What started a Cold War? Sources of the conflict between The United States and The Soviet Union

The United States began its preparations for World War II in 1940, when President Franklin Delano Roosevelt authorized plans to double the size of the US fleet and increase the number of military personnel. On the other hand, Lend-Lease Act plans were in preparation, which was confirmed by the Destroyers for Bases Agreement (September 2, 1940).

This agreement opened a credit line for the United Kingdom in exchange for the transfer of British naval bases, fifty destroyers to the United States and the leasing of British colonial territories for a period of 99 years.

The Lend-Lease Act alone obliged borrowers to cooperate in the reconstruction of international trade after the war (Imperial Preference). The Lend-Lease Act was a blatant attack on the British Imperial Preference system. The contract included provisions such as „the elimination of forms of discriminatory activities” (i.e. colonial exploitation), as well as „lowering tariffs and eliminating other trade barriers” (i.e. eliminating the pound’s defense system against other currencies – only pound trading countries did not have to pay customs duties). The British, being in the early stages of World War II, were pushed to defend by Hitler and were forced to accept American „help”. Therefore, they crossed out the existence of the United Kingdom as a hegemon.

The combined power of the Axis countries’ economies produced only 50% of the US GDP alone. In combination with huge profits from loans under the Lend-Lease Act, control of sea routes on which the former power of the British Empire was based, the inflow of huge amounts of gold (after the war about 70% of the world’s gold reserves were located in the United States), the growing strength of the dollar (as a settlement and reserve currency), low foreign debt (about 3% of GDP), a huge distance away from war theater (security for capital increase), powerful economy and military strength, and above all entering the war as the last power, the US had all the necessary opportunities to become a global hegemon.

The incorporation of the United States into World War II (December 7, 1941) became the culmination of American efforts to dominate the international system. Therefore, the American economy came out of recession and there was a great prosperity.

By tying their allies’ debts, the Americans could control them, and the prospect of conquering the Axis States meant that Americans would be able to occupy their territories (or oversee them in another form). Such a perspective was very attractive to provide US hegemony, establish a monopoly on the control of sea communication routes, set currency standards in international settlements, and obtain price privileges.

Roosevelt’s biggest fear was not the expansion of the Soviet Union, but the revival of the sterling zone and the re-domination of the British Empire (more about the currency war).

Vision of Roosevelt’s Post War Government

While joining the World War II, the United States for the first time began to pursue imperial policy. The United States historically were an isolationist country that for decades consolidated its influence and provided the necessary security (The Monroe Doctrine) on the continents of North and South America.

Churchill accepted the post-war dominance of the United States as early as in 1941, while signing the Atlantic Charter. He was aware that the breakup of the British colonial system would lead to the marginalization of the global influence of the British Empire, and even in Europe, due to the land dominance of the Soviet Union, which would become the most important ally of the United States.

Prime Minister Churchill understood that the British Empire must accept the new hegemon. His rule will be lighter than Soviet and will allow to preserve the international influence of Great Britain.

A great critic of the colonial approach and the system of colonial preferences was Roosevelt. He claimed that it was the colonial system that led to wars, and the United States could not support this form of world order.

Roosevelt’s vision sought to completely surrender of the Axis, force France and Great Britain to understand that they could not rebuild their empires, complete trade liberalization (under US patronage), support the industrialization of backward countries, the right to choose the form of government by all nations (obtaining favor of societies that are colonial territories of European powers), and above all, the creation of international institutions that rule the law so that disputes are resolved by the international community and there is a unified order.

In 1941, the Atlantic Charter was signed by Churchill and Roosevelt on board of the HMS „Prince of Wales” at Newfoundland’s shores, and then the countries of the anti-Hitler coalition (including the USSR) joined it in London. The United Nations Declaration (preceding the UN) signed on January 1, 1942 in Washington refers to the Atlantic Charter.

With the United States joining the war, the Allies began to take the lead. For this reason, world leaders began a series of meetings discussing the post-war international order.

Initial talks on The World’s Powers of The Post War Order

On August 17th, the first Conference in Quebec (QUADRANT) took place, at which William L. Mackenzie King (Prime Minister of Canada), Winston Churchill (United Kingdom) and Franklin Roosevelt (USA) discussed future actions in the European war theater, among others planning Operation Overload, options for opening other combat fronts (Italy and Balkans), as well as the issue of Poland. Also discussed was the way Japan was cut off from communication routes, the issue of China and Palestine.

The most important point, however, was the signing of a secret agreement called the Quebec Agreement (excluding Canada from talks), which allowed British and American scientists to cooperate on the Project Manhattan, ensuring the non-proliferation of technical knowledge about the construction of a nuclear bomb, not using it against each other, and not using it bombs against other countries for no apparent reason

On November 22nd, 1943, the Cairo Conference between Franklin Roosevelt (USA), Winston Churchill (United Kingdom) and Chiang Kai-shek (Republic of China) lasting four days, began. On November 26th, the Cairo Declaration was signed, which outlined the order in the Far East and western Pacific. The declaration sanctioned, among others the return of the territories defeated Japan acquired thanks to World War I (including Manchuria, Peskadors and Taiwan for the Republic of China) and guaranteed the sovereignty of one Korea. The document is included in the Potsdam Declaration and for this reason the Chinese (mainland) are now right to claim their rights to Taiwan.

The first meeting of the Big Three took place on November 28th 1943 in Tehran. It was decided to open a second front in France on May 1944, reject the Balkan variant, divide Europe (and Germany) into the zones of influence of the Allied countries, the initial shapes of the United Nations, and above all, the fate of Poland by designating the so called Curzon Line.

In the same year, on December 4-7, the 2nd Cairo Conference (SEXTANT) took place with the participation of Winston Churchill, Franklin Roosevelt and the President of Turkey – İsmet İnönü. The goal of the conference was to pull Turkey to the Allies side and to open the longed for Balkan, front by Churchill. However, Turkey was afraid that its military capabilities were too weak, compared to the Axis and that it could be defeated. Turkey remained neutral until February 1945, when it declared war on the Axis Countries with a view to join the United Nations as a victorious party.

The Bretton Woods System and its consequences

By entering the war, the Americans were certain of victory. The American Economy in 1944 accounted for almost 50% of global GDP, which allowed for planning a new global economic order, and the American maritime power allowed to maintain security on key maritime communication routes.

It should be remembered that at that time it was gold that was the most recognized resource and was associated by governments as an indicator of stability and credibility. The post war reconstruction of the international order was to be based on the solidarity will of the nations. The destruction of gold parity would condemn the failure of the US striving for hegemony. In addition, the pressure of a possible resurrection of sterling power and the expansion of the Soviet Union were growing.

The Americans, having the ability to be a hegemon and enjoying international trust (the largest lender, the world’s largest economy and the owner of 2/3 of the world’s gold reserves), decided to take advantage of the opportunity in which the dollar would become a key currency on the world, due to the omnipresent dollar in international settlements thanks to war loans.

The Bretton Woods system was a sensational movement of the American elite. Everyone trusted the value of gold, the US dollar (USD) was associated with gold (35 USD / ounce of gold), and other world currencies were associated with the US dollar. Under this system, gold and the dollar were to constitute foreign exchange reserves, thanks to which the national currency of individual countries could be issued. In this way, the dollar was deeply implanted in the creditworthiness structures of the countries in this system.
At the moment when the global economy began to grow, the expenses of states increased, which in consequence caused that the demand for the American dollar increased.

The dollar being the global settlement and reserve currency had to be constantly issued by the Federal Reserve (FED) due to the fact that if it did not do so, the dollar would strengthen dramatically, which would have negative effects on the US economy.

The Americans wanted to set up international institutions to harmonize financial circulation on the world (taking over the function of central banks in the field of exchange rate fluctuations). Such an institution was the International Monetary Fund (IMF), whose main role was to stabilize exchange rates and provide short term loans in the case of problems.

In the future, countries were to use the dollar as the core for their own foreign reserves and their currency issues. The dollar core alone would be the center of American political power by harmonizing the world market under the banner of peace. The IMF was controlled by the United States and Great Britain. Most resolutions (decisions) required 80% support. The USA had a 27% share in the fund and the United Kingdom a 25% share (except that it had to obtain the unanimity of all its colonies).

The second instrument created in Bretton Woods is the World Bank (WB).
The initial goal was to finance the post-war reconstruction of the world economy (the later period was to support the development of less developed countries). Loans offered by the World Bank were a „reward” for countries supporting the assumptions of the American system by using preferential conditions for obtaining long term loans, while liberalizing their economy.

Bretton Woods required acceptance from major powers. Because of Britain’s huge debt in the US dollar, they had to support this initiative. France, always trusting in gold, naturally supported the American project. The Soviet Union was also present in Bretton Woods.

The Soviet ruble was based on gold parity. Bretton Woods was hoping for the Soviet Union to become part of global trade and was tempted by the possibility of using short term loans to continue building economic power (fulfilling five year plans). Of course, at that moment, the Soviets did not notice the American masterpiece by which they were delaying their response to joining the system.

The United States wanted so much to liberalize international trade (abolish barriers to trade), because of the elimination of all independent currency areas, the possibility of using colonial resources of France and Great Britain, the inclusion of China, Japan and other Asian economies, as well as the use of enormous power working and resource resources of the Soviet Union. Destroyed Europe was completely dependent on US loans. The goal was to unify the global market and manage it under its own American dictate.

The United States defeat Germany, British Empire and begin march on The Soviet Union

Before the Yalta Conference (February 4-11, 1945), Churchill went to Moscow to get the deal with Stalin. Britain committed to recognizing Soviet influence in Romania and Bulgaria (Eastern Europe became a Soviet buffer), and the Soviet Union recognized the privileges of the British Empire in Greece (a key point to control trade in the Mediterranean). During the Conference, Roosevelt was surprised by this decision.

A point of contention arose regarding Poland in such a situation in the Soviet sphere of influence. Roosevelt agreed to take action against the Polish underground, due to the fact that the Soviet Union was still interested in joining the Bretton Woods system. The exact shape of the zones of influence of the victorious countries in Europe (including the transfer of the Eastern Borderlands of the USSR) and the size of Germany’s reparations for the victorious countries were also established.

Roosevelt’s numerous compromises to Stalin, drove Churchill mad. On the day the war ended, the British were immediately forced to repay the loans, while the Soviet Union was given a breath. This was due to the belief that the Soviet Union is not able to overthrow the capitalist system, and even more so to compete for control over global resources (raw materials, labor, production, capital, technology, etc.).

The Americans said that because of the huge internal problems and the spread of the huge territory, the Soviets would not compete with the US. Roosevelt saw a regional player in the Soviet Union, and dreamed of using its natural resources for the interests of the United States.

However, Great Britain could revive its imperial influence and become a serious competitor to the American system by inflicting powerful blows on it (more about the system of imperial preferences).

Victory in the European War Theater on May 9, 1945 gave place to the Potsdam Conference (July 17 – August 2nd, 1945) with the participation of the Big Three (US President Harry Truman).

The new president of the United States was ruthless towards the Soviet Union from the very beginning and ended with a „policy of concessions” towards the USSR.

The fears of the College of Chiefs of Staff began with the thought that the Soviets could occupy all of Europe, followed by the Eastern Mediterranean, the Persian Gulf, Korea and Northern China. American and Soviet claims began to appear in Turkey (territorial claims of the USSR), Iran (delaying the withdrawal of troops) and many other countries, which deepened distrust in relations between the two countries.

The system of lifting all regulations was contrary to the vision of the economy built by the Soviet Union, which was based on regulations. In 1945, the Soviet Union rejected the ratification of the Bretton Woods Declaration and was forced to create its own ruble empire.

After the Potsdam Conference, all efforts were focused on the Far East. On August 6th, 1945 (Hiroshima), and then on August 9th, 1945 (Nagasaki), the United States demonstrated its technological advantage by dropping atomic bombs on both cities.

There is always a temptation to use technological advantage. Truman gained political advantage. From that moment, the United States conducted the Atomic Diplomacy against the Soviet Union.

In December of 1945, the Ministers of Foreign Affairs of the United States (James F. Byrnes), the Soviet Union (Vyacheslav Molotov) and the United Kingdom’s (Ernest Bevin) met at the Moscow Conference. During this conference, the issues of China, Korea, preparation of treaties ending the war with allies of the Axis States (Paris Treaties, 1947), establishment of international institutions for Korea and Japan (Far Eastern Commission and Allied Council for Japan), as well as the possibility of establishing institutions in UN framework for control over nuclear energy.

In 1946, the American Bernard Baruch presented before the UN delegates The Baruch plan, which assumed the establishment of an institution within the UN, authorizing it to control all activities related to nuclear energy (potentially threatening global security), and above all to conduct inspections at nuclear facilities around the world to possibly stave off danger.

The Soviet Union immediately vetoed the proposal, which would confirm the rule in the international system of the United States. Oppenheimer also attacked Baruch’s offer because, in his opinion, the US pre imposed sanctions on the Soviet Union instead of cooperating. On August 29th, 1949, the first Soviet atomic bomb exploded – the Americans were incredulous. This information raised deep fears of the aggression of international communism and fear of internal penetration of this ideology.

On February 2nd, 1946, American diplomat George Kennan sent the most famous telegram message in American diplomacy history – The Long Telegram. Kennan rightly pointed out that Soviet policy must be expansive. It results from geopolitics rules towards a typical Heartland state which is the Soviet Union (currently Russia).

The Heartland country is developed in a circular way, building buffers (zones of influence) protecting its historical and cultural centers. It always feels threatened so it wants to own more land to secure its interests and is therefore perceived as an aggressive country. Kennan provided the American elites with an external deadly enemy that suited them.

An external threat fueled the US economy (and the military industry complex), and also allowed imperial politics to bind other countries (politically, militarily and economically) with the United States to conduct anti-imperial policy.

The „fear” of a competing power allowed the Americans to exercise a protective function of the world and Western civilization against the interference of the bloc under the leadership of the Soviet Union.

In the 68th report of the US National Security Council, a threat was found to the Soviet Union and its functioning. The Soviets first wanted to consolidate their influence in the Soviet Union itself, and then in areas under its control (this is a similar pattern of development of the United States, consolidation of power after the Civil War, subordinating its interests to the nearest regions, then creating the Monroe Doctrine and interacting as a regional hegemon, then emerging as economic power from isolationism and undertaking a global game).

The Americans at all costs wanted to prevent every country (also now) in such proceedings. Through the „Long Telegram” in 1947, the Containment Doctrine was created to halt the expansion of communism, as Niall Ferguson describes it – „The US has found the perfect ideology for its own special kind of empire: anti-imperialism imperialism„.

Truman himself said that „We are (United States – author) a giant in the world of economics. Whether we like it or not, the pattern of future relationships depends on us. The world is watching to see what we will do. The choice is ours„.

Truman claimed that the world could be saved from totalitarianism only if the whole world adopted the American system. It was caused by the fact that it can survive only when it becomes a world system.

Having a strong industrial and agricultural base supported by military capabilities is the key to the country’s success as a global player. Americans undoubtedly had a much greater opportunity to respond to the changing international environment and exert aggressive pressure on their opponents in a subtle way by hitting economic sectors. Stalin’s rejection of Bretton Woods meant, that the riches of Eurasia’s Heartland were closed, and the Soviet Union through the skillful strategies of the United States remained closed in Rimland not allowing it to participate in the exchange of international capital. As a rule, trade by sea is cheaper than by land, so that sea powers are getting richer than land (land-lock).

Americans made another attempt to penetrate and control Heartland’s resources. These plans were the Marshall Plan (economic impact on the reconstruction of European economies) – rejected by socialist countries (except for Yugoslavia), Radio Free Europe (cultural impact), the creation of the Central Intelligence Agency (CIA) and the remaining American troops in Western Europe. In the same period (1947), the National Security Council was created.

Americans by stimulating economic growth in Japan and Germany, in conditions of increasingly liberalizing trade (in 1947 the General Agreement on Tariffs and Trade was introduced), preferential treatment of American economic allies (loans from the World Bank and the IMF), the beginning of the world dollarization era economies (primarily Germany and Japan through currency reforms – more about Germany here), have created new very dynamic markets for US exports. The impulse to come out of the post-war crisis of the economies of European countries, as well as a salvation for the post-war US economy (it was difficult to maintain full employment, as during the US war) was the Korean War.

The Soviet Union, being in a defensive position, decided to counterattack for the first time in „neutral” territory. This was mainly due to the Soviet Union’s possession of nuclear weapons and the prosperity that had begun in the Warsaw Pact block. The Soviet economy was not strong enough to interact in a subtle (economically) way, and the Soviet Union remained the only effective tool that is perceived by all countries in the same way – military force, or an open aggressor.

The most important operating theaters during The Cold War in Europe

In 1943, American strategists from the College of Joint Chiefs of Staff prepared a list of post-war bases to be leased by the United States or to remain under international control.

In the Atlantic a new defense line was to run through the so called GIUK, which was Greenland Iceland, Great Britain (UK), Madeira and the west coast of Africa.

During the Cold War it was the most important point in the world. The one who controlled this communication route decided about the fate of Europe (this was the case during World War I and II and thanks to this the naval powers won both wars).

For this reason, during the Cold War, the Americans made a huge effort to maintain this route and not allow the Soviet Union to cross the communication lines in the North Atlantic using the all out sea battle concept. Then, during the Cold War, allied troops were dislocated in Norway to deter the Soviets and successfully implement this strategy.

In the Pacific, the defense line of the US sphere of influence ran from Alaska, the Philippines, Fiji, Samoa and the Galapagos Islands. Micronesia was under American trust.

Such assumptions were made by American strategists before the Cold War and rivalry with the Soviet Union.

During the Cold War, the Americans developed two more operational theaters, which were key in the NATO-Warsaw Pact rivalry.

The next key area is the Danish Straits, due to blocking the Soviet fleet so that it can’t to cross NATO communication lines and project forces into the North Sea.

Another important area was the Turkish Straits (which Churchill sought to control in 1943, followed by US Soviet friction, during the Truman term since 1945). Therefore, Turkey was included in the NATO system to keep the Soviets in the land zone and prevent them from using sea communication routes with the Middle East and India (by using the Suez Canal).

The main area of confrontation was the Central Front, crossing the Iron Curtain border (North Sea, West Germany Czech Republic border, Czechoslovakia). This episode was small (short), however, it was characterized by a huge saturation of troops, and the priority goal of combat operations was to destroy the enemy’s base (dislocation of its missile systems, nuclear weapons) before they were brought into combat by the enemy.

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