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-RDP79-01090A000400040001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: November 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 1
• Publication Date: April 4, 1950
• Content Type: PAPER

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t' ESTERil EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
WORKING PAPER
DIVISION Wt En;Y
NOTI : This document is a working paper,,;
1 Tan official CIA issuance. It has been
co-ordinated within ORES, but. not with the
IAC Agencies. It represents current think-
ing by specialists in CIA., and is designed
for use by others or-gaged in similar or
overlapping studies. The opinions e: essed
herein may be revised before final and offi-
cial publication.? It is intended solely for
the information of the addressee and not for
further disse ination a
Included in this issue is a special article on:
French Cartels Threaten Trade Liberalization
:GATE : 4 April 1950
DOCUMENT NO.
AUT * H: It
NEXT H :VIEW DATE:
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WEEKLY SUMMARY
VOL. VI - No. 13 For week ending
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4 April 1950
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b' ANCF
The French Comaunist Part PF) will Intensify
its "peace campaign" 2furliiE enex~ G few weeks by spreading
milit ry defeatist propaganda and provoking manifestations
against the MDAP. PCF leaders, however, will probably
slacken their efforts to incite labor 3.mres.t Leaders of
the Comnist-led General Confederation of Labor (CGT) have
.recognized both the apathy prevalent among workers during. the
recent strikes and the inability of the PCF for the moment
to exploit politically labor's legitimate demands for
higher wa e s a While CGT leaders are laying the groundwork
among labor unions for unit' of action In fut%n-e itruggles,,
the PCB' will use CGT workers and Party militants to promato
widespread demonstvat:ion.s against the iloading, transport,
and manufacture of war materiel in principal por=ts and
TId
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is dustri:al centers. Recent indications are that the PUP
also issued. instructions to members to devote their
Individual. efforts to effect work stoppages and. sabotage
in the manufacture of war materiel whenever opportunities
arl, ua
It is unlikely that France will take the stems
necessary a au riican a is c o ar r.`n n subs nt3_ ? ly 16
1 nearuc; to die gexae.'corz~rl ctfi on among ITS
and French officials that these earnings =us t be greatly
Increased before the close of the ERP. The requisite
increase in dollar exports, which have been almost
stationary since 1948..; depends upon the accomplishment of
lo' a. range reforms in the French economy,
The French Cover?rrrment professes to be eager to
promote exports to the dollar area, and In December 1940
or-,cated the Dollar Extort Board to study the problem. For
its part, however.. Goverr tent is too absorbed in the
problems of political instability to promote the necessary
roforms a The f iris t r>eciuiremen t .i s a mange. in. French
production to chni que s ,, which are badly outmoded a Them
the fundamental outlook of French businessmen, who prefer
IL-Tilted but sure markets, must be altered to favor efforts
at ,aloe development Recently, the Goverrrztaent provided
some incentive for an altored outlook by permitting ex.
porters to retain 3% of their earnings in dollars for
unrestricted expenditure.. The French Goverrmaent could
Sim plify administrative export procedures to speed ship.-
merits and thereby reduce costs. Furthermore, if French
goods are to be sold widely In the US, they :mast be
priced substantially lowers or US trade barriers (primarily
hi;,h tariffs and complicated customs procedures) must be
reduced
Fr .once could do something to increase her dollar
oa%-nings immediately, though inadequately, by proxrmo-tir
sales to tourists o Appropriate sales facilities could be
set , and, ptthhiclty given to the privilege of US citizens
of ' bringing home e'400 worth of goods duty .free
Of slight value In eliminating the dollar
diortage now,, but of great potential value after the
tee;, .ination of the RP9 is the development of the production
of raw materials in the Overseas Territories, gradually
obviating the necessity for buying these ras.terials in the
dollar area
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The plannh_ ?:.nd execution of a Point IV
Sao am for - rencli Vest A3 xj cj V wo ` ` in alto
more an the normal mount of difficulty because of the
negative attitude of the French high Commissioner., Paul
Bichard, toward US aid and interests..
Since the temporary cessation of Marshal]. aid.,
while a U.S. investigation turned up evidence of its serious
maladministration in FtvA.,, the Hi i Commissioner has appa yen C1X6
been attempting to seal off all the functionaries of his
2S 1v'ffirnment from contact with the Consulate General
Not only has there been an undercurrent of
suspicion and resent zment of US interest in FWA among the
higher echelons of the French administration for some t;imep
but there is also evidence that the British are cool to the
idea of US participation in the economic life of the
territory.
The Director of the Cabinet for the Hi .z
Commissioner (Joan Ramadier', son of ex. Premier Paul Rarnadier)
is known to have a low opinion of the possibilities for
fairther development of INVA and to hold the view that US
colonial policies are "setting a dangerous example for
natives",,
Some of the most controversial issues on the
nda of The 6 nc" one ? n 'int `on Cr~nf er nce~ ~, -Mr
cndp l x'ein~n`unso:.ve aic continue to make
close cooperation difficult. The fact that neither side
attempted to force a decision on these issues indicates,
however, that no serious strain has been placed on Dutch-
Indonesian relations at this time. Joint co aissions
were appointed to study the questions of New Guinea and
the employment of Dutch citizens in the Indonesian
Gover. nment., as well as other less debatable subjects.
The problem of responsibility for pensions to Dutch civil
servants has been referred to the Union court.
On the positive side., agreement was reached. on a
Dutch 200-million-guildor loan to Indonesia, and on the
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ostablishinent of a temporary Dutch military mission
of not more than 800 men, to be replaced later by
permanent mission;, to advise the Indonesians on the
development of their armed fore-s. The relatively email
size of the loan indicatc a that the concern of the
Zte thorland s Finance 1v'tini s ter over Dutch budgetary
.problems overshadowed the desire of some of the Dutch
officials to extend the maximum. aid to Indonesia and
strengthen Dutch Indonesian trade tieso
Although the atmosphere of the Conference
itself was friendly, daily working-level Government and
business contacts will ultimately determine the extent
of cooperation and the value to both countries of main-
taining, close ties "
The Italian Government' oblemwo of reserj1
~blic order ` n ,, i`hoe o e "Gomrnuni ?e f e rocs may
be ma e`mora difficult by an. Increasing nimtaer of clashes
which are likely to occur between the Italian Communists
and members of the neo-Fascist party;, the Italian Social
Movement (MSI )
The MSI has lately shown increased vigor,
particularly In areas near Communist strongholds. It may
be receivin;;; greater finano:t.al support, especially from
large landholders Who are concerned lest the Government
succeed in promulgating agrarian reform measures and are
fearful of the growing number of Communist-led land
seizures s,
The MSI4, however,; does not in Itself pose aggreat
problem to the Government, at least at present; but it does
afford the Communists a two-edged sword in. their offensive
against the Government. On edge is the considerable civic
disturbance and anxiety generated since the first of the
year by a score of more violent incidents between the two
groups n (The police have not been successful in preventing
these clashes? although they have been able to Tell them
more or less effectively once they have started.,) The other
edge is the exploitation in Communist anti-Govornment
propaganda of neo-L asoist activities The Gomm ,iuaiats allege
that the Goverx .nnt F s failure to bring legal action against
th.c MS+I testifies to the unconstitutionality of the
Gover;rment. f1,111e constitution denies political rights to
Fascists or groups of a Fascist nature -)
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This developing situation could be dangerous, if
the Government should fail to meet the challenge adequately.
On the othor hand,, clashes between the two extremist groups
present the Goverment with an excellent opportunity to
deal with the ComrPiunists and neo-fascists in the common
category of law breakers a By directing early police and
legal action against the leaders of both extremist factions.,
the Government will probably prevent the development of any
situation similar to that of 1922,, when a much weaker.
government succumbed to the Fascists. The lack of
appropriate Government measures against the extremists
would, in 1950, make the Communists,, not the Fascists, the
beneficiaries.
Leo old?s current negotiations for return to the
'throne of a .g~re a subject offconcern o ttifoly See
and of disagreement within Vatican c;ircles. Some Vatican
leaders are probably giving unofficial support to the
position of the Belgian Catholic Party, which favors the
return of Leopold. Others,, equally anxious for maintenance
of the monarchy, believe the exiled King's inability to
symbolizo national unity would jeopardize his chances for
heading
a,stable Belgian Government. They would prooably
prefer to see the Kin" abdicate in favor of his son. The
1atican would dislike a polarization of Catholic and
Protestant sentiment in Belgium over this issue. Further-
more,, some Vatican leaders probably fear that Church
insistence on a stand which endangers the unity of the
country might pre ud1 oc the position of the Belgian
Catholic Party and tend to alienate the republican fallow
its; of other European Catholic Parties as well.
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1-t portant factor In maintaining the present high price
levels by curtailing production to keep it below damand,,,
dividing the market, and actually fixing prices so as to In-
sure a profit for the least efficient members of the associa-
tions,. The prevalent fear among producers is that the
? bo"lisbment of these practices would load to cut-throat
domestic and inter--national competition, with the more in-
efficient among them being forced out of business. Even
the most efficient manufacturers, who stand to gain under
a competitive, regime,, are psyohologically conditioned
a,ainst investing in the expansion which would be
necessary to meet the demands formerly satisfied by their
co-producers.
The tJS would like to see these rostrictive
:aa cti ces outlawed so that productivity (rate of output per
x a.~k .our) could be augmented. It is believed the resulting
increased supplies and lower production cos`?s per unit
-.gould lead manufacturers of exports to reduce pricer and
obtain greater foreign markets., consequently alleviating
:t`'ronch foroign trade problems,. Powerful business interests
however, are too deferrnined, and the Groverrment is too prone
to appease them, for either to play a constructive role in
r' medyi..n ; the si, tuation
Front. businessman, If left to themselves, will
continue to develop the pre 7rar pattern of the E, ropean
cartel system, and progress toward ECA r s goals of a high
love1 of trade and a rapid rationalization of product ion in
Europe will be severely impeded.
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