WEEKLY SUMMARY NUMBER 55

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002200080001-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 23, 2016
• Document Release Date: July 9, 2013
• Sequence Number: 1
• Publication Date: June 17, 1949
• Content Type: REPORT

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? Apimmenui, COPY NO. 90
ietitrt
I WEEKLY SUMMARY
Number _55
7 JUN 1949
Document No. LO
NO -GUNGE in Class.
[BoDECLASSIFTED
Class. C TA"CED TO: TS -
D-A r m,? 4 Apr 77'
Autbt
Natio 414-coN-78 By:
CENTRAL INTELLIGENCE AGENCY
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AVICEIVAZ =COW".
PLICASE RETURN TO
MEENCY ARCHIVES, BLDG. A-le, z
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alig.
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
Page
HIGHLIGHTS
1
WESTERN EUROPE
2
EASTERN EUROPE
5
NEAR EAST-AFRICA
6
'FAR EAST ?
9
WESTERN HEMISPHERE
12
ARTICL E: Internattmal Labor Developments.. 14
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HIGHLIGHTS
The Council of Foreign Ministers, which has found
it exceedingly difficult during the past four weeks to reach
agreement on Germany, Berlin, and Austria, is also finding
it bard to reach agreement on a day to adjourn. Soviet Dele-
gate Vishinaky's latest instructions from Moscow--which did
not arrive in time for the 16 June session--will apparently
permit him to conclude a limited working agreement on east-
west German trade and Berlin traffic and possibly to make
some advance toward an Austrian treaty,
Possible Israeli intentions to resort to arms once
again in order to gain territorial objectives may be fore-
shadowed by a recent increase of Israeli aggressive moves,
the cancellation of all military leaves for Israel's armed
forces, and inflammatory speeches by Israeli leaders (see
page 6). Meanwhile, the negotiations at Lausanne and Is-
raeli armistice talks with Syria and Jordan are deadlocked.
The possibility that violence may break out in the
Caribbean has been greatly increased recently by a flurry
of revolutionary activity and the ahift of the Caribbean
Legion's base of operatinns from Costa Rica to Guatemala
(see page 12). The outbreak of fighting in the region, whether
its immediate point of focus is Panama, Nicaragua, or the
Dominican Republic, wculd have broad and adverse effects
on hemispheric solidarty.
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WESTERN EUROPE
GERMANY
Illegal Trade One of the malor problems which will confront
the new German government in its efforts to
produce a sound German economy will be the establishment
of effective customs controls. During the past eighteen months,
the foreign exchange pcsition of the Bizone has been seriously
affected by the illegal export at an estimated $200 million el
goods, about 25% of the Bizone's total production for export.
These exports have consisted largely of shipments to Eastern
Europe of commodities which are in short supply in the Scviet
orbit and on the US list of restricted items; in addition, sab-
stantial quantities of tax-free luxury items have been smuggled
Into western Germany. Unless this illicit trade can be stopped
by effective border controLs which will permit uniform eppli-
cation of customs regulations and consumer taxes in the three
western zones, stabilization of the German economy either wtii
be materially delayed or will require more ECA aid.
ITALY
Farm Strike The current Italian farm labor strike is symp-
tomatic of the struggle between the Government
and the Communists for eontrol over farm labor. The expressed
aim of the strike, conducted by the Comrnuulst-dominated
General Confederation of Labor (CGIL) and supported by the
Christian Democrat-sponsored Free Confederation, is to obtain
a national contract covering wages and working conditions.,
Although the Communists probably do not expect to win a
national contract, they hope to use the strike to persuade the
farm workers that the CGIL was responsible for forcing the
Government to institute reforms in regard to farm labor.
The Communists thus hope that the strike will assist in re-
tarding the trend toward greater government influence over
2
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ITALY
farm workers. COIL control over labor is being threatened
by: (1) gradual a3sumption by the state employment offices of
CGIL's power over the placement of farm workers; (2) legis-
lative plans for regulating relations between farm employers
and agricultural laborers, Including the establishment of mini-
mum wages and standards of working and living conditions;
and (3) a proposal to limit by law labor's right to strike.
Meanwhile, continuation of the present strike may force the
Government to intervene in order to insure the harvesting of
the nation's wheat crop, which supplies two-thirds of Italy's
requirements and which should be harvested in the period
between now and the end of July.
TRIESTE
Election Results Failure of the Italian faction in Trieste
to win more than 63 percent of the votes
In the 12 June communal elections of the US-UK Zone has
strengthened the Soviet bargaining position regarding final
disposition of the area. Trieste's pro-Cominform Commu-
nists emerged as the second most powerful political group
and are now in a much stronger position to attack both their
political rivals and the Allied Military Government (AMG).
The poor showing of the pro-Tito Communists, however, re-
flects general Slovene hostility toward the Yugoslav brand of
Communism and the bankruptcy of the Tito faction in Trieste.
Although those elements favoring the return of the Free Ter-
ritory to Italy failed to win a decisive victory, the majority
won by the moderate pro-Italian parties will, at least, per-
mit the communal administration of Trieste to continue to
cooperate with the AMG.
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UNITED KINGDOM
Labor Party The British Labor Party's political platform
and policies were strongly endorsed by the
delegates to the recent annual convention in Blackpool, al-
though unrest among the rank-and-file of organized labor is
evident throughout the country. The delegates overwhelmingly
approved the program of the Party leadership for the next
general election and supported Foreign Secretary Bevbx's for-
eign policy without criticism. Although the strong support of
the delegates for Cripps' severe economic policies will
steady the government's hand in holding the line against
substantial wage raises, it is questionable whether the dele-
gates, on returning to their labor unions and constituencies,
can convince ordinary workers and other laborites of the
need to accept existing, or harder, living conditions.
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EASTERN EUROPE
Paris Muddle The Council of Foreign Ministers, at the
end of four weeks, was finding it nearly
as difficult to adjourn as it has been to reach agreement on
Germany, Berlin, and the Austrian treaty. Moreover, the
same obstacle blocking agreement on the time for adjourn-
ment-namely, the compulsion Soviet Delegate Vishinsky has
been under to refer the most minute points back to Moscow
for decision--has also been a contributing factor to the
glacial pace of the negotiations. What has become clear
during the paEt four weeks is that in the face of current
western terms the Kremlin has authorized Vishinsky to
negotiate no more than a limited working agreement on east-
weet German trade and Berlin traffic and possibly to per-
mit some progress toward the drawing up of an Austrian
peace treaty. In short, the USSR apparently still finds the
price of the western powers too high.
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NEAR EAST - AFRICA
Arms Shipments Greatly increased pressure for lifting the .
UN embargo on arms shipments to the
Middle East will probably impel the Security Council to con-
sider the matter in the near future. The UK is especially
anxious to fulfill limited commitments to Egypt, Iraq, and
Jordan, in connection with their internal security problems.
Although a precipitate and complete lifting of the present em-
bargo might touch off an arms race that would seriously
Jeopardize the uneasy calm prevailing in the Middle East,
it Is. unlikely that the release of small arms to the Arab
states for internal security purposes would ha.ve'dangerouh
consequences. Thus, if the issue is raised in the UN, the
Security Council will undoubtedly modify the ban. somewhat.
PALESTINE
Military Rumblings With Israeli armistice negotiations with
Syria and Jordan, as well as the Lausanne
peace conference, deadlocked and apparently doomed to early
failure, an increase in Israeli aggressive moves, combined
with Israel's cancellation of all military leaves for the im-
mediate future and inceidiary speeches by Israeli officials,
suggests that Israel may resort to force to gain its territorial
objectives. The most serious threat to peace is in the Jeru-
salem area. Israeli forces recently moved into the UN-de-
militarised zone around Government House, which dominates
the Arab Legion supply route from Jordan to Jerusalem and
the Jordanian-held region of Samaria. Although pressure from
the Mixed Armistice Commission resulted in the withdrawal
of troops, Jewish civilian police remain in the area and Israel
thus maintains a strategic hold on the sector. In addition, the
Israelis have threatened to take over the Mt. Scopus area, and
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PALESTINE
new Israeli concentrations have been reported in the Latrun
sector. Concurrently, the Syrian-Israeli armistice deadlock
Continues, and the Israelis have reinforced their troops to
the west et the disputed Mishmar hay Yarden border area.
The Acting UN Mediator's suggestion that the area be demili-
tarised has not broken the deadlock, and the issue will prob-
ably be thrown back into the lap of the Security Council, al-
though the Israeli build-up of strength may presage an attempt
to retake the area and present the Security Council with
another fait accompli.
Meanwhile, weeks of discussion at Lausanne have
accomplished little. Recently the Israeli delegation ostensibly
sought to resolve the deadlock by proposing that: (1) such
issues as territorial boundaries, refugees, and the status of
Jerusalem be turned over to separate sub-committees; (2) the
Arab governments increase the authorities of their delegations
to make effective decisions; (3) the Palestine Conciliation Com-
mission (PCC) meke a genuine effort to bring Arabs and Is-
raelis together; and (4) the various armistice agreements be
used as a basis for the final peace settlement. These proposals,
which were immediately rejected by the 'Darkish and French
members of the PCC, represented more of a propaganda mlve
than a sincere attempt to compromise and suggest not only
that the Israelis are seeking to shift the onus for the current
deadlock from themselves to the PCC and the Arab delegations,
WI that they are hoping for a breakdown of the conference that
would provide an excuse for resuming hostilities in Palestine.
INDIA -PAKISTAN .
Kashmir Truce The UN Commission for India and Pakistan
(UNCW) has now sent a two-man delegation
to New Delhi in the forlorn hope of obtaining a statement
sufficiently precise and reasonable to present to Pakistan as
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I. INDIA- PAKISTAN
the Indian position on the Kashmir truce conditions. This
final effort to obtain agreement on UNCIP's truce proposals
will probably be unsuccessful. Subsequent attempts by UNCIP
to bring the governments together in a joint meeting or to
turn the matter over to arbitration also appear foredoomed.
Of the Commission members, only the Czechoslovak repre-
sentative has shown signs of favoring prolongation of nego-
tiations almost certain to end in failure. Thus, it is probable
that the Commission will soon feel compelled to confess its
failure and to refer the matter back to the Security Council.
1
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FAR EAST
CHINA
Political Consolidation The recent assignment of leading
Communist military figures to high
political positions suggests that the Communists now believe
that the military phase of the revolution is virtually over, or
at least subordinate to the task of political and economic con-
solidation. Top-rank Commanders Chen Yi and Liu Po-Cheng
have been appointed to senior positions in Shanghai and Nanking.
Their appointment appears normal and logical during the neces-
sary period of martial law since both men are able administrators
and experienced in organising and operating military governments.
Communist Government ? Because of the need for further
political and economic consolidation
of Communist-controlled territory, the establishment of a
central Communist government claiming jurtsdiction over all
of China is not imminent. Such a regime will probably not be
proclaimed until at least October. Moreover, it is unlikely
that the USSR will accord formal diplomatic recognition to
the Communists until they have established such a central
government. It will be some time, therefore, before the
western powers will be forced to take a stand on the inter-
national status of Communist China, particularly with reference
to China's seat on the UN Security Council and its representation
on other international bodies.
Soviet Orientation Meanwhile, Chinese Communist state-
ments have been entirely in accord with
orthodox Communist doctrine and the Party continues in its
unwavering acknowledgement of Soviet leadership in the
International Communist movement Despite this orthodoxy,
the Chinese Communists may erect a temporary facade of
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CHINA
friendly cooperation with the western powers in order to
expedite trade and commerce essential to China. In fact,
China's tremendous economic needs and the inability os
the USSR to fill those needs eller the most likely prospect
at present for the development of friction between the two
nations.
TAIWAN
Communist Infiltration Despite concentration on Taiwan
of at least 250,000 Nationalist
troops (including the Chinese air force), increasingly effec-
tive Communist infiltration and a lack of Nationalist leader-
ship and organization do not augur well for permanent
defense of the island against Communist attack. The
Nationalist position on the island is steadily degeneratiag
as a consequence of widespread dissension among Nationalist
army, navy, and air force units, instability in the Nationalist
political administration And deteriorating economic conditions,
In addition, there is as yet no clearly defined Nationalist
determination to fight the Communists. Meanwhile, the
Communists have intensified their propaganda program
designed to exploit Taiwanese discontent. In view of the
unlikelihood of a direct Communist assault in 1949, however,
Chiang Hai-shek will probably be able to hold the island
beyond the end of the year, although his long-term prospects
of retaining control remain poor.
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KOREA
Border Clashes Continued border clashes along the 38th
parallel in Korea may eventually seriously
weaken the ability of South Korea's security forces not only
to defend the Republic's northern border but to maintain order
within the country. Korean border clashes, which multiplied
following the withdrawal of US occupation troops from the
38th parallel in January 1949 , have recently increased in
number as well as scope. Although it is usually impossible
to determine whether individual border incidents were pre-
cipitated by northern or southern forces, the North Korean
regime undoubtedly believes that the bOrder clashes will con-
tribute to the eventual neutralization of South Korea's capacity
to resist. More immediately, the North Korean regime pro-
bably hopes that these engagements will: (1) maintain an
atmosphere of fear and tension in South Korea; (2) test the
capabilities of southern defenses; (3) disorganize and dis-
perse concentrations along the two main Invasion routes into
southern Korea; and (4) force South Korean security forces to
concentrate along the 38th parallel, leaving the Republic's
interior more vulnerable to guerrilla attack.
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WESTERN HEMISPHERE
Caribbean Legion Recent revolutionary activity in the
Caribbean area, involving the shift of
the Caribbean Legion's base of operations from Costa Rica
to Guatemala, increases the possibility of violence some-
where in the Caribbean in the near future. Indications have
been growing recently that the Legion is formulating opera-
tional plans and has the arms with which to mount a formidabifi
attack. These facts, in addition to a gradual shift in the
balance-of-power favorable to such countries as Costa Rica,
Cuba, and Guatemala (the countries actively supporting the
I. Caribbean Legion), augment uncertainty in the region and
encourage the revolutionaries to take action. Although no
clue to the direction of such an attack can be found in the
present grouping of forces in Guatemala, the most likely
targets of the Caribbean Legion are: (1) the Panamanian
Government, against which the Legion might act in collabora-
tion with Arias partisans who seek to overthrow the Diaz
government; (2) the Somoza regime in Nicaragua; and (3) the
Truji.U.o government in the Dominican Republic. The Carib-
bean Legion is litely, as cover for its real attack, to engage
In preliminary feints and maneuvers intended to confuse ob-
servers. &mew r, an outbreak of fighting in the Caribbean
area ? regardle:is of its immediate point of focus -- would
aggravate the co mplex governmental interrelationships and
could result in c ansiderable bloodshed and a widespread break-
down of hemispteric solidarity.
ARGENTINA
Improved Stability The recently concluded Argentine-British
trade agreement will have a short-term
stabilizing influence, on the Peron regime and may pave the
way for the substamial expansion of foreign trade essential to
the Government's stability. Army discontent will lessen in
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111 ARGENTINA
proportion to the extent towhich the agreement and current
trade discussions with the US relieve Argentina's economic
plight. The Cabinet group, which favors a program of inter-
national cooperation as the best means of restoring economic
stability, is temporarily in the ascendancy over the nationalist
obstructionists. Moreover, the Government will be able par-
tially to refute nationalist objections to the British agreement
by claiming that Argentine interests are not being sacrificed
In view of the higher price being paid by the UK for Argentine
meat. The Government, however, is still beset with labor tin-
iest, army dissension, and nationalist obstructionism, and it
Is still not certain whether the administration can withstand
domestic pressure during the considerable period before an
improvement in the Argentine economy is realized.
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DITERNATIONA L LABOR DEVELOPMENTS
The struggle between East and West for control ni
labor will be highlighted at the WYTI., Congress in Milan on
28 Tune and at the Genet Conference of Free ?Teade Unions 07,
26 bine, Although the alignment of certain left -wing unlotes le
the West is still in doube the trend toward the division of orgae-
tied world iebor into Commeeist and non-Communtst camps
will be accelerated as a reeult et these two meet ims,
Indleating the substantial influence of the WFTU
tn areas outside the Soviet orbit, left-wIng tritons la Canada;
A weernote , the UK,: and the US recently repodlate0 the deeistoee
of their national organieatione to withdraw from the WFTU. The
extent of this revolt, however, will depend primarily on wbat
dieciplinary tion the erareot national organizations in these
countrteewifl tra'ee againet their recalcitrant unions and oe
whether these left-wingers will be willing to face expulsion
for failure to comply wffl the decision to leave the oirru
if any of these lett -wing unions participate in the Milan Con on.
gress, along with Western European labor federations sun
tinder Communist domination (the French CGT, the Italian CGU. ,
and the Dutch EVi."., the WFTU would continue to exert a set38een.
tial Influence outside the Soviet orbit.
Meanwhile, non .e.'%eremunist labor leaders are malting
progress toward the establishment of a democratic labor inlet -
national.. The recently otge.nized moderate leftist and Christ:eh
Democratic labor federatioes in Italy have decided to pa. Mc ko
In the Geneva meetings'; the national Swedish labor organizatien
will withdraw from Wril, prior to the Milan Congress; and tee
Swiss labor movement es refetreedly determined to resign frore
the WFTU and to partici tri In the Geneva conference. Thus,
Finland and Israel will be the only countries with noneComme
ntst national labor federations represented at the WFTU Congeoss
Ilietadrutie tsrael's government-controlled labor organization,
however, heti temporarily siviestepped the baste problem of
Fast-West alignment by deciding to seed representatives to
both Geneva and Milan with instructions to plead for unity ot
international labor.
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SECRET
DISTRD3UTION
I 1
2,64 The President
Secretary of State
3,4 Secretary of Defense
I 5
Secretary of the Army
a
Secretary of the Navy
7 Secretary of the Air Force
I 8,70
Chairman, National Security Resources Board
9,71
Executive Secretary, National Security Council
I 10
Assistant Secretary of the Navy for Air
11,89
Chief of Staff, U.S.Army
12,13,14 Chief of Naval Operations
I 15,10,17
18 Chief of Staff, U.S. Air Force
Director of Plans and Operations,General Staff,U.S.Army
19 Deputy Chief of Staff (Operations) U.S. Air Force
I 20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, U.S. Air Force
I 22,23,24 Special Assistant to Secretary of State for Research
and Intelligence
25,26,27,28,29, Director of Intelligence, General Staff, U.S. Army
I30,31,32,33,34.
35,36,37,38,39, Chief of Naval Intelligence
I 45,40,41,42,43,44.
46,47,48,49. Director of Intelligence, U.S. Air Force
50 Director of Security and Intelligence,Atomic Energy Comm.
I 51. . . . Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. Chief, Acquisition & Distribution Division,OCD,Dept.State
I 57
58 Director, Federal Bureau of Investigation
Secretary, joint Chiefs of Staff
I 59
60 Chief, Policy Planning Staff, Department of State
Secretary of State (Attention: Chief, Policy Reports Staff)
61 Deputy Director, Joint Intelligence Group, Joint Staff
I 62,63
65 Secretary, Joint Intelligence Group, joint Staff
US Air Force Representative on joint Strategic
I
Survey Committee
66,87
68 Secretary, State-Army-Navy-Air Coordinating Committee
Administrator, Economic Cooperation Administration
SECRET
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Document No. 00/,
NO CaANGE in Class. 0
20DECLASSIFTED
Class. C 1"_D TO: TS S C
DA r 4 Apr 77
Auth: Dk. 77/1763
Dat.z t?-?2.--? 7 II By;.t3
-: ?
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"-"
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U. S. GOVERNMENT PRINTING OFFICE
2631-13--1848
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