WEEKLY SUMMARY #86

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002300280001-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 27, 2016
• Document Release Date: May 22, 2013
• Sequence Number: 1
• Publication Date: January 30, 1950
• Content Type: REPORT

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WEEKLY SUMMARY
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CENTRAL INTELLIGENCE AGENCY
 1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance with applicable security regulations, or
returned to the Central Intelligence Agency.
W.ARNING-
This document contains Information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C.. 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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HIGHLIGHTS,,, o.. o ............. 1
EASTERN EUROPE ..........>... 7
NEAR EAST - AFRICA 9
FAR EAST .............0.......0.12
WESTERN HEMISPHERE ......... 15
ARTICLE.
The British General Election ......... ,16
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 The East=West struggle in Western Europe was
brought into sharper focus during the week as the USSR
reaffirmed its refusal to reach early agreement on an
Austrian treaty and as plans developed for a coordinated
Communist attack to disrupt shipments under the Mutual
Defense Assitance Program (see page 5)o Meanwhile, the
development of more cordial relations between France
and Germany was threatened by continued French insist-
ence on obtaining long-term leases on Saar mines and
railways (see page 2)a
The Chinese Communist decision to seize US
installations in Peiping after explicit warning that such
action would result in the withdrawal of all US officials
from China, in addition to indicating that the Communists
no longer regard US recognition as essential to the success
of the new regime, may have been made as a token of
fealty to the Kremlin (see page 12). Meanwhile, the nations
of Southeast Asia remain lukewarm toward following the
lead of those Western Powers that will probably accord
de facto recognition to the Bao Dai regime in Indochina
following expected French ratification of the 8 March
agreements for the transfer of'sovereignty (see page 13).
C
 Saar Dispute The achievement of friendlier relations
between Germany and France will be
retarded by continued French insistence on obtaining
'long-term leases on Saar mines and railways.. Growing
anti-French sentiment in Germany over the Saar issue,
as well as over other French actions which are deemed
to run counter to German interests, will make itfncreas=
ingly difficult for Chancellor Adenauer to carry out his
generally pro-French-policy which he believes essential
for the attainment of Germany's domestic and foreign
aspirations Although Adenauer is not likely to be strongly
influenced by attacks on his foreign policy from the Social
Democrats and the parties of the extreme left and right,
he may gradually exploit this sentiment to strengthen later
demands for a Saar plebiscite.
Trade Policy Continuation of West Germany's unfavorable
trade position with Western Europe may
soon force the West Gsrnan Government to renounce some
provisions of recent agreements for trade liberalization.
Such a move would be a setious setback to ECA efforts to-
ward European economic integration, In the last quarter of
1949, following West Germany's action to eliminate restric-
tions on trade to a degree exceeding that of other Western
European nations, German exports to Western Europe, instead
of exceeding imports, were $11.3 million less than imports.
These trade deficits are rapidly approaching the level at
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which, according to existing agreements, they must be
settled in dollars,, thus adding to West Germany's balance
of payments burden. Unless other Western European
nations purchase large quantities of West German goods,
or adopt reciprocal trade liberalization measures, the
German Federal Republic may be forced to abandon its
leading role in trade liberalization and re-impose re-
strictions on foreign trade in order to restore the balance
between exports and imports.
Labor Demands Current labor demands for a second
cost-of-living bonus pose no immediate
threat to the Bidault regime.. The Socialists will remain in
the coalition pending the outcome of Bidault's efforts to
obtain Parliamentary approval by 1 February of the col-
lective bargaining bill and are likely to adopt an attitude"of
compromise in view of Bidault's authorization of a 3,000
franc bonus to those categories of workers which did not
receive the bonus granted in November 1949. The Social-
ists .will probably renew their threats to withdraw from the
government, however, if Parliament fails to pass the col-
lective bargaining bill by 1 February.
Housing Program Continued failure of the French Govern-
ment to institute an adequate housing
program, which is not likely to reach even the planning stage
during the next few months, will contribute to social and
political unrest already aggravated by intensified pressure
for wage increases. Of the one million dwelling units
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 O SECRET
L
FRANCE
estimated in 1947 to require urgent replacement and the
four million judged unsatisfactory, only about 160,000 will
have been rebuilt by the close of 1950, and a considerably
smaller number will have been replaced. Private financing
for a housing program will continue to be negligible in view
of low rent ceilings, and public financing is blocked by the
Government's investment policy, which emphasizes the
modernization of basic industries primarily in an attempt
to expand exports and balance foreign payments accounts.
Although the Monnet Plan for modernization of the French
economy originally made generous allowance for a housing
program, French officials responsible for public investment
expenditures(which are financed partly by ECA franc counter-
part funds) have virtually neglected housing despite the" im-
portant relation of worker welfare to increased production.
The non-Communist left will become increasingly critical
of the Government's investment program, a trend which,
together with growing labor unrest, may undermine the pro-
gram unless the Government can find some means of stimulating
a more extensive housing construction, effort.
African Defense Recent maneuvers in French West Africa
revealed glaring defects in French military
preparedness; Little progress had been made toward unifi-
cation and development of French military forces in the area:
materiel was scarce and obsolete; staff work was outdated;
and the operations were marked by a spirit of defeatism re-
miniscent of French military opinion and behavior in 1940.
Because the population of French West Africa is predominantly"
backward politically, economically, and socially, the area is
ripe for Communist exploitation. Continued French military
weakness and ineptitude would increase the potential of the
large Communist-slanted African Democratic Rally to in-
stigate disorders and weaken French control over this strategic
area,
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 Labor Disorders The recent disorders at Modena reflect
a growing deterioration in relations
between labor and management which may cause further
outbreaks of violence, make it more difficult for non-Com-
munist trade unions to avoid supporting the Communist-
dominated General Labor Confederation, and obstruct the
creation of a single, effective non-Communist labor organ-
ization. Management, heartened by the steady weakening
during the past year of the Communist hold on organized
labor, is resorting more and more to unilateral action in
defiance of labor demands, Moreover, the Government,
aware of its increased ability to make effective use of the
police, is making no serious effort to discourage strikes, in
the belief that they will fail and that their failure will be a
victory for the Government. Actually, continuation of this
trend would enhance the prestige of the Italian Communist
Party and diminish popular support of the Italian Government,
GENERAL
Port Strikes , Communist efforts to disrupt shipments
under the Mutual Defense Assistance Pro-
gram (MDAP) to ports of North Atlantic Pact countries will
probably not obtain. sufficient worker support to be generally
effective. The Communist campaign against MDAP is a
coordinated effort of the World Federation of Trade Unions
(WFTU) and the World Peace Partisans Committee. The
Communists hope to: (1) organize strikes in North Atlantic
ports and possibly even to damage cargoes; (2) disrupt trans-
port on the railroads servicing these ports; and (3) promote
extensive sympathy strikes in the transport industry, The
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effectiveness of these strikes and demonstrations "in
defense of peace" will depend primarily upon the degree
of support received from non-Communist dockers and
transport workers. Although WFTU funds and organizers
may increase Communist influence, the rank-and-file
French and Belgian workers will still be reluctant to
follow Communist directives and to sacrifice employment
on an issue affecting national defense. The recent anti-
strike vote of the'French dockers in Cherbourg and Saint
Nazaire reflects strong opposition to Communist-inspired
strikes on this issue. Moreover, this opposition will
probably grow as the anti-Communist International Trans-
port Workers Federation steps up its drive to organize
local dockers committees, and as counter measures by the
French and Belgian police become effective.
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Yugo-Greek Accord The early restoration of rail traffic
between Yugoslavia and Greece,
which has been made more feasible by the renewal of Greek
rail service from Athens to the Yugoslav border, now ap-
parently depends only upon agreement between the railroad
authorities of the two countries and upon completion of the
war-destroyed bridge on the Yugoslav line. Although poli-
tical difficulties between the two countries have been con-
tinuous since the end of World War II, even after Yugoslav
withdrawal from the Greek guerrilla adventure, Yugoslav
representatives recently expressed the opinion that no
obstacles stand in the way of a purely commercial agree -
ment governing transit traffic from one country to another.
In addition to the material advantages to Yugoslavia result-
ing from access to the Yugoslav Free Zone at the Greek
port of Salonika and the establishment of another important
commercial link with the West, the Yugoslav strategic posi-
tion would be substantially improved in the event of an
increase in Cominform pressure? For Greece, a direct rail
connection with western and central Europe would stimulate
Greek trade, lessen dependence upon. ocean. transport for
European trade, and at least lay the groundwork for an
improvement of Greek-Yugoslav relations.
Electoral Results The Finnish people in the recent presi-
dential elections responded to Soviet
threats and intimidation by re-electing the pro-Western Juho
Paasikivi by the greatest majority ever given a Finnish presi-
dential candidate, Soviet pre-electoral pressure, in fact, was
..3i
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a
Q FINLAND
largely responsible for uniting all non-Communist parties
except the Agrarian in support of a single candidate. Few
significant changes occurred in relative party strengths,
Social Democratic losses amounting to approximately five
percent do not necessarily reflect a corresponding decline
in popular support, but can be attributed to a variety of
O factors peculiar to this presidential election, Similar -
considerations attach to the slight gain in the Communist
vote and the decline in the Agrarian vote. The composition
of the Diet, however, remains unchanged and although the
Communists will point to their large vote as justification
for representation in the Cabinet, former Premier Fagerholm
will probably head either another all-Social Democratic
Cabinet or a coalition composed of Social Democrats and
members of the minority rightist parties,
0
a
.~I
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 Kashmir Dippute Neither the Colombo Conference of
Commonwealth Foreign Ministers
nor increased pressure on India by the US, UK, and Canada
has improved; prospects for an early settlement of the Kash-
mir dispute, Indian Prime. Minister Nehru is apparently as
obdurate as ever in opposing an over-all Plebiscite for Kash-
mir.. and is even suggesting that most of the disputed area
be partitioned and a plebiscite limited to the Vale of Kashmir.
By protesting that it favors a continuation of mediation of the
issue, India merely hopes to keep the issue in abeyance until
Nehru's partition plan can be arranged.. Meanwhile, McNaughton,
Canadian representative on the Security Council, will keep him-
self available as mediator, but will probably eventually be
forced to report his failure to the Security Council. The SC
will then invite India and Pakistan to make statements before
the Council, and at this stage, only a major change in Indian
or Pakistani policy would bring the SC any nearer to a settle-
ment of the dispute,
Two Crises The Saudi Arabian Government, faced with
temporary insolvency and a possible small-
pox epidemic, has thus far shown little disposition to take i
the firm action these problems require. With its supply of
ready cash so low that obligations due this month cannot be
met, the Government has taken the obvious step of attempting
(thus far in vain) to obtain a substantial advance on royalties
e..
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from the American-Arabian Oil Company., Although Saudi
officials are also making some attempt to cut down on ex-
penditures, there is no indication that a sustained attack on
the careless spending habits and slipshod accounting which
produced the present crisis will be forthcoming. Saudi.
officialdom has meanwhile shown. little.concern over an.
outbreak of smallpox in Jidda which threatens to develop
into a full-scale epidemic. Although the Government, after
two weeks of hesitation, has finally authorized the use of
vaccination teams in the area, the cooperation to be expected
of the population. is doubtful,, and the Saudi Government may
have to be persuaded.toappeal to the World Health, Organ= -
zation for help,
Cabinet Shakeup The recent shakeup in the Iranian Cabinet--
although notable for the replacement of the
inept Hekmat as Foreign Minister, the termination of General
Ahmadi's long occupation of the Ministry of War, and the in-
clusion of three relatively youthful newcomers--is apparently
only a temporary expedient. While the Shah believes that Iran's
present economic and social problems require a more forceful
man than Prime Minister Saed at the helm, the latter will pro-
bably be allowed to retain the premiership long enough to steer
the attempt to get the controversial Anglo-Iranian Oil Company
agreement ratified by the Majlis. In his search for a replace-
ment for Saed, the Shah may be giving serious consideration to
Chief of Staff Razmara, who apparently desires the post. Razmara's
already strong position has been improved by the appointment of
General Yazdan Panah as Minister of War to replace General
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 Ahmadi, who had long been critical of Razmara. The Chief
of Staff also benefits by the recent removal of Marshal
Shahbakhti from the military governorship of Azerbaijan,
which Razmara has long sought., Despite these develop=
ments, there is as yet no substantial indication that the
Shah supports Razmara's ambitions, and it is unlikely that
the Shah would agree to his selection as Prime Minister
unless convinced that no civilian was available capable of
putting through the drastic measures required to alleviate
Iran's present difficulties.
7
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e
e
dJ
C
Colombo Conference The recent Colombo Conference of
Commonwealth Foreign Ministers,
called primarily to develop mutual underslandi.ng rather
than to adopt specific policies, concentrated its activity on
a discussion of the problem of the spread of. Communism to
South Asia. It was generally agreed that the fight against
Communism required an economic development program
designed to raise living standards throughout the area, and
a consultative committee was appointed to make recommenda-
tions. Although no immediate results are expected, the Asian
dominions at least now appear to consider the fight against
Communism as necessary for the protection of their own
interests. India's coolness toward anything resembling a
military alliance, however, barred any action to form a
regional association against Communism. The Ministers
generally agreed that denial of recognition was no longer of
any value as a means of combatting Communism. On'ehe
other hand, the UK was unsuccessful in its efforts to persuade
the other countires of the urgent need for encouraging the
Bao Dai, regime in Indochina by granting early de facto
recognition. During the meeting, the UK, India, Pakistan,
and Ceylon agreed to grant a small internal loan to Burma.
The Conference expressed a unanimous desire for an early
Japanese peace treaty and appointed a committee to study the
many unsettled details.
Peiping Crisis Although the Chinese Communist seizure of
. Western "military installations" in Peiping
was primarily designed to exert pressure on non-recognizing
Western nations, the action, has wider implications. First,
 occupation of the former. US Marine Barracks, after explicit'
warning that all US officials would be withdrawn. from China
In consequence, indicates that the Communists no longer
regard early US recognition as essential to the' success of
the new regimes Second, the consequent withdrawal of US
officials will complete the progressive reduction. in the
number of US observation posts in China which has been
going on since 1947. The prospect of profitable commercial
relations with the UK and a possible promise of extensive
trade and credit relations with the USSR may well have con-
vinced the Chinese Communists that their program of re-
construction can succeed independent of the US. Even if
assurance on this point were lacking, however, the action
might well have been. taken as a token of Chinese Communist
fealty to the Kremlin, since the elimination of all US official
influence can be expected to assist the USSR considerably in
the consolidation of Soviet gains in China.
Bao Dai Recognition International acceptance of the Bao Dai
regime in Indochina continues to
depend primarily upon French action in ratifying the 8 March
1949 agreements for a transfer of sovereignty. French
Assembly approval of the agreements, hitherto delayed largely
as a result of Socialist reluctance to back such a transfer of
limited sovereignty, now appears likely by 1 February. De facto
recognition of Bao Dai by the UK and most other western
powers will probably follow soon afterwards. Even then, how-
ever, the Southeast Asian nations will be reluctant to follow
suit. In. general, Thailand, Indonesia, Burma, the Philippines,
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 and India, though aware of the danger of Communist control
of Indochina, are far from convinced that France intends
ultimately to grant full independence to the Bao Dai regime
or that the regime enjoys a large measure of popular
support and satisfies the nationalist aspirations of the
Vietnamese,
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r
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 Revolt Fails The Bolivian Government's prompt action
in declaring a state of siege and rounding
up known MNR leaders has apparently prevented a revolt
at this time, but the friction within the government be4een
the army commander An-chief and civilian leaders will
continue a situation which may be exploited more success-
fully by MNR leaders at a later date.
As in. the past, future success of MNR-led efforts
will depend to a large extent on its ability to win military
support. Regardless of MNR activities in the future,
prospects for a continuation of the present all-civilian
government are poor because the military will probably
continue to increase its influence in. the government.
Civil Disorders Current demonstrations against the gov-
ernment may develop into a general
strike accompanied by considerable violence, Resentment
against the government is increasing as a result of: (1) the
rising cost of living following revaluation of the local
currency; (2) the imposition of price controls, which has
infuriated the merchants; and (3) the failure of the British
to take effective steps to alleviate the colony's acute eco-
nomic distress, Although British security forces would be
able to suppress any disorders which might occur, consider-
able anti,-British sentiment would result. Such disorders
would also provide Guatemala with propaganda with which to
press its claims to the territory.
M
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 The outcome of the British election on 23 February
will not have a serious direct effect on the security of
the US. Whichever party forms the government, the main-
tenance and development of close and harmonious relations
with the US will remain a fundamental policy. Britain's
opposition to Soiriet expansionist aspirations will be un-
altered, and, subject to pressures arising from the state
of economy, the main lines of foreign and defense policies
will continue virtually as at present.
The election will be fought on domestic issues. It will
determine either that a Labor Government, avowing a
creed of democratic socialism and drawing its main sup-
port from the working class, shall be allowed to consolidate
and probably to continue the considerable social revolution
which has been wrought in Britain during the past decade;
or that a Conservative regime shall call a halt to the re-
volutionary process and, without trying to undo much of
what has been done, shall nevertheless carry on the govern-
ment in the future according to somewhat more traditional
principles. For the British voter this decision is momentous,
and the election campaign will probably be waged with vigor
and even with bitterness.
The most likely possible results of the election are.- (1) a
safe working majority for Labor, or (2) a safe working majority
for the Conservatives; or (3) a narrow, indecisive majority (less
than 40 or 50 seats) for either party. From the standpoint
of the US either of the first two results would be preferable
to the third. With a weak government in power, political
maneuvering would continue in preparation for another election.
M
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 at an early date, attention and energy would be diverted
from the formation of necessary constructive economic
policies, and Britain would lose international prestige.
Between the two major parties, US interests might
be slightly better served by the return of Labor, though
the balance is nearly even. A Labor Government could
more surely maintain internal stability and neutralize
Communist agitation among the working class at a time
when living standards may have to be lowered. The Attlee
Government has on the whole been easy to deal with; there
is no evidence that a Churchill Government would be easier,
and there is reason to suspect that it might be more diffi-
cult. Incessant Communist propaganda concerning Anglo-
US "capitalist-imperialist-reactionary" policies carries
less weight in the world while Britain is under a Socialist
government; conversely, joint Anglo-US positions are less
suspect among leftist-inclined communities than exclusively
US policies. Among newly independent states, and to some
extent in colonial areas, the British Laborites enjoy a higher
degree of trust than the frankly "imperial" Tories and are,
therefore, more useful allies in the ideological struggle for
the minds of backward peoples. On the other hand, the non-
Socialist doctrine of the Conservative Party is somewhat
more acceptable to public opinion in the US, and the Con-
servatives might infuse new vigor into the British economy
by altering fiscal policies and by relaxing the rigidities of
government control in those few places where relaxation is
feasible. They might also treat the diplomatic problems of
Western Europe with more skill and flexibility.
Although the popular vote on 23 February will probably
be close between Labor and Conservatives, the House of
Commons seats will not necessarily be as evenly divided;
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 the British electoral system normally magnifies a narrow
majority in popular votes into a sizeable majority in Parlia-
ment. Prediction of the outcome is difficult; many voters
are undecided and will remain so through most of the cam-
paign. Recent polls have given the Conservatives a sub-
stantial edge among those voters who have made up their
minds. Labor is expected, however, to recover ground
and to win enough of the undecided vote to give the Party a
satisfactory working majority in Commons.
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The President
Secretary of State
Secretary of Defense
Secretary of the Army
Secretary of the Navy
Secretary of the Air Force
Chairman, National Security Resources Board
Executive Secretary, National Security Council.
Assistant Secretary of the Navy for Air
Chief of Staff, US Army
Chief of Naval Operations
Chief of Staff, US Air Force
Director of Plans and Operations, Gen0Sfaff,US Army
Deputy Chief of Staff (Operations), US Air Force
Deputy Chief of Naval Operations (Operations)
Director of Plans and Operations, US Air Force
Special Assistant to the Secretary of State for
Research and Intelligence
25,26,27,28,299
30,31,32,33,34,Director of Intelligence, General Staff, US Army
35936937938,39,
40941942 943,44.Director of Naval Intelligence
45,46,47,48,49. Director of Intelligence, US Air Force
50. o e o 0 0 0 o Director of Intelligence, Atomic Energy Commission
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Chief, Acquisition & Distribution Diva, OCD, State
Director, Federal Bureau of Investigation
Secretary, Joint Chiefs of Staff
Chief; Policy Planning Staff, Department of State
Secretary of State (Attention. Policy Reports Staff)
Deputy Director, Joint Intelligence Group, Joint Staff
Secretary, Joint Intelligence Group, Joint Staff
US Air Force Representative of Joint Strategic
Survey Committee
Administrator, Economic Cooperation Administration
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U. S. GOVERNMENT PRINTING OFFICE
2631-S-1948
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