REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY OF THE UNITED STATES
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CIA-RDP67-00059A000500070009-0
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S
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14
Document Creation Date:
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Publication Date:
May 12, 1948
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CENTRAL INTELLIGENCE AGENCY
Review of the World Situation
as it Relates to the Security
of the United States
CIA 5-48
Published on
12 May 1948
COPY NO.38
FOR THE ASSISTANT DIRECTOR
FOR OFERATIONS,CIA
CIA botafy
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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, USA, 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.
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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SECRET
REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
1. The conspicuous absence of any spectacular Soviet reaction to the Communist
defeat in Italy may reflect the lack of any positive plan suitable for use in the circum-
stances, but more probably is calculated to achieve a psychological effect (infra, para.
1).
2. As the result of a series of developments culminating in the loss of the Italian
election the Communists have lost their former influence and control over Western
European organized labor (infra, para. 3).
3. A primary objective of current Soviet policy must be to regain the confidence of
the workers. This purpose requires abstention from political strikes, disorder, and
threat of war. In these circumstances Soviet initiative in Europe is restricted to
Germany and Greece (infra, para. 4).
4. Soviet policy in Germany is apparently directed toward long-range objectives
rather than an immediate and violent decision (infra, para. 8).
5. The USSR has yielded the initiative in Greece, for the time being at least (infra,
para. 11).
6. Civil war on a major scale is already in progress in Palestine. Early interven-
tion by the regular armies of the Arab States is highly probable, as is Soviet support and
infiltration of the Jewish state (infra, para. 12).
7. Iran is currently being subjected to strong Soviet diplomatic and psychological
pressure (infra, para. 13).
8. A critical political situation in China affords the USSR diplomatic as well as
military opportunities (infra, para. 15).
9. In Korea the USSR has created a political situation highly favorable to its
purposes (infra, para. 16)
10. The Bogota Conference has revealed profound differences between the United
States and the Latin American republics (infra, para. 19).
11. The disturbances which interrupted the Bogota Conference are more properly
attributable to local tensions than to international Communist conspiracy. These
tensions are not peculiar to Colombia, but are common throughout Latin America (infra,
paras. 20 and 21).
Note: This review has not been coordinated with the intelligence organizations of the Departments
of State, the Army, the Navy, and the Air Force. The information herein is as of 10 May.
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
But for the dramatic international support received by the Italian Government in
the last stages of the electoral campaign the result of the Italian election might well
have been different, yet the conspicuous absence of any spectacular Communist reaction
to that defeat casts an impression of unreality over the recent excitement. This matter-
of-course Soviet attitude may reflect a lack of any positive plan of action suitable for
use in the circumstances as they unexpectedly developed. More probably it is calcul-
ated for psychological effect.
Even before election day the USSR conceded Communist defeat by flatly rejecting
Western proposals to return Trieste to Italy. No explanation for this apparently gra-
tuitous blow to the Communist campaign is evident unless it be a desire that the Krem-
lin's decision not seem a spiteful reaction to defeat and so a sign that it hurt. On
election day the Italian Communist partisans "went to the mountains" as though they
meant business, but three days later they had the word from Moscow and came quietly
down again. The USSR's only post-election communication to the Italian Government
has been that indeed it would be pleased to discuss a commercial agreement on terms
more favorable to Italy than might have been expected.
But, if international tension has eased, there is ferment within the Italian Popular
Front, where non-Communists are disillusioned about Communist leadership and are
disposed to break away, while even the Communists may be human enough to blame
their failure on the Kremlin. Thus Italian Communists, like those in France and
Greece, may have come to resent the tendency of the planners in the Kremlin to reject
their advice, project them into impossible situations, and then let them down.
The Communist defeat in Italy is, of course, a relief and encouragement throughout
Western Europe. The news was not good, however, for two picturesque political figures,
Francisco Franco and Charles DeGaulle. They are alike in that each requires for his
justification an imminent Communist menace. Franco being in power, an initiative is
required to put him out and none is in immediate prospect, although there is now a
better chance for the many discontented Spanish factions to combine against him.
DeGaulle, to achieve power, must take the initiative himself. Seeing that his political
prospects were fading in proportion to Schuman's success, he has already sought identi-
fication with the Schuman Government, without result. Realizing, after the Italian
election, that he must break in at once or forego his ambitions, he may well upset an
otherwise favorable political situation in France.
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2. DEVELOPMENT OF EUROPEAN DEFENSE.
The signatories of the Brussels Pact and possible adherents show extreme caution
in their approach to the problem of Western European defense and a continuing ten-
dency to regard it piecemeal. The United Kingdom considers the creation of an effec-
tive military system prerequisite to any further extension of commitments. The Bene-
lux countries are unwilling to commit themselves to the defense of distant Italy. On
this account France suggests the possibility of three regional defense systems, Western,
Mediterranean, and Scandinavian. Sweden continues to cling to neutrality. Italy,
however, would accept the obligations of the Brussels Pact if permitted to rearm by
revision of the peace treaty. (If still disarmed Italy would of course hope to remain
aloof from any conflict in northern Europe.)
These attitudes are a natural consequence of the actual military weakness of the
nations concerned and of their uncertainty regarding both the will and the ability of
the United States to participate in their defense. The security of the West is mani-
festly indivisible, but it is equally apparent that only US leadership and effective support
can bring about the development of an integrated Western European defense system.
3. THE ANTI-COMMUNIST TREND IN ORGANIZED LABOR.
A revulsion of organized labor from Communist influence and control began with
the political strikes in France and Italy last fall and has been sustained by continuing
Communist attacks on the European recovery program. The outstanding manifesta-
tions of this trend have been the secession of the Workers' Force (FO) from the Com-
munist-controlled French Confederation of Labor (CGT) and the establishment in
London of a Trade Union Advisory Committee dedicated to support of the recovery pro-
gram and representing organized labor in 15 of the 16 participating countries. The
sixteenth country, Italy, has not been represented because the Communists and Nenni
Socialists continued to control the Italian Confederation of Labor (CGIL). Now, in
the aftermath of the Italian election, Nenni's leadership is under attack within the So-
cialist Party and the existing management of the CGIL is equally in jeopardy. The
Communists may be able to retain nominal leadership of the CGIL and even to avert a
major secession such as that of the FO from the CGT, but their actual control is
neutralized for the time being, inasmuch as a call to an obviously political program of
strikes would certainly precipitate their repudiation. Thus in Italy, as elsewhere in
Western Europe, the Communists' power to call a paralyzing general strike, which was
yesteryear their most formidable weapon, has now been lost.
This trend is apparent even in Berlin, where anti-Communists won control of im-
portant unions in recent local elections and are now daring to seek control of the city-
wide federation (FDGB).
4. PROBABLE SOVIET INTENTIONS.
However greatly Soviet propaganda may scorn the "bread and butter election" in
Italy, the Kremlin must by now realize that uncompromising attack on the European
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recovery program has only served to antagonize European workers. There is reason
to suppose that the Kremlin would regard Communist loss of influence and control
in organized labor as far more important than any electoral reverse. It must therefore
be a primary objective of current Soviet policy to regain the confidence of the workers.
This purpose would require abstention from political strikes and violence, and from
threats of economic disruption or war.
This thesis is supported by such current indications of Soviet policy as (a) the new
pretension of the Cominform to speak, not only for Communism, but for all workers'
parties-a reversal of its previously bitter attitude toward Socialism; and (b) a speech
by Thorez, the French Communist leader, calling on Communists, Socialists, and
Catholics to unite in defense of French liberty and independence (against US "im-
perialism"). There are other indications of reversion. toward the popular front tech-
nique and of a shift in emphasis from political purposes to the concrete daily problems
of the workers and petty bourgeoisie. There may well be further resort to strikes,
covertly to hinder the European recovery program, but they will be ostensibly economic
in motivation. The May Day slogan for this year-"Struggle for a stable, democratic
peace, against aggression"-calls for resistance to Western "imperialist warmongering,"
but, in the Communist vocabulary, its tone is defensive. It recognizes the universal
longing for peace and stability. Even in international relations the USSR may adopt
a pose of conciliatory and constructive reasonableness, as in its treaty with Finland,
in the negotiations concerning Austria, and at the current session of the Economic
Commission for Europe.
If the requirements of the current situation preclude aggressive tactics in Western
Europe, Soviet initiative is restricted to Germany, Greece, and the East. Soviet policy
in Germany appears to be directed toward long-range objectives rather than toward an
immediate and violent decision. Soviet initiative in Greece is apparently in abeyance.
But in the East the situation is more threatening. The USSR will almost certainly
penetrate into Palestine as champion of the Jewish state. It is subjecting Iran to
strong pressure. It has created in Korea a political situation highly favorable to its
purposes. In China it now has diplomatic as well as military opportunities.
Despite the increasing prospects of European stabilization and US rearmament,
the USSR is still far from having to choose between a general settlement and preventive
war (CIA 4-48, p. 2). The strength of the Western European defense system is as yet
unimpressive; the rearmament of the United States is still a disputed long-range pro-
ject. The Kremlin as yet has no reason to conclude that in either case a dangerous
development is inevitable.
British efforts to increase industrial production and exports were remarkably suc-
cessful during the first quarter of 1948. The export volume for March was higher than
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that for any previous month except July 1920. This achievement is offset, however, by
an unexpectedly high volume of import requirements and by the fact that the costs of
essential imports are increasing faster than the prices obtainable for British exports.
The British trade deficit therefore continues to be alarmingly high.
The current political situation in France is relatively stable; the long-range eco-
nomic prospects are good. The immediate problem of the Schuman Government is
that of holding the wage line until food prices decline as a result of more plentiful
supply in early summer. In view of the Government's success to date in achieving a
slight decline in food prices, non-Communist labor leaders have agreed to withhold de-
mands for wage increases. As long, however, as 80 percent of the average worker's
income must be spent for food, Communist agitators may succeed in fomenting wage
demands and consequent strikes of an ostensibly economic character.
The tendency of Norway and Denmark toward alignment with the West continues,
but Norwegian and Danish officials are fearful of Soviet retaliation and anxious to
receive positive assurances of Western military support. The Swedish Government
clings to its policy of neutrality, but a recent Gallup Poll indicates that 64 percent of the
people believe that Sweden would become involved in any major war and that only 20
percent believe that Sweden should remain neutral. High military and other influen-
tial elements in Sweden are opposed to a policy of neutrality, fearing that isolation will
invite Soviet aggression.
8. GERMANY.
Public tension regarding Berlin has eased, but the situation there has not improved.
Further gradual tightening of Soviet restrictions on the position of the Western Powers
in Berlin is to be anticipated.
Meanwhile Soviet preparations for the establishment of a German government in
the Soviet Zone continue to develop. In an effort to exploit the universal German
aspiration toward national unity, the Soviet-controlled People's Congress in Berlin has
called for a country-wide plebiscite on that subject. No serious response is to 'be
expected in the Western Zones in view of Allied disapproval and German skepticism
regarding Soviet initiatives. By pressing the issue, however, the USSR is enabled to
pose as the sole champion of German unity in the face of Western imperialist, anti-
democratic opposition. Eventually it will claim that its German government in the
Soviet Zone, based on the People's Congress, is actually representative of all the German
people.
9. AUSTRIA.
For some time it has been apparent that the USSR really desires to reach quadri-
partite agreement on a treaty with Austria. This attitude, so greatly at variance with
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that shown generally, presumably reflects no change in Soviet purposes, but rather a
tactical conclusion that nothing further can be accomplished in Austria on a basis of
quadripartite occupation and that a mutual withdrawal of occupation forces would
present new opportunities for Soviet maneuver toward the ultimate objective of reduc-
ing Austria to the status of a satellite state. Moreover, the elimination of the zonal
division of Austria would have obvious psychological effect in support of the Soviet line
on the unification of Germany.
Although it had been apparent that the political trend in Italy had been reversed
(CIA 4-48), the extent of the Christian Democratic victory exceeded all expectations.
The Italian Communist Party itself apparently anticipated a close vote and prepared to
assert with armed force a claim to have been counted out. Such a pretension was ren-
dered absurd by the anti-Communist sweep and the assembled partisans accordingly
dispersed.
The Christian Democrats, with 49 percent of the popular vote (as compared with
37 percent in 1946), received a clear majority (307 out of 574 seats) in the Chamber of
Deputies. In general this gain was accomplished, not by the conversion of former
Leftists, but by the expedient adherence of Rightist elements. The Rightist parties,
as such, made a poor showing and may now be regarded as of minor importance. The
increase of Rightist influences within the Christian Democratic Party, however, may be
of long-term significance. Already DeGasperi has been subjected to pressure to aban-
don his coalition with the moderate Left and establish a one-party cabinet.
Consolidation of the anti-Communist victory in Italy requires the actual imple-
mentation of extensive economic and social reforms which may well be opposed by the
right wing of the Christian Democrats as presently constituted. Only the continued
participation of the moderate Socialists and Republicans in the Government would give
reasonable assurance of its serious intention to accomplish these reforms. DeGasperi
has wisely decided to maintain this coalition, which jointly represents 58 percent of the
electorate and a majority of 62 in the Chamber.
Despite its defeat, the Italian Communist Party remains formidable in terms of
popular support, para-military capabilities, and control of organized labor. During
this period of post-election disillusionment the Communist management has to contend
with ferment within its controlled auxiliaries, the Socialist Party and the Confederation
of Labor, and threats of defection therefrom by dissident elements. This situation
imposes upon it, for the time being, a necessity to follow a conciliatory and reassuring
policy. The immediate Communist objective must be to maintain the Party's position
as spokesman for the mass of Italian workers, and this can possibly be accomplished by
such astute management as the Party leadership has shown in the past. The Com-
munists would thus retain a capability to exploit any failure on the part of the Govern-
ment actually to bring about the amelioration of conditions that the Italian people have
been led to expect.
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SECRET
Satellite aid to Markos has been on a lesser scale than apparent preparations would
have allowed, with a consequent lessening of anticipated guerrilla capabilities. This
default must be attributed to Soviet caution in the face of global developments. It has
caused misgiving in the Markos camp, where it is now realized that the USSR's purpose
in Greece may not have been to bring Markos to power, but only to use the Greek
Communists as a means of imposing economic attrition on the United States. In these
circumstances the Greek Army has achieved some initial successes against the guer-
rillas. Eventually the USSR may be compelled to provide greater support for the
guerrillas or to accept their defeat. The USSR retains the capability to provide,
through the Satellites, support sufficient to prevent a military decision in Greece, and
will presumably exercise that capability unless there is a general revision of Soviet
policy in consequence of developments outside of Greece.
Civil war on a major scale is already in progress; early intervention by the regular
armies of the Arab States is highly probable. Jewish forces, assuming the offensive
in order to improve their position in anticipation of unlimited hostilities after 15 May,
have demonstrated their initial superiority over local Arab resistance and ill-organized
volunteers. This demonstration, while stimulating Zionist self-confidence, has equally
stimulated Arab determination to prevent the establishment of a Jewish state in Pales-
tine and aroused a popular demand for effective intervention such as no Arab govern-
ment can resist. Cooperation among the Arab States is hindered by mutual suspicions
and by the reluctance of some, notably Egypt and Iraq, to commit their forces abroad
in the face of unstable situations at home. Nevertheless public clamor will probably
compel them to commit forces in Palestine coincident with the termination of the
British mandate.
The termination of the mandate will also open the way to unlimited Jewish immi-
gration and to the importation of heavier armament. There is every reason to suppose
that the USSR will actively support the Jewish state, infiltrating Soviet personnel into
Palestine and seeking to establish there a lodgment in the Eastern Mediterranean.
Under continuing Soviet pressure, the Iranian Government evinces a disposition to
placate the USSR by seeking to curtail the authority of the US Gendarmerie Mission
and by reiterating its claim to Bahrein. There is also mounting agitation in the Majlis
for revision of the Anglo-Iranian Oil Company concession.
Qavam's return to Tehran will probably result in a renewal of the struggle for
power between him and the Shah, and may hasten the fall of the ineffectual Hakimi
Government. This internal tension may further impair Iranian ability to resist Soviet
pressure.
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SECRET
Although responsible leaders of India and Pakistan have recently shown a disposi-
tion to cooperate in most matters of mutual concern, the Kashmir dispute remains
unresolved. Indications are that the Indian Army may soon resume active operations
in Kashmir and that Pakistani tribesmen, whom the Government of Pakistan cannot
control, will go to the aid of their coreligionists. Thus the situation in Kashmir con-
tinues to endanger peace and order in India-Pakistan.
The National Assembly's re-election of Chiang Kai-shek to the presidency of China
was a recognition of his present indispensability, but its rejection of his choice for vice-
president and election of Li Tsung-jen to that office was a rebuke to his tendency toward
personal rule and a repudiation of his reactionary associates in the CC clique party
machine and the Whampoa military clique. Thus Li emerges as the representative of
discontent among the Kuomintang rank and file and the independents (including
probably a majority of the civil servants and army officers) who demand a more liberal,
efficient, and vigorous national leadership. By misguided and stubborn resistance to
Li's election Chiang has lost face. If, as seems probable, he refuses to collaborate with
Li, conflict between these two strong personalities is to be expected, with consequent
disintegrative effect within Nationalist China.
Meanwhile the Chinese Communist armies are ready to renew offensive operations
in Manchuria and elsewhere, and the new Soviet Ambassador is on his way to Nanking,
where he may resume discussion of a political settlement of the civil war. As the
Nationalist position deteriorates this solution may prove more attractive to various
elements who now have in Li a potential leader with whom the Communists might be
willing to negotiate.
Action by the Soviet-inspired conference of North and South Korean political
leaders at Pyongyang was limited to pronouncements condemning the South Korean
election, demanding the withdrawal of all foreign troops, and favoring Korean action to
establish a united and independent Korean state. How this last should be done was
plainly indicated by the separate but timely adoption of a Soviet-type draft constitution
for all Korea by the North Korean People's Council, subject to final action by a future
all-Korean convention.
The expected landslide for the Rhee Syngman political machine in the South
Korean election will not insure political stability in that area. Rhee will probably be
compelled to include in his administration representatives of the wealthy and powerful
Hankook Democrats and others not under his direct control. Rhee's sense of mission
is such, however, that he cannot be expected to work harmoniously in any coalition.
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Moreover, continued bitter opposition is to be expected from those who, under Soviet
influence, boycotted the election.
The USSR may be expected to denounce as unrepresentative any regime based on
the election and to reiterate its demand for a mutual withdrawal of occupation forces in
order to permit the Koreans to frame a democratic constitution in unity and
independence.
Since the sudden death of President Roxas political activity has centered in the
developing candidacy of Jose Laurel with respect to the presidential election in 1949.
Laurel, who was president of the Japanese-sponsored Philippine government, is an
ardent and opportunistic nationalist. His eventual succession to the Philippine presi-
dency could hardly be regarded as favorable for US interests.
The Burmese Communists have begun widespread insurrectionary activities which
the Government may be unable to combat effectively for several months on account of
the onset of the monsoon during May. By the end of the monsoon the Communists may
have become too well established in central Burma to be readily suppressed.
The achievement of the Conference, in continuing its sessions and reaching com-
promise agreement on the major subjects before it, tends to obscure the profound differ-
ences which actually exist between the United States and the Latin American republics
and the difficulty of winning Latin American understanding and support of US policies
framed with reference to the global situation. For example, the "Organic Pact," which
was intended to provide a more effective regional organization, was so weakened by
compromises as merely to confirm existing procedures. The economic discussions
emphasized without solving the basic contradiction between the US desire to encourage
private investment in Latin America and the Latin American preference for govern-
mental "grants-in-aid" which, with freedom to institute highly nationalistic develop-
mental policies, would in effect subsidize incumbent governments and facilitate their
retention of power in the face of increasing economic tensions within their own
countries.
The disturbances which interrupted the Bogota Conference are more properly
attributable to the basic political and economic tensions prevalent in Latin America
than to international Communist conspiracy. Without question the Communists were
conspiring to embarrass and discredit the Conference, and they were quick to seize the
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opportunity afforded by the outbreak of violence. That outbreak, however, was clearly
the spontaneous reaction of Liberal partisans, already on edge as a result of acute politi-
cal tension and party violence, to an assassination no doubt erroneously attributed to
the Conservative Government.
Although the popular reaction at Bogota was to a distinctly local situation, the
basic conditions which made so violent an outbreak possible are widespread in Latin
America. At Bogota the Communists may have discovered a technique which might
be employed deliberately and with greater effect on other occasions.
Mexico. There have been recent indications of increasing dissatisfaction with the
Aleman Government and of increasing legal and illegal arms traffic into Mexico.
Although the ultimate destination of the arms in question may be Palestine or some
other trouble spot, the conjunction of these two developments may be ominous.
The Caribbean. Political stability in the Caribbean is jeopardized by the existence
of mutually hostile alignments (Nicaragua, Honduras, and the Dominican Republic
versus Guatemala, Cuba, and Venezuela). The recent civil war in Costa Rica, local in
origin, became essentially a contest between these antagonists as represented by Nica-
ragua and Guatemala. Nicaraguan and Dominican exiles may now set out to "get"
Somoza and Trujillo with the covert support of interested governments. In turn,
Somoza and Trujillo may be expected to engage in counter plots.
Panama. Arnulfo Arias, who was expelled from the presidency in 1942 because of
his pro-Nazi attitude, is claiming victory in the 9 May presidential election. If he fails
to win office through election he may attempt to seize it by force.
Ecuador. General Alberto Enriquez may attempt to seize the presidency if he con-
siders himself unlikely to win the 6 June election, or if he is actually defeated at the polls.
Peru. Tension exists between an exclusively military cabinet and the most popular
political party, APRA. The Congress, through which the policies of APRA might find
expression, was prevented from meeting by a "strike" of conservative members, pre-
venting a quorum. Either side might resort to force to break the deadlock.
Chile. The Government, with military support, currently has the situation under
control, but economic grievances provide a genuine basis for popular unrest.
Paraguay. An arch-reactionary faction is scheduled to take office in August as a
result of chicanery resented even by most of those who supported the Government in
the late civil war. However, the attitude of the Army, which will be the deciding factor,
is still in doubt.
The Communists are not a major factor in any of the foregoing situations. They
are capable of exploiting fortuitous developments, as recently in Costa Rica, where they
in effect took over the cause of the Government against the revolution. In no Latin
American country, however, is the Communist Party capable of seizing and holding
office, nor have the Communists any apparent intention of making such an attempt.
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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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U. S. GOVERNMENT PRINTING OFFICE
2512-5-1948
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