GERMANY
Berlin Currency Although Soviet reaction to the proposed Issuance of the western "B" mark as the sole currency for the western sectors of Berlin will be swift and well-publicized, the USSR is not likely to Interfere seriously or forcefully with the operation of the airlift. Soviet retaliatory action will probably take the form of further tightening of the blockade and may involve conversion of the Soviet eastern markew currency. Soviet measures to curtail theof supplies from Soviet-controlled territory to thesectors will increase the hardships of the western popula -Hon, further impair the west sector economy, and probably require an increase In the airlift. Soviet authorities could tighten the land blockadealting all railahn andutting off water traffic oo thetopping or sharply reducing pedestrian traffic between the western sectors and Soviet-control ledarring all mailutting west-sector long-distance phone cables, local inter-sector phone lines, and all telegraph cables;plitting completely Berlin's systems of electrical, gas, and water supply, and the sewage disposal facilities. In determining the extent to which these measures will be applied, the USSR will be restrainedby the economic repercussions In the Soviet zone, which would be deprived of Important materials and skilled labor now being received from the western sectors of the city. If the USSR converts Its present eastern mark, it will do so In order to prevent eastern marks presently held tn western Berlin from flowing back Into Soviet-controlled territory.oviet move would leave western sector occupation authorities with the moral obligation toery large number of relatively worthless eastern marks in order to avoid undue hardship for the German holders of this currency.
EASTERN EUROPE
SOVIET UNION
Recent Soviet reaction to western economic and defensive measures, though not yet crystallized, has thus far manifested itself chiefly by top-level changes in ministerial positions in Moscow and by an apparent shift in tactics by Communist Parties outside the Soviet Union. The implications ofnd Mtkoyan's shift from their ministerial posts will probably be clearer after the current session of the Soviet parliament, but no basic change tn Soviet policy toward the West is expected. The USSR will continue its attacks on the Atlantic Pact, its obstructionist policy in the UN, and its attempts to gain control over all of Germany. Meanwhile, however, Communist Parties outside the USSR are apparently reverting to the active, militant policy ofs.
Molotov-Mlkoyan The Kremlin decision to relieve Molotov
from his position as Foreign Minister and Mikoyan as Minister of Foreign Trade, although not anof any fundamental change in Soviet policy, probably doesoviet reassessment of the progress of the cold war. Molotovshift may reflect the Kremlin's belief that the problem cf formal relations with the West has been reduced to secondary Importance by western gains and the growing Inability of the USSR to make progress on the diplomatic level. Similarly, western gains have made it more imperative for the USSR to consolidate its position in Eastern Europe and Communist China. Thus, although Molotov may have been released for the purpose of taking over Stalin's position as Premier, he, as well as Mlkoyan, may have been relieved of ministerial duties In order to concentrate on the pressing pol?tical and economic problems of the Soviet sphere.
SOVIET UNION
Communist Militancy The apparent failure of recent Soviet
diplomatic and propaganda weapons to sabotage US-European defense efforts and to gain popular support for Communism has prompted the Kremlin to order Communist Parties outside the Soviet Union to prepare for militant and subversive methods in pursuit of Soviet objectives. This announced reversion to the active militant policy employed by the Communist Party in thes may, therefore, signify the end of postwar tactics which were characterized by so-called "legal" Communist operations within established political frameworks. This shift in political tactics apparentlyenunciation of the popular-front technique ofwtth non-Communist governmental factions.
Atlantic Pact Continued Soviet efforts to defeat the purposes
of the Atlantic Pact are revealed by recent Polish feelers for non-aggression pacts wtth the Scandinavian countries. The Polish campaign is apparently concentrating on the minimum goal oformal Swedish alliance with the West. Aside from the strategic and political factors which makeatural goal for Soviet hegemony, the USSR's Industrialization plans for Poland anddepend upon an uninterrupted flow of imports from Sweden. Likewise, Polish coal has longignificant part in Scandinavian industry, especially Sweden's. Thus, aside from the USSR's Interest In preventing closer political and military cooperation between Sweden and the West, the Soviet Union Is desirous of maintaining uninterrupted the vital economic lifeline from Scandinavia to the Satellites.
S^njrtnT
YUGOSLAVIA
Reports of Increased military activity In Bulgaria and Albania, combined with recent changes In Communist activities in northern Greece, suggest that the Kremlin isreatly Intensified campaign for the overthrow of Tito.that six months of dialectical battle and relatively minor diplomatic and economic reprisals have, if anything, driven Tito further toward the western camp, the Kremlin now appears to be planning more drastic steps, which may possibly end in overt military action.
Greek Guerrillas An apparent shift in Communist activity
S
in Greece strongly suggests that the Kremlin has decided to abandon temporarily its campaign to gam control over all of Greece and Instead to attempt to exploit the Macedonian question as an additional weapon against Tito. The guerrilla radio has announced that an autonomous Macedonian state would be proclaimed In March. This new strategy is probably an attempt to gain the support of the large Slavo -Macedonian population In northern Greece. The autonomous Macedonian state envisaged by thewould, if established, tend to undermine tbe Tito regime and would thwart Tito's deep-seated ambitions for astate under Yugoslav control. The Kremlin may also believe that It can secure such long-range benefits as an Aegeanand route between Bulgaria andurtailment of Greek economicase which could servetrategic threat against Greece, Yugoslavia, and Turkish Thrace. Aside from the possibilitieslan offers for increasing the pressure agaInst Tito, however, tt is unlikely that the USSR will derive much benefit from raising the controversial Macedonian question at this time. Although
YUGOSLAVIA
Greek Communist leaders have,edgingtheir support for an-independent Macedonia-,
ment of Greece. Moreover, even withthe guerrillas would be too weak toagainst the Greek Army without open intervention
Military Preparations Meanwhile, the USSR is reportedly
stepping up military preparations elsewhere. Top-ranking Satellite military leaders areto be meeting at Debrecen, Hungary. Although the meeting may be designed todefensive' East European military blocounter to the Atlantic Pact, plans for exerting greater military pressure on Yugoslavia may also be on the agenda. Bulgaria is reportedlyits flow of supplies to the Greek guerrillas in easternoticeable Increase in Soviet military activity has been observed in Albania. Soviet supplies and arms are arriving at Albanian ports, and numerous reports have been received Indicating the landing of Soviet personnel andMoreover, Increased Albanian protests of Yugoslav-Inspired border incidents, although at this stagetepping-up of the war of nerves, could be used as an excuse for eventual armed action against Tito.
Yugoslav Reaction The Tito regime, in the face of these signs of increased Soviet pressure, shows no sign of capitulating to the Kremlin. Finallyan enigmatic silence on the proposal for an autonomous Macedonia, the Yugoslav Government has Issued acontending that the proposed campaign for an independent Macedonia: (l) would only create confusion in the ranks of
YUGOSLAVIA
Greek and Macedonian guerrillas;asart of tbe Com Inform campaign against Yugoslavia. The Tito regime will exert every effort to prevent the formation oftate and will publicly accuse Bulgaria of violating its past pledges for cooperation In handling the MacedonianIn conclusion, there is no reason to believe that Tito will be Intimidated by these Soviet measures, and any attempt short of overt military action will probably fail to dislodge him. Moreover, present Satellite armed forces are not strong enough to overcome the Yugoslav Army unless they are strongly supported by Soviet troops and materleL
Original document.
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