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-RDP79-01090A000400010007-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 7
• Publication Date: July 26, 1949
• Content Type: PAPER

VIE, STET' CT EUROPE 'BRANCH
OFFICE OF REPORTS AND ESTIMATES
C] TTRAL MTELLIGk TC2 AGENCY
WORKING PAPER
iIOTICE: This document is a working paper,
T107 an official CIA issuance. It has been
co-ordinated within ORE, but not with the
IAC Agencies. It represents current
thinking by specialists in CIA, and is
designed for use by others engaged in
similar or overlapping studies. The
opinions expressed herein may be revised
before final and official publication. It
is intended solely for the information of
the addressee and not for further dissemi-
nation,
DATE: 26 July 1949
NO
DATE
\'i
A VJ.4:
CLA
ECLASS {F;ED
A. 3 C, ;:A+ZO D TO: TS S C
NEXT Y V;EW DATE:
AUTE ( ' REVIEWER*. 372044
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VIESTEfNS EUROP13 BRANCH
I'MI LY SU, rff
VOL. V - No. 2 For week ending
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26 July 1949
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AUSTRIA
Current reports of liquidation activities in
Soviet-he s in Austria emphasize that a Aus rian
treaty rails to clarify the condition in which these firms
should be returned to Austrian control. Despite Soviet
agreement to relinquish equipment in "war industrial enter-
prises", the degree of actual Soviet concession will not be
clear until treaty negotiators have defined that term,
clarified other Soviet claims to "war booty", and agreed on
the disposition of equipment in other Soviet-held firms.
There is little doubt, however, that the Soviet element will
attempt to reap whatever economic benefits can be obtained
while the firms remain in Soviet possession, and there is
little reason to suppose that protests would deter the USSR.
At present, there is fairly substantial evidence
that the USSR is making inventories of equipment and materi-
als available for immediate sale from at least three major
USIA (Soviet Administration of German Assets in Austria
plants; such lists apparently comprise machinery and materi-
als not needed to fill present Soviet orders. Unsubstantia-
ted reports indicate that in other firms lists are being
drawn up of equipment and materials to be sold, shipped to
the USSR, or scrapped, Rumors of the conversion of USIA
stocks into cash are also prevalent. Although current in-
formation on the Soviet transportation agency in Austria
suggests a substantial increase in shipments to the USSR,
the flow of dismantled equipment L% suction steel and
rail track) appears to be normal* XX11 bb
25X1X6 The Austrian Government,
has revealed that Austrian investigation
o ese reports so far indicates only that raw material
stocks and production inventories are being reduced. While
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this i y be true, the possibility cannot be overlooked
that the Austrian Government may not desire to protest
to the western authorities any large-scale Soviet
stripping of plants. At present, the Austrians are too
aixio}a to obtain a reasonable treaty to risk serious dis-
cOrc which might stall the negotiations.
The existence of the present .French Government
has b enn 2r0 oonn ed by e decision o the oc al sts SFIO)
a their Party Congress to remain in the Queuille Cabinet.
The Socialist resolution has avoided a resurgence of the
Co=U#st and, Gaullist threats, and the resultant danger
of parliamentary dissolution. For the time being, at least,
the Socialists have chosen to forego the advantages of being
in the opposition, in which position they could have re-
coined their losses in membership and reassumed their char-
acter 'of a workers' party.
The Party Congress adopted a general motion favor-
ing continued participation in the Government, on the con-
ditions that the coalition preserve nationalizations and
socia) security and effect a more equitable distribution of
national income* The SPIO also called for a decrease in
industrial prices, a return to free collective wage bargain-
ing., and an economic reorganization of Europe. A motion was
passed, strongly favoring a prompt end of the Indochinese warp
with a, resort to international mediation under TJT, control, if
need be,
Socialist criticism of the Government's Indochinese
policy, and its trend toward a free economy will strain
coalition harmony, but will not cause a political crisis
during the summer* Although the Socialist ministers may be
forced; into a more doctrinaire attitude when Parliament re-
turns from its summer recess, they appear more likely to main.
tain a practical outlook, since the motions or the Party Con-
gress have on some past occasions been treated more as prop-
aganda;than as strict directives to SFIO Cabinet members.
Mor=eov r, SF10 leaders recognize the value of Premier
Queuillots continued willinzgess to reach a compromise with
the Socialist Party, and therefore will probably persist in
their determination not to go into the opposition.
t develo ments assure relative labor eace in
France uring n the summer. In the pas err weeks, the
ormuga. s General Con e oration of Labor (CGT) has been un-
able to increase the scope of its "unity of action" with the
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 othoV t ad u .ons. The workers stil,Z display apathy to
tr .kes an
emonstrations, Mox over, the Christian Labor
"Confederation (CFTC) has on ocoasLcin shown resistance toe .;
uti.izatiom of the unity of acton oonrd.tteo for political
ends, dais tendency on the part of the CFTC may increase,.
(MAeh are time-saving and thereby reduce the length of
the word; week), and production of military weapons instead
of consumer Soods. On the posht he side, joint advocacy; is
likely for special vacation pa'r supplements, wage increases,
The COW, however, will continue its campaign foi
joint action, on the local union level, during the paid-
vacatic period of July and Au .s.t. There will probably
be protests against personnel cxts, imports of US products
Despite the current 140'k of progress toward further
labor unity, serious labor unrest. may still occur in the
fall, based not only on joint action but also on the CGTls
Increased internal strength at Its dominance of the con-
and coil ective wage oonventtons..
et.ltative plant comrcd. ttees .
d' nat .on of various independent Leftist ("front") groups
is OndaZgered, as they demonstrate growing resentment of
strict 4ta1inis t discipline* the French Ci' has decided to
try to prevent their defection to the "American camp" by
approving their adoption of a policy especially deairAed
to attract popular support in France a policy Of
"Wtestern European neutrality" in the east-west struggle ---
even though this is opposed to the general CP line.
"e . various front" organizations so far drawn in-
to dtsaussions of the GP proposal have apparently fully
appreciated that it was prompted by weaknoss. Consequently,
they have seized the opportunity to bargain for a broader
.share z formulating national as well as International poi-
icies, demanding, for exar spl e, that they also be allowed to
join the Communists In propagandizing for the increase of
n.ation4izations of Industry. The CP's rejection of this
demand has brought the leaders of these "front" groups to
the conclusion that. they cannot cooperate with the Party
on into tional.propaganda so long as the Party insists on
preserv 'its predominant influence over French working-
class i. terestss. Furthermore, these "front" groups are en-
courage in their stand by their doctrinaire conviction that
counter, forces to Stalinism are necessary for the "progressive"
Who French CP is incr in..1..concerned about its
r essive
o cal iso atio , but its remedial attempts
probably no Alter materially this adverse tz o-year
d. For some time French Cptumunists have failed; to
t b1isth,.. oc mion cause with Socialist and Centrist leaders.
neb. ntiy the Communists have recognized that even their
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rolution of.world Cxntsm, and by the fact that bht
newspaper "Franc Tireurtt (independent Leftist) has rift
outstrrippedl "Humai21t&.t' (Coxi uniat) in circulation,
CH AND SPANISH NORTH AND W3t'~3T AFRICA
The friction betnveen the Sultan 'of Morocco and
his cousin, e Caliph o Tetuan; s crease as a re-
sult of a disagreement over royal titles. The Caliph,
thoSultan's personal diplomatic representative in Spanish
Morocco, had already incurred the Sultan's displeasure by
.his recent. marriage. Now he is refusing to comply with the
Sultan"s decree limiting-,the use of imperial titles through-
,out Morocco in suoh, a way as to down--grade the Caliph from
-Imperial Highness to mere, Highness a lot reasons. of local
'prestige, the Spanish Moroccan authorities are encouraging
;the. Caliph in his defiance of the Sultan. The French, too,
probsbly welcome this rivalry, which helps to keep the
Stapp more easily under their control, and which is apt
t'to' continue,, as both the Caliph and his newly-.acquired wife
are ambitious for the Sultan's throne.
b1 ,CIuM
he ch cos of a ' Eel tan Cabinet bein, formed within
ve mprove cons era y t appoin mbn
off a _th .r :Catholic,' former Finance Minister iyskens, as Pre-
mier -designate. His task 'ill be to attempt to gain
Socialist .and Liberal approval of financial and economic
policies, with a solution of the royal problem postponed for
the present. if Liberal agreement cannot be obtained, then
ryskens probably will try for a Catholic--Socialist coalition*
Since ' yekens' views are closer to those of the Socialists
than to those of the Liberals, If he succeeds In forming a
flovernzneut, it is more, likely to be a. Catholic-Socialist
coalition than a tripartite Government,
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t 's disposition to abandon claims to parti.-
cipation in the administration of Tripo tan .a will be
further stimulated by the prevailing sentiment among
Italian settlers In this former colony, in cpntrast with
the colonial aspirations of many Italian nationalists in
Italy is the belief of probably 65~; of the Italian
settlere in the Tripolitanian area that their own safety
is best served by the absence of any direct governmental
control of Tripolitania by Italy. The rioting in May by
local Arabs has reminded the Italian colonists of the
seriousness of Arab threats to oppose by violence a res-
toratiop of Italian political influence in. Tripolitan;.a0
Some colonists are said to be willing to remain in
Tripolitania even under an Arab regime, which they
apparently feel would not interfere with their normal
activities,
The najority of Italian residents presumably
feel that Italy, if it disavowed a share in the adminis-.
tration, could enjoy economic privileges in Tripolitania,
Tong connected with Italy by cultural and commercial ties a
The Italian Government, which has been gradually modifying
its earlier demands for the return of Tripolitania, will
seek to obtain an international guarantee of the rights of
Italian residents there0 It will continue to press for
special immigration privileges in Tripolitania, especially
if important outlets for Italy's excess population are riot
opened up elsewhere.
SPAIN
ind cotes the great dissatisfaction within the Party over
the dwindling influence of the Falange within the present
Governxrent 0 Apparently at the instigation of "old guard"
members, the conference passed resolutions advocating: (1)
freedom of the press; (2) removal of price controls and better
.food distribution; (3) more energetic measures to combat mal-
nutrition and unemployment; (4) freedom for deputies in the
Cortex to criticize the Government; and (5) a purge of certain
"in.efficient" and "tired" Cabinet Ministers, This is believed
to refer especially to Minister of Commerce and Industry
Suances and also to Minister of Justice Fernandez Cuesta,
whom Franco last year placed in charge of the Falange as its
Secretary-General. Fernandez Cuesta's efforts to dissuade the
The drastic nature of the reforms demanded of
Franco byte recent conference o Falange pray nc a chiefs
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Conference from passing these resolutions- were unavailing,
The demands represent the chief criticisms of the
regime found in nearly all elements of Spanish society.
In calling for these changes the Falange is apparently
seeking to capitalize on the general dissatisfaction and
reassert its position as a radical party of r eforrn, as
well as to reestablish its influence in government policy
and administration, The demands for greater freedom of
press and discussion, which are counter to Falange pre-
eepts, indicate that the Falange no longer enjoys its
former relative freedom from censorships The Falange
action is In effect a condemnation of the policies of the
Franco regime and is especially significant in view of
the uncritical loyalty to the Caudillo which has been a
fetish of the Party leaders up to this time.
Falangist dissatisfaction takes on added weight
because France's relations with Don Juan and his
M7onarchi.st supporters are now reported approaching a
crisis in which the Monarchists may make now demands,
Although Franco may be forced to make some concessions in
order to maintain unity in the Falange Party and retain
its support, he is most unlikely to concede any substan-
tial press freedom, or allow criticism in the Cortes,
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