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November 9, 2016
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September 24, 1998
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April 26, 1950
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Approved For Relea 9-010900400040004-0 WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES CENTRAL INTELLIGENCE AGENCY DIVISION WEEKLY VOL. VI ? No. 16 For week ending 25 A1950 a m 26 April. 1950 This document is a working-paper, not an official issuance, since it has not necossarily been coordinated with and reviewed by other components of ORE. It represents the formulative thinking of one group of analysts in ORE and is designed to provide the medium for transmitting their informal views to other intelligence analyats of the US Government who are working on similar or overlapping problems, It is intended for the use of the addressee alone, and not for further dissemination. 7 CLASS. CHANGED TO: TS S C NEXT REVIEW DATE: CHANGE IN CLXSS ^ - DQCU;VIENTNO. Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Relea ~., P79-O109dM00400040004-0 VOL. VI - No. 16 For A k ending 25 1950 25X6A B The issue in Austria of nationalization of industries Ic otil2 very real, oug " do om visible on the scausa die extension of nationalization in Austria is improbable in the near future, an active behindm-the-scenes struggle between the Socialist and People's Parties for the policy control of industries already nationalized is now taking place, Two incidents have recently highGlighted this strife, First of all} the Socialists have attwoted to undermine the Austrian Fuel Import Co. (OBI:G) monopoly,,, which is Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Rele a 19 ~ ? tlA-RDP79-010 000400040004-0 under People"s Party influence, by proposing that, to echieve econor.t ee in purchasing, the nationalized industries should deal directly with foreign distributors and pool their coal imports, Considering that over 90% of the inland coal mines are under public management (aid under Socialist influence) and that 60% of Austrian coal requirements are imported, such a step would appreciably enlarge the scope of Socialist control of the total coal supply, Secondly, the expansion of the nationalized United Iron and Steel Works into the wholesale building materials trado in all of the principal cities of Austria has been assailed by the PeopleQe Party as a Socialist attempt to extend the scope of nationalization through indirect methods. Following the elections of last fall, the nationalized industries were placed under a Socialist Minister, and Peoplee.z Party sensitivity on nationalization has increased since that t-inoo The tactics of the People gs Party now appear to be directed toward: (1) maintaining the nationalization of the Austrian economy within present limits; (2) preventing nationalized industries from branching out into other fields of activity; and (3) gaining control of nationalized industry policy. This last point will continue to furnish ample ground for contention between the Socialists and the Peoples Party (coalition partners), and will be particularly troublesome in the post=treaty period, when the Soviet4held industries are returned to Austria, A The formation of an Atlantic High Council, a tripartite agreemen on an omm s po cy in sou east Asia, and the German problem, will be the matters of primary. interest to the French when the Foreign Ministers of France, the US, and the UK meet in London early in May, The French will endeavor to gain support for the formation of an Atlantic High Council,, as recently outlined by Premier Bidaultd Bidault es proposal for the establisJm ent of an organization which would integrate the economic, military, and political policies of the Atlantic community on the basis of a common global conception is a manifestation of the growing European uncertainty as to the efficacy of the North Atlantic Treaty Organization and of fears that too much emphasis is being placed on the military aspects of the treaty, while other factors are neglected. Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Releas1999/,,9902 RQIA-RDP79-0109000400040004-0 Serious doubts exist as to the reliance which can be placed on the US to continue in its present international role, French leaders believe that growing unemployment in the Us would increase isolationist sentiment, which might be reflected in Government policy, The French Government, therefore, strongly desires a development of the present Atlantic Pact and Marshall Plan which would tie the US more firmly to western Europe,, believing that if the US were to take the lead, the UK would also be less hesitant regarding Continental commitments, In regard to Indochina,, the French for the past several months have been emphasizing the importance of that area as an outpost against the spread of Communism in southeast Asia, and the resultant need for a joint defense policy, An effort mdl1 probably be made to obtain a commitment from the US and the U' for support in the event of a Chinese Communist invasion, Although the French Government is favorably disposed in principle toward increasing German participation in European affairs, its willingness to approve'specific moves in that direction is still conditioned by the traditional fear of German dominance. The French will undoubtedly attempt to obtain assurances from the US and the UK that there will be no rearmament of Germany until French military strength has grown adequate to safeguard France against its northeastern neighbor, B The strength of the Communist-controlled General Confederation o or is Jjke3Y to ec ne was a result a decisions n at the T e na o committee mee ng on 13-14 April, Although the COT has made some slight gains since the failure of the February4larch strikes, the committeees decision to stress political action by the workers will in the long run make the workers question the value of the CaT as the primary defender of their economic rights. At the meeting, resolutions denouncing the atom bomm-b', the Atlantic Pact, the importation and production of national defense equipment, and the operations in Vietnam took precedence over the issue of immediate wage relief (the principal concern of French workers), Croizat, secretary general of the metalworkers,, union, particularly stressed the CGTms struggle for a government pursuing "a policy of peace and national independence"a Such statements tend, to alienate even some lesser COT officials, who are acutely aware of the workers a real needs. In giving secondary attention to economic problems,, the committee demanded a minimum hourly wage of 115 francs (the present minimum is under 60 francs), a 40-hour week with pay for 48 hours,, and a 6,,000 franc vacation bonus. These demands were probably T__-- SEC RE Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Relea 1999/%9Ia 1tC RDP79-0109000400040004-0 intended to encourage labor unity of action at the lowest levels, Unity of action at higher levels will be increasingly difficult as a result of the CGT's denunciation (for the first time) of all non-Communist union leadership. (The non-Communist National Committee of the Christian Labor Confederation (CFTC) has, however, recently insisted on COT participation in wage negotiations,) Violent incidents of the type which occurred at Brest on 17 April will continue to be provoked by the CGT's Communist leaders. During this disturbance,. police fired on 4,000 rowdy demonstrators, killing one. and injuring 20, whereupon 15,000 workers of all unions struck to protest the police oppression, This Communist method of gaining support, by playing on the sympathies of the workers after having instigated police violence, may have limited success, The workers, however, who have participated in such demonstrations, will, when they realize that these are inspired by predominantly political, motives, tend to drop out of the CGTO B The increasi pro cariousness of the French Treasury's operati position may well unaer"Ine the s coalition in June_, ore eWaanticipated effects of France's steady economic progress can be realized. French officials hope that this progress will soon have advanced to a point where tax returns and increased confidence in government bond issues will make extensivo recourse to short-term, inflationary borrowing from the Bank of France unnecessary. The Treasury itself seems convinced that it can hold out without having to ask Parliament for relief. The first long-term (non-inflationary) loan of 1950, however-floated by the Goverment in Maroh was poorly received, and it does not nqw appear that new issues will be counted upon by the Government to bring in important sums before the close of the second quarter, The chances are growing therefore, that the Government soon will be forced to ask Parliament either: (1) to approve modifications of the 1950 budget; or (2) to raise the ceiling on advances by the Bank of France to the Treasury. The first of these requests would reopen the bitter struggle over economies and higher taxes; the second would be a blow to the growing stabili.ty of'the franc and of general price levels. Either request would produce a serious clash between the Radical Socialists and the Socialists; the support of both parties is equally essential for the survival of the Bidault Government. The Treasury itself now estimates that its deficit for the second quarterwill amount to more than 200 billion francs, altost one- half of the deficit originally anticipated for the. entire year, Even this latest estimate is probably optimistic, Franc counterpart funds m4 Ir- 05 all. Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Relea"L 1999/0/,P% :Ipy~TRDP79-0109000400040004-0 (derived from the sale of EGA goods) available for public investment expenditures are likely to be smaller during the quarter than expected, Serious operating deficits are developing in the nationalized railroad and gas industries. Also, as thei French balance of payments position improves, some nations, particularly Argentina, are drawing heavily upon their franc holdings and hence are causing a greater drain on the Treasur s resources than was foreseen, The Treasury expects to manage its operating deficit, for the quarter with the help of a number of improvised born ,-d ng devices. Its chief source of credit, however-the (central) Bank of Franeeie all but closed to it, as the volume of adv?sices received from the Bank reached 171 billion francs early in Apt il, or only 4 billion under the legal ceiling? B Surpluses of some French agricultural products are becoming an additional anco to e large-scale expansion o farm production which ECA considers essential to the attainment by France of a sound balance of payments position in 1952-53. Of principal immediate concern to the Government are present surpluses of IL.ilk1, with output in 1950 expected to rise at least 30% above 19499 and, meat, The uncertain marketing prospects created by surpluses strongly influence French producers to cut back output, Total annual agricultural production has not yet subpassed the prewar average (whereas, industrial output in 1919 was 22(,'v above 1938). and the French have already reduced their goal for 19521-53 from 25% to 16% above the prewar level, Attainment of even this modest objective has for acme time been seriously threatened by a large number of handicaps., such ass (1) the steady downward ;end of the total acreage of arable land; (2) the growing disparity between farm and industrial prices; and (3) the Governmentae postponement of an aggressive policy to boost farm production., while industrial modernization is being emphasized, The Government is taking various steps to assure Fr')nch farmers of adequate markets and hence minimize their tendency to curtail production in the face of the current surpluses A s'.zeable part of public expenditures for agricultural purposes is being devoted to Government purchases of surplus commodities at fixed prices, British and German markets for meat and dairy producl,.s, as well as wheat and vegetables, are being sought., especially on the basis of longterm contracts, A bill is pending in the French Parliament, which would provide for the establishment of a foreign agricultural service, with ten agricultural attaches to study long- range marketing possibilities, These measures reflect the Go ernmentea understanding that massive exports of farm products are easen-1;:gal if France is to maintain even present living standards after 195'. without extraordinary aide -5.- S ara.24i-~ Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Relea I 99%f09LO :FAA-RDP79-0109000400040004-0 FRENCH AND SPANISH NORTH AND WEST AFRICA A The basic friendliness of Moroccan nationalist (Istigla7. PartyL le ers e s worn so thin as a result o re- pea sap n ens an long unMITI ea Topes that it has ceased to be a factor which would favorably affect US capabilities Formerly there was every indication that in another in Morocco 0 war the first consideration of the nationalists would be to offer cooperation with the US in exchange for support of Moroccan independence at a definite date0 Now, however, Istiqlal leaders are saying that their confidence in.the US has evaporated and that US mediation with the French can no longer be trusted, Disillusioned in their expectation that the US would take acme concrete steps to assist the Moroccan people toward self- government., Istigial leaders admit that the wall they have tried to maintain against Communist influence is weakening. The Secretary- General of the Istiqlal Party, Ahmed Balafre3, recently sent a message to the US Consulate to the effect that the party was seriously worried at the US policy of supporting French colonialism in Indochina and North Africa. According to him, this policy was playing into the hands of the Communists, giving them additional arguments with which to win converts away from the nationalists in North African Despair of US support has led to a vogue among Moroccans of criticizing the US on many counts, from the recognition of Bao Dai to an alleged "new" policy of supporting Franco, The Istiqlal Executive Committee has labeled the Voice of America Arabic-language broadcasts "uninformative propaganda" in the same category as French and Soviet broadcasts, and the Sultan is said to be displeased because construction of the Voice station on Moroccan territory was undertaken when he had not,been consulted. Also symptomatic of Istiqlal feeling toward the US today is the sharp increase in anti-US editorials in Al Alain, the party newspapers Balafre1 says he is determined to cfecT "such editorials because they merely abet the Communist cause, It is not certaing however, that he will be able to make his views prevail, for the line taken in the newspaper must have had the approval of the Istiqlal Executive Committees Sam younger members of the Istiqlal are openly saying that Soviet satellite status is no worse than that of Morocco under foreign occupation. The possibility exists, therefore, that the Istiglal, despite its apparently sincere opposition to the Soviet Union, may eventually consider itself forced into cooperation with the Moroccan Communist Party to prevent the complete extinction of -6- Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Rel se 1 0 ! CIA-RDP79-010 .000400040004-0 Moroccan sovereignty. As a small straw in the wind, a prominent nationalist recently granted an interview to the Communist- controlled paper., Le Petit Marocain, as that was the best gray of getting his message o peop Without censorship. Both Abd--el4Krim, exiled Moroccan hero, and Abd-el-Khalik Torres' nationalist (Isiah Party) leader in the Spanish Zone of Morocco, have recently made statements to the effect that it might be necessary to accept Soviet support to attain their objectives,, Though these statements met with the disapproval of the Sultan and principal Istiglal leaders, they were given widespread publicity and may be indicative of a spreading mood. A The formation in Belgium of a representative Catholic Liberal awernmen , pos nc u n oons or~#W' Balsa s, seams likely as a result of the acceptance by the three major parties of King Leopold's proposal to transfer his royal powers 'ntemporarily" to his son, Prince Baudouin, Although some major points of difference still exist on the conditions to be attached to solution of the royal question, particularly in regard to whore the King shall reside during Baudouin's reign and when the temporary transfer of power shall and, a compromise agreement,. including provisions for the parliamentary program, probably will be reached. If agreement, however., on every step is not achieved, or if the King fails to concur in the arrangements, it is likely that the former Eyakens Cabinet will be called upon to handle pressing domestic problems, until a satisfactory compromise is agreed upon. B The reemergence _ of the Dossetti "left-+ning" group into active pa c pa on in the roc sin o a CFEILOTTa-n~Democratic Party may be another step toward single-party Government by the Christian Democrats, At the party Congress in June 1949, the reformist group led by Dossetti, although it controlled about one-third of the party votes, was excluded from the party Directorate,, which was taken over by the conservative wing, The Dossetti group made another bid for power at the time of the last Government reorganization, in Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0 Approved For Rele a 1999&2iCJ -RDP79-0109000400040004-0 January 19508 but was refused Cabinet posts and has since. appeared to be maintaining an attitude of watchful waiting for an opportunity to reenter the arena, The inclusion of four members of the Dossetti group in the 12-man party Directorate elected in April now suggests that the dominant Christian Democratic conservatives might have to rely on the collaboration of the "left-ringers" in any attempt at a one party Government, The reintegration of the two groups makes such a Government increasingly possible, not only by strengthening the party, but by giving it more reason to claim that it is sufficiently representative of popular political currents to make up a broadly based Cabinet without the inclusion of the moderate Left, B The failure of the Communists to arouse public au Fort f o r t h e i r an cam gn is to Ee- rregarcleci as one Indication of Me-spread an apat to the Ml APO Consequently, the Communists may be expected to exploit basic socio-economic issues increasingly in order to sabotage effective Italian utilization of US military aide They will ascribe the continued existence of the country's social ills to the imposition on Italy of the economic and military objectives of US "imperialists", who will be charged with sacrificing Italian national interests to buttress the US in relation to the USSR. In this approach, the Communists will intensify their accusations that the Italian Goverment, as a willing "stooge" of the US, is diverting its energies from long- standing domestic problems to develop the nationos potential for a war of aggression by the West against the USSR, By such strategy, the Communists hope to generate sufficient popular dissatisfaction with the Italian Government?s pro-US policy to win widespread support for agitation and strikes, which they will conduct in order to obstruct the transshipment of NDAP cargoes and the production of war materiel in north Italian industrial centers, B Vatican ties with the Italian Christian Democratic--Party will be ,loser as a resUlf BE M e ec ono o n a as Political Secretary of the Party, Gonella was formerly an editor of the semi-official Vatican newspaper,, Osservatore Romano, He is Minister of Public Instruction in the preaen a n6 , and has had long association with Italian Catholic universities, both as a teacher and as director of university publications, His election is undoubtedly gratifying to the Holy See, Approved For Release 1999109/02 : CIA-RDP79-0109OA000400040004-0 Approved For Relea1999/ RDP79-0109000400040004-0 Savo Vatican leaders probably welcome, too, the acquisition by the Doasetti "left wing" of the Christian Democratic Party of one-third membership in the Party directorateo Dossetti- and his followers are dedicated to the furtherance of the Coals of the Church, and at one time askeedf, without success, to be recognized as a religious order, Presumably their close connection with Italian politics was a deterrent to such official recognition, The Italian Communists will attack the new leadership of the Christian Democrats as proof of increasing clerical influence in the Italian Goverrm ent0 Approved For Release 1999/09/02 : CIA-RDP79-0109OA000400040004-0