COP SFCRST SOVIET OPPOSITION TO THE RECOVERY PROGRAM Soviet oppositloo to a European recoostruclioa program will be demonstrated at the Parl s Conference of 12 July by tho absence of delegates from the U lt and Its Satellites Including Czecboslovakla Less direct Indications of Sol'let opposition will be seen l t the future In Communist Interference wltbln the participant countries and in vi3orous propaganda emanatmg from Moscow British supp0rt of the program on the other hand will cootlJlue to be stroog French su pport now that the Sariet postUoa Is fully clear will pr o b3bly continue strong despite the axpected domesttc Communlsl opposlti lll Tho basis for British interest In a successful lmplementaUon of the US proposals Is fully apparent Tho UK will benoflt Immediately by tbe provisions of the prog1ao 1 and ullim l elf by general Europe3n reco More partJc ularly In tile face of a new economlc crlBls the proposals provide an •scape for the UK trom havillll to cboose between lncre sed domestic austerttr and the appllcation for another US lo 'ln Both choices are politically unpalattble If not Impossible The UK bas therefore sel 7 cd upon the proposals and hns been the driving force In constructive action to Implement them The clear-cut Soviet re u sal to join in the prauram t s solldUlcd Brlttsh sup through Its effect in un Uut the Labor Party on fo reign policy particularly vts- i-vts the USSR French interest ID the success of • Europe tn recovery progrrun ts as strOn f ns British but French abWty to partlclpllto hinged upon the strength uh whlch Foreign M1Dister Bldnult resisted pressure rom the USSR and lrom French Communists 1n order to side with the UK against the USSR Bldnult had to abandon the postwtt French poUcy of preventing nn East-West division or Europe In boldlng to his courageous decision to support the r covery program despite Soviet opposition Bldault was considerably strengthened by the efforts of Bevin to put the French In a posttloo Of Apparent leade rship at the Big Thrc c meeting Bidault also strengthened bis own bruld In 1u1 lre de I Ungs with the French Comm mists by oflerlng a last minute compromise whlch did not actually compromise on fundametrtals Thls move In nnttcipatlon of firutl Soviet refusal was deslgnerl to disarm the French Communists and to align French Ul lic opinion behind the present government -9 pop SECk R I TOP SL Gl'HR' Soviet opposition to joint nction on tho basis of tho Marsbnll proposals was based upon more th u1 the famUlar concepl that ConimUJtlsm nourlshe upon economic distress On this occasion the USSR was caueht tn n real clllomma If the USSR chose to participate In the recovery program U would have been obliged to sacrt ice the exclusive economic controls e stabUshed In Eastern Europe since the war and to permit a western reortent tion ol satellite economies Into the broader European ecOllomy env Sllged by the pr gram Such a course 'hlch would Jeopardize Soviet hegemony In Eastern Europe wns absolutely unacccptablo On the ou cr hand by refusing to partlclpate the USSR would violate a cardinal principle of Sonet policy to perm no combination of pcl¢ers wtthout Soviet participation with power of veto ThO ultimate decision to follow this latter course despite Its potential dangers to Soviet interests was probGbly made In tho cm flclent e specta Uon that France would not dare to enter the program n fter Soviet refusal Th s decision to gamble upon a French withdrawal gained further support trom Soviet con9ictlon that the us rill suffer an economic col Lapse before the recovery px-ogram can become effc tlve and that such collapse can b I hllstencd by Soviet oon-partlcipQUon The stren 11h of tho Soviet oppOSitlon to the Europc11n rccoostructlon program can l ost be mea ured by the Jast-mtnule refusals by the Satellite natlons to p irttclpate Until the flnal word was received from those countries there was every evidence of their strong desire to pa rtlclpate SUch evidence of o•erpo o erlng SoYlet OJ l SitlOD gives warnl D that tho USSR w1ll utilize every opportunity to defeat the ends of the recovery prog am In the llnllledi tte future the USSR can only resort to a propaganda onslaught upon the progr m because more o -ert-action such as a wave ot Commun St-led strila s In France might weaken the Soviet posttloa in Western Europe st 111 further ho premises wW probably be gutcllng concepts l n the Soviet propag u1da campaign 1 that the EJropcan stltes because of their rtnlrtes and eonfllcttag Interests are incapable of developL lg an e fectlve progr m therefore the projected program wlll only disappoint the exuberant hopes ot the participants tutd thus promote further antagonism among them 2nd 2 that the US within a year wtU undergo an economic collapse that will make Impossible the fulflllmeot - 10 - of Its pr0f 08ltlS and may finally lead to the collapse of capitalism generally Soviet propaganda will thus I seek to Increase susptclon and dhtslon among the pa r ttctpallilg states 2 capllallze ul Oll every snag fo lluN In the development of the pN g' t'am 3 cont lnue to cast suspicion up a US motives and 4 predtct the collapse of the US economy beforo th progx a 1 can be fully effective IQd In view of the certainty of vigorous Soviet countoractton both Bevin and Bldault have shown anxiety regarding MY delay In the effective tmplement ttloo of the prospective program Bevin L9 parttcularly apprehensive lest tho USSR shOuld succeed In persuading the p irtlclpant European stAtes thnt It 18 vain to hope that Umoly US aid will actually be forthcoming Ile h s predicted that U effective 'OS support ls deferred until the late fall or 'Winter Europe 1 ncludlng France will be • 10 Jt - 11 - 'f'OP 51561 ET EFFECTS OF NON-PARTICIPATION ON THE SATELLITES Non-participation by the Eastern European COU11trles In the forthcoming Paris Conference on ihe Marshall proposals will seriously complicate the discussions and will create numerous problems ior the Communist-dominated governmeots Poland Hungary Yugosla ia and Rumanl l are In desporatc need of western economic aid to reconstruct their w u --ravaged economies The economies of Czechoslovakia and Finland whUe less dependent on western aid are so Inextricably tied with those of participating nations that the USSR' s decision ha presented them with the gravest problems The Marshall proposal therclore has dramatically highlighted the basic conflict in these countries between national self interest and subservience to the Kremlin Non-parttctpat on will lnev tably Increase popular resentment and i nagnlfy the dlff cnltles already facing the Communists in maintaining their police control over these countries Participation In the plan by the nations of Eastern Europe however could have benefited the enUre European economy only If the USSR had also agreed to cooperate and to rel ax Its economic demands upo11 the Satellltes--partlcularly for Polish coal Rumanla n and IIu nsarlan oil and food and Yugoslav raw mate rials Given continued Soviet obstructionism therefore western aid to the Satellttes would materially increase their economic potential without producing corresponding benefits to Western Europe The political nature of the Soviet decision is underlined by the inescapable concluslo th -it the USSR had more to gain economically from participation by its Satellites than Western Europe Increased Polish coal production without which fall recovery and greater Industrialization of the Polish economy is Impossible ts dependent upOn the lmpo1·t of western machinery Moreover Poland's decision wlll 1 P rlou5Jy tmpal It chances to obtain a World Bank loan of $100 000 000 The USSR therefore appears willing to lose an opportunity to make Poland economically strong In order to deprive Western Europe of tnc -e i sed quantities of Pollsh coal The USSR would hava slmUarly benefited by Rum uua'a participation In the plM Tncreased production of Rumanian on and food resulting from the Import of western machinery agricultural equipment seeds etc ts essential 1f Rum 1 nla ls to recover economic stability and the USSR probably would have deir anded the greater share o any such Increases 1n the form of reparations - 12 - ror SECRET One of lb major problems facing the cooferecs nt Paris will be he mcnt to whlel tile coontnes ol Western Europe can count upon the co 1ttnuC d fulfillment by the Satellt- ss w exhtlng Ir Ide agreements_ Czecboslovakla'a trace wlfh the West Is far gre ter lba n wttb the USSR and LI$ satcUltes A1'Jll'0ximately 7 000 000 toos of Polish coal Is commilted to participating n t1ons dur1n8 tile next yen - YugOlllavta Hungary and Dulgnrl3 at so 11 ve fairly extensive trade NlaUoas with mnny of tbe western nMlons A logical exte SiO l of the USSR's dc clston--now that thu lilies a re so lortn tcly d -awn--mlgbt - ell be gra tually to sever all economic tlos bet ol en Eastl 'rn nd Western Europe Such a move would a Crer nondous short-range detriment to the ocon on1y of astern Europe and at tho sn no time It would be a Rerl ous threat to the success of the Ma ·shaJ l proposals Moreover it would free tho US to make a substantially larger contr button in return for economic st bUlty In Qnly ball of Europe - 13 - TOR SFC Rl- T