WESTERN EUROPE BRANCH OFFICE OF REPORTS AND ESTIMATES WORKING PAPER BRANCH WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400010006-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 6
• Publication Date: July 19, 1949
• Content Type: PAPER

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C}~: This document is a ~rorking, paPsr~
an o~~ic~.al. CIA issua~-cea It h~.s been.
c~o~-ordinated w1:th~.n C~RE~ btxt not with the
IP~C Agenc~.es 4 ~t x~epres~nts ouxrent
thinking bg specf.alists in CIAO and is
designed ~"or rase ~g ath~srs ongaged in
ei~il+ar or overlapping studiese TIC
opiixi.ons expressed her~ain mag be revised
before ~ina~> anal official publ3,cationa It
is inte~ide~d sa~el.y ~'ar the inPox~nation o~
the addsgessee snd not fox? ,~'ux?ther ~.~.sse~.~
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CLASS. ~''.~,,,... ,.. 1 ~. .
D~%Lf.S'ci.~~ ~_. ~
RUTH: ~~0~~ ~Z R[ViEWE~: 372044
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~i~~~~~ ~vno~~ B~rrcx
~~~~~~ su~;~,~r~
VOL o V- ~t a a l for ~v?~k ending
19 ~'ialy 1949
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Should an ~.ustriar. treat be concluded tcta
uestions w ecr~me ~aramo~ant ixi us r ao Those tv 11
Q: Aus rims a y to increase its exports in
odor ~o p~.~ ~';"I5a riillion to th? USSR tivithin 6 years;
and (~) the aap?3.bilities af? Austria+s future Barmy to
control intdrna7, securitya The US will probsbly be
called upon to ease the financial burdens inherent 1.iz
-''both problems o
Payment of the lump-stun, probably the rlost
~i,~'~icult problem Austria will face, yvill require more
~caordin~ted and astute planning; than Austrians have
-evidenced in their post-war historyo Unles;~ clearly
.and pronptly discotars.~ed, Chair reliance on ?"T;~ assis~
ts~nce scald. easily extend to a corlplete covara~;e of
this sumo otherwise, the Austrians gust base their
e~onpMic planning; ~w at least far two z~aro years --~
.tpon la~A assistance, and calculate an increased economic
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potential only upon ti~ae sustained recovery aGeruin~ #"r~~m
the ACA pro~;rr~m Vinci fxjor~ the economic irspx*overaents re~
~uL~ii~~; from r~. terrair~mtion of the oc~uprition and other
'~err~s oi' the tre~zty~ Xn such planning, ~lll Austrian
#~~encies and ~nrsennc~, con~err_eci (regardless of politicai.
~saneu~t~ra ~ ~'rt~uld have to coardinate tha3x? efforts, t;~ ad~
Vic~r~ amareover$ r"ii~ht prove of invaluab3.o help to the
t'rer~uently unc~ertrained lustrian econe~mists and a ben4fi--
~~.al restr~~nt to bitiau^ politic:3.ans~
she c,~pabi.litior~ of the frxturc~ axmy will rest
~Qt only upon its organization and training;, but also
upon its ec~uipmc~nt q L3rfitod by the tremty in its ovm.
rruf~c~:ure of arras, Austria zvi11 have little funds
~v~ilablc for international purchases.. The lack of e~,uip~-
~ant~ which can. only be remadi?d by outsida_assstnnce, may
be a r,1o1"c svr; r~us threat to Austrian sec~.uyity th?~.n tho pram
?nt 3nabi~,Sty of the coalition p?~rties to reach an aGeord
ors principles and details of the future array ar~arzizatic~no
The Gavernr~ent e s indifferent Qro~re_ss tav~ard
reali~Sn~; ~ a , ac~:.vc~s"o tie ~r~ro ~f~ ~.,:~+:.,,~~
ana aconQxa~.;; .union negotiated ixa 19 g& is no~5R4'B~iy t
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as both steps must be taken and the Gaverru~ent pro
oses
p
~t this stake to talfe the next several months to c~Qi~;h
ei~ x*e~.?~t3ve merits, it appears t~7?~t the C=overnz~ent
~s .stir. diviarrd oxi basic policy tocAr:3rd fx?eadot~ of
'gads, .despite t~~e influence of mconoari~.s liberals such
&s Far?~i~n R~gin.ister Sch?zrianv
3Jissensian within Ise t3au11e e s Rally ref tho
b'~-ench I'saple (P~'F~ may be expected to increase as ~iis
pi~~~.ls.r ~a~p~al doclinr~s o `t*his decline has already caused
t~xe RPM' .tea r ev~.se sorae~vhat its previous role of a Grusade
'~~ "rslly~' a dividod peoples and it notiv tends to assLtr~s
S~stea.d tlxo c~iax~ac~eris tics cif a political party, iricl~.xdi~
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~quetel~e~ ~3~:uzn?3~ T,Zalrau~c~ and Pale~sk~,~ i~ st~.ll
~rec~apture the .grrt;a.ly~r aspect of .the movement by b~oad-
~nin~; ~~.rliamentar~.an rapresen~at3 on in. tea tvp ochelon
of the ~tP~~, the riovsx~ant re~antly raplacsad its old
F~aeuti~re Camm~.ttee by a new ri~.re.ct~.r.~ 0ourxcild T~.
:th~.~ _caux~c~~.,. havraver, the RFF 'gold ward?t (sue~h as
that of ix~~ra~?pax=ty squabbl3.r~.~,. In ?rder to ~.raprove _ .
thQ frequently bad ralat~.ons betwaen t'he RPP$s head.
~ua~ue~s and ite .par~.iamentary e~pportars anal also to
r~xi. 7 J~ly~ Tn vi~~v o~ thQ ax~'~agonism '~atwaen RPF air
~asren~s $~a Parl~.amant and a,~ .c~aLZ],le s s anteuraRa, :~.arther
-~r~sigrzatio~s ~~ frs~.loave Jacques Soustella,. ~?:ha
5ecr`e~a,r~~>G?neral . of the~Ra~.ly~ has rept~r. ted1;~ conf errr~d
w3,tk~, R~~' par"l~ame~.tar~a~z~ in an attempt tv h?a~. the breach 4
such ~~a ~atx~ct~sn+~ a~~ea:rs ur~l3~el j ; hawaver; . part~.cu~.arly
$~.YIC~ :de ,C~aul~.e hira~~~.~ atrgsaad fvd3.sGipl3.ne?4 W~,th~.n the
app ;~ a ~re.cent. speecho
Despf,tia th3.s top level raox+~anizat on,, open
~.onf~,~,Qt Its ar3.sa
~t~f~` and. t~~e , ~iPP n betv~oen de ~ Gaulle t s .~~a~.quartsra
i. 'par~.iamantar3.ar~~;. ~'oZlocvin~ the
t~1.se~p~:S.na~?y ~xpu~.s3on o~ dour mambers of Parlisanent
~c?om tkaa .~P1'~ Rad~.cal-Socialist Paul Giacobb~.,, presideniG
o~ the . I~~'T ~.z~ter~group ~n the Assombly and member o~ the
~a~.ly4s Diarect~.ng, Co~xnciT~ x?~as~.~rzad bath posts in parotost
d~.ant
. ~'~.ee~ day?lopments indicate a pro'ba'c1e decline
A~eet~bly ~. a poss~.bl,e s3mi3,ar trend in the, Covxac5.1 taf
.' pc~3.it~oa~1 sign~.~'~.caxaca o~ -the PPS' 3.nter~-group 3n: tho
t~c~ I~ep~.bl~.c
~~'~ ~e~ ,~e~~ the great ma~or~.ty of P~en.~i~.eh, vQho ~
~~~,t~.exa~~.~.g ~~.phald strict anfQ~~eemen,t o~ m3.13.t~:~y
. lla~a~. `s.uppa~~es:~ion~ ~,~ Commun3.st act~~v~.ic3.es~ sx~d (~~ it ~,~
t'~~~p~~;e,~ tk~at ~;h~s pr~ps,ganda will' p.o~ under eras?nt cir_cum~
the I~.~cs-Ch~.x~ese tvar~ ' ~?~ist periad~,cal~, ~'Qr e~?zr~ple~
ale .nab .i~c~~.x~e~tly 3.nc~.t~,~ the armed farces to disoi~edLisnce
by pr~.~.tin~ e~o,erpts From Party leaders t speeahea ~.ianed more
d.ir~aa'~~.y at thy.s ob j act~.va in. thy, past
Tai Goverza~a~nt~s reasons for not rno;rir~~; .?~t once..
t4 s^appre~~ guoh p1''opa anc~r~ ~rob~.tO~,~r are: (l ~ it is xio~
~t'~.~.'~~ss~ :~~e, o1xteoma of a ~.e~;a'! ~?st. ease a~;s.inst s. Co~nmwr~ist
youth period~.ea~. e~~,r ed y~:~.th 3nc:~~ing troops to diso~iediance
`~z~ the ~.~4~' strikes; ~2) it s up to aiow Garas~.sten~G~.y ?~void?d
~ivin~; the CP an;~ defar,sible gx*otinds .nor comp~.ainirl r o:#
t~~ ~ovax~nr~e~t ~.n ~.~s su
pport csf ~chs A,,tlant~.u Pact aria ~~
thou~Ii ,ths . obviouB ~.tr_z cif sueYi props.gazida 3.s to ?mbarxe.ss
a.s being ~.xitanFa.fi~d-~. -the ~Ge~~raz~rarnent
.~.~ probab~.y de~.?~y supprgss3.ve countermeasures ~ e~re~n
~.i~ap~.ine.Q
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k3 A sc~co~.d failures of th? Cathol3._r_ ~'art;Y to
fot~xn a C~.bixxe pi.~r;;ed pri~~ar ~-~W~z~-_a so_.,? ion 'to
`the royal problem, avain demonstrates tkxat the Catholic
Party dust modifg its de~snds in order to obtain support
of wither tkie Socialists ~.~r Liberals, or both in
astablfshin~; a ne~v Goverre~.ant. A proposal put forward
by van Cauivelaart, Catholic leader, c?~llin~ fora referen-
dum to deterxn'ne the popu3.ar. support f'or Yin; Leopold~s
return, was ra~,~ected by both i~he Socialist and Liberal
Parties? The Socialists stated adamantly that a ttvo-thirds
r.;j~rity mould be necessarg r-xnd that failure to obtain
sufficient sl.zppc~rt must riean Yin Leopold~s ~.bd~.cration.
The Liberal Partly dec3,arQ~3 that :ooperation with the
Catholic Party tivuuld be possible only if the Weer ~;overnr::ent
subordinated a solution o:~~? the rural probloxn to the solu-
tion of more urgent and important econox:~ic problex~s ? There
is v?ry slight possibilit~r tha.~~ the Catholic I''s.rt;~ ~rlay
attempt to ~;over?~. atones ~rtth the s~alaport of. a faun Liberal
votes in Parl~.ar.~ent, in ti~s~ich case the Government probably
vt~ould bg short-lived a 1~Zo~~e lil~aly, hoi~ever, f.s anather
Cath?lic-~SocS.al3st coalit:'~ord, e:~ther with Soc~zalist terms
government a popsxlar conv~~lta t~.on on. Leopold r s return or
Frith a temporary tivithdraZR~r~l of ?she royal prob:~erz ix~.to the
background>
rr~T~~ ~L~rrl~s
A Continuation of the Governmentfs canciliator~
ta,r~ ?~p~orova ast , tivee off' t e a.~rearnents reae~h~d with the
Republicans on (~.) restoxation of the F~epublican Government,
(2) provisions for restor:~.ng 1?~w and order, and (3 )
agenda for a roundtable c4~nference at the IIa~.te a Severe
Briticism of Govc~rnmont policy from conservative parlia-
xnentary rnernbers and Gathcs:~.ic leaders, since tiie return of
Republican officials to Jo~;~al~~.x~ta on 6 July, had caused
some concern ar:xoxs~~ Dutch officials that the Governmc~rat
.could not sts.y in power t~~.tkl.out modifying its autitude
totaard tlza ~lepub3.ic> Parliamentary support ~~~as received
at a secret session of tho Second Chamber, anal althouf;h a
public, debate will be held aft~;r the Republican Gove3rnment
ratifies the agreQments, :~_t is xzotiv e~pect~;d to ,rive rise to
-na serious difficulty for the ~Jatherlands Goverx~xnent. .~
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the Dutcrs representatives ~aegin the more a~t~snsive
negotiations vdith the indonesiars.s on the United States
.~~ ~ndones,~.a rznd t17e I'detharlands~-Indonesian '~'nion~
however., further criticisrl of any DutcPi cc:ncessiorxs riay
ba exPectac3 anal msy be strong; Qnou~;h to restrict sorae-
tvhat the lati tYxc~e of the t~overnrient in the negotiations
The Vaj-,ican decreQ of ~.3 3u1~ excoarumanicating
~athol~.cs ~v o e end or spree C~i~rnin.~.sm will have a
.significant impact upon political aliE~.ents :fin Italy
and will tend, to accentuate sharply the clerical and
anti-clerical lie?s of political division
Italian Golrrmzn.ist Party r~.etx~bars~xips now
estirxated at ~.m8 to 2 r~illiona ~v3.11 be substantially
reduced ~ Lee.dership of the party t?~ill not be affected,
xo~-ever, a3~d the pr~.rty mill be tr3.r~-~ed to its more
xLardened anr.! d3.sciplin$d elera?nts o The voting strength.
~f .the Goru~anists ~v3,~?~. be weaken?d to an even greater
extent than 2ts membersh~.pQ This loss vaill be reflect;sd
~.n t3ie regional electionsp which are scheduled fortha
Fall, anc~ will be greater still if the regic~r~al
elections are postponed until the springy; of 1954, to coin--
cide ti~'ith the communal. c~lQetions, as is novr urged by
right~~vin~; Christian Democrats,
?,Rost of the members and votes lost by the
Corrmzunist. P~art~~ will be absorbed 'oy the Socialist groups
The statement of 1sCt-Socialist Chief ~lenni that the
Vatican decree does not affect h3,m or his Party me.y pre
~a~;e an effort to make the It?zliaxz Social~.st Party accegt~
'able to these who attempt to retain both their leftist
pol~.tieal, beliefs and their roli~;ious affiliations Because
of previous collaboration of tie left-t^~in#; oci$l~.sts with
the Communists, however, the condermation of fellotiv
travellers #.mplicit in the Vatican decree wi~.l tend to
neutrali~s any such Offorts?
Larger benefits will probs.bly accrue to~tomita~s
Y'Autonomous socialists", a non-Cor~unist offshoot of tYio
~eft~~?rin~; Soc~.alists, whose traditional Soci a~.ist prim
~ciples will pc~rrt~.t it to attract foz~or Gomr.7unist members
and voters ? I,7orsover, the anti-clerical position of the
~tAutonomists" racy serve a.s a safe rallying Point far anUi~-
;clerical reactf.orx to thou decree ~--- a Point vrhsz5a a
catholic Italian coup? roooncile a deeply reli{;iaus ctalture,
~.eft3.st political. learaint;s, and rosentnant against G~nxrch.
nterfsrence in his pol~.tical life
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The socialist Party of Italian ~?lorkers (PSLZ~
_ has bead clQarly anti-Gor~iznist since its inception
,
but. l~~~ausa its traditional socialisr;~ and anti-clerical--
isx~ ~i?~ve bean ;anakensd in the eyes of left-wind; voters
by its particips.tion in the Christian Dsrzoeratic Govern-
ment, it stands to gain little from political reali~nrrtents
growing out of the Vatican decrees
The Liberal Party, though traditionally con-
$ervative, is strongly anti-clerical and will tend to be
alienated f'Y-ora the pro-al?rical Christian Democrats by
what it gill consider further manifestation of C~~urch
rae3dling in secular affairs
The Christian Democratic Party ;rill tend to be
stamped more indelibly as a clerical party ~s political
alignments tend to congeal into four seganents -- ?xtreisist
Taft, extremist right, clorical (Christian DemocrEitic-
t'rovox~,ment Party}, and anti-clerical (Soci?ilist-4ppagition
~'arties } --- the pressures may be increased from both vr; th-
in and ~~ithout the Christian .Democratic Party to form a
single-party GovernmentQ
SPAI2T
- is .. .....-.-~ ..~. ! .. vs vaw
purch,ass of French indus'.rial equipment appear to be nearing
conclusions although thc~ French Finance T,~inistry raay veto
the loan on political groundse If the loan is made, it will
constitute, an important step in 5gain~s attempts to rehabil-
state its national economy, and will represent the largest
privets foreign loan negotiated since ~~orld t's'ar II
Announcement of the negotiations follov~ed soon of tsr the
conclusion cf a bilateral trade agreement betvresn the
Crovernments of Franca and Spain, amounting; to 23 billion
francs The trade agreement and the loan negotiations con-
n~itute notable exsmples of the w~.1lin~ess of the French
to do business with Spain on a considerable scale while
officially canderrming the Franco regime and opposin~~ the
r?turn of ambassadors to rtadrid0
B Tie?;otiations with French privat? banking; interests
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