INFORMAL COMMENTS ON DRAFT OUTLINE OF THE REPORT ON FOREIGN ECONOMIC INTELLIGENCE REQUIREMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01084A000100070009-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 9, 2016
• Document Release Date: March 28, 2000
• Sequence Number: 9
• Publication Date: February 23, 1951
• Content Type: MEMO

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SUBJECT: Informal Comments on Draft Outline of the Report on
Foreign Economic Intelligence Requirements
1. These informal comments, which represent only my views,
have not been cleared with the USAF. They are not as full as I
should-like to make them. However, due to the press of time, it
seemed advisable to submit them now with the possibility that we
could discuss the matter in more detail later on, or if you prefer,
I could discuss it with 25X1A
2. The first point which I made at the last meeting is that
the type of intelligence reports upon which broad U.S. policy
guidance can be given from a viewpoint of economic intelligence, are
identical with the intelligence requirements upon which the operat-
ing agencies base their detailed plans and programs. That is to
say, the broad policies and the more detailed operational plans, to
be soundly conceived, both should rest on as broad an intelligence
base as possible. This base, which represents the detailed pick
and shovel work of research analysts in many agencies, must be relied
upon to produce the backbone of national intelligence estimates.
The national intelligence estimates can be no better than the factual
data which support them, nor can the operational plans, say of the
Army, be any better than the same factual base permits, to the extent
that both rest upon economic intelligence.
3. With respect to the second point, ttvery limited intelligence
facilities versus enormous requirements for intelligence production",
I think this is somewhat misleading. In the first place, there has
been an intensive effort to collect and evaluate economic data on the
U.S.S.R. and Satellites for the past three years. The result is that
the basic intelligence of the U.S. military establishment with respect
to the U.S.S.R. and its Satellites is far better than was the respec-
tive case just prior to the war with Japan and Germany. While it
may be an exaggeration to say that the intelligence potential of the
Soviet Union is limited only by the money and effort we are willing
to put into the collection of the needed information and into its
sound evaluation; nevertheless, I am sure that most experienced intel-
ligence authorities would agree that it is possible to increase our
knowledge of the U.S.S.R. Bloc by a very appreciable percentage, if
the decision is made by such an agency as the National Security Council
that the national interest required this to be done.
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My own experience indicates that an attempt to lay on detailed
priorities with respect to the production of intelligence in the
various I.A.C. agencies will not be too fruitful. Requirements are
just too diverse and too numerous to permit more than general over-
all guidance. An informal exchange of intelligence production pro-
grams, for example, should result in a somewhat more economical use
of the available research manpower. Even more important, however,
than the division of the "pie" is the devising of ways to increase
our knowledge of the Soviet Bloc, particularly with respect to 1950-
1951 information. Two things which obviously suggest themselves are:
(1) the ste in up of the Defector Program, and (2) a substantial
increase in activities.
L. Part II, A, (1) of your paper states that "first priorities
should be given to economic analyses designed to throw light on the
problem of strengthening the relative position of the non-Soviet world
in the struggle against the Soviet Bloc." This point is further
elaborated by the statement. that studies should be designed to reveal
what the key limitations are on what presumably the potential enemy
countries or comp exes of countries can do. The point of focusing on
key limitations is beyond me; it would appear that, at first glance,
the s u ies should be directed at the general economic capabilities
of these countries rather than pointed specifically to key limitations.
Certainly the validity of these key limitations cannot a udged
except against a background of relatively full knowledge of the total
Soviet Bloc, for the apparent limitations of one specific country may
not exist in any meaningful way if a broader geographic base becomes
the area of inquiry.
5 The same section of your paper indicates that there is a
paucity of both information and meaningful analyses on the economic
situation in the Soviet Bloc relative to that in non-Soviet areas.
I question whether this is a fact or not. Certainly many analyses of
basic Soviet industries have been made, whereas even in the European
countries which the U.S.S.R. can overrun very quickly in the initial
stages of World War III, relatively few meaningful economic studies
have come to the writer's attention. There are a number of general-
ization studies, but in terms of specific industries studies covering
each plant, say in the aluminum industry of Western Europe, detailed
studies do not appear to have been made by ECA or any other U.S.
organization. It is possible that these studies exist in some
European offices of ECA or in organizations of the United Nations,
but if so, we have been unable to obtain them.
6. I think this is particularly important, and is highlighted
by what you will remember of our discussion on Yugoslavia, for it
appears to me that the intelligence collection problem divides down
into two parts: (1) the areas behind the Iron Curtain, and (2) the
areas this side of the Iron Curtain. It has been my experience that
since the State Department has assumed the major function of the
collection of economic information on countries this side of the Iron
Curtain, he a vicing of other agencies has been quite unsatisfactory.
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-Certainly this information is available, and can be collected with
relatively little effort. It is important not only in connection
with an analysis of the country concerned, but also because of the
Soviet potential for overrunning these areas.
7. My comment on Part II, A, (2), which delineates the specific
kinds of studies which should be made dealing with economic capa-
bilities of the U.S.S.R. and its Satellites, is that what is needed
is not a series of economic analyses pointing to answering some
specific questions, but a number of broad studies on specific indus-
tries and on other areas of the economy which will provide the economic
intelligence base from which more specialized types of inquiries can
be answered. Thus, the study of the aluminum industry in the U.S.S.R.
and Satellites, once completed, can be drawn upon and furnish answers
with respect to the general capabilities of the Soviet Bloc to pro-
duce aircraft and other types of munitions, and also can shed light
on Soviet intentions, to the extent that there is an interplay between
intentions and capabilities. My major criticism of many Washington
studies made during the past four years on the Soviet area is that
they have been too narrow; a fraction of additional effort would have
produced a basic document which could have been drawn upon to answer
a multitude of inquiries. I am aware that the so-called NIS series
was designed to supply this requirement but the NIS series appears
to have been poorly conceived, both with respect to its basic method
of analysis, and with respect to the time scale of its production.
8. My only comment on Part III is a word of caution with respect
to attempting to devise answers from sophisticated analytical tech-
niques which require the availability of a large volume of precise
data, and where a relatively small estimating error, when cumulated,
can give very misleading answers. This was the sad experience with
certain national income studies made of Germany in the last war,
presumab b eo le with considerable competence; it is the case today
with the trying to develop index numbers on industrial
production in the Soviet Union. The utilization of these techniques,
in my opinion, must await the development of a far larger storehouse
of factual data than we now have, or are likely to get for some time.
once again I then ppmakng ortunitysto expand sonsthem
brief f as they hey are, , and hope to
at some future time. Necessarily they deal with points of difference
of opinion about a fundamentally good study.
4. &a'&-
EDWARD L. ALLEN
Deputy for Research
Target Research Branch
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