WESTERN EUROPE BRANCH OFFICE OF REPORTS AND ESTIMATES WORKING PAPER BRANCH WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400010001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 1
• Publication Date: June 14, 1949
• Content Type: PAPER

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IU,TRCF. DM ,1C11
OFFIC1 OF R' 7ORTw M -D ESTIUATT1
C dTD..AL INT] LLIGf:CE AGR Y
BRATCII IzLY
11O CCD: This document is a work paper, NOT
an official CIA issuance, and has riot necessarily
been coordinated with other OF.B producing corpo -
nents6 It represents current thinking by one
group of specialists in CIA., and is designed for
use by others engaged on similar or overlapping
studies m The opinions expressed herein may be
revised before final and official publicatiom
It is intended solely for the infoxma on of the
addressee and not for further diseer&ation.
DAT 14 June 1949
DOCUMENT NO.
NHANGE IN CLASS. ^
DECLASSIFIED
CCASS. CHANGED TO: TS S C
NEXT REVIEW DATE;
AUTH:
GATE, (~ r REVIEWER: 372... 204_
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VOL 11" -- Pio w 8
25X6A
;'7 TIM, EMci OPt ucII
i'C ' I'Teei.; endinC
.14 Juno 1949
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 SC
aaainainiJ. rie:
R'he a t determination of the Socialists to remain in the
Governme t c strengthen Premior eui e'e as controversial economic
econ'de come before the Assembly for debate, Concessions on these
issues are likely to be made by the Socialist Party (S; I0) because of its
recent, realization that the present goverrmental coalition is probably the
only workable one, given the present composition of the loner house and the
will of the center bloc to keep in check the extremes of Left and Right?
The Sj IC trill, be influenced by its fear of a Cabinet crisis, which could
possibly lead to, Assembly dissolution and national elections.
In the coming weeks, two of the most difficult problems facing
Parliament vri.-411 be the reorganization of nationalized industries and the
refcrm of the costly social security system. In regard to nationalized
industries, Socialist leaders confidentially admit that; some reorganization
must be effected, and thus are not likely to balk unless they believe the
principle of nationalization itself is threatened. The Socialists will
probably be less pliable on changes in the social, security system., holding
firmly for short-term illness allocations, but willing to make soma con-
cessions on management of funds and absenteeism.
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The SoCIAlists thenr appear to be at the present time a more
*e ble etmponent o? the -third Force coalition than they tmre in the
~r of 1948. Sig IO leaders respect and trust Premier C0ueuille, and
Appreciate the cooperativeness of the L.^P; they continue to be
app hensive cif De Gaulle, and fear that the :'icht will attempt to
nu ..lip^y post-Liberation legislation on nationalizations and social
security.
B 2E VS di_ sanity rrU1 prevent it from presenting
a coOz x;,ted resistance to the c ign of the Cozaumi.st-controlled
General Confederation' of Labor (CGT) for the "unity of action" of all
labor. In their respective recent national meetings, the two principal
nor-Co ict unions,, the Force Ouvriere (FO) and the Christian
ConfOderation (CF'), ''bich are about equal in size, passed sharply
divergent resolutions concerning the CGT"c appeal, and also engaged in
ZuturA] recriminations on this issue. FO's national, committee condemned
an unity of action rr1th the CGT, while the CFT4's annual congress supported
a Olu 1ifi.ed collaboration, not extending to the highest national level,
restricted in durst .,on, and limited to strictly trorkerc l objectives, subject
to CFTC headquarters directives. Although the FO and CF have cooperated
pcr?odicafy through a non--Commu.st labor "cartel" in exerting pressure
upon "the Goverzmtcnt,, their mediocre leadership and deep doctrinaire differences
W-11 preclude their -forming a united front agoins-t the Communists.
FFti1CIi !ND SP?NI5I1 1 OtTH AEM =T AF ICA
C Tjati Usts in Tunisia and Lclorocco are more like v to cooperate with
the Goat mists French officials continue to make policy state rents like
that recently delivered by the L'.inister for Overseas France. I-. Conte-Floret
described Ilt ilia and L orocco as associated states of the French Union by
integration." Immediate and vehement protestations were made by two of the
leadUk,R nationalist rev olutionar r parties in French Iaorth Africa, the
Istig1a1 (Independence) in Lorocco and the Neo-Destour (Constitution) in
Tur1.sian Spokesmen of both p?urties charged that the I:inister's statement was
arbitrary and without Constitutional basis. They assorted that the political
transition from protectorates to associated states could occur only through
arL cession of the. free choice of the L1oroccan and Tunisian peoples.
Coate-Floret's roa r,,, which vas apparently timed to coincide tiith the French
great, ,on of an Associated $tcte of Vietnam., as also attacked by the Tunisian
and L`naroccan Cc=mists, tyho promptly made 'msuceessful efforts to enlist the
nationalists in a coordinated programs of protest. By such statnts as that
of Conte-Floret,, the French unnecessarily antagoni a the nationalists, and
provide grounds for furthor Communist mgDloitation of a delicately balcnccd
situation in a particularly sensitive area
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BELIU
ices o e an coal and steel combined with the payments
difficul s .Be], .umos trading partners, Will make it increasingly
difficult ,Zr r . Belgium to maintain its high level of exports and ,,dll
consequently have an adverse effect on domestic productions Of the Belgi n
coal and coke offered for allocation during the third quarter of 1949 to
the countries in the D onoanic Council for ?"u=pc (ECE ), only 40 percent
has been firmly or provisionally provisionaaly accepted. Belgian coal prices are higher
than, those of at3~y of the other. European producers, mainly because of the
use of 100r1ctng poor sears and the high rages of the miners. Belgium
ai.r dy has 1otaured coal prices to France, an importcnt prewar purchaser,
but the action does not reflect loured production costs. Plans for
=de niZathton of the mines are under way, but with the developing coal
GWPIUG it is doubtful that much-will be done. High steel prices,
dernden*t partly on the cost of coal, are increasingly hindering sales as
other sources of supply become available to Belgium's prospective
customers and the demand for steel falls off. The backlog of steel orders
is rapidly dv1ndlint*., and reports that Belgian exporters are milling to
undsquote any supplier of steel to India, at a loss, indicates Belgian;
desperation for new markets.
Belgium is a creditor to most of its "normal" purchasers of coal
and steel over and above the large drawing rights of Belgian francs
gra_zted . them under the auspices of ZCA and in spite of their restrictions
on Belgian ;Mports. In the face of little progress in multilateral
plans to restores free currency exchange in Jestern 31rope, Belgium is
attempting negotiations -tith France and Switzerland to a11a i freer circu1 -
tion of Belgian francs in the hope that increased purchases of Belgian
goods call result. Because of the close economic relationship of Belgian
14th other European countries, Belgian plans to :increase industrial
efficiency and break dorm currency barriers iuill not of themselves have a
decisive effect in preventing a slackening in Belgian economic activity?
ITALY
A rc losses and a continuation of bread ration which has
been scheduled to eJ , are in prospect if the strike of Italian
farm laborers continues. No progress has apparently been made on the key
strike issue-a national contract. Both the Italian General Confederation
of Labor and the1a"ree Labor Confederation are demanding country-wide uniform
wages and working conditions, M wept for rice, relatively little crop loss
has occurred to date, but harvest time comes in the next six to eight Taeks
for virtually the entire national, rtheat crop, vhich makes up trio-thirds of
Italy's ye-rly requirement a (Moat can remain bested for only 7 to 10
days before rotting,) If tI present impasse continues, intervention by
the Government will be necessary to avoid serious consequences.
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between the Cacmonist-dominated General Confederation
for control of farm workers is involved
the present farm labor strike, although t1d.s fact has not yet been made
clear b either side. The CGIL's influence among the farn workers is
threatened by a pattern of governmental actio=n in the labor field:
(1) The state-operated kztploym.nt Offices, using their control over
e ii5l : g rit , bencf:tr as a 'Lever, have been slowly gvin ng potter over the
placerent of farm workers. The placement right ("collocamento") previously
monopolized by the Ccr unists through the local Chambers of Labor, remains
an important source of Communist po :e;r among the farx: v,orkers.
(2) _ The Agricultural _'.jinistry is preparing a bill to regulate
re3otions between farm employers and agricultural laborers, and to set
minimum wages and standards of working and living conditions. (An
un ploymont insurance plan, increc?.sed benefits to share-croppers, and the
Government's agrarian reform proe=m are in the legislative process.)
(3) On 15 May De Gaspori called for legislation to limit labor's
right to strike. This, in effect, would facilitate goverment intervention
in nritical disputes.
By these mccns, the Goverment expects to undermine the Ccm-w i.st
control of tam w rkers. On the other hand, the Communists -even though
they may have no expectation of winning their full strike demands -hope
to convince the workers that it was CGIL strike pressure which forced
local concessions frwi the lando:mer s and the national minimum. wa' c bill
x'rom the G verrmont.
B Recent developments in Cyrenaloa suMost that the Italian
G~~~I~e~~lll ~1~IIII~a~
Government will find it necessary to change its ultra-nationalist line
with regard to the, former colonies. Following the repudiation of the
Bevirr-Sforza compromise motion in the MGM., and subsequent Forth African
native demonstrations against return to Italian control, the recent
Cyrenaican move for independence has bade it even less likely that
neighboring ipolitania will be returned to Italy.
It is now clear to the Italian Goverment that the d-be..ting
of official and press statements served only to Inflame the colonial
aspirations of the Italian public without, improving Italy's case in the
eyes of most other nations. Some sectors of the Italian population have
increasingly expressed doubt over the wisdom of pressing Italy's claims to
former colonies that were a consistent economic liability, without providing
a material solution to Italy's overpopulation problem. Italy is already
resigned to the loss of Cyrenaica; and there is increasing evidence that
the Goverment could resign itself to the loss of Tripolitania and &'itrea
in exchange for special privileges for Italian emigrants to these areas.
Foreign Linister Sforza., for instance, in spite of earlier threats to resign
if Eritrea were not returned to Italy, recently declared that a ten-year
Italian trusteeship over that area would have been less beneficial to
Italian interests than the "permanent autoinxy" now contemplated for the
Eritrean cities of Asmara and thesw a, which are largely inhabited by
Italians. Purtherraore, a Christian Democratic deputy has suggested that a
study be made of the possibility of admitting Italian workers not only to
territories under Italian trusteeship, but also to those administered by
other'states.
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After President ms's inaugural address rith its faus point
Four, the ItaMan Gover amunt expressed the hope that it be made the agent
for the economic, social, and political der elopac .t of Tripolitania. It
is possible that Italy t411 ncr~., urge a US trusteeship for Tripolitania,
with special political and economic privileges for Italians in the area.
Show such a solution appear impossible, and should Tripolitania attain
self-goveain*t the Italy i Government rd11 probably seek to obtain
similar privileges from the native leadership.
SPAIN
B e co t e t year of Ar time reheat ehi nts to Spain
after July appears uncertain. This possibility stems from: (1) a
sharp reduction (1e2 ,lf")) in Argentina's 1949 exportable reheat surplus
estimated at 1,292,000 metric tons compared to 2,221,OOC metric tons in
1948; (2) a yer.rly limitation on the credit to be extended to Spain
under the tens of the Franco-Peron Protocol; end (3) the deterioration
in Lrgentine-Spanish relations, due in part to Spain's inability to
fulfill its commitments under the protocol. The Protocol provides that
should the exportable heat surplus fall below 2,600,000 metric tons..
Argentina will still assure the export to Spain of 12,E of the current
surplus. As some 155,000 tons had been exported to Spain as of April
1949, the promised 12 has already been delivered. In a statement on
3 June the Spanish Ambassador to Argentina said that by the end of July
Spain taould have ozhausted her yearly credit allotment.
Spain mast import an estimttod 600,0',0 to 900,000 metric tons
of wheat in 1949-50 to supplement domestic production, and should ship-
ments from Argentina cease,, the Spanish Government till], be faced with a
grave problem in endeavoring to secur:- reheat elsewhere.
A rgentina e s shipments of wheat in 1948 to Italy, Brazil, and
India were almost equal to the current exportable surplus, and under a
new trac..c agreement has asked for double its last year's quota.
Therefore, it appears that if Argentina continues to ship wheat to
Spain on credit, it will have to do so at the expense of refusing
shiprnerits to countries which have been paying; for their wheat. It would
thus seem to be economically un:ioo for Argentina to continue the Spanish
shi; tents, but its past policy toward Spain has not always been dictat3d
by economic considerations.
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