SUMMARIES OF TRENDS AND DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300030005-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 12, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 5
• Publication Date: October 31, 1950
• Content Type: SUMMARY

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SUNIVIARIES OF TRENDS AND DEVELOPMENTS
USSR
1. In resDonse to evidences of renewed US-initiated
efforts tone otiate a Janan.ese Peace treaty the USSR has
expressed its wilin_gness to discuss, informally, Ua Pace
proposals and, possibly for the same reason, after an absence
of nine months has returned its delegate to the Far Eastern
Commission. Since there is little likelihood that the Soviet
Union will reverse its fundamental policy regarding a Japanese
treaty, Soviet participation in peace treaty discussions seems
intended to serve chiefly as an obstructionist and delaying
tactic,
31 October 1950
(Page 5 )
20 Molot.ov's recent attendance at the Prague Conference
of Satellite Foreign Ministers -indicates that, in addition to
any specific duties he may have, he is still concerned with
the UJSR's foreign policy on the broadest possible scale.
(Page 6 )
3. The. Pr ue Conf. rence of Foreign U7:inieters of the
USa:`Z and its ~uro~ae2,n_: ~tellites, --including East Germany.
appears to bows Ma J21: i oPL ands and diplomatic attemytt to
exploit opposition in France and ';vest Germany to West German
rearmamenca
(Page 7 )
4. On thy, basis .-of tyre third quarter report . it is
estimated that the number of workers andhol
na oyres in the
tional economy ofthe USSR will be between and 7
million at_,t., tr 36F end of 1950. The goal for the end of the
DDGUMENt' NO.
NO CHANGE IN CLASS' C7
0 DECLASSIFIED
CLASS, CHANGED TO: TS
DATE (7EViEWER: 000514
NEXT REVIEW DAT
A[!TH? HA 7n.1
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Five Year Plan will thus be exceeded by 3.5 to 4 million.
Of the total now workers, the proportion assigned to industry,
construction, transport, and state farms and forestry again
increased over the previous quarter, indicating continued
emphasis on the expansion of production.
EASTERN EUROPE
BULGARIA
5. The Soviet drive to create a Bulgarian Communist
Pra,rt; has set the stage for the almost inevitable downfall of
all present Bulgarian Communist leaders.
FINLAND
(Page 10 )
6. A formula for the settlement of strikes in the
Finnish metal industries has been _a ?reed .Mon and the con-
elusion of other strikes is at hand, 11hile the terms of the
settlement will enhance the political prestige of the Social
Democratic Party, there will be greater inflationary pressure
on the Finnish economy and no long-range wage-price stabili-
zation is foreseen.
HUNGARY
7. The current excess of Hun arian imxoorts over exports
in trade with Wost orn Furo_pe could create difficulties for
Hungar~r! s Five-Year Plan. Unless exports are increased, re-
ceipts of essential materials from the West will probably be
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8. The Catholic Church in Poland will shortly lose
two of its traditional sources of income. While this move
will seriously curtail the financial resources of the Church,
no immediate harmful eff.cts upon the Church's position are
expected, although its long-range ability to resist Communist
demands will be seriously weakened.
(Page 12)
POLAND
RUMANIA
9. Rumanianoeasant resistance to the Communist, reEinie
is aaren considerably more wider r~,ac Lnd violent this
y pr than in. that.
(Page 13 )
10. The recent Rumaniantrial aimed at the French
Legation indicates that while the US rrems,ins_the~rimary tar-
gf-t of the anti-Western cam al presssure on other Western
nations will.,robably increase. Propaganda relating to the
trial alleged that the Ua was actually the motivating force
behind the case, since the US had been forced to turn to
France, its "Marshallized ally," to carry on espionage work,
its own operations having been compromised.
TR.IESTE
(Page 14)
11. Trieste Dort traffic has bec me a casualty of the
east-West conflict. This leaves the port primarily dependent
on Austrian, and to a minor extent Italian and Yugoslav,
business in competition with Venice and Rijeka.
(Page 15 )
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INTERNATIONAL COIU -IUNISM
AND PROPc~G.UNDA AN M'J,'Y5Ia
12. Soviet_,pra~?aanda durin ,.recent weeks was noteworthy
not only foritsefforts to quiet Western war_ fears, but also
for endeavors not to increase the war fears of the Soviet
lE. While this strong and consistent "peace" theme may
n2op
be designed to create a false sense of security in the West
and to slow down 'gestern rearmament, the fact remains, that
it also has a nogativ:~ effect on any effort to create a "war
morale" in the Soviet Union. On this basis, it would appear
that the 1JSR is not preparing its people psychologically for
early direct participation in an armed conflict.
(Page 16 )
SPECIAL ARTICLE
13. The new Soviet system of freight rate effective
January 1949 and modified in 1950 is increasi& the ef-
ficionc of rail transportation largely through the reduc-
tion of uneconomic long hauls. Items of military importance;,
however, will continue to receive favorable rates on long
hauls.
(Page 18 )
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EAJTEE%d EUROPE-
U S S R
Joviet delaVir tactic evident ItAll
in Japwnese Peace Treaty negotiations
In response to evidences of renewed US-initiated ef-
forts to negotiate a Japanese peace treaty, the USSR has ex-
pressed its willingness to discuss informally US_ peace pro-
posals and, possibly for the same reason, after an absence of
nine months, has returned its delegate to the Far Eastern
Commission. In making these gestures, patently designed to
appear conciliatory, the US3EZ probably hopes to distract at-
tention from the Soviet defeat in Korea, to diminish Japanese
antipathy to the USSR and to gain support for the Soviet peace
offensive, as well as to undermine efforts of non-Communist
nations to agree on a peace treaty for Japan. Additionally,
an important motive, may be to prove to the Chinese Communists
that the USSR, by its willingness to discuss the question
of a peace treaty, is working to effect those terms in the
Sino-Soviet Treaty which are concerned with Manchuria and has,
therefore, no imperialistic designs on that border area.
Specifically, these terms provide for the withdrawal of Soviet
troops from Port :';rthur, the return of the Chinese Changchun
railway, Port Arthur and Dairen to the Chinese People's Re-
public by 1953 or at the conclusion of a Japanese peace
treaty.
The USSR may be expected to repeat its public
declaration favoring a peace treaty and the withdrawal of
occupation troops, and may also take part in exploratory dis-
cussions on Japan. There is little likelihood, however,
that the USSR will reverse its fundamental policy regarding
a Japanese peace treaty and will continue to maintain that
the Potsdam Agreement specifically intended that the treaty
would be prepared by the Council of Foreign Ministers (CFM).
In addition to demanding that the Peking regime represent
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China in all treaty negotiations, the USSR may be expected
to: (1) charge that a separate Japanese peace is invalid,
(2) claim that Japanese rehabilitation is designed to serve
US military purposes, and (3) insist that continued occupa-
tion disregards the interests of the Japanese people.
The Soviet Government has consistently refused to
give up the veto right on international bodies such as the
CFM and the UN Security Council and has maintained that the
Japanese peace treaty should be considered by the CFM under
the "unanimity rule". In order to participate in a peace
conference, the USSR would probably have to accept the US
position, according to which the treaty would be prepared by
the nations of the FEC operating under two-thirds rule, and
without the veto. The USSR might consider that participa-
tion under such conditions could produce certain advantages,
mainly those of propaganda and limited obstruction, particu-
larly if Peiping were to represent China. However, in the
event of Soviet participrti.on, Moscow would probably. refuse
to ratify the final draft of the treaty, leaving the Kremlin
free to negotiate a separate peace treaty with Japan under
circumstances more favorable to the USSR. Nevertheless,
since the USSR apparently would gain no substantial advantages
from accepting U.S. treaty conditions that could not be
achieved by other diplomatic means, it is now considered un-
likely that the USSR would retreat from its previous stand.
Therefore, informal talks with the US and renewed participa-
tion in the FEC seem intended to serve chiefly as an ob-
structionist and delaying tactic. (SRCRET)
Molotov's Prague appearance suggests
his continued interest in foreign affairs
Molotov's appearance in Prague on 20 October to
head a Satellite Foreign 1`Miinisters' Conference provides a
clue as to his present area of official responsibility, which
has been unknown since March 1949. !it that time he was re-
lieved as Minister of Foreign Affairs, presumably to free him
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from administrative detail so that he could devote all his
energies to high level policy considerations. although he
retained his position in the Soviet inner cabinet as a
deputy chairman of the Council of 1Mdnisters, there was no
information available as to his specific duties.
In December 1949, when all Politburo members pub-
lished testimonials to Stalin on the occasion of his 70th
birthday, Molotov's contribution indicated a catholicity of
interests embracing both internal and external policy. Some
even speculated that he was being groomed to take over the
Communist empire from an "aging and tired Stalin." A theory
that he had been given the Far East as h:is own special area
and that he was particularly concerned with relations between
the USSR and China emerged from his presence at Mao's re-
ception given by Stalin in December 1949 and rumors of a visit
to Peiping last x.ugust. Therefore, despite whatever other
duties he may have assumed, it would seem that Molotov, who
continues to be officially listed as Stalin's number one
lieutechant, is still concerned with the the USSR's foreign
policy on the broadest possible scale. (CONFIDENTILL)
Recent Prague Conference apparently_desi ned to exploit "A"
West German--French oposition to West German rearmament
The recent Soviet note to the Western Powers on
German rearmament and the declaration issued by the Prague
Conference of Foreign Ministers of the USSR and its European
Satellites, including East Germany, appear to be a major
propaganda and diplomatic attempt to exploit opposition in
France and West Germany to West German rearmament. These
statements serve as a warning to the West regarding West
German rearmament and, at the same time, give a surface in-
dication of Soviet "willingness" to settle the German problem
in the interest of unity and peace. The US,R apparently be-
lieves that these declarations will strengthen French and lost
German fear of provoking Soviet military action by West German
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rearmament, and will arouse hope in West Germany of obtain-
ing unity by peaceful means. The Soviet maneuver may have
been timed to precede the recent French Assembly, debate on
German rearmament and to take advantage of an apparent in-
crease in West German sentiment against rearmament, as ex-
emplified in the recent resignation of Minister of Interior
Heinemann and the statements of Pastor Niemoeller.
Although these declarations demonstrate Kremlin con-
cern at increasing Western rearmament and the possibility of
West German contribution to it, neither the content of the
declarations, the propaganda treatment of them, nor recent
Soviet tactics in East Germany indicate that the Uj,3R, in
order to forestall Western rearmament, is considering any sub-
stantial alteration in its current German strategy -- the com-
munization of East Germany and its integration into the Soviet
orbit. However, East German official statements and propa-
ganda treatment of the Prague declaration suggest that the
USSR may carry its recent actions a stop further in order to
bolster its claim that the West is interested in neither peace
nor German unity. East Germany, for example, may formally
request the West German Government to fulfill the Prague
proposal, particularly the provision calling for creation of
an sLll German Constitutional Council" to prepare the forma-
tion of a provisional "ill German sovereign government.}} If
the USSR decides upon a formal move, it will be in the full
realization that the Prague proposal, which makes no provi-
sion for free elections in all Germany and which demands a
Constitutional Assembly with parity representation of East
and West Germany, is not acceptable to either West Germany or
the Western Powers, (SECRET)
EA;3TERN EUROPE
BULGARIA
Conti nuM n _pur e is reducing 1ul arian Communist "A
hierarchy to fear-ridden uncertainity
The Soviet drive to create a Bulgarian Communist
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'arty, which is both an implement of Soviet imperialism and
a strong internal persuasive and coercive force, has set the
stage for the almost inevitable downfall of all present
Bulgarian Communist leaders.
Communists who ruthlessly crushed Bulgarian opposi-
tion leaders and their followers in the first three years
after Bulgaria's "liberation" now find themselves being given
similar treatment. Vlarned by the success of Tito's defiance
of Soviet omnipotence, the Kremlin set the pattern for in-
suring absolute Bulgarian subservience with the "discovery"
of the Kostov deviation in January 1949. Since that time a
continuing purge and program of criticism and self-criticism
has reduced the Bulgarian Communist hierarchy to a state of
abject and fear-ridden uncertainty,
The fate of Kostov and those alleged to have been
his followers has convinced other Communists of the wisdom
of unquestioning acceptance of Moscow directives. Despite
their willingness, however, these Bulgarians have been un-
able to carry out Soviet demands for the wholesale exploita-
tion and rapid communization of Bulgaria. Their failure has
provided and will continue to provide a ready justification
for the rtimoval, whenever the Kremlin so directs, of any
Bulgarian Communist who has outlived his usefulness. Ap-
proximately one-third of the Central Committee has been
purged since its election in December 1948. Full knowledge
of his personal dilemma will continue to make each of these
cowed leaders a mouthpiece for the glorification of the USSR
and his own self-abasement to conceal the part Moscow is
playing in the systematic destruction of all individual
rights of Bulgarians.
anxious to' pleace Moscow and thus prolong their
own uncertain existence, Bulgarian Party leaders have in turn
become vassals in the accomplishment of the purge of the vast
rank and file of the Party in which approximately 100,000
were removed from its ranks in June 1950. For the second
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time this year, the C';ntral Commi_tte has announced that the
"annual" account--electoral meetings of all Party organiza-
tions will be held, from 15 October to 30 May 1951. The
previous meetings ran from February to June when the Party
Conference announced the purge results to date. Since the
uncovering of mistakes, criticisms and self-criticism have
been announced as an integral and important part of these
primary group meetings, it can be expected that the ranks
of the expelled will be considerably increased during the
next few months.
Paralleling the rapid and deliberate Soviet cam-
paign to eliminate present Bulgarian Communists is a con-
c.rted drive to educate the coming generation in the ac-
ceptance of Soviet supremacy and the ultimate destruction of
any separate Bulgarian nationality. Bulgarian Communists
now furnishing the facade for the Kremlin can only look for-
ward to existing until these younger party members are con-
sidered sufficiently well-trained to take their place in the
art of accepting and performing Soviet orders. (CONFIDENTIAL)
End of strikes in Finland near
A formula for the settlement of strikes in the
Finnish metal industries has been agreed upon and the con-
elusion of other strikes is at hand. The remaining unions
which are out on strike: will use as a pattern whatever final
agreement is accepted by the metal workers.
The stalemate over the settlement of the strikes
was broken late last week when the Central Federation of
Finnish Trade Unions (OAK) accepted a mediation proposal of-
ferced by the Government Mediation Commission. The proposal
offered, as a prerequisite for the settlement of the strikes,
the provision that a new higher basic wage rate be used in
negotiations to meet union demands.
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The Social Democratic leaders of SAK were all
satisfied by the Comm:issionts proposal, inasmuch as it will
serve to enhance the political prestige of the Social demo-
cratic Party as the only Party able to obtain gains for the
workers. However, because of the wage increases there will
be greater inflationary pressure upon the Finnish economy,
and no long-range stabilization of the wage-price picture is
foreseen. (CONFIDENTI1L),
HUNGARY
Hun$ar?,;.ian West ern Eurpean trade
faces serious difficulties
Hungary's foreign trade with Western Europe is
threatened with serious difficulties. Imports, running 10 per-
cent above 1949 (based on a partial monthly average compari-
son) have far exceeded exports which have been averaging 35
percent under last year. If this trend continues, a deficit
of approximately $30 million will accrue for 1950. Import
balances in -trade with Western Europe, in addition to hamper-
ing future procurement of essential items, will. limit Hungaryts
ability to liquidate claims for nationalization of foreign
properties,
Certain economic aspects of the Hungarian situation
bear a similarity to the Yugoslav problem, Both countries
have extensive industrialization programs dependent in vary-
ing degrees on equipment from the West: the paucity of
foreign assests and the inability to earn sufficient foreign
exchange through exports necessitates financial assistance
from abroad. Moreover, if Hungaryts drought is severe, a
serious unde.rfulfillment of agricultural export commitments
could also r3sult, Thus, the manner and speed with which the
U3SR supports the superior Hungarian economyy; will make an
interesting contrast to the United States' program for Tito.
(SECRET)
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Catholic Church in Poland to lose
financial resources to state
The Polish Government intends shortly to eliminate
two of the traditional sources of income of the Catholic
Church, a move which will seriously curtail the financial re-
sources availabl, to the Church in its struggle against the
encroachments of the State upon its remaining independence.
Curtailment of Church income has been a successful Communist
tactic elsewhere in the Church-State struggle in Eastern
Europe.
The Polish Government plans to give a monopoly on
the sale of all religious articles in Poland to Caritas, the
former Catholic welfare organization now under State control.
The Government also intends to award exclusive rights on the sale
of sacramental wane to an asr ociation of Catholic pro-Government
priests. Undoubtedly a large proportion of these lucrative
sources of .income, will find its way into State coffers. The
assets of the liquidated Catholic journal 9,'ygodnyk, amount-
ing to some ten rraii..1ion zloty, are to be turned over to
Caritas. These developments, plus the loss of much of its
lands last spring when the Government nationalized all Church
holdings of over fifty hectares, will severely reduce the in-
come of the Church.
Before these steps are announced, the State will un-
doubtedly revive its dormant propaganda campaign against the
Church, probably charging it with violations of the Church-
State agreements. Although no immediate deleterious effects
are expected from the curtailment of the Church's revenues,
without its broad financial resources the Church's power and
its long-range ability to resist Government demands will be
seriously weakened. The new attack developing against the
Church shows ovey sign of being the most vicious that has yet
occurred and will probably result in the loss of the few re-
maining perogatives of the Church. (SECRET)
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RUM4 NIA
Peasant unrest in Rumania in2r,casin
Rumanian peasant resistance to the Communist regime,
which annually causes some sabotage at harvest time, is ap-
parently considerably more widespread and violent this year
than in the past. There are indications that in the late sum-
mer resistance was especially strong in Transylvania and
Moldavia, in the north, the Dobruja, in the southeast, and in
the area around Bucharest. There are instances of peasants
burning crops to prevent them from falling into the hands
of authorities, driving out militiamen sent to aid in the
collection of grain, and even seizing control of some isolated
localities. Attempts to murder local Communist officials
are made with increasing frequency, judging by the volume of
press accounts of trials of peasants charged with the crimes.
Some peasants have fled to the mountains or swamps after
clashing with security .forces, but so far none of them have
formed an effective resistance, organization.
A prolonged summer drought has aggravated the
peasants' dormant resistance to Communist authority. The
drought, which reduced the production of coarse grains in
Oltenia (along the Danube) and the Dobruja, has heightened
peasant resistance in these areas towards the delivery of
grain to the state. The peasants receive extremely low
prices for these compulsory deliveries of produce, and re-
cently a ceiling was put on the price of farm products sold
in the open market, This, in conjunction with excessive tax-
ation, will seriously reduce peasant purchasing power.
Finally, the peasants' realization that the Bucharest Regime
is relentlessly pressing forward its planned collectivization
of agriculture has probably induced a sense of extreme despera-
tion.
Despite the extent and intensity of peasant unrest,
resistance will probably not get out of control in the im-
mediate future. Means of repression available to the state
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are capable of dealing with local outbreaks, and the re-
calcitrant peasants are unsupported by any organized re-
sistance organizations. Nevertheless, manifest peasant
willingness to combine efforts in undertaking. dangerous
sabotage suggests that as pressures on the peasants are in-
tensified, the potential of opposition wil increase.
(SFCItiT )
Rumanian al,med at France
as "Marshallized" al. of US
The recent trial of French and Rumanian citizens
accused of carrying on criminal espionage on behalf of the
French Legation indicates that while the US remains the pri-
mary target of Rumaaais l s anti-Western campaign, pressure an
other Western nations will increase. The trial will probably
be used as a pretext to oust the present French military
at Cache, Colonel Parisot, per arza non_ ata, and to reduce
the strength of the French Legation staff. French officials
have maintained their staff at twenty, despite a Rumanian
demand in July that the number be reduced to five or six,
If Parisot is ousted, the French will probably demand the
.removal. of the present Rumanian military attache in Paris,
but they are at a disadvantage in bargaining with the
Rumanians on the strength of their respective Legation
staffs. While the Rumanian Legation in Paris employs only
five or six Rumanians, it also has on its staff a large
number of French citizens, presumably Communists, and the
French Government would be unable to reduce their number in
retaliation without a special law. In addition to effecting
personnel cuts, the trial will make it more difficult for
French representatives to exploit traditional French-Rumanian
ties for their own purposes, and will further dissuade the
people from contacting Western representatives or even har-
boring pro-Western sentiments.
The handling of the case, both in the preparatory
stages and in court indicates that the Ruirtanian security
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agencies attached considerable importance to Parisot's opera-
tions, which were evidently extensive. From the indictment
of the eleven defendants and their testimony in court, there
emerges a picture of Parisot as the unscrupulous master-spy,
organizing and directing several espionage and subversive
nets throughout Rumania. Four of the defendants were French
citizens and one of them was a local employee of the French
Legation, so that the case is the first in recent years in
which a national of a Western diplomatic mission has been
tried and convicted in Rumania.
Although the trial was aimed directly at the French,
propaganda material on the subject alleged that the US was
actuall7 the motivating force behind the case. It was charged
that the U.S had been forced to turn to France, its "Marshal-
lized ally," to carry on espiona,.ge work, its own operations
having been compromised by resounding failures in the People's
Democracies, a theme which will probabl,-~ be employed in sub-
sequent attacks on Western diplomatic-activity throughout
Eastern Europe. The Vatican was also implicated in the trial,
through Parisot's close relations with the nunciature, and
the fact that one defendant was a Roman Catholic priest,
(CONFIDENTL.L)
TRIESTE
Soviet orbit abandoning use of Trieste abort
Trieste port traffic has become a casualty of the
East-West conflict. This leaves the port primarily dependent
on Austrian and to a minor extent Italian and Yugoslav business
in competition with Venice and Rijeka. In 1949, Czechoslovakia
was second to Austria as the most important shipper using the
port of Trieste. At present Czechoslovak traffic is dwindling
to limited scattered trade with the Middle East and the Soviet
Balkan satellites. Increased routings by Hungary to Albania
still comprise only a small part of the total transit ship-
ments. For the first half of 1950 as compared to 1949, the
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combined volume of Czech, Hungarian, and Polish traffic
through Trieste dropped almost fifty percent from 244,000
tons to 112,000 tons. Strategic goods comprised only a
small fraction of the latter figures.
Abandonment of Trieste by the Soviet Orbit coun-
tries stems from two causes: the Orbit's program of utiliz-
ing Northern European, particularly Polish, ports to conserve
foreign exchange and escape the surveillance over shipments;
and a need for diversion to evade difficulties caused by AMG's
implementation of the 1949 UN resolution banning military
type shipment via Trieste to Albania and Bulgaria. In line
with this shift, Albania's small postwar fleet has apparently
been transferred from the Trieste-Duress run to service be-
tween Duress and the Black Sea.
The more serious long-range problem impeding
Trieste's development are the difficulties caused by multi-
national control. The interests of Italy, the US, the UK,
and Yugoslavia regarding Trieste are seldom in harmony. In-
sufficient earnings from trade with Italy, along with dollar
port and service charges, limit transit shipments. Revitali-
zation of Central and Eastern European commerce and competi-
tive ports and transport systems (both barge and rail) has
adversely affected the use of the port, and the Tito-Stalin
split has resulted in some detours through Austria. No per-
manent improvement to Trieste trade problems will be found
until the territory has an established status, or free intra-
European commerce again prevails. (SECRET)
INTERNATIONAL CO1&IUNISN
AND PROPAGANDA ANALYSIS
Soviet ro aganda attem~ts to reduce war fears
in the West and in the USSR
Soviet propaganda during recent weeks developed a
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variety of approaches apparently designed to regain the propa-
ganda initiative for the U,iSR in a situation where Western
psychological, political and military warfare has become in-
creasingly effective. The common denominator of all these
Soviet propaganda steps, however, was "peace:" Not only was
there an effort to quiet Western war fears and thus slow down
Western rearmament, but Soviet domestic propaganda, as it has
ever since the outbreak of the Korean war, avoided any items
which might increase the war fears of the people of the USSR.
While this strong and consistent "peace" effort may be designed
to create a sense of false security in the West, the fact re-
mains that it also has a negative effect on any endeavors to
create a "war morale" in the Soviet Union. On this basis, it
would appear that the USSR is not preparing its people
psychologically for early direct participation in an armed
conflict.
Among the chief items in Soviet foreign propaganda
during the week was the Prague declaration which was made part
of a broad USSR "peace" offensive, This offensive has a wider
base than the "peace campaign," the latter having now become
merely a segment of the entire Soviet propaganda endeavor.
Besides contributing to world-wide Soviet peace propaganda,
the Prague declaration was used to undermine US policy with
respect to Germany, particularly West German remilitarization.
Another major topic was the United Nations, with the
Moscow radio taking full advantage of United Nations Day to
proclaim the USSR's interest in the success of the organiza-
tion. Accompanying this theme, however, was a new and potent
line to the effect that the capitalist majority nations in the
UN are actually not representative of the majority of the world
population but rather that the vetoing, .non-participant and ab-
staining nations (USSR, block, Communist China, Indonesia, and
India) are the true representatives,
The most important item of the past week was the
Soviet All-Union Peace Congress which elected delegates to the
forthcoming Sheffield (Bngland)World Peace Congress (13-19
November). While the treatment of the All-Union Peace Congress
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was characterized by the usual belligerency of the "peace"
campaign, other propaganda stressed conciliatory lines to
the effect that war was not inevitable and that "coexistence"
was a possibility,
The Soviet people, themselves, were treated to such
reassuring items as a New York Gallup poll which purportedly
showed that the majority of the imerican people support the
resolution of differences between the US and the USSR.
Most interesting, however, was the Kremlin's
failure to exploit the strafing of a Siberian airfield by
US planes, even after the US had conceded its responsibility
for the incident. This was in line with the treatment of the
shooting down of a Soviet plane over Korean waters, In both
cases, Soviet propaganda, although having excellent opportuni-
ties to arouse the people of the USSR to a fever pitch over
specific incident, avoided any alarmist lines. (SECRET)
SPECIAL ARTICLE
New Soviet freight rates aid in increasing,
railgtransport.tion efficiency
The new Soviet system of freight rates, effective
January 1949 and modified in 1950, is increasing the ef-
ficiency of rail transportation largely through the reduc-
tion of uneconomic long hauls. Items of military importance,
however, will continue to receive favorable rates on long
hauls.
In a speech in June 1950 before the Supreme Soviet,
Minister of Railroad Transportation Reshchev, stated that the
new railroad rates had exerted a considerable economic effect
on enterprises which used transportation inefficiently. The
exaction of higher surtax rates for hauls from long distances
when goods are available closer by, illustrates what is meant
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by the USSR in the statement that Soviet freight rates are
based on "the value of transport." The "social value" of
transport in the USSR, (according to Soviet freight rate
practice and theory,) forces certain types of freight move-
ments into specified channels and eliminates other freight
at the source. The new rail rates also hamper short hauls
and force a shift to motor transport. Coal and ore are an
exception and short rail hauls of these two commodities are
not discouraged because of the advantages of mine-to-mill
movement in rail hopper or gondola cars.
Soviet rail freight rates are apparently designed
to penalize the dependence of heavy industry in several of
the newer centers on "irrational long hauls" in order to de-
velop, local self-sufficiency. In the case of oil, however,
the rate does not increase per ton-kilometer above 1100
kilometers, probably because of the strategic need for POL
movement to the Far East. Soviet economists make much of
the fact that US rail rates are based on the exploitation of
the monetary value of the commodity, whereas in the USSR
rolled steel and rails, for example, move at the same freight
rate as pig iron and the freight rates do not increase per
ton-kilometer after 1500 kilometers, Thus, strategic move-
ments of steel and petroleum to the Soviet frontiers are
outstanding permissible exceptions to the higher freight
rates or fines for "irrational long hauls."
Railroad freight rates in the USSR were temporarily
modified in the spring of 1950 with an increase in some rail
freight rates and a decrease of inland waterway charges, to
encourage water movement when the rivers are free of ice.
The pressure to induce river traffic by cheap rates has led
to complaints from the Ministry of the River Fleet. It is
argued that the low rates are not properly compensatory and
that the increased volume of traffic cannot always be handled
economically. There have also been serious complaints in the
technical press that bulk river shipments of,oil and timber
should not be considered cheap freight.
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The policy of price reductions, which characterizes
current Soviet economic policy, has also been applied to
truck freight rates.. However, the continued failure to build
enough roads, the maintenance of freight rate differentials
which favor cartage and short truck hauls, and the seasonal
increases in truck rates in the spring and fall when the
roads are very bad, discourages the development of motor
transportation of the US type.
Soviet transportation is, of course, designed to
serve Soviet industry and trade, but is directed and con-
trolled by Moscow in accordance with economic plans. Soviet
freight rates, cherefbre, vary irivezrsely with the value of
the transport to the States, and only secondarily take ac-
count of the costs of the service. The USSR is only par-
tially concerned with the value of the commodity to the
private consumer. Competition between rail lines or be-
tween rail and other transport media is generally discouraged.
Transportation in the USSR is made to serve as an instrument
to control industrial. growth according to the pattern set by
the State, (3ECRFT )
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