The London Conference

on the World Today

THE immediate cause of the breakdown of the Foreign Ministers’ Conference in London was German reparations. Molotov reaffirmed the demand for ten billion dollars to be paid by Germany in goods to the Soviet Union over twenty years; out of this Russia would give a share to Poland. Marshall rejected this claim absolutely and even proposed that all German reparations from factory production cease from January 1, 1948.

The basic cause of the breakdown was the American-Soviet struggle for a new balance of power, of which rivalry for control of Germany was only one aspect. Marshall, Bevin, Bidault, and Molotov met in the midst of this epic contest. Neither in Europe, in Asia, nor in the Middle East has the frontier between East and West been drawn for keeps. As the London Economist said: “Settlements tend to reflect an already established balance of forces. They do not create one.” An equilibrium must precede accommodation.

No compromise

The truthful historian will discount the attempts of each side to fasten sole guilt on the other follow. None of the Four came to the table expecting agreement or ready for it. None was prepared to make the concessions which meant retreat while the balance-of-power struggle was in full progress.

If Molotov had seriously intended to come to terms, would he constantly have poured forth his propaganda appeals to the German people over the heads of Marshall, Bevin, and Bidault? Would he falsely have accused the United States and Britain of profiteering in Western German coal and timber at the expense of the Germans? Citing only newspaper and radio stories, would he have charged America and Britain with wholesale buying of German firms? Above all, would he have repeated such accusations after Marshall and Bevin denied them?

At the next to last meeting of the Conference, Molotov did make one new proposal on reparations which might have been susceptible of discussion. This time it was Marshall and Bevin, totally ignoring Molotov’s suggestion, who seemed to intimate their indifference towards possible understanding. True, Molotov’s “offer” tumbled out amid his torrent of abuse and denunciation. But this need not have prevented Marshall and Bevin from singling out Molotov’s idea and at least asking him to clarify it.

Molotov’s proposal

Molotov would raise the output of Western German industry from the present 35 per ceni of the 1938 level to 70 per cent. He would then draw off 10 per cent for reparations, leaving 60 per cent of production instead of 35 per cent as today. Molotov’s plan implied the chance of an agreed standstill in reparations deliveries for several years while the output of German factories gradually climbed to twice its current output. It was the first time Russia ever hinted that she might assent to a reparations moratorium.

Marshall and Bevin might have answered something like this: “Your scheme, Mr. Molotov, assumes the return of an economically unified Germany. If the zones were abolished and Germany again became an undivided country, even the rise of Western German production would still see the United States pumping food and raw material subsidies into one end of Germany while you Russians drain German resources at the other end. So tell us whether Russia would be willing for a period to forgo reparations from Eastern Germany too, while we lift the German economy and bring it into balance.”

Marshall, Bevin, and Bidault asked neither this nor any other question to put Molotov’s moratorium proposal to the test of negotiation. Three days elapsed before the Ministers’ next meeting. That interval allowed time to ponder. Yet when they met again, Molotov repeated his proposal and once more we ignored it. On Marshall’s motion the Conference adjourned without naming a date for any future meeting.

Molotov’s propaganda and the inflexibility of the other three Ministers indicated that none of them expected agreement and that no serious effort was made to attain one. This, incidentally, helps to explain the current remark heard in Germany: “We Germans can stand another war but we cannot stand another liberation.”

One casualty which most people have overlooked is the American proposal for a four-power treaty guaranteeing Germany’s disarmament and demilitarization for forty years. That plan seems dead. Arc we to have in its place a three-power treaty without Russia? Delegates at the London Conference were saying privately that such a pact would be directed against the Soviet Union rather than against future German aggression.

Where do we go from here?

For many months it was assumed that failure of ihe Foreign Ministers’ Conference would result in prompt establishment of a new Western German government in Frankfurt. That was definitely the intention of some of the United States and British top representatives in Berlin.

Early in January, officials of the United States and British military governments proposed to the Minister-Presidents of the eight German states in Bizonia a new “economic” government. It would consist of a two-house legislature, a nineman supreme court, and an executive who would choose his own six-man cabinet. Appointment of the executive would be made by the Economic Council. The plan also called for a central bank with the right to issue currency and control credit.

Faced with the need for grave decisions, should we proceed more cautiously? Anglo-American organization of a Western German state with its own parliament and government would give the Russians the best excuse for setting up a rival regime in Berlin. There are a number of measures we can take. German monetary reform, with a stable currency to fight inflation, is one. Another is to put into legal form the de facto economic union of the Saar with France.

We must also decide on long-term policies. What sort of regime is to be established for the Ruhr? The United States would allow German management to run the Ruhr industries with an Allied board lo glance over the Germans’ shoulders. France prefers that the Allied board itself shall control output and distribution of coal, steel, and other Ruhr products. What is to be the political structure of Western Germany, and how are we. and especially the British, to meet France’s demand for giving real power to the Länder and avoiding a strong German central authority?

Reasonably enough the French government wants agreement on such crucial questions to precede establishment of Trizonia. The French fear that otherwise we shall inject into the relations of the three Western Allies another brand of ihe poison which crippled four-power rule of Germany. It would be wise to let the Russians lake the initiative if two rival German governments are to be created, each claiming to be the central government of the Reich. With or without that development, the Western powers face the risk of being dislodged from Berlin under Soviet pressure.

Berlin a Russian city?

The morning after the London Conference dispersed, the American delegation met and privately discussed this danger, to which General Lucius Clay, the United States Military Governor in Germany, has been particularly alive. The American, British, and French sectors of Berlin are a tiny oasis one hundred miles deep in Soviet occupied territory. If the Russians were to suspend rail traffic to Berlin from the West, it would be a costly and arduous job to supply not merely thousands of Allied citizens but more than two million Germans in our Berlin districts. We have been considering provisioning by air the non-Russian parts of Berlin, rather than abandoning that key city to exclusive Soviet control.

Any foreign master of Berlin possesses a great psychological advantage among the German people. Whether living cast or west of the Elbe, they look to their traditional capital, It would need many years of habit to induce the same popular sentiment towards Frankfurt.

The imminent danger is the race between Russia and the American-led Western powers to win all Germany by pandering to German nationalism. The Russians must cope with a big segment of anti-Communist Germans in their third of the Reich. But we should not underestimate the strong anticapitalist minority in our two thirds of Germany. Even the billions of dollars the United States is investing in restoring Western Germany will yield us ingratitude and resentment if we reimpose on the Germans against their will a system of private capitalism which their workers identify with unemployment and evil working conditions.

The peril is that while we and the Russians are trying to outbid one another, we shall make Germany the arbiter. It would not be the first time that the umpire turned out to be the victor.