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November 9, 2016
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March 3, 1999
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October 5, 1954
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CONSULTANT'S REPORT ON THE INTELLIGENCE SUPPORT FOR ECONOMIC WARFARE (Revised 5 Oct 1954) -Copy #1 RETURN M SECRET ARCHIVES & REC01,10S CEN IMMEKTELY AFTER USE JOB,_62:2ABOX Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 STANDARD FORM NO. 64 :PROD UCTION A prov.Ofor Release 1$99/0SECRURDP69-00642R0001000004-5 0 tttce Memorandum ? UNITED STATES GOVERNMENr TO Assistant Director, ORR DATE: 20 October 1954 THRU t Chief, Coordination PROM : Acting Chief, D/E/RR suaywn Consultant's Report on "The Intelligence Support for Economic Warfare." 1. Transmitted herewith is a copy of the above cited report. 2. The purpose of the report is to provide a background paper for the consideration of economic warfare planning, with particular reference to the intelligence support required. In the perspective of the experience in both world wars and the cold war to date, it points out the comprehensive nature of economic warfare intelligence, the manifold uses and applications of that intelligence, and the need of an integrated organization to provide it. 3. This report should be a useful contribution to the consideration of the nature and scope of economic warfare (economic defense) intelligence support by IAC Agencies and of economic warfare planning by the responsible agencies. The report should be immediately useful in connection with the Bureau of the Budget's current study relating to the coordina- tion of economic, psychological, and other nonmilitary defense measures. L. The report is now under review in p/E as a basis for the formulation of specific recommendations along the lines requested by Mr. Amory. 25X1A Enclosure D/E/RR:HDG:aa (20 Oct 54) Distribution - Addressee 1 - Ch/C 3 - D/E Approved For Release 1999/ 4I.A-RDP69-00642R000100070001-5 _ Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 DRAFT To : Assistant Director, ORR Thru : Chief, Coordination From : Chief, DA subject: Consultant's Report on "The Intelligence Support for Economic Warfare." 1. Transmitted herewith is a copy of the above cited report. 2. The purpose of the report is to provide a background paper for the consideration of economic warfare planning, with particular reference to the intelligence support required. In the perspective of the experience in both world wars and the cold war to date, it points out the comprehensive nature of economic warfare intelligence, the manifold uses and applications of that intelligence, and the need of an integrated organization to provide it. 3. This report should be a useful contribution to the consid- eration of the nature and scope of economic warfare (economic defense) intelliyence support I,gencies of economic warfare planning by the responsible agencies. The report should be immediately use- ful in connection with the Bureau of the Budget's current study re- lating to the coordination of economic, psychological, and other nonmilitary defense measures. 4. The report is now under review in DIE as a basis for the formulation of specific recommendations along the lines requested by Mr. Amory. Approved For Release 1999/09/07 : GIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 ?.garisEri DRAFT ?69-274110?14,0114- 5 October 3.91.4 r1E.3311Tif 1-5LIQII9144C .1tAIT1RE Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 GCE SUP WARFARE Ie 2320gallal 1 A. Purpose and Scope of Study 1 B. Definitions 3 C. Assumptions 5 D. The Role of Economic Warfare in any War with the Soviet Union _ 00000 ......0.0.0000. 6 E, The Role of Economic Warfare in a Limited 9 F. The Transition from Peacetime to Wartime Intelligence Becul rements................ 9 II. zwangtiagmEgEzgashla_Utr_fl ARE POLICL?000 OOOOOOOOOO 0000000000 OOOOOOOOOO 00 13 AO Gignera10000000000,00000.0000 OOOOO 00090000 13 IL As to Enemy Nations..?..? ?00?00000000?0 14 C. As to Allied Nations...... ............. 15 D. As to Neutral Nations .................. 15 E. The Transition from Peacetime to Wartime Policy and000 Plarming., 15 THE WARFARE OPERATIONS. 18 A. General. e000000000000000000000000000000 18 B. Control at the19 1. Export Licensing 3.9 20 Import 20 3. War Trade Agreements with Neutrals.. 21 4. Preclusive BUldi41.00000000000000000 21 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 C. Prevention of Trading. ******** 00. o,.0000000. 22 1. Proclaimed Listing and Blacklisting 04,0000000 22 2. Financial Mea8ure8OOOUOODOOQOOOOOOOQOOOOOOO 26 3. PreventionofSmugg1ingODOOQOOOOOOOOOQQO27 4. Prevention of Enemy 28 D. Prevention of Transport00000?0000000000000?00000 28 E. Military Measures... 31 10 Genera10000000000000000,00000000?00000000000 31 2. Disruption and Destruction of Enemy Transport. 32 3. Disruption and Destruction of Enemy Industrial Power.... 000090000?0000?00000000 Fo Other MeasureeQ 0000 0 0 0C 0 0OOOOOOOOO ??........ 00 1. General.......00? ?0000?000o?ocoo?oo?e0000?00 26 Promotion of Subversion and Disaffection in Enemy Industrial Areas. ? 32 34 34 34 2. Sabotage of Enemy Supplies and In ..?........................... 34 Go Counter Economic Warfare 00000oo00000000000000000 35 IV. THE INTELLIGENCE PROCESS IN ECONOMIC WARFARE. ....... 37 A. Collection... 37 1. Sources Available in Peacetime. 0000.10,10000 0 37 a. International Economic Organizations.... 37 Central Intelligence Agency 00000000000 37 State Department. ....................... 39 d. Foreign Operations Administration....... 40 - geoeye ???? 411?10, .y01 :Me MOW Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 p7E-C-Rp4-T e. The Armed Forces ..................... 41 f. Department of Commerce.............., 42 g. Department of Agriculture.00000000000 42 h. Department of Justice.o........ ...... 43 1. Department of Interior............... 43 je Treasury Department.................. 44 k. Federal Reserve System...0...o 00000. 44 1. Department of Labor? 0000000000000000 44 m. Tariff Commission... 00000000000000000 45 n. The National Archives and Records SerViCe009000000000000000000000000000 45 o. Other Ag 45 Po Library 46 q. Private Foundations, Scientific Assoc- iations and Economic Study Groups?.. 46 r. Foreign Broadcasts................. 0 47 25X1 C 10007000:M -51efUgees and Displaced Persons....... 47 25X1 D 2. Additional Sources Available in wartime.. 51 a. Censorship.. 0?00000000000000000000000 51 c. Captured Enemy Naterials............. 53 d. Prisoners of War.... 00000?00,00000000 54 e. Covert Collection. ................... 55 S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 25X6 25X6 8 . f. Aerial Reconnaissance0000000000.500000 55 PrOdUetiOn00000000000011000.000000000000000000 56 C. DietributiouofInte11igenca0000Qo.0000eo 58 V. ORGANIZATION FOR INTELLIGENCE SUPPORT OF ECONOMIC WARFARE.......... 000000 .......................... 59' A. NOrld War Iii4 59 1. 59 3. The US Experience ........................ 61 B. World War II...........?..........-......??... 63 2. The US cperienaeOOOQOCOOOOOOOG..00OQOOO 66 3. Allied Operations.. 00090.0000000000000000 69 Co The Korean War..... 71 D. The Cold War.. 0000 o .......................... 72 1. The NSRB Studies. ........................ 72 2, Planning Study for Intelligence for Economic Warfare. ........................ 73 3. The NSC Request and Subsequent Action.... 74 4. The Clamorous Customer vs the Basic Study00000000000000000,000o0000e0?000000 o 75 5. The Economic Intelligence Committee.... 76 6. The Intelligence Working Group........... 78 E. Wartime Organizational Requirements..., 80 5?E-0?R.?X?T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T 1. Organization for Economic Warfare o00000000 SO 2, Organization for Intelligence Supporte..., 83 F. Intelligence Support for Allied Economic 87 VI. CONCLUSIONS.??............?.....,................. 92 Appendix I - Chart Showing Intelligence Support for Economic Defense _______...00.00.00.....00.0.000,000 97 Appendix II - Chart Showing Organization for Mutuai Defense Assistance Control Operations. ..0 98 Appendix III - A List of Reference Material Relating to Economic Warfare' with Special Refer- ence to Intelligence Support ...........0 99 v -E -C Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 ?-E-C-R-ET . INTRODUCTION A. bmittixit?,,..eolAket "A comprehensive economic warfare program aimed at supporting our national security in times of peace as well as war" was a major recommendation of the Hoover Commission in 1948. Six years and two wars later, that recommendation has not been given effect. The intervening years have not lessened the importance of the recommen- dation. The threatening situations in many parts of the world have now accented its urgency. It is true that the National Security Resources Hoard in 1949 prepared a series of excellent monographs on certain economic war- fare measures, but these cannot be said to constitute a "compre- hensive economic warfare progrms," and did not purport to do no A prerequisite to such a program must be provision for ad- ? equate intelligence support. Intelligence support represents a major part of economic warfare activities. Intelligence, of course, is a vital part of military warfare, but the scale of military operations is 'vastly greater than that of the intelligence operations on which it is based; whereas in economic warfare, a large part of the total personnel employed is engaged in intelligence activities, and intelligence and operations are even more closely integrated. The recent annual report of the Chairman of the Intelligence Working Group suggests that this group may undertake a study of the Approved For Release 1999/ilittf4ga-RDP69-00642R000100070001-5 Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 fligence support ehat wooi d b emotired for economic warfare, 7 hoped that the nt reoort may serve as a contribution to eht study, Its purpose i to :gest erre nature of the intelli- gen- required and the orgavie eion tecessary to provide Auch material has been drawn from nrevio?e relevant studies, as been included nitro, at the risk f being unduly academic feg ? ),-((r to provide a be:Aground and perspoctive for the consideration x" :is important problen, and to ahoy ehe comprehensive nature of the inte.LLigencc which must be drawn on in support of economic war - fart., the manifold uses and an.ication of that intelligence, and the need of an integratco organization to provide it -eneeon I a2eks to define economic warfare, to evaluate its ro3e ln any war with the Soviet Union ard to consider the effect on veoramic intelligence eouirmeente of the traniition from peacetime to eertime, eention II deals with the intelligence support required for ec. euele ewertare policy- latrine vie Vie enemy, neutralseand allied natioreto 2-cct..ion III attemetio to aeseee the intelligence requirements of ecenemic warfare operaeions in tcs telde of international trade and traneactione, iiooinp vntrIe and in military and politica loafteres .ection IV is coneerned with the collection, production, and dine tib ion of economic warfare ineeIlieenee with epeeriel reference to time and wartime mimeo of entellieeree- Approved For Release 1999/09/67r: CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Section V considers, against the background of two world wars, Warp the Koreariand the "cold war," the organizational arrangements needed for the intelligence support of economic warfare, B. Definitiou Economic warfare is a relatively new word in the bright lexicon of logistics As such it has been variously defined. For a long time the Industrial College of the Armed Forces, which began its study of economic warfare in the period between the world wars, con- ae "the use of economic, military, political or other measures to injure an enemy ,s economic support of his war effort, or a possible enemyos economic potential for war." The objection to this definition was that it made no distinction between peacetime and wartime operations. Economic warfare has also been defined simply as the use of economic measures against economic targets. This simp- lification overlooks the fact that economic measuree such as the ec- onomic blockade or "paper blockade" depend on the armed forces for their enforcement* In intercepting an unnavicerted ship, for example, the non-military and military measures are integrated. -?-/ As used herein* "economic warfare" is the use of all measures to impair an enemy's economic support of his war effort. "Economic defense" is the use of such of these measures as may be employed in peacetime to impair the economic potential for war of an unfriendly or aggressor nation, and may embrace economic sanctions and reprisals, including even pacific blockade, Approved For Release 1999/09/07 : alA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : GIA-RDP69-00642R000100070001-5 Th aliference bttween econamic ael'ense and economic warfare is yefore largely legtlistic and semantic - legalistic, because of L- difference between measures which can legally be taken in peace- toA0 and those which can be taken only in war; semantic, because in p-;oetime "defense" it a good word and "war" is a bad word, while in 1AM4 0 e the reverspis true. Immediately after Pearl Harbor, the Ec- onomic Defense Board became the Hoard of Economic Warfare. There is ,,5.0? unfortunately, a difference in the extent and intensity of the T'ams a economic Cefenee and. economic Ilarfare. Economic defense,, in the sense of ftab, effective sanctions, has never been applied in peacetime the concept of the totality of economic warfare is generally aepted, there is no such acceptance of the totality of economic defense. Even in the so-ealled limited war in Korea, full economic warfare was not employed by the United Nations. There was noJAock- ade of the China coast and no complete eMbargo of exports to Communiit China, Although the nature and extent of economic warfare may Vary in a limited war as compared with a general war, the character of the intelligence support required is the same in both. There must be cognisance of all area: enemy, allied, and neutral, and of all ec- nomic resources The term "economil warfare" was first adopted by the British in the period between the World Wars. In World War II economic warfare bt.,Ame the substitubefor and an enlargement of the blockade operations in the first war, The Ministry of Blockade in the first war became 4 - S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 SER-ET the Ministry of Economic Warfare in the second. Economic warfare thus became synonymous with the figurative meaning of blockade. "Intelligence support," as used herein, includes substantive intelligence and also the organizational arrangements for its co- ordination and application to economic warfare problems. C. jimm_jpilsm It is assumed that the various economic warfare measures will be implemented by the appropriate existing agencies of the government; for example, diplomatic negotiations by the Department of State; export - Import licensing and the mwatch lists by the Department of Commerce; actual implementation of export-import controls by the Bureau of Customs; foreign exchange controls by the Treasury Department and the Federal Reserve Banks; alien property control by the Department of Justice; off-shore procurement and preclusive buying by the Department of Defense and General Services Administration; the ship warrant and navicert system by the Maritime Administration, the Navy, and the Bureau of Customs; and naval interception and military attack on economic tar- gets by the armed forces. Same of these measures are now in effect with the machinery for their administration already functioning. Others are closely related to the normal operations of the respective agencies and experienced personnel are available to implement them. It is fur- ther assumed that the coordination of these measures will be administered by a foreign economic administrationo under the guidance of or with the advice of an interagency oommittee,, Approved For Release 1999/04/0t1 dIA-RDP69-00642R000100070001-5 4 .11.4-T, Approved For Release 199970970T :C1A-RDP69-00642R000100070001-5 D. he Rolekt_asmais_Eid_arfass_k_afi?toL_AILaLleteg.agga.lifax Originally it was believed by many persons in this country and abroad that economic warfare would have a relatively minor role in any war with the Soviet Union. This reasoning was based on the follow- ing assumptions: (1) that the Soviet Union is largely self-sufficient, with relatively limited dependence on overseas trade, and is, therefore, not vulnerable to blockade; (2) that in any future world conflict there will be few if any neutral areas, neutral areas being the principal battleground of economic warfare; (3) that the new weapons of war preclude the possi- bility of a long war of attrition and make obsolete other methods of warfare, including economic warfare. Each of these assumptions may now be challenged. It is true that the Soviet Union is largely self-sufficient for its austere civilian economy, and its overseas trade is relatively small. This is not true, however, of Communist China and the Asiatic neutrals, who are dependent on seaborne commerce. The European satellites are also dependent on imports from the WestYFurthermore? the Soviet industrial system lacks flexibility and diversification and specialisation and is or was highly vulnerable to a denial of certain strategic materials and products (e.g. natural rubber, copper, antibiotics), of ships and shipping ser- vices, and of equipment and components incorporating advanced tech- nology (e.g. high-speed, high production precision tools, anti-friction - 6 - S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T bearings, electrical generating equipment, electronics components, and precision instruments). This is indicated by the Soviet trade offensive and the frantic efforts to acquire strategic materials from the western nations. It is not to be inferred from the foregoing that other materials may not also be strategic* indeed, in tfare or in the case of a nation striving for autarky or preparing for war, any imports permitted may be assumed to be strategic and in short supply. The "strategic materials fallacy," i.e. that some imports by such a nation or by a belligerent are not strategic, had its origin in the pre-total-war period of modern history.-4/ The Declaration of London in 1909 considered commodity trade in three categories - absolute contraband, conditional contraband, and non-contraband. This distinction was voided in both world wars by the U-boat sinkings and the compulsory navicert. All trade with the enemy was contraband. It is recognized that there are differing opinions within the intelligence community regarding the relative strategic advantage te the Soviet bloc and to the free world of current trade between them. It is a difference that cannot be reconciled because there are no means of measuring the relative strategic advantage. Whether coal, grain, timberi, and gold are more strategic to Western Europe than are ships and shipping, machine tools, anti-friction bearings, natural rubber, and tractors to the Soviet bloc, is a matter of judgment. These and many other items are presently traded in. With respect to economic warfare (i.e in wartime), however, there is virtual unanimity of opinion that "trading with the enemy? is legally, strategically and morally wrong. There is no such unanimity Approved For Release 1999/09107 : CIA-RDP69-00642R000100070001-5 SECRET Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E4-R-E-JT as to trading with the enemy in a cold war. There are those who thus seem to doubt the hostile intentions of the Soviet Union and Communist China or who make a distinction between trading with an enemy who is actually waging war and trading with one who is merely preparing to wage war.Itiotof course, in the period of build-up and preparation for war that economic sanctions could be most effective. History teaches us, however, that not until the aggressor has filled his stockpiles, completed his preparations and launched his aggression; are other nations willing to lock the export stable. Nevertheless, in spite of all the enemyes preparation there still remains in wartime an opportunity for economic warfare to aggravate the critical stresses and strains Of his war economy. Also subject to review is the assumption as to limited areas of neutrality in a future world conflict, especially one between the USSR and Western Nations. As a result of mAlitary exigency and political expediency, there is a reasonable prospect of varying degrees of neu- trality and non-belligerency for important and strategically placed areas. As to, the third assumption, that the new weapons of war have made obsolete all other means of warfare, including economic warfare, it may be said that similar assumptions have been made erroneously as to each war since the invention of gunpowder. The possible use of nuclear weapons compels a revision of many previous concepts, but most author- ities are agreed that other methods of warfare cannot be abandoned. Indeed it is possible that the belligerents in a future war may refrain from the use of atomic weapons for fear of the awesome retaliation, or that they may limit them to tactical employment against Adlitary targets. This Artissoviadif euReitaire '199100970PACIA-iteskigftratt (5131V60Abtb1-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 World War II in the use of poison gas. There is also strong support for the view that the East-West struggle may be a prolonged one, fought with diplomacy, propaganda, subversion and economic measures, with or without military warfare. E. The Role of Boarmie Warfare in a Idmited War. It is in order to consider also the role of economic warfare Ina so-called "limited," i.e a war in which the military operations are confined to a limited area. In principle, the measures of economic war- fare which should be employed and the intelligence support required do not vary in such a conflict from those employed in a global war between .major powers. The coast line to be blockaded may not be as long and the volume of shipping to be interdicted may not be as large. The armed forces engaged and the logistical support required for them may not be as great. Nonetheless, while the sdlitary conflict may thus be confined to a limited area, the economic war may be expected to have global ramifications. The trade of belligerents, non-belligercnts, and neutrals and world-wide shipping and financial servicesmay be involved. P. The Transition from Peace to art e - Inte once Re ? uiremen s In peacetime the principal intelligence requirements of economic warfare are basic studies or the capabilities and vulnerabilities of various areas, studies of foreign trade and finance, basic commodity studies, and Planning studies for economic warfare operations. In wartime and in the period of strained relations often preceding a war, there is a shift to the analysis and evaluation of current spot intelli- gence against the background of these basic studies. In peacetime prob- ably three-fourths of the information on which economic intelligence is Approved For Release 1999/CWSIMRDP69-00642R000100070001-5 J5X1D Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 slnrcarinl based is from open unclassified source*. In wartime probably nine4enths of current intelligence information in from censor- 25X1D ship gleanings, and other classified and covert sources. In peacetime most economic intelligence is basic and strategic in character. In wartime there is an additional requi?ement for current and tactical intelligence. Intelligence as to a country is economic potential, -- manpower, productive capacity, foreign trade, internal economy, tech- nological development, -- all this IA strategic economic warfare intelligence? In the category of tactical economic warfare intelli- gence are such reports as the followingt aninumvicerted ship is about to leave a neutral port; censorship reveals an illegaa financial trans- action; a member of a ship os crew is suspected of smuggting jewel bearings; a neutral trader is shipping to a suspected cloak; Al]. of thisls tactical economic warfare intelligeace. Stated another way, in the processing of information ,into etrategie intelligence in peacetime, the emphasis is on the production of r3ports and estimates. In a period of strained relations or in Wartime, it is cn analysis, interpretation, and evaluation of current, tactical, and epot reports, against a background of personal knowlt*ge and studies And estimates for the most part previously prepared. Intelligence4n peace- time is largely static. In wartime it becomes dynamic? Even more portant now than refinement of estimates on the degree of capability or vulnerability in production of strategic commoditigmis intelligence S-E-C-RAwf Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1D Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 as to how the enemy supply of strategic materials, whatever it is, can be out off or reduced, Also needed is new intelligence of new enemy requirements 'for new methods, new products, new weapons, and new materials previously without significance which, as substitutes for strategic materials, have themselves become strategic, Basic research and analysis in support of economic warfare operations were of somewhat greater relative importance in World War II than they may be expected to be in a future conflict because it was necessary in 1941 to "start from scratch." In the present situation there is a vast body of material .prepared in World War II and the experience of that war is available to us, The period of the cold war, furthermore, has afforded the opportunity and the necessity for may studies, This is not to discount the importance and urgent necessity for continued research and analysis. The Soviet situation and the Soviet methods differ radically from those of the Germans, Less basic information is available as to their foreign trade and still less as to their domestic production. A greater emphasis, therefore, is placed on the analysis and synthesis of current intelligence to supply this deficiency, And so in organisation for economic intelligence there is necessarily a conversion of at least part of an organisation designed for the production of basic reports and estimates to one for the analysis and . evaluation of current information and the support Of daily operations. To borrow terminology of the Industrial world, what is indicated in the transition from peacetime to wartime intelligence production for Approved For Release 1999/01/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 economic warfare, is the partial conversion and retooling of a factory producing capital goods (basic studies) to one producting also consumer goods (operational intelligence), -12- S-E-C-R-E-T Approved For Release 1999/097077CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 - TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/99/0,7 ;,cJA-RDP69-00642R000100070001-5 II. THE INTEk4IGENCE..,UPT'ORT _OLMONOMIC WARiAliE POLI_QT, 410 2gBagl The distinction between intelligence in support ok policymaking and that in support of operations is, of course, large:y arbitrary. Many of the same basic and current intelligence report!! support both policy-making and operations. This is true eeppeially in wartime when policremaking, plans, and operations are often telescoped and ptherwise events would overtake intelligence and planning. In broad principle the intelligence requirements Per policyemakng and strategy in the field of economic warfare are not essentially different from those of polioyemaking in other fields. Against a back- ground of historical precedent and a comprehension of the foreign policy objectives of the US and other countries, they include areestemate of the current situation and of the probable conseqpenees of alternative courses - of action. More specifically, they include esttmates of the ec- onomic capabilities and vulnerabilities of enemy, allied, and neutral nations; estimates of intention; and estimates of consequences of prob- able courses of tion While the outline of the National Intelligenee Surveys and other basic peacetime economic studies of foreign countries is essentially the same or all countries? the pattern of the economic warfare estimates and thesipporting data required for economic warfare policy and planning will vary aecordeng to the status of the country as enemy, ally, or neutral 5tudies of economic eganimation? manpower, food and agriculture, forest preducts:. mineraf,, fuels and power, manufacturen& transportation, Approved For Release 1999/09/077: CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 s-E-C-R-Ear communications, international trade and finance --- all furnish support for economic warfare policy and operations. The need is largely for the analysis, synthesis, interpretation and application of that part of the various fields of economic and other intelligence pertinent to the particular problem. The resulting production of reports and estimates will "cut across the board". For example, as estimate of The Vulnerability of the Swedish Iron and Steel Industry to Pressures from the East and the West" requires intelligence as to mining, manufacturing, transportation, finance, economic organization, international trade, and other aUbJects. So also would a study of "The Feasibility of Increasing Stockpile Objectives'to the Point of Pre-emption of Certain Strategic Minerals," or "Transit Trade to Eastern EUrope through Trieste," (or Swiiland or Austria), or "The Feasibility of Preventing export to the Soviet Bloc of tigic Materials from Spath.4 Such reports and estimates, nnot be epared on an effective 'and timely basis by an inteUigeflc nization - P*04 to Soviet or nonSoViet areas? Neither can thetj; anprganization limited to research or to current inteIll .,,.As to Enemy Nations In the case of an snow or potential enemy' nation,' tWe141:1Ose of the estimates of capabilities and vulnerabilities is to determine (1) its economic potential for war, (2) its intentions and probable courses of action, and (3) its deficiencies in raw materials, in technology, in facilities, in transportation, in mummer, and its vulnerability to interdiction of its international trade and the disruption by strategic bombing or other means, of its domestic production and transport? Approved For Release 1999/.tVIRDP69-00642R000100070001-5 Approved For Release 1999/P19,10,7;CIA-RDP69-00642R000100070001-5 ??E;!.. C. As to Allied Nations In the case of allied nations or probable a) ii the policies for which intelligence support is required have to do with (1) combined or parallel action in the execution of ec- onomic warfare measures against the common enemy (especially in ax- port-import controls, control of port facilities, and blacklisting), (2) the ability of the allies to contribute to the allocation of essential civilian suppliestocooperating neutrals, and (3) the dea. pendence of allies an neutral sources of supply. D. As to Neutral Nations The neutral nationss as stated above, constitute the principal lettleground of economic warfare, and in this area will arise the majority of economic warfarsproblems.requiring policy determination. Estimates of capabilities and vulnerabilities are for the purpose of determining the position of the neutral nation as a possible source of supply for the enemy. Intelligence support will be required for the negotiation of war trade agreements, which will seek to Unit its exports to the enemy and to secure supplies for the DS and allied nations; for preclusive bpying programs, where expoil,lindtation agreements are not feasible or effective; and for determining the Vul- nerability of the neutral to pressures from the enemy or from the allies, and its ability to emittain its neutrality. E. The Transition from Peacetime to Wartime Poll d In peacetime these estimates are in broad and comprehensive term . Even though based on detailed studies of raw materials, manpower, and Approved For Release 1999/09/oh CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 SE-C.R.104 productive capabity and on economic organization, technological prog- ress, and international trade and finance, and on all the factors enumerated in the National Intelligence Surveye, they necessarily in- clude !mew assumptions as to possible future situation and conditime. After the outbreak of war these estimates can be brought into sharper focus as the status of various countries is revealed as that of enemy, ally, or neutral black, white, or varying shades of grey. In the war period, furthermore, evaluation of the effects of existing policies and estimates of probable effects of proposed policies are largely the by-products of operational intelligence. As stated above, the economic warfare policy and strategy are dynamic, not static, and the policy- making process is necessarily a continuing one. The same is true to a large extent of economic defense in a cold war. New policies and changes in policy evolve from operational experience. In World War I the US, as late as October, 1915, vigorously protested to Great Britain that "the methods employed by Great Britain to obtain evidence of eneny destination of cargoes bound for neutral portssndto inpose a contra- band character on such cargoes are without juntiMmetion indefen- sib's 0... illegal in conception mad nature lau5 task of championing the integrity of neutral rights theUnited States unhesitatingly assumes." But later as public sentiment became aroused in Britain's behalf, the US devised the "navicert" which was to become the principal instrument of economic warfare, and in 1917, the US became the full Ally of Great Britain in the Ward Sometimes the events that force changes of econamic warfare policy come with dramatic suddenness, Today's events may make Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T today's policies obsolete tomorrow. For example, Russia WAS delivering strategic supplies ii Germany up to and including the week preceding the German invasion of Russia on 22 June 1941, In general, broad and basic estimates of capabilities and vulner- abilities are a requirement .of peacetime planning, After the outbreak of war, these previously prepared studies furnish a basis or background for the evaluation of current intelligence and a point of departure for more specific estimates of capabilities, vulnerabilities, and probable courses of action. The necessary integration of the production of these latter estimates with the operational intelligence process and in fact with the close support of actual execution of economic warfare measures is illustrated in the experience of both the US and the UK in World War II. (See Section V) Approved For Release 1441/69'1e1CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/99/07 : CIA-RDP69-00642R000100070001-5 TIE INTELLIGINUE SUPPORT OF ECONOMIC WARFARE OPMATIONS A, General The intelligence support for economic warfare operation draws on the entire field of economic intelligence - on both at area and a functional basis, The coaprehensive nature of this support may best be understood by considering tho successive steps in seeking to pre- vent the enemy's acquisition of materialst (1) We seek to stop the goods at the source by control of our own exports and the exports of allies and frienaynamtrals, by war trade agree- ments with neutrals, ar46 where necessary and feasible, by preclusive buying. (2) If this fails, we seek to ,prevent the trading for them by blacklisting suspect traders, by financial controls, by prevention of smuggling, by interference with enemy exports, and by a close watch on all enegetransactions. (3) But if the geode are available, and if they are traded for, then ve seek to prevent their transport, by control of bunkering, repair fetal- itiee, and detistl of marine insurance. (4) And if they are available, aid are traded, and if they are started on the:Irv/vs the Navy seeks to intercept the unnaviaerted ship, the Aravramd Air force attack the transport of such supp1i16'48 do get through,: or bomb the factories producing the same or substitute supplies. That is economic warfare from export control to strategic boMbing, Some of these measures are taken concurrently. All are interreaate4 and umtual4 supporting. There are other measures ulth economic objec- tives, including pe7ohological warfare and subversion4 dittaffectien and Sabotage by dissident groups in enemy industrial areas, And tieral,ly 1.8 - Approved For Release 1999/0 9744,...%1A-RDP69-00642R000100070001-5 Approved For Release 1 9atapLiCIA-RDP69-00642R000100070001-5 there is counter-economic warfare - the prevention or the detection and frustretion of the enemy's efforts to interfere with our overseas trade or otherwise impair the economic support of our war effort. B. Control at the Source /- 1. Export Licensing,0 Export licensing is usually the first measure of economic sanction or economic warfare to be invoked by a nation, for the reason that the implementation is entirely within its own power. Most other measures involve negotiation with other nations. Furthermore, export licensing may be and actually is employed to con- serve supplies needed for the domestic economy or national defense and does not necessarily imply a sanction against any other country. Export licensing may be administered on a selective basis as to the coarodities to be controlled, and as to destinations and consignees, or there may be embargoes or limitative controls by categories of commoditiea to all or certain areas. In peacetime or in the period preceding the outbreak? of yaw, the controls are usually instituted on a selective basis. In war- time, of course, all exports to the enemy are embargoed, some coesmdities are embargoed to all destinationo, materials in short supply are alio* eated among allies, minimum essential civilian supplies are rationed to neutrals, and non-strategic items in ample supply are uncontrolled ex- cept as to enemy destinations, or are controlled under general licenses. In any event, the intelligence support required draws on the entire field of international trade, oriell major categories of commodities, and on politico-economic intelligence as to all areas, but especially on intelligence as to deficiences of the enemy or probable enemy, Approved For Release 19,pfor9141,7::?PIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 telligenoe is required for export licensing policy, programming, des termination of the ertent of ccotrols? and the fixing of quotas* Ine telligence is also required for the processing of the individual li- cense, especially intelligence as to intermediaries and the ultimate consignee* This includes not merely checking againet watch lists but poeitive intelligence as to his acceptability and also as to the ulti. mate end-use of the material. A vigorous and aggreesive intelligence support is required for the enforcement of controls tad the apprehension and treatment of vio1ators0 The burden of the intelligence support is more onerous in the case of the selective aeproach than in the cate- gorical classification becalms of the necessary refinement of technical definition, process, and endeuse, as well as the inveetigation of the consignee and end-use of the materia14 20 IeplEt_lAcensints Import licensing may be used in the exerciee of prsseures on aad iniunements to neutrals in connection with the negotiation of mar trade agreements mad coppeiniticet in other respects* It mme,also be used to rapplesent and reinforce the controls of enemr exports, by denying licenses for the import of commodities any part of which is of enemy origin* It may also supplement foreign exchange cone trols in conserving or controlling US dollars* Perhaps the most inpore tent use of import licensing, however, is in the conservation and alloe cation of shipping space, but this objective is, largely outside the field of eommedmmarfare4 The nature of the intelligence support required for inport licensing is very similar to that repine' for export licensing ieee as to international trade, various commodities, and the political Approved For Release 1999/09/07 ;,,pIA-RDP69-00642R000100070001-5 u Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T N? and economic situation in the exporting country and in the country of origin, if it represents a reexport. Commercial intelligence is also required as to the consignor instead of the consignee as in the case of export licensing. 3. MAL_Tra_jehgreements with Neutrals. This represents in some respests one of the most important areas of economic warfare because, when satisfactory agreements can be reached, they may fdr- nish the basis for export-import licensing, limitation of exports to the enemy, compliance with the navicert and ship warrant system, supply-purchase agreements, and other cooperative relations consistent with neutrality. The negotiation of war trade agreements requires intelligence as to the neutral nations o production, imports, consump- tion, and exports of the prinpipal commodities, in order that import ? quotas may be agreed upon, against which all export licenses and all approved navieerts may be charged. In addition to this, estimates are required of the current political and economic situation of the country. #quired is biographical intelligence regarding prcminent:Persons '....101/1404-: in trade and Industry and the leading political per$Onelities, especially those engaged inthe ?negotiatione. 4. Preclusive Buying._ Preclusive buYing requiretthetame types of economic reporting and intelligence estimates is are required support of export-import licensing, negotiation of war trade. :'agree and in the administration of the nevicert system. -requires current intelligence as to market fluctuations In adclit Ion it and the,':oper- ations and manipulations of .enemy purchasing agents and black operators. It also requires estimates of the feasibility. of Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 buying programs, including projections of the effect of such programs, lest they defeat their purpose by stimulating more and more production to be precluded at higher and higher prices. In general, preclusive buying is a useful measure only in situations (a) where it is combined with an agreement to limit production and to prohibit export to an enemy or potential enemy and (b) in mopping up individual non-recurring pockets of strategic material which cannot otherwise be denied to the enemy, The experience of World War II Shows that "a general program" of preclusive buying defeats its purpose by stimulating an increase in production of otherwise uncontrolled supplies available to the enemy. Prevention of 1. laglAimed LAding_m_tuallguns, In peacetime, persons on a Black List or Watch List may be denied export license or may have funds blocked, as was done prior to US entry into World War II. In wartime, persons on such lists are re- gar ed as enemy nationals. They become untouchables, No allied national can trade with them, and if they or their property come within allied control, they are subject to seizure, The threat of postwar reprisal in trade also hangs over their heads. The US "Proclaimed List of Certain Blocked Nationals" published first by Presidential proclamation 17 July 1941 was a list of (a) "certain persons deemed to be, or to have been acting or purporting to act, directly or indirectly, for the benefit of, or under the direction of, or under the jurisdiction of, or on behalf of, or in collaboration with Germany or Italy or a national thereof." 22 - Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 c Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T (b) "certain persons to whom, or on whose be- half, or for whose account, the exportation directly or indirectly of any article or ma- terial exported from the United States, is deemed to be detrimertal to the interest of the 25X6 national defense." In World War I from Jan 1918 to April 1919, 127,000 reports were digested by the Bureau of War Trade IntelligenceV The sources of these reports were identified as follows: Censorship 40%, Foreign Service 30%, and Miscellaneous 30%. Ne comparable statistics are available as to the Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 World War II experience, but there is evidence that the percentage distribution was similar, and the vole, of course, vastly greater. At the present time several "watch lists" are maintained within the US Government. The Treasury Department maintains a "Consolidated List of Designated Nationals, including Specially Designated Nationals;" the Defense Department has a list of firms to whom overseas procurement contracts are denied; the Commerce Department maintains an "EXport Screen," pepularly known as "Watch Lists?": the State Department main- tains a "List of Registrants" in the Office Of Munitions Control, and a Visa List in the Visa Division. The CIA mAintains an extensive Biggraphical Register and Industrial Register, which are valuable for background and more extensive development of cases, and a Current Reference Section in ORR/DE; all of which support the several lists maintained within the Government. The Administrative Action Panel (LAP composed of representatives a the interested agencies, provides a mechanism by which information win be eoordinated to provide uniformity of action in placing names on V their respective watch lists; where such uniformity is practicable. (See p and App. III - 12) In the event of war with the Soviet Union, it may be assumed that blacklists will attain even larger proportions and their maintenance pre en't serious problems in intelligence and in administration. The ? 24 ? 44-c -T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1C S-E-C -R-E-T fifth column of fellow travellirs in many countries will result in the addition of many thousands of names. The problems of intelligence support and administration of black- lists are so great, in fact, as to warrant consideration of "White Lists" instead of blacklists. The navicert and ship warrant system is essen- tially based on the principle of the"White List," as are most of our licensing systems in both domestic and international affairs. The burden is on the licensee to prove his good faith in a number of under- 25X1C takings, including in some circumstances the giving of bond, s-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T 25X6 2. Financial Measures.. In general the objectives of financial measures in economic warfare are (1) to interfere with enegy's foreign trade (2) to prevent the building up of enemy external financial assets, (3) to vest or sequester such tweets as exist or (4) to immobilize them by preventing their transfer between different centers, and (5) to bring financial pressures on neutral nations and their nationals. These ob- jectives may be accomplished by the control of foreign funds and other transactions controls; assets; by foreign exchange controls; the export and import licensing of gold, silver, and currency; the mainipulation of foreign markets, eeg., the dumping of gdelor silver on foreign markets where the enemy is selling bullion or specie for the purpose of procuring foreign ex- change; and by the granting or withholding of credit, exchange facilities, and insurance protection to neutral traders. To support these operations, there are requirements for estimates and avalyses of the fiscal position, financial resources, aad monetary systems of enemy and neutral countries; observation and interpretation of clearing balances between enemy and neutral countries; analysis of international cartels and other international corporate and financial relationships; and examination and analysis of inventories of foreign 7 26 - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 e-e.eCee-E-T 25X1DGN 25X1C Approved For Release 1999/09/07_: CIA-RDP69-00642R000100070001-5 MO. 11.1* ????? .11?Nla 4=110 P. funds and other foreign assets. There is also a requirement for the evaluation, interpretation, and analysis of financial information in censorship subnissionm, foreign publication interrogations, and other sources of current information with special reference to evidence of "cloaking" and other OVEIBione and violations of the exchange controls. 3. FreventienA.2Facam. ? The prevention of the smugglinb of industrial diamonds, Platinum, quartz crystals, mics1 certain drugs and other highly strategic items of small bulk was one of the most difficult problems of the allied economic warfare agencies in World War II. The effort was made to control at the source the production and sale of strategic items susceptible to smuggling. Where possible, agreements were negotiated with the producing countries whereby the entire output was to be sold to the US or its allies. NOvements of suspected black market operators were carefully watchedby undercover operatives. Black market prime were wutched as an indication of the presence of buyers. It vas noted that prices rose sharply when certain neutral ships put into port. This led sometimes to interception and search of the vessels and seizure of the contraband. Few vessels were given a thorough search at control ports and even when this was done, it was difficult to discover email iteme in the absence of clues. In addition to these eources, there is a requirement for foreign service reporting of market fluctuations, especially in the black market,' and of transshipments, diversions, irregular movements, and other evasions of the controls. Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 ? .11, MU+ 40. 25X1C Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 4o? .Pi,....:......21eveof toso The primary purpose of tor. trol of the enemy's exports is to deny him foreign exchange.' The in.. telligence required includes analyses of the normal peacetime export channel and the effectiveness of the measures adopted to close theme the requirements of neutral nations *doh were formerly met by Laporte fro the enemy and the feasitAlity of supplying them from allied seurces in consideration of the interdiction of the former trade; and analysis of proposed neutral exports to determine those which, or any parts or components of which, are of enemy origin, in order that pavicerta may be denied. Censorship submissions gem" ewe 25X1 D clue to enemy exports. The difficulty in controlling enemy exports to contiguous neutrals, however, is that the negotiations looking to the export and the financial transactions in connection therewith do not /come under surrsillancstor control except to a limited extent. D, Prevention of Transport He come now to the principal weapons in the arsenal of economic warfare - the =Acerb, the ship navicert, and the ship warrent - the instruments of the *paper blockade." It is in fact a paper blockade. It depends for its effectiveness on political End economic pressures and inducements as set out else:severe in this study, and of course, as a last resort, on enforcement by and naval power. But its extent and effectiveness are far greater than could be achieved by physical enforcement alone. 40, ow. ???? 400 ?iwei Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 DialliCartS are In essence commercial passports. It is interesting to note that the navicert was invented by the AmerbuniConsul General in London during World War I; its purpose was to facilitate American exports during the period of neutrality* The British instituted the navioert device early in December 1939, and made it compulsory in July 1940. All uneramicerted shipe and cargo vessels were subjdet to seizure'. The ehip navicert, as its text indicates, wee given when all the item Of the manifest had been navicerted. It permitted a ship to make a single voyage through naval oontrole. It provided a description of the ship and its proposed itinerary; a list of its officers, crew, and passeagers; a description of its cargo, slip stores, mail, and money; an acqount of the source and destinations consignor and cone signal* When an application for a shiple navicert was received, the crew and passenger lists-were checked and a requirement made that objectionable persona be removed1 if the Anericans devised the navicert, it was the British who invented the ship warrant* A ship warrant entitled a ship to the use of British and Allied port facilities N.. bunkering, ships stores, re- pairs, etc. To receive a warrant, the owner agreed that no vessel awned or controlled or operated by him would sail to or from the navicert area without a ship navicert; that he would not sell or part with effective contra of any veesel awned by him without the approval of the Ministry of War Transport; that he would not employ my enemy company for the purpose of obtaining insuranre or any other facilities; and many other amements. In addition, fleet owners were required by the British to Approved For Release 1999/09/07,.: Q4AsIRDP69-00642R000100070001-5 " E T 25X6 Approved For Release 1999/09/07 dIA-RDP69-00642R000100070001-5 chortler to the Minietry ?flier iraneport a portion or their fleets All of this constituted the price which the British put an the port facilities which they owned or controlled. It is claimed for the alit', warrant system that it in a pure commercial bargain and avoids all questions of international law or oven of dal:acrostic discussion. After the US entered the war this country* was associated, of course, in the ship warrant system and in fact cooperated during the period of "aid to Britain short of war". But it was the global chain of British ports that made the ystem most effective. The intelligence support required for the administration of the micert and chip warrant system and tale control of enemy and neutral chipping requires first of all intelligence as to the movements of tinmy shipping and the movement of all ships carrying unnericerted cargo and all blacklisted ships, i.e. ships not having a ship warrant. Close liaison must be maintained with the Maritime Commiasion and uith commercial shipping information services. In addition to intelligence regarding voyages, the administration of the navicert system requires all of the economic intelligence re- wired in the administration of export licensing. As the export licensing would control the export of materials from this country arA 30 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 from allied countries, so the navicet.t system would control the ex- ports from neutral countries, and the Lyame intelligence as to aommod- ities? requirements, production and trade would be necessary* The administration of the ship warrant system requires detailed intelligence regarding port facilities - allied, einem, neutral - around the globe. This is neoessary to know those facilities that are available and those that are not available to enemy and blacklisted neutral ships. Estimates are required of the possibility of *block- ade voyagee in the light of refuelling facilities and other factors. E. MIllau Measures. 1, General. Military action as a weapon of economic war- fare denotes the use of the armed Xorces to deny to the enemy concoct- ities required for the prosecutiou of the war. This action is directed (a) at the disruption and destruction of the enemy's! transport by all or of blockade and (b) at the disruption and destruction of enemy industrial power by strategic bombing or other military attack on economic targets. Obviously, these measures frequently serve immediate military objectives as well as economic warfare objectives, as in the case of the capture of a port or other strategic tratugmlation gate- way, Thiel should occasion no conoroversy? however, as to whether a particular measure or operatim is military or economic wrarfare. The ultimate objective of all economic warfare is to support tbe militery objective by the strangulation mad attrition of the enemy's economy., and as stated above, economic, d.1itary, psychological End political weapons maybe employed. And it is axiomatic that military operations - 31 - S-E-C-R-E.T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1 91994)/MT IA-RDP69-00642R000100070001-5 are not an end in themeeleves but an instrument of national policy. Military operations in support of economic warfare, by sea, lends and air, are necessarily controlled and directed by the military an the basis of operational factors, but much of the intelligence on which they are based and the desired order of priority of targets are matters of economic warfare. 2. pistio.m.n....andDestructlonof Ene Trans_L.ort. This in- cludes (a) air and naval patrole (both surface and submarine), inter.. caption, and blockade, and (b) attack on strategic transportation tar- gets, by air, land, or sea. It is the former that we are concerned with,primarily in economic warfare not only because of the importance of the actual phynical interception of contraband shipping, but even more so because of the fact that an this ultimate physical enforce- ment depends the effectiveness of the whole system of the 'paper Wock- aden. The intelligence required in support of the military blocklde includes that previously outlined for export licensing. In addition there is a requirement for technical information as to anew aad neutral shipping, including identification* speed, fuel capacity* etc. As it is probable that nothing in the ship's papers of a blockade rummy -ter indicate its destination and that nothing on the manifest of un- navicerted ships will indicate the contraband character of are, of tilt cargo, there is a requirement for covert intelligence as to therv covert shinments. 3? ap.p.tiz_ru on and Deetr....,:dust7 1.....tow addition to all of the basic intelligence regarding evoy capabilities and vulnerabilities in certain industries and the desired order of priority of economic targets, such, as electric poser plants, petroleum Approved For Release 199910002 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T Approved For Release 1999/0970r:: CIA-RDP69-00642R000100070001-5 mfineries? munitions factories, synthetic rubber plants, or trans- portation gateways, there is a requirement for evaluated information RS to the specific installation* including: a, Location of target, and identifying infor- mation as to nearby atlas, industrial instaD- lations, housing, railroads, rivers, mountains, and other terrain features. 25X1B b, Physical description of plant and points of vulnerability, c. Administrative information, including owner- ship, government agency having authority, and names of key officials of the facility. d, Labor force, including numbers employed, work shifts, nationality, skins, percentage of forced labor, conditions as to housing, food, aid other morale factors, f. Importance of this facility as determined by its contribution to the industry aggregate, by the distribution of its nroduct, and by the dependence of other facilities an this source, g, Possible importance of this facility to US and allied occupation forces, in the event of occu- pation of the area. h, Appraisal of the effect of bomb damage. In addition to the intellirenee as to individual facilities, there is a requirement for similar intelligence as to concentration of such strategic targets. This is required for area attack either by high explosive or atomic weapons. - 33 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1?1$910XUT CIA-RDP69-00642R000100070001-5 F0 Other Measures 1. General. The foregoing represent the principal measures of economic warfare, but they are not exclusive of others, which may, in a given circumstance, be of great effect. Among thase are psycho.- logical measures, sabotage, and a variety of activities to plague and confound the enemy and his friends, Examples of the laat category are the dropping of counterfeit ration cards over enemy territory to confuse his rationing system, and counterfeiting his money, 2. Promotion of Subversion and Disaffentioa in Enemy In- dustrial Areas. Just as military operations maybe directed to ec- onomic objectives, so may psychological mempons be araixiered in support of economic warfare, Pmpaganda maybe directed to., certain industrial areas and individual facilities in coordination a?th tary, economic and political strategy. The intelligence requimml in the selection of targets and in the choice of psychological amwation would include reports of conditions and incidents in the area csme.erned, evaluated against a background of knowledge of political, sociolog:oal and economic factors, 3. ELLStbtatat.......Esemjazlies_ and InstaUations, Sabotage will ordinarily be the work of forced labor, dissident groups and in- dividuals in the enemy country, and reaisting patriots in the satellite and occupied areas. Sabotage is no longer as simple as the throwing of a shoe in the machinery, but :may be a highly technical and comp- licated operation. Intelligence estimates will deal with the feasi- - 34 - s-E-C.R.EiT Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 -T billty and probability of sabetage, the anticipated effects, and the requirements in material and supplies fax the operation, Collpter Economic. Warfare The enemy?s economic warlare riLt. probably fall into these major nategoriesg (1) Hls efferts to disrupter impair the economies of the rree nations by. the sudden termination or threat ef termination of their trade with the Soviet bloc This can best be countered by the avoidance of depend- eney. on the bloc either as a source of supply or as a market. To the extent that such trade is permitted In peacetime, efforts shoued be made to develop alternative eourcee of supply and aeternative markets for the tommodities traded. (2) His efforts to no cite favorable war trade agreements with neutrals. The competition with our own efforts to do the eame thing will be a battle of di- plomacy and economie pressures. (3) His infiltration and sabotage of the productive capacity of the free natione. Counter measures against this are the responsibality of the Departments of De- fense and of Justice, and of industry itself. (4) Bleokade or allied or neutral ports, especially seme in the Far East where he may have the capability ef doing so, The countering of this measure will be the responsibility of the Department of Defense, but economic. warfare intelligenee will be useful in developing di- versionary routes and alternative sourees. (5) Military attack on our sources of supply and trans- port of war materialse The defense against this is also the responeibility of the armed forces. Foremoet among the measures te offtet the effect of the enemy's aeonemic warfare is our 3tocitptUn,g program, but this is a part of our industrial mobilization pregram and the responsibility of other agencies. Tee ecoromic wafare agency, however, and partieularly the intelligenee element eau be c-2 great assistance in studying the enemnOs ;5 3 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/01.;AperDP69-00642R000100070001-5 economic warfare in competitive buying and in his embargoes and blockades. The countering of these measures is primarily a problem of procurement, but where they involve the techniques of economic warfare, the economic warfare agency can be of assistance to the procurement agencies. A valuable study on "The Nature of the Policy and Tactics of Soviet- type Economic Warrant 1949-1952" was prepared by the Economic Defense Staff of the Department of State in October 1952, and a National Intelligence Estimate (NIE 10-54), published in March 1954 dealt with Soviet bloc capabilities in economic warfare, the vulnerability of the free world to economic warfare measures, and the probable courses of action by the Soviet bloc in this field? -36- Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 STATSPEC s-rea-a-,E4 IV. THE INTELLIGENCE PROCESS IN ECONOMIC WARFARE A. Collection 1. Sources Available in Peacetime ? a. International Economic Organizations. Comprehensive international statistics on production, consumption, domestic dis- tribution, and international trade, if such were available, would be first on the list of materials to be exploited for economic Warfare policy-making and planning in peacetime. It has been said, in fact, that the complete and uniform reporting of such data by all nations would have tended to prevent wars by indicating warlike intentions. This ideal of statistical compilation, however, has never been attained. The lack of uniformity in reporting and other deficiencies have long plagued economists. This was true even when there was the best of in- tentions. It has been greatly aggravated by the recalcitrance and secretiveness of the Soviet Union and its satellites. Nonetheless, to the extent that such data are available in the United Nations and other international organizations, and in international cartels and study groups, they constitute an important source. b. Central Intelligence Agency. Exploitation of domestic STATSPEC sources of foreign intelligence, covert collection overseas, - all important sources of economic war- fare intelligence - are among the services performed by of common concern to all intelligence agencies. CIA is charged by statue with - 37 - Approved For Release 1999/Q91017-Whar-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S -E-C -T responsibility for correlating all intelligence relating to the national security and with making recommendations to the National Security Council for the coordination of intelligence activities. Frequent references to its functions appear throughout this report and especially in Section V on Organization. The Director of Central Intelligence is the Chairman of the In- telligence Advisory Committee, under the aegis of the National Security Council, and CIA furnishes the chairman and the secretariat of the Economic Intelligence Committee and of the Economic Defense Intelligence Committee, formerly the Intelligence Working Group. In economic re- search, CIA has cognizance of the Soviet bloc. Its current intelli- gence is on a world-wide basis. Among other important services it publishes the daily and weekly Current Intelligence Digest and pro- vides special situation briefings. CIAlis facilities include, among others, the Industrial Register, the Biographical Register, the Graphics Resister, the Foreign Documents Division, and the CIA Library with its Intellofax System of indexing, digesting and filing intelligence docu- ments. CIA coordinates and supervises the publication of the encyclo- pedic National Intelligence Surveys. It has extensive geographical in- telligence resources. Of particular interest for this report, it has a small unit - the Economic Defense Division - which supports the EDAC agencies respon- sible for the strategic control of commodities and services, and also - 38 - Approved For Release 14**542/121 CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 provides current intelligence required especially by the Diversion C.ntrol Net and the Administrative Action Panel to which reference is made in Section V. The following paragraphs suggest the vast resources of intelli- gence material pertinent to economic warfare in the various governmental and other agencies. While baoed in part on the CIA/OCD survey of "The Primary. Economic Information Interests of Certain Government Agencies. (1951)1 it does not purport to be congas) but is merely suggestive of major areas of interest. C. State DemArsqnt. The periodic and special reports of our foreign service fficers are the most fruitful sources of intelligence for ea nomic defense operations and economic warfare policy and plan- ning in peacetime and a valuable source for operational intelligence,* in wartime. Economic Defense Officers (MOO have been designated at the principal posts overseas and peripheral reporting officers at appropriate points. In wartime the geographical area of direct foreign service reporting te_reduced by the recall of our representatives from enemy countries and by somewhat restricted opportunities in WM nem- tral countries. Quantitatively, the intelligence for econmnic warfare purpoaes from foreign service reporting officers in wartime is much less than that from censor 25X1D ship, and other wertime sources. The Economic Manual t A Guide for Reporting Officers in 39- S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 the Foreign Service of the United States" is an excellent and compre- hensive statement of economic intelligence requirements for all:pur-. pose*, and 60 organised as to be of great use in economic warfare re- porting. The Department has cognisance of economic intelligence research covering non-Soviet areas. It publishes "Current Economic Developments" (bi-weekly) and "Current Foreign Relations" ( and Soviet Affairs (monthly.). The Office of Intelligence Research (caR) and the Office of Libraries and Intelligence Acquisition (OLI) provide the noWns for processing intelligence within the Department0 d, prejitaandiat Afts.g:tut_mi.u___Artr, The Foreign Operations Administration is concerned primarily with assistance to friendly nations. Its information regarding countries receiving aid is tempt, lanantary to that regarding the Soviet and satellite countries irk- cluding some of the most prominent of the prebibIe neutrals? The _statistical and other economic reports contain much intelligence of iMport in economic warfare. The FOA does liOt have an intelligence division as such, It does have a Research, Statistics and Report. Dijeigicii4 but its eeenomi4 analysis in Washington is largely integrated with the work of the various !Unctions' divisions. In the Us Roglotal Office at Paris, a small staff is maintained for the collation of =- Omni* dgfense intelligence and the coordination 0 *venom/4 defense operations in Europe. Approved For Release 1999/6/67 : CIA-RDP69-00642R000100070001-5 s-E-c-R-ErT ApproOrmffainsPeigilkoiertiAtitibm_66talowatiorotpn5 of the Nbtual Defense Assistance Control (NDAC) Act in the Director of the Foreign Operations Aaninistration, in harrow with the foreign policy direction of theDeperbment of State, This has to do with the international program of security trade control. Calateral with this is the domestic program of security. trade control, represented by the rt Control Act, administered by Department of CotMerce. The former program is coordinated through the Econonic Defense Advisory Committee (MAC), and the latter through the Advisory Committee on Export Policy (ACEP): These two committees are intact winbeel,=king directorates, ft coordinated at the vorking level by the daub Operating Comattee. A nuMber of working groups, under the EDAO Executive Committee, provide for interagenayconsideration in connection*Lth their respective functions. Of speelel interest for the purpose of this study is the Intelitgence Working Groups which is discussed ter- therle(SeationV4-60 040.41 4 _ - -ea The Armed Forces. Each of the armed forces main .mormementmemntervreVnt.11.... tains attaches attached to the DS diplomatic missions. They report primarily= subjects of special interest to their reepective services, but also make economic estimates. The Intelligence Division of the Army. (G-2) is interested in intelligence required for logistical oper- ations, plannieg for civil affairs, administration in the moupied areas, and in economic uarfare. The Industrial College of the Armed Forces includes Economic Warfare in its curriculum. Infect. the study of economic warfare, as such, had its genesis in the DS in the In.. dustrial College in 1940. The Office of Naval Intelligence (ONI) is interested in these subjects and particularly in ehip building, port - Approved For Release 1999701/brtIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 facilities and related subjects., Air Force intelligence (AMIN) is interested particularly in target information for strategic bombing, and its Strategic Vulnerability Branch has done extensive work in this field0 f. istmrtnter_Simmq. The Department of Comnerce is of outstanding importance in economic intelligence, Its Division of CommerCial Intelligence publishes the World Trade Dirmetonrindmain- tains the &port Screen (Watch List). Foreign service reports, espes- Jelly thoee of the commercial attaches, are available to all depart- ments and in the Deeartment of Commerce are the Oasis for oommodity, imdustry, and regional economic studies. While these studio* are primarily for Us benefit of US industry, theyere of great,valie in economic warfare. The Bateau of Foreign Commerce, especially in con- neetion with the administration and enforcement of exert'cOntrols? the Civil Aeronautics Administration, the Office of Technical Services, The Patent Office, the Bateau of Standards, the Maritime Administration, The Weather Bureau, bureau of Public Roads, the Bureau of the Census), and US Coast and Geodetic Surveys, -- all have a signifidant tiontii- bution to economic warfere intelligence? g. .2gMsit_.tr_bgrlienillm. In the Department of Agri..; culture, the Office of Foreign Agricultural Relations, and other units have furnished basic studies and current reports on agrioatural commodities and on agricultural conditions in foreign areas. Approved For Release 1999A9TEiflA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 plpartmTt of Justice. Because of its interest in international cartels, the vesting or sequestration of foreigi.. owned assets, and other matters ratted to economic warfare, the De- partment of Justice maintained in World War II an Economic Warfare Division. Since that time the Office of Alien Property has been placed in the Justice Department and in addition to the administration of control or -vesting of alien property, handles all litigation growing out of toreignfUnds program of the Treasury Department. The Federal Bureau of Investigation (FBI) rendered valuable assistance in World War' II especially in 00311390.1022wLth detection of smuggling operations and other violations. The lamigration and Naturalization Service, charged with the admission, exclusion, and deportation of aliens, and their registration and finger printing, vas a amerce of biographical intelligence =deem= of the discovery of sources for investigation, atertment of Interior. Minerals represent the ,largest category of strategic naterials, and the Bureau of Mines? and the US Geological Survey have been sources of much of the basic material. The mineral attaches in oertain diplomatic missions have furnished much of the current information csamatial to economic warfare operations regarding minerals, fuels, power, and water resources. - 43 - ?:1E-cnEEI Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release msg,4292T: CIA-RDP69-00642R000100070001-5 N A.T.F.e.itmaar........tment. The Treasury Department was the first agency of the Government to implement an economic warfare measure inlicubldWar II, or, more properly; to apply an econonic sanc- tion, since the US was not at war at the time* This was the freezing of the assets of Norway and Denmark in April 1940 and the extension of the order in June and July 1940 to the Axis countries and the European neutrals, While this was for the purpose of protecting the interests of rightful owners of these assets from Nazi exploitation, item also impressed with economic warfare considerations* From that time on the Treasury Department was actively interested in the implementation of economic 'warfare measures .through its Foreign Funds Controls and the Bureau of Customs, and in intelligence through its Ihnetary Research Division* It has statutory mOhnirity? for foreign assets control nudism, the authority of the Trading with the Enemy Act* The Office of Inter- national Finance collects and analyzes current information concerning economic policies and positions of foreign countries, having ,a, bearing an US financial or monetary policy. k. Federal Reserve System. In intelligence support through its Division of Research and,Statistice and Division of Inter- national. Finance, and in implementation of foreign exchange controls through member banks the Federal Reserve System also has apart in economic warfare. Department of Labor. The Bureau of Labor Sta- tistics prepares studies of labor conditions in foreign Countries, based in part an reports of labor attaches abroad* Approved For Release 1 dbtigkOW :-CIA-RDP69-00642R000100070001-5 Approved For Release 1999/19Wi9IA-RDP69-00642R000100070001-5 140 Tariff Commission. Because of the emphasis on inter- national trade and world wide commodity atudies? many of the reports and analyses of the Tariff Commission are germane also to economic warfare, The National Archives aad Records Service is the repository of a vast store of official documexts and records, in amazingly available arrangement when the quantity and diversity of the material are considered, The Department is engaged in the pmearation of a series of ? handbooks of records of World War II that will make these records even more serviceable. .0.0 Other Aglasies. The foregoing list ts not intended to be exclusive of a number of agencies, some of them very closely fled with economic warfare, but otherwise than in intelligencv support, for example, the Office of Defense Mobilisation and the Bureau of tLy Budget in connection with mobilization planning and organization; the General Services Administration in the implementation of preclusive buying; tie Export-Import Bank in financial intelligence and in the negotiation of ? foreign loans; the Federal Communications Commission in international telecommunications; the Department of Labor in its Office of International Labor Affairs; and the various wartime agencies, notably the Office of Censorship, an important source of economic warfare intelligence in wartime discussed elsewhere in this study. - 4 ? Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 SE-C-R-E-T p. Library Material. First among the sources of library material is the Library of Congress. In addition to its min un- equalled resources9 it publishes the "Library Reference Facilities in the Area of the District of Columbian covering more than two hundred general and specialized libraries. These facilities and in- deed the resources of the research libraries throughout the nation may be tapped through inter-library loans. The Interdepartmental Committee for the Acquisition of Foreign Publications (INDEC) pro- vided much material for research analysts in the field of economic warfare. The Foreign Documents Division of CIA has done and is doing a vast amount of translation and analysis for this and other agencies. q. Private Foundations. ScientifiC Aseociations and Economic Studs,' Croups. The Rockefoller Foundation, the Ford Foundation. the Carnegie Endommt for International Peace, the Brookings Institution, the National and American Geographic Societies, the various engineering, scientific, and professional associations, the American Economic Associ- ation, and international commercial study greups such as the International Rubber Study Group and the International Tin Study Group, and research centers at various educational institutions, many of them under government contracts, - all are invaluable sources of basic studies and current information. The list is intermled merely to suggest many other organi- zations of which these are typical. Some of them sponsor research pro- jects of considerable scope and depth, some organize special missions and Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 3-E-C-R-E-T %OM Mib MOM [1-3 TATSPEC Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 expeditions, some conduct institutes of International affairs. The published and unpublished records or most or them yield valuable material to the economic warfare analyst. r. Forelosd_casts. In World War II the Radio Unit of the Economic Intelligence Division in the Board of Economic Warfare processed reports and transcripts of foreign broadcasts. These broadcasts were monitored for the most part by the Federal Communications Commission, the output at times approximating three thousand pages per day of monitors' reports and transcripts, in addition there was an exchange of selected material with the British Broadcasting Corporation and other allied sources. Only a small portion of the broadcasts contained information of value, but the potential significance of that small portion was frequently very great. It required a vase amount of winnowing to separate the grain from the chaff. Evaluation and interpretation were very important. For example, the theme of the propaganda to condition the public mind might be an indication of a erebahle course of action. It is also freouentiv necesRArv to hroadcasiti official announcements to the people even at the calculated risk of its disclosure. . q litNets anmdAillzt_ace_Versons. Never before in h $ ory have there been so many displaced persons in the world as the millions - 47 - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 o4, STATSPEC Nil 25X1C Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 H?1 -13.;.;" fr,s Fal3i and then from Soviet tyrannz. :rola the Baltic states, frorli Polandp Hungary, iabania, from when they ce-old., from the .3ov1et VItiOrk itself, Most of them have to return to aleir homelande now held by the Communists? rtv have resi.steci or ?heaped tue Soviet kidnap gangs which operated in the ilave ral)atrlat'i.on. inong their number are statesmen., scholarsoncietktists, :1Eineern, artist fl lawy(37:11, doctors, rarmers and laborers. Their value ici of intelligence ha 3 bets recognized. They E?re being developed 7och as time End available personnel wial permit. The first intallf_gence 3.0:i.z.ement is as to thf..3e peot.Le themselves, as groups, as types, as LA.d.uals; then the ezbloite.tioni of a, lected sources both for the they have ark' ror what they can acquire, not merely passive .tive intelligence. And not merely intelligence but operations or i..:46ance, of liberatioa. But this is beyond the scope of this study? _ Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1C Approved For Release 1999/09/Orti cL4-RDP69-00642R000100070001-5 U? Firms on4 Tra4eilispciAtins, The foreign economic uy.e:Iligence in the possession of 113 exporters and importers, moulded-mere, engineers, banks and insurance companies, and trade associations is pia?. ticany unlimited. They have traded with or in competition with intfi. national traders all over the world. They have supplied equipment a'Ad technical "kmowhown? for industrial facilities. They have built an operated subsidiaries in many of the leading countries, They have sunducted research into markets, actual and potential. They have financed capftal improvements and commercial transactions, They know the capabilities and vulnerabilities of the major industries and the individual faelities, They know the requirements and sources of essential raw materials, and possible substitutes for those in short supply, The intelligence is there. It is freely available, and yet its adequate exploitation prosene serious difficulties in administration, in collection, evaluation, a:10.'8JB, interuretation and dissemination, - 49 - S-E-C-114-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1 C 25X1 C Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 - 50 - 5-E-C-ErE-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 kfri-A-1-1 2. Additional Sources Available in Wartime, In addition to the foregoing catalog of some of the sources of economic intelligence available in peacetime, important additional sources are available in wartime. Among these are censorship, intercepted messages, interrogation of prisoners of war, analysis of captured enemy materials, espionage and aerial recennais- sance. a. Censors412. As has already been indicated, censorship Is the source of the greater part of current economic intelligence in war- time. The extent to which the principals or agents in illegal or inimical transactions will go in their communications is almost incredible. Some- times, it is due to carelessness or ignorance; sometimes the parties think they have successfully concealed the significance of the message; sometimes they a calculated risk, such is the urgency of the communication: sometimes the information is revealed by collateral reference of innocent parties; sometimes a clue is gleaned from the mere fact of correspondence between certain parties even though a private code is used; sometimes the volume of communications from or to a given source is an indication to an alert censor or intelligence officer of suspicious circumstances. Whatever the explanations, censorship in World War II 10/ spotted a number of targets for the economic warfare batteries74'Amone these were the following:. 51 - S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T Obtained information pinpointing for the Air Force targets of strategic and tactical importance: such as the exact engineer. ing details of the dams in the Rhine area and previously un- known defense being constructed in the Hague Forest of the Netherlands capital. Obtained information concerning strategic and critical materials making it possible to increase allied war production and weaken the enemygs production; one censorship item alone enabled the War Production Board to obtain $25,0000000 worth of much needed textiles; other censorship items uncovered some $2,000,000 worth of dragline dredges, galoshes, cocoa, cattle hair and other diversified commodities. Exposed black market activities. Discovered and reported violations of export license controls: at one time, according to an official of the Foreign Economic Administration, 60% of the eases of vio- lations of export licenses were discovered through censor- hip Aided in preventing the outward flow of technical data. Helped to implement controls of the international transfer of funds: one group of censorship items dhowing how funds had been provided to build up a stock of goods at a Latin American port for transport by a German blockade runners while in another instance censorship material showed that a considerable amount of money sent to the Bank of China was intended for beneficiaries in Japanese-Occupied territory. Assisted in the enforcement of restrictions applicable to the Proclaimed List of Blocked Nationals; one of censor - shipgs greatest contributions in this respect being to supply data indicating that listed parties were using intermediaries or cloaks to mask their activities. Detected commercial transactions which might have resulted in the Nazi obtaining vitally needed commodities. It would be desirable for the Economic Intelligence Committee and the Intelligence dorking Group to direct the preparation of a manual of instruc- tions to censors and to keep it current. It is also important to post Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1 C Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 9-&-C-R-E.T economic intelligence officers in the principal censorship control offices. Even so, with the vast volume of material handled, it is not feasible to be too discriminating in the first selection as to what may or may not be of value to ecommic warfare. Accordingly, a unit in the latter agency must further selieen and analyze the material and prepare copies or extracts or digests for the interested branches. Thousands of these are handled dailye c. fispAtitel.Jasy Materials. From the beginning of World War IT, and in fact in the period between the wars, the British had made careful technical examination and analysis of German material and supplies and found it an important source of intelligence regarding the enemy ,s supplies of raw materials, his use of substitutee, manufacturing processes, technical innovationsond other factors in production. It was not until 1943 that the Economic Intelligence Division of PEA undertook similar activities with regard to Japanese materials. Prior to that time the War and Navy Depart- ments had been examining enemy material primarily with a view to determining the military operational potentialities and limitations of such equipment, 5-E-C -R,E,T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1B Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 and the possibility of any improvement that might be introduced into our own design. This work is now directed by the Joint Materials Intelli- gence Agency (JMIA) in the Department of Defense. 25X1B do Prisoners of War. While the first objective in the interrogation of prisoners of war is to extract information of immediate military signifi- cance, it is also true that many of them are possible sources of economic intelligence of great value. Due to lack of coordination and sometimes cooperations the economic intelligence agencies in World War II had only 12/ limited opportunity for interrogation of prieoners of war7-"In 501219 theaters, however, notably at New Delhi, where the Combined Services Depart- mental Intelligence Center (CSDIC) was organized, very important results were achieved. A valuable aid to intelligence officer ss whether economics military scientific, political, -- would be an Economic Interrogation 54 S Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S=ECRE=T Manual kept up to date, and classified not only by industries and regions, but according to the experience and competence of the type of individual being interrogated. e. Covert Collection. Covert intelligence in World War II was the responsibility of the OSS. In this as in so many other respects there was for a time an unwillingness to make the intelligence available to the Economic Intelligence Division of FEA. After FEA took proper security measures, however, the economic intelligence obtained through covert means was made available to them. Since the establishment of CIA, with responsibility for this type of intelligence collection overseas, this is a valuable source of voluntary reports as well as reports in response to specific economic intelligence requirements, and should be given high priority, f? Aerial Reconnaissance.. Great progress wat made during and after World War II in the development of aerial photography. The new techniques of making mosaics and the specialized Skills in interpretation have greatly increased the value of this intelligence especially for economic purposes. It is frequently possible to assess with fair accuracy new industrial developments, the extent of industrial activity at a particular facility, the nature of bemb damage, condition of agricultural crops, congestion in transportation gateways, and character and direction of transportation movements. 55 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T The Graphics Register in CIA contains a large collection of photo- graphs and motion picture films collected in both peacetime and wartime, covering areas and subjects of intelligence value in economic warfare. Intellofax tapes, giving abstracts of the content of films, and machine listings of etill photographs, covering various subjects and geogr-phies1 areas can be supplied. B. Productionc, Having considered, in barest and suggestion, k the requirements of economic warfere intelligence am. the sources for collection of the information on which it is based, it is in order now to look at the methods of processing that information into intelligence.. Again, as in the case of the requirements and the sources, it is to be noted that, in the event of actual war, and even now with the accelereting tempo of the economic war, significant changes will be necessary in the processing and production of the supporting intelligence, Now, more than ever, time is of the essence. Comprehensive treatment of the subject, the manner of organization and presentation, perfection of style, complete coordination - all always desirable - are less important now than speed,? the greatest possible speed in distribution to the. usine agency consistent with accuracy of the evaluation and soundness of the estimate. The steps in the processing of information into intalligence are usually identified somewhat as follows: classification, indexing, synthesis, analysis, interpretation? evaluation. The steps frequently eccur in that order, although, of course, not necessarily so. Evaluation - 56 - SE-GR-ET Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1D Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 s-E-c-R-E-T and interpretation may be necessary at various stages in the process from the source to the finished product. Classification and indexing have a much greater significance in economic warfare intelligence than these words usually connote The claesifying and indexing are done not merely for future convenient reference,, They serve an immediate purpose that of matching up the pieces of the jig-saw puzzle into an identifiable intelligence picture. Interpretation and evaluation are both more difficult and more important than in the peacetime process 25X1D And as the uses and the sources and the methods of processing economic intelligence undergo radical.. changes in the transition from a peacetime to a wartime economy? so does the form which the production takes, As stated In the Introduction, while there will be a greater need than ever for reports and estimates, periodical and special, in support of economic warfare policy and operations, there will be an even greater requirement for current intelligence memoranda and spot reports. Quantitatively, these latter fiMmms will constitute by far the greater part of the production - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1s9191694t21T: CIA-RDP69-00642R000100070001-5 Ca Distribution of Intelliglam, The ideal distribution is to deliver as promptly as possible to every analyst all the information he need d nothing else; to deliver to each using agency the intell- igence which it requires and nothing else; and within each agency to distribute the intelligence to each officer who requires it and to no othersa Only the lees important material should be "circulated". Within the agency all reports from overseas, and 25X1D other information requiring action, should be duplicated, or digested and then duplicated, and distributed as fast as received throughout the day and night - to the responsible brenches? with one copy des- ignated as the action copy? So much for the distribution within the Agency. The final product may be no more than this bare message properly interpreted and evaluated. Or it maybe an estimate or a study based on this and many other items and the result of much research and analysis. In any event, the final product should be delivered as speedily as possible to the Agency or Agencies, the individual or individuals, who require it, Then, and not before, is the intelligence process complete? -58- s-E-c-B7E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 Approved For Release 19acanTCIA-RDP69-00642R000100070001-5 - V. ORGANIZATION FOR INTELLIGENCE SUPPORT OF ECONOMIC WARFARE A. World War I 1. General. The purposes to be served by economic intelligence are as numerous and varied as the many departments and agencies of the government which have responsibilities in the economic field. They maybe grouped, in wartime, under four main headings: economic war- fare, economic mobilisation, military strategy, and military occupation. In volume of intelligence required, economic warfare is the largest customer. Prior to World War I and in the period between the wars, economic intelligence was limited largely to commercial intelligence, hydrographic data, foreign service reports, occasional economic reports of the military attaches as a part of strategic intelligence, and published data in sta- tistical year books and similar publications. In wartime, as we have seen, new sources of intelligence are developed and new objectives Served. The experience of two world warn and the present cold war in- dicates that by far the greater mxt of the economic intelligence effort is required for the support of economic defense we of economic warfare. -59- Approved For Release 19?SktitTRIA-RDP69-00642R000100070001-5 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 3. The US Experience. The principal agency of economic warfare in the US in the first world war (although the term "economic warfare" had not been coined at that time) was the War Trade Board. It con- sisted of representatives of the Departments of State, Commerce, Agri- culture, the Food Administration and the War Shipping Board. At the 12/ peak of its activity in 1918 it had 2897 employees? Of these 230 were in the Division of Research (dividedinto Country Studies, Commodity Studies, and Special Studies), 275 in the Division of Tabulation and Statistics, and 409 in the Bureau of War Trade Intelligence. There were thus a total of 914 employees engaged in intelligence Whereas the largest of the operational units, of the Board, the Bureau of &ports, had 599 employees? The Bureau of War Trade Intelligence was largely an intelligence support and liaison organization, serving as the "repository and clearing.- house" for other agencies of the US Government, other bureaus of the War Trade Board, and the embassies of the allied governments in Washington, supporting export-import licensing, blacklisting and control of enemy property. All of the measures of blockade and mar trade control were admin- - 61 - Approved For Release 1Zeffeliet-MIA-RDP69-00642R000100070001-5 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 istered by the War Trade Board. - 62 - SE-C-R-E-T Approved For Release 1999/09707CIA-RDP69-00642R000100070001-5 25X6 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Next 2 Page(s) In Document Exempt Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release mow. : CIA-RDP69-00642R000100070001-5 2. The ullmtrinsit. The succession of agencies -the Administrator of Export Control, the '-;conomic Defense Board, the Board of Economic Warfare, the Office of Economic Warfare, and finally the Foreign Economic Administration (NA), and concurrently with this the Coordinator of Information which became the Office of Strategic 4,4ms Services (OSS) -- tells a sad story of costly improvisation, 25X6 25X6 Both the FEA and the OSS had intelligence and operational responsibilities in the field of economic warfare, but after a period of duplication and jurisdictional disputes, collaborated in the collection, analysis, and application of economic intelligence, and worked out a satisfactory modus vivendi. Economic warfare intelligence in World 'Jar IT began with the establishment in 1940 of a Projects Section in the office of the Administrator of Export Control. This later became a Research Division, with an intelligence Section in the Economic Defense Board. Shortly after Pearl Harbor, the Board (now called the Board of Economic Warfare) Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09407 : CJArRDP69-00642R000100070001-5 divided this Research Division into four geoeraphical divisions -- 15/ Ruropean, nritish Empire, American Hemisphere and Far East:? Each division had an analysis section and an intelligence section. By the end of April 19n2, the intelligence sections of the four geograph- ical divisions were combined into a single Economic intelligence Division. It should be noted that this division was concerned pri- marily with procurement of intelligence. The work of analysis, with or without positive recommendation, was the responsibility of the Office of rconomic Warfare Ana4sis. It should also be noted that BEW and its successcr agencies also had a Trade Intelligence Division which had the responsibility of procuring, analyzing and applying economic intelligence to the export licensing procedure. Following a visit of the Chief of the Economic Intelligence Division to London in July 191.L2 the economic intelligence function was brought closer to operations by making the Economic Intelligence Division a part of a newly organ- ized Enemy Branch.. The functions of the Intelligence Division were 16/ described as followsr- 25X1D "a. The compiling, classifying, and routing of informa- tion obtained from censorshipIMMIE, foreign radio broadcasts, foreign publications, British MEW, American business firms with foreign interests, refugees, returned travelers, foreign representatives of other Government agencies and all sources other than espionage; "b. The answering of specific requests for economic intelligence information from other Divisions of the BIM, the armed forces, the Ministry of Economic Warfare; The continual search for new sources of economic intelligence; - 6 - tee, S-E.C-R-E.T Approved For Release 1999/09707 rCIKADP69-00642R000100070001-5 Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 "d. The indexing, routing and safeguarding of all restricted, confidential, and secret documents which originate in the Board or come to the Board from other sources." Later, on 30 November, 1942, the Assistant Director, Office of Economic Warfare Analysis, Board of Economic Warfare, stated the essence of the intelligence function to be "to find and exploit All possible sources of economic information useful in the work of economic warfare ,,.. and to mobilize this infOrmation in such a way that it makee the maximum possible contribution to the work of the Board4" The Economic Intelligence Division lived happily ever afterwards, or rather to the end of the war and the liquidation of PEA and its absorption into the State Department. At that time some of the intelligence personnel were transferred into the research area of the State Department. In fact some of the personnel in both the Intelligence Division of FEA and the OSS formed the nuclei of the Office of Intelligence Researcn (OIR) in the State Department and the Central Intelligence Group (GIG), the predecessor of the Central Intel- ligenee Agency. In a sense, therefore our major economic intelligence units today grew out of the intelligence support for economic warfare in the last war. For a documented accoant of the costly and tragic lack of coordination in World 'Jar II, see the report The Enemy Branch of the Board of Economic Warfaret A Study in the Relation of esearch to (Appo III, Item 3) Operation,"/and also "The Procurement of Economic Information for Strategic Purpoyes - Analysis of the Experience of the Economic SCLLT Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-54 Intelligence Division of the Board of Economic Warfare, the Office of Economic Warfare, and the Foreign Economic Administration, 1942-44 with Observations Pertinent to Future Operations of Intelligence Series." (App. III, Item 15) The conclusions supported the later proposal for a central intelligence agency. 3. Allied Operations. A strong case for allied cooperation in the waging of economic warfare was stated by the Allied (Britain, France, Ilelgium Netherlands) Ministerial Emoting in London on 17 June 1940. It asserted that the vigorous prosecution of economic warfare was an essential factor in victory and that, as the four allied empires commanded the major portion of the world g0 essential roe materials and commodities, it should totally deny them to the enemy. The statement is reproduced here as a fine declaration of principle and high resolver.; 'The representatives of the four Allies in consultation 1) Consider that the vigorous prosecution of the economic war against the enemy constitutes an essential factor in the ultimate victory of the allies; 2) resolve that, since the four Allied Empires jointly command the major part of the essential raw mater- ials and commodities of the world, the export of these commodities and materials shall be so con- trolled as totally to deny theme of them to the enemy; 3) agree that such control cannot satisfaetorily be established without the imposition in all terri- tories of the Allied EWpires of a system for licens- ing exports; 4) resolve that such wystems ehail, where not already in existence, be imposed and that they should be co-.- ordinated in scope and practice and in the poliwy governing their operation; Approved For Release 19391,119/61...ICIA-RDP69-00642R000100070001-5 25X6 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 5) direct theta Committee of experts, representing the four Allies, shall canine how best these resolutions and this policy may be implemented; 6) agree to Meet again from time to time as required to receive reports from the committee of experts and to Undertake any necessary action*" Unfortunately this same too late, Owing to the fall of France a few days later, the committee of experts never met, and no allied commit- -tie was established until nearly two years later* Cengress enacted the export control law on 2 July 1940? and the US began the progressive control of its sac. ports, both to conserve its supply of critical materials and, to deny them to the Germans, The cooperation was greatly handicapped, however, throughout 1941 and the first few months of 1942, by the lack of an integrated economic defense organization, supported by an integrated intelligence office* Hedlicott in his monumental work on "The Economic Blockade" in the series on the History of the Second World War says, in speaking of American cooperation during this period: "A genuine handicap was the absence from the Adminis- strati= of any single administrative organfsation charged with planning economic defense, and therefore able to take a comprehensive view of the prebleme involved and to see that Plans were carried through in all departments of government*" In discussing the confusion in the famoue "Sheherasade" (French tanker) case, Hedlicott refers to it as an illustration of the sort of Blind Mange Buff that was going an inside the US administration* - 70-. S,E-C-R-SO4 Approved For Release 111997O9/177": CIA-RDP69-00642R000100070001-5 25X6 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 s-E7retinZ An outstanding example of a situation in which an economic Warfare measure 'toed have saved American lives, Ships, and material would have been the stoppage earlier of the Italian Air Lines (LATI) service to South America. At a time when US national policy was one of "all aid to Britain short of war," these Axis planes were spotting American convoys on the South Atlantic route and notifying German submarine cemmanders. They were also transporting Axis agents and industrial diamonds and other strategic materiale, And they were flying with tetraethyl lead produced In the USo The Korean War In the Korean War economic warfare was employed by the United Nations only to a limited extent. In response to the "Unitin&for Peace" resolution and the appeal of the Additional Measures Committee of the UN, many of the natiOns imposed embargoes on the most strategie categorieu of materials, The US imposcd a ccmplete embargo on exports 00,811. OM fa. S-1E-C-R-96-1 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E-T to China and North Korea. There was no blockade, however-of the China oast, no interception of allied or neutral shipping, no attack on transport sordsa the !al% and no interference with sources of supply in Chins, D, The Cold War 1. The NSRB Studies? In 190-49, the National Security Resources Board, in the exercise of its statutory responsibility for the planning of mobilisation measures, undertook the production of a series of inter- agency studies on mobilisation planning for foreign economic measures? Comprehensive studies were later condensed into Shorter monographs as follows: NSRB 118/1 Proclaimed Listing NSRB 118/2 Preclusive Buying NSRB 118/2 Export Controls NSRB 110/4 Import Controls NSRB 118/5 Foreign Economic Assistance NSRB 118/6 Foreign Assets Control NSRB 48/1 Foreign Precurmnent and Development, - 72 . Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-E.T These useful studies dealt with the substantive nature of these instruments of economic warfare and proposed "readiness measures" and "wartime measures," for their implementation but carefully avoided ally' consideration of jurisdictional responsibility. There are two notable omissions in the series. The first is the absence of any paper on shipping controls (the ship warrant and navioert systems), probably one of the most important measures of economic warfare. The second omission is the absence of any coordinated study of intelligence support for economic warfare. This latter omission was attributed to the statutory responsibility of CIA in this field. 2. Planning StRdr_pr Economic Warfare. An excellent preliminary "Planning Study on Intelligence for Economic Warfare" had been prepared in the intelligence area of the Department of State, dated 19 April 1949, which recommended creation of an inter- departmental committee under the chairmanship of CIA. "The committee should concern itself', said the report, "with delineation of responsi- bility in the fields of procurement of economic intelligence and its analyais or exploitation. The mere assigning of responsibility is, of course, meaningless unless it is carried out by action, It will be necessary therefore to devise some type of clearing machinery to insure that major questions received by an intelligence unit through its policy or operating officers will be subjected to all the talent avail- able in all the agencies concerned. At the same time such a mechanism must not deprive the individual agencies of the freedom to handle quick or spot requests." 73 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C.R-E-T Following this report and a series of conferences between the NSRD staff.and the Chief of the Office of Reports andFatimates of CIA and the Chief of the Economic Warfare Banat of that office, the NSRSturler date of 2 February 2.95o requested the National Security Council to direct the CIA to organize and conduct a study oft a, foreign economic intalligenee requirements requirements rel:tieg to the national securitr, including requirements for mobilization planning; bc, facilities and arrancements currently employed for meeting those requiremente; a, the adequacy of such facilities and arrange. ments; and, where appropriate, means for their improvement. 30 111.2212m22122142AL.;_litlees This Mae" became the basis of BSC Action 282 which set off a chain reaction in CIA. It was originally intended to cal for another planning study in the NSW series of interagency studies on mobilization planning for foreign economic measures (economic warfare)* Nowrenmas, it was broadly interpreted and became the basis of an extensive interagency survey by OIAIOCD and for a survey by an office.wide task force in CIA to determine the "areas of ignorance in intelligence regarding the Soviet bloon* It was made the basis for planning a future research produo. tion program, and finally on 31 Mgy 1951 in a regY to the BSC, the Director of Central Intelligence proposed the establishment of am itonomic Intelligence Committee and recommended the issuance by the NSC of an intelligence directive ,which was issued as NSOID.150 - 74 - Approved For Release 199tif*A-RDP69-00642R000100070001-5 Approved For Release 1999/09107 ? CIA-RDP69-00642R000100070001-5 S-E-C-RzE.c1 Thus what was originally sought as a Planning study in the NSRB economic warfare series, emerged many months later as a general survey of economic intelligence requirements - a larger and perhaps more useful study - but it left still unsatisfied the need for a study of the intelligence support required for economic warfare. 4. 211EMETERealletmerel----22-tttatialtRgE, The agencies of the Government, charged with responsibilities in the economic cold wars had made since 1946 continuing demands on CIA for intelligence -auppott. The-"clamerout customers", as they were called, were told in ;to' intelligence require- ments and of CIA capabilities to meet those requirements. This was facetiously called the "survey of ignorance" and was followed by an effort to close the gaps. The effort is still continuing. As soon as one area of research is completed the result tends to become obsolete, as the situation does not remain static. The concept that current demands can wait until basic research is completed was dis- credited early in the last war. Research and current analysis and evaluation are all continuing and interrelated processes. The dilemma of "the clamorous customer vs the basic study" was forcibly expressed in one of the supporting papers on "The Role of ORR in Economic Intelligence," 1 August 1951: "The problems to whose solution we are asked to con- tAbute are very urgent. Events will not wait for the orderly, patient, exhaustive research which alone can give satisfactory answers to these problems. If we were to devote ourselves exclusively to amassing all the facts we need, we would have to tell harried policy-makers that we would be glad to advise them-- Approved For Release 1999N9S-AtIGTA-RDP69-00642R000100070001-5 Approved For Release 1999/09ta~pP69-00642R000100070001-5 beginning in two years. (Ed. note: three years has now elapsed.) We neither should nor can stay in an ivory tower that long. Even if it were possible ... it is highly likely that at the end of that period many that we would be asked to help with would have changed so that our results would no longer be particularly applicable. On the other hand if we succumb to the very real pressure on us to answer all current requests for prompt information, we will never have any information better than the slim fragments that we can now supply. Thus our dilemma is, in a sense, whether to be encyclopedic and irrelevant, or operational and incompetent. Clearly the only tolerable solution is a compromise between these two extremes." In the three years intervening since that plaintive plea, the preponderance of effort in ORR has been in the field of research on the Soviet bloc. There is now an urgent need for a redirection of economic intelligence to serve the needs of economic defense/warfare in both research and current intelligence regarding both Soviet and now-Soviet areas. Research must be continuing and diligent, but at the same time there should be a timely and adequate response to the intelligence demands of economic defense and economic warfare planning. The vast amount of intelligence in the various research projects will remain sterile unless it is brought into the focus of those charged with policy-making and operations in economic warfare. S. The Economic Intelligence Committee. The several periodic reports of the work of the Economic Intelligence Committee and the Intelligence Working Group reveal that those committees, with certain limitations, serve admirably as advisory and even as coordt4 nating groups. They also reveal, however, the difficulty, if not the Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/043197-TCIA-RDP69-00642R000100070001-5 futility, of attempting to do in committees what should be done by individuals or individual agencies. Some of the difficulties of intelligence production by committee are implicit in the following statement from the current EIC progress report: When the EIC agrees as to the priority need for particular economic-intelligence studies, and as to the agencies which should be responsible for making detailed contributions thereto, the results must not be invalidated by inability of the contributing offices to provide competent staff and required data which should be available through their channels. It is not sufficient for other agencies with greater and more flexible facilities (perhaps CIA) to be in position to "pinch hit" and undertake studies for which it was agreed other agencies should be responsible." An economic defense or economic warfare agency wouldbe in a peculiarly helpless position if it had to await first the assignment of responsibility for such contributions and then the production of the intelligence by diverse agencies, each probably giving priority to its own departmental requirements. "In general" says the report "the EIC has been developing into a planning and service mechanism by Which the intelligence community seeks to coordinate the economic intelligence needs or the government as a whole with a minimum of duplication and a maximum of mutual support among the several agencies. During this period) however, the initial emphasis on the Soviet bloc has continued." - S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/01.:(.CIA-RDP69-00642R000100070001-5 In calling for a full-dress evaluation of the US economic Intelligence program as a whole, the same EIC report states that "without pre-judging the results of such an overall evaluation, it soems clear that the econom1c0intell1gence community nhould supplement its stadies of 0.0 the economic strength of the Soviet Union to support hostilities, by considerably greater attention to the emerging economic patterns of principal countries in peripheral areas and in the free world, and to those developing economic pressures which might influence alignments of particular regional or nations1 economies towards the Soviet bloc or non-bloc systems..." It would also seem that somewhere in the intelligence community, either in CIA or in the economic defense/warfare agency, these emerging patter eJs should be kept current as a back-drop for the evaluation of the daily scene in economic defense and economic warfare operationa. The Office of Current Intelligence in CIA (CIA/OCI) publishes in loose-leaf form and keeps current a series of excellent Handbooks an major countries of the world, but they are "far CIA internal use only". 6, The Intelligence WOrkihgAmp2iain April 1952, the Administrator of the Yutual Defense Assistance Control Act and the Secretary of State requested the Director of Central Intelligence to establish an Intelligence Working Group for direct intelligence support of the EDAC, The Secretary of Defense endorsed the proposal and requested well of the. Services to designate representatives. The IAC approved the terms of reference and the IWG began to function., One of its first undertakings was to tackle the problem of the rapid S-E-C-R-E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 199ggit401-t'tiA-RDP69-00642R000100070001-5 collation and dissemination of operational intelligence to the using agencies. Its recommendations resulted in the establishment of the Current Reference and Transactions Sectionsin the Strategic Trade Branch of the Economic Defense Division of CIA, This Branch supports the work of the Diversion Control Net, the Administrative Action Panel, and other agencies and other elements of CIA in curreit operational intelligence and serves one of the purposes for which the An was originally created. The difficulties which the 11,0 has encountered are the necessary preoccupation of members with their departmental responsibilities and the other usual difficulties of action by committee. Nevertheless, the IWO has performed a useful service and its program includes (1) further review of the intelligence produced in the course of the security list review and additional intelligence on the hard core items as required, (2) preparation of papers on Soviet trade trends and tact'ins for the fall sessions of cocam2 (3) efforts to improve the priorities for the collection of economic defense intelligence and to expedite its transmission, (4) consideration of the problem of bilateral and multilateral exchange of economic defense intelligence with allies, (5) an indoctrination program and arrangements for briefing and debriefing personnel assigned to overseas posts and (6) compilation of enforcement regulations of other countries. This would certainly appear to be a useful and constructive program. However, continuation of IWO would seem to be justified if only as a stand-by facility in the event of war or a worsening of the international situation, 79 S-E-C.R-E-T Approved For Release 1999/09/07: CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/0Zz,QJA-RDP69-00642R000100070001-5 A periodical economic defense intelligence digest was proposed and authorised in 1953. It was never instittted tecause it was felt that the problem of the prompt collation and diss:nination of mrrent operational intelligence to the using agencies had been partly solved for the time being by the establishment of the Current Reference and Transactions Sections in the Economic Defense Division of CIA and by the work of the Diversion Control Net and the Administrative Action Panel. However, the preparation of such a digest by the secretariat of IWG and its dissemination to member agencies would serve a highly useful purposec Thi, would seem particularly timely in view of the um allied export contra policy. E0 1, azanization for :EcononiclWarfareo It was pointed out in the Introduction tlat although the floover Commission in 1948 recommended that a comprehensive economic Trarfare program be developed, that recommendation had not becn given full effect* The I= studies referred to above which follow3d in 1949, dealt with certain measures of economic warfare but did not pnopose an organization for their administration, The developments of the cold war, however, have resulted in the evolution of an interagency enganization for the coordination of economic defense measures, which may be adapted to serve a shmilar rmrpose in economic 80 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/0Ttta-RDP69-00642R000100070001-5 warfare. The responsibility for tee administration of the Mutual Defense Assistance Control Act was vested in the Director of the Foreign Operations Administration, In harmony with the foreign policy direction of the Secretary of State (p;EL supra). The diverse elements of economic defense and the necessarr implementation of its measures by various other agencies of the government under constitutional or statutory authority, required that these measures also be coordinated by an interagency mechanism. This has been accomplished by the forma- tion of the Economic Defense Advisory Committee (EDAC). It is not the purpose of this paper to review in detail the EMC structure, with ito Executive Committee, Working Groupe, and staff and secretariat furnished by the Vuteal Defense Assistance Control (MDAC) element of FOA. This is described succinctly in "The Economic Defense Structura of the US" (EDAC-D-85, 14 May '54). It is pertinent, however, to consider this structure as the possible prototype of an economic war- 17/ fare committee structure, in order to determine the arrangements required for its intelligence support. Indeed, it furnishee more than a prototype. It furnishes an interagency organization in being whose present activities could be continued and expanded and adapted te wartime conditions as needed. In this respect we are now years ahead of our position at the outbreak of World War II. There should thus be no necessity for the costly improvisations, "empire building," and jurisdictional disputes that characterized the early months of that war? Whatever organization structure is required for ?concede warfare S-E-G-R-E.T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999i06/117F;SIA-RDP69-00642R000100070001-5 (and its intelligence support) in wartime, should be planned MANIN To the extent that it is applicable to economic defense operations in the cold war, it should be implemented now. Then, in the event of war, we would have an organisation in being, which would merely have to change to a belligerent status? as do the armed forces. Some additional measures would need to be implemented, e.g. tht ship warrant and navicert systems; some new sources of intelligence would need to be exploited, e.g. censorship. Basically, however, the objective is the same -- the limitation of the Soviet bloc's economic potential for war -- in economic defense and in economic warfare, and the same expertise is required in their administration. Some addi- tional executive orders and directives perhaps some legislation, will be required. It is presumed that some of these exist now in draft. They should be brought togeliher now in an "Economic Warfare Plan" and kept under review, so that they might be promulgated immediately in the event of war. Personnel assignments to "battle stations" in economic warfare should be made now. At least the organization structure and the job descriptions for the key posialH should be determined. When the eombe begin to fall, it will be too late to be drafting plans unieh could better have 1)003 prepared in advance. It would be tvagic Irces if after biX years of economic war (euphemistically called "economy denanleA) it should be necessary on the outbreak of war to lose irrapiae in hastily prepared improvisations for the prosecution of economic warfare,. It would se as illogical as waiting until the outbreak of hostilities to establish the armed forces. -82- Approved For Release 14461W.IICIA-RDP69-00642R000100070001-5 Approved For Release StailIckfil CIA-RDP69-00642R000100070001-5 A comprehensive plan for an eaonoiic defense organization and a collateral plan for its augmentation, in the event of hostilities, to an economic warfare organization, should be made now. The EDAC structure was devised for economic defense in the cold war. It can be adapted, insofar as interagency coordination is con- cerned, to the mission of economic warfare in a hot war. What is needed is an administrative organization with the authority and ability to take action. The EDAC committee structure could serve such an agency in an advisory capacity. Any lack of effectiveness of EDAC in economic defense measures thus far, particelavly in international controls, may be attributed to policy limitations rather than to operational deficiencies. In the event of war, it is assumed that policy objectives will be clear and definite. 2. ariesiie,t_,ion for Intellatnniklupport. As previously pointed out intelligence constitutes a large part, perhaps the activities. greater part, of economic warfare/ There are vast redources of per- sonnel and data and facilities within the Government devoted to intelli- gence. And much of it is relevant to economic defense/Warfare. The irony of the situation is that there is no office within the Government prepared to furnish promptly as required adequate intelligence in support of economic defense or economic warfare. Witnin CIA, ORR has devoted practically its entire resources to research regarding the Soviet hloc. Only a skeleton staff in the Economic Defense Division - 83 - S-E-C-R-E-rIT Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release tga96),1pg CIA-RDP69-00642R000100070001-5 has served in close support of the vast economic defense operations of the cold war. OCI produces a substantial volume of current economic intelligence concerning Soviet and non-Soviet areas, but much of it cannot be used outside CIA. (p69 Supra). Much of the intelligence being produced in and out of the Government is pertinent to economic warfare, but is not recognised as such and is not directed to economic warfare needs. This is illustrated by the Intelligence Publications Index for July-December 1953, prepared by the CIA Library, This is a cumulative index by subject and area of some forty intelli- gence periodicals and monographic intelligence studies, The index "economic defense" or contains no classification off "economic warfare," although the Library Reference Code for the Intellofax System contains "Economic Warfare" (790), Included under "warfare" in addition to the various aspects of military warfare, are "Biological Warfare," "Guerilla Warfare," "Psychological Warfare," "Radiological Warfare," but nothing on "Economic Warfare",, Under "Economic" appear "Conditions," "Develop- ment," "Plans," "Policy," "Relations," "Problems," and "Resources". Of course many of these have economic warfare implications but they are not pointed to economic warfare needs, and are not listed under "Economic Warfare." The effective prosecution of economic warfare calls for an Intelligence office within the responsible agency, Such an office would have cognizance of relevant intelligence regarding all areas and all commodities and essential services.. It need not duplicate the facilitilis or the production of any existing agency, but would -84 . S-E-C-R-E.T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E-C-R-T4 bring into the focus of the economic warfare agency all pertinent available information. Its nist;ion would not be primarily one of collection or researdh. It would be rather one of collation and evaluation, for its own departmental use, of intelligence and in- telligence information produced by the other agencies, This being trees, its staff need not be large. It should have a Trade Division with three branches - enemy, allied* and neutral with "desks" for the principal countries in each, It should have a Steagegic Resources Divieice6 bxerohee for the major categories of oommodlties and the principal services, except shipping which should constitute a separate division It should have a Liaison Division, mhiehmould include a Sup .ort Staff and furnish the Secretariat for the.Intalligence Working Group, It should have a Current Reference! Division .to culvert the diversion control program, the adhinistration of the watch lists and black lists, and other current operations, The responsibility for econouic defense measures and for the intelli. gene? rapport of such wasures is now diffused among several departments and agencies of the government - State, FOA (4DIC), Commerce, Treasury and others, Under the National Security Act of 1947, it is the duty of CIA "To make recommendations to the NSC for the coordination of eadh intelligence activities of the departments and agencies of the government as relate to the national security; to correlate and evaluate intelligence relating to the national security (provided that the departments-and S-E-C-a-E-4 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999J99297.T: CIA-RDP69-00642R000100070001-5 moot OOP 0.110 IMMO 011.1. other agenciesof the government shall continue to collect, evaluate, correixte and disseminate department intelligence); g.e. and to perform for the benefit of ell.sting intelligence agenciessuch additional services of comma concern as the USC determines can be more efficiently accomplished centraAy," Accordingly, if an existing department or agency of the government were given responsibility for the coordination of economic defense measures now an of economic warfare me_sures in the event of war, such department or agency would doubtlessThe empowered under the National Security Act to establish an intel3genc0 ooMponont with authority to correlate for; departmental use the relevant inteiligenoS produced by the. various intelligence agencies, Until such time as a department or agency is designated or established to coordinate economic defense and economic warfare measures, an office should be established within the intelligence community to correlate economic defense and economic warfare intelligence. It is believed that such an office could Le esteblisl:ed without additional personnel by re-assigning existing persomnel in keeping with a re.directed emphasis and the elimination of duplication of effort, In the meantime the deficiency is being met in part by the coordination of economic research in the Economic Intelligence Committee and direct support of economic defense cverations by the Intelligence Worktng Group, but with the difficulties cited by each of those groups in the preceding section. In addition the rtversion Control Net (DCN) and the Administrative Action Panel (AAP) are supported by the Economic 86 4. Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 i? Defense Diviesion of CIAMR. The former is the prototype of a war- time Blockade Committee and the latter of a Blacklisting Committee, In the event of the establishment of an economic defense agency or an economic warfare agency, with its own intelligence unit, the need would still exist for the EIC and the IWG? not as produce" of in- telligence but as means of the mutual interchange of -ideas and facilities, F, AL11g_filLamtelermv_itior Allapd Economic Warfare The intelligence support needed for combined economic warfare may be considered in three major categories: (I) economic infor- mation concerning the allied or cooperating countries themselves, (2) intelligence concerning neutral countries and (3) intelligence concerning the enemy or potential enemy As to the first category, each country will be the logical source of data regarding its own situation, All such intelligence must be carefully examined and evaluated for subjective elements and national bias,. Each of the allies may be presumed to have information and intelligence re- garding the others but ordinarily it would not be consistent with protocol to introduce it at the intergovernmental level, ILs ex- istence, however, may be useful in making the subject country care- ful of the accuracy of its facts and the validity of its estimates As to the second category, the problem is more difficult. Diplomatic and trade relations will continue with the neutrals, but there will be more reluctance on their part to disclose significant data to the belligerents, The neutrals have a vital interest in establishing -87 . Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 favorable import quotas for themseivee and in preserving some trade with one or both belligerents, The neutral countries which, by the way, may be expected to represent various gradations of neutralityo constitute, as stated elsewhere in this report, the principal battle ground f economic warfare, Basic intelligence is needed as to their economic capabilitiea and vulnerabilitiea and cufwent intelligence is required as to their surpluses and shortages, their re-exports and diversions and the activities of persons trading with the enemy, The greatest difficulty in collecting intelligence, and therefore the greatest need and opportunity for international exchange of intelli- gence, oocurs in the ease of the third category - intelligence con- cerning the enemy. Economic warfare, even more than any other phase of the war effort, requires combined or parallel and noordinated operations among allies. In economio warfare the measures and the weapons are largely the same and they are employed on a worldwide basis, It is the same firms and individuals to be blacklisted by the allies for trading with the enemy, the same >ship s to be navicerted or intercepted., as the case may be, and the !lame commodities to be preempted, By the freest exchange of in- telligence consistent with seeurity and by a division of labor to avoid duplication and to conserve manpower, each of the allies can have more complete and valid economic inteleigence than would otherwise be possible, The opinion is widely held in the intelligence community that effective eooperation between intelligence agencies of allied nations can best be acc-dplished on an agency to agency or bilateral basis and on a 86 s-E-C-R*3 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/033/0RDP69-00642R000100070001-5 foundation of mutual confidence? similarity of interests and the supplying of quid pro quo, The very nature of an intelligence system, it is said, precludes its participation in an international organ- ization. At the same time it id recognized9 as stated above 9 that the successful waging of economic warfare requires combined, or parallel and coordinated9 operations by allies and this requires combined or coordinated intelligence, The arrangements by which appropriate in- telligence will be brought to bear on economic warfare policies and ? operations at the intergovernmental level will necessarily depend on the type of allied organization adopted for waging economic warfare. It is assumed that same structure will be built on the foundation of the Coordinating Committee at Paris extended to a worldwide scope. It remains to be determined the organization ueuld be a come bined one under a single allied command as in military operations or if it will be a coordinating mechanism as at present* If the former.. the combined economic warfare organization should have its own small intelligence staff responsible directly to the organizaticn 'Itself:, This staff as in the case of military commands9 would draw on the resources of the economic intelligence agencies of the member nations,, If the allied economic warfare organization is one for coordination only then it is to be expected that the intelligence would be furnished by each nation to its delegation on the Coordinating Committee and its sub-rommittees, notably the Black List Committee and other operational eommittees such as Diversion9 Transaction59 Permits, etc, Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07,,LIA-RDP69-00642R000100070001-5 In a period of threatening hostilities it is important to make an Inventory of document. collettions and of individuals with special knowledge regarding them and with expertness in specialized asides who are in areas in danger of invasion by the enemy, Arrangements should be made for the microfilming of many of these records and their storage in other areas less likely to invasion and far the evacuation of the intelligence personnel ta the event of invasion, In Germany and Mustrles for encamples ar large reservoirs of intelligence coneerning Eastern Europe, In, France and Belgium tilers is a vast amount of infor-? nation on Africa9 of it in dcatments some in the knowledge of 1et- dividuals9 Which if lost would Le largely irreraaceable, In the Nether-, lands and the UK arc similar resmrees regarding the Far East, The experience in allied economic varfare in both world wars haa been cited above. Another case history in intergovernmental economic operstiona, with magy applications to the present situation is that of the Middle East Supply Centers which controlled the import and exports and many aspects of the econony of 17 diverse political entities in the 25X6Dliddle Finsto The nultilateral approach in the Coordinating Cont.ttec at Paris has presented difficulties in vi ete of the divergent national interests and policies Irith respect to East4rest trade, It ha e reeulted too often in a - 90 - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 ad. mm m. mow milO =IF course of action based on tne .A..owest common denominator- Intelligence, (or the lack of it in the specificity demanded, was frequently made to bear the onus of the failure to sere effective united action, But the results were frewently no dlfterent where the intelligence was adequate and even whore there was wanimity in ite evaluation, A different situation wouA4 be expected in wartime, however, with com. pieta Interdiction of and a concentration on the pre- vention of violations ard evacioLs., A reconsituted and rededicated nCocom" might thus ert as the oordilating mechanism f,41. Lhe Allied economic warfare,, -91.. Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 eeEeCA-E-T ahlw ame VI. ccIJ3XONS 1, The otruggle between the Coemunists and the free world will probably be a prolOnged one, fought with political9 psychologitele and economic measures, uith or eithcat military warfare* In ouch a continued cold war or in armed conpActo economic meaeures will play an important role becauae of (a) the reqeirements of the Soviet bloc eopecially Communist Chine and the Surepean aatellites, for certain strategic imports and (b) the probable existtnce at important artes of neutra11ty0 which constitute the principal battlegrourd of economic warfare. 20 The experience of twowceld wars and the cold war to date emphasises the urgent nese ea comprehensive economic uarfare .nlans coordinated by a single agency ni the Jovernment* Our allies in both woad wars provided a Peovero operatioe in economic warfare as in etilltary warfare, while the US uas mobilising* In any fUture liar the reeponeibility for the enitiattee will doubtless davdive on the US* 3* An essential part of any ecemegio warfare plan is a. provision for adequate intalligenee support() This can beet be aceemplished an ;i timely and effective beelen by an intelligence component of the &game responsible for the conduet at evecomie warfare* 40 In order to avoid the lone and coetly lead time for ths settee, liehment of ouch an organisation alter the outbreskeef war, an ?fries ee Economic Defense butelligerce ehoeed be establiehed now for the support Approved For Release 1999/09107': CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 of economic defense operations in the cold war and as a nucleus for an Office of Economic Warfare Intelligence in the event of war. 50 Under the provisions of the National Security Act such an Office can be established only in CIA or, for dspertmental purposes, in the agency designated to coordinate economic warfare. 60 The intelligence required in support of economic defense and economic warfare embraces all geographical, areas and all major re- sources. It is inter-related and cannot be produced on a satisfactory basis by an intelligence organization limited to Soviet or non-Soviet areas* or devoted primarily to basic research or to current and oper,-? ational intelligence. Furthermares economic warfare requires not only economic letelligence* but military and political intelligence as well? It thus represents the most important area of correlated intelligence O' common concern* 76 The Mission of suchen office should be the collation and eval- uetions for economic defense and economic warfare purposes* of all pertinent intelligence. The office would not engage in collection or in primary research. Ite staff need not be large and could be re- cruited from existing personnel in the intelligence community0 Plans should be made, however* for: some expansion in the event of war. - 93 S-13-C-11,6E-T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1C Approved For Release 1999/U9t07 re1A-RDP69-00642R000100070001-5 FOOTNOTES +111ff, V011ar Ismet Other Definitions: "The use of diplomatic, economic, financial, and sometimes military means to cut the Axis off from the supplies they needed to fight, and to destroy their economic Dower throughout the world." - The Hidden Wepp. Gordon and Dangerkield. N.Y. Harper Brothers l9h77 "All actions other than military taken to weaken, disrupt, or interfere with the ability of an enemy or potential enemy to provide economic support for his national policy. As defined hero, economic warfare might be employed during periods of general war, limited war, or cold war." - Economics of National Security. US Military Academy. Uest Point 19530 ---------------- "Economic warfare is defined in this estimate as the use of economic measures to alter the power positions and alignments of opposing nations or groups of nations," - GIAINIE 10-54. (Secret) "A process of conflict in which measures are employed to ? ro e an enemyls trade, destroy his foreign credit, and/or prevent him from acquiring supplies necessary for the prosecution of warfare. Among the measures used in this connection are export restrictions, foreign -94- S-E-C-R-B4 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X1C1 S-E-C-R.EaT Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 funds control, blacklisting of nationals of foreign countries, the purchasing. of goods to prevent others from getting them and naval blockade." - Dio_jltiom_afj1914Es_aczemlat NY Public Affairs Press, 1949. "Economic warfare has many definitions... Generally speaking, economic uarfare is the use of diplomatic, economic, and financial power in peace or in war directed toward the weakening of enemy resources, and the strengthening of one's oun position.., it is non. military in character, except in actual war when blockading and stra- tegic bombing takes it into the field of military operations -- but its objectives are the same as the objectives of military victories, In time of peace, its theater is universal, but particular emphasis is placed on the sources on which the enemy depends, and on the sources from which he would hope to operate his springboards of offense* Examples of economic warfare used by the Allies in 1-!or1d Warn were the blockade, export and import controls, preclusive buying, the safe haven program, and the blacklist technique. Examples of economic warfare currently being used by the Wet3tern powers are export contra on military items against the Soviet and its satellites in Eat-West trade; the economic aid programs; and technical and capital assistance progranm." - Mobilization PlAnnillg and the National Uko Y. Elliott, Public Affairs Bulletinigr.ui..y 1.500 2, For further discussion of military measures in economic warfare, see "Military Measures", page 24. For mamas, 3. the captain of the P p Pram, in descrating the Soviet , .." Shipping situation basil- ? ?itrt if other western nations followed the DS lead in denying shipping services and shipyard facilities, Soviet and Satellite shipping would be virtually immobilized. 4. Mon, Li-Wu. Economic Warfare. nr. Prentice-Hall. 1952. 5. Mote of Secretary Lansing to Ambassador Page at London, October 20, 1915. 6. Report of the War Trade Board 1917-1919. Washington, D.C. GPO 1920. pp 268-90 7. Economic Defense Adninistrative Action Pro ram. (EDAC D-46a; 7.-"Selit"Mrir-Zi-ErWar-V2777-2-7une 9* Ritchie, H. The Navicert tem Dari the World ler. WashIngton, D.C., Carnegie En owmen or n erne eace. 10. Censorshi ? Mobilization Mobilize on ESRB Doc. 119 1949, and Censorslia gt ea se easures. 17SRB Doc. 119/1. 15b0 - 95 - S-E-C-a-F,T Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 14447461CIA-RDP69-00642R000100070001-5 11. The Procurement of Economic Information for Strategic Purposes. (An yaeo e eence ? * onomic Intelligence Division of the Board of Economic Warfare, Office of Economic Warfare and Foreign Economic Administration 1942..19a.) Foreign Economic Admini- stration. (Secret) p 80. 12. Ibids p 57. 25X1AReP3. Report of the War Trade Board, 1917-19. 25X6 150 Foreign Economic Administration op0 cit. p 7. 16. Ibid. p 9. 180 %melee, Maurice. Blockade and Sea Power, No Yo Crowell. 1924 (out of print) 190 Medlicott, 1.4 No The Economic Blockade* London ? Ho No Stationery office, 20. At the time of the preparation of this report, a change in the name of the Intelligence Working Group to the ',Economic Defense Intelligence Committeeti was awaiting approval 'by the Intelligence Advisory Committee* -96-. Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/0i: CIA-RDP69-00642R000100070001-5 INTELLIGENCE SUPPORT FOR ECONOMIC DEFENSE DIRECTOR OF FOREIGN OPERATIONS ADMINISTRATION (P.L. 213, 82nd CONGRESS) SECRETARY OF STATE EDAC WORKING GROUPS Export Control Programs Application and Enforcement Cargo Transport Controls Transit Trade Economic Defense Programs and Policy Decreasing Reliance Far Eastern Economic Defense ECONOMIC DEFENSE ADVISORY COMMITTEE (EDAC) (1, 6-16) EDAC EXECUTIVE COMMITTEE (EDAC/EC) (1, 7-9, 15, 16) ADMINISTRATIVE ACTION PANEL (AAP) (1,7-10,15,16) DIVERSION CONTROL NET (DCN) (1,7-10,15) NOTE: Dashed lines indicate flow of intelligence support form IWG 13501 CIA, 9 -54 1. CIA 2. STATE (RI 3. G-2 4. ON) 5. AFOIN 6. AEC JOINT OPERATING COMMITTEE (JOC) (1, 7-9, 15, 16) SECRET SECRETARY OF COMMERCE (P.L. 11, 81st CONGRESS) INTELLIGENCE WORKING GROUP (IWG) Members Responsible (1-5) to the IAC Associate Members (7-10, 15-171 PARTICIPATING AGENCIES NUMBERS ON CHART INDICATE PARTICIPANTS 7. DEFENSE (OSD) 8. STATE (E) 9. COMMERCE 10. TREASURY 11. ODM 12. EX-IM BANK SECRET 13. 14. 15. 16. 17. AGRICULTURE INTERIOR MDAC FOA STATE (MC) ADVISORY COMMITTEE ON EXPORT POLICY (ACEP) (1, 6-10, 13-161 OPERATING COMMITTEE (0C) (1, 6-10, 13-161 COORDINATOR TECHNICAL TASK GROUPS Construction and Mining Transportation Metal-Working Machinery General Industrial Equipment Iron and Steel Nonferrous Metals and Minerals Chemicals and Agricultural Products Electronics Electrical Rubber Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 ApproveEMI9 /RUCT4JRE7oo?1 5 ECONOMIC DEFENSE &mow COMTE CHAIRMAN: FOA DEPUTY DIRECTOR FOR BATTLE ACT *STATE *TREASURY ? AEC ? DEFENSE ? CIA ? AGRICULTURE ? COMMERCE ? ODM ? EX-IM BANK ?FOA EXECUTIVE COMMITTEE CHAIRMAN; ASSISTANT DEPUTY DIRECTOR FOR BATTLE ACT ? STATE ? COMMERCE ? DEFENSE ? FOA *CIA SPECIAL JOINT COMMITTEES JOINT OPERATING COMMITTEE ADVISES ON BOTH LI S. AND INTERNATIONAL SECURITY EXPORT CONTROL LEVELS_ INTELLIGENCE WORKING CROUP (COORDINATES BETWEEN EDAC AND INTELLIGENCE AGENCIES) WORIONG MOWS (inter- Agency) APPLICATP3N AND ENFORCEMENT TRANSIT TRADE ECONOMIC I DEFENSE I PROGRAMS MC MUM' DECREASING RELINICE Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 TAB Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : tIA-RDP69-00642R000100070001-5 APPIA011 111 1?11. 011...1111.E, ttyy. A LIST OF NEFLIENCE TERIALS 1ATING TO ECONOMIC WARFAR --IMFTOM REFERENCE 1. Abbott, Charles C. "Economic Defense of the United States." Harvard Business Review. Sept. 1948. Vol. XXVI, No. 5. 2. Army Industrial College. Economic Sanctions: A Project in Economic Warfare. 27 VII 115. (SeadnarTo. t3451 3. Bureau of the Budget. Enemy Branch. War Records Section. The Enenrj Branch of the Board of Economic Warfare: A Cat1oniip orResear"-Ers one.? 19414. L. Central Intelligence Agency. Appraisal of Foreign Economic Intelligence R raments Pacilifies and Arra 7agia"" related-to the'Si.. 5. ---Forei Economic Intelli once 6. ---Guide to OCD Reference Service and Facilities. Jan 1954. 7. --7Ettary. of Ecomal..!1.21LensILem421. CIA-ORR-DE. July 1954. 8. ---Tbe Role of ORR in Economic Intelli ence. CIA.,ORR. 1 Aug 1951. 9. The Economic Information Interests of Certain Govern- urtqf Commission on Organisation of the Executive Branch of the Government. Appendix G, National SecuriMasraniaation. Jan 1949. Economic Defense Advisory Committee, The Economic Defense Structure of thejlE.... EDAC D-85. 14 14 19L. -.Economic Defense Administrative Action Proem. EDAG4)-4642 7?t rations of the Diversion Control Network. ED/EC D-58. 1 EconoMic Intelligence Committee. Terms of Reference, IAC-D-22/1, 29 May 1951.- Third Annual Progress Report. sept 1954. - 99 - S-E.C.Rp.E.Jr Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 15. Foreign Econcad.c Administration. The Procurement of Economic Information for StrategLc Purposeu. Analysis of the Experience of the Economic Intelligoce Division of the Board of Economic 'Warfare, Office of Economic War. fare, and Foreign Economic Administration, 194249440 May 1945. 160 Georgetown Univereity. School of Foreign Service* The Political Economy of Total War, a llabus. 1942. Part tqarfare -Stratszu_seckmicas. 17. Gordon, David L. Techniques in Economic Warfare. Army In. dustrial College. May SI, J? ? (5ntnRr 5BT ...and Rayden Dangerfield. The Hidden eapon, the Sto.TA Economic Warfare. N.Y. Hirper Bros., 19147. 18. Industrial College of the Armed Forces. Economicliarfaav A Selected List of References. Jan 1950. 19. -.Economic Warfare. Student Officers' Report SR 49-43. 1949. 20. ...Numerous Lectures and Student Reports on Economic Warfare and Economic Intelligence. 21. Intelligence Working Group. First Annual Provess Rsr..yle Sept 1953. 22. -.Second Annual Progress Report. Sept. 1953. 23. ...Terms of Reference. IAC-D..3/1. 25 July 1952* 24. -.Intelligence Working Group Procedures. EDAC D.48. 25 Na 19S3 Kent, Sherman W. Strategic Intelli.ence for American World Policy:. Princeton. Princeton 1,4 versity Press, 1949. 26. National Security Resources Board* Record Sources Relatinli to Foreign Economic Operations in woridwar II. 10 Mgr 1949. 27. -Proclaimed Listing. IISRI4 1.14/1. 19149? 28. ...Preclusive Buying. NSRB 118/2. 1949. 29. -Export Controls* NSRB 118/3. 1949. 300 -Import Controls. NSRB 118/4. 1949. 31. ...Foreign Economic Assistance. NSRB 118/5. 1949. 32. ...Foreign Assets Control. BERB 118/6. 1949. 33. ...Censorship. NSRB 119/1. 1950. - 100 - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 25X6 Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5 S-E4-4-&T Parurelees, Maurice. BloOkade and Sea Power. E. Y0 _ Crowell. 1924. 35. Pettee, George S. The Future of American Secret Intellimcc, Washington, InaiEFF7MairPress. 10460 360 Series of Lectures on Economic Intelligence Before the Industrial College of the Armed Forces. (L46-97; 12i7-63; 149-133; L50-101.) 38. ---......4Iandbot_1(.322s...2.Atrame Revised Draft, 1953. 39. ---Medlicott, W. N. The Economic Blockade. Vol I. London. H. M. Stationery Office. 1951-. 40. United Nations. General Assembly. Report of the Collective Measures Committee. Supplement No. I') (1/1591) 1951. hl. War Department. Military Intelligence Division. Economic Warfare British Exeerlence. Aug 1941 (I.E. 117). - 101 - Approved For Release 1999/09/07 : CIA-RDP69-00642R000100070001-5