Created: 12/20/1954

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Th? following Intelligence arganaaltoni participated in"the preparation of tht* estimate: The Central Intelligence Agency ana the intelligence organizations ol the Deportments of State, the Army, the .Vary, the Air force, ana The Joint Stcff.


onDecember ttu Concurring tcere the Special Assistant. In!ethgenee, Department of state, ihe Assistant Chief of, Department af the Armu; the Director of Naval /ifefh.the Director of Intelligence VSAF; and the. Deputy Director for Intelligence. The Joint Staff Thenergy Commission RepresentatKe to the IAC. and the Assistant to the Director, Federal Bureau of Investigation, abstained, the subject being outiule of their ftrudlctton.


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Central Intelligence Agency4



To estimate probable developments in West Germany over the next several years, with particular reference to its future stability and probable orientation.


We assume that the Paris agreements (including the agreement concerning the Saar) will be ratified by all the signatory nations.


long as West Germany continues to be economically healthy we believe it will retain its present social and politicaland continue to be dominated by moderate political forces. Majorwith Germany's position in the Western alliance would intensify internal strains in West Germany and increase the influence of nationalist and extremist elements, but we believe that onlyime of economic crisis wouldgovernment have much chance of returning to Germany.

The present coalition government led by Adenauer's Christian Democratic Union (CDU) will be confronted byrcstiveness among the minor partners, and Adenauer's departure from office would almost certainly be followed by some Jockeying for the succession.

'Thii estimate JupenedMhe Outlook in WealubLLsneC

These challenges to coalition unity will probably increase with the approach of7 national election. Nevertheless, despite local manifestations of discontent with Adenauer's control, such as theof the Bavarian Governmentthe recent election, we believe that the common interests that have in the past kept the coalition together willto do so. The strength of theSocial Democratic Party (SPD) will probably increase somewhat by7 election, but the chances are better than even that somo form of center-right coalition will be continued ln power.

e believe that the strength ofpolitical forces will remain sufficient to insure civilian control over Westprospective armed forces. The military will probably reacquire someinfluence but is unlikely to attempt to resume its former political role, except

possibly in the eventrend toward authoritarian government.

an forces which West Germany is scheduled to contribute to NATO could possibly attain combatwithin two to three years afterhad begun. However, to reach this goal West German requirements for aircraft and heavy equipment will have to be filled largely by the US and UK.

West Germany's remarkable economic recovery is likely to continue for the nest few years, particularly with the added stimulus of rearmament. In view of West Germany's heavy dependence on foreign trade, however, any major contraction of world markets would have serious

undamental West German foreign policy objective is totrong and united Germany, the universal desire for reunification is tempered by the widespread realization Lhat reunification on acceptable terms is unattainable for some time to come. On the other hand,oviet proposal for reunification coupled with neutralization wereby tangible evidenceasic shift in Soviet policy which persuaded the West Germans that the Communists were prepared to abandon their position in East Germany, most West Germans would find the proposal acceptable.

Except in this unlikely event, wethat West Germany will for thefuture remain allied with the West. If the USSR reacted toof the Paris agreementsolicy of renewed militance (as, for example, new restrictions on intercourse between East and Weste believe that the West German Government and people wouldirm stand against Soviet pressures. West Germany will seek an increasingly influential role in NATO, though It will be careful at least in the short term not to unduly arouse allied suspicions as to its ambitions.

Over the longer term, however, as West German strength and influence increase, Bonn will tend to pursue certain lines of policy which may create new strains with some of its allies. First, it willseek the position of continental leadership to which it will regard itself as entitled. Second, it will probably attempt to commit the Western alliance to exert heavier diplomatic pressure on the USSR over reunification, although lt will remain unwilling to go so far as to create risks of war.


Postwar West Germany has remained free from the disabling social cleavages and divisive political pressures that helped tothe Weimar Republic. The vast majority of the population seems satisfied with the democratic Institutions createdhancellor Adenauer and his moderate.

pro-Western government have been highly successful ln maintaining Internal stability. The continuous economic improvement8 has been mainly responsible for that stability and has served to subdue discontent over continued occupation and partition. Widespread antagonism toward the USSR and

disillusioning experience of the Nazi regime have severely limited the politicaloi Communism and of Irresponsible nationalism.


3 national election, theercent of the popular vote; theercent; theercent; and theercent.

Short-Term Outlook for theenter-right coalition led by KonradChristian Democratic Union (CDU) has governed the Federal Republic since its inceptionhe CDU and its Bavarian affiliate, the Christian Social Unionon an absolute majority of one seat in3 Bundestagictory without precedent In the history ot free GermanThe coalition, comprising the CDU/ CSU, the Refugee Partynd the right-wing Free Democraticnd German (DP) Parties,ajority In both houses oft represents the preference of the mass of middle class and conservative West Germans for moderategovernment andro-Western foreign policy. The government isin economic policy, but Is committed to an extensive social welfare program.

The most significant politicalover the past year has been the increased restiveness of the smaller coalition parties under the largely personal rule of Chancellor Adenauer. Though Adenauer remains by far the dominant figure in the coalition, tensions have been Increased by the desire of theparties to emphasize their separateand by Adenauers frequent failure to consult their leaders on the formulation of government policy. As evidenced In theof tbe Bavarian Governmentthe recent election, tho smaller parties of the coalition will probably continue to strain against the paternalistic control of Adenauer In order to Increase their popular support and their influence on the government.

Nevertheless, despite current frictions, we see no Immediate threat to the basic stability of the coalition or to the continuedof Adenauer. The willingness of the smaller parties to break away from the coalition Is likely to be limited by their lack of any satisfactory alternatives to continued membership In the coalition and byprobable willingness to make limited concessions where necessary to preserveunity. While intracoallUon dlflrrences over lhe Saar will probably continue, thecoalition parties probably will betoreak over this Issue alone. The basic economic programs of the CDU and the FDP are so similar that Adenauer will probably be able to retain FDP support In matters of domestic policy. Adenauer can almost certainly assure the cooperation of the Refugee Party by assigning to Its leaders the administration of certain social welfare funds. Moreover, the strength of the party willdecline as the refugees are assimilated. Many of the Refugee Partyiddle class background, are likely to gravitate eventually to the CDU and FDP. The smallest member of the coalition, the German Parly, probably will remain generally satisfied with Its role In the Cabinet anditself too weak to press for greater power.

* Possible contenders (all members of ttie CDU or CSU) are Finance Minister Fritz SchaefTer.Minister Ludwig Erhard, CDU Bundestag leader Heinrich von Brentano, the Minister President of North Rhino-Westphalia. Karl Arnold, and Bundestag President Eugen Geraten-malar.

However, Adenauer isnd his departure from office probably willtruggle for political leadership. Noof equal stature is on the politicale believe, however, that the present coalition would eventually be able to agree on aand that, although tho loss of Adenauer's prestige and ability would bo an Immediate handicap, the coheslveness of the coalition would not be seriously disturbed.

Prospects for lhe SPD. The SocialPartyhe only major onethe coalition,lass partyajority of West German labor. It IsSocialist in outlook and Isantl-Coininunist. At the same time, though the party Is generally pro-Westcm,

S fcTSJi E

by some of Ita leaders frequentlyeutralIstic lone. The SPD haschampioned the early reunification of Germany, and argues that this aim isby West Oerman rearmament inwith the West Due largely to Adenauer's great prestige, popular support for tho SPD declined slightly8 percent of the voteut is likely to show an increase at the next election. Followingof the Paris agreements, the SPD will probably concentrate more on social andissues than on foreign policy. Itsto exert some measure of control over the new armed forces may also lead it loomewhat less obstructionist role on military questions- The SPD, if included in thewould be likely to advocate secularist and moderate welfare state policies.

grand coaliilon" of the CDU and SPD remains unlikely, particularly as long as Adenauer is In power. The SPD has repeatedly Indicated that it would notoalition under Adenauer. Moreover, given the moderate conservatism of the presentand the likelihood of increased SPD milltance on social and economic issues, we believe that the difference* between tho CDU and SPD will tend to deepen rather thanThe CDU may occasionally threaten togrand coalition" to bring Its present coalition partners Into line, but an actual CDU-8PD coalition seems Improbable except in the unlikely eventtrong bid for power by the extreme right.

The Communists. The Communist Party (KPD) Is of negligible importance as aforce and hua llitle prospect for growth Commuiust strength declined sharplyercent of the total vote In the last federal election, and the party lost its smallin the Bundestag. Although the KPD has aimed at penetrating the SPD, there is little evidence of Communist success.

The Extreme Right The splinter parties of tho extreme right continue lo lackrepresentation or effective leaders and programs.mall minority of West Germans has responded to the ultranatlon-allst and neo-Nazi appeals of the extreme right, and IL appears that the extremists can hope to increase their Influence only through parties now represented In the parliament. However, we believe that at least In the short term, these extremists arc more likely to be absorbed by the moderate right-wing parties than to dominate them.

The Longer-Term Political Outlook.some probable decline in the coalition's popular strength between nowhe chances are teller than even that it willa majority ln7 national election and that some form of center-tight coalition will be continued In power. Further strains on the solidarity of the coalition parties are likely, but we believe lhat they will remain willing to compromise sufficiently toew government. SPD strength is likely to Increase somewhatut notto overcome tho parliamentary lead of the CDU. The strength of the CDU probably liaseak from which it will decline, but the Christian Democrats probably willthe dominant force In West German politics as long as economic well-beingand the CDU pursues policies aimed at assuring for West Oermany at least an equal position In the Western alliance.

In any event, under these circumstances we believe that West Germany will retain its political stability and continue to beby moderate political forces. In view of the probable continued willingness of the present parties to compromise on basic social and economic issues we see no politicalground for extremist expressions of social discontent. If West Germany should become seriously frustrated ln its political, economic, and international aspirations, ultranation-alzst sentiment might develop. However, at least in the short run. the granting ofand NATO membership will strengthen popular confidence ln the democratic forces in Germany. Moreover, the government will probably remain strong enough to restrict the activities of extremist elements.

We believe that the strength of moderate political forces In West Germany will remain sufficient to insure civilian control over its prospective armed forces. The military will

probably reacquire some political Influenceountry traditionally conditioned to respect for military Institutions and deference to the views of the military. However, the political position of the professional military leaders will be conditioned by the tight legalwithin which they will have to operate from the very Inception of rearmament und by their realization lhat the maximumstrength West Germany could raise would be Insufficient to permitole equal to or Independent of the US and the USSR. Any likelihood of formationeparate power center by military elements will also bereduced by: <a) the careful scrutiny to which the CDU and SPD will subject military leaders, budgets, and policies; (b) thethat solid public support for the concept of civilian control will continue; (c> theby West German commanders that adventurist tendencies would threaten the growth of German influence in the Western alliance; and (d) the continuing check on West Germany's military activities resulting from its dependence on allied aid and Its assimilation In NATO andn the other hand, If graverendoreand nationalist type of government might develop. The experience of the past cannot be discounted, andevelopment would be in accord with traditional German willingness to submit lo authority and wiih the past fragility of democratic institutions in Germany. Major dissatisfaction withposition in the Western alliance would also Intensify Internal strains In Westand Increase the Influence ofand extremist elements, but we believe that onlyime ot economic crisisrend toward authoritarian government have much chance of developing.rend might take the formass party of the right, drawn from the unemployed, the residue of unaxslmilatcd refugees, someof the military establishment, andelements in the middle class, The rate at whichovement could develop would depend largely on the success with which the existing moderate parliamentary regime could meet economic problems and avoid the appearance of weakness. If this trend were to develop. It is possible that tho new German military hierarchy might again seek to play an active political role.


West German society has survived theeffects of National Socialism and World War II to emerge as one of the most stable national communities in Europe. The experience of war and National Socialism has moderated class, regional, and religiousand has induced scepticism toward radical innovation. These elements ofhave been strongly reinforced during the past few yearsrosperity that hasalmost all elements of society. As long as reasonable economic stability Istho potentially disruptive confessional issue and the other antagonisms uro unlikely to reappear In their former virulence.

West Oerman workers have revived their pre-Hitler labor unions, but the hold of these unions over the workers is somewhat weaker thanabor's real annualhave Increased by aboutercent over the prewar level, and there Is little danger of acute dissatisfaction as long as economiccontinuesigh level. On the whole, labor has pursued its economic goals with moderation, and the possibility lhat lt may upset the social balance by adopting militant practices Is considerably lessened by theof sharp labor and managementand by the conservative views of theot labor's leaders. Although labor will increase Its efforts to Improve workingand adjust wages, it will probablylis activities to negotiations und occa-

espite the social and economic problems created by the settlement in West Germany of more thanillion refugees fromareas, their assimilation Into the West German society and economy has been surprisingly successful. It has been accomplished most effectively with industrial workers In urban centers, less so with farmers and middle class groups.ajor problem

ias been the lack of adequate housing. AI-;hough the refugees account forercenthe West German population. Ihe Refugee Party attracted less than six percent of the aatianal voteew more years of assimilation we believe that many of the refugees will see no further needeparate national party to protect their interests and that the Refugee Party will decline How-=ver, should adverse economic conditions occur in the near future, those refugees still unasslrnilated would suffer sooner and more severely than the rest of the population and might thenenter of social unrest.


West Germany's economic expansion is continuingapid rate, although the country's recovery still lags behind that of the rest of Westernew studyfor the OEEC. based on quantitiesvalued0 US prices, gives Westross national product (GNP)illion, comparedillion for Franceillion for the UK. The standard of living of West0 people is now approximately equal to that of France, though considerably below that of the UK-

est Oermany has devoted overercent of lis GNP to Investment at home and abroada higher percentage than any other Western European country. This intensive investment effort, together with favorable terms of trade and overillion In US aid, made West Germany'srecovery and industrial expansionand permitted the absorption of some five million refugees Into the active labor force The availability of this highly mobile and skilled labor reserve became, in turn, ancontributing factor in speeding the country's recovery.mployment is likely toostwar highnd unemployment will drop tohe high level of West3 percent of8 figure) has been made possible by the Increase in industrial employment, rather than byindustrial productivity (which Isercent of8ills Increase in productivity is about equal to that of France though less than that of the UK.

The fiscal and monetary policies of the West German Government have encouraged savings without deterring investments. The total volume of personal, public, and business savings apparently has been adequate to finance all domestic investments and thesurplus, and the price level has remained stable. High rates of taxation4 have permitted the government to balance the budget, althoughercent of GNP goes for social welfare expenditures and about sixfor occupation and defenseIn fact, mainly because of delays in defense spending, the public budgets haveshown substantial cash surpluses. However, agitation for tax reductions has been successful, defense appropriations will nowand the budgetary surplusesin past years will be spent as theprogram gets underway. Presentarc, therefore, that the current cash surpluses will give way to moderate budget deficits, and that there will be greater recourse to credit creation in financing privateIn the next few years.

A great economic burden has beenon the Federal Republic by tlie increase in pensioners and other beneficiaries of social welfare and insurance programs, resulting from:elative increase in the older age group; (b) the large number of war disabled and dependents of war dead; (c) the loss of property and savings caused by the war; and (d) the Influx of millions of destitute refugees. The government will find it politicallylo reduce these programs, but their relative burden will decline as economic growth continues and the population balance Is restored.

West Germany has successfullythe foreign trade problems created by the expansion of its population, the decline of Its trade with Eastern and Southeastern Europe, and the loss of the East Germansurplus area. In spiteise of imports during the past year, West Germany has been successful in holding importselatively low level while expanding the vol-


umc of exports (nowercent of the prewar level) toontinuing export surplus. Ita commercial dollar surplus for US4 is estimated at SSOO million and its extraordinary dollar receipts0 million. Total gold and dollar reserveshave risen to more7 billion.

so. The foreign trade pattern of the Federal Republic Is not markedly different from that of prewar Germany, except that the volume of Ita trade with Eastern and Southeastern Europe (which accounted forf Germany's total tradeas been reduced to about one-tenth of thelevel. This development, together with the virtual disappearance of the large volume of trade between Western and Easternhas increased West Germany'son trade with the West. West Germany will almost certainly try to Increase its trade with the Soviet Bloc, particularly In the event of adverse developments In its trade with the West,ajor reorientation in Westforeign trade Is unlikely. Theof the Bloc and its self-sufficiency policies have reduced the likelihood of fullof the prewar trade pattern under which Germany supplied countries now In the Bloc with Industrial products and received food and raw materials In return.

hus far, the expansion of Westforeign trade has not greatly hurt any specific foreign competitor because lt has been diffused throughout the world andit has occurred when the total volume or world trade was expanding. However, West Germany is continuing vigorously to ox)wnd Its trade In Latin America, the Middle East, and other areas, and Is offering growingto the US. UK. and Japan. West Germany's willingness to offer highlycredit terms has been an important factor in this trade expansion. Because of thesize of these credits relative to the whole West German economy, and because of the probability of governmental relief should these credits become frozen, this credit extension Is unlikely to become the source of financial difficulties serious enough to threaten the stability of West Germany's econmy.

In view of West Germany's heavyon foreign trade, its economic health is highly dependent on continued worldIts vulnerability Is enhanced by the factigh proportion of its exports consists of capital goods which arc particularlyto any decline In business activity. In the next few years the rearmament program willeasure of insuranceoderate slackening of foreign or domestic civilian demands, but any major contraction of the world market would have immediate and serious repercussions in West Germany.

However, provided trade conditions remain favorable, West Germany's economicis likely to continue for the next few years with the added stimulus of rearmament. GNP may Increase by as much asercent In the next five years, industrial production byercent, and private consumptionn the latter part of this period, the annual rate of growth of ONP is likely loa decline to an estimated long-termof three to four percent,

The relatively leisurely rearmamentpresently contemplated by Westwill not Impose severe strains on the country's economic and financial resources or on the government's political ability lothese resources. West German defense appropriations, including occupation costs, have approximatedillion annually sincend expenditures hare beenless. Occupation costs will taper off innd on the basis of presentplans military expenditures will increase4 billion (eight percent of estimated GNP) inuch rearmament outlays will probably stimulate:igh level of economic activity; (b) slight upward pressure on prices; (c) greater pressure for wageand (d) moderate shortages In some sectors of the economy. If the demands of the civilian economy remain as strong as at present, the resultant rise In prices may turn the export surpluseficit

West Germany's economic development will continue to be facilitated by an adequate supply of qualified scientific and technological personnel in almost all fields. The govern-

lent will continue to give strong support to eience ln order to meet foreign trade com-etitlon. The period from Worldntil he recent past may best be described as an ra in which West German science devoted its nergy to catching up. This period hasn end and West German scientific capa-jilitles ln many fields are now al leasthose of other continental Western Euro-wan nations.


ARMEDnder the terms of the Paris agreements. Vest Germany Is scheduled to contribute an irmed forceen to NATO. This orcc would provideivisions (Including ubstantial armoredwing air orce ofircraft (principally Ighter-bombers andoastal (efensc navy which Is not to Include surface rarships of moreons or sub-narincs of moreons. We believe hat these forces could possibly attain combat eadlnesseriod of two to three years ifter the Initiation of rearmament How-iver, to reach this goal West German rcqulre-nents for aircraft and heavy equipment will lave to be filled largely by the US and UK In he early stages of the rearmament effort.

e believe that the gap in5 will retard but nothandicap the formation of West German armed forces. Planning and operations ele-nents staffed by experienced officers already >xist wlUiln the Bonn defense office, and num-'rous officers and noncommissioned officers vith extensive combat experience are avall-ible. The firstonths of rearmament sill be devoted to enlisting and training themilitary personnel who will serve as ;adrcs. Shortages of pilots and company grade officers should be overcome in the two lo three year training period.

e believe it likely, at least over the next *ew years, lhat the West Germans will accept :he established limitations on their rcarma-nent. Most West Germans are resigned to the necessity for rearmament, but: (a) there is an antlmilltary biasegment of

West German youth; (b) tho populationremains apprehensive of policies that might lead to the recurrence of war; and (c) great numbers of West Germans, especially among the working classes, fear the possible influenceevived military caste on the government. Even should these attitudes change, It would bo difficult for the Westto evade the agreed limitations onso long as the nations which arc party to tlie Paris agreements displayand unity in enforcing the control measures.

The economic sacrifices Involved inarmed forces to scheduled levels are not likely to engender resistance to theprogram, but we believe that anyIncrease above these levels might do so. Although West Germany's presentprobably couldeacetime military establishment of about one million men, efforts to expand the armed forcespresently planned levels probably would be limited by domestic political controversy, especially if such rearmament affected the standard of hvlng or necessitated curtailment of social welfare programs. We believe that the present government, currently committed to tax reductions, would be unwilling todefense outlays much beyond presently projected levels except in the eventarked increase in International tensions.

Although prohibition or controls over military research and development have been ln effectest Germanyigh potential tn the field. It has beenas much military-related research as allowed under the regulations and Is capable of converting to large-scale weapons research and development programs as soon as the controls are lifted, However, West Germany will remain bound by Its commitments Inwith the Paris agreements not to make atomic, bacteriological, or chemical weapons. For at least the next two years, West Germany will limit itself to an atomic energy program centered aboutedium power research reactor. In any case, the development of atomic weapons would be limited by the fact that uranium deposits in

'est Germany appear to be small and of low rade Even though manufacture ol long-inge guided missiles remains forbidden, lemlcal research and development in the eld of guided missiles, rockets, and fuels will robably increase sharply in the next five

l. Even were controls lifted, the speed of re-jvery in the weaponi development field de-endsreat extent upon the acquisition (research and test facilities that are not nowind tunnels, ship model asms, and guided missile test ranges. We elieve that the Germans could acquire and evclop adequate facilities to overcome the md of other Western European nations in ticse fields within three to five years.

'. PROBABLE FOREIGN POLICY ihort-Term Objectives and Orientation

undamental objective of West Serman foreign policy ts the recreationtrong and reunited Oermany. the universal lesire for reunification Is tempered by the widespread realization lhat reunification is inlikely for some time to come. The Bonn Governmentajority of West Germans TCGgnlxc that early reunification on any but Soviet terms Is unattainable and that West jcrmany cannot hope to alter this situation it leust until it has greatly Increased its own nfluencc and power and secured the supportowerful allies Moreover, thus far intwar period West Germany has been more immediately concerned with its own security ind recovery than with regaining thehe East.

nder these circumstances the Bonn Gov-anment has addressed itself chiefly to tbe -es to ration of German sovereignty andin the Western alliance. Bonn has viewed tills policy as essential, not onlyeans of regaining equality among Itsand assuring protection from Soviet encroachments, buttep toward the restoration of West German strength and eventual leadership on the continent. In addition, we believe that Chancellor Adenauer and many other coalition leaders regard the creationearmed Oermany In closewith Its Western partners aa ultimately providing the best basis for reunification negotiations with the USSR For thesewe believe that the Federal Republic will retain its basic pro-Western alignment. It willarticularly close relationship with the US, not only as the leader of the Western coalition, but as the ally which the Westrcgai'd as most likely to be sympathetic to their aspirationsarger role InEurope.

n the otheronn Government which has become sovereign will becomeassertive in pursuit of its own objectives West Germany will probablydiplomatic relations with the USSR as well as seek increased trade with the Bloc.eriod of reduced tensions, Bonn may also take various independent Initiatives to explore reunification possibilities with East Germany and/or the USSR However. If the USSR reacted to ratification of theolicy of renewed militancc (as, for example, restrictions on intercourseEast and Westc believe that the West German Government and people wouldirm stand against Soviet

erman Reunification.tated goal of all West German parties, ihey differ in the priority they give to tins aim. While the coalition parties have felt compelled publicly to agitate the unity question, they have generally subordinated it to integration with the West On the other hand tlic SPD has insisted that theof West Germany's relations with the West must not be allowed to foreclose the possibility of early Four-Power negotiations on German unity. This policy upjiears bused largely on the SPD's desire to use theissue to advance its electoral prospects, and on Ita belief that it would stand to gain politically ii predominantly Protestant East Germany were reunited with the FederalIn the light of the Paris agreements, the SPD has reformulated its argumentsomewhat more neutralist tone, suggesting that Soviet consent to reunite Germany could

se t

obtained only If tlie new slate were unfet-ered by alliances and Its territorial Integrity /ere guaranteed by an over-all collective ecurity agrecment.

nce West Germany has achieved Its lm-oediatc goals of sovereignty and NATO mem-icrshlp, the government will become liicreas-ngly willing to take the initiative on rcunifi-atlon. Nevertheless, moderate CDU-leden's will be careful lest premature pres-ure in this direction strain relations with Vest Germany's Western partners and con-llct with Bonn's objective of attaining major nfluence in the Western alliance.

he reunification formula which almost ill West Germans would prefer Is substan-lally tn accord with that of the Westernand would involve genuinely free all-iernian elections to set up an all-Germanassembly charged with the prep-ira'-iononstitution for the new state, (he constituent assembly would alsorovisional government to participate with he four occupying powers inwace treaty. Tlie preferred formula would also In-rolvt giving post-treaty Germany freedom of Uliance. No formula which gave the USSR he right to intervene in internal German iffairs, or which assigned to the Germanosition of power, would be accept-ible to Bonn.

ven if the USSR were to reverse its present tactics and agree to reunification on the basis of free elections provided thatwere neutralized and Its level ofseverely restricted, most West Germans would be strongly suspicious of Soviet good faith. On the other hand, if the proposal were accompanied by tangible evidenceasic shift in Soviet policy which persuaded the West Ocrmans that the Communists were prepared to abandon their position in East Germany, most West Germans would find the proposal acceptable, and the Bonnwould find It difficult to reject. The West Germans would be convinced that the Western Powers would still hare to guarantee their security and that eventually Germany would be able to escape from its enforced neutrality.

West German Policy toward NATO and WEU. Except ln the unlikely event ofonvincing Soviet offer, West Germany will seek an increasingly influential role in the NATO alliance system. Though initially it will be careful not to arouse allied suspicions, it almost certainly expects gradually toore influential role than that of France. Eventually West Germany willon Standing Group membership. While no successor is likely to be as effective an advocate of the "European idea" as Adenauer, Bonn is likely to favor further integration measures, in the expectation that Westwould eventually dominate anEurope. In the short term at least, the West Germans will be unlikely to attempt to change the defensive character of NATO, since any such move would arouse Western suspicions and tend to undermine theframework that the West Germansessential for the realization of their political and economic aspirations.

The presence of foreign troops Isan irritant, but we believeajority of West Oermans will probably continue to desire the retention of some US and UK forces and to tolerate French forces as essentialat least as long as Soviet troopsin East Germany.

The Soar. The Saar is likely toerennial Issue, and West Germany almost certainly will not abandon hope of eventually reintegrating the territory with Germany. However, at least for the next few years the Bonn Government will attempt to prevent the Saar issue from disrupting efforts towith the French. This policy is not likely to be abandoned unless the operation of German political parties in the Saarso inhibited that the Germans werethey could never reintegrate the

Relations with West Berlin and EastIn response to Western urging and substantial US contributions, Bonn has made considerable expenditures to maintain West Berlin. If there shouldecline in US support for the city's emergency needs and long-range program of economic recovery, a

irUuimcnt of the Went Ocrman effort might illow. Oh the other hand, now that West crmany is economically strengthened and kely toore active reunification olicy.ay feel more of an incentive to eepWesl Berlin aliveymbol of German nlty

West Germany will probablynormalize relations with the Soviet Bloc,formally accept the Eastby granting diplomaticthe West Germans will probablyincrease trade andideInformal arrangements between thepartly to keep hopes forullve.

onger-Term ProspecH

that West Germany retainswell-being and does notdissatisfied with Its positionWestern alliance, we believe that itthe foreseeable future remain alignedWest. Realising that even in thoWest Germany will still lack the stature

ruly Independent role between East nd West. Bonn will In our view continue to ee overriding advantages and opportunities

membership in the Western alliance and lose relations with the US and the UK.

the context of this basichowever, we believeearmedWest Germany will tend In timetwo lines of policy which maystrains with some of Its allies First,recovery proceeds to the stage at which,believe Likely. It will be the strongest ofEuropean continental powers,will seek that continentalwhich It will regard ilaelf as the Soar, which in the shortWest Germans had been willing tomight again be raised by Bonn.this nuture may lead to markedleast with France and the UK, andwith some of the minor powers. ByGerman trade competition may alsoso Intense as to create problems,with the UK.

Second, once West Oermany estimated that the Western power position was strong enough to minimize the risks, ft might attempt to commit the Western alliance to exert heavier pressure on the USSRinimum Bonn willinsist that the Western Powers seize the diplomatic Initiative on this Issue. However, we believe that Bonn will remain unwilling to go so far as to create risks of war in which West Germany wouldattleground. In addition, the limits Imposed by Germanin NATO will actrake onwill and ability to maneuver

In the remote contingency of an eventual Soviet attempt toeal with WestInvolving reunification in return for German alliance with the USSR, the Germans would almost certainly reject this proposal. Some West German elements might be willing to explore such an offer, but we believe that West Germany would be fearful that, in the changed European power context, Germany could not maintain an Independent statusoviet partner but would sooner or later be swallowed up by the USSR. Under these circumstances, we believe that no foreseeable West German Government wouldoviet alliance, even If reunification could thus be achieved.

Probable Foreign Policy if Germany were Reunited

the USSR agreed to Germanon the basis of neutralisation witharmament, the Germans wouldfeel compelled to observe thesefor some years and to maintain anrole between the twoeunifiedultitude of pressingand administrative problems,forced to cope with these difficultiesa more active foreign policy.

owever, It la unlikely that Germany's foreign policy would long remain on deadand wc believe that In time it wouldtoward the West rather than the USSR.

We believe that fundamentally the Germans would consider that: (a) the chief threat to their security still lay in the power anddesigns of the USSR; <b) the conflicts of Interest between them and the Soviet Bloc (over such issues as the Oder-Neissewere greater than those with thePowers; (c) their opportunitiesarger world power role would be greatereading memberestern European coalition thanjunior partner" of the Soviet Union; and (d) their trade with the

West would remain more important than any prospective development of trade with the Soviet Bloc. Accordingly, we believe Hint the orientationeunified Germany would be towards the West Whether this orientation would be manifested within the frameworkormalized neutrality or whether Oermany would attempt to join the Western alliance would In large measure depend on German estimates of the nature and extent of the Soviet rouctlon.

Original document.

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