SUMMARIES OF TRENDS AND DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300030001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 1
• Publication Date: October 3, 1950
• Content Type: SUMMARY

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3 October 1950
SUMMkRIESo OF TRENDS AND DEVELOPMENTS
1. A;] thaugi then failure of Soviet ,2121ec ,vEs in Korea
is ix ob .h?Y-nmax ded b hl o Krem l.in as the vreatest setback
in_ito post-war R23 .cY.., t ? ?eat u -aril kE t there will be
a basicr chaml in TTTSSR fore ; 19), 1 c, or in the tactics of
the into rnra.tior>al Communis moveme n L Furthermore , the impact
of the Korean defeat probably will not threaten the stability
of the Soviet or Satellite, regimes.
(Page 4
EAS'T'ERN EUROPE
GENE,?,AI, ,..,.,_.,. _,,. .
2. The sivning,. in quick succession, of joint declara-
ti ons brEastern G~~xrn:any with fluff nrl:a anc 7man a is arot io
orms int ~;rat3 o ti-~o 'tie ;nova d one of ?~
otE p in the rapid
( ersn T w~tllan tlio ovi ~e n - u' lTw fie'r 'rTec aia a.ons on the
treaties ~str svatie~xnt;icl political interests and in-
dicate that the treaties will provide for the exchange of
foodstuffs in return for German technical assistance.
`Page 10
3. Detention in the American Zone of "Properly"
licensed strategic good trans2ti ng ens xcrman`r to ~I`unga.ry
and Th mania may mark a nrw trrncT _n E zs ="CAlc r ^i c e r sent
i tpor is of 1 of i countrie4 from r ;, te]'ri urope cons s largely
of essential strategic goods, Thus any extensive use of
this type of action could force a major re-adjustment in the
non-Orbit trade of both Hungary and Rumania. Hungary's con-
corn is evidenced by the pointed reference to forthcoming
trade negotiations with West Germany, which accompanied their
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formal. protest against the detention of the goods
CZECHOSLOVAKIA
4, Term of a Dr osodCzech-NorweRian trade pact
of nt, uD the d fficUlte in weigh zqg the? value ofE s t Wc;st
tr.c3.e, and demonstrate the subjective approach used by Cora-
munist'countries in non-Orbit trade, The Czechs are offer-
ing $3,000,000 worth of sugar in exchange for $1,000,000
worth of industrial raw rn.aterials, particularly fe rro-alloys,
aluminum, silicon carbide, and pyrites. Such an exchange
would follow the pattern of pxovious trade. Although none
of these proposed Norwegian exports are on the international
export control list, (several are embargoed by the U.S.) all
are in short supply in Czechoslovakia, and are essential to
the Czech economy.
PINIAND
5. No yottlemf nt of thy} strikes in Finland is rot in
,,lit despite a proposal by .theGovernment mediator. From
the point of view of the worker, the proposal is unrealistic
economically and could result in lower wages.
(Page U )
HUNGARY
6, A further step in the process of eliminating the
middle class t xou economic pressure is evidenced by the
iori rlinc'nt n_stopping payment of all
pensions to civil servants of pre-1945 regimes. Removal of
this last source of income for many families will further
deprive:, the middle class of its moans of livelihood, which has
already been affected by discriminatory taxes, nationalization
without compensation, expropriation of private property, and
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prohibitory employmont practices.
SPECIAL ARTICTE
a _the _ Polish merchant fleet formerly engP d iri rc; lzlar
sorvico to the lie stern, are being 'Placed in o ora-
tion on routes tothe_Middle East and lks: a~ There are indica-
tions that this trancfcor is closely related, to they formation
of the so-called "Comintern Shipping Company" and that its
significance, while tb some degree strategic and political, may
be largely econoraic 3
T rc swpons to better ,tr .do. o prtuni.tias ves-l
(Page 12 )
~..
"'V KATUMV
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U S S R
lznoactt ofKorean Setback on Soviet Pali=
Although the failure of Soviet objectives in Korea
is probably regarded by the Kremlin as the greatest setback
in its post-war policy, it appears unlikely that there will
be any basic change in USSR foreign policy or in the tactics
of the international Conariunist movement. F Zrthermore, the
impact of the Korean defeat will not threaten the stability
of Soviet or Satellite regimes.
It now appears that the USSR has written off Korea
and will make no direct effort militarily to preserve the in-
tegrity of North Korea, Diplomatically, the USSR will seek
to obstruct UN action but a serious Soviet effort to achieve
a settlement appears unlikely. The USSR apparently considers
that overt military intervention constitutes a greater risk
than it. is prepared to assume. While the USSR would still
welcome the reestablishment of the status quo, the rapid
successes of UN troops have destroyed any favorable bargain
ing position which either the USSR or the North Korean regime
once possessed, The USSR is apparently reconciled to a UN-
dictated settlement but intends to make the UN victory as
costly as possible.
In view of the Korean debacle, the USSR must be
seriously concerned overs (1) the united reaction of the
non-Communist world to Communist aggression in Korea and the,
rapid strides undertaken by the West to ream; (2) the pos-
sible repercussions within the Satellites and the Coramw.nist
movement to the revelation of the Kremlin r s fallibility and
the subsequent failure of the USSR to roscuee one of its
Satellites; (3) the setback to the Communist propaganda claim
of the early success of colonial liberation movements, 1ed by
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the Communist parties; (if) the demonstration by the West that
Soviet power and influence in Asia will not go unchallenged.
`.Co counteract these possible consequences$ the USSR
can be expected to exert additional efforts to minimize the UN
victory and to distract attention from its loss of Korea. While
the USSR may have planned the Korean aggression as the first
in a series of aggressive moves utilizing Satellite troops, the
unexpected world reaction to the Soviet-sponsored aggression
and the unwillingness of the USSR to commit its own troop, to
rescue the North Korean regime makes reasonably clear that the
Kre:rrnlin is unlikely to stage similar overt aggression in the
near future. Since Soviet strategy is notably long-range, the
Kremlin will probably regard this setback as only temporary
and not necessitating drastic counteraction, Any diversionary
moves, therefore, will consist of a continuation and possibly
intensification of current tactics. An effort is apparently
already underway to stop up the guerrilla warfaro in Indo-China
with increased covert assistance in military supplies and train-
ing from the Chinese Communists a The threat of a Communist
attempt to invade Formosa will be maintained and an intensifi-
cation of guerrilla activities in the Philippines and Malaya
may also be attempted. In Europe and the Near East, where
indigenous Communist forces are not capable of successful
guerrilla operations, or launching military attacks without
Soviet participation, Soviet diversions will probably take the
form of increased political agitation and harassing tactics,
with particular emphasis on increasing their covert capabili-
ties.
LORE,,Ai In Korea the USSR will probably continue its "non-
involvement" policy and the North Korean Army will continue
fighting until its organized, units have been totally defeated
in both North and South Korea, Guerrilla operations will
probably continue in Korea supported from Manchuria. The USSR
apparently intends to force UN troops to destroy an extensive
area of Korea, thereby facing the now UN-sponsored government
with tremendous problems of reconstruction and economic recovery.
The USSR will then maintain that the UN-sponsored government is a
US puppet without popular Korean support. The present North
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Korean government will probably be retained as a government-
in-exile charged with the responsibility for directing contin-
ued guerrilla warfare inside Korea and providing instructions
and directives to Korean Communists in their efforts to in-
filtrate and subvert the 'new government,
CHINA; The mistake of the USSR in underestimating world
reaction to North Korean aggression, coupled with present in--
effectiveness of Soviet policy in Korea may serve to emphasize,
to the Chinese Communists the blunder made by the USSR in
initiating hostilities in Korea, which in turn has apparently
postponed a Chinese Comunist invasion of Taiwan. There is no
evidence, however, that the Korean affair has occasioned
serious disagreements between the USSR and the Chinese Commun-
ists or that the Chinese Communi.sts are less willing to pursue
a policy for the communization of China along Soviet lines4 It
appears that Chinese Communist loaders,, have turned with renew-
ed effort to domestic issues, emphasizing the building of a
large standing army and a strong economy as the main task before
the Chinese people,
IND( CAIN. AND SOUTHEAST ASIA s As a result of its Korean
setback the USSR may be expected to increase pressure on Commun-
ist China to accelerate aid to the Viet Minh in Tndo China, but
short of overt Chinese intervention, In Hong Kong, the
Philippines, and other areas of Southeast Asia, the USSR may be
expected to create further internal unrest in an effort further
to counter the adverse results of its Korean venture,
MINs Soviet strategy towards Iran has been one of inter-
mittant pressure and conciliation, combined with aid and on-
couragement to local subversive groups, For the past several
months the USSR has been pursuing an official policy of con-
ciliation in order to promote pro-Soviet sentiment and intensify
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anti-western sentiment Simultaneously, however, the USSR. has
continued. its efforts to incite disaffected groups in Iran?
Although the USSR may revert to a policy of unfriendliness and
external pressures, western commitments in Iran and the inability
of local pro-Soviet groups to launch successful guerrilla war-
fare without overt Soviet assistance probably precludes any
basic change in Soviet tactics in Iran in the near future.
GREECE The Soviet setback in Korea will have little effect
on Soviet policy towards Greece Since the termination of the
guerrilla warfare a year ago, Soviet strategy vis-a-vis Greece
has aimed at strengthening the Communist Party by rebuilding
its underground apparatus and reestablishing a broad popular
support through the infiltration of leftist political parties,
labor unions, cultural organIzationsy and the Greek National
Army. Former ,guerrillas, after specialized training in the
northern Satellites, are being prepared to return in small
groups with instructions to help rebuild the KKE network in
Greece, In this manner the USSR probably hopes that the Corn-
munists may be able at some future date to seize power either
by revolutionary tactics or by a resumption of the guerrilla
war, if events in the Balkans make a renewal of such warfare
feasible:,
YUGQ VIA:, The Kremlin, as a result of the Korean debacle,
will be most unlikely to undertake military action against
Yugoslavia, However, Cominform-inspired internal pressures
against the Tito Governient, in conjunction with Yugoslaviais
developing economic crisis, are likely to increase. For the
present., the Kremlin may be content merely to continue its
propaganda warfare against the Tito Government, which is faced
with growing popular hostility as a result of food shortages
and a declining standard of living. Within the Yugoslav Com-
munist Party itself, an increase in popular antagonism and the
problems created by severe economic difficulties are likely
to develop differences of opinion and internal tensions. Those
could undermine the cohesiveness of the Party and especially
the lattergs confidence in Yugosl.aviats ability to "build
socialism" alone;,
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Although the Kremlin has so far given no sign of
intensifying its effort to exploit the current situation in
Yugoslavia, it is anticipated that, as tho full extent of the
crisis becomes known in Moscow, the USSR will step up its
efforts to infiltrate subversive agents into the country.
While carefully coordinated external pressures will also be
continued to maintain the "war of nerves'! against Tito, the
Kremlin may well estimate that deteriorating internal con-
ditions will serve in the long run to accomplish the weakening
and eventual overthrow of the Tito Government without the need
of risking involvement with the West through open aggression
against Yugoslavia,
WESTERN O.PE The loss of North Korea is not likely to
have any substantial effect on Soviet strategy in Western
Europe in the near future. In Germany, the USSR will continue
to,,, (1) consolidate Communist power in East German; (2)
strengthen the paramilitary forces, and (3) integrate East
Germany into the Satellite orbit, The USSR will continue its
harassing tactics in Berlin and West Germany. Although the
Kremlin will undoubtedly threaten to encroach on the sovereign-
ty of the Austrian Government from time to time, it will prob-
ably maintain the status quo in Austria, The French and
Italian Communist Parties, in order to retard economic recovery
and military production in the two countries, have begun a
campaign to increase their control of labor, The two parties
are stressing the exploitation of legitimate labor grievances
and are preparing for a series of fall strikes,
UN?s Through its return to the United Nations the Soviet
Union has indicated that it will attach even more importance to
its policy of obstruction and division. Having miscalculated
the unity and strength of UN reaction to the invasion of South
Korea, the Soviet Union will take care to be in a position to
block future UN actions. The USSR will oppose the US program
to strengthen UN capabilities for prompt, effective action
with charges of illegality and indirect threats of Soviet with-
drawal from the UN, The USSR is not likely to withdraw, however,
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since UN membership in any event still provides broad cap-
abilities for obstructing action inimical to Soviet interests
and important propaganda opportunities.
IN`1a,.NAL USSR.- The Korean setback will not cause any great
changes in the USSRts internal affairs, The Kremlin will try
to cover up by concentrating all propaganda media on Soviet
desires for peace. The newly announced, planned construction
of three gigantic dams for hydroelectric power will be pre-.
sented as evidence that of late the Politburo has 'been con-
cerned only with such peaceful objectives as the Soviet peoplets
welfare. Inasmuch as the USSRIs Korean policy was made on the
highest political level and the propaganda e .phasis was on the
Kremlin's disassociation with the affair., it is unlikely that
the failure will result in a serious personnel shakeup.
SOVIET PROPA,GANDA3 in order to explain the loss of North
Korea f the following, major propaganda lines will, probably be
exploited: (1) UN crossing of the 38th Parallel ttproves"
that American imperialists -- using South Korean stooges -
were the real aggressors in Korea. Soviet propagandists will
state that these American imperialist ambitions are "unlimited"
and are a particularly grave threat to the Chinese people; (2)
the "Peace Partisans Campaign tt will 'receive increasing emphasis,,
stressing particularly that the Soviet Union and the People's
Democracies =s t be strong in order to checkmate the "American
warmongers" and that greater efforts on the part of "progressive
forces" outside the Soviet orbit must be made; (3) in Western
Europe Soviet propaganda will intimate that war destruction
caused by American bombing in Korea is a fate which could easily
befall the Europeans.
INTERNATIONAL COMMUNIST ACTINS: The International Communist
movement is well inured to "minor" defeats such as were suffered
by the North Koreans, and probably will, not adopt different
tactics as .a, result of the defeat. While small--scale defections
among some Communists and fellow tro..vollers may occur as a
direct result of the Korean defeats these will not be sizeable
enough to affect appreciably Cor.>rnunist strength either naation-
all.y or internationally, (SECR'E'T)
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EASTERN EUROPE
GENE AL
Tnte,gU:Lion of East G rnan=r into Soviet Orbit
Aided by East Gorman Treaties with But ;ri and Runan a
The signing, in quick succession, of joint declara-
tions by Eastern Germany with Bulgaria and Rumania is another
stop in the rapid formal integration of the Soviet Zone of
Germany within the Soviet bloc. The treaties were concluded
during visits of high r?:nking East German officials to Bucharest
and Sofia during 20.25 September- and follow similar pacts in
June with Poland, Czechoslovakia, and Hungary.
The published declarations disclose that the treaties
are political and economic in nature. The political aspects
include the stated intention of the signatory powers tot (1)
cooperate to maintain the "independence, freedom and culture
of the respective countries against the imperialist powers-11
(2) prevent the remilitarization of Western Germany; (3) create
a united Germany; and (4) sign bilateral cultural. conventions.
Economically, the treaties provide the instruments.
whereby, in return for foodstuffs from the Balkans, the GDR will
aid in the development of the Rumanian and Bulgarian economies,,
The provisions call fort (1) A trade treaty between East
Germany and Rumania to be signed shortly. Under its terms,
Rumania wil1 deliver to the GDR moat, wheat, maize, fruit, sheep-
skins, special woods for musical instruments, and "other com--
rnoditie;s;'H (2) a convention on scientific and technical coopera-
tion providing for East Gorman assistance to the Rumanian Govern-
ment in the development of the chemical, soda, dyestuffs, and
metallurgical industries, and thc; mining of zinc, lead and tin;
(3) a special agreement on the financing of non-?coimiorcial
transactions which will afford an opportunity to arrange an ex-
change of delegations "from all sphere a of life;" and (4)
Bulgaria is to supply East Germany with pyrites, tobacco, grapes
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and apples; also, East Germany is to help Bulgaria with its
electrification program, the development of its pig iron pro-
duction,, and of a chemical industry.
Walter Ulbricht, loader of the East German delegation
has disclosed that the delegates encountered some difficulty in
negotiations on economic matters, Ulbricht stated that they
could not be solved "with one country but would have to be
clarified with the Soviet Union and the other People's Democra-
cies in the Council of Mutual Economic Aid," The admittance of
the GDR to CEMA,, gives a formal method for the solution of those
and similar problems.
Mutual military assistance pacts are not mentioned in
the agreements. The special agreement on the "financing of non-
commercial transactions," not connected with the technological,
scientific and cornorcial agreements, may be the Method by which
the two Balkan countries will-pay for East German military
materiel exports and,, perhaps, technical military assistance.
The published statements regarding the treaty do not
indicate any 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 the
GDR. Because the GDR is experiencing great difficulty in meet-
ing Soviet reparations delivery schedules,, it is hardly in a
position to supply more goods to the Balkans, unless some of
the Soviet reparations goods are delivered to the Southeastern
satcll..tes or the reparations required by the USSR, are reduced.
(RE TR ICTED
FINLAND
No settlement in sight, for. Finnish strikes
The Finnish Government mediator in the Metal. Workers
Union strike has submitted a proposal. which will probably be
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rejected by vote of the union members, The proposal is not
realistic from the workers I point of view and they fool that
it leaves the door open for employers to make future reductions
in the take-horme pay of the workers.
Aside from the political considerations which in part
motivated the strike, the primary economic issue has been the
establishment of a basic minimize hourly wage scale. It is on
this pay scale that extra allowances, such as cost of living
increases, piece work differentials, and others, are computed,,
The Govornra.e:nt mediator proposed the establishment of a basic
minimmi hourly wage of 95 Finnmarks, which would include in it
previously awarded allowances,
The average hourly wage of the metal workers is 120
Ia`innr~?z' s az'ding to union statistics, If the workers
accept !,he zxanmark proposal they suffer a decrease, in their
take-home ae.r Cm oo the employers would be computing the allow.
ances on a aaaller basic pey. The proposal contains no pro-
vision to prevent the employer from computing on this lesser
base pay.
It seems likely that there must be substantial wage
increases if there is to be a settlement of the strike. This
would be inflationary, and if put into effect would force the
Government to impose some form of partial price control.
(CONFID NTTAL)
SPECIAL ARTICLE
Po les
.~~d_ s~.~h_~? p_v to the Middle and Far East
ani in service. the n r East
A steady reduction, beginning over a year ago, in
Polish merchant marine service to the Western Hemisphere, has
been accompanied by a corresponding increase in Polish shipping
to the Middle and Far East. The most recent development along
this line is thy: reported complete withdrawal of Gdynia-
America Line vessels from regular South American service and
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their replacement by chartered vessels, This reorientation
of Polish shipping is probably associated with the formation
of the so-called "Comintern Shipping Company.."
At the beginning of 1949 seven Polish vessels operated
regularly to the Western Hemisphere and another was added in
March. By the middle of 1950 four of those vessels were trans-
ferred to other areas or sold to the USSR. They are now operat-
ing on routes to the Middle East and Asia. One of the three
other ships was last reported in the South American trade in
April, 1950 and is currently completing its initial voyage to
China while the; other two are at present en route from South
America, prior to their reported transfer to the Far Eastern
trade.
This transfer of Polish shipping from the Western
Hemisphere is believed to have been motivated primarily by
economic considerations. Basically, the Poles have not been
able to obtain trade agreements with South American countries
which are as satisfactory, in terms of commodities and prices,
as are the agreements which they and the Czechs have success-
fully concluded with India, Pakistan, and China, Furthers
shipping service, as such, now encounters stiffer competition
in the Atlantic than along the route to the Middle and Far
East,
However, there are also some political and strategic
considerations. Clandestine shipments of arms to Communist
groups in the Middle and Far East arc being made, but this
mi7.itaxy traffic has been incidental to the general increase in
shipping motivated by the conclusion of satisfactory trade
agreements, It is not anticipated that Polish charter opera--
tions in the Atlantic will involve as many vessels as the
Poles themselves assigned to those routes. Neither the trade
nor the political potentialities of the area warrant it. On
the other hand, a steady increase in Polish shipping to the
Orient may be expected.
Also, it appears probable that there is a connection
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between this shift in Polish shipping and the - formation of the
Soviet--.controllod "Comintern Shipping Company," which has been
in the process of organization for the past year. Its purpose
is the expansion and exploitation of shipping between countries
of the Soviet Orbit and areas of North Africa, the Middle Eat
and Asia. Soviet domination of the Polish merchant marine is
virtually complete, and the shift of Polish vessels to the, Far
Eastern trade is certainly Soviet-d.irecteda This may indicate
that operations of the "Comintern Shipping Company" have actually
begun,
The overall signi..ficanco of those developments is
probably economic,, inasmuch as Soviet Orbit shipping is being
expanded into areas where increasing coz.mercial activity has
been :assured by the conclusion of satisfactory trade agree-
ments? (SECRET)
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