This report comes from the Northern Department of the Foreign Office. This
department was based in London but was staffed by experts who were familiar
with events and developments in Northern Europe, especially the USSR.
At the time of the report, the USA had a new President, John F Kennedy.
He was preparing to meet Khrushchev at a summit meeting in Vienna in June.
British politicians would have consulted with Kennedy before the summit. This
report was probably part of the general background preparation for that meeting.
The satellite system means the East European states under Communist control.
East Germany's 'indeterminate status' refers to the fact that a formal treaty
with Germany had not actually been signed since the war.
Ulbricht was the Communist leader of East Germany, Gomulka was the Polish
Allied occupation rights means the rights of the French, US and UK to have
forces in Berlin. Remember that Berlin was deep inside East Germany.