CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000200020001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: April 15, 2004
• Sequence Number: 1
• Publication Date: December 4, 1953
• Content Type: REPORT

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OCI NO.1469
4 December 1953
CURRENT
INTELLIGENCE
WEEKLY
2
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DATE! RLVIEWLR:
NO CHANCE IN CLASS. C:
SEC LA SIFEED
CLASS. CHANGED TO. TS
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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TIAL
STATE review(s) completed.
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared pri-
marily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of
all current situations. Comments and conclusions rep-
resent the immediate appraisal of the Office of Current
Intelligence.
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THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . Page 4
FRENCH FOREIGN POLICY AND THE BERMUDA CONFERENCE . . . Page 6
The French National Assembly's feeble support of
Laniel's foreign policy motion emphasizes France's
vulnerability to the Soviet suggestion for four-power
talks and to Ho Chi Minh's offer on Indochina.
STALEMATE CONTINUES ON US-SOUTH KOREAN AID TALKS . . . Page 8
Negotiations on the American economic aid program
for South Korea have reached an impasse over President
Rhee's insistence on control of the program's major
aspects, and a satisfactory early agreement is pre-
cluded by his unwillingness to make concessions.
THE CURRENT STATUS OF SUEZ BASE NEGOTIATIONS . . . . . Page 9
Suez base negotiations between Britain and Egypt,
though now suspended, may soon reach a decisive stage.
Current prospects for an agreement are poor.
SIGNIFICANCE OF THE SUDANESE ELECTIONS . . . . . . . . Page 11
The decisive victory of the pro-Egyptian National
Unionist Party, which controls 55 of the 97 seats in the
future Sudanese house of representatives, reflects anti-
British sentiment rather than wholehearted endorsement
of unibn with Egypt.
INDIA'S POTENTIAL REACTION TO AMERICAN MILITARY AID
TO PAKISTAN . . . . . . . . . . . . . . . . . . . . . . Page 12
India's reaction to a military aid agreement between
Pakistan and the United States would likely be little mor
than verbal. Any actions India might take against either
country would only superficially affect American security
interests.
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USSR QUIETLY RETURNING WORLD WAR II PRISONERS . . . . . Page 15
Over the past few months, the USSR has quietly re-
turned some 7,000 prisoners of various nationalities
from World War II. Moscow apparently wants to remove
any unnecessary cause of bitterness, particularly in
Germany, Austria and Japan, hoping thereby to improve
relations.
SPECIAL ARTICLE. APPREHENSIONS OVER COAL-STEEL COMMUNITY
POLICIES AM ON NONPARTICIPANTS . . . . . . . . . . . . Page 16
Several Western European nations not belonging to
the Coal-Steel Community are showing increasing concern
over its discriminatory trade practices. These appre-
hensions do not endanger the progress of the CSC, but
do have various adverse implications for the broader
efforts toward integrating Western Europe.
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THE SOVIET WORLD
The tactical shift in Soviet diplomacy since 24 November,
when a Pravda editorial called for "normal relations" and
"cooperation' with the United States as a major condition for
easing international tension, may be part of a concerted effort
to recoup the propaganda losses resulting from Moscow's rigid
position.
The Soviet note of 3 November was the climax of a trend
which had begun last August and which had convinced most of
the West that the "peace offensive" was a closed chapter. To
offset this Western reaction, and with a view to raising a dis-
cordant note at the Bermuda meeting and in the French parlia-
mentary debate on foreign policy, the Soviet note of 26 November
ostensibly modifies Moscow's previous position that a five-power
conference on the reduction of international tension must pre-
cede any four-power meeting.
The Kremlin apparently proposes a conference to determine
the agenda and composition of a subsequent foreign ministers'
meeting at which it expects Communist China to be present..
This tactic simply transfers a subject of many diplomatic ex-
changes to the conference table. The Soviet representatives
probably will use this first meeting to repeat the arguments of
recent notes and propaganda on EDC, military bases, and dis-
armament, without getting to the substance of the German question.
The note's reference to European security similarly is in-
tended to reflect a more reasonable position. Rather than
reiterating its formula for German unity as the only basis; for
security, the USSR now alleges that it is ready to cooperate in
"assuring European security by means of appropriate agreement
between all countries of Europe independent of their social
structure."
This line is not consistent with Soviet propaganda, which
has ridiculed the idea of any form of East-West security arrange-
ment, and the USSR is unlikely to agree to any of the security
plans suggested in the West. There has been some indication
that the Soviet Union, particularly if put to a test, would pre-
fer a bilateral approach to security. Malenkov,in his interview
with the British ambassador on 28 November, cited the Soviet-
British treaty of mutual assistance as a good basis for the
development of improved relations between the two countries.
Other Soviet commentaries have pointed to the French-Soviet pact
as a basis for security arrangements between France and the USSR.
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According to American officials in Berlin, the signi:icance
of the speech by East German deputy premier Ulbricht on 25
November lies in its return to a softer line. He emphasized
East Germany's willingness to negotiate with the Adenauer
government rather than reaffirming the position he took as
recently as last September that the West German government
must be replaced with one willing to negotiate on unity. This
shift of emphasis, it is believed, reflects specific Kremiin
instructions received during Ulbricht's recent visit in Moscow.
In the Far East, as well, there appears to be some effort
to appear less adamant. Ho Chi Minh was quoted by a non-Communist
Swedish paper on 29 November as offering to discuss a possible
armistice for ending the seven-year war in Indochina. In reply
to a series of questions from the newspaper he stated that the
Viet Minh would "be prepared to discuss" a proposal from 1'rance.
This was probably intended to affect the French position at
Bermuda.
At Panmunjom, the Communists agreed that neutral partici-
pants at the political conference would not have a vote and
suggested that New Delhi rather than Panmunjom be the site of
the conference. The Soviet Union, however, is still proposed
as a neutral, and the United States is still accused of stalling
on the prisoner of war issues.
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The Laniel coalition emerged shaken and disunited from
last week's indecisive foreign policy debate and, even in
advance of the presidential election scheduled for 17
December, it has merely a caretaker status. The potential
pro-EDC majority in the French National Assembly has been
reduced and the postelection search for a new government
may become a showdown on the treaty.
There is insufficient parliamentary support for, any
alternative means of rearming Germany, but an ostensibly
sincere Soviet offer to neutralize Germany could jeopardize
France's commitment to present Western defense plans.
In the meantime, the offer from Ho Chi Minh-to negotiate on
Indochina exposes Laniel to increased public pru. ure to
abandon containment of Communism in Southeast Asia.
Pro-EDC sentiment had been increasing in France dur_ng
the past few months. The results of the C September Wes;
German elections had put the i4sue squarely before the
French, and the subsequent Soviet side-stepping of four-
power talks had convinced them that German unification was
indefinitely postponed. Moreover, additional American
financial aid for Indochina put France in a better position
to face German economic and military resurgence in Europe.
The French cabinet, nevertheless, remained split on the
European integration question and Premier Laniel scheduled
the foreign policy debate for late November in a search for
a basis of agreement. .
The 275-244 vote obtained by the government after this
debate did not accurately reflect pro-EDC sentiment.
Domestic political considerations were allowed to determine
the outcome of the debate when the government failed to
object to the Popular Republicans' withdrawal of their
resolution supporting European integration. This left as
the only remaining pro-EDC motion before the assembly a
Socialist resolution, and this was rejected because rightists
were fearful of Socialist-Popular Republican collusion look-
ing toward a left-center coalition.
Laniel, pressed by anti-EDC forces within his coalition,
dared present nothing stronger than a mild motion carrying
no explicit reference to the EDC treaty. The Socialists,
despite their earlier decision to back a pro-EDC resolution,
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refused to support this motion partly because it did not
specify their reservations, and especially because it
involved a vote of confidence in a government they opposed
on almost every other issue.
The imminence of the Bermuda conference and the receipt
of the Soviet note on 26 November asking four-power talks
induced the ex-Gaullists to abstain, thus saving Laniel a
defeat from within his coalition. Another major consider-
ation was the unwillingness of many deputies to precipitate
a crisis on the eve of the presidential election. The fear
that a left-center coalition under Mendes-France would
follow him probably influenced Laniel to swallow his earlier
refusal to accept a vote of confidence supported by less
than an absolute majority of the 627 deputies.
The French delegation at Bermuda may well use the
assembly vote as an excuse to make demands while avoiding
commitments. Foreign Ministry officials agree that the
USSR's new willingness to meet for talks reflects no basic
lessening of Soviet hostility, but favor acceptance of the
Soviet proposal. The professed Viet Minh offer to negotiate
over Indochina has evidently increased France's determination
to press for a five-power conference.
In the foreign policy debate government spokesmen
indicated their intention to seek American and British coimnit-
ments to keep troops in Europe for an indefinite period.
French leaders have also repeatedly made clear their desire
to be consulted on new-weapons development and use. The
government may further request some statement favorable to
French demands on the Saar, and even a repudiation of any
American intention to reach a bilateral rearmament agree-
ment with Germany.
The latest Soviet note has evidently encouraged many
deputies in the belief that it is possible to bargain with
the USSR on German rearmament, and Soviet peace gestures may
play a preponderant role in French foreign policy in the next
few months.
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Negotiations on the American economic aid program for :youth
Korea have reached an impasse over President Rhee's insistence
on control of the program's major aspects, and an early agree-
ment is precluded by his unwillingness to make concessions.,
The main area of disagreement centers around Rhee's refusal
to commit to the joint rehabilitation effort South Korean funds
from normal foreign exchange earnings and the substantial receipts
from the sale of local currency to the UN forces. In effect he
has been demanding two separate programs: the first utilizing
American and UN funds under joint administration; the second
using South Korea's independent resources under sole control of
the Rhee government.
With regard to the United States aid program, Rhee has not
been willing to grant the safeguards required by American legis-
lation and policies. At various times he has stated that the
money should be turned over to Korea, that South Korea should
have veto power over all procurement contracts, that the Untted
States should agree to a permanent rate of exchange, and that
internal fiscal policies should be free from American influence.
During the protracted negotiations, Rhee has employed his
familiar tactics of constantly seeking additional concessions
on points to which he has already supposedly agreed. Both
Economic Coordinator Wood and Ambassador Briggs believe th:ii
if the United States retreats any further on the disputed issues,
new ones will immediately arise. Wood also warns that if Thee
persists in believing the United States does not dare refuse
economic aid on his terms, there could be serious repercussions
in the military and political negotiations as well.
Much of Rhee's intransigence stems from his misunderstanding
of economic principles. In addition, his attitude is a reflection
of his long-standing opposition to foreign intervention in Korean
affairs, to which he attributes most of Korea's difficulties.
His concern over Japan's economic resurgence is also a major
consideration, as noted in his attempts to limit procurement
from Japan, his expressed desire for a permanent exchange "ate
"like Japan has," and his insistence on diverting as much aid
as possible to industrial development to reduce Korea's depend-
ence on Japanese imports.
Rhee's attitude is thus blocking the aid program for >outh
Korea, while the Communists have mobilized financial and man-
power resources in an attempt to rebuild North Korea quickly
as a practical demonstration of Communist achievement.
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There are increasing indica dons that negotiations be-
tween Britain and Egypt over the future of the Suez canal
zone base may soon reach a decisive state. Discussions are
to be resumed when the British ambassador returns to Cairo
in mid-December. Foreign Secretary Eden believes that the
outcome will be known before the end of the year.
Meanwhile, neither Egypt nor Britain has shown any
disposition to make further concessions, and popular criti-
cism of government attitudes is growing in both countries.
Without an agreement, the Suez situation is likely to deteri-
oriate further,.
During informal consultations between late July and 21
October conditional agreement was reached on the evacuation
of British troops within 15 months after a pact is signed,
the retention of 4,000 British technicians at the base,
their gradual withdrawal over a period of seven years, and
Britain's supervision of its technicians under an Egyptian
base commander.
British military authorities initially wished to con-
cede much less, and Egypt entered the informal talks unwill-
ing to permit as much British control as it now concedes.
Egypt's Vice President Nasr has stated that if there is no
agreement, his country will not consider itself bound by the
concessions it has already made. Furthermore, neither party
has given any indication that it is prepared to compromise
on the two remaining unsettled issues--future availability
of the base and the right of British technicians to wear uni-
forms.
On the availability question, both sides agree that the
base would become automatically available to Britain in the
event of an attack on any member of the Arab League Collect-
ive Security Pact, and that Britain and Egypt would consult
should Iran or Turkey be attacked. Britain, however, wants
a further assurance that the base would be available if the
United Nations found there had been aggression anywhere in
the world. Egypt, on the other hand, has been unwilling to
go beyond a general statement that it will honor its obliga-
tions under the terms of the United Nations charter. London
regards this as an attempt to restrict the automatic availa-
bility of the base.
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Egypt also flatly refuses to grant permission for Brit-
ish technicians to wear uniforms on the base. The state-
ment by a Conservative member of parliament that.the British
government would be doomed if it yielded on the question of
uniforms is indicative of the domestic pressures being
brought to bear on both governments.
Lord Salisbury, then acting foreign secretary, told
the Conservative Party conference in early October that Brit-
ain was prepared to face the possibility of maintaining
its hold permanently on the Suez base, presumably by force.
Conservative leaders can probably control any party dissen-
sion in parliament over a Suez agreement as they did on the
Sudan agreement, but the Egyptian government appears to
feel more restricted by domestic pressures.
Egyptian spokesmen have resumed their inflammatory,
anti-British statements, and attacks against British sol-
diers and stores in the canal zone have increased recently.
There also have been renewed deportations of British sub-
jects from Egypt. Intemperate charges by both sides of
interference in the Sudanese elections, the results of which
represent a victory for the pro-Egyptian elements, have fur-
ther dissipated good will.
Should negotiations break down at this stage, it would
be extremely difficult to resume them in view of the fact
that both parties feel that their concessions to date were
made only for the sake of reaching an agreement. If the
situation is allowed to drift, it is likely to become worse.
Although Egypt lacks the military strength to force British
troops out of the base, it could make retention of the base
difficult and the base itself less valuable by cutting off
food and water and by guerrilla attacks against British
installations.
Any attempt to obtain Egyptian cooperation with Western
planning for Middle Eastern security outside the framework
of an Anglo-Egyptian agreement might involve an appeal to
the United States. Egypt has already expressed its dissatis-
faction with the United States' "failure" to furnish econom-
ic and military assistance. Britain, on the other hand,
could not countenance aid which appeared to encourage Egyp-
tian obstinacy.
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SIGNIFICANCE OF THE SUDANESE ELECTIONS
The decisive victory of the pro-Egyptian National Unionist
Party, which controls 55 of the 97 seats in the future Sudanese
house of representatives, reflects anti-British sentiment rather
than wholehearted endorsement of union with Egypt. The outcome
complicates the problem of the Sudan's future and'that of Anglo-
Egyptian relations.
The pro-independence Umma Party, which has generally
cooperated with the British administration and was considered
the strongest party in the Sudan, won only 22 seats. Despite
Umma leaders' charges of fraud and threats of boycott, the elec-
tions will probably stand. The party's failure to measure up to
pre-election expectations is largely attributed to its collabora-
tion with the British at a time of rising anti-British sentiment.
The victory of the pro-Egyptian faction will encourage Cairo
to expand its activities in the Sudan. Egyptian efforts to pro-
mote unity with the Sudan, however, may run into difficulties
during the next three years prior to a plebiscite on the future
of the Sudan.
Egypt has carried on its activities in the Sudan through
the National Unionist Party, which it created in October 1952
and which it has supported financially. The party is a loose
coalition which has depended for much of its support on rivalry
between the two dominant Moslem religious sects, Whether Egypt
can continue to direct the National Unionist members of the
Sudanese parliament during the coming transitional period will
depend on its ability to satisfy Sudanese nationalism.
The new Sudanese parliament faces complex problems inherent
in premature self-government. Over 98 percent of the population
is illiterate, and few Sudanese have had administrative or par-
liamentary experience. The basic division of the country between
Arab-speaking Moslems in the north and primitive non-Moslem
black tribes in the south, as well as deep-seated political and
religious antagonism, will further complicate efforts to estab-
lish a stable government.
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INDIA'S POTENTIAL REACTION TO AMERICAN
MILITARY AID TO PAKISTAN
India's reaction to any military aid agreement between
Pakistan and the United States would likely be little more than
verbal. Any actions Nehru might take against either country
would only superficially affect American security interests..
Within India itself, signature of such a pact would be fol-
lowed immediately by bitter comment, similar to that now being
published. Pressure for drastic action against Pakistan would
be brought to bear on Prime Minister Nehru by Hindu nationalist
groups which have long agitated for a stronger attitude, "he
Indian Communists, with the continued support of the Moscow and
Peiping radios, would campaign against American "imperiali-sm" in
South Asia.
These maneuvers might lead to some incidents affecting
India's 40,000,000 Moslem population, though for the most part
the Indian public has displayed little interest in Indo-Pal-:istani
disputes. As in the past any violence would be suppressed by the
government before it got out of hand. The only concrete move the
Indian government might take internally would be to reinforce its
military establishment to the best of its ability in order to
counter any reinforcement of the Pakistani forces resulting from
a pact and thus to maintain the present 2-to-1 ratio between the
two armies.
None of India's several choices of retaliatory action against
Pakistan would essentially change the existing situation between
the two nations. India might limit air traffic between East and
West Pakistan. It might curtail certain items of trade, though
its imports from Pakistan have ordinarily been larger than its
exports.
In Kashmir, India's freedom of action is limited by United
Nations interest in the problem. Complete diversion of canal
waters from West Pakistan would be so obviously a retaliatory
move that India would seriously risk censure by the International
Bank group now studying the dispute. By being adamant on finan-
cial issues such as refugee property, New Delhi would forfeit
sums owed to it by Pakistan which are considerably larger than
those it owes to Pakistan. In nearly all instances, hostile
Indian behavior would merely prolong and intensify a situation
already six years old.
Nehru might well denounce the present air agreement with the
United States and limit American air traffic. Government pwwessure
for the Indianization and nationalization of American-owned
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businesses. might increase, forcing some firms to withdraw.
Missionary operations, already under attack, could be increas-
ingly curtailed. None of these actions, however, would signifi-
cantly affect American security interests.
. India would be unlikely to cut its trade with the United
States in manganese, mica, tea, and jute, primarily because it
can ill afford to lose these important sources of dollar income
but also because this action might benefit Pakistan's jute and
tea industries.
In and out of the United Nations, India could take a stand
favoring the Communists on Korea, Indochina, and Chinese N,_tion-
alist troops in Burma. It could intensify its agitation against
American "meddling" in Tunisia, Morocco, Israel, Egypt, anc: Iran.
Consistent adoption of a pro-Communist attitude, however, would
soon destroy any impression of Indian neutrality, the keystone of
Nehru's foreign policy. It would also dim India's hopes of be-
coming a great world power by lessening its influence with both
Asian and Western nations which sometimes follow its lead cr use
it as a convenient mediator between Eastern and Western power
blocs.
Furthermore, New Delhi is fully aware of the hazards posed
by Chinese occupation of Tibet and of the food and security prob-
lems which would be created if Southeast Asia fell into Communist
hands. Thus, Prime Minister Nehru seems unlikely to initiate any
rapprochement with the Communist bloc.
Possibly the most irresponsible action India could take would
be to make itself ineligible for American financial and technical
aid by shipping strategic materials to the Orbit. However, Yehru
would hesitate to lose the advice of valuable technical experts
and the monetary assistance which now totals $90,000,000 annually.
Neither would he willingly see the certain failure of the mich-
touted Five Year Plan., which would be accompanied by increased
disappointment with the ruling Congress Party, more.extensi,e un-
employment, and unrest exploitable by local Communists. In addi-
tion, he would recognize the Orbit's inability or unwillingness
to provide equal aid, as well as the possibility that Colombo Plan
countries might decrease, rather than increase, their aid fo`low-
'ing American withdrawal.
In any.case, Nehru and his government would have no reason
to believe that their actions, most of which would be detrimental
to India, would force the United States or Pakistan to end the
military aid program. Without some such conviction, Nehru will
probably not jeopardize his dream of making India a great indus-
trial nation and the recognized spokesman for Asia.
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USSR QUIETLY RETURNING WORLD WAR II PRISONERS
Over the past few months the Soviet Union'has quietly re-
turned some 7,000 prisoners of various nationalities held as
military and civilian "criminals" of World War II, The manner
of release suggests that Moscow desires to remove an unnecessary
cause of bitterness, particularly in-Germany, Austria and Japan,
thereby hoping to improve relations.
Between 1945 and 1950 the USSR repatriated approximatE.ly
2,529,000 of the estimated 7,000,000 captured during World War
.II. Of those captured, about 50 percent were Germans; 20 per-
cent Japanese and the rest Italians, Austrians, Finns, Rumanians
and Hungarians, with small numbers of French, Dutch and Spanish.
A UN commission estimated that nearly half of the original
7,000,000 prisoners had died in the USSR or were missing,
leaving approximately 1,500,000 yet to be returned, In April
and May of 1950 TABS announced that all Japanese and German
POW's had been repatriated except for about 2,000 Japanese and
13,000 Germans sentenced for war crimes and a few score patients
under medical treatment.
Shortly after the announcement of the amnesty decree in
April, however, Molotov stated that it would apply to Austrian
prisoners. The first implementation of the new policy toward
POW's was a joint Soviet-East German declaration in August an-
nouncing that all German prisoners would be returned except
those guilty of the most serious crimes. During September ind
October the USSR returned 5,374 Germans, most of whom went jack
to West Germany, 634 Austrians, and small numbers of French,
Dutch and Norwegians Press reports indicate that more German
prisoners are being released.
The new regime also has been receptive to Japanese pleas
for prisoner repatriation, In October the Soviet Red Cross in-
vited the Japanese Red Cross to Moscow to negotiate. An ag~'eee-
ment was signed on 19 November for the release of 1,274 mil.._tary
and civilian prisoners who have served their sentences or be3en
pardoned under the amnesty decree.
A joint Soviet-Japanese communique stated that 1,047
Japanese "war criminals" will remain in the USSR to complete
their sentences and that permission has been granted Japanese
delegates to inspect camps where they are being held. While
such an inspection is unique, reports of the first tour indicate
that "ideal sites".have been selected where.. :prisoners probably
were indoctrinated to give an impression of good treatment.
It. is expected that in the coming months the USSR will con-
tinue unobtrusively to return additional prisoners,
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SPECIAL ARTICLE
APPREHENSIONS OVER COAL-STEEL COMMUNITY POLICIES AMONG
NONPARTICIPANTS
As the six-country Coal-Steel Community (CSC) grows
in authority during its second year of operations, several
nonparticipating nations are showing increasing concern
over its discriminatory trade practices. These apprehen-
sions do not endanger the progress of the CSC, but do have
various adverse implications for the broader efforts toward
integrating Western Europe.
Most of the difficulties arise because the CSC -- new
including France, West Germany, Italy, and the Benelux coun-
tries -- was obliged to begin operations in only a part of
Western Europe, thus creating a semi-national boundary be-
tween the new "Little Europe" and other countries. Behind
the new trade barrier the traditionally cartelized coal and
steel industries have preserved their restrictionist tenden-
cies, and these are now being intensified with the develop-
ment of a buyers' market. Thus, in order for the CSC to
fulfill its function of forming the nucleus of a united
Western Europe it must overcome its present tendency to
interfere with trade and divide Europe further.
When the CSC assumed its functions in the summer of
1952, a transitional provision of the Schuman Plan treaty
called on the High Authority at Luxembourg to proceed at
once to negotiate on behalf of the member governments with
"third countries" for establishment of over-all commercial
and economic relations. Among these were Britain, the
Scandinavian nations, Switzerland, Austria, and also the
United States. Such talks, together with the appointment of
observers to Luxembourg from outside countries, were to
have helped prevent misunderstandings and any development
of discriminatory practices. To date, largely as a result
of the CSC's concentration on organizational and internal
market problems, the prescribed negotiations have not
commenced.
Outside countries made the first concerted approach to
the CSC in November 1952 after it requested a waiver from the
General Agreement on Tariffs and Trade (GATT) permitting its
members in their mutual trade to discriminate in effect
against other GATT participants. The "third countries" ob-
tained a promise from the CSC's High Authority that it would
avoid raising "unreasonable barriers" on exports to outsiders
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and make the eventual single tariff schedule for the community
lower and less restrictive than the existing tariffs of thc~
member nations, A later effort by a group of outside
countries to obtain additional concessions from the CSC
failed when Sweden refused to go along.
The first substantial justification for the apprehensions
of outside countries appeared in a steel export price agree-
ment among producers in all the member countries, except Italy,
which was initiated in March 1953 and reinforced in September.
This agreement set minimum prices on steel exported outsid,
the community, authorized fines of up to $50 per ton for
underselling, and set up an administering Commercial Commis.;ion
in Brussels.
Several outside countries have expressed great concert
over this cartel; the Danes even asserted that it weakened
their desire to join the community. High Authority president
Jean Monnet has warned the producers that, unless they
abandon their agreement, the High Authority will take action,
presumably following the meeting of the Council of Ministers
scheduled for 7 December. There are indications that the pro-
ducers will contest the competence of the High Authority,
thus causing the issue to be brought before the CSC's
Court of Justice
Meanwhile, the first clear evidence of another type of
threat to outside countries appeared in a demonstration of
favoritism by two members toward Switzerland. In return for
loans, the French and Germans last summer assured the Swiss
generous coal and steel supplies, at prices competitive with
those prevailing within the community, for a limited number
of years, Other "third countries" found particular cause
for alarm in a simultaneous ruling of the High Authority
assuring execution of these agreements in times of shortages.
By early October the Austrians, too, showed a rapidly
growing impatience to obtain special arrangements with CSC
countries for adequate supplies of coal, iron ore, and scrap.
About half of these are normally imported, and the Austrians
described their need as acute., They also expressed fears of
losing their competitive position in the German and Italian
markets, on which their expanded steel industry has tradition-
ally depended. Should the Austrians succeed in obtaining free
access for their steel to any CSC country, a hornets' nest
of competitors' demands would be opened. In recent months,
both the Austrians ,and the British have been particularly
apprehensive of higher CSC tariffs on most special steel
products from outside the community when these products are
added to the common internal market on 1 May 1954.
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The infrequent indications to date of a British desire
for special arrangements with the High Authority have been
prompted by such apprehensions of competition in steel.
Britain's delegates at the joint meeting in June of the CSC
Common Assembly with the Council of Europe's Consultative
Assembly voiced a preference for specific understandings
on such matters as prices, investments, and even scrap and
iron supplies. The BriLish delegates went so far as to admit
that they would not reject the idea of cartel arrangements
with the CSC.
Monnet appears determined to talk with the British soon.
He has given many indications, however, of wanting only the
sort of general agreement on principles which the High
Authority could later seek to have accepted by other "third
countries" in the spirit of the Schuman Plan treaty. Whither
or not he overcomes the British preference for a more exclusive
and specific agreement, these negotiations with the CSC's
most powerful competitor in Europe can be expected to bring
the issue of "third country" apprehensions to a head.
The solution suggested by some Danish and Austrian leaders
is for their nations to join the CSC,. There is no evidec-e
that such steps will be taken soon; Austria is afraid of the
Soviet reaction.
"Third country" pressures cannot endanger the success
of the CSC as long as neither Britain nor the United States
is disposed to go along on a concerted program. Thus far
the High Authority has shown a strong desire to cooperate
on American recommendations for avoiding discriminatory
practices. Nevertheless, the extent of its control over the
member governments' commercial relations with "third countries"
remains to be clarified. Belgium, for example, is currently
attempting to reduce its excessive coal stocks by restricting
imports of American coking coal, despite the High Authority's
opposition to such action as discriminatory.
One consequence of the outside countries' dissatisfactions
may be an i tensification of their efforts to expand trade with
Orbit.
The growing "third country" apprehensions have ominous
overtones for the question of Western Europe's capacity for
rapid progress toward further integration. They may increase
the number of those important political elements both within and
outside the community who fear that the current steps toward
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military and political integration of only the six CSC
countries will accentuate an unnatural division within
Western Europe.. Indeed, a serious question now exists
whether there is sufficient support within the community
for its own long-term mission of promoting liberalization
of the Western European economy.
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