WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400040005-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 16, 2016
• Document Release Date: April 6, 2005
• Sequence Number: 5
• Publication Date: May 3, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
VOL. VI - No. 17
For week ending 2 May 1950
3 May 1950
NOTICE: WORKING-PAPER
This document is a working paper, not an official
issuance, since it has not necessarily been coor-
dinated with and reviewed by other components of
ORE. It represents the formulative thinking of one
group of analysts in ORE and is designed to provide
the medium. for transmitting their informal views to
other intelligence analysts of the US Government who
are working on similar or overlapping problems. It
is intended for the use of the addressee alone, and
not for further dissemination.
Included in this issue are these articles:
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FRANCE
A The political calm which has prevailed In France during
the recent recess of the Nation Assembly is likely to boo e n
during the next ew weeks y renew friction among. the parties in
Parliament. These party disagreements, however, will probably. not
shape into an immediate threat to the- Bidault Government, at least
until after the London Foreign Ministers' Conference, where France's
position would be considerably weakened by a Cabinet crisis and the
fall of the Government.
The National Assembly will probably take up controversial
domestic issues during the coming weeks, postponing, however, the most
critical. The majority of the deputies agree that the detailed breakdown
of the budget, which was passed last January, should be decided as quickly
as possible. The problem of funds for state and Church schools has arisen
once again, and undoubtedly there will be friction between the Socialists
and the Popular Republicans (MRP) on this issue. In addition, disagree-
ments will arise over the proposed anti-trust law, which is to be debated
is the near future. A major political crisis, however, is not likely to
develop, at least until the MRP and the Socialists have held their party
congresses toward the end of May.
The most critical issue which the National Assembly is
likely to consider, although probably not until June, and one which could
well cause a Government crisis, is. the. question of meeting the budgetary
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deficit for the current year. Premier Bidault is expected to have
difficulty in maintaining his middle-of-the-road Government in
power when this issue is debated, especially as his Government
was seriously endangered when the over-all budget was discussed
last aanuary. The Radical Socialists, the "economy-minded party",
might very well upset the Bidault coalition if the Government fails
to stay within the budget's limits and proposes to meet this deficit
by increased taxation. The Socialists, on the other hand, might
refuse to support the Government if it attempted to economize at
the expense of the nationalized industries or the civil service.
A new approach to the ECA goal of prompt trade
liberalization, now under serious study by renc o c s, would
be Me yo overcome somewhat the strong opposition of business and
farm groups to this objective, and may soon be put forward
energetically by France in the OEEC. The French are not optimistic
that adoption of their approach would insure trade liberalization,
which they are convinced, however, cannot be achieved except along
these or similar lines,. and with the simultaneous adoption of a
multilateral payments union.
The French approach consists of two proposals which
the French may urge all countries participating in the ERP to adopt:
(1) A common list of goods which all participating countries (PC's)
would free from quota restrictions; and (2) The abolition of all
existing bilateral trade quotas between PC's, with multilateral quotas
to be established on goods which the PC's could not agree to leave
free.
The officials favoring these suggestions argue that
relatively little progress has been made toward trade liberalization
under the present approach, with each country freeing such goods as
it chooses. The PC's have singled out imports that offer their own
products little or no competition, or those that have been entering
without restrictions. The French allege that as a result no important
items (steel, chemicals, fertilizers, etc.) have been freed by all PC's.
Furthermore, they claim that the cause of trade liberalization has
actually been damaged by the present approach, because: (1) the
arbitrary refusal of a country to liberalize particular goods can often
be considered discriminatory by other PC's; (2) some countries resent
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the fact that others have more government-managed trade, which
is not now subject to OEEC's liberalization plans; (3) the removal of
import quotas has hastened the restoration of tariff duties by
countries such as France and Italy; and (4) protectionist tendencies
have in general been encouraged. The French believe that a common
list of free goods could be worked out on the basis of reciprocal
concessions by which all PC's could expect to gain, whereas it may
be impossible to go much further in trade liberalization with the
present approach. -
Officials defending the French plan are hopeful that
business and farm groups would find it more difficult to. oppose
liberalizing the importation of items on which all PC's are agreed
than to oppose the liberalization of goods by the French Government
alone. Furthermore, these officials are apparently ready to
concede to business interests that cartels must be permitted to
exist for the protection of ? Cweak" industries, although the same
officials profess to desire real trust regulation and more competition
than existed under prewar cartel arrangements.
The French Government may be able to conserve its
investment capan` d" rove its Balance of payments position -by
towering coal production costs as a result of the Government's
decision to invest more in the Saar and less in the Lorraine coal
basin. Previously, expansion of -Lorraine coal production was. being
pushed; now the French Government is giving the Saar authorities 2
billion francs (over $52 million) for investment in 1950, a sum
smaller than that originally scheduled for Lorraine.
Already Saar' coal production has increased from 14.2
million tons in 1949 to an annual rate of 15.3 million for the first
three months of 1950.. Investments for new extraction machinery
should enable the Saar, to reach a total production of 16-17 million
tons by 1952--a target which the French Government is likely to set in
the near future- -while, Lorraine- s goal will probably be revised down-
ward still further, from 13 million tons to 10-12 million.
The increased production of Saar coal through a minimum
of investment could ' cause a reduction In the export price of coal, and
hence a rise in the amount exported, possibly aiding France's balance
of payments position.
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Renewed emphasis by the French Communist Party
on greater actiVity o e con ve plant committees H-weatens
gradually impede e implementation o the A-promoted
productivity program, as well as the production of military equipment
These committees (compulsory since 1945) are. composed of French
worker delegates, about 80% of whom are members of the Communist-
controlled General Confederation of Workers (CGT). Over the past
two years most other elements have been purged from the committees.
At their national conference on 22-29 April, consultative
plant committee delegates resolved to: (1) support worker demands;
(2) impede arms production; (3) oppose the "productivity campaign";
and (4) refuse to approve the disciplinary firing of workers. Worker
opposition (presumably physical) to the entry of foreign productivity
experts into plants is to be promoted by committee members, who are
also called upon to be "among the best members of the Combatants for
Peace."
It is unlikely, however, that the great majority of the
workers will support the second resolution. Nevertheless, these
committees are in a position to slow down production, and will remain
under the control of CGT union leaders. Further committee purges,
which are contemplated, will result in turning the committees into
'"red cells" in industry, with legal standing.
FRENCH AND SPANISH NORTH AND WEST AFRICA
By encoura the religious brotherhoods of French
Morocco, the French are act one o the most a ective a errents
Communism and nationalism in North Africa. A somewhat amorphous
force on the side of tradition, conservatism, and the French Protectorate,
they resolutely oppose modernisation, the nationalist movement,
Communism, and the pro-independence stand of the reigning Sultan. The
religious brotherhoods are found throughout the Moslem world and bear
much the same relation to Islam as monastic orders bear to Catholicism.
A principal difference between the brotherhoods and Catholic orders is
that there are no professional Moslem devotees, all adherents being lay
followers. These sects are basically orthodox Mohammedan, differing
only slightly from each other in ritualistic detail, and allegiance to their
dynastic leadership.
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BELGIUM
A Belgian political instability will continue during the
pre-election period in view of the-fact that the solution of the royal
question and other pressing domestic problems must be postponed.
Upon the inability of Catholic Party leader van Zeeland, an ardent
pro-Leopoldist, to form a Government based on a compromise
solution of King Leopold's status, the Prince Regent called upon
former Premier Eyskens to dissolve Parliament and schedule new
elections for 4 June. The political campaign, revolving solely around
the Issue of the return of King Leopold, probably will further divide
the country. No matter what the final outcome of the elections on the
parliamentary strength of the three major parties, the repercussions
of the royal question will have an unfavorable effect on Belgian
political and economic stability for some time..
ITALY
Widespread popular criticism of the Western Powers
from the highly inflamed state of Italian public opinion over the recent
developments concerning Trieste. The Italians, who have long feared
that the Yugoslav section (zone B) of the Free Territory of Trieste
might be lost to Italy, have'been alarmed at: (1) Yugoslav moves in
that zone, high-lighted by the victory of the pro-Tito party in the
16 April local elections, and (2) the failure of the Big Three to reaffirm
adherence to their 20 M.xrch 1948 declaration, advocating the return of
the entire territory to Italy. Furthermore, the evident US interest
in strengthening the position of Tito vis-a-vis the USSR, and the approach
by the Western Powers to the Italian and Yugoslav Governments urging
bilateral negotiations to solve the Trieste issue, have aroused wide-
spread apprehension among the Italian people that the US may have
already abandoned the tripartite declaration.
The concern of the Italian Government over the current
Trieste situation is reflected in Sforza's statement in Parliament
that further territorial losses might lead Italy to denounce the peace
treaty. The reaction of nationalists in Parliament has been expressed
in ex-Premier and elder statesman Orlando's request for a revision
and the pro-Western policy f the Italian vernmen s result
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of Italy's system of alliances and Italy's withdrawal from the NATO.
The danger inherent in such an appeal is accentuated by the general
public apathy in Italy regarding the MDAP, compared to the
inflamed state of public opinion on the Trieste Issue.
Because of strong Italian irredentlst and nationalist
sentiment for Trieste, formal negotiations leading to a loss at
this time of zone B would threaten the political stability of the
De Gasperi Government and adversely affect Italy's relations with
the Western Powers.
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SPECIAL ARTICLE
AUSTRIA'S DISPLACED PERSONS
Displaced persons in Austria constitute a more
urgent problem to the Western Powers as a result of the Soviet-
sponsored treaty text on DP's and the approaching termination of
the International Refugee Organization (IRO). Although no over-
all solution to this problem is foreseen, new consideration is
being given to a removal of many of these DP's from Austria to
The Western Powers have been unable to alter the
Soviet-sponsored provisions on this subject in the Austrian treaty.
By the terms of the Soviet text, Austria would be prohibited from
granting aid to persons who refuse to return to their native countries,
if such persons helped the enemies of the Allies during the War or
are engaged in hostile activities against their countries of origin.
Although the Western Powers realize that this wording would, in
effect, force Austria to repatriate political refugees from the Soviet
and Satellite area, they are considering an acceptance of the Soviet
text as part of an effort to resolve all the remaining unagreed treaty
articles. Before accepting, however, the Western Powers are con-
sidering the implementation of a plan to remove from Austria the
great majority of those persons whom the USSR would want repatriated.
Similar measures were taken, though on a much smaller scale, prior to
the Italian treaty.
Considerable assistance in such removals could be ren-
dered by the IRO, which is, however, scheduled for termination as soon
as possible after 30 June 1950. Although its activities will begin to taper
off after that date, it will probably operate at least into 1951. Any evacua-
tion movement of DP's from Austria which might be undertaken prior to
completion of the treaty is, nevertheless, preferable during the period of
IRO operatic.
It is mainly the DP's in the western zones of Austria
who would be affected by the plan. In these zones there are an estimated
49,000 displaced persons who might desire a transfer to Germany for
political reasons; this figure does not include those numerous DP's
unaffected by the Soviet text. Of this figure, there are presently 15,000
IRO in-camp DP's, 24,000 IRO out-of-camp DP's, and 10,000 ex-enemy
displaced persons. it is estimated that at least 80%, or some 39,000, of
Germany.
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all these would elect to go to Germany. Their number would be
augmented by displaced persons who would make their way from
Vienna into the western zones, and it is possible that there would
be some increase in the Influx of Satellite refugees into Austria
as the plan got under way.
There are several reasons why the Austrian DP's
might be sent to Germany. The Federal Republic is the only western
European country which could be forced to receive them. As an
occupied ex-enemy nation, it differs legally from Austria, which is
considerated a "liberated" country. In addition, an evacuation to
Germany could be considered as part of the Volksdeutsche program,
which has never been completed. Of newly 300,000 Volksdeutsche in
Austria, approximately 80,000 should, according to the Potsdam
Agreement, be returned to Germany.' Despite this agreement, how-
ever, no Volksdeutsche have been received in Germany since 1946,
and their care has fallen to the Austrian Government. Under an
evacuation plan, the total of IRO and ex-enemy DP's to be transferred
would still be below the number of Volksdeutsche scheduled for
transfer to Germany, but never actually transferred,
The evacuation of these persons from Austria would
not only rid the Austrian Government of an embarrassing political
problem, but would be a step toward alleviating economic and
sociological problems. These problems would undoubtedly grow if
the DP's remain after the termination of IRO activities. Observers
agree that if a treaty, including the Soviet text on DP's, comes into
effect, many thousands of displaced persons in. Austria might be in
real danger, and their tardy evacuation would be a serious problem.
The Austrian Government would undoubtedly welcome an early
evacuation plan, and hail it as evidence that the Western Powers are
cooperating with the recent Austrian proposals for an alleviation of
the occupation burdens on Austria.
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