Postwar: A History of Europe Since 1945 (23 page)

As for the Soviets, they never lost their distrust of the West—a distrust whose roots go back far beyond 1917, of course, but which were well irrigated by Western military intervention during the civil war of 1917-21, by the Soviet Union’s absence from international agencies and affairs for the next fifteen years, by the well-founded suspicion that most Western leaders preferred Fascists to Communists if forced to choose, and by the intuition that Britain and France especially would not be sorry to see the Soviet Union and Nazi Germany engage in mutually destructive conflict to others’ advantage. Even after the wartime alliance was forged and the common interest in defeating Germany was clear, the degree of mutual mistrust is striking: there was, revealingly, very little wartime exchange of sensitive intelligence between West and East.

The unraveling of the wartime alliance and the subsequent division of Europe were thus not due to a mistake, to naked self-interest or malevolence; they were rooted in history. Before the Second World War relations between the US and the UK on the one hand, and the USSR on the other, had always been tense. The difference was that none of them had had responsibility for large tracts of the European continent. Moreover they had been separated by, among other considerations, the presence of France and Germany. But with French humiliation in 1940 and German defeat five years later, everything was different. The renewed Cold War in Europe was always likely, but it was not inevitable. It was brought about by the ultimately incompatible goals and needs of the various interested parties.

Thanks to German aggression the United States was now, for the first time, a power in Europe. That the US had overwhelming strength was self-evident, even to those mesmerized by the achievements of the Red Army. US GNP had doubled in the course of the war, and by the spring of 1945 America accounted for half the world’s manufacturing capacity, most of its food surpluses and virtually all international financial reserves. The United States had put 12 million men under arms to fight Germany and its allies, and by the time Japan surrendered the American fleet was larger than all other fleets in the world combined. What would the US do with its power? In the aftermath of the First World War Washington had chosen not to exercise it; how different would things be after the Second World War? What did America want?

So far as Germany was concerned—and 85 percent of the American war effort had gone on the war against Germany—the initial American intent was quite severe. A directive from the Joint Chiefs of Staff, JCS 1067, was presented to President Truman on April 26th 1945, two weeks after Roosevelt’s death. Reflecting the views of, among others, Henry Morgenthau, the US Secretary of the Treasury, it recommended that:

‘It should be brought home to the Germans that Germany’s ruthless warfare and the fanatical Nazi resistance has destroyed the German economy and made chaos and suffering inevitable and that the Germans cannot escape responsibility for what they have brought upon themselves. Germany will not be occupied for the purpose of liberation but as a defeated enemy nation’. Or, as Morgenthau himself put it, ‘It is of the utmost importance that every person in Germany should realize that this time Germany is a defeated nation.’

The point, in short, was to avoid one of the major mistakes of the Versailles Treaty, as it seemed in retrospect to the policy makers of 1945: the failure to bring home to Germans the extent of their sins and the nemesis visited upon them. The logic of this initial American approach to the German question was thus demilitarization, denazification, deindustrialization—to strip Germany of her military and economic resources and re-educate the population. This policy was duly applied, at least in part: the Wehrmacht was formally dissolved (on August 20th 1946); denazification programs were set in place in the US-occupied zone especially, as we saw in Chapter Two; and strict limits were placed upon German industrial capacity and output, with steel-making particularly severely restricted under the March 1946 ‘Plan for the Level of the Post-War (German) Economy’.

But from the outset the ‘Morgenthau strategy’ was vigorously criticized within the US Administration itself. What good would be served by reducing (American-controlled) Germany to a virtually pre-industrial condition? Most of pre-war Germany’s best agricultural land was now under Soviet control or else had been transferred to Poland. Meanwhile western Germany was awash in refugees who had access neither to land nor food. Restrictions on urban or industrial output might keep Germany prostrate but they wouldn’t feed it or rebuild it. That burden, a very considerable one, would fall on the victorious occupiers. Sooner or later they would need to offload this responsibility onto Germans themselves, at which point the latter would
have
to be allowed to rebuild their economy.

To these concerns, American critics of the initial US ‘hard’ line added a further consideration. It was all very well forcibly bringing Germans to a consciousness of their own defeat, but unless they were given some prospect of a better future the outcome might be the same as before: a resentful, humiliated nation vulnerable to demagogy from Right or Left. As former President Herbert Hoover expressed it to Truman himself, in 1946, ‘You can have vengeance, or peace, but you can’t have both.’ If, in American treatment of Germany, the balance of advantage swung increasingly to ‘peace’ this was largely due to the darkening prospect for US-SOVIET relations.

Among a restricted circle of Washington insiders, it was obvious from the outset that the incompatibility of Soviet and Western interests would lead to conflict and that clearly delimited zones of power might be a prudent solution to post-war problems. This was the view of George Kennan. Why, he wrote on January 26th 1945, ‘could we not make a decent and definite compromise with [the USSR]?—divide Europe frankly into spheres of influence—keep ourselves out of the Russian sphere and the Russians out of ours? . . . And within whatever sphere of action was left to us we could at least . . . (try) to restore life, in the wake of the war, on a dignified and stable foundation.’

Six weeks later a more pessimistic and implicitly confrontational response to Soviet actions in eastern Europe was proposed to President Roosevelt in a memo from Averell Harriman, the US ambassador in Moscow: ‘Unless we wish to accept the 20th century barbarian invasion of Europe, with repressions extending further and further in the East as well, we must find ways to arrest the Soviet domineering policy . . . If we don’t face the issues squarely now, history will record the period of the next generation as the Soviet age.’

Harriman and Kennan differed implicitly on how to respond to Soviet actions, but they did not disagree in their account of what Stalin was doing. Other American leaders were much more sanguine, however, and not just in the spring of 1945. Charles Bohlen, another US diplomat and the recipient of the Kennan letter quoted above, believed in the possibility of a post-war settlement based on broad principles of self-determination and Great Power cooperation. Recognising the need to maintain Soviet cooperation in working out a solution in Germany itself, Bohlen and others—like the post-war Secretary of State James Byrnes—placed their faith in Allied military occupation of the former Axis states and their satellites, together with free elections along the lines adumbrated at Yalta. Only later—after observing the workings of Soviet power under the auspices of Allied Control Councils in Romania and Bulgaria especially—did they accept the incompatibility of these goals and come to share Kennan’s preference for the
realpolitik
of separate spheres.

One ground for initial optimism was the widely held view that Stalin had no interest in provoking confrontation and war. As General Eisenhower himself put it to President Truman and his Joint Chiefs of Staff in June 1946, ‘I don’t believe the Reds want a war. What can they gain now by armed conflict? They’ve gained just about all they can assimilate.’ In a limited sense Eisenhower was correct: Stalin was not about to go to war with the USA (although the reasonable conclusion to be drawn, that the Soviet Union thus had an interest in cooperating fully with its erstwhile ally, did not in fact follow). And in that case the US, which had a monopoly of atomic weapons, risked little by keeping communications open with the Soviet Union and seeking mutually compatible solutions to common problems.

Another element in US policy in the initial post-war period were the new international institutions that the Americans had helped bring about and whose success they sincerely desired. Of these the United Nations, whose Charter was ratified on October 24th 1945 and whose General Assembly first met in January 1946, is obviously the best known; but it was the financial and economic agencies and agreements associated with ‘Bretton Woods’ which perhaps mattered more to policymakers at the time.

The economic meltdown of the inter-war years seemed to Americans especially to be the root source of the European (and world) crisis. Unless currencies were convertible and nations stood to benefit mutually from increased trade, there was nothing to prevent a return to the bad days of September 1931, when the post-World War One monetary system fell apart. Led by Maynard Keynes—the moving spirit behind the July 1944 meeting at the Bretton Woods conference center in New Hampshire—economists and statesmen sought an alternative to the international financial system of pre-war days: something less rigid and deflationary than the gold standard, but more reliable and mutually sustaining than a floating-rate currency regime. Whatever this new regime was to be, it would need, Keynes argued, something resembling an international bank, functioning rather like the central bank of a domestic economy, to administer it: to maintain the fixed exchange rate while at the same time encouraging and facilitating foreign exchange transactions.

That, in essence, is what was agreed at Bretton Woods. An International Monetary Fund was set up (with US cash) ‘to facilitate the expansion and balanced growth of international trade’ (Article I). The initial Executive Board, modeled on the UN Security Council, had representatives from the US, UK, France, China and the USSR. An International Trading Organisation was proposed, which would eventually take shape in 1947 as the General Agreement on Trade and Tariffs (later the World Trade Organisation). Members agreed to tariff and other concessions for contracting partners, as well as codes for trade practices and procedures for handling breaches and disputes. All of this was in itself a dramatic break from earlier ‘mercantilist’ approaches to trade and was intended, in due course, to inaugurate a new age of open commerce.

Implicit in the Bretton Woods goals and institutions, which also included a new ‘World Bank’, was an unprecedented degree of external interference in national practices. Moreover currencies were to become convertible, a necessary condition for sustained and predictable international commerce, on the basis of their relationship to the US dollar. In practice this proved problematic: both Britain and France resisted convertibility, the British because of their protected ‘sterling area’
²³
and the weakness of their post-war economy, the French through a longstanding obsession with a ‘strong franc’ and their wish to preserve multiple exchange rates for different sectors and products, the neo-Colbertian heritage of a bygone era. Full convertibility took over a decade to achieve, with the franc and the pound finally joining the Bretton Woods system in 1958 and 1959 respectively (they would be followed by the
Deutschmark
in May 1959 and the Italian
lira
in January 1960).

Thus the post-war Bretton Woods system did not come about all at once. The participants at Bretton Woods had anticipated universal international convertibility by the end of the 1940s, but their calculations did not allow for the political and economic consequences of the coming of the Cold War (or, indeed, of the Marshall Plan). Put differently, the high ideals of those setting out plans and institutions for a better international system presumed a stable era of international cooperation from which all would gain. The Soviet Union was originally integral to the financial system proposed at Bretton Woods—it was to be the third-largest contributor to the International Monetary Fund quota. It was perhaps naïve for the Americans (and some British) to imagine that these proposals would be acceptable to Russian—or indeed French—policy-makers; in any case, they got around this impediment by the simple expedient of drawing up their plans without consulting the Russians or the French or anyone else.

Nevertheless, they sincerely expected that the mutual benefits to be had from an increase in international commerce and financial stability would eventually overcome national traditions and political mistrust. So when the Soviet Union abruptly announced, at the beginning of 1946, that it would not be joining the Bretton Woods institutions, the United States Treasury Department was genuinely bewildered; and it was to explain the thinking that lay behind Stalin’s move that George Kennan sent from Moscow, on the night of February 22nd 1946, his famous Long Telegram, the first significant move in America’s acknowledgement of the coming confrontation.

Putting the matter thus has the effect of depicting the makers of US foreign policy, Kennan aside, as remarkably innocent. And so, perhaps, they were, and not only those like Senator Estes Kefauver or Walter Lippmann, who simply refused to believe what they were told about Soviet actions in eastern Europe and elsewhere. At least through mid-1946, many US leaders spoke and acted as though they truly believedin the continuation of their wartime partnership with Stalin. Even Lucretius Patrascanu, a senior figure in the Romanian Communist leadership (and later victim of a show trial in his own country), was moved to comment, at the time of the Paris Peace Treaty negotiations in the summer of 1946, that ‘[t]he Americans are crazy. They are giving even more to the Russians than [they] are asking and expecting. ’
²⁴