After World War II, the Truman administration faced a deteriorating relationship with the Soviet Union and a Europe in dire economic straits that made it vulnerable to communist blandishments and powerless to resist potential Soviet aggression. In central Europe, the failure to establish a cooperative framework for the occupation of Germany was leading to a permanently divided German state. When the United States responded to these developments with a containment policy, it soon became clear that neutralism had the potential to undermine the unity of purpose the Truman administration deemed necessary to repel Soviet advances.
West Germany was a key factor in American policymakers' response to neutralism. With the creation of the Federal Republic in 1949 in the wake of the Berlin airlift, West Germany quickly emerged as an important component of the western European alliance, and a divided Germany became an accepted part of the Cold War landscape. To many Germans intent upon reuniting their country, however, neutralism often surfaced as a means of accomplishing this reunification. Through the years, this solution even had prominent advocates in the United States. The noted American diplomat and historian George F. Kennan, in his 1957 Reith Lectures over the BBC, called for the superpowers to disengage from Germany, which would be united and demilitarized. Throughout the Cold War, Washington consistently resisted such solutions, fearing that this would weaken Western resolve to resist the Soviet threat.
The traditional neutrals, Switzerland and Sweden, along with Finland, were particular obstacles to Western solidarity. Neutrals were more than willing to participate in postwar economic programs such as the Marshall Plan. (Finland was the notable exception. As it tried to construct a relationship with its Soviet neighbor that would preserve its national autonomy, Helsinki opted against participation so as not to antagonize the Kremlin.) Economic ties were as far as they would go, however. Political and military bonds were out of the question.
The Truman administration initially viewed neutralism with suspicion and even hostility. The advice that Secretary of State George Marshall offered to the president on the occasion of a 1948 visit by the crown prince of Sweden was typical. Marshall argued that Sweden's adherence to neutrality had "been more benefit to the Soviet Union than to the Western countries" and urged Truman to "avoid any expression of approval of the neutrality policy," since such a policy that "reveal[ed] a division among the free nations of the world [could] only serve to invite aggression."
Gradually, however, officials grudgingly conceded that it was futile to try to dissuade these neutrals and that neutralism had to be accommodated for the foreseeable future. They thus concentrated on finding a way at least indirectly to turn neutralism to the West's benefit. Washington curtailed efforts to pressure neutrals to choose between the two competing camps and moved toward a consistent, pragmatic plan to bind Europe's neutrals closer to the West, thus strengthening rather than weakening the emerging collective security.
The Eisenhower administration, despite its more confrontational public stance and expressions of intolerance for neutralism—Secretary of State John Foster Dulles called neutrality "obsolete," "immoral," and "shortsighted"—continued and in fact institutionalized this trend. Dulles's public statements obscured an underlying realism in the administration's approach, a realism that was willing to accommodate the neutral cause if it served U.S. interests.
By the mid-1950s, a number of factors had moved neutralism to a higher priority for policy-makers. Nikita Khrushchev, successor to Joseph Stalin, in 1955 proclaimed a drive for "peaceful coexistence" and backed his words with action—the return in 1956 of the port of Porkkala, which had been seized at the end of World War II, to Finland; his decision to support a neutralized Austria in return for a treaty ending its occupation; and efforts to mend relations with Yugoslavia. The United States doubted Khrushchev's sincerity and suspected that he was simply maneuvering to divide the West by encouraging neutralism. Khrushchev's actions, combined with his interest in a unified and neutralized Germany, raised some concern that the Kremlin was seeking a neutralized zone across central Europe—including Austria, Germany, and Yugoslavia—that would weaken the Western defense system. As these events unfolded in Europe, the Bandung Conference highlighted the expanding appeal of neutralism worldwide, a potential advantage for the Soviet Union.
In response to these developments, the National Security Council in 1955 asked the State Department to prepare an assessment of neutralism worldwide to aid the White House in developing an informed approach to this third force. This pivotal study established a framework for America's approach to neutralism through much of the remainder of the Cold War. For Europe, its analysis and conclusions led to a pragmatic and measured relationship with the neutral states.
The study began by making a distinction between neutrality, a government policy or a nation's status in foreign relations, and neutralism, described as "an attitude or psychological tendency." It went on to distinguish between what it called "classical" neutralism, which had always entailed a determination not to take sides in international rivalries, and a new "quasi-neutralism," a "hodge-podge of attitudes and tendencies which… involve[d] a disinclination to cooperate with U.S. objectives in the Cold War and in a possible hot war." Even though this new neutralism eschewed commitments to both the Soviet Union and the United States, it was more threatening to the West's interests. Soviet strategy could exploit it.
The report proceeded to list several explanations for the appeal of this new neutralist sentiment in Europe: fear of nuclear war, nationalism, negative reactions to U.S. leadership, a desire to achieve security without responsibility, pacifism, pursuit of special interests, and economic motivations. It further emphasized that this new neutralism, more than the legal government policy of neutrality or even the neutralist position some European states assumed in the Cold War, was what threatened American interests most. A government's declaring itself to be neutral, the study stressed, did not automatically mean that nation was infected with that troublesome neutralism.
This cautionary insight was fundamental to the evolution of America's relations with the neutral states. From the U.S. perspective, the litmus test for beneficial neutrality was a strong ideological identification with the West, demonstration of "solid resistance to Communist blandishments," and maintenance of a strong national defense establishment. The key neutrals in Europe fulfilled these criteria. Each for its own reasons had adopted a neutral position, but this did not necessarily translate to that damaging neutralism that threatened to undermine relations with the West. Indeed, the State Department study identified neutralist sentiment as stronger among some of America's allies than among the neutral states. These insights led the United States to understand the distinct interests and positions of the individual states.
Switzerland Switzerland, the purest of the neutrals, dated its neutrality to the sixteenth century. Its status was reinforced in the early nineteenth century by provisions of the Congress of Vienna, and it carefully maintained its neutral stance throughout World War II. After the war, Switzerland even eschewed membership in the United Nations because it determined that membership in this international organization might compromise its neutrality. Despite Switzerland's stubborn refusal to cooperate, U.S. officials took solace in the fact that Switzerland practiced an armed neutrality. There was no doubt that it would defend its territory in time of conflict. Bordered by France and Italy, Switzerland, of the four major European neutral states, was of least concern to the United States.
Sweden Sweden dated its neutrality to the Napoleonic wars at the beginning of the nineteenth century and maintained this status throughout World War II. After the war, it defined its position to be neutral in war and nonaligned in peacetime. When the United States began planning for the security for Europe, Sweden presented a particular problem. As a significant military force on Europe's northern flank, it was important to continental defense. U.S. officials understood the advantages of convincing Sweden to participate in Western defense arrangements. But as Washington negotiated the North Atlantic Treaty, Stockholm, rather than cooperating, attempted to exclude the Cold War from the Nordic region by proposing a league of armed neutrality, a Nordic Union, with its Scandinavian neighbors, Denmark and Norway. This scheme ultimately failed, and Denmark and Norway signed the North Atlantic Treaty. Sweden continued to refuse to associate itself with the Western military alliance.
Sweden's actions caused some tension with the United States, but relations improved by the early 1950s. A 1952 National Security Council policy paper on Scandinavia and Finland (NSC 121) admitted that in the near future the United States would have to accept Sweden's determination to avoid military alliances and calculate the best means to increase Sweden's contribution to Western defense. Subsequently, Sweden became an important centerpiece of a "Nordic Balance" that secured the North Atlantic alliance's northern flank. Its neutrality, furthermore, contributed to Finland's success in maintaining its neutral position.
Finland In contrast to these established neutrals, the United States confronted in Finland's situation a neutrality created out of necessity. Precariously situated on the border of the Soviet Union, the Helsinki government struggled to preserve its independence by building a relationship premised on the belief that the Kremlin's interest in Finland was strategic, not ideological. After signing a punitive peace treaty in 1947 that imposed devastating reparations and took away 11 percent of its territory, Finland agreed to a ten-year Treaty of Friendship, Cooperation, and Mutual Assistance in 1948 that required it to resist any attack on the Soviet Union through Finnish territory by Germany or any nation allied with Germany, to consult with the Soviet Union on an appropriate response in the event of attack, and to refrain from joining any alliance aimed at the Soviet Union. Finland subsequently tried to interpret and apply this pact in such a way that it could move more to a neutral position between the two blocs. Washington ultimately appreciated that Finland lacked alternatives to its chosen course, and was careful not to disrupt the delicate balance.
At times during the Eisenhower years, as Finland's economic situation improved and its independence became more secure, Washington considered the possibility that the solution crafted by Finland might serve as a model for other states bordering the Soviet Union. Secretary of State John Foster Dulles at the 1955 Geneva summit meeting between Khrushchev and Eisenhower suggested to Soviet Premier Nikolai A. Bulganin that Finland exemplified the relationship that might be acceptable to the United States for the Soviet-dominated nations of Eastern Europe. A 1959 National Security Council report titled "U.S. Policy Toward Finland" (NSC 5914/1) mirrored this suggestion when it asserted that "If Finland is able to preserve its present neutral status… it could serve as an example of what the United States might like to see achieved by the Soviet-dominated nations of Eastern Europe."
This appreciation of the benefits of Finnish neutralism for American foreign policy goals contrasted with later scathing assessments of the Finnish example. In a 1977 article titled "Europe: The Specter of Finlandization," the scholar Walter Laqueur coined the term "Finlandization," which from his perspective bore the negative connotation of a country willing to sacrifice its sovereignty for the sake of preserving felicitous relations with the Soviet Union. Laqueur feared that other European states might succumb to the temptation to follow Finland's example. Yet here, years before Laqueur's criticism, Dulles was offering the Finnish style of neutralism as a means of diminishing rather than enhancing Soviet control in its own sphere. Even if the Finnish situation was in no way analogous to that of the satellite states in Eastern Europe, the mere presence of this small nation resisting Soviet domination was useful as a propaganda tool for the United States.
Austria In 1955 neutral representation in western Europe expanded further as Austria joined this "third force." Austria, occupied by the Allies after the war's end, suffered through occupation and protracted treaty negotiations as the Cold War rift widened. By late 1953, Austrian officials were ready to accept neutralization as the price for regaining sovereignty. Soviet negotiators endorsed this solution at the foreign ministers' conference at Berlin in 1954, but the proposal was tabled, the victim of the continuing dispute over the status of Germany, because the neutralization of Austria could be linked to a similar solution for Germany. This was particularly unacceptable to the United States. Although Washington was willing to respect Austria's decision if it chose neutrality, Dulles articulated Washington's misgivings when he asserted that it was one thing for a nation to choose neutrality and another to have neutrality forcibly imposed. Under such circumstances, a nation could not be truly independent and sovereign.
West Germany's incorporation into NATO in 1955 removed this obstacle to a neutralized Austria. (The Soviet Union responded to West Germany's new status with the Warsaw Pact, which further solidified its control of the eastern bloc.) Austrian officials traveled to Moscow and negotiated the terms of the State Treaty of May 1955, agreeing that Austria would join no military alliances, would permit no military bases on its territory, and would practice a form of neutrality along the lines of the Swiss model. France and Britain endorsed this arrangement; the United States reluctantly agreed.
Economic and Military Assistance Each of these states traversed a different path to neutralism, and each defined its neutralism in its own distinct terms. Nevertheless, all shared an affinity with western values. This reassured U.S. officials, who employed several tactics to strengthen these ties. Economic measures figured prominently in American plans. European integration, furthermore, provided a vehicle to tie the neutrals to the West. Finally, in response to Sweden's efforts to improve its military capabilities and shore up its defensive position, covert military arrangements developed between Sweden and the United States and its NATO allies.
Economic assistance in the form of trade, loans, and credits was a particularly useful method of fostering a beneficial relationship. But economic assistance was not unrestricted; it had to address the West's Cold War interests. Switzerland and Sweden were economically sound and had healthy trade relations with the West. The United States continued to encourage this trade, but it feared the possible transfer of strategically important materials and technology by these neutrals to the Soviet bloc. In 1949, the United States and its allies had reached an agreement to restrict the transfer of strategic goods. In ongoing negotiations parallel with the establishment of the Marshall Plan, U.S. officials pressured both Switzerland and Sweden to adhere to these export controls. Both countries, reluctant to compromise their neutral status, nevertheless by 1951 informally agreed to adhere to parts of the export controls. Reflecting Sweden's strategic importance in the Nordic region, its adherence to these controls led the United States in 1952 to begin to allow Sweden to purchase selected military equipment and supplies. This made Sweden eligible for military equipment otherwise restricted to America's allies. The United States went even further in 1956 when it agreed to share some nuclear technology for peaceful purposes.
U.S. aid to Austria between 1945 and 1955, prior to the restoration of its sovereignty, amounted to an estimated $1.25 billion. Assistance continued after the State Treaty was signed in order to strengthen Austria's armed neutrality. In relations with Finland, Washington assiduously pursued an essentially hands-off political posture, intended to minimize antagonizing the Soviet Union, combined with measured economic assistance to strengthen the Finnish economy and orient it more firmly toward the west. This assistance included the sale of surplus agricultural goods as well as loans, the latter conflicting with the 1951 Battle Act, which prohibited loans to nations exporting strategic goods to the communist bloc. In the late 1950s, Eisenhower cited overriding foreign policy considerations to bypass Battle Act restrictions and ensure millions of dollars in loans to Finland. As a result, by the late 1950s, Finnish exports to and imports from the east bloc declined in relation to exports to and imports from the West.
In tandem with these economic measures, the United States exploited the steady evolution toward European integration to draw the neutrals further from the Soviet orbit, so as to reinforce rather than weaken the Western security system. Aside from any benefit integration could provide for its neutral policy, the United States recognized the value of a more tightly integrated Europe, both economically and politically. It therefore consistently encouraged Europe's movement toward cooperation, beginning with the Organization for European Economic Cooperation (OEEC), established in 1948 to coordinate Marshall Plan aid; proceeding to the European Coal and Steel Community and then the European Economic Community (EEC), which portended the possibility of a truly effective union; and refusing to rebuff the European Free Trade Association (EFTA), a tariff union created by states excluded from the EEC. Despite its interest in integration with truly effective supranational authority, the United States continued to encourage institutions like the OEEC and EFTA, which lacked that desired supranational authority, in part because these organizations provided a niche for the neutrals in the Western system. The OEEC included Sweden, Switzerland, and Austria. And when the EFTA was negotiated in 1958, U.S. officials hesitated to repudiate it, largely because it offered a haven for these three neutrals. Also, as Finland became more secure in its relationship with the Soviet Union, it began negotiations in 1959 that culminated in associate membership in this customs union in 1961.
In addition to these efforts aimed at all the neutrals, the United States and its NATO allies engaged Sweden in a covert military relationship that theoretically contradicted that nation's nonaligned posture. Soon after the promulgation of the North Atlantic Treaty, Sweden began to meet with Denmark and Norway to coordinate military cooperation and planning. These secret meetings eventually expanded to include the United States and Great Britain, and led to other areas of cooperation. Sweden in effect became an unofficial member of the Western alliance system.
The Kennedy Years John F. Kennedy was the willing heir to this relationship with Europe's neutrals. Mirroring the findings of the 1955 neutralism study, a State Department study released in 1961 admitted that there were many variants of neutralism arising from "unique, indigenous conditions." The new administration was reassured by the fact that the European neutrals were stable nations that had proved impervious to communist influence, so Washington was content to let these favorable trends mature.
Illustrative of Kennedy's approach was his response to a visit to Washington in the fall of 1961 by Finland's President Urho Kekkonen and the subsequent "note crisis" provoked by Moscow. Finland's effort to associate with EFTA was only one of a series of cautious steps that nation had taken since 1955 to carefully establish its independence from Soviet control. On his visit to Washington, Kekkonen met with Kennedy and received a public endorsement for his country's neutral course. Soon thereafter, alarmed by Finland's expanding outreach to the West, Khrushchev sent an official note to Helsinki invoking the consultation clause of the Treaty of Friendship, Cooperation, and Mutual Assistance, a move that potentially threatened Finland's sovereignty. Although concerned about this development, Washington reacted cautiously. Bowing to Finnish wishes, Washington remained in the background and avoided escalating this incident into a Cold War confrontation. The U.S. ambassador to Finland privately reassured the Finns of America's support, then bowed to Helsinki's wish to address the crisis in its own way. After a visit to the Soviet Union, Kekkonen succeeded in defusing the crisis with Finland's independence still intact.
Britain and the EEC Despite this appreciation of neutralism, however, when neutral interests conflicted with more pressing priorities of America's Cold War policies, neutrals were the losers. A case in point was the U.S. response to Prime Minister Harold Macmillan's announcement in the spring of 1961 that Great Britain intended to apply for EEC membership. Washington encouraged Macmillan because Britain was an important force in European economic and political affairs, and would provide an Atlantic link between the European Union and the United States. But to the dismay of American officials, Macmillan also pressed for membership, either full or associate, for Britain's fellow EFTA members, including the neutrals Austria, Switzerland, and Sweden (as well as associated Finland). Although Macmillan's proposal potentially would have drawn the neutrals closer to western Europe, Washington opposed his plan because these neutrals were unwilling to accept the full political commitments required of EEC members. Their participation, therefore, would erode the supranational authority necessary for a strong union. Washington encouraged Britain's application, but pressed London to postpone its efforts on behalf of fellow EFTA members. This decision was not encouraging for the U.S.-neutrals relationship. The issue ultimately became moot when the EEC, led by France, rejected Britain's application in January 1963. Nevertheless, these events illustrated the limits of America's willingness to accommodate the interests of these neutrals.