WEEKLY SUMMARY #84

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002300300001-2
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 27, 2016
• Document Release Date: May 23, 2013
• Sequence Number: 1
• Publication Date: January 6, 1950
• Content Type: REPORT

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C WEEKLY SUMMARY
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Number 84
6 JAN 1950
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CENTRAL INTELLIGENCE AGENCY
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I. 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. . ?
.. ?
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
Page
HIGHLIGHTS 1
-WESTERN EUROPE
EASTERN EUROPE
NEAR EAST-AFRICA..... 8
FAR EAST 10
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HIGHLIGHTS
As Western Europe entered the year which will be
critical in determining to what extent its long-term
economic problems can be solved before the expiration
of the European Recovery Program (see page 2), the?
French Communist Party was making plans once again
to marshal its still considerable strength behind a poli-
tical strike program designed to undermine French
national defense efforts and the Military Defense Assis-
tance.Program (see page 5).
The sudden end of the uneasy Populist-Liberal Gov-
ernment in Greece has ?purred the establishment of a
pre-election "service" government and has increased
speculation concerning the future role of the immensely
popular. Marshal Papagos (see page 6).
The almost certain appointment of a completely
Wafdist Cabinet in Egypt, as a result of the recent
elections, will give Egypt a more stable government than
under the minority coalition regimes of the past five
years (see page 8). The new government will con-
tinue its pro-West alignment, but will jealously guard
against any threat to Egypes dominant role in the Arab
world.
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WESTERN EUROPE
? Economic Prospects As Western Europe enters the
second half of the European
Recovery Program, it is clear that 1950 will be the
critical year for the solution of Europe's long-term ec-
onomic problem. With production restored and monetary
stability well on the road to accomplishment, the basic
remaining problem is one of trade-expansion, both within
Europe to increase productivity through greater -corn--
petition; and to the dollar area to close the dollar gap. -
A fundamental redirection of the ECA program is already
in process and is aimed at reconstructing Europe's in-
ternational economic position by creating a single mass
market in Western Europe and at least some central ,
economic institutions. This is the last year that US aid
Will be sufficient to provide a potent incentive for the
far-reaching liberalization of intra-European trade and
payments essential as the groundwork for such economic
integration. If this trade and payments liberalization can
be substantially achieved in 1950, Western Europe will
have taken great strides toward the creation of a single
market economy by 1952, although the extraordinary
European dollar deficit will still be far from eliminated.
The struggle for trade and payments liberalization
will therefore be the crucial development in 1950, with
numerous obstacles remaining to be overcome. These
obstacles include the incipient revival of traditional
,
European cartel practices as kpy shortages disappear;
the autarchic protectionist attitudes of some ECA
participants; and the concern of such Countries as the
UK and the Scandinavian nations that premature trade
and payments liberalization will interfere with their
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more carefully controlled economic programs. The role
of the UK in European economic integration will also be
crucial; particularly with respect to whether the British
will provide the leadership or even the wholehearted
participation which the continental , powers need. For the
UK itself, 1950 will continue to be a time of trouble al-
though no crisis of the magnitude of last summer is ex-
pected. Great Britain will probably manage to keep its
head above water financially and to continue its out-
standing productive and export effort despite some rise
in cost of living resulting from devaluation. The key
British problems, those of the dollar gap and the sterling
balances, are extra-European and will not be solved by
the freeing of intra-European trade.
GERMANY
Export Controls With West Germany's export position
at a critical stage since devaluation
of European currencies, the area will probably become
increasingly important as a source of strategic materials
for the USSR and its Satellites. West Germany already?
exports more strategic materials (particularly those on
the 1-B list) to the Soviet area than any other Western
European country because: (1) such goods are available
in greater quantities in West Germany; (2) existing controls
can be easily evaded; and (3) there are few controls on
Berlin and interzonal trade. Export controls are now ad-
ministered by German authorities and apply to materials
on the 1-B list as well as those on the 1-A list. Because
the other Western European nations place few controls
over the export of 1-B materials, the Germans are feeling
increasingly discriminated against. German authorities
may, therefore, succumb to the growing pressure from
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GERMANY
German industrialists for greater exports to the East
and become even more lax in their enforcement of
export controls.
AUSTRIA
Treaty Prospects Resumption of Austrian peace treaty
talks on 9 January in London is un-
likely to result in an early treaty, in view of the probable
continuation by the USSR of its stalling tactics. Always
reluctant to withdraw from an area once occupied, the
USSR is under no particular compulsion to conclude a
treaty at this time and, in fact, can derive important
advantages from indefinite postponement. In the absence
of a treaty, the USSR has a legal basis for maintaining
troops in Rumania and Hungary to exert pressure on
Yugoslavia and can avoid the international censure which
would result from the artifice of having these Satellites
formally request them to remain. Moreover, Soviet
occupation of eastern Austria provides an opportimity
for economic exploitation and entrenchment and prevents
? the full economic ittegration of the Soviet zone with
the rest of Austria. As long as treaty negotiations
continue, the Kremlin probably also hopes to exploit
Austrian and Western desire for a treaty to gain a few
more concessions, not only on the treaty provisions
themselves, but in its dealings with the Austrian
Government.
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FRANCE
Communist Plans In pursuit of one of its major objec-
tives for 1950--the undermining of
French national defense and the Military Defense Assis-
tance Program (MDAP)--the French Communist Party
intends once again to resort extensively to the political
strike. Although relatively unsuccessful during the past
year in its efforts to promote labor unity of action and
to-gain support for economic strikes, the Communist-
controlled General Confederation of Labor is still the
most powerful single organization of trade unions, with
a large following of workers who could obstruct French
defense production through work stoppages in key in-
dustries. The Communists will also be able to call upon
sizeable sympathetic forces both to form picket lines
during port strikes against the delivery of MDAP equip-
ment and to stage mass disturbances to impress non-
striking workers and the authorities. The Communist
attack on France's defense program would become
critical if the French Government attempted to defeat
the legitimate demands of organized labor for higher
wages, and thus itself provide&the stimulus for a unity
action program by labor under Communist leadership.
Such a result, however, may be avoided by the appreciable
concessions the Government and management will probably
grant to labor following the imminent return to collective
bargaining.
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EASTERN EUROPE
FINLAND
Electoral Prospects Finland's presidential election on
15 and 16 January will be held in
an atmosphere clouded by Soviet threats and a wage policy
controversy imminently threatening Premier Fagerholm's
Social Democratic Cabinet. In an attempt to prevent
Paasikivi's re-election, the USSR on 1 January accused the
Finnish Government of violating the Peace Treaty and the
Finnish-Soviet Treaty of Friendship and Mutual Aid by
failing to deliver 300 alleged war criminals to the USSR.
Instead of frightening the Finns, this Soviet action will
virtually assure the re-election O Paasikivi by bringing
to the polls many voters who might have abstained because
they considered his election certain. Meanwhile, the Govern-
ment's decision to grant a 7 percent general wage increase,
even if it should result in the overthrow of the present Cabi-
net and the appointment of an interim government of experts,
will act in President Paasikivi's favor by assuring labor
support for the Social Democrats, who are backing Paasi-
kivi s re-election,and by lessening the appeal of the Com-
munist Party.
GREECE
Cabinet Crisis The resignation on 5 January of Premier
Diomedes, following the sudden withdrawal
of the Liberals from the government, marks the end of the
uneasy Populist-Liberal coalition. The King has already called
upon John Theotokis, the independent Populist President of
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GREECE
Parliament, to form a "service" government with authority
to dissolve parliament and proclaim a general election; even
in the event the Theotokis fails in this task, the lively in-
crease in political maneuvering which culminated in the
present crisis will probably preclude any attempt to return
to a party coalition.
One major result of the current crisis is to increase
speculation concerning the future rale of the immensely
popular Marshal Papagos. Although Papagos has withdrawn
Ms resignation as Commander in Chief, he is a favorite of
the King, who recently asserted that he wanted to hold the
Marshal in reserve for a possible Political crisis. It is un-
likely that circumstances will force the King to name Papagos
as Premier before the elections (which may be scheduled for
March), but the Marshal would be a popular choice for the
premiership if--as is possible--none of the established political
leaders is able to command a majority in the new parliament.
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NEAR EAST-AFRICA
IRAN
Discontent Growing The Shah, who returned from his
US tour on 2 January, is confronted
?
by a serious internal situation. During his two-month
absence, the economic situation has been allowed to grow
steadily worse and threatens to become even more critical
during the spring. This general economic deterioration
has overshadowed the modest gains thus far made by the
seven-year development program, and many Iranians are
being tempted to regard the program as just another device
for lining the pockets of the ruling classes. Moreover, the
outlawed pro-Soviet Tudeh Party is apparently benefitting
by the economic distress which is developing. Despite the
arrest of ten to twelve suspects a day and the threat of
three to ten year prison terms for those involved in the
distribution of Tudeh leaflets, additional issues of Tudeh
Party publications have recently appeared in large numbers
both in Tehran and the provinces, and there are indications
that this stepped-up propaganda effort is being received
more favorably than previous ones. Soviet encouragement
of the party's revival is suggested by the return to Iran of
a Soviet diplomat who has widespread contacts in political
and newspaper circles and who was reportedly involved
in the organization of the Azerbaijan Democratic Party.
EGYPT
Election Results The overwhelming victory of Egypt's
major party, the Wafd, in the parlia-
mentary elections, opens the way for the establishment of
the first popularly-supported Egyptian Government since
the war. In addition to being a definite setback to the
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EGYPT
political prestige of King Farouk, who has indirectly con-
trolled Egypt's governmental affairs since 1944 through
a succession of minority coalition cabinets, the election
results leave Farouk little alternative except to appoint
a completely Wafdist cabinet.
The chief significance of the return to power of the
Wafd is that Egypt will have greater stability in the hand-
ling of both internal and external problems than under the
minority coalition governments of the? past five? years.
Because the Wafd Party, like the other major Egyptian
parties, is generally rightist,: Egypt will continue its
pro-West alignment. The Wafd will probably reopen
negotiations with the UK to revise the Anglo-Egyptian
Treaty. of 1936 and with the US for a general treaty of
commerce, navigation, and friendship. The new govern-
ment will also probably attempt to strengthen the Arab
League and to confirm Egypt's leading position therein.
Possibly even more than its predecessors, the Wafdist
Cabinet will jealously guard against any threat to Egypt's
dominant role in Arab affairs generally, such as would
be offered by an enlarged Hashimite Syria. The govern-
ment will probably be willing to cooperate with the UN
toward a settlement of the Palestine issue hut will be
reluctant to enter direct negotiations with Israel. In
domestic affairs, the Wafdist Government will probably
initiate mild reforms but will make little effort to weaken
the dominant position of the wealthy land-owning minority.
Because the election results indicate that the Wafd may
even have the support of the fanatic Moslem Brothers, the
government should have little trouble in maintaining in-
ternal security for some months to come.
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FAR EAST
CHINA
Coastal Mines The Chinese Nationalist announcement
that the mouth of the Yangtze River has
been mined has effectively closed Shanghai to ocean-going
traffic., There is reason to believe that mining operations
have actually been carried out, although there has been no
positive confirmation. In any case, the Communists are
planning mine-sweeping operations in the Yangtze estuary,
possibly to enable the US Flying Arrow now at Hong Kong
to reach Shanghai. The Nationalist Navy is believed to have
a small supply of mines, but is Probably incapable of effec-
tively mining the approaches to all the major Chinese ports.
Even the presence of a few mines, however, accompanied by
vigorous publicity, will serve to prevent most shipping
from entering the major China ports from Shanghai south.
The Nationalists, however, will remain powerless to interfere
seriously with shipping activities to and from the major
North China -city of Tientsin.
INDONESIA
New Government The Government of the new United
States of Indonesia has gotten off to
an auspicious start. Composed of the ablest of Indonesia's
conservative and moderate leaders, the new Government
has demonstrated its ability to maintain law and order
during the critical period of transfer of sovereignty from
the Netherlands and has shown that it has the support of
the Lmajority of the populace. No really serious outbreaks
of violence are-expected in the near future and any dis-
turbances by dissident elements such as the fanatic Moslem
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INDONESIA
Darul Islam can probably be controlled, if not by political
means, by the army and police forces under the Minister,
of Defense. In addition, general confidence in the Govern-
ment has already had a favorable effect on economic con-
ditions, and black market prices have dropped appreciably.
Despite this auspicious beginning, however, the new
Government faces many trying problems. Although the
Government is capably led, there are too few trained and
experienced administrators on the lower levels to fill the
vacuum created by the departure of Dutch officials and
administrators. Economic rehabilitation and development
will not be easy. Moreover, the advance of Communism
to Southeast Asia will pose fresh political and economic
problems for the new state as it seeks to establish itself.
INDOCHINA
Transfer of Power The eleventh-hour transfer of powers
? from the French to the Bao Dai regime
in Indochina falls far short of the sovereignty demanded by
the Vietnamese. Some thirty conventions were signed, re-
portedly covering transfer of power in the fields of justice,
armed forces, economics, finance, public works, culture,
public health, information,and personnel. Vietnamese
sovereignty even in these fields has been limited by pro-
visions in the judicial convention for special-rights for
Frenchmen the retention in altered form of the French
Surete,and
Frenchmen,
subordination of the Vietnamese educational
establishment to the University of Paris. Moreover, full
French military authority is to continue "until peace and
order are restored," despite liberal terms providing for
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INDOCHINA
French military bases in Vietnam. Meanwhile, Vietnamese
participation ininternational affairs has apparently not
been discussed further and French, Vietnamese, Cambodian,
and Laotian representatives will not meet to discuss such
vital subjects as currency, immigration, customs, and com-
munications until late in January.
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DISTRIBUTION
1 The President
2,64 .... - . . Secretary of State
3,4 Secretary of Defense
5 ...... . . Secretary of the Army
6 Secretary of the Navy
7 Secretary of the Air Force
8,70 Chairman, National Security Resources Board
9,71 Executive Secretary, National Security Council
10 Assistant Secretary of the Navy for Air
11,69 Chief of Staff, US Army
12,13,14 Chief of Naval Operations
15,16,17 Chief of Staff, US Air Force
18 Director of Plans and Operations, Gen. Staff, US Army
19 Deputy Chief of Staff (Operations), US Air Force
20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, US Air Force
22,23,24 Special Assistant to the Secretary of State for
Research and Intelligence
25,26,27,28,29,
30,31,32,33,34. Director of Intelligence, General Staff, US Army
35,36,37,38,39,
40,41,42,43,44. Director of Naval Intelligence
45,46,47,48,49. Director of Intelligence, US Air Force
50 Director of Intelligence, Atomic Energy Commission
51 Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. . Chief, Acquisition & Distribution Div., OCD, 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: Policy Reports Staff)
61 Deputy Director, Joint Intelligence Group, joint Staff
62,63 Secretary, Joint Intelligence Group, joint Staff
65 US Air Force Representative of Joint Strategic
Survey Committee
68 Administrator, Economic Cooperation Administration
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U. S. GOVERNMENT PRINTINCI OFFICE
2631-S-.1948
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