"Despite winning most of the battles and sinking the Russian fleet in the Battle of Tsushima Strait, Japan could not decisively defeat the Russian Army. The continuation of the struggle threatened both Russia and Japan with financial ruin, destabilized the established balance of power in Asia and Europe and risked, through complicated alliances, drawing the other European powers into the conflict as later happened in World War I. As President of a neutral power not aligned with either warring party, Roosevelt seized the opportunity to be peacemaker.
"Careful to make certain that both parties understood the United States was not imposing its own view on the conflict, Roosevelt offered the US as the neutral host for peace negotiations, respecting the Japanese and Russian insistence on direct, face-to-face negotiations without the third party interference the European powers had previously imposed on both nations. After convincing both Russia and Japan to come to Portsmouth, New Hampshire, Roosevelt engaged the capacity of the US Navy for the security, diplomatic protocol, and telecommunications necessary for the formal talks at the Portsmouth Naval Shipyard. Roosevelt then entrusted the Governor of the State of New Hampshire and the local people of New Hampshire and Maine with the responsibility of hosting the delegates' stay (accommodating them at Wentworth by the Sea Hotel), confident they would provide the right neutral, encouraging atmosphere for the negotiations to proceed both formally and informally.
"True to his promise of non-interference, Roosevelt never came to Portsmouth. But when the negotiations deadlocked for days over issues of territory and indemnity, Roosevelt pressed back channel communication with the Russian and Japanese governments and with other European powers to encourage both parties to break the impasse. Roosevelt relied at this critical juncture on the diplomatic protocol of the Navy, the informal encouragement of Governor John McLane and the persistent spirit of hope within the hospitality of the local people to keep the negotiators at the table. The two sides kept at their negotiations until they reached agreement, neither Japan nor Russia wishing to disappoint their hosts or risk world disapproval for being the first to break the negotiations.
"Roosevelt 's brilliance was as a realistic diplomat. He created a neutral but supportive negotiating atmosphere where he could suggest compromises through back channel contacts but ensured that the belligerents decided their mutual balance of power without the interference of any other government. Ultimately, through the Treaty of Portsmouth, the Russians and Japanese established a framework that balanced power between Russia and Japan in Asia until the end of World War II."
The entire article is here. In his 1913 autobiography, TR himself commented on the 1906 Nobel Peace Prize: "As a result of the Portsmouth peace, I was given the Nobel Peace Prize. This consisted of a medal, which I kept, and a sum of $40,000, which I turned over as a foundation of industrial peace to a board of trustees which included Oscar Straus, Seth Low and John Mitchell. In the present state of the world's development, industrial peace is even more essential than international peace; and it was fitting and appropriate to devote the peace prize to such a purpose. In 1910, while in Europe, one of my most pleasant experiences was my visit to Norway, where I addressed the Nobel Committee, and set forth in full the principles upon which I had acted, not only in this particular case but throughout my administration."
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