WEEKLY SUMMARY NUMBER 22

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002100010001-6
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 27, 2016
• Document Release Date: May 21, 2013
• Sequence Number: 1
• Publication Date: October 15, 1948
• Content Type: REPORT

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Copy No. I Z
WEEKLY SUMMARY
Number 222
15 ;1('.T 1948
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CENTRAL. INTELLIGENCE AGENCY
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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.
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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a
a .
0
0
C 0 T E Tai T S
HIGHLIGHTS ..............
TEE BERLIN DISPUTE............. 2
WESTERN EUROPE ................ 5
EASTERN EUROPE ................ S
FAR EAST .. ?. ? ?......... ?.... ? ?...1I
WESTERN HEMISPHERE... ?? ?. ?. ? ? 1'l
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H I G H L I G H T 8
The Berlin dispute remained in the center of the
world's attentive dear the past week as the UN Security
Council's "little six" (Argentina, Belgium, Canada, Cldna,
Colombia, and Syria) strove for a compromise formula which
would lilt the blockade and turn the whole German question
.over to the Council of Foreign Ministers. By countering
with the proposal that East-West negotiations be resumed
on the basis of the 30 August "agreement,,, the USSR has
once again made it clear that its price for ends the Berlin
blockade is higher than a western agreement to " re-open"
the German question (see page 2). Meanwhile, the blockade
has drastically curtailed industry in western Berlin and has
confronted the western powers with the possible necessity of
placing additional thousands of Berliners on the dole (see
pages 2 and 3).
General De Gaulle's return to power in France now
appears inevitable. Barring a grave domestic or interne
tional crisis which could precipitate his return at any time,
it is likely that De Gaulle will be legally installed some time
this winter, following the anticipated dissolution of the
National Assembly and the call for new national elections
(see page 5). Although De Gaulle's strident nationalism will
complicate French international relations, his intransigence
will be mitigated by his awareness of France's dependence
on the US. De Gaulle's will to resist Soviet aggression, his
desire for a strong western European union, and his determi-
nation to build a strong France will further US security
objectives in Europe.
Chinese Communist forces are continuing to sweep
through North China virtually unchecked and seven more
Nationalist cities appear doomed to fall (see page 11 and map).
The stubborn Dutch refusal to agree to the basic provisions
of the US plan for the resumption of Dutch-Indonesian nego-
tiations has prolonged the stalemate; meanwhile, the Nether-
lands Government has been making plans for setting up an
Indonesian government composed of non-Republican repre-
sentatives (see page 12).
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THE BERLIN DWPUTE
coatiaoed to plague the security
03fig
Council be pas week, with the so-called neutral mem-
bers (Argentina, Belgium, Canada, Chbmt, Colombia, and Syria)
attempting to dwse a conapllcomise formula which would pro-
vide for a simoltaaeous lilting of the blockade and reference
of the entire German problem to the Coewcf of F oreign Minis-
ters. This attempt by the -SC "neutrals'. tae thus far had little
success. The Soviet proposal for resumption of direct aego-
tiations on the basis of the 30 August agreement would merely
return the discussions to their status prior to UN consideration
of the matter. This Soviet proposal cisro emphasises the likeli-
hood that the UBBR, in return for lifting the blockade, will con-
tinue to demand a more substantiall concession than western
agreement to "re-open" the German problem. The minimum
Soviet demands will probably be either temporary suspension
of pioas for it western German government or western agree-
ment to the Kremlin terms for the use of Soviet currency in all
sectors of Berlin. Meanwhile, the USSR may reason that,
following SC action on the Berlin question, discussion In the
Assembly will be prolonged. Such a delay would enable the
USSR to: (1) observe the effect of winter upon the western air-
lift and upon the resistance of the Berlin people to Communism;
(2) weigh the effects of its attacks on the European recovery
program; and~53) confuse further the Berlin issue by additional
co ciliatory proposals designed primarily for tactical or
propaganda value.
WftjftWft ca on the Berlin soon may also
be prompted by the bleak outlook for western Berlin,
which is not likely to improve until the blockade is lifted and
normal transportation restored. The food processing industry
has been closed by military government order to conserve coal
and power, and the major industries (chemicals, textiles, machines
and machine tools) continue to operate at about 50% of the pre.
blockade level. The continued depletion of fuel and raw material
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trl neces sltate P. ?g16:str lal vz' tactic n an the :eriin sc:'etors, ti .-E
to restrict prcxiuction to supplies fable by air.isft. Nfo.?c. -
over, disposal of this reduced iud,;.-triki output could only 1,
effected by airlifting the products to western German zones
or by distributing them to the soviet sector of Berlin. A
drastic reorganization of industrial production in the west-
ern sectors will force the western powers to place thousand
of Germans on the public dole or "W'P,t? "' cleanup pro;ect.
.i.nd will further impair the presently weakened economic
and currency position of the westerf sector economy. The
industries in the western sectors are already so heavily
handicapped that, even with the blockade lifted, severed
moniho, would be rec uired o restore them to pre-blockade
strength. Meanwhile, in an attempt to hasten the collapse
cf the western sector economy, Soviet occupation authorities
are preparing for a price war with the western sectors. By
successfully undercutting the price; prevailing in the west-,
ern sectors, the USSR could further reduce the already
seriously short supply of cur?rc ncy available in the western
sectors.
Soviet Pro anda conce:.tratc d prirma ily upon the
Berlin blockade during the past week. In sharp contrast to
a previous dearth of information to the Soviet people, the
Soviet press has published the texts of several Soviet notes
and statements on the Berlin problem. All were carefully
selected to support the Soviet line that: (1) the western
powers are responsible for the breakdown of the Berlin nego-
tiations in Moscow; (2) the Security Council is not competent
to discuss the Berlin question; and (3) a blockade of Berlin
does not exist. Apparently the Kremlin is concerned lest
the western airliftfs success in feeding, clothing, and fueling
western Berlin have an adverse effect on the Soviet people.
Recent press and radio commentaries for domestic consumption
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have stated that the airlift has failed, that the western
sectors of Berlin are being supported by 900 tons of food
sent from the Soviet zone daily, and that the failure of
the airlift has forced the western powers to request the
Soviet Government to reopen negotiations on the Berlin
question.
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WESTERN EUROPE
I
may _b I Own the suMcoesaoor to the Queville
Govern-e t, De Gaulle is more libly to aacosed a transitt 1
Cabinet heeded by a Gaullist sympathizer. Neither the present
moderate eoal'ltics g stameat nor rebellious labor in l kely
to will a clearo4 decision in the delerfoesting strike situation,
and iaibetic will soon hiwe ssed to the point where the
propertied class of France peasantry and lower middle-
elm) will become rebelitoue against the increased ta:ntioa,
The stage will than be set for serious social d si r atian
as two roagVly equal groups, labor and small capital, lace
each other in woompromis ng defiance. The late October.
election for the Council of the Republic will certainly give
De Gaulle a marking majority of followers and sympathisers.
Following the seating of the Council, this majority will be
in position to add IN pressure to the demands at other groups
that the National Assembly dissolve itself and call for new
national elections. Than elecUons could return De Gaulle
to power. This langthy process could be hastened by a grave
domestic or international crisis which would force the French
Presides either to ask De Gaulle to form a Cabinet or to ar-
range for. ant "Interim" Cabinet sympathetic to De Gaulle.
De for the F Is da-
re and re-ingrate reosh institutions by:
(1) granting sweeping powers to the eve; (2) is-AMA
ppreseiog
Communist violence, strikes, or "disobedience' ; (3) reducing
the power of organized labor by the subetitation of worker-
employefaesociatiaos"; (4) saving the economy by a "forceful
approach" designed to restore Confdence; and (5) increasing
the size and morale of the French Army in order to permit
France to restore its colonial empire and take a leading
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FRANCE
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position in the western European union. This program will
probably subordinate the improvement of the national standard
of living to the strengthening of French economic and military
reserves. Large sectors of the middle and working classes
in France fear this prospect and also fear that De Gaulle may
be tempted to short-cut parliamentary processes in order to
achieve this ambitious program. However, compromises
with various political leaders to assure their support will
probably restrict opportunities for De Gaulle to abuse his
power. Moreover, De Gaulle's ability to arouse French
patriotism will probably enable him to retain sufficient
popular support for his program to end present French in-
stability without resorting to outright dictatorship.
The Communist inspired strikeg, crane are de-
signed primarily as an additional and timely weapon with
which to further the Kremlin's primary goal of defeating
the European recovery program. Consequently, the fate
which befalls the French Communist Party as a result of
the strikes is a secondary consideration to the USSR. The
current Communist attack in France reflects the Soviet
belief that such action, if taken before western aid restores
French political and economic stability, would seriously
dislocate the French economy and dissipate the beneficial
effects of the European recovery program throughout
western Europe. However, in choosing France as the
first major battleground in its fight against European
rehabilitation, the Kremlin has run the risk of precipi-
tating De Gaulle's return to power and of possible outlawing
of the Communist Party. Regardless of the outcome of the
strike offensive in France, the Communists can be expected
to resort to similar direct tactics in other ECA countries.
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UNITED 1CINODOM
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A revival of trea tiations in the Middle East
may be ca current conversations between British
and Arab officials. The Iraqi government has approached
Foreign Secretary Bevin with specific suggestions for
British cooperation in the defense of Iraq, thus improving
the prospects for a new treaty comparable to that which
Iraq re~pediated last January. The Syrian delegate is expected
to be sympathetic to a British suggestion that defense against
the USSR be organized. Moreover, there are indications that
Iran maybe equally sympathetic to such a suggestion. Saudi
Arabia has lately shown a new interest in military cooperation
with the British, despite the announced Saudi intention of
granting valuable Persian Gulf oil rights to a US company
instead of a British company. Arab initiative in these Middle
East conversations may reflect increasing Arab realization
of a need for a powerful friend. The Arabs may feel that the
apparent pro Israeli policy of the US and USSR makes the UK
the most acceptable candidate.
British Government spo_ kesmen are taking the hopeful
line that the present moderate rearmament program will not
unduly strain the recovery program. However, it seems clear
that any diversion of men, material, and machinery to rearma-
ment will inevitably postpone restoration of a sound economy
and that rearmament may also lead to additional austerity
measures. Present Government optimism on the costs of
rearmament is poorly preparing the British public for such
measures.
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EASTERN EUROPE
The on~ nttio aing East-West stride for control of inter-
national labor forces is accelerating the alignment of labor in
opposite camps. During the past week, exiled labor leaders of
eastern Europe formed a cedtral committee in Paris to repre-
sent their banned organizations. The new committee, strongly
supported by the AFL and by the French Force Ouvriere, is
attempting to organize European workers against Communism
and in support of the European recovery program. Simultaneously,
in Mexico, the drive to organize the world's oil workers against
the US was advanced by the decisions of the Communist-dominated
Petroleum Workers Conference to form a World Federation of
Petroleum Workers and a new federation of Latin American petro-
leum workers. The conference had previously voted to deny Latin
American oil to the US and UK In the event of war. These deci-
sions parallel Soviet efforts to organize European and Far Eastern
labor against the US and the West.
FINLAND
The USSR continues to harass the Finnish Government
with official protests and with unfounded charges in the Soviet
press and radio. Since August, the Kremlin has complained a
number of times to Finland's Social Democratic Government
because of alleged violations of - the Finnish peace treaty, and
the Soviet press has accused Finnish Prime Minister Fagerholm
of carrying on secret negotiations with the US minister. Although
these protests are designed to create Finnish apprehension over .
the ability of the Social Democratic Cabinet to handle Finnish
relations with the USSR, Fagerhoim received a strong vote of
confidence in the Diet when his policy visa-via the USSR was
questioned recently.
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COMMUNIST CONCENTRATION
COMMUNIST ? CONTROLLED AREA
COMMUNIST DRIVE
COMMUNIST MOVEMENT
NATIONALIST CONCENTRATION
NATIONALIST MOVEMENT
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C7.FCWVWV .,
of : CIok uncle
plan f a cant d'atat a thnst the `ot stet Government o
28 f -tasber, tbip t' cnal 1ndwxw4ew* day for Czechoslovakia,
such a e p ta uaftke ty. The army and olce are under c1eye
r.nrl, ^ by t (o mitt , mind coup could sac ct s -
ful titer active ictpetIon Large blocks of both army
and no4 u %M. ks tddittoa, any anti -Communist crp Would
encr strag Soviet counteraction Wore a new government
could consolklato %tta p tten. H the V ASR wishes to occupy
Cn ch nlov*Ma, however, the C omnaant sts may actually attempt
to proadcae local disorders between now and 28 October as a
prebeut for requesting armed Soviet assistance to eradicate the
underground.
YUGOSLAVIA
The establishment of a "dissident" Y lav rnment
in Prague might W the next move by the ',kremlin to harass to
and prepare for his eventual displacement. For the time being,
this ` `shadow" government used not be recognized by the USSR
or the Satellites, but it ouuld be used in the future as a device
for severing diplomatic relations with Tito's Government. A
dissident government in Prague could also serve as a rallying
point for all anti-Tito elements in the Balkan area and assure
control of Yugoslavia by Soviet-dominated Communists in event
of Tito's downfall.
GREECE
T Greek refugee problem resulting from the guerrillas'
campaign of terrorism is having brave economic repercussions
in Greece. The Greek Army's summer operations have not im-
proved security conditions and the number of refugees has grown
from 600,000 to 700,000 (appradmately one out of every ten
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GREW E
peapl? in Groece). It costs the Greek Government and the
Erman recovery program aboat 51 million dollars each
month tr. carc for the refugees. Moreover, the enforced idle-
ness at the refugees represents a large indirect lose to the
Greek economy. Plans to use the displaced persons on recoa-
strisction projects have proved abortive; the We men are so
dependent and so fearful of guerrilla reprisals that few will
accept Jabs. For one European recovery project, only 150 out
of 11 1000 able -bodied men responded to recruitment; on a US
military Job, all the workers resigned following a guerrilla
raid on their town. Many of the men who are removed from
public relief rolls because of their failure to work will un-
doubtedly join the guerrilla ranks. This situation will continue
as long as the Greek Army is unable to clear guerrilla areas
or to provide adequate security for individual reconstruction
projects.
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FAR EAST
CHINA
Communist forces may soon seven more prin-
cipal Chinese cities: long-isolated Changchun in Manchuria,
Chefoo in Shantung, Chenghsien and Kaifeng in Honan, Taiyuan
in Shansi, Sian in Shensi, and Chinhsien in Liaoning. Comma..
nist attacks of renewed intensity have been resumed in the
strategic Chinhsten corridor. Despite the National Govern-
ment's efforts to reinforce this vital sector with troops evac-
uated from the Shantung port of Chefoo and with most of the
defending forces from the important Kaftan coal mine region,
the fall of Chtnhsteu is considered imminent. If Chinhsien
falls, the Communists will gain a major base for future opera-
tions as well as possession of this large government supply
depot. In Manchuria. Nationalist countermoves have been
limited to minor offensive operations, involving the re-occupation
of Anshan to the south of Mukden and a northwest movement in
the direction of Cbangwu, The latter move, executed in an
effort to relieve Communist pressure on Chinhaten, apparently
failed. There are indications, moreover, that one or more of
the armies defending Changchun may have deserted to the
Communists, and that Changchun Is currently ripe for Com-
munist occupation through attack, widespread defection, or
Nationalist evacuation.
Nationalist fear of impending attacks on the Hsuchou
area in Central China have prompted the evacuation of Chenghsien
and Kaifeng, important rail junction and capital of Honan, respec-
tively. The main Nationalist strength has also been withdrawn
from the area south along the rail line between Hsuchou and
Nanking into the Hsuchou perimeter. Although temporarily
strengthening the Nationalist position at Hsuchou, these ma-
neuvers may hasten the isolation of that strategic base, thereby
setting the stage for its eventual redaction by the Communists.
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CHINA
In Central Ronan, elements of Communist General Liu Po-cheng's
troops have moved south toward lfankow as a result of a minor
drive to the west by Government forces under Pat Chung-Hal.
In Shansi, the Communists have renewed their attacks on You
Hsi-.shans restricted holdings around Taiyuan, and the Nanking
Government expects its early capture. Communist General
Peng Teh-boat in Shensi is leading at least four columns in
attacks on the weak Nationalist lines north of the provincial
capital of Sian.
JAPAN
The new Japaneseovernment, headed by ex-Prime
Minister Yoshida of the conservative Democratic-Liberal Party,
will probably be only an interim, caretaker regime. Yoshida has
announced that he will dissolve the Diet and call for new elec-
tions after passage of the SC AP -endorsed revision of the Nation-
al Public Service law. Conservative strength in the Japanese Diet
will probably assure passage of this legislation. However, fear
of Yoshida's increasing popular support in the coming elections
will prompt his opponents to seek to obstruct formation of a new
Cabinet and passage of a Democratic-Liberal wage stabilization
program.
INDONESIA
The Netherlands Government may announce the formation
of an interim Indonesian Government at this crucial period when
the UN Good Offices Committee (GOC) is attempting to resume
Dutch-Republican negotiations. "Federalist" representatives
from non-Republican areas of Indonesia are reported to have
reached a basic agreement with officials at The Hague on the
structure of an interim government which will precede establish-
ment of a United States of Indonesia. This interim government
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INDONESIA
will become an instrument of Dutch authority if, after the re-
fusal of the Republic to join the new Interim government an a
Mahe-it-or-leave-it" basis, the Netherlands decides to bypass
the GOC completely and to arrive at a solution in Indonesia by
military means.
KORV A
The Soviet cision to std a delegation to the UN
General Assembly representing the Democratic Peoples'
Republic of (North) korea is designed; (1) to forestall UN
recognition of the Rbee regime as the government for all
Korea; and (2) to support the fiction, by including three South
Koreans in the five-member delegation, that the Soviet puppet
regime in North Korea is a truly national government. The
USSR and its Satellites will have accorded de Pure recognition
to the North Korean government before the Korean case is
considered by the GA. In a final attempt to forestall decisive
UN action on Korea, the USSR may counter US efforts to
secure UN recognition of the Rhee government as the only
legitimate Korean regime by a "conciliatory" proposal for
federation of the two governments.
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WESTERN HEMISPHERE
MEX O
The stability of the Aleman Government is temporarily
enhanced by its settlement of four serious labor disputes, and
the long-standing labor problem appears to be solved. Mexi-
can federal labor authorities within the last two weeks have:
(1) terminated two railway strikes without meeting the workers'
demands for expropriation of the railroads; (2) obtained accept-
ance by steel strikers of the wage increases originally offered
them; and (3) ended a textile strike by declaring it to be illegal.
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1
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