841.20/11–1748

Report by the Office of Intelligence Research

secret

No. 4769

Britain’s Rearmament Policy: Political and Economic Implications

summary

The emergency rearmament program announced by the British Government in September 1948 is essentially of a precautionary nature [Page 1122] and does not in itself involve a radical departure in Britain’s long-term defense policy. The latter is now under close Cabinet review and, while its terms have not been revealed, signs point toward a new postwar defense plan which rejects the earlier assumption of a 10-year respite from war, aims at putting the forces on an operational basis as rapidly as possible, and bases military strategy on a regional defense system embracing Western European union and a North Atlantic alliance. But in shaping this plan Britain is not wholly a free agent, its policy being limited by a reduced power position and the continuing struggle for economic recovery. In the final analysis an adequate rearmament program depends on American military guarantees and substantial economic assistance.

Meanwhile, the limited rearmament program of September, defined in strictly insular terms, is designed to alert the country to the seriousness of the international situation, to furnish strength for emergency needs (such as in Malaya), and to tighten administrative gears of a military machine which suffered a rapid postwar rundown. Measures include postponement for three months of the release of conscriptees in order to conserve trained strength, intensive recruitment for regular and reserve forces, accelerated production of munitions, and appreciable strengthening of the air arm through doubled production of jet-type fighters. Halting demobilization will boost effective troop strength by 80,000—resulting in new armed forces target figures of 825,000 by January and 790,000 by April, 1949—and foreshadows probable stabilization of British armed strength at some three-quarters of a million men. Effective combat strength is much lower than current order-of-battle figures would indicate and the ultimate size will depend on the need to maintain large cadres for training conscriptees and meeting overseas commitments, which have not been appreciably reduced despite the withdrawal from Palestine. Easing of left-wing pressures within the Labor Party will now allow the government to amend the 1947 National Service Act and raise the period of conscript service from 12 to 18 months as originally proposed by military planners.

Measures to strengthen air defenses confirm previous plans giving priority to RAF needs second only to research and development. Fighter squadrons in the United Kingdom are already equipped with jet-powered aircraft and it is intended to make these types available to overseas and auxiliary units. Production of jet fighters is being doubled. It must be emphasized, however, that even with this additional strength both production and operational effectiveness remain on a modest scale. Doubled output is being achieved through existing productive capacity and will result in an annual rate of about 1,000 [Page 1123] jet fighters. Actually there are now less than a score of RAF interceptor squadrons stationed in the United Kingdom and in view of the commitment to provide auxiliary and allied units as well as the lack of trained servicing personnel, there is little likelihood that doubling jet fighter production will result in a parallel doubling of immediate combat effectiveness.

The central fact remains that the current emergency defense program is of limited dimensions. Though hard to translate into precise economic terms, the direct cost will probably add between £50 million and £100 million to the annual defense bill of £700 million, while the indirect cost resulting from manpower loss to industry will prove to be less than £100 million. Although not negligible, the cost for additional rearmament can be absorbed within present economic margins without depressing consumption levels or disrupting investment and export plans.

The picture would be completely altered, however, if a substantial rearmament effort beyond this point were undertaken. Defense requirements would then tend to dislocate the industrial effort, bringing drastic changes in living standards and production plans and jeopardizing the recovery program. This is the focal dilemma of defense: rearmament measures which require no substantial diversion of manpower and resources are inadequate in the light of the world situation, but a large-scale defense expenditure which would result in such diversion would undermine the foundations of British economic recovery on which its military power is fundamentally dependent. Essentially, Britain’s defense problem is conditioned by the narrow margins of its economic capabilities, which leave little room for undertaking further commitments unless wartime sacrifices are imposed or additional outside assistance provided.

Consequent political pressures stem from this dilemma. On the central issue of strengthening defenses the government enjoys the solid political backing of the country, with the negligible exceptions of the Communists and a Labor fringe which advocates neutrality. From Eden to Crossman and from the Daily Mail to the leftist Tribune, all Britain is agreed on the basic wisdom of rearming, of placing the forces on an operational basis, and of building a regional defense system. Political differences, however, emerge in discussions of how far Britain, with its straitened resources and vulnerable economic position, can afford to undertake large-scale defense expenditure. The official view skirts the issue by emphasizing that present measures present no intolerable burden; Conservatives declare that adequate rearmament must be undertaken even at the cost of living standards and civilian production; and a large segment of Labor opinion, led [Page 1124] by Crossman, warns that rearmament at the cost of recovery will prove self-defeating. The influence of this last group is growing.

Official London is gradually adopting the view that the accent must continue to be on economic health and that economic viability must come ahead of adequate rearmament. It is now openly or implicitly assumed that the way out of the dilemma is some form of lend-lease and American military aid, and although there is some reluctance to accept such aid because of its presumed threat to Britain’s freedom of political choice, there is no real opposition. The way out for Britain, it is now granted, is participation in a regional defense system geared to a North Atlantic alliance. Despite a series of difficulties resulting mainly from Anglo-French differences over the structure and objectives of a defense union and British preference for pragmatic solutions, creditable progress has been made in coordinating Western European defense plans. Consultative arrangements under the Brussels Pact have resulted in a certain measure of defense planning, including establishment of a unified military organization and consideration of financial aspects of defense. Real integration of command, standardization of equipment, and division of production according to national capacity are the goals; actual achievement has been far short of these targets and has been largely limited to the study of strategic and logistical problems.

The ultimate aim is the conclusion of the North Atlantic alliance, a draft of which is now being prepared in London by the Brussels powers following exploratory conversations in Washington. It would relieve Britain of many pressing defense problems. It would draw Canada (and perhaps other Commonwealth countries) into active partnership with Western Union; it would maintain the compactness of the Brussels union for economic and political purposes while expanding the purely military alliance to include some peripheral European powers; it would remove from British shoulders much of the burden of French hesitation and suspicion over an alliance that France continues to fear may lead to a war. Most important, it would throw upon the United States primary responsibility for meeting the cost of European rearmament without jeopardizing the European Recovery Program. That, at least, is Britain’s present calculation.

[Here follow sections on the emergency defense plan, the cost of rearmament, the reappraisal of long-term defense policy, and regional defense and Western Union. An extract from the last of these sections is printed on pages 273 ff.]