THE POSITION OF THE SOVIET SATELLITES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A000800090001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 23, 2016
• Document Release Date: March 19, 2013
• Sequence Number: 1
• Publication Date: November 7, 1949
• Content Type: MEMO

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CENTRAL INTELLIGENCE AGENCY
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Project: "r'f,:448 YOFFICE OF REPORTS APIA ESTIMATES S ~
Project Initi~aj,Pflemoraud~
To: A/RE
Publications
From; Division, Projects Planning 1 L-
Subject: The position of the Soviet Satellites
Statemeat o? Project
off: NRO staff
To estimate the position of the Soviet satellites in Eastern
Europe with respect to'the US and the USSR
scone: This is a preliminary vorsion of WE 96-49, qv.
GraDpllCa i? AA4~ S
?Si rM memorandum
j aft due jn D/8ts 4 Nov
~esoanaible Blanch: D/EE
Internal C+j~ntios: as needed
~las~ification to j AQ_hielaer than: Secret
Heowimended Disseminations Requester only
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 IIYI'..L LICENCE 10,10RANDU14 170. 24.8
SUBJECT: Satellite Relations with the USSR and the West
Svcuv Cr.
The separation of smy Comin.Torm Satellite from the Soviet +.Tbit is
unlikely under current conditions, Circumstances comparable to those
which enabled Tito successfully to challenge Soviet domination in Yugo-
slavia do not exist in the other Satellites. By the drastic remedial
measures to which it has resorted, the Kremlin has indicated its aware-
ness of the grave dangers to its control of Eastern Europe inherent in
satellite nationalism.
The Coy7.nform Satellites can be ernected to maintain a basically
antagonistic policy toward the US reflecting that of the Soviet Union.
Any relaxation of satellite antagonism toward the US would be a tempxlrary
tactic motivated by opportunistic considerations.
The current shift in the Y-agcslav attitude toward the US is based
on motives of self-preservation before the mounting pressure from the
Soviet bloc. However, the continued dependence of Yugoslavia on US support
Notes This memorandum has not been coordinated with the intelligence
organizations of the Departments of Stater Army, Id'avr, and the
Air Force.
Document No. C V_ I
NO CHANGE in C-a:?? ^
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Cle55. C.*.. :C=D TO: T" S C
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 against the Soviet Union mill probably result in a gradually improved
Yugoslav attitude toward the US,
Approximately 90 percent of the populations within the Satellites
are hostile to the Commnist regimes imposed on them. Althot4h opposition
elements in the various Satellites constitute a !majority of the population,
Commuvnist measures aimed at separating then and destroying their organi-
zation and leadership, render ouch elements ineffective as opponents to
Communist domination of Eastern Europe,
Local Commn!anict control over the satellite peoples is eunerelsed through
the traditional Communist instruments which include the Party, security
organsa and the armed forces. In addition, subsidiary political, rultural,
and economic organizations are used to disseminate Communist Influence.'
The presence or availability of Soviet military might in the Satellites
constitutes the most potent factor in maintaining the Communist regimes in
power, The various Commbm mist parties under the immediate direction and
control of reliable Soviet agents, form the chief vehicles by which the
sovietization of Eastern Europe Is being carried out. The entire political,
military, and economic life of the Satellites is being geared to the irr-
plemaentation of Soviet aims under a tight Kremlin control, in now iastences
the Soviet khtbaasy itself serves as the main command channel between the
Kremlin and the satellite govcruri ents; in others, trusted local Coammsnists
have direct access to Y$oscow.
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The USSR has already attained a high degree ofreconomic control over
the Satellites. One of the major points of Soviet vulnerability, however,
is the subordination of satellite economic welfare to Soviet interest. Con-
siderable popular resentment, even in Communist circles, has resulted from
the forceful transformation of the economic structure of Eastern Europe,
the lowered standard of living, and the failure of the USSR to meet the
,industrial requirements of the Satellites. Thus far, however, Soviet
political and economic control has been sufficient to prevent effective
nationalist deviation from Kremlin authority. Mean:.hile, the US export
control program has contributed substantially to slowing the rate of economic
development in the Satellites and has added to the strain in present Soviet-
Satellite relations.
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Ss?; -The Soviet Union has attained its domination of Eastern Swope. through
the'metbodical use of maltiple instrimments of control and intimidation,
141i'Weaenoe or availability of Soviet military might in the satellite
oofMtries constitutes a passive bat potent factor in maintaining the eateflite
i6n 9.n power. The various satellite Comauniet parties, themselves
diinhtod and oontrol2ed by reliable t'9osc6w-trained agents, form the chief
Vehicle by which sovietization is being imposed on the Pastern European
populations, As in the Soviet Union, each satellite Communist party has
penetrated and now 'wholly dominates the government and security threes,
ii=aiom9 cases, the Soviet ltabassy serves as a command dhannel between
f!isacew and the satellite capitals; in others, trusted local Communists appear
ts' have 'direct access to tabacow. hi addition, Eastern Europe has been,
thoVugh1y penetrated by Soviet secret police who operate independently
btzt'e.breise control over the satellite police. Numerous Soviet "technical
acifieis,n especially for the satellite armies and economic enterprises, are
pexZanently stationed in the Satellites; while many inspectors from the USSR
oircn ato throughout astern Europe to control and report on local conditions.
With the growing nationalization of industrial and commercial enterprises`
throughout the Satellites, the economic life of astern Europe has been
increasingly subjected to Soviet direction and controls. In early 19495,
the Council of Mutual Economic Assistance was created with the purpose of
ul?imtely integrating the satellite economy with that of the Soviet Union,
swam
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Although the methods of Soviet control follow the sane pattern in all
of the S te]..l.itcs, the degree of :ovistizetion varies from country to country.
Thus Soviet contra]. is more thorough In the Balkans, particularly Ruoania
and Bulgaria, than in the northern Satellites where opposition has been
greater. Steps are new being taken in Czechoslovakia to bring that country
under similarly strict Soviet control., Complete sovietization of Poland,
which has traditionally evidenced its strong antagonism toward the USSR,
will probably confront the Kremlin with its severest test.
20 Tmdiaenous Basis of Contmsniat Control,.
'Local Communist control over the satellite peoples is exercised through
the traditional Communist instruments which include the Party, the Security
Police, and the Army. In addition, all cultural, political, and economic
organ.2zations, as well as all local media of mass communication, are used
by the Communists to extend their influence over the people. To an increasing
extent, the entire population of Eastern Europe is being impressed into these
mass-organizations for the "construction of socialism." The traditionally
anti-Communist Churches have been, or are being, brought under the domination
of the Communists to serve as additional levers of control. The Eastern
European area has become, therefore, progressively isolated from Western
contacts, and completely subjected to Communist indoctrination and though-
control. In view of this Communist domination over all aspects of community
life, there is little opportunity for any organized resistance to develop,
despite the fact that the populations in general are opposed to the authori-
tarian Communist regimes.
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30 A tvde o? CoMsanist Refines, F oluding YSl~OSi&id t _toward the U .
The attitude of the Communist regime in the Satellites is expected.
to'remainbasical3y antagonistic toward the USE, thus reflecting the attitude.
of the Soviet Union, 'which now regards the US as the leading obstacle to its
expansionist aims. Any relaxation of this pol.ior ad11 be temporary and
purely for opportunistic reasons. Thus the more industrialized Satellites,
such as Poland and Czrchoslovalda, may continue their attempts to improve .
economic relations'with the US in order to acquire vital industrial equip-
ment unobtainable in the Soviet orbit.
Yugoslavia, on the other hand, has already-to a certain extent tempered.
its past hostility toward the US. This modification of Yugoslavia?s attitude
stem from the realization that Yugoslavia is isolated from the Soviet bloc
and increasingly dependent upon US. economic. and military aid. The change
in tactics toward the US, therefore,, is based on motives of self-preservation
before mounting pressure from the Soviet bloc. The Tito regime will probably
gradually adopt a more friendly attitude toward the US as it continues to
rely 'on US support to maintain its independence.
The extent of direct Soviet control oven the Satellites and the in-
The Y'w]nerabi7ity of_the Satellite States to Seosscation?from the Kxam)iA.
struments of power in the hands of the satellite Communist parties eliminate
the possibility that any'Satellite in, the near future can be separated from.
the., Soviet Union by measures short of war. A set of conditions comparable
to.those which brought about Yugoslavia's successful revolt from Kremlin
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domination does not exist in any other Satellite, Nona of the Cominform
satellite parties has a relatively-popular leader m such as,Tito -- with
_a devoted pasty and military following. With the exception of Albania,
the, Satellites lack, the exposed geographic position of Yugoslavia which
has affordod!Tito access to the West.
Although approximately 90 percent of the populations within the various
Satellites are hostile to the Commmist r=egimes imposed on them, the elements
ffilcing,up Chia anticommunist majority have actively opposed the Communists
only when directly attacked. Thus, the Communists at first turned. their
efforts to the successful elimination of organized underground groups and
anti-Communist political parties. Nbre recently, the Commmists have
directed theii attacks against the various religious organizations . the
nucleus for remaining anti-Communist opposition., The Orthodox Church,
?mainl. represented in the Balkans, succumbed and is now a subservient
,Communist instrument. The Communist regimes in the northern Satellites
. are now carrying on a relentless campaign to neutralize the powerful in-
fluence of the Catholic Church. Next on the Communist timetable trill
probably be the peasants, whose anti-Communist stand has thus far delayed
the widespread collectivization of agriculture. Communist efforts to
-separate the. opposition elements and destroy their organization and leader-
ship one at a time have thus made it possible for the Communists?to impose
their will on a population predominantly anti-Communist.
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NOW
Nevertheless, certain weaknesses do exist in varying degrees through-
out the Satellites.. which if properly exploited, might, in the long run,
enable at least some of the Satellites to throw off the Kremlin yoke.
Chief among these is the strong undercurrent of rationalism, extending
even to many Coma3mit party members, uuirich has been caused by resent-
ment against the enforced sacrifice of xttional to Soviet interests.
With the Tito lesson in mind, the Kremlin, by its widespread purges of
satellite parties, has indicated that it fully appreciates the dangers
inherent in nationalism. Hower, the basin problem remains unsolved,
and ruthless Soviet exploitation of its Satellites.. which resulted in
Tito's defection, will continue to augment nationalist discontent through-
out the area.
Of the Satellites, Albania, by virtue of its isolated geographical
position and the relative instability of the present regime, is meet
susceptible to defection. Poland, with 95 percent of its population
devoutly Catholic, and with the unquenchable nationalism of the Polish
people evident even in the highest councils of the Communist Party's
leadership, might well prove the hardest morsel for Moscow to digest. On
the other side of the scale, Rumania, where Soviet control is virtually
complete, is considered least able under present conditions to break away
from its Kremlin masters.
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Albania
The USSR appears capable of maintaining effective control over Albania
0
in the course of the next several months. Because of the impoverished
economic circumstances of the Albanian people and the hostility of the
freedom-loving Albanian mountaineer toward a harsh Communist regime, 90
percent of the population is disaffected and ripe for collaboration with
any anti-Hoxha movement. However, in the absence of unity among the anti
Botha elements, resistance amounts to no more than sporadic sabotage and
subversion and overthrow of the Communist regime is considered unlikely.
Meanwhile the USSR has extended its control over all phases of Albanian life
to a greater degree than in. the other Satellites.and the formation of an anti-
Soviet element Aithin the Albanian Communist Party isimprobable. Refugee
anti-Hoxha elements concentrated in Yugoslavia, Italy, Egypt, and Greece,,
comprise both pro-Tito Communists and anti-Communists. These groups have a
combined membership of approximately 1,000 and maintain liaison with cells
in various parts of the country, However, the extent of their influence with-
in Albania is probably small under present conditions.
Bulgaria,
The USSR can probably maintain and even extend its control over Bulgaria
despite the powerful force of Bulgarian nationalism, The small inner circle
of Bulgarian Communists dominating the nation is absolutely responsive to
Kremlin directives., Below this ruling clique the Communist Party is divided
on the question of subservience to Moscow, and constant Soviet vigilance will
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be required to prevent the growth of effective resistance to the Soviet
Union from within the party. The Kremlin's success thus far in liquidating
potential opponents suggests, however, that it will continue to be
successful in dominating the Bulgarian Communist Party, and through it the
Bulgarian nation. No organized political opposition to the Communists is
political
knoxn in Bulgaria. The Agrarian Union is the only non-Communist/party still
in existence and is retained merely as a symbol of peasant participation in
the government in order to facilitate the eventual collectivization of
agriculture. Approximately 90 percent of the total population of 7 million
opposes the regime, but this opposition lacks effective organization. Such
active resistance as there is manifests itself in sporadic subversive and
sabotage efforts. The only Church which does not actively espouse the
government's program is the Roman Catholic, but its influence is insignificant.
Czechos).ova!ie
Czechoslovalda is not believed to be vulnerable to detachment from Soviet
domination. On the other hand, Soviet control tends to be undermined by
the basic conflict between Czechoslovak national interests and the aims of
Soviet imperialism in Czechos).ovakia,.aslwell as by the widespread opposition
of a historically pro-Western democratic people to a Soviet-imposed police
state. In this content, actual and potential opposition elements include:
(1) the Roman Catholic Church; (2) the former middle class; (3) a large
portion of the Czechoslovak Communist Party composed of idealists from the
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prewar period and opportunists vrho have joined the party since the February
1948 coup; (4) numerous non-Communist government officials still retained
by the Communists for their technical knouledge; and (5) the underground.
The peasants are non on the whole apathetic but till join the active op-
position ashen collectivization is begun in earnest, Labor is becoming
increasingly restive as its standard of living declines and it finds itself
controlled by the Communnists, Both the Catholic Church and the middle class
are at present under concentrated Communist attack vaith the object of re-
ducing their influence and capabilities-, The underground has little
influence, having been disorganized by increasingly stringent security
measures., Nationalism within the Communist Party, however, constitutes a
serious problem for the regime?
This opposition poses continuing but not crucial problems for Soviet
control of the country.: The Soviet Union, through the Czechoslovak Comnaaist
Party, gives every indication of its determination and ability to maintain
its porser position in the country. Neaniahile, actual and potential clemants
opposing the Kremlin's tightening grip on Czechoslovakia are being
relentlessly sought out and destroyed.
Hungasy.
Thn USSR can retain its hold on Hungary under current conditions, despite
the fact that Hungarians are non-Slav, non-Orthodox, strongly nationalistic,
individualistic, and intensely religious. Since World War II, this
antagonism has been aggravated by: (1) the excesses of the Red Army military
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15ZUKbT %.W
groups in Poland and Czechoslovakia -- it is impossible to estimate the
extent and cohesion of the Hungarian undergrbund movement.
Ninety percent of Hungary's population is estimated to be non-Communist,
but it is incapable of exercising independent political action, The major
non-Communist factions - opposition political parties, the Church, and
the capitalist and land-owning elements -- are all.being gradually eliminated,
and the non-Communist political parties have lost all semblance of in-
dependence. The effectiveness of the Catholic Church as an opposition force
has been sharply reduced and in order to survive even temporarily the Church
will be forced to relinquish all but the most basic religious functions,
However, as a spiritual anti-Communist force the Roman Catholic Church will
probably remain a rallying point for anti-Communist Hungarians.
Poland
The USSR is believed to be capable of retaining its control over Poland?
although it faces a continuing problem in the unquenchable nationalism of
the Polish people which is evident even in the highest councils of the
Communist Party's leadership, and forms a continuing threat to this control,
Polish nationalism neakens the USSRfs hold on Poland by: (I)-lessening the
absolute reliability of native Polish Communist leaders in following Soviet
dictates; and (2) intensifying Poland's traditional nationalistic antagonism
toward Czechoslovakia and Germany, thus hindering Soviet efforts to
integrate the Polish economy with those of Czechoslovakia and Eastern Germany,
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The uncoordinated anti-Communist groups scattered throughout Poland bear
little resemblance to the once-flourishing underground organizations. The
underground movement in Poland has a membership numbered in, the thousands,
is,largely passive and maintains limited connections with the other Satellites
and the West. The Ukrainian Partisan Army is engaged in limited
terroristic acts in southeastern Poland near the Polish-Soviet frontier,
The size of its membership is unknown. The Roman Catholic Church in Poland
is a strong ideological rallying point for anti-Communist resistance with
about 95 percent of the Polish population members of the Catholic Church,
Out of an estimated total population of 24 million, the Polish Communist
Party claims a membership of 1.5 million, The remainder of the population
is non--Communist, comprised primarily of peasants who constitute two-thirds
of the total population and are by nature extremely individualistic and
independent.
Rumania.
The present trend toward complete Soviet domination of Rumania is
expected to continue. The Rumanian Communist regime will continue to
tighten its control over the people, bringing the country ever closer toward
incorporation in the USSR. Defection of the Tito type is unlikely,
primarily because of ample Soviet military-strength in the country. Although
individual officials and Communist Party members may have to be replaced
occasionally, such nationalistic deviationism as exists cannot be considered
a threat to the stability of the pro Soviet regime,,
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s.4,
The historic political adaptability of the Rumanians probably explains
their reaction to current Soviet domination. Most Rumanians live for the
'day when the Soviet domination no longer exists and present Rumanian
leaders are liquidated, The Rumanian people, however, are incapable of
taking action to subvert the regime, their attitude being one of hostile
inertias The National Liberal and the Independent Social Democratic parties
are subversive to Communist demands and other opposition parties have been
destroyed, The churches do not present a major deterrent to Communist control,
the Roman Catholic, Uniates, and anti-Communist Orthodox clergymen having
been subjugated,,
There are no indications that an effective illegal resistance exists or
is being developed,. Small-scale and apparently spontaneous outbreaks do
occur, however, presumably prompted by dissatisfaction with working conditions,
The impending collectivization of agriculture on a wide scale may also
provoke peasant resistance. Under present conditions, however, coordination
of the various small opposition groups and their development into an
organized resistance cannot be effected.
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5. Present Economic Relations between Satellites and IISSR.
The i*nediate objective of the Soviet Union in its economic relations
with the Satellites is to enlarge its war potential by directly utilizing
and expanding the industrial capacity of its eastern bloc. The first step
is the coordination of the satellite economies with that of the USSR, and
accordingly the Council for Economic Mutual Assistance (CE &) was founded
in Moscow in January 1949. This Soviet-dominated organization includes
Albania, Bulgaria, Rumania, Hungary, Czechoslovakia, and Poland. Officially
CEMA is to begin operation in January 1950, however,it has already begun to
coordinate the economic plans of the satellite area by controlling production:
in certain areas, directing foreign trade and finance, and allocating
materials and technical knowledge. The bloc's foreign trade network has
been closely knit through a series of bilateral trade agreements. Similarly,
the Satellites are pooling their dwindling foreign exchange resources, thus
permitting their more effective utilization.
The 1948 volume of trade among the six Eastern European states has
increased 25 percent over 1938. The present volume accounts for one-half
of the total foreign trade of Eastern Europe as compared with 20 percent
before the war. Exports from these countries to the USSR, however, have
increased tenfold and imports have risen twenty-five times over the 1938
levels. Because prewar Soviet trade with these countries was insignificant,
these striking percentage rises do not represent comparative increases in
volume. More revealing is the nature of the commodities now being exchanged
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between the satellite arezi and the USSR. Soviet shipments comprise
capital goods and raw materials, some of which are used for processing
into finished manufactures for re-export to the Soviet Union. The Satellites,
chiefly Hungary, Czechoslovakia, and Poland, ship the USSR other-industrial
products, as well as agricultural items. Thus the Soviet-Satellite trade
pattern is radically different ? from prewar years when agricultural
products and industrial raw materials were the chief commodities exchanged.
Despite increased exchange in industrial products, however, the orbit is
still largely dependent for these items on imports from the ECA countries
and the US.
Soviet control over communized Eastern Europe has permeated almost
every segment of the economy. It is most manifest in the joint companies
established in Hungary, Rumania, and Bulgaria. Supervision of the satellite
transportation system, standardization of industrial equilment,.the pooling
of production methods and scientific skills, and the closely supervised
allocation of scarce raw materials are all executed either by CEMtL, the
Cominform, or directly by the Kremlin. Its reparations demands on several
of'the Satellites provides the USSR with another opportunity for exploiting
the industrial output of Eastern Europe,
The strength of Soviet-Satellite economic ties is further illustrated
by the extent to which the industrial capacity of Eastern Europe is geared
to Soviet interest. At present the USSR accounts for a major part of Eastern
European foreign trade. Soviet approval is often required before the
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Satellites may conclude trade pacts with non-Cormsmist nations. Credit
and commodity loans have been made by the USSR without which the output
of many satellite industries would be curtailed. The satellite economic
organizations have now been modelled after that of the USSR, thus facilitating
the exercise of Soviet disciplinary controls over satellite production plans
and forcing the.Satellites to depend upon Soviet technical, administrative,
and scientific knowledge.
Soviet influence is also evident in the field of finance. Banking pro-
cedures and credit policy are coordinated among the satellite states on the
one hand and with the USSR on the other. Preliminary stepst are probably
underway toward the creation of a "ruble bloc" which would facilitate the
balance of payments among the Satellites and the USSR.
Despite the rapid growth of Soviet-Satellite trade and the strength
of Soviet control over the satellite economies, there are several points
of vulnerability in Soviet-Satellite economic relations. Nationalist re-
sentment in the Satellites over Soviet dictation in economic matters is
perhaps the greatest potential obstacle to complete integration of the
Soviet-Satellite economies. Other difficulties have arisen as a result oft
(1) the strain caused by forceful transformation of the economic structure
of the Eastern European countries; (2) the excessive demands on labor
productivity coupled with a lowered standard of living and burdensome taxes;
(3) the failure of the USSR to fulfill promptly and in sufficient quantities
and types the essential industrial requirements of the Satellites; (4) Soviet
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attempts to impose agricultural collectivization upon a stubborn peasantry,
and (5) the subordination of satellite economic welfare to Soviet interest.
Although these t;eaknesses exist at presentDthey do not. represent a serious
threat to Soviet domination in view of the strong political and economic
controls exercised by the Kremlin. These points of weakness, however,,
are susceptible to exploitation by the West and are a continuing source
of strain in Soviet"Sateflite economic relations.
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 Declassified in Part - Sanitized Copy Approved for Release 2013/03/19: CIA-RDP78-01617A000800090001-3
6e Present Economic Relations between the Satellites and Western Europe,
Economically, the satellite area and Western Europe are complementary,
Eastern Europe supplies foodstuffs, fuel, and some primary products in return
for Western European finished industrial products, items of light and heavy
industry, and particularly precision instruments and replacement parts,
Since World War II, the USSR has replaced Germany as Eastern Europe's
chief trade partner,. and Eastern Germany is producing for the Soviet orbit?
Western Germany rill undoubtedly play an increasingly important role in trade
with Eastern Europe, but cannot regain its prewar positions
Trade between Eastern and Western Europe is now only approximately half
the prewar levels In addition to being the result of the enforced orientation
of satellite trade toward the USSR, the loe level of East-West trade has
stemmed from: (1) the incomplete recovery of agriculture production. in
Eastern Europe; (2) heavy demands for recovery in Western Europe and the lack
of exportable surpluses; (3) Western export controls on certain commodities;
(4) the absence of credit or other means of fiiancing imports to Eastern
Europe; and (5) the widespread adoption of bilateral agreements.
Despite these barriers to an improvement in East-West economic relations,
the volume of East-West trade may gradually increase. Eastern Europe's
agricultural production will probably reach prewar levels by the end of 1949
an4 the satellites all desire an increase in trade vith Western Europe in order
to obtain industrial goods presently in short supply or unobtainable in the
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Soviet orbit. Moreover, increased production in Western Sur-:p6 will
stimulate the search for additional markets. A decisive factor affecting
future East=We"st trade will be whether the ECA nations: (1) will take
effective parallel action with the US in. implementing export controls; or
(2) in vien of mounting competition in world markets will attempt to find
outlets in Eastern Europe for their industrial output. Regardless of Western
Europe's attitude, however, the Satellites will still face numerous
difficulties in their effort to expand East-Vest trade. The shortage of
foreign exchange and lack of credit facilities will be a continuing problem
and the satellites will have increasing difficulty in finding markets for their
ram materials (for example, Palish coal) in the face of growing world
availability of these productes and the decline in world prices? Thc0e obstacles
can only partially be overconx.a through state control over. foreign trade,
financial manipulation and Vie adoption of such unfair trade practices as
dumping and clandestine oper;ationa.
7, Present Economic Relatirons between the satellites and the US.
Trade between the satellite states and the US has declined'to a nea lon,
despite pressing satellit,,e needs for industrial equipmrent, replacement parts,
precision natruments, '-Industrial raw materials, and technical knowledge.
US export controls and. denial of financial assistance are largely responsible
for this lack of trade, which has also been caused by such factors as the
satellite dollar cx',;hange shortage, lack of exportable items desired by the US,
unsettled question's of nationalization of US property, and the difficulty of
conducting trade 'through State monopoly channels. The denial of strategic items
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has contributed to the reduction of production goals throughout the
satellite area, and has tended to.intensify the strained relations within
the Soviet orbit.
Even if export controls Caere eliminated, however, Eastern Europe :could
not have sufficient exportable surpluses to balance the cost of imports from
the US. Thus$ these countries could require considerable US financial
assistance in the form of long-term credits, similar to those now being granted
to Yugoslavia. Such aid would result in increased trade and would permit a
sharp upswing in satellite production., and, finally, an improvement in the
relatively low standard of living.in Eastern Europe, However, as-long as the
USSR continues to exercise its economic control over the Satellites, any Us
aid uculd ecosti? primarily to Soviet rather than satellite advantage, Thus,
only its Satellite can successfully defect from Soviet domination will
there-bb'av prospect for a marked improvement in economic relations with the
US..