WESTERN EUROPE DIVISION OFFICE OF REPORTS AND ESTIMATES DIVISION WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400040016-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: November 9, 2016
• Document Release Date: September 24, 1998
• Sequence Number: 16
• Publication Date: July 19, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF REPORTS AND EST119ATES
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
VOL. VII - Noe 3
For week ending 18 July 1950
19 3uly 1950
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
ASS. CHANGED TO: TS S C
DECLASSIFIED
AUTH:
DATF.,ty rC .4 REVIEWER: 372044
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tN ST 'S1 TROP--; DIVISION
1LEnY .` TY.U" TtY
VOL. vii ;4o 3 For imok ending
25X6A 9 July 1950
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 5X6A
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S E C R E T
25X6A
AUSTRIA
B The Union of Independents VDU) a newcomer to the
Austrian poli~ !car sc~ a ien captured 16 seat:o last Fall, is at a cross-roads of its career. parliamentary
frog the r11-inistry of Interior has dlss-)Ived the organization in
the province of Styria on charges of wearing unlfor ms and inci t.-
in" the public (to pan-Gormsnjsm) ? This ordel> has been seized
upon: by the national executive of the VDU as an opportunity to
suspend the Styrian leaders, who constituted the chief threat
to the national leadership represented by Kraus, the founder of
the Party. Their suspension permits Kraus to strengthen his
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S E C R E T
own position and rid the Party of its most n.eo-Tlaz! element.
It also whittles down the size of the VDU still further,, but
leaves the organization with a stronger national leadership
and a more harmonious membership.
Shortly after the elections last Fall, the
soatrms began to open in the VDU, which was conceivod as a
catch-all for dissident groups, including; nowly enfranchised
ex Nazis and Volksdeutsche anti-clerical farmers, and
dissatisfied raerzoer; o the People's Party and Socialist
Party. Differences of opinion between rightist and moderate
wings caused numerous resignations and a lo-s of V:~U influence
among independent labor voters. The ousted leader of a small
VDU group, suspected of collaboration with the Soviet element,
later created a new political organization preaching neutrality
and belittling the dangers of the Communist .arty. gore
recently, the VDU has suffered by its Inability to k:;5 , au
active organization In the Soviet Zone, where I t has los U
members to another small Soviet-sponsored rights st g;roup,.
The suspected desire of Kraus to align the
re ainin ; VDU more closely with the People's Party (the major
party in Austria's two-party coalition rovewrnraent) may be
Increased if the VDU cannot control its mei hers in Parliament.
One of the peculiarities of Austrian politic: is that upon
election, members of parliament send their party directorates
undated letters of resignation. This custom an effect assigns
the legislative seat to the party, not the 4.ndivid~ml,, and
result: In unusually strong party discipline of members.
Earlier this year, however, one of the renegade VDTJ represen-
tatives challenged the legality of this system, and. though no
conclusion has been reached in the matter, It appears that
the VDU may not be able to check independent voting.
Although the VDU may cleanse itself of Its more
Nazi elements and attempt to draw closer to the People's
Party, there are no indications that the People's Party would
choose to substitute the VDU for the Socialists in the
national coalition. The VDU, for one thin g, cannot brir to
the coalition control over an important segr?aent of the popula-
tion, such as the Socialists r:aaintain over the ;rout nia jority
of Austrian trade union znenbors. The People's Party, however,
will probably continue to cooperate with the VDU on the local
level, and use the V.DU as an indirect lover to gain conce.4sions
from the Socialists.
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Preparations for widespread di=sect action this
coming fall bUe ren Communist Par ( P Vii .1 pro iaa ly
beep c up as a result o the international crisis.
During the remainder of the sum., or the Party will probably
concentrate on training militant cadres for the purpose of
engaging in mass action.
Since the commencement of hostilities in Korea,
there have been reports that the Cominform has told French
Cominunist leaders that In the immediate future there will
be no change in the Party line, but that all efforts must
be devoted to intensifying the peace campaign. Although
there are no indications that direct action is presently
contemplated, the PCF apparently intends to stage widespread
demonstrations and riots and to engage in sabotage attempts
next fall. Earlier action would be taken upon Conilnfor
orders if the international situation deteriorated appreciably.
Paramilitary forces (the ETPF) are presumably alerted now, and
special mobile commando squads are currently being trained for
the purpose of inciting riots and neutralizing local French
administrative agencies. Meanwhile, PCF militants will
probably also attempt to undermine French security forces,, both
morally and physically, by increased penetration of these
organizations.
At the present time., French military and security
forces are probably capable of suppressing an attempted cou by
the PCF. The fear of retaliatory steps by the Goverrmen
probably diminishes the possibility of any direct action now
unless Cominform orders change. Should, hovuever, the USSR
move against western Europe, the Party would be capable of
immediate action and could cause widespread riots and sabotage,
especially If France were in a state of confusion as a result
of the Soviet move.
The investiture statement of Premier Rene Pleven re-
affirmin -, I4 ranee s Intention to ma ce t e ncte eri esce thin
e i renc-h on of the Friree associated ted states of . china
a res. a. y may have some avorac~ e e ect upcin V etn 9ameie pub .ic
opinion, which is skeptical of French good faith in regard to
the 8 March Accords. Furthermore, a Ministry of Associated
States has been established in the Pleven cabinet to handle
the affairs of the three Indochinese states, thus lending more
prestige and importance to their International relations.
77
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S E C R F T
Pleven further acknowledged that the possession of armed
forces is one of the essential attributes of sovereignty
and reiterated France's resolve to establish ar-.lies of
the three states. This is one of the most definite: public
statements yet r'rade by a high-ranking French offi c .al
concerning the future evolution of Vietna:i, a i`1o:: a, and
Laos. In view of the fact that Pleven's investi' ture speech
set forth the policies of the Government, his approval by
the Assembly may be considered an implicit earl ax1mcntary
acceptance of the proposals.
Its attitude thus far on Koreas r,;i s that the
Italian Cor m st ar hopes to pro cons?'deraraly
rorhr and peace o er e t1`.Sx might make, par ti cula r. ly if such
an offer were made while US and 7J1; military fortunes in Korea
are at a low ebb.
In the course of the Chamber of Deputies debate
on Korea on 7 July, PCI leader Togliatti delivered a lengthy
appeal for peace in a speech that appeared mode--at e; and well-
documented".. and which was widely disseminated In the Left
press. Although alleging US imperialist aggression against
fora Korea, he glossed over the idea, previously advanced
by other Communists and fello;v-traveling Left Socialists,
that South Korea had attacked north Korea. (n_-ils legend had
been poorly received even among the far Left.) Togliatti also
averred that Korean developments were not to be feared as the
beg* nning of 1.7orld 71ar III. In so stating he reversed Nonni
(leader of the follow traveling Italian Socialist Party) and
other ear leftists who saw "the bombs dropped on Korea as the
first of :lorl.d ':ar III". Togliatti stressed that a general
war has not begun, because "a groat power; a ?peaceful po'cer,
the Soviet Union, never makes war unless it is attacked". lie
concluded by proclaiming the need for a new alignment of the
Italian Government, even though it remain Bourgeois, to preserve
peace, and declared, "our only wish is that peace in Italy is
saved."
The immediate aims of this "moderat.e" line are
probably to counteract growing political demands from the Right
that Co:mnunist activity and the Conrunist press be curtailed,
or even that the Party be outlawed. It Is also designed to
regain some of the ;round lost by the Cormunist "peace campaign"
because of the immediate popular reaction against the aggressive
acts of Co*mnuni s t-dominated North Korea
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SE CRE T
In a larger sense, however, the line might also
be contemplated to take advantage of any efforts at a
compromise settlement the USSR might make, particularly while
North Korea retains the military initiative. .iith Korea
standing as an Immediate example of what riight happen in
western Europe, an offer of a settlement by the Kremlin would
be viewed with great emotional relief by the pusses ef'
approhensive and war-weary people in Italy. In this respect,
the Contiunists have been unwittingly aided by esterr: propa-
ganda, which has given the people the impression that the
USSR holds the key to peace or iar. This thesis would assist
the Kremlin to pose as the great savior of peace along; the
lines developed by Togliatti.
At the same time US military prestige has
suffered considerably in the eyes of the average Italian,
peculiarly sensitive as he is to power alignments, but
unacquainted with logistical problems. A compromise offer
by TZosco r would place the Italian Communists in a position
to profit whichever way the US would react. On the one hand,
acceptance by the US of the offer would leave US prestige at
a low level, and cause an Italian reaction against the
PNATO, while a rejection by the US of a "reasonable" offer
would still further lower the Italian will to resist in the
event of war.
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S L; C 1 E T
SPECIAL ARTICLE
EFFECTS ON ITALY OF A SOVIET- SPO dSORED IIWMSIOS?
Q:4:Yrvo SLAM
invasion of ?u oslavia. would
probably croLL11-e in taly serious and ime.iediate repercussions
.
arising; fron t 1'r ar of an i nent attac1:c upon t;aly itself
Stich an inva I...,n wot.'I:i probably be interpreted in Itai;, as
the beginnin;_, o : :or ? ':+a-r' III, particularly in v ,ew of
Secretary Ac;I :; ~. a re:eent warnin , to the U:;SI' against further
military mover b tho Corrunist world,
I z alian Communists might first deliver a
9uick ultima> n ~ o -,c Goverrmient in an effort to achieve a
`.bloodless" .e :Uand1n, the renunciation of the Atlantic
ch would
Pact and the of a "Popular" governnont wh l
include the and the left. Socialists Su
ultimab n,,Wouj. , :rc?:'t = ply be rejected by Premier Do Gasperi o
Tai Italian ~tb. ';s mould then be very apt to seize the
opportunity ca?a ?.. , J by the General confusion to to zle over
various Indus tr 1 e l Lacili ties in the north, where the
Conm unis+ts are t. strop th; h y would also
probably succeed. 1 i cutting; rail and other cotit:nications
between the nor '' of Italy and the rest of the peninsula,
Cora.-2a its t paramilitary units would be able for
several weeks to control or disrupt movements of personnel
and supplies in the strategic north-central r oGlons of Liguria
and Eadlia-Roma,na . Under the cir ouras tanc%e s of war arixi e1 icy o
the Government, mainly preoccupiod with !riobi"lizat, on and the
establishment of defense lines and troop concentrations in the
northeast, would be unable to prevent ntxaerous acts of sabotage
and violent demonstrations throughout Italy.
Furthermore, both the Government and the mt li. tar ty ,.
conscious of Italy's poor military capabilities and recently
impressed by Communist successes' against US forces in Korea
would be disposed to demoralization at the prospect of facing,
r
even Satellite troops backed by formidable Soviet support
The Government would ii iedi.atoly call for considerable U,
military aid 4 If such aid crere not promptly extended or were
considered as "too little and too late", various sect, Sri of
the population and political parties of both the giit and Left
would loudly demand an official pronouncement of neutrality--in
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SECRET
effect an abandonment of Italian membership In the NATO.
finis demand, vrhich has its roots In the traditional
Italian sentiment of neutrality,, would grow rapidly on the
fear of Invasion. The recurrent desire of th:.o Italian to
adjust himself to shifting tides of power would probably
be evidenced by a largo number of opportunists hastening
to join the Communist carT.
Much would depend on the development of the
invaders campaign in YuCoslavia. Fairly rapid success of
the Soviet-sponsored march into Yugoslavia would doubtless
accentuate the adverse roactions in Italy describod above.
The failure of the invasion to make any
appreciable progress in a number of weeks Vould enable the
Italian Govorr ont to restore a good measure of internal
security. But uncertainty and apprehension. In the Govorn
ment and among the people would continue..-as would the
insistent calls for more US aid.
Only a prolonged stalemate or the complete
cessation of Soviet-sponsored military activities against
Yugoslavia would mare it pos_Able for the Italian Government
to nullify the various reactions in Italy unfavorable to US
interests.
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S E C R E T
FF s 1C11 P ?od: vsSAL FOR NEV APPROACH TO
EtJT OP1 .I, l ;"J :>T , T; T PLATING
The growing leadership of the FrencYi in the.
economic expansion of aesl'-c, ?n Europe is not being confined to
the Schuman Plan. llec ntl-~-, they advanced in the OEEC a new
approach to post-1952 ins.*es trient plar3ni'-,, hihlighted by a
proposal for a European ;investment Bank.
The principal thesis of the now French proposal
is that the countries of western :ru.rope cannot expect to
comae to favorably with I. industry if they have independent
national investment pro ;roes. Rather, over-all coordinated
investment planning; is e: sential. Such planning should
(1) seek the greatest possible volume of production for a
single European market; (2) pursue the Greatest possible
economy in the. use of Europe's equipment and resource-s- and
thus (3) promote a thorough rationalization of Continental
production. The French argue that the inve s tme::i t prograri for
western Europe as a whole must be }pore than the sum of the
independent programs of the componcn' countries '2.e national
economies are so interdependent, the argument curs, that no
single country can carry out an investment prog rarrn without
making allowances for the investment progr cis of other
countries. A comprehensive and competitive aeronautical in.-
dusttry, Tor example, must be a rrestorn .iropean effort; it
cannot be financed or made to attain lar et-volume production
by the independent efforts of the countries invol ed.
The French, therefore, have questioned whether
the QEECts recent request to-each member nation for its post-
1952 investment plans will give adequate results They,
consider that two steps are indispensable : (1) comprehensive
studios by the OEEC of western Europe's production and marketing
problems, product by product; and (2) a European Investment
Ban].k, to insure the necessary international approach to the
investment problem. The Bank should be under the control of
either the national governionts or tho OEEC, and should appeal
strongly to the necessary private capital, incluu'~.ing that from
the US.. Thus the sink might be expected not on1 to supplement
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considerably the inadequate volume of Government-financed
investment, but also to direct both public and private
investments toward the desirable rationalization of western
European industry.
Though many French officials are no doubt
convinced of the economic necessity for this European
approach, it also appears desirable for domestic political
reasons. The Pleven Govern nont is committed to an expanded
progra-,,,i of new housing, and sentiment for the more rapid
repair of war dar. Ged property has been Growing. hence,
the Goverment is now likely to lay less emphasis on lonr;-
term investment in heavy industry, and will probably give
increasin attention to investments of local and social
importance. Both labor unrest and military requirements will
tend to strengthen such a policy. Consequently,, the Govern-
ment, which recently relaxed credit restrictions in an effort
to draw out private capital, would welcome a povjerful inter-
national device for attracting; European and US private funds
in order ul tima tely to reduce the French Gove rmnont's own
investment burden.
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