THE economic geographers' maps show a black smudge running along both banks of the Rhine from just north of Cologne almost to the Dutch border. Loosely called "the Ruhr," after one of the eastern tributaries of the Rhine, this area provided one-third of the steel and two-fifths of the coal and coke produced in continental Europe (excluding Russia) before the war. Coal and steel are sources of power, and in a world where power is centered in national governments the decision to put the Ruhr under international control is momentous.

That decision had two professed purposes and a tacit one. As a means of ensuring against another German attack on the west, international control of the Ruhr has a good chance of success. As a means of getting the maximum economic benefit from the Ruhr for the whole of Western Europe, it is of dubious value and risks self-defeat. The third purpose, so plain that it has not needed expression, is to solidify and strengthen the western nations. This accounts for taking the decision now and gives grounds for running the risks that international control of the Ruhr will entail in the future.

Early in June representatives of the United States, Britain, France and the Benelux countries meeting in London made recommendations to their governments on five questions concerning Germany: a procedure for creating a government in the western zones, an outline of a security régime to guard against a renewal of German aggression, principles for the international control of the Ruhr, association of Benelux representatives with decisions on German matters, and provisional arrangements for minor changes in the western frontiers of Germany. Within a few weeks the governments accepted the recommendations and the first steps were taken toward establishing a German government in the western zones. At the same time other discussions continued about Western Germany's share in the European Recovery Program. Thus the agreement to internationalize the Ruhr -- "a statement of principles" to be followed by a more detailed agreement -- is set in its logical framework.

But politics explains more than logic about the Ruhr Agreement. France, seeking security, coal, and a guarantee that she will continue to rank above Germany in European politics, has consistently sought some kind of international control of the Ruhr. American and British official opinions were divided. For some time the fear that such a step would hinder German economic recovery dominated policy. More recently, concern for European coöperation and the desire to minimize Russian influence in Germany led to some change in views. The issue was decided at London instead of being postponed, because Britain and the United States wanted to get French acceptance of the creation of a western German state, or pseudo-state, and expansion of production in the western zones. Had the United States and Britain gone ahead with such a program in the Bizone without French consent, the process of political coöperation among the Western European Powers and the United States would have been set back, perhaps indefinitely. Naturally the compromises on which it is founded have left their marks on the Ruhr Agreement, not only in its precise terms, but in its ambiguities and its silences. The way international control of the Ruhr works depends very much on how firmly all sides have accepted these compromises and, even more, upon whether there is agreement and not misunderstanding about their substance.

II

"The resources of the Ruhr shall not in the future be used for the purpose of aggression but shall be used in the interests of peace. . . . Access to the coal, coke and steel of the Ruhr . . . [shall] be in the future guaranteed without discrimination to the countries of Europe coöperating in the common economic good." To achieve these purposes the six-Power Agreement creates an International Authority for the Ruhr made up of representatives of the United States, the United Kingdom, France, Belgium, the Netherlands, Luxembourg and Germany. The Authority will operate primarily by deciding how much of the coal, coke and steel produced in the Ruhr is to be exported. It will have the right to demand information and make on-the-spot inspections so as to know what is going on and whether its orders are being obeyed. The Authority will not own or manage the mines and mills of Ruhr, as the French had proposed, nor will it say what shall be produced, or in what quantities. Iron, chemicals, machinery and other products outside the three named in the Agreement will not fall within its jurisdiction.

The Agreement distinguishes a "Control Period" during which "the Occupying Powers concerned exercise supreme authority" and the indefinite future thereafter, when Germany presumably is autonomous. During the control period the Authority's decisions are to be carried out by the occupation authorities, afterward by the Germans. Should the Germans not carry out the Authority's decisions it may recommend to the governments represented "the application of the necessary enforcement measures." The German Government is to be given a hearing before the measures are applied.

The Germans will have no vote on the question whether their Government "is in default on its obligations" as a result of not carrying out the Authority's decisions. Nor have they a vote in security matters. Otherwise Germany will cast three votes on the Authority, along with Britain, France and the United States. Each Benelux country will have one vote. Decision will be by simple majority (whether of votes cast or total votes the Agreement does not say). However, "until the contracting Governments decide otherwise, the representative of Germany shall be designated and the vote for Germany exercised by those Powers which share the responsibility for the economic administration of that part of Germany which includes the Ruhr." Most commentators have taken this provision to mean that Britain, France and the United States will each cast one of the three German votes. That would give the American and British bizonal officials control of the Authority, with 8 out of 15 votes. But the provision may mean that the German "vote" is to be cast as a unit, by agreement among the United States, Britain and France.[i] If that agreement had to be unanimous there might be important issues on which the German vote could not be cast and, if the Benelux countries agreed with the French view of the matter, the Authority would be at an impasse. Not the Ruhr economy but the Ruhr Authority would stop running.

Whatever voting arrangements are established, it seems clear that the most fundamental issues on which the French differ from the Americans and British cannot really be settled by balloting but will require the same kind of compromises that gave the Ruhr Authority its life.

III

As a security measure, the Ruhr Agreement is part of a larger framework outlined in another part of the London Agreement. Occupation "until the peace of Europe is secured," continued disarmament and demilitarization of Germany policed by international inspection are the main features of this system. The way is left open for industrial control and the occupation of key areas as well. The Ruhr Authority is a kind of advance installment on the more comprehensive system, since it will carry out inspection in a crucial area of the German economy and, by its allocation of coal, coke and steel for domestic consumption, will have the power to prevent any sizable German rearmament.

There is plainly no threat of independent German aggression while the country is occupied. But as if to make doubly sure the Ruhr Agreement specifies that the occupation authorities will take necessary disarmament measures and particularly mentions the power to deny Ruhr steel, coal and coke to industries prohibited or limited on security grounds. After the control period the enforcement powers will be transferred to whatever security agency is set up, and provision will be made for the Ruhr Authority to coöperate with that body. If no such body should be created, the powers would be exercised by the Allied representatives (without the Germans) on the Authority.

We are here at one of the major compromises underlying the Ruhr Agreement. Most articulate Frenchmen were not satisfied by the security measures proposed by Secretary Byrnes when he put forward the draft Four-Power Pact in 1946: disarmament policed by inspection and backed by mutual guarantees against German aggression. The French wanted these and more, especially some kind of control over heavy German industry. The prevalent American and British opinion has been that emphasis on industrial controls for security would lead to a permanent damping down of German production with serious consequences for the economy of Europe.

The Ruhr Agreement meets the French thesis to the extent of creating an international régime for the most important products of Germany's key industrial area. The Authority will have adequate powers to prevent large-scale German rearmament. Of itself, however, the Agreement does not limit German economic activity and industrial development and could be used to promote them. Production and management are deliberately left in German hands. Coupled with the disarmament and inspection system envisaged in the other parts of the London Agreement, and with the system of defensive pacts emerging in Western Europe, the arrangements for the Ruhr seem, from an American point of view, to be wholly adequate to prevent German aggression, provided a majority of the western allies adhere to the purpose of keeping Germany disarmed. It is that proviso, too, which worries the French who remember the assurances they were given after 1918. But the qualification is unavoidable. No machinery or formal arrangement can prevent German rearmament unless the western Powers will use the machinery. Nor is elaborate machinery necessary. Large-scale rearmament cannot be clandestine. What was lacking in the thirties was not knowledge of what the Nazis were doing, but the will to do anything about it.

Admitting that the Ruhr Agreement fell short of the French proposals, Foreign Minister Bidault told the National Assembly: "In our view, this is the first time that substantial guarantees for the security and prosperity of France and Europe have been given." The Assembly accepted the Agreement since its rejection "would lead to a regrettable weakening of the understanding [entente] among friendly Powers whose constant coöperation is today the surest guarantee of peace." The resolution urged the French Government to press its case in the continuing negotiations, and to seek the expropriation and international management of the Ruhr mines and basic industries, and a long occupation of Germany, the troops to be withdrawn only after guarantees of peace had been negotiated and key areas occupied.

IV

The immediate problem in the Ruhr is production. The output of coal and steel is much farther below the prewar rate than in the rest of Europe. The United States has pressed for the revival of German industry largely on the ground that it is essential to European recovery. The case will be proved when German goods begin flowing to other Western European countries and they, in turn, find a market for some of their products in Germany. The Ruhr Authority may play a part in this process.

During the next few years, however, the Authority's freedom of movement is limited by several provisions of the Agreement. The Authority's allocation of Ruhr coal, coke and steel between domestic use and exports must be consistent with the recovery programs of the Organization for European Economic Coöperation. In carrying out the Authority's decisions the military governors must adhere to the existing agreements among the contracting governments regarding the allocation of coal and coke such as the sliding scale arrangement under which France gets increased shipments of these products as German production goes up. Another provision seems to subordinate the Authority's decisions to the terms of the bizonal merger and the bilateral agreement covering ECA aid to Germany. How much power this gives the United States to set the limits within which the Ruhr Authority can move is not altogether clear.

Together with the voting arrangements that seem to give the bizonal authorities a majority, these provisions make it likely that the Ruhr Authority will not have a great effect on the conduct of the German economy in the next few years. The crucial decisions will continue to be made by the bizonal authorities within the framework of the European Recovery Program. By virtue of its financial responsibility for Germany, the United States will have the dominant voice. Still the influence of the Ruhr Authority cannot be wholly discounted. Through the Agreement France and the Benelux countries acquire a position and a right to express their views on the allocation of Ruhr production, which may not be without its effect on the decisions of the American and British authorities. Nor can one overlook the difficulties that may arise from adding one more piece of administrative machinery to the complex that already exists.

Broader questions underlie these issues: Who is to take the crucial decisions about Germany's contribution to European recovery? Will the OEEC acquire the strength to overrule the bizonal authorities? Within the United States Government, who will carry more weight, General Clay -- whose orders and reponsibility run in terms of Germany -- or the State Department and ECA which tend to take a broader view? If recovery decisions are made on a broad basis, the Ruhr Authority may gain in importance. Mutually satisfactory compromises over Ruhr issues are more likely to be reached if policy on Germany is made in the perspective of Washington rather than of Berlin or Frankfurt.

V

The long-term economic effect of the Ruhr Agreement can run in either of opposite directions. Combined with the development of the OEEC, the Agreement may become a useful instrument of European economic coöperation. Used as an instrument of economic nationalism, the Ruhr Authority can become a device for giving the western victor countries the usufruct of the old enemy's chief industrial treasure and control of a powerful competitor. No doubt both these elements will appear in the future history of the Ruhr Authority. "Coöperation" has become a magic word that wards off critical analysis. It has been easy to assume that applying so attractive a formula as "international control of the Ruhr" would surely benefit the whole European economy. Perhaps it will, but not automatically. The experiment may also damage Europe's economy.

The Ruhr Authority is "to make the division of coal, coke and steel from the Ruhr as between German consumption and export, in order to ensure adequate access to supplies of these products, taking into account the essential needs of Germany." Access is a problem of scarcity. Now, international allocation of scarce coal and steel is crucial to recovery. But later, when this time has passed and supplies are plentiful or demand falls, access will no longer be an important issue. Before the war one did not hear complaints that foreign countries were unable to buy what they wanted from the Ruhr. On the contrary, a more common objection was to the competition of German heavy industrial products.

Nor is Germany likely to be reluctant to export in the future. A unified Germany would count heavily on the export of Ruhr coal and steel which before the war accounted for from 60 to 75 percent of the whole country's exports of these products. A truncated Western Germany with an enlarged population and smaller food production will be even more hard pressed for foreign exchange to buy its necessary imports. Once foreign financial aid has ended only exports can fill the gap. After the present period of shortages, that hard taskmaster, the need for foreign exchange, is likely to assure the countries of Europe and the rest of the world access to Ruhr products without the help of the Ruhr Authority. (Latent powers of allocation would have sufficed for exceptional circumstances; for instance, if Germany were able to keep borrowing abroad in amounts large enough to reduce substantially the pressure to export or if for political bargaining purposes the German Government were willing to pay the price of withholding exports.)

The Ruhr Authority may turn out to be more concerned with checking the flow of German goods into world markets than with assuring it. Germany's principal European competitors in the manufacture of steel -- Britain, France, Belgium and Luxembourg -- have a majority of votes on the Authority. Once surplus steel-making capacity begins to appear, and particularly if depression threatens or occurs, the pressure will be very strong on these governments to protect the markets of their own producers by curtailing Ruhr exports. Nor need one suppose that only a depression will lead to the Ruhr Authority's taking on a restrictive function. A cartel dominated Europe's steel industry before the war. The forces that created it will again be felt even in nationalized industries. If as seems likely their activities receive the assent or active support of governments that they had before, the Ruhr Authority is almost certain to be used as a weapon to strengthen the cartel. Once a major force in the cartel, the German steel industry will in these circumstances be a weak partner on whom the burden of compromises among the others is likely to fall. Unless one supposes that the Ruhr mills thus shut down (or at least cut off from foreign markets) are the least efficient in Europe -- and that is not the way cartels usually work -- the result will be that the European economy as a whole will suffer. Of course a cartel may dominate Europe's steel industry without the help of the Ruhr Authority, but since one of the great aims of cartels is to have their decisions enforced by governmental edict, the risks are great that the Authority will often work quite contrary to its professed purposes.

The cartel example is just one illustration of the many ways in which the Authority's apparently limited powers may extend its functions. Under another provision, for instance, the Authority is to prevent the Germans from using "artificial measures or discriminatory practices which would distort the movement of Ruhr coal, coke and steel in international trade, except for measures of protection approved by the International Authority." On its face this seems to give the Authority extensive powers over German commercial policy. In making its export allocations, the Authority will continually pass judgment on the whole German economy, as the Agreement requires it to take "into account the essential needs of Germany." In the immediate future the question will be how much coal, coke and steel must be left in the Ruhr for the German economy to function at the level required by the European Recovery Program. Later, when foreign financial aid has ended, export markets will be part of Germany's "essential needs." Not only direct exports of coal, coke and steel, but retention in Germany of enough of these products to permit the export of machinery, metal products, chemicals and other items will help to pay for imports. If the Authority allocates exports among foreign countries (the Agreement is silent on this point), the direction trade flows will affect Germany's ability to pay for imports of its "essential needs," as long as many currencies are not generally convertible. Implicit in every one of these calculations is an assumption about the living standards of the Germans and the character and level of activity of the whole German economy.

The Authority will shape the German economy not only by the absolute quantities of Ruhr products it allocates for export, but also by the relative proportions of coal and steel it requires to be exported or kept for domestic consumption. Some Frenchmen have argued that it would be better for Europe if the Ruhr were to concentrate on exporting coal, leaving to others a larger share of steel-making than they had before. The Ruhr Authority could enforce such a view simply by setting so high an export quota for coal that steel-making in the Ruhr would have to be curtailed. Security and national advantage probably have more to recommend this course in French eyes than consideration of Europe's economic needs.[ii] American and British opinion has generally assumed that there is no convincing economic reason for such a shift, and that large-scale production of steel in the Ruhr is essential to European recovery. Fairly early in its career the Ruhr Authority will have to settle this issue. Otherwise members of the Authority frequently will be at cross purposes, and continuing suspicions of each other's motives will further jeopardize the experiment.

Assuming that the French thesis is refuted, the implication will be that the Ruhr should be a thriving center of heavy industry if Europe is to produce as much as it can -- as it must if it is to become self-supporting. For reasons with which we must have the greatest sympathy, it will be hard for any French government to accept this conclusion. Only if France can be persuaded that the checks placed on Germany are adequate for security will that acceptance be given willingly. Unwilling assent, leaving France a permanent minority on the Ruhr Authority, will cause constant trouble and weaken the bonds of western union. But concessions to the French view that result in lower production in the Ruhr will also weaken the western union by perpetuating some of the damage the war and the Nazis inflicted on Europe's economy.

The existence of so fundamental a dilemma adds to the skepticism -- indeed, pessimism -- one must feel about the possible effect of the Ruhr Authority on the European economy. Partly because of the mixed motives that led to the Agreement, partly because of the opportunities that will arise to substitute limited national interests for the broader European interests, it will be easier for the Authority to go wrong in important decisions than to keep right.

There are, however, at least a few factors that may restrain the Ruhr Authority from going too far with policies likely to restrict productivity in the Ruhr. By all odds the most important is the widespread recognition that the Ruhr can make its maximum contribution to the economy of Europe only if the emphasis is on stimulating production. The best chance of this view's being translated into action lies in the development of economic program-making on a West-European basis. Not only is that the proper context for judging the Ruhr's function, but among the OEEC nations are some not represented on the Ruhr Authority who have less to fear from German competition and more to gain from larger and more numerous sources of supply.

The second factor checking an exploitative and repressive use of the Ruhr Authority is public opinion in the United States and Britain. The experience of the interwar period should suffice to show that the people of these two countries are unlikely to tolerate over a long period arrangements which seem to them unfair, even to a former enemy. The consequences would be felt in the unwillingness of their governments to go very far in enforcing such arrangments. If they are not to be self-defeating, the Ruhr Authority's policies must plainly further the general European interest and not just the separate interests of member states.

The third brake on a repressive policy is the attitude of the Germans themselves. "You can't dig coal with bayonets." In the long run the Ruhr Authority can be fully successful only if it is acceptable to the Germans. Undoubtedly a major motive of the Americans and British in rejecting French proposals for international management of the Ruhr mines and smelters was to avoid giving every dispute between labor and management, every haggle between producer and customer, the color of a national issue and making it thereby less tractable. Reduced consciousness of "the foreign masters" will help, but acceptability will depend also on how heavily the Authority's hand lies on the economy of the Ruhr and, most of all, on what the Germans think they get out of it.

The decision to create a West-German government, followed by currency reform and the Berlin crisis, seems to have pushed the Ruhr Agreement into the background of German thought. Although some German intellectuals have advocated internationalization (and socialization) of the Ruhr as a price Germany should pay for readmission to the Western European comity, it seems certain that the predominant reaction will be unfavorable. Communists and Christian Democrats alike are already exploiting the Authority's obvious vulnerability to nationalist propaganda. A statement issued at Duesseldorf on June 5 by the Minister Presidents of the Bizone Länder, the mayors of Berlin, Bremen and Hamburg, German representatives from the French Zone, and spokesmen for heavy industry expressed opposition in relatively moderate terms. While agreeing that the Ruhr should make its maximum contribution to European recovery, and should never again threaten the peace, the statement denied that international control was the way to achieve these ends. If there had to be international surveillance, it should be applied -- with German participation -- to all the important centers of Europe's heavy industry.

How much support the Ruhr workers would give the Authority in return for prosperity and fair treatment remains to be seen. Probably a policy of high production and a generous estimate of "the essential needs of Germany" will help, but Europe's political climate is likely to be even more important. Too "soft" a policy might only convince the Germans that the west's need of them will command any price they choose to ask. Somehow the Ruhr Authority -- and behind it the victor Powers in their peacemaking -- will have to try to find policies which while not cozening the Germans to the point of frustrating the purposes of the Agreement still recognize the need to reconcile the Germans.

One would like to think that the Authority's best chance of success lay in convincing the Germans that it was truly pursuing a "European interest" in which they shared. But there is no warrant for such optimism. To try now to say what gods the Germans will follow in the next few years, much less decades, is to stare at a blank wall. By depriving the Germans of full control over the Ruhr, internationalization reduces the ability of a future German government to make a deal with the Russians (the Germans have less to offer) and offsets some of the hazards to the west should such a deal be made (the Germans cannot deliver). While the Ruhr Authority lasts, Germany's chance to become once more an independent Power in Western Europe depends on the willingness of the United States and Britain to see that happen.

France faces a crucial decision. She can try to use the Ruhr Authority to keep Germany permanently in a subordinate economic position, or she can consent to the growth of a strong Ruhr economy in the control of which she has a voice. The former course will almost certainly lead to trouble for the European economy and for inter-allied relations. Perhaps France can only be persuaded to the latter course by an American commitment to help her with arms and men if there should ever be renewed German aggression. Otherwise, since the Ruhr Authority can be successful in fostering the maximum economic contribution to Europe only with the willing assistance of the Germans, the United States may find itself in the position of fostering the growth of German power against France. That would be a dangerous result, since there is no evidence of the emergence in Germany of democratic and liberty-loving forces strong enough to run the country. Without such a development an independent German Power cannot be made a bulwark of a western bloc without betraying the principles which give that bloc its meaning.

[i] If there should not be a fairly complete economic merger of the French zone with the Bizone, the provision might also be read to mean that the British and Americans control all three of the German votes.

[ii] The main lines of an economic argument that have been touched on by various Frenchmen are that technical developments have made it economical to bring the coal to the iron as a general practice; that before 1918 the Germans favored Lorraine for the location of steel mills; that much of the Ruhr's heavy industry was subsidized in one way or another; that the Germans held their position in world trade through dominating the steel cartel.

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  • WILLIAM DIEBOLD, Jr., economist on staff of the Council on Foreign Relations; author of "New Directions in Our Trade Policy"
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