CHALLENGE TO THE WEST
Clubb, O. Edmund
Challenge to the West by 0. EDMUND CLUBB IN THE red glow of Hungary and Suez, men could perceive a great change for the worse taking place in the world: the laborious trend toward international...
...In the post-1952 period, one-half of American foreign investment was in Canada...
...In 1955, Western Europe (including Britain) consumed 92 million tons of Middle East petroleum...
...government would provide a capital fund of $10-12 billion, other advanced industrial countries would contribute $2-3 billion more, for loans and grants over an initial five-year period...
...The,United States is investing about $46 billion of private capital annually at home, but only something around $1 billion abroad, mostly in petroleum and mining...
...had granted $5.25 billion in credits to other Communist-bloc countries, including $1.4 billion to China...
...The Communist bloc, far from wasting away behind our economic cordon sanitaire, has become industrially strong...
...Now there is a new world emergency growing up in the East: the underdeveloped countries in that part of the world, armed with the nationalism we taught them, are rising in revolt against an ancient economic inequality that they deem unjust...
...report hows that the trade of the Arab countries is tending to shift from the West to the Communist bloc, including China...
...For those countries trying so hard to lift themselves by their own bootstraps, the fundamental need is massive international movements of capital...
...Java had four and one-half million people in 1815, 50 million in 1955...
...Measures would be taken to increase the international flow of private capital during those five years by $3-4 billion over present levels...
...The traditional private U.S...
...But the international market for their primary products is, for technical reasons, not expanding as rapidly as Western industry advances...
...At best, the blockage of Suez will have far-reaching effects on Western Europe's industry, foreign trade, and financial position...
...With the increased demands which will doubtless be made upon the United States, for emergency aid to Western Europe, and the stimulus that martial events in Eastern Europe and the Middle East will lend to the Cold War spirit, resistance to pro-posals for an expanded program of economic aid will probably increase...
...to the economic and political development of the rest of the world...
...China's foreign trade in 1954 was up an estimated 4.5 per cent over 1953 and reached a total value of $3.6 billion...
...Our foreign economic policy, in the aggregate, is a crazy-quilt of laissez-faire improvisations...
...In the post-World War II period, after corralling Eastern Europe, Russia projected its national planning into international dimensions, for coordination of economic efforts...
...The depressed peoples look to the economic aristocrats of the community of nations to help them, from their wealth and technical knowledge...
...It depends in large measure upon the, Atlantic community for political survival...
...The times demand a generous measure of coordination of economic relations within the Atlan tic community, coupled with an in ternationalization of the exigent taste of helping the underdeveloped areas of the world overcome their economic difficulties...
...Recent events have indubitably weakened the NATO community politically as well as economically...
...India, for example, received only $100 million of such capital in ten years...
...The lion's share of that huge sum went to Europe...
...The Communist bloc now counts some 30 trade agreements with different countries of Asia, and its 1955 trade with that continent was approximately 20 per cent greater than in 1953...
...The United States is among them...
...But such aid as the United States offers is primarily military...
...Given especially the rapid growth of population, the current rate of investment enables the underdeveloped countries to do little more than maintain the present standard of living_ a standard of misery...
...Our government in stalwart in rejecting any protest from, say, the New Zealand govern ment regarding the dumping of our surplus dairy products in the world ^^fceij or from the Egyptian cotton grower But it is quick,to surrender to a bicycle lobby, or to investigate saports of butter-oil from Scandinavian countries "to determine if there is a need for import restrictions...
...Our economic aid programs remain minor...
...Upon becom ing allied to China in 1950, the U.S.S.R...
...The U.N...
...He saw a "steadily rising tide of resentment on the part of the majority of the world's citizens, against the wealth and power of the West, and against our indifference...
...And it is at this juncture that the Communist phalanx comes forward to develop political economic and cultural relations with the Asian and African peoples who have grown to distrust, where they do not hate, the West...
...Yet the U.S government between 1954 and 1956 contracted to sell $2.2 billion worth of farm surpluses abroad, including huge quantities of wheat, rice, and...
...The interruption of transport via Suez will, in sum, bring deleterious consequences for the underdeveloped areas of Asia...
...Many countries have joined in digging that "abyss of separation...
...But since World War I private capital has become fearful of leaving its own shores and tends to stay at home, excepting as it can go into "sure things...
...nearly doubled...
...Israel, Britain, and France have attacked not the Soviet Union, but Egypt...
...it is less able than before to undertake common action against a general threat...
...We obtain 57 per cent of our imports from the underdeveloped countries...
...other countries should share in the burden of lending aid where needed in the human family...
...The Canal that year handled a full 65 million tons of oil...
...A contemporary U.N...
...As they approached the time (1956) for the launching of their next Five Year Plans, that concept was brought to full flower...
...From that trade the West obtains the raw materials of industry...
...1 The events of the past weeks in Eastern Europe and the Middle East, offer a harsh commentary on the cultural status of Western Man...
...The program presented Congress by the Administration in 1956 was typical: it had earmarked a full $4 billion of the $4.9 billion total for military aid and "defense support...
...the underdeveloped countries rely on the same trade to better the onerous lot of their peoples...
...They supply for world commerce such important primary products as manganese, tin, uranium, rubber, jute, cotton, rice, and coffee...
...Thus, although the then foreign operations director, Harold Stassen, reported in November 1954 that the United States had "informally" pro posed to the Organization for Euro-pean Economic Cooperation that the nations of Western Europe join witi the United States in a "broad devel opment program" for the free coun tries of Asia, his idea died a-borning-At the May 1956 meeting of the NATO Council in Paris, French For eign Minister Pineau proposed the creation of an agency for world eco-nomic development responsible to the U.N...
...One cannot now see the ultimate outcome, but even the immediate consequences are grave...
...Millikan and Rostow recommended a progressive liberalization of American foreign-trade policies, and the achievement of a common free-world policy respecting East-West trade...
...Thus we might in the end be able to assist in rebuilding mutual trust and confidence and contribute our share toward bridging the "abyss of separation" that now divides, so dangerously, so many of the world's peoples...
...James P. Warburg, that indefatigable banker-pamphleteer, in a monograph entitled Danger and Op~ portunity, says that Western Man, who "has preached love and practiced hate," who "has spawned Torque-madas, Napoleons, Hitlers, and Stal-ins" but not since the birth of Christ has produced a Gandhi, faces his final challenge: Western Man, with his civilization, "now stands on trial before the aroused masses of mankind...
...world capital market has shriveled up...
...Over a billion people live in the underdeveloped areas, and their numbers are rapidly increasing...
...Most of them are dependent upon the export of only one or two major raw materials, such as oil or rubber, for their foreign exchange...
...Suspicion and distrust have dug a deeper abyss of separation...
...Pakistan and Burma, with construction plans of their own, are O. EDMUND CLUBB, a retired American Foreign Service officer, served for 20 years in Asia...
...Those nations have no capital pool of their own...
...It would smack of wishful thinking to conclude that, with the Soviet Union and China held together by bonds of common political and economic Interest, with Poland and Yugoslavia Maintaining their essential loyalty to the Titoist concept of Eastern Eu-hope and Czechoslovakia unmoved by developments, and with East Ger-many firmly controlled by Soviet plops, the Soviet Union's European Jtower is about to disintegrate If is more logical—and safer—to fejfj-flr that the Communist bloc's llgi.'ties will hold, and that the HPfet Union and China in partiallar will endeavor to recoup any European losses by exploiting opportunities now offered east of Suez...
...The soundness of our basic Cold War concept has been belied by an event which sees various elements of both the Communist and anti-Communist camps warring with each other...
...In the postwar period the United States decided that this was a bipolar political world, divided into "our" and "their" camps, and in the service of that concept provided vast stores of arms to a large number of countries and assiduously trained various Asian nations in the art of political and economic warfare...
...Nor would it be wise to assume at this stage that the events Hungary make any essential difference in this regard...
...And it is in the so-called underdeveloped areas of the world that the greatest political crisis of all for the West is building up...
...India (including the part which is now Pakistan) had 150 million people in 1850, and 440 million in 1955...
...World Economic Survey for 1955 recorded that the total foreign trade volume of the Soviet Union in 1954 was four times as large as before the war, and that from 1948 to 1954 the aggregate foreign-trade turnover of six East European satellites (East Germany omitted) increased by 70 per cent—while that of the U.S.S.R...
...Yet the world's changes will not Wait upon our convenience...
...Yet, there can be no shirking of the chal-lenge to our intelligence and our humanity...
...Such proposals run directly counter to the whole trend of our existing policy...
...When U.N...
...Here lies a great danger, described by British economist Colin Clark in a 1953 lecture on "The Have and Have-Not Countries...
...In 1949, the Communist bloc erected its own substitute for the Marshall Plan a Coun il of Economic Mutual Aid...
...Khrushchev reported in February 1956 that the U.S.S.R...
...There has been no dearth of U.S...
...moved to adjust its pans to a still greater sphere...
...But to share requires international organization, and there is the rub...
...In its competition for a major share of the world's output of raw materials, the United States cannot with impunity ignore current trends, for they spell danger...
...Not even the powerful United States is self-sufficient...
...The task before him is to make an effec-tive response to the challenge of the many peoples of other cultures whom he once ruled but rules no longer, but his actions deny that he appreciates the urgency of the hour...
...The total income of that billion people in 1950 amounted, by United Nations estimates, to about $80 billion, an average of $80 per capita per year (in Southeast Asia, $30 per capita...
...India, for instance, normally ships about 70 per cent of its imports and 60 per cent of its exports via Suez...
...That action, designed to re-establish Western control over the Suez Canal, has instead disturbed the whole Middle Eastern situation and resulted in the severance of sea communications between Europe and Asia via the direct Suez route...
...The impoverishment of the underdeveloped countries is manifestly not only an American problem...
...delegate Henry Cabot Lodge at the end of April said only that the United States must channel more of its foreign aid through the U.N., both Secretary off State Dulles and President Eisen hower promptly spoke out to the contrary...
...cotton (all of them competitive with the exports of various underdevel oped countries) at prices far below American levels...
...Beginning in 1953-54, the European Communist countries began to eliminate "harmful parallelism" in their economic activities and undertook a fuller ro-ordination of their several national economic plans...
...But now the Cold War has assumed a strange and furious aspect...
...The Soviet Union has entered the Latin American market, and an American oil company's report of last October to a Congressional committee stated that "Soviet trade with the Latin American states is now running at the rate of half a billion dollars annually, representing a growing adverse influence and a loss of traditional American markets...
...The United State consequently experiences the greate embarrassment in participating in international economic enterprises Any proposal that the Atlantic com munity organize itself for the purpose of aiding three retarded continents at some sacrifice to ourselves is cer-tain to encounter bitter opposition...
...The Middle East crisis will have serious consequences, moreover, in South Asia...
...Africa and Latin America stir in unrest...
...Those areas (arbitrarily excluding Communist China) comprise roughly all of Latin America and Africa, the Middle East, and South and Southeast Asia...
...Even before the West has effectively seized the problem, time has run' out...
...The perr vading protectionist urge led us to put an anti-dumping law on our books as early as 1921...
...The Communist effort to date is substantial...
...Challenge to the West by 0. EDMUND CLUBB IN THE red glow of Hungary and Suez, men could perceive a great change for the worse taking place in the world: the laborious trend toward international order and justice had been suddenly reversed...
...The United States opposed the project...
...The Soviet Union has reinstated its authority in Hungary by force of arms...
...In May 1955, the Soviet Union and its seven East European satellites met at Warsaw, with a Chinese observer present, and according to East Germany's Walter Ulbricht (as quoted by the New York Times) the Political Consultative Committee there devised would act to coordinate policies, including economic planning, "for the huge area from Peiping to Berlin...
...Alongside the credits and industrial projects goes Communist trade...
...It depends upon foreign lands for vital industrial raw materials, feeding its roaring industry with manganese from India, rubber and tin from Malaya, and iron ore from Canada, Africa, and South America...
...likewise affected, and so are all other Asian countries trading with Europe...
...Ever since World War I, economic autarky has been vigorously fostered in the West, and in the United States particularly, with primacy always given to "nafionaT interests...
...The West had not yet made a substantial start toward economic regulation within the Atlantic community, and was therefore years behind...
...The Soviet Union let the United States spend $55 billion in performing the emergency functions of rehabilitating, and then re-arming, the devastated postwar world...
...By the beginning of 1956, the Communist bloc had completed the complex task of organizing international economic coordination as an institution and was ready for world-wide business...
...In general, such credits are for industrial and construction projects, with military deals (as in the case of Afghanistan) separate...
...We are forced to return to the old axiom that military alliances are strong only in so far as they are firmly based upon common political and economic interests...
...The State Department was reported in May as estimating that the Soviets had in addition granted about $600 million in credits to India, Afghanistan, and Yugoslavia...
...most of the rest went into South America, African, and Middle Eastern oil and minerals...
...And the United States, if it stands (like Japan) to make some short-term gains in Asia as a result of the blocking of Europe's trade shipments through the Canal, cannot in the longer term escape unscathed from the ill effects of the Suez crisis...
...New governmental committees were set up last summer to study the perennial problem of foreign aid, but there is no visible sign that the Executive, or Congress, has made any perceptible advance in a new direction...
...This, although U«S...
...practically none has gone into the long-term development projects so close to the hearts of Asians...
...There must be, they said, no tie between economic aid and military pacts...
...Nor does it act alone...
...The economy of the entire Atlantic community will suffer...
...This is dumping but the United States maintains a double standard...
...But there is a great inequality between those countries and the advanced manufacturing nations of the world...
...The U.S...
...That threat is present, in world trade—and economic aid...
...The United States even continues adamantly in opposition the projected Special United Nations Fund for Economic Development (SUNFED), although the Fund is strongly favored by Asian nations, on the unconvincing grounds that it could contribute its modest share only if and when a disarmament agreement might permit savings in arms costs...
...Pope Pius XII put his finger on the critical factor in the deteriorated world situation: "The slender thread of trust, which had begun to reunite peoples and sustain their hearts a little, seems to be broken...
...But there can be no restoration Of the status quo ante in the Middle East, for the Israeli-British-French actifln set in motion a chain of events which cannot be turned back...
...exports exceeded imports by $4 billion in 1955 So, although the slogan makes it trade, not aid," the most productive ptation on earth maintains foreign-trade policies which often do injury to the exports of various underdeveloped countries—and make their need for aid all the deeper...
...The net result is that the rich countries are continuing to advance at a relatively as well as absolutely faster rate than the poor countries...
...It must import bauxite, crude oilr oil, wood pulp—and uranium...
...Their comprehensive plan envisaged the early implementation of a joint program for sustained growth in the free world, effective for at least a decade...
...Some 74 per cent of Western Europe's exports, and 65 per cent of its imports, are with the underdeveloped areas...
...He voiced a warning: "Unless something is done, and done within a few years, I fear that this resentment will turn to an irrevocable hatred which will send the whole world up in flames and may mean the end of any kind of civilization...
...The issue is thus more than a moral one...
...Now its Second Five-Year Plan, launched in 1956 with a present financing deficit of $600 million, will become notably more difficult to accomplish...
...The Soviet Union, which occupied a minor position (roughly comparable to Switzerland's) in foreign trade between the two World Wars, has now entered world commerce in a major role as a source of capital, supplier of industrial equipment, and purchaser of primary products...
...governmental studies of that problem as related to American defense, and in the past year especially there has been a growing demand for a reduction of the predominantly military emphasis in our aid programs...
...the Soviet Union has struck at one of its own satellites, not at ATO...
...The population of South and Southeast Asia is growing at the explosive rate of 10 million a year...
...In May 1956 economists Max Millikan and W. W. Rostow submitted to the U. S. government a survey stressing the economic aspects of the matter...
...His warning suggests the true dimensions of the problem of foreign aid...
Vol. 21 • January 1957 • No. 1
