REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY OF THE UNITED STATES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00059A000500070014-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: November 11, 2016
• Document Release Date: August 20, 1999
• Sequence Number: 14
• Publication Date: January 12, 1948
• Content Type: REPORT

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REFERENCE CENTER LIBRARY
CENTR
GENCY
Review of the World Situation
as it Relates to the Security
of the United States
CIA 4
12 January 1948
Copy No. 8.
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WARNING`
THIS DOCUMENT CONTAINS INFORMATION AFFECTING THE NA-
TIONAL DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF
THE ESPIONAGE ACT, 50 U.S.C., 31 AND 32, AS AMENDED. ITS TRANS-
MISSION OR THE REVELATION OF ITS CONTENTS IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
12 January 1948
1. Our reports in this Series have been premised upon the analysis of the world
situation presented in CIA 1 (26 September 1947), the Summary of which is reproduced
in the Enclosure. This analysis has been reviewed and is now generally reaffirmed.
2. Within the context of the general analysis in CIA 1, the immediate and overrid-
ing objective of Soviet policy is to defeat the European recovery program without incur-
ring the risk of war. Operating principally through local organizations of militant
Communists, the USSR will seek to accomplish this purpose by:
a. Direct action designed to disrupt and cripple the economies of pivotal West-
ern European countries (e.g., by strikes and sabotage) .
b. Revolutionary activity in Italy, and possibly in France.
c. Contributory activities, diversionary in effect, but also potentially profitable
in themselves (e.g., the intensification of revolutionary efforts in Greece and in the
Far East; aggravation of the Palestine situation).
3. Since our last report (CIA 3, 17 December 1947) there has been a generally
favorable trend in Europe, including evidences of (1) an adverse reaction of Western
European labor to Communist efforts to wreck the European recovery program, (2) the
remarkable success and increasing stability of the Schuman Government in France,
and (3) Satellite realization of a present need for economic assistance from the West.
At the same time there have been an intensification of Communist effort in Greece and
increasing manifestations of Soviet interest in the Far East.
4. The immediate prospect is none the less grim. Increasingly effective Soviet
coordination and direction of Communist efforts are apparent, as well as preparations
for concerted offensive action on all European fronts. An early renewal of a campaign
of strikes and disorders in Italy is probable, and may develop into an all-out insurrection.
A similar development may follow in France. Meanwhile, intensification of Communist
revolutionary activity in Greece will continue, with increasing Satellite support.
In the Far East the trend has been consistently favorable to Soviet purposes, and
present prospects are for its continuance and possible acceleration.
THE SITUATION IN EUROPE
5. Labor reaction against Communist policy. The Communist penetration of or-
ganized labor and control of the powerful labor federations of France and Italy has
been a potent weapon in the Kremlin's arsenal, the threat of a general strike being
Note: A preliminary draft of this report has been furnished to the intelligence organizations
of the Departments of State, the Army, the Navy, and the Air Force.
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often more persuasive than the political power of the Communist parties. The effective-
ness of this weapon has been seriously impaired, however, by the adverse reaction of
Western European, particularly French and Italian, workers to the Cominform line and
to Communist-called strikes designed to serve only Soviet political purposes.
The strongest manifestation of this worker reaction is the secession movement
from the Communist-dominated French Confederation of Labor (C.G.T.) and formation
by the secessionists of a rival federation, the Workers' Force (F.O.), dedicated to "non-
political legitimate trade-union activity." The growth of the F.O. has been impressive,
despite its lack of organization and funds. It may attain a membership comparable
to that of the C.G.T. within a few months.
A corresponding tendency exists in Italy, although there has been no formal
secession as yet from the Italian Confederation of Labor (C.G.I.L.). A Communist
order for a general strike would probably precipitate such a movement.
The Communist position in the British labor movement has never been comparable
to that in France and Italy. The recent British Communist adoption of the Cominform
line, however, has been accepted by the Labor Party as the occasion for a movement
to eject Communists from key positions in the constituent unions of the Trades Union
Congress (T.U.C.).
At the meeting of its Executive Bureau in February the World Federation of Trade
Unions (W.F.T.U.) may well split on the issue of the European recovery program. The
Communists, however, having once had good prospect of using the W.F.T.U. as an
effective front organization, will do their utmost to evade the issue.
Meanwhile, the Belgian Federation of Labor has proposed a conference of trade
unions of the sixteen countries participating in the program with a view to the forma-
tion of a new international organization based on its support. This initiative, alarm-
ing to the Communists, is likely to receive the adherence of important labor
organizations in all sixteen countries, with the possible exception of Italy, where
Communists still exercise official control of organized labor. The British T.U.C., how-
ever, would postpone action pending developments in the W.F.T.U. The proposed
conference has therefore been put off until April.
6. The United Kingdom. Encouraging production figures and firmer leadership
have enhanced the prestige of the Labor Government and improved the morale of the
British people. Bevin's foreign policy, characterized by a stiffer attitude toward the
U.S.S.R. and closer collaboration with the United States, now enjoys nearly universal
support: the left-wing Labor opposition has subsided except for a few die-hard fellow
travelers.
The continuing drain on Britain's gold and dollar reserves, however, is cause for
grave official concern. Even if the Cripps production and export plan is fulfilled, the
United Kingdom (and the entire sterling area) will face a dollar crisis during the
latter half of 1948 unless further dollar aid is forthcoming. The solvency of the
United Kingdom is thus dependent upon early beneficial effects of the European
recovery program. If timely and sufficient dollar support does not become available,
the British must again resort to emergency retrenchments, with serious consequences
to both domestic stability and overseas commitments.
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7. France. The Schuman Government has been remarkably successful, not only
in rallying the French people against Communist-inspired strikes and disorders, but
also in securing the passage of politically painful fiscal legislation essential to a realistic
economic recovery program. It remains to be seen whether these unpopular measures
can be as successfully executed. The trend, however, is encouraging with respect to the
prospects for both economic recovery and a moderate political solution in France.
De Gaulle has shown himself to be sensitive to the fact that Schuman's success is
prejudicial to his own prospects, but still appears to be unwilling to seek power and
responsibility until the difficult winter has passed. His economic program is an echo
of Schuman's; he claims only that he could do it better. In appealing for labor support
he has offered only the idea of the corporate state, a strange echo of Vichy not likely to
prove enticing.
The Communists, despite their great loss of power and prestige, retain dangerous
capabilities for disrupting French production and economic recovery through strikes and
sabotage. It is considered unlikely, however, that they will renew their efforts in this
direction in the immediate future.
8. Italy. The situation is somewhat improved, but still far less secure than that
in France. The Communist capability to conduct an effective general strike is jeopard-
ized by the threatened defection of Italian labor from the C.G.I.L. Recent Communist
organizational activities and maneuvers would serve as preparations for either an
insurrectionary attempt or an effort to achieve a political victory in the April elections.
These alternatives have presumably been under consideration at the Party Congress
just concluded in Milan. Undoubtedly the Italian Communist leadership would prefer
to return to political action. The decision, however, rests with the over-all strategists
in the Kremlin.
It seems probable that a renewal of Communist direct action will occur within a
month, beginning as a strong campaign of strikes and violence and possibly leading into
an all-out revolutionary attempt. The Communist capabilities for armed insurrection
are formidable; they could probably achieve early local successes, especially in North
Italy. Unless they received open support from Yugoslavia, however, the Government
could probably suppress them eventually-but only after a thorough disruption of the
Italian economy. If the Communists did succeed in consolidating their control of
North Italy, outside aid would be required to dislodge them.
9. Germany. The break-up of the C.F.M. has as yet produced no major change
in Soviet policy, which continues to be directed toward the political, economic, and ad-
ministrative consolidation of the Soviet Zone. In the Western Zones German politi-
cians tend to show increased self-assertion, presumably based on the supposition that
the United States is now committed to rebuilding and developing Western Germany and
that their support is indispensable.
10. Austria. There are indications that the U.S.S.R., if unable to obtain quadri-
partite agreement on its terms for an Austrian Treaty, may seek to resume bilateral
negotiations with the Austrian Government, and that the latter, in its anxiety to
obtain a definitive settlement, may make concessions prejudicial to Austrian
independence.
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11. The Satellite States. In dethroning King Michael, the Communists have seized
a convenient opportunity to further the consolidation of their position in Eastern
Europe. There are, however, indications of Satellite realization of a present need for
economic assistance from the West in view of the inability of the U.S.S.R. to supply
all their wants. This economic situation affords the United States some leverage with
respect to Satellite foreign policy.
THE NEAR AND MIDDLE EAST
12. Greece. Proclamation of the Markos "government" is indicative of a Soviet
intention to provide increasing moral and material aid to the Greek insurgents through
the Satellite States, but this intention will be carried out by successive stages with
careful regard to U.S. reaction and to the avoidance of direct conflict with the United
States. The attitude of the United States has already caused the Satellites to hesitate
in recognizing Markos, at least until the significance of the U.S. position can be esti-
mated. However, barring the unlikely event of Markos' decisive military defeat, the
Satellites will probably extend to him increasing material aid and eventual recognition.
The U.S.S.R. itself is unlikely to grant formal recognition to the Markos regime until
assured that it is capable of winning control of Greece and that to do so will not involve
the U.S.S.R. in direct conflict with the United States.
The recent fighting at Konitsa demonstrates that the insurgents are strong enough
to make dangerous local attacks, and that there are increased central direction and
coordination of activities on both sides of the border. The guerrillas cannot yet hold
open ground, but reports of preparations in Satellite territory suggest plans for the
occupation and defense of substantial areas in Greece.
In Athens, the Konitsa crisis has temporarily checked the growth of political dis-
unity, but inflation continues to undermine the Greek economy.
13. Turkey. The Turks, having reduced their armed forces, are increasingly
alarmed by the course of events in Greece and by the danger of Soviet penetration of
the Arab States under cover of the Arab-Zionist conflict. Soviet control of Greece
and subversion of the Arab States would isolate strategically Turkey and Iran.
14. Palestine. Arab opposition to partition, although still largely unorganized, has
already caused several thousand casualties (including over 500 deaths), millions of
dollars of property damage, serious disruption of the Palestinian economy (particularly
in the Jewish communities), and increasing lawlessness among both Arabs and Jews.
That such consequences should result from relatively little effort is indicative of the de-
struction which would ensue were the Arab Higher Committee to order all-out offensive
action with the support of the Arab States. Although the members of the Arab League
disagree among themselves as to retaliatory action against the United States for its
support of partition, they are united in determination to support the Palestinian
Arabs. No concerted action is planned until after the British withdrawal. In the
face of the existing chaotic situation, the British tend to advance the date of their
withdrawal, reducing the time available to prepare for that eventuality.
On the Zionist side, there is evidence of a widening schism between moderates and
extremists. The former, who now control the Jewish Agency and the Hagana, feel that
their ultimate salvation depends on British, U.S., and U.N. support and protection.
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The extremists, an anomalous miscellany of radical and reactionary elements, look to
the U.S.S.R. for support and are disposed to fight not only the Arabs, but also British
and U.S. "imperialism." They demand unlimited immigration of European Jews and
apparently welcome the Communist agents among them.
The U.N. Commission will find a chaotic situation in Palestine, with the great
majority of the population violently opposed to any action it might take. The Com-
mission must consequently call on the Security Council for aid, raising all the problems
implicit in the dispatch of U.S., Soviet, or other troops to Palestine to impose partition
by force of arms.
15. Iran. The weak (and probably short-lived) Hakimi Government cannot be
as effective as was Qavam in dealing with either the U.S.S.R. or the domestic situation.
Regarded as anti-Soviet, it will undoubtedly be subjected to strong pressure by both
the U.S.S.R. and resurgent Iranian leftists. Although Soviet forces are unlikely to
re-enter Iran for the present, it is possible that Soviet-supported elements will attempt
to penetrate Azerbaijan and other northern provinces.
On the other hand, the political ascendancy of the Shah and the Army and the
Shah's recent understandings with some of the more powerful tribes should facilitate
Army action against Soviet infiltration and subversion.
16. India-Pakistan. Although the Kashmir dispute is now before the Security
Council, continuing hostilities between Moslem tribesmen and Indian troops in that
area may lead to open warfare between India and Pakistan before a solution can be
devised. Such a conflict, in which Afghanistan also might become involved, would
be disastrous for both Dominions and would afford opportunities for eventual Soviet
exploitation.
THE FAR EAST
17. General. The Chinese Communist leader, Mao Tse-tung, has called for united
and vigorous revolutionary action and resistance to U.S. "imperialism" on the part of
all "democratic" elements in East Asia. Moreover, Soviet publications have directed
increased attention to developments in China and in southeast Asia. Nevertheless, no
radical change in Soviet policy or activity in the Far East is anticipated in the near
future. In particular the U.S.S.R. is expected to maintain its hitherto "correct"
diplomatic relations with the Nanking Government.
18. China. Although the Communists have won no spectacular victories, the
military position of the Nationalist Government continues to deteriorate. In Man-
churia, the Nationalists have had to expose Changchun and Kirin in order to reinforce
Mukden. In Central China, the Communists are now able to intercept Yangtze ship-
ping west of Hankow, thus separating the Nationalist armies from important Szechuan
rice supplies. Mao Tse-tung has now publicly declared that the Communists have over-
come the initial disadvantages and that the turning point in the civil war has been
reached.
Despite its urgent need for U.S. aid, the Chinese Government will be reluctant, in
forthcoming negotiations, to accept any close degree of U.S. supervision. This attitude
is attributable to normally acute Chinese sensitivity with regard to national sover-
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eignty and to the ascendancy of the reactionary CC Clique, which now permeates most
of the Government's economic and financial agencies.
19. Korea. The U.S.S.R. is rapidly preparing to establish the North Korean Peo-
ple's Committee as the government of a "People's Republic." At the same time, in
South Korea, the Communists are dissuading moderates from cooperation with the
U.N. Commission by offering them participation in a "coalition government" for all
Korea. The South Korean Right, however, perceiving in this situation assurance of
an overwhelming victory in a U.N.-observed election, has welcomed the Commission
and will support it as long as that prospect continues.
It has long been evident that the Commission will be unable to establish a provi-
sional government for all Korea in consequence of Soviet and North Korean intransi-
gence. If it should also prove incapable of providing a representative and generally
accepted regime for South Korea, the U.S. position in that area would be greatly
jeopardized. In such circumstances the United States must quickly establish such a
government by its own action, or its position will become politically untenable. The
Korean passion for unity and independence is strong enough to blind South Koreans
to the fact that a coalition government, including the North Korean People's Committee
and the South Korean Left, would be but the first step toward Soviet domination of
the entire country.
20. Japan. Despite Chinese attempts to effect a compromise between the U.S.
and Soviet positions regarding a Japanese peace conference, the U.S.S.R. consistently
refuses to participate without veto power. The Kremlin is evidently content to con-
tinue the development of its own position in northern Asia as a counter to the U.S.
position in Japan, apparently trusting that prospective Communist successes in China
and Korea will so undermine U.S. prestige in Japan and throughout the Far East that
a more favorable peace settlement can be obtained at a later date.
21. Indonesia. The Dutch, by forming separatist states in territories taken from
the Republic and still in dispute, and by presenting as an ultimatum truce terms which
would hardly permit the continued existence of the Republic, have gravely jeopardized
the mission of the U.N. Good Offices Committee, in which the United States occupies
the key position. The collapse of the Republic, from internal causes if the Dutch
terms were accepted, or from Dutch military action if the terms were rejected, would
seriously affect the prestige of the United Nations and the United States. Soviet and
Communist propaganda and Asiatic opinion would attribute that development to
"imperialistic" U.S. intervention.
LATIN AMERICA
22. Panama. Panamanian rejection of the defense-sites agreement was primarily
the result of domestic political considerations in an election year and not of Communist
influence, although Communists exploited the opportunity to assume the appearance
of popular leadership in inciting demonstrations. Basically, the Panamanians re-
mained unconvinced that the United States really needed the base sites to defend the
Canal from attack in the existing state of world-power relations and dispositions.
23. General. Communist capabilities for sabotage and espionage in Latin America
remain considerable, although the anti-Communist trend referred to in CIA 3 continues.
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However, developing differences between the United States and some Latin American
countries on economic matters (such as the opposing positions taken at the I.T.O.
Havana Conference) and on political matters (such as base-sites negotiations with
Panama) tend to strengthen the position of the Communists by associating non-Com-
munists with them in opposition to the United States.
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SUMMARY, CIA 1, 26 September 1947
1. Among foreign powers, only the U.S.S.R, is capable of threatening the security
of the United States.
2. The U.S.S.R. is presently incapable of military aggression outside of Europe and
Asia, but is capable of overrunning most of continental Europe, the Near East, northern
China, and Korea.
3. The U.S.S.R. is unlikely to resort to open military aggression in present circum-
stances. Its policy is to avoid war, to build up its war potential, and to extend its
influence and control by political, economic, and psychological methods. In this it is
deliberately conducting political, economic, and psychological warfare against the
United States.
4. The greatest danger to the security of the United States is the possibility of
economic collapse in Western Europe and the consequent accession to power of Com-
munist elements.
5. Stabilization and recovery in Europe and Asia would tend to redress the balance
of power and thereby to restrain the U.S.S.R.
6. From the point of view of containing the U.S.S.R. and eventually redressing the
balance of power the order of priority among the major regions of Europe and Asia is:
a. Western Europe.
b. The Near and Middle East (but within the region the situation in Greece
is of great importance and the utmost urgency, while the situation with respect to
Palestine is extremely dangerous).
c. The Far East (but within the region Japan is important as the only area
capable of relatively early development as a power center counterbalancing the Soviet
Far East).
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C'M
U. S. GOVERNMENT PRINTING OFFICE
2058--S-1948
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