FOREIGN RELATIONS, 1950, VOLUME I


encroachment. The free world lacks'adequate means--in, the form of
forces in being-to thwart such expansion locally. TheUnited States
will therefore be confronted-more frequently with the dilemma of
reacting totally to a limited extension of Soviet control or of not
reacting at all (except with ineffectual protests and half measures).
Continuation of present trends is likely to lead, therefore, to a gradual
withdrawal under the direct or indirect pressure of the Soviet Union,
until we discover one day that we have sacrificed positions of vital
interest. In other words, the United States would have chosen, by lack
of the necessary decisions and actions, to fall back to isolation in the
Western Hemisphere. This course would at best result in only a rela-
tively brief truce and would -beended either by our capitulation or
by a defensive war-on unfavorable terms from unfavorable posi-
tions--against a Soviet Empire compromising all or most of Eurasia.
(See Section B.)
   3. Economic-and S6cial aspects. As was pointed out in Chapter VI,
 the present foreign economic policies and programs of the United
 States Will not produce a solution to the problem of-international
 economic equilibrium, notably the problem of the dollar gap, and will
 not create an economic base conducive to political stability in many
 important free countries.
   The European Recovery Program has been successful in assisting
 the restoration and expansion of production in Western Europe and
 has been a major factor in checking t-he dry rot of Communism in
 Western!Europe. However, little progress has been made toward the
 resumption by Western Europe of a position of influence in world
 affairs -commensurate with its potential strength. Progress in this di-
 rection will require integrated political, economic and military poli-
 cies and programs, which are supported by the United States and
 the -Western European countries and which will probably require a
 deeper participation by the United States than has been contemplated.
   The Point IV Program and other assistance programs will not ade-
 quately supplement, 'as now projected, the efforts of other important
 countries to develop effective institutions, to improve the administra-
 tion of theiraffairs, and to'achieve a sufficient measure of economic
 develo0pment. The moderate regimes now in power in"many countries,
 like India, Indonesia, Pakistan, and the Philippines, will probably be
 unable to restore or retain their popular support and authority unless
 they-are assisted in bringing about a more rapid improvement.of the
 economic and social structure than present programs-will make
 possible..,
   The.,Executive:Branch ýis now undertaking a study of the problem
   of the -United States balance of payments and of ;the measures which
   might be taken by the United States to assist in establishing inter-


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