UNGLASSIF! TOP SECRE! In explaining this doubt, Secretary Dulles went on to state that a nation as strong as the Soviet Union, and one as capabie of giving priority to military needs, would encounter virtually no impairment of its military power through the imposition of trade controls by the Free World states. In illustration of this, Secretary Dulles reminded the Council of the widely~held and quite mistaken view at the outset of World War II, that Germany was incapable of fighting a long-drawn-out war. Secretary Dulles pointed out further that all our U. 5S. military planning is based on the assumption that if general war breaks out it will be a nuclear war and that, accordingly, it would be of relatively short duration. He believed that our economic planning should be kept in line with the above assumption underlying our military plans. Secretary Dulles said that of course he recognized that elimination of controls on some of the items presently controlled would help the Soviet Union to accelerate slightly its current rate of industrial develoment--as, for example, in providing ' automation more rapidly. On the other hand, this may be a good thing or it may be a bad thing, in terms of keeping the peace. It was quite possible that the more rapid develomment of the Soviet industrial base would not turn Soviet policy to more peaceful ends, but rather would increase its capability to wage effective economic or political warfare against the Free World, although the Secretary was inclined to doubt it. Furthermore, we should remember that trade is a two-way proposition. When we trade with the Sovlet bloc we do not give things away; there has to be an exchange of goods and advantages. All this was one side of the picture. Beyond this side, however, we mist remember that we are obliged to think of the impect of our policy on trade controls as it affected our alliances; not only the obvious impact on NATO, but the impect on other al- CE Pe ! ;AD RHE. DNEGHE, W.. oe an! : é , ae a im + oe . - . Rag a . _ opty ee ; at * a peter 4 - USA 2 oe TeEe 1 ey . : a - lied countries like those in Latin America, for example. In the face of an economic recession in the United States, with the resultant severe impact on industrial activity, it was going to be increasingly difficult to induce other countries to maintain restraints on their trade with the Soviet bloc when they feel they need to trade with bloc countries. As an illustration, we might take copper. The world price of copper is now approximately half what it has been. This works a very great hardship on countries iike Chile and Peru, which depend on the sale of their copper. We would be in a difficult position if we find ourselved obliged to raise a protective tariff on imports of copper, while at the same time being obliged to insist that Chile and Peru refuse to sell their copper to Seviet bloc nations. TOLASSIF==