Created: 11/5/1947

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central intelligence agency



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THEN SPAIN I, Strategic Importance in Stain

Because of its geographic position. Spain might become the last bastion In Europe against Communismrospective beachhead for the recovery of Western Europe, in casear In which Soviet forces expanded their control over the remainder of the Continent.

Spain occupies the land extremity of Europe nearest North Africa and covers thc approaches to the western end of the Mediterranean It is separated from France by the Pyrenees mountains, whichopographical barrier to land Invasion, and possesses good ports on the Atlantic Ocean and Mediterranean Sea. Conditions of weather and terrain In the interior are favorable for Intensive development of air trafFlc.

Thc Spanish people are almost unanimously opposed to the expansion ofThe present government is fanatically anti-Communist. Its opponents, exceptew minority groups, have also taken an anti-Communlit stand, with varying degrees of emphasis. This includes the Monarchists, the Republican Govern-mcnt-ln-Exile, thc Basque Nationalists, and thc formerly powerful Socialist and Anarchist workers' groups.

General Franco seized and maintains power by force, and has suppressed civil and political liberties His regime has not been able to solve the country's basic problems: inequitable land distribution, maldistribution of wealth, low production In agriculture and industry, and malnutrition. General domestic discontent arising from economic causes and from thc unsatisfied political aspirations of the people, plus outside pressure, might have caused the overthrow of the government, but Franco lias remained In power and is stillelatively strong position because: (a) many Spaniards fear renewal of civil war if the regime relaxes its control; (b) East-West conflict has been such as to make impossible any fully effective application of international sanctions. <c) he has been able to arouse patriotic resentment against foreign interference; (d) opposition parties within and without Spain have been too divided to be effective; and (e) police methods have succeeded in keeping opposition under control.

Thc Franco government seeks US friendship on the grounds of its conspicuous opposition to Communism. It also claims that change to any alternative government would open Spain to Communist domination, thus implying, although proffering no commitment, that Spain under Franco wouldotential ally of the US inent of conflict with the USSR.

Note: Tills paper hascoordinated with the intelligence organizations of the Departments ol State. Army. Xaty. and Air Forces

See Enclosure "a- for Butte comment.

The Western Powers continue to oppoie General Franco and his totalitarian regime. Yet they have declined to impose economic sanctions on Spain; (a) within the UN. because the Security Council did not find Franro'shreat to the peace;


and (b) outside It, because they believed that such intervention would arouseresentment among the Spanish people, and might precipitate violence and result in prolonged instabilityune when the struggle against Communist penetration in France and Italy makes It desirable that Spain should be quiescent. They also lack assuranceadical change in government could be accomplished without creating chaos or that any of the potential successor regimes so (ar known could maintain stability during the transition. The situationilemma If Spain continues to be the target of special discriminations, it will be further weakened by being deprived of aid which could relieve Its economic plight and help prevent Communist penetration. If. however, the Western Powers relax their opposition to Franco, pro-democratic peoples who recognize the antidemocratic character of the Franco state will lose confidence in the sincerity ol these governments in acclaiming democratic ideals. This action would furnish the USSR with telling propaganda material, while the growth of distrust of the democracies would increase popular receptivity to Soviet propaganda

2, kvxiopmems.

Shortudden revolt, which appearsiew of the efficiency of Franco's secret police, political chaos Is not to behe immediate future. The situation in Spain, however. Is one which, by its veiy nature, cannot remain stagnant, but accurate prediction of the time when the inevitable change will occur is impossible. However, it should be noted that the Army, which characteristically in Spain is almost moreoliticalilitary institution, is sensitive lo the real implications of public opinion It can be expected to be among the first to detect the growthoncrete political movement against Franco Ifoes, history' may be repeated and, as in the case of Primo de Rivera and Allonso XIII. the Army may withdraw its support at the critical hour, leaving Franco, like his predecessors, no choice but exile.

In the meantime, the Spanish situation under the present regime contains elements of explosivcness and the longer the repression of political thought and action continues, Die more acute these pressures may become. This implies the danger that, if unduly prolonged, the regime will lead into revolutionary violenceoderate group with some, support from both Left and Right can somehow ftnd encouragement and prepare lor leadership, Franco's "stability" will either be perpetuated through the total suffocation of progressive elements or in the end terminateew cunlest between extremists on Spanish soil.

3. The Political Situation.

7 General Franco celebraledh anniversary of his accession to power. As military dictator he controls and directsational life Stateor National Syndicalism,asic jiattern to Fascism and Nazism, has been established in the social and economic realm, administered through thearly. Under Hip new Succession Ijiw, Franco lias provided for the re-definition of Spainingdom and for the appointment, at Franco's will,egent The King may thus be symbolically representedacant Throne Franco himself may become Regent, continuing also his preseni titles of Commander-in Chief ol the Armed Forces, Chief of Stale, and Chief of the Falangehrewd, daring, and able political strategist. Franco hasalance among the divergent groups which helped his


rise to power. With tlic same skill he has met an international situation in Spain has been isolated (rom the UN because of his totalitarian regime, yet In which he has been able to capitalize on his fanatical antl-Communismeriod of rising tension between the USSK and the Western democracies.

Franco's power rests upon the support of the Army, thc Church, the Falange. and thc conservative moneyed classes, groups winch together dominate the bureaucracy, direct popular opinion, regulate all economic activity, and control the Instruments of force. By assuring internal order with strong police and army forces. Franco has kept the propertied classes reliant upon him for the protection of their interests. measures against political activity meanwhile have prevented resurgence of theparties of thc Left and Center, while Franco has maneuvered so as to split the Monarchist forces.

Thc Franco regime nevertheless has failed signally, duringears of peace since the Civil War. appreciably to eliminate the rancors and hostilities between the two opposing sides and has failed to win the confidence of thc masses. Opponents of Franco would probably outnumber his supportersubstantial degreeree election. At piesent. however, the opposition is disorganized, both because of Its own factionalism and because of thc vigilance of the police. Perhaps the most important psychological factors in Franco's retention of power are the lackoncrete political idealeader able to capture the popular imaginationeneral movement against him. and almost universal dreadew civil war

The Franco regimehort-term prospect of stability. Barring financial catastrophe, even the critical economic situation is not likely to cause Ha down/all There are, however, various long-term forces very gradually undermining the present regime stems from: (a) the failure of thc government to solve the nation's economic problems; (b) the growing realization in Spain of the inconveniences of International isolation; (c) thc resentment created among formerly pro-Francoby Franco's Law of Succession, aimed against Don Juan, and his subsequent assumption of royal prerogatives in the creationew nobility; (d) growing coolness on the part of the Vatican; (e) the progress toward rapprochement of the Lefthl opposition; and (I) the feeling In Spain that eventual change Is inevitable,onsequent tendency to seek for the best alternative to Franco.

Wlille no final understanding has been effected on thc passible future coalition of the Right and Left opposition movements, many obstacles to such ang have been overcome. Under the leadership of Right-wing Socialist Indalccioubstantial sector of the Spanish Left (as organized in exile or clandestinely in Spain through the Socialist and certain Republican parties and the formerly powerful VGT and CNT trade unionsj Is endeavoring lo join with the Don Juan monarchists andnited opposition to the regime.

Certain conditions in Spain under the Franco icglme invite Communist pene'.ra-lion. Widespread poverty, political discontent, and other factors exist which could produce confusion in the event of governmental disintegration, military rebellion, or social revolt Political repression coupled with lhe regime's failure to improve the lot of the working classes may advance rather than retard thc underground growth of Communism.

On the other hand, Spaniards tend to resent the Intrusion of Communist discipline. Distrust of the Communists is strong at present among most opposition groups. The limited acceptability of the Communist Party is shown in the progressive acts whereby it has been eluiiinaled from the Republican Governn-Exile and deprived of virtually all influence in the underground National Alliance of Democratic Forces.

Nevertheless. Communism, by offering foreign aid to the discontented, anti-Franco proletariat, is making some gains. The Spanish Government claims that lheParty in SpainW) members. This figure is probably greatlyBut because the Party has outside backing, discipline, and undebatable directivesource beyond the reach of Die Spanish security police, it is the best prepared to step in and take advantageudden confused situation, should the Franco regime be followed by revolt or temporary political chaos.

4. Tint Economic Situation.

Spain possesses principal deposits of mercury, copper, and tungsten, and is an accessible sourcearge producer of iron pyrites. Low-grade coal is mined in an inadequate quantity for domestic requirements. Uranium has been found, but so far as at present known It exists in very limited quantity. Spain's internal economy, prostrated by the Civil War, was partially restored by the temporary prosperity the nation enjoyedon-belligerent trader during World War II, but is nowosition of precarious uncertainty owing lo high Government costs, low national production, inflation, decline in foreign trade, and critical lack of foreign exchange.

Predominantly an agricultural and stock-raising country, Spain6 was self-sustaining, although the standard of living was low. Since then the means of food production have been reduced by the effects of the Civil War and World War II. while the population has increased by more than two millions. (The present population isith an annual increase. Emigration is negligible) To maintain food supplies at the current average00 calories per day for non self-suppliers, Spain must import- ol its foodstuffs. Fish must be imported, as must wheat and meat. Better farming methods and capital outlay are needed to correct this situation. In the long run the problem of land distribution will also be fundamental to Spanish economic and political stability. No effective reform can be expected under the present regime, since Franco's main support comes from theclasses.


One of the most important needs of the -Spanish economy at present is replacement of capital equipment for heavy industry, railroads, electric power, and agriculture. National requirements In these lines have been estimatedillion dollars The capacity of railway and truck transportation lias declinedoint which hasIndustrial production and retarded all internal traffic and distributionand expansion of capital investments in private industry have been retarded throughout the Franco regime by uncertainty on the part of management and Investors as to the political and economic future. Intervention by the State in private industry has restrained the spirit of initiative and has absorbed existing resources which might have been used to expand production

Spanish national production has beer, reduced in volume to less than5 level and there hasecrease in man-hour productivity Industrial labor hampered by lack ol tools and equipment, while undernourishmentecognized caus* of reduced output Deliberate slowdown is not absent, however, as political discontent is strong among industrial workers since the Government has (ailed to bring effective wages into line with the increase In the cost of living. Official Spanish figures give the cost-of-living index as of7omparedhile the index of real income had dropped by IMS5 comparedG. There has been no substantial in real wages since then.

In addition to the decline in national production, the cost of government hasteadily0 The initial7illion pesetas. The tola] budget showed estimated expenses3 million pesetas and expected revenue4 million pesetas The public debt has doubled in the post-civil war period6 the circulating medium has

, of the national budget goes to thc armed forces and the police,arge part of the allocations for pub:ic works, government supervision ot national production, and labor organUation is spent wastefully on an over-expandedstructure and in ways which tend to hamper or discourage new capital investment while fostering speculation and promoting, rather than curbing, black-market activities

Foreign trade, essential lo maintain Spain's industrial life and internal transport system, has also fallen upon bad times As thc war demand for Spanish products has dropped off, balniice-of-paymciits difficulties have become acute Exchange falls short of covering the desired volume of dollar areas imports, including petroleum products, cotton, machinery and electrical equipment. The Iberian Peninsula has no oil resources beyond limited amounts of low-grade shale Coal also must be imported At the same time the Governments inability to devaluate the peseta, pegged a:5 to the dollar but selling in Tangier. lor example, atr higher, keeps the price; of some Spanish export products loo high to compete In the world market

The Franco Governmentitylng hard to meet tne foreign exchange and ptocje-lion crises- Since Spain is ineligible for loansinternational agencies, alterr.pts have beer, made by various Spani'li agents to obtain loans fiom puvate Amer.ran sources, but ihesc have been unsucccsslul because Spainad economic risk Tride agreements with the UK. Argentina, and Sweden have alleviated the situationertain extent

These are stop-gap expedients which cannot cure the long-term deterioration which already has made such Inroads upon the national economy Nevertheless, tiiey may be enough to avert eronomic coilapw Franco will probably be able to maintain tiic stability of his government through thc wjntei. hoping for better crops next year In the meantime he probably will have lo rail on the people for rem-aod sacrifices

5 Military Situation

The stiength of the Spanish Ainu li estimateden under aims,emi-military Civil Guard0 and an Ai med Police0 This forcere than sufficient to maintain the internal serurlly of the country and lo guard the frontier The Army is hinderedack of modern equipment, training i$ seriously

curtailed by the acute shortage of gasoline. The Spanish munitions industry produces sufficient small arms for the present size of the Army, hut production of arliliery and heavy weapons is completely inadequate

The Navy0 officers and mm.arines Adequate modern nava! equipment is lacking and shortage ol fuel restricts naval maneuvers

The Air Forcetrength of0 men. of0 are service personnel, such as guards,hile0 arc considered effective air foice personnel Airciaft, ail obsolete types, numberf which onlyre operational Scarcity of gasoline lias cut the training program, and there is almost no flying in active units except on state or emergency occasions Conditions of weather and terrain are favorable for intensive development of air traffic

Spam could not repel attackodern army, trained and equipped with the newest arms Capabilities of the Spanish aimed forces will not improve in the near future, unless Spain obtains weapons, aircraft, nnd equipment from foreirjn sources

oreign force occupy Spam or use the areaase, it could draw upon the region lor food supplies only by imposing great hardship on the civilian population Because of the character and Individualism of the people, their attitude wnuid have considerable effect on the operations of an invading or an occupying foreign force If hostile. Spaniards are capable of sustaining an attitude of costly obstructionism At the present tune, most Spaniards arc friendly toward Ihe US and unfriendly toward the USSR However, as the proletarian opposition to the Franco regime loses hope of aid from the democracies, sonic sectors of it lend lo turn for leadership to the Spanish Communist Party. The consequence* could be unfavorable lo lhe US in lhe event of an Invasion of Spain by forces serving the USSR



change is noi toexpected in Spain in the immediateueces: ful revolt by any group now opposed to Franco is out of the question. Bad as economi conditions are. they do not foreshadow an economic collapse in Spam or. live collapse of the Franco regime so long as conditions in the rest o: Europe do not In prove markedly faster than in an isolatpd Spain. Any succession movement that coul take over power while avoiding tiic rcne*al of civil war which the Spaniards cread wou! have lo be bioadly based, possess the support of the Army, and enjoy som? pik understanding with major Western powers. Despite recent progress in prchminar negotiations between the Don Juan monarchists and moderate leftists led by Priet-these conditions are not now fulfilled and seem unlikely to be so for manyome. The Spanish Communlila-too weak to revolt, unable lo counl on economi chaos, and excluded from lhe only promising successionno immfdftt threat to the stability of the Franco regime

)ver the sii. or an arniot

Barring hisdeath or upheaval in the rest of Europe. Francos regime is CtptM of continuing essentially unchanged for years The longer his repression ofction is maintained, the deeper the political discouragement and apathy of nv. Spaniards is likely to become, but also the e. tenter resentment and desperate impalieni will the thwarted |xilitically-minded minorities develop. The Communistsxploiting both ihis apathy and this impatience. The longer, therefore, that the crisilo Franco is delayed, the more necessary for the avoidance of chao ilest between political extremists becomes the emergenceodcrai nment prepared loower vacuum without delay.

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