WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400040013-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: November 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 13
• Publication Date: June 28, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
VOL. VI - No. 25
For week ending 27 June 1950
28 June 1950
NOTICE: WORICNG.-PAPER
This document is a working paper, not an official
issuance, since it has not necessarily been coon--
dinated 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 informal views to
other Intelligence analysts of the US Government who
are working on similar or overlapping problems. It
is intended for the use of the addressee alone, and
not for further dissemination.
DOCUMENT NO.~~
NO HANG; IN CLASS.
DECLASSIFIED
CLASS. CHANGED TO: T-,-,, S C
NEXT RE !EVI DATE:
RUTH: '3 -_-.--
DATG , it \ II a'at ~:: 372044
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VOL VI - No. 25 For rick ending
25X6A
27 Ame 1950
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treat rye Doti a ons ~: e ;e are nos -s~ af`"ari ~ mpen rid; can e
in the vetpo~ s .on in the quadripartite occupation of
Austria. The USSR has not undertaken any unusual interference
In Austrian affairs, and Soviet conduct in the Allied Control
Commission has not suggested any deterioration of the present
four-power interpretations of the Control Agreement for
Austria. Soviet military riovements, though varying; somewhat
from previous annual spring trainin; schodules, appear to be
concentrated in the u.}:sual :Doellersholm and Apelton training
areas and no abnormal increase in Soviet forces has been noted.
`there is no evidence that the Austrian Communist Party has
been strengthened either by paramilitary training, receipt of
arms, or by fresh overt support from the Soviet element.
`enough Soviet propaganda continues to belabor the
theme that Austria's Government is meekly submitting to Western
schemes to exploit the country as a colony for capitalist profits
and aggressive ,.,ioves, this propaganda does not appear to be
taken too seriously by the US SIR'. Such charges against the
Western Powers are not new and appear to be calculated more to
discredit and confuse the Austrian Government than to precipitate
a 'crisis with the Western Po,.,iers. The Soviet version of the
present treaty impasse continues to emphasize the unwillingness
of the '.vest to demonstrate its desire for a treaty by withdrawing
troops from Trieste
Dessite the present serious impasse .
asse. in the Austrian
i1e: e ection by the S :iss eleectorate of the federal
Nana: .al tie g~n e Sys aoa.u . ~ccn tc she mo s
?iIff i. ^uit postwar problem in Suit zerland- -t:` at of assuring
e 'edera.l , verniient dependable and adequate revenues. the
d:I.efea`ed ieasuzre would have provided a constitutional basis
for the sources of federal. revenues, much of which is now
collected under emcrrency po,.`ers scheduled to expire by the end
of 1950.. Should these cnergenc powers end, and should no
alternative method of ra I sins funds be found, fedeoai revenues
could well be reduced by an estimated 60;:l at the end of this
1j,ear
A parliamentar? extension of the present temporary
powers was defeaued by the S%jiss voters last September, and the
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S E CIt E, T
recent measure was an effort at a permanent solution
acceptable to the population. In providing, however, for
taxation by both the cantonal governments and the central
government,, the new measure proved to be complicated and
confusing to the voters. Its defeat may also be attributed to
public apathy and to the perennial Swiss issue of cantonal as
opposed to federal power. Perhaps 'u-he greatest factor contri-
buting to the bill's defeat, however, was strong opposition by
the Socialists,., Who normally seek to strengthen the central
government. The Socialists opposed the bill on the grounds
that it would put a disproportionate burden upon the small wage
ear.Ilers
The Government must now redouble Its efforts to find
a solution to its revenue problem. During this sumer, the
Confederation will have to choose one of the following courses
of action: Cl) seek again an extension of the present
temporary taxing powers; (2) propose another temporary taxing
regime; or (3) attempt to make the cantons assi rie the obligation
of supplying the federal Government with supplementary revenues
every year.
- _Sj__ ...... yrvcai va Z-z.Lo 3 tJV L LJ LL ULLL 1 'UrS.LUtI1LL
ncent Aurio s ros ect;ive f'f' c t ern f ndi a .r
su
ccessor
tmcrreie,~or~ea au w ose rn d e=o~ie~ro
T
c
: o t n gas unexpec`;ea y over own on 24 June, would weaken
France f s position among western European nations. Bidault's
Government collapsed on a vote of confidence of 352 to 230.
Considering the Schuman Plan negotiations,, the Interstate
conference in France of the Indochinese states, and the invasion
of south Koreas, the Government 8 s '?ollapse occurred at a most
-r=ow portunc time especially as Prance has been recently emerging
as the leader of the western European nations. These factors
r=rIl , however, probably spur French efforts to foriua a Govern rent
coalition, probably includii t'_t.e Socialists, as quickly as
possible.
One of t..? most urgent needs is a working agreement
between the 2opular xtepublicans (PIi,P), the Socialis't;s, and the
Padi.ca.l Socialis :-s for though they may not all participate in
the next coalition, they must all support the Government in the
ya Ional As-sembly~, `,' .e split between these three parties on
c)L. ,aosti.c issues, especially ' the question of increased wages to
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workers, renders more difficult an agreement on the policy
of a new Government.
The situation is further complicated by the fact
that a second defeat on a vote of confidence will require
dissolution of the Assembly and new elections. The Gaullists
immediately took up the cry for elections in the near future
as a result of the recent crisis. The first issue on which
the views of the three parties must be reconciled prior to
formation of a new Government is that of budgetary expenditures,
the issue on which the Bidault coalition collapsed.
Throu 11 their u parent decision not to expand the
scope of tie con erefice with t he t roe n oc nose sat e
an over-all review of French In oc nose re at ions e the
8 March Agreements, the French will further weaken the already
unpopular Huu Government in Vietnam" The conference was
called, as provided in the Agree:iient s, to work out the
technical details of matters of com. on interest to the three
states, such as c,3ntrol of customs, finance, Immigration, and
communications. One of Bao Loci's major complaints has been
that close French control of finances makes it impossible for
his government to fuuiction. Although the French will probably
be willing to relinquish overt controls to the native govern-
ments, the fact that the piastre is ultimately supported by
the Fronc'7 Treasury stringently limits the freedom of action
which the French are likely to allow a joint Indochinese bank
of issue. Until there has been appreciable Indochinese
economic recovery, the French will insist on supervisory controls.
The French could have contributed to stabilizing the
political situation in Indochina if they had been willing to
hthe Conference discuss the 8 March Agreements as a whole?
have ..
with a view to their liberal revision. The presence of Bao Dal
in France during, the conference, and the implied threat of his
prolonged absence from Vietnam w` th its consequent serious effects
on French policy in Indochina, may influence the French to allow
the three states greater control of their finances.
F1IE2,CTI AND SPANISH NOi Tll AND WEST AFRICA
B The recent formation of a Yxoroecan Socialist Part
a sparke by .-ie .'rencn as . ency in Morocco to nu____y tt e
political dominance of the nationalist Istiglal party and destroy
that party's capabilities as a vital force and challenge to
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St; CRET
French he,ertony in the area. The infant Socialist
organization has drawn attention principally by denoutxcinC
Imperialism and the reactionary outlook of the French colonists
In ftforocco--to attain any success it needed to attack some
r?a.nifestations of the Protectorate--and by indica uin ; that it
would support a constitutional monarchy for "or?occo * Its recent
public statements, however,, have evidenced little enthusiasm for
the norarchleal farm of Coverrr,ent. Represented on the
directorate Is a relative of the Serif el Kottani, leader of a
Oli ticall-? active rcl .{sous brotherhood (Soo ''Western Europe
(vision '.'Jeekly - 3 !lay 1350) and opponent of the rei~ninG
Sultan, ho Is also t ho noritnal 1i ad of tho I tigla.l party. The
?s.t:vW party has attracted only a few -oroccaru3, who are ;enorally
considered to be French stoogos. Because of the Residency's
role in Its creation, it will not a~, tract and; ;rca t number of
>1oroecrazas, and p obably will not succeod in ;:earenin the
istigia.l movorlent
Anti-British f.eeline In Italy has boon revived
the pub ca on t' " ar 1a ' ; r6--xan er s repo` F-f-o-n the
a ~.alian caripait;n of 'r orld '.,ar 11. '.'his development will
!:ron ,then the appeal of nationalist and. c, tremist groups who
,;Lat l t.a lyW s i.nteres _ s a,re not best served by Its present
r'e3`'~.'ter . #orl`1 "n policy.
=utt'l.ic 1 eeaction against some, sta raent s in the report
#I?'! ^" Ita.liarns feel belittles their participation in the ~r'ar
llizti_~;~1,~]x?i7 the contribution of the Italian partisans,
-''kmr's ra a time when there is resentment over tlrc :3ri tish
;?~_~s1 tiui:r 01z. the cchi iari Plan. i31 tterrroes toward the UK may in
r3 rekindle} public dirsatisf