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

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400030002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 2
• Publication Date: January 17, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
WORKING PAPER
DIVISION WEMY
NOTICE.- This document is a working papers
IM an official CIA issuance o It bas been
coordinated within ORE,, but not with the
IAC Agencies, It represents current think-
ing 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 offi-
cial publication. It is intended solely for
the information of the addressee and not for
further dissemination,
DATE: 17 Jan vary 1950
AUTH: H
DAT;~~~ _ fl V EWER: 372044
DOCUMENT NO.
NO HANGE IN CLASS. C 1
D ECLASSIFIEO
CLASS. CHANGED TO: 7S ; C
NEXT REVIEW DATE:
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S E O P. B T
WESTERN Ei3ROP1 DIVISION
WEE KLY SPRY
25X6A VOL. VI w No 2 For week ending,
17 January 1950
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S E C R F. T
25X6A
25X6A
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S E C R E T
AUSTRIA.
The eino ~genoe of the new Austrian oliticai
aasociatioo"tSi Rational gMLe may presage a et
a exnp to ex rac whatever advantages may inhere In an
Austrian rightist party sympathetic to the USSR. Because
the appeal of the strictly leftist and international,
Communist Party has been extremely slight in Austria, a.
more nationalistic and rightist appeal is seemingly being
made through the device of the National League. This
interpretation is supported by unconfirmed reports that
indicate a relation of the League to west German elements-
such as the Naubeim Circle--susoeptible to Soviet Influence
The League also bears a strong resemblance to the east
Germ= National Democratic Party.
A suggestion of the future role of the National
League oar. be had by considering its known persornxel o
Official spokesmen of the League are two former officers of
the von Paulus arr, both of whom have been in Soviet
indoctrination camps for POWso One of these, Frans Heger,
was a leading member of the Austrian Association or
Independents (a party organized in mid-1949) until he
was expelled, apparently for suspected Soviet penetration
work. Other League followers are believed to be largely
former German army officers,, Hitler youth leaders, and
Nazi party functionaries. Their participation in this
new association suggests that they are dissatisfied with
the Association of Independents, which received a large
share of the ex-Nazi vote in the October 1949 elections.
An extremely small radical element from the People's
Party may also form a part of the-League.
Several reports also connect Josef Dobretsberger,
founder of the unsuccessful Democratic UnionF, with the
National League. Although Dobretsberger has been anti-
Nazi in the past, his record with respect to the USSR is
less clear, It is not believed that he has ever consciously
worked for Cczmnunism, but his program for the Democratic
Union stressed opposition to ERP, increased trade with the
Soviet satellites, and friendly relations with the USSR,
The current following of the National League Is
small, being estimated at 300-400. The League constitutes
no present political threat in Austria, and* its prospects
appear to be extremely poor- Its emergence, however, is
indicative of continuing Soviet Interest In Austrian
political life.. and may also represent a realistic appraisal.
by the USSR of the present and future prospects of the
Austrian Ccmmsunist Party,
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Fa& CE
B Earl French ratification of the 8 March A ccords$
granting au .Homy w a rent Un on o etnam, seems
to be assured. This step will remove one of the obstacles
to international recognition of the J3ao Dal government
The major obstacles to ratification has now been removed..
as the Socialists have recently committed themselves in
favor of this step, leaving the Communists the only major
group in opposition. Since conclusion of the agreements
with Bao Da` early in 1949, the French Government has
hesitated to press for quick approval, mainly because of
strong Socialist opposition. The measure will probably
come up for debate in the National Assembly during the
last week in January.
Although the Socialists now support ratification,,
they maintain that they will not thereby acknowledge Bao
Dai as the exclusive representative of the Vietnamese
people. They regard him merely as a necessary go-between,
until the cessation of fighting permits the Vietnamese an
opportunity to choose their regime. Long-standing Socialist
pressure for a military truce in Indochina is therefore
likely to increase. The Socialists may also attenpt to use.
their promised support of ratification as a lever to get the
Government T s approval of the second "patience bonus",, now
urgently demanded by labor. The political parties of the
Right will not raise their objectives to some aspects of the
8 March Accords because they realize the political advan-
tages of French ratification prior to any diplomatic move
by the Chinese Communists on behalf of Ho Chi Minh. The
large political group of the Center,, the Popular Republican
Movement (MEP), has long favored early ratification
B The current demands of French labor leaders
-
-
1
probably no 0o
cost-vf l v n 00 snc onus ill
threat to withdraw free the BidaultGovernment. These
leaders will be intent upon the restoration of collective
bargaining, which might be prejudiced should the Government
fall in the near future,
Bidault has refused payment at this time of a bonus
similar to that granted in November, but has promised to work
for Parliamentary approval of the collective bargaining bill
by 1 February, and has authorized payment of a 3,000-franc
bonus to lowest-paid categories of civil servants and
agricultural workers, groups not included in the November
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S E C R E T
bonus. The Socialists are likely to adopt an attitude of
compromise and postpone any decisive action until February
Should final passage of the collective bargaining bill be
delayed beyond 1 February, however, the Socialists will
probably renew their threats to withdraw from, the Govern-
ment.
Peraiatent pressure from economic row s will con-
tinue for same e to :LMP6d9 the cane Government's
cooperation in ECAts far-reaching objectives concerning the
advancement of western European economic integration. The
opposition stems mainly from industrial? agricultural., and
labor organizations, which.. though professing support of
the pr--.nciple of trade liberalization,, strongly oppose any
'tpremature't plans for regional integration that would result
in a major increase of competitive imports harmful to the
French economy.
French industry is wary of tie initial impact of
accelerated liberalization of trade. French businessmen
fear that competition with foreign countries will be made
all the more difficult by wage increases j-ranted to labor,
because these are likely to be largely refloated in in-
creased prices of manufactured goods: There are indications
that the rormation of Bartels is envisaged by industrialists.
The employers' bloc (CNPF) favors the establishment of inter-
national agreements to soften the impact of liberalization.,
and eventually to achieve specialization in industry through
coordinated production. This organization, moreover, recently
announced that some contacts had already been made by several
French industries for the purpose of forming cartels with
German firma.
Agriculture and labor will also continue to protest
against further lifting of import quotas, the former fearing
disadvantageous competition and the latter increased unem-
ployment. The farm bloc (CGA) and the Communist-led General
Confederation of Labor (COT) argue that trade barriers should
not be lowered until France has further modernized production
in order better to meet foreign competition.
In view of the opposition from these groups, and the
unstable political position of the Government, it will probably
resist: (1) early tangible steps toward interconvertibility
of European currencies; (2) substantial concessions to trade
liberalization under the proposed Fritalux agreements; (3)
admittinsx Germany into any arrangements without the UK; and
(4) reversing its recent policy of applying tariffs as import
quotas wore removed. Although the Government's decisions to
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lift quotas on: 54"' of manufactured goods,, 5~ of agricultural
products, and 58% of raw materials indicate that some
progress toward western European economic integration has
been made by France, it will not satisfy the present
objectives of BCA.
FM C11 AND SPANISH NORTH AND WEST AFRICA
lar defects are aarent in the implementation
of Frenchs to strengthen appreciably the military
defenses of-Ere Rest African areas. Maneuvers near Bobo
Dioulasso in Upper Volta revealed that very little, if any,,
progress had been achieved in the unification and development
of the French military forces in West African Despite in-
spired accounts in the French press of the "magnificent"
display of French' armed power, the French co meander of the
joint armed forces was so unfavorably impressed that he left
the scene before the maneuvers terminated.
Aside from the paucity and obsolescence of the
materiel employed, high-ranking officers apparently lacked
an understanding of the tactical problems Involved. A
mentality reminiscent of 1914 guided the operations, and was
accompanied by a spirit of defeatism harking back to French
military opinion and behavior In 1940, and an absence of
interest in the potential and strategic importance of the
area. Although probably provoked by the French delay in
providing the funds, personnel, and materiel required to
build up an adequate defense system, this atmosphere of dis-
couragement does not augur well for the, maintenance of In-
ternal security.
French West Africa is the largest area under French
control, and contains a population almost half that of France.
It is the most backward politically, ono icnically, and
socially of the French-dominated overseas territories, and
includes a large and growing Communist-slanted political
party, the African Democratic Rally (IIDA). Continued
military weakness and ineptitude would inspire Communist in-
terference, should Soviet interest shift from Asia to Africa.
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S E C R E T
BELGIUM
B There will be Increasing strain on the somewhat
un table a an a o c~ era =overnmen as a resu
o the con roversy over the s a us o E; eopold and
a securities scandal involving; some promixient Catholic
leaders, but these pressures probably will not cause the
fall of the Government in the near future. Reports on the
recent visit of Foreign Minister van Zeeland to King
Leopold Indicate that the King reaimended repeal of the
law of 1945 (which declares the Kinij 1nelij;ible to rulo)p
instead of continuing debates for a "popular consultation".
The bill providing; for a "popular-consultation". represent-
ing the Catholic Party's official policy, has already passed
in the Senate and probably will be adoptod by the Chamber
of Deputies; it is doubtful whether any proposals to
abrogate the law of 1945 prior to the "popular consultation"
will receive serious consideration. In any event, various
opposition members would like to have the responsibility
fora popular consultation", or any other solution to the
royal question, fall upon the present weak and partly dis-
credited Government,
ITALY
A A serious deterioration of Italian labor-management
relations un er the rb ent 1 ena so ere , an If It
checked, it may be the cause of further violent
demonstrations. Management, heartened by the steady weaken--
Ing during the past year of the Communist hold on organized
labor, is resorting more and more to unilateral action. The
Government, conscious of its increased prestige and ability
to make effective use of the police arm, makes no serious
efforts to discourage strikes, in the belief that they will
fail and that their failure will be a victory for Italian
democracy.
The entire strike pattern at Modena, including the
violence, the most serious since July 1948, evidenced careful
plannin,, by the Communists. Their plans were based on a valid
economic issue, which the Communists were able to develop to
arouse strong worker support In north Italy. Even the
Christian Democrat-'-?onsored Free Labor Confederation has
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condemned what It regards as "unjustifiable" action by
the management of the Modona plants in closing the factories
to get rid of surplus workers The Free Confederation has
also criticized the Government's local officials for'alleged
Inadequate and tardy attempts to mediate. A continuation
of the intransigent attitude of management and the un-
willingness of the Government to mediate would probably pre-
cipitate other serious outbreaks. Such an eventuality would
make It difficult for the non-Coom unist trade unions to avoid
supporting the policy of the Cc*mnist-dcn 1nated General
Labor Confederation (CGIL)1, and would obstruct the creation
of a single, effective non-Communist labor organization.
This total situation would materially Enhance the prestige of
the Italian Communist Party, and would seriously underzmine
popular support of the Italian Government,
PORTUGAL
B Portugal ma be forced to recognize the Chinese
ommunist re a soon, view o f recent RUTS
recognition e regime, and the high vulnerability of
Macao, Dr. Salazar prefers to be guided by US$ French,s,
and other reaotiona, and has expressed full agreement with
the policy of waiting for evidence of international
responsibility on the part of the new Chinese Communist
regime. Events., however, may force his hand? In keeping
with its traditional nationalistic attitude,$ Portugal will
endeavor to maintain a satisfactory relationship with the
Chinese Communists out of concern for Macao, even though
the colony is of little economic or other use to Portugal.
The Portuguese have not discounted the possibility that
Macao will be attacked and are fully aware that In such
an event they could not offer effective resistance against
the Chinese Communists. It to highly probable that the
Communists will not attack the colony-, however, before
trying to negotiate with Portugal for the return of Macao
to Chinese sovereignty.
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SPECIAL ARTICLE
FRENCH HOUSING PROGRAM
8 A . adequate French housinn_proRrem_,_ which FCA
re ards as cl ar siii.ble to -insure attainment of its
major objectives France, is not likely even to reach
the planning stage in the coming months. This failure
of the French Government to act on an important demand
of all labor organizations, in a period of intensified
pressure for wage increases, will contribute to social
and political unrest in France. Moreover, the failure
to promote the housing program means the lose of an
opportunity to overcome the current widespread in-
difference of the workers toward the ERPQs benefits for
France.
In 19478 over a million dwelling units were
considered to require replacement urgently, and almost
4 million others were judged unsatiafaetoryo Yet., only
about 80,000 units have been rebuilt since 1946, while an
approximately equal number are to be rebuilt in 1950, New
housing construction is just beginning to be encouraged.
The present rate of new residence building is insufficient
even to'offset obsolescence, and would have to be expanded
roughly ten times in order to give France adequate housing
by 19700
Housing construction at a considerably lower rate
than that estimated to be necessary will probably be under-
taken in the next few years. Private financing, strongly
discouraged by the low rent ceilingsr will probably continue
to be negligible. The alternative, public financing, is
blocked by the Government's investment policy,, which existing
political and social forces are likely to maintain largely
unchanged in 1950. This policy will continue to emphasize
heavily the modernization of basic industries, on the pre-
mise that export expansioon and the balancing of foreign pay-
ments accounts are the primary national goals for 1952, when
MCA aid is scheduled to be terminated. The chronic budgetary
stringency does not permit substantial sums to be invested
in both industrial and social programs.
The non-Communist Left has already, however, cri-
ticized the government's investment program, alleging that
attainment of "adequate" production and even "over-production"
is now in view in many basic industries. In any event, as labor
unrest grows during 1950, the existing long-range investment
goals of the French Government may be undermined by its failure
to embark on a large-scale housing- program.
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C R E T