WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES WORKING PAPER DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400030001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 1
• Publication Date: January 10, 1950
• Content Type: PAPER

Approved For Ruse 1999/09/02 :CIA-RDP79-01 A0004DO030001-
WESTERIT EMOPE, DIVISION
OFFICE OF'. flEPORTS AND ESTIMATES
CRTTRAL INTELLIGENCE AGENCY
C1ORKIFNG PAPER
DIVISION WElCLY
NOTICE: This document is a working paper,
TIM -an official CIA issuance. It has been
co-ordinatod within ORB, but not with the
IAC Agencies.. It represents current think-
ing by specialists in CIA, and is designed
for use by others engaged in similar or
overlapping studies. The opinions expressed
herein may be revised before final and offi-
cial publication. It is intended solely for
the information of the addressee and not for
further dissemination
DATE: 10 January 1950
DOCUMENT NO.
N CHANGE IN CLASS.
DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE: ---
AUTH:,H 372044
(3A~"~ REVIEWER;
Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400030001-4
 11 Approved For R se 1999/09/02 CIA-RDP79-01 WA0004000300011-4
WESTERT3 EUROPE DIVISIO1T
WEEKLY sui4rtA1;Y
B
25X6A
25X6P
VOL. VI - r'o. 1
For week ending
10 January 1950
Approved For Release 199/09/02 : CIA-RDP79-01090A000400030001-4
 5X6A
Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400030001-4
Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400030001-4
 Approved For Reuse 1999/09/02 : CIA-RDP79-01 A000400030001-4
SEC R E T
B There is likel to be a greater volume of
Austrian tra o w Ith the Soviet Satellites an ugos avian
Despite e decline in Austria's trade with the West
during the months preceding Austrian devaluation in
November, Austrian trade with eastern Europe remained and
has since remained, constant. The anticipated Austrian
devaluation led to a reduction in western orders, Other
factors influencing the trade decline have been the level-
ing-off of the demand for pi:,,-iron, steel, pulp, and paper,
and the continued low productivity of Austrian industry
with its consequent hi'h cost of production. In contrast,
the quid-pro-quo basis of the barter arrangenonts with
eastern Burope, and existence of complerientary trade
relationships, have militated against a comparable drop in
trade. Austrian trade with the present Satellites and
Yugoslavia is considerably below the prewar level (consti-
tuting about 2V of Austria's current imports and exports
compared to the 1937 figures of about 391' for imports and
32f for exports). Austria, nevertheless, still takes con-
siderable foodstuffs and solid fools from eastern 1.'urope,
and will probably require even greater quantities of such
goods in the future. Furthermmore, as the Austrian indus-
tries continue to increase their production of metals,
equiTnent, machinery, and textiles, it will be natural
for Austrian businessmen to seek markets in the Satellites
and Yugoslavia.
Recently, Austrian businessmen, for example, have.
entered a. riillion-dollar trade deal with Hungary through
Intrac, the Soviot-front export-import organization.
Although this transaction, which the US is trying to get
the Austrian Government to void, represents but a small
fraction of total Austrian trade, it is the kind of arrn2ge-
ment that will slow down the tempo of Austrian recovery,, It
dissipates Austrian hard goods, by exchanging them for semi-
luxury food items, when the hard roods can be traded else-
where for hard currencies and goods more important to the
Austrian economy. Furthermore, the success of Intrac as a
middleman, at a time when the Austrian Government is seeking
to undermine Intrac's incipient monopoly position, is
particularly disturbing, and indicates that Austrian
businessmen are willing to reap a profit regardless of over-
all Austrians econce is needs.
,.T
Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400030001-4
 ~~~
Approved For Re ia 1999/09/02 : CIA-RDP79-01y,A000400030001-4
S E C R E T
A .The Bidault Government, narrowly sustained in the
Assembly by six recen votes o confidence resulting in the
passage of the budget, will enjoy a reprieve, at least
through January. Parliament, in its ordinary session which
opens 10 January, is primarily concerned in the first week
With the formation of cozen It tees and the election of officers,
and is not expected during the remainder of January to debate
any new matter which could provoke a political crisis
Although labor is pressing urgently for a bonus, pending the
final return to collective bargaining, the flight is not
likely to threaten withdrawal from the coalition on this issue.
Legislation for collective bargaining passed the first reading
in the Assembly on 5 January, The Assembly's second reading
of the budget and collective bargaining bills will probably
be delayed by extended debate in the Council of the Retnublic
(second chamber).
The Council is likely to amend both of these bills
substantially, and the Government would then face a severe
test when the budget bill undergoes the second reading in
the- Asserbly,. An absolute majority (311) will probably be
necessary to override Council amendment of this bill., ion-
?asnuch as the Council itself is likely to pass the amendments
b, such a majority. I3idault :,as unable to obtain more than
306 supporters on any of the recent votes of confidence. The
ov }rnrsent, moreover., apparently carried one of these votes
over strong Rightist opposition only because Bidault promised
to reconsider the tax-increase provisions when actual revenue-
raisin; measures are debated. Hence, it is likely that
opposition to the tax features of the budget bill will be
strong both in the Council, where the right is powerful, and
on the second reading in the Assembly.
ducts cam_
al&n in the comint ; months- with the-- a rate
on ec i ve of tun erminin, Trench national defense Th
P
0 e
CE
hopes to achieve this objective by directly obstructing de-
fense production and by promotins-;widesprbad defeatism.
The PCP is already spreading "peace" propaganda by
calling.; on workers, youth, and Ccrmunist front organizations
to rebel against any plans for rearmament for an imperialistic"
war. One of the primary motives of this propaganda is to per-
suade workers to initiate strikes in all enterprises engaged in
war produetion0 Although the Communist-led r~onoral Confederation
CC r 0_ is 1 Approved For Release 1999/09/02 CIA-RDP79-01090A000400030001-4
 Approved For Re a 199919/92d cI4-IpP79-01 A000400030001-4
of Labor (CGT) has been relatively ineffective in creat:'L
extensive strike action during the past year, it remains
the most powerful single organization of trade unions, and
has a large following of workers in some key activities
directly affecting defense production,, where limited work
stoppages are likely. Recent indications are that efforts
by CGT langshorerion+.s unions to stop loading; arms for
Vietnam are not supported by the majority of dock workers.
Communist pressure to persuade longshoremen not to, unload
NDAP equipment will therefore be intensified.
The PCF's attempts to provoke widespread defeatism
among the French will probably not seriously impede US
plans for the 3afonso of western Buurope? These attempts will
include intensified dissemination of newspaper articles,
pamphlets, etca, which will emphasize purported US designs
to: (1) use the French as soldiery, (2) rearm Germany, and
(3) dominate the French nation completely,
THE Nl':'TlI'71 ANDS
B The Dutch will be more interested in stren thenin*
a western-or en a an -U-T contra a German , now that the
e er an s' Most complete preoccupation with Indonesia
is ended with the grantin ; of Indonesian independence?
Before World 'Yar Ii, Germany was the Netherlands first
supplier and second best customer, and was an important
source of invisible income. 17ith some loss in income from
Indonesia expected, the Netherlands is seeking; to renew
prewar economic ties with Germany, with the important
difference that through collective western control the
Netherlands hopes to prevent the revival of the former German
discriminatory practices.
The Netherlands seeris determined to include Germany
as soon as possible in the regional economic ?;rouping of the
continental western I?uropean powers which is currently under
discussion among Prance, Italy and Benelux. lhile Belgium
has joined the Netherlands in favoring German participation
in such an organization, the Netherlands has been more in-
sistent and vocal on this point. The Netherlands also
insists that the Benelux countries participate in the dis.
eussions of the western occupying powers on the question of
terminating the state of war with Germany. The Netherlands
wants firm assurances that, if the state of war is ended,
the German Federal Government will assume responsibility for
prewar German debts and accept six-power decisions on the
protection of foreign interests and the r ectification of
Approved For Release 19 79-01090A000400030001-4
 Approved For Rese 1999/SQ9P0j R IffDP79-01094,000400030001-4
Gormany's western borders.
Currently, the Netherlands Is attempting to
obtain: (1) increased use of Dutch ports, waterways, and
inland craft for international shipments, to crest Germany,
and (2) token utilization of Dutch craft in the west
German inland waterway traffic, in preparation for more
extensive operations, with complete freedom for Dutch
shipping;. The Dutch, furthermore, are opposed to German
control of the currencies used in paying; for inland
shipments. The Netherlands probably will now concentrate
on obtaining satisfaction on these points, because the trade
agreement with the Federal Republics concluded in September
1949. has made possible a large increase in Dutch exports,
and has resulted within the past few : nanths in a. very f avor-
able balance of trade for the Netherlands.
B The groundwork beinn laid for future Dutch-
Indonesian Cooperation Indicates as the e gar an s
Government Is a cceptiii the new relationship with Indonesia
and, at the same time, is determined to obtain the maximum
political and economic benefits within the limitations
imposed by the Netherlands Indonesian agreements. Prepara-
ti.cw s are underway for the organic establislx ont of the
Piotherlands Indonesian Union, which provides for consultation
on matters of mutual interest. The machinery has already
been utilized for discussions on foreign polio;*, particularly
the question of the recognition of Communist China.
The appointment of Dr. Uirschfeld, former Dutch
Government adviser on TB'.RP affairs, as the first Itigh
Comnissionor to Indonesia is a strong indication of the
attitude of cooperation, aesiuned by the Netherlands Government.
A nom-political appointee and an astute financial techmicIan..
Hirschfeld was on excellent terms with the Indonesians
during The Hague Conference, and was instrumental in obtain-
ing; Dutch acceptance of economic and financial concessions.
lie has indicated that the Netherlands is willing to grant now
credits if the Indonesians request them. An agreement has
been reached between the Government of Indonesia and the Ioyal
Dutch Airlines (1:111) to form an airline for inter-island
traffic in Indonesia. According to reports, KLM will receive
5+ of the profits from an operation which, until now, it
monopolized. The advance in Amsterdam stock market prices for
Indonesian shares at the end of December indicates confidence
in the Indonesian Government's policy on foreign investments
and the Government's ability to maintain order,
Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400030001-4
 Approved For Rele 1999/09/02 : CIA-RDP79-01 A000400030001-4
ITALY
The reluctance of the Italian. (rover ncnt to
reflects an Italian Government policy resulting from its
readiness to accept the majority opinion of local
cc iuunities against minority evangelist groups. In
;'ovember, 194 , the Italian Goverrunent, despite repeated
inquiries by the State Department, refused to permit a
group of ITS Jehovah's Witnesses to -,~xtend their visit in
Italy, and requested that they leave on short notice.
At that time, the Acting; Director General, of Italian
Political Affairs explained to US representatives that
Italian authorities interpret religious freedom to mean
that "everyone is free to worship in his o.n way", but that
this policy does not extend "to allowing foreigners to
enter Italy for indiscriminate religious proselytizing".
The rowixi "~ a prehension arnon=* many I. aalians as
to the efficacy ZTS m o a y cou x O more
serious consequences than the extreme leftist campaign
af,;ninst TIDAP. In an offort to counteract Cex:iriixnist pro-
pa;anda that this miiitanr aid will eventually involve
Italy in an "Imperi.alist" offensive ar-ainst the TT"SP, the
Goverruiont-inspired press has declared that the relatively
modest amount of assistance, together with limitations im-
posed by the peace treaty and the national budget, will
rostrict Italy's participation in the Atlantic at to
strengthonin; its own defensive position, and will preclude
a campaign of aggression. This explanation by the pross may
boomerang by riakin~- increasingly apparent to the Italians
the precariousness of their position in the event of an
Fast-t;cyst war.
Although Italy's vulnerability to invasion from
the east cannot be overcome, the population's will to
resist could be stiffened if the country's defense poten-
tialities were developed to the maximum. Such a program,
however, *would involve violation of the peace treaty's
m13itai- clauses, as, for example, by requiring the re-
activation of iar industries in north Italy. Furthermore.,
the psycholo -ical advantages accruing; to the Italians from
participation in the production of .iar materiel for MDAP
may be outweighed by the Italian realization that north
Italy would probably be quickly overrun, and its war plants
captured intact, by an invadin ; enemy.
Approved For Release I 99 9iO .:riCj4 DP79-01090A000400030001-4
 Approved For Re se 1999/0,9/p2- CIA; F P79-01 A000400030001-4
T VATICAN
Fear for the position of the S anish Roman
Catholic C ur n the even o political changes in Spain
is ma or . armor deterring the Vatican from working for
the removal of Franco, despite dissatisfaction of important
loaders in the Vatican over its present relationship with
the Caudillo's Government. The Vatican is aporehensive
lest Franco's fall would mean immediate loss of prestige for
such organizations as opus Dei (designed to exert a conserva-
tive influence on Spanish youth), which have been promoted
as much by the Spanish Government as by the Spanish Church.
More important, Vatican leaders are aware of the widespread
hostility among the Spanish Catholic population to the
alloged venality of the higher clor?;;-. Many Spanish
Catholics are afraid that a chant e in the Government would
lead to serious popular attacks against the Spanish Church.
Approved For Release 1999/G 9-01090A000400030'001-4