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-RDP79-01090A000400030012-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 12
• Publication Date: March 28, 1950
• Content Type: PAPER

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WESTERN LtTROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
DIVISION V =LY
FOTICE: This document is a working paper,
YOTan 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 studies. 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 dissemination.
lZ
CLASSIFIED
NEXT REVIEW DATE; -
- DATi IREVI WER: _7?-- 044'--.r1
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WESTER T I JROPE DIVISION
VOL. VI -- NNo. 12 For week ending
28 March 1950
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Although the Swiss have stressed their difficulties with
respect to luxury exports in asking for special conditions,
SW ITZERi,A IID
Switzerland's desire fors ecial tems.as a condition
for joining Elie Genera Agreement on Tariffs and rade CrA CT
s ems from security as well as from coxinercia con orations o
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their fundamental concern is probably the fear that strict
adherence to the GATT would increase agricultural imports
enough to jeopardize agricultural production in Switzerland.
For security reasons, Switzerland desires to maintain
agricultural production at its present level as a means of
mitigating the country's vulnerability to an economic
blockade in case of ware At present, Switzerland-maintains
2CP; of its population in agricultural pursuits only by
costly protection,
Neve-theless, with the proper safeguards., the
Swiss desire to enter the GATT because It 'is in line with
their interests as a trading nation, Through participation
in such programs, the Swiss hope to achieve higher levels of
trade., resume substantial exports of capital, and thus assure
a high level of employment and a high standard of livings
on inflation= finance
o a reat~ex~entw Vt le nex.ew
men is, despite probable Inability to stay within the
present military budget, which is somewhat larger than last
year's, Later in the year, however, the Government may find
that unbudgeted military expenditures, occasioned by T,IDAP
and the operations in Vietnam, call for substantial in-
flationary financing, as was necessary toward the close of
1949, ECA still intends, however, to press for stricter
measures by the French Government to insure financial
stability, and is in a position to propose such measures
as a condition for its approval of releases from BOA counter-
part funds for French public investment, The military
budget is likely to be inadequate because sufficient
economies to cover the proposed increase in defence production
will be difficult to effect, and expenditures connected
with the Vietnamese war are likely to rise well beyond the
limit presently set for them. These expenditures nay well
reach at least the amount actually spent in 1949, which was
about 30;', beyond the budgeted figure,
The Government's prospects for maintaining short
terra financial equilibrium are fairly good. The unbudgeted
military expenditures will not become a problem durng the
first.half of 1950. Although a general increase in wages is
being ;ranted in the nationalized industries, it will
probably be held in the neighborhood of 6?;, and is likely to
be covered by price increases already authorized or now being
considered, Over-all Government economies under study since
mid-1949 are about to be given official consideration, and
tax collections are encouraging,. I.ioreover, the recent sharp
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declines in gold prices and in the black market quotation
of the dollar both presage a gradual acceptance by private
investors of the Crovernment's expected offerings in April
of non-inflationary bonds,
B France will have a brief respite from strike action
as the bac - o-wor movement progresses, Some beneficial
effect may be expected from Premier Bidault's recommendation
that private industries raise salaries as much beyond the bq;
now being granted as possible, without raising prices,
T3idault also suggested that private and public enterprises
grant production bonuses beginning 1 June, The Government
has taken stern measures against disorderly strikers and
those in the public utilities who failed to comply with
requisition orders issued to insure sufficient supplies of
gas and electricity. These repressive measures will, however,
Increase the dissatisfaction of labor, so that a resurgence of
strikes in a few months is likely,
FRENCH ATTD SPANISH NORTH AND VEST AFRICA
A In French West Africa (FWA) an emerging pattern of
IntensifiedCmmunnist penetration is discernible on a lateral
line stretching 1600 miles through the geographic center of
the territory from southern Niger to the environs of Dakar.
Organized Communist activity, which commenced with
the founding of the Rassemblement Demoeratique Afrricain (RDA)`
in 1946, has heretofore been concentrated mainly in the Ivory
Coast, which is the only center, except for Senegal, where
labor is employed to any considerable extent in oamriercial
enterprises, From its Ivory Coast stronghold, the RDA
version of Communism was intended to spread eventually through-
out FTIA, but energetic Government measures since 1948 have more
or less sealed it off. it appears that the Communists now
recognize the strategic limitations of such an easily
accessible focal point, and have chosen a supplementary line
of penetration offering greater possibilities for sabotage
of military operations. .
The selected area is a marginal strip where the
northern limit of the fully habitable portion of West Africa
merges gradually into the southern reaches of the arid Sahara,
Its peoples are forced to struggle harder for existence
than along the southern coast, they are more tenacious and
may be more easily persuaded to blame the French for all
their misfortunes. North-south movement across the desert
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by land (such as General Leclercts expedition) or air is
largely dependent on the use of the facilities of this
strip, which must necessarily be crossed.
The assistant chief of the African section of
the French Ccaiimunist Party recently visited Zinder, TTiger,
the most important military, trading, and communications
canter at the eastern end of this fringe zone, and
undoubtedly gave instructions for the subversive work among
troops and prison guards being carried on there. Farther
west at lTiamey, the capital of Tif?er, the recruiting of
sympathizers, and probably of militants, is being directed
ener ;etically. At smaller outposts and comrnmications
relay points, RDA leaders occupying key spots are in a
position to control communications.
Abdulla Diallo, influential RDA official who was
recently in the USSR, and others, held meetings and made
speeches at Thies, rail and road center near Dakar, during
January. The oratory was similar to that used in the
Ivory Coast when the RDA was being established there. In
the middle regions between Thies and P`iamey, the western
part of Upper Volta has been a hotbed of Communist
organization and practices since the establislnent of the
RDA, and the southern Sudan is the home base of Diallo.
It should be noted that the strip being infiltrated
is also the area across which military reinforcements would
find it most feasible to move from concentrations of the
interior, for example, Ft. Lamy, to the region of Dakar, in
case of emergency. Preparations to hinder movement and
mobilization along this route would thus appear to be good
Communist strategy.
A Although sporadic local strikes and land seizures
will continue 'lri i a7. A t ie a .an f; onzxstm s s will pro a y
shift EE-a-To-cus of their offensive temporarily into the
parliamentary arena during the coding weeks. During this
period they will attack the Government for various
unconstitutional" acts and proposals, including police
violence, anti-labor legislation,, and, especially, the
extraordinary decrees whereby the Government has empowered
the provincial prefects to suspend the right of assembly,
Violent scenes in Parliament similar to those
which occurred after the Modena incident are probable. The
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Communists will launch Parliamentary debate, not with any
expectation of securing any of their major demands, but to
lay the propaganda basis for renewed public disturbances.
By this policy of alternating violent direct action with
parliamentary attacks, the Communists probably hope to whip-
saw the Crovernment,and keep the country in a state of ferment
Besides the Immediate objectives of discrediting
Italy in US eyes as a stable ally, and of destroying
confidence in DAP in Italy and hindering its effective
implementation, the Communists hope to inhibit the economic
and social progress which would remove the popular bases of
Ca,nmmiat strength.
B The Italian Government will face rave and peerhaaQss
naurriounta e dIM-FM es is e ort to attract private
capital, par a ar y from the US, into sectors of the Italian
economy where it is most needed, Italy may therofore be
expeetod to devote itself increasingly to securing aid from
the US under Point IV or other post--J flP plans . Despite the
help of ERP. Italy will probably be unable for some time to
generate enough capital to finance adequately the long-range
improvements in the economy which are essential to a stable
and reasonably democratic Italy.
The basic obstacle to attracting private investment,
either domestic or foreign, is fear of war or a Conusunist
coup. it is questionable whether any guarantees to private
capital would allay these basic fears and attract sufficient
amounts of private foreign investment into those sectors of
the economy where it is most needed, Such sectors include the
thermowelectric, textile, food processing, and light mechanical
industries, and, in southern Italy, agriculture and industry
generally. These sectors offer only a long-range and modest
yield.
To doubt the present Communist offensive is intended
to accentuate the fears of investors, perpetuate the Italian
investment quandry, and preserve the conditions of unemployment
and er;rarian unrest.,
ITow, substantial private investr:iont ' can thus
probably be attracted into Italian enterprises only after the
Government has created the basically healthy political and
economic atmosphere prerequisite to bold investments
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SPAIN
Ra ports of secret trade agreements between S ain
and Eastern uro a are pro a y Inspired
in -
pa y "Mpe'Waneo
overnmen se f to Increase pressure on the US for aid to
Spain. Nevertheless, allusions in the Spanish press to the
possibilities of trade riith the Soviet bloc indicate the
real interest of the regime in such trade for economic
reasons, and the desire to prepare public opinion at home for
its further development. Small-scale commerce between Spain
and the Soviet Satellites has been carriod on since World
War II largely through third countries, such as Sweden,
Switzerland, and the Netherlands. Reports of an official
trade agreement discussion with the USSR,, however, have no
known basis in fact, other than attempts of the Spanish
Government to promote the barter, chiefly through private
trade channels, of Spanish manufactured goods, minerals
and food in exchange for wheat, cotton and other raw materialso
One shipment of Polish coal has recently been delivered,
No details of this transaction are yet knotm but it is
alleged that trade worth 350 million pesetas is provided for,
A firm headed by Nicolas France, the Generalissimo's brother
and Ambassador to Portugal, has been granted licenses for the
export to Eastern Europe of Spanish goods valued at 93 million
pesetas, and for importation from that area of an equal
amount in manufactures and raw materials m The bulk - of this
trade is to be conducted by Dutch firms, and shipments on a
small scale have already begun. Even if this plan is success-
ful, the volume of trade is too small to benefit the Spanish
economy materially, and, in fact, a large part of the
imported goods is likely to get into the black riarketo
Because of the serious economic situation the Franco
Government will seek trade advantages wherever possible. The
development of any large commerce, however, or the negotiation
of a formal trade agreement, with the Soviet area does not
appear likely at this time because of Spain's limited offerings
and the political inconvenience to both sides inherent
in direct relations,
Monarchist-Socialist
Exiled leaders of
coalition opposes ranco regime are person ly
propagating their vigorous denial of the recent State
Department assertion that no viable alternative to the
Franco regime is in sight. Don Juan and his chief
advisers, including the Duke of Alba,, took up the question
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of an alternative regime at the Vatican during
a holy Year
Visit made last week. Representing the Catholic opposition
in general, Jose Antonio Aguirre, president of the Basque
Government-in-exile, has been active in New York and
t'lashington, and has conferred with political leaders in
Havana and Caracas* At the same time Trifon Gomez, president
of the UGT, labor arm of the Spanish Socialist party, and
Secretary.-General of the International Federation of
Transport Workers., has renewed his contacts with US and
European labor leaderse
The primary object of the approaches to US citizens
is to stimulate resistance to proposals of US economic aid
for the Franco Government. In his Vatican visit, Don Juan
requested that the Papal Pluncios, especially in the US and
Latin America, be instructed to maintain a more neutral"
attitude with regard to the Spanish question. The Pope's
scrupulous personal "neutrality" was indicated by the fact
that ho received ',members of Don Juan's entourage in more than
one personal audience(,
The Don Juan Monarchists and the Socialist strategists
still firmly believe that in the absence of large-scale
foreign aid, Pranco-s position will become untenable because
of the compounding of the nation's severe economic problems,
Because of the enormous police power of the regime, they do
not intend at present to develop an opposition force beyond
the skeleton group now existing inside Spain as the Comite
Interior de Coordinacjon. They are confident that thoup
e3u-121 rally-
a y a Ar?;e o owing in short order, upon the lifting
of press and police restrictions. Their expectation is that
Franco will be forced to invite Don Juan to rule, and that the
strength of the coalition will appear when that time comes.
The coalition is undoubtedly correct in its estimate of
Franco's power and will to suppress any effort to expand the
coalition's organization in Spain beyond its present sizes
The coalition has made measurablo progress, nevertheless,
in clarifying the bases on which its leaders believe the
rank and file would unite under free conditionse During
his trip to the US, President Aguirre made it Imown that the
Basques will support the coalition, although they are not
now a party to it
PORTUGAL
B in an effort to dela an action on the future status
o
to 211s this-- f Port uese In Ia, a Por uguese Goverrmen s refused
stion with that Portugal hasunoconstitutional n authority s" ton the o negotiate
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its sovereignty'- This refusal was made orally after the
Indian Minister in Lisbon sent a communication to the
Portuguese Government regarding the future status of Goa
and other Portuguese possessions in Indian Presumably,
a Portuguese note will follow? Although the contents of
the Indian oorzunicatian have not been disclosed, Prime
Minister ITehru, in a speech before the Indian Parliament
early in February, declared that as far as the Indian
Government was concerned, Goa must revert to India*
Semi.-official press agencies in Portugal have been
endeavoring to reassure the sensitive public that there
would be no encroachment on Portuguese sovereignty, and
to enlist world opinion in support of Portugal, Although
the Government apparently intends to delay as long as
possible any discussions of possible Portuguese withdrawal
in India, Drm Salazar some time ago indicated that he did
not discount the possibility of the eventual loss of these
possessions,
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