WEEKLY SUMMARY #20

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002000200001-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 27, 2016
• Document Release Date: April 12, 2013
• Sequence Number: 1
• Publication Date: October 1, 1948
• Content Type: REPORT

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Copy No.
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WEEKLY SUMMARY
20
Number --
roll OCT 1948
Document No. DO/
NO CHANGE in Class.
DECLASSIFIED
ass. CHANCED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: By;
By: All_
CENTRAL INTELLIGENCE AGENCY
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0 ?
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
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HIGHLIGHTS.......... ....
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1
WESTERN EUROPE
2
EASTERN EUROPE
5
NEAR EAST - AFRICA
8
FAR EAST . . ............ ?
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WESTERN HEMISPHERE.
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HIGHLIGHTS
The UN sessions in Paris became the center of the
world's attention this week when the western powers, after
10 weeks of fruitless negotiation on the Berlin crisis, took
the problem to the Security Council as a threat to the peace.
Soviet propagandists made use of the time remaining before
the 4 October meeting on the problem to attack the personali-
ties and decisions of the UN (see page 5). Within the USSR,
the Soviet public gave evidence of increased war apprehension
following a TASS statement this past week of the Soviet posi-
tion regarding the Berlin negotiations (see page 5).
US and UK efforts to persuade the Arabs and Jews to
accept the Bernadotte plan have had only limited success, and
It now appears that both Arabs and Jews regard the General
Assembly meeting as the scene at another battle in the long
fight between Zionism and the Arab world (see page 8). Even
if both sides reluctantly acquiesce in the plan, vigorous UN
supervision will be necessary to prevent repeated outbreaks
of hostilities.
At the same time that Paris was the forum for the dis-
cussion of the world's major problems, the city was also the
center of a continuing economic crisis (see page 2). Threats
of serious labor troubles and uncontrollable Inflation now over
in importance the question of how long the Queuille
Government can survive.
The long-continuing crisis in China reached unprece-
dentedly serious proportions this week as a consequence of the
fall of Tsinan, a Nationalist strategic military base (see page 11).
Further military disasters would aggravate the already critical
economic situation and might precipitate the disintegration of the
Nationalist Government.
In Argentina, recent political gyrations by President Peron
are symptomatic of the country's serious economic ills (see page
12). Peron apparently hopes to make the economic crisis appear
to be a political crisis, thus justifying the use of authoritarian
controls.
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WESTERN EUROPE
?
FRANCE
and uncontrollable
inflation now overshadow in importance the question of haw
long the crisis-ridden Queu'itle government can remain in
power. Neither of these problems can be relieved except by
measures which would aggravate the other, Although the
fight against inflation may now be vigorously resumed under
the terms of the recently-passed fiscal bill, the government
cannot hope to halt the course of inflation without stronger
economic controls and all-out support from labor, Despite
the intention of the Queuille government to supplement the
recent wage increase with special bonuses and vigorous
action against rising prices and speculation, labor has con-
tinued to demand a greater general increase and now appears
to be striking against the entire economic and fiscal program.
The Communtsts are exploiting current labor dissatisfaction
to the maximum, and it is now doubtful whether the non-
Communist labor leaders can stem the trend toward major
labor disturbances.
11,1
? ? ?
EignaszaltialLasliamias_i economic disorder may
reduce the part france has been expected to play in the Euro-
pean recovery program and western European union. Final
consolidation of rren.ch agricultural, industrial, and financial
recovery appeared within reach this summer when France
displayed an internal disunity which its more disciplined
neighbors probably found unwarranted. This sudden deteriora-
tion occurred at a time when the Organization for European
Ee.enornic Cooperation was preparing to make France the major
V.,,eneficiary of the Imre -European payments scheme whereby
tinase Enr ()pearl nations with superior international trade posi-
tions make grants to neighbors whose position is less favorable.
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FRANCE
Combined US and European aid make France the largest over-
all beneficiary of the European recovery effort. Unless the
French soon turn to good account the help they are receiving,
they will face an increased reluctance among their neighbors
to contribute further economic or military support.
BELGIUM
A maior obatacle to the rehabilitation of European
transport may be removed through the probable approval by
the Belgian and Dutch Governments of a provisional agree-
ment recently concluded by the Bizonal Joint Export -Import
Agency (JEIA) with Belgian and Dutch representatives. By
the terms of this provisional agreement, JEIA will now divert
to Rotterdam and Antwerp a portion of the incoming traffic
for western Germany which formerly was routed through
German North Sea ports. Economic advantage to US-UK Zone
Germany will be the criterion for such diversion, but the
Netherlands and Belgium are free to allocate traffic between
Rotterdam and Antwerp, provided that it entails no increase
In cost to the western zone. Besides stimulating port activity
In the Low Countries, the agreement will benefit the German
economy by: (1) allowing Dutch barges to operate on the
upper Rhine and Mittelland Canal, thus increasing waterborne
traffic; and (2) giving German barges access to the lower
Rhine and certain Low Country canals.
ITNIT.CD KINGDOM
The rapid disintegration_ofiernati labor bor uni
may be indicated by the renewed struggle of western labor
leaders at the recent Paris sessions of the World Federation
of Trade Unions (WFTU) against Soviet controls. The present
conflict in the WFTU is principally concerned with: (1) failure
of the Federation to incorporate the international craft unions
(such as International Transport Workers or International
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UNITED KINGDOM
Metal Workers); and (2) the Federation's support of Berlin's
Communist trade unions. The US and British delegations have
demanded passage of a resolution denouncing the Berlin block-
ade and a public statement of the sharp division over recogni-
tion of Berlin's Communist and non-Communist trade unions.
The Soviet representative succeeded In watering the resolution
down to an appeal for solution of "the existing deadlock on
Germany."
.! I, 11.N.1 I III .
nationalism because of fear of Communist exploitation of
nationalist aspirations. Foreign Secretary Bevin's recent
statement in Commons is a recognition of the opportunity
which may be provided the Communists, particularly in South-
east Asia, by the British policy of gradually increasing self-
government for the colonies. Although the basically progres-
sive British colonial policy is not likely to change, its imple-
mentation will undoubtedly be slowed. Because the British
now tend to sympathize with the French and Dutch position
that to meet colonial demands at this time would merely
throw the colonies open to factional and Communist disorders,
closer colonial cooperation with the Dutch and French may
follow.
PORTUGAL
10_21.4isalaix_i est in Portugal may d9w1Qp from the
economic crisis which has been getting steadily more acute
during the past 12 months. The economic deterioration of
Portugal, largely resulting from postwar dislocations in its
traditional trade pattern, will be speeded by the disastrous
harvests of the past summer and the unprecedented shutdown
of the sardine industry caused by the absence of fish off the
Portuguese coast. The poor harvests will necessitate increased
imports of food grains. At the same time, failure of the sardine
pack, which normally is one of Portugal's major exports. will
temporarily remove an important source of foreign exchange.
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EASTERN EUROPE
SOVIET UNION
Increased wa2.12prehension among the Russian people
Is now evident, even though the Kremlin has attemptedo keep
the Soviet masses from learning the true seriousness of the
present world situation. The Soviet press has consistently
played down the Berlin blockade, reporting only "Soviet counter-
measures" against the western currency reform and alleged
violations of quadripartite agreements. Until the 26 September
TASS statement of the Soviet Government's position regarding
the Berlin negotiations, the Soviet people had only been told
that meetings between western envoys and Stalin and Molotov
had been taking place in Moscow. Contributing to the increased
apprehension of war were the secrecy of the negotiations, the
Increased emphasis in the Soviet press on "US imperialism
and preparations for war," and the confirmation by TASS that
the Berlin negotiations had broken down.
Soviet propaganda during the past week continued to
attack the personalities, policies, and decisions of the UN. The
submission of the Berlin crisis to the UN will probably set off
a series of even sharper attacks against that organization and
the western powers. Wide distribution was given to propaganda
charging domination of the UN by the "Anglo-American bloc
whose "mechanical majority" made possible the selection of
Its own candidates for all posts. The western powers were also
charged with undermining the UN by loading the agenda with
irrelevant issues and the possibility of a collapse of the UN
was mentioned occasionally in a way to attribute the desire and
responsibility for such a collapse to the western nations.
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GREECE
The Greek .41=1:11 joaiduts jAusibdiaxasuratisas
Is being forcefully demonstrated by the vigor with which the
Markos forces are now operating in every corner of Greece.
Although current guerrilla activity lacks the dramatic character
of last winter's attack on Konitsa or the recent defense of the
Grammos area, its aggressiveness and its pervasive character
Indicate that the army's difficult summer offensive has brought
no decisive results. Guerrilla bands are re-infiltrating areas
once cleared by the army, including the Grammos sector; US
aid projects are being sabotaged and equipment is being de-
stroyed; static positions along the northern border are being
stubbornly defended; the Satellites are continuing to provide
supplies and refuge; and over-all guerrilla strength is being
built up steadily through forced recruitment and the arrival
of reserves from the Satellites. Undiscouraged by their
Grammos losses, the guerrilb.s.are more defiant than ever.
They have recently broadcast a description of civil machinery
they have established in the Peloponnesus, and there is a possi-
bility that Markos might, as a psychological coup, set up tempo-
rary headquarters there. The Kremlin will probably continue
to supply the guerrillas, hoping to prolong economic and social
chaos in Greece indefinitely.
CZECHOSLOVAKIA
Sqviet annexation of Czechoslovakia, the subject of an
Increasing number of rumors which now cite 28 October as the
date, will not take place until the requirements of military
security become the overriding consideration in determining
Kremlin policies, Soviet military requirements, unless altered
by the outcome of the East-West conflict in the UN sessions in
Paris, do not appear to justify a Kremlin decision to accept the
many political disadvantages which would follow from outright
annexation of Czechoslovakia. The primary disadvantage of
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CZECHOSLOVAKIA
any kind of annexation would be the irreparable damage to
the Soviet and Communist positions in non-Satellite countries,
especially where the local Communists claim to be defenders
of national interests. Similarly, repercussions in Satellite
countries would further complicate the positions of the Com-
munist regimes in power.
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NEAR EAST AFRICA
PALESTINE
? r r e e - ? z, e - to
accept the Bernadotte plan are having only limited success.
The Arabs oppose the basis of the plan: the partition of
Palestine and the recognition of Israel as a sovereign, in-
dependent state. The Provisional Government of Israel,
on the other hand, accepts this basis but opposes such
provisions as: (I) the repatriation of the Arab refugees;
(2) the internationalization of Jerusalem; (3) the establish-
ment of a "free port" at Haifa; and (4) the award of the
Negeb to the Arabs. Israel will probably accept the
Bernadotte plan in principle but will seek to have it amended
during the General Assembly's deliberations. The Arabs
may be expected formally to reject the plan but to cooperate
In implementing certain of its provisions if the UN adopts
the plan. The equivocal attitude of both Arabs and Jews to
the Bernadotte plan as a whole gives little hope that active
cooperation is possible. Both sides apparently look upon
the meeting of the General Assembly as merely another
battle in the long fight between Zionism and the Arab world.
Even if the General Assembly adopts Bernadott.e's report,
the Arabs will continue to boycott Israel politically and
economically, refuse to withdraw their armies from Palestine,
and build up their strength for a future offensive against
the Zionists. The Jews will continue to encourage the
immigration of Jewish DP's and will still plan to extend their
control over all Palestine. Without vigorous and continuing
UN supervision, hostilities are certain to break out from time
to time, and instability will become chronic throughout the
Arab world.
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INDIA
trhsiftn of Byderabad has been turned
over to a military government set up by the Government of
India with a view to restoring order and maldng preparations
for eventual disposition of the state. Although a plebiscite is
still under consideration, it appears more likely that the
future of the state will be determined by a constituent assembly.
The assembly, which will not be elected for some months, will
obviously have a strong pro-Indian majority and will. certainly
favor accession to India. ? It will then have to decide on
the manner of accession: whether Hyderabad will be made an
Integral part of India, or whether it will be split into several
areas on a linguistic basis and merged with adjoining pro-
vinces which are already included in India. The Nizam,
astutely disclaiming responsibility for the recent actions
of his own government and formally "approving" all orders
issued by the Indian military governor, may be allowed to
remain as titular head of the state if, as is considered likely,
it is incorporated as a whole into the Dominion of India.
Meanwhile, the Rpzakars, local extremists recently outlawed
by the Government of India, are carrying on guerrilla activities,
along with small Communist bands to whom the Razakars
have reportedly given arms.
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FAR EAST
INDONESIA
Tension between the Netherlands and the Indonesian
Republic will probably be increased if Indonesia presents
Its case to the UN Security Council. The Republican Govern-
ment has formally accepted the Ub draft agreement as a
basis for the resumption of negotiations by the UN Good
Offices Committee (UNGOC). Dutch objections to the plan,
however, are expected to raise fundamental Issues which
will be difficult for the Republic to resolve in view of its
Internal military crisis. Because the Dutch Government
has forcefully pushed its plan for an Indonesian Government
excluding the Republic, and because many Dutch regard the
Republic as largely communistic, further opposition from
The Hague is expected. Threats to enumerate its grievances
before the SC may represent the strongest step the Republic
can take in attempting to force resumption of negotiations,
especially since the success of the US plan is dependent
upon its speedy adoption.
KOREA
Untilot_Lea'sInternational b.AU.s.s,...,_,Iarified important
opposition groups within the National Assembly will probably
not insist upon a revision of Korea's governmental structure.
Dissatisfaction is increasing, however, with President Rhee's
extensive powers and with his appointment of incompetents
and alleged pro-Japanese to the Cabinet. Further dissatisfaction
is felt by influential assemblymen who desire to exercise tighter
control over the government. A drastic Cabinet shake-up and
an amendment to the constitution which would produce a re-
sponsible Cabinet would lend stability to the Republic in the
not unlikely event of Rhee's assassination. If Rhee is assas-
sinated before such reforms are implemented; however, a
chaotic struggle for power will ensue and the present govern-
ment's popular support will be dissipated.
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CHINA
chines National Government is faced with the prospect
of unprecedented military, economic, and political crises
following the Communists capture of Tsinan, a Nationalist
strategic military base. The Communists have changed their
military tactics in North China from hit-and-run operations
to coordinated assaults against well major cities,
which they are now apparently prepared to defend and administer.
The next major Communist military effort may be against the
rail junction of Esuchou, on the last important Nationalist
line of defense north of the Yangtze and Nanking. The Communist
war potential has been substantially improved by the capture
of the Tsinan textile mills, arsenal, and rail center.
The National Government is also losing its principal
economic battle, and public confidence in the Government's
ability to survive will probably reach a record low. Military
defeats may seriously affect the already shaky new Chinese
currency and lead to a worse financial crisis than that which
occurred in July and August. Meanwhile, the desire for peace
through compromise will probably grow stronger in Nationalist
China. The USSR may thus be able to force acceptance of
Soviet mediation. Any resulting coalition government probably
would be dominated by the Communists.
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WESTERN HEMISPHERE
ARGENTINA
Recent political devlqpients in Argentina are
symptomatic of its serious economic ills. f or the
fourth time in five months, Peron has charged that the
"threats" against his life were supported by "powerful
forces," which, by implication are close to the US Govern-
ment. Peron apparently feels that the US will not make
It possible for him to obtain sufficizrtt dollpr exchange to
allow his administration to continue the course planned for
It. By taking the offensive before any event occurs that
will actually undermine his regime, Peron may be trying
to make existing economic difficulties appear to be a
political crisis which would justify the use of authoritarian
measures. Such measures would probably place Peron
in a position to deal summarily with all forms of opposition
and to employ drastic economic means with which to fight
inflation and to salvage as much as possible of the five-year
plan. An arrangement with the US whereby Argentina would
obtain urgently-needed dollars might relieve both political
and economic tension at home and reverse the deteriorating
trend in US-Argentine relations.
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MOM,
DISTRIBUTION
1 The President
2 Secretary of State
3 Chief of Staff to Commander in Chief
4 Secretary of Defense
5. ? ? O ... Secretary of the Army
6 Secretary of the Navy
7 Secretary of the Air Force
8 Chairman, National Security Resources Board
9 Executive Secretary, National Security Council
10 Assistant Secretary of Navy for Air
11. . ? . . . ? ? Chief of Staff, U,S. Army
12,13,14 Chief of Naval Operations
15,16,17 Chief of Staff, U.S. Air Force
18 Director of Plans and Operations,General Staff,U.S.Army
19 Deputy Chief of Staff (Operations) U.S.Air Force
20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, U.S. Air Force
22,23,24 Special Assistant to Secretary of State, Research &
Intelligence
25,26,27,28,29. Director of Intelligence, General Staff, U.S. Army
30,31,32,33,34. Chief of Naval Intelligence
35,36,37,38,39. Director of Intelligence, U.S. Air Force
40 Director of Security and Intelligence,Atomic Energy Comm.
41 Executive Secretary,Military Liaison Committee,Atomic
Energy Commission
42,43,44,45,46. Chief,Acquisition & Distribution Division,OICD,Dept.State
47 Director, Federal Bureau of Investigation
148 Secretary, Joint Chiefs of Staff
49 ..... ? ? ? ? Chief, Policy Planning Staff, Dept. State
50 ..... ? ? ? ? Secretary of State (Attention: Chief ,Policy Reports Staff)
51 Deputy Director, Joint Intelligence Group, Joint Staff
52,53 Secretary, joint Intelligence Group, Joint Staff
54 U.S. Air Force Representative on Joint Strategic
Survey Committee
55,56 Secretary,State-Army-Navy-Air Coordinating Committee
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U S. GOVERNMENT PRINTING OFFICE
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