into line with American economic objectives. These objectives 
have been accepted in principle by the British Government. The diffi- 
culties are of a practical kind, and from a negotiating point of view con- 
sist of divergent estimates of what can safely be done to convert agree- 
ment on objectives into agreed courses of action. A wide variety of nego- 
tiations has been concerned with this question. 

Some negotiations, like those resulting in the Articles of Agreement 
of the International Monetary Fund and the ITO Charter, stated gen- 
eral rules that were applicable to sterling as well as to other currencies. 
These defined the conditions under which, and the period during which, 
exchange controls and discriminatory trade restrictions were admissible. 



u8 Major Problems 1050-1051 

Other negotiations, like the Anglo-American-Canadian conversations of 
1949 and the negotiations with the British on the inclusion of sterling 
in the European Payments Union, were more specifically related to the 
problems of the sterling area. 

Great Britain has given frequent and explicit assurances that it will 
direct its efforts toward ending the situation that makes it necessary to 
operate the sterling area in a discriminatory manner, and it is still bound 
under the terms of the loan agreement not to impose discriminatory 
quotas against United States trade. The United States has agreed, how- 
ever, that this obligation cannot be fully met until the British reserve 
position has been strengthened, and that the rule of nondiscrimination 
shall not be so applied that it prevents an expansion of trade between 
Great Britain and countries with which it has no balance-of-payments 
difficulties. 

It is to be noted, however, that although the Economic Cooperation 
Act of 1950 recognizes discrimination of the types covered by these under- 
standings, it instructs the ECA Administrator to take remedial action to 
prevent other types of discrimination. This provision in effect reserves 
the freedom of action of the United States in the dispute over "sterling 
oil," which was currently causing strong feeling. 4 The action of the Con- 
gress in this instance suggests that even under present liberalizing poli- 
cies, retaliatory action against discrimination by other countries cannot 
be entirely excluded from American courses of action. 

As long as the United States follows the first alternative as a matter 
of general policy, opportunities for such action are, however, necessarily 
limited. But they would be greatly increased if the United States were 
both to reject the ITO Charter and to renounce the General Agreement 
on Tariffs and Trade. In that event, the United States would be free to 
follow the second alternative. Although this would not necessarily mean 
a change of basic economic objectives, the attainment of these objectives 
would be made more difficult by the cumulative effects of unilateral 
American actions in a variety of particular situations. The difficulties of 
co-ordinating policy in order to reach a constructive solution of the 
problem of the American balance of payments would be increased, and 
the possibilities of counteraction by other countries would at all times 
have to be taken carefully into account. 

The choice between the two alternatives is not absolute and clear 
cut. The question is one of emphasis rather than choice, for it involves 
decisions by the United States on how far and over what range of subjects 
its actions should be bound by bilateral or multilateral international 
commitments. If the United States were to withdraw from some of its 

4 This dispute was settled in part soon after the passage of the act by direct nego- 
tiation between the American oil companies and the British. 



The Economic Field 119 

present multilateral commitments in the field of commercial policy and 
were not to enter into new ones, major decisions would have to be made 
with respect to the use of the freedom of action thus gained. Should 
the United States attempt to create trading principles without serious 
reservations? Should it threaten reprisals against countries that refused 
to participate in such a system? Should it make a unilateral offer of freer 
trade with individual countries as an inducement to participate in such 
a system? Should it return to bilateral tariff negotiations of the most- 
favored-nation kind? Should it, as a major creditor power, embark on 
a program of unilaterally lowering its tariff regardless of the discrimina- 
tory practices and trade barriers in other countries? Or should it use its 
freedom to revert to a high tariff policy, even though this choice would 
mean abandoning the policy of reducing tariffs that it started in 1934 and 
has followed ever since, and even though such a course would tend to 
complicate rather than to solve the balance-of-payments problem. 

Another aspect of the over-all problem of liberalizing and expanding 
world trade in its relation to the balance-of-payments problem concerns 
the interactions of foreign economic policy and domestic economic policy. 
Domestic agricultural policy in particular illustrates the problem. As 
already indicated, a policy of high-level agricultural price support re- 
quires the frequent use of agricultural quotas and subsidies, which 
weakens the position of the United States in advocating the reduction 
of trade barriers in general. At a recent meeting of the Foreign Agri- 
cultural Trade Policy Advisory Committee of the Department of Agri- 
culture on April 24 and 25, 1950, the conclusion was reached that a pro- 
gram "which endeavors to maintain prices above market levels for any 
considerable share of the time is inevitably nationalistic [and] conflicts 
with efforts to develop international trade and other forms of inter- 
national co-operation." The committee summarized the effects of such a 
program as follows: 

(i) It leads to well-nigh irresistible demands that barriers be raised to keep 
products of other nations from sharing in the artificially high prices they created; 
(a) it involves keeping American resources out of fullest use to curtail output in 
order to raise prices, and it is not logical to expect that imports which will defeat 
that objective will be acceptable; (3) it increases the difficulties of exporting 
because prices are above those from competing sources of supply; (4) it fosters 
programs of export dumping which invite retaliation from other countries; (5) 
it requires barriers to keep products sold abroad at lower prices from returning 
to our markets; (6) it encourages an expansion of state trading because of the 
government controls necessary in their effective operation; and (7) it encourages 
similar nationalistic programs for the expansion of uneconomic production 
in other countries to replace our products which in turn will lead to further 
demands for restrictive action. 



iso Major Problems 1950-1951 

There are three possible approaches to the solution of this difficult 
problem. The United States could eliminate the undesirable effects de- 
scribed by the committee by ending those features of its domestic agri- 
cultural policy that encourage agricultural overproduction. If this were 
not feasible, it could seek to mitigate their harmful international effects. 
A possible method of doing so would be to reduce imports of agricultural 
products that were accumulating in the hands of the government only in 
proportion to the domestic restrictions imposed under the support pro- 
gram. This would, as a matter of fact, represent the application of a 
principle already incorporated in the ITO Charter. For some com- 
modities, a solution could perhaps be found by using the technique of 
intergovernmental commodity agreements. A third method would be to 
restrict the importation of the agricultural products that the Government 
is purchasing domestically in order to hold up prices. The grounds for 
such restrictions would be that imports in this situation increased the 
burdens of the Government in its price support operations, but the logical 
outcome would be the total exclusion of such imports. If the third alterna- 
tive were adopted, present policies would in the main be continued, and 
international objections and the counteractions of other countries would 
have to be dealt with as they arose. 

Selected References 

U.N. Interim Commission for the International Trade Organization, The Attack 
on Trade Barriers, a Progress Report on the Operation of the General Agreement 
on Tariffs and Trade from January 1948 to August 1949 (1949). U.S. Congress, 
Conference Committee, Foreign Economic Assistance Act of 1950, S. Doc. 168, 
81 Cong. 2 sess. (1950). U.S. Congress, Senate Committee on Foreign Relations, 
Charter of the ITO, Hearings, 81 Cong. 2 sess. (May 1950). U.S. Department 
of Agriculture, Report of Foreign Agricultural Trade Policy Advisory Com- 
mittee (Apr. 28, 1950). U.S. Department of Commerce, The Balance of Inter- 
national Payments of the United States, 1946-1948 (1950). U.S. Department of 
State, "Tripartite Economic Conference Ends," Text of Joint Communique* 
issued at the conclusion of the Anglo-American-Canadian Financial Talks, Sept. 
12, 1949, Bulletin, Vol. XXI (Sept. 26, 1949), pp. 473-75. U.S. Federal Reserve 
Board, "Anglo-American Trade and Financial Negotiations," including British 
White Paper on the "Anglo-American Financial Agreement," Bulletin, Vol. 32 
(January 1946). 

FOREIGN INVESTMENT 

A major factor in the solution of the disequilibrium in the balance 
of payments of the United States is a steady outflow of American invest- 
ment capital. Under present conditions the large dollar requirements 
arising from reconstruction and development programs are being filled by 
extensive United States Government aid. The continuation of these pro- 
grams to increase world productivity is necessary both for satisfying 
domestic needs of individual countries and for increasing their capacity 



The Economic Field 121 

to export. A combination of this increased export potential with the 
restoration of world trade and an increase of imports into the United 
States would go a long way toward producing an equilibrium at a high 
level in the American balance of payments. If an outflow of American 
capital, the principal source for financing the dollar content of these 
projects for increasing productivity, should not be forthcoming, other 
nations of the world would have to seek alternative sources for American 
export products and an equilibrium would be reached at a lower level. 

Although the immediate causes of the present disequilibrium are 
war destruction and dislocation and the trade policies resulting from post- 
war political tensions, the more fundamental causes are basic changes in 
the industrial and trade pattern of the world. The interwar period saw 
the rise within Europe of the use of weapons of economic nationalism to 
combat the stagnation of the world-wide depression. It was also during 
this period that the raw material producing countries began to see the 
need for the diversification of their economies through programs of in- 
dustrialization. As the old pattern of international specialization began 
to change, the Western European economies, which were based on the 
export of industrial goods in exchange for imported raw materials, were 
adversely affected. The world pattern of trade was further distorted by 
the cessation of the flow of American investment funds, especially to 
Europe, at the end of the igao's. As a result of these developments, the 
nineteenth century framework of international economic relations was 
radically changed. Thus the postwar problems of the reconstruction of 
war damage have been greatly complicated by the need for the establish- 
ment of a new international pattern of industry and multilateral trade. 

Without assistance it will be extremely difficult for the under- 
developed countries to achieve a balanced development unless they resort 
to a rigid authoritarian organization of their national life, including 
stringent limitations on personal consumption during the early stages of 
their programs. The choice will be between proceeding slowly and adopt- 
ing a severe domestic program and pushing the rate of development to 
the limit of resources. If the first course is adopted, political and eco- 
nomic unrest may develop; if the latter is decided upon, similar unrest 
may develop as a result of controls, restrictions, and the denial of demo- 
cratic processes. 

Either of these developments, if unchecked, would greatly increase 
the danger that communism might spread and the possibility that the 
Soviet Union might expand its area of dominance. Intensified nation- 
alism, moreover, will inevitably lead to the development of national self- 
sufficiency, in opposition to the principal United States objective of estab- 
lishing a multilateral, nondiscriminatory, freer system for world trade. 
Thus the United States has two important interests in encouraging an out- 



12% Major Problems 

flow of investment capital: national security and economic well-being. 

Under existing conditions, national security must be the more im- 
portant of the two and must always be taken into consideration even in 
decisions that appear to be purely economic. This situation has been 
reinforced by the adoption, on the part of the United States, of the con- 
cept of collective security. The success of this adoption rests upon the 
establishment of political stability and on increased economic produc- 
tivity. For this reason the questions of capital investment for economic 
development cannot be decided on economic grounds alone. 

The economic interests of the United States in foreign investment 
are two-fold. First, in a country whose economy is based on private enter- 
prise and the profit motive, it is part of the duty of the government to 
assist in developing domestic and international conditions that will in- 
crease the opportunities for private enterprise. Second, there is the more 
general consideration of the relation of American national economic 
well-being to that of the rest of the world. Although American foreign 
trade is small in comparison with national output, it affects large sectors 
of industry and labor and provides an outlet for a large and steadily 
expanding productive capacity. A decline in foreign sales would have an 
adverse cumulative effect on the rest of the economy because of the close 
interrelationships among all parts of the economy. Foreign investment 
would serve a double purpose by improving productivity in other coun- 
tries, thereby increasing their ability to export and at the same time 
enlarging the potential world market for United States exports. How- 
ever, the size of this potential increase is limited by the degree to which 
import restrictions still obstruct the flow of imports to the United States. 
A program for the carefully executed lowering of tariff barriers and for 
securing a steady flow of foreign investment is thus an essential element 
if the goal of an expanding export trade is to be achieved. 

In addition to these two major material factors there is the interest 
of American people in the well-being of others. This good neighborliness 
has in the past taken the form of private philanthropic activities, mis- 
sionary work by churches, and governmental programs of technical as- 
sistance in Latin America. The same spirit is now embodied in varying 
degrees in many of the United States programs of foreign assistance. 
Although nonmaterial in nature, it has been strengthened by the tacit 
recognition that well-being in one country is dependent on well-being 
in others. 

The United States Government has recognized the need for Ameri- 
can capital as a positive force in the vast readjustment of the economic 
pattern of the world. The many forms taken by this aid in the postwar 
period have been described above. In 1949 the United States began to 
formulate a longer-range policy, the Point IV Program. The principal 



The Economic Field 123 

objective of this program was to make American technical knowledge 
available to the underdeveloped countries to assist them in their develop- 
ment programs. It is expected that the creation of a more favorable 
economic situation will attract the necessary quantities of private enter- 
prise and capital from the United States. Furthermore it is expected 
that increased productivity in underdeveloped areas will assist in the 
final stages of European recovery through increased multilateral trade. 
As a further aid to the flow of investment, the Congress was asked to 
broaden the authority of the Export-Import Bank to allow it to guarantee 
private foreign investment against risks peculiar to such investment. To 
accompany this program, the Department of State has begun the negotia- 
tion of a series of new treaties of friendship, commerce, and economic 
development to improve the conditions of entry and the treatment of 
private investment in capital-receiving countries. 6 

These programs may not be adequate for achieving a large steady 
outflow of American private investment. Moreover, it is questionable 
whether private foreign investment can become the major source of de- 
velopmental capital during the critical initial phases even under the most 
favorable conditions. For this reason, additional policy decisions regard- 
ing American investment policy must be made. 

The problem of investment policy is to determine by what means 
the outflow of American capital can be achieved and how it can be best 
made to serve the interests of the United States and of the world as a 
whole. 

The three basic issues involved in this problem are (i) the amount of 
foreign investment required; (2) how the United States can best supply 
it; and (3) how a more favorable climate for private investment can be 
developed in the capital-importing countries. The amount of United 
States capital required in the present situation is a highly controversial 
issue. Two entirely different standards of measurement set the rough 
limits of the problem. The first is based on the requirements determined 
by the various national developmental plans. These are attempts, carried 
out with varying degrees of skill and success, to establish the investment 
required for a co-ordinated program to diversify the economy, to modern- 
ize industry and agriculture, and to develop the resources of the country 
concerned. Many of these plans have been criticized as too grandiose or 
as impossible to achieve in view of the lack of skilled technicians and 
administrators, or in the absence of political and economic stability. The 
Food and Agriculture Organization, in a report of July 1949 to the 

8 This subject was comprehensively treated in "American Assistance to Underde- 
veloped Areas," Major Problems of United States Foreign Policy 1949-1950. 



124 Major Problems 1950-1951 

United Nations Economic and Social Council, examined these plans in 
order to establish a very rough approximation of the amount of invest- 
ment required over the next four years. Excluding investments in the 
United States and Canada, it amounted to 43 billion dollars per year, 
8.5 billions of which would have to come from international sources. 

In spite of these criticisms most underdeveloped regions are faced 
with a problem the solution of which requires simultaneous action in all 
sectors of the economy. To raise the standard of living, there must be 
increased agricultural output. This requires new techniques, equipment, 
and marketing organization, as well as increased irrigation, power, and 
transportation facilities; and all these require capital and technical 
knowledge. The greatest difficulty, however, is the development of alter- 
native employment to prevent the expansion of population in the agri- 
cultural sector from absorbing the increased output. This development 
requires the further import of techniques and capital equipment. It 
raises the difficult problem of selecting for development the industries 
that are best fitted to the resources and needs of the country, taking 
account of the importance of increasing productivity in other sectors. 

There are grave domestic obstacles to the implementation of such 
a program even if external technical assistance and capital are available. 
First, there is the small volume of domestic savings owing to the low 
per-capita incomes and the still smaller volume available for development 
programs because savings are absorbed in speculative projects or seek a 
safer market abroad. Second, the framework for a modern money 
economy an honest, effective governmental administration and a work- 
able fiscal and monetary system is often lacking. 

Finally, there are the foreign exchange problems involved in the 
use of foreign capital. Loans and investments require that convertible 
foreign exchange be available for transferring the service payments. To 
do this the borrowing nations must eventually develop a net export 
position. The lending countries must develop an import surplus or in- 
crease the outflow of capital to take care of the repayment problem. 

Thus the problem is great, and the difficulties numerous and varied. 
If it is deemed necessary to relieve the social pressures that contribute to 
instability and unrest, this problem must be attacked. Some means for 
providing the necessary foreign capital must be devised, and it must not 
impose so great a future burden that it undermines the developing 
economies. 

This is the rationale of the second standard, to limit foreign capital 
to what is economically feasible in the sense that it will be profitable and 
repayable. Applying this criterion, the National Association of Manu- 
facturers has estimated that after 1952 the outflow of American private 
capital will approximate 2 billion dollars a year, provided the borrowing 



The Economic Field 125 

countries create an improved climate for investments. The International 
Bank is also operating on this standard, and in a recent report it stated 
that even with its relatively small resources, it will have sufficient funds 
for some time to fill the external capital requirements of all soundly 
conceived developmental projects. 

Whatever may be the volume of the American share in foreign in- 
vestment, an important question arises of its significance for the domestic 
economy of the United States. Can this economy support an outflow of 
investment at a rate of perhaps 5 billion dollars a year? Or, conversely, 
may not such an outflow be necessary if the United States is to maintain 
high levels of employment and production? These questions cannot be 
answered with any degree of precision, because of the many imponder- 
ables that enter into decisions concerning the use of resources in relation 
to the various objectives sought. 

Another issue is concerned with the channels through which Ameri- 
can capital will be made available for foreign investment. These channels 
are private investment, government loans, and lending by international 
financial institutions. The decision to be made is not a simple choice 
among these three, for they are never mutually exclusive. It is rather to 
determine the proper role of each with reference to geographic area, to 
types of projects or investment opportunities, and to the general and 
specific objectives sought. 

Except in periods of crisis, American investment has come directly 
from private individuals in the form of portfolio or of loan investment or 
of the now more popular direct investment type. Owners of investment 
capital prefer to make the decisions by themselves, or through private 
investment institutions, on how best to invest it rather than to leave this 
function to the Government. To use the traditional means rather than 
to change to a governmental lending program would cause less contro- 
versy, and in due course and under favorable conditions it might well 
provide an adequate flow of capital. 

It is of fundamental importance for capital-seeking countries to 
realize that this is the tradition under which the United States developed, 
and from the American point of view it is a proven method that can 
accomplish similar results anywhere in the world if given a chance and 
if the risk-takers are allowed to profit from their venture. Private direct 
investment may be doubly beneficial, for it brings to the receiving 
countries technicians and knowledge, the items for which they have the 
greatest need and which might not be so readily available with other 
forms of capital investment. Moreover, the receiving government is not 
called upon to guarantee that interest payments will be periodically 
forthcoming nor that the investment will be repaid. If the venture fails, 



is6 Major Problems 1950-1951 

the entrepreneur is the loser, not the country involved. To tap this source, 
the capital-receiving countries must assure American investors that they 
will get fair treatment and the protection of their persons and invest- 
ments, but not that the businesses will be profitable. 

Many prospective borrowing countries, however, strongly object 
to depending on private lending. These objections range all the way from 
opposition to private enterprise on doctrinaire grounds to opposition 
arising from fears that economic imperialism will accompany American 
entrepreneurs and capital abroad. These countries fear, moreover, and 
with some historical justification, that uninhibited private investment will 
tend to concentrate on the development of raw materials for export or 
on other enterprises that promise the quickest return, and that the dic- 
tates of the market will not allow proper consideration of national re- 
quirements or desires in the use of limited resources. 

When a development program is largely the responsibility of the 
government, government-to-government lending is considered more de- 
sirable by the borrower. Such funds usually carry more favorable condi- 
tionsa longer-term maturity date, lower rate of interest, and greater 
flexibility in repayment provisions. The postwar experience with the 
flow of public funds from the United States has encouraged this belief. 
The borrowing countries have tended to overlook, however, certain 
potential disadvantages. It may well develop that governmental lending 
will lead to a greater degree of foreign interference in domestic affairs 
than would be contemplated in connection with the investment of private 
capital. The United States Government has learned from experience the 
need for the right of following public money to its end use, and it now 
insists on it. As a practical matter, the proceeds of Export-Import loans 
must for the most part be spent in the United States directly, thereby 
preventing the receiving nation from buying on a commercial basis in 
the best market. To all intents and purposes they are therefore "tied" 
loans. A continuing flow of governmental lending could not, moreover, 
be assured, because this type of lending is contrary to the economic system 
in the United States, and countries counting on it might develop domestic 
conditions which would not be sustained by private lenders. 

Lending through an international institution would ostensibly answer 
most of the objections of the borrowing countries to interference from 
another nation. Although the International Bank exercises supervision 
over the use of its loans, it escapes charges of intervention because of its 
international character. Another advantage is that international lending 
can tap sources of public and private capital in all member countries 
and make it available to those member countries that require develop- 
mental capital. The character of the International Bank also provides an 



The Economic Field 127 

excellent method for mobilizing skills and knowledge from all member 
countries. But this method has disadvantages. The capital-seeking countries 
contend that this source is inadequate for their programed require- 
ments. The existing strict economic basis for lending, furthermore, does 
not allow for some of the more basic developments that are desired for 
general social and political as well as economic ends. 

In determining sources of American capital, the first alternative 
would be to place the major responsibility on private investment and to 
limit strictly the sphere of governmental lending to such projects as 
hydroelectric power, agricultural development, and transportation, where 
it will not compete with private capital. Such a program would force 
borrowing nations to realize that private investors are the major source 
of funds in the United States, and it would tend to force the borrowing 
countries either to improve their treatment of private capital or to do 
without additional funds. The great danger in this alternative is that 
private capital will prove to be inadequate at the crucial, early stages of 
development. 

The second alternative would be to continue public lending on the 
scale required for national security and for getting feasible developmental 
programs off to a good start. This would be accompanied by governmental 
action, through international conferences and agreements, to improve 
conditions for private investment in the borrowing countries both during 
the period of governmental lending and for the future. This is perhaps 
more realistic in the light of world conditions, but would cost the United 
States more in public funds. 

The third alternative would be to form a new international develop- 
mental agency or to make larger amounts of American capital available 
to the International Bank. The advantages of this alternative are that 
it could combine the public and private investment of all countries. The 
latter will become more important as the countries of Europe are restored 
to economic viability. Accompanying this program would be the United 
States governmental lending deemed necessary for general policy reasons, 
and private investment wherever it could be found. 

The last issue is the method of establishing a climate favorable to 
international private investment. A League of Nations study published 
in 1945 listed the following administrative and technical obstacles to 
private investment: (a) the lack of equality in access to law and fear of 
arbitrary behaviour by the administering authorities; (b) double taxa- 
tion; (c) fear of discriminatory taxation; (d) compulsory reinvestment of 
profits; (e) compulsory participation with domestic capital; (f) inflexible 
provisions regarding employment of foreign personnel; (g) restrictions on 



i 2 8 Major Problems 1950-1951 

the ownership of land, mineral deposits, and so forth; (h) restrictions on 
the transfer of profits abroad; and (i) the lack of assurance of appropriate 
compensation in case of nationalization or expropriation. These obstacles 
have resulted from the fear of economic imperialism, a doctrinaire oppo- 
sition to private enterprise, the adoption of planned economic develop- 
ment in an effort to compensate for a general lack of resources for de- 
velopment, continuing balance-of-payment difficulties, the lack of trained 
administrators and technicians, and conditions of political and economic 
instability. 

There is no agreement on the best means of solving these many prob- 
lems. One approach advocated for the United States is to negotiate 
bilateral treaties with potential borrowing countries, setting forth the 
conditions that are to govern foreign investment. Two examples of this 
approach are the new treaties of friendship, commerce, and navigation 
that have been negotiated with Italy and Uruguay. 

Another method suggested is for the United States Government to 
guarantee private foreign investment. It has been proposed that the 
guarantee should cover the transferability of earnings, just compensation 
and transfer of payment in case of expropriation, and the right to with- 
drawal of investment. The guaranty has many problems, however, that 
have not been fully explored. What is the position of the old investor? 
To what extent will the United States Government have to interfere in 
the flow of private investment to determine which investments it will 
guarantee? What will be the position of third-country investors and com- 
mercial traders in time of foreign exchange stringencies? Is it feasible, 
moreover, to expect many countries to accept binding decisions in ad- 
vance with respect to the use of their available foreign currency in times 
of crisis? Then there is the problem of local funds accumulated when the 
United States Government as guarantor pays the investor his earnings or 
his capital in dollars how will these accumulations of foreign currencies 
be disposed of? Finally, what is to constitute a fair and just compensa- 
tion in case of expropriation or a fair profit rate for priority transfer in 
times of balance-of-payment difficulties? 

There is no question that guaranties would encourage a certain 
amount of private investment. They fail, however, to provide solutions 
for two fundamental problems: the competition of domestic investment 
outlets for American capital, and the continuing political and economic 
instability abroad. Guaranties are no answer to the continuing political 
as well as economic instability in many of the underdeveloped countries, 
even if the guaranties are extended to cover purely business risks during 
an initial period. In these circumstances they would be nothing but thinly 
disguised, publicly directed private lending whose objectives would more 
readily be achieved by direct governmental lending. 



The Economic Field 129 

Another method suggested for improving conditions for private in- 
vestors is the multilateral acceptance of an international code of invest- 
ment by all prospective borrowers and lenders. The International 
Chamber of Commerce has submitted to the United Nations Economic 
and Social Council the International Code of Fair Treatment for For- 
eign Investments. Fair treatment for investors and borrowers alike is 
sought by this approach, which includes international machinery for the 
settlement of disputes and for minimizing the danger of national inter- 
vention. The action of the South American countries in attaching to the 
Bogota" Agreement (1948) a series of major reservations concerning for- 
eign investment seems to indicate, however, that this will be a difficult 
if not impossible method of attacking the problem in the present circum- 
stances. 6 

The choice of alternatives or combinations of these and other meth- 
ods for encouraging the flow of private investment capital depends pri- 
marily on the decision regarding the second issue the source on which 
the major responsibility for providing capital will be placed. If it is 
on the private investor, all the suggested methods must be attempted. If 
the principal responsibility is placed on governmental lending, however, 
particularly in the early stages, the main hope for developing a flow of 
private foreign investment to accompany and eventually to supersede 
governmental lending must rest on the general improvement of economic 
conditions that is presumed to result from the developmental programs. 

Selected References 

League of Nations, Conditions of Private Foreign Investment (1946). United 
Nations, Department of Economic Affairs, The Effects of Taxation on Foreign 
Trade and Investment, Publ. 1950, XVI.i (February 1950). United Nations, 
Department of Economic Affairs, Methods of Financing Economic Development 
in Under-Developed Countries, U.N. Doc. 71233 (1949). United Nations Secre- 
tariat, Methods of Financing Economic Development of Under-Developed 
Countries: Survey of Policies Affecting Private Foreign Investment, U.N. Doc. 
E/i6i4 (February 1950). United Nations, Report of a Group of Experts, Na- 
tional and International Measures for Full-Employment (December 1949). U.S. 
Congress, House Committee on Banking and Currency, Export-Import Bank 
Loan Guaranty Authority, Hearings, 81 Cong, i sess. (August 1949). U.S. Congress, 
Senate Committee on Banking and Currency, Foreign Investment Guaranties, 
Hearings, 81 Cong, i sess. (August 1949). U.S. Department of State, "A Favor- 
able Climate for Private Investment," Bulletin, Vol. XXII (Feb. 13, 1950), pp. 
231-34. 

See "Economic Development," pp. 329-33 below. 



Chapter VIII 

The Military Security Problem Field 

THE PROBLEM of United States military security appears in three distin- 
guishable forms. The first relates to the proportion of national re- 
sources that is to be allocated to the development and maintenance of 
the military strength of the nation. This is the domestic, or the exclusively 
national, form of the problem. The second concerns the steps that can 
be taken to improve American military security by entering into arrange- 
ments with other states or groups of states. The third involves the steps 
that can be taken in and through an international organization in par- 
ticular, the United Nations to satisfy the requirements of military se- 
curity. These two latter are international in character. 

Though these three aspects of the problem for purposes of analysis 
can be separated, in reality they are so closely related that a problem 
arising in any one category instantaneously raises questions and calls 
for adjustments in the others. The maximum successful development of 
policies in the international categories, for example, never wholly elimi- 
nates the responsibility of the United States Government to develop and 
maintain the military strength of the nation. Conversely, in view of the 
power situation that now prevails in the world, even a complete con- 
centration on unilaterally organizing and projecting American military 
strength would fall far short of the theoretical condition known as abso- 
lute security. The merits of alliances, treaties, and pacts would conse- 
quently still call for examination, as would the security possibilities of an 
international organization. 

The First World War provided an illustration of the fact that a 
modern major power, if aggressively expansionist, can be defeated only 
by a coalition of states whose security is jointly felt to be threatened, 
but the United States failed to interpret correctly the significance of this 
lesson. It rejected the proposals for collective security that were embodied 
in the League of Nations, returned to its isolationist concept of na- 
tional interest, and confined the international aspect of its military 
security policy to advocating disarmament and the renunciation of war 
as an instrument of national policy. The outbreak of the Second World 
War proved this concept of military security to be too limited. The 
United States was unable to develop its potential military strength 
rapidly enough either to narrow the scope of the conflict or in the initial 
stages to protect adequately its obvious interests. 

130 



The Military Security Field 131 

The lessons of the Second World War emphasized those of the first. 
This time, however, the lesson was properly read. For the first time in 
its history, the United States committed itself in time of peace to join 
other nations in a comprehensive international organization designed 
to maintain collectively the security of its members. 1 As far as military 
security was concerned, the United States had modified its previous 
security policies. Instead of depending upon its own military strength, 
supported by limited treaty arrangements and fortified by a deliberate 
avoidance of involvement in international controversies, the United 
States accepted the collective security system of the United Nations as 
one means of providing for its national security. 

It has been pointed out earlier in this volume that the concept of 
international security that was formulated for the United Nations was 
based on the assumption of full collaboration of five major nations, and 
that therefore the organization is not able by its own action alone to deal 
with a threat to the security of a major nation if another major nation is 
the aggressor. Because of the threat that is implicit in the expansionist 
policies and aggressive actions of the Soviet Union, the United States has 
taken the lead in organizing similarly threatened states into groups for 
common defense. The republics of the Western Hemisphere were already 
bound together in a regional security and collective self-defense arrange- 
ment by the Inter-American Treaty of Reciprocal Assistance (the Rio 
Treaty), and the United States moved to bind the states of the North 
Atlantic community in another collective self-defense arrangement the 
North Atlantic Treaty. These multilateral agreements represent an im- 
portant effort that the United States has recently made to increase the 
military security of the nation by action in the international field. Bilateral 
military agreements have also been concluded with states in Europe and 
Asia in order to help them by their own action to resist both external at- 
tacks and internal subversion. They contribute generally to the security 
of the United States, but avoid the obligations of collective action under- 
taken in the multilateral agreements. 

These actions must be understood to mean that although the United 
States still firmly and officially stated that its security would be most com- 
pletely safeguarded by an effective United Nations system, it was obliged 
by its interpretation of Soviet policy to initiate courses of action that 
sought protection by other methods. It was officially held that these 
methods were employed in accordance with the Charter of the United 
Nations. For example, specific reference was made to Article 51 as au- 
thority for both the North Atlantic and the Rio treaties. It was also 
held that by making war less likely, such arrangements strengthened the 

*See Chap. 2, pp. 12-16 above, and Chap. 9, "The United Nations Problem 
Field," pp. 162-68 below. 



132 Major Problems 

United Nations by maintaining conditions under which it had a chance 
to function as designed. Furthermore, the various congressional resolu- 
tions and acts which authorized the participation of the United States 
in regional and other collective arrangements for defense reaffirmed the 
over-all objective of American policy to be the achievement of inter- 
national peace and security through the United Nations. Nevertheless, it 
appeared that the search by the United States for military security was 
shifting from a world-wide basis under the United Nations system to a 
regional basis under specific treaty arrangements. But the recent action 
taken by the United States and other countries under the auspices of the 
United Nations in connection with Korea indicates that the United States 
has by no means abandoned its search for security through the United 
Nations system. In this case action by the member states under a recom- 
mendation of the United Nations is the instrumentality. 

The extent to which the over-all problem of military security has 
expanded has made security considerations an increasingly important 
factor in all policy problems. Political and economic programs have there- 
fore been tailored to fit considerations of military security. In particular, 
they have forced a re-examination of the national factors in military power. 

If political arrangements for regional defense rest upon common 
interests, a common understanding, and a willingness to compromise, 
they are a potent factor in the maintenance of peace. It is becoming 
increasingly clear, however, that the moral and psychological advantages 
following a purely political association are not adequate to meet a 
military situation; more tangible backing is required. It is this fact, more 
than any other, that brings the national and international elements to- 
gether in a comprehensive security policy problem. The cflcctivcness 
with which the United States provides for its own military security by 
multilateral and bilateral arrangements depends largely on the military 
assistance that the United States is able and willing to furnish the states 
with which it joins for collective defense. This assistance, in turn, is 
related to the measures that it takes to increase its own military strength. 

The need for assisting nations with which the United States was 
thus associated resulted in the Mutual Defense Assistance Act, which 
authorized funds for military assistance to eight signatories of the North 
Atlantic Treaty, to Greece, Turkey, Iran, Korea, and the Philip- 
pines, and for assistance, not necessarily military, in the general region 
of China. The act also permitted specified nations, including all the 
signatories of the Rio Treaty, to purchase equipment and materials in 
the United States. But this omnibus authority, which rolls together the 



The Military Security Field 133 

military assistance aspects of both the multilateral and the bilateral 
security arrangements of the United States, has by no means settled the 
questions involved. 

The military requirements of the nations with which the United 
States is now associated, the manifest inability of the United States to 
satisfy them all, and the possibility that its military obligations may be 
increased by new regional defense arrangements, all raise a significant 
policy problem relating to the bearing of regional defense arrangements 
on the military security of the United States and on one another. Under 
the North Atlantic Treaty, the United States has an obligation to con- 
tribute forces for the integrated defense of the North Atlantic area. The 
United States is also facing new demands for military assistance in the 
Middle East and Far East. And until, through its efforts, the military 
strength of the Rio Treaty nations is built up, the defense of the West- 
ern Hemisphere will rest almost entirely upon the United States. 

In addition to these international obligations, the United States must 
plan to maintain armed forces and military facilities for the defense of 
its continental home base and overseas possessions and bases, and for 
meeting its occupation responsibilities in Germany, Trieste, Austria, and 
Japan. AH these measures require national military strength, which, like 
military assistance to other nations, imposes a burden on the economic 
potential of the nation. A policy problem is thus raised as to the balance 
that should be reached between military assistance to strengthen other 
nations and the military strength of the United States. Until recently 
American opinion and United States policy, supported by the combined 
policy of Great Britain and France, held to the principle that effort should 
not be fundamentally diverted from the maintenance of political and eco- 
nomic strength to economic and military mobilization. At the present time 
the allocation of resources for military purposes, formerly controlled 
largely by economic considerations, is rapidly being given precedence over 
the latter in the face of a developing and fully accepted threat to na- 
tional security. 

The varying interpretations of the international situation that justify 
the current debate on the balance between military assistance and na- 
tional strength have been sharpened by the Soviet acquisition of atomic 
weapons. Insofar as the American monopoly of these weapons was con- 
sidered to have been a major deterrent to direct Soviet aggression, the 
concept has become invalid; and insofar as the unique possession of 
atomic weapons was assumed to have balanced and thus checked the 
use of Soviet ground and air forces in Europe, the development of a 
restraining power must now take some new form. Whether the new 



i$4 Major Problems 

form will be hydrogen bombs, atomic weapons for tactical use, or the 
imposition of mass against mass or of fire-power against mass, is a ques- 
tion for future determination. 

These considerations account for the pressure to re-examine the mili- 
tary security position of the United States. They also give direction to 
the re-examination by defining the principal problems of the moment 
as to determine (i) the weight to be given to national military strength 
as a factor of national security; (2) the bearing of regional defense 
arrangements on the military security of the United States and on one 
another; and (3) in light of the existing situation, the measures that the 
United States should advocate in respect to the international control 
of atomic energy. The first two of these problems are discussed in the 
remainder of this chapter; the third is taken up in Chapter IX. 

NATIONAL MILITARY STRENGTH AS A 
FACTOR IN MILITARY SECURITY 

The domestic elements of national military power are derived from 
the man power, natural resources, and industrial capacity of the Nation, 
and national military strength is the result of the development of these 
elements. The allocation of resources to the development of military 
strength must always be balanced against the requirements of the civilian 
economy and the demands of collective security. One of the essential 
methods of making collective security arrangements contribute effec- 
tively to national security is to strengthen all participants militarily. 

Because the United States alone among the Western nations has 
the necessary resources and economic strength, the greater part of the 
burden of arming friendly nations naturally falls upon it. The military 
equipment and materials furnished to other nations, however, are also 
derived from the same resources that provide national military strength. 
Military assistance to foreign nations therefore raises two questions about 
the national aspects of military power. One concerns the total amount of 
national resources that should be devoted to military purposes. The other 
concerns the portion of the total that should be devoted to the military 
strength of the United States. 

The first question is an economic and political one. In financial 
terms, the question is how much of the annual budget the nation should 
devote to the joint processes of developing the national military strength 
and to increasing that of other nations. In examining this question it is 
necessary to consider always in relation to one another: the perils to 
national security that are inherent in the existing international situa- 
tion; the amount of economic assistance being furnished to other nations; 
the efficacy of foreign economic and military assistance in furthering na- 



The Military Security Field 135 

tional security; the essential requirements of the Government; the rela- 
tion of national expenditures to national income; the effect of a national 
deficit on the economic stability of the nation; and the degree of inter- 
ference with normal peacetime economy that the nation is willing to 
accept in order to divert the available national resources to national and 
collective military strength. 

The second question is a military one. It concerns both the amount 
of national resources that should be devoted to national military strength 
and the allocation of available resources between national military 
strength and foreign military assistance. The United States Congress, 
in 1949 and 1950, provided first for the military requirements of the 
United States and then determined the amount of military assistance 
that could be furnished to foreign nations without injury to the United 
States economy. This was a logical procedure, for national military 
strength is accepted as the keystone of national military security. Further- 
more, the determination of the amount of military assistance that can 
be given to foreign nations is dependent on national political and economic 
as well as military considerations, and these are often less tangible in char- 
acter than the considerations that determine the nation's military strength. 

The problem is to determine the weight to be given to the develop- 
ment of United States military strength as a factor in maintaining na- 
tional military security. 

The over-all military security policy of the United States is funda- 
mental to a discussion of this problem. Obviously, the amount of military 
strength that is necessary at any given time depends upon the imminence 
of danger and the strength of probable opponents. There are several fac- 
tors that enter into the problem: how much the United States itself should 
mobilize; how much the nations that might be expected to co-operate 
with the United States under the North Atlantic Treaty and other arrange- 
ments can, with the assistance of the United States, contribute toward 
meeting the danger; and the manner in which these factors can be co- 
ordinated. The most important external factor is the combined potential 
strength of the North Atlantic Treaty nations. This strength is very great, 
but, under the terms of the North Atlantic Treaty, there can be no 
positive assurance that in the event of armed attack, all the parties to 
the treaty will meet their obligations under the approved integrated 
plan for the defense of the North Atlantic area. The Secretary of De- 
fense recently estimated, morever, that it will require three or four 
years, with military assistance from the United States continuing at the 
rate of about one billion dollars' worth a year, to strengthen the Euro- 



1^6 Major Problems 

pean treaty nations to the point where they will have a reasonable de- 
gree of security against armed attack. According to the chairman of the 
Joint Chiefs of Staff, even this goal will depend on the maintenance of 
the present rate of progress in planning and on the concurrent effort 
of the European nations to rebuild their military strength from their 
own resources. Because of the attack on Korea all this may be speeded up. 

As far as the North Atlantic Treaty is concerned, therefore, the 
determination of the weight that the United States should give to its 
own military strength, aside from these supplementary supports, in- 
volves consideration of one firm and three speculative requirements. The 
firm requirement is that the military strength of the United States should 
be adequate to accomplish the military tasks that have been assigned 
to the United States by the integrated plan for the defense of the North 
Atlantic area. The first speculative requirement concerns the amount 
of military strength that should be maintained in excess of this firm 
requirement as insurance against the failure or inability of any of the 
treaty nations to play their full part in the integrated defense plan. 
The second concerns the amount of military strength that the United 
States should maintain in the interim period until the European treaty 
nations can build up their own military strength sufficiently to provide 
for a reasonable degree of security. 

The third speculative requirement concerns the nature of a balanced 
collective force and of the contribution of the United States to it. Al- 
though there is doubt regarding its acceptance, this proposed plan would 
probably have little effect on the current military strength requirements 
of the United States. As far as is publicly known, the proposal would 
place upon the United States responsibilities related to strategic bomb- 
ing and the control of the seas. The chairman of the Joint Chiefs of 
Staff has, nevertheless, stated that: 

. . . the estimate that Western Europe can be defended . . . includes the 
total effort that the United States could make if war should come. It means the 
full effectiveness of our strategic air force in retaliation, if necessary; it means 
the full effective strength of our Navy and Naval air arm in keeping the sea 
lanes open, and keeping supplies flowing, as well as defeating any submarine 
menace; and it would mean a very strong effort by our Army. 

In the view of the Secretary of Defense, the adoption of the proposal 
for a balanced collective force would be of limited concern to the United 
States because of American world-wide military responsibilities. 

Beyond its obligations under the North Atlantic Treaty and the 
concrete military responsibilities that may consequently be accepted, 
the United States has other military requirements. Some are the tradi- 
tional concomitants of sovereignty; others are the inevitable accompani- 
ments of a major power status. The United States has an inherent re- 



The Military Security Field 137 

sponsibility to protect its national interests wherever they be threatened. 
With the extension of military and economic aid to the nations of south- 
east Asia, the initiation of the Point IV Program, the extensive existing 
programs of foreign economic and military assistance, and the obliga- 
tions of the United States under the terms of the Rio Treaty, these in- 
terests are indeed world-wide. Whenever a show of military strength 
will contribute to stability and international peace, moreover, the United 
States has an obligation to itself to use its military strength for this 
purpose. 

The action taken in Korea has introduced a new element into this 
situation. Even if a war with the Soviet Union does not eventuate, the 
United States may well find itself involved in a series of incidents similar 
to the one in Korea, any one of which may make a substantial demand on 
American military strength. 

The national military requirements that have been noted here and 
the military responsibilities assumed under collective defense arrange- 
ments and other international commitments, are no more than the two 
sides of a coin. The coin is national security. The problem, at the moment, 
arises first from the difficulty of making an estimate that will fit all possible 
contingencies in a highly unstable international situation. It arises also 
from the difficulty of satisfying both national requirements and inter- 
national responsibilities without forcing fundamental readjustments be- 
tween the claims that military, economic, political, and social interests 
make on available resources. 

Selected References 

U.S. Congress, House Committee on Foreign Affairs, First Semiannual Report 
on the Mutual Defense Assistance Program, H. Doc. 613, 81 Cong. 2 sess. (U.S. 
Department of State Publication 3878, General Foreign Policy Series 33, June 
1950). U.S. Congress, House Committee on Foreign Affairs, Message from the 
President of the United States Transmitting a Recommendation That the United 
States Continue to Provide Military Aid to Other Free Nations During the Fiscal 
Year 1951, H. Doc. 616, 81 Cong. 2 sess. U.S. Laws, Statutes, etc., Mutual Defense 
Assistance Act of IOJQ, Public Law 329, 81 Cong, i sess., Chap. 626. U.S. Depart- 
ment of State, "Continued Military Assistance: A Protection Against Enslave- 
ment," President Truman's message to Congress, June i; Secretary Acheson's 
statement of June 2, Bulletin, Vol. XXII (June 12, 1950), pp. 938-44. U.S. Depart- 
ment of State, "Final Communique* by the Foreign Ministers of the Twelve 
Nations of the North Atlantic Treaty, issued at London May 18, 1950," Bulletin^ 
Vol. XXII (May 29, 1950), pp. 830-31. 

REGIONAL DEFENSE ARRANGEMENTS IN RELATION TO 
NATIONAL MILITARY SECURITY 

The success of the United States and its allies in both world wars was 
due largely to their unity of purpose and effective military collaboration. 





139 



140 Major Problems 1950-1951 

This favorable condition was brought about, however, only after the 
conflicts had begun. The current policy of the United States of seeking 
to provide for its military security through peacetime coalitions of na- 
tions that are bound together by common interests and threatened alike 
by aggression from the same source is therefore a new and untried 
American policy. In no previous instance during peace has the United 
States entered into treaty agreements with groups of other nations for 
the collective defense of all of them. 

The regional defense arrangements that the United States has now 
entered, or may enter in the future, are intended not only to deter ag- 
gression but to inspire peacetime unity and collaboration among the 
signatories. As the President of the United States explained in one of 
his addresses during May 1950: "Today the United States is engaged 
with other free nations in a great co-operative endeavor to preserve free- 
dom and achieve peace in the world. . . . Together, nations can build a 
strong defense against aggression, and combine the energy of free men 
everywhere in building a better future for us all." 

The Rio and the North Atlantic treaties are the products of this 
kind of co-operative endeavor. Though they are frequently thought to 
be much alike, they were actually developed out of different back- 
grounds to fit different circumstances. The Rio Treaty was a follow-up 
of the Act of Chapultepec of March 1945. The act in general and the treaty 
in particular were detailed projections of a long process of converting 
the inter- American system into an organization for maintaining peace 
within, and the security of the Western Hemisphere. 

Between September 1947, when the Rio Treaty was signed, and the 
signing of the North Atlantic Treaty in April 1949, suspicion and dis- 
trust of the Soviet Union increased, and international relations reflected 
the growing intensity of the cold war. After five European states had 
joined in the Brussels Treaty in March 1948, the Senate passed the 
Vandenberg Resolution in June 1948, which paved the legislative way 
for extending collective security arrangements beyond the Western 
Hemisphere. Although the resolution reaffirmed that the policy of the 
United States was "to achieve international peace and security through 
the United Nations so that armed force shall not be used except in the 
common interest," it also expressed the view of the Senate as favoring 
"the progressive development of regional and other collective arrange- 
ments for individual and collective self-defense" and the association of 
the United States in such arrangements "as are based on continuous and 
effective self-help and mutual aid, and as affect its national security." 
A few months later, when it was already committed by the Marshall 
Plan to the economic restoration of Western Europe, the United States 
took the lead in creating closer group co-operation for collective self- 



The Military Security Field 141 

defense, and it negotiated the North Atlantic Treaty, which was signed 
in April 1949. This treaty was given practical support by the Mutual 
Defense Assistance Act, which followed in five months. 

Both the Rio and the North Atlantic treaties provide for collective 
self-defense within the meaning of Article 51 of the United Nations 
Charter. In addition, the Rio Treaty provides for enforcement measures 
to restore peace in the case of a conflict between its signatories. It also 
contains provisions for specifically complying with Chapter VIII (Articles 
5 2 > 53 an d 54) of the United Nations Charter, as well as with Article 51. 
Enforcement action under the Rio Treaty, except when the treaty is 
functioning as an arrangement for collective defense under Article 51, 
remains subject to the veto power of any of the five permanent members 
of the Security Council. The North Atlantic Treaty, on the other hand, 
does not provide for enforcement measures against offenders among its 
signatories, and its provisions are limited to compliance with Article 51. 
The inter- American system has long been accustomed to the pacific settle- 
ment of disputes among the participants, and at various times since the 
Rio Treaty has been in effect, its machinery has been used for this pur- 
pose. The North Atlantic Treaty, however, was not so designed. It was 
intended to provide for joint action by its signatories in their common 
defense against an outside aggressor, and not for policing its members. 

If the pressure of Soviet aggression continues, it is possible that 
the device of group arrangements may be extended to groups of states 
in the Far East and the Middle East. It is probable that such exten- 
sions would follow the pattern of the North Atlantic Treaty under 
Article 51 of the United Nations Charter. The Mutual Defense Assist- 
ance Act, in fact, expressed the view of the Congress as favoring "the 
creation by the free countries and the free peoples of the Far East of 
a joint organization, consistent with the Charter of the United Nations, 
to establish a program of self-help and mutual co-operation designed to 
develop their economic and social well-being, to safeguard basic rights 
and liberties and to protect their security and independence." 

The Rio and the North Atlantic treaties and the measures taken 
to implement them, along with proposals for similar arrangements in 
the Far East and Middle East, raise questions requiring further con- 
sideration by the United States. Most important of all, the policy em- 
bodied in them needs to be examined from the military point of view 
to determine its value as a means of ensuring the national military 
security. 

The problem is to determine the bearing of regional defense ar- 
rangements on the military security of the United States and on one 
another. 



142 Major Problems 1950-1951 

The supreme measure of the value of regional defense arrangements 
to United States military security is the extent to which such arrange- 
ments can contribute to essential military ends. The very nature of 
the agreements themselves may therefore have substantial effect on the 
desired results. Considering the Rio Treaty as a collective defense ar- 
rangement only, it is similar to the North Atlantic Treaty in many respects 
but differs from it in others. Both require reciprocal military assistance 
under the principle of mutual aid. Both provide that an armed attack 
within a defined area, on one or more parties to the treaties, will be 
considered as an attack on all, and both obligate all parties to take such 
action as may be deemed necessary to assist the nation attacked. Each 
treaty creates a strong presumption that an armed attack under these 
conditions on any of its parties will result in the collaborative military 
action of all. Neither treaty, however, makes such positive military ac- 
tion obligatory. 

To be effective in providing for the military security of the parties 
to either the Rio or the North Atlantic treaties, the presumption con- 
tained in the terms that an armed attack on a party to either treaty will 
be met by the military action of the other parties must become a cer- 
tainty. This requirement can be met only by the proper solution of 
political, economic, and military problems, each of which is difficult in 
itself and is dependent upon the satisfactory resolution of other prob- 
lems in the same and in other fields. Politically, the end to be sought is 
solidarity in support of the common cause and political stability in the 
individual treaty nations. Economically, all must possess such a degree 
of economic well-being that it contributes to the combined moral and 
military strength of the treaty nations. Militarily, strong armed forces 
must be equipped, trained, and prepared through effective planning 
for full military collaboration. Complete and perfect attainment of these 
ends cannot be expected, but measures that fail to eliminate political 
dissidence, half-hearted support, economic instability, and military weak- 
ness cannot be expected to ensure effective collaborative defensive ac- 
tion if an armed attack should occur. 

Because the threat to international peace, and therefore to American 
military security, is much greater in Europe than in the Western Hemi- 
sphere, the United States has been exercising its leadership and devoting 
its political and economic resources to the encouragement of solidarity and 
to the development of combined military strength primarily among the 
Atlantic Treaty nations. The priority given to the improvement of the 
European situation has prevented the United States from developing 
with the Rio Treaty nations the same measures that it considers essential 
in Europe. 

There is no Latin American economic program similar to that for 



The Military Security Field 143 

Europe, and no comparable military assistance is being furnished to any 
of the Rio Treaty nations. There is, however, general support of the 
traditional principle of solidarity among the American republics, and 
the Organization of American States has functioned satisfactorily in 
settling minor disputes among the Rio Treaty nations. There has been 
a marked decline, on the other hand, in military unity among them 
since the end of the Second World War. This has been manifested partly 
by the failure of four nationsBolivia, Ecuador, Guatemala, and Peru 
to ratify the Rio Treaty, but more specifically by the failure of both 
Panama and Ecuador to reach agreement with the United States on a 
matter of base sites for the protection of the Panama Canal. Unstable 
governments in several of the Latin American nations and suspicions 
and jealousies between some of them, moreover, are not conducive to 
full collaboration among the American republics. These circumstances 
do not inspire confidence that the Western Hemisphere collective de- 
fense arrangements will be a reliable means of ton tribu ting to the mili- 
tary security of the United States. 

Under the Rio Treaty some progress, nevertheless, is being made in 
developing plans for military collaboration and collective defense. Al- 
though the United States has not undertaken to build up the military 
strength of the Rio Treaty nations by furnishing them with military 
assistance on a grant basis, it has authorized the use of United States 
governmental agencies for the purchase of military equipment and ma- 
terials in the United States. The United States is providing most of the 
Latin American nations with military training missions on a bilateral 
agreement basis, and in some cases, notably that of Brazil, considerable 
progress has been made toward effective bilateral military collaboration. 
Such bilateral military arrangements may be of more value than any 
collective defense arrangements that have yet been developed. 

The signatories of the North Atlantic Treaty have made marked 
progress which has been supported by United States economic aid to 
Europe and by the unified action of the United States, Great Britain, and 
France with regard to political matters in Europe and other areas. An 
integrated plan for the defense of the North Atlantic area, drawn up 
by the Defense Committee, has been approved by the North Atlantic 
Council and the treaty nations. The military requirements to imple- 
ment the plan have been estimated, and the Defense Finance and Eco- 
nomic Committee has examined the problem of meeting these require- 
ments. Eight treaty nations are being furnished with military assistance 
by the United States under authority of the Mutual Defense Assistance 
Act of 1949 and in accordance with the terms of bilateral agreements. 

When the North Atlantic Council met in London in May 1950, it 
resolved that the treaty nations by their united efforts should build a 



144 Major Problems 

modern defense system capable of withstanding an external threat di- 
rected at any of them. It established a committee composed of deputies 
to the foreign ministers of each nation and charged it with the duty of 
increasing the effectiveness of the treaty organization. The council issued 
directives for the co-ordination of the work of its subsidiary organs and 
emphasized that the problem of adequate military forces and of the 
financial arrangements needed to provide them should be examined as 
one and not as separate problems. These directives were formulated on 
the assumption that if the combined resources of the signatories were 
properly co-ordinated and applied, they would be adequate to provide 
for defense without impairing social and economic progress. To accom- 
plish the most economical and effective use of the forces and materials 
available, the members of the council agreed to urge their governments 
to concentrate on balanced collective forces rather than on balanced 
national forces in building up their combined military strength. 

But many difficult problems must be solved before there can be 
a high degree of assurance that the treaty nations will stand together 
in the event of an aggression against one or more of them. Although the 
designation of deputies to co-ordinate military and economic measures 
for implementing the treaty terms and the approved plan for integrated 
defense is a step forward, their recommendations must be approved by 
national governments before they can become effective, and the means 
to carry them out must be provided by national legislative bodies. In 
this process national and international political considerations, as well 
as economic and military ones, will play important parts. They may 
result in no agreement or in inadequate national action. 

A military issue of particular significance in this connection has 
arisen from the recommendation of the North Atlantic Council for bal- 
anced collective forces to replace the traditional balanced national forces 
to which most nations have aspired. Under this proposal each treaty 
nation, instead of providing all the elements of the armed forces neces- 
sary for its individual defense, would be limited to providing only 
specifically designated elements. These elements, together with those 
provided by other treaty nations, would constitute an integrated force 
for the collective defense of all. The failure of any nation, whether of 
major or minor importance in the defense scheme, to accept the arrange- 
ment would nullify it. But the failure of a strong nation to carry it out 
once it was agreed to would be even more significant. The entire plan 
would then collapse, and collectively the nations would be less strong 
than if they had adhered to the system of balanced national forces. 

The scheme of balanced collective forces makes it imperative that 
all treaty nations respond by taking collective military action in the event 



The Military Security Field 145 

of armed attack on any one of them. If a single important nation 
fails to make its contribution, the rest can stand neither together nor 
alone. The treaty provision that requires each party to assist by taking 
"individually and in concert such action as it deems necessary including 
the use of armed force" becomes in effect an obligation to take action 
in concert, and it makes the use of armed force mandatory. This obliga- 
tion makes the North Atlantic Treaty more like a military alliance and 
raises a question for the United States on the constitutional powers of 
the Congress to declare war. 

Before the recommendation for the integration of the armed forces 
of the treaty nations into a balanced collective force is acted upon by 
the national governments, the questions it raises will undoubtedly be 
extensively debated. National decisions probably will be influenced by 
each national estimate of the probability of a Soviet aggression. Strong 
support might develop if the tempo of the cold war were increased by 
the Soviet Union. On the other hand, a Soviet gesture of co-operation, 
whether genuine or not, might have the opposite effect. Perhaps the 
most important consideration will be the confidence of each state in 
the fidelity with which others will adhere to the common cause. The 
treaty nations of Western Europe will hesitate to accept the proposal, 
for example, if the United States does not clearly demonstrate its inten- 
tion of meeting its obligations under all circumstances and in spite of 
constitutional difficulties. Similarly, the United States will want to be 
satisfied that the European nations will not withdraw from their treaty 
obligations if they find a hope of remaining neutral in a war between 
the United States and the Soviet Union. 

The attitude of the European nations toward the military proposals 
will be influenced, moreover, by the action of the United States in related 
economic matters. The full co-operation of the United States will be 
an essential factor if the treaty nations are to be armed without inter- 
fering with their social and economic progress. The action of the United 
States Congress in authorizing and appropriating funds for economic 
and military assistance will therefore be watched carefully. Any stipula- 
tions the Congress may make to protect the economic and military in- 
terests of the United States will also be examined to determine their 
effect on the individual and common interests of the other nations. 

The proposals for regional defense arrangements in the Middle 
East and Far East raise another set of issues bearing on United States 
military security policy. In both areas Great Britain, France, and the 
United States are concerned in maintaining peace and stability and in 
checking the spread of communism; but their interests are frequently dif- 
ferent and in some respects conflicting. The disparity of resources and 



146 Major Problems 

power between the states of the Far East and Middle East and the 
United States, Great Britain, and France is so great, however, that 
group arrangements of the former without the participation of the lat- 
ter would be almost meaningless from the point of view of military 
security. Comprehensive regional defense groupings in these areas would 
furthermore lack the political justifications of either the historical tradi- 
tion of solidarity underlying the Rio Treaty or the common cultural 
foundation of the North Atlantic Treaty. They would rest, instead, on 
the vital strategic and economic interests of the United States and 
Western Europe and on the fear of aggression felt by weak and newly 
independent states. 

Regional defense arrangements in the Middle East would require, 
therefore, the participation of all three major Western powers as well as 
of the free nations of the areas. Since the nations in the areas are mili- 
tarily weak, their defense against armed attack would depend upon the 
strength that the three major nations could contribute to their common 
defense. To develop unity and loyalty to a common cause in these states 
would require wise political handling by the three major nations work- 
ing in complete accord. It would be difficult to employ the principles 
of military collaboration developed under the North Atlantic Treaty 
in either of the areas, and it is doubtful if the principle of "continuous 
and effective self-help and mutual aid" defined by the Vandenberg 
Resolution could be carried out. Collective defense in these areas would 
probably amount to individual self-defense encouraged and supported 
by the three major nations, in addition to such collaboration as the 
three nations could induce. 

The attitude of the United States, Great Britain, and France toward 
some of the Middle East nations has been indicated by the agreement 
of the former of May 1950 to sell arms to the Arab states and to 
Israel. Although the three powers were willing to assist these states 
to arm in the interest of their internal security, their self-defense, and 
the defense of the area, at the same time they assumed a specific re- 
sponsibility to interfere by action within or outside the United Nations 
if any of the local states was found to be preparing to violate frontiers 
or armistice lines. The collective security arrangement that the Arab 
League proposed at its meeting in June 1950 may imply a willingness to 
accept Western influence and guidance in order to obtain military 
assistance. 

In the Far East, where various regional defense arrangements have 
been proposed over the past year, an entirely different development 
has taken place. In southeast Asia United States military assistance was 
granted in a form that left France responsible for the combined military 
action of Viet-Nam, Cambodia, and Laos. This arrangement, however, 



The Military Security Field 147 

was made before the communist attack on the Korean Republic took 
place and before the possibility of external armed aggression was acutely 
present. The fact that such aggression was in the case of Korea met 
through the United Nations and not in terms of any regional defense 
arrangement, has again brought into the picture the pattern of collective 
security under the United Nations. 

Finally, there remains to be considered the issue of the bearing of 
the collective defense arrangements upon one another. Co-ordination in 
military matters between the Rio and the North Atlantic treaty arrange- 
ments might present a fundamental difficulty, for the areas in which the 
two treaties are operative overlap in the western North Atlantic. The 
United States is the only nation party to both treaties, and such co- 
ordination may place on it a heavy strain. Co-ordination between the 
North Atlantic Treaty and possible arrangements in the Middle and 
Far East requires the effective functioning of a central body; and if 
Middle East and Far East regional collective defense arrangements are 
organized, a central organization dominated by the United States, 
Great Britain, and France may have to be established. This would 
squarely pose the issue whether the United States, by following a military 
security policy that emphasizes regional defense arrangements, is carry- 
ing out a policy that is fundamentally in conflict with full American sup- 
port for the United Nations and the action taken in Korea under the 
auspices of the organization. 

There has always been a danger that too ardent a pursuit of a 
regional interim security policy may undermine the policy of supporting 
the United Nations. With respect to the North Atlantic Treaty, the 
Senate Foreign Relations Committee pointed out the danger of replacing 
the United Nations machinery by the machinery of group arrange- 
ments. The committee felt that "it would be particularly unfortunate if 
our Government took part in 'exclusive' consultations with Atlantic 
Pact members over situations of deep concern to friendly states in Asia, 
Africa, Latin America, and the Middle East." 

Selected References 

Great Britain, Parliament Papers by Command, Cmd. 7367, Text of Fifty-Year 
Treaty of Economic, Social and Cultural Collaboration and Collective Self-Defense 
Between Great Britain, France, Belgium, the Netherlands, and Luxembourg, 
signed at Brussels, Mar. 17, 1948 (1948). Pan-American Union, Inter-American 
Conference on Problems of War and Peace, Cong, and Conf. Scries 47 (1945). 
Walter A. Surrey, "Emerging Structure of Collective Security Arrangements," 
U.S. Department of State, Bulletin, Vol. XXII (May 22, 1950), pp. 792-95. U.S. 
Congress, Senate Foreign Relations Committee, Documents Relating to the 
North Atlantic Treaty, S. Doc. 48, 81 Cong, i sess. (Apr. 12, 1949). U.S. Congress, 
Senate Foreign Relations Committee, International Peace and Security Through 
the United Nations, the "Vandenberg Resolution," S. Res. 239, 80 Cong. 2 sess. 



148 Major Problems 1950-1951 

(June 11, 1948). U.S. Congress, Senate Foreign Relations Committee, North Atlantic 
Treaty, S. Kept. 8, 81 Cong, i sess. (June 6, 1949). U.S. Department of State, 
"Balanced Collective Forces Urged for Defense of North Atlantic Community," 
address by Secretary Acheson, May 31, 1950, Bulletin, Vol. XXII (June 12, 1950), 
pp. 931-37- U.S. Department of State, "Final Communiqu^ by the Foreign 
IVfinisters of the Twelve Nations of the North Atlantic Treaty, issued at London, 
May 18, 1950," Bulletin, Vol. XXII (May 29, 1950), pp. 830-31. U.S. Department 
of State, Inter-American Conference for the Maintenance of Continental Peace 
and Security, Quitandinha, Brazil, Aug. i$-Sept. 2, 1947, Rept. of U-S. Delegation, 
International Organization and Conference Series II, American Republics i, 
Publ. 3016 (1948). U.S. Department of State, "Inter- American Treaty on Re- 
ciprocal Assistance," Bulletin, Vol. XVII (Sept. 21, 1947), pp. 565-72. U.S. Depart- 
ment of State, Ninth International Conference of American States: Bogota, 
Colombia, March jo-May 2, 1948, Rept. of U.S. Delegation, International Organ- 
ization and Conference Series II, American Republics 3, Publ. 3263 (1948). U.S. 
Department of State, "North Atlantic Council Resolution on Central Machinery," 
Bulletin, Vol. XXII (May 29, 1950), p. 831. U.S. Department of State, "Pacific 
Pact Corresponding to North Atlantic Treaty Untimely," statement by Secretary 
Acheson, May 18, 1949, Bulletin, Vol. XX (May 29, 1949), p. 696. U.S. Depart- 
ment of State, "Tripartite Declaration Regarding Security in the Near East," 
Three-Power Declaration of May 25, Bulletin, Vol. XXII (June 5, 1950), p. 886. 
U.S. Department of State, "U.S. Answers Soviet Charges Against North Atlantic 
Treaty," statement by Ambassador Austin on Apr. 14, 1949, Bulletin, Vol. XX 
(May i, 1949), pp. 552-55. U.S. Laws, Statutes, etc. Mutual Defense Assistance 
Act of 1949, Public Law 329, 81 Cong, i sess., Chap. 626. 



Chapter IX 
The United Nations Problem Field 

rri HE United States, as one of the leading proponents of a system of 
JL international co-operation and as one of the major-power signatories 
of the United Nations Charter, must of necessity take a position on any 
question that affects the organization and operation of the United Na- 
tions. Even a question of internal administration, such as the co-ordina- 
tion of economic and general welfare activities, requires a judgment 
by the United States concerning the methods it is prepared to advocate 
and support. More significant issues, like changing the voting procedure 
in the Security Council and proposals for revising the Charter, involve 
correspondingly more significant decisions. In view of the strength and 
position of the United States, even the taking of no position at all on 
questions of this importance exerts an influence and constitutes a policy 
on the part oi the Government. 

Another type of problem for the United States Government arises in 
connection with the use that it makes of the United Nations system to 
further American objectives. Such questions as the extent to which 
the cold war should be fought through the processes of the United 
Nations, and whether unilateral actions, bilateral or multilateral agree- 
ments, and regional arrangements and the machinery of the United 
Nations arc more or less effective methods of achieving American ob- 
jectives, illustrate this type of problem. All these methods have a place 
in American foreign relations, but for many purposes the machinery 
of the United Nations may not be the appropriate means to use. The 
choice is wide and frequently difficult decisions have to be made about 
which method or combination of methods is best adapted for particular 
situations. There is, therefore, the general problem of how the United 
States can best design its operations as a national state in an interna- 
tional organization when its interests at times seem to require unilateral 
action, although one of its most firmly stated objectives is to support and 
develop a system of continuous international co-operation. The compre- 
hensive character of this problem, which is treated in detail later in this 
chapter, can be most clearly grasped if it is understood how the United 
Nations was intended to function and how it has actually functioned. 

The operation of the United Nations to date has reflected as it 
must reflect the general state of the world, especially the disharmony 
among the major nations. This has been unavoidable, because the or- 



150 Major Problems 1950-1951 

ganization was designed neither to replace the existing network of inter- 
national relations nor to provide machinery for the solution of all inter- 
national problems. Much criticism of the organization has been based 
on a popular misconception of the role that it was intended to play. 

There were no initial illusions about the fact that the effectiveness 
of the United Nations depended upon the actions of the major powers, 
or that the actions of the major powers would reflect the character of 
their relations. It was recognized that any one of the major nations would 
be able to stop action against itself as well as to stop any action by the 
organization as such. It was equally certain that a major nation tould be 
coerced only by the combined forces of the other major nations, and that 
because this would be the equivalent of a world war, it was a type of de- 
cision that each major nation would make for itself and would not agree 
to have made for it by any international organization. 

The judgment that the United Nations would succeed rested on the 
belief that the principles of international behavior pledged in the Char- 
ter, would, if observed, offer a reasonable hope that peace and security 
could be achieved and preserved. There were also other supporting as- 
sumptions involved in this expectation. The most important was that 
each of the major nations would maintain sufficient forces to ensure . 
that those of them that wanted peace would be able to make a course 
of aggression by any nation too risky to undertake. A related assumption 
was that the gigantic effort to win the war would have driven home 
the lesson that only unity among nations desiring peace could make 
peace an enduring reality. 

Neither of these assumptions was vindicated in the period immedi- 
ately after the war. The Soviet Union chose a course of action that could 
be interpreted only as aggressive. The United States, the other great 
center of power, permitted its military establishment to deteriorate out 
of all proportion to the military strength still kept in being by the 
Soviet Union. 

To some extent, then, the failure of the system to operate in the 
manner that was expected of it has been caused by difficulties among 
the major nations rather than by defects in the system itself. The Soviet 
Union has followed a course of non-co-operation and obstruction, espe- 
cially in the Security Council. Other states have also contributed to the 
general difficulty by their insistence on public attention to issues that 
could not be settled, but the discussion of which would aggravate inter- 
national relations. Keeping in mind the procedure of majority voting 
in the General Assembly, some states, large and small alike, have at- 
tempted to organize the Assembly to secure the support of "world opin- 
ion." In general, this attempt has primarily served to develop a species 



The United Nations Field 151 

of political manipulation in the General Assembly in order to get a 
favorable majority decision recorded. It has also worked to emphasize 
the power basis that underlies the privilege and use of the veto in the 
Security Council. 

The open world forum that the General Assembly provides has lent 
itself only too well to propaganda and to efforts to manipulate and or- 
ganize world opinion in support of purposes that had little to do with 
international peace and security or with general welfare. Although the 
Soviet Union has been one of the most persistent offenders in this respect, 
other nations, including the United States, cannot be cleared of blame. 

Prior to the Korean incident there was a tendency to overlook the 
accomplishments of the United Nations organization, the record of which 
in the past five years includes moderate successes as well as conspicuous 
failures. The news value of crises and breakdowns caused them to over- 
shadow successes. The constructive moves that were being taken in the 
United Nations system, minor though some may have appeared to be, were 
nevertheless slowly building a basis for peace and security. 1 It remains true, 
however, that the full effectiveness of these efforts depends in the final 
analysis on the willingness of the major nations themselves to carry out in 
good faith the obligations imposed by the Charter and to assure by their 
united action that other nations do likewise. It also depends on the will- 
ingness of the major nations to avail themselves fully of the processes of 
peaceful adjustment that the United Nations system provides by working 
together in a spirit of co-operation and mutual accommodation, both in- 
side and outside the organization. This continues to be the central problem 
of the United Nations system. 

The activities of the United Nations system have taken place in 
two broad fields: maintenance of peace and security, and promotion of 
the general welfare. A separate examination of what has developed in 
these fields will give a picture of the operation of the system and some 
of the basic difficulties into which it has run in the absence of funda- 
mental agreement among the major powers. 

MAINTENANCE OF PEACE AND SECURITY 

The international system of collective security established by the 
Charter of the United Nations contains three essential components: the 
obligations and procedures prescribed for the pacific settlement of dis- 
putes between states; the power given to the organization to take en- 
forcement action, including the use of armed force, in order to restore 

'The very term "United Nations system" is used to emphasize that more than 
the organs of the central organization are concerned in this endeavor and that the 
specialized agencies and regional organizations have important parts to play. 



The United Nations Field 153 

or maintain international peace and security; and the responsibility of 
the organization for formulating plans for the regulation of armaments. 

The success of the system depends primarily on the peaceful ad- 
justment and settlement of international disputes. In Article 33 of the 
Charter, member states undertook to take the initiative in using the 
methods of peaceful settlement available to them such as conciliation, 
arbitration, and judicial settlementbefore referring a dispute to the 
United Nations. The organization itself, acting through either the Se- 
curity Council or the General Assembly, was given the function of 
promoting adjustments or settlements by making recommendations to 
the parties concerned. Although these recommendations are neither 
binding on member nations nor enforceable by the organization, the 
basic assumption was that they would carry decisive weight if they were 
backed by all the major nations not themselves parties to the dispute. 2 

The peaceful settlement of disputes by the United Nations has been 
most successful in cases where the major powers were only indirectly 
concerned, as in Palestine and Indonesia. But even in cases where great- 
power interests are directly involved, there have been partial successes. 
In the Iranian case, although the Soviet Union refused even to participate 
in the Security Council discussions, the influence of consideration 
by the Security Council and of its decision to keep the question on its 
agenda contributed to the withdrawal of Soviet troops from Iran. In 
the Greek frontier case, after a Soviet veto had blocked action by the 
Security Council, condemnation by the General Assembly of the northern 
neighbors ot Greece for aiding the guerrilla forces and the establishment 
of a commission to observe events on the border gave both moral and 
practical support to the Greek Government in preserving the independ- 
ence of the country. In the case of Korea, although the General Assembly 
did not succeed in establishing the unity of the country, it did supervise 
the setting up of an independent government in the southern part of 
the peninsula. 

But in the case of the Berlin blockade, which was directly pertinent 
to the East-West power conflict, neither the Security Council nor joint 
appeals of the President of the Assembly and the Secretary-General nor 
a committee of "neutral" members of the Security Council was able to 
settle the differences between the Soviet Union and the Western powers. 
The publicity and study given to the case, however, may well have 
helped to promote the conversations between the Soviet and American 
delegates that ultimately led to the lifting of the blockade. 

Within the United Nations itself, ways have been sought to circum- 
vent the deadlocks in the peaceful settlement of disputes that have oc- 

2 This was one reason why the so-called veto provision was applied to the pro- 
cedures of pacific settlement in the Security Council. 



154 Major Problems 1950-1951 

curred in the Security Council. Greater emphasis has been placed on the 
political and security responsibilities of the General Assembly, where 
action cannot be blocked by Soviet disapproval. 3 Even if a recommen- 
dation by the General Assembly is not backed by all the major powers, 
it has a moral authority that derives from the fact that at least two 
thirds of the members arc behind it. In 1947 the Assembly established, 
over Soviet protest, the Interim Committee, composed of representatives 
of all the members of the United Nations, to deal with questions of peace 
and security, to do preparatory work for General Assembly sessions, to 
conduct investigations, and to consult with subsidiary organs. Although 
the refusal of the Soviet Union and its satellites to participate in the 
work of the Interim Committee has, on the one hand, facilitated the 
proceedings of the committee, it has, on the other hand, made it difficult 
if not impossible for the committee to deal with problems in which the 
Soviet Union is directly involved. 

The authority and power of the organization to remove threats to 
the peace and to suppress breaches of the peace is vested in the Security 
Council. For these purposes, the Council is empowered under Articles 41 
and 42 of the Charter to take drastic measures, including the use of 
armed forces. But because none of the major powers was willing, at the 
time the Charter was drafted, to allow its armed forces to be used with- 
out its consent, decisions of the Security Council to take enforcement 
action are governed by the veto provision. This limitation does not, how- 
ever, prevent individual nations or groups of member states from acting 
voluntarily on the call of the Security Council. This possible course of 
action was illustrated in the case of Korea. 

Article 43 of the Charter obligates member states to make armed 
forces, facilities, and other assistance available to the Security Council 
"on its call." The strength of such forces and the nature of the facilities 
and assistance are to be determined by special agreement between the 
Council and the member states. The Security Council has directed its 
Military Staff Committe to examine these questions, but the views of the 
committee members are widely divergent on the crucial questions: How 
many of what forces? From whom? and Where should they be based? 
With respect to the initial contributions of forces by the five permanent 
members of the Security Council, for example, the majority hold that 
they should be comparable in over-all strength but might differ widely 

* The Assembly is empowered by Article 1 1 of the Charter to "consider the gen- 
eral principles of co-operation in the maintenance of international peace and security," 
and by Articles n, 14, and 35 to consider disputes and make recommendations for their 
peaceful adjustment. 



The United Nations Field 155 

in the particular strength of land, sea, and air components. The Soviet 
view is that identical units should be contributed man for man, ship 
for ship, plane for plane and that deviation from this formula would 
need a special decision of the Council. There is also an unreconcilable 
disagreement on the over-all strength of the forces to be made available. 

The regulation of armaments under the United Nations collective 
security system was conceived as an objective to be attained after a wider 
and permanent basis for international collaboration in maintaining 
peace and security had been established. 4 In other words, a general 
reduction in the burden of national armaments is to be expected only 
after the major powers have demonstrated their ability to co-operate in 
keeping the peace. Under Article 11 of the Charter, the General As- 
sembly has the authority to make recommendations to member states 
and to the Security Council regarding the principles that should govern 
disarmament and the regulation of armaments. But under Article 26 
only the Security Council, in which each major power has a veto, has the 
authority to formulate, with the assistance of the Military Staff Com- 
mittee, plans for the "establishment of a system for the regulation of 
armaments" for submission to member states. 

The United Nations Atomic Energy Commission was established in 
January 1946. The commission was directed to make specific proposals for 
the exchange between nations of information on the use oi atomic energy 
for peaceful ends, for the control of atomic energy to ensure its use for 
only peaceful purposes, for the elimination of atomic weapons and all 
other weapons of mass destruction from national armaments, and for estab- 
lishing safeguards to protect complying states from the hazards of violation 
and from the evasions of a control agreement. After four years of negotia- 
tions on this problem, further discussions were suspended in January 1950, 
when the Soviet Union refused to participate in any United Nations or- 
gans with representatives of the Chinese Nationalists. Even before then, 
however, the negotiations had been deadlocked for some time. The sus- 
pension of them, on the other hand, does not remove the problem of the 
measures that the United States might advocate for the international con- 
trol of atomic energy. The fact that the Soviet Union now possesses atomic 
weapons, coupled with the fact that the United States decided early in 
1950 to go ahead with the development of a hydrogen bomb, has given 

4 It should be noted that the terra "regulation" rather than "reduction" or "limita- 
tion" was deliberately used in recognition of the fact that armaments are used both in 
ensuring national security and in contributing to collective action. The word "regula- 
tion" was also intended to indicate that consideration should be given not only to an 
upper limit for armaments but also to a lower limit below which national military 
strength, especially of the major powers, could not be allowed to fall without jeopardiz- 
ing international peace and security. 



156 Major Problems 

new importance to the problem. The problem, together with the history 
of the negotiations in the United Nations up to the present, is therefore 
treated in detail later in this chapter. 

The deadlock on atomic energy control was paralleled by a similar 
deadlock on the question of the regulation of conventional armaments. 
In December 1946 the General Assembly agreed on a set of general 
principles to govern the regulation and reduction of armaments, and it 
requested the Security Council to determine what information had to be 
obtained from member states in order to implement these principles. The 
Security Council then set up the Commission for Conventional Arma- 
ments, excluding from its jurisdiction all questions within the compe- 
tence of the United Nations Atomic Energy Commission. The commis- 
sion succeeded in agreeing on a plan of work and, over the negative 
votes of the Soviet Union and the Ukraine, on a definition of general 
principles. These were (i) regulation should eventually include all states 
and must initially include all states possessing substantial forces; (2) 
regulation can be carried out only in an atmosphere of international 
confidence and security; (3) the creation ot such an atmosphere involves 
agreements under Article 43 of the Charier, on international control ol 
atomic energy, and on peace settlements with Germany and Japan; (4) 
limitations must be consistent with the carrying out of obligations as- 
sumed under the Charter; and (5) regulation must be accompanied by 
safeguards based on international supervision. The Soviet proposals, 
which were rejected by the Assembly, called for a blanket one-third 
reduction within twelve months ot the land, sea, and air forces of the five 
permanent members of the Security Council; lor the prohibition ot 
atomic weapons; and tor a control body to supervise the execution of 
the proposals. 

In October 1949 the Soviet Union vetoed in the Security Council 
both the report of the commission on its progress and the French pro- 
posals for reporting, verifying, and publishing information on military 
effectives and conventional armaments. The General Assembly in De- 
cember approved a resolution tailing for a verifiable world census ol 
conventional armaments and armed forces and rejected one proposed 
by the Soviet Union that asked all nations to submit information (with- 
out a verification procedure) on both atomic and nonatomic weapons. 
In January 1950 the Security Council referred the Assembly resolution 
to the commission for further study. This action was taken in the ab- 
sence of *the Soviet representative, who had walked out in protest against 
the repiesentation of Nationalist China in the Council. Secretary-General 
Lie in the spring of 1950 urged that negotiations in the control of 
armaments should not be deferred until political problems are solved, 



158 Major Problems 

"but should go hand-in-hand with any effort to reach political settle- 
ments." 

Attempts to achieve the collective security system that is a pre- 
requisite to the regulation of armaments have so far been unsuccessful, 
largely because of the serious political differences among the major powers 
that have developed inside and outside the United Nations. This general 
failure, which has been reflected in the many failures to settle specific 
disputes, has given rise to a search for security on new lines. Proposals 
have been made, on the one hand, for some form of world government, 
to be achieved either by scrapping the existing organization and making 
a fresh start or by drastically amending the United Nations Charter. 
On the other hand, proposals have been made for adapting the existing 
system to changed conditions by modifying the veto, by making greater 
use of the General Assembly in maintaining peace and security, by put- 
ting more emphasis on the use of peaceful methods of settlement, and 
especially by developing regional arrangements. In general these ar- 
rangements have been brought within the framework of the United Na- 
tions organization by being referred to Article 51 of the Charter, to 
Article 52, or to both. The first authorizes arrangements for collective 
self-defense; the second explicitly makes regional security arrangements 
compatible with obligations under the Charter. 

The struggle to reach agreement in building the system of collec- 
tive security presents the United States with problems of crucial im- 
portance that require major policy decisions, and some of these problems 
are set forth later in this chapter. The United States also faces, within 
as well as outside the United Nations system, major problems that arise 
from disputes in particular countries. These are dealt with in later 
chapters on the relevant geographic areas. 

PROMOTION OF THE GENERAL WELFARE 

The duty of the United Nations organization to promote general 
welfare was held to be of equal importance with the establishment of 
its authority to maintain peace and security. The creation of conditions 
of stability and well-being was expressly recognized in the Charter as 
necessary to peaceful and friendly relations among nations. It was taken 
as self-evident that to remedy the economic and social dislocations of 
the war and to set in motion longer-run improvements would require 
positive international action supplemented by appropriate national sup- 
porting action. It was also clear, however, that the range of problems 
involved was so great that a single international organization could 
hardly handle them. The United Nations system therefore includes many 
specialized intergovernmental bodies, but over-all responsibility for co- 



The United Nations Field 159 

ordination is vested in the General Assembly and is exercised under its 
general authority by the Economic and Social Council and the Trustee- 
ship Council in their respective fields. 

The international machinery established to deal with problems of 
the general welfare makes an impressive list. As shown in the chart, it 
covers food and agriculture, international trade and finance, transporta- 
tion and communications, labor, health, human rights, and education. 
The Economic and Social Council has established twelve commissions, 
including regional commissions for Europe, for Asia and the Far East, 
and for Latin America; five subcommissions; three standing committees; 
and various drafting and ad hoc committees. Agreements on relation- 
ships with the United Nations have been concluded with ten specialized 
agencies, whose fields of activity include food and agriculture, inter- 
national finance, transport and communications, refugee problems, labor, 
health, and education. 5 The Economic and Social Council has also called 
international conferences to consider such matters as freedom of in- 
formation, shipping, trade, and employment. Much useful work has been 
performed in the technical fields, and machinery has been established 
for the international execution of broad economic and social policies. 
The proliferation of agencies, overlapping functions, inconsistencies 
of membership, and inadequate programing, however, have raised urgent 
problems of co-ordination. Attempts to solve these problems have been 
made in various ways: through the United Nations Secretariat and the 
staffs of specialized agencies; through agreements with the specialized 
agencies that provided for reciprocal representation at meetings and 
exchange of information and services; through consultations to avoid 
overlapping activities; and through the establishment of priorities that 
brought the same topics up for consideration in all relevant agencies 
at the same time. Much remains to be done, however, to achieve an 
efficient correlation of programs and functions. 

Although there has been great activity as well as some tangible 
results, the initiation of a steady trend toward economic improvement 
and social betterment has also been checked by the same international 
frictions that obstructed the Security Council in its area of responsibility. 
Political differences have made it difficult to consider even purely techni- 
cal questions on their merits, and when attention in the field of welfare 
began to include not only economic, agricultural, health, and refugee 
questions but also conceptual questions of human rights and individual 
liberties, deadlocks once more became inevitable. 

The history of the efforts to formulate an international Bill of 
Rights, to draft conventions on genocide and the freedom of the press, 

"The Soviet Union originally joined only one of these agencies, the World 
Health Organization, and in 1949 it withdrew even from that. 



160 Major Problems 

and to explore the means of developing educational, scientific, and cul- 
tural co-operation illustrates the nature of the problem as well as its 
insolubility except in a pre-existing atmosphere of agreement. Initial 
discussions revealed basically different concepts, and subsequent discus- 
sions led to a variety of conflicts and frustrations. In consequence of the 
fundamental nature of these differences the attempt to draft an inter- 
national Bill of Rights had to be broken down into three separate stages: 
the first, to secure agreement on a Universal Declaration; the second, 
to convert this into a covenant; and the third, to agree on measures for 
carrying out the covenant. It was so difficult to reach agreement on even 
the broadest and most general principles that only the first stage has 
been completed. 6 The kind of difficulty that has developed raises a pro- 
found question about the capability of an international organization 
to treat issues of this sort in the absence of common beliefs and generally 
accepted standards. And assuming even partial success, it raises important 
questions about the capability of individual states to carry out in fact 
general agreements reached in the abstract. Can an international society, 
lacking agreement on fundamental concepts, solve its problem of adjust- 
ment and change in a democratic way? Can a minority, in such cases, 
accept the decision of a majority except under compulsion? And finally, 
does not the effort to act universally on unagreed abstractions increase 
the very tensions it is desired to reduce, and thus make common action 
difficult even on agreed matters? 

In addition to these basic questions, which are problems of the 
United Nations organization, the United States faces important problems 
as soon as it obligates itself to implement international agreements on 
such matters as human rights. Federal actions run into diverse concepts 
on this subject even within American society. Questions of states' rights 
and conflicting public attitudes stand in the way of general application. 

The responsibilities of the United Nations in respect to dependent 
people are set forth in Chapters XI, XII, and XIII ot the Charter. In 
Chapter XI, the Declaration Regarding Non-Self-Governing Territories, 
member states undertook to promote the general advancement and the 
development toward self-government of the territories for which they 
were responsible and to submit regular reports thereon. The Trustee- 
ship Council was established under Chapter XIII to carry out the func- 
tions of the General Assembly in the administration of former enemy 
territories, of former mandated territories of the League of Nations, and 
of territories voluntarily placed under trusteeship by the governments 

Differences of opinion wcie so pronounced that votes had to be taken 1200 times 
in order to get a draft declaration for submission to the General Assembly. The draft 
was adopted in December 1948, with the Soviet Union, South Africa, and Saudi Arabia 
abstaining. 



\lz 



LJ. 



C M M I S|S ION* 




i | r~| r 




i L-JL.J 



161 



162 Major Problems 

responsible for them, pursuant to Chapter XII. The Security Council 
exercises the functions of the United Nations in trust territories desig- 
nated as strategic, and it receives the assistance of the Trusteeship Coun- 
cil in functions that have no security aspects. 

In many non-self-governing territories, the war gave great impetus 
to militant nationalist movements that were striving for complete inde- 
pendence or political autonomy. Some of these territories, such as the 
Philippines, India, and Burma, have already gained their political in- 
dependence. Some, like Indo-China, are still in the throes of gaining inde- 
pendent status. Others are either not ready for, or not interested in, 
complete self-government or independence in the near future. The 
problems that have arisen for the United Nations in the field of non-self- 
governing peoples have come largely from the attitude of the Soviet 
Union and other anti-colonial states, which constantly attack the ad- 
ministering powers and seek to extend the authority of the trusteeship 
system and to exert over colonial territories an authority that was not 
explicitly intended by the Charter. 

The picture that has been sketched above of the United Nations 
as it has operated makes it clear that it is not an organization separate 
and apart from power systems that are in conflict. The main problems 
that confront the United States in connection with the United Nations 
can be divided into two categories: (i) those that are inherent in a 
system of international organization and with respect to which the 
United States must take a position by virtue of being a member of the 
organization; and (2) those that arise in consequence of the fact that 
the United States, as a sovereign state, inevitably enters into relations 
with the international organization and seeks to use it for attaining its 
national objectives. Action taken about a problem in either category, 
however, almost automatically creates problems in the other. 

The three specific problems dealt with in detail in the remainder 
of this chapter illustrate the types of problems included in the two broad 
categories described above. The revision of the Charter and the control of 
atomic energy are essentially of the first type; the character of United 
States operations in the United Nations is essentially of the second type. 

UNITED STATES OPERATIONS WITHIN THE 
UNITED NATIONS SYSTEM 

Whether the members of the United Nations are major or small 
states, they all make use of the organization to promote their own inter- 
ests and to move toward their own objectives. The cases that come before 



The United Nations Field 163 

United Nations bodies are consequently conditioned by the policies of 
individual states, and the actions taken by the organization itself are 
not determined solely by accepted principles of international behavior or 
by the absolute merits of the case in hand. Many other considerations 
are also pertinent, such as the precedents that may be created for similar 
future cases, the repercussions of a decision in parts of the world other 
than the one directly concerned, and finally the implications that a given 
course of action may have for apparently unrelated questions in which 
particular member states are vitally interested. 

In order to advance the policies they advocate, member states have 
increasingly tended to use in the United Nations the political techniques 
common in national legislatures. Bloc voting has become a prominent 
feature in the General Assembly. The votes of the Soviet bloc are usually 
easily predicted. Those of the Aiab states and of a large Latin American 
bloc are often deciding factors in swinging the General Assembly. In 
pressing for particular courses of action it was perhaps inevitable that 
lobbying procedures should develop. 

It is possible to point out fairly consistent lines of tactics that have 
been pursued by some states in the United Nations. Some smaller and 
middle-sized states have on many occasions sought to reduce or counteract 
the influence of the major powers by attempting to extend and increase 
the activities and responsibilities of the General Assembly. The Soviet 
Union, which insists on the prerogatives of the major powers and of the 
Security Council, is the strongest advocate of the opposite approach. At 
the same time, the Soviet Union has attempted to win over the smaller 
powers by emphasizing, at least verbally, respect for national sovereignty 
and support for colonial peoples seeking independence. 

The United States, and all the other member states, must decide 
on the courses they will follow in the United Nations in the light of the 
current world situation, the objectives of their foreign policy, the ma- 
chinery and capabilities of the United Nations, and the tactics pursued by 
other states. For example, the United States must decide to what extent 
it should use the machinery of regional organizations rather than the 
machinery of the United Nations for the settlement of disputes and the 
maintenance of security. This question must be considered not only from 
the standpoint of how current disputes can best be settled but also of the 
effect on the prestige of the United Nations. If only insoluble disputes 
were referred to the United Nations, others being handled in a regional 
arrangement, the continued existence of any form of world-wide security 
organization would become doubtful. The report of the Senate Com- 
mittee on Foreign Relations on the North Atlantic Treaty points out 
that there would be danger of impairing the usefulness of the United 
Nations "if consultations under the pact became so frequent they tended 



164 Major Problems 

to replace United Nations machinery, or if such consultations resulted 
in a crystallization of views in advance of United Nations meetings and 
encouraged pact members to vote as a 'bloc/ " 

American foreign economic and technical assistance and military aid 
programs also raise questions of whether the machinery of the United 
Nations should or should not be used for their execution. This caused 
particular difficulty when American aid to Greece and Turkey was pro- 
posed in 1947. Charges that the program as originally formulated would 
"by-pass" the United Nations led to the insertion of provisions permitting 
the program to be terminated by a vote of the Security Council or of 
the General Assembly. 

The problem is to determine the methods of conducting United 
States policy within the United Nations system. 

The broad issue of strategy is whether the United States should use 
the machinery of the United Nations as an instrument in the cold war. 
It involves the nature of the relationship between the United States objec- 
tive of supporting the United Nations and its objectives in the East-West 
struggle. It raises a number of closely connected and subsidiary 
issues which, though they can be stated in general terms, affect in many 
practical ways the conduct of American policies in all fields of United 
Nations activities. 

One of the basic issues is the kind of question that the United 
States should bring before United Nations organs. Should it strictly limit 
the number and the type of questions, or should it bring to the United 
Nations all the numerous problems that arise in American international 
relations? Should it bring up only problems that are reasonably soluble 
and not likely to cause a serious clash with the Soviet Union, or should 
it use the machinery oi the United Nations to examine and negotiate 
the crucial problems oi the East- West struggle? The United States must 
face these questions not once and for all, but continuously. Therefore 
it is courses of action that must be weighed, and not fundamental deci- 
sions that must be reached. 

The selection of a course of action must at the present time be in- 
fluenced by two considerations. The first is whether the solution that 
will conceivably emerge irom the United Nations will help the develop- 
ment of United States policy. The second is the effect on the United 
Nations organization of its being required to deal with a particular ques- 
tion. There is no ready formula for reconciling these two sets of considera- 
tions. 

In the case of the Italian colonies, the foreign ministers of the major 
powers were unable to reach agreement in three years of discussions, 



The United Nations Field 165 

but the General Assembly, to which the question was finally referred, 
was able to work out a compromise solution, mainly because the three 
major nations agreed in advance to accept its decision. On the other hand, 
when the United States, Great Britain, and France brought the case of 
the Berlin blockade before the Security Council in 1948, it was strongly 
argued that this was a problem with which the United Nations was not 
equipped to deal; and it was predicted that a discussion of it would 
destroy the organization. The Security Council was unable to reach a 
solution, but the United Nations was not thereby wrecked. In deciding 
what questions to refer to the organization, the danger of a possible 
future division so complete that it would destroy the future usefulness 
of the organization must, however, be borne in mind. The likelihood of 
such a split depends more on the general international situation, and 
especially on whether the Soviet Union considers it more advantageous 
to participate in or to withdraw from the United Nations, than it does 
on the content of a single question. 

A closely related issue is whether to use a strategy of emphasizing in 
the United Nations the differences between Soviet and American interests 
and objectives, or to avoid controversy whenever possible. Because the 
Soviet Union assiduously uses the forum of the United Nations to point 
out the differences between communist virtue and capitalist imperialism, 
there is a strong argument to the effect that the United States should not 
leave these attacks unanswered but should take every opportunity to 
emphasize the virtues of democratic policies and the vices of Soviet im- 
perialism. Soviet obstructionism in the United Nations has also led the 
United States and the other Western powers to take steps to place the 
blame for the alleged failures of the organization squarely on the Soviet 
Union. One method of doing this has been to bring controversial ques- 
tions frequently to a vote and to "force vetoes" in the Security Council. 

In 1948 and 1949, for example, the membership applications of states 
opposed by the Soviet Union were brought up in the Security Council 
again and again. The number of Soviet vetoes grew steadily, and the im- 
plication of deliberate obstructionism was driven home. The argument 
against this strategy is that it is more important to maintain an atmos- 
phere of good will and to keep channels open for possible future negotia- 
tions on more vital issues than it is to win tactical victories. Secretary- 
General Lie declared in March 1950 that it is "a negative and destructive 
policy to spend one's effort on placing the blame for the world's troubles 
instead of on trying to reach a constructive solution of them. . . . The first 
concern of all the governments should be to uphold and strengthen the 
organization that is the world's one hope for peace." 

Another form of this same issue is the question of how far the 
strategy and alignments of the cold war should dominate the actions of 



i66 Major Problems 

the United States in the United Nations. This aspect is linked to a prac- 
tical consideration at the present moment. The United States is faced 
with a dilemma whenever questions involving the interests of colonial 
powers come before the United Nations. Because of the alignments of the 
cold war, the United States must maintain harmonious relations with the 
colonial powers. Colonial peoples, on the other hand, are an object 
of concern to the United States by virtue of the basic American attitude 
toward dependent peoples. As a result of this conflict of interests the 
United States has found itself opposed in the United Nations to states 
otherwise aligned with it. 

The Indonesian case is an example of differing points of view on 
colonial matters directly affecting broader questions of peace and security. 
The positions of both the British and the French were inevitably influ- 
enced by the implications of the case for their own nearby colonies, some 
of which were also seething with unrest and revolt. The United States 
had to weigh its interest in supporting the Netherlands as an ally in 
Europe and in maintaining solidarity with Great Britain and France, 
against the claims of the traditional American principle of supporting 
demands for independence and self-government. Such conflicting inter- 
ests make it difficult for the United States to develop a uniform strategy 
of action in the United Nations. There have been some indications re- 
cently that the demands of an intensifying cold war may be modifying 
the American position on colonial issues by leading it to accept more 
often the point of view of the colonial powers. 

Another issue concerns the relative use that the United States should 
make of the different United Nations organs, particularly as between the 
General Assembly and the Security Council. Although the Charter gives 
the Security Council "primary responsibility for the maintenance of 
international peace and security," the General Assembly also has re- 
sponsibilities in this field. This overlapping of functions gives member 
states a choice of the organ in which to bring up particular cases. Con- 
sideration by the Security Council has the advantage that its recommenda- 
tions have the support of all the major powers and are consequently 
backed by the possibility of sanctions, which only the Security Council 
has the right to invoke. Because the Security Council has not yet been 
provided with armed forces, the authority to invoke nonmilitary sanc- 
tions gives the Council its only means of enforcing its decisions, except 
for such actions as might be taken by the member states on the recom- 
mendation of the Council. Reference of cases to the General Assembly, on 
the other hand, has the advantage that recommendations cannot be 
blocked by the veto of a major power and that the weight of public opin- 
ion can be more effectively brought to bear. 



The United Nations Field 167 

Choice between these organs is complicated, however, by the Soviet 
interpretation of their functions. The Soviet Union does not admit the 
presentation of security issues to the General Assembly, arguing it "by- 
passes" the Security Council. The Soviet bloc, in addition, has refused to 
participate in the work of the Interim Committee of the Assembly. Con- 
sequently, if the United States refers to questions so that they reach the 
Interim Committee, the resulting deliberations may in the absence of the 
Soviet bloc be very satisfactory from the American point of view. But 
at the same time they produce even sharper divisions throughout the rest 
of the United Nations organization. 

An issue that is increasingly in the forefront of American operations 
within the United Nations concerns the course to be followed in connec- 
tion with the deadlocks that have developed in the Atomic Energy Com- 
mission, the Commission for Conventional Armaments, and more re- 
cently throughout the whole organization on the question of Chinese 
representation. In each case the United States is faced with deciding what 
concessions it can make for agreement and how far it can give way on a 
particular point without weakening its over-all position. Its action on 
these matters involves many considerations other than the effectiveness of 
the United Nations system. 7 But it must be borne in mind that although 
the present dispute about Chinese representation had a crippling effect on 
the United Nations, because of the Soviet boycott of all organs in which a 
Chinese Nationalist sat, it did not prevent the organization from acting 
at a critical time when the communist aggression occurred in Korea. 

In May 1950 Secretary-General Lie proposed to the major powers a 
procedure for dealing not only wth the Chinese question but also with 
other deadlocked matters. He suggested a special session of the Security 
Council at which members would be represented by their foreign minis- 
ters. Article 28 of the Charter provided for such meetings. The funda- 
mental issues, however, are substantive rather than procedural, and it is 
unlikely that the special meetings would serve much purpose unless one 
side or the other were prepared fundamentally to change its position. 

Selected References 

Coster, Douglas W., "The Interim Committee of the General Assembly: An 
Appraisal," International Organization, Vol. Ill, No. 3 (August 1949), pp. 444-58. 
Dennett, Raymond, "Politics in the Security Council/' International Organiza- 
tion, Vol. Ill, No. 3 (August 1949), pp. 421-33. Rothwell, Charles Easton, "Inter- 
national Organization and World Politics," International Organization, Vol. 
Ill, No. 4 (November 1949), pp. 605-19. 

T See, "The Doctrine of Recognition," pp. 81-89 above, and "China," pp. 294-304 
below. 



i68 Major Problems 

THE REVISION OF THE CHARTER 

Shortly after the framing of the United Nations Charter, proposals 
began to be made for its revision. During the five years of the existence 
of the organization, the number of such proposals, both official and un- 
official, has steadily increased. These have sprung from discouragement 
with Soviet obstructionism, from the presumed failures of the organiza- 
tion, from the deterioration of the international situation, and frequently 
from misconceptions of what the United Nations was intended to do. 
During the San Francisco Conference and immediately after, the capa- 
bilities of the United Nations organization were "oversold," particularly 
in the United States, where the memory of a failure to ratify the League 
of Nations Covenant led to extreme efforts to gain public support for 
the new organization. A popular belief was built up that the participa- 
tion of the United States would almost automatically prevent the recur- 
rence of war and would solve all problems of American foreign rela- 
tions. It was not emphasized, and consequently not widely realized, that 
there were outstanding problems, such as the making of a general peace 
settlement, that had to be solved by the major powers and with which 
the United Nations was never intended to deal. Nor was it generally 
appreciated that the success of the organization would depend on the 
preservation of good relations among the major powers and on their 
willingness to use its machinery. 

At the time the Charter was negotiated, the governments of the mem- 
ber states considered that the realities of international relations made it 
inevitable that the organization should be essentially a voluntary associa- 
tion of sovereign states. It would consequently be an agency of adjust- 
ment rather than an instrument of supergovernment. This reading of 
the facts imposed certain limitations on the United Nations, of which the 
most important were the veto provisions. Each of the major powers 
claimed the right of veto as a means of protecting its vital interests. The 
smaller powers reluctantly granted this exclusive privilege to the five 
principal powers, which in turn solemnly undertook to use it with re- 
straint and not "wilfully to obstruct the operation" of the Security Coun- 
cil. The only general exception to the rule of five-power unanimity for 
substantive decisions of the Council is that, in the pacific settlement of 
disputes, the provision that all parties to a dispute must abstain from 
voting applies to the permanent members of the Council as well as to 
the others. Since major-power unanimity is required to amend the Char- 
ter, no change in the veto provisions is likely at the present time. 

The belief that the veto has been misused, especially by the Soviet 
Union, has led to increasing demands for its modification or abolition. 
Although Soviet opposition has prevented any drastic changes, certain 
more liberal practices have been developed out of the experience of the 



The United Nations Field 169 

Security Council. Regardless of the understanding accepted at the San 
Francisco Conference, voluntary abstention of a permanent member from 
voting is not now considered a veto. This new understanding has facili- 
tated action by the Council in the pacific settlement of disputes. 

In 1947 the United States announced it had come to the conclusion 
that "a liberalization of the voting procedure" was necessary. This view 
received widespread support, but it was strongly opposed by the Soviet 
Union, and the matter was referred to the Interim Committee for report 
to the General Assembly. The United States then submitted to the In- 
terim Committee a list of thirty-one types of Security Council decisions 
for which it proposed that the veto should be eliminated. The committee 
submitted a detailed report in the autumn of 1948. On the basis of this 
report the United States, Great Britain, France, and China formulated a 
resolution that called on the members of the Security Council to agree 
among themselves that certain decisions would be regarded as procedural 
and that certain others, even though substantive, would not be subject 
to veto. The latter category included decisions on the pacific settlement 
of disputes and the admission of new members. The resolution also called 
on the permanent members to consult together before voting on impor- 
tant questions. This resolution was passed by the General Assembly in 
April 1949, but the Soviet Union has presented it from being carried 
out effectively. 

In the meantime, various public groups in the United States and, to 
a lesser extent, in Western Europe have proposed more comprehensive 
and fundamental changes, which have been directed at the basic structure 
and intent of the United Nations organization. These have gained the 
support of groups of American Senators and Representatives, who have 
submitted to the Congress a variety of resolutions in which these pro- 
posals are embodied. Hearings on these resolutions were held by the 
House Committee on Foreign Affairs in October 1949, and by the Senate 
Committee on Foreign Relations in the winter and spring of 1950, but 
none has yet been reported to the floor of the Congress. Some of these 
resolutions advocate measures to be taken under the provisions of the 
United Nations Charter, such as a wider and more specific defense agree- 
ment under Article 51; others advocate measures to be taken outside the 
Charter, such as the formation of a federation of North Atlantic states. 
Still others propose the amendment of the United Nations Charter. 

One of the latter proposes, for example, that the United States im- 
mediately press for a revision of the Charter to remove the veto-right in 
matters of aggression, to avert the "threat of atomic catastrophe," to end 
the armaments race, and to establish "an effective but tyranny-proof 
international police forte . . . under a workable Security Council and 



170 Major Problems 

World Court." The supporters of this resolution advocate the amend- 
ment of the Charter only in respect to security matters. They do not 
think it feasible to give any other sovereign powers to an international 
organization. 

Another resolution, sponsored by 22 Senators and 111 Representa- 
tives, declares that it should be "a fundamental objective of the foreign 
policy of the United States to support and strengthen the United Nations 
and to seek its development into a world federation, open to all nations, 
with defined and limited powers adequate to preserve peace and prevent 
aggression through the enactment, interpretation and enforcement of 
world law." Those who favor this proposal argue that peace can be kept 
only through a federal government and that such a government must be 
universal to be effective. They express the belief that the Soviet Union 
would be likely to participate in such a government if the United States 
proved its own good faith by taking the initiative in sponsoring it. 

A third resolution advocates the establishment of a world govern- 
ment with authority in political, economic, and social fields, as well as 
in security matters. It calls on the President to request under Article 109 
of the United Nations Charter a general conference "for the purpose of 
establishing a true world government" on the basis of a detailed consti- 
tution. If such a conference were not called within one year, the Presi- 
dent would then be directed to call a world constitutional convention of 
delegates elected directly by the people. 

In testifying on these resolutions, State Department officials have 
said that the importance of changes in the existing international ma- 
chinery should not be overemphasized, adding that in relations with the 
Soviet Union, what is needed is not a new over-all agreement, but "per- 
formance on the ones we already have." They have also pointed out the 
need to determine the full implications of the various proposals before 
the Government commits itself to any comprehensive plan. The State 
Department does not consider that any of the proposals are practicable 
at the present time, with the exception of those for developing and in- 
creasing the use of existing United Nations machinery. 

In April 1950 former President Herbert Hoover proposed a basic 
reorganization of the United Nations that would limit its membership. He 
declared: "The Kremlin has reduced the United Nations to a propaganda 
forum for the smearing of free peoples. It has been defeated as a preserva- 
tive of peace and good will." He therefore suggested: "The United Na- 
tions should be reorganized without the Communist nations in it. If that 
is impractical, then a definite New United Front should be organized of 
those peoples who disavow communism, who stand for morals and re- 
ligion, and who love freedom." 

President Truman and the State Department promptly disagreed 



The United Nations Field 171 

with this suggestion and reiterated that support of the United Nations 
was the "cornerstone" of American foreign policy. Prime Minister Nehru 
of India declared that his country was one of many that would refuse to 
choose sides, but would "maintain their separate identity and viewpoint." 
Secretary-General Lie and General Romulo, president of the General 
Assembly at its last session, both strongly opposed Mr. Hoover's pro- 
posal. General Romulo stated: "If the conflict between the great powers 
threatens to divide the nascent world community into two, the remedy 
is not to harden the cleavage by splitting the United Nations; the wiser 
course would be to do everything possible to maintain the strength of 
the United Nations, which is the only workable bridge that we have 
today between the two hostile camps on either side of the chasm." 

The problem is to determine the position of the United States with 
respect to proposals for revising the Charter of the United Nations. 

This raises many complex and interrelated issues. A broad issue that 
the United States Government must face is whether to propose, or to 
support if proposed by other members of the United Nations, the con- 
vening in the near future of a general conference to review the Charter. 
Such a conference can be called, under Article 109, by a two-thirds vote 
of the General Assembly and the concurring vote of any seven members 
of the Security Council. Amendments to the Charter that such a confer- 
ence might propose would not take effect, however, unless they had been 
ratified by the five major powers. It is argued, in favor of holding such 
a conference, that full official discussion of the existing proposals for 
revision would clear the air, would concentrate public attention on the 
practical limitations imposed by the present international situation, and 
would demonstrate clearly the precise degree of power that governments 
and peoples are now willing to delegate to an international authority. On 
the other hand, there is danger that the holding of a conference would, 
in the face of adamant opposition from the Soviet bloc, emphasize differ- 
ences rather than unity and produce an irreparable cleavage in the 
United Nations. 

Specific issues exist in connection with standing proposals to amend 
the veto provisions of the Charter. Among these issues are the use of 
the veto in connection with the pacific settlement of disputes, applica- 
tions for membership, the determination of threats to the peace, the 
grounds for collective action, and the ordering of provisional measures 
and nonmilitary sanctions. 

The United States has already taken the position that the veto 
should be eliminated in the first two instances, but it has sought to 
achieve this elimination by agreement among the five major powers 



172 Major Problems 

rather than by amendment of the Charter. In view of Soviet unwilling- 
ness to enter into such an agreement, should the United States now initiate 
more formal efforts to modify the voting procedures? The desired change 
would undoubtedly facilitate the reaching of decisions on pacific settle- 
ment, but the fact that these decisions might be made over the opposi- 
tion of one or more of the major powers would inevitably reduce the 
effectiveness of Security Council recommendations. With respect to the 
admission of new members, advocates of universal membership are espe- 
cially eager to modify the veto so that all applicants will be accepted, 
and they think that it might be possible to obtain Soviet agreement on 
this one question. But the past rigid position of the Soviet Union on all 
proposals for changing the voting procedures does not hold out much 
hope that it would be any more willing to ratify amendments even if 
they had been approved by a general conference. The United States 
must consider the possible effects on the United Nations of modifying 
the veto if the only practicable method of doing so would result in the 
withdrawal of the Soviet Union. 

The remaining questions connected with changes in the voting pro- 
cedures are more complex. They involve decisions about whether or not 
the United States should advocate the removal of the veto in determin- 
ing the existence of threats to the peace and the grounds for collective 
action, under Article 39 of the Charter; in the ordering of provisional 
measures under Article 40; and in the application of nonmilitary sanc- 
tions under Article 41. In these instances the United States must carefully 
weigh the advantages of eliminating the veto and thus preventing any 
one permanent member of the Council from obstructing formal action, 
against the disadvantages of losing its own right of veto in cases where 
a majority of the Council favor action contrary to vital American 
interests. 8 Another argument against the removal of the veto in such 
matters is that the determination of threats to the peace and the appli- 
cation of nonmilitary sanctions are essentially steps in the sequence of 
an enforcement action that logically ends with the commitment of the 
military strength of major powers. 

The issue of whether or not the United States should delegate the 

8 For example, is the United States willing to break diplomatic relations and cut 
o(f trade and communications with a given country when ordered to do so by a vote in 
which it does not concur? Under the Rio Treaty the United States is bound to do this 
on a two- thirds vote, but it might not be willing to give the same power to the United 
Nations. It still remains to be discovered what the United States will do if ever it is 
confronted under the Rio Treaty with a decision made by fourteen American republics, 
without its concurrence, that would obligate the United States to impose diplomatic or 
economic sanctions when it believed its own vital interests or world 'peace would be 
endangered by such action. 



The United Nations Field 173 

control of its armed forces to an international organization is involved 
in proposals for restricting the use of the veto in decisions on military 
questions under Articles 42 and 43, but it is raised even more drastically 
by various proposals for world government. The crux of the issue is 
whether the United States should commit itself in advance to the em- 
ployment of its military forces to enforce decisions in which it may not 
concur. Under present conditions there is no likelihood that one major 
nation could be coerced without the mobilization, and possibly the 
use, of all the military forces of the other major nations. A United 
Nations collective security system that operated without a veto-right 
over decisions to take enforcement action would hence require that 
each permanent member of the Security Council be willing to make its 
armed forces and resources available to the Council. Closely related arc 
questions of whether the United States should relinquish to a world or- 
ganization its control over national conscription and the establishment of 
military bases on its territory. 

Some of the general world government proposals also involve ques- 
tions whether the United States is willing to surrender such sovereign 
powers as control over its tariffs, immigration policies, and taxation. 
Also involved is willingness of the United States to abide by majority 
rule in matters affecting the habitual social attitudes and practices of the 
American people, for it cannot be expected that other members of a 
world federation would agree that these attitudes and practices are 
necessarily the best. And at the end of a list of similar questions is the 
final one of the constitutional changes that would be required before 
the United States Government could commit the nation to participate. 
The workability of a world federal government formed of states with di- 
verse cultural and political traditions, at different stages of economic 
development and social organization and with divergent interests and 
objectives, is highly speculative. Its success is not to be determined in 
advance by good will alone. 

A fundamental and immediately important issue is involved in all 
current proposals about the United Nations from the most limited to 
the most drastic. It concerns the possibility of completely splitting the 
states of the world into two opposing blocs. Some proposals, such as 
Mr. Hoover's, frankly envisage such a consequence. Others are phrased 
in the terms "developing" or "strengthening" the United Nations. In 
even these it must be considered whether the end results might not be 
the same. It is an oversimplification to say that the world is already split 
into two camps. Many points of contact still remain, and the United 
Nations provides the most important of them; many states, whose aggre- 
gate weight is considerable, have refused to commit themselves to either 



174 Major Problems 

group. Is it in the interest of the United States to force such countries 
as India, Pakistan, Sweden, and Israel to choose sides? Some have argued 
that the United States would be in a better position to assert moral 
leadership of the free world if it broke all relations with all Com- 
munist states that have flouted their international obligations. Others 
assert that the United States should be the last to leave the conference 
table or to lay aside the obligations it has assumed under the United 
Nations Charter. They also hold that the United States can exert more 
pressure on the Soviet Union within the United Nations and that no 
useful purpose would be served by deliberately releasing the Communist 
states from the obligations they assumed when they accepted the Charter. 
The United States must accordingly consider whether proposals to 
amend the United Nations Charter might not destroy the machinery that 
now exists without putting anything better in its place. If this latter were 
to happen, the last means of collective world action would be destroyed, 
and the United States would find itself in a weaker position to assert moral 
and practical leadership for the achievement of its objectives. 

Selected References 

Hoover, Herbert, "Text of Address . . . Proposing a Reorganization of U.N., 
Apr. 27, 1950," New York Times (Apr. 28, 1950). United Nations, Abstract of 
Proposals and Suggestions Made Regarding the Voting Procedure in the Security 
Council, U.N. Doc. A/C.i/63 (Nov. 20, 1946). United Nations, The Problem 
of Voting in the Security Council, Report of Interim Committee to General 
Assembly, U.N. Doc. A/578 (July 15, 1948). United Nations, Problem of Voting 
in the Security Council: Resolution Adopted by the General Assembly, Apr. 
14, 1949, U.N. Doc. A/837 (Apr. 15, 1949). United Nations Secretariat, Annota- 
tions to the Provisional List of Categories of Security Council Decisions Proposed 
by the United States, U.N. Doc. A/Ac.i8/5i (Mar. 18, 1948). United Nations 
Secretariat, The Problem of Voting in the Security Council: Decisions in Ap- 
plication of the Charter or of the Statute of the ICJ f U.N. Doc. A/Ac.iS/SC.^/s 
(Mar. 26, 1948). United Nations Secretariat, Review of Discussion Regarding the 
Voting Procedure of the Security Council, U.N. Doc. A/Ac. iS/SC.g/s (Mar. 23, 
1948). U.S. Congress, House Committee on Foreign Affairs, To Seek Development 
of the United Nations Into a World Federation, Hearings, 81 Cong., i sess., Oct. 
12 and 13, 1949 (1950). U.S. Congress, Senate, Development of the United Nations 
Into a World Federation, S. Con. Res. 56, 81 Cong, i sess. (July 26, 1949). U.S. 
Congress, Senate, Establishment of a True World Government, S. Con. Res. 66, 
81 Cong, i sess. (Sept. 13, 1949). U.S. Congress, Senate, International Peace and 
Security Through the United Nations, the "Vandenberg Resolution," S. Res. 239, 
80 Cong. 2 sess. (June 11, 1948). U.S. Congress, Senate, Revision of the United 
Nations Charter, S. Con. Res. 133, 81 Cong, i sess. (July 8, 1949). U.S. Depart- 
ment of State, "A Program for a More Effective United Nations," address by 
Secretary Marshall, Sept. 17, 1947, Bulletin, Vol. XVII (Sept. 28, 1947), pp. 618-22. 
U.S. Department of State, "Statement by the Delegations of the Four Sponsoring 
Governments on the Voting Procedure in the Security Council," Bulletin, Vol. 



The United Nations Field 175 

XIV (May 11, 1946), pp. 851-53. U.S. Department of State, "Strengthening the 
United Nations," statements by Secretary Marshall and Ambassador Austin, Bul- 
letin, Vol. XVIII (May 16, 1948), p. 633. 

THE INTERNATIONAL CONTROL OF ATOMIC ENERGY 

The problem of the international control of atomic energy was the 
inevitable result of the detonation of the first atomic bomb over Hiro- 
shima on October 6, 1945. Recognizing both the disastrous possibilities 
inherent in the general use of this new weapon and the potential 
benefits to mankind of the use of atomic energy for peaceful purposes 
only, the United States immediately suggested international control of 
this new force. In November the United States, Great Britain, and 
Canada the nations that had collaborated in the development of atomic 
energy proposed that the United Nations study and recommend meas- 
ures for international control. This proposal, eventually sponsored also 
by the Soviet Union, China, and France, was accepted by the General 
Assembly on January 24, 1946. The United Nations Atomic Energy Com- 
mission first met in June of that year. 

At once extreme differences in the commission developed between 
the Soviet Union and the Western possessors of the atomic secret. The 
United States proposed that atomic energy should be controlled by an 
international body. This would be authorized to own and manage atomic 
processes dangerous to international security; to control, inspect, and 
license other activities; and to foster research and the beneficial use of 
atomic energy. The control system was to become effective by stages. 
After it had been completely established, the manufacture of atomic 
bombs would stop and existing stocks would be disposed of. Violators 
would be penalized, and no right of veto would apply in cases of viola- 
tion. The Soviet Union, on the other hand, proposed an international 
convention requiring the destruction of existing stocks of atomic weapons 
and prohibiting the further production or use of them. This was to 
be followed by an examination oi the problem of atomic energy in all 
its aspects. The Soviet Union later proposed the national management 
of atomic energy production, combined with international inspection. 
The majority of the commission .accepted the American proposal. 

The commission has made three reports to the Security Council. 
The first recommended a plan of control based on the American pro- 
posals; the second tentatively rejected the Soviet proposal; the third 
stated that an impasse had been reached. The reasons given for the 
impasse were that the Soviet Union had rejected the majority plan as 
infringing on national sovereignty but that the majority considered the 
alternative Soviet plan to offer no protection against noncompliance. 



176 Major Problems 1950-1951 

The commission therefore recommended that its negotiations be sus- 
pended until co-operation among the major nations in over-all policy had 
produced favorable conditions for agreement with respect to the control 
of atomic energy. It also recommended that all three of its reports be 
transmitted by the Security Council to the General Assembly, as mat- 
ters of special concern. 

On July 29, 1949 the commission adjourned indefinitely, after con- 
firming a resolution of its working committee to the effect that further 
study was useless until the five permanent members of the Security Coun- 
cil and Canada the so-called six sponsoring nations met, as they had 
been requested to do, to report whether a basis for agreement existed. On 
September 23, a month before the six sponsoring nations reported to 
the General Assembly, President Truman announced that the Soviet 
Union had mastered the development of the atomic bomb. The report 
of the six sponsoring nations, however, took no notice of this change 
in the situation. The five Western nations continued to support the sys- 
tem of control approved by the General Assembly in November 1948, and 
the Soviet Union reiterated its proposal, first made at that time, that 
there be two conventions to be placed in effect simultaneously one pro- 
viding for the prohibition of atomic weapons, and the other for the 
control of atomic energy. The Assembly then requested the six sponsoring 
nations to continue their talks, and recommended that all nations agree 
to renounce such rights of sovereignty in the control of atomic energy as 
were incompatible with the promotion of world peace and security. 
The six nations resumed their talks in December 1949, but on January 19, 
1950 conversations were suspended because the Soviet representative 
declared that he could not participate until the representative of the 
National Government of China had been excluded. Secretary-General 
Lie in the spring of 1950 urged that every possibility for a fresh ap- 
proach to atomic energy control be explored. He suggested as one pos- 
sibility that the Security Council instruct him to call a conference of 
scientists who might produce new ideas for the consideration of the 
Atomic Energy Commission. He also suggested that an interim agreement 
might be worked out "that would at least be some improvement on the 
present situation of an unlimited atomic race, even though it did not 
afford full security." 

The suspension of the negotiations furnishes a concrete example 
of one of the basic reasons for the failure of the major nations to agree 
on a system of international atomic energy control. For the political 
nature of the Soviet action emphasized one of the conclusions of the 
third report of the Atomic Energy Commission that the control of 
atomic energy is dependent on co-operation among the major nations in 
the broader fields of policy. It also confirmed the views of the five 



The United Nations Field 177 

Western nations as expressed in the interim report submitted by the 
six permanent members of the Atomic Energy Commission to the 
General Assembly in October 1949: "The Government of the U.S.S.R. 
puts sovereignty first. ... If this fundamental difference could be over- 
come, other differences . . . could be seen in true perspective, and 
reasonable ground might be found for their adjustment." The General 
Assembly, in its resolution of November, recognized the political aspects 
of the problem by recommending that all nations renounce such rights 
of sovereignty in the control of atomic energy as are incompatible with 
the promotion of world peace and security. 

The problem is to formulate the measures that the United States 
might advocate for the international control of atomic energy. 

The strongest pressure for international control came in the first year 
after atomic bombs were dropped on Hiroshima and Nagasaki. There 
was then a considerable body of opinion, particularly in the United 
States, which believed that immediate control was imperative because 
civilization stood on the brink of doom. This was before a wide diver- 
gence of views on the system of control was disclosed by the proceedings 
of the Atomic Energy Commission. Yet five years have passed without 
the dire consequences that were anticipated. With the refusal of the 
Soviet Union to consider the system of control approved by the General 
Assembly, and with the deterioration of relations between the East and 
the West, the pressure for a solution of the problem has relaxed. 

A new factor was introduced into the situation when the President 
announced in September 1949, that there had been an atomic explosion 
in the Soviet Union. This was taken as evidence that the Soviet Union 
possessed atomic weapons and that its attitude toward a system of atomic 
energy control would be affected. The mere possession of the bomb 
gave the Soviet Union a powerful propaganda weapon that it is ex- 
ploiting. Its assertions that atomic energy would be used, not to ac- 
cumulate a stockpile of atomic bombs but for the great tasks of peace- 
ful construction, were intended to contrast with American statements 
about the capacity of the United States to produce and use atomic 
weapons. In the cold war the Soviet possession of the bomb gives it 
a weapon of terror to add to the threat of its vast armies. More impor- 
tant, however, is the fact that Soviet ability to manufacture atomic bombs 
neutralizes the military advantage the United States holds even while the 
Soviet stockpile of bombs is small. Under these circumstances it is argued 
that there can be little incentive other than a fear of atomic destruction 
for the Soviet Union to accept international control. Many observers 
believe that the Soviet Union discounts this danger. They contend that the 



178 Major Problems 

Soviet Union may wish to avoid a restriction of its atomic capability by 
merely failing to agree on a control system, or by discouraging the West- 
ern nations from seeking agreement in the face of continued Soviet politi- 
cal recalcitrance. In the meantime, the argument goes on, the Soviet 
Union is free both to capitali/e on the propaganda advantages of its 
possession of atomic weapons and to use those weapons at its discretion. 

There is a belief among many in the western nations that only the 
possession of the atomic bomb by the United States has prevented the 
threat of Soviet aggression from becoming a reality. Many know that since 
the war United States military strategy has been based on the use of 
atomic weapons in retaliation against Soviet attack. International control, 
depriving the United States of the use of the weapon would, therefore, 
leave Soviet armies supreme in western Europe. 

On the other hand, others believe that the possible development 
of the hydrogen bomb makes international control of atomic energy more 
urgent than ever. The loss of the atomic bomb monopoly by the United 
States adds to this belief. It is held that no degree of superiority in the 
American stockpile of bombs can prevent the destruction of European 
and American cities by a Soviet atomic bomb attack. But the political 
difficulties of agreement on control are recognized. This point of view 
has led to new proposals in the United States Senate designed to remove 
these political hindrances. A general disarmament conference, dealing 
with both conventional weapons and weapons of mass destruction and 
sponsored by the United Nations, has been recommended. A less specific 
proposal suggests "moving heaven and earth to stop the atomic arma- 
ment race" by studying the relation of the control of hydrogen bombs 
to the United Nations atomic control plan, by discussing the means of 
creating a "climate for peace" in the North Atlantic Treaty Council, 
by initiating new atomic control talks at a meeting of the General 
Assembly in Moscow, and by an American offer to divert ten billion 
dollars from armament production to economic aid to all nations in- 
cluding the Soviet Union. 

There are three basic reasons for the failure of the major nations to 
agree on a system for international atomic energy control. The first and 
most important reason is the mutual distrust that exists between the 
East and the West. The second reason, a result of the first, is the suspen- 
sion of all negotiations to reach a control agreement. The third is that 
there is little incentive at the present time to reach agreement. The 
issues to be examined in the solution of this problem are related to these 
three reasons for the existing stalemate. 

Numerous measures by the Western nations to improve the political 
relationship between them and the Soviet Union and to create a political 



The United Nations Field 179 

climate in which an atomic control agreement could be reached have 
been tried during the last five years. Reliance on Soviet integrity and 
good will has failed. Military weakness has encouraged political aggres- 
sion. Negotiations in the United Nations have been met with veto, in- 
transigence, and abusive propaganda. Instead of improving, inter- 
national relations have deteriorated. A "peace offensive" led by the North 
Atlantic Treaty nations, economic aid to the Soviet Union and its satel- 
lites, propaganda appeals to the Soviet people to undermine totalitarian 
disciplineare courses that it has been suggested the United States 
might follow. The United States might also advocate a general disarma- 
ment conference; but to convene such a conference merely to discredit 
the Soviet Union, as some of its proponents suggest, would hardly clear 
the international atmosphere. 

The resumption of negotiations within the United Nations must 
await the decision of the Soviet Union to return to the organization. If 
the prospect of such a return was not encouraging, it has been advocated 
that the United States might seek a discussion of the atomic control 
problem among the heads of the major nations. This procedure has been 
proposed several times, most recently by former Prime Minister Churchill 
in February 1950. His proposal, made in the midst of a political campaign, 
was not favorably received, though it was not positively rejected by the 
governments of the major nations. The United States might also advocate 
the acceptance of a proposal of the International Red Cross to discuss 
atomic control under its cognizance, and it might disregard the blow to 
the prestige of the United Nations that such action would entail. 

Possession of the atomic bomb by the Soviet Union undoubtedly adds 
to its political and military strength. Moreover, the importance of the 
atomic bomb to the immediate security interests of the United States can- 
not be ignored. There is little likelihood, therefore, that either nation 
would be willing to sacrifice its atomic weapons by agreement while the 
contest between the East and the West exists. Just as the Soviet Union may 
prevent control by refusing to accept any control system but its own, the 
United States may accomplish the same purpose by continuing to advocate 
the system approved by the General Assembly. For even if the Soviet Union 
should accept the United Nations plan, the United States knows that it 
would be years before it could be made effective, and the present American 
superiority would be maintained. It is argued, however, that the United 
States might more frankly declare that it would not seek international 
control until conditions for agreemet were more favorable. 

In contrast, it is argued that if the United States believes that its 
security interests would best be protected by the international prohibi- 
tion of atomic weapons, no concessions that it might make, either in modi- 
fying the approved plan or in agreeing to the Soviet plan, would be of 



180 Major Problems 

any avail if the Soviet Union wanted no agreement. On the other hand, 
if the United States were willing to forego the safeguards against the 
violation of an international control agreement in order to secure the 
advantage it might gain from the prohibition of the use of atomic 
weapons, the United States might support an international convention 
to prohibit the use of them without controlling the manufacture of them. 
This was the essence of the first Soviet proposal in the Atomic Energy Com- 
mission. In this case both nations could produce atomic weapons, but nei- 
ther nation could legally use them. But the question would inevitably arise 
whether either of them would trust the other to comply with the con- 
vention. 

Selected References 

United Nations, International Control of Atomic Energy: Resolution Adopted 
by the General Assembly, November 22, 1949, U.N. Doc. A/ngo (Nov. 23, 1949). 
United Nations, International Control of Atomic Energy: Statement by Repre- 
sentatives of Canada f China, France, United Kingdom and United States on 
Consultations of Six Permanent Members of Atomic Energy Commission, October 
2 5> *949> U.N. Doc. A/ 1050 (Oct. 25, 1949). United Nations, Atomic Energy 
Commission, Recommendations for the International Control of Atomic Energy 
and the Prohibition of Atomic Weapons, U.N. Docs. AEC/C.i/77/Rev. i (Apr. 
5 1 949) an d AEC/C.i/77/Rev. i/Add. i (June 2, 1949). United Nations, Atomic 
Energy Commission, Resolution Concerning Futility of Further Discussion by 
Commission, July 29, 1949, U.N. Doc. AEC/42 (Aug. i, 1949). United Nations, 
Atomic Energy Commission, Resolutions Adopted on June 15, 1949, U.N. Docs. 
AEC/C.i/85, and AEC/C.i/86 (June 15, 1949). United Nations, Atomic Energy 
Commission, Second Report to the Security Council, Sept. n, 1947, U.N. Doc. 
AEC/26, and 8/557 (1947). United Nations, Atomic Fnergy Commission, Third 
Report to the Security Council, May 17, 1948, U.N. Doc. AEC/2i/Rev. i (June 
27, 1948). U.S. Department of State, "Atomic Explosion Occurs in the U.S.S.R.," 
statements by President Truman and Secretary Acheson, Sept. 23, 1949, Bulletin, 
Vol. XXI (Oct. 3, 1949), p. 487. U.S. Department of State, A Report of the 
International Control of Atomic Energy, Publ. 2498 (1946). U.S. Department 
of State, First Report of the United Nations Atomic Energy Commission to the 
Security Council, Dec. 31, 1946, Publ. 2737 (1947). U.S. Department of State, 
International Control of Atomic Energy: Growth of a Policy, Publ. 2702 (1946). 
U.S. Department of State, International Control of Atomic Energy: Policy at 
the Crossroads, Publ. 3161 (1948). 



Chapter X 

The Soviet Union and Its Periphery 

SOVIET expansion is one of the prime factors in world politics today. 
It came about partly by direct territorial acquisition, and partly 
through the actions of foreign Communist parties controlled from Mos- 
cow. It started when the Soviet Union was a partner of Hitlerite Ger- 
many, and it continued when the Soviet Union was a partner of Great 
Britain and the United States. In the course of these partnerships, terri- 
tory was acquired from Finland both in the area near Leningrad and in 
the north, and a common frontier with Norway was reached. Latvia, 
Lithuania, and Estonia were absorbed. In addition, the western frontier 
of the Soviet Union was extended nearly halfway through the former 
territory of Poland; the northern half of East Prussia was taken over; 
C/echoslovakia and Rumania ceded important areas; and in the Far 
East, the Soviet Union acquired the Kurile Islands and the southern half 
of Sakhalin. 

Territorial acquisition, however, has been only one form of the 
extension of Soviet influence. The Soviet Union took advantage of the 
opportunities that existed at the end of the war to establish control in 
areas beyond its frontiers. The methods used were a significant factor 
in destroying confidence in the good faith of the Soviet Union and in 
creating the tensions that now dominate international relations. 1 

These methods were most clearly revealed in Eastern Europe. At the 
time the states of this region were liberated, the Soviet Union announced 
that it would not interfere in their internal political reorganization. 
Coalition governments, including representatives of all outstanding anti- 
fascist parties, were taken as demonstrating the good intentions of the 
Soviet Union. In all cases, however, Communists were installed in the 
ministries that controlled internal security and the armed forces. These 
posts were used, in co-operation with the Red Army high command in 
the early stages, to neutralize opposition. In addition, the centralized 
control of food rations and employment rights were used to deprive the 
opposition of the means of livelihood. Newsprint and radio time were 
distributed in ways that invariably favored the Communists and de- 
prived the opposition of the means of influencing opinion. One by one 
the coalition governments fell, and a series of political maneuvers, the 
most ruthless of which occurred in Czechoslovakia, brought the Com- 

1 For a discussion of the objectives of Soviet policy, see Pt. i, pp. 52-58. 

181 




i8 2 



The Soviet Union and Its Periphery 183 

munists into full power. Only Finland has been able to keep a semblance 
of political independence. Only Yugoslavia, of the states that fell under 
Communist domination, has broken its direct ties with the Soviet Union. 

The case of Eastern Germany has been somewhat different. Soviet 
policy sought to realize the maximum advantages of a joint allied con- 
trol of the whole of Germany. But now that no further material benefits 
can be secured, evidence is accumulating to show that the Soviet Union 
hopes to include its zone of Germany among the satellite states, and 
that it will consent to a unification of Germany only on terms that offer 
opportunities to extend Soviet influence over the whole nation. 

At the present time the Soviet Union exercises firm control of two 
of the most important strategic areas of Europe the Polish plain and 
the Danube basin. Unless the defection of Yugoslavia is to be copied 
elsewhere, there is no discernible challenge to Soviet authority in this 
region. It is nevertheless significant that the area of Soviet control in 
Europe has not expanded beyond the line of the wartime advance of the 
Red Army. Although Communist parties in Western Europe continue to 
act as instruments of Soviet policy, they have not gained actual political 
authority or influenced the course of events in any final way. 

While the Soviet Union was building up its position in Eastern 
Europe, it was not quiescent on other strategic fronts. At Potsdam Stalin 
raised the question of revising the Montreux Convention for the control 
of the Bosporus and the Dardanelles. The other major powers agreed 
to investigate the matter. The Soviet Union, however, attempted to 
force the issue and initiated a movement to flank the Straits by bring- 
ing pressure on Turkey, Iran, and Greece. It claimed the Turkish prov- 
inces of Kars and Ardahan and demanded a base in the Dodecanese Is- 
lands and a trusteeship over Tripolitania. These efforts failed because 
the United States and Great Britain were unwilling to see the Soviet 
Union established in the Mediterranean and Middle East. 

The most serious Soviet effort to flank the Straits was its attempt 
to foment civil war in Greece. Communist control in this area would 
have extended Soviet influence into a strategic sector of the eastern 
Mediterranean and provided an excellent base for the expansion of in- 
fluence into Italy, Turkey, and a wider Mediterranean area. It was to 
counter this threat that the Truman Doctrine, to provide economic 
and military aid to free peoples, was announced. The rapid imple- 
mentation of this doctrine, together with the defection of Yugoslavia, 
gradually checked and diverted Soviet pressure. Initially, the new direc- 
tion of the Soviet effort was toward Western Europe, where it called 
forth an American reaction in the form of economic and military aid- 
specifically, the Marshall Plan, the North Atlantic Treaty, and the 
Mutual Defense Assistance Program. The development of these programs 



184 Major Problems 

has led to at least a momentary balancing of power relations in Europe 
and the Middle East. 

At the point where Soviet pressure in Europe and the Middle East 
met the stiffening resistance of the West, the main line of thrust shifted 
to the Far East, where the troubles that had been stewing since the end 
of the war were beginning to boil over. The Chinese Communist party, 
many of whose leaders were Moscow-trained and had demonstrated their 
ideological loyalty to the Soviet Union, were able late in 1949 to com- 
plete its drive for the control of the Chinese mainland. By this victory 
the Soviet sphere of influence was extended to the Pacific littoral and to 
the gates of southeast Asia. 

This dramatic reorientation of China tended to obscure, however, 
the Soviet probings along the inner Asian frontiers of China. The Soviet 
Union had established actual control over Outer Mongolia and Tannu 
Tuva as early as 1921, though Mongolia technically continued under 
Chinese sovereignty and Tannu Tuva was not incorporated in the Soviet 
Union until 1944. Soviet pressure on Sinkiang Province became persis- 
tent after 1927, when the Turkestan-Siberian Railroad was begun parallel 
to the Sinkiang frontier. The control of these areas, combined with the 
Soviet maritime provinces, has almost encircled Manchuria, the rich 
prize of the Far East. 

Mongolia, Sinkiang, and Manchuiia were all aflected by the Sino- 
Soviet Treaty of 1945, drawn up on the basis of the Yalta agreement. 
Under Soviet pressure China recognized the independence of Outer 
Mongolia; but in the case of Sinkiang, Stalin affirmed that "the Soviet 
Union has no intention to interfere with China's internal affairs." Be- 
cause its interest in Sinkiang was being forwarded by Soviet-trained na- 
tives, the Soviet Union was in a position to claim noninterference. 

The treaty also gave the Soviet Union the right to use Port Arthur 
and Dairen, and it opened the way for invoking technicalities that would 
keep the Nationalists out of these important ports. In addition, the 
Maiichurian railroads were to be managed jointly by the Soviet Union 
and China, but the appointment of a Soviet general manager nullified 
any co-operative features of the agreement. As a result the Soviet Union 
has effectively controlled Manchuria since the end of the war. To this 
control must be added its dominating influence in Northern Korea. 

Although China is now governed by a Communist regime, it cannot 
be assumed that Soviet encroachment on its frontiers will cease. The 
new Soviet-Chinese treaty of February 1950 and the supplementary eco- 
nomic agreements do not indicate a final stabilization of the territorial 
position. Nor do they necessarily dispose of the possibility of "Titoism." 

Efforts to extend Soviet influence into Japan have not achieved 
spectacular results. Soviet representatives on the Allied Council have 



The Soviet Union and Its Periphery 185 

not been able to alter the course of events. The only other available 
channel of influence was the Japanese Communist party, and it has not 
had conspicuous success cither in elections or in agitation against the 
allied occupation. 

In the Korean Republic, subversive ellorts by North Korean Com- 
munists were held in check with American assistance in the form of 
equipment and economic aid. However, an entirely new situation was 
created when a full-scale, highly organized armed attack was made on 
the Republic by Communist forces of North Korea. 

Conditions at the end of the Second World War were peculiarly 
favorable to Soviet expansion and to an extension of its political in- 
fluence. The disorganization of social, political, and economic patterns 
was an invitation to a state that was eager to exploit the situation for 
its own ends. The defeat of Germany and Japan, followed by United 
States dcmobili/ation, left vacuums in regions where an equilibrium of 
power had previously existed. 

Except where Soviet power was actually present in force, as in 
Eastern Europe, the extension of Soviet influence was primarily limited 
to countries whose economies were disorganized or underdeveloped and 
in which pressures for social and political change had reached a critical 
point. People under such conditions were seeking new directions, and 
Soviet promises and Communist propaganda offered a new way and new 
hopes. In Western Europe, the Communists found a ready response 
in areas where the standard of living was very low. The Far East pro- 
vides an even better example of Communist success in an underdeveloped 
region, for the promise of agrarian reform was an important feature of 
the program on which the Chinese Communists built their reputation. 

The Ear East, moreover, offered still other opportunities. The peo- 
ples oi Soviet Asia are familiar with oriental traditions and have mingled 
with other Asiatic peoples more successfully than have Western peoples, 
who have tended to cluster in the port cities. This has often worked 
to the disadvantage of the West. Moreover, the great wave of nationalist 
feeling that swept former colonial territories invited and was given 
Soviet encouragement and support. Conflicts between the expansion of 
the Soviet Union and Asiatic nationalism have been carefully laid aside 
for later reckoning. 

Soviet expansion has thus capitalized on a world-wide situation in 
which prevailing disorganization and maladjustment demand some kind 
of solution. The Soviet Union has been eager to impose its own solu- 
tion. This solution and its system of controls have thus far been success- 
fully projected only into areas contiguous to the Soviet frontiers. 

Whether there are any foreseeable limits to Soviet expansion is a 
moot question. It may be argued that the aspirations of the Soviet Union 



i86 Major Problems 1950-1951 

are insatiable. These aspirations are real, however, only by the measure 
of a capacity to fulfill them. The question of Soviet expansion, whether 
by overt action or by means of other Communist activities, must there- 
fore be considered within the present configuration of power in the 
world. 

Power relations between East and West have been in a constant 
process of redefinition ever since the end of the war. The Western nations 
have indicated what they consider to be their essential strategic frontiers. 
In the North Atlantic Treaty, they have defined a defensive area in 
Europe and in the rest of the North Atlantic community. In the Medi- 
terranean and Middle East another defensive area has been marked out 
by implication. The American Secretary of State has said that in the 
Far East a defensive frontier running from the Aleutians to Japan, and 
thence to the Ryukyus and the Philippines, "must and will be held." 
It was arguable whether the Soviet Union would seriously challenge these 
defensive lines until it had fully expanded and consolidated its posi- 
tion in the regions fronting them. 

As matters stand today, further conflict between the East and West 
is likely to center on the areas of the world that lie between the present 
limits of Soviet power and the present defensive lines drawn by the West. 
These areas are contestable, and in the cases of Korea, Formosa, and Indo- 
China are in fact being contested. Whether the present configuration of 
power can be changed by measures short of a world-wide war is a question 
that only the gods can answer. 

The most comprehensive policy problem immediately facing the 
United States and its allies today is how to prevent the further expansion 
of the Soviet Union. The impossibility of policing this extended 
periphery has led the Western powers to seek countermeasures broader 
than those used in piecemeal opposition on a limited local scale. They 
have adopted the policy of building up areas of strength all around 
the Soviet periphery, defining strength in economic, political, and mili- 
tary terms. Programs designed for this purpose are intended to check 
Soviet expansion by removing the basic conditions that make it possible. 
European recovery, mutual defense assistance, and general economic 
and technical aid to underdeveloped areas can all be interpreted in this 
light. 

Problems of more limited scope can be identified within this com- 
prehensive problem. In countering the obvious interference in the in- 
ternal affairs of the states on the Soviet borders, the United States 
has to exercise great skill lest it open itself to charges of equal inter- 
ference. This is important especially when it comes to providing aid 



The Soviet Union and Its Periphery 187 

to smaller and weaker nations, such as Greece and Turkey, and when 
standards must be enforced to make the aid effective. It is also important 
when concurrence is sought from Great Britain, France, and other large 
states in courses of action that the United States considers desirable. 

An analogous situation is found in the economic sphere. In im- 
plementing its policy of restoring world trade on a multilateral basis, 
the United States has had to make exceptions with respect to the Soviet 
orbit. It has placed controls on the export of strategic materials to 
Eastern Europe, and through the Marshall Plan it has sought to enforce 
similar controls on exports from Western European countries. These 
countries consider that the restoration of East-West trade is essential to 
the re-establishment of a viable European economy, and do not willingly 
accept the proposed controls. The problem is especially acute in relation 
to the economic recovery of Germany, formerly a single economic unit 
and now split into eastern and western segments. It occurs also in the 
Far East, where it is doubtful whether Japan can fully reconstruct its na- 
tional economy without restoring its trade with China. The question of the 
weight to be given to security as compared with economic factors re- 
quires continuous examination. 

The security problem, as it occurs in all aspects of Soviet-American 
relations, cuts sharply across a wide range of other policies. Policies 
favoring cultural exchanges and the free exchange of information, which 
in the long-run may offer some of the most promising antidotes to the 
spread of totalitarian rule, have undergone modification in the face 
of Soviet activities and techniques. The United States has on occasion 
refused to issue visas to foreign Communists desiring to attend meetings 
in this country. The question arises whether it would be desirable to 
have a two-pronged policy in such matters one for the part of the 
world that shares American feelings about civil liberties, and another for 
the part of the world that does not share these convictions. The issue has 
important internal implications for the United States and other West- 
ern nations in establishing public policy toward domestic communistic 
parties. 

The conllict between American and Soviet objectives and methods 
has two other important aspects that may be noted here. First, Soviet 
obstructionist tactics have profoundly affected the workings of the 
United Nations, both in the Security Council and the General Assembly. 
This problem, as it affects American policy in the United Nations, is 
discussed elsewhere. The issue, however, is but one phase of the problem 
of devising diplomatic strategy and tactics for dealing with the Soviet 
Union. Secondly, there is the problem of relations between the United 
States and the Soviet satellites. Because these states are dominated by 



i88 Major Problems 1950-1951 

the Soviet Union, there is the temptation to dismiss them as of lesser 
importance in the larger struggle that occupies the attention of the 
world. The defection of Tito in Yugoslavia demonstrated, however, that 
shifts in these states may produce changes in the balance of power. Rela- 
tions with the satellite states therefore require on occasion the greatest 
diplomatic finesse. These particular aspects of the broad problem are 
taken up in detail in the remainder of this chapter. 

DIPLOMATIC STRATEGY IN UNITED 
STATES-SOVIET RELATIONS 

The basic approach of the United States in dealing with the 
Soviet Union during and immediately after the war was to seek to main- 
tain the major-power unity that had been developed during the war. 
It derived from the premise stated by Secretary of State Hull that "for 
these powers to become divided in their aims and fail to recognize 
and harmonize their basic interests can produce only disaster." When the 
Soviet Union embarked on a policy of expansion, it eliminated the pos- 
sibility, for the time being at least, of harmonizing the interests of the 
major powers. As Soviet policy became widely identified as a threat to 
American interests, several possible strategies were publicly discussed. 
A review of these strategies illustrates the nature of the principal courses 
of action that were open to the United States as it adjusted to the new 
situation. . 

One of the possible strategies would have been to agree on spheres 
of influence. The history of such agreements, however, has shown that 
they arc likely to be a prelude to conflict rather than a road to stability. 
And in any case United States principles of action would not readily 
allow for the type of control implied by a sphere of influence. Never- 
theless, apprehension has occasionally been voiced abroad that American 
policy might veer in this direction. In May 1948 the Soviet Union 
attempted to cast American policy in this light by publishing a distorted 
version of a diplomatic communication Irom the United States Am- 
bassador to Moscow. This version created in Western Europe the fear 
that the United States might be preparing to sacrifice European interests 
in favor of a direct settlement with the Soviet Union. In denying any 
such intention, the United States declared that it would not negotiate 
with the Soviet Union on matters of interest to other nations unless they 
participated a pledge that has been repeated many times since. 

Another strategy that might have been adopted was that of a pre- 
ventive war. This strategy would have interpreted Soviet policy as clearly 
demonstrating a desire to dominate the world. Furthermore, it would 
have implied the assumption that Soviet strength was likely to increase 
in relation to that of the United States. There is little evidence to sug- 



The Soviet Union and Its Periphery 189 

gest that this policy ever received serious official consideration in the 
United States. The counselor of the Department of State has recently 
stated, for example, that a war as a deliberately chosen alternative "is 
something which no democratic country could make the objective of its 
policy." 

A third possible strategy would have been a policy of armed neu- 
trality, which would in effect have been a modern version of traditional 
isolationism. It has been argued in this connection that the United 
States could not defend the world against Soviet attack and that by 
dispersing its defenses it would only weaken itself. It has also been 
argued that this course would avoid involving the United States in 
remote political controversies that were none of its concern. Such a policy 
of armed neutrality, it was argued, would have enabled the United 
States to retain its maximum strength at home and would have enhanced 
its power to deal directly with the Soviet Union. These proposals might 
have had a wider audience but for the memory of the failure of neu- 
trality to prevent either the Second World War or American involve- 
ment in it. 

A fourth strategy would have called for the United States to use 
its resources to strengthen the states on the Soviet periphery and to 
create a common will among all non-Soviet states to resist further Soviet 
expansion. This is very close to what is now called "total diplomacy," 
which identifies Soviet expansion as a common threat to the independent 
nations of the world and asserts a common interest in frustrating it. 
Such strategy, it is argued, would permit the United States to ask other 
nations to contribute to the foregoing purpose to the full extent of 
their ability. Success in developing such strategy would confront the 
Soviet Union with the choice of dropping its policy of expansion or of 
accepting the danger of a conflict in which it would be opposed by 
overwhelming strength. In this way, it is asserted, the Soviet Union 
might ultimately be convinced that its own long-range interests lay in 
carrying on relations with other states on the basis of accepted stand- 
ards of international conduct. An additional advantage of the strategy 
just described, it is claimed, is that it keeps the door open for a pos- 
sible settlement with the Soviet Union. 

The problem is to examine the main issues raised by a pursuit of 
the policy of "total diplomacy" in dealing with the Soviet Union. 

The first issue that arises is the relationship between the strategy 
for dealing with the Soviet Union and United States foreign policy as a 
whole. The problem of American relations with the Soviet Union has 
been so important in the years since the war that it has tended to 



190 Major Problems 1950-1951 

dominate the entire field of United States foreign policy. The areas 
where the United States has concentrated its attention abroad, for 
example, have been only too frequently determined by Soviet initiative. 
In the Middle East, in Europe, and in the Far East, American efforts 
have tended to be activated by Soviet threats. 

On the other hand, the enactment of the European Recovery Pro- 
gram can be interpreted as the beginning of an attempt to assert in a 
positive fashion the broader aims of United States foreign policy. The 
program became the beginning of a general strategy of restoring and 
rebuilding the non-Soviet world, in order to remove weaknesses that were 
open to exploitation by the Soviet Union. At the same time, the pro- 
posals for United States adherence to the International Trade Organi- 
zation and for providing technical assistance to underdeveloped regions 
are designed not only to forestall the growth of conditions in which 
the Soviet Union could take effective action, but also to create a more 
stable world. 

This development of policy thus encompasses two aspects of the 
relationships between the strategy of dealing with the Soviet Union and 
United States foreign policy as a whole. It should be noted that in each 
aspect, the role of "third states" is important. The American strategy 
is in effect a coalition strategy that necessitates harmonizing the in- 
terests of the various parties in order to create an effective working 
relationship between them. The result is that within the framework of 
present policy, all available options under this issue assume the de- 
velopment of a high degree of co-operation with other non-Soviet states. 

One aspect of this issue is the extent to which the strategy of deal- 
ing with the Soviet Union is allowed to dominate American foreign 
policy. In this connection, it is argued that if attention is concentrated 
on countering Soviet threats, United States policy in all its aspects would 
be designed to score diplomatic victories over the Soviet Union in the 
cold war. This would derive from the assumption that there can be little 
progress toward other objectives until the threat implied by Soviet policy 
is removed. 

On the other hand, it is held that a concentration on countering 
Soviet threats is a purely negative policy, bound to fail in the long-run 
because it offers nothing to the peoples of the world. By placing pri- 
mary emphasis on creating a better world order, this alternative assumes 
that Soviet propaganda and Soviet action can be largely overcome by the 
positive results of American foreign policy. Considerable reliance is 
placed on economic aid and economic reconstruction to achieve these 
results, and any basic compromise with the preceding alternative is 
considered likely to fail because of the contradiction in method and 
objectives between them. 



The Soviet Union and Its Periphery 191 

Another alternative is a compromise between the two foregoing 
approaches. This is based on the belief that the United States cannot 
depend solely on policies that will bring results only in the long-run, 
because Soviet action may produce its results in the short-run. A compre- 
hensive policy, it is held, should devote the necessary part of American 
efforts and resources to countering Soviet threats, but it should also 
devote all possible efforts to creating the kind of a world in which 
freedom and democracy can flourish. The question of how to determine 
the relative weight to be given to each of the two aspects of this alter- 
native is obviously crucial. The choice, however, depends not only on 
the desires of the United States and of its friends, but also on the actions 
of the Soviet Union. 

The second issue is the choice and priority to be assigned to various 
diplomatic methods in the application of the agreed strategy. Total 
diplomacy demands the use of a wide range of diplomatic methods 
to implement foreign policies. At the present time, the United States 
is engaged in programs of economic, military, and technical assistance, 
of cultural co-operation, and of overseas information. It is pledged to 
support the United Nations as the cornerstone of its foreign policy. 
The choice of method or the various combinations of methods that 
will be most effective in counteracting Soviet threats and in strengthen- 
ing the non-Soviet world can be determined only in particular situations. 
Several questions of a general character, however, can be raised. 

What, for example, ought to be the relative emphasis between such 
programs as economic recovery and rearmament? How should the 
United States adapt its policy toward the United Nations in view of 
Soviet action? How can programs of information and cultural exchanges 
achieve good will for the United States abroad and thus be brought to 
bear on the struggle with the Soviet Union? Again, programs of eco- 
nomic recovery and of rearmament compete to some extent for the same 
resources of materials and man power. Pushed to an extreme, either 
program may reduce the effectiveness of the other. The choice of one 
method of diplomacy thus may limit the effectiveness of another, and a 
careful allocation of priorities is necessary to prevent this limitation. 

A similar situation is found in respect to the United Nations. Nego- 
tiations outside the United Nations may render negotiations within it 
unnecessary or impracticable. The question therefore arises: Which 
conflicts with the Soviet Union should be negotiated in the United 
Nations, and which are more suited for settlement through other chan- 
nels? Furthermore, it can be asked whether the potentialities of con- 
ciliation and mediation through the United Nations are being adequately 
employed as a means of ending or mitigating the East- West struggle and 



192 Major Problems 1950-1951 

whether sufficient efforts are being made along these lines as compared 
with others. And there is the perennial question, recently raised again 
by former President Hoover, of reorganizing the United Nations without 
the Soviet Union. 

In regard to the role of the overseas information program, President 
Truman has stated that "unless we get the real story across to people in 
other countries, we will lose the battle for men's minds by default." 
This is more than a matter of counteracting Soviet and Communist 
propaganda. There is an accumulation of evidence to show that the 
objectives of the United States are widely misunderstood by allies and 
deliberately misinterpreted by opponents, to an extent that can funda- 
mentally damage American interests. Whether in view of this the United 
States ought to place primary emphasis on information as a diplomatic 
method is a matter of importance. To what extent this is an alternative 
to other diplomatic methods rather than a supplement to them, is a 
matter that can be worked out only in practice. 

The third issue is the role of Germany and Japan in the strategy 
of relations with the Soviet Union. It is something of a paradox that 
only five years after the end of the war the question of strengthening 
the two principal former enemies as a means of bolstering the United 
States against one of its former allies should be actively debated. It is 
undeniable that Japan and Western Germany have an economic and 
military potential that could contribute materially to strengthening the 
non-Soviet world. But there is a fairly sharp divergence of opinion about 
whether it is desirable that they should do so. 

On the one hand, it is said that these two former enemies, and 
especially Germany, are a key factor in the industrial balance of po\ver 
in the world. If the United States and the other Western powers do not 
find ways of integrating this vast potential into their system, the Soviet 
Union may find a way to absorb it. Thus, the argument goes, it is im- 
possible to keep vigorous peoples forever in bondage, and the attempt to 
do so would create the kind of dissatisfaction that the Soviet Union is 
best able to exploit. 

On the other hand, there are those who are equally concerned over 
the possibility of an alliance between these former enemies and the 
Soviet Union, because they are not convinced that Germany and Japan 
have lost their own aggressive attitudes. An alliance with the Soviet 
Union might become a channel by which chauvinistic elements in former 
enemy states could fulfill their dreams of conquest. Concern is felt 
especially at evidence that former members or supporters of the mili- 
tarist parties in the occupied states are regaining positions of influence. 
It is consequently asserted that purges and processes of re-education and 



The Soviet Union and Its Periphery 193 

democratization have not been carried out with enough thoroughness. 

These two points of view determine the two alternatives. The first 
is to go no further in relaxing occupation controls until the former 
enemies demonstrate that they are fundamentally oriented toward a 
democratic way of life. This alternative would require a more rigid 
application of restraints and a greater development of re-education in 
democratic philosophy and method. Only when the Western powers 
feel assured that their former enemies will follow a friendly policy to- 
ward them, it is argued, can they abolish the controls on industry and 
rearmament that were instituted as a protection against a revival of 
German and Japanese aggression. 

The second alternative is a progressive and relatively rapid relaxa- 
tion of controls. This alternative is based on the belief that the occupa- 
tion already has accomplished as much as it can and that, furthermore, 
there is an inherent contradiction in trying to create democracy by force. 
Progress along these lines is said to rest on precept, example, and in- 
fluence, not on coercion. To use implied or direct coercion any longer 
as a primary instrument of policy may, it is feared, make the occupied 
areas an easy mark for Communist subversion when the occupation 
comes to an end. 

The final issue concerns the circumstances in which the United 
States might be prepared to negotiate a settlement with the Soviet Union. 
In his speech of March 16, 1950, the Secretary of State outlined seven 
major points of conflict with the Soviet Union in which constructive 
action by the Soviet Union would relax the tension in world affairs. 2 
The action required, however, would constitute a complete reversal of 
present Soviet policy. A fundamental change in the relations of the 
major powers thus seems to be a precondition of a settlement. 

A fundamental change could be brought about by one of several 
shifts: a change in policy by one side or the other, a compromise between 
the two, or a resort to war by one side to impose its will on the other. 
And finally, there is the possibility of a long-term stalemate. Since it is 
believed that the deliberate choice of war would not be accepted by the 

3 These seven points were defined at Berkeley, California, as (i) agreement on peace 
settlements for Germany, Austiia, and Japan that would not make them satellites of 
the Soviet Union; (2) withdrawal of Soviet military and police forces from the Eastern 
European satellite countries and the holding of elections there in which the "true 
will" of the people could be expressed; (3) abandonment of the Soviet policy of ob- 
struction in the United Nations; (4) agreement on "realistic and effective" arrange- 
ments for control of atomic weapons and the limitation of armaments in general; (5) 
desisting from the use of the Communist apparatus to undermine and overthrow 
established governments; (6) co-operation in assuring the "proper treatment" of diplo- 
matic representatives; and (7) stopping the distortion of motives of others through false 
propaganda that speaks of a "capitalist encirclement" and of the United States "craftily 
and systematically plotting another world war." 



194 Major Problems 1^50-195 / 

American people, this course is presumed to be open only to the Soviet 
Union. The signatories of the North Atlantic Treaty have made it clear 
that they would defend themselves against attack, but such defense could 
hardly be considered war by choice. The present strategy of the United 
States is accordingly designed to make the choice of war by the Soviet 
Union prohibitive. 

The remaining alternatives amount to changes in basic policy or to 
compromises that might lead to a settlement. In this connection it should 
be noted that, particular issues aside, some very fundamental difficulties 
obstruct the way to a compromise in the general line of United States 
policy and make such a compromise unlikely in any foreseeable future. 
There has been for some time a strong popular conviction that the United 
States first approached postwar problems with the Soviet Union in too 
conciliatory a spirit and that further compromises would lead to no bene- 
ficial results. The Soviet Union has failed to reciprocate this spirit, and it 
has not fulfilled even its existing commitments. It has been concluded 
from this experience that the Soviet Union interprets a willingness to 
compromise as a sign of weakness and that it accordingly increases its 
demands. 

Prior to the Communist attack on the Republic of Korea, there was 
a considerable popular sentiment in the United States and elsewhere in 
favor of making overtures to end the impasse in major-power relations. 
National pride, it was said, should not stand in the way of peaceful 
solutions, provided that vital interest were not jeopardized and future 
peace not compromised. This sentiment disappeared in the face of the 
evidence of Communist willingness to resort to armed and organized ag- 
gression. 

The crux of the question is whether there are any possible forms 
of compromise, short of a change of Soviet policy, that could be ac- 
cepted without strengthening the Soviet Union. The current strategy of 
the United States, which has now been brought into conjunction with 
action taken in Korea at the recommendation of the United Nations as a 
measure of collective security, appears to be firmly based on the judgment 
that Soviet policy is a comprehensive challenge to world peace and security, 
and that there is little room for compromise until that policy is basically 
changed. 

Selected References 

George F. Kennan, "Is War with Russia Inevitable?" U.S. Department of State, 
Bulletin, Vol. XXII (Feb. 20, 1950), pp. 867-71, 303 (Fine Solid Arguments for 
Peace). U.S. Department of State, "Balanced Collective Forces Urged for Defense 
of North Atlantic Community," address by Secretary Acheson, delivered to the 
members of the Senate and the House of Representatives, May 31, 1950, Bulletin, 
Vol. XXII (June 12, 1950), pp. 931-37. U.S. Department of State, "Extemporane- 
ous Remarks by Secretary Acheson after His Address to the American Society of 



The Soviet Union and Its Periphery 195 

Newspaper Editors, Apr. 22, 1950," Press Release 395, Apr. 83, 1950. U.S. Depart- 
ment of State, "Final Communique 1 by the Foreign Ministers of the Twelve Na- 
tions of the North Atlantic Treaty, Issued at London May 18, 1950," Bulletin, 
Vol. XXII (May 29, 1950), pp. 830-31. U.S. Department of State, "Going Forward 
with a Campaign of Truth," address by President Truman before the American 
Society of Newspaper Editors, Apr. 20, 1950, Bulletin, Vol. XXII (May i, 1950), 
pp. 669-72. U.S. Department of State, "Peace Goal Demands Firm Resolve," 
extemporaneous remarks by Secretary Acheson at press conference, Feb. 8, 1950, 
Bulletin, Vol. XXII (Feb. 20, 1950), pp. 272-74. U.S. Department of State, 
Tensions Between the United States and the Soviet Union, address by Secretary 
Acheson, Mar. 16, 1950, General Foreign Policy Series 22, Publ. 3810 (April 
1950). U.S. Department of State, " 'Total Diplomacy' To Strengthen U.S. Leader- 
ship for Human Freedom," remarks by Secretary Acheson, Feb. 16, 1950, Bulletin, 
Vol. XXII (Mar. 20, 1950), pp. 427-30. U.S. Department of State, Toward Secur- 
ing the Peace and Preventing War, address by the President to the Congress 
of the United States, Mar. 17, 1948, General Foreign Policy Series 2, Publ. 3102 
(1948). 

DIPLOMATIC STRATEGY IN RELATIONS WITH 
SOVIET-DOMINATED STATES 

The strategy employed by the United States in relations with 
Soviet-dominated states is not, and perhaps cannot be, so clearly defined 
as that for dealing with the Soviet Union itself. On the one hand, in its 
legal relations with them, the United States has accepted some of the 
Soviet-dominated states as sovereign and independent. On the other 
hand, in its political relations, the United States regards all of them as 
Soviet satellites. American experience with Soviet-dominated states cen- 
ters in Eastern Europe, for Communist control in China has been too 
recently established to judge whether the relationship of the People's 
Republic with the Soviet Union will follow the pattern that has de- 
veloped in Eastern Europe or will take some different form. 

Expecting that the end of the war would find the states of Eastern 
Europe the meeting place of Soviet and Western European interests, 
the United States worked to keep this situation from producing con- 
flict. The desired solution was to emphasize the sovereign integrity of 
the small states and to persuade the major states to agree on joint action 
for their rehabilitation and their re-establishment as independent states. 
It was believed that under these conditions, the interests of the Soviet 
Union and of the West would freely intermingle. This was the frame- 
work for the Declaration on Liberated Europe adopted by the three 
major powers at Yalta. In that declaration, the powers pledged them- 
selves jointly to re-establish, economically and politically, the liberated 
nations of Europe. Political restoration was to consist of the establish- 
ment of interim coalition governments and later of free elections in 
accordance with democratic principles. 

Although this agreement broke down almost from the moment of 



196 Major Problems 1950-1951 

its enunciation, the declaration remained the basis of subsequent efforts 
by the United States to secure at least a minimum protection of the 
American interest in Eastern Europe. It provided the point of reference 
for the conduct of United States relations with Poland and Czecho- 
slovakia and for the role of the American members of the Allied Con- 
trol councils in Hungary, Rumania, and Bulgaria. It entered into the 
negotiation of the peace treaties signed with these three states in January 
1947, and it was finally enshrined in some of the clauses of those treaties. 
Since then the Declaration on Liberated Europe has been a practically 
inapplicable but legally useful frame of reference for conducting rela- 
tions with the Eastern European satellites of the Soviet Union. 

The other aspect of this situation was the continuous expansion of 
Communist and Soviet authority in Eastern Europe from the formation 
of the Lublin regime in Poland in 1945 to the coup d'etat in Czecho- 
slovakia in 1948. However, the extension of Communist control brought 
with it a new kind of trouble for the Soviet Union. Prior to the defection 
of Tito in Yugoslavia, two cases foreshadowed difficulties. The first oc- 
curred in January 1948, when Dimitrov, the leading Communist in Bul- 
garia, suggested that the time might soon be ripe lor a confederation of 
south Balkan states. This idea was vetoed by an editorial in Pravda, which 
made it clear that the Soviet Union wanted no competing power units, 
however small, in its sphere. A similar case arose shortly alter Secretary 
Marshall made his proposal for European recovery. Poland and Czecho- 
slovakia both indicated acceptance of the plan, apparently without con- 
sulting the Soviet Union. Later, at directions Irom Moscow, they had to 
change their acceptance to refusal. Such actions by satellite Communists 
seemed to convince the Soviet Union that it must tighten its grip on the 
orbit nations. 

The Tito-Cominform break in June 1948 marked the beginning of 
a new phase in American relations with Soviet-dominated areas. It opened 
a new possibility for the restoration of more nearly normal relations with 
at least one Communist government, but at the same time it evoked in 
the remaining satellite states of Eastern Europe countermeasures of a 
kind that made it unlikely that the United States could maintain even 
minimum diplomatic relations with them. 

These countermeasures were a comprehensive drive to eliminate all 
traces of Western influence. Such efforts had previously been directed 
largely against local non-Communist elements. By giving the label "Com- 
munist deviation" to any emanation of Western influence, however, a 
new excuse was provided for recriminations against the United States. 
The American Minister to Bulgaria, for example, was alleged in January 
1950 to have "been in contact" with the former Bulgarian Foreign Min- 
ister, a leading Communist who had been suspected of "Titoism," con- 



The Soviet Union and Its Periphery 197 

victed of treason, and sentenced to death. Bulgaria requested the recall 
of the American minister as persona non grata. The United States Gov- 
ernment replied that the accusations were groundless and asked Bulgaria 
to withdraw them. Failing to receive a reply, the United States in Febru- 
ary broke off relations. Similar measures have since been employed else- 
where. Rumania and Czechoslovakia have closed down local offices of 
the United States Information Service and, with Hungary, have re- 
quested a reduction in the number of American diplomatic personnel 
serving in their countries. In return, the United States has closed Czecho- 
slovakian and Hungarian consulates in America and restricted Rumanian 
diplomats to within thirty-five miles of the District of Columbia. 

In explaining American action in breaking relations with Bulgaria, 
the Secretary of State remarked that the United States did not hold the 
peoples of Eastern Europe responsible for the deterioration of relations 
with their governments and added that the United States would maintain 
an undiminished concern for their rights and welfare. On the other hand, 
he said: "States which claim to be sovereign must act the part. Their 
governments must observe accepted standards in their relations with the 
rest of the world, and they must maintain attributes of independ- 
ence. ..." Relations with Bulgaria had become so unsatisfactory, the 
Secretary added, that the breaking off of relations was the only remain- 
ing means that could adequately express the concern of the United States. 
In phrasing his remarks, the Secretary of State left open the question 
whether the retaliatory action was directed primarily against Bulgaria or 
against the Soviet Union. 

The problem is to review the diplomatic strategy employed in rela- 
tions with Soviet-dominated states. 

The first issue is whether relations with Soviet-dominated nations are 
only a secondary aspect of relations with the Soviet Union, or whether 
other factors must also be considered. The first alternative under this 
issue is to treat the Soviet problem as encompassing both questions. It 
may be argued that the only way to create mutually beneficial relations 
with the satellites lies within the framework of a Soviet-American accord. 
It would follow therefore that the two problems are really one and that 
all efforts should be concentrated on dealing with the major aspect rather 
than the minor. Relations with the satellites could thus be allowed to 
take their natural course until there is a settlement of the major power 
conflict. 

The second alternative is to treat the two problems as related but 
separable. The argument behind this alternative is that the satellites 
cannot be considered a minor matter only, when in fact they are a major 



198 Major Problems 1950-1951 

issue in Soviet-American relations. Although direct approaches to the 
Soviet Union on questions connected with the satellites have consistently 
failed to produce results, the matter ought not to be allowed to rest there. 
New approaches must be considered and prepared. As a policy of 
strengthening the non-Communist world develops, a progressively strong 
influence will be exerted on the Eastern European satellites. The latent 
resistance to the Communist regimes in these satellites may gain new 
hope and see a possible alternative to present conditions. There must be 
a separate strategy, it is argued, to deal with this situation as it de- 
velops. In any case the United States cannot afford to allow the belief 
to grow that it has lost interest in the peoples in Soviet-dominated areas. 
The second issue is whether the spread of Titoism can be encouraged 
by United States action, and if so, how this can be done. The first alterna- 
tive under this issue is to take positive steps to encourage the spread of 
national-communism. These might include clandestine operations behind 
the Iron-curtain, a full-scale propaganda campaign directed toward 
presumed dissident groups, and the promise of economic and military 
support. Strategy of this kind calls for very careful planning and timing, 
if encouragement to "deviate" and promises to support "deviation" are 
not to produce premature attempts to overthrow Soviet-controlled re- 
gimes. 

The second alternative is to regard Titoism as a fortunate develop- 
ment of a serious difficulty in the relations of the Soviet Union and its 
satellites. In this view the actions of the United States should be generally 
negative and confined simply to adding fuel to the flames. The basic 
method would be to continue to expose the real nature of Soviet im- 
perialism and to provide the minimum support needed to keep recalci- 
trant national-Communist regimes alive, but not to enter into serious 
commitments to such regimes. The Secretary of State, in explaining the 
present official attitude toward China, emphasized Soviet encroachment 
on Chinese frontiers and urged: "We must not seize the unenviable posi- 
tion which the Russians have carved out for themselves. We must not 
undertake to deflect from the Russians to ourselves the righteous anger 
and the wrath and the hatred of the Chinese people which must de- 
velop. . . ." The second alternative would thus wait for the Soviet reac- 
tion to Titoism to develop, would adjust the character of United States 
action to this development, and would prepare for the maximum pos- 
sible advantage of the situation at all stages. 

The final issue is the extent to which the United States should re- 
taliate against the present actions of the satellite states. The first alterna- 
tive is to take equivalent action whenever called for, including a com- 
plete rupture of relations. The argument in favor of this alternative is 
that the United States has already suffered as much loss of prestige at 
the hands of the satellite states as it can afford in its own interest or in 



The Soviet Union and Its Periphery 199 

that of the free nations generally. To allow this loss to go on without 
taking serious steps only opens the door to limitless abuse and leads to a 
popular conviction of American weakness or indifference. The satellite 
states must, therefore, be held strictly accountable for their acts. 

The second alternative is to accept these risks in order to retain 
a foothold behind the Iron-curtain. The complete withdrawal of Western 
representatives, it is argued, is precisely what the Soviet Union most 
desires. To be goaded into withdrawal is to play their game. If the 
United States is to encourage the spread of Titoism, moreover, it must 
have the most accurate knowledge possible of satellite affairs. The United 
States should consequently do everything it can to maintain relations 
with Soviet-dominated states. 

Selected References 

"Indictment Presented by Hungarian State Prosecution in Case of Rajk and His 
Accomplices, Sept. 11, 1949," New Times (Moscow) No. 38, Supp. (Sept. 14, 1949). 
United Nations, Observance in Bulgaria, Hungary, and Rumania of Human 
Rights and Fundamental Freedoms: Resolution Adopted By United Nations 
General Assembly, Oct. 22, 1949, U.N. Doc. A/ 1043 (Oct. 22, 1949). U.S. Depart- 
ment of State, "Accepted Diplomatic Standards Disregarded by Soviet Satellites," 
statement by Secretary Acheson, Feb. 24, 1950, Bulletin, Vol. XXII (Mar. 6, 
J 95) PP- 377'78. U.S. Department of State, "Bulgaria Warned Actions Threaten 
Normal Relations with U.S.," Bulgarian Note of Jan. 19, 1950, and United 
States Reply of Jan. 20, 1950, Bulletin, Vol. XXII (Jan. 30, 1950), p. 159. 
U.S. Department of State, "Czechoslovak Demand to Cut U.S. Staff Follows 
Isolation Pattern," Bulletin, Vol. XXII (June 12, 1950), pp. 974-75. U.S. Depart- 
ment of State, "Limitations Surrounding Normal Diplomatic Relations with 
Hungary," Releases of Mar. 3 and 4, Bulletin, Vol. XXII (Mar. 13, 1950), pp. 
398-99. U.S. Department of State, "Rumania Requested to Clarify Demands 
for U.S. to Discontinue Information Activities in Bucharest, Mar. 7," Bulletin, 
Vol. XXII (Mar. so, 1950), pp. 443-44. U.S. Department of State, "Statement 
by United States Representative Before United Nations Political and Security 
Committee on Question of Observing Human Rights And Fundamental Freedoms 
in Hungary, Bulgaria, and Rumania, Oct. 4, 1949," Bulletin, Vol. XXI (Oct. 
24, 1949), pp. 617-19, 622-24. U.S. Department of State, "Statements on U.S. 
Minister in Bulgarian Trial Fabricated," Bulletin, Vol. XXI (Dec. 12, 1949), 
p. 911. U.S. Department of State, "Undermining of Religious Faith in Czecho- 
slovakia," statement by Secretary Acheson, June 23, 1949, Bulletin, Vol. XXI 
(July 11, 1949), p. 30. U.S. Department of State, "U.S. Closes Hungarian Con- 
sulates," Hungarian Note of Dec. 24, 1949 and U.S. Note of Jan. 3, 1950, 
Bulletin, Vol. XXII (Jan. 16, 1950), pp. 95-96. U.S. Department of State, "U.S. 
Closes Information Libraries in Czechoslovakia, Apr. 21," Bulletin, Vol. XXII 
(May i, 1950), pp. 684-85. U.S. Department of State, "U.S. Requests Rumania 
Close New York Office Apr. 26," Bulletin, Vol. XXII (May 8, 1950), p. 735. 
U.S. Department of State, "U.S. Takes Serious View of Hungary's Conduct in 
Trial of Robert A. Vogeler," Releases of Feb. 15 and 17, Bulletin, Vol. XXII 
(Feb. 27, 1950), pp. 323-26. U.S. Mission to United Nations, "Communication 
to UN Secretary-General Transmitting Copies of Hungarian and Rumanian 
Notes to U.S.A. Replying to U.S. Note of Jan. 5, 1950, on Execution of Human 
Rights Clauses of Peace Treaties," Press Release 811 (Feb. 17, 1950). 



Chapter XI 

Great Britain and the Commonwealth 

THE British Commonwealth is of vital importance to the United 
States. It occupies invaluable strategic positions in many parts of 
the world, especially on the western and southern periphery of the 
Eurasian continent, and it includes some of the most stable, wealthy, 
and dependable democratic powers. The Commonwealth commands 
vast resources of man power and raw materials and possesses great mili- 
tary, industrial, and political skills. It can bring strong influence to bear 
in practically any region of the world. 1 

Powerful as the Commonwealth is, its economic, military, and 
political structure presents a striking contrast to that of either the United 
States or the Soviet Union. No vast continental land mass, full of human 
and natural resources, serves the Commonwealth as a base. Although 
there are strong cohesive forces holding the Commonwealth together, it 
has no formal political institutions by which the collective influence of 
all the inhabitants can be concentrated on defined objectives. The various 
peoples and states within the system differ profoundly among themselves 
in race, religion, political tradition, and interest. The organi/ation of the 
whole is tenuous, its power dispersed, and its communications vulnerable. 

The structure is the result of a long series of historical occurrences, 
comparatively few of which represent the fruits of deliberate policy. 
Commercial adventures developed the Old Empire of the seventeenth 
and eighteenth centuries, establishing British settlements in North 
America and dominion over native peoples in India and southeast Asia. 
Failure to discover a feasible method of governing the Old Empire led 
to the loss of thirteen North American colonies in 1783 and to grave 
political scandals in connection with the administration of India. Partly 
in reaction to these calamities, but more through the influence of eco- 
nomic and political liberalism and pre-occupation with industrial de- 
velopment at home, the British public for more than half of the nine- 
teenth century took little interest in the Empire. This meant that the 
reins of authority over the colonies were lightly held. The British in 
this period expanded the Empire and greatly increased their world-wide 
commitments by a series of local adventures and accidents, almost un- 
co-ordinated by any central authority and resulting in an extraordinary 
agglomeration of territories, peoples, privileges, authorities, and respon- 
sibilities. Hence arose the British saying that the Empire was acquired 
in a fit of absent-mindedness. 

*For a discussion of the objectives of British policy, see Pt. i, pp. 48-52. 

200 




201 



202 Major Problems 1950-1951 

In the 1870*8 Benjamin Disraeli and the Conservative party brought 
the Empire back into public consciousness and made it a subject of do- 
mestic political significance. Moreover, it began again to be of first-rate 
economic importance: a market for British goods, a source of raw ma- 
terials, and above all a field for the investment of British capital. Toward 
the end of the century there also appeared the realization that the power 
of Britain would not long remain adequate in a modern world unless the 
full potentialities of British overseas possessions were thrown into the scale. 

Despite these indications of the increasing value of the Empire, no 
real attempt was made by the British to bring their far-ilung lands to- 
gether under a uniform system of administration. Such an attempt would 
almost certainly have been doomed to failure by reason of the extreme 
diversity of races, customs, and cultures comprehended within the Em- 
pirethe problems of government in North Borneo, for example, having 
little in common with those in Bermuda. It had become clear, even be- 
fore 1900, that not even the English-speaking countries of the Empire 
could be combined into a well-integrated political structure, for each had 
its own interests and affairs and each wished to manage them in its own 
way. Because the separatist tendencies of the larger units could not be 
effectively countered, they were tacitly accepted. The result was the 
evolution of "dominion" status. 

At the end of the nineteenth and the beginning of the twentieth 
century, the amount of authority conceded to those colonies accorded 
dominion status gradually increased until by the 1920*8 it had come to 
include even the important field of foreign affairs. Great Britain could 
then no longer commit a dominion to war, to peace, or to treaties; and 
by 1931 the only formal link of any consequence among the dominions 
was that of allegiance to a common sovereign. But in 1950 India, which 
had become a dominion in 1947, renounced allegiance to the King and 
yet remained in the Commonwealth as a republic. Perhaps the only 
official connection between India and the other Commonwealth nations 
now lies in the fact that they mutually and severally declare that a con- 
nection does in fact exist and that they frequently act in accordance 
with their declaration. However, all dominions generally accept a moral 
obligation to take no important step in foreign affairs without con- 
sulting any other dominion whose interests are involved. 

The dominions now number seven Canada, Australia, New Zea- 
land, South Africa, India, Pakistan, Ceylon and collectively they are 
generally designated the Commonwealth, as distinguished from the de- 
pendent overseas territories, which make up the Empire.- 

2 The usage described above is convenient and common, but it is not official. The 
word "Commonwealth" has been used in British official documents to refer to the de- 
pendent overseas tciritotics as well as to the independent nations. The word "Empire" 



Great Britain and the Commonwealth 203 

The Empire consists of a vast congeries of dependent overseas 
territories, too numerous to list here and too varied to describe. It in- 
cludes not only those areas indisputably belonging to Great Britain but 
also protectorates such as Bechuanaland and Swaziland, condominiums 
like the Sudan and the New Hebrides, and mandates or trust territories 
such as Tanganyika. Some of these are points of strategic importance- 
Gibraltar, Malta, Cyprus, Aden, Singapore. Some are important sources 
of raw materials Malaya, Nigeria, Rhodesia, East Africa. Some are 
trading depotsHong Kong, Singapore. Many, on the other hand, are of 
little strategic or economic consequence. 

Over the Empire Great Britain retains political authority, and the 
success with which this authority is exercised depends on the skill and 
vision of colonial administrators and on the economic and political re- 
sources that Great Britain can expend for their support. Forms of 
government range all the way from a paternalistic rule over aborigines 
in Borneo to practical self-government in Bermuda. Government is, at 
least in theory, adjusted to the capacity of the inhabitants for running 
their own affairs, and the announced principle of British colonial ad- 
ministration is to guide all subject peoples as rapidly as possible to the 
goal of self-government. Since the granting of dominion status to India 
and Pakistan, and the withdrawal of Eire and Burma from the Common- 
wealth, serious problems of internal stability have seldom arisen in the 
Empire save in Malaya, where guerrilla warfare presently engages the 
attention of British troops. 

The main problem that faces Great Britain in the administration of 
its dependent territories is economic. Almost all the Empire requires a 
heavy program of capital investment, not only to maintain and increase 
local standards of living but also to enlarge the sources of raw materials 
and foodstuffs for the economy of the mother country. The kind of in- 
vestment needed will not yield a quick return. It will take years, for ex- 
ample, to construct an adequate transportation system in Africa and to 
prepare the land and train the population for new forms of agriculture. 
The financial resources of Great Britain are not adequate to the task, 
yet the continued existence of the Empire may turn upon its successful 
execution. 

Although the cohesive force of the Empire is plainly to be seen in 
the political, economic, and military authority of Great Britain, that of 
the Commonwealth is far less easy to discern. It has sometimes been 

is avoided by nearly everyone save Conservatives; the official phrase is "Dependent 
Overseas Territories." Even the word "dominion" is now sparingly employed, perhaps 
because it still carries a slight connotation of dependent status. Finally, even the desig- 
nation "'British" in connection with the Commonwealth is now officially avoided. 



204 Major Problems 

described as a sense of common experience and common aim. Insubstan- 
tial as such a force may be, it is powerful enough to withstand almost 
any dissolving influence short of a really fundamental conflict of interests. 
It is true that each Commonwealth nation derives advantages from the 
association a wider range of contacts than might be available to it if 
standing alone, access on easy terms to the enjoyment of the trading priv- 
ileges of Imperial Preference, and to the information and skills of other 
governments and a share of the world-wide prestige still attaching to 
Britain. Moreover, there are advantages of security. Beyond doubt the 
defensive strength of each Commonwealth member is increased by the 
fact of the association, even though few precise commitments for mutual 
defense exist. 

But the elements of disunity loom very large. It still remains to be 
seen how long the new Asian dominions India, Pakistan, and Ceylon- 
will prove in fact to be knit to their associates by a sense of common ex- 
perience and common aim. The Government of South Africa is at present 
in the hands of men who appear to be hostile to many of the ideals for 
which the Commonwealth has stood. The financial resources of Great 
Britain, formerly a powerful cement to the system, are now at low ebb. 
And it is to the United States not to Great Britain that Canada, Australia, 
and New Zealand now tend to look for help in the maintenance of their 
security. 

There are, moreover, divisions of interest within the Common- 
wealth itself, some of them very sharp. Most important at present is the 
dispute between India and Pakistan over Kashmir, a dispute that at times 
has seemed close to breaking into open war. It is significant that this 
problem was referred to the United Nations for adjustment and that the 
Commonwealth has treated it with great circumspection. India and 
South Africa have long been at serious odds over the latter's treatment 
of a large Indian minority. Great Britain and Canada are allied with 
the United States in the North Atlantic Treaty and thus are insistently 
drawn toward Atlantic and European commitments. Australia and New 
Zealand, together with the Asian dominions, naturally find their security 
interests primarily centered in the Far East. Australia and New Zealand 
are concerned lest Japan become once more a military and economic 
menace; India, lest it become either an Asiatic nation subjected to 
Western "imperialism" or a power great enough to be a serious rival. 
And though all the Commonwealth nations are anti-Communist, India 
refused until very recently to abandon an attitude of neutrality in the 
great political conflict between the Western powers and the Soviet 
Union. 

Although the Commonwealth is undeniably a definite political 
grouping, it is plainly far from being a political unit. Indeed the British 



Great Britain and the Commonwealth 205 

long ago gave up any attempt to make it function as an integrated 
whole. Commonwealth business is transacted in two principal ways: by 
meetings either of experts or of important political leaders from the 
several countries, and by a regular transmission of information and ad- 
vice between the governments, and particularly between the Government 
of Great Britain and the others. This process is facilitated by the Com- 
monwealth Relations Office in London a department of the British 
Government and the network of Commonwealth High Commissioners 
with their diplomatic staffs. 

In addition to the political authority of Great Britain, which holds 
the Empire together, and the common consent by which the nations of 
the Commonwealth declare themselves to be associated, there is one con- 
siderable force operating to knit together the whole in a common inter- 
est; this force is the pound sterling. With the important exception of 
Canada, all the Commonwealth and Empire, together with a few other 
countries like Iceland and Iraq, are members of the sterling area. The 
dollar reserves of the sterling area are kept in London and managed by 
Great Britain in a common pool. During the war, moreover, various 
countries of the area, especially India, Pakistan, and Egypt, supplied Great 
Britain with considerable goods and services and acquired in return "ster- 
ling balances" in London amounting to some three billion pounds. These 
debts are now being paid ofl by extensive shipments of British manufac- 
tured products to the creditor countries. Although such repayments con- 
stitute a great burden on the British economy, they contribute greatly to 
the maintenance of stability in the countries that receive them and tend 
to keep these countries closely associated with the British system. This 
problem is treated in detail later in this chapter. 

The sterling area forms a great multilateral trading area, which in 
1948 accounted for about 36 per cent of all visible world trade and about 
50 per cent of invisible transactions. Thus today the Commonwealth 
system, in its economic aspect, is one of the most significant in the world. 

As a formal ally of Great Britain and of Canada, the United States 
is in a sense allied informally to the entire Commonwealth and Empire. 
It is clearly in the interest of the United States that the Commonwealth 
group be strong. This presents several problems, both of policy and of 
method. How far should the United States treat the Commonwealth 
nations as independent (as in fact they are), and how far should it deal 
with them through the intermediation of Great Britain? This question 
scarcely presents itself with respect to Canada, but it is serious with 
respect to the Asian dominions. If India, Pakistan, and Ceylon are dealt 
with too obviously through Great Britain, they may resent the imputa- 
tion of dependent status; yet if they are handled without reference to 



206 Major Problems 

Great Britain, the valuable relationships of the Commonwealth may be 
impaired. It is often difficult to strike a successful compromise between 
these extreme alternatives. 

A group of problems arises in connection with the bestowal of eco- 
nomic aid by the United States. Is it, in general, better for the United 
States to make loans or grants directly to members of the Commonwealth 
or Empire, and thus tend to loosen the ancient financial ties of those 
regions with London; or would it be preferable, for the sake of strength- 
ening the system, to make capital available to Great Britain for use in 
the dependencies? In this regard the British have recently made a great 
departure from their older custom by announcing that American capital 
investment in the Empire would be welcome. It is to be expected never- 
theless that they will wish to be consulted if such investments are made, 
and their views may not always coincide with those of American investors. 
Again, should the United States endeavor, in the interest of disburdening 
the economy of Great Britain, to restrain the British from freeing the 
sterling balances? 

Finally, the most perplexing class of problems arises from the plain 
question of how far Great Britain should be urged to extend its responsi- 
bilities and commitments on the European continent. There is no doubt 
that the British Government considers itself involved in two, or perhaps 
three, relationships whose requirements are not always compatible one 
with another. First is the relationship with the Commonwealth and Em- 
pire, second the relationship with the rest of Western Europe, and third 
the relationship with an Atlantic community including the United 
States. No commitments in Europe can be accepted that will seriously 
impair Commonwealth responsibilities and connections, but it is rarely 
clear just how far these connections would actually be affected by any 
given European commitment. The British have insisted that sterling, 
which is an international currency, should not be subjected to many of 
the hazards that involvement in a European Payments Union might pre- 
sent. The United States, interested as it is in a closer integration of 
Western Europe, very frequently has to decide whether pressure should 
be exerted upon Great Britain to commit itself more completely to this 
policy, or whether in fact the resulting damage to the Commonwealth 
structure would outweigh the resulting benefits in Europe. This issue, 
as well as other issues raised by the conflict of objectives between the 
United States and Great Britain, is dealt with below. 

CONFLICTS OF OBJECTIVE BETWEEN GREAT BRITAIN 
AND THE UNITED STATES 

The alliance between the United States and Great Britain is solidly 
founded on many common democratic principles, several well-tested his- 



Great Britain and the Commonwealth 207 

toric connections, and a close identity of broad strategic and political ob- 
jectives. To so revive and strengthen the non-Communist world politi- 
cally, economically, and militarily that it can withstand the internal 
assaults of communism and the external pressures of the Soviet Union, 
is the primary strategic aim of both countries. It is of the greatest con- 
cern to the United States that Great Britain should be powerful and 
prosperous, because British stability tends to spread into other parts of 
the world and to fortify the whole democratic cause. 

Within the broad framework of fundamental agreement there is 
nevertheless room for many differences about functional policies and 
subsidiary or short-term objectives. Such differences may make themselves 
felt in any region of the world, and in any matter where the interests of 
the two nations come into contact. They require particular attention in 
connection with the problem of establishing a pattern of international 
trade acceptable to the United States and with that of achieving a closer 
integration of Western Europe. It is without doubt an aim of Soviet 
policy to exploit and increase all conflicts of opinion and objectives be- 
tween Great Britain and the United States. For these and other reasons, 
it is important to identify carefully the points of Anglo-American differ- 
ences. 

Faithful as Great Britain is, and must of necessity be, to the over- 
shadowing objective of security against the Soviet Union, it has other 
aims that ordinarily engage the attention of its people and of its Gov- 
ernment even more continuously and insistently. First of these is the 
maintenance of full employment, an objective that to a very great degree 
currently determines the shape and nature of British economic policy. 
This objective is professed by both major political parties and by the 
great majority of the citizens. With the domestic policies of a "fair" dis- 
tribution of the national income among the population and a liberal 
provision of amenities by the welfare state, it constitutes a social and 
economic program to which the present Government is committed and to 
which foreign policies are expected to be subordinate unless the most 
insistent requirements of national security are at stake. 

Another major objective of British policy is to re-attain economic 
viability. Although British industrial production and volume of exports 
have already reached a level well above that of prewar days, they must 
be pushed still higher if Great Britain is to recover its former inter- 
national financial position. The British economy is dependent on im- 
ports, the need for which is increased by the high goals set for employ- 
ment and the standard of living. To earn enough foreign exchange, espe- 
cially dollars, to pay for imports is one of the most urgent British prob- 
lems. Many Britons believe some as a matter of principle and others as 
a matter of temporary necessity that the recovery of viability cannot be 



so8 Major Problems 1950-1951 

achieved without some direct intervention of the political authority in 
economic affairs. 

A third major objective of British policy is to preserve and improve 
the structure of both Commonwealth and world-wide economic and 
political relationships, on which British power so greatly depends. The 
maintenance of close intra-Commonwealth connections takes precedence 
over all other aims of British overseas policy. At the same time, in the 
current British difficult situation it has become essential, not only for 
the sake of political prestige and strategic security but probably also for 
economic survival, to cherish the extensive British connections and inter- 
ests in China, Latin America, the Middle East, and Africa. Thus there 
arises a multitude of secondary and short-term objectives toward which 
the policy of Great Britain must be directed in many parts of the world. 

The major objectives of British policy are not, for the most part, con- 
trary to the interests and objectives of the United States. Insofar as they 
contribute to the preservation of British power, they tend to strengthen 
the power of the Western democracies. They nevertheless require the pur- 
suit of some policies, and entail some consequences, that are not in ac- 
cordance with United States objectives. 

The problem is to examine the principal points at which the objec- 
tives of Great Britain conflict with those of the United States and to de- 
termine the American positions. 

By far the most serious conflicts of objectives between Great Britain 
and the United States concern the pattern of international trade and 
payments. For a decade or more the United States has frequently set forth 
as one of its major aims the restoration of nondiscriminatory multilateral 
world trade, convertible currencies, and free movements of capital. The 
British often proclaim their sympathy with this objective and their in- 
tention of proceeding toward it with the greatest possible speed. They 
continue nevertheless to enforce elaborate quota regulations of trade and 
strict exchange controls and to negotiate bilateral trade and payments 
agreements with other countries. The machinery of British controls 
operates not only over Great Britain itself but also to a great degree 
over the entire sterling area, insulating it from free economic contact 
with the rest of the world, particularly from the dollar area. The system 
of preferential tariff arrangements linking the Commonwealth countries 
together is fully maintained. 

The British explain that these controls and restrictions have been 
dictated by the inescapable but temporary exigencies of their economic 
situation. As viability is achieved, they say, the controls (except perhaps 
the Commonwealth tariff preferences) can and will be abandoned. But 



Great Britain and the Commonwealth 209 

premature relaxation would be disastrous; indeed in 1947 it was proved 
to be disastrous. With such arguments, the United States has in great 
measure agreed and therefore has found it necessary to modify its position 
in various negotiations, though without permanently abandoning its 
final objective. Already, however, there are some indications that the 
British, and especially the Labour party, may find that the perpetuation 
of controls and discriminations in international trade is essential to the 
management of their planned economy. At present the British appear to 
hold the objective of full employment in higher regard than they do the 
aim of nondiscriminatory world trade. 

The problem is aggravated by the normal rivalries of British and 
American traders, seeking competitively to sell their goods in third 
markets like Latin America. This factor was of small importance during 
the years of the seller's market and while British productive capacity was 
recovering from the dislocations of war. It is likely to become of increas- 
ing significance in the years to come, and it has already been exemplified 
by sharp disputes over the marketing of oil. 

The first issue, therefore, for the United States to decide is when 
and how to use economic and diplomatic pressures to force the British 
into a more rapid abandonment of quota restrictions, exchange controls, 
and bilateral trade pacts. This issue arises in such broad programs as the 
loan negotiations of 1945, the General Agreement on Tariffs and Trade, 
and the European Payments Union, and also in specific British policies, 
like the discriminatory trade agreement with Argentina and the restric- 
tive practices adopted against American oil companies. 

It is clearly impossible for the United States to abandon lightly 
an objective so long and so emphatically proclaimed. The only practica- 
ble course of action for the United States whenever the issue arises is, 
therefore, to examine with great care the particular circumstances in- 
volved, in order to see first whether technical adjustments can be made 
that will lead to an acceptable compromise. If a compromise cannot be 
discovered, it may then be necessary to consider whether the particular 
British policy proceeds from inertia, from excessive aversion to risk, or 
from mere habit, or whether it is based on a clear and fixed conviction 
that British interest is genuinely at stake. Finally, it will obviously be 
necessary for the United States to keep its objectives continuously under 
review. It will have to consider how far world economic conditions per- 
mit its objectives to be achieved, what concessions to circumstances may 
have to be made, and what the United States might do to change world 
conditions in order to make its objectives attainable. 

A second point of conflict between British and American objectives 
is suggested by proposals for the closer integration of Western Europe. 
The American objective of an integrated community of Western Euro- 



2io Major Problems 1950-1951 

pean nations is not yet fully and precisely defined, but its general nature 
is reasonably clear, and it is becoming increasingly urgent. For the 
achievement of this goal British co-operation is almost essential, because 
without Great Britain a European organization would lack much of the 
strength and many of the resources envisaged by the United States. Brit- 
ish co-operation is essential also because certain continental European 
countries, notably France, believe that without British participation the 
organization would inevitably be dominated by Germany. Finally, the 
British possess the qualities of leadership and of political and adminis- 
trative skill without which the organization would be defective. 

By playing an important part in the Organization for European 
Economic Co-operation, the Brussels Pact, and the first European pay- 
ments scheme, the British have materially helped to give practical effect 
to European co-operation. They have also frequently and officially de- 
clared their sympathy with the objective of co-operation. But it has 
become increasingly clear that the British envisage for themselves a de- 
gree of participation considerably short of that expected by the United 
States. They have attempted to restrict and circumscribe the political 
structure of the Council of Europe by preventing any appreciable transfer 
of sovereignty to the Consultative Assembly, and they have held back 
from joining a new European Payments Union on the lines first proposed 
by the United States. Certain British objectives, especially those of main- 
taining intact the present world-wide structure of British commitments 
and of keeping strict control over the British economy and over the 
sterling area, appear to be in conflict with the American objective of 
achieving a unified Europe. 

Therefore another issue for the United States to decide is how far to 
use economic and diplomatic pressure to persuade or force Great Britain 
into more extensive commitments in continental Europe. 

The courses of action open to the United States are much the same 
as in the issue relating to the pattern of international trade, and for the 
same reasons. Although it may be true that Great Britain will not assume 
commitments that are contrary to the national interest, the United States 
may have to decide how far the British are in fact justified in believing 
that their connections with the Commonwealth and with the rest of the 
world will be imperiled by a closer association with Europe. If it should 
appear that the British exaggerate the incompatibility of the two objec- 
tives, strong pressures upon the British Government might be called for. 
If, on the other hand, the United States should agree with the British 
estimate, it would then have to decide which of the two objectives was 
more important in American policy. Should the former seem the more 
desirable, the pressure upon Britain to extend its European commitments 
could be only slight. 



Great Britain and the Commonwealth 211 

No other points of conflict between British and American objectives 
compare in significance with the two foregoing. The intense British 
preoccupation with solving financial and commercial problems, and with 
conserving British world power, give rise, however, to various other dif- 
ferences with the United States in various parts of the world. In China 
the British seek to do what business may be done with the Communist 
regime, and they avoid treating it as irrevocably hostile. In the United 
Nations they resist proposals for international supervision of the adminis- 
tration of their colonies. They tend to stress the potential danger of 
German and Japanese commercial competition. In the Middle East they 
appear to distrust Israel and to put undue emphasis on relations with 
the Arab states. In all these other issues United States policy will be to 
some extent affected by a consideration of the result of action contem- 
plated in the over-all strength of the British position in world affairs. 

Selected References 

"British Government's Statement on Recognition of Chinese Communist 
Regime," Jan. 6, 1950, New York Times (Jan. 7, 1950). British Information 
Services, British Foreign Affairs, Debate in the House of Commons: excerpts 
from speeches of Mr. Bevin, Mr. Eden, Mr. McNeil, Mr. Churchill, and Mr. 
Attlee, Jan. 22 and 23, 1948, I.D. 807 (February 1948). British Information Serv- 
ices, "Foreign Secretary Bevin's Statement on Foreign Policy, Dec. 9, 1948," 
Release T. 45, Washington (Dec. 10, 1948). British Information Services, 
"Speeches in House of Commons by British Chancellor of the Exchequer Cripps 
Concerning Dollar Crisis, July 6 and 14, 19^9," Releases T. 69 and T. 70, Wash- 
ington (July 1949). "Communique Issued by Finance Ministers of British Com- 
monwealth Concerning Exchange of Views on Economic Problems Facing Com- 
monwealth Countries, July 18, 1949," New York Times (July 19, 1949). Great 
Britain, Conservative Party, The Right Road for Britain (Conservative Party's 
Statement of Policy), Publ. 3969, London: Conservative and Unionist Central 
Office (July 1949). Great Britain, Parliament Papers by Command, Cmd. 7895, 
Statement on Defense 1950, presented to Parliament Mar. 6, 1950 (1950). Great 
Britain, Parliament Papers by Command, Cmd. 7915, Economic Survey for 1950, 
statement of Economic and Financial Position of Great Britain, presented to 
Parliament by Chancellor of the Exchequer, March 1950 (1950). Labour Party 
of Great Britain, Feet on the Ground, A Study of Western Union (September 
1948). U.S. Department of State, "International Economic Policy," address by 
President Truman, Aug. 29, 1949, Bulletin, Vol. XXI (Sept. 12, 1949), pp. 400-03. 

EXCHANGE CONTROL AND THE STERLING AREA 

The sterling area consists of countries that have long been accus- 
tomed to conducting their foreign trade and to holding their monetary 
reserves in sterling. It was these tactics, in fact, that made the formation 
of the area feasible. Great Britain has been the principal purchaser and 
international distributor of the major export products of these countries 
and their principal source of short-term credits and long-term invest- 
ment capital. 



212 Major Problems 1950-1951 

The area within which sterling can be used as an international cur- 
rency is large, but it is now fenced in by an elaborate system of exchange 
regulation centrally controlled by Great Britain. This barrier prevents 
trade from flowing as freely with the outside world as it does within the 
area, and it is an obstacle to the realization of the basic United States 
objective of restoring as nearly as possible a world-wide system of trade 
and payments. 

At the outbreak of the Second World War Great Britain issued 
regulations restricting the use of sterling for the purchase, sale, or lend- 
ing of foreign currencies. British residents were required to surrender 
their holdings of gold and of the principal foreign currencies. All foreign 
exchange transactions were subject to control by the Bank of England. 
The effect of these regulations was to mobilize financial assets that could 
be used in making purchases outside the sterling area, and to conserve 
them for the British war effort. 

These regulations controlling exchange transactions and foreign 
currencies in general did not extend to the other countries of the British 
Commonwealth (Canada, Hong Kong, and Newfoundland excepted) or to 
certain other countries having close ties with Great Britain-the group 
that comprised the sterling area. Transactions among these countries, 
and between each of them and Great Britain, remained relatively free. 
Many changes have since occurred in the membership of the sterling 
area, but these are not significant for postwar problems. 

The changes that have occurred in the nature of the controls them- 
selves, on the other hand, are significant for postwar policy. At first these 
controls regulated the transactions of the sterling area with the outside 
world as a whole, and not their transactions with individual countries 
or groups of countries. In 1940, however, the terms and conditions gov- 
erning the use of sterling by countries outside the area were laid down in 
bilateral agreements between Great Britain and the individual countries. 
Transfers of sterling between these outside countries were prohibited, a 
minor exception being made for transfers between Central American 
countries. Only sterling paid into American and Swiss accounts was con- 
vertible into dollars. 

Bilateralism was thus introduced into the relations between the 
sterling area and the rest of the world. The system of control was made 
effective by the adoption of similar regulations by the various independ- 
ent and semi-independent monetary authorities within the area. Great 
Britain became the custodian of a central pool of gold and dollars into 
which most of the dollars currently earned in trade by members of the 
sterling area were paid and out of which dollar commitments were met. 
Thus the reserves of the area were centralized. At the same time, sterling 
balances accumulated in London as the result of the supplying, by mem- 



Great Britain and the Commonwealth 213 

bers of the sterling area, of the sinews of war on credit to Great Britain. 

This system remained substantially unchanged until 1947, when it 
was modified in accordance with the terms of the Anglo-American Finan- 
cial Agreement of 1945. Under that agreement Britain undertook within 
a limited period of time to make the sterling receipts from current trans- 
actions of all sterling area countries freely available for current transac- 
tions in any other area without discrimination, and to remove all restric- 
tions on payments and transfers for current transactions. This was in 
effect an undertaking to make currently earned sterling convertible into 
dollars. Great Britain also made a unilateral declaration in the loan agree- 
ment regarding the wartime accumulations of sterling. It expressed its 
intention to make agreements, especially with countries of the sterling 
area, under which part of the sterling balances would be made freely 
convertible for current transactions in any currency without discrimina- 
tion, part would be similarly released by installments, and part would be 
"adjusted" as a contribution to the settlement of war and postwar 
indebtedness. 

It did not prove possible, however, to make such agreements with 
the large holders of sterling balances, among which were Egypt, India, 
and Pakistan. The procedure was therefore adopted of placing these 
"old sterling" balances in separate accounts (the so-called No. 2 accounts) 
and to allow the sterling in these accounts to be used only for transfers 
to other No. 2 accounts or for investment in certain types of securities. 
Sterling currently accruing was also placed in separate accounts (the so- 
called No. i accounts) and was subject to the regulations governing the 
use of sterling arising from current transactions in general. 

In preparation for fulfilling its obligations under the loan agree- 
ment, Great Britain took a number of steps to liberalize its wartime ex- 
change control system. These v .0 designed to allow greater freedom for 
the transfer of sterling from one bilateral account to another and from 
these accounts to American accounts, which were already convertible into 
dollars. In February 1947 a "transferable account" system was intro- 
duced. Sterling was allowed to pass freely between members of the trans- 
ferable account group of countries and from these countries into Ameri- 
can accounts. On July 15, 1947 sterling arising from current transactions 
was made fully convertible into dollars or other currencies. By August 20 
British gold and dollar reserves had fallen so drastically that, by agree- 
ment with the United States, convertibility was temporarily suspended. 
This was accomplished, not by abolishing the system of transferable 
accounts, but by withholding the privilege of transferring sterling from 
these accounts to American and Canadian accounts. Several important 
countries, however, were at this time removed from the category of "trans- 



214 Major Problems 

ferable account" countries into the category of "bilateral account" coun- 
tries. This was a partial return to the wartime system. 

The intricate system of control over sterling that resulted from these 
changes divided the world, as far as the use of sterling in international 
payments is concerned, into segments, each subject to a slightly different 
type of regulation American account countries, transferable account 
countries, bilateral account countries, and the Scheduled Territories (the 
new name for countries of the sterling area). Within each of these groups 
except the bilateral group, intercountry transfers of sterling were per- 
mitted. An important group of countries, including Argentina, Belgium, 
Brazil, Canada, France, and Germany, made up the bilateral account 
category. Sterling held by countries in all the categories could be used 
without special permission to make payments in the sterling area, but 
transfers of sterling from the sterling area to countries in the other cate- 
gories, and between countries in different categories, could be made only 
with the consent of the British authorities. Because sterling is to be in- 
cluded in the proposed European Payments Union, the latter restriction 
will have to be relaxed enough to permit transfers between members 
of the union in the settlement of current surpluses and deficits in their 
mutual trade. 

Under the exchange control system described above, the countries of 
the sterling area acquire sterling by selling goods and services to Britain 
and to transferable and bilateral account countries, and by selling the 
greater part of their dollar receipts in foreign trade to the British ex- 
change control. They continue to meet their external obligations by mak- 
ing sterling transfers to British accounts and to the transferable or bilateral 
accounts of other countries, and by converting their sterling into dollars. 
But payments into sterling accounts that are governed by bilateral agree- 
ments, and conversions into dollars, must pass the scrutiny of the British 
authorities. 

When the sterling area countries convert sterling into dollars, they 
are in effect drawing on the central dollar reserve they have helped to 
create. But their withdrawals may not equal their contributions, and 
both are subject to negotiation. Gold or dollar payments between Great 
Britain and other countries may be called for when the credit limits 
agreed to under bilateral agreements are reached. The causal factor 
determining all of these payments is the trading balance between the 
country or countries concerned and the entire sterling area. 

These features of the operation of the British exchange control place 
Great Britain in a special position of responsibility as holder of the 
external reserves of the sterling area, and they account in part for British 
reluctance to abandon bilateral arrangements with other countries or 
to enter very far into European plans for monetary integration. One of 



Great Britain and the Commonwealth 215 

the advantages of membership in the sterling area is continued access 
to sterling credit, both short and long-term. There has been a steady 
flow of capital to the sterling area, possibly to the point of putting a 
strain on the British economy. It has reduced the amount of British 
exports available as payments for imports, some of the reduction having 
undoubtedly occurred in hard currency markets and thereby increasing 
the British dollar deficit. To reduce the potential drain on the common 
pool of gold and dollars, moreover, it has been necessary for the members 
of the sterling area to institute a policy of discriminatory restrictions 
on imports from the United States. 

The release of accumulated sterling balances has had effects similar 
to the outflow of capital. During the past few years there has been a con- 
siderable shift in the ownership of these balances from India, Pakistan, 
and Egypt to Australia and other British countries. Large releases from 
the No. 2 accounts of the former countries have been negotiated, to be 
used for the purchase of capital equipment and other goods in the sterling 
area, and to some extent for purchases in dollars. This has created a 
strong market for certain branches of British industry, which produce 
goods needed for the development and social stability of these countries. 
By fostering "unrequited exports" the name given to exports in liquida- 
tion of old indebtedness and therefore not available to pay for current 
imports Britain has preserved its industrial and commercial connections 
that have been built up in the past. These unrequited exports, especially 
to India and Pakistan, have been a major cause of weakness in the 
balance-of-payments position of Great Britain. 

It has been the position of the British Government that the arrange- 
ments governing sterling described above, and the continued existence 
of the sterling area, have made it possible for sterling to be widely used 
as a truly international current;. The British have contended that the 
sterling system is still the greatest system of multilateral payments in 
the world and that the maintenance and future expansion of this system 
is dependent on bilateral agreements with countries outside the sterling 
area. The British Government has expressed the firm intention of gradu- 
ally liberalizing its exchange control with a view to reaching full con- 
vertibility as soon as possible. In the negotiation of the European Pay- 
ments Union and in other ways, however, continental countries, Belgium 
in particular, have pressed for more rapid progress in this direction. 
There have been indications that the willingness to use sterling as a 
monetary reserve and as a medium of international payments is being 
undermined by these prolonged restrictions on its unfettered use. 

There are indications that Great Britain has modified its original 
postwar position that the sterling balances were a matter for negotiation 



216 Major Problems 

exclusively between itself and the holding countries, but no formal pro- 
posals have been made that the United States should play a part in the 
settlement. Nonofficial suggestions have been made, however, that a pro- 
gram of American assistance to India and Pakistan and other holders 
might be developed under which these countries would, as a condition of 
receiving the assistance, relinquish part of their sterling claims. The 
countries concerned have, however, shown their strong opposition to 
suggestions of this sort. 

In short, then, two features of the British exchange control impede 
a return to a regime of interconvertible currencies, which is necessary to 
a world-wide system of monetary payments. The first consists of the 
arrangements that in effect merge the current balance of payments of 
Great Britain with those of the other countries in the sterling area; the 
second feature consists of the arrangements that govern the use in inter- 
national transactions of sterling accumulated during the war. 

The problem is to determine what additional action, if any, the 
United States should take in connection with the system of centralized 
exchange controls that characterize the sterling area. 

Whether the dissolution of the sterling area, in the sense of abolish- 
ing the exchange controls that separate it from the outside world, would 
be in the interest of the United States largely turns on whether a solution 
of the sterling balances problem would give reasonable assurance that 
sterling could be made convertible within a relatively short period. 

The first issue is whether the United States should take action with 
regard to the sterling balances. One alternative is to insist that the final 
solution should be in accordance with the principles of the Anglo- 
American loan agreement, but that some immediate steps should be taken 
to reduce the actual and potential drain on British reserves created by 
present British policies. Under this alternative the United States might 
urge that Great Britain renew its efforts to persuade the holders of the 
balances to agree to a substantial reduction by cancellation, and if no 
agreement were possible, Great Britain might be encouraged to take 
unilateral action. Furthermore, as an interim policy, Great Britain might 
be urged to set aside a definite part of the remainder of the balances for 
release by installments, but in amounts that would not seriously burden 
the British balance of payments or cause serious drains on the sterling 
area gold and dollar reserves. The question of what proportion of the 
balances remaining when sterling again becomes convertible on current 
account should be fully released would be left for later decision. 

Under this alternative the United States would not assume direct 
responsibility for the consequences in the Near East and Asia of a reduc- 



Great Britain and the Commonwealth 217 

tion of unrequited exports from the sterling area. The major emphasis 
would be placed on the removal of barriers to sterling convertibility, and 
the resistance of the governments of Egypt, India, and Pakistan to any 
reduction of their sterling claims would be disregarded. This resistance, 
however, reflects profound emotional forces of an economic, political, and 
social nature that are at work in areas of great strategic importance to 
the United States. To break down the resistance to this type of solu- 
tion it might be necessary to link the reduction of sterling balances with 
American assistance to India, Pakistan, and the Middle East. 

This suggests the second alternative, which is to make American 
assistance in these areas conditional on a scaling down of sterling bal- 
ances. Under this alternative the strain on the reserves of the sterling 
area would be diminished, convertibility of sterling would be facilitated, 
and the United States would assume large responsibilities as a supplier 
in the reconstruction and development of countries whose traditional 
economic ties have been with Britain. The relations so established be- 
tween these countries and the United States would in time probably trans- 
fer them from the sterling to the dollar area. 

The second and deeper issue is whether the United States should 
in fact seek, by taking action in connection with the sterling balances or 
by other means, the gradual dissolution of the system of controls in the 
sterling area. 

The first alternative would be to base United States policy on the 
belief that the multilateral arrangements now existing within the area, 
and within the general sterling system of which the area is the core, are 
a stabilizing influence in world economic relations. If the United States 
took this view, it would be accepting the British contention that the 
safest and best road to sterling convertibility is through the gradual 
liberalization and relaxation of British exchange control regulations as 
the balance of payments of the sterling area as a whole improves. 

The second alternative would be to base United States policy on the 
assumption that even in the long run Great Britain can continue to be 
the leader and banker of the sterling area only with the aid of a perma- 
nent system of discriminatory controls over its trade and payments. The 
justification for such a view would be a judgment that the British economy 
is no longer strong enough to exercise leadership on any other basis. 
Under this alternative the United States would encourage sterling area 
countries to increase their use of dollars as monetary reserves and to 
settle the greater part of their international transactions in dollars. If 
this policy were adopted, the United States would have to be prepared 
to provide by some effective means the short-term commercial credits and 
the longer-term investment facilities that have been traditionally pro- 
vided by Great Britain to the world and are now provided by it to the 



218 Major Problems 1950-1951 

sterling area countries. The United States would also have to weigh the 
probable effects of such a shift on the over-all position of Great Britain 
and on the Commonwealth as a whole. Political and strategic considera- 
tions would have to be placed in the balance to see whether they would 
tip the scale against the cold logic of a purely economic calculus. 

Selected References 

British Information Services, "Speeches in House of Commons by British Chancel- 
lor of the Exchequer Cripps Concerning Dollar Crisis, July 6 and 14, 1949," 
Releases T. 69 and T. 70 (July 1949). British Information Services, "Statement by 
British Chancellor of the Exchequer Concerning Sterling Area Gold and Dollar 
Reserves, Jan. 4, 1950," Release No. T. 89 (January 1950) . Kaplan, Eugene J., 
"Britain's Sterling Balances and Their Impact on World Trade," U.S. Depart- 
ment of Commerce, Foreign Commerce Weekly, Vol. XXXVIII (Feb. 13, 1950), 
PP- 3\5 4 1 '! 2 - Midland Bank, "The Changing Shape of Britain's Monetary 
System" (Pt. I: 1931-45; Pt. II: Post-War Transition), Midland Bank Review 
(November 1947), pp. 1-6, and (February 1948), pp. 1-7. Midland Bank, "The 
Evaluation of Exchange Control in the United Kingdom, 1939-49," Midland 
Bank Review (February 1949), pp. 6-11, 13. U.S. Department of State, "Tri- 
partite Economic Conference Ends," U.S., U.K., and Canada Agree on Measures 
to Expand Dollar Earnings of Sterling Area, Bulletin, Vol. XXI (Sept. 26, 1949), 
pp. 473-75. U.S. Department of State, "U.S., U.K.-Canadian Economic Dis- 
cussions," Text of British Treasury Communique* Issued on July 10, 1949, 
Bulletin, Vol. XXI (Aug. 8, 1949), p. 197. U.S. Federal Reserve Board, "Anglo- 
American Trade and Financial Negotiations," including British White Paper 
on the Anglo- American Financial Agreement, Bulletin, Vol. 32 (January 1946). 



Chapter XII 

The European Problem Area 

THE Europe of modern times has consisted of little more than an un- 
stable equilibrium of competing sovereign states, loosely held together 
by a commercial and financial network and with a thinly spread common 
culture. The unstable equilibrium has frequently been upset as one or 
another of the competing sovereign states has sought to dominate the 
whole, and it has as frequently been restored by the re-establishment of 
some sort of balance of power. The two most nearly successful attempts 
to dominate were those of Napoleon and Hitler, which occurred a little 
more than a century apart. 

Since the Second World War the Soviet Union has established 
domination over the states of Eastern Europe. To prevent the further 
expansion of Russian power, the states of Western Europe, together with 
the United States, are seeking a pattern of joint action that will serve to 
check and perhaps ultimately to reverse the course of Soviet policy. 
Most European states feel the pull to one or the other of these power con- 
stellations. The experience of the prewar pattern of continental relations 
nevertheless persists. It underlay the basic plans for rehabilitation and re- 
construction in Europe. It is revealed in the persistent attempts to revive 
the older pattern of complementary trade between Eastern and Western 
Europe. It is shown in the reluctance of the states of Western Europe to 
commit themselves to courses of action that might lead to a freezing 
of the pattern in its present form. 

To restore the economic health of the Continent and to revive and 
maintain the political freedom of its constituent states are long-term 
objectives that arc valid for Europe as a whole. But the immediate ob- 
jective is the development of an effective defensive posture in Western 
Europe with respect to the Soviet Union. The result has been to estab- 
lish in Europe a line of direct contact between the Soviet Union and the 
United States. This line corresponds with the zonal boundaries in Ger- 
many and Austria, and it links with the revised Yugoslav-Italian border 
and the Free Territory of Trieste. In its present form it constitutes an 
unstable political and strategic frontier between the East and the West. 
The fundamental policy problems that confront the United States in 
Europe arise out of this central fact. In this context the control of Ger- 
many is the basic issue. Germany, partly because it is de facto partitioned, 
is an unstable element affecting the policies of most European countries, 
the United Slates, and the Soviet Union. Problems arise that are con- 

219 



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220 



The European Area 221 

nected with the control of Germany and with the reorganization of 
Western Europe as a frontier region in contact with Soviet power. 

The objectives and policies of the United States with respect to 
Europe, even if they were related to only two categories the strength- 
ening of Western Europe, and relations with the Soviet Union in Europe 
cannot be kept strictly focused. Western Europe consists of states with 
fully developed relations and interests outside Europe. It is accordingly 
involved in the development of United States policy at many points 
throughout the world. There are French interests in north and west 
Africa, in the Near East, and in Indo-China. There are Dutch interests 
in Indonesia. There are Belgian interests in equatorial Africa. There are 
British interests in every quarter. Many American objectives, though de- 
veloped for regions far removed from Western Europe, turn out to have 
a European aspect. Many of them, though developed in close relation to 
the problems of Western Europe, turn out to have important conse- 
quences elsewhere. 

In the field of foreign economic policy, for example, the difficulties 
of reconciling the global and European aspects of problems have become 
most acute and most complex. The economic restoration of Western 
Europe could scarcely be achieved without a revival of its overseas trade 
and investments. The first step in this direction, the revival of domestic 
production, has been largely accomplished with the help of the Marshall 
Plan. The second and more difficult step remains to be taken the in- 
crease of international trade, both intra-Europcan and extra-European. 

The political and social changes that have taken place in the world 
have impaired the prewar channels in which Western European trade 
and investment moved. This is true especially of the complementary trade 
patterns that were built up between the Western industrial and the 
Eastern agricultural regions of Europe, and between European states and 
their colonial possessions in south and east Asia. The first of these chan- 
nels has been blocked by the division of Europe. American anxiety to 
prevent strategic materials from moving into areas dominated by the 
Soviet Union has added still further impediments. In the case of the 
second channel, the destruction of war and continuing political instability 
have prevented a rapid restoration. 

Factors operating in Western Europe itself further condition the 
expansion of both intra-European and extra-European trade. Inflation 
of both costs and prices, scarcity of foreign exchange, and inconvertibility 
of currencies have reduced the movement of goods and services and have 
hampered investment. In some countries production has been restored in 
forms that are essentially autarkical. In others internal conditions have 
fostered social policies that are often uneconomic but are also short- 



222 Major Problems 1950-1951 

term political necessities that cannot be postponed in favor of hypo- 
thetical benefits in the longer run. 

One of the most comprehensive policy problems confronting the 
United States with regard to Europe arises from the fact that economic 
revival in Western Europe has now reached the point where emphasis 
must be placed on questions of international trade and finance. The 
problem involves, first, the emphasis that is to be given to the European 
Recovery Program for the remaining term of its operation; and second, the 
character and purpose of any program of assistance that is to be devel- 
oped as a follow-up. The present tendency is to shift the focus of the 
European Recovery Program from the expansion of production to the 
restoration of a more general exchange of goods and services. This is 
the goal of proposals for the relaxation of import quota restrictions and 
for a Western European payments agreement. These represent highly 
technical devices, and it is by no means certain that the use of them will 
not lead to an expansion of intra-European trade at the expense of over- 
seas trade rather than to an increased flow of European trade generally. 
The course of developments in this respect will condition the larger 
question of what, if anything, is to replace the Marshall Plan in 1952. 
This question is already anticipated by President Truman's appointment 
of a special aide to study the general problem of United States economic 
relations, not only with Western Europe but also with the rest of the 
world. 

American pressure for the "integration" of Western Europe is an- 
other approach to the problem of trade expansion, though a less precise 
and clearly defined one. European statesmen, for their part, are begin- 
ning to suggest that the degree of co-operation and co-ordination that 
the combined American-Western European interest requires can be 
achieved only by action on a broader scale than that covered by the 
"integration" of Western Europe alone. The North Atlantic Treaty, in 
this view, calls for a closer drawing together of the United States, Great 
Britain, and the countries of Western Europe economically and politi- 
cally as well as militarily. Proposals of this kind present the United 
States with fundamental problems, of which the major ones are whether 
to loosen or tighten its organizational relationships with Europe, and 
whether or not to press Great Britain into a more complete identification 
of its interests with those of the Continent. 1 

It is significant that this European interest in broadening the basis 
of co-operation within the Atlantic community developed on the heels 
of two important events. The first was the increasing American insistence 
on speedier action toward greater economic integration specifically, 

1 See Chap. 11 above, "Great Britain and the Commonwealth." 



The European Area 223 

toward more rapid reduction of European quantitative trade restrictions 
and the conclusion of a payments agreement. The second was a meeting 
of the Military Committee of the North Atlantic Treaty Council, in 
which an over-all defense plan was drawn up requiring a scale of military 
expenditures that the Western European states generally felt they would 
be unable to meet. This situation brought two critical and related prob- 
lems to the fore in United States relations with Western Europe: one, 
the total costs for defense and recovery and their relationship to each 
other over the next few years; the other, the organizational form of 
American co-operation with Europe after 1952. 

In both cases the underlying security implications of the existing 
economic programs have become of increasing importance. The worst 
effects of wartime destruction and disruption having been overcome, 
the most obvious cohesive influence in Western Europe at the moment is 
its search for security against the Soviet Union. The most obvious com- 
mon interest between the United States and Western Europe is also se- 
curity in this same sense. From the American point of view, because a 
stable world is the basic objective, the immediate necessity is that West- 
ern Europe should be politically stable, economically viable, and mili- 
tarily strong enough to discourage aggression. The long-range hope might 
be the development of this stabilized sector into a means of restoring an 
earlier European community, economically prosperous, organized on the 
basis of representative government, and maintaining the basic rights of 
its individual citizens. This might be achieved by means of formal federa- 
tion, some other form of political organization, or informal co-operation. 

The question may then be asked, Why have American spokesmen 
placed emphasis exclusively on formal Western European integration? 
To some extent this seems to be due to a false analogy between the 
American and European scenes. It is frequently contended that the United 
States has become strong and prosperous through the application of the 
federal principle and through the development and expansion of a con- 
tinental market. Therefore, let Western Europe unite, at least to the 
extent of integrating its separate economies into a single market to which 
the techniques of mass production and marketing can be applied; then 
Europe too can become strong and prosperous. It is easy enough to point 
out the flaws in this analogy, which ignores the enormous differences in 
national origins and the political and historical development of the two 
areas. On the other hand, by failing to develop positive proposals that 
might lead to the restoration of an international market and to an increased 
flow of trade and capital both within and outside the Continent, the states 
of Europe left themselves open to these none-too-specific demands for a 
solution by means of integration. 

If the present demand for economic integration means simply a con- 



224 Major Problems 

certed rationalization of production and trade and a new form of pay- 
ments agreement, it results in no more than arrangements between 
sovereign states in matters of common interest and is subject to reversal 
for national political, economic, and security reasons. If more is intended, 
the need for political integration in the precise sense of the establishment 
of a supranational authority is implied. Even if the United States could 
force the creation of such an authority in Western Europe, the funda- 
mental institutional changes involved might be so revolutionary that 
they would endanger even the existing degree of co-operation that has 
been achieved, and they might intensify, not harmonize, the divisive 
tendencies of European nationalism. 

In this situation the combined effects of decreasing Marshall Plan 
aid and of increasing military expenditures led the French Government 
to propose a shift in emphasis from the narrower scope of Western 
Europe to the broader one of the Atlantic community. With an existing 
defense organization, with adequate room under the terms of the Atlantic 
Pact to expand the area of co-operation to the political and economic 
spheres, and especially with no definite termination date to the policy 
of North Atlantic co-operation, this shift was an almost inevitable de- 
velopment. It would not only tend to prolong direct United States par- 
ticipation in the European scene, but it would probably serve to increase 
the strength of the American commitment by formalizing its economic 
and political association with Western Europe. 

It should also be noted, however, that there is an element of escapism 
in all these proposals. In the popular American view, if Europe were to 
solve its problems by integration, the United States would at once be 
relieved of a heavy burden, and a strong position would be established 
against Soviet encroachment. In the popular European view, if the United 
States were to make its commitments firm and lasting, the European 
states would be relieved of the necessity of making difficult internal eco- 
nomic adjustments to meet increasing defense costs. It is noteworthy 
too that the pendulum has swung periodically between two contradic- 
tory arguments concerning the best method of achieving the desired 
unity. When difficulties have arisen over integration, or economic union, 
or federation, all on a broad scale, the argument has been that the proper 
way to proceed was through gradual expansion from smaller units, such 
as Benelux or a Franco-Italian union, to a wider Western European 
union. When this approach has run into difficulties, it has been argued 
that the base of co-operation was too narrow and that effective co-opera- 
tion, in whatever political form, could be developed only out of broad 
common interests. The second phase seems now in the ascendant among 
Europeans, because of an acute awareness that increased military ex- 
penditures threaten economic recovery. Although it is simple enough to 



The European Area 225 

point out the common interest of the United States, Great Britain, and 
Western Europe in creating a strong position against the Soviet Union 
and communism, it is far from easy to draw up the detailed courses of 
action by which that position must be developed. Generally speaking, 
there is considerable reason to think that both the American preference 
for formally knit integration and the European preference for an agreed 
co-ordination are conditioned in large measure by the urgency of a Soviet 
threat. 

Germany, either as a West German government or in the sense of 
an ultimately unified state, is a key point of uncertainty in all proposals 
to integrate, to co-ordinate, or to form collective security arrangements. 
From the point of view of the states of Western Europe, Germany is in 
itself a security problem, and it is politically difficult for these states to 
ignore the potential power of Germany in order to face the actual power 
of the Soviet Union. 2 

By way of Germany, where the United States has a direct if partial 
responsibility for the domestic and foreign policy of the West German 
state, the American Government has become actively involved in the 
domestic problems of Western European states. A number of crucial ques- 
tions arise from this situation. With France in a politically unstable 
condition, and with Great Britain still uncertain about the advisability 
of making final commitments to take integrated action with the states 
of Western Europe, these questions become even more difficult to solve 
than they would be otherwise. A weak France cannot accept the possi- 
bility of even a moderately strong West Germany unless it believes that 
Great Britain will provide a consistently available counterbalance or that 
the United States is committed politically and economically, as well as 
militarily, to a North Atlantic organization. 

The internal security of the states of Western Europe is thus another 
question with which United States policy is intimately concerned. Local 
Communist parties are making a co-ordinated effort to sabotage the build- 
ing up of economic and military strength and to maintain an atmosphere 
of political tension and uncertainty. Their efforts have in the past been 
particularly dramatic in France and Italy, where the Communist party 
musters considerable political strength and can capitalize on obvious 
social maladjustments and antagonisms. The United States has given its 
direct moral support to the established non-Communist governments in 
both these countries, and, in addition, has partially directed its economic 

2 The French proposal of May 1950 for a merger of French and German coal and 
steel production into a single economic complex was explained in security as well as 
in economic terms. It would ensure France and Western Europe against the misuse 
of the war potential of the German steel industry. 



226 Major Problems 1950-1951 

and military assistance programs to countering these internal threats. 

These are the general problems that confront American policy in 
Western Europe. Reference must also be made to two special points of 
present uncertainty and difficulty, Yugoslavia and Spain. Yugoslavia, 
strategically located with respect to central and Eastern Europe and with 
respect to Italy and Greece, is of great significance for the position of 
the Western powers in the Mediterranean. In breaking with the Soviet 
Union and its satellite states, Yugoslavia has conceivably upset the basic 
pattern of Soviet control in Eastern Europe and has actually checked the 
expansion of Soviet influence into the Mediterranean region. But Yugo- 
slavia, as a Communist state, cannot be brought into reliable conjunction 
with the non-Communist West. The advantages of enabling this state to 
continue to act as a thorn in Soviet flesh must, however, be continually 
weighed against the political dangers of compromising with a dictatorial 
and totalitarian regime and of supporting it. 

Spain is situated strategically with respect to Western Europe and 
to the position of the Western powers in the Mediterranean. It is firmly 
anti-Communist, but it is also a dictatorship. Its anti-communism, more- 
over, carries a strong flavor of previous links with Hitler, Mussolini, and 
the Anti-Comintern Pact. As far as American policy is concerned, the 
strategic advantages that might be gained by insisting on including Spain 
in a Western European system must be weighed against the possibly de- 
structive consequences of including Spain against the political feelings 
of the American and European peoples. 

THE UNITED STATES AND EUROPEAN INTEGRATION 3 

For several centuries national divisions and power rivalries in Europe 
have periodically been the cause of warfare. The United States may be 
said to owe its independent existence in part to those conflicts, but other- 
wise it did not directly participate in them until very recently, when it be- 
came involved in two major wars that were world-wide in scope though 
European in origin. Long before the remedy for discord and disunity in 
Europe became a significant American preoccupation, European minds 
had grappled with the problem. Many proposals were produced for the 
unification, integration, federation, or confederation of separate national 
states to form a single harmonious whole. 

The outbreak of the Second World War led to renewed discussions 
of the consequences of national divisions in Europe, and various pro- 
posals for integration were discussed by the allied European governments. 
It is possible that interest was revived in the old ideas of integration by 
Hitler's concept of a "New Order" to be imposed on Europe under Ger- 
man hegemony, in which many foes of the Axis saw the germs of an 

This topic was treated comprehensively in a problem paper on European inte- 
gration in the 1949-1950 edition of Major Piohlems of United States Foreign Policy. 



THE ORGANIZATION OF WESTERN EUROPE 



J COUNCIL OF EUROPE (WESTERN GERMANY AND THE SAAR ARE ASSOCIATE 

MEMBERS) 




NOTE 

Members of OEEC: France, Great Britain, Belgium, Netherlands, Luxembourg, Den- 
mark, Norway, Italy, Sweden, Portugal, Iceland, Ireland, Switzerland, Austria, Greece, Turkey, 
Western Germany, Military Government of Trieste. 

Members of Council of Europe: France, Gieat Britain, Belgium, Netherlands, Luxem- 
bourg, Denmark, Norway, Italy, Sweden, Iceland, Ireland. Greece, Turkey, Western Germany 
(associate), Saar (associate). 

Members of North Atlantic Treaty: France, Great Britain, Belgium, Netherlands, Luxem- 
bourg, Denmark, Norway, Italy, Portugal, Iceland, United States, Canada. 

Members of Brussels Treaty: France, Great Britain, Belgium, Netherlands, Luxembourg. 



227 



228 Major Problems 1950-1051 

attractive ideal if only it were fathered by the forces of good rather than 
of evil. The new impetus to integration was especially strong in the gov- 
ernments-in-exile representing the smaller countries of Europe, whose 
very existence depends on a stable European order. Whatever wider pos- 
sibility this development might otherwise have had, enthusiasm for it 
was dampened in the United States and Great Britain, even during the 
war, by the discovery first that the Soviet Union was hostile to the federa- 
tion of states on its borders, and later that it was opposed to any idea 
of federation in Europe. In these circumstances the ideal of achieving 
European unity had to be strictly limited for the time being to the na- 
tions outside the Soviet sphere. 

After the war even the European nations outside the Soviet orbit 
were under the shadow of subversive movements calculated to reduce 
them one by one to the status of satellites of the Soviet Union. Most of 
them were too exhausted economically, and some of them were too 
divided politically, to oiler resistance to internal or external pressure. 
At this stage a problem was created for the United States, because its 
interests became directly involved through the Communist threat to 
world peace and hence to American security. In the formulation of 
United States policy for dealing with the problem, Western European 
integration became increasingly prominent. Consequently, the major ob- 
jective of United States policy in Europe has become the development of 
an integrated community of free nations economically, militarily, and 
politically strong enough to resist either piecemeal or wholesale absorp- 
tion by the Soviet Union, and capable of serving if necessary as the first 
line of defense against Soviet attack. 

The first important American step toward this objective was taken 
in June 1947, when Secretary of State Marshall offered economic assistance 
contingent on the initiative and co-operation of the European states in 
drawing up a joint recovery program. The original offer was open to all 
the countries of Europe, but the Soviet Union refused to co-operate, pre- 
vented the satellite states from participating, and subsequently made 
every effort to wreck the project. 

If the original American proposal implied the idea of a single in- 
tegrated plan for European recovery, the idea has not been achieved. 
Instead, partially co-ordinated national plans were combined with a sys- 
tem by which annual grants of American aid were jointly allocated. The 
central body involved was the Organization for European Economic Co- 
operation (OEEC). Chiefly at American insistence, the position of the 
Council of the OEEC has been gradually strengthened, and it has taken 
a number of important steps to improve the flow of trade and payments 
among the member states. In particular, quantitative restrictions on a 
considerable amount of intra-European trade have been reduced, and 



The European Area 229 

intra-European payments have been facilitated. Most recently, the nego- 
tiation of a European payments union was completed in June 1950.* 

One of the basic integrating proposals that had been made in the 
early stages of the Marshall Plan was the formation of a European cus- 
toms union. Before the end of the war, Belgium, the Netherlands, and 
Luxembourg had already agreed to form such a union, to be known 
as Benelux. In 1948 the union was still under negotiation, and it was 
then announced that a complete economic integration would be es- 
sential to an effective customs union. Benelux has not yet evolved beyond 
"preliminary union." Other attempts were made after the initiation of 
the European Recovery Program. France and Italy in 1948 opened 
negotiations that looked to an eventually complete economic union. A 
treaty was signed in March 1949, but it has not yet been ratified. 

In the fall of 1949, when EGA Administrator Hoffman took the 
OEEC countries to task for not moving faster toward an integration 
of their economies, the Council of OEEC approved in principle the 
further development of regional blocs within Europe for freer trade. 
The possibilities of a Scandinavian customs union were examined, 
but in January 1950 a preliminary report stated that "at present there 
is no foundation for realizing a customs union between Denmark, 
Iceland, Norway, and Sweden." A limited financial union between 
Britain and the Scandinavian countries known as Uniscan was, however, 
agreed upon. It removed certain restrictions on current payments and 
established a standing committee to study further steps toward economic 
co-operation. 

A new approach to economic integration was made in May 1950 
by French Foreign Minister Schuman. He proposed to tackle simul- 
taneously the problems of eliminating Franco-German enmity and of 
fostering general European unification, by immediate action "on a 
limited but decisive point," namely: "to place all French and German 
steel and coal production under a common high authority in an or- 
ganization open to the other European countries." This pooling of 
production would be "the first stage in European federation" and 
would "lay the real foundation for [the] economic unification" of all 
countries participating. 

The proposal met with a mixed reception. Official and unofficial 
reactions ranged from enthusiastic if uncritical acceptance of the worthy 
objectives involved through more restrained endorsements in principle to 
a pertinent questioning of the meaning of such undefined points in the 
plan as the powers of the proposed high authority, the nature of transi- 
tional measures to equalize conditions and prices, and the methods by 
which actions to rationalize and modernize production were to be kept 

4 See "The European Payments Union," pp. 255-61 below. 



230 Major Problems 1950-1951 

from developing into restrictive cartel arrangements. Great Britain 
was especially wary about committing itself in advance. Negotiations 
began in June among France, Western Germany, the Benelux countries, 
and Italy. Great Britain was absent. 

The possible military integration of Western Europe did not be- 
come an explicit objective of American policy until some time after the 
European Recovery Program had been launched. The opposition of the 
Soviet Union to this program, together with the complete breakdown of 
the four-power negotiations for a German peace settlement in London in 
December 1947, led British Foreign Minister Bevin to propose closer 
military co-operation among the Western European states. From this 
emerged, with the encouragement of the United States, the Brussels Treaty 
of March 1948. 

Signed by five states Great Britain, France, and the Benelux 
countries the Brussels Treaty was more than a simple military alliance. 
It provided the framework for genuine military integration by establish- 
ing regular organs of consultation and the Permanent Defense Or- 
ganization with a combined headquarters at Fontainbleau, France. The 
treaty also reinforced the idea of economic co-operation and provided 
for furthering the harmonization of the social services and cultural ac- 
tivities of its signatories. Official approval of these steps was speedily 
given by the United States, conversations on problems of common inter- 
est were initiated, and American observers were sent to the military 
meetings and to the defense headquarters after it had been set up. 

Out of this activity evolved the wider project of the North Atlantic 
Treaty, which brought together Canada, Iceland, Denmark, Norway, 
Portugal, Italy, the Brussels powers, and the United States. The treaty 
was signed in April 1949, ratified by the United States Senate in July, 
and brought into force in August. Immediately afterwards, the United 
States instituted a military assistance program by passing the Mutual 
Defense Assistance Act of 1949. This act authorized i billion dollars 
in military aid to the Atlantic Treaty countries. Bilateral agreements 
covering the use of this aid, which were signed in January 1950, stated 
that priority should be given to economic recovery because it was es- 
sential to international peace and security, and required that the mili- 
tary assistance provided be used to promote an integrated defense of 
the North Atlantic area. 

The experience of the first year of the North Atlantic Treaty made 
it clear that the task of defense was "so large, its costs in labor and 
material resources so high, and the problem of security so indivisible" 
that a combined effort and continuous direction at the highest level 
would be needed if the purpose of the treaty was to be achieved. This 



The European Area 231 

was the considered conclusion reached by the North Atlantic Treaty 
Council when it met in London in May 1950. 

In accordance with this judgment, the council agreed to appoint 
deputies to sit for the foreign ministers of the member states and (i) 
to co-ordinate defense planning; (2) to recommend implementing meas- 
ures; (3) to consider common political problems relevant to the purposes 
of the treaty; (4) to co-ordinate public information; and (5) to consider 
the development of political and economic co-operation as contemplated 
in Article 2 of the treaty. 5 The common defense effort was to be based on 
the principle of a balanced collective force. Secretary of State Acheson 
pointed out: "If we put this principle into practice, it follows that the 
members of the Atlantic Community will have to intensify their practice 
of developing common policies on the major problems of common concern 
in the field of foreign affairs and that they must also develop even closer 
and more cohesive economic policies." 

Although agreement on objectives and principles is fundamental, 
there is still a long way to go before actual policies are formulated and 
action is taken. In this particular case the policies required would affect 
United States action in every part of the world. The nature of American 
commitments within the North Atlantic community, therefore, presents 
one of the basic problems of United States foreign policy. 

In June the President presented Congress with a request for an- 
other i billion dollar appropriation for military assistance to the At- 
lantic pact countries for the fiscal year 1951. The plans for strengthen- 
ing the military position of Western Europe that have thus developed 
out of the treaty have necessarily involved greatly increased expendi- 
tures for rearmament by the European nations as well as the United 
States. This has complicated the incomplete program of economic re- 
covery, and the problem has been made still more difficult by uncer- 
tainty about American action when EGA legislation expires in 1952. 
Recognizing this, the American, French, British, and Canadian foreign 
ministers agreed in May 1950 to broaden the existing relationships 
between the OEEC on the one hand and Canada and the United States 
on the other, and "to provide for regular discussion and consideration 
of the problems requiring cooperative action in the coming period." This 
decision was supplemented by the announcement of the North Atlantic 
Treaty Council that it would consider further action under Article 2 
of the treaty. 

Although unofficial proposals for the political unification of Europe 
have been numerous since the war, the development of official proposals 

"The significant portion of this article reads: "The Parties . . . will seek to 
eliminate conflict in their economic policies and will encourage economic collaboration 
between any or all of them." 



232 Major Problems 1950-1951 

for closer political integration has moved slowly. In July 1948 France 
proposed a federal parliament and an economic and customs union of 
the Brussels powers. This proposal was rejected by Great Britain as 
premature, but from it developed the Statute for the Council of Europe, 
which was accepted by ten countries Denmark, Norway, Sweden, Italy, 
Ireland, and the five Brussels powers. Greece, Turkey, and Iceland were im- 
mediately approved as additional members, and some time later, the 
Saar and the West German Federal Republic were invited to join as 
associated members. The Council of Europe consists of the Committee 
of Ministers, meeting in private, and the Consultative Assembly, meeting 
in public. The powers and the agenda of the assembly are strictly con- 
trolled by the Committee of Ministers. Questions of national defense were 
specifically excluded by the statute from consideration by the council. 

The first assembly decided that the goal for the Council of Europe 
should be "the creation of a European political authority with limited 
functions but real power," and assigned its General Affairs Committee 
to formulate proposals for such a union. This committee later recom- 
mended steps to bring the Committee of Ministers and the assembly 
into closer relations, but made no proposals for actual federation. In 
the economic field the assembly adopted proposals to unify its member 
states as a single preferential tariff area in which there would also be 
free currency convertibility. It was also proposed to send a mission to the 
United States to discuss tariff reductions and the modification of com- 
mercial treaties. The Committee of Ministers referred these proposals to 
OEEC for a report. 

The problem of the relationship of the United States with multiply- 
ing North Atlantic and Western European organizations involves an 
elaborate complex of issues. Difficult questions exist of adjusting United 
States economic and military assistance programs for Europe with similar 
programs for other regions of the world, of the adequacy of United 
States resources for the comprehensive policies being developed, and 
of priorities and allocations between regions. 

Within Western Europe itself the issues are more precise but no 
less interrelated. The United States has stated that the "integration" 
of Western Europe is a desirable development, but since it has not 
concretely defined "integration," what is the kind and degree of integra- 
tion desired? How fast and how far should the United States press for 
integration as a matter of policy? 6 Each of these questions calls for a dif- 

6 The general policy decisions required were discussed at length in a problem 
paper on European integration in Major Problems of United States Foreign Policy 
- 



The European Area 233 

ferent answer according to whether it refers to separate economic, military, 
or political acts of integration, or to a complete and single act of unifica- 
tion. Each question has to be examined in relation to Western Europe as 
a whole, taking account of the difficulty of associating Germany and of 
the differences between the continental and British outlook. Nor has 
there been in the United States any close examination of whether a 
genuinely and closely integrated Western Europe would be wholly satis- 
factory to American interests and objectives. The restrictive features of 
the economic proposals of the Consultative Assembly of the Council 
of Europe suggest a point of view very different from that embodied in 
American foreign economic policy, namely, to promote the growth of 
multilateral, non-discriminatory trade. 

It has still to be asked what practical conclusions can be drawn 
from the inability of small groups of Western European states to estab- 
lish customs unions, and what significance is to be attached to the re- 
luctance of Great Britain to commit itself to a continental role. 

With the development of the North Atlantic Treaty organization 
into a more closely-knit structure, all these issues take on a new form. 
The new structure implies a continued and even a closer association 
of the United States and Europe, and this in turn affects the willingness 
of the states of Western Europe to enter into commitments looking 
toward further integration. It also changes the focus of the problem for 
the United States. On the one hand, it opens the way for Great Britain 
and the continental states to make proposals for drawing the United 
States into a closer policy co-ordination and a tighter organizational 
relationship with themselves. On the other, because the United States 
will be involved in developing practical co-operation, its freedom of 
action will be diminished in fact, whether commitments have been made 
or not. 

The problem is to examine the interest of the United States in the 
integration of Western Europe in the light of the developing emphasis on 
the creation of a North Atlantic community. 

The main issues are the nature and extent of the commitments that 
the United States Government should enter into militarily, economical- 
ly, and politically in connection with the developing North Atlantic 
association. Another issue concerns the kinds of organizational machinery 
that would be best suited for carrying out the decisions made. 

The first issue is whether the United States should increase its 
military commitments to Western Europe. At the time the North At- 
lantic Treaty was being considered by the Senate, the careful wording 
of Article 5 was declared by Secretary Acheson to leave the Congress 



*34 Major Problems 

full freedom to decide whether a particular situation required going to 
war in order to restore the security of the North Atlantic area. He also 
told the Senate that Article 3 bound the United States not to a particular 
program of military aid but only to the principle of self-help and mutual 
aid. When, however, in accordance with the Mutual Defense Assistance 
Act of 1949 it became necessary to develop an integrated defense plan 
for the region, the military plans were drawn up on the presumption 
that the military means of putting them into effect would be avail- 
able. This presumption has become more explicit with the acceptance 
of the concept of "balanced collective forces"; for if a program is ac- 
tually set in motion to create such forces, an agreement to provide some 
of the components becomes a fundamental commitment. It is difficult 
to see that the United States in such circumstances retains freedom of 
action with respect to the defense of Western Europe or has any choice 
left if a question arises whether or not to continue a military aid pro- 
gram. Certainly an American refusal to proceed to the practical execu- 
tion of the agreements of the North Atlantic Treaty Council would 
undermine the whole structure of regional collective security arrange- 
ments. 

The relation of economic and military assistance programs is the 
next issue. When the North Atlantic Treaty was being examined by 
the Senate Foreign Relations Committee, there was concluded to be no 
implication that "the United States could be called upon under the 
treaty to contribute toward a long-term recovery program for Europe." 
Although it may still be argued that no commitment exists in this re- 
spect, it is less certain that an obligation has not been created. On the 
assumption that the Western European states have bound themselves to 
a military plan involving heavy expenditures, it may be presumed that 
their plans for economic development will be interfered with. By press- 
ing for a military plan, the United States has consequently reached a 
point where its security policy in Western Europe can be jeopardized 
by the abandonment of its economic assistance program. The future 
economic policies of the United States are now much less easily sepa- 
rated from its security commitments. 

The issue of the extent to which the United States should enter 
into closer political relations with members of the Atlantic community 
has not reached the point of official discussion. But there is a parallel 
between the political integration of Western Europe and closer political 
unity under the North Atlantic Treaty. The official United States position 
with respect to Western Europe has been that although the Council of 
Europe and related activities are to be encouraged, all initiatives and 
decisions in connection with such questions are a purely European matter. 
However, the implication that political unification is equally essential 



The European Area 235 

to European recovery and security has frequently appeared in many 
official and unofficial American statements. The same implication appears 
with equal justification in discussions of the need for unity of action and 
policy among the North Atlantic states. In fact this is essentially the 
argument of those who propose some form or other of an Atlantic 
union. There is, then, a pertinent question whether the United States 
can press for a closer political integration of Western Europe without 
exposing itself to counter-pressures for a similar integration of the 
North Atlantic countries. 

Even if the North Atlantic Treaty organization develops associa- 
tions no more binding than those that already exist, there is an im- 
mediate issue presented by the complexity of the organizational machin- 
ery that now operates. Problems of overlapping jurisdiction between 
the organs of various European and North Atlantic bodies have already 
led to the establishment of joint committees. Premier Bidault of France 
proposed an Atlantic High Council for Peace, which Foreign Minister 
Schuman explained as something to be "superimposed upon already 
existing organs, each of which has a clearly defined purpose: economic, 
military, political or social. ..." Although this particular proposal was 
not taken up, the North Atlantic Council established a continuing 
body of deputies and gave it sufficient authority to undertake at least 
part of the task of co-ordination. 

The chief alternatives are (i) to establish an over-all co-ordinating 
authority; (2) to establish ad hoc committees as circumstances require; 
or (3) to unify all existing bodies into a single structure. The last alter- 
native implies something very like integration, the second something like 
the present situation. 

Selected References 

British Information Services, Statute of the Council of Europe, text published 
May 5, 1949. Release P. 905/2 (May 10, 1949). Brussels Treaty Powers, Joint 
Communique* of Oct. 26, 1948, after third session of Consultative Council of 
Foreign Ministers on a North Atlantic Pact, New York Times (Oct. 27, 1948). 
Great Britain, Labour Party, Feet on the Ground, a study of Western Union 
(September 1948). Great Britain, Parliament Papers by Command, Cmd. 7367, 
Treaty of Economic, Social, and Cultural Collaboration and Collective Self- 
Defense Between Great Britain, France, Belgium, the Netherlands, and Luxem- 
bourg, signed at Brussels, Mar. 17, 1948 (1948). Great Britain, Parliament Papers 
by Command, Cmd. 7807, Report on First Session of Council of Europe (With 
Related Documents) Strassbourg, Aug. 8, to Sept. 8, 1040, Miscellaneous No. 14 
(1949). Organization for European Economic Cooperation, "European Recovery 
Programme," Second Report of the O.E.E.C., Paris (February 1950). Truman, 
Harry S., "Military Aid: President's Message to the Congress, June i, 1950," 
Congressional Record (June i, 1950), pp. 8002-04. United Nations, Economic 
Commission for Europe, "The Economic Plans of European Countries/' Survey 
of the Economic Situation and Prospects of Europe, App. A, U.S. Doc. E/ECE/58 
(Mar. 30, 1948). U.S. Department of State, "Balanced Collective Forces Urged 



236 Major Problems 

for Defense of North Atlantic Community," address by Secretary Acheson, 
delivered to the members of the Senate and the House of Representatives, May 
31, Bulletin, Vol. XXII (June 12, 1950), pp. 931-37. U.S. Department of State, 
"Final Communique by the Foreign Ministers of the Twelve Nations of the 
North Atlantic Treaty, issued at London, May 18, 1950," Bulletin, Vol. XXII 
(May 29, 1950), pp. 830-31. U.S. Department of State, "The Meaning of the 
North Atlantic Pact," Bulletin, Vol. XX (Mar. 27, 1949), pp. 384-88. U.S. Depart- 
ment of State, "Meeting of U.S., U.K., and French Foreign Ministers at London: 
Communique' of May 18, 1950," Bulletin, Vol. XXII (May 29, 1950) , p. 827. 
U.S. Department ot State, "Mutual Defense Assistance Agreements Signed by 
Belgium, Denmark, France, Italy, Luxembourg, the Netherlands, Norway, and 
the United Kingdom with the United States," Bulletin, Vol. XXII (Feb. 6, 13, 
and 20, 1950), pp. 198-211, 247-56, 293-95, respectively. U.S. Department of 
State, "North Atlantic Council Resolution on Central Machinery," Bulletin, 
Vol. XXII (May 29, 1950), p. 831. U.S. Department of State, "A Program for 
United States Aid to European Recovery," President Truman's message to 
Congress, Dec. 19, 1947, Bulletin, Vol. XVII (Dec. 28, 1947), pp. 1233-43. U.S. 
Department of State, The Signing of the North Atlantic Treaty, General Foreign 
Policy Series 10, Publication 3497 (June 1949). U.S. Senate Foreign Relations 
Committee, Documents Relating to North Atlantic Treaty, S. Doc. 48, 81 Cong, 
i sess. (Apr. 12, 1949). U.S. Senate Foreign Relations Committee, Foreign Eco- 
nomic Assistance Ace of 1950, S. Doc. 168, 81 Cong. 2 sess. 

GERMANY 

The United States is determined that Germany shall not again 
constitute a threat to international peace and security. At first the 
American attitude toward Germany contained a certain punitive ele- 
ment, but the United States has officially never aimed at the complete 
destruction of the German state. Although the United States agreed at 
the Potsdam Conference in 1945 to decentralize Germany politically, 
it nevertheless insisted on German economic unity, which was essential 
to a self-supporting and independent country. 

Despite the failure of the Soviet Union to co-operate through the 
Allied Control Council in establishing the central economic institutions 
agreed on at Potsdam, the Western powers tried throughout 1946 and 
1947 to reach an over-all settlement of the German problem in the 
Council of Foreign Ministers. With the breakdown of the London 
conference in December 1947, however, the Western powers decided, 
pending four-power agreement on Germany as a whole, to proceed with 
rebuilding the part of Germany that they controlled, for it was a vital 
element in the rebuilding of Western Europe and the checking of 
Soviet expansion. There was little ground for optimism that in the 
prevailing atmosphere four-power agreement on a unified Germany 
could be reached in the immediate future, but the achievement of 
such an agreement remained the long-term goal of United States policy. 7 

7 See problem paper on the German peace settlement in the 1947-48 edition of 
Major Problems of United States Foreign Policy. 



The European Area 237 

In the absence of the Soviet Union, agreement among the three 
Western powers became less difficult to achieve. France remained wary 
of the revival of a strong Germany, but a spirit of compromise entered 
into the discussions. By June 1948 agreements had been reached among 
the three powers and the Benelux countries on the measures necessary 
for the reconstruction of Western Germany. Among the most important 
of these was the decision to establish a federal form of government in 
the three Western zones. The Soviet Union retaliated with its blockade 
of Berlin, and a complete split followed between the Eastern and 
Western zones. Four-power discussions on removing the blockade were 
held in Moscow late in the summer of 1948, but these proved fruitless 
because the three Western powers would not agree to postpone the estab- 
lishment of a West German state as the price of Soviet agreement to the 
lifting of the blockade. The Western powers then referred the Berlin 
dispute to the United Nations Security Council, which also failed to 
settle it. 

A general strengthening of the European position of the Western 
powers occurred during the winter of 1948-49. This was primarily due 
to the success of the European Recovery Program, the new spirit of 
confidence that was produced by agreement on the North Atlantic 
Treaty, and the agreements finally concluded on a "basic law" for a 
western German state, an occupation statute, the halting of plant dis- 
mantling, and the establishment of the International Ruhr Authority. 
This improvement in the position of the Western powers, their success 
in countering by means of the airlift the Soviet attempt to drive them 
out of Berlin, and the damaging effect of the counterblockade on the 
economy of the Soviet zone led to a renewal in May 1949 of four-power 
talks on Germany. Although the Soviet blockade of Berlin was removed 
as a precondition to these talks, no basis was found for the resumption 
of four-power collaboration in solving the long-range problem of re- 
organizing and rebuilding a Germany that would fit into a peaceful 
pattern of European and international relations. The Western powers 
therefore proceeded with the establishment of the Federal Republic 
of Germany, which came into being in September 1949 in the three 
Western zones. This was soon followed by the proclamation of the 
People's Republic of Germany in the Soviet zone. Thus the temporary 
four-fold division of Germany, that had been made for occupation pur- 
poses at the end of the Second World War and had gradually become 
a two-fold division because of the split between the four powers, became 
a de facto partition. 

Although the Western powers and the Soviet Union took the ini- 
tiative in the creation of the two new German states, both sides left 
the initiative for unification ostensibly to the Germans. Eastern Ger- 



838 Major Problems 

many started with a Communist "National Front" campaign for the 
abolition of the Bonn Government and the Ruhr Authority, the repeal 
of the Occupation Statute, the withdrawal of occupation troops, and the 
conclusion of a peace treaty. The West German Republic countered 
with a demand for the formation of a Constituent Assembly, chosen 
from the whole of Germany by free, democratic elections under four- 
power or United Nations supervision. Late in May 1950 the Western 
powers followed this up with a proposal for free all-German elections 
under democratic conditions including the prohibition of secret political 
police and of all paramilitary forces, and for the return to Germany 
of all industrial enterprises acquired by or on behalf of a foreign power 
after May 8, 1946, without quadripartite approval. The Eastern Ger- 
man Government replied to this by declaring that the abolition of the 
Western Republic and the repeal of the allied statutes must be the 
precondition to any such elections. 

The United States is interested in the emergence of a unified demo- 
cratic Germany that will be sufficiently stable and willing to withstand 
Soviet and Communist pressure and to operate as a vital part in the 
political and economic system of the Western world. Such a Germany 
would have to be based on genuinely free and democratic elections, with 
a constitution embodying and protecting the essential features of Western 
democracy. 

The problem is to formulate an over-all United States policy for 
Germany on the assumption that unification is the long-term objective. 

An inclusive United States policy for Germany must satisfy require- 
ments that are only in part of German origin. Policy must be adjusted 
to relations with the Soviet Union and to United States objectives in 
Western Europe generally, as well as to factors that are inherent in a 
sovereign German nation. So regarded, the problem consists of four 
main issues: the adaptation of policy to the East- West political struggle 
within Germany; the restraining of authoritarian forces within Germany; 
the reconciliation of French security interests with the development 
of a strengthened Germany; and the possibilities of safeguarding against 
the dangers inherent in the industrial pre-eminence of Germany. Each 
of these issues can be discussed in the light of a West German Federal 
Republic and an East German Democratic Republic, or of a unified 
Germany. 

The first issue relates to the conduct of the East-West struggle for 
political control within Germany. The most significant aspect of this 
issue is the possible orientation of a unified German state. The orienta- 
tion of the Eastern German Republic is obviously conditioned by fac- 



The European Area 239 

tors over which the Germans themselves have no control. Anti-Com- 
munist propaganda in the East is not likely to change the enforced 
alignments with Russia, and the Western powers have shown their de- 
termination to resist Communist activities in the West. 

All immediate considerations aside, however, there is a strong tradi- 
tional orientation of German policy toward the East (though not toward 
the Soviet Union) as well as toward the West. In the past that to the 
East has had strong conservative and intellectual support. Arguments in 
favor of reviving the links, chiefly with the Eastern German state, have 
begun to be restated by West German industrial circles and by certain 
agricultural interests. This has little significance for the present, but its 
development in a unified Germany would be important. Although a 
national government might be both unable and unwilling to break 
definitely with the West, it would be under considerable internal pres- 
sure to develop a "bridge-policy" to try to establish a position as the 
intermediary between the West and the East. 

The alternative courses of action available to the United States 
in connection with this issue are not clear-cut. One possible course 
would be to tie Western Germany so tightly to the Western European 
countries that the knot could be cut only with great difficulty by a 
unified Germany. 8 Another would be to treat the issue as a risk that 
can be deferred. This would avoid setting in motion the complex ac- 
tions and reactions that would accompany pressure now for integra- 
tion. On the other hand, it would encourage the tendency of West 
German politicians to seek concessions by playing off the United States 
and the Soviet Union against each other. It can also be argued that the 
possible development of a bridge-policy is an actual and not a remote 
risk because it might become the focus for a movement toward European 
neutrality. 

The second issue is the control of authoritarian political and social 
tendencies within Germany. One of the most significant aspects of post- 
war Germany is the economic, cultural, and sociological differences- 
nonexistent in 1945 that have been created by the diverse policies of 
the occupation powers. The forms of parliamentary democracy and the 
institutions of private enterprise were reintroduced in Western Ger- 
many, and Eastern Germany was transformed into a Communist-con- 
trolled People's Democracy, with nationalized industry and a centrally 
directed planned economy. In Western Germany the social structure of 
the pre-Hitler Weimar Republic reappeared. In Eastern Germany nation- 
alization of industry and the confiscation and distribution of large estates 

The problems involved in this course of action are considered in "The United 
States and European Integration," pp. 226-36 above. 



240 Major Problems 1950-1951 

destroyed the economic basis of the older structure. Former leadership 
was replaced by a Communist bureaucracy .which, with the help of the 
Soviet authorities, changed the social structure from top to bottom. 

This issue differs in degree according to whether it is considered 
in the context of a West German or of a unified German state. The 
greater the freedom of action of Germany, the greater the danger of 
the revival of authoritarian methods of organization. In either context 
the issue is closely related with security and economic issues. 

Again the available alternatives are not clear-cut. The obvious 
alternativeto retain the controls needed to check authoritarianism 
wherever and whenever it shows has the effect of weakening both the 
German Government and developing democratic forces and of thus creat- 
ing a demand for authoritarian solutions. The equally obvious one of 
letting nature take its course, although it will not weaken the Govern- 
ment, will permit the evolutionary re-establishment of authoritarian 
methods. 

The third issue is the satisfaction of French security interests. At 
the end of the war, France sought the complete decentralization of 
Germany, arguing that a highly centralized administration permitted 
the organization of German resources for aggression. Although this 
earlier position was gradually modified to the point where France re- 
luctantly agreed to the formation of the West German Federal Govern- 
ment, the French are still apprehensive of the growing political and 
economic effectiveness of the new state. The inclusion of Eastern Ger- 
many in this state would add about twenty million people and con- 
siderable industrial potential. Now that the West German state has 
begun to raise territorial claims and that the question of rearmament 
has been raised, the possibility of a unified Germany merely aggravates 
French fears. A unified state, the French insist, would seek full sov- 
ereignty, including the right to defend itself with its own armed forces, 
and such claims would be practically irresistible. 

The issue does not permit the consideration of many alternative 
courses of action. The French proposal to merge the coal and steel 
industries of Western Europe was defended as a method of reaching 
a satisfactory compromise on the issue of French security. But aside 
from this still pending suggestion, the alternatives are (i) to keep 
Germany relatively weak by prolonged controls over its key industries, 
by restrictions on certain branches of production, and by the prohibi- 
tion of any rearmament; or (2) to restore Germany to full political 
and economic independence regardless of French apprehensions. Under 
the first course of action, Germany would probably remain a reluctant 



The European Area 241 

junior partner of the Western European group, but French morale and 
willingness to contribute fully would perhaps be strengthened. The 
second course of action would tend to make Germany again the pivot 
of continental Europe and of the Western struggle against communism. 
It would also raise the possibility of serious conflicts between Germany 
and the Western European nations that might fear, once German power 
was fully restored, that there would be no guarantee that it would not 
one day again be turned against the West. The extent to which these 
apprehensions can be satisfied depends in part on the actions that the 
United States takes in connection with other of its policies, notably 
the degree to which it commits its weight and influence to the defense 
of Western Europe. 

The fourth issue relates to the effect of German industrial pre- 
dominance on the existing situation in Western Europe. With the re- 
habilitation of the Ruhr industries well under way, the steel capacity 
of Western Germany has already surpassed that of France. The limit 
of steel production set by the allies has been reached, and the lifting 
of this restriction in the near future is expected in many quarters. The 
need to rebuild German facilities that have been destroyed and dis- 
mantled and to regain highly competitive markets is likely to lead to 
an intensive rationalization and modernization of German industry. 
The trade unions, free irom serious Communist penetration, appear to 
be co-operative and unlikely to make disrupting wage demands. These 
factors make for an effective industry, operating with relatively low 
production costs and in a strong position to compete with the British 
and French industries. The recent French proposal for a merger of the 
French and German coal and steel industries under an international 
organization may be prompted partly by the hope of guarding against 
the possible ill-effects of German economic predominance by bringing 
its industrial potential under a new form of control while there is still 
time. 

The unification of Germany would change these prospects in several 
important respects. Because unification would involve at least a working 
agreement between the Western powers and the Soviet Union, it would 
direct part of German trade toward the East and would to that extent 
relieve the German pressure for Western markets. On the other hand, 
unification would accelerate the rehabilitation of German industry 
and provide it with a larger and stronger base. 

One alternative for dealing with this issue would be the compre- 
hensive integration of German heavy industry with the key industries 
of Western Europe under complete international supervision. Such an 



242 Major Problems 1950-1951 

organization would, however, require supranational authority over 
production, distribution, and prices, which would penetrate nearly every 
aspect of the national life of its members. Without such authority, it is 
questionable whether the national governments would be able to resist 
the political pressures of their vitally concerned business and labor 
groups that will be necessary in order to make the organization work. 

Another alternative would be to let an equivalent integration de- 
velop from negotiations between interested nongovernmental national 
groups. Given the background and present tendencies in Western 
Europe, this alternative would almost certainly result in some form 
of cartel arrangement. It can be argued that although this pattern of 
development might alienate trade union and labor groups, it would draw 
together other equally powerful social forces, and it would provide a 
basic stability in Western Europe and ensure the industrial potential 
needed for its security. The real product of this course of action would 
be the acceptance of German economic predominance, and this result 
would be produced more quickly by a unified Germany than by a West 
German state alone. 

A third alternative would be to encourage an equivalent integration 
to take place on the lines of the present socialist concept of a controlled 
economy. This would require the political dominance of the socialist 
parties in Western Europe, which is not the case at the present time. 

Selected References 

French Embassy, Press and Information Division, "France Proposes a Franco- 
German Coal and Steel Pool," Foreign Minister Schuman's statement of May 9, 
New York (May 10, 1950). Soviet Union, The Soviet Union and the Berlin 
Question (Documents), Ministry of Foreign Affairs (1948). U.S.S.R. Embassy, 
"Bonn 'Government' Splits Germany, USSR Note Tells West," USSR Informa- 
tion Bulletin, Vol. IX (Oct. si, 1949), pp. 622-24. U.S. Department of State, 
The Axis in Defeat: A Collection of Documents on American Policy Toward 
Germany and Japan, Publ. 2434 (1945). U.S. Department of State, The Berlin 
Crisis: A Report on the Moscow Discussions, 1948, European and British Com- 
monwealth Series i, Publ. 3298, (September 1948). U.S. Department of State, 
The Bonn Constitution: Basic Law for the Federal Republic of Germany, 
European and British Commonwealth Series 8, Publ. 3526 (1949). U.S. Depart- 
ment of State, "Communique" on Six Power Meetings Establishing an Inter- 
national Authority for the Ruhr, Dec. 28, 1948," and "Text of Draft Agree- 
ment," Bulletin, Vol. XX (Jan. 9, 1949), pp. 43-52. U.S. Department of State, 
"Democratic Advance of Western Germany: U.S. Rejects Soviet Interpretation 
of Events," Bulletin, Vol. XXI (Oct. 17, 1949), pp. 590-91. U.S. Department of 
State, Directive Regarding the Military Government of Germany, July n, 194*], 
European Series 27, Publ. 2913 (1947). U.S. Department of State, "East German 
Government Established Through Soviet Fiat," Bulletin, Vol. XXI (Oct. 24, 1949), 
PP- 634-35. U.S. Department of State, The Future of Germany, addresses delivered 
Jan. 23 and Feb. 6, 1950, by U.S. High Commissioner for Germany McCloy, 
European and British Commonwealth Series 14, Publ. 3779 (1950). U.S. Depart- 



The European Area 243 

ment of State, "The German Problem and Its Solution," address by U.S. High 
Commissioner for Germany McCloy, Apr. 4, 1950, Bulletin, Vol. XXII (Apr. 
J 7 ^S )* PP- 587-89. U.S. Department of State, Occupation of Germany, Policy 
and Progress 1945-46, European Series 23, Publ. 2783 (1947). U.S. Department 
of State, "U.S. Asks U.S.S.R. to Cooperate in Unifying Germany with Proposal 
for Free, All-German Elections," Bulletin, Vol. XXII (June 5, 1950), pp. 884-85. 
U.S. Department of State, "U.S. Protests East German Remilitarization," note 
of May 23, 1950, Bulletin, Vol. XXII (June 5, 1950), pp. 918-20. U.S. High 
Commissioner for Germany, First Quarterly Report on Germany, September 
21-December 31, 1949 (1950). 



FRANCE 

A basic objective of United States policy is to restore France to a 
position that would enable it to exercise leadership in Europe and to 
exert a stabilizing influence to the benefit of European recovery as a 
whole. To regain such a position, however, France itself must first be- 
come politically stable, economically sound, and militarily strong. Eco- 
nomic weakness and unstable French governments have, since the end 
of the war, complicated the inherent difficulties of solving European 
problems by diplomatic agreements among the United States and the 
Western European states. 

Although much of the weakness of France is the consequence of the 
Second World War and of postwar developments, many French diffi- 
culties stem from long-standing basic maladjustments that were clearly 
visible before the war. The political tradition of the Third Repubic 
encouraged numerous splinter parties that combined with certain fea- 
tures of the constitution to produce unstable governments. The histori- 
cal military position of France as the leading continental land power 
had been taken over by Germany. Although France had managed to 
create a balance between agriculture and industry in the development 
of its economy, this had been done at the cost of subsidizing the fa- 
vored agricultural interests. The industrial capacity of the country never 
became adequate to support both a major military establishment and 
the demands for a higher standard of living. Many other factors con- 
tributed between the wars to a deterioration in all phases of French 
life, particularly in public morale. Accordingly, in the 1930*5 France was 
in no position to resist the resurgence of German militarism or to with- 
stand the Nazi onslaught in 1940. 

The war and the occupation further sapped French military and 
economic strength, and the moral damage done by defeat and the dis- 
sensions involving the Vichy Government were only partly offset by 
the growth of a resistance movement at home and a Free French 
movement abroad. After the war even a wholly unified France in a peace- 
ful world would have been hard pressed to overcome the effects of the 
war and at the same time to correct the older maladjustments. It was 



244 Major Problems 

totally unable to cope not only with its purely internal problems but 
also with the domestic repercussions of the postwar international con- 
flictsthe Communist threat of subversion, the cost of the cold war, 
the battle against a dictatorship of the Right, and the struggle between 
economic liberalism and state control. 

French postwar political difficulties first centered around the at- 
tempts to establish a new government, for the animosities before and 
during the war reappeared on a much larger scale after 1945. The 
elections to a Constituent Assembly showed clearly the basic political 
pattern of postwar France: the three leading parties returned were the 
Communist, Socialist, and Mouvement Republicain Popnlaire (MRP), 
the last-named being a new party of the Center. A tripartite coalition 
at first proved the only workable basis for government, but it was so 
tenuous that in the end the MRP deserted and actually campaigned 
against the constitution that the Constituent Assembly had proposed. 
The constitution was not ratified, and a second Constituent Assembly 
had to present a new one, which was finally accepted by a vote of nine 
million for to eight million against, with eight million abstentions a 
poor augury for a stable political future. 

The abrupt resignation of de Gaulle as president in January 1946 
ruined his chances of leading France through the transition period; 
but by October 1947 public dissatisfaction with successive coalition gov- 
ernments gave his new party, the Rassemblement dn Peuple Fran^ais 
(RPF), a large protest vote. At the other extreme the attitude of the 
Communists toward the new constitution aroused widespread suspi- 
cions of their future political intentions. Dislike of the extremes led 
to the formation of the Third Force, a center coalition of Socialists and 
the MRP directed against both the Communists on the Left and the 
de Gaullists on the Right. Although retaining control of the Govern- 
ment, this coalition has been so unstable a mixture of the center parties 
that it has not been strong enough to enforce an effective economic 
program or to depart from the traditional tenets of foreign policy. 

The unstable economic situation complicated the political problem. 
At first an all-out effort to restore production made marked progress. 
But oppressed by budget deficits, a deteriorating balance-of-payments 
position, and a wage-price inflationary spiral, the coalition governments 
have been unable to apply the strong remedies required to bring the 
situation under control. There has been a fundamental difference of 
view about the economic measures needed to meet the difficulties. The 
first Constituent Assembly started a program of state-control (dirigisme), 
the most important action being the nationalization of the coal mines. 
But this lead was not followed, and several years of fluctuating policies 



The European Area 845 

have left France with an economy that lies somewhere between dirigisme 
and economic liberalism. 

As the burdens of inflation mounted and the decline in trade 
became serious, the bad harvest of 1947 led to a wave of strikes. The 
economic grounds for public discontent were exploited politically by 
the Communist party, and the Marshall proposals were opposed on both 
economic and political grounds. For a considerable time a close race 
was run between the efforts of the Communists to interfere with the 
operation of the European Recovery Program and the appearance of 
the benefits that the program was intended to produce. Gradually, how- 
ever, the weight of American economic aid began to make itself felt, 
and the extreme actions of the Communists alienated large sections of 
French labor. Good harvests in 1949 and continued improvement in 
industry and trade made it possible to reinstitute collective bargaining 
and to begin, at least, to raise wages, to stabilize prices and, by increas- 
ing tax revenue, to approach a balanced budget. 

On the deficit side, however, international factors have clouded 
the picture. The Communist party now opposes all measures of the 
Government to collaborate with the other Western states. Party support 
of the Soviet Union became less and less concealed as the early hope 
of making France a bridge between the Soviet Union and the West 
was abandoned and as French foreign policy moved toward full col- 
laboration with the West. 

More recently the French Communists have attacked the govern- 
ment's Indo-Chinese and North Atlantic policies. They have carried 
their obstruction so far that in the spring of 1950 the Government 
passed an anti-sabotage act and began to remove Communist officials 
from their Government posts. The Communist party remains strong 
and disciplined, however, and is still able to exploit economic and 
social dissatisfactions for its own ends. It therefore continues to be a 
potential threat to the internal stability of France. 

The unstable domestic political situation has had its effects on the 
foreign relations of France. The traditional French fear of Germany 
has continued to color all French thinking on European problems and 
has not been wholly subordinated to the Soviet threat. Political weak- 
ness has led French governments to hesitate about making foreign policy 
commitments that might be unpopular at home. The original French 
desire to play an intermediate role between East and West was only 
reluctantly abandoned by force of circumstances. And the suspicion 
has not been wholly eradicated that American policy is aimed at forcing 
the French to take sides in an "inevitable" conflict with the Soviet 



246 Major Problems 1950-1951 

Union. It reappears from time to time in various concepts for the neu- 
tralization of France in such a conflict. 

French foreign policy, however, has gradually evolved to the point 
where it seeks a solution in a more formal development of the Atlantic 
community. The assumption is now made that the superior German 
industrial and military potential would be controllable if it was brought 
within a more inclusively organized community of states. To this end 
France has supported the inclusion of both an autonomous Saar and 
the West German Federal Republic in the Council of Europe, and has 
recently proposed the pooling of European coal and steel production as 
the basis for European economic union. In order to ensure continued 
American support for Western Europe, France has also proposed the 
creation of an Atlantic High Council, which would in effect broaden 
the North Atlantic Treaty to cover economic and possibly political 
co-ordination as well as military. 

Another French difficulty that has repercussions both domestically 
and in relations with the United States is the imperial policy of the 
French Union, especially as manifested in Indo-China. One of the 
deep-seated divisions in French opinion after the war concerned the 
status of the empire. The Right emphasized the importance of main- 
taining imperial prerogatives and was opposed to any colonial autonomy 
or self-government. The Left favored equal citizenship for the natives of 
the overseas territories and freedom to join the French Union as they 
wished. The new French Constitution left the way open for the develop- 
ment of "associated states" within the union, but made changes of 
status subject to the consent of the French parliament. Representative 
assemblies, with limited powers and with an assured representation for 
colonial white minorities, were established in the overseas territories, 
but legislative control remained with the French parliament. 

Soon after the liberation, imperial troubles developed in Syria, 
Lebanon, and North Africa. The temporary Anglo-Chinese occupation 
of Indo-China gave the nationalists a chance to establish a strong 
foothold in the Chinese zone. Outbursts have occurred sporadically in 
various territories, but in Indo-China the situation has developed into 
open warfare and become an international instead of a purely French 
question. 9 Within France the costs of the war in Indo-China have 
added seriously to budgetary and general economic difficulties. The 
Communists have taken up the case politically and have called for 
violent resistance to American military aid and to the shipment of 
arms to the Orient. 

The condition of France in mid-ig5o can be called convalescent 

9 See "United States Commitments in Indo-China/' pp. 311-15 below. 



The European Area 247 

but not beyond the possibility of a relapse. Although there is evidence 
of a strong desire to avoid the extreme political and economic remedies 
prescribed by both the Right and the Left, there is no broad national 
agreement about what should be done to make the nation stable and 
secure and to keep it so. In these circumstances the coalition govern- 
ments of the Center have been unable to do more than carry on interim 
compromise programs. These fail to satisfy all their 'supporters, and 
both the de Gaullist Right and the Communist Left continue to be 
able to exploit a discontented and confused public opinion. 

Two objectives of the United States are significantly affected by the 
degree of stability that exists in France. The first objective is to draw 
together the states of Western Europe into a force strong and coherent 
enough to resist Soviet pressure. The second is to adjust the political 
conflicts of southeast Asia in order to make the region secure against 
Communist encroachments. Although France may not be the principal 
difficulty in either case, neither objective can be satisfactorily achieved if 
France is unstable. For the geographical and political position of France 
in Western Europe cannot be argued away, and France appears deter- 
mined to maintain its position in Indo-China. 10 

The problem is to decide what methods are most likely to hasten 
the restoration of the political stability and the economic and military 
strength of France, thus enabling it to play a constructive international 
role. 

The first issue concerns the action that the United States could 
take to influence the domestic situation in France. The alternatives 
are limited by the fact that direct intervention would not only be con- 
trary to a stated American principle but might be self-defeating even 
if it were employed. Because it is obvious that no consideration can 
be given to the theoretical possibility of favoring the extreme and 
Communist Left, the practical alternatives would be either to support 
and to attempt to strengthen the position of the parties of the Center, 
or to encourage the development of a government of the Right. For 
four years United States policies have in effect been such as to help 
maintain the parties of the Center. Although this support has served to 
keep alive a succession of coalition governments, it has not been able to 
develop any one combination into a politically valid force that could 
expand into a strong, middle-of-the-road government. 

It has been urged that United States interests might be as well or 
better served by a strong government of the Right. The purposes of 

10 The questions raised by this last fact are considered later in connection with 
southeast Asia. 



248 Major Problems 1950-1951 

such a government, it is pointed out, would be at least as favorable to 
American objectives as those of the coalitions that have been formed, 
and such a government would pursue those purposes with greater vigor 
and assurance. Against this it is argued that the Right is a political 
minority, that it would assert itself only by authoritarian means, and 
that its efforts to govern by such means would force the moderate Left 
into Communist hands and lead to violence. It is also pointed out that 
even though the Right shares the American view on the importance of 
France and would bend every effort to justify that view, it does not 
share American views on Germany or on the national aspirations of de- 
pendent peoples. Consequently, it would oppose all policies designed 
to forward these views. 

The second issue concerns the policy the United States should fol- 
low in strengthening Western Europe. The practicable alternatives have 
from the start been three: (i) to base such a policy on the national power 
of one state; (2) to base it on some combination of selected states; or (3) 
to base it on a combination of all the Western European states. 

It has been impossible to choose the first of these alternatives. 
Great Britain has been unwilling to commit all its national power to 
such a policy, arguing that the continent of Europe is only one item in 
British world interests. Although France might aspire to such a position, 
it has not provided convincing evidence that it has sufficient or ade- 
quately organized economic, military, and political resources to carry 
out the part. Germany could not be assigned the role without the risk 
of its dominating Europe and thus reviving the tensions that underlay 
the last two wars. 

Various efforts were made to develop the second alternative, by 
attempting various combinations: an Anglo-French, an Anglo-American, 
an Anglo-American-German, a Franco-German. More realistic com- 
binations, involving more than three states, simultaneously evolved in 
the Brussels Pact, in the Council of Europe, and finally in the North 
Atlantic Treaty. This last, in which the United States is included as a 
major component, is in effect a choice of the third alternative. 

The present condition of France makes difficult, however, the 
development of effective action under any of these alternatives. Domestic 
problems hamper the French Government in its efforts to carry out the 
international obligations that it assumes in this connection. The national 
interests and objectives of France, moreover, continue to run beyond its 
physical and moral resources. 

On the other hand, whatever the reservations made about French 
strength may be, the facts of history and geography, as well as present 
political realities, make it impossible to relegate France to a subordinate 



The European Area 249 

position. France may be unstable enough to oblige the United States 
to take this weakness into consideration in determining the feasibility 
of specific American proposals, but France is also in a sufficiently vital 
position to make it necessary for the United States to adjust some of 
its more specific policies to meet French wishes. 

Selected References 

French Embassy, Press and Information Division, "France and the Council of 
Europe," News From France, Fifth Year, No. 5, New York (May 15, 1950). 
French Embassy, Press and Information Division, "France Proposes a Franco- 
German Coal and Steel Pool," Foreign Minister Schuman's statement of May 9, 
New York (May 10, 1950). French Embassy, Press and Information Division, 
"France's Economic Recovery Policy: Achievements of French Union 1947-1949 
and Objectives 1950-1952," News From France, Fifth Year, No. 3, New York 
(Mar. 15, 1950). French Embassy, Press and Information Division, "French 
Political Crisis of October 1949," News Ftom France, Fourth Year, No. 14, New 
York (Nov. 15, 1949). French Embassy, Press and Information Division, "Pro- 
posal for an Atlantic High Council for Peace," text of speech by Georges Bidault, 
Apr. 16, 1950, News From France, New York (May 1950). French Embassy, Press 
and Information Division, "Text of Further Comments on Proposed Coal and 
Steel Pool by Foreign Minister Schuman at Press Conference," New York (May 
12, 1950). "Text of the Draft Constitution Adopted by the French Assembly," 
New York Times (Oct. i, 1946). The French Text appears, along with 4 sub- 
sidiary "organic laws," in the Journal Officiel of Oct. 28, 1946. "Text of Schuman 
Statement on Pool Plan, June 20," New York Times (June 21, 1950). U.S. 
Department of State, "Agreement Between the United States of America and 
France," signed at Paris June 28, 1948; entered into force July 10, 1948, and 
"Agreements . . . Amending Agreement of June 28, 1948," effected by exchange 
of notes dated at Paris Sept. 21 and Oct. 8, 1948, entered into force Oct. 8, 
1948; and exchange of notes signed at Paris Nov. 17 and 20, 1948, entered into 
force Nov. 20, 1948, Treaties and Other International Acts Series, Publs. 3251 
and 3475, Economic cooperation with France under Public Law 472, 80 Cong. 

SUPPORT FOR YUGOSLAVIA 

Since the break between Tito and the Cominform in June 1948, 
there has been a gradual improvement in relations between the United 
States and Yugoslavia. It was slow to develop because the real nature 
of Tito's dispute with the Cominform, or more exactly with the Soviet 
Union, had to be tested over the course of time. A few words about 
the Cominform controversy are consequently necessary to an examina- 
tion of the problem. 

The difficulties between the Soviet Union and Yugoslavia were 
brought into the open by the lengthy correspondence that each side 
has made public in its own defense since 1948. Tito's sin was not so 
much ideological heresy, it appeared, as an insistence on independence 
of action. The dispute came to the surface over Tito's refusal to allow 
Soviet "advisers" direct access to political and economic intelligence 



250 Major Problems 1950-1951 

from subordinate personnel. This the Soviets regarded as an unfriendly 
attitude. They complained that their advisers were "surrounded by 
hostility" and were actually kept under surveillance by Yugoslav secret 
police. After the Soviet Union had proposed to take the dispute to the 
Cominform, Yugoslavia refused to attend the meeting. The com- 
munique* issued by the Cominform on June 28, 1948 stated that the 
task of the Yugoslav Communist party was "to compel their leaders 
to recognize their mistakes" and to "break with nationalism and to re- 
turn to internationalism. ..." Moreover, it was warned that if the 
present leaders of the party were incapable of doing this, the Yugoslav 
Communist party was bound to "replace them and to advance a new 
internationalist leadership of the party." 

The underlying cause of the dispute was probably given by Tito in 
his speech of December 27, 1948, when he declared that the denunciation 
of Yugoslavia by the Cominform and the subsequent economic blockade 
had not rested on ideological grounds. The Yugoslav refusal to act in 
effect as an economic colony of the Soviet Union and its more indus- 
trialized satellites was the root of the matter. "Our country," Tito stated, 
"should not continue to be a source of raw materials for those coun- 
tries which already possess strong industries and to buy from them at 
high prices industrial products . . . while our people continue to be 
poor and backward." 

Before the Cominform dispute Yugoslav relations with the United 
States and other Western countries were at a low ebb. Tito's territorial 
claims were largely responsible for the unwieldy compromise over 
Trieste that was included in the Italian peace settlement. Similar Yugo- 
slav demands for Carinthian territory were partly responsible for the 
early lack of progress in the Austrian peace talks. The Yugoslav refusal 
to compensate foreigners for nationalized property and its material 
support of the Greek guerrillas were further sources of Western griev- 
ances. The shooting down of an American plane in mid- 1946 was in- 
dicative of a Yugoslav attitude toward Western democracies. 

Almost immediately after it had defied the Cominform, Yugoslavia 
took steps to improve its standing in Western capitals. It agreed to 
compensate American and British citizens for the nationalization of their 
property. These agreements were signed with the United States in July 
1948 and with Great Britain in December. In return the United States 
moved to unfreeze Yugoslav assets in this country, including 47 million 
dollars in gold, and in the early months of 1949 it began to relax export 
controls on trade with Yugoslavia. Great Britain concluded a short- 
term trade agreement with Yugoslavia in November 1948 and started 
negotiations for a long-term agreement. In May 1949 Yugoslavia filed an 



The European Area 251 

application for a loan from the International Bank for Reconstruction 
and Development. 

Several months passed before the Western powers were willing to 
go much further in support of Yugoslavia. By then the Cominform eco- 
nomic blockade against Yugoslavia was almost complete; it had cut off 
nearly half the trade of the country, the growth of which was basic 
to the fulfillment of its five-year plan. The Tito regime was facing a 
stringent economic situation. Evidence of a more favorable Western 
attitude began to show in August 1949, when the United States decided 
to issue export licenses for the Yugoslav purchase of a steel rolling mill. 
Further evidence came in October, when the United States took the lead 
in supporting the candidacy of the country for a seat on the Security 
Council of the United Nations and succeeded in the face of determined 
Soviet opposition. 

By that time rumors had begun to spread that the Soviet Union was 
planning to inaugurate a guerrilla type of campaign to overthrow the 
Tito Government in the spring of 1950. Credence was lent to the ru- 
mors by a speech that Molotov made on December 21, in which he said 
that "the time is not far off when the treacherous Tito gang . . . will 
be overcome by the shameful fate of dishonest hirelings of imperialist 
reaction." The following day in Washington the new United States 
Ambassador to Yugoslavia declared that the President had authorized 
him to say that "the United States is unalterably opposed to aggression 
wherever it occurs or wherever it threatens to occur. ... As regards 
Yugoslavia we are just as opposed to aggression against that country 
as against any other country, and we are just as favorable to the reten- 
tion of Yugoslavia's sovereignty." This position, which was publicly 
confirmed by the President, has been widely interpreted to mean that 
the United States would not sit idle while the Soviet Union and its 
satellites subverted Yugoslavia. On the other hand, the reports that 
appeared in the press in January 1950 of a National Security Council 
decision to extend limited military assistance to Yugoslavia under certain 
conditions have so far not been officially confirmed. 

In the economic field the United States Export-Import Bank ex- 
tended two loans to Yugoslavia of 20 million dollars each, the first in 
September 1949, the second in March 1950. Yugoslavia also exchanged 
dinars for a total of 9 million dollars through the International Mone- 
tary Fund in the autumn of 1949, and received a loan of 2.7 million dol- 
lars from the International Bank. This last was to be used for forestry 
equipment, as part of the program sponsored by the Economic Com- 
mission for Europe to develop European timber resources. By late June 
1950 the Yugoslav application for a large general loan from the Inter- 



252 Major Problems 1950-1951 

national Bank was still pending. Yugoslavia announced, however, that 
it was negotiating with Western Germany for a long-term credit of 80 to 
100 million dollars for the purchase of capital equipment. In addition, 
Yugoslavia signed during 1949 and 1950 several trade agreements in- 
volving considerable amounts. One agreement with Italy provided for a 
mutual exchange of goods to the value of 108 million dollars, and a 
second with Great Britain called for a reciprocal exchange of goods 
to the value of no million dollars over a period of five years. A third 
agreement with Western Germany amounted to nearly 127 million 
dollars. Still other agreements involving lesser sums, were signed with 
France, Denmark, Argentina, and a number of other countries. Although 
there has thus been a considerable rapprochement between Yugoslavia 
and the West, there has been no real test of the full extent of Western 
support. 

The problem is to determine the extent and kind of support that 
the United States is prepared to give to Yugoslavia under existing con- 
ditions. 

The first issue is the extent ol political support. Even the limited 
political support already given the Tito Government has called for a 
refinement in United States foreign policy. Prior to the Gominform in- 
cident, it had not been considered necessary to distinguish between 
Soviet imperialism and communism as such. The Yugoslav case, how- 
ever, posed the question of whether it was the former or the latter 
that was the major adversary of the United States. The choice of the 
former narrowed the definition of the East- West struggle and increased 
the number of potential non-Soviet associated states. 

The question of the political support to be given Yugoslavia may 
be answered only by letting events decide the extent to which the in- 
terests of the parties concerned are parallel. Both the United States 
and Yugoslavia are now interested in checking Soviet expansion 
as regards the latter country. Many of their other interests, such as 
an expansion of their mutual trade, may also be the same, but many 
of their policies continue to be contradictory. One of the most out- 
standing of the latter type concerns the problem of Trieste. The United 
States prior to the Yugoslav-Soviet break in 1948 pledged itself to work 
for the return of the whole of Trieste to Italy, but Yugoslavia stead- 
fastly maintains its claim for its occupation zone, and no mutually 
satisfactory solution has yet been found. It was difficult to determine 
whether the Yugoslav withdrawal of support of the Greek rebellion 
reflected a desire to improve relations with the West or whether it was 
solely related to the break with the Cominform. In any case completely 



The European Area 253 

satisfactory Yugoslav relations with Greece have yet to be restored. In 
internal affairs, as well as in relations between Yugoslavia and the 
United States, concerning matters like political and civil liberties, there 
is definite conflict of view; and it is difficult to keep such matters en- 
tirely separate from direct relations between the two countries. 

The issue of the extent of United States political support thus cen- 
ters on the kind of a political relationship the United States would like 
to establish with Yugoslavia. This raises two principal alternatives. The 
first is to consider Yugoslavia as a special case, in view of the unusual 
conditions that surrounded its defection from the non-Soviet world. The 
separate consideration of particular questions as they arise would be the 
method to adopt in this case. Each request for economic or military 
assistance or for political support would be examined separately and 
solely in the light of the United States interest. They would not be re- 
lated directly to American programs such as those for European re- 
covery, for mutual defense assistance, and Point IV. This would em- 
phasize a purely bilateral approach to Yugoslavia and would keep Yugo- 
slavia strictly in its present international position, that is, cut off from 
the East and aligned only provisionally with the West. 

The second alternative is to try to find a way to fit Yugoslavia into 
the multilateral coalition that is being developed. It would be politi- 
cally embarrassing to Tito to be invited to join the OEEC or to sign 
the North Atlantic Treaty, but if some kind of eastern Mediterranean 
security arrangement were developed, Yugoslavia might be eligible to 
membership. It might also be possible for the United States to invite 
Yugoslavia to participate in the Mutual Defense Assistance Program. 
The act of 1949 does not provide sufficient authority for such a move, 
but the proposed act of 1950 does so. The intention of this alternative 
would be to draw Yugoslavia into a closer political relationship with the 
non-Soviet coalition. 

The second issue is the extent of military support. The Yugoslav 
army is considered to be the strongest in Eastern Europe outside Russia 
and is presumed to be capable of dealing with any attack by the satellite 
states alone, whether of the military or the guerrilla variety. It is gen- 
erally believed that the Soviet Union would have to participate in such 
an operation for it to succeed, and only in this event would United 
States aid be required. The rumored attack against Tito had not de- 
veloped by June 1950, and the question of American military support 
had not yet become pressing. If such a threat does develop, however, the 
United States will have to decide, on the basis of the existing situa- 
tion, whether and to what extent it should provide military equipment 
and supplies. 

The final issue is the extent of United States economic support. 



254 Major Problems 

United States economic aid to Yugoslavia is probably the critical factor 
in the present problem, unless the Soviet bloc opens a concerted drive 
to overthrow the Tito Government. The extent and form of American 
economic aid, either direct or furnished through the United Nations, 
depends upon two considerations Yugoslav needs and Western objec- 
tives. Yugoslav needs can be estimated in two ways: the minimum re- 
quired to support the population, and the requirements of Yugoslav 
economic planning. Depending on over-all Western objectives, United 
States economic support could be designed to fit either or both esti- 
mates. 

The economic resources made available to Yugoslavia since the 
Cominform break provide some indication of its minimum needs. The 
figures are as follows in millions of dollars: 

Unfrozen gold held in United States $47.0 

U. S. Export-Import Bank Loans 40.0 

Drawings on International Monetary Found 9.0 

International Bank Timber Loan 2.7 

U. K. Sterling Credit 22.4 

Total $121.1 

After the granting of the second loan from the Export-Import Bank in 
March 1950, a bank spokesman stated that, despite increased Yugoslav 
earnings from exports, the needs of the nation for additional earnings 
were "urgent." He described the amount of the second loan as "a mutual 
estimate of minimum needs" arrived at by the two countries. Thus the 
first alternative under this issue is to extend aid for the purpose of main- 
taining minimum standards in Yugoslavia. 

On the other hand, it can be argued that if the United States and 
its allies are to encourage actively the spread of Titoism, they should 
help Yugoslavia to meet more than its minimum needs. Although the 
Yugoslav economic plan is considered to be over-ambitious, it might 
be feasible to support those features of the plan that would most rapidly 
raise the low Yugoslav standards of living. In order to adopt this second 
alternative, it might be necessary to re-evaluate the basis on which the 
present scale of economic support is being extended. 

Selected References 

"Cominform Resolutions Calling for United Communist Action for Peace and 
Against Imperialism and Tito Regime: Excerpts From Communique" Broadcast 
by Moscow Radio, Nov. 29, 1949," New York Times (Nov. 30, 1949). Great 
Britain, Parliament Papers by Command, Cmd. 7880, Trade Agreement Between 
the Government of the United Kingdom of Great Britain and Northern Ireland 
and the Government of the Federal Peoples Republic of Yugoslavia, Belgrade, 
Dec. 26, 1949, Treaty Series No. 6 (1950). International Bank, Loan Agreement 
Between Yugoslavia and International Bank, Oct. 17, 1949, International Bank 
Publ. Loan No. 20 Yu. International Monetary Fund, "Yugoslavian Purchases 
. . . From Fund," Press Releases 109 and 111 (Oct. 10 and Nov. 7, 1949). Royal 



The European Area 255 

Institute of International Affairs, The Soviet-Yugoslav Dispute: Text of the 
Published Correspondence f Mar. so-June 29, 1948 (1948). United Nations, 
Letter Dated Aug. n, 1949 From United States and British Representatives to 
United Nations to President of United Nations Security Council Transmitting 
Report of Administration of British-United States Zone of Free Territory of 
Trieste, April i to June 30, 1949, U.N. Doc. 8/1374 (Aug. 11, 1949). United 
Nations, Letter Dated July 14, 1949 From British Representative to United 
Nations To Acting Secretary-General Enclosing Text of British Note to Yugo- 
slavia of July 14 , 1949 Regarding Free Territory of Trieste, U.N. Doc. 8/1351 
(July 15, 1949). United Nations, Yugoslav Report on Administration of Yugoslav 
Zone of Trieste September 1948 to September 1949, U.N. Doc. 8/1467 (Mar. 9, 
1950). U.S. Department of State, "Peace Treaty Not Workable With Regard 
to Free Territory of Trieste," Bulletin, Vol. XX (Mar. 6, 1949), p. 292. U.S. 
Department of State, "Soviet Note on Trieste," Secretary Acheson's comments 
on note of Apr. 20, 1950, Bulletin, Vol. XXII (May i, 1950), p. 701. U.S. Depart- 
ment of State, "United States-Yugoslav Claims Settlement" (Summary of Agree- 
ments), Bulletin, Vol. XIX (Aug. i, 1948), pp. 137-40. U.S. Department of State, 
"U.S.-Yugoslavia Sign Air Transport Agreement" (Text of Agreement), Bulle- 
tin, Vol. XXII (Jan. 9, 1950), pp. 63-64. U.S. Export-Import Bank, "Grant of 
$20,000,000 Loan to Yugoslavia," Press Release 96 (Sept. 8, 1949). U.S. Export- 
Import Bank, "Grant of Second $20,000,000 Loan to Yugoslavia," Press Release 
no (Mar. 2, 1949). Yugoslav Embassy, Yugoslavia: Progress of the Five Year Plan, 
addresses by Tito, Kardelj, and others, Dec. 27-31, 1948 (Washington, 1949). 

THE EUROPEAN PAYMENTS UNION 

The Economic Cooperation Administration (EGA) has during the 
past year applied increasing pressure on the members of the Organi- 
zation for European Economic Cooperation (OEEC) to move in the 
direction of economic integration. This objective is quite separate from 
the successful completion of a joint recovery effort. The attainment by 
the countries of Western Europe by 1952 of a position that will enable 
them to function with no further outside assistance, which is a primary 
objective of EGA, is not contingent on the achievement of the essentially 
long-run objective of European integration or unification. In vigorously 
pressing for such integration, however, EGA has taken the position that 
it is carrying out a mandate expressly laid upon it by the Findings and 
Declarations of Policy that preface the Economic Cooperation Acts of 
1948, 1949, and 1950. 

This mandate is to be found, if at all, only by implication, in the 
act of 1948, but it became explicit in the later acts. The formulation in 
the 1948 act was: 

Mindful of the advantages which the United States has enjoyed through 
the existence of a large domestic market with no internal barriers, and believing 
that similar advantages can accrue to the countries of Europe, it is declared 
to be the policy of the United States to encourage these countries through a 
joint organization to exert sustained efforts . . . which will speedily achieve the 
economic co-operation in Europe which is essential to lasting peace and 
prosperity. 



256 Major Problems 

In the act of 1949 it was further declared to be the policy of the people 
of the United States to encourage the unification of Europe. The 1950 
act called for "further" unification, and a reference was added to the 
advantages enjoyed by the United States through the absence of bar- 
riers to the free movements of persons. It was only in conference, more- 
over, that a firm declaration in favor of the political federation of 
Europe was eliminated from the 1950 act. 

In the 1950 act the Congress for the first time gave its sanction to a 
particular method to be followed by the OEEC countries in promoting 
"unification." It authorized the EGA administrator 

... to transfer funds directly to any central institution or other organ- 
ization formed to further the purposes of this act by two or more participating 
countries, or to any participating country or countries in connection with the 
operations of such institution or organization, to be used on terms and con- 
ditions specified by the administrator, in order to facilitate the development of 
transferability of European currencies, or to promote the liberalization of trade 
by participating countries with one another and with other countries. 

The act earmarked a substantial part of its total authorization (600 
million dollars) to be used by the administrator solely for such transfers. 

Because the analogy of the United States in many ways does not 
apply to Europe or to Europe and the sterling area, it was necessary 
for EGA, in bringing pressure to bear on the OEEC countries for 
economic unification or integration, to arrive at some practical defini- 
tion of these terms. In February 1950 EGA Administrator Hoffman re- 
ported to the Congress that the type of integration aimed at by EGA 
and by the Council of OEEC was agreed to be "the creation of a single 
large market" to be brought about by (i) the removal of all quantitative 
restrictions on the movement of goods; (2) the elimination of monetary 
barriers to intra-European trade; and (3) the progressive reduction of tariffs 
among the participating countries. Mr. Hoffman went on to say that 
integration could not be achieved quickly, and that even if it could, 
it would have no immediate effect in closing the "dollar gap" and re- 
ducing the amount of American aid required by Europe. Integration, 
he said, was a necessary foundation for sustained recovery and a neces- 
sary safeguard against a return to the narrow economic isolation that 
was one of the deep roots of European economic weakness. 

This conception of European economic integration as an independ- 
dent objective, related only indirectly to the immediate problem of clos- 
ing the dollar gap, raises intricate policy problems. Because a European 
payments union has been selected as a principal instrument for promot- 
ing integration, many of these problems are now being debated in terms 
of the techniques and possible effects of such a union. 

As was pointed out in the description of the economic problem 



The European Area 257 

field, European trade for the past two years has been financed by a 
combination of a network of bilateral agreements and two successive pay- 
ments agreements adopted by the OEEC. In spite of these payments agree- 
ments the bulk of intra-European payments has continued to be made 
bilaterally, with the result that efforts to liberalize intra-European trade 
have been of very little effect. The payments union plan was designed 
to make them effective by removing the monetary obstacle to multi- 
lateral trade within Europe. It was, moreover, proposed by the OEEC 
that, concurrently with the establishment of the payments union, 60 
per cent of private intra-European trade should be freed from quota 
restrictions with the hope that the remainder would be eliminated as 
soon as possible. It was also proposed that, once removed, these quotas 
could be re-imposed only on a multilateral basis and only after consulta- 
tion with the union. 

The mechanism suggested for eliminating bilateral payments was as 
follows: the participating countries were to trade with each other as 
before, but at periodic intervals they were to report to the union the 
amount of their surpluses and deficits in the currencies of other coun- 
tries; these were then to be translated into a common unit of account, 
and the net creditor or debtor position of each country in terms of these 
units was to be established. The accounts of the various countries would 
by this process be automatically cleared, and the currencies of the par- 
ticipants would in effect become interconvertible. 

After the clearing, the central bank of each country would emerge, 
either as a creditor (lender to the union) or debtor (borrower from it). 
Every participant was to extend to and receive from the union a line of 
credit that would predetermine the maximum amount of these advances. 
Both short-term and medium- and long-term credits would be extended 
under these credit lines. Short-term credits, until exhausted, would be 
used automatically to settle net creditor and debtor positions and when- 
ever any part of these credits had been utilized for an agreed period, they 
would be deemed to have financed a semipermanent deficit. They would 
then be funded into medium or long-term advances. If these provisions 
had been adopted, they would have made the payments union more 
than a clearing house, for they would have entrusted it with banking 
functions. 

Two measures were proposed to prevent this new intra-European 
credit system from becoming seriously unbalanced or illiquid. One was a 
system of partial gold and dollar payments by the union to the creditors 
and by the debtors to the union, designed to bring pressure on the 
creditors to increase imports and on the debtors to increase exports in 
their intra-European trade. 

The other measure was the assignment of very substantial powers to 



258 Major Problems 1950-1951 

the management of the union. These suggested powers were described 
in the second OEEC Report of February 1950 as follows: 

The Management would have the duty to consult continuously with Mem- 
bers on their relevant economic and financial policies, particularly with a view 
to averting a situation where the medium and long term credits would be 
exhausted. . . . Whenever the position of a Member, whether a net creditor or 
debtor, was in the opinion of die Management, the consequence of undesirable 
monetary, financial or general economic policy followed by him, it would be 
in their duty to place conditions on the access to the facilities of the Union. 

The management was also to have power to vary the amount of the re- 
quired gold payments, to grant additional facilities, and to act by less 
than a unanimous vote. 

In this form the European payments union was not acceptable to 
Great Britain, which made counter proposals in March 1950. These in 
turn were not acceptable to EGA or to many of the continental countries. 
The resulting deadlock was not broken until May, when Great Britain 
accepted the main principle of using sterling in a European system of 
multilateral payments. This acceptance was, however, made contingent on 
numerous special safeguards for sterling and on other substantial modi- 
fications of the original payments union plan. Questions were also raised 
within the United States Government regarding the consistency of the 
original plan with, and its contribution to, the general commercial and 
financial policies to which the United States was committed. The pay- 
ments union, as finally negotiated in June 1950, therefore represented a 
compromise between conflicting views within the United States Govern- 
ment, and among those of the United States, the continental countries, 
and Great Britain. It must be regarded as an experiment in which final 
judgments must be deferred until after experience has been gained. 

The problem is to harmonize the "integration" objective of the pay- 
ments union with other objectives of the United States, and to determine 
whether the union can be administered to assist in a further reconcilia- 
tion of American and British approaches to the general problems of for- 
eign exchange and commercial policy. 

It has been pointed out by the OEEC that the liberalization of intra- 
European trade in the manner contemplated by the payments union plan 
might, in the short-run, adversely affect the solution of the dollar prob- 
lem. By increasing the attraction of export sales to other European coun- 
tries, it might divert European producers from the vital task of winning 
new markets in dollar areas. It might also divert supplies of scarce export 
products away from the Western Hemisphere or attract investment away 
from dollar-earning to dollar-saving activities. It would not do much 



The European Area 259 

for some time at least to reduce the need for dollar imports. These con- 
siderations raise serious problems concerning the relationship between 
the payments union project and United States objectives other than the 
unification of Europe. 

Chief among these is the objective of restoring as soon as possible a 
world-wide multilateral system of trade and payments. This requires the 
development of a multilateral trade pattern within Europe that can be 
fitted into a world pattern. During the past year intra-European sur- 
pluses and deficits have been substantially reduced, but if they were 
eliminated entirely, many new difficulties would be created. It would be 
necessary to find ways of maintaining an internal balance within Europe 
and of fitting Europe as a whole into a world trading network. If an 
attempt were made to achieve this degree of integration through the pay- 
ments union, its banking and administrative functions might have to be 
developed to the point where the union could function effectively as a 
central bank for Europe as a whole. 

The first issue is whether the payments union is to be an interme- 
diate step leading to the earliest possible participation by all members in 
a multilateral payments system in which general convertibility prevails 
or a first step toward the creation of a central bank for a fully integrated 
Europe. In February 1950 the National Advisory Council laid down the 
following principles concerning the payments union: (i) "The operations 
of the proposed Union shall not conflict with the obligations undertaken 
by the United States and other member governments to the International 
Monetary Fund"; and (2) "the establishment of the Union on the re- 
gional basis proposed shall not prevent any one participating country 
from moving as rapidly as possible toward full currency convertibility 
and closer integration independently of progress evidenced by other 
Members of the Union." 

The first alternative is to accept these principles and to make the 
ncessary modifications in the techniques and administration of the union. 
Acceptance of this alternative would leave open the possibility of ex- 
amining at a later date the need for continuing such a union after its 
principal members were in a position to accept full currency converti- 
bility. 

The second alternative is to accept the payments union as potentially 
one of the principal organs for administering a future Western European 
union on a broad economic and political basis and to develop its techniques 
and strengthen its administration as a permanent supranational authority 
in Europe. The choice between these alternatives is fundamentally a choice 
between basic objectives, and it will be influenced by broad political and 
security considerations. 

The policy decisions to be made on this issue are enormously com- 



260 Major Problems 

plicated by the inclusion of sterling in the payments union. To obtain 
British participation, the powers of the union have had, in fact, to be 
considerably restricted, and the acceptance of the second alternative 
would mean that the question of how extensive these powers should be 
would have to be reopened after the first year of operation. 

In voicing its original objections to the inclusion of sterling on the 
same basis as other currencies, Great Britain stressed the fact that about 
36 per cent of world trade and nearly 50 per cent of other international 
transactions are now carried on in sterling. It took the position that the 
continuation of its bilateral payments agreements is essential to the con- 
tinued functioning of the sterling area and to the gradual expansion of 
the multilateral payments facilities afforded by sterling. It reaffirmed as a 
basic policy its intention to extend these facilities by gradually liberal- 
izing the present regulations of the British system of transferable ac- 
counts, but stated that it could not accept at present the complete trans- 
ferability of sterling through the union from one European holder to 
another. It was willing to accept a limited transferability subject to safe- 
guards against interference with its bilateral agreements and the possible 
loss of gold to the union. Great Britain also took the position that sterling 
is often held by other countries as a monetary reserve and that this use 
of sterling would be interfered with if sterling accounts were automati- 
cally "cleared" through the union at periodic intervals. For all these 
reasons Great Britain made its participation in the union contingent 
on special provisions regarding sterling. 

In the final negotiations for the payments union a compromise was 
worked out. It recognized, on the one hand, the special position oi 
sterling as an international currency, and, on the other hand, it included 
sterling in the multilateral compensations of the union to a greater ex- 
tent than under the original British counterproposals. The basis of this 
compromise was that creditors of Britain holding sterling would have 
the option of continuing to hold it or of holding the accounting units 
of the union instead. Great Britain, however, reserved the right to reach 
agreement in advance with the continental countries on the amount of 
sterling they would hold. Agreement on the payments union therefore 
meant a considerable increase of sterling transferability under the British 
bilateral payments agreements, but not a complete elimination of these 
agreements. Under the compromise, moreover, the union was not given 
powers that would enable it to influence effectively the internal credit 
policies of its members or to exert really strong pressures for greater 
balance in the trade of each of them with the others. 

These features of the compromise reflect the reluctance of Great 
Britain to give up the bargaining advantages afforded by bilateral mone- 
tary agreements or to accord to an international agency any authority 



The . European .Area 261 

that might interfere with British full employment policies. The EGA, 
however, will have considerable influence in the administration of the 
union, for the administrator is authorized to transfer dollars to the union 
or to the individual participating countries needing dollars to make 
partial payments on their debt balances with the union on terms and 
conditions specified by him. 

A further issue arises as to how these powers are to be used. One 
alternative is to use them in such a way as to reduce to a minimum the 
practical effect of the bilateralism and discriminatory trade control that 
Great Britain is still permitted to apply under the union. The choice of 
this alternative would give maximum effect to the intent of the Congress 
that the payments union should make a major contribution to European 
unification. The other alternative is to accept the compromise that led to 
the formation of the union as a major advance towards sterling con- 
vertibility, and not to use the mechanisms of the union to bring further 
pressures on Great Britain. If this alternative were adopted, the United 
States would be free to work out with Great Britain the solution of 
sterling area problems without the added complication of having them 
intimately bound up with problems of European economic integration. 

Selected References 

Organization for European Economic Cooperation, "European Recovery Pro- 
gramme," Second Report of the O.E.E.C. (February 1950), Chap. 23. U.S. 
House Appropriations Committee, Foreign Aid Appropriations Act for 1951, 
Hearings, 81 Cong. 2 sess., pp. 12-18, 68. U.S. Conference Committee, Foreign 
Economic Assistance Act of 1950, Conference Report to Accompany H.R. 7797, 
H. Rept. 2117, 81 Cong. 2 sess. U.S. Economic Cooperation Administration, The 
Proposed European Payments Union, submitted by the Joint Committee on 
Foreign Economic Cooperation, S. Doc. 144, 81 Cong. 2 sess. See also: U.S. 
Department of State, Bulletin, Vol XXII (May i, 1950), pp. 681-83. u - s - House 
Foreign Affairs Committee, To Amend the Economic Cooperation Act of 1948 
ax amended, Hearings on H.R. 7378, 81 Cong. 2 sess., pp. 9, 31-34, 103-110. 



Chapter XIII 

The Mediterranean-Middle East Problem Area 

THE Mediterranean has for centuries been vital as a thoroughfare 
for the exchange of ideas and goods between Europe and Asia. The 
Mediterranean assisted in the expansion of the three great monotheistic 
religions of Judaism, Christianity, and Islam, all of which originated 
in the Middle East. Until the opening of the Suez Canal in 1869, the 
great caravan routes of the Middle East combined with the Mediter- 
ranean sea lanes to connect India and China with the nations of the 
West. 

The importance of the Mediterranean and Middle East as a highway 
has historically led to attempts to control all or part of the area. For 
nations interested in maintaining or securing a position of power in the 
Mediterranean and Middle East, there are several strategic avenues of 
approach. The value of the Mediterranean as a sea route depends in 
the first instance on access to and control of the Straits of Gibraltar at 
the western extremity of the Mediterranean and of the Suez Canal at the 
southeastern end. The waters that wash the western and eastern shores 
of the Arabian Peninsula have more than local significance, for the Red 
Sea governs the approach to Suez, and the Persian Gulf gives access to the 
rich oil wealth concentrated in the countries on its western and northern 
fringes. Three approaches to the region exist in the northeast: the Balkan 
land route, leading to the Adriatic and Aegean inlets; the Caspian land 
route, terminating in Turkey and Iran; and the Black Sea-Dardanelles 
sea route, offering the sole egress into the Mediterranean for Russian 
ships. 

The pattern of great power interests in the Mediterranean and Mid- 
dle East acquired a considerable measure of stability after Great Britain 
achieved and maintained undisputed naval supremacy during and follow- 
ing the Napoleonic wars. The principal challenge during the nineteenth 
century came from Imperial Russia, which sought to gratify its expan- 
sionist aims in the Balkans and in Central Asia by speeding the dis- 
integration of the Turkish Empire and capitalizing on Persian and 
Afghan weakness. The Russian Revolution in 1917 resulted in a sus- 
pension of Russian expansionist aspirations that lasted until World War 
II again offered a tempting opportunity. 

The acquisition by France and Italy of North African colonies pre- 
sented no great threat to British naval primacy and stabilizing role. The 
real threat first came from Germany in 1914 and then in the 1930*5, when 
German policy renewed the drive to the East that had been tried and 

262 



The Mediterranean-Middle East Area 263 

checked by World War I. Italy then also entered the scene, seeking to 
revive the hegemony of the Roman Empire and longing for a Mediter- 
ranean that would be a "mare nostrum." 

In contrast the interest of the United States in the Mediterranean 
and Middle East is of recent date and until 1920 was strictly limited to 
private investment and to religious and educational activities. In the 
iQ2o's, however, the discovery of rich oil deposits in Iraq initiated an 
important American commercial interest in the area. This commercial 
interest was supported by the United States Government, which insisted 
that the "open door" policy be applied in the exploitation of resources 
of the area. The Near East Development Corporation, a consortium of 
American oil companies joined in the formation of the Iraq Petroleum 
Corporation on an equal footing with British, French, and Dutch inter- 
ests. In 1933 Standard Oil of California acquired a major oil concession 
in Saudi Arabia. Subsequently, American business entered into the de- 
velopment of oil fields in Bahrein, Kuwait, and, very recently, in the 
Saudi-Kuwait Neutral Zone. 

The events of World War II especially the North African campaign 
and the Sicilian and Italian invasionstremendously expanded American 
interest in the Mediterranean and Middle East. Initially, American men 
and materials entered the Mediterranean theater with the single purpose 
of eliminating enemy forces in that area as a preliminary to an assault 
on the continent of Europe; for unlike Great Britain, the United States 
had no previous political or strategic commitments to preserve. Victory, 
however, entailed certain new responsibilities for both the United States 
and Great Britain in the form of military government and relief and 
rehabilitation. This became more than a wartime or humanitarian under- 
taking. The end of the war found the Anglo-American position firmly 
established in the Mediterranean, and events in that area determined its 
prolongation. 

Beginning in 1944 the Soviet Union exhibited a renewed interest in 
expanding its influence into the Balkans and Turkey. In the course of 
that year and the following one, the Soviet Union succeeded in installing 
Communist regimes in Yugoslavia, Rumania, and Bulgaria. These, in 
turn, exerted heavy pressure on Greece and Italy and aided in the estab- 
lishment of a Communist regime in Albania. Unsuccessful attempts were 
made by the Soviet Union to detach Kars and Ardahan from Turkey, to 
obtain a trusteeship over Tripolitania, and to acquire military bases in 
the Dodecanese. An American interest in urging a revision of the Mon- 
treux Convention governing the Dardanelles was withdrawn when it be- 
came clear that the Soviet position in the matter called for an equal 




264 



The Mediterranean-Middle East Area 265 

sharing of control between the Soviet Union and Turkey. Soviet interest 
was also expressed in the settlement of the Tangier and Syrian questions 
in 1945. Russian actions thus weakened and finally destroyed the concept 
of tripartite policy in the Mediterranean and Middle East and en- 
couraged in its place the formation of an Anglo-American policy. 

The primary basis of the present United States interest in the Medi- 
terranean and Middle East is strategic, and the overriding objective of 
American policy is to halt Soviet expansion and to prevent it from 
spreading from the Mediterranean hinterland to the coastal areas. It is 
vitally interested in preventing the creation of a vacuum that Soviet 
power might fill. It is desirous of maintaining peace and stability through- 
out the area, because the absence of either provides opportunities for 
Soviet penetration. In short, strategic considerations have created an 
American concern in the external pressures being exerted on the area 
and in its internal stresses as well. 

Beginning with the spring of 1947, pressure from the Soviet Union 
resulted in the development of an American policy of "containing" it 
along the borders of Greece, Turkey, and Iran. At that time it became 
clear that mere American approval of British activity in Greece was no 
longer sufficient to maintain Anglo-American policy in the eastern 
Mediterranean. The postwar financial condition of Great Britain neces- 
sitated a reversal of roles. Simultaneously, it became essential for the 
United States to lend assistance to Turkey, where Soviet pressure neces- 
sitated the maintenance of an army far beyond what the country could 
afford. Hence the enunciation of the Truman Doctrine and the con- 
gressional appropriation of funds for Greece and Turkey. Subsequently, 
aid has been provided to these countries under the European Recovery 
Program, the Greek-Turkish Assistance Act of 1948, and the Mutual De- 
fense Assistance Act of 1949. 

The expenditures of three and a half years in pursuit of these ends 
have been great and so have the returns. In Greece the civil war between 
the Government and the Greek Communists ended in victory for the 
Government in the fall of 1949. By February 1950 United States Ambas- 
sador Grady was able to report that reconstruction was proceeding apace. 
New highways had been built; vital ports had renewed operations; modern 
airfields had been constructed; and rail traffic between Athens and Salo- 
nika, a vital necessity in integrating Greek economy, had been revived. 
In Turkey the substantial flow of military aid has immeasurably strength- 
ened the independence of the country and has provided an opportunity 
for its internal economic development. 

The picture is not, however, without a dark side. In Greece political 
stalemates still tend to slow down the progress of economic rehabilitation. 



a66 Major Problems 

In the early months of 1950 American spokesmen in Greece spoke out 
sharply about parliamentary delays in giving legislative support to EGA- 
sponsored projects. In Turkey there remains a need for more co-ordinated, 
over-all economic planning. 

Iran represents the easternmost border of Soviet influence in the 
Mediterranean-Middle East zone. The continued stand of Iran against 
the spread of that influence is essential to Anglo-American success in 
"containing" the Soviet Union. Having withstood Soviet attempts in 
1946 to detach Azerbaijan province and Soviet efforts to obtain an oil 
concession, Iran now faces a far more subtle threat. Militarily it has been 
strengthened, thanks to American police and military missions and to 
ten million dollars' worth of military equipment under a credit author- 
ized in June 1947. Its present precarious position stems from its economic 
situation. Archaic agricultural methods, insufficient irrigation projects, 
and malconceived taxation are among the ills that increase each year. 
The Tudeh Party, the Communist group in Iran, which has been out- 
lawed since 1949, flourishes and expands underground, especially in the 
southern oil zone. The seven-year plan currently undertaken by Iran 
prescribes a systematic correction of the national economy, but its ful- 
fillment will require external assistance. 

The problem of preventing the spread of Soviet influence is com- 
plicated in the case of Italy because of the geographical position of the 
country. As a Mediterranean power, Italy is subject to Soviet pressure 
transmitted through her Balkan neighbors. Soviet pressure was exerted 
through Yugoslavia until the Yugoslav-Soviet break in the summer of 
1948. The intervening relaxation of pressure ended early in 1950 with 
the reopening of the unsolved question of Trieste. It is possible that 
Communist influence may penetrate into Italy by way of Albania, with 
which Italy has now established formal diplomatic and commercial 
relations. As a European power Italy is subject to the forms of Soviet 
pressure that are used in Western Europe as a whole, an aspect of the 
problem that is treated elsewhere in this volume. 

American strategic interest in the Mediterranean and Middle East 
is affected by the internal stresses of the area as well as by external pres- 
sures. Since the conclusion of the Second World War, the Mediterranean- 
Middle East region has been in a state of political turmoil. In the Moslem 
world this has arisen in large measure from an ever-growing sense of 
nationalism, which seeks among other things to remove all vestiges of 
Western authority. Such a development would constitute a new threat to 
the Anglo-American position in the area. 

The treaties that followed the First World War extended the earlier 



The Mediterranean-Middle East Area 267 

commercial and cultural interests of Great Britain and France in the 
eastern Mediterranean and Middle East by placing Iraq, Transjordan, 
and Palestine under British mandate and the region now including 
Syria and Lebanon under French mandate. Local enthusiasm for inde- 
pendence in these areas, however, had already developed, and the man- 
date system did not cause it to diminish. By constant agitation, each of 
the mandated countries with the exception of Palestine, which pre- 
sented a special problem, gained independence between 1932 and 1946. 
Egypt had already gained independence in 1922, after having been a 
British protectorate since 1914 and subject to British control from 1882. 
The achievement of political independence in each of these countries did 
not bring their various commercial and cultural ties with the West to 
an end, and in the case of the territories formerly under British rule, 
British military establishments as well remained. 

Intensified nationalist feeling after 1946 resulted, however, in an 
effort to eliminate these military footholds. British relations with Egypt 
under the terms of the 1936 treaty came up for revision in 1946, but suc- 
cessful revision was not accomplished because of the conflict of nation- 
alistic and strategic interests. The Egyptians are anxious to be rid of 
British troops in the Suez Canal Zone, but the ability to defend the Canal 
and to assure its peaceful operation is vital to Anglo-American strategy. 
Furthermore, the Egyptians are anxious to end the Anglo-Egyptian Con- 
dominium in the Sudan and to replace it with "unity of the Nile Valley" 
under the Egyptian flag. Aside from the questionable value of such unity, 
the wartime development of air routes in Africa gave the Sudan a positive 
place in Anglo-American strategic thinking. Likewise, the failure to revise 
British-Iraqi treaty relations in 1948 jeopardizes the future of the Brit- 
ish military position in Iraq. 

In the Maghreb, too, waxing nationalism is urging an end to West- 
ern influence. Although Algeria, French Morocco, and Tunisia stand in 
different relationships with France, they are all basically desirous of com- 
pletely severing the French tie and achieving independence. Neighboring 
Libya, a former Italian colony, has been more fortunate in its quest for 
independence. There the United Nations has set up a trusteeship under 
the guidance of a commissioner, who will endeavor to prepare the way for 
complete independence by 1952. Independence, or the desire for it, may 
have important consequences for the Anglo-American position not only 
in the Mediterranean but in Europe as well if it should affect the par- 
ticipation of French Algerian Departments in the North Atlantic Treaty 
or the continued operation of the American air field at Tripoli. 

In addition to stirring up hostility toward Western authority, nation- 
alism has thus far frustrated attempts at unity in the Moslem world. Since 



268 Major Problems 

1945 attempts have been made to co-ordinate the policies of the Arab 
countries through the Arab League. But although Hashemite Jordan has 
incorporated Arab Palestine, the governments of Egypt, Saudi Arabia, 
and Syria have objected to such a benefit for Jordan as a result of the 
Palestinian war. Their objections find expression in their support of the 
so-called Gaza Government. Although the latter was formed in the 
Egyptian-held Gaza strip of Palestine in 1948 under the leadership of 
Haj Amin Al-Husseini, former Grand Mufti of Jerusalem, its center of 
activity has perforce been the Heliopolis suburb of Cairo. 

Dynastic rivalries stemming from events in the igso's still cast a 
shadow of suspicion and distrust on relations between the kingdom of 
Ibn-Saud and the Hashemite countries of Jordan and Iraq. The situa- 
tion is further complicated by covert suspicion of Iraq on the part of 
Jordan, a suspicion prompted by the recent espousal by Iraq of a "Fertile 
Crescent" plan in preference to King Abdullah's cherished "Greater 
Syria" project. 

The economic maladjustment of the Mediterranean and Middle East 
area is not a new phenomenon. The growth of American strategic inter- 
est in the area, however, has made it a matter of more than academic 
interest to the United States. The region as a whole is predominantly 
agricultural. Modern agricultural methods are, even when known, still 
largely unpracticed, and the concentration of land ownership in the hands 
of a few enforces a bare subsistence livelihood on the many. Industrial- 
ization is hampered by the lack of raw materials and by the tendency 
of foreign capital to avoid areas that are apt to be politically unstable. 
Oil is the one great known resource in the area, and it is being developed 
by foreign capital. Oil royalties have only recently begun to be invested 
in improving the welfare of the countries receiving them. The fiscal sys- 
tems are, with but few exceptions, poorly geared to economic realities. 

Each of these points of economic stress is capable of infinite illus- 
tration and expansion. Egypt is a prime example of agricultural mal- 
adjustment. Syria and Iran suffer from unrealistic and hence unstable 
currencies, and in Syria this contributed to the succession of political 
coups d'etat in 1949. Despite large oil revenues, a budgetary deficiency 
plagues Saudi Arabia. Although a low standard of living exists through- 
out the area, it poses a particularly acute threat to Iranian stability in 
1950. Lebanon suffers from the unusual economic predicament of being 
not a producer but solely a middleman, and thus its very existence hangs 
precariously on the trade passing through Lebanese hands. The post- 
war problems arising from blocked sterling accounts affect the fortunes of 
Iraq, Jordan, Saudi Arabia, Israel, and especially Egypt. 



The Mediterranean-Middle East Area 269 

The repercussions of political and economic instability are strikingly 
illustrated by the Palestine problem. The general Palestine issue has 
passed through several phases since the Second World War and has been 
complicated by the interplay of emotional, political, and economic fac- 
tors, each of which has vied for ascendancy. American policy has vacil- 
lated under the pressure of all three factors. In 1947 the United States 
concurred in the decision of the United Nations to partition the Holy 
Land. In March 1948 it considered the alternative of trusteeship, and 
finally, in May 1948 it gave prompt de facto recognition to the newly 
formed state of Israel. 

The problem has not ended, however, with the establishment of 
the state of Israel, or with its acceptance into the United Nations in 
May 1949. An appalling refugee problem was created by the partition 
and the fighting that accompanied it. Smouldering Arab hostility to- 
ward the Jewish state remains still unextinguished, and the problem of 
Jerusalem, which is treated at length below, can easily upset the un- 
certain calm that prevails in Palestine. 

The acute economic dislocation resulting from the overflow of three- 
quarters of a million Arabs into surrounding Arab states has imposed a 
crushing burden on their already strained economies. This represents a 
threat not only to Anglo-American strategic positions in the area but also 
to the extensive American-British oil interests. The pipeline to Haifa from 
the Iraq fields ceased to operate with the partition of Palestine. Ameri- 
can policy seeks an early reopening of oil operations at Haifa, the main- 
tenance of the outlet at Tripoli in Lebanon, and a successful conclusion 
of the Tapline project from Arabia to the Mediterranean. 

In view of the stress of this economic dislocation in the Palestine 
area, the United Nations Conciliation Commission for Palestine in the 
fall of 1949 dispatched to the Middle East an economic survey mission 
headed by Gordon Clapp, a Tennessee Valley Authority administrator. 
This commission was charged with investigating ways and means of as- 
sisting the Levant states in the development of their natural resources in 
order to alleviate the refugee problem by providing employment on a 
variety of work projects. The mission was primarily concerned not with 
resettling the refugees but with eliminating the threat to political and 
economic stability to which refugee unemployment gave rise. The final 
report of the mission in January 1950 called for stimulating self-help in 
the Arab countries under the guidance of a United Nations Relief and 
Works Agency for Palestine Refugees. Self-help was to be supplemented 
by limited outside financial aid. Four pilot projects were outlined, one 
each for Jordan, Syria, Lebanon, and Palestine. 



tfo Major Problems 1950-1951 

The interest of the United States in the Mediterranean-Middle East 
area has been shown to be the strategic one of maintaining and strength- 
ening the Anglo-American position there. Specific political, economic, and 
military security problems arise from this interest. 

In the security sphere the problem of containing Soviet influence 
continues. Containment in the states bordering on the Soviet Union is 
not enough, however. To be of real value, it requires the existence of 
stable and friendly states in the whole region. Consequently, the United 
States has a complementary political problem of encouraging the forces 
of stability in these countries and of counteracting and discouraging 
disruptive forces. The United States is also confronted with the in- 
stability inherent in the relations of Israel and the Arab states, and 
has before it the continuing problem of assisting in the integration of 
Israel in the political and economic framework of the Middle East. 

In the economic field two problems are outstanding. Commercial 
and strategic interest in Middle East oil calls for an early solution to the 
difficulty of marketing "dollar oil." Upon that solution depend not only 
American investments in the area but perhaps the political stability of 
the Arab states that are involved. Economic stability, on the other hand, 
awaits the assistance that will come from the implementation of the 
Point IV Program. In the financial field, the United States will inevitably 
be confronted with requests for loans and financial advice. 

Military security problems are of prime importance. The Anglo- 
American position in the Mediterranean and Middle East and in Europe 
requires at least maintaining currently held military facilities. The 
need for arms and military training in some of the countries will con- 
tinue. Likewise, assistance in the form of supplies and spare parts for 
local air lines will be sought. The American problem will be to satisfy 
these needs to a degree that will discourage Soviet aggression but not to 
an extent that will stimulate intra-area disputes. In the latter connection 
Israel and the Arab states need to be in a position to defend themselves, 
but they must not be enabled to become mutually aggressive. The possi- 
bility of regional defensive alliances and of American participation in 
them in accordance with the Vandenberg Resolution of June 1948, re- 
mains to be explored. 

THE STABIUZATION OF THE MIDDLE EAST 

The Middle East presents American foreign policy with an immediate 
and a long-term problem, both of which stem primarily from the neces- 
sity of "containing" the Soviet Union. Its strategic importance on the 
Soviet periphery has made the Middle East a focal point of United States 
interest. 



The Mediterranean-Middle East Area $71 

Wartime developments in the Mediterranean-Middle East theater 
forced an expansion of American activities in that region. In the postwar 
period the resurgence of Russian imperialist aims ensured that American 
strategic concern with the Middle East would continue to supplement 
previously formed commercial ties if not to overshadow them. Fortu- 
nately, in pursuing its strategic objectives, the United States has a power- 
ful ally, for Great Britain has a long-standing strategic interest in the 
Middle East, which is basically identical with that of the United States. 

The dual nature of the security problem faced by the United States 
and Great Britain in the Middle East arises from the nature of the pres- 
sures being exerted on the area. Although it is primarily the external 
pressure exerted by the Soviet Union that creates the short-term problem 
of immediately improving the defensive position of the Middle East, this 
Soviet pressure exploits internal conditions that encourage disorder. The 
effectiveness of this tactic in Greece from 1945 on prompted a request 
by the Greek government for external assistance. After Great Britain 
could no longer carry the burden, the United States responded with the 
Truman Doctrine. Even with American aid, however, success in combat- 
ing the direct Soviet pressure through guerrilla warfare was slow. Not 
until September 1949 was the danger reduced to negligible proportions, 
and the Greek Government was free to turn its attention to remedying 
the ravages of war and to alleviating the condition of the people. 

Soviet pressure on Iran has been continuous since the end of the 
war. Wartime developments had forced an Anglo-Soviet occupation of 
the country in 1941, in which the United States later participated. At 
the end of the war, the withdrawal of foreign troops in accordance with 
the treaty of occupation was slow because of deliberate Soviet delays. 
In 1945 Azerbaijan province, often described as the bread basket of Iran, 
undertook with official Soviet blessing to proclaim its autonomy. The 
Iranian Government vigorously opposed this move and ultimately re- 
asserted its authority in the rebellious area. The Soviet Union also sup- 
ported the short-lived Republic of Mahabad, which was set up in the 
adjoining province of Kurdistan. These efforts to dismember Iran and to 
create internal disorder were accompanied by pressure for an oil conces- 
sion in northern Iran. The momentarily grave situation in Azerbaijan 
forced the Iranian premier to agree to the formation of a joint Soviet- 
Iranian oil company. The following year, however, a general strength- 
ening of the Iranian position enabled the Majlis (parliament) to reject 
emphatically this attempt at penetration. 

In contrast to Greece and Iran, attempts to foment internal disorder 
in Turkey have been singularly unsuccessful, largely because there is no 
Turkish Communist party to assist the effort and because the central 



27* Major Problems 1950-1951 

authority has been energetic and effective. Soviet demands upon Turkey 
for territorial and military concessions have produced tension, but they 
have been firmly rejected. In 1945, when Turkey proposed a new treaty 
of friendship and neutrality, the Soviet Union suggested as a quid pro 
quo the cession of the districts of Kars and Ardahan and the acceptance 
of joint Soviet-Turkish control of The Straits in defiance of the rights of 
the other powers under the Montreux Convention. Turkey preferred to 
forfeit the possibility of a treaty rather than to acquiesce to these condi- 
tions. 

Coupled with internal intrigues and diplomatic demands has been 
the constant menace implicit in the Soviet concentration of military 
might on the northern borders of Greece, Turkey, and Iran. The per- 
sistent military threat of the Soviet and satellite forces has necessitated 
the maintenance of Greek, Turkish, and Iranian forces at a level incom- 
patible with the economic strength of these states. 

Communist parties, when they exist, provide a connecting link be- 
tween external and internal pressures. In the period since the end of the 
Second World War, several Middle Eastern countries have outlawed their 
Communist parties, and Communist activity has been driven under- 
ground. Its present or potential strength is difficult to estimate, even in 
Israel where the Communist party still has legal status. There appears to 
be a vigorous Communist propaganda campaign among the Arab refu- 
gees. In addition, communism makes a definite appeal to two elements 
in Middle Eastern society: the dissatisfied industrial laborers a group 
that the Iranian Tudeh party has exploited and the growing "effendi" 
class, which cannot find employment comparable to its educational train- 
ing. As yet the Communists have not directed a strong appeal to the large 
numbers of agricultural workers who live at a bare subsistence level. The 
continuation of the economic and political ills that beset the Middle 
East as a whole and produce malcontents throughout Islamic society 
can only invite Soviet exploitation. 

The internal maladjustments are the chief obstacles to long-term 
stability. Economic backwardness unfortunately is reinforced by unreal- 
istic and wasteful fiscal policies. Added to this are traditional Middle 
Eastern attitudes toward the use of capital. These call for quick rather 
than long-term profits and impede the financing of developmental proj- 
ects by local capital. Foreign investors, on the other hand, hesitate to risk 
their money in politically and economically unstable areas. 

Political stumbling blocks to the long-term stabilization of the Mid- 
dle East consist of immaturity, inertia, and adventurousness. Syria is a 
good example. The immaturity and inertia of the Syrian public were 



The Mediterranean-Middle East Area 273 

reflected in the general apathy that prevailed during the Syrian elections 
of November 1949. The public pronouncements of Syrian leaders, on the 
other hand, often reveal irresponsible adventurousness rather than states- 
manship. Thus in the spring of 1950 the Syrian ministers of National 
Economy and of Defense intimated that their country might consider 
closer relations with the Soviet Union to offset Western support of 
Israel. 

The general economic, financial, and political difficulties of the 
region are supplemented by minority problems of varying degrees of 
seriousness and by the continuing problem of the relation between Israel 
and the Arab states. All this constitutes a threat to the stability of the 
region and an invitation to Soviet intrigue. 

Concerted Arab hostility toward Israel has not displaced past rival- 
ries among the Arab states; instead, a new round of competition has been 
touched off. The expansion of Jordan by the annexation of the Arab 
Palestine has alarmed Egypt, which aspires to retain its position of 
primacy in the Arab world. This same expansion, coupled with periodic 
proposals for the unification of the Hashemite states, has disturbed Saudi 
Arabia, which as a countermove has taken steps to improve its relations 
with Egypt and Syria. 

To explain the full complexity of the problem of attaining imme- 
diate security and long-term stability in the Middle East, it is also essen- 
tial to take into account the objectives of the different states involved. 
Greece, Turkey, and Iran wish above all to maintain their political 
and territorial integrity and at the same time to modernize and expand 
their economies with Western aid. The Arab states, only recently inde- 
pendent, are extremely sensitive to any infringement, real or imagined, 
of their sovereignty. Although they desire economic advancement, they 
have been jealously reluctant to modify their existing political and social 
patterns. The new state of Israel desires to achieve a firm basis of political 
stability and economic adjustment and development. 

Because the United States interest is so directly affected by Soviet 
activity, Soviet objectives require analysis. Specific objectives include a 
longing inherited from Tsarist days for warm water ports on the Mediter- 
ranean and Persian Gulf and more recently for control of the rich oil 
resources of the area. The Soviet Union is also concerned to protect that 
part of its agricultural and mineral resources that border on the Middle 
East. Finally, it has become clear that the Soviet Union wants to oust 
and to replace American and British military and economic influence in 
the Middle East. 



274 Major Problems 

The problem is to determine the means of immediately strengthen- 
ing the defensive position of the Middle East while acting to stabilize 
the region over the longer term. 

The problem breaks down into two groups of issues. The first group 
concerns the means of immediately improving the defensive posture of 
the Middle East. The first issue in this group is the applicability and 
form of military measures. The United States now has an air field at 
Tripoli in North Africa and one at Dhahran in Saudi Arabia. At present 
the United States has no military facilities of its own in Greece, Turkey 
and Iran, to which it is sending military aid and in which it has small 
military missions. The British have important military privileges in Egypt, 
the Anglo-Egyptian Sudan, Jordan, Iraq, Aden, and Cyprus. British and 
American fleets ply the Mediterranean, and small naval units of both 
countries operate in the Persian Gulf and Red Sea. 

One alternative is to acquire additional military facilities. Bases in 
the countries bordering the Soviet Union, however, would be extremely 
vulnerable in the event of war with Russia. To supplement existing 
British privileges in the Arab states would be difficult at this time in 
view of the prevailing strength and sensitivity of Arab nationalist senti- 
ment. 

A second alternative is to establish additional regional pacts, either 
by extending the North Atlantic Treaty to include some Middle Eastern 
countries, or by establishing a separate Middle Eastern, east Mediter- 
ranean, or Mediterranean pact. The co-operation of the countries pres- 
ently in the Atlantic Pact is facilitated by long-established, close cultural 
links. The absence of such bonds would tend to complicate a similar 
treaty relationship with the peoples of the Middle East. Either an exten- 
sion of the North Atlantic Treaty or a strictly regional pact would in all 
probability entail an enlargement of the United States military responsi- 
bilities and expenditures abroad. 

A final alternative is to give unilateral assistance to Middle Eastern 
countries. Unilateral military assistance has been given by the United 
States in the past three years to Greece, Turkey, and Iran. Great Britain 
has supplied arms to some of the Arab countries in accordance with 
treaty arrangements. In May 1950 the United States, Great Britain, and 
France announced a three-power decision to sell arms to all Middle 
Eastern states, including Israel, which gave assurances that arms so pur- 
chased would be used for internal security and self-defense and not for 
aggression. 

A second issue is the applicability and form of political measures. 
The principal alternative is for the United States and Great Britain to 



The Mediterranean-Middle East Area 375 

exert pressure on the Middle Eastern states concerned for an immediate 
settlement of the Palestine difficulties. The promise of economic, finan- 
cial, and military assistance could be made dependent on such action. 

A third issue is the applicability and form of economic and fiscal 
measures. One alternative is to provide immediate economic aid to Iran, 
which is currently suffering from serious, disruptive economic pressures. 
Unlike Greece and Turkey, Iran is not a recipient of Marshall Plan aid. 
A second alternative is for the United States to put pressure on Great 
Britain to expedite the solution of the sterling-dollar oil controversy. A 
third alternative is for the United States separately, or in conjunction 
with Great Britain, to put pressure on the countries of the Middle East 
for fiscal changes capable of fulfillment in the immediate future: for ex- 
ample, realistic exchange rates and careful budgeting. 

The second group of issues concerns the means of stabilizing the 
Middle East over the longer term. Despite some overlapping of the issues 
and alternatives of this group with those of the preceding, the emphasis 
is differently placed. The military aspect is paramount in the first group, 
the economic in the second. Expedients that appear desirable in the first 
instance may be injudicious or unnecessary over the longer term. Co- 
ordination of Anglo-American policy may |?e easier when it is primarily 
a question of strengthening militarily the countries of the Middle East 
than when it is a question of the economic development and integration 
of the Middle East in the world economy. 

The first issue is the amount and the methods of giving long-term 
economic assistance. The United States may decide to give aid of Marshall 
Plan proportions or on a pump-priming scale. Despite the urgent need 
for improvement, current sentiment appears to favor a pump-priming 
operation as being probably the more effective measure. The initiative in 
administering economic aid may be taken by individual governments, by 
private business, or by the United Nations. Alternatively, all three may 
co-operate, as present plans would seem to envisage. A final alternative 
is the inclusion of requirements for political, social, and fiscal reforms in 
return for economic assistance. 

The second issue is the extent to which the United States should 
intervene to reduce political tensions. One alternative is to make positive 
efforts on the part of both Arab and Jew toward the peaceful integra- 
tion of Israel into the regional framework a quid pro quo of economic 
and financial aid. Or the United States could press the Middle Eastern 
countries to work out a solution of their problems by group deliberation, 
either in regional conferences or in the United Nations. 

The third issue is the means of combating the spread of communism 
in the Middle East. Current efforts by the United States in this field repre- 



276 Major Problems 1950-1951 

sent one alternative: They include the Voice of America program, the 
work of public affairs officers and cultural attaches, and exchange pro- 
grams under the Fulbright and Smith-Mundt acts. Another alternative 
is to concentrate on private endeavors in this direction such as the exist- 
ing efforts of the educational and religious establishments in the Middle 
East and the conscious and unconscious educational endeavors of oil 
companies in the area. A third alternative is to rely on the educational 
effect that would be implicit in effectively administered economic aid. 

A final issue is the broad form of implementation for United States 
long-term policy. In this regard three alternatives, or various combina- 
tions of the three, exist. The United States might implement policy 
through the United Nations, through action taken in concert with other 
powers, through unilateral action, or through two or more of these 
avenues combined. 1 

Selected References 

Harry N. Howard, "Greek Question in the Fourth General Assembly of the 
United Nations," U.S. Department of State, Bulletin, Vol. XXII (Feb. 27 and Mar. 
6, 1950), pp. 307-22 and pp. 365-71. United Nations, Final Report of the U.N. 
Economic Mission for the Middle East, Publ. 1949, II B.5, Parts I and II (Dec. 
28, 1949). U.S. Department of State, "Aspects of International Petroleum Policy," 
Bulletin, Vol. XXII (Apr. 24, 1950), pp. 640-45. U.S. Department of State, Eighth 
Report to Congress on Assistance to Greece and Turkey for Period Ending June 
30, 1949, EGA Series 17, Publ. 3674 (November 1949). U.S. Department of State, 
"First Interim Report of U.N. Survey Mission for Middle East," U.N. Doc. 
A /no6 or 11/17/49, Bulletin, Vol. XXI (Dec. 5, 1949), pp. 847a-52a. U.S. Depart- 
ment of State, "Germany, the Soviet Union, and Turkey During World War 
II," Bulletin, Vol. XIX (July 18, 1948), pp. 63-78. U.S. Department of State, 
"Importance of American Relations with the Near East and South Asia," Bul- 
letin, Vol. XXII (Jan. 30, 1950), pp. 170-73. U.S. Department of State, "Joint 
Statement on U.S.-Iranian Relations," Bulletin, Vol. XXII (Jan. 9, 1950), pp. 
54-55. U.S. Department of State, "Military Aid to Iran Established," U.S. and 
Iranian notes of May 23, 1950, Bulletin, Vol. XXII (June 5, 1950), pp. 922-23. U.S. 
Department of State, The Problem of the Turkish Straits, Near Eastern Series 5, 
Publ. 2752 (1947). U.S. Department of State, "Statement on Military Aid to 
Greece," by Ambassador Henry F. Grady, Aug. 2, 1949, Bulletin, Vol. XXI (Aug. 15, 
1949), pp. 232-35. U.S. Department of State, "Stop Communism" Is Not Enough: 
(Problems in the Near East, South Asia, and Africa), Near and Middle Eastern 
Series 2, Publ. 3708 (December 1949). U.S. Department of State, "Tripartite 
Declaration Regarding Security in the Near East: Three-Power Declaration of 
May 25, 1950," Bulletin, Vol. XXII (June 5, 1950), p. 886. U.S. House Foreign 
Affairs Committee, Strategy and Tactics of World Communism: Supplement 
HI, Country Studies B, Communism in the Near East, 80 Cong. 2 sess. (1948). 
David W. Wainhouse and Philip A. Mangano, "The Problem of the Former 
Italian Colonies at the Fourth Session of the General Assembly," U.S. Department 
of State, Bulletin, Vol. XXII (May 29 and June 5, 1950), pp. 832-59 and 887-917. 

1 The problem of security and stability in the Middle East will be comprehensively 
treated in a problem paper on the subject to be published by the Brookings Institution 
in October 1950 in pamphlet form. 



The Mediterranean-Middle East Area 277 

THE STATUS OF JERUSALEM 

The problem of Jerusalem today arises from the deep religious sig- 
nificance of the city for the great monotheistic faiths of Judaism, 
Christianity, and Islam and from the chaotic state of affairs that has pre- 
vailed in Palestine since the termination of the mandate. The interna- 
tional religious importance of Jerusalem obtained for it special con- 
sideration by the United Nations when the organization was discussing 
the future of the former British mandate of Palestine. The General As- 
sembly resolution of November 29, 1947, which determined upon parti- 
tion for Palestine, also included a decision to establish Jerusalem as a 
corpus separatum under a special international regime. The area in- 
volved was defined as the existing municipality and the surrounding vil- 
lages and towns. 

The task of drawing up the statute for the city of Jerusalem was en- 
trusted to the Trusteeship Council, which during the spring of 1948 
evolved a plan. It provided for the appointment of a governor, for a 
unicameral legislative council to be elected by universal suffrage with 
due regard for the various religious elements in the city, and for an in- 
dependent judiciary with a supreme court and subsidiary courts. The 
violent course of events in Palestine following termination of the man- 
date on May 14, 1948, however, caused the Trusteeship Council in the 
summer of 1948 to postpone further work on the statute indefinitely. 

In December 1948 the General Assembly of the United Nations re- 
solved to entrust the entire question of Palestine, the status of Jerusalem 
included, to a special group, the Conciliation Commission for Palestine, 
which was made up of representatives from the United States, France, 
and Turkey. Included among the instructions to the commission was an 
obligation to report on a permanent international regime for the Holy 
City. The special committee of the Conciliation Commission that drew 
up the recommendation for the city did so after considerable consulta- 
tion with interested governments and religious groups. Its proposal re- 
jected by implication the principle of a corpus separatum in favor of con- 
tinuing the existing split of the city into two zones, one Jordanian and 
the other Israeli. It also recommended the appointment of a United 
Nations commissioner, an elective council representing both zones, an 
international tribunal, and a mixed Jewish-Arab tribunal. The Holy 
Places were to be under the supervision of the United Nations commis- 
sioner. The final report of the commission was presented to the United 
Nations in the fall of 1949. 

When the fourth session of the General Assembly convened in the 
fall of 1949, the question of Jerusalem, and related Palestine problems, 
was foremost on the agenda. The Jerusalem matter was referred to the 



278 Major Problems 1950-1951 

Ad hoc Political Committee. A sharp divergence of opinion on Jerusalem 
appeared in the various resolutions, as well as in the recommendations 
of the Conciliation Commission that were presented to the committee. 
The Ad Hoc Political Committee set up a subcommittee to prepare a 
resolution for its consideration. The sub-committee in turn decided upon 
an Australian resolution with amendments, the substance of which meant 
a return to the principle of corpus separatum. Approval of the Australian 
resolution by the Ad Hoc Political Committee resulted in the considera- 
tion of the proposals by the General Assembly, again in competition with 
a variety of rival draft resolutions. On December 9, 1949 the General 
Assembly accepted the Australian proposal, thus returning the Jerusalem 
question to the Trusteeship Council for review and action. This step 
by the General Assembly was undertaken in spite of the negative votes 
of the United States and Great Britain. Both these countries were of the 
opinion that the decision adopted by the General Assembly was not in 
line with the facts and that the proposals of the Conciliation Commis- 
sion had not been given proper consideration. 

Subsequently, M. Garreau, French delegate and presiding officer of 
the Trusteeship Council, was requested by his colleagues to draw up a 
working plan. His plan, which called for a considerable modification 
of the 1948 draft, was rejected by the Council on the ground that it failed 
to follow the exact instructions of the General Assembly resolution. The 
Council then turned to a reconsideration of its 1948 draft statute. In 
slightly revised form the statute obtained the endorsement of the Coun- 
cil on April 4, 1950. However, on June 14 the Trusteeship Council 
agreed to report to the General Assembly that it had been unable to inter- 
nationalize Jerusalem because Israel and Jordan, the occupants of the 
area, refused to accept the principle embodied in the statute that the 
Council had drawn up. The question was returned accordingly to the 
General Assembly. 

The problem of Jerusalem cannot be fully grasped unless it is con- 
sidered in its proper context. It is but one element in the complex prob- 
lem of Palestine, and a feasible international solution of the status of the 
city cannot be found unless it is sought with that understanding. Any 
successful resolution of the problematical status of Jerusalem depends in 
the first instance on the existence of peaceful relations between the two 
nations presently in de facto possession of the area involved, namely 
Jordan and Israel. Secondly, its future depends on peaceful and stable 
relations between Israel and the states of the Arab League. 

Although opposed to the November 1947 resolution in toto f the 
Arab states have revised their position on the status of Jerusalem since 
that time in accordance with existing facts. Since Israel is no longer just 



The Mediterranean-Middle East Area 279 

a concept but a physical fact, the Arab states, with the notable exception 
of Jordan, have reluctantly given their assent to the proposal to inter- 
nationalize Jerusalem. Furthermore, they will now countenance no 
diminution of the December 1949 proposal for complete internationaliza- 
tion in favor of a more limited territorial scheme or one merely for safe- 
guarding the Holy Places. Jordan and Israel, on the other hand, as the 
two states in physical possession of the territory in question, are inalter- 
ably opposed to any attempt to reduce their control. They are willing 
to give guarantees concerning the Holy Places and to permit certain 
supervisory and inspection privileges to the United Nations for ascertain- 
ing the observance of their pledges. Both states have taken steps intended 
to strengthen their positions in the city: Israel by completing the transfer 
of its governmental offices to Jerusalem at the end of 1949, and Jordan 
by formally incorporating the old city of Jerusalem and Arab Palestine 
into the Hashemite Kingdom of Jordan. 

In the consideration of the matter in the General Assembly, in the 
Trusteeship Council, and in the Conciliation Commission for Palestine, 
it was apparent that interest in the settlement of the Jerusalem question 
was widespread among governments and religious groups outside the 
Middle East as well as within. 

The Soviet Union opposed the recommendations of the Concilia- 
tion Commission on Jerusalem and in fact opposed the very existence of 
the commission. It did, however, favor internationalization of the city 
as a corpus separatum. Hence, in company with Arab and Catholic 
interests, the Soviet Union endorsed the General Assembly resolution of 
December 1949. Suddenly, however, in April 1950 it withdrew its ap- 
proval of the plan. The Soviet explanation of its revised stand, that 
internationalization was unworkable in view of existing facts, is inade- 
quate. The doubtful possibility of implementing internationalization 
of the Holy City has long been recognized and discussed by interested 
powers. The delayed Soviet acceptance of this assumption thus would 
appear enigmatic. Soviet policy, however, is not concerned with the 
Jerusalem issue per se. Instead it regards Jerusalem as a weight to be 
cast on the scales of international relations in accordance with larger 
policy considerations. 

Although inclined also to regard the United Nations proposal of 
December 1949 as unworkable, the United States and Great Britain have 
nonetheless continued to work for a feasible solution through United 
Nations channels. Earlier in the fall of 1949 they objected to the short 
shrift given to the report of the Conciliation Commission, which seemed 
in their judgment to fit the facts of the situation better than did the 
Australian proposal. Despite their objection to the latter, both countries 



280 Major Problems 

as members of the Trusteeship Council participated in the endeavors of 
that body at its sixth session to carry out the instructions of the Gen- 
eral Assembly. 

In addition to governmental interest in the question of Jerusalem, 
there has been an abundant expression of interest and opinion by religi- 
ous groups. The Vatican especially has come out strongly and repeatedly 
for internationalization, and the majority of Catholic countries reflected 
that sentiment in the December 1949 vote in the United Nations. Protes- 
tant opinion has generally been inclined to reject internationalization in 
favor of international guarantees for the Holy Places. 

A general definition of the United States objective with respect to 
an international solution of the status of Jerusalem was expressed by 
Representative Ross in the United Nations in December 1949: 

. . . The United States delegation has earnestly sought ... to obtain approval 
for a workable international regime for the Jerusalem area which: first would 
give genuine recognition to the international status of the Jerusalem area as 
the center of three great world religions; second would provide for the necessary 
protection of and access to the Holy Places under United Nations supervision; 
third, would contribute to the peace and stability of the area; and finally would 
take into account the interests of the principal communities in Jerusalem and 
the views of Israel and Jordan. 

This statement of the United States objective has not, however, resulted 
in a policy that can be followed without further adaptation to changing 
circumstances. 

The problem is to determine the form of further action by the United 
States with respect to an international settlement of the status of Jeru- 
salem. 

The attempts to solve this problem over the past two and a half 
years have served to emphasize a basic issue confronting United States 
foreign policy. This issue is the regularization of Arab-Jewish relations 
and the harmonious integration of Israel into the Middle Eastern 
political and economic framework. Early solutions to the problems 
of the status of Jerusalem, of refugee settlement, and of territorial 
boundaries are called for in order to remove a trouble zone that the 
Soviet Union may exploit. Unfortunately, the general confusion sur- 
rounding the United States policy on Palestine has served to postpone 
rather than to expedite a solution. Internal pressure groups have vied 
with external pressures, and the United States position, being subject to 
the influence of both, has been accordingly inconsistent. 

Three alternative methods of stabilizing Arab-Jewish relations ap- 
pear possible. In the first place, Anglo-American pressure could be ex- 
erted on Israel and the Arab states. The United States is in a favorable 



The Mediterranean-Middle East Area 281 

position to exert such pressure on Israel in view of the strong support, 
both political and financial, that the United States has given the new 
state. Great Britain, on the other hand, is in a better position to influence 
the Arab states and especially Jordan, whose very existence depends in 
large part on an annual British subsidy. A second alternative is for the 
United States to press for continued and vigorous United Nations action 
in stabilizing relations in the Middle East. Finally, all outside pressure 
might be withheld in favor of letting the states of the Middle East de- 
termine the pattern of their relations for themselves. With regard to the 
Jerusalem question, this last alternative appears to be not only a possi- 
bility but a probability, for while the Jerusalem question is currently 
buried in United Nations procedure, Israel and Jordan are in the process 
of perpetuating the status quo of the divided city. 

Selected References 

British Information Services, "British Government Statement in House of Com- 
mons Concerning Recognition of Union of Part of Palestine With Jordan and 
De Jure Recognition of Israel," Press Release No. T.Q4 (Apr. 27, 1950). United 
Nations, Text of Egyptian-Israeli General Armistice Agreement, Feb. 24, 1949, 
submitted with Addendum to Security Council by Acting Mediator, U.N. Doc. 
8/1264 and 8/1264 /Add. i (Feb. 23, 1949). United Nations, Department of 
Public Information, Palestine, Background Paper No. 47 (Apr. 20, 1949). United 
Nations, Final Report of the U.N. Economic Survey Mission for Middle East, 
U.N. Publ. 1949 IIB.5, Pts. I and II (Dec. 28, 1949). United Nations, General 
Assembly, Palestine: Question of International Regime for Jerusalem Area and 
Protection of Holy Places, resolution adopted Dec. 9, 1949, U.N. Doc. A/ 1245 
(Dec. 10, 1949). United Nations, General Assembly, Proposals for a Permanent 
International Regime for Jerusalem, communication from the U.N. Concilia- 
tion Commission for Palestine to the Secretary-General transmitting the text 
of a draft instrument, U.N. Doc. A/973 (Sept. 12, 1949). United Nations, 
General Assembly, Report of Ad Hoc Political and Security Committee on 
Proposals for a Permanent International Regime for Jerusalem Area, Protection 
of Holy Places, and Assistance to Palestine Refugees, U.N. Doc. A/ 1222 (Dec. 
7, 1949). United Nations, Trusteeship Council, Question of an International 
Regime for the Jerusalem Area and Protection of the Holy Places; Working 
Paper prepared by the President of the Trusteeship Council, U.N. Doc. T/457 
(Jan. 31, 1950). United Nations, Trusteeship Council, Removal to Jerusalem 
of Certain Ministries and Central Departments of the Government of Israel, 
resolution adopted Dec. 20, 1949, U.N. Doc. T/427 (Dec. 21, 1949). United 
Nations, Trusteeship Council, Statute for the City of Jerusalem, approved on 
Apr. 4, 1950, U.N. Doc. T/592 (Apr. 4, 1950). 



Chapter XIV 

The African Problem Area 

EKE the interest of the United States in the Mediterranean and in 
North Africa, American consciousness of that part of Africa lying 
south of the Sahara (to which the following discussion is limited) was 
greatly increased during World War II. This interest had first been 
aroused in the days of the slave trade, and it has recently been intensified 
by the possibilities of technical assistance under the Point IV Program. 
Unlike the Mediterranean-Middle Eastern-North African area, however, 
Africa as such does not pose any urgent problems for the foreign policy 
of the United States. 

It is treated here for several reasons. Its location at the bend in the 
road to India, Asia, and the Far East is of importance strategically, espe- 
cially when the Mediterranean passage is closed. British strategists have 
referred to East and West Africa as vital links in the equatorial defense 
chain, and they have stressed the value of bases there for the support of 
military operations along the Mediterranean coast and in the Middle 
East. Dakar, the African point nearest the Western Hemisphere, flanks 
the European routes to South America. 

Important economically as well as strategically, the minerals known 
to be deposited in Africa are significant in any major struggle. Although 
these deposits may not be so rich as they were once thought to be, the 
continent has vast reserves of manganese, chrome ore, asbestos, industrial 
diamonds, tin, copper, and uranium, all of which are contributing to 
American stockpiles. Africa is also the largest producer in the world of 
vanadium and cobalt. American imports from Africa, which amounted 
in 1949 to about 338 million dollars, also include spices and twine. The 
economic contribution of Africa to Europe is of greater significance, for 
in 1948 African exports to Western Europe totaled about half those from 
the United States. Any increase in the African supply of those com- 
modities now being imported from the United States would have an 
obviously beneficial effect on Western European dollar deficits. 

Although communism seems to have made little progress in Africa, 
political and social tensions in many of the territories are mounting, 
and there is no way of knowing when the Cominform may be able to 
divert more of its propaganda and agitation to subversion in this new 
area. For this reason if for no other, it may prove desirable to inspire in 
the African peoples the determination to resist the blandishments of 

282 



The African Area 283 

communism and to help them to do so. And this can be done best by 
the creation of firm economic, political, and social institutions. 

The development of their primitive economies presents the Africans 
with one of their most difficult problems. There is practically no local 
capital available, and foreign private investors have been understandably 
reluctant to risk their resources in ventures on the Dark Continent, 
where the lack of transportation and trained man power and the preva- 
lence of disease and discomfort have remained formidable obstacles. Any 
considerable degree of economic development will have to depend, it 
appears, on public capital. 

Several development plans have already been begun by the colonial 
powers in their own territories. Under the Colonial Development and 
Welfare Program Great Britain began in 1946 to contribute 120 
million, most of which is being spent for the basic needs of British 
Africa. In addition, Great Britain has set up the Colonial Development 
Corporation and the Overseas Food Corporation to carry out economic 
projects in the entire Commonwealth including the 'colonial possessions. 
In 1947 Belgium began sponsoring a ten-year plan for the Belgian 
Congo and for Ruanda-Urandi, the most urgent projects calling for the 
equivalent of almost one billion dollars. The French Government since 
1946 has been combining private, metropolitan, and colonial public 
funds for development in French territories abroad. In addition, these 
nations have been using American technical experts provided by the 
Economic Cooperation Administration to conduct surveys in their re- 
spective African territories. Years would appear to be required, how- 
ever, before the second largest continent can improve its present status 
as the most underdeveloped in the world. 

Fully as vital to the African peoples as their economic development 
is at least a partial solution of their social problems. These problems 
stem not from the number of people, for Africa has a density of popula- 
tion less than that of any other continent but Australia; they arise out 
of the extreme diversity of the races and cultures represented. South 
of the Sahara there are about 100 million people, nine- tenths of whom 
are illiterate, speaking more than 700 languages and dialects. The 
largest groups are the Bantu and the West African Negroes; the small- 
est group are the Bushmen; others are the Hamites. This racial pattern 
is confused by the several million Europeans, nearly half a million 
Asian peoples, and the pronounced mixture of these and other racial 
stocks. It has been ascertained that racial friction exists almost in direct 
relation to the proportion of European inhabitants to the total. It is 
consequently worst in the Union of South Africa, where two million Euro- 
peans have established their domination in a nation comprising many 



i,84 Major Problems 1950-1951 

East Indians, several hundred thousand "Cape Coloured," and six mil- 
lion Bantu. Racial troubles are also serious in Kenya, South- West Africa, 
and the Rhodesias, where the percentage of Europeans is also small. 

Any solution to the economic and social problems of the area as a 
whole is vastly complicated by the varied political relationships in- 
volved. There are only three independent states in Africa south of the 
Sahara: Liberia, Ethiopia, and the Union of South Africa. Independence 
will also be given to Italian Somaliland within ten years. The remain- 
ing territories have varying kinds of political ties with Great Britain, 
France, Belgium, Spain, and Portugal. As colonies, protectorates, trus- 
teeships, and overseas territories, at various stages in the long way to 
independence, they contain the major part of the dependent peoples of 
all Africa, which have been estimated to total three fourths of the de- 
pendent peoples of the world. 

These European powers quite naturally differ in their colonial 
policies. At the one extreme is the British emphasis on the native cul- 
tures with the realization that the diversity of the colonies under British 
control prevents a high degree of standardization. Indirect rule is 
favored whenever possible, and the native chiefs are allowed to follow 
their own patterns as long as neighboring territories are not injured 
and the laws are not broken. The French policy represents the other 
extreme point of view, with a native elite being educated by the French 
to exert more influence than the native chiefs. These "assimilated" 
Africans are brought up in the French tradition to consider themselves 
part of the French state, and they are given a position of greater im- 
portance than that accorded the natives in any other part of Africa. 

This political complex of poverty stricken, underprivileged peoples 
has raised many problems and innumerable disputes, most of which have 
either been settled directly between the parties concerned or have 
remained unresolved. In at least three instances, however, questions raised 
south of the Sahara have been brought to the attention of the United 
Nations. 

One such question was the disposition of the former Italian colonies, 
two of which Somaliland and Eritrea are within Africa south of the 
Sahara. In accordance with the terms of the Italian Peace Treaty Great 
Britain, the United States, and the Soviet Union having failed to agree 
the General Assembly of the United Nations was called on to dispose 
of these colonies, as well as of Libya in North Africa. After discussions 
running through two sessions, the Assembly decided in November 1949 
that Somaliland should be a United Nations trusteeship for ten years, 
and after that, an independent and sovereign state. Italy was appointed 



The African Area 285 

the administering authority. Eritrea, however, remained an unsettled 
question. A United Nations commission was appointed to ascertain the 
wishes of the inhabitants, to consider their capacity for self-govern- 
ment, to report on the best means for promoting their welfare, and to 
reconcile this information with the rights and claims of Ethiopia and the 
requirements of peace and security in East Africa. The commission is 
to report with recommendations to the Assembly in 1950. 

Another African question before the United Nations has been the 
legal status of South-West Africa. In 1946 the Assembly recommended 
that this former League of Nations mandate should be placed under a 
United Nations trusteeship. In July 1947 the Union of South Africa 
informed the United Nations that it intended to maintain the previous 
status but that administrative reports would be submitted. In July 1948 
the Assembly criticized the South African attitude and passed a reso- 
lution of trusteeship. The following year South Africa stated that no 
further reports would be submitted and that steps were being taken to 
associate the territory more closely with the Union. In December 1949 
the Assembly put the issue to the International Court of Justice, asking 
for an advisory opinion on (i) the international status of the territory, 
(2) the legal obligations of the Union of South Africa, and (3) the com- 
petence of the Union to change the international status of the territory. 

Probably the most bitter issue presented to the United Nations by 
political and social questions in Africa has been the alleged discrimini- 
nation practiced against many of its inhabitants by the Union of South 
Africa. In 1946 India accused the Union of South Africa before the 
United Nations of restricting the rights of Asiatics and Negroes to own 
land, to share representation in the legislature, to receive an education, 
and to obtain employment. The General Assembly approved a resolu- 
tion seeking South African co-operation in settling the disagreement, and 
in May 1949 the General Assembly made another similar request. The 
Union of South Africa, however, has asserted that the Charter of the 
United Nations specifically bars interference in domestic affairs and 
that the question is one for the Union of South Africa alone to settle. 
As a result India and Pakistan imposed trade sanctions against the 
Union of South Africa, and the Indian ban has not yet been lifted. 

In addition to these disputes, on which the United States as a 
member of the United Nations has to adopt a position, there are other 
questions that in the more distant future will require a carefully 
formulated African policy. As the most underdeveloped continent in 
the world, Africa will naturally become the focus of more and more 
of the attention of the officials planning the Point IV Program. Already 



*86 Major Problems 1950-1951 

surveys are being made for improving agricultural practices and trans- 
portation facilities. The vital fight against soil erosion and the tsetse 
fly and the development of water power will require closer and more 
numerous contacts between the United States and the African peoples 
than have existed in the past. 

In carrying out the many projects under the Point IV Program 
for Africa, the United States will also be pursuing its traditional ob- 
jectives: the establishment of a stable world order, the progressive de- 
velopment of dependent peoples toward self-government and eventual 
independence, and assistance to underprivileged peoples to raise their 
standards of living and education. On the other hand, the United States 
itself has no direct responsibilities in Africa, and its activities have to 
be examined for the effect they might have on the European powers, 
four of which are associated with the United States in the North At- 
lantic Treaty. The United States furthermore is itself an administering 
power in the Pacific. If an African policy for the United States presents 
any problem, therefore, it appears to be the avoidance of action that 
might either jeopardize American hopes for the welfare and the increas- 
ingly nationalistic aspirations of the African peoples or disrupt the 
relations between the United States and the colonial powers in Western 
Europe. 



Chapter XV 

The Asian Problem Area 

i HE PART of Asia that lies south of the Soviet border and east of 
JL the Iranian plateau and includes the Malay Archipelago, contains 
about one half of the population of the world in less than one seventh 
of its land area. The underlying civilizations of the region were formed 
from two main cultural streams, the Chinese and the Indian. The Indian 
culture was spread into Farther India and the Malay Archipelago 
mainly by peaceful methods. The Chinese culture was spread south- 
ward largely by military conquest, and its maximum expansion is 
marked by the present southern border of China and the country of 
Annam. Dissimilar as these cultures are in many of their philosophical 
and practical aspects, they have in common an innate conservatism and 
a religious fatalism, and they have both developed authoritarian po- 
litical patterns from patriarchal or theocratic bases. In addition, both 
cultures rest on self-contained and traditional economies of which 
agriculture is the mainstay. 

In historic times two important alien cultural influences intruded 
into the area. Between the eighth and sixteenth centuries successive 
waves of Muslim invaders from the Middle East and Central Asia 
brought Islamic, Arabian, and Iranian cultures into Malaya, the eastern 
archipelago, India, and inner China. Although Islam gained many mil- 
lions of converts, it is only in the areas that are now Pakistan that the 
established culture was fundamentally changed. 

The impact of Western civilization was far more widespread and 
radical in its effects. Between the year 1498, when a Portuguese fleet 
arrived at Calicut, India, and the end of the eighteenth century the 
greater part of south and southeast Asia was brought under the political 
domination of western European powers. During this period, however, 
the East was unresponsive to Western influence: it wanted neither 
Western goods nor Western ideas. The West, in contrast, was dazzled 
by the splendors of the East and enormously enriched by Asian trade. 
It was not until after the Industrial Revolution in the nineteenth cen- 
tury, however, that the West was able to make a deep impression on 
Asian life and thought. At that time direct rule provided orderly ad- 
ministration and government by law. Modern schools taught world 
geography and history and developed an awareness of race and na- 
tionality. Western political philosophy introduced new concepts of 

*8 7 



288 Major Problems 1950-1951 

human dignity and of the rights of man. Western techniques opened 
new sources of wealth. Even in China and Japan, which remained in- 
dependent, similar results were produced by occidental advisers and 
by ramified cultural contacts. 

The intellectual and spiritual influences of the West were less 



SOUTH AND EAST 
ASIA 




obtrusive than its material power. Even the unlettered masses could 
recognize the superiority of Western material progress. It was, more- 
over, the technical demands of Western material civilization that set 
in motion the processes of social change in Asia. The competition of 
imported factory products with those of native cottage industries forced 
changes in the economy and in the social structure of the myriads of 
self-contained village communities in which the greater part of the 
population of Asia lived. Japan was able up to a point to adjust itself 



The Asian Area 289 

to these changes by the speed with which it converted an older political 
structure into a modern centralized state. But in China the inability of 
the traditional order to meet the challenge of the West brought about a 
revolutionary process that still continues. 

Between 1840 and 1940 south and east Asia developed into a region 
of economic viability in which a power equilibrium was simultaneously 
achieved. Japan held the islands that commanded the Pacific approaches 
to the continent from Kamchatka in the north to the Tropic of Cancer. 
On the continent itself, Japan controlled Korea and penetrated Man- 
churia, and it thus acquired access to an important source of raw 
materials at the cost of establishing itself in the path of Russian expan- 
sion. Except to the extent that Russian land power and American naval 
power, with its advanced bases in the Philippines, acted as a counter- 
balance, Japan occupied a dominant position in the northern Far East. 
Farther south and on the Indian Ocean littoral, the maintenance of a 
counterbalance was largely a British responsibility, though it was 
shared by France and Holland. 

During the same period an economic interdependence was de- 
veloped between the East and the West when European traders, seeking 
to expand their markets in Asia, turned to producing or processing in 
Asia commodities that could then be exchanged for Western goods. 
In colonial Asia they turned chiefly to plantation enterprises and ex- 
tractive industries. In China and Japan their initiative was responsible 
for the introduction and development of export industries. 

Only Japan freed itself from foreign control of its external trade. 
It developed mercantile houses, foreign exchange banks, and an effi- 
cient merchant marine, and competed successfully for a substantial share 
of the foreign trade of other Asian countries. It thus came to play a vital 
part in the economic development of east Asia. It formed the principal 
Asian workshop. It used its cheap manufactures, well suited to Asian 
markets, to pay for the grains and raw materials it needed. In China, al- 
though foreign trade remained largely in foreign hands, internal eco- 
nomic development, except in Manchuria and at the treaty ports, was 
from the first under Chinese control. In India native enterprise steadily 
gained ground, but elsewhere in East Asia native participation in modern 
business ventures was negligible. 

These developments, however, did little to alter the basic character 
of Asian life. Although production was enormously increased, popula- 
tion also grew rapidly, and the advantages that the West had found in 
industrialization were not duplicated in the East. The standard of living 
of the Asian masses remained at the bare subsistence level where it had 
been for centuries. Except in Japan additional material resources did 



ago Major Problems 19501951 

not become available for developing new human resources. Under these 
conditions, a growing social disequilibrium was inevitable. 

The power equilibrium and economic stability that had been 
reached in east Asia were overthrown when Japan embarked on an ex- 
pansionist policy, that led by direct steps to Japanese participation in 
the Second World War. The war produced consequences that were dis- 
astrous not only to Japan but also to China, and they were fraught with 
grave implications for the security and well-being of nations far re- 
moved from the immediate region. 

Japan now lies disarmed and under military occupation. Its out- 
lying possessions have been detached. It cannot for a long time be 
thought of as a power capable of exerting a significant influence in the 
East. Postwar China could not be developed quickly enough as a modern 
democratic power. Instead, a small but disciplined and determined 
Chinese minority, fired by the ideologies of Marx and Lenin and fortified 
by Soviet support, aid, and training, has come into power. The sphere 
of Soviet influence has been significantly expanded, and the United 
States is faced with the pressing problem of developing a counter- 
balancing force, for there is no power equilibrium in the Far East, and 
American and Soviet power now confront each other. 

Apart from the attack on the Republic of Korea, the gravity of the 
problem has been increased by the threat that has developed to the 
security of Indo-China and of the other neighbors of Communist China. 
This threat has been heightened by another consequence of the Second 
World War, namely, the flowering of native nationalism and the emerg- 
ence of independent or self-governing states. This development has added 
to the general instability and insecurity of the region. All but two of 
these states were freely granted their independence by the metropolitan 
powers concerned. Indonesia achieved its independence through the 
good offices of the United Nations only after a revolution. In Indo- 
China, the issue is still unsettled. Three separate French-supported re- 
gimes have been set up, but the authority of one of these regimes 
Viet-Nam is being disputed by the ultranationalist Viet-Minh group, 
which is supported by the Soviet Union and the People's Republic of 
China. The newly fledged states have an aggregate population of some 
670 millions, as compared with the 10 million people who are still in 
a dependent status. 

The advent of these new states means that the Western powers 
which formerly maintained peace and security in the area no longer 
have either the motives or the authority to continue this responsibility. 
Yet the states of southeast Asia, singly or in coalition, are incapable by 



The Asian Area 291 

themselves o resisting external aggression or internal subversion. They 
lack experienced leadership and disciplined, enlightened, and united 
populations; and their disorganized economies are not adequate to a 
resolute and sustained defense. 

Even if no external threat to their security existed, the problem of 
making these states viable, stable, and progressive would be formidable 
enough. They all contain disaffected racial minorities, many of which 
are still in a tribal state of culture. The standard of literacy in these 
states is among the lowest in the world. Even among the educated 
minorities, few possess the necessary training and experience or have 
the command of public confidence requisite to competent public ad- 
ministration, organized defense, and the management of modern com- 
mercial enterprises. In all these states are large Chinese communities, 
strongly entrenched in trade and industry and maintaining their loyalties 
to their homeland. In Indo-China, Burma, and Indonesia, the over-all 
economy has suffered serious physical deterioration and organizational 
disruption from war and revolution. 

The present disordered condition of this area has contributed ma- 
terially to economic disequilibrium throughout the East and elsewhere 
in the world. Burma, Thailand, and Indo-China no longer produce the 
exportable surpluses of rice on which the other countries of south and 
east Asia depended to make up their deficiencies in food production. 
Indonesia and Malaya were large dollar-earning countries, closely in- 
volved in a three-way trade relationship with Western Europe and 
the United States. These channels have not been fully re-established since 
the war, and both Europe and the East have suffered economically from 
the persistent dislocation. 

Although in many of its aspects the entire region can be regarded 
as a single security zone, the Indian Ocean littoral presents problems that 
distinguish it from the Pacific Ocean littoral. Because of a formidable 
mountain and jungle barrier, the Indian peninsula is not exposed to direct 
attack from China. Its northwest frontier is, however, comparatively open. 
India and Pakistan have modern and reasonably efficient armies. Their 
vulnerability lies not in a lack of fighting strength or competent leaders, 
but in their failure to settle communal differences in the interest of their 
joint security. This failure grows principally from the political and social 
incompatibility of the indigenous Indian culture and that introduced by 
the Muslim conquests. This incompatibility prevented the formation of a 
unitary state to which Great Britain could transfer authority when it with- 
drew from India in 1947. The fears that it raises in the minority lead to 
frequent outbreaks of fanatical communal strife and stand in the way of a 
peaceful settlement of territorial disputes between the two states. The con- 



292 Major Problems 

slant danger of an outbreak of war between India and Pakistan, though 
put off for the moment by an agreement on the fair treatment of minorities, 
is a source of serious concern in itself, and it increases the vulnerability 
of both states to aggression from without. 

The relations of the United States with south and east Asia date 
back to an early period. This country has had a traditional interest 
in trade with this area, and it has historically sought to protect that 
interest by advocating and supporting the policy of the "open door." 
Paralleling this interest has been considerable activity in religious, cul- 
tural, and philanthropic enterprises. More generally, the United States 
Government has had in the Far East and elsewhere a paramount ob- 
jective of supporting orderly processes in international intercourse. It 
has also desired the development of free, stable, and prosperous nations 
with which it might co-operate. These objectives, threatened as they 
now are by present developments, have tended to be restated in terms 
of security. The security interests of the United States in Asia therefore 
have currently assumed a vital character, and new problems arise and 
old difficulties must be newly defined. 

Aside from external threats to these interests, Asia itself presents 
obstacles to the safeguarding of them. These obstacles are want, igno- 
rance, and prejudice. The prevalence of them is the great check on the 
development of stable and prosperous states with which the United 
States could effectively co-operate. These attitudes themselves limit the 
social changes that are desired by Asian peoples and that are essential 
to the stability that the American interest requires. The vicious circle 
thus created suggests that the problem of Asia must be attacked on a 
very wide front. 

Want arises primarily from the crowding of populations into the 
fertile river valleys and plains. The pressure of population prevents the ac- 
cumulation of capital needed to break through the rigidly fixed low 
standard of living. Yet it is only by capital outlays that there is hope 
of relieving this pressure. Once this fixed pattern is broken, however, 
there is a possibility that a more favorable trend can be developed, and 
ignorance, prejudice, and fear can be diminished. 

Such a development would not, of course, dispose of immediate ex- 
ternal and internal threats to political freedom. Nevertheless, in the 
long run the strengthening of the economies of Asian states will pro- 
vide an alternative to communism and, with the spread of education 
and knowledge, will tend to fortify the capacity and the will of the 
people of this area to defend themselves and their new institutions. 
There is an interaction of effects between freedom from want and from 



The Asian Area 293 

ignorance and a growing sense of security. Any fundamental ameliora- 
tion in one of these respects or in one geographical sector will tend to 
create favorable conditions for improvement elsewhere. If progress is 
made in these directions, no official police controls can prevent a 
knowledge of what is taking place under democratic stimuli from pene- 
trating areas under Communist authority. If non-Communist Asia be- 
comes demonstrably more successful in dealing with Asian problems 
than Communist regimes have been, social change and reorganization in 
the region will probably move in directions more likely to resist com- 
munism. 

The ultimate solution of the pressing problems of Asia depends 
on the will and the genius of its own people. They are, however, so 
bogged down at present in almost insuperable difficulties that it is doubt- 
ful whether they can extricate themselves without outside help. This 
is the justification of a policy of assistance. Discerning statesmen recog- 
nize that assistance, if it is to lay a sound basis for healthy progress, 
involves a long-range program. The area is vast; its people are numerous 
and have far to go before they can approach modern statehood. Any 
program for improvement must be wisely conceived to meet funda- 
mental needs first, and it must proceed systematically. Efficient industrial 
systems cannot be built on archaic social structures, nor can there be 
stable industrial progress without progress in trade and transportation, 
in finance, in public administration, and in justice. Political develop- 
ment depends on these and on the steady spread of literacy. Educa- 
tion is costly and slow to produce results. An effective program of aid 
to Asia cannot be had cheaply. 

Meanwhile, the immediate political and territorial security of the 
weak new and old states of the region is a prime essential. No program 
of economic and social assistance, however extensive and wisely de- 
vised, can safeguard these countries from their present dangers. To do 
this requires such positive measures as the maintenance of strong forces 
in the western Pacific and Indian Ocean areas, military aid in the form 
of equipment, training, and staff advice, and consistent diplomatic sup- 
port and guidance. Diplomacy would come into play to resolve the 
local political and economic conflicts that stand in the way of uniting 
against a common danger, to explore and develop the possibilities of a 
regional security pact, and to keep the problem of the security of Asia 
before the United Nations. Measures like these would have to be taken 
jointly with other nations whose interests in Asia are similar to those 
of the United States. 

Such in broad outline is the general problem presented to the 



894 Major Problems 1950-1951 

United States in south and east Asia. In specific situations, however, 
the general problem breaks down into issues that frequently seem to 
call for contradictory action. In consequence, the development of in- 
terim policies gives rise to sharp differences of opinion within the United 
States. It reveals the detailed divergencies of interest between the dozen 
or more states whose friendly co-operation is important to the achieve- 
ment of any American objective and which are vitally touched in 
some respect by what happens in Asia. The particular problems by 
which all are now confronted are the shift of China into the Soviet 
sphere of influence, the future position of Japan, the receptivity of the 
Asian masses to Communist doctrine, the widespread antagonism of Asia 
to the West as a former colonial overlord, and the restoration of mu- 
tually beneficial economic exchanges between the East and the West. 
More specifically still, the problems are the consequences of armed 
Communist aggression against the Republic of Korea, the civil war in 
Indo-China with its threat to open the whole of southeast Asia to Com- 
munist subversion, the need for the development of a new basis for 
Japanese economy, and the methods of checking any further Communist 
aggression. 

Again apart from the attack on the Republic of Korea, the prob- 
lems of China, Japan, and Indo-China are the peaks most clearly visible. 
They represent the types of problem that the United States faces in 
connection with the general problem of south and southeast Asia. The 
situation in Korea, in so far as it can be considered as a part of the 
general problem of Asia, has not been treated separately. In so far 
as it raises questions of collective security and of steps to maintain the 
peace and security of the world, it falls into other and more compre- 
hensive problem fields. 

CHINA 

Few recent questions in United States foreign policy have aroused 
as much public controversy as the question of China. The problem has 
been the extent to which the United States should try to influence the 
course of events in China. Opinions ranging from extremes of all-out 
aid to the National Government to complete inaction have been ex- 
pressed. At the root of this public controversy lay the traditional Ameri- 
can belief that China was the key to the peace and stability of the Far 
East, and that the future of China was of great significance to the United 
States. The United States, in the course of more than a century and 
a half of intercourse, had developed important material and cultural 
interests in China and had consistently sought to protect them by at- 



The Asian Area 295 

tempting to reduce major power rivalries in the area. This was one of 
the aims of the "Open Door" policy, as well as of the Nine Power 
Treaty of 1922 to which the United States, Japan, China, and six 
European nations with important interests in the Far East were parties. 
That and other treaties were designed to ensure peace and stability in 
the area. 

Japan broke away from the Nine Power Treaty by invading and 
occupying Manchuria in 1931. Six years later, in 1937, ^ launched an 
all-out attack that won for it control of the key regions of China proper. 
Although it had thus acted contrary to the intent of the Nine Power 
Treaty, Japan proposed to the United States in 1941 that a new agree- 
ment for the settlement of outstanding problems in the Pacific area be 
concluded. No agreement could be reached, because the United States 
was unwilling to assent to a preferred position for Japan in China. 
While discussions between the two governments were still proceeding, 
Japan attacked Pearl Harbor, as well as American, British, and Dutch 
possessions in the Far East. 

A politically stable and economically prosperous China might have 
replaced Japan after the Second World War as the stabilizing force 
in the Far East, and it might have played an effective part as one of the 
major powers in the United Nations. But, although China was on the 
winning side, it emerged from the war physically crippled and with 
shattered morale. Twelve years of devastating warfare, during eight of 
which Japan occupied the principal industrial and commercial areas, 
destroyed the economic edifice that the new China had reared in the 
prewar years. The National Government found itself unable to retain 
public confidence and to cope with the grave problems of reconstruc- 
tion that beset the country. Generally unsettled conditions discouraged 
the resumption of productive effort, and mounting inflation was an im- 
portant factor in the stagnation of industry and trade. The periodic 
efforts of the National Government to bring the situation under control 
had no noticeable success. 

A number of other factors operated to produce a steady deteriora- 
tion in the situation. A very important factor was the equivocal policy 
of the Soviet Union. As a result of the Yalta Agreement and the Sino- 
Soviet Treaty of 1945, the Soviet Union acquired substantially the same 
position in Manchuria that Tzarist Russia had held before 1904. In 
return for the rights thus acquired, the Soviet Union agreed to support 
only the National Government and to give it "all possible economic 
assistance." At the Moscow Conference in December 1945 the United 
States, Great Britain, and the Soviet Union announced that they were 



296 Major Problems 

in agreement on the need for a united and democratic China and for 
the cessation of civil strife, and they reaffirmed their adherence to a 
policy of noninterference in the internal affairs of China. 

The Soviet Government failed to live up to the spirit of these assur- 
ances and commitments. Instead, it turned over to the Chinese Com- 
munists vast amounts of war material taken from the Japanese forces 
in Manchuria. Immeasurable damage was also done to the Chinese 
economy by the Soviet stripping of Japanese factories in Manchuria. 

During the war the United States extended to China substantial 
military, diplomatic, and financial assistance. Because of the growing 
internal disunity after the war, the United States made further aid to 
China conditional on the achievement of unity, and to that end tried 
to exercise its good offices in order to create a Chinese coalition govern- 
ment composed of Nationalists and Communists. General Marshall spent 
several months in China in 1946, but he was unable to achieve a 
settlement between the warring factions. He reported that his efforts 
had been frustrated by a reactionary group in the National Government 
and by irreconcilable Communists. Thereafter, armed clashes between 
the two factions gradually developed into a large-scale civil war. Alarmed 
by these developments, the United States Congress in April 1948 ap- 
proved a renewal, after a two-year suspension, of aid to China. But by 
the autumn of 1948 the Communist advance had reached such serious 
proportions that although Chiang Kai-shek appealed to President Tru- 
man for immediate increased aid, the Government of the United States 
felt that further extensive aid would not be effective because the 
Chinese situation was so uncertain. 

The Chinese Communist forces, aided by the Soviet Union, ad- 
vanced steadily southward until, by the summer of 1949, they were in 
control of all north and central China, including Manchuria. On Au- 
gust 5, 1949 the United States made clear in a "white paper" that it 
would give no further active support or substantial aid to the National 
Government. It was explained that the ineptitude of the Nationalist 
military leaders and the absence of a will to fight had rendered Ameri- 
can aid ineffective; that the strategic areas of China were now in the 
hands of the Communists, who had acknowledged Soviet leadership; and 
that although the United States had in the past assisted China to resist 
foreign aggression, in this case the attempt at foreign domination had 
been masked as an indigenous crusading movement. The intention was 
affirmed, however, of encouraging the development of China as an inde- 
pendent and stable nation, of giving support to the creation of condi- 
tions that would safeguard basic rights and promote the well-being of 
the Chinese people, of opposing the dismemberment or subjugation of 



The Asian Area 297 

China by a foreign power, and in continued consultation with other 
powers of contributing to the welfare and security of the people of the 
Far East. On that and subsequent occasions the Secretary of State 
gave warning of the possibility that the Chinese Communist regime 
might lend itself to the aims of Soviet imperialism and engage in ag- 
gression against the neighbors of China. 

In October 1949 the Communists, who had now extended their 
power to south China, announced the establishment of the People's 
Republic of China and invited international recognition. This was 
promptly accorded by the Soviet Union and its satellites. By the end 
of the year the National Government, practically excluded from the 
mainland of China, transferred its seat to Formosa, and there were fears 
that an early Communist assault on the island would be successful, and 
it would fall into hostile hands. Consequently, there were strong public 
demands in the United States for the protection and, if necessary, the 
occupation of Formosa because of its strategic importance for the de- 
fense of the Philippines and of Japan. On January 5, 1950, however, 
President Truman issued a statement in which he disclaimed any inten- 
tion on the part of the United States to establish military bases in 
Formosa, to pursue a course that would lead to involvement in the 
Chinese civil war, or to provide military aid or advice to the Nationalist 
forces on Formosa. 

Early in 1950 Great Britain, a few other Western powers, and 
India broke their relations with the National Government and recog- 
nized the People's Republic. In February the Soviet Union concluded 
a Treaty of Friendship, Alliance, and Mutual Aid with the People's 
Republic; since then the two have made several economic agreements. 
The United States continued, however, to recognize the National 
Government; and American public opinion, outraged at the ill-treatment 
of its representatives and citizens by the Chinese Communist authori- 
ties and aroused by the world-wide manifestations of Soviet methods and 
aims, strongly opposed any suggestion to recognize the People's Re- 
public. Furthermore, the refusal of the United States and other nations 
that have not recognized the Communist regime to agree in the United 
Nations to the unseating of Nationalist representatives and to the in- 
stallation of those of the People's Republic led in the spring of 1950 
to a boycott of the various United Nations organs and agencies by the 
Soviet Union and its satellites. The United States has taken the position 
that although it would vote against motions to unseat the representa- 
tives of the National Government, it would accept the will of the ma- 
jority if a United Nations organ should vote to seat a Chinese Com- 
munist representative. The United States has declared, however, that 



298 Major Problems 1950-1951 

such action would not constitute a recognition of the People's Re- 
public. 

The disappearance from the mainland of China of the National 
Government and the advent of the Communist People's Republic, 
hostile to the United States, have fundamentally altered the situation 
about which United States policy has long been concerned. There are 
now serious obstacles to the furthering of the declared aims of the 
United States toward China and the Chinese people, and a grave threat 
to vital security interests has developed. This became clear later in 
June 1950, when the North Korean Communists attacked the Republic 
of Korea. Almost overnight American policy in east Asia was recast 
especially as it became clear that the South Koreans could not by them- 
selves successfully resist the Communist assault. President Truman on 
June 27 therefore ordered United States sea and air forces to give the South 
Korean troops cover and support. At that time the President also 
declared: 

The attack upon Korea makes it plain beyond all doubt that Communism 
has passed beyond the use of subversion to conquer independent nations and 
will now use armed invasion and war. ... In these circumstances the occupa- 
tion of Formosa by Communist forces would be a direct threat to the security 
of the Pacific area and to United States forces performing their lawful and 
necessary functions in that area. 

Accordingly I have ordered the Seventh Fleet to prevent any attack on 
Formosa. As a corollary of this action I am calling upon the Chinese Govern- 
ment on Formosa to cease all air and sea operations against the mainland. The 
Seventh Fleet will see that this is done. The determination of the future status 
of Formosa must await the restoration of security in the Pacific, a peace settle- 
ment with Japan, or consideration by the United Nations. 

The implication that the United States has intervened in the 
Chinese civil war, though as a necessary adjunct of its action in Korea, 
has put the problem of China in a new light. 

The problem is to reformulate United States objectives and policy 
with respect to China in light of the United States declaration of June 
27, 1950. 

Early in 1950 the central issue posed for United States policy in 
China was that of deciding which of the two governments competing 
for recognition was the Government of China. There appeared to be 
four possible alternatives under this issue. 

First, the United States could continue to recognize the Nationalist 
regime as the Government of China. Those who advocated this course 
of action argued that the Chinese Communists were an armed minority 
who represented Soviet imperalistic ambitions, alien to the true interests 



The Asian Area 899 

and aspirations of the Chinese people; that the Communists seized power 
both at the urging and with the support of the Soviet Union, which 
thus exerted pressure in direct defiance of the United Nations Charter 
and the Truman Doctrine; and that therefore the Communist Govern- 
ment came within the purview of United States policy, under the Stim- 
son Doctrine and its corollaries, of not recognizing a government im- 
posed upon a nation by the force of a foreign power. Furthermore, it 
was held that the traditionally friendly American relations with the 
National Government, as well as its staunch loyalty to the allied cause 
during the Second World War and the sacrifices it made at the behest 
of the United States in connection with the Yalta Agreement, imposed 
upon the United States a strong moral obligation to uphold the National 
Government and the millions of Chinese people who still support it. 

Second, the United States could withdraw recognition from the 
Nationalist regime and extend it to the Communist regime as the Gov- 
ernment of China. Proponents of such a step argued that a basic revolu- 
tionary force was loose in China and the Communists had merely ridden 
it into power; that the people of China would soon awaken to the fact 
that Communist aid and Soviet imperialism were synonymous and would 
act accordingly; and that therefore for the United States not to recog- 
nize what is inherently a Chinese regime would have the practical 
effect of driving China further into the Soviet orbit instead of drawing 
it away. Those who advocated recognizing the People's Republic also 
emphasized that such an act would be in line with the traditional 
American doctrine of recognition and would not imply approval of 
the Communist regime. The People's Republic, controlling most of the 
territory of China and enjoying the passive acquiescence at least of most 
of its people, was the only government qualified to represent them and 
capable of fulfilling Chinese international obligations. It was also held 
that such recognition, by making possible the resumption of a profitable 
trade and a renewal of contacts with the Chinese people, would thus 
make it possible to influence them. 

In rebuttal, opponents of recognizing the Communist regime as- 
serted that even though such recognition would not necessarily imply 
approval, Asian peoples would nevertheless construe it that way, and 
it would consequently detract from American efforts to rally Asia against 
communism. They also pointed out that the record of the People's 
Republic and the experiences of Great Britain did not encourage any 
belief that the Communist regime intended to carry out its international 
obligations faithfully, or that a revival of trade and a resumption of 
untrammeled contacts with the Chinese people would follow recogni- 
tion. 

A third alternative would have been for the United States to 



300 Major Problems 1950-1951 

continue to recognize the Nationalist regime as sovereign on Formosa, 
and at the same time to extend recognition to the Communist regime 
as sovereign on the mainland. Those who proposed such a policy as- 
serted that it would be a realistic recognition of the facts in the case 
and would have the added advantage of keeping the strategic island 
of Formosa in friendly hands. It was also argued that the dilemma within 
the United Nations could be resolved by this action, because the Na- 
tionalist regime, as the Republic of China, could be permitted to retain 
its seat on the Security Council, and the Communist regime could be 
admitted as another member of the United Nations, with no permanent 
seat on the Council. Opponents of such a partition of China argued 
that it would antagonize both the Nationalists and the Communists and 
would therefore be self-defeating. They also stressed that it would set 
a bad precedent with respect to Korea and Germany. 

A fourth alternative would have been for the United States ulti- 
mately to withdraw recognition from the National Government but 
to refuse to extend it to the People's Republic, thus declaring in effect 
that no government existed for China. Such American action would be 
similar to the policy that the United States followed for fifteen years 
toward Soviet Russia. Against this it was argued that such a policy would 
be highly unrealistic in any circumstances short of a war with the Com- 
munist regime. 

It is obvious that during the coming months any choice from among 
the foregoing alternatives will be profoundly influenced by events grow- 
ing out of the Korean crisis. If the Korean situation does not lead to a 
general war in the Far East, one general set of conditions will prevail 
and shape United States policy toward China. But if the Korean situation 
should result in such a general war, the general conditions will be wholly 
different. From whatever decision is finally made on the recognition ques- 
tion will flow several other issues, which can be examined best in the light 
of a series of assumptions regarding future United States recognition 
policy toward China. 

If the United States should follow the first general alternative out- 
lined above, and decide to continue recognizing the National Government 
as the sole government of China, then it must decide the extent, if any, 
to which it is willing to aid that government to regain control of the 
Chinese mainland. If this issue arises in the framework of a general 
Far Eastern war in which Communist China is allied against the United 
States, the alternatives will be fairly clear. If, however, the Korean 
situation is settled without a general war, the issue and its alternatives 
would become more complex. It could then be argued that because 
United States military action under United Nations auspicessaved 



The Asian Area 301 

Korea from the Communists, similar action in China would restore the 
National Government to its former position of power on the mainland. 
Against this it could be argued that popular Chinese resentment against 
the Chiang Kai-shek regime is so great that it would be impossible for 
the United States to effect the return of that regime without a long and 
costly struggle. Another issue could then arise: whether the National 
Government could be reconstituted in a form that would appeal to the 
masses of the Chinese. This has been one of the issues in the Chinese 
situation since the end of the Second World War, and the possibilities of 
action under it have been fairly well explored. 

The selection of this first general alternative would raise several 
other subsidiary questions. One is the extent to which the United States 
should go in preventing the unseating of the National Government in 
the United Nations. Should the United States continue to maintain the 
position that it will concur in a majority vote, or should the United 
States use its veto in the Security Council? Another is the question of 
trade with Communist China if the United States continues to recognize 
the National Government. Should an economic blockade be instituted 
against the People's Republic? Would the other major Western powers 
with economic interests in China concur in such a blockade? And what, 
in view of the fact that the revival of trade with China is considered a 
vital factor in the rehabilitation of the Japanese economy, would be the 
effect of such a blockade on Japan? 

If the United States should decide to follow the second general 
alternativeto withdraw recognition from the National Government and 
extend it to the People's Republic it appears reasonable to assume that 
the Korean situation will have been solved without a general war. Given 
the continuation of the United States objectives of countering com- 
munism, the next question would be the extent to which economic rela- 
tions should be encouraged with the new Chinese Communist state. One 
view is that the fostering of trade would tend to bring the People's Re- 
public gradually into a relationship of dependence upon the maritime 
trading nations. Its ties with the Soviet Union might then be loosened, 
since the Soviet Union can neither satisfy Chinese import needs nor take 
Chinese exports in payment. It is also held that trade would give reality 
to the United States objective of promoting the well-being of the Chinese 
people. The contrary view is that commercial intercourse, by providing 
the means of relieving the pressing economic difficulties of China, might 
enable the People's Republic to consolidate public support at home and 
to contribute to the aggregate military resources of a fundamentally 
hostile bloc of nations. 

A third view is that since the United States is only one of many 
nations whose policies affect the situation in China, and since other 



302 Major Problems 1950-1951 

maritime powers are not likely to follow an American lead in discourag- 
ing trade, the adoption by the United States of a policy of denial would 
not make any serious difference to China but would play into Communist 
hands by providing material for a campaign to embitter the Chinese 
people against the United States. This view therefore favors permitting 
trade on a strictly quid pro quo basis, subject to the same restrictions that 
apply to the export of strategic commodities to the Soviet Union. It is 
held that other maritime powers might be more willing to concert their 
policies with those of the United States on such a basis. 

If the United States should choose the third general alternative and 
recognize both the Nationalist and the Communist regimes, the de facto 
partition of China that would follow would create several issues for 
United States policy. These would all be raised because a general Far 
Eastern war had not grown out of the Korean situation. For example, 
would the United States continue indefinitely to act as a policeman be- 
tween the two governments as it is doing under the declaration of 
June 27, 1950? Would the United States be prepared to extend economic 
aid to the National Government indefinitely if such aid should be 
necessary to maintain the National Government in power on Formosa? 
What course should the United States follow within the United Nations, 
assuming the Communist regime would be willing to accept a member- 
ship in the organization that did not entitle it to a permanent seat on 
the Security Council? Should the United States insist on vetoing all 
attempts to unseat the Nationalist representatives? 

If the United States should follow the fourth alternative and with- 
draw recognition from the National Government but refuse to extend 
it to the People's Republic, it appears reasonable to assume that such 
action would take place only if no general war broke out in the Pacific. 
The contemplated withdrawal under this alternative of American recog- 
nition from the National Government would, however, force the issue of 
the disposition of Formosa, for it appears reasonable to assume that 
without American support and recognition the National Government 
would soon disintegrate. 

The legal status of Formosa is currently somewhat in doubt. In war- 
time declarations at Cairo in 1943 and at Potsdam in 1945, the restora- 
tion of Formosa to China was pledged, and under the surrender terms 
Japan relinquished its claims on the island. Soon after the surrender 
Formosa was returned to Chinese control, but whether sovereignty there- 
upon passed automatically to China or whether it awaits the conclusion 
of a formal peace settlement has not been authoritatively decided. In the 
declaration of June 27, 1950, however, President Truman said that the 
"determination of the future status of Formosa must await the restora- 



The Asian Area 303 

tion of security in the Pacific, a peace settlement with Japan, or con- 
sideration by the United Nations." In any event, it is clear that Formosa 
constitutes a vital link in the chain of islands stretching from northern 
Japan to Indonesia that controls access to continental east Asia from the 
Pacific. These islands have been in the possession of the United States 
or friendly governments since the end of the war, and the passing of 
Formosa into unfriendly hands would impair the defensive value of the 
island chain. Therefore, when the time conies to make final disposition 
of the island, the alternatives would be limited. Formosa could be placed 
under the sovereignty of a power friendly to the United States; it could 
be placed under a trusteeship administered by the United Nations, the 
United States, or some combination of major powers; or it could be made 
an independent state. 

Although under all the foregoing possible alternatives the means 
open to the United States for directly influencing the Chinese people 
under the People's Republic may necessarily be limited, it is important 
that this aim be kept in mind as a material factor in weighing all the 
other significant issues that arise out of the problem of China. Apart 
from recognition of the People's Republic and the development of trade, 
other means that suggest themselves for influencing and assisting the 
Chinese people are information and propaganda, the encouragement of 
Chinese students to enter American institutions of learning, and the 
establishment of close relations with the ten million Chinese overseas 
who maintain important contacts with their homeland. 

Selected References 

"British Government's Statement on Recognition of Chinese Communist Regime 
and Statement by Foreign Minister of Chinese National Government Concerning 
British Recognition," Jan. 6, 1950, New York Times (Jan. 7, 1950). "Statement 
by President of Communist People's Republic of China Proclaiming New 
Regime/' Oct. i, 1949, New York Times (Oct. 3, 1949). USSR Embassy, "Tele- 
gram from Soviet Deputy Foreign Minister to Minister of Foreign Affairs of 
People's Republic of China Announcing Decision to Establish Diplomatic Rela- 
tions, Oct. 2, 1949," and "Statement of the Soviet Government to Charge* 
d' Affaires of Nationalist Government in Moscow Announcing Severance of 
Diplomatic Relations, Oct. 2, 1949," USSR Information Bulletin, Vol. IX (Oct. 
21, 1949), pp. 625-26. USSR Embassy, "Texts of Treaty of Friendship, Alliance 
and Mutual Assistance Between Soviet Union and Communist China, and Re- 
lated Agreements," Feb. 14, 1950, USSR Information Bulletin, Vol. X (Feb. 24, 
1950), pp. 108-10. United Nations, General Assembly, Threats to the Political 
Independence and Territorial Integrity of China and to the Peace of the Far 
East, Resulting From Soviet Violations of the Sino-Soviet Treaty of Friendship 
and Alliance of 14 August 1945 and From Soviet Violations of the Charter of 
the United Nations, U.N. Doc. A/1215 (Dec. 6, 1949). U.S. Congress, "Con- 
gressional Debates on United States Policy Toward Formosa and the Far 



304 Major Problems 

East in General," Congressional Record, Vol. 96, Nos. 5, 7, 8, 9, 11, 16, and 17 
(January 1950). U.S. Department of State, "Angus Ward Summarizes Mukden 
Experiences," Bulletin, Vol. XXI (Dec. 26, 1949), pp. 955-57. U.S. Department 
of State, "Chinese Issue Second Port-Closure Order," Bulletin, Vol. XXII (Jan. 
2, 1950), PP- 23-24. U.S. Department of State, "The Chinese Situation in the 
United Nations," statement by Ambassador Jessup made in Political and Security 
Committee, Nov. 28, 1949, Bulletin, Vol. XXI (Dec. 12, 1949), pp. 897-901. U.S. 
Department of State, Crisis in Asia An Examination of U.S. Policy, remarks by 
Secretary Achcson, Jan. 12, 1950, Far Eastern Series 32, Publ. 3747 (February 
1950). U.S. Department of Slate, "Department of State's Announcement Con- 
cerning Sci/ure of United States Consular Property in Peiping by Chinese Com- 
munists." Bulletin, Vol. XXII (Jan. 23, 1950), pp. 119-23. U.S. Department of 
State, "President Truman's Statement on United States Policy Toward Formosa," 
Jan. 5, 1950, Bulletin, Vol. XXII (Jan. 16, 1950), p. 79. U.S. Department of State, 
"Soviet Penetration in Northern Areas of China," Bulletin, Vol. XXII (Feb. 
(>, 1950), pp. 218-19. U.S. Department of State, "U.S. Secretary of State's Back- 
ground Statement on Formosa," Jan. 5, 1950, Bulletin, Vol. XXII (Jan. 16, 1950), 
pp. 79-81. United States Mission to the United Nations, "Statement by Deputy 
United States Representative Gross in the Security Council on the Credentials of 
the Chinese Representative," Jan. 13, 1950, Press Release 791 (Jan. 13, 1950). 
Vishinsky, A.Y., "Statement to Press," remarks by Soviet Foreign Minister con- 
cerning U.S. Secretary of State's comments of January 12 regarding China and 
the Far East, USSR Information Bulletin, Vol. X (Jan. 27, 1950), p. 39. 

THE FUTURE OF JAPAN 

The sunemler of Japan took place in August 1945 on the basis of 
the Potsdam Proclamation of the previous month. Besides providing for 
such immediate action as the permanent elimination from the political 
scene of the leaders who had led Japan along the path of aggression, the 
trial of war criminals, disarmament, the disbandment of armed forces, 
the payment of reparation, and the military occupation of Japan, the 
proclamation also foreshadowed the nature of the peace settlement. The 
sovereignty of Japan was to be limited to its four main islands and such 
minor islands as the allies might determine; obstacles to the revival and 
strengthening of democratic tendencies among the Japanese people were 
to be removed; and the basic human freedoms were to be established. 
Although the military power of Japan was to be permanently abolished, 
the country was to be permitted to retain the industries necessary for 
sustaining a peaceful economy, to have access to raw materials, and 
eventually to participate in world trade. The promise was made that the 
occupying forces would be withdrawn when the allies had achieved their 
objectives, which included the establishment of a peacefully inclined, re- 
sponsible government in accordance with the freely expressed will of the 
Japanese people. 

The United States is playing a leading part in determining allied 
policy toward Japan in the interpretation of the Potsdam Proclamation. 



The Asian Area 305 

The allied occupation is predominantly American in composition, and 
the Supreme Commander for the Allied Powers (SCAP) is an American. 
The formulation and review of policies relating to the obligations as- 
sumed by Japan under the surrender terms is the function of the Far 
Eastern Commission (FEC), which has its scat in Washington. The com- 
mission consists of representatives of the thirteen nations principally con- 
cerned with Japan. Although the final responsibility for policy rests with 
FEC, the United States has the right to issue interim directives to SCAP 
on matters of urgency. The Basic Post-Surrender Policy for Japan, issued 
by the FEC in June 1947, was substantially a reaffirmation of the initial 
post-surrender policy of the United States on which the earlier directives 
to SCAP were based. 

Under the Potsdam Proclamation, Japan was shorn of all its out- 
lying dependencies. Certain islands of Japan proper were also detached 
from Japanese sovereignty pending the final disposition of them in a peace 
treaty. Of these the Kurilcs were held by Russia, and the islands south of 
the 30th parallel by the United States. The elimination of military power 
and militarist influence in Japan was soon achieved, and democratic 
reforms were initiated. In many respects, however, the development of 
democracy depends upon the will and the capacity of the Japanese people 
for it. 

As the allied occupation continued, the United States became more 
and more preoccupied with Japanese economic problems. Defeat had left 
Japan with famine impending and with many difficult problems to be 
solved in restoring economic viability. Industrial plants had deteriorated 
or had been destroyed, transportation and communications had broken 
down, the financial structure was shaken, business leadership had suf- 
fered in morale, and business organization had been disrupted. Japan had 
lost its flourishing overseas trade, its income from extraterritorial invest- 
ments, and its former access to valuable fishing grounds. Its population 
had been swollen by five million repatriates of former occupied areas. 
Outside assistance was essential, and the United States found itself 
saddled with the burden of making up an annual deficit amounting to 
about 400 million dollars in the Japanese economy. 

The impossibility of carrying this burden indefinitely would in 
any case have provided the United States with a strong motive to aim 
at making Japan self-supporting. But it became increasingly clear that 
Japanese economic recovery was also indispensable to Far Eastern re- 
covery and thus to world recovery. Moreover, there was a growing real- 
ization that it was idle to expect the Japanese people to become either 
peace loving or democratic unless their material existence could be made 
to depend on their own efforts. These considerations impelled the United 
States to relax some of its democratizing directives when they hindered 
economic activity, to direct the Japanese Government to initiate a com- 



306 Major Problems 

prehensive program of economic recovery, and to suspend additional 
reparation removals from Japan. Certain other handicaps to Japanese 
economic recovery, such as the debarment of many business leaders from 
holding important positions in economic life, restrictions upon the con- 
struction and operation of merchant vessels, and limitations upon pro- 
ductive capacity, are still in force. 

It soon became obvious, however, that no combination of favorable 
internal factors could by itself be decisive in easing the Japanese economic 
situation. With an area smaller than that of California and a population 
ten times as great, Japan is dependent on a revival of foreign trade in 
which its manufactures can be exchanged for essential food and raw 
materials. External factors therefore are the primary determinants of its 
economic future. The revival of foreign trade is handicapped by chaotic 
conditions in the Far Eastern countries that form the most important 
Japanese trading area, by the shift of China to communism, by opposi- 
tion based on fears of Japanese competition and of a revival of Japanese 
militarism, and by the development of substitutes or new sources of supply 
for goods formerly obtained from Japan. Some of these handicaps might 
be surmounted if the future relations of Japan with the outside world 
could be regularized by the conclusion of a peace settlement. As early 
as July 1947 the United States proposed that a conference of the FEC 
member states be called to discuss the peace treaty. Nothing came of the 
proposal at that time, chiefly because of the opposition of the Soviet 
Union, which made the counterproposal that the Council of Foreign 
Ministers be given the primary responsibility for drafting a peace treaty. 
This would have meant subjecting the negotiations to the power of veto 
of the four major nations and virtually excluding the other FEC mem- 
bers from the processes of treaty-making. Experience in negotiating peace 
settlements for other countries under similar conditions was not such as 
to recommend the Russian proposal, and no progress has been made in 
breaking the deadlock that followed. 

Since the autumn of 1949, after an exchange of views between the 
British Foreign Secretary and the American Secretary of State, the United 
States and Great Britain have been going ahead with the preparation of 
separate drafts of a peace treaty, the latter consulting with other mem- 
bers of the British Commonwealth. It was understood that at some stage 
there would be Anglo-American conversations on the basis of their respec- 
tive drafts. These conversations have not been held. It is reported, more- 
over, that the United States Government has not so far been able to de- 
cide what terms to propose. 

Of the other members of the FEC only the British Commonwealth 
nations have shown an active interest in the early conclusion of a peace 
treaty. They are reluctant to resume normal trading relations before 



The Asian Area 307 

Japan has given the formal commitments that are necessary to allay their 
fears of an economic or a security threat to their future. They have indi- 
cated, therefore, that guarantees for continuing democratic reforms and 
restrictions on trade and shipping should be included in the peace treaty. 
In Japan itself the subject of a treaty has aroused much public contro- 
versy, and in the spring of 1950 Prime Minister Yoshida and his fol- 
lowers were said to be in favor of an early treaty, even if this meant the 
nonparticipation of Russia, on the grounds that a long occupation is 
not desirable. Socialists and others have called for an "over-all" treaty 
(one that includes the Soviet Union), for no foreign bases, and for 
permanent neutrality for Japan. This would mean postponing the treaty 
until Russia was ready to agree to terms that would permit the neutrality 
of Japan to be backed by a common guarantee of the major powers. 

The problem is to formulate a United States policy for re-establish- 
ing Japan as a sovereign state. 

Although the authority of the Far Eastern Commission is complete 
within its terms of reference, these contain the proviso that it shall "re- 
spect existing control machinery in Japan, including the chain of com- 
mand from the United States Government to the Supreme Commander 
and the Supreme Commander's command of occupation forces." Under 
the general supervision of the FEC the Supreme Commander has in fact 
governed Japan, special sections of SCAP having been set up to supervise 
the activities of the Japanese Government. That this was to be the case 
was made clear by the United States Government in clarifying and am- 
plifying the Potsdam Proclamation in August 1945, when it was stipu- 
lated that "from the moment of surrender the authority of the Emperor 
and the Japanese Government to rule the state shall be subject to the 
Supreme Commander for the Allied Powers, who will take such steps as 
he deems proper to effectuate the surrender terms." The existing Japa- 
nese constitution was drafted under the supervision of FEC and SCAP. 
It can be amended only with the approval of these authorities for as long 
as they choose to exercise this right. 

The first issue is to determine the minimum conditions that should 
be imposed on Japan in connection with the restoration of its sovereignty. 
There appear to be five main alternatives, excluding the possibility that 
the occupying powers will withdraw from Japan without the imposi- 
tion of any conditions at all. 

The first alternative is to impose conditions relating only to the 
outright cession of territory. In defining this alternative it would be neces- 
sary to decide whether the decisions already made for detaching territory 
from Japan were to be confirmed, or whether some of the designated 



308 Major Problems 

territory was to be left under Japanese sovereignty. It would then be 
necessary to decide what further territory if any was to be detached from 
Japan. The argument for limiting the conditions to territorial concessions 
would rest on the assumption either that this would leave Japan so weak- 
ened that it would no longer be a threat to the peace, or that this rela- 
tively lenient treatment would be the best way of ensuring the future 
support of a friendly Japan for the treaty-making powers. Against this it 
could be argued that the very pressure of population in the restricted 
area left to Japan would tempt Japan into expansion in the future and 
that therefore other conditions should be imposed in the interest of 
security. 

The second alternative is to impose the additional condition that 
Japan should grant base rights to the United States or to a combination 
of democratic powers including the United States. This additional de- 
mand would be based on the argument that bases are necessary as a 
protection against future Japanese aggression or as an element in collec- 
tive security measures against aggression by other powers in the Pacific 
area. It could be argued further that with the present state of security in 
the Far East the United States must do everything possible to stop Japan 
from passing under the control of another power. This would be true 
whether or not under this second alternative the clause in the present 
constitution that prohibits Japan from creating a military force was 
abolished, for Japan might be in danger as a victim of aggression before 
it was sufficiently rearmed to protect itself. On the other hand this alter- 
native might not go far to satisfy countries other than the United States 
that are most in fear of the future military and economic power of 
Japan. 

The third alternative that might satisfy these countries is to add, 
as a further condition, continued limitations on armaments and armed 
forces. It might be argued against this alternative, however, that it would 
deprive Japan of the military forces with which to defend itself or to 
play a part in collective security at a time when the great need is to 
restore stability and security in the Far East. Furthermore, this alterna- 
tive would raise the question of guaranteeing the integrity of Japan in 
view of its inability to defend itself. Even this alternative might not 
satisfy some countries, either because it did not go far enough in de- 
priving Japan of the power of aggression, or because it contained no pro- 
vision for the payment of reparation. 

A fourth alternative is to add conditions limiting the industrial 
capacity of Japan to make war and providing for the payment of repara- 
tion either from plants and equipment dismantled in destroying the eco- 
nomic war potential, or from current production. The arguments against 
this alternative are in part the same as those against the third alternative, 



The Asian Area 309 

because this would also deprive Japan of military forces and weaken it 
in playing its part in resisting aggression. Additional objections might be 
based on the obstacles raised by such conditions to the creation of an 
economically viable Japan. 

The fifth alternative is to add still further conditions for the con- 
tinuation of democratic reforms and for the preservation of human rights, 
analogous to the clauses on this subject in the Italian and satellite peace 
treaties. Although these conditions might have the advantage of con- 
tributing to the objective of keeping Japan a peacefully inclined nation, 
the disadvantage urged against it is that such conditions are difficult to 
police and that democratic processes cannot be nurtured by force, espe- 
cially when the force is external to the state in question. 

Various other combinations of the conditions characterizing these 
live alternatives are conceivable, and a corresponding combination of the 
arguments for and against stated above would be applicable to them. The 
main differences among all the alternatives, however, turn on the extent 
to which a sovereign Japan could be trusted to pursue a peaceful course 
in the attainment of broad objectives in the Far East substantially the 
same as those of the United States and the other Western powers. 

The second issue is to determine what means are available to the 
United States for ensuring the observance by Japan of the conditions 
imposed. 

The first alternative is to continue the occupation for an indefinite 
period without a formal treaty. There are two main reasons why this 
might be proposed: the improbability of reaching agreement with the 
Soviet Union on the nature of the peace settlement for Japan; and the 
possibility of imposing conditions, such as those relating to democratiza- 
tion or human rights, that Japan might not otherwise fully observe. To 
some extent, therefore, the decision for or against this alternative depends 
on the decision taken on the first issue, and similar arguments for and 
against apply here. The greater the apprehension of other countries 
regarding the future behavior of Japan and the more severe the condi- 
tions that are to be imposed, the stronger the argument for this alterna- 
tive. 

The second alternative is to negotiate a formal treaty which would 
in the main restore the sovereignty of Japan but would also contain pro- 
visions for such controls, short of continued occupation, as were deemed 
to be necessary to police the conditions imposed. The argument for this 
alternative might be contingent on obtaining Soviet adherence to the 
peace treaty. On the other hand, if relations between the Soviet Union 
and the non-Communist states deteriorated or even failed to improve, it 
might be argued that the members of the FEC should proceed on a 



jio Major Problems 1950-1951 

twelve-power basis to negotiate a settlement in the interest of recon- 
stituting Japan as a stabilizing force in the Far East. This argument 
would imply that the threat of aggression from Japan was less than that 
from other powers. 

The final alternative is to proceed to the negotiation of a formal 
treaty without provisions for control. This alternative would mean that 
instead of policing whatever conditions were imposed on Japan, the ful- 
fillment of the conditions would be left to the good faith of future Japa- 
nese governments. Limitations on Japanese sovereignty would then be 
derived only from the conditions imposed and not from the means of 
seeing that they were carried out. The strongest argument for this alter- 
native would rest on the assumption that a democratic, friendly Japan 
would be more likely to result from a policy of trust than from one of 
suspicious policing. As in the case of some of the other alternatives, the 
argument for and against this alternative would be affected by the state 
of relations among the powers concerned with security in the Far East 
and by the degree of severity of the conditions imposed, although it 
might be additionally argued that if the democratic states were actively 
combining in opposition to threats of aggression from the Soviet Union 
or other Communist states, this alternative would give the best assurance 
of obtaining the adherence of a friendly Japan. 

Selected References 

Espenshade, Ada V., "Japan's Foreign Trade: Present Conditions, Future Out- 
look," U.S. Department of Commerce, Foreign Commerce Weekly, Vol. XXXVII 
(Dec. 26, 1949), pp. 3-7, 36-43. "Text of Statement Issued by the Information 
Section of the Japanese Foreign Ministry on Peace Treaty," June i, 1950, New 
York Times (June 2, 1950). Tokucla, Kyuichi, "New Situation and the Policy of 
the Communist Party of Japan," statement by Secretary-General of the Commu- 
nist Party of Japan, For a Lasting Peace, For A People's Democracy, Cominform 
Journal published in Bucharest (Apr. 14, 1950). U.S. Department of State, The 
Axis in Defeat: A Collection of Documents on American Policy Toward Ger- 
many and Japan, Publ. 2423 1945). U.S. Department of State, The Constitution 
of Japan, Far Eastern Series 22, Publ. 2836 (1947). U.S. Department of State, 
"Japanese Reparations and Level of Industry: Statement by U.S. Representative 
on Far Eastern Commission, May 12, 1949," Bulletin, Vol. XX (May 22, 1949)* 
pp. 667-70. U.S. Department of State, "Labor Policy in Japan," statement by 
Major-General McCoy, U.S. Member of Far Eastern Commission, July 13, 1949, 
Bulletin, Vol. XXI (July 25, 1949), pp. 107-13. U.S. Department of State, Occu- 
pation of Japan: Policy and Progress, Far Eastern Series 17, Publ. 2671 (1946). 
U.S. Department of State, United States Policy Toward Asia, address by Secre- 
tary Acheson, Mar. 15, 1950, Far Eastern Series 33, Publ. 3817 (April 1950). U.S. 
Department of State and Department of the Army, Program to Achieve Economic 
Stabilization to be Carried Out by Japanese Government, joint release (Dec. 18, 
1948). 



The Asian Area 311 

UNITED STATES COMMITMENTS 
IN INDOCHINA 

Prewar French Indo-China comprised the colony of Cochin China 
and the protectorates of Tongkin, Annam, Cambodia, and Laos. In the 
first three states named and in Indo-China as a whole the overwhelming 
majority of the population is Annamite, or Viet-Namese a virile race 
culturally akin to the Chinese. The Khmers and the Laotians, who form 
a majority of the population in Cambodia and Laos respectively, are both 
relatively docile peoples who derive their basic culture chfefly from India. 

Even in the protectorates actual power was in the hands of French 
advisers. The French denial to the natives of an effective voice in govern- 
ment and the attitude of superiority assumed by French officials were all 
the more galling to the literate classes because French education had 
given them the ideals of liberty, fraternity, and equality. French economic 
policy also was largely one of exploitation, and trade was artificially 
channeled toward France instead of being allowed to develop its natural 
relations with other Far Eastern countries. 

Early in 1945 the Japanese, who had occupied Indo-China but did 
not exercise administrative power, interned French authorities and as- 
sumed control. The three Annamite states were united under the Em- 
peror of Annam, Bao Dai, and given the traditional name of Viet-Nam. 
In March of the same year the French Government in Paris announced 
that on liberation Indo-China would have the status of a federation 
within the French Union and that there would be greater economic 
freedom and fuller educational and civil service opportunities for natives. 
By the end of August the Japanese-supported government collapsed and 
Bao Dai abdicated in favor of Ho Chi Minh, a veteran Communist 
organizer who was supported by a coalition known as Viet-Minh, which 
was made up of Communist and non-Communist groups favoring com- 
plete independence. 

In the south, where the British received the surrender of the Japa- 
nese forces, the Viet-Namese did not oppose the allies. When the latter 
ousted local Viet-Namese officials from Saigon and expelled Viet-Namese 
forces from its environs, however, violent fighting broke out. In the north, 
where the Chinese received the Japanese surrender, allied landings at 
Haiphong were opposed. In Cambodia and in Laos the French had little 
trouble in reasserting their authority. In January 1946 a treaty was con- 
cluded in which the Cambodians were promised semi-autonomy, and 
some months later a similar adjustment was reached with Laos. 

In March 1946 after prolonged negotiations a convention was con- 
cluded between France and Viet-Nam, in which the French Government 



318 Major Problems 1950-1951 

recognized the Viet-Nam Republic as a free state within the French 
Union and pledged itself, as far as the unification of Tongkin, Annam, 
and Cochin China was concerned, to ratify the decisions of their popula- 
tions taken by a referendum. The Viet-Namese interpreted the agreement 
to mean that Cochin China would be left an integral part of the Re- 
public, at least until a popular referendum was held. The French pro- 
ceeded, nevertheless, to suppress Viet-Namese organs of opinion and to 
organize an "Autonomous Republic of Cochin-China," with a cabinet 
of nine members, which included seven French citizens. The French de- 
fended this action on the grounds that the Cochin Chinese, though 
racially and linguistically Annamite, had political and economic inter- 
ests different from those of the northern Annamites. The colony had a 
special importance for the French, who have held it for nearly a century, 
but it is equally important to Viet-Nam, which could not attain a rounded 
economy if Cochin China were to be detached. 

Within a few months armed clashes between the French and the 
Viet-Namese became intermittent, and they culminated in December 
1946 in a general attack by the Viet-Namese against the French. At 
Hanoi many of the 5,000 French civilians there were killed or taken 
prisoner. Eventually the French succeeded in holding key cities, but they 
could not dislodge the Viet-Namese from the countryside, and through- 
out 1947 the situation remained deadlocked. The French encouraged 
various native groups who were discontented with the Ho Chi Minh regime 
to turn to Bao Dai, then living in Hong Kong, in the hope that he might 
head a government which with French support would supplant that of 
Ho Chi Minh. The French then made what they called their final offer 
to Ho, but because it reserved the control of foreign affairs and defense 
and certain judicial rights, it was not accepted. Even Bao Dai's sup- 
porters were dissatisfied. Although a provisional government of anti- 
Viet-Minh elements was actually formed in May 1948, and although 
France concluded an agreement with this government accepting the con- 
cept of Viet-Namese unity, negotiations over details of implementation 
dragged on into the following year, and the provisional government 
failed to win popular support. In France the agreement was attacked by 
the socialists on the grounds that the provisional government lacked 
actual authority in Viet-Nam; by the rightists, for having conceded too 
much. 

In the meantime Bao Dai had been carrying on conversations with 
the French in Europe. The French were concerned at the growing Com- 
munist ascendancy in China and at the prospects of a working arrange- 
ment between Communist China and Ho Chi Minn's regime. Finally, in 
March 1949 there was an exchange of letters between the French presi- 
dent and Bao Dai in which Viet-Nam was given internal autonomy within 



The Asian Area 313 

the French Union. In December 1949 an agreement was signed by Bao 
Dai and the French High Commissioner at Saigon effecting the final 
transfer of authority in internal affairs but retaining control of foreign 
affairs and defense in French hands. Cochin China became an integral 
part of Viet-Nam, which then constituted 44 per cent of the area and 
82 per cent of the population of the Federation of Indo-China. 

Early in 1950 the Ho Chi Minh regime recognized the People's Re- 
public of China, a gesture that was promptly reciprocated. The Soviet 
Union and its Eastern European satellites followed suit in recognizing the 
"Democratic Republic of Viet-Nam." Thereupon the United States Sec- 
retary of State declared that the Soviet action removed any illusions 
regarding the nationalist nature of Ho Chi Minh's aims and revealed 
him as a "mortal enemy" of native independence. A week later on 
February 7 the United States recognized the Viet-Naim regime of Bao 
Dai, as well as Laos and Cambodia. Great Britain and other powers 
took similar action. 

A United States mission that visited Indo-China in March 1950 
recommended to the Department of State an aid program consisting of 
public health assistance, the furnishing of agricultural implements and 
food processing machinery, and arrangements for Indo-Chinese nationals 
to study public health and agricultural methods in the United States. 
The United States Secretary of State, after discussing the Indo-Chinese 
situation with the French Foreign Minister in May, made a statement in 
which he said: 

The United States Government, convinced that neither national independ- 
ence nor democratic evolution exists in any area dominated by Soviet imperial- 
ism, considers the situation to be such as to warrant its according economic aid 
and military equipment to the associated states of Indo-China and to France in 
order to assist them in restoring stability and permitting these states to pursue 
their peaceful and democratic development. 

Subsequently, it was announced in Washington that the needs of south- 
east Asia for military assistance would be met from the President's 
emergency fund. 

In consequence of the establishment of a Chinese Communist regime 
on its northern border, Indo-China now occupies a critical geographical 
position. The situation is made more serious by the internal weakness of 
Indo-China and by the three-sided conflict among colonialism, national- 
ism, and communism that consumes its energies and resources. The neigh- 
bors of Indo-China to the south and west are in a relatively defenseless 
condition if exposed either to Communist aggression or subversion. The 
expansion of Communist influence into Indo-China might well open the 
flood gates through southeast Asia. 

Unity of purpose and agreement on methods are the chief weapons 



314 Major Problems 1950-1951 , 

by which the Western Democracies can resist such unfavorable develop- 
ments. This has been achieved in principle by the action which the Se- 
curity Council of the United Nations took to meet armed aggression in 
Korea and by the general acceptance of the Council's recommendations 
by members of the United Nations. As part of the American response, 
President Truman, in his statement about Korea of June 27, 1950, 
directed that military assistance to the French and the Associated States 
in Indo-China should be accelerated and that a military mission should 
be dispatched. 

The problem for the United States is to determine the limits to be 
placed on its commitments to the Bao Dai regime. 

Because the United States has already recognized the Bao Dai 
Government and has pledged to give it substantial aid and to strengthen 
it in the internal conflict with the Ho Chi Minh group, the problem 
would seem to have been settled in principle for the short term. The 
United States is, however, confronted with a related problem, for it has 
an announced policy of supporting the principle of independence and 
self-government for all qualified peoples, and it considers that the security 
and stability of states depend in the long run on the application of this 
principle. 

The principal issue is the extent to which support of the Bao Dai 
Government can and should be used as a quid pro quo for persuading 
the French to make pacifying concessions to the national aspirations of 
the Viet-Namese. One alternative would be to inform the French that the 
present commitment is for limited security purposes only and that its 
extension is conditional upon a complete settlement of all political dif- 
ferences with the Viet-Namese. If France were persuaded that accession 
to these conditions offered the only way of saving substantial French 
interests in Indo-China, such a course might enable the United States 
to gain both its security objectives and its objective of aiding Viet- 
Namese nationalism. On the other hand, short-sighted materialistic and 
sentimental interests might preclude French compliance and cause France 
to dissipate its strength in trying to hold Indo-China by its own efforts. 
Not only would this weaken the French capacity to play its part in the 
common defense of the North Atlantic area, but the bonds of Franco- 
American friendship and co-operation might also be seriously strained. 
There is the further risk involved of increasing the domestic political 
instability of France and playing into the hands of right or left extremists. 
Furthermore, if the United States withdrew aid from Indo-China in con- 
sequence of a French failure to comply with United States terms, Indo- 
China might succumb to communism and thus to Soviet domination. 



The Asian Area 315 

A second alternative is to impose no conditions upon France in con- 
nection with the granting of aid to Indo-China. In support of this alter- 
native, it is argued that the only force to oppose a Communist ad- 
vance into southeast Asia is French, and that the United States can ill 
afford to impose conditions on France that might reduce the French in- 
centive to act. It is also held that France may be eventually brought 
by the pressure of events to make the required concessions. It is pointed 
out that France has already moved some distance toward liberalizing its 
colonial policy, and it is suggested that France cannot indefinitely carry 
the heavy burden of conducting costly and inconclusive campaigns 
against determined native resistance. The possibility is also envisaged 
that with United States material aid at its disposal, the Bao Dai Govern- 
ment might become strong enough to force France to take the progres- 
sive steps that would lead to complete self-determination. This alterna- 
tive is opposed as speculative, and it is asserted that if unconditional 
American aid is successful in saving Indo-China from communism, it is 
just as likely to result in a firmer French hold on the country. These 
alternatives indicate that the problem is not the simple one of preferring 
a French-controlled Indo-China to a nominally independent Communist 
state. It is rather a question of acting in the short-term in such a way as 
to check the Communist regime that is likely to gain control in the 
guise of a nationalist movement if genuine self-government is not granted 
at an early stage. 

Selected References 

French Embassy Press and Information Division, "Development of the Political 
Situation in Indo-China" (including texts of Franco-Viet-Namese Agreements of 
Mar. 8, 1949). News from France, No. 12, New York (Sept. 15, 1949). Hammer, 
Ellen J., "The Bao Dai Experiment," Pacific Affairs, Vol. XXIII (March 1950), 
pp. 46-58. U. S. Department of State, "Economic Aid Program for Viet-Nam, Laos, 
Cambodia," statement by Secretary Acheson of May 8 and U.S. Note of May 24, 
1950, Bulletin, Vol. XXII (June 12, 1950), pp. 977-78. U.S. Department of State, 
"Economic and Military Aid Urged for Indo-China," statement by Secretary 
Acheson in Paris on May 8, 1950, Bulletin, Vol. XXII (May 22, 1950), p. 821. 
U. S. Department of State, "Objectives of U.S. Policies Toward Asia," Ambassador 
Loy W. Henderson, Bulletin, Vol. XXII (Apr. 10, 1950), pp. 562-66. U.S. Depart- 
ment of State, "Report to the American People on the Far East," address by 
Ambassador Philip C. Jessup, Apr. 13, 1950, Bulletin, Vol. XXII (Apr. 24, 1950), 
pp. 627-30. U.S. Department of State, "U.S. Extends Congratulations to Viet- 
Nam," Bulletin, Vol. XXII (Feb. 13, 1950), p. 244. U.S. Department of State, "U.S. 
Recognizes Viet-Nam, Laos, and Cambodia," Bulletin, Vol. XXII (Feb. 20, 1950), 
pp. 291-92. Warren, Lansing, "French Note to Soviet Union Protesting Soviet 
Recognition of Communist Leader in French Indo-China," Jan. 31, 1950. New 
York Times (Feb. i, 1950). 



Chapter XVI 

The Western Hemisphere 

i EOGRAPHICAL factors give a special importance to the relations of the 
United States with the other countries in the Western Hemisphere. 
To the north of the United States lies the part of the hemisphere that 
is closest to Europe and Asia. Its northern frontier is the Arctic, once a 
barrier to human passage but now in an air-borne era a virtual pathway 
between the East and West. At this doorway stands the friendly power 
of Canada, closely linked historically and culturally to the United States. 
To the south of the United States, from the Mexican border to Cape 
Horn, lie the twenty Latin American countries and a scattering of small 
European possessions and dependencies. Within that region are the 
Panama Canal and the Straits of Magellan, important naval links in the 
hemispheric defense system, and the hump of Brazil, an important air 
link with Africa and Europe. This southern region is, moreover, a great 
source of strategic materials. In this southern sector arc friendly states 
also, though of different cultural and institutional character. 

The United States is linked with both the southern and northern 
sectors of the hemisphere by treaties of mutual assistance. The regional 
pact of Rio de Janeiro is evidence of the intention of the United States 
and the Latin American republics jointly to maintain hemisphere se- 
curity. The North Atlantic Treaty ties the United States to Canada and 
to the states of Western Europe. The United States thus serves as the 
keystone of two great regional defense systems that, within the frame- 
work of the United Nations, are designed to protect the security of the 
Western Hemisphere. 

Because of the close ties that Canada has with Great Britain and the 
other members of the Commonwealth, relations between Canada and 
the United States have been on a footing that is different from the basis 
of the relations between the United States and Latin America. This has 
been true especially since the Second World War, when assistance from 
the United States for the European Recovery Program and participa- 
tion in the North Atlantic Treaty have given the United States and 
Canada a very close community of interest in Western Europe. Some of 
the most important aspects of that interest have already been treated. 1 
For this reason, the present chapter is devoted entirely to the problems 
of United States relations with Latin America. 

The strategic importance of Latin America to the United States 

J See pp. 226-35. 



The Western Hemisphere 317 

has been implicit in United States policy ever since the declaration of 
the Monroe Doctrine in 1823. Today, however, the importance of Latin 
America to the United States rests on both security and economic con- 
siderations. Latin America now constitutes one of the sources of raw 
materials for American industry and will be a greater source in the 
future. The importance of Latin American coffee, sugar, and other 
tropical foods is obvious. World War II dramatized the significance of 
Latin American resources to American industry, which obtained, during 
the war, vital supplies of copper, tin, nitrates, manganese, balsa wood, 
fibres, and other items essential to war production. The dependence of 
American industry upon Latin American sources of raw materials con- 
tinues during peacetime. Recent increases in the Latin American produc- 
tion of iron ore and petroleum indicate that this dependence may increase 
in the future as domestic supplies decline in the United States. 

In the light of contemporary political and ideological warfare, Latin 
America has another great value for United States foreign policy. As the 
United States strives to invigorate and rally the forces of anti-com- 
munism it has the backing of the twenty Latin American countries. Their 
influence is dramatically expressed in the twenty votes that they cast in 
the General Assembly of the United Nations. On more than one occasion 
their allegiance to the principles for which the United States stands has 
played a major part in winning effective support in the United Nations. 

But from the point of view of United States policy, Latin America 
is a land of contrasts. An area rich in resources, it is yet very poorly de- 
veloped. The resources of the twenty republics are unevenly divided. Too 
often the various countries depend on the production and sale of one 
or two main products such as tin, sugar, or coffee. The exploitation of 
resources is frequently faced with tremendous obstacles born of jungle 
or mountain geography, dangers to health, and costly transportation. 
Finally, in some countries the pressure of population threatens to reduce 
sharply the productivity of the land by virtue of overintensive use, soil 
erosion, and other forms of depletion. 

The history of Latin America also throws light on the present prob- 
lems of the area. Settled largely under the Spanish and Portuguese em- 
pires, the southern Americas experienced more than three centuries of 
colonial rule. Political, economic, and social institutions built around 
the master-and-serf relationship of the feudal world took firm root in the 
New World, where a relatively small group of Europeans had seized 
power over large numbers of native Indians. 

The rebellions led by Bolivar and San Martin, which threw out the 
royal power of Spain, left the life of the peon and of the Indian masses 
untouched. Beneath a facade of liberal political institutions, patterns of 
economic and social organization continued virtually unchanged. The 



gi8 Major Problems 1950-1951 

concentration of wealth in the hands of a small minority of people, the 
absence of any large or influential middle class, and the control of gov- 
ernment by the landed aristocrats, the army, and the clergy continued, and 
they persist in most Latin American countries today. 

Widespread poverty and political instability are twin features of 
this scene. The generally low standard of living and social backward- 
ness of the Latin American masses is in sharp contrast with the luxurious 
and cultivated way of life enjoyed by the small upper class. Although 
conditions vary from one country to another, the vast majority of people 
everywhere are poorly paid, badly housed, and undernourished. Com- 
parative indices of life-expectancy, incidence of disease, illiteracy, and 
other significant factors contrast vividly with the conditions of life in 
the United States and Western Europe. Yet modern means of communica- 
tion, such as the motion picture, radio, and the press, have shown the 
Latin American masses that other peoples fare better and that their own 
hard lot may not be impossible to improve. 

It is therefore only natural that Latin America should be in con- 
tinual political ferment as its discontented peoples seek to establish 
governments that will be responsive to the needs of the underprivileged 
millions. Ever since achieving their independence, the Latin American 
countries have suffered from the tendency to resort to force as a means 
of political change. The "caudillos" who have led the traditional Latin 
American revolutions have found ready followers among the ignorant 
and the discontented masses. Normally these revolutions make little 
change in the existing order of things: one faction merely throws out 
another for reasons of private advantage rather than public policy. Al- 
though over the period of a hundred years or more the political stability 
of Latin American governments has slowly increased, a violent eruption 
like that which took place in Bogota in April 1948 indicates that the 
political and social system of Latin America still rests upon insecure 
foundations. 

In any description of the Latin American area as a whole, it is im- 
possible to avoid giving the impression that Latin America has a far 
greater homogeneity than actually exists. Actually Latin America repre- 
sents a remarkable combination of important divergencies with an equally 
significant unity. Countries differ in climate, in resources, in languages, 
in race, in population density, political complexion, economic progress, 
and capacity for orderly government. Yet they also have certain impor- 
tant characteristics in common. They are similar in their Latin outlook, 
in their Roman Catholicism, in their love of independence, and in their 
devotion to democratic principles in theory if not always in practice. 



The Western Hemisphere 319 

A major unifying influence has been their belief in certain rules of 
international conduct, which has found its greatest political expression 
in the development throughout the past half century of the inter-Ameri- 
can system and, more recently, in the establishment of the Organi/ation 
of American States. Begun in 1889-90 when the First International Con- 
ference of American States met in Washington at the invitation of the 
Government of the United States, the inter-American system grew slowly 
throughout the first forty years of its existence. During the 1930*5 and 
thereafter it proceeded more rapidly in establishing through international 
agreements the principles and procedures that would build confidence 
among the American states and would regulate their international rela- 
tions. In the Treaty of Rio de Janeiro (1947) and the Charter of the Or- 
ganization of American States (1948), the American republics established 
the firm basis of a regional organization to encourage co-operation in 
all major fields of inter-American relations and to provide methods for 
defending their peace and security against attacks or threats from any 
source. 

The Organization of American States, as now established under the 
Charter of Bogotd, consists of six major entities. The Inter-American 
Conference, meeting every five years, is the supreme body. Next in rank 
comes the Meeting of Consultation of Ministers of Foreign Affairs, which 
is called into session to consider urgent matters of high importance and 
particularly problems of peace and security under the Treaty of Rio de 
Janeiro. In permanent session in Washington, D.C. is the Council, on 
which all twenty-one member states are represented. It carries out specific 
assignments of the Conference and Meeting of Foreign Ministers and at ts 
provisionally as the consultative body under the Treaty of Rio de Janeiro. 
The Council also supervises the operation of the Pan American Union, 
which, headed by a secretary-general, is the permanent central secre- 
tariat. Finally, there are the specialized organizations and specialized 
conferences, which execute programs in technical fields such as agricul- 
ture, public health, and child welfare. 

The provisions of the Inter-American Treaty of Reciprocal Assist- 
ance (the Rio Treaty) are of particular interest. This treaty establishes 
the proposition that an armed attack against one American state is an 
attack against all, and that in such an event each party will assist in 
meeting the attack. The treaty also provides for an "Organ of Consulta- 
tion" (actually the Meeting of Foreign Ministers or, provisionally, the 
Council of the Organization of American States). This body may decide 
upon certain collective measures that are set forth in the treaty. When 
any measure is adopted by a vote of two thirds of the parties to the treaty, 
it becomes obligatory for all parties, except that no state may be required 



ORGANIZATION OF AMERICAN STATES 

The international Organization of the SI American Republics established by the Charter 
signed at the Ninth International Conference of American States t Bogot6 t Colombio,i948 



THE MEETING 
OF CONSULTATION 

OF MINISTERS 
OF FOREIGN AFFAIRS 




THE 
INTER -AMERICAN CONFERENCE 




Supreme Orgon of the Orgoniiotion 
DecMee general action ond pobey 



THE COUNCIL 
OF THE ORGANIZATION 



Permanent Executive Body and 
Provisional Organ of Coniultafion 



INTER-AMERICAN 
ECONOMIC 

AND 
SOCIAL COUNCIL 



INTER-AMERICAN 

COUNCIL 
OF JURISTS 



INTER -AMERICAN 
JURIDICAL COMMITTEE 




THE 
PAN AMERICAN UNION 



General Secretariat 
ot the Organisation 



DEPARTMENT OF INTERNATIONAL 
LAW AND ORGANIZATION 



DEPARTMENT OF ECONOMIC 
AND SOCIAL AFFAIRS 



DEPARTMENT OF 
CULTURAL AFFAIRS 



DEPARTMENT OF 
ADMINISTRATIVE SERVICES 



INTER-AMERICAN 

CU LTU R A L 

COUNCIL 



Prepared by Pan American Union 



The Western Hemisphere 321 

to use armed force without its consent. The United States has thus 
bound itself to abide by a decision of two thirds of the American re- 
publics in such important matters as the adoption of economic sanctions 
against an aggressor state. 

Both the Rio Treaty and the Charter of Bogota recognize the primacy 
of the Charter of the United Nations and are related to the provisions 
of Articles 51 to 54, inclusive, of that document. Under these provisions 
the Organization of American States may not take enforcement action 
without the authorization of the Security Council of the United Nations. 
In the absence of such authorization force may be resorted to only in 
the event of an armed attack in the exercise of the right of self-defense, 
which is reserved under Article 51 of the United Nations Charter. 

Although the main lines of the legal relationships between the re- 
gional organization and the United Nations are fairly clear in theory, 
no occasion has arisen to test these relationships or to expose the gaps 
in legal theory. The practical problems of gearing the work of the two 
mechanisms, moreover, are still numerous. Both organizations have 
agencies operating in similar fields. For example, the Economic Commis- 
sion for Latin America (ECLA) of the United Nations and the Inter- 
American Economic and Social Council (IA-ECOSOC) of the Organization 
of American States have very similar terms of reference, a fact indicating 
a potential if not actual duplication of effort. One type of relationship 
currently being tried out to avoid duplication is exemplified in the field 
of public health: the long-established Pan American Sanitary Organiza- 
tion of the Organisation of American States serves also as the regional 
branch in the Americas for the World Health Organization. 

To ensure the successful functioning of the inter-American system 
has long been a major objective of United States policy, and this objec- 
tive has had a powerful effect on United States relations with the other 
American republics. Perhaps nowhere else in the world has the collec- 
tive will of a group of states achieved so powerful an influence on the 
actions of any one of them. Experience gained in the early part of this 
century has led the United States during the last twenty years to abandon 
intervention and since 1933 to pursue more and more its important ob- 
jectives in Latin America on the basis of co-operation and mutual re- 
spect. 

The significance of the Organization of American States has been 
highlighted by its successful handling of two international conflicts dur- 
ing the last two years. Invoking the Rio Treaty and acting through the 
Council of the Organization of American States, the American nations 



322 Major Problems 1950-1951 

were able to bring about a peaceful and apparently constructive solution 
of disputes among states of the Caribbean region that had on more than 
one occasion flared up into hostile acts. The question remains, of course, 
how far the regional system can be effective should a case involving 
larger powers be brought before it. 

No less outstanding an issue than that of peace and security is the 
question of democracy in Latin America. The Charter of the Organiza- 
tion of American States recognizes that the effective application of the 
principles of representative democracy is essential to the purposes of 
the inter-American system. Yet all observers agree that democratic prin- 
ciples are widely flouted however sacredly they may be enshrined in con- 
stitutional documents. The more active spokesmen for democratic gov- 
ernment in Latin America point with alarm to the threat that comes from 
both the extreme Right and the extreme Left today. 

In the search for some way to bring the influence of the inter- 
American community to bear upon internal political conditions, loyal 
democrats in Latin America have at times found the road blocked by the 
deeply-rooted principle of nonintervention. Attention has therefore been 
largely focused on the possibility of achieving some protection for 
democratic governments by adopting a recognition policy that would 
discourage the overthrow of them by force. These problems are discussed 
in the following section on political problems. 

The threat of communism to democratic government is less of an im- 
mediate problem in Latin America than in other parts of the world. It is 
to be expected that in an area of great poverty, where democratic gov- 
ernment has so consistently failed to meet the needs of the people, com- 
munism would have a large, popular appeal. In some Latin American 
countries, Communist parties after World War II did achieve a fairly 
high numerical strength, notably in Brazil, Cuba, and Chile. In others, 
such as Mexico and Colombia, the Communists gained positions of influ- 
ence far in excess of their numerical strength, largely by winning control 
of labor unions. 

The high tide of the appeal of communism to the Latin American 
masses seems to have been reached in 1947, when it became clear that 
local Communist parties were serving Soviet policy. Vigorous opposition 
by governments such as those of Brazil and Chile, where the Communist 
party was outlawed, has now materially altered the picture. The establish- 
ment of a new, non-Communist labor organization is another step of 
significance. At Bogotd in 1948 the American republics declared their 
opposition to international communism and other totalitarian doctrines. 
They agreed to exchange information on Communist activities within 
their respective territories and to take such measures as might be necessary 
to prevent the subversion of American democratic institutions. 



The Western Hemisphere 333 

Communism is intimately connected with the economic problems of 
the Americas. It is generally conceded that a major approach to the 
strengthening of democratic institutions in opposition to communism in 
Latin America lies in the improvement of economic conditions. Latin 
Americans have openly expressed their disappointment at the absence of 
a Marshall Plan for their area. They have sought through bilateral and 
multilateral channels, including both the United Nations and the Or- 
ganization of American States, to call attention to the seriousness of 
their own economic problems and the need for the development of their 
potential resources and production. 

The need for increased technical knowledge is recognized as an im- 
portant facet of the problem of economic underdevelopment in Latin 
America. During recent years and largely through the initiative of the 
United States, some interesting programs and techniques have been 
worked out for lending technical assistance in the solution of economic 
and social problems, especially those of agriculture, public health, and 
education. The Organization of American States has been drawn into 
active participation in this general endeavor. In the spring of 1950 a 
special session of the Inter- American Economic and Social Council de- 
voted its major efforts to planning a program of technical assistance to 
be carried out through inter-American specialized organizations and the 
Pan American Union. 

Financial capital, however, is what Latin America needs most of all. 
Latin American countries look to the United States, and particularly to 
the United States Government, as a source of investment capital. The 
United States, however, has declined so far to take on a major share of 
the burden of financing economic development in Latin America. Spokes- 
men for the governmental policy have emphasized that most of the invest- 
ment capital that Latin America requires from the United States must 
come from private sources. This means that Latin American govern- 
ments must take sometimes unpalatable measures at home to create 
conditions sufficiently attractive to foreign capital. Such steps are not 
easily taken in countries where the expropriation of foreign-owned enter- 
prises has often been the basis of a popular political program. At the same 
time loans from the Export-Import Bank and from the International 
Bank for Reconstruction and Development have been extended to the 
Latin American countries for developmental projects, especially for major 
agricultural or industrial enterprises that are considered to fall more 
appropriately within the scope of public rather than private financing. 

As long as the peoples of Latin America continue to be oppressed 
by poverty, ignorance, and disease, the solution of the political, economic, 
and security problems of Latin America will continue to face obstacles. 
Some of these problems are discussed in the sections that follow. 



324 Major Problems 

POLITICAL STABILITY 

At the end of the war most of the Latin American states were faced 
with severe economic and political problems. The purchases of strategic 
materials dropped sharply, and the countries were faced with serious 
problems of readjustment. Instead of conserving foreign exchange re- 
serves, they dissipated them on nonessential imports. Falling prices of 
some basic Latin American exports aggravated the difficulties. In addi- 
tion, a widespread popular demand for higher standards of living and 
an increased government interest in long-range plans for economic de- 
velopment complicated the immediate problems. Since 1945 armed 
revolutions have constantly taken place throughout Latin America, and 
significant changes have been made in the character of governing groups. 
Until recently Communist propaganda has stimulated unrest and pro- 
duced counterrevolution of the Right. The totalitarian methods and con- 
cepts of these latter forces have tended to check the growth of democratic 
reforms in Latin America. 

It was to deal with this and other Latin American problems that a co- 
operative strengthening of the inter-American system was undertaken. It 
sought to adapt the older, traditional system to the new needs and require- 
ments of the states of the Western Hemisphere, not only in their relations to 
each other, but in respect to their relations as a community of states 
under the United Nations. The Rio Treaty, signed by all twenty-one 
American states and ratified by all but Bolivia, Ecuador, Guatemala, and 
Peru, represents the present form of this effort to protect the peace and 
security of the Western Hemisphere. 

Two opportunities have been provided within the past two years 
to test the effectiveness of this machinery for maintaining peace and 
stability. In December 1948 Costa Rica charged its neighbor, Nicaragua, 
with assisting armed forces to invade Costa Rica. The Organization of 
American States promptly dispatched a commission of inquiry and suc- 
ceeded in putting an end to the incident. Subsequently, the governments 
of Costa Rica and Nicaragua signed a formal treaty of friendship that 
declared the incident closed, and laid down proceedures for dealing with 
any future disputes that might arise. 

In the following year tensions developed between Cuba, the Domini- 
can Republic, Guatemala, and Haiti. The Inter-American Peace Com- 
mittee tried to relieve these tensions, but because it could only suggest 
methods of settlement, its efforts were unavailing. At the end of 1949 
Haiti formally charged the Dominican Government with conspiring to 
overthrow the Haitian administration. The Dominican Government 
brought countercharges that Cuba, Guatemala, and Haiti had encouraged 
Dominican revolutionary activity. The Council of the Organization of 



The Western Hemisphere 325 

American States sent an investigating committee to the four states. The 
committee reported that the Dominican Government in one case, and the 
Cuban and Guatemalan governments in another, had assisted groups 
aiming at the violent overthrow of the governments of Haiti and the 
Dominican Republic respectively. 

In April 1950 the Council approved the five resolutions that the 
investigating committee had proposed. Governments were called upon to 
carry out the treaty obligations that they had assumed under the Havana 
Convention on the Rights and Duties of States in the Event of Civil 
Strife, and not to allow interventionist activities to be organized in their 
territories. Procedures for removing the causes of outstanding disputes 
were recommended, and a committee was appointed to assist in applying 
these recommendations. 

Official and private comments in the press suggest that the action 
of the Organization of American States was considered a triumph for 
the inter- American system as well as a proof of the effectiveness of the 
Rio Treaty. It might be argued, however, that only small countries were 
involved in these disputes. The question consequently still stands un- 
answered whether the organization would be equally active and equally 
successful in a case involving one of the larger nations of South America. 
It is possible that a large nation would not respond so readily to moral 
suasion and the force of public opinion. This would bring up the issue 
of sanctions, and the determination of the American states to act collec- 
tively against all forms of aggression would be put to a real test. Such a 
situation would confront the United States with a grave policy decision, 
for it might be called upon to bear the major share of the burden of 
applying the sanctions. 

Despite these doubts, an elaborate mechanism for maintaining the 
peace and security of the Western Hemisphere does exist. But its existence 
and its operation do not dispose of another persistent problem of political 
quality that arises in a variety of forms within the inter-American sys- 
tem. This is the perennial problem of the development, extension, and 
maintenance of democratic institutions within the member states of the 
system. It was fundamentally involved in the two cases described above. 

The problem is to examine the political methods for promoting 
democracy in the states of Latin America. 

Two basic issues exist in connection with this problem. The first 
concerns the meaning and application of democratic principles in the 
actual social and political circumstances generally prevailing in Latin 
America. The second concerns the collective defense of democratic insti- 
tutions in Latin American states without transgressing either the prin- 



36 Major Problems 1950-1951 

ciple of nonintervention or the related doctrine of recognition, as these 
have developed in the inter-American system. In the general conduct of 
inter-American relations the two issues are very closely related. 

In connection with the dispute between Haiti and the Dominican 
Republic referred to above, the failure of some of the governments in- 
volved to apply democratic principles was cited as a factor contributing 
to unstable relations in the Caribbean. One of the resolutions passed by 
the Council of the Organization of American States called for a study 
of the possibility of applying the principles of democracy without inter- 
vening in the domestic affairs of a sovereign state. More generally, the 
entire question of whether democracy would expand in Latin America 
or be checked by dictatorships of the Right or Left has been debated at 
length since the Second World War. The extent to which the community 
of American states can exert a significant influence on this situation has 
been raised in the course of this debate. 

If, as has been proposed, the Organization of American States should 
address itself to this question, two apparently conflicting principles in 
the Charter of the organization will require resolution. Article 5(d) of 
the Charter states that the effective exercise of representative democracy 
is essential to the high purposes of inter- American solidarity. Article 15 
of the Charter declares, however, that "no State or group of States has 
the right to intervene, directly or indirectly, for any reason whatever, 
in the internal or external affairs of any other State." This noninterven- 
tion provision has been pointedly referred to by those who, for political 
reasons, are against any move by the Organization of American States to 
concern itself with the internal politics of any member state. 

Article 19 of the Charter offers, so it has been suggested, a way to 
reconcile these apparent contradictions. This article states that measures 
taken under existing treaties to maintain peace and security do not con- 
stitute violations of the nonintervention agreement. If a connection is 
established between internal political conditions and external aggressions, 
the maintenance of peace in the inter-American system can conceivably 
be linked with the preservation of democracy in individual states. But 
though a legal resolution of the issue might thus be devised, the prac- 
tical political question of what can be effectively done continues to stand. 

Democracy in Latin America is too often approached on the naive 
assumption that the phrases of a democratic formula will magically pro- 
duce results. It is easily forgotten that the strength of democracy de- 
pends upon gradually influencing a large number of political, economic, 
and cultural tendencies. The tradition of the caudillo and of per- 
sonalismo is strong in Latin American politics. The average level of 
economic and cultural life is relatively low. The lack of a sense of civic 
responsibility is characteristic of important segments of society. Even 



The Western Hemisphere 327 

liberal governments are often unable to check significantly the power of 
entrenched economic interests. Factors such as these are among the basic 
causes of the weakness of democracy in Latin America. 

The alternative courses of action open to United States policy are 
to use its position of power to exercise strong pressure for rapid democ- 
ratization, or to work toward democratization by gradual means. 

Latin American sensitivity and experience in Latin American rela- 
tions suggest that the first course of action is more likely to create re- 
sistance than it is to produce democracy. Such resistance would work 
to break down the solidarity that has been built up in the inter-American 
system, and the end product would probably be less peace, less security, 
and less stability than is now being achieved. 

The second course involves a continuity of statesmanship over a 
long period of time and the slow development of accepted standards of 
political behavior. As a course of action it is frequently jeopardized by the 
impatience of sincere supporters of democracy who press for policies that 
consist of unrealistic short cuts. 

The second issue, which in effect concerns the use of diplomatic 
recognition as a sanction against an undemocratic government, is closely 
linked in the inter-American system with the first. 2 It has been repeatedly 
urged that the American states should adopt a policy of not recognizing a 
government that has come to power by means of an antidemocratic 
revolution. 

This subject was debated at the Ninth International Conference of 
American States at Bogota in 1948. Two proposals were put before the 
conference. One made the recognition of a de facto government con- 
tingent on its adherence to democratic procedures. The other abolished 
the act of recognition and made diplomatic relations automatic with 
whatever government was in power. The discussions revealed that neither 
of these proposals commanded general acceptance. A third formula was 
drafted and now constitutes Resolution 35 of the Bogotd Pact. It declares 
that continued relations among the American republics are desirable, but 
that the maintenance of relations is not to be understood as approval or 
disapproval of the form or practices of the governments involved. 

If these three formulas are for the moment considered as the alter- 
native courses of action open under the second issue, it must be noted 
that choice between them became extremely difficult shortly after the 
Bogotd Conference. A series of revolutions throughout Latin America 
created a number of situations in which action had to be taken. In two 
cases, those of Peru and Venezuela, constitutional governments were over- 
thrown by military juntas. When, after weeks of delay and consultation, 
5cc "The Doctrine of Recognition/' Chap. 6, pp. 81-89 above. 



328 Major Problems 1950-1951 

these new governments were recognized, the recognizing states were 
criticized for encouraging undemocratic acts. Some states refused for sev- 
eral months to enter into diplomatic relations with Peru and Venezuela. 
Resolution 35 was attacked and its repeal was urged. The issue was thus 
opened for general debate once more. 

The debate made it clear that no simple formula, such as with- 
holding recognition, would meet the larger issue of promoting democ- 
racy. It was asserted on the one hand that there was no convincing his- 
torical evidence to support the belief that the nonrecognition of an 
American government with de facto control of its territory and people 
would lead to its replacement by a democratic regime. It was also argued 
that the maintenance of diplomatic relations serves a larger purpose than 
to show approval or disapproval of a given government. Such matters as 
the protection of nationals in a foreign state, the conduct of economic re- 
lations, and the general protection of national interests depend on the 
existence of established diplomatic contact. These functions cannot be 
entirely set aside in the hope of creating a more desirable government 
by a refusal to recognize a regime that holds power. 

The real alternatives that emerge are (i) to consider recognition as 
a political action and as a stage in the development of sanctions designed 
to prevent any government except a democratic one from exercising 
authority; (2) to consider recognition as a legal action required for the 
conduct of normal business; and (3) to avoid any formula for recognition 
and make the action depend entirely on the merits of the particular case. 

It is frequently argued that the difficulty of reaching a sound judg- 
ment about the nature of any government is so great that the use of 
recognition as a political weapon will rarely be absolutely justified. It 
is more likely, so this argument goes, to appear as intervention. Further- 
more, when does a regime qualify as "democratic"? And if a representa- 
tive government evolves into a dictatorship, must recognition then be 
withdrawn as a political action? On the other hand, it is asserted that the 
development of democratic solidarity is a process that calls for firm and 
consistent action against all groups that would undermine democracy. 
To recognize in this view is to condone, and to condone is to compromise 
a basic objective. These points of view indicate the complexity of the 
problem and suggest some of the reasons why the simple formula of 
Resolution 35 was the maximum for which general assent could be se- 
cured at Bogota. 

Selected References 

Barber, Willard F., "The Inter-American System in the World Scene Today," U.S. 
Department of State, Bulletin, Vol. XXI (Aug. i, 1949), pp. 149-55?. Pan American 
Union, American Treaty on Pacific Settlement, Pact of Bogota, signed at the gth 
International Conference of American States, Bogota, Mar. go-May 2, 1948 (1948). 



The Western Hemisphere 329 

Pan American Union, Charter of the Organization of American States, signed at 
the gth International Conference of American States, Bogota, Mar. go-May 2, 
1948 (1948). Pan American Union, Final Act of the Ninth International Confer- 
ence of American States, Bogota, Colombia, Mar. jo-Apr. 30, 1048 (1948). Pan 
American Union, Resolutions on the Competence of the Council and on Stand- 
ards with Reference to Inter-American Specialized Agencies, Council of the Or- 
ganization of American States, decisions of Apr. 21, 1949, Doc. C-sa-27-E (1949). 
United Nations, Analysis of the Main Features of the Inter-American Peace Sys- 
tem, submitted to the Interim Committee of the General Assembly, U.N. Doc. 
A/Ac.i8/46 (Mar. 16, 1948). U.S. Department of State, "Cases of Haiti and the 
Dominican Republic Before the OAS: Inter-American Peace Machinery in Ac- 
tion," Bulletin, Vol. XXII (Feb. 20, 1950), pp. 279-82. U.S. Department of State, 
"Growth of the Organization of American States," Bulletin, Vol. XX (Feb. 13, 
1949), pp. 198-200. U.S. Department of State, Inter-American Conference for the 
Maintenance of Peace and Security, Quitandinha, Brazil, Aug. 15 to Sept. 2, 1947, 
Report of Delegation of the United States, International Organization and Con- 
ference Series II, American Republics i, Publ. 3016 (April 1948). U.S. Depart- 
ment of State, Inter-American Conference on Problems of War and Peace, Mexico 
City, Feb. 21 to Mar. 8, io.j5, Report of Delegation of the United States, Con- 
ference Series 85, Publ. 2497 ( 1 94^)- U.S. Department of State, "OAS Decisions on 
Cases Presented Under Rio Treaty by Haiti and Dominican Republic," Bulletin, 
Vol. XXII (May 15, 1950), pp. 771-74. U.S. Department of State, "Report of the 
First Regional Conference of U.S. Ambassadors in the Caribbean Area, Bulletin, 
Vol. XXII (Jan. 30, 1950), pp. 160-62. U.S. Department of State, Sovereignty and 
Interdependence in the New World: Comments on the Inter-American System, 
Inter-American Series 35, Publ. 3054 (February 1948). U.S. Department of State, 
"Statement Concerning Overthrow of Governments in the Western Hemisphere," 
Bulletin, Vol. XX (Jan. 2, 1949), p. 30. U.S. Department of State, United States 
Leadership in the Americas, Inter-American Series 39, Publ. 3750 (February 1950). 

ECONOMIC DEVELOPMENT 

The disruptive forces of economic instability and social unrest that 
block the growth of political democracy and a stable international eco- 
nomic order are present in Latin America, as they are in much of the 
world. The immediate causes of them arc the economic dislocations re- 
sulting from two world wars and an economic depression, all within the 
short span of three decades. The more fundamental causes, however, are 
to be found in the pattern of historical development that has been de- 
scribed above. This pattern has led to present economic difficulties and 
social tensions, and a change cannot be looked for except on the basis 
of a greatly increased productivity accompanied by improvement in 
domestic economic organization, trading relations, and regional co-opera- 
tion to solve mutual problems. This goal will be extremely difficult to 
attain because of the underdeveloped state of the natural and human 
resources of the region and the relative lack of the particular resources 
necessary for a modern diversified economy. In the pages that follow, the 
factors contributing to the present economic state of Latin America are 



330 Major Problems 1950-1951 

developed in order to bring out the crucial importance of these primarily 
domestic problems and to emphasize the major internal adjustments and 
corrective actions that must precede or accompany any external assistance 
from the United States. 

With the exception of Argentina, Latin America is one of the two 
lowest per-capita-income regions of the world. The range is from an 
estimated $98 a year in Cuba to $39 in Paraguay. These figures, which 
were obtained in 1939, suggest the extent of the destitution of the masses 
in this area. It is estimated that 75 per cent are undernourished, inade- 
quately housed, and poorly clothed. Infectious and deficiency diseases 
affect approximately 50 per cent of the population. The rate of illiteracy 
ranges from 30 per cent in Uruguay to 92 per cent in Bolivia (Argentina 
is again in a separate class, with only 17 per cent). The birth rate is high 
and life expectancy short, which means that a relatively small percentage 
of the population supports a disproportionately large unproductive group 
under the age of fifteen. A combination of these and other factors has led 
to a situation in which large sections of the population take no part in 
a modern money economy. 

These conditions are largely a result of the basic economic organiza- 
tion of the majority of the Latin American countries. What was set up 
as a colonial-feudalistic structure has become a concentration of the 
ownership of natural resources and land in the hands of a few wealthy 
Latin Americans and foreign investors. This concentration is especially 
characteristic of the major industries mining and agricultural produc- 
tion for export. Agriculture is the occupation of the majority of Latin 
Americans, and they are usually employed under oppressive conditions of 
peonage, sharecropping, and tenancy. The possessors of economic power 
also enjoy sufficient political influence in many countries to prevent 
fundamental social change. The improvement of general economic condi- 
tions consequently depends on changes in the existing political and social 
order. 

A result of this system has been the concentration of the wealth that 
has been produced. The accumulation of private capital that has taken 
place, in general, has been directed into speculative investments in land 
or building, or has been transferred into secure investments in Europe 
or the United States to the detriment of the development of a domestic 
capital market. The growth of governmental investment as an alterna- 
tive has been far from effective because of the unstable nature of many 
governments, the lack of effective fiscal and monetary systems, and the 
absence of competent administrators. Even in Latin American states 
that have developed a considerable amount of industrial capacity 
net investment has averaged only 5 per cent of the national income. 
Bank credit has been the major source of development capital, and its 



The Western Hemisphere 331 

over-use has contributed to the inflationary forces at work in postwar 
Latin America. 

The structure of most Latin American economies has restricted the 
development of a middle class business community. The concentration 
of production on one or two export commodities has encouraged the 
continued importation of manufactured goods and agricultural prod- 
ucts, and it has discouraged the growth of local industry and local and 
intraregional trade. Business development is further limited by the lack 
of human and financial resources and by the existence of relatively few 
metropolitan market areas. These deficiencies have resulted in the opera- 
tion of both business and industry on a high unit profit basis. A rise in 
prices becomes the normal response to an increased demand. Usually no 
attempt is made to meet demand by increased output. The stabilization 
of Latin American economies requires not only diversification, invest- 
ment, and technical skills but, equally important, a change in business 
and economic philosophy. 

This as a brief picture of the difficult and complex problems faced in 
varying degrees by the Latin American countries. The chief difficulties 
are largely domestic, and they are likely to be met only if governments 
themselves take the initiative. Outside assistance is of crucial importance 
as a source of technical knowledge and capital to be applied to develop- 
mental programs once they have been initiated. Aid of this kind can 
contribute to the power of governments to overcome the many obstacles 
that will develop as a program progresses. 

The problem is to examine the factors involved in the economic 
development of Latin America. 

The United States has recognized for many years its interest in the 
well-being of Latin America, and since the inauguration of the "Good 
Neighbor" policy, positive measures of assistance have been taken. The 
purposes guiding the hemispheric policy of the United States have 
been stated by Secretary of State Acheson as the 

. . . protection of the legitimate interests of our people and government to- 
gether with respect for the legitimate interests of all other peoples and govern- 
ments; nonintervention in the internal or external affairs of any American Re- 
public; the stimulation of private effort as the most important factor in political, 
economic, and social purposes; the promotion of the economic, social and po- 
litical welfare of the people of the American Republics. . . . 

The specific economic policy of the United States, he has added, is to 
"give positive co-operation in the economic field to help in the attainment 
of our first two objectives [hemispheric security and the establishment 
of democratic governments]." 



332 Major Problems 

Before and after World War II, the United States developed this 
policy by extending unilateral aid, by seeking regional co-operation, and 
more recently through the United Nations system. Over the past ten 
years technical assistance has been provided by such governmental agen- 
cies as the Department of Agriculture, the Public Health Service, and 
the Institute of Inter- American Affairs. The Export-Import Bank has 
provided over 700 million dollars for developing steel plants, meat pack- 
ing plants, hydroelectric works, highways, agricultural programs, and 
other large and small industrial undertakings. In 1949 the Point IV 
Program was formulated. It implied additional aid to Latin America, as 
well as to other underdeveloped areas. It was also proposed that the 
authority of the Export-Import Bank be increased to allow it to guaran- 
tee private investment. 3 

The main current issues relate to the form that United States assist- 
ance might take and to the actions that the receiving countries should 
initiate to help themselves. The two fundamentals of American policy 
in this matter were stated by Secretary of State Acheson. They are, that 
foreign countries seeking American capital must rely on private capital 
as the principal source, and that progress will come only to those coun- 
tries that "help themselves vigorously. . . . Economic development, like 
democracy, cannot be imposed from outside." 

The Latin American countries are wary of private capital. At the 
Havana ITO and the Bogota conferences, the majority of these countries 
refused to give assurances that private American investment would be 
accorded fair and equitable treatment. Because no progress has been made 
in resolving these differences, the members of the Organization of Ameri- 
can States have still not set a date for the Buenos Aires Economic Con- 
ference, although the conference was projected two years ago. The pro- 
posed purpose of this conference was to consider the regional economy 
of the Western Hemisphere and to seek more effective co-operative action 
on mutual problems. 

It is a matter of considerable difficulty for the United States Gov- 
ernment to decide if the Point IV Program as it is conceived at present 
can be applied in Latin America with any reasonable hope of the realiza- 
tion of its purposes. If the United States stands firm on the principle of 
private investment as the primary source of developmental capital for 
Latin America, the opposition of most Latin American countries to the 
use of this source can be expected to continue. If a more rapid rate of 
economic development is considered desirable by the United States on 
non-economic grounds, a program of increased economic assistance might 
produce results more quickly. It can be argued, for example, that the 

8 See, "Foreign Investment," Chap. 7, pp. 1220-29 above. 



The Western Hemisphere 333 

present social and economic underdevelopment of Latin America is a 
potential threat to the stability and security of the hemisphere as a whole 
and that the threat will grow if the problem is not soon taken in hand 
on a large scale. 

Selected References 

Export-Import Bank, Ninth Semiannual Report to Congress, for the period July- 
December 1949 (1950). Pan American Union, Economic Agreement of Bogota, 
signed at gth International Conference of American States, May 2, 1948 (1948). 
United Nations, Economic and Social Council, "Discussion of Annual Report of 
the Economic Commission for Latin America," Official Records, Fourth Year, 
Ninth Session, July 5-Aug. 15, 1949, pp. 150-66. United Nations, Economic Com- 
mission for Latin America, The Economic Development of Latin America and 
Its Principal Problems, U.N. Publ. 1950, II. G. 2. (1950). United Nations, Secre- 
tariat, "Economic Commission for Latin America," Economic Survey of Latin 
Ameiica, 1948, U.N. Doc. E/CN. 12/82, Publ. 1949, II.G.I. 1949). U.S. Depart- 
ment of State, "Closing of Inter-American ECOSOC," remarks by Edward G. 
Miller, Apr. 10, 1950, Bulletin, Vol. XXII (Apr. 24, 1950), pp. 650-51. U.S. De- 
partment of State, Point Four, Economic Cooperation Series 24, Publ. 3719 
(January 1950). U.S. Department of State, "Statement of United States Chiefs of 
Mission Conference, Rio dc Janeiro, Brazil," Press Release 228 (Mar. 9, 1950). 
U.S. Department of State, United States Leadership in the Americas, Inter- 
American Series 39, Publ. 3750 (February 1950). 



PART THREE 

A PROBLEM PAPER 

ON 
THE SECURITY AND STABILITY OF SOUTHEAST ASIA 



INTRODUCTORY NOTE 

THE PAPER that follows is a detailed discussion of a problem that was 
treated briefly in one of its aspects in Chapter XV. In this more ex- 
tensive form, the analysis has been carried out in a manner that illus- 
trates in a general way the methods of drafting and presentation used by 
Government officials in formulating foreign policy. There is no uniform 
method used throughout the Government in the preparation of the neces- 
sary materials for this purpose, but there is a basic similarity in all the 
methods employed. Therefore this paper, which is a composite of a number 
of methods, attempts to present the general type of analytical procedures 
that are used in the government. 

Certain important differences, however, should be noted. One is that 
although official papers are based in part on confidential information, 
the following paper was prepared entirely on information that is avail- 
able to the public. Another is that the paper presented here stops with 
an analysis of the issues and alternative courses of action, whereas an 
official paper would go on to a further stage and recommend a preferred 
solution or course of action. Because the purpose of this paper is to 
demonstrate a technique of analysis and discussion and not to reach con- 
clusions and make recommendations, this further step has not been taken 
here. 

Many readers of course will wish to take the next step for themselves 
and formulate a conclusion. It is suggested that this is essentially a process 
of selecting a course of action from among several alternatives, and that 
the selection of one course of action inevitably implies the rejection of 
others. The value of the analytical method illustrated here is that it em- 
phasizes the importance of not making a final choice until the entire 
array of alternatives and of their relationships has been subjected to a 
rigorous examination. 

It is believed that a close study of the following problem paper will 
put the reader in the position of a Government official charged with the 
duty of exploring possible courses of action in order to recommend ways 
of implementing policies that have been already decided. The official 
may or may not agree with the policies, but it is not his task to review 
them. Instead he is responsible at this stage for finding ways of carrying 
them out. By the same token the analysis in this paper, proceeding as it 
does within the framework of existing official policy, seeks primarily to 
emphasize the various implementing courses of action that are open to 
the Government of the United States. 

In the end, the reader may wish to review the existing policy. Cer- 
tainly nothing would give him a better understanding of the entire 

337 



338 Major Problems 

policy-making process than to make such an effort. To be useful, however, 
the review itself must be made on the basis of a thorough examination of 
the alternative policies that might have been adopted but were rejected, 
and of the advantages, disadvantages, and implications of each of these 
alternative courses of action. 



L STATEMENT OF THE PROBLEM 

BEFORE the Second World War, southeast Asia was internally stabilized 
by the control of various colonial authorities, and it was protected 
from external pressures by an adequate equilibrium of power in the sur- 
rounding areas. The dislocations of the war and the forces that it released 
have now created an entirely different situation. On the west, the authority 
that Great Britain formerly exercised and the security tasks that Great 
Britain performed have been relinquished to three new dominionsIndia, 
Pakistan, and Ceylon. On the east, where Japan at times acted as a 
powerful stabilizing force, there is now a projection of United States power. 
On the north, where China had formerly represented a state neutralized 
by the competing influences of Western nations, there is now a Com- 
munist China allied with the Soviet Union providing a channel by which 
Soviet influence can be transmitted into the region. 

The Soviet Union, using the instrument of communism, appears 
bent on undermining the economic, social, and political stability of south- 
east Asia and on bringing the states of the region into the same pattern 
of alliance in which the People's Republic of China now stands. The 
states of Western Europe lack the earlier colonial incentives and power 
to protect their extensive interests in the region, much less to guarantee 
its security. 

The problem of internal stability of southeast Asia has become trans- 
formed, as one colonial authority after another has been succeeded by 
independent governments. Where this shift in authority has not actually 
taken place, nationalist movements, paralleled by or associated with 
Communist activities, exert a steady and often violent pressure for politi- 
cal and social change. Even where a colonial regime is still functioning, 
as in Malaya, the difficulty of maintaining a stable community is increas- 
ing. The new governments, having been established in abnormal times 
and by processes that made the transition from a colonial to an inde- 
pendent status abrupt and disorderly, have gained freedom, and in the 
process have generated more profound problems than ever faced the 
preceding European authorities. Their independence is clouded by ex- 
ternal threat and internal disorder. In addition, they have assumed the 
responsibility for satisfying the increasing demands of the masses for 
social change. 

It is important to the United States that the countries of southeast 
Asia should be independent and stable, safe from internal subversion, and 
capable of maintaining their frontiers against external aggression. The 
United States interest goes beyond a general principle in this respect, just 
as it did in the case of Greece and Turkey. 

339 



34 Major Problems 

Southeast Asia is a cross-roads oi trade routes that are vital to maritime 
trading nations. It is an important link in the lines of communications ot 
nations friendly to the United States, and of the United States itself now 
that its interests have become demonstrably world-wide. As a producer of 




strategic raw materials, southeast Asia is also significant to the mainte- 
nance of the industrial potential of the United States. In addition, the 
production and export of these and other raw materials make the region 
economically important to the United States on three counts: (i) as a 
"dollar-earner" in multilateral trade on behalf of certain of the North 
Atlantic Treaty nations, whose financial stability is a factor in their 
capacity to contribute to the purposes of the treaty; (2) as a comple- 
mentary element in the economic recovery of other Asian states, which 
in the case of Japan is a pressing problem of United States policy; and 
(3) as a potential market for United States exports of goods and capital. 



Security and Stability of Southeast Asia 341 

It is generally recognized that if the countries of southeast Asia were 
to come within the sphere of influence of the Soviet Union, the political, 
economic, and military positions of the Western democracies relative to 
the Soviet Union and its satellites and allies would become weaker. A 
main link in the global communications of the Western democracies 
would be severed. Strategic material could be denied to them. Asian 
economy could be redirected away from its historical focus, the West. By 
controlling exports of rice and other commodities, economic pressure 
could be used to secure political advantages in Asian states that are de- 
pendent on this trade to make up their deficiencies. And finally, the re- 
gion could be used as a base for further encroachment. 

The disastrous effect of such developments on the interests of the 
United States can be briefly listed at this point. The United States would 
be precluded from developing ties of friendship with the newly formed 
states of the region, and its capacity to guide the emerging forces of na- 
tionalism into desirable channels would be reduced to nothing. This, in 
turn, would make it increasingly difficult to maintain even the present 
limited contacts with the peoples of Asia. The time might not be remote, 
in these circumstances, when it would become impossible to maintain 
the interests of the United States in Japan and the Philippines, where 
those interests are now established and generally accepted. 

A general United States objective is to encourage and support the 
aspirations of all qualified peoples for the right to govern themselves. In 
the case of the peoples of southeast Asia, this means the creation of oppor- 
tunities to develop effective governments and to encourage in their 
countries the evolution of democratic characteristics. Another general 
objective is to develop on as broad a scale as possible a world in which 
an expanding economy provides the basis for nations to live in secmity 
and peace. This means for the countries of southeast Asia the creation 
of an economic foundation for democratic statehood. 

The specific and immediate objective of the United States in south- 
east Asia is to establish conditions of security and stability. This can be 
taken to be the creation of the means by which the governments of the 
region can quickly establish their authority in their territories, can main- 
tain it against subversion by minorities, and can be helped to defend 
their territories from external aggression. 

These objectives and the problems of southeast Asia are very closely 
related to United States policies and problems of policy in other parts of 
the world. The historical connection between southeast Asia and Western 
Europe has been such as to make mutually dependent the solutions of 
some of the problems confronting the United States in the two regions. As 
the economic relationships between Japan and southeast Asia existed 
in the past and as it may be possible to re-establish them, they are of 
fundamental significance to a policy of restoring an economically viable 



342 Major Problems 1950-1951 

Japan to a community of free and peaceful nations. The objective of 
making southeast Asia secure against internal subversion and external 
aggression is an integral part of the United States policy of strengthening 
the free nations of the world against Communist subversion and Soviet 
aggression, and this is essential to the creation of those "situations of 
strength" that are considered a necessary condition for an over-all negotia- 
tion of differences with the Soviet Union. 

The problem is to formulate the methods to be used and the steps to 
be taken to meet existing and potential threats to the security and stabil- 
ity of southeast Asia. 



IL THE DEVELOPMENT OF THE PROBLEM 

TERM "southeast Asia" is used in this problem paper to mean 
JL the area that lies south of China and east of India, together with the 
off-shore archipelagoes of the Philippines and the East Indies. The area 
comprises Burma, Thailand, Indo-China (Viet-Nam, Cambodia, Laos), the 
Federated Malay States, the Republic of Indonesia, the Philippine Re- 
public, and various colonial holdings. The area is not a compact land 
mass, but is dispersed over a large expanse of ocean. It extends about 
three thousand miles from east to west and about two thousand miles 
from north to south. 

Except for its northern fringe, the whole region lies within the mon- 
soon area. Seasonal rainfall is consequently abundant, and there is in- 
tensive agriculture in the fertile river valleys and on the plains; on the 
high slopes there is a luxuriant forest growth. There are also vast tracts 
that soil erosion or floods have left waste jungle. Many parts of the 
region have valuable sub-soil deposits of petroleum, tin, bauxite, and 
iron ore. 

The estimated population of southeast Asia is 155 millions. About 
eight million immigrant Chinese, many of them of families that have been 
established for generations, are widely distributed through the region; 
and there are large concentrations of Indian immigrants in Burma and 
Malaya. Except for scattered and isolated pockets of indigenous primi- 
tives, the inhabitants represent blends, in varying proportions, of wavy- 
haired and straight-haired types. The basic culture is Indian, with the 
exception of a Chinese intrusion in Viet-Nam (formerly Annam) and a 
western European intrusion in the Philippines. There is great religious 
diversity in the region. In Burma, Siam, and Cambodia the prevailing 
faith is Hinayana Buddhism; in Viet-Nam, Mahayana Buddhism; in the 
Philippines, Roman Catholicism; and in Indonesia, Islam. In addition, 
scattered throughout the region there are numerous patches of tribal 
cultures with animistic religions. 

The native inhabitants are mainly farmers, craftsmen, fishermen, 
and sailors, with the Chinese and western European immigrants con- 
trolling domestic trade and operating local industries. These immigrant 
groups have shown themselves difficult to assimilate. The Chinese, even 
after generations of expatriation, have maintained close ties with their 
homeland, and most of the Indians hope to return home after a few years. 
The natives generally regard these groups as intruders and exploiters who 
have achieved a superior economic status and who play the detested role 

343 



344 Major Problems 1950-1951 

of money-lenders. There has also been the superimposed stratum of Euro- 
pean colonials, numbering only 0.2 per cent of the total population. This 
group has formed the ruling class in dependent areas, and throughout the 
region generally has controlled international trade and large-scale eco- 
nomic enterprise. 

The native population is far from homogeneous. The region has 
been a meeting place of races and cultures, but ethnic fusion has been 
discouraged by natural barriers to communication, cultural diversity, 
illiteracy, and a constant procession of new rulers. The various ethnic 
elements that have made up the population of southeast Asia have tended 
to segregate themselves in separate communities. Racial and cultural 
differences have therefore remained sharply defined, and time and pro- 
pinquity have done little to eliminate them. 

In the Philippines, where there is perhaps the greatest cultural homo- 
geneity, since 90 per cent of the population is Christian, eight vernacular 
languages are in current use, and there is a permanent cleavage with the 
Muslim Moros of the southern islands. In Thailand, where the dominant 
race forms more than 80 per cent of the population, the economic life of 
the country is chiefly controlled by Chinese, who constitute less than 17 
per cent of the population. In Indo-China the Viet-Namese, though mak- 
ing up 80 per cent of the total, are a dominant majority in less than half 
the country, and in other parts they are outnumbered by Khmers, Lao- 
tians, or tribal peoples. The Burmese are no more than 66 per cent of the 
population of Burma; the Malays, less than 50 per cent in the Malay 
States (even excluding Singapore Island, where the Chinese predominate); 
and in the new Republic of Indonesia, the Javanese are only 45 per cent 
of the whole population. 

The characteristic economic pattern of southeast Asia has contributed 
to division rather than to unity. For centuries, that pattern was based on 
self-supporting village communities, whose mainstay was agriculture sup- 
plemented by handicraft industry and fishing. Until the demographic 
balance was upset by the intrusion of an industrial economy, the bounties 
of nature satisfied basic needs, and the enervating climate bred habits of 
indolence and improvidence. The greater portion of the peoples of the 
region lived in a communal society of small village units. Production 
was co-operative, and the means of production as well as the distribution 
of what was produced were communally controlled. This pattern of life 
and economic activity still prevails. The historical political instability 
of southeast Asia has produced little change from generation to genera- 
tion in the normal pattern of village life. The rise and fall of little em- 
pires, the creation and the destruction of a multitude of domains, and 
ever-disputed boundaries between kings, rajahs, sultans, and tribal chiefs 
impinged on the basic social pattern only in small ways. 



Security and Stability of Southeast Asia 345 

THE IMMEDIATE HISTORICAL BACKGROUND 

By the end of the nineteenth century the whole of southeast Asia, 
with the single exception of Thailand, was brought under the political 
authority of one or another of the states of western Europe. British, 
Dutch, and French colonial authority, constantly reflecting the industrial 
and commercial expansion of the mother countries, eventually super- 
imposed on the ancient pattern of village life a framework of economic, 
social, and political stability. As internal security was established and as 
European administrative practices and measures became effective, the 
rate of population increase mounted. 

The increasing population, however, was sustained by the simultane- 
ous development of new economic activities. The plantation and extrac- 
tive industries tobacco, tea, coffee, cinchona, rubber, tin, petroleum- 
created by European capital and management, provided the basis for a 
nourishing export trade that supported in turn the production and im- 
portation of the goods and services needed to maintain a growing popu- 
lation and a more highly organized society. In this way an interdepend- 
ence was built up between southeast Asia and western Europe. Into this 
relationship the United States ultimately entered by way of its require- 
ments for rubber and tin. Thereafter the extractive economy of south- 
cast Asia became a dollar-earning economy and hence an important factor 
in the operation of a system of international balance of payments. 

A more direct relationship developed between the economy of the 
region and the economies of Japan and China. Both Japan and China 
came to rely heavily on the surplus rice production of Indo-China, Burma, 
and Thailand to make up their food deficits. Japan, in addition, imported 
large quantities ot industrial raw materials for which it paid by exports 
of cheap manufactured goods that were suited to the tastes and limited 
means of the southeast Asian market. Japan also drew considerable earn- 
ings from the shipping and trading services which it provided for the 
region. A particular feature of the Chinese economic ties with the region 
was the export of labor, which gave China a regular flow of large remit- 
tances from Chinese immigrants. 

At the same time that this complex of interdependent economic 
activity was being developed, the security of southeast Asia was also being 
brought to a more satisfactory condition. Internal security followed 
naturally from the establishment of efficient colonial governments. As far 
as security from external threats was concerned, an adequate equilibrium 
of power was reached in the Far East by the early twentieth century. Great 
Britain was the major stabilizing force within the region. Its establish- 
ment at Singapore was the basis of its power, and the British assump- 
tion of responsibility was accepted by France and the Netherlands, both 
of whom saw their own colonial interests as identical. The region was 



346 Major Problems 1950-1 951 

amply secured on the west by the British Indian Empire. The Pacific 
Ocean approaches were controlled on the north by Japan, but Japan was 
balanced and checked by the land power of Russia and the naval power 
of the United States and Great Britain. The potential power of China, 
immediately to the north, was neutralized by Chinese internal weakness 
and by the balanced influences of the United States, Great Britain, Russia, 
and Japan. The total effect was an automatically working equilibrium, 
and the diplomacy that was concerned with the Far East, such as the 
Washington Conference of 1922, sought to maintain peace and security 
by fortifying the power equilibrium with political agreements, such as the 
Anglo-Japanese alliance of 1902 and the Washington Conference treaties 
of 1922. 

The economic advances and the political stability initiated and en- 
forced by the West influenced the well-being of the native population. Im- 
proved public health, higher standards of living, and educational facilities 
were the by-products of material change. When the formidable obstacles 
to such improvements are considered, the total change brought about in 
a comparatively short time is impressive. In fact, the degree of change 
can be measured in part by the extent to which its products social de- 
mands, nationalism, and western-educated native leadershave contrib- 
uted to the present unstable situation. Although only a small percentage 
of the population was directly affected by European education, that small 
fraction was large enough to leaven the whole and to furnish leadership 
to nationalist groups, to revolutionary groups, and to the general move- 
ment to reject colonialism. 

THE EFFECT OF THE SECOND WORLD WAR 

The equilibrium of power described above was upset by Japan in 
1931, when a policy of aggressive expansion was launched by the occupa- 
tion of Manchuria. Six years later, and after uninterrupted pressure on 
the Chinese Government, China proper was invaded. Japanese armies 
gradually overran and occupied the strategic areas of the country, the 
lines of communication in the interior, and the great centers of com- 
mercial contact with the Western world. With the outbreak of war in 
Europe, the fall of France and the Netherlands, and the hardpressed condi- 
tion of Britain, Japan considered the moment opportune for a full-scale 
effort to dislodge the Western colonial powers from southeast Asia. The 
campaign was initiated by the attack on the United States at Pearl Harbor 
in December 1941. The importance of this victory can be measured by 
the speed and ease with which a series of linked military and naval 
operations put Japan in control of virtually the whole of southeast Asia 
and in position to move into the Indian Ocean and to Australia. The 
defeat of Japan canceled these spectacular successes and reinstated the 



Security and Stability of Southeast Asia 347 

Western colonial nations. But four years of Japanese control had pro- 
foundly changed the character of southeast Asia. None of the previous 
patterns security, economic, or political were any longer present. 

The most obvious change was the increasing strength and determina- 
tion of the nationalist movements, which had existed for many years. 
These movements, a natural consequence of Western education and ex- 
ample, had, nevertheless, been kept under control by colonial authorities. 
When they had become active, they were vigorously suppressed as se- 
ditious. 

But the initial triumphs of the Japanese in the Second World War 
severely damaged the prestige of the West. Natives were embittered at 
having been abandoned to a ruthless Japanese imperialism, and they re- 
garded themselves as the victims of a colonialism so weak and stupid that 
it had failed to prepare them even for something as fundamental as self- 
defense. The new Japanese overlordship, though unpleasant and un- 
wanted, was in general lightly felt; and native leaders, who were left to 
fend for themselves, developed confidence and self-reliance and built up 
a semblance of local native authority. 

The Japanese played an important part in this development. They 
carried on a systematic propaganda campaign in which Western im- 
perialism was denounced. They organized collaborationist groups and 
brought forward leaders whom they flattered with attention, honors, and 
considerable local responsibility and power. Finally, in the latter stages 
of the war, when the inevitability of defeat was recognized, the Japanese 
organized and armed independence groups in Indo-China and Indonesia 
in order to impede or frustrate the re-establishment of Western authority. 
Thus the defeat of Japan and the brief interval before the West could 
even begin to reassert itself gave native leaders an opportunity to claim 
and use authority in the name of national independence. 

There is no evidence that native Communist groups were deliberately 
encouraged by the Japanese as part of this general policy in southeast 
Asia. But they encouraged and supported revolutionary groups that had 
historically developed in conjunction with more diffused nationalist move- 
ments. Such groups were fundamentally an expression of protest against 
the uprooting of immemorial custom and the destruction of a way of life 
rather than an indication of an organized and regimented body of 
political and social doctrine. When the Dutch in the East Indies began 
in the 1920*8 to reform their colonial administration in ways that flouted 
tradition, they seriously disturbed the conservative masses and produced 
a flurry of ideological radicalism. And when trained Communist agita- 
tors and organizers later appeared, they had more success in many areas 
with villagers, whose self-sustaining village economy could no longer be 
maintained, than among the urban proletariat. Whatever Japanese in- 



348 Major Problems 1950-1951 

tentions may have been, there is no doubt that many of the arms they 
distributed fell into the hands of native Communists. There is also no 
doubt that the chaotic conditions that prevailed at the end of the war 
gave these armed revolutionaries a chance to establish a foothold and to 
take an active part in the political struggle that followed. 

THE ESTABLISHMENT OF NATIONAL STATES IN SOUTHEAST ASIA 

There are now in southeast Asia four national and wholly independ- 
ent states: Thailand, the Philippine Republic, Burma, and Indonesia. 
Thus 77.4 per cent of the population of the region has realized its desire 
for self-government. There are three quasi-autonomous states--Viet-Nam, 
Cambodia, and Laos constructed out of Indo-China. They include an 
additional 17.6 per cent of the population of southeast Asia. The remain- 
ing 5.0 per cent lives in the largely non-self-governing territories of Ma- 
laya, British Borneo, Dutch New Guinea, and Portuguese Timor. 

The Republic of the Philippines came into existence on July 4, 
1946. A year later Great Britain transferred its authority in India to the 
two new dominions of India and Pakistan. In 1948 Burma was granted 
independence and British authority was withdrawn, and in the same year 
Ceylon was granted dominion status. These changes, locally understood 
as triumphs of Asian nationalism, gave hope and stimulus to nationalist 
movements in the Netherlands East Indies and Indo-China. 

The Dutch were probably no less sincere than the British in their 
intention of acceding gradually to native demands for self-government. 
Nevertheless they pointed to the records of many of the nationalist lead- 
ers of collaboration with the Japanese and attributed the rise of these 
leaders to this circumstance rather than to their being genuinely repre- 
sentative of the wishes of the people at large. The Dutch had also a 
preference for a slow and orderly transfer of authority in order to ensure 
the maintenance of their extensive economic interests. Dutch delay on the 
one hand and native impatience on the other created mutual distrust 
that led finally to chronic armed clashes and widespread conditions ot 
chaos. When, in the interests of general economic and political stability, 
the United States applied pressure to the Dutch, directly and through the 
United Nations, the Indonesian nationalists were encouraged to hold out 
for immediate and full independence. Late in 1949 an agreement was 
concluded whereby the Dutch transferred their sovereignty over the 
Netherlands East Indies to the United States of Indonesia. 1 

The situation in Indo-China was from the start a fundamentally 
different one. Before the war, the authority of France was complete and 
unconditional. No concessions, even to the concept of preparing colonial 

'See "The Problem of Indonesia/' Major Problems of United States Foreign 
Policy 1 9 19-J 950, pp. 352-402, for a detailed analysis of the situation. 



Security and Stability of Southeast Asia 349 

peoples for ultimate self-government, were contemplated. In July 1941 
Japanese troops overran the country. In the last year of the war, the 
Japanese army took over entire control of Indo-China and interned 
French officials and troops. The Japanese united the Annamites of Ton- 
kin, Annam, and Cochin China in a government called Viet-Nam and 
set up Bao Dai, the former emperor of Annam, as its head. Before French 
forces returned to Indo-China in September 1945, the Viet-Nam govern- 
ment collapsed and Bao Dai abdicated in favor of a Viet-Namese repub- 
lic. The republican regime was composed of an ti- Japanese and anti-French 
groups who called themselves the Viet-Minh. The head of this coalition, 
Ho Chi Minh, became president of the new republic. Both he and other 
leaders were Communists. 

Somewhat earlier, in March 1945, the provisional French govern- 
ment in Paris announced a post-liberation plan for Indo-China. There 
would be set up an "Indo-Chinese Federation," which would be a part 
of the proposed French Union. Greater economic freedom was promised, 
as well as a more liberal labor policy, increased educational opportu- 
nities, and less discrimination against natives for government posts. 

When the French returned to Indo-China, they had little difficulty 
in reaching agreement on the basis of this plan with those parts of the 
country that are known as Cambodia and Laos. But the status of Cochin 
China was not so easily settled. The Viet-Nam Republic under Ho Chi 
Minh, in signing an agreement with France in March 1946, had believed 
that Cochin China would remain an integral part of the republic, at 
least until a popular referendum was held. The French, however, organ- 
ized an autonomous republic of Cochin China in a form that kept it 
subservient to French control. Because it was in Cochin China that French 
interests were most deeply entrenched, and because the population of 
Cochin China was overwhelmingly Viet-Namese, the difference could not 
be settled peaceably. After months of intermittent fighting, the parties 
pledged themselves to put an end to hostilities and to negotiate, but this 
truce was short-lived. In December 1946 there was a general attack on 
the French, and since then Ho Chi Minh and his followers have been un- 
interruptedly at war with the French. 

In mid- 1947 the French sought another method of adjusting the 
issue. They persuaded Bao Dai, who was then living in Hong Kong, to 
offer to act as an intermediary with the Viet-Minh groups. This effort 
collapsed when the Viet-Minh refused to receive Bao Dai. The French 
then encouraged the anti-Viet-Minh groups in Viet-Nam to send repre- 
sentatives to Hong Kong to try to persuade Bao Dai to return to his 
country and lead a native counter-movement against the Viet-Minh. 
Bao Dai hung back, not satisfied that France would offer enough in the 
way of national autonomy to enable him to outbid Ho Chi Minh for 



350 Major Problems 

popular support. Ho Chi Minh insisted upon complete autonomy, and 
though France was prepared to make many concessions, it would not 
grant Bao Dai control over foreign affairs or defense. 

The position of France became steadily more disadvantageous and 
more expensive to maintain. Although the French retained their hold in 
the cities, life there was subject to constant guerrilla raids from the 
hinterland. In the country the French held only thin lines of communica- 
tion. Commerce and industry were at a standstill, and French financial 
and military resources were being drained away in a struggle in which 
neither side was able to mount sufficient force to bring about a military 
decision. 

France made a second political effort in June 1948 and set up a pro- 
visional government of Viet-Nam, of which it was intended that Bao Dai 
should ultimately be the head. General Xuan, an Annamite who had 
long served in the French army, was appointed Prime Minister. Bao Dai 
went to Europe, and the French Government, now spurred on by the 
steady gains of the Chinese Communists and by the potential threat they 
offered to the French position in Indo-China, pushed their negotiations 
with Bao Dai with great vigor. On March 8, 1949, a treaty was signed 
establishing an independent state of Viet-Nam, which was within the 
French Union, with France retaining control of foreign affairs and de- 
fense. The treaty became effective on December 30, 1949. 

THE CHARACTER OF SOUTHEAST ASIAN NATIONALISM 

The transformation of the colonial empires of southeast Asia into 
independent states has come about, not by gradual internal evolution, 
but precipitately and as a consequence of opportunities provided by a 
combination of remote events and external influences. The events were 
the demands of war, the consequent elimination of established controls, 
and the impossibility of their rapid restoration after the war was over. 
High among the external influences must be noted the operation of the 
American principle of action that encourages the independence and self- 
government of all peoples. This principle, which had been acted on in 
the case of the Philippines, was repeatedly stated as a general objective 
of United States policy. Consequently, it is understandable that at the 
end of the war there was a clearly expressed reluctance on the part of 
many Americans to see the restoration of colonialism appear as the first 
fruit of a Far Eastern victory that was felt to have been won largely by 
American arms. 

In Great Britain also there was a strong anti-imperialistic sentiment. 
It coincided with an official conviction that British interests in Asia would 
be better served by the voluntary co-operation of Asian peoples than by 
an effort to enforce British authority on a relatively increased opposition 



Security and Stability of Southeast Asia 351 

with inadequate means. This judgment of what was politically practical 
and militarily feasible was only partly shared by the Dutch and not 
shared at all by the French. The lack of a uniform European approach to 
the political problems of southeast Asia, along with diminished reserves 
of power that could be diverted to the region and the inhibitions imposed 
by American attitudes, all contributed to the rapid emergence of new 
independent states. 

Certain observations can be made about the general difficulties faced 
by these new states, which throw light on the question of nationalism 
as well as on the security problems that have arisen in the region. In each 
of these new national units there are racial minorities for whom the 
political change that has taken place represents little more than an ex- 
change of one alien master for another. One such minority, the Karens 
in Burma, has been actively resisting a national Burmese authority from 
the time of its establishment. The recent uprising of the Ambonese 
against Indonesian authority is another example of a group that is not 
reconciled to the change that has taken place. 

At present, the heterogeneity of the populations in each new state 
is a source of national weakness and political instability. It is possible 
that independent native governments, in which a single racial or cultural 
group tends to dominate, might try to accelerate ethnic fusion. They 
would at least have strong motives for doing so that were absent in the 
case of the colonial powers. If such policies were set in motion, they could 
easily result in an oppression of minority groups to a degree unknown 
to them in the period of colonialism. 

Another source of political instability is the general unreadiness of 
the peoples concerned to assume the minimum responsibilities of self- 
government. Although this unreadiness is largely caused by mass illiteracy 
and traditional habits, it frequently derives also from a lack of adequate 
leadership. This is more than a lack of experience, a charge that native 
governments answer by blaming the policies of colonial administrations 
that practically refused to give natives responsibility. Leadership is inade- 
quate because few of the present leaders have more than local followings. 
Their ability to make their influence felt on a national scale is severely 
limited by the fact that knowledge and information in southeast Asia are 
normally transmitted by word of mouth. It is consequently proving ex- 
tremely difficult to develop the wide command of public confidence that 
is essential to the exercise of national leadership. 

It is very probable, given these handicaps, that a national govern- 
ment will not be readily equated with a popular government. It cannot 
be assumed that nationalism in southeast Asia will be automatically 
accompanied by Western concepts of democracy and by the use of Western 
political institutions. It is, in fact, more likely that nationalism will take 



352 Major Problems 

various oligarchical forms in which Western institutions will be formally 
acknowledged but distorted in practice, and from which local institu- 
tions will gradually evolve. It can be argued, however, that a popular 
government is not indispensable to stability in southeast Asia or even to 
progress. A competent, disciplined, and patriotic oligarchy could be 
capable of providing the necessary degree of efficient public administra- 
tion, economic management, and military leadership if it could command 
the requisite skilled personnel. 

Another handicap that is now being felt by the new national go\- 
ernments is the realization of how underdeveloped their economies actually 
are and how deficient their economic institutions, now that their links 
with a world system of commerce and finance have been interrupted and 
Western managerial skills partially withdrawn. Rich as the region is in 
potential resources, its developed resources are not adequate of them- 
selves, as far as a national, self-sustaining economy is concerned, to create 
the freedom from want and the social stability that the citizens of an 
Asian national state have learned from the West to consider a right. 

The once flourishing export industries that the colonial system de- 
veloped are stagnant. To be sure, the rewards that native labor drew from 
these industries were small; but it is equally true that these industries 
did have an improving and stabilizing effect economically and socially, 
and that the livelihood they were once assured is now uncertain. A very 
painful lesson is in process of being learned: political independence and 
economic betterment are not automatically connected. 

The first reaction of the new governments to this lesson has been a 
policy of nationalizing key industries and services. In some cases, as in 
Burma, this has been justified mainly on doctrinaire grounds. But in other 
cases it has been a practical method of getting around the fact that there 
were no native entrepreneurs who possessed either the capital or the ex- 
perience needed for the ownership and management of a modern economic 
enterprise. Whatever the reason may have been, the evidence to date is 
that the problem of economic reorganization and development will not 
be solved until an adequate corps of officials and technicians is available. 

Thus the first general impression of southeast Asian nationalism is 
that the solid bases of national unity are lacking. The present basis for 
regional co-operation is even flimsier. Heretofore, the major integrating 
forces, political and economic, in southeast Asia were the nations of 
western Europe, for they provided peace, security, and economic integra- 
tion. Dutch conquests and administrative penetration, for example, did 
more in fact to create the political entity that is now called the United 
States of Indonesia than any efforts of the peoples of the same area. 

Yet the national states of southeast Asia are an international fact. 
These observations are therefore pertinent only in that they indicate the 
nature and scale of the problem that is now presented. The Western 



Security and Stability of Southeast Asia 353 

nations have a strong interest in the independent survival and the de- 
velopment of these states into effective members of an international com- 
munity. The new states themselves have an identity of interest in main- 
taining not only their individual independence but also the security of 
the region that they form. The difficulty of bringing them together or of 
their coming together to take concerted measures against an external 
threat are enormous. Their economies are competitive; their new govern- 
mental institutions vary widely; they lack the experience of international 
consultation and of the processes by which the agreements of such con- 
sultation are translated into action. And it is by no means certain that 
what the West defines as the threat to their security is clearly felt to be 
so by the new national states themselves. 

SIGNIFICANT CHANGES IN THE AREAS SURROUNDING SOUTHEAST ASIA 

The problem of the security of southeast Asia would have arisen 
from the changes that have taken place in the areas that border the region 
even if there had been no changes within the region itself. Among these 
external factors are the relinquishmcnt of British authority in India, the 
disappearance of Japan as a force in east Asia, the emergence of the Soviet 
Union as a contender for world domination, the shift of China except 
for Formosa to the Soviet orbit, the precarious position of Hong Kong 
and Macao as outposts of Western influence, and the expanding interests 
and responsibilities of the United States in the western Pacific area. To 
these must be added an awakened consciousness on the part of Australia 
and New Zealand of the importance, as far as their own interests arc 
concerned, of playing an active part in the region. 

India and Pakistan 

When British authority was transferred in 1947 to the two states of 
India and Pakistan, the structure of power in the Indian Ocean region 
was profoundly altered. Great Britain had maintained an unchallenged 
control over the entire region from the east coast of Africa to Australia 
and north to the central Asian mountain barrier. Command of the sea 
was complete, and it was ensured by the possession of naval bases at the 
strategic points of Cape Town, Aden, Colombo, Singapore, and Perth. 
Land defenses were concentrated in India, largely on the northwest 
frontier, the historical invasion route from the north. A small professional 
British force was the hard core of a larger native army. The significant 
feature of the situation was that the security of the whole region was 
accepted as a single problem and treated as such. 

The transfer of British authority automatically transfeired the ic- 
sponsibility for the defense of the Indian sub-continent to India and 
Pakistan. The establishment of an independent Burmese state still further 
divided the responsibility for the defense of the region. The only direct 



354 Major Problems 

responsibility retained by Great Britain was the defense of the Malay 
States. Thus what was previously a well-co-ordinated structure of power 
is now broken down into several un-co-ordinated parts. 

The main question that arises is of the ability of India and Pakistan, 
either by themselves or with such support as Great Britain and the 
United States can give them, to carry out the responsibility that they have 
acquired. This responsibility is divided between them, and the successful 
fulfillment of it depends on the harmonious co-operation of the two 
states in a common defense. For the new political boundaries of the Indian 
sub-continent have little relation to its strategic position. 

The real external threat that can now be anticipated to which the 
two states are open comes from the Soviet Union, to the north. The 
feasible approach for this threat is by way of the northwest land frontier, 
the defense of which lies wholly in Pakistan hands. Though both states 
possess ample military man power, some of which is well trained and of 
good morale, the security of India is directly dependent on the readiness 
of Pakistan to take action. The defense of the sea approaches, in contrast, 
is primarily the responsibility of India, supported in the first instance by 
Great Britain. Pakistan has no navy and few facilities. India took over 
from Great Britain a naval establishment adequate for local use. In that 
quarter the security of Pakistan is dependent on the readiness of India 
to take action. Thus relations between the two states are a measure of 
the security of the sub-continent. 

China 

Before the proclamation of the People's Republic of China in 
October 1949, China of itself could not be described as a threat to the 
security of any state or region on its borders. The only conceivable danger 
was that a strong aggressive power, taking advantage of the weakness of 
China, might create a threat by controlling China. This danger was kept 
in check by the equilibrium of power that developed in the Far East, 
and in two instances the checking process led to war after an attempt by 
a single power to break this equilibrium to its own advantage Russia in 
1904-05, and Japan in stages from 1931 to 1941. 

Today China is probably no more able than before to carry out a 
policy of direct military aggression against neighboring states. It lacks 
the developed industrial plant and the military resources, other than 
crude man power, that are needed to wage a modern war. On the other 
hand, China provides an admirable staging area for the kind of indirect 
aggression at which the Soviet Union, now allied with the People's Re- 
public, is conspicuously adept. The Chinese Communist regime provides 
a channel for the transmission of arms, aid, and agents to Communist 
movements in neighboring states. 



Security and Stability of Southeast Asia 355 

China has a common border with Burma and Indo-China. There are 
some eight million Chinese in southeast Asia. The Communist groups 
in Thailand and Malaya are largely Chinese. Even the non-Communist 
Chinese have very close family ties with their homeland, have not been 
assimilated in southeast Asia, and will probably remain in touch with 
China regardless of what regime is in power there. 

Even if the People's Republic of China were at this time judged to 
be unequal to, or uninterested in, embarking on aggressive ventures in 
southeast Asia, an important reservation must be made in view of the 
influence of the Soviet Union on the new regime. Account must be taken 
of the importance that Soviet policy may attach to maintaining a vigorous 
Communist movement in Asia and to preventing the West from stabiliz- 
ing areas that are at present disorganized and open to subversion. The 
basis of such action has in any event been laid by the treaty of friend- 
ship, alliance, and mutual aid that was concluded between the Soviet 
Union and the People's Republic on February 14, 1950. 

The situation in Formosa calls for brief comment. Formosa occupies 
a special position in relation to the security of southeast Asia because it 
is the sole territory under the control of the Chinese National Govern- 
ment and because the main anti-Communist Chinese forces are concen- 
trated there. It is a link in the chain of islands that extends from Kam- 
chatka to the Philippines. Part of this chain has been described by Secre- 
tary of State Acheson as the "defensive perimeter" of the United States. 
It is not impossible that a re-examination of an earlier decision may lead 
to the inclusion of Formosa in this defensive perimeter. In fact, the action 
taken by the United States on June 27, 1950, to use armed force as a 
means of preventing, for the time being, a conquest of Formosa by the 
Communists may well point in that direction. 

When Japan surrendered in 1945, Formosa was re-occupied by Chinese 
Nationalist forces. This action was in accordance with the Cairo Declara- 
tion of December i, 1943, which promised the return of the island to China. 
This intention was reaffirmed by the Potsdam Declaration and became 
part of the surrender terms. There is some doubt, however, in international 
law whether sovereignty was actually transferred from Japan to China or 
was merely suspended until a peace treaty was concluded with Japan. 
At the present moment the National Government is in actual possession 
of Formosa; the People's Republic claims sovereignty; and the United 
States has not made a final judgment. 

Japan 

The status of Japan in Asia was completely altered by defeat. The 
country was demilitarized, its continental and outlying possessions were 
detached, and the home islands were placed under an allied military 



356 Major Problems 1950-1951 

occupation. In 1947 Japan voluntarily adopted a new constitution in 
which war was forever renounced as an instrument of national policy. 
Even without this the revival of Japan as an independent military power 
in the Far East is unlikely in any foreseeable future. 

Nor is the prospect that Japan will once more become the hub of an 
integrated trading system in the Far East especially promising. Japan can 
become self-supporting and economically significant only as other countries 
are willing and able to do business with it. The livelihood of Japan was 
based on a flourishing foreign trade in which it exchanged manufactured 
goods and services for food and raw materials. The complex commercial 
relationships that were built up before the war have been destroyed, and 
many factors militate against their reconstruction. The principal Japanese 
prewar trading area, southeast and east Asia, is so unstable politically and 
so chaotic economically that almost no market exists. The Communist 
regime in China does not encourage trade except on politically unaccept- 
able terms. There is a widespread fear of Japanese competition and of an 
economic and military revival; substitutes have been developed for many 
goods previously supplied by Japan; and Japanese freedom of action is 
restricted by the allied occupying powers. 

The total consequence is that the part Japan formerly played in the 
equilibrium of power in the Far East has gone unfilled since the end of the 
war. This change in status has had profound effects in the Far East, in- 
cluding southeast Asia. The chief effect has been to draw both the United 
States and the Soviet Union more deeply into Asian affairs. 

The Soviet Union 

By virtue ot the Yalta Agreement of February 1945 the Soviet Union 
took over from Japan the Kurilc islands and the Japanese half of 
Sakhalin. A treaty with the Chinese National Government, concluded 
on August 14, 1945, restored the Soviet position in Manchuria. These 
arrangements put the Soviet Union in substantially the same position 
in the Far East that Russia had occupied before the Russo-Japanese 
War of 1904. By this treaty, the Soviet Union was granted for a period 
of thirty years a naval base at Port Arthur, joint and equal ownership 
and control with China of the vital Manchurian railways, and a thirty- 
year lease of one half the port facilities of Dairen. In return for these 
concessions, the Soviet Union undertook to support the National Govern- 
ment as the legitimate government of China. 

By agreement the Soviet Union received the surrender of the Japanese 
forces in Manchuria and Korea north of the Thirty-eighth Parallel. In 
Manchuria Soviet forces stripped Japanese factories of equipment valued 
at two billion dollars, allowed arms and military supplies to get into the 
hands of the Chinese Communists, and impeded the entry of Chinese 



Security and Stability of Southeast Asia 357 

Nationalist troops by refusing them the use of Dairen as a port of entry. 
Consequently the National Government found the Chinese Communists 
well established in a strategically and economically vital area. It was 
from the Manchurian base that the Communists later launched the 
attack that led to the overthrow of the National Government. 

After accepting the Japanese surrender in Korea, the Soviet Union 
set up a Communist regime in North Korea. The existence of this regime 
effectively prevented the unification of the country that allied policy had 
intended. On June 25, 1950 the regime launched without warning a full- 
scale and unprovoked invasion of the Republic of Korea, which had been 
established in the southern part of the country under the sponsorship 
and with the support of the United Nations. 

These developments, with the recent Sino-Soviet alliance, have 
brought Soviet power significantly to the front in the Far East. 

The British Commonwealth 

In addition to India and Pakistan and to Great Britain itself, the 
units of the Commonwealth that constitute important factors in south- 
east Asia are Australia and New Zealand. British territorial possessions 
within the region are the Federation of Malaya, the crown colony of 
Singapore, and British Borneo. Prior to the Second World War, Great 
Britain counted heavily on its fortification of Singapore to ensure the 
security of the area, but the Japanese demonstrated that the island was 
not impregnable against land attack. The weakening of British power 
generally as a consequence of the war and the undermining of the 
stability of Malaya by Communist insurrection are significant features 
in the new situation. 

In the area immediately contiguous to southeast Asia is the crown 
colony of Hong Kong. Its security is intimately bound up with the 
security of southeast Asia, and this fact adds to the British stake in the 
security of the latter. 

For the last decade, ever since Japan first showed indications of 
aggression against the regions to the south, Australia and New Zealand 
have shown an increasing awareness of the threat to their security from 
east Asia. In the Pacific war they played a resolute role, and since the 
war they have made clear their purpose to assume their full share of 
responsibility in collaboration with other members of the Commonwealth 
and with the United States in furthering the security of the entire western 
Pacific region. 

The United States 

The war left the United States more convinced than ever of the 
vital importance of the western Pacific to its national security. United 
States policy accordingly accepted heavy military and financial responsi- 



358 Major Problems 1950-1951 

bilities in order to safeguard its interests in the region. The power that 
had been brought to bear to defeat Japan was only partially withdrawn. 
The island of Guam was strengthened and turned into a permanent 
military base. The Japanese mandated islands were occupied as strategic 
areas under a United Nations trusteeship. The Japanese islands south of 
the Thirtieth Parallel, which include the Ryukyus (Okinawa), Bonins, 
Marcus, and Iwo Jima, are provisionally held by the United States pend- 
ing their final disposition under a peace treaty. The allied occupation of 
Japan is in all essential respects an American responsibility. Although 
United States troops were withdrawn from Korea in 1949, the Republic 
of Korea continued to receive economic as well as military assistance 
from the United States even before the attack upon it in June 1950. 

The commitments of the United States to the Philippine Republic 
are also substantial. Beginning with the Philippine Rehabilitation Act 
of 1946 and running through the commercial agreement of the same year 
to various military assistance and base rights agreements in 1947, the 
United States has indicated the extent of its interest. 

The United States has contributed heavily by loans, by grants, by 
military assistance, by economic aid, and through the Economic Co- 
operation Administration (EGA) toward the maintenance of the Chinese 
National Government. Allocations of EGA assistance are still being made 
to Formosa. More recently, commitments have been made to extend eco- 
nomic and military assistance to both the Bao Dai regime and the French 
authorities in Indo-China. 

After the launching by North Korean Communist forces of an armed 
attack on the Republic of Korea, President Truman on June 27 issued 
a statement in which he said that the attack had made it plain that com- 
munism had passed beyond the use of subversion to conquer independent 
nations and would now use armed invasion and war. With regard spe- 
cifically to southeast Asia, the President announced: 

I have also directed that United States Forces in the Philippines be strength- 
ened and that military assistance to the Philippine Government be accelerated. 

I have similarly directed acceleration in the furnishing of military assistance 
to the forces of France and the Associated States of Indo-China and the dispatch 
of a military mission to provide close working relations with those forces. 

THE POWER POSITION 

One major fact emerges from the foregoing examination of the 
changes that have taken place in the power structure of the Far East. The 
reduction of Japan left a vacuum in that structure. The internal weak- 
ness of China kept that country from filling the vacuum. The United 
States and the Soviet Union were drawn in, or they moved in, to fill it. 
And these two major powers now confront each other across the Sea of 
Japan. 



Security and Stability of Southeast Asia 359 

Early in 1950, the cumulative effect of local conflicts in southeast 
Asia some anti-colonial, some factional, some Communist insurrections- 
was so great that what had previously been considered, a somewhat inci- 
dental regional problem suddenly took on the character of a major policy 
problem for the United States. Contributing factors were the establish- 
ment of a Chinese Communist authority on the borders of Indo-China 
and Burma, in both of which Communist-supported forces were in revolt, 
and the drain of a highly unsettled situation on France and Great Britain, 
whose military and financial resources were desired in Europe in connec- 
tion with the North Atlantic Treaty defense arrangements. It was con- 
cluded that in the whole of southeast Asia communism was engaged in a 
concerted drive for power. The assumed aim was to disintegrate existing 
governments, to undermine authority, to create economic and social dis- 
order, and to create a situation in which disciplined Communist groups 
would be the sole remaining effective force. 

The apparently smooth transference of sovereignty from the Nether- 
lands to the United States of Indonesia on December 27, 1949, was a 
little deceptive. As originally designed, the new nation was to be a federal 
republic of sixteen states. Of these, the Republic of Indonesia, which 
comprised most of Sumatra and about one half of Java, was the most 
powerful. Indonesia did not have a homogeneous population, and cul- 
turally was highly diversified. It was considered that these differences 
would be less likely to produce dissension under a federal system than 
under a centralized government dominated by a single racial group. An 
opposite tendency has now been clearly established, for all but three of 
the sixteen states have been merged into the Republic of Indonesia- 
most of them voluntarily but in some cases, such as in East Java and 
Madura, under pressure of the Republican army. East Sumatra and East 
Indonesia were still holding out in June 1950. 

It is possible that attempts at unification by force will lead to more 
extensive resistance and delay the economic recovery and the political 
stabilization of the new state. There have already been three revolts 
against the new government. The first was promptly crushed. The second, 
in the course of which the island of Amboina declared its independence, 
is still continuing. The third, in the Celebes, appears to be under control. 
The efforts of the Republic of Indonesia to replace the federal system 
with a unitary one under its own dominance contrary to what was origi- 
nally agreed upon by all the parties concerned are not the sole cause of 
the political stresses and unrest. Other causes are reported to be a growing 
administrative inefficiency, arising from the struggles of native aspirants 
for public office and from the apathy of Dutch civil servants, who are 
being retained on a temporary basis. 

The present difficulties were not caused by communism, but the dis 



360 Major Problems 1950-1951 

orders to which they are giving rise can easily provide situations for the 
Communists to exploit. The recognition of Indonesia by the People's 
Republic of China was greeted with enthusiasm by politically militant 
groups of Indonesian Chinese. An Indonesian mission left for Moscow on 
April 15, 1950, to hold exploratory talks with the Soviet Union. It is 
possible that the decision of the Indonesian Government to recognize the 
dissident regime of Ho Chi Minh in Indo-China is one of the first fruits 
of this mission. 

The Philippine Republic, after four years of freedom, has reached 
a critical point in its existence. Governmental corruption and fiscal mis- 
management have forced the republic into serious financial difficulties. 
In spite of sincere efforts to check corruption, public office is still widely 
considered an opportunity to accumulate wealth. Tax collections in par- 
ticular have suffered. The estimated budgetary deficit for 1950 is 187 
million pesos, with a total expenditure of 400 million pesos. The deficit 
for 1951 is likely to exceed 200 million pesos. The present deficit has been 
met by borrowing from the Central Bank to the legal limit, by with- 
drawals from the Government-owned Philippines National Bank, and by 
the use of sinking funds. Capital has begun to take flight and American 
investment has slackened. Restrictions on imports have had an infla- 
tionary effect on commodity prices, and a black market for dollars has 
developed. Unrequited imports have been paid for in the past out oi 
American grants, but funds for this purpose are diminishing each year. 
President Quirino has replied to American criticism of his government by 
accusing the United States of imperialistic designs. 

Public order has been endangered by a fresh outbreak of Hukbalahap 
guerrillas. The Hukbalahap movement, originally a peasant anti-landlord 
revolt, is now firmly in the hands of Philippine Communists. Its strength 
is estimated to be between ten and fifteen thousand. Early in 1950 the 
Philippine army and constabulary broke up the principal Hukbalahap 
concentrations, and they are now scattered but not eliminated. The Huk- 
balahaps maintain that when Formosa is taken from the Chinese Na- 
tionalists, they will receive aid from the Chinese Communists. 

In Malaya the British have been involved in a continuous policing 
operation against Chinese and Malayan Communist terrorists for two 
years. The British forces have grown in this time to about one hundred 
thousand men, and the guerrillas have been reduced to about five thou- 
sand, but they have not been suppressed. The terrorists have drawn their 
support from the Malayan Chinese, and in an effort to break this con- 
nection the British authorities are offering greater citizenship rights to 
the Chinese. The Malayan natives, however, dislike and fear the Chinese. 
Malayan nationalism is not an active political movement, chiefly because 
it is generally feared that a British withdrawal would do no more than 



Security and Stability of Southeast Asia 361 

open the way for a Chinese influx. The maintenance of so large a con- 
centration of troops in Malaya has been costly to the British Government, 
but economic activity, especially rubber and tin production, has not been 
greatly impaired. The Malay States are still the major dollar-earners of 
the sterling area. 

Burma, since its establishment as a national state, has been the scene 
of six or seven simultaneous revolutions. Two are led by antagonistic 
Communist factions. The most persistent revolution, that of the Karens, is 
the revolt of a racial and cultural minority. The Government, which is 
Marxist-Socialist but anti-Soviet, has been doctrinaire, inefficient, and 
sensitively nationalistic, and it has conducted Burma from one crisis to 
another. The Burmese rice industry, formerly one of the major producers 
of exportable surpluses in Asia, has fallen behind. Public finances are in 
extreme confusion, and although Great Britain and the Commonwealth 
early attempted to provide financial support, negotiations foundered on 
the touchy nationalism of the Burmese. The United States has now taken 
an interest in the Burmese situation as an aspect of its general interest 
in the stability and security of southeast Asia. It has been reported that 
Burma is considered to have a chance to escape both anarchy and Com- 
munist subversion. A fifty-million dollar loan for rehabilitation has been 
requested from the United States, and an additional request for military 
aid is expected. 

Unlike other states in southeast Asia, Thailand remained independent 
throughout the period of European colonial expansion, although it did 
not develop strong national unity. No resistance was offered to the Japa- 
nese in 1941, and Premier Pibul Songgram and his government easily 
accepted Japanese dictation. A Free Thai movement was organized in the 
later stages of the war, and alter the deleat of Japan, Premier Pibul 
was ousted; but he regained political control by a jnp d'etat in Novem- 
ber 1947. A staunch opponent of communism, he instituted repressive 
measures against it. He also made a bid for popular support by oppressive 
measures directed against the unpopular Chinese community. The present 
threat from communism is not regarded so seriously as the possibility that 
the local Chinese may be driven by severe treatment to co-operate with 
the Chinese Communist regime. 

The vital spot and the heart of the present problem is Indo-China. 
Attention was publicly focused on Indo-China when the Soviet Union, its 
satellite states, and the People's Republic of China recognized Viet-Minh, 
the dissident regime of Ho Chi Minh, a step that the Soviet Government 
did not take in the case of Greece. Shortly afterwards, Viet-Nam, the 
French-supported government of Bao Dai, was recognized by the United 
States and by the majority of the countries of Western Europe. Since 
an agreement signed by Mao Tse-tung on behalf of China and the Ho 



362 Major Problems 19501951 

Chi Minh, arms deliveries to Viet-Minh have been accelerated. There is 
evidence that the rate will probably increase. 8 The recent capture of 
Hainan island by the Chinese Communists will facilitate the shipment 
of arms to ports held by Viet-Minh. Previous deliveries have had to be 
packed over the mountain trails of the northern border. 

French commitments in Indo-China had grown until in 1950 mili- 
tary operations were costing 500 million dollars a year and required a 
force of 140,000 regulars, colonials, and legionnaires. The economic and 
financial strain and the diversion of military resources were incapacitating 
France to play her assigned role under the integrated defense plan of the 
North Atlantic Treaty Council. 

The general situation had come up for re-examination by the United 
States Government when the Chinese Communists reached the borders of 
southeast Asia. The re-examination had included a fact-finding trip by 
Ambassador-at-large Jessup in February and an economic mission in 
March 1950. Ambassador Jessup's recommendations have not been 
made public, but in a radio address he emphasized that "the United 
States believes that free people who are determined to maintain their 
independence are entitled to military aid which will help them to remain 
free." In May the Department of State announced that a special study 
group had recommended the expenditure of 64 million dollars in assist- 
ance to southeast Asia, allocating 23 millions for Indo-China, 10 millions 
for Thailand, and the balance for Burma, Malaya, and Indonesia. After 
conferring with French Foreign Minister Schumann, Secretary of State 
Acheson said that the United States had decided to grant economic and 
military aid to France and to the Indo-Chinese states of Viet-Nam, 
Cambodia, and Laos for defense against Communist threats, for "the 
restoration of security/' and for "the development of genuine national- 
ism." This aid is to be granted directly to the three associated states as 
well as to France. 

The Secretary of State further said that "the United States Govern- 
ment, convinced that neither national independence nor democratic evo- 
lution can exist in an area dominated by Soviet imperialism, considers 
the situation to be such as to warrant its according economic and military 
equipment." It is expected that some of the funds authorized by the 
Mutual Defense Assistance Act of 1949 for use in the general area of 
China will be applied for these purposes. 

2 The Czech newspaper Rude Pravo reported on Mar. 17, 1950: "Great China 
counts on our heavy industry. Reading the contracts between the USSR and Viet- 
Minh we find heavy products particularly." 



HI. MAIN ISSUES AND ALTERNATIVE COURSES OF ACTION 

THE United States has repeatedly declared that a threat to interna- 
tional peace and security, wherever it may occur, is a threat to its 
own security. The United States has, moreover, carried out in many cases 
a policy of aiding free nations to maintain their national integrity against 
external aggression and against internal subversion if the subversion has 
been directed by a foreign power. This policy recognized that the Soviet 
Union was engaged in a policy of expansion and that it was employing 
internal subversion, the fomenting of disorders, and threats of aggression 
as means of extending its influence and control. 

The armed attack on the Republic of Korea has made it abundantly 
clear that the forces of international communism, guided by the policy 
of the Soviet Union, are intent upon subjugating the newly established 
national states of Asia. The economic and political instability of these 
states offers easy opportunities for every variety of disruptive action. The 
immediate advantage to the Soviet Union would be to set up a drain on 
the resources of the West, whose interests in the region are so great that 
they cannot be abandoned by default. The longer-run benefits would be 
the possible extension of Communist influence and the strengthening of 
the relative position of the Soviet world. 

In the opening section of this paper, the problem confronting the 
United States was stated as follows: The problem is to formulate the 
methods to be used and the steps to be taken to meet existing and poten- 
tial threats to the security and stability of southeast Asia. The problem 
presents two aspects, and they are distinguished from each other in the 
analysis that follows. There is the short-term aspect, which is concerned 
with an immediate state of emergency; and there is the long-term aspect, 
which relates to the establishment of a more lasting stability and security. 
It would serve no good purpose to bring southeast Asia through the pres- 
ent emergency by measures that might be the source of graver difficulties 
in the long run. Conversely, if the immediate threat to the independent 
states of southeast Asia is not effectively met, and if these nations suc- 
cumb because the measures taken to support them are faulty or inade- 
quate, long-range programs of economic improvement and political 
stability will be of little use. 

Finally, it should be clearly understood that the problem is focused 
on southeast Asia. Although the preceding analysis of the situation has 
shown that the problem has been created as much by forces that are 
external to the region as by internal conditions, that it has global im- 



364 Major Problems 7950-795 / 

plications, and that local remedies cannot of themselves be expected 
wholly to effect an improvement, these external factors will not be treated 
in detail. They have been noted under "The Development of the Prob- 
lem," and any further examination of them would call for consideration 
of types of action involving a fundamental alteration of policy and also 
would take the discussion into other problem areas Japan, China, India 
and even into the all-inclusive problem of current international rela- 
tions: the possibility of an ultimate accommodation between the West 
and the Soviet Union. 

The issues that present themselves concern the implementation of 
established policy. Each broad category of measures that calls for con- 
sideration raises a distinct issue. These issues are discussed under four 
principal captions: military measures, economic measures, political meas- 
ures, and patterns of action. 

1. MILITARY MEASURES 

The issue is to determine the form of military assistance to be given 
to the states of southeast Asia, and the means of rendering it. 

Inasmuch as the United States must deal with governments, it is to 
the governments of the states that any assistance determined upon must 
be given. In this connection it is pertinent to review the plans that have 
been formulated and the steps that have already been decided upon by 
the United States before discussing the further alternative courses of 
action that arc open. 

The Mutual Defense Assistance Act of 1949 authorized 75 million 
dollars to be used at the discretion of the President in "the general area" 
of China. The President made no use of this fund until he could receive 
reports from the chiefs of United States diplomatic missions and from a 
special mission charged with making an economic survey. These reports 
were presumably in hand in March and April 1950. In May the Acting 
Secretary of State announced that about 60 million dollars would be ex- 
pended in southeast Asia. 

The United States, Great Britain, and France agreed on May 12, 
1950, to exchange information on the steps that each was planning to 
take in the region, to co-ordinate their efforts to prevent gun-running, 
to co-ordinate their propaganda, and to encourage jointly the economic 
development of southeast Asia and the raising of its standards of living. 
In presenting his proposals for the Mutual Defense Assistance Act of 
1950, the President in June 1950 asked for aid for the general area of 
China and for some parts of southeast Asia. Later that month, in connec- 
tion with the Korean crisis, he announced the acceleration of aid to Indo- 



Security and Stability of Southeast Asia 365 

China and the Philippines and the sending of a military mission to the 
former. 

The policy of providing aid has been based on the general argu- 
ment that if Communist regimes come to power in southeast Asia and if 
Soviet influence expands from China into that region, the security of the 
United States would be vitally affected. The Soviet Union would in this 
view be able to threaten indispensable trade and communication routes, 
to render the Middle East and India insecure, and to pre-empt the vast 
strategic resources of southeast Asia. As a result, the economic stability 
of Western Europe would become more difficult to maintain, and the 
collective strength of the North Atlantic Treaty organization might be 
impaired. It is finally concluded that by stages the relative strengths of 
the Western democracies and the Soviet bloc would be significantly 
changed in favor of the Soviet Union. The alternatives that follow must 
be examined in the light of the foregoing facts, of the basic policy de- 
cisions, and of the underlying argument. No account is taken of possible 
other alternatives that would carry the discussion far beyond the scope 
of policy as it is at present defined. 

Alternative One is merely to continue to furnish military assistance 
in the form of equipment and supplies to the states in southeast Asia. 

There has been very little controversy about this course of action, 
either during the tentative stages of its development or now that it has 
become an accepted practice. The principal objections to it are raised 
on the grounds that it falls short of what is required to achieve the 
objective and that more vigorous measures are needed if the security 
ot the United States is to be effectively ensured. There is therefore a 
demand that this course of action be supplemented by more compre- 
hensive efforts. 

Alternative Two is, in addition, to commit United States forces to 
assist the states in southeast Asia. 

This alternative can be most profitably examined at this time in 
connection with the situation in Indo-China, for there the threat of ex- 
ternal aggression from China is an acknowledged possibility, and the 
United States has warned the People's Republic of the serious view that 
it would take of military adventures beyond the Chinese borders. The 
French have shown themselves unable to concentrate sufficient power to 
bring dissident Viet-Minh forces under control. If the Viet-Minh in- 
surgents now receive organized support from across the Chinese border, 
the French might well be unable to maintain even their present foothold. 
It is reported that even though the French are now making delayed con- 
cessions to the claims of Indo-Chinese nationalism, they are unlikely 



366 Major Problems 1950-1951 

to get effective support from the Indo-Chinese. It could consequently 
be concluded that unless the French are supported by United States 
forces, a vital area in the defense of southeast Asia against communism 
may be suddenly lost. This argument is strengthened by the fact that in a 
similar situation in Korea, American forces were committed. 

Arguments against this course of action are derived from two gen- 
eral considerations. The first is that it would identify the United States 
with French colonialism. Because the political difficulties in Indo-China 
have arisen as much from national resistance to French colonialism as 
from any other single cause, such an identification would naturally under- 
mine the entire United States position in Asia by appearing to justify the 
widespread propaganda that the United States is the leader of an eco- 
nomic imperialism. The French have, however, in Indo-China a constitu- 
tional position that neither China nor the Soviet Union can rightfully 
challenge. Intervention by these countries would, it is held, justify 
counteraction by the United States with due regard to United Nations 
procedures. 

A second consideration is that this course of action might well be 
another step along the road to global war. It is pointed out that the 
United States and the Soviet Union have recognized respectively the two 
regimes that are in conflict. The addition of American forces to those of 
the French already operating in support of the Bao Dai regime might be 
used to justify the Soviet Union in taking equivalent action on behalf of 
Ho Chi Minh. 

A third consideration is that the United States forces are too limited 
in numbers to be dispersed in secondary areas. If any forces were thus 
tied down, they would have to be replaced by partial mobilization in the 
United States; otherwise the plans for mobilization and protection of 
necessary bases in case of full-scale war would be seriously weakened. 
Since the French to date have at least maintained their position without 
United States assistance, it is regarded as likely that adequate assistance 
to the French and the Indo-Chinese governments would enable them to 
quell the revolt. Consequently, it is held, there is no cogent argument in 
favor of committing United States forces until either the effect of Ameri- 
can aid has been evaluated or a more direct threat has become imminent. 

ECONOMIC MEASURES 

The issue is to determine the character of the economic measures to 
be taken to strengthen the national states of southeast Asia. 

There are many types of economic measures that call for considera- 
tion as possible means of strengthening the national states of southeast 
Asia, and there are various ways in which such measures can be applied. 



Security and Stability of Southeast Asia 367 

They include the granting of loans and credits for general or for special 
purposes, the supplying of goods and services on an ad hoc basis, EGA 
programs, developmental and investment programs, and technical assist- 
ance under the Point IV Program. The selection of the types of measures 
and of the method of applying them would depend to some extent on 
local circumstances, and to a considerable degree on whether the purpose 
was to meet an immediate threat to security or to lay the economic 
foundation for more permanent stability. Thus, in the first case it might 
be judged that what was most urgently needed was the granting of credit 
to support the national currency, or shipments of grain to meet an acute 
food shortage, or the allocation of shipping tonnage for the movement of 
troops and supplies. 

In the second case, although it might be equally essential on political 
grounds that measures be initiated forthwith, the measures would neces- 
sarily require a longer time to be productive of more material results. 
Types of aid appropriate in this case would include various kinds of de- 
velopment and investment programs. Although in the first case the meas- 
ures to be employed would generally in the nature of things be trans- 
actions between governments, in the second case private enterprise might 
also be made the recipient of aid. 

Whether or not the United States should assist the states of southeast 
Asia to strengthen themselves is not in question, for it has been decided 
to provide such assistance. A 64 million dollar program of economic as- 
sistance has been agreed upon, and the funds have been earmarked in a 
pending EGA appropriation of 100 million dollars for use in the general 
area of China. The alternatives that present themselves are concerned 
rather with methods of implementing an established policy. The alterna- 
tives are suggested by the considerations mentioned in the foregoing 
paragraph: whether aid should be directed to stop-gap measures to meet 
the immediate emergency without regard to long-term stability; whether 
there should be combined with stop-gap measures such long-term meas- 
ures as are possible and are consistent with short-term objectives; or 
whether measures should be planned primarily for the achievement of 
long-term aims, and only those short-term measures adopted as are con- 
sonant with long-term aims. 

Alternative One is to adopt only stop-gap measures without regard 
to objectives of long-term stabilization. 

An argument in favor of this alternative is based on the thesis that 
southeast Asia is only one of many regions where United States assistance 
is needed to meet threats to free nations from external aggression; that 
at best the limits upon United States resources require that aid be spread 



368 Major Problems 1950-1951 

very thin; and consequently that failure to concentrate on the immediate 
emergency might result in defeat in a situation that otherwise might have 
been saved. It is held that the world situation today is so critical that how- 
ever desirable and important long-term stabilization might be, measures to 
further this objective should be deferred until the immediate crisis has 
been dealt with. If the effort to save southeast Asia from the immediate 
threat that confronts it should fail, efforts directed to long-term stabiliza- 
tion would be wasted. 

On the other hand, it has been argued that a start must be made in 
dealing with the fundamental weaknesses of southeast Asia, for unless a 
process of improvement is begun, the strains that current threats are 
imposing on its people will increasingly impair their capacity for resist- 
ance. The efforts of outside states to maintain the security of southeast 
Asia would consequently be a mounting burden. 

Alternative Two is to combine stop-gap measures with such long-term 
measures as are consistent with short-term objectives. 

This alternative meets in part, at least, the objection to the pre- 
vious alternative that it takes no account of the necessity for making an 
immediate beginning toward ameliorating the fundamental ills in the 
situation in southeast Asia. It is argued also that there are occasions when, 
if emphasis is placed solely on long-term requirements, slight shifts in the 
nature of measures taken or in the way in which they are applied will 
contribute to those requirements without seriously impairing their effec- 
tiveness in serving the primary purpose of meeting the immediate crisis. 
As between supplying a government with goods or services for specific 
purposes and granting it credit, the first course might make relief much 
more promptly available, especially in the case of an inexperienced na- 
tive officialdom, which at best might lose valuable time in negotiating 
for the purchase and delivery of supplies needed. 

On the other hand, the second course might contribute, as the first 
course would not, to developing in the native government a sense of re- 
sponsibilityan end that is worth the price of certain mistakes if these 
countries are to be expected ever to stand on their own feet. It might 
also contribute to promoting a spirit of co-operation with the United 
States, which is indispensable to the effectiveness of its aid in the long 
run. Those who favor this alternative point out that the degree of conces- 
sion to long-run objectives must vary according to circumstances. 

This alternative encounters objections from those who believe that 
the gravity of the situation precludes any deviation from a line of action 
calculated to meet the immediate requirements with the utmost expedi- 
tion and effectiveness. It fails to impress those who are skeptical of the 



Security and Stability of Southeast Asia 369 

possibility in the foreseeable future of developing a due sense of responsi- 
bility and a spirit of co-operativeness among the native leaders of south- 
east Asia. This alternative is likewise unsatisfactory to those who believe 
that it would be futile to attempt to save southeast Asia unless its peoples 
are convinced that their interests lie in aligning themselves squarely on 
the side of the Western democracies, and that for this reason an earnest 
start must be. made now to lay the foundations for long-term stability. 

Alternative Three is to plan measures primarily for the achievement 
of long-term objectives and to adopt only such stop-gap measures as are 
consistent with long-term objectives. 

Those who favor this alternative stress the economic basis of the ills 
from which southeast Asia suffers. They point out that until the problem 
of providing the masses with a reasonable livelihood can be solved, the 
region will remain in constant danger from the threat of subversion. They 
urge that if effective means for attacking the problem are wisely chosen 
to produce the maximum change in the social structure, they need not 
entail costly and elaborate programs. 

Southeast Asia is predominantly a society of peasant cultivators, 
and rice has been the agricultural mainstay from prehistoric times. Rice 
yields have been increased only as trial and error have resulted in im- 
provements. It is now asserted on good authority that yields could be 
greatly increased by scientific methods and that acreage could be increased 
by the use of modern machinery. A concerted drive at this one point 
could produce immediate and direct benefits for millions of people. The 
standard of living is so low throughout southeast Asia that a very small 
improvement has an incalculable social value. Increased yields would 
again make southeast Asia a rice-exporting region and would provide a 
reliable basis for a national economy. From this could be expected to 
flow increased public revenues and generally better government. The de- 
sired product of a disciplined and self-reliant body politic and an efficient 
and responsible government becomes a reasonable expectation if a line 
of growth of this kind is initiated. 

The arguments against this alternative are in general those in sup- 
port of the first alternative, and less cogently those in support of the 
second alternative. 

POLITICAL MEASURES 

The issue is to determine the kind of political influence that the 
United States might exert to assist the states of southeast Asia to protect 
themselves against external threats and to establish stable political systems. 



370 Major Problems 1950-1951 

Various means are open to the United States for exerting political 
influence on the states of southeast Asia. Among these means are the dis- 
semination of information and the strong forces of suggestion and exam- 
ple. These means might be appropriately and effectively employed to 
harmonize the conflicts of interest, within states and between one state 
and another, that stand in the way of unified action against a common 
threat. This course of action might be developed on two parallel lines. 
One would be to undertake to conciliate specific conflicts of interest; the 
other would be to convince the nations concerned that their differences 
must be composed in order to develop a common front against their 
common danger. The first line was followed by the United States in con- 
nection with the differences between the Netherlands and the Indonesian 
Republicans. The second might be opportune even where no concrete op- 
portunity to offer good offices presents itself. 

The essential foundation for this course of action is the creation of 
confidence in the disinterested friendliness of the United States. This im- 
mediately involves dealing successfully with Soviet and Communist 
propaganda. The Soviet Union is especially diligent in its effort to sow 
dissension, to spread confusion, and to impugn the motives of the United 
States, but a defensive refutation of these efforts is not enough. 

A propaganda offensive has been proposed to set out United States 
principles and objectives in a positive way and at the same time to expose 
Soviet policies and Communist methods. Such a program, however,