314


FOREIGN RELATIONS, 1950, VOLUME i.


Memoar tzum by Mr. John Fo8ter DuZles, Consultant to the Secretary
                             of State'

TOP SECRET                            [WASHINGTON,] May 18, 1950.
  The United States faces a new and critical period in its world

  The loss of China to Communists who, it now seems will work in
Asia as junior partners of Soviet Communism has had tremendous
repercussions throughout the world. It has marked a shift in the
balance of power in favor of Soviet Russia and to the disfavor of the
United States.
  While that basic fact is generally accepted, no one is yet quite sure
as to the precise extent to which that power relationship has been
shifted. Throughout the world, in Europe, the Mediterranean, the
Middle East, Asia and the Pacific, governments and peoples are in-
tently watching for the ,next move which will provide a measuire of
the extent of the power shift, so that they can orient their own policies
accordingly.
  The barometer most closely watched is that which seems to measure
the judgment of the United States itself as to its present power and
position in the world. If our conduct indicates a continuing disposi-
tion to fall back and allow doubtful areas to fall under Soviet
Communist control, then many nations will feel confirmed in the
impression, already drawn from the North Atlantic Treaty, that we
do not expect to stand firm short of the North Atlantic area-which
under the Treaty includes Berlin-and the Americas covered tradi-
tionally by the Monroe Doctrine and now by the Rio Pact.
  If our conduct seems to confirm that conclusion, then we can expect
an accelerated deterioration of our influence in the Mediterranean,
Near East, Asia and the Pacific. The situation in Japan may become
untenable and possibly that in the Philippines. Indonesia, with its vast
natural resources may be lost and the oil of the Middle East will be
in jeopardy. None of these places provide good "holding" grounds
once the people feel that Communism is the wave of the future and
that even we are retreating before it.
  This series of disasters can probably be prevented if at some doubt-
ful point we quickly take a dramatic and strong stand that shows our
confidence and resolution. Probably this series of disasters cannot be
prevented in any other way.

  'Mr. Dulles prepared this memorandum for Dean Rusk (Assistant Secretary
of State for Far Eastern Affairs since March 28) and Paul Nitze, Director
of
the Policy Planning Staff. On May 19, he also transmitted a copy to Under
Secretary Webb.