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contribution to US security as stabilizing factors in Western Europe is far out of pro-
portion to their size. The Economic Union, under Belgian leadership, can be expected
to continue playing an important part in the European recovery program if its neigh-
bors can survive economic and political crises within the next few years. The Benelux
Customs Union has increased considerably the general bargaining power of the two
countries in Western Europe. They can be expected to use this favorable position to
obtain increased economic and political cooperation in Western Europe.
Belgium has abandoned all thought of seeking a neutral position and ideologically
and politically has aligned itself with the West. Luxembourg also formally forsook
neutrality in view of the demonstrated failure of such a policy to protect the country
from two German invasions. The two countries will continue to support the United
Nations, because, as small countries, they feel that the effective functioning of a world-
wide international organization is to their advantage. Until the UN meets this need,
Belgium and Luxembourg will continue to seek collective security in conjunction with
other Western nations. Progress made along these lines is evident by active Belgian
and Luxembourg participation in forming a western union with the UK, France, and
the Netherlands. With insignificant military forces and little military potential, Bel-
gium and Luxembourg are dependent upon British technical assistance and US arms
to establish a defensive force of any value. Belgium is looking to the Congo as a base
of operations in the event of an invasion of Europe, but the investment required for an
effective military establishment in this undeveloped area is almost prohibitive. The
Governments can be expected to continue their efforts to obtain a voice in the German
peace treaty, and a step in this direction was achieved by the inclusion of the Low
Countries in the three-power discussions on western Germany in February 1948. Bel-
gium is particularly concerned with a revival of the German economy which would
partially restore that economy to its normal relations with Belgian trade and transit
traffic. Luxembourg, though it concurs with Belgium on this subject, is perhaps more
concerned with the security aspects of a revived Germany.
Belgium and Luxembourg, with the Netherlands, are sponsoring discussion with
other Western European nations for the establishment of a more general customs
union. As one of the chief exponents of a Western European bloc, Belgium openly sup-
ports the eventual formation of a political union of some sort to be based upon the cus-
toms union. Because of this open support of a grouping that Moscow has branded as
anti-Communist, Belgium, and to a lesser extent Luxembourg, will continue to receive
Soviet criticism.
The Economic Union is not expected to become a special target for Communist ac-
tivity, because in the long run Communist success or failure in Western Europe is not
dependent upon the situation in Belgium and Luxembourg. On the contrary, complete
Communist control of France and the consequent economic chaos would be sufficient to
disrupt the stability of both countries. In Belgium, the proximity of a Communist
France probably would produce a sharp political division between the Right and the
Left that would make it difficult for the present coalition Government to remain in
power. Communist agitation alone in conservative and stable Luxembourg could not
upset the economic activity of the country. The USSR is expected to limit its activities
SECRET
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"ocrText": "SECRET\ncontribution to US security as stabilizing factors in Western Europe is far out of pro-\nportion to their size. The Economic Union, under Belgian leadership, can be expected\nto continue playing an important part in the European recovery program if its neigh-\nbors can survive economic and political crises within the next few years. The Benelux\nCustoms Union has increased considerably the general bargaining power of the two\ncountries in Western Europe. They can be expected to use this favorable position to\nobtain increased economic and political cooperation in Western Europe.\nBelgium has abandoned all thought of seeking a neutral position and ideologically\nand politically has aligned itself with the West. Luxembourg also formally forsook\nneutrality in view of the demonstrated failure of such a policy to protect the country\nfrom two German invasions. The two countries will continue to support the United\nNations, because, as small countries, they feel that the effective functioning of a world-\nwide international organization is to their advantage. Until the UN meets this need,\nBelgium and Luxembourg will continue to seek collective security in conjunction with\nother Western nations. Progress made along these lines is evident by active Belgian\nand Luxembourg participation in forming a western union with the UK, France, and\nthe Netherlands. With insignificant military forces and little military potential, Bel-\ngium and Luxembourg are dependent upon British technical assistance and US arms\nto establish a defensive force of any value. Belgium is looking to the Congo as a base\nof operations in the event of an invasion of Europe, but the investment required for an\neffective military establishment in this undeveloped area is almost prohibitive. The\nGovernments can be expected to continue their efforts to obtain a voice in the German\npeace treaty, and a step in this direction was achieved by the inclusion of the Low\nCountries in the three-power discussions on western Germany in February 1948. Bel-\ngium is particularly concerned with a revival of the German economy which would\npartially restore that economy to its normal relations with Belgian trade and transit\ntraffic. Luxembourg, though it concurs with Belgium on this subject, is perhaps more\nconcerned with the security aspects of a revived Germany.\nBelgium and Luxembourg, with the Netherlands, are sponsoring discussion with\nother Western European nations for the establishment of a more general customs\nunion. As one of the chief exponents of a Western European bloc, Belgium openly sup-\nports the eventual formation of a political union of some sort to be based upon the cus-\ntoms union. Because of this open support of a grouping that Moscow has branded as\nanti-Communist, Belgium, and to a lesser extent Luxembourg, will continue to receive\nSoviet criticism.\nThe Economic Union is not expected to become a special target for Communist ac-\ntivity, because in the long run Communist success or failure in Western Europe is not\ndependent upon the situation in Belgium and Luxembourg. On the contrary, complete\nCommunist control of France and the consequent economic chaos would be sufficient to\ndisrupt the stability of both countries. In Belgium, the proximity of a Communist\nFrance probably would produce a sharp political division between the Right and the\nLeft that would make it difficult for the present coalition Government to remain in\npower. Communist agitation alone in conservative and stable Luxembourg could not\nupset the economic activity of the country. The USSR is expected to limit its activities\nSECRET"
}