SUMMARIES OF TRENDS AND DEVELOPMENTS
Document Type:
Collection:
Document Number (FOIA) /ESDN (CREST):
CIA-RDP79-01090A000300040001-4
Release Decision:
RIPPUB
Original Classification:
S
Document Page Count:
15
Document Creation Date:
November 9, 2016
Document Release Date:
August 18, 1998
Sequence Number:
1
Case Number:
Publication Date:
November 7, 1950
Content Type:
SUMMARY
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7 November 1950
SUMMARIES OF TRENDS AND DEVELOPMENTS
USSR
1. The USSR is e loitinE the resorted Chinese Commu-
nist invasion ofTibet.in order to demonstrate support of
Peiping in this action and to impress upon India and other
Tibetan border areas the inevitable success of Communism in
Asia. Reported plans to coordinate a revolt in Nepal with
Chinese Communist invasion of Tibet may indicate further Soviet
aggression in this part of 'Asia.
(Page 4 )
2. The Soviet_nro,osal for aForeign Ministers' Con-
ference to aisscuss the Prague declaration as a basis for the
settlemeit, cf the Germanrcblerrl is apparently only another
step in the USSR's diplomatic and propaganda effort to Ob-
struct a West German military contribution to Western de-
fense. The USSR apparently hopes that its proposal for a
CFM on. Germany, as well as its recent note to the Western
P: wets on German rearmament and the Prague Conmiwiique, will
arouse hope in West Germany of obtaining unity by peaceful
means, and will strengthen French and Western fears of pro-
voking Soviet military action by Western German rearmament.
(Page 5 )
3. There is no firm indication as to Soviet intentions
regarding the current attempt of the Austrian Government to
ur e Soviet Zone and Sector police of disloyal officials.
Statements and actions of local Soviet Commanders indicate
intransigence; the Soviet High Commissioner has, however,
made unofficial statements which may indicate a desire to
find a way out of the present difficulty without too great
a loss of prestige to the USSR.
(Page 5 )
< No CHANGE IN CLASS.
E} DECLAftFIEb
*W*R" CLASS. CH A1ut2ar% ,?.,_
"Cow' NE{"Wy DATE
AUTtt. HR xo
Z ~ --. REVIEWER. 6514
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COENI1A
4, The UK still ranks as the soviet Orbit's most im-
port ant tradin n~x~tner in the West* Moreover, the USSR is
absorbing an increasing share of this trade.
(Page 6 )
5. The pros nt_ly_ st iffed ne otiatios between the UK
and the US 3R for the Durchase of ooarse rains portends pos-
sible failure in the forthcoming East--West grain trade con-
ference at Geneva.
(Page 9 )
EASTERN EUROPE
POLAND ..._...__.......~_
6, Inter tion of the Polish economy with that of the
UaaR will be facilitated bar" the revaluation of the Polish
zloty on 2 October 1 50 whiche out a considerable or-
tion of uublic._jZ r. char j.L&_,power,
(Page 10)
7. Yu osl~evia,I sinability__to maintain an independent
economy, which has been accentuated. by the drought induced
crisis, has led to a more conciliatory attitude toward its
neighbors to the West.
(Page 11)
INTERNATIONAL COMMUNISM
AND PROP1AGANDA. ANALYSIS
g. Reliable r~orts deny, that the illnesses of
Togliatti and Thorez,_l rtaders respectively~_of e the Italian
and French Commun st 1'arteo were timed or "manufactu ed"
for ulterior Soviet motives, While Thorez's absence prob-
ably will not involve any fundamental change in the French
CORFINNTI&
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CP policies, Moscow may make use of Togliatti's incapacita-
tion to effect certain changes in the leadership of the
Italian CP.
(Page 12 )
SPECIAL ARTICLE
9, Two iiclortant _Sovi _personnel shifts announced
28 October provide a basis for certain reflections on the
state of both agricultural cultural procurement and security inside
the USSR,
(Page 13 )
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Cog I~.NTIAL
U S S R
Soviet Union ex_loi.ts reported
Chinese Communist invvaasion of Tibet
The alacrity with which the USSR and its Satellites
highlighted Peiping-s announcement of the unconfirmed Chinese
Communist invasion of Tibet suggests that Moscow finds this
development highly useful as a means. to: (1) support Commu-
nist China's tactics against Tibet; and (2) demonstrate to
India and other Tibetan border countries the inevitable
success of the Communist drive in Asia. Additionally, the
USSR probably hopes to focus interest on Tibet in order to
assuage Chinese Communist frustration caused by the blocking
of the Taiwan invasion and to distract attention from the
Soviet setback in Korea.
The USSR and Communist China have undoubtedly
taken into account the adverse effect of such action on
India and are, therefore, prepared to accept the Government
of India`s expressions of "shock" and "concern." However,
the fact that the USSR is still prepared to accept a calcu-
lated risk likely to alienate Indian friendship, may re-
flect Moscow's estimate of Indian incapability for strong
resistance as well as the importance to the USSR of ex-
tending Communist influence to the Indian border.
Another indication of willingness of the Soviet
bloc to employ aggressive tactics in this area of the Far
East is revealed by the report of 30 September 1950, which
indicates that the Nepal Congress apparently is not only
buying arms and recruiting guerrillas in India, but also has
finalized plans for a revolt to coincide with the Chinese
Communist invasion of Tibet, (,>ECRET)
CO~~ENTIAL.
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r,_ Ka' able si nificance of 'Soviet proposal
for o *n Hinisters I Conference on German
The USSR has made a proposal to the Western Powers
to hold a Foreign i'iinisters' Conference to discuss the Prague
Declaration as a basis for settl=ement of the German problem.
The Soviet Union is undoubtedly aware that the Prague declara-
tion, which makes no provision for free elections in all Germany
and demands a Constitutional 1assembly with parity representa-
tion of East and West Germany, is not acceptable to the Western
Powers, Thus the proposal is apparently only another step in
the Soviet Union's diplomatic and propaganda effort to obstruct
a West German military contribution to Western defense and
was well-timed to coincide with 7 November anniversary and
the Second World Peace Congress.
In its effort to obstruct or at least delay West
German rearmament, the USSI'. is apparently attempting to ex-
ploit the opposition in France and West Germany. The cur-
rent proposal, as well as the recent note to the Western
Powers on German rearmament and the declaration of the Prague
Conference, give a surface indication of Soviet "willingness"
to settle the German problem and, at the same time, serve
as a warning to the West regarding West German rearmament.
The USSR apparently believes that such tactics will arouse
hope in West Germany of obtaining unity by peaceful means,
and will strengthen French and West German fear of provoking
Soviet military action by West German rearmament, (SECRET)
Soviet interference in Austrian Government's '"A"
,Zur sc fiction over__policee force
The _ustrian Government is currently attempting to
rid the Soviet Zone and Sector police of those officials who
proved disloyal in the recent distrubances. Soviet authorities
(local commanders) have stated that the ustrian Government
will not be permitted to dismiss, transfer, or take any
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disciplinary action against these officials. Furthermore,
the five Coraaunist Police Chiefs of the Soviet Sector in
Vienna are continuing, by Soviet order, to exercise their
official functions despite an i:.ustrian order suspending them
from office.
The -ustrian Government, realizing that any con-
cession to the USJR on police jurisdiction would invite
further Soviet encroachment on Austrian political autonomy,
is proceeding with the judicial investigation of the five
police chiefs and apparently intends to carry out the ver-
dict of the disciplinary court.. Minister of Interior Helmer
has intimated that the decision of the court will be dis--
missal for three of them and lesser penalities for the other
two.
There is not, at present, any firm indication as
to whether the UJSR will remain intransigent or will be will-
ing to compromise on this issue. The statements and actions
of local Soviet commanders would appear to indicate in-
transigence. On the other hand, Sovi::A authorities have
made such statements in the past and retreated from them
upon encountering vigorous reaction on the part of the
Austrian Government, Furthermore, in the recent meeting
(requested by the Soviet authorities) of Soviet High Com-
missioner Sviridov, Chancellor F'igl and Minister Helmer,
Sviiridov asked if the investigation of the five Communist
Police Chiefs could not be c.ncelled, or at least terminated
with reprimands rather than removal from office. This may
indicate a Soviet desire to find a way out of the difficulty
without too great a loss of nr: sti?e. (SECRET)
USSR and Soviet Orbit continue
to o exploit UK trade
The UK still ranks as the Soviet Orbit's most im-
portant trading partner in the West. Moreover, the USSR is
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absorbing an increasing share of this trade. The following
table, based on British statistics, reveals that Eastern
Europe imports from-the UK declined during the first seven
months of 1950, as compared with the same period of 1949,
but that Soviat exports rose sharply and that those of
Poland and Czechoslovakia also increased substantially,
ES TRADE WITH THE UK
January-July,_ .1~ . January=Jul, r O
Ell Im o~ rts* L ~orts E,E Irnnorts=* EE Exhorts
(in 1000 pounds sterling)
USSR
7,027
3,584
6,923
17,058
Poland
6,402
6,822
4,288
11,796
Hungary
2,451
5,606
1,283
362
Czechoslo-
3,700
1,124
3,110
4,727
vakira
Bulgaria
485
1446
323
39
Rumania
1x2
LK
L10
E
154
.
-
Totals
21,316
18,779
17,031
34,536
`Including UK reexports,
Note: Figures are presented in pounds sterling rather than
US dollars, in view of the devaluation of the pound
in September 1949 from 8'4.03 to .2.80. Conversion to
dollars does not, therefore, present a completely
accurate picture. On the other hand, devaluation
was followed by an increase in prices in some cases.
The sharp rise in Soviet exports was due to in-
creased shipments of grain and timber, which are imports of
fundamental importance to the UK economy, The value of grain
exports exceeded L13 million during the first eight months of
1950. :Exports of timber rose to more than L2 million as com-
pared with L381,086 during the corresponding period of 1949.
In view of current timber contracts and pending negotiations
on grain, it seems likely that the increase for the entire
year of 1950 will be still greater as compared with 1949.
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SECRET
In addition to serving as an important buyer of
Soviet grain and lumber, the UK also. provides valuable im-
ports for Eastern Europe. Despite the decline in total
Eastern European imports, purchases of machinery of all
types rose from r8 million in the first eight months of
1949 to tll million in the same period of 1950, with the
Soviet, share rising from I;5 million to L-7 million. Pur-
chases of machine tools rose slightly, to hl.2 million, but
the Soviet share jumped from 1111,775 to L-509;493. These
are mostly goods which were ordered from British manufac-
turers one to three years ago. Similarly, Soviet purchases
of rubber directly from the UK rose from 152,124 to L322,5l9
although those of the Satellites decreased.
This export balance of trade in favor of Eastern
Europe continues to provide an important source of sterling
with which to purchase strategic raw materials elsewhere in
the sterling area. In contrast to a small unfavorable
balance for the first seven months of 1949, British figures
show that Eastern Europe enjoyed an export balance of b17.5
millions in the same period of 1950, of which more than L-10
25X6Alions went to the USSR.
SECRET
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East-West ,grain trade talks
nat.expected to succeed
The presently stymied negotiations between the U.K.
and the Soviet Union for purchase of coarse grains portend
possible failure in the forthcoming East-West grain trade
conference at Geneva. The Geneva grain conference, sponsored
by ECE, will be held 14 November when discussions will be
held on the multilateral exchange of cereals from the East
for Western goods or currencies.. The unilateral talks now
taking place in Moscow between the U.K. and the Soviet Union
have been deadlocked by price disagreement and Soviet in-
sistence that sterling proceeds be usable for purchase of
certain sterling area commodities.
If the present Moscow negotiations with the U.K.
indicate the kind of concessions the Soviet Union will de-
mand at Geneva, only negative results can be expected,.
Western European countries may be looking forward to a price
concession by the East, similar to the relatively low prices
agreed to in the International Wheat 'groement by wheat
trading nations outside the Orbit. Furthermore, conflict
may arise over whether or not Western goods will be guaranteed
in return for the grain. Originally, the ECE indicated that
the Soviet Union would accept Western currency without asking
for specific commodities. The Soviets are now demanding in
the unilateral talks with the British that proceeds from
grain sales be used for purchase of rubber, wool and other
strategic corn oditieso If, on the other hand, the talks
are successful and these demands are carried over to the
Geneva Conference they may result in an embarrassing situa-
tion because of the policy of the West in retarding the
flow of strategic materials to the Orbit countries. (SECRET)
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SECRET
EASTERN EUROPE
POLAND
Poland eguatos the zloty to the ruble
Integration of the Polish economy with that of the
USSR will be facilitated by the revaluation of the Polish
zloty on 26 October 1950, which wiped out a considerable
portion of public purchasing power. The immediate effect on
relations with the West will be a minimum threefold increase
in the cost of diplomatic and commercial representation in
Warsaw.
The initial internal effect will be to reduce the
purchasing power of currency in circulation. Wages, prices,
forward contracts, deposits in financial institutions, and
government bonds and funds will be converted at the rate of
three gold zloties for one hundred paper zloties. Cash in
the hands of the public will be converted at a rate of one
for one hundred. The new zloty is equated to the ruble,
having a content of 0.222168 grams pure gold (US-$0,25).
No limit is imposed on tha amount of cash which may be con-
verted at the 1/100 rate, but, unlike the Soviet monetary
reform of 1947, no preferential rate for holders of small
balances was allowed.
It appears that more damage will be done to the
"working classes" than to the remaining capitalistic segment
of the Polish economy, because of the relative purchasing
power of bank deposits will be unchanged by the deflation.
Because checking accounts are not extensively used by the
working population of Eastern Europe, the urban worker per-
sonally retains his savings in cash. Savings and working
capital of the small remaining segment of the capitalistic
Polish economy will. retain undiminished purchasing power to
the extent that these funds were held in banks. Cash in
tills, as well as that in pockets, will lose two-thirds of
its value.
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The official declaration does not make the new zloty
a gold standard currency, nor will it produce a stable price
level. Neither will a Governmental statement as to the gold
content of a currency necessarily increase domestic savings
nor produce international., confidence in the zloty. Trade
with the West is, and will continue to be, conducted in terms
of Western currencies and on a world price basis.
The effect of the deflation of relations with
Moscow.will probably not have more than minor reactions on
daily Polish economic activity. Adjustments in norms, prices,
and plans may be expected in Poland, but major adjustments
seem to have. been already consummated. The net immediate ef-
fect of the revaluation will be reduction of the',Polish stan-
dard of living ^nd the faciliation of.Soviet control of Polish
affairs for Soviet benefit, In addition, if Poland is over con-
verted into a Soviet Socialistic Republic, the most essential
single step remaining in its economic preparation has now
been accomplished, (CON.FIDENT IAL)
Drou ht crisis in rin ,bout j oslav, conomic "A"
rra rro 2Lrg(;nt with its non-Communist neighbors
Inability to maintain an independent economy, which
has been accentuated by the dlroutht-induced crisis, has led
to a more conciliatory Yugoslav attitude toward its neighbor
to the West. This is :evidenced by the improvement in Yugoslav-
Italian economic relations. Recent Yugoslav restrictions on
relations between the Yugoslav and Allied Zones of Trieste
have been relaxed, Yugoslav cooperation in determinin valuations
of former Italian properties will probably lead to a settlement
of Italian reparations to Yugoslavia under the 1947 Peace Treaty.
The urgent need for food imports to the drought stricken areas
of Macedonia and Southern Serbia may cause Tito to become some-
what more conciliatory toward Greece, in order to facilitate
the reopening of communications through aalonika.. Other actions
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designed to overcome long outstanding problems are the re-
turn of German P1,Ws and the apparent soft-pedaling by the
Belgrade Government of its claims to Austrian Carinthia.
(aECJ;.]T)
INTERNATIONAL COMMUNISM
r,SNDPR~O 'i G MDA l TtJ: hIS
Togliatti f s i lln s is real ?ay eyentual1-result "B"
in_,stren,teni~activist Reliable reports. deny that the illnesses of Togliatti
and Thoroz, leaders respectively of the Italian and French
Communist Parties, were timed or "manufactured" for ulterior
Soviet motives, While Thorez's absence probable will not in-
volve any fundamental change in French CP policies, Moscow
may make use of Togliatti's incapacitation to effect certain
changes in the leadership of the Italian CP.
Paliniro Togliatti, at 57, has been the effective
leader of the Italian CP since 1926, despite frequent rumors
that he was losing power to one of his subordinates or fall-
ing into disfavor with Moscow. His incapacitation again
raises the question of the future leadership of the Party.
During his illness, Party matters will probably be directed
by a Triuziivirate,, which includes Longo, para-military
chieftain of the Party, Secchia, the org??nizational expert
and one other prominent member of the Party. Should
Togliatti recover from the serious brain operation he has
undergone, Moscow may delegate him to the position of
"elder statesman" of Italian, if not of :European, Communism.
He enjoys the admiration and respect of the rank rind file of
Communists throughout Western Europe and his permanent removal
from the Italian CP leadership would result in a distinct set-
back to the mass party in Italy,
By keeping Togliatti in the position of the "grand
old man" of Italian Communism and giving the active leadership
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to the Longo-Secchia group, the Party would seek to: (1) re-
tain a symbolic leader important for mass allegiance, and (2)
facilitate the achievement of organizational changes which
are badly needed. Should such a leadership remain in con-
trol, greater emphasis may ;radually be placed on the
strengthening of cadre organization underground preparations.,
and direct action tactics. (SECRET)
SPECIAE Id TICLP,
,1 ortant tersonnel shifts within USSR
Two important Soviet personnel shifts, announced
in the ;.soviet press on 28 October, provide a basis for cer-
tain reflections on the state of both agricultural procure-
ment and security inside the USSR. P- K. Ponomarenko, since
194 a member of the all-important five man Secretariat of
the Party Central Committee, replaced B. A. Dvinsky as
Minister of Agricultural Procurement, a position held by
the latter for more than six yea.-^s. Simultaneously,
announcement was made that L. Z. Llekhlis, owing to "ill
health", had been supplanted as Minister of State.Control by
V. N. Merkulov, 1'finister of the NOB until 1946, and more re-
cently in charge of the Administration for Soviet Property
:";broad,
Is a high Party official, Ponomarenkors appoint-
ment to a specific ministerial post appears particularly
important. The relationship between Party.and Government
in the USSR is based on the idea that the Party, naturally
has collected at the top of its hierarchy the ablest per-
sonnel available and, therefore, is most capable of determin-
ing policy and checking on 1_ts correct execution. Theoreti-
cally, the Party guides rather than interferes in adminis-
trative detail. This ideal is openly contradicted, only in
such times of stress as the last war when most Politburo
members headed specific Ministries. Ponomarenkots appoint-
ment would appear, therefore, as an administrative job to
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troubleshoot what must be very important shortcomings in the
Ministry of Procurement.
This .in.istry is a vital clearing house, collecting
from the Ministry of Agriculture and supplying the 'Ministry
of State Reserves. Both of these actions proceed according
to planned production and planned needs. Since available
evidence indicates that grain procurements for 1950 are
above those of ..1949 and evidently satisfy the requirements,
apparently the trouble does not lie with agricultural pro-
duction per se.
The two most logical alternatives which might ac-
count for this suddenly increased emphasis on Procurement
are: (1) Because of the close liaison required between the
Ministry of Agriculture and the Ministry of Procurement on
the one hand and the Ministry of State Reserves and Ministry
of Procurement on the other hand, the Kremlin may have de-
cided that in order to attain better coordination of pro-
duction, procurement, arid reserves, a top Party man was
needed as, at least a temporary administrator, to strengthen
the procurement program. (2) There is some reason to be-
lieve that the Gov; rnment he.s embarked on a plan to increase
state reserves rapidly. This may well have caused local food
shortages by way of heavier procurements. Since the officials
of the Ministry of Procurement have control over local food
supplies they have undoubtedly been exposed to graft as a
result of these shortages, The appointment of Ponomarenko
might foreshadow a general "tightening up" of the procurement
system, further increases in procurements in 1950-1951, and
even a purge in those regional offices where procurements have
proved unsatisfactory.
In considering this second alternative, it is in-
teresting to note that one of the duties of the Minister of
State Control is the checking on the fulfillment of planned
procurements. ivierkulov, with his experience in secret police
techniques and his obvious connections with the MGB, is.well
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suited to liquidate any i1 egYal practices which might be
interfering with planned procurement. He should also prove
adept at-extorting newer and inordinately heavy procure-
ments.
Merkulovis appointment will have the effect of
more closely linking State Control with the MVD and MGB.
Even in the Administration for Soviet Property Abroad, it
is probable that Merkulov was still primarily engaged in
MOB work Indeed, the background of other personnel in his
Administration, such as V. G. Dekanozov former Deputy Min-
ister of Military Intelligence, hardly emphasized the sup-
posedly economic interest of this organization.
The removal of L. Z. Mekhlis as Minister of State
Control may well have occurred at an earlier date. He was
last:, publicly identified in this position on the occasion of
Dimitrov's funeral, 4 July 1949, and was one of three sup-
posed members of the Party's important Orgburo who were not
given the honorary appointment to the Commission which pre-
pared Stalin's 70th birthday celebration in December of the
same year. Whether his release was in fact because of ill
health or because he is now in political decline is not yet
apparent,,. (CONF_LDt1PJ'1'1r:L~
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CUNFIDENTIAl,
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