PRINCETON CONSULTANTS ' MEETINGS OF 8 - 9 FEBRUARY 1956

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 03436549
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 10
• Document Creation Date: December 28, 2022
• Document Release Date: August 9, 2018
• Case Number: F-2013-02252
• Publication Date: March 6, 1956

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CENTRAL INTELLIGENCE AGENCY
OFFICE OF NATIONAL ESTIMATES
6 Mardh 1956
STAFF MEMORANDUM No. 19-56
SUBJECT: Princeton Consultants Meetings of 8-9 February 1956
PARTICIPANTS
Chairman
James Cooley
Consultants
Hamilton F. Armstrong
William H. Dunham
George F. Kennan*
Klaus Knorr
William L. Langer
Edgar Hoover**
Colo George A. Lincoln4 USA
Max F. T4illikan
Philip E. Mosely
William A. Reitzel
Joseph R, Strayer
T. Cuyler Young
477;13.17aWii-C;nly
**9 February only
Board of National Estimates
Sherman Kent
Staff_ Members
CO I NTIAL
Robert Korner
Robert Hewitt**
DOCUMENT NO
ati
NO CHANGE IN CLASS. Ca
0 DECLASSIFIED
CLASS. CHANGED TO: T� S
NEXT REVIEW DATE u
AUTH: HR 10-2
DATE." MAUI 8.13 REVIEWER
(b)(3)
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I. WEST GERMANY
1. The discussion was based on a staff memorandum dated
3 February. STRAYER opened with the observation that the memorandum
was too optimistic regarding Adenauer's control of West German politics�
He felt that the Chancellor is already losing his grip, and that Bonn
will become more independent in foreign affairs over the next several
years. LANGER said that the important question to be considered
is what MOSCOW will do in East Germany and what effect Soviet policy
regarding Pankow will have on the West Germans� He questioned the
memorandum's emphasis on the current Western orientation of the
Federal Republic; he felt that Bonn is pursuing its national interests
at the present timep and can be expected to follow a more nationalis-
tic course in the future. He suggested that considerable attention
should be given in the coming NIE on West Germany to Franco-German
relations, to the Saar, and to the probable domestic and foreign
economic policies of Bonn.
20 Speaking on the economic question, KNORR asserted that
the forecast in the memorandum was too ontimistic. He held that
economic progress is doubtful, because of labor and capital shortages,
an increase in wage demands by unions, and the credit squeeze. He
also felt that rearmament might have a serious effect on estern
Germany's exporting industries. LINCOLN stated that German firms
would trade anywhere they can gain profits, and would attempt to
increase trade with the Soviet Bloc� He felt that rearmament would
not seriously impair economic growth because Bonn will purchase or
receive its military equipment from the US. MILLIKAN said that West
Germany will not be able to maintain its favorable balance of trade,
and that inflationary pressures will increase. He suggested that
East Germany will attempt to entice Bonn into negotiations by
offers of trade. LANGER didn't believe that Pankow had anything in
the way of trade to offer Bonn and felt that West Germany would
increase its Middle Eastern trade, and might help in the development
of southern Italy�
30 Turning to Bonn's foreign policy, KENNAN said that West
German enthusiasm for European integration has waned considerably
in view of the weakness of the movement to "create Europe". He stated
that many younger West Germans are disillusioned, don't believe that
the US is sincere about European integration, and feel that France
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is against it, KNORR felt that European integration had received a
boost following the Geneva Foreign :iinisters9 Conference, citing
EURATOM and the common market proposals. KENNAN replied that there
may be some feeling for modest efforts at European economic coopera-
tion, but not for full-scale political integration. LANGER didnRt
believe the West Germans had any real hope that the Geneva Conferences
would speed unification. STRAYER said that the West Germans certainly
didn9t expect the tough line Molotov took at Geneva. ARMSTRONG
said that Adenauer is already being discounted as the only political
factor, and cited the Chancellor g9 backing down in his dispute with
the Free Delocrats as an indication that Adenauer is losing his power.
He said that the Chancellors prolonged illness had a profound effect
upon Ilest German opinion in that Germans now realize fully for the
first time that Adenauer will not head the Government for very long.
4. KENNAN said that While the men around Adenauer are pro-
Western, there is tremendous political pressure concerning unification.
He said it is not a question of whether to negotiate with the Bloc,
but rather of what types of negotiation to conduct. He then suggested
that considerable attention should be given in the upcoming NL to
Berlin. If German unification is not realized in the next five years,
he felt that Berlin could not be held, and that the East German
regime meld acquire tremendous prestige by making Berlin its capita.
There was general agreement that West German enthusiasm for unifica-
tion was especially strong in Berlin, and would grow in West Germany,
although LANGER and MO3ELY felt that the fact that Soviet terms were
unlikely to be acceptable in the foreseeable future would restrain
West Germany in its efforts at unification. ARMSTRONG said that
West Germany would almost certainly negotiate with the Soviets on uni-
fication after Adenauer leaves the scene. To LANGERfts rejoinder that
the West Germans have learned that it is impossible to negotiate
fruitfully with Moscow, ARMSTRONG and KENNAN replied that the West Germans
believe Russia hasngt really been asked for its terms by Bonn, acting
apart from its Western partners. MOSEL! and LANGER argued that the
inflexibility of the Soviets is clear regarding unification, and
foresaw no change in this position, KENNAN felt that there will be con-
tinuous discussions between Bonn and Pankow and Bonn and Moscow on
many technical subjects, and that terms for unity will be considered
in these low level negotiations. There was general agreement that
we could expect increasina discussions, informal and on a_varieter
of topics, between East and West Germany. MILLIKAN cautioned that the
US should be alert to avoid Soviet efforts to depict us as the inflexible
party.
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5. ARMSTRONG felt that the West Germans believe, as a result
of their self-confidence, resentment, and perhaps stupidity, that
they can do better than the Allies in negotiating for unification.
LANGER questioned if it was true that West German belief in its
Western association as a means to unification has diminished, and
doubted that Bonnos NATO membership was really a stumbling block to
the Soviets in granting unification. KEINAN replied that the tough
position of the UM did not appear until after Bonn was admitted to
NATO. YOUNG felt that the Soviets would be tough in the short run,
but would modify their terms later on. ARMSTRONG believed that Moscow
would abandon East Germany in exchange for a neutral, free Germany,
while LANGER did not feel that the USSR would accept such a settlement.
XENNAN said that the Soviets would be willing to make such a deal in
the long run. STRAYER said Bonn has gotten everything the West has to
offer, and will in the future almost certainly negotiate with Russia
regarding unification. LANGER stated, and KENNAN and ARMSTRONG agreed*
that the US should say, as a tactical maneuver, that it would accept
a neutral, unified and free Germany. Against the suggestion of
KENNAN that the French have been hostile to German interests, MOSEL./
said that France permitted Bonn to enter NATO, took the lead in
pressing for German unity at Geneva, and has been calm over the Saar
situation. Regarding the succession to 4denauer, ARMSTRONG felt that
von Brentanoas chances improve the longer Adenauer remains on the
scene, and that the Foreign Minister is the best bet for the US.
II. COMMUNIST CHINA
6. The Consultants discussed NIE 13-56, 1Chinese Communist
Capabilities and Courses of Action in Asia through 1960". MOSELY
said that the Chinese Communists were having serious problems in
their farm collectivization program, pointing out the lack of mechani-
zation, peasant resistance, and Soviet inability to pick up the
tab for the costs of collectivization. MILLIKAN felt that the esti-
mate dealt with the agricultural problem adequately, but that the
NIE would have been more useful to the policy maker if it had high-
lighted more the major factors to watch in the development of collecti-
vization, and spelled out in more detail the important contingent
factors for the next few years0 He suggested that an NIE on the
overall agricultural prospects for the Sine-Soviet Bloc might be
useful. STRAYER noted that the estimate did not correlate Chinaas
foreign trade policy with Bloc political objectives in Southeast Asia,
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especially their use of agricultural surpluses. He also suggested that
the Communists will be faced with a shortage of foodstuffs as a
result of the increase in population and peasant resistance to collecti-
vization, which is preventing an increase in production. KNORR said
that the Chinese are much less rigid than the Russians were in their
collectivization, and will learn from the disastrous results of Soviet
experience. M03ELY stated, however, that the Chinese can't leave an
uncollectivized sector for very long because of the effects on those
peasants brought under the State system. KENNAN suggested that the
Soviets had accepted a decline in production in the interests of
political control, and felt that the shock of collectivization would
probably be more limited in Chinas at least for the short run, than it
had been in Russia. MLLIKAN asserted that the Red Chinese leaders had
to take into account the morale of party cadres, and that they valued
this eore highly than the attitude of the peasants and immediate produc-
tion quantities.
7. ICEMAN said the estimate's analysis of the cohesive and
divisive factors between the USSR and Red China was excellent, and
believed the estimate was correct that the mutual interests of the two
countries would be paramount over the next five years. MOSELY and
MILLIKAN suggested that the Chinese may not be as aware as the USSR
of the effects of aggressive words or actions against the West upon India
and other neutral nations, and argued that the Soviets may have to
restrain the Red Chinese. STRAYER felt that the extent of Sino-Soviet
coordination in Asia during the past year had been even higher than indi-
cated in the estimate, especially in offers of trade to the Middle and
Far East. LANGER said that since the Bulganin-Khruschev visit to China,
Sino-Soviet coordination has appeared to be much closer. KENNAN stated
that following the absence of US influence in Japan there will be less
cooperation between Russia and China. M1LLIKAN suggested two sources
of possible conflict: spheres of influence and division of the spo'ls,
and disagreement over the effect of vigorous Bloc actions toward the
leest. STRAYM felt that the first source would not be a point of
friction in the foreseeable future, LANGER believed the Korean war
and negotiations demonstrated the coordination which he felt now exists
between the Soviets and Chinese, although he acknowledged latent con-
flicts of interest. He pointed out that the Soviets were even now,
hce:ever, giving aid to neutrals and developing Siberia at the expense
of help for the Chinese.
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8. ARMSTRMG raised the lack of discussion in the NIE of the
possible conflict over eianchuria and expressed symuthy with the sugges-
tion that Sino-Soviet conflicts of interest in the area were involved
in the Kao Kang purge. KEENAN suggested that the renunciation of all
former control over Manchuria must have been a bitter pill for the
Soviets to swallow, recalling that dureng the period he had been in
Moscow there were indications of hard bergainine on both sides.
9. There was a general tendency to discount IOSIX's suggestion
that the Soviet effort to quiet down India and Burma might be part of
a coordinated Sino-Soviet plan in anticipation of a contemplated erup-
tion in South Vietnam. However, KEMAN agreed that the current play for
neutralist sentiment would aid them in pursuing any of a number of possible
future courses of action.
10. The Consultants were in general agreement that the US is at
an immense psychological disadvantage in dealing with the former
colonial peonies of Asia. KE:TAN felt that paragraph 108 of the estimate
did not sufficiently stress the violent and irrational anti-Americanism
of Asian intellectuals, a sentiment which he had been made acutely
aware of at a conference in Milan last fall. nThe Russians offer us
fellowship; you offer us nothing to join except military pacts".
11. On the other hand, the Consultants felt that the US was too
alarmist over Soviet offers of aid to the nations of the Middle Zest
and Southeast Asia. They felt that acceptance of aid did not neces-
sarily mean that a country would come under Bloc control. There was
general agreement with KE"NANgs statement that the Bloc continues to
reap political advantage from aid offers, but that this is likely to
diminish when the time comes for serious bargaining and for actual deli-
veries. STRAYeR noted that Sine-Soviet ability to take surplus raw
materials was an advantage to them in economic relations.
III. BURMA
12. In connection with the staff memorandum on Burma dated
3 February, LANGER argued that U Nu wasn't"born yesterday," that he
simply needed technical assistance and an outlet for Burma's rice shortage,
and that he was under no illusions about the Soviets. KENNAN and
DUNHAM both asked what was wrong with neutralism, and suggested it
was understandable in the case of Burma and other newly independent
countries in Asia, and that it might not be so much to the advantage of
the Bloc as we tend to think. LANGER stated that U Nu just wants to
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be left alone and develop his country. There was, however, no firm
answer to COOLEY's question whether Burma woald, like Finland, be
able to keep her independence despite substantial economic dependence
on the Bloc or would lose it, as Afghanistan was generally felt to
be doing. The Consultants agreed with the mmorandumgs emphasis upon
the importance of the university at Rangoon and of the intellectuals
in Burma.
IV. THL MIDDLE EAST
13. Following a half-hour situation report by HEUITT, the Consul-
tants discussed several problems in connection with the staff memoranr-
dum dated 3 February on the area. LANGER and YOUNG agreed that the
UK was making a mistake in the handling of its dispute with Saudi
Arabia over Buraimi. They felt the UK had chosen a poor issue on
which to take a tough stand. DUNHAM said, however, that the Saudi
Arabians and other countriec in the area would not be appeased by the
UK's withdrawal from Buraimi, to which YOUNG agreed. STRAYER stated
that Buraimi was not in the sphere of influence of Saudi Arabia, and
also felt that concessions would not satisfy Egypt and Saudi Arabia.
He suggested they will continue to play the West off against the Soviets.
YOUNG said the arab countries have little experience in dealing with
the USSR, but believe they can avoid Communist influence when accepting
Russian aid.
14. Concerning the Arab-Israeli situation, LANGER felt the Arabs
really accept thefactof the Israeli State but are interested in
face-savinp after their defeat in the Palestinian War. He queried
whether a boundary revision woilld not appease the arabs. YOUNG stated
that the best doesn't give the Arabs enough credit for their willingness
to negotiate with Israel. He said the US and UK shotld decide on a
policy, and force the Arabs and Israelis to accept it. Although
the Arabs would complain bitterly if this were done, several leaders
have said that they would like to have the western Powers impose
a settlement� KNORR said that Israel will not accept the boundaries
agreed upon by the UN in 1947p and didn't feel the Western Powers
could push the two sides into a settlement which would have any perman-
ence. LANGER, on the other hand, felt that an enforced deal would
gain time, and help the chances for a longer run accommodation.
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AMISTRONG was dubious about what exactly the Lest could decide in
the may of a settlement that would be at all satisfactory to the two
sides. LANGR said a war between the Arabs and Israel would be
ominous, and was alarmed whether it could be contained. REITZEL
said he understood that the UK felt the Middle East was still an area
in which the 'est had the option of using force, unlike most Icolonial"
areas, STRAY41L said an Arab-Israeli war, regardless of its outcome,
woeld hurt the prestige of the ;lest throughout the neutral areas�
l50 Turning to the question 1' the Baghdad Pact and Soviet
entramlinto the area, LANGER and ARMSTRONG argued that the Pact
was virtually worthless, and had given the USSR an excuse to jump
into the 'Addle East. MILLIKAN agreed and said the Pact was just a
device to get arms and economic aid from the test in the eyes of the
Arab members. YOUNG said the UK hoped by its allegiance to the
Baghdad Pact to get US aid for nations in the area under her influence
or control. The Consultants agreed with STRAnR's analysis that
Soviet attacks on the Pact were based on three considerations:
(a) the USSR was worried at the prospect of US air bases in the
Pact countries, (b) a weakening of the Pact would weaken US prestige
in the Middle East, (c) the process of detachine allies from the US
is always good business and might in time lead to erosion of SEATO
and even NATO. LINCOLN felt, however, that the Soviets viewed the
Baghdad Pact as at least a psychological obstacle to local aggression
in the area. MO3eLY replied that the USSR believed the US would inter-
vene without a treaty, and that the Pact simply gave the Soviets a tar-
get for propaganda and political purposes. MILLIKAN suggested the
Pact should be played dawn as a military instrument, and that the
West should deal bilaterally with the member countries to broaden
political and economic relations with themo ARMSTRONG felt, and the
Consultants generally agreed, that the proposals of Secretary Dulles
for a '.414stern guarantee of a revised boundary, a settlement of the
refugee problem, and economic aid were along the right linos if they
were implementede
V. INDIA
lb. HOOVER, who recently returned from indianopened the discussion
with several observations on the Indian Year Plan. He said that
the differences among Indian officials regarding the emphasis to
be placed on developing heavy industry and on small village programs
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had resulted in a compromise generally acceptable to both groups.
He stated thatIndian economists had been divided on the issue,
that businessmen largely favored emphasizing heavy industry, while
various groups favored concentration on developing village programs
on the grounds of decentralization and an ideological belief in coope-
ratives. MILLIKAN noted that village development would do more than
heavy industry expansion to alleviate India's unemployment problem.
He asserted that the Soviet and Chinese model of socialized heavy
industry was accepted as a model by Mahalanobis and those associated
with him in backing emphasis on heavy industry as the key to national
development. HOOVER said he detected a great deal of cynicism in
India about eliminating the problem of unemployment, which it was
felt was neither measurable nor too important. He said the Indians
had decided on the need for a six million ton steel capacity based
on Soviet experts' advice, who he said had influenced Mahalanobis
heavily. MILLIKAN noted that the Indian planners were more competent
than the experts of any other underdeveloped nation. He said that
India0s problem was leso one of the availability of capital than of
incentive among private groups, who are reluctant to invest on a
large scale in view of the restrictions and plans for socialism of
the Government. He stated that the planners are nevertheless placing
their faith in a heavy investment of private capital. He further
asserted that India will have a problem of inflation stemming from
deficit financing.
17. Turning to the difficulties faced by Nehru over his plan for
reorganizing the system of states, HOOVER said the Government viewed
this program as an unwelcome necessity, It had been hoped the
Commission dealing with the problem would not bring forth its recommen,-
dations for some time, but the proposals were quickly produced, and
strong local pressures forced the Government's hand. The Congress
Party was unable to control the local politicians in the matter. He
suggested that the riots in Bombay were the result of class and racial
antipathies which flared over the proposed reorganization of boundaries.
AOSELY noted that the people of India who speak zinglish and Hindi
will be at an advantage in securing employment in the Government.
MILLIKAN said the North-South cleavage would bealong-term problem for
India. He didn't believe this would emerge as a significant conflict
until after Nehru leaves the scene. STRAMR suggested that the
Congress Party would not have a monopoly of power after 10 or 15 years,
and noted the decline of the �iocialists and the strong organization of
the Communists.
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18. LANGER felt thA disintegration would set in after Nehru
leaves the scene. Comparing the development of India and Communist
China, STRATL;R said the Indians are lagging behind, although they
had a stronger industrial base to begin with than did the Red
Chinese. HOOVER stated that little has been accomplished regarding
Indies expanding population, hut that the Minister of Health had
recently changed his mind regarding birth control, MILLIKAN concluded
the discussion by observing that economic growth is the key to Indian
solidarity,
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