WEEKLY SUMMARY NUMBER 23

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002100020001-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: May 22, 2013
• Sequence Number: 1
• Publication Date: October 22, 1948
• Content Type: REPORT

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Copy No.
o WEEKLY SUMMARY
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Number 23
21 O CT 1948
Document No.
CHANGE J,-.-I E
DECLA SIF k -D
Class. C TS S
D" "' :... !.--.7 77
. ?~~3
Auth: D.-
Date: ~~ "'--~- By
CENTRAL INTELLIGENCE AGENCY
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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.
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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C 0 N T E N T S
ON GQ ! Paq
I
I
C ,:.PEItN EUROPE ................. 2
EASTERN EUROPE .....?.... 5
T "AIt V.'AST - IkFR C A ... ..... 7
R ~_A3T.?....... .............20
' .;tT YtN HEMISPHERE ............ 13
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B I ti 8 L I G H T 3
The renewed outbreak of iigng In Palestine
duri^8 the peat week temporarily deflected the attention
of the UN bas the Berlin dispute. Israeli thrusts against
the Egyptian armies in the Negeb area are motivated pri-
marily by a desire to gain control of the Negeb, which
the Bed p allots to the Arabs, and thus present
the UN with a fait accompli (see page 7 and map). Mean-
while, the grave Arab refugee problem has been accen-
tuated by the renewal of hostilities (see page 7).
While the Security Council continued to seek a
compromise acceptable to the East and West parties in
the Berlin dispute, Communist electoral strength in
western Germany gave evidence of waning as German in-
dignatton over the blockade heightened (see page 3). As
the six "rmntro." numbers of the Security Council offered
their latest compromise proposal at the 22 October SC
meeting, there remained a possibility that the USSR would
modify its stand and eventually accept some compromise
formula.
The Chinese Communist offensive continued
unchecked during the past week, though the Nationalist
forces scored minor local successes in Manchuria and
Shensi (see page 10 and map). The total collapse of
Nationalist military power in Manchuria has been made
an imminent possibility by the rapid capitulation of Chinh-
sien and subsequent Communist control of this strategic
base and Nationalist supply center (see page 11). Despite
Communist success in politically consolidating their gains
in North China, Soviet recognition of the North China govern-
ment does not appear likely at present (see page 12).
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WESTERN EUROPE
1TALY
beDe Graspers Government's stab lit! and the ulti-
mate success of the European recovery program in Italy
dill be seriously endangered by the continued failure of the
Italian government to implement its campaign promises of
economic and social reforms. The outstanding issues on
which the De Gaspers Government pledged constructive action
are: (1) gross inefficiencies and inequalities !n the tag system;
(2) agrarian reform; and (3) the acute housing shortage. The
Government's reform program continues to be hampered by
ideological differences, technical difficulties, and business
pressure groups. Failure of the De Graspers Government to
overcome these obstacles promptly will alienate the support
of the moderate leftist coalition members as well as popular
support;; the loss of moderate leftist support would weaken the
parliamentary strength of the De Gaspers Government, and
loss of popular confidence would play into the hands of the
Communist propagandists. Even though De Gaspert's party
remains in power, a delay in the promised reform measures
would broaden opposition to all government proposals. In
addition, widespread popular dissatisfaction with the De Gaspers
Government would increase the Communist potential to nullify
the European recovery program in Italy.
FRANCE
The Quoujille is now apparently seeking to
contain the Communist-led strike offensive on the gamble that
French opinion will eventually be aroused sufficiently to force
the General Confederation of Labor (CGT) to abandon its rotat-
ing strike tactics. By making moderate concessions to the
strikers throughout France and by capitalizing upon public
revulsion to widespread unemployment and economic hardship,
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FRANCE
the Govern t will probably lit the *Bad" by n-fd-
Noeember. Eves tria s cress world, baaevsr, remove
merely the most direct threat to the Garesomeat's sur-
vival. The trend beard political sad economic lnabtbt
is likely, In the long rum, to be cold.
A ~d E du to the riot Is indicated by the
recent aunt for no Preach Gaud d the Republic.
Whetter this swiag to the right will produce it Gaailist
majority is the Council, however, will not be known until
after the 7 November balloting. Despite the comparatively
poor shoving of De Gaulle=e Rally of the French People
(RPF), as RPF working majority in the Council remains a
definite poseib#lity beca&-.,e: (1) Rigdttsts and Rightist
sympathisers comprise 50% of those elected and will at
least be sympathetic to the RPF'; sal (2) the Independent
delegates, who are tree to support the candidates of other
parties, are predominantly Rightist and may awing their
votes to De Gaulle.
GERMANY
be waning, probably as a result of German lddigpaappearstion
over the blockade of Berlin and of a clarification of differ-
ences between the western German political parties. Com-
munist Party strength is apparently lessening despite
intensified political agitation by the Party organisatio
throughout n
the western zones of Germany. Scattered re-
turns from the August works council elections in the Bisoae,
although reaffirming the leadership of the Social Democratic
Party, show the Christian Democratic Union as having made
the greatest party gains. `the gains of both these non-
Communist parties were made mostly at the expense of the
German Communist party.
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IINlrED ROQpDOM
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CON MUM wKbout formula a { ~~ from its recent
tisg platform on domestic
or lsatiee which would provide thle voters with a clear-cut
Iterative to the Labour Party program. Instead, the Party is
apurNkly ccafii ent that popular dissatisfaction with the Labor
Government and a strengthened Party organization and treasury
will asrar, a Coueervattve victory in the general elections which
swat be held before mid-1950. AUtecn~h the Conservatives gen-
erally endorsed the Labor Govrnment 6 foreign policy, a minor
split was Wosast between advocates of an "empire -first"
Policy and of an internationalist policy.
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A
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\STERN EUROPE
A. i ri~,'ill in recision to in e a bJQq 4e pf Vienna is
~t. l'kel y du.mn. UN discussions on the Perlin question. Such
.;. decision will :' v'lit further development. of East-West relations
will d;-p;end )rimaril?? on the gremlins estimate of US
s,.sceptibilhy to farther pressure and secondarily on the Krern-
lin's evalltaticn of the probable effect of a blockade of Vienna
on Soviet ob,erttves In Austria. Indefinite continuation of the
East-West I t iasse may induce the USSR to disregard completely
the possible consequences of further Soviet aggression and to
extend its blockade to Vienna. The immediate objective of such
a. move would be to force the western powers out of the city,
Such a maneuver would also reflect the i'Cremlin's intention to
freeze the present line dividing Europe, to partition Austria,
and to eliminate western political influence east of these lines,
klthough a temporary settlement of the Berlin dispute would tend
to reduce the likelihood of a Soviet blockade of Vienna, the threat
of a blockade would continue in the background until basic, over-
all East-West differences had been settled. Moreover, this
threat will exist until the Kremlin decides that its' objectives in
kustria can be best achieved through successful conclusion of
the Austrian treaty and withdrawal of allied occupation forces.
YUGOSL WVt
S viet--directed Satellite political moves against Yugo-
slavia have deepened the Tito-Cominform rift, although the
USSR apparently does not intend to interfere with Yugoslavia's
economic relations with the East. Poland hasrecently recalled
its cultural group from Yugoslavia and the Yugoslav Peoples'
Front Party has been dissolved in Bulgaria. Meanwhile, the
Yugoslavs have countered by recalling students from Poland and
by renewed press attacks against the Cominform countries.
Despite this mounting political tension, the USSR and its Satel-
lites are maintaining trade relations with Yugoslavia in an
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t!JrO )'PLPi.
attempt to continue to receive the advantages of Yugoslav
txr,ade to prevent the development of economic ties be -
tween Yugosiav,,sa and the West. Negotiations for a ne^w
Soviet -?Yugosiai trade agreement are proceeding in Moscow,
and the bolos apparently intend to renew their trade agree-
ment with Yugoslavia in. November.
SOVIET YJNI`,N
The USSR has raaen beg n to exploit Caspian
_Ltly Sea oil. reserves in the Baku archipelago. Prospecting o7
these depositus is under way to determine potential reserves
for additional exploitation. Although the extent of present
development is unknown, the USSR may be planning to
develop these Caspian reserves in order to increase the
supply of crude oil to the partially idle Baku refineries.
RUING ARY
The arrest of Hunnry's Roman Catholic Cardinal
Mindszenty on trumped -up economic "r charges appears
Imminent. Mindszenty, who has been branded as "reaction-,
army," :s un filing to jeopardize church interests by
comprom;sing. with the present government, and his long-
time critic, Archbishop Czapik, would willingly fill any role
created by 1'diirdszenty s removal. Cz apik believes that, by
granting certain concessions to the state such as recognition
of the present government, the church could again its
former prerogatives of governing itself, acquiring property,
and maintaining a church press. Moreover, Czapik may hope
to promote the re-establishment of relations between Hungary
and the Vatican.
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MILITARY SITUATION-18 OCTOBER 1948
Showing Israeli Advance into the Negeb
PALESTINE
Approximate line between
Arab controlled and Jewish-
controlled areas
CONFIDENTIAL
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NEAR EAST - AFRICA
The problem of the. Arab refugees is one of the
most serious arising from the Palestine war. Almost
half a million of these destitute Arabs are living in
sprawling, open encampments --in Syria and Lebanon, in
Transjordan and Iraq, and in various parts of Palestine
itself. The lack of sanitation, medical supplies, and ade-
quate nourishment has already made camp epidemics a
strong possibility, and about one-fourth of the refugees
may die of exposure during the winter months. The re-
lief which has reached the refugees, to date, has come
primarily from the Arab countries, which are now
nearing the end of their available financial resources.
Unless TiN relief agencies, an international relief organi-
zation like the Red Cross, or the western powers them-
selves act forcefully, the refugee problem will soon
reach calamitous proportions.
PALESTWE
The Israeli thrust against the Egyptian armies on
the southern front suggests that the Israelis not only feel
it necessary to control the routes supplying the isolated
Jewish settlements in the Negeb but also wish to present
the UN with the fait accompli of Israeli dominion over
the Negeb, which would be awarded to the Arabs under
the Bernadotte plan. Israeli tanks and armor have made
a thrust southward across the Ma jdal -Falu ja road leading
to lfebroxi, and Israeli aircraft have bombed Egyptian
supply centers at Majdal, Gaza, and El Arish. Israeli
forces have also reached the vicinity of Gaza. These
initial operations assure the opening of the supply routes
to the Negeb settlements. Moreo%cr, the Israelis, by
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PALESTINE
cutting the Maidal-Hebron and the Gaza-Beersheba roads,
have split the Egyptian Army. The Egyptian units along
the coast are thus dangerously isolated and may be forced
to withdraw southward to the Egyptian frontier. Although
the Security Council's renewed `cease-fire' order may
halt the fighting, only further determined SC action (in-
volving the threat of sanctions) can make Israel relinquish
the areas it has conquered during the past week.
Israeliefforts to control the extremists in the new
state have not been altogether effective. The Provisional
Government of Israel (PGI) apparently has not apprehended
Count Bernadotte's assassins. Many members of the Stern
Gang are still at large and a number of those arrested
shortly after the assassination have managed to escape.
The POI ordered the disbanding of the Irgun Zvai Leumi
(IZL) but has taken no punitive action against the leaders.
Although IZL members of military age have been assimi-
lated by the Israeli Army, youths under the age of eighteen
remain free and will probably form the nucleus of a
future para-military organization. Even if the military
potential of the extremists has been dissipated, a large
proportion of the Israeli population will continue to support
the extremist plan to drive the Arab Armies out of
Palestine and to take over the whole country. Terrorist
leaders will seek to increase their political power in the
right-wing parties and may even attempt to replace the
more moderate leaders now controlling the PGI. The
outbreak of hostilities on the southern front and the apparent
determination of the Israelis to conquer the Negeb in defiance
of the UN truce may reflect the influence which the extremists
are already exerting on the PGI.
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PALESTINE
Soviet efforts to prevent anylawting Palestine settlement
~~ rn
will probably now tam the form championing the original
UN partition plan of 1947. By insisting that the UN reject
the Bernadotte plan, the USSR will hope to prolong the present
chaos in the Near East and further complicate US-UK rela-
tions with the Arab countries. In an attempt to capitalize
upon Jewish and Arab opposition to the Bernadotte proposal,
the USSR probably will: (1) press for an independent Arab
state in. the non-Jewish areas of Palestine; (2) charge the
US and UK with responsibility for dragging out the conflict;
(3) protest exclusion of the USSR from the Truce Commission;
and (4) oppose any proposal to incorporate the Arab areas of
Palestine Into Trans Jordan.
I
t
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 DD 105 1 0 115 120 125 00 LAS
The International boundaries shorn on this map do not
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PAR EAST
I
I
I
t
'(")NESIA
R llc will probably eventually
refer Its aWkOjOs *"r in th truce violations to the,
UN qty Co%Wl despite US success up to this time
in hefty each setlon Republican reaction to the
latest Dutch modWcatit ; of the US delegatioQps pro-
posed sow to the problem is expected to be negative.
The fourth re m of the Utz? Good Otficee Committee
(GOC) is expected, moreover, to substantiate Republican
claims in the dispute, at least in part. Because of its
preoccupation with the Berlin and Palestine Issues, the
Security Council may try to lighten its crowded agenda
by referring the matter back to the GOC in order to
encourage anther attempt at a Dutch-Republican settle-
ment.
CrIWA
AJthouh the Communist offensive in North China
continued unabated through most of the civil war areas,
Nationalist forces scored minor local successes in
Manchuria and Shensi. Manchurian Nationalists pushed
northwest from Mulsden and occupied Changwu and
several points near Hsinniin. These minor gains, how-
ever, were more than oitset by the loss of Chinhsien and
Cha shun and Nationalist elements can progress no
further without engaging large Communist forces. In
Shensi, Nationalist reinforcements In the Tall sector are
credited with halting temporarily the southward advance
of -Pang Teb-bual. In North Chiina, Communist troops are
active along the Peiping-Sulyuan railway both east and west
-10-
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C HnN 1
of Ka14 n, a well az south of Peiping near Chohsten. Thoy
continued their assault on Taiyuan, capital of Shansi, where
they are reported to have breached the city's outer defense
walls All regular Nationalist forces have been withdrawn from
Chenghsten and Kaifeng and the evacuation of Chefoo is under
way.
The, total collapse of the Nationalist effort in Manchuria
may be presaged the recent all of Chinhsien to the CoLnnu--
~7 'Z7
nists after an unexpectedly short siege Control of this strategic
Manchurian anchor has enabled the Communists to block the
Nationalist corridor to Manchuria and seal off the Nationalist
armies to the north. Chinhsien also provides the Communists
with an excellent base for future military operations to the
south against the Peiping-Tientsin area, As a result of the
rapid capture of Chinhsien, the Communists probably obtained
intact most of the vast Nationalist supplies there. Moreover,
Nationalist airlift facilities are insufficient either: (1) to supply
Nationalist forces in the TAukden area; or (2) to extricate all of
the first-class troops (US-equipped) from Manchuria. Any
attempt to remove the Nationalist troops by land would result
in severe losses en route.
The Nationalist economic reform effort continues to
weaken under the combined hammering of major military re-
verses and increased inflationary pressures. The pre-reform
inflationary pattern of rising prices, black market operations
in both commodities and US currency, and under-the-counter
dealings above the fixed-price level is becoming more apparent
day by day. There is now a sizeable volume of black market
US currency transactions in Shanghai, with rates rising to
between gold Yuan (GY) $ 6 and $ 7 to US $1, compared to the
official exchange rate of GY $4 to US $1, In Peiping and
Tientsin, where police surveillance has been only nominal,
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CHINA
the exchange rate reached GY $16 to US $1, a 100% increase
over the preceding week. Food shortages, high prices, and
labor troubles are contributing to an explosive atmosphere In
Tientsin. Although the adverse military developments in the
field will make it impossible for the National Government to
halt this inflationary trend, the Government can hardly afford
to abandon publicly the reforms upon which so much was so
recently staked. Enforcement activities will probably slacken
while the Government yields to what appear to be uncontrollable
economic forces..
Soviet recognition of the North China vernment is
unlikely at this time. Such a step would impair Soviet vftorts
to establish a coalition government for all of China as a pre -
requisite for Communist domination of the entire Chinese
nation., Soviet recognition of the North China regime would
not only violate the Chinese-Soviet Treaty of Friendship and
Alliance, but would probably cause a break In diplomatic re-
lations with the Nationalist Government, In such circumstances,
the USSR could hardly hope to offer its good offices for media-
tion between the North China Communists and the National
Government.
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Declassified and Approved For Release 2013/05/22 : CIA-RDP78-01617AO02100020001-5
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V :STEIR HEMISPHERE
The r ea rt iomi of ~Nr entina's nei yhbors to Peron `s
r?trex e nationalist. policy may further complicate US rela-
tions in that a .z ea .. in varying degrees, the neighboring states
i=re exagg' raitng the threat cc imminent Argentine aggression
as a pretext or demanding U33 military and economic aid
This trend is most pronou.need. in Uruguay, where the.danger
exists that the Government may misjudge the extent of US
recepti~Yeness to Uruguay alarmist anti--Argentine propa-
ganda and, confident of US support, recklessly compromise
its relations with Argentina.
CUBA
The expected outlawing of the Cuban Communist Party,
through the probable passage of a bill by the House of Repre-
sentatives, will lessen Communist effectiveness in influencing
Cuban public opinion but will not eliminate the Communists
as a potential sabotage threat to US interests in Cuba. The
Cuban Communists have formed an organization of "militants"
within the Party, apparently in preparation for clandestine
underground activities.
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Declassified and Approved For Release 2013/05/22 : CIA-RDP78-01617AO02100020001-5
 Declassified and Approved For Release 2013/05/22 : CIA-RDP78-01617AO02100020001-5
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DgiTRIBUTIOR
1......... The president
2......... Secretary of State
3......... Chief of Staff to C ommander in Chief
4......... Secretary of Deface
5. . ....... Secretary of the Army
6......... Secretary of the Navy
7......... Secretary of the Air Force
8......... C1 1rman, National Security Resources Board
9......... E'llecattve Secretary, National Security Council
10......... Assistant Secretary of Navy for Air
11. . 0 0 0 0 0 0 6 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 Stan (Operations) U.S.Air Force
20......... Deputy Chief of Naval Operations (Operations)
21......... Director of Plans ahd 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
57,58,59,60,61.
35,86,37,38,39. Director of Intelligence, U.S. Air Force.
40......... Director of Security and Intelligence,Atomic Energy Comm.
41......... Isecutive Secretary,Military Liaison Committee,Atomic
Energy Commission
42,43,44,45,48. Chief,Acquisition & Distribution DivIsion,OKD,Dept.State
47......... Director, Federal Bureau of Investigation
48......... 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,StateArmgNavy -Air Coordinating Committee
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Declassified and Approved For Release 2013/05/22 : CIA-RDP78-01617AO02100020001-5
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U. S. GOVERNMENT PRINTING OFFICE
2631-8-1948
Declassified and Approved For Release 2013/05/22 CIA-RDP78-01617A002100020001-5