I attach herewith a paper which I have prepared on this subject. It attempts to examine recent developments in the Satellites and Western policy with regard to them. It concludes with a few suggestions as to how we might take the initiative in this field.

2. It is, of course, rather speculative, and I should be grateful for your comments.

3. If you think there is any value in my suggestions we could try them out on the Foreign Office, and get the reactions of some of our missions.

R.A.D. FORD

[PIÈCE JOINTE/ENCLOSURE]

Note du chef de la Direction européenne

Memorandum by Head, European Division

RELATIONS WITH THE SOVIET SATELLITES

We have given a good deal of attention in recent months to our relations with the U.S.S.R., in the light of recent modifications in Soviet tactics.⁵³ But we have neglected almost completely the question of our relations with the European satellites of the Soviet Union, and have tended, in fact, simply to assume that they should be treated as appendages of Soviet policy. I think there is good reason to take exception to this theory, and I have therefore reviewed the situation with the aim of seeing if our present policy is satisfactory and, if changes are required, what they might be. This paper represents a first examination of the subject and, as in all attempts to deal with Soviet policy, is highly speculative.

Recent Developments in the Satellites

2. The slight easing of tensions in the past year between East and West has not brought about any significant change in the relationship of the satellite countries and the Soviet Union, and only a slight improvement in their relations with the West. Their governments still remain puppets of the Soviet leaders in Moscow, servile to Soviet political and economic ends, and dependent on the USSR for support against a predominantly hostile, oppressed populace.

3. The communist governments of Eastern Europe continue to keep a tight hold over their peoples. Economically the drive is still towards greater industrialization and collectivization, with the result that, as in the USSR, agriculture lags behind industry in per capita productivity. Production and trade have been oriented toward that of the Soviet Union, and very close industrial links developed. This economic dependence has become an important deterrent against the risk that these countries might try to break away from the Soviet orbit.

4. Some minor concessions have been made in the past year. In some of the Eastern European countries the people seem a bit better fed and clothed than in previous years, although the overall grim, shabby poverty remains. Following Khrushchev's emergence to power, most of the satellite governments again followed the Soviet line by stressing heavy industry at the expense of consumer goods. However, while cabinet shuffles occurred in Hungary and Roumania, there were no major purges nor extra harshness in domestic policy. The Russians made a number of moves designed to shift their dominance over the satellites from overt to covert control; these included the relinquishing of their share in the joint stock companies seized as part of war reparations, the withdrawal of a number of their troops from Hungary and Roumania and the establishment of the Warsaw Pact ostensibly on the basis of equal sovereign association. Moscow has also permitted the satellite governments to increase considerably their trade with Western countries. Besides the Czech arms deal with Egypt a number of agreements have been reached involving exchange of Western surplus agricultural commodities for satellite industrial products. These represent marginal purchases on the part of the Satellites however, for they have shown little interest in multilateral trade or in adjusting the exchange value of their currency, which in most cases is closely tied to the rouble, to a realistic dollar or sterling rate. Recent indications are that a substantial part of Eastern Europe's new export trade may be directed for political reasons to the under-developed countries at prices below cost.

5. At the present time, despite the largely passive antagonism of the people, the communist governments of Eastern Europe seem to be well entrenched. Through the existence of Soviet troops, the highly organized terror of the secret police and the monolithic structure of government and party organization, the expression of effective opposition in any overt form has been impossible. The failure of the West to elicit any real concessions from the Soviet Union at the two Geneva Conferences seems to have, at least temporarily, extinguished many of the hopes of those who looked to us for liberation.

Soviet Intentions in Eastern Europe

6. The Soviets have gained considerable advantage by maintaining real control over the countries of Eastern Europe. These countries serve as a buffer zone against the hostile, capitalist camp of the West, and their addition to the Soviet orbit has added prestige and military and economic power to the USSR. They also count as additional communist voices in the international agencies and conferences which they attend. The economies of these states have been diverted away from their normal type of production and marketing in order to serve the ends of Soviet planners. Through these economic and political ties the USSR hopes that in the long run all of Eastern Europe will succumb to a permanent form of communism which does not require Soviet armed might to preserve it. Finally, the mere continuation of their control greatly strengthens Soviet bargaining position in any top-level discussions to reduce international tensions.

7. It seems quite certain that government leaders in the satellite countries do not wish to see the effective withdrawal of Soviet control. Aware of their growing isolation from the people, they look to the Soviet Union for their own preservation, and are as a result inclined to be even more rigid in their policies than the Soviet authorities. The likelihood of their attempting some type of Titoist independence is remote, for not only do they lack the popular support necessary to offset Soviet sanctions, but their borders are also much more vulnerable to Soviet pressure than that of Yugoslavia. Furthermore the satellite leaders have been chosen by and are wholly compromised creatures of the Kremlin, and so long as the entire machinery of police control and propaganda is in their hands no alternative to Soviet communism has any chance to develop. Where some degree of liberalism is permitted it generally indicates Soviet confidence in the reliability of the satellite and its government. It is highly significant that the most liberal of the satellites, Poland, is also the country which seems to be regarded most favourably by the USSR.

8. It is possible, however, that the Soviet leaders realize that totalitarian control over people who are historically hostile to Russia cannot be maintained indefinitely. Undoubtedly they, as do the communist régimes in these countries, realize how widespread is the discontent and opposition. Their rapprochement with Tito and the settlement of the Austrian Peace Treaty did much to stir popular hopes in the prospects for eventual freedom or at least Yugoslav-type national independence. It is perhaps significant that the supporters of Rajk in Hungary and Slansky in Czechoslovakia who were purged for Titoist activities have been edging back into favour in the past few months, undoubtedly as a consequence of the Belgrade Declaration in May.

9. There can be little doubt that if there is a change in the relationship between the USSR and the countries of Eastern Europe it will come about at the time and choosing of the Soviet leaders. It has become quite apparent that the West will not resort to armed force to liberate the satellites. Thus as long as the Soviet leaders construe it to their net advantage to continue their hold there is little likelihood that their domination can be overthrown.

Western Policy towards the Satellites

10. The leading Western nations, while in general agreement with regard to the satellites, differ somewhat in their policies towards the governments and peoples of the satellite countries. The United States has taken a more rigid stand concerning communist domination of Eastern Europe, and has continued to demand publicly that the USSR end its domination and grant freedom to the people of these states. As late as Dec. 31, 1955, a White House press statement, approved by President Eisenhower states: The peaceful liberation of the captive peoples has been, is and will continue to be a major goal of United States foreign policy.⁵⁴ This decision is predicated on the assumption that it is the duty of the West to keep alive the hope that through Western firmness the Soviet Union will be forced at last to relinquish its hold. In practice the United States Government has, while recognizing some of the régimes, publicly disapproved of them and when possible avoided close association with them. It has unofficially endorsed the aims of Radio Free Europe and officially sponsors the more moderate Voice of America broadcasts directed to the peoples themselves. Recent indications are, however, that the U.S. is perhaps moderating its views on the subject, e.g., the toning down of its Voice of America broadcasts and President Eisenhower's proposal to Congress to export agricultural surpluses to communist countries.

11. There is some disagreement among other Western governments with this approach as being too inflexible and unimaginative. They consider that as long as the Soviet Union maintains its hegemony over the satellite countries there is little possibility for peaceful liberation. To continue to espouse publicly this cause without being able to take any effective action will in the long run only convince a despairing people that the West is being weak and hypocritical. They argue that we should take every opportunity to deal with the communist régimes in order to promote increased contacts with the West and possibly to modify internal conditions in the satellites.

12. The French Government in the last year has taken the lead in responding to Soviet, Czech, Polish and Hungarian overtures, especially in the cultural field. By increasing the area of contacts they hope that enough free aid will permeate the Curtain to offset whatever political capital the communists hope to achieve. Such a policy, they argue, permits greater flexibility than does the U.S. approach, it provides us with greater opportunity to expose subtly the arbitrary restrictions, injustices and exploitation incumbent in Soviet domination, and it enables us to encourage a spirit of independence which may force the satellite régimes to grant concessions.

13. Yugoslavia, as might be expected, has adopted a third course. While espousing communism per se, President Tito has condemned the continuing rule of unpopular régimes dependent on Soviet support and hostile to Yugoslav independence. He has, with considerable success, urged all the satellite governments to follow the Soviet lead, recant, and restore on Yugoslav terms, old commercial and cultural ties. There is little indication, however, that he has modified his basic distrust of most of the régimes, especially Hungary's, and he has not reduced Yugoslav defences, which are largely on the frontiers with the satellites.

14. Students of the satellite question can generally be divided into two groups, those who discount the possibilities of Titoism and advocate a firm policy towards the satellite régimes, and those who urge a moderate policy towards the régimes in order to stimulate tendencies of independence. Those in the first group predicate their policies on the same assumption as does the United States, - that to co-operate with the communist governments tends to lend official sanction to their actions. They consider that members of these régimes neither wish for nor are able to achieve Titoist type independence, and that in fact their long run aims are for closer orientation towards the USSR. It would be folly, therefore, to play into the hands of the communists by co- operating with the puppet governments; rather we should direct our attention to the plight of the people, expose the ruthless actions of their governments and hold on to our hope that peaceful liberation is at least fairly close at hand.

15. This policy stems largely from United States internal political considerations. The Republicans gained a large number of votes in 1952 from persons of Eastern European origin and the Eisenhower government would find it difficult to depart publicly from the policy of peaceful liberation. More positive objections, however, are that incitement to oppose the régimes in Eastern Europe, without any positive assistance from the inciters, in the long run is against the interests of both parties, particularly if there seems to be very little hope of liberation. It can lead only to hypocrisy on the one hand and disillusion on the other, for, if active incitement is used it runs the risk of sparking a hopeless revolt. All that can be said for it is that it keeps the Soviet government on the defensive, as witness the immediate reaction to President Eisenhower's Christmas message.

16. Those of the second school of thought argue that while rejecting the dictatorial nature and ends of the satellite régimes, we should recognize that they are firmly established, and will continue to be so as long as the USSR maintains its hold. The argument runs that efforts directly on behalf of the people are futile, and that the only real hope for amelioration of conditions is through the possibility that the régimes themselves will acquire greater national independence and more liberal policies. While the chances for democracy as we know it are remote, (only Czechoslovakia has any real tradition of democracy, and it spans but a 20-year period) through greater trade and direct contact we might well encourage such Titoist tendencies as exist. For a large segment of the population of Eastern Europe have long had close religious, economic, cultural and political ties with Western Europe, and still feel themselves Europeans in a sense few Russians ever did.

17. The reaction in the satellites to the two Geneva conferences illustrates the difficulty in choosing between the two policies. Before Geneva I, a large number of persons, in Czechoslovakia at any rate, seriously believed that the heads of state might, under Western pressure agree to organize free elections. The spirit of Geneva resulted in a feeling of betrayal; if the situation was hopeless, anti-Communists in Eastern Europe argued, it would be better for the remnants of the bourgeois classes to make their peace with the régime. But the effect on the satellite régimes seems also to have been unsettling, and may be one of the reasons which prompted Moscow to take a strong line at the second Geneva Conference. In particular, the Russians probably wished to scotch the idea that they might be prepared to sacrifice their satellite régime in East Germany.

18. Put briefly, then, the dilemma can be summarized as follows. The policy of ostracism is related principally to the question of relations with the USSR, and is intended to be one way of keeping the Russians on the defensive. But it also runs the risk of alarming the Russians and of convincing them of the aggressive intentions of the West. It has little effect on the satellite régimes except possibly to force them into even more absolute dependence on Moscow, and it has practically no hope of achieving its end of peaceful liberation.

19. The policy of improving relations with the satellite régimes recognizes the impossibility of overthrowing these governments, but hopes to be able gradually to modify them with the ultimate aim of creating more Titoist régimes, or at least of modifying their dependence on Moscow. It runs the danger in the interim period of discouraging the anti-communist elements in those countries and of strengthening the communist governments. It proceeds, however, on the assumption that Eastern Europe is the weakest and the most Western part of the Soviet bloc, and therefore the area most fertile for western activity.

Conclusions

20. Canada should, I believe, follow a course between the two alternatives outlined above. Naturally we agree in private with the hope for peaceful liberation of the satellites but to the best of my knowledge we have never officially associated ourselves with the U.S. policy. At the same time we have attempted to avoid policies which are unduly provocative and self-defeating.

21. I am inclined to discount the possibility that any of the satellite countries could independently adopt a Titoist role. At present Soviet control is too tight for this to happen, - any apparent relaxation seems due not to satellite pressure but rather reflects the degree of confidence which the USSR has in their docility. This means that Soviet leaders, if they wish to give the impression of loosening their control, have room for manoeuvre without altering the realities of the situation. The only two issues which would really indicate Soviet relaxation, - free elections and the complete liberalization of East- West contacts - are unacceptable to them.

22. However even if we rule out the possibility of Titoism among the satellite governments, I think it would be unwise to take a rigid non- cooperative attitude. Instead I believe that, while making it clear that we disapprove of their totalitarian tactics, we should adopt a policy of promoting greater contacts between the satellite countries and the West. We could, where not to our disadvantage, encourage commercial and technical exchanges, especially with those countries which like Czechoslovakia, Poland and Hungary have shown an interest in trading with us, and also encourage such cultural links as sports exchanges, the exchange of films, packaged radio broadcasts, documentary publications, and artists and technicians. We could perhaps also ensure that the tone of our C.B.C.-I.S. broadcasts is in keeping with these aims.

23. In this connection, I have long felt that Chancellor Adenauer and others were justified in their complaints that Western - and particularly United States - propaganda to Eastern Europe was far too prone to stress the material achievements of the industrialized Western states and their relatively luxurious level of personal consumption. As the Chancellor has recently reiterated in his year-end statement (which has since been elaborated in an official German Government Bulletin entitled Conflict of Ideologies) - We are in danger of recognizing the very materialism we are trying to oppose as the basis of life and society. We would wind up in the grotesque situation in which the Russians would only be materialists in theory while the Western peoples would be materialists in their manner of thought and living.

24. This point of view is, it seems to me, particularly applicable to the problem of what to say to the Eastern European peoples. Certainly economic conditions in Eastern Europe are bad and Western propaganda should not miss the opportunity of rubbing in the imposed sacrifices which the consumer in Communist societies is compelled to make for the sake of the very rapid expansion of heavy industry and the building up of the military machine. But by and large the Eastern European peoples are not anti-Communist because they are being deprived of refrigerators. They are anti-Communist because they feel that Communism is opposed to the whole basis of European civilization which is broadly Christian in faith and liberal in political practice. This is the Europe from which these people now feel themselves forcibly cut off. This should, therefore, be the core of our appeal to the Eastern European peoples. After all, in another five or ten years Communism will probably be able to give them refrigerators. But Communism will give them our Western values only, as Khrushchev said last September, when shrimps learn to whistle.

25. The suggestions outlined above are very general, and we should examine each step with the utmost care. One probable result, which we wish to avoid at present, is that the satellite countries will make increasing demands for the exchange of missions or the establishment of trade representatives and/or consulates here.

26. If the new Soviet tactics are to continue, and all the evidence points this way, we can expect determined Soviet efforts, by diplomatic means and coupled with offers of economic aid, to weaken the Western alliances in Europe, and in the Middle East and South-East Asia. It seems to me that the West might equally try to exploit this new period which we are approaching by a diplomatic and political offensive against the Soviet bloc. I think an offensive of bluster and hostility will be ineffective against both extremities - China, and the European satellites. But I equally think that a more skilful and more determined attempt to detach them from the USSR would at least have an unsettling effect on Russia, even if we were not able to achieve our ultimate goal.

27. The first step we ought to take is to try to establish closer contact with the satellite governments and peoples, and the opportunities for this are opening up. We should then make it clear that we have no intention of trying to change the social systems in these countries, either by force or otherwise. It is up to these countries to decide by themselves their form of government. We only object to this form of government being imposed from the outside. We should make it clear that we are not advocating a return to prewar régimes, most of which, with the exception of Czechoslovakia, would probably by now be quite unacceptable to the people. We should equally make it clear to the Russians that we recognize their legitimate security interests in Eastern Europe and attempt in some way to reassure them that a relaxation of Soviet control would not mean the immediate extension of United States and NATO influence up to the frontiers of the USSR.

28. I am not suggesting that this is very easy to work out, or implement, or that it really stands much chance of success. Under present circumstances it seems highly unlikely that the Soviet Union would contemplate any major change in the satellites, the control of which are essential to the USSR for strategic, economic and political reasons. But we must look forward a few years, and it is not inconceivable that the USSR might consider that the present form of control, of which the costs are undoubtedly high, was more of a liability than an asset, and contemplate a change in the nature of their control. The withdrawal of Soviet participation in joint economic enterprises indicates, among other things, that the Soviet bloc economies are so well integrated that this kind of formal control is no longer necessary.

29. Politically the Soviet Union can be expected to grant freedom of action to those satellite governments which it considers most firmly in the saddle and least likely to deviate from the Soviet line. Strategically, the Soviet Union obviously does not want along its European borders countries closely aligned with the West. However, depending on the degree of its political and economic control, and in the light of modern military thinking, it might be less concerned with having access to satellite territories for large numbers of its troops. It might, for instance, be content with an early warning system in the satellites linked with that of the Soviet Union, perhaps coupled with a mutual security guarantee from the West or a strengthened E.E.T.O. based on a greater degree of sovereign association.⁵⁵

30. All this is, of course, highly speculative. However, if it could be tentatively accepted that some other form of control is possible, then I think it is worth considering what course of action on our part might best promote such a change. Certainly it is time we recognized that a public policy in favour of peaceful liberation is not only unrealistic and ineffective, but because of its aggressive tone it also provides Soviet leaders with an excuse not to make concessions. As an alternative perhaps it is worth considering whether we might take the offensive to the Russians in another way by proposing that a neutral status similar to that of Austria, with free elections, be accorded the satellites. They would not accept it, but it would have these advantages:

(a) it would show the Soviet Union and, more important, the uncommitted nations, that the West does not necessarily insist on the extension of Western control over the satellites;

(b) it would show that we are seriously concerned over the fate of the people of the satellites for themselves, and not just as pawns in the East- West struggle;

(c) it would seize from the Soviet Union some of its initiative in the promotion of neutralism in, for example, India;

(d) it would show that we are concerned not with the form of government in the satellites, any more than we are concerned with the existence of a communist régime in Yugoslavia, but merely with the domination of satellite governments by the Soviet Union.

It is, in fact, the old plea for self-determination, with the one limitation of permanent neutrality.

31. Any suggestion that the objective of the Western Powers should be the neutralization rather than the liberation of Eastern Europe would, I feel sure, encounter a good deal of opposition not only for domestic political reasons (as in the United States and Germany) but because of the recent history of the idea of Central European neutrality as it has developed during the past year. When the Western Powers reluctantly agreed to the neutralization of Austria as the price for an Austrian State Treaty last Spring, it will be recalled that there was a good deal of talk about the application of the Austrian model to Germany. Soviet propaganda deliberately fostered this obvious parallel and used it to play up the German opposition to Chancellor Adenauer's policy of military alignment with NATO and the West. To counter such propaganda, the Chancellor insisted that the future united Germany must be free to choose its political alliances. At the Summit Conference in July, Sir Anthony Eden suggested that Eastern Germany at any rate might be de-militarized. This idea might have been expanded to include a neutral belt (in the military sense) extended from the Baltic to the Adriatic comprising not only Eastern Germany and Austria but Yugoslavia and some or all of the satellites - the whole package to be wrapped up in the context of a general European Security Treaty between East and West. It foundered because the USSR would not accept reunification of Germany through free elections as the precondition, still less the neutralization of the satellites.

32. In view of this recent history, any Western proposal or propaganda now directed towards neutralizing the Eastern European satellites would immediately awake echoes of the neutral belt which would include part of Germany - or, in the Soviet version, all of Germany. Such a proposal might therefore be opposed in Washington and in Bonn. Nevertheless, for the reasons I have already given I believe that such an initiative applied only to the satellites is worth a try and would represent a more realistic line than the doctrine of liberation. Even if the United States could not change their tune in an election year, there is no reason why other NATO members might not place the accent more on neutralization, though it would be more convincing if the West were prepared to offer some quid pro quo.

33. The suggestions made in para. 30 would be, I recognize, almost exclusively a propaganda move, and there are many details of such a proposal that would have to be worked out carefully. Nevertheless a policy of publicly urging Soviet concessions along these lines would complement our general policy of encouraging trade, exchanges and contacts with communist countries on an ad hoc basis. It would, I think, allow greater flexibility of diplomatic negotiation and still not break faith with the subjugated peoples of Eastern Europe. I was doubtful last July of the advisability of raising the question of Soviet control of the satellites during the Summit Conference, in part because I thought it would wreck the chances of anything useful being done about Germany, and it was better to explore the new Soviet intentions first. Now, however, that the Russians have shown that they intend to maintain their hold on Germany, I think we should go over to the offensive on the satellites. If the Russians want peaceful competitive co-existence, then we ought to give it to them, but this means skill and imagination on the diplomatic front, as well as building up our military defences and consolidating the NATO alliance.

R.A.D. FORD