A constructed Peace The Making of the European Settlement, 1945-1963

The USSR had evidently opted for a simple expansionist policy. The Soviets, as Molotov later recalled, had gone "on the offensive" in the early postwar period; the aim had been "to extend the frontier of our Fatherland to the maximum."⁴⁹ If there was a chance of making gains, why not make the attempt? Who was going to stop them? The United States did not seem committed to blocking an expansion of Soviet power, and the British were too weak to hold the Russians back without American support. If by some chance the Soviets encountered major resistance, they could always pull back, so what was there to lose? In any event, there was nothing really new about Russia's expansionist goals. The tsarist regime had long coveted the Straits, and before the First World War had been active in the Balkans, northern Iran and Manchuria. Stalin saw himself as the rightful heir to those tsarist policies, and thus as entitled to claim for himself rights acquired by the imperial regime, including the right conceded by the western allies during the First World War to take control of the Straits.⁵⁰ How could Britain, for example, deny to the Soviets what she had been ready to give the tsars? Stalin insisted on being treated as an equal. Britain controlled Suez and America had the Panama Canal, so why shouldn't the USSR dominate the Straits?⁵¹ This was her prerogative as one of the three great powers.

The western governments might talk a lot about the rights of small nations, but, as Stalin saw it, they certainly understood that in the final analysis the interests of countries like Panama, Egypt and Turkey were of minor importance. The great powers would decide things as they always had. It was therefore an outrage, for example, that "a small State (Turkey)" held "a great State (Russia) by the throat."⁵² International politics was the politics of power. Everyone understood that regardless of what was said in public the three great powers would run the show, and that they would relate to each other on the basis of their core strategic interests.

Stalin was not opting for a policy of confrontation with the West. What he wanted was to conduct foreign policy in classic pre-World War I fashion. He saw the USSR as a great imperial power that had to deal with a rival, although not necessarily hostile, bloc of powers. Disputes between the two sides would naturally arise, but international politics was no love feast, and conflict could be taken philosophically, as simply a normal part of the game. There was certainly no reason for Stalin to think that the policy he had chosen would put him on a collision course with his wartime allies.

The western governments, however, had been counting on the Soviets to cooperate with them in running the postwar world, and were profoundly disappointed by the new thrust of Soviet policy. Averell Harriman, for example, the U.S. ambassador to the Soviet Union, complained about "expanding demands being made by the Russians." "They are throwing aside all their previous restraint as to being only a Continental power and not interested in further acquisitions," he told the top civilians in the War Department on July 23, "and are now apparently seeking to branch in all directions."⁵³ Anthony Eden, the British Foreign Secretary, was also disturbed by the emerging "pattern of Soviet policy." Eden, who during the war had tried hard to lay the basis for a cooperative relationship with the USSR, now felt that the Russians were becoming "more brazen every day."⁵⁴ Real cooperation of the sort people had hoped for during the war was evidently not possible. Churchill, on his return from Potsdam, summed up Soviet policy there in a nutshell: "'Everything I have is mine,' says the Russian; 'as for what you have, I demand a quarter.' On that basis, nothing can be done."⁵⁵

This led to a fundamental change in American policy on Germany. Given the new thrust of Soviet policy, given in particular the way the Russians had acted in Poland and elsewhere in eastern Europe, was it still a good idea to try to govern Germany together with them? The western powers might be wise to think about running Germany on a somewhat different basis.⁵⁶ The Control Council regime might simply be unworkable. General Lucius Clay, who just two months earlier had been put in charge of the American military government in Germany, made the obvious point on June 6. The Control Council, he pointed out, might "become only a negotiating agency and in no sense an overall government for Germany." If the allies could not run Germany as a unit, maybe the western powers, he said, should think about running western Germany by themselves.⁵⁷

So the great issue at Potsdam was whether Germany could be run as a unit, and if not, what alternative arrangements could be worked out. During the war there had been much talk of "dismembering" Germany--that is, of splitting her up into a number of smaller states--and at Yalta, as Churchill noted at the time, he and Roosevelt and Stalin were "all agreed on the principle of dismemberment." A committee was in fact set up to "study how to put dismemberment into effect." But interest in a formal partition of Germany soon waned, and by the time the Potsdam Conference met, all three major allies had abandoned the idea. As one British official put it at the time, "whatever the de facto result of dividing Germany into zones of occupation may be, the idea of planned and deliberate dismemberment is dead."⁵⁸ A unified Germany was by now in principle the preferred solution, especially in the U.S. State Department. The general sense was that a policy of repression--dividing Germany up, crippling her economy and preventing her from governing herself--could not work over the long run.⁵⁹ And beyond that, many high officials in America and in Britain as well, whatever their misgivings about Soviet policy, were reluctant to give up too quickly on a four-power solution. To abandon the goal of a unitary Germany would be tantamount to admitting that the allies could not cooperate even on this vital issue, and for many key policy makers wartime hopes died hard.⁶⁰

But although a unified Germany run on a quadripartite basis was in theory the optimal solution, the prospect of a divided polity growing out of the zonal division was not viewed with anything like horror. A division of Germany between east and west in fact had a certain appeal, and there were three distinct reasons why people in the American government especially were attracted to the idea. First, a divided Germany would be weak. The goal of the dismemberment plans had been to punish the Germans and keep them down permanently, and at the end of the war anti-German sentiment still carried a good deal of weight. A formal policy of dismemberment might have been abandoned, but it was understood very early on that a permanent partition of Germany might grow out of the zonal division of the country, and that this might have the same political effect. Roosevelt, for example, had noted this possibility at Yalta, and it was clear that the president did not view partition as an entirely undesirable result.⁶¹

The second factor had to do with the interest of the U.S. military authorities in making sure that they had the unobstructed power to run things as they saw fit in the American zone. War Department officials in early 1945 insisted on the need to safeguard the authority of the zonal commander and to make sure that it could not be undercut by a foreign majority on the Control Council. Indeed, American representatives at times defended the principle of zonal authority more zealously than their British or even French counterparts.⁶² The Army would be responsible for administering the part of Germany occupied by the United States, and the zonal commander could not have his hands tied by a cumbersome and possibly unworkable quadripartite regime.

The third and by far the most important set of considerations had to do with the Soviet attitude. Events in eastern Europe and elsewhere had made it clear that the Russians were difficult to get along with, and in Germany itself it seemed that they were not really interested in governing the country as a unit, but rather would run their own zone as they pleased. As Field Marshal Montgomery, the British commander in Germany, reported on July 8, there was already "a complete 'wall' between the Russian Zone and the Zones of the western allies."⁶³ But if the Russians were going to run the eastern zone as a sort of private fiefdom, why should they be allowed any influence in the western part of Germany? What was good for the goose was good for the gander: the western powers should also get to run their part of Germany as they saw fit.⁶⁴

All of these considerations added up to one conclusion: in all likelihood, Germany was going to be divided. And while a division of Germany was not seen as the ideal solution, it was not viewed as a catastrophe either. Far from it: a weak Germany would pose no threat; the western powers would have a free hand in the part of Germany they occupied, which was by far the most valuable and important part of the country; and--a point which was of considerable importance to Byrnes--a partition of the country along east-west lines might provide a framework for tolerable relations between the USSR and the western powers. Each side would do as it pleased in the part of Germany it occupied, and the two sides would be able to get along with each other on that basis.

An arrangement of this sort was in fact worked out as the three powers grappled with what turned out to be the central issue at Potsdam: German reparations. Byrnes pressed for an arrangement that would basically allow each power to take whatever it wanted from its own zone. This plan emerged at Potsdam in large part in reaction to what the Soviets were doing in eastern Germany. It was clear by the time the conference convened that the Soviets were stripping the eastern zone of everything of value that could be carted off. Whole factories were being dismantled and prepared for shipment back to Russia. The Soviet conception of "war booty" or "war trophies" was so broad that it allowed them to carry off practically everything they wanted from their zone.⁶⁵

American and British officials disliked what the Soviets were doing. But the Americans, at least, came to wonder whether there any point to arguing with them and trying to get them to limit their actions to what could be agreed to on a quadripartite basis. Instead of entering into endless quarrels about how much the removals were worth, about whether "war booty" should be counted as reparations, about how much Germany should be made to pay and about how exactly payment was to be made, wasn't it much better to opt for the extremely simple solution of letting each side draw off whatever it wanted from the areas it controlled? And this was exactly what Byrnes now proposed.⁶⁶

The reparation issue, however, could not be isolated from the broader question of how Germany was to be dealt with. Byrnes made it clear that there would be no limit to what the Soviets could take from eastern Germany. Even as late as July 29, Molotov, still thinking in terms of a four-power arrangement for Germany, could scarcely believe what Byrnes was now suggesting. If reparation were not dealt with on an all-German basis, the Soviet foreign minister wondered, how could Germany be treated "as an economic whole"? If Germany were to be run as a unit, the amount each power could take from its own zone would obviously have to be limited, and Molotov assumed that this must have been what Byrnes had in mind. As he understood the Byrnes plan, "the Soviet Union would look to its own zone for a fixed amount of reparations" and would in addition get a certain amount of the surplus industrial plant in the Ruhr. But Byrnes, who had insisted rather disingenuously that under his plan Germany would still be treated as an economic whole, was nevertheless quick to correct this misconception: Molotov's understanding was "not quite accurate," and in fact the idea was that "the Soviet Union would take what it wished from its own zone"--that is, without limit.⁶⁷

In such circumstances, however, the western powers could hardly be expected to help finance the Soviet zone. If the Russians were intent on stripping the part of the country they controlled, there was no way to prevent them from doing so, but they and not the western powers would have to deal with the consequences. They and not the western powers, that is, would have to finance any deficit their zone would run. To help finance imports into the eastern zone, which America and Britain in effect would have to do if Germany were run on a unitary basis, would be tantamount to paying Germany's reparations for her. In a unitary system, the more thoroughly the Soviets stripped the east, the greater the burden on American and British taxpayers; the Soviets would thus be able to draw indirectly on western resources. As a British official later put it, they would in that case "simply milk the cow which the US and British are feeding."⁶⁸ And neither Byrnes nor Truman would have any part of it. "The American position is clear," the Secretary of State declared at Potsdam, invoking what was called the "first charge principle," a long-standing American policy. The first claim on German resources had to be the financing of necessary imports; until the Germans could pay their own way, there would be no reparations--at least none from the American zone. "There can be no discussion of this matter," Byrnes said. "We do not intend, as we did after the last war, to provide the money for the payment of reparations."⁶⁹

The western powers would therefore under no circumstances help foot the bill for what the Soviets were doing in the east. But by the same token the USSR would not have to worry about financing essential imports into western Germany. If his reparation plan were adopted, Byrnes declared, the Soviet Union "would have no interest in exports and imports from our [i.e., the western] zone. Any difficulty in regard to imports and exports would have to be settled between the British and ourselves."⁷⁰

It was thus clear, even at the time, that the Byrnes policy was by no means limited to the relatively narrow problem of German reparations. It was tied very explicitly to the assumption that Germany's foreign trade would also not be run on a four-power basis.⁷¹ A decision had in fact been made, in the words of one internal American document from the period, to "give up" on a four-power arrangement not just for reparations but for imports as well.⁷² But the management of foreign trade was the key to the overall economic treatment of Germany. If the country were to be run as a unit, exports and imports would obviously have to be managed on an all-German basis. If there were no common regime for foreign trade, normal commerce between eastern and western Germany would be impossible: the two parts of the country would have to relate to each other economically as though they were foreign countries.

And this was not just some sort of arcane economic theory which Byrnes and the others were too obtuse to understand at the time. The Secretary of State and other key American officials at Potsdam were fully aware of the implications of their new policy. Byrnes himself pointed out a few weeks after Potsdam that in the original American plan, "the German economy was regarded as forming a whole," and he implied that, given what the Soviets were doing in the eastern zone, this approach had to be abandoned. His reparation plan, as one of the Americans involved with these issues pointed out, was in fact rooted in the assumption that the allies would probably not be able to "pull together in running Germany."⁷³ That plan, as a high State Department official noted after hearing Byrnes lay out his views, was based on the premise that the three western zones would constitute "a virtually self-contained economic area."⁷⁴ The top British official concerned with these matters at Potsdam, Sir David Waley, a man who had argued long and hard with the Americans (including Byrnes himself) about their new policy and who was thus very familiar with the basic thinking that lay behind what the Americans were doing, made the same general point. "The American plan," he wrote, was "based on the belief that it will not be possible to administer Germany as a single economic whole with a common programme of exports and imports, a single Central Bank and the normal interchange of goods between one part of the country and another."⁷⁵ The British (and State Department) objection that the plan would lead to a division of Germany was not so much refuted as ignored. A British official who raised the point with the Americans at Potsdam noted in frustration that it was "quite obvious" that they considered him a "starry-eyed and wishful-thinking idealist" for still believing in a unitary solution for Germany.⁷⁶

Byrnes's own views can scarcely be clearer. When an incredulous Molotov asked him whether his plan really meant that "each country would have a free hand in their own zones and would act entirely independently of the others," the Secretary of State confirmed that this was so, adding only that some arrangement for the exchange of goods between zones would probably also be necessary.⁷⁷ Byrnes certainly understood what he was doing. American officials at the time might have claimed, especially when confronted with the charge that their policy had the effect of dividing Germany, that they had not really given up on the quadripartite regime. But when one strips away the verbiage and reads the internal documents carefully, when one looks at what was actually done and the sort of thinking that real policy was based on, it is clear that the Americans at Potsdam had indeed essentially given up on the idea that Germany could be run on a four-power basis.

The basic idea of the Byrnes plan was thus for Germany to be split into two economic units which would exchange goods with each other as though they were separate countries engaged in international trade--or more precisely, international barter. And one should stress that under this plan, Germany was to be divided into two parts, and not four. In the Potsdam discussions, and even in the Potsdam agreement itself, western Germany was treated as a bloc. There were in fact frequent references, in the singular, to the "western zone," and Byrnes in particular repeatedly referred to the western part of Germany as "our zone."⁷⁸ The assumption was that the three western powers--the Americans, the British and even the French, who were not even present at the conference--would be able to work out a common policy among themselves, and that Germany would in all probability be divided along east-west lines.⁷⁹

What had led Byrnes to take this course? It was not just the fact that the Soviets were stripping the east and were in general acting unilaterally in the part of Germany they occupied that had given rise to the Byrnes plan. The more basic taproot was political in nature. In the Secretary's view, what the Soviets were doing in their zone simply reflected the more fundamental fact that real cooperation with the USSR was just not possible. This was the lesson he and other top U.S. officials had drawn from America's dealings with the Soviets, especially on the Polish question, in the first half of 1945. And in fact it was on July 24--that is, the day after the new reparation plan was first proposed to the Soviets--that he made the comment quoted above about the two sides being too far apart on basics "to work out a long term program of cooperation."⁸⁰

But that did not mean that serious tension was inevitable. The way to get along was to pull apart. The unitary approach, Byrnes argued over and over again, would lead in practice to "endless quarrels and disagreements" among the allies. The attempt to extract reparation on an all-German basis "would be a constant source of irritation between us, whereas the United States wanted its relations with the Soviet Union to be cordial and friendly as heretofore." If his plan were adopted, the West would not have to "interfere" in the determination of what was available for reparation from the Soviet zone, nor would the Soviets need to get involved in such matters in western Germany. The western powers would settle things among themselves. A clean separation was the best solution, the best way to put an end to the squabbling and lay the basis for decent relations among the allies.⁸¹

Here in a nutshell was Byrnes's basic thinking about how the two sides should relate to each other in the future. Let each side do what it wanted in its own part of Germany. This was the simplest formula for a settlement. The Soviets would almost certainly go on acting unilaterally in the eastern zone in any case. But if they ran eastern Germany as they pleased, they should not expect to have much influence in the western zones. The obvious solution was for each side to have a free hand in the part of Germany it controlled. The allies would go their separate ways, but there was no need for them to part in anger.

And President Truman, although not deeply involved with these issues, agreed with Byrnes's general approach. He was determined not to pay Germany's reparations for her. The Russians were "naturally looters," he thought, but given what Germany had done to them, one could "hardly blame them for their attitude." The Americans, however, had "to keep our skirts clean" and avoid commitments. If the Soviets insisted on stripping the areas they occupied, they could not expect America to foot the bill.⁸² Truman had thus decided to take what he called a "very realistic" line at Potsdam. Soviet control over the areas the USSR now dominated was a fact of life, and if one accepted that, one could deal with Stalin in a straightforward way. People like Harriman might have been very upset about a new barbarian invasion of Europe, but Truman had no trouble adjusting to the new situation. Nazi aggression had opened up the floodgates, and Soviet power now dominated central Europe, but this was something the United States could easily live with: thanks to Hitler, the President said, "we shall have a Slav Europe for a long time to come. I don't think it is so bad."⁸³ He was not hostile to the USSR, but like Byrnes he felt that the Soviet Union and the western powers should go their separate ways in peace.

The American aim, therefore, was to reach an amicable understanding with the Soviets, and the U.S. government was willing to go quite far to achieve that objective. The reparation question was of fundamental importance at Potsdam and Byrnes knew in general how he wanted it settled. But he took care to make sure that his plan was not simply imposed on an unwilling Soviet Union that was left feeling cheated.⁸⁴ The original Byrnes proposal was that each country take reparations from its own zone. This of course was something each of those states would have been able to do even if no agreement had been reached, a point Molotov himself made during the Potsdam discussions: "if they failed to agree on reparations," he noted, "the result would be the same as under Mr. Byrnes' plan."⁸⁵ But to get the Soviets to accept this result more or less voluntarily--by their own admission, the same situation as that which would prevail in the absence of an agreement--Byrnes was willing to give the Russians two things which they valued highly.

First of all, he offered to accept the Oder-Neisse line as in effect the eastern border of Germany--that is, to accept the exact line that the Soviets had drawn as the border between Poland and eastern Germany--if the USSR agreed to his reparation plan. This was a major concession, as Truman was quick to point out.⁸⁶