Norman Stone - The Atlantic and Its Enemies

All of this allowed de Gaulle to appear as a world statesman, to put France back on the map. Now, he, many Frenchmen and many Europeans in general resented the American domination. There was not just the unreliability, the way in which the USA, every four years, became paralysed by a prospective presidential election. France’s defence was largely dependent upon the USA, and, here, there were fears in Paris and Bonn. They did not find Washington easy. The more the Americans became bogged down in Vietnam, the more there was head-shaking in Europe. They alone had the nuclear capacity to stop a Russian advance, but the Berlin crisis had already shown that the Americans’ willingness to come to Germany’s defence was quite limited, and they had not even stood up for their own treaty rights. Now, in 1964, they were involved in a guerrilla war in south-east Asia and were demonstrably making a mess of it: would Europe have any priority? Perhaps, if West Germany had been allowed to have nuclear weaponry, the Europeans could have built up a real deterrent of their own, but that was hardly in anyone’s mind. The bomb was to be Anglo-American.

At the turn of 1962-3 the British Prime Minister, Harold Macmillan, had met Kennedy (at Nassau) and agreed to depend upon a little American technology on condition that the French got even less. There would be no Franco-British nuclear link and as far as de Gaulle was concerned, France would have to make her own way forward. He got his own back. The Americans were trying to manoeuvre Great Britain into the EEC, and, conscious now of their comparative decline, the British reluctantly agreed to be manoeuvred. At a press conference in January 1963, de Gaulle showed them the door. Europe was to be a Franco-German affair, and de Gaulle was its leader. France could not go alone. If she had seriously to offer a way forward between the world powers, she had to have allies, and Germany was the obvious candidate. Adenauer, too, needed the votes of what, in a more robust age, had been called ‘the brutal rurals’, and the Common Agricultural Policy bribed them. In return for protection and price support, they would vote for Adenauer, even if they only had some small plot that they worked at weekends.

France, with a seat on the Security Council and the capacity to make trouble for the USA with the dollar and much else, mattered; the Communists were a useful tool, and they were told not to destabilize de Gaulle. He was being helpful to Moscow. In the first instance, starting in 1964, the French had made problems as regards support for the dollar. They built up gold reserves, and then sold dollars for more gold, on the grounds that the dollar was just paper, and inflationary paper at that. There was of course more to it, in that there was no financial centre in France to rival that of London, and the French lost because they had to use London for financial transactions; by 1966 they were formally refusing to support the dollar any more, and this (an equivalent of French behaviour in the early stages of the great Slump of 1929-32) was a pillar knocked from under the entire Atlantic financial system.

De Gaulle had persuaded himself that the Sino-Soviet split would make the USSR more amenable, that it might even become once more France’s ideal eastern partner. There were also signs, he could see, of a new independence in eastern Europe. The new Romanian leader, Ceauşescu, looked with envy on next-door Tito, cultivated and admired by everybody. Romania had been set up by France a century before, and French had been the second, or even, for the upper classes, the first language until recently. Now, de Gaulle took up links with her, and also revisited a Poland that he had not seen since 1920, as a young officer. In March 1966 he announced that France would leave the NATO joint command structure, and the body’s headquarters were shifted to Brussels, among much irritation at French ingratitude. In June the General visited the USSR itself, and unfolded his schemes to Brezhnev: there should be a new European security system, a nuclear France and a nuclear USSR in partnership, the Americans removed, and a French-dominated Europe balancing between the two sides. He had already made sure of Europe’s not having an American component, in that he had vetoed British membership of the Community. Now he would try to persuade Brezhnev that the time had come to get rid of East Germany, to loosen the iron bonds that kept the satellite countries tied to Moscow, and to prepare for serious change in the post-war arrangements. Brezhnev was not particularly interested, and certainly not in the disappearance of East Germany; in any case, although France was unquestionably of interest, it was West Germany that chiefly concerned Moscow, and there were constant problems over Berlin. De Gaulle was useful because, as Brezhnev said, ‘thanks to him we have made a breach, without the slightest risk, in American capitalism. De Gaulle is of course an enemy, we know, and the French Party, narrow-minded and seeing only its own interests, has been trying to work us up against him. But look at what we have achieved: the American position in Europe has been weakened, and we have not finished yet.’

Europeans, and Germans especially, had built up a trade surplus, storing their dollars as reserves; they, this time mainly British, had also invested in the USA. What would happen if their holdings of dollars were so large that they outnumbered the Americans’ own reserves? And then they sold, as de Gaulle was to do? There was a free market in gold, partly in London, and the Swiss were also not bound by the rules. What would happen if dollars were sold for gold, at a price different from the official one? It would weaken the dollar, make it unstable, and less useful as the medium for world trade, upon which the prosperity of the Western world depended. And if the producers of oil especially, but also other essential raw materials, realized that their dollars were just paper, would they not react by raising their prices? In the sixties there were moments of trouble, as dollars built up in private hands, and the dollar’s junior partner, the pound sterling, looked weaker and weaker as the British economy lagged behind the German and then the French.

However, there were still too many important interests involved in the existing system for it to be easily abandoned. In the very first place there was defence — largely American, but with a not insignificant British contribution, whether in central Europe or ‘east of Suez’, where a British presence guaranteed important areas in the Arabian peninsula and South-East Asia. The drain of dollars and pounds was partly accounted for by the military spending that went on abroad, a problem that the Germans themselves did not now have to face. One answer to the particular difficulties of the dollar might have been just to increase the value of the Mark, to take account of the Germans’ export surplus. There was resistance in Germany, where the Bundesbank and exporters feared what might happen if exports became more expensive, though with much heaving and puffing, small increases (revaluations) of the Mark were agreed in 1961 and at the end of the decade. Meanwhile, if speculators sold dollars, Germans bought them up at the fixed and increasingly artificial price. This did not address the fundamental problem, that more and more dollars were held outside the system, and the problem kept coming back. In the early 1970s, the dry and technical debates of ten, or even twenty-five, years before suddenly took on a hectic life. There always was a central problem, that the dollar was in the end just paper, and would appear to be such if the Americans produced too much of it. That was what happened. Vietnam had to be paid for, but so also did the expense of Johnson’s vast public spending programme.