I suspect my next update is actually going to be the Middle East.
1950 United Kingdom General Election and Two-Track NATO
The 1950 elections were less about the weakness of Labour than the reformation of the Conservatives. In fact, Prime Minister Attlee was still reasonably popular. However, the Conservatives had hammered out a complete agreement with the National Liberals, which ensured that the two parties would no longer divide their votes in any districts.
Churchill vociferously attacked Attlee over his conduct in the independence of Burma, claiming that Attlee had “turned over” Burma to Communism, while also decrying defense cuts that had been recently instituted. However, the campaign would largely waged over a different issue: British coal and steel.
Chiang Kai-Shek’s victory in the Chinese Civil War brought a huge windfall to British investors, as Britain was the largest investor in China before World War II. Many British investments that had horrifically tanked in value between 1937 and 1948 started springing back to life. The soaring economy vindicated the approach of Bevan, and the Attlee ministry rammed through various socialist measures, regularly overriding the House of Lords. The most contentious and unpopular was the nationalization of British coal and steel.[1]
In 1948, Chancellor of the Exchequer Cripps rejected calls to double-down on austerity and instead dramatically expanded state spending.[2] The Russel's administration expanded Marshall Plan aid, but the Netherlands spent most of it on the war in Indonesia. The financial contagion quickly spread to the Netherland’s closest trading partner, the United Kingdom, sparking a balance of payments crisis. In response, Cripps drastically cut back on spending. He was unapologetic, claiming that it was natural to spend in a period of economic recovery and cut back in times of prosperity. Indeed, the United Kingdom was much more prosperous in 1949 than it was in 1948, due to both the KMT windfall and Cripps’s counter-cyclical spending.
However, this was the worst political timing imaginable. Cripps looking for savings and unwilling to cut public housing, infrastructure, or healthcare, settled on cutting the military and coal subsidies. As a result, in the winter of 1949, British faced coal shortages just as the mines were nationalized. Although economists still debate the role nationalizations played, the public was convinced in 1950: coal nationalization was to blame.
The Tories soared back into power, putting Churchill back into the seat of power. The economy quickly recovered as coal and steel nationalizations were reversed, the new Russell administration dropped sanctions on the Netherlands, and the Conservatives ironically reaped all the benefits of Cripps’s public investments. Churchill also immediately hiked defense spending and fulfilled his campaign promise by deploying troops to Burma and Malaya to fight Communist insurgents.
Abroad, Churchill advocated increasing European integration and tightened relationships with the United States, finding a fellow spirit in American President Richard Russell, with whom he shared many attitudes with. His own papers indicated that Russell was receptive to Churchill’s vision of the world order, where the “Western” powers, chiefly United States, France, and Great Britain would continue to economically integrate, while leaving each other’s “sphere of influence” alone. In many ways, Churchill was a stronger influence on the American President than his own State Department, so did he revere the British statesman for his critical role in defeating Hitler.
In fact, it was under Churchill’s influence that the United States, France, United Kingdom, Portugal, Netherlands, and Belgium agreed to a corollary to Article 5 of NATO. The original Article 5 limited NATO's self-defense promise to national territories in Europe or North America. In contrast, the corollary did not limit the self-defense clause to attacks on national territory in Europe or North America, provided that another sovereign nation was the attacker. Portugal in particular immediately declared all of its overseas colonies as integral provinces, while the Netherlands declared all of its Indonesian possessions as “constituent countries.” The French similarly gained assurances that the member nations of the French Union were included. Churchill similarly shepherded the entry of Spain into NATO upon similar terms. Several nations, most notably Canada and Italy, refused to join the corollary, but most nations agreed.
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[1] OTL, this was done in 1949. Here, it’s done in 1948, and comes into effect by Winter 1949.
[2] OTL, Cripps was forced by a balance of payments crisis to enact fiscal austerity. Here, the 1948 windfall from the KMT victory in the Civil War causes him to do the opposite. However, that just means the crisis hits later.