TABLE OF CONTENTS

<table><tbody><tr><td>Introductory Note</td><td>1</td></tr><tr><td>Participants in the Conference</td><td>3</td></tr><tr><td>Program</td><td>7</td></tr><tr><td>Morning Session (Political Relations)</td><td></td></tr><tr><td>Advance Paper presented by Dr. Arnold O. Wolfers</td><td>9</td></tr><tr><td>Commentary by Dr. Wolfers at Conference Session</td><td>13</td></tr><tr><td>Discussion by Conference Members</td><td>19</td></tr><tr><td>Luncheon: Address by Professor Milton Katz</td><td>29</td></tr><tr><td>First Afternoon Session (Economic Relations)</td><td></td></tr><tr><td>Advance Paper and Commentary (combined)<br>presented by Dr. Henry A. Kissinger</td><td>37</td></tr><tr><td>Discussion by Conference Members</td><td>44</td></tr><tr><td>Second Afternoon Session (Economic Relations)</td><td></td></tr><tr><td>Commentary by Dr. Richard N. Gardner at<br>Conference Session</td><td>51</td></tr><tr><td>Discussion by Conference Members</td><td>59</td></tr><tr><td>Note: Questions prepared in advance by Dr. Gardner</td><td>64</td></tr><tr><td>Dinner: Address by the Honorable Ernest A. Gross</td><td>67</td></tr><tr><td>Discussion by Conference Members</td><td>72</td></tr><tr><td>Biographical Notes: Chairman, Discussion Leaders, Speakers</td><td>77</td></tr></tbody></table>

* * * * *

# INTRODUCTORY NOTE

The year 1960 was the 40th anniversary of the founding of The English-Speaking Union of the United States. In celebration of this event, the E-SU held a Conference on Anglo-American Relations at its National Headquarters in New York City on Monday, October 17th. The advance papers, addresses to the various sessions, and summaries of the discussions are included in this volume.

A selected group of experts on various aspects of international relations was invited from academic institutions, research and educational foundations, business and the professions. In addition, unofficial observers from the United States Government and representatives of the English-Speaking Union of the Commonwealth, the sister society of the E-SU of the United States, were present. A total of 53 attended the Conference, the maximum number possible with the space available.

Mr. Frank Altschul, a Director of the New York Branch of the English-Speaking Union, was Chairman of the Conference. The participants were welcomed by Brigadier J. W. F. Treadwell, National Vice-President of the E-SU.

In addition to the discussion sessions at the E-SU National Headquarters, the Conference members met at luncheon and dinner at the Lotos Club. The luncheon was addressed by the Honorable Milton Katz, Henry L. Stimson Professor of Law and Director of International Legal Studies at the Harvard Law School. The Honorable Arthur H. Dean, National Chairman of the E-SU at that time, greeted the Conference participants at dinner, and the Honorable Ernest A. Gross, former member of the U. S. Delegation to the General Assembly of the United Nations, gave a major address.

For the purposes of the Conference the broad topic of relations between the United States and the United Kingdom was broken down into discussions of the political, military, and economic aspects of the topic--and each of these was further narrowed in advance to a single key question. Each question was taken up at a separate session of the Conference, led by a distinguished expert in the field. In each case the panel leader presented his views on the topic at some length, after which it was discussed by the Conference as a whole.

The proceedings of the Conference were recorded, the transcriptions submitted to the participants in order that they might correct their remarks, and then summarized, without attribution, for each section. These are included here together with the papers prepared in advance by the Session Leaders and their further discussion of each question at the beginning of each session (in the case of Dr. Henry Kissinger who led the session on military policy, his prepared paper and his conference discussion have been edited and combined to form one continuous text).

2

Preparations and arrangements for the Conference were handled by Hugh Boyd, a member of the National Board of Directors of the English-Speaking Union, and Hartley E. Howe, E-SU Director of Information. The transcript of the proceedings was edited and summarized by R. Grant Smith, a candidate for the degree of Master of International Affairs at Columbia University.

Because of the wide interest shown in the Conference, the English-Speaking Union plans to make it the first of a continuing series. Future Conferences will take up other aspects of relations between the United States and Great Britain and other nations of the Commonwealth.

* * * * *

["3", "CONFERENCE PARTICIPANTS", "Conference Chairman", "Frank Altschul", "Director, New York Branch\nThe English-Speaking Union of the United States", "Speakers", "Luncheon . . . . . . . . . . . . . . . .

4

<table>
  <tr>
    <td>Hugh Boyd</td>
    <td>Publisher, New Brunswick (N.J.) <u>Daily Home News</u>; National Board Member, E-SU</td>
  </tr>
  <tr>
    <td>Everett Case</td>
    <td>President, Colgate University</td>
  </tr>
  <tr>
    <td>James H. Case</td>
    <td>Director General, English-Speaking Union of the United States</td>
  </tr>
  <tr>
    <td>Harrison K. Chauncy</td>
    <td>IBM World Trade</td>
  </tr>
  <tr>
    <td>Gray Cowan</td>
    <td>Professor of Law, School of International Affairs, Columbia University</td>
  </tr>
  <tr>
    <td>Arthur H. Dean</td>
    <td>Former Head of U.N. Delegation to Korean Peace Conference; International Lawyer; National Chairman, E-SU</td>
  </tr>
  <tr>
    <td>John Dickey</td>
    <td>President, Dartmouth College</td>
  </tr>
  <tr>
    <td>William Diebold, Jr</td>
    <td>Director of Economic Studies, Council on Foreign Relations</td>
  </tr>
  <tr>
    <td>Roscoe Drummond</td>
    <td>International Affairs Specialist, New York <u>Herald Tribune</u></td>
  </tr>
  <tr>
    <td>Frederick S. Dunn</td>
    <td>Director, Center of International Studies, Princeton University</td>
  </tr>
  <tr>
    <td>Ruth Emery</td>
    <td>Associate Professor of History, Rutgers University; Executive Secretary, Conference on British Studies</td>
  </tr>
  <tr>
    <td>John Fischer</td>
    <td>Editor, <u>Harper's Magazine</u></td>
  </tr>
  <tr>
    <td>William T. R. Fox</td>
    <td>Professor, Institute of War and Peace Studies, Columbia University</td>
  </tr>
  <tr>
    <td>George S. Franklin</td>
    <td>Executive Director, Council on Foreign Relations</td>
  </tr>
  <tr>
    <td>Ronald Fredenburgh</td>
    <td>Director, Commonwealth-American Current Affairs División, Commonwealth E-SU</td>
  </tr>
  <tr>
    <td>Lincoln Gordon</td>
    <td>William Ziegler Professor of International Economic Relations, Harvard Business School</td>
  </tr>
  <tr>
    <td>William Henderson</td>
    <td>Associate Executive Director, Council on Foreign Relations</td>
  </tr>
  <tr>
    <td>Hartley E. Howe</td>
    <td>Director of Information, E-SU of U. S.</td>
  </tr>
  <tr>
    <td>John K. Jessup</td>
    <td>Senior Political Writer, <u>Life Magazine</u></td>
  </tr>
</table>

5

<table>
  <tr>
    <td>W. John Kenney</td>
    <td>Lawyer; former Under-Secretary of the Navy; President, Washington Branch, E-SU</td>
  </tr>
  <tr>
    <td>J. Burke Knapp</td>
    <td>Vice-President, International Bank for Reconstruction and Development</td>
  </tr>
  <tr>
    <td>Irving Kristol</td>
    <td>Editor and Book Publisher</td>
  </tr>
  <tr>
    <td>Keith Kyle</td>
    <td>Representative of Commonwealth E-SU</td>
  </tr>
  <tr>
    <td>George A. Lincoln</td>
    <td>Colonel, USA; Professor, U. S. Military Academy</td>
  </tr>
  <tr>
    <td>Charles B. Marshall</td>
    <td>Center for Advanced Study, Johns Hopkins University</td>
  </tr>
  <tr>
    <td>Laurence W. Martin</td>
    <td>Professor of Economics, Mass. Inst. of Tech.</td>
  </tr>
  <tr>
    <td>Porter McKeever</td>
    <td>Director of Information, Committee for Economic Development</td>
  </tr>
  <tr>
    <td>Philip Mosely</td>
    <td>Director of Studies, Council on Foreign Relations</td>
  </tr>
  <tr>
    <td>Paul H. Nitze</td>
    <td>Foreign Service Educational Foundation</td>
  </tr>
  <tr>
    <td>John B. Oakes</td>
    <td>Member Editorial Board, New York Times</td>
  </tr>
  <tr>
    <td>Gardner Patterson</td>
    <td>Director, Woodrow Wilson School of Public and International Affairs, Princeton University</td>
  </tr>
  <tr>
    <td>Henry L. Roberts</td>
    <td>Professor of History, Russian Institute, Columbia University</td>
  </tr>
  <tr>
    <td>Michael Ross</td>
    <td>Director, Department of International Affairs, AFL-CIO</td>
  </tr>
  <tr>
    <td>Dean Rusk</td>
    <td>President, Rockefeller Foundation</td>
  </tr>
  <tr>
    <td>Eustace Seligman</td>
    <td>International Lawyer; Board Chairman, Foreign Policy Association</td>
  </tr>
  <tr>
    <td>James W. Swihart</td>
    <td>Officer in Charge, U. K., Ireland and British West Indies Affairs, Department of State</td>
  </tr>
  <tr>
    <td>J. W. F. Treadwell</td>
    <td>National Vice President, E-SU of the U.S.</td>
  </tr>
  <tr>
    <td>Jacob Viner</td>
    <td>Professor of Economics, Princeton University</td>
  </tr>
  <tr>
    <td>Howard Whidden</td>
    <td>Foreign Editor, Business Week</td>
  </tr>
</table>

6

<table><tr><td>Jean Wilson</td><td>Professor of History, Smith College (representing Council on British Studies)</td></tr><tr><td>Howard Wriggins</td><td>Chief, Foreign Affairs Division and Legislative Reference Service, Library of Congress.</td></tr></table>

Note:

In the above list the participants are identified as of October, 1960, when the conference was held.

7

PROGRAM

Conference opened by the Chairman, Frank Altschul, at E-SU National Headquarters, New York City

Welcome by Brigadier J. W. F. Treadwell, National Vice-President, English-Speaking Union

First Panel: Political Relations, Dr. Arnold Wolfers, leader; "How the political alliance between the U. S. and the U. K. can be strengthened with full appreciation of the independent and sometimes conflicting interests and obligations of the two countries in many parts of the world"

Luncheon, Lotos Club

Speaker: Professor Milton Katz

Second Panel: Military Relations, Dr. Henry Kissinger, leader; "How a joint U. S.-U. K. defense policy can best be developed and implemented in view of recent disclosures concerning Soviet advances in nuclear weapons"

Third Panel: Economic Relations, Dr. Richard Gardner, leader; "Future relationship between the U. S. and U. K. in the three areas of trade, finance and aid to less-developed countries"

Cocktails and dinner, Lotos Club

Welcome by the Honorable Arthur H. Dean, National Chairman of the English-Speaking Union

Speaker: The Honorable Ernest A. Gross

* * * *

MORNING SESSION - POLITICAL RELATIONS

9

CURRENT PROBLEMS IN ANGLO-AMERICAN
POLITICAL RELATIONS

How the political alliance between the United States and the United Kingdom can be strengthened with full appreciation of the independent and sometimes conflicting interests and obligations of the two countries in many parts of the world.

Discussion Leader

ARNOLD O. WOLFERS

Director, Washington Center of Foreign Policy Research,
Johns Hopkins University

Advance Paper

by Dr. Wolfers: Questions for Discussion.

Political relations between the United States and Great Britain have been so friendly during the last 20 years -- except for the short-lived rift over Suez in 1956 -- that it may seem almost superfluous to make them a subject of discussion. Have not the close ties between the two English-speaking countries been one of the most significant and encouraging features of the post World War II international scene? Yet, while a degree of identity of interest, thought and action exists between them that is rare among major powers, tension between them has not been absent. Most frequently it has arisen over matters of an economic or military nature which it will be more useful to discuss in connection with the economic and military relations between the United States and Britain; some serious friction has its root, however, in real or imagined differences less about political goals than about the methods by which to pursue common political objectives. After all, if there were nothing but harmony and unity, it could not be explained why anxiety should flare up from time to time among people in Britain over a possible return of the United States to isolationism, and among people in America over a possible future swing of Britain toward neutralism.

Five sources of actual or potential political tension in Anglo-American relations would seem to deserve attention at this time. They will be briefly identified here not with a view to suggesting the best way of eliminating them or of mitigating their impact but for the purpose of raising questions that may be suitable for discussion:

1. Responses to the Sino-Soviet Threat

All British governments since the beginning of the Cold War have agreed with the United States that the Sino-Soviet threat constitutes the major issue confronting their country. However, the respective policies of the two countries toward the Cold War are not identical.

10 Morning Session-Political Relations

A large section of the British public places higher priority on the avoidance of nuclear war than on meeting the Sino-Soviet threat. Moreover, the British government is less inclined than the American to subordinate all other foreign issues to the requirements of the Cold War or to ascribe to the Communists all difficulties it encounters abroad.

As a result, while U. S. Cold War policy places emphasis on firmness and on the attainment of positions of strength sufficient to assure deterrence of Sino-Soviet aggression, Britain is more concerned about mitigating the East-West struggle and preventing power competition with the Soviets and distrust of Soviet intentions from becoming obstacles to fruitful negotiation and compromise. The issue is clearly illustrated by the difference in attitude toward Summit conferences.

If this is found to be the case, the following questions might be raised:

a. How important is it that the approach of the two countries to the Cold War be identical? Cannot some advantage be gained from having Britain serve as spokesman for the many nations and people in the Free World who place their hope in relaxation of tension and negotiation while the United States guards the Free World against the pitfalls of unilateral concessions and of military weakness?

b. Is it necessary or wise for the United States to insist that all of the troubles besetting the Free World originate with the Communists, whether the trouble be in Japan or Indonesia, in Egypt, Cuba or the Congo, when Britain and many other allied countries consider such simplification dangerously misleading and a cause of intensified difficulties in the uncommitted parts of the world?

c. Could not open clashes over the way to deal with the Soviets--for instance in such matters as West Berlin--be avoided, or rendered less dangerous for Western unity, if there were more continuous common and anticipatory study by the two governments and peoples of impending East-West crises? If so, how could one go about creating appropriate channels for such study?

2. <u>Relations with Red China</u>

The treatment to be accorded Red China is obviously tied in with the Cold War; yet in many ways it is a separate issue in Anglo-American relations. Here, more than anywhere else, Britain and the United States have pursued different policies, partly, it may be assumed, owing to their special positions and interests in Hong Kong and Taiwan respectively, but partly because of the greater British inclination towards accommodation. So far, discord over their China policies does not seem to have had serious adverse effects on the two countries and the West; even if there had been a common policy either of recognition or non-recognition of the Peiping government, either of extension of trade or of restriction of trade with Red China, it is unlikely that the Red Chinese threat would have been diminished or the Sino-Soviet alliance destroyed. But looking toward the future some questions such as the following suggest themselves:

In view of the fact that the issue of recognition and of the admission of Red China to the United Nations continues to be acute, should not an attempt be made

Morning Session-Political Relations 11

to work out a concerted Anglo-American position? What, if any, concessions should the United States make to bring about agreement with Britain and what British concessions might it ask in return?

In view of the fact that a new crisis may arise any day over Matsu and Quemoy, an issue over which public opinion, if not the governments, in Britain and the United States is seriously divided, is some give and take between the two countries conceivable, for instance in the form of a British commitment to assist in the defense of Taiwan against direct attack on the island, in return for a modification of the U. S. attitude towards the off-shore islands?

### 3. The Problem of Germany

There has been comparatively little public awareness of Anglo-American differences over Germany. Yet, the German problem has at least intermittently constituted an irritant in Anglo-American relations. For understandable reasons, the British have been far less willing than people in this country to forget the bitter experience they have had with Germany twice in the course of this century. As a result, the unqualified support and encouragement the United States has given to the enhancement of West German power and the confidence it has placed in the reliability of West Germany as an ally have caused serious misgivings in Britain. If Churchill disapproved of the "one-track mind" approach to the Hitlerian danger that characterized U. S. policy to the very last days of the war, many Britishers today deplore a similar approach to the Soviet dangers, an approach that now precludes any concern with possible future difficulties with Germany.

Here the following questions might be posed:

Because the British fear a united Germany naturally even more than they fear a West German state growing in industrial capacity and military might, could it be made clear to them that the U. S. advocacy of German unification does not foreshadow action to bring it about, but is necessary to prevent the Soviet Union from assuming the popular role of champion of German unity?

Because the integration of West Germany into a "little Europe," composed of only six countries, appears not to allay British fears of eventual German predominance in Europe or of German adventurism, should not the United States make every effort to promote a Europe of the kind in which Britain would feel able to take her place?

Could not the fear that Germany might entangle the West in conflict with the East, through conflict arising along the borders between East and West Germany -- a fear that has prompted some of the British disengagement proposals -- be allayed if the NATO forces in Germany were so regrouped that British and American forces would control the area adjoining East Germany?

### 4. European Integration

The integration or union of countries in Western Europe has itself become a bone of contention between the United States and Britain. The dispute has not arisen out of the conflicting economic interests; the United States and Britain

12 Morning Session-Political Relations

[L]

are both likely to suffer commercially from the establishment of the Common Market and its external tariff, though Britain will be hit much more seriously. But while the United States is willing to pay a high price for what it expects to be the great advantages of political union in Western Europe, the British are apprehensive, on political as well as economic grounds, of the development of the Europe of the Six which is receiving such strong backing by the United States. Whereas the United States places great faith in the benefits of supranational ties among West European countries, as a means both of integrating Germany into the West and of creating a stronger bulwark against the East, the British, prevented by their interests and traditions from accepting supranational forms of federation, focus on the risks of a Europe split into two blocs and on a Little Europe vying for a superpower position under either French or German hegemony.

If it is agreed that the controversy over the future of Europe could seriously impair Anglo-American cooperation, some questions such as the following suggest themselves for discussion:

* Is it preferable, from the point of view of the United States, that countries in Western Europe aim at a tight union on the model of the United States of America or that they content themselves with whatever looser form of integration will join Britain with them? Would Britain be likely to play a useful role as mediator and balancer among the continental states or would her participation threaten the close ties between France and Germany?

* Are not the British fears, as well as the American hopes, of an early emergence of a "United States of Europe" unrealistic in the face of President de Gaulle's recent statements indicating his decision in favor of European bonds modeled far less on the United States of America than on the British Commonwealth? Since part of Britain's reluctance to accede to a united Europe stems from her desire not to forfeit her privileged position as America's foremost ally, could not the United States allay this fear of Britain's that she might lose her position were she to participate in European integration?

## 5. The Colonial and Post-colonial Issue

For a long period of time the worst stumbling block on the road to political harmony between the two English-speaking countries was their conflicting views concerning "colonialism." But in recent times this source of discord has virtually disappeared, although during the Anglo-Iranian and Suez crises the British were suspected in some American quarters of persistent colonial aspirations. Actually Britain has pushed ahead with such speed in granting self-government to erstwhile colonies that other colonial powers have been dismayed and placed under great pressure by her actions. While still troubled in some areas such as in the Middle East by deep-seated native resentment and hard put to solve her problems in East Africa, Britain's position in the uncommitted and underdeveloped parts of the world is no longer very different from that which the United States occupies in Central and South America. Therefore, conditions favor a common outlook towards the emerging new nations and the national and social movements that account for the character and orientation of their regimes.

If this is so, one may ask oneself:

* Is it not desirable that Britain and the United States attempt together to

Morning Session-Political Relations 13

map out a way in which they can best deal with those areas of acute or most active turmoil in which one of them has a predominant stake? Would it be wise for them to agree to keep hands off of such areas unless asked to intervene by the country enjoying an established primary interest or should they attempt instead to reach agreement in advance that an offer of good offices or mediation by the other will be regarded as a friendly act?

Would the common interest of the two countries in a future development of the new states that is compatible with the ideals and institutions of the West, be served by agreement on the policy to pursue towards the United Nations and its pacificatory role in the Afro-Asian world and what should this policy be?

* * * * *

Commentary

Presented at the Conference

by Dr. Wolfers

I'm a little embarrassed because I distributed to you a brief paper, which politely I must assume you have all read, and therefore I don't want to repeat myself. But I did put down there some of the ideas that came to my mind as a means of provoking a discussion.

Now there's nothing for me to do but to try to be more provocative in a few opening remarks in which I want to bring out at least some of the points that seem to me to need particular attention.

I shall repeat again that, of course, Anglo-American political relations are surely way down on our list of worries today. If we had nothing else to worry about, we could be very serene. And yet -- maybe I'm the worrying kind -- I am worried. I think we are facing a situation in which there will be crisis after crisis, and in any such crisis facing the West it's not a question of whether the United States and Great Britain will be on different sides -- we'll be on the same side -- but even the slightest doubt in people's minds about the unity of these two English-speaking countries is enough to cause a great deal of confusion and may actually mean failure instead of success.

And there are reasons to believe that there may be something less than complete consensus or complete unity between the two countries when we move on to, let us say, the next Berlin crisis, or the next "Summit-or-not-Summit" crisis -- the debate on whether there should be one or not -- and as we go further into these problems we see that the same kind of possible cleavages may develop with regard to other questions.

I said that there is not the slightest chance of a real rift. Some people in Britain, who fear that the United States, once it has no further need for foreign bases, will turn isolationist, misunderstand the reason that prompted the United States to break with isolationism.

14 Morning Session-Political Relations

This break came about not because this country needed the support of allies to protect its homeland, or North America; there was no direct threat to North America at the time when NATO was established. The reason why the United States entered into alliances and why the American people today are as firmly behind the alliances as they ever were is because the threat to our overseas friends and allies, the free countries overseas, is regarded as an indirect threat to the United States, and rightly so.

We are now facing not only the problem of deterring an attack on the United States, which is now possible, but also the older threat of Sino-Soviet expansion overseas at the expense of other countries. It is here that we are asking other peoples to face up to a common danger collectively with us.

In a way, we've been trying to prompt them to see a danger which is primarily directed against them, but which we realize is just as much directed against us. Because if this expansion should take place, the United States would find itself isolated in a sea of Communism and would have great trouble to survive as an independent free country.

On the other hand, if Englishmen have no reason to be concerned about future American isolationism, we in turn have no reason to be seriously concerned about whether Britain will put herself into the hands of a neutralist government, committed to disarmed neutrality. I can't imagine Britain reaching a point -- even though there are currents in that direction, which are strong in the Labour Party -- where it would decide to become a kind of Denmark, a small country on the fringe of Europe and at the mercy of a great power on its borders. This would represent an extreme situation. Though unforeseeable events might lead there, Britain today is as remote from that kind of attitude as we are remote from a return to isolationism.

However, if we look into the attitude of the two countries with regard to the Cold War -- to start with the most important topic -- there are differences which I think had better be brought into the open rather than glossed over.

When Lord Home, the new British Foreign Secretary, spoke recently, I thought he had knocked my subject out of my hands. He spoke about the constant threat of Soviet enmity, he spoke about the need of containing Communism by military means, he said we shouldn't give an inch, so it looked as if he had accepted wholeheartedly what one might call the American Doctrine -- that he had agreed with us that any kind of concession carries with it the danger of further concessions, that there is nowhere to stop, that every concession will only be interpreted as weakness. This was clearly the "anti-Munich" outlook which has been so strongly held in this country.

But Prime Minister Macmillan came to my help the next day and used the terms that I think more exactly expressed the basic concept of the British. He started out by saying that we must dampen the controversy with the Soviets. He said we must negotiate with the Russians on Berlin. He is said to have told Khrushchev that the Berlin situation must be solved by negotiation, not by force. He spoke about an agreement, which apparently he mentioned to Khrushchev, which will do justice to the reasonable demands of the German people.

[LC]

Morning Session-Political Relations 15

This is not a *status quo* position. This doesn't mean *status quo* -- or else. It means that only negotiation, only peaceful accommodation, is acceptable, but it leaves the door open for some adjustment.

Now some people are quick to call this softness -- hoping that the British will wake up and get more tough. We like to think in terms of toughness versus softness, firmness versus flexibility, as it is sometimes called. But this doesn't really explain the difference. I can't imagine that the British have really turned soft, but they do look at the world somewhat differently than we do.

They seem to assume that even when facing a revolutionary and dogmatic regime that insists on expanding its force until it dominates the world, that even in the face of a country that is bent upon getting more -- as we and the British assume the Communist bloc is -- that even here the attitude to take is not one of simply standing pat. This leads nowhere they feel and in fact carries with it the gravest risks.

The British attitude with regard to very serious crises, which they have had to face again and again in Africa, in Asia, and elsewhere, has usually been that if, in the face of the new power situation, they are not strong enough to solve the problem by force -- as they thought they were in the Suez crisis -- they have got to find ways of accommodating themselves to the new situation.

Churchill during the war was quite ready to stop the Russians if he could, at a time when we were not ready, but once he saw that there was no way of doing it because the United States wouldn't follow his lead, he was the first to suggest that we make what we label "deals" with Stalin -- "deals" on the Balkans; "deals" on Eastern Europe. This British attitude of recognizing facts that have been established, and being prepared to face up to them can be seen today, e. g. in the case of Red China. Similarly, the existence of East Germany is one of these facts which we have not got the power to change and, therefore, demands of us that we make our peace with it and try to get something out of such recognition by negotiating and reaching some form of compromise, some give and take.

This, I think, is going to be the prevailing British attitude, and we had better face up to the difficulties arising out of it when we go into conferences with the British and the Russians. As we move toward new negotiations, we and the British may have to reconcile our attitudes. After all there is very little chance that we could stand firm -- insist on the *status quo* or its improvement to our advantage -- if we did not have the backing of Britain.

The British, by the way, are not alone in the attitude just mentioned. It represents a very strong current throughout the Free World, the prevailing current perhaps, except for the position taken by such allied leaders and their supporters as Chiang Kai-shek, Adenauer, or de Gaulle. And even in the case of those who insist on maintaining the *status quo* in a particular situation, it will be found as a rule that what they mean is the *status quo* only inasmuch as it is of particular interest to their country.

Thus, the Germans who insist on not giving an inch in Berlin are tolerant about making concessions in the Far East and, as far as I could judge, Chiang Kai-chek has never come out as staunchly in favor of the *status quo* in Berlin

16 Morning Session-Political Relations

as he has in favor of the *status quo* in Quemoy and Matsu.

This is understandable. These countries have their local dangers and problems which involve them completely. The United States, on the other hand, as I suggested in something I wrote elsewhere, is at the hub of the wheel and thus at the end of the spokes that connect with every crisis area in the world. It is sensitive to anything that happens anywhere because it has a global responsibility, while its allies, by and large, are absorbed by their local responsibilities.

Perhaps this is drawing the contrast too sharply. This country, too, is more concerned with Cuba than with events in East Africa, let us say. One cannot help, even in a global framework, even in a collective defense system, feeling more hotly and passionately about threats and changes at one spot than at some other.

However, the United States bears a special responsibility for the balance of world power and for the freedom of the Free World. It has reason therefore to take the view that every trouble spot is almost equal in importance to every other and that concession, anywhere, may affect conditions everywhere. Also, because the United States has made so many commitments, it dare not fail to live up to any commitment for fear of jeopardizing all of them. It may be fortunate that we did not commit ourselves one hundred per cent to the defense of Laos because if we failed to protect Laos from a Communist take-over we would then be creating a dangerous precedent.

From one end of the globe to the other we have commitments, most of which the British do not share, and, therefore, their greater "flexibility" is understandable. They are not violating any pledges if they suggest changes here or there, and they don't feel solemnly committed to the *status quo* as it happens to have developed rather accidentally at the close of the war and the immediate post-war period.

I am not going to suggest how we can overcome this difficulty with the British. I would raise the question whether it might not be to our advantage to agree to disagree on this point, and maybe on other points too. Let the British be the leaders in the Free World of those who believe that some way out must always be found by probing for chances of adjustment, accommodation, change, compromise. Let us be the guardians of the policy of firmness, insisting that one can never become effective in any negotiations unless one has sufficient power. Also let us do more about having sufficient power.

Above all, let us not become enraged every time the British play their particular role and hope that they too will not become enraged, and call us provocative and hysterical every time we place the emphasis on our role.

Perhaps the Chinese and the Russians are playing this game of divided roles too, and we don't find it particularly convenient if they do. It keeps us guessing where we stand. There may be some advantage if they don't know where they stand, and have to deal with two great countries that emphasize different aspects of a problem.

While there's always need for firmness in dealing with an enemy, I sympathize with the British when they insist that imaginative and constructive ideas

[L]

Morning Session-Political Relations 17

can frequently show ways by which to so change the *status quo* that the situation will become a little more stable or a little more promising.

But now to turn to another major problem. I won't go into the Red Chinese one, where the lack of agreement with the British is obvious. The difference here arises from the fact that the British accept what has happened while we believe that we can improve the situation by not accepting what is and waiting for what someday might become. This has its advantages no doubt but it also has very definite disadvantages in the meantime.

Let me talk about Europe for a moment, if I may. Here I think we are at the real nerve center of Britain. Here we are in their front or back yard, whatever you want to call it. If we try to manipulate the European situation--I'm sure nobody doubts that we do--we are manipulating a situation which in every respect is of vital concern to the British. What we do to change the complexion of Western Europe must necessarily affect the British, and it so happens that much of what we are doing and have been doing runs counter to deep convictions of the British. And, as they see it, it runs counter to their most vital commercial and political interests.

We are aiming, as a kind of long-run goal, at a United States of Europe. Call it European integration, federation, or political union if you prefer. We are thinking in terms of some supranational unit.

The basic idea which led us to encourage the European integration movement was the idea of getting away from European nationalisms, and substituting for a German and Italian and French nationalism some kind of European nationalism. The "Europeanists" on the other side, of course, were gratified by the support they received from the United States.

The British, as you know, feel they cannot join any such federation. They haven't even federated with the Commonwealth--with their own dominions. They are completely opposed to the idea of supranational organization that could control, politically, the major decisions of their country. Also, they believe that, quite aside from ideological and traditionalist reasons, they could not join any such federation because they would lose their special position in the world, their close relationship with the United States, their special ties with their Commonwealth and Empire.

While they are liquidating their Empire more rapidly than anybody had expected, their overseas interests, their overseas trade, their overseas investments, all of their opportunities which through the centuries they have built up and don't want to give up completely, all point to openness toward the world rather than to any exclusive link with one area such as the federation would require.

While unable to join, they also lack confidence in a European federation that would be established without them. They fear it not so much because of economic competition--though their trade would suffer immensely from an external tariff wall that was modeled on French protectionist ideas--but because they know that such a Europe will have interests different from British interests. It would be either dominated by France, and take a special view on North African and African affairs generally that might run counter to British interests, or it will be more

18 Morning Session-Political Relations

under German dominance and take a different line, e. g. on the unification of Germany, than would suit the British. This scares them all the more because they know that a European federation would be potentially much stronger than they.

So when the United States seems to be the chief champion of the very kind of integration which they dread, when the United States seems to back France even in matters of a commercial nature, though they hurt the United States as well as Britain, all for the sake of political union on the Continent, the British naturally react rather bitterly. And we may act sour when the British seem to be sabotaging the idea on which we have pinned such great hopes.

Again, I'm not going to suggest that there is any way out, or an easy way out, of this dilemma--which I think is quite serious, because the cleavage between the Six and the Seven is leading to friction, particularly between France and England. I say there's no easy way out, but I would like to ask--are we not exaggerating this European integration idea? Is there any chance, any likelihood that any kind of supranational political integration will take place in the foreseeable future, given the openly avowed position that President de Gaulle has taken? Hasn't he made it clear, beyond any doubt, that in fact he agrees with the British that national sovereignty must prevail? All he is asking for, in vague and mys- tical terms, is in fact a kind of European Commonwealth.

It is amazing to what extent de Gaulle, even in his attitude toward the French community, has been affected by what used to be thought of as a purely Anglo- Saxon, non-French kind of thinking. Instead of advocating a genuine federation with central government, he speaks of loose ties and of a Europe tied together merely by conferences between sovereign governments, a kind of concert of Europe. If we espoused this idea too, there would be no reason why the British could not join, provided the French are sincere in saying that they are leaving the door open for Britain.

However tightly France and Germany remained linked with each other, Western Europe, for the foreseeable future or the period of the Cold War, would be tied together as a kind of Commonwealth or concert of powers. If we agreed, I think we would remove the main political difficulty and maybe then we would also face up to what surely will be discussed this afternoon, the question of whether we cannot be helpful in bringing the Six and the Seven closer together economically, mainly, I presume, by means of a liberalization of trade between them.

I think we would be removing one of the more serious obstacles to Anglo- American unity if we could find some way of bringing our European policy closer in line with the British.

I don't think I need to go into the other points I raised. I discussed the colonial or post-colonial problem. There's little to say there because actually there is a surprising amount of agreement today between the British and ourselves. They still have colonies. Their withdrawal from the remaining colonies is likely to be slow. But they can point to us now and say, "You've got your own 'colonial' problems in Central and South America. At least a lot of people there insist on calling you an imperialist or colonial power and you are finding withdrawal just as painful and as difficult as we. You would also like this to be a slow and peace-

Morning Session-Political Relations 19

ful evolution rather than the unruly, destructive kind of thing that these revolu-
tions are, whether in the Congo or in Cuba, so that we are close together."

If there is any difference, I think it is more a question of whether when it
comes to African affairs, we shouldn't grant the British the right to lead. There
it is they who are deeply involved, especially in East Africa, where they're
pinched between the extremism of the whites who are backed by South Africa and
the extremism of the colored people who are supported by developments in the
Congo. This is for them a very acute and a very delicate situation, and we are
faced with a similar situation in Cuba.

Is it better to say we will give you the lead in Africa and you let us have our
say in the Western Hemisphere, or is it more desirable to agree that if they
have too much trouble in Africa we will try to mediate? Should we try particular-
ly in the United Nations to find ways out that they can accept, and maybe in return
accept the idea that despite the Monroe Doctrine we will be willing and glad if
the British sometimes take a hand in trying to mediate quarrels which we have
with countries in this hemisphere? I think both these solutions are conceivable
and it might be worth while for us to discuss them.

* * * * *

Discussion by Conference Members
Following Dr. Wolfers' Commentary

The discussion of political relations between the United States and the United
Kingdom centered around the proposal advanced by Dr. Wolfers that the two
allies should recognize differences between them and agree on a division of roles
in the international sphere. As Dr. Wolfers had suggested that this division might
be twofold -- both functional and geographical -- participants considered whether,
on the one hand, Britain should take the lead in searching for solutions by adjust-
ment, accommodation, change or compromise while the United States stood firm
or whether, on the other hand, Britain should be given the lead in Africa and
parts of Asia while the United States had its own way in the Western Hemisphere.

The first proposition, described by one individual as "Britain negotiating from American strength," drew a number of comments. One participant suggested that, although it might be very useful to have differences of opinion within the alliance, it would not be wise to tie the differences to adjectives such as "accommodating" and "firm" without describing "the reality to which these adjectives refer." In thus calling for specifics rather than generalities, he pointed out that "on any issue on which there is likely to be disagreement, there must be some specific disagreement to which these adjectives refer, and we ought to be able to express what firmness means and what accommodation means in terms of a rather complete program." For example, he suggested that discussion should begin with a specific problem such as that of Germany. The United Kingdom and the United States would then resolve their own positions and compare them. Dr. Wolfers agreed that there was an inherent difficulty in applying "over-all labels," citing the reversal of the roles of accommodation and firmness in the Suez crisis. But, he argued, "There is a continuous search for a mediator in every situation. It seems to be an inevitable consequence of international

20 Morning Session - Political Relations

conflict. There is always one country that will try to prevent a clash between others."

A discussion of the 1954 negotiations over Southeast Asia at Geneva revealed other problems of operating an alliance in which themembers take different roles. One observer termed these negotiations a "classic example of United States rigidity in contrast to British willingness to seek accommodation." He believed that, although it could not have been revealed to the public, "this was in effect a kind of classical diplomatic ballet in which one partner, with a clear understanding, went out a little bit ahead of the other in order to find a compromise which was probably the best that could be achieved." He admitted, however, that because of the effects on public opinion in the two countries, this maneuver "left a rather bad feeling for a time on both sides." Another participant, who had been personally involved in these negotiations, disagreed that there had been a "planned" difference of opinion between the British and American leaders at Geneva and said he feared that "Mr. Eden and Mr. Dulles were each deeply convinced that he had been double-crossed by the other." He concluded that the Geneva episode was "as far from a planned diplomatic ballet as anything could be."

The conference also questioned the meaning of "accommodation" as applied to British foreign policy. Making a distinction between traditional accommodation in one direction only and reciprocal accommodation, in which hostile groups make bargains so each side gets something, one observer asked in which category Dr. Wolfer's "accommodation" fell. Dr. Wolfers replied that he thought the British were seeking something in return for concessions. As an example, he pointed out that "in the case of Germany and Berlin the British have been trying to find something which would give the Russians some satisfaction--maybe recognition of East Germany -- in return for, let us say, new guarantees of access to Berlin." He also suggested that the United Kingdom might still believe that bargaining was possible with Red China. In support of Dr. Wolfers' view, another observer of the British scene noted the existence of a tendency in the U. S. to assume that all Russian proposals are to the West's disadvantage and that any agreement to a Russian proposal gives the Soviets an advantage. "The Russians may think in a given instance that one of their proposals is more to their advantage than ours, but they could be mistaken; furthermore, some of their proposals may be to our mutual advantage," he argued.

Continuing the discussion of an "agreement to disagree," it was pointed out that it also involved consideration of public opinion in the two countries. Dr. Wolfers admitted that an open disagreement was not the solution because of the need to present a common front "both with regard to the Soviets and our own people." Another observer pointed up the essential difference between the United Kingdom and the United States with regard to public opinion, explaining that "in the United States both of our major parties are united on our international approach, but now the two British parties are disunited on this question." Although the conference questioned whether the Americans were "completely addicted" to the policy of firmness, there appeared to be general agreement with Dr. Wolfers that the British government was under pressures which the American government did not have to face. There was disagreement as to the strength of these pressures in Britain, however. One individual maintained that in Britain there was a "massive turning within the Labour Party to isolationist, unilateralist, pacifist, one-sided disarmament policy." Another disagreed, pointing out that an

Morning Session-Political Relations 21

examination of the constitutional machinery of the Labour Party would show "that these apparently popular movements which appear at the annual party conferences are in fact the result of a very small, very energetic minority." A third observer agreed that the movement was not as strong as had been suggested originally, but estimated that 15 to 20 per cent of the British public supported unilateral disarmament.

The conference also disagreed as to the effect of these pressures on the British government. One argument was that the split in the Labour party relied on the Macmillan government of effective opposition. "It means that either the Labour Party will go to the country on a unilateralist ticket at the next election, in which case it will be left with about seventy seats in the House of Commons, or it will split in two, in which case it would undoubtedly mean Conservative government for another ten years," an observer asserted. While Dr. Wolfers also noted that the split in the Labour Party might have eased the pressure on the government, he added that there was still reason to be afraid that the Conservative government might falter in the face of strong public demands for accommodation. He suggested that the United States should bring counter pressure to bear on the British government to prevent it from being at the mercy of such forces, but also that the United States should not exaggerate its pressure. "We ought at least to go along where they have reasonable arguments to show that concessions would not be dangerous or would be, in fact, beneficial to the West. If we do so, they can better stand up to the forces within their own country and in the Commonwealth."

Finally, one participant noted that an agreed division of functional roles in the alliance would call for "greater unity rather than less between the two partners." Such a complicated maneuver would require "a most elaborate system of mutually understood signals between the two capitals and the two peoples." If the United Kingdom and the United States could work together this closely, he argued, the maneuver would be very useful. Thus, expanding on Dr. Wolfers' proposal, he suggested that because the United States could not take the initiative and sound out possibilities without giving the other side an advantage, it would be useful to have someone else do the probing for a solution. Specifically, he pointed out that the technique might be useful in arranging a "deal" over Red China's admission to the United Nations. "This is a major diplomatic undertaking. It requires a concentration and a versatility of diplomatic resources to bring this about. Therefore we had better get moving quickly and get everybody assigned to his proper position on the scene."

Moving on to Dr. Wolfers' proposal that the two Atlantic allies might agree to spheres of influence, the conference was able to find both advantages and disadvantages in such an arrangement. Among those who were worried about this proposition was one who suggested that it was the "wrong way to approach the problem." He explained that the United States and the United Kingdom "are so mixed up together and have such joint responsibilities in the underdeveloped world in Asia, Africa and Latin America that it is essential that we hammer out a common policy." He argued that joint objectives would not be achieved by giving the British the lead in Asia and Africa or by keeping countries other than the United States out of Latin America.

Getting down to specific current problems, several individuals argued that

22 Morning Session-Political Relations

it would be to the advantage of the United States to dilute the American influence in Latin America. "One of the troubles in Latin America is that there is too much exclusive American presence," one of them said. Therefore, he concluded that "it would be all to the good if there were more British, German, French and Japanese and other foreign presences there from various advanced free countries."

Two participants expressed support for current British policies in East and Central Africa, but did not indicate that this meant the United States should keep out. As one of them said, "It will be necessary to have an active American presence all over the African continent, including the parts that are not yet independent but will be, on some basis or other, probably within a decade." The other participant was more specific, citing as "a very good thing" the way American private organizations had "taken up" Tom Mboya and brought his students to the United States. "This ensured that even if there had been an ultimate breach between Britain and the nationalist leaders in Africa, there would still have been among the nationalist leaders reasons for gratitude and reasons for connections with one of the Western allies." He also pointed to the fact that American interests behind the large copper firms in the Federation of the Rhodesias and Nyasaland had been establishing relations with African nationalist leaders like Kenneth Kamda in Northern Rhodesia and disentangling themselves from the white-settler federal government. He concluded, therefore, that non-governmental American organizations had contributed to the pressures directed toward what he believed to be the correct solutions for African problems.

This participant drew a line between the action of private organizations and the American government, however. In the case of Africa, he noted that the United States government had allowed the United Kingdom government to take the lead and that there had, "rightly," been no government intervention. Later, Dr. Wolfers underscored this point. He stressed that the United States would not "want any foreign government, British or other, to espouse causes that we do not approve of in Latin America." As an example, he suggested that the United States would not have liked to see the British government sponsor Castro at a time when the United States was opposed to him. On the same point and in reply to a question asked earlier concerning the spheres-of-influence approach and Algeria, Dr. Wolfers pointed out that the United States had been "very discreet" in its pressure on France over Algeria. He maintained that open interference might have made it impossible to continue cooperation with France.

The conference discussed this same problem of geographical division again when it considered whether the United States should deal with the "New Commonwealth" through London. One observer pointed out that if it did not deal exclusively through London, many opportunities would be open to the United States. "There is a clear virtue in the West providing a multiplicity of contact with the New Commonwealth and a multiplicity of functions which we as a non-colonial administrator in the area can perform but which the British cannot," he explained. On the other hand, he felt that this was only one side of the problem. "The real question is: how do we augment United States presence in the New Commonwealth and induce dynamic economic assistance and educational assistance policies without disrupting whatever fruitful British relationships may already exist in the area? Often in fact we do become competitive in the field, however much it is perceived from a distance that we are supplementing one another's efforts." His solution, which he admitted to be tentative, would be for the two countries to have "a great deal closer mutual consultation on our concerted approach to the New Common-

[L4]

Morning Session-Political Relations 23

wealth." "In that way," he explained, "we will be able to profit from the virtues of multiplicity while not standing in the way of whatever relationships already exist."

Outside this general discussion of a division of diplomatic roles between the United Kingdom and the United States, the conference concentrated on specific points of friction between the two and on common problems which the two allies would have to face together.

One participant observed that a "whole shopping list of disputes between Britain and America" had been masked by the Cold War. He pointed to the British resentment of "the extraterritoriality of American institutions and practices." Examples of the latter effect which aroused the British included "the fact that Britain makes an agreement regarding overflights and then finds that this agreement is subject to all kinds of judicial procedures under the Civil Aeronautics Board" and "the fact that the question of quotas on British woolen goods imports into the United States is subject to interminable delay through the Tariff Commission." Indeed, this individual complained that the Executive branch of the United States Government, when dealing with allies, often took the position of an "impartial" mediator between their governments, on the one hand, and the United States Congress, on the other.

Agreeing that the United States and the United Kingdom were not in full agreement on everything, another individual added that "one of the things that has characterized our relations over the last many decades has been that there have always been more points of difference with the British than with whoever it was that we regarded as our chief opponent." He suggested, however, that "it may indeed be that the capacity to have a full agenda of differences, to be able to see minor differences as of some importance, is always evidence of fundamentally good relations in major matters."

When the conference turned to some of the specific problems with which both the United Kingdom and the United States had to deal, it considered supranationality, the Common Market, the Chinese offshore islands, Red China and the United Nations, general problems in the United Nations, and deterrence.

**On supranationality,** one observer noted "the American conviction of the value of supranationality for everybody except themselves." While the United States supported the movement toward the United States of Europe, "anything which even remotely suggests generalizing this supranational trend, even as mildly as provided in the General Agreement on Tariffs and Trade, produces an adverse reaction in the American Congress." Continuing, he commented that the Bricker Amendment controversy had "cast a great deal of doubt" on the United States commitment to international agreements at the very time when the United States was pressing other countries to engage in arrangements "creating a new frontier in international relationships." Later, Mr. Wolfers agreed with this point. He added, however, that other nations were asserting their sovereignty to impress the United States with the fact that, when it came to matters which they regarded as vital, they wanted the last word. "The more we recognize this, the less friction we will have with countries that are regaining their pride and trying to regain some of their lost prestige."

24 Morning Session-Political Relations

On the Common Market, one participant claimed that Dr. Wolfers had overemphasized the "contrast between the supranational federation aspirations of the Europeanists on the one hand and the absolute unwillingness of the British to surrender sovereignty on the other." He doubted that, even without de Gaulle, the Common Market would have evolved as clearly in the direction of a tight federation as some of its sponsors thought. In addition, he pointed out that the British had become "much more fluid" in their position, recognizing that "no country in the world is really sovereign any more anyway." He concluded that "the institutional side of the European community is now by no means the principal obstacle to British participation, at least from the British point of view." Dr. Wolfers agreed that there might not be as much federationism on the Continent as some people believed and that Britain and the Six were closer together about practicalities. He felt that "it is more their projection into the future that seems to be repelling the British, particularly because they think that we want to press them into a federation."

On this same question, another observer asked whether the United States policy of supporting both European federation and German reunification was not self-contradictory, whether in fact the two aims were not alternatives rather than objectives to be achieved simultaneously. He suggested that the Russians would never agree that the whole of Germany belong to some federation which was in an alliance with the United States. "Therefore, the idea of a United States of Europe federation which includes Germany, or in its first stages Western Germany, is surely incompatible with the objective of the reunification of Germany." He argued that the two Atlantic allies should agree which of these two policies should have priority.

On the Chinese offshore islands, one individual suggested that the United States might extricate itself from this "nasty predicament" without being called a "paper tiger" by getting a British commitment to defend Taiwan from a direct attack, in return for which the United States would commit itself not to defend Quemoy and Matsu. He commented that the United States would be in an "extremely awkward position" if the islands were attacked and it either did or did not defend them. Therefore, if the United States could make the agreement he had suggested with Britain, it could say, "Well, now, look, we have said all along that we are not interested in these islands except for the purpose of the defense of Taiwan. Now we have gotten something much better in return for these two pieces of rock, namely an agreement by one of our major allies to defend Formosa."

On Red China and the United Nations, two participants asserted that at the next session of the General Assembly there would be a vote to seat Communist China. One of them explained that this would automatically exclude Formosa from a seat in the General Assembly but would not necessarily result in a change in the Security Council. In the latter organ, he pointed out, there would probably be a test on whether a question of credentials could be vetoed. Also, he posed the question of what would happen if the Nationalist Chinese delegate died or left the Security Council for some other reason. "It would be difficult under these circumstances to get seven procedural votes to approve the credentials of his successor. So it is possible that, on a technical question, this seat would go vacant in the Security Council."

LJ

Morning Session-Political Relations 25

[A]

This speaker suggested that, in any event, the prospects for the United States on the issue of Chinese representation were not very attractive. "The United States, if it insists on total victory, invites total defeat, whether immediately or in a longer period," he explained. His solution was to be realistic about the problem:

First, this is not just a technical or procedural question. It is not a question of credentials. It is a major political issue and ought to be treated as such. We should ask our friends to give up their purely technical positions in order to deal with it in terms of the importance which it deserves.

Second, this is not just a case of a government claiming to sit for another government. The reality is that there are two political units which have emerged out of what we once called China, both of which have the physical attributes required for membership in the United Nations. Therefore it would be realistic for us to insist that whatever happened with regard to the Peiping seat, something has to be done about the Formosa seat.

He argued that this should not be put off until after Communist China was seated, because then Nationalist China would have to apply for membership, and would be vetoed by Communist China from its seat in the Security Council.

On general problems in the United Nations, several participants thought these were serious enough to warrant their being added to any list of issues with which the United Kingdom and the United States would have to deal. One individual, going beyond the immediate question of Chinese representation, maintained that "the time has come for a renegotiation of the permanent membership of the Security Council." Noting that the Peiping government could not be accepted as "a kind of spokesman for Asia," and that the continent of Africa was underrepresented in the Security Council, he asked whether the whole question of permanent membership should not be reviewed. Another participant took issue with this suggestion, pointing out that in light of the Russian attacks on the structure of the United Nations consideration of such matters as permanent membership "might mean the opening up of a Pandora's box under the worst possible conditions."

Taking up these Russian attacks, a third speaker suggested that they were an attempt to "change the organization in such a way as to amount to destruction from our point of view."

Another suggested that the United Nations would become a problem because of its change of membership in favor of the smaller, uncommitted nations and that therefore a threat would exist independently of the Russian attack. "Too much attention to the legalities and technicalities of its charter may be a serious mistake because the United Nations can get paralyzed within its charter without any violation," he added. Along the same lines, Dr. Wolfers brought up the possibility that "the so-called neutral bloc may not prove as neutral as we would like." He explained that many "neutrals" might press the United States, possibly with the support of Britain and the Commonwealth, to do certain things which it did not want to do. Noting Red China's entry into the United Nations as an example,

26 Morning Session-Political Relations

[L.C.]

he suggested that "to find Britain in a United Nations bloc voting for admission would be highly distasteful."

On deterrence, the conference felt that this too was a subject over which differences of opinion could develop between the United States and the United Kingdom. Indeed, these differences might be intensified if, as one observer predicted, the allies could expect increased matching of Soviet missile threats to actual possibilities of using them in a politically effective way. "In other words, in each new crisis that develops, we are likely to see the threat become a little more direct and a little more terrifying to this or that partner or to all of them," he explained. In connection with this, another participant pointed to that section of conservative opinion in Britain "which has been yearning to have independent power and is quite strong-minded rather than weak-minded." A third participant questioned whether the British were sure the United States would respond as readily to an atomic attack on Britain as on itself, and, even more important, whether the Russians believed this. "If the British are not certain that the Russians know and if they are even less certain as to what we would do at various other points around Europe, is not this an area for the most precise understanding not only between officials of the two countries in their private discussions but also in the image that the two countries present to the world and to the Russians?"

Dr. Wolfers agreed that "to the extent the British feel little or not at all protected by the United States" they would move in the direction of neutralism if they could not find any other way out. He felt, however, that this "hot war contingency" was not in fact a source of disagreement between the United States and the United Kingdom because, as he expressed it, "we both begin to see that our grand deterrent is no longer the protection which we believed and they believed it was for countries overseas." He admitted, however, that "the alliance is no longer on the firm grounds on which it rested in the earlier stages, particularly in the middle stage, when it seemed as if our grand deterrent in itself offered adequate protection both for them and for us."

In connection with this problem of deterrence, Dr. Wolfers noted that the United States had done nothing to replace the feeling of protection which had begun to evaporate as its grand deterrent became less grand. "Alliances in the past -- and our collective defense agreements even more, by which one great power is trying to project its power to the fringes of another continent -- have been based on a deep feeling of protection one gets from being allied," he explained. With the lessening of this sense of protection, "alliances are bound to be more shaky than they were and might easily become increasingly eroded," he warned.

This problem of deterioration of the alliance was considered in another context by an individual who found the source of the trouble in the "failure of the United States to take clearly that position of pre-eminence which, indeed, must be hers." He suggested that Britain was coming to realize that her role was to follow intelligently. "But," he continued, "in order to be a contented follower, you have to feel that you are receiving a lead which, first of all, you can distinguish and, secondly, is worth following." While admitting that there was a good chance that Britain would find herself in the dilemma of wanting a lead but expecting that

Morning Session-Political Relations 27

she would dislike portions of it, he maintained that "it is essential that there should be a lead" and that "a strong lead would be desirable."

Finally the conference questioned whether the two countries agreed on the basic nature of the threat they faced. As an example, one observer cited the way the United States felt about the British attitude on Berlin: "It sometimes seems to us that they did not realize that to make a concession concerning the government of East Germany would represent a profound set-back in the war for the struggle of our own eventual survival as a free and independent nation." On the other hand, he suggested that Britain looking over at the United States would say that it was not "behaving like a nation that acted as if it knew its survival as a free and independent nation was at stake." In considering this problem of disagreement on the nature of the challenge, Dr. Wolfers commented, "The British tend to identify the present threat with other serious threats that have occurred in history while we have a tendency to regard it as unique." The United States feels that it is "dealing with an enemy who will not make any concessions whatsoever, who negotiates only for conquest," while the British "tend to speak of dampening the conflict, of changing it somewhat and of changing the mood," he explained.

Throughout the conference there were suggestions that the United Kingdom and the United States should work more closely together--whether they decided to agree to disagree or to agree to agree. One speaker suggested that Anglo-American diplomacy should be conducted "more quietly and informally through continuous discussions at every level of contact between our two governments rather than just at the Summit where we tend to set off chain reactions of prestige and feeling among other countries."

In his final statement, Dr. Wolfers declared:

> We know that there is the United Nations problem, the Red China problem, the Berlin problem. What disturbs me is not so much that there is a good deal of disagreement on how to solve these problems but that we wait until one country makes a move that shocks the other, maybe even gives it the impression of having been double-crossed, and that then the world is faced with a very clear-cut disagreement.

* * * * *

29

LUNCHEON ADDRESS

Speaker

MILTON KATZ
Stimson Law Professor; Director of International
Legal Studies, Harvard Law School

Gentlemen, I should like to take as my points of departure a cartoon, a reference to a novel -- which is now an old novel as it dates back to the twenties -- and a reference to a poem. It seems to me that each of these instruments relates to some aspect of Anglo-American relations or perhaps relates to Anglo-American relations from at least one angle of vision.

The cartoon -- some of you may be familiar with it -- was in the style of Mauldin or of Dennis Wortman's "Metropolitan Movies." It showed two tramps of the Mauldin type or the "Metropolitan Movies" type. One tramp was observing: "It's a rotten world." And the other tramp's comment was: "Compared to what?" This is my first theme.

My second theme comes from a novel by Tomlinson, "All Our Yesterdays," which you may recall appeared shortly after World War I. The scene was in the period immediately following the collapse of the British Fifth Army, Lord Plummer's Army, in 1917. You will remember the Germans were pouring through and the great question was whether the war wouldn't be over before the Americans could come over to make the world safe for democracy.

At that time, there was a conference of statesmen from London and statesmen from Paris and generals from both armies and, as was so often the case in those post-World War I novels, there were a couple of heroes who were British captains of impeccable educational background who were present carrying briefcases, and they listened to the discussion of all the starched linen and all the brass. Then they went back to their bunks. One crawled in and the other went for a walk. When the walker came back, he woke his friend and he said, "Tom."

Tom said, "Yeah."

He said, "Tom, you were at that conference. Did you hear all those statesmen?"

Tom said, "Yeah."

"Did you hear all those generals?"

Tom said, "Yeah."

He said, "Tom, after a meeting like that, I go out and I walk under the stars and I look up and I say, 'Well, God, it's up to you.'"

30 Luncheon Address

Now, my third text, if I may call it that for this sermon, is a poem from "A Shropshire Lad." It's the first one, you'll remember, the poem on the Diamond Jubilee of Queen Victoria. You will recall that the opening verses described the celebration, the beacon fires burning all over England. As the poet watches the fires he reflects on Englishmen recently dead and long since dead who had served their country. And, referring to the "God Save the Queen" motif, he says:

Look left, look right, the hills are bright,
The dales are light between,
Because 'tis fifty years tonight
That God has saved the Queen.

Now while the flame they watch not towers
Above the soil they trod,
Lads, we'll remember friends of ours
Who shared the work with God.

Now, I take it that one of the purposes of this group is in a modest way to consider how we and others may share the work with God.

Since the morning session covers political matters and the first afternoon session will cover military matters, and the second afternoon session will cover economic matters, that makes it perfectly clear what I have to cover.

This really fascinated me and I decided I could work my way back to fundamentals, on the theory that, after all, nothing much can happen without people, and that there were a couple of things which the Americans and the British could work on jointly and comparatively which are not ordinarily thought of as foreign affairs or international affairs at all, but which ultimately must bear profoundly on foreign affairs because they involve people, which I think all of us would recognize to be the principal natural resource of any society.

This is a matter which we all take for granted; it's obvious. You'll forgive me if I stress it anyway, because, as a great judge once observed, there are a lot of matters with respect to which we constantly need to re-educate ourselves in the obvious.

My point is that the fundamental natural resource of any society is neither its coal, nor its oil, nor its steel, nor its uranium, nor water, nor its soil, but its men and women... the intelligence, character, and skill of men and women, and everything that affects that.

I think that such a reminder of the obvious is especially relevant to the situation of America and England. As we consider the balance sheet or, (to use the language of the generals) the appraisal of intentions and capabilities, in the two main sectors of the contemporary international struggle, by and large we have to concede that the Russians and the Chinese have the numerical advantage, and that we're not likely to change our habits sufficiently in the next few years to change the numerical balance, so that if we have any advantage at all, the advantage will have to be qualitative, and it will have to remain qualitative.

[LC]

Luncheon Address 31

Of course, ordinarily, when we think of qualitative advantage we think of industrial and technological advantage. When we think a little beyond that, we remember the science which underlies the technology. When we think a bit beyond that, we remember the great tradition of the free and self-reliant mind which underlies the science. And when we think a little beyond that, we remember the whole moral tradition of the worth of the individual man and the set of values that goes with it -- freedom and justice and truth, that underlie the tradition of the free and self-reliant mind.

So I would like to talk about people, and I'd like to talk about two sets of problems which have a considerable bearing, it seems to me, upon what kind of people we will be in the United States and in Britain. Both problems are painfully familiar. The first is the city, the metropolitan area, and the second is the educational system.

When I speak of the metropolitan area, I'm not going to go into a lot of folderol about it: I would like to remind you of some of the interesting aspects of the matter, first from the American point of view and then the British.

According to the statistics which learned people have given me, it wasn't more than fifty years ago -- maybe sixty, say the turn of the century -- when 60 percent of people lived outside the metropolitan areas and 40 percent lived within them. I'm told that the proportions are just about exactly the reverse today, that 60 percent of our people now live within these great metropolitan complexes and 40 percent outside of them, and that in fifteen years, say in 1975, if the projections are validated by events, some three-quarters of our people will live within these great metropolitan complexes.

We are all familiar with the problems which are associated with the city -- traffic congestion, the problem of the commuter, transportation generally on the one hand, juvenile delinquency on the other, and in between the whole problem of urban sprawl and urban blight. Some of you may have attended the conference in Hartford a couple of years ago under the auspices of the Connecticut General Life Insurance Company and its energetic chairman, Frazier Wilds, on the city in the automobile age. Following that conference a book was written on it by a man who was the "rapporteur" in the Council of Foreign Relations sense -- meaning he wrote his own book after listening to everybody else -- a man named Wilfred Owen. He has an opening paragraph, which is quite vivid. He says: "The American people like to live in cities," period. "The American people like to ride in automobiles," period. "It's an open question whether they can continue to do both."

This I think is as vivid a description of the problem, in one of its salient aspects, as I have heard.

But, you know, lying back of the problem of the schools and the school system and all that that implies, and juvenile delinquency, and urban sprawl, and urban blight, and traffic congestion, and all the rest, there is, of course, this really critical question: If three-quarters of our people are going to be living in these complexes, is it any exaggeration to say that the kind of life that goes on in these complexes will, in half a century, determine what kind of people we will be in the United States? It therefore is a matter of some considerable concern as to just

32 Luncheon Address

which way that goes.

Now, I don't offer you any Jeffersonian pessimism about the city. Some of you probably read the interim preliminary sketch of a report by the distinguished French geographer, Jean Gottman, who, under the auspices of the Twentieth Century Fund, has been engaged in a study of what he calls Megalopolis, the vast urban area running from Washington to Boston with a curve swinging from New York through Philadelphia, out along northern Pennsylvania, up through Buffalo, and back across the Thruway to Albany and down again to New York City.

In his preliminary indications of how it's going, he indicates that there is a good deal of evidence to suggest that in terms of income distribution, housing, education, and even physical height and weight, people who live within these areas can very well come out a whole lot better than people who live in the ancient blessed agricultural state.

But I would simply leave this with you: a great deal can be done with cities of this kind to realize the full possibilities of the human personality; and, as we know from juvenile delinquency and all of the other paraphernalia that we are reminded of daily as we read the morning paper, you can go downhill in a big way fast in a city, and I therefore suggest there are few problems more important for us than to make sure that the city goes in the affirmative direction rather than the negative.

On these matters, of course, the British have suffered earlier than we and longer than we, and they are encountering what I understand from them to be comparable problems, often in a more advanced stage of development.

Take, for instance, one phenomenon that we're all familiar with -- on the one hand, everybody crowding into the city; on the other hand, the central city being emptied and turning into a kind of ghost town right in the middle of a great metropolis.

Now I'm told by informed Britishers that they have exactly the same problem, exemplified on the one hand by London and on the other hand by Manchester. One of them even has a theory about it, which I pass on to you. Perhaps it will be as interesting to you as it was to me.

He said, "There are two kinds of cities. There is the management city, the leadership management city, like London, and there everyone will continue to push into the central city. Then there's the manufacturing or distribution city, where people will tend to pile out of the central city."

Let's look at what they tell me about London. They say everybody is pushing into London, "but we in England don't want to build buildings that go up too high because that's un-English, you see." So the British decreed that nobody in central London can build buildings going up very high, but people kept on coming and London spread and spread and spread again. The British developed a green belt around London, and now the great question is the meeting of the irresistible force and the immovable object or, as the British put it: "At what point and in what way do we admit that the green belt is going to explode?" London

Luncheon Address 33

will either go on growing, spreading out over England, or it will have to start
going up in the air, thereby adding to the convolutions of Central London some-
thing of the American genius for parking snarls, in a British way that would be
a very special thing to observe.

So they have -- as I say, they are further along in this respect than we -- they
surely have the same problems, and I would suggest that a common and com-
parative study of these things among us would not only be profoundly interesting
and useful but also by no means irrelevant to the problems of foreign policy and
defense policy which we have been discussing.

Now, of course, the relationship of the educational system to the quality of
our people is at least as direct and rather more obvious. Here I think that in
a sense the roles are reversed, that is if I understand correctly what I'm told
by friends in Britain, the British are beginning to encounter a problem that we've
been struggling with for quite a while.

Much has been said about the problem of deterioration in the quality of Amer-
ican education. Some people have pointed to the fact that Britain and France and
other European countries have maintained their quality better than we. Perhaps
this is true; I think, however, that the bare statement overlooks the source of
the problem and its core.

If you will forgive me for throwing some statistics at you, in the year 1948 --
which happens to be the last year for which I got statistics that purport to be
reliable; I haven't got any more up to date than that -- in the United States one
person out of 56 went to something that we call a university or a college, while
in the United Kingdom one person in 575 went to something they call a university
or college. In other words, we were trying to give a university education to ten
times as large a part of our population as the British, and in this respect the
British were a whole lot further along than the continent of Europe.

Perhaps it isn't as hard as one would think to maintain the quality of an ed-
ucational system if it is carefully confined to a very tiny fraction of the population.
But when you undertake -- and I think this is one of the glories as well as the
headaches of America -- when for the first time in the history of society you
really undertake seriously to give full-scale education to your entire population,
you run into special troubles. The undertaking is wise and right, for it means an
attempt to maximize the ultimate source of strength of our society, its people.
It is based on a realization that a free society, to the extent that it vindicates its
own principles, is the strongest of societies, for it seeks to tap and utilize
every bit of the major primary resource, namely, the mind and character of
people. Nevertheless, while it is wise and good, it obviously produces all kinds
of tough problems,

I'm also told that in 1900 in the United States, of the age group 18 to 21, some
4 percent were in the educational system; and in 1953, of that same age group,
26 percent were within the educational system. You begin to get some idea of
what it is we've been struggling with in this country's educational system and
of the problem of actually giving everybody possible a crack at education and
maintaining its quality, of why it's as difficult as we all find it to be, of why it

34 Luncheon Address

warrants--as I read in the TIMES the other day--at least an increase in the allocation of our resources from 3.02 percent to 3.57 percent. I would like to suggest that there are signs that the British are beginning to run into this too.

They are beginning to discover that as a result of recent developments in British life, all kinds of people want to go to schools and universities, that didn't really go before, and that there are in some of the universities many kinds of people different from those who used to be there before. They too are beginning to encounter the key question: How to maintain the purity and quality of the old education when it must be given to all of these people?

So, there too I would suggest that a joint and comparative study by America and Britain on this vital problem could be a useful thing; and again I would suggest that such a study, and the facts underlying it, will have more than a little bearing upon how well we will do our job in places like Africa.

Here I can't resist for a moment poaching on the provinces of the three discussion leaders dealing today with the three great segments of international affairs. I'll do so to the extent of recalling the need to visualize the problem and possibilities in operating terms. Consider, for instance, the task of getting reliable information on which to base policy about some part of the world. I once got involved in a project in which we tried to find out how many people there were who were generating news. We added up AP, and UP, and the New York TIMES and the CHRISTIAN SCIENCE MONITOR and all the rest. We finally figured out that on a world-wide basis, the number of people who were actually at the site generating news was somewhere between 250 and 400. That's not counting what the newspaper men call "stringers."

Of those 250 to 400, many are concentrated at a few key points. Anyone who has ever been in Paris or London for example, has a fair notion as to how large a part of the total are there, and in a few other obvious places like that.

Now, suppose a great crisis comes, say in Iran, Laos, or some similar place. People back home get to developing policies at a great clip, both in government and outside of it in groups like this one here today and in the newspapers. On what are those policies and would-be policies based? If ever there was a pyramid standing on its apex! How many people are there to generate news out of Iran or Laos? I'll bet you it is not more than three or four. Out of those three or four, would there be more than one, if one, who spoke Arabic or Persian or Laotian? How often would those three or four get outside of Teheran, or Vientiane? And yet this would be the generating source of the news on the basis of which so many of us back home get into arguments of policy about what should really be done. Why do we bring this out? It is a simple way of reminding ourselves that trained people have some importance, not only in high government posts but in the different processes of daily life.

It's all very well to talk about technical assistance programs for the Belgian Congo. Let's suppose that the ad hoc, de facto trusteeship which the UN Secretariat has been preparing for the Belgian Congo should be put into effect--and if it isn't I should think the Congo may go back to the Stanley-Livingstone conditions--but let's assume that this trusteeship (which will be called not a trus-

Luncheon Address 35

teeship and which will be run by the UN) goes into effect. Will it be wonder-
ful; will it solve things? It will if the program gets the people. Where will the
program find the people? To find three or four or five thousand skilled men
to move in to the Belgian Congo, to spend a large part of their lives there -- not
to mention their wives and children and not to mention the fact that you can't
have Belgians, you know, just the way you couldn't have Dutch in Indonesia -- to
find such people won't be easy. Our capacity to find them and train them special-
ly will depend very largely on the quality of the education of the population with-
in which they must be looked for.

Now, this brings me to the end of this sermon, and I want to come back to
Housman's poem, as the last verse in the poem seems to me to have a con-
siderable bearing on everything that we've talked about this morning and every-
thing we'll be talking about this afternoon.

Housman reverts again to the question of God saving the Queen. At this
time, may I ask you, "Mutatis Mutandis" as we lawyers say, to substitute Amer-
ica for the Queen, if you happen to be an American. The poet says:

O God will save her, fear you not,
Be you the men you've been,
Get you the sons your fathers got,
And God will save the Queen.

* * * * *

37

FIRST AFTERNOON SESSION - MILITARY RELATIONS

CURRENT PROBLEMS IN ANGLO-AMERICAN
MILITARY RELATIONS

How a joint U. S.-U. K. defense policy can best be developed
and implemented in view of recent disclosures concerning
Soviet advances in nuclear weapons.

Discussion Leader

HENRY A. KISSINGER

Associate Professor of Government, Harvard University
Director, Harvard Defense Studies Program; Associate
Director, Harvard Center for International Affairs.

Advance Paper and Commentary (combined)
by Dr. Kissinger:

A. <u>NATO Strategy</u>

Anglo-American relations in the military field cannot be discussed separately from the problems of NATO as a whole. Many of the difficulties are due to the inability to develop a common strategy or to resolve issues such as these: Is Europe more secure because our nuclear arsenal is more powerful than ever, or less secure because we are vulnerable as never before? Does the increase in the range of missiles and airplanes make a substantial military establishment on the continent more important or less important? Should NATO forces be designed to defeat Soviet aggression in Europe or does their function remain to hold only until the effects of the nuclear retaliatory blow have made themselves felt? Almost all the outstanding issues in NATO depend on a resolution of the basic issue: the significance of all-out war for the defense of Europe in the missile age.

During the first decade of its existence, NATO relied for deterrence as well as defense on a retaliatory strategy. The preponderant part of the strategic striking forces, however, remained under the exclusive control of the United States. With its primary weapon outside the NATO structure and not subject to NATO control, the Western alliance inevitably took on something of the character of a unilateral guarantee. The demand by our European allies for a substantial commitment of United States forces on the Continent did not mean that Europe was to be defended locally. On the contrary, the role of these forces was conceived almost as that of hostages--to insure that the American retaliatory power would in fact be employed against a Soviet attack. The military establishment on the Continent came to be thought of as a trip-wire designed to unleash

38 First Afternoon Session - Military Relations

the United States and British retaliatory force.

Because of the reliance on an all-out strategy, our allies have resisted the effort to achieve an adequate local defense, partly for economic reasons, but above all because they feared that it might reduce the American willingness to resort to all-out war in the defense of Europe. To be sure, at various stages there have been NATO force levels set for a defense of Europe locally. But one of the reasons these force levels have never been met is that the Europeans did not believe that there could be a local defense of Europe. In their heart of hearts, they and we believed that any attack on Europe inevitably had to involve the United States in an all-out war.

Unfortunately, deterrence is tested by things which do not happen. As a result, as long as no aggression takes place, anyone advocating a change in the existing policy has to meet the argument that, since all the dire things which have been predicted have not occurred, one should continue along the present course. Thus, the more seemingly successful the policy of deterrence, the more arguments one has for maintaining the *status quo*, and, in a rapidly changing technology, the more dangerous the situation may become.

Now when the theory of all-out war was first developed, we had a tendency to believe that its deterrent quality resided in our capacity for destruction. There was a great deal of discussion of the degree to which we could obliterate the Soviet Union. What was not fully understood at the time, however, was the fact that the deterrent effect did not depend so much on our capacity for destruction as on our invulnerability. We were in a position to destroy without being destroyed ourselves.

Even after the end of our atomic monopoly, we were still invulnerable as far as an attack on Europe was concerned. The Soviets could not attack Europe alone because if they did so, and we in reply attacked their retaliatory force, we could have wiped out their retaliatory force. In the equation of all-out war, we were essentially invulnerable in relation to them.

As long as we were either invulnerable or could win a war by striking first, we could carry out the policy of massive retaliation. This strategy has now reached an impasse.

The reason is that as retaliatory forces came to be composed of mobile missiles, they will also become more invulnerable. But under conditions of mutual invulnerability it will become increasingly futile to rely on the strategy of the past decade. The defense of Europe then no longer rests on the threat of all-out war alone, for this threat might not be believed and disbelief might tempt aggression. Or it might encourage a pre-emptive attack. Even if we made good our threat, this would only insure our destruction without protecting our allies. Western Europe could not be saved from Soviet occupation and social upheaval. We could achieve no more than mutual devastation. If the only recourse against aggression in Europe is to devastate Soviet centers of population, deterrence may fail. The Soviet leaders, in view of their own capability to retaliate, may come to believe that our threat of all-out war is a bluff.

For the policy of all-out war to be effective in the age of invulnerable missile

First Afternoon Session - Military Relations 39

forces, a statesman must convince his opponent that, on any given crisis, he will commit national suicide rather than to give in on a stated objective. He will have to convince his opponent that the question of rational calculation will not be posed. This presupposes a diplomacy which conveys to the other side a high capacity for irrationality. It is much better bargaining technique to take off your shoe and bang your desk in the United Nations, because you will give the impression that you may simply be beyond reason.

Such planned irrationality is inconsistent with both our domestic policy and our alliance policy, however. In any given crisis, the governments of the West will be impelled to attempt to convey to their own people and to each other that they are going to be calm, that they are going to be reasonable, and that they will explore every avenue of settlement. In other words, they will have to behave precisely in the fashion which is calculated to convince the Soviet Union that they cannot possibly mean what they say with respect to their willingness to risk all-out war.

If we do not want to follow this policy of irrationality -- and we should not -- we must change our military policy. If we do not, if NATO can be defended only by all-out war, we will face a hopeless dilemma: to yield to pressure will set up a pattern of Soviet blackmail, while to resist will involve catastrophic devastation. The pressure on Berlin is probably but an augury of things to come. As the strategic choices of NATO grow more drastic, Soviet policy is likely to become increasingly bold.

Arnold Wolfers was the first to point out the possibility of a limited war in Europe. Since his article, the need for a military establishment capable of withstanding a wide range of challenges has become ever more apparent. The stronger the local forces, the less the likelihood that certain kinds of threats will be made at all. The willingness to resist Soviet encroachments will be increased if a maximum number of alternatives is created between surrender and a war which may appear suicidal.

The line of demarcation between local defense of Europe and all-out war need not be determined in the abstract. The more effective the military establishment on the Continent, the larger must be the Soviet attack designed to overcome it. The more the required effort approaches the scale of all-out war, the clearer will be the challenge, and the more plausible the threat of all-out war becomes. The most favorable situation would exist if the military establishment in Europe could not be overcome locally. Then the risk of initiating all-out war would be shifted to the Soviet Union. At the very least, the forces in Europe should be sufficient so that the scale of effort required to overcome them raises the risk of all-out war to an intolerable level for the USSR.

## B. The Problem of Nuclear Weapons

At the time of Sputnik, the United States impulsively offered its NATO allies 1500-mile missiles. These were intended as a reply to Soviet advances in long-range missiley, implying that the only change that was required by the new strategic situation was to convert our air bases into missile bases.

If our allies had fully accepted the theory on which NATO strategy was based,

40 First Afternoon Session - Military Relations

they should have been eager to accept these missiles. In fact, they hesitated. It was said by some that these missiles would make our allies vulnerable and that Europe should not let itself be destroyed on our behalf. Now, if our allies could hesitate about being engaged in a war in defense of the United States' security, it was at least not inconceivable that we might hesitate about being engaged in a war over questions affecting their security. If they were not prepared to suffer devastation of their countries in what looked to them like an American war, might we not hesitate to suffer devastation in what looked to us like a European war? It was not a far step from extrapolating their own hesitations to assume some hesitation on our part.

The fear that the United States might not be prepared to risk devastation on behalf of its allies, or else that it might use its power in a manner likely to destroy a partner's national substance, has given rise to the attempt to develop independent retaliatory forces within NATO. Both the British and French deterrents have been justified with the argument that possession of nuclear weapons would enable our allies to exert a greater influence over our actions. Since these weapons were obviously not intended as a threat against us, the influence they are believed to confer must be the power to initiate a nuclear war in defense of vital British or French interests -- if necessary without United States participation.

Great Britain and, more recently, France have sought to create an independent deterrent, at least in part, to remove any doubt in the mind of a potential aggressor about the likelihood of retaliation when their security is at stake -- regardless of what the United States might decide to do. The implication is inescapable that nuclear weapons are thought to confer influence because they can act as a "triggering mechanism" of the United States Strategic Air Command.

The same reasoning has been applied to the actual conduct of a war: The British deterrent was justified as a means of guaranteeing that targets considered vital by Britain would be attacked whatever their role in an over-all strategy as seen from the United States. "There are . . . big administrative and industrial targets behind the Iron Curtain," said Sir Winston Churchill in 1955, "and any effective deterrent policy must have the power to paralyze them all at the outset or shortly after . . . . Unless we make a contribution of our own . . . we cannot be sure that in an emergency the resources of other powers would be planned exactly as we would wish, or that the targets which would threaten us most would be given what we consider the necessary priority . . . ."¹

Finally, proponents of independent deterrents maintain that such forces confer certain advantages with regard to arms control negotiations. The fact that Great Britain has had nuclear weapons, whatever the strategic significance of these weapons, has enabled her to participate in all arms control negotiations on nuclear weapons. On the other hand, France has had less of a voice in these arms control negotiations, although her survival is as intimately affected by what is decided at Geneva as Great Britain's. Since we claim that the security of the West depends on nuclear weapons, it is not unreasonable for the allies whose security is supposed to depend on these weapons to have a voice not only in the manner in which they might be used, but also in disarmament negotiations.

¹Hansard 315, p. 1901, March 1, 1955.

First Afternoon Session - Military Relations 41

We have attempted in a number of ways to take account of these arguments for national deterrents. One of them has been the stationing of missiles in Europe under a double-veto system. Neither the type of missiles we have stationed in Europe nor the double-veto system really goes to the heart of the problem, however. The stationary 1500-mile missiles are highly vulnerable and, secondly, the double-veto system means that the question of whether the missiles will in fact be used in case of a disagreement is foreclosed because they cannot be used without our agreement--our allies can keep us from using the missiles but they cannot insure use of the missiles.

The reliance by NATO on a retaliatory strategy has thus had one of two consequences: either our European allies have considered themselves protected by our retaliatory force and have therefore seen no point in a substantial military effort of their own, or else they have concentrated on developing a separate retaliatory capability, duplicating the strategic category in which we were already strongest.

At the same time, we must understand the dilemma that had led to the effort by Great Britain and France to develope retaliatory forces of their own. Present NATO doctrine confronts our allies with a very real and serious problem: the alliance relies for its primary weapon on the United States Strategic Air Command and, to a lesser extent, the British Bomber Command--forces which are outside NATO control, indeed, whose deployment for purposes of deterrence and dispositions in case of war are unknown to our allies. While our partners are urged to integrate their conventional forces--which are adjuncts in terms of prevailing strategy--they have no effective voice in the control of the weapons on which, by our own assertions, their security primarily rests. In this situation our allies may come to feel that as long as the United States assumes the almost exclusive responsibility for the defense of Europe, it may subordinate their vital interests to its conception of requirements of the overall strategic situation. As the United States grows more vulnerable, our allies may fear that ever fewer objectives may seem "worth" an all-out war. Even Europe may not appear important enough, particularly in the case of ambiguous challenges.

Such fears may appear to us as unfair, yet would we react differently if the defense of Alaska depended on Britain's willingness to employ her retaliatory force on our behalf and if we knew that the decision to retali ate would mean the destruction of the British Islands?

Because this nuclear problem arises from a lack of confidence that under certain circumstances we would be willing to commit ourselves, there is no purely military solution to the problem. If it becomes clear both to every member of the alliance and to the Soviet Union that we will take the interests of our allies as seriously as our own, then the question of the deployment of nuclear forces becomes primarily a technical one rather than an issue of prestige.

### C. Disarmament

It has become increasingly clear that arms control is not an alternative to military policy but its reverse side. The test of arms control is whether it increases stability or detracts from stability. Neither reduction of forces, nor inspection, nor any of the other remedies that are being offered are an end in themselves. The ultimate question must be whether the chance of war is in-

42 First Afternoon Session - Military Relations

creased or decreased by specific measures. We cannot answer this question until we have answered the strategic questions. Until we know the significance of certain forms of warfare, we do not know whether a certain control system adds to stability or detracts from stability.

For the United Kingdom and the United States, arms control has two aspects: comprehensive arms control measures and arms control measures confined to Europe. As for the general problem of arms control, the situation seems to be as follows:

In the past, it could be argued that arms were not the cause but the symptom of tension. For the nuclear age this is no longer true. No country can protect itself against all the technological possibilities increasingly open to its opponents. Conversely, an advantage once achieved will produce powerful incentive to exploit it, for the scientific revolution which made it possible also insures that it will be transitory.

The fear of a momentary weakness is compounded by the dangers of being surprised. As long as the retaliatory forces are composed primarily of liquid-fuel missiles and airplanes--as they will be until the middle Sixties--the side which strikes first will have a perhaps decisive advantage unless the defender's retaliatory force is in a state of high readiness. But when two retaliatory forces so constituted confront each other, their very structure may contribute to instability.

Both sides should therefore have an interest in stabilizing the arms race as much as possible. All countries should be concerned with preventing a war which might break out simply because of the automatism of the retaliatory forces. At the very least, they should strive to make certain that war, if it does start, is the result of a deliberate decision and is not produced because the opponents, in taking measures which they deem to be defensive, push the other side into an attack in self-defense. In short, with modern technology, arms--at least certain types of them--are themselves a factor of tension. As a result, arms control acquires a new significance.

The importance of arms control measures is therefore beyond dispute. There are, however, a number of paradoxes involved in arms control.

First, the common interest in stabilizing the arms race is produced only as long as there is a certain instability in the arms race. If either side is convinced that the arms race tends toward stability or if one side is convinced that it is going to obtain a unilateral advantage, then there will not be any motive for arms control. For example, if the Soviet Union became convinced that we intended to disarm unilaterally, then it would have no conceivable motive to make any agreement.

Secondly, arms control may cost more money rather than save money. It is often said that arms control will save us from the crushing burdens of defense expenditures. In fact, however, almost all conceivable initial arms control measures will probably increase military expenditures. If we are really serious about controlling nuclear weapons, we will have to build up our conventional forces, and this will cost money.

First Afternoon Session - Military Relations 43

Finally, if arms control is effective, it may well increase rather than decrease political instability. If one part of foreign policy is to attempt to affect the will of another country, then protecting certain powers against external aggression will make them feel much freer to engage in subversion.

These are not arguments against arms control. Effective schemes of arms control may well arrest a slide towards a cataclysm. They could reduce the risks of accidental war. They may prevent, or at least slow down, the spread of nuclear weapons. If the two sides cannot give expression to this community of interest by proposing concrete, serious programs the future of negotiations is dim indeed.

As for arms control confined to Europe, the experience of World War II and of a decade of cold war should give us some guide to understanding this problem. An agreement must protect the Soviet Union against the danger of a resurgent German militarism and against an attack from NATO territory. But it must also safeguard the West against the risks of Soviet pressure and encroachment. It is true that the Soviet Union's experience in this century may make it unusually sensitive to German military strength. But it is also true that for over a century the Russian Empire in one form or another has been pressing on all peripheral areas, including Europe. The Soviet Union has a right to demand protection against military attack. Yet in a society of sovereign states, absolute security is obtainable only by reducing the importance of all other states. It is the road to empire.

A scheme for European security, therefore, must take care not to wreck NATO, for without NATO each European country would face the preponderant Soviet might alone. It must not eliminate the possibility of local defense, lest our allies become demoralized by the threat of Soviet conventional and tactical nuclear strength. But while protecting our European allies against nuclear blackmail or conventional aggression, it must also give assurances to the Soviet Union against attack from NATO territory. The question then becomes whether it is possible to conceive of two military establishments on the Continent capable of defensive action but deprived through appropriate control measures of offensive power.

In the end, the issues of arms control go back to a question of whether the democracies can solve their problems. Can we get leaders who are willing to tell the truth to their people and who will not pretend that any arms control agreement is progress? Can we get leaders who are willing to say that we may have to be passionate about both arms control and armament at the same time, that we may have to build up one kind of force while reducing another kind of force, that a changing technology is forcing us to reassess our situation, and that this is not the fault of anybody in particular?

* * * * *

44

First Afternoon Session- Military Relations

Following Dr. Kissinger's Advance

Paper and Commentary:

The conference considered the basic military problem facing the two Atlantic allies to be the defense of the United Kingdom and Western Europe: were these two areas adequately protected from the Soviet Union, and, if not, how could the protection be increased? In trying to answer these questions, the conference focused on the role of nuclear and conventional weapons in the defense of Europe.

A majority of the speakers appeared to agree with Dr. Kissinger that Russian advances had reduced the effectiveness of the policy of "massive retaliation." As one put it, "we have had basic contradictions in what has been called our strategy ever since the Soviet Union had the power to reach the United States with any weapons." There were two lines of thought on the results of this changed situation, however.

One group believed the problem was that the United States would no longer react if Western Europe, or even Britain, was attacked. In support of this view, one participant cited a statement made by Christian Herter during the hearings on his confirmation to the effect that the United States should not involve itself in an all-out nuclear war unless it was in danger of devastation itself or moves had been made toward devastating it. This participant concluded that the United States should "as quickly as possible" disencumber itself of the idea that it would respond to an attack on a third area with a nuclear strike at the Soviet Union. He suggested that Americans should "start thinking about how we are going to defend third areas by other means."

Another observer pointed out that the Mulley Report of the Western European Union Parliamentary Assembly had similarly concluded that the United States nuclear deterrent was no longer credible if a European country was attacked but the United States itself was not. On these grounds, the unanimous report had advocated a separate European deterrent under European control, he explained.

While agreeing with Dr. Kissinger that there was a lack of confidence in the willingness of the United States to retaliate, a third speaker suggested that this was not because the United States was less interested in the territory of its allies than in its own territory. "The reason why this is fundamentally different is that if bombs fall on this country, they will not fall just on Alaska--they will be a counter-force blow against our strategic force." On the other hand, a strike at the Allies of the United States would leave its own strategic force intact. "Then we are the ones who have to decide whether or not there is to be a general war. We have to make the initial thermonuclear strike against the Soviet Union, and this is a much more difficult decision to make."

Other participants believed that the real problem was not that the United States would not retaliate, but rather that it might indeed retaliate and cause wide-spread destruction in Europe. One of them compared the situation in 1960 with that ten years earlier. "Then, the main worry of such a country as England was: will America use its atomic capability in case of a Russian threat?

First Afternoon Session- Military Relations 45

Now, with Russia having a nuclear capacity too, the main worry of England is that America *will* use her atomic capability in case of an armed clash in Europe." He explained that the reason for this fear was that nuclear war would turn Europe into a "pile of rubble." While admitting that some countries of Western Europe might accept this "first use" of atomic weapons by the United States if their own national existences were threatened, he questioned whether the Western alliance could evolve a world-wide foreign policy when the United States insisted "on hanging this sword over their heads." This observer noted that, while Americans still believed that their country would survive a nuclear attack, "the majority of the population of Western Europe is absolutely convinced their countries will not." Indeed, he stated that he could not conceive of a nuclear war in Europe in which the European people could be expected to take part. "This would be madness on their part; it would be suicide," he explained.

Another speaker, who distinguished between the "first use" of atomic weapons and a "pre-emptive strike," agreed that the result of the first use of atomic weapons was the core of the problem. He claimed, however, that the Europeans had some responsibility for the creation of this problem. "When it was a matter of either building up conventional forces or substituting nuclear weapons for conventional forces, they fell for the idea of the cheaper, and what seemed more agreeable, nuclear forces just as much as this country did." Under this arrangement, weapons were considered to be to prevent war, not to be used in case of war--war itself was considered an impossibility, he explained.

One participant pointed out that nuclear forces were only half of the problem, however. He agreed with Dr. Kissinger that, with the growth of Russian nuclear capabilities, countries which had to rely on nuclear weapons were in a weak position. As he explained, the West had left itself no alternative when it armed its troops in Europe with nuclear weapons. "We could not now fight a non-atomic war in Europe if we wanted to--perhaps a skirmish, but not a war," he said.

In light of the changed circumstances, the conference agreed that new policies were needed. One speaker stated his belief that NATO was at the crossroads in its thinking about strategy. He suggested that, because NATO could not be separated from over-all United States strategy, "we have to get our own thinking on the role of the United States in focus before we are going to make useful progress with NATO or with the British." In specific, he hoped that there was some way the United States could "go down somewhat parallel roads with NATO strategic needs." In doing that, he thought that "it would be most helpful if Britain thought that she was more than a very junior partner in the determination of the way to go."

On exactly what way to go, however, the speakers were not entirely agreed. In the first place, there was a general reaction against Mr. Herter's suggestion that the United States would not defend its allies. One participant said Mr. Herter's remark "sounded like a statement of a Secretary of State who was trying to get his appointment ratified, but not as a statement of a member of an alliance." Later, the same participant asked, "What sort of an alliance is this that we have now with our allies in which such a statement can be made by a Secretary of State?" Another observer emphasized that he would be "very disappointed" if the conference shared Mr. Herter's views. Finally, a third individual pointed out that in the 1958 Sandys White Paper, the British Government had said they would

46 First Afternoon Session-Military Relations

initiate the use of atomic weapons in response to any aggression. He explained that, although Mr. Herter's statement had "encouraged the idea that the Americans would not honor their commitment," the British Government had later made statements to the effect that they had received assurances that the Strategic Air Command would be employed on behalf of NATO.

One speaker suggested that, because of the devastation which would occur in Europe if nuclear weapons were used there, the West should abandon the policy of the first use of atomic weapons. Dr. Kissinger, while admitting that it would be very tempting to renounce the first use of nuclear weapons, argued that this would be equivalent to saying that the West would prefer to be defeated by conventional weapons rather than to use nuclear weapons. "Can we really responsibly say this? Would we prefer to have Europe overrun with conventional weapons rather than use nuclear weapons?" In addition, he asked whether, even if the West did renounce the first use of nuclear weapons, it would really carry out this commitment. "It will either tempt the Communists to believe they can use a very large level of conventional pressure or it will simply restore the status in which we find ourselves." Finally, he suggested that stigmatizing nuclear weapons to such an extent would create a widespread horror of them among the public. "The Communists, far from following us and adopting conventional strategy, will exaggerate their nuclear threats because they will then be convinced that the West will surrender in the face of every nuclear threat."

On the other hand, Dr. Kissinger did not think that complete reliance on the threat of all-out war was the solution. He emphasized that there were only two situations in which such a threat would be "militarily sensible." The first situation, on which the United States had been able to rely until 1955, was one in which "you can win even if you have suffered a first blow," he explained. The second situation, which still prevailed in part in 1960, was one in which "you can win by striking first--win in the sense of reducing the retaliatory blow of the opponent to levels which you consider acceptable." While noting that there were problems involved in the latter strategy, he maintained that the real problem was that by the mid-1960's it would be impossible to win an all-out war even by striking first. "We cannot, with foreseeable projections, reduce the counter blow to acceptable proportions. Under those circumstances, threatening all-out war is militarily senseless, and a lot of pressures may become possible that would be fantastic today."

The conference also considered whether NATO, or NATO countries should be given nuclear weapons. One observer noted that, although France had held nuclear tests, it would be five to seven years before she achieved nuclear deterrent capability, including both weapons and delivery force. "Are we going to encourage such national and unilateral actions or do we turn over nuclear weapons to NATO and make NATO a fourth nuclear power?"

He suggested that there were "major differences" between a nuclear-armed NATO and the situation prevailing in 1960. Then, the 60 Thor missiles in England were under a double veto power. Also, the 30 Jupiter missiles in Italy and the 15 in Turkey were, in fact, under a triple veto power according to this observer. He explained that while the missiles in Italy and Turkey were under NATO control, the United States controlled the warheads and the Italian and Turkish troops which manned them probably would not fire without the approval of their govern-

First Afternoon Session - Military Relations 47

ments. "Now, what is proposed is that General Norstad or whoever is the supreme commander in Paris would control not only the missiles but the warheads. In other words, he would have nuclear capability ranging all the way from small-scale tactical warheads mounted on Honest John field artillery rockets up to 1500-mile missiles with megaton warheads."

But such a solution would not be without problems, he added. "If we agree that we should make NATO a fourth nuclear power, then we beg the question, in effect, of who gives the final go-ahead signal." On the one hand, he ruled out vesting the NATO Council with the authority to make the decision because he could not see "how we could depend on a ponderous body of this size in time of war to say, 'Fire.'" On the other hand, he suggested that it would also be impossible to decentralize control by giving authority to the field commander. "Practically and probably, I would think, you would come back to the question of the strongest powers and they would probably make the decision."

Another participant proposed that the "Norstad strategy" be considered, since he believed it had "a good deal of merit." General Norstad's strategy, as described by this participant, was that if he had adequate forces ("without too much definition as to whether their arms included tactical nuclear weapons"), he would be able to execute a definite military check in case of an attack either produced by miscalculation or intended as a test of NATO's determination. "This check would give time for political processes to work, time to determine whether the world is going to choose to have an all-out atomic exchange or whether it is going to choose to settle this peacefully," he explained.

Dr. Kissinger discussed the Norstad strategy further, pointing out that the main function of the forces in Europe was to increase the risk of all-out war to an intolerable level for the Russians. "The deterrent effect of those forces was precisely that uncertainty on the part of the Soviets whether at some point they would not trigger an all-out war." Dr. Kissinger added, however, that "the level at which the risk becomes unacceptable is rising with the decreasing military purpose that one can ascribe to all-out war." In other words, the less "militarily sensible" an all-out war, the higher the level of conventional fighting which would be possible without touching off an all-out war. Indeed, Dr. Kissinger noted that "the position that everyone describes as so highly desirable, namely, that of two invulnerable retaliatory forces confronting each other, is also a condition which makes much higher the violence level which is rationally supportable." While admitting that some uncertainty was helpful insofar as the Communists were not given a "price tag" ahead of time, he maintained that uncertainty was not permissible at the "lower end" of the scale. "If the uncertainty includes the possibility that you may not resist at all, then it may tend to encourage aggression," he explained.

For this and several other reasons, Dr. Kissinger argued that NATO should build up its conventional forces. Several participants questioned exactly how far existing conventional forces would have to be increased, however. One of them pointed out that "most of the estimates we see talk in terms of a relatively modest increase in the number of divisions and quantities of manpower needed, but emphasize that qualitative improvements are necessary." Another participant agreed that "these goals we have talked about are not out of sight." He noted that there already were twenty-one and a third divisions on the central

48 First Afternoon Session- Military Relations

front in Germany. "When Western Germany increases her forces to twelve divisions, as she has already promised to do, and if France by some magic could settle the Algerian War and increase her present two divisions to her promised four, there would be twenty-eight and a third divisions--very close to the present goal of thirty." Dr. Kissinger agreed that a great increase might not be required, but suggested that additional effort and probably a reorientation of thought was needed.

On the same subject, one speaker asked what the objective of such increases would be. "Are we trying simply to stop a Russian assault mounted only with the forces Russia has in Eastern Germany, or are we trying to stop the entire mobilized Russian Army?" Disagreeing with another participant who suggested that if necessary the United States could fight a third conventional war in Europe, this speaker stated his belief that a limited war was impossible in Europe, "except possibly a Berlin street riot or some small border incident." He argued that a large-scale war involving all thirty divisions could not be fought without the use of small tactical nuclear weapons, which would probably lead to the use of megaton weapons as well. His opinion of the objective of the conventional forces in Europe was that they should confront Russia with a dilemma:

> That dilemma should be that she cannot take Western Europe as a hostage. She can destroy it, just as she can destroy the United States, but she cannot take it as a hostage. If we confront her with that dilemma, it seems to me we have accomplished all we can hope to accomplish from the point of view of military force.

The conference also covered several issues affecting, but not so central to, the defense of Europe. These included: the role of British public opinion, civil defense, deterrence in Asia, and integration of NATO forces.

On British public opinion, one participant pointed out that this was quite important for the future of NATO. He termed the unilateral disarmament movement a "rather dangerous trend," and said that it was probably still increasing in strength. "There is evidence of the fact that it does influence British policy," he said. In particular, he maintained that over the previous two weeks United States negotiations with the British Government on "some military matters" had been affected by the opinion. "I think this growth of neutralism is particularly important in connection with our bases in Britain. There is pressure on the British Government that stems from this and must be recognized."

Later, the conference again dealt with the problem of public opinion in considering some results of giving nuclear weapons to Germany. One observer suggested that the possibility that the Germans would obtain control of nuclear weapons was "a fundamental cause of friction between American and British political thinking." In agreeing with this statement, another participant said that "giving nuclear arms to Germany would be quite intolerable to the mass of British opinion." He said that the issue had been covered over "by having two keys for the lock" but that if it was presented to the British public as one of whether or not the Germans should have nuclear weapons, "there would be 90 percent opposition."

First Afternoon Session - Military Relations 49

**On civil defense,** one participant expressed concern that "as long as we have no system of civilian defense in either Britain or America which could by the wildest stretch of the imagination be described as adequate, we expose ourselves to a type of Communist blackmail which we certainly could not resist in the final pinch." He questioned whether, if the Communists demonstrated that they could destroy 50 million Americans, the United States would be willing to go to war, and asked two questions:

First, is it really necessary for us to have an adequate system of civilian defense in order to avoid this type of blackmail, a system which would be extremely expensive, which would cost billions of dollars, and a system which is utterly repellent to public opinion in both Britain and the United States? And second, if this system is necessary in order for us to have the bargaining power that we need in trying to reach an agreement with the Soviets short of war, is it not the responsibility of government in both countries to bring this to the attention of the people and to try to convince them that this is yet something else that we must have, expensive as it may be and as wasteful as it may be?

Dr. Kissinger also considered this problem, observing that it was strange for a government to rely on deterrence without informing its people of even the most elementary forms of protection. He asked whether a government could "morally continue that type of line over a long period of time." Taking up the argument that civil defense will encourage war, he said, "I do not see how over any period of time a policy based on such distrust of one's people can be supported. Such an approach must lead to surrender or suicide."

**On deterrence in Asia,** one individual argued that, at the time he was speaking, the United States could not make a credible threat of nuclear retaliation or resist an attack in Asia because its European allies would not agree to such a move. He advocated that the free world develop two deterrents: "one that could be used to keep war out of Europe and another which we could use in order to try to limit the expansion in Asia of Communist China." A single deterrent applied simultaneously for two purposes might not work in either place, he observed. This speaker suggested that a separate NATO deterrent would free the United States "to use the only kind of power we really have in Asia to resist new advances which are bound to come in a very short time." He said that the United States should start planning immediately to develop a deterrent for Asia rather than waiting until it was faced with a threat by Communist China. "I think the only planned deterrent we can use in Asia would be a national United States deterrent, possibly combining defenses with Australia, because I do not think any European country or Japan would join in supporting the political threats to use this in order to deter military aggression." Dr. Kissinger agreed that insofar as the United States had to rely on a retaliatory strategy, there should be separate solutions for Europe and Asia. But, he proposed that "even in Asia we have to give up, as far as we possibly can, the notion of the retaliatory strategy and try to protect the threatened areas against a fait accompli."

**On integration of forces,** one observer asked whether the United States and Britain should support military integration or national expressions of strength

50 First Afternoon Session-Military Relations

for NATO. Noting that France had taken a position in favor of loose international control, he said that if France pressed this point, "revision of the whole NATO command structure, including a revision of our relations with Britain, might have to result." He cautioned against believing that the question was entirely black and white, however:

> De Gaulle has entered into a limited common air-defense policy with NATO and, although he has placed only one tactical air force and the northern fraction of France under it, nevertheless it represents a limited achievement in military integration. The French fleet in the Mediterranean participated in considerable numbers in the last NATO maneuvers under NATO command, so that despite de Gaulle's words about taking part of his fleet away from NATO command, he is still cooperating with NATO.

Finally, the need for closer cooperation was again mentioned, as it had been in the morning session. One individual questioned whether there had been "enough discussion between knowledgeable individuals in the United States and knowledgeable individuals in Britain about the fundamentals of the situation in the world we face today, fundamentals not only as to what our external environment is, but also as to the programs which might be used to affect this external environment." He suggested that such discussions should consider long-range policies. "It seems to me that such a discussion, such an attempt at definitions, might develop useful ways of going. Even in defining a difference you sometimes define thereby ways to get together."

* * * * *

51

SECOND AFTERNOON SESSION-ECONOMIC RELATIONS

CURRENT PROBLEMS IN ANGLO-AMERICAN
ECONOMIC RELATIONS

Future relationship between the U. S. and U. K. in the three areas of trade, finance, and aid to less-developed countries.

Discussion Leader

RICHARD N. GARDNER

Professor of Law at Columbia University Law School;
Chairman, Committee on Foreign Economic Cooperation,
American Bar Association

Note: Dr. Gardner prepared in advance of the conference a number of questions for discussion and these are given in a Note at the end of this section.

Commentary by Dr. Gardner

Our conference today is taking place some twenty years after the United
States and Britain first undertook that historic effort of Anglo-American econom-
ic cooperation which produced some of our most important international institu-
tions for finance, aid, and trade. Indeed, it was in the autumn of 1940 that Lord
Keynes came down from Cambridge and started to work in the British Treasury
on his Clearing Union proposals and other plans for post-war economic cooper-
ation. At that same time, in the State Department and in the U. S. Treasury, a
number of Americans -- some of them with us today -- were doing similar bold
thinking about the design of a post-war economy.

The upshot of all this planning some twenty years ago was an extraordinary
effort of Anglo-American collaboration -- indeed, I doubt that the United States
ever worked so closely with another country in economic affairs in its entire
history. Together the two nations worked to promote a world-wide multilateral
trading system which would facilitate a maximum of freedom, stability and econ-
omic growth.

All of us are well aware of the institutions of world economy which resulted
from this effort of collaboration. We are also aware that the effort fell some-
what short of its great goals. It was displaced very quickly by more pressing
problems -- the problem of reconstruction and, later, the problem of collective
defense against the Soviet military power.

With the end of the reconstruction effort and the development of the Western
defense establishment, we are returning once again to some of the fundamental
questions about the shape of the free world trade and financial system. We are
still working toward the same objectives as twenty years ago, but the environ-

52 Second Afternoon Session - Economic Relations

ment has rather strikingly changed. We are faced, to mention only the obvious factors, with a Soviet economic offensive, a trend toward regional market arrangements, a serious U. S. balance-of-payments problem, and an explosive "revolution of rising expectations" in the less developed countries.

Before discussing our current problems, I think two contrasts should be noted between the present situation and that of twenty years ago. On the one hand, the U. S. and Britain have achieved a consensus on most international economic issues which would have seemed impossible two decades ago, when the two countries were far apart on such matters as Imperial Preference, currency controls, and measures to promote full employment.

On the other hand, we have, in a sense, abolished Anglo-American economic relations. Twenty or even fifteen years ago, the two countries could go about planning the shape of the economy practically alone; the rest of the great trading countries were enemies, were recovering from enemy occupation, or (in the case of most less developed countries) were not in a position to advance their own views. Today, by contrast, Anglo-American economic relations are merged in a much broader framework. We no longer have the possibility of defining the solutions ourselves. Nevertheless, it seems to me that an Anglo-American agreement on major issues is still a necessary, if not a sufficient, condition for further progress.

In the discussion outline, I have tried to define the current issues under the three categories of trade, finance, and aid. Let us turn to a consideration of these questions in that order.

In the field of trade, the most pressing problem is to determine what kind of a trading pattern within the free world the U. S. and the U. K. regard as an objective. When I say objective, I mean something which we can reasonably aim to achieve within the present decade.

I have tried to indicate in this outline some of the major alternatives. We have, first of all, what seems to be emerging from the present situation--a fairly high degree of trade restriction plus the Common Market, the Free Trade Association, a preferential area in Latin America, some sort of common market or preferential system in Central America, perhaps regional markets eventually in Africa and Southeast Asia, and the Middle East. This is one possible trading system.

A second alternative would be a system essentially similar to this but one in which the Six and the Seven merged, either by forming a customs union or a free trade association. A settlement might also take the form of a bridge between the Six and the Seven--a swapping of preferences which stopped short of complete free trade.

A third alternative would be something along the lines of this regional development, but with very deep inter-regional tariff cuts of the order of 50 per cent or more, so that the discrimination involved in regionalism would be substantially reduced.

A fourth alternative is North Atlantic free trade. A fifth is Governor Rock-

Second Afternoon Session - Economic Relations 53

efeller's proposal for "interlocking confederations" in the Americas, the North Atlantic Community, and Africa. Finally, there is the alternative of substantially free trade throughout the entire free world without regionalism.

I shall try to summarize my own views on these alternatives, even though I can't possibly defend them adequately in the limited time available. But at least you will have something to shoot at in the discussion period.

The first alternative (the one we're living with now) strikes me as inadequate. That is to say, I would not regard a situation in which there was a Six and Seven without a settlement between them, and in which there were only moderate, rather insignificant tariff concessions of the order of 10 percent or so -- I would not regard this as a tolerable situation in terms of either U. S. or British interests. It would involve an uneconomic diversion of natural trade patterns and would pose a threat to the unity of the North Atlantic alliance. From the British point of view, it would interfere with traditional trade patterns in Europe of great importance; it would confront the U. S. with substantial discrimination from regional market blocs in which we did not participate.

Well, then, what are the alternatives? If we move down the list of possibilities to number two -- can we find some formula by which the Six and Seven can be somehow brought together? Now, of course, you are familiar with the issues which appear to have blocked the settlement so far. The United Kingdom is reluctant to accept full membership in the European community -- a membership which would mean sacrificing Commonwealth preference and accepting supra-national institutions. France is reluctant to accept British competition if Britain does not accept the supra-national commitments and refuses to abandon her special economic relationship with the Commonwealth.

The United States has put its blessing on the Six, has rather reluctantly accepted the Seven, and has not encouraged a settlement between them. Our Government has apparently felt that the value of the Six as a step toward eventual political federation should not be compromised by bringing in outsiders who might dilute the close economic and political integration. We have also felt that nothing should be done to prejudice the German-French rapprochement involved in locking the two together in the Six. Finally, we have felt, in view of our balance-of-payments difficulties, that we don't want to extend the range of discrimination against the United States' exports.

I must say I don't find these arguments fully convincing. I think the dangers to the interests of our two countries of a split in Western Europe outweigh these arguments against seeking an integration of the two.

What then is the price of bringing the two together? What has to be done to make it a reasonable possibility? Well, I think that if it's to be made feasible, it has to be done through fairly substantial reductions in tariffs between the regional groups, reductions made possible by some substantial new tariff-negotiating authority in the United States. That is to say, it is conceivable that the Six and Seven might combine if the French were bribed, as it were, with the prospect of a substantial increase in their market in the United States through a reduction of American tariffs.

54 Second Afternoon Session - Economic Relations

Or, to put it another way, assuming that Britain would have to enter into the
Six and accept something like a customs union, involving some discrimination
against the Commonwealth, it could accept this more readily if the common tariff
of the Six were really low. The lower the external tariff, the smaller the dis-
crimination and the easier a settlement would be.

What about North Atlantic free trade? I really don't think that's something we
should aim for, because it would involve discrimination by the industrialized
countries of the North against the less-developed countries of the South. I think
that to seal ourselves off from a relationship with the rest of the free world in
this way would be most undesirable.

Governor Rockefeller's proposal of interlocking confederations is also un-
desirable and for similar reasons. One of the confederations he proposes is a
union in the Americas. I don't think our Latin American friends would even
look twice at a scheme of complete free trade in which they would be committed
to allow free entry of industrial products from the U. S. But the main point is
that such a scheme would involve discrimination in Latin America against
European products in favor of American products, and discrimination in Europe
against Latin-American products in favor of American. This would not be desir-
able, either on economic or on political grounds.

The final alternative would be free trade on a free world basis without region-
alism. This may have been the objective of some people in 1940. It's clearly not
a realistic objective today. The drive toward regionalism is too strong and the
less developed countries are too deeply wedded to import restrictions for the
sake of industrial development.

In summary on this trade question, I see no satisfactory alternative to new
American initiative, a new thrust forward to a freer non-Communist world
trading system within which there would be regional blocs, but regional blocs
pursuing liberal, outward-looking trade policies.

My first preference would be for nothing short of this: A dramatic commit-
ment by the United States to eliminate substantially all tariffs on industrial pro-
ducts by five percent a year over a twenty-year period, in return for the same
commitment by other industrial countries. I know, in the light of political oppo-
sition at home, in the light of the Southern governors' statements, in the light of
the mounting wave of protectionist sentiment and concern for our balance of pay-
ments, that this looks almost hopeless, but I really think something of this order
is necessary to preserve the integrity of the multilateral trading system and to
prevent dangerous economic divisions in the free world.

To turn to the next question in the outline, I'm asked what international trade
institutions are necessary to handle free world trade problems. As far as
G. A. T. T. is concerned, all of us know the unhappy story of how this Administra-
tion tried to get approval of the Organization for Trade Cooperation which would
have put G. A. T. T. on a formal footing as an international institution. That effort
failed. It's unfortunate, but I think we must now move on to the next problem --
how to preserve the integrity of G. A. T. T. without another O. T. C. In fact, Mr.
Wyndham White is strengthening the G. A. T. T. secretariat. In fact, he is provid-
ing for continuous G. A. T. T. discussions through an Executive Council just as

Second Afternoon Session- Economic Relations 55

he would have done if he had gotten the O. T. C. These developments may be somewhat makeshift, but I think we will just have to learn to live with the situation.

O. E. C. D., of course, is a new institution which will be presented to the Congress this coming spring. It is the replacement of the old O. E. E. C. with the difference, of course, that the United States and Canada which were only associate members in the O. E. E. C. are full members of O. E. C. D.

Many people have asked, why do we need this new institution? That's something we might discuss. I think there are several arguments that can be made on behalf of O. E. C. D. First of all, it will provide a forum for the settlement of the trade difficulties between the Six and Seven. Secondly, it will facilitate close economic consultation between the North Atlantic countries in the field of general economic policy, including interest rate policy.

Third, and perhaps most important, will be to coordinate and expand the efforts by the industrial countries of Europe and North America to aid less developed countries. I'll defer further discussion of that until we get into the area of economic aid.

Let us turn now to the second major area of our discussion--the area of finance. Here again, I think we need some new initiative on the part of the United States and the United Kingdom. The situation, of course, is dramatically changed since the former era of Anglo-American economic collaboration. Only three years ago, Sir Geoffrey Crowther, formerly Editor of *The Economist*, told a Harvard audience very proudly that for twenty years he had preached the doctrine "of a permanent and organic shortage of dollars. The more time passes, the more convinced do I become that I am right."

"It is difficult," Sir Geoffrey continued, "to believe that there could have been another case of a country (the United States) where the demand of the rest of the world for its products was so urgent, and its demand for the products of the rest of the world was so indifferent."

Well, of course, all this talk of dollar shortage has suddenly been transformed into a talk of dollar glut. And one of the things that we ought to discuss at least briefly is whether there is in fact a structural long-term dollar problem in this new reverse sense.

I must say that on this subject I have been increasingly troubled. I had thought this year our problems were going to look much better, but we are still going to be faced with a big payments deficit in 1960--something close to 4 billion dollars--despite a fantastic 20 billion dollar export figure and a substantial improvement in our merchandise surplus over last year.

So one does have the feeling that there is something here that is not just a temporary phenomenon and that there has been mounting up over the last decade a capital drain on the United States in the form of foreign private investment, foreign aid and foreign military spending, overbalancing our commercial surplus, and that somehow we have to get control of this in our own and in the free world's interest.

56 Second Afternoon Session - Economic Relations

This does, it seems to me, pose something of a threat to domestic and inter-
national financial stability. To take one obvious example, an American admin-
istration cannot contemplate pushing the interest rate down as an anti-depression
device, without being concerned about the impact on the large foreign dollar
holdings which have been accumulating against our shrinking stock of gold.

I think this forces us to consider possible new international financial institu-
tions which might, as it were, "take the heat off" the United States, as central
banker of the free world.

I've also tried to raise the question here of the U. K. position, the U. K. balance of payments and the vulnerability of her reserve position. In the fixation on the American problem, some people have tended to forget that the British problem is in no way really solved. The British position is still extremely vulnerable.

In the United States, for example, we have a stock of about 18 billion dollars in gold against about 19 billion dollars in foreign dollar holdings. In Britain, the ratio is 3 billion dollars of reserves against 9 billion dollars in sterling liabili-ties, a reserve position about one-third as good. Of course, you can argue that much of the sterling is held by members of the sterling area, but, even allowing for this, the British position is at least as vulnerable as ours.

The vulnerability of the British position shows up strikingly from recent trade statistics. In 1959, Britain ran a moderate trade deficit of about 180 million dollars. This was more than compensated for by an invisible surplus of about 550 million dollars, but this current account surplus was completely overbalanced by an outflow of capital to the tune of about 800 million. About half of that was government capital and about half of it private. This resulted in a net deficit of about 430 million dollars. I'm leaving out of account Britain's payment to the IMF which was a non-recurring item. In 1960, the British current account has badly deteriorated and the over-all position is made tenable only because of a temporary influx of short-term capital.

Thus, neither the British nor the American financial position is very secure. You have a pyramiding of claims against the two great financial centers, which suggests the need for new international financial institutions.

This leads me to say just a word or two about the International Monetary Fund. As you know, the Fund was set up to serve three main objectives of British and American policy; first, to provide for exchange-rate stability; second, to assure freedom of payments on current transactions and, third, to assure domestic stability and expansion, free from the restraints of the old Gold Standard.

Now I think we should face the question raised by Professor Triffin and others, whether these three objectives can be achieved in view of the emerging shortage of free world liquidity. The ratio of free world gold to free world imports has fallen steadily over the last several decades. This ratio, which was at about 100 percent in 1938 dropped to about 60 per cent in 1950, and is down to about 40 per cent today. At the present rapid rate of growth in free world trade and at the present slower rate of growth in world gold stocks, this ratio will be down to about 25 percent in 1970. With an inadequate stock of gold against a rising volume of world trade, countries are being forced increasingly to hold reserves

Second Afternoon Session - Economic Relations 57

in the form of sterling and dollars, thus pyramiding claims against the U. S. and Britain and increasing the vulnerability of these two countries to short-term capital movements. This vulnerability needs to be remedied. You are aware of the various remedies which have been suggested by Triffin and others, and we might discuss this later.

Now finally, I want to say just a word on the third topic of aid to less developed countries. I'm going to make a bold assumption, just state my own preference, that a substantial increase in the flow of development capital is essential to promote our own national interest and the interest of the entire free world.

Mr. Paul Hoffman has given the familiar estimate that to double the rate of growth in per capita income in the less developed countries from the present rate of about 1 per cent a year to 2 per cent a year would require additional government assistance over and above present levels of about two billion dollars a year. Well, let's just take that as a desirable objective. How is this burden to be shared by our two countries?

Let me set out some interesting statistics. The United States, with a population of about 180 million, a gross national product of something nearly 500 billion dollars, income per capita of something over $2,000, a balance-of-payments deficit of nearly 4 billion dollars a year, is channeling something like 2-1/2 billion dollars a year, in aid to less developed countries, about two-thirds of 1 percent of our gross national product.

(At this point a questioner interrupted to ask whether Mr. Gardner was equating aid with development capital and other forms of assistance. Mr. Gardner made it plain that he was including government loans and grants through such agencies as Public Law 480 -- agricultural surplus disposal -- ICA, DLF and other forms of multilateral assistance. Private investment, however, was not included in Mr. Gardner's figures.)

This is, of course, very difficult. I think this figure is the right order of magnitude, it's about 2-1/2 billion dollars. Perhaps Mr. Knapp will tell us whether we ought to include World Bank loans in this. I tend to think not, since most of the capital comes from the private capital market, but I'm subject to correction.

The U. K. with a population of 50 million, GNP of about 60 billion dollars, income per capita about $1,000, with a balance of payments which tends to run from balance to modest deficit of about half a billion dollars, has been moving up quite strikingly over former aid levels to a figure of about 380 million dollars this year in aid to less developed countries. This is also about two-thirds of 1 per cent of her GNP, a relative effort in these terms about the same as our own. I just mention these figures in case some one thinks they will provide some kind of indication of whether the allocation of the burden is appropriate ---

(The speaker was again interrupted to ask for comparable figures for Germany and Japan. No definitive figures for these two countries were given, but one of the participants estimated that Germany had contributed between 200 and 250 million dollars in the current year, not counting reparations payments. He observed that Japan was also paying reparations in fairly sizable amounts.)

58 Second Afternoon Session - Economic Relations

One question I think we might discuss is this -- if a new aid effort is going to be made on a multilateral basis, is it really going to be multilateral or is the U.S. going to have to put up 80 or 90 per cent of the money and, if we are, is it worth calling it a multilateral effort and putting it in a multilateral framework?

This leads me to my next question of the adequacy of the allocation of British and American aid among recipient countries. About four-fifths of U.K. aid to less-developed countries is directed to the Commonwealth. Less than one-fifth of U.K. aid to less-developed countries is directed to recipients outside the Commonwealth. This latter proportion is channeled through multilateral agencies like the World Bank, the new IDA, the Special Fund of Mr. Hoffman, and so on.

The United States up to very recently has had an almost completely bilateral effort -- that is, up until the creation of the International Development Association, the Inter-American Development Bank, and the Special Fund. Of this bilateral effort, about two-thirds of the U.S. aid has been given to countries which are military allies, and only about five to six hundred million dollars a year to so-called uncommitted countries. One might ask whether this distribution of effort by the U.K. and the U.S. is appropriate -- whether the U.K. should be doing more outside the Commonwealth, and whether the U.S. should be doing more for uncommitted countries.

My final question relates to organization. What is the appropriate organizational form of an expanded, collective aid effort in which the U.K. and U.S. would join? As far as the OECD is concerned, my own view would be that it will be a useful means of obtaining new aid from the industrial countries, but not for dispensing the aid. If it took on this latter function it might look like a ganging up of Colonial powers on the less-developed countries. It would seem to me you'd want an institution in which the less developed countries could participate with the industrially advanced ones.

The International Development Association (which now has a capital of only a billion dollars) might be an appropriate institution to strengthen if we want to make new efforts along these lines.

The Special Fund of the U.N. is another possibility. This has the liability in some people's eyes that the Russians participate, and that it doesn't provide the same assurance of control by the West which is provided by the weighted voting in the IDA and World Bank and that it does not have the staff to carry on an effort of this size.

Some people believe we ought to be thinking about regional institutions of the O.E.E.C. type in certain underdeveloped areas, such as Southeast Asia, but one may question whether the necessary prerequisites for success of regional cooperation such as existed in the Western European community exist in the less developed countries.

Some people think we ought to create a new institution. I think this should be avoided if possible, since the landscape is already cluttered with lending institutions. One economist has remarked that the West seems to be acting under the motto, "a bank a day keeps Khrushchev away." Perhaps the time has come to

CJ

Second Afternoon Session - Economic Relations 59

[L]

make more use of what we have, rather than to set up new instruments of collaboration.

* * * * *

Discussion by Conference Members
Following Professor Gardner's
Commentary:

The participants appeared agreed that relative harmony had been achieved in economic relations between the United States and the United Kingdom. Therefore, the discussion of economic relations centered not so much on the interaction between the two principals but rather on their relation as a working team with the Common Market and the underdeveloped countries of the world. Indeed, there was a tendency to expand the area of joint effort further, making the question not one simply of United Kingdom and United States economic policy toward the underdeveloped countries but one of policy of all the principal industrial non-Communist countries toward the underdeveloped areas.

One speaker explained that the progress which had been made in Anglo-American economic relations had a number of components. In the first place, he said, discrimination against the dollar had "virtually disappeared" in Western Europe, with most of the countries of the area behaving as if they were operating under Article VIII of the International Monetary Fund Articles of Agreement, which prohibits restrictions on payments by member countries. Secondly, another source of friction between the United States and the United Kingdom had been removed by the fact that the flow of reserves away from the United Kingdom had now shifted to a flow from the United States. Third, there was no longer a tendency in Britain to base policies on the fear that the United States would suffer a depression. Fourth, the two allies had stopped bickering over IMF policies and were acting in common against the policies of, for example, Germany. Finally, the United States and the United Kingdom had joined together in certain economic aid activities.

Later, Professor Gardner agreed that there had been "extraordinary achievements in Anglo-American economic relations over the last twenty years." In particular, he singled out the existence of basic agreement between the two on the principles of international finance. Fifteen or twenty years ago, he explained, the British foresaw economic troubles which would spread from the United States following the war; the Americans held "rather doctrinaire views on the immediate elimination of exchange restrictions"; and the two disagreed over the importance of reducing preferences as opposed to cutting tariffs. As Mr. Gardner put it, the removal of the differences between the two permitted them "to get on to some of the more urgent problems of common concern."

One of these problems of common concern to come up for comment was the position of the United Kingdom with regard to the Common Market. An observer of the British scene noted that there were some "welcome elements of rapprochement" between Britain and the Six. He cited the fact that British politicians associated with the European institutions to which Britain belonged had been "gain-

60 Second Afternoon Session - Economic Relations

ing in stature in the British House of Commons as a result of their European stature," and that the House of Commons had recently held its first full-scale debate on relations with Europe. Also, the flow of information between the United Kingdom and Europe had increased, with, for example, certain Labour Party leaders recognizing that the approach to economic planning in the European institutions was "by no means antithetical to current Labour thinking in Britain." Meanwhile, in France there had been an agreement that Britain should be brought into existing European institutions by accentuating their economic rather than their political purpose. Although the British still pointed up the political aspects of European integration, pressure on the British government from its own supporters in industry who did not want to be left out was having "a discernible effect," he said. Noting that Foreign Secretary Selwyn Lloyd had said that Britain would be ready to join both the Coal and Steel Community and Euratom as a full member if her European partners so desired, this observer of the British scene concluded that "the significant British objections to joining the Common Market are rapidly ceasing to relate to the ultimate political objective of the federation."

On the more general question of Anglo-American policy toward customs unions, one individual stated that there was, in fact, no sharp distinction between 100 percent tariff cuts and fractional cuts such as are made under preference schemes. He noted that the United States had combined historical prejudice against preferences with enthusiasm for regional free trade and regional customs unions. He argued, however, that "to draw a sharp distinction between fractional cuts and 100 percent cuts and to say that the fractional cuts are vicious while the 100 percent cuts are the path to Utopia, is to argue that chastity is not violated if the baby is of the maximum possible size." Indeed, he warned that what was to be feared was selectivity. "Once they start selecting, they will select for heavy duties precisely those imports which would hurt the outside world most and give them the least protection at home; they will extend the area of hot-house industries within their region," he declared.

The conference felt that the United Kingdom and the United States should be concerned over the Common Market for reasons other than this primary effect, however. It considered the effect of the creation of the Common Market on the underdeveloped countries also to be of importance to the two Atlantic allies. For Britain, the basic problem was that the former French territories in Africa had free access to the whole Common Market while ex-British territories in Africa, Latin American countries, and some Asian countries did not, one speaker explained. Another participant pointed out that Brazil had "protested very vigorously" at the creation of the Common Market on the grounds that it involved discrimination against the Latin American friends of the United States. Brazil, according to this individual, had claimed that its most formidable prospective competitors in coffee, cocoa, sugar, cotton, and certain metals were in Africa. She had asked the United States to take this into account in encouraging the creation of the Common Market.

This problem was dubbed the "orphan country problem" in the course of the discussion. As the originator of this term explained, "the extension of these European regional agreements will create orphans scattered all over the world." In particular, he pointed out that the entry by the United Kingdom into the Common Market would "involve their making orphans of some countries they now

61

take care of." He suggested that Haiti and the Dominican Republic would be "thoroughly orphaned" by this action. According to this individual, the orphan country problem would not be a result of ordinary tariffs and preferences so much as of subsidies to sugar growers and high excise taxes discriminating against tobacco, tea and coffee.

This aspect of the Common Market was one of the primary factors making it difficult for the United Kingdom to join, according to one observer. Since Britain discriminated against the advanced industrial countries of Europe and elsewhere in favor of industrial goods of certain members of the Commonwealth, Britain's participation in the Common Market without making special arrangements for the Commonwealth would be "to stand this policy on its head and discriminate in favor of advanced industrial countries in Europe and against the underdeveloped countries in the Commonwealth."

Another speaker termed as dangerous the tendency towards the creation of "client areas," each with patrons in the free world and each trying to gain special advantages through discrimination. Such a situation, he suggested, would be "a free gift to our enemies in the Cold War." The solution suggested for this problem was "not to eliminate the advantages that some underdeveloped countries have now, but rather to generalize them." Under such a scheme, all the advanced countries would give free access equally to all the underdeveloped countries. One participant proposed that this should be added to Dr. Gardner's six alternate routes for the development of international trade. It would involve "a movement towards free trade on the part of the advanced world while the underdeveloped countries would be permitted to do what they liked." He pointed out that although he did not think it would be in the real interests of the underdeveloped countries to employ protection, "politically it may not be possible for them to move in any other direction."

Along the same lines, another individual suggested that problems of trade and other economic relations with the Western industrialized countries should be separated from those involving the underdeveloped countries. Problems involving the former group would then be dealt with "along traditional lines of foreign economic policy," while a different set of standards would be applied to the underdeveloped countries. For example, "one-way" free trade might be allowed, with the underdeveloped countries permitted to establish tariffs for their own development but given free trade treatment by the industrialized countries. He explained that "the liberal trade policies, convertible currency, and other traditional policies that prevail in our relationships with the industrialized West just are not accepted by the underdeveloped countries and are not likely to be accepted for a long, long time." Nor did this observer feel that free trade policies were adapted to the most urgent needs of the underdeveloped countries. Thus, the Western industrial countries "would not be giving away much anyway if we give away our allegiance to these classical ideas in relation to these areas."

In specific, one of the participants suggested that the slogan "trade not aid" should be revived. As examples of where it would be effective, he noted the market for Indian textiles in Italy, now restrained by artificial restrictions, and the potential outlets for South American products in Germany. "One of the most effective ways to redistribute trade, with an appropriate and healthy effect upon re-