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

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400020008-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 8
• Publication Date: November 22, 1949
• Content Type: PAPER

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WESTERN EUROPE DIVISION
ObIPICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGFITCY
VORKING PAPER
DIVISICRT
NOTICE: This document is a working paper,.
!an official CIA issuance. It has been
co-ordinated within ORE, but not with the
IAC Agencies. It represents current think-
ing by specialists in CIA, and is designed
for use by others -engaged in similar or
overlapping studios. The opinions expressed
herein may be revised before final and offi-
cial publication. It is intended solely for
the information of the addressee and not for
further dissemlnatione
DATE: 22 Novenber 1949
DOCUMENT NO.
NO HANGE IN CLASS. I-
DECLASSIFIED
SS. CHANGED TO: TS 3 C
NEXT REVIEW DATE:
AUTH: HR
DATE, /0*
REVIEWER: 372044
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IlESTERIT EUROPE DIVISION
WEEKLY SUVITIARY
VOL. V - No. 19 For week on ding
22 november 1949
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AUSTRIA
Austrian ChansellorMclfs ro osala for combatting
price increases and contr-aang cartels wi.1 not keep labor
from pressing for a widespread wage increase. In the paste
the Socialists have tried to prevent inflation by holding
down both prices and wages, but the growing wage-price dis-
parity occasioned by the current rise in the cost of living
has forced tho Socialist leadership to declare that it will
have to demand higher wages if the Governmnt does not
restore the wage-price relationship which existed after the
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May wage-prce af.reement. That agreement, although it
reduced real wages about 105, nevertheless aimed at
lon,;-term stabnization of the economy, so that when the
cost of living subsequently declined slightly, Socialist
leaders wero able to keep labor in line. By mid-September
this trend toward lower prices halted, and wage demands
began to increase perceptibly. In soverta instances,
workers who had suffered most by the May asreenent
engaged in ecattered strtken which led to increased wages?
first on a local basis and then on an industry-wide bas's.
The strl.1c?8, eoupled with the prico rise since September,
have culninoted in widespread discontent evidenced In re-
cent protest strikes and in demands of factory deleg&tions
for immediate measures to combat price rises.
The recent price rise has been larg.ely caused
by: (1) the upward pressures exerted on the Austrian price
level by rhe European devaluations; (2) the failure of the
Miristry of Trade to Yetplement fully a raw material
control law; (3) the price rigidity resulting from in-
creasinc, cartelization which has accompaniod derationing;
and (4) the abnormal buyinr; which has reflectod 'aborts
concern that its real oarnincs will drop again as a con-
,
imp:once of an expected schilling devaluation*
FRANCE
The_arrival_in Prance of MAP arms shitments will
provide the Pronca Communist ra;437). waran exeelf6ET chance
to capitalise on the national sensitivitj in security matters.
French goveramont officials have already revealed this sen-
sitivity b7 eequesting the US to withhold publicity in France
of the requirement that MAP shipments are contingent upon a
bilateral agroonent between France aad the US. The CP pro-
paganda line against the iTilita:ey Assistanco Program will, in
peneral, be as follows: (I) efrective large-scale defense
is i-tpossible, and Prance would again becoiee a major battle-
fleld in the event of Ivor with =;he 112SR; (2) the French role
under Western strategic planninc: is to provide most of the
nanPower? uhtle the US and Ta engage in mass destruction by
aerial bombardment and by use of' the atomic bomb; (3) MP
shinments mark a shift from a policy of economic reconstruc-
tion and sbaseinzatIon of western Europe to an intensive
military reall,aament race at the expense of French recovery;
(4) MP shipionts will consist largely of outdated surplus
military equipment, wk1e the US retains most of the modern
arms for Its own forces; and (5) the TTAP may have the effect
of provoh5n the UflSR to early retaliation,
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S gaRET
13 DegUtips of- the French. Peasant partzln_the
National AsseiTay b'emomo ir875-alairarabstrii6fraaist
IMERIN-Mrin-vernmsnt's economic policies and will
probably maintain tieir recent detision not to support
the Bidault coalitLon. Although the Peasant Party has
only 15 seats in the Assembly, it is of strategic
political importarce, inasmuch as thn Third Force majority
is diminishing and the Peasant Party is generally repre-
sentative of French agriculture, whose animosity toward
the Third Force, economic policy is being intensified,
Hostility towards the Government on the part of
the Peasant Party and the General Confederation of Agri-
culture, the largcst organization of farm groups in Prance,
has-been steadfln.;. developing since the end of the War.
Farmers have aiwzys expressed grievances that the Govern-
ment's aasistanco to agriculture has been negligible as
compared to its oupport of nationalized industries, allow-
ing for little agricultural modernization or Improved rural
engineering., Ia .the summer of 1949 there were strong
protests against Government-controlled wheat and milk
pricoae In support of the- Farmer's grievances the Peasant
Party has advocated the following program: (1) "fair" farm
prices; (2) protection against foreign agricultural
products; (3) reduction of taxes; and (4) more equitable
distribution of investment-fundS, In prospective debates
In -the National.Assembly concerning the 1950 budget and
other economic issues, the Peasant Party will oppose strongly
any proposals to increase taxes,
Taken alone, neither tho refusal by the Peasant
Party deputies to support the. present Government, nor the
General Confederation of Agriculture's threat to resist
actively any agricultural policy "equivalent to otaaanic
suicide -would be a critical throat to the present coalition?
Add, however, to the growing Inclination of many Socialists
and Radical Socialists to defect from the coalition as a
resUlt of internal disagreements, this opposition may result
In a critical weakening of the Government's majority in the
Assembly.
A renewed Rpwardsp ral Of pr ces_aad wages, 41,
tho coirarta moiTrinallirr',o103' y 67F6e i s omo 67-Pran Fri
T717%resi-tar6a-nnancial stabilization achieved in the
first half. of 1940, The public warning by the Government-
owned flank of Prance that this trend is the result of
action by pressure groups, and is dangerous to the economy,
18 not likely to be effectual, The Bank itself shod a
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tendency toward lax enforcement of credit restrictions
prior to September. Within the Cabinet, moreover, the
Right of Center and pro-labor-elements have recently
appeared more romponsive to the demands of business and
labor respectively.
The steady rise of the retail price index since
July amounted by October to 95. In that month, a down-
ward trend in wholesale prices of industrial products was
sharply reversed as a direct consequence .of devaluation,
presagine another boost of living costs. Now substantial
reductions in Imports are to be anticipated, a development
which will limit the supply of many essential goods and
thus give a further impetus to the price rise. This cur-
tailment of imports will result from: (1) the approximately
:30 decline in direct TCA aid in the current fiscal year,
and (2) the unlikelihood that France can sufficiently ex-
pand its volume of exports to the dollar area to maintain
even the pre-devaluation level of imports financed by dollar
earnings.
Meanwhile, labor is likely to contribute to the
price rise by achieving in the next few months some increase
In the general level of monthly wages, as collective bargain-
ing is restored. Business, whose cash requirements were
eased in August and September as the r2reasury and the
nationalized industries expended large sums for investment
purposes, is now increasing its pressure for the creation of
new money through credit expansion, partly in order to meet
the heavy tax payments duo in the final weeks of 1949.
All these influences are likely to undermine the.
earlier relative financial stability evident even through
the recent political crisis, when French stocks, Government
bonds, and the blackmarket quotation of the dollar remained
steady.
After tqleing a minor step in Decpmber toward free-
ja...t he c orinTr. i'7Zi):;"-E176-- iirFe-irai Go vo rnnrear unr-FganTY
proce4U-71175TY iii-MEinating import quotas. on agricultural
products. Caution is dictated by the need to appDase the
farmers, who, nevertheless, will probably lend mme support
to the trade liberalization program if the Government stresses
the British. and German markets for agricultural goods which
would be created br the removal of trade barriers. The final
step, to be taken in December, towards removal of import
quota restrictions on 50,1 of private agricultural imports
from MEC countries will be small, inasmuch as most of the 50,
was previously freed on 1 October by the French Government.
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FRENCH AND SPANISH NORTH AND WEST AFRICA
Increased labor unrest and strikes a ear
robable durEETTEiggEE74the n dorocco. T e lot of
the farm laborors, who conStflufg-ibourlOrof the
20100,000 working population, is one of the virtual
animal subsistence by western standards. The current
monthly wages vary between about 04.00 and E350 (1,500--
3,000 francs). The Moroccan industrial workers are only
slightly bettor off. Although social and labor legislation
of a fairly progressive nature exists in Morocco, its
application and enforcement is extremely spotty.. The nost
difficult problem confronting the native laborer results
from the advance in the cost of living index at a rate
twice as fast as the rise in wages, which were last in-
creased in March, 19400 Such increases as were obtained
were achieved principally after bitter s#rikes or the threat
of strikes. These may be expected to become more numerous
during the caning months, and at the same time there may be
a growth of the Communist-controlled General Confederation
of Labor, Which is by far the most important union in
Morocco. Although organized labor represents only a small
percentage of the native laboring population (which, under
French law, is prohibited membership in unions), its
championship of wage Increases will raise its prestige and
attract adherents.
ITALY
Continued delay 1r...the Italian Government in
formula tin 411A lig6aen al?rix-rerigrig=d?r?e-roWi-
prograM wi -laqinsfrrETI6-tatternens long existing among
the landless peasants of southern Italy and Sicily and afford
the Communists further opportunity to capitalize on the under
unredressod grievances of this large social group.
The need for alleviating the extremely serious
plight of the country's unemployed, landless peasants has
Iona been recognized by the Government, which is committed, to
a program of agrarian reform by Article 44 of the Constitution
and by Christian Democratic election campaign pledged. The
urgency of such a program has recently been accentuated by
Communist-incited disorders in the southern Italian province
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of Catanzaro, whore police iPere compelled to fire upon
Cana laborers who had occupied privately-owned land.
There have aubseauontly been similar seizures of land
on a larger scale by the peasants around Palermo, Sicily.
The currently quiet situation among farm
workers is temporary, and is due only to: (1) the
achievement of a satisfactory agreement between the
peasants union and the landowners! association of
Catanzaro, (2) Cabinet approval of a bill redistributing
land in the most backward areas of Calabria, and (3) an
order from the secretary of the Communist-dominated
General Labor Confederation to the peasants unions to
desist from further land seizures, pending the outcome of
the Government?s efforts to provide land for the peasants.
The Cabinet is reportedly now discussing the
problem of :Land redistributions with legislation scheduled
for parliamentary consideration within a month. The need
for technical consultations and the inevitability of
protracted parlinmentary debate render final legislative
approval unlikely within the next two months. Once a
program for land reform receivesparliamentary approval, its
scope and its results will be limited by several major
factors. The most scatous is the lack of sufficient land
to provide for the 2.5 million peasant families who want
their own small farms. The great majority of those will
be bitterly disappointed in their expectationa, and will
direct their resentment against the Government. In additions
the now recipients of holdings will initially lack capital,
equipment, and the skill requisite for efficient exploita-
tion of the land. These deficiencies will result in a sub-
stantial decline in agricultural yield during any change-
over period,. Any land redistribution legislation is there-
fore to be regarded as the first step in an over-all program
of agrarian reforms the ultimate objective of which--
elimination of the basic causes of agricultural unrest--can
be attoined only over a long perioth
The failure of the Government to take steps to
remedy tIas situation in Calabria until pressure was exerted.
through Camaunist-instigated agitation has strengthened the
Italian Comnimists! appeal to the peasants. As a result of
Communist initiative in that area, further land reforms
undertaken by the Government either locally or on a national
scale will be interpreted as a victory for Communist leader-
ship and pressure. Meanwhile, the Communists may be ex-
pected to play on the hopes of the peasants and to exploit
fully their widespread discontent, as an integral part of -
the Ccnaminiat campaign to die credit and ultimately to take
over tho Government.
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THE VATICAN
Conflict between th_opcies_o_ftl_leVatican
and those of the 'Polish e_pls_22mteisindicat
various recent developments. The Vatican was reportedly
disturbed by the fact that little publicity was given by
Polish ecclesiastics to the Papal decree avAinst Catholic
Communists. Later, however, Vatican recognition of the
difficulty of enforcing the decree in Poland reportedly
resulted in virtual suspension of the decree there. The
Polish hierarchy, on its side, has presumably become
equally disturbed by increasing indications that the
Vatican may favor revision of Polish-German boundaries at
the expense of Poland.
A sharp difference between the views of the Holy
See and the Polish episcopate over the question of
cmacessions to the Polish Government was recently revealed
when the Polish Bishops appeared ready to acquiesce in
three of five demands made by the Polish Government.
These three demands were: (1) Church recognition of the
Polish Government, (2) appointment of Polish (rather than
German) bishops in the territory annexed from Germany,
and (3) taxation of Church pi.operties. Such concessions
were averted when Vatican Undersecretary of State Montini
declared that no rapprochement with Poland is likely in
the fcroseeable future "as long as the Polish Government
continuos to attack the Catholic Church".
Now that the Government-controlled Polish
Catholic press is again denying any attempt to establish
a national Church divorced from the Vatican, the Holy See
can be expected to renew its instructions to the local
hierarchy to stand fast against Government blandishments.
A Vatican broadcast to Europe shows increasing apprehension
over possible weakeninr of the local clergy under Govern-
ment pressure and urges "a much stronger resistance on the
part of the faithful and the clergy in Poland than was the
case in Czechoslovakia".
The Polish Church will endeavor to prolong the
present stalemate in State-Church relations for as long as
possible in order to husband its strength. However, should
the State Institute a new and apparently uncompromising
effort to eradicate all Roman Catholic political influence
in Poland, it Is likely that the Church would adhere to the
official Vatican policy of firm resistance.
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SPAIN
The unnrecedented failure of the S anish Police
to interf6FFIRT571 ega a or meet gs, e? ?y ocla s a,
in the Barcelona and Valencia area may be ascribed to the
possibility that such gatherings are becoming so frequent
that local authorities are unable to cope with then by
arresting all the participants. Some of the police, more-
over, are probably in sympathy with the workers. Likewise,
in a recent memorial to the Minister of Industry and
Commerce, mill owners and managers of Catalonia appeared
to be more on the side of labor than of the Government in
regard to wage and cost of living problems. The leaders
of the labor meetings, which are reported to have taken
place outside the official syndical organization, have not
incited violence, but have appealed to thoughtfulness and
restraint. Police tolerance of unauthorized labor meetings,
it should be noted, does not extend to Communist undertakings.
PORTUGAL
Salazar's full control of Portugal has been recon-
firmed by the iFiari=tr?irdrETT'f his National Union Party
in the National Assembly elections of 13 November In which
120 delegates were chosen. Although the election was by no
means free by western democratic standards, the large turn-
out of voters (unofficially estimated at 65-85% as compared
with 75;!, in the February presidential elections) showed that
the population is strongly behind the Prime Minister. The
opposition was stifled by close censorship of all press media.
It was also caught off guard by an electoral law published
4 October which set 14 October as the last day for filing
lists of candidates; nevertheless the opposition managed to
submit lists of fourcandidates each in two electoral districts.
ElseWhere in Portugal's 30 districts the Government was un-
challenged, and only a small number- of voters in the two
districts cast their ballots for the defeated eight opposition
candidates. Following the elections-the chief oppositionist
and former premier, Cunha Leal, sharply criticized Dr. Salazar's
policies, charging that the Government manipulated the electoral
rolls and thus invalidated the poll. This assertion will be of
little consequences however, as the Assembly is expected to lose
much of the slight authority it possesses. According to De.
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a?wr-el-IrE
Dr. Salazar's pro-election speech, the new National
Assembly, which meets on 25 Novamber, will be called
upon to amend the constitution so as to curtail its
already limited powers, Since its inception in 1M53, the
National Assembly has been confined mostly .to comma4ting
upon the acts of the Government and ratifying Cabinet
decrees pronulgated during the three months: the Assembly
is in session each year. Some of the delegates did
criticize the Government severely last year in reference
to domestic and colonial.ecanamic policies. The plan to
reduce the Assembly's imPortance,May be a result of this
indiscretion, and will further strengthen tho organization
of Portugal as a corporative state.
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