POLITICAL AND ECONOMIC SITUATION IN SELECTED AREAS AT OUTBREAK OF EAST-WEST HOS

Created: 8/19/1948

OCR scan of the original document, errors are possible

POLITICAL AND ECONOMIC SITUATION IN SELECTED AREAS AT OUTBREAK OF EAST-WESTRIOR TO9

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By: J

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8 (Reference: Joint Iatelllgence Group

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CENTRAL INTELLIGENCE AGENCY

CONRCtifllM.

FOREWORD

?hie roport la tm mflUasixt.of the request of the Joint -ntelligonce Croup, The Joint Staff, eat forth In oovoranduai

outline proposed by thu JIG has been auostantially adhered co, dnriatlons having been cado only whan available naterial aas nothe proscribed form.

Jection nnd pai-agraph nuabers used throughout the paper refer to tihoso uaod in tha JIG outline.

The terms "eight allies- or the "eight designated allies- refer to the Unlteo Kingdom, Canada, Australia, New Zealand, Unionuth Africa, France, Belgiue (includingnd thelands.

In addition to the aaeuaptlona stated by the Joint 1ntelligence troop, It has bean nocssaary to asauae tho followlngi

3. Tho aituation ia oatiaatod aa of9ay.

q. Thoayay for all practloahlo purposes

coincide; hence war cooeeurprise to the West, but noturprlse to the East,

Thsite ERP eeesritnents, and US aid wil' be

ofriciontly utilized.

d. Tho proDont general polltioal and econonio situation will

continue, as will the present political and ooonotdo division of Geraeny and Austria.

*- Mo substantial disruption to European trade will occur frea Soviet policy or action.

t. orsal crop year will be had throughout the world.

W^re pertinent to the treatment given the polltioalbeen included on Germany, Austria.Spain, and

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7. 9 expected uranium production and requirements of the eight designated allied countries is infornstion which is covered by the Atomic Energy Act6 and oonnot be reported by CIA without special permission of the Atomic Energy Commission, it is suggested, therefore, tbat this request be referred to then for their Judgment on release of tbe requested information.

S. IThils certain military information was obtained from the

He part meats of the Amy, Navy, and the Air Force (particularly information used in preparation ofndhis pspsr has not been coordinated with tha dspartmsntal Intelligence organisations.

CENTRAI, lOTELLIGSiCE AOSfJCT8

POLITICAL Aim ECONOMIC SITUATIONECTED AREAS AT OUTBREAKAST-TOST HOSTILITIES PRIOR TO9

CCELUSI0H5

SOVIET UMOH AKD SATELLITE oTATSS

1.

Tb* political alma of tha USSR will ba to check tba threat to th* Soviet orbit inherent la the growing stabilisation of tha non-Ccaronist world, to eliminate possible bridgeheads froa which tha Western Powers might launch an attack on the Soviet sphere, and to establish Soviet-deed nated governments in areas occupied by Soviet forces, Tb* political instruments used in th* attainment of these objectives would bei

of tb* propaganda program which willparticularly to undermine tha united front of the Western

Alllss, to portray ths Sovist Union as the defender of alldemocracies" and "Peace loving" peoples of the world and to convince the peoples of the world that saa has been forced on the USSR by the imperialistic design of the US.

Maximum exploitation of th* Cesmunlst Parties In tb* allied countries for subveralon. and

Exploitation of dissatisfied minority groups in tha allied countries.

The Satellite States, with tb* possible exception of Finland and

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Yugoslavia, would firmly support tha USSR in ell these efforts. Tho

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police control maintained by the Soviet Government and the solitary auccenooa and booty that probably would behe early stages of the war wouldine assure the Soviet Oovernmect of strong popular support. Aa the war progressed, however, withhardships accoBpanying Soviet Military reverses, the Soviet position could be seriously affected by tba following baslo weaknesses,If properly exploited by the alllssi

(l) The strong native nationalism of tbe Satellite nations and certain ethnic groups within the DSSH,

(3) The natural friendship of the Russian people for the Aaerlcen people aad the healthy respect of tbe Russian people for Anerlcan technical and Industrial ingenuity.

(3) Tb* susceptibility of the Soviet people and the Soviet Irwy to psychological warfare. Th* Amy would bo particularly vulnerable after 'an extended period of occupational duty outside tbe 1SSR.

(l) The popular disUluslooserit andthat would develop among tbe Basses throughout th* areaa under Soviet controlesult of ruthless Soviet and Ccexnmiat suppression and exploitation.

Instinctive fear Invading all elesenta in the Sovietsocieties which tends to destroy independent thinking

Influence of religious groups.

The forces of resistance Inherent In these weaknesses, however, would not assert theaselves effectively unless they received guidance and antarial support free the Beat and until the Soviet orbit were subjected toand effective aerial bombardment and the prospect for ultinat*

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victory seriously diminished or invasion of tba Soviet orbit bybecasB

2. Economic.

The combined wartime productive abiUty of the USSR and Satellites9 will be below that While their Industrial end agricultural capacity will then be considerably advanced over5 level, defioiencise will continue in certain key fielde primarily inskilled manpower, high-grade gaeo'ine and lubricants, special types of machine tools, some areola inn equlptoont, industrial diamonds,ferro-alloys, tin, natural rubber and certain types of finished steel. Stooka of aoat vital commodities will probably be below tho prewar level.

Despite these deficiencies there la no doubt that the Soviet bloc would ba able to mobilise ita economyajor warhe extreme flexibility of the Soviet war economy, ae evidenced in World II in the abort run would permit the necessary adjustments to overoose soet of tbe above weaknesses,

ALLIED RATIOS 1. Political.

j. PQlAUgflJ. Alr.Q. Oblflcttvog. Trende. aod tothqda..

(1) The po* itical aims and Objeotlvee of the OX during the period prior to the presumed outbreak of war will be to attain the maximum deinree of International stability In the interest of achieving as rapidly as poseible ita own economic rcoovery, and to protect its remaining Imperial possessions and its strategic positions in the Middle Eaat from Soviet encroachment. To these ends it wil1 strongly support OS policy and will

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encourage the davelopmant of tbe Wsstern Onion, enoouroge inoresaiug five-power military cooperation and invite increased OB participation to insure the security of threatened areas wfaioh the OK deem* strategically and economically important. It will proceed cautiously with respect to

Implementing Vfoetern union in order not to alienate the dominions but

its objective will bo ultimately to harness tho entire coaaonwealth to *estern Onion. It will continue toirm but patient policy towards tha OSSR and, while not appeasing, Bay be Inclined tomoderating" influence on tha OS.

the possible exception of South Africa all thewill actively support the OK and the OS in their aims toeconomic stability and to contain the OSSR. France and theshow increasing economic stability recovery, relycooperation with the US and actively promote Western union. France

at the ease time will attempt within the framework of the above procedure to restore Its lost prestige end to establish its Independence of the OS.

present rightist dictatorships of Spain and Portugal,regime in Switzerland and the democratic governmentontinue in power. In spit* of eon* probableSpain nor Italy will escape discontent from economicSpain, and Portugal will undertake to maintain theirItaly, while showing cone disposition toosition ofprobably be increasingly disposedilitary alignment withUnion, at th* sane time developing increasing resentment toward

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ver ths colonial issue end toward Yugoslavia ever Trieste.

U; Austria will oontlnue Its strong Eastern orientation but ta Germany hostilityatern occupation policies sad increasing natlonallamead to antagonism toward the Western Powerstrengthening within the country of the political forces on the oxtreas Left and Right at the exponas of the center.

Attitude end Morale of native Populations.

(l) British norale is high and tho country will react with cus-

toeary resolution in the event of hostilities. The population is oraotloslly

impervious to psychological warfare. In 8anada both the Anglo-Saxon and

the French elements are equally devoted to the traditions of liberty end

donocracy and nay ba expected) to support tba OK and ti3 in the struggle against

Coemnicisa. The susceptibility of the Anglo-Saxon elements to psychological

in

warfare is negligible. The French eleasnt is/vulnerable to Communistbut with Its strong racial eopsolcusnsss might be suaooptible to certain types of psychological warfare. Tha loyalty of certain Slavic minority groups in Canaoa, located frequently in industrial areas, however, ia subject to question snd will oontlnue toarticular target of Soviet propaganda. Neither the Australians nor New Zoalandero would be susocptlblo to psychological warfare under wartime conditions in spite of spprseiab'e Communist Influence in tho Australian labor movement. South Africa, while hostile to the USSR, would probably not approve full partici-etionar overseas. Its while population, with its intensive anti-British feeling, would bo vulnerable to certain types of psychological warfare snd its non-white population would be highly vulnerable to Communist orepaeanda. Both the Frenoh and the Italians, who are largely cynical, selfish and disillusioned would ba extresaly susceptible to psychological warfare, particularly under conditions in whloh they might see little hopsastern victory. The

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Dutch and the Swiss ara unsusceptible to psychological warfare but tbe Bolgians, Although in meat raspaots similar to tbe Dutch, oould be taore easily Influenced, Spain, bscause of ite low standard of living, wouldertile field for Coonunlst doctrine and Portugal would likewise be axtromely susceptible to psychological warfare. The Germans, although not strongly oriented toward the West, fear tho USSR sore than the Western sllies. They are not easily deluded by propaganda. Tbe Austrians, on tbe other hand, ar* strongly oriented toward the TVst buttronger sense of expediency.

c. subrorglYfl PrgBHiaUgM.

(l) Subversive organizations ln tho UK can have no moreuisance value. Inubstantial Communist influence in tbe labor unions, particularly on the Pacific Coast and ln the industrialised provinoe of Ontario, could interfere with industrial operations, bat strong, popularly supported government action ahould he able to prevent serious political or physical sabotage. Sidespread Coaeunist control of Important labor unions in Australia oould temporarily dlarupt an initial Australian war effort but the inherent loyalty of th* rank end file would probably soon restore unity to suoh war effort. In How Zealdnd the small number ef Communists, through their influence in labor organisations, oould initially cause some Industrial stoppags but tho government could quickly get control of the aituation. The smell number of South African Communists cannot seriously disrupt the economy in tha face of firm government action. While the Coaaninlst parties in Franc* and the Benelux countries are well organised and disciplined, tbey cannot seise power by force in tho absence of foreign intervention, but they ara capable of retarding economic recovery. Their influsncs and capabilities ar* less in Holland than in any other of these- oountrioa. Tho Italian Ccsaunlat

Party ia the aoat powerful aad influential in Western Europe. It has tbe capability of temporarily seising oontrol in northern Italy by insurreotloc but could not maintain thla oontrol without outside assistance. As In France and the Benelux countries, they retain the capability of retarding eoonoerlc recovery but cannot carryeneral strike;. In Spain therenail group of trained adaut Coesauniats which has tbe dapobl' Ity of fomenting labor unrest and carrying on guerrilla action but has not the capability of overthrowing tha Franco regime) cm the other hand, the unorganized nem-Cooramlot opposition to the Franco regime in Suainotential strength of acre than 5C* of tbe population. There is no potential Communist throat In either Portugal or Switzerland. stern Germany and Austria the Coomunists number aboutof the population, and, will's oapable of coo-alder able sabotage in both government and Industry, could not carry out an armed Insurrection or large-soale guerrilla notion.

Tho UK is the strongest ally of ths US In the political seneo. Its propaganda directed toward Eastern Europe is believed to be relatively effective owing to its long experience in this field and to the fact that Its socialist government renders British propaganda lese suspact to tbe socialdnded Eastern Europeans. If Seetern Europe ware occupied by tbe eneray, competent British support of resistance movements and British Influence and prestige In numerous countries outside the floarwmaealth and the Enplre would be beneficial to the US. A'though the British Government*end people are firmly united, and morale Is high, In war th'a morale might eventually tend to weaken under the followinga) rolonged intensive bombardment against which counter-measures were ineffective, particularly If allied strategy excluded the defense of the UKatter of priority;

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or (b) if tba iToatorn sea approachoc wore not )cept open sufficiently toiable dietubstantial moasure of oconca'o activity. Prior to the outbreaJc of war, any appreciable diversion of ths UK Industrie'1 plant for military production would be feasible only If OS eoonosjlo aid were increased to fill tha gap; In wartlse tbe UK would rsquire US econoaio In the event of war it sight be polltioally lapossible for tbe British Government to use mass destruction weapons before they were used by the onsuy. The traditional opposition of the French in Canada to participate in military conflicts Involving the British Enpire might againanadian war effort, but the French Canadians would probably bo sere inclined toar against tbe USSR than they have been to support previous wars. In view of Canada's exposed northern frontiers, also, tbe government wight be reluctant to supply forces for other theaters. However, there is Introng sense of tho unity between US and Canadian strategic Interests which should bban full official collaboration in preparation for ear and In Industrial planning. Both Australia and Mew Zealand would strongar effort in spite of cose initial difficulties front tho Comsunlsta within. While South Afried would unquestionably cooperate In providing tha US with bases and access to its atrategle raw rate rials, the serious internal differences presently prevailing in the country would probably preclude the posslbl1 ity of an all-out war offort. The lack of military strength In France, Italy and the Benelux countries will oak* than of little value to tha US In tba event of war. With the possible exception of the IE Indies and Frenchhowever, the colonial resources of these countries would probably be available to the allies. Because of their geographic location, Spain and Portugal might be of acsje temporary use In spite of tbe weakness of their armed for cob and their economies. Switzerland, with its well trained army

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and elaborate defenses would be able to delay for somo tlte tha total occupation of the country. Helther Western Germany nor Austria could be expected toart of any strategic significance.

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2. Economic.

Data showing thof aelf-sufflclonoy for tho eight designated allies, taken collectively, are somewhat unrealistic! if not Interpreted with caution, they might be seriously adeleading. The areas of the eight respective eountriea are not oontlguoua, nor do their economise readily blendohesive whole. Although, col"actively, the eight oountrlee may be iwarly self-aOf fie lentiven coarodity, their strategic poaitlon may be quite otherwise when one analyses their ordinary and traditional channels of trade.

In the ordinary course of world coomorce, even though these eight countries conatitute markets or sources of suoply for given products, frequently they do not constitute one another's usual aarketa and sources for auch products. ron ore, for example, la not usually shipped to her "sevenut to the United States, Similar"y, the eight countries are potentially about self-sufficient in nitrogenous fort11leers; but inasmuoh as some of thorn customarily export to non-allied countries, others must depend heavily on "outaide" sources of aupply. Thus, only by substantial, and at tiaua costly, reorientation of established trade

chanaola may the dogree of soif-sufficiency calculated on the basis of tha given aseueptione be attained-

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Sith ooce reorientation of thoir Bateblisbed patterns of trade, the eight countries could be aolf-suffictont In bread gnaina, steel capacity, aluminum, sulphuric acid, nitrogenous fertilizers, soluble phosphates, synthetic rubber, motor trucks and moat forest products. ew instances, the eight alllea areubstantial export basis.

It the other extreme, the eight countries would hare vital defioienoiea in their supplies of certain items.

Tin and natural rubber fron the Far East and petroleum from the Caribbean region and the Middle East involve critical supply situations not only becauao of the strategic nature of the coamodltles theaselvea, but alao because of the extreme deflolenoy of Indigenous allied production, the lack of adequate alternate sources, tha inherent difficulties of wartime transportation and political uncertainties In the producing areas.

The character of foreign dependence say be as important as the extant of the deficiency itself. Fortunately for many items,aourcea of supply would not be immediately closed in the event of war. The Importance of tha various areas from which such supplies may be obtained or* indicated below.

lHpd, Steffi would be able to furnish the allied countries their entire requirements of sulfur and cower their deficiencies of coal and coarse grains and could by control of the Caribbean probably oeotribute to the allied petroleum requirements. In addition, united States supplies of phoephate rock end fats and oils would supplement other foreign acuxces to satisfy allied deficiencies.

Afrje* would be tbe nost laportant single foreign source of phosphate rook, copper, tine, sal lead. In addition, it could supplement other foreign sourcesupplier of bauxite, fats andnd iron ore.

The Far Eaat is in port ant as the supplier off the allied requlre-sants of both tin and natural rubber and alsoource off fats and oils and phosphate rook.

Latin, Aaarioe would be able to satisfy allied rleflclsncles of sugar and neat.

Soalo is importantupplier of pyrites, potash, iron ore and

Sweden le ordinarily the allied countries1 oost inportant single foreign supplier of iron or*.

Tho Ulddlnsually aupplias virtually all of the alliedf petroleum.

Th* Allied Natlone will enjoy9 anof strategic strength in their ability to organize transport operations by air. This long-range siobility, which cannot be natchad by the USSR, is based in part on the availability of world-wide air bases. It would hs of particular signlfloanee In gaining advantage through rapid initial moves at the outset of host IT. it'ea. Tho foregoing conclusions aro true without regard to the donlnant position of the OS in air transport, and would applyar greater degree If the rosoureea of the US were taken Into consideration.

Fron the point of view or aurfaoe transportation, thorotrategic weakness in ths Allied position, due to the dispersion of Its ooapenoct areas, which requires intercontinental transportation across vulnerable as* lanes,

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and Into narrow aroaa within offootivo rang* of Soviat air power. Moreover, ouch of tho allied shipbuilding capacity would be likewise located within tha range of enemy air attack. Tbe entire aufface transportation ay stews of Western Europe, In fact, would be vulnerable to this type of enemy actlon.

A contingent strateglo weakness reata in the Allied tanker poeltlon. Bhlle the world tanker fleet, exclusive of Soviet-controlled vessels, is larger than it was at the end of World "ar n, losses of -ajor oil-producing or refining areas sight require changes in the distribution of oil which could seriously tax the capacity of the tanker fleet presently available to the Allies,

The surface transportation positions of the Soviet-Satellites snd of the Allied Nations, as viewed slong the iron curtain across Europe, seen to be balanced strategically in favor of the Allies. Important allied Industrial areas are close at hand snd are connected by highly organised surface facilities, with aaay alternate routes. The USSR, on the other hard, could not match the nearby industrial resources oflls a, and would depend on sparser lines of supply to this area. Thus the resources for th* maintenance of the roll systems themselves are also such wore acceelble to the Allies than thay wou'd be to the Eastern Powers.

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SOVIET PNIOW MOD TBE SATELMTB ST^g

aust&isilaa-

Walla ultimate domination of the world oontlnuea to be the long-range objective of the Conmunista and the Krenlin,B could embarklobal war Such an undertaking, however, would by no neans be assured of eventual success.

Ohlesan obtain sons voice in the oontrol of Feotern Ctarnany, the DSSR will increase its efforts to force tbe Western Powers out of Berlin.

Valla tbe possibilityiscalculation on the part of the Soviet bloc ia over present, it is estimated thathe Soviet union would only cosjait en aggressive act, which would bringdefensive" war in Western Europe if tbe Kremlin decldoB that (l) the Western Powers are becoming so strong as toeal threat to tbe Soviet orbit In the near future,ecauao of suooessful Western solidification it can penetrate no further in Western Europe by present re*hods.

Sortet Polltioal

olitical Alee and Ofafrctiva.*.

iBadti gpiQn.

A ear bo (run by tbe Sovlot Union in the period prior9 probably will ban the objective* of (a) checking the threat to the Soviet orbit Inherent in the growing stabilisation of the non-Coaaumiatb) eliadnating poaaible bridgebaade froa which the Western Power* wight launch an attack on the Soviet sphere to give the USSR greater defense ln depthi(c) estabilebaent of Soviet-dominated governmente ln areas occupied by Soviet force3.

The above war alma would be Implemented by the following measuresolitical nature already pursued by the USSR and which would be greatly augmented iu time of war;(a) undermining the united front of th* western allies by exploiting their polltioal snd national differences snd wesucnesses; (b) Imposing rigid Communist Party control and influence ln the Soviet orbit through ruthless pursuit of party policies sad objectlvssi (c) strengthening of Communist elements in the "astern world to aid the Soviet cause by means of espionage, sabotage, and other fifth-column aotlvlties. SwfcBllltfl Btwsswsa

In general, th* governments of tho Satellite states, being completely under Soviet domination and control, will have no political alas anddistinguishable froa those of the USSR.

Two cases, howeverFinland and Yugoslaviacall for special mention. Is Finland, Soviet influenc* over the present governs*nt is by no means oooplets. In tba event of hostilities, however, the USSR would move proetptly

/ft

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with political or military osans, or both, to bring Finland under complete domination. In Yugoslavia, oaouning praaent political eondltlona prevail at tha tine of tha outbreak of hoetllltlao throe alternatives present thorn-selvesi

esult of pressure or prosdees fro* aceeow, Tito and tba Yugoslav Govemaent sdght be brought completely within th* Soviet fold;

Th* preaent Yugoslaw Governaent eight refuse voluntarily to accept Soviet domination, and tba USSR eight proceed with military fore* to occupy Yugoslavia andplace the preaent government with one completely subservient to th* Kremlin;

If tbe preaent Yugoslaw Governaent stubbornly refused to suppnrt the Soviet ear effort, tho Kremlin might decide temporarily to by-pass and Isolate Yngoalavia In the belief that it could be readily subjugatedater date.

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Soviet Polltioal

Tba principal methods in tbe political and sociological fields on which tba Soviets would rely after tbe outbreak of hoatllltioa arei

(a) he Soviet propaganda policy now in usn by the Kremlin woald not bo radically alteredesult of war. However, its intensity would be greatly strengthened and Its esthoda considerablyto facilitate tbe realisation ofpropaganda objectivesotal war.

1. Every conceivable propaganda medium would be exploited by the Kremlin in support of Soviet political alas. Propaganda would be more openly and ruthlessly directed to sow doubt and confusion in tbe ndnda of the oneoy and to undermine enemy morals and desire to oontribute to the war effort. The doedmatiag war propaganda theme probably would be tbat the Soviet Onion was defending the interests of all "true desoersoiseN and Bpeace loving0 peoples throughout the world} and that tbe war had been forced upon the USSR by the imperialistic designs of

ii.esult of the war, Cossemlst Parties in Pentern countries other than those overrun by the USSR, would laced lately be forced to go underground. The effectiveness ef Party control sndwould be further reducedesult of arrest aad internment of its leaders. It esn be assumed, however, that in spite of these counter measures certain Cocnunist eloaenta would be able to oontlnue to eld the Soviets ln their total war effort through sabotago and subversion, Soviet leaders would attempt to re-establish and reinforce the channels of communications with

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Soviet Political

their underground groups and would continue to exerelce Party aoatrol and direction. They would make strong efforts to infiltrate nee leadership and extend their subversive operations to cover war industries, government organs, and the armed forces.

ill. HlnfliTltiThe Soviets would make strong efforts to exploit dissatisfied minority groups living Inoeuntrlas for the purposes of creating political disunity, unrest, and sabotage of Western war efforts. Tbe Kremlin, for example, may be expected to exploit the negro problem within the Unltod States to ite own advantage. By appealing to the Slaw nationalism of the various Slav elemente In the Western florid, tbe OSSR would further seek to use these people for subversive and propaganda activities. Satellite States.

The methods and trends employed by the Satellite states In the pursuit of the above-mentioned objootlvoe will In most cases be identloel with those of tbe Soviet Union itself. In addition, however, they may be expected to seek to exploit, for purposes of sabotage, espionage, and propaganda, Satellite national elements residingped ally in tb* western hemisphere, through patrlotio,rellgious, and cultural appeals.

Attitude and Ssrale of the Native Populations. Arlainw

their Traditiona, National Chara.cteri?to9a. and Ftecegt HiBtwr-

Soviet Onion.

Tha aorale of the Soviet people would notecisiveto tha Kremlin until such tinerastic deterioration of the Soviot military position took place. While certain elements of the Sovietparticularly ethnic groups in too Baltic States, Ukraine, the Caucasus and Central Asia, ore dissatisfied with Soviot rule and hostile toby tbe Great Russians, tha Soviet Government through its efficient security police network would be able to keep these groups under effective control In the oarly stages of the war* The more protracted the war, tbe more chance there would be for these subversive influences, already present In the Soviet Union, to nanlfast themselves andore aotivpert In Interfering with the Soviet war effort, Effective resistance or uprisings could be expected to occur only when the Western allies are ablo to give material support and leadership, and assure the diasidsnt elements early liberation from the Soviet yoke.

Although ths people of the USSR have not recovered from the privations and horrors of tho lost war, they can be expected to ondure additionalin the initial stages of the war, Russian patriotism, while Iaaa ardent in supportoreign war than in defense of home territory, would not ba greatly 3haken as long as military'victories and war booty were As hostilities progress, however, and If Soviet military reversso bacone known within the USSR, tbe increased hardships and suffering would magnify the already oxt3nsivo popular dissatisfaction with the regime. The

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natural friendship for tba Aaerloan people and th* healthy reapect for American technical and induatrlal ingenuity might aleo prov* to be important factors Ln affecting tho Soviet people 'a morale and their willingness to make eee singly use loss sacrificaeustained war effort.

Th* people of the USSR are vary eusoeptibl* to psychological warfare. Tb* Sovlot Onion's most significant weakness in thla regard is Its policy of keeping Ita people io complete ignorance of the true conditions both Inside and outside the USSR.

Psychological earfare, therefore, can be an extremely Important weapon In promoting dissension snd defection among the Soviet people, undermining their morals, and creating confusion and disorganisation within the country. It oould ba particularly effective in subversive operations directed toward those ethnie nationalities which would welcome American liberation, as wall 'as against the Soviet Army, especially those element* of it which would be stationed outside the bordsra of tbe USSR.

The most effective themesychological warfare effort directed against th* Soviet Union would be that the Western Powers are not fighting against tbe peoples of Russia, out only against the Soviet regime snd ita pollciaa of enslavement andm.ta gwktwg.

The overwhelming majority of tba native populations In tb* Satellite countries are Intensely nationalistic, and bitterly resent Uoseow domination andresent Communist regimes with which they are burdened. Thishowever,ource of great potential weakness to the Soviet bloc

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if shrewdly exploited by tbe "est, wou'd not give rise to effectivemovements immediately upon the outbreak of hostilities. Initially, tbe dosdnant attitude among the Satellite populations could be one of increased non-cooperation and passive real stance toward their Communist masters. This sight result In Impairing tha agricultural, industrial, and militaryof tbe Satellites to the Soviet war effort. More effective resistance, however. In tho form of organised sabotass) end guerrilla aotlvity, would be unlikely to develop significantly until assured of guidance and support from the Vest. In view of those conditions, the peoples of tha Satellite area will prove readily susceptible to psychological appeals, and will be particularly influenced by assurances that aid from tbe ffeet. In support of theirfor national independence Is forthcoming.

flth tha

of those la tba Ukraine and tba Baltic atataa.

are no known subversive organisations within tba USSR borders. The Pkralnian Partisan Array (DPI) still reobs vestiges of its original organization, although since the ead of World far IX its effeetlvanese and numbers have been considerably reduced by Soviet counter-seesurea. Reporta fros the Baltic states indicate the existence there of ant1-Soviet partisan acrecents consistingumber of loosely organised groups which have little or no liaison with one another.

In the initial stagea of hostilities theser other eubvjralve organisations whioh would spring up, would not materia'ly affect Soviet war capabilities. As the war progressed, however, snd silled material help and guidance were extended toroups, they sight be expected to asses* sore active roles In sabotage, propaganda, and resistance activities directed against the Soviet war effort. Satellite States.

There are, in all of tba Satelllt* states, underground groups organised for the purposs of resisting Communist domination. These groups hare been th* object of relentless campaigns by Soviet and Cress ml at security forces,nd it ia doubtful if they are presently capable of more than Isolated acta of sabotage and harassment. Despite their limited capabi"itlea, however, theirexistence would, in the event of war, constitute an additional burden upon the already severely taxed reaouroes of Coonunist security machinery.

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the penological effect of the activities of these groups, however limited, wouldosenxniatng tbe general population.

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a. U) Conclusions of Stratewlo SWf Inane*.

insgnirleant political strengths sad weaknesses of tba Soviet orbit ar* estimated to bo tho following!

Strartftbai (a) The oatire couraga, etanine, and patriotIsm of tha Rosslan population;

(b) Ths elaborate and rutbleaa machinery by which ths Kremlin exorcises centralized political oontrol throughout tha Soviet orbit,police forces, propaganda, and economic and political duressj

(o) Tba ideological appeal of theoretical Cossranism. WoaknoaneBi (a) Popular disillusionment and eabltternent among the masses throughout the Soviet orbit, resulting from ruthloss Soviet and Cosnmnlst oppression and exploitationj

(b) Tho instinctive fear, pervading all elements In Soviet and Satellite society, which tends to destroy independent thinking and paralyse initiative j

(o) Tbe traditional admiration of many of tba Soviet end Satellite peoples for Western deobcraoy In general and the OS in particular;

of religious groups, especially among the

Satellites|

The native nationalism of the Satellite populations and of oertaln ethnic groups In the USSR)

Probable demoralisation which would result from foreign military and occupation duties.

)

ia estimated that the strengtha noted above constitute an actual and preaent advantage to the USSR, while the weaknesses, in moat cases, axe potential rather than actual. During the early stages of conflict, tha above-mentioned weaknesses wouldubstantial burden upon the Soviet union's senMnary for political control, and would also impair theconomic and adainJotratlve capabilities. These woakneaase, however, would not have an early and decisive effect upon the outcomeoviet military venture. During tbe early stages of war, native Soviet morale wight1-prove with reports of spectacular victories and tbe prospects of booty froa Western Europe. It is unlikely tbat the psychological weaknesses in the Sovlot and Satellite structure would produce esrlous consequsDces unless (a) the Soviet orbit were subjected to prolonged amd affective aerial atteok froa the West, and the preepeot for ultimate victory eeriously diminished; or (b) invasion of the Soviet orbit by Western foroee be earns Imminent.

Furthermore, it la extremely doubtful tbat the forces of resistance within the Soviet orbit would effectively asaert themselves unless and until they received guidance and material support from the "est, and aaw hope for early liberation by Western forceso

RET

Allied Politieol

naland Ohlnntl^H. .United, BJ'V'jlQj])-

Tho Dlruriaori of international otebility In order to aohioveGcononlo recovery as rapidly on pooelble, but tMs ain la qualifiedotorainatlon to insure ita oun security, that of the dependent aroaa and Imperial ooromicctiona, and that of tho Middle East froa Soviet enoxoochrjant.

Tho DlC intends, in concert uithlrnly to chock Sovlot oxrjenaionlonw

The UK intenda to mintoln ito irqwrlal position so for ae poorfblo. In tho dependent aspiro it nine toocaonahlo rata of pro-zrtouord eelf-cuvui-nusnt, roplnoing polltioal oontrols with ooonocdo, cultural, ond security tloo. With regard to the ftvrlnlono it oirjs to prosorvo and prccoto Cornonvoalth oolidorlty,

Tho UK lntonda to eneouTaoo Uoatom Union and inaroacing unity In Uostovn Duropo, butace ufaiob uill not risk the cotjoneoMnt of the Coniniono

While the DK uill continue to support the OB, until tho latter haa the pouor to guarantee collective security Uie UK uill continue to triiri povar-polltioal rolGtionaliipo uhoae cornerstone In an intimto association vith the U6 and uboso ouperstxueture includee tho Brussels poet and Cocrwnueelth cooperation*

So

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Car-adfl.

Ccdbob desires lntornctlonal penceigh lovol of Irrtorraitdonal trade as conditions prerequisite to the dovelopcmnt of its territory and rsnourooo. Canada intendo to rn IntoIn aloae rolatlono with the US as the beat (juorantoo of its security. Canada also Intends to continue its taeo bership In the British Corxoonuealth of nations, seeing In theajor support of world order andn portioipntionital linkorth Atlantic security system enbraedng tho US and tho UK. Canada desires political stability and ooonoaio recovery in ifeotern Europecauao of the area's inportaooe to Canadian security and longstanding oultural and conaoroinl ties.

Auatralia deolroa lntornatlonal peaceigh level of world tredo. It wishes to preoorve tho Australian Continent as an area of unite settleoent and secure against Asiatic iaporialim. It deslros frlordly relations with tho US and oloeo contacts with tho IX and other Corrjoouealth eounta-iea.

Ifnr Iimlnnfl

Nov Zocland desires peaceigh level of uarld trade. It doolres to rruarantoo tho ooourlty of tho Southwest Paolfio area, and It 'riahes to obstruct any Aslatlo lriperlalisri, South Afrloa.

South Africa deaires to raintian its oountry free of external Influence nnd Internally secure for its doalnant wliito minority. It

io intoreotod in oecinc oa nach of the Afrioon Continent ooa "unite nan'a country" In which tho Union would bo tho 1

Frunoc pad Donelux.

The prinery oonoem of the Gewnmuuts of France, Belgium, the Oothcxlnndo, and Laxnaburg ia poooo in order to affect the political and ooonorrio eocurity and otahdlity of thedr reopoctivo pooples. Tbooe Cevernnento also seek to reetora the prestige of their notionsre-Uorld War II level and to retain their colonial posaeoolonadnimun of roforno. All wish to participate in the foraatton of an oconorri colly stable,oon trail ced Vestern Gensany* Italy. Svitwrlrnd. Sm1n. and Portugal.

Tho basic aloe ond objectives of Italy, Switzerland, Spain, and Portugal ore odrdlar. All deeire peace, lntornnl and external security and the opportunity to ootabliah or to nointoin their political end eoonordo independence! all hope to reaoin neutral in tho oventor0 Italy uiehoo tolace in International councils.

tarn fornrvrr ftf JBtfaemV

Although both Western Ceroany and Austria want peace and eoonordo reoovary tholr principal political objectives differ soenvhat from those of the other Western rXo-opoan oountrdeo. Eooh desires restoration of oonplete oovorelgnty and tho withdrawal of all occupation forces as wall as tho lifting of controls end restrictions. The Gerrauio seek oontrol of the Ruhr, ollsriration of reparations, restoration of their arood foroes,

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unification of tho country Including restoration of loot torrltory, and tho recapture of thoix forrasr poaition in foreign trade end international

Enttoro-

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Tra-la.

Tba UK is politically stable. There are indications af atrend ultbin tho Labor governaont. With regard to foreignlo bi-partisan, the Dritish people solidly support theuill oontlnue to do so. DS leadership, particularly oonoorningof the USSR, is tacitly oonoeded. Eoononie recoveryalow, owing to factoro both id thin and outsldo the nation'ssooo progreec io apparent and should continue until industrialbo diverted in any oppreolnble nioeujuro to nlUtary production. uill urook the ooonoaio

The UK is ooooureging Joint nllitary planning under tho terms of -tho Oruaoelo poot0

Jlthln tho cord no nt Liberal Party loadorehip is being paoood fron W. L, [faoloanele King to LouisLaurent, but tbe change ie not llkoly to have any appreciable affoct upon Caneda'a cxtornal affaire. alffl&OeUA*

Australia is inclined to be aooertivo of itaand to rafuoo to aooept on ordering of lntornatlonol affairs by tho Groat Pouers alonepfcal 7nmlfWl

Close cooperation vith Auatralia in rarbuol socuxity oonoorns uill bo aaintainod, and increased reliance on thoill be nonifosted,

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fries,,

With tho advent of tbo fhlan gcvernnont tho politlool trends are In the direction of lone intornatlonal and Cceronueelth oooporation and the intensif ioation of isolationism in foreign policy and ^uthori--terlnn prootieoa in doaeotic affaire0

Tho centrist coalition Covoruounta of Franco and Belgium are tending Increasingly toward tho right, while the isodarate loft-rightwhich governs the Motherlands oontinueo unchanged. All throe notione aro showing incroaaixtg oconcrrio otobllity and recovery. The Governrjanto of Belgium and tho Itothorlands are attaching growing inportanoe toprobleno end thalr roopootlve parts in solving then, and ore laying greater emphasis on such regional groupings as tho Western European Union and thes lone Union. The Ccverraent at Paris Is exerting itself to rostoro the lost prootlge of Franco and ia ocoking to orjanoipate tho oocntry frca depondonoe on tho US,

ItnJrind. Portwrfd-

The present riohtist dictatorships of Spain and Portugal, and the conncrvutlvo roglrjo of Switzerland probably will oontlnue in power as will the ckssooratlc Government of Italy. Spain, Portugal, end Italy will show scrjo econonlc Irjrrovocjsnt although neither Spain nor Italy will escape oonaidorablo discontent fron econcede causeo* in Switzerland both eoonoalo otobllity and prosperIV will continue. Italy will show increased sympathy ulth tho West and probably xdll be disposedilitary cOlcnaent with

Inoxoaood protects and reeiatanca to oocapotion polidoo and0 depend once on tho US can be expooted ln Woetenerrxiny and Austria. In the faroer area inorocoed netlonallsn will leadroakenLng of tho political oontor, and political unrest will prevant stability despite ii^oved ccononie oonditlono resulting fron ECA<> Tho Industzdal potential uill bo increaoed, ol though Lobar utll gradually be aliecated fron tho vest, aa uill polltiaal loaders. In Austria, the Ifootom orientation vill contlnuo otrong ae vill the oooperotlon between tho ncwillidffl pal tt leal portlos. Inareanod econanlo stabilityresult fron groctor produotion, lovored prices,arger voluno of oxrorts.

1

tho yootorn Union, at tho ooao tJao dorelopins lncreaood roceatoent touerd the UK over tlio oolonlal issue, and touord rogoolavla because ol* Trieste} Iraaroved eoonortlo relations with France will load to irnxroved polltioal understanding vith that eta to. In Spain, tho reedae vill lntonalfy Ito Moranldod progron and oollaborat* noro olooely vith Argentina In ito progren for an "International Third Position*.

1

The UK will oontinbo to eoploy flrDness with patlonoe to contain the

USSR, oocoptlnc US loodorahlp In agreed tactloo and strategy but eooartins aa atrouc en influence oa penal hie. Tbe UK will not appease, but say he Inclined toroderoting'1 influence on the

The UK trill not risk offending the Docdnlone Ir; sacrificing Corrjon-UBalth intcreatsor even appoorlnc to do soIn favor of those of Western Union. Rather, the UK will proceed cautiously in regard to ia-ploQontlng Woe torn Union, consulting tho Doatnionn at each step, so oe to avoid giving offence to tho latter. While this nay give rise to charges of "dragging itoho UK Intends ultimately to hnrnoQB the entire CcErjonweolth to Woe-torn Union.

Tho UK will continue to use UH forune to mrohal world opinion to ito views. It will support UU principles objectively when British prlnclplca dooned vital are not at stake. Ho-ever, the UK will etteenpt to obstruct UN actions censidored to be oontrary to British in teres to. For tho most port, in this commotion, British intone ate will generally correspond to US interests,,

The UK will continue to encourage inorooaing flvo-powor military oooporation and integration according to tho Brussels pact.

Tho UK will continue to invite increased US participation to insure tho security of threatened areas 'hich tho British deoc strategically or econonically Important.

Although tho UK uill otrire to tho utnoet to forestall vox, It uill not uith high resolution oaoe uor lo farced upon It.

itanQstloolly, Canada "Ml continue to odhoro to duooorotic rjethods In tba forrailatlon ond too-on tion of policy. InJ^WBB MA flfllnn participate ootivoly In tha UP, nMntwln olooo dlplonotlo and nilltary liaioon vith tho US, and oontlnue ouotocexy nethode of ax>-cl-anglng of vievs and developing polioy uith the UK and other Cccraouoalth oountrioo. Because of tho Canadian etoho ln world trade, the rrrdnlnn ulll bo a ling participant In lntoxnational procrons doedgned torecovery fron the last uor. Arf *TTUfl-

liov Zealand uill coplcy tho traditional noohinery of British Curoo-uoolth oooporation in prcaotlng ito nine. It vill also activelycipa to in UIIries,.

South Africa uill bo genorally cooperative uith the US for security and oooTOralal reasons. It uill oontinue to use tho consultative rod cooperative nachincry of tho British Corxjonvonlth Insofar as it isorrov South African Interest to do so. Sooth Africa's support ofill be largely determined by UII cation in causes of opoclol internet to tho Union,

tho nandntod orea of Southwest Africa ond racial nlnorltiefl0

* v

Auotrclla vill oooparato uith the UK ln natters of Corxzniuoalth interest andthe US in policies to proexrbe world peaoe and stability. It vill actively participate :.

The trends outlined in 1 (l) Trends will proceed in Franco, Delgiun, and the netherlando fron oontlnoed reliance upon tho oooporation withotivo proaotlon of tho Western European Union, and tho oontlnoed use of deiaoerctic Dathodo in governaent. Fronoe uill nttonpt to use the Utf to pro rote its own interests and uill delay ioplaaontatlon of the French Union progran, uhlle tho Hothcxlands uill nttuopt to raoovo cons id oration of

and

colonial nottero froa thelgiin uill prooote the 'interests of snail or nations.

the so-celled "neutralhef Spain and Portugal will continue their nochlmotiono to ronuin in pouor, uhlle Portugal will participate in the EGA, continue Its traditional oonrarolol ties with ths UK and seek to iimprove such ties with the US, linking these efforto to Its military oooporation uith the US, Spain, vhllo continuing to oollaborate with Argentina and to tanks uidoepreod trade ogreononto, uill seek to obtain indirect benefits fron ECA and direct econonlo and nilltory aseictonoe fron tho US, at tho sane tioo avoiding participation In the Woe tern European Union and attacking derjooratic systccis of rover-rent. Italy will seek ite

by roo0tebllohing friendly dlploiivitlo relatione In both East seal West, talcing port in international organizations, and by onrphcslslng the dangers fron Cormuniom, and tho need for continued US aid. The SuCsa Covurnaont, uhllo increasing Its rdlitcry roadlnoso, will otrooo its neutrality aad inoroaoo its oconoolo cooperation with the West but still npW-Mo. Ite Enetcm trade

The New Zoafcndorii arQ tensely loyal to tho Dritlah Crovn, and are traditionally tho toot pro-Brltlah of thef tbe ecverel Dordniona8

They lould not bo vulnerable to poyoholocloal warfare. They would not b* paniekf. Altho-gh not oonpletely recovered poycholorloolly fron ex-tensive casualties during tho last uor, theiruould likely be high. They would, by and largo, be ohrreotoriotloally rooolute.

South African popular attitudes are doalncted by the race question, mitorate natives, plus smallor groups of half-broods and Indians, oaks up the underprivileged and pouerloss four-fifths of the population) the unites, uldoly Isolationist, are both habituatedopious supply of cheap Denial labor end obsessed by underlying fears of natlvo revolt. Racial tensions have sonouhoi increased slnco World War II, The uhltee aro aecordlngly quite absorbed in dooestlc aonoerns.

The electorate ie anti-Soviet, but its hostility to th* USSR would in nost oaoos probably not go so far oo to approve all-out participationar overseas, or any far-roechine austerity nsasures in the dcoestio eoonoDj- urjeerrloa uas closely threatened. Althourfa there would probably be substantial rasabers of voluntary onlistaants for overseee

o

Political

service If war were izxainont, ooneeription for that parpoao wo old be opposed, ao would industrial no hill rationotal war bails*

Although they could not be subverted or aaally ponloked, white South Afrloona cdgtb be specially Tulnerahla to peyohological warfareophosleed the dangerative uprising and urged the lnadvieeblllty of overeeaa participationeriried to discredit Sooth Afrloa's potential allies, particularly by appealing to the anti-Sritinb,Uatholia and anti-Semitie sentiment to be found among the rural Afrikaans element, and their puritanical disapprobation of American "high living."

3or>-wfaiteo are extremely vulnerable to Coxnuaist propaganda against tho wblteej but their backwardness and high Illiteracy (except for the Indiana) would make them poor propognnda targetso

The French areemocratic- peopletrong militaryreat fooling of cultural superiorly, who, bocause of their recent history,athological fear of Germany and anoomplox which, couplod with defection, hasrofoundly cynical selfishness. Properly led and equipped, the French cake excellent offensive troops. Tbe notionholo io Busceptlblo to psychological warfare.

Thoelf-aatiariod, stolid people^ comparatively unamenable to rdlltery discipline,ong tradition of democracy and neutrality, and of international oooporation. Theyarked intolerance offoreign. Dncusoeptlblo to psychological warfare, they oreilitary tradition baaed on underground aotlvitlee during Worldnd the postwar confliot in the KSI, but are under no illusions as to their inpotonooajor war.

The Dolricns arc in nost rcrrpootn similar to tho Dutch, butore highly developed Indlvlducllsn and eenae of expediency, aed are more anally Influenced by payobologloal warfare.

The Italian* are an extrooely flexible people militarily and diplomatically. Theytrong eenae of their cultural ouperiority vhloh noroally orients then toward the West. They are presently surfeited with war, have abandoned their dreamsew Romannd desirehance to eat and work. Dl soon ten ted with the Gorernnrintentral adrdniatratloa, thay hevoynioiaa toward their own rulers and toward other oountrlea which includes the Vatican, although tho Church still possesses considerable Influence. The Italians are capable of sustained conatructlvo effort when convinced of itsand make good defensive troops uhon they believe In their cause and in their Isadora<, The people ore, however, strongly and widely Influenced by changes in fortune and are extrenely susceptible to psychological war fore*

Tho Soanlarda ore traditional lots in religion and In everything else. Tbeyroud, arrogant, Inefficient, Istpraotlaal, and visionary people, capable of sustaining great hardchips, bat incapable of discipline. Tbey aro lognllstlo but pesaeaa no reapeot for the law. Tbey erebut because of tholr low standard of living and tho high Incidence of extreme want, Spain wouldertile field for tlio sowing of CocnunlBt doctrine were it not for the strong reproeeive noasures of the Governcent. The people are highly suooeptlble to poyohologioal warfare.

Tho rurtuguqaerodccal neatly Wee torn orientation booed on trndltione, the Cathollo Church, end three centuries of political anddependence on the UK, In Betters touching national pride, the Portuguese sufferensitive nous uhlob io pathological. The people are poor, illiterate, and passive) they are given to the fabrloatlon of grandiose dree mo which they cannot carry out. They do not oako dependable troops and arc extrenely susocptlble to peychologieal warfare, or any other kind for that natter,

Tqo Swigsold, snug, doaooratio, oonoervctlve people, unconcerned with the troublen of other nations, with tho detercdnotlon to defend their oountry at all ooets. Although traditionally neutral, they ere syopathetio toward tho westa They ore not suaooptlblo to

arj] possess the strongest nilltary tradition on the continent of Kurope, and uhilo not strongly oriented toward the west, tholr twelve yours of anU-CooBBnist teaching, the hiotorio enedty toward Russia, and eone experience with Soviot occupation has led then to fear the USSR nore than they do tho western Allies. eople, the Cermns are egocentric, natlonelistlo, and authoritorlanj they are Industrlouo, lagallntio, aoornful of dccDcrooy and weakness, and arrogant or obsequious as serves their purpose. They cake excellent ooldlors, akillful, brave, and poeeeaoedigh degree of technlool ability in planning and waging war. They are great runor aongera, but ore not easily deluded by propaganda.

Tho Auatrinnn, ore strongly oriented toward the west, and are generally an optlcdotlo people, confident of their ability to nenage their destiny.

o

secbst

strong provL-cial loyaltlno and little natlonalisn. The people era lrduetrlouB and individualistic, not on ally given to hyataria end slthougb posaeaaedsgree of noral ooorage vben thodr righto ere Involved,trong erase of expedienoy.

Allied

1 Subverelvc orrtunlz*tlona. Dtaltad Kingdom.

d ooaniailst-influenced argiclautlonsolltloal potential hardlynuisanos value. No Co muni it lino flnda

i

a vary widely raoaptiva audience. In event of war, paraona suspected of aedltloua or troaaonabla agitation would be ouiolcly arreatad under emergency lavs coautrable to the "Defense of the Realm Aot" under which Oswald itonloy, for example, waa incur oars tad during Tier Id War II. Although Communist influence In sods trade unions la appreciable, it ia preaently on the wane and, in an emergency, top union leadere and the government would have tha strength and the prestige to act quickly, forthrlghtly, and affeetlvely. Internal Britlah eeourity and counter-intelligence, moreover, are believed to be excellent. British faoollteegligible influonoe. Canada.

Conounltt influenoe in Canada la centered in labor organisations, foreign language groups, tha left-wing press, and tha Labor Progressiva Party (ootaauniat). It la estimated that the Connunlst Partyin Gonads numbers In addition, within tho tao largest trade union orgmications olalningembers,re under oommmlst influenoe. aall number of active oomuunista wieldowerful influenoe in ten major unions. Comaunist activity in unions ia gnn-test in the Peolflo Coaat province of British Columbia and in thaod province cf Ontario

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oa tho Great Lakes. Politically, the ooioaunlste in the guise of th* Laborty have no real national strength. Industrially, however, the oorram'.and their sympathisers through labor unlone havo oertuin capabilities to interfere aith operations, but serious phyelOkl and polltioal sabotage oould be largely fcea-stallod by govcrnraont action and strong popular cooperation in oaee war beoaaa imminent. Australia.

nidespraad Couounist control of important labor unions oould temporarily disrupt an auetraliea war effort. Corarauniat and oommailat-front aocial organisations would have ton* initial nulsano* value. Hank-and-file union membership, however, is preponderantly loyal. Ihe Government, moreover, would take drastlo teas urea to aUndnate aubvurslve influanoes. at worst, cosssunlst

ot-pabllitles for eoonomlo and politioul sabotage ooukl only temporarily retard industrial mobilisation, labor oooporation, and tlie development of unity within austrelis regarding the proeeoutlon of the war. How Zealand

though few in numbers, th* Coiamunlsts hare virtual control of *th* waterside workora and other labor organisations. They night thu* initially havo aome power which would amount to little more than nuisance value si nee the rank-and-filw is loyal and oould not long be led by enemies of the Ccvernswuit. It is to be expected that the government would quiokly take control of the situation and eliminate subversive influence.

The South African Go re unlet Party haa0 merabora und ia led mainly by well-to-do white lntellsotuels without any appreciable following in the electorate and little labor support. It will probably be forced underground in the- neur future, ia any erect.

Betives utd Indiana oolong to all levels of the Party, and it la here tAtt the Connxonlete would hare aone onanoe to disrupt South African preparation for war. Though oonfined largely to one provinoo, the Indian minority would have nuiaanoo value, ainee it la intelligent, well led, oonsolous of its grievances andi Connunlst alroi-dy. The natives are potentially vulnerable to Communist anti-white propaganda, however, native bocjewardnesa, disunity and look of leadership at this juncture prevent effective Although the Coa oooaaionally make minor trouble, they oould not seriously dierupt the whole economy. The government would in emergency take quick, firm aotlon against tho leaders of any subversive actions. ft-ar.ce and Benelux.

Although the Couaimlat Fartiea end their syapetblcers In Prenoe and Belgiumighly vooal, important, and dlaaipllned voting bloo, the meter of hard core nUitants is insuffleient to aelae powor by force in tho absenoe of foreign intervention. They are oapwble of retarding the eoonomio recovery of both countries for short periods of tine by isoUtod strtkee end eaDotage but do not

huvo the strength to curry outGeneral strike, Belgian Oooaunlets0 militants, while the French purfcy has uioonbora enrolled ln pure-solitary organisations. In the Netherlands, the Coasuniat Party includes0 militants wIkmb the Oovurnaent "is well uble to control. The Dutch ore increasingly unti-Coraaunist and tho pollticul Influence of tho Party is small, Italy, Switzerland, Spain, and Portugal.

Tho oust powerful and influential Connunlst Party in Tiestern Europe is in Italy where tho poro-ndltt ury personnel nunbersim-tely lSO.OOO, andillion totoa were oust in6 for Coonunist candidates and their eaeoolatos. onnunist inaurreotion in Italy would meot with initial success in the north where the largo oities would proU-bly be lost teiaporarlly to the Insurgents. Plthout considerable outside asaiotanoe, howover, the Ccivinmiste would be unable to retain their oontrol. As in Franco, the Party oan retard reoovury by strikes and sabotage but oannot carryeneral strike.

Two potentially subversive groups exist ln Spain, the Communists and the non-Coccmmiat groups opposed to Pranoo. Both are outlawed. Tho Coimnunist Party probably haart-lnodnd Bore0 edtioronta, nhile tho unorganized non-Coanunlat opposition to the Pranoo regimeotential strength of sere than SOT* of the population. Both groups lack power to overthrow the Qovurnraent, although the 'Comunlste oontlnue, by fomenting labor unrest, slowdowns, guerrilla aotion, and aabotage, to maintain a

snull acalo but'peroaneirt inaurreotion". In the event of politloulhe Communists possoes tlte capability of ua aiming leadershipgs nuobara of the unorganized enti-Franco proletu-iat.

In Portugal und Switzerland tho Cumrauniotp, who nuaboroe_eotirely, poae no actual or potential throat to the regimec.

fleatemtd Austria.

atern Germany and in sustris, tho Co-sssiiats nunber about 6'A of the population. Id Qoriaany thay would be oapubla of oonslder-oble sabotage In both govurnaont and Industry and could ore*.to eons civil disorder. They could not, however, of foot armed insurreotlon or large aokle guerrilla aotlon. Communist potentialities in Austria are sisdUr to thoao In Germany buteduced aoale except la the Soviot Zone where overt Soviet aupport oould be expected.

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Allied Political

i j; U) rflneinflifinn orrUflfftf

qg gXtflgJalflg war wVoatfftU-

Tho United Kingdom la tho strongest ally of the USolitical IU proporenda dlreoted toward Eeatern Europe la cellared to be relatively effootlve, ovlnc to (l) breadth of experience In propaganda;he fact of Its post-Uorld war IX nod co-ate sodallat ppwrnoant, vhloh ooken British ppopogH"dP least suspect aoong the ieoasflaany<lBftee' Eastern Europeans. If Uastern Europe were oooupled byasty, British enoourageoont of reoistanoe groups would bo oonpotently nonaged. The United Xlngdon enjoysand exerts to British advantageaa Influence, In greater or lesser degree, in onerous countries outside the Cocsaanvealth and Eopdre. This is often benefiolsl to tho US.,

Internally the British Oe Vermont and people are unitedlm polioyia the USSR. Ibralo lo this regard le high. In war it night eventually tend to weaken,nder prolonged, intensive bonbnrdcient against which courrtar-oooaurag were lnoffoctlve, particularly If the eesuBption gained currency that allied strategy excluded the defense of tho UKatter of priority|f the Western sea approaches were not kept open sufficiently to enable the nalntonanooiable diet andubstantial neaeure of tbe ooononio life of the country. In war. tba UK would require to bo supported economically by tho US. likewise, any appreciable diversion of Industrial plant to nilltary production would bo

feasible only If US econccrio aidiwml to fill tba gap.

It night bo polltioolly iBpoaoible for tho British Govaruciant to approve tho uoe of oaae-dee trust Inn weapons, unless tho UK were flret attacked by thon or unleao tlie UK beoane herd proaoed by attacks enploying oon-ventlonalanada,,

The Dost olgriifioant polltloal footer adversely affectingar potentialho teadltlonol division of feeling between the Irench-Conadlan and tho Drltioh population eleaenta with rognrd to pnrtiolpetion In cdlltary oonfllote involving the Dritloh Ergdrejhe traditional Preooh-Ccnedinn stand against oonscrlptlon and against nilltcry eorvioa except to defend hone soil. These would tend toanadian war effort, as In tho past. However, for religious reasons and beoamee Canada would appear nore directly threatened, the franco-Canadians would be nore Inclined to partlolpato In andar against tho USSB. lfareover, this aohlaa would be further reduced by the governosnt's own rcluotanoe to supply forces for other thoatera, owing to tho exposed northern frontiers* The trodltlonol steed of tho FrewvW>Tienisnw provides an eneny with acne grounds for payohologioal warfare and night retard Canadian mbxlination at tbe outbreak of hoitillties. .

Tho principal polltloal olonent of strength is tho general recognition in tho OoBdnlon of the identity of US and Canadian otratcglo Interests. Thle recognition would men full official collaboration in preparation for war and In industrial planning, Canada wouldully dependable ally.

Australia uould fully support th* uor,ocrjormry period of oonfuslon growing out of Cojrounlst influences a

Th* oontinent would be totally available for allied use.

The Australian peoplo uould be dependably resolute. IB JBJbbssV

Rev Zoelond's war effort would parallel that, when th* oountry no bill rod on an all-out basis. Ufflcultles arising froa Conrauniat Influence would be tenporory. There uould be no political objections to overseas enploymont of the services. Tho people and govornaent would be united in an all-out effort to contribute to viotory.rjgpi.

Thereo question of South Africa's cooperation a* regards OS use

of its baseo and access to its strategic row natoriels. It la doubtful, however, whether ite willingness to put its economyull uortdne basis and send troope overseas wouldew war, even go as far as in World War IX, whenrier, sent0 con to servo outside the Union, primarily owing to Sort's leadership. Thereronounced hostility towards the USSR; but tho atrotegio value of this Is offset to an appreciable degreeeteriorating polltioal relatione end military cooperation

betuoon South Africa and the UK which might coEiplloato tbe task ofSouth Africa In tho oooooarowing racial tens lone (subject to aono exploitation by Soviet efforts) which might convince the Government that internal security requires the retention cf Beet South outh Afrioon troops at hone;general popular dlalnoltnatlon to aco*pt

econocdo austeritiesotential conflict against an antagonist which, no nrittcr bowiked, la still ragrrded as essentially seme one else's pro bloc. If the Soviot army wore eatabllahod in North Africa, however, nore active steps could be azpooted to support an Allied offort.

Iko-whlte Allied troops would not be accepted Into South Africa

Fronch, Belgian, ond Dutch oontrlbutlona as Allleo of the USar against the Soviot Union are largely atrateglo, their weaknesses are largely tactical. France is potentially the boat US base on ths continent of Europe because of Its transportation net, available airfields, port facilitioo, and its ease of access free the liodltarranaon, the Atlantic Ocean, and tho English Channel. Tho Ifany and well developed harbors and ports of tho Low Countries would bo inportant military assets if they oculd be held or retaken before being badly oanaged. All three notionso serve of trained manpower, which In tho case of Franco and Mfltaw) is well adapted to necbonlsed warfare. In their colonies, all three possess, too, either strategically placed land masses, or inportant ooonomio assets, although Insecure Dutch oontrol over the East Indies would Jeopardise the availability of that region's resources. France and the Netherlands have many trained and competent scientists. The three nations, however, sufferovere lack of military notarial and fron inability to ryoduoe enough arms and equlpnont to supply their amies. Finally, France and the Low

Countries are highly vulnerable to ottaok by land andact! eel disadvantage which goes for to outweigh their strategic assets.

Although not eo vulnerable to land or air attack aa Pranoo, Belgian, and the Notherlande, Italy poeaeeeee Dost of tho oane tactical disadvantagee and pone of the same strategic assets, Ite reserve of industrial manpower, including trained technicians, its position in the Ibdltcrranean, and its potentially valuable naval and air bases ln Italy ae well as in Sardinia andily would bo Important either in dolnying on enemy advenoe or in the re conquest of the continent. Tbe condition of the Italian armed forces and Italy's lack of Industrial oa realty are serious defioite.

With the exception of their geographlo locations end thoee of their overseas and island possessions, Spain and Portugal would bo of soont value to tbe Western AUieo0 The rugged terrain of tho Iberian peninsula, tbe paucity of transportation fadlltlee, the weakness of tbe amed foroee and nf the economies of the two notions oaks them poor potential Allies. Tbe strategic location of Spain, in relation tooditorranoan and north Africa, hoiwver, requires that It not be allowed to fall Into hostile oontrolo

Tho elaborate inner defenses of Switzerland, its well trained amy, and the high morolo of tlie individual sol dim- would serve to delay for sometime the total occupation of the country. Look of Industry to provide arms and munitions and Inability to supply ite people with food except by Import, however, uould prevent the Covornment fron holding out for long even If ranpowor were availablero treated struggle. Switzerland's ohiof value would boeutral center for espionage and clandestine operations.

TOP SEOrLET

WcgVarn Qmrtm arvl fifflVieV

Both Western Gernany and Austria ara so vulnerable to attaok frees tbe east, ond so disorganised by total defeat and occupation that even their potentially great' strategic advantages are of little value. Western Gernanyarge reserve of trained nenpouer end tho greatest Indue trial oonplex in Europej the life of the oountry, however, le dependent on inrorts of food and rev naterlal as le tbe aase vith iustria. ational amy. The strategic eignlfioanoe of both nations for the inrjediate futare Is nil.

St

2. iMBgfia flfitorfl.

^Ansfalm^ ^fltQlUta ^Ina1lldilfffqmhTll

(1) Industrlsl Bfflof dot.

Thu industrial efficiency of tho tBSR, aa Judged by Western stand arris, will resedaosporatlvely lov lerel9 because of the shortage of skilled labor, low productivity of labor, backward technology, bureaucratic set bods of management, industrial wast*.oapaolty of rail transport and continued dislocation ofand population.

Tha Satellite countries will not have regained theirlevel of industrial efficiency byeturn to this level will be prevented byi war-time lossea of akllled labor and engineersi .the natural ontogonion of many workers to Cooauniet control; Inept Soviet interference; shortages of certain nachlnery and materials} and look of uniformity in Soviet and Satellite rail systes*.

An Integration of tba Soviet end Satellite eoonosdeaoint war effort will Involve considerable economic odjuataeut and will temporarily retard an effective utilisation of the Satellite economic potential.

The total non-agricultural labor force in the OSSR during tha period conaldered ia estimated atillion, which inoludeadon workers in industry, from the point of view of total nuabera of industrial workers, the comparison with prewar lo favorable, and laelow0 plan. However, tbe shortage of skilled workers is acute, and tha hasty attempts of the Soviet authoritlaa to fill these ranks is resulting In an output of ill-trained workers. While this situation may correct itself In tbe long-range point of view, the effects on Industry9 will not be favorable. The supply of nnsrniad workers will be sufficient.

The number of forced laborers is estimated atn. While productivity per man of tola group Is low, the usefulness ofarge, mobile, and cheap labor force to tba Soviet economy should not be discounted. Other favorable factors in the Soviot Union's najipoaei' problem are tba numbore of skilled and semi-skilled war prisoners and skilled foreign labor recruited fron the Soviet Zone of Germany,

Tbe farm labor situation la more favorable since so many wcman and children received several years experience during tbe war. In an emergency, the USSR can remove significant numbers of sen from faims Into industry or armed services without serious detriment to farm operations,

Tho Eastern European oountrleeon-agricultural

labor force of aboutillion, many of whoa are highly skilled. Ceecho-

Eastern Austria andastern Germany would be excellent sources of skilled labor for

tbe Sovietlthough shifts of skilled labor from Eastern Europe to

otrengthon tbe USSR would la turn weaken tho econoay of Eastern Europe.

r

2. a. Estimated Production of Certainuly IPAQ, (a) foodstuffs.Qrplnji-

?roiaction of bread grains Ln tbe USSR Is eetieated4 sUlIontons whichfi ofverage. er oaplta pro-duotloo basis, eat laa ted production of bread grains willdlograasfverage, while this say appear toesrcess, it must be reaeeherod that consuaption oan be adjusted quickly ln order to conserve broad grains. While only bread grains are Included here. It is known that certain coarse grains and even potatoes say be added to the bread mixture. This practice can be instituted whan and if the bread supply Is tight.

Tbe total production of bread grains ln the Satellite countries, le estimated atllllon metric tons. er oaplta production basis, eetinated production of bread grains will amountilo gransf the prewar average.

Production of coarse grains ln the USSR is estimated6 million matrlo tons whichfverage. On tba basis of amount

cf feed per bead of livestock (excluding sheep endba supply of

ffan

ooarao grain frommayilograms per bead whichf tba coarse grain available per heed of livestock. Obviously, production of meat, dairy products and other livestock products ln the USSR will beelatively loser level than in prewar.

Soviet Econoelo

Coarse grain produotlon In the Satellite countries (excluding the Soviet Zone of Austria) forrop year Is est lasted aftillion netrle tons,. of the prewar evorage. On the basis of amount of feed par head of livestock (excluding sheep andhe supply of coarse grainrop year willllogrsns perllght reduction frostilograms available forIn those countries prior to tbe car. Production In the Soviet Zone at

of Austria isstrle tons, voichf prewar.

Meat.

Heat production (caroaae weight) Is estimatedetric tons which isf prewar. er capita productionf neat will be produced, which isof prewar per capita production.

Beat production (carcass weight) In the Satellite countries la estimatedetric tons,6 kHograae per person. There are no figures immediately available on which torewar eompsrison.

Mia.

Production of fata and oils (animal fats, butter, fat outs, bacon, and vegetable oils) is estimatedetric tons which laf tbe prewar production. er capita produotlon basis,9 production will7 kilogramsf the prewar average.

The fats and oils situation, therefore, will be one of the tightest In the Soviot food picture but here again consumption can be regulated quickly In order to conserve the supply.

Produotlon of fats and oils In the Satellite, countries la estimatedetrio tons, orer capita basisilograms. There

no figures immediately available on wbloh torewar

Sugar produotion during the period considered Is estimatedll Hon metric tons which Is nearly up to tha prewar level. On apar capita basis, produotion Is estimated8 kilograms whichf the prewar average.

Sugar produotion for tba Satellite countries is estimatedetric tons. er capita basis, production Is estimated atilograms. There are no figures Immediately available on wbloh torewar comparison. 2. a, (b) Electric Power.

Electric power output In USSR9 may prove sufficient to meet all essential wartime requirements. Soviet self-enffloleney In electric power hinges basically oni (l) the amounts of power equipment produced domestically and procured from foreign sourcea|be time required for the Installation of equipment.

In light of such favorable factors aa (l) new wartlasnticipated restoration8 of all war-damaged plants|ew construction and expansion of existing faoilitlea, electric powerla the Soviet Union9 Is likely to reach an annual rate ofillion Kw hours with an estimated installed capacity ofoillion Ew, Thisoes approximation of tba anticipated reqOJ merits. The maximum prewar capacity4 million Ew was surpassed In

otal5 alllion Kw.

The main problea that will faoe the Sovleta la that high proportion of electric power la providedelatively few aejcr stations. Tho destruction of these stations would severely reduceoutput since there ia no eoaplete grid eyetea to providesuppllea to seln Industrial areas.

Tho Satellite countries excluding the Soviet Zones ofAustria will have an estimated capacity ofend la the

aggregate they are expected to produce approximatelyillion Kw hours for the year. The bulk of this capacity will be utilised by Polish aid Caach Industry, Reliable data for the Eastern Zones of Germany ond Austria are not available.

2. 1. e)

Tho output of coal9 is expected toillion metric tons, which. It ie estimated, will satisfy Sovietoonsuaption requirenenta. It is believed that this rata ofwill be attained despite suoh present retarding factors asequipment, poor mairtonance, and insufficient transportation. The eventual elimination of these Inadequacies will steadily Improve the annual rat* of produotion. The maximum prewar level of productionillion metric tons has boon surpassed by means of restoring war-damaged fields, development of new fields, and continuing increases in the rate ofIn the now fields. Tbe chief factor that would hinder Soviet war efforts would be tbe local shortages of ooal that would occur because of difficulties of transporting coal from surplus to deficit areas.

A surplus coal production ln the Satellite area Is expected to totalillion metric tons during the period considered. This will be sufficient to moot deficit In Soviet coal requirements should their Indigenous coal production fall to reach tba scheduled goal.

c

Soviet Economic

ii. d) Petroleum.

Soviet petroleum production9 will probably be euffi olent to meet mart las civilian end military requiresnarts. It la expected that tha Soviets will accomplish this endontinued policy of vigorous exploitation of Indigenous reeerves, stringent allocation of domestic production, utilisation nf synthetic fuel snd Importation of Satellite production.

Soviet crude oil production9xpected to reach and possibly surpssa0 level2 million me trio tonsj provided that the Industry continues to expand at the annualillion metric tons. Although Soviet refineriesnd outmoded, there preeently exists an excess of refinery capacity over crude output. While corns deficiencies of high-grade gaao'lne and lubricants will continue to be in prospect for the Sovietsn general it can be assumed tbat oil Shortages will not be serious enough to effectively impair tbeconomy. Tbe primary limitations expected to hamper Soviet wartimeare (l) shortage of extraction and roflnlngn inadequate supply of technicianshe operationalbottlenecks.

Satellite output will totalillion metric tonsurplus ofillion metric tons over Satellite requirement* will probebly be available for utilisation In USSR proper.

^7

) ingig frm. gri Sttnl.

stimated production of lion ore, pig Iron, and steal will be as followsi

IronBullion petrlo tons

Pig

Produotion of tbc above items will0 production. Iron ore reserves are plentiful, even considering the low credo of much of the Iron ore in the USSR, end therefore not likely to impedeof pig Iron, although produotion methods and transportation arefactors. Pig Iron output may be hindered somewhat by unavailability of enough coo! coking cool. Bach of tbe eoldn; coal wast be hauled long distances,0 kilometers, plus the fact tbat the total quantity of good oolcLnn coal Is considered Just adequate. Bbwevor, the scrapof the USSR ie unusually rood durine this period due to war born scrap, with possible stockpiling Indicated. This supply of eorap will more than sake upossible deficiency In pi? Iron tbat might occur. The large amountsrap oral' able have resulted ln the Soviets Increasing the amount of scrap charged into the furnaces to answith the prewar practice of. To3 Billion metric tons of steel9harge, onlyillion metric tons of pig Iron will ba required. 7 million metric tons of pig iron ware used to3 million metric tons of steel. Besides the possible shortage of ooksottleneck may exist in scorn

2. fi, o) (f) Ferro- Alloy.

Tlie production of ferro-alloys9 will be adequate for fulfilling noranl Induetrlol requlreoontn oo envisaged oviot war ooonoray, however, serious pro hi one would be presented. As any el oo trio or open hearth furnace any be used in the production of ferro-alloys, furnace capacity la plentiful. The USSR is tbe world's largest producer of tho two nost important ferro-elloying elements, manganese and chroaite. Of the other ferro-alloylng elenents, tbe Soviots will likely havo an adequate supply of nickol, tungsten, and vanadiun only for nornal usage. They will have an lnedeouate supply of cobalt and molybdenum. Tho shortage of tho latter two itono, however, moors only that tho Soviets will not bo able to take full advantage of technicaln tho field of ferro-alloy metallurgy.

The Soviots ere dependent on foreign eoarcoo for ell but very little of their cobalt and for much of their molybdenun. within the Sovietmall an mint of cobalt can be obtained from Finland, and

quantities of nolybdenum fron Finland, Runnels, end Yugoslavia. Other oourcos of thooe two olomenta ore not ropartod to be exporting then to tho Soviets*

The Satellite oountrlon produce suffiolent quantities of manganet

and obrone to neat their own requirenento, but they ore deficient in tungsten, nickol, and vanadium. The snail ounntitieo of nolybdenun

produced in Rtmmnla and rugoelavia will probably bo exported to the USSR,

7c

Sovlot Eeonoaric

types of rolled ateel becsuss of lack of balance In facilities forcertain finished rolled products such ss oold rolled steel, sbsst stsel for timplate, etc.

Production of ateel ln the Satellite ares vill probably totalill ton metric tons} provided that aMpmente of Iron ore froa Seeden to Poland and CeeehoalaraJda are oontlnaed. ssaation of these Imports wouldeliance on low-grade domestic ores sndeduction ln output. Coke supplies are sufficient to moot all Satellite requirements and permit siseeble ezpcrta to the Soviet union.

2. *. tan-Ferrous MftJQjJ.

The olunlnun production program of the USSR ia progressing atbettor rate than that of any other noorferrouo octal. Production,secondary notal, hoe inareoaedetric tone5 toons It is eetlnatod that production of aluminum byillo trio tons. Satellite oontrdbutlono will ougnent thin by0 no trie toco.

Bauxite production woo eetlTatedons4 and It Is bollevod it uill retchons by JulyWith Hungaryatellite country, the Soviet Onion controls the world's largest bauxite dcpoelte, ae well en those In Yugoslavia, also an Important producer of bauxite.

Prdnoxy copper production of tho OSSR during World War ZZ woo on highetrio tons. Sinoo oonaunptlonons annually, large anounts had to be imported to meet her war needs. BySSR copper produotlon, including oeoondary notal. Istoons, which is still snort of World War II ooo-eunption. Produotlon in tho Satellite countries ofetrlc tons of copper Is sufficient to coot their own reonlrerjente, but part of this output nay bo diverted towards the Soviet war needs.

OP SEO

XJr>

It ia ootlnatod thatoviet tin produotion will boone. Thin io considerably below bar re-qulrooonto uhlob oonndt bo satisfied by tho negligible produotion in Sctollite countries.

Load..

Load production, including eeoondory netal, ie cetlnotod too trie tone by Productive copaolty of load In tho Sovlot Onion could be increoood with tho use of rod cm equipment, Improved tranaport facllitiea ond practice! experience in concentration of lead-tlno ores. Although some progroas haa boon nado oinoo the uor, production of urinary load la still inadequate and tbe USSR is obliged to use secondary Dotal fron Tugoolavio and Poland to in area oo herotal load produotion In the Satellite areas, assto0 no trie tons0

Zinc produotion in tho Sovlot Onion, which Inoreesod0 tone3 toonss oetLnatod toons, including secondary netal, Be-quirenenta, oo tiro tedone oncually nust bo not by Imports of sooondary netal fron rugoalavin ond Poland. Total zino produotion in the SotolUtofl uill lUcolyotrlo tono by tho above date.

TOP^ECRET

Sovlot aOOIlOOlo

2. J. l0 ttsnloals.

9-ilnhtirln Aoid-

Gnlphurlo acid proOnotloa for the floool9 ll expected to be Id tho neighborhoodetric tons. Of tote tonnage, however, it Is bolievod that not mareons la of such quality that It eon be oonvurtcd or used for nunitions or Industrial use. Tho balance, orons is used for th* aoldulation of phoepbat* rook for fertUlxer.

Produotion of eulpburlo sold ln the Satellite oountrlee vill be slightlyetrlo too*.

Sulphur.

The USSR has eignlficant natural sulphur deposits in th* Middle Volga, Crimea, Caucasus, Central Asia,and Kamchatka, liiohhis supply lies in relatively lnocoossible areas and transportationro hi on.

Satellite produotion Is estimated0 no trio tons. Pyrites.

The USSR has otjmtxms natural reserves of pyrites. The pressor, supply of sulphur pyrlto wasrillion tons per year. There is no reason to believe that production9 fiscal year uill be belov the prowar nark. Tho output of pyrites ln tho Satellite bloc will beo trio tons.

TOP'SECRET

Fortlllzprfl.

Production of rd navel fertiliaero in tho USSR during9 fiscal year la ootlnated ottone. Thia cooparee favorably with0 aupplyow. Thoill be larger doe to tho expanding agricultural procren baaed on Ancr.nl for greater crop yieldo.

fertiliser output in the Satellite oountrioo will be allghtlyetrlo toon.

2. a. n)

USSR synthetic rubber produotion lo oetirntad to reach the yearly roteone by July Baolo row notoriala for tl* produotion of rubber ore available la plentiful supply, with tbe poaelble exception of oloobol. In on eaergency, tho noo-lnanstrlal oennunption of Bloohol will be drastically reduoed in order to provide alcohol for tho rubber industry.

Produotion of natural rubber in the USSR froa kob-eagys, guayule, and other plants lo eetlaDtad atone for9 fiscal

Roclaimod rubber produotion has node alow progress due to difficulty of rerlnlrrlnc from synthetic rubber and production probably will not0 tons

The Soviet Zone of Gerocny con produce0 notrio tons of synthotio rubber which accounts for the entire rubber output la the Satellite bloc . This Is sufficient to eeot estiva ted however, the dooondency on outside sources for natural rubber will seriously inpoir synthetic produotion in wartime.

t

2. A- o) llnbor.

Total timber production In ton OSSR during tho period oon-eiderod ia ootlmtedillion cubic ootere uhlohboveverage. ar caplto production boo9 fiscal year production uillf prewar,

Tho produotlon of industrial timber, bouover, la esticntcdrWIon cubio oetorBf prouor. ar oepitc prodnctlon bnela, produotlon uill* of prouor,

Lunbor production is ootlmted atdlllon cubic netcra uhloh uillf prewar. er capita produotlon9 fieool produotlon willf prover.

Conporioonn uith tho prouor oltuatlon oppoor favorable because of tho 1wlunion of Finnish, Baltic, nnd Polish production fomewly acquired arenao Tho oltuatlon in tho nore Important Industrial tinhornoan favorable andoeJcoeoB that will affect other Soviet Indus tries,

Tinbor produotlon in tho Satellite countries will totaldllion cubio no tor a, uith over half of tho production provided by Finland and Yugoslavia,

o

(P)

It la estimated that tho aircraft production of USSR and the Satellites during tho period conflldered will bo as

Production

lQ/fl

Structural Weight

(loco lbs J

0

Structuralbs.)

800

2 ft. '-:) Ibtor Volilolon. .

Ibtor vehicle nroAiction9 le esthsatednite. Thio corjporeo to7 produotion ofotor vehicles (neatly trucka) and to0 vehloloao-jovor,9 fiscal year produotion uill bo below anticipated roto of production oinoo0 oolonder year plan callsotorf which oro to bo trucks. This feiluro to fulfill9 anticipated rotor vehicle produotion plan will rnke ltoolf apparent in tbe fulfillment of otbor lnduotrial plans.

Tho Satellite produotion of rotoraaienmcant.

0

SECKET

Soonorda

2 fl. r) ArmrodcMoloa.

USSR and Cscclioalovakln ore tha only ooUDtrloo expected to produce arxured coabat vahlalofl during tha period considered. Tba)stdrntod rate of production8 end

USSR

Czechoslovakia

2 ft. Ibrchent arippyy;.

It lo ootlmted that the coablnod Soviet-Satellite rate of nerchont chip construction, asillroflc registered tone. This figure Includes onlyDorohant vooseloons, and thus exoludos river craft ond naval auxiliary typos on uhloh Soviot yards are currently concentrating. Likewise, Caspian Sea vessels ore excluded beoenae thoy aro not ocean-going. The fore going oo tim too are ooaevhat higher than tho rate at vhich Soviet and Satellite shipyards are believed to be currently producingvessels.

Q

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RET

) tomcim*

(t) Submarine production for tha USSR9 la estimated atnits, divided aa follows!

Aaaanblage of Type XXI

Completion of "K"

Ccapiation of"

C carpio tion of "S"

Complation of "SJCH*

Cwaplotion of Coastal*

Satellite Statest Bo indications of new submarine construct'on. Reporta indicate tbat Yugoslavia Is assembling pocket and midgetfrom parts sent overland from Germany and USSR. These reports, however, have not been completely evaluated, pending further information, and in any event do not represent new construction.

f

TOP-*ECRET

Sovlot Eoonoalo

2 u) ThvurJ;pg|-

Tne ostianted annaal productionof USSR and Satellite* on of0 tons of

2 fl, U) Dependence on Foreign

It is estlantod thot laSSR ond the Satellite countries uill entirely or largely depend on foreign source* of aupply for Industrial dioxonds, tungsten, tin, oobslt, mlyrxVjnun, special typos of laaohlno tools, and oaeo precision oquipneat. Tbe Satellltss vill bo dofioient inIron ore.

The dependence on outside eearroee for natural rubber will bo teoporarlly relieved by current stockpiling.

2. fl. Transport CormbJlAtlgo.

Transportation In the Soviot Onion dopendo mainly on the roll roods, uhloh still eocoirit for about 9CC of all Inland freight traffic Freight haulage, as refloated fay average dally oar loadings, is oxpoctod to approach0 level by9 However, Judging by reports of tlie first 2J- years of tho postwar Five Year Flan, both construction and rehabilitation of railways are far behind planned levels because of tho shortages of steel and poor nonagecent. Evenharp Inoreoso in stoel outputarked Improvement In organization occur beforeho plan for new construction io not expected to be noreulfilled at the time. Rehabilitation of war damaged linos end equipment will urobably be acoompliebsd but It is doubtful that tho capacity of the reconstructed lines will have lmeroaoedthe prewar level. Tho rolling otook position, though difficult to estimate, should be somewhat better by9 than0 but locomotives and rolling stock oust still bo used intensively to meet Inert -cod demands af Industry.

Tho additional problems involved in trans shlpoeot between the USSR and Sotoll1to area resulting from gauge differences cannot bemphasized. Cargo handling oquipmont required for transshipment is not available la sufficient quantities} and tho tine required for changing tho gouge ofou main Satellite lines will exclude the possibility of major improvements before Although Satellite rail shipments

<

o

approximately up to0 level, rail transport wouldoading bottleneck in any combined war offort. Satellite oonntruotlon of re lie and

onginee have been negligible; production of rolling stock baa been

"

to meet current requlrerjonto; naintenenco and replacement

hove boon inadequatej lntenoivo utilization of existing faollltieo has speeded deterioration; end wholesale Soviet removals fron occupied areas, particularly from Soviot Zone Goirany, have generally disrupted railfctW Transport-

Ibtcr trenaport is of little significance ic peaoetlne OSSR as it Is used oainly for short freight hauls fron fomo and Industries to railroad stations, ports, It Is believed that by9 tho road system will be In soaewhat better conditions than prewar and that the general lovel of motor transport will bo slightly Improved 0 however, this will not relievo tho strain on the railway system to any appreciable degree, as Its total inland freight turnover will be little nore than 2f> of the total freight carried. In tho event of hostilities, this leak of adequate no tor transport will seriously impair the operation ofood forces.

Ifaveneut of ffroicht by motor transport io being pushed by tho Satellites to aupplooont the overtaxed rail systen and It la expected that notor freight will represent roughlyf total freight movement. Further utilisation of motor transport will be limited by the number of vehicles and the highway network*

EeVanfl ^'PtvTHayi'

Inland waterway transport is expected to almost regain its prewar level for handling aboutf tho total Inland freight turnover. Lack

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RET

t5P

Sovlot Ikxinonic

of odoquste shipbuildinge ml repair fcolli tlee, low priority on lrarc^vancnts, tai-tine dnregc to tiie river fleet ond to port facilities, lapro pen-Utilization of eartntrlng, ohlppinc ond froesingduring tho winter aro bottlenecks for an increase in the level of river freight turnover,

Donube shipping vdll aocount for opproxiratelyof rugoolevin, Rirmnien, and Ihingorian freight shipnonto and will renrecent leaver for Sestern Austria, Czechoslovakia, end Dulgorie. Roughly one-third of Polish froifjit end ons-fifth of Corrjon sMrnonte >fill novo on inland veter transport.

Tho ?iain point of strategic strength if tho USSR and Satellite overs,espect to transport conditions es affecting be war potential, Hor- in tho geographic fact that the arenc are contiguous, and poaceas interior connecting linoc. In general, thoroforo, Soviet cacrmnlcatio no-am not subject to the foms of nttoclc uhioh con bo developed against sea eorriunicatlono. In rony respects, on tho othor hand, Soviet and fctellitc transportation suffars fron .Inhoront strategic vecknij3soe. The lack:ojor Merchant acrine, for cxcnple, procludoo the transportation of large todies ef troops to overcoat eroan, or thoir subsequent rnipport,,

Withinoviet-Satellite land-horoJnesa in tho poor corriunloatlono betuoon the areasof the Urals, end the ihriiinc rrovincea. The Trens-Siborion railroad is Incapable of raving * or iToifbt iriilch uould be requircc' for nojorhootilitios in the list. Thlc deficiency cannot be eliminated by

TOP/feyrKET

(J

TOPSE<!rtET

uao of air transport, or altornato lend routoa. Furthermore, the Soviet Union doos not oontrol tho necessary anount of large-sizo merchant vessels to pernit extensive novononto by sea fron tho Bel tie end deck Seen toPacific, and the OSSR could not protect the see routoa in any

cose.

An added strategic ueakness results fron poor distribution of land conriunioatlonsa roil linos in tho Balkans, for oxcmplo, am too operac to cupport large movements directed at tho Bosporus. Another major weakness of tho Soviet land transportation system Is tho problon of gougo differenoe, uhloh has long plagued Soviot operations around the entire Soviet perimeter,

RET

A localized strategic uocknooa exists in tho vmr-doxagod, dis-rtoniled and dotorioratod rail system In tho Soviet Zone ofhissyntoa, on tho verge of collapse, "ill be handling less than half its normal peacetime volume of traffic, 'Ifaera is ct the moot only one double-track line into Derlln. Under uartlme conditions, tho system might be organized on tho basis of one-way linos, uhloh oould probably handle minimum military requirements for through traffic, Tho full exploitation of tho industrial potential of tho area by thoowever, would hardly bo attainable under such conditions.

2 W StookgUos.

(a) Saw IfeWiala0

USSR.

brood Gri.lcB.

i.Ki bread etookpile on6 la estlmtod otillion metric tone,aonth supply bneed on current rate oi' consunptioa. illion metric tone could ba added fron6 crop bringing tho total7 million netrio tons, oronth supply, if tha USSR should decide not to export eny grain from8 orop.

Conreo Oruin.

ein stookplle io estlut-todetric tons or ustookpilo of feod for livestock. Includingia fromStookpile of 4W9 tdlllon notrie

tons, orasnth supply, is indicated olwuld tho USSR decide not toy rruln fron8 crop. ami OilB.

BhiJe otooka may be of hu mourn quantity, there is ovluonco that tha USSR is building up ita oilsooo stockpile.

on8 probably coro

Qetrio tons whichook supply, /idding to thisugar boat orop could provideotal stock ofonsweok supply.

Coal.

Apart fron possible strategic coal stockpiles. It ia probbble that ovary industrial enterprise of any importance attempts to maintain reserves equivalent to at least one month's requirements to compensate for seasonable fluctuations. However, the magnitude of these recurves Is not known.

Rubber.

Hubbor atoakpilee estimated5 at less0 tons, probably will have increased to aoaswhereons This inorease ia due to heavy buying of natural rubber, mostly from Uolayaith expootatione of continued large purohaaes, and possibly some inporta of synthotio rubber from the Soviot Zone In Germany.

Bauxite.

It is doubtful that the Soviet Union lebauxite sinoo the new plants are all located near theinoreoseo in mine production ere made to laeet tho doiwnds. since the Soviots are deisanding large Increases inoutput, this tonnage, plus Yugoslavian produotlon may be

abol.

Recent heavy purchases of Australian and Mew Zealand wool maytockpiling program in this commodity. tJran-iun.

Tho estimated stockpile available to USSR90

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so riot joononio

ons3 equivnlent. Tungsten.

It is estiauted tbat duo to import* froa Koroa and China tho Sovlot Onion will9 ba able to stockpileotrio tons of tungsten above the noraal consumptiononsoar. This indloetos that the Soviote byilltockpile which will under normal conditions lest about one yoar.

Scrap Iron und Stool.

War-born iron and ateel sorep in tho USSR plus largo Bhipnonts of scrap fron Soviet Zone, Oernany have rosultad in the probability that'oxtoasivo stockpiles will exist lnatellite States.

Stockpiling within the Satellites9 mill be seriously

liulted due to tho requirements of postwar reconstruction and devolop-

BM.it in thoaoonoaiss. Such stookpillng as doos oxlst

will ocount to no noro than noraal induetrial reserves, end, in most

couos, will bo loss than normal industrial reserves.

(fl) (b) Military Supplies

Military Egulpeent

USSaSatellite States,

Tho attaahod estimates of vstjor typos of rdlltaryas9 ore dorivud as follows:

of preoont quantities on hand;

of attrition botaeun now andune addition of estlmutod produotion between now und

Ho no count kiao been token of possible tranofora of equip-

Sorlet Economic

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Soviet Boonooio

neat fron one country to another country. It should he noted that

In sobs. Rumania, this may result in considerable change

in tho sale or purohnie of equipment by the various nations.

Aircraft USSR

Ab of the present there are an0 military rircruft In operational unite,? resorve. In addition,ransport typo ulroruft ere proaeutly operational within the Civil Air Fleet. Of this nunher,0 could bo utilized for military purposes.

Aeuumlng normal attrition and no mobilisation prior9 tha fijruroa presented above will still apply as of that dute.

Satellite

Totaleserve.

CSeoho

.

o

Soviet Economl*:

c

skcret

Soviot Eoononio

2- Conolualons of Strategic Sjgnificanca.

combined wartime prqduetivo ability of the USSR and

Satellites9 will be below that While their industrial and agricultural oapaoity will then bo oona iderably. advanced over6 to vol, deflcionoles will continue In oortaim key fields primarily In transportation, skilled manpower, high grade gasoline and lubriownta, apeoial types of anchine tools, some preoislon equluuont, industrial diamonds, certain ferro-alloys, tin, natural rubber and corU-in typos of finished ateol. Stocks uf most vital ooianmdltios will probably be below tho prewar lovol.

Despite those dofloiencles there is no doubt that the Soviot bloc vould bo eblo to mobilise its eoonomyajor wur Tho extreme flexibility of tho Soviet wur economy, aa evidonoed In IVorld War II in tho ehort run would permit the ueoosaary edjuetneirta to ovorooae most of tho obovo weaknosses.

ECONOMIC FACTOR

TO^BECRET

Allied Sconoade

2 4 (i) ttrfr

The total outputountry la largely the product of two factors:

(a) the roeourcee which the nation haa at its disposal and (b) the efficiency with wbloh those resources are employed. Industrial efficiency

art of tha second factor. Apparently no measuresdustrial

efficiency for tba various nations are available. Any oessure or index

which night bo employed to Indicato tho degreo of Industrial efficioacy

a given country haa attained, sucheasure of labor oroduetlvlty,

inherently would reflect the effects of both factors ratherortion

of tbe second alona. Tbe following data are presented, however, as having

a bearing on the subject.

Comparison of relative production per man hour in manufacturing industrlos for specified eountrlea.

aQductaviiT irrioa

%..

united

United

Data on production per oen hour in manufacturing Industries wbloh

reflect not only industrial efficiency but other factors ore available for

ew of the countries concerned and only for prewsr years. In the

pretrcr years (see tabulation below) output per nan hour in tbe United

Kingdom amounted to onlyhird that of the United States and

slightly lose than that of Germany. Produotion par man hour ln Canada,

however, was more than two-thirds that of the Uttltod States and much greater than In Qornany.

Data, on per capita incoeo (which areon lees Indicative of Industrial efficiency than output par nan hour) are availablereater number of countries. 8 the per capita incone of thoted countries ranged fronercent (Union of South Africa)new Zealand) of that of the United States. The per capita lrcoae of tho designated countrleo, on the other hand, was markedly higher than those of various Eastern European countrios which averaged aboutercent of United States per capita income.

Par capita lncoaw la specified.

United

New

United

The above infernation auggosta only Indirectly tha relative Industrial

efficiency of the various countries, since anon? other factors tbe number

of houro per work-year is left out of account. Statistical ocoperisone are

not conclusive. In general, it is believed that tho Industrial efficiency

of Canada under wartime conditions would probably be the highest of

TO^^aw^RET

oight countries (and would aporoach that of tho Unitedollowed in

order by the United Kingdom, Netherlands, Belgium, and France. That of Bow

Zealand, Australia, and ths Union of South Africa cannot be Judged, even In

TOP

order of negnitude. On the average, tb. Industrial efficiency of tbe eight designated allies probably ia significantly higher than the average of the USSR end Eastern Europe.

o

Tha high degree of industrialisation and tho high level of industrial

produotion attainable in tha eight allied countries lo reflected ln the

following figures on the composition of their labor force:

of

J,

Since basic data used cover differing periods and inasmuch aa worker categories are not ldontlcally defined in official reports of tbe various countries, these figures are only rough approxinations. Unemployedare includedj military psreoanel are not. It Is probable that the war tin* Increase :ln military personnel would not materially reduce tbe else of tre labor foroe as etated here. For aome countriesustralia) accretions to the labor force in recent years have not been included. losses to the military establishment In wartime would ba partly balanced by the esployment of persons who in peaootime ore not classified as

Estimates of tho labor force tbat would bo available to tbe Allies9 should take into consideration two factors wbloh supply an Important complement to tbe flgurea given above! (l) tho assistance that would be provided by Latin Airorioan and other areaahe losses in availableuick conquest of Heaters Europe would entail. Tbe gains wh'ch would result froa the addition of other possible alllna probably would not oomponsato for tb? expoctod los3 of European labor; they certainly would

not compensate tho loss IT tho United Kingdom ware neutralized. The loss of continental Europe's labor fores would reduce tho total Allied labor force2 al1 lion and if tho United Kingdom wore neutralized,A million.

Allied Eeononic

tnfl iszlzs.

Total requirenoroduction

Dependent* on foreign BOUT1

Of Totrfll _

Otflaf tnflB the elgfct'qosTgyiatea allies tBeasdlTBa.

Zj Shows net exportable surplus for allied regions taken collectively.

Production.

Produotlon of bread grain within the eight countries and thus available for consumption during the8 through9 is(as of0 metric tons whichercent of tlie total probable supply0 metric tone.

The foregoing total probable supply is predicated onheoup of countries and Canada. The balance batwoon production and tho total probable supply Indicates that tho designated allies wayurpluss trio tons In excess of total Tequireaents."

The following considerations will be isportant in connsction with import-export polioyi

1) To conserve oversees ehlpplng, parts of the Australian and Canadian execsn (sereillion aetric tons) nay be allocated to neutral countries (Far East, for example) It Is therefore anticipated that tbe United States and other Western Hemisphere countries, as well as certain other countries, tay ship bread grains to tbe European group of countries.

Allied EooBovrlc

The dependent oversoae territories are taeniaeeficit la bread Brain production and probably will require lnporta ofetric tons.

The Eastern Bice le expected toonsiderable excess of bread grainsron whichetric tons or more night be offered for export. Substantial quantities are currently being shipped to No8torn Europe in exchange for essential Imports. Tbeand quantity made available depend on Soviet policy,

In tbe event of war, possible supplies from the Eastern Bloo would be cut off. Other important aouresa of supply probably wou'd be unohoncod.

Production.

Cparae pro In production in the eight countries and thus available for consumption during the8 through9 has been estimated (as ofCOO metric tone whioh laercent of the total probable supply0 metric tons.

Pepandf'ace, psj FcrnlTa swwag.

Tho foregoing production and probable aupply situation indicates net Importsetric tons which may be Increased ln view oflarge crops of feed grains 'Id tbe Western Hemisphere. Various factors including the following are pertinent to Indicated imports|

Assuming the surplus produotion of Australia and Canadaetric tons) is wade available to tho other six countries, the uncovered balanooetric tons may bo supplied largely by shipments from other Western .'lordsphare countries, the United States supplyinghird.

The dependent overseas territories will moke no contribution of feed grains; cortala of these willetric tons supplemental to indigenous production.

The Eastern Bloc is expected toxcess of feed grain from whichetric tons might bo offered for

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export. The destination and any quantity aada available for export will depend on Soviet policy.

4) In cane of ear, ouppllee froa the Eastern Bloc would be out off. Other important sources of supply probablya unchanged.

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o

C

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y

Qf TattL

requirenenta

Dependence on foreign sources^*

2

Pure basin.

2/ Other than tho oight designated allies themselves. PrfldBQtA9D-

?ats and, flU? produced within ths eight countries and thus available for consumption during to*8 through9 Is estimatedetric tons (pur*dible}: this is equivalent toercent of the total probable supplyotrio tons.

In vies of the shortage in the world supply and probable allocations, net imports aro expected to beetric tons. In this eonnoetion, the following observations ore Important:

1) Assuming that tbe total surplus production of Australia and New Zeelend (moreercent of tho contained probable supply) la madeto the other six countries, the1 uncovered balanceould be aupplled chiefly by shipments fron dependent overseas territories amounting probably to moreetric tons. The combined contributions by Korncy, Denmark, and Iceland Bight supply anetric tons. The United States and other Western Hemisphere oountries ore also expected to contribute appreciable additional quantities of fats and oils.

3) The Soviot Onion is deficit in fats and oils while the Eastern Satellites are expected to require net imports ofotrio

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L h (ft? sugar.

icoo i7

Percentage of Total

requirements

Production

Dopondence on foreign source

7

Ro* ougar.

ther than the eight designated allies themselves.

Produotion.

Sugar, production In the eight countries and thus available forduring the8 through9 Is expected to boetric tons (raw sugar)i this is equivalentf the total probable supplyetric tons. Dggindence or, Foreign. SourgaB,

Tbe total probable supply Indicated above Is predicated on possible sbipmcnts from outside tbe areaetric tons which may be increased ln view of tbe world sugar surplus situation. The following observations are pertinent with respect to possible imports:

Assuming tbe total exeeas production of Australia and South Africao trie tons) is made availablo to tbe other six countries, the uncovered balanceetric tons would be supplied chiefly by tbe Western Hemispherepossibly Cuba. Denmark sightnail contribution.

Tbe dependent overseas territories could sake very considerable shipments,etric tons.

The Soviet Unionugar deficit country, but tba Satellites

are expected toonsiderable surplus of sugarossibly more thanillion tons, the/Ultimate disposition of whioh will depend

TOP spfgsn

Allied'

on Soviet polioy.

A) Rax would cut off toe possibility of shipments from the Satellite countries, but probably would not materially affect other sources of supply. |

Q

Z' Percentage

Total

nel, mutton and lamb, porkora*

moat) but not edible offals,arcase weight.

ther than tho eight designated allies themselves. faaaasttaasV

as used In this statement, includes beef and veal. Button and lanb, eork (excluding lard: ind horse seat, but does not Include edible offals. The total quantity of neat produced within the eight countries availublo for consumption djring the8 through9 ia cstiratedetric tons; this la equivalent toercent of their total probubla supplyetric tons, PeDend'Tpqa op Fopo jbu So^rcefl,

In view of the shortage in the world seat supply and the probable resultant ollocationo, cot Imports by the eight-country group may be expected to beCC metric tone. In this connection, the followingare important!.

1) Assuming the total excess produotlon of Canada, Australia, and(moreatrie tons) Is made available to the otherthe uncovered balanceetric tons -ould originateArgentina and other Best-ra Hemisphere countries with smallDeniiark, Eire, and possibly

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Dependence on foreign sources^

Ho dependence can be placed on Dependent Overseen Terrltorlaaource of seat supply.

The Soviet Union willeficit of seatA9 while the Satellites are expected toet surplusetricho ultimate disposition of which will depend on Soviet Policy.

a) tho event of war, the email Italianetric tone) may not ba available; other sources would probably remain unchanged.

Alliad Roonondc

e. O) (w? ffljctr^y

ospaclty

of

requiremonto

j/ Other than tho eight designated allies themselves.

ProductionP

For practical purposoo tbe eight allied countries may be considered aa BeIf-sufficient In the production of electric powerj aome electricity le

Imported, however, and all of these countries have additional connrating capacity under ocretruction or projected. The combined generating capacity of tho eight countriea, amounting toi1lion Kw, is sufficient to supply abouter cent of total requirements.pn Fgreliffl SobTfiiifi.

Electric generating oapacity Is adequate ln all of tbe eight countries oxeept, France, Eelglus-LuxDmburg, and Netherlands which ourchaee small amounts of power from Germany. These three oountrieo rely upon Imports to proviie the following percentages of their total consumption of olectrlclty.A, Balglum-Luseoburg -and

e. o? (o) CoM

Total requirements

Ik trie Tons.

ota)

on

sourcesi/

Other than tho eight designated allies theraelvos. PrpdMoUBQ.

Aggregate production of coal, estimatedillion metric tonsn the oight alliod countries mill probably approximateercent of the current consumption. Output of ooal la the United Kingdom, estimatedillion metricllurplus ofillion tons for export and bunkorej similarly, tho production in the Union of South Africa ereeedo Its needn by nearlyillion tone. Domestic produotlon la the remaining allied countries falls short of requirements. Their relative degrees of self-sufficiency aro as followsi ,,,,, and New

BflPflSriflnocources,,

Except for Franco, Bolglins-Luxemburg, and the Mother'nods, adequate supplies of coal could bo assured. Australia and New Zealand are virtually sulf-sufficient and Canada's deflolt could bt net by the United States. About half the deficiency of Franca, Belgium-Luxemburg, and the Netherlands coulc be supplied by the United Kingdom, provided transportation is available.

Si Allied Econcedo

It is not practicable foi' ooal deficit countries to build upsufficient to seat their largo Industrial requirements. Accumulation of large suppllee would tio up transportation end storage space otherwise needed and loser thealue Inasmuch as ooal deteriorates in open storage.

d) Pftt.rolftUH

metric tgns

Percentage of Totfll

requirements

V Other than the eight designated allies themselves. Proi-jctlon.

It le estimated that during tho year9 the production of petroleum in the eight countries wTlhousand metric tons, equivalent to lesfercent of their total requirements, Canada and the Motherlands (not including its dependencloe) each produceenth of their petroleum needs. Output ln the other allied countries la negligible.

DergnJwnoft on Pprsisn

Consldered collectively, tbe slant allien are dependant on eouroes out-elds their national boundaries for aboutercent of their petroleum requlre-oenta.

In ease of hostilities,Canada, ln view of Ita proximity to the United States snd Its sizeable domestic produotion, would be reasonably certain of adequate supplies. The position of tho other allied countries Is leas oeeure. The United Kingdom, Netherlands, and Prance, through their dependencies and

capital holdings, control respectivelyetric tone of annual crude oil output ooncsntrated largely in the Western HemiBphore and tho Fflddlenough to cover annual aggregate

Allied EooBOBie

requirements ono and one-half tinea. In event of war, however, tha petroleum resources of the Middle Beat probably would bo subject to early enemy capture while those of tbe Caribbean wou'd probably be smployed first to meet United States needs; tbe reaalnder, allooated to tha allies, would risk seisure and sinking en route to destination. Australia, Hew Zealand, and tbe Union of South Africa ootid obtain some of theirfron the East Indies. Production in that part of the world, however. Is far froa adequate to meet Par East demands.

Storage facilities suitable for petroleum tire oostly to build, particularly if placed underground. It would be feasible perhaps for small oil consumers auch as New Zealand, Bolglum-Ijuxeabourg, and the Union of South Africa to dapead substantially on stockpiles of petroleum; countries Ilk* tbe United Kingdom end Praros would find It extremely difficult to provide sufficient storage.

I

top^^ret

TOP^CRET

) (f) (tr) Iron Ore. Ftp Iron. Fmrra-All.

, ftrtrttlottd

Iron; Or?

Total

Dependence on foreign sourceiron and fOrro-ellOTO

Total

Dependence on foreign,fjBgptg, end, qastjoga)

Total require

Dependence on foreign

i/ CKJwr than the eight designated allies themselves,

lices net exportable surplus for allied region* taken collectively.

frpducUon-

Of the sight countri-ie under review, New Zealand produces practically no iron end steel andery minor quantity of iron ore} Australia and Canada produce Iron and steel la quantities adequate for most of their ordinary needs) the Netherlands producesnail amount of steel and expojts pig iron to neighboring steel-producing countries. In the United Kingdom, France, and Belgiusr-Luxsmbourg, however, iron sad steel produotlonajor element In tho national economy. These eight countries,takenhale, export large amounts of iron and steel, principally finished and fiairhod products.

SECffET

Allied Economic

Tha probable annual rate of produotlon of 'ngot steel and steal for castingsn those countries,e as fo'lows (thousands

of metric tone)!

Australia and New

do Source^.

It Is expected that demand for Iron and steelill continue to exceed supply and that all of the countries concerned elll produce the maximum poaelble, Canada, France, and Belgium-Luxembourg may find It expadiont to export otaV ingots and oeatings to neighboring countries, but such shipments will be small. On the whole, the eight oountries will bo solf-suffie'ent In regard to iron and steel and will tend to be on on export rather than an import basis.

TOP.

Iron ore and other raw Supplies of raw materials,high-grade Iron ore, coke and coking ooal, are not sufficienteight oountrieshole to maintain iron and steel productionprojected levels. The United Kingdom and the Benelux countrieshigh-grade Iron ores from Sseden, Algeria, Spain and elsewhere. over-all basis it ia estimated thatoercent of the totalof ore must be net through

A Bore preaaing ra* material deficiency, however, is that of caking cod Projected levels of iron and ateel production in Pranoo end the Benelux countries will be attained only with substantial imports of coke or coking coal, principally from the Ruhr.'

The supply of scrapimilar uroblew. The united Kingdom, the Benelux countries and Prance are currently receiving Carman and Austrian scrap which is convertible into steel almoston for ton basis. Should this supply be cut off, steal production would fall at least five percent-Furnace capacity to produce ferro-alloys is probably adequate, but the area under review Is, on the whole, heavily dependent on outside sources for supply of alloying elcmanta such as ohromlte and manganese, tungsten, cobalt, uolybdonum, etc.

Tbe eight countries are not stockpiling either raw materials or Iron and steel aa such beyond tbe ordinary demands of Industry.

hi Bauxite.

Total requtresonta

Tom

Percentage

Porcent

100

on foreign sourcea

i/ona will be required for aluminum nroductioni tbe remainder for tbe al und nous cement, chemical, and abrasive industries.

%f Other than tha eight designated allies themselves.

Product laa-

Tho total annual requirements of bauxite for tbe eight designated countries ore estimatedetric tona, while their domesticis expected to beetric tons. efloit ofons will have to bo nftde up by la ports during tba ported under con-nleeration. ons will be required for the aluminum Industry, with tbe reoainder be'ng consumed in the aluminous censnt, obemioal, aod abrasive industries. Practically all the estimated produotionons will be mined In Franco, tbe only current producer in tbe eight countries, Derendonop on Foreign Source p.

Canada, with an estimated consumptionetric tons, is by for the principal consumer, ordinarily Importing Ita supply from Brltlah Guiana. The United Kingdom could Inoort all Its requirements from Prance, and if France were occupied, from the Gold Coast. Bauxite requlrementi of Belgium-Lufsmbourg, South Africa, Hew Zealand, and Australia are relatively small. Australia has Important deposits which have yet to be exploited.

Allied Eoononic

) UU imm

ifetrtq tea

requlreDento

rendonce cm foreign oonrooo 1/

V

2/ Other than tho olght de eigne tod alllos thenaolves.

2/ Show not exportable ourplus for the eight doidgnnted allies taken colleotivoly0

Prod-.ictlcaa

Tho annuel rcquTrwiantf! of prlrjory DlojBllBO for Uie eight countrlooestdxctcdotrlc tons, and productionetrlo tonefurplunetrlo tone will probably bo available to noot shortcgoc in Uieo tec. Canada la expected to produooo trio tons while Franco nay produce virtually oil of'ito ostlrctod require-nonto0 cotrlo tons.

P.UTaa2e

The designated countries oould be lndopendsnt of other oroao for aluminua end, ao Indloatod, nay ho cble to exportons to meet

tho United States deficiency.) Substantial tonnagoc ere now bolnc ehlpped to tho United States to alleviate tho preoent shortage, which la expected to oontlnue Tho Unitod Klngdon nayotrlo to no, of0 tons uill be produced within tho countryons

Inported from Canada, ite usual eupplior. Balgiu^Luxonburg, ttetherlando, Nov Zealand, South Africa, and Australia could import virtually oil their require-:ntr fron Canada, although Ibrucy ia nov an Inportent source of supply for Weobsrn Europe*

After World Mar II largo stocks of oooondary- alurdnun existed in those countries, but, due to increased denondo, these stocka ore nesring exhaustion.

.c

Other than the eight doalQnatod ellieo themselves.

For the period under consideration, the annual produotlon of tin from donee tic oris In tho eight countrloo is os tint tedong tone, end requdrerjentoons, indieficit0 to no. Among those oountries tho principal producer is Australia, aooountlng for about half their total tin production; the principal consumer is tlie Doited Kingdon, vfhloh io oxpeoted to have on estimated ooaoumption of0 tons.

POIWTalCIW flBPQ3i

Oving to too ocall produotlon of tin in tho designated allied oountries, tho defloit0 long tons oust bo endo up by imports In tho fora of eoncentratea and notal fron foreign sources. Ordinarily, the principal foreign sources ore tho ISalayan Onion and the Netherlands East Indioo in the For East,ombined production of0 tons (aocuning that poll tl eeltwbsnces do not substantially of foot their production) j Nigeria and the

;

7*

0

hoonocrfo

Congo In Africa, which ahouldanbliied produotion of0 tons; and Bolivia producing0 tons. Although relatively snail quantities of tin aro produced in Portugal and Spain, their output Is of dnor inportance* Under tlio present allocation system (by tho Combined Tinin Dotal is ell oca ted and exported In qui ntitiooew hundred tone annually to aeet essential roq^ilrenontQ ofetelllto eoun-trioo; euch ohipnents, of course, uould be discontinued in case of on onorgeneyo

Owing to tho world shortage, tin netal la under allocation. There lo thus little likelihood of stockpiling in tho designated oountries except the United Klngdcn, which bee rjolntainod stocks at an average ofSCO long tone during tbe past year, and could probably Inereeoo its tin reocks0 tons or corn

il

o

Wktmtt kaA

Percentage

requiroraonto

on foreign sources 1/

Other than the eight doeienctec ali lea thoracal vos. Pro'hio-

For tho period under conaidoration, the annual production of prlmry load froa dooegtio ores in tho countrioe included in this analysis is eatinQtodo trie tons, and roaulrecontoeficit0 tona. Of these oountries, Australia and Canada are the principal producers, uith on ostlnatod oocfainod productionotrdc tons6 Popondence onourooa.

Tho indicated deficit0 metric tons of primary lead has to bo nado up by Inporto Ir. tho forn of concentrates and octal. Ordinarily, tho principal foreign ccurces arc tfarocco, French Equatorial Africa, northern Rhodesia, and Tunis, in Africa, ond. In thondsphere, Iloxioo, and Peru. Some inporto of lead ore being rocedved fron Western European countries, uhorocoarte fron tho Eastern Bloc aro negilgihlo.

Allied Scononie

Ouinc to the present uorld shortage of and heavy densnd for lead, otockpiling in the various countries is believed to be Inaigniiioant.

T

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o

For tha period under consideration, tho ersnal production of prlnery zlnoVneetic oros in tho coimtrles ineludod in this analysis lootedo trie tone, end recriirerentoons,efiolt0 tons. Of tliese countries, Canada end Australia ore the principal producers uith ened oonblned eamnaJ prodnotion0 ions,

Dependence on foreign

The indioatod doflcit0 no trie tons of prlnery zinc has to be mdo up by inporta in tho fors of concentre tea and notal fron foreign sources. Ordinarily, tho principal foreign sourceo are the cependercion of Northern Rhodesia, JSoroeoo, ant Tunis In Africa, and, in tlie western Herd sphere, the United States* nc concontrotea and zinc no tel. aro inported fron Norway, although not in large quantities, uhoroes Inports fron the Eastern Bloc are negligible,

Bo Infomation Is avelloblo to indicate stockpiling of tdno in the designated countries,

Tp/SECRET

AddAUonal) .geppcr,

Total requlrcoonta

on foreign aourcoo 1/

1/ Other than tho olght dooignntod ollioD tbanaolTO30

Produntlnn.

Tho annual roqidrcaenta of princry copper for the countries included

in this analysis are ootdootodetrlo tone ond their produotion fron aoooatlc oresone,eficitone for tho period under considerstion. Of theoo counfcrloe Canada ie tho principal producerossible snnonl Troduotionone, the balaneo0 tons coning principally fron Australia and tho Union of South Africa.

PBPW-'BIWO flB ft>fcdf^ PWTrWes

Inaanuch as the nine produotion of copper fron tho United Kingdon, Frcnco; end Denolux countries io nogligiblo, practically all their recrdrorento of pr leery ooppor hevo to be lnportod, oltlier ln the fern of concontratco or notel. The principal foreign sources ere tho ooloaieorioc, such ao Ibrtham Rhodooie and tho Delglan Congo, and in thoord sphere, the United States, Chilo, end Itoleo0 Tho countries lncludod in this analysis

TOP SBC RET

Allied Eoonorric

arc nat dependent on tho Eastern Bioo for ootzrcoa of copper,

no informtion is ovailablo to indicate atookpiling of copper supplies, at the rrjaent world daaand for copper exceeds supply.

u

ATI Ind Econorrlo

> Sulfur

ttf total

roqulrerjontfl

on foreign sourcan 1/

1/ Other than too eight deelgnoted allioo theaeelvco. Production

A9 the eight designated alliee uill produce an0 an trie tone of sulfur orercent ofone which thoy will probably require.

v?fl"

Almost tho entira supply of this sulfur cooes fron the United States; Italy,ubstantial producer, ie finding it increasingly difficult to oospore, Araong other sources of sulfur are Mexico, Chile, and Japan, whoso coslbined output, howovor, io anall conparod with tbet of the Doited States*

Tho principal uoo of botli oulfur and pyrites is in the annufneture of sulfuric cold, followod by mnufacture of sulfite pulp. Sulfurio acid, diocuoood eloeuhero, is of groat strategic importance and sulfite pulp of high purity is used ln the manureature of onokelesB powder, rayon, plastico, and lacquers o

Allied Hoononic

Although eulfor can easily be stockpiled, there Is no evidence of such activity by any notion,. In tho united States mine stocks In recent years have roncedoontha of the required supply including export

TOP SECRET

Allied Ecenonia

prcnont, on abasis, pyritos provides loos than half tho supply of sulfur accounted for by native

I^IDendenco onW>$*

Tho world's largest eoonortor of pyritos io Spain, whichcast of

Bspendencs on foreign, sour cod

X/ Other than tho eight designated allies thaDoelvos<

he pyrites requirononto of tho eight designated allies are estiratodo trie tone,5 pareent of uhloh will be produced by tho allies theaselves. This produotlon oooursIn France, Canada, and Austral la, none of uhloh le self-sufficient wither in pyrites or sulfur.

Estimates of production, and particularly of requirements, of both pyrites aad sulfur aro subjectide enrgin of error irasraich as tho two products ore competitive in their principal usos. The relativeof soch uhloh are consunod fron year to year aro Influenced by mny oconccdc and other factors, Ibreover, data are not sufficiently coaplete to pemlt accurate ostinatos of consumption of those two Items by the respective allies. There ore little data as to the quantities of sulfuric acid produced In Europe fron snoltcr gasos of non-ferrous sulfide ores, although largeare so produood In England, France, Belgium, and tho Netherlands. At

prooent,orld basis, pyritos provides losshalf tho supply of sulfur aooountod for by native sulfur.

The world's largest exporter of pyritos io Spain, vhloh ordinarily auppllei) nost of tho United Kin/don's requiranonta, as well as part of the reoulrecionts of the other non-produoing allies. Portugal. Italy, and Cyprus have supplied ouch of the continental allies1 recniironanto, Xbrway and Streden liavo not only helped to fill Gernoay's deficit but also shipped sono quantltieo to tho uoYJt. Although noot of tho pyritesof the Uoatom Euro peon allies cone from oouroos which nay bo oonnldared normally dependable, n'ne stocks of sulfur in tho United States eon be counted upon for soj* nontlis should those sourooo of pyritos bo curtailed. The stretofde lnporvanoG of both pyritoe and sulfur arises fron the fact that bothcree of sulfur for the nonufaoture of sulfuric acid, and less inner tan tly .'or the rxnufaoturo of sulfite palp.

TOP SEORET

ujftgic AcW,

mntU tone

Percent

x-equirorjents

on foreign oourooe }J

2/

1/ Other then tho eight deolcnated alliee thenselvos.

2/ ery email net exportable surplus for allied regions taken oollecttvely.

S-A9 it ia eetlnatod that tho eight designated clliot willetrle tone of eulfuric acid, an acount roughly equivalent to their total do noetic production. Sulfurio ooid does not enter notably intotrade. Tho industrial nations produce enough for thoir ownnenta plus smll quantities for export to non-producing notions. Perandongg qn fawfar, flPHfOegt

Those allies produce noat of their sulfuric acid fron inportad sulfur and pyrites and obtain tho balance ao aof non-ferrouo netal aneltero. Prance, Canada, and Australia have oubetontlal indigenous auppliea of pyrites, but aro mostly dopondent on Inporta of pyrites and sulfur.

Stratogioolly, Eulfuric acid is eaoentlal for tho produotion of noat exploolveo (being nixed with nitric aold for tho nitrating operations),

Allied Soocrmio

inleansing) of iron and steel, patrol ova refining, manufacture of rayoa, superpboepoatoa, and rany oheaicals of direct and Indirect cdli-tory applioation. In tho event of uur the neoessary quantities of sulfuric acid would boroa the onmifcoture of fertilizers to exploslvoo0 Adequate fortilisero for nointeining crop yields, hovovor, would be vital g

Sulfuric acid does not lend itself to otookpllinc been tee of the necessity of building etorage

TOP /ECUET

Alliedc Wr^Bttv ftMnfrrM

lis triecontent) of

roquirenento Produotion

Depondenco on foreign sources 1/

) 2/

j_/ Other than the eight designated allien thanaelvoo.

2/ Shovs snail not exportable surplus for allied regions taken collectively.

firedrtotioftn

Production of soluble phosphatoo (superphosphates)by the eightallies ie ootiratodo trio tonsontent)6 percent) In exoeas of their roqulrerjento. and tho Netherlands, each of uhlch Is on an orport basis, shipprincipally to deficit European countries and dependencies. Stitos supplies tho Canadian ond ecoe of the Austral ionbeen scne shlpnantfl of aupcrphosphotes fronJR, vhlch has huge phoophate ore rosoreeo but insufficient pro v

Allied toonoalo

trio Tone (KgO Contont)

Percentage of total

reonireconts

on foreign doutcoo 1/

i/ Other than tho oicht dealcrated nil leg tbeoselvoo.

frgsittqtVftt.

stirnto of potaeh roquirononta for tho olflht doolgriatod allieso trie tona (KjOona ororoont of vhioli lc tho ootirjvted production of these oountrlee, thane el voo. fiBPenfonce on fyrotnn ponrceB,,

Tbe deficit in the nil led group ic supplied principally by Spain, although tho Tk-ltlsh Zono of Germuy, and tho USSR and Palostino furnish csnll quintitios. The only other producing countries are theo too, which io little noro than self-cufficiont, Poland, which has not exported potash to Ueetcra Europe since the war, and the Soviet and Anorloon Zones of Geraonyo Exports fron the Soviet Zone havoprincipally to the USSR) the Anerloan Zone lo on on import basis. Canada plans to exploit recently discovered potash depoolta.

Aa ilth other fertilizer mtorielo, the stmtoglo value of potaeh is ite role in increasing crop yields u Certain potash compounds are inportant in direct and indirect nilitary

There ia no cvidenco of stockpiling by any of the eight allien.

TOP' SECRET

lie trio tone (II WTygfl)

Total

rroduotion

Dependence on foreign sources

Other thent designated allloe thenoelvoo. fTvdu.QtioD,,_

In tho fioealhe eight designated allies are expected toetrie tons of contained nitrogen for fertilisers, thus5 percent of their total requlrenonto.

Although the united Klngdoa, Dele/ion, and Canada ore net exportoro of nitrogen, tho other allies variously inport oubotnatinl quantities not only iron these three countries bat also froa Chile, tho United States, andooser extent fron liorvay. Tho United States, however, iset inport baolo.

Uo nitrogen coaoc fron the depondenolofl except Canada whosef course, io Included ln Uio above totals, and none fron the Ecstern doe, Gerriany (allornerlyorld* ii lnrgeot exportor of nitrogim, is nowubstantial Inport bos la. Bo other countries ore sources of nitro-gon to tho eicht allioo.

Allied Lconerdc

worldholo, and Europe in particular, io extronely ahort of rdtroEon end will continue to be bo for several Tears until repairs to var-deneged plants, increased supplies to ooal, and new facilities in nooountries relieve the shortage.

Inosnueh as nitrogen, in the fern of rdtric acid, is assentialEonufQoture of iiost explosives, oupplieo ordinarily coneuaod inoanverted largely to mnufaoture of explosives in thowar. Adequate fertilizer nitrogen for Increasing crop yields,

TOP SECRET TOP/SECRET

There lo no evidence that nitrogen fertilisers ore boing stockpiled.

fate w,

Content)

Percentage of total

roqulrononto

Dependence on foreign sourooo 2/

ther than tho eight designated allies tborjsolvoo.

otlnntod requirenonts of the eight cesiEuotod allien will

otriell butpercent of vltlch or-

one uill hove to bo Inportod.

Tho invertedhoto rock cones principally fron French north Africa and tho United Stated; tho Pacifio Islands, however, largely supply Australia and Hsu Zealand, cad hritish West Africa is tho chief source of supply for the Union of South Airier. ^ Spanish ibrooco ond Spain aro snail producers of phosphate rock, and ft:eden ond Chile of apatitehosphateut ordinarily those oountries do not export to the allies.,

Fhoephato rock is the row raterlal for producing superphosphatewhich ore strategically inportant in Eolntalnlng crop yields, andource of phoephorous for certain Munitions.

TOP

There lo no ovidonce of stockpiling of phosphate rook by the do eigne tod ellloo*

Allied Econanic

Total requiroEanta Pr eduction

Dependence en foreign sources i/

/

Percent* go

Qf total

1/ Other then the eight designated allies tbeomelves.

2/ portable surplus for alliedxon collectively,

Prqlyct}9P,

The estimated roqulromenta of the eight designated allies for eynthetlo rubber0 long tons. The only production of synthetic rubber ty tola group io In Canada which la sxpooted to0 tons,6 percent more than the requirements of the group.

Synthetic rubber is not produced cocnercially In Europe except In the Soviet 2one of Gernany and In the OSSR. Output of the Soviet Zone indoes not go to Postern European countriesj production In tho western Zones stopped

DgMIaler.ce 9P. feraJflP gPUTCes,

TOP

Takennit tao designated allied oountries would bo more than self-sufficient la synthetic rubber. In the event of curtailment of supplies of natural rubber because of political instability in Uelays, however, the demand for synthetic rubber would increase. In the United Stetos recent legislation requiresong tons of synthetic rubber capacity bo kept la standby

Allied tcocoolo

or operating coiidition and oaken mandatory Uie consumption of one-third of this quantity lr. the transportation field. Aaone of capacity could bo cede availableear.

Tho strategic importance of oynthetio rubber roata mainly on its useubstitute for natural rubber ln tho event the flon of supplies of tha latter ie Interrupted. For setae purposes, however, synthetic rubber is superior to tho natural product, as for example, in oil-reals tan t, usee and ln Inner tubes. In the nunufacture of tires fron syntheticadl jroportion of natural rubber Is still desirable, especially for truck tiresj technical edvences, however, are expecteduperior product entirely of synthetic rubber.

Th<TO is no avidonce of stockpiling of synthotio rubber by any of tho deslgwted allies.

i1

U Lai EtoaaJ RaMmr

ulrenonto

on forolgn ooarcoH

then the eight deolgnated allien theaselvoa*Prochictl-jnfl.

ho roqulrareata of naturol rubber by the eight designated all too aro eetinatedong tone (exclusive of wo^ilronents of synthoti: rubber) estimated0 long tone). Although thoeeproduce no naturalheir dopondenclaa produoef the world output.

Derjoadon-ft onp^ona^

Beoauoo of Corrainlat-inotlcated dieturbanoos in tblaya, which produoos about half of tho world's natural rubber, the supply of rubber fron that region nay decline. Indonesia accounts forourth of world output) political Instability in that region, however, renders uncertain aflow of rubber from tho area In tho event of war. Lose Icportant but undepondublo aouroos of natural rubber are Sioxi, Dume, and Indo-China,onbined, produce leas thanercent of the world totol0 Should the flow of natural rubber to the designated countries be interrupted, tho large oyn-thetio rubber capacity of the United States and Canada would contribute oub-

Allied Bcononio

atontlally to mooting tholr rubber requlreaonto, Some additional natural

rubber lould bo available fron Ceylon and Africa; Bolivian and Drezilion produotlon, uhloh le nore expensive, co-Id be increueed. Total supplies of natural rubberA9 are expected to be ali/htly lo oxoeeo of demand, exclusive of stockpile purahaoefl.

The USSR has greatly laoreoBed Ito purohasea of <irudo rubber,having0 tone In ifelaya thin year, oaipared0 tons The Sovieto have aloo codo Inquiries for rubber in Indonesia end Slon.

Stocks of nature! rubber In the hands of tho eight lealgnated allies ore currently ootlmted to boong tons, ei nival ant toontho supply at noroal rates of concunption. In viewlie lengthy transit front producing to oonaunlng countries, thlt roaervo io no sore then vo ild be ccopected In nomol ocoaoxclcl operations, an! thus Indicates no unuoiEl stoolrplllng of tlio oozrrxllty. The United Slates stockpilinghouevor,one; tho rapidf this reserve would create seoouhotliortago of natural rubber.

Allied

ftotal

Total

Dependence on foreign sources2/

1/ Expressed aa roundsood equivalent.

2/ Other than the eight designated allies tbeoaelvoa,

3j Not exportable eurplus for allied regions token collectively

The> total requdreoonto of foreet products for the eight allied oountriea token coUactivelya estlnatedhousand cubic motors loxpreaood ao roundsood oqulvalont). Production during the sataa period Is ee tic* ted athousand cubic re tors, thuset exportable eurplus froo tbe combined areas of'housand cubic ootere.

Canada alone accounts for betweenndercent of tho totaland for nore thenercent of treexports of foreet products of tha coiblned oroas. The antirotoet exportable surplus from tbe eight countries lo baaed on the assumption that the surpluses of Canada will be at the disposal of tho seven other allied countries. Thle aoaumptlon la acewrhat unrealistic alnco itrastiche pattern of Canadian foreign trade;7 apprcodmtclyercont of the exports

Allied bdcnccdo

of Torest products free Canada vera sold to tho United States. In vie* of its dollar shortage, it Is improbable that Canada would readily relinquish or even reduce substantially this reedy source of foreign exchange.

r, fprvlgp oowvfflu,

Although thereet exportable surplus of total forest products In the combined arose, there are doflolte of some items, particularly softwood lumber and various wood pulp products. Important sources of forest products, outside tho sight countrios theoselvos, Include Sweden, tiorway, the United States, end Finland and Csechoslovelcla in the eastern Bloc; relatively small quantities ore obtained from dopondont overerritories. Supplies froa tho Eastern Bloc end iron 3oandlacvla could not be depended upon In tine of mar.

Ia vlow of general uarld shortages, there Is virtually no stockpiling of forest products la the eight-country group. Surplusas produced or Imported oinco tho ond of World Yfar II have toon used to fill accumulated deficits.

g

SECRET

Lconomic

fl3 HrtPr ?ru^a

of Total

Dependence on foreign sources2/

104

X/ Other than the eight designated allies themsolvoo.

7j Shoes small net exportable surplus for allied regions takencall actively.

Estimated productionrucks for the eight countries9 is based on an expectedoraont increase over that Ccmblned production In the eight countries nay thus be abouteroent of that In tho UnitJd States,, Estimated minimum requlrenenta for the yeareaving an exportable surplus for tbe cocblned areas

p taspim

In tha noma! course of trade the United States la the only lip orupplier, Ir; orts froa tbe united States are estimated0 units as ooinparod mlth allied exports to outside areas0 units. The trucks exported for the cost part have special features and could not servo in on emergency to repluoe those Imported froa the United States.

i

TOP SECRET

1

SEC

Allied Ecnnrrrlc

q) invton

total

requirements

on foreign sources 1/

Other than tho eight designated allies themaalvee.

Production of traotora in the eight allied countriesb expected to

sillnits, resultingot dependence on foreign sources0 units. Combined produotion of the eight countrieo la aboutercent of8 produotion In the United States,

PqBWolqnco op foreign, muma*

Tbe United States is the only laportsnt foreign supplier. Estimated Imports fron the United States for the0 unite, anile allied exports to neutral countries and to depondencles sill00 units respectively,et defiolt0 units. Certain of tho larger track-laying typeu of tractors now obtained froa the United States ere not being produced by the allied countries.

Stockpiles are virtually non-existent.

TOP^ECRET

Allied Sccnooic

ccount has boon taken of possible transfer of aqulpnent from one country to another. Likewise no acoount hae teon taken of the aalo or purchaiio of equipment by the various nations.

A;nry weapons, vehicles and oqulpoent enployad by the sight countries aro In the caln ofi;; lesser quantities produced In the United States and Canada as wall as acne of indigenous production in tho allied countries are aleo in use.

TOPJBECRET

Allied Sconofido

. (a)p^-

Tho animated production of merchant tonnage of the dealgnated Allied Nations fcr the fiscal9.

2. i. t) Gjilryjri^.

Under present aircinotancco end conditions, the designated Allied intions will produce no eubrrrinea during tho fiscal yearnited Kingdom end Corrom^th.

Appropriations provide for the construction ofnite, uhioh will not bo operational but experimental, ead it Is not expected toot those will bo coupleted Subaarine construction program, representing reoldue of World ucr II oonotruction oonpleted in

Australia, !eu Zealand, Coneda, and South Afrioo do not Uijia oulnarinee, ohd thoro are no Indiootiono that thoy intend to. Franco and Benelux.

Mo now conetruotion contemplated Ono unit5 conploto la not sxpeoted to ccaplete

Belgium and Luxembourg do not build oubrnrinoo. Nether lands la concerned with refitting autocrines now in their poococolon, but no not' construction oontemplated,

(u) th-aniue.

9 expected uranium production and requirements of the eight designated allied oountriea la information which la covered by the Atomic Energy Aot6 and cannot be reported by CIA without special permission of tha Atonic Energy Coaalaalon. It is suggested, therefore, that this request be referred to them for their judgment on relttane of the raqueatod information.

. Trcnepgrt tkUtWJBm.

' The ccahinod :ierohcnt fleet cf the designated Allied rations is estimated as0 Grooa Registeredf world tonnage. In Septemberthe cone notions, Tho probloo excludes tho US floot, whl'oh slightly exceeds tho above corddaed fleet. It also oxcludoo consideration of additional uorld tonnoco which could probably be chartered by tho Allied Ilatlons. Tcldnc into consideration tho tonnage now controlled by tho US ond otherctions, plus tonnage which uould probably bo available under charter or operate Indirectly to the benefit of the Allied war offort, tho conolusion appears justified that tho Western Po- we in9 will oontrol cone that nore tonnago then theontrolled at tho ond of Iforld Iter

In goncral, tho land transportation system of tho declf.no tod Allied Nations tdll bo carrying in9 nearly as nuch tmfflo oe they were boforo tlio outbroafc of World Iter II. On tho other hand tho ooedition of eoulpncnt, while superior to that of Soviot-controlled systems, will not ho as pood as it wasnd roacrvo capabilities ore lower*esult, tho crpcbilitlos of those eyatcras for added wartime coonitnonto will be somewhat loso9 than they uoro before World tiir n0

ConoluBlona. ofSl^^flcano?.

beta ahoving the degrees of eelf-euf flolency for the eight designated, allies, teJcen collectively, are eoaevhat unreal letlo; if not Interpreted vith cantion, they night he serious lr alei eading. The arena of the elfiht respective countrloe are not contiguous, nor do their economies readily blendohesive whole. Although, collectively, tbe eight countries oar he nearly self-sufficientiven caxnodity, their strategic position nay he quite otherwise vhsn one analyses their ordinary end traditional channels of trade.

In tbe ordinary course of world camerce, even though these

eight oountrloi constitute market* of Bourcci of supply for givenrequently they do not constitute one another's usual markets and aouroea for each products. Canadairon ore, for exasple, Is not usually shipped to her "sevenut to tho United States. olnilarly, the eight countries are potentially about aelf-sufflolent ln nitrogenous fertUlssra; but lnaernoh ae sore of then aaetocsurlly expertn-allied countries, othsrs must depend heavily on "outdlie8 sources of supply. Thus, only by eubetenflal, snd at tines costly, reorientation of established trade channels nay the fall self -oaf flolenoy Indicated be attained.

The following tabulation presents estlnates of the extent to

idilch the eight designated allies, taken collectively, depend on foreign aouroea for oertala Itees.

Ii X

Dependence of the designated allied countries on foreign sources for supplies of designated commodities, year ending

f requirements)

Chief foreign eouroes of supply

rubber Sulfur

Phosphate rock

Petroleum Tin

Pyritos Copper Bauxite Pats and Oils

Sugar Potash Tractors Zinc

Coarse grains

Ueat

Lead

Iron ore

Coal

Electricity Bread grains

Pig iron and ferro-alloys Steel (ingot8 and oaatlnga) aluminum Sulfuric acid Sitrogocous fertllitera Soluble pheaphatea Synthotio rubber Forest products actor trucks

100

99

122

.

26

21

19

15

14

13

12

10

oi/

EestS/ United States

French Horth Africa, United State* and Pacific lalands aUddls East, Caribbean region Malaya^ Netherlands East Indies

northern Rhodesia, Belgian Congo British Guiana, Cold Coast Phllip-iines, Afrloa, United Stater and Argentina Cuba Spain

United States

Africa, Mexico, snd Peru

United States, Argentina

Argentina

Afrloa

Sweden, Algeria, Spain

United States, Ruhr, and Poland

dependence on tbe res pec tire colonies, etca eubotantlal extant, synthetic rubber free Canada and the United States

could ba substituted for the natural product. In addition, Ceylon, andaerloan ocuntrioo, and Africa produce arcai1 quantities of natural rubber.For strategic uses, natural sulfur from tbe United States can be substituted

for pyrites.

RET

//Indicates ret exportable but plus for allied regions takenensiderabie dependence on foreign aouroea for raw nateriola, ace text.

Allied aCOBOBds

Wltareorientation of their established patterns of trade, the el^ht oountrloe could hs self-eufflolent in breed grains, steel capacity, aluminum, sulphuric sold, nitrogenous fertilisers, soluble phosphates, synthetic rubber, motor tracks and nost forest products. v Instance a, the eight all lee areubetantlal export baale.

At the other extreme, the eight countries would have vital

deflclenoles ia their supplies of certain lteno. It is apparent that tin aad natural rubber fron tha lar last aad petroleum from the Caribbean region and the Kiddle East Involve critical supply situations not only because of the strategic nature of the eosmiodities themselves, bat also becanao of the extras* deficiency of Indigenous allied protection, the leak of adequate alternate sources, the inherent difficulties of wartime transportation and polltloal oncertaintlea la fas producing areas.

Tho

Ths character of foreign dependence say be aa Important as the extent of the deficiency Itself. Fortunately for nany Items,sources of supply would aot be inned lately dosed la the event of war. The Importance of the various areas fron which such supplies may be obtained are Indicated below.

would bo able to furnish tho allied couatrloa

their satire requlremente of solfur aad cover their deficiencies of ooal aad coarse grains aad could by control of the Caribbean probably contribute to the allied petroleum requirements. In addition, United States supplies of phosphate rock aad fate and oils would supplement.other foreign eouroee to satisfy allied deficiencies.

Africa, woaldtha most Important alaelo foreign eoaroo of phosphate rook. Copper, tine, and load. In addition. It could supplement other foreign aouroeaupplier of bauxite, fata and olla, and Iron ore.

The For Be,at la isqwrtant ae the tuppller ofof tba alliedof both tin and natural rubber and alsoource of fate and oils and phosphate rook.

ld bo ablel*fy allied deflalenolee of sugar and noat.

mportantuppller of pyrites, potaah, Iron ore and

sine.

Sweden, la ordinarily tho allied countries' cost laportaat single foreign euppller of Iron ore.

Ibe gtfMi fcsli usually supplies virtually all of tho allied deflalesoy (oci) of petrolsun.

The Allied Hatlone will snjoy9 an eleaont of itroteglo strength ln their ability to organise transport operation* br air. This long-range nobility, Mhlah cannot be matched by tbe USSB, la baaed In part on tbe availability of world-wide air baae*. It would be of particular significance In gaining advantage through rapid initial aovea at the outset of hostilities. Tbe fcregoing conclusion* are true without regard to tba dominant position of thea sir transport, and would applyar greater degree if the resources of the US were taken Into consideration.

Iron tha point of view of surface transportation, theretratogie weakness la the AUlsd position, due to the di*per*ion of it* component areas, which require* Intercontinental transportationulnerable sea lanea,

mtm

X Contingentwaaxneaa rests In the Allied tanker position. While tba world tanker fleet, exclusive of Soviet-controlled reeaela. Is larger than it was at the end of World Var XI, losses of najor oil-producing or refining arena night require changea in tho distribution of oil which ooulaleerlously tax the capacity of the tanker fleet presently available to tbe Allies.

The surf ace transportation posltlone of the Soviet-Satellitestbe allied Sat iocs, aa viewed along the iron curtain across Iferope,be balanced, strategically In favor of the Allies. Importantareas are close at hand end are connected by highlyfacilities, with Many alternate routes. The USSR, on the othernot natch the nearby industrial retourcea of tbe Allies, endon sparser llnoe of supply to thia area. Thus tbe rosouroee forof the rail systems thamselves are oloo auch moretbe Allies than tbey would be to tba Sastern

conotektim.

Original document.

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