CURRENT INTELLIGENCE BULLETIN - 1952/06/10

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02064591
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 8
• Document Creation Date: May 24, 2019
• Document Release Date: May 30, 2019
• Publication Date: June 10, 1952

Approved for Release: 2019/05/08 CO2064591
N-wv TOP
SEC INFORMATION
10 June 1952
Copy No."
CURRENT INTELLIGENCE BULLETIN
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
TOPS
SEC NFORMATION
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SUMMARY
FAR EAST
1. Japan informally requests American "political" loan (page 3),
2. Little sentiment for Rhee in Korean provinces (page 3).
3. Economic depression in China reported (page 4),
4, Chiang Kai-shek plans increased control over military forces
(page 5).
5. French report increased Kuomintang activities in Southeast
Asia (page 5),
SOUTH ASIA
6. Comment on Ceylonese rubber shipments to Orbit (page 6),
WESTERN EUROPE
7. West Germans want increase in armored strength of border
police (page 7),
8. Comment on reaction to insulation of East Germany (page 8),
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FAR EAST
I. Japan informally requests American "political" loan:
The Japanese Government has approached
Ambassador Murphy informally to request
his support of a 100 to 200 million dollar
line of credit by the United States.
Finance Minister Ikeda, while reiterating
Japan's need for fresh capital, told the ambassador that it is poli-
tically necessary for the Yoshida government to have this support
from the United States prior to the general elections expected in
October. He stated that the amount of the loan was not as important
as the mark of confidence which it would constitute in the present
regime in Japan.
Comment: Yoshida's government expects
to be attacked vigorously during the election campaign on aspects of
Its relations with the United States, particularly the Administrative
Agreement and the China trade policy. It undoubtedly believes that
a practical demonstration of US-Japanese economic cooperation is
essential to counter this criticism. Direct American aid to Japan
ceased in June 1951.
2. Little sentiment for Rhee in Korean provinces:
American officials, reporting on political
developments from South Korean provincial
centers, generally confirm that Rhee has
little genuine popular support in his campaign
against the Assembly. They add that petitions and demonstrations
are attributable primarily to oppressive tactics by the official and
quasi-official organs subordinate to the President.
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Comment: Rhee has publicly proclaimed
that his over-all campaign against the National Assembly reflects the
"will of the people" Only recently the "Communist plot" theme was
introduced to justify his dictatorial actions of late May and early June.
3. Economic depression in China reported:
Eye-witness accounts from several recent
arrivals in Hong Kong give a picture of eco-
nomic depression on mainland China which
contradicts Communist claims that the
economy has recovered from the effects of
the anti-bourgeois campaign.
A source from Tientsin reports that eco-
nomic deterioration there is "indescribable." Half the personnel
In government trade organs, he asserts, have been purged, and the
remainder are fearful of assuming responsibility.
Another report from a former resident of
a town in East China states that business there has been at a standstill
for weeks and that the number of beggars is greater now than in
Nationalist times.
Comment: Economic initiative among pri-
vate businessmen and offraTiira�government economic organizations
has been paralyzed by Peiping's campaign against the bourgeoisie.
Peiping's current propaganda, acknowledging the "temporary diffi-
culties now encountered in production and business," declares, how-
ever, that this campaign is "basically concluded" and states that the
regime will grant loans and orders to business enterprises. It is too
soon to assess the effectiveness of these new efforts to restore com-
mercial confidence.
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4. Chiang Kai-shek pll_ns increased control over military forces:
Kai-shek plans a reorganization of the military
forces to increase his control and that of his
elder son, Chiang Ching-kuo. During the past
sik weeks over 3,000 officers have been processed for retirement, ef-
fective in July, and hundreds of promotions are being prepared. Op-
ponents of Chiang like General Sun Li-jen will be deprived of their
trusted subordinates.
Chiang has also proposed to reorganize the
ground forces into separate area commands, responsible directly to
him rather than to the chief of the ground forces.
Comment: Although no effective opposition
to Chiang Kai-shek exists among Nationalist leaders, his elder son is
disliked by Kuomintang members.
The reorganization of the Nationalist Army,
suggested by the US Military Advisory Group, will necessitate some
officer transfers. The Generalissimo apparently plans to use this
opportunity to retire those officers who oppose him and his son.
5. French report increaseduomintang activities in Southeast Asia:
the Kuomintang' s "surge
of vitality" through Southeast Asia. It is
multiplying its propagandists and intelli-
gence agents, and attempting to regain control of Chinese schools,
unions, and businesses.
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These activities seem to be centered in
Bangkok and Saigon. in ad,dition to the inter- 3.3(h)(2)
nal dangers they may cause, they will bring about reactions both in
Indochina and Communist China.
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Comment: Reports of Chinese Corcimunist
terrorism and experience with the extortion campaign have turned
many of the ten million Chinese in Southeast .Asia against the Peiping
regime. The Nationalists have attempted to capitalize on Communist
policy and to win back the overseas Chinese, because they are im-
portant as a source of financial support and of increased Nationalist
prestige with foreign governments.
For some time the Nationalists have tried
to obtain permission to use Indochina as a base for intelligence and
guerrilla activities against the China mainland, but the French have
consistently rejected this proposal.
SOUTH A Slit
Comment on Ceylonese rubber shipments to Orbit:
Ceylon will apparently continue to sell rubber
to the Orbit, despite the Prime Minister's announcement of 1 Stine
that the government's export policy is being reconsidered.
The Prime Minister personally favors halting
rubber shipments to China, and the government, as a result of the re-
cent parliamentary elections, is strong enough for the first time to
embargo such shipments without fear of being overthrown. Current
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Ceylonese queries regarding an American rubber contract like that
� offered them in 1951, whereby the United States guaranteed to pur-
chase a fixed amount, suggest, however, that only a quid pro quo
of this sort would produce a reversal of the present policy of selling
to all customers. Otherwise, the Ceylonese Government would
hesitate to raise the controversial embargo issue.
Unlike last year, however, the United States
no longer has either the administrative machinery or the funds im-
mediately available to purchase rubber, and this may become a major
factor delaying a Ceylonese embargo.
Meanwhile, the USSR and its Satellites are
in a position to capitalize on any anti-American feeling which may
arise in Ceylon as a result of disagreement on rubber tilicy. Soviet
propaganda is already suggesting that the USSR is in a better position
to supply South Asia with consumer goods than is the West. The
USSR has entered the Ceylonese rubber market for the first time
since 1946, and more Communist shipping is becoming available to
transport rubber to China.
WESTERN EUROPE
7. West Germans want increase in armored strength of border police:
The West German Minister of Interior,
R mbert Lehr, has asked United States
authorities to permit him to equip the
border police with a second group of 70
American-made light armored vehicles, in view of growing poli-
tical tension and "danger to the east zonal be-rerun�area."
HICOG officials note that if a strong para-
military force is permitted ts develop, the Bonn government may
not be able to reduce it after the German EDC contingents are raised.
They admit, however, that Lehr's request is justifiable because of
the signs that the Russians and German Communists are determined
to foment further trouble.
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They further point out that the Federal
Republic still has no substantial force other than the border police
to quell large-scale civil disturbances and to cope with possible East
German "police" actions along the interzonal border.
Comment: Lehr has also recently renewed
his efforts to secure approval of the cabinet and parliament for doubling
the size of the 109000-man border police.
8. Comment on reaction to insulation of East Germany:
The adoption of measures to insulate the
Soviet Zone caused a sharp rise in the flight of refugees westward
into the Federal Republic, but the flow was cut down by 8 June by
reinforcements of Soviet troop patrols and People's Police. The
daily average of 190 refugees as of 27 May had risen to 2,000 on
6 Iune. A large proportion of the refugees are men between 18 and
22 who seek to escape military service.
Unconfirmed reports state that open re-
sistance to the intensive military recruiting campaign is being en-
countered. Studentsat the Russian-sponsored Michur in Institute
reportedly refused to volunteer, and an overwhelming majority of
the administrative employees of the consumers' cooperative voiced
open opposition when called upon to approve a national army.
Popular op copsition to the anti-unification
measures of "sealing" the border and forming a national army may
make it difficult for the Communist regime to implement its plans
to isolate East Germany. The increasing flow of refugees, the
postponement of "People's Police Day," the failure formally to pro-
claim a national army, and the decline in propaganda on border
security suggest such difficulties.
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