WEEKLY SUMMARY NUMBER 57

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 05949558
• Release Decision: RIPPUB
• 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: July 1, 1949

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WEEKLY SUMMARY
57
Number
1 JUL 1949
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CENTRAL INTELLIGENCE AGgNCY
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GIN
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.
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
Page
HIGHLIGHTS
1
WESTERN EUROPE
2
EASTERN EUROPE
5
NEAR EAST-AFRICA
8
FAR EAST
11
AR TIC L E: Expansion of Satellite Air Operations. 15
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HIGHLIGHTS
In the key points in the world where US security is
most sensitively affected the situation was comparatively
quiet during the lull following the ending of the Council of
Foreign Ministers meetings in Paris. In Berlin, negotiations
on the modus vivendi have made progress and Berlin cora-
munications have been largely restored. In Greece, a six-day
government crisis following the death of Prime Minister
Sophonlis has been temporarily resolved by the naming of
Alexander Diomedes as head of the coalition (see page 6).
The Palestine Conciliation Commission Ms recessed for
several weeks, leaving prospects for an Arab-Israeli peace
settlement still remote (see page 8). In Indonesia, the ulti-
mate conclusion of a Republican-Dutch agreement has been
furthered by the considerable progress now being made toward
full restoration of the Republican Government to Jogjakarta
(see page 12). In China, the Nationalists are making efforts
to hamper the consolidation efforts of the *Communists by
blockading Shanghai, an operation which threatens to paralyze
this key city (see page 11).
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WESTERN EUROPE
Communist Policy Widespread reports indicate that Com-
munist Parties in Western Europe have
for some time been in the process of re-evaluating their
membership. policies and eliminating unreliable elements.
The Swedish Communist Party has reportedly abandoned the
idea of obtaining mass membership and is concentrating on
creating strong cadres in certain key Swedish areas. In
France, the reduction in Party membership has recently been
extended to include even veteran Communists as well as many
Communist militants in the para-military groups. There is
also evidence that similar reductions are being effected in
the Communist Parties of Switzerland and western Germany.
Although the Tito defection has undoubtedly contrib-
uted to the disillusionment of many members of the Western
European Communist Parties, they are more probably being
reduced in size in response to changing conditions in
Western Europe. With constantly decreasing opportunities
for building a mass Party following, the Party leadership
probably feels it necessary to build a Party core of en-
thusiastic and militant supporters who will unwaveringly_
hew to the Stalinist line. This reduction to a "hard core"
will simplify Moscow's task of maintaining discipline
during the present period of temporary Communist retreat
In Western Europe. Despite the retrenchment, the Com-
munist leadership will make an intensive effort to win
popular support for its program through the use of front
organizations such as "Peace Committees" and the
World Federation of Trade Unions.
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GERMANY
Soviet Plans Although the Kremlin apparently decided at the
recent Paris meeting of the Council of Foreign
Ministers that Soviet objectives could best be achieved by con-
tinuing the division of Germany, there has been no relaxation
in Soviet efforts to obtain a "neutral" or Soviet-oriented uni-
fied Germany. To meet this goal, the USSR is apparently
developing a long-range plan to outbid the West for German
support. As part of this plan, German Communists are em-
phasizing the theme of "national unity" and stressing Com-
munist willingness to cooperate with all German elements
which desire unification of Germany. Such propaganda cam-
paigns will be ineffective, however, unless the USSR first
reverses its present economic and political policies in the
Soviet Zone and is prepared to risk losing control of eastern
Germany. Nevertheless, the Kremlin probably believes that
time favors the USSR in its campaign because: (1) the anti-
cipated economic depression in the West will lessen west
GermPn resistance to the USSR and weaken the western posi-
tion in Europe; and (2) west German desire and need for trade
with the East will weaken East-West political barriers.
AUSTRIA
Treaty Prospects Soviet "concessions" on Austria at the
recent Paris meeting do not necessarily
assure the early conclusion of a peace treaty and may ac-
tually have been motivated only by a Soviet desire to relax
East-West tension. !n this connection, the USSR could afford
the concessions made at Paris because they involved no
relinquishment of material Soviet interests in Austria. The
abardonrnent of Yugoslav territorial claims was a sacrifice
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AUSTRIA
of Yugoslav rather than Soviet interests, and the USSR re-
tained the means to exert a considerable influence on the
Austrian economy. Meanwhile, the unsettled issues 13,4ssed
to the Deputies for solution are sufficiently controversial
to provide the USSR with ample opportunity to delay indef-
initely agreement on the final treaty. These issues include:
(I) the specific list ci assets and booty which the USSR must
turn over to Austria; (2) the terms governing Soviet with-
drawal of profits from the interests it will retain in Austria;
and (3) the question of whether disputes between the Soviet
and Austrian governments, arising out of the treaty provisions,
shall be settled on a bilateral basis. Soviet willingness to
reach agreement on these matters will depend primarily on
the success of current Soviet efforts to consolidate and
strengthen Communist control in Soviet Zone Germany and
the Satellites and to create increased opportunity for Com-
munist influence in Austria.
BELGIUM
Election Results Failure of the Catholic Party to obtain
a majority in the Chamber of Deputies
in the recent Belgian national elections will probably result
in the formation Cl another Catholic-Socialist coalition Cab-
inet. Extended negotiations will probably be necessary,
however, before a Cabinet can be formed because: (I) the
Liberal Party, which scored. relatively large gains, will
undoubtedly seek representation in the Cabinet; and (2) the
Socialists will object to a Catholic-controlled coalition.
The elections also demonstrated that the Catholic Party is
not strong enough to force a referendum on sing Leopoldss
return azid that Communist strength has declined since
1940 by nearly 50.
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EASTERN EUROPE
SOVIET UNION
Mass Deportations The Kremlin's recent mass deportation
of unstable foreign populations from
the southern borders of the Caucasus is indicative of the re-
pressive measures increasingly required to enforce the Soviet
brand of chauvinism. Similar drastic measures were taken is.4
the Baltic area presumably to supprestst resistance to agri-
cultural collectivization and expressions of anti-Soviet senti-
ment. These border areas, for security reasons, have always
been of concern to the Soviet regime and in the past the Kremlin
has attempted a solution by replacing "unreliable" ethnic
minorities with Great Russians. This particular wave of de-
portations may have been caused in part by the Kre mlin's cur-
rent emphasis on "Greater Russian" nationalism, which has
served to arouse the equally nationalistic resentment of non-
Russian peoples in the USSR, thus aggravating the security
situation in sensitive border areas.
BULGARIA
Economic Plans Even though Bulgaria's Five Year Plan
(1949-1953) for increasing industrial pro-
duction must be jettisoned in large measure, the USSR has
apparently decided that Bulgaria's role in the Soviet family
Of minions must remain that of a predominantly agricultural
producer. This abandonment of Bulgarian industrialization
plans was probably ordered by the Soviet-controlled Council
for Economic Mutual Assistance (CEMA) which provides for
the assignment in 1950 of a fixed economic function to be per-
formed by each signatory. The implementation six months
ahead of schedule of this agreement assigning specialized
functions among the signatories may indicate the Kremlin:
(1) realizes the need to achieve more effective integration
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BULGARIA
of the economic operations of the Satellite nations as soon as
possible; and (2) finds it impossible to support industrializa-
tion of all Satellites simultaneously. As the first step in re-
establishing Bulgaria as a primary agricultural producer,
the Kremlin has ordered that work on five hydropower
stations be stopped and that construction emphasis be trans-
ferred to irrigation dams, which are more in line with Bul-
garia's future role as an agricultural Satellite.
GREECE
The New Premier The six-day government crisis resultng
from the death of Prime Minister Sophou-
lis has been ended by the designation of the 74-year-old Alex-
ander Diomedes to head the old coalition cabinet. For the
time being, the business of the government will be carried on
much as before or even slightly more effectively. (Some matters
have been held up in recent weeks because of Sophoulis" growing
Infirmity and his reluctance to delegate authority.) Nevertheless,
it is doubtful whether Diomedes will have more than temporary
success in holding the old coalition together in the face of the
intensifiee political and personal rivalries that have sprung
up since the death of his predecessor. Diomedes is a respected
financier and a Liberal without strong political coloration;
he was finally accepted as a compromise candidate only after
Vice Premier Tsaldaris, whose Populists form the largest
bloc represented in the coalition, was refused the support of
the second-ranking Liberal Party. Diomedes will probably
soon find his task complicated by his relative inexperience in
politics and by his inability to exercise a stabilizing influence
comparable to that of the venerable Sophoulis. With no one
on the scene apparently capable of commanding general approval
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GREECE
and of restraining political factionalism, a new and more pro-
longed cabinet crisis might take place and the King may then
be tempted to take matters into his own hands for the sake of
the anti-guerrilla effort.
GENERAL
Sovietized WFTU By reorganizing the leadership of the World
Federation of Trade Unions and by augment-
ing its financial support, the USSR has effectively converted the
WFTU into a far more aggressive instrument of Soviet 'policy
than was possible before the recent withdrawal of the western
labor organizations. The frank transfer of central direction of
the WFTU to Soviet and Satellite trade unionists makes it clear
that the USSR is more intent upon gaining efficient control of
the world organization than it is upon maintaining the pretense
that the WFTU is a genuinely representative labor organization.
Moreover, the creation of five "regional bureaus," paralleling
the structure of the old Red Labor International, reflects Soviet
determination to tighten its hold on the WFTU-affiliated national
labor unions. To regain the contacts it lost when the western
organizations withdrew, the USSR is now organizing among
such strategic industries as metalworking, clothing, and leather.
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OW Orr
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NEAR EAST AFRICA
Palestine Outlook. As the Palestine Conciliation Commis-
sion announced a recess of several
weeks in the negotiations at Lausanne, a permanent Arab-
Israeli peace settlement still appeared remote. Limited
progress, however, has been made toward local stabilization
along the Syrian border and in Jerusalem. In the disputed
Mishmar hay Yarden region Just west of the Syrian-Pales-
tinian border, both Syria and Israel have indicated their
willingness to accept, as a basis for armistice discussions,
Acting Mediator Bunche's proposal for withdrawal of Syrian
troops to the border and demilitarization of the area between
the two armies. Armistice negotiations will probably be
blocked, however, by Israeli-Syrian disagreement over in-
terim administration of the demilitarized area. The Israelis,
who regard all territory on the Palestine side of the inter-
national border as theirs, are insisting upon their right to
exercise civil authority over the entire region; the Syrians
are demanding UN supervision of the area as well as the
right of Arab civilians to return to it.
in Jerusalem, tension between Jordan and Israel
over the disputed Government House region has relaxed
somewhat, and the proposal of the UN Mixed Armistice
Commission (MAC) that the area be divided between the
two countries may settle the dispute temporarily. Mean-
while, Jordan has approved the US proposal that the Israeli-
Jordan Special Committee established under the armistice
agreement be abolished and its functions transferred to the
MAC. Israel's refusal to approve this change apparently
reflects Israeli determination to let the MAC handle only
special local questions, on the grounds that decisions favor-
able to Israel on the larger problems of territorial changes
In Jerusalem would be more difficult to achieve through the
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MAC than through bilateral negotiation with Jordan. Failure
to agree even on this procedural matter underscores the
difficulty the Arabs and Israelis face generally in trying to
reach settlement of the basic issues.
TURKEY
Election Demands Although general elections in Turkey
are not scheduled until 1950, the ques-
tion of electoral reform has already agitated political leaders
Into heated controversy and political tempers are likely to
remain high during the coming months. The opposition
Democratic Party, hoping to prevent repetition of the govern-
mental rigging of the vote which almost certainly took place
In the 1946 elections, has been demanding that the judiciary
supervise the electoral process, particularly with respect
to secret casting and open counting of votes. When the gov-
ernment failed to present an electoral reform bill to the
National Assembly before its adjournment until November,
the reaction of opposition leaders was bitter and vociferous.
Although the government has managed to evade the issue
thus far, the recent flareup may persuade the diehards of
the need for some relaxation of the government party's tight
control over elections.
IRAN
Crisis Brewing Despite a relatively commendable record
for its seven months in office, the Saed
Government is presently under heavy attack and may fall
unless some concrete action is taken to improve internal
conditions. While the Shah has been devoting himself to
building up a military establishment, dissatisfaction and
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IRAN
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unrest have increased among the people of Iran. Riots, pro-
voked by local bread shortages, have cropped out in the north;
and Iranian merchants and religious leaders, probably as a
result of the current decline of commercial activity in Iran
and in protest against the concentration of power in the hands
of the Shah and the army, are demanding an end to "political
and economic anarchy" and threatening a general strike.
Although Prime Minister Saed believes he can survive the
present crisis by reshuffling his Cabinet, the multiplicity of
economic problems facing the country and the developing op-
position among influential groups as a result of the Shah's
preoccupation with military matters suggest that pious pro-
posals and Cabinet shifts may not be enough to save the Gov-
ernment. If the Government should fall, the Shah would be
faced with a crucial internal situation because of the difficulty
of finding a candidate for Premier who would be as capable
as Saed.
PAKISTAN
Afghan Relations Relations between Afghanistan and Paki-
stan have again become critical as a
consequence of a recent incident in which a Pakistan Air Force
plane machine-gunned and bombed Afghan tribesmen in Afghan
territory. Pakistan's failure to provide a satisfactory explana-
tion of the affair has undoubtedly angered the Afghan Govern-
ment; the real importance of the incident, however, lies in the
resentment almost certainly aroused among border tribesmen
who have hitherto responded only moderately to anti-Pakistan
propaganda. Should the tribesmen's current resentment be
aggravated by further Afghan propaganda or by other similarly
unfortunate incidents, the natural restiveness and bellicosity of
the tribesmen might flare into disturbances serious enough to
involve Afghanistan and Pakistan in armed conflict.
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FAR EAST
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CHINA
Shanghai Blockade Although the Chinese Communists can
bring adequate food supplies into
Shanghai from the interior, a continuation of the present
Nationalist blockade will bring economic paralysis to this
third largest city in the world. Shanghai's fuel imports,
normally 125,000 tons of coal and 35,000 tons of fuel oil
per month, will be completely cut off, except for a trickle
of coal from inland, and the resulting power shortages will
reduce industrial production sharply. Moreover, as soon as
stockpiles of chemicals, rubber, metal, and other raw ma-
terials have been depleted, industrial activity will be further
decreased.
The Nationalists, observing that hysteria over the
alleged mining of the Yangtze River entrance had virtually
closed the Shanghai port, have also announced that all ports
from Foochow north to Manchuria would be "temporarily
closed" to foreign air and sea traffic. Although the Nation-
alists are not capable of effectively blockading the entire
"closed" area, their air and naval forces are adequate for
limited patrol action, and they probably will be able to con-
tinue isolating Shanghai from foreign commerce. Few foreign
vessels are likely to risk the danger of entering the port under
threat of Nationalist attack, and the Communists possess few
ships capable of running the blockade. Six US ships have al-
ready dropped Shanghai as a port of call and virtually all for-
eign vessels in port left before the Nationalist deadline.
Except for some avaricious Hong Kong shippers, who will
run any blockade for anybody for a price, and a few Communist
vessels, the port of Shanghai will probably remain closed for
some time.
am+V11Elm
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INDONESIA
Restoration Progress The full restoration of the Republican
Government to Jogjakarta by the end
of July now appears virtually certain provided Republican offi-
cials can consolidate popular political support, restore law
and order, and implement a cease-fire order. Of these re-
maining problems, the most difficult will be to achieve coopera-
tion between Republican and Dutch forces in carrying out the
cease-fire order. Following a successful solution of these
problems, Indonesian Republicans and Federalists and repre-
sentatives of the UN Commission for Indonesia will attend a
conference at The Hague to work out plans for the transfer of
sovereign powers from the Netherlands to a federated United
States of Indonesia. At The Hague, the widely divergent views
of the Dutch and Republicans on the detailed delineation of
powers and duties within the projected United States of Indonesia
will place a severe strain on the recently adopted Dutch policy
of conciliation and cooperation. However, an agreement will
probably be reached because the Dutch; (1) will be subject to
the same international pressures which produced agreement
on Republican restoration; (2) are resigned to the necessity of
granting substantial independence to the Indonesians; and (3) are
convinced thattgreement with moderate Indonesians is the only
alternative to a Communist-dominated Indonesia. The outbreak
of violence in Indonesia, however, would stiffen the Dutch atti-
tude and threaten the success of The Hague conference.
JAPAN
Economic Troubles Japan faces a period of augmented
austerity and Communist strife unless
demand for Japanese exports improves during the next few
months. Since April, a 50% drop in new export contracts
has caused the Japanese serious concern; simultaneously
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JAPAN
1
severe economic retrenchment is anticipated as a result of
the US-sponsored rehabilitation program. Depressed world
prices, import restrictions imposed by dollar-short countries,
rumors of sterling devaluation, and generally unsettled con-
ditions in Southeast Asia all presage difficulties for the attain-
ment of Japan's recently reduced 1949-50 export goal of $500
million. Moreover, progress in Japanese economic rehabili-
tation may be further retarded by labor unrest if unemploy-
ment caused by industrial rationalization becomes unmanageable.
The Japanese Communist Party may thus be provided with fer-
tile propaganda opportunities for its future program which
appears to be switching from one of "peaceful revolution" to
violence.
IrIDOCHINA
Reaction to Bao Dal The hesitancy of various Far Eastern
countrieS to commit themselves re-
garding the US statement of 21 June, which welcomed the
formation of a unified state of Vietnam, may be a portent of
difficulties the new Bao Dai regime will encounter. Certain
Asian governments apparently were not convinced by US
efforts to emphasize that: (1) the agreement is only a pre-
liminary step toward the solution of the Franco-Vietnamese
problem; and (2) failure of the Bao Dai experiment could
result in Communist control of Indochina. In both New Delhi
and Bangkok, official reaction to the US statement indicated
skepticism regarding Bao Dai's chances for success and un-
certainty as to France's intention of eventually transferring
sovereignty to the Vietnamese. The generally negative inter-
national reaction to the US declaration will weaken Bao Dal's
chances for success and indicates a widespread lack of faith
In both French intentions and the Bao Dai experiment.
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AUSTRALIA
Coal Strike Australia's labor Government is faced with a
major political problem as a result of the
current Communist-led coal miners' strike. Thousands of
laborers in industry, which is virtually dependent on coal as
a source of power, are unemployed; internal transportation
has slowed down; and state governments have been forced to
ration electricity and fuel. Although the miners apparently
have some legitimate grievances in existing working condi-
tions, the government is insisting upon their return to work
pending federal arbitration of the strike, and the Attorney
General plans to introduce legislation prohibiting relief to
the miners from union contributions. If government insistence
on arbitration fails and general paralysis overtakes Australian
Industry and commerce, the consequent loss of prestige to the
Labor Party is likely to have serious repercussions in this
election year.
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EXPANSION OF SATELLITE AIR OPERATIONS
1
Violations of the joint US-UK policy to exclude Satel-
lite commercial air traffic from Western Europe are increasing
and Western European nations are becoming more reluctant
to conform to the policy rigidly in the face of western desire
to expand commercial relations with the East and mounting
Satellite pressure for air outlets. The ineffectiveness of
the US-UK policy, combined with pressure for its relostion
or abandonment, particularly with regard to Yugoslavia, has
again focused attention on the effects expanded Satellite air
operations beyond the Iron Curtain will have on US security.
With the exception of Rumania and Bulgaria, all the
Satellites have increased their air operations into Western
Europe, and nearly every Western European country has been
reluctant to comply with US requests that such operations
by Soviet-controlled carriers be barred until the USSR permits
western aircraft to operate to the USSR. Poland has concluded
reciprocal air agreements with Denmark and Belgium. The
Czechoslovak airline, on the basis of long-standing agreements,
Is operating regular flights to practically every Western Euro-
pean capital north of the Pyrenees. Hungary has made special
flights to a number of points. Yugoslavia is negotiating with
Italy and is about to open negotiations with the UK for recip-
rocal air agreements. Swiss-Yugoslav negotiations are in
progress and Yugoslavia is also reportedly negotiating with
the French for an exchange of air rights and for the delivery
of French aviation equipment
In attempting to expand their operations into Western
Europe, most of the Satellites have indicated their willingness
to grant reciprocal rights. In actual fact, however, the Satel-
lites are unable to grant full reciprocity because Satellite
airlines -- with the exception of the Yugoslav carrier -- are
In practice controlled or owned in part by the USSR. Full
reciprocity would thus mean granting western carriers per-
mission to operate to the USSR.
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� In seeking to expand to the West, the Satellites ap-
parently hope to facilitate trade relations. In any future
negotiations for an air agreement, they are thus likely to
attempt to obtain western agreement to relax the current
embargoes on export of aircraft and aircraft parts. Czecho-
slovakia, for example, is particularly anxious to obtain re-
placement parts and must procure long-range aircraft from
the West if it is to re-establish regular air operations to the
Middle East. Although the USSR could in the long term provide
the Satellites with aircraft, the current shortage of air equip-
ment in the Satellites would prevent any substantial early
Increase in Satellite air operations to the West in the event
that the US-UK containment policy is abandoned. Moreover,
If the Satellites were to receive air equipment from the West,
the resulting increase in their civil air potential would be
reflected largely in rehabilitation and extension of their
domestic networks.
Yugoslavia has been the most active of the Eastern
European nations in seeking to establish commercial air
relations with the West. Unlike the Satellite companies, the
Yugoslav airline is not Controlled or owned by the USSR.
the Soviet-controlled Yugo- (b)(1)
slay airline JUSTA has been dissolved.) Yugoslavia is par- (b)(3)
ticularly eager to obtain air agreements with western nations
In order to: (I) improve the chances of attracting commercial
representatives and technical experts to Yugoslavia; (2) estab-
lish closer western ties as a countermeasure to increasing
Combdorm pressure; (3) obtain a source of supply for aviation
gasoline, the shortage of which has severely hampered Yugoslav
air operations; and (4) secure the necessary equipment to
restore domestic air operations.
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DISTRIBUTION
I The President
2,64. . � . . . Secretary of Slate
3,4 . . . � 0 � 0 Secretary of Defense
5 Secretary of the Army
6 Secretary of the Navy
7 Secretary of the Mr Force
8,70 Chairman, National Security Resources Board
9,71 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
Ili, � . . . . . � � Director of Plans and Operations,General Statt,1 -.,.Army
19 Deputy Chief of Staff (Operations) U.S. Mr Force
20. . , . . . � . � Deputy Chief of Naval Operations (Operations)
21, . . . . . . u� 4 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 Ermargy Comm.
61. ... . . . � , Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. Chief,Acquisitton et Distribution Division,OCD,Dept,State
57. . . . � . . . . Director, Federal Bureau of Investigation
58. 4 � It . 0 0 � 0 Secretary, joint Chiefs of Staff
59 Chief, Policy Planning Staff, Department of Slate
60. Secretary of State (Attention: Chief, Policy Reports Staff)
61. . . . 4 0 � a o 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 Administrttion
_
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Auth: r. 77/17a1
Dates 0-b-02-14 By: 0/3
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