ESTIMATE OF THE WORLD SITUATION THROUGH 1955

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A003200010001-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 11
• Document Creation Date: December 27, 2016
• Document Release Date: January 14, 2013
• Sequence Number: 1
• Publication Date: October 23, 1953
• Content Type: NIE

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NATIONAL INTELLIGENCE ESTIMATE
ESTIMATE OF THE WORLD SITUATION
THROUGH 1955
lose COPY
1012,90n
NIE-99
Approved 20 October 1953
Published 23 October 1953
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At1TH: HR 70-2
DATE: /____ y_ l __ REVlEWER:3 2,2 1Ti'
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The Intelligence Advisory Committee concurred in this
estimate on 20 October 1953. The FBI abstained, the
subject being outside of its jurisdiction.
The following member organizations of the Intelligence
Advisory Committee participated with the Central Intel-
ligence Agency in the preparation of this estimate: The
intelligence organizations of the Departments of State,
the Army, the Navy, the Air Force, and the Joint Staff.
CENTRAL INTELLIGENCE AGENT U,
REST E: sfr
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1. This copy of this publication is for the information and use of the recipient
designated on the front cover and of individuals under the jurisdiction of the re-
cipient's office who require the information for the performance of their official duties.
Further dissemination elsewhere in the department to other offices which require the
information for the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary for Intelligence, for the Department of
State
b. Assistant Chief of Staff, G-2, for the Department of the Army
c. Director of Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
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Department or Agency
2. This copy may be either retained or destroyed by burning in accordance with
applicable security regulations, or returned to the Central Intelligence Agency by
arrangement with the Office of Collection and Dissemination, CIA.
3. The overseas dissemination of this intelligence will be limited to a period of
one year or less, at the end of which time it will be destroyed, returned to the forward-
ing agency, or permission requested of that agency to retain it in accordance with
IAC-D-69/2, 22 June 1953.
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
DISTRIBUTION:
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ESTIMATE OF THE WORLD SITUATION THROUGH, 1955
SCOPE
This estimate is concerned with the major international trends which will affect
the world situation through 1955 rather than with the specific events and conditions
which will characterize that situation. The estimate must assume a continuation of
present US policies and thus cannot consider the effects which, a change in these
policies would have on the world situation.
ESTIMATE
THE OVER-ALL SITUATION THROUGH 1955
1. Despite the change in regime in the USSR
and the shifts in Soviet foreign and domestic
tactics, there has been no change in the
USSR's basic hostility to all non-Soviet power.
The USSR will continue its cold war against
the Free World, largely through a vigorous
political warfare campaign. While East-West
negotiations are possible, there is little likeli-
hood of any major Soviet concessions.
2. On the other hand, we believe that delib-
erate initiation of general war by the USSR is
unlikely during this period,' and, to the ex-
tent that the USSR pursues a more cautious
policy, the chance of war by miscalculation
will also probably be less. However, there
will be continuing danger that it may occur
from a series of actions and counteractions
initiated by either side, but not intended by
either side to-have that result. In particular
it might arise from actions by one side that
were regarded by the other as an imminent
threat to its security. There will also be a
continued danger of new or intensified East-
West clashes, particularly in Indochina, and
Korea, and of incidents in Germany.
3. In the absence of such East-West clashes,
and unless the USSR, abandons its ostensibly
The Deputy Director for Intelligence, The Joint
Staff, considers that the intelligence available is
insufficient to permit a judgment, of Soviet capa-
bilities or intentions, sufficiently accurate to jus-
tify the conclusion that:
"Deliberate initiation of general war by the
USSR is unlikely during this period."
conciliatory tactics, the' next two years will
probably be a period of reduced Free World ap-
prehensions of general war. So long as this
period lasts it will present a new challenge to
the Free World. While over the longer run
the very diversity of the Free World may lend
it a flexibility and potential for growth which
will constitute a source of strength, over the
next two years this diversity may prove a
source of weakness. The totalitarian nature
and centralized controls of the Soviet Bloc
might give it advantages in this phase of the
cold war, even though the totalitarian rigid-
ities of the Bloc system might over the longer
run impair its stability and cohesion. Con-
tinued stresses and strains within the Soviet
Bloc are likely, but the monolithic unity and
forced cohesion of the Bloc will probably be
much less affected by a situation of reduced
apprehensions than the more divided Free
World. Moreover, the build-up of Bloc
strength will almost certainly continue, even
if at a somewhat reduced rate, while the Free
World may be inclined to relax its guard. We
believe that in a situation of reduced ' inter-
national apprehensions and Bloc emphasis on
divisive tactics, there is danger of a weakening
in the unity of the Free World.
4. The progress being made by the USSR in
the development of nuclear weapons is also a
factor of prime military and psychological
importance in the world situation. As this
Soviet capability increases, Western superior-
ity in numbers of nuclear weapons will be of
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relatively less significance so far as the psy-
chological factor is concerned. As the USSR
increases its capabilities for delivering a seri-
ously damaging attack on the US, the US is
losing the unique position it has held in the
East-West struggle. ' The full impact of this
development is not yet clear, but even now we
perceive two new elements:
a. One is the danger that the USSR may
use threats of atomic bombardment against
certain Free World countries in an attempt to
force their compliance with its demands.
There is a chance that some US allies, if they
feared that the threat of US retaliation would
not deter Soviet action, would be forced by
the prospect of atomic devastation to adopt
more neutral positions in a cold, or especially
in a hot, war.
b. In an age where initial air assault can be
so destructive, the US is losing, if it has not
already lost, the immense advantages of being
able to conduct a deliberate and extensive
post D-day mobilization with relative freedom
from enemy attack.
PROBABLE TRENDS IN SOVIET BLOC
COHESION, STRENGTH, AND POLICIES
5. Cohesion of the Bloc. Despite the possi-
bility of a disruptive struggle for power within
the new Kremlin leadership and the evidence
of popular disaffection within the Satellites,
we believe the Bloc will preserve its cohesion
through the period of this estimate, and that
the Kremlin will continue to play the dom-
inant role in the formulation of Bloc policies.
We believe that the USSR and Communist
China will remain closely allied during the
period of this estimate.
6. Bloc Capabilities. The build-up of Bloc
basic industry and military capabilities will
continue even though increased attention will
be devoted to the correction of certain eco-
nomic deficiencies in agriculture and con-
sumer industries which recently have been
specially emphasized. There are indications
that the Soviet authorities intend to proceed
along the lines laid out in the announced
plans for these sectors of the economy. This
would require an allocation of greater re-
sources to agricultural and consumer goods
production and, at least for the short run,
would lead to a reduction in the rate of ex-
pansion of other sectors of the economy.
7. The most significant increase in Bloc mili-
tary capabilities during the period of this esti-
mate will arise from enlargement of the Bloc
stockpile of nuclear weapons (and the addi-
tion of a thermonuclear component), and
from an increase in the number of its jet air-
craft and its submarines. The Bloc may by
mid-1955 have available a sufficient number
of heavy bombers to increase greatly its long-
range air offensive capabilities. The Bloc will
probably increase its air defense capabilities,
and may have a limited number of all-weather
jet interceptors in operational units. We do
not believe that marked changes in Bloc mili-
tary strength and capabilities are likely to
occur in other respects; however, there will be
a general improvement in training and equip-
ment of Bloc armed forces.
8. Bloc political warfare capabilities, through
exploitation of Western political and economic
vulnerabilities, encouragement of anti-West-
ernism and nationalism in underdeveloped
countries, and utilization of the world-wide
network of Communist parties, will remain
great.
9. Probable Bloc Policies.2 We believe that
the Communist rulers remain profoundly con-
vinced that permanent hostility exists between
the Communist and the free worlds. Their
basic objectives, therefore, continue to be an
expansion of their own sphere of power and
the eventual domination of the non-Commu-
nist world.
10. We believe that during the period of this
estimate Bloc leaders will try to avoid courses
of action which in their judgment might in-
volve substantial risk of general war. We also
believe it unlikely that. the Bloc will initiate
new local aggressions with identifiable Bloc
forces during the period of this estimate, since
the Communist leaders probably estimate that
virtually any new local military aggression
'The material in paragraphs 9-14 is taken from
NIE-95, "Probable Soviet Bloc Courses of Action
Through Mid-1955," 25 September 1953.
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would now entail substantial risk of general
war or political consequences adverse to Bloc
interests.
11. It is always possible, of course, that the
Kremlin will deem some act of local armed
aggression sufficiently advantageous to make
the risk worth while. Moreover, despite its
reluctance to run substantial risks of general
war, the Kremlin might through miscalcula-
tion adopt some course of action involving
such a risk. We also believe that the Kremlin
would not be deterred by the risk of general
war from taking counteraction against a
Western action. which it considered to present
an imminent threat to Bloc security.
12. During the period of this estimate the
Communist leaders will conduct a vigorous
political warfare campaign to undermine the
Western power position. At present the
Kremlin seems to be trying to give the impres-
sion that it has adopted a more conciliatory
policy than that followed in Stalin's later
years. The Kremlin may hope by such tac-
tics to relax the vigilance of some Western
states, to encourage dissension between the US
and its allies, and to delay the progress of
Western rearmament. We cannot predict
how long such comparatively conciliatory tac-
tics will continue; we believe that harsh
courses of action similar to those pursued by
the Kremlin in the past will reappear when-
ever the Kremlin deems them advantageous.
13. We believe that Bloc leaders during the
period of this estimate will probably be pre-
pared to reach an accommodation on some
minor questions, and may make plausible but
unacceptable proposals on major matters.
However, they will almost certainly be un-
willing to settle any East-West differences at
the cost of major concessions. We believe,
moreover, that the Bloc leaders will be ex-
tremely cautious in pursuing conciliatory tac-
tics, and may revert from time to time to
demonstrations of toughness, especially when
they consider that their vital interests are in-
volved, or that their tactics are being con-
strued abroad as a sign of weakness. Offers
to negotiate may be accompanied by remind-
ers that the USSR now has improved capa-
bilities in the nuclear weapons field, and as
these capabilities further increase, the Krem=
lin may become bolder in its dealings with the
West.
14. There are recent indications that the Bloc
intends to increase its trade with non-Com-
munist states. The Bloc's volume of trade
with the Free World will probably increase
somewhat during the period of this estimate,
but this trade will continue to be very small
in proportion to intra-Bloc trade. New trade
agreements will probably be intended not only
to obtain desired imports but also to weaken
the economic ties of non-Communist states
with the US, and to make strategic trade con-
trols a bone of contention between these states
and the US. While the Bloc will not be able
to bring about a major shift in present trade
patterns, the Communists probably estimate
that political dividends can be earned from
even small increases in their current volumes
of trade with individual non-Communist
states.
PROBABLE DEVELOPMENTS
IN THE FREE WORLD
15. During the next two years the Free World
will have difficulty in maintaining its strength
in the face of Soviet divisive tactics and prob-
able reduced apprehensions of East-West con-
flict. In contrast to the Kremlin's ability to
control or influence the close-knit Soviet Bloc,
the US, as leader of the anti-Soviet powers,
faces the complex problems of dealing with
the loose anti-Soviet coalition and the agglom-
eration of other nations of varying neutral
tendencies which together make up the Free
World. To many of this latter group, partic-
ularly the Middle and Far Eastern countries,
the East-West struggle seems less important
than the solution of their internal problems
and the assertion of their independence' of the
chief Western Powers.
16. Differing views also exist between the US
and its allies over the imminence of the Com-
munist threat. The very fact of Communist
aggression in Korea increased fears of general
war and was a prime factor in stimulating
Western rearmament. Now that many Free
World countries believe that the threat of war
has been reduced by a Korean armistice and
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by an ostensibly more conciliatory Soviet
policy, the US will have greater difficulty hold-
ing together an anti-Soviet coalition and in
securing increased Free World armed strength.
The levelling off of the US's own rearmament
effort and the decline in many of its foreign
aid programs also lessens the sense of urgency
abroad.
17. The apparent decline of Free World confi-
dence in US leadership is another problem
facing the US. Influential groups in many
Free World countries, including several US
allies, doubt the stability, moderation, and
maturity of US policy. On the one hand,
there is fear the US will shift to a "go-it-alone"
policy or even retreat to isolationism, on the
other that the US will involve the Free World
in war. These doubts and fears offer a fertile
field for Soviet divisive tactics, and the new
Soviet regime may be more successful than
Stalin in exploiting them.
18. In a situation in which many Free World
countries believe that the threat of war has
been reduced, economic problems will also
assume greater prominence and will test the
strength and cohesion of the Free World.
This reduced apprehension will weaken what
has been a powerful incentive to cooperation
and sacrifice. Moreover, some readjustment
to a reduced rate of rearmament and declin-
ing US aid will be necessary. Much will de-
pend on US economic policies and the US
economic situation. Not only would US eco-
nomic setbacks have a serious impact on the
Free World, but US trade policy will directly
affect the economic health of Free World
countries, and US aid will remain in many
cases an important element in their military
build-up, economic stability and development,
and political orientation. The problem of
East-West.trade is also likely to become more
troublesome.
19. Therefore, we believe that in the absence
of renewed Soviet provocation, there may de-
velop further serious rifts between the Free
World nations which will weaken the Western
position. in the cold war. Such rifts may
develop in any case as a result of economic
developments or local nationalist pressures
but reduced apprehensions of war, combined
.with skillful Soviet divisive efforts, would
make them even more serious. The most
troublesome differences may arise over poli-
cies to be pursued in the Far East. It is pos-
sible, therefore, that the next few years might
see an increasing isolation of the US, not by
its own desire but because of increasing policy
differences between it and other countries of
the Free World.
20. Even assuming the continuation of the So-
viet courses of. action projected in paragraphs
9-14 above, there remains a serious danger of
new or widening East-West clashes in such
critical areas as Indochina, Korea, and Ger-
many, which would again increase Free World
apprehensions. Whether, if such clashes took
place, the Free World would then rally to the
support of the US and of expanded rearma-
ment programs, as after the Korean aggres-
sion, would probably depend at least in part
on the circumstances under which the clashes
developed.
Probable Developments within the NATO
Coalition
21. Although we foresee no developments
which will undermine the basic solidarity of
the NATO alliance, we believe that, in view
of reduced European apprehensions of East-
West conflict, rifts may develop between the
NATO partners, particularly between the
European NATO countries and the US. The
USSR will attempt to undermine popular sup-
port for the NATO alliance and for rearma-
ment, in particular the program to rearm
West Germany. These efforts, together with
increased Soviet nuclear capabilities, contin-
ued intra-European differences, and Euro-
pean disagreements with the US over cold war
policies, may lead to more nationalist and
neutralist attitudes in Western Europe.
22. So long as apprehensions remain reduced
there also will almost certainly be a further
loss of momentum in the NATO build-up.
The general feeling that the immediate Soviet
threat has receded has already led most NATO
countries to reduce their military outlays.
While a further slow increase in NATO
strength over the next two years is probable,
only in event of renewed Soviet aggressiveness
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will it be as rapid as in 1950-1953. On the
other hand this might allow many NATO
countries to concentrate on domestic needs
and to devote more resources to meeting their
own social and economic problems. Such a
trend might strengthen countries such as the
UK, which remain highly vulnerable to ad-
verse international economic developments.
23. Significant increases in European NATO
military strength over the coming period will
probably depend upon the extent to which
Spain, Yugoslavia, and above all West Ger-
many can be directly or indirectly associated
with NATO. The Trieste issue will remain
an irritant in Italo-Yugoslav relations which
will render the association of Yugoslavia with
NATO difficult. Until a settlement of the
Trieste issue is generally accepted, the use-
fulness to NATO of the Greek-Turkish-Yugo-
slav entente will be impaired.
24. But above all, the prospects for greater
European NATO strength and cohesion will
revolve increasingly around the interlocking
problems of Germany's future and the atti-
tude of France. As a -result of Soviet failure
to come forward with any acceptable reunifi-
cation scheme and of Adenauer's overwhelm-
ing victory, the chances for integrating West
Germany with the Western Powers and for
initiating its rearmament have increased.
The Kremlin may seek to avert or postpone
these developments by renewed talk of Ger-
man reunification, but it is unlikely to offer
any terms which would jeopardize its control
over East Germany. Adenauer's position is
so strong and German disillusionment with
Soviet unification offers is so great that any
Soviet offers not involving abandonment of
Soviet control over East Germany would be
unlikely to have much impact on German
opinion. The importance attached by the
Soviet rulers to West German rearmament is
such, however, that they might react to it by
measures which would enhance the risk of an
East-West clash in this area. A likely pres-
sure point would be West Berlin.
25. Other difficulties will be created by the
weakness and hesitations of France. A strong
West Germany and a strong France are both
necessary for the creation of a strong and
stable Western Europe; French weaknesses
and indecision are. blocking the achievement
of this objective. France is over-extended in-
ternationally, hampered by outmoded political
and economic institutions, and still torn by
domestic, economic, and social difficulties.
France fears a strong West Germany which
might dominate it or drag it into war. More-
over, there are indications that the USSR, in
its efforts to forestall West German rearma-
ment, may concentrate on France as the most
vulnerable point in the Western coalition.
26. Though many in France are aware of the
need for strong government, there is no evi-
dence that this awareness will lead to a
stronger French political system. The social
cleavages, economic problems, and political
weaknesses of France will remain as serious
obstacles to the building of a strong and stable
Europe. A successful resolution of the Saar
issue, now made more likely by reason of the
Adenauer victory in West Germany, may well
prove the barometer of French willingness to
accept EDC. Even if France should ratify the
EDC, it will remain weak and divided during
the period of this estimate and will seek to
limit and delay West German rearmament.
Probable Trends in the Far East
27. In the last two years the most active
theater in the East-West struggle has been in
the Far East. There the Western Powers have
kept the Communists from overrunning South
Korea and Indochina while attempting to
build up anti-Communist strength through
US support of the non-Communist countries
in this area. We believe it unlikely that the
Communists will undertake new local aggres-
sion in the Far East with identifiable Bloc
forces. The emphasis in Communist China
over the next two years will probably be on
building up industrial and military strength.
However, we believe that the Communists
would take counteraction against Western
actions which they felt presented an imminent
threat to their security, even at the risk of
widening hostilities in the Far East.
28. It will be difficult to increase the strength,
cohesion, and anti-Communist orientation of
the non-Communist states of the Far East.
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The cessation of hostilities in Korea, together
with Communist efforts to promote rifts
among the anti-Communist powers, will add
to this difficulty. During the next two years
there is unlikely to be any significant improve-
ment in the Western position in this area;
moreover, there are possibilities of serious
deterioration, particularly in Indochina, Indo-
nesia, and Korea.
29. Korea. A Korean political conference, if
it takes place, is unlikely to result in any
agreement which would alter the status quo.
The Communists are unlikely to break the
armistice by renewing hostilities, but they al-
most certainly will not agree to Korean reuni-
fication on terms which would endanger their
control of North Korea. On the other hand,
if President Rhee remains convinced that the
US could neither prevent an ROK armed at-
tack against the Communists nor disassociate
itself from military support of such action,
once undertaken, we believe that he will prob-
ably at some time seek to disrupt the armi-
stice by such an attack. If hostilities are re-
newed, the Communists will probably take, at
a minimum, the military measures they con-
sider necessary to maintain their position in
Korea. Unless the ROK renews hostilities, we
believe that there will be a continued armed
truce in this area, with both the US and USSR
engaged in reconstruction and in strengthen-
ing their respective Korean partners.
30. Taiwan. Any major change in the status
of Taiwan is _ unlikely. The Communists
probably will not attempt invasion so long as
the US defends Taiwan; and unless the US
decides to support Chiang's forces directly, he
in turn will be unable to undertake more than
minor harassment of the mainland.
31. Indochina. We believe that there will al-
most certainly be important developments in
the Indochina situation during the period of
this estimate. The steady deterioration of
France's will to continue the struggle has been
at least temporarily checked by French re-
sumption of* the initiative under the Laniel-
Navarre plan. We do not believe, however,
that the French will achieve a complete mili-
tary victory. The French objective is to re-
duce the drain of the Indochina war on
France, while maintaining a position for
France in the Far East. The outcome will
depend on whether, by a combination of mili-
tary victories and political concessions, the
French can strengthen the Associated States
to the point where these states will be able
to maintain themselves against Communist
pressures with greatly reduced French sup-
port. The French would hope in this way to
create a situation which could serve as a basis
for successful negotiations with the Commu-
nists. The Laniel-Navarre plan may be the
last French effort in Indochina. Should it
fail to achieve its objectives we believe that,
unless the US proves willing to contribute
forces, the French will in time seek to nego-
tiate directly with the Communists for the
best possible terms.
32. For their part, the Chinese Communists
will almost certainly continue their present
type of support for Viet Minh. They are un-
likely to intervene with organized units, at
least in the absence of Western moves, which
in their opinion threatened the security of
Communist China. At the same time, the
Communists will probably talk of peace nego-
tiations as part of their propaganda campaign
and might raise the Indochina issue in high
level political conferences. They are unlikely,
however, to agree to any political settlement
which they believe would lessen their chances
of eventually gaining control of Indochina.
33. Other Countries of Southeast Asia. Prob-
lems facing the other Southeast Asian coun-
tries are those of attaining political stability,
coping with local insurrections, and meeting
their own serious economic problems. The
outlook in the Philippines, and in the absence
of serious deterioration in the Indochina situ-
ation, in Burma, Thailand, and Malaya, is for'
some improvement in stability, though these
countries will by no means resolve their
numerous internal problems. In Indonesia,
however, the leftist character of the present
government offers increased opportunities for
Communist penetration.
34. Japan. Accumulating economic difficul-
ties and the reluctance or inability of the Jap-
anese Government to adopt energetic eco-
nomic and rearmament policies are prolong-
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ing Japanese dependence on the US and delay-
ing Japan's development as a counterweight
to Communist power in the Far East. At the
same time there is growing anti-American
sentiment in Japan. Unless Japan can find
the necessary foreign markets and take the
necessary internal economic measures, the
development of a sound defense structure as
well as a sound economy will be endangered,
the present dominance of the moderate con-
servatives will be weakened, and the whole
pattern of US-Japanese cooperation will be
threatened. We foresee no basic change in
Japan's pro-Western orientation, but eco-
nomic difficulties and growing nationalism
will create increased US-Japanese frictions
and postpone the development of a strong
anti-Communist Japan.
Prospective Trends in the Middle- East,
Africa, and South Asia
35. In the underdeveloped areas of Asia and
Africa the Western position has deteriorated
since World War II. Local nationalism has
proved a force against the West and the deep-
seated revolutionary forces at work in these
areas have created political instability. It is
difficult to overcome the anti-Western senti-
ments of the newly independent Asian and
African countries and convince them that
Communist policies threaten their independ-
ence. Except in Iran, however, the internal
Communist threat is small and is unlikely to
grow greatly in the next two years.
36. The Middle East and North Africa. Con-
flicts between native nationalists and the
"colonial" powers will continue, but we be-
lieve that in certain areas there are prospects
for improvement in the West's position. The
fall of Mossadegh in Iran has at least tem-
porarily increased the opportunities for
strengthening Iran's internal stability and
settling the Anglo-Iranian oil dispute.
Chances for settlement of the Anglo-Egyptian
base controversy have improved, and if a set-
tlement is reached it will probably have a
favorable effect on both the stability of the
Egyptian regime and on the Western position
throughout the Arab World. On the other
hand, an Anglo-Egyptian settlement may set
the pattern for similar demands from Iraq.
The Arab-Israeli dispute will continue, but a
renewal of large-scale hostilities remains un-
likely in view of the near military equilibrium
of the two parties, and the restraining in-
fluence of the US, the UK, and France. The
more favorable policy that the US has adopted
toward the Arab States may contribute to
better relations with them. However, there
remain possibilities of markedly adverse de-
velopments in this volatile area. Although
the deposition of the Sultan of Morocco has
temporarily bolstered French control, it is
likely to drive the nationalists to more ex-
treme positions since France seems unlikely to
implement very far-reaching reforms.
37. South Asia. India and Pakistan will prob-
ably remain preoccupied with their own seri-
ous economic and social problems; they will
also remain concerned with their dispute over
Kashmir. India is unlikely to abandon its
neutralist position in the cold war, but Pak-
istan, motivated largely by its desire to im-
prove its position vis-a-vis India, will continue
its efforts to secure some pact with the West-
ern Powers, in return for extensive US aid.
Some further improvement in the relations of
this area with the West may occur over the
next two years, but they will remain acutely
sensitive both to anti-colonial disputes in
other areas and to any indications that the
West is pursuing aggressive cold war policies,
particularly against Communist China.
Probable Trends in Latin America
38. There will probably be a continued trend
in Latin America toward extremely national-
istic regimes based on demagogic appeals to
sectors of new political importance - organ-
ized labor, white-collar workers, and the lower
middle class. This trend will be most evident
in countries where rapid social and economic
change is taking place. This change results
from forced industrialization at the expense of
agriculture, which is generally accompanied
by severe inflation. Right or left extremism
which poses potential threats to US security
interests will probably be strongest in Argen-
tina, Bolivia, Chile, Guatemala, and possibly
Brazil. In these countries there will continue
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to be substantial Communist and demagogic
nationalist influences, which will attempt to
channel the resentment of the dislocated
groups against the US. In Guatemala Com-
munist influence over the government, already
strong, may increase. Communist penetra-
tion of British Guiana has posed a new prob-
lem in the Caribbean area.
39. Most Latin American countries will prob-
ably continue to cooperate with the US in the
UN on basic East-West issues, although they
will tend increasingly to pursue an independ-
ent course on issues affecting underdeveloped
countries. Latin America will be increasingly
concerned about US trade and especially tariff
policies. Regardless of the degree of Latin
American cooperation with the US, there will
probably be an increasing tendency to expand
commercial and possibly diplomatic relations
with the Soviet Bloc.
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