Created: 1/10/1956

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SvbtmlttC by the DIRRCTOK OF BgtHU LNTELUG EN CE The foil owing tnttlUgenc* organuattoKSie preparation of thil eitimate Tht Central InUIhgrr.ct Agmey and Ike orgennetians of the Department! of Stall, thehe Navy, Ihe Atr Parte, and The Joint Staff


on't, ISM Concurring ictre the Special Assistant. Intelligence. Department Of State; the Assistant Chief Of Staff. Intelligence. Department of the Army; the Director of Haeal Intelligence; the Director of Inielligence, VSAF; and the Deputy Director for Intelligence. The Jomt Staff. The Atomic Ktitrgy Commission Representative to the IAC and the Assistant Director. Federal Bureau af Imxsttgation, abstained, tha subject being outside Of their Jurisdiction.




estimate was disseminated by the Central Intelligence Agency. Thisfor the information and use of the recipient indicated on the front cover and ofunder his Jurisdictioneed to know basis. Additional essentialbe authorized by the following officials within their respective departments:

Assistant to the Secretary for IntelUgence, for the Department

Chief of, for the Department of the Army

of Naval Intelligence, for the Department of the Navy

of Intelligence, USAF, for the Department of the AirDeputy Director for Intelligence, Joint Staff, for the Joint Staff

of Intelligence, AEC, for the Atomic Energy Commission

Director, FBI, for the Federal Bureau of Investigation

Director for Central Reference, CIA, for any other Department

This copy may be retained, or destroyed by burning in accordance withsecurity regulations, or returned to the Central Intelligence Agency bywith the Office of Central Reference, CIA.

When an estimate Is disseminated overseas, the overseas recipients may retain iteriod not In excess of one year. At the end of this period, the estimate should either be destroyed, returned to the forwarding agency, or permission should beof thc forwarding agency to retain it in accordance with2

materlal contains InformaUon allefittaff" Uie^TTHUtajlDefense of

within Un nll'iiiii

theof wWenTTr^Ku^manner un authorized person ls

This docutranc hasfor releaseHISTORICAL REVIEW PROGRAM of


Department or

DepartmentCtoMoUnaUng 2

Atomic Energy Bureau of




To estimate the current situation and probable developments in the European Satellites'


military, political, and economic significance of the Satellites to the USSR is so great that Moscow almost certainly regards the maintenance of control over the area as an essential element of its power position. The Satellites provide the Soviet Unionefense in depth and an advanced position for launching attacks on western and southern Europe, The Satellite regimes themselves areto the USSR as instruments in the conduct of Soviet foreign policy,and economic and subversiveThe Satellites represent anelement of over-all Bloc economic strength. The total gross national(GNP) of the Satellites istwo-fifths that of the USSR andsignificant production of certain key materials and heavy manufactures.)

The USSR now has/ for all practical purposes, complete control over theregimes and will almost certainly be able to maintain it during the period of this estimate. Within the limitations suggested below with respect to East Ger-

' As used in this paper tho term "Europeanincludes fast Oermany. Poland,Hungary. Rumania, Bulgaria, and

many and Albania, we believe that It will remain firm Soviet policy to retain such control. This control restson the USSR's military capability of maintaining its domination over tlie area. Control is exercised primarily through the Satellite Communist parties, assisted and guidedomplex of Sovietand military establishments,advisors, and police agencies. Moscow has made clear that the status of the Satellites isatter fornegotiation. In the case of Germany, the USSR has held open the possibility of reunification on the basis of negotiations between the East and West German regimes. We believe, however, that the USSR will not voluntarilyEast Germany exceptolution of tBe Germanfavorable to Soviet interests. It is also possible that the USSR might beto reconsider its position with regard to Albania. For example, therelight chance that the physical isolation offrom the Soviet Bloc and its minor strategic value to the Bloc would induce Moscow to use Albaniaawn inintrigue.

he maintenance of effective Soviet control over the Satellites docs not prc-

elude policy modiflcatlons calculated to take greater account of local conditions, to promote smoother economicand to diminish the impact ofrule on Satellite national sensibilities. In addition, Moscow might expect that such measures would document the claim of Satellite independence, and would thereby impress opinion in neutral and underdeveloped countries and improve the propaganda position of Free World Communist parties.

espite Moscow's firm control of the Satellites, thereumber of local factors which hamper the execution of Soviet policy. In some of the Satellites factionalism has become evident in the party leadership and has causedin the program. Some elements privately resent dictation by Moscow andeduction of political terror and an increase in consumer goods. There are many party members with atinge whootential forll the governments are still confronted with problems arising from their unpopularity with thc masses and from the difficulties inherent inan efficient administrationotalitarian state under an alien ideology. Wc believe, however, that none of these difficulties will jeopardize either theby Moscow-ortentcd Communists or the implementation of Soviet)

"The Assistant Chief of Staff. Intelligence,of the Army and the Deputy Director for Intelligence. The Joint Staff whllr conceding Uie existence ol certain ideological and admln-IslraUve problems In Lhe Satellites, nevertheless, believe these problems ant currently of no great magnitude and are likely to diminish during the period of this estimate. They would therefore omit this conclusion.

Dissidence1 is widely prevalent in the Satellites. It is unlikely that anfive years of Communist rule will appreciably reduce this dissidence. or greatly diminish the traditional national aspirations of the East European peoples. On the other hand, dissidence-is offsetendency of the Satellite population to become resigned to Communist rule and by the gradual increase in the number of Communist-indoctrinated youth. Wethat, except possibly in Eastno development shortrastic impairment of Communist controls or the approach of friendly forces in time of war would be sufficient to stimulateoutbreaks of open -resistance.)

The Satellite regimes have asgoals the expansion of industry, the collectivization of agriculture, and thc Sovietization of the countries generally.owever, faced with mounting difficulties, they reduced the pressure for rapid achievement of these goals.and collectivization ofwere slowed and police controls became somewhat less obtrusive Inowever, pressures foroutput were revived, the priority of heavy industrial development wasand collectivization efforts were renewed. These modillcations do nottoull return to therogram. )

We estimate that the Satellitetaken together, will increase their GNP0 at the rate of slightly

'On this subject, see. "AnU-Communist Resistance Potenual in the Sino-SovietatedDissidence" Is definedtate of mind Involving discontent or disaffection with the refilme. "Resislarice" Is defined as dissidence translated Into action..

less lhan four percent per annum, adecline from the extraordinary average annual rate of over seven percent achieved. Satelliteoutput0 will probably be aboutercent greater thanhile nonagricultural production willby aboutercent. Meanwhile, total population is expected to increase about seven percentconsumer goods will account for the major part of the small prospective rise in living standards. )

During thc period of the estimatetrade with the Free World maylo rise somewhat faster, interms, than total Satellite trade. For economic as well as poliUcal reasons, the Satellites apparently desire to increase their trade with the Free World. In the absence of substantial medium- or long-term credits from Free World countries, however, an early expansion of Satellite exports will be necessary to balance any increase in imports from the Free World. This confronts the Satellites with the problem of adjusting the character and prices of their exports and their way of doing business, in order to improve their position in Free World markets. It will probably be easier for the Satellites lotrade with the underdeveloped areas than with lhe industrial countries of the West. )

Wc believe that the scope of Bloc-wide' regional planning will substantiallyas compared with thc. During the period of this estimate,

mi "Sovietr "intra-Bloc" refer to thend the EuropeanWhere communist China Is also referred to, the term "Sino-Soviet Bloc" will be used.

this policy will probably not contribute greatly to the growth of thc economy or to the resolution of basic economicalthough some benefits canonger period,may make significant contributions to the economic strength of this area.)

The Satellite armed forcesubstantial clement in the balance of military power in Plurope. Ground forces now numberivisions, which, given extensive Soviet logistical support, could be expanded"ivisionsays. There are currentlyatellite operaUonal military aircraft of all types. We believe that theof these forces will be substantially augmented by conUnued conversions to newer weapons and equipment and by an increase in numbers of aircraft.

The combal effectiveness of thearmies varies considerably from country to country. However, wethat up toercent of presentdivisions could be employed initially in combat alongside Soviet forces.of the armies, with Soviet logistical support, would be capable of sustained independent operations againstenemies. Thc reliability of Ihese armies is such thai they would beto defectubstantial scale until victorious Western forces approached the Satellite area. IndoctrinaUon andpersonnel sclecUon have increased the poUtical reliability of the Satellite air forces. Wc believe that the combatof these air forces is such that they could be employedefensive role in the event of general war and would

have some offensive capability, particu- ly equipped and constituteinor larly against traditional enemies. The contribution to Bloc naval strength. Satellite navies are small in size and poor- )



Basic Soviet Interests in the Area

Thc military, political, and economicof the Satellites to the USSK is so great that Moscow probably regards theof control over the area as an essential element of Its power position.

The Satellites provide the Soviet Union with defense inonsideration which may become of increasing Importance to thc USSR in view of the prospective rearmament of West Germany. The fact that theare being given current Soviet aircraft and that their air defenses are beingwith those of thc USSR, indicates the importance which Moscow assigns to the area as an advanced line of air defense. Similarly, Satellite ground forces constitute increasingly effective obstacles along thc land approaches to the Western USSR. For offensive purposes, control of Poland, Czechoslovakia, and East Germany provides the USSR with anposition tor an assault on Western Europe; Hungary, Bulgaria, and Rumaniaase from which lo operate against the Slates on the northern shore of theand againsi thc Dardanelles.

The Soviet leaders probably regardcontrol over the Satellites as essential to prevent the recreationerman state of prewar size and power, which in their view might once again exert dominant influence in Eastern Europe and threaten the security of tlie USSK. Directly, or through thethe USSR controls not only Eastbul also lhe formerly German areas of Silesia, Pomeranla, and East Prussia, from which most of the German population8 the eastern provinces of Germany now held by Poland and the USSRopulation of nine million, and the terri-

tory of present-day East Germanyillion, ln other words, Moscow now controlswhich constituted one-fourth thc area8 Germany, and sustained morehird of Its population, We believe lhaL the USSR will not voluntarily relinquish any of these territories except in exchangeolution of the German problem favorable lo Soviet interests.

The Satellites represent for. lhe USSR an important economic component of power in the over-all East-West struggle. Satellite gross national product and Satelliteare approximately two-fifths as large as those of the USSR, and the area provides the USSR with important strategic raw materials and manufactured goods. Economically, the three most important Satellites are Poland, Czechoslovakia, and East Germany, whichcontainercent of the Satelliteand account forercent of Satellite GNP.

Finally, control of thc Satellites has great political value for the Soviet Union and the international Communist movement. The Satellite regimes are used by the USSR in the conduct of foreign policy, propaganda, and subversive operations. In addition, the mere existence of thc "People'sith their population ofillion,to the outside world that Communism is on thc march. Communist domestic and foreign propaganda has made capital of the fact that these varied and populous states are members of the "progressive camp."

The USSR has made clear that it regards incorporation of these areas into the Soviet Bloc as an accomplished fact, and that the status of the Satellilcs isatter fornegotiation. In the case ofthe USSR has held open the possibility of reunification on the basis of negotiations



between the But and West German regimes. We believe, however, that the USSR will not voluntarily relinquish East Germany except in exchangeolution of the German problem favorable to Soviet Interests. It ts also possible that the USSR might be willing to reconsider its position with regard loFor example, therelight chance lhat the physical Isolation of Albania Irom the Soviet Dloc and its minor strategic value to the Bloc would induce Moscow to use Albaniaawn In Balkan intrigue.

Tactical Shifts in Soviet Policy in the Satellites

Soviet policy in the Satellites hashanging but generally consistent course since Soviet iroops occupied thc area In the wake of the German retreat.17 tlie Soviet tactic was to direct and assist the local Communist parlies in gainingof thc East European governmentsacade of legality. The Communistscauses which could give them some initial popular support, such as land reform, thc expulsion of someillion Germans from East European territories, and thcof the property of ihese Germans to Poles, Czechs, and Slovaks. Coalition cabinets were the order of the day, and prime ministers sometimes came from non-Communistbut key ministries were held by theThe Communists most in view were frequently those who had acquired localas underground resistance leaders, rather than those who had spent the war years in thc USSR On the economic front, the USSR exploited the Satelliles, particularly those identified as ex-enemies, for its own benefit, and simultaneously introduced Soviet-typeInto the nonagricultural sectors of their economies. The USSR as yet showed little interest In thc long-range economicof the area.

7 the next phase of Soviet policyto develop. The Communists, wellin key positions, proceeded totheir power and to sovietize the Satellites. In some countries coalition governments were eliminated by means of intimidation and

rigged elections. In Septemberhe Cominform was founded. In part to provide Moscow with closer control over the Satellite parties. Early8 thc vestiges of freedom in Czechoslovakia were wiped outoup d'etat In8 lhe Yugoslav party was expelled from the Comlnfown for "nationalistn Seplember.-Wladistawwas dismissed as secretary general of the Polish party on the same charge. Therea series of purges, llie object of which was to decapitate nationalist Communistthroughout thc Satellites. Communist leaders especially loyal to Moscow, men who had spent long years in the Soviet Union and who in many cases were Soviel citizens, openly took over the direction of the localeginning was made at screening undepend-able elements from the large Communistwhich had been built "Up In the.8 direct exploitation of East Germany, Hungary, and Rumania was gradually eased, and every eflorl was devoted to the rapid development of heavy industry throughout thc Satellites. This development was patterned after Soviet practice, whicha high rate of forced savings through depressed consumption levels, and concurrent neglect of agriculturalolicy aimed at full agricultural collecUvtrauon was inaugurated. Security measures wereWestern correspondents were expelled, or arrested as spies, and Western embassies were cut oil from contact with thc localPressure on the churches wasand religious leaders wereon charges ofhis patternuntil the death of-Stalin, in

eginning Inhift in Soviet tactics in thc Satellites became evident. This shift emerged primarily in the economic field with announcementsnew course" which held out Uie promiseigher standard of living for the Satellite populations Planned rales of economic growth were cut back to more realistic levels, and the emphasis on Uie development of heavy industry was toned down. In general, collectivization ofwas greatly slowed, and in aome countries il actually lost considerable ground. Invest-


In agriculture was increasedMost ol the Joint Soviet-Satellitewhich had become symbols of Soviet exploitation, were dissolved, and other overt signs of Soviet economic control were reduced. Inowever, there was someof Uie "new course" economicconcurrent with the consolidation of the present regime in the USSR. Pressures lor increasing output were revived: heavydevelopment was re-emphasized, and collectivization efforts were renewed. At lhe same time, Soviet and Satellite plannersto place more emphasis on Bloc-wideof economic planning and onspecialization in economic activity.

n the political field, security and police pressures became somewhat less obtrusive. Mass deportation of urban middle classin Hungary camealtew countries, some representatives of formerparties werepecialwas made to persuade political refugees to return home. The isolation of the Western diplomatic corps was somewhat reduced,ew Western correspondents were permitted entry.


hc USSR now has. for all practicalcomplete control over the Satelliteand will almost certainly be able to maintain it during the period of this estimate. Within the limitations suggested inith respect to East Oermany and Albania, we believe that it will remain firm Soviet policy to retain such control. Control restson the USSR's military capability of maintaining Its dominalion over the area for an indefinite period. Soviet control isprimarily through the SalelUteparties, assisted and guidedomplex of Soviet diplomatic and military establlsh-mcnts, economic advisors, and police agencies. Under Uie aegis ol thc Soviet securitythe various Satellite security services have become inart of the Soviet police mechanism. These controls are soas lo bind the Satellites to the USSR Individually, rather thanroup.

he Soviet leaders will continue thc policy of controlling the Satellite area inay as to produce the greatest possible internal and foreign policy advantages for the USSR. This aim. does not preclude Soviet policycalculated to take greater account of local conditions and to produce smootherdevelopment. Such flexibility maydiminish the impact of Soviet rule onnational sensibillUes and supportclaims that these states are Independent. Bloc statements on the Importance of "local conditions for the development of socialism" muy portend increasing flexibility in planning and in socialization, aimedore realistic program of economic development for Uie areahole. Moreover, Communist controlwell established. Uie regimes can now afford to grant minor relaxations of political pressure and police control. In addition, Moscow might expect that such measures would document Uie claim of Satelliteand would thereby impress opinion in neutral and underdeveloped countries and improve Uie propaganda posiUon of Free World Communist parties.

The USSR may somewhat reduce or refine its more visible means of control. Soviet troops might be wlUidrawn from Rumania and Hungary, where tho USSR probablytheir presence is not essential. Aboll-Uon of Uie Comlnform would be an even more inexpensive gesture, since this agencyoviet Bloc information and prup;^anda link with the West European Communist parties, rather than anof control. In matters essential tocontrol, such as thc building up of nand subservient SalelUte Communist leadership and the staffing of key positions with Soviet or Moscow-oriented personnel. Uie Soviet rulers will almost certainly continue to maintain the policies of thc Stalin era.

Soviet leaders are almost certainly aware, however, lhat some of the acUons they have already taken Involve certain risks for iheir position in thc Satellites. The visit tofor example, had the effect of building up the prestige and influence of Tito, and the public acknowledgment of Yugoslavia's right to pursue its own "way to soclaUsm" aroused

hopes in the SatellitesubstanUalof Soviet control. The case of the Jmrc Nagy regime in Hungary indicates theof latent conflicts within the Satellite party leadership which may have to beby Moscow from time to Ume.

believe Uiat Soviet authoritiesany actions which, in theirjeopardize their control of Uieor the regimes* control over theThere aie, therefore,to the freedom of action whichafford to permit the Satellite regimes


The Communist regimes, backed by the ultimate sanction of Soviet power, almosthave firm control of Uie SatelliteNevertheless, there are indications of factionalism within some of Uie partyand all governments are still confronted with problems arising from their unpopularity with Uie masses and from thc difficultiesin developing anotalitarian state. We believe,lhal during Uie period of this estimate, Soviet dominated regimes will be able totheir control over the populations and gradually to Increase their administrative effectiveness.

Since the Communist parlies are the basic Instrument of the regimes' control over the populations, any weakness or inefficiency within these parties actsonditioning factor on the execution of percent of the total Satellite population,illion persons, areparly members. This means that one of everydults in the Satellitesarty member. Obviously, the development of such large parties from very small beginnings (there were probably lesshousand Communists in Rumaniaould noi have been accomplished without taking in large numbers of people who were notto Communism. In staffing positions at thc lower echelons of the bureaucracy, the party has often had lo sacrifice technical qualification in favor of political loyalty. At

higher levels an element of the partywith technical qualifications isSome elements privately resentby Moscow andcducUon of poliUcal terror and an increase in consumer goods. There arc many party membersationalist tinge whootential forc believe, however, that these "unreliable" elements will not attain sufficient influence within the parties toeither the control by Uie Moscow-oriented Communists or the implementation of Soviet policy.*

n the field of educaUon, Communist attempts to indoctrinate the adult generation have apparenUy had litUe success. Within Uie youth, however, intensive Indoctrination, coupled with the bait of advanced schooling, career opportunities, and other materialhas begun toreater degree of cooperation with the regime. Educational opportunities, especially for favored classes, have in fact been greaUy increased,in technical fields.

UNIVERSITY STUDENTS per thousand population 1

"The comparable) for Ihe US. for the. for West. and for the.

' Thc Assistant Chief of Start. Intelligence,of the Army, while concurring In the esU-mative conclusion contalned-ln the last sentence of Uils paragraph, considers that the paragraphhole conveys an Impression of weakness In the Satellite Communist parties that is notby Intelligence and recommends the sub-sUluUon of thc following forSatellite Communist parties are large in comparison lo Immediate postwar size, and membership now consists of seven percent of lhe total Satellite populaUon or G5 million persons. Although the parties probablysome unreliable elements, we believe that these elements either will remainor will be eliminated and will notsignificant Influence on control by Uie hard core Communists or implementation of Soviet policy."


esult, the regimes will probably become Increasingly able to find adequate personnel for positions in the state apparatus and the nationalized economic enterprises. Some of these younger people are likely to constitute an elementested Interest in theregimes, even though the majority of youth will probably not become convinced Communists during the period of the

In relations between church and state, the Satellite regimes haveead-on collision with popular devotion to traditional religious observances, which appears to have been increasing. Instead, they have directed their policy primarily toward strangulation of thc independent organizational andfeatures of the churches, in the hope of making these churches subservient to thc regime. This aim hasarge extent been realized in the case of the Orthodox,and Moslem churches of the area. Even thc Catholic Church has been forced toolicy of avoiding open controversy with the regime, in order to conserve the position of ils clergy and as much as possible of ilsfunctions.

All available evidence Indicates that throughout the Satellite area the regimes have made no appreciable progress inthe people to give active support to the Communist syslem and its program.umber of reasons, of which economicand regimentation, hatred of Sovietand fear of the police state appearubstantial majority of tlie people continue to be antipathetic toward thc regimes. Dissidence is widely prevalent among the peasantry, which stubbornlycollectivization, andignificant fac-Uir even within groups which are ostensibly favored by the regimes, such as youth and industrial workers.

he effectiveness of thc Satellitein combatting dissidence andCommunist Indoctrination will be limitedumber ofhortage ofand ideologically grounded teachers and writers will probably continue. The tradi-tionul affinity of the Satellite Intelligentsia for

Western culture will probably remain strong in the older generations. Western broadcasts will probably continue to reach the Satellite populations, and there may be greaterof cultural, technical, and sportwiih Western countries.

he failure of the Satellije governments to win mass support will be partly offsetendency of the population to become resigned to Communist rule. Next to general positive support, the Communist regimes probablya growth of popular acquiescence and resignation as thc second best development for their purposes If the Soviet policy of "relaxation of international tensions"attitudes of resignation among many elements of thc population will be reinforced The Satellite populations have placed their main hope for eventual liberation on Western Europe and the US, and they have tended to believe that this could be accomplished only through war. This hope of liberationremained fairly strong uput since then has been diminishing. The Sum-mil meeting at Geneva intensified the belief thai the Western Powers were determined to avoid war and, if necessary, toodus vivendi with thc USSR involving theof the status quo in Eastern Europe.

So far as Is known, no active resistance organizations survive in the Satellite area at present There are today, and probably will be for many years toew elements of potential resistance scattered throughoutsociety which may be able to survive by remaining inactive and deeply concealed. Only in the event of war. however, would they be likely to attempt conspiratorial activity Except possibly In the case of East Germany, we believe that no development shortrastic impairment of Communist controls or lhe approach of friendly forces in time of war -would be sufficient to stimulate important outbreaks of open resistance.

While the number of Communistwill probably increase over the period of the estimate. It is unlikely that anylhingajority within thc Satellitewill accept Communism, or that, the

national aspirations of thc East European peoples will be extinguished. These peoplesong history of suffering undermasters. While submitting to theof the Turk, or the Tsarist Russian, or the German over many centuries, they yet managed to maintain their national identity. They will probably continue to do so.there will probably be some increase in support of the government by more favored elements in the population and, among the people generally, an increasing resignation to life under Communist rule.


Trends in Economic Policy

While Satellite economic policy In theesultedonsiderable growth of heavy Industry, this wasat the expense of consumer goods and agricultural production. Moreover, aimbalance developed in heavyresulting from overrapld bulld-up oifacilities without correspondingof thc raw material, fuel, and power base. By the end2 rates of industrial growth began to fallace which made It apparent that many of thc augmented plan goals set1 would not be met. The growth rates of previous years had beenprimarilyesult of substanUalto the industrial labor forces and of fuller utilization of capacities.lo the total labor forces and transfers of workers from agriculture to Industry had greatly diminished, so that further economic growth depended increasingly on improvedproductivity. Disaffection of both workers and peasants, however, seriously hampered efforts to achieve such an Improvement.

Beginning inll the Satellites adopted, under Moscow's guidance, an"newhis new policy involved an acceptance by the Satellite regimes ol much lower planned rates ol industrial growth than they had foreseen1 for the. It entailed some shift in emphasis within industry from heavy machinery to basic raw materials, power, and consumer

goods. In agriculture, the "new course" called for Increased investment and for theof incentives through such concessions as the lowering of delivery quotas and, in some countries, permission to withdraw from the collecUvized sector. By means of such athe regimes also hoped to Improve the economic response of workers and peasants and thereby to alleviate the major economic difficulties of Uie previous period.

4 some progress was made In altering the structure of industry. However, the "new course" ran into serious economic difficulties and evenertain political threat. Slowness in implementing unrealistic promises of improved living standards led to widespread disillusionment and skepticism. Noncooperatlon was encountered from almost all elements of the population. Thcelements in the Communist partiesto what theydcvialion-ist" economic course, The workers andwere inclined to hold out for greater and more effective concessions. Changes inand allocation patterns adverselyindustrial schedules and unfavorable weather reduced crop yields.esult,in both industry and agriculture was extremely disappointingven the reduced industrial goals were notand rising wage levels withoutincreases In productivity began to cause fiscal problems for the regimes.

Early5 modifications of the "new course" were undertaken, coinciding with the ousler of Malenkov and Soviet reaffirmation of the primacy of heavy- industry. These modifications called for restoration of some degree of emphasis to heavy industry,Uie eventual goal of fulland reintroduced some of the earlierinto economic acUvitics.he stress was placed on the restoration of discipline in such matters as workers' norms, wage payments, and peasant deliveryIn some countries, collectivizationwas resumed. The implementation of the renewed emphasis on heavy industry,was put off. at least in part,

The5 modlflcatlon does nottoull return to pre-"new course" programs. Emphasis on heavyis coupledetermination to keep development plans more in line withandecognition of the danger of neglecting agricultural development. In some respects discipline has been restored, but many of the "new course" incentives remain Intact.

The present industrial programfor the immediate future the fullof existing industrial capacities. Such an effort will continue the "new course" stress on the production of raw materials, fuel, and power. Only limited major new investments in the field of heavy manufactures areIndustrial investments arc toreater degree on replacement and modernization of outmoded equipment and on technological improvements, rather than on wholesale expansion of industrial capacity. The program also seeks to reduce the disparity which had existed prior3 between the rate of expansion in the output of producer goods and that of consumer goods. It envisages, moreover, greater use of heavy industrial plant for the production ofequipment and durable consumer goods.

The Satellite regimes arc faced with thorny policy problems ln the fieldatter of doctrine, they continue lo insist lhat full collectivizationrerequisite for the "building ofyet they have an acute awareness that rapid and forced collectivizationagricultural production.they can Increase agricultural outputover lhe next five years only ifis carried outlow pace, and private agriculture is given at Icasl limited encouragement. They will be facedelicate problem ofudicious balance between the incentives given theand those provided thc free sector. In any case, as longubstantial private sector remains, thc regimes will have difficully in getting maximum results from thesector. On balance, in view of the serious concern of the Satellite leaders Lo in-

crease agricultural output, we believe there will be only moderate Increases induring the period of this estimate.

Rate of Growth

The application of the "new course" was accompaniededuction* in thc rate of growth of Satellite GNP.4 estimated GNP was only five percent greater thanodest rate as compared withyears. Only Poland was able to fulfill its initial industrial production goal for that year. In all seven Satellites, the announced percentage gains In Industrial output over thc previous year were smaller thanhe average gain ln the productivity of labor was also significantly less than in previous years; in the case of Hungary, output per Industrial worker actually declined. Total Satelliteor agricultural commodities showed no increase4 over the preceding year.

We estimate that even with theof the "new course" undertakenhe rate of increase in the total GNP of the Satellites for theill average somewhat less than four percent per annum. This is lower than thc projected Soviet rate of about five to six percent, andubstantial decline from the extraordinary Satellite average of over seven percent for the.






Assuming only moderate increases in the collectivized sector, we estimate that Satellite

agricultural output0 will be aboutercent greater thanelatively large increases are projected lor Hungary andwhere agricultural output Is still far below thc prewar level, but thc anticipated increase for the Satelliteshole is much smaller than during the. Realization of the projected II percentwould still leave Satellite agricultural production aboutercent below the prewar level. The agricultural labor force Isto increase slightly rather than decline as in the past, even though mechanization is to be accelerated. The increased use of labor in agriculture, where productivity is low, rather lhan in industry where productivity Is higher, will tend to have an adverse effect on the rate of economic growth.

We estimate that nonagriculturalwill increase by approximatelyercent In the. This will be made possible by an estimated Increasen thc nonagricultural labor force and by an expected growth in output per worker on thc order of two to three percent per year, The productivity of labor ln the Satellite area0 will still be considerably less than that of the industrialized countries of the West.

Wc estimate that there willmallin Satellite living standardshc total population of the Europeanis expected to increase about4pproximately fromillion persons. Since the projected increase in total agricultural production amounts toercent,ery small per capita increase in agricultural output IsEven with some Increases in imports of agricultural products, comparatively littlein the per capita consumption of foodstuffs will result. The diet will remain low in proteins and high in starchyand the caloric Intake will not beincreased Manufactured consumer goods will account for the major part of the small prospective rise in living standards. Producer goods output will increaseore rupid rale than consumer goods, andwill rise more rapidly than consumption.

Sotollilo Contributions to Bloc Strength

The European Satellites represent anelement of over-all Bloc economic strength. Satellite ONP4 is estimated at roughly two-fifths that of the USSR. Thc ratio probably will be somewhat smallerince the estimated rate of growth of GNP is significantly lower for thc Satelliles than for the USSR.

Satellite production of basic materials such as uranium, coal, petroleum, bauxite, calcium carbide, and caustic sodaarticularly significant contribution to Bloc strength. Thc largest Satellite reserves of bituminous coal nre In Poland, which ships important quantities to the USSR and East Germany, and lesser amounts toand Hungary. Hungary-has the largest bauxite reserves In Europe and accounts for approximatelyercent of Soviet BlocAlthough Satellite oil reserves are estimated to constitute only seven percent of the reserves of the Soviet Bloc, thc Satellites currently provideercent of Bloc

It is estimated that.he Satellites provided approximately two-thirds of Bloc uranium ore production. East Oermany alone provided almostercent of the Soviel Bloc total. The uranium production of Eastcan be expected to remain about the same during thc period of this estimate, and Lhe other Satellites maylightTlie USSH, however, is not dependent upon Satellite sources. If necessary theatomic energy program could probably be supported at Its present level of operation from internal Soviet sources alone.the USSR will almost certainly wish to continue Its rapid and large-scaleof Satellite ores in order to accumulate maximum reserves.

Thc Satellites also produce some types of machinery and equipment which the USSR continues to import in large quantities. Most of thc production of rolling stock has beento the Soviet Union, leaving Satellite railway systemseplorable condition by Western standards. Satellite" shipbuilding



capacity has been expanded, and the bulk of the output, consisting chiefly of merchant ships, has been exported to the USSR, thus freeing Soviet shipyards for construction of naval vessels.

Foreign Trade and Bloc Economic Integration

having steadily increased sincetrade of the Satellite countries withinBloc remained constant Intheir trade with the Free WorldDuring thc period of thiswith the Free World may continuesomewhat faster, in percentagetotal trade. However, thcwill probably again begin to showincreases and, In any case, willpredominant part of the trade of each

For political as well as economic reasons, the Satellites apparently desire to increase tbeir trade with the Free World. Politically, the development ol trade ties with the Free World coincides with the current Soviet drive to extend Communist influence,nderdeveloped areas. Economically, the achievement of the planned rates of growth and the improvement of living standards will be significantly facilitated if the Satellites can import from tlie Free World certain keysuch as agricultural products, Iron ore. nonferrous metals, and machinery. Some items In these categories arc at presentby the COCOM countries.

In the absence of medium- or long-term credits from Free World countries, which are unlikely to be offered on any substantial scale during the period of this estimate, an early expansion of Satellite exports will belo balance an increase In Imports from the Free World. Thus, the Satellites arc now facing thc problem of adjusting the character and prices of their exports and their way of doing business in order to improve theirin Free World markets. Except ln East Germany and to some extent lnproducts of the newly-created Satellite manufacturing industries have been high in

cosl and Indifferent in quality. The large agricultural surpluses formerly used by some Satellites in their foreign Irade have dwindled rapidly. Moreover, Satellite regimes havead reputation In the Free World for abruptly terminating the exchange qfcommodities and for unsatisfactory performance on commitments and deliveries. Under these circumstances, lt will probably be easier for the Satellites Lo Increase trade with thc underdeveloped areas, particularly in South Asia, the Middle East, and Latinthan with thc Industrial countries of the West.

espiie this interest in East-West trade. Soviet planners ore also placing greater stress on the economic integration of tbe Sovietjhoc. The particular aspects of integration to which they are giving attention arc regionalof production planningore rational adjustment of the industrialof the Satellite area. Beginninghe Five-Year Plans of all the Satellites except Bulgaria will cover the same time period as the Soviet plan, and it has been officiallythat these plans will be coordinated with one another and with the Soviet planreater extent than heretofore. As in the past, the plans will reflect broad economic policies and goals laid down by the USSR. The Council for Economic Mutual AssistanceUl probably play the majorrole. The planners apparently hope that,esult of closer coordinaUon of production plans for particular commodities, togetherontinued high volume of intra-Bloc trade and increasing exchange of technical information, critical deficiencies in maieriuls, plant or labor can be avoidedtlie next five years. They further hope that Uie concept of better balanced economic development applied to the areahole, with Individual countries concentrating on thnr most efficient economic activities, will increase the benefits of intra-Bloc trade and help avoid imbalances, strains, and Such an adjustment wouldrequire the maintenance or elevation of the already high priorities established forUie output of coal in Poland,in Rumania and Hungary, machinesund



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equipment in Czechosolvukla and Eastand chemicals in East Oermany and Poland. In agriculture thc highest priorities would logically be assigned to Hungary and thc Balkans.

c believe lhat during the period ol this estimate Ihe scope and effectiveness of Bloc-wide regional planning will substantiallyas compared lo the. Economic interdependence of thearea has already grown significantly through thc forced shift of the Satellitesthc past seven years to Ultra-Bloc trade at tbe expense of trade with thc Free World. The benefits from such trade could be increased by further developing the complementary character of the Satellite economies.

he success of these efforu will, however, be limitedumber of factors. The task of coordination is intrinsically difficult, and its extension will almost certainly encounter practical and doctrinal obstacles.planning and organization of supply channels on an international scale are much more complex thanational sculc. Greater interdependence will multiply the area-wide repercussions of plan failures lncountries. While It would befor each country lo intensify concentration on lis most efficient production lines, It will apparently be necessary, at least during thc period ot this estimate, for individuallo maintain or even increase their efforts along certain uneconomical lines, pendingproduction increases by their Bloc trading partners. Finally the nationalistic and doctrinaire position that each Communist country should concentrate on theof heavy industry will probably militate against the full acceptance of the concept of interdependent economies.

n balance, wc view the current stress on economic integration as Indicativeong-term policy which will IncreasinglySatellite development plans. During thehis policy will probably noi contribute greatly to the growth of the economy or lo Ihr resolution ol basic economic problems, allhough some benefits can be ex-

pected.onger period, integration may make significant contributions to the economic strength of this area.


uring theatellite capabilities In many fields of science willto grow. At thc same time, however, the USSR will probably cease to be dependent upon the Satellites for Its basic research and development needs In such fields as scientificrecision tools, optical goods, photographic equipment, and electronics This trend will probably resulteneral redirection of effort toward thc development of Items for the domestic economy and foreign trade.

Since World War II, East Germany and,esser extent. Czechoslovakia have made significant contributions to the scientific and technological development of the USSR by supplying instruments for scientific research and development and for industrial process measurement and control.he USSR cancelled large contracts forprobably reflecting an Increased supply from domestic sources. Thc leas of thesemay at least temporarily reduce funds allocated for East German instrumentation research and development. Unless Sovietis revived. East German research andIn this field will depend upon theof other trade outlets. Including the West Progress, in any case, willbe slower than prior

Competent scientific manpower is still in short supply, but there arc many young and well-trained research workers in EasiCzechoslovakia. Poland, ond Hungary whose capabilities arc increasing wllhThe current trend toward theot scientific research, which has been noted particularly In East Oermany, mayumber of scientists from admin istralive duties and make them available for more productive work While thc scientific-technical manpower shortage will not beduring the period of this estimate, it will probably be considerably alleviated.

Satellite restrictions on the dlssernlnalion of scientific-technical information have been eased, and the controlled interchange of such information has been encouraged. Greatly increased attendance at internationalmeetings, together with an easing ofpolicy, have permitted contacts with scientific colleaguesorld-wide basis. Such exchanges of ideas and experience, if they continue, will be of considerable benefit to the Satellites.

There hasharp increase in nuclear physics research. In East Germany, Poland, and Czechoslovakia new institutes of nuclear physics have been established, andin this field are expected to increase. Thc Soviet Union hasroad program of assistance to the Satellites, including Lhe supply of nuclear reactors and fissionable materials.rogram, if carried out. would considerably broaden the base andthe capabilities of the Soviet Bloc in the nonmilitary aspects of nuclear research. In any case, the full impact of this program would not be felt

The direct contribution of the Satellites to Lhc Soviet Bloc air, ground, and naval weapons research and development program is of little significance. Theremall amount of work being done in Czechoslovakia and in East Germany which gives support to Soviet weapons programs. Soviet policy,has been to limil Satellite research and development work on weapons. Thehave been encouraged to apply their scientific and technical effort Lo lhcof test and research equipment, ofmiliiary ilems. and of induslrlal Icch-niques related to military production. We believe that, during lhc next five years, there will be no significant change in this policy.


conirol of the Satellites hasSoviet military frontier into CentralIn view of lhc slrategic importanceregion, the USSR has given greatlo ils development for military It has maintained and modernized

large forces of lis own In the area, and has Intensively developed airfields andIt has sought to build reliableforces and has Increasingly supplied them with modern weapons and equipment.

Soviet Forces Stationed in the Satellites

Of anoviet Army ground forces0 security troops) stationed in the Satellites,ine divisions) arc located in East Germany, while the0ine divisions) are located In Hungary, Poland, and Rumania. It is possible that the Soviet troops in Hungary and Rumania will beduring the period of the estimate, since their presence is probably not consideredto the maintenance of"5ovlet control. Thc Soviet leaders mightove in support ot their diplomatic and propaganda campaign against NATO. At present,the indications are that these troops will remain. Provided there is no basic change in the German situation, the number ofin East Germany and Poland willnot change substantially during Lhc period of tlie cslimate. allhough Iheir combat effectiveness will be increased through the re-equipmcnl and reorganization program which has been in progress since

The most significant change in Soviet air strength in thc Salclliles over the past year hasizeable increase in Jet light bomber strength. This substantially enhances Soviel capabilities for direct and indirect support of ground force operations. Of -theight bomber regiments currently In tliere based In Eastn Poland,n Hungary.

Aboulercent of the Soviet FAGOTSased in the SaLellites4 have been replaced by FRESCOS. Thisignificant Increase in combat effectiveness. All Indications point to the probability lhat this re-equipmentwill continue until all FAGOTS arcby improved fighter types byl present thereimited number ol jel all-weather fighters which are probably being


for training purposes. While these planes do not materially increase the over-all combat effectiveness of the Soviet air force in the Satellites, their presence portends ain all-weather fighter strength andcapabilities. IL is also expected that all BEAST (IL-IO) attack aircraft will be phased out bynd replaced in the attack role by Jot fighters and light bombers. In short, present Soviet authorized air strength ofiliiary aircraft of all types stationed ln the satellites will probably not change substantially over the period of the estimate. Actual strength is presentlyat aboutercent of TO&E. The capabilities of this force will be increased by tlie continued phasing in of new types; actual strength could be brought up to theigureelatively short time.

USSRmall number ofand minesweepers in severalon lhe Ballic and Black Seas. Thepurpose of these forces is to directof tlie Satellite navies in thc useequipment and operatingthe size, composition, disposition, orof the Soviet naval forces basedSatellites there have been noand none are anticipated overof Lhe estimate.

Satellite Forces'

The Satelliteubstantial element inof military power in Europe. Wethat currently the ground forcesivisions, of which six are tank andRecently cuts have beenfor Lhe major Satellite forcesnine loven If theseactually carried out, the over-allof the ground forces will not beimpaired. These ground forces arc

'See Uie tables In tbc Appendix for detailedon the strengths of Satellite military forces.

' In the case ft Albania the figureercent. Ill East Oermany no cut has been announced In the strength ot the militaiy forces.

supplemented by Satellite security troops whichen.ays thc Satellites couldenivisions, provided there was extensive Soviet logistical support.

We do not believe that there will beincreases in the Satellite standing armies over the period of the estimate, with theexception of the East German army. If conscription is adopted Lhe lalter could be doubled in sizeut quality and political reliability would sharply decline.evelopment will probably depend in large part upon theent of West German rearmament.

There appears to have been little joint planning or Iraining amoatg- Satellite armies. The recent formationnifiedarmed forces command has changed only the forms under which thc established Soviet control over military affairs Is effected. There Is as yet no conclusive evidence of inter-Satellite or Soviet-Satellite training under direction of Lhe unified command. There is no evidence of plans for tactical Integration of Bloc forces in wartime. It Is probable,lhat integraled planning is under way and thai combined maneuvers will be heldew years. In the meantime, in tlie event of general war. thc Satellite forces would probably be used separately under the direction of the Soviet high command and might be placed directly under Soviet officers.

The morale and reliability of Satellite ground forces has increased over the past year and will probably continue Lo-improve during the period of lhe estimate. This trend will be largely the result of continuedand training. We believe that theol these armies is such that they would be unlikely to defectubstantial scale unlil victorious Western forcesthc Satellite area.

Tlie combat effectiveness of the Satellite armies varies considerably so that no over-all generalization is possible respecting their probable performance in the event of general war. The amount of transport and mecha-

t fr.

equipment allocated to major Satellite forces has Increased significantly in the last year, and mobility approaches that of Soviet forces. Wc believe that up toercent of existing Satellite divisions could be employed initially in combat alongside Soviet forces. With Soviet logistical support, several of the armies would be capable of sustainedaction against traditional enemies. In general, the Bulgarian army is probably the most reliable, best trained, and effective of all thc Satellite forces; division-level maneuvers have been held each year for the past five or six years. Bulgarian reserve training Isand thorough. Against suchenemies as the Turks or lhe Greeks, the Bulgars would fight with their maximum effectiveness. If tlie enemy forces included sizeable German contingents, theand Polish armies would probablyood account of themselves, for the Poles would fear the loss of the "recovered" lands and the Czechs the reoccupation by Germans of the Sudeten areas. Thc Hungarians and Rumanians, on thc other hand,evival of German influence ln Eastern Europe as favoring their chances of liberation from the USSR, and consequently their troops would sutler from poor morale if pitted against German units. The Satellite army with the lowest combat potential except for the small Albanian force, is that of East Germany. The Garrisoned People's Polices this army is still called, couldnot be used for operations against NATO forces in West Germany, especially If the latter included components of GermanRepublic troops. KVP units would. In Lhis case, have to be used for guarding lines of communication and in other secondary roles.

hc Satellite militarized security forces have not changed significantly ln strength over the past several years, although they have probably become more efficient. It is believed that they will retain approximately their present status through thc period of this estimate, and lhat they will remain capable of protecting thc local regimes against any threat of internal subversion. The oneto this general capability ls provided

by East Gennany where, until recent years, most security functions were performed by Soviet security forces. During the past year, however, there hastrengthening and reorganization of East German security forces, probably in anticipation of their assuming greater responsibility for security operations.

The total Satellite output of arms and ammunition willmall share of total Soviet Bloc production. Although thesewill manufacture small arms, artillery, tanks, ammunition, personal and optical equipment, no significant Increase inof army equipment is expected.

Air. The Satellite air forces now have an estimatedtrength, and an estimated actual strengthperational aircraft of all types. WTestimate that0trength will probably. and thai actual strength by that date will be. Personnel strength is atestimated to. The capabilities of the Satellite air forces will probablyesult of an over-all increase in available aircraft and in the proportion of jet aircraft. We believe that, even if the recenLIy announced manpower cuts are actuallyout. thc over-all air capabilities will not be affected. No heavy bombers arc expected to be introduced but piston medium bombers could be made available to the Satellite air forces as they are phased out of the Soviet air force. The greatest stress will conlinuc to be placed on air defense, with secondary emphasis on air support of ground operaUons. Throughout the period of.this estimate, the Satellite air forces wiil continue toignificant increment to Soviet air strength in Europe.

The USSR provides intensive training for carefully selected Satellite pilots in Uietechniques, and tactics of the Soviet air force. Soviet policy appears to be directed toward Uie attainmentigh degree ofbetween the air force of eachand lhc Soviet air force, and Uieof thc Satellite air forces into the Soviet air defense system There has been littleamong the individual Satellite air

forces. While lhe Eastern European Defense Pact (EEDP) suggests that such coordination is contemplated, probably no significantIn this direction will be made. Wcthat the policy of close Soviet control ol lhe Satellite air forces will continue

After the Polish defectionshe USSR strengthened its control over flyingin all Satellite air forces.there were increased efforts to improve personnel selection and politicalEmphasis was also placed upon the role of each Satellite air force in thc defense of its own territory, thus stressing the nalionalThese measures have Increased thereliability of the Satellite air forces. We believe that the combat effectiveness of these air forces Is such that they could be cm-ployedefensive role in the event of general war and would have tome offensive capabilily. particularly against traditional enemies.

Combat aircraft production in thenow accounts forercent by number and five percent by airframe weight of Bloc production. This share will probably increase toercent by number and seven percent by weighte believe that aircraft models now being produced ln the Soviet Union will gradually replace obsolescenton Satellite production lines, after thehave converted to newer models. For example, wc estimate that the FAOOT, the only Jet fighter now being produced in the Satellites, will be phased out and will probably be replaced by the FRESCOet fighter in Czechoslovakia and inbyhe FRESCO willbe phased out after about three years and be replaced by either the FARMER jet fighter or the FLASHLIOHT all-weather fighter, or by both. The BEASTround attack aircraft, was phased nut in Czechoslovakia innd It is expected that the produclionight Jet bomber, probably the BEAGLEill beginbe BEAGLE will probably be phased out by0 and be replacedew light jet bomber. ew plant under

construction in Rumania will probably begin production of FRESCO jet fighterso production of guided missiles in thels expected during the period of the

extensive program of alrfielo*and construction Is being continuedUie Satellites. Principal emphasisfrom East Germany to Poland,Satellites coniinue to pursue aconstruction effort. Runwaysbuilt are ateetr more. Thereirfields available to Soviet forcesSatellites. CurrenUy the number ofairfields (permanent runwaysmore) In the Satellitesfthan one-half are located ln PolandGermany. If recent trends inconUnue. this figure would0 Airfields ln thenumerous enough to support elementsSoviet air force, as well as thcforces,eneral war occurringperiod of this estimate. Manyare being equipped with nightnavigation aids, radar, increasedand improved structures. Thisnetwork of modern well-equipped airas it progresses toward completion,materially to Soviet Bloc air capabilities.

Satellite Naval Forces*

Satellite navies are small In sizeequipped and constitute only ato Bloc naval strength. _Attheir primary funcUon is Uietrained and politically reliable cadrespatrol operaUons. They areattaining some degree of defensiveOffensively they could givesupport to ground forces. TheEast German navies have theproviding appreciable assistance to UieNavy ln such fields asescort and coastal defense.Polandimited potential for

Tor detailed Usures on Satellite naval atrmsth, iee Table 0.

Mlltloiy olwotl

til* a* tKftfifi i'Ui

defensive submarine operations withinto Polish waters. Thc Rumanian and Bulgarian navies, however, will be capable of rendering only token assistance. Satellite ports and bases provide the USSR with aextension of naval logistic andfacilities. While in thc past. Satellite navies have not been considered entirelythe recent acquisition of severalby Polandteadily Increasing number of mine warfare and patrol vessels in the East German Sea Police attest toSoviet confidence in their reliability. However, it is not expected that any long-

range program to build up thc strength of the navies will be undertaken until the USSR is certain of their reliability.

he Polish Naval Air Arm, the only naval air arm in the Satellites, has progressedto its present strength of one -regiment of Jet fightersossible regiment of piston attack type aircraft. It is considered to have limited capabilities for fighter defense and air strikes on surface vessels In the South Baltic area The effectiveness of this air arm will probably remainmall East German navut air arm may also be formed during the period of this estimate.


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Actual strength is estimated loercent of TOAE Fullould be achievedbort period of Ume.





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figures on the strength o( the East German Navy (Sea Police) and or. thfcEoltsh Navy arereliable. The figures on thc Rumanian. Bulgarian, and Albanian navies areesser order of reliability, but are believed to be generally accurate No projection has been attempted since there ls no reliable Information as to future addition* to We Satellite naval forces and anyaugmentation of usual strength would have lo come from the USSR. The figures given Include ocean-going and coastal type vessels River and harbor craft areumbers ta parentheses are ships under construction.

Additional vesselsDDay have been transferred Irom the URSR
















Original document.

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