FIRST ANNUAL PROGRESS REPORT OF THE ECONOMIC INTELLIGENCE COMMITTEE (JULY 1951 - JUNE 1952)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61-00274A000200100034-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 12, 2016
• Document Release Date: July 25, 2002
• Sequence Number: 34
• Publication Date: August 6, 1952
• Content Type: MF

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S~~Gtu' 7'1Y~i' Ft~}T#!ATION
WASHING`mN 25, D. Cc
(a August 1952
NEMOR L NDUM FOR: (Members of the IAC)
SUBJECT s First Annual Frogress Report of the Economic
Intelligence Committee (July 1951 - June 1952)
The EIC is transrriitting herewith its first annual pr. ogress report
to the IA.C (Tab 40. In view of the fact that this marks the fist phase
of the EIC program., it is appropriate to stmnrnarize briefly;- the organiza-
tion and accomplishments of the Committee as they relate to its mission
and to point out some of the major problens that have limited the
effectiveness of its operations,
I. Anuuraisal of Foreign Econoiilic Intelligence Feauircner.rts and
r a.c,.l t yes ea tc~ the ?a~zo~ia 8C nurlty - ''h~ 7T!,ea T7: an EIC
In compliance with NSC Action 282, CIA, in May 1951, completed a
survey of the requirements and facilities of the UTS Government for
foreign econo?~.ic intelligence relating to the national security, This
survey revealed that while some twenty-four agencies of the Government
collected and analyzed substantial amounts of information concerning
foreign economi--s, there were co established procedures for:
a, relating the information thus collect :d and the techn:.cal
talent available in the Government to problems of national.
security,
b, locating readily all the information in the Government on
specific economic intelligence probl.mn.s for use by any one
agenczr,
c, identifying gaps in the total information available and
initiating action to fill the more critical gapes
To meet this problem the Director of Central Into lligenca,. in
accordance with his responsibilities '.and:.r ;NTSCID 15, established the
Economic Intelligence Co aittee (RIC) for which terms of reference were
approved by the LAX at its meeting of 17 May 1951 (Tab B),,
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II. O.^,c nization of the EIC - `l'ho M.;chanisrn for Coordination Tab C
Since its formal establishment in J ne 1951, the, ETC has de vet-,d
a large part of its time to developing the mechanism for coordination.
The main committee, chaired by the Assistant director for Research and
Reports, CIA, is composed of representatives of the 12-C agenci(,s, who
sit as full members, and representatives of some twonty non-LC
agencies who, as associate members, are invited to sit on matters
relating to the particular interest, competence and responsibility of
their respective agencies.
In order to focus available intelligence on problems of importance
to national. security the EIC has sat up special. ad hoc working greuns.
Their function is to coordinatee on an interagency basis the production
of anocific priority economic intuiligonce studies.
Other functions of the :EIC relating to the identification of major
research gaps as well as collection and collation problems, the location
of data, and the preparation of basic research papers are delegated to
ETC subcommitteos, These subcommittees are composed of the outstanding
Gove;rr nont specialists in each of the major forei,;~,'n economic fields. In
order to comprehensively cover the fields which are important to the
production of foreign economic intelligence, the EIC has authorized the
eventual formation of fourteen subcornnitteos.. Eight subcommittees are
presently in operation; two .- Electronics and Tealecorruimnications and
Armaments -- are currently in she process of being activated,
III. E b A)
While the EIO hee been the rgo.d with coordinating economic
intelligence in they entire foreign economic field, its primary attention
has been focused on the oconor.r of the Soviet Orbit. This priority is
generated by the general, scarcity of intelligence on the area relative
to demands for intelligence support. The EIC, however, has not over..
looked its responsibilities relating to non-Soviet economic intelligence.
In fact, two major projects on non-Soviet areas have already boon
coordinated by EIC working groups,,
A. Focusing Economic In t'11122nce cn Problems of 1 a.tion-d S: 2j ity
In the first months o the FIC q s existence it, became
appare7:1t .that the: re should be close Liaison with the Office
of National Estimates to '.assure that coordinated economic
studios are -undertaken to provide the bust possible factual
basis for national estimates. During the past year the EIC
provided the Office of National Estimates (ONE) with three
aoord1nated..;^e s: .r eh sl;ud;_es as major contributio is to national
Ustimstss. One of thoco r,as used in bre separate estimut, s, A
Fourth EIO study is schodall.ed. for completion by 2i.. August 1952,
and will serve as the pr.incipa,l contribution
25X1
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Two ETC studies wore undo2.tal:en at the direct request of
the IAC, The research paper for the IAC on the "Status and
Efi'ectivenoss of Trade Controls Against Communist Cline)'
25X1 C8B (IC-R-1 was coordinated both within the EIC and w: th inter
ligence The other
study for e entitled "Economic Capabilities of the Soviet
Bloc to Support a General War" is still in the: rocess of
production. Also currently underway is revision of
25X1 C8B EIC-I.-1 and a Ofact-,finding study on .. ranch Indochina and
Bunria. All of the above research papers are designed to focus
the available economic intelligence on major national security
problems. In addition to. these, there ^7o-be on projocts
undertaken at the request of indivi i.ial EIC representatives to
moat the needs of their particular department or agency.
To insure the adequacy of basic research to meet future
national security needs it is necessary to rationalize the
current economic research effort with an eye to probable future
demands. This is one of the principal functions of the
snbcoirunitteos. In part this rationalization is assisted
through the catalytic effect of gathering the top professional
experts in a given field into one subcorunittee:. The acquaint-
anceship among those professional experts, the exchange, of
research -projoct lists, the discussion of agozicy functions and
programs in particular fields, and the analysis of common
problems all tend to reduce duplication, to encourage at least
an inf'ornial coordination of effort and to promote a joint attack
on common problems. In addition to these general benefits the
subcommittees prodree special research studios which the members
feel are needed to fill critical gaps in basic intelligonce0
B. Measures to Improve the Collection and Collation of
",CAG:7Gm~ 7Lc inti3-L ! j goncc
The EIC responsibility for improving the collection and
coliai"pion of economic intelli;ence has been delegated largely to
th ,C bcommitt'ee on Renui.r"'c:r'jcnis and Facilities for Collation.
It is worth noting that this : nibcoimri _tte e rop'esemts the first
continuous body in which collection representatives have come
together since the dissolution of the old CTG Committee on
Collection In 1-94 7. Since its establishment less than a year
ago this group has made several important contributions, First,
it has -o opo.red and coordinated the requirements of the IAC
agencies for economic reporting by the Foroign Service on some
17 countries and, as a related effort has submitted a detailed
proposal for world-wide periodic Foreign Service reporting on
minerals, Also of related interest have been its written pro-
posals to assist the State Peripheral Reporting mi:i.ts. Second,
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the Subcommittee has initiated a coordinated travel folder
program for intelligence guidance of travelers in the USSR.
Several folders have in fact already been pr-,pared. Third, a
sub-group has been set up to determine the treatment, operations,
procedures and end-products which would make foreign l nguage
documents of maximum value to analysts engaged in economic
intelligence research. Finally, in addition to the numerous
other activities listed in Tab A, this group is now examining the
theoretical and practical feasibility of some form of central
index of documentary and published economic intelligence material,
In the future these and other programs will play an important
role in providing more useful information for the research. analyst.
C. Continuing Snrv of Economic Int~~1li nco Deficiencies
The EIC naturally looks for guidance on intelligence targets
from the NSC, the IAC, and ONE as well as from the individual
departments and agencies,,, At the same time the of its own
initiative, also seeks to identify those intelligence deficiencies
and problems which require either action or recommendations by the
economic intelligence community.
One of the principal methods used to identify these
deficiencies is the special survey. In one instance a sucevcy was
conducted at the request of the Office of National Estimates to
determine the extent of the current economic research effort on
Communist China. This survey revealed serious intelligence
deficiencies and its findings wore incorporated by ONE in a spacial
report to the D.C. In the future it appears that. ONE will continue
to use the EIC survey facilities in connection with its post-mortem
procedure in order to determinc whether certain suspected critical
gaps do in fact exist.
Apart from the special surveys generated by ONE, the EIC
has in process, through the med.-.um of its subcommittees, a
continuing government-wide surveey, of critical gaps in the economic
research effort? Area-wise the principal emphasis is currently
on the Soviet Bloc, including China; although some of the
subcommittees are conducting these surveys on a world-wide basis,
sZssentiaily these surveys are designed to determine the critical
deficiencies on the major intelligence aspects of each important
field. On the subject of petroleum in the USSR, for example,
what is the stag: of our intelligence on production, consumption,
trade, plant data, etc. The critical natrxe of the deficiency is
determined by its importance to nay ionai security in terms of the
probable end-intelligence use. For example, it is of much more
imxmed.iato importance to increase our knowledge on Soviet stocks of
aviation gasoline than it is to expand our understanding of Soviet
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petroleum gooloiy largely because of the importance of the
f ?rm r to studies of Soviet capabilities and vta~l.naerabiliti,es,
It is on this basis that critical deficiencies are idmitifi_Ld.
Once the subco runittees have made this identification they must
then determine whether the deficiency is caused by inadequate
collection, inadequate collation (i., e, indexing, translating)
etc.), inadequate research or by some combination of these,
Only by knowing the source of the problem can the proper action
b taken or the appropriate rccom.aendations made. On the date
this memorandum was prepared several s .bcoznmitteos were. well
along in their survey of 'cart s.
TV. Problems and Limitations
The principal limitation to the effectiveness of the EIC has been
the inordinately long p,-riod. of time required for completion of its
various reports and surveys. One reason for the delay is inhere net in
the mochanic s of coordination among a large number of agencies; although
it is expected that in its soCond year the, EIC will establish procedures
to mitigate this difficulty, , second factor is bound up in the natur
and scope of the studies and surveys that have been undorta ken.. 1 or the
most part they have not represented merely summary judgements and
estimates but rather have been careful analyses with a detailed acec.unt-
ing of the facts relating to the problem. The third element in this
problem dori..ves from the fact that individual ETC members are among the
top professional analysts of their respective agencies and as such they
have agency responsibilities tlhich limit their time on EIC matters. In
a large part this problem will. be overcome in the coniin; year by
enlarging the EIC Secretariat to provide fcr grater assistance to the
members end to the subcorrunittees and working groups. iiowcver, in order
to satisfactorily resolve this problem, member agencies must k.x