The Present Situation in Spain

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R00904A000300030008-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 8
• Publication Date: February 28, 1957
• Content Type: MF

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C E N T R A L 1: N T E L L I G E N C E A G E N C Y
Office of National Estimates
28 February 1957
MEMORANDUM FOR THE DIRECTOR OF CENTRAL INTELLIGENCE
SUBJECT: The Present Situation in Spain
Conclusions
1. Franco's position has been somewhat weakened by a
deteriorating economic situation, by growing student and labor
opposition, and by factionalism within the ruling coalition.
However, the army and police remain loyal, and the rightist
groups (the business, landholding and church interests) backing
the Caudillo have given little indication that they are ready
to abandon Franco and risk the grave danger of internal turmoil
that would result. We believe, therefore, that while popular
resentment may continue to grow, Franco will be. able to control
the situation for another two years or so. We do not believe
that the recent cabinet reshuffle will result in any major
reorientation of Spanish domestic or foreign policies. The
question of the succession remains as obscure as ever. We do
not believe that the Franco regime or any likely successor will
withdraw US base rights. DQUMCNT O.
NO MINCE IN CLASS. ^
_ Cf LASSIFIED
GLSS. W ~KCIED TO. TS S C
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NEXT RaViL I DATE:
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PAT APR 198
L'j REtlIEVdER,.
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Recent Trends
2. Inflationary pressures have intensified since mid-1956
and have become especially strong during the past three months.
Discontent has been recently manifested among student and
labor groups. The government, through deficit financing of
an ambitious public investment program, the failure to curb
the rapid growth of credit, and the granting of liberal wage
increases, is largely responsible for the inflationary pressures.
The US base program, though blamed by some Spanish opinion,
does not appear to have contributed significantly to the
present economic difficulties.
3. Since the beginning of the year the stability of the
regime has been mildly upset by the efforts of the Falange to
expand its political role. Franco in May of 1956 initially
endorsed these efforts. However, the rightist groups in the
governing, coalition, including the military, reacted, and at
the year's end, friction among the government's supporters,
particularly between the Falange and anti-Falange groups, had
notably increased. In the showdown, Franco seems to have sided
with the latter, and has apparently jettisoned most of the
Falange-sponsored program.
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4. On 25 February, Franco carried out a major cabinet
reshuffle, the first since 1951. He named 12 new cabinet
members and created two new ministries. Although it is still
too early to estimate the ultimate significance of this move,
the traditional balance among Falangists, Monarchists, church,
and. military men in the various cabinet posts has not been
materially altered, nor has there been any apparent change in
the political orientation of the regime. The question of the
succession remains as obscure as ever. With respect to
economic policy, the dismissal of the austerity-minded Ministers
of Commerce and Finance indicates that the "soft-money" advo-
cates have gained the upper hand. Consequently, the problem
of inflation may become more serious.
Probable Developments
5. We believe that Franco will be able to control the
situation for another two years or so for the following reasons!
as The rightist coalition is still held together
by its fear of popular forces. The rightists now have
no alternativE) leader possessing the political sagacity
and military prestige of Franco, and they are generally
eager to avoid any political experimentation that might
lead to civil war.
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b. The arrr7 is almost certainly loyal to Franco,
particularly since he apparently heeded its warnings not
to allow the Falange to get too powerful. Also latent
military discontent in the lower officer ranks was
probably somewhat mitigated by the liberal June 1956
pay increase. Further, the police, whose loyalty has
not been questioned, recently demonstrated that they are
capable of restoring and maintaining order.
c. The Falange, though disgruntled over its recent
setback, is unlikely to break openly with the regime for
it has much to 'lose by such a break. It is one of the
weakest of the coalition nroups and its immediate poten-
tial for winning popular support is very limited.
6. Although there are serious dangers inherent in the .
present inflationary trend, we do not believe that Spain is on
the threshold of runaway inflation. On the whole, it seems
probable that Franco and his backers, because of.necessity, will
take some steps to prevent the present economic crises from
getting completely out of hand. However, the regime is unlikely
to undertake any substantial retrenchments. Franco probably
Awvrrooo~
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assumes that the US will assist Spain in the alleviation of
present difficulties and that the US will come through with
emergency assistance in the event of an econrmic crisis.
7. We believe that the Franco regime or any likely
successor will not withdraw existing US base rights. How-
ever, especially in case of increased economic difficulties,
Spain will seek increased aid from the US and will be less
cooperative if such aid is not forthcoming,
FOR THE BOARD OF NATIONAL ESTTNMATES
SHERMAN KENT
Assistant Director
National Estimates
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