SOVIET UNION
opposition. Her arrest as an "intelligence agent" and her deportation from tne USSR seem calculated not only toher In Communist circles generally but also toMao Tse-'tung or Tito from welcoming her. Miss Strong's attitude toward the Chinese Communists hasnegated someears of propagandizing the Soviet cause. Soviet leaders also probably consider her too closely identified with the old Communist propaganda claim that the Chinese Communists are independent of Moscow. This line, in view of the vastly increased power and prestige of the Chinese Communist Party, has become potentiallyfor the Kremlin and will probably be abandoned soon.
HUNGARY
Financial Crisis Tbe USSR may be forced to grant a
foreign-exchange or gold loan toas has been done recently for Czechoslovakia, in order to bolster the Hungarian financial position and to forestall serious retardation ofndustrialHungary's critical foreign exchange position has been caused chieflyncreased orientation ofto theeliveries on account of reparations to the USSR;se of hard currency reserves for western imports.
SECRET
SOVIET PLANS FOR AN EAST GERMAN STATE
Further Communist designs to Integrate eastevn Germany into the political and economic system of tlie Soviet bloc were apparent at the recent Socialist Unity Party (SED) Congress in Berlin. Speeches by Satellite delegates and Congress approval of the Oder-Neisse line as Germany's eastern boundary laid renewed stress on Communist efforts to reconcile the Satellite states to closer collaboration with the Soviet Zone and to eventual Inclusion of the area in the Soviet orbit. Other action at the Congress indicates that the USSR is still attempting to insure Communist control of east Germany. By reviving advocacybroad democratiche Communists are seeking the political support uf formerly uncooperative elements. The establishmentan SED "Politburo" was designed to discipline the SED in order to makeore effective instrument of Communist control.
The reversal of the SED stand for the incorporation of Berlin Into the Soviet Zone Indicates that the Communists believe the Berlin impasse will continue. In line with the Soviet themeunifiedhis tactical renunciation of Communist claims that Berlin is an integral part of the Soviet Zone may be designed to combat possible inclusion of the three westernhe cityest GermnnMoreover, by omitting Berlinuture cast German state, the USSR may feel that It can insure control over the new state by maintaining Soviet troops there to guardlinesoviet garrison In Berlin. Although the Congress again stressed the theme of German unity.tactics at the Congress once more suggest that the USSR intends to create an east German state which will claim sovereignty over all Germany. The formation oftate would probably be timed to counter me formationest German provisional government
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SECRET
Original document.
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