740.00119 Control (Germany)/12–548: Telegram
The Ambassador in the United Kingdom (Douglas) to the Secretary of State
us urgent
5111. Ruhrto 31. A. Analysis of factors involved in current Ruhr talks and particularly French proposals re supervision of management during post-control period suggests following points:
- (1)
- Strong French reaction against statement in preamble trusteeship laws re allowing German Government to decide on ownership of [Page 548] coal and steel industries is indicative of extent to which French see Ruhr as symbol of German military power. In these circumstances an objective approach by French to any problem involving nature of Ruhr is not to be expected.
- (2)
- Any French Government must take a strong line on Ruhr and insist that, in view of prospect that Germans will determine future ownership, there must at least be long-term controls of Ruhr, particularly re steel production.
- (3)
- French believe Germans, if free to choose, will nationalize steel and coal. Such action, as Schumann stressed, would in their view so strengthen central German Government that principle of decentralized power would be largely lost. Reports from Bonn re centralized nature of constitution Germans are drafting, emphasize this concern and strengthen French desire to impose controls over operation and development Ruhr industries.
- (4)
- Failure on part of any French Government to obtain adequate satisfaction on supervision of Ruhr developments in post-control period may be expected to lead to violent attacks on that government from Communists and Gaullists alike and might well hasten fall of any moderate government. (Mildness of recent debates in French Assembly explained by them as resulting from restraint during Berlin tension and waiting for outcome of Ruhr talks.) Even if assumed Gaullists would eventually come to power anyway, and though basic and unpublicized causes would probably relate to disorganization of French economy, rise of De Gaulle on crest of wave of national feeling that legitimate French fears re Ruhr and Germany have been denied satisfaction, would probably mean a French policy which would seriously split three Western Powers, impair if not frustrate our policy towards Germany, and give Communists free gift of very popular issue in France, out of which to make subsequent capital. Furthermore, any serious split would probably prejudice development of ERP, effective action re North Atlantic Pact, and threaten our position in Germany from the rear.
- (5)
- Forthcoming talks with Humphrey Committee re dismantling program1 are not expected to calm French fears re revival German economic power. Coming at same time as Ruhr talks and involving same French personnel, they will undoubtedly influence latter considerably.
- (6)
- French pass over their own impotence in dealing with own internal fiscal affairs and, irrespective of the justification, undoubtedly believe US has pushed German recovery faster than French, statements of US policy to the contrary notwithstanding.
- (7)
- French fear, and probably correctly, that Germany can produce steel more efficiently and cheaply than France. Consequently, specter of competition of a revived German steel industry haunts those who want, under Monnet Plan, to build large French steel industry with dominant position on continent. These fears are expressed in terms of security risk involved in existence of large steel capacity in Germany but undoubtedly are based largely on economic considerations.
We are fully aware of the many factors in present European complex and US relationship to them which, viewed logically and calmly, refute the validity of these French preoccupations. These factors have been explained many times to French in past. But we can not, I believe, expect a wholly objective French assessment of the problem.
B. Benelux countries share many of these French views as Ruhr seems to them not only a center of German war potential but particularly in case of Belgium, a source of dangerous future competition. Their reactions are sufficiently like French for them to support French position.
C. British have not publicly displayed evidence of fear of competition and do not seem so worried about security implications. They are obviously aware, however, of political factors, particularly in France and are seeking to give French maximum satisfaction without paying unreasonable price.
D. At plenary 3rd December, USDel suggested informally for consideration following line of thought: steel production in Germany involves special economic and security problems. Economic recovery of Germany to self-supporting basis is necessary for European welfare; her long-continued insolvency would either require perpetual outside support, which cannot be expected, or would raise most serious political dangers to Western Europe. Recovery of Germany requires steel production and European recovery requires steel. By producing steel, Germany can thus contribute both to own and to European recovery by exports. Level of steel requirements of Germany and Europe cannot be reliably forecast over a protracted period in the future. In recovered and expanding economies, need for steel increases greatly as shown in US experience. Further, steel requirements will be affected by armament programs under Brussels Pact as US cannot export steel for recovery program and large amounts besides. But steel produced in Germany presents a security problem as it could be used for non-peaceful purposes. As a method of meeting security problem and to insure that no steel in excess of peaceful needs remains in Germany, principle could be agreed that IAR shall allocate for export all steel produced in Germany in excess of peaceful needs. Use of steel that remains there would be subject to supervision of Military Security Board and its successor which would insure that it is not used for non-peaceful purposes or in violation of agreements on limited arid prohibited industries. Mention was made of fact that present Bizonal level of 10.7 million was computed to allow for only domestic needs of all Germany under quadripartite occupation so that, while that limit applied, no substantial amount of steel exports could be expected. Under this approach, definition of steel is of lessened importance.
E. First reaction to this suggestion from French was to ask whether [Page 550] it postulated continued ceiling on steel production. USDel answered no implications one way or other re ceiling, which should be discussed elsewhere, e.g., in connection with limited and prohibited industries. Further French remarks clearly silhouetted fear of effects on programmed French steel expansion if Germany produced and was required to export substantial quantities of steel. British reaction not clear but implication was that British contemplate continued ceiling, and remark was made that suggestion did not meet security risk inherent in large steel producing potential in Germany. USDel will report any further reactions. Enough has been said to disclose clearly that French and Benelux would like to use IAR to suppress German steel industry, not only as a security measure, but also as a device, far more effective than tariffs, to protect their own steel industries.
F. My present tentative thought is that failure to give French some satisfaction on something approximating their proposals without at the same time making IAR more punitive and less acceptable to Germans would not be in best US interests. I believe that IAR, however laudable, is an experiment in international affairs. It can be an instrument for good or evil depending on the way it operates. In endowing an unprecedented agency like IAR with any powers affecting production, development or investment, utmost care should be taken to prevent their being used to suppress steel production and technological development in Germany if that is the most efficient and economical place to produce it for benefit of Europe.
G. We are considering certain suggestions which we hope later to be able to submit for your opinion and advice.
Sent Department as 5111; repeated Paris as 977; Berlin as 629.