CURRENT INTELLIGENCE REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79S01060A000100150001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 16, 2016
• Document Release Date: October 26, 2004
• Sequence Number: 1
• Publication Date: October 3, 1951
• Content Type: CIAPER

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68
VOL. I No. 8
3 October '1951
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Office of Current Intelligence DOCUMENTNo --_-
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CENTRAL INTELLIGENCE AGENCY NEXT F; ,,! 11-WW ATE:
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THE SOVIET WORLD a
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SOVIET ATOMIC ENERGY DEVELOPMENT 4 a o 0 0 o d a , o Page 6
In five years the Soviets have managed to build an im-
pressive atomic energy industry whose primary objective is
the production of weapons. There appears to be no doubt
that the guiding aim of the program has been and continues
to be the acquisition of a large stockpile of atomic bombs
in the shortest possible time.
CURRENT SOVIET POLICY TOWARD GERMANY o
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Russia does not desire .a united Germany that is free
of Soviet control. Although the Russian Government might
now be prepared to offer unification proposals on a four-
power level which appear closer to the Western position
than anything that it has previously proposed, its purpose
in so doing would be to exploit German hopes for unification
to delay or even prevent German integration with the West
WORLD CDNIl+43I aMo COMIT.IST
The Burmese Communist movement, in apparent disinte-
gration less than a year ago, is being transformed into a
vigorous force with a clearly-defined strategy for obtaining
control of Burma. This revival is largely the result of aid
received or anticipated from Communist China. Barring a
Chinese invasion, however, there is little danger of a Com-
munist government assuming control of Burma in the immediate
future.
ITALY ? S INTERNATIONAL RELATIONS FIORT
COMPLICATED O U 0 0 0 Page 14
As a result of the tripartite declaration of 26
September favoring revision of some of the restrictions
of the 1947 peace treaty, Italy?s relations with the treaty
signatories have reached a delicate point. France as refusal
to revise the economic provisions of the treaty creates a
point of tension; and alleged British support of the Yugo-
slav position on Trieste is already a source of friction
with Italy. Relations with the US will continue close, but
disappointment at the results of De Gasperi's visit may less-
en Italian public support of De Gaeperi?s pro-US policies.
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AUSTRIA'S COALITION GOVERNMENT FACES NEW DIFFICULTIES . ? . Page 16
Dissension within the People's Party and the pro-
spective strengthening of political forces on the extreme
right have recently increased the internal instability
of the Austrian Republic and have raised new obstacles to
the continuation of Austria's coalition government. Should
the present trends continue, the fulfilment of American
policies in Austria would be seriously handicapped.
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THE SOVIET WORLD
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Continuing Satellite attempts to maintain trade relations useful
to the Orbit, in spite of US efforts to curtail the eastward flow of
strategic materials, are evident in recent Czech and Hungarian trade
negotiations with non-Orbit countries.
Negotiations are taking place for renewing a Czech-Indonesian trade
agreement which provides that each country will take all measures to
facilitate an annual trade turnover of some thirteen million dollars.
The deal will involve the annual shipment of 400 tons of Indonesian tin
to Czechoslovakia, plus an unknown commitment for rubber. Czechoslovakia
has renewed its agreement with Mexico, Hungary and Poland have renewed
trade agreements with Indonesia,
A Hungarian-Austrian trade treaty has recently been signed to run
through August 1952; it calls for the exchange of Hungarian foodstuffs
for Austrian steel and manufactured goods. During 1950 Hungary was the
second largest importer of Austrian ball-bearings.
Finnish commercial interests are attempting to interest the US in
the purchase of Finnish cobalt, a steel alloying metal indispensable in
the making of jet engines, The Finns fear that the USSR will put pres-
sure on their government to obtain the metal if the US does not make
prior application. The quantity of the metal involved in the offer is
some 300 tons annually out of an estimated annual world production of
5,000 tons (1947)0
Several recent reports indicate that the Satellite countries are
having further success in acquiring Western shi in , 25X1
# UJ. L1U now
owns three tankers an charters two o ers. The Polish overnment is
also on the verge of acquiring an 8,000-ton French cargo-passenger
vessel, which exceeds the size and speed restrictions agreed on by the
Western Powers as making the vessel potentially useful for military
purposes,
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Various reports from Eastern Europe point to continuing Communist
difficulties in tightening the Soviet grip on the area. Moscow has ap-
parently begun a weekly series of broadcasts stressing vigilance against
imperialist spies. The first broadcast pointed out that the US was re-
sorting to all measures to undermine the People's Democracies, including
espionage, provocation,, sabotage and terrorism.
a well-supplied and well-organized resistance
band has been operating in Western Poland since May. The band, which
has been terrorizing local Communist headquarters,, seems to have in-
filtrated the Communist Party ranks and apparently operates with a
prior knowledge of local Party activities.
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The Bulgarian Ministry of Industry has been split into the
Ministries of Light and Heavy Industry. The move has probably resulted
from the Ministry df Industry's failure to meet planned goals. The re-
shuffle will reallocate and narrow responsibilities,, tighten central
controls and align the Bulgarian administration with those of the more
industrialized Satellites.
Western embargoes are forcing the soviet Union to draw on its own
resources to supply the strategic materials which China formerly ob-
tained from the West.
The USSR Manchurian
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trade agreement concluded in July 1949 and the several wino-Soviet eco-
nomic agreements of September 1950 concerning Sinkiang are other illus-
trations of the manner in which Moscow's influence extends to the border
areas,
Since World War II several autonomous republics
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have been either reduced to plain Oblasts or have vanished from the map.
Three republics formed out of minor nationalities which collaborated
with the Germans have suffered this fate, the Crimean is an example of
the first procedure and the Volga-German and Checheno-Ingush ASSR's of
the second,
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In five years the Soviets have managed to build an extensive
atomic energy industry whose primary objective is the production of
weapons, not research into peaceful uses. There appears to be no doubt
that the guiding aim of the program has been and continues to be the
acquisition of a large stockpile of atomic bombs in the shortest possi-
ble time.
It was formerly believed that the amount of available uranium
might seriously limit the productive capacity of the atomic industry,
However, the discovery of additional sources of ore?and the willingness
to expend manpower and resources extravagantly have now apparently as-
sured the USSR an uninterrupted expansion. The rate of bomb production
is accelerating and a much greater increase in the total number of bombs
may be expected within a few years. It is estimated that the USSR will
have a stockpile of 100 bombs by mid-1952, and 200 by 1953.
During World War II atomic energy activity in the USSR was conducted
on only a minor scaled After the explosion at Hiroshima and Nagasaki,
however, L. P. Beriya, Deputy Chairman of the Council of Ministers, was
given the responsibility of organizing a large-scale atomic energy program.
In October 1945, the First Chief Directorate attached to the Council of
Ministers was formed to handle all of its aspects. As a result of a
major reorganization in 19509 the Second Chief Directorate attached to
the Council of Ministers was set up to handle the mining, concentrating
and refining of uranium. The production of fissionable materiels and the
fabrication of weapons was retained by the First Chief Directorate.
The Russians currently obtain uranium ore from sources both inside
and outside the USSR, with foreign producers providing two thirds of . .
the total estimated production. Outside sources of uranium ore are in
Germany, Czechoslovakia, Bulgaria and Poland; Germany and Czechoslovakia
provide around 90 percent of the total outside production. The deposits
in the Soviet Zone of Germany, although they contain low-grade ore, are
at present the most productive single source, but it is estimated that
these will be greatly diminished in another three to five years.
The magnitude of the Soviet atomic energy program has necessitated
the diversion to it of large blocks of manpower, especially from among
scientific, engineering and construction personnel. The estimated
number engaged in related mining activities in the USSR is 80,000 to
120,000; in Germany 150,000 to 200,000; in Czechoslovakia 15,000".to
25,000; in Bulgaria 4,000 to 6,000 and in Poland 6,000 to 10,000.
Those engaged in production activities are estimated at 20,000 to
30,000; in research 5,000 to 8,000; and in construction 50,000 to 60,000.
The grand total for all these activities is 330,000 to 459,000 workers.
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Soviet espionage against the Americana British and Canadian atomic
energy projects was widespread during World War II and has since been
well publicized. However, the mass of information reported to the USSR
by Fuchs, Gold, Nunn-May and others apparently did not find expression
in a well-organized large-scale program until after the war. All in all,
the available evidence concerning Soviet atomic energy espionage activi-
ties warrants the inference that Soviet plant design, construction and
operations have been carried out with considerable knowledge of all the
important atomic energy programs in other countries. The Soviet program
has followed a line of development technically similar to the US program,
After the end of World War II., the Russians showed considerable in-
terest in German research in heavy water. In October 1945, the personnel
of the principal German pilot plant located in the Lewaa works at Merse-
bur were evacuated to the USSR under MVD auspices.
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e ge o neavy water production was exploited.
u sequen y, the group was isolated from further hea water research
and transferred Many other 25X1
German scientists an technicians are apparently making significant con-
tributions to the Soviet atomic energy program, but few, if any, are in
its more highly sensitive branches.
The bulk of the equipment for the Soviet atomic energy program is
standard, and is produced in any number of plants throughout the Soviet
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Union, The Russians have offset deficiencies in their industry by pur-
chasing equipment not obtainable in the USSR from the Satellites and,
prior to increased export restrictions, from Western countries, in-
cluding the United States.
Until such time as the USSR becomes far more self-sufficient in
atomic weapons and other military applications of atomic energy and un-
til international tension is eased, there will be a minimum diversion of
effort toward peaceful applications of atomic energy in the Soviet Union.
In fact, although Soviet propaganda proudly tells of moving mountains
by atomic power, the Presidium of the Supreme Soviet of the USSR in a
resolution of 6 August 1951 pointed out that "there is no doubt that only
after a ban on atomic weapons is imposed, can atomic power be truly
utilized for peaceful purposes, for the good of peoples."
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Early in September, as it became clear that the Western powers in-
tended to go ahead with arrangements to integrate West Germany into the
defense of Europe, the Soviet Union increased its efforts to forestall
West German rearmament, Moscow~s efforts were probably stimulated when
the Western powers demonstrated at San Francisco that, if necessary,
they would proceed with settlements involving the former enemy nations
without the participation of the Soviet Union,
The Soviet diplomatic campaign was opened on 11 September with a
note to France charging that French acquiescence in Germany's role under
the Schuman and Pleven Plans violated the Franco-Soviet Treaty of 1944
and the Potsdam Agreement. The Kremlin can be expected to make further
demarches to the French and may send a similar protest to Great Britain
before the October elections in that country,
On'15 September Prime Minister Grotewohl of the (East) German
Democratic Republic renewed the campaign for German unity based on a
two-point program-. (1) the holding of free, all-German elections with
the objective of establishing a unified, democratic, and peace-loving
Germany; and (2) the speeding. up of the conclusion of a peace treaty
with Germany, The Volkskammer, at Grotewohl7s request, passed a reso-
lution proposing joint all;-German consultations between representatives
of East and West Germany98 to implement this program. On 20 September,
the proposal was endorsed by General Chuikov, head of the Soviet Con-
trol Commission in Germany. At about the same time, Soviet propaganda
attention to Germany reached the highest point since formation of the
East German state,in October 1949.
The Soviet motives in endorsing the East German approach were made
very clear in the note to France by the emphasis on the Schuman and
Pleven Plans, which involve the economic and military integration of
West Germany into Western Europe,
Although the USSR might now be prepared to offer unification pro-
posals on a four-power level which appear closer to the Western position
than anything that it has proposed in the past, the purpose of this
would be to exploit German hopes for unification to delay or even pre-
vent Germanyvs integration with the West. Actually, such proposals
would not indicate that the USSR was interested in German unity on
terms that could be acceptable to the West. Soviet tactics are being
applied, not in the expectation that the Bonn"government or any of the
Allied powers will undergo a change of heart,but with the calculation
that popular support for the policies of these government may be weakened,
perhaps to the point that the policies themselves become ineffective.
Soviet postwar policy toward Germany has been distinguished by two
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main aspects, The Soviet Union has consistently sought de facto in-C
tegration of the Eastern Zone into the Soviet Orbit, although at a slower
pace than in the case of any Eastern European Satellite. At the. same
time Soviet diplomacy, backed by strong propaganda, has claimed that the
USSR favors German unity and the early conclusion of a peace treaty with
all of Germany.
These obvious contradictions stem from the West's success in
frustrating the USSR's efforts to extend its control over Germany as a
whole. The Soviet Union does not desire a united Germany led by a govern-
ment which might have Western sympathies and irredentist aims beyond the
Oder and theNeisse. By holding firmly to Eastern Germany, Russia can
retard indefinitely the resurgence of a united Germany which might be-
come a threat to its security.
Nevertheless, the Soviet Government is aware that this attitude
may help bring about a progressive integration of Western Germany into
Western Europe, In particular, it is extremely unwilling to see Allied
defenses strengthened by the addition of fifty million Germans and their
resources. A rump West German state will have even greater irredentist
aims in the east than a united Germany. In order to counteract these
tendencies, Russia has been obliged to state its diplomatic objectives
in terms of a united Germany and an early peace treaty.
From the Soviet point of view, no wholly satisfactory solution to
the German question is possible at the present time. As a result,,
Soviet policy continues to drift in its already well-marked channels,
and each move in the West is countered by a similar move in the East.
Both Russia and the Western powers are confronted with a partition of
Germany that appears likely to be prolonged indefinitely, and both face
a situation in which the German question may ultimately lead to war among
the powers themselves,
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WORLD COMMUNISM-. COMMUNIST THREAT TO BURMA
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The Burmese Communist movement, in apparent disintegration less than
a year ago, is being transformed into a vigorozs force with a clearly-
defined strategy for obtaining control of Burma, This revival is largely
the result of aid received or anticipated from Communist China,
Burmese Communist propaganda frankly admits the .movementQs dependence
on China. Since the Issuance in January 1951 of a Burmese Communist Party
"Order of the Day" which called for "winning the war in two years," there
has been persistent stress on the need for strengthening Sing-Burmese
"friendship." Thakin Than Tun,., chief of the Party., is reliably quoted as
stating that it was the partyvs aim to establish a "Peoples Democratic
Republic of Burma," and advocating the creation of an "4i.mpregnable strong-
hold" in Upper Burma., which would serge as a key area for the advancement
of the "revolution" in Southeast Asia, Proclaiming that the US is attempt-
ing to make Burma into a military base from which to attack China., Than
Tun has told his followers to join with the Chinese Communists'should the
latter enter Burma in pursuit of an American or r$puppet" force,
While they are still active in Lower Burma, the Burmese Communists
have shifted their principal efforts to areas north and east of Mandalay.
Communist-created unrest has broken out in the heretofore peaceful Shan
Besides entering into closer relations with China, the Burmese Com-
munists have sought to enhance their capabilities by shifting from a "go-
it-alone" policy to one of active collaboration with the various other
insurgents in Burma, The Communists insist upon retaining leadership in
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any joint effort, but toward the other insurgents they stress the common
objectives of overthrowing the government. While little unity has actu-
ally been achieved, the Communists have been strengthened by the reduc-
tion of internecine warfare among the anti-government forces. The develop-
ment of a "united front" of this nature has also been advocated by inter-
national Communist strategists,
The greatest asset of the Burmese Communists, aside from their Chinese
allies, is the continued indifference of most Burmans, including high gov-
ernment and military officials, to the threat of international Communism.
Only very recently has the government admitted that the Communistst north-
ward movement existed. It still ignores the significance,of this develop-
ment. This apparent opacity is a combination of fatalism, belief that
Communists are not real Communists, and blind reliance on Buddhism to
save Burma from an alien faith. It'directly contributes to the increased
relative strength of the Communists. For example, it has permitted the
current bickering between political leaders and the Army Commander-in-Chief
to continue with the result of lowered morale in the already weak and over-
extended Burmese Army,
Barring a Chinese invasion, there is little danger of a Communist gov-
ernment assuming control of Burma in the immediate future. Nevertheless,
current developments clearly indicate that Communism in Burma is on the
upswing and there appear to be few obstacles in the way of the Communists
gaining control of large areas in north Burma from which an effective
political., military and"psychological campaign can be conducted against
the rest of the country,
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I'T'ALY Q S INTERNATIONAL RELATIONS FURTHER COMPLICATED
As a result of the tripartite declaration of 26'September favoring revision
11of some of the restrictions of the 1947 peace treaty, Italy's relations with the
treaty signatories have reached a delicate point. At the same time, Italy's re-
lations with its former axis partners, Japan and Germany, are moving toward a
new status as a result of the San Francisco and Ottawa conferences, respectively.
The Ottawa meeting gave Italy the opportunity to promote, in unofficial
discussions, German participation in a European defense force, as advocated by
Premier De Gasperi. Italo-German rapprochement is growing, fostered by the close
ties between the two Christian Democratic Prime Ministers,. and, on a lower level,
between Christian Democratic foreign office officials of the two countries. In
addition, the Vatican strongly supports such relations and presumably is anxious
for the emergence of western Germany as a Catholic and an anti-Communist force,
Italy and Germany have terminated the state of war between them.
Relations between Italy and Japan, on the other hand, have been awkward since
the Italians first protested their exclusion from. the San Francisco conference.
They further complained that the conference produced a peace treaty for Japan far
more lenient than the 197 treaty between the Allies and Italy despite the fact
that the latter had been a co belligerent rather than an enemy after October 1943.
Italy and Japan also have reached agreement on a bilateral termination of the
state of war, but have not settled Italian claims for war damage.
The decision of the big three to "make every effort to secure Italy's member-
ship in the United Nations" renews Italo-Soviet friction. Formal contacts between
the two countries are correct, but the USSR continues to block Italy's admission
into the UN. Italian relations with the Satellites are deteriorating under the
same pressures.from the Satellites that have been imposed on most Western nations.
Continued Czechoslovak harassing tactics forced the Italians to close their con-
sulate in Bratislava and they, in turn, requested the Czechs to withdraw their
consulate in Milan.
A pledge from the US, Great Britain, and France to free Italy from the peace
treaty limitations on its armed forces is considered only a small part of the big
issue of total abrogation of the peace treaty which Italy wants. France's refusal
to revise the economic provisions of the treaty was a disappointment to the Italians,.
who were beginning to regard France as their champion, particularly on the Trieste
problem.
The question of disposition of the Free Territory of Trieste, not dealt with
by the tripartite declaration, remains a cause of sharp friction between Italy and
Yugoslavia and one of Premier De Gasperi's major problems of foreign relations and
domestic stability. Italy has-transmitted a note to Tito, expressing its willing-
ness to negotiate but leaving it up to him to arrange.for such negotiations. There
are indications that the note was intended less as the prelude to Italian conces-
sions than as a sop to the Western powers, who have urged bilateral negotiations,
and as a means of showing up what the Italians regard as Yugoslav intransigence on
the issue.
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Italian relations with Britain since the war have been generally less cordial
than those with the United States. Currently the Italians claim that the British
are supporting Tito at the expense of Italy, and that they even favor an indepen-
dent Trieste rather than return of the area to Italy, as supported by the US-UK
French declaration of March 1948.
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Relations between the Italian Government and the US, hitherto regarded as a
protagonist of Italian interests, will continue close, but the Italian public may
feel somewhat less inclined to support De Gasperi1s pro-American policies. The
Italians had been iinipped up by their press to expect concrete decisions on Trieste,
Italian emigration and exports to the US, and other issues, to be championed,by
the US against opposition from the other Western powers. The non-government Italian
press is already showing unfavorable reactions to the tripartite meetings,, especial-
ly their failure to deal with the Trieste issue, and the Italian Communists are of
course seeking to exploit this disappointment.
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AUSTRIA'S COALITION GOVERN.LENT FACES NEV DIFFICULTIES
Dissension within the People's Party and the prospective strengthening
of political forces on the extreme right have recently increased the
internal instability of the Austrian Republic and have raised new obstacles
to the continuation of Austria's coalition government. This is of parti-
cular interest to the US, as the present coalition of Austria's People's
and Socialist Parties has been an effective instrument for the attainment
.of American political and economic interests in Austria since 1945.
The monopoly of conservative leadership exercised by the People's
Party since World War II was not seriously challenged until 1949, when
the Union of Independents appeared. Austria's first authentic "fourth
party," the Union polled nearly 12 percent of the total votes in the-
elections of that year and contributed an impressive delegation, many of
them well-known Nazis, to the national parliament. The Union subsequently
frittered away much of its new prestige, however, in factional disputes
and in an alignment with the Communists on the fourth wage-price agreement.
But in the presidential elections this past spring, the Union once more
revealed surprising strength and showed that it resins a political force
of significance.
Diverging objectives of the component cliques of the Union of
Independents have heretofore prevented a clear definition of the Party's
program. The Union of Independents has commanded wide support from former
Nazis by demanding equal rights for all Austrians, a camouflaged, but
obvious, denunciation of the denazification laws. In speeches and in
publications it has made vague references to cultural pan-Germanism and
talked about a rehabilitation of the military virtues. Even monarchists
have found a sympathetic response among party adherents. The Union has
become a refuge for the malcontented.
Recent ideological disputes have provided some insight into the
current thinking of the party's more moderate'leaders. While this
thinking cannot be termed '"neo-Nazi," "totalitarian" may not be an incor-
rect appellation. Party Chairman Herbert Kraus in a recent article on
the prospects of European unity defended "national" parties, denounced
those democratic forms he considers debilitating, and made a plea for
an economic philosophy transcending class warfare.
Within his own party Kraus is attacked for his betrayal of "national
conscious socialism," for cooperation with the "capitalistic People's
Party," and for his rejection of the alleged "'progressivism" of
"European veterans' organizations" in favor of DeGaullism. In other
words, Kraus' totalitarianism is obviously not "fascist" enough for some
of his militant followers. This apparent moderation may cost him sup-
port within his own party, but it attracts those who defect from the
People's Party and protest against compromise with socialism.
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Negotiations, never successful heretofore, between dissident ele-
ments of the People's Party and representatives of the Union of
Independents are now reported to be in progress. Whatever its ultimate
objectives, the Union hopes immediately to form a rightist bloc of
sufficient strength so that the People's Party will be compelled to
accept the Union of Independents in a coalition government of the right.
If it should achieve this goal, the Socialists, who regard the Union
as ultra-reactionary, have sworn to leave the government. This would
bring to an end the system of organized compromise which has provided
the comparative political stability in Austria. The fulfilment of
American policies would be seriously handicapped should Austria revert
to a prewar type of politics when socialism and conservatism were
irreconcilable.
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