ESTIMATED PRODUCTION OF SPECIFIED INDUSTRIES IN THE SINO-SOVIET BLOC, 1959

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01049A002000150001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 58
• Document Creation Date: November 16, 2016
• Document Release Date: December 15, 1999
• Sequence Number: 1
• Publication Date: May 27, 1960
• Content Type: MF

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86th Congress
2d Session
COMPARISONS OF THE UNITED STATES
AND SOVIET ECONOMIES
Supplemental Statement on Costs and Benefits to the Soviet
Union of Its Bloc and Pact System : Comparisons
With the Western Alliance System
PREPARED BY THE CENTRAL INTELLIGENCE
AGENCY IN COOPERATION WITH THE
DEPARTMENT OF STATE AND THE
DEPARTMENT OF DEFENSE
FOR THE
SUBCOMMITTEE ON ECONOMIC STATISTICS
OF THE
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1960
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington 25, D.C. - Price 20 cents
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JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Publio Law 304, 79th Cong.)
PAUL H. DOUGLAS, Illinois, Chairman
WRIGHT PATMAN, Texas, Vice Chairman
SENATE
JOHN SPARKMAN, Alabama
1. WILLIAM FULBRIGHT, Arkansas
JOSEPH C. O'MAHONEY, Wyoming
JOHN F. KENNEDY, Massachusetts
PRESCOTT BUSH, Connecticut
JOHN MARSHALL BUTLER, Maryland
JACOB K. JAVITS, New York
HOUSE OF REPRESENTATIVES
RICHARD BOLLING, Missouri
HALE BOGGS, Louisiana
HENRY S. REUSS, Wisconsin
FRANK M. COFFIN, Maine
THOMAS B. CURTIS, Missouri
CLARENCE E. KILBURN, Now York
WILLIAM B. WIDNALL, New Jersey
JOHN W. LEHMAN,
Acting Executive Director
RICHARD BOLLING, Missouri, Chairman
JOHNFSPARKMAN, Alabama HALE BOGGS, Louisiana
J. W. FULBRIGHT, Arkansas FRANK M. COFFIN, Maine
PRESCOTT BUSH, Connecticut THOMAS B. CURTIS, Missouri
JACOB K. JAVITS, New York
JoeN W. LEHMAN, Economist
JAMES W. KNOWLES, Economist
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LETTER OF TRANSMITTAL
JUNE 17, 1960.
DEAR SENATOR DOUGLAS : Transmitted herewith is a supple-
mental statement to the Subcommittee on Economic Statistics'
study of "Comparisons of the United States and Soviet Econ-
omies." As you know, the study consists of a series of papers
prepared by panelists appearing in the subcommittee's hearings,
and the published hearings. The papers were issued in, Septem-
ber and October, 1959, as Parts I, IT, and III of the study and the
hearings were published in November of 1959.
The following paper has been prepared by the Central Intelli-
gence Agency, in cooperation with the Department of State and
the Department of Defense, in response to a request from Senator
Jacob K. Javits, made during the appearance of Director Dulles
of the Central Intelligence Agency at the subcommittee's hearings
on November 13, 1959 (hearings on "Comparisons of the United
States and Soviet Economies," pp. 16 and 17). Senator Javits
at that time asked that the comparisons which Mr. Dulles made
in his statement to the subcommittee be expanded at a later date
to include an examination and appraisal of advantages to the
Soviet of their bloc and pact system, as compared with the alliances
of United States and its Western allies.
The subcommittee thinks this reply to Senator Javits' question
is a highly useful statement and takes this method of bringing it
before the Joint Economic Committee, the Congress, and the
public.
Sincerely,
Hon. PAUL H. DOUGLAS,
Chairman, Joint Economic Committee,
U.S. Senate, Washington, D.C.
RICHARD BOLLING,
Chairman, Subcommittee on
Economic Statistics.
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A comparison of the costs and benefits to the Soviet Union of its
bloc 'and pact system with the costs and benefits to the United States
of its alliances is, at best, difficult. The very asymmetry of the two
systems; on the one hand a grouping based on coercion by intimidation and
on the other an alliance based on cooperation by invitation, causes
controversy over the judgments and conclusions reached in making the
comparison. It is a comparison which in some respects courts danger.
For example, in judging the relative potential effectiveness of opposing
Commmist and Free World military forces one must consider, in addition
to their equipment and training the attitudes and morale of the forces
involved. And it is in just such areas that our ability to predict is
weakest. A soldier compelled to bear arms for an authoritarian state
may not be an enthusiastic and courageous warrior. On the other hand,
fear of repressive measures, to himself or family, may restrict the degree
of acceptable alternatives open to him other than to carry out his assigned
duty.
The analysis which is contained in this report is an attempt to
distill out of this heterogeneous mixture of factors and forces rational
judgments and measurements of the contributions which each of the
ingredients makes towards the strength of the. two systems.
This report is based upon the joint contributions of the Departments
of State and Defense and the Central Intelligence Agency and has been
reviewed by all contributors for matters within their respective purviews.
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I.
Suaasry and Conclusions
A.
B.
The Siao-Soviet Bloc
The Western Alliance
II.
The USSR and Its Bloc and Pact System
A.
The European Satellites
1.
Economic Assets and Liabilities
2.
Political Assets and Liabilities
3.
Military Assets and Liabilities
B.
Coaaatmist China
1
1
5
8
8
8
14
18
21
1. Economic Assets and Liabilities 21
2. Political Assets and Liabilities 25
3. Military Assets and Liabilities 27
III. The US and Its Alliance System 30
A. Economic Assets and Liabilities 30
B. Political Assets and Liabilities 35
C. Military Assets and Liabilities 39
Appendix Tables 47
Table 1. Estinated Gross National Product Indexes, Western
Alliances and Sino-Soviet Bloc, 1950-1965, Selected
Years
Table 2.
Eatimated Industrial Production Indexes.
Alliances and Sins-Soviet Bloc, 1950-1965,
Years
Western
Selected
1+9
Table 3. Co erative Military Strength Data, Us and Its
Allies Vs. Sion-Soviet ul.ac, Winter 1959-60 50
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I. SUMMARY A1U) CONCLUSIONS
The USSR and the US and its allies derive significant economic,
political, and military gains from their respective treaty arrangements.
Losses too, are incurred by both. On balance, it is felt that the
Western powers gain more from their alliances than the Soviet bloc does
from its bloc and pact system. Such a conclusion must be assessed, .
however, under the sobering realization that the Soviet gains result in
a total bloc power position which presents the Free World with a serious
challenge.
A. The Sino-Soviet Bloc
mere can be no question but that the Soviet Union has realized,
and will continue to realize, significant economic, political, and
military gains from its bloc and pact system with the European Satellites
and CommEmist China. That these gains have been counterweighted, to
varying degrees, by losses is an equally unchallengeable conclusion. On
balance, the weight of evidence clearly shows a net gain for the Soviet
Union in terms of the present world power position of international
camssusniem.
The economic gains accruing to the USSR as a result of the
European bloc arrangements were greatest during the 1945-55 period when
direct and indirect reparations netted the USSR an amount estimated at
roughly 10 billion dollars. Of lesser import initially, but of increasing
value, has been the establishment in these Satellite countries of Soviet-
type economic systems whose total energies are directed towards an effort
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which is both complementary and supplementary to the Soviet economy.
While these Satellite economies cannot be utilized by the Soviet tb ion
as though they were its own they have extended the geographic area which,
under Soviet hegemony, contributes to overall Bloc economic strength.
This accrual of economic assets was not without the incurrence
of economic liabilities, however. As a result of the political reali-
zation that the events of 1956 required a reappraisal of economic policies,
various economic concessions made to the European Satellites probably
"cost" the USSR as much as 3 billion dollars over a period of years.
For the foreseeable future, given a continuation of current economic
policy, the USSR will continue to derive a net economic gain from its
alliance with the European Satellites although this gain vill probably
be proportionately smaller than previously.
Conversely, the economic contribution of Ca?mmist China while
amsll, if not negative, during most of the last decade, is becoming of
increasing importance to the USSR.
Soviet aid supporting Camounist China's forced industrialization
has been wholly on a pay-as-you-go basis and, while the goods received
by China are vital to the industrialization program, they have not
represented any significant drain on the Soviet economy.
In. addition, the rapid economic growth of Communist China, made
possible by the receipt of this Soviet aid, will increasingly permit
China to support from indigenous sources its own industrial and military
goods production programs.
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In terms of total economic strength, using the concepts of gross
national product (G1w) and industrial production as a measure of this
strength, the contribution of the European Satellites and Communist
China to total bloc power is impressive. Aggregated, these states
contribute about 45 percent of the total Communist Bloc GVP and about
the same percentage of total industrial production. Of particular
significance is the rising share of Communist China in total industrial
production; 6 percent in 1950, 12 percent in 1959, and an estimated 16
percent by 1965. With an annual average rate of growth projected for
the 1959-65 period of about one and one-half times that of the aggregated
Western e114""e, the growing economic strength of the Coasanlst Bloc
is a formidable challenge to the West. In addition, due weight should
be given to the relatively greater power of Communist governments to
direct the expenditure of national resources.
This economic growth ban also been a significant contribution
to the political power of the Soviet Bloc. Moreover, the extension of
Soviet political and economic power into Eastern Europe and Mainland
China has provided distinct assets to the Soviet Union in addition to
the aggregative increase in total economic strength. It has replaced,
on borders of the Soviet Union proper, many of the governments formerly
hostile to it with Communist regimes not only " riendly" but also
heavily dependent on it and therefore amenable to Soviet control or
guidance. It has, in the Soviet Union's own eyes, largely removed
the threat of "capitalist encirclement" and provided it with forward
military positions from which to pressure the Went.
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In addition to these assets, and at least of equal importance,
is the boost for the power and prestige of world ceainmism provided by
this multiplication of communist regimes. Their existence has been of
great importance to the heightened elan of the world comnanist movement
and to caev.mmima's claim to represent the system of the future
The liabilities incurred by the Soviet Thion in the formation
of the "socialist camp" are equally impressive. In Pastern Europe
Soviet political control is maintained largely by the threat, or the
weyof force. Historic nationalism in same of these Satellites is
co led with a traditional enmity towards Russia. To these factors
not be added the restiveness incurred by the depression of living
standards and the totalitarian system of rule.
Conmmist China presents a problem of a different nature. Close
political relations with the TJSSR are maintained on the basis of near
co-equelness rather than by force. The national. interests of the two
states do not always coincide -- and may well significantly diverge in
the future -- affecting Moscow's hegemony in a system which demands a
single source of leadership and direction.
From a military point of view, the armed forces of the Soviet
Satellites and Ccommist China provide a significant increment to total
bloc military strength. They are the source of over 50 percent of the
total active strength of the armed forces of the Sino-Soviet Bloc (59 per-
cent of Army active strength) and a lesser, but meaningful sham of
military aircraft and naval vessels. The areas controlled by these
forces provide a defensive buffer against ground action and a vital
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contribution towards early warning for air defense purposes. The
size of the Soviet contribution of military end-items has become
proportionately smaller while the capability of the other bloc
meufiers to supply their military forces from indigenous production
has steadily increased. Nonetheless, the Bloc members are far sore
dependent on the USSR for advanced weapons than our allies are upon
While the Eastern European Satellites and the Communist Chinese
military forces are well trained and equipped to fight effectively,
any estimate of their contribution to total military strength depends
upon an evaluation of their "reliability." This reliability judgment
also has gradations within groups in each national state and between
the various bloc countries. On an ordinal scale, Cosssne1st Chinese
forces would probably stand at the top of the list with East German
and Hungarian forces at the bottom. The other European Satellites
would be ranked in between with the degree of reliability in large
part a function of the nature of the conflict.
B. The Western Alliances
It is true, too, that our alliances have clearly realized
significant gains for the Thited States. On balance, these gains
accrue equally to each partner since the alliances are effectively
based an can= political values, reciprocal security agreements,
and mutually advantageous economic relationships. That there are
costs to the US -- and to its partners -- in these alliances is also
recognized. Almost without exception though, these costs are ad hoc
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liabilities which result frm the freedom of action insured to each
amber of the all e. Of crucial significance in this comparative
study is the fact that the long-run effect of these costs an the
stability and cohesion of the alliance is to strengthen it.
Econmically, the Marshall Plan and the Point IV prograss of
the early postwar years were the antithesis of Soviet expropriation
pol...cies. Freely given, they provided the economic stability essential
to the survivial and progress of the recipients as members of a Free
World community. The economic relationships of the US with its
allies, based on the principle of mutual advantage, have not differed
materially from pre-alliance periods.
Measured in statistical terns, the GNP of our allies is presently
larger than that of the US and their total industrial production is
nearly equal to ours. Both measures are a growing share of total
Allied ecenesic strength. The past, and projected future, growth
rate* of the Western Alliance an a whole, however, are lover than
those of the Commu ist Bloc.
Politically the great contribution of our Allies is the fact
that they hold to the common principles of hung dignity, freedom,
and individual worth; principles which have resulted in a degree of
mutual cooperation. In attaining comm goals that is unprecedented in
peacetime. The political cohesion of the Western alliances during
such periods as Korea, the Berlin blockade, and the current Berlin
situation is further testimony to the contribution of our allies to
Western world political paver. This cohesion against a com on. foe,
coupled with a freedom of choice in internal political affairs is an
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asset which is becomiing Increasingl recognized by the underdeveloped
and uznco mittad nations of the world and is a primary weapon in the
political struggle. Events such as Hungary in 1956 and Tibet in
1959 serve to eabona our appeal while helping to dull the lure of
the cootssaist ideology.
US military strength is Impressive. The contribution of
our allies to total allied strength is perhaps more impressive.
In terns of total armed forces active strength our allies contribute
almost three quarters of the total (five-sixths of total army
active strength), about two-fifths of the aircraft in operational
cants, and about three-fifths of total allied naval strength. In
each of these examples, this voluntary association has resulted in
a contribution whose share of the total is much larger than the
share coerced by the USSR from its Satellites -- testimony to the
ftmodsmentel differences in the nature of the two alliances. These
allied forces represent an impressive deterrent and retaliatory
strength.
The costs to the US of its military aid program are signi-
ficant, but for each dollar we have spent on military assistance
between 1950 and 1958, recipient nations have spent more than
six dollars.
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II. THE USSR AND ITS BLOC AND PACT SYSTEM
A. The European Satellites
1. Economic Assets and Liabilities
Important economic benefits have accrued to the Soviet
Union from its aggreements with the European Satellites since World
War II, although these have been sharply reduced since 1955, and in
some recent years there may have been Soviet economic coats. Through
its political and military power position the USSR exerts considerable
control over the economies of the European Satellites. The degree of
Soviet control, given its inherent ability to apply direct and ruthless
pressure in order to enforce its objectives, has been consistently
high since the seizure of power of Communist regimes in each of the
European Satellites. However, the nature and form which this control
has actually taken over time has varied.
During the early postwar years there was a clear advantage
to the Soviet Union from direct reparations of capital plant and
equipment received from the European Satellites; from indirect repara-
tions in the form of profits of Soviet-controlled companies which
used skilled personnel, plant and equipment, and materials indigenous
to the area; from Satellite payments of the occupation coats of the
Soviet troops in their countries; and from the abnormally low prices
paid by the USSR for such goods and services as East German uranium
ore, Polish coal, and Polish railroad services. These Soviet takings
were slowly reduced during the early 1950's, but continued through at
least 1955, and in the case of East German occupation costs, through
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1958. Over the postwar period as a whole a rough monetary estimate
of the reparations comes to 10 to 12 billion dollars, several times
the value of Soviet credits to the Satellites during this period
which amounted to about lJ billion dollars and which were probably
partly repaid by 1956. In view of the weakened state of all Soviet
bloc economies after World War II these impositions must have. been
of considerable advantage to the Soviet Union and were certainly a
heavy burden on the European Satellites.
With the establishmeut of Soviet-type economic systems
in each of the Satellites, involving state ownership of most of the
means of production and central planning of the economy, economic
policies favoring the rapid development of heavy industry and the
development of intra-bloc trade have been the primary objectives of
each of these countries. In following these Soviet-inspired policies
the Satellite regimes have implemented economic plans which both
supplement and complement the economic development plans. of the USSR.
Although the Soviet Union can levy specific requirements on particular
Satellites for industrial development programs which it considers
important for economic or strategic reasons, Satellite plans are
neither closely integrated with the Soviet plan nor can the Soviet
Union now utilize the economic resources and production of the
Satellites as though they. were its own. The practical limitations
of control by sheer force were amply demonstrated in the events of
1956, since which time the Soviet Union has preferred to discard the
most onerous forms of control over the Satellites. In discarding
these controls it bC.s allowed more liberal economic policies in some
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of these countries (notably Poland and Hungary) and has provided
greater support for their economic programs. These measures have
involved Soviet economic outlays, or at least the foregoing of
certain economic gains, in the interest of ensuring the economic
and'political stability of the European Satellites.
During 1956-58, Soviet credits to the Satellites
exceeded those extended in the entire preceeding decade, and they
involved more favorable terms -- longer repayment periods and lower
interest rates. Moreover, the Soviet Union made some additional
economic concessions, such as the cancellation of part of old debts
due from the Satellites; the granting of higher prices for Polish
coal; Polish railroad services, and East German uranium ore; and
reductions in the charges to East Germany for occupation costs.
These concessions probably freed the Satellites from obligations
to the Soviet Union of over 3 billion dollars, which would otherwise
have had to been paid over a period of years.
Since the disturbances of 1956, Soviet-Satellite trade
relations have assumed a volume and character which more closely
approximates the economic law of comparative advantage. At the same
time, however, these trade relations reflect the effects of Soviet
influence in the orientation of Satellite economic development along
lines both supplementary and complementary to Soviet economic develop-
ment. In 1958, trade in each direction between the Soviet Union and
the European Satellites amounted to about 2y billion dollars; roughly
one-half of the total foreign trade of the Soviet Union and 40 percent
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of the total foreign trade of the Satellites. The pattern of Soviet
trade with each of the European Satellites varies with the degree of
industrialization of the Satellite trading partner. From the more
industrialized Satellites the USSR receives machinery and equipment
such as merchant ships, railroad, metallurgical, chemical, and
electrical equipment in exchange for raw materials and food; from
the less industrialized Satellites, on the other hand, Soviet trade
involves the exchange of raw materials and foods for items of Soviet
manufactures.
On balance, if the European Satellites were suddenly
detached from the Soviet Union and all antra-bloc trade came to a
standstill (with no concomitant increase in Soviet trade with non-Bloc
countries) it would be a clear disadvantage to the Soviet Union. The
USSR, with the Seven Year Plan goals as a restraint, would undoubtedly
have to use more internal resources in producing the commodities and
services planned to be imported from the European Satellites than the
resources it plans to use in producing the goods and services to be
exported to the European Satellites in payment. Under a second
assumption, namely, that the European Satellites were detached and
normal trading relations were establithed by the Soviet Union with
all countries (former European Satellites and non-bloc countries),
then the pattern of trade with the former European Satellites would
probably not be very different from what it is at present. This
continuation of patterns, at least in the short run, would be a
function of the history of the economic development of the European
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Satellites since World War II as affected by the influence of the
USSR on Satellite economic development. Over the longer run, the
economic development of these "former" European Satellites, especially
and be less complementary to the USSR. In that circumstance the Soviet
Union would probably suffer a net "loss":
The economic benefits to the Soviet Union of its pact
with the European Satellites, as described above, are important
and, to some extent, quantifiable. Probably as important, if not
more important, is the contribution of these economies to overall
Soviet influence and prestige. This contribution is also the most
difficult one to quantify. Economic size and growth in the European
Satellites is a significant contribution to the size and growth of
the Sino-Soviet Bloc. The size of the Bloc relative to the Free
World is considered by many to be a significant measure of the success
or failure of the Communist system and the achievement of rapid or
low rates of growth another such measure.
From the point of view of size alone, the European
Satellites represent a considerable addition to the economic resources
of the Soviet Union. Population, total civilian employment and
employment in industry in the Satellites are approximately one-half
of that in the Soviet Union in each case. The aggregate gross national
product (GNP) of the European Satellites amounts to about two-fifths
of the Soviet GRP and is about equal to the GNP of West Germany. Some
of the Satellites are more developed economically than the Soviet Union;
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others are less developed. East Germany is one the most
industrialised countries in the world while Albania is the most
primitive country in Europe. Per capita GNP in the Satellites
ranges from a high of $1,100 to $1,200 in East Germany and Czechoslovakia
(compared to about $1,500 in West Germany, $2,500 in the U.S., and
nearly $1,000 in the Soviet Union), to approximately $500 in Bulgaria,
and probably much less in Albania. Satellite total industrial
production presently is over 55 percent of USSR industrial production,
a smaller share than in 1950, but still a significant portion of the
total.
Economic growth in the European Satellites has roughly
paralleled that in the Soviet Union. Since 1950, GNP in the Satellites
has grown at about 6 to 7 percent a year, and industrial production at
about 9 percent a year. Rates of economic growth in the European
Satellites are expected to decline only slightly in the next few
years -- to perhaps 5 to 6 percent for GNP and about 7 percent for
industrial production. Past rates of growth in the European Satellites
have been considerably larger than in the NATO countries as a whole
(with or without the United States), and have been equalled in only
a few countries of Western Europe. (See Appendix for a tabular
presentation of comparative economic data).
This success in achieving a rapid rate of industrial
economic growth was accomplished, in large part, at the expense of
little or no improvement in living standards. Comparisons, in living
standards, with Western Europe are more unfavorable to the European
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Satellites then they were ten years ago and, in some cases, than
they were before World War II. This failure to fulfill either the
promises of the regimes or the expectations of the populations has
been an important element in the economic and political instability of
t h e E u r o p e a n S tellites, particularly in the period 1953-56. Present
economic policies in the European Satellites, although still aimed at
achieving rapid economic growth, appear to provide for a steady, if
slow, rise in living standards and tend, therefore, to be more conducive
to political stability than the earlier "Stalinist" policies.
The Soviet Union probably also benefits economically from
European Satellite trade relations with the-underdeveloped and uncommitted
countries. The economic gains from comparative advantage, particularly
in the export of whole plant andequipmeAt (protects) and of technical
talent are quite clear. Less directly observable but probably equally
important, is the fact that this activity is a less obvious form of
communist economic penetration than if it were practiced solely by
the Soviet Union itself. '
2? Political Assets and Liabilities
The extension of Soviet political power into Eastern
Europe at the close of World War II has provided certain distinct
assets to the Soviet Union. First and most obvious, it enhanced the
security of the Soviet state. Not only had the governments of the
countries bordering the Soviet Union frequently been hostile to it,
but the geographical area itself forms a natural invasion route of
the USSR, and history is replete with instances when that area has
been so used. The imposition of Communist regimes in. the East European
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countries -- in effect an extension of Soviet state power -- meant the
establishment in those countries of governments not only "friendly" to
the Soviet Union but almost entirely dependent on it and amenable to
Soviet control. The conclusion of bilateral mutual assistance treaties
between the Soviet Union and the communist regimes of these countries in
the late 1940's, and the founding bf the Warsaw Pact in May 1955 provided
the legal framework and justification for the stationing of Soviet forces
in Eastern Europe and their reintroduction in the event the regimes there
were threatened either from within or without. This forward position of
Soviet military power in Europe has both enhanced the Soviet state's
security and provided the Soviet Union with a vantage point from which
to pressure the West, particularly in the case of Germany whose Eastern
part is occupied by Soviet troops.
In addition to these assets and at least of equal importance,
is the boost for the power and prestige of world communism which has been
provided by the multiplication of communist regimed in Eastern Europe and
the formation of the "socialist camp." Despite the fact that the East
European bloc regimes were set up and are largely maintained by the use,
or threat of use, of Soviet military force, their existence has been of
great importance to international communism's added prestige in inter-
national councils (UN and East-Test negotiations), to the heightened elan
of the world communist movement, and, probably most important of all, to
communism's claim to represent the system of the future which will
eventually and inevitably encompass the entire world.
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The liabilities to the Soviet Union of its East European
empire are no less impressive than its. assets, and they stem from two
fundamental factors which the Soviet Union cannot alter without basically
changing the nature of the bloc structure in Eastern Europe. First, the
regimes were imposed by the Soviet Union by force (except, in Czechoslovakia's
case, under the shadow of Soviet armed might) against the will of the
people in Eastern Europe and they are maintained largely by the use or
threat of use of Soviet force. Thus they are obliged to subordinate
their own national interests to the interests of the Soviet state and
therefore are, by their very nature, colonial regimes in an era where
nationalism is probably the strongest political force extant. In addition,
some of the nationalities of Eastern Europe hold traditional enmities
toward Russia as a historic entity. A second basic and closely related
weakness is the fact that most of the peoples of Eastern Europe strongly
dislike the communist system imposed upon them, with its stringent domestic
policies, depressed living standards, and oppressive method of rule.
These two factors reinforce each other: dislike of communism is heightened
by the fact that it has been imposed by an alien government, and hatred
of national oppression is intensified by the fact that it is totalitarian
in nature.
The harsh policies which the Soviet Union is obliged to
pursue to maintain the stability and unity of the bloc structure in East
Europe also affect adversely other Soviet foreign policies. For example,
Soviet intervention to suppress the Bungerian uprising in the autumn of
1956 belies Moscow's professed desire for "peaceful coexistence," its
alleged respect for the independence of all nations iaaW and small, etc.
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Similarly, the i enewed r; t te,-:ks on the irdep:.ndent 'x ugoslair regime in
April-May ?(,)58 damaged the USSR's assidu.cusly cultivated relations with
the neutralist countries of Asia.
The i'utu;mm outlook is for the maintenance of Soviet control
over Eastern Europe for the foreseeable future, and for the reasons given,
Soviet hegruony in the area will continue to constitute a positive benefit
for the political interests of the USSR.
The maintenance of Soviet influence in Eastern Europe will
not, however., be an unalloyed blessing and will by beset with continuing
difficulties. Even though the USSR has largely succeeded in repairing
the damage caused by the Hungarian revolt and Polish riots of 1956 and the
short-term outlook is for less instability,it appears likely that, over
a period of time, there will be a gradual attenuation of the more overt
forms of Soviet control in Eastern Europe, In more than a decade of the
existence of Soviet control over the communist regimes in Eastern Europe,
there have been four major cases of national defiance or popular revolt
against Soviet rule (:Yugoslavia, ?91+8; East, German Berlin uprising, June
1953; Poland, June-October 1956; :-?. Hungary, October-November 1956), with
one of th,=m completely successful (Yugoslavia), one of them partially
successful (Poland), ind the' other two suppressed at, a large cost to Soviet
prestige. There may well be similar developments, although under different
circumstances, over the next decade inasmuch as tscow*s basic problems
in the area aill remain unsolved. Simultaneously, or alternatively, the
USSR may feel obliged to grant the satellite regimes a large degree of
autonomy in the hope that this will allay popular hostility and avoid
overt acts of defiance.
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3. Military Assets and Liabilities
Evaluated only in terms of sheer magnitude the armed
forces of the European Satellites provide a significant increment
to total. Sino-Soviet Bloc military strength. At the same time,
this increment of strength is available to the USSR only at a very
considerable cost.
There is a close inter-relatio:aship between the military
establishment of the Soviet Union and the European Satellites, with
the latter depending heavily on the former for weapons, equipment,
POL, and other support. This dependence is intentional, however,
and is in keeping with Soviet plans for retaining internal military
and political control in these countries as well as for retaining
control over the freedom of action of these countries in their owm
foreign policy, military, and political activities. The Satellite
military raw material and hardware contribution to the USSR is,
in turn, nearly insignificant except for the provision of uranium
ore and the production of military electronic and optical equipment
in East Germany and Czechoslovakia. In addition, the countries in
which Soviet troops are stationed (East Germany, Poland, and Hungary)
supply products such as food, fuel, clothing, and ammunition to the
Soviet Forces and provide some material and training as part of the
Soviet Bloc military aid programs.
Of the total Sino-Soviet Bloc active military manpower
strength of about 9.3 million, the European Satellites contribute
over one million. military troops. The Soviet-sponsored ground armies
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of these Satellites total nearly one million men, organized in some
sixty line divisions. They are equipped with Soviet-type armored
vehicles, artillery, small arms, and electronic and engineering
equipment. Most of this material has come from the USSR, although
all of the Satellites except Albania are producing some Soviet-type
military equipment. Only Czechoslovakia is known to be making weapons
of original design. Satellite line divisions are generally well
organized, well equipped, and well trained; some of the units reflecting
the latest Soviet organizational concepts designed to meet the require-
ments of modern war in which tactical nuclear weapons could be used.
The combat effectiveness of these forces is maintained at a high level
and, while almost wholly dependent on Soviet logistical support they
could, with an outbreak of hostilities, provide a defense buffer for
the USSR and/or protection for its lines of communication. (See
Appendix, Table 3, for tabular data)
The European Satellites have only a limited air capability.
On the other hand, in addition to providing this marginal supplement
to the strength of the Soviet air force, the air defense role of the
Satellites, especially Czechoslovakia and Poland, is an important
source of early warning to the Soviets. A major contribution is the
larger number of well distributed airfields and depots which would be
invaluable as advanced staging areas for the-Soviets. Czechoslovakia
and Poland also have minor military aircraft ladustries but these
lean heavily on the USSR for material support. The contribution,
similarly, of the Satellite naval forces to the overall strength of
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the Sian-Soviet naval forces is also marginal. Most are of Soviet
origin; and. all are heavily dependent upon the USSR for logistic
support. Some small benefit to the USSR probably also accrues as a
result of the usa by Soviet naval forces of Satellite port facilities.
While the Satellite military forces are well trained and
equipped to fight effectively, the capability to assist the USSR in
war depends to a great extent on their "reliability." It is in this
area that the evaluation of costs or benefits becomes most difficult.
Reliability may be considered to be affected primarily
by the influence that the USSR will have on these forces, either due
to the proximity of Soviet armed forces, or the success of Communist
indoctrination upon their will to fight. Reliability to the Bloc cause
would have various gradations within different groups in a single
country. The national leadership, being de facto closely identified
with Bloc objectives, can be considered as highly reliable. The
careful selection and surveillance of military leaders and their
indoctrination and, that of their troops should result in a higher
degree of reliability among the military than in the population as
a whole.
Satellite armed forces would fight beat against traditional
enemies or if they believed their national interests were at stake. In
general, the armies could be expected to fight at least reasonably
well until Bloc forces are put on the defensive and forced to retreat.
If only because of strict Soviet control measures, significant defections
could liot be confidently expected until this situation existed.
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It is difficult to rate the Satellites in order of
reliability. However, in East Germany, the most exposed Satellite
with ties of blood with West Germany, the USSR would probably exercise
great care in the manner in which East German forces were employed.
Bulgaria, on the other hand, being traditionally pro-Russian, would
probably be considered as reliable by the Soviets. In all cases the
performance of the Satellite nations, would be determined in large
part by the circumstances of the war.
B. Communist China
1. Economic Assets and Liabilities
The decade just passed, which saw the seizure of power
by a communist regime in mainland China and the alliance of that
regime with the Soviet Union, was a milestone in Sino-Soviet relations.
It is only now that the point is being reached where economic magnitudes
have a significant meaning in terms of the costs and benefits of the
alliance to the Soviet Union. Barring some unusual and unexpected
development which would drastically alter the present course of the
economy of Communist China it is estimated that the rapid growth in
Communist China's economic strength will continue and that this growth
will be of increasing benefit to the world power position of the USSR.
During the past ten years, the timely and selective
shipment of Soviet manufactured machinery and equipment and the pro-
vision of technicians and other technical aid has had a tremendous
impact or the Chinese Communist industrial economy. Soviet aid has
been concentrated on the building and equipping of large, relatively
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modern, industrial plants which form the backbone of the Chinese
industrial development program. By the end of 1958, about 1?+0 to
350 of the some 300 major plants being built with Soviet assistance
had gone into pilot or full operation. Chinese Communist industrial
producti.ore, over the period 1950-58, is estimated to have increased
approximately 5 times, an annual average rate of about 23 percent.
Gross national. product nearly doubled during this same period. (See
Appendix, Tables 1 and 2, for further statistical data)
The Soviet support for Communist China's forced
industrialization program has not been of any significant cost to
the USSR. In the earlier years of the program the USSR provided two
loans for economic purposes totalling $1+30 million. These were
substantially used up by the end of 1955, and since that time, the
Chinese have been exporting more to the USSR than they have been
importing. This excess of exports over imports has been going
primarily to repay these economic credits plus some military credits
used in earlier years. It is not impossible that these priority
contributions to China's industrialization have been of some cost
to the Soviet economy by hindering the equipment of programmed Soviet
industrial expansion. In view of the rapid expansion of the Soviet
industrial base in recent years, however, it is not believed that the
shipment of machinery and equipment to Communist China has represented
any significant drain on Soviet industrial growth.
The goods received from the USSR are vital to Communist
China's industrialization program whereas those received by the USSR
from China are not nearly so vital to the Soviet economy. Nonetheless,
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the USSR derives substantial benefits from Communist China exports
of such commodities as tin and beryllium which are not available in
sufficient volume fray Soviet sources. Other Chinese Communist exports
to the USSR -- foodstuffs, textiles, and raw materials -- have no
direct bearing on Soviet industrial production but, as a result of
comparative advantage, result in the freeing of capital resources
for further industrial expansion in the USSR.
In addition, the rapid development of the Chinese
Communist economy, and especially the industrial sector, is in itself
a benefit to the USSR. The Chinese Communists are increasingly able
to provide capital goods for the expansion of their industry and to
fill their own military supply requirements. Chinese Communist
industry produces small arms and ammunition; and, with Soviet help,
has been able to undertake the production of Soviet-type artillery,
jet aircraft, tanks, and submarines. Some of the component parts for
these Items are presently supplied by the USSR but the Chinese Communists
have not advanced beyond the "assembly stage" in which the Soviet-made
parts were put together in Chinese factories.
Continued rapid expansion of the Chinese Communist
economy will he of increasing benefit -- and decreasing cost -- to
the USSR. The image of rapid Industrialization under a Soviet-type
system presents an appealing picture, particularly to the underdeveloped
countries of South and Southeast Asia. So long as this picture is not
unduly blurred by a realization of the human costs involved, or destroyed
completely by crude power blunders such as recent Chinese actions in
Tibet and India, the USSR will realize a net gain from the alliance.
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If Communist China can maintain its previous rapid
economic growth, it will be able to provide the additional resources
needed to equip and maintain a large and increasingly modern armed
force without the assistance from the USSR which was forthcoming
in past years. While assessments of the economic development of
Communist China are uncertain at best, it is estimated that industrial
production in Communist China, less than 7 percent of that of the
USSR in 1950, may have grown to about 16 percent by 1958 and, by 1965,
could increase to about 25 percent of that of the USSR according to
present forecasts. This expanding industrial base would provide the
goods and services required for an expansion of Communist China's
foreign aid program in direct support of the overall Bloc foreign
economic policies.
In short, if the anticipated rapid growth in Communist
China's economic strength actually occurs, it will greatly benefit
the USSR through its effect on the Bloc's general economic strength
and through its enhancement of the prestige accorded to the Soviet
economic model by the underdeveloped and uncommitted countries of the
world. The one sour note from the USSR's point of view -- and it is
essentially a political rather than an economic note -- is that
Communist China's greatly enhanced economic strength as it is
translated into military and political policy may continue to be
wrapped in a revolutionary fervor which will make it less responsive
to, and more independent of, overall Soviet objectives.
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2. Political Assets and Liabilities
The Soviet Union derives substantial assets from its
alliance with Communist China. The existence of a communist ally in
Mainland China greatly increases the security of the USSR on its flank
in Asia and the Far East. Further, the establishment of the Chinese
Communist regime was -- as the Soviet themselves publicly proclaim --
the most significant extension of communist power in the world since
the communist revolution in Russia in 1917. For their part, the
Chinese Communists see in the Soviet Union a guarantor of their
security and an indispensable source of the economic assistance which
they need to realize their ambition to build Communist China into a
modern industrial paver.
At the same time, the acquisition of a valuable ally in
Mainland China has raised certain problems for the Soviet Union. From
its very inception the Chinese Communist regime has occupied a special,
junior partner, position in the bloc system, and has presented the USSR
with a unique problem in maintaining close relations with it. As
Communist China's power has grown it has become more vociferous and
assertive in pursuing certain of its national interests which do not
coincide fully with those of the USSR. A case in point is the Peiping
regime's recalcitrant and aggressive stand in its present border dispute
with India which the USSR apparently views as detrimental to its short-
The Chinese Communist regime's special status in the
communist bloc, which has become even more pronounced since the death
of Stalin in 1953 and the USSR's troubles in East Europe in the autumn
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of 1956, has also bad disruptive effects within the Bloc. Basic in
this regard is the fact that the Peiping regime is building "socialism"
under conditions which differ greatly from those in the USSR and con-
sequently is led to adopt policies and ideological formulations which
diverge from the Soviet model. The most recent example of this is
the commune program in Communist China. Although this approach to
the administration of agriculture and small scale industry appears
to the Chinese Communist leadership as logical -- indeed, vitally
necessary -- it is a significant deviation from Soviet practice in
a critical field and hence poses a challenge to the UESR's position
of unqualified leadership of the communist bloc and international
communist movement. The Soviet Union's disapproval of the commune
program has been unmistakcbly, though obliquely expressed.
In sum, Peiping's emergence within the Bloc as a second
ideological center -- given the different conditions confronting the
Chinese Communists -- cannot but affect Moscow's hegemony in a system
which claius to be based upon a universal scientific truth and thus
demands a single source of leadership and direction.
On balance, the Sino-Soviet alliance constitutes a large
advantage to the Soviet Union, as well as to Communist China itself.
The prospects are that the dominant characteristic of the alliance
for the foreseeable future will be continued close cooperation between
the two powers in what they conceive of as their vital struggle against
the non-communist world.
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It is also likely that the difficulties and problems
in maintaining close harmony in the alliance will increase with the
passing of time. This is true because Communist China's increasing
power and decreasing dependence on the Soviet Union will, weaken the
leverage the latter has on Peiping and provide a more propitious
background for the emergence of differences between them. Nevertheless,
both powers apparently see no acceptable alternative -- quite apart
from the obvious advantages -- to maintaining their alliance, and
adjusting to differences which arise between them.
3. Military Assets and Liabilities
The military establishment of Communist China depends
heavily on the Soviet Union for support. Most advanced weapons,
complex equipment and POL are supplied to the Communist Chinese armed
forces by the USSR. In addition, Communist China depends on industrial
machinery and technical assistance. from the USSR to build up its own
munitions industry. The military logistics contribution of the Chinese
Communists to the USSR is insignificant except for a few raw materials
such as tin, tungstan and, indirectly, rubber. However, the vast
manpower resources and area of Communist China, extending from the
Soviet border to the Pacific, are potentially valuable contributions
to the Bloc in time of emergency.
The Chinese Communist armies are equipped with Soviet
type vehicles, artillery, small arms, electronic and engineering
equipment, an increasing amount of which is being manufactured in
Communist China.
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The Chinese Communist standing army totals over two
million men, the equivalent of well over 100 line divisions, with the
bulk of these infantry. A very such larger semi-military militia,
reinforced by a hard core of ex-servicemen, could in time of emergency
be quickly absorbed into the armed forces. The militia is used to
assist the army and police in maintaining internal security and,
together with the army, to augment the labor force.
Although not as modern as those of the Soviet Union,
the ground forces of Communist China are improving in efficiency by
means of reorganization, training, and equipping with never weapons.
They are a formidable addition to Bloc military strength.
The air forces of Communist China have an improving,
though limited, air capability. They are, however, still heavily
dependent on the Soviet Union for training, weapons and equipment.
While the Chinese Communists produce a few light transport planes
of their own design and helicopters and fighter aircraft in very
limited numbers, the Soviets provide all other aircraft. Communist
China does not produce either jet fuel or aviation gasoline and is
almost entirely dependent upon shipments of these products by rail
from the Soviet Union to satisfy its requirements.
On the other hand, in addition to supplementing the
strength of the Soviet air force, the air defense capability of the
Chinese Communists is an important segment in the Bloc defense warning
system and the many well distributed airfields and their facilities
would be useful as staging areas for the Soviets.
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Lilco the army and air force of Communist China, the navy
is also largely dependent on the USSR. Most of the ships in the fleet
are of Soviet origin and those few smaller types which have been built
outside the USSR are based on Soviet plans and technology. Communist
China has constructed submarines and escort vessels (the largest
warships constructed in the Bloc outside the USSR), but only with
considerable Soviet assistance. logistic support also canes largely
from tjhe USSR. Ordnance and ammunition for the most part originate
in the Soviet Union as do P01 and s?Y.re parts for Soviet-type ships.
The only Naval facilities of significance provided by
Communist China to the USSR are port facilities. Bovever, the Chinese
Communist Navy; especially its submarine force, is a small but useful
addition to Bloc naval strength.
The capability of the armed forces of Communist China
is continuing 'o improve. Since the Korean War it has much improved
with Soviet assistance in training and modernization. In addition,
the regime is stressing heavily political indoctrination in order to
insure loyalty to the regime. In small scale operations of relatively
short duration, as in Tibet, the Chinese Communist armed forces could
operate independently. In large scale operations the Chinese Communists
should be able to contribute materially to the over-all military
strength of the Bloc, provided logistic support from the USSR is
forthcoming.
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III. TM US AND PPS ALLIANCE SYSTEM
A. Economic Assets and Liabilities
It is more than a little difficult to attempt to strike
a balance of economic advantages and costs to the US of its NATO and
other alliances in terms cassensurable with those used to describe
the USSR's relations with the other countries of the Sino-Soviet Bloc.
The first and most obvious difference is that the collective security
arrangements in which the US participates cannot be equated with the
Soviet bloc and pact system. Whatever exploitative economic advantages
may have accrued to the USSR during the early post World War-II period,
(through direct and indirect reparations, other forms of more or less
disguised expropriation, and crude manipulation of the terms of trade),
they have no counterpart in the West. Indeed, while the USSR was
taking reparations, the US was implementing the Marshall Plan and
Point IV. Whether or not these policies involved, respectively,
net economic "gains" for the USSR or net economic "costs" for the
US, they largely antedated the political and military alliances
and would thus seem only remotely relevant to an inquiry into the
present economic strengths and weaknesses of alliances as such. Had
there been no itarahall Plan in the early post-war years, however, we
would probably have fewer Free World Allies today.
It has been noted above that the economic development
policies of the European Satellites were patterned after those of the
Soviet Union and that the foreign trade of these Satellites was
reoriented so as to complement and supplement Soviet resources.
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Here again, such "advantages" had no counterpart in the West. The
USSR was -- and, to a predominant extent, still is -- an autarkically
isolated economic area, dependent to an abnormal degree on its own
natural resources and. on its own centralized planning. Enlargement
of this economic space to include the resources of the Satellites
made possible very real economic gains by extending the scope for
international and inter-regional specialization. The US and Its
Allies, on the other hand, already belonged to a world economy which,
although it was less integrated in the first post-war decade than
under the pre-19]) or pre-1931 international monetary standards, was
nevertheless more integrated economically than the Soviet Bloc is
today. Moreover, in comparing the superficially parallel moves
toward regional economic integration on the two sides of the Iron
Curtain, another significant difference should be kept in mind;
integration of the Bloc has increased the Satellites' trade depen-
dence on the USSR; integration in Western Europe has greatly improved
the position of the European countries in developing sound multilateral
trade relationships with other countries, including the US.
To the extent that, since 1956, the Bloc may hevm been
moving into a third phase of economic inter-relationships, in which
trade is increasingly of mutual benefit to the respective partners,
this has been only a. partial and belated turn toward what has all
along been considered a normal state of affairs in Free World trade.
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Similar mutual benefits from the international division of labor
accrue to the US in its trade with its Free World partners regardless
of alliances. It may be noted, however, that more than 85 percent
of both our import and export trade in 1958 (excluding "special
category" exports) is carried on with members of our alliance
system, or their overseas territories. Thus, if it could be said
above that a hypothetical sudden detachment of the Satellites and
China or a cessation of intra-bloc trade would be "a clear disadvantage
to the Soviet Union," which has followed autarkic policies for 40 years,
an analogous hypothetical severance of ties between the US and its
Allies would be even more disadvantageous to this country. Viewed
in this light, the US undoubtedly has a far greater economic stake
in its alliance system than the USSR has in China and the Satellites.
The success and prestige of the Communist system are
frequently judged by the economic size and economic growth of the
Bloc. In this respect the resources of Red China and the Satellites
add considerably to the economic strength of the Soviet Union. However,
the allies of the US (not counting their overseas territories) are
estimated to have an aggregate gross national product (expressed in
dollars of comparable purchasing power /) surpassing that of the
US by one-eighth or more. Their total industrial production in value
1 It may be noted that for the purposes of the present paper, which
involves direct comparisons with estimates of Soviet Bloc national
accounte, aggregates calculated by a purchasing-power-parity method,
it would be seriously inconsistent and misleading to convert GNP
data of the other Free World countries into dollars at the current
official exchange rates. The figures given herein have been expressed
in dollar terms at implicit rates of conversion believed to represent
the approximate purchasing-power ratios between the domestic currencies
concerned and US dollars of 1958 purchasing power.
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terms is approximately equal to that of the US. Their aggregate
steel production and electric power production are also of comparable
magnitudes. Thus, one can say that this country's various Allies
together have all the industrial strength of a second United States,
that the total GNP of the US plus its Allies is E,nut P. trillion
dollars cf 3.958 parchaeing power, and that the particular combination
of Free World countries that is linked by multi- and bi-lateral
security arrangements with the US still "outweighs" the Sino-Soviet
Bloc economically by more than two-to-one.
Now that rates of economic growth are coming increasingly
into public consciousness as elements of the contest for "prestige",
it is of special interest that the percentage growth of our Allies'
GNP and industrial production has considerably exceeded that of the
US during the past decade. An important element in this growth in
the first half of the decade is of course the period of recovery from
the destruction and economic dislocation brought on by World War II.
It is probable that during the next few years our NATO partners and
our other Allies will continue to grow economically at a somewhat more
rapid rate than this country. The relatively greater importance of
their combined economic strength will be of increasingly critical
importance if the Free World coalitions are to maintain a substantial
material lead over the Bloc.
As the name of the "mutual security program" suggests,
a large part of the military and economic foreign aid effort of the US
is associated with our policy of collective security. It has undoubtedly
33
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contributed to the fact that today the Sino-Soviet Bloc is confronted
by a set of interlocking collective security arrangements having twice
the economic importance of the US alone. On the other hand, it would
be just as clearly unrealistic to try to impute the "costs" of our
aid programs against specific economic "advantages" which, even if
quantifiable, would be non-comparable. For example, our military
grant aid programs, which are running at a level of some 2 billion dollars
annually, are not in general on a quid pro quo basis with the recipient
countries. Rather, they must be viewed in the context of our entire
defense effort, in which the manner of allocation or deployment of
particular US resources of men, supplies, and material depends ultimately
on our strategic interests. In this sense, military grant programs
are analogous to our expenditures of dollars abroad to support our
own overseas troops and installations. To single out deliveries
of military end items to allied governments as a more significant
portion of the "cost" of a collective security arrangement than, say,
maintenance of SAC bases in the US and abroad is very misleading.
Moreover, some of our military aid goes to governments with which we
-are not formally allied.
The relationship between our economic aid and our collective
security arrangement is still more indirect. Of total non-military
grants running at an annual rate of about 1.6 billion dollars, less
than;a billion dollars go to P.llies. Where credits or sales of
agricultural products for local currencies are concerned, it is
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impossible (except in one or two obvious cases) to consider such "aid"
as part of the "cost" of an alliance at all. Indeed, with few excep-
tions, our NATO Allies are now repaying us more annually in debt
redemption than they are receiving in new credits or giants.
B= Political Assets and Liabilities
Collective security in peacetime must be grounded on a
set of basic values held in ccaanon, a security. system acceptable to all
the Allies and to which they all contribute, and mutually advantageous
economic relationships. The interaction of these three factors deter-
mine not only the durability but the political strength and cohesion
of the alliance.
It is the great strength of NATO that it so materially
satisfies these conditions. The values held in coon among the nations
of the North Atlantic Community are as extensive and probably more
responsive to basic human aspirations than those held by any other
group of people in the world. Although interpretations of the concept
of democracy vary somewhat, attachment to the principle of human dignity,
freedom and individual worth is almost universal. Perhaps, more signifi-
cantly, the North Atlantic peoples recognize their common heritage and
West European culture derived from Greco-Roman civilization.
Faced by the danger of Soviet aggression and subversion,
the NATO countries banded together in 1949 to combine their resources
for defense. Since then they have worked out an agreed strategy and
a set of military goals. Their cooperation in organizing their forces
and working toward these goals has been unprecedented in peacetime.
'35
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The infinite complexities of such joint programs as the building of
the necessary military infra-structure -- airfields, port, and other
common-use installations -- have in the main been coped with successfully.
Beginnings have been made on joint production of complex modern weapons.
While greater cooperation is undoubtedly desirable, the fact remains that
NATO's functioning integrated command system has no peacetime precedent
in relations among sovereign nations.
US assistance to European recovery from the devastation of
World War II, through the Marshall Plan, plus a growing realization of
the economic interdependence of the Atlantic area has led to close economic
cooperation in Europe. The improvement in Europe's economic situation
resulting from such cooperation has substantially strengthened the
NATO alliance. The emergence of new forms of highly promsing collabora-
tion among the coo cities of the Six, now makes it necessary that
ways be found to establish health trade relationships between the
Six and other trading nations of the Free World.
To these accomplishments the NATO Allies have added
the practice of frequent and close consultation on matters of mutual
political and military interest. These consultations have repeatedly
been the means of resolving differences of views among the Allies,
who like other groups of people have from time to time seen problems
from different standpoints. Thus, NATO's strength and its value to
the members is reflected, not by the number and complexity of the
problems that have arisen within its framework, but by the host of
solutions that have been found to them.
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In Asia there are several overlapping systems of
alliances which together, however, are not comparable in comprehensive-
ness to NATO in Europe. One of these, the British Commonwealth, is
not considered here although it includes a number of important Asian
countries contributing significantly to the aggregate strength of
non-Communist Asia. Alliance systems linking countries of the area
directly to the US are SEATO and ANZ'JS, which include as Asian members
Pakistan, Thailand, the Philippines, Australia, and New Zealand.
In addition,. Japan, Korea, and the Republic of China are linked to
the US through bilateral treaties. Although these countries, singly
or in combination, are no match for the might of the Sino-Soviet Bloc
without US participation, each of the countries listed contributes
importantly to the strength of non-Communist Asia..
The US allies in the area have repeatedly and in various
ways demonstrated their strength. Indicative of their democratic
approach to basic problems of the area are the orderly land reform
programs that have been completed in many of them, notably Korea,
Japan, the Republic of China, and the Philippines. The most highly
developed economy in Asia is that of Japan. competing in growth and
exceeding in absolute texla3, the highly-touted progress of Communist
China without the reg7.mentetinn of the latter. SEATO has instituted
several projects to encourage regional cooperaticu in each fields as
military;, planning, s:czituva, end education. To a degree, such
cooperation and other forms of outside help are required to assist
a number of the smaller and, less developed uatione to meet successfully
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the political, social, and economic strains caused by the need to
maintain the necessary defense establishment. The military effective-
ness of the alliance system was demonstrated in 1958 in the Taiwan
Strait. Deterred from expanding hostilities by the commitments embodied
in the US-Chinese alliance, the Chinese Communists were forced by
Republic of China military action to abandon their publicly-proclaimed
effort to seize Quemoy as a stepping stone to the seizure of Taiwan.
The alliances created since the cessation of hostilities in Korea and
Vietnam have helped prevent further outbreaks of aggression in those.
areas. Me constant Sinc-Soviet Bloc diplomatic and propaganda
campaign seeking to undermine the alliances and "neutralize" the
Asian participants can be regarded as a further testimonial to the
effectiveness of the alliance system.
The Rio Treaty signed in 1942 is the cornerstone of
all our military relationships with Latin American countries. In
this treaty, we and a r Latin American neighbors enunciated the
doctrine that an attack against any member of the regional community
shall be regarded as an attack against all. Since the beginning of
World War II, and especially since the Korean War, Latin American
countries have sought to reorient their armed forces in tln direction
of collective hemispheric defense. They have requested US military
training missions (now assigned to 18 countries), have had military
personnel trained in US military schools, have procured standard
US equipment, and 12 countries have signed bilateral agreements
committing certain of their military units for the performance of
collective defense missions, under the coordinated directions of the
Inter-American Defense Board.
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We have enjoyed close relations with Latin America since
their independence almost 150 years ago. Latin America is a major
market for US goods, having purchased 24 percent of our total exports
in 1957 and 25.6 percent in 1958. She has supplied many strategic
items to our defense mobilization stock pile. US direct investment
in the area rose from $3 billion in 1946 to approximately $9 billion
at the end of 1957. Latin American influence in the UN and other inter-
national forums has become an increasingly significant force for world
stability and peace, and the various countries of the area have, for the
most part, taken a common position with the United States in such forums.
C. Military Assets and Liabilities
Most Americans are intimately familiar with US defense
efforts -- an annual national defense and military assistance program
of more than $40 billion per year and the fact that we have almost 2.5
million men under Arms. However, there is comparatively little knowledge
of what our allies are contributing to the mutual defense effort.
Since 1950, the Army ground forces of our Allies have
increased from 3.5 million to 4.7 million men. Combatant naval forces
have increased from 1,200 to 2,100 vessels. Aircraft in these forces
have greatly increased while operational units now contain over one-half
jet aircraft. These figures do not reveal the vast qualitative improve-
ments in training, equipment, morale and leadership which apply to all
these forces. Today, US ground forces represent about 15% of the
total allied ground forces of 5,570,000 men, 60% of the 29,000 aircraft
in operational units, and 40% of the 3,700 combatant vessels. (See
Appendix, Table 3 for a tabular presentation of comparative military
strength data.)
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The US has contributed substant~ally to the growth of
allied forces; however, for each dollar we have spent between 1950
and 1958 on military assistance, recipient nations have spent more
than $6 -? with the ratio of expenditures by our allies steadily
increasing.
No consideration of the contribution of allies to free
world defense would be complete without taking into account relative
costs. Evidence of these costs can be seen in a comparison of the
cost, to pay, feed and clothe a US soldier with the same costs for
soldiers of our allies. The cost for an American soldier has been
estimated to be $3,859 annually. (Not including weapons, equipment,
transportation and other expenditures.) By contrast, the similar cost
to pay, feed and clothe a Belgian soldier was $1,430; a Greek $391;
or a Chinese $167.
We cannot evaluate how much the strength represented by
Allied forces would have cost the US had we tried to create it entirely
with our own resources. Beyond question, were it not for the allied
contribution to defense, for our own security, as well as for theirs,
we would have had to maintain a larger defense effort involving much
greater defense expenditures, more men under arms, and a considerably
larger proportion of them overseas. Moreover, the armed forces of our
allies have a familarity with local terrain and conditions that cannot
be matched by US armed forces.
The primary security aim of the United States and its
allies is to deter the Sino-Soviet Bloc from using its military power
to precipitate either global or local wars. Total war could begin
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either with a massive attack by the bloc, or through the. expansion of
a local conflict. We and our allies must be prepared to right either
type or war should it be forced upon us. In addition, our allies must
maintain forces capable of maintaining internal security, particularly
in areas along the periphery of the Communist bloc.
The NATO alliance serves as a deterrent force against
either local or all-out Soviet-bloc. military action against the -NATO
area. The retaliatory forces of NATO are composed of the strike force
of the Allied Command plus external forces under national ccmmand,.1.e.,
US SAC, UK Bomber Command, and the Allied Naval Forces with their
nuclear capabilities. The shield forces, with the exception of five
US divisions, are composed entirely of forces of our NATO allies.
One of the principal functions of strong NATO shield forces, deplcyed
well forward, is to reduce to a minimum, or remove altogether, any
possible uncertainty in the minds of the Soviet leaders that they
could risk military action on any scale in Europe; and particularly --? to
insure that they could not take such action rithout a major all out effort
which would make their intentions clear beyond doubt. European NATO
powers have over 3 million men under arms and the annual combined
defense expenditures of these countries have more than doubled in the
past ten years. In general their defense efforts have been great; in
those cases where their defense expenditures have been lower than might.
have reasonably been expected in terms of their general economic condition
there have frequently been. cogent political reasons why these expenditures
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could not be increased. However, the US has recently, on a number of
occasions, asked its allies to do their utmost to take on a larger
share of this burden. On balance, the NATO forces represent a formidable
deterrent to Communist aggression. However, the forces in general are
suffering from obsolescence and lack of money to more fully modernize.
Diversion of French equipment and forces to Algeria and other differences
of national interests have tended to decrease the cohesiveness and power
of NATO.
The collective defense system has enabled the US to maintain
more than 250 military installations abroad. Our Strategic Air Command,
our Navy, and our Army would each be vastly more costly if they were
forced to operate only from continental US bases. Our response to such
situations as Lebanon and Korea would be unacceptably slowed and our
present capability to launch a knock-out retaliatory strike from diverse
loca.ions would be severely hampered if it were not for these bases.
They further help insure that the Soviets could not launch a surprise
attack which would cripple our retaliatory capability at one blow.
These bases are especially important to us during that period when long-
range guided missiles are under development.
In countries associated with CHNTO, SEATO and the Rio Pact
the principal contribution desired from our allies is their ability to
resist local egression and maintain internal security. We rely upon
Allied forces around the periphery of the Sino-Saviet Bloc to deter
egression and provide initial resistance in the event of hostilities. In
addition to this direct military gain, the US reaps certain benefits of a
more general political nature from the cohesiveness of the alliance system.
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In the Par Met, for example, allied forces total over
1,500,000 men. Without these forces the United States would have to
station far greater numbers of American troops in the area to maintain
our security objectives. In this area the Republic of China and Korea
are two significant bulwarks against Communist expansion. They have
sufficient strength In personnel and material to convince the Communist
Chinese that any attempt to move against them will mean serious fighting.
Similarly, forces in Turkey and Pakistan serve to hinder
the Communists from penetrating, either overtly or covertly, into the
Near East and South Asia.
While CENTO, without outside assistance, cannot be expected
to withstand all out Soviet military aggression its members are taking
Hhnyy of the more underdeveloped countries of the Near
and Far East, which do not have a strong capacity to resist overt
agreasion, are nonetheless contributing to US security objectives by
maintaining internal security and thwarting Communist, attempts at
subversion.
Of necessity, SEATO was not organized with the expectation
of developing a cohesive regional force similar to NATO. However,
individual country forces and their agreement to meet common dangers
have served as a deterrent to Cammminist aggression in this strategic
area. Lack of standardization, obsolete equipment, insufficient
logistical facilities, and widespread illiteracy and malnutrition
limit the contribution these forces can make to collective security.
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In accordance with the Mtual Security Act, assistance
to Latin America has been furnished only in accordance with defense
plans which are important to the defense of the Western Hemisphere.
Under the terms of bilateral military assistance agreements between
twelve Latin American nations and the United States, each government
by mutual agreement makes equipment, materials, services or other
military assistance available to the support of hemispheric defense
units. The most pressing threat to hemispheric security is submarine
action in the Caribbean and along the coast of Latin America. Accordingly,
the nations of the Rio Pact have considerably modernized their anti-
submarine warfare capabilities.
While the United States does not ordinarily provide
military assistance for the purpose of maintaining internal security
in the Latin American Republics, the United States has heavy world-
wide commitments and would doubtless have few military forces to spare
for this area in the event of general hostilities. We would not be
able to spare 190,000 troops, as we... did in World War II, to protect
this area against aggression and infiltration. Thus, the ability
of Latin American nations to maintain internal security against
infiltration and subversion is extremely valuable to US interests.
The tracking facilities in Brazil and the Dominican Republic are
important to the development of our own missile programs.
Despite these signs of strength there is little capacity
for united action by the Latin American Republics. Participation by
the United States would be required to repel invasion by a mayor
outside power.
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United States military security is becoming increasingly
dependent on the ability to secure strategic materials from our allies,
while denying some of these materials to the Sino-Soviet bloc. Today
we import 100% of our natural rubber, tin, and abacs; 93% of our nickel
and c roe; and 85% of our manganese and bauxite for making alums um.
brewer, such products as cobalt, industrial diamonds, tungsten, and
platinum came either from our allies or areas controlled by them. By
preserving US access to these materials, our allies are contributing to
US and allied military strength.
The benefits derived from these various allied forces
cannot be measured solely in terms of tangible military capacity.
Intangible factors are of equal importance, for allied will and deter-
mination to resist aggression are highly significant factors in the
enemy assessment of the cost of aggression; and the existence of
military forces is a critical factor in bolstering allied determination
to resist aggression. Even small forces on the-Communist periphery,
outside the NPO area, serve as a trip wire to warn the world of
Communist incursions although indigenous forces may not be strong
enough by themselves to successfully resist aggression.
It has been necessary to speak rather generally of the
contributions which our allies make, without undertaking detailed
evaluations of the effectiveness of individual forces. One cannot judge these
contributions solely in terms of the percentage of gross national product
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devoted to military expenditures. or can a country's contribution
be measured strictly in terms of the nnber of men under arms. Such
a reckoning does not take into consideration either changes in strategy
or changes in the quality of manpower. The strengthening of NATO in
recent years has been more in modernization of equipment and facilities,
and in raising the efficiency and firepower of troops, than in increasing
numbers. Finally, one may perhaps evaluate the contribution made by
our allies by imagining that we had no alliances and that the US were
alone in maintaining armed forces to combat Communism. Former Secretary
of Defense McElroy rejected such a Fortress America theory with these
it is doubtful whether the United States alone could
hold all these varied fronts dispersed widely around the
world. Certainly, it would stretch our resources to the
full. To maintain adequate American military personnel
ready to respond immediately to aggression, major or minor,
would place such strains on our manpower that we probably
could not meet them -- even if the American public were
reconciled to do so. Furthermore, it, is most doubtful
that the deployment of American forces in such numbers
and such strength would be acceptable to the nations in
which they would have to be located.
Basic to our whole security program is the concept
of a strength created and maintained by joining the capa-
bilities of ourselves and our allies.
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1
14
I
14
U, W o W
MI N
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1-4
H H H ri H
11N1 CQ U1 .~' 1lNN1
rl r"-1 ."-1 r"-1 r-1
u1
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TABLE 3
COI PARATM MILITARY STRE1VCTh RATA
US AND ITS ALLIES VS. SING-SOVIET BLOC
2 ? /
US and
Alliances
US Allies
as percent of total
5,570,000
4,700,000 12,000 2,100
84 41
Sino-Soviet About
Bloc About About About
9,300,000 7,250,000 25,000
3
,
006
of which:
European Satellites
and Couunist China
About
About
4
,700,000
4,250,000
European Satellites
and Communist China
as percent of total
r
time of the completion Y forces, implied in this table. As of the thi
thOrOu of Khrushchev'ss statement hadsnot beenacomrl * 4gh evaluation of the credibility
is almost 1,000,000 less than the c 8 figure for total armed forces
ommonly
accepted figure of about
4,600,000, including secu
it
e not
included.
On 14 January 1960, premier Khrnshchev placed the personnel strength of
the Soviet armed forces at 3,623 000 Thi
s
mutual defense agreement. Numerous either bilateral or multilateral
are receiving U.S. mill other friendly nations, maw, of which
tart' assistance ar
About About
6,000 700
For Purposes of this table, allies of the U.S. have been defined as those
countries with whom the United States ha
Includes vessels in reserve and undergoing repair.
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Armed Forces Aircraft in
Major
Total Active Arm. Active Operational
Strength Strength Unite Cambatant
Vessels J