THE OUTLOOK FOR GERMANY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP98-00979R000400440001-9
• Release Decision: RIFPUB
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• Document Page Count: 18
• Document Creation Date: December 23, 2016
• Document Release Date: May 28, 2013
• Sequence Number: 1
• Publication Date: November 5, 1957
• Content Type: NIE

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NIE? 2 3 ? 5 7
5 November 1957
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N? 334
NATIONAL INTELLIGENCE ESTIMATE
NUMBER 23-57
(Supersedes NIE 23-56)
THE OUTLOOK FOR GERMANY
Submitted by the
DIRECTOR OF CENTRAL INTELLIGENCE
The following intelligence organizations participated in the
preparation of this estimate: The Central Intelligence Agency
and the intelligence organizations of the Departments of
State, the Army, the Navy, the Air Force, and The Joint Staff.
Concurred in by the
INTELLIGENCE ADVISORY COMMITTEE
on 5 November 1957. Concurring were the Director of Intelli-
gence and Research, Department of State; the Assistant Chief
of Staff, Intelligence, Department of the Army; the Director
of Naval Intelligence; the Assistant Chief of Staff, Intelli-
gence, USAF; and the Deputy Director for Intelligence, The
Joint Staff. The Atomic Energy Commission Representative
to the IAC and the Assistant Director, Federal Bureau of
Investigation, abstained, the subject being outside of their
jurisdiction.
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CENTRAL INTELLIGENCE AGENCY
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TABLE OF CONTENTS
Page
THE PROBLEM
1
SUMMARY
1
DISCUSSION
2
'.-DOMESTIC SITUATION IN WEST GERMANY
2
Results of the Recent Elections
2
Prospects Under the New Parliament .
3
Economic Situation and Trends
4
Economic Outlook
5
Current Attitudes
6
EAST GERMANY AND THE REUNIFICATION PROBLEM.
7
Soviet Policy Toward Germany
7
The Situation in East Germany
7
LINES OF DEVELOPMENT IN WEST GERMAN FOREIGN
POLICY
9
Basic Problems of Foreign Policy
9
Association with the West
9
Rearmament and the NATO Alliance
9
The European Cooperation Policy
11
Expansion of West Germany's Influence
Outside Europe
11
Policy Toward the Bloc
12
THE LONGER TERM OUTLOOK
13
The Problem of National Security
13
The Problem of Reunification
13
CHART ? The West German Bundestag
(Post-Election 1957) Following Page 13
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THE OUTLOOK FOR GERMANY
THE PROBLEM
To estimate the outlook for Germany, including the Federal Republic of West
Germany, East Germany, and Berlin, but with special reference to political develop-
ments in the Federal Republic and to the foreign and defense policies of its govern-
ment.
SUMMARY
1. As a result of the decisive victory of the
Adenauer government in recent elections,
the prospects are good for the continu-
ance in West Germany of a moderate
stable government allied with the West.
Its current economic health as well as
political stability could be threatened
both by crises generated by internal cir-
cumstances and by developments outside
West Germany's control, e.g. a major re-
cession in the West, or a major decline in
the strength and cohesion of NATO. We
believe that, barring such external devel-
opments, serious internal divisions and
extremism are highly unlikely.
2. The rate of economic expansion will
probably slow down primarily as the re-
sult of an increasingly tight labor situ-
ation. Some price rises also appear likely.
However, serious economic strains appear
very improbable unless caused by a ma-
jor recession in the West.
3. The Soviet leaders have again slammed
the door on reunification. They have no
intention of permitting the anti-Soviet
population of East Germany to be added
to that of West Germany on terms which
would enable a unified Germany to join
with the West. Moreover, they want to
continue their occupation of East Ger-
many in order to protect their position
in Eastern Europe, to apply a vise on
Poland, and to retain the advantages of
the advanced deployment of powerful
military forces.
4. Similarly the USSR is not likely to
weaken its hold on Berlin and, in con-
junction with the East German regime,
will probably apply increased pressures
on the Allied position. A widespread
East German revolt seems unlikely in the
next few years, although spontaneous
outbreaks are always possible, particu-
larly if there were uprisings elsewhere
in the Satellite area.
5. So long as this situation continues, the
West Germans seem likely to remain in
NATO. They also believe that they must
rearm in order to assure their national
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security, either as a part of NATO or, if
need be, independently. Nevertheless, re-
armament progress will probably con-
tinue to be hampered by doubts concern-
ing the basic strategic concepts upon
which forces and weapons systems should
be built, and by a lack of popular enthu-
siasm to accept the costs and sacrifices
involved. We believe the West Germans
are unlikely to consider withdrawing
from NATO and assuming a posture of
2
armed neutrality unless the alliance be-
came greatly weakened or unless the
USSR made an acceptable reunification
offer. In the event the USSR reassessed
its position and offered new terms for re-
unification, the West Germans would not
accept them if there were clearly a risk
of their becoming a Soviet satellite; on
the other hand, they probably would ac-
cept something less than they or their
Western allies now consider essential.
DISCUSSION
DOMESTIC SITUATION IN WEST GERMANY
Results of the Recent Elections
6. The outcome of the September 1957 na-
tional elections for the Third Bundestag was
a decisive victory for Chancellor Adenauer and
his administration. The Chancellor's Chris-
tian Democratic Union (CDU) and its Bavar-
ian affiliate, the Christian Social Union
(CSU) , won 50.2 percent of the popular vote,
as compared with 45.2 percent in the 1953
federal elections, and now hold 270 seats out
of a total of 497 in the new Bundestag. 1
7. The results of the election confirm the
trend toward a two-party system. The CDU/
CSU and the principal opposition party, the
Social Democrats (SPD) , represent over 80
percent of the electorate. The SPD also in-
creased its strength in the recent election by
polling 31.8 percent of the vote and obtaining
169 seats in the Bundestag ? a gain of 16
seats over its standing in the second Bunde-
stag. It now controls over one-third of the
Bundestag and is consequently in a position
to block amendment of the Federal constitu-
tion.
8. The two major parties are united in their
commitment to democratic government, and
their programs and policies have increasingly
come to reflect a public consensus on basic
social and economic objectives. On neither
domestic nor foreign policy was there a funda-
mental disagreement between the two parties
in the recent political campaign; their differ-
ences in approach were primarily a matter of
political tactics. On the reunification of Ger-
many, the major issue of public debate, the
SPD has contended that the government's at-
titude was needlessly rigid and proposed an
all-European security system as an alternative
to NATO membership. However, both parties
Distribution of popular vote and of Bundestag
seats as a result of the 1957 election. (See also
attached chart following page 13.)
Number of Bundestag
Percent of Vote
Seats
1957
(1953)
Present
August
1957
1953
Christian
Democratic
Union/
Christian
Social
Union
(CDU/
CSU) a
50.2
(45.2)
270'
253'
(243)
Social
Democratic
Party
(SPD)
31.8
(28.8)
169
153
(151)
Free
Democratic
Party
(FDP)
7.7
( 9.5)
41
35
( 48)
German
Party/Free
People's
Party (DP/
FVP) a
34
( 3.3)
17'
34 .
( 15)
Refugee
Party
(BHE)
4.6
( 5.9)
0
19
( 27)
Other
Parties
2.3
( 7.3)
0
3
( 3)
100.0
100.0
497b
497b
487
a Parties in the government coalition.
b 10 Saar deputies seated in January 1957.
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as well as the populace tacitly acknowledged
the current international impasse over reun-
ification. The previously important issues of
rearmament and of West Germany's NATO
membership ? both widely believed to be a bar
to reunification ? lost much of their divisive
impact. The building of West German armed
forces and their contribution to NATO have
been widely accepted as a practical necessity.
9. The blurring of political differences and a
lack of interest in ideological appeals has led
to the progressive weakening of smaller par-
ties. The electoral system used in the Federal
Republic eliminated the splinter parties, and
permitted only two of the smaller parties to
secure representation in the Bundestag. The
Refugee Party, which received 27 Bundestag
seats and 5.9 percent of the votes in 1953,
failed to obtain representation. Its greatly
reduced position as a national party reflects
the degree to which West Germany's 10 mil-
lion refugees from the East have been assimi-
lated into West German society. The two
right wing parties which obtained representa-
tion in the new Bundestag both did poorly.
The Free Democratic Party (FDP) , which
followed a blatantly opportunistic course dur-
ing the campaign, hoping to play the key role
in the formation of a government if neither
the CDU or the SPD won a majority, obtained
only 41 seats. The German Party, which won
17 seats, owes even this limited success to its
election agreements with the CDU.
10. The two major parties have tended to dis-
card ideological appeals in favor of platforms
which attract a wide variety of interests and
groups. This movement toward more broadly-
based moderate appeals has necessitated
greater efforts in balancing the divergent in-
terests within the two parties. The SPD's ap-
peal for middle-class support has involved the
muting of its orthodox old guard. The CDU,
in its attempts to represent at the national
level the interests of both Catholics and Prot-
estants, industrialists and workers, peasants
and urban dwellers, has benefited from the
quality of Adenauer's leadership and the ab-
sence of any major divisive issues so that the
problem has been manageable, at least for
the time being.
3
Prospects Under the New Parliament
11. With a comfortable majority of 43 seats,
the CDU/CSU will almost certainly retain con-
trol of the government over the next four
years. Its margin is increased by the support
of the smaller German Party, which will con-
tinue to provide a useful adjunct as a source
of conservative Protestant support. While
the Chancellor is 82 years old, he seems to be
enjoying vigorous health and an undiminished
appetite for leadership. Unless he suffers from
a seriously debilitating illness, he probably will
not retire. He has avoided indicating his
choice of a successor.
12. There is no dearth of candidates to suc-
ceed to the party leadership; Vice Chancellor
and Economics Minister Ludwig Erhard, For-
eign Minister von Brentano, Defense Minister
Franz-Josef Strauss, and Finance Minister
Franz Etzel are possible successors. Whoever
succeeds to Adenauer's position will probably
not exercise the same effective leadership.
Serious dissension in the CDU/CSU will prob-
ably be avoided, at least during the first year
?or two following Adenauer's departure.
13. We believe, however, that the party will
suffer some loss of cohesion and discipline
when Adenauer is no longer at the helm. The
regional, religious, and economic interests of
the groups comprising the CDU/CSU in both
the Bundestag and in the country will be less
effectively harmonized, and separate factions
or currents are likely to emerge. This will
complicate the legislative process and tend to
weaken the decisiveness and effectiveness of
the government.
14. The Social Democrats, again condemned
to political opposition, will have to reexamine
both their basic strategy and their policy posi-
tions. Some of its leaders probably will urge
that the party give up its attempt to cultivate
middle-class votes, reestablish itself as a class
party, adopt a radical program of social re-
form, and carry on a strong campaign against
the pro-Western policy of the government.
Such a program might have the advantage of
rallying a variety of discontented elements to
the Socialist cause in the event the domestic
economy deteriorated or the foreign policies of
Christian Democrats proved unrewarding.
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15. Wo do not believe, however, that the SPD
will adopt such a program. The vast majority
of its supporters do not appear either to be
eager for a social revolution or convinced that
a fundamental change in foreign policy would
win much for the party or for Germany. The
present moderate leadership seems likely to
retain control despite its inept and lackluster
management of the party. It will keep a crit-
ical eye on CDU policies, take advantage of
any mistakes or changes in the international
situation, and in general advance the line that
West Germany should be more flexible and
less committed than at present. We believe
that the Socialists have little prospect of be-
coming a majority party or of heading up a
coalition government at least in the next few
years unless developments outside their con-
trol ? such as a severe economic crisis or a
foreign policy debacle ? should give them op-
portunities not now foreseeable.
16. The FDP, weakened by dissension among
the diverse elements of the party, must at-
tempt to remain in vigorous opposition if it
is to retain its political identity. As with the
SPD, its only hope appears to be to capitalize
on unforeseeable opportunities. Containing
conservative nationalist elements already com-
mitted to greater independence from the West,
the FDP must wait upon an atmosphere when
this appeal could be more effectively exploited
as a political force.
Economic Situation and Trends
17. One very important factor underlying the
high degree of current political stability in
West Germany has been its remarkable prog-
ress in economic development and interna-
tional trade. Starting with a heavily dam-
aged industrial base and a very low standard
of living, West Germany is now enjoying con-
siderable prosperity and has a sound financial
position. This economic progress has ab-
sorbed the major energies of the West Ger-
mans, has contributed to the weakening of
formerly rigid class distinctions, and has
greatly enhanced the acceptance of the poli-
cies of the Adenauer government. The CDU's
overwhelming victory in the recent election
was probably more an endorsement of Ger-
man prosperity than a measured approval of
the specific policies which accompanied it.
18. Both domestically and in foreign trade
the West German economic situation in 1956
and early 1957 was exceedingly favorable.
The West German gross national product, in
terms of purchasing power equivalents, is now
about as large as that of the UK, $74.4 billion
compared with the UK's $75.6 billion, and con-
siderably larger than France's almost $60 bil-
lion. 2 By 1960, when the Saar is scheduled
to return to the German economic area, West
Germany's total GNP will probably exceed
that of the UK. West Germany's per capita
consumption in 1956 was slightly lower than
that of France and about 10 percent below
that of the UK, but it was substantially im-
proved over earlier years. The rapid recovery
of West Germany is due to the fact that it
invested a significantly higher proportion of
its national product than did other West Eu-
ropean states. Moreover, while France and
the UK struggled with internal inflation and
foreign payments problems, West German
prices increased only slightly and an export
boom was piling up large foreign exchange
reserves, which had reached $5.5 billion by
August 1957, about 70 percent of it in gold
and dollars. However, West Germany's rel-
ative position in Western Europe still falls
short of the position of pre-war Germany,
both in over-all production and in per capita
production and consumption.
19. The recently accelerating trend in the
West German export surplus to an annual
rate of almost $1 billion in the first half of
1957, has been due primarily to expanding
demand and inflation in the rest of Western
Europe. 3 The resulting strains on the for-
eign exchange reserves of other Western Eu-
= Estimate for 1956 on the basis of 1955 US prices.
Figure for West Germany adjusted to include
West Berlin.
West Germany's Foreign Trade
(in billions of US dollars)
First Half
1957
(Annual
1955
1956
Rate)
Exports
6.14
7.36
8.24
Imports
5.82
6.66
7.30
Export Surplus
0.32
0.70
0.94
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ropean countries, intensified in recent months
by capital flights to the Deutsche Mark, may
now be brought under control by the French
devaluation and more stringent credit restric-
tions in the UK. In any case the West Ger-
man government will almost certainly main-
tain its refusal to appreciate the Deutsche
Mark. Its approach rather is to liberalize im-
port duties, to advance the schedule for pay-
ment of foreign debt obligations and arms
purchases, to make increased restitution pay-
ments, and to provide for some export of cap-
ital. If these measures plus some anticipated
inflation in West Germany fail to correct the
imbalance, the Federal Republic hopes that
other countries will make the necessary ad-
justments. If they do not, West Germany will
be under increasing pressure to appreciate the
Deutsche Mark, relax credit restrictions, and
lend more extensively abroad, or suffer trade
discrimination.
20. Long-term private capital investment
abroad by West Germans is developing slowly.
In the year ending June 30, 1957, it amounted
to $118 million, mostly in the Western Hemis-
phere. Private lending in the Middle East
and South Asia has consisted mainly of medi-
um-term credits to facilitate the sale of capital
equipment and construction goods. West
German exports to these latter areas have
been expanding steadily for a total of $650
million in 1956, or about 9 percent of all West
German exports. The Federal Republic has
made two recent loans to the IBRD for a total
of $175 million, and this may indicate that
further government loans abroad will be
made. West Germany is committed to pro-
vide $200 million during 1958-62 for the de-
velopment of the overseas territories of its
Common Market partners and may undertake
loans to the European Payments Union and to
France.
21. There are indications that the rate of eco-
nomic expansion in West Germany may be
slowing down. Some decline was to be ex-
pected as the backlog of reconstruction needs
was met and the labor situation became
tighter. In 1956 real GNP and industrial
production increased 6.4 and 8 percent re-
spectively, as compared with gains of 11.2 and
14 percent in 1955. However, in early 1957
West German economic growth accelerated
somewhat, as it did in the rest of Western
Europe. In large measure, the level of West
German economic activity is dependent on
conditions in other Western countries, since
West German exports total over 30 percent
of its industrial production. The continuing
growth of the West German economy even at
somewhat reduced rates has been due largely
to the rising level of its exports.
22. In part the declining rate of growth has
been in response to the West German policy
of maintaining a tight monetary and financial
brake on the economy in order to control in-
flationary pressures resulting from an already
tight labor market. Gross fixed capital in-
vestment reached a peak of 23 percent of GNP
in 1956, but fell off significantly in the first
half of 1957. Authorizations for both indus-
trial and residential construction have de-
clined. The recent reduction in the bank rate
was an attempt partially to offset this trend.
Economic Outlook
23. Under the best of circumstances West Ger-
many will encounter greater obstacles to fu-
ture economic growth. Fully 50 percent of the
total population is now employed or self-
employed ? a higher proportion than in any
other Western industrial country. The labor
force will grow more slowly during the next
five years. Due mainly to low wartime birth
rates, annual net accretion to the labor force
will decline from the current rate of 700,000
to about 400,000 by 1962. Moreover, the aver-
age number of hours worked in manufactur-
ing and building has fallen from 47.7 in early
1955 to 46.7 hours per week in early 1957.
Further reductions are likely as the result
of already negotiated and pending trade union
contracts.
24. West Germany will increasingly encounter
some of the inflationary pressures which have
bedeviled its Western neighbors. The tight
labor market and somewhat more limited op-
portunities for productivity increases raised
West German wage costs by 5 percent in
1956; greater restlessness on the part of trade
unions indicates that this trend is likely to
continue. Recently several large trade unions,
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including those of the metal workers, have an-
nounced their intention to seek higher wages,
shorter hours, and greater fringe benefits.
Coal prices have been raised by 8 percent since
the election and other basic industries may
seek to follow suit. In contrast to substantial
surpluses in recent years, the federal budget
is expected to be in deficit by over $1 billion
in the year ending March 31, 1958, as a result
of growing defense and social security expend-
itures. These and other factors point to the
likelihood of rising wage costs and an accel-
erated rise in consumer prices.
25. Because of West Germany's strong foreign
exchange and trade position, it will be able to
absorb a considerable amount of inflation
without economic strain. However, industrial
disputes, pressures on profits, and public sensi-
tivity to inflation may thus come to disturb
an otherwise favorable economic and political
situation.
Current Attitudes
26. The most characteristic attitude in West
Germany today, consequent to this sense of
economic well-being and to the absence of any
major political issue, is one of self-confident
euphoria. The West Germans seem chiefly
concerned with matters personal and materi-
alistic. Encouraged by their individual prog-
ress toward personal security and material
comfort, they are hopeful and expectant that
these things will be further strengthened in
the years just ahead. Individually the West
Germans are not exercised over political faiths
or nationalistic ambitions. There is a pre-
dominating desire to play it safe.
27. Yet, this desire to play it safe carries with
it certain undercurrents of uneasiness, espe-
cially in informed circles. There is a latent
feeling, which from time to time is surfaced
by events outside Germany, that perhaps the
course which West Germany is pursuing could
turn out to have been the pathway to dis-
aster. The Suez crisis in 1956, with the sharp
split between the policy of the US and the
UK and the veiled threat of Soviet military
action against the UK and France, had a
forceful impact upon West Germany, depend-
ent almost wholly upon a healthy NATO for
6
its security. Likewise, the events in Poland
and Hungary were recognized as harboring
serious danger of violent conflict in which
West Germany itself might become involved.
28. What made these developments of such
concern to the West Germans is their belief
that, in a war between the great powers, West
Germany would probably be virtually de-
stroyed. The presence of US forces together
with the NATO alliance are generally recog-
nized as essential to West Germany's national
security. Yet, this means an identification
with policies which the West German public
may not at all times approve. While West
Germans generally have a deep aversion to
nuclear weapons, an increasing number are
coming to accept the need for nuclear forces
on their territory. These contradictions cre-
ate a dilemma which no German likes to face
and which many are prepared to leave to a
trusted leader, willing and able to assume
responsibility.
29. This attitude is reinforced by a widespread
feeling that West Germany cannot now do
very much to shape its own national policy.
Bonn is a temporary capital; half of Germany
and a quarter of its population are under So-
viet and Polish administration; Berlin is
under alien control. The West Germans,
through association with the West, have
gained an outlet for their energies and a
measure of national security, but for many
Germans this is not good enough. They find
it difficult to become reconciled to the fact
that the solution of Germany's major prob-
lems ? security and reunification ? is de-
pendent to so great an extent on other powers.
But to take the responsibility wholly upon
themselves, they recognize, is beyond their
capabilities, and it involves difficult prob-
lems with the USSR which they are not pre-
pared to face alone. Few West Germans be-
lieve that the Western policy of strength in
itself will lead to German reunification; they
recognize that, under present circumstances,
reunification can be brought about only if the
two great powers assent to it. This does not
prevent the West Germans from taking a con-
stant measure of the policies of those powers
and trying to devise means to influence the
outcome.
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EAST GERMANY AND THE REUNIFICATION
PROBLEM
Soviet Policy Toward Germany
30. Whatever may be the long-term Soviet
objective in Germany, it is obvious that dur-
ing the past year, the Soviet leaders have
again slammed the door on reunification and
locked and bolted it. If for no other reason
than to protect its position in Eastern Europe,
the USSR believes that it cannot now afford
to give up its control and occupation of East
Germany. Over the longer term, perhaps the
Soviet leaders have some hope that events
will so progress as to give them an oppor-
tunity to bring about West Germany's with-
drawal from NATO and heighten responsive-
ness to Soviet pressures. They will probably
continue to show interest in negotiating with
the Federal government on matters of com-
mon concern, particularly trade, and at the
same time probe for weaknesses on larger
issues. At the moment the Soviet leaders
almost certainly are not giving any thought
to permitting the deeply anti-Soviet popula-
tion of East Germany to be added to that of
West Germany on any terms acceptable to
the West Germans.
31. Retention of control over East Germany
has practical advantages for the USSR, aside
from that of denying it to the West, including
(a) the application of a vise on Poland
through the powerful Soviet military forces
stationed in East Germany, (b) the advance
positioning of Soviet forces against NATO,
and (c) the possibility of exerting continuous
political pressure on the Federal Republic
through holding 18,000,000 Germans hostage.
While the USSR is taking a smaller percent-
age of East German GNP, it still derives a
considerable economic advantage from its
position. In addition, the importance of East
German uranium must be considered. We
believe these advantages outweigh in Soviet
eyes the adverse effect of holding down a
deeply anti-Communist, anti-Soviet popula-
tion through a regime devoid of popular sup-
port.
32. We believe that the USSR will continue
to oppose any scheme for German unification
which does not create conditions in central
Europe at least as favorable to the Soviet posi-
tion as those which now obtain through the
occupation of Eastern Germany. It seems
unlikely, in particular, that the USSR will be
genuinely interested in proposals for reunifi-
cation on the basis of a neutralization of Ger-
many alone. The USSR is probably convinced
that the prospect of a neutralized Germany is
illusory, that a formally neutral Germany
would sooner or later side with the West. The
USSR will almost certainly continue to insist
on direct negotiations between East Germany
and the Federal Republic as a pretext for
avoiding serious discussion. The USSR will
seize every opportunity to enhance the posi-
tion and prestige of the East German regime.
At the same time the USSR will take all meas-
ures, including the suppression by force of
popular movements, to maintain the security
of its position in East Germany.
33. Similarly the USSR will probably not
weaken its present hold on Berlin, although it
will probably continue to turn over additional
responsibilities to the East German regime.
Pressures on West Berlin are almost certain
to continue in order to test Western vigilance
and resolution, to maintain a security check
on allied movements, and to erode the West-
ern position. As more authority is trans-
ferred to the GDR, the harassments of West-
ern communications are likely to be stepped
up in an attempt to force West Germany and
the Western powers to deal with the East Ger-
man regime. The ousting of the Western
Allies will remain a major Soviet objective.
To achieve this objective the Kremlin might
take harsh action against Berlin if: (a) West-
ern political, psychological, and military
strengths eroded sufficiently to encourage
Moscow to believe that Western responses
would lack unanimity and decisiveness, or (b)
the Soviets became convinced that more vig-
orous actions against West Berlin would divert
Western strengths from other areas of critical
importance to the Bloc.
The Situation in East Germany
34. The overwhelming majority of East Ger-
mans regard the regime of the zonal Com-
munist Party (SED) as alien in its subservi-
ence to Soviet interests and have not accepted
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the "German Democratic Republic" as a sep-
arate national entity. Their overriding polit-
ical aspiration is for reunification and the
elimination of Soviet control. Faced with al-
most universal hatred and contempt, the SED
regime has been forced to resort to many tech-
niques for repressing and diverting open hos-
tility, and it has had to forego any change
which might be interpreted as a confession of
weakness. Hence, the processes of de-Stalin-
ization in other areas of the Bloc have not led
to any changes in the SED leadership. Walter
Ulbricht, the leader of the party, has remained
fanatically loyal to Moscow and his position
and repressive policies have been strength-
ened by Khrushchev's unqualified public en-
dorsement. Stability in East Germany rests
heavily on the presence of Soviet troops and
the belief of the populace that these troops
would be decisively employed against any at-
tempt to change the political situation by
force.
35. Contributing to the basic political discon-
tent is the low standard of living, which we
estimate to be less than 75 percent that of
West Germany. The people are aware that
these conditions are due both to Soviet exploi-
tation and indigenous Communist misman-
agement. The Communists have attempted
to alleviate economic grievances as one means
of avoiding a popular revolt in this highly
sensitive area. In order to assist the East
German government to maintain economic
growth and to provide some concessions to
German consumers, the USSR has reduced its
exploitation considerably and is providing
goods and foreign exchange to the zone on a
loan basis. The result has been some im-
provement in living standards and a reduction
in the population's irritability. However, the
economic situation of the zone is likely to re-
main depressed in spite of a possible increase
in Soviet assistance. The USSR is not will-
ing to undertake assistance on a sufficient
scale markedly to improve the situation in
the next few years and the SED regime lacks
the flexibility and resources to do so on its
own. A factor contributing to the depressed
situation has been the continuous loss of man-
power due to the flight of almost 300,000 refu-
8
gees annually to the Federal Republic since
1953.
36. Although the East Germans have little or
no loyalty to their own regime, a majority
appear to be socialist in orientation. In any
reunification they would probably attempt to
salvage some of the social changes ? land re-
form, nationalization of large-scale industry,
and the enhanced status of the workers rela-
tive to other East German groups ? which
they believe have been the only accomplish-
ments of the occupation regime. Although
these attitudes have lent some plausibility to
the Soviet proposal for the reunification of
the "two Germanys" on a "confederative
basis," the East Germans by and large recog-
nize that the Soviets are using this formula as
a device for perpetuating their control of East
Germany.
37. A widespread East German revolt seems
unlikely in the next few years, although there
is always the possibility of spontaneous out-
breaks, particularly if there were uprisings
elsewhere in the Satellite area. The popula-
tion is aware, both through their own experi-
ence and by viewing the example of Hungary,
that resort to force would prove abortive, if
not disastrous. Moreover, it seems clear that
the SED leaders, whose personal and political
survival would be at stake, would assist in re-
pressing disorders without mercy. They
would probably consider the East German
forces unreliable and would therefore depend
almost entirely upon Soviet forces.
38. While the present Soviet position on East
Germany appears frozen, it is possible that
the Kremlin will make changes in the leader-
ship of the East German regime in an attempt
to give it an appearance of respectability.
Such alterations would be made only with due
regard to the Soviet security position in
Poland. Such a move would be designed to
increase the chances for broadened interna-
tional recognition of the East German regime
and its acceptability within East Germany.
Although the Soviets probably regard the
present West German government as unlikely
to make substantial concessions on reunifica-
tion, such changes in East German leadership
would have the effect of placing Bonn in a less
advantageous position.
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LINES OF DEVELOPMENT IN WEST
GERMAN FOREIGN POLICY
Basic Problems of Foreign Policy
39. Considering the situation existing in the
world today, and particularly the strength and
determination of the USSR with respect to its
position in Eastern Europe, West Germans
have three alternative lines of policy open to
them. These broadly stated are: (a) to seek
to develop a rapprochement with the USSR
and the Satellites, with the aim of achieving
reunification while preserving an acceptable
degree of autonomy; (b) to follow an inde-
pendent course in foreign affairs, eschewing
military alliances and counting on a stale-
mate between East and West to enable them
to achieve a strongly independent neutral pos-
ture; and (c) to remain firmly attached to the
Western alliance, in confidence that the
strength and resolution of the West will pro-
tect them against any attack while they at-
tempt to enlarge West Germany's role in the
Western alliance and in the world at large.
40. The first alternative would be a complete
reversal of West Germany's post-war policy
and most West Germans recognize the serious
risk of being absorbed into the Soviet orbit.
We believe that this alternative would be
given little consideration in West Germany
short of US actions signifying an abandon-
ment or critical reduction of its defense com-
mitments in Western Europe.
41. The second alternative probably exercises
a greater attraction for the West Germans.
Leaders in at least two of the parties, the So-
cialists and Free Democrats, have publicly
sought support for a formula which would
lead to the reunification of Germany and
guarantees of its security by both the West
and the East. So long as their present confi-
dence in the effectiveness and reliability of US
security guarantees continue to exist, how-
ever, most West Germans would not consider
this alternative seriously unless there was
some better prospect than at present of at-
taining reunification thereby. Since the
USSR has made it clear beyond all misappre-
hension that it will not now accept a reunified
Germany on any condition short of Soviet
hegemony over the whole, a policy of com-
plete non-involvement appears to most West
Germans as a poor substitute for the present
policy.
42. During the next few years close coopera-
tion with the Western alliance seems likely to
be regarded not only as the sole workable
alternative for West Germany, but also as
according opportunities for expansion of trade
and influence. The policy of association with
the West still leaves considerable room for the
employment of German initiative and energy.
It provides the West Germans on the one
hand with the opportunity, through demon-
strating their own strength and trustworthi-
ness, to retain US support and to discourage
the US from adopting policies inimical to Ger-
man interests. It provides on the other hand
the opportunity, through exercising its eco-
nomic power within an association of Euro-
pean states, to emerge ultimately as the dom-
inant power in Western Europe.
Association with the West
43. Rearmament and the NATO Alliance. A
number of factors induce West Germany to
rearm. Most West Germans believe that they
need to build armed forces to assure their
national security, either as a part of NATO
forces or, if need be, independently. Many
West Germans are anxious to rebuild their
military strength in order to be in a position
to exercise greater influence in the Western
alliance. Moreover, they know that the US
sets considerable store by a substantial West
German contribution to NATO. West Ger-
many's NATO partners, while harboring vari-
ous degrees of apprehension over the prospect
of a well-armed Germany, recognize the de-
sirability of strengthening the NATO shield
forces. They tend to feel that West Germany
should get on with its rearmament so that
their own defense efforts can become less bur-
densome. Despite all these considerations,
rearmament progress will continue to be
hampered by doubts concerning the basic
strategic concepts upon which forces and
weapons systems should be built and, to a
lesser degree, by a lack of popular enthusiasm
to accept the costs and sacrifices involved.
44. In order to deal with some of these prob-
lems, Defense Minister Strauss has reoriented
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defense planning toward smaller, combat-
ready forces equipped with the "most modern
weapons." Both he and the Chancellor have
made their position clear that, short of an
over-all agreement on disarmament which in-
cluded a political settlement for Germany,
West German forces must in due course have
tactical atomic weapons. The government
also revised its force goals from 500,000 men
by 1958 to a tentative 343,000 by 1961. By
the end of 1957 the military establishment will
total 135,000 of which 85,000 will be ground
force personnel. At the same time, the Fed-
eral Republic has pressed for a full review of
NATO strategy in the light of recent weapons
development. The Chancellor and his de-
fense minister apparently believe that this re-
view will lead to acceptance of West Ger-
many's program. Nevertheless, there will be
continuing uncertainty about West German
defense efforts at least until the current NATO
review of strategy is completed and its impli-
cations are fully understood.
45. In the meantime, West German military
plans are for forces which can be readily
adapted to tactical atomic weapons. The seven
divisions now activated for NATO will not have
a significant combat capability until early
1959. Similarly, the West Germany navy and
air forces are still in an initial organizational
and training stage. Development of a small
but highly efficient anti-submarine, escort,
and minesweeping navy will probably have
been completed by 1962. However, it appears
likely that the preoccupation of the West Ger-
man air force with advanced aircraft types
and missiles will lead to substantial delays
in West Germany reaching by 1962 the goal
of 1300 operational aircraft or 20 percent of
anticipated NATO combat air strength. De-
fense Minister Strauss has placed strong em-
phasis on a territorial army not under NATO
command for such duties as home defense.
46. The West Germans are conducting re-
search and development work on missiles. All
phases of research are permitted the West
Germans but they are prohibited by treaty
from the production of missiles for military
purposes, with the exception of air defense
missiles of a specified size. The Federal Re-
public plans to request a waiver on these re-
10
strictions to permit the production of the Co-
bra, a small anti-tank missile, which has been
developed by a German firm. At the same
time the Federal Republic has an agreement
with Oerlikon, a Swiss firm, for the production
of the Cobra and perhaps some other missiles
being designed in West Germany. An air de-
fense missile, being developed by Telefunken
with the cooperation of other West German
firms, will reportedly not reach a test firing
stage for three years. In addition, numerous
private organizations have been experiment-
ing with missiles for meteorological and other
scientific purposes. Some of these vehicles
might be adapted to military uses.
47. While West Germany has the technical
capacity to initiate a nuclear weapons produc-
tion program, it is forbidden to do so by treaty
restrictions. Any attempt to revise these at
an early date would almost certainly involve
serious political and diplomatic problems.
Furthermore, West Germany would be de-
pendent for at least the next three and per-
haps as much as five years upon an outside
source for the fissionable material necessary to
develop its own atomic weapon. If it were able
to obtain this material, it could probably pro-
duce a prototype inefficient low yield bomb
in about one year.
48. High level talks in January 1957 laid the
groundwork for West German-French coopera-
tion in weapons research and development,
including missiles. Detailed arrangements are
still being developed, but it has been agreed
that common research facilities and French
testing sites in North Africa will be used.
There have been some indications that official
discussions between the two countries also
included the possibilities of collaboration in
the production of nuclear weapons. There
is no firm evidence of such collaboration and
it has been denied in responsible West Ger-
man and French quarters.
49. Although such collaboration would have
advantages for both West Germany and
France, it would need to be open and large
scale in order to result in a significant weap-
ons program. A joint program on this scale
would necessarily encounter serious obstacles,
not the least of which would be French popu-
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lar sensitivity in assisting the West Germans
to develop a new and powerful force. It is
more likely that the West German government
will seek through NATO to obtain these weap-
ons from the US, or failing in this, to produce
them cooperatively, not only with France but
with other West European states.
50. The Federal Republic will remain sensi-
tive to any evidence that the other NATO
members, particularly the US and UK, are
weakening their interest in or their commit-
ments to NATO. It will react quickly to
any proposed revisions in strategy which in
its view might weaken either the deterrent
strength or defensive posture of NATO. The
Chancellor was deeply disturbed over reports
in 1956 intimating that the US was revising
its military policy in Western Europe and over
the more recent British plans for withdrawing
substantial numbers of troops from Germany.
It is possible that West German apprehension
over the prospect of reductions in US and UK
forces would be lessened as West German
forces develop quality and striking power.
However, the West Germans would insist that
US guarantees be strongly reaffirmed if US
forces in Germany were reduced.
51. The West Germans have also demonstrat-
ed considerable sensitivity to the disarma-
ment negotiations. Their particular concerns
seem to be (a) to use these negotiations to
bring the question of reunification back into
the area of international discussion, and (b)
to prevent any disarmament arrangement
which would give a cover of legality to the
East German regime and thus lead to a wide-
spread recognition of the GDR as a perma-
nent government. We do not believe, however,
that the West German government would re-
fuse to accept an otherwise satisfactory dis-
armament agreement, if supported by its ma-
jor Western allies, merely because its partic-
ular concerns were not fully satisfied.
52. The European Cooperation Policy. West
German backing for economic integration
among European states already adhering to
the Coal and Steel Community seems assured
for the next few years. The EURATOM and
Common Market treaties were approved in
the Bundestag with the support of both the
11
government parties and the Socialist opposi-
tion. Some private interest groups are un-
easy about the way in which the Common
Market may affect them. They further pro-
test that Germany has already made undue
sacrifices for the integration policy, such as
concessions on the Moselle Canal and agree-
ment to EURATOM ownership of nuclear
fuels. However, most Germans feel that the
Federal Repubic with its ?present economic
strength will not only be able to overcome
inequities but to influence future develop-
ments in its favor.
53. Among the political considerations mo-
tivating West German interest in West Euro-
pean cooperation almost certainly is a desire to
reduce the remaining Western European sus-
picions and fears of Germany. For some West
Germans, particularly those who view eco-
nomic power as a source of security and pres-
tige, West European cooperation also pro-
vides an outlet and an opportunity to exercise
influence. Others, fearful that US support
and assistance may not be as forthcoming
in the future as in the past, wish to pro-
mote among Western European countries the
means and the habit of mutual assistance to
match the fact of their strategic and economic
interdependence. The Suez and Hungarian
crises of 1956 in particular demonstrated to
many in West Germany, as elsewhere, that
developments which vitally affected one of the
West European States necessarily had a grave
impact upon the others.
54. West German interests in European co-
operation will probably survive Chancellor
Adenauer, its main protagonist, although it
may not be as actively pursued by his succes-
sors. West German pretensions for Western
European leadership may become overween-
ing in the eyes of other countries, with adverse
effects on the movement. West Germany's
promotion of a special relationship with the
US might become an added source of friction
in the Western alliance.
55. Expansion of West Germany's Influence
Outside Europe. West Germany will probably
intensify efforts to expand its influence out-
side Europe. Private West German interests
are seeking the expansion of markets in those
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areas of the world once dominated by British,
French, and Dutch influence. The West Ger-
mans are likely to be more willing than in
the past to provide government loans in the
underdeveloped areas, preferably in coopera-
tion with the US or other Western countries.
In the next few years West German political
interest in these areas is almost certain to be
directed toward discouraging recognition of
the East German government and to support-
ing common Western programs. In time,
West Germany will emerge as a substantial
contributor of foreign capital, with the Ger-
mans becoming a greater political force in
underdeveloped areas. While providing vig-
orous economic competition, the Federal Re-
public will probably avoid taking political
positions which would seriously clash with
those of its allies, since their good will and
support is essential to the execution of pri-
mary West German foreign policy objectives.
Policy Toward the Bloc
56. Despite the absence of any genuine ex-
pectation of progress toward the establish-
ment of a free united Germany, the West
German government will continue to probe
Soviet policy and intentions. These tactics
will be designed primarily to satisfy public
opinion that a stalemate continues to exist
and that only Soviet intransigence bars the
way to a satisfactory solution. Regardless
of how successful its policy of cooperation with
the West may prove to be from the standpoint
of expanding German influence, no West Ger-
man government will risk implying abandon-
ment of the hope for eventual reunification.
Consequently, West German leaders neces-
sarily will be responsive to any sign of So-
viet flexibility and willingness to negotiate.
57. In its relations with the Satellites other
than East Germany, the West Germans ap-
pear to be moving toward a position of greater
flexibility. In particular, the Federal Repub-
lic will seek to strengthen its economic ties
in Eastern Europe; trade with the Satellites
while small has been gradually increasing.
The West Germans consider that their in-
terests are served by encouraging Communist
deviation from Soviet hegemony. While they
are fearful that changes in Eastern Europe
12
may get out of hand and result in a bloody
repression similar to that in Hungary, this
fear is mixed with the hope that the estrange-
ment of the Satellites ? coupled, perhaps,
with internal dissension in the USSR itself ?
will eventually induce the Soviet Union to
withdraw.
58. The present West German leaders are
currently seeking to establish a basis for a
rapprochement with Poland. Many of them
have assumed an attitude of "realism" to-
ward the German territories under Polish
administration east of the Oder-Neisse line.
The Chancellor has publicly stated Germany
will "never" seek the return of these territories
by force, but might rather seek a form of
Polish-German economic cooperation along
the lines of the Common Market in Western
Europe. However, the recent joint state-
ment by Tito and Gomulka supporting
recognition of the Oder-Neisse boundary
and Yugoslav recognition of East Ger-
many demonstrate the difficulties and uncer-
tainties of a flexible West German policy to-
ward Eastern Europe. The Federal Republic
has broken off diplomatic relations with Yugo-
slavia in order to discourage other non-Bloc
states from recognizing the GDR. It is, never-
theless, willing to maintain its economic re-
lations with Yugoslavia and will probably con-
tinue to seek some formula which would per-
mit it to recognize Gomulka's Poland. In any
case, West Germany will almost certainly de-
velop trade and other informal relations with
Poland.
59. Despite the determination of the Federal
Republic to avoid giving the East German
regime any vestige of legitimacy, informal
contacts exist in a wide variety of fields ?
such as trade, transportation, police, and pub-
lic services. These contacts have been at the
administrative rather than the governmental
level. They will probably increase in the next
few years and the West Germans will have
increasing difficulty in avoiding relations at
the government to government level.
60. In the event an East German uprising led
to extensive and bloody suppression by Soviet
troops, strong passions would be aroused in
the Federal Republic. However, the West Ger-
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man government has clearly shown its under-
standing of the risks involved in an uprising,
and has sought to discourage open resistance
against the East German regime. In event of
an uprising we believe the Federal Republic
would refrain from official actions in direct
support of the rebels and would do its best to
prevent the involvement of West German na-
tionals. It would appeal to the United Na-
tions, the NATO Council and the US for help
and intercession, and would probably appeal
directly to the Soviet Union, in an effort to
stop the bloodshed and assuage the demands
of the populace. The longer the duration of
the rebellion, the greater would be the danger
of West German involvement.
THE LONGER TERM OUTLOOK
61. Barring major upsets in the world situa-
tion, we believe West Germany is likely to con-
tinue to remain economically healthy, politi-
cally stable, and allied to the West. A firm
foundation for constitutional government has
been laid. All significant political parties
have maintained moderate and constructive
policies: neither the Communists nor other
extremists have obtained any important sup-
port.
62. However, West Germany has not yet had
to meet the problems which would arise in the
event of a serious crisis, generated either by
internal or external circumstances. Although
the possibility of serious divisions and ex-
tremist solutions cannot be excluded, they
appear very unlikely. However, the political
stability of the Federal Republic, its pros-
perity, and Western orientation could be
directly affected by external developments
largely beyond its control. In particular, ex-
ternal developments bearing on the poten-
tially disruptive issues of security and reuni-
fication could upset present political trends
in Germany and pose serious threats to the
interests of the US and the West.
63. The Problem of National Security. No
matter what party controls the government
in the future, it is certain to consider the
development of substantial West German
military forces as essential to German secu-
rity. West Germany is unlikely to contem-
plate withdrawing from NATO and assuming
a posture of armed neutrality, except in the
event of an acceptable offer of reunification
or a critical weakening of the Western alli-
ance. As long as NATO proves effective, and
West Germany has what it feels to be a satis-
factory place in it, German security efforts
will continue within the NATO framework.
We believe that West Germany will ultimately
develop a military establishment which in-
cludes nuclear and non-nuclear forces, and
forces not committed to NATO.
64. The Problem of Reunification. The con-
tinued division of Germany will remain a
source of national frustration and a symbol of
Germany's lost power. It will remain an is-
sue about which the Germans could be
aroused. Feelings on reunification could be
greatly intensified if political or economic con-
ditions within West Germany were upset; if
there were further dislocations in Eastern Eu-
rope; or if the West Germans became frus-
trated in their quest for security, influence,
and trade in the West.
65. Even without such stimuli, West German
leaders will gradually and increasingly direct
their policies toward this goal. We believe
they will aim at positions of flexibility, and
will seek, through combining their mounting
political and economic strength with diplo-
matic initiatives, to normalize relations with
their eastern neighbors and the USSR as steps
toward reunification. West Germany might
use its growing military strength as a bar-
gaining instrument with the USSR, offering
to withdraw from NATO as a price for reuni-
fication; or if extremist elements assumed
control in West Germany, they might be
tempted to use their strength as a threat.
66. We believe the West Germans are more
likely to seek reunification by agreement than
by threats or adventures. In seeking such an
agreement the West Germans would probably
not accept conditions which would clearly risk
their becoming a Soviet satellite; on the other
hand, we believe they would accept something
less than the terms which they and their
Western allies now regard as essential. More-
over, changes within the Bloc, the emergence
of new leadership in West Germany, or a
major change in the situation in the West,
might lead the USSR to reassess its position.
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THE
WEST GERMAN
BUN DESTAG
POST-ELECTION PRO.
1957
>s
497
SEATS
SPD ? Social Democratic Party
CDU ? Christian Democratic Union
CSU ? Christian Social Union
DP ? German Party
FVP ? Free Peoples Party
FDP ? Free Democratic Party
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