Between Containment and Rollback: The United States and the Cold War in Germany

BETWEEN CONTAINMENT AND ROLLBACK

THE UNITED STATES AND THE COLD WAR IN GERMANY

Christian F. Ostermann

Stanford University Press

Stanford, California

STANFORD UNIVERSITY PRESS

Stanford, California

©2021 by the Board of Trustees of the Leland Stanford Junior University.

All rights reserved.

No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press.

Printed in the United States of America on acid-free, archival-quality paper

Reprint corrections, 2024

Library of Congress Cataloging-in-Publication Data

Names: Ostermann, Christian F., author.

Title: Between containment and rollback : the United States and the Cold War in Germany / Christian F. Ostermann.

Description: Stanford, California : Stanford University Press, 2021 | Series: Cold war international history project | Includes bibliographical references and index.

Identifiers: LCCN 2019051240 (print) | LCCN 2019051241 (ebook) | ISBN 9781503606784 (cloth) | ISBN 9781503607637 (ebook)

Subjects: LCSH: Cold War. | United States—Foreign relations—Germany (East) | Germany (East)—Foreign relations—United States. | United States—Foreign relations—1945-1953. | Germany—Foreign relations—1945- | Germany (East)—History.

Classification: LCC E183.8.G3 O83 2019 (print) | LCC E183.8.G3 (ebook) | DDC 327.73043/109045—dc23

LC record available at https://lccn.loc.gov/2019051240

LC ebook record available at https://lccn.loc.gov/2019051241

Cover photo: June 17, 1953 Uprising—strikers on Leipziger Strasse on the way to Potsdamer Platz. Courtesy of Gert Schütz/Landesarchiv Berlin.

Cover design: Rob Ehle

Typeset by Kevin Barrett Kane in 10.2/14 Adobe Garamond Pro

To my parents, Elisabeth and Friedrich Ostermann

Contents

Preface: Writing East Germany into Cold War History

Acknowledgments

Map of Allied Occupation Zones, 1945–1949

1. Toward a Line down the Middle of Germany: Containment at Potsdam, 1945

2. Western Democracy on the Elbe? Rollback through Cooperation

3. The United States and the Political Transformation of the Soviet Zone, 1946–1947

4. Springboard for Penetration: 1947–1949

5. Preventing Roll-up: Diplomatic Blockade, Free Elections, and the Battle of Berlin

6. Planning for Rollback in Germany, 1950–1951

7. The United States and the Cold Civil War in Germany: Eastern Initiatives and West German Rollback Efforts

8. Economic Cold War? The United States and Inter-German Trade, 1950–1952

9. Roll Them Out for Keeps: The United States and the 1953 East German Uprising

Conclusion

Notes

Index

PREFACE

Writing East Germany into Cold War History

On February 9, 1990, U.S. president George H. W. Bush sat down to pen a personal letter to West German federal chancellor Helmut Kohl. He wanted Kohl to know that he wholeheartedly supported the chancellor’s accelerated drive toward German unification. The situation in the German Democratic Republic (GDR) had been deteriorating. For many East Germans, change in the wake of the fall of the Berlin Wall on November 9, 1989, could not come fast enough. Thousands of East Germans went west, putting pressure on Kohl for fast-track unification. The West German leader was about to confront Soviet Communist Party secretary general Mikhail Gorbachev, who, by all accounts, held the key to Germany’s unity. Bush assured his German counterpart of the complete readiness of the United States to see the fulfillment of the deepest national aspirations of the German people. If events are moving faster than expected, it just means that our common goal for all these years of German unity will be realized even sooner than we had hoped.¹

In characterizing his support of Kohl, Bush was on the mark. Sooner than other European leaders, the American president had developed a comfort level with the idea of German unification: I’d love to see Germany reunited, Bush told the Washington Times on May 16, 1989.² It reflected his belief, as Robert Gates, the then–deputy national security adviser, later recalled, that the Germans had changed, and he was prepared to gamble a great deal on that faith.³ The president’s conviction that West Germany had become a stable democracy and a reliable ally positioned him and his administration to embrace the idea of a united Germany sooner than others, including the Germans themselves. His advisers, too, believed that there is no German of any age who does not dream of it in his soul.⁴ But it was more than empathy for the Germans that motivated the Bush administration in its support for German unity: it made the alliance with West Germany the centerpiece of its strategy to preserve U.S. preeminence on the European continent. The Bush administration’s support for German unification, Robert Hutchings, a National Security Council (NSC) official at the time, recalled, was genuine, consistent with our principles and based on careful consideration of our interests.⁵

Yet the grand narrative of Americans and Germans standing side by side for all these years in the pursuit of Germany unity, so evocatively suggested by Bush’s letter to Kohl, reduces the complex story of U.S. policy toward the German question since the end of World War II. This study looks at that story’s early years, from Allied occupation to the early 1950s, when both West Germany and East Germany became members of the politico-military pacts facing off against each other in Europe. It does so through the prism of American attitudes and policy toward the Soviet-controlled part of Germany. It was these Germans, caught by the post-1945 geopolitical fallout of the war that Nazi Germany had launched in 1939, who most dearly paid the price of the country’s division.⁶ Histories of the American–German relationship in the postwar era have left these Germans largely out of the narrative. This book seeks to write the East Germans—leadership and populace—back into history, certainly as objects of American policy, at times even as historical agents of their own.

Was there an American policy toward East Germany? Two major intellectual-political projects for a long time relegated the answer to this question to a footnote. One was the perception, prevailing for most of the Cold War, of the USSR’s dominating role in the Soviet occupation zone and later the German Democratic Republic. In this view, generally speaking, the GDR as part of the Soviet-led eastern bloc lacked historical agency. American policy was thus directed at the Soviets in Germany; based on the supreme authority the four occupation powers had assumed in Germany in June 1945, the United States held the USSR responsible for events in the Soviet zone and GDR. If there was a distinctive U.S. approach to East Germany in this perspective, it was one of diplomatic non-recognition of the Communist German regime after 1949, a policy that sought to deprive that regime of any legitimacy and aligned with the West German Hallstein Doctrine, which punished recognition of the GDR by other countries. During the Cold War and beyond, many historians unconsciously echoed the dominant political view in the West by denying the GDR historical agency. Not until 1989 did a book by a political scientist address the topic more fully, although it focused on the period after the resumption of relations between the United States and the GDR in 1974.⁷

The more important reason for the lack of inquiries into U.S. policy toward East Germany was the primacy of the American relationship with its Germany. To this day, the alliance the United States forged with the Federal Republic of Germany (FRG) represents one of the most successful endeavors in the history of U.S. diplomacy. Turning the western part of Germany from a wartime adversary to an economically and politically pluralistic, vibrant, and peaceful ally was and is considered critical to the post–World War II reconstruction and stabilization of Western Europe and the global liberal-capitalist system, vital to America’s prevailing in the Cold War, and central to assuring U.S. predominance on the European continent once the Soviet empire had crumbled.⁸

Emblematic of the importance of West Germany to the United States, President Bush in May 1989 called for both countries to become partners in leadership. With a great deal of merit, generations of historians in the United States and Germany and beyond have written libraries full of books exploring every aspect of America’s relationship with the Federal Republic. Whether supportive of the relationship in which both countries had invested so much, or critical of the mistakes, failures, and moral or political compromises that had been involved, however, these bodies of work were by and large united in their neglect of East Germany as a serious factor in forging the relationship.⁹

This book is made possible by two recent historiographic shifts, both facilitated in part by access to declassified documents. First, a greater appreciation for the fact that U.S. foreign policy in the early phase of the Cold War was far more assertive in nature than the defensive posture implied by the notion of containment. Since the late 1940s, reactive, defensive notions of containing the new Soviet threat mixed in the political discourse in Washington with more activist and offensively conceived notions of liberation and of rollback of Soviet power. Benefiting from increased declassification of formerly secret documents in the 1980s, Melvyn Leffler’s Preponderance of Power (1992) finally provided persuasive documentation that U.S. objectives had been more far-reaching than previously acknowledged. American planners, Leffler argued, wanted to redraw Russia’s borders to their pre-1939 status, destroy the Cominform, retract influence of the Soviet Union, and eventually cause the Soviet system to weaken and decay. Given time and strength, containment could evolve into a rollback of Soviet power. On the basis of declassified top-level U.S. planning papers, Gregory Mitrovich and Peter Grose pushed this notion even further: Rollback did not await successful containment. The Truman administration embarked on a strategy to compel the Soviet Union to abandon its international ambitions in sync with its containment policy.¹⁰

Notions of rollback and liberation struck a deeper chord because, as Bernd Stöver has demonstrated, they related to traditional American political paradigms of liberty and Manifest Destiny, linked to the religiously infused ideology of American exceptionalism and America’s moral superiority that had motivated U.S. interventionism from the nineteenth century until the world wars of the twentieth. Faced with yet another totalitarian challenge to its very concept of modernity in the wake of the German Reich’s defeat, the United States saw itself as assisting the natural or divine trends of world history and defending its own security at the same time as it sought to expand the domains of freedom abroad. The United States, therefore, could not limit itself to the long-term, patient but firm and vigilant containment of Russian expansive tendencies alone, as U.S. diplomat George F. Kennan had—now famously—demanded in his 1947 Foreign Affairs article The Sources of Soviet Conduct.

Led in fact by Kennan himself, American officials had set out in 1947–48 to destabilize the Soviet regime and its East European satellites through a concerted psychological warfare effort—termed counteroffensive—that sought to further exploit vulnerabilities of the Soviet system, particularly its pervasive distrust and suspicion, and rollback Soviet domination from Central Europe. East Germany constituted an important target in this counteroffensive strategy, especially after the North Korean invasion of South Korea led to a dramatic rise in Cold War tensions globally. This study benefited from the unprecedented openness and declassification of U.S. government records through the Freedom of Information Act (FOIA)—including records on covert operations and psychological warfare. More recently, new scholarship based on exclusive access to the archives of West Germany’s foreign intelligence service, led by German historians Jost Dülfer, Klaus-Dietmar Henke, Wolfgang Krieger, and Rolf-Dieter Müller, has enriched the Western perspective.¹¹

Second, with the end of the Cold War, the implosion of the Communist regimes in east-central Europe, the disintegration of the Soviet Union, and the ensuing opening of archives of the former Communist world, historians have also sought to internationalize the history of the Cold War. Gaining access to the innermost chambers of secrets of the formerly ruling Communist parties from Moscow to Berlin has allowed historians to recast the Cold War in ways that were unthinkable beforehand: the narrative could now be reconstructed from an international perspective, on a multi-archival basis, overcoming the one-sided, largely Western-centered perspectives that had dominated scholarship in East and West.¹² The sudden end of the Cold War confrontation posed the challenge to historians to write its history knowing the outcome, yet it also allowed them to escape the ideological and political parameters that it seemed to have set while it was ongoing.

The German battleground of the Cold War has always formed an important sub-narrative. Reflecting the larger debate on the origins of the Cold War, during the Cold War (and beyond) historians fought and refought the battle over who was to blame for the division of Germany. During the height of the Cold War, most Western accounts laid the blame squarely at Stalin’s doorstep. Much of the late Cold War–era scholarship had firmly grounded American policy toward postwar Germany in the containment paradigm. To be sure, the notion of a double or dual containment developed by Wolfram Hanrieder and Thomas Alan Schwartz added subtlety to the notion that Washington was solely preoccupied with countering Soviet expansionism into Europe.¹³ With the U.S. and British sources well exploited by the late 1980s, the study of American policy in Germany during the first postwar decade took a cultural and transnational turn in the 1990s. Reflecting similar trends in other fields, major works of the 1990s emphasize the significance of ideological or cultural agendas and discourse as well as the importance of non-state, nongovernmental actors in the international arena of the postwar period.¹⁴

Though over time historians came to question the Cold War consensus, only Carolyn Eisenberg finally turned the historiographic tables, with her 1996 work Drawing the Line: The American Decision to Divide Germany, 1944–1949. The United States—along with Britain and France, not the Soviet Union—Eisenberg argued in what has become the standard account of the subject, was the architect of Germany’s partition. Lacking access to archival sources in Germany and Russia, Eisenberg’s brilliant account, however, tended to underestimate Soviet responsibility. In other ways, it did not go far enough in analyzing U.S. responsibility. This study is meant to complement Eisenberg’s account in the light of new Russian and German documentation. It also builds on Marc Trachtenberg’s pathbreaking work, especially his A Constructed Peace (1999).¹⁵

What these new and important contributions, including works by Hermann Josef Rupieper and Frank Schumacher, had in common—and indeed what united them with landmark earlier studies such as John Lewis Gaddis’s The Long Peace: Inquiries into the History of the Cold War (1987) and Melvyn Leffler’s Preponderance of Power (1992)—was the fact that they paid little attention to East Germany, as either an object or an actor in the story that unfolded. Still mirroring the American political vantage point, much of the scholarship focused on West Germany and, in line with the longtime denial of diplomatic recognition, ignored the eastern part of the country and treated it as a negligible appendage. Other studies subsumed the GDR as a Soviet satellite, as part of the political east-central Europe, famously written off to Soviet domination by American non-policy.¹⁶ Even in works on German-American relations, including classics by John H. Backer, Frank Ninkovich, Wolfgang Krieger, and Thomas Schwartz, developments in eastern Germany found scant mention.¹⁷ Only recently have a number of new publications—among them work by Anjana Buckow, Schanett Riller, and Burton C. Gaida—focused greater attention on certain aspects of the American approach to the other Germany.¹⁸

The scholarship deficit on the GDR diminished when the doors of the archives of the Socialist Unity Party of Germany (Sozialistische Einheitspartei Deutschlands, or SED), and the government that it ran were flung open in the wake of the fall of the Berlin Wall.¹⁹ To be sure, the GDR had been a subject of serious study in West Germany before reunification, particularly by the Mannheimer Arbeitskreis Geschichte und Politik der DDR, led by Hermann Weber, as well as other experts, such as Karl Wilhelm Fricke, Gisela Helwig, Peter Christian Ludz, Ilse Spittmann, and Carola Stern, but it remained handicapped by the dearth of sources.²⁰ Much like the broader debate about the Cold War in the United States, the study of the GDR reflected the political debate and exigencies in the Federal Republic about Deutschlandpolitik, from the early totalitarian critique of the 1950s to the systemic understanding of the GDR as a modernizing society in the détente years. Only access to the archives in eastern Germany (and Russia) after 1989–90 allowed historians in East and West Germany to begin a critical reassessment of the political and social history, the historicization of the second German state.²¹

Since the early 1990s, the history of East Germany (and the relations between both German states) has witnessed an explosion of new research. In this process, a new generation of historians born and/or educated in the GDR—in particular Ilko-Sascha Kowalczuk, Michael Lemke, Andreas Malycha, Armin Mitter, and Stefan Wolle, liberated from the prerequisites of Marxist-Leninist ideological framework—have played a leading role in reassessing GDR history.²² International historians have joined this proliferation of research on postwar eastern Germany, with landmark studies by Timothy Garton Ash, Catherine Epstein, Hope Harrison, Konrad Jarausch, and Norman Naimark.²³ Between Containment and Rollback builds on this rich archival corpus of documents and analytical literature to show how American policy affected events in East Germany; access to these resources has allowed this study to give historical agency to the East German leaders and masses as they faced the West.

While the events of June 1953 and the Soviet occupation period drew much public and scholarly attention, research on international history based on the former East German records preoccupied itself largely with German-German relations, with an emphasis on the period after 1960.²⁴ Studies of GDR foreign policy generally suffered from two circumstances: First, despite the setting up of a foreign ministry in the GDR in 1949, international affairs remained a tightly guarded prerogative of the Soviet occupation power, particularly in the immediate postwar period, but to a great degree into the 1950s as well. Thus the German record, exemplified by the important but often cryptic Pieck diary notes, has been fragmentary at best.²⁵ Second, until the early 2000s, Russian records for the early postwar period in Germany remained inaccessible in the Presidential Archive and the Russian Foreign Ministry Archive in Moscow.²⁶ Thanks to the patient efforts of Jochen Laufer, Elke Scherstjanoi, Jan Foitzik, and others at the Zentrum für zeithistorische Forschung in Potsdam and the Institute for Contemporary Research in Munich/Berlin, Russian records on occupied Germany have begun to be published in cooperation with the Russian Foreign Ministry Archive. Norman Naimark, Bernd Bonwetsch, Gennadij Bordjugov and Gerhard Wettig published additional important Russian documentation for the period under consideration in this study. Though far from complete, these records, supplemented with Russian records relating to Germany from other collections and archives, have informed this study to the extent that they allow, for the first time in a fairly systematic fashion, insights into Soviet (and German) intentions and actions vis-à-vis the United States and its allies.²⁷

ACKNOWLEDGMENTS

This book is the result of research over a number of years, more than I care to admit. I am indebted first and foremost to Thomas A. Schwartz, dear friend and mentor, without whose encouragement, steadfast support, and inspiration this book would not have seen the light of day. The late Erich Angermann and then Norbert Finzsch, leading German historians of the United States, played a foundational role in forging my historical tradecraft. My mentor, colleague, and friend Robert Litwak at the Wilson Center provided me with cherished opportunities away from program management. I am grateful to my dear friend Hope Harrison for encouragement, close reading, and stimulating conversations about our respective book manuscripts. Her work on the history of the Berlin Wall has been an inspiration for me.

Friends and colleagues Chen Jian, Warren Cohen, Frank Costigliola, John Lewis Gaddis, William Gray, Jamil Hasanli, James Hershberg, Mark Kramer, Konrad Jarausch, Melvyn Leffler, Li Danhui, W. R. Louis, Charles Maier, William Stivers, Thomas Boghardt, Vladimir Pechatnov, Sergey Radchenko, Shen Zhihua, William Taubman, Odd Arne Westad, and Vladislav Zubok supported me throughout the process. Thomas Boghardt, Marc Frey, William G. Gray, Hope Harrison, Jim Hershberg, Mark Kramer, Melvyn Leffler, Vladimir Pechatnov, Thomas Schwartz, and William Stivers read early versions of the manuscript; I benefited greatly from their comments.

At the Wilson Center many other colleagues encouraged, supported, and critiqued along the way: besides Rob Litwak, the Honorable Lee H. Hamilton, the Honorable Jane Harman, Michael H. Van Dusen, Samuel F. Wells Jr., Haleh Esfandiari, Robert Hathaway, Blair Ruble, Cynthia Arnson, Diana Negroponte, and Joseph Brinley. My talented and dedicated staff and generations of interns assisted in a variety of ways in the completion of the manuscript: I thank especially Charles Kraus, Laura Deal, Nancy Meyers, Mircea Munteanu, Pieter Biersteker, Evan Pikulski, Allison Lylakov, Martha Dee Beutel, Kayla Orta, Kristina Terzieva, Kian Byrne, Ryan Gage, and Timothy McDonnell.

This study began under the auspices of the U.S.-Soviet Flashpoints Project of the National Security Archive, of which I am to this day a proud senior fellow. I gained access to many documents as a result of the archive’s Freedom of Information Act (FOIA) requests and am indebted to the archive’s amazing staff, led by Thomas Blanton, Malcolm Byrne, William Burr, and Svetlana Savranskaya. Thanks also to my research assistants Gregory Domber, now a published historian in his own right, and Peter Voth. I owe enormous gratitude to the Cold War International History Project under its first director, Jim Hershberg, for encouraging, editing, and publishing my research on the 1953 uprising.

For a historian working in a public policy institution, quasi-sabbaticals that allow time for thinking and writing are rare and hence precious. Geir Lundestad, Odd Arne Westad, and Olaf Njolstad allowed me to start working on this project during a research fellowship at the Norwegian Nobel Institute. The institute’s librarian, Anne Kjelling, was incredibly helpful. I am grateful to the American Academy in Berlin for giving me time to put the finishing touches on the project. Librarians Yolande Korb and Kelly Pocklington fanned out across Berlin to fulfill my numerous research requests. In Oslo and Berlin, my co-fellows inspired me to be a better historian and writer.

I also gratefully acknowledge the financial support of the Society of Historians of American Foreign Relations, the Gerda Henkel Foundation (Düsseldorf), and the Harry S. Truman Presidential Library and Museum (Independence, MO). My thanks also go to the archivists and other staff at the National Archives (College Park, MD), the U.S. Department of State, the Truman Library, the Dwight D. Eisenhower Library, the Bundesarchiv (Koblenz/Berlin), and the Political Archive of the German Foreign Ministry (Bonn/Berlin), as well as to the Public Record Office/UK National Archives for providing access to the records. I am grateful to Ulrich von Hehl and Stephan Kieninger for their assistance with the Bundesarchiv records in the final stage of the manuscript.

I am deeply grateful to Margo Irvin, Nora Spiegel, and Emily Smith at Stanford University Press for their superb editorial assistance.

Unfailing in their encouragement, support, inspiring diversions, and nagging questions, my friends, near and far, have helped make this book possible: Carol Ann Adamcik, Keith Allen, Lynn Brallier, Harold and Clemencia Cohen, Katharina Dahl, Joan Dobkin, Jordan Fried, Axel Frohn, Marilena Gala, Francis Gavin, Massimiliano Guderzo, Eva Kleedermann, Paweł and Anka Machcewicz, Jürgen Martschukat, Leopoldo and Teresa Nuti, Mark R. Pennington, Lynda Pilgrim, Maria Stella Rognoni, Ruud van Dijk, Elena Vitenberg, Sherrill Wells, Andrea Williams, and Chris and Angela Willmore.

This book is dedicated to my parents, Elisabeth and Friedrich Ostermann, whose love, support, and life story formed the foundation for the passion and effort that went into this project. My American families—the Wilsons and the Katchkas—extended that foundation to the United States. And all of them will be pleased that this book will now no longer be a topic of increasingly painful conversations at family reunions and vacations.

I remember when my partner and love of my life, Elizabeth H. Katchka, first read an early version of the chapter on the failed East German rebellion of 1953. Lisa was moved to tears by the tale of the workers and students who took to the streets for freedom and democracy, by the human story. Long before and even longer afterward, she believed that their story would finally see the light of day. It is to her I owe my greatest and unending debt.

Map of Allied Occupation Zones, 1945–1949

1

Toward a Line down the Middle of Germany

Containment at Potsdam, 1945

BERLIN WAS A DESOLATE PLACE when President Harry S. Truman and his entourage arrived there on July 15, 1945. Truman planned to discuss the future of Germany with the leaders of the Soviet Union and Great Britain, his wartime allies, on the outskirts of a city largely in ruins. Berlin had absorbed more bombs and shells in World War II than any other metropolis. The scale of the wreckage and mass of rubble defied measurement.¹ For mile after mile through Berlin and its suburbs, one member of Truman’s party remembered, every building was shattered beyond habitation. Some were still smoldering. . . . The stench of death was everywhere.² To another, former Moscow ambassador Joseph E. Davies, Berlin seemed like a spectral, ghost city with scorched and burned-out wrecks of buildings.³ Yet another, John J. McCloy, the assistant secretary of war and future U.S. high commissioner in Germany, noted driving past dogged looking people trudging along the road—most of them without shoes on his way into Berlin on the autobahn. Everything in the center of town was stark ruin—it [went] on as far as you [could] see and the deeper we proceeded through the city, the worse it became. There was a stink of broken sewers, people in the streets looked grey and dull. A conquered, devastated and depressed city—so different from the vigor of Berlin and its neat if heavy character in peace time that it is almost unbelievable.⁴ McCloy and most of the American delegation, headed by Truman and Secretary of State James F. Byrnes, stayed more than two weeks in these almost surreal surroundings.

This chapter argues that the two weeks that U.S. leaders and their foreign policy advisers spent in Potsdam in the Soviet zone were critical for the transformation of American policy. Truman and Byrnes had arrived in Germany prepared to work out some kind of joint governance of the territory they had occupied. But the core deal struck between Truman and his counterparts at Potsdam was a dramatic reversal of the plan to treat Germany as an economic unit and in good measure a result of their experience in the Soviet zone: an agreement that allowed each occupation power to serve its reparations needs from its own zone. Buried in a thicket of pronouncements on the unitary political treatment of Germany by the World War II allies, the zonal solution to the reparations question had profound ramifications for the future of Germany: it set the eastern and western occupation zones on different economic and political trajectories. While recent historiography has rightly placed this American-inspired plan in the context of broader fears about socioeconomic turmoil in Europe, internal administration debates over occupation priorities, or a broader sphere-of-influence approach to relations with the Soviet Union, it is important to emphasize that this zonal approach to the reparations problem owed much to the preemptive Soviet campaign of dismantling that had taken place since the Red Army entered German territory. In Potsdam the results of that campaign were staring the Americans in the face.

The Evolution of American Policy

We have to remember that in their occupied territory they will do more or less what they wish.⁵ President Franklin D. Roosevelt (FDR) had a sober and somewhat ambivalent view of what to expect from the Red Army occupation of eastern Germany. He acknowledged the geopolitical reality that the Soviet government would run the zone of Germany that it would come to occupy with an essentially free hand. And probably a heavy one as well. No one had any idea as yet what they have in mind, but disagreements were to be expected. American leverage to ensure Soviet cooperation was minimal—though not entirely ruled out. We could not afford to get into a position of merely recording protests on our part unless there [was] some chance of some of [the] protests being heeded. FDR hastened to add that he did not intend by this to break off or delay negotiations with the Soviet government over lend-lease, the wartime program that had supplied matériel to the USSR since 1941.⁶

The presidential statement, a rare intrusion into the postwar planning debates within his bureaucracy for a president who, as late as October 1944, famously expressed his dislike for making detailed plans for a country . . . which we do not yet occupy,⁷ encapsulated Roosevelt’s wartime priorities: defeating Germany and Japan and securing Soviet cooperation for the postwar world. If he had any inkling of what was awaiting the German population that came under Red Army control, he showed no qualms. He had been inclined toward draconian treatment of the Germans after the war, and he was convinced that it needed to be driven home to the German people that their nation has been engaged in a lawless conspiracy against the decencies of modern civilization. Worried that the Germans might rise again to unleash another war, he had suggested that we either have to castrate the German people or you have got to treat them in such a manner so they can’t just go on reproducing people who want to continue the way they have in the past.⁸ As late as November 1944, FDR professed to still be in a tough mood. He was determined to be tough with Germany.⁹

FIGURE 1. Pedestrians walk down a street in Berlin lined with buildings destroyed or damaged by bombing during World War II, circa July 1945. Courtesy of Harry S. Truman Library and Museum.

His attitude on Germany let him and his New Deal advisers consider the deindustrialization, dismemberment, and harsh punishment of the country that had engulfed the world twice in a global conflagration.¹⁰ For a few weeks in late 1944 he had supported a scheme, pushed by Secretary of the Treasury Henry Morgenthau, for the complete eradication of German industrial productive capacity in the Ruhr and Saar, though he later denied doing so.¹¹ He had also been enthralled with the idea, first proposed by Soviet leader Joseph Stalin, of dismembering the German Reich into five to seven parts, and he and British prime minister Winston Churchill strongly supported dismemberment at the first Big Three Conference in Tehran in October 1943. Roosevelt hung on to the idea as late as the Yalta Conference in February 1945, despite opposition from within his administration and Churchill.¹²

At Yalta, the Big Three leaders (Churchill, Roosevelt, and Stalin) also confirmed Germany’s obligation to compensate the Allied nations for damages, through dismantling, reparations from current production as well as the use of German labor. There was broad understanding that the Soviet Union would receive the lion’s share, given its tremendous wartime losses. To be sure, when Stalin requested $10 billion of a proposed total of $20 billion as the Soviet portion in reparations from Germany, with the deputy Soviet foreign minister, Ambassador Ivan Maisky, adding a demand for 75 percent of dismantled German industrial equipment, both Churchill and Roosevelt balked at fixing the amount. But Roosevelt had at least implicitly acknowledged the validity of the Soviet request by agreeing to use the Soviet proposal as a basis for discussion in the Allied Reparations Commission in Moscow, which was tasked with resolving the matter.¹³

In Roosevelt’s view, assuring Soviet cooperation for the postwar peace required accommodating reasonable Soviet security interests, especially in central and eastern Europe. Roosevelt had therefore quietly endorsed the October 1944 percentage agreement in which Churchill and Stalin had divided southeastern Europe into spheres of influence (British dominance in Greece, Soviet dominance in Bulgaria and Romania), and he had consented to Soviet control over the Baltic republics and eastern Poland (which the USSR had annexed as a result of the Molotov-Ribbentrop Pact of 1939). But FDR had stopped just short of giving Stalin a completely free hand in the region, especially in what would constitute postwar Poland. He and Churchill had insisted at Yalta that the Communist-dominated Lublin Committee, which Stalin had recognized as the provisional Polish government, be reorganized on a broader basis by including democratic leaders from inside and outside of the country. A new government facilitated by Allied negotiations in Moscow would be pledged to holding free elections. The solution reflected a broader approach to central Europe: acknowledging Soviet security concerns in an area that had been the gateway for the German invasion, Roosevelt aimed at a region made up of countries that aligned with Russia strategically but preserved autonomy in their domestic affairs. It implied some degree of political openness.¹⁴

The Moscow negotiations on a reconstituted Polish government soon stalled. In Poland, the Soviets proceeded to impose a Communist police state. Unwilling to whitewash the Lublin Committee, Roosevelt sought to increase public pressure on Moscow—in vain, as it turned out. Roosevelt’s death on April 12 left the issue to his successor to deal with. Truman, lacking full details of Roosevelt’s negotiations with Stalin (and Churchill), warned of a violation of the Yalta agreements, telling Soviet foreign minister Vyacheslav Molotov on April 23, 1945, that the issue would be the symbol of future collaboration between the countries. The Polish issue—and Soviet communization in Eastern Europe more broadly—threatened to undermine Allied relations at the very moment when the three countries set out to run occupied Germany collectively. Unwilling to allow a complete break with Moscow, Truman dispatched Roosevelt’s confidant Harry Hopkins to Moscow in May. Following quick agreement on the composition of the new Polish government and assurances of free elections, the Truman administration recognized the still Communist-dominated government.¹⁵

The ruthless sovietization of Poland and much of eastern Europe frustrated U.S. officials. But what was truly alarming to the Truman administration, Melvyn Leffler has argued, was that Soviet imposition of Communist rule in Poland and elsewhere in the region was occurring at the same time as economic chaos, social turmoil, and political upheaval were spreading in southern and western Europe.¹⁶ While the Kremlin may not have instigated these developments, U.S. officials were certain that the Soviet government could capitalize on the unrest. As World War II ended in Europe in early May 1945, Leffler contends, the Truman administration did not consider anything of greater strategic significance, excluding the defeat of Japan, than dealing with the potential for revolution in European areas not under Soviet occupation.¹⁷

German coal resources in particular were quickly identified as critical for the stabilization and reconstruction of all of western Europe. This in turn meant that the United States and Great Britain would have to import substantial amounts of food, clothing, and machinery in order to resuscitate German coal production and its distribution to western Europe. The funds necessary to pay for these imports, top policy makers within the administration decided well before the Potsdam Conference, were to be the first charge on all German exports from current production and stocks. This arrangement would require reparations to be deferred until the payments for imports necessary to rehabilitate the German coal industry had been recovered. By the time Truman arrived in Potsdam in mid-July 1945, the need to revive German coal production was firmly entrenched in the minds of his top advisers.¹⁸

The priority that these rebuilders (Carolyn Eisenberg) within the administration, most of them conservatives at the State and War Departments whose influence was eclipsing that of the New Deal liberals under the new president, ascribed to resuscitating German coal production over reparations reflected a view of reparations that starkly contrasted with the Soviet position: they valued the punitive effects of reparations only to the extent that they fostered a controlled demobilization of German self-sufficiency, but not economic disarmament. These officials felt that penalizing and crippling Germany permanently through harsh reparations or dismemberment would fail. They considered the punitive reparations regime after World War I to be one of the most fundamental sources of conflict and tension. Instead, they wanted reparations to become a tool for economic integration. Preventing future German aggression, from their perspective, was less a matter of emasculating German industrial might than creating inextricable interdependencies with other economies. They regarded integrating German economic potential with the economies of neighboring countries as the best way to undercut German nationalistic propensities for autarky and hegemony. This in turn would facilitate the restoration of a multilateral capitalist world trade system deemed vital to assuring American preponderance and to sustaining peaceful international order.¹⁹

If the idea of the centrality of Germany’s coal and steel industrial complex-–located as it was largely in the western Rhein-Ruhr Valley—to the revival of the European economy thoroughly pervaded American postwar planning in the spring of 1945, most officials still looked at the former Reich as an economic whole. Roosevelt’s sustained interest in various dismemberment schemes had raised the specter of Germany’s political division, but not one along ideological lines. Few at this stage would go so far as the U.S. chargé d’affaires in Moscow, George F. Kennan, who, just before the Yalta Conference advocated Germany’s division into a Soviet zone and a U.S. zone. Key American officials in fact felt that reviving prewar trade patterns within Germany was critical to supplying the western zones as well as serving as leverage vis-à-vis the Soviet interest in reparations. In their view, treating Germany as a single economic unit would be the only way to address the food shortages, economic dislocations, and trade imbalances. Thus the first charge principle would be applied to trade in all zones, including the traditionally export-rich east.²⁰

The economy of the German Reich had in fact been marked by a high degree of sectoral interdependence and interregional exchanges. Traditionally, eastern Germany had been the country’s bread basket and had depended extensively on imports of hard coal and steel from the heavily industrial Rhein-Ruhr heartland region (and to a lesser extent from Upper Silesia, which had come under Polish administration); in turn, it processed these imports into finished and semi-finished goods. Eastern Germany’s thin raw-materials base was largely limited to brown coal, allowing it to boast extensive highly developed and export-oriented manufacturing capacities centered on textiles, ceramics and glass, optics and fine mechanics, paper, and printing machines, as well as cars. The wartime economy had only accelerated eastern Germany’s degree of specialization in processing industrial goods—and its dependence on the rest of the Reich. By 1945–46, the Soviet zone was almost completely dependent on the West for iron and coal, for 92 percent of its pressed metal, and for 84 percent of its concrete supplies.²¹

Truman, his newly appointed secretary of state, James F. Byrnes, and his other top advisers used the ten-day voyage to Potsdam to hammer out final negotiating positions for the Big Three meeting. Aside from securing Soviet entry into the ongoing war against Japan, their most important and most controversial positions at Potsdam related to the economic treatment of Germany. Given the new emphasis on reviving German coal production, they first aimed at reducing the Soviet demand for $10 billion in reparations extractions from Germany, tentatively agreed to by Roosevelt at Yalta. Second, they sought to ensure that any capital or production extracted from Germany would first pay for Allied imports required to restart coal production, thus deferring reparation payments. Administration officials had also had second thoughts about the internationalization and separation of the Rhein-Ruhr Valley, possibly involving a Soviet role, as had been envisioned in Yalta. That idea was now off the table. Truman’s party was fully aware that the U.S. priorities clashed with Soviet interests in compensation for their enormous war-induced losses, in long-term economic demilitarization of Germany’s industrial-military might, and in participation in controlling and exploiting the Rhein-Ruhr.

The U.S. concerns reflected not just a preoccupation with German coal as the motor for western Europe’s survival and recovery, and a shrinking conception of the utility and value of reparations. They also betrayed at the highest levels of the administration deeply held ideological convictions that called into question the possibility of cooperation with the Soviets. Secretary of War Henry Stimson professed to be much troubled about the fundamental difficulty with the Russians—theirs a totalitarian political concept—a secret police regime with subordination of all to the State and the use of the one-party system. Perhaps no one epitomized that belief more than Byrnes. Marc Trachtenberg has emphasized Byrnes’s conviction by the time of Potsdam that there was too much difference in the ideologies of the U.S. and Russia to work out a long-term program of cooperation.²²

That belief was increasingly shared among the inner circle of foreign policy advisers that the new president gathered for his diplomatic debut among the Big Three. U.S. ambassador to Moscow Averell Harriman and Edwin Pauley, Truman’s lead negotiator on the Allied Reparations Commission, joining Truman’s party from Moscow, were both reportedly violently critical²³ of Russian behavior. General Lucius DuBignon Clay, slated to take over as General Dwight D. Eisenhower’s deputy to run the U.S. occupation government in Germany (OMGUS), arrived from U.S. headquarters in Frankfurt and told of reports of the excesses in the Russian area. Assistant Secretary of War John J. McCloy, who accompanied Stimson to Berlin for the conference, bemoaned his country’s hesitancy about setting our ‘ideology’ against hers [the USSR’s], allowing the Russians to pose as democrats in spite of practicing totalitarianism in its most complete form.²⁴ Joseph E. Davies, FDR’s former ambassador to Moscow who had been invited by Truman to serve as his personal adviser during the conference, was among the few in the delegation who were more optimistic about the prospects for Soviet cooperation. He quickly noticed the anti-Soviet temper of many about the PRESIDENT. He felt the hostility towards Russia was bitter and surprisingly open among the delegation.²⁵

Soviet behavior in eastern Europe seemed to reinforce this skepticism. But the posture at Potsdam also suggested that American policy makers were cognizant of Soviet vulnerabilities in the wake of the war. News of the successful U.S. atomic test, which reached Truman on July 16, the morning after he got to Potsdam, could only strengthen a sense of the hand they had to play even further.²⁶

The Soviet Approach

By the time Truman encountered Stalin in Potsdam, the fundamental thrust of American policy ran counter to the Soviet approach to the German problem. The German invasion in June 1941 had brought Stalin’s regime to the brink of collapse. The existential threat and the staggering human and material losses the country suffered at the hands of the Germans had a profound impact on the international outlook of the Soviet leadership and people. An estimated 26.6 million Soviet citizens had lost their lives in the war. Millions of buildings, tens of thousands of industrial plants, agricultural production cooperatives, train tracks and stations, postal and telegraph stations, thousands of schools, universities, and research institutions, hundreds of museums, libraries, theaters, and hospitals had been destroyed or damaged. By mid-1944, internal Soviet estimates figured that direct physical damage caused by the war alone amounted to $130–$150 billion. Consequently, the Soviet government planned to assert a right to compensation from Germany and its allies as the highest possible priority. Historical lessons influenced that view as well: arguing that reparations in the form of financial transfers had proved unworkable after World War I, Soviet planners demanded reparations in the form of one-time removals of industrial plants and goods, annual deliveries of industrial and other products over a span of ten years, and German labor.²⁷

In the Soviet view, reparations were crucial not only to the country’s postwar recovery but also to the goal of emasculating Germany’s potential for future aggression. It was a common assumption in Moscow’s foreign policy circles that Germany, if unchecked, would quickly recover from its 1945 defeat.²⁸ In July 1944 the Soviet Foreign Ministry’s Commission on Reparations, led by Maisky, had called for scaling down Germany’s living standard to a minimum that would not exceed the average postwar central European standard, estimated to be half that of the German prewar standard. Industrial disarmament would reduce Germany’s heavy industry, such as iron and steel production, to 25 percent of prewar levels. Overall, Soviet planners anticipated halving Germany’s total industrial capacity. Given the huge discrepancy between Soviet losses and Germany’s capacity for compensation, the most practicable method was to extract from Germany everything that can possibly be extracted from this country.²⁹

While the Western powers had recognized the Soviet right to compensation and also considered it necessary to disarm Germany completely, it had not been lost on Soviet officials that American and British officials almost never spoke of industrial disarmament. The notion of reparations as a tool of guaranteeing security in Europe was completely lacking in the Anglo-American approach, Maisky told Soviet foreign minister Vyacheslav Molotov in the fall of 1944, and so he expected them to oppose the expansive Soviet program that linked reparations to the reduction of German war potential.³⁰ Soviet diplomats considered Treasury Secretary Henry Morgenthau’s deindustrialization plan to be a step in the right direction but remained skeptical. The Soviet ambassador in Washington, Andrej A. Gromyko, was well aware that Secretary of War Henry Stimson was emphatically opposed and that the majority of those State Department officials who dealt with postwar Germany were strictly set against any plans to weaken Germany economically. In his view, the Allies wanted to preserve Germany as a developed industrial country. Though Roosevelt’s final decision was still pending, it was becoming clear, Gromyko reported in the fall of 1944, that influential groups inside and outside of the administration favored a softer policy toward Germany.³¹

These warnings aligned with those of Eugene Varga, an influential Soviet economist who advised Stalin that reparations among capitalist countries could not be implemented given the insuperable contradiction between reparations and the need to protect the capitalist social order. Marxist-Leninist ideology thus fed Soviet officials’ doubts that the Western powers would be willing to impose a harsh reparation regime on Germany.³²

The logic of the Soviet approach to reparations took all of Germany into view. As they advocated for a zone-by-zone occupation of Germany, Soviet officials emphasized that these zones should be simply administrative, not economic entities. One should not consider them property of the Allied power that occupied them, the deputy chairman of the Council of People’s Commissars, Kliment Voroshilov, a confidant of Stalin, emphasized in the internal deliberations of spring 1944. After all, in that case the Ruhr and Saar areas would become British property, which was not acceptable under any circumstances. Future reparation capacity could not be the decisive consideration underlying the zonal division since the Allies would receive reparations from Germany as whole.³³

Yet throughout the discussions in the tripartite European Advisory Commission meetings in London charged with planning for the armistice period in Germany, the Soviet government pushed for the zone commanders—not an interallied executive organ—to have exclusive authority to implement the armistice agreement. They were worried that American and, even more so, British proposals for a centralized, complicated, and possibly omnipotent interallied control mechanism would lead to confusion, misunderstandings and weakened authority of the supreme commanders.³⁴ Behind these very practical concerns lurked suspicions about Western interference in Soviet zone affairs and fears of being outnumbered in any joint occupation agencies. Protecting their zone from Western influence became an obsession for Soviet officials even before they had occupied their part of Germany. Strikingly, Soviet planning documents on more than one occasion referred to the American and British zones as the western zone, reflecting a mental map with deep ideological fault lines. As late as August 1944, such documents denied relinquishing even the most rudimentary executive and administrative functions to any central inter-Allied authority proposed by the Americans to coordinate matters pertaining to all of Germany and supervise a future German government; at most, Moscow officials wanted to concede some form of regular consultations between the supreme commanders within a control council whose decisions had to be unanimous.³⁵

To be sure, American and British officials took little time to recognize the advantages of a military government that operated primarily at the zonal level. American planners still favored creating a three-power entity in Berlin that would act on the orders of the three governments in all matters concerning Germany as a whole. But the final Zonal Protocol agreed upon by the European Advisory Commission on September 12, 1944, reflected the basic predilection for zonal control and decentralization shared by all three powers: Allied control in postwar Germany would be divided between joint central authority vested in the Allied Control Council and the authority of the individual zonal commanders for administration in their zone, with the weight of power gravitating toward the latter.³⁶ Moreover, in May 1945, after France had been ceded its own occupation zone in southwestern Germany, American negotiators advanced the idea that while the Allied Control Council’s authority would be supreme in all of Germany, in cases where the Allies would not be able to agree, each military commandant would be free to proceed unilaterally in his own zone.³⁷ Germany’s capital, Berlin, was to become in effect a fifth zone, stay undivided, and come under joint Allied control, with sector lines of rather platonic significance. Supreme Allied Commander Dwight D. Eisenhower’s decision in the spring not to advance directly toward Berlin made the Soviets the sole masters of the city for a full two months.³⁸

The Soviet insistence on a free hand in their zone was crucial for understanding the Soviet attitude toward reparations. The formal Allied recognition at Yalta of Germany’s responsibility to pay reparations in kind from its national wealth, along with the acknowledgment that the lion’s share would fall to those Allied nations that had suffered most and had contributed most to defeating the Germans (which meant above all the Soviet Union) was to Stalin far more important than the actual amount that became the focus of endless Allied discussions. His ideas about what the USSR required in compensation had shifted significantly over the years. Early in the war he had stated: 40,000 machine tools—that is all we want in reparations from Germany!³⁹ As late as Yalta, Stalin was apparently willing to ask for no more than $5 billion in reparations, causing Ambassador Ivan Maisky, the head of the Soviet Reparations Commission that had been developing a Soviet reparations plan for more than a year, to produce panicked memos arguing for twice that amount, which he considered the absolute minimum.⁴⁰ When Roosevelt and Churchill pushed back on a $10 billion commitment at the Yalta Conference, Stalin was apparently ready to back down to $7 billion, though the figure was never officially tabled.⁴¹ Despite the lack of a firm Western agreement on overall amounts for reparations, the Soviet leadership considered the Crimea Conference a success—especially with regard to reparations!⁴² The reasons would soon become apparent: a massive unilateral dismantling program for their zone.

What Stalin wanted to avoid at all costs was for the negotiations over a precise reparations plan to curtail the Soviet dismantling effort that had been long prepared and began to unfold in the weeks after Yalta. He thus dragged out till mid-March the appointment of Maisky as Soviet representative to the Allied Reparations Commission, which the Big Three had agreed was to finalize a countrywide reparations plan, and then he blocked the beginning of the commission’s work over the inclusion of France as supported by the United States and Great Britain. When Edwin Pauley, the head of the U.S. delegation to the Allied Reparations Commission, called for a joint inspection trip through Germany’s industrial zones, Molotov refused to let Maisky participate. Maisky was also forced to stall in responding