Postwar

miscalculation of all. The Americans and West Europeans immediately drew the (erroneous) conclusion that Korea was a diversion or prelude, and that Germany would be next—an inference encouraged by Walter Ulbricht’s imprudent boast that the Federal Republic would be next to fall. The Soviet Union had successfully tested an atomic bomb just eight months earlier, leading American military experts to exaggerate Soviet preparedness for war; but even so, the budget increases requested in National Security Council paper #68 (presented on April 7th 1950) would almost certainly not have been approved but for the Korean attack.

The risk of a European war was greatly exaggerated, but not completely absent. Stalin was contemplating a possible assault—on Yugoslavia, not West Germany—but abandoned the idea in the face of Western rearmament. And just as the West misread the Soviet purpose in Korea, so Stalin—accurately advised by his intelligence services of the rapid US military build-up that followed— mistakenly assumed that the Americans had aggressive designs of their own on his sphere of control in eastern Europe. But none of these assumptions and miscalculations was clear at the time, and politicians and generals proceeded as best they could on the basis of limited information and past precedent.

The scale of Western rearmament was dramatic indeed. The US defense budget rose from $15.5 billion in August 1950 to $70 billion by December of the following year, following President Truman’s declaration of a National Emergency. By 1952-53 defense expenditure consumed 17.8 percent of the US GNP, compared with just 4.7 percent in 1949. In response to Washington’s request, America’s allies in NATO also increased their defense spending: after falling steadily since 1946, British defense costs rose to nearly 10 percent of GNP in 1951-52, growing even faster than in the hectic rearmament of the immediate pre-war years. France, too, increased defense spending to comparable levels. In every NATO member state, defense spending increased to a post-war peak in the years 1951-53.

The economic impact of this sudden leap in military investment was equally unprecedented. Germany especially was flooded with orders for machinery, tools, vehicles and other products that the Federal Republic was uniquely well-placed to supply, all the more so because the West Germans were forbidden to manufacture arms and could thus concentrate on everything else. West German steel output alone, 2.5 million tonnes in 1946 and 9 million tonnes in 1949, grew to nearly 15 million tonnes by 1953. The dollar deficit with Europe and the rest of the world fell by 65 percent in the course of a single year, as the United States spent huge sums overseas on arms, equipment stockpiles, military emplacements and troops. FIAT in Turin got its first American contracts, for ground-support jet aircraft (a contract urged upon Washington for political reasons by its Rome embassy).

But the economic news was not all good. The British government was forced to divert public expenditure away from welfare services to meet its defense commitments, a choice that split the governing Labour Party and helped bring about its defeat at the elections of 1951. The cost of living in West Europe went up as government spending fuelled inflation—in France consumer prices rose 40 percent in the two years following the outbreak of war in Korea. The West Europeans, who had only just begun to reap the benefits of Marshall Aid, were clearly in no condition to sustain for very long what amounted to a war economy and the 1951 US Mutual Security Act recognized this, effectively closing out the Marshall Plan and transforming it into a programme of military assistance. By the end of 1951 the US was transferring nearly $5 billion of military support to Western Europe.

From a psychological boost to European confidence, NATO thus became a major military commitment, drawing on the seemingly limitless resources of the US economy and committing the Americans and their allies to an unprecedented peacetime build up of men and materiel. General Eisenhower returned to Europe as Supreme Allied Commander and Allied military headquarters and administrative facilities were established in Belgium and France. The North Atlantic Treaty Organisation was now, unambiguously, an alliance. Its primary task was what military planners called the ‘forward defense’ of Europe: i.e. confrontation with the Red Army in the middle of Germany. To perform this role, it was agreed at the NATO Council meeting in Lisbon in February 1952 that the alliance would need to raise at least ninety-six new divisions within two years.

But even with a significant and ever-growing American military presence there was only one way in which NATO could meet its targets: by rearming the West Germans. Thanks to Korea the Americans had felt obliged to bring up this sensitive matter (Dean Acheson first raised it formally at a Foreign Ministers’ meeting in September 1950), even though President Truman himself was initially reluctant. On the one hand no-one wanted to put weapons in the hands of Germans just five years after the liberation of Europe; on the other hand, and on the analogy of the economic difficulties of the Bizone just three years previous, there was something perverse about spending billions of dollars to defend the West Germans from Russian attack without asking them to make a contribution of their own. And if Germany was to become, as some anticipated, a sort of buffer zone and future battlefield, then the risk of alienating German sympathies and encouraging neutralist sentiments could not be ignored.

Moscow, of course, would not take kindly to West German rearmament. But after June 1950 Soviet sensibilities were no longer a prime consideration. The British, however reluctantly, saw no option but to find some device for arming Germany while keeping it firmly under Allied control. It was the French who had always been most firmly opposed to putting weapons in German hands, and France had certainly not joined NATO just to see it become an umbrella for German remilitarisation. France managed to block and postpone the rearmament of Germany until 1954. But long before then French policy had been undergoing a signal transformation, allowing Paris to accept with some equanimity a limited restoration of Germany. Unhappy and frustrated at being reduced to the least of the great powers, France had embarked upon a novel vocation as the initiator of a new Europe.

The idea of European union, in one form or another, was not new. The nineteenth century had seen a variety of more or less unsuccessful customs unions in central and western Europe and even before World War One there had been occasional idealistic talk, drawing on the idea that Europe’s future lay in a coming together of its disparate parts. World War One itself, far from dissipating such optimistic visions, seems to have given them greater force: as Aristide Briand—the French statesman and himself an enthusiastic author of European pacts and proposals—insisted, the time had come to overcome past rivalries and think European, speak European, feel European. In 1924 the French economist Charles Gide joined other signatories across Europe in launching an International Committee for a European Customs Union. Three years later a junior minister in the British Foreign Office would profess himself ‘astonished’ at the extent of continental interest in the ‘pan-European’ idea.

More prosaically, the Great War had brought French and Germans, in a curious way, to a better appreciation of their mutual dependence. Once the post-war disruption had subsided and Paris had abandoned its fruitless efforts to extract German reparations by force, an international Steel Pact was signed, in September 1926, by France, Germany, Luxembourg, Belgium and the (then autonomous) region of the Saar, to regulate steel production and prevent excess capacity. Although the Pact was joined the following year by Czechoslovakia, Austria and Hungary, it was only ever a cartel of the traditional kind; but the German Prime Minister Gustav Stresemann certainly saw in it the embryonic shape of future trans-national accords. He was not alone.

Like other ambitious projects of the 1920s, the Steel Pact barely survived the 1929 crisis and ensuing depression. But it recognized what was already clear to French ironmasters in 1919: that France’s steel industry, once it had doubled in size as a result of the return of Alsace-Lorraine, would be utterly dependent on coke and coal from Germany and would therefore need to find a basis for long-term collaboration. The situation was equally obvious to Germans, and when the Nazis occupied France in 1940 and reached agreement with Petain on a system of payments and deliveries amounting to the forced application of French resources to the German war effort, there were nevertheless many on both sides who saw in this latest Franco-German ‘collaboration’ the germ of a new ‘European’ economic order.

Thus Pierre Pucheu, a senior Vichy administrator later to be executed by the Free French, envisaged a post-war European order where customs barriers would be eliminated and a single European economy would encompass the whole continent, with a single currency. Pucheu’s vision—which was shared by Albert Speer and many others—represented a sort of updating of Napoleon’s Continental System under Hitlerian auspices, and it appealed to a younger generation of continental bureaucrats and technicians who had experienced the frustrations of economic policy making in the 1930s.

What made such projects especially seductive was that they were typically presented in terms of a shared, pan-European interest, rather than as self-interested projections of separate national agendas. They were ‘European’ rather than German or French, and they were much admired during the war by those who wanted