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November 28, 1951
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Approved Welease 2001/11 /2%RDP79R010 ?. ,001500030008-3 ;ECURITr fl OBU&TIQN Ok . OYR Contribution to NIE?5 TM CURRENT SITU&TICH AND PROBABLE DEVELOPMENTS Iri Bf.,STWIN GERM&NY THROWH 1952 Ne mmbsr 289 1951 State Dept. declassification & release instructions on file fleview of this document by CIA has determined that 9 CIA has no objection to declass 9 It contains information of CIA Interest that must remain OFFICE OF ENTI I LIGENCE RESEARCH classified at TS S Authority; HR 70.2 DEPARTMENT OF STATE r '0 It contains nothing of CIA Interest 08% ` t Reviewer 0 6 Approved For Release 20 1 f 3( "1012A001500030008-3 Approved Fo Release 2001/11/20 : CIA-RDP79R010 001500030008-3 `SECRET dECU T% INFORMATION 11 i6ASTl?.RW GERM W THROUGH 1952 1. THE CURRENT POLITICAL SITUATION AND YROBi'BLE POLITICAL D'E' LOPMERTS ho The Position of the Regime In Governmental Structure. Ostensibly Eastern Gerxs.ny has a democratic form of govnrnmento There is an executive branch appointed by the lower house of the legislature, the Volkskatamero There is also an upper hour,, the ij enderkatruaner, which represents the various states, The judicial branch has little independence and the, constitution does not attempt to carry through separation of power between the various branches of the i,ovo rnm0nt o Vhi`le the Socialist Unity (Communist) Party (SED) by itself .does not hates a majority in the main legislative body, the Volk?skammer, it nevertheless has secured complete control of this body, At the last oleotion~ October 1950,, it has forced all the other parties to aerie to ca singe elate ticket called the "National 1 ronto" Moreover, it has j 4ced numerous loyal SOD adherents in the seats reserved for representatives of the so?oailed mass organizations, such as the trade union and youth organizations. Which were granted special representation in the Volkale~sr~se Political power mists in the SH,D which dominates the whole govern- mental and administrative apparatus, Its power derives Prom its olose collaboration with the Soviet Control Commission as well as from the fact ,,,hat SED members occupy all the key positions,in the admi.n.J.etretion and the economy of the oountryo #i GC R!,T SECURITY INFORMATION Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 Approved For Release 2001/11/20: CIA-RDP79R010 001500030008-3 '., o sitar- tunportn Betw an five and fifteen percent of the East Inrnan population is estimated to favor the continuation of the present egi o Probably one-third of this croup consists of convinced believers, =th the remainder boing. opportunists. The percentage of the population :hich is politically indifferent, is thought to be negligible, Between 8'5 and 95 percent of the population, therefore, hopes that the regime will be eliminated, The amount of active or passive resistance which this predominant majority manifests against the regime, however, is very small] its attitude is one of passive acoeptancso Youth furnishes the largest single segment of support for the regime0 The contribution which other groups such as women and labor cake is relatively much smaller,, Basically those elements who have a vested intorest in the continuation of the regime provide its chief support,, This applies in particular to the 81h,'D, which comprises roughly ten percent W the population,, There are probably more adherents of the regime in urban, indus- trialised areas than in rural areas. Beyond this, with the exception of cast Berlin,, there is no apparont relationship between the geographical distribution of the population and support for the regime* Since the establishment of the regime in October 1949, the extent of the regimets popular support has inoreasodo This development stems from the refimsas increasing influence on youth, some improvement in the standard of living, the indirectness of Soviet controls and exploitation, &van if all or part of the Soviet occupation forces wore withdrawn the security apparatus of the regime is adequate to ensure its remaining SECRET IX Approved For ReleiiT&01P0=11iMR P79R01012A001500030008-3 Approved Folease 2001/11/20 : CIA-RDP79R010'001500030008-3 S K,;C aT S! URI TY INFORMATION in poser, The position of the regime could be made still more secure by an Bast Germaa+Soviet arrangomont, providing for a return of Soviet forces in the event of a serious threat to the roZimea a. Areal of regime's' program. The lower age group anon- youth is partioularly susceptible to the a, peals of the regimen Clergy and active church members are least susceptible. Other groups, such as older youth,, woman, farmers, artisans, industrial workers, former Nazis, resettlers and expellees, occupy an intermediate position; 4o Impact on youth,,,. In attempting to gain adherents among the popula- tion,, the regime has directed its major effort toward youth, especially the lower age groups and has scored considerable success,, The age group from 6 to 26 comprises one-third of the total popula.. tionv Even though 75 percent -- comprising the older people in this group is believed to be opposed to the regime,, most of the regimees support derives from this groupo Among youth the percentage of those favoring the regime is higher than in other social groupsj moreover;, proportionally youth probably provides the, largest, percentage of supporters whose attitude is not governed by considerations of immediate self-interest. As time goes on the amouat of active support which the regime receives from youth will increase still furthers U, Effectiveness of lecdershipa In the immediate post,i mr period professional competence was apparently the basic criterion for holding an administrative position of some consequence, so long as the applicant wms not a major Nazi Since then this situation has changed,, An actively pro-Communist attitude, or at least political reliability from the Corrtmtanist SECRET Approved for Rele g UAW 14 WHL4A%P79R01012A00150003 0008-3 Approved Forlease 2001/11/20 CIA-RDP79R0101 01500030008-3 81 DRI,TY Il1POa' ATI014 pobt aC tier, is now more of a consideration than heretofore, mole the sdaassistrative apparatus is, thus, politically reliable, it is loss skilled thu.it would .7b* if the political factor were to receive less stress, aid tioaal factors which further weaken the effectiveness of the administra. tiie apparatus are= the practice of entrusting position to individuals ose age and qualifications aro not oaomensurate with their responsibilities= the deterioration of the educational systems the westward flight of prom faesiaeal people: and the imposition of 'Soviet method., As the social revolution becomes stabilised, a corrective trend will probably develop, Those administrators who do not now have the requisite qualifications will learn by doing. Increasingly the choice before any young person envisaging a career in o;overnmtient 'is simple either to accept the Communist dictation of East German life or to forego any chance for such a career, Very probably he would make the former choice, prospect, then, is that a corps of leaders,, competent at least by .oist standards, will emerge in Eastern Germany, On Political parties and groups, Aside from the SED the following political parties exist in'Sastern Germanys Christian Democratic Union (ODU Liberal Democratic Party (LDP), Democratic Peasants Party (DBD), and National Dsmooretio Party (NDPD)o In W ast Berlin, the Social Democratic Party i. still permitted to exist legally las CDU and WP are the eastern counterparts of the Christian femsorstio won and free Democratic Party in:1t9stern Germany, Their activity has boooane more and more limited so that today their primary purr oat pose, as fa./the SED is concerned, is to maintain the fiction that Eastern Approved For ReI/ -9PP79R01012A001500030008-3 Approved Felease 2001/11/20: CIA-RDP79R010W001500030008-3 ..,.,, i',ET SECUI>,i TY IN?OR ATION Germany is a multi-party state. The DSD and NDPD were expressly created by the 8ED to broaden the base of its support among. those elements in the population who are reluctant to join the SI?.'D or whob because of past lia4 .associations, are not desired in the SED. All those parties participate in the " Xatioasl Front." none of these parties maintain any formal ties with political organisations is Western Germany. However, they are used as unofficial and personal channels of communication by the SED for the covert dis.. semimatico of propaganda concepts. This is especially true of the CDU in th. current unity campaign. To German Commnaiist influence on Soviet policy. Like Communist leaders the world over, the East German leaders have a dual character. On the one hand they are the leaders of a national Communist party which at least to some extent mist espouse national interests; on the other hand# they belong to the leadership of international Commu nismo ti*henever these two roles conflict the latter is overriding. While they may participate in the formulation of Soviet policy on Germanyo they do so in their international oapaoityo Within Eastern Germany,, they are primarily the executors of' Soviet policy. In order to made this policy more palatable to the popula.. tiano they may exert an ameliorating effect on the way in which.thia policy is carried out but they cannot change its main lines. 8o German Communist influence in 0rbit4 There is no evidence on how mush or how little influence the Nast German Communist leaders have in the Orbit. 4hatever the extent of this influence, it derives from their personal charaoteristioa_ and their international, rather than national, positions, SLURRY Approved For Relea P/1I1YYO1 gP79R01012A001500030008-3 Approved Foe lease 2001/)CIA-RDP79R010001500030008-3 SECUEaTY INFORMATION In. vi+r+ir of the subservience of all the Orbit leaders,to Moscow, any difo ferentiat ion . of influence is. of little practical importance D Although the USSR has made abundant use of German technicians and the various fast Gorman-Satellite treaties provide for the ezohange of soientitic and technical information, there is only scanty evidence that German specialists are being employed in the satellite cauntrieso FQ Soviet control, With the establishment of the GDRD the USSR replaced its instrument of direct control ?d the Soviet military Administra- tion (SIA) -a with less obvious but nevertheless just as effective means and devices of controlo The SMA was succeeded by the Soviet Control Commission (SCC)a which operates with a smaller and more centralized staff and whose functions are chiefly superrisoryo The functions exercised by the various departments of the SM&' were transferred to the new governmsnt0 There are two vital exceptions to this general relaxation of direct Sarin oontrols., The control exercised by the Soviet internal security apparatus (Mm) over its Last German counterpart was not modifiedo In the eoouomio sector, the Soviet-controlled corporations (SAGes) still operate as an adjunct of the Soviet economy,, with control being exercised by Soviet representatives directly responsible to Moscowp As Soviet politiodl control became less direct,, the SED emerged as the principal and most potent instrument of Soviet policy. 10' Position of regime visa-~vis USSR The leaders of the Last German arr~..rprr.~.r r regime are totally subservient to Moscow This condition would continue tb prevail even if Soviet forces were withdrawn., Even under these air- SECRET Sr.CURITY IIiU'ORMTIOJ Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Fo lease 2001yh 3xi;T CIA-RDP79R010t 001500030008-3 SOCURI TY INPOR V.ATIOB sru1sstanaes, there is little oht uoe that "Titoism" will emerge in Eastern #ier " Only in a united Germany, under Communist control, would there exist U* mseessary pro conditions for the. astablishmsnt of a center of Capwtumist power competing with Mos*Ov $ Issues and Pores Affootinr; the Regime 1, Hsndiaa to the regime result from Soviet and Communist control. Traditiasai attitudes. There are several basic traditions in $arterm Germany which promote latent hostility to the regimen Given suffi4 oient tiesq the regise,.through the medium of indoctrinating youth, will probably be able to neutralise these traditions sufficiently so that they do not constitute an important impediment to the realisation of its program0 i~ Perhaps the stron sst of these is anti-Slav nationalism Gen !s antipathy for its Slav neighbors manifests, itself chiefly in the cultural sphered Almost all Germans identify themselves with the destern cultural heritage and consider Slavic, particularly Russian culture, gaerally interior to their owno Politically,, this tradition has been less firmly ant"lav.: There is some willingness to enter into arrangements of oamwenieneeo Despite strenuous efforts the Comm mists are reported to have met with little success in breaking down this tradition in its cultural upsetse ii, Before 1933 Social Democracy and trade unionism were partic ouilarly strong in Eastern Gerzuzyo In weakening this tradition the Co gists had the spade work done for them by the Nazis., On the other hand, the salricquent diaillusion,ment experienced by-'Social Democrats who agreed to the Socialist-Communist merger, which led in 1946 to the creation SECRET Approved For Relei'%u1ll gP' i-I P79R01012A001500030008-3 Approved Fo lease 2001/11//220:. CIA-RDP79R0101 01500030008-3 Q0 I =1M SEiC JRITY I7ORMATION of the BED, and the. labor policy of the regime have acted as a brake on the visken,Ug of this tradition. ifiQ ' The religious tradition of anti-materialism and Christian ,else affemrts wide strata of the populationo Thus far, the regime has rottalasd from launehiug a frontal attack against the Protestant and churches although it is probably only a matter of time before such e an attack is undertaken IT*. Finally, although it is counteracted by the tradition of obedience to authority, the tradition, throughout Germany, of a government at lams, rather than of men provides the basis for soma of the opposition against the suppression of individual freedoms and political terror in fact against all the appurtenances of he totalitarian state. Of all the traditions this .is the most difficult to deal with because unlike the others it does. not depend in large part on transmission from one generation to another e bo Recent Soviet decisions, Those elements among all groups of the East Crean population who have suffered out tangibly and directly from the current implementation of kosocw s German policy can hardly be expected to be protagonists of the USSR, The grievances arising fray Soviet implementation of this policy probably contribute heavily to popular die s satisfaction with the regimse The Ceuamunist myth that Soviet and German national interests are identical undoubtedly finds little acceptance* ks'ertheless, the. dissatisfaction engendered by Moscow's recent decisions is diff?esi.s$ inchoate' and' largely centered in those groups on whom the Oemstu 'isO do not rely aarmy for supporting the regimen In addition, the east deersaar probably consider, at least in part, Soviet occupation policies w the F 14i ?! )1 102(1 iA' t)P79R01012A001500030008-3 SECRET Approved F(It elease 11 f l ~ R010 4001500030008-3 2. Berlin and ;;estexn Gemy R. . The presence of allied forces in Berlin serves as strong evidence to the anti-regime elesents of the population that the Western sorld has not abandoned them. of The democratic life/the still accessible Western sectors of Berlin constitutes a factual refutation of the Communist wopaganda line that political and, individual liberties are being suppressed in the . West. be Western Germany. Among the opponents of the regime opinion is divided between those who favor a neutralized, united Germany and those who favor the total integration of a united Qermany with the West. The farmer groupseee in the Western prograu for Western Germany a major obstacle to the realisation of its aims. The latter group is likely to be heartened by the growing evidence of Western determination to get on with the job, and is -believed to be considerably stronger than the first, h4oreover, this group is said to be! augtannted increasingly tv elements who see in.the growing strength of the West the only opportunity for a release from Cornmmist dons- nation. While these developments may make considerable groups among the population more restive, it is doubtful that Soviet expolitation of Eastern Oernan,rvill be significantly affected. Restiveness will be answered by the regime by further repression and intensified controls. 3. The Unique. a. Politi ly it po . The East German population undoubtedly shares the general German desire for unity. Very probably, that desire is stronger in Eastern than in Sestern Germany because the position of the ? S Sb:CURITY INpORLW ION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved F a r 2001/1 DP7 010 ?W001500030008-3 S?'v1 It ATIt~I~t 10 predarsinant majority could not help but be better in a united Germany than it is now. In pushing its unity drive, the -regime prdbably derives eocro' support from elements of'' the popul: tti on who are not basically pro-Ca unity, such as nati onaii st or Church groups. b. Avidenye of Hel tion of Soviet Control. Evidence that the UDR is likely to relax or surrender its control over Bast. Germany in an effort to slow or stop West Germany's rearmament and integration with the West consists chiefly of rumors and "private" statements of Soviet and last German officials to that effect and to persistent effort in the East German unity caroatnn to convey that impression. Poriodical1v since the beginning of the current phase of the unity drive , curie or another Soviet or tart German figure has stated more or less definitely in private conversation that the USSR in its desire to avert feat Garman rearmament mould be willing; to allot; ganuine1 r free elections in Fast Germany even at the cost of its own control, would accept even a "reaotionary" German government, etc., always with the proviso that the resultin ; Germany be demilitarized and neutralized. Such statements, plus a certain amount of wishful thinking in various Western circles, are, apparently responsible for tie numerous rumors to the same effect which have paralleled them. No such statement or rum-or has, however, been followed up by a aarrresp ng concrete and binding offer on the official level. The various Nast German Dropoeal8 for all-German'disoueeions dr unification have SECRET SECURITY INFO1 kTION Approved F.or Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Folease 2001/1 0A-RDP79R010'F01500030008-3 S CT tiTY IM)OWlOfil U indeed been designed to create an t preesion of willingness to exchange control of Sant Germaty for German neutrality and disaroanent. The." have from the first proclaimed the Corec-uniat desire for a "free, democratic and peace- lovir Oor,sany" .err) they have implied a progressively greater willingness to cousider syah points as free elections and the necessary Guarantees t: at each elections would be free, :?rise implication has been conveyed, however, by the proposal that such points be "discussed" rather than by unequivocal acosvtance of any Specific guarantee. The ;rmneral concession of "free" elections itself in vitiated by simultaneous insistence that Co'munist-. controlled elections already held in East Germar' have been free and a number of the specific guarantees demanded by the Meat have been categorically rejected. "lhile the manner in which the latest proposals are being presented to belligerent in this respect, the East German Communists aftd the USSR dti71 flatly reject neutral or UN pro-election inspections In Germany in favor of four-paver inspections with the 'USSR participating under unspecified coedit .ans. Continuing consolidation of the 'oviet military position in Last Germagr by such measures as airfield' construction and enlargement would also ,argue against arp- likelihood of abandonment of the area in the near future. The bal an ce of probable advantages and dis advantage s to the USSR of such a step would also appear on the whole to be evidence against it. While a guarantee of the neutrality and demilitarization of Germany might be a serious blow to the Western de^erise effort, It is doubtful whetior the SECRET SECGK[TT INFORMATION Approved For Release 2001/11/20 : CIA-RDP19R01012A001500030008-3 Approved Fb lease 2Q. 10 01 500030008-3 riremi,in's confideace in the long-continued validity or such a guarantee would be mat. The a$8R could possibly gain under a united, neutral GOrmaryr certain trade advantat-es in West Germany which it does not AM enjoy, It would have, however, to weigh against the problematical extent of these advantages, the certain loss of a large share of the, profit it now derlvoe from $astern Germany. Surrender of control would also be a serious blow to. daviut prestige and propaganda effect'.veness, both as an example at Soviet retreat and as furnishing a convincing exposure, once East Germany had been opened to the Zest, of the fraud of arevious Soviet and Communist claim' regarding conditions there. On balance it would annear that, while the kremlin, ma4Y hope that the prospect of ooviet retreat frill a ntice the Western porn rs . or the S7est Germans or both into prolonged negotiations with camquent delay in West Oermacz r'a progress toward rearrua.ment and integration with the West, it-has at present no intention of actually retreating, Prospect for a Soviet-East German Peace Treaty. There is no tanglible evidence to eug.Mst the possibility that the USSR will conclude a unilateral peace treaty with Fastorsi Q erramny. (an tie pi ttorn of previous Soviet tactics in Germany some such stop might be expected to follow successful conclusion of the current --erotiations between the Western powers and lest Germany on contractual, relations, much as the formation of the Federal Republic was countered by the establishment of an East German state with nominal3y greater sovereignty and privileges in foreign relati.onse SECRET SEC1 RI?Y Iur0INATION Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 Approved For Release 2001/11 WSW 04 4001500030008-3 13 Soviet and bast Qar ian prestige has )erhaps also become :ssc aewfiat involved in the targe I date of 1951 set by the cor munist--sponsored plebiscite of last spring and summar for a r sneral Gorman aeace treaty and it is biirely conceivable that a unilateral treaty ?a? rht be considered as a p rti al fulfillmxnt of t'4is -oal. a.' ere has been no concrete ndication that suds a step is conte:-plated 'tor t:-e aear futures however Certainly little time re:aains for a fulfill- rent or the 1951 target date; there has been no propaganda build-up as yot for such a step, and it i.s noteworthy t' gat t -,ie date has received little e..:iphasis of late. Such a treaty V.ould !lave re Latively few advantages from the Soviet viewpoint. Should it be cc'ncl:ided, it woull certainly be played up arola a:lda-e ise as Indicative of Soviet g*onerosity and as conferring greater soverei ~Tnty and more benefits otherwise upon East Germany than Nest Germany eti1o'-,ed under its ahree*>ants vrith the Jest. The Kremlin :airht also hope that ,.are :iraasti.c action could he taken acra::ist the .test in certain fields,. Berlin for instance, and with less direct Soviet involvement and risk, through a nominally independent East Garman rovernment than 1,s possible under ;)reeaht c' rcu stFi:lcee. on balance ho-:ever, It !:ive t?te -L1rei.i1in 'no real benefits which it does .iot alreadw,f have, and it would have a nualber of serious disadvantages. 11c .matter how it'was re?sresecited in Soviet and East German Propaganda., it would probably be interpreted in the lest as finalizing the inclusion of Boat Germany in the Soviet orbit -ind the division of Germany. A. would thus SECRET SECURITY INPURMATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved For elease 2001/11/20 CIA-RDP79R01$Q4001500030008-3 SECRET SECURITY INFOf.ATION turn against the USSR the sentiment in favor of. German unity which it has itself encouraged and attempted to use against the Went. It would end the hopes of elements now inclined toward neutralism for a peaceful mifica- tion of Germany and enlist at least a portion of their support for rearma? Dent and integration with the Nest. For these reasons alone, such a step would appear unlikely at least until t7est Gerriany'e new relations with the West have been rinalized and the USSR has abandoned all hope of weakening them by appeals for German unity. Such a treaty would perhaps have more weight in ';7estern eyes should it be accompanied by Soviet troop withdrawal. ,While the treaty in itself would tend to make continued presence of Soviet troops less justifiable politically and propaganda-wise, however, it is doubtful that the Kremlin would contemplate withdrawal while Western troops remain in West Germany or before East Germany and the neighboring satellites are regarded as thoroughly reliable, Furt'hermore,ile, as noted, the Kremlin might feel that the nominal independence of East Germany offered a convenient instrument for eliminating the -,Yesterii position in Berlin, that position would be an even greater irritant and potential threat under such a circumstance than at present; if it could not be eliminated. d, Soviet ctione Rezardii Go,:-,..an Unity. Beyond the elaboration and intenoif icationt of the tactics now being followed, the Kremlin can take virtually no action to influence the Nest and West Germany on the issue of German unity without accepting a' weakening of its control over East Germany. g~ SECRET pp,~ Approved For Release 2001/11/20-=FtDP73 A001500030008-3 Approved Ftr'elease 2001/11/20: CIA-RDP79R01(-001500030008-3 SECRET SECURITY INFOR1 ATION 15 Unequivocal acceptance of the conditions laid down by the ffest ad lectern Oermany would certainly do so. Moscow may feel, however, that existing; internal divisions in West bernany and differences between Test Germany and the Western powers and among the latter still offer favorable chances of at 'Za act delaying Western progress by a continuation of ats -)resent policy of :raking progressively more attractive offers of terms on the preliminarysasures to be taken for unification. Si ch an offer might thus eventually contain specific points virtually duplicating the majority of the Vestto basic demands with the hope, horrever, of raroducing negotiations on unity rather than icxedi.ate steps to:aard implementation. Such negotiations ca .1d still be indefinitely prolonged by haggling over apparently minor remaining differences without leading to an actual agreement, implementation of which would endanger the Coinrnunist position in East Germany. Until or unless greater divisions appear in the Western ,camp than have. to date' It is doubtful. whether the Kremlin would expect that actual -unity could be attained on terms acceptable to itself. 1, - Popular Discontent. a.- and b. .Thila popular discontent with the ,regime is widespread, there is no evidence that it is on an ar ganized basis or that it is particu- larly effective in preventing the regi.r2 from attaining its objective. Similarly,sympathy.for the West is widespread but it too is diffuse and unorganized. CO Because of its very size, youth probably contributes. 'wit heavily in, numerical terns to popular d iacoent. As a group the clergy Approved For Release 2001/11/iRdTft l ffMM1a#001500030008-3 Approved Flease 2001/11/20 : CIA-RDP79R0102001500030008-3 SECRET SECURITY INFORMATION is reported to be the most solidly anti-regime element. At least among the Protestant clergy, however, the tradition of submission to the civil authorities probably militates against manifestations of active resistance. d. The regime will probably be able In the future to prevent popul r discontent from coalescing into an orgartaed force. SECRET SECURITY > idFORLt&TION Approved For Release 2001/11/20: CIA-RDP79RO1012AO01500030008-3 Approved Fcelease 2001/11/20 : CIA-RDP79R0102i2 ,001500030008-3 S1eR T SECURITY INFORM&2I0N in, Cm EC02011IC SITUATION $canomip.- MM for 1951-1955 At the SAID party congress in July 1950, Walter Ulbricht, Deputy kewder. of the Dim, first announced the ambitious Five.-Year Plea for the period 1951-1955, This Plan, in a modified version though basically eimilaa and. frequently identical in its phrasing, has been enacted into law by the People's Chamber on November 1, 1951. The main purpose of the plan is to increase the IDR's heavy industrial capacity in order to reduce the areas dependence on imports, particularly from west Germany which was its traditional source of bituminous coal, steel, heavy machinery and many other products. Under the plan, total industrial output is expected to double over the present level (which is roughly equal to the 1936 level). Real national income is scheduled to rise by 60 percent. Steel production is to reach 3 million tons by 1955, or about three times the 1950 output and more than twice the prewar production. This level would correspond approximately to the prewar steel consumption in That Germany. In order to achieve this result a vast expansion of iron ore and pig iron produc- tion is envisaged. The 1955 goals for these two items have been greatly raised in the new version of the Fivb-Year Plan. The target for domestic iron ore -production has been increased from 1.8 million tons to 3.65 million tons (production in 1951-is estimated at 450,000 tons), and that for pig. iron from 1.25 million tons to 2 million tons (production in 1951 SECURITY INFORMATION Approved For Release 2001/11/20 : CIA-RDP79RO1012A001500030008-3 Approved elease 2001/11/20 : CIA-RDP79R01 WA001500030008-3 SI~i~RT SEJ$ITY INFORMATION 18 about 400,000 tons). Other large increases are planned for brown. coal, eopper ore, electric energy, heavy chemicals. machine tools, electric generating equipment, and. trucks. Targets for most of these key commodities were revised upward in the new version of the plan. For bawsn coal an additional 10 percent increase was ordered on top of the 55 percent increase stipulated in the original Five-Year Plan in spite of the known difficulties in providing the machinery for this expansion of mining operations. The 1955 target for copper ore output was increased from 1.5 million tons to 2.65 million tons, compared with a present annual production of only 800,000 tons. The shortage of copper in East Germany has created very serious difficulties in the manufacture of many key items. Consumers' goods production which. so far bad lagged considerably behind that of the basic industries is scheduled to double by 1955. This would bring textile and leather consumption to approximately the 1936 level. The agricultural plan for the five-year period calls for a 57 per- cent increase in the value of production over present levels. US intelli- .to 11 percent above the prewar level, for sugar beets to 27 percent and for gence sources I/ estimate that the real value of all agricultural produc- tion (including livestock) in 1950 did not exceed 75 percent of the prey level in spite of higher claims (up to 100 percent) by the East German authorities. The plan envisages an increase in output for grains and pulses potatoes to 29 percent. Yields per hectare are to exceed prewar levels by about 5 to 10 percent. Availabilil' y of fertilizer in 1955 is scheduled to reach the prewar amounts in the. case of potash and nitrogen, but to ,j7 SS Oee IR 5202, . Economic Siti*tion Pt East Germany.-1950, August 7. 1950. Approved For Release 2001/11/20 : Cl D 9RO1012AO01500030008-3 smRiTY nuri .'1'ION Approved F elease 2001/11/20 : CIA-RDP79RO114001500030008-3 SBQQRITY I21P0HMATIOS ,expected to remain about 10 percent below in the case of phosphates. It is estimated that for the crop year 1950/51 nitrogen end potash 19 consmn>tion was only 85 percent of prelrar and phosphates only 50 per- cent. Generally, food availabilities per capita in 1955 are expected to equal or slightly exceed the 1936 level.- The earlier hope that meat, fat, milk and egg rationing could be abolished by the end of 1951 or at the beginning of 1952 has apparently proved to be premature and the date for de-rationing has been postponed to 19530 The Plan foresees wa e'and salary increases of'16.5 percent over 1950 for the economy as a whole and of 20 percent for industry. At the same time the general price level for food and consumers' goods is to be lowered by at least 28 percent. Taxes are also to be reduced. This is consistent with the planned inc'ease in real national income of 60 per- cent. Even such a large increase, if realized, would bring private consu p- tion per capita in 1955 to only a little above the 1936 level, based on a previous OIR estimate of the'1950 consumption level of 67 percent of 1936. The Economic Plan for 1951 published in the Spring of 1951 provides for an Increase of gross industrial production by 17.9 percent above 1950. This expected increase represents exactly one-fifth of the proposed expan- sion during the Five-Year Plan. If the proclaimed achievement of about no, percent of the -prewar level in 1950 is used as a basis, this would bring 1.951 gross industrial production to about 130 percent of the 1936 level. If the US intelligence estimate zJ of 85 percent is accepted for see 0 R 5202. J OIR - HItOG Intelligence. See OI8 5202. Approved For Release 2001/1 A001500030008-3 Approved Felease 2001/11/20: CIA-RDP79R01 114001500030008-3 8 1' $WJRI'PT 1>~IORHATYdg 2950.. eaierseaent of the 1951 pleat vaaid rye ind~s trial output to 100 psarosnb of the 3936 lard. "IS Nut 0ssasn govsr m t e3aiss tbat oa an orssjLll 'basis- the industrial plan bas been ovwfslftiled in the first three quarters of the year by about # percent, eoq:h admitting that in soon iWrtext sectors the targets we" not fully reached. In_ line with the gMs1s1 principle of the Pies-Teary P3+en, 69 largest e3Veasion is planned for machine eonatr?ation,.and precision end. optical instruments.. A considerable acceleration of the capital investment progrea is foreseen, partionlarlp in heavy industry, machine dui lading, and transportation faeilities. It is admitted that the 1950 investment plan was not realized owing to faulty planning, difficulties in obtaining equipcent (particularly frog West Gerdy), and wlscat of discipline." The 3,951 Plan singles out specific plate for the e1ansion progren, including several Iron and steel mills, machine tool and heavy industrial equipsent factories, synthetic fiber pleats, and a large electric generating plant. These projects are to receive priority in the allocation of rear materials, Biel,. and industrial equipment. In o*der to mitlipte the effects of the acute shortage of electric power, which cannot be overcome in 1951, the Plan calls for a better diversification of the power load. CoaVlaints about the inferior quality of iron and steel prodwets brought a warning from the government that rolling. mill products must be "decisively' improved. It is also stated that available capacities mast be used more efficiently than in the past. The 1951 plan for agriculture alas at an output equal to the prewar . Ievsl for the main field crops, which would represent a slight increase Approved For Release 2001/11/20 :8P79R01012A001500030008-3 glop, I M N Approved %Wlelease 2001/11/20: CIA-RDP79R01QJA001500030008-3 T S ITY ThT08MATIOB 21 (between 2 and, 6 percent for the individual crops) over 1950. larger increases are planned for livestock production, but output will still remain considerably below prewar. Beneficiaries of the ]and reform will receive father aid. The a11-powerful Machine Lending Stations (MAS) will be further expanded, but no mention is made of plans for collectiviza- tion. The trend toward increased state control of the economy will continue during 1951. By the end of 3951 the share, of publicly-owned enterprises in total industrial production (excluding SAG's) is expected to reach 76.6 percent, as compared with 68 percent in mid-1950. The need for private enterprise and its importance for the economy is emphasized, as on previous occasions, but actual developments do not bear out the sincerity of this statement. 111MR1 11 . SIICU'BITY I2 ORMATIOB Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 Approved F release 20~qffqt(3, ;711 A001500030008-3 at Industrial and Other Goods Soviet Ta .ln Soviet takings continued on a substantial level in 1950 although they seem to have been roughly one-third less than in 1949. Deliveries to the Soviets were made under any different headings and this makes an even a pprozinate accounting difficult. The DM I a economic plan for 1950 stated that reparations would amount to 4.4 percent and other deliveries to the occupation authorities to 1.9 percent of the planned gross industrial production. This statement is probably literally correct. The budgeted amount for reparations proper of DM 970 millton and the planned deliveries of goods to the occupying power of DM 452 million con- stitute 4.3 and 2.0 percent,, respectively, of the gross production plan for 1950 of DM 22.5 billion. However, these figures are misleading for several reasons. Reparations and deliveries to the Red Army are calculated strictly at 1944 stop prices (or about 20% above 1936 prides) while the production plan figures., though originally also in terms of 1944 prices, reflect subsequent upward price adjustments amounting, on the average., to about 30 percent. Furthermore, reparations are end products and must therefore be compared with net production values which on the basis of the 1936 relationship, are only 53 percent of the gross values. After ad- justments made for these reasons, it was estimated in the middle of 1950 that industrial deliveries in 1950 represented about 17 percent of the total net industrial production. Very little information has subsequently become available regarding 1950 deliveries and no better estimate can be S' RET SECURI R.UP TIOA Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved or Release 2001/11/20; CA-RD 79R011 A001500030008-3 SEC='LT INFOM3ATI0N given at this time. A recent Intel icenae report indicated that actual reparations deliveries in 1950 amounted to Dot 1,007 million at about 4 percent more than those stipulated in the original plan. This aver- fulfillment of reparations deliveries is in line with the slight over- fulfillment claimed for the 1950 Production, P2=* The 1951 economic plan does not mention reparations or other deliveries to the Soviets. The only basis available for a 1931. estimate in the statement by the Soviets of September 1950 announcing that they would reduce by onessalf the reparations still oared to them of the original demand of $10 billion. They declared that $3,658,000 (presumably in termfl of prewar purchasing poorer) would be considered paid by the end of 1950 and that aaa-alf of the remaining amount, or $3,1718000- would be payable over the period 1951 to 1965- If this amount is to be %,2l1,400s000- paid in equal i~tall.m~ants, the annual payments would amount to Depending on the conversion rate used, this amount would equal about 530 to '00 nd.ll ion prewar Reiohamarkp, as compared with about RU 800 md.]lion for 1950. There is no indication that occupation costs and goods deliveries to the occupation authorities have been reduced in 1951. Total industrial deliveries therefore are probably only slightly reduced and still amount to about 10-13 percent of the increased net industrial production. 25X1 reparations deliveries to the Soviet consist predominantly of producers' goods, about half of the value being accounted for by heavy machinery, electroteohnical products, optical SECRET g r URIV UPa .JATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Flease 2001/11/20 DP79R010.,,001500030008-3 $SOtaI1? WOMUM and p,roision 3astrumeats, and prefabricated houses. Other important items are ohemi+oals+ synthetic petrol products, and fishing boats. Arasmeoeats Prodgotion for the Soviet ikaioa IBM 25X1 25X1 Reosmatlir considerable evidsnos Las bseaoe available that armament production is taking place in But Gsr eny. acids from the production of small arms, weapons components, mzmitions, and dual purpose equipment, which has been going on for now time an a limited scale, production of heavy military equipment is being organized in the area. The manufacture of complete tanks of the type "T34" and "Stalin" is reported in two plants. In one plant four to six new tanks are reported to leave the factory each week, while in the other one tank is said to-be completed every other day. The two plants are reported to be equipped for hrge scale serial production which so far has not yet been startodo A large number of plants, mainly SAG +s and VEBts, are said to be producing tank parts, mainly for the"ra4:" Frequently production 4a reported to be carried on under disguise (such as parts for tractors or dredging maohities) but it can apparently be established that the quantities produced exceed by far the need for such spare parts and their dimensions and speoifiAationa fit only tanks. =the following tank parts are produced in specif ioally named plants s SECRET SECURITY IWC MATI0N Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 25X1 25X1 Approved F release 2001/11/20 : C79R014jA001500030008-3 SECURITY INFORy&TIO Armor plate for O T340 up to 80 mm thickness in six Plants Gears for tanks in three plants Armored turrets for tanks and perm in . three plants Tank underbodies in one plant Luny factories are reported to produce gun parts such as gun carriages, heavy and medium gun turrets, parts for, anti-aircraft guns, and gun breaches.' One of the SAG's Is producing railroad net care of heaviest construction, ostensibly "crane care." These cars were identified by their specifications as carriers for long-barrelled guns. It is estimated that about 2000 such flat cars were produced up to the and of 1950. Special purpose freight cars suitable for the transporta- tion of tanks and guns and other heavy war equipment are also being built for Soviet account. One factory produces track removal machines (three per month) copied from an American model. Other military items identified in the reports are munitions of pinny kinds, chemicals such as nitroglycerine, taluol, concentrated nitric acids gun cotton and poison gases, fuel for jet aircraft and high octane aviation gasoline. Among the neny miscellaneous military items produced in the area are camouflage nets, mi 1i ta7'y boots, military leather goods, uniforms, field kitchens, military hardware such as belt buckles and canteens. An important item is the production of fine wire mesh which is needed for het propelled aircraft and for ore concentration in the mining of uranium. sum SECURITY INFORMATION Approved For Release 2001/11/20 :' CIA-RDP79ROl 01 2AO01 500030008-3 Approved F elease 2001/11 /20DP79R010001500030008-3 44 902= - SECOM 2IYITION 26 pas SAG is producing special rapes' bearings for tw and aircraft. The ten people's caned shipyards are filling orders from the Soviets toe' an annual prodsetfaa at 250 hags of 450 gross sterid tows and 50 sei n 's of 350 tons. Alm as ships are suppA fi~ebdng craft, it is reported that the epseifioatiocs' suggest that these vessels may be intended for pstrat, ails laying and e~horee po sabion duties: The baste are delivered to the Soviet navy= the m&ler oases him i~syoartedly been added to the Soviet Black Sea fleet. Production of submarine parts such as diesel engines, ape" valves and centrifugal. is also reported. Alm no aircraft Arad matian has so far been reported, accessories are apparently being prods among ahich are precision ring instruments, bout sits, cameras, p'otsnticetere and others. There are also reports on production of equipment for air fields, such as Mbd3,e pager plants for search lights, tank oars for refuelling, tanks for jet fuels and ssatrvbligbte~ Teleoommgcdostion egnipment or practically every description including transmitters, ampl.itera, special mobile sending +stations, field t phaasss, Coulon rers are maxufaotured by a large number of plants for delivery to the Soviets! A further 3,ntensification of armament production could be achieved since most of East c ay's industry could be esal)y converted to military production. The general development of the tndui tai al eaonaopr in East Germany pod hts tomrd the creation at the largest pateati a]. Center of War' SD8P6T SEC IIECRYATIOW Approved For Release 2001/11/20 CIA-RDP79.ROI012A001500030008-3 Approved Fcit' 2001/11/20 CIA-RDP79R010W001500030008-3 SECRET SECURITT INFCL ATION 29 of its present production, including trucks, chemicals, synthetic gasoline, industries among the Satellite countries. In case of war, East Germany could readily serve as an advanced supply area for the Red Arm. !kith etc. are of dual character and could, without conversion, imaaediately fill pressing needs of the Soviet armed forces. Uranium Mining miming of uranium falls within the category of armaments production for the Soviet Union, Very little specific information is available on the vast operations of the wismut A.G., which is in charge of the project. According to East German census figures a total of 242,000 people were employed in these operations in 1950, and the ==ber for 1951 is officially estimated at 2$3,000. Even though the company is officially described as an SAG, it is practically autonomous in order to preserve complete secrecy of operations. The ore, is dispatched to the USSR in special containers, probably in the form of concentrate. The uranium content of the ore is variously estimated at between 0.06 and 1.1 percent; that of the con- centrate (in one of ten dressing plants) at 2.5 percent. No information is available as to total output. Apparently no German has access to the records. In order to gain an idea of the magnitude of the operations, the following calculation is made. On the basis of an average income of DM 4,500 per year (as indicated in the East German census for the Wismut A.G.), and a total labor force of about 280,000 men, the totel payroll amounts to DM 1.26 billion. Adding expenditures for materials of at least DUE 300 to 400 million r year, the total cost of operations amounts to more than DPI 105 bi11i o , or the equivalent of at least 0300 to 400 million. SECRET SECURITY INFORMATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved ForIease ~ 001/11/20: CIA-RDP79RO101QW01500030008-3 SECRET SECURITY INPXIL CATION 28 Obstacles ...to the Full mnt of the Iiustrial Mail, Sven under favorable conditions, the East German economic plans for the period 1952 to 1955 will pose enormous problems to the planners and the industrial eoonony will be strained to the limit. Shortages will inter- fere with the even flow of industrial production 4nd hamper the badly needed improvement of productivity and quality of output. Some of the principal vulnerabilities of the East German economy at present and in the coming year are discussed below, The lack of bituminous coal and coke in East Germany has been one of the most serious economic problems since the and of the"war. The area produces at present only about 3 million tons as compared with 3,5 million tons in 1936. Imports of bituminous coal and coke in 1950 amounted to about 4,5 million tons as compared with a little over 11 million tons in 1936. However, the increased lignite production of 135 million tons in'1950, about one-third more than in 1936, compensated to some extent for the bituminous coal deficiency. Progress has been made in expanding the use of lignite for industrial processes, but the shortage of bituminous coal is very critical in the iron and steel, chemical and other industries. Minister Rau recently mentioned the coke short- age as one of the area's greatest economic worries. Considerable hope is held out for further progress in substituting lignite for bituminous coal. SECRET SECURITY INFUaTION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 on. The economic plan does not provide for any si$eable increase of bituminous coal production, but brown coal output is scheduled to rise by more than 60 percent by 1955. East German technical experts have expressed serious doubts about the feasibility of the program. Should coal production fall consider- ably. short of the goal and imports of bituminous coal and coke do not in crease substantially, achievement of other five year plan goals will be Jeopardized. Electric Power Almost as serious as the coal shortage is the shortage of electric power. Output in 1950, with 18.5 billion.,' was, about one-third above that for 1936. Plans call for an output of 33.4 billion KWH by 1955, an increase of 80 percent over 1950. The load on the system is extremely heavy,, particularly in view of the high age of the equipment, averaging about 26 years. Rehabilitation and expansion of the power system is one of the key programs in the economic plans. A large part of the needed equipment and spare parts must be imported from West Germany and West Berlin. Only about 50 percent of the import program materialized in 1950. Production of generating equipment is planned to increase substantially. The power shortage may be expected to continue to handicap the overall industrial expansion program.. Great difficulties in obtaining machinery from imports SUMT SECURITR INFORM&TION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 1 SECRET SECURITY IN?'ORM&TION 29 The success of experiments with brown coal coke in the production of pig iron in low shaft blast furnaces is still in doubt,, The use of brown coal briquettes in locomotives has raised considerable problems. that have not yet been solved. Experiments with coal dust firing are now being carried Approved F eelease 2001/11/20 CIA-RDP79R010t 001500030008-3 SUM T SECURITY INFORMATION and domestic production (simultaneously with the execution of large repara- tions orders) must be anticipated. Iron and Steel The lack of iron and steel, together with the coal shortage, the area's most pressing material supply problem, and 'the increase of iron and steel supply is, therefore, one of the key points in the industrial program. The Five-Year Plan calls for a steel production of 3 million tons by 1955, or roughly a tripling of the 1950 output.. This level of output would, however, be only just sufficient to satisfy Eastern Germany's prewar steel requirements. Pig iron output is scheduled to reach 2 million tons in 1955s a. sixfold increase from 1950. The iron and steel program requires an enormous expansion of blast furnace capacity, steel and rolling mills, and iron ore mining and in,addition calls for substantial imports of iron ore from the USSR, and of coke from Poland. Some of the heavy equipment is scheduled to be Imported from West Germany in spite of strenuous efforts to manufacture a large part of the machinery in East Germany. In the immediate future large imports of steel, mainly as rolled products, are required, estimated by DDR authorities at between 700,000 and 9509000 tons in 1951, but it is unlikely that more than 500,000 will be obtained. Total steel availability for 1951 may be estimated at about 1.8 million tons., an increase of 30 percent over 1950.. This quantity will fall short of the goal by at least 250,000.3009000 tons, Furthermore, there are' qualitative inadequacies. Frequent complaints 8 CRET SECURITY INFORMATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Fo lease 2001/11/20 : CIA-RDP79R0104 001500030008-3 S8CRET SECURITY INFORMATION 31 of substandard quality of iron.and steel have been officially recognized in the 1951 plan. It appears that haste in the erection of now steel mills and lack of skilled manpower are the main factors. These problems will continue throughout the Five-Year Plan period. Nor Fe, , Metals The shortage of non-ferrous metals was discussed with considerable emphasis in Minister Rau?s speech in March 1951, introducing the 1951 economic plan. The area is greatly deficient in all non-ferrous metals.. The worst shortage is that of copper. Supplies in 1950 were less than 40 percent of the 1936 quantity. Since imports are'difficult to obtain, domestic ore production is to be greatly expanded, from 800,000 tons at present to 2.65 million tons in 1955. However, given the low metal content of about 1015 percent, this quantity of ore will yield only about 30,000 .tons of copper or about one-third of prewar consumption. In view of the urgency of repair and new production of electric generating equip- nt, transformers and distribution network, which require large quantities of copper, the copper shortage is critical. Copper is extremely short through- out the Soviet orbit; imports from the West are very small and the domestic scrap collection drive has proved a failure. No substantial alleviation of this shortage is to be expected in the next few years0 The area.has practically no deposits of learn, zinc, tin, or any of the minor non-ferrous metals and is therefore largely dependent on imports. The supply of all these metals is very short, far below the prewar level. SECRET SECURITY INFORMATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Felease 2001/11/20 CIA-RDP79R010-? 00150.0030008-3 SBMT SECURITY INFORMATION Moat of the available aluminum reduction capacity was dismantled by the Soviets, Reports indicate that new capacity is being installed,, but in view of'the power shortage and the need to import all bauxite, it is un- likely that production will become, substantial in the near future, Also short are most of the steel alloys, with the exception of ferro?eilicon, which is made from quartz which is abundant in the area, Ghomigala Most of the basic chemicals are in short supply, particularly sulphurio acid,, caustic soda and calcinated soda. Great efforts are made to increase production in the coming years and the 1955 targets have been raised again in the recent revision of the Five-Year Plan, Production of sulphuric acid and caustic-soda is to double by 1955 as compared with 19509 and that of calcinated soda is to increase sixfold. In view of the shortage of imported pyrites, domestic minerals are to be used as raw material for sulphuric acid, but considerable technical problems remain to. be solved Also in critical supply are oxygen, fatty acids, glycerine, toluol (for explosives), cyanimide salts (metal hardening agent),. resins (for paints and lacquers), barium carbonate (for steam boiler cleaning), carbon .bi.sulphide (for synthetic fiber production) and hydrochloric acid (demanded for uranium mining), Other risk. Shortages exist in wood, leather, asbestos, natural rubber, and textile fibers among important raw materials. Industrial goods in critical SECRET Approved For Release 20Mt2 [: CRIIMRREM1012AO01500030008-3 'Approved FA lease 2001/11/20 :'CIA-RDP79R010 2t 001500030008-3 AV SECRET SEC ITY INFORMATION 33 supply are ball and roller bearings, diesel injection pumps, electrodes, automobile parts, high-grade metal cuttj.ng tools, transformers, cables, electric motors, orankehafte, gears, grinding machines and many others. Tra_nsvort_tion Another serious bottleneck in the economy is the rail transporta- tion system which will be even more heavily taxed in the future by the scheduled 73 percent increase in freight traffic during the five-year period. In 1950 freight traffic had reached about'70 percent of 1936 and fell about 12 percent short of the target set for the year. The 1955 goal means an increase of abot}t 25 percent over the prewar levels The freight car park is to be expanded by. 40,000_ cars, or more than 50 percent compared with the present park of 70,000-75,000 cars, but will still remain about 25 percent below prewar. Only 200 locomotives are to be. added to the present locomotive park of 4,0000 The strains of the rail system are aggravated by the loss of track due to large-sq4, a dismantling after the war. Only a small part of the dismantled track has been replaced. The Five-Year Plan envisages the lay- ing.down of only 750 km of additional track in spite of the fact that about 6,000 km had been dismantled in earlier years, reducing the net to 13,000 km. Replacement of about 2,300 km of existing track is programmed for the five-year period, doubt that the proposed replacement and expansion program can be managed. Close to 100,000 tons of steel per .year are SECRET Approved For Release 2091y GPI RbWON1012A001500030008-3 Approved F4 Release 2001/11/20 : CIA-RDP79R0102,001500030008-3 SECRET SECURITY INP'QRM&TION required to maintain, replace and expand the car and locomotive park. Another 40,000 tons are required for the 750 km of new track. In view of the general steel shortage, it is doubtful whether the total quantity of steel needed for the program can be made available. Creditable intelligence has been received that the roadbed, track, signal, and rolling equipment are in extremely bad condition and that many emergency measures are being taken to keep traffic: going. This critical state of the railroads will make it all the more difficult to fulfill the high plan targets. Sho ,of s} i.leed abor Besides the shortage of materials, the scarcity of skilled labor raises serious problems for the East German Planning authorities. In order to provide an adequate supply of skilled workers for the realization of the economic' plans, efforts are being made (1) to increase the total labor force, primarily by the increased employment of women; (2) to increase the number of positions for apprentices; (3) to retrain workers for critical trades. The realization of this program is meeting considerable resistance in the population. The total number of employed (excluding persons employed within the family) is expected to rise by 890,000, or 13 percent in the next five years In 1951 alone 300,000 additional workers are to be employed. Very little of this increase can be achieved by reducing unemployment. SECRET SECURITY IM MATION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Fo lease 2001/11/20 : CIA-RDP79RO10 .2001500030008-3 10, SECRTT SECURITI INFORMATION '35 -as of the end of August 1950, a total of only 83,000 men and 1798000 women were officially registered as unemployed. Moreover, more than half of the unemployed men and about one-fourth of the unemployed women are classified as handicapped, The number of registered unemployed represents only a little over 3 percent of the total employed population. Three-fourths of the scheduled increase in total employment is to be achieved by the increased employment of women. The total number of employed women (excluding women employed within the family) is to rise from 2.448 million in 1950 to 3,20, million in 1955, or about 30 percent. The share of female workers in the total labor force is to increase from 37 percent at present to 42 percent in 1955. The percentage of women in publicly-owned enterprises is to rise from 33 percent to 42 percent, The Labor Law (Gesetz der Arbei.t) of April 1950 obligates all enterprises and administrations to employ women to the largest possible extent. The law provides for the employment of women in the mining industry and other trades never before open to female workers. The apprentice plan for 1950 provided 2218000 positions for the 333,000 juveniles leaving school in that year. For the first time certain percentages of these positions were earmarked for female apprentices. In the field of precision mechanics and optics, at least 70 percent female apprentices are to be employed, and in the ready-made clothing industry 98 percent. The drive for increased employment of women follows a well established SE0RET SECURITY IN. iMaTION Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved Fcelease 2001/11/20: CIA-RDP79R010 2001500030008-3 SECRRT SEQUEtITY INFO MkTION .36 Soviet pattern. German tradit&on, boiever, has so far reoisted- this trend. TW Shat tags of sklllmd tortes in partioularly acute in the mining and metaUnsgical industries, The quality deficiencies in the output of the new iron aDd steel mills aunt be largely attributed to this factorb SECRET 9ISC11RIT! INFORMATION Approved For Release 2001/11/20: CIA-RDP79RO1012AO01500030008-3 Approved Fig Fjelease 2001/1 CIA-RDP79R01 G2 001500030008-3 ~/ S CU 3.~.p1' li+ir'C u`L0N 37 General Difficulties of Economic PlazMiPA To the physical shortages mentioned above must be' added the general, difficulty of developing and pursuing a balanced and cot istout econ i.c plan. The.'E t German authorities have had only limited experience with the problems of coordination. and phasing 'Which this involves. Further- more, since many production goals must be messed in monetary terms., the problem of price changes (Which, era envisaged mainly in form of specifio cost reduction) becomes important, and it is obvious from the literature on the subject that these difficulties have not been solved. The flow of funds is another problem that has bothered the authorities. It seems that =uW public eute~prises have not strictly ccvaplied with the now regulations which require them to surrender their current assets to the central budget, but continue to retaina certain proportion for their The Pattern of Et=Al Trade The economic plans for the period 1951?.1955 rely heavily on large imports, particularly of critical materials, such as iron and steel products, : non -ferrous metal:, bituminous coal and coke and specialized machinery. Trade developments so far have not fulfilled expectations. In 1949 the volume of fcareign trade-was estimated at about 20 percent of the 1936 level, :chile interzonal trade reached only about 7 percent. Foreign trade plans for 1950, which envisaged more than a doubling of the trade vol w e, were not fulfilled. At the beginning of 1951 it was officially stated ' that the volume of foreign trade in 1950 increased 42.9 SEGR*r SECURIIT INFOWATION Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 Approved F lease 2O81 D 1 01500030008-3 percent over 1949, which would put the volute of East Ueman foreign trade In 1950 at roughly 30 percent of pre =w. Trade with the USSR a'md the Satellites increased by 56 percent according to the same source. Applying these percentages to the 1949 figures, it would appear that the share of the Soviet orbit in East Germany's total trade has risen frog 79 percent in 1949 to 87 percent in 1950. The 1951 plan provides for an increase. of 60 percent over 1950, with particular emphasis on ;trade with the Eastern bloc. If this goat is achieved, the volume of foreign trade would reach about half the 1936 level. Judging from tl}e official criticism leveled at the For sign Trade Administration, it eeems, however, that foreign trade got off to a slow start in 1951. Agreements finally concluded.-notably with Czechoslovakia and Poland, provide for a sub- stantial expansion of trade. Trade with the western world in,1951 is apparently somewhat larger than originally anticipated. In the second quarter of 1951, this trade accounted for 20 percent of East Germany+s. total foreign trade, rather than 13 to 15 percent as previously anticipated. This increase may be explained by the greater frequency of three-cornered deals to circumvent interzonal trade restrictions, East-West German (interzonal").trade in 1950 was about one-third above 1949 (1949 was law because of the blockade in the first part of the year), bringing it to a level of about 10 percent of the 1936 volume. West German deliveries to the East in 1950 consisted largely of steel products and vital industrial producers' goods. Metallurgical products accounted for about 30 percent, machinery for about 17 percent, chemicals for about 20 percent and metal products for about 6 percent of total SEC tE-T SFCURIt^I IYdI?'O&UATI0I Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 .Approved F (ease 2001/11 \-RDP79R010 2 01500030008-3 SEvMYrdly It 'G ,T1Oi deliveries. The new interzo.ial trade agreement recently signed, but not yeb implemented, provides for a- similar pattern of West German deliveries, but permits a greater flexibility in determining the specific goods to be delivered. Actuu ly, ho rever, East-West German tradi decreased by about one third c:.ring the first half of 1951 compared with the average for 1950, and its relative importance in East Germany's total external trade decreased to About 10 percent. It suns obvious the' the DDR. will continue to make determined efforts to obtain critical oupplies from the test. Recent developments indicate, honover, that a substantial increase of legal -dest German exports of strategic materials to East Germany is unlikely. On the other hands East Gorman attempts to procure the desired co=odities by illegal means will 'probably be inter.,^ified.' Should actual imports in 1951 fall considerably below the plann d level, as is likely, the industrial pros dnation goals of the 1951 PL -m will probably not be reached. SECRET SECURITY INF(EUATIOIJ Approved For Release 2001/11/20 : CIA-RDP79R01012A001500030008-3 Approved FeIea 2 P79RO10OO15OOO3OOO8-3 40 Wb TB m mm UILI SZTVATION' AND PRGBA$LE MILITARY DEVEW The Bt stems Geri an Qs,'ouud !orces 2. 'A raplCk expaaunz iat of ,'im Alert Police wa":a13 have ecrio?. poliitiofti reporenaeiana in Western Geri zy. It would presvide the West Qerrmne With dran*tio ec oe of the ncccl for clc e ly developing a West Germs counter- force. Moreover, it might roll bav + an adverse effect on saow'o relations with the Qtber 3atelliteii,, v+t:o -arould view the extensive roan nt of Pastern Oern ny with misgivings even though it core done under Co ti,cat auspices. An additional factor is the eur- ont Comm mint emphasis on the f ulf i12 nt of industrial targets o. If the Alert Police mere rapidly expenodthe lebor force needed to fulfill industrial targets would he reduced. The low morals among the Alert Police as mall as then probability of adverse public reaction am further oone?.derations. 4. go apeoial effects of the East Germ n peace and anti-r'earw=at campaign live been. observed along the Alert Police. Generally speaktg, beoaue, of tb monotcxay of tkao propaganda there s the fact that part of the propaganda expenses is charged to membora of the Alert Police, and the general lack of political eu iocity, political indoctrination in the Alert Police has not beex- too sucocr full S. i. Ibmber. An eeti ted 200,000 PWCa tyre still hold in the USSR* it. Soviet intentional There are no indications that (e n PP/Me are presently organised in unitary units. While carefully selected and indoctricatOd PV's are Icioavn to have been to c n into the Alert Pol lco is the past and have frequently boon given impor- tant position3, there is no indication that position in, the 'Alert Police SECRET Approved For Releas`9N81 /79RO1O12AOO15OOO3OOO8-3 Approved or I%IMP79R0'001500030008-39&.: are still bei sg filled by Pale Drom the USSR. Such a development for say approaiable weber of Pt*'#3 2s liks2y for the future, eiaoo long oeptiiity hoe =,de these am p2yeios 4y and paq+ohologioat v Wit for military oearo'ie9 for the Soviet cute, rd because if they w rv potential military a a ta t i a i , t h e y w o u l d h a v e been givon better treat mat or perhaps already havo been oorgan3sed in military unite. For the own roon1 it is un lil sly that PWae still r,em ring 1 the USSR will bs organized into a terms armod false in the 111$SR. This does not prea2ude the ocoasi oral use of Gersim military azperts among the PP:'c an the basis of any special skills they may hove. S EET stamis-! XFo> Tiox Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3 Approved eleasg/2W9R0001500030008-3 Ve J-D1? IOUL ICAT M OF PROMM SOVM CO QP :ACT ICn i s Abs nog of &IV (IOM Bast Euro Dofgnso Pacts Bast on tai1o to have mt l d.fenaa pacts with the M SR aaa4t the other SatQ113' a ioald appear to to In part a reflection of ito forctl sta#un, ac a teritory occupied by the Soviet. thion with no officially -recognized almod farces or its ova,, an in part due to the psychologioal inadvisability of urging such plots on countrJas such as Poland and Czechoslovakia with stres g residual. antif.-tar feelinj among their populations. 2hus, the present status 'of East Garrany in effect oommits the USSR to its "defense" while East Germany itnelf has theoretically nothing to contribute to the defense of the USSR or other satellites. So lox as the fit Coal ist tine on Germany is folloaed3, raoognitlon, explicit or implicit,. of a military role for East Germany would have obvious adverse payrrht~lagical effects in the West and among the Eastern h' u ropoon satellite . similar to those already disaucsod for a separate treaty with - East Geri ny With regard to the East European sateilitess, the concentrated Omphaoic receatly placed on campaign of G mm-Polish and tko ?Csaoh "fr3 dehip? would Indicate that much rovains to' be done d j may of scetwing popular acoopp tsnoe of relations already existing or projected bstwoen tho a aotuatries and Germany, let aloud the preparation of public opinion for alliances with a rears ad Gerrmny, As an additional point, it should be romambered that similar exisitlag pacts between the tlSSR? and othois axe still forsally directed against (dome it is also worth noting that the network of these pasts' is net conreto even amoa the satellites to the extent that every satellite bm concluded one with SECURITY INFOR1TXOR Approved For Release 2001/11/20 : CIA-RDP19RO1012AO01500030008-3 wary other. Tn general the absence of euoh pacts uou2d as z to, have no 04M ioua effect .on the actual control of Past Gersz or its tactual Latin- aim In tho Soviet orbit. 2.. tip NLAOMI !SWIM t bb sotvos, - Soviet policy . Gcr hes shaft oonaiderab? a s,pparsnt flnctuatie in Its dei ailed applicat io and tote a rsas$veeness with *ic4 it has been p auo . TI ,0 a pnrio4 of pha? st an reparations through y a anal of capital egtatp i nt , and general looting of the Sant Ger eoonarW mas felled by cm of atrenuoue efforta to rebuild thet eeoonony, with remamls taken frarn current produotion* A orioc! in eahich the Kremlin sought additional ovort influence in Car a affairs through four-power char ela has been follovsed by one of e>nphani?e an reaatora ' tier of G rmen sovereignty r.ith Soviet influence to be exerted through the list Gere*n Oonamists. A th3nl vo led ?ffe to force.Woetern eevaouatie at Berlin was suspended ' in. then face of doteri43ned resistance, and though pressure on-the Voctern position in Berlin has. continued, it harp e.voldod ? ostenatble challenge of the'Soatle right to be there, In general such. fluctuation my indicate an adaptation of tactics m d poasiblsr of Short-term objectives to varying conditions and charging astUate6 of relatively early eucoeeca in attaining long-term ob jeotivas. The remlln n a y a t first h a v e a panted a relatively ehort occupation of Go ' later have felt that ohanova of axpending its control over all of Gory in the near future gore relatively good, and finally have revised this eatiazac o in the face of greater difficulties; than expected, though evidence in thoso rsapscts io by no moena oanolus ivee. Soviet policy has been uniform howevor In progressively atrengthanSng control of East Germany and excluding Western influence from the area and in Approved For Releas j 1 2 LM-RO1012AO01500030008-3 eeslcf by a Vsrf of rnoano Oro for influunee in West 3er e~ In this respect it has been consisteza, with an ultimate goal of expanding Soviet control over tba i holo . of 00rn. 1 ht1I1 its flitot sti ons in application my indicate ape iodin rc irion of the time ?fac :ora they &YPeILr In no -,,my to indicates any cl e In the ,cal ftrelf ? 3. Soviet .Polio in ticrrr as an. Iwi'ioeator of Soviet Polio Elsewhere o pr. indications' as to The general lines of Soviet prslicy .in Gowany may 6v the general Soviet policy to by followed eleeu aa'e. Thus, for instance, the e xpensiaaaist tondoaaics avic ort in Gamy are undoubtedly characteriotic of Soviet policy in general, e*nd the Soviet attitude to rd rearm ont In Japan y be ezpeoted to be similar to its attitude ftoard rearm nt in oormanro Soviet. policy in Germany ocan,, ho ver, give little reliable, indication of the specific courses of action rich the' Jroialin ray be expsoted to tolls r in. implcrosnting ita policy in other areas and under t feront lc l conditic as. Approved %ijklease 2001/97CIA-RDP79R01-d001500030008-3 SECRET URITt' I oR>[&TI0N Approved For Release 2001/11/20 : CIA-RDP79RO1012AO01500030008-3