WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400040015-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: November 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 15
• Publication Date: July 11, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
VOL. VII w NO. 2
For week ending 11 July 1950
NOTICE: WORKING PAPER
This document is a working-paper., not an official
issuance, since it has not necessarily been coor-
dinated with and reviewed by other components of
ORE. It represents the formulative thinking of one
group of analysts in ORE and is designed to provide
the medium for transmitting their informal views to
other intelligence analysts of the US Government who
are working on similar or overlapping problems. It
is intended for the use of the addressee alone., and
not for further dissemination.
COPY FOR:
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WESTERN EUROPE DIVISION
VOL. VII - No. 2
For week ending
11 July 1.950
The Soviet Zone aramil.itary yAlert Police
Bere1tsc a en are~presen y ins c e it y~ d armed,
a nc ec r na ed to be effective in an attack on west Germany.,
and it is considered unlikely that the USSR would seek to use this
force for that purpose ? The Alert Police could now be effectively
employed only for limited security operations within the Soviet
Zone and for petty harassing incidents against west Germany and
west Berlin. The Alert Police will.,, however, be maintained and
expanded, and constitute a future but increasing threat, to an
unarmed west Germany.
As presently conceived, the Alert Police are essentially
a training group, organized in part along military lines up to a
battalion level-, and in part as 'a school co=.and~ The Alert Police
can develop, however, either into an effective, highly mobile
internal security force or into the cadre for an east Gern Army,,
The latter development would require broad,-scale reorganization
and general conscription. Training in the Alert Police is primarily
military, and, under the close supervision of. Soviet Army officers,
emphasis is placed on the creation of cadres for possible future
development,, 'There have been appreciable increases of strength
and equipment during the past year and the force now comprises
around 51,000 officers and men. During 1950 the organization is
not expected to exceed the estimated T/0 strength of 55, 000,,
although the completion of trai,nin, for approximately 15,000 men
in the Alert Schools will increase tactical capabilities. Coastal
patrol units have recently been activated, and the e 5t:ab11slncnt of
25X6nAr units is probable, but not yet. definitely confirmed.
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S E 0 B E T
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Austria's housin rob:f.e presently a major political
issue betreenie- `woners in the Government coalition., is
expected to be tackled by a workln; compromise without endangering
the coalitions Public statements by members of the Peopia e s
Party to the effect that political differences on housix:; con.-
stitote a fl-treat, to the co=aM t;io-n are .rohr:bl only attempts to
! ;--o e the position of its heh1nd- the-.sceries negotiators now
at.ten tiny to work out a housinu proe'ramG Furtherrriore, it is
'unlikely that e!. 4.--',e,-. Ute Pooplc v s Party or the ::ocf al.i.st Party
ae tual_? y ?v sYaes to assume unilateral responsibility for the
implementation of a program that cannot please all sectors of the
public. Hence, the coaBtion parties--particulariiS. the Poopleks
Party--are also stressing the necessity for contJmii s.g the coali-
tion
The development of a housing program is fundamental to
Austrian recovery, but presents a considerable problem:, The need
for a prot'am is emphasized bq UL fact that pres.^rt hol::sf.nC;
e,bortages prevent the redistribution of labor to more affi,cient
industries, as reTiAred for the a : iavement of ;:CA goals in read-.
justing Austrian industry; at the same time, poor housing facilities
are one of the main reasons for the drift of needed labor away from
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S E J R E T
agriculture. In addition, by lowering, worker -iorale, poor
housing contributes to low productivity ECA has estimated
that it would take at 20 ,ears for Austria to recapture
even its modest prewar housing suandar~xd, and that to do so
would require the building of at least 200,, 000 now units and the
annual replacement of some 15, 000 o thers o It is unlikely that
the prewar standard could be regained in less than 20 years,
especially as there is a dearth of private capital., and present
low rentals nullify prospects for increased private capital
available for housing purposes. An absence of statistical
Info-.nation on numbers and sizes, and rents of Austrian housing
un ' s further complicates the development of an effective
analysis and program to meet the situation.
In approaching the housing problem, the People's
Party, representing business interests, has taken no firm
affirmative stand, but has talked vaguely of desiring; increased
rentals sufficient to encourage private capital; on the other
hand,, the Socialists have been more defini Lea realizing the
urgency of new construction acceptable to the public wants and
pocketbook. Moreover, the Austrians are aware that little, if
any, RCA assistance will be forthcoming for hous.n,M It now
appears that both parties will probably compromise on a plan
which embodies the main features of the Socialist proposal: an
increase in some taxes to provide housing funds, part to be
used to subsidize private building and the remainder to be used
In public housing; projects.
A Reaction to the Korean war h.as_ varied between the o,
leaders and 'the rank_ arc ire ani13 ~int1 of i rencY Co n ,.ist
a PC n A thou h a0 a CiGiiMt was Initially restrain?.d .
t e Party s now following the ::Toscow line by condemning the US
and South Korea as the aggressors.
There are recent evidences that the regular members,
al though faithfully fallo< i n ; the official interpre to von, were
both surprised and apprehensive at the outbreak of hostilities
At a mass meeting in Paris, Secretary General : aurice Thorez
remarked that there should have been no reason for such surprise
at the developments in Korea, and reminded them of the warnings
expressed at the National Congress in April tat 'peace hangs by
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a thread?" ;11-iorez censored members for inattentive readinj of
Party literature. Furthermore, there is also apprehension
among the rank-and-file that the US will use the atomic bomb n
On the other hand, top Party leaders have been calm
and confident. Jacques Duclos has expressed the opinion that
he is highly satisfied with the situation, High Party officials
have given the impression that they "Imow more than they are
telling"---that they were forewarned of the action in Korea, and
have foreknowledge of future international developments,, There
is no evidence, however,, that such is the case. Nevertheless,
there are reports that the French Co=aunist Party has alerted
militant groups charged with direct action, while probably
awaiting more precise orders from the Cominformo
B ?aport in France for the Schuman Plan has been
increased by a recent reversal in e attitude of he steel
ritere, originally the most formidable opponents. This group
was at first considerably annoyed at not having been consulted
before the Plan was introduced, and was also-strongly opposed to
renewed controls on production, prices, and efficiency standards..
At a meeting, however, with (overrnment officials on
27 June, leaders of the i~'rench steel industry generally accepted
the Plan, and some steel spokesmen ever: Rave it their substantial
endorsement. All had some reservations, stemnino in part from a
foaling that industries of a public utility character should have
been used first to further the cause of European unity, but now
that the step had been taken, they we re willing to go along.
the, stool, Industry now accepts the fact that inefficient
plants will have to be closed-..--an exceptional attitude In French
big business circles. `Me steel leaders were anxious only to
cushion theocks of these shut-downs, especially by conversion
funds to create new industries. They assumed also that,theIr
previous restrictive practices would be eliminated.
The most apparent reasons for this chance of attitude
are : (1) the political inexpfxiiency of opposing such a popular
plan; (2) the fact that the Plan probably removes any threat of
French steel nationalization; (3) a lessenin of the fear that the
German steel industry would eventually be preponderant in any
private arrangements; and (4) the advantages to French steel
makers of access to expanded markets.
The criticism the French steel Industry now
levels at the Schuman Plan Is cons ti,ructi ve-- to find solutions for
such problems as oqualizinr, wages and production costs, and de-
fininG "steel" as it will be embraced by the Plan on an inter-
national basis. The industries new approach may well lead to a
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S E C R E .T
making t re.ter military efforts fx- th.ey have a der-taken
sacrifices and efforts toward self-help they have already -made
to augment the T DAP are the total of what they are willing to
do .~t this time. Although France stands only in sixth plac
amionF the Atlantic Pact powers on the basis of the percentage of
the budget devoted to defense expenditures, tentative estimates
for next year f s military budget are approximately the same as
for this year. These estimates have been set despite the fact
that funds for this year's additional military production projects
had to be obtained through economies'in other defense operations
and that the nationalized aircraft industry is on the point of
collapse because of lack of orders. There would, nonetheless, be
con; iderable political opposition on the part of the Socialists
and labor groups, as well as the Communists, to any move to in-
ere -se military expenditures, because such a diversion of finances
would necessarily cut into the fund available for other Govern-
ment activities. Economic recovery still continues in the French
view to.have a higher priority than the rebuilding of the armed
forces.
under present p_J&nsb --Thhere are growing indications that the
It is probable that the reaction of Arab nationalists
t h r o e h out rerl o h A ? i g e n e r a l l y be ie rNS Wc-VM fn-Rorea.
Members of the Executive Committee of the Istiqlal
(nationalist) Party In French a:torocco have expressed sympathy with
the Egytpian attitude and have Indicated their belief that the US
has fallen into the same: error in Korea as it did in supporting
Chiang Kai-shek and F3ao Dal. The Committee members explain their
indifference to the dai ger of a general war--whiL,h in the -nationa-
list view would be an opportunity to strike a blow at the French
by an Arabian proverb: "A drowning man is not afraid to get wet."
It appears that only severe and public pressure on the
French to effect drastic political and social re 'orms would per-
suade the Arab population to support the US position.,
mor economically practicable plan than was at first thought
possible by the skeptics, a plan which could promote the
attainment of Schuman's basic political objectives of a
French German ra prpchement and western European unity.
1 The French will probably be increasing)
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There is no reason to suppose, however, that French-
l, nor
led native troops (mainly Berbers) will not remain lo,
is nationalist antipathy to the US action likely to result in
anything more than verbal protest.
Effor=ts of the Italian Government to arouse Italian
nationals st sent ent over Lib you d no only adversey affect
talc- re tons u wou conflict with US interests in chat
area and in Eritrea.
The Italian Government is seeking, tangible gains in
Libya in order to offset the unfavorable effect on Italian
public opinion caused by the current Trieste impasse. The Italians
are making every effort to achieve participation in the constitu-
tional development of Tripolitania, hoping thereby to extend their
political as well as economic influence in Libya,. To attain this
objective, they have enlisted the support of Egypt and Pakistan,
both of which are represented on the JN Advisory Council for Libya
Recentlyql there have been reports of an agreement between Italy
and Egypt,, whe. eb Egypt pledges support of Italian aspirations
in Libya In return for Italy's comitment to persuade the Latin
American nations to support Egypt should the latter raise the
matter of its relations with the UK at the next session of the
UNGA
Egypt and Pakistan would be disposed to support Italy,
because they are intent on undermining US, UK., and French influence
in the Advisory Council. Furthermore, the positions taken by these
two Moslem countries are bound to have a wide appeal a?}nong the
people of Libya. An understanding, between Italy, Egypt, and
Pakistan could seriously obstruct the efforts of'the Advisory
Council to implement the UN resolution providing for a unified,
independent Libya by 1952?
Should Italian nationalist elements take advantage of
the current discussions on Libya to crea4le such popular furor as
was recently displayed over Trieste, Ethiopia's long-standing
auspicions of Italian designs in Eritrea would be greatly in-,
tensified. This situatx.on would militate against the achievement
of an Italo- .:thiopian compromise agreement on Eritrea and might
result in a UN decision on the Eritrea problem unfavorable to ITS
Interests.
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