Foreign Relations of the United States, 1950, National Security Affairs; Foreign Economic Policy, Volume I

611.00/1–650

Memorandum by the Counselor (Kennan) to the Secretary of State ¹

confidential

[Washington,] January 6, 1950.

Mr. Secretary: Since we assume that you will wish to make your presentation to the Congressional committees² in your own words, we are submitting the following in abbreviated form, as an outline from which you might speak.

We have pruned it ruthlessly, on account of the limitation on the time which will be available to us.

I. General

Our foreign policy program falls into two parts:

1. Conflict with Russian Communism;

2. Improving climate of international life in free world.

This last is matter of finding suitable bases for living together and cooperation between our own country, with its overwhelming economic power and its own peculiar traditions and psychology, and large number of weaker countries in various stages of change and readjustment.

The two problems inter-related—but latter is basic. We cannot avoid it; and must not let “cold war” blind us to its necessities.

II. Conflict With Russian Communism

1. soviet problems

Last few months have seen important developments in relations within communist world.

Tito³ affair continues to constitute major problem for Kremlin.⁴ Soviet effort to unseat Tito by internal subversion thus far quite unsuccessful. Come spring, Kremlin will have to decide whether to use military means or let Tito continue to disrupt unity and discipline of communist world. Probably won’t use military means. In any case, we will face that problem when we come to it.

Meanwhile, most recent indications are that Soviet attention is shifting to Germany and China, with reduced hopes for accomplishments of western European parties. If this is true, it would indicate no Soviet intention of attacking in west at this juncture; and indeed there are no indications that Soviet leaders are intending to resort to war at this stage to achieve objectives. We can never be sure about these things; but that is the way things look at the moment.

2. our action to oppose russian communist expansion

A. Europe

(1) ERP ⁵

We are continuing to shore up spirits and confidence of western Europeans, where we can. By and large we are being successful. It is important in this respect that reduction in ERP aid, which we have always felt should occur in third and fourth years and which we continue to favor, not be carried out too abruptly or thoughtlessly and thus play into communist hands.

(2) Military Aid Program

Military aid program of great importance in this respect. Administrative arrangements virtually completed. Bilateral agreements all practically complete except with U.K., where we hope a few more days will do the trick. Integrated defense concept has been prepared and accepted by North Atlantic Council, and is now before President. If approved, we will be set to proceed with program, as envisaged in Act. We will of course have to come before the Congress with proposals for the continuation of this program during following fiscal year.

(3) Germany⁶

Obvious concentration of Kremlin on its political program in Germany highlights continued importance of that country in “cold war”. Our policy continues to be one of most rapid possible progress toward

(a) Stable government,

(b) Hopeful spirit of people in western Germany, and

(c) Integration of western Germany into western Europe.

Progress has been made recently through establishment of federal republic and by clarification of complicated and difficult reparations and dismantling problem.

Political sentiment in Germany remains by and large thoroughly anti-communist and anti-Soviet. New government has become relatively well established as legitimate political authority. There is plenty of political extremism but not as much as we had feared. In particular, refugees have shown greater moderation than we were entitled to expect from them in their desperate situation.

But we must avoid over-confidence with respect to Germany. Its economic and population problems are bitter. Eastern German republic constitutes dangerous and unscrupulous competition to healthy western Germany. We should not underrate persistence and resourcefulness of Russians and their helpers in eastern Germany. We must remember that German people are still politically immature and lacking in any realistic understanding of themselves and their past mistakes.

(4) Austria⁷

We have gone very far and made many compromises to get an Austrian treaty. It looks now as though Russians had no serious intentions of concluding such a treaty in present circumstances. We began negotiations in London, Jan. 9, where we hope to find out definitely whether they want a treaty or don’t want it.

Austrians are impatient, to a serious degree, with foreign occupation, and many would prefer to risk attempt at “neutralized status” if foreign troops could be gotten out.

We must continue to handle this situation tactfully and to give Austrians all due support in their difficult situation. Austria is a key country politically in Central Europe.

B. Far East

In Far East, we have a complicated problem with respect to the expansion of Russian Communism. Great dangers in over-simplified and impulsive approaches.

By and large, problem is this. Most peoples of area dangerously vulnerable to communist penetration by virtue of

(1) Political immaturity

(2) General present state of flux and instability

(3) Stubborn misconceptions about western nations, including ourselves, arising out of past experiences with colonialism and imperialism.

Remember, Russians haven’t attacked anyone militarily since V–J Day. Their successes, such as they have been, have been primarily in minds of men. True, their communist stooges have used force; but they first had to be convinced themselves.

No automatic means of “stopping communism” on our part, particularly where it is primarily a matter of men’s minds.

Military occupation or direct military action not always fool-proof remedy, and not even seriously advocated for most of Asia—even by strongest critics of our policy.

Economic and military aid effective only where such aid is major missing component of successful resistance. Where other important components also missing, aid is not only no use, but often directly strengthening to forces hostile to us.

Psychological approach important and should be further developed—but we are just beginning and will have to learn much more than we now know about how to talk to people with quite different needs, traditions, motives and terms of reference. More about this later.

Result—we choose our methods according to requirements of situation. In some instances course of events has been favorable, though usually only in small part as result of things we have done, In other instances, unfavorable.

Indonesia⁸

In Indonesia our diplomacy has achieved success of great importance, for which our people have not yet received due credit.

Japan⁹

In Japan, too, we must continue to give credit to our occupational authorities for occupation which is by and large politically successful. We recognize need of Japanese people for early resumption of full responsibility for conduct of own affairs and would like to move ahead rapidly to peace treaty. Will do so as soon as we can find acceptable means of assuring for Japs in post-treaty period that same security against outside pressures and intimidation which is now provided by presence of U.S. forces.

As for remainder of area still not under communist control, situation is spotty.

Korea

South Korea has come along surprisingly well and shows signs of being able to hold its own with our help. That is why we have recommended continued U.S. aid.

Indo-China¹⁰

In Indo-China, French are now proceeding to give semi-independence to that portion of native movement which acknowledges authority of Bao-Dai;¹¹ but it may well prove too little and too late. We are limited here by common loyalty to old and honored ally. It is no solution to say we should now put greater pressure on French Government. They have delicate parliamentary problem; and heavy pressure from us now would only get their backs up and cause bad feeling within Atlantic group. There are as yet no indications that Chinese communist forces intend any serious military incursion into Indo-China.

Burma

Burma is in highly unstable state, and anything might happen there. For us to try to intervene would get everybody stirred up against us and would be sheer madness. Perhaps they will continue to muddle through; perhaps not. Burma is typical example of country where U.S. aid and effort has very little to tie into.

The Philippines¹²

In the Philippines we have situation which should engage our most serious attention. Reflections of immaturity and lack of political experience were to be expected during the initial period of independence. However, recent months have witnessed political and economic deterioration on a scale so serious as to raise question whether republic can cope successfully with responsibilities of independence without extensive outside guidance. Responsibility now lies on Filipinos. They will have to make suggestions. We will not force U.S. guidance on them. But we must be sure present instability does not create too favorable opportunities for communist penetration. We could not remain indifferent to such development.

Southeast Asian Collaboration

No chance of any effective Southeast Asia federation. No agreement as to who should be leader. Others don’t want India. India doesn’t want any other. British Commonwealth, after all its vicissitudes, stands out today as most hopeful international rallying point of resistance to communism in Southeast Asia. Granting of freedom to India and Burma has removed former stigma of imperialism. Commonwealth now embraces native peoples. We should support it: we have nothing to lose.

General

In general, we will continue to do what we can where we can, to help people who are seriously trying to help themselves. In this, we will use all means available: including Point IV,¹³ informational activities, diplomatic support, etc.

Possibly, further areas of Asia may fall into communist hands. Again, perhaps they won’t. No one in this country could guarantee anything. If they should so fall, this would be serious blow to stability of area and to immediate prospects of peoples immediately concerned. It would constitute definite deterioration of world situation. But it would not necessarily be fatal or irreparable, from our standpoint, and no cause either for despair or lack of self-confidence on our part. World realities have greater tolerances than we commonly suppose against ambitious schemes for world dominion. Attempt to maintain rule over vast areas and populations of Asia would be no easy thing for Russians and would probably eventually involve them beyond their own depth.

Situation in China¹⁴ still unclear in this respect. Still is no assurance that communist rule in that country and Chinese-Soviet relations will not both be stabilized for years to come along lines unfavorable to us. But Chinese communist leaders are now beginning to come up against real difficulties, both in domestic problems and in arranging their relations to Kremlin in manner acceptable to elements among their followers whose continued support is essential to them. It would be wrong to jump to any foregone conclusions about outcome of contradictions in which Chinese communists have now involved themselves through their precipitate assumption of full responsibility in an area plagued with staggering social problems and dilemmas.

We have, of course, immediate problem of recognition. This is less important than one would think from press furor. Really important developments in China will not be much affected by whether we recognize or don’t recognize; nor is there any compelling need for uniformity in timing, as among western powers. Everyone has his own particular problems. We will be guided by sum total of pertinent factors, including state of our public opinion, results of congressional consultations, prospects for acceptable treatment of our representatives, etc.

We will not assure any benefits to ourselves just by recognition; it will be a question of how we handle ourselves once relations exist. But we will also not gain anything by withholding recognition for sentimental reasons alone, if realistic considerations indicate desirability of maintenance of diplomatic contact.

We are now extending to China our policy concerning trade with communist areas, which is to restrict trade in commodities of security importance but to permit other exchanges to take place. This east-west trade problem is a complicated and tricky subject. Total cessation of trade with communist world would not be in our interest or that of other non-communist countries. It is particularly desirable that countries lacking raw material sources and markets for industrial products, such as Japan, western Germany, and U.K., should not be wholly cut off from communist orbit, since we could not permanently make up resultant deficits. But we must see that trade does not give unequal advantage to communists. And we must stand by to provide alternative in emergency, so that our friends can maintain independence in their bargaining with communists.

III. Non-Communist World

a. general

Hard to generalize. Embraces great variety of nations and problems. Such varied elements as:

1. Latin American countries

2. Dependent areas

3. Under-developed areas just entering into independent status

4. Old industrial areas losing their colonial empires

5. Well established small independent states in Europe

6. Older Commonwealth countries

Plainly huge variety of problems embraced in U.S. relations with these countries. Only two main generalizations can be made:

1. Economic dollar-gap problem.¹⁵

Self-financing of U.S. exports over nearly half a century. Logical necessity of increasing imports or restricting exports to the extent we are not prepared to continue large grants and loans. Export of investment capital only partial answer. Point IV will help, but again—only partially and through a delayed action. ITO Charter will also only have a delayed effect; but failure to ratify it now might be confusing and discouraging to our friends. Best solution in national interest—increase in imports. But some continued foreign aid will certainly be required, in our own interest, after present ERP program. Solution of this problem important to health of entire non-communist world.

2. Psychological.

U.S. has a problem in misconceptions about us which are prevalent throughout non-communist world. These partly a natural reflection of resentment and fear of our wealth and success. Partly result of hostile propaganda. But largely result of our own failure to think through the realities of our relations to other peoples, to find correct approach of rich and powerful country to weak and insecure ones. We are only gradually becoming conscious of irrelevance of our national experience to contemporary problems of many other peoples.

b. by areas

1. Latin America¹⁶

Problems have not shown any marked change in recent months. They are traditional problems of:

a. Finding possibilities and modalities for private American economic activity in that area which will have useful and healthy effects locally and will at the same time assure adequate return to American businessmen.

b. Finding sound U.S. official stance toward domestic problems L.A. countries, particularly difficulties they encountered in development of democratic institutions.

c. Handling problem of inter-American frictions, intrigues and rivalries which sometimes trouble peace of area.

In all three fields we hope we are making slow but steady progress.

Point IV and trade agreements should improve opportunities for U.S. investment. Actually, L.A. has long been proving ground for Point IV principle, and has considerable possibilities from this standpoint. But in last analysis, this must depend on creation of suitable climate for U.S. private investment. Primary responsibilities for this on L.A. governments. Some progress noted in recent past. Commercial treaty concluded with Uruguay. We hope others will follow. There is evidence of greater readiness today on part of L.A. governments themselves to cooperate financially (i.e., put up funds in local currency) in constructive development programs utilizing U.S. help.

While we continue to be confronted with occasional seizures of power in individual countries by irregular means, there seems to be increasing public consciousness of dangers involved, and most such regimes, as for example today in Peru, Venezuela and Panama, are making greater efforts than would have been case some years ago to regularize their status and seek genuine popular support. As for international frictions, Organization of American States is beginning to function effectively. It will soon have task of smoothing down trouble which has arisen between Haiti and Dominican Republic. We have strong hopes that from now on, by this means, sense of collective responsibility among all nations of area will suffice to handle such instances of international friction and to save us from dilemmas which in past often caused us to resort to unilateral U.S. intervention.

In both of these matters—problem of stability and liberality of domestic institutions as well as problem of inter-American relationships—firm, vigorous but tactful U.S. leadership will continue to be essential to real progress.

2. Europe

Main problems with European countries already covered in remarks about cold war and dollar gap problem.

U.K.¹⁷

British exchange position has improved somewhat since devaluation. British now have 200–300 million dollars more in kitty than they had in September, but nearly half a billion less than at beginning of ERP. Still too early, however, to state whether this recent increase represents permanent improvement or not. Presumably, as ERP gives off, they will run into further difficulties at some stage, and probably sooner than later. We are not through with this problem; and we would be foolish to think of it as problem for U.K. alone.

Continental recovery.

On continent, recovery has progressed favorably. Production now in many instances at all-time high. But we are still concerned about ability of OEEC countries to pay their own way in modern world when ERP is over. This depends not only on production but also on exchange, i.e., on international trade. They must learn to stick together as a group, to lower their costs, and to go out aggressively after foreign markets. We are trying to prod them along these lines. Hence our emphasis on European integration.

Greece.¹⁸

We are highly gratified by turn of events in Greece. Only few hundred guerrillas left—probably less than at any time since age of Pericles. We were helped by Tito affair; but our people also deserve credit.

Spain.¹⁹

As for Spain—importance of problem is exaggerated. It has been discussed far more in press than in Government. It is true: U.N. resolution has not proved useful in weakening Franco and establishing more democratic regime. We would be glad to see it removed from books, and diplomatic relations normalized. Perhaps this will soon be possible. This will depend largely on our European allies, whose hand we don’t wish to force. But this does not mean we would then rush to other extreme and shower Franco with loans or welcome him as ally. We must insist on retaining dignity and reserve of our position toward those who repudiate ideals of government we happen to believe in.

3. Mediterranean and Near East

Area has thus far survived surprisingly well drastic readjustments of post-hostilities period.

Italian Colonies.²⁰

Most of Italian colonies question has found solution in recent resolutions of U.N. Assembly. Solution not perfect, and presents some serious problems of implementation. But it is (better than no settlement at all, and has at least virtue of not being vulnerable to attack as cynical great power arrangement which disregarded interests and rights of subject peoples.

Palestine.²¹

Initial phase of adjustment to establishment of Israel state has proceeded thus far with less violence and trouble than many had feared. This was due largely to patient and successful efforts of U.N., although decisive Israeli military superiority played important part. Difficulties are not over. Recent U.N. resolution calling for rigid internationalization of Jerusalem was mistake and is unacceptable to parties. This will complicate difficult question of future of that city.

Arabs.

Working through U.N., we have been able to do something to alleviate plight of Arab refugees, but their problem by no means solved. We are fortunate in having a program here which has the support of both Jews and Arabs. Our part in financing this program will now require Congressional consideration. Arabs remain resentful of Israeli state and of our part in its establishment. But they have been impressed by success of our policy in Greece, Turkey and Iran, and situation has not yet led to Soviet exploitation in serious degree.

India and Pakistan.²²

On subcontinent, future course of developments still obscure. As of today, Pakistanis seem to have better chance of coping with their problems than Indians. India is bound shortly to run into serious problems of economic backwardness, political ignorance and apathy, lack of trained administrative personnel, retrogressive social customs, and tenuous nature of popular support and authority of Congress Party. This last is serious on account of vainglorious promises hanging over from pre-independence period. We hope for the best. But no assurance yet of real stability.

Meanwhile, serious conflict continues to exist between India and Pakistan over Kashmir. U.N. Commission brought about cessation of fighting and agreement on temporary cease fire line, but was unable to go further. Security Council remains seized of this problem, which could still cause serious complications at any time. India and Pakistan are already conducting a trade war against each other of alarming intensity.

4. Far East

Again, most problems have been discussed in connection with danger of communist expansion. I expect later this week to give fuller exposition of policies we propose to follow in that area to the extent that communist problem permits us to do so. We have opportunities today both in Philippines and in Indonesia to work at development of positive and constructive relationship which might serve as useful pilot project for future relations with other underdeveloped areas in that region. This is not simple problem. Human nature is such that we can be successful only if peoples learn to respect integrity and independence of our attitude, and realize that we have the will to deny, where necessary, as well as to give. In addition to this, immaturity and corruption in domestic administration, as well as deep seated demographic and social problems still existing throughout large parts of area, place limitations on what any outsider can do to help. We must realize, therefore, that we cannot alone metamorphize life, and that our problem is identifying those areas—often modest in extent—where our help really can serve useful and constructive purpose—meanwhile preventing hopes from rising too high either among eastern peoples or here at home, and combatting the foolish and dangerous assumption that U.S. can or should take upon itself basic responsibilities which peoples of area must bear for meeting their own problems. Much time and effort will be required before we can establish relationship to those peoples devoid of illusions and sentimentalities, based on clear understanding of what each may expect, therefore no longer conducive to disappointment and acrimony.

IV. Framework of International Association

We have continued our efforts to strengthen role of U.N. in settlement of international problems.²³ I have already mentioned cases of Greece and Indonesia and Palestine, and the Italian Colonies, where U.N., with our vigorous support, has performed useful service. In addition to that, U.N. is joining in effort to work out suitable framework for extension of technical assistance to undeveloped areas, which we hope can be coordinated with our own Point IV efforts. In coming year U.N. bodies will continue to have important problems before them, and we will continue to give every support to U.N. as forum and instrumentality for transaction of international business, where-ever this does not over-strain agency itself, thereby damaging its prestige and effectiveness, and wherever this can contribute to international stability. We are aware of deep interest of our people in collective association with others for treatment of international problems, and we will continue to examine carefully and with understanding various schemes for deeper and wider collective associations, both regional and universal, which interest people in our country. But we will also bear carefully in mind dangerous significance of great political division which does exist in world today and fact that no international juridical system can relieve us of our outstanding responsibility for firm and incisive leadership which we bear by virtue of our overwhelming economic, and potential military, power.

V. Conclusion

In cold war, we are holding our own, on balance. Tito controversy has roughly offset communist successes in China, full significance of which is not yet clear. But victory in cold war will be a meaningless concept if we do not make real progress in development of our relations with non-communist world. Here we must proceed with courage, insight and restraint demanded of us as great power and reconcile ourselves to doing many things which will be neither easy nor pleasant.

George kennan

1. Marginal notations by the Secretary of State, each consisting merely of a summary key word or two, appear beside certain paragraphs in the source text.

2. Secretary Acheson discussed the world situation in executive sessions of the Senate Foreign Relations Committee on January 10 and 13, 1950. For the record of those meetings, see Reviews of the World Situation, 1949–1950: Hearings Held in Executive Session Before the Committee on Foreign Relations, United States Senate (81st Cong., 1st and 2nd sessions), Committee on Foreign Relations Historical Series (Washington, Government Printing Office, 1974), pp. 105–200.

   Secretary Acheson also appeared in executive session before the House Foreign Affairs Committee on January 11.

3. Josip. Broz Tito, Marshal of Yugoslavia; Prime Minister and Minister of Defense of Yugoslavia.
4. Documentation on the attitude of the United States toward the Yugoslav Cominform conflict and on the extension of military and economic aid to Yugoslavia is scheduled for publication in volume iv.
5. For documentation on the European Recovery Program and the interest of the United States in the economic recovery of Western Europe, see vol. iii, pp. 611 ff.
6. Documentation on United States policy with respect to Germany is scheduled for publication in volume iv.
7. Documentation on United States policy with respect to Austria is scheduled for publication in volume iv.
8. For documentation on United States relations with the Republic of Indonesia, see vol. vi, pp. 964 ff.
9. For documentation, on the occupation and control of Japan and on United States initiatives toward the conclusion of a peace treaty with Japan, see ibid., pp. 1109 ff.
10. For documentation on United States policy with respect to Indochina, see ibid., pp. 690 ff.
11. Chief of State of Vietnam.
12. For documentation on the political and economic relations of the United States and the Republic of the Philippines, see vol. vi, pp. 1399 ff.
13. For documentation on the Point IV program of economic and technical assistance to underdeveloped countries, see pp. 846 ff.
14. For documentation on United States policy with respect to China and Taiwan, see vol. vi, pp. 256 ff.
15. For documentation on the United States commercial policy program, see pp. 681 ff.
16. For documentation on United States policy with respect to Latin America, see vol. ii, pp. 589 ff.
17. For documentation on political and economic relations of the United States with the United Kingdom, see vol. iii, pp. 1598 ff.
18. Documentation on United States policy toward Greece is scheduled for publication in volume v.
19. For documentation on United States relations with Spain, see vol. iii, pp. 1549 ff.
20. Documentation on the disposition of the former Italian colonies is scheduled for publication in volume v.
21. Documentation on the Arab-Zionist controversy respecting Palestine is scheduled for publication ibid.
22. Documentation on United States efforts to resolve the dispute between India and Pakistan over Kashmir is scheduled for publication ibid.
23. For documentation on general United States policy with respect to the United Nations, see vol. ii, pp. 1 ff.