Read France Restored: Cold War Diplomacy and the Quest for Leadership in Europe, 1944-1954 Online

Authors: William I. Hitchcock

Tags: #History, #Europe, #France, #Western, #Modern, #20th Century, #Political Science, #Security (National & International), #test

France Restored: Cold War Diplomacy and the Quest for Leadership in Europe, 1944-1954 (17 page)

BOOK: France Restored: Cold War Diplomacy and the Quest for Leadership in Europe, 1944-1954
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Total balance with dollar
zone (including
shipping and overseas
territories deficit)
697.1
1,356.8
1,395.7
1,133.6
857.6
Source:
Institut National de la Statisrique et des Etudes Economiques,
La balance des paiments
(Paris, 1957), 23839.
spite large-scale liquidation of foreign assets and investments, as well as the American loan and credit negotiated by Léon Blum in early 1946, France lost nearly $ 2.5 billion of gold and foreign currency reserves in the 194548 period and over $ 1 billion in 1946 alone. The gold holdings of the Bank of France in 1948 were one-tenth the level of 1932.
63
It is important to note that in these desperate conditions  chronic inflation, an enormous current account deficit, the loss of reserves, capital flight  the multilateralism that the United States glibly urged upon Europe in the Bretton Woods accords seemed downright threatening to the French government (and to the British as well). France's need to establish a trade balance by exporting goods commensurate with its large import requirements meant that the government ought to have favored the development of international commerce and the lowering of tariffs. But its domestic economy could not yet support the impact of unfettered international competition, at least not until the economy had been strengthened by the modernization plan that the government in 1947 was planning to undertake. These were contradictory positions, and André Philip, the minister of national economy, recognized this. France, he nonetheless believed, had to maintain a balance between an open market and protectionist tendencies. As a consequence, Philip was unwilling to give up tariffs in exchange for American aid or to give up the advantages of imperial preference. Prime Minister Paul Ramadier, a fellow Socialist, agreed with Philip. "The permanence of the [economic] crisis," he declared to the CEI, "justifies discriminatory measures."
64
 
Page 67
Indeed, France was forced to pursue economic policies quite contrary to those that Washington hoped to see: state trading through the French Supply Missions abroad, periodic devaluations, and extensive government control of capital movements and trade. Until the problem of France's trade deficits could be solved  which, as a prerequisite, meant increased production and stepped-up exports  France could not support the kinds of multilateral policies that the United States demanded. But increased production could only come about through expansionary, and inevitably inflationary, government policies and through increased imports, both of which aggravated the trade deficit. This infernal cycle endangered the entire plan for French reconstruction.
Another threat to the French reconstruction plan that had to be resolved through diplomatic channels was the shortage of coal in Europe. France habitually imported between 30 and 45 percent of its coal needs in the interwar period. Although by the middle of 1946 domestic coal production had achieved its 1938 level, imports lagged woefully, largely because German coal resources were as yet limited, and because American coal was so expensive that imports from the United States aggravated an already desperate balance-of-payments situation. By the end of 1946, French observers were reporting that German coal production was recovering and that France ought to press its claims for access to this increased supply. With German coal costing only $ 14 per ton, as against American coal at $ 22 per ton, the French clearly had a strong financial interest in greater imports of German coal, in addition to their politicoeconomic goal of slowing German recovery in favor of France's own.
65
The need for German coal was all the more acute in light of the alarming report of Philip to the CEI in early March showing that because of a falloff in foreign labor and the repatriation of the German POWs working in French mines, the 55.5 million tons of domestic coal production that the Monnet Plan had envisaged for 1947 could not be met. As a consequence, the production levels of iron, steel, electricity, and gas would not meet their projected increases either. Ultimately, the coal shortage might lead to cutbacks in expenditures for the merchant marine, public works, building construction, shipbuilding, and the military.
66
Not surprisingly, the Ministry of National Economy now believed that ''the entire economic outlook is dominated by the coal problem." Alphand at the Quai went even further: "substantial and regular deliveries of German coal are an indispensable element in the return of France to her industrial strength, and by consequence, to her political influence." Coal was vital to domestic and international recovery.
67
 
Page 68
With these grim realities in mind, the French government had to outline a strategy for the coming Conference of Foreign Ministers in Moscow. Would the economic and coal crises force the French to compromise with the United States and Britain in exchange for aid and a coal settlement? Certainly, Bidault must have felt under a great deal of pressure to demonstrate some flexibility on German policy. For a brief onemonth period, Bidault had to surrender the Foreign Ministry to Leon Blum, who acted as premier and foreign minister in a caretaker government from December 1946 to January 1947. During this month, Blum began to dismantle Bidault's German policy, trying to slow the economic union of the Saar with France, and pushing the idea of an international agency  along the lines of the Tennessee Valley Authority  that could control Ruhr coal and steel production. This effort squared with André Philip's thinking that economic access to the Ruhr promised a more constructive policy than dismemberment, an approach now totally rejected by the ACC in any case. Blum also launched an intensive campaign for an Anglo-French alliance, on the premise that better relations with the British might smooth the way toward an understanding over Germany. Blum's tenure was too brief to bring about a wholesale change in France's policy. His initiative did result, however, in the signing of the Treaty of Dunkirk in March 1947. This Anglo-French mutual security pact explicitly referred to the shared interest of both states in "preventing Germany from becoming again a menace to peace," and was a considerable shot in the arm for the beleaguered French government. In the wake of this success, Bidault's Socialist critics openly suggested that too great an emphasis on achieving specific demands in Germany had blocked progress on other fronts and made strangers of France's closest friends, especially Britain.
68
Not only the Socialists were restive: Pierre-Henri Teitgen, a Christian Democratic colleague of Bidault's who acted as interim foreign minister while Bidault was in Moscow, urged Bidault to seek a deal with the Anglo-Americans. Without coal, he wrote, "our entire program of economic and financial development will be put in doubt, and with it the standard of living, and the very political stability, of the nation." Given these dire circumstances, Teitgen continued, "we should immediately examine . . . the counterparts that the Anglo-Saxons would be disposed to offer us to obtain our adhesion to their interzonal agreement.'' This was a call to exchange France's zone of occupation  the country's only trump card  for coal.
69
Bidault remained reluctant to alter his positions, especially in the areas of the centralization of administration and increases in the level of
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