NORTHERN DIVISION OFFICE OF REPORTS AND ESTIMATES CENTRAL INTELLIGENCE AGENCY INTELLIGENCE SUMMARY NO. 86

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000100080003-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 11
• Document Creation Date: November 9, 2016
• Document Release Date: January 21, 1999
• Sequence Number: 3
• Publication Date: October 17, 1949
• Content Type: SUMMARY

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OTICE: This document is a orKin paper, not
//~~CI issuance. It has been co--ord.ina.-
an official
tect ~::ithin ORE, but not 'kith the IAC Agencies.
Tt represents current thinking by serialists in
CIA, and is e'esiFned or use by others en'aFed
in similar or overlanni.ng studies a The orinions
exrressed herein may be revised before final and
oi'"ici.al nublicatl OTls It is intended solely: for
the information of the addressee and not for
f=arther disse tine Lion.
Copy s or :
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:,:,, CAN
Intelligence Sunrir ry No. 86
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17 October 1949
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Of.Vice of Reports and Estimates
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MWIfMENTIAL
See t1B 7,eelly No 74, ?;5 July
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See TIB 7eek1y, No 79, 2 0A
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CNRDEN11AL
_5_.
fee I L, '' eekly 'To 6", 16 I"ay
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* See NB Weekly No 8.i, 19 Sept
CO IDENTIAL
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Cf lDL _(;7I AN ,, to CH
I : f'-_l'"AY
1. Labor Parly t=ins overv-hel:iin[-, -major
-7-
Although no significant chom,,e in Labor Party policy
Is anticir}ated as a result of its overrhe Ling election
victory, the (overnment's ability to deal effectively with
increased economic difficulties arising: from currency de-
valuation has been materially strengthened. Ac-ording to
election returns rhich are almost final the I7orr eggian Labor
party has gained nine seats and tr:.th 85 of the 15() seats in
he Storting; "7111 have an absolute majority , ,hi ch Trill be
secure aE.-ainst the fetr left-wring members rho occasiOPally
bolt the Tarty on important issues. The Corrunists failed
to return candidates to any o" the eleven sects for +erly
held, though their loss of popular votes was only an^roxi-
7rately 401., of their total in the 1945 n-.tional elections.
The strength of the non-labor ,iarties, remained relatively
the same.
The wrobable of "ects o ci. rrency devalwn.tion on ilo-ay's
cost o- livin, index as calculated by the Governrlent indicate
:a. rise of 7.9 points. A leeway of only 5,9 index points re-
., c.ins before the "red line" of 165.6 (193U=1u0) is passed,
beyond which ':age increases are Rutornnc.tically granted. The
index has bean kept beloir' the "red line" in the past by heavy
,?overnment subsidies, and additional subsidies anvear almost
impossible. The new Governrlent will, however, be called
upon to adopt definite policies to combat the threatening
inflationary spiral. Dire economic difficulties are not
likely because Labor Party leaders have already demonstrated
their determination to combat inflation by imposing; increased
taxes or added austerity measures. Such measures can now be
taken with relative impunity since the clay for political
reckoning is four years hence:
2. Reactions to Nlorrrej;ia.n elections
Unofficial Governnent reactions in Sweden and Donriark
.n iicato satisfaction ;;ith the size of the Labor Party victory
in the I;orwekSian election:. In Sr.=ed.en the reaction indicated
surnrisc at the margin of victory. All non--Corvlunist tapers
CONEVENTIAL
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hailed the Co;w iun st set ba.ck, and there was some antici-
-?)ation that the results irrould encourage labor parties in
other European countries. f"ost papers stressed the outcome
as a DDersonal victory 'Ge TV 'Me 4"i ?.ister Gerhardsen while
only one interpreted the result as a vote of confidence in
Uorway's foreign policy.
Danish Social Deriocrats exnressed. , ;ratification at
the T r?bor Party victory and there is sore speculation that
they may be encourt ^-ed to seek elections. There is a general..
3eelingg that the Labor T}arty's increased representation woes
not reflect a true bast. ince of power between right and left,
but rather that the opposition ryas t eakened by distributing
Its votes among several parties. The Communists blamed their
fellow corkers' losses on inequities in the election system
.': ii ch they characterized as an exanple of western democracy.
=3. Finance 7.,inister rPsl s
Finance Finister David Hall has been forced to resign
his position as a result of party censure because of his
ill-advised attack, on an old political adversary, Albert
Lundkvist, Social Democratic Chairman of the Provincial
Assenbly of Vastrnanland. lIall accused Lundlkvist of financial
irreL~:ularities in connection with provincial Viscal affairs
and attempted to secure his resignation. The controversy
between the t o men received retch publicity and was so in-
eptly handled by Hall that both the Social Democratic and
the non-irbor press accused him of stooping to obvious lies
to eliminate a political rival. '11-1-en the VA.stmanland Pro-
vinc ..al Assembly re-elected L::.ndkvist chairr:lan by accla- ation,
Hall was rtib].icly d.i.scredited and his moral inte"rity placed
i
on as
in such (doubt even rithin the party that his retent
Finance i.`inister was politically embarrassing.
Hall's behavior threatener arty unity and domestic
tranquility and could not be tolerated. On the other hand,
1_
the storm of controversy u tiicn inv! viably is aroused by his
public utterances on the subject of Sweden's neutrality and
foreign clicy. nought's conduct defaries Sweden's reputation
abroad and embarrasses, but ani,arently does not seriously
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trouble, the parochial Social Democratic Party.
IC sL ED
Parliamentary election s, 23-25 October
As a result of the Parliamentary elections on 28-25
October, the relrtive strength of the four parties in the
Althing (narlia: ont) is not cxnected to be drastically chs.npeda
The Conservative, Social Democrat and. ''rogressive parties,
which comprise the present coalition Covernment, have 19, 14,
and 9 se; is respectively in the F2-seat Althing, The Com-
munist ?'arty has 10 seats.
The only real issues in this election are Communism
and continued confidence in the Governiient. It is impossible
to say t ,nether the Communist party will benefit by offering
the only o~ portunity for a vote against the Governrient. It
is practically certain that no tarty will Cain an absolute
majority. The most likely outcome is that with only slight
shifts of seats the Governnent parties will again form. a
coalition. No party will form a coalition with the Com-
Mrunists,
C4?uNT1AL
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