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

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000400050003-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: November 9, 2016
• Document Release Date: July 27, 1998
• Sequence Number: 3
• Publication Date: December 6, 1950
• Content Type: PAPER

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WESTERN EUROPE DIVISION
OFFICE OF RESEARCH AND REPORTS
CENTRAL INTELLIGENCE AGENCY
DIVISION WEEKLY
For week ending 5 December 1950
6 December 1950
NOTICE: !1ORKING PAP? R
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
0/RR.. It represents the formulative thinking of
one group of analysts in O/Kit 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 over-
lapping problems. It is intended for the use of
the addressee alone, and not for further dissemina-
tion.
COPY FOR:-
DOCUMENT NO.
NO rHANGE I
N CLASS. ^
DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
AUTH:
DATVt 7 REVIEWER: 37,1044
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For week ending
5 Decerilber 1950
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The municipal elections in the Soviet-occu-plied
province o ir5en and on 27 Lovcmber re,-)resent a c.rastic
reduction of CO::m nist. rruri cipc.l representation to its :roper
proportions; (2) a further indication of a lull in Soviet
interference with Austrian domestic affairs; and (3) the con-
tinuod refusal of the Austrians in the Soviet zone to vote
Co::r..unist. Before the elections the Co_riuniste occupied a
much Greater number of municipal offices than their electoral
stren-th warranted, because in 1945 those offices were dis-
tributed amonc the Socialist, People's and Coi iunist -parties
on the basis of inter-party agreements and not free elections.
The elections, however, do not represent any recent decline
in Co.uunist strei th in the province, because the gamy
polled ap:?roximately the same proportion of total votes cast
(3) as in the 3urgenland returns of the national elections
in D40. Nevertheles , the elections do represent the failure
of a Soviet-sponsored Comunist-front Group (' he wall Par ers'
Party) to Cain favor with the politically-wise Austrian popu-
lace. Another notable feature of the elections was the total
absence of Soviet interference as contrasted to the Soviet
attempts to prevent the holding of Burgenland municipal elec-
tions in the sprinC of 1950, interference which delayed the
oloctions until _lovember.
A developinG food shortaGe in ilustria, prim^.rily of
gra?Ins, may cause social unrest and pol tics disturbances
within tho next few Lmonths. Anticipated domestic and _foreiLn
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S E C R E T
deliveries of broadgrains are at least 200 less than 1950-51
roquiroments. Along with the considerable labor dissatis-
faction over last October's wage-price agreement, a food short-
age would be an additional issue which the Corrr^.iunists might
exploit to spark labor disorders. The current grain shortage
is largely due to the farmers' reluctance to sell grain on the
donestic market, cncch, in spite of a recent increase in the
controlled prices, is still below world price levels. Lacking
sufficient coarse Grains for their livestock, the farmers have
fed their stock broadgrains, which they have also been soiling
to the Soviet economic agencies in Austria. These in turn sell
the -rain abroad at substantial profits.
Another factor leading, to the -rain shortage is in-
sufficient imports, presumably because deliveries hoped for
or expected from Eastern Eh?ropo are not materializing. Even
if the Goverment receives sufficient US assistance to prevent
a serious economic crisis, it will continue to be faced period-
ically with similar problems, which arc sy ipto: atic of the
artificial and distorted subsidy price-wage structure,
FIU.
.?ICE
Although the recently announced French military
budget for 1051 falls eonsider~:bly below US expectations
the French Government is prepared to begin implementing its
plans both for placing 10 divisions in active status in
Europe in 1951 and for stopping up defense measures in
Indochina. The draft military budget amounts to 740 billion
francs (includi -15 billion which are being transferred from
the civil budget), compared to about 500 billion of actual
military oxpondi tures in 1050.
The US, however, is e.:pocted to contribute the
equivalent of 140 billion francs of this sum in military aid,
and hence the French are proposing to increase their share of
the bud.-et only a,out 16;,. over actual military expenditures
for 1050. At Washington in September, Defense :sinister Loch
declared that a military budget of at least 650 billion
francs would be necessary, including US military aid to the
amount of 270 billions, if his plans for the 10 divisions
were to be realized. The US subsequently indicated, however,
that only 140 billions in aid should be expected, and the
present draft budget reflects a similar cut below t:iochts
estimate of the required military budget.
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Me assertion by the ITS that it had considered
granting any military aid only on the assumption of a mili.
terry budget aTp roxima tL*Z 850 billion francs, has boon rat
by strong assurances from Premier Pleven and Finance I.Unister
Petacho that France will fulfill its eormailanents to activate
10 divisions and intensify the defense effort in Indochina.
For this purpose, French, Govcrmmont officials have increased
the budgetary figures for Ietropolitan France at the expense
of In~.ochina, apparently expecting that in the course of the
year the perennial resort to extraordinary financing, of the
Indochinese budgetary deficit would perm. it the greater de-
fenso effort in that area which is presently contemplated.
Furthermore, for political r a sons French of~:icials may have
found it expedient to ar.blo that the rapid march of world
events might per t a major recasting of their financial
needs by late 1951.
",bile the suItstantial vote of confidence ,Which
the French Assembly has just granted the Ploven Govcrn:ront
gives the Premier initial ac vantage in the debate on the
1951 budget, coalition solidarit~r has been seriously weak-
ened as a result of the secret ballot against the Socialist
Defense :'inister Jules foci Which led to this vote. Premier
Pleven demanded, in his declaration prior to the vote, that
acceptance of additional tax Measures be implicit in the vote
of confidence, thus insuring; ca no support for the now budget.
The Socialists bitterly charged that the size of the anti-
I.Toch vote was due to the dupolicty of those Popular Republican
(,.TRP) r:ic_ bers who, influenced partly b-17 their poreonal animo-
sity towards the Defense 'sinister, had abetted the Communist
scheme to embarrass the Government. The vote against 'loch
revealed a serious split not only between the dominant parties
of the coalition, Taut also within the ranks of the QUIP.
The anti-IToch vote which precipitated tai s sudden
political crisis resulted from loch's association with the
Revers-I:Tact Scandal, involving a breach of natl onal security.
The Government attom_-)ted to rosin when the opposition polled
a lame vote against _Toch, but President Auriol refused . to
accept the resignation -and prevailed on the Premier to as};
for a vote of confidence. Pleven realized that Parliament
would be reluctant to face dissolution before electoral re-
form had boon agreed on, and in the face of the critical
international situation. Ho also saw in a vote of confidence
the opportunity to exact support for a tax program which the
Socialists had boon expected to op, ose. Although the` Assembly
cleared the integrity of Defense Tinistor Hoch and approved
the general poll ties of the Cabinet, the hostility engendered
during, this politic,-:1 crisis may sufficiently weaken the pro-
eariously balanced Third-Force regime to hasten the holding
of U,or-.eral election-,-, now scheduled for the fall of 1051.
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NFMIEZUUDS
To protect Dutch economic interests in Indonesia
the Netherlands probably v-1111 find if, necessary to accede
to some of the Indonesian demands for sovereignty over
Netherlands New Guinea (lING) at the special bilateral Dutch-
Indonesian Conference on 11110 beginning 4 December. Any re-
treat from the Dutch Government's publicly announced deter-
mination to maintain sovereignty over ITITG will be op. used by
a substantial and vociferous monority of the people in the
Netherlands, but the threat of a non-official boycott of
Dutch inter cts in Indonesia probably will cause the Govern-
ment to modify its 11110 policy. Although both the Netherlands
and Indonesia are unwilling to allow the Now Guinea question
to receive international consideration, a bilateral compromise
probably will be exceedingly difficult to achieve. The most
likely con-,:romise will follow the lines of the solution pro-
posed by Indonesia's Foreign Affairs Minister Rum. Under
this agreement, 1110 would be under Indonesian sovereignty and
the island would be leased to the Netherlands for a period
of years, with the Dutch gradually turning the administration
over to the Indonesians. At the same time, the Netherlands
would have dominant economic privileges, and defense probably
would be under Dutch jurisdiction. If extremists in Indonesia
proclaim anything loss than complete Indonesian control over
1r.G as unacceptable and carry out a boycott and sabotage of
Dutch holdings, the Netherlands Government will be faced with
strong op-position at home to any appeasement of Indonesian
donanes4 The Dutch Government probably will receive sufficient
support for a compromise agreement, but then its ability to
i iplement other important ?olicies, such as defense, may be
jeopardized.
ME VATICAN?
The
opposition to can ;es in thc pr sen measure for -inter-
nationalization of Jerusalem. if such a modification becomes
clearly inevitable, hovevor, the Vatican will probably accept
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a suitable con : r o ., i so . in the epr' r~ ; of 1050, there wore
indications that :ie Vatican leaders, including; the Pope
himself, were becoming; aware that the TTITts internationaliza-
tion plan could not be enforced. Just prior to the meeting
of the UIT Assembly in the fall, however, the Vatican resumed
its militancy in favor of internationalization, and reitera-
tions of to Vatican position have been published periodically
in such organs as the so:-.ii-official newspaper, Osservatore
itio:::iano .
A pos iblo com: romise, soon to be considered by the
UIN, would provide for supervision of the Iloly Places by a UN
Coi iissioner, leaving Israel and Jordan to acaninister their
respective areas of occupancy in Jerusalem. Such a solution
would permit the Vatican to modify its earlier stand in favor
of total internationalization of the area A.thout sacrificing
its primary aim of protecting, the Holy Places. Such a corn--
promise on the part of the Vatican might be encouraged by
the' current world tension and the increasing necessity for
buttressing the authority of the UN.
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