DAILY SUMMARY - 1947/12

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 02643633
• Document Creation Date: October 8, 2018

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1 Oct 19147 (#497) - 31 Doc 1967 (#572)
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GENERAL
81 BEG 1947
1. GR-eecayre.tests �C:o I'l!,goslavit--US Embassy Athens reports that the
-Or'etc.4. Governineut kfag prese./ted a note to the Yugoslav Legation pro-
testing the dissemination of news by the Belgrade press and radio
designed to instigate revolt in Greece. The note also states that Greek
authorities have evidence that the rebel radio is established on Yugoslav
territory., The note concludes that: (a) there can no longer be any doubt
of
the support given by the Yugoslav Government to the rebellion of
the bandit Maritos and his following"; and (b) the Yugoslav attitude is
contrary to the UN Charter and constitutes open intervention in the
internal affairs of Greece.
Eari Yuyoslav recomnition o Markos hinted�The UK Ambassador
in Belgrade, has fnfonne0. US Ambassador Cannon that he gained from
the "general atmosphere" of a coriversat.on with the Yugoslav Deputy
Fere.igi Minister the impression that "the Yugoslav Government is
contemplating early recognition .of the Markos group.":'
3: Arabs turn to UK at allp_OWSCa of US--US Charge Dorsz reports from
Baghdad that, in view of US and Soviet support of the partition of
Palestine, the Arabs feel that the UK is the only big power to whom
they can turn for assistance, lie adds that the USSR has never inspired
friendship and that the US now "has let the Arab world down" to such
an extent that the Eragis consider the US nfriendly.
EUROPE
4. GERMANY: Continued Soviet pressure* hpLiiitical opposition�US
,
Political Adviser Murphy reports that in a further move to oust the
leadership of the Christian Democratic Union (CDU) in the Soviet
Zone, the Soviet Military Administration has simultaneously: (a) recog-
ized a new party eneentive; an,d (b) named new editors and a new licensee
or the CDU Berlin paper and authorized an increase in the paper's etr-
e lation from 50,000425,000. Murphy adds that the recently ousted
party officials, Kaiser and Lemmer, still consider themselves legitimate
012
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CDU heads and have been conferring with CDU officials from the
Soviet and Western Zones; these officials have not yet reached a
decision regarding dissolution of the party in the Soviet Zone.
E,mected Soviet efforts to oust West from Berlin--US Am-
bassador Smith shares Ambassador Murphy s misgivings over the
reported UK suggestion that "some reparations" be given the USSR
to keep Soviet officials from creating intolerable conditions in Berlin
for the Western Powers (see Daily Summary for 26 December, item 5).
Smith considers that any such attempt to appease the USSR would dis-
regard "what we have learned from experience in dealing with the
USSR." Smith also anticipates that Soviet officials in Berlin will
undertake a "noisy campaign" and make conditions as unpleasant
as possible to "scare" the Western Powers into evacuating the city
(see CIA Special Evaluation No. 23, 22 December). Smith believes,
however, that the Kremlin will not push matters to the breaking
point on any European frontlat least until the USSR has further con-
solidated and organized the Satellite economies and military estab-
lishments.
5. FRANCE: France desires improved relations with Franco Spain--
An official of the French Foreign Office has told US Ambassador
Caffery that, in view of the Cominform Declaration and the recent
activity of French Communists, France wishes to improve its rela-
tions with Franco Spain. As a step in this direction,the French hope
to begin official conversations with the Spanish in January looking
to the gradual reopening of the French-Spanish frontier and the eventual
resumption of normal commercial relations between the two countries.
Caffery's informant observed that because of open Communist efforts
to take over western Europe, France must strengthen its relations
with both Spain and Portugal, as well as its other neighbors.
6. USSR: No evidence of serious food shorta es in Moscow--US Embassy
Moscow reports that, although certain bottlenecks have retarded dis-
tribution, there is no evidence of serious food shortages in Moscow.
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Although the people fear that the present availability of goods in state
Itores may not continue, there has been no increase in the state-con-
.irokled prices established at the time of the recent monetary decree.
NEAR EAST-AFRICA
7. TURKEY: Arab requests for arms refused--Foreign Minister Sadak
has informed US Ambassador Wilson that requests for arms made by
representatives of Arab states have been refused by the Turkish Gov-
ernment. Sadak informed the Arabs that: (a) such supply would place
the Turks in an "impossible" position with regard to the US, which is
now supplying arms to Turkey and which supported the UN decision to
partition Palestine; and (b) such aid would be a violation of Turkey's
obligations as a member of the UN.
8. PALESTINE:�-rritish to- interce_pt PAN YORK and PAN CRESCENT--
US Consul Macy reports from Istanbul that the British have stationed
a frigate and two destroyers at the exit of the Dardanelles (with a
cruiser available for boarding operations) to intercept the Zionist
immigrant ships PAN YORK and PAN CRESCENT. (According to a
IA source, the two ships are due off the Palestine coast on I or 2
January.)
THE AMERICAS
9. PARAGUAY: komilge_gmAium on of extraordinaz by Mor_kiko--
US Embassy Asuncion has been informed by the Argentine Ambassador
that Finance Minister Gonzalez, the Government's candidate for the
presidency, has so little support that he could only hold office as a
"Presidential puppet." The Embassy's source added that a group led
by Foreign Minister Vasconsellos is now seeking a formula whereby
Morinigo can assume extraordinary powers until he can call for new
elections and hold a new convention to elect his successor.
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GENERA Is
3 0 DEC 1947
571
1. UKop_l_aglAtess concernime "free" Greek governmen�A UK Foreign
Office official has informed US Embassy London that the UK proposes
to. take, the following steps concerning the Markos regime: (a) instruct
UK representatives in Belgrade and Sofia to inform the Yugoslav and
Bulgarian Governments that "by no stretch of International law can
the Markos group be considered to have the rights even of a belligerent,
and therefore it does not have the status of a government"; and (b) in-
struct the UK Ambassador in Athens to urge the Greek Government
not to suppress indiscriminately non-Communist leftist parties but
to endeavor to persuade leftist splinters" to condemn the Markos
group. The official said that while Satellite recognition of the Markoe
regime would create a "tricky" situation vis-a-vis the UN, he thought
that "the Greek Government could ask the US, or the UK to send troops
to Greece to assist it in reeist2ng aggression." The official also ex-
pressed the opinion that :l'ecc.)E,nion of the Markos regime might take
Place in stages, and that A lban:a2 .sti;.1 technically at war with Greece,
esig,ht,be the first to accord recognition "as a test."
.2. Reported Satellite intentio.as in Greece--The US Military Attache in
Belgrade believes that the announcement of the "free" Greek govern-
ment strongly implies imminent recognition by the Satellites. The MA
considers that the USSR and its Satellites will 'do everything to estab-
lish a Communist Government in Greece short of bringing on World
War III." fie expects the Satellites successively: (a) to step up con-
siderably shipments of materiel and supplies; (b) to assign military
missions to the "free" government, "thereby adopting a 'Truman
doctrine' for Markos"; and (c) to supply more volunteers and perhaps
international brigades.
EUROPE,
3. GREECE: ' Strong, Greek arnom2ffort necessary for relief of Ko:aitsa.--
A ccording to US Embassy Athens, the Greek Commanding Officer of
the jannina area believes that the current guerrilla operation against
Konitsa is the work of Soviet and Yugoslav experts rather than of
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amateurs because it is so well planned and executed. The
toiltant US Military Attaches believe that Konitsa can be relieved,
tioy point out that: (a) the operation will require additional re-
151)!crcements and a strong effort by the Greek Army; and (b) if the
cyperation is successful, the resulting concentration of the Greek
iTJ-zny around' Konitsa will leave jannina "badly exposed." The Greek
Corhmanding Officer also declared that Greek Army casualties have
extremely heavy and that guerrilla ammunition is apparently
tualimited.
TRIESTE: -Yugpik.avs press for early appointment of Governor--US
A.rryJnssador Dunn reports that the Yugoslays are exerting pressure
the Italians for early agreement on a candidate for Governor of the
-Free Territory of Trieste. Dunn believes that this pressure reflects .
7..772.]Icslaviaas desire to get US and UK troops out of Trieste and has a
very definite bearing on Yugoslav and Soviet intentions toward Italy.
adds that the UK Ambassador has hinted to De Gasperi that the
iTic "would not be at all sorry" if Italo-Yugoslav discussions regard-
Lig
a Governor came to nothing.
5. ITALY: Anti-Communist moderates considering_ split with CGIL--The
uS Military Attache in Rome reports that the Christian Workers Union
Is planning a congress in January to discuss the present policy of the
1talisn General Confederation of Workers (COIL) and the establishment
oZ a movement similar to the new Force Ouvriere in France. The Attache
believes that such action may lead to the secession of all moderate labor
groups from the CGIL, which would then be composed only of leftist
extremists.
(CIA Comment: The withdrawal of anti-Communist elements
from the COIL would deprive the Confederation of only about 18% of its
present membership. As the secessionists would be primarily white
collar workers, their defection would not, In the immediate future,
reduce the CGIL's capability for instigating a paralyzing general strike.
On the other hand, a new anti-Communist labor movement could serve
as a nucleus for a far larger anti-Communist labor group which in
time could neutralize the capabilities of the Communist-dominated CGIL.)
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6. .UK: US statement welcoming UK-USSR_pact st_Igw_led�The UK
Foreign Office has told US Embassy London that the public does not
sufficiently recognize that the recently signed UK-USSR agreement
fits in with the purposes of the European recovery program. Accord-
ing to the Foreign Office, the agreement has been interpreted in some
quarters as a UK move to reorient its trade from the US to the USSR.
.A Foreign Office official believes that a formal US statement welcom-
ing the agreement in connection with the recovery program would be
most helpful in Europe.
NEAR EAST-AFRICA
7. TRANSJORDAN: Government's resignation may impair Arab solidarity--
US Consul General Macatee reports from Jerusalem that TransJordan s
Prime Minister, Samir Rifat, has resigned and King Abdullah has re-
quested former-Premie Tewfic Pasha Abul Huda to form a new govern-
ment. The resignation marks the culmination of a feud between Abdullah
and Samir
(CIA Comment: This development may threaten Arab solidarity
�krirv' as Samir Rifai, unlike King Abdullah, has unequivocally supported the
A rab League's Palestine policy. The new Prime Minister will be more
amenable to the policies and personal wishes of Abdullah.)
8. INDIA: British fear Indian attack on Pakistan�According to US Em-
bassy London, Undersecretary Patrick of the UK Commonwealth Rela-
tions office regards the recently-expired Indian note to Pakistan con-
cerning Kashmir (see Daily Summary of 26 December, item 1) as an
ultimatum and fears that it will be followed by an Indian attack on
Pakistan within the next few days and by a complaint to the Security
Council.( Although Patrick believes some concession by Pakistan might
relieve the tension over what India regards as interference in its
integral territory, he points out that Pakistan has asserted its inability
to control the Moslem tribesmen who have invaded Kashmir in a spirit
of holy war. He also believes that the Sikhs might get out of control
and thus force an inter-dominion struggle. Patrick adds that although
the immediate withdrawal of British officers from the armies of both
dominions following outbreak of hostilities would "cripple" Pakistan's
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Army, the larger Indian Army is at present overextended so that Pakistan
would not be immediately overwhelmed. He stated his belief that Af-
ghanistan would probably make an alliance with Pakistan and that the
USSR also would probably take Pakistan's side. According to Patrick,
the 3ritish position has not yet been formulated.
(CIA Comment; Sikh ambition to regain lost territOry in the
West Punjab may prove a critical factor in the present situation. A large
concentration of Sikhs near the India-Pakistan boundary suggests that the
Sikhs may have determined to precipitate a conflict. In the event of hos-
tilities, Moslem tribal support might enable Pakistan to gain an initial
success over the overextended Indian Army despite the withdrawal of
British officers. CIA doubts that the USSR would align itself with
Pakistan, because India is more receptive to Communist doctrine and
would have greater long-range value as an ally.)
FAR EAST
9. PHILIPPINES: Immediate 3Rorisinffseported cancelled�The US Command-
ins! General in the Philippines reports that the probability of an immediate
uprising has been greatly lessened by apparent action of Communist
leaders in cancelling what promised to be an initial outbreak on Christmas
eve. Through a well-informed and reliable source, the Commanding
General has learned of recent conferences between three Communist
leaders and the President of the Philippine Senate during which: (a) the
Communists were informed that the Philippine Government was aware
of the plans for revolution; and (b) the participants discussed possible
Communist proposals to the Philippine Government regarding a compro-
mise settlement of the Central Luzon situation. Followirw these meetings,
it was reliably reported that plans for the uprising were suspended. The
Commanding General warns, however, that the dissidents do not appear
to have abandoned their original intentions, and that future action is a
(CIA Comment: CIA believes that conditions favorable to revolu-
tion exist in the Philippines, and that sporadic outbreaks and rumors of
revolt will continue.)
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10. CHINA:tsts.15.E.Sallatiyjui--Us Consul General Mukden
reports that the current Communist offensive in Manchuria apparently
is designed to hasten the fall of Changchun and Kirin and is not aimed
primarily at the capture of Mukden. He considers, however, that in-
ternal revolt, desertions, or fifth column activity may cause the fall
of Mukden within weeks or months. He expects that if the Nationalists
and Communists are able to negotiate an evacuation of the city, the
transfer of authority may be orderly, otherwise he believes it likely
that the turnover will be "wild and bloody."
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c a
ta�
EUROPE
1. SPAIN: Embassy US poitcy toward Spain--With reference
to the State Departments recent review of US policy toward Spain,
US Charge Culbertson observes that: (a) Franco will not substantially
modify his regime so long as the US and other powers insist on his
personal elimination; and (b) if these powers seek a cooperative solu-
tion with Franco, "pressure would be so great that Franco would
liberalize and in time be eased out of power." Culbertson therefore
suggests that the US convince all elements including Franco of "the
practicability 4r:!f cooperative solution and long-term democratic
results" and implement present US policy by a willingness to con-
sider now "governmental assistance coordinated with private credits."
(CIA Comment: CIA believes it most unlikely that Franco will
or can substantially modify and "liberalize" his regime.)
2. ITALY: Lpa_mitLof critical US aras_sj&Txtskci--US Ambassador
Dunn reports that an existing critical shortage of funds and foreign
exchange is likely to reduce seriously the amount of military equip-
ment and ammunition for which the Italian Government can pay.
Italian military officials have suggested to Dunn that the US "deposit"
in Italy such arms as might be needed by the Government to check
any Communist revolutionary attempt and thus permit the Italian
armed forces and police to pay for only those items actually used.
Dunn suggests instead that: (a) critical military items be
"deposited" in US-occupied Sones in Europe and made ready for
rapid shipment to Italy; and (b) some consideration be given to air
delivery of this emergency military aid. Re observes that "the out-
come of the early days of the fighting would be all-important."
3. GREECE: Friction within KIM reported--US Embassy Athens re-
ports that there issupporting evidence" for current stories
in the Athens press alleging recent friction within the KEE (Greek
Communist Party). The press accounts suggest that the establish-
ment of the Markos regime marks a victory for the "internationalists"
OT-f
TJ C.I.A. HAS HO OBJECTION
TO TH" D7CLA:.SIFICATION OF
THIS DOCUMENT.
N0.4 APR 1978 01-4�S'
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FIT
ovor the "nationalists's 30112... The_ sto:ries allege that the "ir.-7;er
nationalists" have agree z1 to the incorporation of Greek Macedo:11:-.
Into the Yugoslav Feder:l Republic as a condition for the autholizA-
tion z-p.nd recognition of the "free" Greek government by the Ball=
Comm-mist states.
7
SWEDEN: Government to reauest US financial aid-US A mbass'e.dor
Matthews reports that the Swedish Government has agreed in principle
to authorize its financial adviser to the Foreign Office (now in Wash-
ington) to ask for US finaacial assistance (see Daily Summary of
22 December, item 8).
According to Matthews US refusal to grant a loan; (a) would
be interpretel as US disapproval of Sweden's postwar economic and/or
political policies; and (b) would result in "keen disappointment Euld
some resentment," which might prove salutary because a deterioration
of Swedish economic conditions might demonstrate that Sweden's future
is more closely linked to the West than certain Swedish officials have
been prepared to admit. Matthews does not think that such deteriora-
tion would result in a serious increase in Communist strength in the
coultry. In Matthews' opinion, a US refusal might also remove Swedish
complacency toward the European recovery program.
NEAR EAST-A FRICA
5. TURKEY; "Free" Greek regime regarded at of resistance�US �
Ambassador Wilson reports that Foreign_Minister Sadak has expressed
concern over the formation of the "free" Greek government, which
Sadak regards as an example of the familiar Soviet technique of probing
for weakness. The Foreign Minister expressed his belief that ff the
USSR concludes that the Satellites can recegnize and support the
Markos regime without great risk, it will "move in rapidly" and the
situation will then become extremely grave. Sadak added that, in his
opinion, only a prompt declaration of US interest in maintaining the
freedom and independence of Greece can prevent the development of
such a dangerous situation.
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FR EAST
6. FIC: French fall can en en is--US Consul Hanoi reports that from
all appearances the act:re, miliary operations in north T.ndochina
o I about the middle of December. Neutral observers do not believe
tha'z majority of the Viet Minh troops were destroyed or even engaged,
French have claimed. They also doubt the French claims that
th3 greater part of the Viet Minh supplies have been destroyed or that
French casualties have been as low as reported. The Consul expects
Frc.-nch losses to continue as a result of increased Viet Minh action
for owing the onset or bad weather.
THE AMERICAS
7. NICARAGUA: Dominican recomition accorded--The US Charge in
Managua reports that the Dominican Government has recognized the
Roman y Reyes regime.
(CIA Comment: Other atin American Republics may now be
expected to follow the Dominic4n Government's lead in formally recog-
nizing the present Nicaraguan regime.)
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EUROPE
1. FRANCE: Bidault also requests military,talks with US--Foreign,
Minister Bidault has reiterated to US Ambassador Caller" Armed
Forces Minister Tietgen's recently exeressed desire for military
conversations between France and the US (see Daily Summary oi
22 December, item 4). Bidault likewise observed that France
"by definitely aligning itself with the "West" and "by arresting and
exnelling Soviet agitators" has exposed _itself to possible Soviet
renrisals. He added that the Government is nlanning a further
,urge of "dissident elements" from the French Air Ministry, in-
cluding Chief of the Air Staff Major General Mallet.
2. GR:RECE: "F7ee"jtravern- :lent reported in Serbia--Greek Charge
Pappas has told US L'ile,rgQ Bruins in. Prague that he has "reliable
information" that l'ae "free" Creek govc.trnment is located in
f3erbla. Bruins considers Pappas "usually well informed."
Greek morale lowered by announcement of Markos re ime--
US Charge Rankin reports from Athens that the announcement o
the "free' Greek government has made a "surprisingly 'strong
psychological impact" on the Greek man in the street. Rankin adds
.that the Proclamation cast a pall of gloom over Christmas festivi-
ties and caused some specu2ation as. to the prospeCts of (a) the
bombing of Athens; (b) uprising and sabotage in the capital; and
(c) the abandonment of Greece by the US. There is little confidence,
Rankin adds; that the US will take effective counter-measures in
the event that the "free" regime is recognized by the Satellites.
Prime Minister stresses need for arm--Rankin also reports
, that Prime Minister Sonhoulis has emphatically reiterated his plea
for an increased sunnly of US automatic weapons and artillery which,
the Prime Minister says, "must be in the hands of the Greek Army
before April if catastrophe is to be averted."
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GENERAL
6 DEC 1U4/
568
1.! ineita ma take KaslyEkttk�m_to Security Council--US Charge'
Donovan reports from -New Delhi that the Government of India
delivered a note to the Government of Pakistan requesting th
Pakistan deny to the Kashmir invaders "all access to and .use,o .
Pakistan territory for operation against Kashmir, all Military an,
other supplies, and all. other kinds of aid Which might tend to pro-
long the present strugFle." The note adds that, failing a satis-
factory response, the 'GOT will be compelled to take such action,
with due regard to its rights and obligations as a member of the UN,
as it may consider necessary to protect its own interests, and those
of the people of jarnmu and Kashmir." The Secretary General of
the Indian Foreign Office told Donovan that: (a) he sees little hope
of agreement between India and Pakistan on the Kashmir question;
(b) unless a favorable reply to the Indian note is received before
the end of December, the GO I will present the matter to the Security
Council; and (c) the GOI will not permit adjudication of the issue by
the UK or any other member of the British Commonwealth,,
2. Embassy Athens c6mments on Greek Embassy
Athens reports that TliT-sTFT�ni leant features of the announcement of
the "free Greek government are: (a) failure to include any non-
Communists in the cabinet; (b) failure to identify the seat of the gov-
ernment; (c) emphasis on special friendship with the USSR and the
Balkan neighbors; (d) the reference to full equality of minorities
within Greece; and (e) the "onfinous reference" to the organization
of a "democratic air force.," The Embassy adds that the long-term
significance of the announcement depends on whether the government
is recognized by one or more of the Satellites and/or the USSR and
the guerrillas receive substantially increased aid. The Embassy
expresses the opinion that "developments along these lines" will .
occur gradually, their lereclIse natnre and rhythm depending on the
Soviet estimate (yr probable US and world reaction,
�
3. Yugoslav reactle toward 'free Greek government--Yugosiav Deputy
Foreign Minister baole: has professed to US Ambassador Cannon in
Belgrade that he tie n$ Ile' know whether Yugoslav recognition of the
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"free" Greek government will be "early or deferred." Bebler
supposed, however, that "it would be loOcal to break with Athens
eventually depending on circumstances. Bebler described the
Greek situation as a "regular civil war" on which neighbors are
entitled to take a position. Bebler was clearly impressed when
Cannon pointed out that if the Markos regime were recognized by
nearby states, the world at large would consider Yugoslavia "in
the fotbefront with large responsibilities for the consequences.,"
EUROPE
4. BELGIUM: Spaak critical of democratic leadership--US Charge
Millard reports that Premier Spaak has expressed to him a pessi-
mistic view of: (a) the lack of enerrtic leadership among the
democracies as compared with the `positive activity and vigorous
Plans of the USSR"; (b) the apparent lack of planning which preceded
the CFM; and (c) the probability that France and other European
countries would be unwilling to make the sacrifices necessalty for
domestic recovery without firm pressure from the US.
5. UK: Re orted views on Western position in Berlin--According to
US Embassy London, a high Foreign Office official believes that
"some reparations, however limited" should be given the USSR
to prevent Soviet officials at least for a time from creating in-
tolerable conditions for the US the UK, and France in Berlin. The
same official believes the Western Powers should carefully review
their position in Berlin, and if any doubt exists that their position
can be mi intain.ed they should withdraw and make a public state-
ment blaP7ing the USSR. Otherwise, the official believes, an in-
tolerable s=_:aration would be created, if the Western Powers announced
they would remain and then were compelled to withdraw. The same
official has also advised the Embassy that he believes a central
provisional government should be established immediately for the
Western Zones at Frankfurt and its provisional nature widely pub-
licized.
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7-13wever, Ambassador Murphy reports from Berlinthat the
r.bove views are contrary to his understanding of Foreign Minister
Ile7In's attitude on the establishment of a central government.
7:Aurohy disagrees with the view that reparations should be paid to
the 733311 to obtain respect for the four-power agreement authoriz-
ing tin powers to occupy sectors of Berlin.
6, ITALY: No US objections on Soviet trade talks--The Department
of State has authorizedanZ-Traa or Dunn to inform the Italian
Government that the US sees no reason why Italy should not enter
Into trade negotiations with the USSR as currently planned (see
Daily Summary of 18 December, item 2).
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GENERAL �
0%Ui W14.1
567
ArabAltuilagt,Eirms for ossible f hti in Palestine --US
_
Memini er Dama.scus reports that
Syria has made arrangements with Czethoslovakia to
uyarms and ammunition to the value of $2,085,000. US Military
Attache Baghdad reports that Iraq has concluded an agreement
, ,
with the UK for the purchase of arms and equipment to be de-
livered by 30 April 1948. The MA adds that the new equipment
(already arriving) is designed to strengthen Iraqi units for possible
fighting in Palestine.
EUROPE
FRANCE: RPF tactics disfust some De Gaullists--US Ambassador
Caffery observes that De Gaulle's Needs in the Assembly have
_ demonstrated, by their request for new elections and their antagonism
to the Government's economic program, that they are bent upon
making trouble for the Schuman Government (see Daily Summary of
22 December, item 4), raffery notes with satisfaction that "some
supporters of De Gaulle are becoming disgusted with these tactics."
NEAR EAST-AFRICA
"3.EGYnT: Tuck. slitetzepts US take steato r.e..eittip_r_e.Aatte--US
inbassador Tuck reports that US prestige in Egypt is at an all-
time low. Tuck states that Egyptian feeling will continue to be
governed by the US Altitude, official and otherwise, toward the
imelementation of the partition of Palestine. He considers that
Egyptian resentment may develop into an attitude of active hostility
toward the US. Tuck expresses the opinion that the US should care-
fully consider every possible step which could restore its lost
prestige. He suggests that some concrete gesture should be made,
such as an offer of direct assistance ire Egypt's present financial
and economic difficulties.
;
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4. IRAN: Hakim' facing difficulties in formation of cabinet--US Ambas-
sador Allen in Tehran reports that Prime Minister-designate Hakim'
is experiencing considerable difficulty in forming a cabinet and that
the Shah is anparently pleased. According to Allen, the Shah seems
to believe that a continuation of the government crisis will create a
public demand that he take a leading role in resolving the situation.
Allen adds that renorts that former Prime Minister Qavam has
becn arrested have "no basis" and that Qavam Will probably be
allowed to depart for Switzerland in a few days.
FAR EAST
5. CHINA: National Government again stresses ammunition shorta
The Chinese Vice-Minister of Foreign Affairs has stresse � to U
Ambassador Stuart the "dire need" of the Chinese armed forces
for US 50-caliber ammunition, stating that China has only two mil-
lion rounds remaining. Stuart comments that while there is no way
of ascertaining with accuracy the amount of ammunition possessed
by the Chinese Nationalist armies, the deteriorating military situa-
tion indicates that such a shortage is likely.
6. INDONESIA: pis official's imattssion of situation--US Embassy
The Hague reports the opinion of Hugh Grey, recently appointed head
of the SEA Division of the UK's Foreign Office, that nothing tangible
can be expected from the Security Council's Good Offices Committee
(GOC). Grey believes that the US and the UK have a common interest
In a speedy solution of the Indonesian problem. He considers that:
(a) the major nroblem is how to make the Dutch realize that it is to
their own best interest to come to terms with the Indonesian Republic;
and (b) that the Dutch do not realize the "catalytic action of world
war in sneeding up political evolution in the Far East dependent
areas and the consequent, inevitable Nationalist triumph."
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GENERAL
Comiriform" for Latin America renorted under discussion--US
Ambassador Caffery in Perris has been told by a trustworthy source
that: (a)the "CmninternAgent" Vitorio Codovilla, a major figure
in the Argentine Communist Party, attended the recent UNESCO
meetings in Mexico City and discussed with its Communist. partici-
pants the establishment, of a "Latin American tominforrn' 'land (b)
the question was left open because of indecision as to whetherthe
new organization should be strictly secret or "more or less open"
like that in Relgra.de,
(CIA Comment: CIA recently directed attention to the fact
that the creation of additional regional Communist groupings,
particularly in Latin America, is a possibility; see CIA Weekly Summa-
ry of 19 December, nage 1.)
23 DEC 1941
566
.EUROPE �
2. USSR: Controls on missions and correspondents Increased.-US Embassy
Moscow interprets the-lieT-gi measurFlir indications
that the Kremlin has made a basic decision to make living conditions
as unbearable and expensive as possible for foreign missions and
correspondents in Moscow, The apparent aim is to force many of
them to withdraw and thereby limit to the bare minimum the number
of eyes and ears which can report on actual conditions inside the USSR.
The Embassy feels that we should make concrete plans to re-
taliate immediately by placing restrictions upon both Soviet and Satel-
lite missions in the US similar to those placed on US representatives
In Eastern Europe,
New Deputy Chairman of the Council of Ministers a ointed--
The US Millitary ttache in Moscow reports t at 1. A. MalysnevVis
appointed Deputy Chairman of the Council of Ministers on 20 December.
(CIA Comment: The Council of Ministers now has 12 Deputy
Chairmen; of these only two, including Malyshev, are not members of
the Politburo. Malyshev is a member of the Central Committee of the
Communist Party and, as a ColonqrGeneral, he was Commissar of the
�
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THE C.I.A. HAS NO OBJECTION
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THIS DOCUMENT.
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tank industry until October 1945. Since then, he has been Minister
of Transport Machine construction. CIA believes that the purpose
Malyshev's appointment to one of the highest government posi-
tions is primarily to enable him to exercise more direct authority
and to concentrate his attention on the greatest single weakness in
Soviet economy--the shortage and disrepair of railroad transport
equipment, particularly locomotives and rolling stock.)
3, FRANCE: More publicity for US aid recommended--US Ambassador
Caffery expresses his convicticiiiWhe French people are in-
adequately informed of the present scope of US aid to France. He
considers that this aid should receive increased publicity, prefer-
ably through the French Government and French news channels.
Caffery believes that French officials will cooperate provided they
are "continuously stimulated." He inquires as to the possibility of
obtaining additional funds to carry out this publicity program on an
adequate scale.
Bidault exnectu...Freements soon on German coke--Caffery
also reports that Bidault s report to the Foreign Affairs Committee
of the National Assembly stressed the need of an "international
regime" in the Ruhr and of "concrete certainties regarding the ex-
port of German coal and coke." Bidault added that he expected "very
soon" to conclude new agreements guaranteeing certain tonnages of
German coke for the French steel industry,.
4.CZECHOSLOVAKIA: Communisje ir_uar --US
Charge Bruins in Prague reports current indications that beginning in
January 1948 the Communists will make every effort to achieve their
objectives in Czechoslovakia by constitutional rather than extralegal
means, He cites three reasons which militate against extralegal
Communist action: (a) because of their non-revolutionary character,
the Czechoslovak people would probably react unfavorably to un-
constitutional methods; (b) as Czechoslovakia is the only peripheral
country with a highly developed industry, unorthodox Communist
election methods would impair the country's ability to obtain necessary
raw materials from the West and thereby jeopardize the export of
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(.12echoslovak products vital to the USSR; and (c) President Bones,
who is extremely nopular and highly respected, would strongly re-
ist measures.
NEAR EAST-AFRICA
5. MAN: Premier-desknate considered weak--US Ambassador Allen
teports that Ibrahim Hakimi� the Iranian Prime Minister designate,
is regarded as honest and patriotic but as having little force or
courage in emergencies. Allen adds that as the USSR considers
liakimi a "British stooge," he will be under attack by Moscow. Allen
believes that Hakim/. will be fortunate to Last two months, if he takes
FAR EAST
6, CHINA: Possible peace negotiations with Communists--US Ambas-
sador Stuart has learned-from General Chang Chih-ch-ung that Chiang
*%��,' Kai-shek on 20 December, following a conversation in which General
Chang stressed the futility of continuing the civil war, gave the latter
permission to attempt to renew negotiations with the Chinese Commu-
nists. Stuart reports that Chang Chih- chung believes the Chinese
Communists are ready to respond to such a proposal. Stuart adds
that Chang has already approached the Soviet Embassy in an effort
to enlist Soviet assistance in persuading the Chinese Communists to
give up fighting and resume negotiations. In Stuart's view, however,
It is inconceivable that the Chinese COmmunists will accept peace
negotiations at a time when they are winning on all sides, except
I.Jossinly as a means oi ciikiewraging and tu.1.1.tkoering US aid to ilit
National Government.
(CIA Comment: The Chinese Communists will probably not
enter into negotiations with the present National Government on
anything but their own terms unless: (a) their present advantageous
military position is seriously undercut by effectively-implemented
US aid to the Nationalist armies; and (b) any prospect of substantial
Soviet assistance to the Communists is removed.)
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A-Mr.:WM.4 leaders concerned ab(714i PP. aid coRciitiCluf --
US Ambassador Stuart reports that the Generalissimo, the Prime
"Itiinister, and the Foreign Minister are concerned about criticism
from Chinese reactionaries of the Government's recent request
or US aid,. As an indication of official concern, Stuart cites a
memorandum, received from the Generalissimo's secretary, con-
taining conditions for the extension of US $1�500,0007conomic aid
over a four-year period and for loans to enable China to biy
surplus and other military material from the US Government
,testimated at US $loot(oo,000 for 1948). This memorandum states
that the China program: (a) shall impone no legal obligation upon
th.2 Chinese Government to employ US personnel; and (b) shall
tantain no political conditions other than these which may be
ntlpulated in an aid plan for Europe.
7, SIAM: 11.'hamirom-Ph1bul rneeting--US Military Attache Bangkok
believes that a recent meeting between Marshal Phibul and ex-
Premier Tharnrong may lead to Tharnrong's open political resur-
gence. Although Thamrong may have delivered an ultimatum to
Phibul, the MA believes it more probable that Thamrong requested
the formation of a coalition government,. The MA discounts reports
that the Siamese Navy will take direct action against the Govern-
ment but will intensify its war of nerves.
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GENERA,L,
2 DEC 1947
565
� A.;:ab yollultee)7s eppr 1..?alc.ptilq.,e--US Charge Memminger reports
from Damascus that a "sigeable band's of Arab volunteers has
entered Palestina from Syria. Memminga...r predicts that "serious
hostilities" will occur before 24 December,
2. Greece sucraests combined xnilitalty plannts to Turkey�Turkish
Foreign Minister Sadak has informed US Ambassador Wilson that
the Greek Government has made suggestions to Turkey looking to
combined military p.anning and eventual combined operations, if
future developments warrant, aachk said that while Turkcy realizes
that the fall of Greece would constitute a se-Z:1012S threat to Turkish
indeoendence, the TurPdsh Goernment had931ed to the Greeks
dtin a vague and guarded manner because of the instability of
the Greek situation and in order to avoid any action which might
seem provocative to Oth'Z' 8,
3, yunslav;anrofPssedFvdesis ra) "advc,,ntures" Trips�P --US
nbassator Cannon in BeAgrade has been informed by a Yugoslav
',..rice -minister of Foreign AS:Fairs that "yugos la-via wants no ad.�
vtures and emects,the Trieste situation to evolve along treaty
lines.," Cannon has Informed the Yugoslav Foreign Office of the
US intention to enforce the Peace Treaty -provisions on Trieste
with "complete firmness (see Daily Summary of 19 December,
item 2). He believes, however, that any further representations
to the Yugoslays at this stage would have a diminishing effect
and would "indicate nervousness on our part"
EUROPE
4, FRANCE: War..M.1.aiF.:y_r_desires US-French defense thlks --The
French Ministnr of Armed Feri.',OS had informed US Ambassador
Caffery that he is you anxious ti2t France hold informal military
discussions with the US. He added that France would be disposed
to yield to the US such privileges and strategic bases in French
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territory as the US might need. He asserted that France has now
openly declared itself against the USSR and on the side of the western
world,
The Minister commented that if it were made clear to the
French people that the US was trying to guarantee French security,
there would be no difficulty in working out measures for the control
of Germany. He expressed himself as encouraged by recent evidence
of the Government's ability to "stop" the Communists, but added that
he exnects a new outburst of trouble in the latter part of January.
RPF declares Government unrepresentative--US Embassy
Paris retorts the defeat of a proposal, endorsed by De Gaulle's
Rally of the French People (RPF ), that March 1948 be set as the
expiration date for the present National Assembly. RPF spokesmen
alleged that the Government failed to represent public opinion and
lacked a real majority in the French Assembly. The Embassy
comments that although this proposal was decisively defeated, the
RPFIs action: (a) tends to create confusion in the public mind and
hinders basic non-political reforms; (b) possibly results from RPF
apprehension that Schuman's success could make De Gaulle's return
to nower unnecessary; and (c) suggests the increasing possibility
that the Assembly may be dissolved and new elections held, if the
Government's economic program fails.
"Force Ouvriere receives international endorsement--
The Embassy has learned from a French labor leader that the Belgian
General Federation of Labor (CGT) has offered "material and moral"
support to the "Force Ouvriere" group (which recently seceded from
the French CGT), and that the "Force Ouvriere" has also received
endorsement from Dutch and Scandinavian labor groups. The Em-
bassy's informant added that the "Force Ouvriere" expected the
CIO and the AF of L to give it similar support.
French labor schism m_a_m:9_inote split in WFTU�The Em-
bassy also reports the opinion of Belgian and French trade union
leaders that the secession of one million French workers from the
Communist-controlled CGT and the decision of the British Trade
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-;:ielon Congress to support the European recovery program may soon
e:ate a split in the world rederation of Trade Unions. These leaders
,)elieve that a 11/FTU split would be facilitated if US labor organizations
gi.,.re adequate support to international industrial unions that seek to
remain indenendent of the WFTU but which, like the "Force Ouvriere,"
tce great financial difficulties.
5_ CERMANY: German reaction to CFM failure--US Ambassador Murphy
reports that a small sampling of Public opinion indicates that about
if.% of the Germans consider the USSR responsible for the failure
of the London CFM, but that only one percent blame the US for this
failure. On the basis of preliminary information, Murphy believes
that the German public is unimpressed by Soviet propaganda assertions
that the USSR is the major advocate of a central German government.
Murphy notes, however, that a number of the Germans interviewed
believed that the US is creating a state of affairs which is disadvan-
tageous to Germany.
G. AUSTRIA: USSR pressing sale of railroad equipment�US Legation
Vienna has learned from a reliable source that We-USSR is pressing
for an Austrian delegation to come to Moscow early in January to
dAseuss the possible payment by Austria of 400 million schillings
for locomotives and rolling stock which the USSR claims as war booty.
The USSR maintains that all locomotives and most of the rolling stock
in tne Soviet Zone are war booty lent to the Austrian Government.
The US Legation observes that the equipment in question has never
been recognized as captured enemy material either by the Austrians
or by the Allies.
7. GREECE: Continykg_friction in Government�US Charge Rankin
reports that, when he criffireTeTirde-memoires (expressing us con-
cern over the Greek situation; see Daily Summary of 19 December,
item 4) to Prime Minister Sophoulis and Deputy Prinie Minister
Tsaldaris, he gained "the distinct impression that relations between
Populists and Liberals have degenerated to a dangerous point"
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Sc,phoulis informed Rankin that Tsaldaris was doing everything
possible to make him resign, but he had no intention of doing so.
'Rankin adds that publication in the Greek press of the US view
on the importance of continued Populist-Liberal cooperation has
done much to alleviate public fear of an imminent change of
government.
8. SWEDEN: Soitietp_ropaganda on Germany--Sweden's Liberal Party
osposition) leader, -Ohlin has expressed to US Ambassador Matthews
the opinion that many uninformed Swedes have been taken in by the
Ic.peated Soviet propaganda line that the USSR favors, and the
Western Powers oppose, a rehabilitated, self-governing Germany.
�Min considers that the remedy for this situation is for the
Western Powers, using Soviet tactics, to state repeatedly their
own policy regarding Germany.
Ilemspt for US financial aid expected--Matthews also re-
ports that the financiallaTrisennhe gwedish Foreign Office (who
at nresent in Washington) has requested his Government's
authority to ask for some form of US financial assistance in order
to meet Sweden's financial and economic difficulties. The Swedish
Riksbank president believes that the Swedish Government will
authorize this request.
FAR EAST
9. FRENCH INDOCHINA: Bollaert-Ba4.c_c_ps_caW..0,--US Ambas-
sador Caffery in Paris has been informed in great confidence by a
member of the French Cabinet that, during the negotiations in early
December, High Commissioner Bollaert signed an agreement with
former Amiamfte Emperor Bao Dai which grants far-sweeping in-
dependence to Vietnam within the French Union but retains the
ultimate control of Vietnamese military and diplomatic affairs in
FL-ench hands. According to Caffery's informant, the French will
announce their refusal to negotiate with President Ho of the Vietnam
Republic, because they have evidence that Ho has sent a representative
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to "an Asiatic Cominform meeting?' Until popular demonstrations
for Bao Dai's return "force" the French to negotiate with him, the
F;:ench will oppose him publicly in order to eliminate the suspicion
that he is a French stooge. At that time a public agreement (based
on the recent secret accord) will be signed. Caffery's informant
admitted his own lack of enthusiasm for Bao Dai but said he prefers
Bao Dai to a Communist state under Ho Chi Minh which would "hold
unhappy implications for all Southeast Asia."
W. NEI: US deler ;ation's views on dispute�The US delegation to the
Security Councliri GoorafiaTromrnittee (GOC) believes that the
Netherlands-Republic disagreement will center around: (a) the
boundaries of the comnonent states in the United States of Indonesia
(USI); (b) the strength of renresentation of the various states in the
MI; and (c) the extent of sovereignty to be accorded the USI follow-
in; its establishment. The US delegation considers that there are
only two solutions to the Indonesian dispute: the establishment of
the UST in accordance with the present Dutch plan under Netherlands
authority; or the recognition of the sovereignty of the Republic,
either alone or as the dominant element in the USIO The US dele-
gation admits the risks involved in both alternatives but recommends
that the US work for one of the solutions because "there can be no
compromise in questions of ultimate sovereignty."
THE AMERICAS
11. PANAMA: Rejj2nof defense-sites foreseen�President
Jimenez has informed the US Embassy Panama that he believes the
National Assembly will reject the defense-sites agreement with the
US "in toto."
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DO Ete 1947
564
GENERAL
1. Cominform sees French and Italian struggles in.first phase--US
Embassy Belgrade reports that the third issue of the Cominform
Bureau Journal, published on 17 December, describes the present
French and Italian disorders as only the first phase in the struggle.
� against "US domination". The journal states that in France, new
and heavy battles lie ahead of the working people"while in Italy
� recent Communist activities demonstrated that the "democratic"
camp is capable of creating favorable conditions for Communist
victory.
2. US sees no objection to Soak's proposed Moscow visit-- .The State
Department, in response to Premier Spaales inquiry (see Daily �
Summary of 18 December, item 5), has informed US Embassy
Brussels that it has no obction to Spaak's proposed visit to the
USSR.. The Department believes: that the USSR propably would
seek to capitalize on such a visit so �soon after the CFM,and it
doubts that "Spaak or anyone else can do anything useful at this
time about the Russian problem' except through a determined policy
of patient firness.''
EUROPE
3. USSR: Kavanovich returns from Ukraine--US Charge Durbrow.
Moscow reports that, according to the local press' r-raganovich has
been renamed Deputy Chairman of the Council of lilinisters. Durbrm
comments that, if true, 11.':\laganovich's return is an indication that the
4Uficulties in the Ukraine, reported in 1947, have apparently been
solved to the satisfaction of Soviet leaders.
(Kaganovich, one of the earliest members a, the Politburo, is
a notorious economic and Party "trouble-shooter". He was relieved
of Ms position as Deputy Chairman of the Council of Ministers and
Minister of Construction Materais in the spring of 1947 and sent to
the Ukraine where problems concerning political loyalty and agri-
cultural production had apparently arisen.)
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4, NORWAY: Western orientation held essential�Norwegian Foreign
Minister Lange has told US Ambassador Bay that: (a) the London
etcadlock will help crystallize Norwegian policy in favor of the West,
"where Norway belongs"; (b) while Norway must cultivate friendly
relations with USSR as the two are neighbors, its basic policy must
be pro-western; (c) Norway may vote against the US in individual
Instances, but it will always side with the US "in matters of im-
portant princiPle.'1
5.
FAR EAST
SIAM: Qpositton to present regime--According to US Embassy,
Dan.gkok, ex-Premier Thamrong has informed the UK Naval Attache
t!,!!A he IF prepared to oust by force the present Siamese regime by
Tanua.ry, if he is able to gain the support of the Siamese Navy.
Ti Navy sup rt is not forthcoming)Thamrong plans to bide his time
and await a uerious split which he expects to develop within the Army.
that the Siamese Navy is planning to
utage a coup, If Phibul and the Army try to control the elections
in late January.
(CIA Comment: The Siamese Navy is interested primarily
preventing the Army from gaining complete control of the governe
meat. not in reinstituting Thamrong as Premier. The Navy has
consistently supported civilian elements in the government and)in
continuation of this policy, will tend to oppose overt Army control.)
6. INDONESIA: Viewpoints of Netherlands and Republic--Graham, the
head of the US delegation to the Security Councirs Good Offices
Committee in Indonesia, reports that the Indonesian Republic intends;
(a) to obtain from a third party a guarantee of its authority in Java,
Sumatra and Madura; and (b) to achieve control of the archipelago
either through a United States of Indonesia (USI) or by asserting
dominance over the other islands. Graham believes that the Republic
at this time only hopes to obtain the guarantee� According to Graham,
the Netherlands' intention is to eliminate the Republic as a dis-
ruptive factor in Indonesia by confining it to Central Java and by
creating a federal USI which would include the rest of the Republican
territories. Dutch officials indicate that further police action, already
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rumored as impending, may be required to neutralize the Republic
an a directing center for violence in Dutch-held areas.
THE AMERICAS
7. CHILE: Arbitrationte over diplomats to USSR--
The Chilean Foreign Office has told US Ambassador Bowers that (a)
Chile has transmitted to the USSR a formal proposal that the con-
troversy over the joint return of diplomatic personnel be submitted
to international arbitration or to the International Court of Justice;
but (b) expects the proposal to be rejected and will then submit the
issue to the UN Little Assembly.
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GENERAL
563
1. Saudi Arabia asks reconsidesation_aeLaamEiteetweeset--In a note trans-
nittted,to US Minister Chgcla at Jidda, King Ibn Saud has requested
the US to reconsider its refusal to send arms ,to,Saudi Arabia, on
the ground that special US -Saudi Arabian relationships (based on:
mutual economic and strategic interestil) should exclude his country
ofrom. the US embargo on arms shipments to the NeirEp.sty, The
' King states emphatically that the arms Were requested 'only to pro-
�tect oil installations and pipelines and would never be used in Pales-
'tine.. The King adds that the establishment of the modern defense
' force he contemplates Cannot take place immediately, and he suggests
that a program of military assistance to his country be handled by a
US military training mission,
2. REE)licvregardb.e: Trieste�The Combined Chiefs of Staff have in-
formed C-eneral Airey, US-.UK Zone commander .in Trieste, that
under no �circumstances will the US and the 11K agree to any Yugo-
slav participation in the administration of the USAJK Zone andthat
any attempt on the part of the YugoSlavs to enter the US-UK Zone
should be prevented by force. The Department of State has authorized
US Embassy Belgrade, in the event of such an attempt by the Yugoslays,
to make immeeliate representations to the highest Yugoslav authorities
available.
The Department has also informed the US Delegation at the
UN of its belief that Yugoslav failure to gain control of Trieste
Will prompt the USSR to press for agreement on a candidate
for Governor of Trieste in order to gain control of the area by other
.� means after the Governor takes office. The Department has there-
fore Instructed the US Delegation to withhold approval on any can-
didate for Governor of Trieste until the "entire political-military
situation has been revieved" or at least until the Italian and Yugoslav
Governments have been consulted by the President of the Security
Council or the Secretary General of the UN.
3., USeeepemition on Spain- -'heDepartment of State has informed US Em-
bassy Madrid that the US: (a) seek's a gradual return to normal
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relations between the US and Spain; (b) favors the broadest possible
agreement among Spaniards and will encourage an orderly and peace-
ful evolution in Spain toward a free, democratic; and representative
regime; (c) considers Franco's removal is a matter for Spanish
decision but believes that his removal would improve Spain's inter-
national position; (d) hopes to convince the Army and Church elements
now supporting Franco that the US anticipates an evolution which
will not sacrifice their legitimate interests; (e) the US will co-
ordinate any positive economic assistance to Spain with Spain's
political development and employ such assistance to encourage
democratic evolution; and (f) is informing the Vatican of the US
position in the hope that the Holy See may encourage a similar
evolution in Spain.
EUROPE
4. GREECE: EgilUc alarniedgmcliscord inSgy_ex_nitnent--US Charge
Rankin reports that the Greek press and public are now "thoroughly
alarmed" by the efforts of Populists and Liberals and members of
several minor parties to embarrass the present Cabinet, through
intrigue, if not to bring about its downfall. The atmosphere of crisis
is so acute that Rankin has presented aide-memoires to Prime
Minister Sophoulis and Deputy Prime Minister Tsaldaris express-
ing concern over the situation and urging continued cooperation between
Liberals and Populists in the coalition Government.
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ti
GENERAL
Iktmaijg nu b fugm--US Charge Bruins
in Prague reports thativith the growing tension in Eastern Europe,
increasing numbers of non-Communists, mainly from Hungary,
Rumania, Bulgaria and Poland, are appearing in eastern Czechoslo-
vakia, hoping to enter the US Zone of Germany or "other points west."
Bruins comments that many of the refugees, while not US citizens,
have up relatives and their cases present "decidedly humanitarian
aspects." He recommends that a "properly co-ordinated policy"
with US military authorities in Germany be established.
18 DEC ,19.4-1
562
2. Soviet-Italian trade talks in_j_p_L'opect--US Ambassador Dunn has
learned from a high official of the Italian Foreign Office that the
Italian Embassy in Moscow may now conduct preliminary trade dis-
cussions with the USSR. Dunn's informant requested the US attitude
on trade negotiations at this time between the USSR and nations in-
cluded in the European recovery program.
EUROPE
� 3. TRIESTE: Communists fail to incite disorclers--US Political Ad-
viser Joyce reports that Communist attempts to promote a general
strike (originally forecast for 17 December; see Daily Summary of
15 December, item 3) and to incite disorders have failed because
of "general lack of popular response." Joyce also attributes the
Communist setback to the improved morale of pro-Italian groups
resulting from the firm attitude of the Allied Military Government,
but he believes that the Communists have not relaxed their anti-
AMG press campaign and will continue their attempts to stir up
internal disorders. Allied military and political authorities in
Trieste now consider, however, that the Anglo-American position
is "solid and that Slavo-Communist efforts to undermine and destroy
the integrity of the US-UK Zone Are under firm control."
���
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4. AUSTRIA:Petrrateum_shortage jaccanhial--Commanding
General Keyes, US Forces Austria, reports that the petroleum
situation in Austria is becoming critical, The Soviet oil admini-
stration, which uses its control of petroleum shipments and prices
to squeeze concessions from the Austrian Government, has reduced
the December gasoline allocation by one-third and other petroleum
products by lesser amounts. General Keyes believes that this
latest Soviet maneuver is a deliberate attempt to further economic
deterioration by compelling the Austrian Government to increase
its petroleum purchases on the world market, for which it lacks
sufficient dollar exchange.
5. BELGIUM: ..�_plak considers visit to USSR--Premier Spaak has
Indicated to US Charge Millard that he is considering a visit to
Moscow, not only "to sign an agreement for 100,000 tons of wheat,
but to discuss matters in the political sphere." Spaak expressed
the belief that the US might regard such action as untimely and
sought US views. Millard gave Spaak no direct encouragement.
Millard observes that such a visit might present an opportunity
"to look behind the present intransi'vant attitude of the Kremlin."
6. GREECE: Vilitaizzasjy_ilian morale in north Ee29M119w--
According to US Embassy Athens, Colonel Miller (US military rep-
resentative to UNSCOB) has noted "exceedingly low" morale among
civilians in northwest Greece during a week's inspection tour and
has concluded from personal observation that the Greek Army has
lost its will to fight. The Embassy reports that Colonel Miller is
pessimistic about the ability of US tactical advisers to arouse a
sufficiently aggressive spirit in the Greek Army at this late date;
he therefore is inclined to believe that more direct US or UN military
intervention will be required, if the situation is to be saved.
FAR EAST
7, PHILIPPINES: Possibility of revolt die I--USMilitary Attache
Manila discounts reports from well-placed sources which point to a
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right-wing coup d'etat led by Brigadier General Mariano N. Cas-
taneda, Chief of the Military Police Command. As to the possi-
bility of a general uprising, the MA concurs with the US Commanding
General's estimate of conditions favorable to a revolt (see Daily
Summary of 16 December, item 2), but the MA does not consider
that a revolt is likely in the near future. US Ambassador O'Neal,
moreover, believes that the reported affiliation of certain right-wing
elements with a coup d'etat is "fantastic" and reports that Roxas
is "well-informed, but unconcerned."
(CIA Comment: President Roxas' lack of concern lends
credence to the strong possibility that these rumors are part of a
calculated camnaign to obtain additional US assistance.)
THE AMERICAS
8,, DOMINICAN REPUf3LIC: ;Arms purchases_in Br=ilmZ,M
US Embassy Rio reports that, in spite of Venezuela's protests,
Brazil has decided to complete the sale of arms to Trujillo because
it has received "written assurances" from the Dominican Republic
that "the arms will be used for Idefensive purposes only."
The UK Foreign Office has told US Embassy 'London that
the Dominican Government is now negotiating for the purchase of
arms in the UK. The Foreign Office has requested US views re-
garding the sale of aircraft to Trujillo; it proposes, however, to
grant export licenses for the purchase of other types of military
and naval equipment, if Dominican representatives and UK suppliers
conclude sales agreements.
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EUROPE
1. FRANCE:SerioupjEwL,teni of CG'ngIlmes_ttes1--US Amba,ssador
Caffery reports that "many qualified observers" expect the CGT
to lose at least two-thirds of its membership in January as a re-
action to the recent Communist strikes. ,Caffery believes that
the workers are well in advance of their labor leaders in this dis-
sident movement and that even Jouha.ux may have to make this
break in the very near future.
(CIA Comment: Defections from the CGT have already
occurred and may be expected to continue. However, because
non-Communist dissident elements are in the minority in the CGT,
CIA believes that this "two-thirds" estimate is too high.)
De Gaulle antic bates severe economic breakdown �
De Gaulle's Press Officer has told US Embassy Paris that de-
spite Ce failure of the generalized strike, De Gaulle expects the
Communists to continue their efforts to cripple key industries.
According to the Press Officer, De Gaulle expects a deteriora-
tion in France's economic situation in late February and early
March resulting in a "very serious economic breakdown."
De Gaulle believes that Schuman's Government is as "ineffec-
tive and helpless" as Ramadier's, that it cannot prevent a break-
down, and that its failure to do so will cause De Gaulle's recall
to power.
2, ITALY: tcan.nunist reaction to T_JSjaollott.s.:_taten _ient--US Embassy
Rome has been reliably informed that a leading Communist has
told the Foreign Office that the Italian Communist Party resents
"most strongly" President Truman's recent statement regarding
Italy (on the occasion of the US troop withdrawal). The Communist
leader inquired specifically if Foreign Office believed that the
US meant to go to war. The Foreign Office representative replied
In the negative, but he commented that, from a Juridical stand-
point, the US statement seemed based on very solid ground. The
Communist agreed and said that his Party did not intend "to start
anything," but it rid not predict-,"what the people might do,
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particularly because they were under a reactionary government
and faced by a hard winter." The Foreign Office consequently
considers that: (a) the Italian Communists are considerably
shaken by President Truman's statement; and (b) the Comnran-
ists will hesitate to start violent action but will not have the final
decision.
3, GREECE: Imtn4ngrpt esftKish.ment of "democratic" overnment
US Ambassaii; takiiirrepiiitaroi�inaiinEiraccor
local Comintern Comintern circles, establishment of a Greek "democratic"
government under General Markos will take place in the next
� day or two so as to follow immediately the breakdown of the CFM
in London. Caffery's sources also said that: (a) the "democratic"
government will be recognized officially by Bulgaria, Yugoslavia,
� Albania, and Rumania; and (b) both military and financial aid to
"democratic Greece" will soon be greatly acdelerated and will
be made to appear spontaneous, as was the case during the Spanish
Civil War.
(CIA Comment: The guerrilla government announced in
Jure 1947 has proclaimed a constitution, conducted some elections
in "free" areas, and issued numerous decrees, but it has been by
definition a "provisional military regime." Establishment of a
� full-fledged civil government in the near future is a logical prelim-
inary to the anticipated substantial increase in Satellite aid to the
guerrilla forces.)
FAR EAST
4, CHINA: New Communist offensive in Mamhuria--US Consul General
Mukden reports that Communist forces in Manchuria are maneuver-
ing, evidently in preparation for a winter offensive. According to
the Consul General, the National Government forces: (a) have offered
ineffective initial resistance to these maneuvers; and (b) are consider-
ing the advisability of abandoning Changchun and Kirin. The Consul
General notes that despondency and demoralination are increasing
among the people in Nationalist areas.
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GENERAL
� 1. Saudi Arabia re sets direct re uests to break with US�Crown
Prince Saud has inforthal US Minister Childs. at Jidda that, in
the current Arab League meeting at Cairo, Saudi Arabia has re-
jected requests by Iraq and Transjordan that it sever relations
with the US and cancel the oil concessions, although it has backed
other Arab plans to onpose Zionism. Prince Saud said his Gov-
ernment fully appreciates the US reasons for refusing to ship
arms to the Near East but hopes that this policy will not con-
tinue indefinitely (see Daily Summary of 15 December, item 1).
FAR EAST
2. PHILIPPINES: Increasumors of revolt--The US Command-
ing General in Manila reports that: (;.�ritimors of impending rev-
olution, which have persisted since the November elections, have
Increased; and (b) Philippine Communist leaders reportedly have
organized disaffected guerrillas in 23 of the 50 provinces for a
revolt on a national scale to take place "on Christmas or New
Year's eve." The Commanding General believes that if "minority
political groups, persons denied recognition as guerrillas, the
Communist Party, and other organizations (including the Iluk-
ba.lahaps)" are adequately united and coordinated under a strong
leader and assisted by disaffection in the Military Police Command,
this opposition is capable of overthrowing the present administra-
tion. The CommandinEr; General considers that a revolt is a
"positive Possibility."
(CIA Comment: These rumors of imminent revolt may
have been inspired by sources close to the Roxas administration
In an effort to enlist US aid. Nevertheless CIA believes that:
(a) present conditions in the Philippines could lead to widespread
revolt initiated either by right-wing or left-wing disaffected
groups, and possibly to an abrupt, overthrowof the Rolms Govern-
ment, but (b) the primary limiting factor at present is the lack
of effective leadership in the Right and Left)
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GENERAL
1. lassasisissLitjualtgable, Sayailralta--The -
Department of State has instructed US Minister Childs in Jidda
to inform the Saudi Arabiali Government that while the US main-
tains the strongest friendship for Saudi Arabia, the interests of
- peace can best be served if "the US should for the time being
refrain from exporting arms and munitions to Palestine and
neighboring countries. (The Saudi Arabian Government has
been exoloring the possibility of obtaining military supplies from
the US; see Daily Summaries of 8 and 9 December, item 1.)
� 2. .trAgslArabjamg_guiting jsmalzikattarmin --US Consul Hen-
derson reports from Dhahran that King 1bn Saud has given
orders for the organization of four armies to aid the Arabs
in Palestine, and that recruiting of volunteers is being carried
out in the Dhahran area,
E U1 )PE
3. TRIESTE : StrftaiLL.Im;in on ``I Dstgambenr --US Political Ad-
viser Joyce warns that a general strike on the Milan pattern
may begin in Trieste on 17 December. the day scheduled for
Security Council discussion of the Trieste Governorship. Joyce
suggests that in the event Yugosh via indicates its intention
to enter Trieste in order to maintain order, " the Department
consider an "energetic and immediate warning to the Belgrade
Government.''
4. RUMANIA: lampachael expected tpseturn this w � els--US Le-
gation Bern reports that, according to King Michael s secretary,
the King and his suite will return to Rumania by train on 16 or
17 December.. The secretary added that the Groza Government
has disapproved of Michael's engagement to Princess Anne because
of the "inauspicious" international situation,
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e'TelERLANDS: Dutch ,impatient with present deadlock on NEI-
3 AmbassaCor -Baruch regards the forthcoming trip of the Nether-
'neeeie Prime lanteter to the NE/ as a reflection of Dutch impatience
-7, 'eih the 'sterile, costly deadlock prevailing since 4 August."
-ruzh says that opinion is growing in the Netherlands that unless
jeene decisive thange is evfaient anti unless international permission
na be obtained fer the cleaning up of lawless elements in the NEI,
Netherlands might as well "pull out now as later."
fkiEAR EAST-AFRICA
I. it-IfiKEY: Arabs urese4 to a.9cfpt 'clpT decision�Turkish Foreign
lnieter Sacink hes informed us Amii-assaTor-Wilson that he is
:ging the Arab states to accept calmly the UN decision on Pales-
ie to avoid ,riolence. Sadak has advised the Arabs that if
ettey
cooperate in implementing the decision, they may be able
--xii):?-A out aeran7ements which will make the situation more
enece table. :3aef k told Wilson that he believes Saudi Arabia and
tow' latLlordaea are the least likely states to resort to extreme action,
ititie the s;ineeteet agitation for such action comes from Egypt and
Sadah added that if the US will use its influence with the
rouists to avoid bringing the new Jewish state under Soviet t.cl or to prevent its being used for Soviet nenetration of the
11) countries, te.e Palestine situation should become less
crous,
(CIA Comment: Turkey's recommendations to the Arabs
one raotivatec by fear that Soviet infiltration may result in a
threat to Turkeys southern border. It is considered most un-
that the Arebs will react favorably to these suggestions,
ne they feel that the immediate threat of Zionism is as dangerous
to the Arab world as the futere threat of Communism.)
EGYPT: !C;9ver_nment e.!efuses. torenew US,militarj_tair rights--
W.3 Ambassador Tuck reports that the Egyptian Government as
eteeneally refuseo to renew US transit military aierights after
7cmliary 1948. Tuck attributes the refusal to Egypt's bitter
meat over the US stand on Palestine..
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TAR EAST
6% CHINA: US aid_ !pouested in military training.p.prai--US Am-
bassador Stuart reports that Chiang Kai-shek has requested the
assistance of the US Army Advisory Group In the organization of
four replacement centers to train personnel for active guerrilla
warfare. Stuart notes that Chinese public minion tends to blame
the US for the lack of success of recent Nationalist military efforts.
Stuart urges that Chiang's request be granted because, in Stuart's
view, any US aid which offers a prospect of success would enhance
US prestige in China.
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i:11"1-`
-
GENERAL
L e De Gasleri fears Communist insurrectionary action--According to
US Ambassador Cafferytin Parts, Premier De Gasperi has informed
the French Foreig,n (like throigh the Italian Ambassador at Paris
that the situation in Italy is very serious and that Pe Gasperi fears
, the Italian Communists may resort about 20 December to some form
t of insurrectionary action particularly in North Italy. De Gasperi
believes that his Government can eventually put down a revolt but
that, if the rialian Communists receive substantial help from the
French Communists, the Italian Government's 'ability to deal with
the Italian Communists would be seriously impaired, De Gasper'
therefore br000sed that immediate eontact be made between French
and Italian military and civil intellittence with a. view to thwarting
the Communists in both countrie.s.
Caffery has been, reliably Wormed that the French. have
agreed to the oroposed and contact has already been established as
suggested,,
(X/E't Comment: lu view of. the existIng, inadequacies in arms,
and equtpment of the rtian Army assl security troops, CIA believes
that OD Italian Contrestelsts at Teessnt have the capability of obtain-
teZ11130Tary C.C.TATOI CY;! ISerth,sty. Ily. If the Italian Communists
receive material 2ISSItElee from the French and/or the Yugoslav
Communtsts, the 'Italian Govermnent w,tuld probably not be able to
regain control el Tioeth taiy unatdecl.)
2,. Ut1T4 t.epttrted offering to sell arms to .rabs--Accordirg to US
Ambassador Wilson in Ankara, the Director of Turkish Military
Intelligence has rettetvesi "fairly re:table" information that e
USSR. ts offering ti seli arms tto the Arabs through Czech inter-
mediae:les in Lebanon ad Syria,
AT,
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EUROPE
INUtClj4f
�557
1. TRIESTE: Communist repea.Lations foletzeneral strike under- way--
US Politicaf2VIvtser Joyce.,reports indlcati�iis that he Communists
have finally received directives to take action in Trieste similar
to that in France and Italy, Joyce expects a general strike and In-
creased Communist efforts to incite "acts of provocation" by the
US-UK authorities, The Political Adviser states that demonstra-
tions backed by a "menacing" Communist press are agitating
against the AMG, ignoring AMG requirements for license's to hold
public meetings, and charging "fascist brutality" when police inter-
vene to control the demonstrations. Joyce adds that General Airey
is tightening controls to meet the emergency,
2. GERMANY: tngrain stipments held inpeselequate--Acting US Poli-
tical Adviser Chase observes that shipments to the Western Zones
Germany of cereals allocated for January 1948 are not sufficient to
maintain the present ration in the bizonal area. Chase points out
that a similar deficiency last spring caused serious difficulties in
the Ruhr and elsewhere, OMGUS believes that unless the commit-
ment to ship 300,000 tons of cereals per month is fulfilled, US
prestige in Germany will be damagedeand the internal problem of
agricultural collections will become even more difficult.
3. AUSTRIA: US maprotest SovieteAus!tria.n currensugreement--
US Minister Erhardt has recommended to US Commanding General
Keyes that a protest be made in the Allied Council against the Soviet
-
Austrian currency conversion agreement (sea Daily. Summary of
4 December, item 6), " Erhardt suggests that the object of the protest
would be to prevent similar bilateral agreements after termination
of the CFM meeting, when the USSR might_sueceed in exchanging a
withdrawal of Soviet troops from Austria for a bilateral settlement
of the German assets questions,
lecemees attain ui:ges rattan increase--General Keyes has re-
iterated the necessity of increasing the Austrian calorie ration to
1800 units as soon as posbible in order to bolster the Austrian Gov-
ernment in anticipation of a failure of the CFM to agree on an
Austrian treaty.
06 I
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THIS DOCUMENT.
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49
CitNE: tAL
pyish Agency seeks US aideajetvi 3h Agency leaders�haVe told Depart-
meit-aStaTeThikiaals frEinhe jev s in Palestine need all types of
weapons, 'f'atcludiing small arms, p aneS, tanks, and anti-aircraft
artillery, as well as military advlears to direct operations. The
Jewish officials said that if they could not get such assistance from
the US, they would be forced to turn "elsewhere" kr it The leaders
added that they would be unable to stop illegal immigration unless a
:Palestine seaport were rnadeeavailable for increased legal immigra-
tion at an early date. .The Jewish leaders also asked that the US dele-
gatton to the UN be instructed to make a statement which would im-
press Urran the Arab world that the US is still behind the UN partition
plan,
EUROPE
ITLAatCE: Estimate ;effects, qf etrikee--US Embassy Paris gives
the following prehiminary estimate of relative gains scored by the
Scharnan Government and the Communists as a result of the recent
stelites and thele conclueion� The Embassy considers that the Govern-
ment .succeeded in: (a) enhancing its Prestige by standing firm Against
the Communists end :invoking energetic measures to guarantee free-
dom of neark; and (b) pointing up to the French people the anti-national
character of Fr011ei COMMIriliSt efforts to disrupt the national economy.
The Embassy adds that by the action which Moscow compelled them
to take, the Communists have alienated the great majority of the
French people and have enormously helped the non-Communist Left
th its efforts to break Communist control of labor0
tan the other hand, the Embassy considers that in their cam-
paign to sabotage the European recovery program,the Communists
(a)� serionsly crippled the French economy .and partially
nullified .1i,teance's anticipated beneliteathrough the recovery program;
(b) severely compromised the Government's efforts to balance the
budget; and (c) greatly increased the Government's difficulties in
attathing aconornie and ftnanctal stabtlity.
Document No.
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2.1E I.A. HAS NI ; JECTION
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..R cancels talks onRain shipments�The Embassy
;al() reparts that dittS8E-has air-tsar-fiance that, as a result
elllulsion of the Soviet Military Commission, the projected
eussions in Moscow concerning shipments of wheat to France
tve been cancelled, The French had hoped to obtain 25,000 tons
Tain in return for French products and to discuss the delivery
the USSR of an additional 300,000 tons before 1 August 1948.
ItMANY: USSR niay force CDU leader's resignation�US Am-
3f dor Murphy reports that the Soviet Military Administration
has demanded the resignation of Jakob Kaiser, chairman of the
cr1stian Democratic Union (CDU), because of his recent speech
7t:.2.chirrg the Soviet-sponsored Unity Congress and demanding re-
vion the eastern boundaries of Germany. Kaiser reportedly
refused to resign except on direct order of the Soviet Admini-
:::fration or as a result of a non-confidence vote from is party.
Kaiser expects that Soviet officials will not allow this vote to be
tarzen, and he will then probably disband the party.
Comment: Because of his many disputes with the
Keiser will Drobably be forced from leadership of the Soviet
ore CM', but he may retain control of the Berlin wing of the
59a.s.ty and flee to the western Zones for protection.)
1.411LGARICA: Soviet troop under way�US Military
cite Sofia reports that numerous reports and "direct observa-
.27:11' indicate that Soviet troop withdrawal from Bulgaria is prob-
vItly under way, but that inadequacy of Bulgarian transportation
-.751ci1ities will delay Soviet evacuation until 26 December,
-. GREECE: Parliament enacts drastic anti-strike law�US Charge
.7c.ee1ey reports that the Greek Parliament has enacted an emer-
:3ene-ir law prohibiting all collective work stoppages by either workers
or employers for the duration of The present rebellion. Keeley
73t2..te3 that the measure is considered unnecessary by AMAG and
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the Embassy labor advisers: is criticized both by labor leaders
and by industrialists in Athens, and will undoubtedly give ammuni-
tion to those who criticize the Greek Government as reactionary.
-Keeley adds, however, that Deputy Prime Minister Tsaldaris
(following conversations with Embassy and AMAG representatives)
;Tinted that the law would be held in reserve and employed only in
an emergency where less drastic measures fail.
Communists may increase urban sabotage and terrorization-
US Military Attache Athens reports that, according to the Greek
General Staff, the Central Committee of KKE (Greek Communist
Party) is attempting to determine the number of reliable members
of the Communist Party in Athens who would be willing to partici-
pate in a KM "armed struggle." The MA adds that KKE plans
renortedly provide that party members unable "for any reason"
to participate in the armed struggle will be organized into teams
for espionage, press, propaganda, medical, and similar duties.
The MA believes that these plans may result in increased Communist
emphasis on organized sabotage and terrorization in Athens, Salonika,
and other urban areas heretofore relatively quiet,
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1,, ITALY: 'Aeeal to USSR for Pra,in held i'madvisablsij&Dann--In
rePly,tci,a S:OggeStion from the Department of 5tatedthat De Gas -
jeri.'.4.Tip:ra4i6hIbe USSR for, the 500,090 tons of wheat Italy needs
to 'ai4id 'ration cut, US Ambassador Dunn eipreSSOs'. the belief
that�Snelv."arlcourse would be "exceedingly inadvisable. Dunn
points out that De Gasper', has previously repudiatealbe Com-
. .
mtniseParty. and that the USSR might condition such assistance
by a demand that Communists be allowed to re-enter the Italian
Ggvernment. Dunn reiterates his warnthg that any cut in the
Italian bread ration 'will greatly imperil the success of the whole
ptat:ty toward Ittly and urges that some other method be found
1`,:c alleviate the seriorls b:road shortage in Italy.
USArr?to b: vithdrawn complekely�The Department of
GtF,Ite ImE;71thorrntec:i IF:mbass,s7 Rome that: (a) US forces will. be
-:viThOra-wn t.L'om It "1.4 Dec..,ember; (b) .the suggested trans-
Ii!er t liese forCIN3 L,;11a is considered inadvisable on military
grouutds; and (c) conToteatory strengthening of US forces in Austria
7.11a1;:eve:3, ..J73.-Iracti4;:ac:qe at thiz time.
2- TI'LUTiSTE:.INIIME:df,-T�PAIVIVANFI,Drpgr,:rrl urgedr-UP Political
,A,4';v1,sar jcv.,.c reports thn Allied Information Service (AIS)
Tte 17ffi 0,'00,Se by 31, Dvmber unless additional US finxds
ar :zeceived joyce states that AIS is the only weapon
.liA�al,:f,thie to 113-1JK authorities to combat the incessant Communist
and YugGsl.ir rropaganda which Ls approaching "climactic
NI1AP, EAST-AFRI:CA
7,:frzERY: r,os51oideic n IET`,.leasIzqshlayeppitect--U3 Ambas-
sato WIon raorai and- political leaderships' has
sulf:)reel in TurY-ey the rep,vit of the US stand On Palestine. Wilson
4"Ls Turks had built great hopes on the solidarity
Arab colintnlkx -1,'Ith the US and U',.( in making a joint elfort
o C?
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eofri
"to keep Soviet Communism out of the Middle East;" (b) the
Turks feel that US policy has been characterized by cynicism con-
cerning domestic political considerations and by naivete in the
failure to foresee the potentialities of Soviet exploitation; and
(c) the Turks are convinced that the US played a decisive role in
obtaining the UN vote on partition by exerting pressure on various
small countries. Wilson adds however, that the loss of confi-
dence in US leadership is not adds:
irreparable," and that
Turkish views will be influenced by future developments in Pales-
tine, particularly by US ability to regain the confidence of the
Arabs and to counter Soviet infiltration effectively.
FAR EAST
4. CHINA: cQmrguatautLTES_Rrsggead_W4Lya reas 1 effective--
US Ambassador Stuart reports that unrelenting Chinese Communist
propaganda charging US imperialism in China, supplemented by
similar Soviet propaganda, is now having a significant effect on
Chinese public opinion particularly among university and intellectual
groups. Stuart also notes a tendency on the part of the Chinese
National Government to play down Soviet expansionism. He urges,
therefore, that the United States Information Service (US) undertake
a positive program to demonstrate that the real imperialist power
in the Far East is the USSR.
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43
GENERAL
tx_ 9 DEC 1947
554
1. 1bn_ j_au_Alip.pgp_tin motorized equipment and planes from US.--US
Minister Childs has been informed by a representative of King lbn
Saud of Saudi Arabia that the kind of aid which the King hopes to obtain
from the US includes equipment for two motorized divisions and some
fifty military aircraft (see Daily Summary of 8 December, item 1).
The representative added that the Saudi Arabian delegation to the Arab
League meetings in Cairo has been instructed: (a) to avoid being drawn
into any plan which might bring the Arab world into conflict with the
US and UK; but (b) to support all others measures against the partition
of Palestine.
2� Palestine police fear safety of UN Commission--US Consul General
Macatee reports from Jerusalem thafhe police have stated
that protection of the UN Commission would be beyond police resources
if the Commission establir:hes tioa.clquarters anywhere other than at
Tel Avtv0 Macatee believes that the British will do everything they can
to protect the Commission, but that after the British withdrawal the
"security of the Commission. will present an acute problem."
3. US anticipates requests to shin military supplies to Palestine_--The
Department of State has informed Secretary Marshall in London that it
proposes to answer anticipated requests from the Zionist Organization
of America for permission to export military supplies to Palestine
by pointing out that: (a) in the period preceding termination of the
mandate, requests for military supplies should be made to British author-
ities in Palestine; and (b) following termination of the mandate, requests
should be made to the UN five-power commission on Palestine.
EUROPE
4. FRANCE: Tripltiite discussions. on Germany sttiggoled--A high-
ranking official of the French Foreign Office has suggested to US Ambassa-
dor Caffery that because the current session of the CFM seems likely
to end in complete failure, the US, the UK, and France should plan now to
-.1
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Auth: DDA R-G. 77/17,3;
Date: 4_292�j928_? BY: _OPAL.
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continue conversations on the German problem immediately after CFM
adjournment. The official considers it of "paramount importance"
that the three western powers should reach agreement on Germany
and has suggested that deputies of the Foreign Ministers should hold
such discussions in Washington.
The official commented that any decisions reached as the
result of such talks would represent "real progress" because if De
Gaulle should return to power in the next few months, the General
would be unable "to undo agreements which have already been con-
cluded."
5, RUMANIA: New anti-Communist resistance moven ted--The
US Military and Naval Attaches have learned from the former CARE
representative in Rumania that a new Rumanian resistance movement
is being organized and will be composed mainly of young men with mili-
tary experience who have been educated in France and England. Source
states that the organization is "sound and means business" and expects
to have a supply and training base in Turkey or Greece.
(CIA Comment: Although scattered resistance and underground
groups still exist in Rumania, this is the first report of a cohesive group
with long-range plans, organized on a national basis. Although such a
group has no chance of immediate success in overthrowing the Govern-
ment, its existence will bolster the hope of the non-Communists and re-
quire the Government to maintain indefinitely its repressive police con-
trols.)
O. GREECE:lee atior_al UK missions reconunended--US
Embassy Athens and AMAG Chief Griswold recommend a complete inte-
gration of the US and UK military missions in Greece, wtth General
Livesay of AMAG as chief and General Rawlins of the British mission as
deputy. If this arrangement is not feasible (in view of the UK's policy
against furnishing operational advice to the Greeks), it is suggested that
an integrated planning staff be created in which US personnel would
handle operational advice and supply matters and British personnel would
be responsible for training.
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FAR EAST
7. FRENCH INDOCHINA: Bollaert-Bao Dai meeting..--US Consul Reed
in Saigon has been told by a usually reliable source that a protocol
was signed at the recent meeting between French High Commissioner
Bollaert and ex-Emperor Bao Dai. The agreement reportedly grants
independence to Vietnam within the French Union but retains French
control over the Vietnamese Army and French direction of foreign
affairs. Source also reports that Bollaert will attempt to obtain ap-
proval of the protocol during his forthcoming visit to Paris.
Source believes that even though many "resistants" may join
Bao Dai, the problem of achieving peace in Indochina remains un-
solved because President Ho Chi Minh of the Vietnam Republic con-
tinues strong.
8. KOREA: F_Li_:,E..Soxijg_ta_s_tjgLjujc,Qrsg--General Hodge has been
told by a usually reliable source that at a conference of high ranking
North Korean and Soviet military and governmental officials, held on
19 November in Pyongyang, the following tactics were discussed: (a)
a decrease of electric-power supply to South Korea in order to cause
unemployment and widespread unrest; (b) the organization of a strong
fifth column in important South Korean cities; (c) the withdrawal of
Soviet forces following the establishment of an independent North
xorean government "according to the desires" of the North Korean
people, despite UN action; (d) the maintenance of the People's Army
in a state of readiness to occupy South Korea with the aid of the
fifth column.
(CIA Comment: The North Korean Peoples Council is now
preparing a "provisional Korean constitution" which would provide
a "legal" basis for formal Soviet recognition of the North Korean
regime. CIA believes that the USSR will initiate a series of moves
similar to those indicated in this report in an effort to force the with-
drawal of US forces and to frustrate implementation of the UN re-
solution on Korea.)
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;
GENERAL
1. Reported pressure on Ibn Saud to break with US--US Minister
Virilag-1117E"has been orniir---TergirW'fbiraud, in an extra-
ordinary two-day audience at Riyadh, that while the King must
make common cause with the other Arab states on the Palestine
issue, he does not anticipate being drawn into conflict with friendly
western powers over this question. The King added that the Arab
League (particularly Iraq and Transjordan) would attempt to draw
him into "direct conflict politically or economically with the US,"
and that pressure would be exerted on him to cancel the oil con-
cessions. The King informed Childs that it is of the highest im-
portance for him to know as soon as possible to what extent Saudi
Arabia could count on US aid hi resisting any incursion friam Iraq
or Transjordan which might result from his refusal to give in to
this pressure.
C.
2. zechoslovLalitai jmorted attitigiapviittatie.main.ii21_1 in Middle East-
US Ambassador Wilson at Ankara has learned from a Turk-
ish Foreign Office official that: (a) a Czechoslovak aviation
mission, sche,Iled o arrive in AAra on 7 December, is en
route to the Middle East for the purpose of extending Czechoslovak
Airlines (CSA) "to India, the Persian Gulf, and the Arab countries";
(b) the mission, except for two Social Democrats, is composed of
Communist Party members; (c) the mission was undertaken at the
instigation of a high Soviet aviation official following his recent
visit to Prague.
(CIA Comment: Although the August visit to Prague of
the Soviet Deputy Chief of Civil Aviation was purportedly for
discussions concerning the Soviet-Czechoslovak air agreement,.
It was suspected at that, time that the USSR was using the dis-
cussions to draw CM into the Soviet orbit (see Weekly Summary
of 12 September, page ii). This report, however, provides the
first suggestion that the USSR may be supporting Czechoslovak ,
efforts to establish air services in the Middle East)
553
DOCUmOnt NO. OCI7
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EUROPE
ITALY: Communists may attempt coup in February�US Command-
GeneigWeitit-e-iiirneitifia nriaVellat a Communist coup will
ia attempted sometime in February and that Yugoslavia will probably
exert pressure in order to pin down Italian forces near the Yugoslav
border. Re observes that the Communists have already "achieved
3ome measure of success" in that they have physically assembled
their own para-military organization.
A representative of Premier De Gasperi has expressed to
US Ambassador Dunn the belief that the Communists will attempt
to overthrow the Government before the March elections. De Gasperi's
representative doubts that present military and police equipment is
adequate for defeating such a coup; Dunn concurs in this view.
De Gasperi believes Italian forces need arms--De Gasperi
has told US Amba�stilat a US military mission to Italy
would be inadvisable at this time and that if Italian forces are well
directed they should be able to cope with any internal disturbances.
De Gasperi feels, however, that Italian forces are in urgent need
of additional arms and equipment. In connection with the withdrawal
of US forces from Italy, De Gasperl emphasized his view of the im-
portance of strengthening US forces in Austria.
4. FRANCE: 2.1.fislial sis of Communist tactics--US Ambassador
Caffery reports that top French officials accept the following analysis
of the Soviet position cm the situation in Western Europe: (a) the
tempo of the Communist Party's revolutionary activity in France
and Italy must be accelerated in order to neutralize the European
recovery program; (b) the democratic governments in Western
Europe would not be able to counteract the revolutionary action of
a small group of determined, militant Communists, and the US
would not intervene directly; and (c) the Communists in France and
Italy do not intend to achieve power at this time by a coup but rather
to cause the collapse of the democratic governments by a series of
strong economic, social, and political blows.
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High-ranking French officials have expressed to Caffery
their confidence that the French Government will be able to cope
with the Communists in the present struggle, though they believe
that some violence will continue for several weeks.
sepi u ard w e rice ad ustments necessar
Finance Minister ayer s to ery rr er u ad-.
justments of industrial prices and wages are to be expected;
Mayer expects that a "provisional" stabilization of these prices
and wages can be achieved after they reach their peak about
1 January 1948. Mayer believes that if he remains in office, a
"definfte" stabilization should be possible by June 1948.
ouha break CGT--Caffery T�Caffery has learned
from Leon 13-11i-nilliftfaltiiiiuWtlie-mass of non-Communist workers
in the CGT desire to break with that organization, their leader
(Jouhaux) is still hesitating and wants the Communists to initiate
the break. Blum is convinced that the Communists will not do so,
although he believes that a break is "inevitable eventually."
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GENERAL
1. British plans for Palestine withdrawal--Foreign Minister Bevin
has informed Secretary Marshall of the British plans for withdrawal'
from Palestine and of the difficulties expected by the UK if the "UN
Commission should arrive in Palestine more than two weeks before
the British are ready to hand over authority to the Commission
(which, according to plan, will be about 15 May). Bevin states that
the British object during the interim period will be to maintain the
status quO in all respects, particularly regarding immigration.
Bevis*, added that his government had recommended forbearance
and moderation to Arab representatives and had received assurances
from various spokesmen that they will not try to make trouble while
the British are still in Palestine. Bevin expressed the hope that the
US: (a) would make similar recommendations to Jewish representa-
tives; and 0)) would "con nue and intensify the measures" recently
Initiated to restrain tho,�nvolved in organizing immigration;
2. Sovlet Ambassador to Argentina reportedly fears mission failure--
riThe 3.3(h)(2)
Soviet Ambassador will not return to Argentina from his 5 December
journey to Moscow, contrary to his announced intention to make a
three-month visit; and (b) the Ambassador fears that the USSR con-
siders his mission hi Argentina a failure.
(CIA Comment: Because Argentina is the country in Latin
America best able to oppose the policies of the US, the USSR has
made an unusual effort to counter-balance US influence in that
country. It is probable that the USSR now no longer believes that
Argentina can be diverted from its pro-US orientation.)
3. China intends to maintain stand on a anese peace talks--The
Efilial-lrice Minister o oreign arss orme US Ambas-
sador Stuart that the Chinese Government, in reply to the 27 Novem-
ber Soviet note demanding that the Your Powers hold a preliminary
Japanese peace conference in China next month, intends to maintain
the earlier Chinese position that:� (a) peace negotiations should be
conducted by all nations represented on the Far Eastern Commission;
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and (b) voting should be in accord with FEC voting procedure (by
1ich each of the Four Powers has veto rights). The Vice Minister
toliti Stuart that China's fear of offending the USSR was blocking
Chinese participation in any peace talks to which the Soviet Union
7'as not a party. Stuart comments that China is "obviously afraid
tn make any other move until it knows more about US policy."
EUROPE
4. FRANCE: Government seeks to conciliate De Gaulle--US Ambas-
dor Caffery was
indirectly obtained for the recent appointment of two inspectors
nai who will have direct administrative and military authority
ill Provence and Languedoc. Caffery's informant, who declared that
the Government is doing its best to avoid The Gaulle's open opposition,
believes that this conciliatory attitude, together with De Gaulle's
belief that the present Government is a useful interim solution:,
accounts for De Gaulle's recent silence.
5, AUSTRIA: Soviet Policy in currency negptip.tions--US Minister
33r1!ardt notes that in the recent negotiations concerning the Austrian
currency conversion law the USSR seemed unprepared to promote
economic partition of Austria at this time. Erhardt observes that
the Austrian Government showed a tendency to make substantial eco-
nomic concessions to the USSR, while at the same time taking US
aid for granted.
NEAR EAST-AFRICA
. IRAN: Qavam maneuvering to retain Premiership--US Embassy
Tehran reports�ialca ons t r me s r vain, in a desperate
attempt to retain his position; may have made a deal with the Shah
which will allow him to continue as Prime Minister (see Weekly Sum-
mary of 5 December, page iii).
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THE AMERICAS
7, BRAZIL: Communist tactics change�US Embassy Rio reports that
be Communinn Brazicaii�applimently shifted their line from
rassive resistance to a campaign of violence and that Communist-
insoired disturbances have occurred during the past two weeks in
a number of imnortant Brazilian cities. The Embassy expresses
the oninion that the Communists are not strong enough to create
serious trouble but are largely employing tactics of harrassmenta
CORRECTION
in Weekly Summary No. 76 of 5 December, page It, line 20, and
.qage 3, line 1, the phrase "indecisive military activity" should
be substituted for "military inactivity."
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d
GENERAL
551
1. ecafl Of British fro os from Greece jot now contemplated- -UK
Foreign Minister Bevin has reassured US Ambassador Douglas
that: (a) recall of British troops from Greece is not now contem-
plated; and (b) no steps for the recall of the UK's forces in Greece
will be taken without providing the US an opportunity for discussion.
Bevin told Douglas that the transportation needed for UK troop with-
drawals will not be available before March 1948.
EUROPE
2. ZELGIUM: Maim and Fz_s_ach Communists to comg_mte--A French
official has told US Embassy Paris that French police recently con-
fiscated a Communist document which indicates that the Belgian and
French Communist parties are planning to coordinate a strong effort
to prevent the opening ,of the mines in northern France. The Embassy's
informant asserted that Belgian Communists were to furnish both
arms and "hardened militants."
a Belgian Com- 3.3(h)(2)
munist Party leader told a meeting of -elite members" in late
November that Itis necessary "to aid our French comrades" and
that the French strikes will be followed with similar action in Belgian
about 1 January 1048.
3. SPAIN: pautinni_p_Ea aid in UN--us Military Attache Madrid re-
ports that US opposition in the UN to further denunciations of the
Franco regime has caused members of the Falange to expect mone-
tary help immediately from the US and has led centrist leaders to
believe that Spain will come under US protection, thus "promoting
peace and prosperity." The MA reports also that the Left is "bitterly
disappointed" and that the divergence between the Spanish Right and
Left is now sharper than before.
(CTA Comment: These re-actions will tend to sharpen and
prolong the national division between the winners and losers of
Spanish civil war. France's domestic position is strengthened in
Document No.
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flroportion to the extent that Spaniards believe he will gain US aid.
Prospects, that the Army will switch its backing to a more moderate
leadership are correspondingly reduced.)
AUSTRIA: USSR demands Communist Police chief Jn Lower Austria--
US Minister Erhardt reports that the Deputy 'Commander of the Soviet
roiices in Austria has demanded that the Austrian Minister of Interior
imqiediately renlace the present Director of Public Safety of Lower
Austria with Duermayer, until recently chief of the Vienna State Police
;Ind a Communist.
(CIA Comment: An aggressive Communist, Duermayer is
believed to enjoy complete Soviet confidence. As Chief of Public
Safety in Lower Austria, he would obviously consolidate Soviet con-
twits over this important province.)
5. BULGARIA: Soviet preparations to withdraw troops observed--US
Now' Charge Horner reports indications thit-&-TJWITireparing to with-
draw its troops by the 15 December deadline. "Several reliable
sources" have observed Soviet concentrations of freight cars and
artillery and have noted the evacuation of Soviet families. Horner
indicates however� that "western military sources" believe it will
be difficult for the USSR to complete military evacuation in the time
remaining without leaving some heavy equipment behind, and that
such equipment could conceivably be stockpiled for future use. Horner
considers it probable that if the USSR withdraws, some military cadres
will remain in the guise of instructors to the Bulgarian Army, and their
retention will be covered by a special agreement with the Bulgarian
Government.
NEAR EAST-AFRICA
G. PALESTINE: Mufti tells Arab Higher Executive to curb disorders--
US Consul General Macalee-ieiiorts from Jerusalem that the Arab
Higher Executive has been instructed by the Grand Mufti to do every-
thing 'possible to curb the present disorders in Palestine. (The govern-
ments of all of the Arab states are similarly attempting to discourage
"unauthorized" anti-partition disturbances.)
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/ ea � �
; T�. ir
GENERAL
0.4 DEC 1947
550
1. AtalzapjamiAg.milft_amasito in Palest ine -King :Farouk .has In-
formed US Ambassador Tuck in Cairothat: (a) Egypt,-in,full accord
t with the other Arab countries, intends to resist the partition of �
Palestine by force of arras but will make no military move until
the British withdraw from Palestine; (b) instructions have gone out
to the other Arab capitals regarding the coordination of military
and economic plans for the conflict; (c) there might exist "the
tragic spectacle" of Arabs fighting Americans if the UN should �
send an international force to Palestine to maintain order; and (d)
a number of Soviet Jewish saboteurs have been app,rehended in
Egyptian territory. Tuck concludes from the Kings remarks that
"there is no doubt" of Egypt's intention to play its part in mili-
tarily opposing the Jews in Palestine and that the King intends, if
possible, to play a leading role in coordinating and organizing Arab
resistance.
(CIA Comment: The acts of violence, sporadic rioting, and
anti-US demonstrations reported by US representatives in various
parts of the Arab world can be regarded merely as a prelude to
the concerted Arab action which, as King Farouk indicates, will
take place after the UK withdraws its forces and administration
from Palestine.)
US piptelipe opet^attons may have to be snmenakel AL. Iteasant--An
official of the Trans-Arabian Pipeline Company has informed US
Minister Pinkerton in Beirut that the gravity of the situation in
�Transjordan and Syria and the probability of trouble in Lebanon
are making it essential that all pipeline operations in the Levant
area be suspended, at least temporarily. The official states that
US policy on Palestine is not only affecting oil interests. but is
also creating a situation which menaces US lives and property in
the Middle East and Is rapidly destroying the constructive influence
of such institutions as .the American University at Beirut.
".0
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3. DP screenins in US Zone Germany _held inadequate --Acting US
Political Adviser Chase in Berlin reports his view, in connection
with the Venezuelan Government's concern over possible Com-
munist infiltration through the immigration of European DP's,
that security screening in the DP camps (US Zone Germany) is
inadequate. Chase points out that any information about the Com-
munist affiliations or activities Of the DP's is probably unobtain-
able unless they engage openly in such activities. The British and
French are reportedly also having difficulty in screening out DP's
who are emigrating to areas of British and French interest.
EUROPE
4. FRANCE: Communists increasir _iolent action--A "high-ranking
Interior Ministry officrar-has expressed to US Embassy Paris
his concern over the increasing tendency of Communist shock troops
to attempt sabotage and to provoke the pol:ce to militant action. The
official said that such actions might eventually cause the Government
to outlaw the Communist Party. The official was puzzled by the
apparent readiness of the USSR to risk driving underground "one of
the best-organized Communist parties in Europe" unless this re-
flected "Soviet willingness to face general war in the near future."
US Embassy and US Military Attache Parts are skeptical of this con-
clusion. They consider that the official perhaps exaggerates the
present importance to the Kremlin of the French Communist Party.
(CIA Comment: In its efforts to sabotage the European re-
covery program,
which is the USSR's immediate and primary target,
the Kremlin will be willing even to risk the sacrifice of the French
and Italian Communist Parties. If these Parties are defeated and
driven underground, the USSR will have lost no more than it would
lose by the success of the European recovery program. CIA believes
that the unexpectedly rapid progress of the Marshall program has
upset the timetable of the Kremlin and forced this desperate action
as the last available countermeasure.)
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5. GERMANY: Communists attempt to promote strikes in western zone--
Headquarters European Comman UT repor re ve
been recent Communist efforts to promote strikes in the western zone
of Germany during the latter part of November but that such efforts re-
ceived little supPort. EUC OM considers that these Soviet efforts are
actually only harassing measures aimed at occupation powers and are
not connected with recent disturbances in France and Italy,
(CIA Comment: CIA believes that these disturbances have all
been coordinated as part of a general attack on European recovery.)
6. AUSTRIA: Soviet-Austrian curreconversion agreement s
US Commanding General Keyes in Austria reports that a currency con-
version agreement, newly signed by Austrian and Soviet reprezenta-.
tives, provides for Austrian paymeht to the USSR of 490 million
schillings in partial satisfaction of Soviet claims. Keyes adds that
there are indications that another 16 million schillings will complete
the Soviet claim.
7. GREECE: Embassy concerned over growing friction in Government--
US Charge Reeley rep orts aeon theLIberaI-Popu siMiv-
ernment has been strained to the point where the continued existence
of the coalition may be threatened. Keeley has emphasized to an in-
fluential Liberal leader in the Cabinet the necessity for making the
coalition work "as the present critical period in Greek history is no
time for a political crisis," Keeley slates that he intends "to speak
frankly" on the urgency of the situation to Sophoulis, Foreign Minis-
ter Tsaldaris, and to other politicians of both parties.
FAR EAST
8. SIAM: Br_cgsloscl stew regime--US Naval Attache Bangkok
believes that militant opposition to the new Siamese Government is
breaking up, Both Nai Pridi, Free Thai leader now in Singapore, and
the ousted premier, Thamrong, have issued orders against any uprising
on the part of the Free Thai movement. Furthermore, Thamrong has
twice refused assistance offered by the Chinese Communists in Siam. The
NA believes it "most probable" that Marshal Phibul, coup leader, is
firmly entrenched.
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AL
CRITICAL SITUATIONS
OPEAN RECOVERY
ipificaIIt new development.
GREECE
The Greek Coalition government may be endangered by the growing
�tendency of center deputies to consolidate with the Liberal (centrist)
Party of Prime Minister Sophoulis. Although Liberal Party spokes-
men disclaim any immediate intention of upsetting the government,
centrist elements in general are becoming increasingly impatient
with the partisan politics of Populist (royalist) leader Tsakiaris.
43 LILL. it I
549
CHINA
No significant new development.
THE C. I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
No. 4 APR we O3
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,
GENERAL
US___Silyt_portedly_pmarimto withdrawlmtkomAilatig---Us
Military and Naval Attaches Bucharest have been informed by a
"reliable" source that the USSR has requisitioned 2500 railway cars
for "movement from Bulgaria" during the first week of December.
The Attaches add that this report is the first indication that the USSR
is preparing to withdraw its troops from Bulgaria and therefore the
Attaches do not accept it as final.
US Minister Schoenfeld relays from a "good source" a current
Rumanian Communist rumor that the Bulgarian Goveznment will
announce a Soviet-Bulgarian agreement or alliance permitting the re-
tention of Soviet troops in Bulgaria.
(CTA Comment: CIA has received no previous indication that
the USSR is preparing to withdraw its troops by 15 December as re-
quired by the peace treaty. Moreover, the rumored agreement would
be a logical basis for the retention of ihe troops.)
EUROPE
2. FRAN(E: Schuman ontiz_ ni0.p_mntua --US Embassy Paris
has learned that Premier Schuman believes the general situation to be
definitely improved)and he is confident that he will defeat the Communist
effort to thrust him out of office.
The Embassy has also been told that militant anti-Communist
trade unionists are optimistic over recent strike developments because
several of the strikes have failed and because a majority of the French
public now realize the anti-national character of the French Communist
Party. The trade unionists believe, however, that the Schu.man Govern-
ment made a serious mistake by introducing a strike control bill which
goes too far in its sanctions against strikers. Although the unionists
admit that the bill would be helpful against "Communist saboteurs,"
many anti-Communist socialist leaders disapprove of the present bill
because of their fear that it might be used later as "a club against the
working class" if De Gaulle were to come to power.
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L ITALY: Transfer of VS troops to Libyairoppsed--US Ambassador
Dunn suggests that in order to avoid the possibly unfortunate situ-
ation which may follow the withdrawal of US troops from Italy, these
troops might be transferred to nearby Libya, ostensibly to assist
the British in the administration of the ex-ftalian colonies. Dunn
feels that the presence of US forces in Libya would have a "bene-
ficial effect" on Italian public opinion and would meet with the ap-
proval of the Prime Minister and tie Italian Government
4. GREECE: Government contlideurther anti-inflation measum--
AMAG Chief Griswold reports that the Greek Government is con-
sidering additional economic measures to meet a new inflationary
threat which is milked partially by the over-extension of bank credit
to industrial organizations. Griswold slates that the officials of
Greek industrial organizations are, moreover, using bank loans for
the purchase of gold sovereigns, thereby increasing the price of gold
which in turn defeats the objective of credit curtailment and threatens
the stability of the Government
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uU
CRITICAL SITUATIONS
EURVEAN RECOVERY
No significant new development.
GREECE
No significant new development.
CHINA
Anti-inflation measures Just adopted by the National Government may
thwart efforts by the Kuomintang� right-wing CC Clique to intensify
inflationary trends (see item 7).
DoouMent No.
VO gUANGE in Clans. 0
C] DECLASSIVIM
glass. CHANCED TO: TS
DDA Memo, 4 Apr 77
�1,: authr DPARGI9
g1
1703
By:
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GENERAL
British appraisal of Italian situation--According to US Ambassador
Douglas in London, the UK Foreign Office considers that the present
disturbances in Daly are not sporadic and that the situation there,
as in France, indicates a concerted Soviet plan. The Foreign Office
expects no armed attacks upon Daly from the outside while US and
UK troops remain in Trieste.
EUROPE
2, FRANCE: Schlimmte�mobjliggelglior--The head of Prime Minis-
ter Schuman's personal Cabinet has informed US Ambassador Caffery
that the Cabinet has agreed "in principle" on a six-months' mobiliza-
tion of railroad workers, metal workers, flour-mill employees, dockers,
and miners and on the "requisition" of government workers by decree.
Source declared that every possible effort is being made to strengthen
non-Communist labor elements and that,in order to avoid alienating
these elements, Schuman will resort to forceful steps only "as a last
resort."
ps_g1.22assing dersl4p--Although General
de Benouville, one of Be Gaullersailose advisers, has alleged to.US
Embassy Paris that Be Gaulle is striving for the support of the non-
Communist left, Be Benouville admitted that De Gaulle is by-passing
the Socialist leadership and hopes to come to direct agreement with
important labor leaders.
3, NETHERLANDS: Possible cabinet cmillEov ta.smyziactmlwa.s.--
US Military Attache The Hague reports that a cabinet crisis may be
precipitated by the Issue of extended service for volunteer Netherlands
troop units in the NEL Lieutenant General Spoor, commanding general
in the NEI, has declared that he cannot hold presently occupied areas
without retaining the volunteer units. War Minister Fievez is rumored
ready to resign if he is unable to fulfill his promise to the volunteers
that they will be repatriated at the end of two years' service.
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.408fp
4. USSR: Derationing and replacement of currency rumored--US
Embassy Moscow reports that the recurrent and widespread rumors
of an early replacement of the present Soviet currency have brought
about "a phenomenal buyer's spree" in Moscow and other cities in
the USSR. According to the Embassy, the most credible rumors indi-
cate that: (a) new currency will be issued about 5 December; (b)
permission will be granted to exchange old ruble notes for new up
to the amount of two months salary; and (c) derationing will take place
on 15 December when a single-price system will be established
setting prices considerably higher than those under the present ration
system. Any changing of the currency, the Embassy believes, would
be designed to prevent a run on food and other stocks if and when de-
rationing takes place.
NEAR EAST-AFRICA
5. IRAN: Qavam Government may be overthrown--According to US
Ambassador Allen, the Democrats of Iran party of Prime Minister
Qavam has been split by the decision of 30 members to form a
separate faction under the leadership of Majlis President Hekmat.
Allen adds that this group, by joining forces with the opposition
National Unity party and the Independents, would have sufficient
strength to overthrow the Qavam Government. Allen reports his .
Impression that everyone considers the fall of the Government immi-
nent except Qavam, who declares that he will retain majority support
in the Majlis when a test of strength comes.
FAR EAST
6. SIAM: Chinese Foreign Office urges non-recognition of cup regime--
According to US Embassy Nanking, the Chinese Foreign Office hopes
that protracted non-recognition of the new Siamese Government will
force a change in the coup government which will permit liberal
Siamese elements to exercise greater authority.
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CITRIA: New anti-inflation measures authorized--US Consulate
General Miiiiiiiiiii-his-ieiricecilio-m�AilErr-Trun-g, financial adviser
to t�he Chinese Government, that leading Central Bank and Shanghai
muizeipal officials have decided, under Chiang Kai-shek's general
autlorizationi, on the following anti-inflation measures: temporary
oosraension of government bank credits, open market sales of cotton
yarn, a crack-down on black-market exchange operators, and
limited suroort of the CN dollar in Hong Kong at black market rates.
{Rumors of imminent anti-inflation measures have already reversed
the trend in Shanghai's black market, where the rate for US dollars
has (framed back to CN $125,000, as against the CN $150,000 peak
Im.8 November.)
(CIA Comment: Prospects of US aid undoubtedly are helping
co create in Chinese financial markets a favorable atmosphere for
Nqtionalist stop-gap measures.)
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CRITICAL SITUATIONS
EURpPEAN RECOVERY :
No significant new developirkent.
GREECE
According to a communique issued concurrently with the recent
Yugosla,v-Bulgarian mutual assistance pact, the two partieipating
states will not giv� the Security Council Balkan Commission any
form of assistance and will not permit it to -"set foot on their
territories." Meanwhile, Foreign Minister Tsaldaris has ex-
pressed to US officials his pessimism on Greece's condition, has
criticimed delays in the US aid program, and has urged the neces-
sity for more speedy action to salvage the situation (see item 6).
Da ULU 1U4/
547
CHINA
No significant now development.
Document No.
0.51
NO CHANGE in Class.
0 DECLASSIFIED
Class. CIAITGL'D TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 4 APR 1978 By:
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GENERAL
1. Reported Communist drive to seize power in France and Italy--US
2,) abassador Dunn in Rome has received from very high Italian Gov-
erment sources a document, which the US Military Attache evaluates
CIaqthoritative," relating to a recent special Cominform conference
f;-1 7-l'o1and. According to the MA, the document indicates that: (a) the
Mviet Politburo is directing a coordinated all-out Communist cam-
paign to take over the French and Italian Governments by violence
rather than constitutional methods.' (b) although the initial emphasis�
ir apparently on the use of general strikes timed to block the opera-
tion of the European recovery program, the Communists will not be
restricted to this method; (c) the campaign is personally directed
from Moscow by Zhdanov, secretary-general of the Soviet Commu-
nist Party, through his "personal representative," Foreign Minister
Pauker of Rumania; (d) Mrs. Pauker is a member of a new
splcial committee in elgrade--composed of representatives of the
Soviet, Yugoslav, French, and Italian Communist Parties--which
operates independently of the Cominform and will regulate and
synchronize Communist action in France and Italy; and (e) the com-
mittee has been assured unlimited means�apparently including
financing, food, and military stores--in order to carry out its cam-
paf..Tn effectively.
(CIA Comment: CIA suggests, preliminary to the receipt of
the reported document, that the document is: (a) an Italian Govern-
ment plant for the purpose of expediting interim aid by impressing
on the US Congress the urgent need for countermeasures against
Soviet plans; (b) a Cominform device to stimulate activity on the part
of the Italian and French Communists and does not reflect any real
intention to take the course indicated; or (c) an authentic and accurate
indication of Soviet plans, which have as their maximum objective Com-
munist seizure of the French and Italian Governments and as their
minimum objective the creation of such economic and political chaos
France and Italy as will preclude the successful implementation of
the European recovery program.
(CIA does not believe that the French or Italian Communists
are capable of seizing control of their respective Governments without
material outside support. The supplying of such support, however,
would involve the risk of a major conflict for which the USSR is presently
unprepared.)
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2. King Michael to delly_return--King Michael has informed US Ambas-
sador Douglas in London that he will reside in Switzerland until the
situation in Rumania is clarified. Meanwhile, US Ambassador Caffery
In Paris has been informed that Michael will await the results of the
London CFM meeting before making his final decision whether to
return to Rumania.
3. France tooi_LR2--US Embassy Paris reports that France has
decided to participate in the international` Refugee Organization
(MO) and that the bill will come up for Assembly action "without
debate" on 2 December.
(CIA Comment: French entry into the IRO, which will bring
the number of members to 12, is expected to encourage the entry of
Belgium, Argentina, and Brazil, thus providing the 15 members neces-
sary to give the IRO full status.)
EUROPE
4. FRANCE: Blum predicts overthrow of Communist union control--
Leon Blum has told US Ambassador Caffery that it should be possible
"in the not too distant future" for the anti-Communist trade unionists
to break Communist control of the CGT where opposition to the Com-
munists is wowing daily. Blum believes that it is "now of vital
importance to support and encourage non-Communist elements in
the trade unions. In expressing extreme disapproval of De Gaulle
for actions which have "seriously hampered the efforts of the real
democratic elements in France," Blum explained that he took a
strong stand against De Gaulle in the Assembly because of his con-
viction that French recovery depends "to a very great extent on the
non-Communist left,"
5. ITALY: Communists may resort to direct action--US Ambassador
Dunn expresses his conviction that, because the political trend of
Italy is now away from Communism and because the internal economy
of the country has improved, the Communists will now assail law and
order directly with intimidation and terrorization and may thus "in
effect take over control of the country." Dunn doubts that the Govern-
ment has sufficient forces of public order for dealing with such a
situation, though he believes that Government use of police and even
the army would have the majority support of the Italian people.
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(CIA Comment: US Military Attache Rome has estimated
that the Government's. armed forces and security troops are
capable of preventing Communist seizure of power unless the
Communists secure major Yugoslav assistance. CIA believes,
however, that the Communists may succeed in creating a general
state of disorder and terror.)
C . GREECE: Tsaldaris eresses p,2ssimism about over-all situation--
Foreign Minister Tsaldaris has expresso US Charge Keeley.and
AMAG Chief Griswold his deep concern over "the whole situation
in Greece." Tsaldaris declared that conditions in Greece have so
deteriorated since the original aid vote that everything points to the
necessity for increased speed if the situation is to be met squarely,.
Tsaldaris expressed the view that implementation of AMAG measures
has been dangerously delayed because AMAG recommendations have
not been approved promptly by Washington. He stressed the serious-
ness of the gold situation and urged the necessity for a quick decision
on the stabilization of the gold market.
F:eeley comments that although the Greeks themselves have
failed "to produce the kind of speed they ask of the US," there is
an overriding necessity to implement AMAG decisions as quickly
as possible, and that "our thinking must transcend the limited cir-
cumstances of the original aid program."
NEAR EAST-AFRICA
7. TURKEY: Turks foresee new Communist menace from the south--
Foreign Minister Sadak has told US mbassador Wilson that: (a)
the Soviet decision to support the partition of Palestine, despite
the Arab resentment thus incurred, can be attributed to the value
the USSR attaches to the opportunity afforded by official participa-
tion in Palestine to infiltrate Soviet agents into Arab countries;
and (b) many small Soviet vessels with large crews and unknown
cargo,passing through the Straits destined for Syria and Lebanon,
are returning with crews of decreased size. Sadak infers that
Soviet agents are constantly being landed for activity in Arab countries
and he considers that Turkey may in the future be faced by a greater
Communist menace from across its long southern borders than it
has hitherto withstood from the north.
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THE AMERICAS
8. VENEZUELA: Betancourt threatens to cancel oil shi ments to Brazil--
US Embassy Caracas reports that President Betancourt called in the
heads of private oil companies to inform them that he has threatened
the Brazilian Government with an embargo on "all shipments of crude
oil and refined products" unless the latter government cancels the
arms deal with the Dominican Republic. Betancourt further stated
that if Brazil does not capitulate, he will ask the oil companies to
"cooperate by stopping shipments."
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