CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000100010001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 15, 2016
• Document Release Date: March 10, 2003
• Sequence Number: 1
• Publication Date: June 5, 1953
• Content Type: REPORT

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ONEI TIAL
OCI NO.4523
5 June 1953
CURRENT
INTELLIGENCE
WEEKLY
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CENTRAL INTELLIGENCE AGENCY
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STATE review(s) completed.
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DE GASPERI'S PROSPECTS ON THE EVE OF THE 7 JUNE ELECTIONS
. . . . . Page 7
Despite serious threats from the Nenni Socialists and
the Monarchists, Premier de Gasperi's center electoral bloc
is still expected to win the 7 June elections by a slim
majority. (SEE CHART)
SOVIET BLOC TRADE OVERTURES ENDANGER WESTERN EXPORT CONTROLS
Page 10
New Soviet trade overtures have produced no significant
changes in the East-West trading pattern, but they appar-
ently will lead to some expansion and have already rein-
forced the insistence of the European COCOM members on
exceptions to strategic controls.
The. survival of Japan's new minority government
depends on the ability of Premier Yoshida and his Liberal
Party to gain the continuing cooperation of the Progres-
sives, but its prospects are not good.
Philippine President Quirino apparently intends to obtain
re-election next November by any means. The reaction to
a fraudulent Liberal victory is Much more likely to be vio-
lent than was the case four years ago.
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1IIF IDENT IAL
This is the first issue of a new publication of the
Office of Current Intelligence. The CURRENT INTELLIGENCE
WEEKLY will appear every Friday, and analyze political,
economic, and military development:; in greater detail and
from a longer range viewpoint than is possible in a daily
publication.
Distribution will be approximELtely the same as for the
DAILY DIGEST. Requests for additions to the distribution
list should be addressed to the Office of Current Intelligence.
SE cI'E :r
HTIAL
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Continued accession by the Congress Party and the
Indian government to'increasing demands for separate
linguistic states could lead to a. serious weakening or
breakdown of India's system of strong federal government. 25X6
(SEE MAP)
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THE SOVIET WORLD-
The Soviet decision to appoint a civilian high com-
missioner for Germany in place of the former Control Commission
under General Chuikov is an administrative change not in it-
self indicative of a major policy shifts The move, which
de-emphasizes the authority of the military, corresponds to
a similar one by the Western powers in 1949 but indicates no
diminution of Soviet control. It may be intended to appeal
to East and West German public opinion, and to hint at the
possibility of future negotiations on Germany, thus-giving
impetus to Western differences on the proper approach to the
German problem and general world issues.
In this connection, the first secretary of the Soviet
embassy in London told an American embassy officer that the
Austrian problem must be solved together with the German.
In an apparent effort to create the impression of.Soviet
willingness to negotiate, he expressed the belief that there
is no reason why Germany could not be unified after free
elections on a proportional basis, with the present Oder-
Neisse frontier maintained. His statement that Secretary
Dulles had overemphasized the Austrian treaty as evidence of
the USSR's peaceful intentions is another indication of the
Soviet aversion to any such test.
The Soviet diplomat echoed some recent remarks by
Vyshinsky when he stated the conviction that there would be
an armistice in Korea. He pointed out that the hostilities
had been a severe drain on the USSR and China as well as the
United States,
Moscow's propaganda output during the past week was
characterized by a complete lack of editorial exploitation
of outstanding international developments. No comment ac-
companied the publication of the Kremlin's decisions on
Austria and Germany, the factual summaries of Taft's and
Eisenhower's statements regarding the Korean situation, or
the Communist communiques on the Korean negotiations. Thus
Moscow avoided revelation of its future policy on these
issues, giving instead the impression of a wait-and-see
attitude toward Western development:;,
Concurring with the view of the American embassy in
Belgrade, Ambassador Bohlen in Moscow doubts that the USSR
now intends or is able to offer the Yugoslav leaders
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concessions important enough to entice them back into the
Orbit. Ostensibly conciliatory steps by the Kremlin have
been cancelled out by other developments. For instance, the
Yugoslav team in the European basketball championships in
Moscow was subjected to organized booing and hissing from
the audience. One man who shouted "Long live Yugoslavia!"
was immediately dragged out by the police. While appealing
to any Cominform sympathy still remaining in Yugoslavia,
the Kremlin apparently regards it as a practicing member of
the Western bloc and treats it accordingly.
Additional manifestations of the hardships of the
peoples of Eastern Europe have appeared in recent weeks.
The shortage and high price of food in both Hungary and
Rumania have become more serious. The disparity between low
wages and high food prices has forced numerous Budapest citi-
zens to pawn personal possessions,. Severe food shortages and
rising prices in Bucharest led to incidents among sullen
market place crowds and forced the government to ban purchase
of food in the city by peasants whose entire product had been
commandeered.
The drastic monetary reforms announced by the Czecho-
slovak government on 30 May reduce personal savings by over
80 percent and, through a preferential currency exchange
rate, will be used as a weapon against "kulaks," private em-
ployers and speculators. The same decree abolishes rationing
and establishes a new uniform price index in some cases
several times higher than previous prices for rationed goods.
Although wages are also increased, the reform will
probably have the net effect of considerably reducing real
income. The measure, which eliminates excess purchasing
power, is aimed at increasing labor productivity by forcing
the worker to rely solely on current income to meet his
daily expenses.
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DE GASPERI'S PROSPECTS ON THE EVE OF THE 7 JUN LECTIONS
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Despite serious threats from the Nenni Socialists and
the Monarchists, Premier de Gasperi's center electoral bloc
is still expected to win the 7 June elections by a slim
majority.
The American embassy foresees serious post-electoral
trouble for Premier de Gaspers in the Senate, however. If
the extreme right were to gain a near balance-of-power
position in this body, it would threaten both government
stability and Italy's commitment to cooperation in Western
defense.
The closing weeks of the Italian electoral campaign have
been marked by strong drives by the Nenni Socialists on the
left and the Monarchists on the right, and comparative apathy
on the part of center elements. Both political extremes have
been concentrating their invective on De Gasperi's Christian
Democrats, evidently hoping to cut into the center's strength
to an even greater extent than in the 1951-52 local elections
(see chart, p,9 )a... Both have been exploiting the government's
inability to achieve a Trieste settlement, its failure to
solve the country's economic problems, and the general un-
popularity of the new electoral law which gives a bonus of
lower house seats to the bloc winning even?a bare popular,
majority.
The most serious threat to De Gasperi from the left
springs from the Nenni Socialists, who are expected to im-
prove their own 1951-52 showings and ensure that the Social-
Communist alliance does not fall materially below the 35 per-
cent of the vote which it polled then.
De Gasperi's chief danger from the right comes from the
Monarchists, whose campaign has been even more effective than
that of their neo-Fascist allies. Much of the Monarchist
threat comes from the appeal to the 10,700,000 Italians who
in 1946 voted to retain the king'. This appeal is especially
strong in the south, where the monarchy has traditionally
been popular and where desperate poverty works against the
government's plea for united anti-Communist support.
None of the three minor democratic parties allied with
the Christian Democrats has drawn enthusiastic audiences. Of
the three, the Liberals, who are the least closely associated
with the present government, have shown the most strength
and have the best chance to gain. All three evidently hold
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to their electoral alliance with De Gasperi mainly from fear
of the Communists and neo-Fascists.
Public apathy has also disturbed top Christian Demo-
cratic leaders who have expressed fears of widespread
absenteeism at the polls. Recently, however, Luigi Gedda, the
authoritarian-minded leader of Catholic Action, who reported-
ly expects to exert a strong influence on a new Christian
Democratic government, has put the movement's civic committees
into vigorous action behind the Christian Democrats. The
clergy have also given considerable indirect support from
the pulpit.
Anticipation of a possible stalemate is suggested by the
guarded overtures from leaders in several parties for new
political alliances after the elections. Pietro Nenni an-
nounced that the Christian Democrats are a party with which
his Socialists could collaborate and reportedly has sent an
emissary to De Gasperi. Former Marshal Graziani, speaking for
the neo-Fascists, also publicly praised the Christian Demo-
cratic record. On the Christian Democrat side, the party
secretary has reportedly drawn up a plan for a post-election
alliance with the Monarchists -- a scheme favored also by
Geddao De Gasperi himself, however, has been carefully
neutral in his public utterances, and has concentrated in-
stead on holding together the shaky center coalition.
The American embassy's latest estimate
are popular ma ority for De Gasperi's bloc, with the new
electoral law then guaranteeing him easy control of the lower
house. Since this law does not apply to the Senate, however,
the Monarchists might still achieve something very close to a
balance-of-power position there.
The premier himself seems to recognize that this parlia-
mentary situation might confront him with the alternatives of
allying himself with the Monarchists at the cost of defections
by certain of his left and center supporters, or making a pact
with Nenni at the cost of grave conflict within the Christian
Democratic right wing.
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THE VOTING STRENGTH OF THE ITALIAN POLITICAL PARTIES
LIBERALS
REPUBLICANS ^ -------
ELECTORAL
BLOC
LEFTIST
ELECTORAL
BLOC
LOCAL ELECTIONS NATIONAL
1951-52 ELECTION
1948
POPULAR VOTE
CHAMBER OF DEPUTIES
574 SEATS
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SOVIET BLOC TRADE OVERTURES ENDANGER WESTERN
EXPORT CONTROLS
New Soviet trade overtures have produced no significant
changes in the East-West trading pattern, but they apparent-
ly will lead to some expansion and have already reinforced
the insistence of the European COCOM members on exceptions
to strategic controls.
The new approaches stand a good chance of success be-
cause of the climate of opinion in many Western countries. A
growing desire by both business groups and governments for
more trade with the Orbit has been evident since 1949, when
new markets for the recovering industries were seen to be es-
sential, and the prospective decline in dollar aid necessitated
a shift to non-dollar imports. Western European governments
fear that new tariff barriers will be raised by the United
States. The Soviet Union has been-exploiting this fear through
propaganda attacks on US "protectionist policy" and assertions
that Western European economic welfare is dependent on trade
with the bloc.
In the plenary session of the Geneva meeting of the
Economic Commission for Europe in mid-April, the speeches of
Soviet bloc delegates were very moderate in tone, departing
from the previous practice of attacking western export
controls and favoring expansion of East-West trade. The
Soviet delegate stated that a 15 to .20 percent increase in
Soviet exports to the West might be ;possible. He suggested
that grains, timber, coal, petroleum, manganese ore and
asbestos could be exchanged for such Western items as ships,
metals and industrial equipment. Most of these Western
products are subject to existing export controls.
Some 80 bilateral trade talks between Soviet bloc and
Western countries followed the Geneva plenary sessions and
a number of trade deals will probably result from these and
subsequent negotiations. In additions, Soviet bloc observers
at the mid-May meeting of the International Chamber of
Commerce in Vienna have reportedly been seeking unofficial
contacts with Western delegates in order to explore trade
possibilities.
The Orbit has adopted a more realistic attitude in its
attempts to include strategic items in trade agreements with
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Western Europe. In cases like Italy and Austria where its
bargaining position is very strong, it continues to insist
on large-scale deliveries of strategic goods. In renewal of
trade agreements with the Scandinavian countries, whose de-
pendence on Polish coal has decreased, it has modified its
demands.
Italy has been especially vulnerable to Soviet over-
tures in view of the coming election and the heavy pressure
of business groups. Recently, the Italian ambassador in
Moscow revealed to American officials that the USSR was
increasing pressure by belittling the importance of past
Italian exports and emphasizing his government's eagerness
for "serious and important" trade.
Some of the dangers to the West are already apparent in
connection with Italy's negotiations with Satellite coun-
tries. When Italy insisted in COCOM on shipping $1,000,000
worth of embargoed bearings to Czechoslovakia, only Belgium
upheld American protests. All COCOM countries except the
United States upheld an Italian proposal to lease 100 List I
tank cars to Rumania, allegedly for the transport of wine.
Shortly after the Geneva talks, the French Economic Af-
fairs Ministry predicted that they would lead to an expansion
of trade with the Orbit. Paris has recently resumed the
trade talks interrupted last summer. It insists on furnishing
the USSR 2,000 tons of lead as well as six cargo ships which
American officials definitely place in a restricted ocean
transport category. Moscow has offered to pay higher than ex-
isting world prices for these goods; France is attempting to
justify its position partly on the basis of the need to re-
duce its serious EPU deficit. In seeking to provide the
cargo ships, France is reversing its stand of last year in
COCOM when it opposed a Dutch request to deliver ships to the
USSR.
In the absence of diplomatic relations between Bonn and
Moscow, a semi-official West German trade organization sent
representatives to the Geneva talks, but has thus far de-
clined a Soviet invitation to bilateral talks in Moscow.
The Bonn government, moreover, has given categorical assur-
ances to American officials that it will not permit shipment
of strategic goods to the bloc.
Britain's long-professed support of expanded trade with
the Orbit in non-strategic items is unchanged. The Soviet
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trade delegation in London recently approached the British
Food Ministry and asked what quantities of wheat and coarse
grain it required, quoting prices and offering early delivery.
Last October the USSR was willing to make only a short-term
grain contract with Britain, probably because of a desire to
connect subsequent renewal of the contract with the licensing
of British rubber shipments.
Denmark, eager for non-dollar imports of feedgrains, is
negotiating an agreement which would double its trade with
the USSR. The only strategic item involved, however, is
refrigerator ships.
Soviet officials have indicated that they are prepared
to export any amount of wheat to India. Although this offer
has been greeted with some suspicion in view of' the limited
amounts the USSR has actually shipped in the past, the Indian
food minister plans to visit Moscow in July to discuss the
matter.
Politically the bloc is still using trade and trade
propaganda, but more skillfully than in the past, to under-
mine Western solidarity. Economically it seeks a limited
increase in trade to supplement bloc production of those
commodities still in limited supply and to raise its in-
dustrial production levels in the immediate future.
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The survival of Japan's new minority government depends on
the ability of Premier Yoshida and his Liberal Party to gain the
continuing cooperation of the Progressives. While these two
conservative groups have no serious differences on policy, they
are afflicted with personal animosities and individual power
struggles which work against an extended tenure for the present
government.
Progressive president Shigemitsu's pledge of constructive
opposition to the Liberals and cooperation with them on certain
matters of national interest marked the first break in the
opposition front which unseated the Yoshida regime and placed
non-Liberals in key Diet posts. If the subsequent Progressive
secession from the opposition and support of the Liberals in
the allocation of Lower House standing committee chairmanships
leads to continuing cooperation, the prospects for government
stability may improve.
The Yoshida government now faces crucial tests on the 1953-
54 national budget and the ratification of the United States-
Japan treaty
of
friendship, commerce and navigation. Later the
regime must
meet
the more hazardous problems of rearmament,
reparations,
the
revision of several occupation-sponsored
reforms, and
the
settlement of Japan's debt for aid during the
occupation. Should Yoshida fail to gain Progressive support,
he must compromise on these and other vital issues or risk
another no-confidence vote.
The Progressives' past anti-Yoshida tactics have been
based on political expediency. While their policies generally
are more conservative and nationalistic than those of the
Liberals, they do not preclude cooperation with the government
party or in themselves presage serious difficulties for
American policy.
The antipathy of all parties to another election gives
some hope that the Yoshida regime will survive long enough to
effect a rapprochement among the conservatives. There is
considerable pressure for unity from business interests and
from the public. The basic problem is whether the forces
working for conservative amalgamation will prove stronger
than the divisive personal rivalries among the right-wing
Japanese politicians.
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ELECTION YEAR PROSPECTS IN THE PHILIPPINES
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Manipulation of the Philippine Liberal Party convention on
24. May by President Quirino's supporters, who overrode a pro-
Romulo movement, is convincing evidence that the president
intends to obtain re-election next November by any means. The
reaction of both the public and other political groups to a
fraudulent Liberal victory is much more likely to be violent
than was the case four years ago.
The most unpredictable campaign is Quirino's
In the event of-his death, ice President Lopez, w o is currently
backing Romulo's candidacy, would become president and by virtue
of his office be in a strong position to name a new Liberal
candidate.
Carlos Romulo's newly-formed Democratic Party is not likely
to have a major effect on the campaign. It might draw some
financial support away from Ramon Magsaysay, the Nacionalista
candidate, and undoubtedly some votes from both Nacionalistas
and Liberals. Romulo has had no practical experience in Philip-
pine politics, however, and the organizational strength of the
Liberal leaders he has attracted does not compare with Quirino's.
It` is probable that as the election draws nearer, at least some,
if not all, of the new group's members will line up with the
Nacionalistas in supporting Magsaysay.
The principal. strength of Magsaysay lies in his popular
appeal. He has emerged as the one Filipino leader who appears
to represent a clean break with the reactionary and corrupt
politicians characteristic of both parties. He is relatively
inexperienced in politics, but the Iacionalista leaders who
chose him are seasoned politicians. They offer little more
hope for better government than the Liberals, but if Magsaysay
is able to establish himself as the leader of a winning party,
he might gradually supplant the old guard with younger, more
progressive men..
Quirino is unpopular and his party has been weakened to
some extent by Romulo's defection; he must, therefore, depend
heavily on arbitrary use of his executive power to win the
election. Through his control of provincial appointments,
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the use of government funds,
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e ver a neuvy vote.
Ten days before the convention, he reportedly said he would
win the nomination and the election and was prepared to use the
army if any serious dpposition arose. During the past few months,
he has reassigned a number of army and constabulary officers in
order to have his men stationed where they can watch the polls.
The president's brother, Antonio Quirino, has been in con-
tact with the Huk insurgents. His purpose is apparently to
arrange some sort of dramatic Huk surrender to regain the admini-
stration's popularity. There is danger in such a scheme, however.
During the past year political infiltration has been the major
element of Huk strategy and a deal with the government would
give them a unique opportunity. They are in an improved position
to capitalize on any outbreak accompanying the elections and on,
the intense political maneuvering between now and November.
Four years ago Quirino defeated Jose Laurel in an election
marked by extensive fraud and coercion. There was strong pub-
lic revulsion, and by 1951 the demand for a free election was
well enough organized to make a repeat performance impractical.
The Liberals were badly beaten in the relatively clean elections
that-year, but the presidency was not at stake.
The campaign and election this year provide a critical test
for democratic processes in the Philippines. The opposition
will almost certainly not accept quietly a fraudulent Liberal
victory. There is a possibility that Nacionalista leaders,
seeing the election stolen or about to be stolen, would ask
for some form of American intervention.
Magsaysay apparently has no intention or desire to lead a
rebellion or attempt a coup d'etat. Should he be cheated of
victory, however, a violent reaction is very likely-and he
could scarcely escape involvement in it. Bloodshed would be
a strong probability, particularly so since many army officers
remain loyal to Magsaysay.
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Recent public reversals of policy indicate that the Con-
gress Party and the Indian government are surrendering to
political pressure for revising state boundaries along lin-
guistic lines. Thus, the party and the government are admit-
ting defeat on a major point of national policy for the first
time since India became independent in 1947.
Further accession to the demands of linguistic groups
could lead to a serious weakening of India's federal govern-
ment, the destruction of national unity, and the rise of petty
states such as existed on the subcontinent prior to the arrival
of the British in the 17th century.
As a concession to nationalistic pride, the constitution
of India specifies that Hindi, a tongue spoken only in north
central India and by about a third of the total Indian popula-
tion, shall be the national language (see map, p. 18). The
constitution adds, however, that English shall continue to be
the official language of government for 15 years, unless
otherwise'decided by law. The right of individual states offi-
cially to adopt languages other than English and Hindi is also
recognized, provided that English or Hindi be used in inter-
state communications and in dealings with the national govern-
ment,
When India became independent in 1947, Prime Minister
Nehru and Congress Party leaders :Foresaw the difficulty of
teaching Hindi to 250,000,000 people to whom it was not native,
Therefore, while admitting the desirability of a native nation-
al language and acknowledging the wishes of minority groups to
continue speaking their mother tongues, they sought to dis-
courage any move that would complicate state and national ad-
ministration.
In the six years since independence, however, the pris-
tine spirit of optimism and national unity has diminished.
The Congress-controlled government has shown itself incapable
of rapidly solving the country's outstanding political and
economic problems. Dissatisfaction has increased, especially
over failure to raise the standard of living, and various
special-interest groups have arisen.
The most successful of these groups has been that demand-
ing a separate state of Andhra, to.include the Telugu-speaking
areas of Madras and Hyderabad states in south India. Heavily
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infiltrated by Communists, who are stronger here than in any
other part of India, and including dissident ex-Congress mem-
bers and Socialists, this group .has pressed its case with in-
creasing vigor. Finally, in the apparent hope of diminishing
or ending the agitation, Prime Minister Nehru announced on 10
December 1952 that he favored formation of an Andhra state,
including, however, only the Telugu-speaking portions of Madras.
On 16 December, demonstrations,, violence, sabotage, and
looting broke out in northern Madras following the death of a
man who had been fasting to force government action. On 19
December, seemingly if not actually influenced by the fierce-
ness of the rioting, Nehru announced, a firm decision to form
the new state, now set for 1 October 1953.
This step represented a major reversal of policy. Instead
of satisfying anyone, it immediately led to further agitation
for the inclusion of eastern Hyderabad in Andhra. It also en-
couraged other linguistic groups in Bombay, Rajasthan,
Saurashtra, and Madhya Pradesh states in south and central India
to step up their demands. A group of Sikhs, a north Indian
religious sect, called for a separate state in the Punjab.
Apparently acceding to this mounting pressure, the annual
meeting of the Congress Party on 18 January 1953 passed a reso-
lution approving linguistic states. On 17 May, the Congress
Party Working Committee went even further and resolved that
state languages must be encouraged, that the local tongue,
rather than Hindi, should be the medium of primary education,
and that Urdu, the national language of Pakistan, was one of
India's principal tongues and deserved due recognition.
This last resolution strongly suggests that the Congress
Party has acknowledged defeat in preventing the growth of
divisive linguistic tendencies. All signs point to the proba-
bility that these forces of separatism and provincialism are
growing stronger. If the central government cannot control them,
additional states will have to be established. This will lead
to further complex problems of organization, financing and ad-
ministration.
As a result, the strength of the federal government could
be seriously weakened, and India could degenerate into a group
of petty states devoid of any sense of national unity.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
5 JUNE 1953
10 JULY 1953
20 AUGUST 1954 - 12 MAY 1960
4 FEBRUARY 1955
10 FEBRUARY 1955
9 JUNE - 14 JULY 1955
26 JULY 1956 - DECEMBER 1962
CURRENT INTELLIGENCE WEEKLY
1st SPECIAL SUPPLEMENT
14 reports of CIWS DECLASSIFICATION ITEMS FOR RELEASE
CIW CEASES
CIWS BEGINS
CIWS SUMMIT SUPPLEMENT
(RELEASE SHEETS)
27 DECEMBER 1956 - DECEMBER 30, 1970
JANUARY 1963 - DECEMBER 31, 1970
15 MARCH 1963
22 MARCH 1963
22 MARCH 1963
OCI-CIWS RELEASES
1st SPECIAL REPORT
#0272/63 A & B
30 SEPTEMBER 1966 - 21 DECEMBER 1973 WS ANNOTATED COPIES
#030916,S)
2 JANUARY-1970 - 30 DECEMBER 1971
2 JANUARY 1970 - APRIL 1972
JULY - DECEMBER 1972
JANUARY - JUNE 1973
JUNE 1972 thru current -
WS MARKED
#0351/70
WS SUMMARY AND SPECIAL REPORTS
WS SUMMARY AND SPECIAL REPORTS
WS SOURCED
25X1
25X1
25X1
Approved For Release 2003/04/17 : CIA-RDP79-00927A000100010001-1