WEEKLY SUMMARY NUMBER 65

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002200180001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 27, 2016
• Document Release Date: May 30, 2013
• Sequence Number: 1
• Publication Date: August 26, 1949
• Content Type: REPORT

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COPY NO. 90
szez tsar*
WEEKLY
SUMMARY
65
Number
E6 AUG 1949
Document No. COO/
NO CNANGE in Class. 0
j3.0151TCLA3SIF1ID
C-11,21) TC.: TS S C
Jo, 4 Apr 77
Auth: DDA R.G. 77/1763
Date: of-or? 7 8 By:
Ass
CENTRAL INTELLIGENCE AGENCY
:fArciliva PeeoPal
Rai,. 10 ecod, Caie
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STAT
Sik4R45:f..
ARCHIVAL RECORD
PLEASE RETURN TO
AGENCY ARCHIVES,
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1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance with applicable security regulations, or
returned to the Central Intelligence Agency.
WIVRNING
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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CONTENTS
Page
HIGHLIGHTS.???????????Jegooso??? n? 1
WESTE N EUROPE.
EASTERN EUROPE
a.e? 0000000000
2
5
NEAR EAST AFRICA 8
FAR EAST....
0.10 000 ********** 0
WESTERN HEMISPHERE. .....
. 10
? .11
ARTICLES
EuropeanCooperation ...... ..............13
Soviet Aims in Manchuria ...... ...... .15
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HIGHLIGHTS
The heated propaganda battle between Tito and the
Kremlin continued to hold the world's attention during the
past week as the Yugoslav Governme t shrewdly invited
the USSR to discuss all outstanding problems but firmly
restated its own rational sovereignty. Meanwhile, the
Finnish Communists have encountered energetic govern-
mental resistance to their campaign of crippling strikes
(see pa 5). The Communists have thus far hampered
Finnish production and shipping at a crucial time, but they
will be unable either to unseat the Social Democratic Gov-
ernment or to bring the national economy to a standstill.
The Palestine Conciliation Commission in tacit
admission of the failure of the Arab-Israeli talis at
Lausanne, has taken a new tack in its search for a solution
to the Palestine problem by accepting a US suggestion that
an economic survey group be established to find answers
to the focal economic difficulties in the situation (see page 8).
The time required by the group to design a program for re-
settlement of the Arab refugees and for raising the economic
level of the area will probably prevent detailed consideration
of the Palestine question during the September session of
the UN General Assembly. However, prospects for solution
of the Italian colonies question at the forthcoming GA session
have recently been improved by the shift of all major western
powers, except France, to the support of early independence
for Libya (see page 9).
In China Communist military forces moved on success-
fully in the northwest, slowed down somewhat on the south
central fr nt, and maintained a steady pace along the southeast
coast (see page 10). Present indications are that the Commu-
nists will gain control of the mainland coas 1 area opposite
Chiang Kai-shek's stro ghold on Taiwan within the next few
weeks.
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WESTERN EUROPE
WFTU Tactics Recent wage and hour demands by Corn-
mi 1st labor in France and Finland reflect
a na*r shift in World Federation of Trade Union strategy,
as a result of the failure to arouse sufficient worker support
of last year's "political" strikes. In its efforts to retard
production nd stimulate inflation in non-Soviet countries,
the WFTU is now ap,,e rently concentrating on the exploitation
of traditional trade union ievances. National Communist
affiliates of the WFTU are evidently abandoning their previous
programs for political agitation and are co centsting on
"legitimate" wage and hour increase demands, to be, coordi-
nated as far as possible with non-Communist labor elements.
The broad strategy will be to extend initial s ikes of Com-
munist unions within individual industries to a walk-out of all
Communist unions, while attempting to in sufficient non-
Communist support to develop a general strike. In order to
achieve such widespread strike action, the Interested WFTU
trade de rtments will probably supply financial and organiza-
tional aid whenever the investment promises substantial returns,
GERMANY
Ruhr Coal Production Unless Ruhr coal production is in-
creased, German industrial produc-
tion targets for 1949-50 will be met with difficulty. Ruhr coal
production for the 1949-50 period is now expected to iota/ 3.4
million tons less than requirements. This shortage ca be
met either by the import of high-priced coal from Poland and
the UK or by the imposition of additional economies among
2
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GERMANY
secondary coal consumers. Only the use of a greatly
-
augmented labor force has maintained total coal produc-
tion at its present level inasmuch as the daily output per
man-shtft is appreciably below that of the prewar period.
This poor showing in daily individual output can be traced
in part to low living standards, particularly poor housing,
and to worn and obsolete equipment. A planned increase
in subsidies for new equipment, as well as an impending
reecganization of the milling industry, may somewhat
Increase individual productivity.
FRANCE
Wage Raise The growing capabilities of the General
Confederation of Labor (CGT) for launching
a powerful strike offensive will probably force the French
Government to grant some form of wage concession by early
fall. Any material wage relief, in addition to weakening con-
siderably the CCT's present campaign for "unity of action"
among non-Communist labor leaders, would reduce labor's
hostility to the Government's firm wage control policy. The
Labor Minister's recent arbitrary grant of a vacation bonus
to social riecurity employees has aggravated labor's anta.go-
&ism toward the Government as well as mak rrg universal
wage demands more difficult for the Government to resist.
Although CGT has demanded the raising of basic wage
rates, prompt approval by the Govern tient of a modest bonus
would probably check the growing trend of non-Communist
labor toward support of the CGT 's strike plan for the coming
fall.
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THE NETHERLANDS
Roundtable Conference The advocates within the Nether-
lands Government of a conciliatory
Indonesian policy are in a moderately strong position at the
roundtable conference on Indonesian independence which got
under way this week. Support of the Government's Indonesian
policy in Parliament was surprisingly strong from the partiee
represented in the Cabinet, and no evidence of active opposi-
tion developed. Although participation in the conferonce by
a Dutch delegation including parliamentary leaders repre-
senting all political parties except the Communists may pro-
long negotiations, such general representation will also
probably assure parliamentary approval of any settlement
resulting from the conference.
ICELAND
General Elections Although general elections scheduled for
Oct er will probably not result in a
government strong enough effectively to cope with Iceland's
political and eco omic problems, an improvement over the
former three-party coalition can be expected. The solution
of the present economic problems, growing out of a wartime-
encouraged high standard of living and an inflated wage scale,
proved too difficult for the last government. The ne Parlia-
ment will face the necessity of instituting an austerity pro-
gram designed to lower the standard of living and to ease
Inflationary conditions. Communist prospects for participa-
tion in the new government are nil.
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EASTERN EUROPE
FINLAND
Finnish Strikes Although the Finnish Communists have
succeeded in interfering with production
and shipping at the height of Finland's export season, the
Communists will be unable either to unseat the Social Demo-
cratic Government or to bring the economy to a standstill.
The Government has demonstrated its determination to meet
force with force and has taken emergency measures to insure
the continued movement of foreign trade. Many striking
workers have already returned to work and in several unions
the rank and file have indicated strong opposition to projected
strikes. The refusal by several Communist-domhated labor
unions to call off their strikes has led to their expulsion from
the Finnish Federation of Labor (SAK) and these Communist-
led dissidents will probably set up a separate labor federation
to compete with the MK. Although the Communists have been
successfully exploiting the understan?eble anxiety of the workers
following devaluation of the finnniark, the Finnish Communists
are incapable of forcing the Social Democrats out of office and,
without the aid of Soviet forces, they are certainly incapable
of the forcible overthrow of the Government at this time. Other
than to quote via radio the Finnish Communist charges that the
Government's anti-strike measures violate their peace treaty,
the USSR has remained aloof from the strike situation.
HUNGARY
New Constitution The new Soviet-type constitution adopted
18 August by Thmga.ry's National Assembly
provides the basis for future measures necessary to create a
completely Socialist state. Heretofore, all the "Peoples'
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HUNGARY
Democracies" (except Poland and Hungary) have had consti-
tutions which retained such concessions to the bourgeois
elements in their governments as recognition of private
ownership of certain means of production and guarantees
of land ownership by those who tilled the soil. In the Com-
munist system, these provisions are recognized as merely
temporary until complete nationalization of industry and
Complete collectivization of agriculture can be achieved.
The new constitution legalizes previous governmental decrees
and makes further changes, which bring the governmental
Structure at both national and local levels closer to the Soviet
pattern. Although the constitution provides for separation of
Church and State, its purpose is undoubtedly to eliminate the
Church's influence in government affairs. Moreover, the
facility with which the constitution can be amended to restrict
basic human rights will make Hungary's forced approach to
communism through socialism a routine matter.
GREECE
Greek-Albanian Tension Although the question of Albanian
support for the Greek rebellion
will assume new importance as the current Greek army offen-
sive develops in the Grammos area, the Greek Government
will probably avoid any rash action against Albania so long as
Greece is preoccupied with major guerrilla concentrations
within its borders. The number of Greek guerrillas harbored
in Albania may now total more than 10,000 as the result of the
recent withdrawal of some 5,000 rebels from the Vitsi sector,
and flagrant Albanian support for new guerrilla attempts at
large-scale border crossings may therefore inflame Greek
popular resentment. The Greek press, however, has thus far
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GREECE
largely avoided the inflammatory issue old territorial
claims against Albania; Greek officials are waiting to see
whether the General Assembly in its September session will
make any move to control hostile frontier traffic; and the
Gr ;k Army is unlikely to make sizable forays into Albania
unless provoked more than during the recent Vitsi battle
by action originating from Albania. Although the Greeks
would still be tempted to take part in the overthrow of the
relatively weak pro-Soviet regime in Albania if the develop-
ment of the Tito-Soviet quarrel provided a sui ble opportunity:,
Greece would still be concerned over Ee =certainties of the
alkan situation and would remain basically distrustful of Tito.
Thus, unless the Greeks feel that they can rely upon US-UK
acquiescence in specific measures against Alan, they will,
however rel ctantly? maintain a cautious attitude until they
can better appraise the course of the Tito-Soviet quarrel and
until they are more cer in of their own progress in anti
-
guerrilla operations.
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NEAR EAST AFRICA
" PALESTINE
US Plan With the Lausanne talks of the Palestine Concilia-
tion Commission (PCC) an admitted failure, the
Commission has now accepted a US suggestion for a new
approach to the Palestine problem, a suggestion based on
the hope that the adoption of an economic development plan
for the entire Arab-Lsraeli area might indirectly bring about
a political settlement. While the PCC itself takes a back
seat, an economic survey group responsible to it is to be
sent to the Near East, where it will attempt: (1) to work out
measures leading to resettlement of the Arab refugees; and
(2) to plan a long-term development program to raise the
economic level of the area. In attempting to solve the refugee
problexr. the economic survey group will probably concentrate
on Jordan, Syria, and Israel, the three countries likely to
absorb the great majority of the Arab refugees. By implying
that additional refugee relief funds might not be forthcoming
from UN members, primarily the US, unless a compromise
were reached,the economic survey group could put pressure
on both Arabs and Jews. The establishment of the economic
survey group and the time required to make its study and re-
port will probably enable opponents of a full discussion of the
Palestine problem in the General Assembly to delay a general
debate on Palestine until at least the middle of the session.
Thus, although the Arabs will undoubtedly find some earlier
opportunities for airing their views be.fore the UN, the GA may
have little time in which to attempt a definitive Palestine settle-
ment before the end of the fall session. The development of an
acceptable aid program by the survey group might lead to a
solution of the refugee problem and thus facilitate a political
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PALESTINE
settlement. Such a program, however, would require
substantial material aid to both Israel and the Arab states
and, unless the necessary dollars and pounds sterling are
assured, the economic survey group's blueprint is likely
to share the fate of its ma y predecessors.
ITALIAN COLONIES
GA Action Early independence for a united Libya will
probably be supported by all the major west-
ern powers, except France, at the fall session of the UN
General Assembly. The US and the UK will probably con-
tinue to support the cession of the bulk of Eritrea to Ethiopia
and the establishment of Italian trusteeship over Somaliland,
which Italy would enthusiastically accept. The French, how-
ever, fear the pr.,,ble repercussions of premature Libyan
Independence on nationalist elements in French North Africa.
Consequently, although the French may reluctantly accept
limited independence for Cyrenaica, they will strongly oppose
a similar status for Tripolitania or the unification of the two
under the Senussi whose religious influence in French North
Africa the French claim to fear. Hoping to capitalize on a
favorable Arab reaction and to gain a preferred economic
position in Tripolitania, Italy has abandoned its efforts to
acquire a Tripolitanian trusteeship and now favors early
Libyan independence.
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FAR EAST
CHINA
Military Scene The Communist military advance in China
last week continued successfully in the north-
west, slowed somewhat on the south central front, and maintained
its steady pace along the southeast coast. In remote Kansu,
where the two rabidly anti-Communist Mas had promised to put
up stiff resistance, the vanguard of Communist forces reached
the outskirts of the provincial capital of Lanchow without en-
countering any real opposition. Ma Pu-fong, commander of the
largest force in the area, has reportedly ordered a withdrawal
of his troops to positions nearer the capital city of Hsining
In his home province of Tsinghat. Ma Hung-kuei, the other
Moslem guardian of the northwest, is r ported to have advised
Chiang Kai-shek that his forces are reduced to twelve rounds
of ammunition per man. Chiang's reply--that Ma should fight
until down to six rounds r man and thei revert to guerrilla
tactics?indicates that the Nationalist leader has written off
the Mas. Strong resistance by Nationalist Commander Pat
Chung-hsi has slowed the Communist advance against his posi-
tions in Hunan. Meanwhile, the Communists have captured
Foochow, the capital of Fuktee, Province and a major port
opposite Taiwan, and are now moving down the coastal highway
towards the port Amoy. The Communists will probably gain
control of all the mainland coastal area opposite Chiang's
Taiwan stronghold within the next few weeks.
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WESTERN HEMISPHERE
PARAGUAY
Government Crisis Although the present Paraguayan one-
party government has been functioning
since 26 February 1949 with relative smoothness, a serious
split now developing will probably result in the forceful over-
throw of the present regime. The breach began in rivalry
between the chief of the Colorado Party and the President,
each of whom aspires to control of both the government and
the party, and now extends through the Cabinet, the party,
and into the army. Army leaders, who were instrumental
In installing the present civilian government but who are now
dissatisfied with their subservient role in President Mo/as
Lopez' administration, are taking sides in the political
struggle and will probably be the deciding factor in the con-
test for power. Thus far, most of the Army appears th
support Chaves, the Colorado Party leader, but the balance
of power is held by the dominant First Cavalry Division which
has not indicated, as yet, which faction it will support. Should
the cavalry refuse to act, a reconciliation between the major
contenders is still possible. A more likely development, how-
? ever, would be the forceful expulsion from the Government of
one group by the other. In either event, there is slight likeli-
hood of long-term political stability.
CELLE -
Labor Unrest The present labor crisis in Chile appears
to be easing somewhat, but the govern-
ment is still confronted with a difficult situation. Recent
student-labor rioting in Santiago over increased transit fares
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CLE
was immediately exploited by Chilean Communists, who
succeeded in converting the disturbances into serious Com-
munist-instigated strikes and similar disturbances in the
future might easily develop into a general strike. If a gen-
eral strike takes place, President Gonzalez may be forced
to decide between: (1) drastic repressive measures, which
would further alienate labor and play into the bands of the
Communists and other administration opponents: and
(2) already-proposed reforms, which might pacify labor
but which would also estrange conservative supporters of
the President. If Gonzalez were to reject both alternatives,
the only course would be to retire in favor of a junta probably
Including the present Ministers of Interior and National
Defense. Even though such a junta would be capable of
restoring order, it could do little to solve the basic political
and economic problems of: (1) declining revenue from copper
exports; (2) spiralling cost of living: and (3) a great need for
agrarian reforms which have been blocked by conservative
elements.
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EUROPEAN COOPERATION
The recent change in the elgian Government and
the present critical stage in the distribution of the European
recovery aid through the Organization for European Eco-
nomic Cooperation (OEEC) may provide the opportunity for
the elevation of former Premier Spaak of Belgium to a posi-
tion of eminent leadership in postwar Europe. The post of
director general of OEEC has not yet been created, primarily
because of British opposition to a truly strong OEEC secre-
lariat, and Spaak, who is a recognized political leader from
a small European nation, an energetic champion of European
cocperation, and the recently elected president of the Euro-
pean Consultative Assembly,in many ways possesses the ex-
perience to head the OEEC. Moreover, the present political
atmosphere in Western Europe is much more promising for
the establishment of a strong OEEC than it was last fall when
stubborn British opposition resulted in the compromise appoint-
ment of a Consultative Group of Ministers as OEEC leaders.
An intensified dollar shortage in Western Europe, plus the
prospect of sharp reductions in the European recovery funds
from the US, will probably force the recipient nations to accept
greater strengthening of OEEC leadership during the period
ahead. Furthermore, the UK, already confronted with a critical
dollar shortage and seeking an increase in its share of Euro- -
pean recovery aid, will be in no position to object to a strengthen-
ing of OEEC powers and leadership.
The appointment of an international figure as OEEC
director general with broadened powers could contribute sub-
stantially toward the establishment of increased economic
cooperation in Western Europe and at the same time provide
OEEC with greater prestige for facilitating the allocation
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SOVIET AIMS IN MANCHURIA
Soviet efforts to gain military and economic control
over Manchuria have been motivated by Soviet ambitions to
become a dominant power in the Pacific ad by the realiza-
tion of Manchuria's strategic protecting position in relation
to eastern S eria. Overall Soviet strategy is based upon the
maintenance of a separate military es e blishment in the Far
East which, even during World War II, as kept at full
strength. Largely to provide support for this separate mili-
tary establishment, Soviet leaders have given high priority
to the development of the economic self-sufficiency of the
Soviet Far Eastern areas. Control over Manchuria will also
shorte the Moscow -Viadivostock railroad route by seven
hundred miles and provide the USSR with a ye r-round,
warm-water port for the development of naval power and
commerce in the Pacific. Moreover, Manchurian raw materials
can be used to supply industries in west Siberia and ie Soviet
Far East, to acquire foreign exc nge, and eve tually to exert .
strong economic pressure on Japan, North Korea, and China.
The USSR is now in an excellent position to exploit
Manchuria's great military and economic potential, Under
the terms of the Sino-Soviet Treaty of 1945 (concluded with
the National Government), the USSR legally acquired ex-
tensive extraterritorial rights in Manchuria and joint owner-
ship with China Of the Changchun railway'. The Chinese Com-
munists, in publicly endorsing the special position of the USSR
In M nchuria recently, hailed it as being in the best interests
of the Chinese people and as a protection against "americasx
imperialist.," After the Communist capture of Peiping, the
Chinese Communist Party transferred its headquarters and
top personnel from Manchuria. Although the Chinese Com-
munists have established a government in Manchuria, it is
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subservient to Soviet "advisers. The recent conchlsion
a Soviet-Manchurian trade agreement gave de facto Soviet
recognition to the Manchurian Communist regime and officially
established a precedent for direct Soviet-bilanchuria,n relations.
Presumably in an attempt to cmceal the conflict between the
special Soviet position and Chinese sovereign rights in Man-
churia., the Chinese Communists have acclaimed the pact as
evidence of Soviet friendship and a forerunner of Soviet
assista.nce industrializing China.
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DISTRIBUTION
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11,69
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18
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/ 21
22,23,24
25,26,27,28,29,
30,31,32,33,34
35,36,37,38,39,
40,41,42,43,44
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52,53,54,55,56..
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68
The President
Secretary 'Of State
Secretary of Defense
Secretary of the Army
Secretary of the Navy
Secretary of the Air Force
Chairman, National Security Resources Board
Executive Secretary, National Security Council
Assistant Secretary of the Navy for Air
Chief of Staff, US Army
Chief of Naval Operations
Chief of Staff, U.S. Air Force
Director of Plans and Operations,General Staff,US Army
Deputy Chief of Staff (Operations) U.S. Air Force
Deputy Chief of Naval Operations (Operations)
Director of Plans and Operations, U.S. Air Force
Special Assistant to Secretary of State for Research
and Intelligence
Director of Intelligence, General Staff, U.S. Army
Chief of Naval Intelligence
Direc or of Intelligence, U.S. Air Force
Dlrectptal Security and Intelligence, Atomic Energy Comm.
Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
Chief, Acquisition & Distribution Division, OCD.,Dept?State
Director, Federal Bureau of Investigation
Secretary, Joint Chiefs of Staff
Chief, Policy Planning Staff, Department of State
Secretary of State (Attention: Chief, Policy Reports Staff)
Deputy Director, Joint Intelligence Group, joint Staff
Secretary, Joint Intelligence roup, joint Staff
US Air Force Representative on joint Strategic
Survey Committee
Administrator, Economic Cooperation Administration
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Doeszna No
Class. 0
Ga/fte:ASSITI.D
D S^: 7S 3 0
t.:1-.ra, 4 Apr 77
-12.41_1221)763
Dates CO-issa-7 8 By:
Declassified in Part - Sanitized Copy Approved for Release 2013/05/30: CIA-RDP78-01617A002200180001-7
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Declassified in Part - Sanitized Copy Approved for Release 2013/05/30: CIA-RDP78-01617A002200180001-7
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U. S. GOVERNMENT PRINTING OFFICE
2631-S--1948
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