WEEKLY SUMMARY #5

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002000050001-3
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 26
• Document Creation Date: December 23, 2016
• Document Release Date: February 19, 2013
• Sequence Number: 1
• Publication Date: June 18, 1948
• Content Type: REPORT

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Copy No.
.WEEKLY SUMMARY
Document No. ~.~ _._....
CBANG In Class. 0
DBCLASSIIP'IED
ass. C_ UGED TO: TS 8 C
D"A Memo, 4 Ap_r 77
_I? A 7!--Gr 77/17^I,
_. s ^ .
CENTRAL INTELLIGENCE AGENCY
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1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance with applicable security regulations, or
returned to the Central Intelligence Agency.
This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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C 0 NN T. E N T S
HIGHLIGHTS..,.
-Page
WESTERN EUROPE S
EASTERN EUROPE .........
NE AR EAST AFRICA 9
F AR EA,ST..>..,' ...................14
WESTERN HEMISPHERE .......,...1
APPENDIX......... ............... f
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H I G H L I G IT T S
n':turo of the Soviet Un one C`,:;:'renl
:' : r i nsLve wR.s ,rapnl1c"_f1U.Ay c*e x!ons : ~t 'ti t"iis .'71e.ck
:: :, three days R1SJ c ,greed to hhold a canfre: ee
>"sal ? T lavi ,at'ion of the F"i~3!3kYi~3 _nd then "'77a ed ouuV` no5f the
.,} t..rr y }^e- .i ? r5; That tyr3~. t ion. r.
~catin
n.. .a r~eef. . ~I ~: ~,
'6 :.'t .~13L 17?' con eren .e at :.AI!& time without lI a n fly
? $"
43..
'i,' 1e~K.. e{,.. ?
it hag. afar`7 a6 .jw~?, the, vein i}~.,f n
~( r ~~z4i A~ { A4i y.4L~? to do,' 4~ f13
t:!w+.:~C's ( ea p ?" 4~ Cr
the 'other hand, the Kremlin may have decided, as: a meat
of consolidating Its own zone or extorting more advantageous
working arrangement., from the western powers, to abandon
completely the facade of four-power control of. Germany's
capital. (The Implications of this step are discussed its the
Appendix.) The USSR will press. mably claim that it was
"forced" to withdraw by the London.^greeraents regarding
western Germany.
Soviet' consolidation efforts continue apace in the -
Satellite areas where the rabid tnternatianalists are clearly
gaining ground over :jerk fellow Con.rr1unt, is who favor some
autonomy for the Satellite nations. A realignment of Corumu-
nIs factions now under way In most of these states Is taking
power away from the "moderate'' Communists (see page. 6).
Meanvwliile, both the 'UM a4d the Satellites are confronted
by sizeable economic difficulties which have been brought
on by the US embargn on shipments of strategic raw inateriais
to, these countries (see page 6)'.
The French Assembly, as was expected, has by a
narrow margin voted its acquiescence in the London agree-
ments concerning western Germany. The .Schuman Govern-
ment, however, must still maneuver through several domes-
tic squalls befgre It will have weathered the present storm.
The success of the government's wage stabilization program,
for Instance, will remain uncertain until late summer (see page 4).
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Ek=ee il,2.re in vvestern Europe, the Benelux countries have
ven new evidence of their determination to achieve oompleie
econrmic union by 1t50 (see page 3). In Italy, anti-Cor^ munist
leaders and pro -Communists are scrambling for control of
the Left Wing Socialist Party Congress scheduled for late
June. and the Communists are intensifying their obstructionism
in an effort to discredit the government and steno the w.nti-Con-
m?,mist fide see page 5).
Although the N truce in Palestine has so tar,becm
generally effective, extreme tension throughout the country,
the determination of both Jews and Arabs to gain maximum
military advantage during the truce, and the inability of the
Israeli regime to control its military extremists may lead
indirectly to the resumption of full-scale hostilities (see
page 9). The USSR has sought to establish a precedent for -
future participation in Uld activities in Palestine by its efforts
to take part in UN observation of the truce.
There has been no lessening of tension in India where
peaceful settlement of the India-Ryderabad dispute has bees
indefinitely postponed by a breakdown in negotiations, India
and Pakistan are still maintaining troops in the?disputed areas
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of Kashmir (see page 12).
Developments in the Far East have in general run true
to previous form. Opposition to Chiang Kai-shek is growing
in China, the political situation continues uncertain in Korea
and Burma, and the Dutch and Indonesians appear even further
froib agreement (see page 15).
In Latin America, the Ecuadoran Government, through
its somewhat unorthodox attempts to prevent a coup by the
supporters of presidential candidate Gale Plaza, may be
Inviting a revolt by the Conservatives who apparently polled
a majority in the recent presidential elections. The Jausta-
mante regime in Peru may be losing its surely-needed army
support (see page 17).
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WESTERN EUROPE
Re ewod Benelux determinat on to achieve complete
eec.vle union by 1950, despite economic and political diffi-
culties, is indicated by the ambitious plans recently drawn up
by ca net members of Belgium, the Netherlands, and Luxem-
b rg. These new measures, approved by the three govern-
ments, are designed, to reconcile more effectively the austere,
cor troiled economy of the Netherlands with the prosperous
and free -trade economy of Belgium and Luxe rsourg. in
general, the plan is to relax government control of the
Netherlands economy gradually and to bring it into line with
the free-enterprise economies of Belgium and Luxembourg.
The effectiveness of these measures will depend in large
part upon aid from the European recovery program. As the
means of obtaining the additional credits needed, the Benelux
countries are considering a possible long-terra US loan to the
Netherlands, to be guaranteed by Belgium. The ability of
the Benelux countries to abhieve complete union of their
Cconomles, a union which would create the third-largest
tradingr area in the world, may not became evident before the
end of 1948.
GERMANY
The, decisions sed an unfavorable reaction
in western Germany largely because of continued German
hostility toward all foreign intervention. The unfavorable
German reaction is based on the specific beliefs that: (1)
internationalization of, the Ruhr will be a violation of German
sovereignty comparable to the annexation of the eastern
German areas by Poland; (2) the projected west German
government does not approach the degree of autonomy desired;
and (3) the entire structure of the projected government will
be imposed upon Germany by foreign powers without partici-
pation in discussions by German representatives.
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FRANCE
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the Schuman Government and ifs support center parties
appear to be encountering a political and economic realism
new to popular French thinking. The-average Frenchman now
seems to realize that political extremism from either the
Left or the Right can only result in continued economic in-
stability and a gradual breakdown of personal freedom. As
a result of this growing French realism and a general feel-
ing that De Gaulle's extremist attacks place political expe-
diency above national unity, the General's influence in French
politics may be on the wane.
The French Government's price stabilization program
will remain on the critical list until late summer, although
French production is sounder in wind and limb than at any
time since the end of the war. Non-Communist labor leaders
have been conferring with government leaders in the iiope of
encouraging price reductions in steel and consumer goods.
At the same time, the French Government realizes it will
probably be necessary to raise the price of cereal grains in
order to make certain that farmers will place their grain on
the market instead of feeding it to livestock. Thus, any re -
duction in the Frenchmlan's cost of living resulting from a
price decrease in steel and certain consumer goods will be
partially offset by an increase in cereal grains, textiles,
leather goods, and non-ferrous' metals. In its unenviable
position, of attempting to be all things to all economic groups,
the French Government will probably grant a price increase
here and a price reduction there, all the while marking time
until increased production can take over the job of stabilizing
prices at a satisfactory level throughout the price structure.
7D Gaulles recentl -launched atte to discredit
ITALY
An effective "third force" for My is a 50-50 propo-
sition as the dissident anti -Communist leaders and the pro-
Communists scramble for control of the Left Wing Socialist
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ITALY
Party Congress which is scheduled to convene at Genoa on
27 June. If the dissident group succeeds in purging the party
leadership of pro-Communists, an independent Socialist party,
including the moderate Socialist, groups of Lombardo and
Saragat, may emerge as it cohesive leftist group, This new
party. would be capable of drawing working-class members
away from the Communists and contributing solid support to
the economic reforms of the coalition government. To counter
such rebel action and retain their control of the Left Wing
Socialists, the Communists have offered to relinquish to the
Socialists some Communist seats in Parliament. In addition,
the Communists will probably attack the "reactionary"
character of moderate Socialist Lombardo who has said that
certain Marxist economic policies should be scrapped in
favor of free-enterprise methods.
Italian CgMMU JBjg are'intensifying their obstruction-
ism both within and outside Parliament in. an effort to discredit
the Government and to stem the anti-Communist tide of the
past several months. Communist rowdyism and interference
with corrective economic legislation is commonplace in both
the Chamber of Deputies and the Senate. Outside Parliament,
the Communists continue to stress their role as the champion
of the working man by encouraging strikes for higher wages
in both agriculture and industry. Such a campaign has the
double advantage of enhancing the prestige of Communist labor
leaders and hampering government efforts to check the infla-
tionary spiral and attain general improvement throughout the
economy.
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EASTERN EUROPE
The US embargo on shiLments of strategic materials
to the USSR and Satellite nations is causing considerable
difficulty in the Soviet Union, Poland, and Czechoslovakia.
in the USSR, the US embargo is impeding industrialization
of the Soviet economy and forcing the Soviet Union to seek
other sources for badly-needed machinery. Because many
of these machines are produced only in the US, the USSR is
now increasing production of these types, many of them copies
of machines previously received from the US. The diversion
of plants and materials for this program further cuts down
the overall productivity of the Soviet economy.
In Poland, US export restrictions have been most
directly felt in the steel industry. These restrictions have
prevented delivery of a blooming and slabbing mill, which
is Important to the expansion of Poland's steel industry and
is a major component in Poland's war potential. The Polish
Government must, therefore, now decide whether to continue
its efforts to obtain dollars by trading with the west or to
resort to bilateral "barter" agreements and to further eco-
nomic orientation with eastern Europe and the USSR.
In Czechoslovakia, the US embargo of copper exports
threatens to cripple strategic industries and add to the short-
ages of materials vital to the Czechoslovak economy. The
Government's extreme concern over the lack' of copper is
indicated by its reported maneuver in securing the reship-
ment to Czechoslovakia of a 500-ton lot of US electrolytic copper
ordered by the Principality of Liechtenstein. Iron ore is
another material in critically short supply. The USSR seems
reluctant to supply any emergency shipments of iron ore to
tide over the Czechoslovak Industries.
1S_ -gy - sM?i' kaLli 5 L==Dats are
gaining ground over those Communists who favor some autonomy
for the Satellite states. As a result of Soviet efforts to con- ' -
soltdate the position of the USSR in eastern Europe, a realignment
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of Communist factions has already begun in Yugoslavia and
Czechoslovakia. Hungary and Bulgaria are rumored to be
next on the list. In Yugoslavia, the issue has already been
decided in favor of such Moscow-dominated leaders as Tito
and Rankovic. In Czechoslovakia, the "moderate" Gottwald
has been booted upstairs to the presidency in order to make
way for the radical trade union boss, Zapotocky. In Bulgaria,
Dimitrov and the internationalists are rumored to be in process
of uprooting the "moderate" Communists. In Hungary, recent
statements by Deputy Premier Rakosi probably indicate a
tightening of the Hungarian Communist leadership in the near
future.
The recent Soviet " reduces" of Hungarian and
Rumanian reparations is virtually meaningless in terms of
actual -economic benefits., but it will enable the USSR to pose
before the world as the real champion of peaceful postwar re-
construction in Europe in contrast to "imperialist aid proffered
by Wall Street." This Soviet "benevolence" is also an attempt
to counterbalance the impression which may be made on the
Satellites by a promising beginning of the European recovery
program.
SOVIET UNION
Soviet agreement to hold the forthcoming Danube Con-
ference fits in wit. the Kremlin's current "peace offensive,".
but does not necessarily represent a preliminary step in the
development of a more conciliatory Soviet policy toward the
west. The Kremlin can hold the conference at this time with-
out making any real concessions because: (1) the Soviet bloc
will have a comfortable 7-3 majority; and (2) pseudo-concessions
can be made (such as agreement on the principle of freedom of
navigation or participation of Austria as an observer at the con-
ference) without endangering Soviet de facto. control of the Danube
from Vienna to the Black Sea.
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GREECE
The resumntion of B nEIzn-,Oreek diplon atic re-
iaticins would probably i~ rab t little immediate im rovc--
:nent in the Balkan situation alt oAgh it might sugerlctasly
s,ase the tension between Greece an^. Bulgaria, and even ;*e -
t een Greece and. the other nortl earn aeighibors.. The pr-1,' twin
.s a knotty one despite the .va wed w viUingness of the acs
ernmenth to resurn negotiatio7 . ?" .r2 ri~: `.: -Australian plan for future negotiations. It app:.. ?s, 1-,c= ;; ,fir,
;.* fC+ 'z1S~.fi on couce ntng t%aen.a proposals vas red y
-i le ' at The T.Ng 13EVii!.'
% ~ r'Ilte : t'iL21?3t;lves" jvle 1'r':
ti : ?.~~~ ui con##r~ yes to iinsfs" that it is in no pos ltk',~-- to con
is `"lA' a ~alor decisi ii on l ixlc;.iasia until of er the Dutch n-atif.,.i.tal
`
.~~
.; . _ ; W j aly. A* th ini: t; LUon of the Dutch, hosw c ~~ er ,
cus,. Bans outside the COG have been be fun L-'lv;ce .
`$ e1. jer llattc o the to ~r'esi~a.n Rep,;blic aid Acting, ' w ?.
' ie: ai ' aye . ok of the P,th,:tviandp die`
yyt at -Van *?blr jH' '.talE--s .i.4 `.. il' pectM'~dly'.i1roth.c'= :? ;. t' w C:`&.'
L\~ ~~~V Z ~~MC
Le cni1 vrited with a1i' f it i;!Sa+ or able cbs"i'-XI s !.a. r .3 i ..?'.
an a reel lent between the two parties.
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WESTERN HEMISPHERE
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,CUADOR
In order to declare a Galo Plaza victory in the recent
presidential elections, the Ecuadoran Government apparently
is disqualifying votes received by Flor, the Conservative
candidate. I for actually seems to have polled a majority, but
the Government wishes Galo elected in order to forestall a
revolt by Gab's supporters. The Government's action, how-
ever, may lead to a coup by the Conservatives in combination
with Enriquez, the third candidate, to whom they reportedly
have proposed joint revolutionary action. The Conserva-
tives have strong popular support. Low morale and dissension
within the Ecuadoran Army will presumably restrict Its ability
to deal effectively with any disorders which may arise follow-
ing the announcement of election results,
VENEZUELA
The seamenss strike, which began aboard Venezuelan
tankers on 7 June, is not expected to last long enough to affect
the vitally important Venezuelan oil supply. The Communist-
dominated striking union controls only some of the seamen
on 18 Venezuelan tankers, and the Venezuelan seamen, who
belong to other unions and who sail under other flags, have
shown no signs of cooperating with the strikers. The Vene-
zuelan Government is reported ready to take whatever measures
are necessary to force -a settlement, if the situation grows more
serious.
PERU
Pr esident Bustamante may be losing his. much needed
army support, both as a result of gains which Peru's largest
party, APRA (non-Communist left), has made in army ranks
and as a result of conflict between Bustamante and his Cabinet,
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4..,, .A s reported to have resigned in a body. An' army groy~ p..
11: _Iuo1n; General Marin, former Minister of War ` vllio is
t control a considerable portion of the Perv n Arm,;,
It, tryi?1g to find a compromise acceptable both to h IVRA. nn
V. tt president; but may withdraw. its support from Presid::t
1:. A .stamante and realign itself with APRA. (Genera.' Marin
%Iso ;s repor'ted'to have frustrated recent attemptz lo fora:
underground and to dissolve the PJFruvian ress.'
`!1c reported resignation of the entire Buztaxnan'e Cabinet,
presumably over the issue of dissolving Congress, suggests
that President Bustamante may lose anti=-APRA, night-wings
army support, and that APRA may draw strength from the
collapse of the Bustamnante-Army Cabinet.
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P P E N D I R
THE SOVIET WITHDRAWAL FROM THE BERLIN
KOMMAND ATURA
The situation in Berlin has been further complicated
by a Soviet "walkout" from the 16 June meeting of the Berlin
?ommandatura in a maneuver similar to the abrupt Soviet
departure from the allied Control Commission (kCC) in
March. As in the case of the ACC, further meetings are not
scheduled, and the USSR may have decided to abandon com-
pletely the facade of quadripartite control of the German
capital;- Through this action, the Soviet Union has 'improved
its position for obtaining the consolidation of the Soviet Zone
necessary for formation of an East German state or for seek-
ing, through "conciliation," the establishment with the west-
ern powers of more advantageous working arrangements for
Germany as a whole, or for Berlin in particular. Soviet and
Communist propaganda will undoubtedly claim that this, latest
Soviet action was forced by the six-power announcement of
plans for a provisional government of western Germany.
kgitation for western withdrawal from Berlin may increase,
but it appears doubtful that the USSR will make a formal de-
mand for such withdrawal.,
If the USSR should proceed directly with the formation
of an east German state, the withdrawal from the Kommanda-
tura will provide Soviet propagandists with a "legal" claim
for the incorporation of the Berlin Soviet sector into the east-
ern zone and will make possible increased pressure for the
withdrawal of the western allies on the grounds that, having
partitioned Germany, the western powers have no place in the
Soviet Zone.
On the other hand, cuirent Soviet tactics may be de-
signed to create an "emergency" situation which would either
force the western powers to call for renewed meetings of the
ACC or permit the USSR to take such action without loss of
face. Through apparent concessions on the question of quadri-
partite control of Germany or through the time -worn method
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ohstru ticxt?,m, the soviet Union ',.?f Fed
ny. L.i~ :any eYIre1r:C
ll v cr.~ Y
(' ,to er-aso' 2C~"