REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY OF THE UNITED STATES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00059A000500070008-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: November 11, 2016
• Document Release Date: August 20, 1999
• Sequence Number: 8
• Publication Date: June 17, 1948
• Content Type: REPORT

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GA Library
CENTRAL INTELLIGENCE AGENCY
Review of the World Situation
as it Relates to the Security
of the United States
CIA 6-48
Published on
17 June 1948
COPY NO.45
FOR THE CHIEF,CIA LIBRARY
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1. This copy of this publication is for the information and use of the recipient
designated on the front cover and of individuals under the jurisdiction of the recipient's
office who require the information for the performance of their official duties. Further
dissemination elsewhere in the department to other offices which require the informa-
tion for the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary of State for Research and Intelligence, for
the Department of State
b. Director of Intelligence, GS, U SA, for the Department of the Army
c. Chief, Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Director of Security and Intelligence, AEC, for the Atomic Energy Com-
mission
f. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
g. Assistant Director for Collection and Dissemination, CIA, for any other
-Department or Agency
2. This copy may be either retained or destroyed by burning in accordance with
applicable security regulations, or returned to the Central Intelligence Agency by
arrangement with the Office of Collection and Dissemination, CIA.
WARNING
This document contains information affecting the national
defense of the United States within the meaning of the
Espionage Act, 50 U.S.C., 31 and 32, as amended. Its trans-
mission or the revelation of its contents in any manner to
an unauthorized person is prohibited by law.
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
1. Although the propaganda purposes in Soviet exploitation of the Smith-Molotov
and Wallace-Stalin correspondence are evident, there is increasing reason to believe that
the Kremlin is also genuinely interested in exploring the possibility of easing the tension
between the USSR and the West, for tactical purposes (infra, para. 1).
2. The situation is not such, however, as to render such a settlement imperative,
from the Soviet point of view. The most recent developments - the French and Ger-
man reactions to the Six-Power Agreement on Germany and the action of the House
in curtailing appropriations for European recovery - will persuade the Kremlin that
the existing situation in Western Europe is still capable of considerable exploitation.
The probability is, therefore, that the USSR, while maintaining an attitude of readiness
to negotiate, will press vigorously its political and propagandistic advantages in Europe
and Asia (infra, para 4).
3. The stability of the Schuman Government is threatened by the adverse French
reaction to the Six-Power Agreement and its exploitation by both the Communists and
DeGaulle. The French Assembly will probably accept the Agreement by a close vote
(infra, para. 5).
4. The German reaction to the Six-Power Agreement is also adverse, for reasons
opposite to those which move the French. The Western Germans are reluctant to
accept federalism, international control of the Ruhr, and the perhaps permanent loss
of Eastern Germany (infra, para. 6).
5. Even if the four-week truce in Palestine is maintained, it is improbable that a
formal political solution of the problem can be reached during that time. A military
stalemate, however, may well ensue, which would in effect partition Palestine between
Israel, Transjordan, and Egypt, subject to confirmation in an eventual political agree-
ment when the situation had become accepted as an established fact (infra,. paras. 14
and 15).
6. Throughout the Far East the situation is increasingly favorable for the accom-
plishment of Soviet purposes by political means. In China, the position of the National
Government is increasingly desperate and there exists a possibility of the eventual
elimination of Chiang Kai-shek by those who would negotiate a political settlement with
the Communists (infra, paras. 19 and 22).
Note: This review has not been coordinated with the intelligence organizations of the Depart-
ments of State, Army, Navy, and Air Force, though information copies were circulated
on 15 June. The information herein is as of 14 June 1948.
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
The evident propaganda purposes of the Soviet exploitation of the Smith-Molotov
and Wallace-Stalin correspondences have been (a) to undermine Western European
confidence in the reliability of US support, and (b) to establish the character of the
USSR as peaceloving and reasonable, and to shift to the "reactionary" governments in
the United States and Western Europe responsibility for the denial of all men's hopes
for peace and stability. Although this propaganda has been effective, there is increas-
ing reason to believe that, beneath these evident purposes, there is also a genuine Soviet
desire to ease the tension between the USSR and the West, if only for tactical purposes.
By its manner of approach the USSR maintains strategic flexibility. If the United
States is responsive to its invitations to negotiate, a new situation will have been created
more susceptible to Soviet exploitation than that which presently exists. If the United
States refuses to negotiate, the hand of current Soviet propaganda will at least have
been strengthened.
It has been anticipated (CIA 4-48 and 5-48) that, when the then current Soviet
strategy in Europe reached a point of diminishing returns by reason of stiffened resist-
ance, progress toward European recovery, and the provocation of US rearmament, the
USSR would probably seek a detente in its relations with the West. The last imme-
diate opportunity for Soviet expansion by political means passed with the Communist
defeat in the Italian elections. A continuation of disruptive tactics merely to retard
European recovery would only intensify the anti-Soviet reaction in the West. On the
other hand, an apparent settlement of outstanding issues might check, or at least
retard, the rearmament of the United States, confirm Soviet control over Eastern
Europe, open new opportunities for Soviet penetration of Western Germany, and secure
badly needed Western aid in the industrial development of the USSR and the Satellite
States. Without abandoning its ultimate objectives and at no more cost than to write
off postwar prospects already lost, the USSR would be enabled to strengthen itself for
the exploitation of future opportunities confidently expected to arise. Such a strategy
would be in complete accord with classical Communist doctrine.
Along with the Italian election, the agreement between the United States, the
United Kingdom, France, and the Benelux countries regarding a regime for Western
Germany, if confirmed and successfully implemented, marks the end of any immediate
prospect for Soviet penetration of the West. The exclusion of the USSR from partici-
pation in the control of Western Germany, particularly of the Ruhr, had long been effec-
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tive, but the Agreement, finalizing that exclusion and establishing, for the first time, a
common Western policy on the subject, marks a new stage in the postwar development
of the German situation.
In France, however, the adverse popular reaction to the Agreement has put in ques-
tion French participation in its execution (see paragraph 5). In Germany also the
reaction has been adverse, for reasons opposite to those which move the French (para-
graph 6). The USSR, of course, has denounced the agreement, for its own reasons, and
is inciting both French and German opposition to it.
From the Soviet point of view, the action of the US House of Representatives in
reducing appropriations for European recovery was a most timely fulfillment of Soviet
prophecy and supplement to Soviet exploitation of the Smith-Molotov correspondence
in undermining European confidence in US integrity and intentions. Even a full resto-
ration of the amount of the cut cannot fully restore European confidence in the United
States.
Although developments in the situation since February have been such as to war-
rant Soviet exploration of the possibility of a settlement of outstanding issues, nothing
has yet occurred to render imperative the adoption of such a course. On the contrary,
the most recent developments - the French and German reactions to the Six-Power
Agreement, and the action of the House on appropriations for European recovery - are
such as to persuade the Kremlin that the situation in Western Europe is still capable
of exploitation. The probability is, therefore, that the Kremlin, while avoiding provo-
cative use of force and maintaining an attitude of readiness to negotiate, will press
vigorously its political and propagandistic advantages in Europe and Asia, awaiting
further developments in the situation before determining its future course.
The position of the Schuman Government, which seemed reasonably secure a month
ago, has been rendered precarious by (a) the tendency of the coalition to divide on
secondary issues in the absence of pressure from the Left or Right; (b) the subsequent,
generally adverse French reaction to the Six-Power Agreement on Germany; and (c)
the seizure upon that issue by both the Communists and DeGaulle, the former in con-
formity to Soviet interests, the latter as a means of escape from political desuetude.
Typical of the secondary domestic issues which divided the cabinet were (a) the
proposed dismissal of 150,000 civil servants, desired by the MRP as an economy measure
and opposed by the Socialists as representing the workers concerned, and (b) the pro-
posed subsidation of church schools, desired by the predominantly Catholic MRP and
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opposed by the traditionally anti-clerical Socialists. Although neither the MRP nor
the Socialists were satisfied with the Six-Power Agreement, they have in the main rallied
to the support of the Government on this major issue under pressure of attack from
both the Left and the Right.
In general, the French reaction to the Agreement turned on the lack of satisfactory
guarantees of French security. Bidault had been obliged to compromise the original
French position on decentralization of Germany and control of the Ruhr. The French
tended to overlook the substantial concessions he had gained. Their sense of insecurity
was heightened by lack of any specific guarantee of US military support for the Western
Union and by the action of the House of Representatives in reducing appropriations for
European recovery. There was no doubt genuine fear of either an immediate Soviet
warlike reaction or eventual German aggression. These fears were aggravated by the
Communists, for Soviet purposes, and by DeGaulle, for his own.
It now appears that the French Assembly will accept the Six-Power Agreement, but
by a close vote. The Schuman Government will probably survive the crisis, but Bidault
may have to retire as Foreign Minister.
National unity is the dominant political issue in the minds of the German people.
This fact is recognized in recent statements to the effect that the Six-Power Agreement
is not merely a device for integrating the economy of Western Germany with that of
Western Europe, but could serve as a basis for the unification of Germany if the USSR
would permit the Soviet Zone to participate. The Germans are likely to regard this
attempt to fix the onus for partition on the USSR as a technical point of no real conse-
quence. The real and immediate issue for them is whether to accept the regime con-
templated in the Agreement and its inevitable consequences, including acceptance of
actual partition, of federalism, and of international control of the Ruhr.
Soviet propaganda will ring the changes on these themes, but the USSR is unlikely
to adopt a specific course of counteraction until a regime is actually set up pursuant to
the Agreement and is successful to a degree dangerous to Soviet objectives. Then the
USSR will probably present a superficially conciliatory proposal to form a unified Ger-
man government under quadripartite control. Such a proposal would not only prove
attractive to German nationalists, but, if accepted, would afford the USSR a voice in the
control of the Ruhr and an opportunity to extend its predominant political influence
to the Rhine. If, however, this attempt should fail, the obvious Soviet alternative would
be to demand the withdrawal of the Western Powers from Berlin and to set up there a
government purporting to represent the entire German nation. The hand would then
be played out according to the Korean pattern.
The new Italian cabinet is designed to carry out campaign promises of economic
and agrarian reform. It is a broad coalition of moderate elements in which the Chris-
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tian Democrats have granted disproportionate representation to the minor parties - So-
cialists, Liberals, Republicans, and independents. Major responsibility with respect to
Italian participation in the European recovery program is assigned to the moderate
Socialists. Italian recovery, however, cannot be achieved without the close cooperation
of all the Government parties.
Prior to the formation of the cabinet there were signs of disunity among the mod-
erate Socialists and between them and the Christian Democrats. A continuation of
these rivalries and particularly of Christian Democratic efforts to compete with the
moderate Socialists for direct labor support would play into the hand of the Com-
munists. The greatest threat to the Communist position would be success on the part
of the moderate Socialists in winning over Nenni's followers to a reunited, independent,
and moderate Socialist Party. This effort appears at present to have an even chance
of succeeding.
The Communists, as anticipated (CIA 5-48), are striving to maintain their position
as sole spokesman for the mass of Italian workers. To this end they are avoiding obvi-
ously political attacks on the recovery program, but are demanding of the Government
benefits for the workers which they know are not presently feasible and are thus foment-
ing "economic" strikes which as effectively retard recovery.
The Soviet position in the Satellite States is not fully consolidated, even yet, but
efforts to perfect it are proceeding apace. In general, consolidation of the Soviet-Com-
munist position is most advanced in the Balkans, less so in Hungary, Czechoslovakia,
and Poland, and definitely retarded in Finland.
With apparent impunity, democratic elements in the Finnish Government have
succeeded in expelling a Communist Minister of the Interior in time possibly to prevent
Communist theft of the 1 July election. The strikes whereby the Communists sought
to resist this action were a failure, emphasizing the continued predominance of Social
Democratic influence in organized larbor. The Communist demand that the office be
restored to the Party was compromised by the appointment of a former Social Demo-
crat who had only recently joined the Democratic Union, a Communist front coalition.
This fellow traveler is believed, perhaps hopefully, to be nevertheless honest and willing
to conduct a fair election. His actions, moreover, will be subject to supervision by a
special cabinet committee.
The Soviet Union's first act, in these circumstances, was to forgive half of the re-
maining Finnish reparations debt and to grant Finland a loan of $5,000,000, perhaps in
execution of a previously planned effort to win Finnish favor at the polls. It would
be difficult for the USSR to take punitive measures against Finland in the face of its
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recent emphatic professions of respect for Finnish sovereignty and its current "peace
offensive". Without a decisive Soviet intervention in their behalf, however, the Finn-
ish Communists are likely to suffer losses in the approaching election.
10. CZECHOSLOVAKIA.
Despite intense propaganda, intimidation, regimentation, denial of secrecy at the
polls, and a controlled count, the Czechoslovak people registered a significantly large
protest vote on 30 May by means of blank and defaced ballots. The subsequent
resignation of President Benes will be understood by them to be a repudiation of the
Communist regime. The Communists, however, confident of their control but ap-
preciating a need to make up for lost time, are moving to consolidate their position
more openly and rapidly than was the case in other Satellite States.
11. HUNGARY.
Although no effective political opposition remains in Hungary, the Catholic Church
has dared to challenge the Government on the issue of the nationalization of church
schools and has received tremendous popular support. The Communists cannot toler-
ate such opposition. Temporarily checked, they must soon act to neutralize the Church
as a center of resistance.
12. YUZOSLAVIA.
The Tito regime, rebuffed in its adventurous foreign policy with respect to Trieste,
Austria, and Greece, is now beset with increasing domestic difficulties, chiefly economic,
but also political. Two cabinet ministers, veteran Communists, have been arrested on
charges of "diversionism" (economic sabotage). Apparently they are to be made scape-
goats for the impracticability and impending failure of Tito's five-year-plan. A gen-
eral purge of their possible sympathizers appears now to be in progress. Although this
purge will insure Tito's political control, it will not improve the economic situation.
Amid these domestic distractions the foreign policy of Yugoslavia may become less
adventurous than heretofore.
THE NEAR AND MIDDLE EAST-AFRICA
13. GREECE.
Although there has been no actual decrease in across-the-border support of Markos,
the guerrillas must soon receive greatly increased Satellite aid if they are to withstand
the continuing Greek Army offensive. In view of the gradual withdrawal of guerrilla
forces toward mountain fastnesses along the frontier and of peace feelers emitted by
the Markos radio, it would appear that the guerrillas no longer expect such aid. The
failure of the Kremlin to render it, after evident preparations to do so, is significant
and may reflect a judgment that the venture would be too risky in the light of recent
developments in the global situation.
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14. PALESTINE.
The four-week truce is in general effect in Palestine, after early charges and
countercharges of truce violation and threats of counterattack to restore the situation.
There still remains danger of a renewal of conflict arising from disputes regarding
the provisioning of isolated garrisons or the control of immigration.
Only if he can enjoy reasonable freedom from such distractions can the United
Nations Mediator hopefully seek a political solution in conference with Arab and
Jewish representatives at Rhodes. The probability is that no formal agreement will
be reached, but a military stalemate approximately along existing lines may ensue, to
be confirmed by eventual political agreement when it has become accepted as an es-
tablished situation.
15. THE ARAB STATES.
An important new development may be indicated by the insistence of Trans-
jordan, Iraq, and Egypt on Arab acceptance of the Security Council's truce proposals
over the objections of Saudi Arabia, Syria, and Lebanon. In the past Egypt has sup-
ported Saudi Arabia and Syria in their opposition to the territorial ambitions of the
Hashimite rulers of Transjordan and Iraq. At present, however, it is the Hashimite
states and Egypt which have borne the brunt of the fighting in Palestine and would
be most exposed to any United Nations retribution. The other Arab states have made no
significant contribution to the Arab cause. What is foreshadowed in this new alignment
is the possibility of a political agreement, or at least a military stalemate, which would in
effect partition Palestine between Israel, Transjordan, and Egypt. King Farouk and the
Hashimites would have their justification in the failure of the other Arab states to render
effective support and their people the satisfaction of a gallant effort made and certain
territorial aggrandizement achieved. United, the three states could withstand any
vindictive reaction in Saudi Arabia and Syria, and they would not be in the least
grieved if popular disappointment in those countries led to political upheavals affording
them further opportunities for aggrandizement.
16. IRAN.
There are indications that the Soviet attempt to browbeat Iran (CIA 4-48) may
be dropped in favor of a softer approach in which protests against US influence would
be accompanied by gestures of friendship toward Iran. Despite the fluid state of
Iranian politics, no presently conceivable Government is likely to be beguiled by such
blandishments. Greater significance therefore attaches to the continued vigor of the
Soviet subversive effort, which includes agitation in Azerbaijan and northeastern Iran
and among the tribes, propaganda intended to arouse the underprivileged, and strong
support of the increasingly active Tudeh Party.
17. INDIA.
Neither India nor Pakistan is believed to desire war, but that danger will exist
as long as the Kashmir dispute remains unsettled. Advancing Indian Army troops
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are reported to have clashed with a Pakistan Army battalion illegally present in Kash-
mir. Direct conflict between the regular forces of the two dominions could not easily
be localized.
There is also friction between India and the independent princely state of Hydera-
bad. The ruler of Hyderabad is a Moslem, but the population is predominantly Hindu.
India could probably annex Hyderabad by force, but the event would be likely to pre-
cipitate a renewal of communal disorders throughout India and Pakistan, jeopardizing
the stability of both countries.
18. SOUTH AFRICA.
Although Smuts' adherents received a clear majority of the popular vote in the
26 May election, Dr. Malan's Nationalist-Afrikaner coalition won a bare majority of
the seats in Parliament. His unexpected victory bodes no good for Commonwealth
relations, in view of the traditional isolationism and Anglophobia of his following. The
one reassurance is that their prejudices also include a vehement anti-Communism.
For the present Malan's precarious tenure of office will permit no radical change
in foreign policy. Should he succeed in consolidating his position, however, the avail-
ability of South Africa as a base in support of northeastern Africa and the Middle East
would be put in question. The utility of South Africa as such a base could be impaired
by either an isolationist external policy or internal disorders resulting from a severe
policy of racial segregation.
19. GENERAL.
Throughout the Far East the situation is increasingly favorable for the accomplish-
ment of Soviet purposes by political means. Circumstances, especially in Korea, in-
dicate that the USSR will continue its efforts to destroy US influence in East Asia by
inflicting a maximum loss of US prestige among Asiatics, with the purpose of eventually
compelling the United States to withdraw from that region. It is highly improbable,
however, that for this purpose the USSR would incur the unnecessary risk of a collision
between US and Soviet or Soviet-controlled armed forces. Rather the technique would
be to act, by political means, to cause the Asiatic peoples concerned to insist upon US
withdrawal, amid execrations.
Active US consideration of the industrial rehabilitation of Japan has revived the
peace treaty issue. An early treaty imposing limitations on Japanese industrial ac-
tivity would alleviate the fear of a resurgent Japan which persists in China, the Philip-
pines, Australia, New Zealand, and Canada. The United Kingdom is associated with
this group by reason of Commonwealth solidarity and its own disinclination to meet
Japanese competition in export trade. The USSR, however, will presumably still refuse
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to negotiate without veto power, and China will still fear to participate without the
USSR.
The representatives elected in South Korea on 10 May have met as a "National
Assembly" to prepare a national constitution for Korea. Rhee Syngman will presum-
ably be elected president, but the extent of his powers may become a major issue.
Kim Seung Soo, leader of the Hankook Democrats, whose strength in the Assembly
is approximately equal to Rhee's following, may attempt to reduce the presidency to
ceremonial functions and to gain real power as prime minister.
The evident intention of the USSR to dominate Korea through extension of the
"Korean People's Republic" has convinced most South Korean leaders and the UN
Commission that US occupation must be prolonged until a reasonably adequate
security force has been organized in South Korea. Rhee subscribes to this view, but
insists that there must be no US interference with Korean sovereignty during the
interval.
The USSR may confidently rely upon the egotism characteristic of South Korean
politics to prevent the establishment at Seoul of a government capable of withstanding
the regimented strength of North Korea. By ceaseless agitation and such practical in-
conveniences as denial of electric power it will seek not only to render the US position
vexatious and untenable, but also to render the anticipated eventual US withdrawal
as damaging as possible to US prestige throughout the Orient.
In Chinese and Asiatic opinion generally the fortunes of the National Government
and the prestige of the United States are inextricably associated. The situation of the
National Government is increasingly desperate. The position of the United States
in China is precarious.
The Communists have no resumed active military operations, especially in Shan-
tung, and are likely soon to make a clean sweep of that province, except for the port
of Tsingtao. There is little prospect that the National Government can check the
Communists' general advance without direct US military assistance on a considerable
scale.
In Nationalist China, meanwhile, the reaction of press and students to the idea of
rehabilitating Japan is bitter. The widespread student demonstrations may be effective
in directing traditional Chinese anti-foreign sentiment into specific antagonism toward
the United States.
Chiang Kai-shek is irrevocably committed to resist Communism to the bitter end.
Within the National Government, however, there are many who believe that continu-
ation of civil war is futile and who therefore would end it, even on terms advantageous
to the Communists. Thus, although the event may not yet be imminent, there exists a
possibility of the eventual elimination of Chiang and the negotiation of a political
settlement with the Communists.
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23. SOUTHEAST ASIA.
Soviet propaganda has long championed the nationalistic aspirations of the peoples
of Southeast Asia in opposition to Western imperialism. Recently the USSR has
actively engaged in direct political and economic penetration of that region, beginning
with the establishment of diplomatic relations with Siam. Concomitant Soviet com-
mercial activities not only facilitate penetration of the area, but also contribute to
the stockpiling of strategic raw materials, especially rubber, in the USSR.
Tension between the Dutch and the Indonesian Republic is again acute, as a
result of their inability to agree on the proper implementation of the Renville Agree-
ment. This situation is aggravated by implicit Soviet recognition of the Republic.
In Burma the Prime Minister, Thakin Nu, has announced that he will retire on 20
July in order to promote a union of all Leftist parties on the basis of a socialistic pro-
gram and close relations with the Soviet Union. If this declaration was intended to
outbid the dissident Communists (CIA 5-48), it may prove in effect to be a capitulation
to them.
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The President
Secretary of State
Chief of Staff to Commander in Chief
Secretary of Defense
Secretary of the Army
Secretary of the Navy
Secretary of the Air Force
Executive Secretary, National Security Council
Chairman, National Security Resources Board
Chief of Staff, US Army
Chief of Naval Operations
Chief of Staff, US Air Force
Director of Plans and Operations, General Staff, US Army
Deputy Chief of Naval Operations (Operations)
Director of Plans and Operations, US Air Force
Special Assistant to the Secretary of State, Research and Intelligence
Director of Intelligence, General Staff, US Army
Chief of Naval Intelligence
Director of Intelligence, US Air Force
Secretary, Joint Chiefs of Staff
Secretary, Joint Intelligence Group
Executive Secretary, Military Liaison Committee to the Atomic Energy Commission
Director of Security and Intelligence, Atomic Energy Commission
Chief, Acquisition and Distribution, OICD, Department of State
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SECRET
U. S. GOVERNMENT PRINTING OFFICE
2655-S-1948
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