REVIEW OF THE WORLD SITUATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00059A000500080010-7
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 9, 2016
• Document Release Date: October 10, 2000
• Sequence Number: 10
• Publication Date: April 20, 1949
• Content Type: REPORT

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SECRET
FOR THE CHIEF,CIA LIBRARY
REVIEW OF THE WORLD
SITUATION
Published 20 April 1949
CENTRAL INTELLIGENCE AGENCY
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This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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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 recipient'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 informa-
tion for the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary of State for Research and Intelligence, for
the Department of State
b. Director of Intelligence, GS, USA, for the Department of the Army
c. Chief, Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Director of Security and Intelligence, AEC, for the Atomic Energy Com-
mission
f. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
g. Assistant Director for Collection and Dissemination, CIA, for any other
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.
DISTRIBUTION:
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
1. A balance sheet of the relative security positions of the US and the USSR is here
drawn up both globally and regionally. It takes into consideration the possible altera-
tions that have been produced during a year which has included
a. The first phase of the European Recovery Program.
b. The negotiation and signing of the North Atlantic Defense Pact.
c. The proposal of a Military Aid Program supplementary to the Pact.
d. The problem of control and consolidation in the Soviet orbit.
e. The definitely unfavorable turn that events have taken in the Far East.
2. A categorical summary of such a balance sheet states
a. The global position of the US has been slightly improved. This conclusion,
based as it is on a favorable change in the immediately important European situation,
cannot be validly projected beyond the short-term.
b. Europe: definitely more favorable to US.
c. Near East: basically unchanged.
d. Far East (China-Southeast Asia) : definitely less favorable.
e. Far East (Offshore Islands) : slightly less favorable and dependent upon direct
subsidies.
f. Latin America: no basic change for US, definitely less favorable to USSR.
Note: This review has not been coordinated with the intelligence organizations of the Departments
of State, Army, Navy, and the Air Force. The information herein is as of 15 April 1949.
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REVIEW OF THE WORLD SITUATION AS IT RELATES TO THE SECURITY
OF THE UNITED STATES
1. The signing of the Atlantic Pact is, in one sense, the culmination of a period
during which US policy has primarily sought to alter the unfavorable security position
in which the US stood in 1946 in relation to the USSR. During this period, the factors
considered significant to the broad problem of security have expanded from specific
strategic and political issues to include economic and psychological considerations, as
well as proposals to improve the underdeveloped regions of the world. Now that a
definite certain point has been reached, the time is right for a general stock-taking.
2. Europe: The cumulative combined effect of economic revival and of the suc-
cessful negotiation of a North Atlantic Defense Pact has modified the relative positions
of the US and the USSR in Europe in a marked way. Economic aid and defense
plans-even unaccompanied by military equipment-have mutually worked to recreate
in Western Europe those significant intangibles: public morale and a more optimistic
psychological atmosphere.
In particular, ECA funds have enabled the UK to strengthen its economic position.
This improvement has, in turn, permitted the UK to give more consideration to the
requirements of Western European nations, to maintain a measure of leadership in
Western Europe, and to re-establish its international position more firmly than seemed
possible a year ago. The politico-economic stability of the Benelux countries has im-
proved and their disposition to support US aims in Europe is assured. The internal
economy of France has been strengthened to the point where the capacity of both
Communists and Gaullists to make political capital out of popular discontents has fallen
below the critical point. A combination of economic collapse and political chaos has
been so far avoided in Italy. Mass response to Communist appeals has dwindled and
the government comes to the problem of controlling organized subversion with
heightened morale and capability. Economic gains have been sufficient to block Com-
munist efforts politically to exploit the uncertain situation in Western Germany. In
Austria, the stability of the anti-Communist government has been maintained by the
use of ECA funds.
These positive advances have benefited the US conduct of the "cold war" in Europe.
A spirit of resistance to Communist propaganda has developed and a clearer under-
standing of Communist tactics has grown up. A general tendency to oppose the further
spread of Soviet influence in Western Europe appears to be established. The negotiation
of an Atlantic Pact aided this tendency by providing a previously lacking element of
psychological security; and this in turn, increased the willingness of weaker states to
accept the risk of Soviet reprisals and enter the Pact. To this extent, it is considered
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that the US-USSR competition for influence and hence for the power potential of
Western Europe has gone in favor of the US.
This does not mean, however, that the security position of the US has been
improved in the quantitative sense of having moved nearer to equivalence with the
force which the USSR deploys in or near Europe. It is possible, on the contrary, to
consider that the position may for the time being have been weakened by the fact that
US defensive commitments have become both more precise and more dispersed without a
corresponding development of ready military capabilities having taken place in Western
Europe.
Although this uncertain element is thus noted, it is emphasized that a real security
value has been achieved simply by having checked the Soviet-Communist activities that
were seeking to break down Western Europe. A process has now been set in motion
that can be progressively developed into a more and more effective security system.
Pending quantitative improvements by way of a Military Aid Program, however, the
relative US-USSR power positions remain essentially what they were twelve months ago;
that is, Soviet force in being is balanced by US potential and by the US possession of the
atom bomb.* The effectiveness of this balance, though admittedly precarious, has
permitted the US to go beyond its visible means in making commitments, and has
enabled the US to define an increasing number of areas in which Soviet-Communist
policy can take further action only at the risk of precipitating full-scale war.
Thus, though the inclusion of Norway, Denmark, Portugal, and Italy in the Atlantic
Pact has not improved the US power position with respect to the USSR, it has con-
tributed to the general security value noted above. Similarly, the absence of Sweden
and the rejection of Spain do not immediately affect the power position in any sig-
nificant way.**
The position of Germany and Austria continues uncertain. As long as ERP alone
was in question, the problem of the significance of Central Europe to the US-USSR power
conflict could be put to one side or discussed in economic terms. The development of a
Defense Pact on the foundation laid by ERP, and the possibility that the Defense Pact
will be accompanied by a Military Aid Program brings the problem to the fore. Taken
in conjunction with the de facto partitioning of Germany, these developments have
already led to plans for West and East German governments and economies. These
plans do not yet correspond to political or economic realities; and, both in the East and
the West, evoke traditional fears of German aggression. Thus, though the logic of
US-USSR power relations points toward the consolidation of Eastern Germany in the
Soviet orbit and the incorporation of Western Germany with a Western European de-
fense system, these developments have not yet become explicit, and Germany continues
to be an area of concentrated power competition. It is probable that, in consequence
* The over-all US position has been slightly bettered by positive improvements in US military
capabilities. These improvements have taken place within the continental US.
** It is considered that the refusal to include Spain at this time has actually improved the US
security position in the "cold war" by avoiding the introduction of a confusing issue into the
relations of the signatories of the Pact and by denying the USSR a potent propaganda theme.
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of the clearer drawing of lines elsewhere in Europe, the competition in Germany may be
intensified. For this reason, Germany is likely to become an even more crucial area.
3. Since Western Europe has been considered a key area for US security, the main-
tenance of its potential and the re-establishment of its morale has resulted in a general
improvement of the US global position. Even in regions remote from Europe the bene-
fits of changes in Europe have been felt. The continuity of US interest has been illus-
trated and earlier doubts about the advisability of being linked with an uncertain US
interest are being more carefully examined. This change is still so indefinable that
it must be taken as an opportunity for development rather than as an accomplished fact.
4. The USSR: One measure of the significance of the growing stability of the
Western world is found in various indications that the USSR is probably reconsidering
its own relative position. The obviously growing consolidation of Western Europe has
complicated the problem of Communist control in Eastern Europe. Reports from
Satellite countries suggest a growing restiveness under increasing Soviet controls, even
in a number of local Communist leaders. At lower Communist Party levels, dissension
is developing around still lively nationalist feelings. An added factor is the appear-
ance of a premature hope among Satellite non-Communists of being freed altogether
from Russian domination, a hope which they wishfully draw from the success of the
US in Western Europe. The over-all problem of control is not, however, an insurmount-
able one for the USSR; but the measures used have been those of expanding the
machinery of control and of eliminating all organized dissent. It is almost a certainty
that, if the relative US-USSR positions continue to shift in favor of the US, the USSR
will speed up the steps necessary to convert Eastern Europe into a defensive buffer region.
It is believed that high level changes in government personnel in the USSR are in part
a reaction to the situation that has developed in Europe and reflect an apparent de-
cision to consolidate the existing position in Europe as the maximum one presently
attainable. While this consolidation is probably defensive in intent, it may also be
intended to provide a firmer base for further attempts to penetrate Western Europe at
a more favorable time in the future.
5. Economic Strength: In respect to comparative economic potential for war, the
relative positions of the West and of the Soviet bloc have not significantly changed.
It is true that the industrial output of the West increased more rapidly in 1948 than did
that of the USSR and its Satellites; but the Western increase was generally absorbed
by civil requirements. In terms of economic potential for war, the Soviet-Satellite group
offset Western improvement by a relatively greater emphasis on military and capital
goods, and on stockpiling; and by a tighter coordination of the economies of the USSR
and its orbit countries.
6. Since US security is global and cannot be protected in Europe alone, a relative
improvement in the US position in Europe must be balanced against an estimate of the
position in other regions of the world.
7. Near and Middle East: At the points where this region borders the USSR and
its orbit-Greece, Turkey, and Iran-tension between the USSR and the US has a con-
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siderable history and questions of security have been continually under consideration.
The US approach to the general problem was to devise a combination of economic and
military aid for Greece and Turkey, and to give slight military aid to Iran. This method
sought to make secure one limited segment of the US-USSR power conflict, just as later,
ERP, the Atlantic Pact, and the supplementary Military Aid Program seek to make
secure a larger segment.
In Greece, where guerrilla activities were and are a projection of Soviet policy, the
success of the method is to be measured in terms of its achievements as a "holding
operation." The means have not been available and do not yet exist for converting
a "holding operation" into a positively improved US security position. Consequently,
the position in Greece is fundamentally unchanged, although 'there are some slight
signs that it may be in course of improving. This is partly the result of direct US aid
finally beginning to have effect. It may partly be the result of frictions having developed
within Communist ranks. It may be a reflection of the improved tone in Western
Europe. The basic difficulties, however, are still operative. The military situation
continues to have its ups and downs, as does the internal political situation. The
re-establishment of a viable economy still lies in the future. US security, insofar as it
calls for the maintenance of a position in Greece, continues to be based on subsidies.
The capacity of Turkey to keep its place in the defined pattern of US security is
definitely better than it was a year ago. The defense establishment is in process of
reorganization and related problems of logistics are being dealt with. The economic
difficulties of the Turkish position, though their solution is not yet in sight, are being
handled through ECA and International Bank channels. The only weakness at the
moment is a psychological one. It derives from Turkish concern at being on the
fringes of rather than in the Atlantic Pact. The feeling is strong that Turkey is in
an exposed position and that the Turkish record with respect to the USSR merits more
than oral reassurances. On the other hand, no alternative to serving US security in-
terests presently exists for Turkey.
Iran has now been defined as a US security interest. This definition was not made
in relation to a developed program of economic and military aid. It was made in order
to strengthen US influence in Iran at a time when Soviet pressure was being renewed
and when the Atlantic Pact gave rise to the notion that US power was to be concen-
trated in Western Europe. Although some military supplies have been provided and
plans for strengthening Iranian economy are under discussion, the position in Iran is
fundamentally uncertain. The Government shows no sign of weakening in its deter-
mination to resist the USSR; but some quarters seem to favor treading more softly and
cautiously in the footsteps of the West. The situation is such that it is difficult, in fact
and by temperament, for Iranians to ignore the Soviet menace and consistently to align
themselves with the West.
8. For the rest of the Near and Middle East, although the situation is extremely
fluid, it cannot be said that the relative security positions of the US and the USSR have
been significantly changed in the course of twelve months. On the one hand, there are
signs that the Arab States are individually seeking to re-establish closer ties with the
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West in order to gain what protection they can against a successful Israel and in order
to be in touch with the resources of the West. The decline of the Arab League * as an
important political force simplifies these individual approaches by permitting more
realistic decisions. On the other hand, however, the local power superiority and the
presumed ambitions of Israel prevent a final stabilization of the'Near East. The maxi-
mum that can be hoped for is a prolonged stalemate accompanied by minor disturbances.
The USSR has not developed any other means of exploiting the situation as effective as
the general one of supporting every cause that will serve to perpetuate the over-all
instability of the region. Soviet intrigues with the Kurdish minority in the area are
not likely to be significant. The possible channel of the left-wing party in Israel is
checked by the superior political authority of the Government and by Israel's admitted
dependence upon the US.
9. India, Pakistan, Afghanistan: Moving still further East to the Indian sub-
continent, changes in the relative positions of the West and the USSR become increas-
ingly difficult to calculate.
Measured in terms of its past system of imperial and colonial controls the position
of the West is weaker. But measured by current fact, the decline of Western authority
has not automatically improved the Soviet position. Political reality now requires both
the West and the USSR to bid competitively for influence over new national units to
which pressures can be applied only at the risk of building up resistance. The West,
working chiefly through the UK, has played its hand with unexpected success in spite
of holding some bad historical cards. It has gone further in maintaining its influence
than has the USSR in developing its opportunities.
However, the very existence of new states in this region has released contradictor-
forces and created a degree of instability that increases US-UK security problems
Relations between India and Pakistan are being adjusted with difficulty. And, cur-
rently, relations between Pakistan and Afghanistan are deteriorating alarmingly.**
The heightened nationalism of India is developing a concept of India as the natural
power center of Southeast Asia. A new factor is thus introduced not only into Western
relations with India but into the policies and methods which the Western Powers are
trying to apply in Southeast Asia.
10. The Far East: In the Far East, generally, the relative power positions of the
US and the USSR have definitely changed in the USSR's favor. If it can be concluded
that, in Europe, Soviet action against US security has been severely restricted, it must
be admitted that the Far East, in contrast, has become a wide open field for maneuver.
Soviet policy and Communist ideology have been translated into programs of action that
have wide popular appeal. Proof of this can be found in the success with which a small
handful of Chinese Communist leaders have converted doctrine into a definitive mili-
* The 10th session of the Arab League Council adjourned after three dreary and routine
meetings. In addition to an embarrassing lack of financial support, there is evidence that A~ab
rivalries have come into full play again.
** The possibility of open hostilities between these states should be tentatively considered;
and the value of an exhausting tribal turmoil on one of the routes from the USSR to India should
be kept in mind in connection with Soviet aspirations in Asia.
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tary victory over the Nationalist Government, and simultaneously into a defeat for the
US in the "cold war" in Asia.
The consequences of this reversal have been widespread and cannot yet be fully
measured. It is certain, however, that the process of re-establishing a new US position
will be exceedingly complex and that the hope of making it a favorable one cannot be
quickly realized. At the present moment, the US security position now consists of the
offshore island chain from the Philippines to Japan, excepting Taiwan, and a con-
tinental toehold in Korea. The strength of this position is directly dependent upon the
continuance of economic and military aid and ultimately on the development of a con-
solidated control. In Korea, the withdrawal of such aid would change the situation
adversely. The Philippine Government simply assumes that the US is committed, in its
own interest, to maintaining the security of the islands. Taiwan is a political no-man's
land, fully exposed to competing interests. The present orientation of Japan towards
the US is considered to be exaggerated and unreliable; though it does rest upon more
than the fact of being occupied. It derives from a complete dependence upon the US
economically and for security, and upon the expectation that the maintenance of the
US position in the Far East will eventually require Japanese revival. Thus Japan con-
tinues to be a purchaseable asset; but if, in more critical circumstances, the US position
appeared untenable, Japan would realistically consider seeking the best possible bargain
with the USSR and its Communist supporters.
China has ceased to be a calculable factor in relation to US security. There is
almost no organized fight left in any of the bits and pieces of Nationalist China. The
remnants of the Kuomintang regime are primarily concerned with diverse regional
interests and, therefore, an effort to build a new US position on this basis would seem
to offer only limited advantages at great risk. Yet the whole of China-Communist or
not-will need the maximum foreign aid that can be had. Superior ability to provide
such assistance belongs to the US, not to the USSR; but this offers no more than a
long-term chance to cut back the present favorable Soviet position.
In addition, Communist success in China has given special significance to the
position of the West in Southeast Asia. Southeast Asia has, since the war, been
primarily concerned to escape from a colonial status. Its collective response to the
conflict that has developed between the West and the USSR has been one of apathy
and aloofness. Indigenous nationalist movements, frequently in open conflict with
Western European authority and sometimes willing to accept Soviet-Communism as an
ally but not as an alternative authority, find themselves in a confusing situation. The
nations of Western Europe, concerned to strengthen their domestic economies, are
reluctant to meet nationalist demands except by the methods of slow political evolution.
The US, whose comprehensive security interest requires, on the one hand, that the power
potential of Western Europe should be rebuilt, and, on the other, that strategic colonial
areas should be stabilized against Soviet-Communist exploitation, is in a dilemma. In
Indonesia and Indo-China, US security is perpetually balanced between undermining
a Western Ally by supporting an Asiatic nationalist movement or destroying the remains
of a US position on the continent of Asia by indirectly helping to suppress such aspira-
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tions. In Malaya and Burma, a similar problem, though presented in a different form,
confronts the UK. The success of the UK in handling it is of direct concern to the US.
If the security problem here described had developed in isolation, it would not have
called for very heavy weighting. But it has developed in conjunction with a weakened
position in China and an uncertain position in India; and is, in addition, tied in with
maintaining the improved position in Western Europe. It is accordingly considered
that the relative security position of the US in Southeast Asia is less favorable than
that of the USSR because the situation will no longer respond to simple solutions and a
delayed solution increases the opportunities for Soviet influence.
11. Latin America: While the signing of the Inter-American Treaty of Reciprocal
Assistance in Rio de Janeiro in 1947 may have marked the first important step in the US
shift toward seeking security through regional groupings rather than in the UN-a shift
that has now culminated in the signing of the Atlantic Pact-Latin America has
received but minor attention compared with the emphasis given to US security interests
in Europe and Asia. The termination of the wartime programs of support unquestion-
ably produced in Latin America a feeling of being "left out" of US plans. More recently,
US emphasis on Europe in the ERP program, taken in conjunction with the economic
problems that were making life hard for Latin American governments, contributed to
the conviction that the entire region was being relegated to a subordinate position.
This feeling possibly reached its height at the time of the Bogota Conference in April
1948. It never led, however, to any real increase in the influence of the USSR. There
are no pro-Soviet or even strongly Communist-influenced governments in Latin America.
In addition, Latin Americans believe, in principle, that their countries have a stake in
the rehabilitation of Europe, and that successful opposition to Soviet ambitions is to be
counted as a gain for themselves.
Since Bogota, there have been signs of a lessening resentment toward the US. For
example, the enunciation of President Truman's "Point 4" program has awakened new
hope of US assistance.
Even though US relations with Latin America may leave something to be desired,
there is no doubt that the position of the USSR has relatively declined in this region,
and that the present position of the US is favorable. It is considered that the Latin
American feeling of being neglected in US planning may continue to impair the coopera-
tion that the US might wish for in the conduct of a "cold war." It is not considered,
however, that, in case of actual hostilities with the USSR in the near future, Hemisphere
solidarity will have been significantly affected.
12. The United Nations: In relation to the United Nations, the Atlantic Pact is the
direct consequence of the inability of the UN to function effectively as the collective
security agent for its individual members. As far as US security is immediately con-
cerned, the shift of the method of obtaining it from the UN to a regional bloc improves
the US position relative to the USSR; and represents a realistic, though only partial
adjustment of US-Western policy to the actual global distribution of power. The conse-
quences of this adjustment on the future of the UN will not become clear for some time.
Basically, while world opinion desires and policy seeks to maintain peace through the
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UN, national feelings demand and policy seeks to achieve security. It is considered that
the present necessary emphasis on security will keep the majority of UN member states
firmly behind the US line, and that Soviet attacks will more than ever be interpreted
as propaganda.
It has been suggested that the practical removal of the US-USSR conflict from a
general body, in which the intentions of a US-controlled voting majority are checked
by a USSR veto, may enable the UN to re-establish its international credit by freeing it
to exercise its less spectacular legal, social, and economic functions. It has also been
suggested that, since it may well seem that the signatories of the Atlantic Pact have
found a method of by-passing the Security Council, the USSR may withdraw from an
organization that no longer offers significant opportunities for achieving its objectives.
Neither of these possibilities seriously affects the security position of the US for the
short-term.
13. The Balance Sheet: On balance, as of April 1949, the following summary state-
ments can be made about the relative power positions of the US and the USSR.
a. The global position has been slightly changed in favor of the US because of
the success with which Western Europe is being revitalized to oppose Soviet and Com-
munist expansion. It is now reasonable to assume that the industrial potential of
Western Europe will increasingly buttress this revived will to resist. But the slight
improvement noted, based as it is on changes in the more immediately important Euro-
pean situation, cannot be validly projected beyond the short-term. The definitely un-
favorable position in the Far East, if it becomes set in an unfavorable form, can lead
to profound modifications in the long-term.
b. A slightly unfavorable change is being experienced by the USSR. It is
essentially a product of US success in reversing a trend towards disintegration in
Western Europe and is accordingly felt most clearly in connection with the problem of
controlling the Soviet Satellites.
c. In regional detail:
(1) Europe: the position is definitely more favorable to the US.
(2) Near and Middle East: slightly more favorable to the US in Turkey; not
essentially altered in Greece; continues uncertain in Iran. Elsewhere in the region
the relative positions remain fundamentally unchanged.
(3) .India, Pakistan, Afghanistan: the situation is so fluid that no estimate
is offered. It is certain, however, that the US-UK position is not yet threatened and
that no positive advantages have accrued to the USSR.
(4). Far East (China and Southeast Asia): definitely less favorable to the
(5) Far East (Offshore Islands): slightly less favorable for the US, in that
the maintenance of a favorable position clearly depends upon the continuance of US
financial subsidies and military commitments.
(6) Latin America: no fundamental change for the US, but definitely less
favorable to the USSR.
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d. Finally, the question comes up of whether or not the USSR, restricted in
Europe, will modify its policy towards Western Europe, seek simply to consolidate the
advantageous positions it has gained up to this point, and concentrate on the long-term
objective of developing the significant opportunities that have been opened in Asia.
Such concentration would not be incompatible with the maintenance of continued
pressure in Europe and the Near and Middle East. It would also be compatible with the
logic of power relations as analyzed by Marxist doctrine.
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U. S. GOVERNMENT PRINTING OFFICE
3681-STATE-1949
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