WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400040008-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: November 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 8
• Publication Date: May 23, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
VOL. VI - No o 20
For week ending 23 May 1950
I May 1950
NOTICE: WORKING PAPER
This document is a working paper, not an official
issuance, since it has not necessarily been co-
ordinated with and reviewed by other components
of ORE. It represents the formulative thinking
of one group of analysts in ORE and is designed
to provide the medium for transmitting their in-
formal views to other intelligence analysts of the
US Government who are working on similar or over-
lapping problems. It is intended for the use of
the addressee alone, and not for further dissemi-
nation
Included in this issue is this special article:
"French Resistance to ECA's Policy on
Investments."
COPY FOR z
~O9-ANCE IN CLASS. ^
DEC LAUSIF BED
NLXT REV,LVv DATE:
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DAT REVIEWER: _ 372044
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WESTERN EUROPE DIVISION
WEEKLY SUM 1ARY
VOL. VI - No. 20 For week ending
23 May 1950
25X6A
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SWITZERLAND
B The Swiss are unlikely to rant reco nition to
the German emocru c Republic espte the current
attemp s by the to maneuver a facto recognition during
trade negotiations. These negotiations are presently sus-
pended, apparently on economic grounds. The Swiss are in-
creasingly determined to preserve their neutral status, and
their relations with both the GDR and the west German Republic
will closely approximate de facto recognition in its practical
as opposed to its legal of aeta. The Swiss have replied to
unofficial expressions of US concern that their commercial
arrangements. with the GDR are made with the cognizance of the
Western Allies in Berlin, and that Switzerland would not take
steps implying de facto recognition, Although the GDR attempt-
ed to attach the condition of what amounted to de lure recog-
nition to the Finnish trade agreement initialed asautumn,
it has apparently used more restraint in the case of Swit zer-
land, as the Swiss trade is more valuable, The Swiss also
find such arrangements profitable and probably consider them
to be of sufficient interest to the GDR so that the GDR will
not hamper Swiss interests in East Germany.
FRANCE
The new minimum wage about to be set in France will
determine in large par the extent o a or s scon ent in
the coming months. A committee composed of representatives of
the four major unions and the Government is now studying bud-
gets of typical French workers so as to be able to make re-
commendations to the Government, which will actually fix the
minimum wage, probably by mid- summer . The new minimum will be
the.basis of all wage scales to be established under the
collective contracts which are still to be negotiated.
The old minimum was 12,000 francs, based, according
to the tradition, on the budget of a Parts metallurgical wor-
ker. The Communist-dominated General Confederation of Labor
(CGT) demands that the minimum be raised to 19,000 francs; the
non-Communist unions believe 17,000 is basic; the Government
seeks to hold the figure slightly under 15,,000*
Should the Government's view prevail, worker resent-
ment, simmering since the virtual defeat of the February-March
strike campaign, might boil up into another wave of strikes.
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Prolonged strikes, however, would still be unlikely
because considerable bargaining power has been lost by the
unions through the continued rise in unemployment, which
makes the workers increasingly fearful of jeopardizing their
jobs.
The minimum wage is finally apt to represent a
compromise between the estimates of the Government and the
non-Communist unions, The closer the figure is to the
latterts estimate, the greater will be the prestige gained by
all the unions, and the smaller will be the likelihood of a
strike wave; also, the closer the figure approaches that
estimate, the greater will be the probability of a new wage-
price spiral.
BELGIUM
A Altho the ro-Leo old Christian Social Part
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over rig Leopold's status will not then be eas
Despite the probable voting power in Parliament for an all-
PSC (Catholic) Government, the PSC will be faced with the
reluctance of many Catholic political and trade union leaders
to bring Leopold back under a one-party Government, and with
the inevitability of Socialist and Communist strikes if
Leopold is restored.
The election campaign will be waged largely over
the issue of King Leopold' s status, and the position of the
PSC in this respect will be strong. In the 1949 national
elections the PSC obtained an absolute majority in the
Senate, but fell two seats short of a majority in-the Chamber
of Deputies. In the same elections, the Liberal Party made
gains in the Flemish areas, where later, the "popular con-
sultation" (March 1950) on Leopold's status showed that
many people who had voted Liberal favored the Kingts return.
The Liberal Party, therefore, may be expcoted to lose out
among the Flemings to Catholic candidates. The PSC probably
has minimized the threat to its strength represented by the
extreme rightist Flemish parties by preparing joint lists
with the most powerful of these groups.
Besides its probable loss of Flemish support, the
Liberal Party, by its seeming willingness to compromise on
its opposition to Leopold, may cause the defection of its
Walloon supporters to the Socialists or to independent
Walloon groups. The running of joint Socialist-Liberal
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candidatoe'in the Luxembourg and Limburg provinces is
unlikely to make substantial inroads into the strong
Catholic position in these areas. There probably will be
little change in the parliamentary strength of the Socialist
Party, although a gain of one or two seats from the
Communists is possible. The severe losses the Communist
Party sustained in 1949 reduced it about to the "hard core",
and almost to its prewar parliamentary strengths
ITALY
A nation-wide strike of the Communist-inspired
farm dayylaBiorers race anti may have been averted by the
surprise conclusion recently--of a national contract for the
day-laborers. All labor unions have hailed the contract as
a major victory for the workers. It provides for an eight-
hour day, except during periods of minimum agricultural
activity, and for various other benefits including extra pay
for overtime, night work and holidays, and for a 6% wage
increase as compensation for national holiday and Christmas
bonuses, which these workers do not enjoy because of the
temporary nature of their employment. The principles of
this national contract had been agreed to at the settlement
of the braccianti strike in June 1949, but negotiations
between rit _e .an owners and the unions (with government
mediation) to Implement these principles had been long and
drawn out, with little evidence. of 'accomplishment until the
contract was suddenly signed on 13 May.
Until that date, it seemed likely that the
numerous sporadic strikes during the past six weeks, in
which a number of farm-laborers had been killed, would lead
to a potentially dangerous nation-wide strike, probably when
the farm-laborers were needed for the wheat harvest at the
end of May.
Though the danger of such a strike still exists,
inasmuch as the braccianti remain the most destitute class
In Italy and their zeta or objective of a uniform national
wage law remains unattained, the danger has been distinctly
reduced by the achievement of the 13 May labor contract.
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Christian Democratic Part will meet
r
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B Ital
sm in ar ament as a resu of
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or
with Inareas in- is sponsors p o` measures c ear y esired by the Vatican.
The opposition will come not only from parties outside the
Goverment, but from the moderate leftists in the Cabinet
itself. The issue of "clericalism" will be raised by these
groups in connection with: (1) the school reform bill
recently outlined by the Christian Democratic Minister of
Education; and (2) the bill limiting divorce, presented by
the Christian Democratic Minister cf Justice. These two
bills are currently the subject of heated press discussion.
Pecause the school reform law would greatly
increase the influence of the Church in education, the
Christian Democrats are vigorously opposed by their coalition
partners, the Republicans and democratic Socialists (both
moderate leftist parties), by the Liberals (conservative)
and by the extreme Left,
The extent of the opposition to the divorce measure,
was shown in the Senate, where the Christian Democrats were
its sole supporters. This bill, which would give the
Attorney General the right to rule on the validity of Italian
divorces abroad, thus taking the matter out of the hands of
local civil magistrates, is attacked as an undemocratic en-
croachment by the executive branch of the Government upon
the powers of the judiciary. The Lateran Pact, recognized by
the Italian Constitution, prohibits divorce in Italy; critics
of the new bill on foreign divorces charge that it would give
the Vatican, through its power of annulment, a monopoly over
marriage dissolution, eliminating the distinction between
civil and religious marriage.
Sectors of the Italian press also interpret the
acquisition by the militantly religious Dossetti group of
membership in the directorate of the Christian Democratic
Party as an indication of greater "clerical" influencee
The Vatican can be expected to disassociate itself
officially from any political group, but will probably take
a strong stand on religious and moral grounds in favor of
the school and divorce bills. If these are enacted diInto stolaw,
they will be another factor in the growing popular
faction with the Goverment' s policies o
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SPECIAL ARTICLE
FRENCH. RESISTANCE TO ECAtS POLICY ON INVESTMENTS
T Through 1950 at least, the French Government is
not likely to concentrate investments in the "critical
sectors" defined by ECA0 The now approach of ECA to in-
vestments calls for financing projects that promote
economic integration and dollar earnings. The French
Government, however, is determined to carry out fully the
remainder of the Monnet investment program, which involves
mainly heavy industry and is, on the whole, designed
neither to prepare French industry for free European com-
petition nor to expand dollar earnings. Private investment
in France, moreover, is likely to remain at a relatively
low level throughout this year.
To promote economic integration, ECA would have
the governments of the participating countries (and private
investors as well) give particular attention to workers?
housing and the retraining of workers. A rationalization
of European production would inevitably force a readjust-
ment of the national economies which mould require the
shifting of some workers from their present homes and
occupations to others. Hence ECA is convinced that the
present French housing program must be greatly expanded and
that French workers must be rapidly retrained for jobs in
the most efficient industries. These requirements are, how-
ever, receiving only secondary attention in the French
Governentt s current investment planning.
In the field of agriculture, ECA favors Investment,
.in the farm "extension service," the recovery of waste lands:,
tho construction of farm buildings, incentives to the use of
modern farming methods, and the improvement of credit fa-
cilities. The French Goverment has barely begun to invest
in these activities, having hitherto concentrated its slight
agricultural investments in such rural community projects
as better roads and drainage systems.
To expand dollar earnings, ECA believes the parti-
cipating countries should accelerate their plans for en-
couraging exporters to develop markets in the dollar area,
and should also promote tourism by such means as the erection
of new hotels and the improvement of existing facilities.
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The French admit that the "critical sectors" must
be strengthened eventually, but they are not inclined
to act energetically at this time. The Government, under
heavy pressure, especially from Industrialists, to cling
to its investment programs finds its present course
politically expedient. The Government is unlikely, moreover,
to request an over-all increase in public investment expen-
ditures, inasmuch as it professes to fear that such action
would jeopardize the financial stability achieved thus far.
Actually, since the Socialists left the Cabinet in February
1950, the Government appears to be favoring business over
labor, in this case by postponing projects advantageous to
the workers.
When ECA suggested that 20 billion francs (less
than 10%) of the 1950 counterpart funds be earmarked for
projects in the "critical soctors," French officials tartly
complained of undue US Influence, and charged that the US
wanted to circumvent Parliament and press the French Govern-
ment to make expenditures popular with labor. Although the
French finally concurred in ECA's proposal, they can be
expected to obstruct any effort by ECA to make further
recommendations along this line in 1950.
ECA has, in view of this situation, decided to
recommend officially only those projects within the "critical
sectors" in which the French themselves have already expressed
an interest, meanwhile popularizing its investment objectives
among groups influential with the Government. With this
approach, ECA will be able to exert some influence toward
strengthening French investment policy in the "critical
sectors." France is likely, for example, to direct some
additional agricultural investment into the channels desired
by ECA, and it is already encouraging the modernization of
automobile production for long-term international competition
and urging common action by the countries participating in
ERP to remove all quota restrictions on automobile importso
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