I am attaching a copy of a memorandum concerning the resignation of Malenkov which was sent to Mr. Pearson on February 11. He thought that you would be interested in seeing this tentative assessment of the changes in the Soviet Government.

J. L[éger]

Confidential
[Ottawa], February 10, 1955

Until about the middle of December none of the foreign missions in Moscow appear to have considered major changes in the Soviet Government to be very likely in the immediate future. There had been signs of disagreement both with respect to internal and external policy, but these signs had not provided really convincing evidence that Soviet leaders would be unable to carry on for some time yet without any major upset within their ranks.

2. In the field of foreign policy it was not until the end of November, when the Moscow Conference of the Soviet Union and satellite states was held, that the emphasis in Soviet statements began to change. This shift went definitely from suggestions of peaceful coexistence, European security pact and four-power or general European conference to threats of retaliation in case of German rearmament or to warnings that there could be no fruitful negotiation between the East and the West if the Paris agreements were ratified.

3. Early in November, at the celebration of the 37th Anniversary of the October Revolution, Malenkov had impressed the United Kingdom and United States Ambassadors with his apparent desire to avoid further tensions and to discuss major issues rationally with Western representatives. On the question of a meeting between East and West after ratification of the Paris agreements, Malenkov's remarks were naturally ambiguous. He did not, however, answer with the blunt negative or with the harsh warnings which have since become characteristic of almost all Soviet utterances on the subject. By way of contrast, in December the French Ambassador was told by a group of Soviet leaders, including Malenkov, Molotov and Khrushchev, that ratification of the Paris agreements would end all chances of negotiation with the Soviet Union. Malenkov said his piece to this effect possibly at the suggestion of other members of the Government and of the Party.

4. Our Ambassador reported in December that "the notable effort which the Soviet Union has been making to impress its anxiety at the prospect of West German rearmament on the Soviet people, coupled with its apparent earnestness in threatening to increase its armament if ratification is achieved, what looks like the emergence of a new emphasis on heavy industry and Malenkov's reception of the Patriarch (of the Russian Orthodox Church) have together, I think, surprised most observers here. This surprise has not had any of the attributes of alarm..." At about the same time he pointed out that "there is no doubt a genuine fear in the minds of the Soviet Government at the prospect of German rearmament but several observers here have suggested that they may also wish to use the threat of it for internal purposes. If plans to increase consumer goods are not working out satisfactorily, the authorities may wish to have a good excuse for the tightening of labour discipline". When the Lenin celebrations, supposed to take place in January, were deferred several months, our Ambassador pointed out that, since the celebrations were normally the occasion for important pronouncements, this postponement might mean that there was "some sort of indecision or lack of final agreement among the collective leadership on the final course of their internal or external policy or both."

5. In terms of internal economic policy the two most important developments in the last few months were the considerably increased emphasis on the priority to be given heavy industry and the increasingly important role played by Khrushchev in a number of fields. The involved questions of economic policy and of relations between individuals in the Government going back several years are being considered in a separate memorandum.? I would like to note tentatively in this memorandum those considerations of foreign policy which might have helped to bring about the resignation of Malenkov and the implications of his resignation for future relations between the Soviet Union and the non-Communist powers.

6. The reaction to a harsher policy with respect to German rearmament in December probably can be explained by the fact that the more moderate approach of earlier months had not deterred the Western powers from seeking more energetically than ever a workable alternative to the EDC and had even led them to believe that the Soviets would make concessions on European problems after the ratification of the Paris agreements. This belief was attacked frequently in the Soviet press along with what Soviet commentators claimed was the intention of the Western powers to use the accretion of military strength resulting from German rearmament as a threat to force concessions from the Soviet Union. The argument used in Western countries that negotiations were impossible as long as there was a serious imbalance of power in Europe and as long as the problem of relations with the German Federal Republic was not solved was thus distorted to indicate that the West was building up a direct military threat to the Soviet Union. It is not easy to say whether this attitude to Western policies was developed as a justification of an intention to reverse the emphasis on consumer goods or as a reaction of fear to the imminent prospect of German rearmament. In any case, this situation appears to have played into the hands of the group in the Soviet Government which had long had doubts about the "soft line" towards the West.

7. Although Malenkov had, on one occasion, referred to the destruction of all civilization, including the Soviet Union, as the result of atomic warfare, Marshal Bulganin and others had carefully reiterated the orthodox view that, while the capitalist nations would probably be finally destroyed by any conflict which they precipitated, the Soviet Union would not go down with them. On this question and on other questions affecting the relationship between the East and West one could detect important differences in the tone and implications of official statements. Khrushchev made several speeches last year which were arrogant and blustering and out of keeping with the tone of the peace offensive.

8. At best, of course, the so-called peaceful coexistence policies of the Soviet Government under Malenkov were more interesting because of what they implied about the possibility of serious negotiation in the future than because of any achievement. It is not expected that the resignation of Malenkov will create any immediate danger of provocative or belligerent policy with a real risk of war. It means rather that relations between East and West will be based simply on the stalemate which has not really been broken since Stalin's death, with no very strong prospects of the kind of settlement implied by peaceful coexistence.

9. The immediate implications for Soviet foreign policy of the resignation of Malenkov are difficult to comment upon until we have the full texts of the statements made by Molotov, Bulganin and others. This meeting of the Supreme Soviet was obviously intended to make clear to the world that any disagreement or instability in the ranks of the Government would no longer exist. Until we can examine the texts of the various statements made during these meetings and consider the implications of the budget brought down last week it will be impossible to give any settled opinion about these future policies.

10. On the Formosan issue Molotov made his suggestion for a conference in the Far East only a few days before the resignation of Malenkov and appeared to be closely interested in preventing any worsening of the situation. The statement by Bulganin yesterday pledging "full support" to Communist China on the Formosa issue and assuring the Chinese that they can count on help from their "true friend, the Soviet Union" may or may not indicate a change in what we have thought was a fairly strong Soviet desire not to become directly involved or to pledge military assistance in taking Formosa.

11. On the German problem the Soviet statement about offering free elections was made only three weeks ago. This statement has, apparently, been having a considerable effect on German opinion and it does not seem probable that the Soviet Government would drop any promising means of impeding ratification of the Paris agreements. It seems generally most likely that changes in the Government were being worked out in the past month or so and that recent moves with respect both to the Formosan and German problems do have the backing for the time being of Khrushchev and Bulganin. Although the change in the Government appears to mean in general a toughening line towards the West it does not necessarily follow that a number of the moves in foreign relations since the death of Stalin, such as the attempt to improve relations with Yugoslavia, will be abandoned. The peace offensive may be continued with effort being focussed chiefly on the neutral and Asiatic nations.

12. Although whatever Malenkov may have intended in the way of an agreement with the West was never made specific enough for Western nations to take up any offer while the Russians were in a more friendly mood, it would be unfortunate if any hardening in the Soviet position were met immediately by warning statements from the West which would only, it seems, help to confirm the position of those who disagreed with Malenkov.

J. L[ÉGER]