WEEKLY SUMMARY NUMBER 42

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 05949541
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 21
• Document Creation Date: March 9, 2023
• Document Release Date: May 10, 2021
• Case Number: F-2021-00355
• Publication Date: March 18, 1949

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43ETTRE-r-
81
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WEEKLY SUMMARY
Number 42
1 8 MAR 1949
Document No. dINIPP
NO CHANCE in Class. r]
De DECLASSIFIED
ti*ass. CHANGED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA 77/1763
Date:
(By: a
CENTRAL INTELLIGENCE AGENCY
(7A
SKRET
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1
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.
7417-40)/5-I4
WARNING
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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CONTENTS
HIGHLIGHTS
WESTERN EUROPE 2
EASTERN EUROPE 5
NEAR EAST - AFRICA 9
FAR EAST 11
WESTERN HEMISPHERE 13
ARTICLES
Argentine Economic Policy 14
Sovlet-burpired Peace Congress 15
Implications of Impending Rubber Conference . � 16
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HIGHLIGHTS
At several points along the perimeter of the Soviet
orbit the USSR applied pressure and stimulated tension
during the past week. In the north, the flood of rumors
concerning the movement of Soviet troops along the Finnish
border continued as the USSR maintained its attempt to
hamper Scandinavian participaction in the Atlantic Pact
and to intimidate border-line countries elsewhere who
may wish to form closer ties with the West (see page 7).
In the Balkans, Kremlin-controlled propagandists have
been laying heavy emphasis upon the question of an auto-
nomous Macedonian state, primarily to further the Soviet
program leading to the overthrow of Tito (see page 7).
In Iran, the serious deterioration in Soviet-Iranian rela-
tions has continued and will probably prompt an increase
In Soviet pressure (see page 9).
1
1
Despite a continuing Arab fear of further territorial
grabs by the Israelis, the Palestine situation will probably
maintain its present trend toward military settlement (see
page 9). The Arab states recognize their Inability to stop
the Israelis by force and doubt the ability of the UN to
restore territory they have lost. They will therefore be
more eager to conclude armistice agreements in the hope
of stopping further seizures by Israel.
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WESTERN EU. 11OPE
FRANCE
Cantonal Elections The French cantonal elections of 20 and
27 March will probably show increased
public support for all the Third Force parties and reaffirm
the strength and prestige of the present coalition government.
The electoral system will give the Third Force parties a
decided advantage over the Communist and Gaullist oppositiaa.
In the 20 March balloting only candidates receiving a majority
will be elected; on 27 March, those communities which had failed
to give a majority to any person will hold new elections in
which a simple plurality will elect a candidate. The first ballot
will therefore provide the different parties an opportunity to
test their relative strengths. In the second ballot, the tendency
of the center parties to unite behind single pro-government
candidates will confront the Gaullists and the Communists with
a handicap in electing their representatives. In comparison
with the 1947 municipal elections, the balloting is expected to
reflect a substantial decline Oxcept in a few isolated areas) in
popular support for De Gaulle's Rally of the French People
as well as a somewhat smaller loss in Communist Party
following.
ITALY
One Party Rule Christian Democrat aspirations to be the
only governing party in Italy may result in
eventual dissolution of the coalition Cabinet and the formation
of a single-party government. Premier De Gasper', long under
pressure from his party to exercise the prerogative of the
majority group and operate a one-party Cabinet, is replacing
moderate Socialist Tremelloni with Christian Democrat Pella
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ITALY
In the important Cabinet post for administration of aid from
the European recovery program. Although the premier is
expected to appoint another Christian Democrat as Treasury
Minister, be apparently intends to make Pella responsible
for the government's entire economic and fiscal program.
In addition, a third Christian Democrat is reportedly under
consideration for the post of Foreign Trade Minister, now
vacant as a result of the resignation of a Liberal Party mem-
ber. Although De Gasperi recently repeated his opinion that
maintenance of the coalition Cabinet was "desirable" to
demonstrate the homogeneity of the non-Communist forces
and to prevent defection to the Communists, he also pointed
out that the coalition was not essential. If the Premier yields
to the demands of his party's left wing that its members be
appointed to replace the moderate Socialist ministers, the
leftist parties would have strong basis for attacking the
De Gasper' Government as unrepresentative of the working
people of Italy.
SWEDEN
Military Policy Despite continued Swedish neutrality, recent
public statements demonstrate that top
Swedish military leaders favor a policy of technical coopera-
tion with the West in military matters. Technical cooperation,
as explained by these men, must include key military equip-
ment and supplies as well as planning for swift and effective
military support of Sweden in case of a Soviet attack. The
materiel deemed essential includes electronics equipment,
aircraft, and petroleum products. Although all the reasons
for giving frank and public recognition to Sweden's require-
ments for adequate defense are not yet clear, one obvious
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SWEDEN
object is to gain increased support in the Swedish Parliament
for the military budget. Other aims may be to sell the west-
ern powers on the advantages of providing aid to a "neutral"
Sweden and to sell the Swedish public on the advantages of
alignment with the West.
UNITED KINGDOM
Commonwealth Plans The sudden dispatch of four high-level
officials from London to the dominion
capitals, though not yet explained by the UK Government, sug-
gests that the Foreign Office has accelerated its timetable for
marshalling Commonwealth support against the advance of
Communism in Asia. The problem of Communism in Asia is
of increasing direct concern to the UK and its Asian dominions,
as well as to New Zealand and Australia, and was extensively
discussed at the Commonwealth conference in October 1948.
One possible subject currently being discussed by these British
officials is the development of a regional defense pact, either
similar to the Atlantic Pact oi confined to political warfare.
Such a pact would have important implications for Common-
wealth relations and hence would need to be considered at
another conference of the Commonwealth leaders. Thus,a
Commonwealth conference may be called at an earlier date
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EASTERN EUROPE
SOVIET UNION
Molotov-Mikoyan Shift No basic change in Soviet policy toward
the West can be expected as a result of
recent personnel changes in the Soviet hierarchy. These changes
were probably designed to increase the efficiency of party and
state mechanisms, both politically and economically. The rela-
tively rapid consolidation of the West, as currently exemplified
by the Atlantic Pact, is the immediate reason for the personnel
changes. The realignment of personnel simultaneously presages
Intensified efforts to consolidate and strengthen the Soviet orb!t
politically, economically, and militarily.
The cold war can be expected to continue undiminished in
intensity. Recent speeches by western European Communist
leaders suggest that subversion and sabotage, in addition to more
conventional tactics, eventually will play a more important role in
Soviet-Communist strategy against the West. Responsibility for
formal political and economic relations with the West has passed
from Molotov and Mikoyan to Vishinsky and Menshikov, beth techni-
cal executives without policy function who can be expected to
adhere religiously to policies established by the Politburo.
The relief of Molotov, Mikoyan, and Voznesen.sky from
operational responsibility will leave them free to concentrate on
pressing problems of political and economic policy of the entire
Soviet orbit. Molotov, as heir apparent to the Soviet throne, would
be the logical choice to assume over-all command. Such responsi-
bility would bring him one step closer to eventual assumption of
complete power in the event of Stalin's retirement or death.
Mikoyan and Voznesensky are the best-qualified Soviet
leaders to deal with the economic consolidation and strengthening
of the Soviet bloc. Mikoyan is apparently the leading figure in
the Soviet-inspired Council of Economic Mutual Assistance (CEMA)
which has already begun to assume the function of economic planning
for the entire Soviet bloc.
One of the first results of this Soviet realignment will
probably be shown in the handling of the case of Tito. Tads defec-
tion,with its ramifications, is undoubtedly the most pressing internal
problem of the Soviet sphere and demands a drastic solution to pre-
vent the further spread of nationalistic deviation.
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SOVIET UNION
1
The New Budget The provisions of the 1949 budget adopted
by the Supreme Soviet reflect increased
Soviet emphasis on ir.dustrial and military production. Although
the allocation to national economy represented only a nominal
increase over the 1948 total, a substantial expansion in heavy
Industry is planned. Compared with 1948, the appropriation for
capital construction rose from 57 to 80 billion rubles and invest-
ments from industry profits were set at 26 instead of 9 tillioh
rubles. Moreover, the 60% increase in the amount allocated
for agricultural mechanization suggests that some of these funds
may be diverted to the production of mechanized equipment
suitable for military use. A preliminary analysis of strictly
military appropriations (announced and concealed) indicates a
possible increase from 1948s* 125 billion rubles to approximately
165. This is the first announced increase in military appropria-
tions since 1945. The total military allocation represents about
40% of the total budget and about 30% of the national income of
the Soviet Union. Moreover, these figures do not include such
additional military accruals as: (1) Satellite military production
for Soviet account; (2) military plants being received as repara-
tions; and (3) requisitions for the maintenance of occupation
forces.
Role in UN Despite recent shifts in high-level Soviet personnel,
there is no indication that the Kremlin is planning
an early Soviet withdrawal from the UN. The USSR will continue
its aggressive obstructionist tactics and will remain in the UN
In order to: (1) prevent it from becoming a body exclusively
oriented toward the West; (2) use it as a sounding board for Soviet
propaganda; and (3) veto any enforcement measures which threaten
Soviet interests. Meanwhile, however, the USSR's fundamental
hostility to the UN's developing economic, scientific, and social
activities is becoming more apparent. The USSR, realizing that
the struggle between East and West will for the next few years
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SOVIET UNION
1
be largely in the economic and social sphere, is increasingly
concerned that the UN will become a structure of inter-
national cooperation inimical to Soviet aims. Soviet propaganda
with increasing vehemence is attacking such agencies as the
International Bank, World Monetary Fund, World Health Organi-
zation, International Refugee Organization, Food and Agricultural
Organization, and International Labor Organization �all of which
are being branded as US-dominated and as serving the interests
of western imperialists. The vigor of the attacks also reveals
the Kremlin's appreciation of the role these agencies can play
In implementing the Truman program for aid to backward
areas
Pressure on Scandinavia The many rumors of increases in
the number or movement of Soviet
troops along the Finnish border are believed to be deliberately
Inspired by the USSR as part of a war-of-nerves against the
Scandinavian countries. This war-of-nerves has the twin goal
of: (I) preventing Scandinavian participation in the Atlantic
Pact, or at least lessening the effectiveness of such participa-
tion; and (2) intimidating border-line countries throughout the
world who may wish to form closer ties with the West. It is
unlikely that the USSR is preparing for armed intervention in
Finland or the other Scandinavian countries, although the ICrem-
lin will probably increase its economic and political pressure
against Finland.
YUGOSLAVIA
Macedonian Question Increased emphasis on the Macedonian
question in Soviet-inspired propaganda
represents primarily a Kremlin attempt to exploit this issue as
an additional weapon against Tito. The Kremlin may hope to
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YUGOSLAVIA
undermine Tito's control over the Macedonians within Yugo-
slavia and to thwart Tito's deep-seated ambitions for a Mace-
donian state under Yugoslav control, The present Communist
line suggests that the USSR is planning more positive pressure
against Tito than the diplomatic and economic reprisals of
the past six months. The re-opening of the Macedonian ques-
tion is actually a part of the Kremlin's anti-Tito program
which has recently become more actively hostile. It is un-
likely, however, that such a program can be successful withcrat
resort to direct military action.
Because this Soviet-inspired agitation over Macedonia
largely reflects an inter-Communist quarrel, it may temporarily
detract from Greek guerrilla efforts. However, any incident
arising from this agitation or any serious efforts to dislodge
Tito by means of military action in this area will actually in-
crease the potential danger to northern Greece. Moreover,
should the various Communist factions involved achieve a
common Macedonian policy, their united efforts would consti-
tute a much more serious threat to Greece than that posed by
present guerrilla forces.
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NEAR EAST - AFRICA
PALESTINE
Prospects for Peace Despite Israel's abrupt action in occupy-
ing the southern Negeb and the threat of
further territorial grabs by the Israelis, the trend toward settle-
ment of the military situation on Israel's terms will probably
continue. The key Arab states, unable to stop the Israelis by
force and doubting the ability of the UN to regain for them terri-
tory already lost, will be more anxious than ever to conclude
armistice agreements in the hope of preventing the seizure of
more territory by Israel. Despite Israel's military moves in
the Negeb, Transjordan is still prepared to convert the present
cease-fire into an armistice. Lebanon wants to.conclude an
armistice in order to stabilize the situation in the north; failure
by Syria and Iraq to follow suit will not have serious consequences.
Meanwhile, Israeli military activities in central Palestine, the
weakening of Arab forces in the area, and Israeli propaganda
accusations of Arab attacks on Jewish communities suggest
that Israel is planning a military move in central Palestine --
the last big area of Palestine still under Arab control. Even
If Israel should make such a move, before concluding an ar-
mistice with Transjordan or Iraq, the trend toward stability,
though checked, would not be permanently reversed, and the
prospect of eventual peace on Israel's terms would be improved.
IRAN
Soviet Relations Intensified Soviet pressure against Iran is
expected as a result of the recent serious
deterioration in relations between the two countries. Principal
factors causing this deterioration have been: (1) the suppression
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IRAN
of the pro-Soviet Tudeh Party in Iran; (2) far more belligerent
anti-Soviet Iranian propaganda; (3) the shipment of US arms
to Iran; and (4) public reference to the possibility of Iranian
participation in a Mediterranean or Near Eastern pact. The
USSR probably sees in these developments a further threat to
its principal immediate aims in Iran: gaining control over
Iranian oil and blocking closer military ties between Iran and
the West. Increased Soviet pressure will probably not take the
form of overt military intervention. Instead, the USSR will
probably renew its demands that Iran maintain "friendly"
relations with the USSR and build up Soviet troop concentra-
tions on the Iranian border. The Soviet Union may also attempt
to incite uprisings in Azerbaijan. In order to counteract such
measures, Iran will probably inform the UN Security Council
of the deterioration in Soviet-Iranian relations and press for
a US denial of Soviet charges that Iran is being turned into an
offensive base against the USSR.
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FAR EAST
CHINA
Peace Prospects The prospect for successful peace nego-
tiations in China's civil war has improved
slightly as a result of the appointment of General Ho Ying-chhi
as Premier and Defense Minister. Ho's appointment has in-
creased the prestige of Acting President Li Tsung-len and will
decrease opposition within Nationalist circles to Li s efforts
to conclude a peace agreement. Because Ho has an anti-Com-
munist record and is on the Communist war criminal list, the
Communists will probably make formal objection to his appoint-
ment. However, the Communists may be even more willing
than heretofore to enter peace negotiations in the hope that,
through Ho's influence over Nationalist military leaders, Li
will have enough authority to carry out the terms of a peace
treaty. Meanwhile, Communist propaganda suggests that, re-
gardless of the outcome of peace negotiations, the Chinese Com-
munists will convene a Political Consultative Conference (PCC)
within the next few months. The purpose of such a conference
would be to establish a government claiming sovereignty over
all China.
INDONESIA
Guerrilla Activity No apparent progress has been made
toward resolution of the deadlock in the
Indonesian dispute, the principal obstacle continuing to be
Dutch refusal to restore the Republican leaders at Jogjakarta.
Meanwhile, guerrilla resistance to Dutch forces in Java and
Sumatra is increasing and, despite heavy Indonesian casualties,
It is becoming more apparent that the Dutch will be unable to
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INDONESIA
settle the Indonesian problem by force. In fact, the Dutch
military position is actually deteriorating. There has been
fighting in West Java, an area firmly under Dutch control
since 1947; the regular Republican Army is launching frequent
attacks in the Jogjakarta area; saboteurs are increasingly
active in East Java; and in Sumatra the Dutch only control the
urban areas.
KOREA
1
Cabinet Change President Rhee's reported intention to
remove the Korean Republics Prime
Minister, Lee Bum Suk, from his concurrent post as Defense
Minister is apparently another indication of Rhee's desire to
eliminate Lee, his foremost rival. Rhee recently abolished
Leeds control over the semi-military Korea National Youth
organization and this new step, if implemented, would leave
Lee without any military influence and probably result in his
eventual removal as premier One of the few able Korean
military leaders whose record is free of the charge of Japan-
ese collaboration, Lee is well-versed in those guerrilla war-
fare techniques which are most suitable to the Republic's
military needs and capacities Ills removal at this time would
jeopardize the Republics ability to withstand any invasion by
Soviet-backed North Korea forces>
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WESTERN HEMISPHERE
Peru-Colombia No immediate solution appears possible in
the continuing Peruvian-Colombian impasse
over the refusal of the Peruvian Government to grant safe
conduct to outlawed APRA leader Haya de la Torre. An ez-
clangs of notes between Colombia and Peru has failed to alter
the stand of either government. Colombia has as yet made no
move to refer this matter to the Council of the Organization
of American States, although such a move would probably re-
ceive considerable support from the other American states.
At the same time, however, it would almost certainly result
In Peru's breaking off diplomatic ties with Colombia and in
further exacerbation of feeling between the two countries.
In the meantime, as long as Haya de la Torre remains in
asylum at the Colombian Embassy in Lima, there is a dis-
tinct possibility of an attack on the Embassy; if such an attack
were made, it would certainly lead to retaliatory measures by
Colombia, and possibly to acts of war.
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ARGENTINE ECONOMIC POLICY
The next few months will probably prove crucial in
determining both the stability of the Argentine economy and
the future pattern of US-Argentine relations. By agreeing
to revise its economic policies and to stress improvement
In economic relations with the US, the Government has gained
only a temporary respite from the threat of army control,
Inasmuch as the next few months will probably be used by
army leaders as a probation period to determine whether the
present administration can successfully implement the new
economic policies. Meanwhile, the Government is showing
a new realism in attempting to carry out its promises.
Although inflation and disruption of Argentine foreign trade
have developed to a point where an economic collapse may
be unavoidable, the Government Is taking steps to modify
destructive postwar trading practices by relaxing state con-
trols on foreign trade and by adopting an internationally
competitive price policy which may be expected to lead to
expanded production of exportable food surpluses. At the
same time, by emphasizing prompt liquidation of Argentina's
outstanding obligations to the US, Argentine leaders have
taken an important step toward restoring the country's inter-
national credit position. Despite long-repeated and vehement
denials by Peron that Argentina would seek foreign assistance,
approaches have been made to the US on the possibility of
concluding a commercial agreement with Argentina, including
reciprocal credit arrangements which, in effect, would con-
stitute a US loan. Government leaders have also for the first
time approached the issue of ECA aid in a realistic manner
by requesting a clear definition of ECA policy, with particular
reference to Argentine participation in European dollar trade.
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SOVIET-INSPIRED PEACE CONGRESS
The impending Cultural and Scientific Conference for
World Peace in New York is only one at a series of similar
peace congresses in different countries projected by the
Soviet-oriented World Congress of Intellectuals to bolster
Soviet "peace" propaganda. Plans for the New York meet-
ing were formulated by the Paris headquarters of this organi-
zation, which has called for peace congresses in France, the
UK, Mexico, Italy, and Rumania. These meetings will be
climaxed in April by a "World Congress of Partisans of Peace"
In Paris, for which the USSR is already seeking the widest
possible support. The broad professional representation planned
for the Paris Congress (as well as for the New York meeting,
though on a smaller scale) will include trade unions, coopera-
tives, women's and youth movements, religious and peasant
groups, and organizations of scientists, writers, newspapermen,
artists, and "democratic politicians." Increasing Soviet em-
phasis on these peace congresses reveals the Kremlin's deter-
mination to use its many front organizations in an all-out
campaign to convince western populations of the USSR's peaceful
intentions.
The importance which the USSR attaches to the New York
conference is suggested by the anticipated presence of a large
Soviet delegation headed by the Secretary General of the Union
of Soviet Writers. Designation of this official, who led the
Soviet-directed World Congress of Intellectuals at Breslau in
August 1948, demonstrates the close relationship between the
New York conference and other Soviet moves in this field. The
central themes which the Communists will develop at New York
will probably include: (1) denunciation of the increasing "mili-
tarization" of the US; (2) the desire for peace by all peoples
"irrespective of race or economic and social regime"; and
(3) the need for "free research" in an "urgent" effort to end
"atomic secrecy."
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IMPLICATIONS OF IMPENDING RUBBER CONFERENCE
Representatives of the natural rubber producing nations
,at the 28 March meeting of the International Rubber Study Group
In London will probably seek US assistance and support in work-
ing out an international agreement for regulating the production
and price of natural rubber at profitable levels. These nations
are becoming increasingly concerned over their ability to sell
their natural rubber in sufficient quantity and at prices high
enough to prevent severe economic hardships and political in-
stability. This concern is caused primarily by: (1) the con-
tinued use of synthetic rubber in the US--and the fear that its
use may increase if the new "cold'. process for synthetic
rubber production is adopted; (2) the realization that increased
use of synthetic rubber by the US would have an immediate
effect on the price of the natural product because the US pur-
chases nearly half the world production of natural rubber;
(3) the fear that the US will curtail its purchases for stockpiling
purposes; and (4) the increasing surplus of natural rubber pro-
duction over consumption.
Indonesia and Malaya currently produce nearly three-
fourths of the world's natural rubber. Even a two or three cent
drop per pound in its price would bring economic hardship to
the European plantation operators and possibly to native small
landholders and plantation workers. In Indonesia, such a develop-
ment would worsen the Dutch position. In Malaya, a decrease in
economic stability could increase the Communist potential for
guerrilla activity against the British authorities.
Over-all US strategic interests in the Far East would
therefore be adversely affected by any decrease in the price of
natural rubber because of the resulting unrest and increased
opportunity for Communist infiltration. Moreover, a substantial
decline in the export of Far East rubber to the US would facilitate
the purchase of rubber by the USSR for stockpiling purposes.
(Soviet natural rubber purchases in 1948 were large and are
reported to be larger so far in 1949.)
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DISTRIBUTION
1 ... ^ The President
2,64 Secretary of State
3. � � . Chief of Staff to Commander in Chief
4. . � � � Secretary of Defense
5 Secretary of the Army
6... Secretary of the Navy
Secretary of the Air Force
8,70 Chairman, National Security Resources Board
9 Executive Secretary, National Security Council
10 Assistant Secretary of the Navy for Air
11,69. . . � � Chief of Staff, U.S.Army
12,13,14 Chief of Naval Operations
15,16,17 Chief of Staff, U.S. Air Force
18 Director of Plans and Operations,General Staff,U.S.Army
19 Deputy Chief of Staff (Operations) U.S.Air Force
20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, U.S. Air Force
22,23,24 Special Assistant to Secretary of State for Research
and Intelligence
25,26,27,28,29, Director of Intelligence, General Staff, U.S. Army
30,31,32,33,34.
35,36,37,38,39, Chief of Naval Intelligence
40,41,42,43,44.
45,46,47,48,49. Director of Intelligence, U.S. Air Force
50 Director of Security and Intelligence,Atomic Energy Comm.
51. . Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. Chief,Acquisition & Distribution Dlvision,OCD,Dept.State
57 Director, Federal Bureau of Investigation
58 Secretary, Joint Chiefs of Staff
59 Chief, Policy Planning Staff,Department of State
60. . . ... Secretary of State (Attention: Chief, Policy Reports Staff)
61. . . . � � � � � Deputy Director, joint Intelligence Group, Joint Staff
62,63 Secretary, joint Intelligence Group, joint Staff
65 US Air Force Representative on joint Strategic
Survey Committee
66,67. . � . � � . Secretary, State-Army-Navy-Air Coordinating Committee
68 Administrator, Economic Cooperation Administration
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U. S. GOVERNMENT PRINTING OFFICE
2631-8-.1948
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