BOOK II WEEKLY SUMMARY - 3 JAN (#29) THRU 27 JUNE 1947 (#54)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A001800020001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 350
• Document Creation Date: December 23, 2016
• Document Release Date: July 19, 2013
• Sequence Number: 1
• Publication Date: January 3, 1947
• Content Type: REPORT

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CONTENTS
TRENDS IN BRIEF..... .
EASTERN EUROPE
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Communist Attacks on Polish Socialists
Yugoslav Offer of Air Rights to the UK
NEAR EAST-AFRICA
Pages
. I -ii
Saudi Arabia Seeks Settlement of Middle East Problems .
WESTERN HEMISPHERE
Canada's Apprehension Over Diminishing Dollar Reserves 4
Critical Phase of Brazilian Politics 4
Prospects for Recognition of the Somoza Puppet Regime . 5
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TRENDS IN BRIEF
WESTERN EUROPE
In Italy t_leo-fascist violence against Communists has increased
since the exclusion of leftist elements from the De Gasper Cabinet,
Communist propaganda may be expected to exploit this development to
represent De Gasperi as an enemy of the working class and a front for
reaction. This charge could be met most effectively by the inclusion
of substantial working-class representation in the Cabinet, which could
be accomplished only through the accession of the Saragat Socialists,
who are willing to participate.
EASTERN EUROPE
Current Communist attacks on the Polish Socialists are directed
toward the eventual abolition of the Socialist Party in Poland or its
fusion with the Communist Party (page -1).
The Leported Yugoslav offer of rights to UK if bona fide,
would represent a reversal of the Soviet policy of excluding US-UK com-
mercial air operations from the Balkans (page 2).
itt.perr Soviet grain prop, according to present indications,
will exceed planned domestic requirements by some five million tons.
Some of this surplus may be absorbed by increased domestic consumption
(an end of bread rationing is promised for 1947); some may be used for
stockpiling; a substantial portion, however, is likely to be used for export
to serve Soviet political and economic purposes abroad.
NEAR EAST-AFRICA
1bn Sauffs recent representations to the US emphasize the dif-
ferences among the Arab State-sWe'IT.
Prime Minister Qavam's new Cabinet (his fifth) appointed by the
Shah on 21 June is, in general, an improvement over its predecessor;
it represents a trend to the Right and thus gives promise of increased
resistance to Soviet demands for concessions in Iran. The fact that
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several of the new Ministers are considered to be pro-UK or pro-US,
moreover, is indicative of Iran's increasing orientation toward the
west. As the new Cabinet is somewhat more pro-Shah than the last
one, it is also probable that the Shah will now have greater influence
In the Government.
FAR EAST
Soviet economic control of North Korea is being established by
means similar to those employed in the Soviet economic penetration of
Eastern Europe: the establishment of monopolistic, Joint Soviet-Korean
stock companies operating under Soviet management and with Soviet
technical assistance. The "considerations," in return for which the
USSR acquires a 50% stock interest in these companies, are the liberation
of Korea and the restoration of North Korean economy. By such devices
the USSR is consolidating its control of North Korea in such form as to
endure beyond an ostensible Soviet withdrawal.
The Viet Minh is increasin its activities throil bout Indochina
In an apparent effort to compel the French to deal with President Ho Chi-
Minh's regime. The French, however, appear increasingly determined
not to deal with Ho and are reported currently to be seeking to establish
a government headed by Tran Trong-Kim, former head of the Japanese
puppet Government in Hanoi in 1945 and, more recently, adviser to former
Emperor Bao Dal. Such French efforts can be expected to delay further
a solution of the conflict in Indochina.
WESTERN HEMISPHERE
Canada's a rehension over its diminishing s
reflects its pessimism regarding the prospects of an early reconstruction
of the world economy (page 4).
Fe..9.1E confidence in the Brazilian Government is beintrussi
by the latter's inabilfty to cope with the country' i economic crisis (page 4).
The unanimity on or.loilasn-reco Mon of the Sornozayuppet
will be difficult to maintain, once the regime has been sanctioned by a
Nicaraguan Constituent Assembly (page 5).
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EASTERN EUROPE
Communist Attacks on Polish Socialists
Within the last month the Polish Communists have increased
their efforts to eliminate the Socialist Party as an independent political
factor in Poland. The present drive is believed to be an attempt gradually
to weaken the Socialist Party in preparation for its eventual abolition or
fusion with the Communist Party.
The Communists are attacking the Socialists on two fronts. On
the economic front, the Communists are undermining the prestige and
power of the great Socialist .dominated Spolem cooperative and have
passed legislation imposing strong government controls which will
weaken further the economic influence and strength of the Socialists.
Concurrently, the Communists have begun a campaign of intimidation
by arresting several Socialist members of the wartime underground on
the pretext of continued contacts with General Anders (the majority of
Socialists belonged to non-Communist factions of the underground and
consequently are also subject to the same allegation). Meanwhile, the
Communists are keeping the Socialists on the defensive by persistently
calling for an "organic union of the two Parties as a more efficient
means of protecting the rights of the working class.
Early realization of the Communists' ultimate goal -- abolition
of the Socialist Party or fusion with the Communist Party -- is unlikely.
Such a drastic step at this time would: (1) create serious internal unrest;
(2) rule out the possibility of western economic aid; (3) remove the facade
of democratic procedure behind which the Communists now operate; (4)
weaken the position of the Communist Parties in such countries as Norway,
Italy, France, and Czechoslovakia; and (5) disrupt the recovery and indus-
trialization of the Polish economy.
These intensified Communist attacks and the recent developments
in other Eastern European countries have so discouraged Socialist leaders
that many of them see little hope of retaining their Party's present semi-
independent status. Socialist leaders are being urged by the Party's rank-
and-file to make a strong stand against the Communists. The Party's
leaders will avert such a showdown -- which they fear would be suicidal --
and, as the only alternative, will probably be forced to grant greater and
greater concessions. Such a policy, however, as in the case of Nagy's
Smallholders' Party in Hungary, will in the long run serve the Communist
purpose of undermining the Socialist Party's remaining political and eco-
nomic strength.
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oslav Offer of 'Air-Righto. the UK
The InJgoslav offer of air rights tO the UK, if it is bona fide,
would represent reversal of .Soviet policy; Whicb. hitherto has excluded
all US arid UK commercial' air operations into and .through the -satellite
states. Now, however, -Yugoslavia has declared its wAllingness to gra'nt
the UK an air corridor -through Belgrade to Sofia and XStanbal.
The Yuf;oslav gesture may be designed to enlist British support
for Yugoslavia s ease in regard to war claims, territorial adjustments,
. and other questions unrelated to air matters my event, the. USSR and ?
Yugoslavia probably desire to ascertaigi the maximum political conces?
sions which the 13rtt1sh.are prepared to make. in order to obtain air rights
. in the Balkans This maneuver would parallel the recent US-Rumanian air
ne-gotiations, which opened on am optimistic tone and which the USSR per-
. Milted to reach an advanced stage before it created a deadlock. ?
The British, believing that the Yugoslav offer may be bona fide,
intend to open negotiaiqons with. Yugoslavia at onee They are aware,
however, that the USSR, through Yugoslavia, may be attempting- to develop
a wedge between the US and the UK, and they. consequently can be expected
to exercise appropriate caution,
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NEAR EAST-AFRICA
Saudi Arabia Seeks Settlement of Middle_East Problems
King Ibn Saud's strong representations to the US concerning UK
policy in the Middle East are designed to convince the US that the UK
should be persuaded to abandon its alleged support of the Greater Syria
aspirations of King Abdullah of Transjordan. Ibn Saud believes also that
the recent t reaties between Iraq and Transjordan and between Iraq and
Turkey were fostered by the UK; he considers them directed against him-
self and, by implication, against the US oil position in Saudi Arabia.
To attain his objective, Ibn Saud has suggested a comprehensive
multilateral US-UK-Arab agreement, to be drawn up by the two Great
Powers and then to be submitted to the Arab States for ratification. He
has implied that the Arab States would be willing to accept compromise
solutions for Palestine and the Sudan in exchange for a US-UK guarantee
to preserve the status quo of the Arab countries. Such a guarantee, In
effect, would prevent the realization of Greater Syria.
Ibn Saud believes that such an agreement would appeal to the US
and UK as a promise of greater stability in the Middle East and, conse-
quently, of greater defense against Soviet expansion. In view of increas-
ing xenophobia in Egypt and Syria and of extreme anti-Zionism in Iraq
and the Levant States, however, it is doubtful whether any of the Arab
States (other than Saudi Arabia) would consider Ibn Saud's plan, particu-
larly if it were presented by the US and the UK. His demarche tends to
emphasize the very real differences among the Arab States and indicates
the weakness of the Arab League position on such international questions
as Palestine and the Anglo-Egyptian dispute.
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WESTERN HEMISPHERE
Canada's Apprehension Over Diminishing Dollar Reserves
Canada's rapidly diminishing dollar reserves have recently
prompted the Government to review its fiscal and trade policies. As a
result, Canada may soon consider restricting imports costing US dollars,
unless some other means (currently obscure) become available by which
Canada can substantially reverse its increasingly unfavorable balance-
of-payment position with the US. Recent restrictive steps in this direc-
tion included the prohibition of private holdings in excess of US$ 10 by
resident Canadians and control of their travel expenditures in the US.
Canada had at war's end a huge accumulation of US dollars and
gold and has paid the US cash for imports (which are at an all-time high)
while exporting to other countries on credit. The result has been a rapid
and alarming depletion of Canada's gold and dollar reserves. Canadian
officials hoped that the Increasingly unfavorable balance-of-payments
trend would be reversed by: (1) the successful promotion of multilateral
trade, as provided in the ITO charter under discussion at the Geneva
? Conference; (2) US tariff reductions; (3) dollar loans by the International
Monetary Fund and International Bank to countries now purchasing from
Canada on credit; and (4) sterling convertibility arrangements with the UK.
Now, however, Canada appears to be pessimistic regarding the prospects
of an early reconstruction of the world economy. Public and private
warnings have been sounded recently that Canada cannot permit current
conditions to continue much longer; however, as late as 21 June, a "re-
sponsible official" was quoted as "certain" that no restrictions against
US imports would be Imposed during 1947. Meanwhile, Canadian officials
seem to be hoping that any developing US aid-for-Europe program will
somehow result in vastly increased US purchases from Canada.
Critical Phase of Brazilian Politics
The confidence of the Brazilian people in the I5utra Government,
as expressed in the 19 January elections, is being rapidly dissipated by
the Government's helplessness in the presence of the country's deepening
economic crisis. The visible results are: (1) increasing social unrest;
(2) a trend of public opinion away from Dutra and his advisers; and (3)
increasing opportunities for political demagogy, agitation, and manipulation.
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Rumors that ex-President GetuHo Vargas is maneuvering to re-
gain political control have become too insistent and too numerous to be
discounted. The plans attributed to him call initially for electoral con-
trol of the states of Pernambuco, Rio Grande do Sul, and Minas Gerais ?
In all of which Dutra already has a foothold -- and then for the recapture
of control in the state of Sao Paulo. At this juncture, it is impossible to
estimate Vargas' chances of success, but with the Communist Party out
of the way he is a logical rallying point for an opposition movement and
a strong claimant to any strength the Government may deliver to its
enemies through the failure of its economic and social policy.
The Government Party is rumored to be working toward the
formation of a new anti-Vargas and anti-Communist coalition strong
enough to defeat Vargas' scheme. Such a party would combine elements
of the PSD, the Partido Social Progressista of Sao Paulo (the political
machine of present Governor Ademar de Barros, which is vaguely com-
mitted to Socialism), and the small Partido Republican? of Baia and
Pernambuco (the oldest and most conservative of the Brazilian parties).
No report has been received as to the probable attitude of the UDN,
(which up to the present has been the leading opposition party) but, as
it is ardently anti-Vargas, it is likely to support the Government Party.
Meanwhile, the Brazilian Army, which has at all times been the
major source of Dutra's strength, will continue to be Brazil's chief
bulwark against political instability. Although some Army leaders have
expressed dissatisfaction with Dutra's handling of the nation's economic
problems and with his belated action against Communism, the Army
apparently intends to support Dutra throughout his present administration.
Prospects fornitton ?tile ..5_2_m_pzne_
The American Republics, as a result of informal consultations
over a period of weeks, are unanimously withholding recognition from the
regime installed by the recent coup in Nicaragua. Inside Nicaragua,
however, Anastasio Somoza is in full control, despite a bitterly hostile
public opinion. On 3 August a Constituent Assembly is to be chosen to
write a new constitution, to "elect" a new President and Congress, and
to reorganize the judiciary. Continued non-recognition, though undoubt-
edly embarrassing to Somoza, is not likely to prevent him from carrying
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Out this plan of action; and once the present puppet regime has been
sanctioned by a Constituent Assembly, the American Republics' common
stand on non-recognition will be difficult to maintain.
The Dominican press is already demanding recognition of the
Somoza-puppet (Lacayo) regime. Argentina is reported to look favorably
on the proposed Constituent Assembly. The President of Panama has
declared that there is no alternative to recognizing the Constituent As-
sembly, if the appearances of electoral respectability are maintained.
Somoza can still be counted on to use every means at his disposal to
retain power in Nicaragua and to persuade the American Republics to
recognize the Government he will have the Assembly elect. The fact
that the Rio Conference is to be convened in the near future will strength-
en Somoza.'s hand, because many of the American Republics will wish to
have this situation resolved before the ConferenceIso as to keep recog-
nition problems off the agenda.
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CONTENTS
53
Pages
TRENDS IN BRIEF i-iv
EUROPE
Eased Strike Situation in France 1
EASTERN EUROPE
Apparent Soviet Plans in Eastern Europe 2
Further Communist Moves in Hungary 3
NEAR EAST-AFRICA
Egypt Breaks Arab League Air Solidarity 4
THE AMERICAS
German Assets in Latin America
5
Argentine Purchase of UK Jet Planes 5
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TRENDS IN BRIEF
GENERAL
Leftist opinion has responded to Secretary Marshall's Harvard
pronouncement on economic aid to Europe by advocating that the program
be executed through the UN's Economic Commission for Europe (ECE), of
which the USSR recently became a member. At the same time Trygve Lie,
UN Secretary General, at the suggestion of the Polish and Czech delega-
tions, has indicated that the matter might be referred to the Economic and
Social Council (ECOSOC) to determine whether the proposed program falls
within the scope of the ECOSOC resolutions establishing the ECE.
These developments are presumably inspired by the USSR, which
last April sought unsuccessfully to subject US aid to Greece and Turkey
to supervision by the Security Council. ECE supervision would almost
certainly result in the obstruction of any program which did not include
generous aid for the Soviet-dominated states of Eastern Europe. To by-
pass ECE, however, would as certainly provoke a clamor that the UN
was being disregarded and undermined.
WESTERN EUROPE
The wave of strikes in France is expected to subside (page 1).
EASTERN EUROPE
The USSR has accelerated its program for the cultural, economic,
and military coordination of its satellites (page 2).
The Communist Party in Hungary is moving rapidly and vigorously
to ensure its control of the country (page 3).
Soviet unwillin?. ess to accept an exchange point inside Soviet
territory for international air traffic has again been demonstrated by
Soviet insistence in recent negotiations with the Dutch that Berlin alone
be the exchange point. The Dutch delegation, which had been invited to
Moscow under circumstances which implied that the USSR would acquiesce
to reciprocal Amsterdam-Moscow service, broke off discussions when the
contrary Soviet position became clear.
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Deterioration of the Greek situation continues unchecked. Soviet
determination to forestall and frustrate the US aid program is evident.
In doing so the USSR could expect not only to gain such local advantages
as control of Greece and the Aegean, but also to convince other states
that hope of effective US support is illusory and to persuade American
opinion that the "Truman Doctrine" is Mile. By techniques exemplified
during the Spanish Civil War, the USSR can, without incurring direct re-
sponsibility, conduct a decisive interiention in Greece in the absence of
vigorous counteraction. Prerequisite to the defeat of its intentions is the
sealing off of the northern Greek frontier, an achievement beyond the
capabilities of the Greek Army in its present condition.
NEAR EAST-AFRICA
Ratificaticl`Bermudaf type air agreement with
the US represents virtual repudiation of the Arab League Aviation Agree-
ment of 1946 (page 4).
The USSR is intensifying its pressure on Iran in order to extend
its influence in Iran generally, as well as to induce the Iranians to grant
the oil concession. Soviet warnings to Iranian representatives in Moscow,
reported Soviet reinforcements near the Iranian border, and Soviet con-
nivance with dissatisfied tribal elements in northern Iran are causing ap-
prehension among Iranians over the possibility Of forceful action by the
USSR. Iran is therefore repeating its requests for US aid and is attempt-
ing to postpone any decision on the oil concession.
_Egoft? usupport for its ease against the UK have
taken the form: (1) of allegations by Premier Nokrashy that the Western
members of the Security Council might settle the issue on a basis of
political expediency without regard to the rights of the small States; and
(2) of implied threats that, in such an event, Egypt might turn toward the
USSR. These tactics serve the double purpose of preparing the Egyptian
people for an unfavorable decision by the SC and of attempting to force US
support for Egypt's case.
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FAR EAST
French determination not to deal with Ho Chi Minh's pt
Vietnam Government has been indicated by an admittedly deliberate attempt
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to present Ho with unacceptable terms. French colonial officials desire
that Ho's Government be reorganized to exclude Communist elements or
be replaced by a more conservative regime, possibly under the former
emperor of Annam, Bao Dal. If neither development materializes within
the next few months, French military leaders may attempt to destroy
Ho's Government.
THE AMERICAS
Argentina may not support the recommendations of a special inter-
American commission regarding the German assets problem in Latin'
America (page 5).
Argentina's purchase of Jet aircraft from the UK does not neces-
sarily suggest a weakening of its professed desire to support the US arms
standardization program (page 5).
Communist reactions to Assistant Secretary Braden's departure
from the Department of State have shown a surprising lack of uniformity.
? In Argentina, for example, the Communist newspaper LA HORA describes
it as a "merited defeat" which marks the termination of the US "big-
stick policy," adding, however, that the "principles of Roosevelt have been
forgotten in the US" in such fashion as to make unlikely any notable change
as a result of this turn of events. In Peru, on the other hand, the Com-
munists are insisting that Braden's replacement, because it "foreshadows"
a merger between the "forces of imperialism" and the "reactionary ele-
ments in Argentina," represents a reversal for South American Communism.
Reported large sales of Brazilian rice to American firms have
awakened British fears regarding Brazil's future capacity to fulfill Inter-
national Emergency Food Council (IEFC) rice allocations to India and
other countries. The UK believes the problem would be solved if the US
were to inform the Brazilian Government that it will henceforth permit
no imports in contravention of IEFC allocations. US observers disagree,
on the grounds that: (1) the rice in question is probably intended for
speculative sale abroad rather than for import into the US; (2) Brazil is
about to withdraw from the IEFC; and (3) Brazil would rather have its
foreign exchange holdings in dollars than in sterling.
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Via.X.O.CgateLehatMlag.E.--Zitir.LatakIdeltd...EMgallating2.1M-
mgat_s_g_mmai has temporarily halted the latter's attempt to outflank
the insurgent troops and force them to surrender. Approximately one-
fourth of the 4,000 rebel forces were committed in the battle, and the
rebel radio station at Concepcion claims that the Government lost 600
men (killed or captured). The rebel thrust was quickly repelled, but
Government military spokesmen describe it as a "brilliant" maneuver
which, but for the rebels' manpower deficiencies, would have caused the
Government real embarrassment. The major political result of the en-
gagement is that officials in Asuncion are now speaking less confidently
about early termination of hostilities; they admit that they must reorganize
their forces before renewing the offensive, and that they must make a new
operational plan.
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WESTERN EUROPE
Eased Strike Situation in France
The wave of strikes in France is likely to subside as a result of
Premier Ramadier's skillful handling of the recent railway workers'
strike and the realization by Communist and General Confederation of
Labor (CGT) leaders that strikes which disrupt national life are unpopular
even with the workers. In order to avoid being outflanked on their left,
the Communists, since they left the Government, have supported workers'
demands for higher wages. This policy has encouraged strikes and
demonstrations against governmental authority without recapturing
working-class support for the Party. Moreover, a marked cynicism in
regard to all parties and politicians is becoming more evident among
the general public. Under these circumstances, a large section of the
French people would probably turn to the "mystique" of De Gaulle, rather
than to the Communist Party, should the government collapse as the
result of a generalized strike movement at this time. To avoid this
eventuality, the Communists may drop their present campaign for higher
wages and take a strong line in favor of price reduction and increased
production to "safeguard republican institutions." hoping to establish a
reputation for political responsibility before they wake another deter-
mined bid to participate in the Government.
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EASTERN EUROPE
Aigmrent st__11_, _tee Pia.E.LiTZEAttrEurope
The USSR apparently has accelerated its program for the cultural,
economic, and military coordination of its satellites. Although the Truman
Doctrine may have stepped up the USSR's timetable, events of the past few
weeks are all essential components of the basic plan which the USSR had
probably intended to consumniste before the withdrawal of its occupation
troops.
As part of this accelerated program, however, the USSR may have
modified what is believed to have been the first phase of its plan for East-
ern Europe. The plan was thought to have envisaged the formation of a
South Slav or Balkan Federation, including Yugoslavia, Bulgaria, Albania,
and probably Greek Macedonia. The next step would then have been a
Danubian Federation, comprising Hungary, Rumania, and possibly Czecho-
slovakia. It now appears that the USSR may have abandoned this concept
in favor of a less formal system of control through Communist Party
channels and a network of interlocking cultural, economic, and military
agreements and alliances. Poland, Czechoslovakia, and Yugoslavia are
already linked to each other and the USSR by such an arrangement. The
recent Rumanian-Yugoslav accord and the apparently imminent Rumanian-
Bulgarian agreement will enlarge the circle. With Hungary now more
effectively under Soviet control, that country may also be expected to be-
come an integral part of the network.
To the USSR such a network of alliances would have several ad-
vantages over a formal federation. A South Slav Federation would be
separated from the USSR by non-Slav Hungary and Rumania. Inclusion
of the latter countries on such a basis would create a. larger coordinated
area which would be of obvious economic advantage to the participants
and to the USSR. As long as the USSR considers membership in the UN
profitable, it will avoid any formal federation in Eastern Europe that
would bar UN membership to the participating states. Moreover, as a
formal federation would intensify strong nationalist opposition, the USSR
probably prefers a less formal arrangement during the present transi-
tional stage preceding outright incorporation of these countries into the
USSR.
The recent discussions in Belgrade among Balkan representatives,
therefore, were probably merely another step toward implementation of
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the master plan for the Eastern European satellites. The talks appear to
have been held: (1) to draft a Yugoslav-Rumanian accord; (2) to resolve
Yugoslav-Bulgarian politico-military problems; and (3) possibly to formu-
late more detailed plans for intensified military activity in support of the
Greek guerrillas. The presence in Belgrade of such a large number of
Eastern European leaders may also have been welcomed as an opportunity
to conduct a war of nerves directed at Greece and to exploit for propaganda
purposes the theme of Communist and Slav solidarity under the aegis of
the USSR.
Further Communist Moves in Hungary
Since its assumption of power in Hungary, the Communist Party
has moved swiftly and forcefully to weaken opposition by the Smallholder
Party and to ensure political and economic domination of the country. The
appearance of normal constitutionality has been maintained in order to
preclude interference from the UK and the US or action by the UN, and the
semblance of a balance of power among the political parties in the coali-
tion government has been preserved.
Prior to the coup the Communists tried unsuccessfully to nation-
alize the four leading Hungarian banks. On 1 June, however, the Council
of Ministers, by decree, placed thirteen principal banks under state con-
trol and assigned to each a ministerial commissioner to control its activi-
ties and to preserve its capital, thereby ensuring complete Communist
domination of 75-80% of Hungarian industry. The extension to 30 September
1947 of emergency powers by the National Assembly permits the Cabinet
Council to continue to govern by decree; the present Communist-controlled
Cabinet will thus be unopposed in its administration of Hungarian affairs.
Initial steps have also been taken to avoid a repetition of the Communist
defeat in the free elections of November 1945. In preparation for the con-
trol of future elections, Party members have been sent to study electoral
methods employed in Poland, Bulgaria, and Rumania, and a new electoral
law is being drafted which will further exclude opposition elements from
the polls.
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NEAR EAST-AFRICA
Egypt Breaks Arab League Air Solidarity
The action of Egypt, most influential of the seven Arab League
states, in ratifying a bilateral,"Bermuda? type air transport agreement
with the US, amounts to virtual repudiation of the Arab League Aviation
Agreement. Abandonment of this agreement appears to reflect Egypt's
fear that it would be by-passed in the development of international air
routes, as well as the hope of obtaining further political and economic
benefits from the US.
The Arab Agreement was an attempt to reserve to the League
states control over, all commercial aviation within their borders. While
it was never formally ratified by the Arab Governments, it did serve to
block all efforts of non-Arab international airlines to conclude permanent
air agreements with the member states.
The US obtained a special provisional agreement with Egypt in 1945
in connection with the sale of US air equipment to Egypt and the transfer
to Egypt of Payne Field. Egypt, however, has not accorded equally advan-
tageous rights to other air carriers. These carriers in turn have refused
to accept permanent agreements on the restrictive terms offered and have
been operating under temporary rights.
The direct consequences of Egypt's action will be: (1) increased
probability that Syria, Lebanon, and Iraq will ratify similar pending agree-
ments with the US; (2) demands on Egypt by the UK, Netherlands, Sweden,
France, and Czechoslovakia for bilateral agreements embodying the same
privileges and regularizing their present interim transport rights; (3)
general introduction of International Civil Aviation Organization principles
throughout the Near East; and (4) abandonment of Arab hopes to dominate
International air operations in the Near East, with resultant concentration
by Arab airlines on local and feeder air systems.
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THE AMERICAS
German Assets in Latin America
The Special Commission on Enemy Property of the Inter-American
Economic and Social Council, which has been studying the problem of a
half-billion dollars of seized German assets in the American Republics
and the latter's reparations claims against these assets, has now sent its
conclusions to the 21 Governments concerned. Brazil, Chile, Haiti, Mexico,
and the US were represented on the Commission; they have recommended
that: (1) German assets in the 21 American Republics be made available
to meet American Republics' reparations claims against Germany; (2) any
republic whose claims exceed its holdings of German assets be permitted
to meet its deficiency by drawing upon funds deposited in a common pool
by the republics whose holdings exceed their reparations claims; (3) any
surplus be turned over to the biter-Allied Reparation Agency for use on
behalf of the United Nations devastated by the war; and (4) each of the
republics dispose of the seized German assets situated within its territory
In accordance with its own legislation. The Commission also recommended
a uniform definition of "German assets" and a uniform procedure for vali-
dating reparations claims.
The idea of pooling the seized German assets, though first presented
to the Commission by the US delegate, was supported by the entire Com-
mission. Argentina (whose holdings of German assets amount to some two-
thirds of the total held by all 20 Latin American Republics) might be tempted
to seek reasons for opposing this solution. Argentina was represented at
the Commission's sessions only by an observer; and If, as appears probable,
Its holdings greatly exceed its total relevant claims, the effect of the Com-
mission's plan would be to make Argentina a large (perhaps the principal)
contributor to the common fund. The countries whose claims are known
to exceed their assets, and might therefore benefit from the common fund,
are Brazil. Chile, Colombia. Cuba, and Paraguay.
Argentine Purchase of UK Jet Planes
The recent purchase by Argentina of jet aircraft from the UK does
not necessarily mean that Argentina's professed desire to cooperate in
the proposed hemisphere arms standardization program is weakening.
Argentina is determined to develop a modern air force and to eliminate
the present air superiority of Brazil. To this end, the Argentine Five-
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Year Plan calls for the rapid development of a domestic aircraft industry
capable of manufacturing Argentine types of military and transport air-
craft, as well as aircraft engines. This plan, however, seems unrealistic
In the light of the limited financial and technical resources of the country.
Neither the reported importation of large numbers of Italian technicians
nor other anticipated European assistance will overcome these difficulties.
While Argentina will probably cooperate with the US in drafting
the arms standardization program, it may be expected to guard its freedom
of action in the event that the US does not make modern types of aircraft
available to the signatories.
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_ ,
52
CONTENTS
Pages
TRENDSXNSRIEF I.Iv
WESTERN EUROPE
Soviet Coup in Austria Unlikely 1
EASTERN EUROPE
Soviet View of Prospective Developments in Eastern Europe. 2
Possible Change in the Rumania,. Government 3
Soviet Plans for the Hungarian Army
3
Expected Soviet Opposition to US Airlines in Finland
4
Apparent Soviet Maneuver to Obtain US Supplies .
4
NEAR EAST-AFRICA
ron Saud Seeks Greater Benefits from Saudi Arabia's Oil. . .
6
THE AMERICAS
Publisher's Views on Mexico's Problems
Document po.
NO CHANGE in Class. 0
IDECLASSIFIED
ass. C-IIANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: D A E2G. 77 1763
Date: By:
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TRENDS IN BRIEF
WESTERN EUROPE
An imminent Soviet cou in Austria, on the pattern of recent
developments in Hungary, appears unlikely (page I).
EASTERN EUROPE
The exist aegImes In Eastern WaEurope are transitional and
their further development along Soviet lines is to be anticipated, accord-
ing to an authoritative Soviet publication (page 2).
A Soviet-e ineered ha :e in the Rumanian Government may be
Indicated by Vice Premier Tatarescu s recent attack on the Groza Gov-
ernment (page 3).
The new Hungarian regime is expected to strengthen the Hungarian
Army in order to maintain itself in power and to assure future Soviet mili-
tary control (page 3).
US airline operations into Finland will probably encounter Soviet
opposition, despite the USSR s acquiescence in an interim US-Finnish
air pact (page 4).
A Soviet desire to needed US goods through the USSR's
? satellites is suggested by recent Yugoslav negotiations with US firms
(page 4).
Soviet mpaganda against Western European Socialism has
recently been intensified. The theme ? denunciation of schismatic
Social Democratic efforts to divide and mislead the proletariat ? is
as old as Bolshevism, but the timing and terms of the current intensifi-
cation of this campaign show it to be a reaction to the recent anti-Com-
munist tendencies of the French and other West9rn Socialist parties.
Its evident purposes are to play upon the misgivings existing within these
parties with regard to the wisdom of an anti-Communist policy, to divide
and intimidate them, and thus to neutralize their political effectiveness.
The Kremlin has long considered Western European Socialism to be a
primary obstacle to the success of its policy in Europe.
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Current Kremlin concern over all bases of national securit is
reflected in two rec at decrees fixing severe penalties for the disclosure
of military, diplomatic, scientific, and economic information. The decrees
cover virtu. lly all information with intelligence significance, and specify
that violators will be tried before military tribunals. Theie decrees,
together with a series of other recent security measures, appear designed:
(1) to conceal Soviet military and economic activity; (2) to warn the Soviet
people not to talk to foreigners; and (3) to intensify nerve warfare against
the USSR's neighbors. The decrees will, furthermore, destroy any hope
for Soviet-US scientific and technical exchanges.
The ulgarIan Government, in ntensUylgjts efforts to liquidate
the Opposition, has ordered immediate implementation of the long-neg-
lected, compulsory labor-mobilization law. Conscription into labor camps
of many legitimately-employ d Oppositior sympathizers belies the stated
purpose of he law, which is to mobilize "idlers" for Government work,
and corro? #r tes the statement made last August by Communist Minister
of Interior Yugov that th law was directed against "those who feign occu-
pations but in reality are agents of foreign powers." The recent order
has already affected an estimated 20,000 persons, most of whom have
connections with the Opposition or with the missions of the Weste Powers.
NEAR EAST-AFRICA
lbn Saud is see gain financial advanta.at and enhance his
prestige among the Arab states by exacting onerous concessions from
the Arabian-American Oil Company (page 6).
Closer political relations between 'rurke and the US are probably
the ultimate aim of a new Turkish policy of encouraging foreign financial
investments in Turkey. This policy represents a reversal on the part of
the Turkish Government, which for many years had discouraged foreign
Investments in the country, and should permit the Turks to carry out more
rapidly their plans for industrialization and increased economic production
generally. As US firms may be expected to take advantage of the opportu-
nity thus presented, the Turks doubtless hope that their new policy will
lead to stronger financial and economic ties with the US and consequently
will result in closer p litical relations between the two countries.
?
Apprehension over the Turkish-Iraqi Treaty of FriensIsil_ad (nego-
tiated in March 1946 and now before the Iraqi Parliament for ratification)
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has been expressed by the Governments of Syria and Saudi Arabia. Strong
opposition has also been aroused in Iraq itself among moderate as well as
? extreme Arab nationalist elements. Following so closely the conclusion
of the Iraqi-Transjordan agreement, the Treaty is interpreted by its oppo-
nents as threatening further the solidarity of the Arab League and as
weake ing the Arab front on the questions of Palestine and Anglo-Egyptian
treaty revisions.
FAR EAST
Insistence b Aust_g_ ister for External Affairs Evatt upon
a UK Commonwealth Conference at Canberra early in August to unify
Commonwealth policy on a Japanese Peace Treaty illustrates Australia's
desire to assume leadership in the matter and discloses divergences
Commonwealth opinion oh procedures for discussing the freaty. Evatt
maintains that the Japanese Peace Treaty should be drafted outside the
framework of the Far Eastern Commission; the New Zealand Governme
however, favors utilizing the Commission. Evatt's ma euvers to hold
unilateral discussions with General MacArthur on the Japanese Peace
Treaty prior to the Canberra Conference have so far been unsuccessful.
However, if the Canberra Conference supports the Australtat position,
Evatt may attempt to initiate discussion on the Tre ty following his
arrival in the US to attend the UN General Assembly.
Ssatimatjapizzal,Alain status, at least on an
interim basis, rather than indepeack ace has been encouraged by Pandit
? Nehru's acceptance of interim dominion status for Hindustan. Although
the Burmese Anti-Fascist League recently adopted a resolution demand-
ing Burma's establishment as an independent Republic, the League is send-
ing a representative to London to discuss the question of dominion status
with UK officials. The urmese Constituent Assembly may also approve
such status, provided it does not prejudice Burmese demands for independ-
ence.
The Indonesian public's the Dutch note of 27 May con-
tains counterproposals which accept in principle the Dutch suggestion for
a joint interim federal government for the Indies as a whole. In many
particulars, however, the Republic disagrees with Dutch recommendations.
Preliminary reaction in the Dutch Government is one of disappointment.
Resolution of the differences between the Dutch and Indonesian proposals
will require protracted negotiation, intensifying the strain on Netherlands
resources and patience. Limited military action by the Dutch in Java
continues to be a real possibility.
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THE AMERICAS
A Mexican observer examines his country's current economic
arid political situation and suggests that Mexico should consider the
possibility of linking its economic destiny with that of the US (page 7).
President Gonzalez Welk who recently removed three Commu-
nist ministers from the Chilean Cabinet under pressure from mariftgan -
Communist elements, has now received a pledge for full support from
his Radical Party as long as his administration does not renew its co-
operation with the Communists. With the several contending Radical
factions thus united behind him, Gonzalez is in a position to make a
strong bid for support from other non-Communist parties in Chile. A
further indication of determination to cut himself off from erstwhile
Communist supporters is to be found in his uncompromising reply to
a recent memorial from a Communist-controlled union which called
upon the Government to refrain from using armed force to break the
current bus strike in Santiago.
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WESTERN EUROPE
Soviet Coimirt Austria Unlikely
The recent Soviet coup in Hungary has suggested to many ob-
servers that Austria might next be the scene of a sinillar illaTheuver
The situation in Austria, however, is not analogous to that in Hungary.
Specifically, only Soviet troops occupied Hungary, while Austria and
Vienna itself are divided into US, UK, French,and Sovi t Zones and are
occupied by troops of the respective powers. Moreover, the strength of
the Austrian Socialist Party, which supports the conservative Peoples
Party as an anti .Com!nun.ist force, has no counterpart Hungary, where
the m.ajor conservative party lacked the support of a united and d ter-
mined workers' party.
Only if the domestic economy of Austria collapses Is it likely
that "popula.r?? unrest could be manipulated by the USSR to place the
Communists in control of the Government. A Soviet coup in Austria,
therefore) Is unlikely so long as US policy in that country contfaues to
be supported.by adequate supplies of coal and food..
?
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EASTERN EUROPE
Soviet View ectrc_lysi_DeveloEnonits in Eastern Europe
A recent article in "World Economies and World Politics," an
authoritative Soviet publication, describes the existing regimes in East-
ern Europe as transitional and anticipates their further development
along Soviet lines:
These regimes are considered to owe their existence (1) to
the discredit incurred by the traditional ruling class and its political
parties through collaboration with German fascism before and during
the war; (2) to the unity of the working class, achieved through Commu-
nist leadership of the resistance movement; and (3) to the "moral/ diplo-
matic, and economic support" of the Soviet Union, without which they
"could scarcely have withstood the pressure of reaction, both from the
outside and from within." The resultant political systems are regarded
as "democracies of a new type," not socialistic (in the Soviet sense),
but a "peculiar new transitional form," characterized by retention of
the external forms of parliamentary democracy without pr9judice to
actual domination by the workers rather than by a capitalist minority.
The wise gradualism of the transitional regimes is illustrated
with reference to land reform. Nowhere has there been repeated the
error made by the Hungarian Communists in 1919, whe they sought
to convert nationalized landholdings directly into state farms without
passing through the essential intermediate stage of land distribution to
the peasants to satisfy their land hunger (as was done in the USSR, 1917-
1928). The present policy of dividing nationalized estates among the
peasants is transitional; as in the USSR, collectivization will follow in
due time.
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Possible ChaligLii_i the Rumanian Government
Vice Premier Tstarescu's recent attack on the Groza administra-
tion, made with the full knowledge of Soviet authorities in Bucharest, may
foreshado a Soviet-engineered change in the Rumanian Cabinet. In such
event, the USSR might well present Tatarescu as the opposition leader
and by "constitutional" means install hi as the head of a new Govern-
ment. Such acti n would be calculated to create the impression abroad
that democratic processes are operating in Rut,ania, while actually it
would be designed to strengthen Soviet control in that country.
Tatarescu is ideally suited to implehaent, such a program. One of
Europe's most conniving and opportunist politicians, his wartime collabo-
ration with the Nazis makes him a pliable stooge Sf the Co At unists who,
at ny moment, could try him as a war criminal. By alio ting Tatarescu
to criticize the Groza Government and by Installing him as the head of
a new administration, the USSR may also hope to deprive the legitimate
opposition of much of its ammunition and to transfer the blame for
Rumania's plight from the USSR to the Groza Government.
Soviet Plans for the Hungam
114
The Soviet-backed Govern ent in iungary is expected to take
immediate steps to strengthen the Hungarian Army in order to maintain
itself in power and to assure Soviet military control following the ratifi-
cation of the Austrian Peace Treaty and the withdrawal of Soviet troops.
The Nagy Government had, for economic reasons, been reluctant to com-
ply with Soviet requests that the Hungarian Army of only 12,000 men be
strengthened, and the USSR has hesitated to support an Army of doubtful
loyalty. owever, Nagy was forced during the past year to acquiesce in
the gradual purge of a large number of anti-Communists from the Army.
Available information now suggests that the immediate plan of the USSR
is to train and equip an Hungarian Army of 25,000 men, which may eventu-
ally reach the strength of 65,000 permitted by the Peace Treaty. The new
-regime can also be expected to follow the Bulgarian and Ru lianian pattern
by creating nuclei of armed Communists in youth groups and trade unions.
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E ected SovietarEsighirlines In Finland
It is likely that American Overseas Airlines (AM) operations
Into Helsinki, which will be inaugurated 20 June, will encounter diffi-
culties with Soviet auth rities in spite of original Soviet acquiescence
in the US-Finnish interim air agreement
Past Soviet policy of permitting Finland to grant interim air
rights to Sweden, the UK, and the US -- pending ratification of the Peace
Treaty -- has been in sharp contrast to the rigid control of civil aviation
ekercised in all other areas under Soviet domination. Soviet leniency
with regard to Finland had appeared to indicate Soviet ntertlo?s to make
Helsinki an extraterritorial traffic exchange point for northern Europe.
It now appears, however, that the upsa has decided to restrict
foreign air operations into Finland. The Soviet Chairman of the Allied
Control Commissio has ref sed a Swedish r mest for a special flight
(in connection with the Ffinnish Diet's 40th anniversary) on the basis that
such flights must have prior approval of the Soviet Military Commander.
This action conforms to Soviet insistence in the satellite countries that
US flights must be similarly appr red. Finnish authorities fear that the
USSR may now object to A0A2s plan for a passenger and cargo stop at
Stockholm on the grounds that the original Soviet permit was granted only
for a direct US-Finnish air-traffic exchange. In any event, the USSR may
be expected to employ harassing tactics in some form in order to impede
AOA operations; this would be line wFr the recent stiffening of Soviet
policy toward the US in civil air matters.
A azientSoviet Maneuver to Obtain US "Supplies
A Soviet desire to obtain urge y-needed goods of US manufacture
through its satellite states is suggested by recel t Yugoslav negotiations
with US co e mercial interests. The USSR would prob bly per it the
supplies to remain the purchasing country, in which case such trans-
actions would also help to relieve the press re from these countries on
the USSR for economic support.
A Yugoslav agreement with Ford Motors for the importatio of
automotive equipment (see Weekly Summary of 9 May, page 8) has now
been followed by a two million dollar contract with another US manu-
facturer for fire-fighting equip= t suitable for protection of air fields.
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' Analysis of the quantities involved in the order discloses that
the equipment represents at least three times the maximum normal
requirements of Yugoslav civil and air installations. These considera-
tions. coupled with the expenditure of such a substantial portion of
Yugoslav dollar resources, strongly suggest covert Soviet financial
participation and the probability that a large quantity of the equipment
is destined for other satellite states and the USSR.
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NEAR EAST-AFR1CA
D_LLSaud Seeks Greater enefits from Saudi Arabi Oil
The normally excellent relations between the Arabian-American
Oil Company (Aramco) and the Saudi Arabian C-o ernment have, during
the past few months, been ruffled by King Ibn Saud's determination to
improve his position vis-a-vis Aramco, both financially and in matters
of prestige. Negotiations are in progress to settle the "misunderstand-
ing" which has developed over the i terpre tio of the gold clause of
Aramco's 1933 contract. Ulder this contract, royalties were to be paid
li gold sovereigns, but the dollar rate of gold in Jidda is today approxi-
mately twice its New York rate. Ibn Saud is demanding the Jidda rate,
and thus in effect is requiring r yalties nearly twice those now being
received by the other Middle Eastern oil-producing countries. Aramco
claims it could not compete on this basis.
Complicating the settlement of this problem is the question of
trans-Arabian pipeline. Ibn Saud demands addi onal roy Hies for all oil
piped across his deserts, but Aramco maintains that such added costs
would offset the anticipated saving on shipping charges through the Suez
Canal. n Saud also intends to take up with Aramco in the near future
the question of the equal treatment by Aramco of Saudi and American
laborers. In addition he will insist that foreign orkers, primarily
Indians and Italians, receive no better treatment than Saudi workers.
i.oth of these steps indicate Ibn Saud's increasing preoccupation with a -
ters of prestige.
To lend force to his arguments, Ibn Saud has suggested that he
could expropriate Aramco after compensating it for its investment (pre-
sumably on his own terms). Although Aramco negotiators believe that
the King has no intention of resorting to such drastic measures, they are
convinced that some way must be found to increase the benefits he is
receiving.
Ibn Saud's immediate purpose in these demands is to b crease his
Income. Almost as important, however, in view of the criticism Ibn Saud
has received from other Arab states, is his determination to show the
Arab world that he is no pawn in America's "pro-Zionist, imperialistic"
game.
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THE AMERICAS
Publisher's Views on Mexico's Problems
A critical "re-examination" of the economic and political
situatiol in Mexico by a leading Mexican observer and publisher has
pr yoked a ",despread public debate conce : (1) the achievements
of the 1911 "Revolution.' (whose heirs Still hold po er in Mexico); and
(2) the possible wisdom of consciously associating Me co's eccs mic
destiny with that of the US.
The writer, Daniel Cosio Villegas, insists that the term "Revo-
lution," as used in Mexican political discussions, is no devoid of
meaning because the movement's original goals have already been
achieved. The overthrow of the Diaz dictatorship, Mexico's widely.
discussed agrarian reforms and social legislation, the development of a
nationalist outlook, and the expulsion of forei ers were all, he feels,
genuine ccomplishments; but they co cerned issues which ari no longer
relevant, and the movement, as a r ,sult, no lo ger possesses a construc-
tive program. Cosio, questioning the democratic character of the regime
the Revolutionary group has built in Mexico, points out that: (1) at no
time since the Revolutio has a party op,pos d to the Government in power
won an election; (2) the legislative branch of Mexico's Government is to-
day as servile as it was under Diaz; (3) the agrarian reform has not bet-
,
tered the living conditions of the Mexican peasant; and (4) the integrity of
Mexico's courts is open to question. The author co eludes his analysis
with the observation that Mexico must give careful thought to the pos-
. sibility that its "regeneration" may have to come from the US.
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TRENDS IN BRIEF . .
GENERAL
CONTENTS
O. OOOOOOOOO 0 ? ? ? 0 0 ? ? 0 ? 0
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Pages
OOO i -iv
UK-USSR Trade Negotioations
Yemen Invites US Air Assistance
WESTERN EUROPE
Efforts to Moderate the Anti-Soviet Attitude of Swedish
Officers. . . ..... C . .......... . . . . . . 3
Soviet Attitude Toward German Minister-Presidents'
Conference . . ....... ......... ..... .3
NEAR EAST-AFR/CA
Iranian Army Intrigue Against the Kurds. ... . ..... . .4
Abd el Krim and North African Nationalism . . . . . . .4
FAR EAST
Prospects for Indonesian Acceptance of Dutch Note. . . . 6
THE AMERICAS .
Preliminary Reactions to Somoza Coup . . . ......... 7
Morinigo's Improved Position in Paraguay r 8
Document No. 671
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Auth: DPA REG. 77 1763
Date:
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TRENDS IN BRIEF
GENERAL'
The slow p ress of UK-USSR trade neg tiations apparently
results from a rea za on on3i iies any s al increase
in trade between the countries during the next fe years is unlikely
(page 1).
The organization of a US-opezated airline in Yemen, as requested
by the Imam, would not materially irese poten-
tial but would extend US influence to a strategic position on the Red Sea
(page 1).
WESTERN EUROPE
,AL.JkinpLty_bringite anti-Soviet attitude of Swed
Forces into line with the Govern as et s policy of conciliation toward the
USSR is indicated by a recent report (page 3).
&ytj1Qrts to control the Munich coirderenc of Ger .4 an Minis-
ter-Presidents appear to ha e failed, but the USSR is expected to attempt
to use the confer nce for propaganda purposes and to obtain economic
assistance and raw materials from the Western Zones (page 3).
Proceedis at the annual conferee of the UK Labor Party
(1) demonstrated the bankruptcy o the left-wffig rebel groups; 2
promoted Party unity; (3) strengthened the Labor Government; and (4)
produced less criticism of the US than was expected. The Government's
domestic and foreign policies won overwhelming endorsement, and Bevin
achieved a personal victory.
Continuing popular unrestAsarticulariv disaffection and low
morale in the Pormix, has prompted the Salazar Government
to make a further bid for the support of military officers. A decree-law
has been passed provi for the non-political promotion of junior of-
ficers. The Government, however, has made no coordinated effort to
Improve the general economic situation which is the basic cause of
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public unrest. Ge eral discontent is expected to continue, but as long
as the Army remains loyal, the Government can control any public
uprising.
he abiljlIke De Gas ri Christian Democratic Cabinet to
resolve Italy's economic crisis and to cope with expected Co ?? munist
disruptive ac vities will depend in large measure on the effectiveness
of US financial and econ mic assistance. The Cabinet is expected to
ea. er its first and easiest test early next ek by obtaining a vote
of confidence from thr Assembly. The Communist leader, Togliatti,
may evefl ast a favorable vote, or'abstain from voting, in order to
give the appearance that his Party is cooperai politically in a program
to restore ec nomic stability. The Communists, howe er, can be ex-
pected to attempt to sabotage the Governme,t's -program by their
familiar tactics of strikes, de on.strations, and iigimiclation. Togliatti's
affirmative vote or Jistention, therefore, would be calculated to fix on
De Gasperi's Christian Democrats responsibility for any failure of
their program to solve Italy's economic problems.
EASTERN EUROPE
Rumors th t top Communist officials will meet in Belgrade
during early June may indicate an impending conference on Communist
strategy in Eastern Europe. Molotov, Zhadnov, and Vyshinski, and
Premier Dimitrov of Bulgaria are said to be on their way to the Yugo-
slav capital, and it has been publicly announced that Premier Groza of
Rumania and the Czechoslovak Minister of Defense and Chief of Staff
would visit Belgrade before 12 _June. If such a confere ce takes place,
its purposes may be: (1) to counter ct the Truman Doctrine in Greece
and Turkey; (2) to complete preparations for a possible withdrawal of
Soviet troops from Hungary, Rumania, and ulgaria; and (3) to make
final decisions concerning a possible south-Slav or Balkan Federation.
1.1:the possibility that the USSR will achieve it. .A_1.2.47 production
goals, while still remote, has been heighten ? by indica ions that a
serious transportation bottleneck is being eased and that, in most
basic branches of industry, production has increased considerably
/since the first quarter of 1947 and is still increasing.
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NEAR EAST-AFRICA
Soviet subversive operations in Azerbai an may be facilitated
by current efforts of the Iranian commander to sow dissension among
the tribes (page 4).
Unless France and Spain can agree quickly on a common policy
regarding Arab nationalism in North Africa, Moroccan nationalists may
with Arab League support create serious political unrest hich could
involve all of North Africa (page 4).
Premier Nokrarhy's account of Communist plans in Egypt,,
during a recent conversation with US Ambassador Tuck, appears to
have been carefully Umed to coincide with Tuck's departure for the
US. Nokrashy probably hoped that by "waving the red flag" at this
time he might influence the US: (I) to increase its support of the Egyptian
Government (particularly in view of the forthcoming Anglo-Egyptian
dispute in the SC); and (2) to reconsider its recent decision to refuse
the Egyptians" request for an $80,000,000 loan.
FAR EAST
The possibilities of Indonesiantitgection or conditional accep-
tance of the terms of the Dutch note of 27 May at present are nearly
balanced (page 6).
Emast?.? foltitical discussions_ between ELrance and Vietnam
continue unfavorable because of indications that negotiators are unable
to agree on the terms of a military armistice. Bo Chi Minh, President
of the Vietnam Republic, is reported to have rejected the latest Fre ch
offer primarily because the French are demanding guarantees that
Vietnam units surrender their arms and that Fre ch troops be granted
free passage through the country. French military officials maintain
that such guarantees are essential in order to preve t Vietnam from
using an armistice to regroup and re-equip its forces.
Under the infla. onary pressure of China's civil conflict, budge-
tary expenditures of the Central Gover.nme t rose to a ne peak of
approximately CN$ 2.0 trillion for the m nth of April, 31% higher than
March (the first full month of current, large-scale ry operations)
and about twice the February lev I. Budgetary receipts in April were
also much higher than in previous months, but a substantial part of the
increase represented a on-recurring transfer to the National Treasury
of the proceeds from past official sales of gold and foreign exchange.
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No improvement in China's fiscal position is believed to have occurred
in May; during the first half orthe mo th, the national currency note
issue increased at roughly the April rate, reaching a record high of
CN$ 7.6 trillion on 17 May.
THE AMERICAS
A decisio r_ggarding recognition of the Somoza Government in
Nicaragua is being postponed by many Latin American Governments
pen ng a US move (page 7).
J.E.Isssi_at deli/110_11e _Ls suggest that the Morinigo
Government will obtain a military decision over the rebels before any
negotiations for joint mediation could be completed (rage 8).
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GENERAL
UN-USSR Trade Nelatiatjm
In spite of the considerable publicity concerning the protracted
UK-USS trade negotiations and reports that the talks have been "suc-
cessful," no substantial agreement has actually been reached. The UK
Foreign Office has encouraged this publicity to refute the left-wing
rebels' charges that the Labor Government is anti-Soviet, to bring home
to the people generally that their desires for improved relations and
trade with the USSR are shared by the Government, and to fix responsi-
bility on the USSR for any breakdown in the negotiatio s.
Because the UK and USSR economies are substantially comple-
mentary, theoretically there are no economic reasons why a heavy
volume of trade between the two countries should not eventually develop.
However, most UN officials doubt Soviet ability to deliver in the near
future important quantities of timber and grains and resent Soviet un-
willingness to consider broad, long-term commitments; the UK, on its
part, has refused to extend to the USSR large credits or to promise
early delivery of industrial products. Neither country, during the long
course of negotiations, has demonstrated either a willingness to make
concessions or particular disappointment at failure to reach agreement.
In view of the pressing need in each country for the products of
the other, the dilatory attitude of the negotiators appears to be based
upon rautval recognition that any substantial increase in trade over the
next few years is impracticable, because of internal needs, prior com-
mitments, and perhaps ideological reasons.
Yemen Invites US Air Assistance
The request of the Imam of Yemen for US assistance in the
commercial development of his country, including the organization of
a US-operated airline, may result In the establishment of US influence
In a strategic position on the Red Sea.
Yemen is a primitive Arab kingdom, hitherto isolated and tradition-
ally resistant to western contacts. It has consistently prohibited establish-
ment of foreign diplomatic missions within its borders. The Imarn's deci-
sion to open his country to US aid may have been influenced by observation
of the benefits for Saudi Arabia which Eon Saud obtained by similar action.
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The advantage to Yemen of a US-operated national air, service
would be rapid communications with the port of Jidda and thus greatly-
improved connections with the holy city of Mecca. A natural sequence
to establishment of such an airline, furthermore, would be a US ele e en-
tary training program similar to that now operating at Dhahran in Saudi
Arabia. This program would eventually permit some Yemen nationals
to participate in simple duties and responsibilities of airline management.
-The strategic advantage to the US of a US-operated Yemen air- (
line would be the extension to the southern end of the Red Sea of US
management contracts which are already in effect rith airlines of Syria,
Ethiopia, Saudi Arabia, and Iran. Aerial reconnaissance of Yemen would
_provide military intelligence on areas never before seen by non-Moslems.
A modern, American air installation at Sanaa, the Yemen capital, would
Increase US prestige in the Ar bian peninsula. The presence of American
air interests in Yemen would not, however, materially increase the com-
ki ed US -UTC military potential because rftish ability to defend the area
is already supported by numerous air installations scattered within air
range of Aden.
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WESTERN EUROPE,
Efforts to Moderate the Anti-Soviet Attitude of Swedish Officers
General Helge Jung, Commander in Chief of the Swedish Armed
Forces, is reported: (1) to have told a recent c raference of top-ranking
Swedish military personnel that most satisfactory political relations
with the USSR had been achieved; and (2) to have issued verbal orders
to those present to cease anti-Soviet talk, to indoctrinate Junior officers
along the new line, and to disseminate propaganda favorable to the new
Soviet relationship.
Soviet Attitude Toward Germ .n Minister-Presidents' C nference
A conference in Munich of all German Minister-Presidents has
been called for 6 and 7 June by Minister-President Ehard of Bavaria.
The purpose of the gathering is to guarantee a mancimum indigenous
effort to relieve the critical hardships of the coming winter and to "
demonstrate to the German people and to the Western Powers the sin-
Cerny of responsible German officials. Attendance from both the
Western Zones and the Soviet Zone is assured.
The USSR suspects that the conference may be a step toward
federalism, and has made efforts to control it by sending political
group leaders and trade unionists with the delegations and by attempting
to move the conference to Berlin. Having failed in these maneuvers,
the USSR can be expected: (1) to attempt to use the conference as a
sounding board for its propaganda for unity and a "broader national
representation" as the only means of alleviating Germany's economic
distress; (2) to discredit any positi e over-all achievements of the con-
ference that might strengthen the cause of federalism; and (3) to attempt
to use the conference to wring from the Western Zones some badly
needed economic assistance, particularly raw materials.
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NEAR EAST-AFRICA
Iranian Ariitrit e AgAiiiisCurds
General Shahbakhti, recently put in command of Iranian troops
In Azerbaijan, is attempting to cause a split between Ammar Khan,
paramount chief of the powerful Shikkak Kurds, and other'Shikkak
chiefs. Shahbakhti hopes in this way to weaken the tribes ad to
facilitate the Iranian Army's task of disarming em. The re-
sult, however, will be the weakening of Iranian security and the creation
of conditions conducive to Soviet subversive operations. Shahbakhti (who
is generally hated by Iranian tribesmen) is taking this actio despite
Ammar Khan's declaration of loyalty to the Iranian Go ernment and his
rece t assistance to the Army in dealing with renegade tribal elements.
So far Shahbalditils attempts to split the tribes have i&et wi little suc-
cess, primarily because of Ammar Khan's influence over his people.
Should these efforts be continued, however, the tribes will increase their
resistance to the Army and its policies (including the purchase of US
military supplies); moreover the breach will be widened between Prime
Minister Qavam, who has the support of the tribes, and the Shah and the
Army.
Abd el Krim and North African Nationalism
The dramatic re-appearance of former Riff leader Abd el Krim
after 21 years of exile not only embarrasses the French in their efforts
to re-establish political prestige in North Africa (see Weekly Summary
of 29 May, page 1) but focuses attention on King F rouk's interest in
stimulating North African nationalism.
M the request of the Arab League (with which France desires
good relations), the French decided without consulting Spain to remove
the aging Moorish chief froi. Reunion Island and to install him in com-
fortable quarters on the French Riviera. On 31 May, when his vessel
stopped at Port Said, Abd el Krim "jumped ship" and, with the aid of
Egyptian officials, proceeded to Cairo where he received a hero's wel-
come from King Farouk. Arab League leaders, and prominent exiled
North African nationalist chiefs. The French, already annoyed by Egypt's
attempt a few days earlier to send a grain ship to "starving Tunisia,
were surprised and angered by this second indication of Farouk's support
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of the Arab nationalist movement in French North Africa. However, in
view of Farouk's influential position in the Arab League, France has
decided not to deliver a formal protest.
The growing influence of the Arab League among North African
nationalist groups has stimulated competition between France and Spain
to win Arab favor. Certain influential 'Spanish military leaders -- who
believe that Spain must eventually lose its strip of Morocco -- prefer a
friendly Arab state adjacent to the Straits of Gibraltar to a French
dominated Morocco. Spanish officials have encouraged nationalism in
their zone by allowing native leaders to organize there for anti-French
action. The Spaniards have done little to locate small arms stolen from
their arsenals or to punish the thieves. France was transferring Abd el
Krim to counteract the effects of Spanish "benevolence" to the Moors.
Unless France and Spain can agree quickly on a common policy regard-
ing Arab nationalism in North Africa, Moroccan nationalists may with
arab League support create serious unrest which could easily spread
to all North Africa.
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FAR EAST
Prospects for Indonesian Acceptance of Dutch Note
The prospects for Indonesian rejection or conditional acceptance
of the final Dutch proposals contained in the note of 27 May are at pres-
ent nearly equal.
Left-wing groups in the Republic, which formerly supported e
Linggadjati. Agreement, have announced their opposition to the terms of
the Dutch note. These groups may be expected to join two influential
conservative Parties, which have opposed cooperation with the Dutch,
in urging the Republican Cabinet to reject the note in the hope that the
Republic might obtain greater concessions if the dispute were submitted
to international arbitration.
On the other hand, UK and US representatives in the NEI are
now directly urging Republican authorities to give favorable considera-
tion to the Dutch proposals. The US and UK believe that these terms
are reasonable in most respects, and that they are offered by the Dutch
in good faith. These representations may encourage the Republic to
accept the Dutch note conditionally and perhaps to make a counter-pro-
posal. Such a development would lead to further negotiations which
might be protracted by Republican delaying methods. Indonesian re-
jection of the Dutch note, however, would put an end to negotiations and
lead to limited Dutch military operations to prevent Republic destruction
of foreign properties.
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THE AMERICAS
Preliminar Reactions to Somoza Coup
With Anastasio Somoza back in control in Nicaragua, a new Somoza
puppet installed as interim president, and plans under way for a Somoza-.
controlled election for a Co stituent Assembly, the other American Repub-
lics must decide what attitude to adopt toward the new Nicaraguan Gov-
ernment.
The U ted States, which has instructed ,its Managua Embassy to
deal with General Somoz only in his capacity as a private citizen and has
indirectly advised the Latin American Governme ts that it will receive the
new (Somocista) Nicaraguan Ambassador only in a "personal and private
capacity," favors consultation among the American Republics regarding
the course to be folio ed. If some appropriate Arriercan Republic such
as Colombia fails to take the lead, the US will itself initiate the consulta-
tion.
Many of the Latin American Governments are postponing decision
regarding possible non-recognition of the ne Nicaraguan Government in
anticipation of a US ove. Guatemala, Panama, El Salvador, and Colombia
have made known their opposition to extending recognition. The Chilean
Foreign Minister has informed US Ambassador Bo ers th t Chile "de-
plores" the turv of events in Nicaragua, but, like Argentina and razil,
has as yet given no indic tions of future policy. Cuba, Ecuador, and
Uruguay have indicated interest in an expression of attitude by the US (as,
despite prior announceme t of their own policy, have Guatemala and El
Salvador). Three countries -- Uruguay, Mexico, and Colombia -- have
already expressed willingness to participate in any inter-American con-
sultation on the subject.
The Latin American press ? with remarkable unanimity, in view
of the traditional tenderness of Latin Americans toward the use of recog-
nition as a weapon of policy. -- is urging on-recognition of the de facto
Nicaraguan Government. The dissenting voices are a Honduran news-
paper which contends that the de facto government came to power in a
normal and legal manner, and the Dominican press, which points to the
prompt recognition accorded the revolutionary Junta in Venezuela last
year as a precedent and insists that the American Republics are morally
obligated to extend recognition in the present case.
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Moriggo.L.'s Imorpved Position in ParasL jua
The major recent developments in Paraguay include: (1)
renewed Brazi an efforts o behalf of a ilegotiated peace between
the two contendirg factions; (2) indications that the rebels, increasing-
ly divided among themselves, are now Wolin to discuss terms; d
'(3) further hardening of the Government's ttitude toward curet
Jo t mediatIi pr posals, which it. finds una.cceptable on the presumed
eve of a final victory achieved at "great sacrifices."
If President Morinigo's esti ate of the, military situa On Is
correct, as seems probable in the light of continuing rea.rts of rebel
re erses, Morinigo could expect to obtain a mill y decision before
time-consuminenego ations for oitt mediation could be comple
It seems increasingly probable that Par y will return to "normal,"
with a government like those " Nicaragua and e Dominican Republic,
hich derives its auth rity from the sanction of force and pp,arently
is beyond challe e from within its own fron ers.
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? X 9 MAY 1947.
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CONTENTS
Pages
TRENDS IN BRIEFI-Ill
WESTERN EUROPE
New French Policy in North Africa
Prospects for Repairing the Socialist Split in Italy. . .
EASTERN EUROPE
Intensified Activity Along the Greek Frontier
3
Political Instability in FinLand. . ..........
3
Communist Device to Curb Press Freedom. . .
. . . e, .
4
UK Presses for Unification of Greek Labor
4
Possible Strengthening of Greek Patriarchate
5
FAR EAST
? China's Ship Crew Shortage
GENERAL
UK Export Policy on Military Aircraft
.5r?O
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N9 CHANGE in Class. 0
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DDA Memo, 4 Apr 77
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Date:
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TRENDS IN BRIEF
WESTERN EUROPE
To achieve elitical stabili in North Africa the French
Government is concurrently ins tu r orms ss establishing a
strong military administration in Morocco (page 1).
Lombardo".s plan to create a single Socialist Figv in Italy
provides some hope for the eventual establishment of an anti-Com-
munist bloc in that country (page 2).
The compromise reached by Premier Ramadier and the
utilities workers, which forestalled a general protest strike in France
on 28 May, indicates that neither the Government nor labor is willing
to risk a showdown on the issue of wage-price stabilization. The cri-
sis has been postponed, but the basic issues confronting the Govern-
ment--wage-price stabilization, relaxation of economic controls, and
the grain shortage--remain unsolved. Unless Ramadier continues
to exert the courage and determination necessary to build public con-
fidence in his regime, another crisis could easily cause the fall of the
Government. Meanwhile, the Communists, in preparation for the next
test, will redouble their efforts to undermine the authority of the Govern-
ment.
EASTERN EUROPE
Greece's northern neighbors are erg to intensify
their attempts through propaganda and misrepresentation to demonstrate
that Greece is guilty of border violations (page 3).
The reinstatement of the Pekkala Cabinet in Finland offers no
immediate promise of political or economic stability in that country
(page 3).
The Bulgarian Communists are likely to. circumvent Treaty pro-
visions for guaranteeing fre spa?Fire by encouraging the printers'
union to refuse to print or distribute Opposition newspapers (page 4).
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The UK is sslng for labor unification, although it
had agreed to "relax press eur on the Greek Government (page 4).
To stre Jmrch in the face of
Soviet penetration, the Greek and Turkish Governments may designate
a successor to the ailing Patriarch Maxims (page 5).
The SOIKKOIC situation in Greece will deteriorate.th r as
the result of damage to agriculture from severe drought and spring
frosts,thereby increasing the difficulties which face the US's rehabili-
tation program. In addition to the serious loss of income from agricul-
ture, the loss in forage crops and in grain (grain constitutes about half
of the Greek diet) will create at least as critical a supply situation as
in 1945. Present indications are that the grain crop may amount to
as little as 50% of the average pre-war harvest, which supplied only
64% of the country's grain needs.
Despite Soviet agreement ement at the Council of Forel Ministers
at Moscow that the Allied Treaty Commission in Vienna should give
?special consideration to the general question of German assets in
Austria and should establish "concrete facts", the Soviet delegation
on the Commission is making every effort to impede fact-finding and
Is attempting to limit quadripartite discussion to the specific problem
of oil assets. The USSR's present obstructionist tactics in Vienna are
apparently dasigned to obtain the settlement of the bulk of Soviet claims
on German assets through bilateral negotiations with the Austrian Govern-
meat.
FAR EAST
C 'scritical shortage of shi crews iews is an important
factor in the failure of the Chinese Government to agree to quadripartite
distribution of minor Japanese naval tonnage (page 6). .
A_Fonvention of theBurmese 11-1FascistAn e (AFL) unani-
mously adopted on 20 May a resolution to proclaim Burma an indepen-
dent sovereign republic. Because the League holds 95% of the seats in
the Burmese Constituent Assembly, that body is expected to follow the
League's lead in this decision. Burma's withdrawal from the British
Commonwealth may therefore be considered a certainty; however, Burma
will probably conclude defense and economic treaties with the UK.
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GENERAL
Sale by the UK of jet engines to the USSR represents an effort
to demonstrate, for the benefit of left-wing Laborites, a more coopera-
tive attitude toward the USSR, as well as a determination to obtain the
maximum commercial advantage from their pre-eminence in the jet
engine field (page 7).
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WESTERN EUROPE
New French Policy in North Africa
To forestall possible uprisings in North Africa, the French Gov-
ernment has adopted a dual policy of instituting long-awaited reforms in
Morocco and establishing there a strong military administration. The
Government's purpose is to undermine the nationalist leaders by grant-
ing much of what they have been demanding for decades and to convince
over-confident extremists that France is still capable of crushing any
, rebellion. For these reasons, General Juin was appointed Resident Gener-
al of Morocco and instructed to carry out democratic reforms in spite of
the Sultan's obstructionist attitude. This policy should enable France to
? maintain a firm hold on an area where political stability is of great stra-
tegic importance to the western democracies.
?
Nationalist leaders, not only in Morocco but also in Tunisia and
Algeria, have shown a tendency to regard France's post-war promises
of colonial reform in North Africa as a sign of weakness. The success
of the Arab league in the Middle East, Soviet encouragement of freedom
for colonial peoples, and US interest in the stability of strategic North
Africa have all contributed to the nationalists' decision to oppose any re-
forms sponsored by France. The native politicians of this area hope, by
exploiting the competing interests of the US, the USSR, and the Arab
League, to throw off French rule completely. The native leaders have
resisted as compromises and half-measures: the political and economic
measures proposed for Tunisia, the various drafts of an "Algerian Or-
ganic Statute,' and the reforms urged upon the Sultan of Morocco. The
nationalists have conducted a war of nerves, hoping to make the French
appear as oppressors and, at the same time, to create such confusion that
the matter could be brought before the UN General Assembly at its next
meeting in September with a recommendation for a UN trusteeship for
the North African Arab states in the "interests of world peace."
With even a moderate degree of political stability at home, the
French should be able to bring a large measure of democratic reform to
North Africa and continue control of the region. Both the nationalists and
the Communists will oppose the new firm policy but effective resistance
is not expected.
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cts for RpairingSplit in Italy.
.Prospects for the eventual formation of an effective anti-Com-
munist bloc in Italy have &-en somewhat improved by the possibility
that ivan.Matteo Lombard y be able to re-establish a single Social-
ist Party in Italy. Lombardo, the Socialist head of the Italian Economic
Mission now in Washington, plans upon his return to Italy to appeal to
moderate eleme tts among Saragaes right-wing Socialists and Dienes
left-wingers to abandon Saragat and Nenni,and their respective extrem-
ist followers, and Join forces under Ms leadership.
Lombardo seems to have the dest popular appeal of any current
Socialist leader. He is moderate, realistic, and energetic in politics and
a successful textile manufacturer. Although he was sympathetic with
Saragaes anti-Communist stand, he remained with the main body of the
Socialist Party when the Party split in January, because he felt the Sara-
gat secessio would weaken Italian Socialism. He has not. however,
Identified himself With Nenni. Lombardo is an abler politician than Sara-
gat and has the added virtue of being an economic technician at a time
when Italy's political crisis is largely a result of economic difficulties.
The chances for the success of his proposed movement obviously would
be greatly improved: (1) if the Vatican should endorse a rapprochement
between the Christian Democrats and moderate Socialists; and (2) if his
mission to Washington is successful.
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EASTERN EUROPE
Intensified Activity Along Frontier
' Albania's Vigorous protest to the UN regarding the alleged machine-
gunning of an Albanian vii nee by Greek Government aircraft may fore-
shadow an intensive propaganda campaign by Greece's northern neighbors
in an attempt to counteract the effect of the Sc Balkan Investigation Com-
mittee report. Although the Greek attack, if it occurred, was certainly
not deliberate, Albania's allegations have involved Greece in an inter- ,
national incident which may prove embarrassing. Further such incidents
may result from: (1) increasing attempts by the Greek Communist bands
to avoid attack from Greek ground and air forces by escaping to satellite
territory; and (2) the reported use of aircraft by the satellites to drop
supplies to guerrilla bands on Greek territory. The Yugoslav, Bulgarian,
and Albanian Governments can be expected to represent Greek counter-
measures as violations of their sovereignty. Such a propaganda campaign
would be intended to distract attention from intensified satellite support
of the Greek Communists.
The Greek Army offensive against the guerrillas in central and
northern Greece has reached a stalemate, which is likely to continue as
long as the bands receive aid from the satellite countries. The Army has
been unsuccessful in pinning down the guerrillas, and the Gendarmerie
has achieved so little success in controlling the "cleared" areas that the
Government is encouraging residents of these areas to arm themselves
as protection against the guerrillas. The arming of civilians will neither
solve the guerrilla problem nor promote national recovery.
Political Instability In Finland
The reinstatement of the Pekkala coalition Cabinet in Finland,
after six weeks of unsuccessful negotiations to form a successor, holds
no immediate promise of political or economic stability for that country.
The fall of the Cabinet was caused by failure of the three major parties
(Communist, Socialist, and Agrarian) to agree on a Government program
to solve the crucial wage-price maladjustment. The ensuing negotiations
demonstrated that no two Parties could govern without the third, and
sharpened the fundamental differences among them. The Cabinet is now
In no better position to agree on a solution to Finland's economic ills.
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The Conservative Agrarians, having failed to weaken the Communist in-
fluence in the Government as they had hoped to do by provoking the recent
crisis, are expected to continue their determined opposition to Communist
economic proposals. A new crisis therefore appears inevitable; when it
occurs, the three Parties may reluctantly agree to new elections this fall
as the only solution to the stalemate.
C s mmunist Device to Curb Press Freedom
? The Dimitrov Government in Bulgaria has laid the groundwork
for a technique which may successfully obstruct attempts by the US and
UK to enforce the provisions of the Peace Treaty which guarantee freedom
of speech. The Communist-dominated printers* union has refusal to print
several issues of an Opposition paper and has passed a unanimous reso-
lution not to print or distribute newspapers containing articles by Oppo-
sition leaders directed against the "interest of the Bulgarian people."
Prime Minister Dimitrov can be expected to counter US-UK protests con-
cerning freedom of speech by disclaiming any Government responsibility;
he has already publicly stated that the action of the printers* union is a
"private matter" in which the Governme t cannot interfere.
UK Presses for Unification of Greek Labor
Despite an earlier agreement with the US to "relax pressure", on
the Greek Government, the UK is undertaking to obtnin speedy unification
of the divided Greek labor movement. It has persuaded the Greek Govern-
ment to recommend that the courts appoint a new Central Executive Coun-
cil of the General Confederation of Trade Unions (GCTU). The Executive
Council would consist of twenty-one members, possibly five of whom would
be Communists or controlled by Communists. While it has been reported
that the Communists are under orders to enter any Executive which might
be formed, it is doubtful whether they would participate unless they were
given a majority position; any Executive formed at this time without Com-
munist participation could be attacked on the ground of being non-repre-
sen tive. On the other hand, an Executive appointed prior to the forma-
tion of an effective and representative coalition of the non-Communist
elements would probably be so divided that even a small Communist
representation might be able to gain control.
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Possible Strengthening of Greek Patriarchaie
The arrival in Athens from Istanbul of the ailing Patriarch
Maximos, head of the Greek Orthodox Church, has focused attention
upon the danger of Soviet penetration and exploitation of the Orthodox
Church in Greece and Turkey for political purposes. Since the resto-
ration of the Church in the USSR, the Kremlin has not only dominated
the Church in that country but has also extended Soviet influence over
It in other parts of the world. Church officials in the Middle East and
elsewhere have been influenced by Moscow, while even in Greece cer-
tain clerics have actively supported the Communist-controlled EAM
organization. For these reasons, the ineffectiveness of the Patriarchate
(resulting from the mental illness of the anti-Soviet Maximos) has caused
the Greek Government serious concern. The Patriarch is now in Athens
ostensibly for medical treatment, but probably also for consultation with
the Greek Government in connection with the choice of a successor.
Patriarchs are elected by vote of the Holy Synod at Istanbul, but,
in practice, the candidate elected is the official most favored by the Greek
Government, which controls the Church's main source ofincome. Agree-
ment with the Turkish Government on a new patriarch is usually reached
before the Synod votes. If Patriarch Maxtmos is replaced, it is certain
that the present Greek and Turkish Governments will select a successor
whom they consider politically safe and who will be prepared to resist
Soviet influence and attempts to dominate the Church.
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FAR EAST
China's Ship Crew Shortage
Failure of the Chinese Government to reply to a US note of
24 February specifying procedures for division and delivery of 239
small Japanese naval vessels (of destroyer tonnage or less) is delay-
ing the distribution of these ships amo the US, USSR, UK, and China.
At Soviet insistence, the US agreed in October 1945 that minor Japanese
naval tonnage (excluding submarines) should be divided equally among
the four major powers; the division of merchant shipping was left as
part of the general reparations problem to be settled by the Far Eastern
Com,* ission. The USSR has continued to press for the agreed division
of naval tonnage. China's failure to reply to the US reflects not only a
critic I lack of trained ship crews, but also a fear that the impracticality
of grandiose Chinese plans for development of commercial shipping may
be publicly confirmed. Presently unable to man its share of the Japanese
naval vessels and uneasy as sut Soviet naval strength in the Port Arthur
area, China may wish to delay action as lo as possible in the hope of
obtaining further US assistance in developing its Navy.
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GENERAL
UK Export Policy on Military Aircraft
The recent sale of additional Britieh jet engines and the impend-
ing sale of jet aircraft to the USSR represent no change in ritish policy.
Such sales are in keeping with the UK desire to demonstrate a coopera-
tive and friendly attitude toward the USSR in military matters, as pre-
viously evidenced by Field Marshal MontgomeryYa proposal to initiate
an exchange training program for British and Soviet Staff Officers.
The domestic, political significance of the jet engine sale is
Indicated by the timing of its announcement just prior to the important
Labor Party Conference now in session. This transaction has served
to counter left-wing charges that the Government has failed to develop
trade relations with the Soviet Union.
The British are now obviously confident of maintaining their
pre-eminence in the jet engine field and are determined to exploit this
position to the fullest commercial advantage. Development of a foreign
market for the British aircraft industry has been a major objective of
British trade policy. Sweden, France, China, and the US have already
obtained licenses to manufacture the Nene engine and complete British
aircraft have been sold to Sweden, Switzerland, and Argentina. It is
apparent that the British have now abandoned their former attempts to
make aircraft sales to the USSR conditional upon obtaining landing rights
in the Soviet Union.
The British evidently did not consider that the original acquisi-
tion of the Derwent V and Ne., e jet engines by the USSR in 1946 presented
a threat to their national security. Meanwhile, both engines have been
superseded by newer British models and it is recognized that the USSR,
aided by German scientists, already has made substantial progress of
its own in jet propulsion techniques. In spite of British classification
of this equipment as obsolescent, it is, nevertheless, noteworthy that
the Derwent V still holds the world speed record and that the Nene is
now to power the US Navy Grumman fighter.
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TRENDS IN BRIEF . .
GENERAL
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CONTENTS
? . . ............. ? 0 ? t ? ?
Pages
. . ? i
Soviet Policy on Austrian Civil Air Development . . ? ..... 1
Friction with UK over Support in US of Palestine Terrorism 1
WESTERN EUROPE
Prospects for Survival of the Ramadier Cabinet ? .
EASTERN EUROPE
.
3
. . .
Soviet Concept of Sovereignty . . .... . 0 0 ?
0
. .
0 . .
4
..
Disintegration of Rumania's Economy .. ? a e a
a
0 0
a ? e
4
Socialist-Communist Split in Poland . ? 0 0 0
?
0 0
. . .
6
Soviet Economic Offensive in Hungary. ? ?
.
. .
. . .
6
Settlement of Soviet Nationals in Eastern European Areas,.
8
NEAR EAST-AFRICA
Factors Endangering the Viceroy's Proposals
. ?
9
FAR EAST
The US-USSR joint Commission Reconvenes . . .
0
0 0
0 di 0
10
Document No.
N9 CHANGE in Class. 0
DECLASSIFIED
ss. nANC:D TO:
117A Memo, 4 Apr 77
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?uthi DDA 77G. 77 1763
Date
BY: VIA--
TS
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TRENDS IN BRIEF
GENERAL
The USSR is seeking to hinder Austrian civil air developpent
in order to protect the antiquated Balkan satellite airlines (page 1).
Support of Palestine thi_Lc2rat public solicitation
of funds in the US may become a source of international friction
(page I).
WESTERN EUROPE
The survival of the present French Government depends largely
on its success in raising the bread ration within the next few weeks
O (page 3).
France appears to have been forced by events of the past few
months to abandon its attempt to steer an independent course between
the US and the USSR and to align its foreign policy more closely with
that of the western democracies. From the French point of view, how-
ever, this is a short-range policy designed primarily to give France
the time and means to recover the political and economic stability
necessary to re-establish its leadership of the continental powers in
? Western Europe and to regain complete independence of action.
The recent "strike" b 30 000 industrial workers at Bilbao
the center of the Basque nationalist movement, was essentially a
spontaneous popular demonstration against the Franco regime. It was
moderate and non-violent. The size and duration of the demonstration,
however, seem to have intluenced General Franco's recent declaration
at Barcelona that he is preparing to decentralize the Government to
provide broader regional autonomy. While it is unlikely that Franco
will make any real concessions to regional autonomy, he is apparently
concerned over the unexpected show of strength in Bilbao.
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UK Foreign Minister Bevin will probabl not have serious
trouble with his left-wing critics during the foreign policy debates
at the annual UK Labor Party Conference which begins on 26 May,
although the debates are certain to be vigorous. (Most Foreign Office
actions since last winter have been taken with an eye on the rebellious
left wing, and the recent foreign policy debate in Commons was unex-
pectedly mild.) The scale of opposition in the Labor Party conferences
to Bevin's policies should not be much greater than that of the left-wing
Laborites in Commons.
UK Foreign Office officials have decided that Czechoslovakia
and Poland are the most favorable areas to attempt penetration of the
"Iron Curtain," chiefly because of their former western orientation.
Accordingly, the UK is courting both countries, Poland less intensively
because of the British desire not to cancel out the effect of the UK's
frequent disapprovals of Polish political methods. This course of
action, like the trade negotiations with the USSR, will serve to disarm
Bevues left-wing critics and will be generally popular in the UK.
EASTERN EUROPE
The Soviet concept of soveg as set forth recently by Soviet
spokesmen suggests that the USSR has renounced international coopera-
tion except on its own terms (page 4).
The USSR's repressive policies in Rumania have resulted in
the rapid economic disintegration of the country and will require the
increasing use of force to maintain Communist control (page 4).
The existence of the Socialist Party in Poland is threatened
by a Communist plan to check the inflationary trend Zpage 6).
The USSR has launched an intensive economic offensive in Hun-
gary ithich aims to prevent Hungarian economic ties with the West
(Page 6).
Large-scale penetration of Soviet nationals into Southeastern
Europe provides the USSR with an ideological and ethnic population-
barrier against the-West (page 8).
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NEAR EAST-AFRICA
_Asoatang.,)2th sh r_s_smAll,for a_,__,_iii.k,._juie_uidgnikadia may
be delayed by disagreements be een the Congress Party and the
Moslem League (page 9).
Increas Soviet ressure on Iran, including pr tests againat
the predominance of US influence and activity in the country, is causing
uneasiness among Iranians. Although opposition to the Soviet oil con-
cession continues stro there are indications that Iran may attempt
to strike a balance in its policies vis-a-vis the US and the USSR. A
characteristically facile Iranian move uld be the refusal by Pa:Ala-
i) ment\ to ratify either the Sfl'..,1711e,' oil tgreement or the purchase of mlii-
tarj from the US. Although the USSR would strongly approve
an adverse decision with regard to the purchase of US military equlp.7
ment, such a decision would not lead the USSR to relax its pressure
for an oil concession.
?
Egtei i.le;70a_....Ereatened by anti-foreign
sentiment which has become increasingly strong since the breakdown
of the Anglo-Egypti treaty negotiations i jam ry. The anti-foreign
agitation, which the Government has failed to curb, may influence the
Egyptian Parliament pass legislation (no under co sideration) hich
would severely hamper the operation of foreign busi eds firms. Under
these circumstances, the pr spective abolition in 1949 of the Mixed
Courts (composed of foreign and Egyptian judges and designed to protect
e interests of foreigners) has particularly serious implications for
foreign business operations in Egypt.
FAR EAST
As the jolot Commission reconvens in Korea, the US faces
the difficult task of mediating between the USSR and the -South Korean
rightists (page W).
The new_ata_.,. gm Cabinet, to be installed about 22 May, 511
probably be headed again by Prime Minister Dhamrong because the
two government parties, the Constitutional Front and the Sahacheep,
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re unable to agree on any other candidate,. Although Dh rong's
retention of the post of Prime Minister will ule out the possibility
for the present at an anti-foreign militarist will assume power,
the new Cblnet will be eakened by indifferent support from the
two government parties d by the despr popular dissatisfaction
with the preceding Cabinetgs inability to remedy the high cost of living.
THE AMERICAS
airnags_two cist 9usthe Quebec (French
Canadian) Church hierarchy and the Tory Conservatives--have re-
rsed their traditional pro-Empire policies and abandoned t eir
anti-US positions. Fre ch Canadian leaders have gone so far as
advocate complete severance from the irItish Crown; this change in
policy apparently was c ted by a conviction tint Quebec Province
is no longer dependent upon the Cro for protection against Otte.
domination. The Tory reversal reflects *ssatisfactio with ritish
Socialism and concern o er UK economic weakness.. The edam if
these two groups is xpected to encourage sentiment in Canada for
indepe deplete, closer oriel' ton to the US, and membership in the
Pan Americ Union.
President de rmination to force ex-
President S m za out of Nicaraguan politics suggests an IA,i lnet
sho down between the two men. Their rela ons have become increas-
ingly strain by Arguellils rapid assertio of his prerogatives as
chief executive, especially by his prompt re e oval of Somoza adherents
(including Somoza's son) from key positions in the Guardia, his appoint-
me t of an ti-Somoza Cabinet, and his assumptio of co mead of
all the armed forces ( hich circumscribes Somozags power as chief
of the Guardia). Arguello, ho has won wide-spr ad.support from the
public and the Guardia, has stated that if Somoza co tinues to a
trouble-maker, he will be obliged to "get rid of him." However,
Somoza, who still exerts powerful influence in the legislature and to
a lesser degree in the Guardia, can be counted on to use every means
at his sposai to retai some measure of contr 1.
Peroes increas 1 strong stand against Communism in Argen-
tina s indicated by (1 instructions recently given the Argentine
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police to prepare a report on Commurdst subversive activities.
(2) the recent arrests on Peri:nes orders, of 220 persons attending
a Communist meeting; and (3) proposed legislation that would probably
have the effect of abolishing the Communist Party in Argentina.
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GENERAL
Soviet Policy on Austrian Civil Air Development
From the Soviet point of view, the creation of a modern civil air
establishment in Austria and the development of Vienna as an important
air traffic center would present unwelcome competition to the antiquated
Balkan satellite airlines and could serve as a check on the desired west-
ward expansion of these lines. The USSR is accordingly still employing
the obstructionist tactics adopted in July 1946, when the Austrian Cabinet
rejected a Soviet offer of assistance in setting up an Austrian civil air-
line.
The current Soviet objective is to prevent any Austrian planning
for post-occupation civil air development; the USSR is trying to accom-
plish this by blocking the establishment of a department of civil aviation
in the Austrian Government.
Austria is financially unable to purchase in the open market the
necessary equipment for rehabilitation and extension of its airfields. A
possible source of such materiel on advantageous terms would be the
surplus US and UK airfield installations now in Austria. However, as
long as Soviet troops are in Austria the USSR would probably bring politi-
cal and economic pressure on Austria to prevent acceptance of any such
US-UK offer of assistance in post-occupation air development.
Austrian acceptance at this time of a US and UK commitment for
extensive participation in Austrian air development might encourage
? further Soviet delaying tactics with respect to the Austrian treaty. Like-
wise, an Austrian airline jointly owned with western interests might later
give other countries an excuse to reject civil air agreements with Austria
on the grounds of the foreign control of its air activities.
Friction with UK over Support in US of Palestine Terrorism
The support of terrorism and illegal immigration in Palestine,
through the public solicitation of funds in the US, has been protested by
the UK and could well become 'a source of international friction. The
latest British protest referred to the publication in several New York
newspapers of full-rage advertisements written by Ben Hecht for the
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Palestine Resistance Fund, which linked an appeal for contributions with
Implied approval of armed resistance against the mandatory Government
of Palestine.
The UK has several times called the attention of the US State
Department to advertisements in a similar vein carrying the added in-
ducement to contributors that "by ruling of the Treasury Department
contributions are tax exempt," thus indicating that the organizations
solicitating funds were charitable or educational in character. The
British maintained that, as the funds contributed were used for the
strengthening of terrorist forces and the encouragement of illegal im-
migration, the description was hardly appropriate and, in effect, placed
O a premium on contributions intended to incite insurrection against a
friendly government. The British likewise have pointed to the charter-
ing, manning, and dispatching from American ports of ships to be used
in illegal immigrant traffic to Palestine as a further embarrassment to
Anglo-American relations. To these observations the State Department
has pointed out that the US Government cannot stop the publication of
such advertisements, that the question of tax exemption is a complicated
legal one now under consideration, and that no legal authority exists for
preventing the sale and departure of the ships in question.
It would be difficult to deny in open debate before the UN that the
US has been the financial base for concerted hostile action against the
Government of Palestine, and that such action has led to the assassination
of British and Palestinian officials. The UN General Assembly might re-
gard the following resolution of the Council of the League of Nations as a
precedent: " . . . it is the duty of every State neither to encourage nor
tolerate on its territory any terrorist activity with a political purpose;
that every State must do all in its power to prevent and repress acts of
this nature and must for this purpose lend its assistance to Governments
which request it. . .."
If the Hecht incident should be laid before the UN in accordance
with the Charter as a "situation" or "dispute," the USSR or other Powers
interested in stirring up trouble between the US and UK might advocate a
rebuke to the US in the form of a UN resolution. Furthermore, one of the
Arab League States (of which there are five members in UN) might dis-
cover in this situation an opportunity to discredit Zionism in the US by
attempting to embarrass the US in the forum of the General Assembly.
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WESTERN EUROPE
12Lems_c_t_s for Survival of the Ramadier Cabinet
The continued survival of the Ramadier Government depends to
a large degree on its ability to raise the bread ration within the next few
eeks. Ramadier has acquired great prestige by his strong stand against
the Communist ministers in the recent Cabinet crisis and by his incisive
attempts to deal with the economic crisis. There is probably a sincere
desire on the part of the majority of the French people to make this Gov-
ernment ork. It is threatened, however, by Communist sabotage and ex-
ploitation of genuine distress and by serious disagreement between the
Socialists and the Leftist Rally (RGR).
The new Centrist Government is on trial before a nation whose
morale is at a low ebb. The critical period in regard to grain supplies
will not be over until July, when the 1947 crop will begin to appear on the
market. Meanwhile, the Communists are stepping up the tempo of their
drive to sabotage not only the food program but also the Government's
industrial and commercial policies. Although Communists have officially
discounted as "idiotic" the idea of a general strike and have even ex-
pressed the Intention of supporting the Government, their official news-
paper carries a daily box-score, listing increases won by "spontaneous"
workers* demands for increased wages. The champions of labor are now
also sponsoring the cause of the "forgotten man" -- the small business-
man, artisan, and salaried worker -- against economic controls and bu-
reaucratic red tape.
This propaganda against a controlled economy has found a ready
response among members of the RCR, who have begun to show signs of
refusing to collaborate with the Socialists. It would seem premature,
however, for the RGR to venture at this time to break with the Govern-
ment over the question of economic controls while the Communist Party
remains strong enough to take advantage of such a crisis to return to
power. Having obtained some success with the propaganda directed
toward the small businessman, the Communists are attempting to win
support from the peasants by attacking as "useless and dangerous re-
pressions" the Government's strong measures to collect hoarded wheat.
In spite of increased payments for promptly-delivered wheat and a highly-
geared propaganda campaign to induce grain producers to disgorge, the
Government will probably not succeed in collecting before July the 400,000
tons of wheat now being held in the expectation of still higher prices.
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EASTERN EUROPE
Soviet Concept of Sovereignty
? Indications that Soviet diplomacy has renounced international
cooperation, except on its own terms, are apparent from declarations
emanating recently from a legal adviser of the Soviet Foreign Office
and repeated in part in Gromyko's speech before the American-Russian
Institute. The Soviet concept of sovereignty, as enunciated in these decla-
rations, points to further ideological isolation from the West and serves
as a guide for Soviet diplomacy.
Western efforts to establish a workable system of international
cooperation, such as th se outlined in the Baruch plan and in Bevin's
proposal to transform the UN into a "World Parliament," were charac-
terized by the Soviet adviser as "systematic attacks on the principle of
sovereignty, that is; of genuine independe ce of states in their domestic
and foreign policy.' The Soviet state, he added, opposes this expansion-
ist philosophy and defines "sovereignty under modern conditions . . as
a legal and international-political barrier in defense against imperial-
istic encroachment and in providing opportunity to construct the most
progressive public and state forms -- Socialist and Peoples Democrat;
It serves as a guarantee of freedom of oppressed peoples of colonial and
dependent countries from the imperialist yoke." The spokesman noted
that while Anglo-American efforts to "parliamentarize the UN and in-
ternational conferences might have been regarded as progressive fifty
or a hundred years ago, they can only be considered today as "profoundly
reactionary" and as attempts on the sovereignty of the Soviet and other
"progressive" states. Western principles of "freedom of trade" and
"equal opportunities" were also discounted as mere legal camouflage
for the economic penetration of states weakened by war.
Disintegration of Rumania's Economy
The continuing rapid disintegration of the Rumanian economy is
largely the result of threatened crop failures and of excessive Soviet de-
mands.- The USSR and the Groza Government must, therefore, rely in-
creasingly on force to maintain control in the face of inevitable unrest,
disorder, and starvation.
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"he USSR is not expected to take steps to alleviate these con-
ditions 'rhich, within the next few months, may mean economic catastro-
phe for the Rumanian people. The USSR has not relaxed its demands for
reparations or food to supply Soviet occupation troops, and Rumanian
Communists are tighte ing their control of the Rumanian economy. Al-
ready strictly regulated by the Communist-dominated Ministry of Nation-
al Economy, Rumanian industry and private enterprise will be further
restricted by legislation which Parliament is expected to pass within the
next few weeks. In order to quell any possible resistance to these econom-
ic controls, the C-overnment within the past two months has arrested an
estimated 2,000 members of the Opposition. In addition, an armed under-
ground organization, scheduled to reach a strength of 40,000 local Com-
munists and Soviet civilians (expressly imported for the purpose), already
has approximately 25,000 members equipped with weapons supplied by
Soviet occupation forces.
, The adoption by the USSR of such severe measures at this time
may indicate that the Kremlin originally miscalculated: (I) Rumania's
productive capacity; (2) the extent to which recovery depended upon the
II/ import of machinery and raw materials from the West; and (3) the strength
of anti-Communist forces. The serious consequences of these miscalcu-
lations to the Rumanian economy have been aggravated by the prospect of
a third, successive crop failure (early estimates indicate that a combina-
tion of frost and drought may have destroyed as much as 50% to 75% of
the cereal crops in Rumania's most productive regions).
Despite these developments, the USSR ? instead of reversing its
repressive policy in order to win popular support -- has taken advantage
of the prevailing economic chaos to complete the Communist stranglehold
on every phase of the economy. Because the USSR probably cannot afford
at this time to provide Rumania with the food, raw materials, and machinery
needed now for its recovery, the Communists will almost certainly continue
to subjugate the Rumanian people by force (even at the expense of short
term economic returns) in order to avoid jeopardizing Soviet strategic
designs on Southeastern Europe.
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Sc.:2ialist-Commtmist S lit in Poland
In the first open break with the Communists since the Moscow-
dictated rapprochement in November 1946, the Socialists have publicly
criticized the plan of the Communists to check the inflationary trend.
The Socialists consider this plan a threat both to their continuance as
an independent Party and to their influence in the present coalition Gov-
ernment. The Communist plan would, in addition, vastly increase that
Party's control over the nation's economy by further reducing spheres
open to private enterprise and by substituting a governmental agency --
presumably under Communist control -- for the Socialist-dominated
national cooperative, the nation's largest agricultural marketing agency.
Socialist-Communist tension has been further augmented by Communist
Vice-Premier Gomulka's May Day speech which called for the "organic
union of both Parties into one."
Although the Socialists and Communists have been reluctant to
air their disagreements in public, the Communists may fear that the
truce is now working to their detriment and that only drastic action can
prevent new gains by the Socialists. Following the Communistic pattern
In Rumania, Bulgaria, and Hungary, Polish Communists may be using the
inflationary issue and its attendant unrest as a pretext to extend Soviet
control throughout the Polish national economy. The Communist plan has
confronted the Socialists with a difficult choice. By opposing it, the Social-
ists run the risk of being accused of obstructing economic recovery,
whereas they will in effect sign their Party's death warrant, if they support
the Communist proposal. Disagreement over this issue, however/ is not
likely to cause any immediate radical changes in the composition of the
present Government. Regardless of the extent of their victory on this
issue, the Communists can be expected to increase their efforts both to
extend their economic control and -- now that the issues have been de-
lineated -- to undermine the strength of the Socialist Party.
Soviet Economic Offensive in Hungary
The USSR and the Communist Party have begun an intensive eco-
nomic offensive intended: (1) to ensure Communist and Soviet domination
of the Hungarian economy; (2) to erect further barriers to the resumption
of trade with the West after the peace treaty is ratified; and (3) to create
a political crisis from which the Communists hope to benefit.
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Despite an inter-party agreement to limit nationalization to under-
ground resources and electric power, the Communists are now demanding
that the Smallholders' Party agree to nationalization of the country's lead-
ing banks. The USSR, meanwhile, is attempting to reinforce its economic
controls: (a) by demanding that an estimated $200,000,000 -- represent-
ing all former Hungarian obligations to Germany -- be paid as repara-
tions to the USSR, possibly in the form of shares in Hungarian industry;
(2) by insisting on the immediate repayment of three Soviet "loans,' to-
talling approximately $3,000,000 -- in 1945 the USSR seized $3,000,000
of currency from the Hungarian banks and "lent" the money to the Hun-
garian Government; (3) by requesting control of the Hungarian Credit
Bank, which owns or controls 40% of Hungarian industry -- the Soviets
already have an 18% ownership in the bank in the form of pre-war French
shares appropriated from the Germans as reparations; and (4) by demand-
ing revision of the Hungarian-Soviet trade agreement in order to give the
USSR a larger share of Hungary's foreign trade.
The Moderates in the Hungarian Government will stubbornly re-
sist the Soviet offensive, confident that the Communists will not publicly.
support Soviet demands for payments which would spell financial ruin to
? the nation. The Hungarian Economic Mission, currently in Moscow, may
succeed, therefore, in delaying settlement of the Soviet demands until
after the Treaty is ratified, when the Hungarian Government hopes that
It will be able to exercise greater independence vis-a-vis the USSR, par-
ticularly through membership in the UN.
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Settlement of Soviet Nationals in Eastern Euro ean Areas
One Kremlin method of ensuring continued control over Eastern
Europe apparently involves extensive colonization by Soviet citizens of
certain politically str tegic areas. A substantial number of Soviet fam-
ilies are being settled in eastern Germany and Austria, along the Black
Sea Coast of Rumania, and in Bulgaria.
I Germany an estimated 300,000 Soviet nationals are being dis-
persed through the Polish-administered territories of Pomerania and
Silesia. In Austria the settlers generally have occupied the farms along
the Austro-Hungarian border; in Rumania and Bulgaria settlement has
taken place principally in The coastal areas. Soviet nationals now con-
stitute approximately half of Constanza's population of 100,000; in Bul-
garia they ,.n9w reportedly number 65,000 and may e entually total 200,000.
Especially significant is the geographic pattern which the coloni-
zation is following. In Germany and Austria the effect has been the es-
tablishment of an ideologically and ethnically solid population-barrier
against the West. The settlements in Austria, moreover, form a Slavic
corridor connecting the Slavic peoples of Czechoslovakia and Yugoslavia
and separating the non-Slavic inhabitants of Austria and Hungary. In
Rumania and Bulgaria, a bridge of Soviet nationals is being built in the
direction of the Turkish Straits, serving at the same time to cut off the
natives of those countries from access to the Black Sea.
In addition to their more or less passive function of serving the
Kremlin as ethnic barriers and bridges in vital areas, these settlers are
in a position actively to promote Soviet purposes: (1) by joining with
local communists in the formation of pro-Soviet underground organiza-
tions -- such organizations are already in existence in Austria and
Rumania and are being armed and equipped by Soviet occupation com-
manders; (2) by forming political pressure groups which would seek to
persuade local governments to follow pro-Soviet policies or would de-
mand "plebiscites" either on "independence" or on incorporation of
their areas into the USSR; (3) by creating "incidents" which would serve
as pretexts for armed Soviet intervention in the "protection" of Soviet
nationals.
? Whatever their immediate function, the settlers will constitute
a continuing source of concern to the governments of the countries in
which they reside and a potent pretext for Soviet pressure on those gov-
ernments.
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NEAR EAST-AFRICA
Factors Endangering the Viceroy's Proposals
Despite reports that both the Moslem League and the Congress
Party have indicated agreem nt with the Viceroy's proposals (scheduled
to be announced on 2 Ju e) for the transfer of ':ritish authority in India,
at least two factors may prevent their final acceptance by the opposing
parties: Gandhi's Influence and Moslem obstruction.
Although t. e exact terms of the proposals are ntt known, it is?
understood that they provide for a procedure whereby authority may be
transferred to two political entities: (1) reas of India rhlch desire in-
clusion in the Union of India to be created by the llidu.dominated Con-
stituent Assembly; and (2) Moslem areas unwilling to join the proposed
Union.
Acceptance of the proposals by the Congress Party, as by the
League, is thus far tentative. Gandhi, ho is not a Congress member
but who, as patron saint of the organization, is often able to sway the
Party to his point of vie , has apparently decided to oppose the creation
of a Moslem state in any form. If, as in many previous instances, his
influence prevails, there is little chance of a compromise solution of
India's problem in the iear future.
? The second factor involves the proposed division of the prov-
inces of Bengal and the Punjab. Although jinnah has appare tly consented
to the division of these provinces and the Viceroy's proposals envisage
the division of India into Moslem and n n-Moslem reas, the delineation
of these areas has not been fixed. Exclusion from Pakistan of all non-
Moslem areas (especially the city of Calcutta in Bengal) ould scarcely
provide what Dinah considers a 'viable" Pakistan; hence, he may at-
tempt to force a division hich ould be unacceptable to the Congress.
If the proposals prove unacceptable to the Co ress Party or to
the Moslem League, a ne crisis might result, with the more radical
elements of either or both sides successfully advocati .g direct action.
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FAR EAST
The US-USSR Toint Commission Reconvenes
The willingness of the USSR to reconvene the joint Commission
on terms which it had previously rejected seems to indicate that the
current stalemate in Korea is no longer working to the advantage of the
USSR. In agreeing to reopen negotiations on the execution of the Moscow
Decision, Molotov declared that the USSR was interested in participating
with the US in extending to all Korea the economic assistance which the
US has pledged to South Korea. The USSR may consequently intend to
reach an agreement with the US during the course of coming negotiations
in an effort to obtain the benefits of US economic aid. On the other hand,
it may again intend to exploit the joint Commission as a propaganda show
in order to place upon the US the blame for repeated failure in carrying
out the Moscow Decision. The deliberations of the next few weeks will
demonstrate which of these two attitudes the Soviets have adopted.
If the Soviet delegation chooses to quibble over the Commission's
mandate in reconvening, it can easily take advantage of the ambiguity
which underlies the Marshall-Molotov correspondence. The Commission
has resumed its session on the basis of General Chistiakov's offer of 26
November 1946, as interpreted in General lodge's letter of 24 December
1946. These terms, which had been previously rejected by the Soviets,
were accepted by Molotov as an alternative to Secretary Marshall's offer
of 2 May. General lodge's letter of 24 December made important con-
cessions to the Soviet insistence on restricting the participation of Kor-
ean parties in the future provisional government of Korea. As Secretary
Marshall's letter, on the contrary, proposed to remove all hindrances to
a free consultation, the Soviet reversion to General Hodge's letter may
Indicate a persistent fear of native Korean opposition, and an intention
again to block the implementation of the Moscow Decision.
In the meantime, however, Rhee Syngman"s rightist parties in
South Korea, by exploiting the intense Korean antagonism to "trusteeship,"
are unexpectably playing into the hands of the USSR and creating serious
difficulties for the US. They are threatening to boycott the Joint Commis-
sion and are accusing the US of Soviet leanings in consenting to the re-
convening of the joint Commission and in supporting trusteeship. They
have apparently come to prefer a separate government in the US Zone,
partly because of their genuine fear of the USSR and partly because of
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their realization that they will not retain in a national provisional gov-
ernment, set up under joint US-Soviet auspices, the dominant position
which they now enjoy in the native administration in South Korea.
The US faces a difficult task in attempting to mediate between
the Soviets and their Korean opponents. If the Joint Commission suc-
ceeds, the US will be accused of treachery by the rightists; if the Com-
mission fails, the US will almost certainly be blamed by the USSR for
the breakdown in negotiations. In the case of a breakdown, the USSR
might propose a joint withdrawal of the occupying powers from Korea,
thereby presenting the US with the alternative of remaining in South
Korea and facing the accusation that it is solely responsible for block-
ing Korean Independence, or of withdrawing and leaving Korea to the
mercy of-the strongly organized Communist minority and the Soviet-
trained native army of the northern zone.
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'
CONTENTS
48
TRENDS IN BIRIEF
GENERAL
Pages
- iv
UNESCO as Cover for Soviet Propaganda
1
WESTERN EUROPE
Top-ievel Changes in the UK Administration
of Germany
2 ,
UK Reluctance to Apply Sanctions to Franco
2
Prospects for a New Italian Cabinet
3
Potentialities of Possible Socialist Support
by the Vatican
4
EASTERN EUROPE
Recent Soviet Attacks on US Press and Radio
6
Greek Government Hesitant to Declare Amnesty. . ? .
. ?
6
Soviet Interest in VS-Rumanian Air Negotiations
7
FAR EAST
Mounting Inflationary Pressure in China
9
Restoration of Foreign Interests in NEI Delayed
9
THE AMERICAS.
Truman Doctrine Awakens Canada
10
Work Stoppage in Colombia
10
Document No.
NO CHANGE in Class. 0
IDECLASSIFIED
ass. C-'ANC:D TO: TS S C
DDA Memo, 4 Apr 77
Auth: DD -.'O. 77 1763
Date: iflBy:
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TRENDS IN BRIEF
GENERAL
Communist sympathizers in UNESCO are expected increasingly
to use that organization as a sounding board for Soviet propaganda (page I).
WESTERN EUROPE
Replacement ofcally_.) Lord Pakenham as chief of the UK
Control Office for Germany and Austria may increase economic coopera-
tion between the US and UK Zones in Germany (page 2).
The UK's reluctance port sanctions against Spain is pri-
marily based on a desire not to alienate Portugal and upon the British
need for certain Spanish imports (page 2).
Communist influence may be substantially reduced in the next
Italian Cabinet (page 3).
The current trend toward closer coo
# -
ration between the Socialist
and Catholic parties in western Europe, in an effort to combat Communism,
would be greatly strengthened by the implementation of a recent proposal
that the Catholic Church give its sanction to Socialism (page 4).
The possibility of including the French Army in the US-UK arms
standar_dizationrci ra been increased 'eased by the removal of the Com-
munists, especially Defense Minister Billoux, from the Ramadier Cabinet.
General Revers, Chief of the French Army's General Staff, indicated,
prior to the reorganization of the Ramadier Government, that he was in
full accord with such a program and that he was doing his utmost to have
It introduced in spite of Communist opposition.
EASTERN EUROPE
Soviet attacks on the reliability of the US press and radio apparent-
ly represent an effort to counteract the influence of the "Voice ofAmerica"
and to explain US popular hostility to the USSR (page 6).
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The Greek Government t to declare a new amnesty
to guerrillas and political prisoners (page 6).
Soviet interest in US-Rumanian air negotiations apparently
reflects the belief that an agreement can be of indirect benefit to the
USSR (page 7).
The USSR's Second State Loan for the reconstruction and de-
velopment of the Soviet national economy has, according to the Moscow
press, already been oversubscribed by 21. billion rubles. While Soviet
propagandists point to the oversubscription as proof of the people's
patriotism and faith in their government, speculators have been convicted
In Soviet courts of buying hundred-ruble loan certificates for 6 rubles
and selling them for 10 rubles.
A further lowering of real wages in the USSR is foreshadowed
by a series of directives recently issued by the All Union Central Coun-
cil of Trade Unions. While the directives purportedly seek to "plromote
the productivity of labor," they entail substantial increases in piece-
work norms, thus adversely affecting the earnings of the great majority
of Soviet industrial workers.
Stalin's role as a military genius was the keyhote of the Soviet
Victory Day celebration. Military concepts of defense-in-depth, organized
retreat, and counteroffensive as advanced by Stalin were presented as
contributions to the basic philosophy of the USSR, comparable to the
political-economic contributions of Marx and Lenin.
FAR EAST
The weakness of the Chinese Government's fiscal position under
conditions of intensified military activity has been further indicated by
an upward revision of the 1947 budget (page 9).
Re-establishment of foreign commercial interests in the Nether-
lands East Indies will apparently be delayed for some time, pending
completion of negotiations between the Dutch and the Republic and sub-
sequently between foreign owners and the Indonesian Federation of
Labor (page 9).
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The eNetherlads East outside the
Indio esian Republic has been strengthened by the establis bent on
12 May of the pr -Dutch autonomous state of West Borneo, headed by
the Sultan of Pontia ak. West orneo will cooperate in the establishment
of the U ited States of Ind nesia (UST) but will retain management of its
own affairs. Eve ttual affiliation with the pro-Republic areas of East
and Sc th Borneo is envisioned in order to form a federated state of
Borneo, within the USI.
ilssatuffsi_. fi,oxn Ho chi AuBh is reported to be in the hands
of a French representative who was sent from south Indochina to anoi
to sound out Vietnam views regarding an armistice and possible bases
for future negotiations. This development is the first concrete step in
renewing direct French-Vietnam contacts and represents s stantial
pr gress toward a cessation of the costly fighting in Indochina.
The US decision to initiate unilaterall d stribution of a nese
repara ions, as em?,4,4 d in its interim directive to SCAP calling for
advance transfers, has stimulated e members of the Far Eastern Com-
mission to present their individual reparations claims. These claims,
submitted on 12 May by all members except Australia, are as follows:
Canada, 11:%; China, 40%; France, 12%; India, 18%; Netherlands, 15%;
New Zealand, 2%; Philippines, 15%; USSR, 14%; UK, 25%; US, 34%:
total, 176*%. No Australian claim was presented as the Australian
Government has reversed its previous position and now maintains that
the Commission has no authority to allocate reparations. In order to
provide a realistic basis for negotiation, the United States has urged
each mem rr to suggest a schedule of shares for the other members,
but few members of the Com ission have indicated a willingness to do
so. Unless such schedules are forthcoming, therefore, the Commission
again will have failed to make any progress toward a definitive settle-
ment of the reparations problem.
1
? THE AMERICAS
ArecoEnjoothe Truman Doctrine has
shifted Canadian attention from domestic matters to the international
situation and will probably lead to broader Canadian cooperation with
US and Commonwealth defense plans (page 10).
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h the Communist-Instigated work sthppge in Colombia
was quickly ended by Government countermeasures, President Osphia
still faces the difficult problem of satisfying the demands of labor and
the requirements of US oil companies (page 10).
The PeronistaAls_lespite dissension within their ranks have
emerged from the recent provincial elections in Argentina without loss
of strength. In Mendoza Province they polled more votes than all other
parties combined. In Catamarca Province, where the conservatives
either did not present strong candidates or abstained from voting, the
Peronistas scored an easy victory (in the Chumbicha department of
Catamarca Province, the Peronista vote was about 3 to 1.). In Jujuy
Province the Peronistas polled about three-fourths of the votes cast.
Only in Corrientes Province did the election results offer any encourage-
ment to those who would like to see Peron out of power; but, even there,
the record shows that many Peronistas deliberately stayed away from
the polls and made no concerted effort to prevent a clean sweep by the
opposition (Peron lost in Corrientes in the 1946 general election).
4genttha and the US have signed a civil air agreement in con-
formity with US freedom-of-the-air principles. At one time it appeared
that negotiations were about to break down, but direct intervention by
President Peron (at the request of Ambassador Messersmith) caused
the Argentine negotiators to abandon their restrictive views. The new
agreement is a major victory for US civil air policy, both because of
the issues it settles between the US and Argentina and because several
Latin American countries have been waiting to see what position Argen-
tina would take before coming to terms with the US. A few days after
the conclusion of this agreement, a similar civil air agreement was
signed between the US and Chile. Although Argentina has reversed its
previous position in order to meet US wishes, Argentina air officials
clearly have not changed their minds on the points in dispute, and there
Is evidence that they resent the pressure put on them by President
Peron.
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GENERAL
UNESCO as Cover for Soviet Propaganda
The USSR for some time has been taking an active interest in
the United Nations Educational Scientific and Cultural Organization
(UNESCO) as a cloak for its propaganda (see Weekly Summary of 28
February, page 1).
? Despite the fact that the USSR has refused to join UNESCO, the
strong nucleus of Communist sympathizers in this organization is at-
tempting to use It to an increasing extent as a sounding board for Soviet
propaganda. UNESCO has agreed to participate in a conference (arranged
by a well-known Communist) of the International Organization of Journa-
lists to be held in June in Prague, at which the Communists reportedly
plan to attack the press and radio of the US as creatures of "big busi-
ness" and "not free as in the classless Soviet Union." Prague is also
to be the site of a Youth Festival, promoted by the Communist-dominated
World Federation of Democratic Youth, to which Julian Huxley, Director-
General of UNESCO, is reported to have given assurances of support.
Finally, at the UNESCO conference in Mexico City next November, the
USSR apparently plans to use the World Federation of Trade Unions, an
unofficial affiliate of UNESCO, as the channel through which to launch
attacks against the American Federation of Labor and US foreign policy.
These examples may be taken as further indications of a Soviet
design to turn UNESCO into a leftist political forum.
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WESTERN EUROPE
Top-level Changes in the UK Administration of Germany
The replacement of Hynd by Lord Pakenham as chief of the UK
- Control Office for Germany and Austria and the subordination of that
office to the Foreign Office (Bevin) may facilitate the economic integra-
tion of the US and UK Zones in Germany. Outwardly, the moves reflect
very belated reaction by the Government to widespread and severe
criticism from all UK factions of the inefficiency and high costs of its
administration of Germany.
Hynd, a somewhat doctrinaire Socialist, is noted neither for his
ability nor for his friendliness to the US. His successor is a right-wing
Laborite intellectual, a Sevin supporter, and a convert to Roman
Catholicism. As Undersecretary for War since the Labor Government
came to power, Pakenham has demonstrated marked ability. He is in-
clined to be friendly to the US. It is likely, too, that Catholic influence
on UK policy toward Germany will increase (Pakenham has been a leader
in the international activities of the Catholic church). The change may
? also result in decreasing support by the UK of the Social Democratic
(Socialist) Party and doctrinaire measures in Germany and in correspond-
ing increase of support for the Christian Democratic Union (moderate
Catholic).
?
UK Reluctance to Apply Sanctions to Franco
The UK Government is not expected to yield to strong pressure
from the British labor movement to seek the application of economic
sanctions against Spain in order to unseat Franco. Instead it will at-
tempt to forestall any such action by the UN. The UK position is based
upon a conviction that Portugal would refuse to participate in applying
such sanctions, and upon British dependence on certain Spanish imports,
as well as upon Britain's declared reluctance to impose hardships on
the Spanish people.
Effective sanctions against Spain, the UK Government believes,
would require a naval patrol of all Iberian ports and hence sanctions
against Portugal as well. The traditionally excellent UK-Portuguese
relations would then deteriorate, and the strategic benefits of the Portu-
guese Azores to the UK (and US) would be jeopardized.
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Another important British consideration relates to internal UK
economy, and consequent repercussions on western European countries.
Spain is the principal source of iron pyrites for the UK. Elimination of
this import would mean lower steel production and higher coal consump-
tion in the UK, because available substitute ores are lower grade. As a
result, the UK contends that it would probably be compelled to seek more
steel from abroad and substantial allocations of coal from the European
Coal Organization -- to the detriment of other European countries. (This
argument obviously rests on the thesis, disputed in some quarters, that
economic sanctions would be required over a considerable period to de-
pose Franco.)
? Prospects for a New Italian Cabinet
The possibility of excluding the Communists in the formation of
a new Italian Government depends primarily upon the ability of the non-
Communist parties?except for the extreme Right--to lay aside their
traditional discord in the face of a common danger. Premier De Gasperes
resignation was probably influenced by the growing demand in Italy for
a coalition without the Communists that could deal effectively with the
serious financial and economic problems of the country. The exclusion
of the Communists from the Government in France and the intensified
Italian desire to obtain foreign economic aid have provided further stim-
uli 63 this demand. Italians of all political parties, including the Commu-
nists, appear to have interpreted the recent approval by the International
Bank of a loan for the Ramadier Government as a clear application of
the Truman Doctrine to western Europe.
In view of the timidity and caution which De Gasperi has displayed
in tie past when dealing with the Communists, he may be unable to form
a new Government. Furthermore, the elimination of the Communists
from the Government in Italy?or even a reduction in their representation--
will be more difficult than it was in France because of the close-working
agreement between the Italian Communists and the larger of the two So-
cialist parties (the Nenni Socialists).
The Premier of a Cabinet with no Communist representation would
face, as in France, two major difficulties: the powerful weapon of general
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strikes wielded by Communist-dominated labor, and lack of unity among
the non-Communist parties. The appeal of a common anti-Communist
cause and the desire for application of the Truman Doctrine to Italy
may prove strong enough at least to produce a Government in which
Communist influence will be substantially reduced. In that event, ex-
pert financial leadership and substantial foreign assistance would go
far toward restoring public confidence in the Government.
Potentialities of Possible Socialist Support by the Vatican
The threat of Communism in France and Italy is inducing in-
creasingly close cooperation among the non-Communist parties (except
the extreme Right) who have more in common with each other than with
the extreme Left. Even in Belgium, where Communist strength has
never been a threat to the principal parties, a gradual rapprochement
is taking place between the Socialists and the Catholic Party (counter-
part to the French MRP), probably as a reaction to the growing strength
of Communism in France and Italy.
In general, the two strongest parties in the non-Communist
groupings in all three countries are the Socialist and the Catholic par-
ties. One of the major obstacles to close collaboration between these
parties has been the opposition of the Catholic Church to Socialism.
If the Catholic Church should reverse its traditional position and give
Its sanction to Socialism, the prospects for the formation of a cohesive
liberal movement in western Europe, capable of resisting both Commu-
nism and a rightist reaction, would be greatly enhanced.
A recent report suggests that, under Belgian auspices, an attempt
may be made to accomplish this reversal of the Papal position. The
Papal Nuncio to Belgium reportedly has suggested to the Prince Regent
that Socialist Premier Spaak go to Rome to discuss with the Pope the
possibility of obtaining a Papal pronouncement that "Socialism is one
form of the political expression of Christian principles."
Such a pronouncement would fall upon fertile ground. In Italy, the
Saragat wing of the Socialist Party has definitely rejected the policies and
tactics of both the Communists and Nennes fusionist Socialists. Attempts
are being made to unite the Catholic Labor Associations and the Saragat
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Socialists' labor units in a common front against the Commtnist domina-
tion of Italian labor unions. Saragat has recently reversed Ms previous
stand against cooperation with De Gasperi's Christian Democrats and
is now willing to share with De GaSperi a "broadened" coalition govern-
ment that would exclude the Communists.
A Papal pronouncement on Socialism would probably have its
most important effects in France, where the non-Communist coalition
is undergoing a test that may decide the future of Communism in west-
ern Europe. Premier Ramadier and the Socialist leader Leon Blum
have emerged with added stature as a result of their forthright dis-
missal of Communist Ministers. The Socialist syndicalists and the CFTC
(French Confederation of Christi= Workers) have been making progress
In combatting the Communist control of labor. While the key to the suc-
cess of the new Government lies primarily in the economic field, the
elimination of a major barrier to close cooperation between the Social-
ist and Catholic movements would be an added source of strength to
the liberal anti-Communist forces in France as well as throughout the
rest of western Europe.
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EASTERN EUROPE
Recent Soviet Attacks on US Press and Radio
Increasing Soviet concern over the penetration of the "Iron
Curtain" by Western ideas and information has been indicated by a
series of recent attack's designed to discredit the US press and radio.
These attacks have taken the form of: (1) a new, widely-produced
play entitled "The Russian Question" which has as its theme the
perfidy" of the American capitalist press; (2) vitriolic attacks by
Ehrenburg and others on American broadcasting which is likened to
the "misinformation put out by Goebbels"; and (3) various articles
and broadcasts on the unreliability of American reporting.
These current attacks are believed to result from a desire to
counteract the influence of the "Voice of America" and the US maga-
zine AMERIKA; and to convince the Soviet people, who may well be
perplexed by the hostility aroused in the US by current SoViet foreign
policy, that this hostility is due primarily to the capitalist-dominated
US press.
Greek Government Hesitant jciRecla_a.e ALang?_q
The Greek Government has reacted unfavorably to the US sug-
gestion that a new amnesty be offered to guerrillas and political prison-
ers. The suggestion was made not only on humanitarian grounds but also
in the belief that declaration of a new amnesty would forestall condem-
nation of the present Government in the UN. The only valid objection
presented by the Greeks is that a step of such political import would be
dangerous unless some assurance is given them that Soviet satellite aid
to the guerrillas will be terminated.
The Greek Government's hesitancy may also be attributed to in-
ternal politics. Two amnesty laws (offered in a half-hearted manner by
the Government in November 1946 and February 1947) were Ineffectual
because the confirmed Communists were too well-disciplined to accept
the amnesty and believed in ultimate victory, and because both Com-
munists and non-Communist guerrillas distrusted the Government's
guarantee of protection. Reports of the harsh treatment meted out to
the few guerrillas who did surrender indicate that this distrust was
justified.
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new governm ',Mal amnesty would probably be equally ineffectual, as
the Communist are still adamant and the non-Communists are even
more fearful of reprisals, not only from the rightists but from the
leftists as well. In the present ruthless fighting, moreover, where no
quarter is given or expected, the Left would Consider an amnesty offer
to be a sign of governmental weakness.
An internationally-controlled amnesty, such as the Investigating
Commission will probably recommend, might encourage some guerrillas
to surrender; but an international commission would hardly be able to
insure the ultimate safety and rehabilitation of the "amnestees." This
matter would have to rest with the Greek Government, which is becoming
more and more vindictive and also considers that international super-
vision would represent an infringement of its sovereignty. At one time
moderate elements in the Government were willing to compromise with
the Left in an effort to end civil strife. Now, however, they feel more
secure with the promise of US aid, and have joined the Right in talking
of settling the guerrilla problem "dynamically" (by liquidation) rather
? than by amnesty.
Unless some form of amnesty can lie designed which will also
control the passions and hatreds fed by three years of violence, thousands
of Greeks will be forced to remain in the mountains or to flee the country.
Soviet Interest in US-Rumanian Air Negotiations
The recently disclosed purchase by Yugoslavia of US surplus
DC-3 transport aircraft through a Canadian operator probably indicates
that the USSR is now willing to permit its satellites to acquire badly
needed equipment from the West, despite the attendant drain on their
stringent hard currency positions (see Weekly Summary of 2 May, pages
7 and 8). Additional confirmation of a change in Soviet policy may lie in
the remarkably sanguine attitude of Rumanian officials at the outset of
the US-Rumanian negotiations for an air agreement. Foreign Minister
Tatarescu, for example, has asserted that he would "dissipate" any op-
position to the negotiations from "special interests." This assertion
was probably designed to convey the impression that he would override
any obstructive tactics even by Communist elements in the Rumanian
Government.
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The Rumanians may be expected to conceal Soviet control of their
policy and to minimize the extent of Soviet domination of Rumanian
air operations.
Tatarescu undoubtedly would not seriously express hopes of
concluding an air agreement without knowledge of the Soviet attitude.
The USSR may therefore be weighing pertain advantages which it might
derive from a US-Rumanian air agreement The USSR probably fears
that it cannot obtain modern US equipment without granting to the US
landing rights in the USSR; it may therefore hope to obtain such equip-
ment and other benefits indirectly through a US-Rumanian air agreement.
While the USSR has probably not committed itself fully to the Rumanians
regarding the agreement, it will in any case expect to learn the cheapest
price at which Rumania can obtain full US cooperation in civil air mat-
ters. Even if the USSR has approved an air agreement in principle, the
Rumanians will doubtless be required to hold out stubbornly for maximum
US concessions in return for severely circumscribed aceess to Rumania
for civil aircraft.
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FAR EAST
Mounting Inflationary Pressure in China
The Chinese Finance Minister's recent announcement that the
Central Government Would have to revise its 1947 national budget up-
ward to an expenditure level of CN$ 20 trillion, with an attendant
deficit estimated at CN$ 10 trillion, represents a new public admission
of the fundamental weakness of the Government's fiscal position under
conditions of intensified military activity. During the past two weeks,
fast-rising prices in Shan hai and many other Chinese cities p accompa-
nied by severe rice shortages resulting in part from the diversion of
rice stocks to the Army, have led to a wave of rice riots, public clamor
for higher wages, and threats of a general strike in Shanghai. The Gov-
ernment has finally voted to increase the pay of all governmental and
military personnel, and it has agreed that workers' wage-scales should
be unfrozen and tied to the cost-of-living index, thus setting the stage
for a new, and perhaps unprecedented, inflationary spiral.
I
Restoration of Forel. Interests in NEI Delayed
Re-establishment of foreign commercial interests in Republic
territory is impeded at present by dilatory tactics of the Indonesian
delegation in negotiations with the Dutch. Members of the Republic
Government are unable to agree on economic policies, and on the de-
gree of cooperation to be accorded the Dutch. The restoration of foreign
properties to their former owners, provided for in Article 14 of the
Linggadjati Agreeynent, has been undertaken in only one known case. In
this instance, British personnel of a British textile factory have returned
as technical advisers only, and the control of the factory remains in the
hands of the Indonesian Federation of Labor. Dutch entrepreneurs will?
not agree to this form of restoration and will offer determined resistance
to Republican efforts to dominate the management of foreign-owned prop-
erties. Moreover, even if a basic economic agreement is reached be-
tween the Republic and the Netherlands, protracted and bitter negotiations
between foreign owners and the inexperienced, nationalistic Indonesian
labor union are in prospect.
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'THE AMERICAS
Truman Doctrine Aiwaliens Cana@
A recognition of the implications of the Truman Doctrine has
substantially reduced Canadian preoccupation with purely domestic
affairs, directed their attention to the international situation, anid has
brought home to the Tory, Empire-minded, anti-American "governing
class". the fad that they can no longer rely on the UK to defend the Com-
monWealth.
Public and official reaction to the enunciation of the Truman Doc-
trine indicates greater concern with national and Commonwealth defense
and a marked change in attitude toward Communism (to which many
Canadians had been apathetic).
These changes in attitude are expected to result in closer co-
operation with the US in Arctic defense plans, heightened anti-Communist
reeling, increased political orientation toward the US, and acceptance of a
greater share in Commonwealth oefense plans.
Work Stoppage in Colombia
Although the 23-hour general work stoppage in Colombia on 14
May was only partially effective because of firm Government counter-
measures, President ?spina still must solve the problem of satisfying
the demands of labor without causing US oil companies to abandon their
Colombian concessions.
Evidence of the gravity of the situation prior to the recent demon-
stration is provided by Ospina's preparations to flee the country, if neces-
sary, and a request for US transit visas from Soviet Minister Rexanov,
who, according to the President, had fomented the strikes and fanned the
discontent that led to the work stoppage. The demonstration was planned
and organized by the Communist-dominated executive committee of the
CTC (Colombian Federation of Labor) and was encouraged by Lombardo
Toleolano and his Latin America-wide trade union organization, the CTAL.
The avowed purpose of the strike was to protest against the Government's
failure to remedy the country's increasingly critical economic situation,
Including food shortages and rising prices.
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The abortive character of the 14 May stoppage does not mein that
the ?spina Government's labor difficulties are at an end. A Communist-
led strike against US controlled petroleum companies is scheduled for
22 May, and there is reason to believe that the left-wing Liberal follo ers
of Eliecer Gaitan -- despite the fact that they hold several portfolios in
the ?spina Government -- will support the strikers. Ospina is therefore
likely to find himself in a situation where strong resistance to the strikers'
demands will lose him his Gaitanist Ministers, while acquiescence in these
demands will reopen the troublesome question of possible withdrawal by
the US oil companies from the extensive concessions which they hold in
Colombia:
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? 47
CONTENTS
Pages
TRENDS IN BRIEF. . ?aonoon??asaana'aaoneeacoanosi". iv
WESTERN EUROPE
Decline in French Communist Prestige , 600000,00
1
EASTERN EUROPE
Indications of Changed Emphasis in Communist Strategy.
3
Draft Report of US Delegation to Ball= Commission. . .
4
!The Campaign Against the Guerrillas in Greece . . . . . .
5
(Proposed Solution for Greek Labor Problem. . . . ., .. . .
6
Soviet Neglect of Satellite Airlines . 0000000000 000 .
7
Yugoslav-Ford Contract Imminent . 0004000 000 0?0 .
8
FAR EAST
Soe?daneseImperllNEIAgreement.000.,..00005.9
THE AMERICAS
Brazil Acts Against Communists ,
0000 0004000 6 10
Document
Cii.ATIGE in Class. 0
DSCLASSIFItD
ass,. ClAO:D TO: TS
DDA Ilemo, 4 Apr 77
Auth: DD'77 763
Date: By:
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TRENDS IN BRIEF
WESTERN EUROPE
Decline of Commtmist prestige in France probably will prevent
the Communists from exploiting their departure from the Ramadier
Government by calling a general strike (page 1).
The recent hunger demonstrations and strikes in Vienna were
instigated by the Communists in order to test the resistance of the
Government and to force the Socialists into joint action with them on
the popular hunger issue. Communist leaders have doubtless been im-
pressed with their own strength and, if the food shortage continues,
may succeed in obtaining the support of the relatively small left-wing
of the Socialist Trade Union Federation in future strikes and demonstra-
tions.
Political tension in Algeria will probably increase between now
and 28 May when a new Algerian Organic Statute is scheduled for debate
in the French National Assembly.
The present French Government favors a plan which would
eventually change Algeria's status from that of a departmental division
of France to that of an "associated state." While the majority of French
colonists (approximately 1,000,000) and Moslems (approximately 7,700,000)
agree that drastic reforms are needed, the French proposal has been
heavily attacked both by the Algerian ultra-nationalists and by the most
conservative French colonials.
The present atmosphere of unrest in the ICabylie region of Al-
geria is not dissimilar to that which preceded the bloody outbreaks in
that region in May 1945. To prevent open conflict, the Government is
making a show of strength by patrolling this newest danger-spot with
tanks and armored cars. These arrangements will probably discourage,
for the immediate future, a full-scale insurrection. The Government has
seen fit, nevertheless, to designate an additional 5,000 troops in metro-
politan France for prompt movement by air and sea in the event of
trouble.
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EASTERN EUROPE
?
To combat the US ram of aid to Communist-threatened
countries and the competition of non-Communist rivoi ug-
class support, the Kremlin apparently is about to launch an offensive
to neutralize the influence of non-Communist liberals and to discredit
"capitalist attraction and deception of the masses"(page 3).
hjin1 report of the SC's Balkan Investigating C,021=1019....
is expected to condemn the actions of the satellite states and make
recommendations designed to terminate such actions. The Soviet and
Polish delegates probably will submit a minority report, and the USSR
may veto in the Sc any condemnation of Soviet satellites (page 4).
GjrriUa '._...eb....Groece is exmtecj to onti_nue until the
northern border of Greece is sealed or the guerrillas accept an effec-
tive amnesty (page 5).
New ?roe ssals for solvinct the Greek labor roblem have been
presented to the Greek Government by a joint group of UK and US labor
experts (page 6).
Failure of the USSR to furnish modernlarImik_nd otAtLmak-
ment to the Soviet satellite airlines has led the satellites to resent
Soviet domination and may lead them to seek limited commercial rela-
tions with the west (page 7).
A contem lated contract between the Yugoslav Government and
the Ford Motor Company suggests limited relaxation by the USSR of
its ban on commercial relations between its satellites and the US (page 8).
The Soviet food situation has continued to deteriorate since the
first of the year. Although bread rations are being fulfilled, the price
of bread in the open market has risen from 30 to about 50 rubles ($10.00)
per kilo. Despite food shortages caused by the drought, the Government's
reluctance to permit the slaughter of livestock, and the depletion of
left-over lend-lease supplies, the Soviet Union apparently is continuing
to stock-pile foodstuffs.
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FAR EAST
The rociamation on 4 May of dent Pasoedan Ratan e
In West Java indicates the -existence of disruptive elements within the
Indonesian Republic and will complicate the implementation of the
recently-signed Dutch-Indonesian Linggadjati Agreement (page 9).
The substantial majority secured bylk_ San's Anti-Fascist
League in the April elections for a Burmese Constituent Assembly
ensures the tai plementation of the London Agreement of January 1947,
which provides for Burma's independence. Of the total of 210 seats
In the Constituent Assembly, the League has secured 185, the Com-
=mists 7, and the Independents 12. The six seats, for which results
are not yet known, will probably be h id by League members.
China's new provincial administration of Taiwan (Formosa),
headed by Wei Tao-ming, is a dubious improvement over the earlier
monopolistic and repressive Taiwan regime of Governor-General -
Chen Yi. Governor Wei, whose appointment appears to ,have been
designed for US consumption (he was formerly Chinese Ambassador
to Washington), is believed to be a "weak sister" of little ability. Wei
will probably do no more than comply ith Kuomintang-dominated
Central Government policy, which appears to be directed thward con-
tinued political tutelage and economic subordination of the Tai anese.
Moreover, delay in removing Chen Yi from office provided him with
an opportunity to remove some of the most competent native leaders
from the local scene. Under the circumstances, the recent political
reorganization i Taiwan offers little promise of much-needed politi-
cal and economic reform for the island or of reducing the lonpstanding
mutual antagonis between Taiwanese and the "mainlanders.
THE AMERICAS
The recent decision to declare the Brazilian Communist Party
111(901 indicates that the Brazilian Government has given up its
attempt to curb Communism by means of persuasion and will now
rely upon police measures to prevent its growth (page 10).
?
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Present indications are that President Gonzalez Videla will
cease, per ps permanen y, co . f ra e w t e ommun st Party.
Factors which have led to this step include: (1) the reduced vote for
his Radical Party in the recent municipal elections (which observers
attribute in large part to its then-existing alliance with the Communists);
(2) differcnces between the President and the Communists on the farm
unionization bill (see Weekly Summary, 2 May); (3) Chiles mounting
economic difficulties; and finally (4) its need for foreign financial
assistance.
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WESTERN EUROPE
Decline in French Communist Prestige
Communist prestige among French workers in the past few
months has declined to such a degree that the Party will probably be
reluctant to advocate a general strike unless it feel reassured of
the support of a strong majority of French labor.,
A turning point in Communist ascendancy in France seems to
have-occurred at the beginning of the year during the six weeks of
Blum's premiership. The popular acclaim then accorded the Social-
ists' domestic program approached a degree of enthusiasm not wit-
nessed since Liberation days. By their participation in the succeed-
ing government the Communists were able to share in this popularity,
but they were also committed to the Government's policy of holding
the line on wages and exhorting the workers to greater production.
Hence, opposition to Communist control developed within the General
Confederation of Labor (CGT) as a result of discontent with working
conditions and the feeling that labor was being made to bear the bur-
den of France's rehabilitation. This discontent manifested itself in
wildcat strikes, refusal to pay dues, and an increase in the strength
of the rival French Confederation of Christian Workers (CFTC),
Although it had been believed that the Communists could count
on 75% of the rank-and-file of the CGT, Communist-supported CGT
candidates received a bare 50% of the votes in the nation-wide elec-
tions held two weeks ago for social security administrators, while
CFTC candidates received almost 30%. By espousing the wildcat
strike of 30,000 workers in the big Paris Renault plant, the Commu-
nists hoped to recoup their position as the leading champion of labor ,
and also to leave the Government on a popular domestic issue. How-
ever, this belated Communist maneuver will hardly be able to reverse
the recent downward trend in popular support. The present non-
Communist government will probably grant essentially what the
workers want, namely, increased wages based on increased produc-
tion, and thus deprive the Communists of an important issue on which
to re-establish their position.
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Premier Ramadier's decision to exclude the Communists from
his Cabinet is of particular interest in view of the much-publicized
policy of the Socialists, announced last year, that they would refuse to
serve in a Cabinet in which the Communists were not represented.
The decision probably reflects Socialist recognition of the continuing
anti-Communist trend and a hope that this reversal of policy will
have the acquiescence of French Labor. The Socialists subsequently
announced that their Party "would not lend itself to any anti-Commu-
nist coalition." This statement, however, was probably made to
satisfy left-wing elements in the Socialist Party, because any success
which the present, largely Socialist, Government may achieve will
clearly work to the disadvantage of the Communists.
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EASTERN EUROPE
Indications of Changed Emphasis in Communist Strategy
The Kremlin's concern over the present position of the Commu-
nist program abroad -- particularly in central and western Europe --
is reflected in a recent PRAVDA article commemorating the 30th
anniversary of Lenin's "April Theses." The article appears designed
as a guide to foreign Communist Parties in combatting the US program
of aid to countries threatened by Communism and the competition of
non-Communist liberals for working-class support -- considerations
which the Kremlin apparently believes are sapping the revolutionary
? strength of the proletariat.
The PRA'VDA article compares the current world situation with
conditions in Russia in April 1917, when the Revolution threatened to
terminate in a parliamentary democracy. Lenin, recognizing the numer-
ical weakness of the Bolsheviks, urged that open rupture with the
Provisional Government be avoided until the Bolsheviks achieved suf-
ficient power to overthrow the Government and replace it with the
Bolshevik-dominated Soviets (local councils). Instead Lenin urged
(1) a revitalization and consolidation of the Party; (2) an intensified
propaganda campaign against the Provisional Government and those
leftist elements which showed a tendency toward compromise; and (3)
Increased efforts to gain control of the Soviets through legitimate and
conspiratorial means. (Until that time, the Soviets were loosely-
organized leftist groups with mass support but without centralized lead-
ership.)
The current applicability of this strategy to central Europe --
where the Communists are delicately balanced between success and
failure -- is obvious. In accordance with Lenin's program and experi-
ence during the Russian Revolution, the Kremlin apparently proposes
for countries such as France and Italy; (1) intensive agitation against
their Present governments and against non-Communist liberals; and
(2) the development of highly-disciplined Communist cores which, at
the proper moment, could assume control. Such a program is well-
adapted to the current situation in France where, relieved of govern-
mental responsibility, the Communists are in a position to threaten (by
propaganda, subversion, and trade-union agitation) the stability of the
present Government. Where Communism is less powerful, the Kremlin
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desires to concentrate on gaining control of trade unions and other
liberal organizations. Current Soviet propaganda evidently envisages
the World Federation of Trade Unions as a primary vehicle of Soviet
ideological expansion.
The Politburo apparently has decided that the time has come
for an all-out offensive, aimed at capturing the leadership of the work-
ing class, neutralizing the influence of non-Communist liberals, and
discrediting "capitalist attraction and deception of the masses."
Draft Report of US Delegation to Balkan Commission
The US delegation to the Security Council's Balkan Investigating
Commission has drawn up a draft of conclusions and recommendations
on the basis of the Commission's investigation of Greek border diffi-
culties. The draft states unequivocally that Greece's northern neigh-
bors have been actively assisting Greek guerrillas. It concludes that
there is evidence of: (1) Yugoslav, Bulgarian, and Albanian aid to the
guerrillas in the form of supplies, military training, tralsportation,
and political indoctrination inimical to the Greek regime; (2) support
by the Bulgarian and Yugoslav Governments of a movement to detach
Macedonia and western Thrace from Greece; (3) persecution of Greek
political opposition groups and trade unions by the Greek Government,
the gendarmerie, and Rightist bands. On the other hand, the draft de-
clares that there is no evidence that Greece has encouraged the political
activities of Quislings against the northern neighbors, and it cites evi-
dence of political freedom as well as freedom of the press, of speech,
and of assembly in Greece.
The draft recommends that the Security Council should: (1) es-
tablish a permanent commission to act under Article 33 of the UN Char-
ter; (2) recommend that the four Governments concerned reach agree-
ments which will establish, machinery for effective border control; (3)
recommend that Greece, Bulgaria, and Yugoslavia initiate negotiations
with the object of developing free port facilities in Salonika; and (4)
recommend that Greece invite observation by an SC international body
of a new Greek amnesty for political prisoners and members of guerrilla
bands.
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The State Department objects to certain inconsistencies and
confusions in the draft report. Whatever the final form of the report,
it is probable that the majority of the Commission will support any
general conclusions which condemn the actions of the satellite states
as well as recommendations designed to terminate such actions. The
Soviet delegate, with Polish support, is expected to write a strong mi-
nority opinion on the entire report. Whether in the Security Council
the USSR will flagrantly disregard the mass of evidence collected by
the Commission and veto any condemnation of the Soviet satellites is
uncertain. The refusal of the satellites, however, to participate in, or
even to aid the operations of, a subsidiary SC commission now being
established in Salonika would appear to point to the probability of a
Soviet veto.
The Campaign Against the Guerrillas in Greece
Reports of Army operations against the guerrillas in Greece are
still indefinite and incomplete, but it is clear that in Central Greece,
where the main operations are taking place, the Army Ms been unable
to contain the elusive guerrillas despite territorial gains.
Several conclusions may be drawn from the general military
situation. The Army will not succeed in a speedy elimination of the guer-
rillas by military action alone; guerrilla casualties have been light and
surrenders negligible. Although the shift of guerrilla forces southward
to conceal their connection with the satellite states has probably weakened
their supply and communications systems, they are not yet faced with an
acute shortage of ammunition. Furthermore, with the departure of the
Security Council's Balkan Investigating Commission they can now re-
establish contact with the north and correct supply deficiencies -- unless
the Commission's projected subsidiary group can operate effectively.
It thus appears that guerrilla warfare, with the accompanying chaos,
drain on the government budget, and international ramifications, will
continue indefinitely until the northern border of Greece is sealed or un-
til the guerrillas can be persuaded to accept an effective, internationally-
supervised amnesty.
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Proposed Solution for Greek Labor Problem
US and UK labor experts, working jointly in Athens, have pre-
sented new proposals to the Greek Government and to Greek labor
representatives for the improvement of the labor situation in Greece.
These proposals, offered as a substitute for the Braine-Tsaldaris plan
(see Weekly Summary of 25 April, page 5), are designed to postpone
elections in the GCTU (General Confederation of Trade Unions) until
the stabilizing effect of US aid has become evident in Greece and to
prevent unfair elections or the formation of a Communist-dominated
provisional executive at this time.
The proposals provide for a court-appointed caretaker executive'
body which would: (I) examine the constitution and structure of the GCTU
with a view to overhauling the Confederation so that it will operate as
a trade union rather than as a political arena; (2) examine labor legis-
lation with the object of reducing governmental interference in the inter-
nal affairs of the trade union movement; (3) be assisted in its work by
International Trade Union experts; and (4) complete its report by 1 January
1948.
Theoretically, the plan is sound. Disagreement among courts,
government, and labor leaders, however, will probably prevent the
Immediate formation of an effective or representative provisional
executive. Barring some such strong step as the imposition of a US-UK
plan (as a condition of US aid) or an unlikely rapprochement between
Communist and non-Communist union leaders, improvement in the Greek
labor situation apparently will depend on --rather than aid in--the general
recovery of that country.
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Sovietpi ezlect of Satellite Airlines
Unless the USSR provides more effective technical and financial
assistance for the airlines of its European satellites, the only hope of
achieving modern standards of efficiency for these lines will lie in tech-
nical assistance from the west.
The Soviet objective with respect to satellite airlines was provi-
sionally satisfied by obtaining operational and policy control. Develop-
ment of these lines into modern air carriers, however, has been sacri-
ficed to the more pressing demands of internal Soviet airlines. As a
result, the satellite lines are the most primitive in Europe. This fact
now has assumed greater significance, in view of the new Soviet policy
which calls for expansion of satellite air activity into Western Europe.
These lines cannot compete in international markets unless they are
strengthened. Mazvolet (Soviet-controlled Hungarian airline), for example,
has received only four aircraft from the USSR. Its weak financial posi-
tion has forced it to suspend regular operations, except on one line.
In March 1947, the USSR reportedly assured the satellite, airlines
of priority over Soviet domestic needs with respect to aircraft and equip-
ment. These assurances, if given, have not yet been fulfilled. It is be-
lieved that internal Soviet airlines are being rapidly equipped with the
IL-12, a new transport, larger and faster than the DC-3 types with which
Soviet and satellite lines have been predominantly equipped. No IL-12's,
however, are known to have reached the satellite airlines.
The neglect of the satellite airlines by the USSR has inevitably
produced disappointment within the satellites themselves. The Rumanians
do not conceal their need for US air equipment of all types, and the Direc-
tor General of the Rumanian Civil Aviation Bureau has frankly asserted
that his Government resents Soviet domination of its air operations. While
this statement was probably tendentious, it may give a clue to Rumanian
thinking.
The obvious implication is that the satellites, realizing that their
most critical deficiencies cannot be eliminated by the USSR, hope that
the USSR will not block their efforts to initiate limited commercial rela-
tions with the west.
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..Y22 cg-Ford Contract Imminent
Despite Tito's oft-repeated intention of orienting the Yugoslav
economy wholly to the East, early signature is expected to a five-year
contract between the Egyptian subsidiary of the Ford Motor Company
and the Yugoslav Government. The contract stipulates that Yugo-
slavia will not import other US, British, or French automobiles, trucks,
tractors, and parts and will accept a minimum of 300 units annually.
Ford agrees to give earnest consideration to the construction of an
assembly plant at Fiume which would supply the entire Balkan area.
The terms of the agreement Indicate that Yugoslavia: (I) expects to
obtain little industrial equip e ent from Czechoslovakia or the USSR;
(2) is having great difficulty maintaining equipment received from
UNRRA; and (3) desperately needs transportation equipment in order
to complete the recently-announced two-year plan.
? The undoubted acquiescence of the USSR in the transaction sug-
gests that the USSR may be relaxing to a limited extent its ban on
commercial relations between the US and those Soviet satellites which
the Kremlin considers "safe." The USSR may sanction additional
agreements of this nature in the hope of obtaining, through its satellites,
western industrial equipment and techniques for eventual exploitation.
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FAR EAST
Soendanese Imperil NEI Agreement
The proclamation on 4 May of the independence of a Pasoendan
State in the Province of West Java by the pro-Dutch Soendanese Peoples
Party has added to the difficulties of implementing the recently-signed
Dutch-Indonesian (Linggadjati) Agreement. The Soendanese, an ethnic
group of from ten to twelve million, occupy the central and southern
portions of West Java and have long been hostile toward the Javanese to
the north and east. Late in 1946, this hostility led to the formation of
the Soendanese Peoples Party which has pressed for recognition of the
ethnic distinction of the Soendanese from the Javanese in the Indonesian
Republic.
-Late in April, the Soendanese Peoples Party, hich now claims a
membership of 250,000, asserted the right of the Soendanese to self-
determination, in accordance with Articles 3 and 4 of the Linggadjati
Agreement. These articles provide that the population of any area may
decide by democratic process that its relation with the United States of
Indonesia (USI) shall be outside the three component parts of the USA:
the Republic, Borneo, and East Indonesia. . ?
?
In its proclamation of 4 May, the Soendanese Peoples Party de-
clared the independence of the Pasoendan State .within the USI. ..The Party
asked that the new state receive the same status as. East Indonesia after
the establishment of a provisional government by a plebiscite in all areas
-inhabited by Soendanese. The proclamation also recognized the continu-
ance of Dutch Sovereignty in the entire Indonesian area during the interim
period before the establishment of the USI.
Although the Dutch have denied encouraging the Soendanese move-
ment, the creation of a pro-Dutch state in West Java would suit Dutch
purposes in many was. The establishment of such a state would reduce
the area of the Republic, separate the Javanese portion of the Republic
from Sumatra, furnish a precedent for later secessions from the Repub-
lic in Sumatra and Madura, and reduce Republic prestige elsewhere In
Indonesia. The Republic, therefore, can be expected to oppose seceasion
of the Soendanese with every possible means.
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THE AMERICAS ,
? razil Acta& a..,Cominimists
The 7 May decision of e Supreme Electoral Tribunal, Nihich
declared illegal the registeanoli of the Brazilian Communint Party, re-,
veals that the Brazi Memeat has abandoned its attempt td co tecat "
Communism by me of persuasion and will henceforth rely upon police ?
measures to plrettitra its groith.
This decision' -- followed by police raids upon all Comtounist
centers -;-; canto at the end of a two year period ok enomenal growth
for the r ilian Communist party; When the PartY was legalized in
May 1945, the small number of .fillitant Communists who had serVived ?
ten years of repression by the Vargas regime suddekly found themselves
free spread their doctrine throughout Brazil. The legalization came .
at a time when Communist prestige was high because the War-tame
role of
he USSR and wadi ons rasil--(dissatisfaction with the econom-
ic and social order, lade of a democratie reformist movement, and a typ3
of econemic organization at permitted the Communists to concentrate
their propaganda on large groups c1 workers .both industry and agri-
oultrre) faefittated the growth of the Party. In December 1&45, the Com-
nreselal east 510,000 veep (8f% ole the total) in the national dee Naas.
In the Amery 1947 state elections, they cast 458 (9itt of all votes)? scor-
several skategic vickories in spite of an intensive anti-Conetnunist
campaign the Goverment and the clergy. In the same period, the Party.
had wo seibstantial followizgl thetureaueranty, am the enlisted per-
Of the arened?.services altd '401 a number important labor ?read-
aatiosts.
The results of the recent elections emphasized the Governme
Inability to atop the growth of the Communist Party short of repressive
'weaves, and Communist postelection activities forecast a renewed
drive to win adherents. raced 'frith the prospect of further Communist
gains, and urged on by militant anti-tommunist sentiment in the Army
and among conservative political groups, the raZillan Govermnent may
have had no realistic political-alternative to the course it has now -adopted.
On the o ier hand; the Dutra Government has not yet demonstrated its
capacity for positive action, and the repression of apolitical movement
With a mass base distributed over a huge territory is, at best, a diffi-
cult government adventure. While the Government's action cannot
have naught the Communists by surprise, it is probable that their imme-
diate reaction will be to reorganize themselves for underground action,
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pending the outcome of an appeal to the Supreme Court and a re-exami-
nation of their strategic position both nationally and internationally.
Against this background, it is a safe prediction that the Government can
prevent further mass gains by.the Communist Party only by adopting
police-state techniques on a scale hitherto unprecedented. in South America.
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CONTENTS
TRENDS IN BRIEF,
Pages
I - iv .
CENERAL .
Anglo-Soviet 'Treaty Negotiations .. . ..... . 0000 1
Soviet Strategy in the CFM . 2
Attitude of the USSR Toward the UN Police Force . . 2
Soviet Efforts to Exchide US Airlines from Balkans. 3
WESTERN EUROPE '
Communists Seek to Arm French Workers 5
Apparent UK Aims in Western Germany 5
Leftist Trend in Italy . 6
NEAR EAST-AFRICA
ICAO Membership Facilitates Iranian Resistance
to the USSR . . a a ?a ......... . 04 004
8
FAR EAST
Chinese Influence in Indochina . 0 ....... 4 0000 9
The Next Japanese Cabinet 9
The Return of Rhee Syngman to Korea 11
THE AMERICAS
Catholic Tactics Score Against Communism
in Costa Rica 12
Document No.
N CHANGE in Class. 0
iDECLASSIFIED
lass. C::iAJC:ID TO: TS
DDA Mcmo, 4 Apr 77
Auth; DD k -:G. 77 1763
By:
Date:
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TRENDS IN BRIEF
?
Soviet efforts to isolate the US by far .reaching revision of the
Anglo-Soviet Treaty have met with stubborn resistance by UK negotia-
tors who refuse to exceed the terms of the French-Soviet Treaty (page 1).
The extreme rigidity of the Soviet pition at the CFM appears
largely to have been the result of Soviet concern over the finiiiications of
the Truman Doctrine (page 2).
The USSR is seeking to delay setting up of UN security forces
because it fears that, as a result of the Soviet minority position in the
UN, the proposed forces might become the exclusive weapon of the
Western Powers (page 2).
Soviet air policy in Europe seeks , through the establishment of
a network of satellite airlines, to gain indirect access to western Europe
while excluding US airlines from eastern Europe (page 3).
WESTERN EUROPE
Comm ,tEl_ars French workers are not expected
to gain wide popular support (page 5),
UTC proposals for the economic develo m ten of the US-UK Zones
In Germany are based on a desire to realize German economic self-
sufficiency but also look toward the creation of a socialist western
Germany and the formation of a system of non-Communist socialist
states in western Europe (page 5).
The strength of the leftist trend in Italy is overlooked by observ-
ers who insist that the Christian Democrats still hold the balance of
power between the Left and the Right (page 6).
General Franco 's position is being strengthened by widespread
rumors in Spain that the US is modifying its unfriendly attitude towards
Franco because of his uncompromising enmity towards the USSR, and
that as a result the US will grant credits to Spain. These rumors are
helping Franco retain the essential support of the Army. The military
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leaders will support Franco as long as their special privileges continue
and as long as they do not anticipate any adverse consequences from the
hostility of foreign countries. Meanwhile, the increasing tendency of
the UK to do business with Spain aids Franco's contention that in the
end the Western Powers will welcome him as a friend.
The protests of recently-established US business interests in
Morocco against alleged trade discrimination by the French has been
seized upon by native nationalists to promote the idea that the US is sup-
porting their cause. While the nationalists have always pursued an
opportunistic policy?hinting variously at US, or Communist, or even
USSR backing--reported "loose talk" by US nationals in Morocco has
led certain French officials to believe that the US is encouraging
Moroccan nationalism, even to the extent of subsidizing the nationalist
press. This belief, unless checked, provides French Communists with
excellent propaganda material to add to their thesis that the real threat
to the maintenance of the French Empire is not Communism, nor the
USSR, but US "imperialists".
NEAR EAST-AFRICA
Iran apparently intends to adopt a stiffer attitude toward the USSR
on air matters, justifying its course by obligations inherent in its im-
pending membership in ICAO (page 8).
Recent Soviet protests against Iran's "anti-Soviet and pro-US
policy" probably indicate that, in anticipation of the implementation
of the US program for aiding Greece and Turkey, the USSR is trying to
strengthen its position vis-a-vis Iran. Increased pressure on Iran is
undoubtedly designed to force ratification by the Parliament of the
Soviet oil concession, which, if obtained, might tend to counter expand-
ing US interests in Iran. Indications are, however, that the Iranians
intend to resist Soviet pressure and coercion in the matter of the oil
concession.
Demands for Turkish territory by the USSR. on behalf of the
Armenian SSR will undoubtedly be repeated at a meeting now in session
In New York of an organization without official status called the
"Armenian National Council." The Council is also expected to air
older Armenian grievances against the Turks and possibly to discuss
a further demand for Turkish territory unofficially made by the Soviets
on behalf of the Georgian SSR. Although claims made by the Council
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will have no effect upon Turkish determination to resist Soviet pressure,
Moscow may be expected to use such claims to intensify its anti-
Turkish propaganda.
FAR EAST
Reduction in Communist strength In the Vietnam Government
may be achieved by the French only by enhancing Chinese influence in
the area (page 9).
'Illtss2KJApanese Government apparently will be formed by the .
right-wing Social Democrats. Like the present Yoshida Government,
it is expected to face opposition from Japanese labor unless it is able
to alleviate economic distress (page
Egnaji r1gist leader Rhee Syngman, in anticipation of the
reconvening of the Joint Commission, may be prepared for a reconcilia-
tion with the US Military Government (page 11).
Soviet propanda attacks on US policy in China have increased
markedly during the past fortnight. Articles in the Soviet press, and
broadcasts to North America and Japan, emphasize the following themes:
(1) American military forces remain in China and continue to commit
atrocities; (2) Unfted States intervention on the side of the Kuomintang
consists almost exclusively of military assistance which has aggravated
the civil war and prevented economic stabilization; (3) under the guise
of rendering assistance, the United States is usurping control of China
thus reducing China to the status of a colony; (4) American and Chinese
reactionaries quashed Molotov's proposal for discussion of China at the
Moscow CFM, a proposal "widely acclaimed by Chinese democrats";
and (5) recent Chinese governmental reorganization is merely a man-
euver by Chinese reactionaries to camouflage the dictatorship of the
Kuomintang.
Serious irregularities in surplus property disposal in the
Philippines, which may involve losses through theft and pillage amount-
ing to more than half of the saleable surplus, are currently under in-
vestigation by the Philippine Congress and US representatives. The
terms of the Philippine Rehabilitation Act, and the surplus property
agreement between the US and Philippine Governments, call for the
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realization by the Philippine Government of US$ 137,000,000 from the
sale of the US surplus property which was transferred to the Philippine
Government. The probable findings of the investigations suggest that
the Philippine Government may approach the US Government for an
appropriation of at least an additional US$ 25,000,000 to cover the
total US dollar commitment under the surplus property agreement.
THE AMERICAS
Communist influence in Costa Rica has been reduced by the
development of a rival labor union under Catholic auspices (Page 12).
Chile's new Cabinet of eleven Radicals and one Democrat,
formed by t President Gonzalez Videla on 16 April as a-"temporary
expedient, is not expected to remain long in office. The major polft-
teal issue in Chile is the farm unionization bill, which the Commu-
nists oppose on the ground that, even if it is amended in accordance
with a new rightist-approved proposal by the President, the bill
would not unionize all farm laborers. Gonzalez, who has recently
accused the Communists of more concern with the political effects
O of farm unionization than with the economic benefits it would bring
to agricultural labor, probably will face increasing opposition from
the Communists and the Communist-led labor movement. Gonzalez
has expressed the hope that he can hold the Cabinet together until
the national convention of the Radical Party early in June.
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GENERAL
Anglo-Soviet Treaty Negotiations
Recent negotiations in Moscow for the revision of the Anglo.
Soviet Treaty of 1942 have so far resulted in an attempt by the USSR
to obtain a pact which would be unacceptable to any important power.
The Soviet draft contains a clause which pledges the two powers to re-
frain from any "direct or indirect" move against each other. According
to PRAVDA, the intention of the clause is to "bind both parties to take no
part in any acreements or measures aimed even indirectly against the
other party.' The clause, however, could logically be invoked against the
standardization of arms by the UK and the US, an anti-USSR vote in the
Security Council, or substantive opposition to policies of the USSR.
Although Sevin has been reluctant to negotiate the revision of the
Treaty, he has pursued the matter for domestic political reasons. He
has sought, however, to limit the revision to deletion of obsolete sections
from the old Treaty and insertion of a reference to the four-power pact
proposed by the US. Bevin and his negotiators have also refused to permit
Isolation of the US, or to go beyond the terms of the recent Anglo-French
Treaty.
Although Soviet negotiators have argued persistently for the prohi-
bition on "direct or indirect" moves, it is doubtful if they expected the
British to consent to the clause. The USSR may desire a compromise
agreement short of the original clause which would tend to isolate the US;
or, failing such a compromise, it may prefer no agreement, in order to
create the impression within the UK that Bevin is rejecting "friendship"
with the USSR. In view of the firm UK position, the latter alternative
appears more likely. Nevertheless, Bevin's position at home should be
secure as he can demonstrate that he offered terms as generous as those
In the Anglo-French Treaty.
Despite the current stalemate, the UK has denied reports that
negotiations have broken down and considers that the next move is up to
the USSR.
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Soviet Strategy in the CFM
The Soviet Delegation at the recent CFM meeting obviously was
intent upon delaying or preventing the solution of most of the vital issues
under discussion.
A major conAideration underlying the Soviet strategy was probably
the dilemma in which the Kremlin was placed by the announcement of the
Truman Doctrine. The USSR could not immediately adopt a more concilia-
tory policy without offering confirmation that the President's program
was effective in checking aggression. The USSR likewise could not harden
its policy without encouraging increased support in the US for the Truman
Doctrine. Furthermore, the encouragement which the President's state-
ment gave to European anti-Communists may have increased the Kremlin's
concern over its eastern European position and its determination to block
an Austrian Treaty in Order to maintain Soviet forces in that country and
communication troops in Hungary and Rumania.
The USSR, therefore, may have considered it even more imperative:
(1) to prolong the unsettled conditions in Europe conducive to Communism;
and (2) to encourage the US to expend its patience and energy in a vain
quest for agreement until forced by its internal economic and political
conditions to curtail its foreign commitments and to leave Europe to the
USSR by default.
The Kremlin now appears concerned over the reaction wbich its
obstructionism has produced among the Western Powers. Through diplo-
macy and propaganda, the USSR seems to be seeking to reassure the West
by insisting that the achievements of the Conference should not be mini-
mized and that "time and patience" eventually will solve most of the re-
maining problems. For the present, therefore, the Kremlin appears to
be pursuing a dual policy of preventing a European settlement while try-
ing to keep alive western hopes that such a settlement eventually may be
possible.
Attitude of the USSR Toward the UN Police Force
In the deliberations on the draft of the forthcoming report on
Basic Principles prepared by the Military Staff Committee of the Security
Council, the USSR has betrayed fear that, because of its minority position
in the UN, the proposed UN security forces might become a weapon in the
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hands of the Western Powers. As a consequence of this fear, the USSR
has sought to delay the setting up of UN security forces. It has taken
positions which disclose a design not only to render any UN armed force
impotent in dealing with aggressors, but also to reduce the relative
effectiveness of military contingents contributed by major powers other
than the USSR.
The USSR has insisted on a doctrine of equality which would mean
that each member of the Big Five would contribute exactly the same
numbers and types of components to any UN armed force. This doctrine
would tend to reduce the efficacy of the security force by restricting the
types of available weapons to the lowest common denominator among the
Big Five. As this circumstance would prevent the UN forces from having
the finest types of new weapons, the USSR would be at an advantage be-
cause its remote land mass and great manpower can be successfully
attacked only by the use of modern, long-range weapons. Furthermore,
the USSR has consistently contested any proposals designed to furnish
UN armed forces with springboards and bases from which to forestall
aggression. The USSR also has objected to reference to so elementary
? a principle as that concerning the advantages accruing from prompt mili-
tary action, which the Soviet delegate characterized as unnecessary and
not a basic principle.
?
Soviet Efforts to Exclude US Airlines From Balkans
Soviet air policy in Europe has now developed to the point where a
clash of interests with the US can no longer be avoided. The Soviet in-
tention is clearly: (I) to create an integrated network of Balkan satel-
lite airlines (Soviet operated and controlled); (2) to extend this network
by means of limited air agreements with selected countries through which
the USSR will gain indirect access to western Europe; (3) to exclude US
airlines from the satellite states, while agreeing to the exchange of air
traffic at points farther to the west.
A plan for the implementation of this policy has been prepared
at Soviet direction by the Hungarian airline Mazovlet. While the USSR
has not yet formally approved the plan, it has prompted Hungary,
Rumania, and Yugoslavia to proceed with negotiations for the necessary
air agreements. In addition, it has authorized the satellites to initiate
discussions for air agreements with certain western European countries.
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The Rumanian Tars has proposed to France and Switzerland an
airline to Paris via Zurich; Mazovlet has approached the Swiss, Czechs,
Danes, Swedes, and Norwegians for bilateral agreements; and Yugoslavia
is negotiating with Czechoslovakia.
Resistance will inevitably increase against the Soviet scheme of
using satellite airlines as a front. The western European countries are
all members of ICAO (International Civil Aviation Organization) and will,
accordingly, be unlikely to sign air agreements with the satellite states
unless fully reciprocal rights are obtained. /f the Soviets resort to the
subterfuge of air agreements on a company level, the airlines of the
Western Powers will find little incentive in the terms likely to be offered.
Meanwhile, US efforts to obtain commercial air rights in Rumania
and Hungary for US carriers have been blocked by Soviet occupational
authorities. (The Soviet contention that these countries are not free to
accord such rights until the peace treaties are signed is patently invali-
dated by Soviet approval of satellite air negotiations with other states.)
The US is thus faced with complete denial of air access to these states
after the scheduled deactivation of the US military European Air Trans-
port Service on 30 June.
The US State and War Departments have now decided to force the
issue by insisting that the USSR, as the occupying power, may not permit
the satellites to negotiate air agreements with other countries unless it
also sanctions air agreements with the US. If the USSR does not modify
Its position, the stalemate will continue, at least until the peace treaties
are ratified, after which Hungary and Rumania will be required by the
treaty terms to accord certain inconsequential air rights to the Western
Powers.
Even if the USSR decides that reciprocal air agreements between
the satellites and the US would be to Soviet advantage and yields to the
US protest, the satellites would inevitably nominate the Soviet-controlled
airlines as their designated carriers. Such action would compel the US
to accept the alternative of refusing the arrangements on the grounds
that the satellite airlines are foreign controlled, or of accepting the nomi-
nations with the attendant danger that the USSR would covertly use these
lines to further Soviet political objectives. Consequently, the prospects
of a satisfactory solution are remote.
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WESTERN EUROPE
Qommunists Seek to Arm French Workers
After prolonged but relatively unsuccessful efforts to increase
Communist infiltration and control of the French armed forces, Com-
munist Defense Minister Billoux has made public his thesis of national
defense. His proposals, which amount to the arming of the working clas-
ses under the guidance of the Communist Party, reflect purest Bolshevik
doctrine.
The Army's new plan for military training has now provitied the
indefatigable Billoux with a new target. Under the plan, the state would
provide `pre-military" training centers for new conscripts. The Com-
munist Defense Minister, after characterizing the Regular Army as "pro-
fessional" and "an instrument for a coup d'etat," urged in a speech on 25
April that certain youth and labor organizations (now Communist-domi -
nated) be responsible for this training. Billoux proposed drastic changes
in the national defense setup, and insisted that the Army must become more
"democratic" with no division between Regular and Reserve. This objec-
tive would be accomplished through the establishment of local "security
forces" based on shipyards, factories, villages, and city quarters. These
forces would be capable of arising instantly as guerrillas to repel an
Billoux's proposals are certain to be resisted vigorously by mili-
tary leaders, especially Generals juin and Revers, as his plan would
eliminate the effectiveness of the Army in combatting any attempted Com-
munist coup. His appeal, however, can be expected to stir sympathetic
feelings among Frenchmen with memories of the failure of the Frerch
Army in 1940 and the subsequent relative success of the popular Maquis.
Nevertheless, it is unlikely that the French would break with their long-
and widely-understood military tradition, if only because they realize
that piecemeal operations by guerrilla forces cannot successfully defend
France against a strong and organized foreign enemy.
Apparent UK Aims in Western Germany
Recent UK proposals for the economic development of the US-UK
Zones call for a degree of centralized economic planning in western
Germany which runs counter to US policy. The failure of the Moscow
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Conference to achieve the economic unification of Germany emphasizes
the importance of the US-UK economic zonal merger. It has become im-
perative that the US and UK put their Zones on a sound economic basis
in order to relieve themselves of the expenses of occupation. Exports
from the Zones must be increased in order to pay for necessary imports.
In the US view, the UK has been relegating the export problem to
second place while concentrating its efforts, through a centralized plan-
ning board, on the development of a planned economy and the socialization
of industry. (This board, the Bi-Zonal Economic Committee, is made up
of the Economic Ministers of the six Laender and the two free cities of
Hamburg and Bremen. Each member is a Social Democrat, the Party
which has lo been the object of benevolent British regard. As US occu-
pation authorities favor a minimum of central control over production of
export goods, agreement between the Zonal Commanders could not be
reached and the issue has now become a matter for discussion at the
governmental level between the US and the UK.
The British desire for a strong central control is based upon a
conviction that central planning offers the most immediate way to relieve
the taxpayers at home of the occupation expense. At the same time, the
UK proposal apparently looks toward the creation of a socialist western
Germany, in harmony with the British Government and subject to British
guidance, and to the formation in western Eut ope of a system of non-
Communist socialist states.
Leftist illreral
The success of the People's Bloc (Communist and Socialist) in
the recent Sicilian elections is attributed to the Communist support of
the Lateran Pact (which went far to remove from the Party the taint of
anti-clericalism) and to the proposed division of certain large land hold-
ings into farms for the peasants. Even in a region as conservative and
Monarchist as Sicily, the Italian peasants and workers have responded
to their desperate economic situation by casting their votes with the
party whose strength heretofore has been found mainly in the industrial
centers. Observers make much of the fact that the Christian Democrats
still hold the balance of power between the Left and the Right in the chang-
ing political picture of Italy as a whole; but such a view overlooks the
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? strength of the trend toward the Left throughout the country. Unless
present economic -conditions improve, it seems clear that in the forth-
coming national elections the leftist bloc will gain a dominant position
in the National Assembly.
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NEAR EAST-AFRICA
/CAO Membership Facilitates Iranian Resistance to the USSR
There are a number of indications that Iran intends to utilize
the obligations of its impending ICAO (International Civil Aviation
Organization) membership as justification for adopting a firmer attitude
toward the USSR in air matters. Such a justification is particularly ad-
vantageous to Iran at this time, because the recent Soviet protest against
the anti-Soviet attitude of the Iranian Government has placed Premier
Qavam in a defensive diplomatic position vis-a-vis the USSR.
Membership in ICAO, particularly if Iran obtains a Council seat,
will commit Iran to the principle of reciprocity advocated by the US.
General Firuz (chief of the Iranian delegation to ICAO and uncle of the
pro-Soviet Ambassador to Moscow) has already asserted that Iran "must
demand reciprocity from any country seeking to fly to Iran." (This is a
belated about-face by Firuz, who last year favored a proposed joint Soviet-
Iranian airline monopoly in Northern Iran.) Qavam likewise has promised
to take action against the continued unauthorized commercial operations
of a Soviet airline in northern Iran by insisting that, if these operations are
to continue, the USSR must grant reciprocal air rights to Iran.
A demand for reciprocal air rights in the Soviet Union, in return
for Iranian sanction of present Soviet activity in northern Iran, is not
likely to be successful. On the other hand, a firm Iranian stand, backed
by the prestige of UN-sponsored ICAO, will embarrass the USSR, even
though it will probably not succeed in inducing the USSR to abandon its air
operations in the northern provinces.
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FAR EAST
Chinese Influence in Indochina
The failure of French authorities in Indochina to restore con-
tact with representatives of the Vietnam Government has encouraged
the emergence of several Annamite groups in which there is substan-
tial Chinese influence. asic Chinese policy with regard to Vietnam
is directed toward the establishment of a regime under Chinese in-
fluence, if not direct Chinese control, with particular emphasis upon
Chinese racial affinity with the Vietnamese. The continuing dead-
lock between France and Vietnam provides an opportunity for China
to seek a stronger position in Indochinese affairs, utilizing pro-
Chinese Annamites to reduce French influence and to prevent the
further development of Communism in Vietnam.
One group amenable to Chinese direction is the Vietnam Quoc
Dan Dang, or Annamite Kuomintang, which enjoyed a prominent role
in Vietnam affairs during the Chinese occupation of northern Indochina.
When Chinese forces were withdrawn in June 1946, this group was
ousted by the Viet Minh under President Ho Chi Minh and fled to China
where it established a quasi-governme tin-exile.
Moderate elements of the Annamite KMT are believed to have
joined the National Union Front, a coalition of minor Annamite anti-
Communist parties kWh desires the return of the former Emperor
of Annam, Bao Dai, to head a provisional government of Vietnam.
Although the National Union Front has declared its opposition
to French dominance in Indochina, its anti-Communist views may in-
duce the French to accept its participation in a coalition Vietnam Gov-
eminent with which the French will negotiate to end present hostilities.
Reduction of Communist strength in the Vietnam Government, therefore,
may be achieved only at the cost of enhancing Chinese influence in the
area.
The Next Japanese Cabinet
Although the new Lower House of the Japanese Diet, elected on
25 April, is essentially conservative, the emergence of the Social Dem-
ocrats as the largest party indicates a popular desire for a shift towards
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the left and considerable dissatisfaction with the present Yoshida Cabi-
et for its failure to control infla on (see Weekly Summary of 4 April,
page 4). The next Japanese Government will pro bly be headed by
Tetsu Ka yam chairman if the Social De.. ocratic Parts e ecutive
coxn ittee.
In the ew Lower acme, the Social Democrats will have 143
seats, the Lib rals 1339 th Democrats 1269 and the People's Coopera-
tive Party 31; while in the old Rouse, the Social Democrats had 98 seats,
the Li rals 140, the Democrats 1459 and the Cooperative Party. 63.
(The loss of two seats by the Co munists, who had six represe tatives
in. the old Lower House, reflects the reaction against Communist in-
fluence currently prevalent thr rughout the Japanese .bor movement.)
In order to obtain a majority in the Diet, the Social Democrats must
form a coalition with one or both of the two 1211 jor conservative parties:
the Democrats and the Liberals.
C oper on wi h the conservatives, however, will probably came
split in the Social p mocratic Party. The discipline of ft s Party has
been notoriously lax cause of the constant antagonism between e
right sztd left gs. The right-wi leaders, who are entrenched in
posi ons of control within the Party and its trade union affiliates, are
bitterly opposed to collaboration with the Communists. The left- g
leaders, on the other hand, have a rrking agr e.,ent with the Commu-
nists d command a strong following in the labor movement at large.
This rivalry of the right and th left wings has thus far pre ented the
formal aIt ent of the Social Dem crats either with the conservatives
r the Communists. Now at the Social Democrats are th largest
rty li the Diet and the indicated leader of'the next government, a
split can h rdly be a aided. The numerically-smaller left wing will
pr ''ably break off and become another splinter party in the Diet, hile
the right wing assumes its leadership in the Government.
The nei Government, hnce the present Yoshida Government, will
face the opposition Japanese labor unless it is able to alleviate eco-
nomic distress in Japan. A solution of Japan's economic difficulties is
beyond the powers of the Japanese Government alone. The eco omic
recovery of Japan depends upon e revival of foreign trade as well as
upo the prompt settlement of the reparations question.
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It Asti=of tan o Korea
The rightist leader and former president of the Korean govern-.
meat-In-exile, Rhee Syngman, has now returned to South Korea with
increased prestige from five months/ travel abroad. Rhee left South
Korea early in December 1946 with the encouragement of the US
authorities who believed that his departure might ease the prevailing
tension between Right and Left. Rhees popularity seemed to be waning
at the time of his departure, but international developments during his
absence have apparently added to his reputation in South Korea. The
US program of economic aid for Korea was announced before Rheers
departure from Washington, and Chinese support for early Korean
independence was reaffirmed during his stay in Na.niting. The Korean
Right has given Rhee a large measure of credit for these friendly
gestures by foreign powers and the South Korean Interim Legislative
Assembly has rallied to his support.
' Rhee has always been one of the principal Korean exponents of
resistance to Soviet domination, and, as a result of his trip abroad, he
may now be more reasonable and cooperative than he has been in the
past. Rhee may be prepared, therefore, for a reconciliation with the
US Military Government in anticipation of the reconvening of the joint
US-Soviet Commission. ,
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THE AMERICAS
Catholic Tactics Score A ainst Communism in Costa Rica
Costa Rica, one of the few Latin American Republics in which
the Communist movement is on the wane, is no longer a Communist
stronghold (as it wag a few years ago) largely because of the activities
of its Roman Catholic hierarchy.
Since 1943 (when the Third International was dissolved) Costa
Rica's Communist Party has chosen to call itself Popular Vanguard,
thus distracting attention from its origin while retaining its claim to
leadership of the country's workers in their struggle for a socialist
state. Under this new name, it entered the country's governing coali-
tion and was able to win for itself the freedom of action it needed in
order to make Costa Rica a useful base for Communist activities. Also,
because of the democratic and reformist emphases in its propaganda,
it was able to attract to its mem rship (and to that of the Confederation
of Costa Rican Workers which it dominates) large numbers of Roman
Catholics,
Archbishop Victor M. Sanabria, Costa Rica's ranking prelate,
though at no time deceived by Popular Vanguard's change of front, re-
fused to take the steps to which he might have been led by strict interpre-
tation of Catholic doctrine and the example of his colleagues in other Latin
American Countries. Instead of exposing the Communist identity of the
movement and admonishing Costa Rican Catholics against joining it, (1)
he expressed publicly his belief in the sincerity of the motives of Popular
Vanguard; (2) in 1943, however, he sponsored the organization of Rerum
Novarum, a labor group designed to compete with Popular Vanguard and
the Confederation of Costa Rican Workers for mass support; and (3) he
waited until Rerum Novarum had become firmly established and was
gaining ground before he attacked, on 29 March 1947, the Marxist charac-
ter of Popular Vanguard and advised Catholic members to withdraw.
This open attack by the Archbishop tends to remove one of the
main props to the "respectability" of Popular Vanguard, and it is proba-
ble that the influence of that organization will continue to decline as its
Communist character is made increasingly apparent to the Costa Rican
public.
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CONTENTS
TRENDS IN BRIEF ......... . ?..... ?. .
...
45
Pages
. . i -
lii
GENERAL
Communist Influence in the WFTU . . . ...........
General Assembly Faces Difficulties on Palestine Issue . . . 2
WESTERN EUROPE
Non-Nationalist Colonial Stand of French Communists . . 4
EASTERN EUROPE
The Greek Labor Problem .
NEAR EAST-AFRICA
Possible Effect of jinnah's Retirement
FAR EAST
Possibility of French-Vietnam Negotiations 8
Reduction of Soviet Troop Strength in North Korea 8
Inflation Threatens Chiang Kai-shek's Military Efforts . . 9
Document No.
NO CHANGE in Class. 0
IDECLASSIFIED
ass. CHANCED TO: TS C
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Datell ( [gli BY: W5
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TRENDS IN BRIEF
GENERAL
An attempt to consolidate Communist forces into an inter-
national labor organization is apparent in the recent activities of the
WFTU (page 1).
_PN consideration of the Palestine issue will raise many diffi-
culties (page 2).
WESTERN EUROPE
The French Communists are expected to continue their oppo-
sition to the Government's Madagascar policy, although such action
Is unpopular with the majority of the French people and might cause
the fall of the Ramadier Government and the exclusion of the Communists
from a new Cabinet (page 4).
The unexpected victory of the Communist-Socialist bloc in the
recent Sicilian elections and the decline in the strength of the Christian
Democrats confirm the trend of the Communal elections held in October
and November 1946, and suggest that in the forthcoming national elec-
tions the Communist-Socialist bloc will gain at the expense of the
centrist Christian Democrats. The center, however, will probably
hold the balance of power and may have to choose between the left and
the right in the new Government.
Failure to conclude an Austrian treaty in Moscow will impose
the severe strain of continued four-Power occupation on the Austrian
coalition Government. The majority People's Party, confronted with
internal friction, has been slowly losing popular support to its chief
rival in the coalition Government, the Socialist Party. The present
Government is, nevertheless, expected to remain in power because
the Socialists are unwilling to force a new election in the face of the
present Soviet threat to Austrian independence. The small Communist
Party will benefit from the continued presence of the Soviet military,
but is too weak to upset the Government by parliamentary means.
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Political rivalry between Communists and non-Communists
? In the Greek labor movement has led to an internal dispute over
? leadership of the national Confederation and to divergent US and UK
positions regarding a solution (page 5).
The first overt dissension within the Communist-dominated
Polish Government bloc since the January elections occurred recently
in Parliament when the majority of the bloc's non-Communist members
refused to back the Government's opposition to a motion to exempt civil-
ians from the jurisdiction of the military courts. Although the motion
was defeated, this minor revolt reflects some slight independence of
action on the part of non-Communists in the Government, particularly
in the realm of civil liberties, and the Communists may eventually be
compelled to make some concessions on this issue.
Rejection by_.he.jm_s_overnment of a joint US-UK note
concerning Yugoslav war criminals now in Italy indicates that the
O Yugoslays will exert considerable pressure on Italy unless the US and
- UK can resolve the problem before their withdrawal. In answer to the
US-UK recommendation that Italy establish the guilt of alleged Yugo-
slav war criminals prior to their extradition, Tito asserted that Allied
military authorities must bear the responsibility for the arrest and
return of all Yugoslav Quislings at large, and that only the Yugoslav
courts are competent to establish the extent of guilt of the accused.
NEAR EAST-AFRICA
If Jbmah soon retires from leadership of the Moslem League.
as is suggested by reports of failing health, his withdrawal is not
expected materially to affect Indian political developments (page 7).
FAR EAST
' Present conditions in French Indochina are propitious for
resumption of French-Vietnam negotiations which are expected to
be started, at least covertly, in the near future (page 8).
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Reduction of Soviet occu ation forces in Korea to approximately
100,000 appears attributable primarily to political and economic consid-
erations (page 8).
Recent Chinese appealsUS probably reflect
Chiang Kai-shek s fear that an explosive inflation in China, attended
by collapse of the national currency,. might paralyze Nationalist mili-
tary efforts to achieve speedy suppression of the Chinese Communists
(page 9).
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GENERAL GENERAL
Communist htfluence in the WFTU '
The recent activity of vestigating commissions sent by the
WFTU into Africa, Korea, japan, Iran, and Germany has evoked official
concern over Communist influence in the World Federation of Trade
Unions and the possible subversion of the WFTU to Soviet political aims.
According to US Embassy Paris, the WFTU conference held in
Dakar early in April "is a good example of how Communist organizations
are busily attempting to construct trade-union strongholds under Commu-
nist control or partial direction in various African territories." In
Korea, the Communist hand wap clearly evident in the visit of the WFTU
delegation headed by Louis S?iant, pr.-Communist Secretary General
of the Federation (see Weekly Summary of 18 April, page 12). In Iran,
a sharp cleavage developed between Communist and non-Communist
factions in the WFTU commission visiting that country. In Germany,
the Communist program has taket the form of a carapai,e aimed at
achieving for the weru exclusive guardianship and tutelage of the Ger-
man trade unto movement. In Greece, organized labor is sharply split
into Communist and non-Communist factions, w e the WFTU is engag
in strenuous efforts to bring about a reconciliation on terms hich will
Insure Communist domination.
Until lately, Soviet participation the organization hae been
characterized by some restra t, probably indicating M sco 's reluc-
tance to show its intentions too clearly lest it provoke the withdrawal
of the WFTUIs A lo-American affiliates. Now, however, Soviet designs
are becoming,appare t. US Embassy Moscow observed on 19 April:
"Communist leadership and control having been assured by cautious
and deliberate organization, the WFTU now clearly is being developed
by Soviet diplomacy as the most effective instrument since the Co e in-
tern for penetrating colonial and dependent areas."
Anglo-American affiliates of the WFTU -- generally unsophisti-
cated in matters of international politics and lacking the discipline, unity
of purpose, and official guidance enjoyed by their Communist colleagues --
have shown little aptitude for meet this challenge. Unless the Western
trade unionists can achieve substantial unity, and unless their program
can be more closely coordinated with the policies of their respective
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governments, the chances of preventing the WFTU from becoming com-
pletely subservient to Soviet policy will be slight. The WFTU may there-
fore succeed, where the Comintern failed, in building up for the Kremlin
an international Communist organization with a substantial base among
the masses.
General Assembly Faces Difficulties on Palestine Issue
With the opening of the special session of the United Nations
General Assembly in New York on 28 April, Palestine for the first
time becomes a UN concern rather than the sole responsibility of the
United Kingdom, the Mandatory Power. Lack of precedent makes diffi-
cult any attempt to streamline the work of the special session, which
was summoned by Secretary General Lie (at the request of the UK) for
the single purpose of appointing a committee to study the Palestine
problem and to prepare a report for the regular meeting of the Gen-
eral Assembly in September.
The aim of the major powers (UK, US, and USSR) to limit the
agenda of the special session to procedural issues has already been
challenged by all five Arab member states, which have submitted to
the Secretariat substantive proposals demanding the termination of the
Mandate, and the independence of Palestine. Although the Arab States
can hardly win the two-thirds majority necessary for consideration of
their proposals, discussion of these resolutions will prevent a speedy
conclusion of the session.
Even if the special session concentrates its attention on the
single procedural issue of appointing a committee to study the Pales-
tine question, lengthy dispute is probable over two points: (1) composi-
tion of the committee, and (2) terms of reference (i.e., powers and
duties) of the committee. Of the two procedural issues, the first will
cause more debate. The General Assembly must decide such matters
as whether the committee should be large or sufficiently small and
compact to travel and gather testimony; and whether it should include
"interested" parties or merely "neutral" members.
The length and effectiveness of the session will be directly in-
fluenced by the strategy of the two groups mainly interested: the Arab
States, which have five official votes in the UN; and the Jewish organiza-
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tions, which have no representation in the UN, but can bring strong
pressure to bear on many of the delegations. The proposal by the
Arab States for Palestine's independence, with consequent cessation
of further Jewish immigration, is based on their feeling that further
study of the Palestine issue is pointless and that action is required.
Arab propaganda in support of this view will be less effective than
Jewish counter-propaganda because of the Arab's relative lack of
organization,funds, and a sympathetic audience. Though the Arabs
could withdraw from the UN discussions if their proposals are not
considered, it is more likely that their next step would be to seek
representation on the special committee, which would give them an
advantage over the Jews. Should the Arabs fail to achieve their aims
In the UN, they may attempt action independent of the UN such as a
boycott of Anglo-American products or a cancellation of foreign oil
concessions.
Through their tightly-knit and well-financed organization, the
Zionists will bring strong pressure to bear on various UN delegations.
Already two Jewish organizations, the Jewish Agency for Palestine and
the extremist Hebrew Committee of National Liberation, have requested
authorization from the UN to represent the Jewish people in the spe-
cial session. Failing this, the Jewish Agency has indicated that it will
demand a hearing at the regular GA session in September. In order to
strengthen the Jewish position in the eventual consideration of the
problem, the Zionist organizations will press for interim action author-
izing increased immigration into Palestine and permitting Palestinian
Jews to increase their land holdings. To this end, the Jewish Agency
has already "warned in all friendliness" that the US Government will
be subject to "tremendous Jewish pressure" to take a strong pro-
Zionist stand.
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WESTERN EUROPE
Non-Nationalist Colonial Stand of French Communists
French Communists apparently intend to oppose the Government's
Madagascar policy, even at the risk of the fall of the Ramadier Govern-
ment and their own exclusion from the Cabinet. Such a course of action
will run counter to the widespread nationalist sentiment in favor of main-
taining the French Empire.
During the recent debate on Indochina, the Communists nearly
brought about the Government's fall by supporting the vie Minh move-
ment, and started a rapprochement among non-Communist political
groups which, had it continued, would have isolated the French Commu-
nist Party.
The re-entry of De Gaulle into politics and the formation of his
RPF (Rally of the French People), however, tended to drive the Social-
ists back into the Communist camp. It seems apparent that the trend
again will be reversed, if the Communists continue to attack the colonial
policy.
The willingness of the Communists to support the interests of
World Communism by working for the independence of the French
colonies -- thereby risking the loss of the greater part of the popular
support and governmental influence which they have won in France since
the Liberation -- can be explained only by the assumption that the policy
of the Communist members of the Cabinet is dictated by Moscow. Such
an assumption is supported by the recent report that Courtade (an editor
of the Communist newspaper ?`Humanite") had returned from Moscow
"very depressed" because he realized that the Kremlin's instructions
to French Communists to work publicly against the Government's colonial
policy would further reveal the non-nationalist character of the French
Communist Party.
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EASTERN EUROPE
lihe ?me_ 11,,ar,13 Problem
Since liberation, the political struggle between Communists
and anti-Communists in Greek labor has relegated the normal concern
of labor with wages and working conditions to a place of secondary im-
portance, and has fostered the growth of two active, rival executives
In the national General Confederation of Trade Unions (GCTU), both _
claiming leadership of the Confederation. Labor has naturally suffered,
to the concern of the World Federation of Trade Unions (WFTU), and of
the British and Greek governments, all of which have proposed solu-
tions. The most recent plan for reconciliation is the Braine-Tsaldaris
Agreement, submitted by British labor expert Braine and backed by
the British government. The US is opposed to the plan on the ground
that it would give the Communists effective control of the GCTU.
The background of the dispute is complicated. After liberation,
both the Communist and the anti-Communist elements attempted to
secure, control of the GCTU executive; by doubtful moves and elections,
the Communist faction won and was recognized by the WFTU. The anti-
Communists, however, appealed the legality of the elections to the Greek
Council of State, which upheld their appeal. The Minister of Labor ac-
cordingly "deposed" the Communist "elected" executive and appointed
a provisional executive. This executive was recognized by the Inter-
national Labor Organization (ILO) and the American Federation of Labor
OF of L), but the Communist executive refused to be deposed, and both
attempted to manage the GCTU. In March 1947, the Greek Supreme
Court upheld the Minister of Labor's decision deposing the one executive
but annulled his appointment of the other. The impasse was thus complete.
Under the Braine-Tsaldaris proposal, new appointments and elec-
toral procedures would result in a Communist-dominated executive in
the GCTU. The US opposes implementation of the plan because: (1) it
would strengthen the Communist position in Greece; (2) Communist-
dominated unions working for political ends would endanger still further
the precarious economic situation in Greece; and (3) following traditional
Communist tactics, the unions could seriously prejudice the application
of US aid to Greek recovery. The British Government, on the other hand,
Is pressing for implementation of the plan because of strong pressure on
Prime Minister Bevin from the British Trade Union Congress (TUC) and
from left-wing elements within the British Labor Party. Bevin, indeed,
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is so cot? mated to the plan that he could not now withdraw without
, seriousl: compromising Ms position vis-a-vis the Labor Party and
the TUC, and without risking renewed charges of acting as a US stooge.
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NEAR EAST-AFRICA
Possible Effect of jimmies Retirement
Reports that jimiah, leader of the Moslem League, is failing
physically and mentally suggest that he may soon retire from Indian
politics. His withdrawal, however, is not expected to affect Indian
political developments materially, despite the absence of a compar-
able successor and the improbability that any other League leader
will emerge with the same capacity to influence Moslem masses
throughout India. The present strength of the League and the growth
of the ideal of Pakistan can be attributed predominantly to jinnah's
personal power and persistence. So successful, indeed, has been his
emphasis on the need for Pakistan and so intense has become the
emotional reaction of the Moslem masses to that appeal, that the
presence or absence of any particular leader probably would not now
appreciably affect the separatist movement in India.
There is a danger, however, that jimiah, fearing the imminence
of death, may endeavor to increase still further the momentum of the
Pakistan movement, and in so doing precipitate an armed clash be-
tween League and anti-League members which would result in wide-
spread bloodshed. If, on the other hand, he is willing to let the move-
ment follow its own course, the Congress Party (which is daily grow-
ing more accustomed to the possibility of a divided India) may avoid
taking any action by force and conclude that the impracticability of
Pakistan can best be proved through trial.
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FAR EAST
Possibility of French-Vietnamtiations
Present conditions in French Indochina suggest a resumption
of French-Vietnam negotiations to settle the major issues which led
to the hostilities of the past four months. The destructive guerrilla
warfare in Cochin China, the rising cost and commitment of manpower
in the hostilities in Indochina, and consequent progressive weakening of
France's military power in Europe and in its other colonies, all suggest
that the French would welcome an armistice. Numerous indications of
declining morale, a growing ammunition shortage, and the disruption of
normal economic life in Vietnam territory make further resistance in-
creasingly disadvantageous for Vietnam.
The major current issues between France and Vietnam center
about the status of Vietnam within the French Union and the future posi-
tion of Cochin China. Before these issues can be discussed, France and
Vietnam must agree on a plenipotentiary who will be acceptable to the
former as representative of the people of Vietnam. Until now, this has
been a major obstacle to even an informal French-Vietnam rapproche-
ment. Rumors of secret preliminary talks persist despite repeated
denials by both French and Vietnam authorities. Contact could be ef-
fected between France and Vietnam through one of several potential in-
termediaries: the former Emperor of Anna.m, his Empress, or the
President of-the Cochin China Provisional Government. In addition,
Annamite groups sympathetic to the Kuomintang in China have volun-
teered to form a government, including moderate members of the Viet-
nam Government, with which the French could negotiate. If they have
not already done so, the French are expected to take advantage of these
opportunities in the near future in an effort to extricate themselves from
an increasingly unprofitable campaign.
Reduction of Soviet Troo Stroll& in North Korea
Since the beginning of April, when Lieutenant General G. P.
Korotkov replaced Guard Colonel LM. Chistiakov as Commander of the
Soviet Forces in Korea, indications have been accumulating of a sizeable
reduction in Soviet occupation forces in Korea, north of the 38th parallel.
General Chistiakov had command of the Soviet 25th Army, but his succes-
sor is addressed only as Commanding General, Soviet Forces in Korea.
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This change of title may signify that the 25th Army has been replaced
by a unit of co is size. Reports from North Korea during February
and March indicated that Soviet troops in that region ere being de-
mobilized and shipped out. The US Political Adviser in Korea also
has reported that the reduction of Soviet forces continued during March
and that Soviet military strength in North Korea may now be no greater
than the US strength in the South (about 50,000 men). Wether or not
the Soviet forces have actually been cut down to this level, it is certain
that substantial reductions have taken place and that S viet effectives in
Korea at present number no more than 100,000 as against a previous
total of approximately 150,000.
Although the USSR has been carrying out the fifth phase of its
Demobilization Plan during this period, these reductions appear to be
attributable primarily to political and economic considerations. Rece t
reports of an increasing scarcity of food in North Korea have been ac-
companied by a renewal of migration to the US Zone. The recent
threat of the People's Committee in North Korea to shut off the supply
of electricity to the US Zone unless paymel t is promptly made for sub-
stantial past deliveries of power -- either in cash, food, r electrical
? equipment -- also reflects the urgency of the eco ? mic situation in the
north. While currency circulatiot and price levels have been stabilized
and are even declining z South Korea, mounting inflation and increasing
scarcity reveal the existence of a real crisis in the Soviet Zone. Inas-
much as the Soviet forces in Korea and in other occupied areas 11?ff
the land, a reduction of Soviet troop strength is probably dictated by
neces ity, as well as by policy.
lratlon
ThreatensCi-shq.kr Efforts
Faced with the threat of an unprecedented inflation in China,
Chiang Kai-shek is now contemplating a new and form 1 request to the
US Government for financi 1 assistance. three separate occasions
within the past two weeks, the urge cy of Chinas need for outside aid
has been eraphasia to US officials i China by high Central Government
authorities. The deep 'concern shown by Chiang and his represe tives
probably arises from their re lizatlot that an explosive inflation might
lead to a complete collapse of Chines national currency hich Tould
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paralyze Natio., alist military efforts to achieve a speedy, decisive
suppression of the Chinese Communists.
Prospects of a runaway inflation can be detected in the record
rise h Chines national budgetary deficit during March -- the direct .
result of intensified military operations that began early in that month.
Th deficit, mainly financed by the inflationary issue of nee currency,
had risen from CN$ 266 billion for the month of January 1946 to a
monthly a er e of CN$ 679 billion for January and February 1947;
but h March it nearly doubled, reaching a new peak of CN$ 19166 bil-
lion. The amount of currency in circulation correspondingly increased
to reach a sew high of CN$ 5,698 billion on 31 March, approxi ately
six times the late 1 5 level. Moreover, it is likely that, without out-
side aid, the deflationary effect tf the net inflo of goods and resources
from-.road in 1947 and of official sal s of gold the Chinese p lie
will be of even less magnitude than last year.
? With little prospect for an increasing 'volume of goods and re-
sources offered to the public, there is a strong probability that the
recent sharp deterioration r the Governme es fiscal position will soon
exert an overwhelmi inflationary pressure oi Chines highly unstable
price structure. (Commodity prices and exchange rates in Shanghai
already h ve broken through official control levels, despite police en-
forceme t.) Once the inflationary spiral ga ers headway, public lack of
confidence in the Government and its currency can be expected to mul-
tiply many times more than it did last year -- the inflationary impact
of budgetary dead on Chines economy.
The real danger, as Chine* Kai-shek undoubtedly realizes, is
that runaway inflation .. ay quickly reach a point where Chines national
currency loses all usefulness as a medium of exchange, and hence as
an instrument of governmental policy. Such a currency collapse could
produce a political crisis of the first magnitude, as currency has tra-
ditionally bee. a major means whereby the Goverment has preserved
authority over its military and civil components. Of even more im-
mediate significance, currency collapse (and the holesale flight into
commodities and real assets that ould accompany it) would deprive
Chiang and his Governme it of the means of giving adequate financial
or material support to Nationalist military forces now in the field.
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Chiang Kai-shek, therefore, faces the alter tives of opting
a policy of immediate large-scale military retrenchments in order to
eliminate the major factor behind inflation? or of inviting a hyper-
inflationary wave that will ultimately force military retrenchment
upon him. It is believed that Chiang seeks to avoid these alternatives
by a plea for immediate and substantial assistance from the US.
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CONTENTS
44
TRENDS IN BRIEF
GENERAL
Reactions to Wallace's. Speeches in the UK
Pages
iv
1
WESTERN EUROPE
Soviet Interference in Berlins Government
3
Effect of De Gaulle's Re-entry into Politics
4
"Moroccan Renaissance" Embarrasses France . . . .
.
5
EASTERN EUROPE
Soviet Reaction to VOICE OF AMERICA. ..... . .
?
?
6
Soviet Industry Falls Short of Goals in First Quarter .
?
?
6
Soviet Military Activity in Black Sea Area
7
Economic Collapse Strengthens Communist Control
In Rumania
8
The Yugoslav Economy
9
FAR EAST
Replacement of Damrong Cabinet in Siam Expected. .
.
11
The Visit of.the WFTU to Japan and Korea
12
THE AMERICAS'.
The Paraguayan Revoli
13
Anti-Cent:n=1st Trend in.Latin America. . . ? ? ?
p
15
Document No.
NO CHANGE in Class. -0 4
tEC:ASSIFILD
ss. CiA-K2D TO: TS S C
DDA Memo, 4 Apr 77
Auth: DOA REG. 77 1763
Date: By:
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TRENDS IN BRIEF
GENERAL
Preliminary reactions abroad to Wallace's geeches in the
UK suggest that they will provide ammunition for anti-US groups in
the Immediate future, but ultimately will not have any substantial
effect (page 1).
WESTERN EUROPE
The anti-Communist SPD Berlin_RHIL nment has indicated
that it will resist further arbitrary interference by the Soviet Military
Authority (page 3).
The immediate effect of De Gaulle's re-entry into politics
has been to disrupt the growing anti-Communist coalition and to
strengthen the position of the Communists (page 4).
The Sultan of Morocco's plea for reforms, in his recent Tangier
speech, has made him a rallying point for nationalist groups in French
and Spanish Morocco (page 5).
The 20 ZiEril elections in Sicily for the regional assembly are
expected to stimulate discussion for regional autonomy in other parts
of Italy (Sardinia, Calabria, and possibly northeastern Italy). The
strength of the Sicilian Separatist movement compelled the Italian
government to approve for Sicily the first autonomous regional assembly
In recent Italian history. If regional autonomy in Sicily proves successful,
agitation for a similar status elsewhere may achieve considerable mo-
mentum . The opposition to Federalization in Italy (as in Germany) has
been led by the Communists, who believe that a strong central govern-
ment is more susceptible to Communist domination. Although a strong
central government is also the ultimate objective of the rightist parties
In Italy, regional rightist elements may support?as a matter of expediency,
similar movements for semi-independence in other areas. Their pur-
pose in so doing will be to forestall Communist penetration and to insu-
late these areas against radical measures which may be imposed as a
result of Communist influence in the central government.
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Despite the stringent fiscal position of the Italian Government,
and consequent rumors of changes in the Cabinet, it seems likely that
the 14-point anti-inflation program proposed by Premier De Gasper'
will delay a political crisis at least until the fall elections. While the
program (some parts of which have already been approved by the
Council of Ministers) is not expected to effect a basic solution of
Italy's financial problem, it is at least a step in the direction of con-
trolling inflation and putting Italy's economic house in order.
EASTERN EUROPE
The violent attack of the Soviet 'ro. : ? ?da machine on the
State Department s Russian-language broadcasts may, in reaching
certain intellectual groups within the USSR, react to increase the
effectiveness of these programs (page 6).
An official Soviet report indicates that 16 of 30 industrial
ministries in the USSR failed to achieve their quotas for the first
quarter of 1947 (page 6).
Current Soviet Black Sea area is
probably designed to maintain military efficiency and to increase
psychological pressure on Turkey and Greece (page 7).
A Communist-sponsored inflation and economic crisis in
Rumania is expected to result in attainment by the Communists of
their principal objectives (page 8).
The cessation of UNRRA si_Tpli,oslavia may seriously
strain the country's economy but is not expected to cause the overthrow
of the Tito regime (page 9).
A threat by Cardinal Mindszenty, Primate of Hungary, to
excommunicate all deputies who vote for the substitution of optional
for compulsory religious education will either force the Smallholders'
Party to break its inter-party agreement to support the bill or accom-
plish what the Communists have thus far failed to do, ? split the
Smallholders' Party wide open. Thus, if Mindszenty carries through
his threat, the Communists will probably use this issue to provoke a
fresh political crisis in the hope of forcing new elections before the
withdrawal of Soviet troops.
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In an attem t to i reak the three-..a deadlock in Finland
foilowingihe res e a a e IrfardairPaiigi-
kivi has asked Sakari Ti ) loja-- member of the small, center
Progressive Party and President of the state-owned National Bank--
to form a new Cabinet. The current crisis was caused by the desire
of the Right and Center parties to use the conflict over stabilization
of wages and prices as a means of reducing Communist inNence
in domestic affairs. Communist opposition, however, may prevent
Tuomioja from forming a new Government. It is also unlikely that
the Moderates, fearing Soviet economic reprisals, will insist on a
cabinet which will seriously lessen Communist influence.
NEAR EAST-AFRICA
treaty of "Brotherhood and Alliance" between Iraq and
Transjordan was signed on 14 April. The terms of the treaty have
net yet been revealed but are described by the Iraqi Foreign Minister
as "fully in accord with the Arab League pact" and designed only to
strengthen Iraq's bonds with the othr r Arab states. Nevertheless,
the new treaty is certain to cause apprehension on the part of the
Syrian and Saudi Arabian governments as a further step toward Iraqi-
Transjordan union and implementatio of the Greater Syria plan.
FAR EAST
Continued and intensified dissatisfaction with the Siamese
Government may cause political leader Pridi to replace Premier
Damron,g with General Adul, Army Commander, and set up a new
Cabinet when Parliament reconvenes on 10 May (page 11).
The recent visit to Korea of a delegation of the World Federa-
tion of Trade Unions will probably result in attacks by international
labor organizations upon US occupation policies in that area (page 12).
Fear that the US might seek bases in China, as a condition
for extending economic or military assistance, appears to be the
motive behind inquiries recently made by Chinese military and naval
attaches in Rome. Under instructions from Nanking, these attaches
have asked their US opposite numbers whether the US is negotiating
with the Greek Government for US bases in Corfu and Crete.
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THE AMERICAS
The Morinigo dictatorship is not expected to survive the
crisis in Paraguay (page 13).
An anti-Communist trend in three Latin American countries
is indicated by the recent actions of Cuba, Chile, and Brazil to curb
Communist influence (page 15).
The Venezuelan Government has apparently forestalled a
revolt, reportedly planned for 15 April by adherents of former
president Lopez Contreras. Acting under extraordinary powers
granted for this specific purpose by the Constituent Assembly, it
has placed under arrest some 325 persons who, in the Government's
view, might have precipitated the revolt.
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GENERAL
Reactions to Wallace's Speeches in the UK
Whatever Wallace's purposes may be in conducting a speaking
tour in Europe, the principal immediate effect is to provide reinforce-
ment and ammunition for those Left-wing political groups abroad
which are critical of US foreign policy or are pro-Soviet in orienta-
tion. Wallace's statements have also encouraged the impression abroad
that a considerable proportion of the US public does not 'support the cur-.
rent 'policy of the Truman Administration. At this point, however, it ?
appears unlikely that Wallace's specious arguments will ultimately have
any substantial effect, though his distortions of Ug policy will be exploited ?
by anti-US elements to discredit the US and harass their own governments.
In the UK, Wallace has probably confused popular thinking, rather
than caused mass conversions to the views of the anti-Bevin Leftists. It
seems clear, however, that Wallace's utterances have somewhat streng-
thened Labor's rebellious Left-wing (which invited Wallace to 'visit the
UK) and, to a similar extent, have jeopardized the Government's foreign
policy. The Conservative and Liberal press for the most part have been
critical of Wallace. The UK Government, however, is dependent upon
the support of some 12,000,000 Laborites. A substantial portion of the
latter have welcomed Wallace as the anti-reactionary, pro-Labor in-
heritor of the New Deal; they are particularly receptive to Wallace's
urgings that the UK adopt a "middle ground" and seek "understanding"
with the USSR, and they fear that current US "toughness" will lead to
war (in which the UK would be the first and major victim). On the other
hand, the British people are politically mature and not easily led by
demagoguery. Wallace's particular target ? aid to Greece and Turkey --
has until now been a responsibility of the British themselves. Farther- ?
more, there may be an unfavorable reaction to his "unsportsmanlike"
attacks on the US in a foreign country.
Nevertheless, the Left-wing has made some gains. (Canadian ?
officials, impressed by the attention given Wallace by the British, view
his appeals to the people as "important".) These gains may be tempo-
rary, for the UK Government will surely make considerable effort to
counter what amounts to an attack on Bevin and Attlee, but the dissident
Laborite group will continue to exploit Wallace's support in order to win
and retain new adherents. Wallace's statements may represent the
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first step of a renewed campaign by the "rebels" to alter the UK foreign
policy.
Elsewhere, the most significant preliminary reactions to Wal-
lace's speeches have been in France, Sweden, and Italy. Only the Com-
munist Party newspaper in Paris has directly reported Wallace's UK
speeches, although other papers have reported US comments. A high
French official (a member of Bidault's Party) has stated privately that
the Government (presumably excluding Communist members) is dis-
tressed at the forthcoming Wallace visit, and that no official entertain-
ment or favors would be proffered. In Stockholm alias been "intimated"
that possibly only two or three Cabinet members will be free to attend
either of the two functions planned for Wallace. Although local groups
originally intended to invite all Government Ministers, Chiefs of Mis-
sions, and members of the US Legation to his speech, officials pre-
vailed informally on the hosts to restrict the functions. (Wallace ap-
parently was invited to Sweden by a warm friend of the USSR.) In both
capitals, however, the promulgation of the Wallace views will provide
potent ammunition for anti-US elements.
This is likewise true in Italy, where pro-US liberal elements
have been losing ground for some time. The press has given wide and
continuous coverage to Wallace's speeches. Only the leftist press has
supported Wallace s position, but it has reportedly made particular
capital of the impression created by Wallace that US policy toward
Greece and Turkey has a serious opposition at home (and hence cannot.
be firmly implemented in the Eastern Mediterranean).
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WESTERN EUROPE ?
Soviet Interference in Berlin's Government
The record of the USSR's repressive actions against the city
government of Berlin demonstrates again that any central adminis-
tration of Germany will fail unless the basic agreements are drawn
so clearly that the USSR cannot readily make unilateral interpreta-
tions. By arbitraryl interpretation of the Kommandatura agreements,
the USSR was able to frustrate and delay the Social Democratic Party
(SPD) in its attempt to set up a municipal government. Although the
SPD had won the October elections, the Soviet Military Authority
sought to prevent the SPD from replacing Communist officials in the
government with their own appointees. After long, and frequently
angry, discussions on the Kommandatura level, the new Assembly
was able to appoint only the top officials.
The position of the new government has been almost intolerable
from the beginning. Of approximately 80 laws passed by the Assembly,
all but 3 were either vetoed or delayed by the Soviet Authority which
. has arbitrarily assumed a veto power. Operating on a lower level, the
USSR employed the Socialist Unity Party (SED) within the government
to nullify Social Democratic action whenever possible. The continued
presence in the civil service of the SED, the Communist-led Free
German Trade Union, and other organizations directed by the USSR,
has made the government's control of the bureaucracy less than
nominal.
The situation is now reaching a climax. The victorious SPD
has for some time been of the opinion that the SPD Lord Mayor has
been indecisive or too conciliatory in his dealing with the Soviets.
With the support of other non-Communist parties in the City Assembly,
the SPD recently obtained a vote of non-confidence against the Lord
Mayor. This is probably a prelude to replacing the present incumbent
with a more vigorous anti-Communist. If the Soviet Authority rejects
this new candidate, it is likely that all non-Communist parties will re-
fuse to participate further in the Berlin government until the Soviet
occupation officials have clearly accepted the principle of self-govern-
ment for the Berlin administration.
The pattern of these developments clearly indicates that if the
Soviets are forced to make concessions on high levels they will con-
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? tinue to exert the same obstructionist tactics on the lower levels of
government, thus making it extremely difficult, if not impossible, for
an elected non-Communist government to operate effectively,
Effect of De Gaulle's Re-entry into Politics
Upon assuming leadership on 14 April of the Rally of the
French People (RPF), General Charles de Gaulle emphatically stated
that the RPF is not just another political party. His intention is to
create a "non-political" organization to which members of the various
parties can adhere in the name of national unity without prejudice to
their Party membership, His appeal is addressed to those weary of
party factionalism to the anti-Communists, and to those who feel that
the De Gaulle "mystique" will bring order, authority, and unity to
France. The RPF is intended to serve as a vehicle by which De Gaulle
may be carried to power in the event of a governmental crisis. Such
a crisis the General confidently expects within the year. If the RPF
obtains a sufficient following, De Gaulle will very likely convert it
into a political party and will declare that the movement constitutes a
mandate from the people to assume the leadership of France.
The balance of forces in the French political structure is so
delicate that De Gaulle's intrusion upon the scene has affected every
group. While every political party in France has reason to resent
De Gaulle's declared scorn of 'existing parties", the anti-Communist
parties are particularly disturbed by his action. These anti-Communist
forces have been drawing together within the framework of their re-
spective party affiliations and feel that De Gaulle has blundered upon
the scene just as they were about to effect the isolation of the Commu-
nists. The Communists are placing themselves before the people as
the true defenders of the democratic process and the Constitution
against the arch-enemy De Gaulle, and thus may win over the anti-
De Gaulle Socialist Party which has been steadily drawing away from
Its Communist affiliations. The immediate effect, therefore, of De
Gaulle's re-entry into politics has been to disrupt the growing anti-
Communist coalition and to strengthen the position of the Communists.
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"Moroccan Renaissance" Embarrasses France
In apparent anticipation of an eventual elimination of French rule
in North Africa, the Sultan of Morocco called for a "Moroccan renais-
sance" during his recent visit to Tangier. While none of the Sultan's
statements could be regarded as inflammatory, his plea for reforms
has made him a rallying point for previously disunited nationalist groups
In French and Spanish Morocco.
Should native extremists now be encouraged to take overt action,
compelling the French to institute repressive measures, serious out-
breaks might spread throughout the area. If the French should seek to
restrain the Sultan or refuse to consider his reform proposals, even
responsible nationalist leaders may decide to change their tactics; they
may abandon their hope of obtaining French acquiescence to autonomy
and may create disturbances in order to force UN consideration of their
cause.
The seriousness with which the French regard the situation is
indicated by the fact that they have instructed the Resident General of
Morocco to ask the Sultan for explanations of his Tangier speech. The
French are particularly displeased by the Sultan's hint that he might
aspire to "some sort of Caliphate."
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EASTERN EUROPE
Reaction&AA kY.OICE OF AMERICA.
The Soviet propaganda machine has reacted violently to the
Russian-language broadcasts from the US. The selection of the '
popular and authoritative ilya Ehrenburg to lead the attack is, in
Itself, significant. Writing in the current issue of CULTURE AND
LIFE, Elirenburg describes the American programs as a mixture of
"jazz culture" and a "holy crusade" against Communism. It is
fortunate, he observes, that Goering and Goebbels have committed
suicide as, otherwise, they might demand copyright privileges.
the attack has been made in spite of the obvious risk of ad-
vertishig the program and is in marked contrast to the official silence
regarding the much older, and more restrained, BBC Russian-language
broadcasts. Such gratuitous publicity is especially surprising because .
the VOICE OF AMERICA audience is composed of a relatively small,
privileged group who own private receivers.
Th e explanation of the Soviet reaction probably lies in the fact '
that these listeners, although numerically small, occupy a particularly
Influential position in the Soviet caste system and are especially sus- ? .
ceptible to Western ideas. The recent "purification" of the intern- ?
gentsia revealed the contern of the Kremlin regarding the ideological
loyalty of this group. information reaching this element is undoubtedly
soon transmitted to other strata of Soviet society which, because of
admiration for and curiosity about the I1S, are sure to grasp at any
scraps of forbidden American fruit. In all probability, therefore, the
Ehrenburg article will only serve to increase the effectiveness of the
programs from the US.
Soviet Industry Falls Short of Goals in First siluarte.
The report of Gosplan (State Planning Commission) on the ?
progress of the Soviet industrial plan for the first quarter of 1947 in-?
dicates that, while there has been general Improvement over the .cor-
responding period of 1946, failure to achieve quotas has occurred in
16 out of 30 industrial ministries. The most critical of such industri-
al failures are in ferrous metallurgy, coal, heavy machinery, and
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building construction. Particularly surprising is the deficiency in
agricultural machinery output, which has been the subject of special
attention by Kremlin economists. Transportation continues a serious
bottleneck. Light industry and consumer-goods production, however,
have shown marked improvement. (Paradoxically, this has been of
little benefit to the Soviet consumer, because excessive food prices
and increased taxation have seriously curtailed his purchasing power.)
It appears, therefore, that while economic recovery is under way, the
achievement of 1947 goals is by no means assured.
Soviet Military Activity in Black Sea Area
Despite recent reports of (1) the assignment of top Soviet mili-
tary commanders to the North Caucasus and Trans-Caucasus Military
Districts, (2) a staff conference on 25 March at Odessa presided over
by Zhukov, and (3) increased training activity in the Black Sea Military
Districts, there appears to have been no abnormal departure from
Soviet military policy in this area.
The latest estimates for the four Black Sea Military Districts
and the Southern Group of Forces (in Bulgaria and Rumania) total
820,000. This figure is consistent with the Kremlin practice of main-
taining border forces equal or superior to those of any conceivable
combination of opponents (combined Turkish, Greek, and Iranian forces
O now total 672,000). Estimated Soviet strength in Rumania has decreased
recently from 200,000 to 130,000.
The Soviet forces in these areas are believed to be in a state of
high combat efficiency and are expected to engage in extensive spring
maneuvers. It is extremely unlikely that such maneuvers foreshadow
early offensive action by the USSR; they are probably designed to main-
tain the efficiency of the participating units and to increase the psycho-
logical pressure on Turkey and Greece.
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Collapse Control in Rumania
The achievement of the Communists' goal in Rumania ? nationali-
zation of industry and complete control over all phases of the nation's
economy -- appears imminent. Currency inflation has been suddenly
accelerated (the open market exchange rate on 15 April was 1,300,000
lei to the dollar) and Parliament has passed legislation granting the Com-
munist-controlled Ministry of National Economy the power to control the
allocation of raw materials and credits, to supervise manufacturing opera-
tions, and to regulate prices, salaries, profits, and public and private in-
vestments. Under these conditions, private industry cannot survive and
early nationalization will be the only alternative.
The present economic crisis, including the inflation, has been
deliberately planned by the Communists. It is, in fact, merely the culmi-
nation of their long-range plan to take over the country. The pattern of
that plan is now clear in most of its details and affords a valuable insight
into Communist tactics.
The Communists first obtained control of the Police, the Army,
and the Ministries of National Economy, Information, and justice; they
were then able by late 1946 to eliminate important opposition elements --
through arrests and faked trials -- and to rig the November elections in
their favor. A period of consolidation followed the elections, during
which the economic situation was allowed to deteriorate with increasing
rapidity, and the Rumanian National Bank was nationalized. By March
1947, any potential overt opposition was silenced by another series of
mass arrests. In the meantime, the Communists took no effective steps
to check the mounting inflation, and on 1 April 1947 they actually gave
it additional impetus by forcing through Parliament a bill which increased
wages and prices tenfold. Private business (particularly foreign-owned) ?
faced with the National Bank's discriminatory credit policy, skyrocketing
labor costs, unprofitable reparations deliveries to the USSR, and lack of
equipment -- has thus been brought to its knees.
Demoralization of Rumania's Opposition is so complete that no
force or group seems capable at this time of offering effective resistance
to the Communists. In addition to the efficient Communist-controlled
Rumanian secret police, the USSR is reliably reported to be organizing
an elaborate MGB (Ministry of State Security) control system, composed
of Soviet civilians domiciled in Rumania, which will cooperate with the
Rumanian Police and the Army after the withdrawal of Soviet occupation
C> forces.
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The Yugoslav Economy.
The cessation of U,NRRA supplies to Yugoslavia in June may
seriously strain the Yugoslav economy. By June 1947, UNRRA will
have supplied Yugoslavia with a total of $500,000,000 in food and in-
dustrial rehabilitation equipment, which sum has been largely respon-
sible for raising the level of the Yugoslav economy to 70% of pre-war.
Maintenance of even this level in 1947 will require foreign credits esti-
mated at $64,000,000. Meanwhile, Tito has promised the Yugoslav peo-
ple that economic prosperity will be achieved by a grandiose five-year
plan for industrialization of the country far beyond prewar levels and
by the close integration of the Yugoslav economy with the economies of
Eastern Europe and the USSR. To accomplish this objective, however,
Tito must industrialize a predominantly agricultural economy and carry
out post-war reconstruction, both of which, in turn, are primarily de-
pendent upon the importation of machinery and industrial equipment from
the West.
Many internal obstacles stand in the way of the accomplishment
of this program. Agricultural products, lumber, and certain raw mate-
rials are the only exports which Yugoslavia could develop to exchange
for the machinery and industrial goods needed to rehabilitate the coun-
try's economy and to implement the five-year plan. Although Yugoslavia
can attain self-sufficiency in food, hoarding by peasants and the lack of
farm machinery and of spare parts for the maintenance of UNRRA equip-
ment wiliprevent the early accumulation of any substantial exportable
surpluses. Lack of sawmills will likewise hinder the exploitation of the
country's large timber resources. Lastly, a shortage of locomotives
and rolling stock will seriously retard full economic recovery.
Even with substantial Western credits for the purchase of capital
goods, Yugoslavia will have great difficulty meeting its five-year indus-
trial goal. Factionalism and hatred among member republics militates
against an integrated national industrial effort. There is a shortage of
skilled labor and management personnel, caused by war losses and by
Communist purges. Conversion of Yugoslavia's predominantly peasant
population into an effective labor force will take many years.
In an effort to obtain essential imports, the Tito regime has
signed many trade agreements, chiefly with the USSR and its European
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satellites. These agreements, however, will provide Yugoslavia with
only a fraction of the goods needed for the five-year plan and with vir-
tually no foreign exchange that can be used for purchases from the
West.
The USSR, although vitally interested in developing Yugoslavia
as a show window to display the advantages of a Communist state, is
unable at this time to offer substantial economic aid and will help --
possibly with a gold loan or limited quantities of sawmills -- only in
the unlikely eventuality of a threatened collapse of the Tito regime.
Although the Yugoslav economy will thus show little improvement
for a number of years, economic difficulties are not expected to cause
the overthrow of the present Government. Tito, with the backing of a
large army and an elaborate police force (Which are themselves an
additional burden on the economy), will be able to retain power despite
the country's low standard of living. He may, nevertheless, be expected
to intensify his quest for Western aid in order to solve his difficulties,
provided such aid can be had without important political concessions.
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FAR EAST
fa
Replacement of Damrong Cabinet in Siam Expected
Because of the failure of the Damrong Government to alleviate
such pressing economic problems as inflation, continuing shortages of
consumer goods and of materials needed for the rehabilitation of Siam's
economy, it was expected that the Government would be replaced upon
Prides return from a world tour late in February. At that time Pridi
took no action, but it is now believed that a new Cabinet will be appointed
when Parliament reconvenes on 10 May. Dissatisfaction with the Dam-
rong Government has been intensified by efforts of certain Cabinet Minis-
ters and government officials to augment their official incomes by black-
market activities.
In an effort to replace the Damrong Cabinet (a coalition of two
parties under the background leadership of Pridi), the opposition Demo-
cratic Party leader, Abhaiwong, assured the wartime Premier, Phibul,
of parliamentary Support by his party. Capitalizing on popular discon-
tent with the Damrong Government, Phibul announced, at the end of
March, that he intended to re-enter politics. Because of Phibul's war-
time record and ultra-nationalism, however, -British and US representa-
tives in Bangkok unofficially expressed great concern over Phiburs
announcement. These unofficial statements, the opposition of the incum-
bent government, and the firm control of the Army by its pro-Pridi Com-
mander-in-Chief, General Adult apparently were sufficient to discourage
Phibul's ambitions.
In order to counter the possibility of a future attempt by Phibul
to return to power in league with Abhaiwong's opposition group, Pridi
is believed to be considering Adul as a successor to the present Prime
Minister, Damrong. Certain difficulties stand in the way of this plan.
Adul is not a member of Parliament; hence, the present Parliament
must be dissolved and new elections held in order to make Adul eligible
for the Premiership. Despite its complications, this procedure may be
attempted by Pridi to provide a strong figure, capable of opposing Phibul,
to head a Cabinet selected from Prides coalition parties. Ades back-
ground as wartime police commander and his present control of the Army
suggest that a government under his leadership might have strong authori-
tarian tendencies.
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The Visit of theF to jawTU and Korea
The delegation of the World Federation of Trade Unions which
recently visited Japan and Korea under the leadership of the French
Secretary General of the Federation, Louis Saillant (a fellow traveller,
If not a Communist Party member), has now left the Far East and pro-
poses to publish a report of its findings at the beginning of Dine. The
WFTUss visit to Japan was uneventful in contrast to its visit to Korea.
Saillant arrived in Seoul, Korea, on 30 Marchrafter having spent
nine days in Japan. Re was accompanied by three other delegates re-
presenting the US, the USSR, and the UK. Saillant, who also represented
France, took command of the proceedings, although the American dele-
gate, Willard Townsend, was supposedly chairman of the group. Accord-
ing to the US Economic Adviser in South Korea, the WFTU delegation
appeared to be more concerned with establishing contact with leftist
trade union leadership than with investigating labor conditions in South
Korea.
During their two-day visit to the US Zone, the delegation made
?a considerable display of mistrust and hostility toward the Military Gov-
ernment. Ignoring the official program of conferences and inspections,
the delegates visited leftist leaders in their homes, in company with the
Soviet Liaison Officer in Seoul and a Communist interpreter who had
previously joined the group on his own initiative.
The Willi delegates subsequently left for the Soviet Zone, from
which they returned with sharply contradictory reports. The French and
Soviet delegates seem to have been favorably impressed by labor condi-
tions under the Soviets, which the US and British delegates later described
as oppressive. Throughout the group's visit to North and South Korea, the
US and British delegates seemed to be unwilling participants in activities
which they could not control. The French and Soviet delegates were well-
informed about the leftist movement in South Korea, while the South
Korean leftists, in turn, possessed many facts about the WFTU unknown
to the US authorities. Saillant himself is a familiar figure to South
Korean leftists,and has, along with Stalin, been elected 'honorary chair-
men" of various People's Front organizations. As a result of this visit
of the WFTU, attacks will probably be launched in international labor
circles against US occupation policies in Korea.
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THE AMERICAS
The Paraguayan Revolt
Although the military situation in Paraguay remains obscure
(in part because of interrupted communications between Asuncion and
the territory occupied by the rebels), the weight of the evidence sug-
gests that the Morinigo dictatorship will not survive the present
crisis.
Several recent Morinigo demarches would, in the absence of
this evidence, seem to indicate that the Government feels genuine con-
fidence regarding its ability to put down the five-week-old rebellion.
The Government has turned a deaf ear to mediation offers from out-
side. It has revoked the decree in which it had recognized the exist-
ence of a "state of war" with the rebels. It has directed the atten-
tion of foreign military observers to "preparations" for a large-scale
offensive against the rebel stronghold in Concepcion. It has named a
date by which it will have brought the rebels to heel.
The facts of the situation, however, point in a quite different
direction. Morinigo has, at no time, had any reason to suppose that
mediation from outside Paraguay would restore the pre-rebellion
status quo, or that he could accept mediation without having the charge
substantiated that his government no longer represents the true bal-
ance of political forces within the country. The "state of war" decree -
had, for various reasons, proved actually beneficial to the rebels.
Rapidly worsening economic conditions in Asuncion (where prices are
sky-rocketing and numerous articles of everyday use are already =-
obtainable), reduce the possibility of adequate preparations for a
large-scale offensive across difficult terrain. Finally, because of
growing unrest and disintegration within the territory it nominally con-
trols, the Government needs to use an increasing proportion of effec-
tives for police duties.
The conclusions that emerge from the welter of rumors, con-
flicting reports, charges, and counter-charges in Paraguay are:
(1) the Covernment after five weeks can point to no single military suc-
cess against the rebels; (2) its hold on Asuncion itself is so uneasy that
it has seen fit to establish eight troop concentrations at strategic loca-
tions around the city for rapid rnoVement to the scene of any disturbance
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and (3) the mere maintenance of a stalemate along .a largely inactive
"front" cannot, as time passes, redound to Morinigo's political ad-
vantage ( recent reports indicate, indeed, that the rebels, recognizing
this, are avoiding battle). Popular discontent reportedly is being
fanned by wheat and gasoline shortages, numerous arrests, interrup-
tion of river transport services and the curfew. There is, moreover,
convincing evidence of potential disloyalty to Morinigo within the
armed forces themselves (the most conspicuous example is the Com-
mander-in-Chief, Colonel Smith, who has told the US Military Attache
that some of the rebels are "honorable officers" and that the revolt
is "understandable").
The political situation -- in Asuncion itself, throughout the
countryside, and among Paraguayan exiles and refugees in neighbor-
ing countries -- is hardly less confUsed than the military situation.
The chief political result of the rebellion to date has been to force
Morinigo, who in the past had avoided affiliation with any specific
political grouping, into the arms of the so-called Colorado party
(which has for some time been a part of the coalition government).
Some prominent Colorados, however, would welcome a solution that
would save the regime but sacrifice Morinigo. A second large pol-
itical grouping, the Liberal party, refused for some time to take sides
either with the Covernment or with the rebellion, but is now, accord-
ing to the Embassy, verbally committed to the latter. A third, the so-
called Febreristas, whose leader is ex-president General Franco, is
clearly the principal political support of the rebels. The Communists
? undoubtedly favor the rebels, but (1) there is no reason to suppose
that they are sufficiently numerous to affect the result; and (2) there
is, in any cape, no evidence that they have played any such role of
leadership in the rebellion as General Morinigo likes to attribute to
them.
The talk of possible mediation, for the avowed purpose of pre-
venting further bloodshed in Paraguay, is traceable mainly to Rio de
Janeiro and to Buenos Aires. Argentina, which rarely nowadays misses
an opportunity to adopt a "correct" inter-American attitude on any
current question, favors multilateral mediation under existing inter-
American agreements. Brazil, whose diplomatic representative in
Asuncion is clearly pro-Morinigo, would apparently oppose any media-
tion procedure that included countries such as Uruguay and Chile,
where powerful Leftist groups could bring pressure against Morinigo.
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Without Brazilian support, the Argentine view is unlikely to prevail;
and Brazil, which is thinking in terms of a mediation upon request by
the Paraguayan Government, has found the latter unwilling to make
the request without assurances of a settlement that would give Morinigo
a complete victory.
Informed observers expect the Paraguayan problem to occupy
a prominent place on the agenda of the forthcoming conference between
the presidents of Argentina and Brazil.
Anti-Communist Trend in Latin America
Two Latin American countries, Cuba and Chile, have apparently
abandoned their policy of lenience vis-a-vis local Communist parties,
and have recently taken action that may curb growing Communist influ-
ence in the area. A third country, Brazil, appears to have determined,
after several months of indecisive debate, to initiate action against the
Communist Party.
In Cuba, the government postponed until further notice a nation-
wide congress of the Communist-dominated Confederation of Cuban
Workers scheduled for 5 April, jailed several Communists in connection
with the murder of an anti-Communist labor leader, and prohibited the
annual May Day labor parade in Havana.
In Chile, President Gonzalez Videla on 16 April turned out of
office three Communist ministers he had appointed last year in recog-
nition of the support he had received from the Party in the presidential
election (they were the only known Communists holding portfolios in
Latin America).
In Brazil, President Dutra on 15 April decreed the suspension
of the Communist Youth Union and directed the Attorney General to ask
the courts to dissolve it.
The weight of evidence indicates that President Truman's recent
speech and the stiffening of US policy with respect to Communism have
been decisive factors in bringing about this sudden change in the status
of the Communist Party in its three major Latin American strongholds.
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CONTENTS
Pages
TRENDS IN BRIEF
GENERAL
Liess Actions Regarding Satan Secretariat 1
WESTERN EUROPE l,
,
Significance of the Conscription Issue in the UK 3
De Gaulle's Expectations Returning to Power 4 1
Italian Comm s Apparently on e ......*-41 ..... 5
,
EASTERN EUROPE
Soviet Propaganda Reaction to US Greek and Turkish Policies 7
Difficulties in the Greek Civil Service 8
NEAR EAST-AFRICA
Effect of Maladministration on Iran's Security 10
FAR EAST
Kuomintang Likely to Retain Political Control in China . . . 11
US de facto Recognition of the Indonesian Republic '12
Document to.
0 CHANGE in Class. 0
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CIAITCLD TO: TS S C
DD Mc-mo, 4 Apr 77
Auth: DDA 77G. 77 1763
Date
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TRENDS IN BRIEF
GENERAL
Lie's decision to investigate char g concerning the integrity
of the Balkan Commission secretariat reflects a desire to bolster
his own position rather than to determine the facts in the case (page 1).
WESTERN EUROPE
? Although anti-conscription sentiment within the Labor Party,
has led the UK Government to decrease the length of service required
by the National Service Bill, this action probably does not constitute
a precedent for further concessions to dissident Laborites. Moreover,
the Government's insistence on continuing conscription indicates a
determination to maintain the UK's world position (page 3).
De Gaulle has indicated his determination to return to power
and expects to be callea upon by the French people to save the
country (page 4).
The Italian Communist Party apparently has adopted a defensive
policy pending the outcome of the national elections to be held within
a few months (page 5).
By authorizing the Spanish press to publish the manifesto by
which Don Juan, the Pretender to the Spanish throne, repudiated the
new succession law, Franco's regime displays its confidence that Don
Juan lacks enough popular influence to upset the status quo. The edi-
torials which accompanied the manifesto denounced the Monarchy for
ineffectiveness in the past and praised the new law for guarding Spain
"against all irresponsibility". The editorials also indicated that
Franco's strategy is to claim for his regime the stabilizing character
inherent in an effectiv e monarchy while simultaneously undermining
the position of the present Pretender to the throne.
EASTERN EUROPE
Crom ko's s ? ech before the Securi
Council and Taxies
lecture oscow indicate the os ic a vie propaganda lines on
US policy towards Greece and Turkey (page 7).
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Unless the Greek civil service is reorganized, low morale
and inefficiency will prevent effective implementation of a Greek
reconstruction program (page 8).
NEAR EAST-AFRICA
Corruption and maladministration in Iran may result in
serious disturbances which would provide an opportunity for Soviet
Intervention (page 10).
FAR EAST
A trend toward continuation of one-party rule in China is
Indicated by recent developments, despite progress in negotiations
between the Chinese minority parties and the Central Government
(page 11).
US de facto recognition Indonesian Republic will be
extended through the Netherlands Ministry of Foreign Affairs follow-
ing a Netherlands Foreign Ministry request that matters relating to
the Netherlands Indies be handled through the Far Eastern Office of
the Netherlands Foreign Ministry in Batavia (page 12).
THE AMERICAS
Preliminar returns from the 6 A ? ril elections in Chile show
substan *, or I e o ex ends parties, the Conservatives and
the Communists, at the expense of President Gonzalez Videla's Radical
Party. Although the anti-Communist parties (which had joined forces)
received an estimated 65% of the votes cast, the Communists have
notably increased their representation on the municipal councils, par-
ticularly in the municipalities in which US copper and nitrate interests
are located. Some of these municipalities will be Communist-controlled.
Punitive dismissal of a number of Colombian petroleum workers
now contemplated by US-owned oil companies as a defensive measure
against further pressure by unions, would probably provoke general
strikes which would intensify the present Cabinet crisis and provide
an opportunity for Gaitan, powerful leader of the left-wing Liberals,
to assume control of the Government.
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?Amigi31e first indication that inflation in Latin America
may have run its course is a recent report from Embassy Mexico
City pointing to a substantial drop in retail sales in Mexico over
the past year. The drop has been followed by a 1.6% decline in
the cost-of-living index during the month of February 1947, and by
a falling off in construction activity. During recent years, volume
of sales and cost-of-living have consistently increased in most of
Latin America, and Mexico has been a major victim of these infla-
tionary trends.
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GENERAL
Lie's Actions Reigardink Balkan Secretariat
The motives underlying the decision of Secretary General Lie
to look into the charges against the UN Balkan Commission secre-
tariat are susceptible of misinterpretation. At first glance, his action
appears to be that of a high-minded official who is shocked to find
abuses in his own official family. Actually, he is taking steps calcu-
lated to bolster his own position. Lie has evinced great sensitivity
to recent charges in the press reflecting on his impartiality as well as
on that of the Balkan secretariat he appointed. Recognizing that he is
Involved, Lie is manifesting a determination to defend the rectitude and
integrity of his secretariat. He is sending his personal assistant, Wil-
liam H. Stoneman, to Geneva, where the Balkan Commission is now
preparing its conclusions, to report on the work of the secretariat and
"to try to find out the origin of all the 'rumors'." The fact that Stone-
man's assignment does not include the investigation of the factual basis
of the charges is consistent with Lie's announced determination to give
"all possible protection" to his secretariat members.
While the sensational published story that Gustav Gottesman,
Polish Assistant to Colonel Lund, head of the Balkan Commission
secretariat, bad attempted to enter the bedroom window of UK repre-
sentative Windle seems to have been thoroughly discredited, the US
delegation on the Commission has reported to the Department of State
numerous instances of pro-Soviet bias on the part of the secretariat
which have seriously impaired confidence in the integrity of the Com-
mission's staff. However, following strong protests by Mark Ethridge,
the conduct of the secretariat has recently been more correct.
In February when the Commission informally requested the
Greek government to postpone the execution of certain leftist offenders,
Gottesman deliberately predated the request in order to make it appear
that Greece, despite sufficient notice, had flouted the plea for a stay.
Ryan, Colonel Lund's press representative, (who, despite his name, is
a Canadian of Russian parentage) issued a false report to the effect
that Ethridge had conferred with Premier Tsaldaris concerning these
executions. At the time of these occurrences, Ethridge reported that
Colonel Lund himself had "played down the Soviet alley," and that the
secretariat had usurped powers belonging to the delegates.
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? While no government participating in the Commission has
thus far made any representations on the subject, Lie clearly recog-
nizes that the attacks against him and his secretariat are rising in
intensitY and is acting to protect his own position in anticipation of
possible official repercussions.
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WESTERN EUROPE
Significance of the Conscription Issue in the UK
By shortening, on its own initiative, the draft period specified
in the National Service Bill (which extends the present conscription law
for five years beginning 1 January 1949), the UK Government has made
its first substantial concession to a rebellious minority within its Parlia-
mentary ranks. In view of the special nature of the conscription issue,
however, the Government's action should probably not be construed as
a precedent for further concessions to the Laborite dissidents.
Despite a pre-debate appeal by Attlee, nearly 40% of the Parlia-
mentary Labor Party voted against the Government on the conscription
issue, abstained, or were absent from the Rouse. The Government's
position was saved by solid Conservative support. In the face of a re-
volt of such dimensions within its own Party, the Government apparently
felt impelled to modify its position, and has reduced the active service
requirement from 18 months to 12 months.
The Conscription Issue, however, is more likely than any other
to mobilize in opposition a large combination of disparate Labor ele-
ments, ranging from extreme left to moderate, and including Pacifists.
It would be premature, therefore, to assume that, on future questions
pertaining to foreign affairs and defense, the extreme left-wing group
alone will be able to exact similar concessions. This dissident group,
however, whose real target is Bevin's policy, will continue to harass
the Government and may gain some public and Laborite support from
sections apprehensive of too full British cooperation with the develop-
ing US foreign policy.
Perhaps the principal significance of the issue is reflected in
the Government's determination to push through long-term peacetime
conscription, despite a tight manpower and economic situation and
deep-seated national tradition. The Attlee Government is giving notice
to the world that the UK intends no wholesale abandonment of its world
position.
?
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De Gaulle's Exmtations of Returning to Power
In three recent speeches, General Charles de Gaulle served
notice that he is willing to redtune the leadership of the nation. De
Gaulle has declared privately that he expects to be called upon to ex-
tricate the nation from a serious crisis in a few months. The recep-
tion accorded hia speeches indicates that the General is still a con-
siderable force in French politics and that his reappearance in the
political arena will have wide repercussions on the present party align-,
ments in France.
This fact was heavily accented by the 300 -mile motor trip that
Premier Ramadier made in order to visit the General after De Gaulle
severely criticized the coalition Government and the political parties
In his first speech (at Bruneval on 30 March). The Premier's purpose
may have been to try to convince De Gaulle that good progress is being
made in eliminating Communist infiltration of the Government and that
more time is needed to build up popular support for an anti-Communist
movement before calling for a showdown with the Communists. It is
also possible that Ramadier sought to convince the General that a pre-
mature attack might give the Communists an excuse for precipitating a
crisis while they are still strong.
The second speech, which was delivered in Strasbourg on Easter
Sunday, presumably was intended to convey an anti-Soviet note. In it,
De Gaulle declared that France and the US would stand together if a
"new tyranny" should menace the world. The third address, also de-
livered in Strasbourg, was to have been "the" speech, but in it the Gen-
eral was content to reiterate the neutrality policy which he urged on
France a year ago. His contention then, as now, was that France must
lead in re-organizing Europe as an "element of equilibrium" between
the two expansionist rivals: the US and the USSR. The General insisted
that the movement for national "renewal," which he was seeking to in-
spire, should take place "within the framework of the laws"; he also
expressed his opposition to the extremists of the Right and Left.
De Gaulle's utterances are usually carefully calculated, and
there is reason to believe that in his third speech De Gaulle departed
from his original draft. It is quite possible that Ramadier's remarks
Induced him to adopt a milder tone; they may also account for his fail-
ure to indicate a definite course of action.
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Although De Gaulle does not wish to precipitate a crisis, he
anticipates .that one is inevitable within a few months. He apparently
hopes that the "Rally of the French People" -- a movement to rally
to De Gaulle's cause members of all non-extremist political parties ?
will become effective in the meantime and that it will, when the occa-
sion is ripe, be instrumental in bringing him to power. His plans
beyond this point appe r to be nebulous and adjustable to future devel-
opments.
Italian Co_mmujakt...s.2.,,itl on the Defensive
There is strong evidence that the Italian Communist Party
has adopted a defensive policy designed to maintain the status quo
pending the outcome a the next national elections to be held some
time before October. The Party has recently reversed its stand on
a number of important issues with the apparent intention of maintain-
ing its popular support.
During the debate on the status of Trieste, the Communist
press consistently defended Yugoslav claims to the area. But rising
popular protest became so insistent that the Party dropped its spon-
sorship of Yugoslav claims and gradually took a more "national
attitude toward Trieste in an effort to reassure the populace that Com-
munists were good Italians.
The national congress of the CGIL (Italian General Labor Con-
federation) was first scheduled for March 1947. Although the CGIL
Is dominated by the Communist Party, the threat of a split within the
organization was so serious that the Party arranged a postponement
until April in order to consolidate its hold over the CGIL and, if pos-
sible, to prevent the secession of a growing number of anti-Commu-
nist members. The Party failed to obtain sufficient assurances of its
ability to prevent the split and a second postponement has been arranged
until 30 June, or even later.
In regard to the Catholic Church, the Party has exhibited a
markedly defensive attitude. In the latter part of 1946 the Party
intensified its anticlerical campaign. The Church responded to these
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attacks by calling upon the faithful to demonstrate their solidarity.
The resultant mass demonstrations of support for the Church were
evidently not without effect, for in March 1947 the Party startled
Italy by supporting the Lateran Pact which gives special status to
the Vatican and recognizes the Roman Catholic Church as the of-
ficial Church of the State. This action by the Party was in direct
recognition of the immense influence of the Vatican over the people,
many of whom can accept the socialism but not the anti-Catholicism
of the Party. These instances of recent Communist tactics suggest
that the Party's current policy is directed at maintaining its present
strength and continuing to participate in the Government even at the
expense of supporting a non-Party line. By playing safe, the Party
may be able to capitalize on the present aggravated economic condi-
tions and hold its own in the next national election, particularly if
the extent and timeliness of Anglo-American assistance Is unimpres-
sive. In the meantime, the Center and Right are making little progress
In the direction of effective cooperation.
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EASTERN EUROPE
Soviet Promanda Reaction to US Greek and Turkish Policies
Official Soviet silence regarding the President's Greek and
Turkish proposals (see Weekly Summary of 28 March, page 3) has been
broken by two authoritative pronouncements -- Gromyko's speech before
the Security Council and a lecture in Moscow by the prominent Kremlin
spokesman, Professor Tarle. Gromyko apparently established the offi-
cial line for foreign consumption, while Tarle's words were aimed at
Soviet ears.
Gromyko confined his remarks to themes already outlined by
the President's US critics. Gromyko charged that the program under-
mined and ignored the UN, and he dwelt at length on the sinister impli-
cations of the provisions for military aid. Nowhere did he imply that
the policy was directed against the USSR.
Professor Tarle (who has been described by a US observer as
the "Soviet trained seal who is required to jump unusually high for his
fish") refers to the Truman proposal as "one of the most curious and
unmistakable political provocations that could be imagined." He inter-
prets it as the logical culmination of a long series of "imperialist" and
"anti-Soviet" machinations which, he claims, have been under way in
the US since 1945. Among his examples, he recalls Undersecretary
Acheson's reference to Soviet foreign policy as "aggressive and expand-
ing." "Never before," says Tarle, has a nation "so insulted a power
with whom it was at peace."
Despite the "aggressive" US policy, the Professor implies, the
USSR is strategically secure. He quotes "American military circles"
as contending that, in the event of war, the USSR would rapidly and peace-
fully occupy all of Europe and Manchuria; that these widely-dispersed
Soviet forces would be practically invulnerable to atomic bombing; and
that under such conditions "neither side will be able to come to grips
with the other."
Furthermore, says Tarle, Truman is losing the support of the
American people, who at last "are beginning to think things over and to
realize what the end of the present policy may bring." "The American
people," he concludes, "never were Nazis and never will be."
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It thus appears that the Kremlin line abroad is to identify the
Soviet position with that of US leftists and isolationists, while at home
the Kremlin is assuring the Soviet people that, in spite of the "provoca-
tive" character of American policy, their future security is assured by
the moral right of the Soviet cause and the strategic invincibility of the
Soviet position. ?
In seeking to explain Taxies words, it must be recalled that
for months Soviet propaganda has harped on the danger of "Capitalist
encirclement." - The Kremlin might well have been expected, therefore,
to use the Truman proposals to demonstrate to the Soviet people that
the threat vias imminent. It did not do so, perhaps because the USSR.is
not in a position to take the countermeasures which such a statement
would reqUire. Lest this failure create among the Soviet people a true
impression of the USSR's present weakness, some logical explanation
had to be offered. To meet this need Tarle quotes "American military
circles" to reassure his listeners as to the security of Soviet frontiers.
"The USSR," he says, "is not alarmed, but is watchful."
A further explanation may lie in the Kremlin's desire to demoral-
ize the numerous and increasingly troublesome anti-Communist elements
in the USSR and its 'satellites. These groups, who have been living in
the hope of a US invasion of Eastern Europe, have no doubt been encouraged
by the President's policy. But Tarle warns them, in effect, that such a
hope is futile, because even US military authorities realize the impossi-
bility of successfully penetrating Soviet-dominated territory.
the Greek Civil Service
One of the many organizational problems which the Greek Govern-
ment faces was well illustrated by the 48-hour strike of Government
employees called on 8 April. This strike, the third in six months, was
non-political; its immediate cause was the Government's failure to meet
the workers' demands for an Easter bonus, but the underlying trouble is
a civil service wage scale far below that necesrary to meet inflation
prices. While recognizing the desperate plight of its employees, the Gov-
ernment feels that any substantial wage increase would constitute a seri-
ous threat to the national budget, and is reluctant, therefore, to take any
positive action in the matter.
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The Greek civil service, which consists of about 85,000 employees,
is estimated to be overstaffed by some 25,000 persons. Furthermore, the
majority of civil servants are so inherently incompetent and are forced
to spend so much time in outside employment in an effort to gain a bare
subsistence that they are incapable of carrying out the simplest govern-
mental functions, such as economic controls and tax collection. Unless
the civil service is drastically reorganized, the Government will not be
able to implement effectively any reconstruction program for Greece ?
with or without foreign aid.
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NEAR EAST-AFRICA
Effect of Maladministration on lx?ar21V
Mounting discontent over governmental maladministration in
Iran may lead to serious disturbances which would provide an excuse
to the USSR to intervene in Iranian affairs. Notably in Azerbaijan,
official corruption, bribery, and repressive military measures, as well
as oppression of the peasantry by the wealthy landowners, have provoked
popular reaction against the Central Government, which a few months
ago was considered Azerbaijan's liberator from its pro-Soviet regime.
Despite the appointment by Prime Minister Qavam of some able men to
administrative posts in the province, the Government has failed to in-
stall an enlightened and progressive regime. Not only in Azerbaijan
but elsewhere in Iran, tribal leaders have become increasingly aroused
over maltreatment of their people by the Army; these leaders threaten
to form a coalition-to resist tribal disarmament and even speak of emi-
grating.
Corrective measures in Iran are hampered by the fact that the
Shah and Qavam, because of their personal differences, have failed to
agree on policy matters. Their continued failure to adopt administra-
tive reforms and a rational tribal policy is likely to cancel other efforts
to maintain Iran's integrity and independence.
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FAR EAST
Kuomintang Likely to Retain Political Control in China
Although negotiations between the Chinese minority parties and
the Central Government regarding increased minority party representa-
tion in the Government have made substantial headway in recent weeks,
Chiang Kai-shek probably will not tolerate any real weakening of
Kuomintang political control so long as he continues Ms military ef-
forts to suppress the Chinese Communists. Developments at the re-
cent plenary session of the Kuomintang's Central Executive Committee
indicate a trend toward the continuation of one-party rule in China, be-
hind a facade of democratic reorganization, and the emergence of the
extremist CC Clique as the dominant group within the Kuomintang party.
In this session, the CC Clique revealed its antipathy toward
multi-party government by attempting to halt plans for governmental re-
organization. Although Chiang effectively blocked this attempt and once
again demonstrated his ability to create an outward semblance of Party
unity, he did not appear inclined to check the efforts of the CC Clique
to gain a dominant position within the Kuomintang itself.
Chiang probably permitted the CC Clique to increase its strength
within the 51/4"MT because it possesses those qualities which can offer him
maximum political support during his military operations against Com-
munists. The CC Clique, more fanatically anti-Communist than any
other group, is the most disciplined and cohesive faction in the KMT;
its organization is far more comprehensive than that of the relatively
liberal Political Science Group of the KMT, and extends through the
entire political structure in China, down to and including county admin-
istrations.
During its period of ascendancy, the CC Clique will probably
make every effort to extend its hold on the Party and the country, con-
centrating on the capture of top administrative posts at the national gov-
ernment level. Already there are signs that the Clique, fairly secure in
its control of Party organization and of an influential part of the Army,
is seeking to expand its influence in the economic and financial field.
The Clique, likewise, probably aims to build up maximum political
strength in anticipation of the national elections scheduled for this sum-
mer.
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In his fight against the Chinese Communists, Chiang Kai-shek,
therefore, is in the paradoxical position of depending upon that faction
within his Party which seeks to maintain one-party domination and
which may aggravate those social conditions which basically give
strength to the Communist movement. If his military campaign
achieves success at an early date, the Generalissimo will probably be
able to reduce the influence of the CC Clique and to bring forward the
liberal elements in the KMT who favor genuine multi-party government.
Prolongation of the civil conflict, on the other hand, would progressive-
ly weaken Chiang's ability to circumscribe the CC Clique's activities;
and, under these circumstances, he might tolerate continuing one-party
rule, if only to avoid a split within the KMT ranks that would lead to the
resurgence of political regionalism within China.
'US de facto Recognition of the Indonesian Re ublic.
US de facto recognition of the Indonesian Republic will be com-
municated to Indonesian Prime Minister Sjahrir through the Netherlands
Foreign Office. This method of recognition followed a complaint by the
Dutch Government that direct US recognition of the Republic -- origin-
ally contemplated by the State Department ? would seriously jeopardize
the implementation of the Linggadjati Agreement by conveying the im-
pression that the Republic was a sovereign nation rather than a corn-
*lent part of a sovereign entity, the United States of Indonesia. In
order to maintain supervision of foreign relations with the Republic, the
Netherlands Foreign Office has requested that all matters pertaining to
the Netherlands Indies be conducted under the cognizance of the Far
Eastern Office of the Ministry of Foreign Affairs in Batavia.
The question of the Republic's diplomatic relations with foreign
po ers is one of the points in connection with the Linggadjati Agreement
on which Dutch and Indonesian interpretations differ. In opposition to
the Dutch view, the Indonesian Republic holds that it should conduct its
own diplomatic relations abroad before the United States of Indonesia is
formed. Since the Republic refuses to consider Dutch interpretations of
the Linggadjati Agreement as binding on itself, it will probably make
determined efforts in the near future to establish representation abroad
either as a part of the Netherlands Foreign Service or, if necessary,
independently. The Republic will resist the supervision of its foreign
affairs by the New Dutch Far Eastern Office and will endeavor to dr -
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vel
cumvent it wherever possible. This will aggravate Dutch-Indonesian
relations ata time when good will is required for the solution of the
economic and political problems inherent in the Liraggadjati Agree-
ment.
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38
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CONtENTS
Pages \
TRENDS DI BRIEF
WESTERN EUROPE
Franco's Law of Succession
Soviet Post-Occupation Plans in Austria
NEAR EAST-AFRICA
League Strategy for Attainment of Pakistan ..... . .
FAR EAST
The General Elections in japan 4
THE AMERICAS
Bolivia Enters Argentine Economic Bloc 6'
c/7
Domolent No.
NI COANTE in Class. 0
EASSIFIED
ss. CJAIq TS
GED TO: S
DCL
DDA ,gemo, 4 Apr 77.
put'
DDA 1763
z.
Date:
0
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TRENDS IN BRIEF
WESTERN EUROPE
Franco's new law of succession is designed to neutralize the
Monarchist opposition and to stabilize the present Spanish regime
(page 1).
The USSR a
against the ustrian
forces (page 1).
EASTERN EUROPE
arentl
is mak
vernment,
lana for subversive action
ocinpation
ollowing
The death of George dLheascent of Paul to the Greekoithr
will have little effect on the political situation in Greece. At some future
time, the Left may revive the question of holding another plebiscite, as
last year's plebiscite was concerned with the return of George himself
rather than with the general question of continuing the monarchy. At
the moment, however, the legality of the succession is not questioned.
All parties in the government will support Paul: the royalist Right be-
cause of conviction, and the Center and the Left-Center because of
their continuing fear of the Left. Paul is untainted by association with
the hated Metaxas regime and is also less unbending than his predecessor;
he should, therefore, prove more popular than George with the Greek
people.
The existence of political difficulties in Byelorussia has been
confirmed by the disclosure that, during 1945-1946, 90f the chairmen
and 96% of the secretaries of central and oblast party committees were
changed. Similar difficulties have previously been reported in the
Ukraine, and it is believed that an analogous situation exists in the Bal-
tic states.
NEAR EAST-AFRICA
The Moslem League's strategy for achievement of Pakistan is
Indicated by its reporied decision to declare the Government of Sind
Province an independent State on 1 June 1948 (page 3).
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The renewal of Soviet subversive efforts in northwestern
Iran is indicated by Soviet interference in the current Kurdish troubles.
The Soviets are reported to be advising Mulla Mustafa and Zerobeg
(leaders of the resistance), and also to be grooming Pishevari and
other agents active in the Azerbaijan autonomous movement for a
return from Azerbaijan SSR to the troubled area. Additional unrest
among Kurdish elements, which is expected to result from the recent
execution of Qazi Mohammad and three other prominent proponents of
the "Kurdish Peoples Republic," may also be exploited by the USSR.
FAR EAST
The forthcoming general elections in japan are expected to
result in a new Cabinet which will include right-wing Social Democrats
as well as conservatives (page 4).
Diversion of China's Yellow River into its pre-1938 northern
course was completed late in March by the Central Government, despite
UNRRA requests for delay and over vigorous Chinese Communist pro-
tests. This diversion has distinct military advantages for the Nationa-
list forces, since the river now flows through, and thus divides, the
Communist-held areas in northwestern Shantung Province. Heavy
floods that may occur this summer will multiply Communist problems
In the area. The Nationalists will probably make strenuous efforts to
prevent the Communists from carrying out their threat to shunt the flow
of water back into Nationalist-held territory by breaking the up-river
dikes.
Ch. Kai-shek's corn lacenc re rd Formosa.may be
1 I
altered by his stu y of objective reports ma e ? I o servers which
Ambassador Stuart recently submitted to the Generalissimo. Chiang's
expressed eagerness to have these reports placed at his disposal sug-
gests that he has not been receiving unbiased information concerning
the,depth of popular Formosan resentment against the regime of
Governor Chen Yl. These reports by US observers make it clear
that, unless substantial Political and economic reforms are put into
effect at once, the growing unrest on the island will require a continuing
and substantial military effort.
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The Burmese Anti-Fascist League appears assured of a
substantial victory in the elections for the Assembly scheduled for
9-11 April. Three minor opposition groups have boycotted the
elections and the chief opposition party, the Communist, which was
expelled from the League in October 1946, will not contest League
candidates except where Communists have a definite majority. After
the elections, the Anti-Fascist League will become the government
of Burma and will work out Burma's independence in accordance with
the London Agreement of January 1947.
THE AMERICAS
By its trade treaty Argentina Bolivia takes its place
beside Chile as a participant in Argentina's plan for an integrated
South American economic bloc (page 6).
Paraguay's civil conflict has been confined to minor skirmishes
between Government and rebel forces who appear to muster approxi-
CO irately equal military strength. Both factions have failed to round up
any substantial foreign support and both Brazil and Argentina are
advocating mediation. The absence of large-scale fighting suggests
that the Paraguayans, in spite of their traditional readiness to fight,
may yet resolve their differences through negotiations leading to the
elimination of Morinigo and the establishment of a more democratic
government.
Colombia's gasoline shortage, which threatened to induce a
political crisis, has been relieved by resumption of shipping on the
Magdalena River, the country's main inland transportation route. A
seasonal rise in the water level now permits the US-owned Tropical
Oil Company to ship petroleum products to distribution points for
? rail delivery to urban centers.
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WESTERN EUROPE
Franco's Law of Succession
Franco's new law of succession in designed to render inef-
fective the Monarchist opposition and to give "stability, continuity,
and permanence" to the present regime. Although the new law de-
scribes Spain as a kingdom and will, therefore, mislead uninformed
Monarchists, it merely provides that Franco's successor as Chief of
State may be either a King or an ordinary citizen. Moreover, it obli-
gates this successor to uphold specified 'fundamental laws," all of
which were promulgated by Franco in order to codify his theory of the
State.
Don Juan, the Pretender, has always refused to compromise
with Franco and the Falange, and, therefore, cannot consistently ac-
cept the new law because it affords him no possibility of legally gain-
ing the throne without first making a deal with the present regime.
His only remaining hope or obtaining the throne now lies in subversive
action, in defiance of the new constitutional procedure.
?
Soviet Post-Occrjatise Plans in Austria
It is increasingly evident that the USSR is laying plans to neutral-
ize the power of the predominantly anti-Communist Austrian Government,
following the withdrawal of the Occupation forces. Although the USSR,
through its seizure of economic assets, has obtained an economic foot-
hold in Austria, it has been unable to make real progress in its attempts
at political penetration. The attitude of the Austrian population has re-
mained strongly anti-Soviet, and the small local Communist Party has
been unable to exert effective influence in either government or labor
circles. Moreover, the influence which the USSR initially attained in
the Austrian Police Force was gradually reduced over a period and has
been further reduced by a recent reorganization effected by the Austrian
Cover ment against vigorous Soviet opposition.
The USSR is now attempting in the Allied Council to prevent the
formation of an Austrian defense force necessary to ensure internal
security when the occupation forces depart. The Soviet aim is to facili-
tate effective subversive operations by a small militant Austrian Com-
munist group (Soviet-financed), supported by demobilized Soviet Army
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personnel currently employed as "civilians" in the Soviet-controlled
industries of Eastern Austria. According to reports received by Presi-
dent Renner, Soviet troop commanders are concealing stores of weapons
in industrial establishments administered by the USSR. Dr. Renner
recently expressed informally to US Legation Vienna his desire that
consideration be given to establishing a "disinterested protecting force,"
preferably under UN auspices, in Austria at the end of the occupation.
Pending the establishment of the Austrian Army, Dr. Renner believes
that such a force is required to prevent Communist uprisings. Such
uprisings could be organized either under Soviet, or --in the case of
Carirthia--Yugoslav direction.
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NEAR EAST-AFRICA
The Moslem League Geyer ment of Sind Province re ? ortedly
will proc1ah itself an ind pe dent state on 1 June 1948. By taking simi-
lar action in other Leagu -controlled provinces, the League iight gain
at least a partial Pakistan (as the British Government has announced
that, if an acceptable constituti n for British India as a hole has not
been framed by June 1948, consider tion Yinust be given to the transf r
of power to the governments existing at that me in the individual prov-
inces). Thus, if the League maintains control in Sind and in Bengal
(where League governments are already installed) and obtains control
in the Punjab, it would be in a position after the British withdrawal to
combine the areas essential to Pakistan (except the North West Frontier
Provi ce). Eventually, the North West Frontier Province also would
probably become a part of Pakistan. The Province's geographic isola-
tion, the increasing stre th 2 the League within the Province, and the
fact that th local population is over 90% Moslem, suggest that this Prov-
ince could n t lo remain in a Bindu-donainated Indian Union.
Two i& portant factors, however, may preclude such developm
and induce the Congress Party and the Moslem League to re ch a com-
promise settlement for India: (1) realization by the Congress that if the
Lague succeeds in its strategy the unity of India w111 be destroyed; a cd
(2) Jinnah's fear that the Punjab Sikhs (a small but powerful alnority
strongly opposed to Moslem domination) may stage a revolt that would
spread throughout WI ?
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FAR EAST
Th it General Elections in
The Japanese general elections, scheduled for 25 April, mark a
turning point in the course of the occuipation. These elections, necessi-
tated by the failure of the present government to deal effectively with
the post-war economic crisis, are timed to precede by eight days the
inauguration of the new constitution which becomes effective on 3 May.
SCAP ordered the Government to hold elections and to institute a more
vigorous program of economic controls shortly after having prohibited
the general strike against the Yoshida Cabinet. This strike was called
by public and government workers' unions for 1 February. The Japanese
Federation of Labor withdrew its support of the strike at the last moment,
but the Japanese Congress of industrial Unions and other organizations
representing almost 4 million workers backed it until it was forbidden.
Although it was finally averted, this threatened strike nonetheless
revealed the conflict between the major parties and the labor unions, as
well as the decline of Social Democratic leadership within the labor move-
ment. Only the Japanese Federation of Labor ow maintains its allegiance .
to the Social Democratic Party; the rest of the Japanese 1 bor organiza-
tions appear to have come under Communist dov.4natlon.
The Social Democrats, the largest opposition Party in the present
Diet, are nevertheless expected to make the greatest gains In the next
elections. According to a recent straw poll, 45% of the electorate favored
the Social Democrats -- as against 26% for the Liberals, and 13% for the
Progressives (the present Government's Parties). Just before the close of
the Diet session, however, the Progressives broke their connections with
the Liberals and reorganized themselves under new leadership as the
Democratic Party. A new conservative party has thus been formed which
may avoid popular association with the discredited Yoehida government,
and emerge as the second strongest party in the next Diet.
it is probable that no single party will win a majority in the forth-
coming elections and that Japan will continue under a coalition Govern-
ment. The new coalition, instead of being of purely conservative compo-
sition like the Yoshida Cabinet, will probably comprise the right-wing
Social Democrats as well as the conservatives (represented by the Liberals
and the new Democratic Party). The Communists are expected to remain
an insignificant minority in the Diet, though they will be able to exercise
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considerable political influence by virtue of their control of organized
labor. This control of labor will place the Communists in a position to
hamper the new Government in its efforts to implement the stringent
measures necessary for Japanese economic reconstruction.
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TIM; AME CAS
With the signing on 26 Match Of a far-reaching commercial,
financial, and cultural agreement with Argentina, revised in response
to domestic ad foreign objections to the original draft, Bolivia takes
Its place beside Chile as a participant in the Argentine pl n for an
integrated South American ec nomic bloc.
The final agreement,. which follows the broad Outlines of the
A rgentheChll? treaty si ed in December 1946, ineiudes the fol-
lowing pro si vs: (I) a revolvi fund of 50,000,000 Argentine pesos.
(US$ 12,500,000) which Bolivia can use, through the next three years,
? to colter any emfa.vorable trade balance with Argentina; (2) the exchange
of specified amounts of Argentine agricultural and pastoral products
for specifial amounts of Bolivian minerals and other exports; (3) the
free transit of railroad and highway vehicles between the two co tries;
(4) the annual purchase by Argentina during 1947-51 (even if prices are
lower elsewhere) of 8,000 tons f olivian tin at a price subject to -
revision each year; and (5) 1 ans tf 100,000,000 Argentine pesos
tUS$ 25,000,000) for-industrial expansi and an equivalent a meat or
public works, the-latter to be increased if netessary.
This agreement, whieh awaits ratification by both governments,
? Is a further indication of Bolivia's economic dependence n Argentina
and Argentina's determination, ith respect to the raw materials it ?
needs for its domestic industri lization program, to insulate itself from
the hazards of the'free market.
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CONTENTS
41
Pages
TRENDS IN BRIEF
WESTERN EUROPE
Communist Victory in Berlin Trade Union Elections ?
.
.
1
Outlook for Non-Communist Parties in France . ? .
.
.
1
EASTERN EUROPE
Soviet Reaction to Truman Proposals . . . . ? . ?
0 0
?
?
3
Reduction of Soviet Forces in Eastern Europe.....
a ?
?
?
3
German Prisoners of War in the USSR
4
The Campaign Against the Creek Guerrillas
4
FAR EAST
Phibulas Return to Siamese Politics
6
THE AMERICAS
Possible Reorientation of the CPD
Dooament No
ITO CHANGE in Class. 0
DEcLosiriza
CISCJCLD TO: T5
D7P. Mem, 4 Apr 77
T-al. 77 1763
Auth:
Date:
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TRENDS IN BRIEF
WESTERN EUROPE
The recent victo of the Communist-controlled Soviet UM
Party (SEP in the Free German Trade Union (FDGB) elections in Berlin
represents a significant advance in the USSR's efforts to gain control of
the German trade union movement (page 1).
Almost 41...m1_1-Communist French Parties have come to believe
that eventually it will be possible to defeat the Communists in a test of
strength (page 1).
Unless the US Senate ratifies the Italian Peace Treaty promptly,
there is danger that the Italian Constituent Assembly may ultimately
refuse to ratify it. The danger is indiCated by the fact that Premier
De Gasperi has been forced by public opinion to defer discussion of the
Treaty in the Assembly until the US has acted. If it has additional time
to build up, opposition to ratification may become too strong for De Gas-
peri to overcome. Italian hopes for revision have been raised by expres-
sions by the Governments of Panama, Argentina, Ecuador, Uruguay, and
China favoring revision; belief that the "Truman Doctrine" may apply
to Italy; and statements by Italo-American groups and individuals in the
US that the US Senate may modify the terms. Early US ratification, how-
ever, will probably lead to similar action in Italy.
, A stimulus to Moroccan nationalism is feared by the French and
Spanish governments when the Sultan of Morocco visits Tangier on 9-13
April. No Sultan of Morocco has entered Tangier in nearly sixty years. -
The Sultan has recently shown signs of increased independence and the
French and the Spanish are apprehensive that he may use the freedom
of Tangiers to encourage his nationalistic partisans. However, the French
and Spanish, as suzerains of Morocco, are expected to receive the Sultan
with great ceremony, despite their covert opposition to the visit.
?
EASTERN EUROPE
Soviet reaction to President Truman'sp_awialgfor aid to Greece
and Turkey continues cautious (page 3).
Reduction of Soviet forces in German Austria Poland, and
Hungary is believed to have no special significance (page 3).
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Soviet-published figures of German PWs in the USSR do not in-
clude the many Germans whom the USSR is exploiting for economic,
military, or political purposes (page 4).
The Greek Army's impending campaign against the guerrillas
may be protracted by the inclination of the Greek General Staff to use
orthodox tactics (page 4).
NEAR EAST-AFRICA
Barzani Kurds seeking refuge in the USSR (apparently with the
approval of Soviet officials) have been turned back by the Iranian Army,
which sustained serious losses. A speedy liquidation of the Barzani
Issue may result, however, if the Minister of War at Tehran accepts
the proposal by the paramount chief of the powerful Shikkak (Iranian
Kurdish) tribe that the Iranian Kurds unite and cooperate with the Iran-
ian Army in its drive against the`Barzanis and other renegade Kurdish
elements.
? The union of Transjordan and Iraq will be wail by King Abdullah
during the forthcoming visit to Amman (Transjordan) of the Regent of
Iraq and Acting Prime Minister Nuri As-said. This'union, if established,
will be the first concrete step in the implementation of the Greater Syria
plan. Regardless of the outcome, however, the conversations in Amman
are certain to cause rumors concerning the establishment of a Greater
Syria and may produce dissension in the Arab League Council, which is
now meeting in Cairo.
FAR EAST
Siam's political crisis has been aggravated by ex-Premier Luang
Phibul Songgram's return to political activity. Liberal Siamese, the
Chinese in Siam, Britain, and France are expected to oppose his return
to power (page 6).
TEE AMERICAS
Fear that the (Inter-American) Committee for Political Defense
may be reoriented for use against Soviet penetration of the Western
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Hemisphere may have led the Chilean representative to demand imme-
diate abolition of the Committee (page 7).
Moving to forestall a threatened revolt, the Provisional Presi-
dent of Venezuela, Romulo Betancourt has: (1) reconstituted the cabinet
in order to "broaden the base of the Government"; (2) granted amnesty
to all political exiles; and (3) called on the Constituent Assembly to pro-
vide for presidential elections by July. The new cabinet, despite its
avowed purpose, is not likely to satisfy the demands for reform being
made by the rebelrious supporters of ex-President Lopez Contreras.
A British firm has submitted to the Ar entine Government bids
on the construction of a cruiser and an unspecified number of destroyers.
While the bids would not have been submitted unsolicited, Argentina will
probably, in view of the large amount of money involved and the incom-
patibility of the transaction with the Hemisphere military standardization
? program, postpone action until the present impasse with regard to the
Rio Conference is terminated. Argentina may have opened negotiations
? with the British firm as a means of exerting pressure in favor of an
early date for the conference.
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WESTERN EUROPE
Communist Victory in Berlin Trade Union Elections
The recent smashing victory by the Communist-dominated Social-
ist Unity Party (SED) in the Free German Trade Union (FDGB) elections
In Berlin represents a significant advance in the USSR's efforts to con-
trol the German trade union movement. The SED success can be ascribed:
(1) to exploitation of an election.system to which the US and the UK reluc-
tantly agreed when the USSR's intransigence threatened to saddle the West-
ern Powers with the responsibility for preventing trade union elections in
Berlin; (2) to the strong support given the SED by the Soviet Military
authority; and (3) to the organizational weakness of the opposition.
The USSR may be expected to employ similar tactics in the event
that the FDGB succeeds in its efforts to become the national German
trade union. Such success, however, would be contingent upon the estab-
lishment of SED in the Western Zones, because the German Communist
Party (KPD) does not have an adequate political machine in the labor
organizations of the US and UK Zones.
Outlook for Non-Communist Parties in France
The general relief that was felt by all French Parties that the
Ramadier Government, however weakened, was able to survive the recent
crisis indicates that no single group was anxious to unseat the Cabinet.
On the other hand, no one believes that the Government can long continue
in power, as was indicated by the unusually long recess (1-24 April)
which the National Assembly voted for itself. (This recess could be ter-
minated at any time, if necessary.) This holiday is intended to preclude
overt dissension and thus give the impression of French political stabil-
ity during what may be the crucial days of the Moscow Conference of
Foreign Ministers.
Almost all non-Communist Parties and their leaders have come
to believe that time is now on their side and that eventually it will be
possible to defeat the Communists in a test of strength. The anti-Com-
munists have been encouraged to this belief by a growing sense of partici-
pation in a common cause and by increasing success in checking and
eliminating Communist infiltration of Government Ministries. Ropes
that Communist control of the CGT (General Confederation of Labor)
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may be weakened have been raised by indications of increasing discon-
tent with Communist leadership among the workers and by the reported
drop of 10% in the membership of the Communist Party and the COT
during the past six months. Vice-Premier Thorees recent public ad-
mission of his primary loyalty to Moscow and recent Communist Party
tactics are leading French workers increasingly to believe that the
Party is operating, not for their benefit, but for purely political ends.
It will take time, however, for a union of "grass roots" opinion
and political leadership to crystallize. Thus far, no leader has emerged
who can appeal to the popular imagination and hold the diverse anti-
Communist elements in a coalition. However, even certain influential
Individuals who dislike De Gaulle's personality envision him in this role,
largely because of his symbolic appeal to the masses.
These developments do not mean that Communism has been
routed in France. French politics have been notoriously unstable.
Moreover, the program for world Communism which the Kremlin
decides to follow at the end of the Moscow Conference may have a
decisive influence on the composition of the French Government; should
the USSR decide upon a "strategic retreat," the French wing may be
ordered to leave the Cabinet and join the opposition. Nevertheless,
French political opinion is clarifying and the non-Communist forces,
which constitute an overwhelming and real majority of the people, are
beginning to see a way to victory, based on a solid foundation.
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EASTERN EUROPE
Soviet Reaction to Truman Proposals
' Although Soviet propaganda has seized upon President Truman's
proposals regarding Greece and Turkey as further evidence of "US
imperialism," the true Kremlin reaction remains obscure. At the CFM
meeting and elsewhere, Soviet tactics appear, if anything, less aggres-
sive and Soviet manners less arrogant since the President's speech.
Actuallx there has been no real softening of the USSR's stand on vital
issues, but the Kremlin appears to be moving cautiously, perhaps in an
effort to appraise world reaction to the US plan prior to the adoption of
a counter-strategy. The USSR may also be considering restraint at this
time in order: (1) not to strengthen the President's hand by offering evi-
dence of Soviet aggressiveness while the Greek and Turkish proposals
are under consideration by Congress; and (2) not to antagonize the West-
ern representatives at the Moscow CFM meeting until the USSR has
explored all possibilities of bargain and compromise on controversial
Issues.
? Reduction of Soviet Forces in Eastern &imp!
Soviet troop movements in Eastern Europe have resulted in a
reduction of the estimated number of troops in Hungary from 55,000 to
40,000, in Austria from 45,000 to 40,000, in Germany from 500,000 to
400,000, and in Poland from 120,000 to 100,000. Although several con-
flicting reports have been received recently regarding the strength
of Soviet forces in Bulgaria, none has been sufficiently conclusive to
warrant a change in the present estimate of 140,000.
No special significance is attached to these reductions. The
USSR had previously declared its intention to withdraw from Austria --
possibly by the end of 1947 -- and also to reduce its forces in Germany.
Forces in Hungary (other than line-of-communication troops) must, of
course, be withdrawn in accordance with the Peace Treaty. Inasmuch
as Soviet units in Poland are required theoretically to maintain com-
munications with forces in Germany, a reduction there is in line with
the apparent decrease in Germany.
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German Prisoners of War in the USSR
The Soviet news agency, TASS, has announced that there are
890,532 German prisoners of war in the USSR. This figure is in sharp
contrast to US estimates of from two to three million. The Soviet total
presumably does not include those Germans in the USSR no longer
classed as prisoners, who are being exploited as "free labor," or for
military, political, and technical purposes. These categories include:
(I) prisoners persuaded or coerced into signing "contracts" to work
In the USSR, some of whom have even "accepted" Soviet citizenship;
(2) young ex-Navy and ex-Luftwaffe officers induced to enlist in Soviet
forces; (3) other officers reportedly enlisted in a "German L'egion"
rumored to be forming in Soviet territory; and (4) ex-prisoners trained
as "agitators" for carrying out under Communist surveillance political
missions in Germany and elsewhere.
Prisoners returned to Germany by the USSR consist almost ex-
clusively of the "agitators," the physically disabled, and some few
brought back to work in Soviet-controlled industry. This number has
O been partly offset by those originally captured by the US and the UK
who, upon release, have been re-arrested by Soviet authorities in the
Eastern Zone and deported to the USSR.
Thus, although the Soviet Union may have in fact reduced the
number of Germans classed as "prisoners," it does not appear to have
reduced substantially the number of Germans actually under its control.
The labor and technical abilities of these Germans are in great demand
in the USSR. The political potential of a mass of Germans indoctrinated
to serve Soviet purposes is obvious. The exact nature of the military
employment of these Germans in the USSR remains obscure, but it is
entirely possible that the USSR contemplates the development of a large
and well-disciplined German force under Soviet control.
The Campaign Against the Greek Guerrillas
The forthcoming campaign by the Greek Government against the
guerrillas may well decide the political control of northern Greece. The
guerrillas have an estimated 14,000 men; the National Army has a total
strength of 103,000, but for various supply and political reasons can put
only enough men in the field to outnumber the guerrillas about three to
one.
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During the German occupation,the German Army, in concentrated
drives with crack mountain troops which outnumbered the resistance
fifteen to one, could not pin down and eliminate the guerrillas. Such
small successes as the Germans did achieve occurred when they adopted
guerrilla tactics and abandoned mechanized equipment, which had proved
useless in mountain terrain.
The British Military Mission has advised the Greek General Staff
to adopt special tactics, including the use of commando units. However,
the commando units have been badly organized, and reports indicate that
the Greek Army in preliminary operations is using orthodox methods of
fighting. The Greek Army has already complained that the guerrillas,
when attacked, have withdrawn "where armored cars could not follow."
General Vendiris, Greek Chief of Staff, has even expressed the naive
hope that the guerrillas will concentrate where he can meet and destroy
them. Furthermore, assurance of substantial materiel from abroad
might encourage the Army to minimize the urgency of the situation and
plan for a long campaign against the guerrillas.
The only hopes for a successful conclusion of the campaign are
that the Army will change its tactics or that the flow of arms from the ,
Soviet-satellite countries can be cut off, thus forcing the guerrillas to
disband for lack of supplies. If the campaign is prolonged indefinitely,
the Army will become demoralized and the guerrillas will achieve a
political, and possibly a military, victory.
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FAR EAST
Phibul's Return to Siamese Po'itics
Field Marshal Lilang Phibul Songgram, Premier of Siam under
the Japanese occupation, has announced his intention of ye-entering
? Siamese polities nd is repOrtedly forming a "rightist inority" party
which claims the Support ot the Army, the present Parliamentary oppo-
sition Democrat Party, and BO% of the Senate membership. A deter-
mined press campaign is being launched to demonstrate that Phibul was
In fact anti-Japanese and to justify by the exigencies of war the dicta-
torial nature of his former regime. Government papers are Countering
with reminders to the people that a restoration of Piaui to power will
be resented by the Western Powers and that, although Phibul was re-
leased from war crimes-trials? by a legal technicality, he is not innocent
of those crimes.
Phib l's emergence from political retirement has been brought
about by widespread popular dissatisfaction with the failure of the
Oresent Darong Government to Solve the economic problems and by
the likelihood of a change in pro -US administration when Parliament
is cOriVened in May. MIS change had been expected in February follow-
ing the return of the Elder Statesman, Nal Pridi Phanomy ng. Royalists
and conservatives who favor a stro - government and oppose the rise
of Communism and f labor influence may previde considerable support
In Parliament for Phibul. Despite the fact that the Commander4n;.Chief
of the Siamese Army supports Pridi, a royalist anti-Chinese lactic)
among Siamese fficers may support Phib 1 in a military coup deal in
rorder to restore the restrictive cOntrols o Chinese activities which
were in effect during Phibul's artime administration.
Phibul's return to politics tate sines and Complicates the po-
litical (crisis in Siam. He IS greatly admired by some and intensely
disliked b &hes; kfitrptSlitical campahc in which he beco es involved
Will be Olaf aciteriged blbitibrnegls and force. Phibul's return to power
Wi11 be OppoSed 1pthe-Z-111114Se in Siam and 'Will be untrelcome to the UK
and Praatek Tui XO aggleavate Sikii.Siamese friction and might
1otrpatdtee SiamtS tOminitme-rats in the rritisivoponsored rice program
and In the tettlemea 02 the border issue witli,Frencli IndOchina,
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THE AMERICAS
121101ble Reozientatlenigijk_C_PD
The Chilean representative on the Emergency Advisory Com-
mittee for Political Defense (CPD) at Montevideo, Senor Montt, believes
that the Committee should be abolished, now that the war is over. The
CPD, the Inter-American Defense Board, and the Inter-American
juridical Committee were formed as a result of the Rio Conference of
Foreign Ministers in 1942. Senor Montt is a member of a subcommittee
Inquiring into methods of reducing the organizations' personnel and ex-
penses. As other members of the subcommittee, reportedly do not share
Senor Montt's views on the abolition of the committee, further develop-
ments are improbable at this time. The CPD's mission, however, as
understood during the war, is nearly accomplished, so that the question
of its abolition or reorientation cannot be indefinitely postponed.
The CPD, created originally to assist in the apprehension of
Axis elements in the Western Hemisphere, could, under the relative
resolution of the Conference at Chapultepec, be readily adapted for use
against Soviet penetration of the Hemisphere. The Chilean representa-
tive's attitude, therefore, is of great interest in view of the following
considerations: (1) Senor Montt speaks for a government which has
three Communist ministers, and could not consistently support such a
reorientation of the CPD's efforts; (2) the Chilean Government alone,
among the 20 other American Republics, has expressed reluctance to
accept the financial responsibilities that will necessarily attach to the
future Hemisphere Defense Pact; and (3) Senor Montt is reported to
have said privately that he regards the CPD as a "US instrument,"
and thatArgentina and Chile are "rapidly bringing neighboring countries
into association with them to defeat this permeating US influence."
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CONTENTS
40
Pages
TRENDS IN BRIEF I - iv
GENERAL
,Reaction to President Truman's Speech ......... . . 1.
WESTERN EUROPE .
Right-Left Rift in France 2
Possible Spanish-Soviet Rapprochement. . .
EASTERN EUROPE
Morale in the Greek Army 4
NEAR EAST-AFRICA
Disorders Continuing in Northwest India 5
Turkey Weighs its Defense Requirements 5
FAR EAST
Accord and Discord in Indonesia 7
Difficulties Facing Prospective French-Vietnam Negotiators 7
THE AMERICAS
Civil War in Paraguay 9
, Left-wing Liberals Gain in Columbia S 10
1/10
Document No.
NO CHANCE in Class. Ej
DECLASSIFIED ,
ass. CHANCED TO: TS S C
DDA Homo, 4 Apr 77
.Auth: DL, FEG. 77 1763
Date:
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TRENDS IN BRIEF
GENERAL ,
Foreign reactions to President Truman's speech on Greece
and Turkey have been generally favorable except from the Communists
and the extreme left (page I).
WESTERN EUROPE
The Increasing zW,Aft_be_typeen the French Communists and anti-
Communists, encouraged by President Truman s recent speech, has
seriously weakened the position of the Ramadier Government (page 2).
The possibility of a S anish-Soviet rapprochement is suggested
in recent reports page 3).
A_piolecte_cI cut in SvissisZLt_ Imports from the US is necessitated
by Sweden s desire to fulfill its bilateral trade agreements with Eastern
European countries and the USSR and to conserve its dwindling foreign
exchange reserves. Substantial Swedish credits were granted the USSR
and other Eastern European countries under these trade agreements;
the imports, however, on which Sweden bases its production of goods
for delivery under these agreements, come from hard currency nations,
chiefly the US and Latin America. Having virtually exhausted its foreign
exchange reserves in hard currency, Sweden is banning luxury imports
from these countries in order to obtain, if possible, the basic commo-
dities necessary to fulfill its export program to Eastern Europe and the
USSR.
he troublesome uestion of the Monarch in Italy may be re-
vived and the breach between Communists and non ommunists widened
if the Constituent Assembly passes a Decree Law recently drafted by
the Cabinet. The law provides that attempts to reconstitute Fascism
or the Monarchy by violence or propaganda shall be a penal offense.
It is broad enough to furnish Communists with a powerful weapon for
eliminating their enemies, and has met with immediate and hostile pub-
lic reaction.
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EASTERN EUROPE
Continued high morale in the. Greek Ary, essential to the
success of Impending operations against the guerrillas, depends upon
implementation of President Truman's recommendations for aid to
Greece (page 4).
A year-oldes ndence between an obscure
military academy professor and Marshal Stalin -- in which Stalin
commented at length on the value of a strategic retreat that paves the
way for a decisive defeat of the enemy -- has recently been published
In Moscow. Publication at this time may indicate that the party faith-
ful are being prepared for such a retreat on the diplomatic front Should
such a maneuver materialize, it would suggest that the USSR, in the
face of determined Western opposition, had temporarily abandoned the
diplomatic offensive in order to concentrate on the solution of present
internal difficulties.
NEAR EAST-AFRICA
Continuing disorders in northwest India are the result of Moslem
League efforts to gain control of the Punjab and the Northwest Frontier
Province as part of the Pakistan plan (page 5).
Turkey's continued resistance to Soviet demands depends upon
increasing the country s economic stability as well as its military po-
tential (page 5).
Further protestsmtMAraA__.world may be expcted to result
from the continuing FBI investigation of the Washington Arab office.
In a formal complaint to the US (describinK the search as an "unfriendly
act directed against the whole Arab world ) the Iraqi Government
stated that the FBI would have done better to search the Hebrew Society
of National Liberation, which allegedly supplies Palestinian terrorists
with arms and funds and which "is a foreign institution subject to con-
trol and search, as is the Arab Bureau." The episode will undoubtedly
be discussed by the Arab League, now meeting in Cairo, and may lead
to a deterioration of US relations with the Arab world.
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rAR EAST
A
Althml the Dutch Commission-General has been authorized
to sign ih-e-th&nesian Agre?ei-iFnt,--Fe-a-a-a"iiperations in East
Java put a severe strain on Indonesian willingness to accept Dutch
pledges (page 7).
Difficulties of deterznh1ngteforznt Adr_l_tainite Government
because of divergent French and Viet views, will complicate the task
of the newly appointed High Commissioner of Indochina Bollaert (page 7).
S natives lAyte_sit,new d_emands'on the Chinese,.
and martial law was declared in the provincial capital during"
;the first
week of March. However, the situation in the capital is now outwardly
nearing normal," and the return to Sinkiang of Governor Chang Chih-
chung, who negotiated an agreement with the 'Turki natives last year,
is expected to facilitatc?the settlement of remaining differences.
fiLia_m_Kai-shek's concern over the _military situ4g.m. together
with the public assurances by his Chief of Staff that the Chinese Com-
munists would be suppressed within three months, confirms earlier
indications that the Generalissimo regards a quick military victory
as the only answer to China's present problems (see Weekly Summary
of 7 March, page 8). Because it is imperative that under such a program
he retain maximum control over the Central Government's military and
fiscal operations, it is unlikely that Chiang will permit any real "demo-
cratization" of the Government in the near future. Rather than coaxing
the third-party political groups into the Government by means of poli-
tical concessions, Chiang apparently has decided that the situation calls
for terroristic action by police and local governmental administrations
throughout Nationalist China. It is probable that these repressive
measures will alienate, rather than inspire, the support of the third-
party groups.
THE AMERICAS
The rebellion in Paraguay is expected to result in the overthrow
of the Morinigo dictatorship (page 9).
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The results of recent co essional elections in Columbia
indicate-tit-Fat e o the dominant L beral arty looks to Eireier
Gaitan for leadership. Caftan thus will probably be a strong contender
at the next Presidential elections.(page 10).
The Brazilian Communist Partys National Executive Com-
mittee has instructed the pa--itiiitr?Sifig-ist section (in the strategically
situated state of Sao Paelo) to do nothing in the current post-electoral
period that might invite anti-Communist measures by the Dutra Govern-
ment. The instructions, undoubtedly an authoritative statement of the
tactics the Communists will adopt throughout the country, direct the
attention of the Sao Paulo Communists to (1) the fact that, in view of
the Communist showing in the recent elections, repressive measures
by the Government are a definite possibility; (2) the wisdom of consoli-
dating the Party's spectacular gains during its 18 months of legal exis-
tence; and (3) the need for an intensive recruitment program, not only
In the trade union movement but among rural workers as well. The
? Brazilian Government, however, is committed to the elimination of Com-
munist influence in the Sao Paulo trade unions, and it seems improbable
that the Communists can intensify their recruitment program there
without precipitating the clash the instructions seek to avoid.
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GENERAL
Reactionto Pr Trux_La SAts_an h
Reaction to President Truman's speech on Greece and Turkey
has, in general, been as expected: conservative and middle of, the road
elements have welcomed the statement of a "new US foreign policy,"
and Communists have attacked US "imperialism" and "dollar
diplomacy."
Some commentaries, while generally applauding the speech,
contain a significant note of warning. In England, France, Switzerland,
and the Scandinavian countries, for instance, there is a feeling of un-
easiness over the future of US-Soviet relations. Some observers fear
that these cotmtriea, caught between two powerful blocs, must review
their own foreign policy and perhaps eventually choose between them.
On the other hand, in France, at least, the speech appears to have had
a tangible effect in encouraging the center elements to take a stronger
stand against the Communists.
The Soviet Government has so far made no official statement.
PRAVDA and IZVESTIA have attacked the speech, but with no more
than _their customary virulence. The USSR probably has not yet -decided
just what tactics to pursue in Attempting to counter the effects of the
President's statements. The Soviet satellite countries have followed
the line laid down by the Moscow press. There is clear evidence, how-
ever, that opposition elements within these countries have been greatly
encouraged by the President's forthright words. Indeed, they have
possibly exaggerated the significance of the speech to themselves,
thinking that it implies aid for all anti-Communists in the satellites.
The speech was gratefully received in Turkey and Greece. The
Turks feel that credits will help them to rehabilitate their economy and
expand their industry, thus increasing the national security. The immedi-
ate reactions in Greece have been a new tendency toward political unity,
a general upswing in morale (except among Communists and the Com-
munist armed bands, where morale has deteriorated), a new stability
in the currency, and a general improvement in business confidence.
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WESTERN EUROPE
Right-Left Rift in France
Increasing efforts by non-Communist elements in France to
discredit the Communists and even to purge Communists from the
Government departments indicate the growing cleavage between the
Right and the Left. Common concern over the strategic position which
the Communists have attained in France has induced various elements
of the moderate Left, the Center, and the Right to take parallel action
against the Communists. As a result, violent disputes between Com-
munist and anti-Communist leaders have flared up in the National
Assembly and the position of the Ramadier Government has been so '
weakened that it mayt fall despite the professed desire among.the par-,
ticipants to keep it in power during the Moscow Conference.
In the Assembly disputes, which caused the suspension of three
recent successive sessions, the Communist leaders tended to reply to
attacks from the Right by statements which demonstrated that they
? place loyalty to the Party, and hence to the USSR, above any other al-
legiance. Under instructions from Moscow, the French Communist
policy hitherto has been to pose as patriotic and "nationalistic" in order
to attract the liberal voters and to support the Government, at least un-
? til the end of the Moscow Conference. .1lowever, on 11 March, the open-
ing day of debate in the Assembly on Indochina, Vice Premier Thorez,
leader of the French Communist Party, was, moved to make a most
damaging admission. In answer to the oft-repeated charge that he de-
serted from the French Army in 1939 (when he fled to Moscow rather ?
than fight for France), Thorez shouted: "I was ordered by the Party.
I was where duty called." The violence of the ensuing tumult forced
adjournment.
The cleavage has been further stimulated by President Truman's
speech on aid to Greece and Turkey. The speech has clearly encouraged
the non-Communist parties to further resistance against the Communists,
and correspondingly may have led the Kremlin to instruct the Communist
Party to withdraw from the Government.
The fall of the Ramadier Government would usher in an extremely
critical period in France's post-war political evolution. Some grouping
of anti-Communist elements might well eventuate, but the selection of a
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leader will prove difficult. Bidault appears to be losing support within.
the MRP and is, therefore, an unlikely candidate. An increasing number
of MRP and Radical Socialist Party members seem to be looking to
General DeGaulle as the only national leader capable of assuming
control, although opposition to him within these same Parties remains
strong.
Possible Spanish-Soviet Rapprochement
The possibility of a rapprochement between Spain and the USSR
has been raised by recent reports which appear to have a more substan-
tial basis than the many rumors on this subject which have been current
for months. On the eve of the Moscow Conference, Spanish Foreign
Minister Martin Artajo informed the US Charge in Madrid that the So-
viet attitude toward the Franco regime had been "considerably" and
"favorably" modified, that the USSR may contemplate the establishment
of relations with the Spanish Government, and that the latter, in turn,
may modify its previous anti-Soviet position. More recently, the UK
Foreign Office has received a secret report that a Swiss intermediary
has approached a Franco representative with a Soviet overture looking
toward the establishment of Soviet-Spanish economic relations, and that
the Spanish response was somewhat encouraging.
The Franco regime may be impelled to such action, or at least
to give the impression that it is contemplating such action, by its Own
needs for foreign economic assistance. Spain Would thus hope either to
obtain economic aid from the USSR or to utilize the threat to obtain
concessions from the US and UK. The USSR,on the other hand, particu-
larly as a result of President Truman's speech, might welcome any
opportunity to gain a foothold in Spain as a counterbalance to the US
move to aid Greece and Turkey and as a base for Communist activities
In North Africa and Latin America. The Soviets may also consider it
advantageous, by extending aid to Spain, to prolong the Franco regime
as the best means of driving the Spanish masses toward a reckless ex-
tremism from which the Spanish Communist Party presumably would
benefit. Otherwise the USSR risks the growing possibility that Franco
will be succeeded by an anti-Communist combination of moderate
leftists and moderate monarchists.
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Morale in the Greek Armx
In the intensive campaign against the guerrillas scheduled
to begin about 10 April, morale in the Greek Army will be as deci-
sive a factor as the materiel which the Greeks hope to obtain from
*the UK and the US. Low morale, which contributed to the Army's
numerous defeats by the guerrillas, resulted from (1) lack of faith
in the Government, (2) propaganda of KOSSA (a leftist organization
which foments dissension within the Army), (3) the resentment of
many reservists who have been on active duty since 1940 against
the governmental policy of retaining loyalists while releasing from
the service men of doubtful political affiliations, (4) fear for families
remaining in leftist areas, and (5) low pay.
Morale in the Greek Army reached a new high as a result of
President Truman's address to the US Congress. Previously, it was
bolstered by Secretary Marshairs declaration of US interest in Greece,
by an Army victory against 1500 guerrillas in Macedonia, and by the
Government's arrest of EAM (Communist) leaders in Athens. Although
further military successes against the guerrillas will contribute to
sustaining the improved spirit of the Greek Army, a new low in morale
is anticipated unless President Truman's recommendations for aid to
Greece are supported by Congress, and unless ?when the danger from
Communist armed bands has been eliminated?the Greek soldier can
return to a more stable economy.
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NEAR EAST-AFRICA
Disorders Continuing in Northwest India
The month-long civil disobedience campaign in the Punjab,
by which the Moslem League attempted to further its scheme for an
Independent Pakistan, caused the resignation of the Coalition Govern-
ment in late February. The subsequent effort by the League to form
a new government was unsuccessful and resulted in bitter communal
fighting, which spread into the Northwest Frontier Province.
In the Punjab, key province in the Pakistan Plan, a highly
militant Sikh minority, plus a larger group of Hindus, are united in
their determination not to live under the control of the Moslem League.
Because elections will have to be held in the near future, the League is
expected to make an a11-out attempt to gain a majority. In the North-
west Frontier Province, the League is attempting to upset the Congress
Ministry and thus, together with the Sind (which already has a League
Government) to present three provinces to the British as a Moslem
bloc in June 1948. On the basis of Prime Minister Atlee's statement
of 20 February, the League presumably expects the British to delegate
power to such a bloc, when UK troops are withdrawn.
Because they would thereby be included in the principal Hindu-
rtan section of India, the Sikhs would probably consent to the suggestion
made by the Congress Party Working Committee that the Punjab be
divided into Moslem and non-Moslem parts. The Moslem League, how-
ever, would oppose the plan because it would detach the thirteen south-
eastern districts of the Punjab, leaving the Moslems little territory of
economic value. The issue of Pakistan is national in scope and, until
some broad agreement is reached, communal tension is expected to
continue throughout the area.
Turkey Weighs its Defense Requirements
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Turkey's stubborn refusal to accede to Soviet demands for a
dominant position in the control and defense of the Turkish Straits (and
for the annexation by the USSR of strategic areas in northwest Turkey)
has been a major obstacle to the extension of Soviet Influence in the
Near and Middle East.
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The ability of the Turks to withstand continued Soviet pressure
will not depend upon the strength of Turkey's armed forces, because,
irrespective of the volume of foreign aid, Turkey can never create an
army strong enough to defend the country against an all-out Soviet
attack. In the final analysis, Turkey's ability to resist Soviet demands
will depend upon the maintenance of a healthy economy as an antidot6
to Communist infiltration, and upon the support of its political integrity
by the Western Powers or by an effective United Nations.
The Turkish Government appears to take cognizance of these
fundamental factors in Turkey's position in suggesting that, before any
new credits are allocated, a study be made of the relative importance
of military and of economic expenditures to the national defense. The
Turks see clearly that modernization of transportation and communica-
tions, and increased agricultural and coal production, would strengthen
both the military potential and the economic stability of the country and,
at the same time, improve the prospects for the repayment of the loans
and the maintenance of the Government's financial integrity.
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FAR EAST
Accord and Discord in Indonesia
The Netherlands Government has authorized its Commission-
General in Batavia to sign the Linggadjati Draft Agreement?which es-
tablishes the United States of Indonesia and the Netherlands Indonesian
Union--without including the controversial Dutch "interpretations."
After the Linggadjati Agreement becomes effective, it is believed a
further agreement will be reached regulating the flow of commodities
between Dutch and Indonesian territories.
These promising developments are largely neutralized by a
Dutch offensive in East Java ostensibly to obtain control of irrigation
dams and alleviate local floods allegedly caused by Indonesian sabotage.,
While a truce has been signed terminating these operations, the Ind-
- dent has increased the tension between Dutch and Indonesian forces and
has gravely compromised the general truce agreement of October and
the over-all cease-fire order of 15 February. While the operations
probably will not prevent the signing of the Linggadjati Agreement be-
cause both parties desire to reach accord as soon as possible, Indonesian
suspicion of Dutch motives and distrust of Dutch pledges has been in-
tensified. This suspicion and distrust will complicate the implementa-
tion of the Linggadjati Agreement as well as the negotiation of corollary
arrangements by which the future of Dutch-Indonesian relations will be
governed.
Difficulties Fact Pros tJm_._m,inZitTIgomh-Vietnam N tiators
Emile Bollaert, the new French High Commissioner to Indochina,
has told US Ambassador Caffery in Paris that he is proceeding to Indo-
china with the determined intention of carrying out all French promises
regarding the independence of the various countries within the French
Union. These promises, made by officials of the Ramadier Government
in the past two months, provide for the freedom of the Annamite peoples
within the framework of the French union and the Indochina Federation,
and for a union of the Annamite countries (Tonldn, Annam, and Cochin
China) in any manner desired by these peoples. According to the French
view, however, these concessions can be granted only to a Vietnam gov-
ernment which will provide adequate guarantees against military attacks,
such as occurred at Hanoi in December.
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The form of government envisioned by the French for the union
of the Annamite countries is a loose confederation in which emphasis
would be placed on the prerogatives of the component states in order
that the French may retain special economic concessions in Cochin
China where most of the French economic interests are concentrated.
This concept conflicts with the Vietnam desire for a strong central
government which would permit the extension of Vietnam control into
the economically valuable state of Cochin China. When negotiations
between France and Vietnam are resumed, this difference in views
will constitute a definite barrier to early accord. The nature of the
military guarantees desired tiy,the French will also be a knotty prob-
lem in view of the inevitable disagreement between France and Vietnam
on this subject. These important issues, and the mutual distrust and
hatred resulting from the past three months of bitter fighting, will
greatly complicate the tasks facing M. Bollaert when he arrives in
Indochina.
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THE AMERICAS
Civil Ear in Paraguay
The Concepcion rebellion is,the product of long-smoldering
resentment on the part of dissident politica/ and military groups vis-
a-vis the dictatorial regime of President Morinigo. Elevated to the
presidency by Cabinet appointment in 1940, upon the death of his
predecessor, Morinigo was "elected" for a period of five years in a
1943 plebiscite in which no opposition was permitted. While he has
been in office, Paraguay has had no representative assembly and,
despite repeated promises to hold congressional elections at the
earliest possible moment, the regime has at no time given its oppo-
nents?many of rhom are in jail or in exile?concrete reasons to
suppose that constitutional government would be restored within the
predictable future.
The history of the present revolt goes back to Morinigo's re-
organization of the Cabinet in January. Until then the Cabinet had been
based on a coalition between the toloratios", who are strong sup-
porters of the President, and a somewhat more liberal political group-
ing that looks for leadership to General Franco, a former president
who returned from exile in August 1946. Morinigo created two new
ministries and put friendly military men in charge of them. Three
days later the "Franquistas", claiming that the President's action
violated the agreement under which they had entered the Cabinet,
withdrew from the government, and the Minister of National Defense,
General Pampliega, called upon Morinigo to resign. Morinigo's an-
swer was a new coalition cabinet of tolorados' and military men,
which decreed a state of siege, threw numerous Franquista and Liberal
party leaders in Jail, and suppressed the opposition newspapers. This
highhanded action appears to have deprived Morinigo of his greatest
political asset, which lay in the inability of the groups opposed to the
government to strike simultaneously as the Franquistas, Liberals,
Communists, and dissident elements of the Army have now done. An
attempted revolt of a group of army officers was put down on 28 January.
On 7 March Morinigo's police quelled an uprising of Franquistas in
Asuncion. On the same day, however, the army garrison in the town
of Concepcion initiated the present rebellion, which has spread to the
troops in the Chaco region.
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The rebels are in control of the northern part of the country,
are developing strength from day to day, and even without further
defections on the part of troops now considered "loyal" to the gov-
ernment, will be able to defend their positions over a considerable
period. It is improbable, however, that Morinigo, who has numerous
opponents within the territory he nominally controls, would be able
to hold his present forces together for a sustained struggle. There-
fore, Morinigo probably will soon recognize that his position is
untenable, and will step down before large-scale hostilities are under
way.
Left-W GatiLiemegia
The congressional elections held in Colombia on 16 March have
left the Liberal Party with control of both the Senate and the Chamber
of Deputies, but, nevertheless, constitute a further step in the devel-
opment of the political crisis that began in Colombia during the months
preceding last year's presidential election.
The real struggle in Colombia, then as now, was between the
traditional leadership of the Liberal Party (ex-Presidents Eduardo
Santos and Alfonso Lopez and such outstanding political figdres as
Gabriel Turbay and Dario Echandia) and a vigorous European-trained
Bogota lawyer by the name of Eliecer Gaitan. The latter, convinced
that the mildly reformist program upon which the Liberal Party was
built is no longer appropriate to Colombia's economic and social needs,
appealed over the heads of the Party's closely-held directorate to its
rank-and-file and to the country's workers and peasants, split the
Party's vote in the presidential elections, and brought to power a -
Conservative (Ospina Perez) who could not conceivably have polled a
winning vote against a united Liberal Party.
In the campaign which preceded this week's congressional
election, Gaitan, whose political enemies describe him as an unscru-
pulous rabble-rouser, continued his crusade against the orthodox
Liberal leaders. The still-incomplete election returns leave no doubt
that the bulk of the Liberal Party's following now look to him. Both for
this reason and because most of his orthodox-Liberal rivals will be
abroad through the months ahead, Gait= will probably be the chief
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anti-Conservative contender for the presidency at the end of ?spina
Perez's term. Meantime, because of his control of numerous Senate
and Chamber seats, he will be in the advantageous position of enjoy-
ing power without responsibility, and the facts of his career suggest
that he will know how to make the most of this windfall. The ortho-
dox Liberals must make an immediate choice between continuing in
President Ospina's coalition government and acceptance of Gaitan's
leadership. In either event, Gaitan is raising issues calculated to
bring Colombian politics into line with the leftward trend in other
South American countries and is the man to watch.
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CONTENTS
Pages
TRENDS IN BRIEF
WESTERN EUROPE
Anti-Communist Elements Gain in French Army
1
Dissension Within the Italian Labor Movement
1
CGT Seeks Wider Control of French Labor
2
EASTERN EUROPE
Soviet Policy on Atomic Control
3
Soviet btdustrial Plan for 1947
4
FAR EAST
Prospects for Vietnam Settlement
3C1
Document No.
NO CHAnGE in Class. -0
It DECDASSIFIED
C'siAIX:D TO: TS
DDA Flom?, 4 Apr 77
Auth: M1.7?G. 77 1763
Date: BY:
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TRENDS TN BRIEF
WESTERN EUROPE
The . in the French Army
has been improved by Lieutenant General Revers' appointment as Com-
manding General (page 1).
, ThfLyattsfLgigj_taj_ian labor rnovemerilmi.az be disrupi and an
anti-Communist labor bloc formed as a result of Communist efforts to
consolidate their control of the Italian Confederation of Labor (page 1).
Wider coptro4 of F ench labor Isso ht the CGT in a measure
which would give the Communist-dominated body virtually exclusive
rights to represent all French workers (page 2).
The Austrizijamon will e more outside aid in 1947 than
was previously envisaged. Fuel shortages have forced a general shut-
? down of most industry since December. This situation ? combined with
anticipated delay in the importation of necessary raw materials, spare
parts, and food -- will reduce Austrian exports in 1947 from the origi-
nally estimated total of 120 million dollars to about half that figure.
Unless foreign credits are provided to offset this cut, Austrian economic
recovery will be further delayed and relief requirements for 1948 will
consequently increase.
Wis it_mlicalltiLas been i__icreased and the position of
Premier De Gasperi greatly strengthened by the vote of confidence the
latter recently received in the Constituent Assembly where he has
successfully defended himself and his Government against charges of
corruption. As a result, no serious political crisis is likely before the
next national elections.
EASTERN EUROPE
desire todefer on atomic control until
It possesses the atomic bomb is reflected in Gromykors recent tirade
against the Atomic Energy Commission report (page 3).
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Te 1947 .hase of the Soviet five ? ear plan, which purports
to benefit the Soviet laborer, is no expec t. ? mprove either the
general standard of living or the public morale (page 4).
Substitutions in the Febru fo_ ocm_i..rations Moscow indicate
serious shortages of meats, fats, sugar, and cereals. Available quan-
tities of fresh meat and sugar were reserved for manual laborers
but even the rations for these workers were only partially fulfilled.
Unless state reserves are released, it is believed that the consumer
food situation will continue to deteriorate until the next harvest.
The cui___.zt_men Weal crisis in ffungary which was precipitated
by the Communists'coun nstitutionaefforts to exploit a conspiracy
against the Government in order to increase their political control of
the country, seems to have been temporarily resolved. The US note
protesting direct Soviet intervention in the affair appears to have
forced the Communists to moderate their terms for continuation of the
coalition Government. With increased leftist participation, the uneasy
coalition is expected to continue until the Communists again feel the
time is ripe for demanding further concessions. The Smallholders'
Party may be further weakened by the desertion of right wing members
either to the rightist Freedom Party or to a projected Catholic party.
yisorous attacks on the Rumanian Communist Pan, by two
major parties in Governmen e i ss sent ?- rats and
the Dissident Social Democrats) reflect a growing dissatisfaction with
Communist efforts to monopolize control of the Government and the
country's economy. This opposition within the Government Bloc may
force the Communists temporarily to adopt a more moderate program.
Agnsig_a's Payment Is expecte4pass.z. Communist-spon-
sored industrial offices bill which, in effect, would nationalize industry
without compensating its owners. and would grant the Communist-con-
trolled Ministry of National Economy absolute authority over almost all
phases of commercial enterprise. The Communists thus hope to con- _
solidate control over the country, to drive out Western capital, and to
facilitate coordination between Rumania's economy and that of the USSR.
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? The Bulgarian Government has ordered all currency in denomi-
nations over 100 leva to be exchanged at the State Bank for new currency
between 10 and 16 March. This order apparently aims to eliminate
the black market and will be utilized at the same time to bring to
trial as Axis collaborators and black marketeers all members of the
opposition who turn in large sums of money for exchange. The closing
of the Turkish-Bulgarian frontier until 17 March was probably designed
to prevent the flight of such persons or the exportation of their funds
to a safe haven in Turkey.
FAR EAST
French efforts to form a si u t e in Vietnam will
probably be abandoned. Because of Ho CM Minh s continued power and
popular support, it is believed that eventually France must negotiate
with a government which includes Ho and some moderate elements of
the Viet Minh (rage 5).
Popular unrest in Formosa still runs high, although Governor
General Chen Yi has reportedly promised civil reforms and Chiang
Kai -Ebel has offered public assurances that Formosa would be granted
constitutional rights at an early date. Native Formosans apparently
are weighing these promises in the light of Chen Yes imposition of
martial law, resulting in systematic repressions and executions, and
Chiang's announcement that troops would be sent to Formosa "for
garrison duty." Prominent Formosan groups apparently are still con-
vinced that the island's only hope lies in US or UN intervention.
THE AMERICAS
The Soviet economic mission in Buenos Aires has been recalled
to Moscow, and resumption of nertiations for a trade treaty in Buenos
Aires seems improbable. Peron s recent outbursts against the Com-
munists, despite the distinctions he drew between "native" and "Rus-
sian" Communists, set the stage for the suspension of the discussions.
There is, moreover, evidence of a feeling on both sides that the negotia-
tions had made little progress. On the other hand, Senator Molinari,
head of the Argentine Goodwill Mission which has been touring Latin
America, recently drew attention to the potentialities of Argentine-
USSR trade. This may mean either (1) that Argentine leaders are
divided on the future of the country's trade relations with the USSR, or
(2) that trade negotiations may be resumed in Moscow.
-Ill-
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WESTERN EUROPE
Anti-Communist Elements Gain In_Imcitlri_un
The replacement of General Jean de Lattre de Tassigny as
Commanding General of the French Army by Lieutenant General Georges
, Revers (until now Chief of Staff of the Army) appears to have improved
the position of the anti-Communist elements within the French Army.
De Lattre de Tassigny will continue in the less important post of Inspec-
tor General, a position he has held concurrently with his duties as Com-
manding General. Even though he is an opportunist, and has, at times
been considered persona grata to the Communists, de Lattre de Tassigny
cannot properly be considered an adherent to Communist doctrines.
Revers, on the other hand, is believed to be the leader of a sizeable anti-
Communist resistance organization. Revers' appointment, made at the
instance of Paul Coste-Floret, anti-Communist MRP War Ministerlre-
suited from pressure by strongly anti-Communist political leaders.
Despite this failure of Communist Defense Minister Mime re-
ported attempts to replace both de Lattre de Tassigny and Revers with
his strongly pro-Communist Chief of Cabinet, General Ernest Petit, it
Is to be expected that Billoux will continue his efforts to increase the
power of his Ministry, the exact extent of which is still under cabinet
discussion. At present, the Defense Ministry possesses a limited co-
ordinating function among the War, Air, and Navy Ministries, but has no
control authority over them.
1
Dissension Within the Italian Labor Movement
The unity of the Italian labor movement may be disrupted at the
Congress of the Italian Confederation of Labor (CGIL), scheduled
tor April. The CGIL, representing all of Italy's important labor groups,
has three directors, one representing each of the major political parties:
Christian Democrat, Socialists, and Communists. Although the three
directors theoretically have parity of power, Communist influence has
dominated. A recent Communist proposal that the three-director system
be abolished and the Congress operated on a parliamentary basis with
officers elected by majority vote indicates that the Communists are now
sure of a majority. However, this proposal may result in the secession
from the CGIL of the non-Communist elements and lead to the formation
of a rival labor confederation. Such a move would be an extension-of the
present anti-Communist trend in Italy.
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ggis 191....karicipmgpArsjoiriwkL,Abor
The Communist-dominated CGT (General Federation of Labor),
In an endeavor further to strengthen its hold over French labor, has
forced through the Superior Commission on Labor Accords a recommen-
dation to the Government that would give the COT virtually exclusive
right to represent all French workers. This recommendation would
exclude from negotiations for collective accords those labor unions
which have less than 10% of the total organtzed labor membership in
the industry concerned and which do not have at least one-fourth of all
union membership in at least one category of workers. Such a develop-'
meat would be a serious blow to the status of the CGT's principal rival
union, the CFTC (Christian Labor Federation), and to any relatively
small groups in industry, such as organizations of engineers, techni-
cians. and white collar workers, who would then be at the mercy of the
masses of unskilled workers. It is likely that the CGT would be accorded
this exclusive status should Communist influence in the Government be
further consolidated.
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EASTERN EUROPE
?
Soviet Policy on Atomic Control
Gromyko's recent tirade against the Atomic Energy Commission
report, which surprised the Security Council by its sharp tone, is be-,
lieved to reflect more accurately the basic Soviet position on atomic
energy control than Molotov's earlier assurances to the General As-
sembly regarding supervision and inspection. Gromyko insisted that
the USSR (1) rejects any plan for international possession and control
of atomic energy plants; (2) rejects the exclusive right of an inter-
national authority to conduct atomic research; and (3) opposes "unlim-
ited access for inspection purposes to all equipment and operations."
? In the course of his diatribe, Gromyko charged the US with
scheming to set up an atomic monopoly,and for the first time openly
pointed to the record as demonstrating that the USSR could expect only
unfair treatment from the UN.
Gromyko's intemperate outburst exasperated all of the members
of the Security Council except the Polish delegate. Consequently, a few
days later the USSR elected to concur in a slightly revised US proposal
to refer the report back to the Atomic Energy Commission for further
consideration.
These developments illustrate Soviet strategy regarding control
of atomic energy. International control of what may eventually prove to
be a major source of industrial power would be intolerable to the group
which controls the Soviet economy. Nor can this group accept any
elimination of the USSR's veto powers. Therefore, in the expectation
that US intentions during the next decade will be peaceful,and that the
USSR will before long have solved the problem of manufacturing the
atomic bomb, the USSR plans to defer any international atomic agreement.
Until it has the bomb, the USSR will stall for time, blowing hot and cold
on the issue of atomic agreement as may suit the purpose of the moment.
In so doing, it must on occasion go through the motions of searching for
agreement.
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Soviet Industrial Plan for 1947
The recently announced 1947 phase of the Soviet five-year plan
aims primarily at improving the coal, agricultural machinery, foodstuff,
rail transport, and housing industries, and confirms previous estimates
that these industries constitute the most serious bottlenecks in the Soviet
economy. The high priority assigned food and housing indicates that
shortages in these fields have had such an adverse effect on labor morale
and effeciency as to impair the entire industrial program. The increased
emphasis on food and housing, moreover, will divert, temporarily, the
national effort from heavy industry, which, however, still retains overall
top priority.
Although the 1947 plan is being presented to the Soviet people
as a measure to improve their material welfare, it is doubtful if this
most recent promise will be fulfilled. Actually, the plan will wring
from Soviet workmen the maximum amount of labor in return for a
minimum amount of consumer goods. Any benefits from increased
food and housing will be offset, in large part, by an industry-wide in-
crease in piece-work norms and by an increase in the state turnover
tax -- a Soviet version of the sales tax and a major source of govern-
ment revenue. The 1947 program, therefore, while correcting the ur-
gent deficiencies in food and housing, cannot be expected to improve
the general Soviet standard of living nor to raise, materially, the pub-
lic morale.
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FAR EAST
Prospects for Vietnam Settlement
The difficulties of solving the Vietnam problem by force have
resulted in several French attempts to establish a puppet regime in
order to circumvent the necessity of negotiating with the present Viet-
nam government of Ho Chi Minh. These attempts began shortly after
the commencement of hostilities in December when the French insisted
that no conversations were possible with Ho Chi Minh or members of
Ms government. Contact was made in Hong Kong with the former Em-
peror of Annam and Japanese puppet, Bao Dail as a figure around whom
a new government, amenable to French influence, might be created.
At the same time an alternative plan was conceived, which provided for
the enthronement of Bao Dal's young son, Bao Long, with a French-
dominated Regency exercising actual power. Both possibilities are
still being pursued by the French. and Bao DM's former Prime Minis-
ter is now in Saigon negotiating with the French.
In recent weeks, the protracted resistance by Vietnam forces
and the unwavering native support of the Viet Minh Communist-front
party have forced the French to recognize that Ho CM Minh continues
to be popular and powerful. The increasingly critical French military
manpower situation and the unfavorable international reaction to French
policy will force the French to seek an early end to hostilities. Conse-
quently, French authorities are maintaining contact with Ho CM Minh
through his representative in Saigon and also through Socialist Deputy
Eugene Thomas, who recently arrived in Indochina ostensibly to inspect
local communications.
Any imperial regime under Bao Dai or his son would lack popu-
lar support and meet with opposition from the Chinese. The latter pre-
fer a government which would include Annamite Nationalists as a counter-
balance to the Communists. Such an arrangement however, could not
prove satisfactory from the French standpoint because the Nationalists
are potentially as inimical to French objectives in Vietnam as the Com-
munists.
Any Vietnam government which does not include Ho CM Minh
or his more moderate followers will, like the present Provisional Gov-
ernment of Cochin China, be limited in scope of authority by the peri-
meters of French military control and will be open to widespread
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popular opposition and sabotage. France's experience with its regime
in Cochin China should discourage a similar attempt in Vietnam and
may lead to the eventual formation of a government which would in-
clude Ho and moderate Viet Minh elements, several pro-French Anna-
mite Catholics, and perhaps Bao Dal as a private citizen. The French
presumably would find it possible to negotiate with such a government
and might be willing to concede to it a greater measure of independence.
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CONTENTS
38
TRENDS IN BRIEF
GENERAL
Pages
I -Iv
Implications of the Anglo-French Treaty .......
?
?
? ? .
1
WESTERN EUROPE
The British Economic Crisis
2
EASTERN EUROPE
Significant Personnel Changes in Soviet Government
4
Anti-Communist Trend in Czechoslovakia. . . . .
..
..
4
NEAR EAST-AFRICA
Shah Unlikely to Eliminate Qavam as Iran's Premier
6
FAR EAST
Dutch Trade Regulations in the Netherlands Indies
7
Chiang Plans for Intensified War on Chinese Communists.. 8
. Do LO.
N CHANGE in Class. 0
ILDECLASSIFIED
lass. CHANCED TO: TS
DDA Memo, 4 Apr 77
Auth: DD* ?EG. 77 1763
Date: Wit By:
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TRENDS IN BRIEF
GENERAL
? The Anglo-French Treaty represents an attempt on the part
of two victorious allies to preclude the use of Germany in any future
conflict (page I).
WESTERN EUROPE
Lhe Mito ic appears iLIpply__creas apprehensive regarding
the prospects for the success of the Labor Government's plan for
Britain's economic rehabilitation as set forth in the Government's
recent White Paper (page 2).
Italian Defense Minister Luigi Gasparotto's recent announce-
ment--that 94% of Italy's war prisoners-in Soviet camps died there--
has provoked violent and bitter, attacks on the USSR by liberal and
rightist newspapers. If, as appears most likely, the USSR now refuses
to consider revision of the Italian Treaty, the growing anti-Soviet atti-
tude of many Italians will increase and may cause the Italian Commu-
nists to lose at the next national elections (particularly if they are held
In early summer) many of the two million independent votes which they
received at the last national election.
EASTERN EUROPE
Recent c s Sovieth.tlitlealA?sonindicates a Kremlin
desire to?TC", -x administrative responsibility and speed solution of Ukrainian
problems (page 4). ?
The Communist Party In Czechoslovakia is gradually losing
ground, and, barring direct Soviet interference the country will probably
emerge as a modified Socialist state friendly to but not patterned on the
USSR (page 4).
The recently announced Soviet economic concessions to Poland
including a $28,000,000 loan of gold and a reduction by one-half in ?
Soviet demands for Polish coal, are probably designed to counter any
US-UK proposals for a change, on economic grounds, in Poland's West-
ern boundary. The USSR apparently hopes to refute expected charges
that the Poles are unable to develop effectively for the benefit of the
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European economy the agricultural and industrial resources of the area
In question. The Soviet concessions will enable Poland to purchase
vitally needed mining machinery and industrial equipment and to con-
tribute more coal to the rest of Europe.
NEAR EAST-AFRICA
Qavam's position in Iran appears. sufficiently strong to prevent
his removal by the Shah (page 6).
FAR EAST
Dutch seizure of US, Britiskand Chinese vessels for violation
of NEI trade controls has brought protests which are likely to effect
changes in NEI export regulations (page 7).
By mid-1947, Chiang will probably be compelled to moilify his
contemplated all-out military campaign against the Chinese Communists,
in order to devote his efforts to the solution of an increasingly acute
political and economic crisis in Nationalist China (page 8).
The position of President Soekarno of the Indonesian Republic
has been strengthened by his success in enlarging the Republic's
temporary Parliament despite opposition. The additional members
are expected to support the desire of Soekarno's Government to sign
the Dutch-Indonesian Draft Agreement (without accepting the Dutch
interpretations). Statements made at the recent meeting of the Parlia-
ment emphasize deep Indonesian distrust of the Dutch, complete accord
In refusing to accept Dutch interpretations of the agreement, and the
determination of all groups to resist by force re-establishment of Dutch
control in Republican territory. Under these circurnstances, the pros-
pects for an early peaceful settlement are becoming increasingly un-
favorable.
The South Korean Interim Legislative Assembly, which was con-
voked primarily to work out a suffrage law for the election of its suc-
cessor, has under Rightist leadership assumed the role of an independ-
ent government Having recently adopted an anti-trusteeship resolution
In the name of the Korean nation, the Assembly is now considering a
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draft constitution to govern the US Zone until the execution of the Mos-
cow Decision. This draft constitution guarantees the powers of the US
Commander in Korea without specifically mentioning his right to veto
all legislation passed by the Assembly. The movement .In favor of a
draft constitution reflects the intense nationalism of the majority of
Koreans, and foreshadows future clashes between the Assembly and
the US Commander.
Serious riots occurred in Formosa on 28 February when the
Chinese Governor General; Chen Yi, took advantage of the financial
crisis in Shanghai to issue drastic decrees which further consolidated
his monopoly control over the island's economy. These new regulations
crystpized the long-smoldering resentment of the Formosans against
Chen 's arbitrary attempts to maintain the island as his personal satrapy.
Responsible Formosan groups are preparing formal appeals for outside
aid, and have already addressed a petition to Secretary Marshall calling
for a severance of Formosa's political and economic ties with China,
and a UN administration until Formosa is ready for independence.
Political tension in China's northwestern province of Sinkiang
probably will be increasingly exploited by the USSR as a means of weak-
ening the Central Government's control of the province. The leading
Soviet representative there, favors the withdrawal of Chinese Nationalist
troops, on the grounds that this tension is being stimulated by the resent-
ment of the Turki's and other rebelling groups against the "oppressive
tactics" of local Chinese "military reactionaries." However, indica-
tions are that local Central Government representatives have been more
cooperative than the dissident groups in developing the means of achieving
democratic reform in Sinkiang.
In the 11 Match plebiscite, the Philippine pippje are expected to
note 3 to 1 in favor of an amendment which provides that until 1974 US
citizens shall have rights equal to those of Philippine nationals in
developing Philippine resources and operating public utilities. The
amendment, a prerequisite to full benefits from the Philippine Trade and
Rehabilitation Acts passed by the US Congress last April, has been a
subject of bitter politica controversy in the islands. The Roxas Admin-
istration has campaigned vigorously for the amendment which has been
opposed by diverse groups on ultra-nationalist grounds as antithetic to
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Philippine independence. This opposition is likely to stimulate in-
creasing resistance to the implementation of the amendment.
THE AMERICAS
The onnced intention of the Communist-led Colombian pet-
roleum workers to strike against the American-owned Tropical Oil
Company on 7 March represents an effort to embarrass Colombia's
Government and to consolidate Communist and left-wing Liberal strength
in the approaching congressional elections. In 1946, in order to appease
the Communist elements, the Colombian Government exerted heavy
pressure on US petroleum interests to accede to the demands of the
Communist-dominated labor unions.
The ambitious nature of entiindustrialization program Is
indicated by negotiations for an exchange of Argentine wheat for Chinese
Iron ore. Argentina is reported to have agreed to accept existing stocks
of ore (about 500,000 tons) on Hainan Island and may take the entire
Hainan production for 1947 and 1948 (scheduled at 300,000 and 800,000
tons respectively). The wheat that China might receive in exchange for
existing Hainan iron stocks probably would meet only about 12% of
China's immediate wheat requirements.
Chile's President Gonzalez Videla is defending the Communists
In his Government against growing opposition. Gonzalez's position is
undoubtedly based upon a realization that the Communists, through their
control of key labor unions, could paralyze the economic life of the
country, if they were excluded from the Government.
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GENERAL
Implications of the Anglo-French Treaty
On the eve of the Moscow Conference of Foreign Ministers,
Great Britain and France have concluded a 50-year treaty of alliance.
The timing of this ,Treaty may have been prompted In part by the hope
of the smaller two of the Big Four to increase their weight at the coun-
cil table, and in part by the desire of the UR to use the Anglo-French
Treaty as a model for a revised Anglo-Soviet alliance. The Anglo-
French Treaty is ostensibly aimed against the menace of German
aggression and is similar to that which France has had with the USSR
since 1944.
The Hoover report, issued last week, indicates that fear of
German military aggression for generations to come will be ground-
less. The UN Charter already is replete with legalistic assurances
against the menaces of ex-enemy states. Except in the case of France,
with her traditional fear of Germany, the rush of victors to clasp hands
and take vows of alliance against the emaciated German corpse cannot
be accepted as wholly genuine. These treaties are not true alliances
against true dangers frankly recited. They are disguised non-aggres-
ston pacts between uneasy allies, wherein the parties renounce the use
of a reconstructed Germany as a possible weapon in any future war
between them.
In signing the Anglo-French alliance, both powers protested
that their mutual arrangements were within the "framework of collec-
tive security" provided by the UN Charter and expressed the hope that
a four-power pact such as that proposed by former Secretary Byrnes
would soon become an accomplished fact. The USSR, however, has
manifested no enthusiasm for a four-power pact which would include
the US. While welcoming a system of alliances with other European
powers, the USSR wishes to be the prime guarantor of peace in Europe
and to exclude the US indefinitely from participation in European
affairs. 1Vieanwhile,the superimposition of a latticework of 'alliances"
upon the UN Charter has been criticized by the US as indicating dis-
trust in the efficacy of the system of collective security envisaged
under UN.
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WESTERN EUROPE
The British Economic Crisis
A sober appraisal of the Labor Government's recent economic
White Paper, in the light of the recent coal crisis, has led the British
public increasingly to recognize the uncertain prospect for the success
of the Government's plan, which involves ultimately expanding UK ex-
ports to 175% of the 1938 level, while holding imports at 80-85% of
pre-war levels. This recognition of these unfavorable prospects may
accentuate the present "psychological weariness" of the British public,
and produce serious internal political repercussions.
The unrealistic aspects of the projected export program are
becoming increasingly apparent. The realization of the ultimate export
goals would require a flow of British exports equivalent to one-third
of the entire world export trade in 1938, and would involve 25% of the
total output of British industry. Because many British industries are
admittedly unable to compete in international markets, other industries
would have to find foreign markets for a disproportionate percentage
of their output. The plan also assumes that British industry can over-
come the disadvantages of an obsolescent manufacturing plant, and low
worker efficiency in some industries.
Prior to the coal crisis, British exports had risen to approxi-
mately 110% of pre-war levels. This progress occurred in a seller's
market. Future British exports, on the other hand, may have to contend
with nationalism, the development of local industries, and various re-
strictive trade practices which frequently confront an aggressive ex-
porter.
The austere import program must find popular acceptance at a
time when full employment and social redistributions have created an
unprecedented cash purchasing power among large sections of a nation
which has been short of consumer goods for seven years. An accentua-
tion of the present "psychological weariness" might endanger the posi-
tion of the Labor Government and cause political repercussions which
would further aggravate the economic difficulties.
- The coal crisis has dramatized a weakness inherent in the eco-
nomic plan. By revealing the absence of any margin of safety in the
coal position, it has called attention to the fact that a setback in any
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phase of the plan may be equally disastrous. One immediate result of
the ensuing shock has been to quiet; and to weaken the position of dis-
senting Laborites who have been contending that the Government has
sought too close collaboration with the US. This suggests that further
economic difficulties will inevitably limit British freedom of action in
international affairs and require continued close integration of basic
British and US policy, in view of probable British needs for continuing
economic assistance from the US.
The UK will, therefore, continue to support the International
Trade Organization, as a means of achieving the barge increase in
world trade which is so vital to the UK's economic future. The present
weakness of the British economy, however, will very likely force the
UK to seek an extended transitional period and to use its unfavorable
balance-of-payments position to justify the utilization of escape clauses
in the proposed ITO charter, and the loan agreement with the US. This
weakness will also force the UK to carry out further reductions in its
foreign commitments.
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? EASTERN EUROPE
Significant Personnel Changes in Soviet Government
Recent changes in Soviet political personnel indicate a desire
on the part of the Kremlin to clarify and strengthen administrative
responsibility among Politburo members and to facilitate the solution
of the pressing problems created by growing nationalism and agri-
cultural breakdowns in the Ukraine.
The appointment of Lazar M. Kaganovich as First Secretary of
the Ukrainian Communist Party surpasses in importance that of General
Bulganin as Stalin's successor in the post of Minister of the Armed
Forces (a change believed to have been an administrative fact for some
time). Kaganovich, one of the most energetic and forceful of Soviet
administrators, Is expected to campaign vigorously against Ukrainian
nationalism -- a matter of grave concern to the Kremlin ? and for
improved agricultural production in the Ukraine. Andrei Zhdanov's
resignation as Chairman of the Council of the Union is expected to
leave him free for his more important duties as a member of the
Politburo, the Orgburo, and the Central Committee Secretariat of
the Comraunii3t Party.
Anti-Communist Trend in Czecjiosiovakla
The Communist Party in Czechoslovakia is gradually losing ground
despite its overwhelming victory in the May 1946 elections. Barring
direct Soviet interference, Czechoslovakia, because of the intense nation-
alism and individualism of its people, will probably emerge as a modified
Socialist state friendly to but not patterned on the USSR. Particularly
In the economic field, Czechoslovakia's orientation toward the West
should gradually increase.
Following the country's liberation, the Czechoslovak Communist
Party attained substantial popular support by avoiding an extremist pos-
ition. Subsequent Communist efforts to by-pass Parliament, to widen
the scope of the nationalization program, and to control the police, the
army, and the press have, however, alienated many former supporters.
Successful resistance by the Moderates to Communist efforts to dominate
the country is demonstrated by (1) the refusal of Parliament to delegate
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authority to the Cabinet; (2) the reduction of Communist control
over the Secret Police; (3) the removal of Communists from many
local governing bodies; and (4) the maintenance of cordial relations
with the West.
The Social Democrats, upon whom the Communist Party depends
for the small leftist majority in Parliament, have voted recently against
the Communists on all major issues and have won decisive victories
In several labor union elections. A recent split within the Czech Com-
munist Party over the extension of State ownership of industry beyond
the limits of the two-year plan indicates basic Czechoslovak opposition
to Soviet regimentation.
The integration of Czechoslovakia's economy with that of the
USSR and its satellites has also become increasingly difficult. The
nation's two-year plan presupposed substantial imports of raw materials
from the East, which, in actuality, are not being received in sufficient
quantity and quality. Czechoslovakia must, therefore, make up this
deficit by imports from the West which, in turn, can only be paid for
by exports to free exchange countries. Barter trade with the East must,
therefore, be reduced. Because the Communists bear the major respon-
sibility for the execution of the two-year plan, they may be forced to
divert trade from the East to the West rather than to jeopardize the
entire nationalization program.
The Soviet attitude will, in the final analysis, determine the
success of the Moderates in preventing Communist domination of Czecho-
slovakia. The Kremlin is aware that strong-arm methods would meet
with stubborn resistance and substantially reduce the value of its most
Important Eastern European source of supply. The USSR, therefore,
probably will avoid direct interference in Czechoslovakia's internal
affairs as long as Czechoslovakia has a "friendly" Government and
continues to supply the USSR with vitally needed industrial products.
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NEAR EAST-AFRICA
Shah Unlikely Eliminate 9.gx_apa as !rads Premier
Recurrent reports that the Shah, backed by the Army Command,
is considering the dismissal of Qavam as Iran's Prime Minister indi-
cate that the old antagonism between the two has been aggravated by
eavam's recent success in extending his control over the Government
and by the Shah's obvious desire to prevent any further increase in
Qavam's power.
This discord is being aggravated by continuing rivalry for con-
trol of the armed forces and by the desire of both to capitalize on their
increased prestige arising from the recovery of Azerbaijan. The ani-
mosity of the Shah, whose head appears to have been turned by his new
prestige, has been further aroused by the defeat in the Tehran district
of all his parliamentary candidates; this district was overwhelmingly
carried by Qavam-supported men.
? The Shah has the support of the military leaders and can proba-
bly Count on the loyalty of the Army as well as of the conservative ele-
ments. Qavam has alienated both conservatives and radicals by his un-
democratic management of the elections. Be must also face the criti-
cism of both the Shah and the conservatives that a Prime Minister corn-
mitted to a Soviet oil concession should not continue in office. On the
other hand, his suppression of pro-Soviet organizations in Iran would
make it difficult for the Shah to justify his removal. Moreover, Qavam
has retained control of the Gendarmerie and the backing of the moderates.
In addition to having created a strong political machine, he has gained
new support among potent tribal leaders, whose hostility to the Army and
the Shah is deep-seated.
In view of the large majority Qavam will hold in the new Parlia-
ment and the apparent absence of any qualified successor, the Shah is
unlikely to succeed in eliminating him.
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? FAR EAST
Dutch Trade_ RgulatIons in tIiherlands Indies
In an effort to curb smuggling of arms into Indonesian Re-
publican territory and unlicensed export of produce grown by Indo-
nesia= on European-owned estates in Republic-controlled areas, the
Netherlands Indies Government, on 28 January, imposed a series of
export-import regulations. The severely restrictive effect of these
regulations on trade with the Indies has aroused opposition in the US
and among British colonial authorities and Chinese trading groups in
Malaya to such an extent that the regulations will have to be modified
considerably in the near future.
These trade regulations require that all Netherlands Indies
exports, except "native produce," be covered by export permits
issued by the Director of Econemic Affairs of the NET Government.
The Dutch contend that "native produce" does not Include commodi-
ties such as rubber, tea, oil, quinine, sugar, fibers, and precious
metals produced on European-owned estates and that such produce
is stolen from those estates for sale abroad. The Dutch wish to gain
control of and use the proceeds from the sale of these materials to
build up foreign exchange for the rehabilitation of the Indies and to
compensate the absentee owners of the estates. Indonesian authori-
ties refuse to recognize Dutch decrees as applying to Republican ports
and maintain that, as the commodities involved have been produced by
Indonesian labor, they are not the property of the former owners of the
estates.
In the enforcement of these decrees, Dutch naval authorities
have detained and searched many British and Chinese vessels for con-
traband arms, munitions, or unlicensed Republican exports. The power-
ful groups of Chinese merchants in Singapore and the Indies have threat-
ened a stringent boycott of all Dutch shipping in Southeast Asia. The
British have protested these seizures toThe Hague as a violation of
International law. The US protest was brought about by the Dutch seizure
of the cargo on board the ship "Martin Behrman," chartered by the US
Government to the Isbrandtsen Steamship Company. The maintenance of
these Dutch regulations obviously would paralyze trade with the NEI and
Impede the restoration of stability in Southeast Asia.
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Chiang Plans for Intensified War on Chinese Communists
There are clear indications that Generalissimo Chiang Kai-shek
has now decided on an all-out military campaign against the Chinese Com-
munists to free as much of China proper as possible from their control.
In Chiang's mind, this course of action appears to have considerable pri-
ority, in terms of both time and effort, over the two other major Chinese
problems: economic deterioration and the reorganization of the Central
Government on broader and more democratic lines.
In making this decision, the Generalissimo apparently is risking
his future on a gamble that the Nationalists can quickly deprive Commu-
nist forces in North China of their present ability (1) to threaten directly
major communications; (2) to saddle the Central Government with almost
insupportable financial and material burdens; and (3) to aggravate politi-
cal instability in Nationalist China.
Chiang's course of action, which he apparently feels 'must be
taken despite only faint hopes of US assistance, is decidedly more risky
than a similar program adopted last summer (with little success). The
Chinese economy has deteriorated sharply in recent months and now
functions uneasily under the "control" of Chiang's emergency economic
measures; in its greatly weakened condition, the economy can hardly
withstand the burden and expense of intensified warfare for more than
a few months. Any prolonged delay in eliminating the Communist threat
will widen the breach betWeen the Central Government and third-party
political groups; it will further shake the allegiance to the Government
of those military elements from which the Kuomintang derives much of
its power:
?
The time element, thus, is of paramount importance to the General-
issimo's military gamble. While sharp Nationalist gains can be expected
In some areas, it is difficult to foresee any conclusive Nationalist victory.
Shortages of such key items as ammunition and spare parts will assume
increasing importance as Nationalist forces attempt to seize and main-
tain the military initiative.
The present outlook is that by mid-1947, at the latest, the General-
issimo will be compelled to adopt a less ambitious program. He probably
will be forced to concentrate Nationalist military strength along some of
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the key North China rail lines and to assume a defensive attitude in other
areas of conflict, in order to devote his efforts to the Solution of a politi-
cal and economic crisis which, as a result of the failure of his military
program, will be even more acute than it is at present.
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38 2 g FEB 1947
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CONTENTS .
Pages
TRENDS IN BRIEF 1 ill
GENERAL
Communist Infiltration of UNESCO , z 1
WESTERN EUROPE
Nev French Price Reduction Decree 2
Spanish Government-in-Exile Exhibits Flexibility, .?.?? 2
EASTERN EUROPE
Soviet Concern over British Labor Party Policies 3
Soviet Budget for 1947 3
The Greek Crisis 5
Tito Asks Opposition to Join Yugoslav Government 6
NEAR EAST-AFRICA
Air Communications to Improve Afghan Accessibility ? ?
THE AMERICAS
Movement of European Emigrants to Latin America 8
Revolutionary Trends in Venezuela. . ?. ? 9
Vqaument No. 37
BO CHANGE in Class. rl
LJ
lkss.DECLASSIFIED
CHANGED TO: TS
DDA Memo, 4 Apr 77
"7,TA4-11
0
4
Auth: DD EG. 77/1763
Date: I By: _DIS"--;
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TRENDS IN BRIEF
GENERAL
Efforts to use UNESCO as a screen for activities of Communis
and fellow travelers is further indicated by moves for collaboration
between UNESCO and certain Communist 'front" international groups
(page 1).
WESTERN EUROPE
Trance's second wise reduction decree is endangered by mount-
? ing demands of the rank and file of labor for wage increases (page 2).
The Spanish Government-in-Exile is demonstrating greater
flexibility than its predecessor in attempting to replace the Franco
regime (page,2).
Italian political stability ma be adversely affected by increas-
ing scarcity of food, especially wheat, which has already caused reduc-
? tion in the pasta ration. The scarcity probably will be exploited by
extremists to discredit De Gasperi and his Party, and place both at a
disadvantage if the national election Is held in June rather than in the
fall, when additional food supplies may be available.
EASTERN EUROPE
The USSR's concern over the UK Labor Party's_ ability to com-
pete for leadership of the European proletariat is Indicated in recent
Soviet propaganda (page 3).
The USSR's 1947 budget characteristically conceals Soviet
expenditures for military and scientific purposes (page 3).
Greece faces Economic, political, and milt collapse. Such
a collapse would mean a revolt by the Soviet-dominated Left, with the
resultant loss of Greece as a democracy of the Western type (page 5).
Tito"s invitation to Y oslav ? -I on ? to join his
Governmen I pro. sly not e accepted, because Tito cannot afford
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to permit the free elections which the Opposition demands as a
prerequisite to acceptance (page 6).
Further evidence of the Soviet Politburo's concern with
the possibility of opposition from Soviet Army circles is provided
by (1) the absence on Army Day in Moscow of the customary por-
traits of, and speeches by, Soviet military heroes; and (2) Stalin's
address on that occasion emphasizing the importance of political
and ideological training of military personnel.
NEAR EAST-AFRICA
The pending establishment of aalighan air, with connec-
tions to Iran and India, will greatly increase the accessibility of the
area. Soviet participation in Afghan air operations is not imminent
(page 7).
Bevinis _opposition to dividing Palestine into two states, as
expressed In Commons on 25 February, foreshadows possible British
support in the UN for one of two plans: an independent Palestinian
state in which the interests of both Arab and Jewish communities are
protected; or, in the event of partition, provision for the union of the
Arab section of Palestine with another Arab state (preatunably Trans-
Jordan) to insure its survival.
Turkif_ ;itarUcitim in the Bank for Recons ctioittru and the
International Monetary Fund created under the Bretton Woods Agree-
ment has been authorized by the passage of a bill in the Grand National
Assembly. This action will eventually permit Turkey to seek foreign
credits for the purchase of machinery and supplies urgently needed to
implement the Government's projects of reconstruction and industrial
development.
Thesituatioz_ Azerbai an has become increasingly
explosiv-e-iii-i-iiiiiiiitarera-Shen-betleen?lranian Kurdish elements and
Government forces,which are moving against the Barzani Kurds near
the Iraq border, as well as fresh indications that other tribes will come,
to the assistance of the Barzanis if the Iranian Army attempts to dis-
arm them. (See Weekly Summary of 21 February, page 7.)
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THE AMERICAS
The resent slow ress of Euro an emi ation to Latin
America vii not materially a leviate the curren P problem in Europe,
although a large number of workers may ultimately emigrate to
Argentina, Brazil, Venezuelaland Peru (page 8).
A serious revolt in Venezuela under the leadership of ex-Pres-
ident Lopez Contreras, may break out in the near future (page 9).
The possibility oil.. successful revolt opposi-
tion to the Somoza administration appears remote. Aguado, who was
recently defeated in the presidential elections by Somoza's candidate,
Arguello, is reliably reported to have said that the opposition has suf-
ficient arms for a revolution and is waiting for a propitious moment to
start shooting. Despite populak resentment that ballot counting under
Government supervision was manipulated in Arguello's favor, Somoza
should be able to check any such revolt through advance knowledge of
the opposition's plans and control of Nicaragua's armed forces.
The new Mexican Government's foreign trade policy apparently
will include protective tariffs and a withdrawal of governmental agen-
cies from foreign trade in agricultural commodities. It is expected that,
in order to become more self-sufficient and to conserve foreign exchange
for the importation of equipment for the industrialization and irrigation
programs, there will be increases in import duties on consumer goods
other than foods.
-The dependence of Chile's Government on Communist supmd has
been reaffirmed by President Gonzalez Videla, as a result of the recent
cabinet crisis. Although the former Chilean Foreign Minister told US
Ambassador Bowers in September, 1946, that any Communist ministers
Gonzalez might name would soon be forced out of the Government, there
Is no evidence that Gonzalez intends an early break with the three
Communists now in his cabinet.
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GENERAL
Communist Infiltration of UNESCO
The Communist infiltration of UNESCO (see MG Special Evalua-
tioh No. 11 of 7 February ) appears to have two main objectives: (1) to
place Communists and fellow travelers in key UNESCO posts; and (2)
to make public all scientific data obtained in atomic research,
It is now certain that Communist Professor Joseph Needham,
the protege of Julian Huxley, Director General of UNESCO, is the ?
principal link by which UNESCO is leiting drawn into collaboration with
certain international Conimunist "front" organizations including: the
World Federation of Scientific Workers, the international Council of
Scientific Unions, the World Federation of Engineers, and the World
Medical Association. These four organizations have been launched but
recently and Needham suggested the collaboration of UNESCO with the
World Federation of Engineers and the World Medical Association at
a time when these organizations existed on paper only.
Professor John Desmond Bernal, the Cambridge physicist and
Communist, is a vice-president of the World Federation of Scientific
Workers. In his keynote speech before the British Association of
Atomic Scientists, Bernal demanded complete publicity for all scientific
research now held secret by military security, and urged that action to
this end be taken before the UN Security Council. He declared that the
Imposition of secrecy on scientists was evidence of preparation for
another world war.
Such developments enable the USSR, which is not yet a member
of UNESCO, to obtain some of the advantages of membership without
assuming the responsibilities and financial burdens.
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WESTERN EUROPE
lifralpirjaneelst 4gelittie
In promulgating its second basic price reduction decree,
the French Government acknowledges that profit margins will be
further reduced and that in some instances business will operate
at a loss. Thin new decree is announced on the eve of a Cabinet'
decision regarding wage demands. In acknowledging the adverse
effect of the decree upon profits, the Government Is undoubtedly
attempting to gain support in its efforts to forestall wage increases
at this time in the hope that by summer an increase in industrial
production and the seasonal improvement in the food supply will ,
stabilize the situation. Although, for the moment, the CGT (General
Federation of Labor) leadership is apparently willing to support the
Government's wage policy, mounting demands for increases among
the rank and file of labor may force the hands of the leaders and upset
the Government's attempt to hold the wage line while reducing prices.
Spanish Government-in-Exile Exhibits Flexibility
The Llopis Cabinet is demonstrating greater flexibility than
Its predecessor by not insisting that the Spanish Government-in-Exile,
because it was created in accordance with the Constitution of the Span-
ish Republic, should be recognized by foreign powers and restored as
the legitimate Spanish Government Llopis believes that Franco should
be succeeded by an interim government which will hold elections; he
opposes the establishment of any non-Republican government in Spain
prior to those elections. The political groups which favor restoring
the Republic will offer to head the interim Government. Llopis himself
appears to be making indirect bids for Monarchist collaboration and
perhaps participation in such an interim Government. Re has told UK
representatives, in touch with the Monarchists, that his adherents may
make contact with Monarchist forces but that his Government will
make no official overtures.
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EASTERN EUROPE
Soviet Concern over British Labor Party Policies"
An article in Pravda of 17 February attacked the British Labor
Party for its alleged willingness to split the unity of the working
classes in order to insure British political and economic influence in
Europe. Tlds article reflects the jealous concern with which the Kremlin
views any competition for the leadership of the world proletariat. The
Kremlin fears that an extension of British labor influence might lead
the Socialist parties in Eastern Europe to revolt against Communist
leadership.
In spite of failures and disappointments over the past 30 years,
the Kremlin still relies greatlyion the eventual mobilization of world
Socialism to advance the expansion of Communism. This has been ,
particularly evident during the past year, in which the USSR has sought ,
to weld all Socialist groups in Europe into Commuatst-dominated "fronts",
an attempt which has generally succeeded in Eastern Europe but failed
In the west.
? The actual schism between Communists and Socialists has
existed since World War 1; the Pravda article is a tacit recognition of
the British Labor Party's potential leadership of moderate Socialism
and shows clearly that the Kremlin recognizes the inherent threat to
Its position.
Soviet propaganda may be expected to intensifY its efforts to
picture the British Labor Party as a vassal of British imperialism.
Should a revision of the Anglo-Soviet Treaty be agreed upon, the Krem-
lin's propaganda machine may try to interpret it to the European working
class as a repudiation by the British Labor Party of any aspirations to
leadership of European Socialism.
Soviet Budget for 1947
The 1947 Soviet budget was announced before the Supreme Soviet _
on 20 February. The major categories (in billions of rubles), together
with corresponding figures for 1948, are as follows:
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1946
1947
National Economy
102.2
131.8
National Defense .
72.2
67
Scientific Research
5
6.5
,
Official Soviet propaganda emphasizes the reduction of the arms
budget and points out that the national defense appropriation represents
only 18% of the total budget expenditure in contrast to 35% for national
economy and 29% for social-cultural purposes. It should be noted, how-
ever, that probably the major purpose of Soviet budgetary announce-
ment:3 is to serve the official propaganda line. Because of this, and of
the Kremlin's virtually unlimited opportunity to distort and conceal the
true nature of government expenditure, the recently-published figures
throw very little light on the actual facts of Soviet finance.
This obscurity prevails especially with regard to military ex-
penditures. For example, the military budget does not cover the numer-
ous military and quasi-military functions of the DOD (Soviet Secret
Police), the extensive military construction work done by political
prisoners, the development of new weapons by industrial enterprises, or
the contributions of the Union Republics to military, funds. The national
defense appropriation, therefore, provides for little more than main-
tenance of Soviet troops and compensations and gratuities to members of
tile Armed Forces.
The increased allotment for scientific research probably includes
only a part of the atomic program. The increased amount devoted to
heavy industry in the national economy appropriation--75% of the total
allotment for 1947 as opposed to 58% in 1946--may disgtdee the major
phases of an atomic development program. The breakdown of appropria-
tions as publishedleaves45.1 billion rubles unaccounted for--a sum suf-
ficient to cover a large atomtc project or other secret activities.
The above evidence points to the desire of the Soviet Government
-to improve the basic military-economic potential of the USSR, which is
currently handicapped by limited Industrial capacity and by the lack of
an atomic weapon. Under present circumstances, the USSR has no need
for mass land armies such as those which fought in World War U. The
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maintenance of such a force now, moreover, would severely strain So-
viet resources of matriel and manpower. U Is logical, there2ore, fo"?
the Kremlin to devote its attention during the next few years to cutting
the number of its military peraonnel and diverting its efforts toward
the development of an industrial base capable of supporting large armies
at some future date.
The Greek Crisis
The fate of Greece may be decided within the nest few months,
U not weeks. Militarily, a demoralized, under-equipped army is los-
ing ground to guerrilla forces backed by the Soviets and their satellites.
Politically, a compromise government of Rightists, through inefficiency
and political narrowness, is losing what little popular confidence It once
possessed. Economically, a country unreconstructed from the devasta-
tions of war, is losing its fight against starvation, inflation, and internal
and external debt.
Since the liberation, two factora have saved Greece from relent-
less attempts by the USSR, through its satellites and local Communist
elements, to dominate the country: (1) The presence of British troops;
and (2) loans, including UNRRA aid, from the US and the UK. Now, in
the face of an all-out Soviet effort to capitalize on the current crisis,
British troops (except for a small token force) are being withdrawn,
and the US and the UK are finding it increasingly difficult to obtain money
to bolster Greece's economy. Because of the UK's own financial straits,
economic aid from that source may cease completely.
Alone, Greece cannot save itself. Militarily, the country needs
aid in the form of equipment and training. Politically, Greece's diehard
politicians need to be convinced of the necessity of a housecleaning, and
the prostrate Center, which traditionally includes the majority of the
population, requires bolstering. Economically, it needs gifts or loans
of commodities, food, foreign exchange, and gold to check Inflation. Of
these needs, the economic are the most vital.
If Greece withstands Soviet pressure during the next few months,
and can contain the guerrillas, the Center, which is ineffectual at the
moment, may become sufficiently aroused by the increasing atrocities
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'of the Leftists and the continued bungling of the Rightists to reorganize
itself and to take control of the Government, excluding both the Right
and the Left. Such a move might be led by the moderate Sophoulis or
the old republican Plastiras.
Without immediate economic aid, however, there would appear
to be imminent danger that the Soviet-dominated Left will seize control
of the country, which would result in the loss of Greece as a democracy
of the Western type. ,,
Tito Asks Opposition to Join Yugoslav Government
Marshall Tito and members of the Yugoslav Communist Politburo,
In order to give their regime a more democratic appearance, are en-
deavoring to persuade top Opposition leaders to Join the Government.
Leaders of the Serb Democrat and Croat Peasant Party?including such
former members of the first Tito' cabinet as Grol, Subasich, and Shutej--
reportedly have been offered as many as eight ministerial posts in re-
turn for their participation. They have refused to accept the offer unless
Tito agrees to form a new government and to assure an absolutely free
election.
In attempting to broaden the base of his Government, Tito appar-
ently is influenced primarily by economic considerations. Re evidently
? desires western financial aid, including a $68,000,000 post-UNRRA loan,
? to carry out his plan to industrialize the Yugoslav economy. Re also
wishes to gain the support of the farmers and thus remove the serious
handicap to the domestic economy presented by their successful efforts
to divert prodUce from the Government market.
While Tito obviously considers that he can permit Opposition
leaders in his Government without materially weakening Communist
control, he cannot risk uncontrolled elections. As the Opposition would
not profit by participation without free elections, it appears unlikely that
It can be persuaded to accept the Tito offer.
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NEAR ITAST-AVRICA
Air Communications to Improve Afghan Accensibility,
The Afghan. Government is ready to give final approval to
the establishment of an Afghan airline, capitalized at 1.5 million
dollare, to be managed and operated by the TWA, which would receive
an option to acquire part ownership. The Afghans have requested a
US loan of 0-7 million dollars for airport construction. Afghanistan,
furthermore, has recently signed an air agreement with Iran, and
has a M111301021 in Mew Delhi negotiatins an air agreement with India.
The airline routes envisaged in these agreements will connect with
the Iranian Minna at Tehran and with an Indian airline at PeGitmar
or Karachi. In the development of theae airlines, Afghanistan has
observed the prineiple of reciprocity, as enunciated in the 1944 Chicago
Convention. AG long as the USSR is unwilliez; to make reciprocal air
agreements with other countries It is unlikely to obtain _air rights
in Afghanistan. Accordingly, Soviet penetration through air activities
into this strategic area on the Indian border is unlikely in the near
future.
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THE AMERICAS
Movement of European Emigrants to Latin America
A number of Latin American countries which lack the man-
power necessary to carry out planned increases in industrial and
agricultural output have announced plans for promoting immigration
from Europe. Argentina, Brazil, Venezuela, and Peru have sent
government commissions or officials to select immigrants considered
desirable on the basis of assimilability, occupation, and ideology. Al-
though it is estimated that Argentina now has facilities to handle no
more than 25,000 immigrants a year, it he announced a program for
bringing in 4,000,000 Europeans during the next 10 years. 'Brazil also
envisages large-scale immigration, and estimates that it can receive
2,000,000 immigrants within the next 10 to 20 years. Chile has expressed
interest in bringing in a limited number of technicians.. Venezuela would
like to bring in agricultural workers.
The following progress has been made toward implementation
of announced plans: (1) on 21 February, Argentina and Italy signed an
agreement by which approximately 5000 Italian workers will leave
Italy for Argentina each month for an unspecified period; (2) Brazil
has informed the IGCR (Intergovernmental Committee on Refugees)
that it is willing to admit 1000 displaced persons and, if the experiment
proves successful, to admit larger numbers at a later time; (3) on
17 February, Venezuela signed an agreement with the IGCR for the
? resettlement of an undetermined number of DPs. Although the authority,
? of the Venezuelan Migration Commission has not been defined, it has
estimated that 15,000 DPs could be received in 1947, 40% of whom '
would be destined for agricultural resettlement.
The efforts of Latin American countries and the MICR to pro-
mote immigration and the resettlement of DPs have so far met with
disappointingly snual results. As serious technical, transportation, -
and financial difficulties must be overcome in undertaking resettle-
ment,"it appears unlikely that ths progress of emigration to Latin
America will be sufficiently rapid to alleviate materially the current
DP problem in Europe.
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Revolutionary Trends InVeneue1a
Recent developments in Venezuela indicate that the Government
may face a serious revolt in the near future. Supporters of conservative
ex-President Lopez Contreras?including a large part of the Venezuelan
army, armed groups of civilians, and Venezuelan exiles in Colombia and
the Dominican Republic ?have been organizing a revolutionary movement
for several months. Although the Government received the overwhelm-
ing support of the people in the October 1946 elections, it has recently
lost some of its popularity as a result of continued allegations of ineffi-
ciency, failure to carry out promised reforms, and disclosures that it
had tortured political prisoners. In the event of revolution it can count
on the loyalty of a portion of the Army (particularly in the garrisons
around Caracas), on armed bands of civilian adherents, and on armed
Communist groups which prefer the present Government to a conserva-
tive regime under Lopez Contreras.
A group of Army officers who participated in, or were sympa-
thetic to, the unsuccessful December 1946 revolt probably holds the
balance of power. This group, although not part of the Lopez Contreras
movement, is opposed to the Government and would probably join a re-
volt headed by Lopez Contreras if it showed promise of success in its
early phases.
The Venezuelan Government appears to have a reasonably
Accurate knowledge of the situation and is reported to be negotiating
with the Lopez 'Contreras group. Such negotiations, however, are inter-
preted as a sign of weakness on the part of the Government and it is
doubtful that Lopez Contreras would come to an agreement, if he thought
that he could successfully execute the planned revolt.
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CONTENTS
36
Pages
TRENDS IN BRIEF i- iv
WESTERN EUROPE .
General Strike Unlikely at Present in France
Slow Progress on the Austrian Treaty
Soviet Pressure for National German Trade Union 2
EASTERN EUROPE ,
Infiltration of Demobilized Soviet Troops in Occupied Areas. 4
Soviet Policy Toward Finland
4
Bulgarian Strategy on Peace Treaty
5
Soviet Delaying Tactics at Moscow Hinted
6
NEAR EAST-AFRICA
Insecurity in Northwestern Iran 7v
Effects of UK Decision to Refer Palestine Issue to UN. . .
THE AMERICAS
Chile's Political Difficulties
Dodument No. __Al:_-____----..?
NO CHANGE in Class. 0 :A
IDECLASSIFIED
ass. CHKOED TO: TS S C
DDA Memo, 4 Apr 77
Auth: DDA G. 77 1763
Date: I BY; _OIL-
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TRENDS IN BR EF
WESTERN EUROPE
- ? No raerai strike is likely in France for th1.1.1.1Lsent despite
threatened C(7.2 demands. for higher wages. Communists and CGT
leaders privately admit that they .do not want overall increases but
only ad stet in cer4tin low wage bratkets (page 1).
The .USSR Aporently desires An AUstrian treat? that will pro-
vtde a legal basis fon future Soviet interference in Austrian affairs
and is therefore unlikely to at major concessions to US-UK views
for the sake 'of an earl agreement (pstge 1).
The ITSSR seeks a matioaI German trade union as one means
of achieving, ultimate Soviet domination of a united Germany (page 2).
The noviet:aponsored,Socialist Unity Pa_i_42.1.) in the Soviet
Zone and the Communist }arty of the 'western one have established
a central cornnittee in Berlin "preliminary to the formation of a
11.11.11AVI SCCial*t Party for ;,a1 Germany." This _plan is essentially an
attempt to e:r.tend the Socialist Unity party WO the western zones by
converting, The western.Communist Party into a branch of SED. As it
parallels Soviet efforts to establish the Soviet -sponsored Trade U oa
on a rational bfl,r.ls (see page 2), this move may be regarded as part of
the long-range Frogram by which the USSR hopes to establish its con-
trol over a Wihit44 Germany.
EASTERN EITROPE
Many denr.nobilized Soviet troops are remaininaln occid
apparently as a part of a plan to insure Soviet control after occupation
forces are withdrawn (page 4).
Sovietnclici___) tal,Fard Finland while sim.ulatimconsideration ?
. for Finnish nationalism, has nevertheless -achieved substantial penetra-
tion of the country's economy. The USSR has avoided a harsh policy
toward Finland for fear. of adverse repercussions in other Scandinavian
countries and the West (page 4). ?
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1.1r1a's re ng.was tg. su_m_vs@ political liberties by
stressing its treaty obligations to root out fascism and minimizing
similar obligations to preserve democratic rights for non-fascists
(Page 5).
The Uc_. SIR may attempt to ittalEt at the Moscow
Conference by eliminating the international secretariat which has
facilitated the proceedings of previous CFM conferences (page 6).
Poland's Communist-dominated adopted a
paRcitoward its internal opponents and the Western Powers following
the recent elections (see Weekly Summary of 7 February, page 2),
which has been exemplified by (1) the announcement that a general ?
amnesty for political prisoners will be passed by Parliament; (2) failure
to retaliate against strong anti-Government statements in Parliament
and the press by Opposition leaders; (3) an expressed desire to reach
a working agreement with the Catholic Church; (4) failure to-liquidate
either Mikolajczyk or his Peasant Party; and (5) a new attitude of cor-
diality and helpfulness to the US and UK Embassies. The change in
policy, however, is merely a tactical maneuver and does not reflect
any ideological about-face nor a desire on the part of Communist ele-
ments for permanent friendlier relations with the West.
NEAR EAST-AFRICA
Continuing insecurity in northwestern Iran bordering the USSR
may provide the Soviets with further opportunities to interfere in
Iranian affairs (page 7).
The Arabs have the initial advanbge in the UK's decision to
submit the Palestine issue to the UN (page 7).
FAR EAST
_A thorougSabinet shakeup is expected in Siam following the
return of elder statesman Pridi Phanornyong from a world tour about
21 February. The recent resignation of the Foreign Minister, in pro-
test against the numerous commercial Involvements of other Cabinet
members has weakened the position of the GOvernment and emphasized
the prevalent discontent with widespread official corruption. Pridi, who
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vintuallY controls all political, activity hi Siam, is expected to force.
the, removal of the present Premiers and to form re new government
from members of the two parties now represented in the Cabinet.
The new Government is expected to employ stronger measures to
improve rice distribution and regulate governmental commerical
dealiags.
TI Z AMERICAS
Seriouamlititafficulties in Chile are expected in the near
future as a result of basic antagonisms within the present Cabinet "
(Page 9).
ArgentintrAssznition of So'viet sis_Ier Betio altic nationals
in the Argentine is reported to have been accorded secretly in December
190. At that time the diplomatic representatives of Esihonia, Latvia,
and Lithuania were advised by the Argentine Foreign Office that docu-
ments relating to the affairs of their nationals resident in Argentina
would be recognized by Argentina only if signed by Soviet Embassy
officials. This action was requested by the USSR presumably as a part
of a larger plan to gain control over a substantial Slavic minority in
the River Plate area. Argentim presumably acceded to this request
as a. part of its policy of playing off the USSR against the US.
twojresIdettinl have agrd
to resolve the country's tadecisive 5 January election and avoid con-
gressional delay In selecting the new President by Guachalla's with-
dnawal in favor of Herzog (who polled the greater number of votes),
and tLe formation of a coalition Cabinet which will follow a bi-partisan
Program.
The transition of Brazil'sppligs_allyniste from the Vargas
authoritarian regime to the clemocratic Government of President Dutra
appears to have been concluded by the 19 January elections for state
governors and legislatures. Returns now available Indicate that the
power of government has been returned to the people -- without the
violence frequently accompanylv, changes of government in Latin
America and without controlled or fraudulent voting. Although the
major oppoettion party gained in strengths the election has benefitted
the Dutra administration in that (I) the Communist Party did not make
the expected gains, (2) the Vargas-sponsored Labor Party was defeated
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at all important points, and (3) the general public has been reassured
regarding the sincerity of the Government's democratic orientation
by the free And orderly manner in which the elections were conducted.
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WESTERN EUROPE
General Strike Unlikely at Present in France
Although the COT (General Confederation of Labor) threaten
to demand an increased minimum wage, and public employees continuo
their insistence on a revision of present wage standards, a general
strike in France in unlikely at this time.
The Communists, who control the COT and thus a majority of
French workers, publicly support the Government's wage stabilization
program and are cooperating satisfactorily in Cabinet deliberations.
Privately, both CGT and Communist leaders admit that they do not ac-
tually desire an overall wage Increase, but simply increases in certain
lower wage brackets where the present minimum is disproportionately
low. Though the Communist press is engaging in desultory sniping at
the Government's program, the Communists do not arts* to risk being
blamed for any interruption of industrial production which would serious-
ly compromise French economic recovery. The Kremlin, moreover,
seems =Was to avoid any serious disorders in France prior to the
Moscow Conference,
The only current strike of any importance is that of the Paris
newspaper pressmen, who are among the highest paid workers in France.
The Communists have openly denounced it as the work of ?Trotskyltes."
The four-hour protest strike on 14 February by public employees, In-
cluding the Paris police, was undoubtedly inspired by the Communists,
but seems to have been intended primarily as a chow of force and a -
warning to the Government to take more vigorous measures to raise
the living standards of organized labor.
Slow Pr as on the Austrian Tr.e..a..k
Progress on the Austrian treaty draft continues at a slew pace.
It is clear that Soviet Delegate Gnaws has not been authorized to ne-
gotiato on important issues, and that the Deputies will be unable to
make any cignificant progress prior to the convening of the Moscow
conference.
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The USSR wants a treaty which imposes maximum restrictions
on the sovereignty of the Austrian Government and provides a legal
basis for future Soviet interference in Austrian affairs. It also wants
to obtain recognition of its ownership of the German assets in Austria
. which it has seized as reparations. In order to realize these objec-
tives, the USSR (1) has demanded the inclusion in the treaty of military
and air clauses even more restrictive than those written into the
satellite treaties; (2) has attempted to insert broad restrictions, sub-
ject. to varying interpretations, which would provide a basis for subse-
quent Soviet interference in Austria; and (3) insists upon the settlement
of the German assets question on the basis of bilateral negotiations
With the Austrian Government.
The task of writing the final treaty in Moscow is expected to
be difficult in view of the fundamental differences between the Soviet
view on the one hand and the US-UK view on the other. Because of the
strong anti-Communist complexion of the Austrian Government, the
USSR would probably prefer a protracted military occupation to the
conclusion of a treaty which failed to meet its requirements. The
Kremlin, therefore, is unlikely to make major concessions for the
sake of an early agreement; it will probably hold out for a treaty which
will permit it to maintain control of the Austrian economy and to exert
a continuing political influence on the Government.
soviet Pressure for National German Trade Union
? The USSR is attempting to establish a national trade union under
its control in Germany as one means of achieving ultimate domination
of the country. The USSR is preparing the Free German Trade Union
League (FDGB) for this purpose and is making every effort to insure
its continuing direction of the FDGB through Communist members of
the Socialist Unity Party (SED). Though Soviet representatives on the
Berlin Kommandatura have,under US-UK pressure, modified electoral
procedures in the FDGB designed to perpetuate SED control over the
? Union, the USSR appears still to be in a position to assure Communist
domination.
This situation has significant implications as the FDGB controls
the civil service and thus is in a position indirectly to influence the
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conduct of Berlin's municipal affairs Thus, by exploiting the Union's
powers, the USSR has been able to compensate for the defeat of the
SED in the October 1946 elections and for the consequent loss of direct
political control.
With the approach of the Council of Foreign Ministers session
in Mosco , Soviet propagandists are attempting to,persuade German as
well as Western opinion of the need for a national trade union organiza-
tion. They are contending that nnification of all trade unions in Germany_
is as essential to the country's economic well-being as a centralized
political.government and are charging that the occupying powersin the
western zones have "lamentably neglected" trade unions.
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EASTERN EUROPE
InffltratioaofDemobtlbedSovietTroops In Occupied Areas
A series of recent reports indicate that a substantial number of
demobilized Soviet occupation troops, rather than returning to the USSR,
are remaining in occupied areas.
Some of the ,demobilized soldiers are being put to work in Soviet-
controlled industry in Austria and Germany, or in local industry in Po-
land and Czechoslovakia. Others have been settled on farms in Germany,
Austria, and the Balkans. Substantial numbers have transferred to the
armies or police forces of the satellite nations, especially of Poland.
In Bulgaria, increasing numbers of Soviet troops are changing to civil-
ian clothes, ,and a large influx of MVD (Soviet Security Police) person-
nel is reported. In Austria, 3,000 troops recently transferred from the
Soviet Army to the MVD.
The foregoing measures appear to be part of a plan to insure
Soviet control over the areas in) question after the withdrawal of the
USSR's occupation forces. The increasing number of MVD personnel
in evidence in Soviet-dominated territory, coupled with the reported
visit which Marshal Berta recently made to Berlin, suggests that the
MVD may assume responeibility for the plan's execution. While it is
unlikely that the MVD will officially take over as the agency in charge
of occupation, the increased scale of its participation indicates that it
may be preparing the ground for covert activity after the withdrawal of
all uniformed army and WM personnel.
Soviet Policy Toward Finland
. Although the ultimate Soviet objectives in all bordering countries
are control of economic resources, a 'friendly government" and pro-
tection from military aggression, Soviet methods in Finland have
differed sharply from those employed with the Eastern European satel-
lites. Apparently aware of Finland's deep-seated hostility, the USSR has
simulated consideration for Finnish nationalism and has used per-
suasion rather than force to gain Finnish compliance with Soviet aims.
The Soviets, furthermore, feared that a harsh policy in Finland would
have adverse repercussions in other Scandinavian countries and in the
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West, where there is greater respect and sympathy for Finland than for
the countries of Eastern Europe.
In the recent agreement on disposition of German assets in
Finland, the USSR attained effective domination while,appearing
"reasonable" and "conciliatory." Initially, the Soviets suggested that
the Finns turn over to them half of the German assets (due the USSR
under Potsdam) in the form of investments in Finnish industry. Even-
tual Soviet acceptance of Finnish offers of outright payments of goods
and services created the impression in Finland, and elsewhere, that
the USSR was showing marked consideration for Finnish independence.
Actually the USSR, without injuring Finnish pride by creating joint stock
companies (as was done in Hungary and Rumania), substantially in-
creased their economic penetration of the country. In the light of this
agreement, a. subsequent Soviet decision to cancel the 57 million mark
penalty for failure to meet second year reparation payments represen-
ted only a minor concession, particularly because payment of this
penalty would have endangered Finland's financial stability and might
have jeopardized the entire reparations program.
Soviet policy toward the Aaland Islands (between Finland and
Sweden)e-while superficially indicative of Soviet respect for Finnish
independence?lays a basis for further penetration. At Soviet insistence,
the Peace Treaty with Finland provides that the Aaland Islands shall re-
main demilitarized "in accordance with the situation as at present
existing." The Soviets interpret the "existing" situation as referring
to a 1940 bilateral agreement with Finland rather than to the 1921 League
agreement to which the USSR was not a party. The implication is that
the bilateral agreement will not prove as serious an obstacle as the
international accord to possible future Soviet designs for joint Soviet-
Finnish militarization of the islands.
ERILLitan Strategy on Peace Treaty
The reaction of the Bulgarian Government to its recent recog-
nition by the UK reveals an impending conflict between US-UK and
Soviet-Bulgarian interpretation of Articles 2 and 4 of the Bulgarian
Peace Treaty. Article 2 refers to the preservation of democratic rights
for all non-fascist groups, while Article 4 imposes on Bulgaria the
obligation to "destroy all fascist political and military organizations
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within her territory." Bu5garia's reply to the British recognition note
paid lip service only to the Britieh stipulatice that Bulgaria's regard
for Article 2 worAd determtne tho future British attitude toward the
Dimitrov Getteenutotat, but tooc pains to point out that Article 4 would
be tlgot oust eoforced. 7,1/Leanwhile, the Dimitrov Government is con-
tinuing its attacks against the OPP-OS/UO/4 despite spasmadte concil-
iatory gedures. Evidence iticresOcts that revelations obtained during
the .reit "Neutral ?Clears" trial (eee Weekly Summary of Feb-
reary? page 1) tefill be usett Cet prows itfeat loaders of the Opposition must
be tried az "facteMS" 11116:Sr the terms of Article 4 of tile Treaty, and
conversely Co not deserve apoctel constderattou under the terms of
Article 2. The .Toviets and the Bulgarian Government wt11, therefore,
probablyVair" OS1 Artidc 4 to titrart Western efforts to maintain some
ractitcum of poltticel Warty for Cho Itulgaelan people.
,Soviet Delaying Tactics at :Mogen? Hinted
preposing routines to hendltng the secretarial work of the
forthcomteg Council of 7cete2gn Vitnistere in Moscow, the USSR has
intimeted that "it mig,ht not be secessaer to bring the usual internetioial seerettaectat to Iti.cocow and Cat it might be replaced by a
group formed txt the wet from all elebvs of the four delegattons. The
'US, Uicand ltrench delegations would be placed at a serious disad-
vantage, if they were obliged to 64 IV/theta the enperienced international
secretarlat which has hitherto operated successfully for the Council of
Foreign Ministers, The, le!'.3s of such a valuable adjunct to the work
of the coaerence would be felt primarily by the iit delegations,
as the entire facilities of the SorteStForeiga Office will be av. liable-
to the Soviet delegation, ?
Tills suggestion is consistentt with the delaying tactics pursued
by the USSR in the remit Deputies' conference in London and would
indicate that the USSR laarttis tc protract the stegotiations on the German
and &Letter. Tates in the hope of forcing acceptance of Soviet terms.
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NEAR EAST-AFRICA
Insecur*Alk Northwesterrk Iran
Continuing Insecurity in northwestern Iran may provide fresh
opportunities for the USSR to interfere in Iranian affairs. This inse-
? curity is attributable, in the first instance, to the failure of the Central
Government to restore order in Azerbaijan following the collapse
last December of the local "Democratic'? government, which was, in
effect, a police regime, and secondly, to the problems created by
10,000 Barzani Kurds who fled to northwestern Iran from Iraq in 1945
under their pro-Soviet leader, MuIla Mustafa.
In Azerbaijan, the Central Government has been unable to
suppress ?wicie-scale looting and pillaging (Including attacks on Chris-
tian villages), and has not succeeded in stamping out corruption in the
local government. Furthermore, serious disturbances are to be ex-
pected when the Government proceeds with its program of disarming
native tribes in the Province.
With regard to the Barzani Kurds, the Iranian Government has
announced that if they remain in Iran, they must surrender their arms
(some 3,000 rifles) by 20 February. The Barzanis are unwilling to
comply with this ultimatum and have declared that they will return to
Iraq on 19 February and will fight if Iraq authorities implement their
plan to send the army against the Barzants for the purpose of capturing
and hanging their leaders.
An attempt by the I3arzanis to return to Iraq may result in
border skirmishes and also may lead to friction between Tehran and
Baghdad because of Iran's failure to disarm the tribesmen. Moreover,
any action against the Barzanis might well create repercussions among
other Kurdish tribes, thereby increasing the instability in the area that
borders the USSR.
Effects of UK Decision to Refer Palestine Issue to UN
The decision by the UK (following the failure of the London
talks) to refer the Palestine problem to the UN emphasizes the Govern-
ment's belief that the conflicting demands of the Arabs OA the Jews
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cannot be reconciled by Britain alone. It also underlines the UK's
unwillingness to carry indefinitely the burden of maintaining peace
In Palestine. As no solution of the problem can satisfy both Jews
and Arabs, the British are transferring to the UN the onus of mak-
ing and enforcing an inevitably unsatisfactory decision.
The British decision to present the issue to the General
Assembly in September rather than to the newly formed Trusteeship
Council at au earlier date indicates that the British feel able to main-
tain the status quo in Palestine until the UN reaches a solution. It is
probable that the Arab League will anticipate any British move by
presenting its own appeal to the UN. With official representation in
the General Assembly, the Arab states will have a definite advantage
over the Jews in winning support for their demands.
Most Jews appear to side with Jewish Agency leaders who prob-
ably prefer to deal directly with the British rather than submit the
Issue to the UN. The Jews have no official representation in the UN,
and they will also be faced with the difficulty of frying to win a favor-
able decision from fifty-five nations instead of from one. Now that an
appeal to the UN is certain, the Jews will continue their efforts during
the interim to persuade the British to administer Palestine on the
basis of the pre,-1939 Mandate without the current immigration and
land restrictions. Concessions of this nature would enable the Jews
to strengthen their hold on Palestine, with the result that they would
be well entrenched by the time the UN announced its solution -- prob-
ably a year hence.
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'ME AMERICAS
hile' P piffic3nties
Ba.-31(' fzntagonierns within rresid)nt Gonzalez Videlres
Cabirkrt r et". CcumurdSrs, Radicals (left of center), and
Liber nIs (cocseTvative) recekt17 produced a temporary political
crts t,nd v..*:.".i3 probably cause more serious political difficulties in
the eieak. The recent criEir appears to have arisen from an.
unsucces:e'u: at-rmiet to force the Coellnunists from the Cabinet.
Cos,?yalez ri an al iiffrAlt to avoid further conflicts, has estab-
ltsed tco'. ei.)mr.aittee composed of the heads of all three
partieF. te 317;.1 dy egisiative matters p:Aor to their submission to Con-
gress. Alth, -4:11 thi9 sbv may improve the sittation temporarily, the
tripartte grT7ernment recogni5cd by many Chileans as a failure be-
cause s Incri unT-Lble to take decisive action to stabilize the chaotic
ecenoreic an social co tot Government-sponsored measures
deeigned to Lnpreve these conditions, such as the Argentine-Chilean
trade agree!: J.mt and traz.? Farm Unionization Bill, are the subject of
O bitter eortmfersyba tk,e, Logis1W.ure and raay provide the spark that
wiL to.,-Ick, of strious raortical crisis.
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CONTENTS
35
Pages
TRENDS ,IN BRIEF.. . Ot? 4110 ?????0?0 a ????0 0000???
GENERAL
Soviet Strategy on Disarmament Commission ??6?.? .. ..
.
1
? WESTERN EUROPE
New Spanish "Government" in Exile . . ???6 .........
2
EASTERN EUROPE
Soviet Demobilization
3
Rumania's Food Crisis . . ? ? 00 ... ... *??0 . of .......
3
Soviet Aims in Germany . ? ?0 ????? ?0???100 0??00???
??
4
,
NEAR EAST-AFRICA
British Proposals on Palestine Opposed by Arabs and Jews. 6
Position of Constituent Assembly Strengthened in India . . . 7
Issue of Greater Syria Raised Again 7
FAR EAST
Possibility of Resumed French Negotiations with Vietnam.. 9
Indonesian Reaction to Dutch Interpretations of Agreement.. 10
Chinese Government Appeals for Economic Aid . ? . ? 10
THE AMERICAS
Argentina Advertises Industrial Growth. ? . ?
Document No.
NO CHANGE in Class.
'DECLASSIFIED
)C
lass. CHANCED TO: TS S C
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763 .
? 6 ? ? ? 0. 13
0
Vaal
Date; By: 0/07
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35
38
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TRENDS IN BRIEF
GENERAL
A Soviet lan to extract atomic bom_12.1114.12,1 uslng
disarmament commission is suspected by many members of the Security
Council because of Gromyko's refusal to agree that the Commission
shall not have cognizance of atomic matters (page 1).
. WESTERN EUROPE
The new Spanish Cabinet in exile reflects more closely than its
predecessor those elements of the Left Opposition in Spain which are
inclined to seek a compromise agreement with the Right Opposition to
Franco (page 2).
Constituent Assembly is expected to ratify the Italian
Treaty, which was signed by the De Gasperi Government on 10 February
despite strong opposition to ratification within the Assembly. The sub-
stantial advantages accruing to Italy particularly in the economic sphere
from ratification presumably will enable De Gasper' eventually to obtain
a favorable vote. (The Treaty becomes operative upon ratification by
the US, UK, USSR, and France, regardless of the action taken by the
Italian Assembly.)
Although the serious coal crisis in England will reduce the
domestic prestige of the Labor Government and administer a temporary
setback to its production and export drive, the Government will not fall.
The crisis may assist the Government in its attempts to prod labor to
greater effort.
The French winter wheat crop has been 65% destroj4, accord-
ing to French estimates, by the severe winter weather. This crop
normally met about 95% of the annual wheat requirements of metro-
politan France. In most parts of France winter wheat cannot safely be
sown after 25 February, yet continued freezing has so far prevented any
replanting, even of spring wheat or alternative fall varieties. If these
estimates are correct, a wheat shortage can be expected which would
contribute to political and economic instability in France for months
to come.
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EASTERN EUROPE
The fifth phase of Soviet demobilization will reduce the total
strength of Soviet armed forces to approximately 3,750,000 by mid-1947,
and will release some 500,000 men who would be potentially available
for industry and agriculture (page 3).
Popular discontent In Rumania over the extreme food shortau
and the near economic collapse of the country may soon reach a point
where only the continued presence of Soviet troops can maintain the
Communist-dominated Government. The Government's deliberate fail-
ure to cope with the problem indicates its desire to use possible food
riots to tighten its police control over the country and to discredit the
Western rowers for their failure to supply relief (page 3).
The USSR will obabli_make concessions on Germany's-polit-
eal structure in order to ogain reparations from the western zone and
a continuing voice in the political and economic affairs of a united
Germany (page 4).
Continued emphasis on Greece's internal affairs by the Soviet
member of the SC Investigating Commission, and by satellite liaison
officers, suggests that the Soviets will protest--or even veto--any
findings_ of the Commission which do not condemn the "monarcho-
fascist" Greek Government.
NEAR EAST-APR/CA
Britain's latest proposals for a solution to the Palestine problem
have proved unacceptable to both Arabs and Jews. Though neither group
has yet indicated complete opposition to further negotiation, it is likely
that no progress will be made on the issue prior to its submission to
the UN in September (page 6).
? Probable rticie ation in the Constituent AsseMbl, ? the Indian
'Princes has strengthened the position of the 'sse .1y. It is a o possible
that the British may be willing to accept a constitution framed by the
Assembly for those areas represented in that body (page 7).
The issue of Greater Syria has been raised again, but opposition
? to the: plan indicates that its implementation is not an immediate proba-
bility (page 7).
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FAR EAST
n_x_a_.e cmelliatog_f_lrench policy toward Vietnam is suggested
by the recall of Admiral D Argenlieu from Indochina. Negotiations may
be resumed with Ho Chi Minh but are not expected to modify the out-
standing issues in Indochina (page 9).
Indonesian re ection of Dutch inte ? retations of the A eement
of 15 November /9 6 has created an impasse which seriously diminishes
the prospects of final settlement and which has caused the Republican
Army commander to prepare for a campaign of destruction and sabotage
(page 10).
Chinese with a serious economic situation
which it is incapable of solving without foreign aid, is requesting an
Immediate loan from the US and a commitment for substantial future aid
as soon as the Chinese Government has been reorganized. It has not
made clear what the reorganization will mean in substance (page 10).
THE AMERICAS
A entina's effort to advertise its industrial str through
a "goodwill mission touring Latin America emphasizes the seriousness
of the Argentine Government's intention to expand its influence through-
out Latin America and the degree to which the Government is cooperat-
ing with Argentine industry (page 13).
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GENERAL
Soviet Strattgy on Disarmament Commission
In the search for a compromise on disarmament procedure,
the US has indicated its willingness to go along with the USSR in
setting up a Commission to formulate practical measures for the
general regulation and reduction of armaments," provided that the
Commission's terms of reference should unequivocally exclude juris-
diction over all matters within the competence of the Atomic Energy
Commission. Soviet Delegate Grornyko has flatly refused to agree
to such a proviso. In so doing, he has raised suspicion in the minds
of the majority of the Security Council that the USSR actually seeks
to use the projected Commission to extract information on the atomit
bomb. When put to vote, the exclusion proviso was adopted 941 the
USSR and Poland abstaining. While the conferences have failed to
resolve the impasse between the USSR and the US, they have enabled
the US to regain the support of the majority of the SC members in its
fight for the uninterrupted work of the Atomic Energy Commission.
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WESTERN EUROPE
listelpLaish "Government" in Exile
The new Spanish Republican "Gcvernment" formed by Bodolio
Llopis --a Socialist relatively little -known in Spain?reflects the
ascendancy, in the Left Opposition to Franco, of the Socialist Party
and the two trade unions: the socialist General Workers Union (UGT)
and the anarcho-syndicalist National Confederation of Labor (CNT).
These forces caused the collapse of the Giral Coalition Cabinet, which
was largely controlled by Republicans. Both major Republican parties
and the Communists have felt it necessary to join the new Cabinet.
Communist participation appears to be an admission of relative present
weakness, as the Socialist leaders of the new Cabinet have bitterly op-
posed Communist efforts to gain control of the UGT and the working
classes.
The Llopis Cabinet appears better suited than its predecessor
to work out a formula of cooperation with individuals inside Spain who
are discontented with Franco. Within the underground, CNT and Soc-
ialist leaders in particular have been negotiating with the liberal wing of
the Right Opposition to Franco. Thus, the dominant element in the Llopis
Cabinet corresponds more precisely to those groups in the Spanish Left
which have shown the greatest readiness to come to terms with the
Monarchists.
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EASTERN EUROPE
Soviet Demobilization
The fifth phase of Soviet demobilization will affect approximately
500,000 men -- chiefly from the classes of 1923 and 1924 ? and will be
completed by June. Thus, by mid-1947, the total strength of Soviet armed
forces will be approximately 3,750,000. It is believed that Soviet strength
will be stabilized at or near this figure and that further demobilization,
possibly in the fall of 1947, will be offset by conscripts from the class of
1929.
The principal reasons for this demobilization are believed to be
the urgent need for manpower in Industry and agriculture, and the lessen-
ing of Soviet military commitments as a result of peace treaties with for-
mer enemy states. At the Moscow meeting of the Council of Foreign Min-
isters, moreover, the Soviets will be able to point to their demobilization
as concrete evidence of their good will and peaceful intentions.
Rumania's Food Crisis
Rumania's economic condition continues to deteriorate. As
Bucharest's food supplies will be exhausted by 1 March, the next few
months will be crucial ones for the Groza Government. The famine,
originally confined to the province of Moldavia, has recently developed
Into a national calamity. An almost complete breakdown of transporta-
tion, a runaway inflation, severe food shortages, and continued heavy
reparation payments to the USSR have accelerated the economic deterior-
lation. Forced collection of foods from peasants, in addition to intensify-
ing rural opposition to the Government, is meeting with little success.
Popular discontent may soon reach a point where only the continued
presence of Soviet troops can maintain the Government until the next
harvest.
The Groza Government's handling of its request for US food
relief suggests, that the Communist Party's primary interest is not
to relieve the suffering of the masses, but to exploit the situation for
its own political advancement by using possible food riots and other
violent uprisings as an excuse to tighten its police control, and by
discrediting the Western Powers for their failure to come to Rumania's
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aid. Despite adequate advance warning of the current economic
crisis, the Government has yet to adopt a single effective measure
to cope with it. Not until mid-January did it make its unreasonable
request to the International Emergency Food Council for 1,000,000
tons of corn. Although the IEFC has approved shipment of 17,000
tons and is considering shipment of an additional 46,000 tons of seed
grains, the US has demanded Rumanian compliance with certain stipu-
lations before the shipments are made. The Groza Government, while
agreeing to cancel aU food exports, has evaded US demands that food
be distributed irrespective of political consideration, that seed grain
be used for seed, and that US representatives be permitted to observe
the distribution of relief supplies.
The USSR, which single-handedly could rehabilitate the Rumanian
economy, continues to draw upon Rumanian food supplies for its occu-
pation troops and thus far has refused to grant a moratorium on oil
reparations, thereby preventing Rumania from exporting petroleum to
other countries in exchange for food. The Soviets are also using Ru-
mania's need for economic assistance as a bargaining weapon to obtain
Rumania's acceptance of Soviet demands for further penetration and
control of the country's economy.
Soviet Aims in Germany
The forthcoming CFM meeting in Moscow will provide the
Kremlin with an opportunity to choose between participatemg, together
with the other occupying powers, in a joint administration of Germany
as a whole, and being frozen out of western Germany entirely. There
Is little doubt that the Kremlin will choose the first of these alterna-
tives. Such a choice wiU be dictated by both economic and political
considerations.
Economically, the USSR is in desperate need of reparations
from the western zones. The Soviet occupation already has stripped
eastern Germany practically bare, and Moscow is now eager to share
in the output of the Ruhr-Rhineland area, the pre-war industrial produc-
tion of which exceeded that of the entire USSR.
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Politically, the Kremlin is opposed to the kind of decentralized
German administration advocated by the Western Powers. U conces-
sions on this point are the price for Soviet access to the western
zones, however, Moscow may be expected to pay such a price. Moscow
is well aware that political commitments can be circumvented, just
as they have been circumvented in the allied councils in Berlin and
Vienna. Once they have gained a voice in the administration of all of
Germany, the Soviets -- in an effort to prevent the development of an
effective Cerman democracy while occupation by the Western Powers
continues, and to insure that, when the latter depart, Germany will be
ripe for Soviet domination -- will adopt the usual tactics of delay, ob-
struction, and subversion.
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NEAR EAST-AFRICA
British ProposalslePal stifle d by Arabs and Jews_
New British proposals for a solution of the Palestine problem
have been rejected by both Arabs and yews, although neither group
has indicated complete opposition to further negotiation. The Cabinet
plan, which envisages the establishment of an independent Palestine
after five years of British direction under a UN trusteeship, satisfies
no one, but it does make greater concessions to the Arabs than to
the yews.
The Morrison-Grady plan (predecessor of the Cabinet plan)
proposed immediate immigration into Palestine of 100,000 Jewish
refugees and the establishment of a modified form of partition, giving
Arabs and Jews separate provinces controlled by a British-directed
Central Government. Under the latest Cabinet proposals, the immigra-
tion of 96,000 Jews would be extended over two years, and local areas
of administration would be established under the majority rule of either
the Arabs or the yews. Supreme authority in Palestine during the five-
year interim UN trusteeship would be vested in the British High Com-
missioner, with an Advisory Council of Jewish and Arab representatives
from local areas.
While the Arabs are not faced with definite partition under the
new plan and would presumably still constitute a majority, they are
strongly opposed to further immigration of Jews into Palestine.
From the Jewish point of view, the most objectionable features
of the Cabinet plan are that: (1) Jewish areas would not necessarily be
contiguous; (2) local Jews would replace the Jewish Agency as official
representatives of Palestinian Jewry; and (3) the immigration of 96,000
Jews would be distributed over two years. The Cabinet plan, moreover,
represents retrogression in the achievement of a national home in
Palestine.
If the tnileg in London break down completely (which appears
likely, at least as far as the Jews are concerned), the British will have
no alternative but to maintain strict control in Palestine until the issue
can be referred to the UN.
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Position of Constituent Assembly Strengthened in India
The position of the Constituent Assembly has been strengthened
by indications that the majority of the Indian Princes (including those
of the influential states of Travancore, Hyderabad, and Kashmir) favor
entering the Assembly regardless of participation by the Moslem
League. If the Princes actually participate, the Assembly would
represent 310 million of approximately 400 million Indians ? a situa-
tion which might well induce the. League to make concessions.
To resolve the Congress-League impasse the British might,
as a last resort, be willing to accept a constitution framed by the
Assembly, but only for the areas represented in that body. Such an
arrangement would not conflict with established British policy, which
refuses to accept any constitution for all of.India framed without the
consent of such a group as the Moslem League. Adoption of a consti-
tution which did not apply to Moslem-dominated provinces might,
however, facilitate the establishment of a separate Moslem state
(Pakistan) and thereby prevent a united India.
Issue of Greater Syria Raised Again
The Greater Syria plan has again been given prominence by
controversial articles in the Arab press and particularly by the recent-
ly expressed fear of King Ihn Saud of Saudi Arabia that the British in-
tend to "appoint" King Abdullah of Transjordan as ruler of Syria. It
is not likely, however, that the plan will be implemented in the near
future.
The plan for Greater Syria has been the subject of periodic
agitation in the Arab World since 1943. In general, it provides for the
unification of Syria, Iraq, Transjordan, and possibly Lebanon and the
Arab portion of Palestine (in the event of partition).
The British support the plan probably because they hope to esta-
blish influence over the new unified Arab state as compensation for the
anticipated loss of prestige as well as strategic bases in Egypt and Pal-
estine. Such a unified state, extending from the Persian Gull to the
Mediterranean, might also constitute a more effective barrier to Soviet
Infiltration in the Near East. Even If the state is not created, the Brit-
ish may still see some gain In diverting Arab attention from the Palestine
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dispute, and, by raising an issue over which the Arab dynasties are at
odds, lessen the chances of a unified uprising by the Arabs in the event
of a solution of the Palestine problem, unpalatable to them.
Among the Arab states, Iraq and Transjordan favor the plan as
a means of extending their influence in the Arab World, while the Saudi
Arabian-Egyptian bloc is opposed to it. King Ibn Saud's opposition
springs mainly from his bitter feud with the Hashemite dynasty (repre-
sented by Abdullah of Transjordan and Feisal of Iraq). A majority of
Syrians are believed to oppose the plan because It would force them to
trade their republican form of goverment for monarchy, and their in-
dependence for a minority role in the affairs of a larger state.
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FAR EAST
Possibility of Resumed French Ne oitations with Vietnam
Moderation of the French position vis-a-vis Vietnam is indicated
by recent trends in French policy. The change may be in preparation
for resumption of negotiations with Ho Chi Minh. This modification has
been caused partly by severe depletion of trained reserves in France,
occupied Germany, and North Africa; by realization of the scope of mili-
tary operations necessary to "moderate" Vietnam policies, and by grow-
ing French fear of the possibility of UN intervention. This trend is re-
flected in the recall cf Admiral D'Argenlieu who represents to Vietnam
the extreme French colonial point of view.
If conversations are resumed between Vietnam and the French,
they will proceed under graver handicaps than have attended earlier
negotiations. Mutual suspicions have been aggravated and hatreds inten-
sified by three months of open warfare. Questions such as the limitation
of military forces, withdrawals of troops to status quo ante positions,
and the allocation of control over police forces awl customs will be even
? more formidable than before the Haiphong Incident of 19 November 1946.
French officials, moreover, appear to regard the Franco-Vietnam agree-
ments of March and September 1946 as invalidated by the hostilities,
hence a preliminary period for determination of new conditions for nego-
tiations will be required before concrete issues can be discussed.
In line with its policy of disregarding earlier commitments to
Vietnam, France has recently granted considerably increased powers
to the rrovisional Government of Cochin China, thus formalizing the
position of Cochin China as a state in the Indochina Federation without
referendum on the area's future status as stipulated in agreements with
Vietnam. This crucial action will greatly increase Vietnam distrust of
French motives and prolong the period of preliminary discussions until
impatient extremists on both sides may decide to resume the bitter
fighting in the hope of achieving a decision by force.
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Indonesian Reaction to Dutch Interpretations of Agreement
The Indonesian Cabinet has rejected the Netherlands Govern-
ment's interpretations of the Dutch-Indonesian Agreement of 15 Novem-
ber 1941,', on the ground that the interpretations violate the agreement.
While both sides have agreed on financial responsibility and other points,
they disagree on the interpretations of relations between the Netherlands
and Indonesian Republic in the transitional period, and,on the reduction
and withdrawal of Netherlands forces from Republican territory.
The Dutch interpretation provides that the transitional period
between signing of the agreement and creating the United States of
Indonesia shall be used to define and strengthen the bonds between the
Repubitc and the Netherlands, with the implication that the Republic
shall remain permanently within the Netherlands Union and the United
States of Indonesia. The Indonesians reject this interpretation, because
of the implication that the Netherlands Union and the United States of
Indonesia are indissoluble. On the question of Dutch forces, the Dutch
consider "at once" and "directly", as used in the agreement, to refer
to the initiation of measures preparatory to the reduction and with-
drawal of their forces; the Indonesians desire that "at once" be inter-
preted to mean the immediate reduction and withdrawals of Dutch ?
forces.
As a result of the present impasse, the Commander in Chief of
the Republican Army has alerted his forces to prepare for a campaign
of destruction and sabotage. Dutch-Indonesian tension has increased
and the prospects of reaching a binding settlement between the two
parties have considerably diminished.
Chinese Government Aypeals for Economic Aid
Since 4 February, the US Embassy in Nanking has been besieged
by appeals from T.V. Soong, President of the Executive Yuan, and other
Central Government officials for immediate US financial assistance to
China. Soong feels that the economic and financial situation is now so
desperate that, without immediate US aid, the Chinese economy will
collapse, the Central Government will fall, and the Chinese Communists
will then assume control. Fe therefore seeks (1) an immediate TJS cre-
dit of US $150 million to pay for imports of cotton and wheat, and (2) an
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immediate commitment from the US Government to make available to
China substantial economic and technical assistance as soon as China
has established a State Council and reorganized the Executive ,Yuan.
Chiang Kai-shek supports Soong's request for US aid, but has indicated
an unwillingness to consider reorganization of the Executive Yuan,
where administrative power is centered.
The appeals by Soong and other Chinese officials have been
dramatically accented by the panic that gripped Chinese financial mar-
kets this week. Although touched off by two specific developments --
cessation of domestic gold sales by the Central Bank of China and un-
favorable public reaction to the Government's export subsidy, plan an-
nounced on 5 February -- the panic grew out of the same basic factors
that have driven Government officials to enter urgent pleas for US as-
sistance.
While Soong has been showing signs of panic, and is obviously
aware of the insecurity of his own position, he does not greatly exag-
gerate the extreme seriousness of China's economic and financial con-
dition. Inflation in urban centers has mounted at an unprecedented rate
since the end of 194e.. Of equal significance is the rapid,depletion of
China's gold and foreign exchange resources, which will be entirely ex-
hausted in the latter half of 1947 if the Government attempts to meet
the presently estimated deficit in this year's balance of payments.
Without outside financial support, and so long as civil strife
continues to disrupt communications, sap the financial strength of both
Government and people, and absorb much of the nation's physical out- -
put, China's economic situation will continue to deteriorate at an accel-
erating pace. The Government lacks the administrative organization
and powers of control to effect anything more jhan temporary stop-gap
measures, which are subject to diminishing returns. Hardest hit will
be the industrial areas, which support the smaller but more articulate
and politically conscious portion of the population. It is believed that
the combined effects of domestic inflation and foreign exchange bank-
ruptcy could lead to complete, or nearly complete, industrial stagnation
before the end of 1947, particularly since under existing conditions the
major industrial centers are abnormally dependent upon the continuing
flow of imports from abroad.
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The effects of this situation will probably be the progressive
weakening of the de facto authority of the Central Government and a
revival of historic Chinese regionalism with: , Government control
of only the Yangtze valley. warlordism in the south and west, and
greatly increased Communist power in the north.
The issue thus posed is the extent to which the US is willing to
support the present Chinese government in its economic difficulties
and the conditions the US will exact for that support. To date, in spite
of many promises, the Chinese Government has not been reorganized,
its domestic policies have not been liberalized, and it continues to at-
tempt a military solution of the Communist problem. Soong requests
an immediate US commitment for substantial-support as soon as Covern-
ment reorganization takes place; neither he nor the Generalissimo has
made clear what the reorganization will mean in substance.
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THE AMERICAS
Argentina Advertises Industrial Growth
Senator Diego Luis Molinari, head of an Argentine "goodwill"
mission which has lately visited twelve Latin American capitals, has
explained to eager and attentive audiences at banquets and public cere-
monies in each country that Argentines post-war policy embraces
three points: inter-American unity, encouragement of trade between
Argentina and other Latin American countries, and "support of demo-
cratic ideals."
To show that Argentina means business, Molinari has revealed
that Argentina proposes (I) to raise all diplomatic missions in Latin
America to the rank of Embassy, (2) to set up trade organizations in
each capital in Latin America to purchase local products and sell
Argentine products, (3) to expand the services'of the Argentine mer-
chant fleet and the Argentine airline; and, possibly, (4) to launch an
inter-American labor organization to compete with the Communist-
(' infiltrated CTAL.
Molinari and the other members of the mission have emphasized
the financial soundness of Argentina's newly developed industry, recent
Argentine measures for a more equitable distribution of real income
between capital and labor, and the vested interest of all Latin American
countries in expanded inter-American trade and heightened inter-
American solidarity. According to som reports, the mission has made
pointed references to Argentines large holdings of gold and foreign ex.
change, and has suggested, particularly in Countries now engaged in
financial negotiations with the US, that these holdings might be made
available to help "sister republics" out of current fiscal difficulties.
The Molinari mission is a natural development, on the public
relations side, of Argentina's current trade-treaty offensive (see Weekly
Summary of 3 January), and a further indication of the Argentine Gov-
ernment's determination to expand its influence throughout Latin
America. The trade-treaty offensive, in turn, with its emphasis upon
guaranteed supplies of the raw materials required by Argentine industry
and upon the opening of markets in countries whose local industry is not
yet extensively developed, is the logical outcome of the main trends of
recent Argentine economic history. Students have foreseen for a long
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time that the post-war period would precipitate a struggle between
the entrenched interests of Argentine agriculture and the war-nurtured
interests of Argentine industry. Most of the major developments in
recent Argentine economic policy have indicated that Argentine industry
has been winning this struggle, and that the large landowners, who
demand an uncontrolled capitalism that will leave them free to expand
meat and wheat production to the limit, are losing ground. The trade-
treaty offensive is a further victory for the industrialists.
Argentina's plans for extending its trade bloc throughout Latin
America do not necessarily run afoul of the ambitions of the other
Latin American countries, which, by tightening their economic ties to
Argentina, to some extent strengthen their bargaining position vis-a-vis
US and European exporters. Argentina can be expected to follow up the
Molinari mission with negotiations designed to extend the bilateral
trade agreements program to the remotest corners of Latin America.
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WEEKLY SUMMARY
Significant Trends
Soviet Industry Shifting Eastward
The Future of Bulgaria's Opposition Parties . . . ? 1
Post-election Prospects in Poland 2
Economic Difficulties of UK Labor Government ? ? 3
UN Border Commission Suggested for Greece. . . ? 4
Possibility of Peaceful Indian Settlement
Further Reduced 5
Domestic Opposition to Burmese Agreement
Possible
Labor Unrest and Political Instability in japan . .
Strategic Victory for Communists in Brazilian
Elections . 8
Pcioment o.
31
kR) CHANGE in Class. 0
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SS. CHANGED TO: TS
DDA Memo, 4 Apr 77
Autb; D A iEG. 77/1763
Dgto By:
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Soviet Industry Shifting_my_
An examination of the current Five-Year Plan reveals that
in the reconstruction and development of Soviet industry the Krem-
lin is placing greater emphasis on the Eastern USSR than on the
Soviet West and South. In 1940, for example, southern mills pro-
duced 61% of Soviet steel; their planned quota for 1950 is only 37%
of the national output. In 1940, also, the USSR obtained only 37%
of its coal from the East; by 1950 eastern mines are expected to
contribute 47.5% of planned requirements. These statistics are
supported by the personal observations of travellers, who have
noted the slow pace of construction in European Russia as com-
pared with that in Siberia and Central Asia.
For, many years Moscow has emphasized the importance of
developing the Soviet East, and great strides had been made in this
direction before the war. German occupation of the USSR's western
and southern industrial centers greatly accelerated this process,
which was further expedited by the eastward evacuation of much of
the Ukrainian and White Russian population. Although economic and
industrial considerations have doubtless been a factor, especially in
view of the natural wealth and limited transportation facilities of
Siberia and Central Asia, it is probable that the plans of the Krem-
lin are based primarily on strategic requirements. It has been sug-
gested from time to time, with great logic, that a major objective of
Soviet military thinking is the development of an eastern economy
capable of supporting, independently, large-scale military operations
in Asia. The vast and remote territory east of the Urals, furthermore,
is ideally suited for the concealment and defense of industrial targets.
The Future of.13i's Opposition Parties
Premier Dimitrov is intensifying his campaign to liquidate the
Bulgarian Opposition Parties prior to the withdrawal of Soviet occupa-
tion forces. The campaign presumably will reach its final stages
following ratification of the Peace Treaty and recognition of his Gov-
ernment by the Big Three. This'Government effort is directed princi-
pally against the 101 Opposition delegates to the Grand National as-
sembly. who?since the purges in the Ministries, the Army,*and the
diplomatic corps--are the last remaining representatives in the
Government of the majority of the Bulgarian people.
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Dimitrov recently declared on the floor of the Assembly
that "there will positively be an end to Opposition presence" in
that body. Meanwhile, in order to prevent expression of Opposi-
tion opinion in the Assembly on controversial issues, Dimitrov is
permitting no voting on major legislation until the treaty is signed.
A basis for legal action against Opposition leaders already has been
established in the current trials of Bulgarian Army officers charged
with conspiring against the Government. The officers, in self-
accusations reminiscent of the Moscow purge trials, have implicated
the Cpposition leaders as co-conspirators. The Soviet radio con-
currently is attacking Opposition representatives as traitors, sabo-
teurs, and spies. Dirnitrov may be expected to exploit recognition
of his Government by the Big Three as providing sanction for his
measures to liquidate the opposition.
Post-Election Prostects,in Poland
?????????????11.01.0.410.???
Although Mikolajczyles Peasant Farty suffered a crushing defeat
by the Government Bloc in the 19 January Polish elections and was
eliminated as an effective political force, the Communist Party has not
yet achieved the dominance it considers necessary for the immediate
achievement of its ends. The groups opposing complete Communist
control of the country, though weakened, show no signs of capitulating
to Communist domination without a struggle.
The Socialist Party, which obtained the same number of seats
in the new Parliament as the Communists, will retain the Premiership.
The selection of Jozef Cyrankiewiez, Secretary-General of the Party,
as successor to Premier Osubka-Morawski, however, represents a
clear-cut victory for the anti-Communist faction in the Party. Cyran-
kiewiez will probably provide stronger and more independent leadership
than Osubka and his appointment indicates Socialist determination to
offer firm resistance to the expected attempt by the Communists to
liquidate or at least assimilate the Socialist Party.
The Government Bloc has failed in its attempt to split Miko-
lajczykDs Peasant Party or to intimidate Mikolajczyk into abandoning his
leadership of the Opposition. Despite a double-barrelled threat by the
rovernment that the Peasant Party would be abolished and IVIlkolajczyk
tried for treason if the latter did not resign, Mikolajczyk has success-
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fully overruled a Party faction which advocated cooperation with the
Government. ffe.has retained the undisputed leadership of the I arty
and has committed it to active opposition in the new Parliament.
?
The Governments claims--that it received Catholic support
in the elections and that improvement in relations between Church and
State are imminent--have been denied by leading Catholics. The latter
insist that the Church does not consider the new Government repre-
sentative of the will of the people. It is likely, moreover, that an early
agreement will be reached between the Vatican and the Polish Govern-
ment as now constituted.
Therefore, despite their "victory" at the polls, the Communists
will probably proceed cautiously for the next few monthssconsolidating
their position,_ and whittling at opposing elements one by one. The Coy-
ernmenes need for Western economic assistance and concurrence in
its claims to the Oder-Neisse boundary should provide a further mod-
erating influence on Communist policy.
gspnomic Difficulties of UK Labor Government
The excellent recovery the UK has made in its export position
since the closeof the war is now seriously threaliened by increasing
tension throughout the ranks of organized labor. In meeting this labor
problem, the Labor Government is currentjy high-lighting Britain'.s
"extremely serious" economic condition in order to impress the people
with the urgency of working harder, producing more, and continuing the
"austerities" of wartime.
Back of this somewhat melodramatic propaganda is the Govern-
ment's realization that if it is forced to grant wage increases, -shorter
hours, and more goods for domestic consumption, it would be unable to
restore Britain's economic health under the present program. Labor,
on the other hand, desires to obtain the Improved working and living
conditions that it was promised during the war and which it expected to
realize by electing a Labor Government.
In an attempt to forestall overt action on these growing demands,
the Government has not only used the current propaganda campaign but
has made continuous attempts to soften the effects of the "austerity"
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program by using for example some 39% (about 190 million dollars) of
its dollar expenditures in the US during july-December 1946 for movies
and tobacco, as compared with 24% for food. The importation of
movies and tobacco reflects a deliberate effort to keep up the morale
of the people while, at the same time, affording them no relief vis-a-vbs
the demand for consumer goods which they must themselves produce in
order to realize an improvement in their standard of living.
UN Border Commission Suggested for Greece
The members of the Security Council Investigating Commission
(except the soviet 'and Syrian representatives who were not present at ?
the Informal meeting) have unofficially agreed in principle to the desir-
ability of a aemi-permanent UN surveillance body in the frontier areas
of -Greece; The feeling that such 'a.comniinsAon should be created is. un-
doubtedly prompted by fear that the present SC Anyestigatice?hainpered
by weather, poor transportation, and delays .during which significant
traces of foreign interference can be hidden--probably will uncover
insufficient evidence to permit effective recommendations to the SC.
Even if proof of Soviet and satellite activities is established, a simple
condemnation of such activities would not prevent their continuance.
? The Greek Government 'probably. would welcome the establishment
Of a surveillance commission provided it did not jeopardize Greek claims
for border revisions. A semi-permanent COMM1851011 should be able _
not only to put an end to much of the present violence but might also,
through-itS extended studies and investigations, find a lasting solution
?to Greece's border troubles.
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Poss1biUy of Peaceful Indian Settlement Further Reduced
The categorical and unexpected refusal on 1 February of the
Moslem League Working Committee to recommend League partici-
pation in the Constituent Assembly has brought negotiations for an
Indian settlement to a complete standstill. The Working Committee
has demanded that the British dissolve the Assembly on the ground
that, as now constituted, its proceedings are illegal. Terming the
purported acceptance by the Congress of the 6 December interpre-
tation of the Cabinet Mission's Plan a "dishonest trick," the Com-
mittee maintains that the Congress attitude has destroyed any pos-
sibility of.a compromise within the framework of the Plan.
The British have expressed complete surprise at the League's
decision. They had clung to the hope that the way would be left open
for further. negotiations, but they now feel that the Moslem stand may
actually foreshadow the demise of the Plan.
The factors that influenced the decision- of the Working Com-
mittee are unlaiOwn at present. It is possible that while in London
last becember, Darnall received a prosnise from representatives of
the Arab States that the Moslem League's demand for the creation
of an independent Indian Moslem State would be referred to the UN.
It is more likely that the ''orleing Committee's action was based on
encouragement which may have been given jinnah by the Indian
Princes, who have viewed with serious misgivings their status under
the proposed Union of India. The Negotiating Committees of both the
P4incely. -States and British India are scheduled to meet 8 February
.to 'discuss terms for the entrance of the States into the Union. If no
agreement is reached, as is likely, and the States should then -openly
support the League, the Congress would find itself opposed by the
controlling elements of nearly half of India. It is highly probable,
however, that the Congress will continue to work for the implementa-
tion of the British Plan regardless of the action of the Moslem League
or the States, and will resist any attempt to dissolve the present Con-
stituent Assembly.
There has been no official reaction from the Congress Party
or the British Government, but it is evident that the possibility for a
peaceful solution of the Indian situation has reached its lowest ebb
since the first announcement of the British Cabinet Mission's Plan,
and that an extremely serious impasse has been created.
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Domestic Opposition to Burmese Agreement Possible
Although Burmese leaders obtained a satisfactory agreement
in London with respect to independence, they now face the major
problems of securing popular support for the agreement reached
at London and of persuading the peoples of the hill states along
Burma's frontiers that they should join Burma proper.
The solution of the first problem will be dependent on Aung
San's ability to convince his following that Burma's gains, while not
all that were .demanded,. represent a satisfactory advance toward the
goal of independence by 31 January 1948. Aung San faces the task of
calming popular feeling which had been prepared-for widespread
civil disturbances in anticipation of a breakdown in the London talks,
? -
The second problem will be complicated by Burmese and
British apprehension concerning the hill states' conference to be
held in February. The British expect Aung San's Anti-Fascist
League to use high-pressure methods to influence the hill states.
The Burmese, on the other hand, suspect that the British plan to re-
tain control in the hill states in order to maintain bases for oper-
ations in the event of an outbreak of violence in Burma.
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Labor Unrest and Political Instabili
A major political and economic crisis in Japan was:tempor-
arily averted on 31 January by SCAP's declaration prohibiting a
general strike and,by the simultaneous announcement of the forma-.
tion of a new Japanese cabinet.
Premier Yoshida was unable to persuade his strongest
opponents, the Social Democrats, to participate in the "rational"
Government and was obliged to confine himself to reshuffling ?
portfolios within the coalition of Liberals, Progressives, and Inde-
pendents with which he had been.governing Japan since May 1946.
The new cabinet, admittedly a stop-gap, will have difficulty surviving ?
until the next general elections, expected in May 1947, when the new
constitution comes into effect. In spite of SCAP's intervention with
respect to the general strike, labor unrest may be expected to con -
tinue. Japanese labor leaders have reportedly protested to the
Allied Council against SCAF's decision.
Labor unrest and political instability reflect conditions of
growing economic distress. Inflation has 'reached new heights, with
the Dank of Japan note issue passing the 100 billion yen mark on 31
January (as against the pre-war normal of .2 billion). Industrial raw
material stocks are approaching exhaustion and production is running
atioast 60% below pre-war levels. One of the most important fac-
tors hindering production is the uncertainty of Japanese industrialists
concerning possible Allied decisions on Japanese reparations and .
levels of industrial production.
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Strategic Victory for Communists in Brazilian Elections
Partial returns from Brazilian state elections indicate that the
Communist Party has (1) made an iinpressive showing against opposing
parties without, however, substantially increasing the half-million votes
it secured in the 1945 Presidential elections, (2) won some legislative
positions and given effective backing to shrewdly-selected candidates
of other parties in about half of the twenty states, and (3) played an im-
portant part in defeating the efforts of the Vargas-sponsored Labor ,
Party to achieve popular recognition as the rallying-point of anti-
capitalist discontent in Brazil,.
The Party, still far short of the strength required to capture the
machinery of government in any of the States, has nevertheless shown
that in some electoral subdivisions it can henceforth control the result
in any close contest between other parties. The new governors of Sao
Paulo, Minas Gerais, and Rio Grande do Sul, owe their election in large
part to Communist votes, In Sao Paulo, indeed, the successful Social
Progressive Party candidate for governor would not, without Communist
support, even have run his opponent a close race..
The chief political result of the election, aside from the apparent
setback for the Labor Party, is the consolidation of the Communist
Party's leadership among the elements opposed to the allegedly inequi-,
table structure of the Brazilian economy. The election, accordingly,
emphasizes the marked difference between the situation in Brazil and
that-in other South American countries, where the recent trend has
favored flarties which, though socialist in tendency, are nevertheless pro-
democratic, reformist, and without ideological commitments with regard
to foreign policy.
The Brazilian Army and Brazilian conservatives in,general have
shown increasing dissatisfaction with President Dutra's inept handling of
the Communist problem. Results of the election put them in a position
to demand immediate aggressive action against the Communists. Although
the large popular following of the Communist Party will probably preclude
its outright suppression as being too difficult to enforce, Brazilian Con-
servatives will mobilize behind any other measures which will combat
further growth of the Party. In any event, the menace of Communism
will require a reorganization of the Government Party, which will seek
to absorb other conservative elements in order to defend the status quo
against the leftist groups.
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WEEKLY SUMMARY
Significant Trends
33
Revised Estimate of Soviet Occupation Forces . . ? . I
Anglo-Soviet Relations 2
-Soviet Tactics at London Conference . . . . 3
Prospects of Unity Under New Greek Government. ,
Italian Cabinet Prospects 5
Anti-Trusteeship Sentiment in South Korea ? ? . ? 5
FEC Fixes Japanese Standard of Living . . . ? ..
Special Articles
Soviet Policy in Terms of Leninist Doctrine
Arab Nation-slism in North Africa Ill
Document No. -
NO CHANGE in CIT;Z:75--7777777--
] DECLASSIFIED . ? '
ass. CHARGED TO: TS S 0
DDA Memo, 4 Apr 77
Auth: DDA RTG, 77 /763
Date.11
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Revised Estimate of Soviet Occupation Forces
Recent evidence necessitates a revised estimate of Soviet
occupation strength in certain European areas. Soviet forces in
Poland appear to have been reduced sharply, minor reductions are
believed to have taken place in Germany and Austria, and the esti-
mate for ulgaria has been raised.
It is estimated that Soviet troops in Poland recently have
been reduced from 200,000 to about 120,000. Only skeleton garri-
sons remain in the southern a ,d southeastern parts of the country,
and forces in the central and eastern areas have been reduced
materially. 'These reductions suggest Moscow's confidence in the
ability of the Polish Govern *gent to maintain its control without the
direct support of Soviet armies. The fact that most of the remaining
Soviet forces are concentrated in the western and northwestern parts
of the country may be caused by: (a) the use of this area as a ship
,-
ping center for the supply and redeployment of occupation troops in
Germany; (b) the usual Soviet concern over strategic considerations,
which would dictate the maintenance of substantial forces in this
area to protect the USSR's Baltic flank and to have substantial forces
available for rapid deployment into Germany should the occasion
demand; (c) the substantial elements of German population remaining
in the area; and (d) the Kremlin's desire to retain effective control
over the area until its final incorporation i to Poland is assured.
In Germany, Soviet occupation forces are estimated to have
been reduced recently from ab?Fut 600,000 to 550,000, and in Austri
from 65,000 to 63,000. The number of Soviet troops in Rumania and
Hungary remains at approximately 200,000 and 55,000,respectively.
While a continued gradual depletion of these forces may be expected,
especially if general Soviet demobilization is resu ed in the spring,
no further drastic cuts are in immediate prospect.
In Bulgaria, the estimate has been raised from 120,000 to
140,000. This change, however, does not reflect the recent arrival
of additional troops, but rather the acquisition of more detailed
evidence on the number of troops which have been quartered there
throughout the winter. It is unlikely that this figure will be reduced
for some months, first, because of favorable conditions which the
area offers for spring maneuvers, and second, because of the possi-
bility that after the completion of the forthcomi CFM meeting the
Kre nlin may re e its psychological offensive against Turkey.
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Ir_m_Laniet Relations .
?'Immediately following Field Marshal Montgomer3es visit
.to the USSR, which was marked by cordiality on both sides, PRAVDA
cast doubt on the sincerity of British motives In relations with the
USSR by charging that Foreign Minister Bevin had repudiated the
Anglo-Soviet mutual assistance pact of 1942. Bevin vigorously dented
the allegation. The controversy was finally resolved through an
exchange of notes between Bevin and Stalin, in which the latter os-
tensibly repudiated the statement of the ,oificial Communist Party
newspaper.
' The Soviet moves reflect the concern with which the ,USSR
views the close association of the US and UK. These moves represent
an attempt: on the part of the Kremlin to isolate the US by discouraging
further development of British collaboration with AMeric , or at least
to determine the extent of Anglo-US cooperation and the curren
titude of the British Government toward the Soviet Union,.
The Kremlin undoubtedly hoped that PRAVDA's charges would
? provide further am gunition for the. Left-winf Laborites in their
opposition to Sevin and stimulate a more !cooperative" British
Policy vis-a-vis the USSR '
?
;The Soviet Union now may -seek to revise the present Anglo-
Soviet-treaty so as to ,continue it in force outside the structure of
the UN. (Stalin indicated the desirability of such an arrangement to
Montgomery.) The Soviet Purpose in any such negotiations would be
to disrupt the current Anglo-US collaboration.
As previously reported, the USSR appears to be conducting
tactical retreat 'in its foreign policy in order to consolidate gains
and to devote more time and effort to the solution of pressirg internal
prcblems. The Kremlin s current attitude on Anglo -Soviet relations..
shows clearly that the Soviet Union, in its diplomatic retreat, does
not wish to leave behind a strong Anglo-US bloc which it would have
to face hen Soviet diplomacy is again on the tactical offensive.
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1
Soviet Tactics at London Conference
The Soviets have employed the same hard, abrasive tactics
In the opening sessions of the conference of deputies to the Foreign Min-
isters at London, as they used in the negotiation of Italian and Balkan
treaties.
The USSR is fighting for the adoption of treaty drafting procedures
which (I) stress the role of the great powers in peace-making; (2) reduce
the participation therein of the smaller nations to a minimum; (3) embody
cumbersome inflexibility by means of which the force of Soviet obstruc-
tionism can be used to the maximum; and (4) require Four Power
unanimity with the fewest possible concessions to majority opinion.
The Soviet proposals on procedure for preparing the German
peace treaty implement the above objectives. Only the Big Four would
"participate" in drawing up the treaty. The CFM would hear the
"viewpoints" of other allied states. A conference for the "discussion"
of the peace treaty would be called, but not until the peace treaty had
already been. drafted and a "central government" had been established in
Germany "recognized as suitable" to accept such treaty. The smaller
powers would thus be confronted by a virtual fait accompli.
The USSR apparently also intends to hold the achievements of the
London conference of deputies to a minimum. Agreement on major
Issues will be deferred until the Moscow conference of the CFM in March
when the Soviet diplomatic team will be playing on its home grounds.
Meanwhile the USSR is making use of the London meetings for the primary
purpose of scouting the plays of the Western powers, at the same time
revealing as little as possible of its own position. This contention is
borne out by the small size and relative mediocrity of the Soviet delega-
tion at London. The USSR has submitted no treaty draft to the deputies
of the CFM and has limited itself to criticism of the proposals of other
nations. Progress at London, therefore, will be largely confined to
drafting the non-controversial features of the Austrian and German
treaties.
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.1Ispects ilijailUnder New Greek Government
On 24 January the new Greek Government was sworn in with al/
parliamentary parties participating except the Liberal Party of Sophoulls.
This coalition Government controls 86% of the votes in Parliament but
without Sophoulis, it remains a government of Rightist groups. Tsalelaris
has been replaced as Prime Minister by Demetrios Maximos, a banker
and former (1933-35) Foreign Minister. Although associated with the
Right and with the King, Maxirnos is -not closely affiliated with any
particular party, and is the onlyperson vailable under whom all Party
leaders, except Sophoulis, are willing to serve.
Barring a financial crisis, always possible in Greece's present
unstable economy, it seems probable that the Maxims Government will
last at least long enough to present a united front during the Security
Council Commission's investigation of alleged border violations, and
the Porter Mission's survey of the economic situation in Greece.
Cabinet leaders are aware, moreover, that any loa which the Porter
Mission might recommend would hardly be made by the US to a govern-
ment lacking bona fide representation and unity. If Rendis should take
over the leadership of the Liberal Party from the aged and ailing
Sophoulis, the former may bring into the Government some less radical
members of that Patty. The addition of this liberal element to the
Cabinet, in'which all the moderate Rightist groups are represented, would
.broacien.and strengthen the Government.
Newspapers of the Left and Center continue to attack the Govern-
ment as a weak, ultra-conservative compromise, but Maximos apparently
Is sincere in his promises of pacification and political reforni. If he
carries out this program as promised, the life of the Government should
be prolonged, permitting it to bring about a greater measure of unity in
Greece than has existed since the Liberation, and to start the country on
the road to recovery.
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Italian Cabinet Prospects
The recent split in the Socialist Party (see Weekly Summary
of 17 January, p, 3) and De Gasperi's relatively successful mission
to the US have afforded Be Gasperi an opportunity to form a new
coalition Government that will have fewerLeftist numbers and will
commit all participating Parties to assume in advance the responsi-
bility for the signing of the peace treaty.
The new Government will probably constst of a coalition of
Christian Demotrats,Communists,,and Socialists; Saragat's new Socia-
list Party of Italian Workers and the Republican Party will probably
refuse to participate, Although De Gasperi undoubtedly would prefer
to form a Centrist Government excluding the Communists, the refusal
of the Nenni Socialists to participate in any government without the
Communists and the inherent strength of the Communist position pre-
clude the possibility of such a solution. However, De Gasperi will
probably be able to strengthen his position by substituting a Centrist ?
or Rightist for the pro-Communist Nenni as Minister of Foreign
Affairs and by obtaining from the Communist members a definite com-
mitment to support the policy of the new Government.
Anti-Trusteeshio Sentiment in South Korea
???????Inarts.s..3????Pam viraZia?Maa-a*.rmlOTO?
Passage by the South Korean Interim LegislativeAssembly of
an anti-trusteeship resolution increases the difftctiltles confronting US
Military Government. The resolution was drafted by Rightists follow-
ing publication of General Hodges 24 December letter to General
Christiakov in which Hodge proposed US-Seviet agreement that only
"active" opponents of trusteeship be excluded from consultation with
the Joint Commission. The resolution was passed despite Hedge's
efforts to persuade its supporters that they would not be surrendering
their freedom of speech by subscribing to the Moscow Decision as a
condition for consultation with the Commission. These Rightists heti
that the US had changed its attitude towards trusteeship and was
collaborating with the SovIets to impose a protectorate on the Korean
i nation.
The resolution, which denounced Hodge for attempting to impasse
trusteeship on Korea in violation of the Atlantic Charter and of his
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own assurances of free speech to the Korean people, was passed by
a 44-1 vote. So strong is Korean public sentiment against trusteeship,
that Leftist supporters of the Moscow Decision abstained from voting.
The moderate Rightist leader, Dr. Kim Kin Sik? was absent on the day
of the vote, and is reported to have gone to the country for a rest.
If he follows the moderate Leftist, Lyuh Woon Hyung, into retirement,
the coalition on which General Hodge depended for support probably
will break up. Hhving lost control of the Interim Legislative Assembly,
the US Military Government in South Korea will find it increasingly
difficult to mediate between the Left and the Right.
FEC Stajid
On 23 January, the Far Eastern Commission unanimously agreed
on a policy of defining Japan's "peaceful needs" as being substantially
the standard of living that prevailed in Japan during the period /930-1934..
Agreement on this question, which has been before the FEC ever since
last July, was reached only after the USSR abruptly reversed its position
and after China, the other objecting power, withdrew its reservations.
- As originally introduced by the US member, the !'peaceful needs"
proposal recommended the period 1928-1930 as the standard of living
yardstick, but permitted reference to more reliable statistics for the
period 1930-1934 as a guide for determining consumption levels in the
earlier period. Even though the general level of Japanese consumption
was about the same in both periods, the Chinese and Soviet members
refused to approve the US paper, on the grounds that it was politically,
undesirable to take cognizance, even for reference purposes, of con-
sumption in, any period after 1931--the initial year of Japanese aggression .
In mid-January, however, the Soviet member offered a surprise amend-
ment that eliminated all reference to 1928-1930 and accepted 1930-1934
as the base period without qualification. China reluctantly voted in favor
of the new proposal, hoping that such action would expedite the determine.-
? tion and distribution of Japanese reparations.
It is believed that the Soviet `4reversal", far from denoting a real
shift in basic Soviet Far Eastern policy, forms part of an attempt to
bolster Soviet prestige by beating a strategic retreat in the face of grow-
ing irritation on the part of other Allied powers at the long delay in the
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settlement of Japanese economic and reparations issues. (Proposals on
these issues have been on FEC agenda for six months or longer.) By
championing speedy conclusion of the "peaceful needs" problem, the
USSR apparently hopes to divert attention from the fact that Soviet
refusal to compromise on other key issues affecting the Japanese
economy and reparations (particularly on the most controversial issue--
treatment of Soviet "war booty" seized In Manchuria) has been mainly
responsible for blocking their passage in FEC. Moreover, the USSR
probably reasons that this latest move, which tends to break the log-
jam in FEC proceedings, strengthens its hand in accusing the US of
violating the spirit of the FEC terms of reference because the US has
threatened to issue unilateral directives to SCAP on economic and
reparations matters that cannot be quickly resolved by the FEC.
Agreement on a "peaceful needs" pelicy was a necessary first
step in settling over-all Japanese economic and reparations problems.
Whether future implementation of this policy and further progress toward
over-all settlement will be effected within the FEC framework or by
unilateral issuance of directives by the US depends largely on the extent
to which the USSR will make additional compromises on controversial
issues. This in turi depends upon the benefits which the USSR believes
It can derive from a vigorous propaganda campaign against the threat
of "unilateral, illegal and domineering" action by the US. (Such a
campaign was launched this week in the Soviet press.)
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SPECIAL ARTICLES
1. Soviet Policy in Terms of Leninist Doctrine
2 Arab Nationalism in North Africa
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SOVIET POLICY IN TERMS OF LENINIST DOCTRINE
r I However far the Kremlin, in its quest for power, may have
strayed from certain of the ethical and humanitarian principles once
professed by Marx and Lenin, there can be no doubt that Marxism is
still the Soviet state religion and Lenin its holy prophet. One authori-
tative eulogizer of Lenin recently placed special emphasis on the appli-
cability of Leninism to current Soviet problems of foreign 'policy. "The
Soviet land," said he. "can take pride in its leaders, who, in the field
of foreign policy, work according to Lenin."
If the architects of Soviet policy do in fact turn to the pages of
Lenin for guidance in solving some of the problems which now confront
them, it may be interesting to examine a few of the passages which may
come to their attention.
What should be the ultimate Soviet objective for Europe? "That
there will be a Socialist Revolution in Europe there is no doubt. All our
hopes in the final triumph of Socialism are based on this certainty which
is in the nature of a scientific prediction."
Can the Soviet Union live in peace with the capitalist states?
"We are living not merely in a state, but in a system of states; and ii
Is inconceivable that the Soviet Republic should continue for a long period
side by side with imperialist states. Ultimately one or the other must
conquer." Furthermore, "a number of terrible clashes between the
Soviet Republic and the bourgeois states is inevitable."
What considerations should govern the offer of a new alliance
to Britain? "We are at present between two foes. If we are unable to
defeit them both, we must know how to dispose our forces in such a way
that they fall out among themselves; because, as is always the case,
when thieves fall out, honest men come into their own. But as soon as
we are strong enough to defeat capitalism as a whole, we shall immedi-
ately take it by the scruff of the neck."
What is the significance of a new trend in Soviet strategy? "In
order not to get lost in these twists. in order not to get lost in the
periods of retirement, retreat or temporary defeat, or when history
or the enemy throws us back...the important and the only theoretically
correct thing is not to cast out the old basic program."
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What tactics should be used in the pursuit of Soviet objectives?
"It is necessary.. ,to use any ruse, cunning, unlawful method, evasion,
concealment of truth."
A glance at the history of Soviet foreign relations can lead only
to the conclusion that the concepts outlined above have had an unmis-
takable influence on Kremlin policy. There is no reason to suppose
that this influence is likely to diminish in the near future.
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.010'
ARAB NATIONALISM IN NORTH AFRICA
France's traditional policy of alternating suppression and mod-
erate reforms in North Africa has failed to prevent the recrudescence
and intensification of Arab nationalism in that area. The USSR, in sup-
port of its long-range objective to control the Mediterranean, has fol-
lowed the classic Marxist line by encouraging Moroccan, Algerian, and
Tunisian Communist Parties to support native nationalist elements.
Recent indications that France "is scraping the bottom of its military
manpower barrel" in North Africa in order to transfer troops to Indo-
china raise doubt as to France's continuing ability to maintain order
In its North African possessions.
The North African nationalist movement comprises two groups:
one, led by the independent Arabs, demands autonomy within the French
union; the other, embracing nationalist Arabs (abetted by the Commu-
nists and tacitly supported by the Arab League), demands complete in-
dependence from France.
The present upsurge in nationalism may be said to date from
I 45 8 May 1945 na (V-E Day) when Arab nationalists took advantage of French
military weakness to rebel throughout the Algerian Department of Con-
stantine. French troops, flown from France, Morocco, and Tunisia.
quelled the insurrection. Rigid censorship prevented exact reports,
but Arab Nationalists claim the French inflicted 16,000 to 20,000 casu-
alties, including more than 6,000 dead.
The Communists have sought to stimulate nationalist sentiment
by propaganda belittling the Western Powers, by encouraging North Afri-
can trade unions to join the Soviet-sponsored World Federation of Trade
Unions (WFTU), and by advocating in Communist-controlled periodicals
Independence and self-government. Tunisian labor unions already have
set a precedent for their counterparts in Algeria and Morocco by leav-
ing the Communiat-dominated but French General Confederation of La-
bor (CCT) and having themselves accepted by the NVFTU as the "sole
Tunisian labor association." Though Communism is repugnant to prac-
ticing Moslems, some nationalists have been taken in by Communist sup-
port and others apparently believe that they can rid themselves of Com-
munist connections, once independence has been achieved.
Arab nationalists, moreover, are attempting to draw the atten-
tion of the great powers to their cause. They appear to be concentrating
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their activities in Casablanca in order to impress foreign consulates '
with their growing strength and determination to achieve independe ce.
In addition, they recently sent Habib Bourgulba, Tunisian Nationalist
leader, to present his cpse before the UN.
There are some indications that Communist influence in North
Africa may be diminishing, in part as a result of unfavorable reaction
to reported Soviet treatment of Moslems in the USSR. However, if
Trance fails to intensify its current efforts to liberalize the various
regimes in North Africa, Arab nationalists may turn increasingly to
the Communists for help in attaining independence, and they may even
,attempt to capitalize on increasing French military weakness in this
region and resort to violence.
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WEEKLY SUMMARY
Significant Trends
The Blum-Attlee Conversations . . . ? . . . .
Soviets Emphasize Production of Consumer
Goods. . . . . ................ 2
Dimitrov, Possible Head of a Balkan Federation . 3
Issues in the London Talks on Burma.
Special Article
.The Rightist Revolt in South Korea
?
Document No.
NO CHANGE in Class. 0
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ss. CHANGED TO: TS
DDA Nemo, 4 Apr 77
Auth: DDA REG. 77 1763
By:
Date:
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The Bluth-Attlee Conyers dome
The initiation of converSations on French.-British economic
and political pr. slernS a !w .day before t 'e e d of lum's interim
Government stemmed from a sincere desire on lu 's part to see
France and England draw closer ether. The British on their mrt
Seem t have realized, somewhat belatedly, that it was net only oppor-
tune but feasible to reconcile British-French differences over the Ger-
man problem.
The chief stuantAing bloc;e to previous agreement had en
the immediate question of additional Ru ccoal for France and, more
fundamentally, France's demand for the political se?rator Ue
Rhineland from from e rest of Germany. The French Co Damietta end the
MRP ha e frequently' voiced their opposition to the UK policy towards
Germany, though for different reasons. e former had oppos -any
pact at e ight erve as a basis for alignment of Western Powers ageinet
the USSR. The MRP had then unwittingly: played the Co munist game
by spons ring France's role of "bridge" be een the US-UK and the
Soete. in most cases, Bidault, while Foreign Minister, attempted to
remain neutral or to effect "compromise" solutions which actwally
were favorable to the USSR. Such a middle-of-the-road Policy aro ed
the opposition of both the US-UK ud the USSR and brought no real be e-
fit to France. A deadlock developed in British-French relations regard-
ing Germany. This impasse was not broken even after the faff of the
Bidault cabinet6
in spite of several Fre ch feeler; the UK did not believe until
the-last days of the Blum regime that a rapprochement was possible.
The success of the Socialist price reduction program, popular backing
of Blum's visit to the UK, and consequent reduction of Communist and
MRP prestige co yawed the UK of the desirability of accepting Blum's
advances. The UK probably range ed at the same time that, while
any coalition government which followed Blumas would not initiate con-
versations, it would almost cer inly have to continue the e if they were
successf ly start.
FOliOWiu an arrangement regard French- coal requirements,
and a joint admission that French-UK differences on Ger any could be
c mposed, Blum and Attie agreed t tiate conversations looking to
a alliance between the countries and to plan for immediate conferences
of financi expe.rts on reconstruction programs for both nations.
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The MRP and the Communists, though still basically opposed
to alignment with Britain, will probably be forced to continue Enures
policies. Biclault, the new Foreign Minister, has eXpressed "reserve
on this new orientatio of Frencritish relations?''emphasiz the
avoidance of an "occidental bloc." The Communists have expressed
the same "reserve" and have insisted that o Western bloc be formed.
Nevertheless, French popular reactio (except from the etre :e Left)
the program ca, French-BritIsh economic and political collaboration
has been so overwhelmingly favorable that neither Party can afford
at the mo en* to depart too radically from this els line in French
foreign policy.
If French public opinion coat ues to sup 4 e the Blum policy,
and the more cooperative British atti e pr wises s result in con-
crete guarantees of Fetch security vis-a- s Germans as ?ell as ,
in substantial amounts of Ruhr cr,al, ida.ult may make a genuine at-
tempt to c nclude an Anglo-Fre. ch affiance.
Soviets Em hasise Prodwi ion of Co?umer Goods
In spite of inv. ?rtant acco .1013bn:tents in lS46, production
in I any branches of Soviet economy ream ell below both the
pre-war level, and tv goals set for the first year of the Fourth
Five-Year Plan.
Th most serious failures have been in the produc On of
foo tuffs, agricultural machinery, consumer goods, and housing.
This situation has caused popular demoralisation-and diss tisfa.c- ?
tion which, in turn, has been partly responsible for low levels of
production in important spheres of heavy industry: electrical equip-
ment, mac e tools, construction equip ent, and coal.
Several recent decrees of the Council of Ministers show that
the Kremlin is seriously concerned. These decrees give a greater
priority to the production of co sumer goods than to heavy 1 dustry?
a policy marked contrast to that expressed hen t curre t Plan
was announced.
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Dimitrov Possible Head of a Balkan Federation
Georgi Mihailov Dimitrov, Premier of Bulgaria and a key Com-
munist, is emerging as a more likely candidate than Marshal Tito to
head a Soviet-sponsored Balkan Federation. Tito has increasingly been
recognized by the outside world as powerful--in fact, he has attained
more power than the Kremlin normally permits a subordinate. The
? recurrent pattern of Communist Party control, however, indicates that
such leaders are often superseded by thoroughly indoctrinated and trust-
worthy but less-publicized individuals. Dimitrov's career and past
affiliations, therfore, make him a logical choice as the Kremlin's most
important representative in Eastern Europe:
Dimitrov served a youthful apprenticeship in revolutionary
activity as Secretary of the Bulgarian Printers' Union, a member of
the Social Democratic Party, and Secretary of the Confederation of
Trade Unions, In 1919, he was co-leader of the faction in the Social
Democratic Party which went over to Communism and became a section
of the Comintern. In 1920, he was a delegate to the Second Congress of
the Comintern in Moscow and headed the Balkan Communist Federa-
tion. As a delegate to the Third Congress of the Comintern he was
designated an alternate member of the Executive Committee and an
organizer of the Profintern (Soviet international trade organization).
After an abortive coup d'etat directed at the Tsankov Govern-
ment in 1923, Dimitrov fled Bulgaria and, for ten years, was a diligent
Party worker in the USSR and in Germany, where he gained fame for
his successful defense against the German Government's charges that
he had set fire to the Reichstag. From 1934-1945, Dimitroir, haying
become a Soviet citizen in Moscow, was made a deputy to the Supreme
Soviet and, finally, Secretary General of the Comintern from which
post he directed the destiny of International Communism and establish-
ed himself as one of the most trusted agents of the Politburo. From
Moscow he maintained close contact with the Bulgarian's Workers'
Party and directed the establishment of the Communist-dominated
Fatherland Front Government of 9 September 1944.
The Supreme Soviet released Dimitrov from citizenship in
August 1945 to campaign for a seat in the Bulgarian Grand National
Assembly and to prepare for his election as Premier in November
1946.
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Issues in the London Talks on Burma
Discussions of Burmese independence proposals between UK
Foreign Office and the Burmese representatives in London have been
marked by the slowness of the latter to recognize the constitutional
implications for the British and the impracticability of immediate
realization of Burma's demands for UN membership and exchange of
diplomatic representatives with foreign governments. While personal
relations between UK and Burmese representatives are amicable and
the Burmese seem impressed with British sincerity, the negotiations
have been complicated by the fact that the League has committed it-
self to withdraw from Burma's Executive Council by 31 January unless
Britain accedes to independence demands which, requiring British
Parliamentary approval, cannot be met by that time.
If the League is compelled by failure at London to withdraw
from the Burmese Government,it would be obliged to seek by strikes
and demonstrations the concessions it failed to obtain by negotia-
tion, in order not to offer Burma's Communists an opportunity to ex-
() pioit the League's lack of success in negotiation.
The Communists already have taken advantage of the absence of
the principal anti-Fascist leaders to stage a series of demonstrations
at home and to press for acceptance by the Government of Burma of
their labor demands. The Communist aim clearly is to appear as the
only group capable of obtaining concessions from the UK. Certain of
the Communist military groups, numerically strong but uncoordinated,
have already clashed with police and units of the Anti-Fascist League.
(whatever the outcome in London, the Communists hope to increase
their strength.)
ff agreement is reached in London, the Communists will seek
to discredit the League by charging it with having "sold-out" to the UK
and to cripple any government established under League auspices.
Their capabilities, however, will probably be limited to scattered out-
breaks and acts of violence. On the other hand, if the UK and League
representatives fail to agree, the Communists expect to increase their
ranks by desertions from the League and improve their ability to wage
underground warfare for Burmese independence. The result would be a
three-cornered struggle between the League and the Communists for
leadership in Burma and between both these groups and the UK over
Burma's independence.
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There are indications at present that in order to avoid such a
situation and to meet UK constitutional difficulties, the Burmese dele-
gation, as a last resort, may agree to a formula such as has been
applied in India whereby the UK Governor would withhold use of his
powers pending action by the British Parliament on the question of
formal independence.
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SPECIAL ARTICLE
The Rightist Revolt in South Korea
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THE RIGHTIST REVOLT IN SOUTH KOREA
The US Military Government in South Korea is now facing the
prospect of general disaffection and civil war as a result of the recent
outbreak of Rightist agitation for immediate independence. General
Hodge was able to forestall uprisings scheduled for 18, 19,and 20
January so that the situation appears for the moment to be in hand.
'Me basic causes for unrest persist, however, and may precipitate
a crisis at any time, unless some satisfaction is given to the insist-
ent Korean demands for unity and independence, As the protracted
deadlock between the US and USSR over a resumption of Joint Com-
mission negotiations prevents the execution of the Moscow Decision,
SCAP has recommended that the entire Korean question be reopened
by submitting It to the UN or to a special four power commission, or
by holding top-level discussions between the US and the USSR. General
Hodge has not suggested any particular line of action, but, in the belief
that the situation may be irretrievably lost if a solution is delayed for
another two months, has asked for a prompt decision.
Although economic stagnation and political unrest have aggra-
vated Korean discontent, the current crisis was provoked by Rhee
Syngman (leader'of the extreme Right). From the beginni of the
occupation until last week, US Military Government in South Korea
had found its chief support among the Rightists. Not wishing to depend
exclusively upon the Right, General odge has long sought to build up
support from the Left. In order to conciliate the moderate Left, the
US Military Government has consistently sought to diminish the influ-
ence of Rhee Syngman and the extreme Right. This effort to form- a
coalition of moderate Rightists and Leftists appeared at one time to
have succeeded. The Interim Legislative Assembly of South Korea
was established last December at the instigation of a unity committee
of Rightists and Leftists which functioned under the aegis of the Mili-
tary Government. Elections to the legislature, however, gave the
Rightists an overwhelming victory and alienated the Left. With the ?
retirement from politics of such moderate Leftist leaders as Lyuh
Woon Hyu.ng, the Left has fallen increasingly under the domination of
the Communists who are operating with great effectiveness. Having
lost the Left to the Communists, General Hodge is now threatened
with losing the Right to Rhee Syngman.
Rhee Syngman returned to the US at the beginning of December
with the encouragement of Ge eral Hodge, who believed that Rhee's
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departure would promote the pacification of South Korea, Immediately
after Rhee's arrival in the US, however, he proceeded to campaign
for abrogation Of the Moscow Decision and recognition of a separate
government for South Korea which would represent the entire Korean
nation. Reports of Rhee's c mpaign appeared in the South Korean
press and aggravated the conflict between Right and Left. Although
bah General Hodge and the State Department have reaffirmed US
adherence to the Moscow Decision, the Interim Legislative Assembly
has increasingly assumed the role of a separate government. The
signal for Rightist agitation against Military Government was given
by Rhee in his New Year's message which he requested General
Hodge to publish throughout Korea, In this message Rhee declares
that the time has come to strike for immediate independence. The
Moscow Decision has already been scrapped by the Soviets, Rhee be-
lieves, and there is no point in further temporization. He adds that
the Rightists have consistently cooperated with the plans of the US
Military Government, which have all been foiled by the resistance of
a handful of Leftists. In these circumstances, he argues, the only
solution is to establish a separate government in South Korea under
the complete control of native Koreans.
After receiving Rhee's message, Ge eral Tde pro eptly got
in touch with the most pro .. inent Rightist leaders in South Korea. A
series of conferences ensued between Korean politicians and US Mili-
tary Government officials, From these conferences General Ni iv
learned of ightist plans to stage uprisings in connection with inde-
pendence rallies on 18, 193 ad20 January. Bloodshed was expected
and a couple of leaders had already volunteered for 2:71 artyrdom,
General Hodge as able to stave off the threat of insurrection at the
eleventh hour, but unrest persists and civil war or rebellion may
break out at any moment.
The lines of conflict bemeen the US Military Government mid
the Rightists have now beelz sharply drawn. In his press-rel ases of
5 January and 16 January? General liode condemned the proposal for
a separate govern.. ent for South Ko ea. The Rightists on the other
hand have redoubled their attacks on the Moscow Deci ion and on
trusteeship. The publicatioe. of General .odge's letter of 24 Decem-
ber to General Chistiako , which offered to resume Joint Co mission
negotiations, resulted in charges by the Right that it is bei "sold
down the river." On. 15 ja uary, 30 Rightist organizations issued a
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manifesto calling on the Allies to cancel the trusteeship clause of
the Moscow Decision and to set up a provisional government im-
mediately. At the same time, the Rightist majority of the Legis-
lative Assembly was prevented from adopting a resolution condemn-
ing trusteeship only by the adjournment of the session.
The US Military Government in South Korea has thus been
put in the position of defending a policy which it cannot carry out.
This dilemma will persist as long as the US remains bound by the
Moscow Decision without being able to come to terms with the
Soviets on its execution.
?
HI
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31
WEEKLY SUMMARY
Significant Trends
Britaids Middle Course Finds Expression
in the UN . . . . . . .. . ....... ? ?
?
?
1
Withdrawal of Soviet Forces from Southern
Bulgaria
2
Political Significance of Italian Socialist Split. ?
.
.
3
Turkey Seeks to Strengthen Relations in Middle
East. ? ? . ...................
.
4
The Irardan-Soviet Oil Concession . . ? .....
5
Communist-Instigated Purge in Hungary . .
?
p
6
The Spitzbergen Controversy
7
Continued Hostilities in Indochina ...... . ? .
?
.
8
Brazilian Elections to Measure Communist
Threat. . . . ............... . ?
?
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9
C
DIMUn 31t No.
NO flEPas in Class.
SUM) A,10
MUTED TO TS ?
DEA 777;:ack, 4 Avr 717
Date:
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Britain's Middle Course Finds Expression in Me UN
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The trend toward an independent British foreign policy as
outlined in the Weekly Summary of 15 November 1946 ("Possible
Strains on Anglo-American Collaboration") is exemplified in recent
developments in the Security Council.
In major differences of opinion between the US and the USSR,
Britain increasingly is assuming a middle of the-road position and
apparently hopes to act as mediator between the two greatest world
powers. By so doing, the Labor Government seeks to expedite the
realization of world security and, at the same time, to satisfy those
critics within the Party who have expressed dissatisfaction with
"reactionary" US policy and with British "subservience" to that
policy.
Sharp protests from Left Wingers of the British Labor Party
against the conduct of British foreign policy have been in some
measure reflected in British tactics in the United Nations. Until
recently, Britain presented an almost united front with the US, es-
I e the procedural whip in the Security Council to compel immediate
pecially in atomic politics. When the US, however, sought to snap
action on the Baruch proposals, the British representative, Sir
Alexander Cadogan, tactfully suggested that the US should avoid
forcing an immediate vote. While Britain urged caution, the protests
of other nations against US procedural dictation swelled into a chorus.
It is clear that the prevailing view .in the SC favors concurrent
discussion and consideration of the Atomic Energy Commission report
and the Soviet resolution for formulating practical measures to reduce
armaments generally. Although concurrent discussion does not neces-
sarily preclude'ultimate priority for the AEC reports, it is significant
that the British did not align themselves with the US on this issue.
Britain has fundamental reasons for adopting an intermediate
position in the UN as between the US and the USSR. These reasons are:
1, The British public is anxious for the rapid substitution of
law for force in world, affairs, s It has been convinced by war-time ex-
periences that the home islands would be expos6d to immediate devas-
tation in any future war It feels that Britain can best assist world
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I
security by acting as a mediator between the US and the USSR.
2. In discussions regarding arms limitations, Britain
occupies a Middle position between the US and the USSR. The US,
with a virtual monopoly of atomic weapons, wishes to confine the
disarmament discussions in the SC to that subject, which it deems
to be of overwhelming importance to world security and in which
the US still holds the trump cards. The USSR, on the other hand,
wants to play for time, and to broaden the agenda to include general
disarmament in the consideration of which its enormous army and
manpower would be effective bargaining points. The U,TC)3aving suf-
fered substantially in the last stages of the war from long-range
guided missiles and V weapons- knowledge of which the USSR has
obtained from German?8ources?has a real and urgent interest in
the regulation of weapons of mass destruction other than the atom
bomb. While the British share atomic knowledge with the US and
Canada, the producing plants are in the US, not the UK. '
3. Britain realizes that its present influence in world affairs
is inferior to that of the US and the USSR. It therefore believes its
Influence can be made more potent by returning to its traditional bal-
I e 4. British manpower limitations and fiscal problems dictate
ance-of-power policy rather than by constant support of the US.
a reduction of the present heavy burden imposed by the continuing
maintenance of large armed forces. Hence the Government favors an
early and complete solution of the? whole world security problem.
5, The British Labor Government, by its very natures occupies
a middle ground between the capitalistic democracy of the US and the
totalitarian socialism of the USSR.
Withdrawal of Soviet Forces from Southern Bulgaria
- Since mid-December the USSR has materially reduced its
forces in southern Bulgaria. While the total Soviet strength in that
country is still estimated at 120,000, troops formerly concentrated
along the Greek and Turkish frontiers have moved northward to the
area immediately south of the Balkan Mountains. Particularly heavy
concentrations have been noted in the vicinity of Plovdiv.
In view of the advantages of southern Bulgaria as a site for
winter quarters, it is probable that these withdrawals have been
dictated by political rather than by military considerations. They
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may be designed to reduce the possibility of embarrassment to the
USSR which might result from the Security Council's forthcoming
investigations into Greek Border incidents. The withdrawals also
may be a part of a general Soviet plan to ease international tension
in anticipation of the Moscow CFM meeting
Political Significance of Italian Socialist Split
Last week's secession of the more conservative elements from
the Socialist rarty will weaken the extreme Leftist position in the next
Italian national election and strengthen, at least temporarily, the Cen-
trist elements. The revolt was the outcome of a prolonged battle be-
tween the majority left-wing Socialists, led by Foreign Minister Pietro
Nenni who favored close collaboration and eventual fusion with the
Communists, and a smaller group, led by Giuseppe Saragat, which
opposed this policy. By establishing "The Italian Socialist Party Inter-
national Section of Socialist Workers," Saragat seeks to attract moder-
ate middle-class opinion which, he believes, shares his view that there
is need for a non-Communistic Socialist party in Italy. Saragat promises
6. progressive program and professes a fundamental belief in democratic
procedures.
In this struggle against fusion with the Communists, Saragat's
right wing has been joined by the "Iniziativa Socialista" (Socialist
Initiative) group of younger Socialisth headed by Deputy Mario Zagari
and Matte? Matteotti, son of the famous Socialist martyr. The factions
uniting under Saragat represent about 20% of the Socialist Party's
membership. Another 15% constitute the "centrist" group of the old
party, which may also join Saragat's new Party.
In terms of the national election of June 1946, the present split
represents a loss to the Socialist Party of one-fifth to one-third of its
electoral strength. (In that election, the Party received 20.6%, of the
votes cast) The split also considerably lessens the chances that the
Communist-Socialist bloc will retain its present 40% strength fin the
next government, let alone increase it.
This anti-Communist trend among the Socialists is gradually
attracting other Leftist elements. Some Republican Party leaders
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reportedly have promised to Join right-wing Socialist and Action
Party leaders in common cause against the Communists. These
leftist, but anti-Communist groups, may then align themselves with
the Christian Democrats, whose right wing has long threatened se-
cession from the Party because of its cooperation and compromise
with the Communists in the present government.
The schism in the Socialist Party has created an immediate
problem for Premier De Gaspert because a number of Cabinet
members belong to Saragat's group of seceding Socialists. On the
face of It De Gasper' might have to reshuffle his Cabinet or form a
new government excluding the Communists and the N'enni Socialists.
He will undoubtedly avoid the latter radical course lest Leftist dis-
orders and strikes violate the "stability" condition of the latest
Eximbank credit loan to Italy. It seems more likely that De Gasport,
master of compromise, will attempt to continue the present Govern-
ment until the national elections in the hope that his relatively suc-
cessful mission to the US and a growing anti-Communist movement
in Italy will strengthen the moderate anti-Communist parties. How-
ever, unless economic conditions in Italy improve substantially, anti-
Communist strength will probably gravitate increasingly toward the
extreme Right.
Turkey Seeks to Strengthen Relations in Middle East
The new Turkish-Trans-Jordan friendship pact, signed on
11 January, represents another step in Turkey's program to establish
friendly relations with individual Arab states. This program--which
already has resulted in strengthening Turkish relations with Iraq,
Syria, and Lebanon--is a consequence of concern over possible Soviet
designs in the Middle East. In order to check extensions of Soviet in-
fluence to the south Turkey can be expected to encourage ix itual trust
and friendship among all the Middle Eastern states, This c ?velopment
is being facilitated by common fear of Soviet penetration.
For two reasons, however, the Turks will advance t ,eir program
circumspectly: they do not wish to become involved in Ara affairs or
to risk any act which might be considered provocative by tt ? USSR.
Thus, while theTarks have concluded a friendship pact with Trans-
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Jordan they have strongly rejected a Turkish-Arab bloc advocated by
King Abdullah of Trans-Jordan. Similarly the Turks are concluding no
agreements of a military nature in the Middle East Likewise, in order
not to arouse Soviet suspicions, Turkey has decided against any formal
ceremony to revive the Saadabad Pact of 1934, which provides for
consultation and collaboration among Turkey, Iraq, Iranland Afghanistan.
The Turks prefer to leave-the agreement subject to automatic renewal
as stipulated in one of its clauses.
The Iranian-Soviet Oil Concession
When the new Iranian Parliament convenes in two or three months
(following completion of the elections which began on 11 January), Prime
Minister Qavam, who will in all probability be re-elected, is committed
to present for ratification the oil agreement he concluded with the USSR
in April 1946. The matter is critical because Iranian-Soviet relations
and British and US interests in Iran may be affected by the action which
Parliament takes.
Iranian opposition to ratification, which has been growing rapidly,
contends that.(1) the agreement was reached under pressure and threats
from Moscow; (2) it was offered as a bribe for the evacuation of Soviet
troops; (3) it was negotiated in contravention of Iranian law; and (4) if
.ratified, it will serve as a spearhead for Soviet penetration and subver-
-sion, paving the way to ultimate domination of the country by the USSR.
Opponents of ratification will be confronted with the Soviet claim
that, because the British hold a concession in the southwest and Iran
favors granting concessions to US companies in the East, the USSR is
entitled to a concession in the North. The USSR may also point to the
negotiations between US companies and the Anglo-Iranian Oil Company
(undertaken without the knowledge of the Iranian Government) by which
the US companies will participate in the use of a pipe line and in signifi-
cant quantities of Iranian oil.
The UK favors ratification and has warned Qa.vam of the possible
consequences of provoking the USSR by rejection. The UK rif347.1oy.-ee,
however, that the terms must be "fair and acceptable" to Iran. The British
reportedly feel that the concession would serve as an obstacle to nation-
alization of the oil industry in Iran and, therefore, would better safeguard
their own interests.
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Regardless of the outcome of the trials of the accused, the Com-
munists have already attained certain primary objectives. Premier
Nagy's control over the present coalition Government and his ability to
resist further Communist demands (see Weekly S mmary of 13 Dee-
ember 1946) have now been weakened, The Communist practice of
representing, on the basis of fragmentary evidence, normal political
differences of opinion as subversive tendencies will also frighten all
potential anti-Communist groups into a policy of extreme caution. This
latest Communist maneuver may, therefore, cause the downfall of the
present Government. Neither the Rightists nor the Leftists, however,
have the strength to rule alone, and the Com unists probably do not yet
consider their police control of the country strong enough to risk another
election in the immediate future. Some s rt of uneasy coalition will
probably continue, with Corn if uriist participation and influence consid-
erably increased,
rie.t22 SpitzbergenControvers
The news leak in London on the Soviet-Norwegia negotiations
regarding Spitsbergen has brought this delicate issue into the open.
Both the US and USSR now have unofficially indicated their probable
attitudes. The US ill maintain that the provisions of the Svalbard
Treaty of 1920, which permanently established a prohibition against the
militarization of the area, do not permit unilateral abrogation or revision,
a position which the UK and Sweden will support. The US will further
assert that its withdrawal from Iceland, following Soviet protests at
the continued presence of US forces on that island, leaves the USSR no
logical grounds for demanding "defense" positions in the Spitzbergen
archipelago.
The USSR has now broken its silence on Spitsbergen by issuing
an "official communique through PASS. This statement asserts that
Bear Island was "Russian territory" prior to 1920, and advances the
fantastic legal argument that the treaty of 1920 "cannot remain valid"
because some of its signatories have since fought against the Allies.
While the communique does not commit the USSR to any course of action,
Its tone indicates that the Soviets will attempt a war 1 nerves over
Spitzbergen. In view of their weak legal position the USSR will probably
include the Spitsbergen question in negotiations on broader issues. The
Norwegians, meanwhile, sorely embarrassed and somewhat compromised,
hope to avoid trouble by expressing willingness to acquiesce in the wishes
? of UN and the Svalbard treaty. signatories.
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Although the US does not object in principle to the concession,
it is doubtful whether an agreement can be so drafted as to protect Iran
against some Soviet penetration. Whatever action the Parliament takes,
Iran can best counter the effect of this penetration by instituting economic
and administrative reforms which will increase living standards and
promote'political stability. The achievement of the latter objectives
will undoubtedly require foreign financial assistance.
Communisated Purge in Hungary
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The Hungarian Communist Party, in an attempt to extend its
control of the country before the withdrawal of Soviet troops, has renewed
its attack on the Smallholders' Party by arresting many of its leaders on
charges of plotting to overthrow the Government. Neither the extent of
the arrests, nor the truth of the Communist charges, nor even the degree
of Soviet complicity can yet be definitely ascertained from the welter of
conflicting rumors and counter-charges circulating in Budapest. This
much is certain: the Communist-dominated Ministry of Interior and
the political section of the Ministry of Defense are arresting all persons
suspected of anti-Government activity, the majority of whom are right-
ist Smallholders who were active in the anti-German resistance move-
ment. The Communists have accused them of belonging to an alleged
subversive organization (The Hungarian Unity Movement), of plotting
the overthrow of the Governmentaand of planning to return Admiral Horthy
Ito power. There is little doubt that the Hungarian Unity Movement exists,
but its members probably do not desire the return of Horthy or the over-
throw of the present Government. More likely the Movement comprises
a group engaged in long-range planning to prevent a possible Communist
coup after withdrawal of Communist troops.
Premier Nagy's position is admittedly difficult. Although the
Communists, as a means of achieving their political aims, have undoubtedly
magnified the plot far beyond its actual importance, they have collected
enough evidence implicating important Smallholder leaders to prevent
Nagy from taking steps to quash the investigation and to make it difficult
for him even to deny Communist charges that his Smallholders' Party is
implicated with the accused. There is no evidence of direct Soviet com-
plicity in initiating the arrests, but knowledge that the Communists have
Soviet backing will also soften Nagy's resistance to Communist machina-
tions.
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Continued Hostilities in Indochina.
? Little hope presently exists for any suspension or termination
of hostilities in Indochina. The peace terms which Ho Chi Minh, Presi-
dent of the Vietnam Republic, apparently planned to present to Marius
Moutet. Minister of France Overseas, had Ho been able to effect a meet-
ing with the French Minister during the latter's visit to Indochina con-
tained provisions which would have been unacceptable to the French.
This Fro Chi Minh presumably knew.
The terms which President Ho was prepared to advance stipu-
lated: (1) a cease-fire order supervised by mixed commissions, with
all forces withdrawing to positions established in the akreements of
6 March and 3 April 1946; (2) release of all prisoners; (3) halting of
all French reinforcements en route to Indochina; and (4) immediate
meetings of qualified French and Vietnam representatives to organize
a referendum for Cochin China and to discuss Vietnam foreign relations,
the Indochina Federation, and the status of Vietnam in the French Union.
The extent of present French military commitments would hard-
ly have permitted local French commanders to agree to a withdrawal
? to the status quo of 3 April 1946, especially since they rejected in De-
cember the Vietnam demands for a return to positions held before the
Haiphong incident of 19 November. Moreover, Vietnam leaders could
not have expected the French to reverse their long-held view that a
referendum in Cochin China should await restoration of order in the
area. If these Vietnam terms were seriously meant and represe ted
the minimum Vietnam conditions for a resumption of Franco-Vietnam
negotiations, French military operations "to restore order" will con-
tinue.
During his visit to Northern Indochina, Moutet was carefully
insulated by French military officials from contact With the Vietnamese,
and despite Vietnam claims that an invitation to meet with Ho had been
sent Moutet, he denies knowledge of any attempt by Vietnamese to reach
him. At any rate. Moutet now seems convinced by what he saw and
heard during his visit that negotiation With Ho would be unprofitable
and has expressed doubts that Ho or his Government "have any real
authority. Moutet believes that French military operations must be
brought to a speedy and successful conclusion and somewhat naively
feels that this would not involve a military reconquest because, in his
opinion, most of the Annamite population does not support "the small
Communist group which now dominates." '
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Brazilian Elections to Measure Communist Threat
The Brazilian elections (for state governors and legislatures)
scheduled for 19 January will (1) constitute a genuine test of strength
for the Brazilian Communist Party after a period of apparently unpre-
cedented growth, and (2) enable the Brazilian Government, which has
for several months been threatening to declare the Communist f arty
Illegal, to base its future policy on facts rather than on guesses regard-
ing the size of Communism's popular following.
Communist spokesmen in Brazil confidently expect to poll over
a million votes in next week's election, and even the most optimistic
anti-Communist observers are resigned to the prospect of strong Com-
munist blocs in the legislatures of such important and strategic areas
as the Federal District, Sao Paulo. Santos, and Recife. A Communist
vote of one million would represent an increase of 40% over the Commu-
nist showing in the December 1945 elections; and, assuming a total of
votes cast for all parties approximately equal to that in 1945, it would
mean that the Communists would control nearly one-fifth of the Brazil-
ian electorate. This would not imply, of course, that Brazil's Commu-
nists are in a position to make an early bid for power; with an elector-
ate still. 8O non-Communist, the Government would be in complete
control of the situation. The alarmism discernible in official, Church,
and Conservative circles relates, therefore, not to the present maxi-
mum strength of the Communist Party, but to (1) the rate of growth
that a Communist vote of one million would indicate, and (2) an aware-
ness of the fact that the Communists, because of the discipline and
energy with which they pursue party interests between elections, will
be able to exert upon day-to-day affairs an amount of pressure out of
all proportion to their numbers. President Dutra's speech on 13 Janu-
ary, in which he made an impassioned plea for a strong anti-Communist
vote, reflects this two-fold anxiety.
Dutra can count on powerful Army support should he adopt meas-
ures against the Communists, Some high Army officers have even been
reported ready to seize power if the President decides to take a chance
on further Communist gains. Moreover, non-extremist civilian circles,
which have in the past opposed any anti-Communist measures involving
"undemocratic" repression of civil liberties, have also been impressed
by recent evidence of the spread of Communist sentiment, and there is
reason to believe that they might at present offer only token resistance
to repressive measures against the Communists.
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If, after the elections the Brazilian Government continues to
extend to the Communist Party the normal constitutional guarantees,
the Communists can be counted on to make the most of the Dutra
Government's continued failure to cope with Brazil's increasingly
unfavorable economic situation. Emboldened by the Government's
failure to make good its long-standing threat to outlaw their Party,
the Communists might, particularly if their gains in the election prove
large, abandon their recent policy of avoiding sharp issues with the
Government on domestic affairs. Failure of the Government to take
strong steps against the Party, in the face of substantial Communist
gains, probably would weaken the Government's present support among
Brazilian Conservatives.
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MC 30
a
a
WEET.{:LY SUMMARY
Significant Trends
Current Soviet Propaganda . . . , . ?
Rumania Seeks US Economic Assistance . 2
Implications of the A lo-Burmese Talks . 4
Prospects in Indochina ? ? . s 0 0 5
Division of /Corea Impedes Economic
Improvensent ? ..... p 7
Special Article
Evaluation of Soviet Policy by Bulgarian
Royalist General. . 0 0 0 i
,3 PeggRapp$ Aqs,
0 et-44,91:
it mass.
PEgOsmED
PAWED TO: TS
? PPA Memo, 4 Apr 77
PDA G. 77/2763
Aut4;
Dat9.;
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Current Soviet Propaganda
While the first manifestations of a more "conciliatory" Soviet
foreign policy caused some confusion among the Fremlids propagan-
dists, the latter now appear to have untangled the Party propaganda
line and have reverted to much the same course as before.
During recent weeks, major attacks have been made on: (1) the
"clearly offensive" character of US plans for "hemisphere defense";
_ (2) US efforts aimed at the "economic domination" of China; (3) US oc-
cupation policies in Japan which, according to RED STAR, "have not
resolved a single one of the numerous domestic problems" confronting
that country; (4) Anglo-American policies in Western Germany, under
which, according to the newspaper TRUD,"Fascism has not only not
been eradicated, but has been permitted to grow new roots"; and
(5) the old standbys, "dollar diplomacy" and "atomic diplomacy."
The immediate target of Eremlin propagandists, however, ap-
pears to be Anglo-American solidarity. President Truman's announce-
ment of the continuation of military collaboration between the U.I? and
the US was promptly attacked by PRAVDA, which criticized "the Anglo-
American agreement on standardization of armaments, the decision on
extended activity of the Anglo-American joint staff committee in the USA,
and the very recently published agreement on prolonged 'wartime' coop-
eration." All these steps, continued PRAVDA, "are aimed at concluding
new military alliances, surrounded, moreover, in notable secrecy and
concluded outside the framework of the international organization for
securing peace, and can but arouse legitimate perplexity."
Along with such comment several articles have appeared in the
Poviet press emphasizing the economic rivalry between the US and the
Mr. and warning the Pritish against becoming involved with "Yankee
imperialism." These tactics appear designed to support British leftists
In their recent attacks on Bevin for alleged subservience to US leader-
ship.
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Rumania Seeks US Economic Assistance
The Communist-dominated Groza Government in Rumania, faced
with a severe food shortage and other economic difficulties, must obtain
outside assistance in order to prevent near-starvation and serious hard-
ships this winter. Rumania is now making belated efforts to obtain US
assistance. The Communist-dominated Governments in Bulgaria and
Poland may, with slight variations, use similar tactics in their efforts
to meet their own pressing economic problems.
The Rumanian Government's attitude toward the US, on the sur-
face at least, has become more conciliatory. Feelers have been put out
in an attempt to persuade US capital to invest in the country. Most im-
portant, however, the Government has launched ai vigorous propaganda
campaign to convince the people that it is on the verge of completing
negotiations for a US food loan to tide the country over the winter. The
purpose of this campaign is to enable the Government to claim full cre-
dit for obtaining any loan that might be made, or, failing to obtain the
loan, to place the entire blame for the country's economic plight on the
US. If the Rumanian Economic Mission scheduled to go to Moscow on
10 January obtains any concessions from the Soviets, the Communists
could then make even greater propaganda capital of a US refusal.
Rumania's 'economic difficulties actually stem directly from the
USSR's occupation and reparations policy and from Soviet failure to live
up to the terms of the Soviet-Rumanian trade agreements? Even last
summer's drought, which was serious only in the northeastern part of
the country, would not have endangered the entire country's food supply
if the USSR had not been draining off the food surplus for its occupation
troops and for reparations. Moreover, shipment of all surplus oil for
Soviet reparations has prevented the accumulation of foreign exchange
in Western countries for the purchase of food to meet the present crisis.
In view of the USSR's own food difficulties and need for oil, it is unlikely
that the Soviets will grant any substantial relief to Rumania at this time,
Furthermore, the Soviets have already obtained their major economic
objectives in Rumania and have no incentive to provide further economic
assistance.
The Opposition parties, however, consider that ,a US loan would
play directly into the Communists' hand. According to competent ob-
servers, the Rumanian Government is incapable of making an orderly
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distribution of large-scale food shipments and would unquestionably
use them for political purposes. Leaders of the Opposition parties,
confident that most peasants have withheld enough food to see them
through the winter, even welcome the food shortage and the impending
economic crisis as an additional problem to plague the Government.
.They therefore oppose a US loan at this time, maintaining that it would?
merely strengthen the Government's position and enable the Commu-
nists to claim credit for alleviation of a situation for which they them-
selves and the USSR are solely responsible.
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I.
Implications of A lo-Burmese Talks
IBurmese delegates are en route to London for conversations
with Foreign Office officials, to begin about 15 January, regarding
independence for Burma. These talks result from the demands made
I? by the Anti-Fascist League in November 1946 t t Britain (1) announce
that Burma would become independent by January 1948, (2) recognize
I the present Executive Council as an interim national government and
(3) permit the April 1947 elections to be held for a Constituent Assembly
independent of foreign participation,. An element of urgency was added
I by the inclusion of an ultimatum that unless these demands were met
by 31 January 1947, all League members of the Executive Council would
resign. Such a move would render ineffective native participation in
Ithe Government of Burma. The British reacted slowly to these demands
and thereby intensified Burmese impatience and determination to force
I the issue of independence. When the Foreign Office late in December
invited certain Burmese representatives to come to London to discuss
Burma's constitutional future, the Anti-Fascist League accepted the
Iim . invitation with the understanding that its members would still be with-
.
drawn from the Executive Council, if League demands were not net
by 31 January.
-I
n.HAssifi.d
While British officials are at present rather optimistic regard-
ing the forthcoming London talks, the Burmese delegates are reported
to feel that the British failure to include all Burmese groups in their
invitation may preclude any agreement in London.,and they suspect a
British move to postpone any real decisions until a later conference.
11 no agreement is reached in London on the Anti-Fascist League de-
mands of November 1946, the League, in addition to withdrawing from
the Government of Burma, may also call a country-wide general strike.
(Continued League membership in the Executive Council beyond 31 Janu-
ary,in the event of failure to obtain British agreement to its demands,
ould involve great lis of the League's prestige in Burma and would
encourage Burmese Communist extremists who believe that the League
has become a tool of British imperialism)
The Anti-Fascist League is well prepared for a campaign of re-
sistance against British authorities, The wide personal following of
the League's leader, Aung San, which has increased since his extended
tour of North Burma, and the existence of private political armies such
as the League's strong Peoples Volunteer Organization.permit the
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League to apply great pressure on the British administration in
Burma. If the London conversations break down widespread civil
disturbances will follow in Burma and may involve conflict between
British forces and armed native political groups. On the other hand,
in view of the existing tension in Southeast Asia and India, .it seems
more probable that the 1M will come to terms with the Burmese.
ri_mosts, in Indochina
since French Overseas Minister Marius Moutees visit to
Indochina. French policy in regard to Vietnam has been committed
to the "restoration of order" before negotiating with Vietnam. To
restore order by force in northern Indochina would require military
operations by large trench forces for a period which the French esti-
mate at six months to a year, but which would probably extend to two
years or more. The French have attributed the fanatical Vietnam op-
position they have so far encountered to the presence of many Japanese
411 in the Vietnam ranks. In reality, few Japanese have been found either
dead or alive in the fighting in Vietnam and French military difficulties
may more accurately be ascribed to the tenacity- and courage of the
Vietnam defense as well as to the French lack of infantry and experi-
ence in handling armored units. (Approximately 2,500 former German
prisoners of war are now unwillingly serving in French forces in Indo-
china.)
?
French authorities in Indochina now believe that extremist ele-
ments within the Viet 1V1inh League (the political party of Vietnam) were
responsible for the attack on Ilanoi on 19 December which they feel
destroyed all chances of compromise by its premeditated violence. tro
Chi Minh is believed to have come under the control of these extremists.
though perhaps not wholeheartedly, and he is still held responsible by
the French for Vietnam actions in the present hostilities. French colon-
ial administrators in Indochina have expressed the naive belief that the
people of Annam and Tonkin resent the "terrorism" of the Viet 1Vlinh
eague and would choose a more moderate and pro-French government
If allowed to make a choice.
When order is restored. the French hope to establish a govern-
ment in Vietnam which will permit French control of Indochinese foreign
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11 e
relations and which would consent to a separate state in Cochin-China.
Such a government would be powerless to enforceits, authority in North-
ern Indochina in the face of extremist -resistance and popular contempt
for its puppet status. The continued instability of Northern Indochina
under such circumstances would spread to Southern Indochina and would
threaten French control in Laos and Cambodia.
I I Leaders of Free Laos and Free Cambodian groups in conjunc-
tion with Vietnam representatives in Bangkok have issued a memorandum
calling for UN intervention in the present situation in Indochina. The
Vietnam radio has appealed for the support of Free Laos and Free Cam-
bodian movements, and there are indications that these broadcasts have
received a favorable response. Important F ree Laos leaders have re-
cently left Bangkok for the border territories and may take advantage
of French involvement in Vietnam to oust the pro-French administra-
tion in Laos. Such an expansion of hostilities together with successful
Vietnam resistance to the French would surely encourage extremist
41 leaders in Burma. Malaya, and the Netherlands East Indies to stiffen
VP-* their opposition to Western colonial powers.
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Division of Korea Impedes sent
Recent reports of economic conditions in Korea again emphasize
the difficulties created by the rigid division at the 38th parallel of this
economically integrated peninsula. South Korea, under US control, con-
tinues to suffer from conditions of extreme scarcity and inflation. Im-
provement in the US zone must depend upon substantial foreign imports.
North Korea faces severe food shortages that may drive the controlling
Soviet authorities to press for aid from South Korea and from abroad,
possibly at the threat of denying essential commodities or services to
the US zone.
In South Korea, food, fuel, textiles,and other consumer goods are
in acute short supply. The shortage of industrial raw materials is grow-
ing steadily more serious, with the result that production in large indus-
trial plants is now falling below 20% of capacity. The over-all food
situation has shown some_improvement, and the official rice collection
program is progressing despite determined opposition by some rice
growers and despite transportation difficulties. However, substantial
Imports of food and additional imports of fertilizers are required to
provide the 6,800,000 South Koreans in urban areas with even the mini-
mum daily food ration. The acute shortage of most commodities, and
the sharp increase in currency circulation resulting from heavy deficit
financing by the US Military Government, have led to ever-mounting
Inflation. Open market prices in South Korea rose by at least 30% in
the single month of December.
In North Korea, Soviet occupation forces face a food shortage
believed to be far worse than in the US zone. Strenuous efforts by
soviet-sponsored committees to collect rice quotas appear to be meet-
ing with considerable passive resistance. (This resistance, in contrast
to that shown in the US zone, is not being fed by steady propaganda
from the opposite zone, and thus carries the implication that the Soviets'
rigid one-party rule in North Korea has to some extent "back-fired.")
One of the chief obstacles hampering the exchange of essential
goods and services across the 38th parallel has been Soviet insistence
that supplies from their industrially superior zone must be paid for by
rice shipments from South Korea. This Soviet insistence and refusal
of US authorities further to deplete the inadequate food supplies in
South Korea were largely responsible for the severe lack of fertilizers
in South Korea during 1946.
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There is some evidence to indicate that the Soviets are now
turning to the supply of electric power as a means of bargaining for
food. In December the supply of electric power to South Korea experi-
enced two major interruptions. Also in December the Soviets report-
edly made an agreement with Chinese Nationalists in Manchuria where-
by the Chinese would obtain the output of North Korea's largest hydro-
electric plant in return for food and fuel.
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SPECIAL ARTICLE
1. Evaluation of Sovi t Policy by Bulgarian Royalist General
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10
0
110
I.
EVALUATION OF SOVEET POLICY BY BULGARIAN
ROYALIST GENERAL
The following is a condensation of a study on Soviet
military policy obtained by the US Military Attache Bern
from General Peter Gantchev, former aide-de-camp to
King Ferdinand of Bulgaria and marshal of his Court.
General Gantchev, who is now living in Lausanne, is a -
graduate of the Imperial Russi^.n Military Academy and
is a recognized authority on Russian and Soviet military
policy. Because of his unique background and experience,
and of the general soundness of his analysis, his observa-
tions are summarized herewith.
What is now taking place in Bulgaria is but a part of the tradi-
tional policy of Russia in the Balkans--a policy which has been in effect
since the 18th century and which is aimed at domination of the eastern
Mediterranean, especially at control of the Dardanelles. For nearly
two hundred years the UN and other powers have frustrated these
ambition, but they persist as the Kremlin's principal goal. There
are, however, certain respects in which the present situation differs
from that of the Czarist period. Chief among them are:
1. The Fifth Column organizations of the Communist Party give
present Soviet leaders a marked advantage over their predecessors.
2. Soviet domination of the governments of Rumania, Bulgaria,
Yugoslaviayand Albania constitutes an advantage never enjoyed by
the Czars.
3. There are no longer, in Central and Eastern Europe, any
major powers which might effectively align themselves against Soviet
expansion, as Austria-Hungary consistently opposed Czarist expansion
prior to the first World War.
4. Soviet armies are now within 90 miles of the Dardenelles.
Despite these advantages, however, there are certain unfavorable
factors in the present Soviet position which make it unlikely that the
USSR will embark on military aggression in the near future. Chief of
these is its lack of potential major allies. The Soviet Union could not
count on assistance from any of the nations beyond the borders of its
present satellites, and would be likely to encounter united opposition
from the other major powers. Because of the military, technical and
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economic superiority whicb the latter could presently mobilize against
It, the USSR will seek to avoid military action in the immediate future.
This does not mean, however, that the USSR will not renew the pursuit
of its objectives at some future date.
In the meantime, the Kremlin will work feverishly to reinforce
its positions. In this, the Balkans will receive top priority. Minor
relaxations of Soviet control may be expected in Finland, Czechoslo-
I. vakia, Austria, Hungary, and even Poland, but Moscow will be adamant -
in any question affecting Rumania and,Bulgaria, In these countries, the
7remlin is developing an enormous brie ehead in preparation for an
eventual drive against the Straits. Nothing short of revolution or war
will drive the USSR from its position in the Balkans or force it to
abando its military expansion toward the Dardanelles.
Concerning a war against the USSR, it should be noted that both
Napoleon and the German Staff laid masterful plans for getting into
Russia. Their defeat was due to their failure to plan how to get out.
Russia can never be conquered by military means alone. The aid of
the Russian people will be necessary, and a war against the Soviet
Union should be planned as a crusade against the Government and a
war of liberation for the people. Germany's defeat was due to her de-
sire to conquer and occupy the country. The Ukrainians and White
Russians at first were ready to cooperate with the Germans. It was
only after Hitler's purpose was revealed as one of conquest that they
turned ainst him.
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WEEKLY SUMMARY
Significant Trends
Soviet Demobilization and Redeployment. ? . ? ? I
The Polish Election. . ? . ....... . . 2
Possible Reopening of the Straits Question . ? 3
Austro-Soviet Negotiations o Cermai Assets . . 4
Chi.ese Intervention in Indochina-. . ? . ? . . ? . 5
. Prospects for Indian Settleme t. . . . ... ? 5
Continuing Friction in Iceland 7
Special Article
?
Argentina's Drive for Trade Agreements
in Latin America
23
3'61
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VE.CLA-5.501:ED -s
ass.DDJ CliANGSDI TO:
l&evo, 4 11-11r 77
763
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Soviet Demobilization and Redeployment
Recent reports indicate that the fourth phase of Soviet
demobilization, now in progress, involves the class of 1922 only,
and does not affect the classes of 1923 and 1924, as originally re-
ported. The number of troops currently scheduled for demobiliza-
tion is, therefore, now estimated at 250,000 rather than 750,000
(see Weekly Summary of 29 November 1946).
The estimate of Soviet forces in Germany has recently
been reduced from 675,000 to 600,000. As previously forecast,
however, occupation strength elsewhere remains substantially con-
stant. The reduction in Germany appears to be permanent, inasmuch
as equipment has been redeployed with troops and, in certain cases,
installations have been abandoned. Furthermore, in some areas
Soviet troops guarding zonal boundaries have been replaced by native
German patrols.
While Soviet withdrawals from Germany have been ley units,
? redeployment in Austria has been on an individual basis. Although
there is at present no firm estimate of the net reduction in Soviet
forces in Austria, indications are that only approximately 70% of
the..troops withdrawn from that area have been replaced, apparentiy
by 'young and inexperienced troops from the Southern Army Group
In Bulgaria and Ruthania.
Previously reported withdrawals from Poland appear to have
been primarily from the cenizal part of the country, leaving the bulk
of the remaining Soviet forces concentrated in the former German
provinces, now part of Western Poland, and along the Soviet frontier.
This latter concentration may be the result of Soviet apprehension
over possible disturbances arising from the forthcoming Polish
elec oils. These troops could serve the dual purpose of rest r
order in Poland and preventing the spread of civil strife to the
border areas of the USSR.
. In other areas there is no evidence that substantial redeploy-
ment is in progress or contemplated for the immediate future. While
the estimate of Soviet strength in Rumania has been revised downward
from 240,000 to 20t),000 men, figures for Btalgaria and Hungary remain,
respectively, at 120,000 and 55,000.
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Thus current Soviet redeployment chiefly affects occupation
forces in Germany. While withdrawals may be expected to continue
for the next few months, it is unlikely that the USSR will reduce its
strength in Germany below the combined British, French, and
Americas total of approximately 443,000 troops.
The Polish Election
Preparations by Poland's Cotnmunist-dominated Government
for the country's first.post-war election on 19 January differ little from
those which swept Leftist blocs to victory in Bulgaria and Rumania. The
Polish Government has flagraelly disregarded the Potsdam agreement
regarding free elections and has i tensified its Mithleis suppression of
all potential oppo ents. The election results, therefore, are predeter-
mined. Vice-Premier Mikol jczyk's Peasant Party, which is backed
by approximately 70% of the population, will probably be allowed no
more than 25% of the vote.
Mikolajczyk has waged a determined but futile struggle against
the now-familiar COmmunist electoral tactics. These include mass ar-
rests Of Opposition leaders t' hiA candidates, restriction a public speech..
anti assembly, intimidation by secret police and armed forces, and mani-
pulation otthe electoral machinery. The Government has exploited the
existence of an active underground as a pretext for its oppressive con-
trol of the country by secret police. It has also handicapped IViikolajczyk
by linidmg him with the underground.
The certain defeat of the anti-Government forces on 19 January, -
coupled with, scarcities of food and clothing,and exorbitant taxes, will
produce an explosive situation which will challenge the law-egorcing
powers of the new Government. Outright civil war, however, is unlikely.
The underground, altheugh well-organized, is not capable of effective
action against the Polish Army and Security Police, both of which are
firmly under Communist control and,backed by Soviet occupation forces.
Bilore important, however, is Soviet unwillingness to allow widespread
disorders at this time., Although armed conflict would give the Soviets
at opportunity bo annihilate the Opposition, it would also?endanger Soviet
communication lines to Germany and would give e lie to Soviet claims
that the present GoVernment has the support of the masses.
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The Polish Government has flatly denied US and UK charges
of failure to fulfil the Yalta and Potsdam agreements. Communist
leaders, furthermore, probably consider, the loss of Western economic
assistance and good will less important than the immediate risk of en-
dangering their control of the Government by adherence to Western
principles of democracy. The Communists' post-election plans, how-
ever, may include an offer of surface concessions to the Opposition
In an attempt to avoid widespread interne./ disturbances and to obtain
some economic aid from the US and UK. Mikolajczyk presumably
would reject such concessions because their basic purpose would be
to weaken the Opposition's ability to resist further Communist control
of the country.
Posskt.11?210.fArusillapt_raits Question
Straits (1936) have rec ized that some of its terms are out of date.
The principle signatories of the Montreux Agreement on the
m VP- No conference for revision has yet been called.however, because of
Soviet insistence that the Black Sea states alone should control and
defend the waterways; and Turkey, with US and ritish support, has
refused to enter into discussions on this basis.
The recent conciliatory trend of Soviet fore policy, par-
ticularly the USSR's non-intervention tit the Azerbaijan affair and
Its failure to veto the Security Council's decision to investigate
alleged border violations in Greece,have apparently suggested to
the Turks the possibility of reaching an acceptable agreement at
this time on the Straits issue. The Secretary General of the Turkish
Ministry for Foreign Affairs recently told US Airbassador Wilson that
he was considering the possibility of proposing a "regional agreement"
for the war-time defense of the Straits to be undertaken by the US,
USSR, UK and Turkey.
ISuch a proposal would provide a further test of the Soviet
desire for genuine international collaboration. An abandonment of the
Soviet insistence that the riparian states alone control the Straits
i would open the way for a general settlement of this issue. 11,son the
other hand, the USSR maintains its previous position, the Turks will
have lost nothing by exploring the possibilities; the current deadlock
I0 will merely continue,
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Auroovie Neot1ations on German Assets ?
The current bilateral negotiations between the Austrian Govern-
ment and the Soviet Command for settlement of Soviet reparation claims
on German property in Eastern Austria are Of great significance because
the issue involves Austria's entire economic future, and the outcome of
the negotiations will indicate the scope of immediate Soviet intentions
In this strategically important area of central Europe.
The fact that the Soviets took the initiative in these negotiations
by urging the Austrian Government to make an immediate offer suggests
that the USER was anxious to commence negotiations before the forth-
I. London meeting of the Council of Foreign Ministers' deputies for
Austria in order to forestall quadripartite discussion of the issue. It
may also suggest that the USSR believes that it can drive a harder bar-
gain by dealing alone with the Austrian Government. While the Austrians
responded by submitting a double offer?one relating to the Zistersdorf
oil properties and the other to all other German assets?the terms of
their proposal are clearly designed to minimize Soviet interest or control
over the national economy.
The Austrian offer provides for immediate Austrian repurchase in
. schillings or schilling obligations from the USSR of certain specified
properties in .which there is .a German interest, in return for which the
Soviets would renounce their claims to all other alleged German assets
in Austria. The Austrians have not committed themselves in their pro-
posal to a Cash sum, nor have they attempted to define the phrase -
"German foreign assets" (employed in the Potsdam agreement) in view
Iof the great difference between Austrian and Soviet definitions of this
term. The Austria= instead have resorted to simple horse-trading in
order to sound out the Soviets on a- principle of settlement which in effect
would break the strangle hold currently exercised by the Soviets over
the Austrian economy. ?
While it seems clear that the Soviets desire to reach a settlement,
they may well consider the Austrian offer unacceptable as it stands.
However, they will likely continue direct negotiations in an effort to drive'
the best possible bargain. In any event it appears probable that Austria
will regain possession of a substantial porticin of the "German" assets
originally seized by the USSR.
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Chinese Intervention in Indochina
In the past two weeks Chinese diplomatic officials in London
have proposed to the British Foreign Office Sino-British terven-
tion in the fighting between French and Vietnam forces. The Chinese
have also suggested to the US Embassy in Paris that the US, British,
and Chinese Consuls in oi offer their good offices to limit hos-
tilities. These advances apparently result from the demands of
Chinese groups in the Hanoi-Haiphong area that the Chinese Foreign
Office make definite efforts to lessen the suffering of Chinese
nationals and business activities in Vietna .
The reaction of the British Foreign Office has been negative,
on the grounds that the French would reject foret intervention and
that the French had already expressed willingness to deal with
Vietnam on the basis of the agreements of 6 March and 14 September,
The British also feel that any British move should await the for a
tion of a permanent French government and a clarification of its
policy on Indochina. The US State De rtment has indicated that its
? reaction would be similar to that of the British and based on the same
considerations.
Further Chinese efforts to intervene in the Vietnam ?dispute.
may be expected in the near future. The Central Chinese Government ?
will continue to oppose any strengtheni7 of the present Communist-
dominated Vietnam Government and may encourage the development.
of the pro-Kuo ..intang refugee .Vietnam government-in-exile rumored
to have been established 'in Nanking by the former Vie ? ; m Foreign
Minister, Nguyen Thong Tam, This government-in-exile 14 ay move
into Indochina withrhines . support. In that eventuality, the French
could recognize it without loss of-face.
Prospects fo Indlai Settlement
Though comparative calm has returned to India, prospecte
fora peaceful, settlement of Hindu-Mosl m differences- remain dim
and an outbreak of civil war, after several months of stalemate,
continues probable. The present lull was ushered In by adjourn-
ment of- the Constituent Assembly until 20 January, following e
tabling of Nehru'S 'proposal that India be proclaimed a Sovereign
republic. '
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The unfavorable outlook is heightened by Gandhi's recent
recommendation that Congress delegates from Assam withdraw
from the Assembly when it divides into groups to draft local con-
stitutions. This advice strengthens the Congress element which
opposes acceptance of the British and Moslem League interpreta-
tion of the grouping clauses of the British plan for Indian self
government (as expressed in the British Government's statement
of 6 December), and creates misgivings among those Congress
members previously disposed to compromise.
The question of the'Cougress' acceptance or rejection of
the British statement is to be decided by the All India Congress
Committee which meets early in January. Despite indications
that prominent Congress leaders including Nehru have inclined
toward acceptance, it is feared that Gandhi's influence will result
In the passage by the Committee of a resolution containing conditions
? unacceptable to the Moslems.
Chances of agreement have been further reduced by a recent
resolution of the Sikh governing body condemning the British state-
ment as designed to "placate the Moslem League" and as making
"a substantial addition to the original British plan. This body .
also authorized a deputation to request Gandhi's assistance in,pro.::
curing "adequate safeguards to fulfil the Congress Comatitnients!'.-
to the Sikhs.
Jinnah, head of the:Moslem League, remains as intransigent
as ever. His confidence has been increased by the recent elections
in Sind Province, in which.the League gained complete control of
the legislature, and by a marked increase in League strength in the
North West Frontier Province.
- The Indian princes are remaining aloof from the dispute on
the ground that until and unless the Moslem League participates in
the Assembly, deliberations by that body are useless.
Sporadic disturbances continue throughout the country, and
the present calm is an uneasy one. It may, however, last several
months even though no agreement is reached.
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The Moslems, who do not consider British withdrawal as
urgent as do the Hindus, look upon the stalemate as a kind of victory
for themselves because it forestalls the establishment of a "Hindu
Raj. The League is unlikely to precipitate disorders as long as
it receives Brittsh support on the disputed constitutional questions.
The ?Congress is also expected to act with restraint for the
present, particularly because increased truculence might ca.use the
British to proclaim that the failur of Congress to cooperate in the
establishment of a united India justifies fav rable consideration of
the Moslem demand for a free P kistan. Any such declaration by
the British would almost certainly result in prompt rebellion by
all Congress sympathizers. If, for my reason, the Congress should
precipitate disorders, it wouldpin effect, be fighting both the British
and the Moslems. Congress leaders would undoubtedly not attempt
to use force without making extensive preparations, including, if
possible, subversion of Hindu and Sikh elements in the Indian Army.
Such preparations would require several months.
Continuing Frictdom in Iceland
Signature of the US-Iceland air base agreement h s failed to end
the tensions between the Icelandic popithtioi and US troops, and some
conserva ve elements i Iceland are now urging abroga Oil a the treaty
at the earliest date perinissible under its terms.
The October 1946 agreement provides for a progressive with
of US military personnel, to be completed by April 1947. Already'
a lack of tecimical.personnel Ms necessitated the temporary closing of
the airport to commercial traffic except for emerge cies in daylight.
This step was protested by the Communists on the ground that such
action requires prior Icelandic concurrence. IcelandPs failure to pro-
vide the agreed number a civilian police for the protection of the
Keflavik area has caused further dfcliculties. A wave of pi ering en-
sued and US MPs were authorized to fire over the heads of any person
refusing to halt when challenged. S.hooting intidents resulted. On one
occasion ?a tar searched by the MPs proved to be that of tiae Icelandic ?
sheriff, into as a member of Parliament had supported the air base
agreement.
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These developments have not strained relations with Icelandts
Prime Minister Thors, although domestic feelings, inflamed by Com-
munist propaganda, resulted in embarrassment to him at an inoppor-
tune period during the protracted cabinet crisis. A protest from Thors
ov r the incidents was promptly met by a US apology, and the Ice-
landers have now given assurances that adequate police protec on
will be provided at Keflavik.
As long as the USSR regards the US position in Iceland with
suspicion, the US will encounter difficulties. Even if the Soviets should
become reconciled to the agreement, Icelandic sensitivities would
probably continue to cause friction.
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SPECIAL ARTICLE
1. Argentina's Drive for Trade Agreeme
in Latin America
fliffilartelaele
tS
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I.
dimismilmb
ARGENTINA'S DRIVE FOR TRADE AGREEMENTS IN LATIN AMERICA
Summary: In recent weeks Argentina has begun to build
a network of bilateral trade agreements with other Latin
American Republics which, if completed, would:(1) inte-
grate into a single trade combine, on an assured long-
term basis, several economies whose produce Argen-
tina needs in order to achieve the objectives of Peron's
Five Year Plan, (2) coninalt Argentina to an internation-
al trade pattern sharply at variance with the principles
enunciated by the US Government, and (3) counteract
the marked trend In Latin America towards increased
dependence upon US exports and US markets.
While the recently-announced. "customs union" with Chile is
the only major success which Argentina's current trade treaty offen-
? sive'has accomplished to data, the main outlines of Argentina's neW
policy had been anticipated in an agreement with Brazil which became
effective on 1 January. Moreover, Argentine negotiators are known to
be at work on agreements, probably of a similar character, with
? olittia;' Paraguay, Venezuela, Ecuador, and Peru. No negotiations
with Uruguay have been reported, but the fact that Argentina is normally
the principal source of Uruguay's indispeusable food imports marks
that country also for inclusion in the emergent "southern economic
bloc".
Since the drive began, US press reports have exaggerated the
negotiate-or-starve character of Argentine trade policy, and have Ignored
two facts: that Argentina's existing commitinents have greatly reduced
its-exportable surplus of the foods which its neighbors require, and that
Argentina's increasingly acute internal transportation problem has
often made shipments impossible (particularly to-Bolivia.), which might
otherwise have been made as scheduled. Nevertheless, Argentina,
operating as it Is In a sellers' market and fortified by the vast cash
balances it earned-by supplying the 'United Nations during the war, Is .
taking full advantage '-of the fact that the countries it seeks to Integrate
with its economy urgently need both food and capital.
Press reports have also exaggerated the cestent to which the
recent agreement between Argentina and Chile involves- "domination"
of thetChilean economy,by Argentina. Ts agreement provides, among
other -thingsefor:(1) two loans of 300 million Argentine pesos to be used
for Industrial inipisoitments and a general public works program in
s
111110111111MINUMIla? p
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oviiiionow
I? Chile, and (2) a commitment on the part of each country to deliver
no exports to a third party until it has met certain stipulated quotas
I? of shipments to the other, and (3) free-port privileges for each of
the two countkies in the other's territory.. In the absence of proof
I that the amount of the loan exceeds Chile's capacity to pay and that
Chile's present leadership is indifferent to the dangers of subordi-
nation to Argentina, there is every reason to believe that Chile will
I maintain its economic independence, and that, by entering the
agreement it has;if anything, strengthened its bargaining position
I vis-a-vis third parties. .The loan was negotiated at a time when
? President Gonzalez,Videla of Chile had informed US Ambassador
Bowers that, in his op on, the US was withholding a loan to Chile
I ? in an attempt to bring presiuze on the Chilean Government in behalf
of a US minieg company.
I .
Argentina'e present trade policy is guided by three impoetaiat
considerations: (1) a preference for agreements of essentially
I barteiniTpe, involving the exchange of stipulated amounts specific
commodities (Brazil is tolurnish Argentina tires; crude rubber,
0 ? cotton'eloth, iron, and glass in return for wool, casein; and wheat);
I(2) shrewd timing of negotiations, to take full advantage of favorable
? diplomatic oppoitunites and of pressing needs on the part of other
ciemtrieS (Argentine negotiators are now most active in Peru, where
1 , they are offering a generous loin at a moment when the US refuses to
negotiate a loan without .a.prior debt settlement that Peru says it ,
I cannot afford, and in Bolivia, whose urgent food requirements possibly
cannot be met by any country save Argentina); and, (3) a determination
to lace the US-sp-ansored International Trade Organization with a
111 fait accompli that will guarantee Argentina's.futuTe markets and
future Supplies of needettemports. e
I ? .
- Some Argentine economists are already speaking of the Argen- ?
tine-Chilean agreement as a -"springboard for similar treaties from
ICanada to Tierra del Fuego." ?A shore moderate but also more ,
? alarmist view of the long-teem implications of the trade treaty offen-
sive has been advanced by Hap de la Torre, the leader of Peru's
Idominant APRA party. Haya, who PPoses Peru's. entry in the new
bloc, nevertheless believes that it will finally ieclude Chile, e tlivia,
I. Paraguay, Uruguay, and perhaps Brazil., e'alsc; believes that
?Argentina itseprepared_to_offer generous terms to the countries It .
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eliadagrallINI
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%op
4111
rano
a
m
iimmouns.
wishes to attract into the bloc, and that Peru, despite his opposition,
may "ultimately deal with Argentina unless aid is forthcoming from
the United States." Brazil's position vis-a-vis the bloc, Haya feels,
will depend on the future political fortunes of Getulio Vargas,whom he
describes as "sympathetic" to Peron. However, Haya believes it is
not too late? to counter Peron's economic expansion program, provided
measures are taken promptly, independent of Argentine leadership,
to increase trade among the South American countries.
Hemisphere Communists face a difficult dilemma with respect
to Argentina's trade offensive. They distrust Peron, but since any
successes achieved by the offensive weaken US leadership in South
America, they are tempted to wish it well. Chile's Communists, for
instance, have applauded the Argentine-Chilean treaty, and the
Communists in other countries, as they join the bloc, may be
expected to follow their example.
-
It
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