Created: 2/19/1957

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ononcurring were the Special Assistant, Intelligence, Department of State; the Assistant Chief of Staff, Intelligence. Department of the Army; the Director of Natal Intelligence; the Director ol Inielligence. USAF; and the Deputy Director for Intelligence, The Joint Staff. The Atomic Energy Commission Representative to the IAC, and the Assistant Director. Federal Bureau of Investigation, at/stained, the subject being outside of their jurisdiction.




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NaUonal SecurityIX>&arUnent of State U'psftmpnt of Dcrenss Operation* Coordinating Board Atomic CnerEV ('Oimniasfon rVrteral Dun-aii of Investigation



To estimate the prospects for stability in thc Soviet Satellite structure over thc icxt few years.


long-latent conflict between Soviet Interests and Satellite aspirationsinto crisis last fallesult of the progressive weakening of ideological authority and loosening of police controls following the death of Stalin. The Soviet leaders are experiencing great difficulty in formulating and putting into eflect policies which will reduce this crisis to manageable proportions. (I'aras.

-We believe that the USSR will continue lo regard the Satellite area as vital to its interests, and will not seriouslyat least for the next several years, the possibilityeneral political or military withdrawal, even in returnithdrawal of US forces from Europe. To the Soviet leaders, loss of control over Eastern Europe wouldevere setback for Communism They would also view it as rendering them powerless to prevent German reunification, and as seriously impairing thc USSR's strategic position.

3 We believe that the Soviet leaders have concluded from the events of recent

months that although reforms in certain fields were acceptable, concessions topressures involve hazards tocontrol. They apparently intend for some time to come to put primaryon thc internal security of thcregimes and on Soviet control over them.

Poland's success in maintaining its present limited degree of independenceey factor affecting -the futuredevelopments in Eastern Europe. Should the USSR succeed-in relmposing its complete control over Poland, it could more easily check dissident elements in other Satellites, particularly disruptive forces in the other Satellite Communist parties If the USSR does not achieve its aim in Poland, its problems elsewhere will probably worsen.

We believe that the Soviet leaders will try to undermine the special status which the Gomulka regime in Poland hasHowever, the costs and risksilitary intervention would be great Such action would almost certainly be


by the bulk of the Polish nation and armed forces, and thus involveforces in large-scale militarywhich could spread to Eastand thusajorcrisis. )

oviet success in repairing its losses in Poland, however, would not remove the underlying causes of disaffection throughout the Satellites. Tensions be-

tween the Satellite populations and their regimes during the next, several years probably will be higher than prior to the events in Poland and Hungary, and the unity of Satellite parties will be subjected to greater strains. Soviet policy is not likely to reduce these tensions in Eastern Europe, or even to restore the degree of acquiescence prevailing earlier.)



political stability ol Communistln the Satellite area dependsariety of factors. Theof these are thc nature and degreepressure applied by the USSR onIts interests in the area, and the degreeattained by the local regimes inopposition force* or winningacceptance. Popular attitudes, inon the to which thefulfill the strong popular aspirationspolitical and economic freedoms,independence, and Improvedliving. Satellite expectationspolicy alsoart. Allwere at work In the crisis ofwill continue lo be present, andtaken into account in assessing thefor Satellite political stability.


it was the conflict betweenin the Satellites and theof the Individual countriesrise to the recent crisis In theThe immediate cause of the crisissimultaneous weakening ofand loosening of police controlsthe death of Stalin. These movesto opposition forces, the strengthof which were apparentlyby the Soviet leaders.of Stalin was probably under-

taken primarilyiew to internal Soviet conditions. On the other hand, thewith Tito was designed, as was the guarded endorsement of "separate roads toor foreign policy aims outside the Bloc. Insofar as the Soviet leadersthe consequences of these movesthc Satellites, they apparently believed that these could be turned to their own advantage or at least contained. Accompanying moves to curb the excesses of police terrorism were probably Intended actually to broadensupport for the Satellite regimes and to stimulate initiative and productivity.

the deterioration of Sovietand security controls-ln thethe prestige and thesome of the Satellite ruling groupsthe emergence of nationalist,and reformist tendencies withinelements of the Satellite CommunistIntellectuals, workers, youth, andgroups among theit possible to speak out moreregimentation, economic burdens,grievances. These forces led tothroughout the Satellite area, to aof party unity and open expressionfeeling in Poland andin the latter, to outright rebellionCommunist system.

upheavals in two Satellites andin others were not the result of organ-


resistance, which had become virtually jmpcaalbte under Satellite police-state rule. Varying degrees of relaxation permitted by toe' regimes and their moderation of certain previous police-state practices ledore open and spontaneous expression of reformist and even of some anti-Soviet sentiment,after the Soviet downgrading of Stalin. Even then, this occurred primarily among Communist party members; only ln Poland and Hungary did wide segments of UieanU-Communist population eventually become Involved. With the probableof Hungary, there is at present no known widespread organization of anllreglme forces In the Satellites; articulate opposiUon has been largely confined to reformist elements within the Communist parties. Uie stateand semiofficial organized groups such as Journalists, artists, students, and trade unionists. So long as the Satellite leaderships remain united, maintain police controls, and stay closely aligned to Moscow, reformistcan only express itself In cautious advocacy of the need for national variations from the Soviet pattern, and cannot openly attack Communist Institutions aa such.In Poland and Hungary showed thatommunist regime permits Uie public expression of nationalist points of view. Uie resulting agitation can rapidly transform Itself Into political demands which arcanti-Communist, especially if thcls divided and indecisive.

e believe that the Soviet leaders are determined to maintain their domination of Uie Satolllue area, This determinationdespite their awareness of thefitrcngUi of opposition forces and their reappraisal of thc costs, especially Inprestige, of maintaining controlparticularly in situations of open revolt. In Uie Soviet view, there are probably three main considerations which make control of the area vital:

a. The USSR's political and Ideological in-vestment In Uie myth of Communism'sworld advance is so great thatfrom the "socialist camp" of any(except possibly Albania) wouldevere setback for the world Communist

movement.efeat, especially Ifby uprisings In other Satellites, would not only impose severe handicaps on Soviet foreign policy everywhere, but would urouse Soviet fears of Western moves to exploit Uie situation. Even worse, it would probably give rise to unrest in Uie USSR Itself which might leadhallenge to the authority of Uie Soviet regime.

Satellite area must continue tofor Soviet military uses. EvenSoviet leaders came in time tothey no longer needed to maintainforces there toroundor to mount offensive action, theyinsist on use of the area for SovietTliey would almost certainlyUiat they could not count uponof Uie areaorward orif they permitted Independentlo replace the present

of control over the Satellitemake it impossible for Uie USSRunification of Germany or toinfluence over the fuLure policy ofGermany. This wouldof one of Uie principal goalspostwai policy In Bmopi

onfronted with Uie conflict betweeninterests and Satellite aspirations, the Soviet leaders have found it'difficult topolicies which reduce this conflict to manageable proportions.ime Iheya policy of lessening direct Soviet controls und permitting, and In some cases Dncouragine. local regimes to maketo popular sentiment. The upheavals in Poland and Hungary have demonstrated to the Soviet leaders the dangers ofourse They can returnolicy of rigid police terror by directly controlled localin an effort to prevent the development of situations where resort to military force becomes unavoidable. Out this course would give no hope of overcoming the problems which were Inherited from Stalin, and would now In fact Increase popular dissidence,retard economic activity, and againthc USSR's propaganda position.


case of Poland brings into sharpcontinuing conflict between Sovietand security requirements on theand Polish nationalist aspirationsdemands on the other. ThcGomuUca in the inner party strugglewas due mainly to his pledgesPoland's slavish adherence toa position which commandedsupport. In fact, the newpower by what was in effect aagainst pro-Soviet elements andSoviet power apparatus in the Soviet leaders mistrusthis colleagues because of thoOctober, but they must doubt the willof many of the elementshim toegime acceptableUSSR, especially In view of theof almost the entire population inexpression of anti-Sovietin October, the Soviet leaderscame within an ace of actuallythe outright use of militaryprobably continue to be uneasydegree of Independence which thcPolish leadership apparently Intends


the general crisis in theSatellites are economic difficultiesdirectly from the imposition ofand policies. Although mostare poorly endowed with the varietyneeded for industrialization onpattern, all have been required tothe USSR in giving first priority toThis policy has resulted ingrowth, particularly inbut at thc expense of otherIn industry, production is highuality, and plagued by chronicof raw materials. Soviet economichaveurther burden.coupled with poor planninghave subjected thc Satelliteto strains which now are increasedpressure to raise living standards

Thc past high rate of defense outlays and investment in heavy industry was madeby maintaining depressed livinginvolving neglect of production ofgoods and housing. The accompanying inflationary pressures required heavy taxes, forced saving, price controls, and in someoutright rationing, all of whichpopular discontents and seriously reduced worker incentives.

Because of the neglect of agriculture In favor of industry and the effects ofthe area has movedood deficit position. Dependence on imports of food, difficulties in grainand poor distribution in urban centers have created food stringencies and in many instances real hardship.

Economic difficulties have beenby disruption of traditional tradingPrewar exports of food products and Industrial raw materials have given way to imports. Meanwhile, the consumer goods Industries which formerly provided foreign earnings have been neglected In order tothe engineering industries, whichmuch less successfully in WesternReorientation of Satellite trade towards dependence on thc USSR, although itfulfilled Satellite needs for raw materials and markets, occurred on terms unfavorable to the Satellites. Trade difficulties wereby thc Satellite obligation to service debts incurred by their forced purchase from thc USSR of so-called German assets in their territories which the USSR seized at the end of World War II. This combination othas further drained the Satellites of domestically produced goods and hastheir foreign exchange position.

3 the Satellites have sought to revise national plans so as to reduce(a) between raw material availability and producUon capacity, (b) betweenoutput of producer and consumer goods, and (c) between agricultural and industrial production. These efforts have beenby popular distrust and by theof doctrinaire leaders intent uponto the Soviet economic pattern. These


which Include an attempt tothe integration of the Blocnow been overtaken by the disruptiveevents in Poland and Hungary.of these two countries to meethas probably invalidatedeconomic plans in greater or lesserall the Satellites. For the moment,have been driven to rely uponcredits and emergency bilateralwith the USSR to rescue theirfrom critical raw materialat the same time to provide stopfor


Poland. The Polish leadership is facing serious internal problems. Although thehas maintained the substantial degree of Internal autonomy it won from the USSR last October, the initial enthusiasm lt aroused has probably been restrained by theto emphasize solidarity with the USSR, to accept the continued presence of Soviet troops in Poland, and to halt political reforms short of the hopes aroused in October. The popular support given the regime In the recent elections rested mainly on the widespread belief that it Is the only government which can make some defense of Polish national interests and still not provoke Soviet military Intervention. The regime appears to have made considerable progress in bringing the military and security organs under its effective control and inmany members of the pro-Soviet faction from party positions. Nevertheless, it still has far to go inoyal party and administrative apparatus at the local level, and there arc still many middle-level and po-iitburo-tevcl party figures who might beto support Soviet efforts lo undermine Gomulkas position. His recent electionhowever, has placed himtronger Position to deal with opponents within his Party.

The regime has not been able to overcome the effectseteriorating economicwhich is characterizedecrease in exports attendantecline In coal produc-

tion, difficulties in collecting food from thc peasants,artial Industrialresulting from the wr^ltening of central authority and the spontaneous establishment of workers' councils. Thus the regime has been facedeakened economyime when it is pledged to gratify long-contained popular desires tor better standards of Irving.

Hungary. Most of the active resistance in Hungary has been weakened by attrition and suppressed by Increasingly firm Soviet-sponsored security measures.emains undiminished andresistance and economic noncooperation have abated only slightly. _There is evidence that most government employees arc not loyal to the regime and that organized antiregime groups continue to exist and to maintainwith each other. In Its recent declaration of policy, thc Kadar regimeits complete puppet status and thus further reduced its chances ol winning new adherents. The regime's main difficulty at present is In reconstituting dependableparty cadres able to maintain itsthroughout the country without the presence or proximity of substantial Soviet armed strength. Its problems areby severe economic dislocation in the wake or the almost complete breakdown In production discipline in mines and factories during the past tew months. It has feltto scrap the scheduled five-year plan altogether, and to concentrate its efforts oninimum level of economic activity.

Hast Germany. Popular disaffection in East Germany continuesigh level and has increased in the wake of developments in Poland and Hungary. Some unrestamong the large urban working class, and increased antiregime agitation among students and intellectuals has led recently to stern countermeasures. The regime'sare increased by thc failure to expand food supplies in the faceromised end to rationing and by the decline in imports of Polish coal. Nevertheless, pressures forchange In East Germany are still held in check by the presence ofoviet divisions.

Although there arc probably differences ol opinion ln the leadership of the East German Ifaty on questions of economic policy and jpst Secretary ITlbricht's dictatorial role In ffie party, most party officials appear to have Rilled around the leadership in response to Ee need for solidarityasically mnU-Communist populace. Solidarity between JMcscow and the Stalin-installed East German [leadership has been reaffirmed in the recent feoviet-Easl German communique. The pop-fulacc at present appears disinclined to risk [revolutionary action in view of the harsh So-fvlct repression of the3 uprising and (the more recent Soviet action in Hungary. I

zechoslovakia. Although there was some open agitation for liberalization and greater independence last spring, in recent months the only overt indications of unrest have been some cautiously stated criticism of theIn literary journals and some ferment In Slovak party organizations. Thc demands of local party organizationsartyand of students and intellectuals for greater freedom were rejected by the regime during the summer. Traditions of caution and accommodation to the existing authority as wellelatively prosperous economic situation apparently dissuaded the populace from attempting any action against thein the wake of the Polish and Hungarian crises. Anti-Soviet elements exist within the Czech party, but presently lack leadership on the national level. The absence of anyopposition political or religious figure to serveymbolic rallying point has aided thc regime in fragmenting and dissipating popular opposition.

umania While popular disaffection Isittle less widespread in Human ia than In Poland and Hungary, iL appears to have no effective means of opposing the orthodox pro-Soviet regime of Gheorghiu-Dej. Sympathy for the Hungarian rebels was widespread, especially among the Hungarian minority. Agitation for change was vigorous amongstudents in the late autumn, and the chronic discontent of lhe predominantlypopulation was increased by poor crop returns However, thc lack of aggressive na-

tionalistic traditions in Rumania, together with the uncompromising severity of the leadership and the Intimidating presence of Soviet troops, has prevented the formation of effective pressures for change.

ulgaria. Since Bulgaria traditionally has been closely linked to Russia, anti-Sovietwhile widespread, has tended to be less Intense than in other Eastern European slates. Nevertheless, popular dissatisfaction wllh thc Communist regime has remained strongthe past year, and there appears to be some factionalism within the party leadership and discontent among prominent militaryIn the face of these developments, the top Bulgarian leaders appear to havetheir differences for fear that disunity at the top would undermine them collectively. Solidarity with the USSR has been vigorously reaffirmed, and tightened security measures have been Invoked, including some rearrests of party figures pardoned of alleged Titoism. Thus, although Bulgariaationalwhich could serveasis for aCommunism movement, the top leadership appears to have unitedolicy ofsubmission to the will of Moscow.ommon border with potentially hostile neighbors serves to some extent to balance desires for greater Independence with interest In the protection afforded by lhc USSR

lbania. Facedisaffected and economically depressed population andby unfriendly states, the Albanian Communist regime sustains Itself by clinging lo Uie ideological rigidity and police methods of Uie Stalin era. It ls the only Satellite which has never recanted its anti-Tltoist trials, and It seized upon recent Yugoslav-Sovietto renew direct attacks on Yugoslavia. The regime actively opposes internal liberal! -xaUon or any greater autonomy, fearing that Such tendencies would undermine thc present leadership and lead to encroachments by Yugoslavia. Greece, or Italy. There is no known opposition within Uie party capable of effectively challenging Uie current leadership. However, the conslstcnUy harsh tone ol Uie Albanian press since the Twentieth Party Con-

rr i? t"

and reports of some recent arrests and -executions probably Indicate apprehension Jafrout the extent of unrest in Albania and the 'flrmness of Soviet protective guarantees.


Jrobable developments

^Soviet Policy

ecause thc Satellites will almostcontinue to represent interests which the USSR considers vital to its securitye believe that Soviet policy will continue to be directed toward theof effective control over the area.we believe that the Soviet leaders will not, at least during the next several years, seriously entertain the ideaeneralor military withdrawal from Eastern Europe, even in returnithdrawal of US forces from Europe, it is possible,that there could eventually be some reduction or even complete withdrawal of Soviet troops stationed in one or anothercountry if the USSR came to believe that thc local regime was reliable and secure without such support.

espite the firmness of the present Soviet attitude on control of Eastern Europe,could arise In which the USSR might be confronted with such seriousthat it would feel compelled tothc possibility of withdrawal. Forin the unlikely event that the Soviet leaders believed themselves to be confrontedhoice between general war orit is possible that they would endeavor to negotiate the best possible terms forIt is also conceivable that if theand economic costs of maintaining control continue to rise, the USSR might eventually, given circumslances in which there was no immediate challenge to itsconsider withdrawal in return forWestern concessions with respect to European securily, the German question, and the withdrawal of US forces. However, we do not believe that either these or any other combinations of circumstances which would alter the Soviet determination to retainof Eastern Europe is likely to occur in the next several years.

e believe that the Soviet leaders have concluded from the events of recent months that allowing even limited -concessions to nationalist pressures was unwise, and that they intend for some time to come to putemphasis on the Internal security of thc Satellite regimes and on Soviet control over them. Tins Is indicated by the themes now being emphasized in Soviet propaganda: vigilance against reactionaries both at home and abroad, continuation of the classthe dictatorship of the proletariat, and, above all, the unity of the socialist camp.there will probablyurther tightening of police controlsenewed insistence upon Moscow's IdeologicalThis renewed emphasis on repressive measures will probably be applied discreetly, however, with appropriate consideration for localystematic, uniform, and provocative policy of repression would probably be regarded by the Communistas disadvantageous, and possibly even dangerous in the wake of the Polish andevents. Nevertheless, the security of Communist regimes will clearly have priority in Soviet thinking, and all policies affecting the Satellites will be judged primarily for their effects on the security of those regimes.

he need to win broader popularfor lhc Satellite regimes will continue to be felt, however, by both Satellite and Soviet leaders. They cannot-achieve lasting stability for the regimes or make the desired progress toward their political and economic goals so long as the bulk of the populations remains disaffected. Nevertheless, for some time they will seek to avoid politicalwhich would stimulate opposition.thc Communist leaders evidently now believe lhat they can make some economic concessions without running this risk, and they will probably continue to make such concessions even at the cost of sacrificing earlier production goals.

pecial Soviet policy is required inwhere the USSR no longer possesses direct control over Polish internal policy. The Soviet leaders are trying to regain thisbut the pro-Moscow faction in the Polish Communist parly is not now strong enough

IT fi.

to obtain compliance with Soviet views. The use of force by thc USSR against the Gomulka


ie would almost certainly be resisted by bulk of the Polish nation and armed lorces. The result would probably be theof Soviet forces in large-scaleoperations which could spread to East Germany and thusajorcrisis.

Even though the costs and risks ofintervention are sufficiently high tothe Soviet leaders that they musttheir dissatisfaction with Polish Internal developments, the threat of suchnevertheless remains real enough tothe Gomulka regime from encroaching on essential Soviet security interests. Thewill therefore continue to make itsavailable for Soviet military uses, inecure line of communications to East Germany, and to refrain from openly opposing the USSR and other Communist states on international issues, The Soviet leaders will probably accept this arrangement for the time being, since lt meets theirsecurity requirements and insures the continued existenceommunist regime in Poland.

In our Judgment, this arrangement will not, however,ong-run solution satisfactory to the Soviet leaders. It Isthat, at any time, they will conclude that their prospects for reimposing fullby limited means are diminishing, and that developments in Poland are becomingdangerous to the Bloc. They might then decide to apply major political andpressures, and might eventuallyto military measures. We believe it more likely lhat they will proceed morehoping lhat, by taking advantage of Gomulka's economic and political difficulties and playing upon his dependence on the USSR lor military supplies and economic help, they can rebuild the pro-Soviet faction within the Polish party and armed forces andore reliable Communist of this effort, other Communist parties have been employed to put ideological pressure on the Gomulka regime.

A major problem for the Soviet leaders, if the present more nationalist leadership In Poland consolidates Its position, will be to prevent Polish deviatlonlst tendencies from spreading to other Satellites. In manypress freedom, relations with the church, the role of trade unions and factory worker councils, agricultural collectivization and procurement policies, political activity by non-Party groups, the allocation ofto consumer needsthe Polish regime is already heretic In terms of some of thc doctrines and practices which prevailin the Bloc. The question which theleaders as well as the leaders ot othermust ask themselves is whether these departures from the hitherto imposedof Communist policy can be safelyBoth groups of leaders must see the danger that the Polish experiments, if they succeed, will set afoot further factionalism within other Satellite parties, The Soviet leaders probably fear that acceptance of the Innovations introduced In Poland could lead to variations of doctrine and practice elsewhere which would ultimately be very difficult for the authoritarian Communist creed to contain. Not least ol all, the Soviet leaders would be concerned that the liberalizing heresy could spread rapidly to the USSR itself. Therefore, they willteady pressure on the Polish regime to keep its reformist tendencies within an acceptable margin of conformity.

It is this same concern with the danger of ideological deviation which has led the USSR to drop for the time being ils effort to associate Yugoslavia more closely with thc Bloc- The Soviet leaders probably believe that Yugoslavia's influence, whilerimary cause, contributed to the troubles in Warsaw and Budapest. They probably also believe that their willingness to receive Tito with high honors and their eager efforts to re-establish party relations encouraged the beliel in the Satellite parties that thc USSR was willing to tolerate independent nationalistThe polemics with -Belgrade since the Hungarian events make 'it clear that the Soviet leaders intend to repair their previous error. They probably feel that lt is essential to resume the ideological isolation of Titoism,

but in order to avoid strengthening Yugoslav tics with the West and alienating neutralist opinion they will probably seek toew break in state relations.

The attitude of Communist China will also be an important factor affecting Soviet policy toward the Satellites. The unprecedented involvement of Communist China in Eastern European affairs through Chou En-lai's recent trip reflects the importance that Communist China attaches to Bloc stability as well as the seriousness of Soviet difficulties. Thishas placed Communist Chinaosition to exert greater influence over Soviet policy. Because of ideological affinity and military and economic dependence, theCommunists have given strong support to Soviet policy toward the Bloc. Concerned, however, with both their own Independence from Moscow and Communism's image in neutralist Asia, they have stressed the dangers of "great power chauvinism" and theof "nationalhilerepression in Hungary. Communist China has not Joined ln Soviet criticisms of the Polish press, and there is some evidence of Sino-Soviet differences on the issue of Poland. The Soviet leaders' freedom of action in Eastern Europe may be limited by theto maintain the approval and cooperation of Communist China.

Soviet military policy toward thewill probably be changed somewhatesult of the Polish and HungarianThe Polish army supported the nationalist opposition and most Hungarian soldiers either went over to the rebellion or did not oppose it. The Soviet leadersnow believe that for many purposes the reliability of these forces cannot be counted upon, and that, in circumstances whereuprisings or foreign war raised hopes of attaining national independence, they might become an actual danger to Communist regimes.

The USSR will probably not In the futureniform policy of supportingof large Satellite armed force, but will adapt Its military programs to localintensive efforts will be undertaken

to Improve security controls within thcforces, especially among_ higher officers.

Economic Plans ond Prospects

economic development in thefor the next several years willonly small increases In livingeven if there are no furtherpopular resistance. Improvementsenough to alter political attitudesUSSR and local regimes would requireoverhauling of same Institutions

1 and policies. This would includeeduction in total-in vestmentedirection of investment programs In favor of housing, consumers goods, and agriculture; abandonment of collectivisation and state trade channels; tbe revival of small private industry; and some redirection of trade away from Bloc partners to Uie West. Except In Poland, sufficiently radical steps In thesewill be very difficult for Soviet and Satellite leaders lo accept, and attempts to undertake them would probably lead todisputes.

while the regimesgain little politically fromincreases in consumer welfare, theyto lose If they aggravate discontentlo achieve such increases or bydeclines. Thus grudgingbe made, although they- probably willfar-reaching enough to reduceunderlying disaffection of thecountries are likely to followand Rumania in revising theireconomic plans to insure thatfor the consumer are in factchanges will probably bean effort to remove specific causes ofbul administrative decenlrallrationactive role for workers' councils lncannot be carried very far withoutpolitical control and fulfillmentWage and pension increasesbeen instituted ln mostthese add to inflationary pressure atwhen the supply of goods isSatellite regimes have declaredto continue pressures lor collcctivi-

l ii 1

olicy which will negate much of tlie effect of other concessions to the peasantry.

[il. The general revision ot Satellite plans, thc Impending revision of the USSR's Sixth Five-Year Plan, and the immediate economiccaused by developments in Poland and Hungary will force the Bloc to take up again the difficult task of coordinating its economies. Poland will probably seek toa large share of Its coal exports tocountries, despite the needs of its Bloc trading partners. Other countries producing commodities readily marketable for hard(such as Rumanian oil and Hungarian bauxite) might try to do the same, andSatellites may seek to avoid those aspects of Bloc specialization which require them to develop uneconomic industries or tounduly dependent upon their neighbors. Thus the effort through CEMA to subordinate national economic programs to an integration of the separate Bloc economies will probably be slowed.

Sufficient Soviet aid could, of course, help the Satelliteseriod ofThe USSR Is waiving claims on many Satellite economies and bolstering them with hard currency loans and raw materials on long-term credit, concessions which thus far will cost it0nd may be Increased later in the year. Except for large grain shipments aimed atailures of Satellite harvests, thesewill not produce important immediate results for Satellite peoples. The currentin the USSR of its own five-year plan suggests that it would be reluctant to raise its aid to thc Satellites much more. Thus, In addition to sanctioning or evena moderation of the industrialization effort In some Satellites, the Soviet leaders probably would not prevent the Satellites from expanding further their trade with the free world, particularly with thecountries.

The Polish economy is presently plagued by general disorganization and low laborProvided these difficulties arePolish long-range economic prospects will be somewhat better than those of most

other Satellites because of Poland's potential for earning hard currency and its willingness to introduce radical economic reforms. The large majority of collective farms havebeen dissolved, and many otherof economic reform have been instituted or are being discussed. At best, thesewill take time to produce improvements in living standards, and additional external economic assistance would be necessary to achieve prompt results. Poland has sought long-term credits from thc West, although thc Soviet leaders would almost certainly be uneasy if agreements for such creditsarge scale were made. Large-scalessistance to Poland would-tempt otherto seek similar assistance and might tend to undermine Bloc unity.

Political Stability

Prospects for political stability in Poland, although remaining uncertain, have beenby the recent elections. The degree of internal liberalization and independence from the USSR achieved thus far does not satisfy many Poles, who submit to the rule of native Communists only ln order to avoid Soviet military intervention. Gomulka'svictory, however, has strengthened his handls the USSR and pro-Sovietin his own party and will probably enable him to move further towardsdomesticevertheless, the balance between Soviet requirements anddesires will remain susceptible to upset by such factors as serious economicprovocative Sovietenewal of the open struggle within the Polish party,lareup of violence elsewhere in the Bloc. Political stability would be considerablyby an early improvement in living standards, but this depends upon completion of extensive economic reforms, theof labor discipline, and probably onassistance as well.

In Hungary, the reimposition of political authority will continue to depend upon the regime's use of force. Fear of encouraging another uprising will prevent the regime from granting the kind of concessions likely to

reduce lhc hatred of Soviet domination. This hatred will be strengthened by the decline in living standards which appears unavoidablehc regime will continue to be no more respected than Its Stalinist predecessor, and Its demands will encounter widespread apathy and evasion. However, exhaustion and the continued presence of Soviet troops will probably prevent another general uprising Because antiregime sentiment Is so widely and consciously shared, however, passivewill probably continue and might at any time flare upeneral strike or other overt acts which could bring renewed violence.

While discontent Is high in all the other Satellites, none seems likely to manifest that combination of party disunity and popular boldness which led to the Polishotential threat to political stability currently exists in East Germany,uel shortage has caused difficulties which may lead to seriousdisruptions possibly followed by strikes, riots, or both. Wc believe, however, that Soviet forces there arc sufficient toeneral rising or to suppress it quickly should it occur.

Over the next several years, tensionsUie Satellite regimes and theirare likely to be generally higher than prior to the events In Poland and Hungary.

intimidating effect of theungary probably will be overshadowed by the disappointment of expectations forimprovement, by Uie inability to grant meaningful political reforms withoutextreme demands, and by the continued employment of strict censorship and atodified form of police terror. While there will continue to be some danger of revolt in the Satellites during Uie next few years, we believe it more likely that major violence will be avoided and that. If It should break out. the USSH will move forcefully to suppress It.

Thc willingness of the Hungarians toSoviet military force and their success In carrying out slowdowns and sltdown strikes haveew appraisal of Uieof armed totalitarian power inopposiUon. The political, economic, and even military costs of armedwill lead thc USSR to make every effort to prevent situations from arising in which this is Uie only Soviet alternative. On the other hand, the bloody reprisals In Hungary will give pause to rebellious elements there and in the other Satellites.

The success or failure of Uie Gomulka regime in Poland will greaUy Influence the future role of naUonalist-oriented elements which continue to exist in most of UieCommunist parties. So long as Poland maintains its present course, nationalists In other Satellite Communist parUes will belo seek substantial gains inwhile the USSR wiil try to suppress moves in this direction In these circumstances, nationalist elements may act not only to disrupt party unity but also, as In Hungary, to stimulate general resistance within the population, although the USSR wouldtake whatever measures were necessary to maintain its control. It Is also possible, however, that nationalist elements, forin Czechoslovakia or Bulgaria, may act in less disruptive ways, and gradually achieve control of party organizationsanner that would be difficult for Uie USSR toThe reim]xisition by the USSR ofcontrol over Poland would probably not extinguish the forces of naUonalism In the Satellite Communist parties, but thesewould be obliged to curtail theirconsiderably and would for some time have to accept only such limited concessions as Uie USSR was willing to grant. In any case, we believe that Uie persistent causes of popular disaffection in Uie Satellites willto be present.

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