Updated: 04-Sep-2001 NATO the first five years 1949-1954

Part 1
Chapter 5

by Lord Ismay

Secretary General



Counting the cost

The period following the Brussels Conference witnessed no relaxation in the tension between the free nations and the Communist world. In Korea and Indo-China fighting continued. In the United Nations there was a stalemate. The disarmament plans were at a deadlock, as were the proposals for controlling atomic energy. In Paris, the attempts of the deputies of the Foreign Ministers of the four Occupying Powers to arrange talks on Germany were a total failure.

Throughout the world the Communists continued their campaign of hate against the Western democracies, unscrupulously using the magic word 'peace' in an attempt to divide and confuse Western public opinion and to foster the Kremlin's aims. Behind the Iron Curtain, however, there was anything but peace. The rearmament and reorganization of the armed forces of the European satellite countries were relentlessly pursued. Mysterious purges took place. In Czechoslovakia, for instance, leading Communist Party leaders and even a Foreign Minister were tried and eventually hanged for 'plotting against the State'.

During the same period the democracies took a number of steps which, while technically unrelated, were aimed at increasing the unity of the free world and its ability to resist. In 1951, mutual security pacts were signed between the United States and the Philippines, and the United States, Australia and New Zealand. At San Francisco, forty-eight nations signed a peace treaty with Japan (with the USSR, Czechoslovakia and Poland abstaining) and on the same day Japan signed a bilateral security pact with the United States which was to be supplemented, in March 1954, by a mutual defence assistance agreement. In Europe, the European Payments Union started to function, the Coal and Steel Community was established; and progress was made with the negotiations on Western Germany's participation in European defence. France, the United Kingdom and the United States granted first economic aid, and then military assistance, to Yugoslavia-Various attempts were made, without success, to organize Middle East defence with the participation of Egypt and of other states in that area.

There were other important developments more directly related to NATO. The question of the accession of Greece and Turkey to the North Atlantic Alliance, which, had already been considered by the Council in 1950, was the subject of prolonged consultation in 1951. In May 1951 the Greek and Turkish Governments. renewed their claim for membership. It was felt, on the one hand, that the addition of these countries to the coalition would carry obvious advantages; on the other hand, that it would involve extending NATO's strategical commitments as far east as the Caucasus. Moreover, some member governments feared that the admission of Turkey, which had a common frontier with Soviet Russia and Bulgaria, might aggravate international tension.

NATO studied the problem in both its political and military aspects. The outcome was favourable; and a protocol inviting Greece and Turkey to join the Atlantic Treaty (which modified the definition of the territories and forces contained in Article 6 of the Treaty) was signed by the Council Deputies on the 22nd October, 1951."' The formal accession of Greece and Turkey took effect on the 18th February, 1952.

During 1951, several agreements related to Western defence were made by the United States: with France (28th March) for the establishment of an air base at Chateauroux and for the installation of seven bases in Morocco (12th July); with Denmark (27th April) for the defence of Greenland; with Iceland (7th May) for the joint defence of that country, and with Portugal (6th September) about airfields in the Azores.

Meanwhile, NATO member states were increasing their defences. Reference has been made in Chapter IV to the important decision taken by the United States to send additional forces to Europe. On the 15th February, 1951, Secretary of Defence Marshall announced that four United States divisions would soon join the forces already stationed in Western Germany, bringing the total of American forces in Europe in 1952 to 400,000 men. A month later, he stated that the total armed forces of the United States had doubled in the last nine months and was now 2,900,000 men. America was to devote 58 per cent of her budget for the fiscal year 1951-52 on defence expenditure. Canada too was increasing her national forces and had decided to send one brigade and eleven fighter squadrons to Europe. Corresponding efforts were being made by the European members of NATO. It soon became apparent, however, that plans for increasing forces and military production were lagging as a result of financial difficulties.

The economic impasse

It has been shown in Chapter III that already in 1950 member governments had shown growing concern at the economic consequences of rearmament. Most NATO countries were still recovering from the economic disturbances which had beset them in one form or another in the previous years. With the outbreak of the Korean war came a great surge of speculative buying. Prices rose alarmingly: the dollar cost of some basic raw materials practically doubled in six months.

The situation was difficult for all, but the European countries were particularly hard hit. The rise in import prices added greatly to their international payment problems. Scarcity of essential raw materials hampered production, while the rise in internal prices threatened to start a vicious spiral of inflation.

It was clear that something must be done to check the deteriorating economic situation if rearmament was to be carried out successfully. In October 1950, the Council Deputies set up a working group to make an analysis of the economic problems arising from the defence effort of the NATO countries during the three-years period, July 1951-JuIy 1954, to assess each country's capacity to devote economic resources to defence purposes, and to give a general view on an equitable distribution of the defence burden. In addition, the Deputies set up an advisory body to study the raw materials situation, and requested the Standing Group for a detailed costing of the Medium Term Defence Plan. At the end of the year, the Council also set up a Defence Production Board, responsible to the Council Deputies, to replace the Military Production and Supply Board and its agencies. (1-2)

On the 26th February, 1951, the French Deputy, M. Herve Alphand, drew once more the attention of his colleagues to 'the continuing deterioration of the Western economic system' which weakened the cohesion and power of endurance of Europe. He reported that 'the budget estimates designed to meet the requirements of a specific rearmament programme had been rendered completely inaccurate by the rise in prices, to such an extent that, in certain cases, the very implementation of such programmes might be imperilled'. He added that the North Atlantic Council had responsibilities in this matter, deriving from Article 2 of the Treaty, and suggested that they should 'recommend and supervise the execution of future measures designed to ensure not only the security but also the economic equilibrium of the Atlantic Community'.

The reorganization of 1951

It "was becoming more and more apparent that political, military and financial problems could not, as in the past, be considered separately by different committees of Ministers, and that NATO, to be effective, must be further simplified and streamlined. Accordingly, acting on a Canadian proposal it was decided (and announced on the 3rd May, 1951) that the North Atlantic Council, originally composed of the Foreign Ministers of the member governments, would thereafter incorporate the Defence Committee and the Defence Financial and Economic Committee, and thus become 'the sole ministerial body in the Organization' charged with 'the responsibility of considering all matters concerning the implementation of the provisions of the Treaty'. The Council would be composed of Foreign, Defence or Finance Ministers as governments saw fit. It would be a Council of governments, not one of individual Ministers.

The status of the Deputies was also enhanced. Instead of being the 'deputies' of the Foreign Ministers only, they now represented all Ministers in their government concerned with NATO matters. The Council Deputies thus became 'the permanent working organization of the North Atlantic Council''. An international secretariat, paid from a budget to which all member states contributed, was set up under the direction of the Deputies' Chairman, Mr. Charles M. Spofford. A new body, the Financial and Economic Board (FEB), responsible to the Council Deputies, was established in Paris. It replaced all existing NATO committees and groups working in that field.

During the spring and summer of 1951 much work was done by the Council Deputies and their subsidiary agencies. The Deputies, for instance, successfully negotiated an 'Agreement between the Parties to the North Atlantic Treaty regarding the Status of their Forces': this determined the legal position of the officers and soldiers of one member country called to serve under NATO command in another member country. It was signed on the 19th June, 1951.(3) A similar agreement, relating to the civilian side of NATO - 'Agreement on the Status of the North Atlantic Treaty Organization, National Representatives and International Staff' - was also negotiated and signed in September 1951.(4) Another important matter was to decide how international military headquarters would be jointly financed by member governments. In August 1951, a cost-sharing formula was agreed for financing SHAPE and its subordinate headquarters. During the same period, the common financing of the infrastructure which SHAPE urgently needed was the subject of prolonged discussions, but without success. (5)

All of these problems raised far-reaching political and financial issues. In fact, they were a test of just how far the members of the Atlantic Alliance "were prepared to go along the path of collective action and collective responsibility.

The Ottawa Conference

In September, 1951, the North Atlantic Council met in Ottawa. The Foreign, Defence and Finance Ministers, for the first time in joint session, examined reports from the Council Deputies, the Defence Production Board,(6) the Financial and Economic Board and the Military Committee (including a separate report from General Eisenhower). These reports, as Mr. Spofford stated in a personal report to the Council, focussed attention on 'the most urgent tasks facing NATO if planning... is to be translated into effective collective defence'. Their common theme was that each NATO agency was still being hampered in its work for lack of information from the others. It was clear that further reorganization of NATO was essential.

The Military Committee reported that the aggregate of the defence contributions offered by member governments fell short of the level of forces and equipment which the military authorities regarded as essential for the defence of the North Atlantic area. It therefore pressed for increases to 'fill the gap'. In supporting this request General Eisenhower stated that he found the military effort to be 'so closely interlocked with economic, financial and social matters that it was often impracticable, and indeed quite unrealistic, to consider one of these fields without giving due attention to the others'.

The interim report of the Defence Production Board concentrated attention on the position of the continental European member countries, and pointed out that, whilst there were serious equipment deficiencies, there was also considerable unused capacity for arms production. The principal limiting factor in developing a programme was the impossibility of obtaining a commitment from governments to provide the money.

The Financial and Economic Board also presented an interim report containing the first systematic analysis of the financial and economic problems arising from the national defence programmes. This report considered the question of how to achieve the 'equitable' sharing of the defence burden between member countries - a subject which had been frequently discussed within. NATO during the last year. It stressed that no simple and generally acceptable formula could be devised: the complex factors which determined each country's capacity to undertake defence could not be reduced to mathematical terms.

On the vital question of assessing the desired increase in the total NATO defence effort, the FEB pointed out that it was impossible to arrive at final conclusions in the absence of close military guidance. So far, the common defence plan had not been worked out in detail: the first rough estimates of its cost were just being prepared and governments were very unwilling to commit themselves to additional expenditure until they knew what the total demand on them was likely to be. Still more important was the fact that the existing defence programmes of many countries were already causing considerable economic strain. The FEB urged that any final decision about the size of the defence burdens should await a careful appraisal of the economic risks involved in undertaking increases against the military risks of not doing so. That was a task which the Board was neither empowered nor competent to perform.

It should here be recalled that the Defence Production Board and the Financial and Economic Board had been in existence for only a few months. It is a tribute to them that they were able so quickly to bring these issues to a head.
The dilemma in which the NATO agencies found themselves could obviously not be resolved by the North Atlantic Council in a single session of a few days. Accordingly, they decided to set up a Temporary Council Committee (TCC) charged with reconciling the requirements of 'fulfilling a militarily acceptable NATO plan for the defence of Western Europe and the realistic political-economic capabilities of the member countries'. In short, the TCC had to decide whether the military authorities were asking too much or whether governments were offering too little. It was empowered to ask for information, advice and assistance from all member governments, and from all the military and civilian agencies of NATO.

Apart from the creation of the TCC the Council took other important decisions. They formally recommended to member governments that the Kingdom of Greece and the Republic of Turkey should be invited to accede to the Treaty. They decided to examine the possibility of extending NATO's activities in the non-military field and established a Ministerial Committee composed of representatives from Belgium, Canada, Italy, the Netherlands and Norway, to consider the best means of strengthening the Atlantic Community and of implementing Article 2 of the Treaty. (7) They also noted that during the session the Council Deputies had finally agreed on a cost-sharing formula for financing the Second Slice of the infrastructure programme. (8)

The TCC at work

When the Ministers ended their talks in Ottawa, they left on the lap of the TCC the prodigious task of cutting through the 'vicious circle' of problems which had so far prevented NATO from developing an acceptable and comprehensive plan of forces build-up, and of defence production. The Temporary Council Committee, which met in Paris early in October 1951, consisted of representatives of the twelve member countries under the chairmanship of Mr. W. Averell Harriman (USA). It decided, however, to delegate its detailed work to an Executive Board of three - Mr. Averell Harriman, M. Jean Monnet (France) and Sir Edwin Plowden (UK) - men who had already won international reputations for their experience in economic planning. They were nicknamed the 'Three Wise Men'.

The TCC worked fast. An international secretariat was established in Paris, drawn from all NATO agencies and from national delegations. Questionnaires were sent to member countries calling, on very short notice, for detailed information on defence programmes for the next three years and on the economic resources available to meet them. The TCC wanted to know about the numbers of regular and reserve troops countries were proposing to raise, the state of their training, the types of equipment available for future defence production and the plans for using it. Questions were asked about the cost of defence programmes, their impact on all sectors of the economy, the measures which were being taken to meet this impact, and additional measures which could be taken by the countries, acting together, to strengthen their economies.

As the replies came in from the countries they were analysed by committees of experts working under the Executive Board. An important innovation was the Screening and Costing Committee headed by General McNamey (USA), which scrutinised each country's military plans in consultation with its senior military representatives, recommending changes designed to cut out unnecessary frills and to concentrate efforts in the direction likely to produce the most valuable results. At the same time, the Executive Board was consulting the NATO military authorities and making up its mind about the sort of total defence plan necessary to meet the estimated military threat.

After these preliminaries the Board conferred with the representatives of each member government. Defence as well as economic policies came under fire and governments recognised the urgency of the occasion by sending senior Ministers to represent them. The Wise Men pulled no punches. They were armed by their advisers with precise proposals for improving each country's defence programme, for welding all programmes into a collective, balanced defence effort, and for the financial and economic measures which would be necessary to support this effort. It should be noted, moreover, that they and their staff were not acting as national representatives: they had been commissioned by the Council to do a specific job for NATO as a whole. That sovereign governments submitted to this searching cross-examination by an international staff, parted with some of their most jealously guarded secrets and debated in common measures affecting matters of high policy, was a signal victory for the NATO spirit. No one who participated in the TCC exercise will forget the arduous labour and long hours of work; but neither will they forget the sense of pride in being able to make a contribution to this remarkable task.

The Rome Conference

The Council held their eighth session in Rome between the 24th and the 28th November, 1951, in order to receive progress reports on the work initiated at Ottawa, and to pave the way for final decisions at their next session in Lisbon.

The Conference on the European Defence Community called by the French Government in Paris had, by November, 1951, made some progress on a final draft treaty. The Council therefore decided to instruct the Council Deputies to consider this draft and to make recommendations at the next session as to the relationship which should obtain between NATO and the EDC.

The Military Committee reported upon the state of readiness and effectiveness of forces assigned or earmarked for NATO Commands. General Eisenhower, the Supreme Allied Commander Europe, and his Chief-of-Staff, General Gruenther, reported upon the military situation in Western Europe in the light of the combined manoeuvres which had been held there during the autumn.

The TCC had not yet completed its task, but it submitted an interim report as did the Committee on the North Atlantic Community. As a result of the TCC's report, the Council Deputies were directed to make recommendations at the next meeting of the Council on the changes that might again be required in the organization of the civilian agencies of NATO.

The TCC Report

On the 18th December, 1951, the Temporary Council Committee forwarded its final report to member governments. In the words of the Chairman, Mr. Harriman: 'It is the first comprehensive review of how the resources of the member countries under peacetime conditions can best be employed in the interest of common security... The TCC has made an appraisal of the present status of NATO defence, the maximum effective forces which can be achieved in the short-term future and the steps that need to be taken now for future build-up. Specific proposals have been made for force targets and military standards, which are to be considered as firm goals for the coming year and as provisional goals and guidance for the years thereafter.

The basis of the report was a study of each country's defence programme:
proposals were made for improvement in the light of the TCC's assessment of the country's capacity. The document had this to say about the level of defence appropriate to each country: 'The assessment has taken into consideration the evident desirability that the contributions to the common defence should be equitably distributed among the member countries; this suggests that, other things being equal, the greater the level of income or the potential rate of increase in income expected in a country, the higher can be the proportion of national income devoted to defence. Careful consideration was given to the specific obstacles limiting the efforts of each country and the extent to which these could be overcome by appropriate national and international action'.

The report reaffirmed the principle, fundamental to the Atlantic Treaty, that defence must rest on a sound economic and social basis. It recommended action to be taken by countries, separately or together, to help resolve problems of inflation, the dollar gap, scarcity of raw materials and excess population. Among the proposals to relieve the balance of payments difficulties, specific emphasis was put on the role of 'offshore' purchases (not then begun), on United States participation in common infrastructure and on other North American military expenditures abroad. This is significant in view of the part which these expenditures have since played in helping to solve the dollar problems of several member countries. (9)

The TCC also emphasised that the agencies of NATO needed to be strengthened and co-ordinated. It recommended that something akin to the TCC exercise be made a regular feature of NATO's work, so as to ensure a continuous appraisal of defence programmes in the light of economic and political developments. This was the origin of what we now call the 'Annual Review'. (10)

The action taken by the Council at Ottawa in appointing the TCC had been wholly justified. At the conclusion of the exercise (i.e. at the meeting of the Council in Lisbon) the military authorities were presented with a three years' plan of what they were likely to obtain from the member countries. This was less than they wanted, but it did represent more than they had previously been offered: the TCC believed that most member states could make a defence effort somewhat greater than that already planned. It should be recorded for the sake of accuracy that not all member countries were happy about the TCC conclusions and that there was also a feeling, among some governments, that the defence capabilities of the larger members of the Alliance had not been explored with sufficient thoroughness.

The NATO defence programmes have since been modified but this implies no contradiction of the Committee's findings. The international scene has changed, and some of the prerequisites on which the success of the TCC programme depended - such as a specific rate of expansion of the free countries' economies - have not been realised. The Committee had anticipated such changes when it insisted on flexibility as to long-term goals and the need for a continuous review of its proposals. AH in all. General Eisenhower did not exaggerate when he called the Temporary Council Committee exercise 'a truly monumental piece of work'. It had performed a wonderful emergency operation.

The Lisbon Conference

On the 20th February, 1952, the North Atlantic Council met at Lisbon. As a result of the vast amount of preparatory work which had been done, they had a great deal of business to transact. The decisions which the Council took at Lisbon have made that session a landmark in the history of NATO.

The main item on the agenda was the 'co-ordinated analysis of NATO defence plans'. Governments had had time to comment on the TCC report, and then-answers had been studied in a supplementary TCC paper. The Council adopted the military targets suggested in the report: firm goals for 1952, provisional estimates for 1953 and 1954. Member governments agreed to build up by the end of 1952 about 50 divisions, 4,000 aircraft and 'strong naval forces'.

The Council also considered the problem of German participation in Western defence. Negotiations, as we have seen, had taken place on this subject throughout the previous year. Although the talks between the three Occupying Powers and Germany had completely failed, the Paris Conference on a European Army had resulted in a draft treaty drawn up by the representatives of Belgium, France, the German Federal Republic, Italy, Luxembourg and the Netherlands. Thus the Council at Lisbon had three papers on the European Defence Community plan before them, namely, the report of the Paris Conference, a report by the Council Deputies, and a report by the Military Committee giving its assessment of the technical value of the plan. The Council's reaction was favourable. They approved these reports in principle and recommended that the member countries of NATO should sign a protocol to the North Atlantic Treaty on the guarantees to be given to member countries of the European Defence Community based on the provisions of Article 5 of the North Atlantic Treaty.' (11)

In doing so they 'reaffirmed the urgency, for the defence of Western Europe, of establishing at the earliest possible date a militarily effective European Defence Force, including a German contribution'. It may be added that the EDC Treaty was signed in Paris three months later (on the 27th May, 1952), together with the Protocol mentioned above.

Among the other business dealt with by the Ministers at Lisbon was the financing of the Third Slice of NATO's infrastructure programme. (12) The Council also considered the report of the Atlantic Community Committee. This document, which covered topics ranging from political consultation to the liberalisation of trade, from the mobility of labour to cultural relations, did not pretend to be a blueprint for NATO action: but it rendered useful service in sorting out the problems to which the Alliance should devote its attention in the future. (13)

Last but not least, the Council acted upon a report by the Council Deputies and recommendations by the TCC and drastically reorganized the civilian agencies of NATO. Henceforth, the Council were to be in permanent session in Paris, served by a Secretary General and an international staff, absorbing all the existing civilian agencies. How this reorganization was carried out and the structure which resulted from it is described in the next chapter.

The end of a period

The increasing responsibilities assigned to NATO by member governments necessitated the centralisation and simplification of the civilian agencies still too complex and scattered despite the measure of co-ordination already achieved by the Deputies, whose work had been outstanding. Their main triumphs lay in the political field: it was they who practised and daily developed what might be called the NATO method - i.e. the technique whereby the representatives of twelve (later fourteen) sovereign governments reach unanimous agreement without formal vote. By bringing to bear on their governments the weight of opinion in NATO they assisted the attainment of an agreed common view which normally received the assent of the Council without further ado. For instance, it was largely due to the Deputies that Scandinavian hesitations about the inclusion of Greece and Turkey were overcome; it was they who did the most to obtain agreement on the principle of a German contribution to the defence of the NATO area; and it was they who reached agreement on the financial contribution to be made by governments to NATO military and civilian agencies.

From their central position as the permanent political body, the Deputies were able to see NATO as a whole, in all its aspects. Great credit must be given to then-Chairman, Ambassador Spofford, and to the tact and ability with which he discharged his sometimes invidious role of being international Chairman and at the same time, the head of the United States Delegation. NATO saw him leave with regret; but NATO was indeed fortunate in that many of the other Deputies, with all their accumulated knowledge of the Alliance, were made available by their governments as the Permanent Representatives on the reorganized Council in Paris. (14)

Related chart:


  1. For text of this Protocol, see Chapter II. Annex B, page 20.
  2. See Chapter XI, Development of Defence Production.
  3. A Protocol to this Agreement, dealing with the 'Status of International Military Headquarters set Tip pursuant to the North Atlantic Treaty' was signed on 28th August, 1952.
  4. For text of these agreements, see Appendices VI, VII and VIII, pages 204 to 231.
  5. See Chapter X, NATO Common Infrastructure.
  6. See Chapter XI, Development of Defence Production.
  7. See Chapter XIV, Non-Military Co-operation.
  8. See Chapter X, NATO Common Infrastructure.
  9. See Chapter XII, Self-Help and Mutual Aid.
  10. For description of the Annual Review, see Chapter VIII.
  11. For text of the Protocol see Annex B, page 50.
  12. See Chapter X, NATO Common Infrastructure.
  13. See Chapter XIV, Non-Military Co-operation.
  14. For the names of Council Deputies, see Annex A, page 49.
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