WESTERN REARMAMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002400100001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 17
• Document Creation Date: December 23, 2016
• Document Release Date: May 21, 2013
• Sequence Number: 1
• Publication Date: October 6, 1950
• Content Type: REPORT

OCT 1959'
&J$ 123
HIGHLIGHTS ................. Page
.......... 1
WESTERN REARMAMENT, . , 2
KOREA AND SOVIET POLICY
Over-all Soviet Policy, , . . . . . . . , . . 5
Korean Settlement Possibilities..... ... , . 5
North Korean Military Tactics , 7 .6 -
North Korean Military Capabilities .......... 6
Foreign Policy,,;,,,,, i,,
Land Reform ,,,,,,, 8
Outer Provinces 9
LOCAL DEVELOPMENTS
East German-Balkan Pacts ......... 11
Aaland Island Autonomy Bill .......... 11
North African Anti-West I. , ......... 12
Commonwealth Aid to Southeast Asia......... 13
Austrian Labor Disturbances .............. 14
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ARCHIVAL RECORD
PLEASE RETURN TO
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 The' continued failure of the. USSR to react violently
to the prompt and vigorous UN endorsement of the Western
position on Korea further lessens the possibility that the
USSR or the Chinese Communists Swill intervene militarily
to prevent the UN occupation of North Korea. The Kremlin
will probably view the Korean failure as a temporary set-
back to its long-range expansionist plans but not one so
damaging as to require an immediate change in the tactics
it has been pursuing since the end of World War R (see page 5).
Meanwhile, North Korean actions indicate a determination to
prolong the. fighting as long as possible (see page 6).
With further NAT conferences scheduled for late
October to discuss Western European rearmament plans,
the French attitude toward *Germany has` once again be-
come a key question, largely because of the strong senti-
ment in other NAT countries for German participation in a
European army and a more aggressive German attitude not
only in dealing with the occupation powers but in the crucial
Schuman Plan negotiations ( see page 2).
In the Far East, Chinese Communist Foreign Minister
ChouEn-lai's recent speech, while threatening in tone, in it-
self portends' no major change in Peiping's foreign policy (see
page 8). Meanwhile, the Peiping regime was preoccupied with
the difficult problems of instituting an extensive land reform .
program in South-Central and East China (see page 8) and in: consolidating its control over the border regions of Sinkiang
and Inner Mongolia (see page 9).
MMW
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 WESTERN'REARMAMENT
French Role The French attitude toward Germany has once
again become a critical factor influencing the
course of negotiations on the strengthening of Western Europe's
defense system. Although French fear of a revival of German
militarism has had a strong influence on Franco-German re-
lations over the past few years, this question has now assumed
greater urgency largely because of the growing sentiment in the
other NAT countries for German participation in a European
army and a more aggressive German attitude not only in dealing
with the "occupation powers but in the crucial Schuman Plan
negotiations. The impact of these new developments affecting
Franco-German relations will become apparent when the French
Parliament convenes on 17 October and discusses the European
rearmament question and when the Military and Defense Com-
mittees of the NATO meet in Washington later in the month.
Greater Urgency The Korean war has provided a strong
impetus for speeding Western rearma-
ment and much real progress was made at the recent conferences
in New York. All the NAT nations except France have agreed,
at least in principle, to German participation in an integrated
Western European defense force. The British. particularly are
anxious to reach an early decision on the use of German forces
so that detailed planning for the new defense force can begin as
soon as possible. The French Government, however, although
actually taking the lead in proposing a truly unified defense effort
and sensing equally strongly the threat of Soviet aggression, does
not yet feel that. it can take the political risk of agreeing to such
a radical departure in its past policy, which has concentrated on
preventing a renewal of German aggression. On the other hand,
French opposition is weakening, in part because France, for
reasons of prestige, cannot afford to be the sole dissenter to an
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otherwise unanimous agreement to incorporate German con-
tingents in' the proposed European-defense force, and in part
because the French themselves realize that such German
participation is essential-to an adequate defense of Europe.-
The French are thus more concerned with timing than matters
of principle, and they are already showing signs of eventual
willingness to acquiesce, with appropriate safeguards, in the
use of German troops.
German Attitude Meanwhile, the recent decisions at New
York by the NAT Council and the Big
Three Foreign Ministers may have an important bearing on
the timing and nature of the French decision on the rearma-
ment question. Popular sentiment in Germany in regard to
participation in the Western defense effort is still in flux, but
the government at least sees in remilitarization a means of
strengthening its international prestige and gaining greater
sovereignty. Moreover, the proposed revision of the occupation
statute is expected to lead the Bonn Government to take a much
stronger and less deferential stand in its dealings with the occupa-
tion powers. In expectation. that the West German. economy will
become more and more essential to the West European defense
effort, Germans will become less cooperative in international
undertakings and display a more aggressive spirit toward matters
of common European interest. This new German attitude is al-
ready apparent in. the negotiations for the Schuman Plan. The
Germans are increasingly reluctant to make national sacrifices,
apparently confident that growing sentiment in the West for the
full use of German military resources will enable them to gain
an influential international position with lighter sacrifices of
national interest than the Schuman. Plan would involve.
.French Reaction This German attitude, while, increasing Western
European fears about the advisability of grant-
ing a more -independent role to West Germany,. Is particularly dis-
turbing to the French. Its most immediate effect on. the French is
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to strengthen French determination to insure effective inter-
national controls over Germany's war-making potential. For
instance, the French have made it clear that agreement on
the Schuman Plan. must precede agreement on the use of German
manpower in the proposed European army, even to the point
of being willing to accept a considerably watered=down version
of the original proposal for a truly supra-national body.. In-
creased German aggressiveness will lead the French to press for
additional safeguards on Germany's military potential, such as
development of a strong NAT army, a large NAT stockpile of arms,
and a firmly integrated command structure, prior to organizing
and training any German units: The French will also seek guar-
antees of substantial US military aid as well as positive safeguards
against eventual German predominance in an integrated Western
force. On balance, full French agreement to the use. of German
manpower and industrial forces will therefore depend on two factors:
(1) the extent to which the other NAT nations will be willing to sacri-
fice national interests to meet French demands for a truly inter-
national defense system capable of controlling German military
C ambitions; and (2) German cooperation and willingness to accept
controls imposed by the occupation powers and to make concessions
necessary for agreement on the Schuman Plan.
4-
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KOREA AND SOVIET POLICY
Over-all Soviet: Policy The loss of North Korea and the
defeat of the North Korean. Com-
munist regime are not likely to produce any immediate or
drastic Soviet reaction. The Kremlin will probably view the
Korean. failure as, a temporary setback to its long-range ex-
pansionist plans, but not one so damaging to the over-all
Soviet'position. at home or abroad as to require an immediate
change in the tactics it has been, pursuing since the end of
'World War II. In the immediate post-Korea period, the
Kremlin will be most 'concerned with the effect the Korean
invasion has had in: (1) uniting the non-Communist world
against Communist aggression and stimulating Western re-
armament; (2) revealing to the Satellites and Communtst
Parties Soviet fallibility and failure to rescue one of its
Satellites; (3)'weakening Communist promises of early sue
cess for Communist-led colonial-liberation movements;. and
(4) demonstrating that Soviet`power and influence in Asia will
not go unchallenged by the West. The USSR will probably be
reluctant'to attempt another Korean-type venture in the near
future, fearing either failure and'thus even greater disadvan-
tages than. grew out of 'the Korean invasion, or the necessity to
use Soviet troops to achieve success, thus increasing the risk
of general war. The-USSR will therefore attempt to minimize
the UN victory while continuing-and intensifying its support.for
subversive and guerrilla operations by local Communists, especi-
ally in Indochina, and the current "peace" propaganda campaign
will be pressed with renewed vigor.
Korean Settlement Meanwhile, in Korea itself, the possibility
continues to diminish that the" USSR or` 'the
Chinese Communists will intervene militarily to prevent the UN
occupation of North Korea. Soviet propaganda and diplomatic
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activity of recent weeks suggest that the USSR has, tempo-
rarily at least, written off Korea. Continued Chinese Com-
munist threats (made through the Indian Ambassador at
Peiping) to intervene if US troops cross the 38th Parallel
are believed to be primarily a last-ditch attempt to in-
timidate the US from taking such a step. In the interim,
the USSR will use its rapidly diminishing opportunities for
obstructing UN action in Korea, but probably will make no
serious effort to reach agreement with the Western Powers.
Realizing that military developments have destroyed any
favorable bargaining position which either the USSR or North
Korea once possessed, the Kremlin will probably not counten-
ance a North Korean peace bid and instead will attempt to make
the UN victory as costly as possible.
Military Tactics The general propaganda line and the mili:-
tary tactics currently being employed by
the North Korean regime indicate that the North Koreans are
? placing little faith in the possibility of a UN agreement satis-
factory to them. The deliberate slaughter of South Korean
civilian prisoners by retreating Communist forces, continued
exhortations for a supreme effort to expel foreign troops, and
evidence of plans for prolonged resistance all point to the im-
probability of an early surrender. Thus, barring the unlikely
intervention of foreign troops, the North Korean regime will
probably prolong the struggle to the bitter end, inflict the
maximum damage on the country in order to confront a UN-
sponsored government with staggering reconstruction problems,
and then retire to a safe haven in Manchuria to direct continued
guerrilla and subversive activity against the new regime.
Military Capabilities ' Lack of trained manpower, a major
contributor to the North Korean defeat
in the south, will probably prove equally disastrous north of the
38th Parallel and is a weakness that could only be cured by time.
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Although North Korea may be able to form ten or more
fully equipped divisions within the next month from. training
camps and remnants from the south, these units would be
poorly trained and not highly effective in combat. The initial
major defense effort by elements of these hastily organized
North Korean forces, will probably be encountered as UN
-forces advance along the Korean- west coast toward the capital
city of Pyongyang and the central Chorwon corridor. Although
North Korean forces will be incapable of maintaining large-
scale organized resistance for long, the terrain in most of
North Korea favors small defensive forces and guerrilla acti-
vity and will enable remnants of the North Koreans to put up
stubborn resistance and inflict severe damage on the country=
side as they retreat.
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CHINESE COMMUNIST PROBLEMS
'Foreign Policy Foreign Minister Chou En.-'tai's recent
lengthy review of Communist China's for-
eign policy contains no new assertions or accusations and
none of: the. guarded threats is sufficiently strong to indicate
any major change in. Peiping's foreign-policy. The statement
that US "intervention" :in China will -be repelled Is an idle
one, as.-the promise to:liberateTaiwan specified no time
limit; and the intention to liberate, Tibet; preferably through
negotiation, but if necessary by force of arms, has. been-ex!"
pressed-before. The'Foreign Minister's 'remarks regarding
diplomatic relations with Western countries,' relations with
the' USSR; and the hostile attitude of the US' have been uttered
many.times in the past. Those. parts of Chou's speech which
have been interpreted as indicating -a Chinese Communist
intent, to occupy North Korea or invade Indochina are in.fact
estimated to. indicate less drastic actions. The statement
that the Korean Communists can' "obtain final victory"
through, "persistent, long-term:'resistance" probably implies
extensive Chinese support of North Korean guerrillas and
sanctuary for North Korean, leaders. However, the intimation
:that. Communist China. is-now prepared to rush to its neighbor's
assistance was probably an attempt to bluff the UN into not
crossing the 38th Parallel, rather than a forewarning of
.Chinese intervention. Finally, Chou's remarks on the UN
suggested Peiping's interest in participating in any UN settle-
ment of the Korean question. .4
Land Reform Neither the'Chinese Communist Government nor
the people seem adequately prepared for the land'
reform which is scheduled.to be instituted this winter in. the newly
."liberatedareas of South and East China comprising nearly
100 million persons. The regime may.thus find that any political
advantages accruing from. land reform are more than offset by..
its unfavorable effects on.both agricultural production and on the
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regime's prestige and.popularity. Implementation of the pro-
gram will be entrusted to land reform committees which are
expected to be understaffed and will probably be unable to solve
such complex technical questions as land survey and classification.
of peasants according to their wealth. Meanwhile, the bulk of
the peasantry is apparently unaware of the full. implications of
the contemplated reform and regards the whole program with
suspicion. There have been frequent reports of landlord "sab-
otage," such as the selling of movable property and trees in
.order to reduce anticipated. losses. Many peasants have been
unwilling to buy seeds and fertilizer and to start fall planting
as long. as the future of their ownership is in. doubt.
Outer. Provinces The Peiping regime is currently engaged
in a concerted effort to consolidate its
control over Inner Mongolia and Sinkiang, where the predom-
inantly non-Chinese population. has long regarded the Chinese
with suspicion and hatred and where sentiment has been strong
for administrative ties with Moscow rather than Peiping. In
addition to making various administrative changes designed to
favor pro-Chinese elements in Inner Mongolia, Peiping is
attempting to control. colonial exploitation of Mongols by
Chinese traders, has relaxed restrictions on the activities
of Catholic missionaries in Mongolia, and has instituted daily
broadcasts in Mongolian. In Sinkiang, the Peiping regime
is confronted not only with the long-standing,hostility of an
.isolated,. non-Chinese population but with the task of eradi-
cating the influence of the Soviet-supported Ili government
'which was dissolved. in. late 1949 when the Chinese Communists
took over the entire province. To counteract these influences,
Peiping has instituted.a widespread cadre-training program,
designed primarily to develop a. body of native officials .for '
working-level administrative cooperation with the Chinese
Communist Party. As yet the success of this program has
been.very limited. In the former Ili area, a disproportionately
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small number of students has been recruited, and Communist
officials have-complained of "inadequate unanimity in the
ideological trends and working attitude of the cadres of the
Government of all the zones.'
In the attempt to consolidate its control over Inner
Mongolia and Sinkiang, the Peiping regime faces not-only a
serious problem in. the internal administration of minority
populations but also the possibility of conflict with the USSR,
particularly over the status of Inner Mongolia, for its annex-
ation by -satellite Outer Mongolia has long been-an objective
of Soviet policy. There is small chance, however, that this
conflict by itself will seriously disturb relations between
.Peiping and Moscow.
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Balkan Pacts The signing by East Germany of political.
and economic pacts with Bulgaria and
Rumania is another step in the formal integration of the
Soviet Zone of Germany within the Soviet bloc; similar pacts
were signed in June with Poland, Czechoslovakia, and Hungary.
Published statements do not indicate a significant increase in
the flow of commerce between East Germany and the Balkan
area Satellites, but they do stress the expansion of technological
developments in the latter countries to be effected through aid
rendered by East Germany. East Germany is experiencing great
difficulty in meeting Soviet reparations delivery schedules and
is therefore hardly in a position to supply more goods to the
Balkans, unless some Soviet reparations goods are delivered to
the Satellites or the reparations required by the USSR are re-
duced. Mutual military assistance pacts are not mentioned in
the agreements.
Aaland Islands The Soviet protest against the Aaland Island
autonomy bill now before the Finnish Diet
will probably cause the Finnish Government to shelve the bill,
despite the fact that such action would alienate the Swedish
People's Party, whose political support is essential to' the govern-
ment. The autonomy bill would incorporate an article, now of purely
theoretical significance, of the Aaland Guarantee Law of 1921 which
provides that in the event the Aaland Diet presents complaints or
 remarks regarding implementation of the provisions of
the law, such remarks, with those of the Finnish Cabinet,
would be forwarded to the League of Nations Council, which
organization would insure proper observance of the law.
The Aaland Islanders, represented in the Finnish Diet by
the Swedish People's Party, insist that this international
guarantee be preserved. The Soviet Union objects to this
article on the grounds that it does not conform with the
armistice and peace treaty provisions "`guaranteeing com-
plete Finnish sovereignty over the Aaland Islands." Soviet
interest in the islands stems from their strategic location
at the mouth of the Gulf of Finland, controlling the sea-route
from Leningrad through the Gulf to the Baltic Sea, and from the
fact that the islands will not be militarized as long as Finland
maintains sovereignty over them. Past actions of the Finnish
Government suggest that it will in this case seek Soviet favor
rather than risk any possible consequences of Soviet wrath.
Anti-Western Sentiment Growing North African disillusion-
ment over the prospect,of attaining
eventual independence is reflected in the attitude of the Istiglal
(Moroccan nationalist) Party and in an increase in native tension
in past months. Although the Istiqlal Party continues to be de-
dicated to a policy of achieving independence peacefully, it
might seriously challenge French hegemony in the area if given
the means and opportunity for action. In a recently-issued
mews bulletin, the Istiglal Party identifies Morocco
with the Moslem world and the East, and implies that the Moslems
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would oppose the use of North Africa as a base by the
'Western Powers in the event France were again overrun
by a hostile power. French authorities will undoubtedly
attempt to suppress the bulletin, and will further tighten
restrictions on native activities.
Commonwealth Aid The emphasis in plans for Common-
wealth economic aid to Southeast Asia
now seems to have been shifted in large part to assistance for
the South Asian parts of the Commonwealth itself; and the
financial scope of the plans has been greatly enlarged. The
draft report. of Commonwealth technical experts sets up the
figure of over a billion pounds. as the external aid require-
ments for a six-year economic development program for these
areas, with India accounting for nearly 80 percent and the balance
allocated among Pakistan, Ceylon, and colonial Malaya and Borneo;
each country would also be expected to raise an equal or greater
amount by internal financing. The plan does not discuss how funds
are to be raised to meet these requirements but plainly implies
that the US is the only practicable source for most of the external
assistance. The presentation of this report to the Conference
meeting in. London apparently means the emergence of a new
British tactic, if not a new policy on this question. The UK pre-
viously opposed setting up a comprehensive aid program on the
grounds that the cost would exceed Commonwealth capabilities
and might raise false hopes in. Southeast Asia, complicating the
already. difficult political. situation in. the region. With the Com-
monwealth determined to have an aid program, the independent
:Southeast Asian nations not overly interested in one under
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Commonwealth auspices, and US economic aid essential
to almost any such scheme, however, the UK has apparently
now decided'to draw up a generous program, pointing it -
where it will do the. most good politically and strategically
to India, the main non-Communist state in Asia. The British
probably feel there will be a net gain for Commonwealth pres-
tige if the UK can. put a Commonwealth trademark on, a develop-
ment plan which the US subsequently adopts in part and under
some other name.
a
Labor Di.sturbances The recent Communist-inspired strikes
and demonstrations, which, in the initial
stages, were joined by some rank-and-file Socialists, neither
reflect an increase in the strength . and influence of the small
Austrian Communist Party nor portend a radical change in
Soviet tactics in Austria. In. this instance, the Communists
were able to achieve some success because: (1) they were
exploiting a legitimate economic grievance (the new wage-price
agreement) felt by all labor groups; (2) the Socialist Party leader-
ship initially underestimated the extent of rank-and-file dissatis=
faction with the agreement; and (3) the Austrian Police and Govern-
ment, as well as the trade union leaders, were taken by surprise
and had not anticipated an all-out Communist effort with limited
overt support by the USSR. In. Initiating and supporting the
disturbances, the USSR probably hoped to probe the ability of
the Austrian Government to control labor's actions, intensify
the campaign to undermine. Socialist control of labor, and test
the action capabilities of the Communist Party. Labor's dis-
satisfaction with. the wage-price agreement will probably continue,
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but, the Communist Party is not likely to make any sub-
stantial inroads on Socialist control of labor unless labor's
economic position deteriorates appreciably during the com-
ing winter. In such an event, Soviet 'actions :during the re-
cent disturbances jiidicate that the USSR would be more willing
than previously to lend open, support to Communist efforts.-to
'exploit economic grievances.
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DISTRIBUTION
Document No.
The President
Secretary of State
Secretary of Defense
Secretary of the Army
1: ....
2,3,4, 5 :... .
6,7,8. ..
00)
NO CHANGE in Class.
DECLASSIFIED
1 s. C:IANNGED TO:
DDA Memo, 4 Apr 77
Auth: DDA REG. 7711763
4 sy; 0213
11..... Secretary of the Air Force
12.......... Special Assistant to the President, W. A. Harriman
.13.,14,15..... Chairman, National Security Resources Board
16,17... , .. , Executive Secretary to the National Security Council
18... . ..... Assistant Secretary of the Navy for Air
19.......... Secretary, Joint Chiefs of Staff
20:........ Chairman, Joint Chiefs of Staff
21,22....... Chief of Staff, US Army
23,24,25..... Chief of Naval Operations
26,27,28..... Chief of Staff, US Air Force
29......... Assistant Chief of Staff, G-3, Operations, US Army
30......... Deputy Chief of Staff (Operations), U5 Air Force
31......... Deputy Chief of Naval Operations (Operations)
32......... Director of Plans and Operations, US Air Force
33,34,35..... Special Assistant, Intelligence, Department of State
36,37,38,39,40,41,
42,43,44,45. Assistant Chief of Staff, G-2, Intelligence, US Army
46p47148,49250)51
52,53,54,55,56,
57,58,59,60. Director of Naval Intelligence
61,62,63,64,65,66,
67,68,69... Director of Intelligence, Headquarters, US Air Force
70.......... Director of Intelligence, Atomic Energy Commission
71......... Executive Secretary, Military Liaison Committee,
83,84,85... Chief, Acquisition and Distribution Div., OCD, State
86......... Chief, Policy Planning Staff, Department of State
87.......... US Air Force Representative on Joint Strategic Survey
Committee
88......... Director, Federal Bureau of investigation
89......... Administrator, Economic Cooperation Administration
90......... Deputy Director for Intelligence, The Joint Staff
91,92....... Secretary, Joint Intelligence Group, Joint Staff
93,94,95..... Director, Armed Forces Security Agency
72)73)74j75;76,77,
78,79,80,81,82,
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