Organizing the World: The United States and Regional Cooperation in Asia and Europe

STUDIES IN INTERNATIONAL RELATIONS Edited By Charles G. MacDonald Florida International University ROUTLEDGE SERIES ...

Author: Galia Press-Barnathan

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STUDIES IN INTERNATIONAL RELATIONS Edited By Charles G. MacDonald Florida International University

ROUTLEDGE SERIES

STUDIES IN INTERNATIONAL RELATIONS CHARLES G.MACDONALD, General Editor

PROMOTING WOMEN’S RIGHTS

The Politics of Gender in the European Union Chrystalla A.Ellina

TURKISH FOREIGN POLICY AND TURKISH IDENTITY

A Constructivist Approach Yücel Bozdağlioğlu

ORGANIZING THE WORLD THE UNITED STATES AND REGIONAL COOPERATION IN ASIA AND EUROPE

Galia Press-Barnathan

Routledge New York & London

Published in 2003 by Routledge 29 West 35th Street New York, NY 10001 www.routledge-ny.com Published in Great Britain by Routledge 11 New Fetter Lane London EC4P 4EE www.routledge.co.uk Routledge is an imprint of the Taylor & Francis Group. This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Copyright © 2003 by Taylor & Francis Books, Inc. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publisher. Library of Congress Cataloging-in-Publication Data Press-Barnathan, Galia. Organizing the world: the United States and regional cooperation in Asia and Europe/by Galia Press-Barnathan.. p.cm.—(Studies in international relations) Includes bibliographical references. ISBN 0-415-94588-7 (alk. paper) 1. United States—Foreign relations—20th century. 2. International organization. 3. International cooperation. I. Title. II. Series: Studies in international relations (Routledge (Firm)) JZ1480.P745 2003 327.73—dc21 2003004361 ISBN 0-203-50901-3 Master e-book ISBN ISBN 0-203-57703-5 (Adobe eReader Format)

Contents

PREFACE

viii

CHAPTER 1

The Puzzle of Choosing Cooperation Strategies

1

CHAPTER 2

What Explains Strategy Choice? The Theoretical Framework

11

CHAPTER 3

The Rise and Fall of the Pacific Pact—U.S. Policy toward Early Postwar Security Arrangements in Asia

36

CHAPTER 4

From “United Action” to the Manila Pact— The Eisenhower Administration and Regional Security Arrangements in Southeast Asia

59

CHAPTER 5

From NAT to EDC—U.S. Policy toward Regional Security in Europe: A Comparative Perspective

83

CHAPTER 6

Reviving Postwar Japanese Trade—American Strategies during the Truman and Eisenhower Administrations

110

CHAPTER 7

The Form of Foreign Aid to Asia—From Truman to Johnson

136

CHAPTER 8

U.S. Strategies for European Economic Recovery—The Marshall Plan in a Comparative Perspective

164

CHAPTER 9

Whither America’s Regional Strategy? Conclusions and Implications for Post-Cold War U.S. Policy

191

NOTES

206

BlBLIOGRAPHY

261

INDEX

280

Preface

This his book began as my dissertation project some seven years ago, in the midst of the debate over the appropriate role the United States should be playing in the post-Cold War world, and at a time of an apparent renewed American interest in regional-multilateral arrangements. It was completed, quite ironically, during the aftermath of the September 11 events of 2001, at a time when American foreign policy appeared to be shifting to a more unilateral approach to foreign affairs. The book deals, however, with American foreign policy in the aftermath of World War II, when American decisionmakers faced similar dilemmas of constructing regional orders as part of their global strategy. My findings suggest that the apparent dramatic shift in current American foreign policy may not end up being as dramatic as it now appears. I will leave the judgment on this suggestion to the reader and to history, which is unfolding as I write. Many people have contributed to the making of this book, intellectually and mentally. I would like to thank my dissertation advisors at Columbia University, Jack Snyder and Helen Milner, and to Gerald Curtis, my committee member, for their comments, criticism and encouragement. Many thanks to my friends and colleagues, at Columbia University and at Hebrew University of Jerusalem—Katie Lawyer-Sperling, Anna Eliasson, Meredith Hyman-Elnems, Tianna Norgren, Patrice McMahon, Korina Kagan, Arie Kacowicz and Benny Miller. Each and every one of them contributed to my work and to me in many different ways. I greatly benefited from the kind financial support of the Lady Davis Post-Doctoral fellowship that allowed me to dedicate my time to writing this book. Also, thanks to the Leonard Davis Institute that provided me financial support for editing the book, and that hosted me so graciously for a year. To end on a personal note, please allow me to convey my gratitude to my wonderful family—my parents, Evelyn and Yaacov Press, and my sister Sharon, for giving me strength and faith no matter how many miles set us apart. And last but not least, to the three men in my life—Rami, Amit and Ido—thank you for bearing with me, and for

vii

giving me perspective about books and life. We have a long, joint journey ahead of us, so you will just have to bear with me a little longer.

ORGANIZING THE WORLD

Chapter 1 The Puzzle of Choosing Cooperation Strategies

THE QUESTION IN CONTEXT Any nyone following debates over foreign policy in the United States since the end of the Cold War cannot help but note the lack of consensus over the nature of, rationale behind, and extent of U.S. involvement in world affairs.1 The events of September 11, 2001 briefly created an apparent consensus around the vague notion of “the war on terror”. This consensus as well, however, is beginning to be questioned. The debate centers both around the goals that American foreign policy should be pursuing, as well as around the type of cooperation strategies that the United States should choose in order to advance its goals. By cooperation strategies I mean the form the United States chooses for organizing its cooperation with regional states, both in security and economic issues, in order to deal with regional security threats or with economic problems. Can and will the United States seek to advance its interests unilaterally, as the Bush Jr. administration initially suggested? Will it adopt mainly bilateral cooperation strategies? Or will it endorse multilateral cooperation strategies, regional or global, as the Clinton administration did in the past? These questions are important not only for American policymakers, but also for America’s partners around the globe. However, before one can make policy predictions on this issue, it is necessary to understand the logic behind the choice among different cooperation strategies. Such understanding can best be gained by adopting both an analytical and a historical perspective. The goal of this book, therefore, is twofold. First, it offers a general explanation to when and why great powers choose certain cooperation strategies (bilateral, regional, or global-multilateral) to deal with smaller partners. This explanation stresses the importance of decision-makers’ desire to reconcile conflicting policy goals, the impact of regional power disparities and the great power’s attentiveness to partners’ goals. Second, the book explains American

2 ORGANIZING THE WORLD

policy toward regional security and economic cooperation in Asia during the Truman and Eisenhower administrations. Nowhere are the opportunities, threats, and uncertainties that the United States faces greater than in that region, where it has fought its bloodiest wars since the end of World War II, and where two of its most serious (albeit different) challengers, Japan and China, are located.2 To put America’s Asian policy in perspective, I include two comparative chapters that analyze American policy toward regional cooperation in Europe during the same time periods. As the story unfolds, many parallels to current U.S. policy dilemmas, both in Asia and in Europe, become evident. While examining the competition among bilateral, regional, and multilateral strategies, the book focuses on explaining when and why

a great power would choose to cooperate with its smaller partners through a regional strategy. The focus on regionalism stems from the

growing importance of regional strategies in the post-Cold War era, both in general and in the context of U.S. foreign policy. After years of American reliance on a bilateral strategy in Asia, the Clinton administration has exhibited a new U.S. interest in regional cooperation arrangements there. After initial reluctance, the United States joined in promoting the forum for Asia Pacific Economic Cooperation (APEC). It also adopted a more positive approach to regional forums such as the ASEAN Post Ministerial Conference (PMC) and the ASEAN Regional Forum (ARF). The building of “a regional architecture that will sustain economic growth, promote integration, and assure stability over the longer run” is now seen as a key element in America’s Asia-Pacific strategy for the 21st century.3 This strategy is not intended to replace the previous bilateral strategy but to complement it. Still, the pursuit of a regional approach in Asia appears to suggest a significant change in U.S. policy.4 What explains these U.S. preferences for regional strategies? How viable are such strategies for post-September llth U.S. policy, with the new Bush administration and its apparent shift back to unilateralism? My focus on regional-multilateral strategies is also driven by an interesting empirical puzzle, namely, U.S. decisionmakers’ apparent fascination with regional and multilateral solutions. Although the actual adoption of regional strategies as policy is indeed a new phenomenon in the context of U.S. policy in Asia, the interest in such strategies is by no means new. Consequently, the book explains both the element of change as well as the less familiar element of continuity in U.S. policy.

THE PUZZLE OF CHOOSING COOPERATION STRATEGIES 3

WHY STUDY THE CHOICE AMONG DIFFERENT COOPERATION STRATEGIES? WHY STUDY U.S. CHOICE? International relations theory has paid very little attention to the issue of choice among different forms of cooperation. Most of the literature on international cooperation has focused on the feasibility of cooperation and the relative efficacy of various forms of cooperation. The debate between Realist and Neoliberal Institutionalist scholars has centered on the issue of the likelihood of cooperation. Realists stress the importance of anarchy and relative gains concerns in hindering cooperation. Neoliberal Institutionalists see anarchy as less determinative, stress the fear of cheating as the main obstacle to cooperation, and assert the importance of international institutions in facilitating cooperation.5 However, less attention has been paid to the factors that influence a state’s choice among different forms of cooperation strategies. This is troubling because the form of cooperation is important. It affects the nature of future cooperation and, once chosen, it makes it difficult to switch to other forms. 1. The form of cooperation affects the viability of future cooperation. Different forms of cooperation have different effects. In theoretical debates, Neoliberal Institutionalists maintain that multilateral arrangements make future interaction cheaper and more transparent, and in the long run, help to develop shared interests and identities among the member states.6 It has been argued that regional arrangements such as NATO, the CSCE, and the EU have played a key role in making war very unlikely among the major European states. These arrangements are helping to sustain cooperation and peace today, despite the dramatic changes in the international distribution of power. Sets of bilateral arrangements may well have been less capable of forging such patterns of tight regional cooperation. The importance of the choice among different forms of cooperation strategies becomes clear when one compares the post-Cold War situation in Asia and in Europe. In the latter, cooperation is deeply embedded in a web of regional security and economic institutions, and so far the transition to the new era has not created major international tensions. Asia, however, faces a less certain future, in large part because the main regional players are not similarly enmeshed. Germany is institutionally deeply embedded in Europe, whereas Japan is much more isolated politically and so far has been unable to achieve deeper reconciliation with its Asian neighbors.7 Hence it is most important to understand why there are so few regional institutions in Asia, as compared to the "alphabet soup" of regional institutions in Europe.8 I do not offer a full answer to this question,


but instead examine one central cause of the difference, namely, the choices that the United States made in the early postwar years about the forms of cooperation arrangements it was to organize in Europe and in Asia. It would be naive to blame the United States for the lower level of regional cooperation in Asia, and presumptuous to accord it full responsibility for the high level of cooperation that prevails in Europe. The basic conditions in Asia and in Europe were, of course, very different. As Peter Katzenstein maintains, the broad regional power disparities in Asia, as opposed to the more balanced power distribution in Europe, and the lack of shared norms in Asia as opposed to the common Western culture in Europe, helped to make regional cooperation more feasible in the latter.9 However, it is arguable that in the early postwar years, when the U.S. enjoyed unprecedented preponderance relative to both regions, it did have a chance to greatly influence the basic character of regional cooperation arrangements. It chose to pursue a regional format in Western Europe, and a bilateral format in Asia. Its support for European integration greatly contributed to the creation, in the long run, of what is often described as the West European security community. On the other hand, the bilateral approach dominant in U.S. policy toward Asia is partly responsible for the present lower level of cooperation there.10 2. The path dependence of form choice. Once a certain form of cooperation is chosen and pursued, certain patterns of relations are created that make it difficult to switch to another form later. In other words, the choice is path dependent.11 In the U.S. context, early choices about the form of cooperation constrain its ability to adopt new cooperation strategies today.12 U.S. leadership in Asia has none of the institutional supports it enjoys in Europe. The importance of such institutional supports is apparent in the central role played by the EU in dealing with the East European states' reintegration into Europe, and before that, with the reintegration of Germany. In contrast, the fact that Japan is not as well embedded within Asia makes U.S. power appear to be the linchpin that holds Japan in place and makes the U.S.-Japan security alliance the cornerstone of regional stability.13 The "hub and spokes," bilateral cooperation arrangements that developed after World War II between the United States and various Asian states make it difficult to create multilateral arrangements in Asia at present, or alternatively, for the United States to shift its main support from its bilateral security arrangements to a regional arrangement.14 This is because, unlike in Europe, the Asian states were not forced to interact with one another over the years. The regional states’ expectations toward their neighbors and toward the


U.S. role in the region have evolved in such a way that would make change difficult. Any attempt to replace the U.S.-Japanese bilateral security arrangement with a multilateral arrangement would be extremely destabilizing. Because Japan’s military revival was not monitored and contained within a regional framework, the regional states’ only assurance against a resurgence of Japanese militarism (other than Japan’s own behavior) has been the American presence in the region and its close military ties with Japan. Any initiative that might signal the weakening of the U.S. commitment in the region would therefore be extremely unsettling to those states. If regional arrangements are to develop in Asia, they are likely to build on the previous bilateral arrangements. On the other hand, the fact that strong regional frameworks already exist in Western Europe makes it easier at present to deal with new challenges (for example, relations with Eastern Europe, the question of Russia, instability in the Balkans) through multilateral or regional means. Thus, U.S. choices about forms of cooperation strategies in the early postwar period considerably account for the different current levels of regional cooperation in Europe and in Asia. They also help in understanding current U.S. policy in the region and in predicting its future choices, which will affect the regional and global scenes as well as the role of the U.S. itself.15 Finally, to the extent that the argument advanced here can be applied to other great powers as well, understanding the choices made by the U.S. can help us understand and predict the attitudes of other regional powers, such as Japan, toward regional arrangements. WHY FOCUS ON ASIA? Interest in U.S. policy in Asia16 reflects both policy concerns and theoretical issues. As mentioned earlier, in the post-Cold War, postbipolarity system, Asia appears to be the most volatile and potentially dangerous region in the world. Once the restraining effects of bipolarity are gone, rapid economic growth, unresolved territorial disputes, a mounting arms race, and burgeoning political aspirations all threaten to produce regional conflicts.17 Such conflicts would inevitably involve the United States. If a regional military conflict were to develop (for example, a Chinese attempt to forcefully reunite with Taiwan, an escalation of the crisis with North Korea), bilateral military alliances would compel the U.S. to get involved. If a regional economic crisis were to develop, the strong U.S. trade and investment ties with Asia would compel it to get involved as well. As the financial crisis that engulfed Asia in the summer and fall of 1997 has shown, regional problems have major global implications. The same crisis also


highlighted the policy dilemma within the U.S. about the most appropriate cooperation strategy for dealing with such crises.18 Furthermore, the new power concentrated in Asia, combined with values that conflict with Western values (for example, on the issue of human rights), pose a potential for conflict between the regional powers, now becoming great powers, and the United States. Different forms of regional and multilateral cooperation arrangements may prove useful in mitigating or even resolving such tensions, and may also help the U.S. and its regional partners to contain potential regional threats. At the same time, encouraging regional cooperation for the wrong reasons, or in order to advance goals that are not agreed upon in Asia, may also prove dangerous. In light of Asia’s tremendous importance for global peace and prosperity, it is even more puzzling that there are so few international relations works that apply theoretical reasoning to problems pertaining to the region, especially in the literature on the early postwar years.19 There are, in fact, some excellent books by historians, many books with a clear policy orientation, and very few if any books that apply international relations theory to the region (or that use cases from the region to shed light on theory). The renewed interest in Asia is indeed leading more political scientists to study key theoretical questions in the regional context. Their job, however, is made more difficult by the aforementioned neglect. Regionalism has long been an issue for political scientists studying Europe. Much has been written on the creation of the Marshall Plan and of NAT(O) in the late 1940s, and much is currently being written about the proper role and size of NATO in maintaining peace now that the constraints of bipolarity have disappeared. Such writings can build on a rich historical as well as theoretical body of research, which simply does not exist in regard to regional developments in Asia and U.S. policy toward those developments. This book aims to begin to remedy this situation. CHOOSING COOPERATION STRATEGIES—WHAT ARE WE TRYING TO EXPLAIN? This study is trying to explain the choice among different forms of cooperation strategies. The subjects of these cooperation strategies are states within a certain region with which a great power wishes to cooperate. Unilateral strategies are not explicitly discussed here because they do not qualify as cooperation strategies. Cooperation, according to Robert Keohane, requires some degree of mutual adjustment, whereas a unilateral approach involves following a certain policy line regardless of the actions of the other party.20


Nevertheless, wherever the possibility of unilateral action is considered, I examine the reasons why it was not adopted, using the same criteria I apply to the other strategies.21 The definition of a bilateral strategy is rather straightforward. The great power chooses to cooperate separately with each of its potential regional partners; at least from a formal perspective, both sides adopt certain explicit commitments with respect to the cooperation arrangement between them. However, under broad power disparities such a bilateral strategy may become a de facto unilateral strategy, where commitments are either dictated and/or borne unilaterally by the great power. More complex definitional problems arise with respect to globalmultilateral and regional strategies. Keohane defines multilateral cooperation as involving three or more states,22 implying that both global and regional strategies are multilateral, with variation in the number of actors involved and in the geographical scope of the arrangement (that is, one region or cross-regional). John G. Ruggie shifted the focus to what he terms “qualitative multilateralism”, defined as “an institutional form that coordinates relations among three or more states on the basis of generalized principles of conduct.” Such generalized principles of conduct entail an “indivisibility among the members of a collectivity with respect to the range of behavior in question” and usually lead to expectations of diffuse reciprocity.23 For Ruggie, pure multilateralism is universal in scope and stands in contrast to bilateral and regional forms of cooperation. An example of a multilateral principle is collective security. It is viewed as multilateral because in a collective security arrangement peace is considered to be indivisible among the members. An economic example is that of the Most Favored Nation (MFN) clause, which implies a “generalized principle of conduct” for all states with respect to tariff levels. A strict use of this definition for a multilateral strategy is, however, problematic for several reasons. First, Ruggie himself admits that pure multilateralism is very rare in international relations. For example, although NATO is often referred to as a multilateral security arrangement, it was clearly created to face a known enemy and was not universal in scope. The GATT is often referred to as the best example of a multilateral economic arrangement, yet it too was never universal in scope (clearly not during the years covered in this study) and it did include provisions for discriminating against actors outside or within the institution if they fail to follow certain rules. It is, thus, best to conceptualize pure multilateralism and strict discriminatory bilateralism as ideal types at the ends of a spectrum. In between, one may find cooperative arrangements that vary both in


the number of states involved and in the extent to which they are guided by generalized principles of conduct. Another distinction among the three strategies concerns the degree of exclud-ability associated with them. A multilateral strategy is defined as one that creates or uses arrangements that include a large number of states from different regions. In the cases examined here, those arrangements are easy to identify, following the common understanding in the literature. Thus, in the security sphere, a multilateral strategy implies the use of the UN Security Council. In the economic sphere, it implies the use of the World Trade Organization (the former GATT) for trade issues and of the IMF and the World Bank for financial matters. This form of cooperation also implies that the benefits and goods created through it are largely nonexcludable. A regional strategy lies in between the two ends of the continuum. It will be defined mainly in terms of the number and geographical concentration of the actors involved. Although various definitions of regionalism exist, this seems to be the most intuitive one.24 More precisely, a regional strategy is defined as one that attempts to coordinate cooperation among several states from the same geographical region.25 It is usually more exclusionary than a multilateral strategy, though not always.26 The regional arrangements pursued through a regional strategy may vary from those that embody clear, qualitative, multilateral rules (for example, NATO) to those that are more discriminatory. A concrete example of such variation is the distinction between regional arrangements where all actors assume the same obligations and rights, and arrangements that take a “hub and spoke” form, where one actor assumes greater importance and where cooperation evolves between the various regional states and the hub, and less so among the regional states themselves. For the purposes of this study, the pursuit of both types of arrangements will be defined as a regional strategy. The implications of those variations will be examined in the case studies. Also, within the category of regional strategies I consider both a strategy of encouraging regional cooperation without the active membership of the great power, and a strategy of developing a regional cooperation arrangement that does include the great power. The possible types of cooperation strategies are summarized in Table 1.1. A state does not necessarily follow only one strategy at one time; it can pursue several strategies simultaneously, either on different issues or even on one issue. The possibility of a mix of strategies creates a methodological problem of clearly identifying a change in strategy. This problem is resolved in two ways. First, I focus on


Table 1.1. Types of Strategies and Empirical Examples.

specific policy debates about the adoption of a specific strategy, thereby isolating the arguments for or against that strategy at a given time. Second, it is possible to make an informed assessment as to the trends in policy toward greater emphasis on one strategy over another. Looking at policy in a comparative manner, across time, issue-areas, and regions, makes such observations more meaningful. One last issue needs to be clarified with respect to the dependent variable of this study: namely, the concept of choice. I do not focus only on explaining the final policy choice but also on explaining initial preferences concerning the cooperation strategy. To reveal the latter I examine policy initiatives and debates within the executive branch (the White House and the bureaucracy), within Congress, and between Congress and the executive branch. Each case study uses a processtracing approach27 to examine the formation of the initial preferences and their translation into final policy choice. When the initial preferences and the final choice differ, I explain the causes of this gap. Is it important to study the initial policy preferences and not just the final policy choice? Does it matter that U.S. decisionmakers were for a long time considering the idea of a regional strategy if they did not end up forcefully pursuing it? The answer is yes. We cannot fully understand the impact of the external factors tested in the argument to follow if we do not first examine the initial policy preferences that emerged within the United States. Also, studying why certain options were rejected helps us to understand why others were chosen and to make more sophisticated predictions about future policy. Systemic constraints may limit states’ choices, but they cannot determine the initial menu of choice. Outcomes are therefore a result of the interaction of desires and constraints. If we do not understand the motivations behind specific choices, we may be unable to make sound predictions about future choices as well.


A certain idea may continuously appear in the political arena but be continuously ignored by political scientists because it has never become embedded in actual policy. When the same idea finally does become manifest in actual policy, for whatever reason, it is likely to be wrongly regarded as a new idea, and the new policy to be wrongly interpreted as revolutionary. For example, the apparently new American policy of support for regional cooperation in Asia (and elsewhere) acquires a different import when considered against the background of past interest in such a solution. The rationale behind U.S. choices of cooperation strategies appears much more consistent when those forgone choices are taken into account. The next chapter sets forth the theoretical framework that explains the formation of strategy preferences and the factors that constrain and shape the final policy choice.

Chapter 2 What Explains Strategy Choice?—The Theoretical Framework

What explains the choice among different cooperation strategies? The framework developed in this chapter and applied in the case studies in the next six chapters, consists of three elements: (1) the impact of the need to reconcile conflicting policy goals and of the pressure to lower the costs of foreign policy commitments on decisionmakers’ preferences regarding different cooperation strategies; (2) the impact of regional power disparities on the attractiveness of the different cooperation strategies; and (3) the impact of the perceived preferences and goals of the potential regional partners on the attractiveness of the different strategies. The first element is the main factor shaping initial strategy preferences; the latter two elements then influence the final strategy choice. However, before we elaborate on these elements, let us consider other potential explanations for this choice. ALTERNATIVE EXPLANATIONS FOR THE CHOICE OF COOPERATION STRATEGIES Since the specific question of when and why great powers choose different forms of cooperation strategies has not received much attention in international relations theory, there are no clear, explicit alternative explanations to that proposed here. However, several more general theoretical arguments may provide possible hypotheses to deal with this question. A close examination of such hypotheses, though, suggests that they do not offer an adequate answer to this question. THE LIMITS OF REALIST SYSTEMIC ARGUMENTS Neorealist theory suggests that the incentives for state action are to be found in the structure of the international system. This structure is most commonly defined in terms of polarity, that is, how many great powers (“poles”) there are in the system. Neorealists suggest that, given the anarchical nature of the international arena, states are


highly concerned with the relative, rather than absolute, gains they can achieve through cooperation. This logic implies that multilateral strategies are more likely to be chosen in a bipolar system. A central problem of multilateral arrangements is the difficulty they create in enforcing compliance with the rules, which is partially related to the inability of members to practice specific reciprocity.1 Hence, if a great power is concerned about relative gains vis-à-vis its cooperation partners, it is less likely to support a multilateral strategy. In a bipolar system, however, the zero-sum nature of the competition between the great powers implies that each great power is less concerned about relative gains within its pole, among its cooperation partners; a multilateral strategy is therefore less dangerous. In a multipolar system, on the other hand, alliances tend to be less stable, states’ shadow of the future is shorter, and therefore relative gains concerns even among cooperation partners rise. Such conditions discourage multilateral strategies.2 The polarity argument is, however, problematic. Since it assumes that the great power will adopt certain cooperation strategies based on the global distribution of power, it is unable to explain variation in the strategies of one great power across different regions (for example, Asia vs. Europe). Also, the polarity argument may explain when a multilateral strategy is possible (that is, when relative gains concerns are low), but not why that possibility will be pursued. As will become clearer in the course of the case studies, bipolarity proved to be a necessary condition for the creation of goal conflict in the United States, but was insufficient to explain why certain strategies were chosen. Finally, it is not clear whether a shift to multipolarity leads to the adoption of bilateral or of regional-multilateral strategies. A different Realist systemic perspective is offered by the hegemonic stability literature. This literature is particularly relevant to the extent that the great power in question is also a regional hegemon. The theory of hegemonic stability suggests that hegemons can and do bear the costs of providing or creating multilateral arrangements, thereby facilitating international cooperation. It offers different explanations for why a hegemon would choose to pursue multilateral policies (for example, economic free trade explanation, arguments about liberal ideology, economies of scale rationale, security incentives in the context of balancing under bipolarity), yet, surprisingly enough, it fails to examine this question more rigorously.3 An explanation that is deduced from the power asymmetry between the great power and its potential regional partners proves to be underdetermined. On the one hand, it is arguable that a hegemon’s large safety margin of power vis-à-vis its smaller partners, as well as its broad interests, will make multilateral strategies both affordable

WHAT EXPLAINS STRATEGY CHOICE? 13

and desirable. As a hegemon declines, the cost of pursuing multilateral strategies will rise. This argument again relies heavily on the relative gains problem. It suggests that power preponderance will make the hegemon less sensitive to relative gains, give it a longer shadow of the future, and thus make multilateral strategies less costly.4 On the other hand, the exact opposite prediction can be derived from the same assumptions: a hegemon’s preponderance of power makes multilateral strategies unnecessary and bilateral strategies more attractive; with extreme power disparities a hegemon can rely on its superior relational power by using a bilateral strategy. The different predictions stem from different interpretations of the relative cost/benefit of bilateral and multilateral strategies. The main problem of both systemic explanations, polarity and hegemony, is that they do not pay sufficient attention to the goals that the great power wishes to achieve by using either strategy. The motivation for action is never the focus of the research. By assuming that state policy is a reaction to systemic incentives, against the background of a vague “national interest,” these arguments fail to specify against what specific goals or values the costs and benefits of each strategy are measured. This failure is closely linked to a basic characteristic of systemic theories, namely, the lack of an explicit element of state choice in this literature and the relative inattention to process.5 While systemic incentives and constraints are indeed important, I suggest that the significance of those systemic cues in terms of the costs and benefits of different strategies will change depending on the specific goals that are being pursued. DOMESTIC SOURCES OF STRATEGY CHOICE One line of domestic arguments regarding strategy choice is strongly economically-oriented, and indeed focuses on cooperation in the field of international political economy. Here the focus lies on the economic consequences of various forms of cooperation. The choice itself is linked directly to the domestic pressure exerted by exporting multinational firms with imperfectly competitive markets to support the formation of regional free trade areas. Such regional arrangements will help those firms improve their global competitiveness by meeting the demands of a larger regional market.6 A firm with increasing returns on scale will prefer a regional over a multilateral strategy if its economies of scale are exhausted by a market size that is larger than its national market but smaller than the global market, and if there are other competitive producers on the global level. Under such conditions, achieving a regional-size market will maximize the firm’s gains from economies of scale.7 This argument


suggests that the actual choice of regional cooperation (in the form of regional trade arrangements) is a compromise solution that decisionmakers adopt in order to simultaneously satisfy consumers’ interests and firms’ interests, but the political process behind this compromise remains unclear.8 It addresses a specific issue-area, trade, and cannot be applied as is to other issue-areas. A more politically oriented approach can be found in the work of Etel Solingen. Her focus, however, is more on regionalism per se, and less so on the choice between bilateral and regional strategies.9 A second, very different variant of domestic explanation for preferences about the form of cooperation focuses on certain beliefs or ideologies that favor certain forms of cooperation. Most of these explanations have been offered in the specific context of U.S. foreign policy. John Ruggie, for example, maintains that U.S. foreign policy is characterized by a “multilateral world order vision,” which reflects “America’s own collective self-concept.”10 The vision of a multilateral world order, he asserts, “is singularly compatible with America’s own collective self-concept,” which is based on the notion of a willful community “formed by the act of choice and premised on a universal organizing principle.”11 Ann-Marie Burley regards the U.S. support for the multilateral arrangements in Europe after World War II as reflecting the ideas of the New Deal, that is, as an attempt to implement internationally the U.S. liberal, legalistic domestic order.12 On the security front, scholars suggest that multilateral alliances are more attractive to the United States because they accord with American ideas, since multilateral arrangements at least seem more democratic and representative.13 Most of these authors suggest that the ideology privileging multilateral approaches is somehow embedded in American society. Arnold Wolfers asks why the United States still pursues collective security policies despite their small relevance, and concludes that “the promotion of the idea of collective security has created a psychological situation in which the U.S. cannot turn its back on the concept ...because of what millions of people...believe it may achieve in time.”14 Similarly, Inis Claude argues that Woodrow Wilson used the “new conceptual cloak of collective security” because he understood that he would not be able to convince the American people to openly join alliances and participate in the balance of power system.15 However, it is not clear from those accounts if the most crucial factor shaping policy is ideas held by specific key decisionmakers, an elite ideology, or an ideology embedded in American society that shapes public opinion and that decisionmakers must deal with. Furthermore, these accounts tend to reinforce an artificial dichotomy between rational or “realist” motivations and other, fuzzier,


“ideational” motivations for foreign policy choices. This book avoids this false dichotomy by focusing on different policy goals, as they are perceived by the key decisionmakers in the executive branch and by influential members or segments of Congress. These goals include both ideological and what some may call “realist” goals.16 Finally, the arguments mentioned above are tailored to the American case. Admittedly, since all of the case studies in this book examine U.S. foreign policy decisions, the general applicability of my framework is not tested. However, this framework can easily be applied to other great powers as well. FUNCTIONAL EXPLANATIONS FOR STRATEGY CHOICE The most rigorous attempts to explain the choice among different cooperation strategies have used a functional approach to strategy choice. These arguments imply that the best institutional form will be chosen, based on the specific problems inherent in the objective nature of the situation to be dealt with.17 This type of argument is especially appealing because it implies that the choice among different forms of cooperation strategies depends on specific characteristics of the issuearea involved. It could therefore, in principle, be easily predicted, and can be applied to various issue-areas. Lisa Martin’s thought-provoking article “The Rational State Choice of Multilateralism”18 is perhaps the best attempt to offer a general framework for the choice of form of cooperation, and also addresses the specific incentives facing a hegemonic state. Martin’s argument focuses on the type of cooperation problem to be dealt with, and the type of cooperation game being played (collaboration, coordination, or suasion), as the key factors explaining the type of institution that is chosen. The argument is highly functional: certain types of problems require certain types of institutional solutions. This approach has been the basis for works both in the field of international political economy, as well as in the field of security cooperation. Thus for example, Yarborough and Yarborough try to account for variations in the form of trade liberalization efforts by using a strategic organizational approach. They argue that the institutional form of “governance structures” will vary depending on the existence of relation-specific assets, and the presence or absence of effective third-party enforcement.19 On the security front, David Lake suggests that the form that cooperation takes can be predicted based upon the calculation of the costs and benefits for a polity of alternative security relationships with its partners. Those, in turn, are shaped mainly by three factors: the gains from pooling resources and efforts with others, the expected costs of


opportunistic behavior by partners, and the costs of monitoring, safeguarding and enforcing alternative security relations. These three factors together interact to determine the optimal security relationship.20 The main problem with this type of argument, however, is its insufficient emphasis on the politics going on around foreign policy making. It is doubtful that statesmen will choose policies based only on the special strategic organizational problems they face. Similarly, one may doubt Lake’s assumptions that view the state as a “firm producing security”, and that deproblematize policy making in the security field by assuming that security is a single dimension of policy, and that voters possess single-peaked preferences. The neoliberal institutionalist literature about the value of multilateral institutions shares a similar weakness. For example, the arguments about the value of multilateral institutions for free trade, which are at the heart of the hegemonic stability literature, focus on multilateral institutions’ ability to reduce transaction costs, create greater transparency, and thus facilitate collective action.21 They suggest that multilateral arrangements are an efficient solution to problems of cooperation among a large number of actors. They also suggest that decomposing the relations into sets of bilateral arrangements is a potential strategy to overcome the large-N problem. There is no effort, however, to hypothesize under what conditions states will opt for one strategy or the other.22 This game-theory approach, emphasizing transaction costs and collective action problems as driving states’ policies, downplays much of the politics involved, as well as the importance of power relations.23 Different actors may have different interpretations of the game being played, and of the potential costs and benefits involved. Furthermore, the definition of the type of game being played depends significantly on the specific goals that each actor wants to achieve by playing the game, as well as on his perception of the other players’ goals and preference ordering. These goals, therefore, need to be problematized. The framework of this book brings to the forefront the political elements of strategy choice. THE NEED TO PROBLEMATIZE GOALS With the exception of the domestic ideational line of argument, the different explanations reviewed so far are all based on a flawed, implicit assumption that choice of strategy is made by a rational decisionmaker attempting to maximize one given goal, or utility. The analytic paradigm of decisionmaking that informs these various arguments assumes that decisionmakers can compare the different


goals (or values) they are interested in promoting, rank them according to their relative utility, and make the necessary trade-offs among them,24 thus ending up with a key goal they need to maximize. Different theoretical arguments stress different state goals and accordingly reach different conclusions about the best means to maximize them. This assumption, however, has been proved to be problematic. Political psychologists have noted that decisionmakers facing complex value conflicts often find it difficult to compare and rank the competing values, that is, to make the necessary value trade-offs. Given this problem, it is also difficult to actually maximize and to find the “best possible alternative.”25 If one accepts this finding, then most functional explanations for the choice of cooperation form are problematic since preferences and preference ordering are taken as given and not problematized. Actors look for optimal institutional solutions, but for what purpose? What value(s) do they seek to maximize through such solutions? The same question emerges with respect to realist explanations, which also cannot agree on the exact goal that drives states.26 If states were driven by one clear goal, or if “the national interest” were a clear concept, it would be easier to predict how they would behave in light of given systemic constraints. However, except for the rare cases where survival is at stake, the meaning of external “compulsion” and security concerns will vary from state to state depending on the more specific values for which protection is being sought.27 This is likely to be the case in choices about cooperation strategies, especially when they are not made in a time of crisis or under the immediate threat of war. Statesmen are indeed sensitive to cues from the international system. However, the meaning of these cues in terms of the costs and benefits of different strategies can only be assessed against the background of the specific goals they wish to advance. Under the broad label of the “national interest,” great power decisionmakers can pursue various goals. Furthermore, different actors within the decisionmaking circle or in society may assign greater priority to certain goals than to others, or may wish to pursue different “grand strategies” to enhance national security.28 To understand the choice among different forms of cooperation it is important, therefore, to problematize the goals sought by decisionmakers, goals against which the costs and benefits of different forms are assessed. This issue is elaborated in the next section, which sets forth the first stage in the book’s theoretical framework, namely, that of preference formation.


STAGE I: THE FORMATION OF INITIAL PREFERENCES ABOUT THE FORM OF COOPERATION RECONCILING GOALS, REDUCING COSTS Decisionmakers, who make choices about cooperation strategies, are Janusfaced actors, facing opportunities and constraints from both the international system and the domestic arena.29 They seek to pursue different policy goals simultaneously, goals that at times may conflict with one another. Furthermore, decisionmakers face domestic pressures to lower the costs of the state’s foreign policy in general. Given this prevalence of goal conflicts, the main hypothesis of this section is that Decisionmakers will prefer the cooperation strategy

that is best able to advance simultaneously (or at least appears to do so) the conflicting goals they face, and that will do so at the lowest cost.

The following pages consider: (a) the various sources of the goal conflicts that decisionmakers face, (b) the special value conflicts that confront decisionmakers in a liberal-democratic hegemonic state (the “hegemon’s dilemma”), and (c) how decisionmakers try to overcome such conflicts by seeking a transcendent solution. I then discuss the potential advantages of a regional-multilateral strategy as a transcendent solution. State leaders must juggle two critical political roles: they are responsible for their state’s security, yet at the same time are politicians who seek to remain in power.30 Decisionmakers must react to external threats to their state’s sovereignty and territorial integrity —as stressed by all neorealist arguments, which postulate that states’ behavior reflects the need to balance external threats under various systemic conditions.31 Decisionmakers are also, however, responsible for their state’s economic prosperity and wealth. A tension often emerges between the desire to expand foreign policy commitments and the desire to reduce the cost of foreign policy, as discussed at length in the next subsection. In formulating their foreign policy, decisionmakers are also both constrained and motivated by privately held beliefs or by a certain normative milieu embedded in their state’s institutions (broadly defined), or by what Ruggie has termed the state’s “social purpose.” They may want to advance a certain ideological agenda in order to create an international system that endorses the values most compatible with those of the state (for example, democratic norms, or Communist ideas). Alternatively, their policy choices may be


constrained by what is considered to be legitimate policy based on those specific ideological beliefs.32 Consequently, in designing international cooperation strategies, decisionmakers can face three types of goal conflicts: 1. The relative importance of conflicting foreign policy goals. Although there may be basic agreement on the need to pursue broad, fundamental goals, conflict often arises about their relative importance. For example, different actors33 may disagree about the importance of promoting security (defined in realist terms) as opposed to, say, promoting democracy. 2. Different means to achieve the same goals (or, conflicting instrumental goals)34. Another potential source of conflict is disagreement about the best means to achieve the basic goals. Put differently, those broad goals can be translated into different instrumental goals. For example, although all decisionmakers may agree on the need to neutralize a certain external threat, some may advocate balancing against the threat by joining an alliance, some may support unilateral action, and some may favor dealing with the threat by absorbing it into a collective security system. Alternatively, in order to reduce the cost of its foreign policy, a state can either minimize its commitments to other states or demand maximal burden sharing from the states to which it is committed. 3. Foreign policy goals vs. domestic goals. In light of their limited resources, decisionmakers must constantly juggle between the advancement of domestic and international goals, while coping with the challenge of minimizing the cost of their state’s foreign policy. This is important for reasons of both domestic and international politics. Domestically, the channeling of resources into foreign policy may come at the expense of domestic projects, burden the citizens, and sow domestic discontent. This, in turn, may diminish the government’s or president’s chances of reelection.35 This trade-off also triggers domestic pressures on decisionmakers to reduce the cost of foreign policy. In the U.S. case, Congress is especially concerned about foreign policy expenditures because they entail higher taxes or, in some cases, diminished benefits for constituents.36 Internationally, investing too many resources in foreign policy will eventually lead to decline if not enough resources are left for developing the domestic economic base. This is Paul Kennedy’s main thesis in The Rise and Fall

of Great Powers.37

The problem of reconciling the cost of an active foreign policy with the need to devote resources to domestic purposes becomes more politically salient at times when there is a major shift in either international or domes tic conditions. Although there is always a tension between domestic and international goals, a consensus usually


arises about the basic trade-off between the two. This consensus is challenged when, for example, major external changes present decisionmakers with the need to expand foreign policy commitments. Changes in an administration’s domestic goals can also lead to a reexamination of the trade-off. For example, in the case studies the concern about the cost of foreign policy emerges much more strongly during the Eisenhower administration, which, unlike its predecessor, had made the achievement of a balanced budget a major policy goal.38 Finally, conflict on all of the above may emerge because of different interpretations of international conditions and their implications for national goals. Different decisionmakers or policy-relevant groups can disagree about the sources and intensity of the threat faced by their state, leading to different policy prescriptions. The objective of the study is to examine the choice of cooperation strategies once a goal conflict has emerged and become politically salient. Statesmen in any country must deal with the dilemma of reconciling an active foreign policy (driven by either security concerns, economic concerns or ideological aspirations) with the need to minimize the cost of such a policy. However, for a liberal-democratic hegemonic state this dilemma becomes more salient, and is often referred to as the “hegemon’s dilemma.”39 Mancur Olson’s well-known argument concerning collective action asserts that, as the most powerful state, the hegemon finds itself forced to provide essential public goods, whereas other states can free-ride.40 If the well-being of its partners is important for the hegemon’s interests, it must extend them commitments, since no one else will if it does not. It then becomes much harder for the hegemon to reduce the cost of foreign policy by simply reducing its international commitments. When cooperating with other, smaller states, it will likely bear most of the burden. In the economic realm that implies, for example, the unilateral opening of its markets to foreign goods in distress in order to maintain the stability of the international economic system. In the security realm it implies a disproportionate contribution to defense spending, as predicted by Olson and Zeckhauser’s classic application of collective action theory to alliances.41 Olson and Zeckhauser’s argument implies that for a hegemonic state there are increasing costs of political domination. These, combined with domestic economic and moral challenges, can lead to its eventual decline.42 This challenge should be greater for decisionmakers in a liberaldemocratic hegemonic state, where both decisionmakers and legislatures are accountable to the citizens. Legislatures are therefore more likely to question foreign policy expenditures that may come at the expense of domestic goals, and the national decisionmakers are more likely to encounter domestic pressure. This challenge is often


ignored in the literature on hegemonic stability, where it is simply assumed that in light of its power preponderance, the hegemon is less concerned about relative gains and can therefore afford to be more “benevolent” in its international contributions.43 However, nowhere does the strong sense of finite resources appear more clearly than in the American case. U.S. decisionmakers during the Truman and Eisenhower administrations were well aware of this dilemma and of the adverse international as well as domestic consequences of overextending U.S. resources. As the following chapters will show, a central theme of U.S. foreign policy throughout the Cold War period was indeed the drive to overcome the hegemon’s dilemma.44 When goals or values conflict, decisionmakers face a situation of value complexity. Political psychologists have focused on the stress, frustration, and anxiety that value complexity generates for the decisionmaker. Alexander George argues that when facing value complexity, the key executive undergoes an “internal debate.” He may cope with the problem by either trying to resolve the value conflict, accepting it as unavoidable, or denying or belittling it. If he chooses the former, he may find an original, transcendent solution that either resolves the conflict or at least offers the “illusory resolution of it.”45 In contrast to this psychological emphasis, this book focuses on the political consequences of value complexity. In the field of psychology as well, it has been acknowledged that individuals in different contexts are likely to process information differently. Thus, the context within which decisions are made is crucial.46 According to Farnham, the central, uniquely characteristic element of the political context is the concept of acceptability, that is, the achievement of sufficient consensus in support of policies and decisions. Whereas the decisionmaker in the rational choice model strives to maximize utility, the decisionmaker in the political decisionmaking model seeks to maximize acceptability.47 As Barbara Farnham argues, “since acceptability is a prior concern and an unavoidable constraint, evaluation in the political approach to decisionmaking normally begins with a screening of the alternatives for acceptability.”48 Acceptability is thus a central criterion for the evaluation of different cooperation strategies, especially at times when value conflicts exist. When assessing different strategies, decisionmakers will therefore prefer to adopt one that can serve as a transcendent solution that will overcome the conflict between the different goals and hence will most likely maximize acceptabili ty. Put somewhat differently, the desire to reconcile conflicting goals becomes a value in itself, against which the merits of different cooperation strategies are assessed. The next subsection discusses how a regional-


multilateral cooperation can serve as a solution to the goal conflicts facing a dem ocratic hegemon. THE LURE OF A REGIONAL STRATEGY AS A TRANSCENDENT SOLUTION The value of a regional strategy, as opposed to a bilateral or globalmultilateral one, is assessed by two criteria: (a) its ability to reconcile the conflicting goals pursued by decisionmakers, and to foster a viable domestic policy compromise. This determines the domestic political cost associated with a strategy; and (b) its ability to advance the state’s foreign policy goals at the lowest cost for the state. This criterion measures the more objective costs for the state in terms of money, foreign policy leverage, and so on. Serving multiple goals: The extent to which different strategies can recincorporating it into the arrangement, thus providing a regional collective oncile conflicting goals is an empirical matter. The case studies focus on the different ways in which regional strategies can at least appear to be advancing different and often competing goals. In the security sphere, for example, a regional strategy can serve as an alliance to balance against external threat, while simultaneously serving to contain a potential regional adversary by security arrangement.49 Such a mechanism cannot be achieved by using a bilateral strategy. If perceived as a form of collective security (albeit regional), a regional strategy can also be presented as serving (or may actually serve) to advance a liberal world order. This is especially important in the context of U.S. foreign policy, as discussed later. A bilateral strategy (or a blatant unilateral strategy) would be less compatible with this worldview; a global-multilateral strategy would be the most compatible with it, but could not be used for balancing against certain external threats. The main advantage of a regional strategy in that respect lies in its exclusionary nature. The ability to exclude certain actors from the arrangement allows the participants to use the arrangement to balance against external threats or to use the arrangement and the benefits derived from it to exert political or economic leverage.50 The ability to exclude offers the great power some leverage over other key actors. In a global-multilateral arrangement this leverage is diminished, since it becomes illegitimate to exclude other actors from the arrangement and the benefits associated with it. Reducing the cost of expanded foreign policy commitments: When the great power perceives it as necessary to expand its foreign policy commitments to regional states, a regional strategy can help reduce


the cost in three ways: (1) By forcing the regional partners to cooperate with each other through a regional arrangement, the great power promotes more efficient regional cooperation. That, in turn, facilitates the pooling of the small partners' resources, so that collectively they can offer greater burden sharing to the great power than each could have on its own. (2) By offering smaller states a cooperation forum in which they have relatively greater "voice" than they would have had in an extremely unbalanced bilateral arrangement, the great power can add legitimacy to its policy within the region. This, in turn, makes it less necessary to use coercion and lowers the risk of partners' defection and shirking. (3) By encouraging cooperation among its regional partners, the great power can enhance regional stability and reduce the risk of involvement in costly regional conflicts. I now elaborate these three mechanisms. 1. Encouraging cooperation among regional partners: the pooling effect. It may seem counterintuitive that a regional strategy would actually promote burden sharing. After all, in unequal power relations, one would expect the great power to stand a better chance of extracting maximal burden sharing from its smaller partners by bilaterally negotiating agreements with them. Such agreements would lead them to contribute monetary resources, military resources (including forces, that is, potential war casualties), or other resources specific to the issue on which cooperation is sought. In a bilateral setting, the great power has overwhelming leverage that it stands to lose in a wider, multilateral setting. Behind this argument lies the assumption that the small partner prefers to free-ride and let the great power bear all the burden of providing the good in question (for example, security, an open international economic system). The logical conclusion is, indeed, that the more bargaining leverage the great power has over its partners, the greater the burden sharing it can extract from each of them. This argument, however, is problematic for two reasons. The first concerns the assumption that partners will always prefer to free-ride; the second, and more central, problem has to do with the structural limitations on burden sharing in extremely unequal relations. Small partners do not always prefer to free-ride: The expectation that small partners will always free ride is based on the assumption that security cooperation in an alliance involves only the provision of a public good. However, security cooperation can produce both public and private outputs. Small partners that receive substantial excludable benefits from cooperation may choose to assume a large burden despite their wealth position. Such private benefits could include concrete benefits such as greater damage limitation in case of an attack (or in case of abandonment), but also more abstract benefits


such as preserving one’s sovereign status or enhancing one’s regional status through greater contribution to regional defense.51 This mixture of public and private benefits is relevant to economic cooperation as well.52 We cannot then assume that the small partners will only want to freeride. Therefore, if and when the great power perceives that there is genuine regional interest in regional cooperation, bargaining leverage through bilateral tactics is no longer the only means of enhancing burden sharing. The logic behind the regional partners’ preference for regional cooperation is explored later. Wide power disparities—a structural and not a political problem: Inducing burden sharing through a bilateral strategy becomes more problematic in cases of wide power disparities. When there are such power disparities between the strong state and its partners, each small state is unlikely to contribute substantially in a bilateral arrangement with the great power, even if it is willing or forced to do so. Hence, the issue of bargaining leverage becomes less relevant. On the other hand, by encouraging the small partners to cooperate with each other and to pool their resources, there is a greater likelihood that more meaningful burden sharing will be achieved. Cooperation among the regional partners can create a “pooling effect.” This occurs where the combination of individual states’ resources into one “pool” is potentially greater than the mere sum of their individual resources. Pooling in its extreme version means actual integration of the individual states’ resources into one supranational pool (for example, a regional army, a free trade area). However, the pooling effect can also be achieved through varying degree of institutionalization of regional cooperation, which allows for more efficient joint use of individual resources.53 This effect, of course, will depend on the nature of the resources that are to be pooled. In the security field, for example, by coordinating and combining the various small military units of the small partners, a greater military contribution to regional defense can be attained. Greater cooperation among one’s allies can lead to standardization of equipment, making it easier for them to act collectively in case of war. It can also facilitate specialization of contributions and roles according to comparative advantage, leading to greater efficiency and equity in public goods production within an alliance. This, in turn, will reduce the hegemon’s burden.54 Such specialization, however, is not likely to occur on its own, given the constraints that the anarchic international system imposes on interstate cooperation. By pursuing a regional strategy, the great power can help overcome this problem. It is likely to bear the initial burden of creating a regional arrangement and providing certain guarantees to the regional states to mitigate fears of


regional cooperation. But it will do so in the belief that in the long run this strategy will reduce that burden.55 When examining the apparent costs and benefits of a regional strategy, it is therefore crucial to distinguish between short-term and longterm burden sharing. The burden-sharing rationale associated with regional cooperation is of a long-term nature. A similar logic operates in the economic field. In both fields the great power is driven to bear a higher burden than its small partners do. However, by promoting regional trade arrangements the great power can shift some of the burden of trade liberalization to the regional states. Such arrangements facilitate small regional states' entry into their neighbors' markets, thus offering them a larger market for export and import. Such regional trade liberalization can then in turn strengthen the global trade system by having more regional states conducting free trade on the regional level and prospering, thus reinforcing the free trade principles. In this way the burden of pushing for liberalization and maintaining the system will be better shared.56 The regional strategy is also attractive because it offers the potential (though often a false one) of not only burden sharing but also burden avoidance or burden shifting in the future. If a great power can get its partners to cooperate effectively with each other, it may be able, at least in the long run, to escape the burden that accompanies its power preponderance. Liska argues that by strengthening local forces the great power may be able to achieve at least partial disengagement in times of relative quiet.57 2. Enhancing legitimacy as a means of cost reduction. Giving the regional partners greater voice in the cooperation arrangement, as is often done in a multilateral setting, runs the risk of losing policy leverage. This risk is much smaller in a bilateral arrangement. At the same time, extreme power disparities leave the great power open to suspicions of imperialism, especially in an extremely uneven bilateral setting. Trying to get its way through a bilateral strategy may therefore create a legitimacy problem for the great power. Enhancing the legitimacy of its foreign policy can help reduce the cost of achieving its regional goals; legitimate domination is far more effective than naked domination. The creation of international (in this case, regional) institutions and rules can help extend the material and social bases of hegemony. If the hegemon's dominance appears legitimate to the smaller states, it is less likely to be undermined by fluctuations in those bases and should thus be more stable.58 Weber argues that legitimization of power depends on conformity with formal and legal principles of government and decisionmaking. Creation of a regional arrangement, based to some degree on


multilateral rules, can achieve the same effect. Also, it is likely to help socialize the regional states’ elites to the norms advocated by the great power (for example, liberal multilateralism), and thereby to encourage future voluntary cooperation. The more legitimate its policy appears, the easier it is to induce cooperation without using coercion.59 This, however, will only work if there is a basic goal compatibility between the great power and the regional states. If a real conflict of interests exists, the great power is most likely to get its way and the strategy may backfire by fostering regional cynicism. 3. Enhancing regional stability as a means of cost reduction. A hegemonic state has a strong interest in preserving the status quo. Thus it has much to gain from encouraging regional cooperation that would decrease the likelihood of regional instability that may necessitate its involvement. Once a sound regional, institutional cooperation arrangement exists, the regional states can deal collectively with threats to their security, without always dragging the great power into the conflict. There are, moreover, less likely to be conflicts among them that would weaken their ability to cooperate collectively and might necessitate great power intervention. Granted, the latter argument is closely linked to the liberal belief that institutions can enhance the chances of long-term cooperation. This rationale, therefore, is likely to play an influential role only if decisionmakers adopt that assumption. Also, as was the case with the argument about the role of legitimacy, this rationale is based on the premise of some basic compatibility of interests between the great power and the regional states. To sum up, the logic of burden sharing discussed above favors multilateral solutions, whether global or regional, over bilateral ones. Bilateral strategies cannot achieve the pooling effect because they do not encourage the great power’s partners to cooperate with one another. The main advantage of a regional strategy over a globalmultilateral one in terms of simultaneously advancing conflicting goals is that it can exclude benefits from nonmembers. Although the great power may be losing leverage toward its regional cooperation partners, it may at the same time be enhancing its bargaining leverage toward other actors excluded from the arrangements. This is a crucial advantage of a regional strategy over its global-multilateral counterpart, since it enables it to perform simultaneously as a balancing mechanism against external security or economic threats, and as a collective security or trade arrangement within the regional context. This being said, even if a regional strategy appears an attractive means to reconcile conflicting foreign policy goals and to reconcile the costs of foreign policy commitments with the domestic pressures to


lower them, the final assessment of the relative cost/benefit of a regional strategy is influenced by two external factors. One is the perception of the regional partners’ preferences and goals. A perception of similar goals will reduce the main risk associated with giving the small states greater voice in a regional or multilateral strategy. It decreases the perceived risk of the formation of a hostile bloc that excludes the great power, as well as of the shirking associated with cooperation arrangements that include a relatively large number of states. The second external factor that largely shapes the perceived benefits of a regional strategy is the regional power disparities between the great power and the region and among the regional states. STAGE II: THE TRANSLATION OF INITIAL PREFERENCES INTO FINAL CHOICE OF A COOPERATION STRATEGY THE INTERACTION BETWEEN GOALS AND REGIONAL POWER DISPARITIES Regional power disparities affect a regional strategy’s potential to induce greater burden sharing than would be achieved through bilateral arrangements, and thereby influence its attractiveness.60 Two power distribution factors play a role here: (1) the power disparity between the great power and its prospective partners; and (2) the regional power disparity among the prospective partners themselves. The second main hypothesis of this study suggests that: The power

disparity between the great power and its regional partners, as it is perceived by the decisionmakers in the great power, will affect the value of the regional strategy for cost reduction purposes. A regional strategy is more likely to be chosen if the power disparity between the great power and the regional partners is moderate.

The relationship between regional power disparities and the attractiveness of the regional strategy can be conceptualized as a bellshaped curve, where a regional strategy is less likely on the extremes (see Figure 2–1 on the following page). If the power disparity with the prospective partners is very high, then burden sharing is unrealistic in bilateral cooperation with each small partner but is also unrealistic in a regional multilateral arrangement. If the regional states are very weak, there are not enough power resources to pool in order to make the investment in such an arrangement worthwhile. If the power disparity between the great power and its partners is moderate, then significant burden


Figure 2–1. Power Disparities and the Likelihood of Choosing a Regional (RL) Strategy

sharing through the pooling effect is most likely, making regional solutions attractive. Although each of the partners could be induced to offer some burden sharing through bilateral arrangements, the impact of their joint efforts for burden-sharing purposes will be more dramatic. Finally, if the power disparity between the great power and its partners is very low, then a regional strategy is again less likely. Although low power disparities may be the most propitious for burden sharing, they also indicate that if each partner is quite strong, then a bilateral arrangement will suffice for burden-sharing purposes. Also, with low power disparities, relative gains concerns should be higher, and the implications of possible defection by partners are more serious. Furthermore, a regional strategy will be too constraining because the partners are strong enough to entrap the great power in a policy it may not wish to pursue. The voice given to the partners may be strong enough to overcome that of the great power. As noted, the second relevant power distribution factor is the power distribution among the different regional partners. The third hypothesis I examine posits that: The regional power disparities

among the regional partners will affect the viability of the pooling effect, thus influencing the potential benefits of a regional strategy and the likelihood of its being pursued. A regional strategy is more likely to be chosen if the regional power disparities among the regional partners are low. If the power disparities among the partners are relatively low, then

a regional strategy will be attractive. The relatively equal distribution of power means that each partner can make a significant contribution to the regional arrangement and to the general pool of resources. If, however, the power disparities among the regional states are high, for


example, if there is one dominant regional state and many weak states, then the regional strategy becomes less attractive. Under such conditions, the relative contribution of most of the regional partners will be negligible compared to that of the one strong regional partner. The advantage of creating an inclusive regional arrangement over a bilateral arrangement with the strongest partner (and perhaps others) will therefore be insignificant for burden-sharing purposes. High regional power disparities also reduce the likelihood of pursuing a regional strategy by affecting the regional states’ preferences. Such disparities tend to accentuate the weak regional states’ fears of domination by their stronger neighbor(s).61 A regional arrangement may appear to be a tool of the great power to gain access to the region and legitimize its control; this concern will intensify if a powerful regional state were to join that arrangement. It follows, then, that if regional power disparities are high, regional states are less likely to favor the creation of a regional arrangement. This point is closely linked to the next external constraint on decisionmakers’ choice of coop eration strategies: the preferences of the regional states. THE IMPACT OF THE REGIONAL PARTNERS’ PREFERENCES ABOUT THE FORM OF COOPERATION The fourth and last hypothesis I present to you in this study suggests that the regional strategy is more likely to be chosen if the regional partners support a regional cooperation strategy and if the partners’

goals are perceived to be complementary or similar to the great power’s own goals.

The main question considered in this book centers on the great power’s perceptions and policy choices. However, it would be a mistake to assume that small states (in this case, cooperation partners) do not matter and that one can ignore the interaction between the great power and its partners. The hegemonic stability literature has been criticized on exactly this point. Critics all show that a hegemon can only lead, and needs followers in order for its policy preferences to have a substantial impact.62 Small partners will have greater influence when they hold more intense preferences than the strong leader, when they threaten to defect or to maintain neutrality in disputes among the superpowers, when the superpower perceives a high level of threat, when the allies can pool resources to confront the leader with a unified position, and when they control specific material resources needed by the superpower.63 Many of these factors appear to be more important


under bipolarity, since in a bipolar system the great powers compete with each other and are very concerned about relative gains. This concern implies that small partners gain in importance because from an extreme relative-gains perspective, even the loss of a small ally could have a major negative impact on the global balance of power. Since bipolarity is a constant in all of the cases examined in this book, partners' preferences are most likely to matter. Regardless of bipolarity, partners' preferences are especially relevant to the great power's choice of cooperation strategy when multilateral and regional options are considered. A multilateral arrangement, whether global or regional, usually gives the prospective partners greater voice. The weakness of such an arrangement from the great power's perspective is that because there are more actors involved and because its bargaining leverage is weaker, free riding and defections are more likely and compliance is harder to enforce. If the regional states do not prefer regional cooperation, it would be extremely difficult to coerce them to comply with the arrangement's rules and to cooperate with each other. Coercion will also be counterproductive if one of the goals of the regional or multilateral strategy is to help legitimize the great power's activities in the specific region. Furthermore, if the regional states are not willing to cooperate with each other, then the value of the regional strategy as a means of creating a regional framework for better burden sharing is greatly diminished. If, however, the regional states strongly support a regional strategy, cheating and defection are less likely. Not only partners' preferences about the form of cooperation matter, but also the goals they seek to achieve through it. In a multilateral arrangement the great power forgoes some of its leverage, whereas the weaker partners gain voice opportunity.64 The risk that such a concession entails is directly linked to the weaker partners' goals, as the great power perceives them. If the partners' goals are perceived to be compatible with the great power's, then the danger involved in giving them greater potential influence on the great power's policy is small. If, on the other hand, their goals are perceived to conflict with those of the great power, then that danger is much greater. In such a case, the regional partners' support or even demand for a regional strategy will not make that strategy more attractive to the great power.65 The relations between the partners' goals and preferences and the likelihood of choosing a regional strategy are summarized in Table 2-1. Given the specific research question, partners’ preferences are important only to the extent that they are perceived by the decisionmakers in the great power. Therefore, the analysis of those


Table 2–1. Partners’ Preferences and the Likelihood of Choosing a Regional Strategy

preferences will be conducted based on, in this case, American perceptions, and less so on original documents or literature from the relevant regional states. What matters for the calculations of U.S. decisionmakers (and therefore for me) are the preferences they perceive and not the “real” preferences, which may or may not be different. The “real” preferences and any disparities between them and the perceived goals are important for explaining the success or failure of certain initiatives. This, however, is not the central question addressed here. Although I do address this issue in the cases, I do not offer an explicit theory to explain the origins of the small partners’ preferences.66 The explanatory framework developed in this chapter, and the links between the different hypotheses, are summarized in the flow chart shown in Figure 2–2 on the following page. CASE SELECTION AND SOME METHODOLOGICAL CAVEATS To test the argument developed in this chapter, the book follows the method of a structured focused comparison.67 Each of the six case studies systematically addresses the following questions: l. What were the great power’s main foreign policy goals? Were there any value conflicts, and how well did different strategies serve as potential transcendent solutions? 2. How did the goals interact with power distribution factors to shape the preference for certain cooperation strategies? 3. How did the interests and preferences of prospective regional partners influence the great power’s choice of cooperation strategy? Each case uses a process-tracing approach to examine the development of initial strategy preferences and their translation into policy. All of


Figure 2–2. The Costs and Benefits of a Regional Multilateral (RL) Arrangement

the cases deal with American choice of cooperation strategies. In the first half of the book I examine three cases of security cooperation, and in the second, three cases of economic cooperation. The first case study concerns U.S. policy toward the creation of a Pacific Pact in Asia during the Truman administration, most seriously considered in 1950. This was to be a rough equivalent of the North Atlantic Treaty in Europe, but it did not materialize. The second case looks at the process leading to the creation of the Southeast Asian Treaty Organization (SEATO) in 1954. The last case of security cooperation offers a cross-regional comparative perspective by considering U.S. policy toward the creation of NATO and the failed attempt to create a European Defense Community (EDC). The fourth case study focuses on U.S. policy toward postwar trade cooperation in Asia. It discusses the U.S. attempts in the early 1950s to use multilateral and regional


strategies to revive the Japanese economy and reintegrate it into the regional and global trade arenas. The next case study examines U.S. policy concerning the form of development aid provision to Southeast Asia, and explains the U.S. preference for bilateral aid provision. The second half of that chapter leaps in time to the Johnson administration to consider the apparent dramatic shift in U.S. policy toward greater reliance on regional strategies, as exemplified in the U.S. support for the creation of the Asian Development Bank (ADB) in 1965. Finally, the last case again offers a comparative cross-regional perspective by focusing on U.S. policy with respect to the Marshall Plan and European integration during the Truman and Eisenhower administrations. By focusing most of my cases on U.S. foreign policy decisions toward Asia, I hope to make this study not only rich in theoretical insights but empirically meaningful. This is important at a time when many complain about the gap between theory and policy and between theory and history. The four case studies in question provide an overall perspective on the rationale behind the U.S. decisionmaking process toward Asia. The addition of the two European case studies offers a comparison that is both intuitively attractive and theoretically enriching. The strong variance in the final strategy choice in Asia and in Europe, and the variance on two of the key independent variables, namely, regional power disparities and partners’ preferences, permit a more rigorous analysis of the causal value of those variables and of the goal conflict variable in explaining the choice of different cooperation strategies. The comparison of the rationale guiding policy choices in both the economic and security issue-areas is important, despite some methodological limitations it imposes. There has been growing acceptance in the field of the fact that security cooperation and economic cooperation are not two separate domains and can be studied with the same tools. Yet there have been very few attempts to actually apply similar theoretical frameworks to cases from both domains, at least explicitly.68 In the world we live in today, where the end of the Cold War and the growing economic interdependence among states have blurred the lines between economic and security issues, it becomes ever more important to examine whether the rationale behind cooperation strategies in both issue-areas is the same or not, and how the two may be linked.69 Different interpretations of the relations between economic and security issues also affect the assessment of the best policy that should be pursued in Asia. For example, supporters of the administration’s continued deep engagement in Asia stress that security is a prerequisite for economic prosperity and that the two are inextricably linked; hence the U.S., as


a major military power, has a major stake in preserving stability in Asia. Critics, on the other hand, argue for the current primacy of economic power; from this standpoint the U.S. is in fact weaker than it claims to be, and its current strategy fails to address the severe economic challenges it faces from the region.70 I argue that the same rationale drove U.S. preferences about the form of cooperation with regional partners in both issue-areas. In both security and economic issues, the cost-commitment conflict was apparent and the need to resolve that conflict played a key role in strategy choice. In both issue-areas, regional power disparities and the regional partners’ preferences were important in allowing the translation of initial U.S. preferences into a final choice of cooperation strategy. The research question driving this book operates on two levels. The book offers a general explanation for the strategy preferences of great powers in organizing cooperation with smaller, regional partners. More specifically, it attempts to explain American preferences. Since all of the case studies deal with U.S. foreign policy decisions, one may ask whether the findings have any applicability to other great powers. This is especially problematic if one accepts the thesis of U.S. exceptionalism, the notion that the United States’ geopolitical status, history, institutions, and normative agenda pose a unique case.71 However, even if one accepts this, the theoretical framework developed here should still apply to other states as well, although the conclusions about the most attractive strategies may differ. The argument about decisionmakers facing multiple goals is relevant to any state. It is, however, more relevant to discussions of liberaldemocratic powers, where decisionmakers are more likely to undergo pressures from various domestic groups with various goals. The degree of sensitivity to such pressures may vary according to different domestic institutional structures, and so may the extent of the goal conflict. Similarly, sensitivity to the cost of foreign policy commitments is also relevant to decisionmakers everywhere. Again, the degree of sensitivity may vary given different domestic conditions, and in turn influence the attractiveness of different strategies. Thus, for example, a nondemocratic great power, where decisionmakers do not face strong domestic pressures to reduce the cost of foreign policy commitments, may feel less compelled to adopt a strategy that can directly reduce those costs, and may therefore be less interested in a regional strategy. The theoretical framework incorporates the role of the decisionmakers’ normative agenda. It is shown that, in the American case, the desire to advance free trade and liberal-democratic institutions helped favor regional multilateral strategies. However, the framework leaves open the possibility that decisionmakers will


want to pursue a different normative agenda, which may or may not be compatible with a regional strategy. This is a matter to be determined empirically. The theoretical framework, however, points to the right questions that need to be asked about the mechanism that creates preferences and strategy choices.

Chapter 3 The Rise and Fall of the Pacific Pact— U.S. Policy toward Early Postwar Security Arrangements in Asia

Although much has been written about the United States’ role after World War II in the creation of regional security arrangements in Europe, it has often been assumed that such regional strategies were a nonissue with respect to Asia. Yet, while the final postwar security arrangements in Asia did indeed take a bilateral form, regional strategies were in fact considered at several points along the way. This chapter, using the framework developed in the previous chapter, examines the rise and fall of the initiative to create a Pacific Pact. It explains the shifts in policy preferences that led to the final choice of a bilateral strategy. More specifically, it shows how U.S. interest in a regional strategy only arose after being confronted with several conflicting policy goals. A regional alliance appeared able to accommodate at least some of these goals, mainly by serving both to balance against the Communist threat and to contain a possible resurgence of Japanese militarism. The chapter next considers how the extremely broad power disparities between the United States and its potential Pacific partners, as well as among the partners, discouraged a regional strategy. Finally, the chapter analyzes the central role that partners’ negative preferences played in shaping the final U.S. strategy choice. Because so little has been written directly about the Pacific Pact proposals, I begin with a brief historical overview of how this idea evolved.1 HISTORICAL OVERVIEW The notion of a Pacific Pact was not invented after World War II. The Australians had proposed a regional nonaggression pact in the Pacific already in 1937, and then again in 1943. Such proposals, however, attracted little U.S. interest.2 The first call for a Pacific Pact after the war came in March 1949 from Filipino President Elpidio Quirino, and was clearly inspired by the signing of the North Atlantic Treaty in Europe. Quirino envisioned a pact that would include Japan, thus allowing the latter to be carefully monitored.3 In April, South Korea

THE RISE AND FALL OF THE PACIFIC PACT 37

also expressed interest in such a pact.4 The U.S. response was an unequivocal rejection.5 Nevertheless, in the following months Quirino, South Korean leader Syngman Rhee, and nationalist Chinese leader Chiang Kai-Shek continued to promote the pact idea, until finally discouraged by the Americans.6 At the same time, however, a parallel notion of a Pacific Pact was beginning to take shape within the State Department. On March 29, the Policy Planning Staff (PPS) advocated a regional approach to Southeast Asia. The policy paper, known as PPS-51, argued that it was important to contain Soviet influence in the region, and stated that “because there is slight hope of our achieving…these objectives through a policy limited to unilateral relations with individual SEA countries, we should adopt a wider conceptmultilateral collaboration, primarily with certain British Commonwealth countries and the Philippines, in approaching SEA as a region.” Furthermore, “We should…view the SEA region as an integral part of that great crescent formed by the Indian Peninsula, Australia and Japan.”7 The next initiative for a pact came in August 1949, again from the Philippines. The United States was more supportive of the new concept, advanced by the Filipino UN representative, Carlos Romulo. This proposal dropped the military element of the pact and covered a broader range of states than the earlier proposal. Still, the United States did not openly approve of the idea, despite its support for cultural and economic regional cooperation. Secretary of State Dean Acheson argued that the formation of an Asian association depended on “indigenous incentive and momentum…and that such incentive and momentum might be in inverse proportion to impetus coming or seeming to come from outside areas.”8 This approach was codified in NSC-48/2 of December 1949, the document that guided U.S. policy in Asia over the next few years. NSC-48/2 expressed U.S. sympathy for Asian leaders’ efforts to form regional associations of non-Communist states, and stated that the U.S. would, if invited, assist such associations to the extent that (1) they reflected the participants’ genuine desire to cooperate, (2) they operated on the basis of mutual aid and self-help, and (3) they were in accordance with Chapter 8 of the UN Charter dealing with regional arrangements.9 In early 1950, there was a change in tone in the State Department. State Department officials developed a new notion of a pact that was to become the final, official U.S. proposal. They envisioned a pact closely linked to the issue of the Japanese peace treaty—specifically, an offshore Pacific association that would address both the danger of future Japanese aggression and the danger of Communist aggression in Asia. This proposal, formulated in March, did not become official American policy until the beginning of January 1951, when John


Foster Dulles, who was in charge of the preparations for a Japanese peace treaty, went to Tokyo with authorization from the president to discuss the creation of a Pacific Pact.10 The developments up to that trip are examined closely below. Dulles, however, did not find the other potential partners supportive (their objections are analyzed later in the chapter). By April, Secretary of State Dean Acheson informed the Pentagon that “the desired results can be better achieved by a series of arrangements rather than by a single arrangement.”11 Those arrangements included a bilateral security treaty with Japan, which was signed on September 8, 1951, a trilateral treaty with Australia and New Zealand (ANZUS), signed on September 1, 1951, and a bilateral treaty with the Philippines, signed on August 30, 1951. The general form of the security arrangements in the region had been finalized, namely, bilateral cooperation arrangements. Each of the treaties, however, stressed that a broader Pacific Pact was the next desirable step. The following sections apply the theoretical framework developed in chapter 2 to explain both the rise in interest in the regional strategy and its eventual rejection in favor of a bilateral strategy. CONFLICTING POLICY GOALS AND STRATEGY PREFERENCE Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost. In the postwar domestic and international setting, U.S. decisionmakers had to deal with several, often competing, goals. The problematic nature of this task was reflected by the congressional environment on the eve of the Truman Doctrine speech, the official declaration of the expansion of U.S. global commitments. President Truman faced conservatives who wanted to reduce taxes and government spending, those who thought the doctrine was still too soft on Communism and called for a more assertive policy, and liberals who feared that the U.S. was becoming an imperial power in Britain’s place.12 The administration had to contend with a strong desire to reduce the cost of foreign policy, with growing external security threats, and with internal disagreements about the sources and nature of those threats. What were the key goals of U.S. foreign policy as they applied to Asia at the time? How did these goals conflict with each other? To what extent a regional cooperation strategy, as opposed to other strategies


(unilateral, bilateral, global-mutlilateral) was seen as capable of reconciling them? These are the questions addressed in this section. DEALING WITH SECURITY THREATS: THE CONFLICT BETWEEN BALANCING AND COLLECTIVE SECURITY

Balancing. Balance of power considerations played an important role in U.S. postwar foreign policy in Asia. By the end of the war with Japan, the U.S. was already preoccupied with containing Soviet Communist expansion. However, whereas in Europe the lines of the conflict were clearly drawn, on the Pacific front the situation was much murkier. Strategic planning for that region remained chaotic up to the Korean War.13 Furthermore, U.S. officials, and perhaps more so the American public, perceived Britain still to be playing a great power role, especially toward Southeast Asia. The preferred option was to “let the West Europeans reform their empires, co-opt the nationalist movements, and preserve Southeast Asia for the wellbeing of the Western world.” The U.S. should not, it was felt, incur primary responsibilities of its own.14 Even before the Korean War, however, Japan’s strategic importance for the U.S. was evident. The Japanese islands were considered crucial mainly because of their location near the trade routes of the North Pacific, as well as the exits and entrances of the Sea of Japan, the East China Sea, and the Yellow Sea. Furthermore, the Joint Chiefs of Staff (JCS) maintained that because of its geographic location, Japan could, under Soviet control, be used as a base for actions against U.S. bases in the western Pacific. Conversely, U.S. control of Japan, direct or indirect, would not only deny the Soviets an important strategic base but make available to the U.S., in the event of war, strategic outposts for early denial to the Soviets of the Sea of Japan and the Yellow and East China seas. It would also provide the U.S. with staging areas from which to project its power to the Asiatic mainland. Japan’s manpower and industrial potential further increased its strategic importance.15 Japan was, therefore, to play a central role in U.S. security policy in Asia, and to be the main regional actor in the concerted effort to contain both Soviet and Chinese Communism in Asia.16 Up to the Korean War there was no consensus in the United States, and especially between the Defense Department and JCS and the State Department, about the preferred permanent security arrangements in Asia. Defense officials favored continuing the de facto U.S. occupation of Japan for the time being, whereas some in the State Department already called for a peace treaty with Japan. The


former can be thought of as a unilateral strategy, the latter as a bilateral strategy. The Korean War shaped the course of the Cold War as we know it both by resolving the incoherence of U.S. foreign and defense measures and by establishing new lines of policy.17 The Korean War, together with the preceding Sino-Soviet Treaty of February 14, 1950, sharpened the perception of bipolarity in Asia and helped clarify the regional sources of threat. The war reversed earlier inclinations to accommodate the nationalist revolutions in Asia and led to the adoption of a much more simplistic approach, following the lines of NSC-68.18 As Dulles described it in November 1950: Developments in Asia confirm that there is a comprehensive program, in which the Soviets and Chinese communists are cooperating, designed as a present phase to eliminate all Western influence on the Asiatic mainland, and probably also in relation to the islands of Japan, Formosa, the Philippines, and Indonesia. It would be reckless not to assume that such a program has been carefully worked out and that steps are being prepared to implement all its various aspects.19 The Korean War’s most crucial impact on future regional security arrangements was in clarifying the need to conclude an early, liberal peace treaty with Japan. The war indicated that it was not realistic to keep Japan unarmed forever. The JCS, which at first strongly rejected State Department proposals for an early treaty, came to the conclusion that such a treaty was inevitable. Although, they argued, the U.S. should assume Japan’s security for the time being, it was inevitable that Japan would resume its status as a sovereign state, and “in the light of the world situation existing today we must realistically concede that these rights must include that of selfdefense.”20 This recognition was shared in the State Department. John Allison, Dulles’s deputy in the negotiations for the Japanese peace treaty, recalls that the “main problem in the back of all our minds at that time was security. How was a completely disarmed Japan to be defended?…”21 It was also feared that the military disaster in Korea would have serious psychological effects on Japan and the countries of Southeast Asia. Dulles argued that a major political effort was required if Japan was not to fall under Communist control. Such an effort had to involve restoring a large measure of self-government to Japan, together with “the capacity…at least to make the exertions necessary to prevent communist conquest of this area.”22 Time was of the essence and it was working against the U.S.23 Finally, it was argued that thanks to war-generated earnings, Japan was likely to achieve self-support


earlier than expected. This, in turn, would likely reduce its amenability to occupation controls and give it greater bargaining power in the negotiation of a treaty. Here too, time was working against the United States.24

The danger of a revived Japan and the idea of collective security.

The idea of a liberal peace treaty that would neither prohibit Japanese rearmament nor demand war reparations from Japan met heavy opposition from most of the other regional states. It appeared that some sort of a regional collective security arrangement, a Pacific Pact, might be the price to pay for a liberal peace treaty.25 Beyond the need to appease the allies, the State Department had already in March 1950 considered the dual security problem posed in Asia: on the one hand, Japan’s recent aggression and the fear among its victims of a possible resurgence; on the other, the threat of SovietCommunist expansion in Asia. A Department memorandum argued that the dual nature of the problem discouraged an early peace treaty that would satisfy all of the U.S. security requirements. The memo then proposed separating the two problems by concluding a “normal” peace treaty with Japan on the one hand, and forging a collective security arrangement on the other. This arrangement would initially include the U.S., Canada, the Philippines, Australia, New Zealand, and Japan—an “offshore” Pacific Pact that would not involve U.S. military commitments to the Asian mainland. Its main provisions would call on the parties to refrain from the threat or use of force, to consult whenever their integrity or security was threatened, and to agree that “an armed attack against any member should be considered an armed attack against all the members, and that each would take such action as it deemed necessary, individually or in concert with other members, to assist the member attacked.”26 This proposal did not win consensus in the State Department at the time. It was resurrected, however, in December, when Dulles, in light of the deteriorating situation in the Koreas, became more anxious to conclude a treaty with Japan. Dulles viewed a Pacific Pact mainly as a means to help Japan rearm. He wrote to General MacArthur that such a pact would “provide a framework within which a Japanese force, if developed, could have an international status rather than a purely national status and thus might ease reconciliation with the present Japanese Constitution.”27 By January 3, 1951, the JCS had also reversed its initial opposition to a regional solution. They agreed that since the United States intended to commit substantial armed forces to the defense of the island chain, it would be useful to explore with the allies the possibility of a Pacific Pact confined to island nations. Such a pact, maintained the Joint Chiefs of Staff, would have the “dual purpose of


assuring combined action as between members to resist aggression from without and also resist attack by one of the members, e.g., Japan, if Jap[an] sh[ou]ld again become aggressive.”28 In summary, a regional pact could have accommodated the conflict between the goal of balancing the Communist threat by resurrecting Japanese power, and the goal of containing future Japanese aggression by reassuring the other regional allies. Interestingly, the interpretation of the regional arrangement as a collective security pact aimed at containing a state (that is, Japan) within the pact became relevant to Europe only later, with the talks about remilitarizing Germany. It was not a central issue when the initial multilateral arrangement for the North Atlantic Treaty was established. In Asia, on the other hand, this was a key motivation for the very initiation of the regional pact solution. “LIBERAL DEMOCRATIC INTERNATIONALISM” AND ITS IMPACT ON STRATEGY CHOICE Any strategy U.S. decisionmakers would choose had to be able to advance simultaneously the goals of balancing the Communist threat in Asia (by reviving Japan) and of preventing a resurgence of Japanese aggression. However, the merits of different strategies were also weighed in the context of a certain normative agenda. A strategy’s compatibility with this agenda was important both in terms of advancing the agenda itself, and of being able to “sell” the strategy and the other goals it promoted to a domestic audience who believed in that normative agenda. It is almost customary to point to the liberal/Wilsonian/idealist/ legalistic thread that runs through U.S. political thought from as early as Washington’s Farewell Address.29 Tony Smith calls this tendency “liberal democratic internationalism” and summarizes it aptly: “The American idea of a world order opposed to imperialism and composed of independent, selfdetermining, preferably democratic states bound together through international organizations dedicated to the peaceful handling of conflicts, free trade, and mutual defense.”30 This line of thought favored multilateral security arrangements because those were perceived as more egalitarian, appealed to the ideal of organizing order by means of collective institutions, and reflected the belief in the efficacy of legal institutions in solving problems. The ideal of collective security was promoted by Woodrow Wilson and later by President Roosevelt and Secretary of State Cordell Hull, and was translated into support for the United Nations. Bilateral security arrangements were not very promising as a means


of advancing this Wilsonian international order. Regional solutions were also seen at first as contravening that goal, as merely another version of the sphere-of-influence arrangement, which U.S. decisionmakers, especially Roosevelt and Hull, strongly opposed.31 However, as the intensifying U.S.-Soviet conflict paralyzed the UN Security Council, there was growing recognition of the need to develop regional-multilateral arrangements. Such arrangements, in the spirit of article 51 of the UN Charter, were at any rate more compatible with the ideal of collective security than bilateral arrangements. Regional arrangements came to be seen as a way to salvage the faltering UN system. They were officially legitimized in the Vandenberg Resolution of June 11, 1948, which presented the regional strategy as a formula for dealing with key problems in a manner that was “within the Charter but outside the veto.” The regional strategy thus seemed to offer a way of reconciling Cold War realities with fundamental American beliefs.32 The State Department, placing more stress on the collective— security aspect of the regional arrangement, tended to sympathize with the normative element, characterizing a Pacific Pact as a “democratic” means of stabilizing the region. The JCS, on the other hand, viewed the regional pact strictly in Realist terms as an alliance for the purpose of external balancing, and were unconcerned about the democratic nature of the security arrangements.33 The virtue of the regional solution was that it could be interpreted either normatively or in Realist terms, and could therefore serve as a good policy compromise. The promotion of decolonization. Another component of liberal democratic internationalism, which underlay a major goal of U.S. foreign policy in its early postwar planning and had a strong impact on the eventual character of the regional security arrangement, was an anticolonial sentiment. The goal of decolonization reflected a basic American belief in people’s right of selfdetermination and was resolutely advocated by Roosevelt. Acheson argued that nationalism, as the symbol of freedom both from foreign domination and poverty, was the most powerful force in Asia. He saw U.S. interests as being parallel to the interests of the people of Asia.34 This ideal, however, was quickly compromised when it became clear that the European colonial states could not be pushed too hard on the colonial issue without endangering their economic security and their cooperation with the U.S.35 At the same time, and perhaps partly because of that failure to pursue the ideal (as well as the U.S. promises made during the war), U.S. policymakers showed a great sensitivity to charges of imperialism.


This concern had conflicting implications for the pursuit of a regional strategy. On the one hand, it favored a regional-multilateral strategy that gave greater weight to the regional states’ desires and sensitivities; on the other, the sensitivity to charges of imperialism strongly inhibited the United States’ promotion of regional security arrangements in Asia. As NSC-48/2 officially declared, the U.S. would only get involved once a regional initiative had already begun.36 In most of the official documents examined here, the main reason cited for the extremely reactive U.S. policy toward regional arrangements was this fear of the charge of imperialism. This in effect doomed any potential regional initiatives from the start, since regional actors awaited a U.S. cue before they would endorse any such initiative.37 Anticolonial sentiments also affected the preferred membership in a potential regional arrangement. The Americans rejected the idea of a meeting of great powers to discuss cooperation in Asia because it would seem to the Asians that the Western powers were “ganging together.”38 One of the reasons the State Department wanted the Philippines to participate in a regional pact was so that the pact would include “a nation less ‘European.’” At the same time, it was feared that if Britain was admitted “the group [would] easily acquire a colonial, ‘White alliance’ taint.”39 The fact that the U.S. did end up signing the ANZUS treaty, a “white man’s alliance,” may suggest that the concern about not appearing imperialistic was not so strong. Yet, to the extent that U.S. refusal to let Britain join a Pacific Pact reflected a reluctance to be associated with an imperialist power, antiimperialism was a crucial factor in that idea’s failure to materialize. One historian goes so far as to argue that the Southeast Asian Treaty Organization was created as a response to the charges that ANZUS was a “white man’s treaty.”40 “Realist” vs. “idealist” goals? It would be wrong to argue that American decisionmakers were driven only by “idealistic” goals. Instead, a mix of what could be considered Realist and Wilsonian principles motivated policy. The interest in multilateral (including regional) arrangements did not stem purely from a Wilsonian worldview; such arrangements were attractive precisely because they could reconcile “Realist” and “Wilsonian” goals.41 To be sure, any attempt to present these types of goals as completely distinct from each other is problematic.42 As Smith aptly describes this: “liberal democratic internationalism has been the American way of practicing balance-of-power politics in world affairs".43 Hence, regional cooperation that could promote U.S. ideals within a certain region, while at the same time fostering a balance of power favorable to the U.S., was highly attractive.


The lingering impact of isolationism. Although it was believed that isolationism had died with the attack on Pearl Harbor, isolationist sentiments in fact lingered on among Republicans in Congress. Indeed, isolationist sentiments as well can be traced back to Washington’s Farewell Address. Truman recalls persistently hearing people quote from that Address, and its serving as the Bible of congressional isolationists.44 The isolationist trend sought to limit foreign policy commitments so as to concentrate on domestic issues. Although this seems to preclude support for any kind of multilateral U.S. commitment, in the Asian case this logic did not work. Isolationist sentiments could also favor a regional strategy to the extent that it was seen as a means of reducing the cost of U.S. international commitments. “Isolationist” criticisms involved calls to minimize U.S. commitments to other states and to international organizations, and great suspicion toward increases in military or foreign aid spending as “New Deal extravagance.”45 Congress held a schizoid attitude of staunch anti-Communism on the one hand and reluctance to increase foreign policy spending on the other. Public opinion as well favored a firm stance against Communism abroad, yet at the same time demanded lower taxes.46 Since anti-Communism, in light of the development of the Cold War, encouraged the expansion of commitments, congressional views shifted their focus to the issue of minimizing the cost of those commitments. It is to this conflict that we now turn. DEALING WITH THE COST OF EXPANDED COMMITMENTS: THE GOAL OF BURDEN SHARING In the immediate postwar period, the United States became an active player in international politics. Yet there was great reluctance to assume an undue share of the Western security burden. Americans wanted to bring the boys back home and to cut taxes; as Leffler puts it, “Truman wanted to achieve U.S. security objectives on the cheap.”47 Despite the relative U.S. power preponderance, in 1949 U.S. decisionmakers had a strong sense of the limits of American power, and were highly skeptical about their ability to influence mainland Asia.48 As argued in the preceding chapter, the cost of foreign policy can be reduced in two ways. The first is to minimize commitments, as advocated by George Kennan, head of the State Department’s Policy Planning Staff (PPS). Kennan called for a policy of “strong point defense,” that is, defense of only the most crucial points for U.S. security. This approach favored minimal bilateral arrangements.


However, by late 1949 Kennan resigned his post, and in spring 1950 his approach was replaced by a perimeter defense approach advocated in NSC-68.49 The latter strategy, inspired by the growing perception of Soviet threat following the “loss” of China and the detonation of the first Soviet atomic bomb, favored expanding commitments on the ground because defending selected strong points was no longer sufficient. Under this concept, all points along the perimeter were of equal importance.50 Once the option of minimizing commitments became less feasible, the dilemma of how to expand commitments while containing the cost of foreign policy intensified. The second option for trying to lower the cost was to multilateralize commitments. As we saw in the previous chapter, under certain conditions a multilateral or regional arrangement can induce the great power’s partners to greater burden sharing. The rationale linking regional arrangements and cost reduction had already found expression in U.S. policy toward Europe at the time, the goal being to rebuild Europe as a third independent force (perhaps a “pole”) rather than as a U.S. sphere of influence (see chapter 5).51 During the Truman administration most of the concern about cost reduction and burden sharing came from Congress. Republicans strongly criticized the costly implications of NSC-68. Senator Taft argued that “there is a definite limit to what a government can spend in time of peace and still maintain a free economy, without inflation and with at least some elements of progress in standards of living.”52 Much of the impetus for inducing greater burden sharing by the United States’ partners thus came from Congress. The literature on congressional-presidential relations and foreign policy often portrays the first two decades after World War II as an era of the “imperial presidency.” Yet Congress, for several reasons, was able to constrain foreign policymaking. The shift to deference toward the president was gradual; during the first postwar decade a mix of cooperation, deference, and hostility characterized relations with the executive. Hostility arose especially with respect to Far Eastern policy, on which there was the least agreement between Congress and the White House.53 Also, Truman and Acheson were highly sensitive to congressional opinion. This sensitivity was based, respectively, on Truman’s fear of the resurgence of isolationism, and Acheson’s views about how policy should be made in a democratic system. The concern for burden sharing is best reflected in the abovementioned Vandenberg Resolution.54 Among Republicans, Senator Vandenberg was the leading champion of foreign policy bipartisanship. As noted, the resolution reflected the growing importance of regional


arrangements in U.S. policy. Another main element of the resolution, however, was its emphasis on self-help and mutual aid as prerequisites for U.S. cooperation.55 The Vandenberg Resolution was clearly reflected in NSC-48/2, which stressed that any association formed in Asia must be the result of a genuine regional desire to cooperate, and based upon mutual aid and self help in all fields.56 Accordingly, the Americans rejected the initial calls for a Pacific Pact by the Philippines, South Korea, and Taiwan because they saw this as an attempt to obtain more military aid from the U.S., aid that could not be obtained bilaterally.57 The result would have been to raise the cost of policy with no substantial increase in burden sharing. It is telling that the main interest in a regional strategy came from a group of legislators led by Republican Senator Jacob Javits. The Senate referred several resolutions to its Foreign Relations Committee, calling for “the negotiation of a Pacific Pact, consistent with the provisions of the United Nations Charter, for the common defense of the Pacific area, and the participation therein of the United States.”58 Javits, in publishing a long article explaining the rationale for such a pact exactly when Dulles was in Asia negotiating the future security arrangements, helped to bring the Pacific Pact issue into the public spotlight and to put more pressure on the administration.59 As for the administration, concerns over the cost of policy played a key role in its desire to revive and rearm Japan, as discussed earlier. However, as we shall see in chapter six, the concern about cost was coupled with the understanding that no meaningful military burden sharing was likely to occur without economic reconstruction. The Defense Department’s final and reluctant agreement to pursue an early peace treaty with Japan (the catalyst for the subsequent Pacific Pact discussions) was based on its recognition of the importance of reviving Japan’s industrial and military capabilities to help the U.S. in the defense of Asia.60 The value of a regional arrangement for burden-sharing purposes. A regional—multilateral strategy can help reduce the cost of policy by inducing greater burden sharing by one’s partners. This occurs when that strategy creates a meaningful pooling effect among the regional partners, and generates goodwill thanks to the greater legitimacy of the multilateral arrangement in the partners’ eyes. For the purpose of inducing meaningful burden sharing through the pooling effect, the regional strategy in this case was in fact less attractive. A main reason has to do with the broad power disparities between the U.S. and its Asian partners, as well as among the latter; this is discussed below. The second reason, however, concerns the nature of the cooperation that was sought. The main concern of the JCS and the Pentagon at the time was to maintain bases for U.S.


troops from which the U.S. could project its power into mainland Asia. If bases were the goal, then there was nothing to be “pooled.” The only burden-sharing rationale linked to a Pacific Pact option was that of using the pact as a means of fostering the revival of Japan’s industrial and military capacity. But if that was the case, a bilateral arrangement with Japan could also have addressed the burdensharing issue. The second way in which regional arrangements can help reduce the cost of foreign policy is by imparting greater legitimacy to that policy, thus encouraging cooperation. In this case, U.S. decisionmakers, particularly in the State Department, believed that a regional pact would indeed boost the United States’ stature in the region. The very declaration of purpose, it was argued, would dramatize the community of interest of the nations participating, their concern for the people of Asia and readiness to defend themselves.61 This symbolic element seems to have been more potent here than the rationale of burden sharing by the pooling of resources. The latter appeared to be more important in the case of SEATO, in the creation of NATO, and in the discussions about regional trade arrangements in Asia. CONFLICTING GOALS AND STRATEGY PREFERENCE: THE RELATIVE VALUE OF DIFFERENT STRATEGIES By late 1950, the regional strategy appeared attractive mainly thanks to its ability to reconcile the two apparently conflicting goals of strengthening Japan and containing a potential resurgence of Japanese military threat. Could not other strategies, however, have helped accommodate those different policy goals? In this case it appears that the regional strategy did not have an overwhelming advantage over the alternative strategy of forging several bilateral arrangements, to create a hub-and-spoke structure. Let us examine the potential of other strategies based only on the goals they had to reconcile. A global-multilateral strategy. The one strategy that was clearly discredited was the global-multilateral strategy, which entailed reliance on the UN Security Council. The fact that the Soviet Union was a member and had veto power made it impossible to use the Security Council against Communist threat. As the JCS concluded in August 1950, “the United Nations has not demonstrated potentialities of becoming adequately effective on a worldwide scale. Indeed, the United Nations, as now constituted, is not intended to be capable of acting as a guarantor of peace and security in the face of a major


threat.”62 The State Department concurred: “While casting the Security provisions in the words of the United Nations Charter and in a framework roughly equivalent to that which would prevail if the United Nations were working perfectly, in all cases the final determination of what shall be done and how and when it shall be done is reserved to the United States."63 A unilateral strategy. The second strategy of unilateral U.S. provision of security, which was supported by the JCS and the Pentagon, was also eventually discredited because of its inability to fulfill all of the above goals. The JCS finally conceded that this strategy could not fulfill the burden-sharing goal. While insisting that the security of a Western-oriented Japan, for the time being, had to be assumed by the United States, they agreed that "the United States is not in a position, either under United Nations auspices or unilaterally [emphasis added], to continue indefinitely to meet over-all United States security requirements and at the same time fill such a vacuum as would otherwise exist in a neutral and unarmed Japan."64 A bilateral strategy. The only other viable strategy was thus the creation of separate bilateral security arrangements with Japan and other Pacific states, with the focus, naturally, on a bilateral security treaty with Japan. Could a bilateral strategy accomplish everything a regional strategy could? A bilateral security treaty with Japan could both have ensured American base privileges on the Japanese islands and enabled the revival of Japan's industrial and military capacity, thus creating a strong ally in containing Communism in Asia. At the same time, the U.S. presence would have limited the danger of Japanese militarism and reassured Japan's neighbors. A bilateral strategy could, therefore, both have balanced the Communist threat and contained the potential Japanese threat. Nevertheless, this solution was bound to be less stable in the long run than a solution based on successful regional security cooperation. This is because the containment-of-Japan aspect of such an arrangement hinged completely on the American presence. The constraints associated with this solution became obvious later on, whenever the U.S. contemplated reducing its forces in the region. As for its ability to satisfy the cost concerns and the burden-sharing goal, the bilateral strategy was not significantly less effective than the regional strategy would have been. This is for reasons directly linked to the regional power disparities, discussed in the next section. Although Dulles went to Tokyo with a presidential mandate to negotiate a regional pact, a bilateral strategy was also considered. As we shall see below, the regional power disparities, as well as the regional partners' preferences as encountered by Dulles during his trip, tilted the balance to the conclusion of sets of bilateral (and one


Table 3–1 Relative Value of Different Strategies for Solving Goal Conflicts

trilateral) security arrangements instead of one regional security pact. The relative value of the different strategies is summarized in Table 3-1. THE IMPACT OF REGIONAL POWER DISPARITIES ON STRATEGY CHOICE a. A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. In the previous chapter I posited that if burden sharing is a central policy goal, then a regional strategy will be chosen only if the power disparity with the great power’s potential partners is not too wide and if the pooling of their resources is expected to provide significant support for the great power. This factor played an important role in this case in undermining the value of a regional strategy. The power disparities between the U.S. and the potential Asian allies were extremely wide, especially when compared to the situation in Europe. In 1950 the combined GNP of Britain, France, Italy, and Germany equaled 39 percent of the U.S. GNP. In contrast, as late as 1965 the combined GNP of Japan, South Korea, the Philippines, Singapore, Thailand, Malaysia, and Indonesia came to only 15.9 percent of U.S. GNP.65 The U.S. clearly recognized this weakness. At the same time, power disparities among the regional states were also very wide, Japan being the one industrialized state with a significant war potential highly valued by the U.S. As the hypothesis would predict, U.S. decisionmakers initially rejected any idea of a regional strategy.


As mentioned, all of the early calls from within the region to create such an arrangement were immediately perceived as mere attempts to extract more aid, not to contribute to U.S. security or Asian stability. The extreme power disparities, and especially Japan’s extreme weakness, were cited as the main reason for the final abandonment of plans to cre ate a single multilateral arrangement in conjunction with the Japanese peace treaty. As Acheson explained: Pending conclusion [of a] Peace Treaty and positive action by JAP to solve its constitutional and economic problems JAP is neither legally nor practically able at this time to give assurances of “continuing self-help and mutual aid” envisioned by Vandenberg Resolution as condition precedent to participation by other nations in long-term mutual security arrangements with US. Hence, contemplated bilateral arrangement with JAP is of temporary nature and entirely under control of U.S. as to terms.66 The bilateral security treaty that the U.S. offered Japan, and that Japan accepted, was best able to fulfill those conditions. This treaty, while formally representing a bilateral strategy, in fact enabled, at least in the short run, the continuation of U.S. unilateral control over Japan’s security, as JCS demanded. The core of the treaty was a Japanese request to the U.S. for the stationing of “land, air, and sea forces in and about Japan.” Although their main purpose was to defend Japan against external attack, the U.S. made no specific commitment to Japan’s defense, and reserved the right to withdraw its troops whenever it saw fit. The U.S. was also permitted to use its bases in Japan without consulting the Japanese, for actions in the Far East that might involve Japan in a war. These forces could also be used to suppress large-scale internal riots if requested to do so by the Japanese government.67 The bilateral strategy, then, solved the problem of the military vacuum in Japan, while avoiding, at least for the time being, the legitimacy problems associated with the continuation of a formal unilateral strategy. As Japan grew stronger, so did U.S. pressures for greater Japanese burden sharing in the bilateral security arrangement.68 Nevertheless, Congress continued to express its preference for a regional strategy. As noted earlier, the Senate referred a number of resolutions to the Foreign Relations Committee calling for a Pacific Pact with U.S. participation. In a conversation with representatives of Australia and New Zealand on June 25, 1951, Dulles stressed that the phrase in the ANZUS treaty describing it as a first step toward more comprehensive regional security arrangements was inserted mainly to


appease the Senate Foreign Relations Committee.69 After the bilateral and trilateral treaties were signed, Senators confirmed again and again that Japan’s future defense would be handled by a collective security arrangement.70 By that time it was becoming clear that even the more advanced European partners would not be able to contribute as many forces to security as the U.S. would have wished. Congress, howev er, chose to downplay those power realities and their implications for regional cooperation in Asia. One possible explanation for this congressional support for regional arrangements in Asia has to do with the fact that under wide power disparities a multilateral strategy can easily be regarded as a pretext for a great power unilateral strategy. One of the main problems of regional or global multilateral strategies is that they constrain the great power’s freedom of action by giving greater voice to the smaller partners. The wide power disparities between the U.S. and its potential Asian partners made this problem less serious, since it was clear that even within a regional arrangement the U.S. would be dominant. It is little wonder, then, that the Republican isolationist bloc, led by Senator Taft, supported an “Asia First” policy while strongly opposing the growth of U.S. involvement in Europe. They assumed that expanded commitments in Asia would not lead to entanglement because of the obvious U.S. dominance. Ironically, history was to prove them wrong.71 Under extremely wide power disparities, then, a regionalmultilateral strategy could have accommodated both the internationalist administration and the more unilateralist elements in Congress because each side could interpret it to mean different things. This may explain the lingering calls to adopt a regional approach, despite its limited value. This point is further developed in the next chapter about SEATO. There as well, some of the congressional support stemmed from an interpretation of the regional strategy as a mere fig leaf for American freedom of action. The SEATO case, however, also shows that despite such congressional attitudes, this was not the perception driving the Eisenhower administration. b. A regional strategy will be most attractive if the power disparities among the potential regional partners are narrow, and least attractive if these power disparities are very wide. For burden-sharing purposes, a regional strategy is attractive only if the power disparities among the potential allies are not very high, because then each potential ally can make a meaningful contribution to the regional arrangement. In this case, a key factor undermining the value of a regional approach for burden-sharing purposes was the


specific nature of the American goals. The JCS was mainly interested in ensuring base rights for U.S. forces. The whole Pacific island chain was seen as crucial for projecting U.S. air and sea power. Specific assets were required from specific states, making the logic of the pooling effect less relevant. This in turn implies that the issue of regional power disparities and the relative value of each potential ally was less important. However, the dramatic disparity between Japan and the other Asian states did lead to a U.S. focus on reviving Japan. Of all the regional states, Japan was the only industrialized one, and the strategic and psychological value attached to keeping it within the Western camp was far greater than for any other regional state. In any regional arrangement that would have been formed, the main actor whose contribution the United States was counting on would have been Japan. Unlike in the following chapters, the pooling effect was less significant in this case. Under these conditions, a single regional arrangement had little advantage over a set of bilateral arrangements with Japan and the other offshore Pacific partners. A regional arrangement was still considered attractive because, as we have seen, it could fulfill the dual goal of balancing the Communist threat and containing a possible Japanese threat. However, once the other potential partners rejected the pact as a means of containing Japan, the regional arrangement lost its appeal. The military implications of the separate treaties were also similar to that of a single pact. In both the ANZUS and Philippines treaties, “armed attack” included an attack on islands in the Pacific perpetrated by any of the parties, or an attack on their armed forces. This meant, in practice, that so long as the U.S.-Japan security treaty was intact, Australia, New Zealand, and the Philippines were committed to come to Japan’s aid in case of an attack.72 THE IMPACT OF PARTNERS’ PREFERENCES ON THE CHOICE OF COOPERATION STRATEGY A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. Both parts of this hypothesis hold up well in this case. As we have seen, the initial calls for a Pacific Pact came from the Philippines, Taiwan, and South Korea, and the U.S. rejected these calls because it perceived those states’ goals as contradicting its own. Whereas the


U.S. wanted to minimize the cost of foreign policy by strengthening regional partners, it interpreted those initial calls as an attempt to extract more aid than could have been attained bilaterally.73 The United States was more supportive of the second regional initiative stemming from the Philippines in August 1949, which called for convening a conference on a Southeast Asian Union. However, though it pressured other states to attend, it refused to take part. As NSC 48/ 2 stated, the U.S. was only willing to support a regional association that was created out of “a genuine desire on the part of the participating nations to cooperate for mutual benefits in solving the political, economic, social and cultural problems of the area.”74 The U.S. adhered to this principle throughout—in part, as we have seen, because of fear of being perceived as an imperialist state. This American caution was further reinforced by the conclusions of the Bangkok Conference. In February 1950, representatives of all the U.S. missions in the Far East met in what came to be known as the Bangkok Conference to discuss the sentiments in the region about future regional cooperation arrangements. They concluded that there was an “unfortunate lack of interest in regional association” and that all of the Asiatic states opposed an openly anti-Communist bloc.75 Another major regional initiative was advanced by Australia’s foreign minister Sir Percy Spender. His plan for a Pacific Pact included Australia, New Zealand, Britain, and any interested Commonwealth countries. However, it was clear that Australia’s main concern was to strengthen its military ties with the U.S.; Spender himself asserted from the outset that a pact without U.S. participation would be meaningless.76 Furthermore, the Australian pact proposal did not include Japan. This was problematic for the Americans in light of the dual goal they envisioned for the pact. It was during those talks with the Australians that the alternative option of a trilateral security arrangement among the U.S., Australia, and New Zealand emerged.77 During those early discussions of a Pacific Pact, Dulles’ main apprehension involved the problem of the allies’ perceived goals. He was concerned that an overall Pacific Pact would commit the stronger and more responsible nations to the support of highly unstable and irresponsible governments. Although this could be solved by a more limited pact, such a pact would have the disadvantage of implying that the excluded states were not of strategic interest to the U.S.78 Perceived allies’ preferences played a crucial role both in making the Pacific Pact option attractive in the first place and in its final rejection. The State Department saw the regional arrangement as the price to be paid to the other regional states for a liberal peace treaty that allowed Japan to revive and rearm. Australia made this


conditional link between a liberal Japanese peace treaty and a regional security pact very clear.79 The decision to go to Tokyo early in 1951 with a presidential authorization to offer a Pacific Pact to Japan, Australia, New Zealand, and the Philippines was based on the assumption that the latter countries would agree to such a pact as a means of containing a potential Japanese threat. The State Department, however, misjudged the intensity of anti-Japanese sentiments in the region. The Department assessed that although the Philippines and Australia “would probably not relish association with Japan in the proposed regional arrangement, their vital interest in a closer security association with the United States and the importance of the defense of Japan against Soviet-Communist domination to their defense might well cause them willingly to join the arrangement.”80 Yet as Dulles was to find out, for regional states the main source of future threat was not Communist countries but Japan—a threat perception that starkly differed from that of the U.S. Australia and New Zealand clearly favored a trilateral arrangement, and argued that they could not possibly explain domestically a membership in a pact with Japan. As New Zealand’s foreign minister explained it, his government’s fear was that “the people would recoil from the idea of having to go to the assistance of a country like Japan.”81 The Philippines, too, reacted negatively to membership in a pact with Japan. The other factor that made Dulles support the regional pact initiative was his belief that the Japanese would prefer to rearm within a regional security arrangement, which would be more compatible with their pacifist constitution. By means of a pact, the U.S. hoped to design an international framework to which Japan could contribute a force, as opposed to a merely national force.82 (As we shall see in chapter 5, a similar rationale underlay the American support for a European Defense Community, as an international forum within which Germany could be remilitarized without actually developing substantial national forces.) However, when Dulles finally arrived in Tokyo in January 1951, he discovered that Japan was enthusiastic neither about rearmament nor about joining a regional security arrangement. During their negotiations the Japanese prime minister, Yoshida Shigeru, insisted that it was impossible for Japan to rearm. Any such attempt, he argued, could give rise to renewed militarism and antagonize Japan’s neighbors. Furthermore, he argued, Japan lacked the basic resources for such rearmament. In the Dulles-Yoshida negotiations, the burdensharing element behind the idea of a regional pact was in fact very clear. Dulles later recalled that he had stressed to the Japanese that


Japan “cannot indefinitely get a ‘free ride,’” and was expected to “contribute armed forces” to collective security.83 For the Japanese, however, the most realistic means of avoiding rearmament (yet achieving formal independence) was to offer the U.S. to sign a bilateral treaty and receive base rights in Japan. In fact, John Dower argues that already in May 1950 the Japanese secretly offered to support post-treaty U.S. bases in Japan, and assured the Americans that such an arrangement would not violate the Japanese constitution.84 The Americans were neither willing nor able to force Japan into a collective security arrangement. In a speech before the Japan-America Society of Tokyo on February 2, 1951, Dulles called for Japanese participation in collective protection against direct aggression, but emphasized that it was “not a choice which the United States is going to impose upon Japan…. The United States is not interested in slavish conduct.”85 It is indeed puzzling that Dulles would have thought the Japanese would be enthused about a regional pact in the first place. In fact, already at the Bangkok Conference in February 1950, the Office of the U.S. Political Adviser in Tokyo had prepared a detailed report explaining why the Japanese did not favor participation in a regional security pact. The report attributed Japan’s reluctance to five factors: its constitutional limitations; fear that such an association would involve long-range risks in defending insecure governments (for example, Nationalist China); fear that because of its strategic position Japan might become a potential battleground in a U.S.-Soviet war; fear that a pact would alienate future markets in Communist China; and finally, the realization that as a defeated nation Japan would be made a junior partner in any combination dominated by countries still harboring distrust and hatred toward it. In view of these considerations, the report expected that the Japanese would prefer an exclusive bilateral security arrangement with the U.S.86 With Japanese lack of interest in joining a regional pact, as well as its reluctance to rearm quickly and substantially, and with the objections of Australia, New Zealand, and the Philippines to joining a pact with Japan, the main rationale behind the pact idea was lost. The country whose preferences dealt the deathblow to the Pacific Pact was the one that was not invited to join it: Britain. The initial Spender Plan suggested including Britain in the pact. The U.S., however, decided against this; the JCS argued that including Britain would lead to the undesirable expansion of commitments to Hong Kong and Malaysia. Once it became clear to the British that the Americans were seriously considering a pact and that they were not included, they voiced strong objections. Thus, at the time of Dulles’s Tokyo trip in January 1951, the British argued that the protection of Australia and New Zealand could be assured without a Pacific island


pact. Furthermore, for Britain as a world power, the proposal would be interpreted in the Pacific and elsewhere as a renunciation of responsibilities, and possibly, in addition, as evidence of a policy rift between Britain and the United States. Finally, the British echoed a concern held by U.S. officials as well: that the exclusion of mainland Asia from the pact would encourage Communist aggression against Malaysia, Burma, and Thailand. Therefore, the Foreign Office was “strongly opposed to the idea of a Pacific defense organization which would exclude the UK.”87 The strong British opposition played a key role in leading the Americans back to the bilateral option. Dulles reported to Dean Rusk that in light of the British insistence on inclusion, it was necessary to inquire about other possibilities such as a series of bilateral arrangements or a tripartite agreement. Such an agreement, however, would “not provide the desired collective security arrangement for Japan’s participation.”88 In summing up the situation to the JCS, Dulles said the State Department had concluded that it would be impossible to accomplish a mutual assistance arrangement among the Pacific island nations by a single document because of the strong British opposition, which Australia and New Zealand respected, and because of anti-Japanese sentiment in the Philippines, Australia, and New Zealand. These three states, as well as Japan, showed greater interest in separate security arrangements with the U.S. The final decision on the form of the security arrangements was not reached until April 1951, only because the British had delayed clarifying their position and Australia and New Zealand had waited for that clarification. Only on April 5 did the British government announce that it would not object to a set of interlocking agreements among the U.S. and Japan, the Philippines, and Australia and New Zealand.89 With all of the key actors objecting, the offshore Pacific Pact lost its feasibility and the bilateral option became much more attractive. The series of bilateral treaties ameliorated concerns about a liberal peace treaty with Japan, allowed the U.S. to maintain forces in Japan while pushing for gradual Japanese rearmament, strengthened coordination with Australia and New Zealand, and did not lead to any further extension of U.S. commitments. SUMMARY The Pacific Pact case has addressed two questions. First, why was there interest in a regional security arrangement, despite what many saw as its obviously unrealistic prospects? Second, what shaped the final policy choice, namely, a bilateral approach to security


cooperation in the region? After the Korean War, the regional option became attractive because it could have served simultaneously to contain possible Japanese aggression and to foster Japanese economic and military revival as a balance against Communist expansion in the region. By allowing Japan to regain its economic and some of its military strength, the U.S. was also preparing the ground for its assumption of some of the security burdens at a later stage. Nevertheless, as opposed to its role in the next chapter and in the European case, the burden-sharing rationale did not play a prominent role in this case, for two reasons. First, since the JCS’s specific objective was to attain base rights, there was little to gain in that respect from pooling regional resources. Second, the extreme power disparities within the region meant that Japan was the central regional partner that the U.S. focused on. This, in turn, also reduced the value of a regional strategy compared to a bilateral one. Similarly, the very high power disparities between the U.S. and the regional states meant that burden sharing could only be relevant in the very long term. Finally, in this case the main reason for the decision to pursue a set of bilateral arrangements was the negative reaction of potential partners, as well as of a key ally, Britain, to the idea of a regional pact. No state wanted to be part of a regional security arrangement that would include Japan, and without Japan, such an arrangement had no raison d’être. Yet, though the regional strategy was dropped in 1951, it by no means disappeared from the U.S. agenda. It re-emerges in the next chapter discussing the creation of SEATO.

Chapter 4 From “United Action” to the Manila Pact —The Eisenhower Administration and Regional Security Arrangements in Southeast

Abandoning at least temporarily the notion of a Pacific Pact, the United States, as we have seen, instead created a network of bilateral security arrangements with Japan, Australia and New Zealand, the Philippines, and eventually with South Korea and Taiwan. During the Truman administration, any notion of a regional pact focused on the offshore islands and flatly rejected any entanglement in mainland Asia. Already during Truman’s administration, however, the U.S. began its evolving commitment to the French in South Vietnam. The Eisenhower administration took office in 1953, against the background of the stalemate in Korea, with the dual goal of regaining the lost initiative in the struggle against Communism and at the same time reducing the costs of foreign policy so as to balance the budget. Its first step in the latter direction was to end the war in Korea and initiate a major rethinking of U.S. global strategy, a process that culminated in the introduction of the “New Look.” However, as the French position in Indochina worsened, the Eisenhower administration found itself facing the same dilemma that confronted its predecessor: how to effectively continue the struggle against the Communist threat while minimizing the costs of doing so for the U.S.? In this chapter I explore the rationale behind the failed U.S. attempt to organize a “United Action” front to defeat the Viet Minh, and then behind the creation of the Southeast Asian Defense Treaty (that is, SEATO or the Manila Pact). Again, I address three central sets of questions: (1) What were the goals of the U.S. administration? Did they conflict with one another? If so, which strategies could best accommodate that conflict? (2) What was the impact of regional power disparities on the attractiveness of the regional strategy and its alternatives? (3) What was the impact of the partners’ preferences, as perceived by the Americans, on the choice of strategy?


HISTORICAL OVERVIEW In March 1954 the French, finding themselves under siege in Dien Bien Phu, requested unilateral U.S. intervention in the form of air strikes. Eisenhower, under strong congressional pressure, rejected the idea; the U.S. could only intervene if joined by allies. Thus, on March 29, Secretary of State John Foster Dulles called for United Action in Indochina. After a meeting with congressional leaders on April 3–4, Eisenhower set the conditions for any U.S. intervention: (a) a coalition must be formed with other “free nations” of Southeast Asia and the British Commonwealth, (b) the French must express willingness to accelerate the granting of independence to Indochina, (c) the French must agree not to withdraw their forces if the U.S. intervened, and (d) any intervention must have advance approval by Congress. During April 11–14, Dulles went on a shuttle-diplomacy journey to London and Paris to try and achieve agreement on participation in negotiations for a regional coalition, that is, the United Action initiative. Britain, however, refused to act before the Geneva Conference convened to discuss the Indochinese problem.1 On May 7, a day before the Geneva Conference was to begin its negotiations on Indochina, Dien Bien Phu was overrun and consequently the United Action initiative was abandoned. On July 20, the Geneva Conference was concluded with an agreement on the partition of Vietnam at the 17th parallel. The U.S. refused to take an active part in the conference, but in light of the demise of United Action, it had no choice but to accept the partition. Once the conference was over, however, formal negotiations for a regional defense arrangement could begin. Since by then there was no longer a possibility of compelling Viet Minh withdrawal, the U.S. sought to create a regional grouping that would agree on a long-term plan to hold the partition line. This marked the beginning of the negotiations for the Manila Pact. The Southeast Asian Defense Treaty was created during the Manila Conference that convened on September 6–8, 1954. It included the U.S., France, Britain, Australia, New Zealand, Thailand, the Philippines, and Pakistan. In article IV, each party agreed in the event of an armed attack “to meet the common danger in accordance with its constitutional processes.” Despite allies’ objections, the U.S. restricted its obligation to act only to cases of “Communist aggression.” In article II, following the pattern of the Rio Treaty of 1948, the parties agreed to maintain and develop through both self-help and mutual aid “their individual and collective capacity…to prevent and counter subversive activities directed from without against their territorial and political stability.” Article VIII defined the treaty area as “the general area of

FROM “UNITED ACTION” TO THE MANILA PACT 61

Southeast Asia including also the entire territories of the Asian Parties.” A protocol to the treaty designated Cambodia, Laos, and South Vietnam as eligible for SEATO protection.2 Although the pact came to be known from the outset as the Southeast Asia Treaty Organization (SEATO), in practice it only became an official organization during 1956–1958. MULTIPLE, CONFLICTING POLICY GOALS AND STRATEGY CHOICE Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost. PERCEPTIONS OF TIGHT BIPOLARITY AND THE NEED TO BALANCE COMMUNIST THREAT IN ASIA Just as the Korean War served to sharpen the perception of bipolarity in Asia in 1950, so the intensification of the war between France and the Viet Minh underlined the implications of bipolarity in 1954. The worsening situation buttressed the new Republican administration’s already strong perceptions of bipolarity and Communist threat. In his inaugural speech, Eisenhower stressed that the balance of power was so delicate that any further Communist victory would upset it.3 The traditional literature on his secretary of state, John Foster Dulles, views him as holding a strong zero-sum view of the international situation.4 Whereas the original concept of containment had called for enlisting the forces of nationalism to contain Soviet expansion, Dulles defined the threat facing the U.S. as Communism in general. Thus, the administration should oppose Communism even when it took nationalist forms.5 More recent work points to the greater complexity of Dulles’s approach. Nevertheless, the extreme black-and-white rhetoric he used served to constrain the administration, especially in light of the resolutely anti-Communist sentiments among congressional Republicans. This, together with the strong Republican criticism of the previous administration’s lack of assertiveness toward the Communist threat in Asia, pointed to expansion of commitments in order to balance the Communist threat. The balancing goal and its implications also became clearer by 1954 in light of the somewhat different perception, compared to 1949, of the region al balance of power in Asia. When Eisenhower took office there was already a clear identification of the Chinese revolution with


Soviet imperialism. In Asia, China became the main Communist threat, the senior partner in the Communist monolith.6 After the Chinese intervention in Korea, the National Security Council (NSC) declared that “the danger of an overt military attack against Southeast Asia is inherent in the existence of a hostile and aggressive Communist China.”7 Thus, the threat perception in Asia became more similar to the threat perception in Europe. Even if it is true that Dulles did not believe in the Communist monolith and hoped to foment a rift between China and the USSR, his preferred method of achieving this goal was through greater pressure on China.8 That again implied, among other things, the extension of security commitments to its weak Southeast Asian neighbors. Furthermore, after the 1953 armistice in Korea, there was a growing fear that China would intervene in Indochina. This was a key motivation behind the anxious U.S. attempts to form a United Action coalition.9 At the time of the initial decision to support France in Indochina (in February, approved in May), direct Chinese Communist intervention was seen as highly probable. Also, there was an ongoing belief that the PRC was assisting the Viet Minh.10 In testimony to the Foreign Relations Committee, Dulles linked the need for a regional pact to the Chinese threat. Chinese efforts to subvert the Thai government, the growth of Communist military forces in Vietnam, the Communist revolt in northern Laos, and other events, he argued, all indicated the “persistence of an aggressive intention of the Chinese Communists.”11 This sharpened threat perception was also exacerbated by the growing power of the domino theory within the administration. This theory, in fact, was already reflected in NSC—124/2 of June 1952. That document argued that any loss of any country in Southeast Asia to Communist control, as a result of overt or covert Chinese Communist aggression, would probably lead to “relatively swift submission of the rest of Southeast Asia and India, and in the longer term, of the Middle East…. Such widespread alignment would endanger the stability and security of Europe.”12 This document was written during the Truman administration, but the theory gained more explicit endorsement under Eisenhower. In January 1954, NSC-5405 stated that Communist domination of Southeast Asia would critically endanger U.S. security interests.13 In the statement marking the appearance of the domino theory concept in public debate, Eisenhower remarked on the issue of Indochina’s strategic importance to the free world: “You have a row of dominoes set up, you knock over the first one, and what will happen to the last one is the certainty that it will go over very quickly.” In Southeast Asia that meant that the loss of Indochina would lead to the loss of Burma,


Thailand, and in turn threaten the defensive chain of Japan, Taiwan, and the Philippines. Next in line would be Australia and New Zealand.14 With the Viet Minh seen as a manifestation of the worldwide Communist movement, events in Indochina seemed to corroborate this theory. Given this threat perception, both Eisenhower and Dulles felt compelling pressure to expand U.S. security commitments in Southeast Asia. Eisenhower recalls that the decision to aid the French “was almost compulsory. The U.S. had no real alternative unless we were to abandon Southeast Asia"—despite the fact that he already knew the aid was unlikely to truly solve the problem.15 Dulles seemed to share this sense of being forced into a certain policy by the circumstances. Even as the pact negotiations were nearing completion, Dulles still expressed doubts about its wisdom. He worried that the treaty would commit the U.S. to an area where it had little control and where the situation was “by no means promising.” At the same time, though, he argued that “a failure to go ahead would mark a total abandonment of the area without a struggle.” Therefore, to include the area of Cambodia, Laos, and South Vietnam in the arrangement was “the lesser of two evils."16 This clear threat perception was also shared in Washington, and found expression in the U.S. insistence on limiting its commitment within SEATO to dealing with Communist threat.17 Given these misgivings, it seems even more odd that the U.S. would choose to extend its security commitments through a regional arrangement rather than a bilateral or unilateral approach. Thus, to understand the relative advantage of a regional strategy we need to examine the other policy goals that the administration sought to advance. The administration’s second central goal was to reduce the costs of foreign spending. The desire to reconcile these goals led to the creation of the New Look doctrine, within which reliance on nuclear deterrence made the regional option attractive. Let us elaborate. BALANCING THE COMMUNIST THREAT AT A MINIMAL COST: THE PROMISE OF BURDEN SHARING The aim of curtailing foreign policy costs was central both to Congress and to the administration. In Southeast Asia, there were two ways in which a regional arrangement could promote that aim: (a) by creating a framework for burden sharing in the long run, and (b) by strengthening balancing through deterrence. The congressional concern was largely influenced by the experience of the Korean War, where despite the purportedly international


nature of the military activity, the U.S. bore most of the burden. There was a bipartisan concern that “we want no more Koreas with the United States furnishing 90% of the manpower.” In the context of the evolving crisis in Southeast Asia, Congress therefore held a unanimous view that there should be no congressional action until the secretary of state had obtained commitments of a political and material nature from the United States’ allies. When Dulles and Admiral Arthur Radford, Chairmen of the JCS, pointed out to the congressional representatives that the administration was not contemplating the commitment of land forces, congressmen replied that once the flag was committed, the use of land forces would inevitably follow.18 Burden sharing, or at least the effort to induce it, had thus become a precondition for any U.S. action. This clearly made any unilateral U.S. strategy politically nonviable. Although the Pentagon preferred to rely on unilateral U.S. action, or at least to keep that option open,19 it had to face the political realities. When on April 6, in an emergency NSC meeting, Eisenhower’s top military advisers asserted that the only alternative to intervention would be a Viet Minh victory, Eisenhower responded that “even if we tried such a course, we would have to take it to Congress and fight it like dogs, with very little hope of success.”20 It was this congressional pressure that led Dulles to his official call for a United Action effort to defeat the Viet Minh and to the three above-noted official conditions for a U.S. air strike.21 Unilateral intervention was therefore rejected in favor of a coalitionbased intervention. The Americans hoped that an ad hoc grouping of ten states (the U.S., Britain, France, Australia, New Zealand, the Associated States of Indochina, Thailand, and the Philippines) would issue a joint warning and engage in serious preparations for intervention. They hoped this would be enough to deter the Viet Minh, although Vice-President Nixon insinuated that the U.S. would go in and use force if necessary.22 Insistence on burden sharing, then, played the crucial role in preventing immediate assistance to the French before the fall of Dien Bien Phu. After the defeat at Dien Bien Phu and the Geneva Conference, the focus of the desired cooperation had changed from an attempt to defeat the Viet Minh to an attempt to prevent their further expansion, that is, to maintain the status quo. This was the goal of the Manila Pact. The concern for burden sharing reflected not only congressional pressures but also deeply held beliefs within the administration. Although the Truman administration, as we saw in chapter 3, was concerned about limited means, this was a much more dominant theme of the Eisenhower admin istration. This had less to do with any objective change in the United States’ relative power than with the


new administration’s fiscal philosophy. This is a good example of how the dilemma of reconciling foreign policy costs and domestic pressures, while ever present in principle, can be affected by decisionmakers’ beliefs and goals. The Eisenhower administration came to power calling for a balanced budget as a main policy goal. Examining what he called “the great equation,” Eisenhower understood that the budget could only be balanced by reining in the biggest spender, the Pentagon.23 He rejected the logic of NSC-68, according to which the national interest justified any means. He feared that the American people would return to isolationism if the price of international involvement was too high, and that unrestrained spending could lead to devastating inflation.24 At the same time, the Eisenhower administration also wanted to pursue a more assertive policy toward the Communists. It also had to contend with the powerful “Asia-Firsters” in the Republican Party, neo-isolationists who opposed expanding collective security in Europe but advocated a more active policy in Asia.25 Indeed, Eisenhower himself believed that failure to oppose Communism everywhere posed an even greater danger than excessive spending.26 These conflicting pressures, then, created a much stronger dilemma for Eisenhower’s administration than for Truman’s between expanding foreign policy commitments and achieving domestic goals, a dilemma that it never fully resolved.27 The concern about reducing foreign policy costs also reflected the interpretation of the Eisenhower administration that the Soviets were preparing for “an entire historical era” and that therefore the U.S. should do the same. Hence it was necessary to establish a new economic-military balance that could be sustained over the long haul. In other words, the duration of the effort became the argument for reducing its scope.28 In a letter to his friend General Gruenther of May 4, 1953, Eisenhower wrote: “we are trying to bring the total expenditures of the U.S. government within reasonable limits. This is not because of any belief that we can afford relaxation of the combined effort to combat Soviet communism. On the contrary, it grows out of a belief that our organized, effective resistance must be maintained over a long period of years and that this is possible only with a healthy American economy.”29 The Joint Chiefs of Staff (JCS) also shared the sense of limited resources. They were less concerned, however, about domestic costs than about the trade-off among different international commitments. A JCS report of May 20, 1954, stressed the limited U.S. forces available for military action in Indochina. It argued that any major U.S. force commitment in the Far East should be reserved for war against China, and urged limiting U.S. involvement to training


indigenous forces through an increase in Military Assistance Advisory Group (MAAG) funds.30 The JCS maintained that U.S. military forces were overextended and that for future conflicts prime responsibility should be taken by indigenous forces backed by U.S. sea and air power. This would leave U.S. forces with the main task of defending the continental U.S. and maintaining massive retaliatory capability.31 We clearly see here the link between the sense of limited resources and the reliance on greater regional burden sharing. The role to be played by the small regional partners reflected the broader doctrine of the New Look. The new strategic conceptual framework, known as the New Look or the Doctrine of Massive Retaliation, set as its goal the regaining of the initiative in the struggle against Communism, while simultaneously lowering the costs for the U.S. Using the detterence of massive retaliatory power it was to give the US the freedom to react to aggression in a different place and in a different nature in order to maximize its strengths. It also implied the implicit threat to use nuclear weapons if necessary.32 By late October 1953, the assumption that a general war or a large-scale limited war would be waged without recourse to nuclear weapons was abandoned: NSC 162–2, approved by Eisenhower in October, made strategic airpower and tactical nuclear weapons the means by which lower military expenditures could be reconciled with foreign policy.33 The new strategy, thus, was driven by three factors, two of which I have already discussed: (1) a reaction to the experience in Korea, (2) the administration’s fiscal conservatism, and (3) the technological development of tactical nuclear weapons, which made the use of nuclear weapons more flexible.34 The New Look in Southeast Asia. In Southeast Asia there were two possible ways to resist armed aggression. One was by massive retaliation against its source; the other was by a localized effort to repel it.35 One of the lessons that Dulles drew from the “loss” of North Vietnam was that collective defense should be organized before aggression was in progress.36 That meant focusing on the deterrent value of such collective defense arrangements. The New Look pointed to the rejection of static defense in favor of direct retaliation against the source of the aggression, that is, China, in case of Chinese aggression against another state in the region. Dulles clarified that there was no expectation to duplicate in Southeast Asia the NATO pattern of standing forces; nor did the U.S. contemplate rushing manpower to the region to fight a ground war. Instead, the focus was on a mobile strike force.37 This approach, clearly reflecting the rationale of the New Look, was also endorsed by the JCS. Its reports now expressed grave concern


over the lim ited resources available to the U.S. on the Asian front. In case of a combined attack by China and the Soviet Union, the JCS did not believe that Thailand, Indochina, or even South Korea could be held. The Navy also expressed growing doubts about its ability to carry out its offensive mission in the Pacific in light of the growing Soviet-Chinese power and plans to redeploy many of its ships elsewhere.38 The JCS therefore called to rely no further on the static type of defense used in Korea. Dulles agreed that in case all or part of Indochina was lost, the rest of Southeast Asia could be held by a policy of collective defense accompanied by a small measure of static defense and a clear willingness to use offensive measures in the event of open attack.39 He explained that “The treaty should permit us to draw a line which, if crossed, would permit us to retaliate at the source of aggression and to do so with the support of other nations.”40 Creating a framework for burden-sharing in the long run: Given these factors, the Manila Pact aimed at achieving the goal of creating a framework that, at least in the long-run, would provide for the necessary local defense (“static defense”) by forces other than those of the U.S. Eisenhower made it clear that the U.S. was not about to “carry the rest of the world on its back.” The administration’s goal was, he explained, to try “to make our friends strong enough to take care of local situations by themselves.”41 Although at the time the regional states were extremely weak, the administration, as noted, had a “long-haul” perception of the conflict with the Communists, and thought in terms of creating long-term burden-sharing capacity. Eisenhower himself stressed to Congress that “it should be possible to adequately train the large indigenous population for ground combat.”42 Eisenhower had a clear notion of the role of allies in the U.S. grand strategy. In his memoirs he asserts that because the United States’ resources are finite, it must be a member in a system of alliances. “The logical role of our allies along the periphery of the iron curtain therefore would be to provide (with our help) for their own local security, especially ground forces, while the United States, centrally located and strong in productive power, provided mobile reserve forces of all arms, with emphasis on sea and air contingents.”43 Like Dulles, he saw no sense in wasting manpower in costly small wars because that would play into the hands of a potential enemy whose superiority in available military power was obvious.44 When discussing two years later the U.S. ability to deal with local aggression in Vietnam, Dulles argued that the military could fulfill its mission without major disruption to security elsewhere because of the assistance the U.S. would obtain via SEATO from Thailand, the Philippines, Australia, New Zealand, and Pakistan.45


To achieve meaningful burden sharing in the long run, the regional states first had to develop "conditions of inner strength."46 The Manila Pact was supposed to help them do so in an indirect way. State Department officials viewed the alliance's initial purpose as to help these countries deal with the problem of internal subversion, which was seen as the greatest danger at the time. A defense pact, according to the logic, would give these countries confidence that there was a deterrent to the Communist threat; this, in turn, would encourage them to overcome their internal problems.47 Fifield argues that the pact was also intended to buy time for U.S. and other related aid programs, which might lead to these countries' economic and social advancement, greater political stability, and thus to the diminution of the Communist appeal.48 In April the JCS stressed that until a comprehensive regional security arrangement for the Far East was established, the full potential of the regional countries' collective capabilities could not be realized. In the meantime, it was important to develop bilateral and multilateral arrangements among the regional states, “with the United States acting as the integrator among the treaty nations" (emphasis added).49 Although the regional arrangement provided the sense of reassurance needed to focus on domestic issues, the specific aid for strengthening domestic security forces was administered in a bilateral manner, largely through the Military Assistance Advisory Group (MAAG). Huge sums were spent to help build larger armed forces in the Philippines, Thailand, and—the most familiar case—South Vietnam.50 From a burden-sharing or burden-shifting perspective, then, it seems that the main value of the regional strategy lay in its symbolic impact, not in its potential pooling effect. This issue will become relevant again in chapter 6, which describes the changes in the U.S. attitude toward providing aid to Southeast Asia. In that case, a shift to greater emphasis on a regional strategy occurred only after the focus of policy had shifted from the strengthening of domestic military forces to economic development; only then did the logic of pooling regional resources become more relevant. Nevertheless, the prospect of some meaningful burden sharing did make it more reasonable to embed these bilateral arrangements within a broader, regional framework that stressed the strategic links among these states and left room for potential future cooperation. Balancing through deterrence: The symbolic role of the regional approach was even more crucial in light of the new emphasis placed on nuclear deterrence in U.S. balancing strategy. That, in turn, led to emphasizing the deterrent power of alliances themselves. In other words, although there was little expectation that the regional


partners would actually contribute directly to U.S. defense, there was hope that the U.S. security umbrella would discourage Soviet or Chinese attacks in the first place.51 Since deterrence involves a strong emphasis on perceptual factors, the symbolic importance of commitments becomes crucial.52 Documents describing the discussions about SEATO reflect the strong symbolic importance that the administration, and especially the State Department, assigned to the alliance. When skeptics raised doubts about its military value or proposed to begin with economic arrangements, State Department officials emphasized the urgent need for a “show of force” in the region. Why not a bilateral strategy? It is clear that a straightforward strategy of a unilateral defense commitment could not have achieved the two goals of deterrence and especially of reducing policy costs in the long run. However, could not a bilateral strategy of signing specific treaties, for example, with South Vietnam or Thailand, have done so? One may argue that had the U.S. signed such bilateral treaties, it could have exercised greater leverage over these states, extracting a higher price in terms of force commitments in return for its security guarantee, while at the same time not committing itself to problematic areas such as Laos and Cambodia. For one thing, however, the domino theory suggested that it was potentially too costly to give security commitments to only a few specific states, because that would make their neighbors more vulnerable by exclusion. This, in turn, would create future vulnerability for the states that received the security commitment. The domino theory also implied that the U.S. should value any state, no matter how small, as dearly as it valued the continued independence of all other non-Communist states. Second, unlike a bilateral strategy, a regional strategy could simultaneously minimize U.S. commitments and create a framework for burden sharing. It was precisely the vague nature of its commitments that gave the Manila Pact domestic appeal in the U.S; specific treaties would have entailed making more specific commitments. Bilateral treaties indeed seem to have attracted greater criticism in Congress, probably because they were perceived as entailing both more specific commitments and more explicit costs. As noted, bipartisanship played a key role in the designing and approval of the Manila Pact; only later, when deterrence failed, did Congress come to question it.53 In marked contrast to this bipartisanship, Eisenhower’s bilateral military assistance programs consistently encountered stiff opposition in Congress.54 Perhaps more important, a regional pact gave the president discretionary authority in the event of overt Chinese aggression in the


area.55 If a bilateral arrangement was signed with one of the small regional states, and if it was attacked and the U.S had to come to its help, this would create a situation of de facto unilateral U.S. intervention, requiring a congressionalapproval procedure that could be lengthy. In the earlier episode where the French asked for U.S. intervention, this was not regarded in Washington as an instance of bilateral cooperation between the U.S. and France but rather as a question of unilateral U.S. intervention. Thus, the only way to allow for a quick response, combined with a quick response by the United States' regional partners, was through a regional collective security arrangement. From a legal perspective as well, a regional strategy afforded the U.S. much more flexibility. The NSC, for example, saw a pact as a means to provide as much legal basis as possible for the president to order an attack on China in case it endangered vital U.S. interests.56 Beyond this domestic politics rationale, there was a strong strategic logic for preferring a regional to a bilateral approach. As we have seen, the concept of the New Look as applied to Asia called for reliance on a mobile strike force instead of earmarking forces for particular countries and areas. Only a regional arrangement could give the U.S. reasonable freedom of action in the entire area covered by the treaty while at the same time not committing it to send specific forces to specific states. Finally, a regional strategy could partially reconcile the tension between the goal of relying on nuclear deterrence and the goal of developing regional armies to fight conventional regional wars instead of U.S. soldiers if necessary. The two are very different ways of reducing the cost of policy; a regional strategy could promote both ways simultaneously. The perceived advantages of a regional approach over a unilateral or bilateral one were also influenced by the Eisenhower administration's normative agenda, to which we now turn. INFLUENCE OF THE NORMATIVE AGENDA ON STRATEGY CHOICE A majority in both Congress and the administration rejected the option of a unilateral strategy in Southeast Asia also on normative grounds. Throughout 1954 Eisenhower asserted that unilateral U.S. action there would be a grave mistake, and that no Western power "can go to Asia militarily, except as one of a concert of powers, which must include local Asiatic people."57 At the same time, he also stressed the danger of an isolationist alternative: "What has happened in Dienbienphu shows the result of trying to defend yourself in a position


of isolation. The U.S. can never safely rest in such a posture."58 Yet unilateral intervention to help the French would not be tolerable since it would place a colonial stigma on the U.S.59 Eisenhower’s emphasis both on liberal internationalism and anticolonialism reflects the agenda of liberal democratic internationalism, discussed in the preceding chapter.60 One of the main reasons Eisenhower decided to run for the presidency was to keep the Republican nomination out of the hands of Robert Taft and his isolationist, unilateralist camp.61 Eisenhower believed that he was the only candidate who could “internationalize” the Republican Party and, in the aftermath of the stalemate in Korea, reconstruct the shaken domestic consensus around the containment policy. This internationalism, shared with his secretary of state, ensured that an open unilateral strategy would not be embraced. As a Republican, Eisenhower combined domestic conservatism with international liberalism.62 A unilateral strategy was also problematic in light of Eisenhower’s strong views about the American anticolonial tradition.63 The anticolonial concern was also pronounced in Congress, and led to constant criticism from all camps of the French for stalling on granting full independence to the states of Indochina. This, in turn, did not generate much goodwill in terms of helping the French in that region.64 Given the extremely wide power disparities between the U.S. and the regional states, any bilateral agreement would have been tainted by imperialist charges. This was, indeed, exactly the image that Communist propaganda tried to create. A regional arrangement involving regional states was therefore much more attractive as a means of advancing U.S. goals without being viewed as the new colonial power. It was the same fear of imperialistic charges that led the U.S. to reject in May a British proposal to examine the Southeast Asian situation in a “Five Power Staff Agency” including Britain, the U.S., France, Australia and New Zealand. The Americans were concerned because that forum was confined to the “white” nations.65 Moreover, the strong anticolonial sentiment, as well as his liberal internationalist approach, influenced the way Eisenhower perceived international legitimacy and the importance he attached to it. In order to gain such legitimacy, a multilateral approach, he believed, was necessary. Thus, he stressed that to win the support of the free world for U.S. military intervention in Dien Bien Phu, the U.S must participate in a coalition with Britain, ANZUS, and some Southeast Asian states. Even token forces by others would lend a real moral standing to the venture.66


The final normative factor that helped favor a regional strategy over a bilateral one was the strong anti-Communist sentiments of Eisenhower and Dulles and their ideological understanding of the Cold War. In his inaugural speech on January 30, 1953, Eisenhower stated: “Conceiving the defense of freedom, like freedom itself, to be one and indivisible, we hold all continents and people in equal regard and honor”67 (emphasis added). Since the struggle against the Soviets was perceived as a struggle against Communism (and for the defense of freedom), a multilateral (in this case regional) approach to this struggle, which stressed the indivisibility of interests among all free nations, only made sense.68 CONFLICTING GOALS AND STRATEGY REFERENCE: THE RELATIVE VALUE OF DIFFERENT STRATEGIES The regional strategy was pursued in this case because it could simultaneously serve different policy goals that were not fully compatible with one another. A regional strategy could help achieve the dramatic symbolic expression of U.S. commitment to the defense of Southeast Asia for purposes of deterrence (including nuclear deterrence); at the same time, it offered a framework for the development of long-term regional burden sharing. When presented to Congress as such a framework, the regional strategy was domestically attractive. Because of the extremely high power disparities between the U.S. and the regional states, any bilateral commitment would in practice have meant a unilateral U.S. commitment, which was unacceptable to Congress. The problems associated with such unilateral action, as well as the advantages of a regional strategy, were further underlined by the administration’s normative agenda and its concern lest it be charged with imperialist policy in Southeast Asia. REGIONAL POWER DISPARITIES AND STRATEGY CHOICE A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. The rationale behind this hypothesis was based on the link between the nature of regional power disparities on the likelihood that any


Table 4–1 Relative Value of the Bilateral and Regional Strategies

significant pooling effect will occur. In the case of the proposed United Action coalition, this logic appears to work well, largely because the key potential partners in such an arrangement were not to be regional states but rather France and Britain. The power disparities between the U.S. and these two countries, while still substantial, can be described as moderate, especially compared to the disparities between the U.S. and the regional Southeast Asian states. The Manila Pact, however, poses more of a challenge to this hypothesis. A regional strategy was preferred even though the regional power disparities were very wide. Three factors can help explain this outcome: (a) Eisenhower’s long time horizon, (b) the specific goal of the cooperation arrangement, namely, deterrence, and (c) the value of the regional strategy in reconciling unilateralist and internationalist views (derived largely from the same wide power disparities). a. Despite the wide power disparities, we have seen that Eisenhower did believe that, in the long run, even the weak Asian allies could contribute to meaningful burden sharing for the U.S. Given his interpretation of the longterm nature of the Communist threat, it was plausible that the weak regional states could be strengthened, thus narrowing the power disparities and creating a greater potential for future burden sharing in the form of local ground forces. Eisenhower adopted, then, a more dynamic approach to the international power distribution. That the burden-sharing consideration played a role in choosing potential members for the pact


is evident from the decision to accept Pakistan, despite its being a Muslim country that viewed its participation largely in terms of its balance of power with India. Although the Americans were well aware of this, Pakistan had the largest forces of any potential partner within the treaty area and was willing to assume the obligations of the pact.69 Thus, given a very long shadow of the future, wide power disparities need not render a regional strategy unattractive. This finding points to the need to adopt a more dynamic approach to power distribution factors. b. Although actual burden sharing was clearly seen as a long-run objective in this case, the immediate goal was to create a framework that would deter any further Communist expansion in Southeast Asia. If the main immediate goal had been to create an alliance that could wage war collectively, then the extent to which each partner could contribute would have been more important. The focus on deterrence, however, particularly nuclear deterrence, meant that the regional partners’ importance was more symbolic. Hence, in the short run their actual potential contributions were less crucial, and the extreme power disparities less relevant to strategy choice. c. Although making the burden-sharing goal less immediately viable, the wide power disparities gave the regional strategy a unique advantage over other strategies in terms of its political acceptability in the U.S. The United States’ power preponderance over its regional allies made it easier to interpret any regional-multilateral arrangement either as a real multilateral, liberal-internationalist arrangement or as a means to maintain U.S. dominance and legitimize its unilateral action. In a case of very wide power disparities between the great power and the regional states, it indeed becomes difficult to distinguish between a multilateral and a unilateral strategy. From a Realist perspective, a powerful state would follow the multilateral rules only so long as they suit its purposes, since it has the power to ignore them at will. When distinguishing between the two strategies, one needs to clarify whether one is focusing on the intentions or the actual behavior of the initiator. In this study, which deals with initial policy choice, intentions are the main criterion. It is clear that for the Taft wing of the Republican Party, the regional-multilateral strategy was attractive only because it appeared not to seriously limit U.S. freedom of action, and to be designed merely as a fig leaf for unilateral action. However, there is ample evidence that neither Eisenhower nor most of Congress were interested in unilateral U.S. action in Southeast Asia. Eisenhower has made very strong, clear statements about the problems and dangers of unilateralism. He, in fact, did not view SEATO as a means for disguising unilateral action. Congress as well,


as I have shown, opposed unilateral action that would entail a full burden for the U.S. The regional strategy thus became the way to politically satisfy both unilateralist and internationalist inclinations. In the European case, on the other hand, the much narrower power disparities between the U.S. and the regional states meant that it was not possible to try to “sell” NATO domestically as a disguised unilateral strategy. A harder political battle had to be fought with the isolationists in Congress. On the other hand, as we shall see in the next chapter, the narrower power disparities made meaningful burden sharing more feasible, and this advantage sufficed to overcome the domestic opposition. Finally, there may also have been an element of wishful thinking that strengthened the preference for a regional strategy despite the wide power disparities. As in the case of the Pacific Pact, congressional pressure for an arrangement providing some promise of burden sharing seems to have ignored to some extent the hard facts of the Asian countries’ weakness. On the one hand, Congressmen stressed that the U.S. should never repeat the Korea experience of providing 90% of the forces for combat. Ironically, however, many of the same Congressmen also strongly opposed the programs of military and technical aid that were established precisely in order to create, albeit in the long run, sufficient local strength to avoid the repetition of the Korea episode. The concern for burden sharing may, then, have had an impact on the preference for a regional-multilateral strategy that was completely independent of actual power disparities.70 PERCEPTION OF PARTNERS’ PREFERENCES AND ITS IMPACT ON STRATEGY CHOICE A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. In the previous chapter, the potential partners’ preferences played a key role in derailing the Pacific Pact initiative. The U.S. decided not to pursue this option further once it became clear that no one supported it. Furthermore, the U.S. showed high sensitivity to the goals sought by the regional states. When South Korea called for the creation of a regional security arrangement, the Americans rejected the proposal because they perceived the real South Korean goal to be obtaining greater aid from the U.S.


In the SEATO case, however, the U.S. was less sensitive to the goals sought by its regional partners—or, perhaps, more willing to view these goals as complementary to its own. PARTNERS’ PREFERENCES CONCERNING THE FORM OF COOPERATION As we have seen, the U.S. initiated two attempts to organize a regional security cooperation arrangement to deal with the Indochina problem. In the case of the proposed United Action front, the partners’ opposition was the main factor that led to its abandonment. The main putative partners were Britain and France. Although the French were the ones to initiate the call for U.S. intervention, they were interested in a unilateral, limited intervention in the form of air strikes. They did not want to multilateralize their war in Indochina and thereby, they feared, forfeit control of its management to the Americans.71 The United States’ ability to pressure France was severely limited by Cold War considerations in Europe. France had leverage over the U.S. in light of the priority the latter assigned to the creation of the European Defense Community.72 France was aware of this leverage and more than once tried to use it. Before the Geneva Conference, for example, it threatened that if the U.S. did not intervene in Vietnam, France would have to compromise in Geneva.73 Indeed, as noted earlier, Eisenhower himself admitted that the decision to aid the French was “almost compulsory.”74 French leverage was not, however, strong enough to force the U.S. to intervene unilaterally. When the situation in Dien Bien Phu further deteriorated, the desperate French withdrew their opposition to United Action. At that point, however, it was British intransigence that complicated matters.75 The official “cause of death” of the United Action initiative was the British refusal to take any military-related action before the Geneva Conference. The different British preferences reflected their different understanding of the balance of threat in Asia. Whereas the Americans perceived a clear-cut bipolar structure in Asia, the British had a more complex view. They perceived China to be less of a threat than the U.S. did, and therefore strongly preferred a settlement with Chinese participation. From this stemmed their insistence on gaining the support of the Asian neutralist states, led by India. They thought that a coalition emphasizing only military confrontation would give the Chinese little incentive to restrain the Viet Minh and would not address the problem of Communist subversion.76 Despite U.S. and French pressure, then, the British refused to join the United Action initiative. When Dien Bien Phu was overrun on May 7, 1954, the United Action option ceased to be relevant.


In the second initiative, leading to the creation of SEATO, the British influenced the form of the arrangement by insisting on compliance with the deal made with the Chinese, according to which Laos, Cambodia, and “free” Vietnam would not be considered for membership in any military alliance. Of all the Asian states invited to the Manila Conference, only Pakistan, Thailand, the Philippines, Australia, and New Zealand became members.77 There were disagreements about the specific nature of the regional arrangement. Whereas the U.S., Britain, France, and Pakistan preferred an arrangement with minimal formal force commitments, the other members wanted a NATO-like structure with specified forces, infrastructure, and so on and were disappointed when that did not materialize. The members almost unanimously rejected U.S. proposals for specifically directing the treaty against Communist aggression. This, they argued, would alienate other Asians. Eventually, as noted, while the term Communist was omitted from the body of the treaty, the U.S. added its own reservation confining its own commitment to Communist attack.78 Although there was overall support for the regional arrangement, this support was based on varying views about what the arrangement should achieve. REGIONAL PARTNERS’ GOALS AND THEIR COMPATIBILITY WITH U.S. GOALS The Philippines, Thailand, and Pakistan, the only three Asian members of SEATO, were much more interested in creating or strengthening their bilateral security ties with the U.S. than in a truly multilateral arrangement. Without the U.S. it is doubtful that they would have joined an alliance with each other. Thailand did see the pact as a means of balancing against Communist threat, but foremost as a means of establishing bilateral security ties with the U.S. Indeed, Thailand was the first to ratify the pact.79 Furthermore, the pact’s regional nature also served to disguise its de facto reliance on U.S. preponderance.80 The Philippines at that point felt little fear of external threat and was mainly interested in strengthening its bilateral relations with the U.S. by proving itself a loyal ally. It viewed the 1951 bilateral alliance with the U.S. as much more important than SEATO. At the same time, it also hoped to use the regional forum to lower its dependence on the U.S.81 Throughout the negotiations, the Filipino representatives pushed for a stronger reference in the final text to the right of national self-determination. They eventually achieved an acceptance of the British Commonwealth of a Pacific Charter,


containing a less anticolonial terminology.82 As for Pakistan, it joined SEATO in the expectation of aid and assistance from the U.S.83 Australia saw the pact as an opportunity to close the “strategic gap” in its defense, to rectify Britain’s exclusion from ANZUS, and to develop its Asian policy of closer relations with its northern neighbors. It also viewed the pact as a way of ensuring that Britain remained committed, not only to Malaya.84 For both Australia and New Zealand, the pact marked a major step: the first time in history that they were making treaty commitments for the security of Southeast Asia. Canberra would have preferred a NATO-like obligation with military command and an infrastructure; New Zealand, for its part, would have preferred bilateral security pacts to a multilateral treaty with only three Asian signatories.85 As for the two Western powers, France saw the pact as a way to preserve its political, economic, and cultural privileges in the three Indochinese states without giving too much control to the Americans. In light of its precarious position, it wanted to ensure at all cost that the residual status quo was maintained.86 The British position remained the same as before. Britain was more concerned about wide Asian membership; it wanted as well to maintain its own presence in Southeast Asia. Still irritated by its exclusion from ANZUS, Britain saw SEATO as a partial compensation.87 As in the case of United Action, the British strongly opposed an explicit anti-Communist reference in the text of the treaty. They feared that Washington would again rush into action without meaningful consultations with its allies, and would blunder into war against China.88 These varying motivations did not appear to concern the Americans, in marked contrast to their behavior with respect to the Pacific Pact. In that case the Americans rejected any regional calls for a regional arrangement that were perceived as intended mainly to advance bilateral ties with the U.S. or extract more aid from it. In that case as well, as in the subsequent case of NATO, the Americans were much stricter about finding evidence of genuine regional interest in regional cooperation before they came to endorse such a strategy. In the SEATO case, this genuine support for regional cooperation did not exist and was not really sought. The United States’ limited concern about its partners’ specific goals reflected the goals sought by the U.S. itself. As described earlier, the Eisenhower administration, more than its predecessor, emphasized deterrence as the best tool for balancing against the Communist threat. This indicated, in turn, that it was better to have as many regional states as possible under the official U.S. security umbrella, to symbolize the American commitment to the freedom of these states. The goal of deterrence did not in itself require an actual, substantial


contribution from each member. At the same time, to promote longterm burden sharing, it was necessary to build “inner strength” for each of the allies. This combination of goals had two implications. First, the regional states’ interest in the bilateral benefits of the regional arrangement did not seriously contravene the U.S. goals. Even though some military officials pointed out that this bilateral interest would be costly for the U.S., most officials in the administration believed that overall the proposed multilateral arrangement would end up costing the U.S. less. Second, the new emphasis on deterrence strategy also meant the U.S. was much more constrained by its regional allies, and thus more willing to tolerate the domestic goals they sought to pursue through the arrangement. The burden-sharing goal meant reliance on the regional allies for local defense so that the U.S. would not have to get involved again in a Korea-type war. Gaddis argues that by rely ing on its allies almost completely to carry out deterrence at the conventional level, the U.S. had in effect relinquished control over that spectrum of response to aggression. As a result, its allies gained the ability to manipulate the U.S. because they were the ones counted on to provide the ground forces should that be necessary.89 Keohane makes a similar argument about the “big influence of small states.”90 The potential allies gained further leverage in light of Eisenhower’s need to ensure congressional backing for any U.S. action, backing that hinged upon allies’ participation as a precondition for approval of any such action.91 One further factor helps to explain the different U.S. behavior in the Pacific Pact and Manila Pact cases. In the former case, a central goal of the proposed regional arrangement was to serve as a collective security arrangement to cope with the potential resurgence of Japan. The main advantage of a regional strategy would have been its ability to serve simultaneously as an alliance that would include a strong, revived Japan and could balance against the Communist threat in Asia, and at the same time as a regional collective security arrangement through which a safe revival of Japan was possible. This goal could only be achieved if the allies were truly interested in a regional-multilateral arrangement, and not only in U.S. aid. In reality, the goals of states such as South Korea and the Philippines were not compatible with what the U.S. sought. In the SEATO case the collective security goal was not mentioned. In fact, the Americans were in conflict with the British, who did want the arrangement to serve the goal of collective security, and favored associating as many Asian states as possible with the Geneva settlement so as to create the political conditions for stability founded on regional cohesion. They also believed that for collective security


purposes, Chinese participation was important. The U.S. opposed this approach;92 at least in the short run, it did not regard actual cooperation among the regional partners as a key requirement. The fact that those partners were not interested in such cooperation, in turn, did not pose a major problem for U.S. decisionmakers. Finally, because many of the supporters of SEATO viewd it as a tool to legitimize unilateral action in the region, the partners’ preferences did not matter very much. Of the six cases examined in this study, in this case the distinction between the regional-multilateral and unilateral strategies is hardest to make. We have seen, however, that there was no consensus among U.S. decisionmakers that SEATO was to serve as a cover for U.S. unilateralism; on the contrary, unilateralism was politically problematic at the time. U.S. POLICY GOALS AND THE REGIONAL PARTNERS’ PREFERENCES: A NOTE The introduction of the collective security goal in the Pacific Pact case and its absence from this case also helps to explain why there was more regional opposition to the initiative in the former case. Of all the different goals that a regional-multilateral security arrangement can serve, the collective security goal is the most ambitious. In the Pacific Pact case, this goal was much harder to “sell” to the small Asian states, which feared Japan much more than China or the Soviet Union and were skeptical about the collective security idea. For them, the key goal of any regional arrangement was to control Japan. The very broad power disparities within the region only underlined these attitudes. In the SEATO case, the pact was not promoted as a collective security arrangement but more as a balancing tool. Indeed, the pact was also aimed at balancing against internal threats, but of a totally different nature—that is, threats emanating from within those states and challenging their governments. It was not an issue of using the regional arrangement to contain a threat from one of its member states. Therefore, the regional states put less at stake by accepting the arrangement. The arrangement and its “American” goals did not contravene their own goals. It was a less demanding form of a regional-multilateral arrangement. Put differently, it was less multilateral in the qualitative sense of the word. Thus, in the Manila Pact case a regional strategy was easier to pursue because it fulfilled the goals both of the regional states and the United States. However, this came with a price. It was in part because actual regional cooperation was not a central goal that SEATO never developed as a significant regional arrangement and has left a minor


mark on the historical development of regional cooperation in Asia and on scholarly work as well. CONCLUSION The creation of the Manila Pact is a good example of a U.S. attempt to construct a cooperation strategy that could reconcile the conflicting goals the U.S. sought to achieve. This regional arrangement was seen as advancing the goal of balancing against further Communist expansion by creating a strong deterrence umbrella over the nonCommunist areas of Southeast Asia. At the same time, the arrangement was to provide a framework for the long-term development of a greater capacity by the regional states to provide forces for future ground combat in the region. Thus, the arrangement was aimed at advancing simultaneously the balancing and the overall cost reduction goals. It offered two approaches to alleviating the cost problem for the U.S., that is, reliance on deterrence and reliance on local forces for limited conventional wars. These two approaches, as noted, were not fully compatible with each other, but the regional framework served to cover up this tension. This necessitated, however, a very weak treaty language, which gave SEATO little teeth, leading to the creation of an organization that contributed little to the region’s ability to cope with Communist aggression.93 As mentioned earlier, the standard view of SEATO belittles its value and regards it as a mere cover or excuse for U.S. intervention in the region. Although that account is not entirely inaccurate, this chapter has sought to clarify why U.S. decisionmakers thought a regional security arrangement was the only way to allow for future U.S. intervention. The rationale behind the decision to pursue a regional strategy reflects a persistent theme in U.S. foreign policy, suggesting a less cynical view of the creation of SEATO. As I have tried to show, decisionmakers were not merely searching for a means to legitimize U.S. unilateral intervention but were struggling with very real domestic pressures not to “go it alone” and not to repeat the Korea experience. At the same time, the regional strategy was also attractive because it might indeed provide a pretext for U.S. unilateral intervention. This was the way in which Republican unilateralists viewed the strategy—but not, as I have stressed, the way in which the administration or most of Congress viewed it. Given the wide power disparities between the U.S. and the region, then, the regional strategy could appeal both to the unilateralists in Congress and to the internationalists. Indeed, there was full bipartisan support for the pact. As we shall see in the next chapter, in the case of Western Europe where the power disparities between the


U.S. and the regional states were narrower, the creation of a regional security arrangement could not as easily have reconciled the unilateralist and internationalist outlooks. The regional power disparity hypothesis did not fare so well in this case. The U.S. pursued the regional strategy despite the very wide power disparities with the region. However, I have argued that two factors mitigated the regional power disparities’ impact on the final strategy choice. One was the emphasis on deterrence, which implied that “collecting” allies had more of a symbolic importance than their actual capabilities would suggest. The second was the very long time horizon adopted by the Eisenhower administration, which implied that the regional power disparities could be narrowed over time by strengthening the regional partners, enabling real burden sharing in the long run. These points highlight the limits of the power disparity hypothesis in explaining strategy choice. Finally, in this case the U.S. showed less concern about the specific goals sought by the regional partners. If in the Pacific Pact case the U.S. insisted on evidence of genuine regional interest in regional cooperation, in this case it did not appear to mind if its three Asian partners were mainly interested in the pact’s implications for their bilateral ties with the U.S. This can be explained by the different sets of goals sought in the Manila Pact and Pacific Pact cases. The combination of the balancing-through-deterrence goal and the longterm burden-sharing goal indicated that in order to build internal strength in the allies, some bilateral assistance was necessary in any case. It was important, however, to keep this bilateral assistance within a regionalmultilateral framework to allow for future coordinated burden sharing. This in turn meant that if allies’ goals were, at least in the short run, to establish bilateral relations with the U.S., this did not conflict in any real way with the U.S. goals. Such was not the case with the earlier Pacific Pact initiative, where creating a regional collective security framework was a central goal.

Chapter 5 From NAT to EDC—U.S. Policy toward Regional Security in Europe: A Comparative Perspective

The two previous case studies focused on U.S. policy toward regional security cooperation in Asia. To what extent are these findings unique to the Asian case? Can the same theoretical framework be applied to the much more familiar case of postwar security cooperation in Europe? This chapter attempts to do so, seeking to determine whether the same mechanisms that helped privilege/discredit regionalmultilateral cooperation in Asia operated in the European case as well. The first part of this chapter applies the theoretical argument to U.S. policy toward the creation of the North Atlantic Treaty (NAT). The second part considers U.S. policy toward the creation of the European Defense Community (EDC). Following the pattern of the previous case studies, this chapter centers on three main questions: (1) What were the U.S. foreign policy goals in Western Europe, and which strategy could serve to advance all of them? (2) How did the regional power distribution interact with these goals to influence the attractiveness of different cooperation strategies? (3) How did the perceived interests of the potential European partners affect the attractiveness of the regional strategy? THE NORTH ATLANTIC TREATY HISTORICAL OVERVIEW As in the Pacific Pact case, in the European case the initial calls for some form of regional security arrangement including the United States came from the region itself. On December 12, 1947, British foreign secretary Ernest Bevin called for a “spiritual federation of the West,” not a formal alliance but “an understanding backed by power, money and resolute action” to convince the Soviet Union that it could advance no further.1 The U.S. refused to rush into such an arrangement. Secretary of State George Marshall asserted that the


U.S. would consider the issue once there was evidence of real European commitment to cooperate. Bevin proposed the creation of a Western Union (initially without U.S. membership) along the lines of the Franco-British Dunkirk Treaty, which was specifically aimed at preventing the renewal of German aggression.2 The State Department rejected the idea of a European treaty based on defense against Germany as being too negative in its implications. As an alternative, it proposed following the model of the Rio Treaty of 1947.3 The U.S. became more involved in the regional security initiative in the winter of 1948, in light of the coup in Prague, fears of Communist victory in the upcoming Italian elections, and Norwegian concerns that the Soviets were about to impose a humiliating treaty on them.4 Although still refusing to associate itself with the Western Union, the U.S. embarked on closer collaboration with the Europeans. In March of that year, Britain, France, and the three Benelux countries signed the Five-Power Treaty in Brussels. In September, the military organization of the Brussels powers was created. This satisfied the U.S. prerequisites for starting the negotiations on a North Atlantic Treaty. By late 1948 a draft treaty had been finalized, and on July 21, 1949, Congress voted overwhelmingly in favor of the NAT.5 MULTIPLE CONFLICTING GOALS AND STRATEGY CHOICE Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost. Balancing the Communist Threat: The Pressure to Expand Security Commitments As we have seen, when commitments must be expanded yet foreign policy costs must be reduced, a regional strategy becomes attractive. In the Pacific Pact case, the apparent conflict between expanding commitments and reducing costs only emerged after the outbreak of the Korean War. In Europe it emerged earlier, although also as a response to changing perceptions of the global balance of power and of the Soviet threat. As noted, the initial U.S. response to Bevin’s proposal to create a Western Union was reserved. The U.S. attitude changed only after a series of events manifested the tightening of bipolarity in Europe and were interpreted as reflecting great Soviet threat. The Czech coup, in particular, cre ated a momentary war scare that removed U.S. doubts

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about military engagement in Europe.6 Up to May 1948, emergency war plans had envisioned a hasty retreat from the continent; in other words, the inclination was to minimize commitments. From late May on, however, the goal became the augmentation of European capabilities through coordinated planning, European self-help and mutual aid, and military assistance. Leffler argues that even at that point the Americans still hoped they could avoid truly expanding their formal commitments, and that it was the Berlin crisis that prompted the U.S. to attend the London military deliberations of the Western Union and endorse military aid.7 The discovery in September 1949 that the Soviets had conducted a nuclear explosion was crucial; it signified that the Soviet challenge could no longer be seen primarily as an economic-political challenge to Western Europe with a relatively low risk of military action. This discovery came at a time when Congress had voted to cut Truman’s military aid request for Europe in half. As Acheson put it, “Once again the Russians had come to the aid of an imperiled non-partisan foreign policy, binding its wounds and rallying the divided Congress into accepting the Senate version of the Mutual Defense Assistance program.”8 The new perception of the system’s bipolar structure and the impending Soviet threat was formalized in the famous NSC-68 document. Likewise, it was only after the outbreak of the Korean War that NAT turned from a political treaty into a permanent military commitment (NATO). The war created an air of panic that Germany was to be the next Korea. This in turn led to congressional support for NATO and the speedy appropriation of increased funds for the defense of Western Europe.9 Above all, the Korean War highlighted the issue of German rearmament. These dynamics are very similar to those in the Pacific Pact case. On the Asian front, the U.S. entertained the hope of minimizing commitments for a longer time than in Europe. There was no Asian equivalent to the Berlin crisis, for example. The dilemma between expanding commitments and minimizing costs did not truly arise until the Korean War. The impact of the war was similar in the two spheres, however. In Asia, it demonstrated the urgent need to sign a liberal peace treaty with Japan so as to allow it to rearm and play a central role in balancing the Soviet-Chinese threat. This necessitated Japan’s reintegration into Asia, in turn enhancing the attractiveness of the regional arrangement. In Europe, the Korean War indicated the need to rearm West Germany so as to create a strong European center of power that could help the U.S. balance the Soviet threat. This entailed West Germany’s reintegration into Western Europe, and made the regional option even more appealing.


In both cases, then, changes in perceptions of polarity and threat were a necessary condition for the regional strategy to become a viable policy option, though not sufficient to explain why the expanded commitments took a regional-multilateral rather than a bilateral or unilateral form. Still, the sense of urgency did lead to the abandonment of one form of cooperation, namely, a wider multilateral arrangement. One of the options initially considered was to create a worldwide defense pact of the “free nations,” based on article 51 of the UN Charter. This option was rejected because it could not meet the “urgencies of the present situation. It would be too cumbersome and too long in implementation.” It was agreed, though, that this might still be the long-term goal of a regional defense arrangement.10 Finally, in the effort to prevent further Communist expansion in Europe, U.S. decisionmakers put much emphasis, at least in the short run, on the symbolic impact of the cooperation initiative in building confidence among the Europeans and signaling U.S. resolve to the Soviets. The desire to achieve such a dramatic, symbolic effect also favored a regional strategy over an incremental, bilateral approach. The United States’ partners argued that such “half measures” would be insufficient.11 This is reminiscent of the Eisenhower administration’s concept of regional solutions as promoting the goal of balancing through deterrence, as discussed in the SEATO case. In the Pacific Pact case as well, officials stressed the symbolic importance of a regional cooperation initiative. Balancing the Communist Threat at a Minimal Cost: The Promise of Burden Sharing The U.S. goal of minimizing the costs of its postwar foreign policy played a central role in the development of the NAT (and later of NATO). Initially it was thought that this goal could be achieved by a short-term effort to reconstruct Western Europe and enable the Europeans to cope independently with the Soviet threat. This seemed feasible especially since the Soviet threat was initially perceived as purely political and not military. This was the background for the European Recovery Plan (ERP), also known as the Marshall Plan. U.S. aid was justified in the Senate as a means of reconstructing the balance of power in Europe, which in turn would remove the need for longterm U.S. participation in that balance.12 Thus, membership in a regional security arrangement did not appear necessary to the U.S. administration. As Marshall declared in response to Bevin’s proposal: “When there is evidence of unity with a firm determination to effect an arrangement under which the various European countries are prepared to act in concert to defend themselves, the US will carefully

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consider the part it might appropriately play in support of such a Western European Union.”13 This was a very similar response to the one the U.S. made to early regional calls for a Pacific Pact. In the SEATO case as well, the first preference was to have the French deal with Indochina on their own. The Americans then shifted to the concept of United Action with other European powers, and only when that option collapsed did they turn to a regional pact. The difference in these cases lay in the initiative taken by the regional states, as we shall see later. Once it became clear that some sort of commitment to European security was necessary in order to balance the perceived Communist threat, the U.S. shifted to achieving the goal of minimizing foreign policy costs through encouraging maximal burden sharing by the Europeans. The main pressure to focus on burden sharing came from Congress, and the administration felt strongly compelled by it. As early as May 1947, the Policy Planning Staff (PPS) observed that the Europeans would have to develop their own recovery plan in order to avoid congressional criticism.14 In his memoirs, Acheson strongly conveys how constrained he felt at the time by Congress.15 Even leading congressional figures like Arthur Vandenberg and John Foster Dulles, who favored U.S. involvement in world affairs, opposed “inviting countries to come to us with their shopping lists.”16 The congressional concern about burden sharing was epitomized in the Vandenberg Resolution, which stressed that self-help and mutual aid were prerequisites for U.S. cooperation, “which is a supplement, not a substitute, for adequate and continuous defensive activities of others.”17 The congressional concern about cost was also central to the administration’s decision to separate the debate over NAT from the debate over the Military Assistance Program (MAP), which in practice was the heart of the treaty’s article 5, in order to make sure the NAT was ratified.18 A unilateral approach and the burden-sharing problem. One of the options considered at the outset was a presidential declaration giving assurance of military support to free nations menaced by Soviet Communism. George Kennan was a strong advocate of such a unilateral approach. Although generally unsympathetic to the European anxieties about a Soviet military threat and about the soundness of the U.S. commitment to Europe, he argued that if those fears had to be dealt with, the best way was through a unilateral security guarantee. He suggested applying the “dumbbell” concept: “the combination, that is, of a unit at the European end based on the Brussels pact, and another unit at the North American end…the two units being separate in identity and membership but linked by an


acknowledgment on the North American side that the security of the European unit was vital to United States-Canadian security.”19 Kennan, however, found it difficult to sell this unilateral option to the administration precisely because of the burden-sharing principle enshrined in the Vandenberg Resolution. A unilateral approach would have placed most of the burden of European security on U.S. shoulders at a time when, according to a Foreign Office analyst, “public and Congressional reaction to foreign affairs is still conditioned by…fear and dislike of Russia and aversion to the

responsibility, and more particularly the cost, of preserving the world balance of power” (emphasis added).20 When the option of a

presidential declaration was discussed in March 1948, it was pointed out that while the U.S. might in emergency situations extend assurances of armed support against aggression, “sooner or later the U.S. would have to require reciprocal guarantees from others.” This was a basic provision of the Vandenberg Resolution. Thus, “were reciprocal guarantees offered, the result would, in effect, be a mutual defense agreement.” The conclusion was that “the objective, therefore, should from the outset include a pact of mutual defense against aggression to which the US (and Canada) would finally adhere.”21 In other words, a unilateral approach was insufficient. A bilateral approach and the burden-sharing problem. The Americans rejected a British proposal for a bilateral alliance.22 Separate bilateral treaties were associated with a piecemeal approach of dealing with Europe, an approach that had already been rejected in regard to the ERP. Marshall and his Undersecretary of State Robert Lovett transferred the same reasoning process from economic considerations to security matters.23 A piecemeal approach was seen as incapable of achieving “the type of regional association in Europe, which would provide the maximum security in itself to the European community.”24 On May 20, 1948, Lovett explained to the National Security Council that the U.S. was trying to get away from one-way arrangements in which it helped foreign countries without receiving anything in return. On the issue of military aid, he argued that if Congress believed the administration was thinking of reviving the Lend-Lease, there would be drastic cuts in domestic military appropriations.25 The wartime Lend-Lease was a bilateral program; now, only aid provided in a multilateral framework would be acceptable. In their talks with the Europeans, U.S. representatives stressed that an arrangement embracing as many countries as possible would be more likely to gain congressional approval.26 Given this view of bilateral cooperation with the West European powers, it becomes understandable that in the context of Southeast

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Asia the Americans did not even make a distinction between bilateral and unilateral strategies. Thus when the French requested U.S. aid in Dien Bien Phu, this was discussed in the U.S. as a question of unilateral U.S. intervention, not bilateral cooperation with France. The extension of the ERP logic to the military realm is evident in the various discussions leading to the creation of the NAT, especially in the context of the military aid and cooperation associated with it. Officials talked about “a military ERP.” The U.S. participants in the London military talks of the Western Union, held in July 1948, were instructed to conduct the talks with a view to “drawing up a coordinated military supply plan” on the basis of a European Recovery Program precedent.”27 The ERP logic, in turn, is closely linked to the pooling effect. As discussed in chapter 2, one of the arguments for the value of a regional solution is the pooling effect associated with it. This effect cannot be achieved through a set of bilateral arrangements. This is seen clearly in this case, where the U.S. notion of a regional security pact was closely linked to that of West European integration, and both were linked to the goal of burden sharing.28 The idea of advancing West European integration was, in turn, closely related to the idea of creating a “third force” in Europe that “was not merely the extension of U.S. influence but a real European organization strong enough to say ‘no’ to both the Soviet Union and the United States.” Such a force would eventually allow the withdrawal of the U.S. from the heart of Europe.29 A federalized Europe would prevent future U.S. entanglement!30 The emphasis on designing an arrangement that would advance European integration became much stronger in the talks on the EDC. Beyond this rather vague vision of a united Europe, where pooled resources would lead to the creation of a third pole, there were also very practical conceptions of the pooling effect. Thus, the discussions during the London military talks of the Western Union nations dealt with such matters as standardizing military equipment, communication procedures, and operating techniques; establishing military administrative, logistical, and tactical organizations; pooling equipment and resources under a combined command; and assigning defense responsibilities to participants. By standardization with U.S. equipment, smooth and efficient cooperation with the U.S. would also be facilitated.31 In the short run, one possible advantage of a regional framework was to allow greater flexibility in terms of resource allocation. For example, there were discussions on the possibility of using exist ing U.S. and British stocks in order to equip an immediate force in France, Belgium, and Holland.32 Such flexibility would not have been available through sets of bilateral security arrangements.


Also noteworthy are the different degrees to which the mechanisms of pooling resources were developed in the European context as opposed to the Asian cases. Whereas in this case talks could have begun right away about the coordination of military plans and so on, in Southeast Asia, for example, such coordination had to be preceded by building of the various national military forces. The prospects of burden sharing were therefore very long-term. In the context of the NAT, Congress was especially adamant on the issue of encouraging intra-European defense cooperation, and made clear that the bilateral alternative was not acceptable. In the long debate over the administration’s proposal for a $1,450,000,000 arms program to strengthen the NAT states (after the NAT was signed), Senators Vandenberg and Dulles, who cooperated with the administration to help pass the bill, worked out several amendments designed to ensure that the military aid recipients would use the aid to promote an integrated defense of the North Atlantic area in accordance with the pact’s defense plans. They proposed that Congress be authorized to cut off such aid shipments if they did not promote “the collective capacity to resist attack.” Both senators stressed “…the supremacy of the North Atlantic Treaty. Its

procedures for collective defense must prevail against any bi-lateral or national system to be inaugurated now” (emphasis added).33 Burden Sharing, Balancing, and Collective Security

Both U.S. decisionmakers and Congress were convinced that a regional, multilateral arrangement in Europe could resolve this dilemma by allowing the European states to pool their resources together and therefore to provide the U.S with meaningful burden sharing. However, there was a twist to this logic. For the pooling effect to work, West Germany had to be a member of this European group. If Europe was ever to develop the capability to defend itself, there was no alternative to recruiting West German units and mobilizing German productive capabilities.34 “Without Germany,” Truman argued, “the defense of Europe was a rear-guard action on the shores of the Atlantic Ocean. With Germany, there could be a defense in depth, powerful enough to offer effective resistance to aggression from the East.”35 West Germany’s centrality in American eyes became even more apparent later when the administration conditioned the stationing of U.S. troops in Europe on West German rearmament. However, strengthening West Germany and even more so, allowing its rearmament, were bound to meet strong European objections, mainly from France. If they were to reincorporate West Germany into

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Europe, the Americans had to provide security guarantees to France and others against West Germany. It is at this point that a multilateral arrangement became very attractive. It was the only form

of commitment that could simultaneously create a framework for pooling the resources of all the West European states (including West Germany), thus providing a tool to balance the Soviet threat with maximal burden sharing, and create a framework to contain any potential German threat. This was the only way to reincorporate West

Germany into Europe while reassuring the French.36 AIl this could not have been achieved through bilateral arrangements. This situation strongly resembles the one the U.S. faced in Asia in 1950, as described in chapter 3. There a regional pact was considered as a serving the dual goal of containing Japan and containing communism in Asia. The different outcomes in the two cases reflect the ways in which these goals interacted with regional power realities and with the potential regional partners’ preferences, as discussed later. Balancing and U.S. “Liberal-Democratic Internationalism” As the Cold War developed, Americans had to come to terms with the decreasing likelihood of realizing Roosevelt’s vision of a multilateral postwar order with the United Nations as its centerpiece. A regionalmultilateral arrangement in Europe had the advantage of reconciling the need to balance the Soviet threat and play “power politics” with the traditional U.S. worldview, which advocated a Wilsonian world order and rejected traditional power politics. At the same time, however, the NAT also symbolized a major break from the U.S. tradition of avoiding entangling alliances with the European Old World, a tradition dating back to Washington’s Farewell Address. Given the pressure to expand commitments, though, this strategy appeared more compatible with the U.S. normative agenda. NATO, together with the Marshall Plan, promised to transform the “old” European order, making it less warprone and, ultimately, making Europe more like the U.S.37 In the debate in Congress about the NAT, the administration had to work hard to establish that the NAT was not a traditional alliance. It tried to downplay the military-aid aspect and stress the need to defend a common Western heritage against a Communist threat.38 The administration could get away with this argument only thanks to the multilateral form of this security commitment. It would have been difficult to sell Congress a set of bilateral security arrangements with European states as anything other than a tra ditional military alliance. In Senator Vandenberg’s view, a bilateral approach where each state would come to the U.S. with its requests would have put


the U.S. “in the position of a second Soviet trying to set up another string of satellites.”39 A regional-multilateral arrangement was also more compatible than bilateral alliances with the UN system. Most Americans saw the United Nations as a symbol of the idealism in their country’s commitment to internationalism. U.S. statesmen in the late 1940s, therefore, had to tread carefully in proposing a regional pact that might seem to be outside the UN and hence might be perceived as a return to old-style power politics.40 The ideal, however, clashed with the harsh realities of the Cold War, which immobilized the Security Council. The NAT, as a regional-multilateral arrangement, was considered second best; it was seen as legitimate under article 51 of the UN Charter and, in fact, as rescuing the faltering UN system. This compromise was reflected in the Vandenberg Resolution, which accepted regional cooperation arrangements as a solution that was “within the Charter but outside the veto”. An arrangement that seemed to advance European integration appealed to idealistic Americans because it reflected their own history of federalism, and to less idealistic ones because it appeared as an effective response to the Soviet challenge.41 The notion of transforming European power politics, as we shall see in chapter 8, also played a role here. In a meeting with Secretary Marshall and with Lovett, Dulles stressed that the agreement would lead to ultimate union in Western Europe, and that “any attempt to freeze the Western European countries in their old habits of thought, association and economics would be futile and…against our national interests.”42 Again, a regional-multilateral arrangement offered a compromise between promoting a Wilsonian world order and more “Realist” goals. These basic ideas about how the world should be organized affected the administration and Congress’s behavior in both the Pacific and European fronts. However, there was an interesting difference in emphasis. In the Pacific Pact case there is no mention of any debate within the administration or Congress about whether bilateral arrangements are “alliances” and as such unwelcome to the U.S., nor any discussion of the regional option as advancing the U.S. normative vision as such. This silence can be explained by two factors. First, the tradition of “no entangling alliances” and critique of power politics developed in the European context. It was European power politics that the Americans detested and into which they refused to be dragged. Second, there was the matter of timing. By the time the Pacific Pact was being discussed, the Cold War in Europe was already a fact of life and there was a growing realization that power politics were inevitabely part of the game. By the time that SEATO was

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debated, Cold War rhetoric was at its peak and power politics a regular practice. Another factor that stemmed from the concept of liberal-democratic internationalism, namely the American anticolonial and antiimperialist tradition played a central role in the Pacific but not in the European arena. REGIONAL POWER DISPARITIES, POLICY GOALS, AND THE REGIONAL STRATEGY A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. Power Disparities between the Great Power and the Regional States In Asia, the Korean War and the perceived growing Communist threat forced the U.S. into a more active role despite its reluctance. In the Manila Pact case this dilemma was even more pronounced, as evident in Eisenhower’s writings. In Europe as well, we witness the same U.S. reluctance to acknowledge the implications of its hegemonic status. Yet the whole dynamics of the deepening U.S. involvement in Europe stemmed from its hegemonic position. It was, for one thing, the only power able in the short run to reassure the Europeans about Soviet encroachment. To change these power realities it had to revive Germany, yet at the same time it was also the only power that could reassure its weak European allies about possible German aggression.43 Both in Asia and in Europe, then, the combination of its power preponderance and of bipolarity forced the U.S. to expand its regional commitments.44 Such expanded commitments, as I argued earlier, are the prerequisite condition for a regional solution to become viable. In the Pacific Pact case, although the power disparity between the U.S. and its potential Asian allies was very wide, once the goal conflict arose, Congress persistently ignored the power realities and kept advocating a multilateral framework for any U.S. commitment in Asia. This is partly because, while the broad power disparity made meaningful burden sharing less likely, it did make it possible for both internationalists and neo-isolationists in the U.S. to support the regional solution, each for their own reasons. In the SEATO case as well, there was congressional interest in a regional solution for solving


the burden-sharing problem, despite the fact that the wide power disparities would have made this feasible only in the long run. In the NAT case, the power disparity was favorable to a regional solution from the outset. The theory posits that if the power disparity between the state and its allies is moderate, burden sharing is more likely and a regional strategy becomes more attractive because of the pooling effect. The U.S., indeed, hoped to retreat from Europe once it was “back on its feet” as a united Western Europe. I also maintained that as the power disparity with allies is reduced, the cost of a regional-multilateral strategy, in terms of constraining the hegemon’s freedom of action, rises. Indeed, in the discussions about a Pacific Pact and later about SEATO, little criticism came from the Republican neo-isolationists. This, however, was not possible in the European case, where power disparities were narrower. As Kaplan aptly puts it: “Asia was never the bugbear of isolationists that France or Britain represented. It seemed to have fitted into a different covenant where America could serve as protector of exploited Asians against the machinations of European imperialists.”45 In hindsight this appears sadly ironic, since the United States’ most costly postwar entanglements, Korea and Vietnam, were in Asia, not Europe. In any case, in Europe the regional strategy could not serve so neatly as a compromise between internationalists and unilateralists. The latter indeed objected to the signing of the NAT, and later fought hard against the sending of U.S. troops to Europe in what came to be known as “the great debate.” Yet the regional-multilateral option emerged triumphant from this debate, because despite the higher risk of entanglement, the narrower power disparities also made successful burden sharing much more likely. The different power disparities in Asia and Europe help explain the difference in outcomes: in Asia the wide power disparity meant that meaningful burden sharing, at least in the short run, was unlikely regardless of the form of cooperation. This being said, a still more compelling explanation for the different final outcomes lies in the power disparities within the respective regions. Power disparities within the region A regional strategy will be most attractive if the power disparities among the potential regional partners are narrow, and least attractive if these power disparities are very wide.

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The rationale linking multilateral strategies and burden sharing was that by cooperating in a multilateral framework, rather than through a set of bilateral arrangements, the U.S. (the great power) could encourage its allies to cooperate with each other and, by combining their resources, provide bet ter burden sharing, at least in the long run. In the Pacific Pact case, since Japan was the only industrialized state in the region, such a pooling effect was not very significant, and in terms of burden sharing the regional option had little advantage over a set of bilateral arrangements. The situation was different in Western Europe, where three former great powers, France, Britain, and Germany, were attempting to reconstruct themselves from the shambles of war. None of these states was strong enough to play a great power role by itself, yet each was (potentially) strong enough to play an important role in the creation of a new, European pole. There was therefore much to be gained from a regional-multilateral arrangement that would coordinate efforts and pool their capabilities together. In each region, one particular state had a crucial role to play: Japan and West Germany were to become the "workshop of Asia" and the "workshop of Europe," respectively.46 In both regions the desire to create a regionalmultilateral arrangement at least partly stemmed from the need to reintegrate these two "bad boys" into the regional and international systems. Both in the Asian and European cases, the U.S. had to assure its allies not only against the Soviet-Communist threat but also against the potential resurgence of Japan and Germany, respectively. However, only in Europe did the regionalmultilateral solution prevail. The main reason lies in the power disparities within the respective regions. In Europe, the narrower power disparities among the allies meant there was much to gain from reintegrating Germany into European defense. In Asia, the wide disparities made the reintegration of Japan less attractive; regional cooperation was pursued less for the purpose of achieving the pooling effect and more as a means of enabling Japanese rearmament. The final "hub and spokes" alliance structure could achieve that goal as well.47 PERCEPTION OF PARTNERS' PREFERENCES AND ITS IMPACT ON STRATEGY CHOICE A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option.


With the exception of SEATO, the U.S. was only willing to join a regional-multilateral arrangement once the regional partners had proved their genuine interest in cooperating with each other. This was the litmus test for establishing that its partners were not just joining the arrangement as a way of getting benefits from the U.S. that they could not have obtained on a bilateral level. The European allies did much better than their Asian coun terparts in passing that test. The initiative for the Western Union, the forerunner of the NAT, came not from the U.S. but from Britain. Despite an initially cool U.S. reaction, Britain, France, and the Benelux countries went ahead and created the Western Union. On March 15, 1948, the Five-Power Treaty was signed in Brussels, and in September a military organization of the Brussels powers was created.48 Such steps were necessary to convince a suspicious Congress that the European allies were serious about helping themselves and not just looking to free-ride on U.S. aid. In other words, they proved that the U.S. and European goals in a regional-multilateral arrangement were compatible.49 Those goals were not, however, identical. The regional arrangement also provided a means to reconcile them insofar as they were different. Kaplan argues that the Europeans were not interested at the time in European integration; they used this concept mainly to convince the U.S. isolationists that they should be helped.50 The British goal was to secure U.S. involvement in regional European defense; the form of the arrangement was a secondary issue for them.51 Bevin, in fact, initially proposed the creation of a loose Western Union, buttressed by a bilateral defense arrangement with the United States.52 The Americans rejected this option.53 When he initially approached the Benelux countries and France in early 1948, Bevin proposed a series of bilateral defense arrangements, following the pattern of the Dunkirk Treaty. At this early stage the Americans tried to steer him away from this form of arrangement and to call his attention to the Rio Treaty It would be preferable, they argued, to formulate a treaty against any aggression, rather than just German aggression. This preference reflected the U.S. desire to use this arrangement for the dual goal of balancing the Communist threat and containing Germany. The French, for their part, objected to this approach.54 This is because France’s initial goal was to balance against the potential German threat. The Dunkirk Treaty that France and Britain signed in 1947 was explicitly antiGerman, and the initial form that the Western Union was to take was based on that treaty. The U.S., in light of West Germany’s importance to the Western camp for balancing the Soviet threat, obviously rejected this form and advocated a regional collective security arrangement that would both allow West

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Germany’s reintegration into Europe and also control it. The French, not surprisingly, strongly opposed this idea.55 A regional-multilateral arrangement with U.S. participation was the best means to reconcile these conflicting goals. Since the multilateral treaty formula regarded an attack on one as an attack on all, including an attack by one member against another, it could avoid the issue of designing a treaty specif ically against Germany or against the Soviet Union; hence it could reconcile the Dunkirk Treaty with U.S. concern about the Soviet threat.56 A set of bilateral arrangements could not have achieved this dual goal, nor would a Congress so concerned about burden sharing have accepted it. A unilateral U.S. commitment to the defense of Europe, in the form of a presidential declaration, was unacceptable to the Europeans, who were extremely wary of the U.S. domestic political situation. A unilateral commitment was also problematic for the U.S. in terms of burden sharing, since it meant the U.S. would carry most of the defense burden.57 The regional partners, then, were clearly interested in a regional defense strategy that would include the United States. In terms of the compatibility of their goals to those of the U.S., despite the various conflicting goals I have noted, there was an overall strong congruency of interests that made the Europeans much more comfortable than the Asians with a regional-multilateral arrangement with the United States.58 Few Europeans in 1949 were distressed by the fact that beneath the formal egalitarianism of the alliance lay a fundamental asymmetry.59 Conversely, as both the Pacific Pact and Manila Pact cases showed, the reluctance of most of the new, postcolonial states of Asia to join a multilateral arrangement with the U.S. was strongly influenced by their fear of a new U.S. imperialism. The U.S., for its part, had little apprehension that the West Europeans would exploit the new arrangement to advance goals contrary to American ones.60 This lack of concern may be closely linked to the democratic nature of all the parties involved. RisseKappen describes the sense of common purpose between the U.S. and the West European allies. By helping the Europeans, the Americans believed they were helping to strengthen their own Anglo-Saxon cultural heritage. Both Roosevelt and Truman considered Western Europe vital to U.S. security interests, a cornerstone of the liberal world order that they envisaged.61 All parties agreed that the arrangement should be more than a security arrangement alone, and also “should serve both to preserve the common civilization and to promote its development by increasing the collaboration between the signatories.”62 In the two Asian cases, there was no such basic harmony of interests. The lack of a common heritage or common domestic


institutional structure presumably contributed to the regional states’ suspicions about U.S. intentions—an issue that deserves more thorough exploration. The goals that the NAT was to advance, and especially the logic of the pooling effect and its significance for burden sharing, are expressed even more clearly in the Eisenhower administration’s policy toward the creation of the EDC. THE EUROPEAN DEFENSE COMMUNITY (EDC) HISTORICAL OVERVIEW Unlike the Pacific Pact, the Manila Pact, or the NAT, the EDC was not supposed to include the United States. It was to be a purely regional arrangement, a European army with forces from France, West Germany, Italy, and the Benelux countries. The EDC, however, is worth exploring here for several reasons. First, although the EDC initiative originated in France in the form of the Pleven Plan, it soon came to be seen as an American initiative. By the time the Eisenhower administration took office, the EDC was clearly a top U.S. priority, and French unwillingness to ratify it became a major source of tension. Second, although the EDC was to be a purely European army, it was meant to be part of NATO and to come under the control of the U.S. Supreme Allied Command of Europe (SACEUR). The U.S. interest in the EDC stemmed from factors very similar to those that guided its policy toward NATO. The EDC project, as an attempt to establish a regional-multilateral cooperation arrangement, was much more ambitious than the NAT because it aimed at creating real supranational institutions, a single defense ministry to lead a single European army.63 Moreover, in terms of the goals that the U.S. hoped to achieve, the EDC initiative bears greater similarity to the Pacific Pact initiative than to either the Manila Pact or the NAT. Both the EDC and the Pacific Pact were aimed mainly at reintegrating the potential regional threats, West Germany and Japan, into their regions. And perhaps not surprisingly, both projects met serious resistance from other regional allies and failed to materialize. U.S. decisionmakers regarded the NA, as well, as a framework that would allow Germany’s future political-military reincorporation into Europe. However, at the time the NAT was negotiated and signed, West Germany’s inclusion in the arrangement was not an issue for serious discussion. The Korean War pointed to the necessity of rearming West Germany and led to U.S. pressures on the Europeans

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to accept such an eventuality. The initial U.S. idea was to create a West German military contingent that would contribute to NATO. In October 1950, as a response to U.S. pressures, the French put forth the Pleven Plan, which envisaged a special European military force with a single High Command and organization, common equipment and financing, all under the control of a single supranational authority, into which West German units could be progressively integrated.64 The U.S. reaction was lukewarm. Many saw the Pleven Plan as another French delaying tactic to avoid the issue of German rearmament.65 Negotiations about the plan continued in Paris for a long time. However, the major shift in U.S. policy away from West German rearmament and toward the European-army idea came only in July 1951, once the new U.S. commander of SACEUR, Eisenhower, came out publicly in support of the idea.66 Eisenhower played a major role in the unfolding of the EDC, first as general and later as president. As the U.S. came to embrace the EDC as the best solution for Europe’s problems, the European army came to be seen in Europe as a U.S. project, and in France this also signified an “anti-French” solution to the German rearmament problem. In the Lisbon Conference of February 20–25, 1952, the U.S. succeeded to get the NATO Council’s endorsement for the EDC. This marked the high point in transforming the EDC from a European to a U.S. endeavor, as well as the zenith of the EDC’s fortunes.67 On May 9, 1952, the draft treaty for the EDC was initialed. However, it was already evident that ratification of the treaty in the French National Assembly would be extremely difficult.68 Indeed, despite ongoing U.S. pressure and Dulles’s famous threat of an “agonizing reappraisal” of U.S. European policy should the treaty not be ratified, on August 27, 1954, the French Assembly rejected the EDC on a procedural motion. Why did the U.S. come to support the European-army idea so vehemently? MULTIPLE CONFLICTING GOALS AND STRATEGY CHOICE Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost. The central goal of the EDC was to enable a West German military contribution to the defense of Europe. As noted before, a West German role in European defense was crucial to the fulfillment of two U.S.


goals: to balance effectively against the Soviet threat in Europe, and to induce maximal European burden sharing in the process. As we saw in the Manila Pact chapter, the cost dilemma intensified under the Eisenhower administration, due to its domestic budgetary constraints. Eisenhower concluded that if the U.S. had to reduce its share in European defense, this would have to be offset by West German participation.69 This is why greater pressure was exerted on the Europeans to ratify the EDC during the Eisenhower presidency. Several scholars agree that the real turning point in U.S. policy toward the EDC was Eisenhower’s endorsement of the project. As a renowned general and the first commander of SACEUR, his views carried much weight, and they influenced U.S. support for the EDC during the Truman administration as well.70 Despite his initial cool reaction to the Pleven Plan, Eisenhower began to seriously consider a regional approach to European security. On June 11, 1951, he wrote: I am coming to the conclusion that Europe’s security problem is never going to be solved satisfactorily until there exists a United States of Europe, to include all countries now in NATO…. It seems scarcely necessary to enumerate the problems that arise out of or are exaggerated by the division of Western Europe into so many sovereign nations. Norway is short of manpower, Italy way over. Many others have none at all. France and Germany (the key powers in the region) are on opposite sides in many problems because of French hatred for the Boche as well as the fear of a restored West Germany…1 think that the real and

bitter problems today would instantly come within the limits of capability in solving them, if we had this single government.

(emphasis added)71

And on November 24, 1951, he wrote more explicitly: “America has spent billions in ECA and is spending more billions in MDAP, and much of it will be sheer waste unless Europe coalesces…. To help this Americans could afford to spend a lot, because we’d get something successful, strong, sturdy.”72 The logic of the pooling effect was expressed in a 1951 National Planning Association (NPA) pamphlet, which argued that only the U.S. and Britain were strong enough to be able to work on an intergovernmental basis, and that no continental country had the economic capability to equip its forces rapidly. Those countries could only contribute forces to NATO as a loose assortment of small, unspecialized national units, each supplied separately and inadequately from its own small, unspecialized arms industry. The only possible solution, then, was a supranational continental military

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organization.73 Similarly, the State Department and the Mutual Security Agency hoped that a strong EDC Commissariat would help centralize military aid to Europe, hence making U.S. aid more effective.74 Congress as well exhibited strong support for European military integration. The Richard amendment to the 1952 Mutual Security Program appropriations for 1953–1954 stated that half of the funds for European military assistance should be channeled to the EDC or its members, and that should the EDC fail to materialize, the funds would not be released unless Congress reconsidered the issue.75 The EDC, and the vision of a United Europe that it represented, seemed very promising in terms of reducing the U.S. defense burden in Europe. Dulles reflected on this in February 1953, insisting that “Europe itself furnish the preponderant strength to insure its own security,” and that this was only possible “if the resources of the individual nations of Western Europe [were] joined together.”76 Three years earlier he asserted that: “Merely to rebuild small, unbalanced national military establishments in each of these countries would be a waste of money and effort. The only chance of getting worthwhile results out of the limited resources available was to have a coordinated program under which each participant would carry a particular responsibility allotted it under a common defense program.”77 Collective Security and American ideals Although the EDC was important to the U.S. for burden-sharing purposes, it was also a means of reintegrating West Germany into Europe, in the face of French fears. As such, it constituted a real attempt to create an institution of regional collective security (more ambitious than NATO in light of its proposed supranational characteristics). Both Eisenhower and Dulles strongly supported the collective security principle, and this reinforced their support for the EDC.78 Eisenhower believed that an organization of NATO forces under the EDC plan would minimize or make impossible an independent German military resurgence.79 Eisenhower’s confidence in the collective principle later found expression in his attempt to create an international nuclear stockpile and to share responsibility for nuclear weapons with the European allies.80 Dulles just as ardently supported the EDC scheme. In War or Peace, he maintained that “Disunity alone prevents Western Europe from being a great—perhaps the greatest—distinctive area of spiritual, intellectual, economic and military power,” and that “If


there were a real political unity of Western Europe for common defense, then Germans, individually, could be part of that defense. We cannot risk a German national army. We might risk having Germans individually part of a European army.”81 He believed that the EDC’s supranational character would promote not only military integration but also European political and economic integration. Institutionalizing the Franco-German rapprochement was “the indispensable foundation for lasting peace.”82 Dulles’s strong support for this regional-multilateral solution was grounded in his belief that collective security reflected a U.S. tradition. He compared the concept of “collective self-defense” to the creation of the U.S. itself—a union of thirteen states that came about when they sought collective security.83 (This domestic analogy also played a role in U.S. support for the Marshall Plan, as we shall see in chapter 8.) Indeed, throughout the long, eventually unsuccessful negotiations on ratifying the EDC, the Americans refused to consider seriously any other means for German rearmament. The final arrangement of German rearmament through a Western European Union (WEU) was a British plan.84 Thus, the EDC presented an opportunity for the U.S. to fulfill different goals simultaneously. Above and beyond burden sharing and the rearming of Germany, it constituted an attempt to create a collective security framework for Europe, an appealing notion for U.S. decisionmakers at the time. The EDC initiative was even more appealing to the Americans than NATO because it did not require a new U.S. military commitment. It is no wonder that Congress overwhelmingly supported the EDC.85 The conflict that arose in the NATO case between the benefits of a regional approach and the constraints it imposed on U.S. freedom of action did not come into play here. By early 1952, everyone in the U.S., including the press, seemed to be reciting the countless benefits of West European integration.86 Interestingly, however, there was no consideration at all of the possible risk that a united Europe might become an independent power center with interests different from U.S. ones. This point is related to the perception of allies’ interests, as will be discussed later. THE IMPACT OF REGIONAL POWER DISPARITIES A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow.

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Despite the creation of the NAT, the broad power disparity between the U.S. and its allies continued to force the U.S. to carry most of the defense burden in Europe. The EDC, like the NAT, was an attempt to resolve the “hegemon’s dilemma” stemming from its preponderant power position. Still, the regional states were perceived to be strong enough (once revived) to collectively contribute to meaningful burden sharing. As we saw, both Eisenhower and Dulles believed that the pooling of resources was the only possible way to attain significant support from the allies. Eisenhower’s confidence in that solution reflected his belief in the traditional role of Britain, France, and Germany as great powers in world politics.87 Yet Eisenhower also believed, as we saw, that burden sharing was a viable option in cooperation with the very weak Southeast Asian states, at least in the long run. A main factor that undermined the EDC’s chances was the introduction of Eisenhower’s “massive retaliation” military strategy. This strategy stressed the role of nuclear weapons in deterring a Soviet attack. Once nuclear weapons became the key power resource, the power disparity between the U.S. and its allies (that is, between a nuclear and nonnuclear states) was perceived to be very wide indeed. In this case as in the Asian one, the wide disparity decreased the allies’ willingness to organize for their own defense. McGeehan argues that the massive-retaliation doctrine convinced the Europeans that U.S. nuclear weapons, not West German divisions, were the solution to Europe’s military problems; this, in turn, made the EDC seem less necessary.88 The failure of the EDC also partially reflects the importance of U.S. commitment for any regional security arrangement. Without U.S. active membership, it was difficult to overcome the Franco-German animosities. Both France and West Germany kept an eye on the U.S. policy toward the EDC. The West Germans in fact only began to show signs of real interest in the project once the Americans came to publicly support it.89 France, on the other hand, constantly demanded more direct guarantees from the U.S. (and Britain) that West Germany would not unilaterally withdraw from the EDC. The importance of the U.S. role became even more evident when the Europeans refused to proceed with the EDC during the U.S. election year until they got a better sense of what future U.S. policy toward Europe would be.90 Thus, despite the U.S. desire to encourage greater independent European initiative, its power preponderance made it an essential player in any such project. It is interesting that the final WEU solution came about only when Britain decided to commit itself to continental defense. In that case, the British took the place of the


Americans in providing France with its desired guarantee against West Germany. PARTNERS’ PREFERENCES AND THE REGIONAL OPTION A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. The final, American, version of the EDC treaty differed from the original French proposal. Its supranational element was weaker, and the West German units were to be incorporated into it as divisions. The French initially stressed the need to incorporate into the European army national units at the smallest unit size possible, clearly not at the division level. The larger the West German units, the more they would resemble a real, national German army exactly what the French wished to avoid. Both in the Pacific Pact case and in the NAT case, the U.S. was careful not to initiate any regional arrangements but to follow initiatives from within the region. This was meant to ensure that the allies were indeed interested in developing a regional security arrangement and not just in receiving U.S. aid that they could not have secured otherwise. Although the EDC case began in a similar manner, with the French proposal for the Pleven Plan, it developed very differently, especially during the Eisenhower-Dulles period. This marked the first time that the Americans took initiative and became assertive with the European allies. In fact, they seem to have ignored or at least underestimated the intensity of their partners’ preferences. As described in the section on the NAT, the U.S. and France held very different threat perceptions. The easing of the Cold War, signified by Stalin’s death in March 1953, the Korean truce in July, and the apparent diminution of Soviet pressure on Western Europe, created a lower threat perception among the European allies. That, in turn, further weakened the chances of the EDC being ratified in France.91 David Bruce, the U.S. special representative for the EDC project, complained a month after Stalin’s death that the Soviet “peace offensive” was spoiling his effort to induce ratification of the EDC. He claimed that the easing of East-West tensions now made it more difficult to assure sufficient votes in the French National Assembly.92 Similar threat perception, therefore, was important in making U.S. and allies’ interests compatible, and it did not obtain here.

FROM NAT TO EDC 105

West Germany’s goals were more compatible with the American ones. The West Germans were mostly interested in regaining their sovereign status, and saw joining the EDC as a means to this. Hence, their two basic conditions for rearmament were restoration of sovereignty, and the equality of the West German forces in the new European army.93 Apart from France and West Germany, there was little support for the EDC initiative in Europe. The Benelux countries objected to the supranational nature of the proposed European army, fearing it would end up being dominated by either France or West Germany. The British, while endorsing the EDC as the only way of solving the German problem, refused to participate in any European federation project. This was especially detrimental since both France and the Benelux states saw British participation as essential.94 Britain’s main goal, however, was not to faster European unity but to cultivate its special bilateral relations with the United States.95 Although the Americans regretted the British policy and viewed it as a major hindrance to the success of the European army and other European integration schemes, they did not regard a British role as crucial to the EDC. After reporting his disappointing conversation with Churchill on the matter, Eisenhower concluded that Churchill’s views, while unfortunate, did not matter much since all agreed that "the attempt to make Great Britain a participant in the European army project would only slow the matter up."96 Whereas the Truman administration preferred not to exert much pressure on the allies, the Eisenhower administration was much more aggressive. As early as 1950, Dulles argued that the Truman administration's hands-off policy toward European integration was not working and that "it now seems clear that Western European unity will not have any early reality unless strong pressure is exerted by us."97 Hence it is not surprising that when as secretary of state he faced French reluctance to ratify the EDC treaty, he threatened to conduct an "agonizing reappraisal" of U.S. policy in Europe if the EDC was not ratified. In this case, then, instead of seeking reassurances that its allies' interest in a regional arrangement was genuine, the U.S. pressured its allies to accept such an arrangement. Although Dulles's agonizing-reappraisal threat backfired, the failure only reinforced the logic that had guided earlier U.S. policy toward regional arrangements. First, the U.S. reluctance to implement its threat once the EDC was rejected showed that the U.S. was dependent on its allies and could not really afford an "agonizing reappraisal." Following the EDC's rejection by the French Assembly, an angry Dulles suggested either writing France off as a partner in the defense of the West or replacing it with a bilateral alliance with


West Germany. Congress appeared to agree, since it had given the president the option of unilaterally granting sovereignty to West Germany in the event of the EDC's collapse. However, none of these threats were carried out.98 Duchin maintains that Dulles's agonizingreappraisal speech was only a bluff, and that the U.S. never seriously considered abandoning European defense.99 The bottom line was that the unilateral alternative was not attractive enough and could not have achieved the American goals. This reinforces the point that when the goal is to create a framework of regional cooperation, then by the very nature of the arrangement allies' preferences become crucial and the great power's leverage decreases. Second, this episode indicated that too much pressure could lead to adverse consequences. The "agonizing reappraisal" only irritated the French and created much ill feeling toward the U.S. in Europe.100 As Aron points out, "The satisfaction of resisting American pressure was not the least reason for voting against the E.D.C."101 Learning its lesson from this failure, the U.S. returned to its original approach of not initiating such arrangements and only supporting European initiatives. It was Britain that came up with a solution to the problem of German rearmament, in the form of the WEU, of which West Germany was to be a member. Even Eisenhower conceded that the key factor that eventually convinced the French to agree to German rearmament was the new and dramatic British commitment to maintain its current forces on the continent for as long as the majority of the Brussels Treaty powers desired.102 In the context of the NAT case, I argued that a regionalmultilateral arrangement was attractive because it was able to reconcile partners’ different goals. The EDC was unable to do so. Both the EDC and the Pacific Pact initiatives, in fact, stressed the goal of containing a potential threat from within the region; in both cases this U.S. goal was less convincing to the regional allies. I pointed out earlier that of the various goals that regional arrangements can serve, the collective security goal is the most ambitious. These two cases indeed show that when this is a central goal, a regional-multilateral arrangement becomes more difficult to achieve. As a collective security arrangement, it poses much greater risks for the smaller regional allies. In the other two cases of NATO and the Manila Pact, the collective security goal was less dominant and therefore less detrimental. The findings of the two cases examined in this chapter are summarized in Table 5–1.

FROM NAT TO EDC 107

Table 5.1. The NAT and EDC Cases Compared.

CONCLUSION: REGIONAL SECURITY IN ASIA AND EUROPE Despite the obvious differences between the situations in Asia and in Europe, U.S. policy toward regional security cooperation followed remarkably similar lines. In both the Pacific Pact and NAT cases, the


U.S. initially responded to regional calls by shifting the burden of initiative to the regional arena. Once some form of commitment became inevitable, the U.S. began more actively promoting a regional arrangement. In both cases the initial U.S. preference was to minimize commitments, and only the growing threat perception and tightening of bipolarity forced it to expand them, thus creating the goal conflict necessary to make a multilateral arrangement viable. In the SEATO case as well, the U.S. went from viewing Indochina as a French problem to trying to organize a United Action of the major Western powers to finally organizing the Manila Pact under U.S. leadership. In Asia, the U.S. sustained the hope of minimizing commitments for a longer time than in Europe. The dilemma of reconciling expanded commitments with the concern for minimizing costs did not truly emerge there until the Korean War. The war highlighted the need in Asia to rearm Japan and in Europe to rearm Germany. That, in turn, created the dual goal of balancing external threat while containing threat from within the region. Emerging bipolarity, together with U.S. hegemony, explained the initial decision to join the cooperative endeavor, though not its form. Also similar in both regions was the interaction between the goals of burden sharing, balancing, and collective security (or binding). In both regions the U.S. interest in pursuing all three goals was crucial in making the regional-multilateral option attractive, at least for Congress, even though in Asia it was not ultimately pursued. In Europe the challenge was to deal simultaneously with the Communist and potential German threats. In Asia the challenge was to deal simultaneously with the Communist and potential Japanese threats. In both regions a regional option was examined as the best means to overcome this conflict. These findings corroborate my point that U.S. policymakers’ recurrent fascination with multilateral solutions can be explained by this need to pursue several goals simultaneously. The SEATO case did not pose the balancing vs. collective security dilemma, but did reflect the U.S. desire to balance the Communist threat at the lowest possible cost. The lure of future burden sharing with the regional states was strong. Both the SEATO and EDC cases highlight the intense dilemma that the Eisenhower administration sought to resolve, namely, how to pursue an assertive policy toward the Soviet Union while advancing the domestic goal of balancing the national budget. Although the desire to reduce foreign policy costs is always a factor in decisionmaking, these two cases in particular indicate the extent to which this concern can become politically salient.

FROM NAT TO EDC 109

The different outcomes in the Pacific Pact and NAT cases mainly reflected how the relevant goals interacted with power realities. In the Asian case, the power disparities between the U.S. and the region were such that a regional-multilateral arrangement had little advantage over the bilateral alternative. In Europe, the narrower disparities pointed to more substantial burden sharing. Power disparities within each region also played an important role in determining the final outcomes. In Asia, the wide power disparities made Japan’s reintegration less necessary than that of West Germany in Europe, and made the other regional states unwilling to join a regional arrangement with Japan. Finally, both the Asian and European cases showed that allies’ preferences play an important role. There is no doubt that the initiatives taken by the Europeans themselves (and not taken in Asia) strongly influenced the U.S. decision to support a regional security arrangement. The EDC case, in which the EDC failed to be ratified in France despite (and partly because of) severe U.S. pressure, highlighted the importance of allies’ preferences. In the SEATO case, the U.S. did not seriously consider the regional partners’ goals. Consequently, while the pact was indeed signed, it did not prove effective in the long run. The second half of the book now moves on to examine how the same logic has played itself out in the making of American cooperation strategies vis a vis Asia and Europe in the economic field.

Chapter 6 Reviving Postwar Japanese Trade— American Strategies during the Truman and Eisenhower Administrations

Not long after the occupation of Japan began, the U.S. began to consider the necessity of reviving Japan’s economy in order to reduce the high costs of the occupation, and to strengthen Japan as an important ally in the struggle against Communism in Asia. The revival of Japan’s economy depended on the revival of its international trade. This chapter examines the American attempts to pursue both a multilateral and a regional strategy to revive Japanese international trade, and the eventual American reliance on a bilateral strategy. I explore the logic behind the changing U.S. preferences among bilateral, regional, and multilateral strategies by applying the same framework used in the security cases. The questions I examine are, therefore, the same: (1) What were the U.S. goals, and did they conflict with one another? (2) How useful were the different cooperation strategies in addressing these goals and reconciling them? (3) How did the regional power disparities, if any, affect the value of different strategies? (4) How did the goals and interests of the United States’ partners affect, if at all, its policy choices? THE QUESTION OF JAPAN’S ACCESSION TO THE GATT The best way to expand Japan’s foreign trade was to allow it to become a member of the General Agreement on Tariff and Trade (GATT) and enjoy the Most Favored Nation (MFN) status. The U.S. sought Japanese accession to the GATT from as early as 1949, although the main effort began in 1952. The Japanese themselves also tried to gain entrance to the GATT, but their eventual accession came about thanks to the relentless U.S. efforts. In 1949 the U.S. formally proposed introducing into the agenda of the Contracting Parties’ session the question of extending MFN treatment to Japan, and in 1950 it asked to discuss the question; but it encountered overwhelming opposition. In 1951, Japan formally requested to send

REVIVING POSTWAR JAPANESE TRADE 111

an observer to the next session of the Contracting Parties. Then in July 1952, under strong domestic political pressure, Japan formally applied for permission to negotiate with other countries for accession to the General Agreement.1 Despite much opposition, this request was finally approved. It was concluded that the question of Japan’s accession should be linked to a new round of tariff negotiations (not foreseen in the near future). In fall 1953 Japan proposed that it be accorded “provisional accession,” pending the next round of tariff negotiations, in exchange for its agreement to bind the duties affecting most of its imports. In a compromise solution, Japan was invited to the sessions of the Contracting Parties. A “declaration” was presented, open to the signature of any state that wished to sign. It stated that pending formal accession by Japan and without prejudice to their freedom of action on the question of later full accession, the signatories’ commercial relations with Japan would be based on the General Agreement. This declaration gave Japan what it wanted, but it applied only to those who had signed it. By July 1954, twenty-four of the thirty-four Contracting Parties had signed the declaration, but major actors such as Britain and France had not. Finally, in spring 1955, Japan held tariff negotiations with seventeen of the Contracting Parties, and in September it became a Contracting Party. This achievement, however, was greatly undermined by the fact that Britain, France, and twelve other member states immediately invoked article 35 of the GATT,2 making the General Agreement inapplica ble to their relations with Japan.3 IN SEARCH OF REGIONAL SOLUTIONS Although the multilateral strategy was never abandoned, the problems it entailed made it necessary to simultaneously pursue a different strategy. The regional solution of promoting Japan’s foreign trade through its reintegration into Southeast Asia was one such alternative. From as early as 1946 various ideas were developed to try and promote Japanese trade with Southeast Asia, to the extent, as some may argue, of attempting to recreate Japan’s prewar Coprosperity sphere in Asia. Already in November 1946, State Department officials discussed an East Asian Regional Economic Plan, but at the time such ideas seemed too controversial in the aftermath of the war. In 1947, both the State and Defense departments emphasized the importance of encouraging Japanese trade with Southeast Asia.4 To this end the U.S. in summer 1948 supported the Sterling Area Trade Agreement, signed by Britain, Australia, India, New Zealand, and South Africa. This


agreement was followed by an arrangement according to which trade to the minimum value of £55,000,000 sterling would be conducted between these countries and occupied Japan from July 1, 1948, to June 30, 1949. General MacArthur pointed out that an important benefit of this arrangement was that “it affords greater elasticity for Japan’s ‘sterling area’ trade, in that it is a multilateral arrangement between occupied Japan on the one hand, and on the other the United Kingdom and the whole Colonial Empire…all of which are important suppliers of Japan’s needs in raw materials, as well as traditional markets for her products.”5 The Draper mission to Japan in April 1948 called for Japan’s rehabilitation through, among other things, a rapid expansion of its foreign trade, and urged that assistance be given with a view to making Japan the “workshop” of the Far East,6 much as West Germany was to become the workshop or economic hub of Europe.7 In December 1949, NSC-48/1 asserted that “Japan can only maintain its present living standard on a self-supporting basis if it is able to secure a greater proportion of its needed food and raw material…imports from the Asiatic area, in which its natural markets lie, rather than from the U.S., in which its export market is small.”8 Already in February 1949, army Under-Secretary William Draper and the economic adviser Ralph Reid proposed a “Marshall Plan for the Far East.” They called for an ERP-type program that would link Japan to a ring of Asian states capable of resisting Communism.9 The State Department rejected the proposal, as well as the ERP analogy. Still, in 1950 the search for regional solutions continued. One such scheme to encourage regional trade that was developed in Washington at that time came to be known as the Yen Fund. This proposal, most closely associated with John Allison (who was to be later the ambassador to Japan), was based on three assumptions: (a) that Japan had productive resources sufficient to dramatically increase its output of export products needed by Southeast Asian countries, (b) that this potential increase in exports was sufficient to achieve an overall balance in Japan’s international trade if markets could be found for the exports, and (c) that the main factor limiting Japan’s exports was the inability of countries desiring goods from Japan to pay for them either with dollars, sterling, or their own goods. The proposal suggested that Japan pay for its imports from the U.S. with Yen, and that the U.S., in turn, give its Southeast Asian partners Yen that they would use to buy Japanese goods, as a form of reparations. This proposal was never pursued, for reasons to be discussed later.10 The Yen Fund was partly a response by the State Department to an earlier proposal by Tracy Voorhees, Draper’s successor as UnderSecretary of the Army. Voorhees suggested that any loan or grant the


U.S. gave any Far Eastern state be tied directly to Japan. His objective, as reflected in NSC-61, was “to furnish economic assistance required for such backward areas to counter communism without additional dollar cost to the United States.” This was to be achieved by a better utilization for this purpose of the Japanese economy, turning Japan into the technical workshop of the area.11 The State Department rejected the Voorhees plan outright.12 Still, while the plan was too blunt, the logic behind it was similar to that of the Yen Fund idea. Joseph Dodge, the Detroit banker put in charge of stabilizing the Japanese economy, and Ralph Reid endorsed Voorhees’s line of thought; the three advocated coordinating all Far Eastern aid toward using Japan’s industry to promote Southeast Asian economic development. These various plans developed slowly in light of the competition between State and Defense for control over funds, and more so in light of the ongoing turmoil in Southeast Asia. The Korean War brought a military complication to the regional integration scheme with the introduction of the Special Procurement program.13 The offshore procurement plan that began after the war had started was seen as an effective means for stimulating and directing the use and expansion of Japanese productive resources. It was based on the belief that Japan, given some investment in new machinery, had the necessary industrial potential to meet a large part of the total military requirements of the Far East.14 Also, since the U.S. and Western Europe had to limit their exports because they were rearming, there was, according to U.S. officials, a distinct opportunity for Japan to service the Southeast Asian market.15 By spring 1951 the program has been named U.S.-Japan Economic Cooperation, or New Special Procurements. Its components were: (a) production by Japan of goods and services important to the U.S. and to the economic stability of non-Communist Asia, (b) cooperation with the U.S. in the development of Asia’s raw material resources, (c) production in Japan of lowcost military material in volume for use in Japan and non-Communist Asia, and (d) the development of Japan’s appropriate military forces as a defensive shield and to permit the redeployment of U.S. forces.16 In 1952 and 1953, such U.S. procurement for various military purposes was more than twothirds as large as Japan’s total commercial exports.17 However, as the war was drawing to an end, there was growing concern in Japan and the U.S. about the future of Japan’s trade. Only then did many officials realize that, despite the rhetoric since 1950, very little had been done in terms of utilizing offshore procurement for the purpose of seriously developing a defense industry in Japan. By 1953, there was still no industrial potential in the field of rearmament production worthy of


mention in Japan. No comprehensive, coordinated procurement policy had been developed. Attempts to advance the regional trade solution continued throughout the Eisenhower administration and were strongly advocated by Secretary of State Dulles.18 During the Eisenhower administration there was a growing realization that aid for development was a necessary prerequisite for the success of the trade strategy. For this reason, the Eisenhower administration is discussed at greater length in the next chapter dealing with aid. Despite the abundant discussions and paperwork devoted to regional economic integration schemes, no large-scale programs were in fact pursued or made a major impact. To understand the U.S. interest in the multilateral and regional strategies and its attempts to downplay a bilateral strategy of cooperation with Japan, one must first understand what were the goals that the U.S. sought to advance in the context of its foreign economic policy. THE MULTIPLE CONFLICTING GOALS OF U.S. FOREIGN ECONOMIC POLICY IN ASIA Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost. U.S. economic policy goals toward Asia in the early postwar years were closely linked to its security-strategic goals in the region. The perceived overwhelming need to balance the Communist threat was central to economic thinking as well. Similarly, the domestic concern with minimizing the cost of foreign policy and maximizing burden sharing, which was so evident in the security cases, was also salient in the economic arena. Strengthening the Japanese economy was perceived as crucial to preventing further Communist expansion in Asia, reducing the cost for the U.S. of subsidizing the Japanese, and advancing the international free trade system. The question was which of the three possible strategies—multilateral, regional, and bilateral to help Japan recover economically, could best promote all the goals discussed above. BALANCING THE COMMUNIST THREAT IN ASIA As described in chapter 3, the onset of the Cold War in Asia, with the Communist victory in China and, more urgently, the Korean War, highlighted the need to rearm Japan and rebuild it as the main U.S.


ally in the region. This entailed revitalizing Japan’s economy as well.19 The growing realization of Japan’s importance to the regional and global balance of power led to what came to be known as the “reverse course” in the occupation policy, which began in June 1947. The reverse course involved a shift from a punitive policy toward Japan to one of rehabilitation.20 This new policy found expression in 1949 in the “Dodge line.”21 The main goal of the Dodge line was to link Japan on a competitive basis to the world capitalist economy both through domestic economic reforms (e.g., balancing the national budget, removing government controls on trade) and through renewed international trade.22 Japan’s economic revival was seen as largely depending on its finding adequate markets for export and import in Asia. The revival of Asian trade became, in turn, a central goal of U.S. foreign economic policy. This task was complicated by the fact that, following the Korean War, Japan was no longer allowed to trade with its biggest natural partner—China. The China factor. Up to the Korean War, the U.S. still hoped for renewed trade between Japan and China as the main solution to Japan’s dollar-gap problem. U.S. export controls on China allowed some trade between Japan and the mainland, and Japanese businessmen hoped that extensive trade with China would develop. However, once Chinese troops crossed the Yalu River, the U.S. government placed under licensing in December 1950 all exports to mainland China, Manchuria, Hong Kong, and Macao.23 Finally, all trade was halted as punishment for the intervention. Japanese trade with China was seen as dangerous because it would undermine U.S. strategic goals in the region and make Japan more vulnerable to Communist pressure.24 Thus the need to contain China made the goal of rehabilitating Japan more important, yet harder to achieve with the loss of the mainland Chinese market. Although the actual potential of the Chinese trade for the Japanese economy was somewhat controversial, the Japanese continued to voice their desire for greater trade with China.25 This reflected Japan’s historical economic affinity with China, arguments that trade with China would be beneficial, as well as the effect of Communist economic tactics aimed at luring Japan.26 Thus, as in the security cases, bipolarity created an initial impetus for expanded commitments, in this case making it necessary to find alternative markets for Japan’s exports. The only possibilities were Southeast Asia, Western Europe, and the U.S. itself.27 Without the cooperation of other states, the U.S. would have little choice but to further open its markets to Japanese products. There were two ways to reduce this cost: a multilateral GATT solution or a regional Southeast Asian solution. The condition of bipolarity in itself,


however, did not make either one of these options more attractive than the other. The multilateral GATT solution and balancing. In the security cases, the global-multilateral option for dealing with Asia’s security problems was hardly considered. The fact that the Soviet Union was a member of the Security Council made it impossible to use the multilateral strategy to achieve simultaneously both the goal of burden sharing and that of balancing the Communist threat. In the economic case, however, the situation was different. What is so often described in the literature as the “global-multilateral” arrangement of the GATT was in fact a Western-multilateral arrangement. In this case, then, it was possible to use the multilateral strategy both to balance the Communist threat and to lower the burden on the U.S. by having other states open their markets to Japanese goods. The recommendations of an Interdepartmental Committee on Trade Agreements Concerning Trade Agreement Negotiations with Japan clearly stressed the importance of Japan’s accession in terms of the Cold War struggle in Asia. “The prospects of lucrative trade with the Soviet bloc,” argued the Committee, “including Communist China, have a strong appeal to the Japanese trading community…if the Japanese are blocked in their efforts to expand their trade with the free world, they may think it necessary to re-orient their trade toward Communist China and the Soviet bloc.” Therefore, “there is no real alternative to supporting the Japanese application and agreeing to enter into tariff negotiations with Japan.”28 Thus, bipolarity both impelled the U.S. into expanded commitments and created an interest in multilateral strategies that might reconcile those commitments with the concern for cost reduction. The regional solution and balancing. There was a strong link between the U.S. goal of balancing the Chinese Communist threat and the rise of the regional trade strategy. Japanese trade with Southeast Asia could help advance the balancing goal in three ways: (1) it helped strengthen Japan through the expansion of its export market; (2) it helped curtail the Japanese temptation to trade with China; and (3) a revived Japan could help encourage trade within Asia, thus economically strengthening the region’s nonCommunist countries.29 But if Japan’s temptation to trade with China was to be curtailed, could weak Southeast Asia really provide an alternative? Although doubts were voiced, in late 1949 NSC-48/1 predicted that “Given a favorable and secure atmosphere—plus adequate freedom to individual traders, readily available working capital, suitable commercial agreements…and general assistance in the promotion of trade—it is expected that a substantial increase in intraAsia trade can occur.”30 Three years later, Dulles declared that after studying


Japan’s history since 1930 he had concluded that it was possible to revive Japan’s trade with “various free nations of Asia” at least as a temporary substitute for Japanese control over parts of China. When National Security Advisor Robert Cutler asked in response whether the administration was considering restoring Japan’s “lost colonial empire,” Eisenhower answered that “we do not want to think of such a step but we do wish to open up new trade possibilities for Japan.”31 In terms of the region in general, the Korean War only strengthened the perception of its strategic importance. NSC-48/1 stated that “a strong trading area among the free countries of Asia would add to general economic development and strengthen social and political stability.”32 Thus, in comparing the benefits of a multilateral and a regional approach, a crucial difference emerges: the multilateral strategy could

not have achieved the goal of strengthening the Southeast Asian economies because it focused on integrating Japan into the advanced world economy and not into Asia. The multilateral strategy, therefore,

would have left Southeast Asia vulnerable to Communist expansion and the U.S. with the main burden of ensuring that would not happen. The link between the Cold War, the Chinese threat, and the regional trade strategy emerges clearly in some of the regional initiatives. For example, the U.S.-Japan Economic Cooperation program, came into being only after the Korean War began. Although this concept was discussed before the war, the war impelled its translation into policy.33 It was then that the whole concept of Japan as a base for Far Eastern mobilization came to life. Japan was to help bear the burden of containment/balancing by developing industrial capacity as a resource for current and wartime requirements, both for U.S. forces themselves and in support of U.S. military assistance programs in Asia.34 The need to encourage Japan’s trade with Southeast Asia was indeed explained to Congress in terms of balancing the Communist threat at minimal cost. REDUCING THE COST OF FOREIGN POLICY COMMITMENTS: THE GROWING COST OF OCCUPATION Cost considerations played an important role in U.S. economic policy in Asia. As was the case in Europe immediately after the war, the Americans believed that the aid they were giving Japan in the form of GARIOA (Government Aid and Relief for Occupied Areas) and EROA (Economic Recovery in Occupied Areas) would be short-lived and would suffice to help Japan get back on its feet. It was believed that this aid would help revive exports and reduce in the long run the burden


of supporting the Japanese economy. By 1947 U.S. aid to Japan totaled about $400 million a year, and was even higher in the next two years. Interestingly, the same sum was extended to West Germany under the ERP.35 However, by 1949 it became clear that Japan was still far from becoming the “workshop of Asia.” By the end of 1948, it still had a trade deficit of $426 million, 65% of its imports came from the U.S., 43% of its exports went to Southeast Asia, and only 10% of its imports were from Southeast Asia.36 Since Japan’s dependence on the U.S. now seemed to be long-term, the U.S. unilateral aid to Japan’s economy appeared much more costly, especially for the local producers who had to contend with the competition of cheap Japanese goods. There was growing criticism of aid expansion in the Republican Congress. These economic-political considerations were by no means of a secondary nature; they played a central role in bringing about the shift in occupation policy toward rehabilitation, which began before the major Cold War events.37 In 1947 Draper began to argue for Japanese recovery instead of mere relief. That was the only way, he argued, to “end the cost of maintaining our occupation administration and our cost of supporting the civilian population and bring the soldiers back home.”38 As Draper put it, Americans had found that “occupation of an enemy country is an expensive business.” The Japanese had to be forced to bear the burden through strict financial controls, reduced consumption, and increased production. Yet, as we saw above, the revitalization of Japan’s industry meant the U.S. had to open its markets to Japanese exports, creating, in turn, another source of cost: the cost for U.S. manufacturers in light industries such as textiles of maintaining an open market for cheap Japanese goods. The latter proved a powerful source of domestic pressure on the administration, dramatically raising the strategy’s political cost. The U.S. textile and apparel industries had enjoyed temporary primacy in the world market because of the destruction of Japan’s strong textile industry in the war. However, by the early 1950s Japan had resumed its central position in the textile trade (with U.S. help), and by 1954 the U.S. textile manufacturers were demanding protection and opposed the lowering of tariffs.39 It was therefore becoming increasingly difficult for the U.S. to revamp the Japanese economy by lowering its own tariffs and opening its markets to Japanese goods. Thus, when Eisenhower took office he encountered strong support in Congress for tightening rather than liberalizing the U.S. tariff structure. Hence, the political price of subsidizing Japanese recovery through the opening of U.S. markets was rising rapidly. This intensified the


dilemma facing the administration, forced on the one hand to abstain from tariff negotiations with Japan (a precondition for its entry to the GATT) and warned on the other by State Department officials in Washington and Tokyo of the risk that such a policy might stimulate ultranationalistic policies in Japan and bring more pressure on the government to trade with China.40 The inadequacies of the bilateral

strategy opened the door to other solutions. The bilateral strategy was never in fact abandoned, but a driving force behind U.S. planning was the attempt to downplay it since it was unable to sufficiently reconcile the balancing and burden-sharing goals.

Both the multilateral and the regional strategies tried to deal with the problem of how to get others to share the burden of Japanese recovery. The Americans argued that all free nations should be interested in making Japan self-supporting as soon as possible. If other trade partners were not found for Japan, then “it will have to be subsidized by the American taxpayer for ever, or it will have to increase trade with Communist China.”41 The multilateral GATT solution and burden sharing. The U.S. hoped that by joining the GATT Japan would dramatically expand its export markets, thereby receiving the necessary boost and allaying the fears of U.S. domestic producers. However, while the multilateral strategy did have a real potential for solving the burden-sharing problem in the long run, it was less able to do so in the short run. Japan’s admission to the GATT meant that other Western states would also share the burden of aiding the recuperating Japanese industry. But since the U.S. was a GATT member, and since new tariff negotiations had to be concluded with Japan, leading to a new list of items on which tariffs would be reduced, the GATT solution also entailed, at least in the short run, a greater burden for the U.S. This was problematic given the above-described political reality. The Interdepartmental Committee correctly predicted in 1952 that “Since most of the principal commodities which the United States imports from Japan are sensitive products, such as tuna fish, canned crab meat, chinaware, cotton textiles and toys, there will undoubtedly be many cries of fear at the prospect of increased competition from Japan.”42 Such concerns were also voiced within the administration.43 The multilateral solution, therefore, could in the long run have satisfied both goals of balancing and burden sharing; in the short run, however, the costs of further tariff concessions made it less attractive to U.S. producers and hence more problematic for the administration to pursue. The GATT solution was also problematic because Congress’s fear of the costs of further tariff concessions led to a presidential commitment not to enter major negotiations on the issue


during 1954, even though such negotiations were a prerequisite for Japan’s accession.44 The regional trade solution and burden sharing. The regional solution was perceived as an alternative way to divert the pressure of Japanese exports from the U.S. market. It promised expanded markets for Japanese exports and imports, while at the same time not committing the U.S. to making further concessions to Japan. Thus, it was able to satisfy both aspects of burden sharing discussed earlier, namely, that of giving aid to Japan and that of opening U.S. markets to Japanese goods. The notion of Southeast Asian-Japanese trade as an alternative to the more problematic Japanese-U.S. trade runs through the documents from that period. Already in 1947, SCAP officials were seeking ways to achieve the “eventual integration of the economy of Japan with the economies of Asia and the Far East rather than with the economy of the United States.”45 The way to lift the burden of supporting Japan’s economy from the U.S. taxpayer was to create a self-supporting Japanese economy with balanced exports and imports. The State Department and the Pentagon agreed that achieving this goal hinged on the expansion of trade between Japan and other Asian countries.46 As for the potential of such trade, the economic officials dealing with Asia assessed that regional trade could be greatly expanded without much difficulty.47 The revival of Japan’s economy in the regional context was seen as a way to encourage burden sharing, or to reduce the cost of U.S. foreign policy in another significant way. A strong Japan, it was predicted, would facilitate the economic recovery of the entire Far Eastern region. Already in 1947, the two main goals of the economic program for Japan were related to cost reduction: (1) to eliminate U.S. expenditures in support of the Japanese economy, and (2) to permit a substantial Japanese contribution to the economic recovery of the Far East. The third goal, of creating a viable economy conducive to the emergence of a peaceful and democratic Japan, was assigned less importance. It was already clear that enhancement of Japan’s regional trade was the solution.48 The issue of cost was emphasized by the proponents of the Yen Fund. The revolving fund notion, they argued, would provide increased exports to the countries that needed assistance at only a slight increase in U.S. outlays for Japan and at only a fraction of the cost of extending such assistance from the United States. Opponents of the plan, using the cost factor as well, argued that in fact Japan would soon be able to be self-sufficient, and that the Yen Fund plan could end up perpetuating aid to Japan longer than necessary.49 Finally, offshore procurements as well had a strong cost-reduction rationale


behind them; they were seen as a means of “stretching aid dollars.” A 1958 report summed up the positive impact of such procurements. As a low-cost producer of many of the goods purchased with Mutual Security funds, Japan had supplied under open competitive bidding a considerable proportion of such goods to aid-recipient countries in the Far East. Japan’s proximity to these countries has also meant additional savings in transportation.50 Compared to the multilateral GATT option, the regional strategy offered less burden sharing in the long run and a very tentative prospect. However, it was politically more attractive because, unlike the GATT option, it did not entail the expansion of short-term burden. This highlights the apparent incompatibility between the domestic political logic for pursuing certain strategies and their actual potential to advance the stated goals. THE NORMATIVE AGENDA: ADVANCING FREE TRADE The range of policy options open to the U.S. administration was limited by the fact that the U.S. was still pursuing a third, broader, goal, of advancing the international economic order of multilateral free trade as a means of achieving global economic recovery and political stability.51 The idea of free trade began gaining ground in the U.S. with the Reciprocal Trade Agreements Act (RTAA) of 1934, which gave the executive branch the authority to enact reductions of up to 50% in U.S. tariffs so long as other countries reciprocated in kind. It ameliorated the problem of distributive disputes over tariff policy because it insulated the trade policy process by relieving Congress of its tariff rate-setting responsibilities and because it gave the president the tools to bring about trade liberalization.52 Within this institutional context, President Roosevelt was converted into a free trade advocate by his secretary of state, Cordell Hull. Hull strongly believed that protectionism and beggar-thy-neighbor policies were the main sources of war. After World War II there was a growing consensus that free trade was crucial for maintaining peace. Economic policy now had strategic implications. Truman as well believed in liberal trade and argued that “The lesson in history, I said, was plain. Freedom of international trade would provide the atmosphere necessary to the preservation of peace.”53 As Eckes argues, U.S. presidents from Truman to Johnson all shared the conviction that foreign policy concerns should take priority over domestic eco nomic interests, and that strategic considerations favored a free trade approach.54


The multilateral GATT strategy and the promotion of free trade. If free trade was to be promoted, then the Americans could not afford to use direct quotas against Japan as a means of reducing the domestic cost because that would undermine the GATT. They also could not use unilateral restrictions because those would undermine U.S. efforts to convince the Europeans to stop using those very same restrictions and to practice free trade.55 As the Interdepartmental Committee put it: “anything less than affirmative support [for Japanese accession to GATT] would be taken by other countries as an abnegation of our commercial policy of reducing trade barriers and as a weakening in our efforts to obtain the economic objectives we desire.”56 In the negotiations over Japan’s accession, the U.S. was extremely reluctant to agree to British demands for a solution that would provide for unilateral discriminatory action. Such action, argued one report, “even if hedged about with restrictions, would give away a principle that is basic to our foreign economic policy and to GATT.” Still, the Americans were willing to compromise. They finally agreed to such a premise so long as a Contracting Party would earnestly seek to work out any difficulties with Japan and would consider the political implications before revoking its basic commitments to Japan. “It was preferable to Japan’s failure to achieve accession to GATT or to win it under conditions which would permit virtually unlimited resort to discrimination against Japanese trade.”57 From this perspective, then, the multilateral GATT solution was the best one in terms of promoting the free trade ideal. This being said, despite the common portrayal of postwar U.S. as the champion of free trade and of a multilateral world order, free trade was by no means the only regnant idea on the domestic scene; protectionism as well struck roots in American thought. The executive often had to contend with a protectionist Congress. At risk of oversimplification, one might argue that Congress tends to be relatively more sympathetic and responsive to domestic constituents harmed by foreign competition, whereas the executive tends to favor the global priority of trade liberalization. The separation of powers between the executive and legislative branches institutionalizes the ongoing tension between these two approaches. Thus, for example, the executive branch was unable to get Congress to ratify the International Trade Organization (ITO); Congress again refused to approve the Organization of Trade Cooperation (OTC), which aimed at correcting some of the flaws of the GATT.58 Congressional opposition to such initiatives stemmed not only from concrete policy differences about their value for the U.S. national interest, but also from fear that such initiatives would further enhance the executive’s power and limit that of Congress. Politically speaking, a substantial part of the Republican Party saw free trade as


a Democrat-inspired program that challenged the nation’s economic interests.59 The promotion of free trade, then, was overall a central goal of U.S. foreign policy, but it faced domestic challenges that intensified during the Eisenhower presidency. As described, the domestic protectionist challenge presented problems for the multilateral GATT solution to Japan’s trade problem.60 The regional strategy and the promotion of free trade. The regional solution satisfied those who feared the costs of practicing free trade. However, although the growth of regionalist thinking among policymakers corresponded to an increasing acceptance of economic protectionism, U.S. decisionmakers did not view the promotion of regional trade schemes as contradicting the goal of promoting global, multilateral free trade. Regional arrangements were seen as building blocks toward the global economic order. State Department consultants argued that after intraregional links were created between Southeast Asia and Japan and within Southeast Asia, the next step would be to expand to the interregional level. Regional arrangements, then, were an intermediate link to global multilateral ones.61 The weakness of its allies and the dynamics of the Cold War impelled the U.S. to accept various preferential trade agreements, tariffs, spheres of influence, and so on. However, the administration had no difficulty in selling the argument that these various regional trade schemes were necessary to allow the eventual development of multilateral free trade. There were no major debates about the dangers that a regional approach might pose to the principles of global, free trade. In the security cases, I argued that the administration was constrained by the prevailing sympathy in Congress and the U.S. public for promoting a new Wilsonian multilateral world order and the rejection of power politics and alliances. In those cases, the administration advanced the regional strategy as a compromise, as a security arrangement that reflected the multilateral, collective security principles, albeit on a regional level. In the economic case one may have expected a greater difficulty in selling the argument that regional strategies in fact promoted free trade as well. Several of the arrangements discussed earlier were clearly not in the spirit of free trade. Voorhees’s ideas, for example, clearly stressed managed trade and were aimed at strengthening Japan for balancing purposes, not at advancing free trade. The Economic Cooperation Agency (ECA) condemned this idea as a viola tion of basic free trade principles, as well as a direct threat to European recovery if Japan came to dominate Southeast Asia.62


However, whereas in the security cases Congress held strong views in favor of multilateralism, in the economic case it seems that with a few exceptions in the ECA there was no one to champion the cause of free trade. Quite to the contrary, the ideal of free trade was, as noted, controversial in U.S. politics at the time. From this perspective, the

regional trade strategy can be seen as a compromise between the protectionist goals of Congress (diverting Japanese goods from the U.S. market) and the fundamental free trade goals of the administration, both of Truman and Eisenhower (expanding regional trade as a means of overcom-ing the dollar gap and preparing the regional states for global trade). The regional strategy, then, was attractive thanks to its ability to reconcile conflicting domestic goals. THE CHALLENGE OF RECONCILING CONFLICTING GOALS: SUMMARY The bilateral cooperation strategy (which was a de facto unilateral strategy at the time) with Japan became politically problematic because of the high costs associated with it. In the long run, the multilateral strategy of getting Japan into the GATT offered the best promise of Japanese economic recovery, with a significant level of burden sharing by other member states that would open their markets to Japanese goods, while clearly advancing the free trade system. This was the number one preference of U.S. decisionmakers, but it encountered domestic political opposition in light of the increased cost it entailed in the short run through increased tariff reductions. The regional strategy offered a second-best alternative to advancing the various goals. Its proponents believed that regional trade could significantly reduce the temptation for Japan to trade with China, by affording Japan access to crucial raw materials, as well as markets for its goods (other than the U.S. market!). A regional strategy would also have served to strengthen the Southeast Asian states themselves, thus contributing to the regional struggle against the spread of Communism. Finally, the regional option had an important political advantage over its multilateral counterpart: it did not entail any further sacrifices by the U.S. and therefore inspired less domestic opposition. However, while the desire to reconcile the different policy goals created an initial interest in these two strategies, their actual viability and in turn their transformation into real policy were affected by the regional power disparities and the partners’ preferences about the form cooperation would take. The relative values of the different strategies is summarized in table 6–1.


Table 6–1 Relative Value of the Bilateral and Regional Strategies

POWER DISPARITIES AND THE CHOICE OF COOPERATION STRATEGY A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. After World War II, the U.S. found itself in a preponderant power position both militarily and economically. At that time the U.S. possessed almost two-thirds of the world’s total gold reserves. More than half of the world’s total manufacturing production took place within the U.S., which accounted for a third of the world production of goods of all types and supplied onethird of the world’s exports. It was, in short, an economic hegemon.63 The European economies and the Japanese economy lay in shambles. In Asia the power disparity was broader, since the U.S. faced not only a devastated Japan (which still had an industrial infrastructure to be revived) but a range of newly independent states in Southeast Asia that were at an early stage of economic development, mostly agrarian. This led to a broad dependence on imports from the U.S., both of raw materials and final products. This dependence found expression in a worldwide dollar gap, which, in turn, posed a major threat to the goal of creating a truly multilateral, free trade economic system.64 It also made it difficult for the U.S. to encourage the economic revival of its key allies (Japan in


Asia and Britain in Europe), so that the Communist threat could be contained without the U.S. incurring the brunt of the cost. As in the security cases, U.S. decisionmakers were reluctant to accept the responsibility that went along with economic power preponderance. U.S. policy was an attempt to overcome Stein’s “hegemon’s dilemma”: on the one hand, in order to maximize its own returns the hegemon should commit to openness regardless of what others do; on the other, to maximize its relative position the hegemon should adopt a policy of continued closure irrespective of others’ policies.65 Stein argues that all free trade eras in history were in fact systems of freer trade, based on asymmetric tariff bargains in which the hegemon substantially opened its own borders and accepted other states’ tariff barriers.66 It is this asymmetric bargain that the U.S. was trying to avoid or at least mitigate. The problem was perhaps more acute in the field of foreign economic policy than in the security field. This is because unlike the costs of providing security guarantees, the costs of opening U.S. markets were felt by specific sectors of the U.S. public, leading to a greater stake in the issue for various interest groups and their congressional cronies. Encouraging states to cooperate with one another can lead to greater benefits than the sum of the individual states’ contributions if a meaningful pooling effect is created. In the security cases the pooling effect meant better coordination of military plans, standardization of equipment, or ultimately a unified command. In the case of trade, this rationale was reflected in the basic argument about the benefits of scale. The American belief that “big is beautiful” is elaborated in chapter 8. Basically, however, the more a state cooperates with more states, the greater market access it will have, the more it will be able to sell, and in turn production costs will decline and more investment can be made in further development. Free trade creates healthy competition, which leads to better products and a larger variety of them for consumers. In the case of the Marshall Plan, the goal was to strengthen Western Europe economically as a whole. In this case, however, the focus was mainly on Japan. The strengthening of Japan could best be achieved by giving it market access to as many states as possible. This, in turn, favored multilateral and regional arrangements over bilateral arrangements that only offered market access to one state at a time.67 In this context, the relative power of the potential partners to the arrangement affected the extent to which it could have provided meaningful market expansion for Japan. Within this general context of U.S. economic hegemony, one must distinguish between the extremely broad power disparities between the U.S. and its Asian partners, and the wide yet more moderate power disparities between


the U.S. and its European partners. The regional strategy had to deal with the more problematic power disparities with Asia, whereas the multilateral strategy had to deal with the more favorable power disparities with Europe.

The multilateral strategy and power disparities: the U.S. and Europe. The use of the GATT multilateral strategy mainly involved the

United States’ Western partners. As we have seen, power disparities between the U.S. and its European allies were smaller than the disparities between the U.S. and its Asian partners; this was true both in terms of military and economic potential. Once rehabilitated, the major European states could offer Japan large markets for its export products. This meant Japan would have new markets to export to and would be able to balance its payments without being completely dependent on the U.S. market. Therefore, the opening of European markets to Japanese goods could significantly ease the burden on the U.S. economy. Moderate power disparities made the potential benefits of Japan joining the GATT multilateral arrangement very attractive, yet at the same time proved problematic. Since the European partners were strong enough to play a crucial role in world economic recovery and in the growth of the free trade system, it was more difficult for the U.S. to induce them to cooperate against their inclination. Hence, their opposition to granting MFN treatment to Japan doomed that policy option almost from the outset.

The regional strategy and power disparities: the U.S. and Southeast Asia. The same rationale shaped the interest in regional trade

schemes. While still focusing on the strengthening of Japan, regional schemes aimed at building the economic strength and political stability of Southeast Asia. Arrangements that facilitate regional trade allow companies (and consequently industries and states) within the region to export their goods more easily and to a larger market. This expanded market for export can then strengthen those companies (industries and, on a broader level, states) by raising their revenues, based on the classical logic of free trade and comparative advantage.68 To the extent that the arrangement is more tradecreating than trade-diverting, it can also benefit consumers who can get more products at lower prices, thus raising their living standards. As the regional states grew stronger and their citizens wealthier, they would be more likely to help share the burden of sustaining Japan’s economy thanks to their stronger purchasing power. Of course, the economic benefits of regional trade would also translate into greater military potential and greater social stability—all of which would greatly contribute to the goal of containing the Communist threat in Asia.


The very wide power disparities between the U.S. and the regional states implied, on the one hand, that the contribution the Southeast Asian states could actually make to Japan’s recovery, even collectively, would be limited. However, as discussed earlier, proponents of the regional approach did appear to believe that the Southeast Asian markets held much potential to divert Japanese trade from the U.S. On the other hand, the wide power disparities also made a bilateral strategy more problematic. As we have seen, the bilateral strategy that the U.S. initially pursued toward Japan meant a disproportionate burden for the U.S. textile industry. Such bilateral arrangements could in fact be interpreted as unilateral ones from a burden-sharing perspective. The same would have occurred in any bilateral arrangement between the U.S. and other Asian states (clearly weaker than Japan). As I argued in chapter 2, when wide power disparities exist, the very weakness of the partner makes it structurally impossible for it to provide a meaningful contribution. Extremely unequal bilateral relations may also encourage the weak state to free-ride. One can easily get used to being taken care of. Dodge, when he examined Japanese-U.S. economic cooperation, complained about this phenomenon with regard to Japan. He noted that Japan tended to expect that the U.S. would plan and blueprint its needs and then fit the U.S. economy into those needs, not vice versa. This, he concluded, was “the inevitable result of the paternalistic care given the reconstruction of Japan in the six years of her almost complete dependence on the United States.”69 This would also have been the case in any bilateral trade arrangement between the U.S. and any of the weak Southeast Asian states: if the U.S. wanted their economies to get stronger (for security reasons), it would have to pay the price. Under such circumstances there was little point in using its overwhelming market power to exploit them. That meant, in turn, that a bilateral arrangement (in which the U.S. indeed would have clear bargaining leverage) was not as attractive. For this reason the U.S. came to support the regional trade strategy. By encouraging regional cooperation instead of reliance on bilateral arrangements with the U.S., it was inducing the small regional states to become more self-sufficient, and it hoped thereby to reduce the costs of supporting them in the future. If the regional states liberalized their economies and increased trade with each other, they could overcome their serious balance of payment problems, alleviate the dollar-gap problem, and reduce the burden of financing those payment deficits. The same rationale also explains why the U.S. supported an arrangement such as the Sterling Area Trade Agreement. The main goal of that agreement was to help the signatories avoid the loss of dollars to either side by encouraging trade


among themselves. This, in turn, would help reduce the dollar-gap problem they faced, thus decreasing both their dependence on the U.S. and the burden on its shoulders. THE IMPACT OF POWER DISPARITIES WITHIN THE REGION A regional strategy will be most attractive if the power disparities among the potential regional partners are narrow, and least attractive if these power disparities are very wide. In the Pacific Pact case I argued that because of the major power disparity between Japan and its regional neighbors, Japan would have been the one to share most of the burden and the other states’ contribution would have been much smaller, even combined. Thus, the relative advantage of incorporating Japan into a regional arrangement over signing a bilateral arrangement between the U.S. and Japan (and between the U.S. and other regional states) was small. Furthermore, broad regional power disparities also discouraged regional solutions because the weak regional states viewed them with great suspicion and feared they were instruments of dominance, if not by the great power then by the stronger regional states. The economic power disparities in Asia after World War II were clearly very high. Japan was the only industrialized state in the region (excluding Australia and New Zealand). The Southeast Asian states were poor, agrarian, suffered from political and economic instability, and lacked purchasing power. Indeed, as in the security case, Japan was the key actor that was expected to contribute to building the global-multilateral economic order, to promoting the region’s economic growth, and to balancing the Communist threat in Asia. However, unlike in the security case, Japan’s economic revival hinged on expanded export markets. A regional approach, therefore, still had its indirect benefits for the United States. Also, the Southeast Asian states, while poor and devastated by war, still held an important power resource as suppliers of raw materials essential to Japan’s industrial development. And yet, the large power disparities between Japan and its Southeast Asian neighbors reduced the likelihood of a successful regional strategy. Many State Department officials were skeptical about most regional programs in light of the Southeast Asian states’ extreme weakness. Many Japanese officials and businessmen shared such skepticism as well. Southeast Asia’s extremely weak purchasing


power undermined efforts to expand Japan’s trade. For example, Indonesia was Japan’s most important market in Southeast Asia, but even it had accumulated by June 1954 a debt of $160 million as a result of chronic trade deficits with Japan. Consequently, Japan had to adopt measures to limit its exports to Indonesia.70 One key objection to the Yen Fund proposal was that because of Southeast Asia's underdevelopment there was a limit to the quantity of Japanese products that the Southeast Asian states could consume. Because of their early stage of economic development, South and Southeast Asian states needed basic equipment for building roads, dams, and so on. The capital goods that Japan could provide were useful but secondary.71 SoutheastAsia was simply too weak economically to absorb Japanese exports and help sustain the Japanese economy. Second, exactly as in the security cases, the broad power disparities decreased the chances of adopting a regional approach by further aggravating the weaker Asian states' fears about Japanese domination of any such arrangement. Their different stages of economic development also affected their economic goals, as we shall see in the next section. Such concerns were exacerbated by the fact that while the Americans did try to encourage regional trade, most of the arrangements they considered or advocated were of a hub-andspoke nature, with Japan as the economic hub. Their main goal was to encourage trade with Japan, and they gave less consideration to the development of ties among the Southeast Asian states. THE IMPACT OF PARTNERS' PREFERENCES ON STRATEGY CHOICE A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. Both the attempts to pursue a multilateral strategy and a regional strategy to revive Japan's economy faltered against the reality of opposition by the other potential members of those arrangements. In this case, the partners' preferences played a crucial role in limiting the success of these strategies. The multilateral strategy and partners' preferences. In the long run the multilateral strategy did succeed. Japan today is well integrated into the global economy, albeit not without conflict and ongoing problems. However, in the short run, in the late 1940s and 1950s, the multilateral strategy was clearly not a viable solution for Japan's


trade problem. The strategy's main liability was the opposition it faced from the United States' allies in Europe. As we saw in the security cases, the U.S. believed that states such as Britain and France were important for the achievement both of its strategic and its foreign economic goals, mainly the strengthening of a free trade multilateral system. In a multilateral arrangement coercion had its limits, as members of the administration were aware: "This [Japan's accession to the GATT] would be a Pyrrhic victory, however, unless the British Commonwealth countries were included among those agreeing to invite Japan.”72 In fact, Britain, France, Australia, New Zealand, South Africa, and the Benelux countries opposed Japan’s accession to the GATT. It took six years from the time the issue was first raised in 1949 until Japan’s formal accession in 1955. Even then the vast benefits for Japan that the U.S. had hoped for did not materialize, since those states applied article 35 and did not grant Japan MFN status. The only states that in 1955 did accept Japan as a full member of the GATT and give it MFN status were the U.S., Canada, West Germany, Italy, and the Scandinavian countries. Britain ceased to apply article 35 to Japan only in 1963, and was then followed by the other European states.73 This opposition reflected the fear that Japan, in light of its large population and desperate need to export, would be an aggressive international competitor in labor-intensive manufactured goods, especially in certain industries such as textiles and footwear that other states were often especially anxious to protect. Britain and other West European states feared that Japan would resume what they perceived as “unfair competition” (for example, dumping, exploiting labor, violating copyright laws) such as it had engaged in before the war.74 The French, for their part, were more concerned with the threat of increased Japanese competition in overseas territories, particularly in the Associated States (Vietnam, Cambodia, and Laos). Moreover, the French did not anticipate any tariff concessions by Japan that would offer substantial benefits to French exporters “commensurate with reciprocal benefits to Japanese traders,”75 and therefore had little incentive to liberalize trade with it.76 When the economic clauses of the peace treaty with Japan were being negotiated in 1951, Acheson noted that he believed it was hopeless to get Britain to agree to Japan’s accession to the GATT.77 Similarly, in the recommendations of the Interdepartmental Committee cited earlier, also stressed that: “However, United States Delegation should not press the application to the point of incurring the risk of outright rejection or of straining our relations with other countries so as to prejudice the attainment of our broad policy goals” (emphasis added).78 These goals included the containment of


Communist expansion in Europe and Asia and the development of the free trade system, both of which required West European cooperation. Still, in July 1954, Eisenhower instructed Dulles to “turn the heat on” the British, as the U.S. ventured on a yearlong diplomatic campaign to convince its trading partners to agree to Japanese accession.79 The U.S. was willing to consider compensating third countries, via tariff reductions, for concessions that they might grant Japan but for which Japan could not provide adequate compensation.80 However, as noted before, even when the American campaign finally bore fruit in 1955, and the member states agreed to admit Japan to the GATT, the achievement was largely undermined when fourteen of the thirty-three members invoked article 35 and refused to apply the GATT to their relations with Japan. Since this action was legal according to the GATT, though perhaps not in the spirit of the agreement, there was little the U.S. could do other than voice concerns. Thus, the United States’ ability to use the multilateral strategy as a means of solving Japan’s trade problem (and its own burden-sharing vs. balancing conflict) was largely compromised by its trading partners’ opposition. This problem, combined with the domestic problems that this strategy had raised, made the regional strategy more attractive. The regional strategy and partners’ preferences. The issue of regional trade cooperation involved to a greater extent the preferences of the potential Southeast Asian partners. Even in this case, though, European preferences had an impact. First, as noted, the fact that the European partners resisted the multilateral strategy for Japan’s economic recovery helped bring the regional strategy to the fore. Moreover, all of the colonial European states had serious stakes in trade with Southeast Asia. This, in turn, made them leery of regional trade schemes that would help Japan achieve regional economic domination.81 ECA officials opposed such schemes because they regarded Southeast Asia as Europe’s backyard.82 Yet the main obstacle to regional trade plans, as far as partners’ preferences were concerned, was the preferences of the Asian states. The only support for such plans came, naturally, from Japan. As discussions of the U.S.Japan Economic Cooperation concept began in 1951, there was high anticipation in Japan about the opening of the Southeast Asian market. Keidanren, the Japan Federation of economic organizations, called for turning Japan into the factory of Asia and argued that the concept behind the Marshall Plan could be extended to Asia to achieve that end.83 While supporting these U.S. schemes, the Japanese as well were skeptical from early on about the potential of Southeast Asia, especially as an alternative to the lucrative Chinese market. These concerns only grew with time. In


1952, Japan relied on Southeast Asia for about 40% of its exports and 20% of its imports. However, the Japanese believed that the relative importance of Southeast Asian trade would further decline. They continued to support the regional solution despite their misgivings because they expected that their export rate to the U.S. would decline in the future, leaving them with little choice but to make the best of the regional option.84 As in the attempt to create a Pacific security pact, Japan’s Southeast Asian neighbors were extremely reluctant to enter into agreements with it. They objected to any plan that smacked of renewed Japanese economic domination.85 Indeed, many of these states now pursued highly nationalistic foreign economic policies and fixed quotas on or prohibitions against the importation of Japanese goods. The Philippines, Indochina, Malaya, and Indonesia remained hostile to establishing trade contacts with the Japanese.86 Most of the regional states thought it wiser to continue their strong bilateral links with the West. Many of the Southeast Asian states did not appreciate the value of foreign trade for their own economic development, regarding foreign trade as “the begetter of colonial domination.”87 Even the UN Economic Commission for Asia and the Far East (ECAFE), the main actor promoting regional solutions and a major proponent of regional trade, decided after many efforts to drop the item of regional trade from its agenda. Only the launching of the European Common Market in 1958 and its expected adverse effects on Asian states’ economies induced some interest in regional trade.88 As in the security case, the Americans were well aware of these problems. However, they hoped such aversions could be allayed in various ways. For example, they encouraged Japan to facilitate its regional integration by an early resolution of the reparations question. They also suggested in the Peace Treaty that reparations be given in the form of the services of the Japanese people in production. This could also facilitate Japan’s reentry into Southeast Asian markets.89 The fact remains, though, that lack of enthusiasm among Japan’s potential regional partners helped prevent most of the U.S. regional initiatives from getting off the ground. Had these states been more politically willing or economically able to cooperate in promoting regional trade schemes, the U.S. initiatives would undoubtedly have borne more fruit. CONCLUSION: BACK TO THE BILATERAL STRATEGY This chapter examined the ongoing attempts of the U.S. administration to lower the burden it carried through its bilateral


trade relations with Japan by expanding the number of Japan’s trade partners through its incorporation into the GATT and through the encouragement of regional trade or traderelated aid arrangements in Asia. These attempts, however, had little success in light of the reluctance of both its European and Southeast Asian partners. The regional strategy was also stymied by the broad regional power disparities. Thus, despite the ongoing discussions about regional solutions, the bilateral component remained central, and with it the burden remained on U.S. shoulders. A report from late 1952 concluded that “a doubling of Japan’s trade with Southeast Asia might hardly touch in magnitude the impact on Japan of a serious U.S. depression. This fact highlights the importance of our own efforts to facilitate Japanese exports to the U.S. market.”90 The findings of this chapter are summarized in Table 6.2

Table 6–2 Findings of the Chapter: An Overview

Despite the high hopes for the development of the regional strategy, the bilateral economic relations came to be the cornerstone. I have argued that a bilateral strategy is problematic for the great power especially in its relations with weak partners, where it is structurally impossible to extract greater burden sharing. As the power disparities between the U.S. and Japan narrowed, that problem was ameliorated. The new focus on achieving greater burden sharing within the bilateral relations (and not through an alternative regional approach)


has translated into the increasing frictions in U.S.Japanese bilateral economic relations from the 1960s to the present. As Japan became economically stronger, pressure grew in the U.S. to force it to contribute more, which mainly meant offering greater and easier market access to U.S. goods. Once the U.S. concluded that Japan could indeed do more without risking economic collapse, it turned to stronger political measures of inducing greater Japanese liberalization. The U.S. demands for voluntary export restrictions (VERs) from the late 1950s, the demands for the removal of domestic “structural impediments” in 1989, the use of the Super-301 article to sanction Japanese companies, and the demands for precise benchmarks of Japanese liberalization through the Framework Agreement in July 1993, are all instances of this approach.91 Indeed, at present one argument for supporting the expansion of regional economic cooperation in Asia is that it would reduce the tensions related to U.S.-Japanese bilateral relations. Unlike in the security issue-area, U.S. and Japanese persistence in promoting regional trade did pay off in the long run, if not during the time period covered here. Today Japan and Southeast Asia are well integrated, and U.S. concerns about finding export markets for Japan in Asia have shifted to concerns about creating a competing Asian economic bloc. For the U.S., this success may have proved a doubleedged sword.

Chapter 7 The Form of Foreign Aid to Asia—from Truman to Johnson

A chapter six described, despite the ongoing discussion of regional trade schemes to reintegrate Japan into Asia, no major regional arrangement came about. The various schemes were not feasible because of the wide regional power disparities, which meant that underdeveloped Southeast Asia was not really able to offer Japan the appropriate export and import markets. Those power disparities also heightened the suspicions that most regional states harbored toward Japan. This chapter considers another aspect of U.S. foreign economic policy, namely, the provision of regional economic aid.1 Whereas the discussion of regional trade cooperation focused on Japan and its links to Southeast Asia, the discussion of foreign aid policy concentrates more directly on Southeast Asia.2 Unlike in the case of trade cooperation, initial U.S. policy concerning economic aid was clearly biased toward bilateral aid arrangements. The United States rejected initial calls by regional states for the extension of an Asian Marshall Plan. In fact, the initial U.S. preference was to offer no public aid at all, and to rely solely on private capital for promoting Asian economic development. Thus, the U.S. administration attempted to rely solely on a trade-enhancement solution before it realized that economic aid for development was unavoidable. The U.S was quite openly hostile to attempts to develop regional forums for aid purposes, particularly the UN Economic Commission for Asia and the Far East (ECAFE). However, during the Eisenhower administration there was a growing interest in regional economic development schemes. From that period on, U.S. policy reflects the same schizophrenia it exhibited with respect to trade: whereas official policy overall supported a reliance on bilateral aid, a plethora of ideas for regional schemes developed in the State Department. These ideas found public expression with the announcement of the President’s Fund for Economic Development in Asia in May 1955, which aimed at supporting regional economic projects. The lukewarm Asian reactions to this initiative led again to a focus on a bilateral strategy. However,

THE FORM OF FOREIGN AID TO ASIA 137

supporters of regional schemes within the administration were far from discouraged. The apparently dramatic policy shift of April 1965, when President Johnson announced the U.S. decision to support the creation of an Asian Development Bank (ADB), seems less dramatic in the context of those ongoing discussions. Once again, I address two puzzles: (1) Why was there an initial strong preference for bilateral arrangements, yet, over time, a growing interest in regional-multilateral aid plans? (2) Given that interest in regional-multilateral schemes, why did the U.S. end up not pursuing such plans more forcefully until 1965? Following the same format, I attempt to answer these questions in terms of the hypotheses presented in chapter two. The key issues I examine are, therefore: (1) What were the goals of U.S. aid, and did they conflict with one another? (2) How useful were the different aid strategies in addressing and reconciling these goals? (3) How did the regional power disparities affect the value of different strategies? (4) How did the United States’ partners’ preferences and goals influence its policy choice? The first part of this chapter examines the U.S. aid policy up to the mid1950s. The second part of the chapter looks at the first, dramatic official policy shift to support regional aid in 1965. The conspicuous change in policy, as well as the major changes in two of the main variables examined here (regional power disparities and partners’ preferences), make this an important comparison to pursue THE GOALS OF U.S. ECONOMIC AID TO SOUTHEAST ASIA AND THE CHOICE OF AID STRATEGY The general goals of U.S. foreign economic policy were discussed in the previous chapter and need not be repeated here as such. In the field of foreign aid, decisionmakers had to consider the contribution of aid to the central goal of balancing the Communist threat in Asia, the cost of aid and how it could be justified to Congress, and the compatibility of aid policy with the basic U.S. economic beliefs. BALANCING THE COMMUNIST THREAT The beginning of aid to Southeast Asia was clearly linked to the Communist victory in China and later to the Korean War, which led to a growing threat perception of Communist takeover and to the perception of the region as a potential solution for Japan’s economic problems.3 Until then aid to the region was practically a nonissue, or, more precisely, an issue for the European colonial powers to deal


with. One could argue about the form of aid (that is, bilateral, regional, or multilateral) only once money had been allocated in the first place. This occurred in 1949 with the Mutual Defense Assistance Act, which authorized $75 million in funds as part of the Military Assistance Program (MAP) to be used at the president’s discretion in the “general area of China.”4 What role would foreign aid play in the context of balancing the Communist threat? The answer to this question changed over time. Consequently, the perceived relative benefits of multilateral and bilateral approaches also changed. The initial focus was on using aid to foster internal stability in Southeast Asia; later, partly in response to Communist initiatives, greater emphasis was placed on encouraging economic development. Aid for building internal strength and the bilateral strategy. After a brief period of emphasizing economic-technical aid, reflected in Truman’s Point Four speech, the focus shifted to military aid. The initial goals of U.S. aid were set by the Griffin mission that visited Southeast Asia in March 1950: namely, to reinforce the region’s nonCommunist governments by invigorating their economy. The Gray Report, completed in 1951, which informed the president about U.S. economic assistance programs, basically reiterated these aims. First and foremost, the goal was to help the non-Communist governments maintain their stability and independence.5 This reflected the high levels of domestic instability in Southeast Asia and the danger that it would be exploited by Communist elements. This assessment did appear to be well founded in light of the Communist-led Huk rebellion in the Philippines,6 and other Communist rebellions everywhere except Thailand and Indonesia. In Burma and Indonesia there were religious and separatist rebellions that forced their governments into neutralism. In Indochina, Ho Chi Minh’s forces were constantly gaining strength and receiving increasing military aid from China.7 These challenges had to be faced in many cases by weak national governments, dealing with a population whose loyalty was often to local and regional authorities.8 The fact that aid was aimed at building internal strength (defined largely in military terms) was crucial for the choice of cooperation form. As Wolf aptly puts it: “Given the objective of internal security, intercountry allocation alternatives did not arise…. Returns in the form of increased internal security tend to be incommensurable as between different countries.” Mutual Defense Assistance was used to create different military capabilities in different countries,9 and this favored a bilateral approach. Since there were no resources to pool or policies to coordinate, there was little to be gained from a regionalmultilateral strategy. Indeed, the Griffin mission recommended


pursuing a bilateral approach of giving aid to specific countries, and resulted in the establishment of special technical and economic missions (STEMs) in Thailand, Burma, Indonesia, and Indochina. Economic and technical cooperation agreements were signed with Burma, Thailand, and Indonesia in 1950 and with Vietnam, Cambodia, and Laos in 1951.10

The shift in the mid-1950s: Growing focus on economic development and the regional strategy. The mid-1950s saw a growing emphasis on

development as the objective of economic aid. This shift was central to the rise of regional aid plans. Cold War balancing considerations played an important role here. The Communist victory in China and the outbreak of the Korean War had impelled the reluctant U.S. to provide aid to Southeast Asia in the first place. The new Soviet policy, following Stalin’s death in 1953, of courting Third World countries with economic assistance led to a greater U.S. focus on economic development in its foreign aid. Several State Department agencies studied ways to capitalize politically on the common desire in Southeast Asia for economic progress. If the communists thought that exploiting economic weakness “might be a smoother road to conquest than outright military aggression” , then “an effective defense against that kind of attack will require more than military strength.”11 A Soviet initiative indeed came with the 1955 Asian tour of Bulganin and Khruschev, in which they offered Soviet technical assistance. China as well was promoting its policy of “peaceful coexistence” in Asia, as expressed in the 1955 Bandung Conference, involving the tightening of ties with many of its Southeast Asian neighbors.12 The new Communist economic initiatives led, indeed, to a thorough reexamination of U.S. foreign aid policy that produced several major policy papers. All stressed the need to focus on long-term economic development. The 1954 Jackson Report13 argued that the militarization of U.S. foreign economic policy had created a false and dangerous image of the U.S. as concerned only with preparation for war; what was needed instead was a reassertion of the critical importance of economic policy. The challenge for the U.S. was to prove to the developing world that rapid economic progress could be achieved without turning to the Communist model of rapid transition to industrialization and modern agriculture; and this required dramatically increasing aid for peaceful economic development.14 Hand in hand with this shift to economic development goals came a growing interest in regional arrangements. Within the administration, the Foreign Operations Administration (FOA), headed by Harold Stassen, began already in 1953 to examine the possibility of “wrapping up together” the Mutual Security Program “as a program


for Asiatic development, investment, trade and security.”15 Stassen advocated a plan for creating a regional development institution to provide loans, which received support in the State Department’s Far Eastern Division.16 The FOA argued that economic cooperation through a Far Eastern regional organization “might be able to help deal with common economic problems and promote common interests, thereby improving the position of over-all strength in the region.” Economic cooperation, in other words, might evolve over time into a broad Asiatic base of support for a regional security grouping as well.17 To assess the value of a regional approach, a committee was formed with representatives of all the relevant divisions of the State Department.18 Known as the Asian Economic Working Group, it submitted its report in August 1954, which called for the inauguration of a large-scale, long-range program of economic assistance to Asia. The new, large-scale plan could be administered either bilaterally or multilaterally, but the report favored the latter approach. The aid program would be administered through a multilateral organization, mainly Asian in character; part of this organization was to be an Asian Development Corporation (ADC), a lending institution oriented to the problems of the region.19 The ADC would offer loans for projects that would not interest private foreign investors nor, in most cases, governmental or international lending institutions—for example, involving transportation, power, and communications. Although the ADC never came into being, it can be viewed as a precursor to the ADB, eleven years later. The growing support for regional arrangements found expression in NSC-5429/5 of December 1954, which called for organizing a maximal Asian economic grouping and for channeling U.S. aid through such a grouping. A month later, however, NSC-5506 stressed that “In view of the vast differences which exist, the economic policy of the United States will be directed on a bilateral or selective natural group basis in accordance with the circumstances.”20 These fluctuations reflect the schizoid nature of policy on this issue. The various discussions gained public recognition with Eisenhower’s proposal in May 1955 to create a President’s Fund for Economic Development in Asia, which would make available $250 million for projects of a regional nature. Thus, the goal of economic development implied that many Southeast Asian states had to deal with basically the same problems of economic backwardness, and that in different domains there was much to be gained from a regional approach. Eisenhower’s proposal was adopted by Congress but, as we shall see later, eventually rejected by the Asian allies in the Simla Conference.


Balancing and the global-multilateral strategy. The need to balance or contain the Communist threat in Southeast Asia induced the Americans to extend aid to those states, aid that otherwise may not have been given. Cold War concerns also explain the U.S. reluctance to utilize the UN multilateral aid institutions. In the trade case, cooperation within the GATT was still able to satisfy (among other things) the U.S. goal of containing the Communist threat because the Soviet Union and China were not members. In the case of aid, the main international institution to focus on regional aid in Asia was the UN Economic Commission for the Far East (ECAFE). One of the main reasons for the strong initial U.S. opposition to giving this commission any substantial authority was the fear that the Soviet Union, which was a member, would use it for its propaganda. But when it became clear that the Soviets were having little success in gaining influence through ECAFE, the U.S. attitude toward this forum became more positive.21 The pressures to increase U.S. aid to the region only accentuated the dilemma between balancing against Communism and minimizing the cost of foreign policy. MINIMIZING THE COST OF FOREIGN POLICY: HOW TO EFFICIENTLY PROVIDE AID? Cost concerns have been more important for foreign aid policy than perhaps for any other foreign policy domain. The U.S. undertook foreign aid commitments with great reluctance. Congress was consistently unenthusiastic about foreign aid, and preferred it to be in the form of loans and not grants. Initially, government economic aid to Asia was not considered, despite the ongoing pleas of regional states for a comprehensive aid program modeled after the European Recovery Program (ERP). One of the purposes of Acheson’s famous Press Club speech of 1950, in which he emphasized the limits of U.S. power, was to discredit the “silly” idea of a Far Eastern Marshall Plan.22 Underdevelopment problems were to be dealt with through Point Four to supply knowledge and the private sector to supply capital.23 As it became clear that U.S. “national interest” necessitated the reconstruction and strengthening of Southeast Asia and Japan, attention first centered on the trade solution as the best means of ameliorating their capital problems. Aid was either provided for military purposes or conceived of as a means of encouraging trade (for example, the Yen Fund plan), but not as a main tool for economic development. Had it worked, the trade solution would have been less costly than the aid solution and more consistent with the U.S.


approach to economic affairs. However, by the mid-1950s both the administration and Congress had come to realize that Southeast Asian states were just too weak economically to develop significant trade relations with Japan and the West. The slogan “trade not aid,” with which Eisenhower came to power, changed into “trade and aid.”24 The conclusion of the Randall Commission report of December 1956 was clear: “In those cases where United States aid programs are large, it is vital that enough of the assistance effort be devoted to economic development in order that the country itself may in the future become less dependent on outside aid. Otherwise, the burden on the United States taxpayer will continue and even increase” (emphasis added).25 Again, the basic conflict between the concern for cost reduction and the United States’ broader policy goals could not have been avoided. Congress continued its efforts to phase out the development aid program, but at the same time began to appreciate the value of aid as a partial response to the problem of Communist expansion in Asia. Amid the criticism, a basic consensus emerged concerning the need for some form of foreign aid program.26 During the 1950s, there was no unified approach to dealing with this dilemma. Congress had to contend with what was known as the “economy bloc” and the residue of isolationists. Within the administration there was also an ongoing contest between the “economizing forces” (those stressing the importance of cost reduction), such as the Treasury Department and the Bureau of Budget, and bodies supporting overseas operations such as the Pentagon, State Department, and the International Cooperation Administration (ICA).27 Cost, then, was a persistent factor that the administration had to bear in mind while devising aid programs, especially in light of the arduous annual appropriation process and the debates surrounding it. As we shall see in the next chapter, even the ERP, which did generate overwhelming support, could not escape this annual congressional inquisition. How did this concern, together with the goal conflict it generated, influence the preference for bilateral or multilateral forms of administering aid? Multilateral aid and cost concerns. In the early 1950s, there was a distinct feeling in the Treasury Department (strongly voiced by Secretary George M. Humphrey) that multilateral aid programs were “international giveaways.” If the U.S. was going to give money away, it should give it away itself. That is, advocates of this approach were hostile to global multilateral aid institutions. One exception was the International Bank for Reconstruction and Development (IBRD), later


known as the World Bank, which was viewed more positively in light of its high economic standards for loans. However, the U.S. strongly opposed the creation of the Special United Nations Fund for Economic Development (SUNFED), a one country-one vote organization with Soviet presence.28 Still, toward the end of the decade, in light of the pressures generated by the extended economic recession and the beginning of the U.S. balance of payments deficit, it became politically necessary to shift some of the burden of aid giving from the U.S. to the other industrialized countries. That, in turn, made participation in multilateral and regional aid forums more attractive than the sole reliance on bilateral aid. At this stage Congress came to support the multilateral approach to aid. In May 1958 the Senate passed the Monroney Resolution, which favored multilateral loans based on sound economic principles. The Senate Committee on Banking and Currency argued that “because the advantages of development accrue to all members of the international political community, it seems only fair to share the costs of the development program among all who can participate.”29 This attitude was reflected in the U.S. support for the creation of the International Development Association (IDA) as a means of extracting more public capital from Europe and Japan (as well as a good, cheap alternative to the contribution the U.S. would have had to make to SUNFED).30 Regional aid and cost concerns. So long as the specific goal of foreign aid was to create internal strength and maintain political stability, the pooling effect was less relevant, and the U.S. saw little to be gained from encouraging the relevant Southeast Asian states to cooperate with one another. Bilateral aid, on the other hand, addressed each state’s specific domestic problems, be they strengthening the local police force or deterring external attack, while also making it easier for the U.S. to maintain its political leverage over its new partners. However, once the focus shifted to encouraging economic development, there was greater appreciation of the potential value of the pooling effect. Most of the Southeast Asian states faced similar challenges in terms of economic development. All except Thailand had been colonies and had gained independence only after World War II. All faced three major problems: population growth, inequitable wealth distribution, and lack of technical knowhow and of skilled and semiskilled labor.31 All were primarily producing agricultural goods and minerals, with very little manufacturing. After the war, prices of the primary products fluctuated greatly, in part because of the sub stitution of synthetic for natural products. Therefore, these states


generally considered industrialization and diversification to be urgent necessities.32 In some areas such as developing infrastructure and utilizing water resources, there was much to be gained from regional cooperation. As for industrial development, coordination in this domain could avoid the duplication of basic facilities such as textile mills, sugar factories, and cement plants (and the unnecessary waste of funds).33 An instructive example is that of steel production. All of the regional states were experiencing a rapid increase in demand for steel. Japan had great capacity for steel production but suffered from a severe lack of raw materials. Those, in turn, could be found elsewhere in the region (for example, steel scrap in the Philippines, coking coal in Taiwan.) Much could be gained from cooperative specialization.34 This type of regional cooperation was highlighted by later ECAFE plans for advancing regional “harmonization” of development. The benefits of encouraging regional cooperation in terms of the U.S. burden were made clear in the Randall Commission report of December 1956. The report argued that if the U.S. would provide the leadership to draw the nations of the region into closer economic relationships, then “the strength of one may serve to offset the weakness of another, and the collective well-being be made to rest

more upon mutual and complementary effort, and less upon the resources of the United States” (emphasis added).35 However, while

hopes for future pooling did generate much thinking on regional aid schemes, the extent to which this pooling effect was applicable to Southeast Asia was controversial. Thus, a paper from the West European desk of the State Department in 1954 analyzing the reasons for the rejection in 1949–1950 of an approach based on intraregional cooperation in Asia, argues the following: ERP proceeded from the established fact that the economic interdependence amongst all European countries was such that recovery in any one country would contribute to recovery of others. Consequently, a U.S. aid contribution to the community as a whole could be envisaged as a constantly diminishing marginal factor in the recovery of each of its compo nents, if the community would but make maximum efforts collectively to solve mutual problems…. In Asia, there was obvious complementarity between the economies of Japan and China…and between Japan and the countries of southeast Asia…. However, there were not within the area as a whole the scope and variety of natural economic interrelationships which, as in Europe, offered promise intra-regionally for solution or at least, substantial alleviation of country problems.36


The Southeast Asian Division of the State Department, the officials in the U.S. missions in Southeast Asia, and most Asian states tended to agree with this analysis. They stressed the fact that a regional arrangement would be most beneficial where there was a situation of economic interdependence. In Asia, they argued, there was relatively little economic interdependence, most of the economies were not complementary, and many of the key states had a potentially large internal market (unlike in Europe), further reducing the necessity of external trade. Most states, it was argued, were devoting most of their developmental expenditures to areas such as the improvement of education and health, increased agricultural efficiency, and so on. Thus there was in fact little chance of a conflict arising between different states’ programs, and the danger of duplication was relatively small. A regional aid program, therefore, had little to contribute and in fact entailed many problems.37 The main support for a regional aid program had to do less with the immediate economic benefits of such an approach and more with its potential positive impact on broader economic, political, and military regional cooperation. For example, the issue of Japanese participation in such regional programs was again raised and regional aid was associated with the strengthening of Japanese-Southeast Asian relations.38 A regional initiative was also expected to reduce the costs of U.S. policy in another way, namely, by creating greater legitimacy for it.

A regional strategy as a means of reducing cost by enhancing U.S. legitimacy. In chapter 2, 1 argued that there are several ways in

which a regional strategy can help reduce the cost of policy. One point was that a regional-multilateral strategy is more likely to appear legitimate to the regional states. By gaining greater legitimacy for its policy, garnering support and goodwill, the great power lowers the potential cost of implementing the policy in the face of partners’ opposition or apathy. Cooperation with the Southeast Asians through regionalmultilateral arrangements was seen as enhancing the legitimacy of U.S. policy thanks to these arrangements’ more egalitarian nature, reducing, as we saw earlier, suspicions about the great power’s imperialistic motives. By channeling aid through a multilateral institution the U.S. would be able to downplay its role to the extent that this role was unwelcome in the host country; in addition, when unpleasant demands had to be made of the host, the blame would not fall solely on the United States. Overall, aid through multilateral arrangements was perceived to be less politicized.39 The case of bilateral military aid to Indonesia clearly reflected that problem. 40


A second advantage of a regional-multilateral initiative concerns its symbolic impact. Because of its large scale, such an initiative is likely to be more dramatic and imply (though not necessarily entail) a greater commitment than a simple bilateral initiative. In the present case, this aspect seems to have been central. The growing interest in regional aid schemes during the Eisenhower administration corresponded to the shift in the official security strategy, with the growing emphasis on deterrence. As discussed in chapter 5, the focus on deterrence led to a greater emphasis on symbolic means of expressing U.S. resolve. This logic applied to the economic sphere as well. Indeed, proponents of a regional aid program put the greatest stress on the need for a large-scale initiative to capture the imagination of the Asian people and the U.S. public. The Asian Economic Working Group argued that the main advantage of a multilateral approach over a bilateral one would be that it “would be sufficiently new to be a sharp contrast with the present method of administering U.S. assistance to produce a dramatic impact on the minds of Asians.”41 This hope, however, turned out to be rather naive in light of the Asians’ own policy preferences at the time, as many in the Southeast Asian Division had predicted. This issue will be discussed later. The perception of the best ways to reduce the cost of foreign economic policy, as well as the perception of what type of strategy would appear more legitimate, were closely related to a more basic, normative understanding of how economic affairs should be conducted. PROMOTING A FREE TRADE, CAPITALIST ECONOMIC SYSTEM The expansion of government aid to Southeast Asia not only conflicted with the desire to reduce the cost of foreign policy. It also contravened the basic tenets of U.S. economic philosophy, which called for minimal government intervention and for reliance on private capital and enterprise. This conflict was even more pronounced in light of the Southeast Asian states’ desires to pursue heavy industrialization, with massive government involvement. The ERP aid, by contrast, aimed to promote trade and strengthen the international liberal trading system. It was partly to avoid this conflict that the U.S. put so much initial emphasis in Southeast Asia on trade liberalization as an alternative to aid. This would have been much more compatible both with U.S. ideology and cost concerns. The initial negative U.S. attitude toward ECAFE also reflected these ideological concerns. The U.S. strongly criticized the “undue prominence” that ECAFE, in the debate over its tasks, accorded to


external financial assistance. It also resented ECAFE’s interest in regional economic planning, since all economic planning was "ideologically suspect."42 Also, there was a fear that regional institutions might become political institutions that would tend to undermine the strict lending standards the U.S. was trying to get accepted.43 Any new proposed regional arrangement was immediately judged according to its relationship with the global—multilateral and more business-oriented financial institutions, mainly the IBRD. While giving way to public capital, U.S. decisionmakers remained loyal to the principle that public capital should never compete with private capital and, when used, should be kept to a minimum. Supporters of a regional scheme such as the Asian Development Corporation (ADC) constantly stressed that it would not compete with the IBRD since it would address different types of projects such as irrigation, flood control, highway and community facilities that did not interest private capital at all; public lending institutions as well usually did not find such projects attractive since they generally preferred self-liquidating projects. Furthermore, ADC supporters attested that the regional institution would extend no loan assistance until it was satisfied that other means of financing were either inappropriate or unavailable.44 This consideration was important both for ideological and cost minimization concerns. Nevertheless, the specific initiatives in the Asian context, such as the 1955 President's Fund for Asian Economic Development and the 1965 ADB, should be understood in the context of a broader shift, or perhaps compromise, in U.S. economic thinking. This shift reflected Cold War necessities, and found expression in the change from a noloan to an orthodox-loan to a soft-loan policy by the late 1950s.45 SUMMARY: POLICY GOALS AND STRATEGY CHOICE Until the mid-1950s, there was little American interest in regional aid arrangements because the goals pursued by the administration were such that the pooling of resources among regional states or even substantial coordination was not possible. A regional aid arrangement in Southeast Asia was not seen as capable of resolving the cost vs. commitment conflict that emerged from the goals of countering Communist expansion on the one hand and minimizing foreign policy costs on the other. Furthermore, in its insistence on relying mainly on private capital for economic development, the administration was still unwilling to expand its aid commitments in the first place. When the focus of aid shifted from the military sphere to economic development, and with increasing calls in the U.S. for a large-scale


economic aid program, regional arrangements suddenly seemed more promising as a means of resolving the cost vs. commitment dilemma, and especially as a propaganda tool to capture the imagination of Southeast Asia. However, there were still serious doubts about the value of the pooling effect and the feasibility of regional aid projects. The lack of consensus was manifested in a somewhat schizoid policy that formally endorsed the bilateral strategy but sometimes was caught up in frenzies of regional schemes and initiatives.46 Table 7–1 provides an overview of the relative value of the different strategies up to the mid-1950s and after that point, respectively.

Table 7–1 Relative Value of the Different Strategies in Two Periods

The various ideas about the creation of regional forums for aid provision were not translated into significant policy. This, in turn, had much to do with the broad regional power disparities, as well as the perceived goals that the Southeast Asian states wished to advance with the help of economic aid. THE IMPACT OF REGIONAL POWER DISPARITIES ON THE CHOICE OF AID STRATEGY Both the extreme economic weakness of the Southeast Asian countries vis-à-vis the U.S., and their weakness vis-à-vis two regional actors, Japan and India, reduced the attractiveness of a regional-multilateral aid program in Asia.


POWER DISPARITIES BETWEEN THE U.S. AND THE SOUTHEAST ASIAN PARTNERS A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. By encouraging its weaker partners to cooperate with each other, a great power may achieve two goals: to create a pool of local resources, and to develop a greater sense of independence and initiative among the partners. In this case, however, the Southeast Asian partners’ economies were so weak that there was very little to pool in the first place. Indeed, the most common argument against regional aid schemes was that there was too little economic interdependence among those states to merit such an approach. Whereas in Europe the task was to rebuild the European powers, mainly by tending to the dollar-gap problem, in Asia the task was to create basic economic power.47 Regional states needed to concentrate the scant resources they had on domestic development. A regional approach, then, could not have solved the great power’s burden-sharing problem, and at least up to the mid-1950s in fact seemed more costly since it entailed large-scale aid. REGIONAL POWER DISPARITIES AMONG THE REGIONAL PARTNERS A regional strategy will be most attractive if the power disparities among the potential regional partners are narrow, and least attractive if these power disparities are very wide. The broad power disparity between the weak Southeast Asian states and Japan and India created an underlying fear among the small states of domination by those two regional powers. Although both Japan and India were interested in regional economic initiatives, others argued that such arrangements would only serve Japan and India’s interests. The same fear of Japan that impeded regional cooperation in the trade case or in the Pacific Pact case operated here as well, though in this case India joined Japan as a potential threat. Broad power disparities clearly hindered the attempts to advance regional arrangements. The situation led the small Southeast Asian states to clearly prefer a bilateral form of aid, as I discuss later. The


Southeast Asian Division of the State Department warned that too much U.S. emphasis on the Japanese market and on Southeast Asia as its supplier of raw materials “would be a ‘kiss of death’ to any Southeast Asian cooperation in regional development.”48 The small regional states’ bias toward a bilateral arrangement affected, in turn, the U.S. perception of its allies’ preferences. PARTNERS’ PREFERENCES AND THE CHOICE OF AID STRATEGY A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. COMPATIBILITY OF THE GOALS PURSUED The Asian partners’ goals played an important role in favoring the bilateral approach to aid. Consistent with its policy in the other cases, the U.S. was unwilling to join or support a multilateral arrangement where it suspected that the partners’ goals were incompatible with its own. The initial U.S. opposition to ECAFE stemmed from the fact that it believed the Asians were only interested in ECAFE as a lever to prize from the U.S. an Asian recovery plan. The State Department was concerned that ECAFE plans assumed extensive U.S. financing, and that encouraging those plans might lead to the growth of a “psychological expectancy among Far Eastern countries, which would be difficult later to deflate.”49 It was for the same reasons that the Americans flatly rejected the calls for an Asian Marshall Plan.50 The U.S. attitude toward ECAFE began to change only after a few years, when the organization had proved its serious intentions about regional economic development. By 1953 the U.S. had acknowledged ECAFE as developing into the most significant forum in the region, and “contributing to the development of a sense of regionalism on the part of the Asian countries and of the need for common action on common problems.”51 A conscious decision was made at that time to show more positive interest in the organization.52 Seriousness of intentions, however, was not enough; the nature of those intentions was no less important. The second key problem for any regional economic aid arrangement was that many of the Southeast Asian states had economic goals that were very different from those envisioned by the U.S. Whereas the U.S. considered the issue of economic development from a liberal, free trade perspective,


most regional states thought in terms of economic nationalism. For them, economic development meant the development of heavy industry. They believed they could skip over the traditional, gradual capitalist development pattern of starting from consumer goods industries, and wanted to focus on developing iron and steel. The U.S., on the other hand, argued that this was not necessary for economic development. On the specific issue of steel it warned that with the rapid expansion and improvement of iron and steel production in Western Europe and the U.S., prices would fall and this would create difficulties for the ECAFE countries wishing to establish that industry.53 This goal conflict was clearly recognized by the Southeast Asian experts in the State Department, who understood the importance of industrialization for those states as a national symbol.54 As the 1957 report of the Committee on Asian Regional Economic Development and Cooperation put it: Reduced to its essentials, the problem for the U.S. in Asian regional economic development and cooperation is to find ways to bridge the gap between the interests of the U.S. in seeking an expansion of suitable Asian regional cooperation on one hand, and the attitudes of the Asians in holding it back on the other…. The most important deterrents to greater cooperation are nationalistic preoccupation with domestic affairs, political antagonisms and suspicions, and the general lack of economic complementarity.55 The different goals pursued by the Asian states made the creation of a regional framework not only more difficult but also more potentially dangerous. Such a regional framework would likely give more relative power to the small Asian states, and this, given their inclinations, entailed a risk. The same report observed: “An elaborate superregionalism, like excessive nationalism, in Asia, would probably be contrary to the interests of the United States even if the Asians wanted it. ‘Pan-Asianism’ could be hostile to the Free World, useful for the Communists, and disrupting to world economic cooperation.”56 It is interesting that more recent concerns about proposals for an exclusive Asian economic bloc, such as Malaysian President Mahatir’s proposal for an exclusive East Asian Economic Group (EAEG), seem to echo those old fears.


PARTNERS’ PREFERENCES ABOUT THE FORM OF AID The Asian preference for bilateral aid, or perhaps more accurately, lack of interest in a regional approach, was clearly manifested in the Simla Conference that was convened to discuss the U.S. initiative known as the President’s Fund to support regional economic projects. All of the Asian representatives, except those of Japan and India, showed a lack of enthusiasm for a regional approach. The general sentiment was that their countries’ own development needs preceded any regional development needs. A main reason for the reluctance to join a regional arrangement was the small states’ fear that India or Japan would dominate it. The Asian representatives therefore stressed their support for the continuation of bilateral aid programs and their desire to deal directly with the U.S.57 Yet, despite this clear rejection of regional arrangements, U.S. officials continued to develop various regional schemes. The Committee on Asian Regional Economic Development, the conclusion of whose report was quoted earlier, stressed that there was still hope for regional cooperation. The proper approach, it argued, was to identify the specific relationships and, more so, the specific functional issues on which regional cooperation was most likely, and promote those.58 It predicted, however, that “the Asians will reject any kind of regional organization that implies less bilateral assistance, exposes national development planning, or requires an additional Asian contribution of funds or personnel.”59 To sum up, U.S. flirting with ideas for regional development cooperation led to very little romance. After the failure of Eisenhower’s President’s Fund initiative there was little significant action on this issue, despite surprisingly intensive investigation of the topic and growing support within the administration for the regional option. It was only during the Johnson administration that the U.S. again took an active role in encouraging regional cooperation. SUPPORT FOR THE ASIAN DEVELOPMENT BANK: WHAT CHANGED? On April 7, 1965, President Lyndon Johnson gave a speech at Johns Hopkins University entitled “Peace without Conquest” in which he committed the U.S. to join a $1 billion aid program for economic cooperation in Asia.60 He named Eugene Black as his special adviser on this issue. On April 14, only a week later, Johnson announced that the U.S. would participate in an Asian Development Bank that had been proposed by the ECAFE countries. On June 23, Eugene Black,


the former head of the World bank and Johnson’s advisor on the ADB, officially conveyed this decision to the ECAFE committee dealing with this issue, and informed the committee that the U.S. was willing to contribute 20% of the bank’s total capital, up to $200 million, subject to congressional approval. As we saw earlier, different ideas about creating regional financial institutions had been in the air for quite a while, but after the failure of the Simla Conference none of them was seriously pursued by the U.S. The specific proposal to create the ADB had been seriously pursued by the regional states themselves through ECAFE ministers’ meetings since 1963. It never received U.S. endorsement until April 1965. Although U.S. goals had not changed dramatically since the 1950s (though the stakes had indeed become much higher), the main changes that account for the new viability of the regional solution took place in the partners’ preferences and power disparities. U.S. POLICY GOALS AND REGIONAL COOPERATION The goals of U.S. foreign economic policy in Asia remained basically the same. One goal that gained a much more central position, however, was that of reviving the crumbling legitimacy of U.S. policy in Asia, both internationally and domestically, in light of the intensifying involvement in Vietnam. Also, both Johnson and his national security adviser, Walt Rostow (initially head of the Policy Planning Council), articulated much more clearly than their predecessors the link between regional cooperation and the goal of burden sharing. BALANCING THE COMMUNIST THREAT: THE RISING STAKES AND THE RISING COSTS The previous chapters traced the evolution of the Cold War in Asia from an initial perception of the Soviet Union as the main source of threat, through the Korean War that led to a focus on China as the main threat. During the Johnson administration, this threat perception intensified. Although Johnson was aware of the fact that the Vietcong had their local, social roots, he was convinced that “[the Chinese] target is not merely South Viet-Nam; it is Asia.”61 He believed that, however complex the relations between China and North Vietnam, China was standing behind Ho Chi Minh’s regime, and Ho Chi Minh was helping the Vietcong.62 In his own writings, Rostow as well suggests that China was “actively leading an explicit effort to take over Southeast Asia in a nutcracker movement, of which


the attack on South Vietnam was one arm, the Malaysian confrontation the other.”63 This impelled the U.S. administration to strengthen its commitment to protect the region against further Communist encroachment. However, the cost of that commitment was now much higher, as the U.S. was becoming militarily involved in Vietnam. As the goal of balancing the Communist threat assumed a military nature, the conflict with the cost-reduction goal intensified and the stakes in resolving that dilemma were raised. COST REDUCTION AND BURDEN SHARING Domestic concerns about the cost of foreign policy and about appropriate burden sharing were intensifying in the mid-1960s, raising the issue of whether the U.S. was “overcommitted.” These concerns stemmed from a general popular perception that after the resolution of the Cuban missile crisis the world was much safer than before, and from the painful and frustrating experience in Laos and Vietnam.64 Regionalism was perceived as a promising way out. Johnson was an ardent supporter of shifting economic assistance to the developing world onto a multilateral basis where “others would do more, the U.S. less, on the principle of ‘partnership and fair shares.’”65 In September 1966, he elaborated that logic: “Our purpose in promoting a world of regional partnership is not without self-interest. For as [regional partners] grow in strength…we can look forward to a decline in the burden that America has to bear this generation.”66 Of these regional partners, special attention was given to Japan, which had both the resources and, logically, the national interests to make an effective contribution, first to reconstruction and development, and later to the security of the area.67 This point was stressed during the hearings on the Asian Development Bank Act. In his testimony, Undersecretary of the Treasury Joseph Barr pointed out that the new bank could be “a multiplier of present assistance.” It could enhance the effectiveness of others’ assistance, for example, by helping to finance expanded programs of technical education and training. Subscription to the bank’s capital, stressed Barr, would help spread the aid burden. The bank enlisted subscriptions from states, such as Italy, Austria, Denmark, and Norway, that had never before participated in any substantial way in bilateral development assistance in Asia. Other countries that had participated in the past, argued Barr, “have in effect increased their share of the burden that in large measure fell on the United States in the past.” Also, “the proposed Bank’s authority to accept and administer special funds would also permit it to spread the


burden of development assistance by serving as a channel for this form of additional financing from donor countries.” Barr emphasized that when the outlays of capital for the new bank were matched against U.S. exports, it appeared that “any effects upon our balance of payments will be very small.” At the outset of his testimony, Barr stressed the relatively small part played by the U.S. in the new bank and the large contributions of other states. The message was clear: the bank serves our interests, the cost of supporting it is low, and others are bearing most of the burden!68 REDUCING COST BY ENHANCING LEGITIMACY At the same time, a regional economic initiative was also seen as a promising way to change the negative American image in Asia, as well as Johnson’s declining popularity in the United States. Late in February 1965 the president ordered continuous bombing of North Vietnam “to force the North Vietnamese into negotiation.” Within four months, U.S. troops were fully engaged in the war.69 Johnson’s Johns Hopkins speech is often analyzed against the background of mounting domestic criticism of his policies in Vietnam, especially his refusal to negotiate with Hanoi. A regional economic initiative, he hoped, would “put a brighter face on his Vietnam policy” and change the emphasis of the crisis in Vietnam from war to the prospects of economic reconstruction.70 New bilateral aid arrangements could not have achieved such a dramatic effect, and would have been perceived as merely additional politicized aid. Although the ADB was not part of Johnson’s proposal in the Johns Hopkins speech for a $1 billion aid program for Asia, the two were clearly linked. Furthermore, the ADB, with its authority to administer special funds made available by donor nations, was especially suited to serve as a channel for the president’s Southeast Asia program.71 A regional initiative, then, had a potential to reduce the cost of American Asian policy through both practical and symbolic means. It is telling that different executive branches stressed different rationales as the main goals of the ADB. After the ADB Act was passed by Congress in January 1966, a State Department spokesman pointed out that the ADB would help demonstrate the U.S. commitment to Asian development, while showing that the U.S. was looking beyond the fighting in Vietnam to a time when the resources now required to curb aggression could be devoted to peaceful reconstruction. On the other hand, Treasury Secretary Henry Fowler emphasized the ADB’s role in getting the Asian nations to cooperate on common problems, as well as its potential for spreading the burden


of economic aid to the region.72 The ADB, then, had something to offer to everyone. COMPATIBILITY WITH THE U.S. NORMATIVE AGENDA The early expansion of government aid to the regional level was problematic because it conflicted with the basic tenets of U.S. economic ideology. In the case of the ADB, however, the very narrow, economic nature of the new institution meant that this conflict was largely ameliorated. The stated goal of the ADB, which was modeled after the International Bank for Reconstruction and Development (IBRD), was “to foster economic growth and cooperation in the Asian region and to contribute to the acceleration of the process of economic development.” There was no mention of social progress, unlike in the cases of the African Development Bank and the Inter American Development Bank.73 The similarities between the ADB and the World Bank made the ADB, despite its regional nature, a legitimate financial institution. A key merit of the bank was that it pursued conservative lending policies. At the same time, there had been a subtle ideological shift in the U.S. toward greater acceptance of regional economic arrangements. There is perhaps no better representative of that shift than Eugene Black himself, who was known for his internationalist views, but no less for his fiscal conservatism. While he was president of the World Bank he strongly opposed the creation of regional development banks, fearing that they would become political institutions that would undermine the World Bank’s work. The ADB, however, was different: it really was a bank. Black argues that it was founded on a set of banking principles and not political assumptions.74 Black’s views symbolized for many the acceptable boundaries of U.S. economic ideology. That was why Johnson’s decision to appoint him and only him as his adviser carried so much weight. Black was approved of by the liberals in Congress because of his internationalist views, and admired by conservatives as a planner of stern fiscal standards.75 His wholehearted endorsement of the regional approach gave an ideological seal of approval to the initiative.76 REGIONAL POWER DISPARITIES AND STRATEGY CHOICE A regional strategy will be most attractive when power disparities between the great power and the regional


partners are moderate, and less attractive when those disparities are very wide or very narrow. The most notable change in regional power disparities since 1955 has been the rapid growth of Japanese economic power. By 1965, Japan was a strong economic actor. In many ways, the hopes the U.S. had held for Japan since the end of the war were now materializing. Japan’s GNP, for example, rose from $30.8 billion in 1957 to $115.0 billion in 1967. Its exports, as a share of total Western exports, more than doubled from 2.4% in 1955 to 5.1% in 1961. It was changing from a newly industrializing country with a comparative advantage in laborintensive products to a highly developed industrial country with a comparative advantage in high-value-added engineering products using sophisticated technologies. Finally, its balance of payments had also improved.77 At last Japan could truly bear a significant part of the burden of Asian economic development. Japan’s ability to do so was also greatly enhanced by the gradually changing perceptions of its neighbors about the threat it posed. Its Southeast Asian neighbors were still wary, as reflected in the fact that Japan did not win the competition over the location of the ADB. However, the high threat perception of the mid-1950s declined, and there was greater willingness to cooperate with Japan. Previously the U.S. had hesitated to support regional-multilateral initiatives, since it was clear that most of the burden for creating them would fall on its shoulders. In 1965, Japan provided the ADB with $200 million—the first instance in which a regional state contributed to a regional organization the same amount contributed by the U.S. Moreover, Asian countries were to contribute 65% of the bank’s capitalization and the U.S. only 20%. Indeed, narrower power disparities make the regional strategy much more appealing for burden-sharing purposes. It was much easier to “sell” the ADB to Congress, as it was constantly made clear that the Asians would provide the largest share of the bank’s subscriptions themselves. Although the growth of Japanese power was central to making the ADB project viable for the U.S., the power disparities between the U.S. and its other Asian partners remained wide. As noted earlier, a relationship with a very weak partner may lead to a dependency mentality on its part, limiting its inclination to become more selfsufficient and leaving most of the burden with the strong power. In the ADB case, however, since the Asians provided a high percentage of the subscriptions for the bank, they did have a direct stake in its proper financial management and overall success. During the Senate hearings, Senator Hickenlooper asked Black: “Is it fair to say that in utilizing this Bank in the area that it is [we have] a very basic


purpose to establish expanded self-help responsibility in these particular countries?” Black replied: “There is no question about this.”78 In a 1967 speech, Rostow observed more generally: Regionalism…has…commended itself to the United States as a way of permitting us to shift away from the disproportionate bilateral relations inherent in a large power working with smaller powers. We see in regionalism a way of not returning to isolationism, but of leaving the nations of the various regions to do as much for themselves as they can—and more with the passage of time—while preserving the ties of interdependence where they are judged on both sides to be in the common interest.79 PARTNERS’ PREFERENCES AND THE REGIONAL STRATEGY A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. From the mid-1950s to the mid-1960s, the most significant change that is relevant to this case occurred in the Southeast Asian states’ attitude toward regional cooperation. PREFERENCES ABOUT THE FORM OF COOPERATION The first part of this chapter showed that U.S. interest in regional solutions could not materialize because of the lack of regional interest in such arrangements. By the mid-1960s, however, this attitude had changed dramatically. Although bilateral aid was by no means neglected, there was genuine, growing interest in regional cooperation. Perhaps the most familiar end product of this new trend was the creation of ASEAN in 1967. This, however, is beyond the time frame of this discussion. There were both positive and negative incentives for the change. Earlier, the lack of complementarity among the regional economies made the development of intra-regional trade a dubious prospect. By the early 1960s, however, regional leaders who were interested in regionalism shifted their focus to cooperation in production. Regional


economic cooperation was now closely linked to national development goals, the aim being to harmonize the latter so as to create a new pattern of complementary production, on the basis of which future regional trade could develop. Consequently, ideas such as an ADB carried much more practical weight when linked to a regional plan for industrial specialization.80 Vague notions of regionalism now gained practical significance as supporting basic national goals.81 Regional cooperation was also encouraged by two negative incentives. First was the growing regional perception of Chinese threat. Although from 1954 to 1959 China had emphasized an Asian policy of friendship and moderation, in the 1960s it dissipated much of that favorable capital. Its souring relations with India, Indonesia, and Burma prompted Southeast Asian leaders to think of ways to ensure their long-term security.82 Second was the formation of the European Common Market as a potentially competing trade bloc. Uncertainty about the long-term impact of this development further prompted the Asian countries to exchange information about their industrial plans.83 Only in the 1960 ECAFE session did its secretariat receive a broad mandate to explore various forms of economic integration. Independently of the ECAFE activities, the Association of Southeast Asia (ASA) was formed in 1961, and included Malaya, the Philippines, and Thailand. The ADB idea was developed in ECAFE’s Ministerial Conference of 1963, the first ministerial-level ECAFE meeting in which only Asian governments participated. While non-Asian sources of funds were necessary, the experts studying the idea agreed stress should be placed on maintaining the bank’s “Asian” character.84 Throughout the process, up to April 1965, the ADB was an Asian initiative that faced lukewarm U.S. reactions. When the U.S. decided to support the project, this local initiative made the U.S. investment seem sounder and in fact much easier to pass through Congress. The bank was presented to Congress as “a product of a new spirit of cooperation.”85 President Johnson, in presenting the ADB Act to Congress, asserted that the new institution expressed the will of Asia and was conceived and sponsored by Asians.86 This was not, then, merely another tool to drain the U.S. treasure chest. Apart from the Southeast Asian states’ preferences, it was the attitude of the United States’ strongest regional partner, Japan, that had a major impact on the regional strategy’s viability. In the Pacific Pact case, Dulles did not further pursue the option of a regional security pact once the Japanese had made it clear that they preferred to enter a bilateral security arrangement with the United States. Although there were other serious obstacles to that initiative, strong Japanese support at the time would have given it a major impetus. By


the early 1960s, Japan was still reluctant to pursue a more active role in regional security. However, it did begin to pursue a more active economic policy and to show strong interest in regional economic cooperation. The Japanese became enthusiastic about regional arrangements long before the Americans changed their minds. Prime Minister Nobusuke Kishi (who held the office from 1957 to 1960) was the first to actively pursue Japan’s return to Southeast Asia, seeking vainly to mobilize U.S. support for this. In Kishi’s June 1957 visit to the U.S. he promoted the creation of an Asian Economic Development Fund, but met with a cold U.S. response.87 In 1958, the Japanese provided the equivalent of $13.9 million to the ExportImport Bank, earmarked for economic cooperation with South and Southeast Asia. By 1961, this had evolved into an Overseas Economic Cooperation Fund. In 1962, the Japanese created the Overseas Technical Cooperation Agency.88 Completely independently of the ECAFE initiatives, a clear concept of a regional development bank was developed in Japan already by the fall of 1963 by a group of private citizens. At first the govern ment did not pursue this track, but once the ADB proposal was openly presented in ECAFE’s ministerial conference, Japan fully endorsed it.89 The more positive attitude also reflected the accession to office of Prime Minister Eisaku Sato in November 1964, who advocated an autonomous Japanese policy in Southeast Asia based on economic aid.90 Although Japanese interest in regional cooperation was not sufficient to convince the U.S. to support that strategy, the fact that the main actor that could share the burden had become eager to do so made it much easier for the U.S. to endorse such a policy. COMPATIBILITY OF GOALS SOUGHT THROUGH THE REGIONAL ARRANGEMENT In 1965, unlike in 1955, the Asians were taking the initiative. Moreover, the compatibility of the proposed bank’s goals with U.S. goals meant that another obstacle to U.S. support for a regional arrangement had been removed. In the 50s the lack of U.S. support for regional cooperation was influenced by the perceived conflict between the U.S. and Asian economic interests, with the latter advocating heavy industrialization, state intervention, and overall a more nationalistic economic policy. The ADB, however, was presented as a purely economic institution, with strict borrowing rules that were insisted on by the Asian members, not by the United States. In fact, the Asian members insisted on conventional instruments of finance to show that “their” bank qualified as a sound financial institution in the world capital markets. Ironically, it was Black who had to convince


them of the need for some borrowing on concessional terms since so many Southeast Asian states were simply not in a position to borrow money on conventional terms.91 The regional states were genuinely interested in complying with the conservative financial policy advocated by the U.S. and the World Bank. Some senators did voice concern about the United States’ ability to wield influence in the bank if it contributed only 20%. In an interesting response, Black reassured the Senate Foreign Relations Committee that U.S. interests were at no risk because there were enough members with compatible interests.92 SUMMARY The findings of this chapter are summarized in Table 7–2. The first part of this chapter examined early postwar U.S. policy concerning the form of aid to Southeast Asia. As in the earlier cases, it took time for the U.S. to come to terms with the need to extend its regional commitments—in this case, to provide government aid. The U.S. decision to do so was driven by the basic power distribution realities: on the one hand, bipolar competition with the Communist bloc; on the other, the overwhelming U.S. regional preponderance and the regional partners’ weakness. As the U.S. gradually increased its regional aid commitments, the problem of reconciling these with the need to minimize foreign policy costs came to the fore. The U.S., as we saw, faced the same dilemma in the trade issue-area as well. In that case, different circles in the U.S. almost immediately became interested in the regional strategy. On aid policy, on the other hand, there was stronger and more sustained support for focusing only on bilateral aid. The regional strategy was not perceived as capable of resolving the goal conflict, since a regional arrangement had no advantage over bilateral arrangements in terms of the specific type of aid given at the time (military, aimed at building national strength). This indicates that the nature of preferable cooperation arrangements depends on the specific characteristics of the relevant issue-area. This conclusion does not undermine my main thesis; a cooperation strategy’s ability to reconcile conflicting policy goals was still a central factor in making it domestically attractive. This ability, however, was influenced by the characteristics of the issue-area. The growing appreciation of the importance of economic development aid as a precondition for other regional cooperation schemes altered those characteristics. If aid was to advance economic development, then a regional approach had new merits. This led to the growth of regional schemes within the U.S. administration, the apex of which was Eisenhower’s 1955 President’s Fund initiative.



Despite the U.S. interest, no serious measures to promote the regional strategy were pursued until 1965. As we saw, the extremely wide power disparities between the U.S. and the regional states made the regional strategy less feasible. As Japan grew stronger and more capable of carrying the burden of regional development, the regional strategy became much more appealing to the U.S. Still, it seems that


the most significant change from 1955 to 1965 had to do with the changed preferences of the regional states. If during the 1950s Asia had shown sincere interest in promoting regional cooperation, the U.S. would in all likelihood have pursued the regional strategy more forcefully. Eisenhower’s fund for regional economic development never materialized because no regional actor came up with a project for which the money could be used. Johnson could so easily and rapidly initiate and pass through Congress the ADB Act because there was so much evidence of strong regional interest and initiative. Both in 1955 and 1965 the Southeast Asian states were weak, yet that did not inhibit the U.S. in 1965. Although the dramatic change in Japan’s relative power helped in implementing the ADB project, it was not, as we saw, the central factor in shaping U.S. preferences.

Chapter 8 U.S. Strategies for European Economic Recovery—The Marshall Plan in a Comparative Perspective

The previous two chapters examined the strategies that U.S. decisionmakers contemplated and finally pursued in order to deal with problems of economic cooperation in Asia, both in the fields of trade and aid. This chapter offers a comparative analysis of the logic behind the U.S. preference for and choice of a regional strategy to provide aid to postwar Western Europe, in what came to be known as the Economic Recovery Program (ERP) or Marshall Plan. The ERP is an especially useful case for comparison since it reflects not only the American approach to the issue of economic aid, but also American thinking with respect to trade and trade expansion. As such, it has implications for both chapters six and seven. In the trade case, the U.S. interest in regional arrangements for the revival of trade in Asia did not translate into meaningful action. On the European front, there was also an interest in encouraging regional trade, but unlike in Asia this interest did translate into real policy through the encouragement of regional trade liberalization via the ERP. In the case of aid, U.S. support for a regional aid strategy in Europe can be contrasted with the initial, clearly bilateral aid policy toward Asia (which changed as of 1965). The first section of this chapter considers the specific policy goals sought by the U.S. in the European context, and the ability of different strategies to accommodate those goals. The second section focuses on how regional power disparities affected the viability of the different strategies, and the third section examines the influence of the European partners’ preferences on the final policy choice. As with the previous cases, this chapter does not attempt to assess or explain the eventual success or failure of the strategy chosen, in this case the Marshall Plan. My focus is on the period preceding Secretary of State George Marshall’s announcement of the U.S. policy initiative during his speech at the Harvard University commencement on June 5, 1947. However, since the Americans did not in fact have a clear conception at the time of the nature of the strategy they were advocating, I examine how such a conception evolved after the speech, as it was

U.S. STRATEGIES FOR EUROPEAN ECONOMIC RECOVERY 165

manifested in U.S. policy toward such issues as trade liberalization and the creation of a European Payments Union (EPU).1 HISTORICAL BACKGROUND In its attempts to help stabilize and revive the West European economies, the U.S. initially used a combination of multilateral and bilateral strategies, which were implemented through the UN Relief and Rehabilitation Administration (UNRRA). However, this aid proved to be extremely problematic as it often ended up supporting states hostile to the U.S. The focus then shifted to a piecemeal, bilateral aid strategy. During 1945–1947 the U.S. provided bilateral aid to France and Italy, and perhaps the most familiar act of bilateral aid was the $3.75 billion loan to Britain in 1946. By the summer of 1947, however, it was becoming apparent that the crisis in Western Europe was only intensifying and that massive U.S. aid might become necessary for European recovery. On June 5, Secretary of State Marshall presented the rather vague U.S. aid proposal for Europe in his Harvard address. From July to September, the Europeans convened in Paris and finally established the Committee of European Economic Cooperation (CEEC), a body that would jointly assess the European aid requirements. After a long debate in Congress, the Foreign Assistance Act was passed on April 3, 1948, providing $4.97 billion for ERP appropriations for 1948–1949. Congress annually appropriated funds for the ERP up to 1951, when the four-year plan officially came to an end.2 This regional strategy of forcing the Europeans to jointly assess, utilize, and distribute U.S. aid money was strengthened by a set of bilateral agreements signed between the ERP participants and the United States. These agreements were all quite similar, their main aim being to assure that aid recipients would indeed pursue regional cooperation.3 It was against this background that a regional aid strategy was finally developed and endorsed. CONFLICTING POLICY GOALS AND THE CHOICE OF COOPERATION STRATEGY Decisionmakers will prefer the cooperation strategy that is best able to serve, simultaneously, their conflicting policy goals, and that will advance these goals at the lowest cost.


Hoffmann remarks that the Marshall Plan “was a single answer to a number of headaches, and its greatness lies in the way in which it transcended these.”4 Indeed, the plan was sold to Congress in the spring of 1948 as a strategy for advancing several different policy goals.5 What were these goals, and why did the U.S. choose a regional strategy to achieve them? BALANCING THE COMMUNIST THREAT: A UNITED EUROPE Is PROSPEROUS; A PROSPEROUS EUROPE Is STRONG The decision to propose a European Recovery Program was clearly linked to the administration’s growing appreciation of the slim chances of resolving Europe’s problems through cooperation with the Soviets. Roosevelt’s earlier decision not to promote a regional arrangement was partly influenced by his fear that this might alienate the Soviets.6 However, by the time Secretary Marshall returned from the Moscow conference of the Council of Foreign Ministers (March 10-April 24, 1947), he as well as other senior State Department officials had become convinced that no meaningful cooperation with the Soviets was forthcoming. Marshall was now certain that the Soviets would never agree to any settlement for West Germany and Austria that would not give them an excellent chance to dominate those countries completely, from the inside. His second conclusion, more directly linked to the ERP, was that the Russians were dragging their feet on a German settlement because they had a vested interest in a weak and troubled Western Europe that would facilitate Communist subversion.7 It is telling that immediately upon his return from Moscow, Marshall contacted George Kennan, head of the new Policy Planning Staff (PPS), and urged him to begin the PPS’s work, the first project of which was the study of Western Europe’s problems.8 Kennan, for his part, agreed with Marshall about the Russian motives for stalling.9 In this respect, then, dealing with the European economic crisis was closely linked to the need to halt Communist expansion in the context of the ensuing Cold War. The PPS concurred that the Communists were exploiting the European crisis and that further Communist successes would create a serious threat to U.S. security.10 The report of the special ad hoc commit tee of the State-War-Navy Coordinating Committee (SWNCC), which examined the issue of aid to foreign countries, argued that the aid program was to help prevent the imposition of totalitarian regimes on free peoples, and "to maintain in friendly hands areas which contain or protect sources of metals, oil and other national resources, which contain strategic objectives, or


areas strategically located, which contain a substantial industrial potential, which possess manpower and organized military forces in important quantities, or which for political or psychological reasons enable the U.S. to exert a greater influence for world stability, security and peace."11 AIl of these criteria clearly applied to Western Europe. Defense Secretary James Forrestal argued before the Senate Foreign Relations Committee that the ERP would "redress the balance" by "rebuilding Western Europe and thereby filling a Vacuum' that otherwise might be filled by the expansion of Soviet power."12 This was the main reason the costconscious Republican Congress, or, more accurately, key Republican leaders, were willing to entertain the thought of such a massive aid project in the first place. Senator Vandenberg, the key figure enabling bipartisan policymaking, argued in late 1947 that if the Marshall Plan failed, "aggressive Communism will be spurred throughout the world" and eventually the U.S. would face hazards "which can put our own, precious 'American way of life' in the greatest, kindred hazard since Pearl Harbor."13 Even leading conservatives like Senator Taft and former president Hoover supported some form of economic aid to Western Europe.14 The consolidation of congressional support for the ERP was aided by the tremendous Soviet agitation against it, which included the fomenting of "spontaneous protests" in France and Italy against U.S. capitalism. (As the New York Times put it on January 18, 1948: "Kremlin, as Usual, Comes to the Rescue of ERP.")15 But the action that most contributed to the ERP's ratification was the Czech coup in February 1948, which stirred U.S. memories of 1938-1939.16 Western Europe's serious economic problems were seen as increasing political instability and thus facilitating Communist expansion. For example, France at the time was extremely unstable. In the first postwar general elections in October 1945, the Communist Party received the largest number of votes of any single party. The Communists now controlled the labor movements both in France and Italy, and were eager to exploit the strong economic discontent.17 This basic assumption linking economic prosperity with political stability, and political stability with the degree of vulnerability to Communist infiltration, was also the driving force behind aid to the Southeast Asian states. However, whereas in Europe the danger of domestic political instability was seen as a temporary postwar crisis, in the new Southeast Asian states it constituted a much more fundamental problem, hence the rationale for long-term economic aid. Against this background, the ERP was to serve two goals in the Cold War context. The more immediate one was to stabilize economic


and political conditions and thus prevent a Communist takeover, while giving the West Europeans new hope and confidence to counter what Truman called the Communist “counsel of despair.”18 The more long-term and ambitious goal was to build a prosperous, capitalist Western Europe that would attract the East European Soviet satellites into its camp. The SWNCC report of April 21, 1947, noted that “the results to be achieved by our program of aid may extend well beyond the countries being aided. There is a ‘bandwagon’ quality attaching to the Communist movement, and efforts at infiltration and minority domination, which is vulnerable to positive measures of aid and encouragement undertaken by U.S.” (emphasis added).19 The advantages of a regional approach. In the past, the U.S. had used a bilateral or global-multilateral approach to aid; why did it opt for a regional approach now? By the time of Marshall’s speech, the multilateral strategy had already been delegitimized in the U.S. in light of the disturbing experience with providing aid through the UNRRA. This form of aid, the first to be pursued by the U.S. in the immediate aftermath of the war, led to a situation where U.S. money was given to countries hostile to the U.S. The especially dramatic case of UNRRA aid to Yugoslavia prompted a widespread outcry in the U.S. and led to thoughts about breaking away from “the idiom of the United Nations Charter.”20 This shift found its first expression in the decision to aid Turkey and Greece outside of the UN framework.21 Another potential source of multilateral aid was the International Bank for Reconstruction and Development (IBRD). However, on April 18, 1947, the IBRD president announced that the bank would not provide loans in cases of high political uncertainty. The remaining channel for administering multilateral aid was the UN’s Economic Commission for Europe (ECE), but this did not seem promising because of the Soviet membership in it.22 A multilateral strategy of aid through the UN was thus problematic, since it could not accommodate the goal of strengthening the European economy as rapidly as possible in order to prevent further Communist encroachments. This was also a key reason why the Americans were reluctant to cooperate in Asia through ECAFE, fearing the Soviets would exploit the forum for propaganda purposes. What, then, of a bilateral aid strategy? During 1945–1947 the U.S. provided a total of $14 billion in foreign aid, $6 billion of it in grants. This mas sive aid endeavor was improvised on a bilateral basis to deal with emergency situations as they came up. The most notable instance was the approval of a $3.75 billion loan to Britain in July 1946.23 And yet, by spring 1947, the economic crisis in Europe was nowhere nearer to an end, and the British were depleting their loan at a much faster pace than anticipated. Hence, the most convincing


critique of a bilateral strategy was simply that it did not work. The Bureau of the Budget concluded on April 7 that Congress was not likely to support any further aid efforts until it received a complete plan.24 Indeed, in his speech Marshall asserted that any future U.S. assistance “must not be on a piecemeal basis as various crises develop.”25 Bilateral aid arrangements were seen as unable to foster a prosperous Europe because they only perpetuated the old bilateral pattern of European trade and finance, which constrained any expansion of economic activity in Europe. For Europe to prosper, the huge dollar gap between the continent and the Western Hemisphere had to be reduced; this, in return, required that trade be expanded. But in order for trade to expand, payment difficulties had to be overcome. One of postwar Europe’s most serious problems was the lack of currency convertibility, as most states emerged from the war with depleted gold and foreign currency reserves, and limited means of obtaining hard currencies through trade with the Western Hemisphere. To allow for some intra-European trade, bilateral payment agreements were negotiated between different regional states that did not possess convertible currencies. These arrangements permitted pairs of regional states to finance trade between them without having to draw on their small gold and hard currency reserves, thus enabling those states to continue importing. However, once the credit margins were used up, net debtors had to either curtail the level of their current imports or settle additional imbalances in gold or convertible currencies. Most opted for the first option of temporarily cutting off imports from their creditors. Moreover, the creditors could not utilize their accumulated bilateral surplus earnings (denominated in their partner’s inconvertible currency) to finance their imports from third countries, in Europe or elsewhere.26 Clearly, then, this system of bilateral arrangements seriously harmed the chances of trade expansion in Europe. Furthermore, given the experience of the interwar period, Americans believed that this bilateral pattern was also responsible for much of the European political problems. Paul Hoffman, who headed the agency established to administer the Marshall Plan, the Economic Cooperation Agency (ECA), argued on October 31, 1949, that “In the absence of integration, nations would each separately try to protect their dollar reserves. They would attempt to earn dollars from each other by restricting imports. The vicious cycle of economic nationalism would again be set in motion.”27 A bilateral aid strategy, therefore, was seen as offering no solution to this basic problem of the structure of Europe’s payments system.


As was the case with U.S. foreign economic policy in Asia, the U.S. officials dealing with the Marshall Plan viewed financial and trade issues as closely linked. Bilateral aid was also seen as problematic because it would only perpetuate Europe’s earlier trade structure, that is, trade between sovereign states with relatively small markets. The prevalent conviction in the U.S. was that one of the European economy’s long-term deficiencies as a whole was its excessive fragmentation, and in particular the lack of a large consumer market. Again, Kennan argued that a bilateral aid strategy would only perpetuate this structural problem; whereas by promoting a regional approach to aid, “we hoped to force the Europeans to begin to think like Europeans.”28 The argument that “big is beautiful” clearly exemplifies the pooling effect. By liberalizing trade on a regional level and later by integrating regional trade, European states would achieve economies of scale they could not have enjoyed through bilateral trade arrangements. Such economies of scale, in turn, would lower production costs, allowing for further economic development and more trade expansion. What was needed was “the formation of a single pervasive and highly competitive domestic market in Western Europe of sufficient size and scope to support mass production for mass consumption.”29 The pooling of European resources was seen as necessary for long-term European prosperity, that is, for the creation of an economically and politically strong Western Europe. As such, it was of central importance to the goal of balancing the Communist threat in Europe. If on the trade front a regional approach would allow the pooling effect to assert itself, on the financial front, it would allow greater flexibility and facilitate coordination among the European states, as indeed did the EPU, which was finally signed by the eighteen OEEC members on September 19, 1950. This agreement provided for a fully automatic, multilateral system that would permit each participant to offset its deficit with any member against its surplus with other members, so that each country would need to be concerned only with its balance of payments with the rest of Western Europe as a whole, and not its balance of payments with any single EPU member.30 It is on the potential of the pooling effect that the European and Asian aid cases are markedly different. In Europe it was assumed that domestic industrial capacity would be revived, and the key problem for the expansion of European trade would then be the barrier of national boundaries. The breaking down of these boundaries would promote the expansion of trade. Encouraging regional cooperation and liberalization would, in turn, advance that cause. In Southeast Asia, however, the key problem was to create that


industrial capacity in the first place. The main barriers to trade expansion and growth of regional economic activity were posed by lack of technical knowledge, infrastructure, and so on. Hence the pooling effect was less significant in Southeast Asia at the time, making the regional aid strategy, in turn, less attractive. The need to revive and strengthen the West European economy also entailed the need to revive the West German economy, which, in turn, was also important for reasons of cost reduction, as we shall see. If West Germany was to be strengthened, the question arose as to how to reconcile this goal with the equally important goal of preventing a future resurgence of aggressive German behavior. BALANCING THE SOVIETS WHILE CONTAINING GERMANY: How TO ACHIEVE RECOVERY BUT NOT DOMINATION? The close link between European and West German recovery was well expressed in a State Department policy paper of August 1948: Germany is potentially one of the most important European suppliers of such acutely needed commodities as coal, mining machinery and industrial equipment. At the same time she is potentially an important market for European goods. German economic recovery is therefore vital to general European economic recovery. On the other hand, German economic recovery is largely dependent on the economic recovery of other European countries since they are the chief markets for her goods. It is U.S. policy that the fullest possible recognition be given to this interdependence in order to achieve the greatest over-all benefits for the European Recovery Program.31 The crisis of German production in the spring of 1947 served as an impetus for coming up with an aid plan. Despite its terrible condition, U.S. businessmen, labor leaders, and officials understood that West Germany had to serve as the revived industrial center for Western Europe.32 Secretary of State John Foster Dulles was the first in the U.S. to publicly call for a new approach to the German problem. The industrial potential of the Rhine basin, he argued, should be used to benefit not just Germany but also its Western neighbors; this could contribute to European prosperity without making the Germans dominant again.33 Here he alluded to the basic policy dilemma. As we saw, essentially the same problem pertained to the security realm: how to rearm Germany so that it could help balance the Soviets, with out laying the ground for future German aggression? As we saw


as well, decisionmakers faced the same dilemma in Asia with respect to reviving the Japanese economy. The mounting pressures in 1947 led to a major reassessment of U.S. policy. The Hoover Report, issued in March 1947, called for the revival of German industry as the engine that would drive recovery across the continent. Although this report won support from key officials, State Department officials attacked it and warned against reviving Germany. However, there was also within the State Department a growing appreciation of the need to come up with a strategy for reconciling the need for German recovery and the fear of German resurgence. It was argued that the bilateral and piecemeal nature of previous aid programs had perpetuated the very order that obstructed economic growth and led to German domination in the past.34 Again, opinions converged around a regional strategy as the best means of reconciling the two goals. Kennan maintained that the German problem could be solved only in the framework of European unification.35 The congressional Herter Committee came to the same conclusion, and suggested that economic integration be used as a means of imposing some form of political union.36 The NSC, for its part, created a special subcommittee to examine the German question. It concluded that “Germany cannot be fitted into the European community in a satisfactory manner until there is an adequate framework of general European union into which Germany can be absorbed. The other countries of Europe cannot be expected to cope with the problem of Germany until there is a closer relationship among them than the existing one.”37 Bilateral aid to West Germany and other European states would not advance this goal but only perpetuate the existing structure. Germany’s full recovery as a “segregated” sovereign state risked its domination of Western Europe because of its central geographic position and great economic potential. The solution, then, was closer association with Western Europe: “To the extent that German interests are merged into the large interests of Western Europe, there will be less tendency for Germany to make an accommodation with the East or to develop a segregated independent position of power.”38 The ERP, it was noted, together with the North Atlantic Treaty were the two most important steps in this direction so far. The need to reintegrate Germany into Western Europe had clear implications for aid policy. The same State Department paper quoted above concluded that the “most practicable approach toward establishing a community into which Germany will fit seems to be along the line of fostering the development of close economic interrelationship.” Political or security inte gration in itself was still regarded as unfeasible and unrealistic.39 The U.S. hoped to advance


that goal by forcing the Europeans to devise their own aid plan and cooperate in its distribution.40 When this rationale for supporting regional economic cooperation is compared to the main rationale for encouraging regional economic cooperation in Asia (see chapter six), an important difference emerges. In both cases support for a regional approach was linked to the need to revive the former aggressors, Germany and Japan, and turn each into a “regional workshop.” However, in the European case a regional framework clearly served the goal of making German economic revival politically acceptable to the other regional states. In the Asian case, on the other hand, the emphasis was on linking Japan to the regional economy as a means of impelling its own economic revival. In the case of security cooperation via the Pacific Pact, the rationale was much closer to that employed in Europe; that is, Japan’s revival would only be acceptable to its neighbors if it was contained within a regional arrangement. As mentioned earlier, the difference in rationale affected the type of regional solutions sought. Whereas in Europe the U.S. promoted a regional strategy much closer to a real multilateral strategy on a smaller scale, the regional strategy proposed for Asia (for example, the Yen Fund) was of the hub-and-spokes model. In Europe, then, an effort was made to strengthen cooperation among the various regional states, whereas in Asia the focus was on strengthening economic ties between Japan and the Southeast Asian states. This difference, in turn, also helps explain why this approach did not receive support from the United States’ partners in Asia, whereas it did succeed in mitigating the German problem in Europe. As we shall see later, a main reason for these different types of regional arrangements was the different regional power disparities. So far, then, by pursuing a regional aid strategy rather than a bilateral one the U.S. hoped to achieve three goals: (1) to create economies of scale in Europe, thus facilitating economic growth and prosperity and fostering a strong Europe to help contain the Communist threat; (2) to encourage economic and political cooperation among the West European states, thus contributing to political stability in the region; and (3) to allow German recovery and reintegration into Europe while checking future German domination. The regional strategy was also more attractive, at least in the long run, from a cost-reduction perspective.


MINIMIZING THE COST OF FOREIGN ECONOMIC POLICY As we saw in previous chapters, in the early postwar years there was great concern in the U.S. about the cost of U.S. foreign policy and foreign commitments, with Congress playing a central role in trying to minimize these costs. The case of the ERP is no exception, and in fact presents an even more dramatic example of the cost vs. commitments dilemma in light of the unprecedented quantity of aid that Congress was required to authorize. Sources of cost. The revival of the West European economies entailed three related elements of cost from the U.S. point of view, involving aid to Western Europe, the costs of the occupation of Germany, and the impact of aid on U.S. trade. The cost in terms of the large sums of dollars to be funneled into Western Europe through the ERP had to be contrasted with the danger that without immediate aid Europe would not recover. A poor, weak Europe, it was feared, would then have to receive endless aid; on the other hand, a prosperous Europe could help itself. The ERP legislation was supported by key conservative Republicans such as Vandenberg, Taft, and Connally because they believed that the creation of a Western Europe independent of U.S. aid was a prerequisite for any future U.S. withdrawal from the continent.41 Even so, there was still criticism in the Republican camp of the large sums that the administration wanted to commit to Europe. Taft warned against underwriting “the food supply of the world,” and stressed that the cost for U.S. taxpayers was too high. Others argued that the U.S. would only drain itself and if it went bankrupt in order to bolster another continent, there would be no one to come to its rescue.42 A second cost problem, related yet independent, was posed by the occupation of West Germany. The administration was increasingly concerned that the economic chaos there was placing an unexpected and heavy burden on U.S. taxpayers and slowing European recovery.43 The desire for a speedy German recovery, as noted, was closely related to cost concerns as well.44 Gimbel maintains that the Marshall Plan was an attempt to make German recovery politically feasible in light of those high costs.45 On May 2, 1947, General Lucius Clay, the military governor of the American-occupied zone of Germany concluded that Germany was in fact bankrupt. In a letter to Marshall, he argued that the bizone (that is, the combined British and U.S. occupation zones) could not be made self-sufficient unless the German debt was calculated and fixed, and unless Germany was permitted to enter into trade relations with other states. “We have to recognize,” he


asserted, “that it is not Germany who is paying the penalty today, but rather the taxpayers of the United States and Great Britain and that we can unburden ourselves of this expense only by returning Germany to a satisfactory trading position or by abandoning her to chaos.”46 This concern is reminiscent of the shift in occupation policy toward Japan, described in chapter five, in light of the heavy costs of the occupation as perceived by William Draper. Clay’s statement about the burden on U.S. taxpayers is remarkably similar to Draper’s statements about the burden of the Japanese occupation. In both cases this desire to reduce occupation costs served to encourage a regional strategy to reintegrate Germany and Japan into Europe and Asia, respectively. In both cases the U.S. tried to convince its other partners to give Germany and Japan MFN status so as to share the burden of reviving their foreign trade, but in both cases it met strong opposition.47 One difference, however, was that whereas in the Asian case regional recovery was clearly subordinate to Japanese recovery, in Europe the goals of German recovery and general West European recovery were more balanced.48 Also, in the Asian case there was no direct linking of aid programs to Japan and to Southeast Asia, other than the trade-related schemes such as the Yen Fund. The Griffin mission toured Southeast Asia and made its recommendations with no reference to the situation in Japan. The clearest link between Japan and Southeast Asia was made in the context of regional trade schemes, but not regional aid. This difference as well may be attributed to the different regional power disparities in Asia and Western Europe, which I explore later. It is also interesting that in the Asian context one cannot find the extent of debate and dialogue between the U.S. and the regional partners concerning policy toward the ex-enemy nation. To a large extent this was because West Germany was under a real joint occupation, whereas Japan was under a de facto, unilateral U.S. occupation. In the former the co-occupiers, who incidentally were also the potential members of the aid program, had a larger say. The final cost concern involved the relative impact of aid on the one hand, and of an economic disaster in Europe on the other, on U.S. traders. In the case of reviving Japan’s economy, the focus was on the cost that U.S. domestic producers would have to pay as a result of opening the U.S. market to cheap Japanese goods. The goal was to encourage regional trade so that Japan would find other markets for its goods instead of U.S. producers bearing the burden of its economic revival. Although a similar concern that a revived European economy would flood the world market and lead to devastating unemployment in the U.S. was indeed voiced by conservative Republicans,49 most of


the relevant policymakers were much less worried about this. Unlike Japan at the time, Western Europe was perceived as a major trading partner for the U.S. The main concern was that a prolonged crisis would harm U.S. exporters and decrease dollar earnings from exports. The SWNCC report of April 1947 pointed out that in 1947 the U.S. would probably export to the rest of the world $7.5 billion more goods and services than it would import, and that the current volume of U.S. financing of this deficit was inadequate. It concluded that under present programs the world would not be able to continue to buy U.S. exports at the 1946–1947 rate beyond another twelve to eighteen months. A substantial decline in U.S. export surplus would, in turn, have a depressing effect on business activity and employment in the U.S.50 The cost dilemma asserts itself. In devising its U.S. aid strategy, the administration had to contend with the congressional concern about the cost of foreign policy commitments. As with the previous cases, initially there did not seem to be a problem, with U.S. decisionmakers believing at the end of the war that European recovery could be achieved by limited bilateral means, currency stabilization through the IMF, stimulation of trade through the proposed International Trade Organization (ITO), and the activities of the IBRD and UNRRA.51 This belief, however, was based on a gross misperception of the severity of the crisis in Europe. As Acheson puts it, decisionmakers “operated on a theory of dealing with hunger, disease, and unrest until one or two good crops could come in.”52 As Milward notes, the multilateral approach, also known as the Bretton Woods system, proved completely inadequate.53 By 1947 it was becoming apparent that the existing strategies were failing. Industrial and agricultural production still lagged behind prewar levels, and shortages and depletion of gold and dollar reserves continued. At the same time, it was becoming more evident, in light of developments involving the Soviet Union as well as China, that European recovery was of great importance to U.S. national security. Even a cost-conscious figure like Senator Taft conceded that “I am prepared to support in some reasonable amount the general principle of aid to European countries to enable them to help themselves…. We must do what we can to prevent the spread of Communism.”54 Thus, the dilemma for the U.S. became one of promoting this recovery at the lowest possible cost. The PPS was indeed worried about the potential costly implications of the Truman Doctrine, arguing that “the extension of American aid is essentially a question of political economy in the literal sense.”55 Congress, for its part, while acknowledging that the Marshall Plan constituted a major foreign policy commitment, still preferred to view


it mainly as a business enterprise. Thus, for example, it preferred to have a businessman, Paul Hoffman, head the ECA.56 The question, then, became one of which type of strategy could best resolve the commitment vs. cost dilemma.

The failure of bilateral strategies and promise of a regional strategy for reducing cost. As noted bfore, the greatest liability of the bilateral

aid strategy for Western Europe was that it had been tried and seemed to have dramatically failed. By spring 1947 the bilateral, piecemeal approach to foreign aid had lost its legitimacy in the eyes of Congress. The most glaring failure involved the $3.75 billion loan extended to Britain in 1946. The administration had hoped the loan would lead to full convertibility of the British Pound in less than five years. However, it turned out to be insufficient and the credit was to be exhausted already by September 1949.57 The majority of Republicans in Congress had voted against the loan, and its failure only reinforced their attitude.58 Furthermore, many believed that a bilateral aid strategy for Western Europe would in any case be more costly than a regional approach. Lippman argued that a consolidated West European deficit would be smaller than the sum of the separate national deficits;59 Kennan, elaborating the point, maintained that unless the U.S. stressed the need for a joint European request for aid, it would face “a whole series of competing national demands, all padded and exaggerated for competitive purposes.” This would be too costly and would force the U.S. to make choices bound to be politically unpopular.60 Indeed, the U.S. made it clear to the Europeans that Congress would never approve an aid request that merely reflected a shopping list of individual states.61 In the Asian case, the bilateral aid strategy did not carry the extremely negative baggage it did in Europe. In Southeast Asia there was no equivalent to the huge, failed British loan. Nor was it feasible, as noted, to rely solely on a multilateral strategy, that is, by utilizing the new multilateral institutions of the Bretton Woods system. That left the regional strategy, which called upon the Europeans to present the U.S. with a joint request for aid. The regional strategy indeed gained tremendous support among congressmen and opinion leaders, with various congressional resolutions calling for the promotion of a United States of Europe, an idea once suggested by George Washington. It was believed that European unity was the only way to eliminate the threatening cost of what might otherwise be a permanent U.S. military and economic commitment to the continent.62 As we have seen, a regional strategy offered the promise of cost reduction through the economic pooling effect. A regional approach was also attractive


because it ostensibly shifted the main burden to European shoulders through insistence on the principle of self-help. Although, as discussed in the security-related chapters, the principle of self-help was later institutionalized in the Vandenberg Resolution (June 11, 1948), it was already compelling at the time the Marshall Plan was being formulated, and was initially implied in Marshall’s historic speech. The U.S. insistence on self-help was also manifested in its opposition to multilateral IMF aid for Europe. The American executive director, Andrew Overby, argued before the IMF board that the ERP was mainly a European self-help program, only to be supplemented by U.S. assistance. Any increase in the means of payments available to Europe might encourage “non-essential and luxury imports more than the essential trade which was desirable.”63 The IMF, which was then practically controlled by the U.S., complied. As discussed earlier, the regional strategy was also the most promising in terms of alleviating the costs of the German occupation. As Gimbel argues, it made German reconstruction politically feasible, and hence made it possible for Germany to become self-sufficient. Moreover, a regional aid strategy that would encourage the creation of a single European market, preferably restructured into a customs union, looked very promising for U.S. exporters. Indeed, the ERP received wide support from the private sector, including conservative business organizations, as well as from more academic bodies such as the Council on Foreign Relations and the Business Advisory Council.64 ADVANCING THE MULTILATERAL FREE TRADE ORDER AND THE “AMERICAN WAY” George Washington once wrote to General Lafayette: “We have sowed the seeds of liberty and union that will spring up everywhere on earth, and one day, taking its pattern from the United States of America, there will be founded the United States of Europe.”65 Two key ideological elements played a role in further privileging the regional aid strategy over its bilateral counterpart. One was the compatibility with the basic goal of U.S. foreign economic policy, namely, the advancement of a multilateral, free trade economic order. The second was the proposed strategy’s ability to tap into basic normative assumptions stemming from the United States’ own historical development. Beginning with the latter, the most striking motif in many of the justifications for a regional approach was the use of the “American analogy.” The preference for regional cooperation was indeed rooted in an economic rationale, as described earlier: encouraging regional


cooperation leads to greater regional trade liberalization and liberal payment arrangements, in turn creating a larger “West European” market, in turn fostering greater productivity and economic prosperity. However, the rationale more often used by key political figures as well as more popular sources was that such a strategy should work in Europe because it had worked previously in the United States. It was argued that productivity in the 20th century had risen to higher levels in the U.S. than in Europe because the vast U.S. market was able to reap all the economic benefits of being a customs union. This large internal economy, integrated by free market forces and central institutions of coordination and control, seemed to have served as the foundation for the United States’ economic growth and social stability.66 The domestic analogy explains why by mid-1948 many in the U.S., while endorsing different forms of European integration, “shared a vision of redemption through unification.”67 In the congressional debate, the point was emphasized that Europe should learn from the American experience.68 Indeed, the final Foreign Assistance Act of 1948 declared: Mindful of the advantages which the U.S. has enjoyed through the existence of a large domestic market with no internal trade barriers, and believing that similar advantages can accrue to the countries of Europe, it is declared to be the policy of the people of the United States to encourage these countries through a joint organization to exert sustained common efforts as set forth in the report of the CEEC…which will speedily achieve that economic cooperation.69 Interestingly, this strong desire to apply the U.S. experience to Europe was not a factor in U.S. considerations of regional arrangements in Asia. This is attributable to the power of the AngloSaxon heritage linking the U.S. and Europe (an issue probably deserving much deeper consideration). A regional approach also had to contend with the issue of compatibility with the ultimate goal of promoting multilateral economic institutions. Initially, such compatibility was by no means obvious. For example, there was controversy between the Treasury Department and the State Department on the one hand, and the ECA on the other, about the creation of a European payment system. Some feared that such a union would undermine commitments to the IMF, or lead to the creation of a permanent soft-currency bloc, thereby undermining the principles of multilateralism. Overall, the Treasury Department, still dominated by officials with what Beloff calls a


“universalist bent,” was the most hostile to regional schemes. The final compromise was to ensure that the clearing union that did emerge would not conflict with U.S. obligations to the IMF, and to obtain a commitment from the participants to move as rapidly as possible toward full currency convertibility.70 On the trade front, it is interesting that the Europeans were concerned about the apparent contradiction between encouraging regional integration and the principles of the proposed International Trade Organization (the GATT’s precursor). Under-Secretary of State Lovett did admit that “undoubtedly if rapid recovery is to be achieved we shall have to interpret various escape clauses in ITO liberally.” Still, despite the seemingly cynical tone, the Americans believed that if the Europeans had a plan that would provide a definite percentage of tariff reductions, culminating in the elimination of barriers at a definite time, then the Charter would be adapted to meet it.71 And yet on a more basic level, a consensus did emerge concerning the compatibility between the Marshall Plan and the global vision embedded in the United Nations, the IBRD, and the IME In his memoirs Truman argues that the ERP goals were in complete harmony with the UN Charter. This view was endorsed by Vandenberg, and eventually made its way into the Vandenberg Resolution.72 From this normative perspective a truly multilateral approach would have been the initial U.S. preference. Indeed, by the end of the Roosevelt administration, supporters of European integration were overruled by their opponents who preferred a worldwide arrangement to a potentially dangerous regional organization.73 Yet already by May 1946, as the State Department contemplated various plans for postwar Europe, it was gradually became apparent that multilateral solutions were less promising and an all-European organization would be preferable. Even later on, Kennan believed that the U.S. would have to work through the UN Economic Commission for Europe (ECE) in light of the high level of support for the UN within the U.S.74 However, the events since the failure of the Moscow conference of the Council of Foreign Ministers made it clear that the multilateral approach of working through the UN was not feasible. Reliance on the other multilateral institutions, such as the IBRD, was also impossible in the short run, both in light of their limited resources at the time as well as the urgency of the situation in Europe. Indeed, the Americans believed that their role was to provide short-term solutions to the urgent problems of food and fuel and basic economic stabilization, whereas in the long run it would be up to the IBRD to deal with Europe’s reconstruction and development.75 Given the problems with a multilateral strategy, a regional strategy appeared as second best.


Clearly it was still more compatible with multilateral free trade principles than a bilateral strategy, which, as argued earlier, would only have helped perpetuate the preexisting, protectionist economic structure in Europe. To sum up this section, in mid-1947 the U.S. administration faced several challenges with respect to its policy toward Western Europe. Western Europe’s severe economic crisis had to be resolved, and a prosperous Western Europe created, in order to: (1) prevent further expansion of Communist influence in Europe and offer an attractive alternative to the Soviet satellite states in Eastern Europe, (2) ensure that Western Europe could stand on its own feet economically, thus needing no further U.S. assistance, and (3) allow for the further development of the global-multilateral free trade system, which was hindered by the crisis and by the huge dollar gap. A globalmultilateral aid strategy through the UN ECE was problematic because of the growing antagonism between the U.S. and the Soviet Union, and thus was ruled out. A bilateral aid strategy had been delegitimized mainly in light of its failure up to the summer of 1947 to bring about significant improvement; it was perceived as inefficient and very costly for the U.S. The regional aid strategy became very attractive partly because of the problems associated with the other two strategies, but largely thanks to its ability to satisfy all of the goals in question. The attractiveness of the regional strategy, however, was also affected by two factors external to U.S. politics: the regional power disparities and the perceived preferences of the United States’ European allies. THE IMPACT OF REGIONAL POWER DISPARITIES ON STRATEGY CHOICE A regional strategy will be most attractive when power disparities between the great power and the regional partners are moderate, and less attractive when those disparities are very wide or very narrow. A regional strategy will be most attractive if the power disparities among the potential regional partners are narrow, and least attractive if these power disparities are very wide We have seen that a regional aid strategy, aimed at encouraging regional economic cooperation in Europe, had become extremely


attractive thanks to its ability to satisfy several U.S. policy goals. This was also the case regarding policy toward trade revival in Asia, and regarding aid policy just before Eisenhower’s President’s Fund initiative. However, in those two instances, this initial preference for a regional strategy failed to translate into actual policy for two reasons: the regional states’ extreme weakness vis-à-vis the U.S., and the wide power disparities among the regional states, namely, Japan’s relative economic progress compared to the preindustrial Southeast Asian states. In the trade domain, these disparities, for example, limited the Southeast Asian markets’ ability to offer Japan adequate export outlets. Most of the U.S. ideas for regional cooperation schemes, such as the Yen Fund idea, focused largely on the revival of Japan’s economy, and this was hardly reassuring to the other potential partners. As for aid policy, the very different levels of economic development in Japan and in Southeast Asia meant different types of aid were needed. Whereas aid to Japan was more along the lines of the aid to the West European states, aimed at facilitating economic revival, the aid to Southeast Asia was more along the lines of Truman’s Point Four, that is, technical aid for the creation of infrastructure for economic development. Given these two different kinds of needs, a regional aid strategy linking both made little sense. In the European case, however, power disparities were much more favorable to a regional strategy. Those between the U.S. and its West European partners were moderate—that is, broad enough to place the U.S. in what can be termed a hegemonic position, but narrow enough to justify the expectation that the European states could eventually stand on their own and prosper. Perhaps it is more accurate to say that the wide power disparities on the eve of the Marshall Plan were perceived as temporary, and that once the temporary crisis was overcome, disparities would be moderate. Following Marshall’s Harvard speech, Bevin noted that the U.S. was now in the position where Britain had been at the end of the Napoleonic Wars. Britain had then held 30% of the world’s wealth; the U.S. now held even more, 50%. To Bevin, the link between power preponderance and the burden of power was clear: Britain for eighteen years after Waterloo “practically gave away her exports” in order to bring about stability and a hundred years of peace;76 now it was the United States’ turn. When Britain announced in March 1947 that it would no longer be able to aid Greece and Turkey, Acheson observed that the problem of Greece and Turkey was linked to a “much greater problem growing out of the change in Great Britain’s strength.”77 Jones argues that this event set off the process that, within fifteen weeks, laid the foundation for a complete conversion of U.S. foreign


policy to the role of world leadership with Marshall’s declaration of his plan. All of the actors relevant to foreign policymaking in the U.S. acknowledged the burden associated with the new role. Truman, in a major foreign economic policy speech on March 6, stated: “We are the giant of the economic world. Whether we like it or not, the future pattern of economic relations depends upon us. The world is waiting and watching to see what we will do. The choice is ours. We can lead the nations to economic peace or we can plunge them into economic war.”78 In April, the SWNCC report on the issue of foreign assistance concluded that the U.S. had become the only country in the world capable of helping Europe and other distressed areas through the period of reconstruction. “The burden of meeting these shortages falls primarily on the strongest economy in the world—the U.S.”79 Similarly, Senator Vandenberg lamented that the U.S. could no longer afford to retire within its bastions: “The greatest nation on earth either justifies or surrenders its leadership.”80 The Herter Committee, the only congressional committee appointed to examine the question of recovery aid to Europe, also concluded that “Whether we like it or not, this great country of ours…has grown…into a position of leadership and power in the world which place on the shoulders of our country a responsibility which heretofore had not rested here.”81 The dire situation in Western Europe presented the U.S. with one such leadership challenge. Europe’s three main problems were low production, inflation, and inability to pay for urgently needed imports. In West Germany, industrial production in early 1947 was only 27% of its prewar value. In Austria, Italy, and Greece it had not yet reached two-thirds of the 1938 level, and in France and the Netherlands it was still below prewar levels. Europe’s labor force had been dislocated by the war. There were serious coal and steel shortages, exacerbated by the severe winter of 1946–47. Meanwhile, Britain was plunging into a serious financial crisis that threatened to bring its economy to a halt.82 As described earlier, faced with this economic crisis on the one hand and the growing Soviet threat on the other, U.S. decisionmakers realized they had to extend economic aid to Western Europe. This severe economic weakness was, however, perceived as a transitory situation. Whereas the Southeast Asian states had to build their economic power from the ground up, in Europe the issue was one of regaining power. This was what enabled the U.S. to promote arrangements for regional trade liberalization and for regional clearance. Milward maintains that the basic problem of correcting Western Europe’s trade balance was a temporary one. The main source of the deficit, or dollar gap, was the large increase in imports of


capital goods and metals, attributable to the very success of Europe’s industrial recovery.83 Thus, there was sound reason to believe that if helped to stabilize, the West European economies could make a major contribution both to the maintenance of the international multilateral economic system and to the struggle against Communism. Moreover, whereas in Asia Japan had a unique status, in Western Europe there were two countries that had been powers in the past and might become medium powers in the future as well, namely, Britain and France. The U.S. expected these two states, while extremely weakened by the war, to play an important role in sharing the burden of European recovery and regional cooperation, as well as in reintegrating Germany into the European system. Provided these states were willing to cooperate, this factor, too, tended to favor a regional approach over a bilateral one, especially in burden-sharing terms. From Marshall’s speech in June 1947 to Britain’s refusal in June 1950 to participate in the Schuman Plan, the U.S. looked to Britain for leadership of postwar Western Europe, though recognizing this country’s weakness. Although Kennan argued that Britain could not and should not be part of a continental European arrangement, most officials in the Truman administration saw Britain as an integral part of Western Europe.84 They were extremely disappointed when, by late 1949, it became clear that Britain did not support a European union. At that point the burden of reintegrating Germany into Europe was shifted to France,85 which, indeed, satisfied expectations when it initiated the European Coal and Steel Community. In Asia there were no other regional powers, in the Western camp, that could have significantly aided Japan’s reintegration into the regional economic system. The burden thus remained with the U.S., and the potential benefits of a regional approach over a bilateral one were smaller. In Western Europe, conversely, not only Britain and France but also most other states had a significant contribution to make on a regional level. For example, the Benelux countries, though small, were internally stable; Belgium held a strong position in the international financial arena and played an important role in pressing for convertibility (a central U.S. goal).86 A regional strategy that encouraged cooperation among the United States’ relatively strong partners promised a greater contribution to the struggle against Communism and the advancement of the global capitalist system. Seemingly, however, this might also pose the risk of those partners gaining too much power vis-à-vis the great power, and pursuing potentially conflicting goals. Yet in the long debate over the ERP, there was very little discussion of this risk. This apparent lack of concern reflected the preferences of the regional states about the


form of cooperation with the U.S. and with each other, as well as the goals they wished to advance. PARTNERS’ PREFERENCES AND THE CHOICE OF COOPERATION STRATEGY A great power will choose to support a regional arrangement with its regional partners only if it perceives their goals to be compatible with its own, and if there is a regional interest in a regional option. We saw in the Asian cases that the issue of partners’ preferences was a stumbling block for any regional strategy. For example, no state (other than Japan) wanted to join a regional trade arrangement that would tie it to Japan. Only in the early 1960s did these states begin to look more favorably on regional cooperation, which helped explain the change in U.S. policy from a strictly bilateral approach to support for the creation of the Asian Development Bank in 1965. The U.S. approach to aid for Europe followed the same logic. For the U.S. to commit its resources on a large, regional scale, the Europeans first had to demonstrate their genuine interest in regional cooperation. This was not merely a U.S. bargaining position. Lovett suggested to the Europeans that they were better off assuming “there was no one to help them and imagine that they had no choice but to try to work out an acceptable economic future without any outside support.” To have a reasonable chance of winning congressional and public support, “the program should provide the greatest possible European self-help, should provide for action on the part of the participating countries which they will in fact be able to carry out, and should be such as to assure the maintenance of the European economy without continued support from the US.”87 The test in this case was the European countries’ ability to work out a joint proposal for aid. As Marshall asserted in his Harvard speech: before the United States Government can proceed much further in its efforts to alleviate the situation and help start the European world on its way to recovery, there must be some agreement among the countries of Europe as to the requirements of the situation and the part those countries themselves will take in order to give proper effect to whatever action might be undertaken by this Government. It would be neither fitting nor efficacious for the Government to undertake to draw up unilaterally a program designed to place Europe on its feet


economically. This is the business of the Europeans. The initiative, I think, must come from Europe.88 [emphasis added] At the culmination of the Paris conference of July-September 1947, the sixteen European participants indeed agreed on the creation of the Committee for European Economic Cooperation (CEEC). The contrast with the Simla conference of 1955, in which, as we saw, the Southeast Asian states showed a lack of interest in regional cooperation, is striking. This is not meant to imply that there was unanimous support for a regional strategy. To begin with, the European partners’ preferences were partly responsible for the United States’ abandonment of its multilateral strategy. As Milward observes, European policies and goals of maintaining rising output and employment were simply not compatible with the Bretton Woods settlement.89 The second best strategy for the U.S. was the regional one, but it was by no means assumed that this would also be the European preference. Dulles argued that unless pressured to cooperate it would be easier for the West Europeans just to let the present situation continue and act bilaterally.90 Indeed, the one actor on whose cooperation the U.S. counted the most, Britain, was more supportive of a bilateral aid strategy that would allow it to continue its “special relationship” with the U.S. The British argued that the pooling of European resources would imply that Britain was just another European state like the continental states, whereas Britain was in fact in a very different position, given its vast overseas commitments.91 Britain, then, supported regional economic cooperation but not integration. To the extent that it entertained any integrationist schemes, they were of a more Atlantic than continental nature. This became apparent to the Americans over time, as the British dragged their feet on various initiatives for higher levels of cooperation. They consistently opposed giving supranational institutions such as the OEEC or the Council of Europe any significant power that would limit national sovereignty.92 Beyond the unique British geopolitical position, Roll points out that there was much more resistance in Britain to the economic innovations associated with the Marshall Plan because it was the only country that had not experienced the destruction of its preexisting pattern of resource allocation during the war.93 The British were also especially concerned about the negative implications for their domestic economy of joining a European customs union or the like because of the ambitious agenda of the Labor Party, which at last found itself back in power.


This problem was clearly perceived in the U.S., generating both sympathy and hostility. Anglophiles like Kennan appreciated the British constraints. In an insightful analysis he discussed the “tragedy of the Labor government,” which “lies in the fact that after waiting several decades for a chance to put certain principles into effect, it has finally come into power at precisely the moment when those principles became essentially inapplicable.” He concluded that it would be unrealistic for the U.S. to expect Britain to swiftly and efficiently adopt a realistic position in compliance with the U.S. policy “essentials.”94 On the other hand, isolationists in Congress perceived the Labor government’s domestic agenda as completely contrary to U.S. goals. As the wartime effort receded, there was a reemergence of old U.S. suspicions about British imperialism, resentment at having to pay Britain’s way after the war, and new suspicions about the Labor government’s socialism. Isolationists argued that U.S. dollars were being used to advance socialist experiments in Europe, which, in turn, ensured continental stagnation and undermined Americans’ faith in their own free-enterprise system. As Samuel Pettengil asked: “Are we to fill rat holes in Europe, and go socialist at home?”95 And yet, despite all the frictions and suspicions between the British and the Americans, on a much more fundamental level the interests and goals of the two states were similar, as the administration realized. It was clear that Britain, too, was concerned about Soviet expansion and that it was to play a major role in the U.S. global defense strategy, though a role distinct from that of continental Western Europe. Furthermore, there was a strong appreciation of the two states’ common values. Indeed, as Manderson-Jones notes, there was an ambivalence in U.S. policy between, on the one hand, trying to include Britain in a general European framework and, on the other, treating Britain separately from the continent, reflecting the two states’ historical relations.96 Finally, though the British were not supportive of regional integration schemes, they clearly did support and encourage a more traditional, intergovernmental form of cooperation among the West European states. One reason the U.S. could afford to concede eventually to the notion of British exceptionalism and still pursue a regional strategy was the fact that the second regional power, France, was much more cooperative on this issue. Here again, Franco-U.S. relations were far from smooth and pleasant, and their interests were not identical. Yet there was clearly enough goal compatibility to make the regional strategy viable. The French wanted to take a leading role in organizing regional cooperation in Europe. In fact, the State Department entertained hopes of helping France play a central role in a new continental balance of power, and it consistently, to the army’s


annoyance, tried to meet the French halfway on the issue of German revival.97 Although France’s main economic concern was the advancement of the Monnet Plan for domestic reconstruction, and its support for integration was an attempt to enhance its own leverage within Europe, the U.S was tolerant of this.98 Unlike their British counterparts, French officials were strongly supportive of the supranational concepts advanced by the Americans, as emerged most clearly in regard to the Schuman Plan.99 The main bone of contention between the U.S. and France, as in the security case (chapter five), was the question of Germany. And for that same reason, a regional strategy looked attractive in both cases. The logic of this approach was discussed earlier, in the context of the goal of containing future German aggression. This was both a principal U.S. goal and the central French preoccupation. Milward points out that membership in the OEEC gave France an additional arena to oppose or delay unwelcome decisions on West Germany and to thwart U.S. objectives.100 However, at the same time, by giving the French some say on the German issue and by attempting to reconstruct the West German economy within a regional framework, the U.S. succeeded in advancing, though perhaps more slowly, both the goals of German recovery and of maintaining French cooperation. Gimbel, indeed, argues that the Marshall Plan was mainly an attempt to dovetail German economic recovery with general European recovery so that the former would be politically acceptable to France.101 Both Britain and France, then, held goals that were different from the U.S. goals yet still compatible with them. Britain indeed objected to regional integration, yet at least formally supported a regional cooperation strategy so long as it did not compromise its national sovereignty. France was more supportive of a regional strategy. The Benelux states, for their part, were clearly supportive of the attempts to liberalize intra-European trade and payment arrangements, as well as of the U.S. goal of reviving the German economy. They sought to magnify the scope of their interests through new supranational agencies.102 These interests held greater weight for them than their concerns about an Anglo-French domination of European arrangements. SUMMARY This chapter examined the logic behind the U.S. adoption of a regional aid strategy toward Western Europe. In this case, all of the conditions identified in the theoretical framework as favoring a regional strategy were present. By the summer of 1947, the regional strategy was perceived as the only aid strategy that could


simultaneously create a Western Europe prosperous and thus strong enough to withstand Communist encroachment, to manage without farther aid in the future, and to allow for the revival of the West German economy within a regional framework, therefore making it politically acceptable to France. The ability to allow for German revival while at the same time connecting it to the rest of Western Europe was a key advantage of a regional aid strategy. In the design of aid policy for Asia, conversely, aid for Japan and for its Southeast Asian neighbors was not linked, since the latter were at a much lower level of economic development than the former. The perceived ability of a regional strategy to satisfy those different goals was only enhanced by the factors of power disparities and partners’ preferences. The moderate power disparities between the U.S. and the West European states indicated that once those states had recovered, they could make a key contribution both to their own prosperity and to the broader defense and stability of the Western camp. Furthermore, the moderate power disparities within the region itself (that is, the existence of several medium powers) made the potential benefits of regional cooperation much greater than those of a bilateral approach. Regional power disparities in Asia, on the other hand, did not bode well for a regional approach in light of the Southeast Asian states’ extreme weakness. The wide disparity between them and Japan also discouraged a joint aid program linking the two. Japan and Southeast Asia simply needed different types of aid, whereas in Europe every state basically needed aid to deal with the same problems. Finally, the regional partners’ preferences, while not identical to those of the U.S., were still perceived as compatible. Despite great difficulties, the West European states managed to meet the U.S. challenge and initiate significant regional cooperation, thus satisfying the main condition for the extension of U.S. aid. The basic perceived compatibility of goals between the U.S. and its European partners went far to explain why there was relatively little concern about the potential cost of encouraging a regional economic grouping for the global-multilateral system and for the U.S. economy. This stands in marked contrast to the preferences of the regional Asian partners, other than Japan, until the 1960s. The newly independent Southeast Asian states were still preoccupied with developing their own national identity and legitimacy, and could not, unlike their established European counterparts, consider compromising that hard-won national sovereignty by adhering to a regional aid arrangement that might at times subjugate their national interest. These findings are summarized in the following table:



Chapter 9 Whither America’s Regional Strategy? Conclusions and Implications for PostCold War U.S. Policy

I n the post-Cold War world, American decisionmakers still have incentives to pursue an active, engaged foreign policy, yet at the same time are confronted with greater domestic pressures to lower the costs of foreign policy commitments. The dilemma that decisionmakers faced in the early postWorld War II period is thus still relevant, and perhaps stronger than before. The events of September 11th have temporarily quelled the criticism regarding high spending on foreign policy. “The war on terror” seems to have engendered a domestic consensus around the need for high spending on foreign policy. However, as the realization of the long-term nature of the war on terrorism is sinking in, as well as the growing need for serious investment in homeland defense, American decision makers will also have no choice but to invest in cooperation strategies that would enable them to reconcile their various policy goals at a lower cost. Unilateral action is likely to prove over time to be unable to satisfy the American goal of fighting terror effectively, as well as to become too costly for the American public to accept. Regional strategies are still able to offer a compromise. Unlike the early postwar period, however, both regional power disparities and the preferences of the regional actors have changed in a way that makes the regional strategy not only domestically attractive but also much more viable. In this concluding chapter I explore these changes and their implications for both economic and security cooperation. THEORETICAL FINDINGS AND THEIR IMPLICATIONS CONFLICTING GOALS AND STRATEGY CHOICE This book has examined four hypotheses about the factors that affect the likelihood that a great power, in this case the United States, will adopt a regional strategy in organizing cooperation with and among


its regional partners. Decisionmakers, I argued, want to advance several, often conflicting, goals at once. They will therefore prefer the cooperation strategy that appears most likely to simultaneously advance those goals. Furthermore, decisionmakers, and even more so the legislature, want to find a strategy that, given its ability to reconcile the conflicting goals, will also minimize the costs of foreign policy. For the decisionmakers, minimization of cost becomes in a sense a goal in its own right. The trade-off between domestic and international goals is always a factor in foreign policymaking. However, during times of international and domestic stability, when no major domestic shifts in power or ideology occur, a balance is commonly struck between the two. The dilemma, however, becomes politically salient especially at times of transition, when either major systemic or domestic changes undermine the existing foreign policy consensus. One such transition period was the one examined in this book, namely, the early postwar years in which the new realities of bipolarity emerged. The transition to the post-Cold War era, which began in 1989 and is still under way, poses similar challenges to U.S. decisionmakers. Given these considerations, decisionmakers consider whether bilateral, regional, or global-multilateral strategies are most likely both to reconcile their conflicting goals and to enable them to pursue these goals at a minimal cost. After World War II, a unilateral strategy was sometimes advocated by elements in Congress, for example, before the creation of SEATO, but was never considered as such by the executive. It is important to stress that decisionmakers assess the costs and benefits of strategies relative to other strategies. Although, as the cases have shown, the costs and benefits of the competing strategies were not always explicitly weighed against each other, the comparative element was always present. Hence, the strategy chosen could entail costs that were high but still perceived to be lower than those associated with other strategies. Also, assessing the value of different strategies is even more difficult because decisionmakers must take into account both economic and political costs, and the two do not necessarily correlate. The three main goals that occupied U.S. foreign policy during the time period covered here were balancing the Communist threat; containing any possible resurgence of the two main wartime enemies, Japan in Asia and Germany in Europe; and advancing the United States’ liberal, multilateral worldview. All of these, as I have shown, came to imply the expansion of U.S. commitments and a costly foreign policy. Throughout the case studies a strong concern about this cost, voiced mainly by Congress, influenced decisionmakers’ preferences about cooperation strategies.

WHITHER AMERICA’S REGIONAL STRATEGY 193

In each case an interest in a regional strategy emerged at some point because such a strategy was perceived as potentially capable of advancing the different policy goals at minimum cost. In both the Pacific Pact and NATO cases, the conflict between the need to revive the former wartime enemy as a regional hub so as to strengthen the regional pro-American alliance against the Communists on the one hand, and the fear that a revived Japan or Germany would threaten its neighbors on the other, played a key role in favoring a regional strategy. This was also a central motivation behind the Marshall Plan, but less so in the Asian economic cases. Furthermore, both in the economic and the security cases a regional approach was the most compatible with the U.S. ideological agenda. A regional security arrangement, as a collective security arrangement on a regional scale, was more attractive than bilateral security arrangements that smacked too much of power politics. A regional (nondiscriminatory) trade arrangement or regional aid arrangement that would encourage regional economic cooperation based on conservative fiscal guidelines seemed more compatible with the goal of creating a multilateral, free trade system than bilateral arrangements that would reinforce old patterns of discrimination and prevent the development of truly multilateral economic transactions. Although in both the security and economic cases a globalmultilateral strategy was the initial preferred strategy from this ideological perspective, such a strategy was unable to effectively advance either the balancing goal or other goals in light of the Cold War realities.1 A regional approach also appeared the most promising, I argued, in terms of minimizing cost. By encouraging the United States’ small regional partners to cooperate with each other, decisionmakers believed, the U.S. would be generating, at least in the long run, greater burden sharing, and might at some point be able to retreat from an active role in providing regional security or promoting a liberal trade order. Regional cooperation arrangements would encourage the partners to cooperate with one another, pool their resources and develop habits of cooperation. The most ambitious form of such pooling would have been the actual integration of resources, through the creation, for example, of a European army (as envisioned in the EDC initiative) or a customs union or common market (as was the case with the Marshall Plan). American planners believed that thanks to more efficient organization and coordination, the regional partners’ potential joint contribution would be greater than the sum of their individual contributions.


THE IMPACT OF REGIONAL POWER DISPARITIES The cost/benefit analysis of a regional strategy was further influenced by two external factors. A regional strategy was more likely to be pursued when the power disparities between the U.S. and its partners, and among the regional partners, were perceived to be moderate. In such situations, the potential burden sharing that could be achieved was perceived to be greatest. In the Asian cases, the extremely wide power disparities undermined the relative advantage of a regional strategy over a bilateral one, both in the security and the economic issue-areas. In the European cases, the narrower power disparities enhanced the case for the pooling effect. THE IMPACT OF PARTNERS’ PREFERENCES The second crucial factor was the regional partners’ preferences about the type of cooperation strategy to be pursued, and the degree of compatibility between their goals and those of the U.S. The regional power disparities were important in defining the limits of the benefits to be derived from regional cooperation. Partners’ preferences, on the other hand, played the most important role in affecting the assessment of the main potential cost associated with a regional strategy. Two main dangers were linked to pursuing a regional strategy. First, by doing so the U.S. might lose its leverage over its small partners, and they, in turn, might either free-ride or shirk. Second, the small partners might exploit their newfound “voice” to promote policies that the U.S. would not support. A regional option was therefore most likely to be pursued when the regional partners actively supported such a strategy, and their goals were perceived to be compatible with those of the U.S. This was the case with the Marshall Plan and NATO. It was not the case in Asia, where most American initiatives for regional cooperation met indifference or opposition, and where regional interest in regional initiatives (when present) was perceived as a means of either extracting more aid from the U.S. or advancing economic goals that the U.S. did not support. The shift in 1965 to support for creation of the Asian Development Bank was greatly influenced by the perceived change in the regional states’ attitudes and goals.


IMPLICATIONS FOR AMERICAN POLICY SINCE THE END OF THE COLD WAR THE RENEWED DEBATE OVER COMMITMENTS AND COST The existence of a dilemma as to how to advance security and economic commitments at the lowest cost was a necessary condition for interest in a regional strategy. With the end of the Cold War, there appeared to be less need for costly foreign policy commitments. The domestic consensus about this need that was reached during the Cold War among the executive, Congress, and the U.S. public had been shaken.2 Yet as noted before, the challenge for U.S. decisionmakers of devising efficient yet cheap strategies for conducting an activist foreign policy has not disappeared and in fact is greater. A basic, general agreement has emerged that the U.S. should maintain its high level of involvement in world affairs, with extreme neoisolationism gaining little support.3 Many, in fact, portray the problem facing the administration as one of cost. Oye argues that the disjunction between “wallet” and “will” in the U.S. limits the possible strategies it can adopt, and that the financing of U.S. hegemony will be held hostage by a growing sense of nativism.4 Critics of what Nye calls the U.S. leadership strategy argue that the U.S. simply cannot afford it.5 This renewed debate over the appropriate scope of U.S. foreign policy commitments led the Clinton administration to initiate the “Bottom-Up Review” (BUR) of U.S. forces. The report, which was published in September 1993, stated that with the demise of the Soviet threat, U.S. strategy had become more regional in focus and was designed to “protect and advance American security with fewer resources.”6 In the Asian context, the Clinton administration has sought a balance between its desire to avoid the role of global policeman on the one hand and to avoid disengagement from international affairs on the other. Simon asserts that the “reduction in defense expenditures, focus on the domestic economy and aversion to power politics preclude the former, while [the] emphasis on human rights and internationalism preclude the latter.”7 Wilborn, in a 1993 critique of U.S. security policy in East Asia, also argues that one of its main problems is that it is potentially expensive. In the absence of a regional or global threat to U.S. security interests narrowly defined, Congress and the public are not likely to support the expenditure of funds to maintain military bases in East Asia and the Pacific unless this is clearly justified in terms of U.S. interests. What is needed,


Wilborn maintains, is to develop a layered regional security web in Asia, relying initially on the preexisting bilateral arrangements, but building new regional arrangements. This, he suggests, is the only way to achieve the long-term U.S. goal for the region: to place the main burden for stability in East Asia on those various regional security arrangements.8 The events of September 11 appear to have provided the global threat necessary to generate domestic support for international expenditures. But as I noted earlier, this support may not last indefinitely. As the unifying impact of the traumatic events of September 11 wanes down, as the American public comes to realize that the “war on terror” is far from being won, and in the case that the U.S. ends up paying a high price in human lives in this struggle, this consensus is bound to be undermined. Consequently, side by side with the unilateral rhetoric of the Bush administration, we have also witnessed growing calls to develop better regional frameworks to deal on a long-term basis with regional terrorist threats through shared intelligence and joint police and juridical work. This is the same longterm goal that motivated decisionmakers in the early postwar period to explore the regional option. It seems, however, more realistic at present, for reasons to be discussed later. In the economic sphere, the desire to shift the burden of providing for Asia’s stability was clearly evident during the financial crisis that began to engulf Asian markets in the summer of 1997 and threatened to destabilize markets worldwide. The administration and Congress were adamant not to offer bilateral U.S. emergency aid to the states hit by the crisis. Any U.S. contribution, it was argued, would have to be made through the IMF. Indeed, when the IMF put together a $17.2 billion bailout package for Thailand in August 1997, the U.S. helped draw up the (stringent) conditions, but did not contribute any funds. The Americans decided to lend Indonesia $3 billion on October 30, 1997, only after the IMF had committed a $15 billion emergency aid package for Indonesia, and only after the crisis had spread to Hong Kong and consequently triggered a record 554-point drop on Wall Street and rattled financial markets around the globe.9 This attempt to rely solely on a multilateral strategy (that is, operating through the IMF) proved problematic and raised criticism both in Asia and the U.S. Asians complained that the U.S. had failed to show leadership, while insisting on a major role in setting the IMF conditions for the bailout programs even though little U.S. money was at risk. Some even charged that the U.S. had helped bring about the crisis by recommending market-opening policies that made the region vulnerable to financial havoc.10 Within the U.S., critics claimed it was a mistake to leave the job to the IMF, which was too slow to react. 11


Although a bilateral U.S. bailout program was seen as too costly, this experience also highlighted the problematic nature of relying on a purely multilateral strategy. Eventually the U.S., the most powerful economy in the world, could not avoid the burden stemming from its international position. In his State of the Union Address, President Clinton emphasized that the U.S. had a major stake in resolving the Asian financial crisis for three reasons: (1) those states are the United States’ customers; if their economies collapsed they would buy fewer U.S. goods; (2) those states are the United States’ competitors; if their currencies depreciated they would flood U.S. markets with cheap goods; and (3) those states are the United States’ strategic partners; their stability is crucial to U.S. security.12 Thus, the search for the best strategy to advance U.S. international goals at the lowest price continues. PURSUING CONFLICTING GOALS: STABILITY, PROSPERITY, DEMOCRACY, AND REGIONAL ARRANGEMENTS The dilemma of reconciling expanded foreign policy commitments with the task of lowering the cost of foreign policy is thus alive and well in post-Cold War U.S. foreign policy. As for the basic U.S. policy goals, there are both similarities and differences compared to the period covered in this book. The U.S. still needs to contend with potential regional threats. Although Japan is no longer seen as an ex-enemy, there is still much concern about its future behavior were it to become a “normal state.”13 The fact that no regional arrangements were developed earlier, after the war, within which Japan could have been embedded by now, makes the bilateral security agreement between the U.S. and Japan crucial to Asian stability. In Europe, by contrast, West Germany was well integrated into the European system and hence the end of the Cold War and German reunification had a less destabilizing impact. The U.S., then, still faces the challenge of how to allow Japan to become more “normal” and assume a more active regional and global political and military role, while at the same time preventing it from returning to a nationalistic course, or at least allaying its neighbors’ fears about such a development. In this context as well, a regional strategy is attractive since it allows Japan to play a more active regional role (for example, to share the military burden that is currently on U.S. shoulders) without generating as much fear or resentment. This, for example, appears to be an important advantage of the ASEAN Regional Forum (ARF), the only forum through which Japan is able to make any security-related initiatives without


appearing threatening.14 To merely continue the reliance on the bilateral security agreement would perpetuate the need for U.S. presence in Asia to assure stability. The U.S., however, is constrained by its previous choices of strategy, and therefore has no alternative but to maintain its bilateral alliance with Japan, while at the same time encouraging the development of regional cooperation forums such as the PECC or the ASEAN Post Ministerial Conference of the ARF. The impact of past strategy choices is apparent not only in the lack of any institutionalized regional arrangements for security cooperation, but also in lingering tendencies in U.S. thinking, with the U.S. still constrained by its old bilateral thinking.15 In the earlier examined, a central goal conflict was between the need to balance the Communist threat, which necessitated the revival of Japan, and the need to contain a potential Japanese military resurgence. This dilemma tended to favor the regional strategy. Today there is no clear threat to balance against, and the goal has, perhaps temporarily, shifted from balancing to maintaining regional stability. If previously a regional strategy was aimed at helping to engage/ contain Japan while offering a vehicle for balancing against the PRC, today it is no longer clear that U.S. interests are best served by balancing against China.16 A regional security arrangement that excludes China could easily be interpreted as an attempt to balance against the Chinese, and risk creating a self-fulfilling prophecy. Once again, the ARF, which includes both China and Russia, is attractive to the U.S. thanks to its open, flexible nature.17 Finally, a regional strategy may be more attractive today because of the nature of the problems that the U.S. confronts. The broadly defined goal of maintaining regional stability includes the tasks of preventing further proliferation of nonconventional weapons in the region, coping with the destabilizing effects of growing economic integration, tackling environmental problems, and dealing with the now-central threat of trans-national terrorism. The nature of these challenges is such that there is more to be gained from pooling the efforts of all the relevant actors rather than dealing with each one bilaterally. In the European context, a similar rationale can explain the U.S. support for the maintenance of NATO as a means to contain a unified Germany within a collective security arrangement. Support for NATO expansion more closely reflects the rationale discussed in the security cases of reconciling balancing and collective security goals. NATO expansion can help contain domestic threats from within the new East European members that, if not dealt with, might create instability in the region. Yet at the same time an expanded NATO can serve the goal, implicit as it may now be, of balancing against possible


Russian resurgence. It also reflects the American vision of the “democratic enlargement.” Indeed, the expansion initiative was justified by National Security Adviser Anthony Lake as a means of “building a stable environment in which the new democracies and free markets of Eastern and Central Europe and the former USSR can flourish.”18 Finally, the advocates of an expanded NATO argue that in the long run it will also help reduce costs for the U.S. by producing a stable, expanded Europe. The fact that NATO expansion can be seen as serving these various and rather distinct policy goals helps to explain the strikingly scant debate on this crucial issue within the U.S. It had something to offer to those who believe in a New World Order, to those who believe that the Russian threat has not completely disappeared, and to those who believe the U.S. should reduce foreign policy costs in favor of domestic concerns. On the economic front, the U.S. still pursues the goal of advancing a liberal, global free trade system. Its support for APEC since 1993 reflects its belief that it can use that forum to promote greater regional trade liberalization. APEC’s insistence on the principle of open regionalism makes it easier for the U.S. to support it, and avoid the potential normative conflict between a regional and a global approach. U.S. support for APEC was also influenced by its potential contribution to the balancing (in an economic sense) of the Europeans. At the time, the specter of Europe-1992 was still raising fears both in the U.S. and, even more so, in Asia. APEC was seen as a potential counterweight for the U.S. in dealing with the EC.19 U.S. APEC policy reveals another interesting point. If during the Cold War the goal of advancing democracy and human rights was often subsumed by balancing needs, it has now reemerged as central. But today as well, its advancement is no less problematic. As the recent frictions with China on human rights issues, and the debate over linking human rights to China’s MFN status have shown, this goal may conflict with the goal of expanding global free trade.20 Through greater involvement in APEC the Clinton administration had hoped to simultaneously advance greater trade liberalization as well as its normative agenda. At the APEC Tokyo summit in July 1993, Clinton announced that the U.S. goal was to establish a “Pacific Community” with not only common security and a common market, but common values as well. APEC was to be the cornerstone of this community. The American attempt to pursue a bilateral approach to human rights issues vis-à-vis China highlights the advantages of pursuing such a normative agenda through a regional forum. In a bilateral setting the advancement of this goal can become politically costly and contentious, raising criticism of great power meddling in regional states’ domestic affairs. But if such a cause is adopted by a


regional forum then the criticism is defused, as pressure on regional authoritarian states is exerted by the regional democratic states as well. Asian reactions to the idea, however, were ambivalent. Since many Asian states hold different views from those of the U.S. on what constitutes human rights and democracy,21 the concept of “enlargement” of the “community of democratic and free market nations” is harder to apply as a basis for regional cooperation than in Europe, where it has been a popular slogan. This problem is closely linked to the issue of partners’ preferences, discussed below. Finally, APEC was created against the background of the problems encountered in the global-multilateral and bilateral approaches already being used by the U.S. The Uruguay Round was facing serious problems and impasses at the time, leading many to believe that the faltering global-multilateral process could be strengthened by further liberalization on a regional level. This is very reminiscent of the U.S. attitude toward regional trade cooperarion in the early postwar years, as well as its approach to regional security arrangements, as embodied in the Vandenberg Resolution: difficulties at the globalmultilateral level can be ameliorated by advancing similar goals at a regional level. Neither in the economic nor in the security realm did the U.S. abandon the bilateral approach it had developed throughout the Cold War period. Nevertheless, there is an undeniable growing emphasis on the contribution of a regional strategy to advancing U.S. goals in Asia. This stems partly from the renewed search for a strategy to reconcile U.S. goals and shift the burden of advancing them onto the regional states. However, what at last made the regional strategy in Asia appear more viable to the U.S. were the changes in the regional power disparities and in the regional states’ attitudes toward regional cooperation. THE NARROWING OF REGIONAL POWER DISPARITIES As we have seen, a major obstacle to a regional strategy in Asia was the extremely wide power disparities between the U.S. and the regional states, as well as within the region. In the economic domain, both have changed dramatically. The recent financial crisis notwithstanding, Japan is a global economic power, and ASEAN members are actively involved in the world economy as well as in intraregional trade. Whereas in 1965 the combined GNP of Japan, South Korea, the Philippines, Singapore, Thailand, Malaysia, and Indonesia came to only 15.9% of the U.S. GNP (in comparison, in 1950


the combined GNP of Britain, France, Italy, and Germany amounted to 39% of the U.S. total), by 1989 this had grown to 79.8% of U.S. GNP.22 Japan’s trade with Asia doubled in the 1980s; during 1985–1993 Asia accumulated a trade deficit with Japan of $9.3 billion to $54.2 billion. At the same time, Asia’s trade surplus with the U.S. and Europe increased from $28 billion to $70 billion. Thus, Asian countries were able to offset their trade deficit with Japan ($390 billion during 1985– 1994) with their trade surplus with the U.S. ($370 billion).23 In fact, the U.S. goal of economically reintegrating Japan into Asia, and diverting part of its exports from the U.S. market, while in the 1950s seemingly so unrealistic, had by the 1990s been accomplished. In 1994, 27.1% of Japan’s total trade was conducted with the U.S., 38.1% of it within Asia. In the same year, ASEAN trade with Japan amounted to 25.2% of its total trade. Within ASEAN there is also a growing trend of increased intraASEAN trade and trade with the NIEs.24 Thus, the U.S. is no longer dealing with Japan as the only significant economic actor in Asia, and the Japan it is dealing with is much stronger than it was in the early 1950s. In 1994, Japan was exporting 42.5% of its exports to Asia and importing 48.7% of its imports from Asia.25 These changed power disparities indicate that the U.S. now has more to gain from encouraging regional cooperation, in terms of trade liberalization and expansion. As emerged clearly in the recent financial crisis, the regional states, like the West European states immediately after World War II, have a major influence on the strength and stability of the international, multilateral free trade order that the U.S. endorses. The U.S. stands to benefit if it can get these states to cooperate to lower trade barriers, instead of dealing bilaterally with each of them as it has been doing with Japan. Finally, in light of their larger, more advanced economies, the regional states as well feel that they can gain from regional cooperation. If in the 1950s there was a prevalent belief in economic development along nationalistic lines, today there is support for the basic premises of multilateral free trade (even if interpreted somewhat differently). This point leads us to perhaps the most crucial factor influencing the U.S. decision to promote a regional strategy, namely, the regional partners’ changed preferences. In the security sphere the change in power disparities is not as dramatic, but still quite significant. The regional states’ tremendous economic growth, and the wealth and technological knowledge they have amassed, has led in turn to greater military expenditures. Throughout Asia, defense expenditures had increased dramatically by the late 1980s. Although Japan has never spent more than 1 % of its GNP on defense, because of its huge GNP its defense budget already


ranks from third to sixth in the world. During 1990–1993 its defense budget grew by 38.2%, whereas the U.S. budget declined by 11.2%.26 In Southeast Asia, armies have been restructured from counterinsurgency capabilities to modern, high-technology forces. China as well is undergoing major modernization of its military, especially its navy. These changes are especially dramatic in light of the decline in U.S. defense spending.27 In the Pacific pact case, regional power disparities were so wide that Japan was clearly the main regional actor the U.S. could hope to rely on in the future. With SEATO as well, despite Eisenhower’s vision of future burden sharing, it was clear that the Southeast Asian partners were extremely weak. Today, however, various regional states have more to offer in terms of their potential contribution to regional stability (as well as the potential harm they can inflict). This in turn has been augmented by those states’ greater interest in regional security dialogues and regional cooperation in general. REGIONAL INITIATIVE, SHARED GOALS, AND THE REGIONAL APPROACH In the Asian cases, the U.S. encountered mainly resistance to regional cooperation, or support for it for the wrong reasons (as the Americans perceived them). In Asia there was no Dunkirk Treaty, no Brussels Pact, and no equivalent of the Paris Conference to devise a joint aid plan. This lack of regional support was crucial in discouraging U.S. attempts to establish such cooperation. In the Pacific Pact case, for example, I concluded that the U.S. would probably have pursued the option further had there been more support within the region. This lack of local interest in regional cooperation has been changing since the 1960s, with the creation, for example, of the Association of Southeast Asian Nations (ASEAN). The most dramatic change has occurred since the late 1980s, when the main impetus for regional cooperation began coming from Asia. Both APEC and the ASEAN Regional Forum (ARF) (as well as other regional security fora) were regional initiatives. APEC was created in 1989 as a result of an Australian initiative, and did not encounter a warm U.S. welcome. The United States became an active supporter of APEC only after the APEC ministerial meeting in Seattle in November 1993, when President Clinton endorsed the idea of a Pacific Community. The ARF was an ASEAN initiative, and also not warmly accepted by the Americans at the outset. Several factors account for this shift toward greater interest in regional cooperation, most notably the perception of U.S. hegemonic decline and the fear that the U.S. would disengage from Asia.28 Even


APEC was seen in part as a way to anchor U.S. interests in the region so as to counter China’s growing power. There was also growing acceptance throughout the region of privatization and more liberal economic policies. This implied both greater common ground within the region for cooperation, and a stronger basis for cooperation with the U.S. Finally, the Pacific states feared that the global trading system was devolving into exclusive blocs, in light of the image of a “Fortress Europe” after 1992 and the signing of the North American Free Trade Area (NAFTA).29 As we have seen, in the early postwar years the region’s extreme suspicions toward Japan constituted another obstacle to any regional arrangement. Although these fears have by no means vanished, and Japan still must operate very cautiously, there has clearly been significant progress in terms of regional confidence building, largely thanks to Japan’s ongoing efforts to improve its regional image. This is manifested in growing cooperation between Japan and ASEAN. These very suspicions, however, also give Japan an incentive to endorse a regional, multilateral strategy. Although Australia was the initiator of APEC, Japan as well, recognizing that a regional forum might help offset what it saw as an aggressive U.S. shift to managed bilateralism, played a key role in its development.30 Also, after the Plaza accords of 1985, which strengthened the Yen against the dollar and impelled many Japanese companies to relocate production to Southeast Asia, there was a dramatic surge of Japanese economic activity in Southeast Asia. A multilateral (meaning regional) strategy could provide Japan with a quiet approach to the region that would help it restore its legitimacy and claims to leadership, and to overcome domestic resistance to a more active international role. 31 As a key regional power, Japan’s growing interest in promoting a regional strategy could make the pursuit of such a strategy much easier for the U.S. It is clear, then, that there is genuine regional interest in the regional option—even regardless of the extent of U.S. support. I have argued that the main danger in promoting a regional arrangement is that the regional partners will then exploit their greater leverage within that arrangement to pursue goals undesired by the great power. This danger increases as the power disparities with the regional states narrow. Because of the relatively stronger position of the regional states in Asia today, it is crucial that the U.S. establish that their goals and preferences are compatible with its own. In this context the main concern voiced in the U.S. is about the danger of the creation of a hostile and protectionist Asian bloc. However, currently there seems to be an overall consensus that the goal of the various regional initiatives is to advance open regionalism,


that is, a regional arrangement that aims at strengthening globalmultilateral arrangements rather than challenging them. Within Southeast Asia there is a strong commitment to economic development and to the role of the market and the global economy in that development. If at all, there is in fact more criticism coming from with in the region about the U.S. conduct of bilateral trade negotiations, which are seen as a violation of its multilateral commitments.32 On the security front, all relevant actors share the goal of maintaining regional stability. The U.S., however, still faces the same challenge it did in 1950, namely, the opposition to an enhanced security role for Japan. In the economic realm, regional integration has been occurring thanks to the power of market forces, thus improving Japan's links with other regional states and creating greater willingness to deal with it. In the security issue-area, however, no such "market incentives" exist. The linking of Japan to the U.S. through the bilateral security treaty solved the "Japan problem," and this situation has not changed much since the end of the Cold War. The main goal shared by most of the regional states is to prevent U.S. disengagement from the region, which is perceived as a very real danger. As noted, U.S. involvement in regional forums such as APEC and the ARF is seen in the region as a means to that end. Greater regional cooperation, even if driven by fear that the U.S. is no longer as committed to the region's security, can still serve the U.S. goal of maintaining regional stability in Asia at a minimal cost. Overall, then, the Asian states' goals with respect to regional cooperation are perceived as compatible with those of the U.S. Two examples of regional initiatives where the goals were not perceived as such were the East Asian Economic Group (EAEG) and the Asian Fund, and in both cases the U.S strongly objected. Similarly, during the height of the financial crisis in late 1997-early 1998, a proposal was raised to create an Asian Monetary Fund of as much as $100 billion. The U.S. objected, fearing that such a fund might undercut the tough conditions the IMF attached to bailouts, and also that a Japanese-led regional organization might freeze the U.S. out.33 Given the changes in the regional power disparities, the interest within Asia in regional cooperation, and the United States' inability to reach a domestically agreed-upon compromise about the cost vs. commitments dilemma, the regional actors' preferences will likely exert an increasing influence on U.S. strategy.


ON PREDICTIONS AND PRESCRIPTIONS Writing a theoretical essay on issues that have bearing on current events, entails special challenges. In the preceding pages I suggested that the changed global and regional power distribution, as well as the changing preferences of the regional partners in Asia, will lead to a greater emphasis by the U.S. on the development of regional cooperation strategies. Such strategies will be seen as a promising means of advancing regional stability and eco nomic openness, a means that will also shift much of the burden onto the regional partners while allowing the U.S. to maintain its involvement (and hence potential influence) in the region. The goal of maintaining regional stability has increased importance now in the context of the fight against global terrorism. However, completing this manuscript in the midst of an impending American war on Iraq leaves me at an uncomfortable disadvantage. After all, this war, as was the previous war against Afghanistan, is a strong example of American unilateral action! This is indeed the beauty and the danger of studying current affairs. Still, the findings of this book do suggest that in the post-war period the United States will again find itself searching for regional cooperation partners to rebuild order and stability and to continue the fight against terrror—a fight not likely to be won through a war in Iraq. Finally, let me conclude with a note of caution regarding the lure of regional solutions—a central theme in this book. It is important not to confuse one’s predictions based on the theory with one’s prescriptions. I have argued that a regional strategy will appear attractive when it can be presented as simultaneously serving different, often conflicting policy goals. I am not, however, suggesting that regional-multilateral cooperation strategies are the panacea to the complex foreign policy problems that the U.S. must deal with. In fact, the findings of my research point to the need to be cautious about the actual value of such strategies. The fact that a regional strategy was preferred because it offered the best domestic policy compromise did not ensure that it was also the best policy. It may be easier to sell a regional collective security arrangement to different domestic constituencies as a collective security arrangement, as an alliance, and as a means of reducing the burden of U.S. provision of security guarantees. Yet it still may not be the best arrangement to serve any one of those goals on its own. A solution that attempts to reconcile too many conflicting goals may in fact end up advancing none.

Notes

NOTES TO CHAPTER 1 1 For an example of competing visions about the United States’ future grand strategy, see Stephen M. Walt, “The Case for Finite Containment: Analyzing U.S. Grand Strategy,” International Security 14, no. 1 (1989): 5–49. See also Christopher Layne, “From Preponderance to Offshore Balancing: America’s Future Grand Strategy,” International Security, 22 (1997); Eugene Gholz, Daryl G. Press, and Harvey M. Sapolsky, “Come Home, America: The Strategy of Restraint in the Face of Temptation,” Michael Mastanduno, “Preserving the Unipolar Moment: Realist Theories and U.S. Grand Strategy after the Cold War,” John Gerard Ruggie, “The Past as Prologue? Interests, Identity, and American Foreign Policy,” all in International Security 2l, no. 4 (1997). 2 On the importance of devising a clear strategy toward Asia, see Richard K. Betts, “Wealth, Power, and Instability: East Asia and the United States after the Cold War,” International Security 18, no. 3 (1993–94): 34–77. For interesting analyses of the future role the U.S. should play in Asia, see Larry M. Wortzel, The ASEAN Regional Forum: Asian Security without an American Umbrella (Strategic Studies Institute, U.S. Army War College, December 13, 1996); Stephen J. Blank, Helsinki in Asia? (Strategic Studies Institute, U.S. Army War College, August 16, 1993); Thomas L. Wilborn, Stability, Security Structures, and U.S. Policy for East Asia and the Pacific (Strategic Studies Institute, U.S Army War College, March 24, 1993). One could add the current North Korean nuclear challenge to this list of regional challenges. 3 Warren Christopher, “U.S. National Interest in the Asia-Pacific Region,” Address to the National Press Club, Washington D.C., July 28, 1995. 4 For a thorough examination of possible U.S. strategies in Asia, which makes the case for a strategy of leadership, see Joseph S. Nye, Jr., “East Asian Security: The Case for Deep Engagement,” Foreign Affairs, (JulyAugust 1995): 90–114. See also Patrick M. Cronin, ed., From Globalism

to Regionalism: New Perspectives on U.S. Foreign and Defense Policies

(Washington D.C.: National Defense University Press, 1993). For a

NOTES TO CHAPTER 1 207

thorough examination of alternative security structures for the AsiaPacific region, see William T. Tow, “Contending Security Approaches in the Asia-Pacific Region,” Security Studies 3, no. 1 (1993): 75–116. 5 For examples of the Realist argument, see Joseph M. Grieco, “Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal Institutionalism,” International Organization 42, no. 3 (1988); Stephen Krasner, “Global Communications and National Power: Life on the Pareto Frontier,” World Politics 43, no. 3 (1991). For examples of the Neoliberal Institutionalist argument, see Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984); Kenneth A. Oye, ed., Cooperation under Anarchy (Princeton: Princeton University Press, 1986); Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: Princeton University Press, 1984). Both approaches are represented in David Baldwin, ed., Neorealism and Neoliberalism (New York: Columbia University Press, 1994). For a helpful review of the state of the art, see Helen Milner, “International Theories of Cooperation among Nations: Strengths and Weaknesses,” World Politics 44, no. 3 (1992). Perhaps the best discussions of the different factors that may affect the likelihood of cooperation are: Robert Jervis, “Cooperation under the Security Dilemma,” World Politics 30, no. 2 (1978); Robert Jervis, “Realism, Game Theory and Cooperation,” World Politics 40, no. 3 (1988). 6 For the functional argument regarding the role of institutions, see Keohane, After Hegemony; Robert O. Keohane, International

Institutions and State Power: Essays in International Relations Theory

7

8 9 10

11

(Boulder, Col.: Westview Press, 1989). For the reflective argument about institutions, see, e.g., Robert O. Keohane, “International Institutions: Two Approaches,” International Studies Quarterly 32 (1988); Alexander Wendt, “Anarchy Is What States Make of It,” International Organization 46, no. 2 (1992); Stephen Krasner, “Sovereignty: An Institutional Perspective,” in James Caporaso, ed., The Elusive State: International and Comparative Perspectives (Newbury Park, Cal.: Sage, 1989). Peter J. Katzenstein and Takashi Shiraishi, “Regions in World Politics— Japan and Asia—Germany in Europe,” in Network Power: Japan and Asia, ed. Peter J. Katzenstein and Takashi Shiraishi (Ithaca: Cornell University Press, 1997), pp. 365–367. This is Aaron L. Friedberg’s term in “Ripe for Rivalry: Prospects for Peace in a Multipolar Asia,” International Security 18, no. 3 (1993–94): 22. Peter J. Katzenstein, “Asian Regionalism in Comparative Perspective,” in Katzenstein and Shiraishi, Network Power, pp. 23–24. This point is supported by Gerald Segal, “Rethinking the Pacific,” Review of International Studies 16 (1990): 278; Bruce Cummings, “Japan and Northeast Asia into the Twenty-First Century,” in Katzenstein and Shiraishi, Network Power, pp. 154–155. On the importance of path dependency for various social as well as biological phenomena, see, e.g., Paul Pierson, “When Effect Becomes

208 NOTES TO CHAPTER 1

12

13

14

15

16

17 18

Cause: Policy Feedback and Political Change,” World Politics 45 (1993): 595–628; Stephen Jay Gould, Wonderful Life (New York: Norton, 1989); Paul David, “Clio and the Economics of QWERTY,” American Economic Review 75 (May 1985): 332–337; Robert Jervis, System Effects: Complexity in Political and Social Life (Princeton: Princeton University Press, 1997), pp. 155–161. For an institutional interpretation of the importance of path dependence, see, e.g., Krasner, “Sovereignty.” So far perhaps the most important example of a path dependency effect, from a U.S. perspective, is the fact that the attempts the U.S. did pursue to create a regional strategy for Asia played an unfortunate role in bringing about its subsequent involvement in Vietnam. This argument is developed in Andrew J. Rotter, The Path to Vietnam: Origins of the American Commitment to Southeast Asia (Ithaca: Cornell University Press, 1987). Friedberg, “Ripe for Rivalry,” p. 32; Bruce Stokes and C. Michael Aho, “Asian Regionalism and U.S. Interests,” in The United States, Japan and Asia: Challenges for U.S. Policy, ed. Gerald Curtis (New York: Norton, 1994), p.132. Tow argues that the most realistic approach to pursue at present in Asia is a “convergent security” strategy. This strategy is a managed transition from a regional security system based on bilateral arrangements to a system based increasingly on more indigenous multilateral arrangements. This, however, will be a long process; immediate reliance on multilateral policy will not work. See Tow, “Contending Security Approaches,” pp. 75–76. The central role of U.S. policy is implicitly or explicitly assumed in Friedberg’s argument, as well as in Betts, “Wealth, Power, and Instability”; see also Samuel Huntington, “Why International Primacy Matters,” International Security 17 (Spring 1993). Cummings warns us, however, against assuming that the U.S. will continue to exert the same degree of influence in the region as it did during the Cold War; “Japan and Northeast Asia,” pp. 161–162. In this study I use a rather loose definition of Asia. In the case studies the focus shifts from the Great Crescent of Japan, the Philippines, Australia, and New Zealand in the Pacific Pact case (chapter 3), to Southeast Asia in the SEATO case (chapter 4), to the Japan-Southeast Asia link in the chapter on trade (chapter 6), and finally to a more exclusive focus on Southeast Asia in the foreign aid case (chapter 7). Communist Asia, especially China, is of course extremely relevant to the study, but is not a subject of the cooperation schemes contemplated. See Friedberg, “Ripe for Rivalry,” pp. 5–33. Also in International Security 18, no. 3 (1993–94) see Desmond Ball, “Arms and Affluence: Military Acquisitions in the Asia-Pacific Region,” pp. 78–112. When the financial crisis began in Thailand, the U.S. chose not to act bilaterally, instead choosing to rely on the global multilateral strategy of cooperation through the IMF. However, by the time the IMF had managed to organize its response, the crisis had spread to other states in the region, with implications for the U.S., Japanese, and Latin


19

20 21

22 23

24

25

American economies. States in the region, as well as U.S. commentators, strongly criticized the U.S. reaction; see, e.g., Tom Plate, “A Duck Now, Pay Later Foreign Policy,” Los Angeles Times, November 11, 1997, p. B7. For a consideration of this issue, see Segal, “Rethinking the Pacific.” This situation is, however, rapidly changing as in recent years numerous works dealing with Asia have been published, especially in the field of international political economy. Keohane, After Hegemony, p. 53. Unilateral strategies will be relevant to this study in several other ways. It may be that a multilateral strategy’s domestic attractiveness partly depends on the great power’s ability to set the terms of the arrangement unilaterally. This implies that, in certain situations, a multilateral strategy might be chosen as a mere camouflage for a unilateral policy. I shall bear this point in mind, since such a critique of multilateral approaches is often heard in regard to powerful actors adopting multilateralism. Finally, the fear among other states of that very option, i.e., the great power’s unilateral abuse of a multilateral arrangement, may be an important factor in shaping their preferences with respect to such an arrangement. Robert O.Keohane, “Multilateralism: An Agenda for Research,” International Journal 11, no. 5 (1990): 731. John Gerard Ruggie, “Multilateralism: The Anatomy of an Institution,” in Multilateralism Matters: The Theory and Praxis of an Institutional Form, ed. John Gerard Ruggie (New York: Columbia University Press, 1993), p. 11. Keohane defines diffuse reciprocity as reciprocity in which “the definition of equivalence is less precise, one’s partners may be viewed as a group rather than as particular actors, and the sequence of events is less narrowly bounded. Obligations are important. Diffuse reciprocity involves conforming to generally accepted standards of behavior.” In Robert O. Keohane, “Reciprocity in International Relations,” International Organization 40, no. 1 (1986): 4. For examples of the different definitions of regionalism and regions, see the essays in Edward Mansfield and Helen Milner, eds., The Political Economy of Regionalism (New York: Columbia University Press, 1997); Beth V.Yarborough and Robert M.Yarborough, “Regionalism and Layered Governance: The Choice of Trade Institutions,” Journal of International Affairs 48, no. 1 (1994). In the security context, see David A.Lake and Patrick M.Morgan, eds., Regional Orders: Building Security in a New World (University Park: Pennsylvania State University Press, 1997), “Part I: Introduction.” It is worth noting that while there have been many debates about the nature of regionalism, there has been no discussion of regional strategies as such. The focus is on regionalism as a phenomenon, a condition, and not as a strategy. Thus, what most scholars try to do is to use it either as a dependent variable (i.e., asking: what leads to regionalism?) or as an independent variable (e.g., asking: what are the implications of regionalism for global free trade?).


26 Regional economic arrangements can be either exclusive or more open, in the sense of allowing actors outside of the arrangements to enjoy the benefits stemming from them. This characteristic, in turn, can make such arrangements more or less compatible with a multilateral strategy. 27 On the value of this approach, see Timothy J.McKeown, “Hegemonic Stability Theory and 19th Century Tariff Levels in Europe,” International Organization 37 (Winter 1983): 73–91. See also Gary King, Robert O.Keohane, and Sidney Verba, Designing Social Inquiry: Scientific Inference in Qualitative Research (Princeton: Princeton University Press, 1994), pp. 85–86, 226–228.

NOTES TO CHAPTER 2 1 i.e., to retaliate to any defection with defection and reward cooperation with cooperation. See Keohane, “Reciprocity.” 2 Joanne Gowa elaborates this argument with respect to issues of international political economy in “Bipolarity, Multipolarity and Free Trade,” American Political Science Review 83, no. 4 (1989); Joanne Gowa, Allies, Adversaries and International Trade (Princeton: Princeton University Press, 1994). She focuses on the fact that bipolarity reduces intra-pole relative gains concerns, as well as lengthening the actors’ shadow of the future since such a system minimizes exit threats of members of one pole. For a similar argument on security issues, see Glenn H. Snyder, "The Security Dilemma in Alliance Politics,” World Politics 36 (1984). 3 See Charles Kindelberger, The Great Depression: 1929-1939 (Berkeley: University of California Press, 1973); Stephen Krasner, “State Power and the Structure of International Trade,” World Politics 28 (1976): 317– 347; Robert Gilpin, The Political Economy of International Relations (Princeton: Princeton University Press, 1987); David Lake, “Leadership, Hegemony and the International Economy: Naked Emperor or Tattered Monarch with Potential?” International Studies Quarterly 37 (1993); Gowa, Allies, Adversaries; John A. C. Conybeare, “Public Goods, Prisoners’ Dilemmas and the International Political Economy,” International Studies Quarterly 28 (1984): 5–22. 4 The most familiar argument about relative gains is developed in Joseph M. Grieco, Cooperation among Nations: Europe, America and Non-Tariff Barriers to Trade (Ithaca: Cornell University Press, 1988). Grieco maintains that very strong states have a low sensitivity to gaps in payoff (p. 46). 5 For a similar critique of the hegemonic stability literature, see McKeown, “Hegemonic Stability Theory,” p. 79. 6 Marc L.Busch and Helen V.Milner, “The Future of the International Trading System: International Firms, Regionalism, and Domestic Politics,” in Political Economy and the Changing Global Order, ed.


7 8 9 10 11 12 13

14 15 16

17

18 19

Richard Stubbs and Geoffrey R.D. Underhill (Toronto: M&S, 1994), pp. 268–271. Helen V.Milner, “Industries, Governments, and Regional Trade Blocs,” in Mansfield and Milner, eds., Political Economy of Regionalism, pp. 80– 86. Ibid, pp. 77, 89. See for example: Etel Solingen, Regional Orders at Century's Dawn: Global and Domestic Influences on Grand Strategy (Princeton, N.J.: Princeton University Press, 1998). John Gerard Ruggie, “Third Try at World Order? America and Multilateralism after the Cold War,” Political Science Quarterly 109, no. 4 (1994): 564. Ibid., pp. 564–565. Ann Marie Burley, “Regulating the World: Multilateralism, International Law, and the Projection of the New Deal Regulatory State,” in Ruggie, Multilateralism Matters, pp. 125–156. Robert Osgood, Alliances and American Foreign Policy (Baltimore: Johns Hopkins University Press), p. 33. Paul Nitze, “Coalition Policy and the Concept of World Order,” in Alliance Policy in the Cold War, ed. Arnold Wolfers, 2nd ed. (Westport, Conn.: Greenwood Press, 1976), pp. 15–19, 30. Arnold Wolfers, “Collective Defense vs. Collective Security,” in Wolfers, Alliance Policy, p. 66. Inis Claude, Power and International Relations (New York: Random House, 1967), pp. 136–137. By breaking down the concept of the “national interest” into several competing policy goals, which may reflect different values and different beliefs, I hope to avoid the awkward distinction often made in international relations literature between ideas and interests. See, e.g., Judith Goldstein and Robert O.Keohane, “Ideas and Foreign Policy: An Analytical Framework,” in Ideas and Foreign Policy: Beliefs, Institutions and Political Change ed. Judith Goldstein and Robert O. Keohane (Ithaca: Cornell University Press, 1993). I problematize preferences by pointing to the existence of competing foreign policy preferences. I do not, however, put much emphasis on exploring the origins of those preferences. For another argument that links the nature of the cooperation problem and the type of institutional solution, see James D. Morrow, “The Forms of International Cooperation: Distribution versus Information,” International Organization 48, no. 3 (1994): 387–424. In Ruggie, Multilateralism Matters, pp. 91–121. Beth V. Yarborough and Robert M. Yarborough, Cooperation and

Governance in International Trade: The Strategic Organizational Approach (Princeton: Princeton University Press, 1992), esp. ch. 2. 20 David Lake, Entangling Relations—American Foreign Policy in Its Century (Princeton: Princeton University Press, 1999), chapter 1. 21 See, e.g., Keohane, After Hegemony.


22 Kenneth Oye, “Explaining Cooperation under Anarchy: Hypotheses and Strategies,” pp. 18–22; and Robert Axelrod and Robert O. Keohane, “Achieving Cooperation under Anarchy: Strategies and Institutions,” pp. 234–238, both in Cooperation under Anarchy, ed. Kenneth Oye (Princeton: Princeton University Press, 1986). 23 Stephan Haggard, “The Political Economy of Regionalism in Asia and the Americas,” in Political Economy of Regionalism, ed. Mansfield and Milner, ch. 2, esp. p. 47; for a different, constructivist critique of functional explanations for regionalism, see Charles A. Kupchan, “Regionalizing Europe’s Security: The Case for a New Mitteleuropa,” in ibid., ch. 9. 24 On the analytic paradigm and its critics, see Glenn H. Snyder and Paul Diesing, Conflict among Nations: Bargaining, Decision Making, and System Structure in International Crises (Princeton: Princeton University Press, 1977,) ch. 5; Graham T. Allison, The Essence of Decision (Boston: Little, Brown, 1971); John D. Steinbruner, The

Cybernetic Theory of Decision: New Dimensions of Political Analysis

(Princeton: Princeton University Press, 1974,) ch. 2; Donald R. Kinder and Janet A. Weiss, “In Lieu of Rationality: Psychological Perspectives on Foreign Policy Decision Making,” Journal of Conflict Resolution 22, no. 4 (1978): 707–735. 25 Alexander George, Presidential Decisionmaking in Foreign Policy: The Effective Use of Information and Advice (Boulder, Col.: Westview Press, 1980), p. 26; Steinbruner, Cybernetic Theory, pp. 105–108; Snyder and Diesing, Conflict among Nations, pp. 341–342; Kinder and Weiss, “In Lieu of Rationality,” pp. 718–720. 26 See, e.g., the debate between offensive realism and defensive realism, surveyed by Gideon Rose, “Neoclassical Realism and Theories of Foreign Policy,” World Politics 5l (1998): 144–172. 27 Arnold Wolfers, “National Security as an Ambiguous Symbol,” in Discord and Collaboration: Essays on International Politics, ed. Arnold Wolfers (Baltimore: Johns Hopkins University Press, 1962), p. 154. A similar argument has been made by Robert Jervis, The Meaning of the

Nuclear Revolution: Statecraft and the Prospects of Armageddon

(Ithaca: Cornell University Press, 1989), ch. 4; John H. Herz, International Politics in the Atomic Age (New York: Columbia University Press, 1959), pp. 236–238; Stephen Krasner, Defending the

National Interest: Raw Materials Investments and U.S. Foreign Policy

(Princeton: Princeton University Press, 1978), pp. 40–42. 28 Walt defines a grand strategy as the state’s “plan for making itself secure.” Grand strategy “identifies the objectives that must be achieved to produce security, and describes the political and military actions that are believed to lead to this goal” (Walt, “Case for Finite Containment,” p. 6). Walt shows how there are currently competing potential grand strategies for the U.S.: world order idealism, neoisolationism, disengagement, global containment, rollback, and finite containment. Each such grand strategy has different implications in terms of its interpretation of external threat and the extent to which expanded


29

30

31 32

commitments are required to deal with it. Different grand strategies are also rooted in, or seek to promote, different ideological agendas. For this approach, see Michael Mastanduno, David Lake, and John Ikenberry, “Toward a Realist Theory of State Action,” International Studies Quarterly 33 (1989): 457–474; Krasner, Defending the National Interest, chs. 1–2. Paul K. Huth, Standing Your Ground: Territorial Disputes and International Conflict (Ann Arbor: University of Michigan Press, 1996), p. 42. See also Mastanduno, Lake, and Ikenberry’s discussion of domestic and international goals pursued by statesmen in “Toward a Realist Theory.” Kenneth Waltz, Theory of International Politics (New York: McGrawHill, 1979). For a general discussion of the issue, see Judith Goldstein and Robert O. Keohane, eds., Ideas and Foreign Policy: Beliefs, Institutions and Political Change (Ithaca: Cornell University Press, 1993). On the relations between ideas and institutions, see Kathryn Sikkink, Ideas and Institutions: Developmentalism in Brazil and Argentina (Ithaca: Cornell University Press, 1991); Emanuel Adler, The Power of Ideology:

The Quest for Technological Autonomy in Argentina and Brazil

(Berkeley: University of California Press, 1987); Peter Katzenstein, ed.,

The Culture of National Security: Norms and Identity in World Politics (New York: Columbia University Press, 1996). 33 As mentioned earlier, these actors are decisionmakers within the executive branch and in Congress, as well as societal interest groups. There may be differences of opinion among decisionmakers within the executive, or between the executive and Congress, or within both. 34 On the distinction between terminal values relating to ends and instrumental values relating to means see: Milton Rokeach, “Attitudes: The Nature of Attitudes,” in International Encyclopedia of the Social Sciences, ed. David Sills (NY: Macmillan and Free Press, 1968), pp. 449– 458. 35 In the U.S. case, perhaps most explicitly during the Eisenhower presidency, there was genuine apprehension that spending too many resources on combating the Soviet Union might undermine the “American way of life” and turn the U.S. into a garrison state. 36 James M. Lindsay, Congress and the Politics of U.S. Foreign Policy (Baltimore: Johns Hopkins University Press, 1994), pp.18–19. Congress has several ways of influencing executive decisionmakers, such as: legislation, provoking anticipated reactions, enacting procedural legislation that has substantive consequences, and by “framing” the terms of public debate on specific issues. On this, see ibid., chs. 4–6; James M. Lindsay and Randall B. Ripley, “How Congress Influences Foreign and Defense Policy,” in Congress Resurgent: Foreign and Defense Policy on Capitol Hill, ed. Randall B.Ripley and James M.Lindsay (Ann Arbor: University of Michigan Press, 1993). 37 Paul Kennedy, The Rise and Fall of Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Random House,


38

39 40 41 42 43

44

1988). The importance of the domestic economic base and the danger of overextension are also central to Robert Gilpin’s argument about the rise and decline of great powers, in War and Change in International Politics (Cambridge: Cambridge University Press, 1981). On this issue in the specific U.S. context, see Aaron L.Friedberg, “The Political Economy of American Strategy” World Politics 41, no. 3 (1989): 381– 406. It should be interesting to examine more thoroughly what factors shape the degree of sensitivity to the level of foreign policy spending (e.g., domestic agenda, availability of resources, the nature of domestic institutional arrangements, etc.). See Arthur Stein, “The Hegemon's Dilemma: Great Britain, the US, and the International Economic Order,” International Organization 38, no.2 (1984); Gilpin, War and Change. Mancur Olson first formulated this logic in The Logic of Collective Action, rev. ed. (Cambridge: Harvard University Press, 1971). Mancur Olson and Richard Zeckhauser, “An Economic Theory of Alliances,” Review of Economics and Statistics 48 (1966): 266–279. Gilpin, War and Change, ch. 4, esp. pp. 168–170. The main premise of the hegemonic stability literature is that a hegemonic state will unilaterally pay the cost of maintaining the free trade system. The hegemon is also expected to maintain international financial stability by bailing out states in distress as the lender of last resort. For the classic argument, see Kindelberger, World in Depression. See also Krasner, “State Power”; Gilpin, Political Economy of International Relations. For specific examples, see Stein, “Hegemon’s Dilemma”; Keohane, “Reciprocity,” esp. pp. 13–15. In the U.S., the domestic concern about the cost of foreign policy is ongoing. As a recent book by Bacchus suggests, the U.S. public is generally considered antagonistic to foreign expenditures and also tends to believe that much more is spent internationally than is the case. In fact, Bacchus argues, ever since the early postwar period Congress has become increasingly involved in the details of funding for foreign affairs agencies. The dilemma of reconciling cost and commitments is therefore even more relevant today (see William I.Bacchus, The Price of American

Foreign Policy: Congress, the Executive, and International Affairs Funding, University Park, Pennsylvania State University Press, 1997). 45 George, Presidential Decisionmaking, pp. 28–36. Various defensive avoidance strategies that decisionmakers use to avoid such conflict are also discussed in Irving L.Janis and Leon Mann, Decision Making: A Psychological Analysis of Conflict, Choice and Commitment (New York: Free Press, 1977), p. 50, chs. 1, 2; Steinbruner, Cybernetic Theory, pp. 62–65. 46 Barbara Farnham, “Political Cognition and Decision-Making,” Political Psychology 11, no. 1 (1990): 88. For an application of the political approach to decisionmaking see Barbara Rearden Farnham, Roosevelt and the Munich Crisis: A Study of Political Decision-Making (Princeton: Princeton University Press, 1997).


47 Farnham, “Political Cognition”, pp. 96–97. 48 Farnham, Roosevelt and the Munich Crisis, p. 29. 49 I follow Osgood, who argues that regional alliances may also be intended “to restrain a member, limit its options, support its government against internal threat, or control its foreign policy in some fashion. In that respect, many alliances have actually been as much concerned as a collective security agreement would be with organizing relations between allies” (Alliances and American Foreign Policy, p.18). For a different approach arguing for a clear distinction between the two forms, see Wolfers, “Collective Defense,” pp. 51–52. 50 On this issue, see Haggard, “Political Economy of Regionalism in Asia and the Americas,” pp. 39–41. 51 Todd Sandler and Keith Hartley, “The economic theory of alliances,” in: Sandler and Hartley, The Economics of Defense (Cambridge: Cambridge University Press, 1995), pp. 19–51; Richard Cornes and Todd Sandler, “Easy Riders, Joint Production and Public Goods,” Economic Journal 94 (1984): 580–598; John Conybeare and Todd Sandler, “The Triple Entente and the Triple Alliance 1880–1914: A Collective Goods Approach,” American Political Science Review 84, no. 4 (1990): 1197– 1206. For other critiques of the original argument related to the public good nature of the provision of security, see, e.g., John R. Oneal, “The Theory of Collective Action and Burden Sharing in NATO,” International Organization 44 (1990): 379–402; Wallace Thies, “Alliances and Collective Goods,” Journal of Conflict Resolution 31 (1987): 298–322. For a very interesting article contrasting the predictions of collective goods theory and of Neorealist theory about the behavior of allies, see Avery Goldstein, “Discounting the Free Ride: Alliances and Security in the Postwar World,” International Organization 49, no. 1 (1995): 39–71. 52 Cornes and Sandler, “Easy Riders,” p. 580. 53 This is the standard argument about the benefits of institutions as providing rules of thumb that can diminish transaction costs, increase transparency, and create a collective enforcement mechanism to decrease the likelihood of individual defection; see Keohane, After

Hegemony.

54 Mark A. Boyer shows how specialization allowed for better and more equitable public goods provision within NATO (International Cooperation and Public Goods, Baltimore, Johns Hopkins University Press, 1993, ch.3). See also Oneal, “Theory of Collective Action,” p. 386. 55 The importance of farsightedness in supporting multilateral arrangements is stressed by Lisa L. Martin in “The Rational State Choice of Multilateralism,” in Ruggie, Multilateralism Matters, pp. 108– 112. 56 This argument will be true only if the regional trade arrangement does not discriminate against nonmembers. For a helpful review of the different ways to conceptualize the relations between globalmultilateral and regional arrangements, see Jagdish Bhagwati,


“Regionalism versus Multilateralism,” World Economy 15, no. 5 (1992): 535–557. 57 George Liska, Alliances and the Third World (Baltimore: Johns Hopkins University Press, 1968), p.58. See also Joseph S. Nye, “United States Policy toward Regional Organizations,” in L. Finkelstein, ed., The

United States and International Organizations: The Changing Setting

(Cambridge: MIT Press, 1969), p. 169. Nye focuses on the importance of nonmilitary regional organizations in helping to reduce the economic burden for the U.S. 58 The importance of legitimizing dominance is central to the Gramscian school. It is, however, acknowledged by several realist scholars such as Gilpin and Morgenthau. On this, see G. John Ikenberry and Charles A. Kupchan, “The Legitimation of Hegemonic Power,” in World Leadership and Hegemony, ed. David P. Rapkin (Boulder, Col.: Lynne Rienner, 1990), pp. 49–52. 59 On the power of socialization, see G. John Ikenberry and Charles A. Kupchan, “Socialization and Hegemonic Power,” International Organization 44, no. 3 (1990): 283–315; Liska, Alliances and the Third World, p. 57. Nye also points to regional military arrangements as a tool of legitimizing leverage over the partners’ defense policies (“United States Policy,” p.169). In his recent book John Ikenberry offers a fascinating discussion of the great power’s choice of advancing multilateral institutions as a means of creating strategic restraint in the eyes of the smaller states in the system. This argument is very relevant to the one presented here, yet the argument of this book focuses more on the need to reconcile various international and domestic goals of decision-makers. Also, Ikenberry focuses on the bargains struck in Europe whereas this book shifts attention to the US institutional bargains in Asia. See G. John Ikenberry, After Victory—Institutions,

Strategic Restraint, and the Rebuilding of Order after Major Wars

(Princeton: Princeton University Press, 2001). 60 The measurement of power is inherently problematic. See, e.g., Robert Dahl, “The Concept of Power,” Behavioral Science 2 (1957): 201–215; Peter Bachrach and Morton S. Baratz, “The Two Faces of Power,” American Political Science Review 56 (1962): 947–952; Steven Lukes, Power: A Radical View (London: Macmillan, 1974); David A. Baldwin, Paradoxes of Power (New York: Basil Blackwell, 1989). It is even harder to offer an accurate measure for “high,” “moderate,” or “low” power disparities. Since the analytical perspective used in this study is that of decisionmakers’ interpretation of domestic and international constraints and opportunities, I focus on decisionmakers’ perceptions about the power of other states as well as their own. Measurement of the degree of power disparities is not an accurate exercise. It does make sense, however, to talk about “high,” “moderate,” or “low” disparities in comparative terms, across several cases. 61 In the cases examined here, the broad power disparities within the region also correspond to a balance of threat in which the most powerful regional states (Japan and Germany) were also the most threatening


62

63 64

65

66

67 68

ones. It is clear that regional threat perception played a major role in these cases. However, it is hard to assess whether the regional power disparities would have made those states more threatening by default, regardless of their aggressive past—a question I do not attempt to answer. On balance of threat, see Stephen Walt, The Origins of Alliances (Ithaca: Cornell University Press, 1987). David Lake, Power, Protection and Free Trade: International Sources of US Commercial Strategy, 1887–1939 (Ithaca: Cornell University Press, 1988); David Lake, “International Economic Structures and American Foreign Economic Policy, 1887–1934,” World Politics 35, no. 4 (1983); Stein, “Hegemon’s Dilemma”; Barry Eichengreen, The Elusive Stability: Essays in the History of International Finance, 1919–1939 (Cambridge: Cambridge University Press, 1990). Thomas Risse-Kappen, Cooperation among Democracies: The European Influence on U.S. Foreign Policy (Princeton: Princeton University Press, 1995), pp. 23–24. For the “voice opportunity thesis” on why weaker partners prefer to join a multilateral arrangement with a strong state, see Joseph M. Grieco, “The Maastricht Treaty, Economic and Monetary Union and the NeoRealist Research Programme,” Review of International Studies 21 (1995): 21–40. Risse-Kappen argues in Cooperation among Democracies that smaller allies have a greater influence on the strong partner in alliances among democratic states. He offers a social constructivist argument for the relatively strong influence of the West European states on U.S. foreign policy, according to which the transatlantic alliance constitutes a community of liberal democracies. This community, he argues, helped the Europeans influence U.S. policies. Risse-Kappen focuses on the impact of consultation norms, domestic politics, and transnational and transgovernmental coalitions, which often tipped the domestic balance of power in the U.S. in favor of Allied demands. However, it is possible to argue that the U.S. decisionmakers’ underlying assumption that their European allies, by virtue of their democratic nature, shared similar basic goals with the U.S., made them more willing to cooperate in such a multilateral setting and to follow the norms Risse-Kappen describes. Works that address this question include: Grieco, “Maastricht Treaty”; Joseph M. Grieco, “Variation in Regional Economic Institutions in Western Europe, East Asia, and the Americas: Magnitude and Sources,” Karl Deutch Guest Professorship Discussion Paper, Summer 1994; Donald Crone, “Does Hegemony Matter? The Reorganization of the Pacific Political Economy,” World Politics 45, no. 4 (1993). Alexander George and Timothy McKeown, “Case Studies and Theories of Organizational Decision Making,” Advances in Information Processing in Organizations 2 (1985): 21–58. See Oye, Cooperation under Anarchy, Charles Lipson, “International Cooperation in Economic and Security Affairs,” World Politics 38, no. 1 (1984): 1–23.


69 Vinod Aggarwal argues that in discussing the role of hegemony in international affairs, scholars often choose to focus on either the economic or the military dimension of hegemony, rather than systematically analyzing the interaction between the two. “Yet, in the current period… the interaction of these two dimensions clearly affects U.S. choices regarding regimes” (“Building International Institutions in AsiaPacific,” Survey 33, no. 11 (1993): 1039). 70 See Joseph S. Nye, “East Asian Security: The Case for Deep Engagement,” Foreign Affairs, (July-August 1995): 90–91; Chalmers Johnson and E.B. Keehn, “East Asian Security: The Pentagon’s Ossified Strategy,” ibid., pp. 110–114. Johnson and Keehn criticize the strategy elaborated in a Defense Department report, supervised by Nye, from February 1995. 71 This line of argument dates back to Alexis De Toqueville’s Democracy in America (NY: Alfred Knopf, 1948). See also: Seymour Martin Lipset, American Exceptionalism—A Double-Edged Sword (NY: W.W. Norton & Company, 1996) ; Robert Dallek, The American Style of Foreign Policy— Cultural Politics and Foreign Affairs (NY: Oxford University Press, 1983).

NOTES TO CHAPTER 3 1 The most thorough discussion of attempts to create a Pacific Pact is in David W. Mabon, “Elusive Agreements: The Pacific Pact Proposals of 1949–1950,” Pacific Historical Review 57 (1988): 147–177. The following discussion, however, is heavily based on a direct reading of the events as they find expression in the Foreign Relations of the United States (hereafter FRUS) volumes of 1949–1951. 2 J.G. Starke, The ANZUS Treaty Alliance (Melbourne: Melbourne University Press, 1965), Chapter 1. 3 The Charge in the Philippines (Locket) to Secretary of State (Acheson), March 24, 1949, FRUS, 1949, vol. 7, part 2, p.1126. 4 Ibid., pp. 1141–1142. 5 Quoted in the Editorial note, ibid., p. 1143. 6 On the Korean response, see ibid., pp. 1144–1145; on the QuirinoChiang KaiShek talks, see ibid., pp. 1155–1160. The official U.S. policy is found on pp. 1160–1166 and 1170–1171. The U.S. eventually threatened the Koreans that closer relations with Nationalist China might negatively affect future aid to Korea; see ibid., pp. 1177–1278. 7 “Policy Planning Staff Paper on U.S. Policy toward Southeast Asia,” ibid., pp. 1128–1133. 8 Romulo to Butterworth and Ambassador-at-Large Jessup, August 15, 1949, ibid., pp. 1186–1187; Secretary of State to the Embassy in the Philippines, August 19, ibid., p. 1189. 9 “Report by the National Security Council on the Position of the United States with Respect to Asia.” December 30, 1949, FRUS, 1949 vol. 7, p. 1219.


10 Memorandum for the President, a draft of the instruction letter to Dulles before his mission to Japan (identical to the final version signed by Truman). This authorized Dulles to say that the U.S. was willing to make a mutual assistance arrangement among the Pacific island nations (Australia, New Zealand, Philippines, Japan, perhaps Indonesia, and the U.S.), with the dual purpose of assuring combined action “to resist aggression from without, and also to resist attack by on of the members, e.g., Japan”; January 9, 1951, FRUS, vol.6 pp. 787–789. 11 Secretary of State to Secretary of Defense (Marshall), April 5, 1951, ibid., pp. 183–185. 12 Cecil V. Crabb, The Doctrines of American Foreign Policy: Their Meaning, Role and Future (Baton Rouge: Louisiana State University Press, 1982), p. 124. 13 Michael Schaller, The Origins of the Cold War in Asia: The American Occupation of Japan (New York: Oxford University Press, 1985), ch. 1 and p. 55. 14 Melvyn P. Leffler, A Preponderance of Power: National Security, the Truman Administration, and the Cold War (Stanford, Calif.: Stanford University Press, 1992), p.97. 15 NSC-49, “Report by the Joint Chiefs of Staff,” June 9,1949, FRUS, 1949, vol. 7, pt.2, p. 774. 16 During the war, U.S. plans focused on China as the main friendly actor in the region. Roosevelt toyed with the idea of rehabilitating China to great power status, as part of his notion of creating four international policemen. As it became clear that China would not play that role, the U.S. moved on to revive Japan as the regional power in Asia. On Roosevelt’s early plans, see Warren F. Kimball, The Juggler: Franklin Roosevelt as Wartime Statesman (Princeton: Princeton University Press, 1991), ch .5. 17 Robert Jervis, “The Impact of the Korean War on the Cold War,” Journal of Conflict Resolution 24, no. 4 (1980): 563–592. 18 Charles M. Dobbs, The United States and East Asia since 1945 (Lewiston: Edwin Mellen Press, 1990), pp. 69–74. 19 Memorandum by John Foster Dulles to the Secretary of State, November 30, 1950, FRUS, 1950, vol. 6, p. 162. 20 Memorandum for the Secretary of Defense, “Proposed Japanese Peace Treaty,” August 22, 1950, ibid., p. 1279. 21 John M. Allison, Ambassador from the Prairie—or Allison Wonderland (Boston: Houghton Mifflin, 1973), p. 155. 22 Paper prepared by John Foster Dulles, Consultant to the Secretary of State, November 30, 1950, FRUS, 1950, vol. 6, p. 163. Dulles warned already in July that “if matters drift because of total preoccupation with the Korean war, we may lose in Japan more than we can gain in Korea” (July 19, 1950, ibid., p. 1243). 23 Memorandum by the Consultant to the Secretary (Dulles) to the Secretary of State, December 8, 1950, ibid., p. 1359.


24 Memorandum by Mr. Robert A. Feary of the Office of Northeast Asian Affairs to the Director of that office (Allison), August 8, 1950, “Japanese Self-Support,” ibid., pp. 1265–1267. 25 Memorandum by Marshall Green of the Office of Northeast Asian Affairs, “Views of Other Countries toward a Japanese Peace Settlement,” July 29, 1949, FRUS, 1949, vol. 7, pp. 819–825. 26 “Position of the Department of State on United States Policy toward a Japanese Peace and Security Settlement,” Attachment to a memorandum by the Special Assistant to the Secretary (Howard) to the Assistant Secretary of State for Far Eastern Affairs (Butterworth), March 9, 1950, FRUS, 1950, vol. 6, pp. 157–160. 27 Cited in Seigen Miyasato, “John Foster Dulles and the Peace Settlement with Japan,” in John Foster Dulles and the Diplomacy of the Cold War, ed. Richard H. Immerman (Princeton: Princeton University Press, 1990), p. 203. See also Michael M. Yoshitsu, Japan and the San Francisco Peace Settlement (New York: Columbia University Press, 1983), pp.53–54. See also Memorandum on Meeting of Dulles with House Foreign Affairs and Senate Foreign Relations Committees, January 11–12, 1951, FRUS, 1951, vol. 6, p. 790. 28 The Secretary of State to the U.S. Political Advisor to SCAP (Sebald), January 3, 1951, FRUS, 1951, vol. 6, p. 778. 29 See, e.g.: Felix Gilbert, To the Farewell Address: Ideas of Early American Foreign Policy (Princeton: Princeton University Press, 1961); George F. Kennan, American Diplomacy, expanded ed. (Chicago: University of Chicago Press, 1984); Norman A. Graebner, Ideas and

Diplomacy: Readings in the Intellectual Tradition of American Foreign Policy (New York: Oxford University Press, 1964); Edward Weisband, The Ideology of American Foreign Policy: A Paradigm of Lockian Liberalism (Beverly Hills, Calif.: Sage Publications, 1973); Michael H. Hunt, Ideology and U.S. Foreign Policy (New Haven: Yale University

Press, 1987). 30 Tony Smith, America’s Mission: The United States and the Worldwide Struggle for Democracy in the Twentieth Century (Princeton: Princeton University Press, 1994), p. 7. Another extremely interesting question related to the impact of democratic beliefs concerns the U.S. perception of its potential partners as being democratic or not and its presumed effect on their interest in regional arrangements. For example, did the perception of Japan as a democratic state make it easier for the U.S. to downplay the possible resurgence of Japanese militarism, thus promoting a regional pact through which Japan could rearm?. 31 See John Lewis Gaddis, “The U.S. and the Question of a Sphere of Influence in Europe, 1945–49,” in Western Security: The Formative Years, ed. Olav Riste (New York: Columbia University Press, 1985). On Roosevelt’s plans for the postwar order, see Kimball, The Juggler. 32 On the resolution, see Daryl J. Hudson, “Vandenberg Reconsidered: Senate Resolution 239 and American Foreign Policy,” Diplomatic History 1, no. 1 (1977): 46–63. For a critique of the rationale behind the


33

34 35

36

37

resolution, see George F. Kennan, Memoirs 1925–1950 (Boston: Little, Brown, 1967), pp. 405–409. Schaller, Origins, pp. 247–248; Report by the Joint Strategic Survey Committee to the JCS, December 28, 1950, FRUS, 1950, vol. 6, pp. 1385– 1393. The JCS objected to articles 7 and 8 of the ANZUS treaty, which called for the establishment of a Pacific Council for consultation and coordination between ANZUS and other relevant states. Military consultations, argued Defense Secretary Marshall, would further reduce U.S. freedom of action. To appease the JCS, article 8 was watered down, though not dropped. See the various correspondence between State and Defense/JCS officials on April 18, June 25, July 20, July 25 in FRUS, 1951, vol. , pp. 209–211, 217–218, 226–229. For article 8, see ibid., p. 174. David S. McLellan, Dean Acheson: The State Department Years (New York: Dodd, Mead, 1976), p. 211. On the initial U.S. focus on decolonization of Southeast Asia and the gradual change in policy, see Gary R. Hess, The United States’ Emergence as a Southeast Asian Power, 1940–1950 (New York: Columbia University Press, 1987); Russell H. Fifield, Americans in Southeast Asia: The Roots of Commitment (New York: Thomas Y. Crowell, 1973), esp. pp. 36–55; Robert J. McMahon, “Toward a PostColonial Order: Truman Administration Policies toward South and Southeast Asia,” in The Truman Presidency, ed. Michael J. Lacey (Cambridge: Cambridge University Press, 1989); Rotter, Path to Vietnam, ch. 4. NSC-48/2 stated that: “The United states must not take such an active part in the early stages of the formation of such an association that it will be subject to the charge of using the Asiatic nations to further United States ambitions” (p. 2). The same concern was voiced earlier in PPS-51, the first policy paper to advocate a regional approach to Southeast Asia. The PPS, however, also argued that in order to minimize suggestions of U.S. imperialist intervention, the Asians were the ones who would have to take the initiative. See “Policy Planning Staff Paper on United States Policy toward Southeast Asia,” FRUS, 1949, vol. 7, part 2, pp. 1128–1133. To mention one example, in August 1949 the Philippines came up with another proposal that called for a conference to discuss the organization of a Southeast Asian Union without military commitments. The U.S. was in principle supportive, but refused to take part. The Philippine initiator, Romulo, warned that a Southeast Asian Union would be stillborn unless the State Department was willing to indicate U.S. approval of the project, and he was right. The U.S. indeed tried to convince Australia and New Zealand to participate in the proposed conference in Baguio, but both refused to cooperate so long as the U.S. did not take part in the initiative. See Romulo to Butterworth and Ambassador-at-Large Jessup, August 15, 1949, FRUS, 1949, vol. 7, pp. 1186–1187; Secretary of State to Embassy in the Philippines, August 19, 1949, ibid., p. 1189, and Romulo’s response on the same page. On


38 39

40 41

42

43 44 45

efforts to convince Australia and New Zealand to participate, see “Philippines Invitation to Regional Association Meeting in March,” February 10, 1950, and “Philippines Sponsored Asian Conference to Be Held at Baguio in March,” February 22, 1950, Department of State, Central Files (National Archives, College Park, Md.) (hereafter cited as DOS), 790.5/2–1050, 790.5/2–2250. Conversation between Ambassador-at-Large Jessup and British Commissioner General for the UK in Southeast Asia, February 6, 1950, FRUS, 1950, vol. 6, pp. 11–17. Emerson (Far East) to Rusk (Far East), “Alternatives to a Pacific Pact,” October 26, 1950, DOS, 790.5/10–2650; Perkins (EUR) to Secretary of State, “Discussions with Prime Minister Menzies of Australia—Question of a Pacific Pact,” ibid., 790.5/7–2750, p. 2. This sensitivity comes across clearly later, in the minutes of the long discussions with Australian representatives about the possibility of a pact, and later about ANZUS. The Americans constantly voiced concerns that a treaty with only Australia and New Zealand (and perhaps Britain) would be condemned by the rest of Asia as an expression of white imperialism. Australian Foreign Minister Percy Spender thought this talk about a white man’s treaty to be “so much damned nonsense.” See Notes on Conversation among Ambassador Dulles, Australian and New Zealand Ministers for External Affairs and Staffs, February 16–17, 1951, FRUS, 1951, vol. 6, part 1, pp. 156–172, esp. p. 158. Henry W. Brands, Jr., “From ANZUS to SEATO: United States Strategic Policy toward Australia and New Zealand, 1952–1954,” International History Review 9, no. 2 (1987): 250–270, esp. pp. 261–264. The tension between these two approaches is reflected in the debate over the origins of the Cold War. Yergin discusses the contest within the U.S. between the Riga and the Yalta axioms, the former reflecting an ideological approach to the Soviet Union, the latter a more Realist approach that saw the Soviets as driven by “standard” national interest considerations. See Daniel Yergin, Shattered Peace: The Origins of the Cold War and the National Security State (Boston: Houghton Mifflin, 1977) See also Arthur M. Schlesinger, Jr., “Origins of the Cold War,” Foreign Affairs, 46, no. 1 (1967): 22–52. For a comparison between the classic Cold War explanation and the ideological explanation, see John Meuller, “The Impact of Ideas on Grand Strategy,” in Richard Rosecrance and Arthur A. Stein, The Domestic Bases of Grand Strategy (Ithaca: Cornell University Press, 1993), pp. 48–65. For a very interesting critique of the problematic Neorealist attempt to discuss “national security” in terms completely divorced from ideology, see Anders Stephanson, “Commentary: Ideology and Neorealist Mirrors,” Diplomatic History 17, no. 2 (1993): 285–295. Smith, America’s Mission, p. 144. Harry S. Truman, 1946–1952: Years of Trial and Hope (New York: Signet, 1965), p. 124. Crabb, Doctrines, p. 128. Acheson grudgingly recalls how he had to appear four times a year before different committees and to justify every


dollar appropriated for every policy and program. See Dean Acheson, Present at the Creation—My Years in the State Department (NY: WW Norton & Company, 1969), p. 460. 46 John Rourke, Congress and the Presidency in U.S. Foreign

Policymaking: A Study of Interaction and Influence, 1945–1982

47 48 49

50

(Boulder, Col.: Westview Press, 1983), p. 5. On the views and activities of the isolationist Republicans led by Senator Taft, see William S. White, The Taft Story (New York: Harper & Brothers, 1954), esp. ch. 13 on Taft’s attitude toward Asia. Leffler, Preponderance of Power, p. 97. John Lewis Gaddis, The Long Peace: Inquiries into the History of the Cold War (New York: Oxford University Press, 1987), p. 101. John Lewis Gaddis, Strategies of Containment—A Critical Appraisal of Postwar American National Security (New York: Oxford University Press, 1982), pp. 27–28. See also Gaddis’s article “The Strategic Perspective: The Rise and Fall of the ‘Defensive Perimeter’ Concept, 1947–1951,” in Uncertain Years: Chinese-American Relations, 1947– 1950, ed. Dorothy Borg and Waldo Heinrich (New York: Columbia University Press, 1980). See Douglas J. Macdonald, “The Truman Administration and Global Responsibilities: The Birth of the Falling Domino Principle,” in

Dominoes and Bandwagons: Strategic Beliefs and Great Power Competition in the Euroasian Rimland, ed. Robert Jervis and Jack

51

52 53 54 55 56 57

58

Snyder (New York: Oxford University Press, 1991), pp. 112–144. See also Gaddis, Strategies, p. 91. For a development of this argument, see Steve Weber, Multilateralism in NATO: Shaping the Postwar Balance of Power, 1945–1961, Research Series no. 79 (University of California at Berkeley, 1991); Gaddis, Long Peace, p. 101; John Lewis Gaddis, “The U.S. and the Question of a Sphere of Influence in Europe, 1945–1949,” in Riste, Western Security. Quoted in Gaddis, Strategies, p. 120. On Congress and the executive, see ch. 2, n. 36. See n. 38. Arthur Vandenberg, Jr., ed., The Private Papers of Senator Vandenberg (Boston: Houghton Mifflin, 1952), pp. 407–411. NSC-48/2, “Report to the President by the National Security Council on the Position of the United States with Respect to Asia,” December 30, 1949, p. 2. Secretary of State to Certain Diplomatic and Consular Offices, July 20, 1949, FRUS, 1949, vol.7, pp. 1170–1171. A memorandum by the Policy Information Officer of the Office of Far Eastern Affairs to the Director (Butterworth) characterized the Quirino-Chiang proposal as “an instinctive ‘me too’ reaction” to announcements of the North Atlantic Treaty; ibid., July 15, 1949, pp. 1160–1166. On the Philippines, see the assessment of the Charge in the Philippines (Locket) to the Secretary of State, March 21, 1949, ibid., pp. 1123–1125. Congressional Records, vol. 96 (Part 8), 1950, p. 10127. Nine resolutions were referred to the Committee on Foreign Relations on July 13, 1950.


59

60 61 62 63 64 65 66 67 68

69 70 71

For an example of a later resolution, see Congress Resolution 81, March 20, 1951, DOS, Central Files, 790.5/3–2251. Jacob K. Javits, “A Decisive Far East Policy: Need and Value of a Pacific Pact and Economic Recovery Program Are Presented,” New York Herald Tribune, January 31, 1951. The State Department was preparing for a public debate on the issue fol lowing the leaks to the press; see Emerson to Rusk and Rusk to Dulles, DOS, Central Files, 790.5/1–3151. Memorandum for the Secretary of Defense from the JCS, August 22, 1950, FRUS, 1950, vol. 6, p. 1279. Emerson to Rusk, “Pacific Pact,” January 4, 1951, and Emmerson to Connors, January 8, 1951, DOS, Central Files, 790.5/1–451, 790.5/1– 851. Memorandum for the Secretary of Defense, August 22, 1950, FRUS, 1950, Vol. 6, p. 1280. Memorandum by the Director of the Office of Northeast Asian Affairs (Allison) to the Secretary of State, August 24, 1950, ibid., pp. 1288–1289. Memorandum for the Secretary of Defense, August 22, 1950, ibid., p. 1279. Peter J Katzenstein, “Asian Regionalism in Comparative Perspective,” in Network Power: Japan and Asia, ed. Peter J. Katzenstein and Takashi Shiraishi (Ithaca: Cornell University Press, 1997), p. 23, n. 72. Acheson to Amlegation, Saigon, May 14, 1951, DOS, Central Files, 790. 5/5–85 l, p. 1. Howard B. Schonberger, Aftermath of War: Americans and the Remaking of Japan, 1945–1952 (Kent, Oh.: Kent State University Press, 1989), pp. 258–259. On the historical development of U.S.-Japanese security relations since the 1950s, see Roger Buckley, US-Japan Alliance Diplomacy 1945–1990 (Cambridge: Cambridge University Press, 1992); Richard L. Sneider, U.S.-Japanese Security Relations: A Historical Perspective (New York: Occasional Papers of the East Asian Institute Toyota Research Program, Columbia University, 1982); Aurelia George, “Japan and the United States: Dependent Ally or Equal Partner?” in Dynamic and Immobilist Politics in Japan, ed. J.A.A. Stockwin (Honolulu: University of Hawaii Press, 1989). FRUS, 1951, vol. 6, part 1, pp. 217–218. “Japanese Peace Treaty and Other Treaties Relating to Security in the Pacific,” Hearing before the Committee on Foreign Relations, U.S. Senate, 82nd Congress, January 21–25, 1952. White, Taft Story, ch. 13; Robert W. Tucker, A New Isolationism: Threat or Promise? (New York: Universe Books, 1972), p. 29. Dower adopts a similar view according to which the U.S. indeed treated the Pacific area as “an American lake” and followed unilateral policies veiled behind multilateral statements. See John Dower, “Occupied Japan and the American Lake, 1945–1950,” in America’s Asia: Dissenting Essays on Asian-American Relations, ed. Edward Friedman and Mark Selden, 1st ed. (New York: Pantheon Books, 1969), pp. 146–206.


72 The fact that the treaties covered Japan as well was clearly stated by Dulles in a message to the secretary of state on January 7, 1952; see American Foreign Policy 1950–1955: Basic Documents, vol. 1, pp. 880– 882. 73 Memorandum by the Policy Information Officer of the Office of Far Eastern Affairs to the Director (Butterworth), July 15, 1949, FRUS, 1949, vol.7, pt.2 pp. 1160–1161. The U.S. also played an active, important role in preventing a military pact between South Korea and Taiwan by threatening South Korean President Rhee that such a pact would harm Korea’s chances of receiving U.S. aid. See: Instructions of the Secretary of State to the Embassy in Korea, July 29, 1949, ibid., pp. 1177–1178. 74 NSC-48/2, p. 2. 75 Ambassador in Thailand (Stanton) to Secretary of State, February 17– 18, 1950, FRUS, vol. 6, 1950, pp. 18–20. 76 Sir Percy Spender, Exercises in Diplomacy: The ANZUS Treaty and the Colombo Plan (New York: New York University Press, 1969), pp. 15–16. See also: Embassy in Canberra to Secretary of State, March 11, 1950, DOS, Central Files, 790.5/3–1050. 77 Rusk (FE) to Mathews (G), “Trilateral Agreement and Consultations with Australia and New Zealand,” October 9, 1950, ibid., 790.5/10–950. 78 Memorandum of conversation between Dulles and representatives from New Zealand, by Colonel of the Defense Department, October 19, 1950, FRUS, 1950, vol. 6, pp. 1322–1323. 79 In his memoirs Spender strongly rejects the assertion that ANZUS was a quid pro quo for the Japanese peace treaty. The documents, however, imply a clear link. 80 “Position of the Department of State on United States Policy toward a Japanese Peace and Security Settlement,” March 9, 1950, FRUS, vol 6, p. 1149. 81 Notes on conversation among Dulles, Spender, and Doidge, February 17, 1951 (seen. 76). 82 Memorandum by Dulles to Jessup, January 4, 1951, FRUS, 1951, vol.6, pp. 134–137; Memorandum on Meeting of Dulles with House Foreign Affairs and Senate Foreign Relations Committees, January 11, 12, 1951, ibid., p. 790. 83 Miyasato, “John Foster Dulles,” pp. 206–207. 84 John W. Dower, “Occupied Japan and the Cold War in Asia,” in The Truman Presidency, ed. Michael J. Lacey (Cambridge: Cambridge University Press, 1989), p. 398. 85 Allison, Ambassador, p. 156. 86 “Bangkok Conference of United States Chiefs of Mission in Asia,” February 13–15, 1950, report prepared by the Office of the United States Political Adviser, Tokyo; DOS, RG-59, “Records of the Bureau of Far Eastern Affairs: Office of NEA Affairs—Briefing Books,” Lot File 60D330, Box 17. 87 Report of the British position, as reported by Dulles to Rusk, February 2, 1951. Dulles also predicted that France would take an attitude similar


to Britain’s, and that the Dutch and Portuguese would also want admittance; Rusk to Dulles, February 8, 1951, DOS, 790.5/2–251, 790/5– 2-851. The issue of British exclusion was indeed a contentious domestic one in Britain. Even after the pact proposal was rejected, the opposition in Parliament gave the government a hard time regarding Britain’s exclusion from the ANZUS treaty. The question was indeed to what extent this was not “just another example of the decline in British influence and prestige under the present dying Socialist Government.” See: Parliamentary debates, House of Commons, April 19, 1951, on “Pacific Defense,” and on April 25 on “Pacific defense arrangements.” Forwarded to the Department of State by the U.S. embassy in London on April 20, 1951, and April 30, 1951; ibid., 790.5/4–25, 790.5/4–3051. 88 Dulles to Rusk, February 8, 1951, ibid. 89 Memorandum used by Dulles in his meeting with the JCS at the Pentagon on April 11, 1951, in which he presented the case for the policy course chosen by the State Department. See DOS, Central Files, 790.5/4–1151.

NOTES TO CHAPTER 4 1 The Geneva Conference convened from May 8 to July 21, 1954, to discuss the Korean armistice and the French war in Indochina. 2 Evelyn Colbert, Southeast Asia in International Politics 1941–1956 (Ithaca: Cornell University Press, 1977), pp. 297–298. 3 Gaddis, Strategies of Containment, pp. 129–130. 4 R. Alton Lee, Dwight D. Eisenhower: Soldier and Statesman (Chicago: NelsonHall, 1981), p. 184; Gaddis, Strategies of Containment, pp. 137– 141. For a dissenting view, which argues that Dulles only used these strong statements for the purpose of public rhetoric, see Michael A. Guhin, John Foster Dulles: A Statesman and His Times (New York: Columbia University Press, 1972). 5 Gaddis, Strategies of Containment, p. 182. 6 Norman A. Graebner, “Eisenhower and Communism: The Public Record of the 1950s,” in Reevaluating Eisenhower: American Foreign Policy in the 1950s, ed. Richard A. Melanson and David Mayers (Chicago: University of Illinois Press, 1987), p. 82. 7 David Allan Mayers, Cracking the Monolith: U.S. Policy against the Sino-Soviet Alliance, 1949–1955 (Baton Rouge: Louisiana State University Press, 1986), p. 108. 8 Gaddis, Strategies of Containment, pp. 143–144; Mayers, Cracking the Monolith, p. 120. Mayers argues that Dulles hoped to “menace or at least fatigue the allies apart.” 9 The Pentagon Papers: The Defense Department History of U.S. Decisionmaking on Vietnam, the Senator Gravel ed., vol. 1 (Boston: Beacon Press, 1971), pp. 85–87. 10 Ibid., p. 187.


11 Hearings before the Committee on Foreign Relations, U.S. Senate, 83d Congress, 2nd session on Executive K, “The Southeast Asian Collective Defense Treaty,” November 11, 1954, p. 12. 12 NSC 124–2, FRUS, 1952–1954, vol. 12 part 1, pp. 127–134. 13 NSC-5405, “The United States Objectives and Courses of Action with Respect to Southeast Asia,” January 16, 1954, ibid. 14 The speech [April 7 1954] is quoted in Walter LaFeber, ed., America in

the Cold War: Twenty Years of Revolutions and Response, 1947–1967 (New York: Wiley, 1969), pp. 96–97. 15 Dwight D. Eisenhower, The White House Years: Mandate for Change 1953–1956 (Garden City, N.Y.: Doubleday, 1963), p. 373.

16 Memorandum of conversation with the President, by the Secretary of State (Dulles), August 17, 1954, FRUS, 1952–1954, vol. 13, part 2, p. 1953. 17 On this issue, see Roger Dingman, “John Foster Dulles and the Creation of the South-East Asia Treaty Organization in 1954," International History Review 11, no. 3 (1989): 457–477. This issue is elaborated in the discussion of the allies’ preferences. 18 Memorandum of a conference with congressional leaders concerning the crisis in Southeast Asia, April 3, 1954, FRUS, 1952–1954, vol. 13, part 1, p. 1225. 19 Dingman, “Dulles and the Creation of the South-East Asia Treaty Organization,” p. 461. 20 Melanie Billings-Yun, Decision against War: Eisenhower and Dien Bien Phu, 1954 (New York: Columbia University Press, 1988), p. 111. 21 Leszek Buszynski, SEATO: The Failure of an Alliance Strategy (Singapore: Singapore University Press, 1983), pp .3–5. Billings-Yun, however, disagrees with this interpretation, arguing that it was not congressional demands that truly constrained Eisenhower but his own personal decisions. The preconditions for intervention that Eisenhower had delineated, she maintains, were even more extreme than those of Congress. One of these preconditions was that any action had to be part of a coalition with active participation by Britain, Australia, and New Zealand, including troops, and if possible units from Thailand, the Philippines, and others. See BillingsYun, Decision against War, p. 100. 22 Buszynski, SEATO, p. 6; Billings-Yun, Decision against War, ch. 6. Nixon’s remarks were an important factor in scaring away the British from any discussion of the United Action option. 23 James R. Arnold, The First Domino: Eisenhower, the Military, and America’s Intervention in Vietnam (New York: William Morrow, 1991), p. 225. 24 Gaddis, Strategies of Containment, pp. 132–133. 25 Billings-Yun, Decision against War, pp. 13–14. 26 Richard A. Melanson, “The Foundations of Eisenhower’s Foreign Policy: Continuity, Community and Consensus,” in Melanson and Mayers, eds., Reevaluating Eisenhower, pp. 60–61. 27 NSC 162–2, the document that supposedly represented the final say on the New Look, did not resolve several issues related to this dilemma.


28 29 30 31 32 33 34 35 36 37 38

39

40 41 42 43 44 45 46 47 48 49 50

See the discussion in Saki Dockrill, Eisenhower’s New-Look National Security Policy, 1953–61 (New York: St. Martin’s, 1996), p. 36. Samuel P. Huntington, The Common Defense (New York: Columbia University Press, 1961), pp. 66–67. Dockrill, Eisenhower’s New-Look National Security Policy, p. 30. Pentagon Papers, pp. 126–127. David Capitanchik, The Eisenhower Presidency and American Foreign Policy (London: Routledge & Kegan Paul, 1969), p. 41. Gaddis, Strategies of Containment, pp. 145–147. Huntington, Common Defense, pp. 69–75, 664. Alexander L. George and Richard Smoke, Deterrence in American Foreign Policy: Theory and Practice (New York: Columbia University Press, 1974), pp .27–28. W. Macmahon Ball, “A Political Re-examination of SEATO,” International Organization 12, no. 1 (1958): 19. Russel H. Fifield, Americans in Southeast Asia: The Roots of Commitment (New York: Thomas Y. Crowell, 1973), p. 229. Hearings before the Committee on Foreign Relations, U.S. Senate, 83d Congress, 2nd session on Executive K—The SEA Collective Defense Treaty, Part 1, November 11 1954, pp. 16–17. Mark S. Gallicchio, “The Best Defense Is a Good Offense: The Evolution of American Strategy in East Asia, 1953–1960," in The Great Powers in East Asia, 1953–1960, ed. Warren I. Cohen and Akira Iriye (New York: Columbia University Press, 1990), pp. 64–68. Memorandum by the Secretary of State to the President on a memo of the JCS regarding the defense of Southeast Asia in case of loss of Indochina, May 28, 1954, FRUS, 1952–1954, vol. 12, p. 527; Memorandum of conversation between the President, Dulles, Radford, Ridgeway, Cutler, and others, May 28, 1954, ibid., pp. 521–526. Minutes of a meeting on Southeast Asia with Vice President Nixon, Cutler, the Defense Department, State Department, and CIA, July 24, 1954, ibid., pp. 665–671. Fifield, Americans in Southeast Asia, pp. 194, 201. Summary of the President’s talk with Republican leaders, April 28, 1954, FRUS, 1952–1954, vol. 16—The Geneva Conference, pp. 599–600. Eisenhower, Mandate for Change, p. 447. Ibid., p. 454. Arnold, First Domino, p. 314. G. Fredrick Reinhardt, “What SEATO Means to the United States,” Department of State Bulletin, March 23, 1959, p. 396. Memorandum of discussions at the Department of State—JCS meeting, July 23, 1954, FRUS, 1952–1954, vol.12, pp. 653–655. Fifield, Americans in Southeast Asia, p. 236. Memorandum by the JCS to Secretary of Defense Wilson, April 9, 1954, FRUS, 1952–1954, vol.12 , pp. 412–420. Gary H. Hess, “The American Search for Stability in Southeast Asia: The SEATO Structure of Containment,” in Cohen and Iriye, Great Powers in East Asia, pp. 286–287.


51 Gaddis makes this distinction between the attitude toward alliances of the Truman and Eisenhower administrations; see Strategies of Containment, p. 153. On the distinction between deterrence by denial and deterrence by punishment, see Glenn Snyder, Deterrence and Defense: Toward a Theory of National Security (Westport, Conn.: Greenwood Press, 1961), pp. 14–15. 52 Robert Jervis, The Meaning of the Nuclear Revolution: Statecraft and the Prospect of Armageddon (Ithaca: Cornell University Press, 1989), pp. 185–186. 53 Fifield, Americans in Southeast Asia, pp. 205, 242. 54 Hess, “American Search,” p. 287. 55 Minutes on a meeting on Southeast Asia with Vice President Nixon, Cutler, the Defense Department, State Department, and CIA, July 24, 1954, FRUS 1952–1954, Vol.12, pp. 665–671. 56 NSC 5429–2, “Statement of Policy by the NSC on Review of US Policy in the Far East,” August 20, 1954, FRUS, 1952–1954, vol. 12, pp. 771–776. 57 Eisenhower, Mandate for Change, pp. 352–354. 58 Summary of the President’s talk with Republican leaders, April 28, 1954, FRUS, 1952–1954, vol. 16—The Geneva Conference,, pp. 599–600. 59 Memorandum of conversation by Cotler, Special Assistant to the President for National Security Affairs, May 5, 1954, FRUS, 1952–1954, vol. 12, pp. 446–450. 60 To recapitulate, this notion referred to the “American idea of a world order opposed to imperialism and composed of independent, selfdetermining, preferably democratic states bound together through international organizations dedicated to the peaceful handling of conflicts, free trade, and mutual defense” (Tony Smith, America’s

Mission: The United States and the Worldwide Struggle for Democracy in the Twentieth Century, Princeton, Princeton University Press, 1994,

p. 7). 61 Gaddis, Strategies of Containment, p .127; Capitanchik, Eisenhower Presidency, pp. 16–20. 62 Melanson, “Foundations,” pp. 31–44. 63 See Eisenhower, Mandate for Change, p. 373. 64 Fifield, Americans in Southeast Asia, pp. 186–187; Robert J. Donovan, Eisenbower: The Inside Story (New York: Harper & Bros., 1956), p. 266. 65 Eisenhower, Mandate for Change, p. 364. 66 Eisenhower, Mandate for Change, pp. 340–341. 67 Gaddis, Strategies of Containment, p. 129. 68 See Ruggie, “Multilateralism,” p. 11. 69 Fifield, Americans in Southeast Asia, p. 241. 70 One possible cognitive explanation for the persistent and independent impact of the burden-sharing goal on decisionmakers’ calculations can be found in Lebow’s notion of “defensive avoidance.” Lebow argues that when faced with incompatible threats from the domestic and international arenas, decisionmakers are likely to resolve the dilemma by downplaying the latter. In this case, this could explain Eisenhower’s rather optimistic assessment of the regional states’ ability to make


71 72 73 74 75 76 77 78 79 80 81 82 83 84

85 86 87 88 89 90 91 92 93

meaningful contributions to the United States’ security burden. See Richard Ned Lebow, Between Peace and War: The Nature of International Crisis (Baltimore: Johns Hopkins University Press, 1981), pp.169–193. Buszynski, SEATO, p. 8. Pentagon Papers, pp.53–54. Billings-Yun, Decision against War, pp. 107–108. Eisenhower, Mandate for Change, p. 373. Buszynski, SEATO, pp. 9–10. Ibid., pp. 21–23; Dingman, “Dulles and the Creation of the South-East Asia Treaty Organization,” p. 460. Buszynski, SEATO, p. 19. Colbert, Southeast Asia, pp. 298–299. Buszynski, SEATO, pp. 28–30. For a similar discussion of the preferences of the different member states, see Colbert, Southeast Asia, pp. 298–310. Fifield, Americans in Southeast Asia, p. 240. Buszynski, SEATO, pp. 30–31; Fifield, Americans in Southeast Asia, p. 240. Dingman, “Dulles and the Creation of the South-East Asia Treaty Organization,” p. 472. Buszynski, SEATO, pp. 28–34. Ibid., p. 34; Peter Edwards and Gregory Pemberton, Crises and

Commitments: The Politics and Diplomacy of Australia’s Involvement in Southeast Asian Conflicts, 1948–1965 (Sidney: Allen & Unwin, 1992), pp. 153–154. Fifield, Americans in Southeast Asia, p. 239. Buszynski, SEATO, pp. 26–28. Fifield, Americans in Southeast Asia, p. 238. Dingman, “Dulles and the Creation of the South-East Asia Treaty Organization,” p. 466. Gaddis, Strategies of Containment, pp. 171–172. Keohane, “Big Influence of Small States,” pp. 161–182. Buszynski, SEATO, p. 5. Ibid., pp. 17, 21–25, 119–126. Arnold, First Domino, p. 243.

NOTES TO CHAPTER 5 1 Sir Nicholas Henderson, The Birth of NATO (London: Weidenfeld & Nicolson, 1982), p. 1. 2 Signed in the port of Dunkirk on March 4, 1947. 3 Timothy P. Ireland, Creating the Entangling Alliance: The Origins of the North Atlantic Treaty Organization (Westport, Conn.: Greenwood Press, 1981), pp. 63–63; Lawrence S. Kaplan, NATO and the United States: The Enduring Alliance (Boston: Twayne, 1988), p. 19. 4 Kaplan, NATO and the United States, pp. 20–27.


5 Ireland, Creating the Entangling Alliance, pp. 73, 107, 146. 6 Klaus Schwabe, “The Origins of the United States’ Engagement in Europe, 1946–1952,” in NATO: The Founding of the Atlantic Alliance and the Integration of Europe, ed. Francis H. Heller and John R. Gillingham (New York: St. Martin’s, 1992), p. 171. In his memoirs, Kennan also points to the Czech coup and the Soviet policy in Berlin as the two factors that strongly influenced U.S. official policy concerning the Brussels Treaty. He himself dismissed these actions as defensive Soviet moves in response to the success of the Marshall Plan, and regarded the growing European anxieties as “a little silly.” See George Kennan, Memoirs: 1925–1950 (Boston: Little, Brown, 1967), pp. 397– 403. 7 Melvyn Leffler, Preponderance of Power: National Security, the Truman Administration, and the Cold War (Stanford, Calif.: Stanford University Press, 1992), p. 216. 8 Dean Acheson, Present at the Creation: My Years in the State Department (New York: Norton, 1987), p. 313. On the impact of the Soviet nuclear explosion, see also Don Cook, Forging the Alliance: NATO, 1945–1950 (London: Secker and Warburg, 1989), pp. 228–230. 9 Ireland, Creating the Entangling Alliance, p. 184; Schwabe, “Origins,” p. 181; Kaplan, NATO and the United States, pp. 44–45; Steve Weber,

Multilateralism in NATO: Shaping the Postwar Balance of Power, 1945– 1961, Research Series no. 79 (Berkeley: University of California at

10 11 12 13 14 15 16 17 18 19 20 21 22

Berkeley, 1991), pp. 33–36; Robert Jervis, “The Impact of the Korean War on the Cold War,” Journal of Conflict Resolution 24, no. 4 (1990): 563–592. Minutes of the second meeting of the United States-United KingdomCanada security conversations, Washington, March 23, 1948, FRUS, 1948, vol. 3, p. 64. Paraphrase of a telegram from the British Secretary of State for Foreign Affairs (Bevin) of April 9, regarding recent talks on North Atlantic Security Arrangements, ibid., p. 79. Ibid., p. 58. Henderson, Birth of NATO, p. 8. Ibid., p. 35. Acheson, Present at the Creation, esp. p. 277. Ireland, Creating the Entangling Alliance, p. 90. Arthur H. Vandenberg, Jr., ed., The Private Papers of Senator Vandenberg (Boston: Houghton Mifflin, 1952), pp. 407–411. Ibid., pp. 131–143. Kennan, Memoirs, p. 407. John Lewis Gaddis, The Long Peace: Inquiries into the History of the Cold War (New York: Oxford University Press, 1987), p. 58. Minutes of the second meeting of the United States—United Kingdom— Canada security conversations, March 23, 1948, FRUS, 1948, vol. 3, p. 65. Ireland, Creating the Entangling Alliance, p. 66.


23 Peter Foot, “America and the Origins of the Atlantic Alliance: A Reappraisal,” in The Origins of NATO, ed. Joseph Smith (Exter: University of Exter Press, 1990), pp. 82–85. 24 The Counselor of the Department of State (Bohlen) to the Under Secretary of State (Lovett), August 9, 1948, FRUS, 1948, vol. 3, p. 209. 25 Harry S. Truman, 1946–1952: Years of Trial and Hope—Memoirs (New York: Signet, 1956), pp. 282–283. 26 Memorandum of the Ninth Meeting of the Working Group Participating in the Washington Exploratory Talks on Security, August 9, 1948, FRUS, 1948, vol. 3, p. 210. 27 Minutes of the second meeting of the United States-United KingdomCanada security conversations, March 23, 1948, FRUS, 1948, vol. 3, p. 65; Memorandum by the Director of the Joint Staff (Gruenther) to the Director of the Office of European Affairs (Hickerson), ibid., p. 189. 28 In response to a question raised by the U.S. special representative in Europe (Harriman), Acting Secretary of State Lovett pointed that “Our objective should be the progressively closer integration, both economic and political, of presently free Europe and eventually of as much of Europe as becomes free.” The U.S. should therefore encourage “any steps which promote the idea of European integration.” This included regional security cooperation. See Lovett to Harriman, December 3, 1948, ibid., pp. 301–302. 29 This idea was advocated by Kennan (who headed the PPS at the time) and Hickerson (chief of the State Department’s Division of European Affairs). For a discussion of this idea, see Foot, “America and the Origins,” p. 86 (from which Hickerson’s quote is taken); Ireland, Creating the Entangling Alliance, p. 108; Weber, Multilateralism in

NATO.

30 Foot, “America and the Origins,” pp. 88, 91–92. 31 Memorandum by the Director of the Joint Staff (Gruenther) to the Director of the Office of European Affairs (Hickerson), July 16, 1948, ibid., pp. 190–191; The Charge in Belgium (Millard) to the Secretary of State, April 24, 1948, ibid., p. 104. 32 Memorandum by the Secretary of State to the Under Secretary of State (Lovett), July 23, 1948, ibid., p. 199. 33 Vandenberg, Private Papers, p. 513. 34 Leffler, Preponderance of Power, p. 408. 35 Truman, Years of Trial and Hope, p. 291. 36 This is Ireland’s central argument in Creating the Entangling Alliance. Leffler, in Preponderance of Power, also agrees that the NAT was a means of promoting European stability through German integration (p. 282). See also Kaplan, NATO and the United States, pp. 45–46. 37 John Gerard Ruggie, “Third Try at World Order? America and Multilateralism after the Cold War,” Political Science Quarterly 109, no. 4 (1994): 564; John Gerard Ruggie, “The Past as Prologue? Interests, Identity and American Foreign Policy,” manuscript, October 1996, p. 16. Similarly, Hampton discusses the “Wilsonian impulse,” which, together with the lessons derived from the Versailles experience, led to three


38 39 40 41

principles that guided U.S. security policy in Europe: (1) to seek to replace the old balance of power system in Europe, which promoted narrowly defined, self-interested policies; (2) to create a trans-Atlantic community that included a rehabilitated Germany; and (3) that community must be forged through interdependence and shared democratic values. See Mary N. Hampton, “NATO at the Creation: U.S. Foreign Policy, West Germany and the Wilsonian Impulse,” Security Studies 4, no. 3 (1995): 618. These principles favored a regionalmultilateral solution. Kaplan, NATO and the United States, pp. 34–35. Memorandum of conversation, by Under Secretary of State (Lovett), April 27, 1948, FRUS, 1948, vol. 3, p. 105. Peter G. Boyle, “America’s Hesitant Road to NATO, 1945–49," in Smith, Origins of NATO, p. 75. Thomas A. Schwartz, “Dual Containment: John J. McCloy, the American High Commission and European Integration, 1949–1952,” in

NATO: The Founding of the Atlantic Alliance and the Integration of Europe, ed. Francis Heller and John R. Gillingham (New York: St.

Martin’s, 1992). 42 Memorandum of Conversation, by Under Secretary of State (Lovett), April 27, 1948, FRUS, 1948, vol. 3, p. 106. 43 This is basically the argument that Ireland makes in his book, Creating the Entangling Alliance, although he focuses less on the U.S. power dilemma and more on the centrality of the German question. 44 The inevitability of this commitment was well expressed by Senator Vandenberg, who noted during the NAT debate that: “Once upon a time we were a comfortably isolated land. Now we are unavoidably the leader and the reliance of freemen throughout this free world. We cannot escape from our prestige nor from its hazard” (emphasis added). See Vandenberg, Private Papers, p. 494. 45 Kaplan, NATO and the United States, p. 43. 46 On the efforts to fulfill this vision, see Schaller, Origins; William Borden,

The Pacific Alliance: United States Foreign Economic Policy and Japanese Trade Recovery, 1947–1955 (Madison: University of Wisconsin Press, 1984). Regarding Europe, see Leffler, Preponderance of Power, pp.

17, 234–235, 281. The workshop concept was first presented by Acheson in a speech on May 8, 1947, while he was still assistant secretary of state. 47 There is, however, a twist to this argument. One could argue that a multilateral arrangement was possible in Europe because the U.S. was willing to postpone the crucial issue of West German membership in NAT(O). This was not an issue on the NAT negotiating table and probably would have been rejected had it been one. The U.S. called for German rearmament and the incorporation of its forces into NATO’s defense organization only after the war in Korea began. See John Lewis Gaddis,

Strategies of Containment: A Critical Appraisal of Postwar American National Security (New York: Oxford University Press, 1982), pp. 114–

115. On the other hand, the issue of Japanese membership in a possible


48 49

50 51

52 53 54

55 56 57

Pacific Pact was a central one and, not surprisingly, rejected by all of the potential members. This is partly because of the different timing of the initiatives in Europe and Asia. In Asia there was a much narrow er (if at all) window of opportunity to launch regional arrangements without Japan, since serious discussions only began with the Korean War. However, a central part of the explanation is, again, the difference in regional power disparity. In Europe, such a two-stage approach was possible because there was enough that was worth integrating even without Germany. In Asia, the resurrection of Japan was the only driving force behind the multilateral initiative. As we shall see in the section on the EDC, even in Europe, once the question of German rearmament came to the fore, it was very difficult to convince the allies to join a multilateral arrangement with West Germany. Henderson, Birth of NATO, pp. 1–13; Ireland, Creating the Entangling Alliance, p. 107. A real conflict of goals about membership in a multilateral arrangement would occur if the great power involved felt that the smaller members were only interested in exploiting the multilateral setting to advance different goals. In a pure bilateral relationship with the U.S., they could not have pursued such goals because the U.S. would not have agreed. In the U.S. case, the centrality of the burden-sharing goal meant that the least common denominator it expected from its allies was a goal of achieving relatively independent strength to withstand external attack and subversion. Kaplan, NATO and the United States, pp. 7, 19. Henderson, Birth of NATO, pp. 39–40. Henderson’s account of the British position is perhaps the most accurate since, as a member of the British embassy in Washington, he was a member of the Working Party that drafted the treaty. Leffler, Preponderance of Power, pp. 198–203. Cook, Forging the Alliance, pp. 116–118. The official French reason was that they were committed by some past prewar understanding with Poland and Czechoslovakia not to negotiate alliances in Europe except on the basis of defense against German aggression. They changed their minds only after the Prague coup. See Cook, Forging the Alliance, p. 122. Ireland, Creating the Entangling Alliance, p. 177 and throughout the book. Ibid., p. 67. Ibid., pp. 84–88. Kennan stresses the latter domestic concern as the main reason for forgoing the unilateral option. Ireland, on the other hand, stresses the impact of European pressure, mainly of French concerns about Germany. In Cook’s account, the main reason the Senate (especially Vandenberg) did not like the idea of a unilateral presidential declaration had more to do with party politics. When Lovett first presented the unilateral option to Vandenberg, the latter’s reaction was: “Why should Truman get all the credit?” He preferred that the Senate take the initiative, which in turn led to the Vandenberg Resolution,


58

59 60 61

calling for the “progressive development of regional and other collective arrangements for individual and collective self defense.” See Cook, Forging the Alliance, pp. 161–163. See: Gaddis, Long Peace, p. 69; Geir Lundestad, “Empire by Invitation? The United States and Western Europe, 1945–1952,” in The Cold War in Europe: Era of a Divided Continent, ed. Charles S. Maier, 3d updated and expanded ed. (Princeton, N.J.: Markus Wiener, 1996), pp. 143–168. A.W. DePorte, Europe between the Superpowers: The Enduring Balance, 2nd ed. (New Haven: Yale University Press, 1986), p. 140. Concerns were voiced about European “shopping lists” and the danger that they would not adequately reciprocate, but this did not reflect any basic conflict of interests. Thomas Risse-Kappen, “Collective Identity in a Democratic Community: The Case of NATO.” In The Culture of National Security-Norms and ldentity in World Politics, ed. Peter Katzenstein (New York: Columbia University Press, 1996), p. 374. For an elaboration of his argument on NATO as a community of liberal democratic states and the implications of this community, see Thomas Risse-Kappen, Cooperation among

Democracies: The European Influence on U.S. Foreign Policy

(Princeton: Princeton University Press, 1995). 62 Memorandum by the Participants in the Washington Security Talks, September 9, 1948, FRUS, 1948, vol. 3, p. 244. 63 For a thorough discussion of the unique supranational character of the EDC in comparison to NATO, see Edward Fursdon, The European Defence Community: A History (New York: St. Martin’s, 1980), pp. 191– 198. See also chapter 5 for a detailed description of the EDC treaty and its associated protocol agreements. 64 On the Pleven Plan, see Robert McGeehan, The German Rearmament

Question: American Diplomacy and European Defense after WWII

65 66 67 68 69 70 71 72

(Urbana: University of Illinois Press, 1971), pp. 62–67; Fursdon, European Defence Community, pp. 86–100. Ireland, Creating the Entangling Alliance, pp. 202–207; Fursdon, European Defence Community, pp. 92–99; Schwabe, “Origins,” pp. 182– 183. McGeehan, German Rearmament Question, pp. 127–130. Ibid., pp. 187, 194–196. Ibid., pp. 204–206. Brian R. Duchin, “The ‘Agonizing Reappraisal’: Eisenhower, Dulles, and the European Defense Community,” Diplomatic History 16, no. 2 (1992): 202–205. McGeehan, German Rearmament Question, p. 133. In his own memoirs Acheson recalls thinking that the original Pleven Plan was “hopeless”; see Acheson, Present at the Creation, p. 459. Robert H. Farrell, ed., The Eisenhower Diaries (New York: Norton, 1981), pp. 194–195. Several scholars credit Jean Monnet with changing Eisenhower’s mind on this issue. Ibid., p. 206.


73 Ernest Van Der Beugel, From Marshall Aid to Atlantic Partnership:

European Integration as a Concern of American Foreign Policy

(Amsterdam: Elsevier, 1966), pp. 273–274. 74 Winand, Eisenhower, Kennedy, p. 31. 75 Ibid., p. 47. 76 Quoted in Winand, ibid., pp. 35–36. Dirk Stikker, the Dutch foreign minister at the time, was convinced that “in the back of Eisenhower’s mind was the idea that the creation of the EDC would allow him to send American boys home”; quoted in McGeehan, German Rearmament Question, p. 185. 77 John Foster Dulles, War or Peace (New York: Macmillan, 1950), p. 118. 78 Duchin, “‘Agonizing Reappraisal,’” p. 202. 79 Ibid., p. 399. 80 For an interesting discussion of Eisenhower’s initiatives for nuclear sharing, see Weber, Multilateralism in NATO; Van Der Buegel, Marshall Aid, pp. 386–391. 81 Dulles, War or Peace, pp. 213, 220. 82 Rolf Steininger, “John Foster Dulles, the European Defense Community, and the German Question,” in John Foster Dulles and the Diplomacy of the Cold War, ed. Richard H. Immerman (Princeton: Princeton University Press, 1990), p. 82. 83 Ibid., p.92. 84 Ibid., pp. 92–94. 85 In a discussion with the British after the failure of the EDC, Dulles noted that “it was really immaterial whether a NATO plus Brussels solution was better or worse than EDC. Congress had been ‘sold’ on the latter as the means of uniting Europe which would then be capable of standing on its own feet without American help” (emphasis added); quoted in ibid., p. 183. 86 McGeehan, German Rearmament Question, pp. 168–171. 87 Weber, Multilateralism in NATO, p. 41. 88 McGeehan, German Rearmament Question, pp. 232–233. 89 Ibid., pp.134, 141. Germany’s concern about U.S. intentions comes across clearly when Acheson recalls a meeting with Adenauer in fall 1951: “The Chancellor said that the Federal Republic was on the brink of far-reaching decisions. In making them, a major factor must be his judgement of the future course of the United States…. His countrymen had twice misjudged our intentions. A third misjudgment could be fatal.” Adenauer therefore wanted to know, before Germany committed itself to the EDC, whether “the United States [was] as deeply committed to the defence of Europe as it was asking the Federal Republic to become.” See Dean Acheson, Sketches from Life of Men I Have Known (London: Hamish Hamilton, 1961), pp. 168–169. 90 McGeehan, German Rearmament Question, pp. 173, 215–216. 91 Ibid., pp. 174, 231; Winand, Eisenhower, Kennedy, p. 43. 92 Ibid., pp. 231–232, n. 148. 93 Van Der Beugel, Marshall Aid, 269–270. On the German attitude, see also Konrad Adenauer, Memoirs 1945–1953, trans. Beate von Oppen


94 95 96

97 98 99

100 101 102

(Chicago: Henry Regnery Company, 1965), ch. 16, esp. pp. 310–315, as well as ch. 18; on opposition within Germany to rearmament, see pp. 321–328. Eden, Memoirs, pp. 36–39; McGeehan, German Rearmament Question, pp. 157, 164–165. Farrell, Eisenhower Diaries, p. 222, report on meeting with Churchill on January 6, 1953. Ibid., p. 207, report on meeting with Churchill on December 21, 1951. In his memoirs, Eden argues that the Americans were not seeking direct British participation in the EDC to begin with. He suggests that although the British were in full understanding with the administration, large sections of the U.S. press did not realize this and blamed the British for the delays in the EDC negotiations. See Eden, Memoirs, pp. 39–40. Dulles, War or Peace, p. 218. Kaplan, NATO and the United States, p. 65. Duchin, “‘Agonizing Reappraisal,’” pp. 212, 220. Eden asserts that Dulles told him, concerning the “agonizing reappraisal” speech, that the Americans felt it necessary to “give French public opinion a jolt,” implying that it was a bluff. However, in the same conversation Dulles also warned Eden that should the EDC fail, the U.S. might swing over to a policy of Western hemispheric defense, with the emphasis on the Far East. See Eden, Memoirs, p. 64. Winand, Eisenhower, Kennedy, p. 50. Raymond Aron, France—Steadfast and Changing: The Fourth to the Fifth Republic (Cambridge: Harvard University Press, 1960), p. 151. Eisenhower, Mandate for Change, p. 406.

NOTES TO CHAPTER 6 1 Allison to Secretary of State, “Japan’s Application for Accession to the General Agreement on Tariffs and Trade,” January 27, 1953, records of the State Department, National Archives II, College Park, MD, RG-59, Lot 55D388, Box 5. The 1953 folders of the Bureau of Far Eastern Affairs are full of documents conveying Japanese concerns and Japan’s pressure for early accession. 2 Article 35 is an “opt-out” article. It allows either a prior member or a new member to “opt out” of a GATT relationship with the other at one time only, the time when the new member enters the GATT. For a helpful description of the GATT rules, see John H. Jackson, The World

Trading System: Law and Policy of International Economic Relations

(Cambridge: MIT Press, 1991). 3 Gardner Patterson, Discrimination in International Trade: The Policy Issues, 1945–1965 (Princeton: Princeton University Press, 1966), pp. 272–286; see also Vinod K. Aggarwal, Liberal Protectionism: The International Politics of Organized Textile Trade (Berkeley: University of California Press, 1986), pp. 48–50.


4 Rotter, The Path to Vietnam, p. 108. 5 General of the Army Douglas MacArthur to the Secretary of State, November 8, 1948, FRUS, 1948, vol. 6, pp. 1041–1044. 6 “Draper Leaves for U.S. with Economy Solution,” Stars and Stripes, April 3, 1948. 7 Already in his May 1947 speech, Acheson referred to West Germany and Japan as the “greatest workshops of Europe and Asia…upon whose production Europe and Asia were to an important degree dependent,” Department of State Bulletin (DSB), 1947, vol. 16, p. 991. The goal of turning Japan into the hub of a new regional economic bloc in nonCommunist Asia is a central theme in the work of several historians, including: Borden, Pacific Alliance; Michael Schaller, The American Occupation of Japan: The Origins of the Cold War in Asia (New York: Oxford University Press, 1985); Rotter, Path to Vietnam. This point is also made in John W. Dower, Empire and Aftermath: Yoshida Shigeru and the Japanese Experience, 1878–1954 (Cambridge: Council on East Asian Studies, Harvard University, 1988). 8 NSC-48/1, “The Position of the United States with Respect to Asia,” December 23, 1949, p. 22. 9 Schaller, American Occupation, p. 144. 10 Doherty to Allison, “Far Eastern Development Proposals,” March 29, 1950, DOS, RG-59, 890.00/3–2950; Rotter, Path to Vietnam, p. 133; Schaller, American Occupation, p. 228. 11 Tracy Voorhees, “NSC Policy Paper on Asia,” January 10, 1950; attachment to NSC-61, “U.S. Economic Aid to Far Eastern Areas,” January 27, 1950. In Documents of the National Security Council, 1947– 1977, microfilm Fa3555, reel 2, Columbia University. 12 Rotter, Path to Vietnam, p. 133. 13 Already before the war Voorhees called for turning Japan into the supplier of low-cost military equipment for Southeast Asia. See Schaller, American Occupation, p. 231; Borden, Pacific Alliance, pp. 47– 49. 14 Economic Foreign Policy Folder, November 24, 1952, DOS, RG-59, Lot File 64D 207, Box 7. 15 Discussion of Economic Cooperation between the U.S., Japan and Southeast Asia with Japanese Industrialists in the Kansai Area, November 5, 1951. In DOS, RG59; “Interdepartmental Committee on Far Eastern Mobilization” file, ibid., Box 5. 16 Joseph Dodge, “United States-Japan Economic Cooperation in the PostTreaty Era,” February 1, 1952, p. 7. In DOS, RG-59, “Interdepartmental Committee on Far Eastern Mobilization” file, Lot File 64D 207, Box 5. 17 Report of a Study Group Sponsored by the Woodrow Wilson Foundation and the National Planning Association, The Political Economy of American Foreign Policy: Its Concepts, Strategy, and Limits (New York: Henry Holt, 1955), p. 314.


18 For some of his statements on the importance of the JapaneseSoutheast Asian link, see FRUS, 1952–1954, vol. 14, pp. 1407, 1725, 1782. 19 See “Outline of Far Eastern and Asian Policy for Review with the President,” sent by Ambassador at Large Jessup to Acheson on November 16, 1949, FRUS, 1949, vol. 7, esp. pp. 1211–1213. This link between Japan’s economic viability and the United States’ strategic goals in Asia is apparent in all of the NSC-48 documents concerning U.S. policy in the Far East. 20 NSC-13/2, “Report by the National Security Council on Recommendations with Respect to United States Policy toward Japan,” October 7, 1948, FRUS, 1948, vol. 6, p. 861. 21 For a fascinating, intimate portrayal of that period of the occupation of Japan, see Theodore Cohen (Herbert Passin, ed.), Remaking Japan: The American Occupation as New Deal (New York: Free Press, 1987). On this period, see also Dower, Empire and Aftermath, ch. 11; John Welfield, An Empire in Eclipse: Japan in the Postwar American Alliance System—-A Study in the Interaction of Domestic Politics and Foreign Policy (London: Athlone Press, 1988), ch. 4. 22 Schonberger, Aftermath, pp. 206–220. 23 Yoko Yasuhara, “Japan, Communist China, and Export Controls in Asia, 1948–52,” Diplomatic History 10, no. 1 (1986): 77–78, 85. 24 Progress Report on NSC-125/5, FRUS, 1952–1954, vol. 14, p. 1414. 25 Warren I. Cohen, “China in Japanese-American Relations,” in The United States and Japan in the Postwar World, ed. Akira Iriye and Warren I. Cohen (University Press of Kentucky, 1989), pp. 42–44. 26 For a review of the private and semipublic trade relations between Japan and China during the late 1940s and early 1950s, see Chae-Jin Lee, Japan Faces China: Political and Economic Relations in the Postwar Era (Baltimore: Johns Hopkins University Press, 1976), ch. 4. 27 Kaufman, “Eisenhower’s Foreign Economic Policy,” in Cohen and Iriye, Great Powers in East Asia, pp. 110–111. On the issue of the China trade embargo, see also Qing Simei, “The Eisenhower Administration and Changes in Western Embargo Policy against China, 1954–1958,” in Cohen and Iriye, Great Powers in East Asia, pp. 121–140. 28 Memorandum by the Chairman of the Interdepartmental Committee on Trade Agreements (Course) to the President, “Recommendation of the Interdepartmental Committee on Trade Agreements Concerning Trade Agreement Negotiations with Japan,” August 20, 1952, FRUS, 1952– 1954, vol. 1, p.116. These recommendations were approved by President Truman on August 22, 1952. 29 The goals of preventing Japanese dependence on China and encouraging Japanese contribution to the development of Southeast Asia were stressed in NSC125/2, “US Objectives and Courses of Action with Respect to Japan,” August 7, 1952, FRUS, 1952–1954, vol. 14, pp. 1300– 1308. 30 Ibid., p. 25.


31 Memorandum of discussion at the 139th meeting of the NSC, Washington, D.C., April 8, 1953, ibid., pp. 1407–1408. 32 NSC-48/1, pp. 22, 24–25. This argument suggests that the logic behind U.S. policy toward regional economic cooperation was based on the logic of its security policy. 33 Dower, Empire and Aftermath, p. 421; Yamamoto Mitsuru, “The Cold War and US-Japan Economic Cooperation,” in The Origins of the Cold War in Asia, ed. Nagai Yonosuke and Akira Iriye (Tokyo: Tokyo University Press, 1979), p. 416. 34 Department of Defense Directive: Japan as a Source for Military Equipment and Supplies, April 15, 1953. This document reaffirms the policy line previously formalized in a March 28, 1951, Defense memorandum on the same issue; DOS, RG59, 890.00/4–1553, C-0046. 35 Richard B. Finn, Winners in Peace: MacArthur, Yoshida, and Postwar Japan (Berkeley: University of California Press, 1992), p. 197; Borden, Pacific Alliance, ch. 2, esp. p. 75; see also Schaller, American Occupation, ch. 6. The figure regarding West Germany is cited in Borden, Pacific Alliance, p. 75. 36 Schonberger, Aftermath, p. 201. 37 Roger Buckley, Occupation Diplomacy: Britain, the United States and Japan 1945–1952 (Cambridge: Cambridge University Press, 1982), p. 132. 38 Cohen, Japan, ch. 21; quotation of Draper from p. 402. 39 Aggarwal, Liberal Protectionism, pp. 44–46. 40 Young to Allison, “Possible Administration Position on Reciprocal Trade Agreements Act,” March 26, 1953, “Discussions with Japanese Representatives on Trade Policy Matters,” March 31, 1953; Japanese Ambassador Araki to Assistant Secretary of State for Far Eastern Affairs Robertson, May 8, 1953; Robertson to Secretary of State, “U.S Trade Policy and the Future of Japan,” May 8, 1953. Robertson called on the secretary to “take prompt and courageous action insofar as our own commercial policy is concerned.” See DOS, RG-59, Bureau of Far Eastern Affairs, 1953, Lot 55D388, Box 5. 41 From a report by Senator Alexander Smith, Chair of the Subcommittee on the Far East of the Foreign Relations Committee, quoted in Noboru Imai, National Security and Trade: Japanese-American Relations in the 1950s, unpublished dissertation, Columbia University, 1995, p. 32. Smith, however, concluded by recommending the regional Asian solution to Japan’s trade problem; this issue is discussed later. 42 Memorandum by the Chair of the Interdepartmental Committee on Trade Agreements, FRUS, 1952–1954, vol. l, p. 117. 43 See comments of Commerce Secretary Sinclair Weeks in: Minutes of Cabinet Meeting, August 6, 1954, FRUS, 1952–1954, vol. 14, pp. 1694– 1695. 44 Current Economic Developments: “GATT Contracting Parties Conclude Seventh Session,” “In view of the forthcoming renewal of the US Reciprocal Trade Agreements Act, it is unlikely that the US would consider participating in tariff negotiations earlier than in a year or 18


45 46 47

48

49

50 51

52

months,” November 10, 1952, FRUS, 1952–1954, vol. 1, p. 125. See also Memorandum by the Assistant Secretary of State for Eastern Affairs (Robertson) to the Assistant Secretary of State for Economic Affairs (Linder), “The Secretary’s Testimony on the Trade Agreements Act,” April 30, 1953, ibid., pp. 155–156; Memorandum by the Deputy Assistant Secretary of State for Far Eastern Affairs (Johnson) to the Secretary of State, “Necessity of United States Support in Order to Facilitate Japan’s Accession to the General Agreement on Tariffs and Trade,” July 13, 1953, ibid., pp. 156–158. There was nothing the State Department officials could do to overcome this constraint. Acting Political Adviser in Japan (Sebald) to the Secretary of State, October 24, 1947, ibid., p. 310. See the correspondence between the Acting Secretary of the Army (Draper) and the Acting Secretary of State, December 14 , 28, 1948, ibid., pp. 1062, 1074. Tokyo to Secretary of State, “Summary of Tokyo Economic-Commercial Conference,” April 22, 1950, DOS, RG-59, Central Files 890.00/4–2250; “Non-Red Asia Trade Bloc Will Be Mapped by U.S. at Talks in Tokyo, Apr. 17,” Nippon Times, April 12, 1950. “A Positive Economic Program for Japan,” Memorandum by the Chief of the Division of Japanese and Korean Economic Affairs (Martin) to the Assistant Secretary of State of Occupied Areas (Hilldring), March 12, 1947, FRUS, 1947, vol. 6, pp. 184–185. Doherty to Allison, “Far Eastern Development Proposals,” March 29, 1950. For opposing views, see Shohan (PSA) to Allison (NA), April 14, 1950; Shohan to Merchant and Lacy (FE), “Increasing Japanese Trade: Another Way to Skin the Cat,” March 9, 1950; Diehl (Financial Attaché, Tokyo) to Sebald, “The Allison Memorandum on Creation of a Special Yen Fund,” June 20, 1950, DOS, RG-59, 890.00, microfilm C-0046. Gleeck (NA) to Parsons (NA) and Matlock (FE), “World-Wide Procurement Policy,” December 18, 1958, DOS, RG-59, Lot File 61D 68, Box 8. For a fascinating interpretation of the development of U.S. foreign trade policy, see Alfred E. Eckes, Jr., Opening America’s Markets: U.S. Foreign Trade Policy since 1776 (Chapel Hill: University of North Carolina Press, 1995), esp. chs. 1–2. Cynthia A. Hody, The Politics of Trade: American Political Development and Foreign Economic Policy (Hanover, N.H.: University Press of New England, 1996), pp. 173–179. On the importance of institutional arrangements for the viability of the liberal foreign economic policy, see also Raymond A. Bauer, Ithiel de Sola Pool, and Lewis A. Dexter,

American Business and Public Policy: The Politics of Foreign Trade (New York: Atherton Press, 1963); Theodore Lowi, “American Business, Public Policy, Case Studies, and Political Theory,” World Politics 16, no. 4 (1964): 677–715; I.M. Destler, American Trade Politics (Washington, D.C.: Institute for International Economics, 1992). For an institutional argument that challenges the presidential focus, see Sharyn


O’Halloran, Politics, Process, and American Trade Policy (Ann Arbor: University of Michigan Press, 1994). 53 Stephen D. Cohen, Joel R. Paul, and Robert A. Blecker, Fundamentals of

U.S. Foreign Trade Policy: Economics, Politics, Laws, and Issues

54 55 56 57 58

59 60

61 62 63 64

(Boulder, Col.: Westview Press, 1996), p. 33; Richard N. Cooper, “Trade Policy as Foreign Policy,” in U.S. Trade Policies in a Changing World Economy, ed. Robert M. Stern (Cambridge: MIT Press, 1988), pp. 299– 301, Truman quotation from p. 300. See also Edward S. Kaplan, American Trade Policy, 1923–1995 (Westport, Conn.: Greenwood Press, 1996), esp. chs. 1–3. Ch. 3 well depicts Cordell Hull’s tenacious efforts to convince the hesitant president of the virtues of a free trade policy. On the story of the RTAA see also Eckes, Opening America’s Markets, ch. 5. Eckes, Opening America’s Markets, p. 158. Aggarwal, Liberal Protectionism, pp. 46–47. Memorandum by the Chairman of the Interdepartmental Committee on Trade Agreements, August 20, 1952, FRUS, 1952–1954, vol. 1, p. 117. McClurkin (NA) to Allison and Johnson (FE), “Japan’s Application for Accession to GATT,” February 5, 11, 1953, DOS, RG-59, Lot 55 D388, Box 5. Cohen, Paul, and Blecker, Fundamentals, p. 15; John H. Jackson, “Multilateral and Bilateral Negotiating Approaches,” in Stern, U.S. Trade Policies, pp. 379–381. For a critique of U.S. trade policy in the early 1950s and a discussion of how congressional constraints made the U.S. unable to exert the necessary leadership, see Miriam Camps, Trade Policy and American Leadership, Memorandum #18, Princeton University, Center of International Studies, 1957. Burton I. Kaufman, Trade and Aid: Eisenhower’s Foreign Economic Policy, 1953–1961 (Baltimore: Johns Hopkins University Press, 1982), pp. 16–22. The fluctuations of protectionist sentiments in Congress were well manifested in the changes in the Trade Agreements program and in the various amendments aimed at curtailing the president’s power to effectively reduce tariff barriers. For example, in 1948 Congress, controlled by Republicans, enacted the “peril-point” amendment, which required the Tariff Commission to survey all commodities on which the president proposed to negotiate agreements and to specify rates of duty below which tariffs could not be lowered without injuring the U.S. industry affected. In 1949 a Democratic Congress repealed the 1948 amendments, but in 1951 when the act came up for renewal, congressional opposition—even with the Democrats in control—was powerful enough to overcome the administration’s proposal for renewal without changes. The peril-point provision was restored, and an escape clause was added. See Report of a Study Group, p. 299, n. 8. Rotter, Path to Vietnam, pp. 109–111. Schaller, American Occupation, p. 228. Data are taken from Kennedy, Rise and Fall of the Great Powers, p. 461. Borden, Pacific Alliance, pp. 6–8.


65 Although the concern for relative position (and, implicitly, for relative burden sharing) is usually explained in the literature in terms of Realist theory and its pronounced concern for relative gains, in this case the concern is driven much more by domestic considerations. 66 Arthur Stein, “The Hegemon’s Dilemma: Great Britain, the United States, and the International Economic Order,” International Organization 38, no. 2 (1984): 383–385. 67 For a general economic discussion of this issue, see Beth V Yarborough and Robert M. Yarborough, The World Economy: Trade and Finance, 4th ed. (Fort Worth, Tx.: Dryden Press, 1997), ch. 9; Paul Krugman and Maurice Obsfeld, International Economics: Theory and Policy, 3rd ed. (New York: Harper Collins, 1994), ch. 6; Paul Krugman, ed., Strategic Trade Policy and the New International Economics, 3rd ed. (Cambridge: MIT Press, 1988). 68 For one economic explanation of the preference for a regional strategy, see Mark L. Busch and Helen Milner, “The Future of the International Trading System: International Firms, Regionalism, and Domestic Politics,” in Political Economy and the Changing Global Order, ed. Richard Stubbs and Geoffrey Underhill (Toronto: M&S, 1994). 69 Joseph Dodge, “United States-Japan Economic Cooperation in the PostTreaty Era,” ICFEM draft paper no. 16, February 1, 1952, DOS, RG-59, Lot File 64D 207, Box 5. 70 Imai, National Security and Trade, pp. 300–302. 71 Andenberg to Sebald, June 27, 1950, DOS, RG-59, 890.10/6–2850. 72 Memorandum by the Director of the Office of Northeast Asian Affairs (Young) to the Assistant Secretary of State for Far Eastern Affairs (Allison), “Japan’s Application for Accession to the GATT,” FRUS, 1952– 1954, vol. 1, p. 118. 73 Ryutaro Komiya and Motoshige Itoh, “Japan’s International Trade and Trade Policy, 1955–1984,” in The Political Economy of Japan, vol. 2, The Changing International Context, ed. Takashi Inoguchi and Daniel I. Okimoto (Stanford, Calif.: Stanford University Press, 1988), p. 178. 74 Patterson, Discrimination, pp. 274–275. Ironically, it was Britain that initially supported the revival and expansion of Japan’s trade while the Americans were still focusing on a punitive policy. At the time, the main concern of the British was the potential development of special U.S.Japanese bilateral ties, which would harm British economic interests in the region. The British prime minister and Foreign Office continued to support this policy. However, growing pressure from British industry forced the British government in the mid-1950s to restrict imports from Japan, specifically in light of dramatic overcapacity in the British cotton textiles industry. See Buckley, Occupation Diplomacy, pp. 3–4, 163–170; Aggarwal, Liberal Protectionism, p. 56. 75 The Ambassador in France (Dunn) to the Department of State, January 16, 1953, FRUS, 1952–1954, vol. 1, p.129. 76 From a longer historical perspective, Komiya and Itoh argue that the difference between the U.S. and the European states’ attitudes toward Japanese participation in the GATT partly reflected their different


77 78 79 80 81

82 83 84 85 86 87 88 89

90 91

experiences with Japanese exports in the 1930s. At the time Japan was able to dramatically expand its exports to countries such as Britain that practiced free trade, greatly damaging the local textile industry. However, this dramatic increase in exports did not occur in states such as the U.S. that had adopted a protectionist policy. See Komiya and Itoh, “Japan’s International Trade,” p. 517, n. 8. Patterson, Discrimination, p. 2 74; Secretary of State to US Advisor to SCAP (Sebald), March 20, 1951, FRUS, 1951, vol. 6, pp. 935–936. “Recommendations of the Interdepartmental Committee,” FRUS, 1952– 1954, vol. 1, pp. 116–117. Kaufman, “Eisenhower’s Foreign Economic Policy,” p. 116. Patterson, Discrimination, p. 285. One clear example of the importance of Southeast Asia to British recovery is that of the triangular trade relations among Britain, the U.S., and Malaya. U.S. rubber imports from Malaya played a crucial role in maintaining the balance of payments between Britain and the U.S. before the war. The British and Americans considered the revival of that trade as crucial for solving Britain’s dollar-gap problem; see Borden, Pacific Alliance. Ibid., pp. 130–131; Schonberger, Aftermath, p. 222. Mitsuru, “The Cold War and US-Japan Economic Cooperation,” p. 414. Imai, National Security and Trade, pp. 297–298, 303. Schonberger, Aftermath, p. 189. Memorandum by the Financial Attaché of the Mission at Tokyo (Diehl) to the Acting United States Political Adviser for Japan (Sebald), FRUS, 1950, vol. 6, p. 1225; Rotter, Path to Vietnam, p. 139. David Wightman, Toward Economic Cooperation in Asia: The United Nations Economic Commission for Asia and the Far East (New Haven: Yale University Press, 1963), ch. 12, quotation from p. 234. Lalita Prasad Singh, The Politics of Economic Cooperation in Asia: A Study of Asian International Organizations (Columbia: University of Missouri Press, 1966), pp. 6–9, 118–122, but see all of ch. 7. Reparations negotiations, however, took a long time. A settlement with Burma was reached in November 1954, with the Philippines in May 1955, with Indonesia in November 1957, and with South Vietnam in May 1959. Indeed, once the agreements had been signed, especially the one with Indonesia, Southeast Asia’s largest nation, a new chapter in Japan’s relations with the region had begun. On this issue, see Sueo Sudo, The Fukuda Doctrine and ASEAN: New Dimensions in Japanese Foreign Policy (Singapore: Institute of Southeast Asian Studies, 1992), ch. 2. For a general discussion of the reparations negotiations, see also Lawrence Olson, Japan in Postwar Asia (New York: Praeger, 1970), ch. 2; F.C. Langdon, Japan’s Foreign Policy (Vancouver: University of British Columbia Press, 1973), ch. 5. DOS, RG-59, Japan-Southeast Asian Development, 1952, November 24, 1952, p. 25; Lot File 64D 207, Box 7. On the history of the trade conflict between the U.S. and Japan, see, e.g., the discussion in Komiya and Itoh, “Japan’s International Trade,”


pp. 190–212; Merit Janow, “Trading with an Ally: Progress and Discontent in U.S.-Japan Trade Relations,” in The United States, Japan and Asia: Challenges for U.S. Policy, ed. Gerald L. Curtis (New York: Norton, 1994); Chalmers Johnson, “Trade, Revisionism and the Future of Japanese-American Relations,” in Japan’s Economic Structure: Should It Change? ed. Kozo Yamamura (Seattle: Society for Japanese Studies, 1990); Stephen D. Krasner, Asymmetries in JapaneseAmerican Trade: The Case for Specific Reciprocity (Berkeley, Calif.: Institute of International Studies, 1987); Amelia Porges, “U.S.Japan Trade Negotiations: Paradigms Lost,” in Trade with Japan: Has the Door Opened Wider? ed. Paul Krugman (Chicago: University of Chicago Press, 1991); Laura D. Tyson, Who’s Bashing Whom? Trade Conflict in High-Technology Industries (Washington D.C.: Institute for International Economics, 1992).

NOTES TO CHAPTER 7 1 It examines only economic development aid and not military aid. My focus is on the specific issue of the shift from bilateral aid to a greater support for multilateral aid. For an excellent analysis see David A. Baldwin, Economic Development and American Foreign Policy, 1943– 1962 (Chicago: University of Chicago Press, 1966). For general, more historical analyses of U.S. aid policy in Asia, see Charles Wolf, Jr., Foreign Aid: Theory and Practice in Southern Asia (Princeton: Princeton University Press, 1960); Michael Kent O’Leary, The Politics of American Foreign Aid (New York: Atherton Press, 1967); John D. Montgomery, The Politics of Foreign Aid (New York: Praeger, 1962); Robert M. Blum,

Drawing the Line: The Origins of the American Containment Policy in East Asia (New York: Norton, 1982); Burton I. Kaufman, Trade and Aid: Eisenhower’s Foreign Economic Policy, 1953–1961 (Baltimore:

2 3 4 5 6 7 8

9

Johns Hopkins University Press, 1982); and most recently Vernon W. Ruttan, United States Development Assistance Policy: The Domestic Politics of Foreign Economic Aid (Baltimore: Johns Hopkins University Press, 1996). 1 use the term Southeast Asia to refer to Thailand, Cambodia, Laos, Vietnam, Indonesia, Burma, and the Philippines. Evelyn Colbert, Southeast Asia in International Politics, 1941–1956 (Ithaca: Cornell University Press, 1977), pp. 86–87, 141. See Blum, Drawing the Line, ch. 8. Wolf, Foreign Aid, pp. 82, 112–113. Russell H. Fifield, Americans in Southeast Asia, pp. 77–79. Ibid., pp. 99–127. This was a central problem in Burma, Malaya, and Vietnam, though not in Thailand or Indonesia. Samuel P. Hayes, The Beginning of American Aid to Southeast Asia: The Griffin Mission of 1950 (Lexington, Mass.: Heath Lexington Books, 1971), pp. 24–27. Wolf, Foreign Aid, pp. 56, 109.


10 The full country reports of the Griffin mission appear in Hayes, Beginning of American Aid. See also Wolf, Foreign Aid, pp. 81–84; Rotter, Path to Vietnam, pp. 190–196; Fifield, Americans in Southeast Asia, pp. 143–147; Schaller, American Occupation, pp. 224–226. 11 Quoted from “Economic Counter-Offensive against Communism in the Far East and Its Relation to SEATO,” Drumright (FE) to the Secretary of State, July 22, 1954, Records of the Division of FEA: Office of the Assistant Secretary of FEA, 1954–1956, DOS, RG-59, Lot File 56 D 206. On Baldwin’s initiatives, see Baldwin to Roberston (FE), “Economic Counter-Offensive against Communism in the Far East,” June 18, 1954, ibid.; Baldwin to Drumright (FE), McConaugy (CA), McClurkin (NA), and Day (PSA), June 1, 1954, RG-59, Central Files, 790.5MSP/6.154. 12 Colbert, Southeast Asia, pp. 320–333; Russell H. Fifield, Southeast Asia in United States Policy (New York: Praeger, 1963), pp. 41–49. 13 Jackson, a former special assistant to Eisenhower, was the most persistent champion of a new foreign economic policy. See Kaufman, Trade and Aid, pp. 49–50. 14 “Proposal for a New United States Foreign Economic Policy,” filed as The Jackson Report, 1954, DOS, RG-59, Records of the Dep. Assistant Secretary of State for Far Eastern Economic Affairs, Lot File 58 D 209, Box 4. It is interesting that Walt Rostow (mentioned later in this chapter) was a central player later in the Johnson administration, who contributed to the new emphasis on regional cooperation in Asia, exemplified in the support for the Asian Development Bank. 15 Paralman to Raynor, February 16, 1953, “Notes on Asian Regional Economic Organization,” February 20, 1953, 890.0/2–2053 (microfilm C-0046). 16 Marvin Gay (FE) to Johnson (FE), “Joint Fund Institution for Asian Development,” July 30, 1953; Gay to Johnson, August 5, 1953 and the attached memorandum of July 27, 1953, “Asian Development Plan in Nutshell,” DOS, RG-59, Lot File 64 D 207, “Asian Development” folder, Box 7. 17 “Position of Strength in the Far East: Regional Economic Grouping,” May 11, 1954, RG-59, Central Files, 790.5 MSP/5–1454. 18 The committee had been formed on the recommendation of Charles Baldwin, the assistant secretary for Far Eastern economic affairs. It is interesting that Baldwin directly links his recommendation to study more carefully the regional approach to the problems of the Far East to the new Soviet emphasis on spearheading their attack in the economic field. See Baldwin to Robertson, “Regional Approach to Far Eastern Economic Problems,” March 17, 1954, DOS, RG-59, “Asian Economic Working Group” folder, Records of the Division of FEA—Office of the Assistant Secretary of FEA, 1954–56, Lot File 56 D 206. 19 “Report of the Asian Economic Working Group Concerning the Inauguration of Large-Scale, Long-Range Program of Economic Assistance,” August 3, 1954, DOS, RG-59, Records of the Dep. Assistant Secretary of State for Far Eastern Economic Affairs (Baldwin and Jones), 1951–1957, Lot File 58 D 209, Box 2. A second version of the


20

21

22 23 24 25 26

27 28 29 30

report, one that more forcefully stresses the need for a multilateral approach, appears in the “Asian Economic Working Group” folder, DOS, RG-59, Lot File 56 D 206. NSC-5429/5, “Current U.S. Policy toward the Far East,” December 22, 1954, FRUS, 1952–1954, vol. 12, pp. 1062–1067; NSC-5506, “Future U.S. Economic Assistance to Asia,” January 24, 1955, ibid., 1955–1957, vol. 21, pp. 17–22. See a report on the ECAFE Committee of the Whole, Bangkok, March 28-April 5, 1949, “ECAFE-1949–50” folder, DOS, RG-59, Merril Gay Files, Lot Number 64 D 207. By 1953, the State Department had concluded that “recent ECAFE meetings demonstrated that Russian efforts to use ECAFE as a propaganda sounding board completely boomeranged and demonstrated that ECAFE may develop into a useful device for implementing U.S. economic policy in the region.” See Briefing Papers for Mr. Walter Robertson, incoming Assistant Secretary of State for Far Eastern Affairs, March 30, 1953, “Regional Economic Problems and Economic Matters in Southeast Asia in Which the United States Is Interested,” DOS, RG-59, Lot Number 55 D 388, Box 5, “Far East General Robertson Briefings” folder. The only book that thoroughly examines the development of ECAFE and its relations with the U.S. is: David Wightman, Toward Economic Cooperation in Asia: The United Nations Economic Commission for Asia and the Far East (New Haven: Yale University Press, 1963). Rotter, Path to Vietnam, p. 123. Ruttan, United States Development Assistance Policy, pp. 52–54. Kaufman, in Trade and Aid, best describes this policy shift. “Report on Foreign Economic Policy Discussions between United States Officials in the Far East and Clarence B. Randall and Associates,” December 1956, p. 13, DOS, RG-59, Lot File 61 D 68, Box 12. Ruttan, United States Development Assistance Policy, p. 72; Montgomery, Politics of Foreign Aid, pp. 201–203. O’Leary, in Politics of American Foreign Aid, argues that Congress’s reluctance to support foreign aid was related to the fact that in both the House and the Senate there was overrepresentation of those geographical regions least sympathetic to foreign aid, and in the House there was a high proportion of representatives of rural districts, also unsympathetic to aid. See p. 56. On these competing forces, see Montgomery, Politics of Foreign Aid, pp. 209–210. James H. Weaver, The International Development Association: A New Approach to Foreign Aid (New York: Praeger, 1965), pp. 26–27, 36–37, 88. Ibid., pp. 86–87. Kaufman, Trade and Aid, pp. 153–154; Weaver, International Development Association, chs. 6–7; Baldwin, Economic Development, p. 200.


31 Somsakdi Xuto, Regional Cooperation in Southeast Asia: Problems, Possibilities and Prospects (Institute of Asian Studies, Chulalongkorn University, Thailand, 1973), pp. 15–17. 32 Wu Ta-Yeh, “Problems and Prospects of Economic Cooperation in Southeast Asia,” in Economic Interdependence in Southeast Asia, ed. Theodore Morgan and Nyle Spoelstra (Madison: University of Wisconsin Press, 1967), pp. 15–17. 33 See: “Position of Strength in the Far East: Regional Economic Grouping,” May 11, 1954, RG-59, Central Files, 790.5 MSP/5–1454; “Report by the Chairman of the Council on Foreign Economic Policy (Randall),” December 1956, FRUS, 1955–1957, vol. 9, pp. 38–39. 34 Bernard K. Gordon, The Dimensions of Conflict in Southeast Asia (Englewood Cliffs, N.J.: Prentice-Hall, 1966), pp. 154–161 (the example about aluminum is taken from pp. 156–157). 35 “Report by the Chairman of the Council on Foreign Economic Policy (Randall),” December 1956, FRUS, 1955–1957, vol. 9, p. 38. 36 Barnett (WE) to Charles Baldwin (FE), “Intra-Regional Cooperation in Asia and Europe,” April 15, 1954, “Asian Economic Working Group” folder, National Archives, DOS, RG-59, Lot Number 56 D206. 37 “An Asian Payment Union?,” March 22, 1954, DOS, RG-59, 890.10/3– 2254; “Summary of the Proceedings of the Conference of Asian Members of the Colombo Plan Consultative Committee,” May 16, 1955, DOS, RG-59, 890.00/5–1655; “SEA Comments on the Report of Clarence B. Randall,” “Randall Committee Report, 1957” folder, DOS, RG-59, Records of the Office of Southeast Asian Affairs, 1956–7, Lot File 59 D 541; “An Analysis of Field Comments on the Proposal for Asian Regional Economic Development,” pp. 7–9, attached to the “Report of the Committee on Asian Regional Economic Development and Cooperation,” September 11, 1957, “Reports and Papers of the Committee on Asian Regional Economic Development and Cooperation, 1957” folder, DOS, RG-59, Lot File 61 D 68, Box 11. 38 “Effects in Japan of U.S. Aid to South and Southeast Asia,” section 3 of the “Report of Asian Economic Working Group,” August 30, 1954, DOS, RG-59, Lot File 58 D 209, Box 2. 39 From the Senate Committee on Banking and Currency’s report on Resolution 264 (the Monroney Resolution), in Weaver, International Development Association, p. 87. 40 Criticism within the U.S. of bilateral aid as being too political grew stronger in light of the Vietnam War. A 1973 congressional report on “Alternatives to Bilateral Aid” reiterates the argument that by participating in an international body the U.S. becomes a less credible target of criticism of its policies toward the developing countries. However, the report also stresses that the main advantage of multilateral aid is to reduce the importance of political and security factors as justifications for U.S. assistance and to put U.S. aid on “what many feel is a sounder basis: considerations of broad humanitarian interest.” See “Alternatives to Bilateral Economic Aid,” prepared for the


41

42 43 44

45

46

use of the Committee on Foreign Relations, U.S. Senate, by the Foreign Affairs Division—Congressional Research Service, June 18, 1973, p. 13. “Report of the Asian Economic Working Group,” DOS, RG-59, Lot File 56 D 206, p. 7. Many in the State Department felt the need to try “something new and different” in the region, to take “a positive and imaginative course of action which might have a ‘dramatic impact.’” See, e.g., Hope (CA) to McConaughy (CA), “Comments on FE Massive Aid Proposal,” DOS, RG-59, Central Files, 790.5 MSP/6–754; Baldwin (FE) to Robertson (FE), January 14, 1955 (from which quotations are taken), DOS, RG-59, Records of the Dept. Assistant Secretary of State for Far Eastern Economic Affairs (Baldwin and Jones), 1951–57, Lot File 58 D 209, Box 3. This feeling was later echoed in the congressional criticism of the administration’s lack of positive goals in its foreign aid plan. Wightman, Toward Economic Cooperation, pp. 41, 98–100, 348–349. Eugene R. Black, Alternative in Southeast Asia (New York: Praeger, 1969), p. 97. McDiarmid to Moyer, “Factors in Regional Organization,” July 2, 1954, “Asian Economic Working Group” folder, pp. 4–5, DOS, RG-59, Lot File 56 D 206; “Relation of the Proposed Asian Development Corporation to the IBRD, EXIMBANK, U.S Grant Programs, SUNFED and the Battle Act,” Attachment to the Report of Asian Economic Working Group, August 30, 1954, DOS, RG-59, Lot File 58D209, Box 2. The best review of this evolving policy is in Baldwin, Economic Development. Rotter offers another interesting account of the gradual shift in U.S. foreign economic policy, arguing that from 1947 on, the Truman administration’s acceptance of the containment doctrine gradually led to a complete compromise of the U.S. ideology of “liberal capitalism.” See Path to Vietnam, pp. 2–7. During a news conference on December 8, 1954, Eisenhower was asked how he reconciled an expanded foreign aid program with the continued deficit financing in the U.S. He replied: “I don’t know that I do completely reconcile this.” See Public Papers of the Presidents, Dwight

D. Eisenbower, 1954.

47 “Notes on Asian Regional Economic Organization,” February 20, 1953, DOS, RG-59, Central Files, 890.00/2–2053 (microfilm C-0046). 48 “SEA Comments on the Report of Clarence B. Randall,” Randall Committee Report, 1957 folder, DOS, RG-59, Records of the Office of Southeast Asian Affairs, 1956–7, Lot File 59 D 541. Quotation from p. 1.; Kocher (SEA) to Young (SEA), “Proposal for Economic Development in Southeast Asia,” April 23, 1956, ibid., Box 1. 49 Wightman, Toward Economic Cooperation, p. 43. The quotation is from a telegram to Ambassador Cowan from the State Department, December 4, 1948, “ECAFE-1948” folder, DOS, RG-59, Merrill Gay files, Lot File 64 D 207. 50 An editorial in the Indian Hindu argued that the desire for such a plan was based on the belief that once Marshall aid to Europe came to an end, the U.S. would have resources that could be diverted to Asia. This


51

52 53 54 55 56 57

58 59 60 61 62 63 64

article also maintains that it was the hope that the U.S. would extend such aid that prompted the Commonwealth countries to take the initiative at Colombo in 1950. See “Asia and U.S. Aid,” Hindu, February 3, 1955. “Regional Economic Problems and Economic Matters in Southeast Asia in which United States is Interested,” p. 2, briefing papers for Mr. Walter Robertson, Incoming Assistant Secretary of State for Far Eastern Affairs, March 30, 1953, DOS, RG-59, Lot File 55 D 388, Box 5. Allison (FE) to Dulles, “Forthcoming Meeting of the ECAFE,” January 14, 1953, “Far East general folder,” DOS, RG-59, Bureau of Far Eastern Affairs, 1953, Lot File 55 D 388, Box 6. Wightman, Toward Economic Cooperation, ch. 9. “SEA Comments on the Report of Clarence B. Randall,” 1957, p. 2, DOS, RG-59, Lot File 59 D 541. “Report of the Committee on Asian Regional Economic Development and Cooperation,” p. ii, September 11, 1957, DOS, RG-59, Lot File 61 D 68, Box 11. Ibid., section 5, p. 4. New Delhi to Secretary of State, May 18, 1955; New Delhi to Department of State and FOA, May 16, 1955; “Foreign Aid Not from Central Fund,” Morning Times (Ceylon), May 24, 1955. For specific country attitudes, see, e.g., Bangkok to Secretary of State, April 19, 1955; Memorandum of Conversation, Indonesian ambassador (Moekarto) and Charles Baldwin from FE, May 16, 1955. All of these documents are from State Department Central Files, 890.00, microfilm, reel 17. “Report of the Committee on Asian Regional Economic Development and Cooperation,” summary findings, p. iii, U.S. Role in Fostering Regional Cooperation, p. 4. Ibid., section 5, p. 1. For the text of the speech, see Public Papers of the Presidents, Lyndon D. Johnson, 1965, pp. 522–526. President Johnson before the House and Senate Committee, May 4, 1965, in DSB, May 24, 1965. Quoted in The Pentagon Papers: Gravel Edition, vol. 3, p. 738. Eric F. Goldman, The Tragedy of Lyndon Johnson (New York: Knopf, 1974), p. 402. Walt W. Rostow, The Diffusion of Power: An Essay in Recent History (New York: Macmillan, 1972), p. 428. “Some Reflections on National Security Policy,” Policy Planning Council, Department of State, April 1965; Walt W. Rostow, The United

States and the Regional Organization of Asia and the Pacific, 1965–1985

(Austin: University of Texas, 1986), appendix D, pp. 213–214. 65 Johnson is quoted in Rostow, Diffusion of Power, p. 423. 66 The quotation is from Bernard Gordon, Toward Disengagement in Asia —A Strategy for American foreign policy (Englewood Cliffs, NJ: Prentice Hall Inc., 1969), p. 67. 67 Black, Alternative in Southeast Asia, p. 26.


68 Hearing before the Committee on Foreign Relations, U.S. Senate, 89th Congress, Asian Development Bank Act, February 16, 1966, pp. 4–5, 41– 42. Barr went on to explain that the bank’s lending would finance for the most part the purchase of capital goods and expert services. Since the U.S. was a competitive world supplier of capital goods and technical services, it was likely to be the main exporter of such services. Furthermore, he pledged that any U.S. contributions as special funds could be explicitly tied to procurement in the U.S. (p. 7). 69 Goldman, Tragedy of Lyndon Johnson, p. 405. 70 Ibid., pp. 406–407; Rowland Evans and Robert Novak, Lyndon B. Johnson: The Exercise of Power—A Political Biography (New York: New American Library, 1966), pp. 540–543. 71 “U.S Treasury Department Special Report on the Proposed Asian Development Bank,” presented in the Senate Hearings, ADB Act, p. 114. 72 Jonathan E. Sanford, U.S. Foreign Policy and Multilateral Development Banks (Boulder, Col.: Westview Press, 1982), pp. 52–53. 73 John White, Regional Development Banks: The Asian, African and Inter-American Development Banks (New York: Praeger, 1972), pp. 51– 59. 74 Ibid., pp. 98–100. 75 Goldman, Tragedy of Lyndon Johnson, p. 408. 76 Black’s endorsement, of course, had more than ideological significance. The fact that he believed the ADB was a financially sound idea also had great implications for the cost concerns held by so many in Congress; it meant the U.S. was not just throwing money down the drain. 77 Bank of Japan data quoted by Ryutaro Komiya and Motoshige Itoh, “Japan’s International Trade and Trade Policy, 1955–1984,” in The Political Economy of Japan, vol. 2, The Changing International Context, ed. Takeshi Inoguchi and Daniel I. Okimoto (Stanford, Calif.: Stanford University Press, 1988), pp. 174–175, 187–188. 78 Senate Hearings, The Asian Development Bank Act, p. 28. 79 Rostow is quoted in Black, Alternative in Southeast Asia, p. 27. 80 Gordon, Dimensions of Conflict, pp. 150–160. 81 Ibid., p.l60. 82 Gordon, Toward Disengagement, pp. 73–84. This observation is based on extensive interviews that Gordon conducted in Southeast Asia. See also Fifield, Southeast Asia, pp. 40–57. 83 Singh, Politics of Economic Cooperation, p. 148; Fifield, Southeast Asia, p. 282. 84 Po-Wen Huang, The Asian Development Bank: Diplomacy and Development in Asia (New York: Vintage Press, 1966), pp. 27–37. For another detailed description of the role of ECAFE in developing and promoting the ADB, see White, Regional Development Banks, pp. 40–47. 85 See Johnson in his Message to Congress transmitting the Agreement Establishing the ADB, January 18, 1966 (appendix 1 in the Senate Foreign Relations Committee Hearings), and also Eugene Black’s


86 87

88 89

90 91 92

statement in the Senate Hearings, Asian Development Bank Act, p. 12, p. 16. Johnson, Message to Congress, p. 69. The State Department as well as the embassy in Tokyo argued that supporting Japanese desires in the field of trade and Southeast Asian development might be the most effective way to promote U.S. security interests in the region and in Japan. See Parsons (NA) to Robertson (FE), “Fujiyama Visit: Asian Economic Development,” September 4, 1958, DOS, RG-59, Lot File 61 D 68, Box 9. Takashi Shiraishi, “Japan and Southeast Asia,” in Network Power: Japan and Asia, ed. Peter J. Katzenstein and Takashi Shiraishi (Ithaca: Cornell University Press, 1997), pp. 177–179. See Daniel T. Yasutomo, Japan and the Asian Development Bank (New York: Praeger, 1983), ch. 2; Sueo Sudo, The Fukuda Doctrine and ASEAN: New Dimensions in Japanese Foreign Policy (Singapore: Institute of Southeast Asian Studies, 1992), esp. pp. 60–69. Sudo, ibid., p. 66. Black, Alternative in Southeast Asia, p. 100. Eugene Black, in Hearings before the Senate Foreign Relations Committee, p.24.

NOTES TO CHAPTER 8 1 In a memorandum of July 21, 1947, the Policy Planning Staff (PPS) commented on the Marshall “plan”: “We have no plan.” See FRUS, 1947, vol. 3, p. 335. 2 For a brief yet comprehensive review, see Robert A. Pollard, Economic Security and the Origins of the Cold War, 1945–1950 (New York: Columbia University Press, 1985), pp. 59–81, 133–167. 3 For the content of the final bilateral treaties, see “Current Economic Developments,” June 28, 1948, FRUS, 1948, vol. 3, pp. 459–463. The only state that did not sign a bilateral agreement with the U.S. was Switzerland. 4 Stanley Hoffmann, “Final Remarks on the Marshall Plan,” in The Marshall Plan: A Retrospective, ed. Stanley Hoffmann and Charles Maier (Boulder, Col.: Westview Press, 1984), p. 91. 5 Michael J. Hogan, The Marshall Plan: America, Britain, and the Reconstruction of Western Europe, 1947–1952 (Cambridge: Cambridge University Press, 1987), p. 88. 6 Pascaline Winand, Eisenhower, Kennedy and the United States of Europe (New York: St. Martin’s, 1993), p. 11. 7 Joseph Marion Jones, The Fifteen Weeks (February 21-June 5, 1941) (San Diego, Calif.: Harcourt Brace Jovanovich, 1955), pp. 218–224. 8 George F. Kennan, Memoirs 1925–1950 (Boston: Little, Brown, 1967), p. 325. 9 Ibid., p. 330.


10 Director of the PPS (Kennan) to the Under Secretary of State (Acheson), May 23, 1947, FRUS, 1947, vol. 3, p. 225. 11 “Report of the Special ‘Ad Hoc’ Committee of the State-War-Navy Coordinating Committee,” April 21, 1947, ibid., pp. 208–209. 12 Hogan, Marshall Plan, p. 89. 13 Vandenberg, Private Papers, p. 382. 14 Hogan, Marshall Plan, p. 95. 15 Harry Bayard Price, The Marshall Plan and Its Meaning (Ithaca: Cornell University Press), pp. 60–61. 16 Van Der Beugel, Marshall Aid, p. 120. Price concurs with this assessment. 17 Price, Marshall Plan and Its Meaning, p. 34. 18 Truman, Memoirs, p. 137. Beloff also argues that the plan was aimed at demonstrating both to the Europeans and to the Soviet leaders that the U.S. was both willing and able to “go ahead with a consistent and adequate recovery program for nonCommunist Europe with or without the USSR.” See Max Beloff, The United States and the Unity of Europe (Washington, D.C.: Brookings Institution, 1963), p. 15. 19 SWNCC report, April 21, 1947, FRUS, 1947, vol. 3, p. 217. 20 In August 1946, a U.S. transport plane that had lost its way was shot down over Yugoslavia. The surviving passengers were held prisoners in Belgrade and were refused permission to see the U.S. ambassador. Ironically, one of the prisoners was an UNRRA official. The American prisoners could see from their cell window a U.S.made locomotive with the letters UNRRA printed on it. The idea that 70% of the locomotive was paid for by U.S. taxpayers seemed frustrating. See Arkes, Bureaucracy, the Marshall Plan and the National Interest (Princeton: Princeton University Press, 1972), p. 45. 21 Ibid., pp. 44–45. Wexler sees the resolve not to repeat the UNRRA experience as the basic premise that guided U.S. decisionmakers in their search for a strategy for European recovery. See Imanuel Wexler,

The Marshall Plan Revisited: The European Recovery Program in Economic Perspective (Westport, Conn.: Greenwood Press, 1983), p.9. 22 Jones, Fifteen Weeks, p. 230. 23 Van Der Beugel, Marshall Aid, pp. 20–21.

24 Mr. Sheppard of the Bureau of the Budget to Director of the Budget (Webb), “US Program for Foreign Assistance,” April 7, 1947, FRUS, 1947, vol. 3, p. 200. 25 Secretary Marshall’s speech at Harvard commencement, June 5, 1947, in Hoffmann and Maier, Marshall Plan, appendix B, p. 101. 26 Wexler, Marshall Plan Revisited, pp. 121–123. Wexler offers the most detailed, yet most comprehensible to noneconomists, explanation for the problems stemming from the bilateral payment arrangements. 27 Paul Hoffman is quoted in Van Der Beugel, Marshall Aid, p. 184. 28 Kennan, Memoirs, p. 337. 29 “The Problem of Western Europe’s Competitive Position in the World Economy and Its Remedy,” July 19, 1949. Quoted in Beloff, United States, p. 39.


30 Price, Marshall Plan and Its Meaning, p. 143. Price also provides interesting, detailed illustrations of the way in which the EPU facilitated regional trade as well. 31 August 16, 1948, FRUS, 1948, vol. 2, p. 1310. 32 Charles S. Maier, “Supranational Concepts and National Continuity in the Framework of the Marshall Plan,” in Hoffmann and Maier, Marshall Plan, p. 31. 33 Jones, Fifteen Weeks, p. 220. Dulles said these things in a speech presented on January 17, 1947, to the National Publishers’ Association. 34 John Gimbel, The Origins of the Marshall Plan (Stanford, Calif.: Stanford University Press, 1976), pp. 181–186; Hogan, Marshall Plan, pp. 33–35. 35 Kennan, Memoirs, p. 452. 36 Van Der Beugel, Marshall Aid, p. 91; Beloff, United States, p. 30. The Herter Committee published its final report on May 1, 1948. 37 Paper prepared by the Chairman of the Steering Group of the National Security Council Sub-Committee on the German Question (Kennan), “Principles of Basic Policy Concerning Germany,” February 7, 1949, FRUS, 1949, vol. 3, p. 91. See also paper prepared by the Acting Director of the Office of German and Austrian Affairs (Murphy), March 23, 1949, ibid., pp. 118–120. 38 Paper prepared in the Department of State, undated, FRUS, 1949, vol. 3, pp. 131–133. 39 Ibid. 40 Although the goal of weaving West Germany into a larger whole served as the basis for U.S. policies toward West Germany, by 1950 some doubts were voiced about the success of the endeavor. There was a growing understanding of the need to deal with the political problems of European integration, which hindered the resolution of lingering economic problems such as the abolition of import restrictions. See Memorandum prepared in the Bureau of German Affairs, “Germany in the European Context,” February 11, 1950, FRUS, 1950, vol. 4, pp. 597– 602. 41 Alan S. Milward, The Reconstruction of Western Europe 1945–1951 (Berkeley: University of California Press, 1984), p. 57; Hogan, Marshall Plan, p. 385. 42 Justus D. Doenecke, Not to the Swift: The Old Isolationists in the Cold War Era (New Jersey: Associated University Press, 1979), pp. 115–116. Taft’s November 10, 1947, speech is quoted in Price, Marshall Plan and Its Meaning, p. 58. 43 Edward N. Peterson, The American Occupation of Germany: Retreat to Victory (Detroit: Wayne State University Press, 1977), pp. 70–80; Van Der Beugel, Marshall Aid, pp. 29–31. 44 To illustrate the central role of Germany in the European economy, before the war Germany supplied almost 42% of the engineering goods, metals, and chemicals in intra-European trade. After the war the burden of supplying these goods fell on the U.S. See Arkes, Bureaucracy, p. 47. Pollard in Economic Security also stresses the issue


45

46 47

48

49 50 51

52 53 54 55 56 57 58 59 60 61 62 63 64

of the cost of the occupation as the driving force behind the Marshall Plan. He argues, however, that Gimbel overemphasizes the importance of the German issue in the development of the plan. Gimbel, Origins, p. 199. The absurdity of forbidding West Germany to export to pay its bills, thus forcing the U.S. to pay them, constituted a powerful argument for U.S. taxpayers. Consequently journalists, Congressmen, and Clay’s subordinates called to “let the Germans be put to work.” See Peterson, American Occupation, p. 72. Ibid., pp. 194–195. “Current Economic Developments,” June 28, 1948, Lovett to Embassy in France, April 13, 1948, Marshall to certain Diplomatic Offices in Europe, April 30, 1948, FRUS, 1948, vol. 3, pp. 459–460, 421–422, 432–433, respectively. Although Gimbel sees the German problem as the key motivation behind the Marshall Plan, most other analysts adduce convincing evidence that there was gen uine interest in West European recovery per se, for the various reasons discussed in this chapter. The need to deal with Western Europe’s economic weakness imposed heavy costs on the U.S. independent of the costs of occupation. Doenecke, Not to the Swift, p. 117. “Report of the Special ‘Ad Hoc’ Committee of the State-War-Navy Coordinating Committee,” April 21, 1947, FRUS, 1947, vol. 3, pp. 207, 210. “The Financing of Reconstruction and Development: Basic Foreign Financial Policies of the United States,”; Memorandum prepared by the Staff Committee of the National Advisory Council, “The Foreign Lending Program of the U.S. Government,” January 8, 1946. Both in FRUS, 1946, vol. 1, pp. 1392–1395, 1411–1415. Quoted in Price, Marshall Plan and Its Meaning, p. 9. See Milward, Reconstruction, pp. 44–48. Price, Marshall Plan and Its Meaning, p. 58. Director of the PPS (Kennan) to the Under Secretary of State (Acheson), May 23, 1947, FRUS, 1947, vol. 3, p. 229. Vandenberg, Private Papers, pp. 383, 392–394; Hogan, Marshall Plan, p. 108. Arkes, Bureaucracy, p. 48. Jones, Fifteen Weeks, p. 96. Ibid., pp. 230–231. Kennan, Memoirs, p. 337. Acting Secretary of State (Lovett) to the Embassy in France, August 14, 1947, FRUS, 1947, vol. 3, p. 356. Lovett warned that “an itemized bill summing up prospective deficits…will definitely not be sufficient.” Van Der Beugel, Marshall Aid, pp. 100–101. Wexler, Marshall Plan Revisited, pp. 130–132. Hogan, Marshall Plan, pp. 97–100. The debate about the Marshall Plan within the U.S. business community is discussed in Jacqueline McGlade, “American Business Debates on the Marshall Plan,” paper presented at


65 66

67 68 69 70 71

72 73 74 75 76 77

78 79 80 81 82

the conference on “The Marshall Plan, 50 Years After,” Columbia University, February 14, 1998. Quoted in Van Der Beugel, Marshall Aid, p. 101. Milward, Reconstruction, p. 58; Hogan, Marshall Plan, p. 27. Hogan’s main thesis is that the Marshall Plan reflected U.S. domestic economic history and the background of the New Deal, and that the U.S. was trying to restructure the world economy along lines similar to the corporative order that was emerging in the U.S. Similarly, Maier also links the U.S. emphasis on output and growth with the experiences of the New Deal and wartime. The U.S. emphasis on economic productivity as a principle of political settlement was evident in its attitude toward the ERP. This reflected, in turn, the belief in the power of economic rationality and in the power of productivity to bridge deep domestic divisions. See Charles S. Maier, “The Politics of Productivity: Foundations of American International Economic Policy after World War II,” reprinted in The Cold War in Europe: Era of a Divided Continent, ed. Charles S. Maier, 3rd expanded ed. (Princeton, N.J.: Markus Wiener, 1996), pp. 172, 177. Ibid., p.l35. See, e.g., Beloff, United States, p. 27. Van Der Beugel, Marshall Aid, pp. 117–119. Hogan, Marshall Plan, p. 199; Beloff, United States, pp. 32–33; Van Der Beugel, Marshall Aid, pp. 296–297; Wexler, Marshall Plan Revisited, pp. 153, 161–163. Second meeting of Clayton and the ambassador with British cabinet members, June 25, 1947, FRUS, 1947, vol. 3, p. 281; Secretary of State (Lovett) to Consulate at Geneva (Clayton), July 10, 1947, ibid., p. 325; Ambassador to France (Caffery) to Secretary of State, July 29, 1947, ibid., p. 340. Truman, Years of Trial and Hope, p. 143; Vandenberg, Private Papers, p. 381. Winand, Eisenhower, Kennedy, p. 1. Kennan, Memoirs, pp. 338–339. Meeting between Clayton and British cabinet members, June 25, 1947, FRUS, 1947, vol. 3, pp. 278–279. Charge in U.K. (Gallman) to the Secretary of State, June 16, 1947, FRUS, 1947, vol. 3, pp. 254–255. Acting Secretary of State (Acheson) to Secretary of War (Patterson), March 5, 1947, ibid., pp. 197–198. Following this conclusion Acheson ordered a study of the problem by the SWNCC, whose report (April 21) was cited earlier. Jones, Fifteen Weeks, p. 166. “Report of the Special ‘Ad Hoc’ Committee of the State-War-Navy Coordinating Committee,” April 21, 1947, FRUS, 1947, vol. 3, pp. 209– 211. Vandenberg, Private Papers, p. 390. Price, Marshall Plan and Its Meaning, p.53. Ibid., pp. 29–31; Jones, Fifteen Weeks, ch. 5.


83 Milward, Reconstruction, pp. 31–32. 84 R.B. Manderson-Jones, The Special Relationship: Anglo-American Relations and Western European Unity 1947–56 (London: Weidenfeld & Nicolson, 1972), pp. 16–17. 85 Hogan, Marshall Plan, p. 292. 86 Maier, “Supranational Concepts,” p. 35. 87 Lovett to Embassy in France, August 14, 1947, FRUS, 1947, vol. 3, pp. 356, 358. 88 The speech is reproduced in full in Hoffmann and Maier, Marshall Plan, appendix B. The quotation is from p. 101. 89 Milward,, Reconstruction, pp. 44–48. 90 Van Der Beugel, Marshall Aid, p. 112. Kennan as well noted that some of the more farsighted Europeans in fact hoped for a unilateral action, i.e., for the Americans to just tell the Europeans what they would get instead of asking them. He suggested that if the U.S. believed that Europe should be aided “in spite of herself,” then this approach should be adopted. See “Report on the Situation with Respect to European Recovery Program,” September 4, 1947, FRUS, 1947, vol. 3, p. 402. 91 Second meeting between Clayton and the British cabinet members, June 25, 1947, FRUS, 1947, vol. 3, p. 279. 92 The British position on the issue of the ERP and European integration is well documented in various sources. See Manderson-Jones, Special Relationship, esp. ch. 3; Milward, Reconstruction, pp. 62–64; Hogan, Marshall Plan, pp. 21–22, 46–53, 109–119, 239. 93 “Discussion,” in Hoffmann and Maier, Marshall Plan, p. 49. Eric Roll, later known as Lord Roll, was assistant secretary of the British Ministry of Food during 1946–1947, assistant secretary of the Ministry of Treasury in 1947, and during 1948–1953 chairman of the Economic and Financial Working Group of the OEEC and Under Secretary of the Treasury. 94 “Situation with Respect to European Recovery Program,” September 4, 1947, FRUS, 1947, vol. 3, pp. 399–400. See also Kennan’s Memoirs, p. 453. 95 Quoted in Doenecke, Not to the Swift, p. 117. See also MandersonJones, Special Relationship, p. 18. Samuel Pettengil, a former Democratic Congressman, was a conservative syndicated columnist and adviser to the America First Committee. 96 Manderson-Jones, Special Relations, p. 131. 97 Pollard, Economic Security, pp. 140–143. 98 Maier, “Supranational Concepts,” p. 35; see also the discussion on pp. 49–50. 99 Milward argues that France and the U.S. held basically conflicting goals concerning European integration and that the Schuman Plan symbolized the rejection of U.S. policy. However, Hogan’s argument that U.S. decisionmakers had always seen a “nuclear” Europe as one step toward a wider and more thorough integration, as was later reflected in the Treaty of Rome, is more persuasive. Hogan maintains that the U.S. decision to exempt Britain from the process of integration, together with


its demands for Germany’s revival, prompted the French initiative. See Hogan, Marshall Plan, p. 439; cf. Milward, Reconstruction, p. 476. 100 Milward, Reconstruction, p. 170. 101 Gimbel, Origins, ch. 1. 102 Maier, “Supranational Concepts,” p. 35. On the Benelux interest in German recovery and French opposition to that view, see Van Der Beugel, Marshall Aid, p. 73.

NOTES TO CHAPTER 9 1 The Asian trade case is one exception. In that case the multilateral option was the use of the GATT, not a truly global arrangement yet considered in the literature as the classic example of a multilateral one. In the case of the GATT, since the Communist bloc was excluded, the multilateral option could, in principle, have advanced the balancing goal as well. 2 See, e.g., Jerry Gray, “Congress Deprives Clinton of Money for UN and I.M.F.,” New York Times, November 14, 1997, p. A1. 3 Barry R. Posen and Andrew L. Ross, “Competing Visions for U.S. Grand Strategy,” International Security 21, no. 3 (1996/97): 5–53. 4 Kenneth A. Oye, “Beyond Postwar Order and New World Order,” in

Eagle in a New World: American Grand Strategy in the Post-Cold War Era, ed. Kenneth A. Oye, Robert J. Lieber, and Donald Rothchild (New

York: Harper Collins, 1992), pp. 26–29. 5 Joseph Nye, “The Case for Deep Engagement,” Foreign Affairs, July/ August 1995, p. 97. 6 Larry M. Wortzel, The ASEAN Regional Forum: Asian Security without an American Umbrella (U.S. Army War College, 1996), p. 9. 7 Sheldon W. Simon, “East Asian Security: The Playing Field Has Changed,” Asian Survey, vol. 34 no. 12 (1994): 1050. 8 Thomas L. Wilborn, Stability, Security Structures, and U.S. Policy for East Asia and the Pacific (Strategic Studies Institute, U.S. Army War College, 1993), pp. 5–9. Gerald Curtis makes the same point in “Meeting the Challenge of Japan in Asia,” in The United States, Japan and Asia: Challenges for U.S. Policy, ed. Gerald L. Curtis (New York: Norton, 1994), p. 217. 9 David E. Sanger, “U.S. Is Set to Lend $3 Billion to Help Bolster Indonesia,” New York Times, October 31, 1997, pp. A1, D5; Martin Crutsinger, “SE Asia Market Woes Top APEC Agenda,” Far Eastern Economic Review, November 6, 1997. For an interesting analysis of the sources of the financial crisis, see Robert Wade and Frank Veneroso, “The Asia Crisis: The High Debt Model versus the Wall StreetTreasuryIMF Complex,” New Left Review, no. 228, March/April 1998. Wade and Veneroso blame U.S. and IMF policy of pressuring for financial liberalization in Asia for bringing about the crisis. This policy, they argue, aimed at opening Asian markets to Western capital, without


10

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14 15

16 17

18 19 20

taking into consideration the unique nature of the Asian financial markets. Wade and Veneroso, “Asian Crisis”; Henry Sender, S. Jayasankaran, and John McBeth, “Not a Happy Bunch: World Bank/IMF meeting Wasn’t the Party Many Expected,” Far Eastern Economic Review, October 2, 1997, pp. 69–70. Tom Plate, “A Duck Now, Pay Later Foreign Policy,” Los Angeles Times, November 11, 1997, p. B7. William J. Clinton, State of the Union Address, January 27, 1998. See, e.g., George Friedman and Meredith Lebard, The Coming War with Japan (New York: St. Martin’s, 1991). Johnson and Keehn criticize U.S. strategy in Asia as based exactly on this premise, namely, that Japan must be contained by an unequal defense arrangement for its own good and for the good of the rest of Asia: “it is only the U.S. military that keeps the Japanese genie in the bottle.” See Chalmers Johnson and E.B. Keehn, “The Pentagon’s Ossified Strategy,” Foreign Affairs, July/August 1995, p. 108. Susumu Yamakage, “Japan’s National Security,” in Network Power: Japan and Asia ed. Peter J. Katzenstein and Takashi Shiraishi (Ithaca: Cornell University Press, 1997), p. 302. Donald C. Hellmann, “America, APEC, and the Road Not Taken : International Leadership in the Post-Cold War Interregnum in the AsiaPacific,” in From APEC to Xanadu: Creating a Viable Community in the Post-Cold War Pacific, ed. Donald C. Hellman and Kenneth B. Pyle (Armonk, N.Y.: M.E. Sharpe, 1997), pp. 75–76. See Betts’s discussion of this question in “Wealth, Power, and Instability: East Asia and the United States after the Cold War,” International Security 18, no. 3 (1993–94): 34–77. The ARF first met in July 1994 in Bangkok. It included the six members of ASEAN, seven “dialogue partners” that include the U.S., Japan, Canada, New Zealand, Australia, South Korea, and the EU, and “observer countries” with significant economic and security interests in the region, which include among others Russia, China, and Vietnam (now an ASEAN member). See Wortzel, ASEAN Regional Forum, pp. 20– 21. On the ARF in general and the links to the China problem, see Shaune Narine, “ASEAN and the ARF: The Limits of the ‘ASEAN Way,’” Asian Survey, 37, no. 10 (1997): 961–978; Allen S. Whiting, “ASEAN Eyes China: The Security Dimension,” Asian Survey, 37, no. 4 (1997): 299–322; Richard J. Ellings and Sheldon W. Simon, eds., Southeast Asian Security in the New Millennium (Armonk, N.Y.: M.E. Sharpe, 1996), chapters by Sheldon Simon and by Karl W. Eikenberry. Stephen E. Ambrose, Rise to Globalism: American Foreign Policy since 1938, 8th rev. ed. (New York: Penguin, 1997), p. 422. Richard A. Higgot, Andrew Fenton Cooper, and Jenelle Bonnor, “AsiaPacific Economic Cooperation: An Evolving Case Study in Leadership and Co-operation,” International Journal, no. 5 (1990): 852–853. This dilemma emerged clearly in the debate in the Congress on the renewal of China’s MFN status. Richard Gephardt (R), opposing


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23 24 25 26 27 28

29 30 31 32 33

renewal, quoted de Tocqueville’s statement that “America is strong because America is good”; the right to liberty was a central American value, and if the U.S. would not lead in protecting that right, who would? Richard Crane (R), a supporter of the renewal, countered that Thomas Jefferson spoke of the right to life, liberty, and property. The pursuit of freedom, he argued, implied the right to property; since free enterprise had raised the Chinese standard of living to its highest level in five thousand years, renewal of China’s MFN status was compatible with the promotion of core American values. Yamakage, “Japan’s National Security,” pp. 293–294; Wortzel, ASEAN Regional Forum, pp. 12–16. Peter J. Katzenstein, “Introduction: Asian Regionalism in Comparative Perspective,” in Katzenstein and Shiraishi, Network Power, p. 23. These data, however, are more a reflection of the rapid growth of Japan’s GNP. Peter J. Katzenstein and Takashi Shiraishi, “Conclusion: Regions in World Politics: Japan and Asia-Germany in Europe,” in Katzenstein and Shiraishi, Network Power, pp. 345–346. T.J. Pempel, “Transpacific Torii: Japan and the Emerging Asian Regionalism,” in Katzenstein and Shiraishi, Network Power, pp. 65–66. Ibid., p. 54. Betts, “Wealth,” pp. 42, 58–59. Desmond Ball, “Arms and Affluence: Military Acquisitions in the AsiaPacific Region,” International Security 18, no. 3 (1993/94): 79–80. Donald Crone, “Does Hegemony Matter? The Reorganization of the Pacific Political Economy,” World Politics, 45, no. 4 (1993): 518–519. On a similar explanation for the regional motivation behind the ARF, see Wortzel, ASEAN Regional Forum. Crone, “Does Hegemony Matter?” pp. 518–519. Higgot, Cooper, and Bonnor, “Asia-Pacific Economic Cooperation,” pp. 848, 853–855. Australia, which initiated the APEC idea, was motivated by a desire to signal its greater involvement in Asian affairs. Kenneth B. Pyle, “Japan’s Emerging Strategy in Asia,” in Ellings and Simon, Southeast Asian Security, pp. 128–138, 145–146. Sheldon W. Simon and Richard J. Ellings, “A Postscript on U.S. Policy,” in Ellings and Simon, Southeast Asian Security, p. 225. David Holley, “Asian Nations Plan to Set Up Money Fund,” Los Angeles Times, October 2, 1997, pp. D1, D6; Edward A. Gargan, “Asian Nations Affirm I.M.F. as Primary Provider of Aid; Japanese Plan for Separate Fund Is Rejected,” New York Times, November 20, 1997, p. D2.

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Index

Acheson, Dean, and Asia, 37, 42, 140, and Congress, 46, 84, 86, 221– 223n. 41, and Europe, 175, 182, 235n. 65, 236n. 84, and Japan's Accession to GATT, 131, and Pacific Pact, 36, 51, and Workshop Concept, 232n. 42, 237n. 4 Adenauer, Konrad, 240n. 84 Afghanistan, 205 African Development Bank, 156 Aggarwal, Vinod, 223n. 64 Allison, John, 39, 111 ANZUS, 37, 51, 53, 54, 57, 58, 221n. 35, 225n. 75, and British Exclusion, 77, 78, 225n. 82, and JCS, 220n. 30, and United Action, 71, and U.S Signature on, 43 Aron, Raymond, 105 Asia, and Definition of Region, 208n. 13, 245n. x (see also Specific Countries, Issues and Organizations) Asia Pacific Economic Cooperation (APEC), 1, 199, 200, 202, 203, 204 Asian Development Bank (ADB), 8, 32, 147, 153, 155–163, 185, 193, 246n. 11, 250n. 63, and Eugene Black, 152, 156, 157, 160, 250n. 72, and Johnson, 136, 145, 155, 156, 159, 161

Asian Development Bank Act, 154, 155, 159, 161 Asian Development Corporation (ADC), 139, 147 Asian Economic Development Fund, 159, 251n. 82 Asian Financial Crisis (1997), 5, 196, 197, 201, 204, 208n. 15, 258n. 6 Asian Monetary Fund, 204 Association of Southeast Asia (ASA), 159 Association of Southeast Asian Nations (ASEAN), 158, 200, 201, 202, 203 Post Ministerial Conference (PMC), 1, Regional Forum (ARF), 1, 197-198, 202, 204, 258n. 6 Australia, 62, 63, 71, 129, and APEC, 202, 203, and ANZUS, 37, 51, 53, 54, 55, 57, 58, 77, 221n. 35, and ARF, 258n. 14, and Japan's accession to GATT, 131, and Manila Conference and SEATO, 59, 67, 76, 77, and Pacific Pact, 35–36, 40, 51, 54, 56, 218n. 7, 220n. 34, and Sterling Area, 111 Austria, 154, 165, 183 Bacchus, William, 213n. 40 Bandung Conference, 138 Bangkok Conference, 54, 56

280

INDEX 281

Barr, Joseph, 154, 250n. 63 Belgium, 89, 184 (see also Benelux) Beloff, Max, 179, 253n. 15 Benelux, 83, 96, 184, 188, and EDC, 98, 104, and Japan's Accession to GATT, 131 Berlin Crisis, 84, 230n. 3 Bevin, Ernest, 82–83, 85–86, 96, 182 Billings-Yun, Melanie, 227n. 18 Black, Eugene, 152, 156, 157, 160, 250n. 72 Bretton Woods System, 175, 177, 186 British Commonwealth, 59, 77, 131, 249n. 47 (see also Great Britain) Bruce, David, 104 Brussels Pact, 83, 86, 96, 106, 230n. 3, 236n. 81 Bulganin, Nikolai, 138 Burden Sharing, 18, 22–25, 26, 27, 28, 29, 192–193, 229n. 65, 234n. 46, 241n. 60, and ADB, 154, 157, and Asia, 62–63, 65, 67–69, 72, 72, 75, 77, 81, 82, 92, 95, 106, 119, 120, 148, 153, 161, 196, 205, and Europe, 74, 85–86, 87, 88, 89, 97, 102, 106, 108, 177–178, 184, 189–189, and Germany, 99, and Japan, 51, 55, 58, 115, 118, 119, 127, 133–134, 156–2, 160–6, 184, 197 and NAT, 85, 86, 89, 94, 97, and Pacific Pact, 45, 47–48, 50– 52, 55, 58, 129, and Vandenberg Resolution, 46 (see also Pooling effect) Bureau of Budget, 141, 168 (see also Treasury Department) Burley, Ann-Marie, 13 Burma, 57, 62, 137, 138, 158, 244n. 84, 245n. 5 Bush Jr. Administration, x–1, 196 Business Advisory Council, 178

Cambodia, 60, 62, 63, 69, 131, 138, and Manila Conference, 76 Canada, 40, 87, 258n. 16, and Japan's Accession to GATT, 131 Chiang Kai-Shek, 36, 223n. 54 China, 1, 137, British Perception of, 80 and Korean War, 61, 114, and Post Cold War Era, 198, 199, 201–202, 258n. 14, 259n. 17 and Regional States fear of, 158, and Taiwan, 4, and Tightening ties with Southeast Asia, 137, 138, and Trade with Japan, 114, 115, 118, 123, 132, 143, U.S Fear of Aggressive Intentions, 38, 61, 65, 67, 69, 70, 114, 153, 161, 175 and U.S Lessons from Communist victory and "Loss" of China, 45, 114, 137, 138, 140, 218n. 13 Churchill, Winston, 105 Claude, Inis, 13 Clay, Lucius, General, 173–175 Clinton Administration, x–1, 194, 196, 199 Clinton, William J., 197, 199, 202 Committee for European Economic Cooperation (CEEC), 164, 179, 186 Committee on Asian Regional Economic Development and Cooperation, 151, 152 Communism, and Anti-Communist Stance, 45, 58, 60, 71, and Asia, 37, 39–40, 49, 50, 53, 55, 57–58, 59, 60, 61, 62, 72, 76, 77, 79, 90, 114, and Containment in Asia, 113, 115, 116, 123, 124, 127, 128, 137, 140, 147, 198 and Containment in Europe, 86, 96, 106, 172, 175, 181, 183, 184, 188, and Competition with model, 138– 139, 161, 181,

282 INDEX

and Struggle against, 38, 41, 49, 58, 62, 64, 65, 67, 67, 71, 72, 76, 77, 78, 80, 81, 109, 131, 191, and Threat, 35, 39, 48, 59, 60, 61, 62, 72, 140, and Threat in Asia, 95, 106, 137, 151, 153, 166–167, and Threat in Europe, 85, 95, 106, 165, 166, 167 (See also Soviet Union and China) Conference on Security and Cooperation in Europe (CSCE), 2 Congress, 8, 14, 18, 45, 46, 59, 60, 62, 63, 84, 87, 122, 126, 212n. 30, 212n. 33, 213n. 40, 227n. 18 and ADB and ADB Act, 155, 156, 159, 161, 250n. 72, and Anti-colonial concern, 71, 187, and Balancing Communist Threat, 116, 141, and against Bilateral Treaties with European Countries, 91, and Britain, 187, and China's MFN Status, 259n. 17, and EDC, 100–101, 102, 105, and ERP and Marshall Plan, 141, 164, 165, 166, 173, 175, 185, 236n. 81, and Foreign Aid, 117, 136, 140, 141, 142, 168, 177, 247n. 23, 248n. 36, and Foreign Assistance Act, 164, 179, and Herter Committee, 171, 183, and Manila Pact, 69, and NAT(O), 83, 84, 90, 236n. 81, and Pacific Pact, 75, and President Fund, 140, and Regional/Multilateral Strategy, 51, 52, 74, 92, 94, 106, and Stress on Burden Sharing and Reducing Costs, 86, 89, 96, 97, 192, 193, 196, and Trade and Tariff Policy, 118, 119, 120, 121, 122, 123, 175–175, 241n. 57

and Unilateral U.S action, 70, 72, 81, 191, and Wilsonian World Order, 122 (see also Senate) Connally, Thomas, 173 Council of Europe, 186 Council on Foreign Relations, 178 Crane, Richard, 261n. 17 Czechoslovakia, 83, 166, 230n. 3, 234n. 51 Defense Department, 39, 47, 110– 111, 112, (see also Pentagon) Denmark, 154 Deterrence, 62, 63, 65, 67, 69, 72, 74, 78, 79, 85, 103, 142, 145, 228n. 48, and Manila Pact and SEATO, 72, 80, 81, 82 and Nuclear Deterrence, 62, 67, 70, 72, 74, 103 Dien Bien Phu, 59, 63, 70, 71, 76, 88 Dodge Joseph, 112, 128 Dodge Line, 114 Domino Theory, 61, 69 Dower, John, 55–56, 224n. 67 Draper, William, 111, 112, 117, 175 and mission, 111 Duchin, Brian, 105 Dulles, John Foster, 39–40, 47, 62, 63, 65, 67, 113, 219n. 19, 225n. 82, and ANZUS, 51, and Communist Threat, 60, 61, 71, and ERP and Marshall Plan, 191 and Japanese Peace Treaty, 37, and Japanese Trade, 116, 131, and NAT(O), EDC, and WEU, 99, 101–102, 104, 105, 236n. 81, 236– 237n. 95, and New Approach to German Problem, 170, and Pacific Pact negotiations, 40, 54, 55, 49, 56, 57, 159, as Senator, 86, 89, 91, and United Action, 59 Dunkirk Treaty, 83, 96, 97

INDEX 283

East Asian Economic Group (EAEG), 151, 204 Eckes, Alfred, 120–121 Economic Commission for Asia and the Far-East (ECAFE), 133, 135, 140, 143, 145–147, 148, 150, 151, 152, 153, 159, 160, 161, 167, 246n. 18 Economic Commission for Europe (ECE), 167, 180, 181 Economic Cooperation Agency (ECA), 100, 122–123, 132, 168, 177, 179 Economic Recovery in Occupied Area's (EROA), 117 EDC (see European Defense Community) Eden, Anthony, 236n. 91, 236–237n. 95 Eisenhower Administration, 1, 19, 20, 32, 122, 228n. 48, 248n. 37 and Advancing Regional Trade Solutions in Asia, 113, and Aid to Asia, 141, and Bilateral Military Assistance, 69, and Communist and Soviet Threat, 60, 61, 106, and Curtailing Foreign Policy Costs, 62, 63–64, 99, 106, 108, 141, and Deterrence, 78, 85, 145, and Domestic Pressure on, 117, 122, and EDC, 97, 98, 105, and Free Trade, 122, 123, and Japan, 116, 130–131, and Normative Agenda, 70–72, 106, and Regional Economic Development and Aid Schemes, 135, 145, 161 and SEATO, 52 Eisenhower, Dwight, D., 229n. 65, and Asia, 92, 103, and Budget, 64, and Anti-Communist Sentiment, 71, and Communist threat, 60, 61,

and Congress, 117-118, 119, and Decision to aid France in Indochina, 59, 62, 63, 76, 227n. 18, and Domino Theory, 61, and EDC and NAT(O), 99, 100, 101, 102–103, 104, 105, 235n. 67, and Free Trade, 120–121, and German Rearmament, 106, and Japan, 116, 131, and Massive Retaliation, 103, and Nuclear Weapons, 65, and SEATO, 202, and "Trade not Aid", 141, and U.S Grand Strategy, 67, and View of Unilateralism, 74 (see also President Fund for Economic Development in Asia) European Coal and Steel Community (ECSC), 184 European Common Market, 133, 158 European Defence Community (EDC), 32, 55, 76, 82, 97, 98–106, 106, 108, 192, 234n. 43, 235n. 72, 236n. 81, 236n. 84, 236n. 91, 236– 237n. 95 European Payment Union (EPU), 164, 169 European Recovery Plan (ERP), 85, 87, 88, 163, 164–189, 253n. 15, 255n. 61, and Congress, 141, and Asia, 111, 140, 143, and West Germany, 117, as a Tool to Promote Trade, 145, (see also Marshall Plan and Foreign Assistance Act) European Union (EU), 2, 203, 258n. 14 Farnham, Barbara, 20 Fifield, Russell, 67 Five Power Staff Agency, 71 Five Power Treaty, 83, 86, 96 (see also Brussels Pact) Foreign Assistance Act, 164, 179 (see also ERP and Marshall Plan)

284 INDEX

Foreign Operations Administration (FOA), 139 Forrestal, James, 166 Fowler, Henry, 155 France, 70, 71, 89, 94, 102, 166, 183, 187, 188, and Animosities and Fear of Germany, 96, 100, 103, 106, 188, 189, 234n. 51, 234n. 54, and Economic Relations with Vietnam, Laos and Cambodia, 131, and EDC, 98, 99, 103–104, 105, 108, 236n. 95, and European Coal and Steel Community, 184, and Indochina, 58, 59, 60, 61, 62, 75, 77, 88, and Japan Accession to GATT, 110, 130, 131, 132, and Manila Conference and SEATO, 59, 76, 77, and Objections to German Rearmament, 90, 99, and Pacific Pact, 225n. 82, and Burden Sharing, 95, 184, and Regional Economic Cooperation, 187–188, and Schuman Plan, 187, 257n. 95, and United Action, 63, 72, 75, 76, and U.S bilateral aid to, 164, and U.S Support for Rapprochement with Germany, 101, and Western Union, 83, 96 Free Ride, 19, 22–23, 55, 96, 128, 193 (see also Burden Sharing and Hegmon's Dilemma) Functional Approach, 14–15, 16 Gaddis, John, 78–79, 228n. 48 Game Theory, 15 General Agreement on Tariffs and Trade (GATT), 6–7, 8, 109–110, 121, 140, 180, 200, 237n. x, 257n. ix

and Japan's Accession to, 109– 110, 115, 118, 120, 121, 122, 123, 127, 130–131, 132, 133, 243n. 72 Geneva Conference, 59, 63, 76, 79, 226n. ix George, Alexander, 20, and Structured Focused Comparison, 30 Gephardt, Richard, 259n. 17 German Problem, 170, 172, 254n. 45 Germany/West Germany, 2, 97, 102, and Berlin Crisis, 84, 230n. 3, and Bilateral alliance with U.S Option, 105, and Economic Importance, 111, and EDC, 98, 103, 104, 236n. 84, and Efforts for Economic Revival, 170, 171, 172, 173, 187–188, 189, and ERP and Marshall Plan, 117, and link with European Recovery, 170, 188, 254n. 40, and Fear and Prevention of Renewal of German Aggression, 83, 92, 95, 96, 98, 106, 170, 171, 172, 188, 189, 192, 198, compared to Japan, 171, and Japan's Accession to GATT, 131, and MFN, 175, and NAT(O), 232n. 43, and Occupation, 173, 175, 178, 254n. 40, and Pooling Potential, 95 and Rearmament and Remilitarizing, 41, 55, 84, 89–90, 92, 98, 99, 101, 102, 104, 106, 106, 170, 232n. 43, 254n. 36, as Regional Workshop, 95, 111, 172, 232n. 42, 237n. 4, and Reintegration, 3, 85, 95, 96, 98, 100, 101, 108, 171, 184, 197, 232n. 34, and U.S—Soviet Disagreements on, 165, and Weakness after the Second World War, 170, 173, 183, and WEU, 106

INDEX 285

Gimbel, John, 173, 178, 188, 254n. 45 Government Aid and Relief in Occupied Areas (GARIOA), 117 Gray Report, 137 Great Britain, 89, 94, 102, 182, 186, and Anglo-Saxon Heritage, 179, and exclusion from ANZUS, 77, 78, 225n. 82, and Asia, 37, 38, 43, and Economic Revival, 124, 244n. 77 and EDC, 104, 236n. 91 and Japan's Accession to GATT, 110, 121, 130, 131, 132, 243n. 70, 243n. 72, and Manila Conference and SEATO, 59, 76, 78, 225n. 82, and Marshall Plan, 186, and Occupation of West Germany, 173–175, and Pacific Pact, 54, 56–57, 58, and Perception of China, 76, 78, and Burden Sharing, 95, 100, 184, and Refusal to Participate in Schuman Plan, 184, and Regional Integration, 186, 187, 188, and Relations and Cooperation with U.S, 56, 71, 104, 186, 187, and Sterling Area, 111, and United Action, 59, 63, 72, 75, 76, 78, and U.S Bilateral aid to, 164, 168, 177, and Weakness after the Second World War, 183, 184, and Western Union, 83, 96, and WEU, 106 "Great Debate", 94 Greece, 167, 182, 183 Griffin Mission, 137, 138, 148, 175 Gruenther, Alfred, General, 64 Hampton, Mary, 232 Hegemon's Dilemma, 17, 19, 102, 126

Hegemonic Stability, 19-20, 28, 213n. 39 and Cooperation Strategies, 11– 12, 14, 15, 23, 24, 25 Herter Committee, 171, 183 Hickenlooper, Bourke B., 157 Ho Chi Minh, 137, 153 Hoffman, Paul, 168, 177 Hoffmann, Stanley, 165 Hogan, Michael, 255n. 61, 257n. 95 Holland (see Netherlands) Hong Kong, 56, 114,196 Hoover, Herbert, 166 Hoover Report, 171 "Hub and Spoke", 3, 7–8, 95, 130, 172 Hull, Cordell, 42, 120, 241n. 50 Ikenberry, John, 216n. 56 India, 61, 72, 76, 111, 148, 148, 151– 7, and Relations with China, 158 Indochina, 58, 59, 61, 62, 63, 64, 67, 71, 75, 133, 137, 138 (see also Cambodia, Laos, North Vietnam, South Vietnam and Vietnam) Indonesia, 129, 133, 137, 138, 144, 158, 196, 218n. 7, 244n. 84, 245n. 5 Inter-American Development Bank, 156 Inter-Departmental Committee on Trade Agreements, 115, 118, 121, 131 Interdependence, 157, 170, 232n. 34, and lack of Economic Interdependence in Asia, 144, 148, and Post Cold War Era, 33 International Bank for Reconstruction and Development (IBRD), 142, 147, 155–156, 167, 175, 180 International Cooperation Administration (ICA), 141 International Development Association (IDA), 142

286 INDEX

International Monetary Fund (IMF), 7, 175, 178, 179, 180, 196, 204, 208n. 15, 258n. 6 International Political Economy, 12, 14 International Trade Organization (ITO), 121, 175, 180 Iraq, 205 Italy, 166, 183, and ADB, 154, and EDC, 98, 100, and Fear of Communist Victory in, 83, and Japan's Accession to GATT, 131, and U.S bilateral aid to, 164 Jackson Report, 138, 245n. 10 Japan, 1, and ADB, 157, 159, and APEC, 203, and Arrangement with Sterling Area, 111, and ASEAN, 197–198, 200–201, 203, 258n. 14, and Bilateral Security Treaty with U.S, 37, 49, 51, 55, 57, 58, 197, 204 and Change in Neighbors Perception of Threat from, 157, 185, 203, and Containing resurgence, 191, and Contribution to balancing Communist Threat and Regional Security, 129, 154, and Economic Bilateral Relations with U.S, 113, 123, 134–135, and Economic Revival, 32, 47, 49, 53, 54, 57–58, 109, 111, 114, 115, 117, 118, 119, 123, 124, 126, 127, 134, 137, 140, 148, 172, 175, 182, 189, and Economic Threat From, 123, 131, and Fear of Free Ride of, 128,

and GATT and MFN, 109–110, 118, 120, 121, 122, 123, 127, 130– 131, 132, 175, 243n. 72, and Isolation, 2, 3, and Militarism, 4, 35, 49, 55, and Mutual Security Funds, 120, and New Special Procurements, 112, and Pacific Pact, 36–37, 40, 54, 55, 56, 57, 58, 95, 218n. 7, 232– 234n. 43, and Post Cold War Era, 197–198, 200–201, 203, 204, 258n. 10, and Potential benefits from Cooperation with Southeast Asia Countries, 143, and Promoting Region's Economic Development and Cooperation, 129, 154, 156–2, 160, 161, 237n. 4, and Rapid Growth and Strength, 156, 161, 161, 200, and Rearmament, 48, 49, 53, 54, 55, 57–58, 106, 113, 219–220n. 27, and Regional States Fear of, 41, 48, 49, 55, 57, 90, 95, 98, 108, 130, 133, 148, 151, 172, 182, 185, 192, 203, 204, as Regiona Workshop, 95, 111, 112, 117, 172, 232n. 42, 237n. 4, and Reintegration, 108, 110, 115, 130, 135, 135, 144, 159, 172, 184, and Reparations, 133, 244n. 84, and Simla Conference, 151, and Strategic Importance, 38, 52– 53, 238n. 16, 239n. 26, and Threat to, 62, and Trade and Potential Trade with China and Soviet Bloc, 114, 115, 118, 123, 132, 239n. 26, and Trade with Indonesia, 129, and Unique Status, 184 and U.S—Japan Bilateral Trade Agreement, 8, and U.S—Japan Economic Cooperation Program, 112, 116, 132, and U.S—Japan Security Alliance, 3, 4, 8,

INDEX 287

and U.S—Japanese Peace Treaty, 37, 39, 57, 84, 131, 133, 225n. 75, and U.S Occupation, 39, 40, 109, 111, 114, 117, 175 and Weakness, 50–51, 117, and Yen Fund Plan, 111–112, 119–120 Javits, Jacob, 47 Johnson Administration, 32, and ADB, 155, 246n. 11, and Perception of Threat From China, 153, and Regional Cooperation, 152 Johnson, Chalmers, and Keehn, E.B., 258n. 10 Johnson, Lyndon, 120–121, and ADB, 136, 152, 155, 156, 159, 161, and Declining Popularity, 155, and John Hopkins Speech ("Peace without Conquest"), 152, 155, and Multilateral Economic Assistance, 154 Joint Chiefs of Staff (JCS), 48, 49, 51, 52, 58, 63, 64–65, and ANZUS, 220n. 30, and Defense of Southeast Asia, 67, 67, and Pacific Pact, 40, 41, 42, 47, 56, 57, and Peace Treaty with Japan, 39, and Perceptions of Japan, 38, 41 Jones, Joseph, 182 Kaplan, Lawrence, 94, 96 Katzenstein, Peter, 3 Keidanren, 132 Kennan, George, 86–87, 165, 169, 171, 177, 180, 230n. 3, 234n. 54, 256n. 85, and Britain, 184, 186–187, and "Strong Point Defense", 45 Kennedy, John Fitzgerald, 120–121 Kennedy, Paul, 18 Keohane, Robert, 6, 79 Khrushchev, Nikita, 138 Kishi, Nobusuke, 159

Komiya, Ryutaro, and Motoshige, Itoh, 243n. 72 Korean War, 38, 39, 58, 112, 114, 138, Aftermath, 61, 71, 83, 104, 114, 116, and U.S Lessons from, 39, 57, 60, 63, 65, 75, 78, 81, 92, 106, 114, 137, 153, and U.S Lessons from Regarding Europe, 84, 98, 106, 232–234n. 43 Lake, Anthony, 198–199 Lake, David, 15 Laos, 60, 61, 62, 63, 69, 131, 138, 154, and Manila Conference, 76 Lebow, Richard Ned, 229n. 65 Leffler, Melvyn, 45, 84 Lend-Lease, 87 Lisbon Conference, 99 Liska, George, 24 Lovett, Robert, 87, 91, 180, 185, 231n. 25 MacArthur, Douglas, General, 40, 111 Mahatir, Mohamed, 151 Maier, Charles, 255n. 61 Malaya/Malaysia, 56, 57, 77, 133, 151, 153, 244n. 77, 245n. 5, and ASA, 159 Manchuria, 114 Manderson-Jones, R. B., 187 Manila Conference, 59–60 Manila Pact, 58, 59–60, 63, 67, 67, 72, 92, as Balancing Tool, 80, and Domestic Appeal, 69, 72, compared to EDC, 98, 99, 106, and Members, 76, compared to NAT, 97, 106 (See also SEATO) Marshall, George, 83, 85, 87, 91, 173, 220n. 30, and Perception of Soviets, 165,

288 INDEX

and Speech at Harvard, 164, 167, 168, 178, 182, 184, 185 Marshall Plan, 5, 32, 85, 90, 102, 126, 163, 169, 180, 182, 192, 193, 251n. ix, 255n. 61, and Calls for Asian Marshall Plan, 111, 132, 135, 140, 150, 249n. 47, and Britain, 186, and Congress, 165, 166, and France, 188, and Germany, 173, 192, 254n. 40, 254n. 41, 254n. 45, and Principle of Self Help, 178 (see also ERP and Foreign Assistance act) Martin, Lisa, 14 Massive Retaliation, 65, 103 (see also New Look Doctrine) McGeehan, Robert, 103 MDAP, 100 Military Assistance Program (MAP), 86, 137 Military Assistance Advisory Group (MAAG) Funds, 65, 67 Military Intervention, and China, 61, 114, and U.S, 81, and in Vietnam, 59, 63, 70, 71, 75, 76, 88, 220n, 33, 227n. 18 (see also Korean War and Vietnam War) Milward, Alan, 175, 183, 186, 188, 257n. 95 Monnet, Jean, 235n. 67 Monnet Plan, 187 Monroney Resolution, 142 Moscow Conference of the Council of Foreign Ministers, 165, 180 Most Favored Nation (MFN), 6, 109, 110, 127, 175, 199, 259n. 17 Mutual Defense Assistance Act, 137, 138 Mutual Security Agency and Program, 100, 139 Mutual Security Funds, 120

NAT(O) (see North Atlantic Treaty Organization) National Interest, 12, 16, 210n. 13, and Japan, 154, and Soviet, 221n. 37, and U.S, 64, 91, 121, 140 National Planning Association (NPA), 100 National Security Council (NSC), 61, 63, 70, 87, 171, NSC-48/1, 111, 116, 238n. 16, 239n. 29, NSC-48/2, 36, 43, 46–47, 53–54, 220n. 33, 238n. 16, NSC-61, 112, NSC-68, 39, 45, 46, 64, 84, NSC-124/2, 61, NSC-162/2, 65, 227n. 24, NSC-5405, 61, NSC-5429/5, 139, NSC-5506, 139, 225n. 82 Netherlands, 89, 183 (see also Benelux) New Look Doctrine, 58, 62, 65, 70, 227n. 24 New Zealand, 62, 63, 71, 129, and ANZUS, 37, 51, 53, 54, 57, 58, 77, 221n. 35, and ARF, 258n. 14, and Japan's Accession to GATT, 131, and Manila Conference and SEATO, 59, 67, 76, 77 and Pacific Pact, 40, 51, 54, 56, 57, 218n. 7, 220n. 34, and Sterling Area, 111 Nixon, Richard, 63, 227n. 19 North American Free Trade Area (NAFTA), 203 North Atlantic Treaty (NAT), 82, 83, 84, 88, 90, 96, 106, 232n. 40, and Burden Sharing, 85, 86, 89, 94, 97, compared to EDC, 98, 102, 104, 106, compared to Pacific Pact, 106, 108, and West Germany, 98, 171

INDEX 289

North Atlantic Treaty Organization (NATO), 2, 5, 6, 7, 8, 32, 36, 41, 48, 65, 215n. 51, and Burden Sharing, 74, 85, and Congress 84, 236n. 81, and EDC, 98, 99, 100, 101, 102, 106, and Expansion, 198–199, and German Rearmament, 98, 232n. 43, compared to Pacific Pact, 192, and U.S Choice of, 78, 193, and U.S Normative Agenda, 90 North Korea, 4, 40, 57, 131, 138, (see also Korean War) North Vietnam, 65, 76, 153, 155 (see also Indochina and Vietnam) Norway, 100, 154, and Fear of Soviet Union, 83 NSC (see National Security Council) Nye, Joseph, 194, 215n. 54, 216n. 56 O'Leary, Michael, 247n. 23 Olson, Mancur, 19, and Richard Zeckhauser, 19 Organization for European Economic Cooperation (OEEC), 169, 186, 256n. 88 Organization for Trade Cooperation (OTC), 121 Osgood, Robert, 215n. 46 Overby, Andrew, 178 Overseas Economic Cooperation Fund, 159 Overseas Technical Cooperation Agency, 159 Oye, Kenneth, 194 Pacific Community Idea, 199–200, 202 Pacific Economic Cooperation Council (PECC), 198 Pacific Pact, 8, 32, 35–58, 58, 217n. ix, compared to ADB, 159, compared to EDC, 98, 104, 106,

and coping with Japan's Resurgence, 79, 80, 148, 172, compared to Manila Pact and SEATO, 75, 202, compared to NAT(O) 32, 82, 83, 84, 85, 86, 91–92, 94, 95, 97, 106, 108, 192, and Potential Partner Preferences, 75, 79, 82, 232n. 43, compared to Regional Economic Cooperation Proposals, 133 Pakistan, 59, 67, 72, and Manila Conference and SEATO, 76, 77 Paris Conference, 185–186 Path Dependence, 3–4, 208n. 9 Pentagon, 37, 47, 49, 63, 64, 141, and Japan, 119 (see also Defense Department) Pettengil, Samuel, 187 Philippines, 62, 63, 67, 133, 143, 244n. 84, and ASA, 159, and Huk Rebellion, 137 and Pacific Pact, 36, 40, 43, 47, 53, 54, 55, 56, 57, 58, 79, 218n. 7, 220n. 34, and Manila Conference and SEATO, 67, 76, 77, and Security Treaty with U.S, 8, 37, 53, 57, 77 Plaza accords, 203 Pleven Plan, 98, 99, 100, 104, 235n. 65 Point Four Program, 137, 140, 182 Poland, 234n. 51 Polarity, 11–12, 85, and Bipolarity, 4, 5, 11, 29, 39, 60, 83, 92, 106, 114, 115, 191, 209– 210n. x, and Ideas of Third Pole, 46, 88, 95 (see also Power Disparities) Pooling Effect, 22, 23, 27, 28, 126, 198, and Asia, 47–48, 53, 58, 67, 72, 95, 138, 142, 143, 147–148, 148, 169–170,

290 INDEX

and Europe, 88, 89, 90, 95, 97, 100, 169–170, 192 Portugal, 225n. 82 Post-Cold War Era, x–1, 4–5, 33, 189–205 Power Disparities, 1, 3, 6, 10, 12, 23, 24, 26–28, 30, 32, 33, 192, 203, 204, 216n. 57, 216n. 58, and Pacific Pact, 35, 47, 49, 50, 52, 53, 58, 92, 202, and United Action and SEATO, 59, 71, 72, 72–75, 80, 81, between U.S and Asia, 103, 108, 124, 126–128, 134, 148, 161, 181– 182, 200–201, between U.S and Europe, 92, 94, 97, 102, 103, 106, 108, 126–127, 182, 189–189, within Asia, 95, 123, 129, 133, 134, 135, 148, 148, 157, 161, 175, 182, 189, 200–201, 234n. 43, within Europe, 95, 106, 175, 189– 189, 234n. 43 President Fund for Economic Development in Asia, 136, 139– 140, 147, 151, 152, 161, 181 Process Tracing Approach, 8, 32 Procurement Program, 112–113, 120 Quirino, Elpidio, 36, 223n. 54 Radford, Arthur, Admiral, 63 Randall Commission, 141, 143 Rational Choice, 14, 16, 20 Realist Scholars, 2, 11, 12, 14 Reciprocal Trade Agreement's Act (RTAA), 120 Reid, Ralph, 111, 112 Rhee, Syngman, 36, 224n. 69 Richard Amendment, 100 Rio Treaty, 60, 83, 96 Risse-Kappen, Thomas, 97, 217n. 60 Roll, Eric, 186, 256n. 88 Romulo, Carlos, 36, 83, 220n. 69 Roosevelt Administration, 180 Roosevelt, Franklin Delano, 41, 42, 90, 97, 120, 165, 218n. 13, 241n. 50

Rostow, Walt, 153, 157, 246n. 11 Rotter, Andrew, 248n. 41 Ruggie John G. 6, 13, 17 Rusk, Dean, 57 Russia, 198, 199, 258n. 14 (see also Soviet Union) Sato, Eisaku, 160 Schuman Plan, 184, 187, 257n. 95 SEATO (see South East Asia Treaty Organization) Senate, 85, 157, 234n. 54, 247n. 23, and Committee on Banking and Currency, 142, Foreign Relations Committee, 47, 51, 61, 160, 166, and Monroney Resolution, 142 (see also Congress) September 11th Events, 189, 196 Shadow of the Future, 11, 72, 209– 210n. x Shigeru, Yoshida, 55 Simla Conference, 140, 151, 152, 186 Simon, Sheldon, 194 Smith, Tony, 41, 43 Solingen, Etel, 13 South Africa, 111, and Japan's Accession to GATT, 131 South East Asia Treaty Organization (SEATO), 32, 43, 52, 58, 58, 59–60, 62, 67, 92, 191, 202, as a Balancing tool, 80, and Burden Sharing, 48, 92, compared to EDC, 106, 108, compared to NAT(O) and WEU initiatives, 85, 86,94,95, 106, and Symbolic Value, 69, and U.S - British different approaches to, 79, and U.S Perceptions of Preferences of Regional Partners, 75, 78, 79, and Weakness, 80, 81 (see also Manila Conference and Manila Pact)

INDEX 291

South Korea, 40, 57, 67, 224n. 69, 258n. 14, and Pacific Pact, 36, 47, 53, 75, 79, and Security Treaty with U.S, 8, 58 (see also Korean War) South Vietnam, 60, 62, 69, 244n. 84, and U.S commitment and assistance, 58, 67, 94, 153 (see also Indochina and Vietnam) Soviet Union, 140, 221n. 37, and Atomic Bomb, 46, 84, and Balance against and Contain, 83, 90, 91, 96, 103, 104, 170, 212n. 32, and ECAFE, 140, 148, 167, 246n. 18, and ECE, 167, and ERP and Marshall Plan, 166, 230n. 3, and New Policy after Stalin, 138, and Problems with cooperation with U.S after the Second World War, 165, and Security Council, 42, 48, 115, and Sino-Soviet treaty, 39, and SUNFED, 142, and Threat in Asia, 84, and Threat in Europe, 83, 84, 85, 86, 87, 88, 90, 92, 97, 183, 187, and U.S fear of, 36, 37, 38, 40, 41, 45, 55, 61, 64, 65, 67, 140, 153, 166, 175 (see also Communism and Russia) Special Technical and Economic Missions (STEMs), 138 Special United Nations Fund For Economic Development (SUNFED), 142 Spender, Percy, 54, 221n. 35, 225n. 75, And plan, 56 Stalin, Josef, and Aftermath of Death, 104, 138 State Department, 40, 42, 179, and ADB, 155, and Asia, 138, 248n. 37,

and Asian Economic Working Group, 139, 145, 246n. 15, and Competition with Defense Department, 112, and ECAFE, 150, 246n. 18, and EDC, 83, 100, and Europe, 180, and France, 187, and Germany, 171, 187, and Japan, 39, 110–111, 118, 119, and Manila Pact and SEATO, 67, 69, and Pacific Pact, 36–37, 48, 54– 55, 57, and Policy Planning Staff (PPS), 36, 45, 86, 153, 165, 175, 251n. ix, and PPS-51, 36, and Regional Economic Schemes for Southeast Asia, 110, 111, 112, 122, 129, 136, and Southeast Asia Division and Far eastern Division, 139, 144, 145, 148, 151, and support overseas operations, 141, and UN, 48, and West European Desk, 143 State—War—Navy Coordinating Committee (SWNCC), 166, 167, 175, 183 Stein, Arthur, 126 Sterling Area Trade Agreement, 111, 128 Stikker, Dirk, 235n. 72 Super–301 Article, 135 Supreme Allied Command of Europe (SACEUR), 98, 99, 100 Supreme Command of Allied Powers (SCAP), 119 Taft, Robert, 46, 52, 71, 74, 166, 173, 175 Taiwan, 4, 62, 143, 224n. 69, and Bilateral security arrangement with U.S, 58 and Pacific Pact, 36, 47, 53, 56 Terrorism, 189, 196, 198, 205

292 INDEX

Thailand, 57, 61, 62, 63, 69, 137, 138, 142, 196, 208n. 15, 245n. 5, and ASA, 159 and Manila Conference and SEATO, 59, 67, 76, 77 and U.S assistance, 67 Tow, William, 208n. 11 Treasury Department, 141, 179 (see also Bureau of Budget) Truman Administration, 1, 20, 32, 38, 46, 47, 52, 57, 58, 61, 63, 64, 85, 87, 181, 228n. 48 and Britain, 177, 184, 187, and Containment, 248n. 41, and EDC, 100, 105, and Free Trade, 123, and NAT(O), 85, 86, 89, 90, and Trade Enhancement Solution, 135 Truman Doctrine, 37, 167, 175, 182 Truman, Harry, S., 37, 45, 46, 84, 97, 167, 182–183, 234n. 54, and ERP and Marshall Plan, 180, and Free Trade, 120–121, and Perception of Germany and Defense of Europe, 89, and Point Four Speech and Program, 137, 182 Turkey, 167, 182 United Action, 58, 72, 75, 76, and U.S position, 59, 61, 63, 78, 86, 106, and British position, 76, 227n. 19 United Nations, 90, 91, 180, and multilateral aid, 140, 167, (see also ECE, ECAFE and SUNFED) United Nations Charter, 36, 42, 47, 48, 85, 91, 167, 180 United Nations Relief and Rehabilitation Administration (UNRRA), 164, 167, 175, 253n. 17, 253n. 18 United Nations Security Council, 7, 8, 42, 48, 91, 115

United States (see Specific Issues and Names) United States Navy, 67 (see also SWNCC) Vandenberg, Arthur, 86, 89, 91, 166, 173, 180, 232n. 40, 234n. 54 Vandenberg Resolution, 42, 46, 51, 86, 87,91, 178, 180, 183, 200, 234n. 54 Vietcong, 153 Viet Minh, 58, 59, 60, 61, 62, 63, 76 Vietnam, 59, 61, 63, 76, 131, 138, 153, 154, 155, 161, 208n. 9, 245n. 5, 258n. 14 (see also Indochina, North Vietnam and South Vietnam) Vietnam War, 153, 154, 155, 161, 248n. 36 (see also Military Intervention) Voorhees, Tracy, 112, 122, 238n. 10 Wade, Robert, and Venoroso, Frank, 258n. 6 Walt, Stephen, 212n. 25, and Balance of Threat, 216n. 58 Washington Farewell Address, 41, 45, 90 Washington, George, 177, 178 Weber, Steve, 24 West Germany (see Germany) Western European Union, (WEU), 86, 102, 103, 105, 106, 106 Western Union, 88, and British Proposal of, 83, 84, 96 Wexler, Imanuel, 253n. 18 Wilborn, Thomas, 194 Wilson, Woodrow, 13–14, 41 Wilsonian, International order, 41– 42, 43, 90, 91, 122, 231–232n. 34 Wolf, Charles Jr., 137-138 Wolfers, Arnold, 13 World Bank, 7, 142, 152, 156, 160 (see also IBRD) Yarborough, Beth and Yarborough Robert, 14

INDEX 293

Yen Fund Plan, 111–112, 119–120, 130, 141, 172, 175, 182 Yugoslavia, 167, 253n.17

Organizing the World: The United States and Regional Cooperation in Asia and Europe

Trade Facilitation and Regional Cooperation in Asia

Trade Facilitation and Regional Cooperation in Asia

The United States in Asia

The United States in Asia

China and the United States: Cooperation and Competition in Northeast Asia

China and the United States: Cooperation and Competition in Northeast Asia

Power Realignments in Asia: China, India and the United States

Britain and Regional Cooperation in Southeast Asia 1945-1949 (LSE)

The United States, Europe, and the Wider Middle East

The Inevitable Alliance: Europe and the United States beyond Iraq

Europe and the United States: The Emerging Security Partnership

The United States and Iran

Landscape and Race in the United States

The United States and Britain in Prophecy

Asia-Pacific Security Cooperation: National Interests and Regional Order

The United States in the New Asia (Council Special Report)

The United States in the Asia-Pacific since 1945

Women and Labour Organizing in Asia (ASAA Women in Asia)

Restructuring Territoriality: Europe and the United States Compared

The Shadows of Total War: Europe, East Asia, and the United States, 1919-1939

The African Diaspora in the United States and Europe (Research in Migration and Ethnic Relations)

States Against Migrants: Deportation in Germany and the United States

Religion and Politics in the United States (Religion & Politics in the United States)

Semiotics in the United States

Civilisation in the United States

Mexico and the United States: Ambivalent Vistas (The United States and the Americas)

Maps Of The World United States

Political Cultures in Asia and Europe: Citizens, States and Societal Values (Politics in Asia Series)

Regional Financial Cooperation

Organizing the World: The United States and Regional Cooperation in Asia and Europe

Trade Facilitation and Regional Cooperation in Asia

Trade Facilitation and Regional Cooperation in Asia

The United States in Asia

The United States in Asia

China and the United States: Cooperation and Competition in Northeast Asia

China and the United States: Cooperation and Competition in Northeast Asia

Power Realignments in Asia: China, India and the United States

Britain and Regional Cooperation in Southeast Asia 1945-1949 (LSE)

The United States, Europe, and the Wider Middle East

The Inevitable Alliance: Europe and the United States beyond Iraq

Europe and the United States: The Emerging Security Partnership

The United States and Iran

Landscape and Race in the United States

The United States and Britain in Prophecy

Asia-Pacific Security Cooperation: National Interests and Regional Order

The United States in the New Asia (Council Special Report)

The United States in the Asia-Pacific since 1945

Women and Labour Organizing in Asia (ASAA Women in Asia)

Restructuring Territoriality: Europe and the United States Compared

The Shadows of Total War: Europe, East Asia, and the United States, 1919-1939

The African Diaspora in the United States and Europe (Research in Migration and Ethnic Relations)

States Against Migrants: Deportation in Germany and the United States

Religion and Politics in the United States (Religion & Politics in the United States)

Semiotics in the United States

Civilisation in the United States

Mexico and the United States: Ambivalent Vistas (The United States and the Americas)

Maps Of The World United States

Political Cultures in Asia and Europe: Citizens, States and Societal Values (Politics in Asia Series)

Regional Financial Cooperation

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