London

on the World Today

THE British are faced with a problem for which a solution seems emphatically imperative: the division of Western Europe between “the Six" — the Common Market—and “the Seven" — the European Free Trade Association.

“This could poison all our relationships. It has got to be overcome. I do not yet know just what economic measures can be taken. But. politically, I know that a solution must be found.”The words are Selwyn Lloyd’s, spoken shortly before cabinet changes shifted significantly the orientation of Macmillan’s government, turning it a point toward Europe.

The threatened relationships, in Mr. Lloyd’s view, are not only those with Western Europe but also those with the United States. Time has simply rubbed out the neat geometry of Churchill’s classic policy, which located Great Britain at the point of intersection of three great circles: Europe, the Commonwealth, and the North Atlantic alliance. There are now two pairs of circles with a gap between them: the United States and the Six (France, Germany, Italy, Belgium, Holland, and Luxembourg), and the British Commonwealth and the Seven (Great Britain, Denmark, Norway, Sweden, Austria, Portugal, and Switzerland).

Britain and the Common Market

It has become the top priority of the British government to close this gap. But it fears, probably rightly, that it cannot do so alone. British liberals say the gap could be closed quite simply if Britain gave up its traditional reservations and joined the Common Market. The government knows that this would also be the solution that would most suit America. For British tariffs would have to be brought down to the lower level of the Common Market tariff agreements. The area of discrimination against the United States in Europe would, in effect, be reduced instead of being enlarged, as it would be under the Macmillan plan for an all-Europe Free Trade Area.

Furthermore, the Common Market is important to Britain not only politically, since it represents the solidarity of France and Germany, but economically. since it could be a decisive source of capital for the underdeveloped parts of the Commonwealth.

Yet membership is not a simple matter for Britain. This country cannot entirely abandon Austria, Switzerland, and Scandinavia, for whom exclusion from the main Continental markets is more serious than it would be for Britain. And it balks at being pulled into a closed agricultural market in Europe, since it would then have to shut the gate tight behind it on Canada, Australia, New Zealand, India, and all the rest of the Commonwealth, which are still granted free entry by Britain for most of their products. Six hundred million people, a quarter of the world’s population, are included in the deal.

Commonwealth support for straight British membership in the Common Market assumes, as does much of the growing British support, that the gate to the market would be left ajar. Simple membership, however, at present implies accepting a self-sufficient and controlled European agriculture. Only associate membership seems, therefore, politically possible for Britain.

An alternative and quite different proposal which would have British support is an Atlantic partnership in trade. This would make tariffs between the main Western markets “wearable,”in Macmillan’s phrase. It could be formed if the United States, the Six, and the Seven all brought their tariffs down to low levels simultaneously.

Either solution, it is said in London, requires active United States support. Associate membership requires it because the Six themselves feel no impelling need for such an accommodation and refuse today even to discuss it. Straight membership requires American support because this solution necessitates at the next GATT session new tariff concessions from the United States, reducing America’s tariffs down to, and in some cases perhaps below, the “peril point.”

Hopes that such help will be offered are not high, particularly because of what happened in Paris. Macmillan himself launched the earlier British plan for a Free Trade Area. It was kept afloat by Mr. Reginald Maudling for three years, but it gradually lost way. Finally, in January, 1960, in Paris, it was sunk without trace. Macmillan and Maudling were alarmed to think that the final torpedo was fired in the presence of Undersecretary of State C. Douglas Dillon, who did not protest.

Division in the West?

At the beginning of the next Administration, Anglo-American relations are likely to be cold, at least under the surface. Britain strongly supports United States policy in the Caribbean and, up to a point, in Japan. But it differs with the United States over Communist China, which it recognizes. In Europe, Britain is now wholeheartedly in support only of American defense policy; over European political and commercial policies the two allies differ seriously. If the United States does not intervene in Europe, and the Six, unprompted, settle for nothing but unconditional British membership, a bitter and widening division in the West is likely.

In the next few months the British government will probably take whatever steps it can to strengthen military and political ties with continental Europe, working through NATO, the Council of Europe, and the Western European Union — the pre-NATO alliance that still maintains an organization in which Britain can meet regularly on equal terms with the members of the Six. But these steps cannot affect the basic issue. Some of these fears were voiced by Macmillan in Washington last year. The results were unfortunate, for they were taken by the rest of Europe as threats. But the fears are genuine. They include a balance of payments crisis if British exports run into new difficulties, reimposition of controls on imports of American goods, and the reduction or withdrawal of British troops in Germany.

Very high interest rates have already been introduced this summer to protect the balance of payments, even before any direct effects of a new tariff arrangement in Europe have, or could have, been felt. Britain is expanding more slowly than the Six. It meanwhile pays out $100 million a year to keep its 55,000 troops in Germany. This sum, in effect, goes straight into Germany’s currency reserves, These are already stronger than Britain’s. Under the Brussels Treaty, establishing WEU, these support costs can be cut in the event of a payments crisis.

The split in the Labor Party

It is quite possible in bad moments to imagine Britain, already allied economically to Scandinavia, Switzerland, and Austria, as growing into the greatest of the world’s neutrals and the richest of its socialist powers. That, indeed, is the dream of the British Labor Party. If it seems an improbable development, it is only because of the fission inside the Labor Party and the dwindling authority of both the executive group and the left wing. Today Labor does not act like a possible alternative government. Yet it is there in the background.

In October, at the Labor Party conference, it will lie seen whether Hugh Gaitskell’s effort to lead the party away from both Marxism and neutralism toward a realistic policy has been even marginally successful. His bid to amend clause four of the constitution, binding the party to the nationalization of all “the means of production, distribution, and exchange,”was defeated. It will be touch and go even for his defense policy, which, while it would abandon Britain’s independent nuclear deterrent, would keep Britain in NATO under the shelter of America’s atomic armament.

Mr. Frank Cousins, leader of the Transport and General Workers Union, has said that he will raise his card against Gaitskell and in favor of total unilateral nuclear disarmament when the votes are taken. Under the party’s block voting system, when Mr. Cousins raises his card it has a million votes written on it, the round number of the union’s membership.

The odd thing is that, dramatic as they may be, these party proceedings are likely to seem almost unreal to the average Briton going about his average day. Not 20 per cent of Mr. Cousins’ members go to union meetings or vote for or against the policies he blesses by raising his card of a million votes. If even half of them attended, a ballot would probably go against him. Nor are Macmillan’s supporters any more united. All party politics is becoming fragmented.

Britain’s boom

The headlines are usually of crises — of the balance of payments, of relations with Europe, of defense, of inflation, of the threats of Khrushchev; but the content of life for most is easy, relaxed, and very pleasant, because the country is so rich and because it is also small and crowded and is kept green by regulation as well as rain, the price of building land has suddenly started to rise. The political reaction has been furious. There are calls for immediate action against speculators and demands for new controls, and even new taxes, and the release of park land for building.

The public reaction has been quite different. A speculative builder who had hurriedly pul up twenty-seven small houses on an estate in a suburb near the London “green belt” advertised them for sale on a certain date at a stated price. Twenty-four people camped all night on the sidewalk in an orderly line outside the real-estate office. Three more came at five in the morning. When the office opened, all the houses were sold in the time it takes to write down twenty-seven names and write out twenty-seven checks, and would probably have been sold had the price ($17,000) been much higher — only that might have taken all day.

Because of the fear of inflation, the government, when it raised interest rates, also moved to curb credit and installment buying. This had some effect on makers of household equipment, but less, in general, than it might have had. For Britain is no longer in fact a nation of debtors. The annual savings of individuals are now four times as great as the savings of the government, and they almost equal the grand total of company savings. Ten years ago, personal savings were only one third as great as the government’s and one sixth as great as those of industry. On the average, today, people save four times as much of their incomes (nearly 10 per cent) as they did ten years ago.

The good neighbors

As for all these crises of foreign affairs, the people have never felt closer to their neighbors. London is full of overseas visitors. There are twice as many as there were five years ago. The Berkeley and Green Park hotels are to be demolished and rebuilt, and ten new hotels are planned, to cope with even more tourists. All summer the crosschannel sea and air ferries have been filled to capacity, as nearly three million Britons streamed out for their vacations to the Continent. To handle even more in the future, commercial interests want permission to build a channel tunnel. The government at present favors instead the building of great Hovercraft ferries that would skim across the channel ten feet in the air every few minutes.

As to Commonwealth affairs, 594 million people who were once British colonials are now, or are just about to become, independent. Some 512 million of these arc nonwhite. If it is a cause of occasional anxiety, particularly in Africa, it is also a cause of considerable national pride.

And with the United States, personal and commercial contacts have never been closer for the British. America is Britain’s best customer. Although the rise in exports to the United States has been checked in recent months, they had already grown in the months before by 20 percent. British buying of American products has recently skyrocketed. Man for man, the British today buy about four times as much from their American cousins as Americans yet do from them. They are conscious of being very good customers.

Is all this good and friendly living really in jeopardy? It seems unlikely. But economists say it may be. Politicians say it is. The dream, they are convinced, is the public’s, and the dream could end with a jolt. North Atlantic unity, from Berlin to California, is the basis of British life and the essential need.