THE DETERIORATING POSITION OF FRANCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000200310002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: December 15, 2016
• Document Release Date: June 14, 2004
• Sequence Number: 2
• Publication Date: June 1, 1953
• Content Type: SUMMARY

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OCI No. 3986 CENTRAL INTELLIGENCE AGENCY
Copy Noe 3 OFFICE OF CURRENT INTELLIGENCE
1 June 1953
Paul Reynaud's declaration before the French Assembly
that continuing political and financial instability gravely
undermines France's position as a world power is amply sup-
ported by the developments of the past two years. In the
political sphere, in the economic, and in the military,
France has repeatedly fallen short of the demands placed on
it as the third ranking member of the Western alliance. No
immediate financial collapse threatens, but no end is now in
sight to the slow deterioration in France's position.
Reynaud's demand for immediate constitutional reform to
allow a premier to dissolve the assembly as soon as his gov-
ernment is overthrown highlighted the problem which has par-
alyzed French governments under the Fourth Republic. As in
the case of Premier Mayer, deputies representing particular
interests have not hesitated to protect the privileged fis-
cal positions of their constituents by overturning the gov-
ernment regardless of the national welfare or international
obligations.
Most center and rightist deputies now agree that con-
stitutional revision is necessary if any government is to
have the stability required to carry through a consistent
program of fiscal and economic reform; but leftist elements
have thus far refused to accept any limitations on the as-
sembly's prerogatives. Meanwhile, the assembly has avoided
decisive action despite two years of deteriorating financial
conditions, and there is no indication that other than stop-
gap measures are yet in sight.
A contributory factor to this instability is the Commu-
nists, who now constitute a sixth of the assembly membership
and the largest political party in France, with an estimated
strength of 450,000 and an electoral following of 5,000,000
out of a total of 19,000,000 voters. Communist-controlled
unions have a membership of some 1,250,000, and the party's
propaganda resources include more than a hundred front or-
ganizations and a press with a combined circulation of about
1,000,000,
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In recent years, however, the Communists have been unable
to translate their strength into impressive political action.
The other parties have kept them isolated in parliament, and
labor has refused to respond to calls-for politically motivated
strikes. Since 1947 the size and influence of the Communist
Party have declined, owing partly to the postwar economic re-
covery as well as to the pro-Soviet and antinational charac-
ter of the party's cold war policy. At present, the party is
experiencing greater internal dissension than at any time
since the war, and this dissension seems likely to grow.
Anti-Communist police measures seem to have played only
a minor part in this decline, since these have tended to in-
crease popular sympathy for the party. The government seems
.to have slackened its efforts to obtain National Assembly
permission to lift the parliamentary immunity of Communist
deputies. The spring municipal elections and the sharp rise
in the number and scope of nuisance strikes indicate that
the Communists still retain their greatest source of strength--
the conviction on the part of the working classes that the
party is the most effective defender of labor?s economic in-
terests.
No French government since the war has undertaken the
drastic steps necessary.to correct the fundamental malad-
justments of the country's economy. There has been consid-
erable plant modernization in basic industries, but credit
limitations have prevented a comparable advance in secondary
industries, and much of the technological progress has been
negated by restrictive business practices and discriminatory
tax policies. Steps to increase productivity in industry,
agriculture and distribution have been blocked by the per-
sistent attitude that every business enterprise has a right
to exist-where it is and as it is, regardless of its compet-
itive ability.
As a result, the postwar increase in French industrial
production has been less than that in any other industrial
country in Western Europe. In 1952 expansion ceased, and in
early 1953, for the first time since the war, the production
index fell below the figure for the corresponding quarter of
the previous year. The economy now appears to be approach-
ing a condition of stagnation.
Little has been done to improve the miserable living
standards of the working class, which are still below prewar
levels. Labor agitation since the war has been almost en-
tirely fruitless, but the workers have grown increasingly
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restive during the past few months and, with the free trade
unions further weakened by internal dissension, have become
more susceptible to Communist exploitation.
. The country's basic economic difficulties came to a head
in two specific financial problems which were largely respon-
sible for Mayer's overthrow on 22 May. One of these was the
increasing disequilibrium in France's international payments.
Only an advance of $51,000,000 on US aid for fiscal 1954 en-
abled Paris to meet its April deficit with the European Pay-
ments Union without exhausting the hard-currency holdings of
the foreign exchange stabilization fund. The continuing fail-
ure, however, of French exports to compete favorably in world
markets precludes any substantial improvement in the situation.
The other problem is the growing budgetary deficit,
made particularly serious this spring by unusually heavy ex-
penditures coinciding with an unexpected shortfall in revenue.
Because of anticipated seasonal increases in revenue, the
government is not faced with immediate bankruptcy; but the
next premier will have to ask the assembly for many of the
emergency powers it denied to Mayer, and some further cuts
in defense appropriations seem inevitable.
Militarily, France is still incapable of playing the
role expected of it in Western defense plans. Although quan-
titatively France came close to attaining the 1952 NATO goals
set at Lisbon, qualitatively, French military units are far
below acceptable NATO standards of readiness. While adequate
equipment is available for existing army units, a large per-
centage of regular noncommissioned and company grade officers
are in Indochina, and training is thus severely handicapped.
Most of the navy's major units are old, and the air force is
still incapable of performing its tactical mission to support
the army. The growing budgetary problems, moreover, will de-
crease the rate at which these obstacles are overcome.
Because of these varied strains, France appears to be
becoming increasingly restive under its commitments to Ameri-
can policy objectives. EDC ratification is definitely
shelved until fall; action then will be strongly influenced
by the tactics pursued by the USSR in the meantime and the
status of the Saar question.
Frenchmen's awareness of their country's deteriorating
position seems to have accentuated their apprehensions over
Germany's resurgence.. Fearing German domination of a united
Europe, they have proved progressively more difficult during
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the past year in a 1 negotiations on ropean integration.
The continued drain of the Indochina war, in particular, has
increased these apprehensions.
The government's most difficult immediate decision may
involve its Indochina policy. Pressure for a negotiated with-
drawal is growing, though it has not reached dangerous pro-
portions. Unless the government can convince the Assembly
that there is still hope for a long-range solution in Indo-
china, however, sentiment for withdrawal may snowball. In
any case, pressure for increased US aid can be anticipated.
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