WEEKLY SUMMARY NUMBER 35

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002100140001-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 27, 2016
• Document Release Date: July 9, 2013
• Sequence Number: 1
• Publication Date: January 28, 1949
• Content Type: REPORT

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Copy No. 81
WEEKLY SUMMARY
I ll
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Number 35
28 JAN 1949
Document No. (
NO CHANGE in Class. 0
oe DECLASSIFIED
CHA7r7:::D TO: TS S C
DDA Memo, 4 Apr 77
Autn: DD_ :G. 77!---33
By: 011
Date:
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.
41-711e-
e-e 61(
WARNING
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
HIGHLIGHTS
WESTERN EUROPE
2
EASTERN EUROPE
5
NEAR EAST - AFRICA
8
FAR EAST
9
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HIGHLIGHTS
Despite agreement by Egypt and Israel to a cease-fire
order, armistice talks between the two nations have reached
a deadlock. The Israelis, strongly confident following their
military victories, are unwilling to sacrifice their recent
gains in the Negeb (see page 8). If the UN Acting Mediator
can find no working basis for Israeli-Egyptian agreement
In the near future, hostilities may break out in Palestine
once again. ?
The last major engagement of China's civil war
appears to have been concluded and the Chinese. Communist
armies are awaiting orders momentarily to cross the Yangtze
River. Once south 'of the Yangtze, the only major obstacles.
In the path of the Communist forces will be those of distance,
terrain, and communications (See page 10). Following the
collapse of peace negotiations, anti-Communist resistance,
probably under the leadership of Chiang Kai-shek, will
continue in southeast China and Taiwan. Detipite Chiang's
retirement, the Communists still regard him as their princi-
pal enemy and remain genuinely concerned over his prospects,
with US aid, for delaying the, realization of the Communist -
program for ettablishing control over all China (see page 11).
The Security Council will probably adopt the US-
approved resolution on Indonesia. Although the Dutch have
heretofore strongly resisted all pressure to recognize the
Republic's existence, increasing political pressure in the
Netherlands and the deteriorating Dutch economic and mili-
tary. position in Indonesia may force the Dutch to modify
their opposition to such a UN resolution (see page 9). Even
if the US-approved resolution is passed and the Dutch accept
it, the Asian-nations who attended the New Delhi Conference
will probably apply greater economic and political pressure
against the Dutch.
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WESTERN EUROPE
European Unification Despite British opposition to the
majority proposals of the Brussels
Pact study group on European unification, a compromise
solution will probably soon be achieved. The UK, which has
agreed to a Council of Ministers, appears ready to modify
its views and accept as well s ortie form of consultative
assembly, thus partially meeting the views of the other four
Brussels Pact powers. In another field of European coopera-
tion, the ECA countries, anticipating early review by the US
Congress of their recoyery progress, will probably soon
take steps on a high political level to strengthen the Organiza-
tion for European Economic Cooperation. The UK, also the
chief stumbling block on this issue, has now reportedly agreed
to this need.
International Labor The secession of the US, British, and
Dutch delegations from the World
Federation of Trade Unions (WFTU) in protest against Com-
munist domination of that body, has left a vacuum in the
world labor movement which the Soviets are attempting to
fill immediately. The WFTU., which still has 64 natinnal
labor organizations as members, will continue to exert coa-
1 siderable influence. At the same time, a Cominform direc-
tive, stressing the need for obedience to Moscow by local
Communist parties, suggests that the USSR is attempting to
meet in advance the challenge of the proposed western-
oriented labor international by strengthening its hold on
national Communist trade unions. Such efforts apparently
reflect the Kremlin's determination to forestall Soviet losses
in the labor field. Soviet success in this en0eavor will depend
I. largely upon haw quickly and effectively a western-oriented
international labor organization can be established. . The
development of such an organization is being retarded by the
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Inability of the AFL and the CIO to are on the terms of
US labor participation and a joint international labor program.
In addition, the AFL is attempting to h3ock the selection of
a veteran Belgian trade unionist as secretary of the fifteen-
nation ERP Trade Union Advisory Committee. Until these
differences between the two leading US labor groups are re-
solved, other non -Communtst national labor organizations
will be reluctant to Join a we3tern counterpart to the WFTU.
17/1ANCE
Gonernment Prestige The Queuille Government is now
restoring the prestige of the moderate
Third Force to at least the level attained by the first Schuman
Government in the summer of 1948. Materially aided by US
release of ECA. counterpart funds, the Government has taken
the initiative in its fight against inflation by tackling the wage-
price disparity and the budget deficit. Such steps could turn
the tide against inflation which, by late 1948, had threatened
to put the Third Force at tho mercy of Communists and
Gaullists. The Government's realistic and vigorous approach
to economic problems, to the Ruhr negotiations, and to the
Atlantic Pact, is showing favorable political results, which
may lead to an increase in the voting strength of the moderate
parties in the March local elections.
ITALY
Colonies Question Increased support for the return of
TripoMania to Italy may result from
recent discussions on the Italian colonies question between
Foreign Ministers Bevin and Schuman and from continued
Italian pressure to regain its colonial possessions. Although
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ITALY.
Schuman urged restoration of both TrippMania and at least the
Massawa -Asmara portion of Eritrea to Italy, Sevin adhered
firmly to the US-UK position for cession of the bulk of Eritrea
to Ethiopia. Sevin did reveal, however, a willingness to con-
sider the return of Tripolitania to Italy, although he seriously
doubted Italy's ability to control the colony and questioned
the French view that the De Gasperi Government would fall
If Italy were denied its former colonies. Meanwhile, the
question of Italy's participation in the Atlantic Pact has mode
Italian reaction to the colonies issue important to the
security interests of the western powers. if Italy were denied
both Eritrea and Tripolitania., De Gasperi's efforts t.) win
popular support for Italian association with the west would
suffer a severe setback. Such a trend would be less pro-
nounced in the event of return of either Tripolitania or
Eritrea.
Communist "Moderation" Continuation of the recent
moderate propaganda line by
the Italian Communists may prove more of a threat to the
Government than the previous Communist policy of head-on
opposition. There is considerable danger that the strong
conservative element in the Government's dominant Christian
Democratic Party may take advantage of the Communists'
new approach to delay further long-overdue action on critical
economic problems. In such an event, the Communists, hav-
ing gained prestige by ostensibly conciliatory behavior, would
be in a strong position to undermine public confidence in the
intention of the Government to fulfill its promises to the
people.
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EASTERN EUROPE
Communist Dictatorships The Kremlin apparently feels
that the Communists of Bulgaria,
Rumania, and Hungary are strong enough to dispense with
the fiction that these countries are democratic states. Com-
munist leaders in the three Satellites have recently declared
that the Soviet-sponsored regimes are now "dictatorships
of the proletariat." Matyas Rakosi, Secretary General of
the Hungarian Communist Party, has also stated that these
"dictatorships" represent one type of government necessary
Ito the transition from a capitalist to a socialist state. The
frank admission that the Communist Party is the controlling
power in Ibmgary indicates the early establishment of a
National Front government, another basic type of Soviet
regime which has already appeared in Bulgaria and Rumania.
Satellite Economy The formation of the Council of Mutual
Economic Assistance by the USSR at
this time indicates that it is a defensive measure designed
to offset the .successes of the European recovery program.
This Soviet-directed Council will attempt to coordinate
further the economies of Poland, Hungary? Rumania, Czecho-
slovakia, and Bulgaria as a major step toward their eventual
integration with the economy of the USSR. Although this
latest Soviet move is undoubtedly part of a long-range plan,
the immediate Kremlin objectives are to counterbalance the
adverse effects on eastern European morale of the relatively
rapid economic recovery in western Europe and to prevent
the spread of nationalistic-economic heresies, such as Tito's.
The Council's formation may have some propaganda value
by renewing hope within the satellite countriez that mutual
cooperation may improve the low standard of living. The
Council will result in some improvements in the Satellite
economies by providing for more effective planning and more
efficient distribution. Despite the fiction of economic equality,
the Council's formation will inevitably result in tightened
control of the eastern European economies by the Kremlin.
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SOVIET UNION
Wheat Conference A reversal ti .'.uviet tactics is apparent
in the Soviet decision to attend the cur-
rent International Wheat Conference in Washington. The
USSR has thus far refused to join most UN economic organi-
zations (except the Economic Commission for Europe) and
ignored similar wheat conferences in i947 and 1946. The
new Soviet tactic may reflect concern over the possible loss
of -western European markets as an cutlet for Soviet wheat
in exchange for strategic materials in short supply through-
out the orbit areas. The USSR may also hope to use partici-
pation in international meetings to prove the sincerity cf its
"peace offensive."
HUNGARY
Minciszenty Arrest There are indications that the Hungar-
ian Government may have been shaken
by the strong protests originating in the US and the Vatican
concerning the arrest of Cardinal Mindszenty. Apparently
the Government is undecided whether or not to carry out its
announced prograna,which would be climaxed by the execution
of the Cardinal; there are already indications that certain
elements in the Government believe that such extremist
measures may boomerang. This belief is most apparent
among rank-and-file Communists. ft is as yet unknown
how much of a moderating influence they will have on some
of the to Moscow-trained leaders whose obstinacy may
actually have increased as a result of western reaction.
GREECE
New Government Although another Sophoulis coalition
government is all that emerged from
the Cabinet crisis that has been convulsing Athens during
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GREECE
recent weeks, the new combination embodies some changes
which may enable it to govern more effectively than its pre-
decessor. The supporters of Populist Leader Tsaldaris,
formerly holding a dominant position in the Cabinet, have
lost key posts to the Liberals and have been relegated to
relatively minor ministries. Tsaldaris himself, although
still Foreign Minister, has been stripped ci his title of Dep-
uty Prime Minister. Prime Minister Sophoulls, accordingjy,
may feel free to proceed more vigorously with his social,
economic, and military program. Moreover, although the
plan to bring the Papandreou Centrist bloc into the Cabinet
has fallen through. the Government has been strengthened
by the addition of the energetic Markezenis, the only new
political leader to emerge since the war, and of the brilliant
but vacillating Centrist, Canellopoulos, as Minister of War.
With the latter's aid, General Papagos, who has finally
accepted the new post of Commander-in-Chief of the Army,
may be able to prevent politics from interfering with mili-
tary operations. The Government, nevertheless, remains
susceptible to its old ailments. Despite assurance of ample
support when Parliament reconvenes on 1 February, the
combination is an unstable one. Composed of traditionally
Incompatible elements, it was brought together only after
the palace had issued a peremptory statement hinting at an
imposed, non-parliamentary government if the warring
politicians did not get together. When the shock of the
King's ultimatum wears off, politica rivalries within the
Cabinet are likely to emerge once more to hamper the ef-
fective execution of a coherent policy.
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NEAR EAST AFRICA
PALESTINE
Armistice Deadlock The Israeli-Egyptian armistice talks
have reached a deadlock, apparently
over occupation of the Negeb during the projected armistice
period. The Egyptians insist that du Israelis, in compliance
with the Security Council resolution of 4 November 1948, with-
draw their forces in the Negeb north to the lines held when
the Israeli offensive began on 14 October 1948. The Israelis,
on the other hand, seem determined to hold on to the greater
part of their military gains. As a result of this dispute, the
Israelis now refuse to release the Egyptian garrison trapped
at Faluja, despite an apparent accord previously reached on
this matter by Israeli and Egyptian representatives. Mutual
recriminations have ensued: the Egyptians accuse the Is-
raelis of broken promises, and the Israelis maintain that
the Faluja release is contingent on the conclusion of an armi-
stice. Thus the Negeb boundary dispute exemplifies the
difficulty of establishing a firm basis for negotiating an
armistice. The Israelis, strongly confident from their mili-
tary victories, are willing to negotiate only if their chief
demands are substantially met. The Egyptians, on the other
hand, have already demonstrated that they will not accept
Israeli terms indiscriminately. If the UN Acting Mediator
can find no working basis for Israeli-Egyptian agreement in
the near future, hostilities may break out in Palestine once
again.
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FAR EAST
INDONESIA
SC Resolution Confronted with a choice between four
competing resolutions on the Indonesian
case, the Security Counztl will probably adopt the joint US-
Norway -China -Cuba proposal. Dete strong pressure
from the New Delhi Conference of Asiatic nations, which
exhorted the SC to take drastic action against the Dutch, it
is unlikely that the four-power resolution can be materially
strengthened without sacrificing some of the seven votes
required for passage. The resolutton attempts to apply the
maximum practical pressure on the Dutch to carry out their
stated intention to establish a United States of Indonesia and
specifically instructs the Dutch to deal with the Republic.
Because of increasing pressure from the Dutch Labor Party
and the rapidly deteriorating Dutch economic and military
position in Indonesia, the Netherlands Government may be
forced to modify its original stand against any SC resolution
which materially restores the former position of the Republic.
Any resolution capable of passing the SC is almost certain
to be unsatisfactory to the nations which attended the New
Delhi Conference. In such an event, or if the Dutch persist
In their intransigence, these nations wiU probably exert
greater economic and political pressure against the Dutch.
Resistance to Dutch Dutch military forces are now meeting
considerable resistance in key areas
of Java. On 18-19 January, the Dutch were forced to use air-
craft and armored equipment to repel attacks by the Republi-
can Army (TNI) at Jogjakarta, the Republican capital. In
East Java, an area to which the Dutch have access only by
air, well-armed guerrilla bands have been attacking large
estates. TNI forces are also a threat to Dutch control over
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INDONESIA
some sections of West Java. The Dutch commander in that
area, under special powers given to him during the emer-
gency, has arrested four pro-Republican leaders in the
Pasundan (West Java) Party and has threatened more
stringent action against those who continue to resist. In
an effort to reduce growing resistance by the TNI, the?
Netherlands forces will probably employ stronger meas-
ures which, however, will only lead to increased violence.
CHINA
Military Situation With the completely demoralized and
defeated armies of Chiang Kal-Shek
retreating southward, the last major engagement of China's
civil war appears to have been concluded. The Chinese
Communist armies have reached the Yangtze and are await-
ing orders momentarily to cross the river. Once south of
the Yangtze, the only obstacles in the path of the Communist
forces will be those of distance, terrain, and communica-
tions. Meanwhile, the capitulation of the ancient North China
capital of Peiping on 22 January gave the Communists com-
plete control of North China. The peaceful surrender of this
city, as well as of Kalgan and Tientsin, has set a pattern which
will probably be followed by the defenders of the Nationalist-
held cities of Nanking, Shanghai, Rankest!, Tsingtao, Sian,
and possibly Taiyuan.
Continued Resistance Chiang Kai-Shek's "retirement"
has left the Nanking Government
under Acting President Li Tsung-jen so little bargaining
power for the negotiation of a peace settlement that he will
actually be forced to the unconditional surrender of a
phantom government. Following this development, there
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CHINA
will be renewed resistance by the large number of Nationalist
leaders who have little chance of surviving under a Commu-
nist regime. All evidence indicates that some of these leaders
will form a new Nationalist center of anti-Communist resist-
ance in South China and that Chiang Kai-shek will probably
emerge from "retirement" to provide the necessary leader-
ship. Such a development is suggested by: (a) the large-scale
withdrawal of Nationalist military supplies and material
resources to southeast China and Taiwan; and (b) the re-
shuffling of key officials in the area in order to place authority
In the hands of persons definitely loyal to Chiang. The probable
re-emergence of Chiang, who would still retain the title of
President as well as the support of many officials in the pres-
ent National Government, would permit his regime to claim
continuing international recognition. This Nationalist group,
convinced that World War III is inevitable, would continue to
hope for sufficient foreign aid to resist the Communists.
Communist Program Despite Chiang's "retirement," the
Communists still regard him as their
principal enemy. Current Communist propaganda accuses
the US and the Kuomintang of plotting to build up South China
and Taiwan as bases from which "to destroy the revolution."
Communist denunciation of Chiang's retirement as a tactical
maneuver inspired by the US also reveals the genuine concern
of the Communists over Chiang's prospects, with US aid, for
delaying the realization of the Communist program for estab-
lishing control over all China.
JAPAN
Election Results Both the extreme right and left made
extensive gains at the expense of the
center parties in the recent Japanese elections. Premier
Yoshida 's conservative Democratic-Liberal party won
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JAPAN
majority control of the Diet by taking 264 of 466 seats, a
gain of 100. The present strong Democratic-Liberal posi-
tion has eliminated the necessity for indecisive coalition
governments, which have rilagued the Japanese since the
war, and promises increased governmental stability for the
future. On the extreme left, the Communists jumped from
the tenth largest Diet party to the fourth largest by adding
31 seats to the 4 which they had previously held. In com-
parison with 1947, however, the Communists only increased
their popular vote from 3.7% to 5.7%, this increase being
concentrated almost entirely in urban areas. Although the
Communists will have little power in the Diet, their in-
creased prestige will materially enhance Communist
capabilities outside parliament.
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DISTRIBUTION
1 The President
2. Secretary of State
3 Chief of Staff to Commander in Chief
4 Secretary of Defense
5 Secretary of the Army
8 Secretary of the Navy
7 Secretary of the Air Force
8,70 Chairman, National Security Resources Board
9 ...... . . Executive Secretary, National Security Council
10 Assistant Secretary of the Navy for Air
11,69 Chief of Staff, U.S. Army
12,13,14 Chief of Naval Operations
15,16,17 Chief of Staff, U.S. Air Force
18 Director of Plans and Operations,General Staff,U.S.Army
19 Deputy Chief of Staff (Operations) U.S. Air Force
20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, U.S.Air Force
22,23,24 Special Assistant to Secretary of State for Research
and Intelligence
25,26,27,28,29, Director of Intelligence, General Staff, U.S.Army
30,31,32,33,34.
35,36,37138,391 Chief of Naval Intelligence
40,41,42,43,44.
45,46,47,48,49. Director of Intelligence, U.S. Air Force
50 Director of Security and Intelligence,Atomic Energy Comm.
51 Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. Chief,Acquisition & Distribution Division,0ICD,Dept.State
57 Director, Federal Bureau of Investigation
58 Secretary, Joint Chiefs of Staff
59 Chief, Policy Planning Staff ,Department of State
60 Secretary of State (Attention: Chief, Policy Reports Staff)
61 Deputy Director, joint Intelligence Group, Joint Staff
62,63 Secretary, Joint Intelligence Group, Joint Staff
64 Director, Joint Planning Group, joint Chiefs of Staff
65 U.S. Air Force Representative on Joint Strategic
Survey Committee
66,67 Secretary, State-Army-Navy-Air Coordinating Committee
68 Administrator, Economic Cooperation Administration
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U. S. GOVERNMENT PRINTING OFFICE
2631-8-1948
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