NEAR EAST/AFRICA DIVISION INTELLIGENCE SUMMARY FOR WEEK ENDING 26 OCTOBER 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000100050017-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: November 16, 2016
• Document Release Date: January 13, 1999
• Sequence Number: 17
• Publication Date: October 26, 1949
• Content Type: SUMMARY

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elections, and that the constitutional tenure or this government be extended
from forty--five days to nine months, evidently represents his bid for
political power. Although Papagos himself is a man of very high
principles and apparently without political ambitions, his strong sense
c, discipline and his tendency to follow Markezinis' political advice
might lead him not only to accept the responsibility of the premiership
but also to join in efforts to strengthen the executive arm at the expense
cf the parliament.
The selection of Papagos, now elevated to the exalted rank of
marshal, will be difficult to block, in view of the great popularity
his military success has given him. However, a personal feud betweef
RMa..rkezinis and Populist leader Tsaldarts, as well as a general fear in
political circles of Markezinis' pronounced ability and driving ambition,
will prompt some opposition to any move to draft Papagos. The result
may be the selection of a less popular but also less controversial figure,
such as the present noi4-political Premier, Diomedes. The question of a
service government will probably assume increasing importance during
the winter, inasmuch as the elections are likely to be scheduled for earl next
spring.
1t~j an Salo f -a: Restoration of Salonika as a trade outlet for Yugoslavia
is likely to be an important by-product of the limited rapprochement with
Greece toward which Tito has been inching. Yugoslavia s rail connection
with Salonika, which might be of major strategic importance in the event
of war, lacks only a single bridge (on the Yugoslav side of the border) to
be restored to operation, and the Greeks are prepared to facilitate any
efforts to reopen the Yugoslav Free Zone in Salonika. Before World War H,
the free zone was of only limited importance to Yugoslavia, reportedly
accounting for less than f0O,0O0 tons of exports a year. With Yugoslavia's
Danubian trade outlets now cut off and its trade reoriented toward the
West, however, Tito will doubtless find it expedient, sooner or later, to
make use of Salonika---and, incidentally, to permit resumption of trans-
Furopean rail service to Greece. Such a move would not only provide
direct economic benefits but would also give the Yugoslav people further
reassurance that the Soviet blockade has not succeeded in isolating them.
On the Greek side, restoration of rail traffic with the rest of the Continent
might stimulate exports, particularly after the last 30-mile gap in the
Salonika-Athens line has been repaired.
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TJi i Y
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Air Force trainin a rann in et) Turkish Air Force pilots are
grounding themselves in such numbers as to cause considerable alarm to
thelS Air Mission. Serious deficiencies in aircraft,ariaintenance appear
to be the principal cause, together with a lack of confidence in unit
commanders. Apart from taking the obvious step of improving both
maintenance and leadership, the 'Turkish Air Force could probably irr
prove morale by: (I) increasing flying allowances for pilots; and (2)
providing adequate pensions for dependents of Air Force personnel killed
in accidents. If the present situation is allowed to continue, the success
of the US Air Mission in Turkey might be very seriously jeopardized.
O.DAN
Abdullah and Arab Palestine: The formal incorporation of Arab Palestine
into Jordan will probably be proclaimed during the next few months. King
Abdullah's natural keenness for formal annexation has been whetted by
rumors of Syrian-Iraqi union, and he recently made a good-will tour among
his subjects-to-be. For all practical administrative purposes, Arab
Palestine is already as much a part of Jordan as the areas of Palestine
occupied by the Israelis are a part of Israel. Until annexation becomes
official, however, various anti-Bashimite groups in Palestine will continue
to agitate against the scheme although their inability to work together and
their weakness before Jordan's Arab Legion make local opposition a
negligible factor. The other Arab states now appear resigned to annexa-
tion. Israel, however, will undoubtedly protest vociferously but probably
will not resort to military action to prevent it. 25X6A
Annexation under such circumstances would
enhance Abdullah s prestige and would greatly increase the security of
the Palestinian Arabs.
AFGHANISTAN
Difficult relations with Pakistan: The Government of Pakistan is
adopting a hard attitude toward Afghanistan, having concluded that any
conciliatory or cooperative gestures are ineffective and are viewed as
evidence of weakness by the Afghans. Pakistan's recent curtailment of
freight rebates on petroleum products bound for Afghanistan may be
only the first manifestation of this attitude. The GOP apparently intends
to fulfill strictly all treaty obligations with regard to the passage of goods
through Pakistan and otherwise to maintain a severely correct position
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'-,A addition, the norinaa heavy irflow of foreign capital was sharply
educed. To meet this unusual sitt.tion, the Reserve Bank was obliged`
to ship large quantities of its monebtry gold to the US and to reduce the
legal ratio 01 gold to the Union currency. In July 1949 the Malan Goverxt?-
oxent tightened import restrictions with the primary aim of curtailing
tNe deficit with the dollar area; the import of non-essential consumer
cods was prohibited, and the import value of raw materials and neces-
sary capital equipment was limited to abut 50% of 1948 imports. The
a ush of buying to beat the import ban resulted in a sterling area deficit
also, and by August the aver -all trade deficit approached one-third of a
billion dollars. The July import restrictions have not eliminated the trade
?leficit, and further controls, especially in relation to the dollar area, have
been announced for 1950. lncrearec?.. production of base minerals and
nleveiopnxent of secondary industries, which could improve the foreign
exchange position, wi in eac case be checked by the need for labor, raw
materials, and machi rery.
Vithin the steming area, ht,wevea, currency devaluation places
One Union tenaporarr y in a s unga =? position by virtue of its gold pro-
duction. Although the cost of sterling area goods will rise because of
internal inflation and increased raw material costs, the price of dollar
area goods, will rise to a greater extent. The result should tend to
strengthen the import control program and force trade out of the dollar
into the sterling area. The Union would, therefore, be able to sell more
of its gold in the UK for British goods, provided that the UK production
could satisfy Union needs. Gold mining, the keystone of the economy, will
therefore become more profitable in terms of sterling. Approximately
55% of the increased geld-mining profits will be absorbed by the government
through taxation. This windfall, added to the recent foreign loans, would
enable the government to continue for the time being its costly internal
development projects, and should a substantial capital influx develop,
restrictions on raw material imports might be somewhat relaxed to aid
local secondary industry.
Generally, however, a uiu a basic readjustment than import
controls, capital influx, or devaluation is needed before the economic
situation can be permanently corrected. Unless the shortage of labor
and the high cost of production are eased by a different approach to the
native problem, and unless the na o, is willing to lower its standard of
living to match its resources and production ability, there is little hope
of achieving an economy not supported by imports of capital from abroad.
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anajxsis (d last : eic ;torai victor von by the Turkish govern meni party
is now passible, a.ithoangfi on the somewhat shaky basis of figures issued
=_+y the government:-oo;;er .ted press agency. These figures tend to confirm
,he impression that, had the apposition participated in these by-elections,
it would have won easily n the more urbanised provinces but would ha> e
lost to the governnaieig pasty elsewhere. On balance, the government
appears still to cor axld a sizalble majority although it is highly probable
that, in fair elections contested by the opposition, such an opposition r axty
as The Democratic would be given inuch greater support than statist' n
seem to indicate.
More detailed rests on ? eer t Tivkish maneuvers indicate that
officers who have reel led courses training under upervision of the
US Mission show .greaL e capabilities than those who have not.
'p ossibility of ~laolesale inC Teti-aw of opposition Nation Partyi.etc ers
in Turkey is now under consideration by the government. Under the
flexible Turkish laws concerned with criticism of the government,
accusations of insulting the "moral personality" of both government and
president could easily be followed by sentences of imprisonment and fine.
Leaders of the major oppositions group, the Democrats, must be Wonder-
ing gleefully if the government will dare to commit this political blunder,
which would certy enhance the electoral prospects of both oppos.tion
parties in future elections.
The Arm ea ue PoUti a .mit finally convened in Cairo on
17 October after sev?ral false start- during the summer. Although the
delegations have attempted to present an outward appearance of peace
and light to the world, strong tension has arisen between the Syrian-Iraqi
bloc and Egypt ever: (1) the proposed union of Syria and Iraq; and (2)
Iraq's suggestion that the Egyptian head of the Arab League, A.zzarn
pasha, be re )lac d. A bitter discussion of these two issues could ~iplit
the already-shaky structure of the League, but neither side appareitly
has either the bacid g or the inclination to force a majority decisf rn on
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t h e s e e main points of itagreement. As a result, the current sessio,:i
rillprobabty follow the precedent established by previous meetings---no
,cisive action on any maior issue.
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Saudi Ara bia ~oucsed $ 6 million loan to Syria, for the p',srpcse of
cementing relations with "the blood brother country," will not be omen
chided. The Saudi Government apparently believes charity begins at
horne and has dipped into the allocated funds to the extent of $ 5 million
in order to meet its own obligations. By improving its immediate
Thiancial position to the detriment of Syria's,Saudi Arabia has as usual
spent in advance an important source of income. The $6 million,
i:oz rov . d from the Banque de L'Indo-Chine, was guaranteed by an
off -shore oil rental of 2 miE.ion per year. This source of income will
now be lost to Saudi Arabia anti. the end of 1951.
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Elections for the e a lig. have been marked by some scattered
disorders and demonstratlan-3 again t alleged government interference.
A contest between Sunni anti Shlah cl.ions erupted into violence in he
south, and in Tehran a small oppositiclaist group conducted a deter inned
but unsuccessful protest against "Ir1gged elections" before the Mal,-
Nevertheless, reports iAndiea:te iinat the government is interfering e~ s
ixa the elections than ever before. Indeed,, the very fact that dexnonsdr a.tions
are being permitted suggests a certain wvillingness on the part of the
goverrrn nti to accept "free' election and their trappings.
1 "he first shipment of 4ovzet, vrheat to .iron arrived in he northern border
area at julfa, on 2U October, according to the Iranian press. As addition-al
shilarnents are received, the preservation of internal security in A?-.erbaiJan,
which was beginning to be threatened in the frontier areas by acute food
horta es, should become less of a problem for the Iranian authorities.
T,~e UN p o l i t i c a1 s committees an j L b..-ya, providing for .uti iaie
independence and membership in the UN after a ,period of adnninistratieri
tinder a till high commissioner assisted by a -multi-nation advisory cou wil,
pleases the Arabs and appeases the lialians. British authorities in
Tripolitania, however, have nut taken kindly to the plan, charging that it
,would make for cumbersome = .drairtistration and expressing doubt as td
Libya's readiness for i. adepercaennce in M 52, the date specified in the p k iz.
Nevertheless, this scheme appears -#.(j be the only compromise solutions
assuring continuance of K -US strategic bases in Libya which is capable
of winning a two-Lairds vote i:7 the General Assembl.Y.
'he C~aras tee: ia~tvin ark establishing their new government
because Premier-de Agnate Paths ekhia is missing and cannot be fourkd.
It i.:, rumored that ekhia., a successful attorney in Alexandria, and his
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who enjoy Aiexandria' s social activity, are not enthusiastic
about the somewhat dubious rewards of litical service In Cyrenaica.
. ,,vs)rqrQvdec con .~.iOcs xt the port Beira in o ain ue at present
tth most inxport nt outlet for Southern I`Thcdesian chrome required by
the US stockpiling program, may be rwlleviated somewhat as mechanical
improvements projected by the Portu uese Government get under way.
Increased imports into the aodesias together with wartime deter for -
i o: n of facilities at Beira have limited the annual export of chrome.
Although Southern Rihodesia normally supplies only about 10% (50, 00
tons) Qf US chro=me in ports, 1 JS Arm.- have contracted for 300,000 tons
of the backlog which cannot be moved from. the mines because of the
Beira bottleneck. `l"=tee short-term inorovementa, which include mechanical
ore-handling facii.ities, should be completed in eighteen months and w-ill
increase port and railway facilities ti) the extent necessary to meet
minimum US s ateg ;ic materials requirements from this area.
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