DAILY SUMMARY - 1947/02

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 02996863
• Document Creation Date: October 8, 2018

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GENERAL
28 FEB 1947
316
1. Turks will not raise_quest19n o_f i_mgional Straits defense--US Ambassa-
dor Wilson reports that the Turkish Premier and Foreign Minister share
the State Department's views on the inadvisability of proposing a regional
agreement for defense of the Straits (see Daily Summary of 21 January,
item 4). Because Soviet policy "unquestionably is to dominate Turkey,"
the Foreign Minister feels that the USSR would not act in good faith but
would take advantage of any new proposal on the Straits question to
weaken Turkey's position. He therefore believes It would be most un-
wise for the Turks to take any further initiative in the matter.
3.3(h)(2)
EUROPE
FRANCE: Nan Minister sugge_sts deal to ac e US shim�Navy
Minister Louis Jacquinot has told US Ambassador C eryat the French
Navy ''sorely needs ships" and that, if the US can supply "some ships,"
:facquinot will "strongly support" the US in regard to privileges for the
US Navy at such North African ports as Port Lyautey.
AL USSR: US Etntsssulans to rotest Soviet detention of US citizens�US
Embassy Moscow plans to send a note of protest to the Soviet Foreign
office regarding a number of claimants to US citizenship who, during
the past two years, have been arrested in eastern and southern Europe
and now apparently are being detained in labor camps in the USSR. The
note will point out that, since November 1945, over 100 such cases have
been called to the attention of the Soviet Government, and that the Embassy's
Inability to obtain a satisfactory reply is "a matter of the gravest concern"
to the US Government.
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5. YUGOSLAVIA: Permission refused US News_nyistit_kielstvis ilia cam--
US Charge Cabot reports that US newspaper correspondents haveTeen
refused permission to visit Bulkjes Yugoslav camp for guerrilla training
of Greek refugees. Greek guerrillas reportedly are "being farmed out"
to small Yugoslav villages in anticipation of the UN Balkan Investigating
Commission's arrival in Belgrade. (CIG sources confirm that all Greeks
are toeing temporarily evacuated from Bulkjes and other training camps.)
rAR EAST
3 3(1-11(71 3.3(h)(2) 6. FRENCH INDOCHINA: Increase in Communist rekorte_d
told US Consul Reed of his belief
that (a) Chinese Communist activity is increasing among Chinese made
homeless by recent fires; (b) French, Chinese, and Soviet Communist
agents are active in Indochina but do not appear to be working in con-
cert; and (c) the Vietnam Government is dominated by Communists
who are establishing a nationalist state as a prelude to a Communist
regime in Vietnam. Reed feels that, while Aimamite Communism is
a potential threat, it is overemphasized as a present danger.
7. JAPAN: War Department favors WFTU visit 4? >inn and Korea--
Secretary of War Patterson, rail-Ping to General Mackiiinliii objections
to the proposed visit of a World Federation of Trade Union mission to
Japan (see Daily Summary of. 14 February, item 3), states that the exclu-
sion of the WFTU from Japan and Korea would result in criticism of US
policy both at home and abroad. As it appears probable that entry of
the WFTU into Northern Korea "can and will be accomplished,' Secre-
tary Patterson points out the US Government would be placed in an un-
favorable light if it refused a similar opportunity in areas under US
control.
THE AMERICAS
8. BOLIVIA: Arrival of special Arentine mission�US Ambassador Flack
reports thai the unexpected arrival in La Paz on 25 February of a special
Argentine mission for negotiating economic and commercial agreements
(see Daily Summary of 20 December 1946, item 4) was regarded by the
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Bolivian Foreign Office as "most untimely," inasmuch as (a) definite
action on the agreements would have to await the seating of the new
President and Cabinet, and (b) shipments of Argentine food and other
products, during January and Februaryshad not fulfilled Argentina's
commitment for that period.
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38
.Toaft-istetter.
GENERAL
27 I-tb 1141
315
2. Argentina kyksAat_es fulfilment of Chapultepec
Embassy Lima reports that, according to unofficial advice from the
Permian Foreign Office, Argentina has asked what measures Peru has
taken in fulfilment of its commitments under the Chapultepec agreement.
(CIG Comment: This suggests that the Argentine Government
may be attempting to prove that other Latin American Governments have
done less than Argentina to fulfill their Chapultepec commitments.)
EUROPE
3. HUNGARY: Soviets arrest Smallholder leader--US Representative
Schoenfeld reports that Soviet occupation authorities have arrested Bela
_Kovacs, member of Parliament and former Secretary-General of the
Smallholders' Party, on charges of organizing espionage against the
USSR and participating "in the formation of armed groups, members
of which committed terroristic acts and murders in Hungary against
members of the Soviet Army." (The Smallholders had previously re-
fused Communist demands that Kovacs' parliamentary immunity be
waived to permit his arrest on charges of conspiring to overthrow the
Hungarian Government; see Daily Summery of 24 February, item 4.)
(CIG Comment: The Soviets have not, until now, openly inter-
fered in the current campaign of the Communists to gain control of the
Government by implicating leaders of the majority Smallholders'
Party in an alleged conspiracy. This direct violation of Hungary's
sovereignty suggests that the USSR is determined to obtain a Com-
munist-dominated regime prior to the withdrawal of Soviet troops.)
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4. GERMANY: Soviet condemnation of US-UK bi-zonal lie --According
to Acting US Political Adviser Mucci�, Soko ovsky, Soviet Repre-
sentative to the Allied Control Commission, on 25 February read before
the Commission a prepared statement bitterly attacking US-UK zonal
fusion. Muccio believes the attack may possibly presage the Soviet line
at the coming Council of Foreign Ministers in Moscow. Should the bi-
zonal policy prevail, Sokolovsky declared, It will lead to the partition of
Germany and threaten European security by enabling the Junkers to te-
gain control.
(CIG Comment: Sokolovsky's condemnation is considered the
initial Soviet effort to defend the USSR's unilateral action in Germany
by placing on US-UK bi-zonal policy the onus for failure to implement
German economic unity.)
5. ITALY: Participation in African territorial dinjaositio_imnd,--US Am-
bassador Dunn recommends that, if the Italians request permission to
accompany the Quadripartite Commission of Inquiry on its visit to
Italian African territories, the US will favor this request. Dunn believes
that "some manner of Italian participation" would go a long way towards
reconciling the Government and public opinion to the final disposition of
the territories.
6. YUGOSLAVIA: Countermeasures to nationalization of US property�US
Charge Cabot, in view of Yugoslav failure to provide for US financial
Interests in the recent property nationalization law, recommends the
following countermeasures: (a) blocking of Yugoslav assets in the US
until a settlement is reached; (b) payment of US claims from these
assets, if negotiations fail; (c) formation of a commission to pass on
US claims; and (d) blocking of all financial transactions between the US
and Yugoslavia except under license.
NEAR EAST-AFRICA
7- IRAN: Shah msff_be contemplating Qavam's removal�US Ambassador
Allen reports increasing indications that the Shah, encouraged primarily
by the Army Command but also by politica malcontents, may be seriously
contemplating the removal of Qavam prior to the convening of the Parlia-
ment. The principal basis for such action would be allegations of cor-
ruption and fraud.
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(CIG Comment: Because of Qavam's political strength and
anticipated large majority in the next Parliament, it would be difficult
for the Shah to remove him from the Premiership without his msent.)
FAR EAST
8. FRENCH INDOCHINA: Federated state sted�US Consul Saigon
reports the opinion of the President the P anal Government of
Cochin China that a federation, rather than a union. of the three districts
(Tonkin, Anaam, and Cochin China) claimed by Ho Chi Minh's govern-
ment as parts of Vietnam, might solve the problem of Cochin China's
future status. The President insisted, however, upon considerable
autonomy for Cochin China to avoid domination by Tonkin.
liss4nition of ira,rriaLregime unlikely�A Foreign Office
official has told US Ambassador Caffery in Paris that while recognition
of an imperial regime under the former Emperor of Aamam cannot be
entirely excluded, it is extremely unlikely in view of the Socialist-
Communist complexion of the present French Government.
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tmi 4u6riorril$11, !
38 . 314
whaa-sfosticiar
GENERAL
I. Emb_may119_scolv_Resp_t_reaanent Greek Border Coramission--US
Embassy Moscow fears that the US and UK may be presented with a
"lightning fait accompli" of Soviet domination in Greece unless an
effective permanent border commission is operating prior to the with-
drawal of British troops. The Embassy points out that Soviet prepara-
tions to exploit any opportunity in Greece have recently been given
Impetus by (a) the continuing political and economic chaos which, con-
trary to Soviet expectations, the US and UK have failed to check; (b)
the effect which control of Greece would have on the problem of Turkey
and the Straits; and (c) contemplated UK troop withdrawals.
EUROPE
2. RUMANIA: Reaction to US food gift--US Delegate Allied Control Com-
mission Bucharest reports that the gift of food by the US to relieve
famine conditions has created "widespread satisfaction" throughout
Rumania. He believes that it will be a long-term factor in maintaining
good will.
FAR EAST
3. CHINA: Third_Artx views on reomanization of Km_rissaAnl--Chinese
minority party leaders have expressed to Ambassador Stuart their fears
that the deteriorating Chinese situation will drive the liberal groups into
the Communist camp. Carson Chang, leader of the Social Democrats,
Indicated he would not join the Government because he could be more
effective outside the Government in influencing change. The General-
issimo, according to Chang, is the greatest stumbling block to a genuine
reorganization because "he can not conceive" of any successful solution
by "democratic processes."
Soom doubts effectiveness of economic controls--According to
a report from US Treasury Attache Nanking, even T.V. Soonf, President
of the Executive Yuan, believes that the Central Government s emergency
economic control measures will provide only temporary respite and do
not affect the underlying economic situation (see Daily Summary of
25 February, item 5).
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4. FRENCH INDOCHINA: Comnromise on Cochin Chins expected.
expressed to US Ambas-
sador catiery his opinion that the government set up in Cochin China by
Admiral d'Argenlieu will not last long and that the French Government
will be compelled to enter into a compromise with Vietnam regarding
Cochin China's future status.
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GENERAL
2 5 FEB 1947
313
EUROPE
2. POLAND: Communist �control increases- told US Am-
Ta;v3vador Lane that the new 'little' Constitution passed by Parliament,
i3igives absolute power to the "councils of state," will place "com-
control of the nation" in the hands of Communists and will remove
veaqge of authority from the Council of Ministers and from Par-
Mant. Lane concurs Opinion and adds that the So-
Yts
rill, for the time oeing, De permitmed to believe that they play
-i-Ap-onant part in the Government, but that actually the Communists
U.:mot allow them to make policy decisions.
3. FIWNCE: Continued US "sympathetic aid" sought�Serve Alphand,
�dimEconomic Director, has iiiiiPiessed to a member of US
';a7A..-Gsy Paris the hope that the US would continue "sympathetic aid"
- oiar to stave off possible political and social repercussions which
"Impel" France to draw closer to "mother" orbit.
4. GERMANY: Reproniyation of French Zone planned--US Political Cb-
Mayer reports from Baden-Baden that�an�niaministrative re-
arp,-0T4*atton of the French Zone is to be announced soon." According
MnYier: the French plan is to decentralize authority by delegating
r[toTfe power to the Regional Military Governments which will in turn
- more responsibility to local German authorities. Mayer adds that
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the reorganisation might be considered "a suitable occasion to replace
General Koenig" as Military Governor of the French Zone.
FAR EAST
5. CHINA: Government's ability carry out economic cox trothdoubted--
US Ambassador Stuart repo s
that grave skepticism esials in high
Chinese circles as to the ability of the Central Government to carry
out the emergency economic control program announced on le Febru-
ary. Many "informed and intelligent" people feel that the measures
will prove only a stop-gap "which may for some time arrest economic
disintegration but cannot provide more than temporary relief."
to modify his ....)414 � m--Ambassador Stuart also
reports that theCh 114--inese iidster of osnmusdcatIons is trying to per-
suade Chiang Kai-shek to adopt a program whereby the Central Govern-1
meat would (a) institute complete political reform in China south of
the Yangtze River; (b) assume a defensive attitude in Manchuria; and
(c) clear the major rail lines passing through Communist-controlled
areas in Shantung Province and immediately south of Shantung. The
Communications Minister believes that this program (decidedly less
ambitious in its military aspects than earlier Nationalist plans) is well
within the capabilities of the Government forces, but he notes that "arms
are desperately needed at the moment" The Chinese 0-2 has also in-
formed the US Military Attache that, at the present rate of consumption,
the Nationalists' supply of ammunition would last only three months.
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EUROPE
2 4 FEB 1947
312
1. RUMANIA: t wale -US R reports
3.3(h)(2) that, the Soviets
have begun organizational preparations for the withdrawal, by 15 April,
of all but four divisions of Soviet occupation troops (currentl) estimated
3.3(h)(2) at 10-12 divisions). the Soviet militat7
commander will have under his cbmmand a "formidable civil organiFa-
*ton of Soviet operators, . . to cotdrol the country in eivilian guise."
2. USSR: .Violent nreeactanda attacks on US--Aecording to US Embassy
Moscow, Soviet propaganda attacks on the US have reached an unprece-
dented Intensity. The Embassy believes this attitude maybe designed
to cover up certain weaknesses made evident by recent. failures of
Soviet policy at home and abroad. In the Embassy's view, the present
campaign is calculated to create among the Western Powers an attitude
of pessimism regarding the forthcoming CFM meeting, so that the West.
ern delegates will be grateful for even minor Soviet concessions.
3.3(h)(2) 3
1410
3.3(h)(2)
4. HUNGARY: C
US Minister S - el reports remier agy now
monists and Social Democrats to withdraw from the coalition Govermnent,
because the Smallholders Party refuses to waive parliamentary immunity
for its former Secretary-General, Bela ICovacs, who Ms been accused by
the Communists of participating in the alleged aversive plot against
the Government (see Daily Summary of 2? January, item 5). Nagy fears
that leftist-inspired disturbancen would make it impossible for a purely
m
Sallholders' Government to maintain order and that new elections may
therefore have to be held.
of coalition Government
imminent--
OM-
5. FRANCE: posBiblemovam_ 1 pf officers
nommen 'o. Mai
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(CIG Comment: Should Petit become Commanding General of
the Army, the Communists will have gone far in neutralizing the effective-
ness of the Army in putting down any Communist attempt to take control
of the Government by force.)
7. GREECE: Further views on Greek economic crisis--Paul Porter, Chief
of the Economic Mission to Greece, reports that the Greek economic
is so acute that if the Greek Government avails the final recom-
mendations of his Mission, the situation will have "deteriorated to the
point where little could be accomplished." Porter is therefore cooperat-
ing with the US Economic Mission and the US-UK Currency Commission
to formulate "specific immediate undertakings by the Greek Government"
to combat further yam and budret inflation_
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FAR EAST
8. CHINA: Chinese Government reo zation--US Ambassador Stuart
has been r orm the reorganization of his
government will be undertaken "in the closing days of this month,"
Courier ship dela --Stuart also reports that on 23 February
(2 days before the scheduled departure of the US costlier ship for Dairen),
the Soviet Embassy handed him a note stating that it could not notify the
proper authorities concerning the shies departure (as the US had re-
quested) because notification must be made through US Embassy Moscow
to the Soviet Minister of Foreign Affairs. The State Department has
Instructed Embassy Nanking to hold the ship pending further instructions:
US aid in ea rivate fore assets --T.V. Soong has
Informed rig-Treasury Attache t he is anxious to obtain from
the US and UK Governments a list of private Chinese holders of assets
In the US and the British Empire. According to Soong, the Chinese
Government is considering taking steps to gain control of these private
assets. Soong believes that without US and UK cooperation such steps
"could not amount to much."
THE AMERICAS
9. PERU: Debt setUemeataffer_t$111--US Ambassador
Cooper, on instructions from Washington, has informed the Peruvian
ivlinitter of Finance that Peru's latest dollar debt settlement offer is
"completely unacceptable" to the US.
10. VENEZUELA: Revolut 0, movement is re read --US Military
Attache Caracas repo::In owers ex-presi Lopes Contreras
as'sert that all local preparations for a revolutionary movement have
been completed (see Daily Summary of 12 February, item 4).
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OROPE
ill FEB 1947
311
ECE: Gravity of Greek situation reaffirmed--
3.3(h)(2)
,HThe State Depart-
at :tas informed Ethridge of its "general agreement with the sugges-
IR that a Balkan surveillance commission be established, and has sent
ma detailed preliminary views on the matter (see Daily Summary of
February, item 6).
1. FRANCE: Political diffteulties anticipated�US Ambassador Caffery
paris that public confidence and morale has gradually deteriorated in
The past three weeks, because of a growing general conviction that the
resent broad coalition Government by its very nature is incapable of
kkag the decisions necessary to restore the French economy and save
:rane. The cold wave has also been a contributing factor. Caffery
believes that a political and economic crisis within the next several
_Tikoaths "seems almost inevitable." The magnitude of such a crisis,
he adds, probably will depend largely on how the financial and economic
tituation evolves; if it deteriorates too far, an "eXtremist" solution of
Wm...Ice's difficulties might result.
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FAR EAST
rRENCEL INDOCHINA: Ho loits Vietnam Socialists�US Consul Hanoi
reports that, in French-monitoWrieirca-7�sts,,Wrtitnam Socialist Party
kmaRzl insisted that the Vletnameeie people only reaognise a government
headed by Ho Chi Minh. The coned believes that the recent prominence
fAtirera to the Vietnam Socialist Party (wholly controlled by the Communist
?Let Minh League) may indicate that Ho is preparing to reorganize his
gerernvaent, at least nominally, to give the appearance of a Vietnam
%1,74-minisLvation purged of "extremists" in preparation for new negotia-
tions with the french.
THE AMERICAS
4. ARGENT/NA: Plans. to develop atomic enemLI enied--US Ambassador
Meeseremith deedribes as "utterly fantastic" recent US press reports
Ont (a) a German scientist has been invited to Argentina to conduct
maearch in nuclear physics, and (b) the Government is planning to
tMIe recently-discovered deposits of uranium in the production of
Atoltio energy and bombs. The Argentine Foreign Minister, confirming
Iflessersmith's opinion, said that though his Government was "natnrally
:interasted in determining whether there were deposits of Iteraniwein
Ay:gentian, this was the limit of its "real interest."
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nr, NERAL
20 FEB 1947
1. French commendst view.% on UP: communist oblectivee--According to
areatery, tete Arrenci: Comesurdete ies ioaris consider that Me prinsary
eeek of the Britteh CrnxununM Pat r at present is to create a united
_ event with the left wing of the E.c.hor Party in order to compel the Brit-
ish Government to reduce the number of British troops abroad as well
me to curtail productien of armaments. Caffery underetands that the
Communists have decided to demand demobilizaUen of at least
te.o-thirds of the UK Army on the pretext of manpower needs.
Caffery adds that among the questions to be discussed at the
forthcoming Communist Confereeees in London is the "world crisis
eapitalism" which Moscow predicts will reach its peak not later than
Lele. All communlet militants rerortedly are to be prepared for "new
ingece" vbich may be required wan the crisis reaches its maximum
fir)f,neity.
(The nineteeeth Congress a the British Communist Party is
ezeeduled in London for 22-24 February. It will be followed, during
rebrutury4 March, by a conference of the Communist Parties of
the British Empire)
2. ITorwary_.t, _fuses to discuss Spitzbegm'exiqp--Foreign
tee Lange of Norway has advised US Ambassador Bay that the recent
:Iterating resolution, which disapproves further bilateral military nego-
%Alone with the USSR cm Spitzbergen, has been transmitted to Molotov.
Lave further indicated that (a) while Norway is satisfied with the
demilitarization provision of the 920 Treaty, it Wed favor "certain
chgrges" in the Treaty, and (h) Norway has offered to continue discus-
Nioas with the USSR on the economic aspects of the Treaty, largely as
-0, friendly gesture to mitleate effects of the refusal to discuss militarie
melon.
(CIG Comment: The forthcoming release to the Norwegian press
of the text of the Storthee resolution will be an open rebuff to the USSR
and will make the USSR's tactical position in respect to bases in the
1\-rettierds decidedly more unfavorable than ft has been at any stage of
Rio negotiations.
�I �
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3.3(h)(2)
3.3(h)(2)
%rnoi
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.T.OF6,SEOREGP
(CIG Comment: Particularly in view of information received on
/ow Army and public morale in Greece and on increasing guerrilla
CIG believes that the gravity of the Greek political as well as
1-ornic situation should not be minimized.)
1-171P AMERICAS
ARGENTINA: Messersmith against US sailors visiting Argentina�US
Ambassador Iessersm1t1i1as �oth�iencfI 1ha ersonnerfral the US
Navel Task Force participating in the 1 March inauguration of Uruguayan
ikient Berreta not be permitted to visit Buenos Aires because their
ee would (a) remind the Argentine Government and Naval officials
Iliat� US Naval forces were sent to Inaugurations in Chile, Brazil, and
Uriumay, but not Argentina, and (b) retard the development of a generally
7iiore friendly attitude toward the US."
Uile"Stifreithirmum
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.T.Q.P-orneKie
GENERAL
1 9 FEB 1947
303
1.
EUROPE
1 USSR: yishinski's views on current twitions--In a recent conversa-
tion, Soviet Deputy Foreign Minister Vyshinsid told US Ambassador
Smith that (a) the USSR is at present unwilling to agree to the flight of
foreign planes over its territory; and (b) in his personal opinion, the
USSR will not sign the constitution of the International Refugee Organi-
zation. Regarding Soviet failure to answer US requests for negotiations
on lend-lease settlement, Vyshinski said he would "follow this through
personally."
US seeks settlement for Austrian oil--The State Department
has instructed US Embassy Moscow to inform the Soviet Goverment
of the "serious concern" with which the US views the USSR's failure,
"despite repeated promises," to compensate US-owned oil companies
for products they have been required to deliver to Soviet agencies in
Austria. Such failure is described as "completely in violation of well-
established principles of international law and commercial practice,
as well as the agreed-upon rights of Allied properties in Austria."
4. RUMANIA: ovtts believed unlikely to grant economic relief -
has told US Rep-
resentative Berry that Rumania has thus far failed to obtain any impor-
tant economic concessions or assistance in current negotiations with
the USSR. *ered as reasons: (a) Rumanian Communist
negotiators, aware of their precarious domestic position, are too hesitant
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to impress upon the Soviets Rumania's true economic difficulties; (b)
although the Soviets desire to aid Rumania economically, their awn in-
ternal difficulties make immediate assistance impossible; and (c) the
USSR would not dare help Rumania, even if it could, for fear of evoking
similar requests from other satellites, such as Hungary, which the
USSR "certainly does not wish to assist."
FAR EAST
5. CHINA: Stuart's estimate of ChianK's financial measures--Ambassa-
dor Stuart comments that the "forthright and statesmanlike" action
taken by Chiang Kai-shek and his Government to cope with China's
economic and financial crisis will probably have "the immediate if
only temporary effect of restoring a degree of public confidence in the
Government's ability to meet present problems." However, Stuart (a)
questions Whether the Government can effectively enforce its currency
And price controls, or collect revenues with the necessary impartiality
and vigor; and (b) believes that "only cessation of civil war would create
conditions for fiscal and currency stabilization." .
On the subject of transportation difficulties (a major factor in
China's economic deterioration), Stuart notes that no major rail line
r th of the Yangtze has operated continuously during the past six
months, and that transportation conditions are now growing worse due
to "continuous Communist harassment."
THE AMERICAS
6. ARGENTINA: Belmonte denied landing permission�US Ambassador
Messersmith reports that Major Belmonte, Bolivian war-time Nazi
agent, arrived at Buenos Aires on 16 February and that the Argentine
Government, complying with a Bolivian request, has confined him to
his ship and professedly plans to return him to Spain on the same vessel.
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1 8 FEB 1947
308
GENERAL
1 Roy Howard to seek all-out aid to Chianz--Ambassador Stuart in Nan-
!fhb?, reports that Generalissimo Chiang had a 90-minute conference
with Roy Howard and eight US publishers and editors on 14 January and �
then granted a 30-minute private interview to Howard which was greatly
repented by the eight others. According to the publishers, Chiang made
a plea for all-out US support with arms, ammunition, and money and
added that with full US support he could suppress the Communists and
unity China. Howard, avowedly speaking for the rest of the press party,
that the US should change its policy and back the Nationalist Govern-
ment fully. Four of the press group took exception to Howard's state-
ment and expressed themselves in favor of Secretary Marshall's state-
ment to the effect that Chiang must broaden and reorganize his Govern-
ment. Howard later told Soong that US actions are all based on the
premise that the USSR is the leading military power and the US must
be prepared for any eventuality.
Ambassador Stuart points out that, as Howard is in complete
agreement with the Generalissimo, he can be expected to demand all-
out aid for the Chinese Government.
2. Chnesen break off treaty negotiations with Philippines--The Chinese
Minister in Manila has told US Ambassador McNutt that he is sending
a tormal note to the Philippines Government announcing that the Chinese
will break off negotiations for a treaty of amity unless the Philippines
Government will accept the draft of December 1946 which it tentatively
agreed to but subsequently repudiated. Reasons given for the Chinese
move include (a) Philippineterefusal to grant most-favored-nation treat-
ment on the issues of immigration, residence, and trade, and (b) Philip-
pines' Foreign Office vacillation which the Minister interpreted as a
deliberate official anti-Chinese attitude.
EUROPE
3. POLAND: New Premier pleads for US aid--The new Socialist Premier
of Poland, Cyrankiewicz, has told US Ambassador Lane that, if the US
teases its economic assistance to Poland, Polish economic and political
dependence on the USSR will be increased. He added that persons in
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the Government who had attacked the US did not truly represent the
Government's views, and that he and the leaders of the Socialist Party
wished to "regain independence" for Poland which would not be possible
without closer ties with the West. Lane doubts Cyrankiewices ability
o obtain approval by "the Moscow masters of the Polish Government"
for such a strong policy.
4. ITALY: pegr3 seen In withdrawal of Allied troops--US Military
Attache Rome reports his opini1htff1ie withdrawal of Allied troops
win leave Italy "virtually defenseless" before a "mobilized and bellicose
Tugosbevia." Re adds that Italy will require at least one year to organize
an effective national defense even if given assistance on a large scale by
the Western Allies.
P ossible frictleiiimon withdrawal to new frontier�US Ambassa-
dor Dunn reports that Allied military ai1iorities ti1W believe they will
not be in a position to make an "orderly withdrawal" to the new Rao-
'Yugoslav frontier or a "pacific turnover" of areas in Zone A, Venezia
Giulia, now held by US and UK troops unless some form of preliminary
borndare demarcation has been completed by the time Italy ratifies the
Peace Treaty.
5. GREECE: EthrIge dmplzsoncerned over Greek situation�Mark
Ethridge reports that the situation in Greece is ditiaiir-ating so rapidly
theft the border difficulties may be "solved by default" before the Com-
:mission completes its work. Re states that the Soviet delegate and
satellite representatives, convinced that Greece will shortly fall within
the Soviet orbit, are stalling the progress of the Commission. Ethridge
feels that the Soviet belief in the imminent fall of Greece is justified
because (a) Greek army enlistments are down; (b) Army desertions
have increased with two detachments going over to the guerrillas in the
last three days; (c) Army morale is at the "lowest possible;" (d) Corn-
=mist membership is increasing, while the Government is losing popular
confidence through its ineffectiveness; and (e) the area lost to Government
forces is growing.
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FAR EAST
6. CRLNA: chiang's strength apparent Infinancial crisis�US Minister-
Conaselor Butterworth reports that in China's curria financial crisis,
it has been Chiang Kai-shek, rather than T.V. Soong and his advisers,
'1470 hat3 "faced up" to the necessity for strong and really drastic
counter-measures. Although Soong offered objections to the economic
program ordered by Chiang, the latter "brushed them aside." In
Butterworth's opinion, the Generalissimo "grasped the crux of the
emergency. . . more clearly than Soong and his technicians" in real-
izing that the fundamental need was to preserve the Government's power
to govern by ensuring the maintenance of food supply to essential groups.
While third party elements are now most reluctant to join the Govern-
ment .4.tider current crisis conditions, Butterworth believes that "the
Generalissimo can exert sufficient pressure. . . to bring them in."
3
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GENERAL
17 FEB 1.'347
307
2.
3. Soviet-French air.agi,Neement "compm,glevel"--US Military Attache
ictoscow reports that has been "company
level"
at 'company
level" between Air France and Aeroflot (Soviet civil airline) which pro-
vides for traffic exchange at Berlin (see Daily Swnmary of 23 January,
item 3). The French Air Mission left Moscow on 11 February after
failure to negotiate an air agreement at government level.
4. Poles French for Joint declaration on western border�US Ambassa-
3.3(h)(2) dor Caffery"TPi1� that the Poles
are again pressing the French to maite some torm ot - "joint declaration,"
apparently having in mind a guarantee for Poland's western frontier.
The Foreign Ministry does not wish to make any "firm declaration"
prior to the Moscow Conference, but after the British and Czech pacts
are signed, it "will probably" work out an agreement with the Poles.
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ILIA-SPORE4P-.
EUROPE
5. USSR: Soviets to relax censorship on "conference matters" only--
Soviet Deputy Foreign Minister Vyshinski has informed US Ambassador
Smith that there would be no censorship on "conference matters" dur-
ing the Moscow CFM meeting. In Smith's opinion, the USSR has no
intention of relaxing general censorship for the visiting correspondents.
B. GREECE: Ethridermain u rmanent frontier commission--Mark
Ethridge, US member 11 St Investigating Commission, has reiterated
his belief that the establishment of a permanent Balkan frontier com-
mission is essential to the preservation of Greek independence (see
Weekly Summary of 7 February, page 4) and that a detailed proposal
for such a commission should be prepared by the US delegation to the
Investigating Commission. Ethridge reports that such a proposal
would be acceptable to the majority of delegates on the Commission.
The State Department has informed Ethridge that it may be
difficult for It to formulate more than preliminary views on these sub-
jects until receipt of facts disclosed by the Commission's investigation.
FAR EAST
7. JAPAN: US Adviser OD sesSoviet r.s2.--The Acting
US Political Adviser to SCAP has expressed tds opposition to a Soviet
proposal that a Far Eastern Commission draft paper on assured mini-
mum production capacity levels for Japan be amended so as to require
that SCAP consult with the Allied Council in the designation of individual
plants for retention. The Adviser considers that the proposed amend-
ment would violate the FEC's terms of reference and would constitute
an unwarranted assumption by the Far Eastern Commission of executive
authority over SCAP. The Adviser believes it to be a move toward the
establishment of a direct relationship between the Allied Council and
the FEC. (When the Soviet delegate introduced the proposal at the
6 February FEC meeting, none of the other delegates supported it.)
8 CHINA: Private holdinss removed from Shansrhai bstakia.
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(tau Comment: The broad financial regulations announced on
Th February did not include nationalization of gold or foreign currencies,
probably because the Government realized that such action would be im-
pxucticable.)
THE AMERICAS
9. BOLIVIA: New plea forWh.21.L. t4Rxrice--ITS Ambassador Flack reports
that both presidential candidates have informed him that, in their opinion
(a) an increase in the price of tin is the key to the new government s
ability to succeed; (b) if the increased price is not obtained, both extreme
leftist and Communist elements may join the MNR Party (principal sup-
porters of the late President Villarroel) in attempting to create chaos;
and (c) without XIS aid, conditions in Bolivia would become worse than
they were under Villarroel. The candidates declared that Bolivia prefers
not to limit its freedom of action by accepting a loan from Argentina.
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GENERAL
1 5 FEB 1947
38
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GENERAL
14 FEB 1947
305
1. Soviet tactics to retain contra in occu countadinThe g
3.3(h)(2) General US Forces in Austria has learnec
3.3(h)(2)
3.3(h)(2)
that 12,961 of the
ouvact Lroops awns:comma in austria up to ii uecember 1946 have been
placed as follows: 4,207 in industrial plants In Austria under Soviet
control, 312 on Austrian farms likewise under Soviet control, and
3,120 in the MVD (Soviet Secret Police) in Austria. The remainder
(5,322) were sent by the Soviet Transportation Office to Hungary and
Saxony.
The Commanding General comments that while these are the
first specific figures, a number of simi/ar reports have indicated that
the Soviets would use methods of this kind in an effort to retain control
in Austria after the occupation.
a has learne
that a transition trom
ooviet mmtary to pouttcat and economic control is indicated by the
arrival in Bulgaria of Soviet officers and civil dependents, and by the
Increased number of Soviet officers appearing in civilian clothes.
(CIO Comment: This evidence is consistent with a number of
previous reportsindicating the methods by which the 'USSR may seek
to retain control of occupied areas after the "withdrawal" of Soviet
troops. It is believed that similar tactics are being employed in
Rumania, Hungary and Poland.)
FAR EAST
3. JAPAN: MacArthur opposes V.IFTU visit to Japan.--Cancelling his offer
of last August to admit a World Federation of Trade Unions' delegation
to Japan, General MacArthur declares that changed conditions in the
Japanese labor movement make this visit "extremely undesirable at
this time." He believes that current unrest of Japanese labor under
Communist influence would only be aggravatedpoeument No. (33
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GENERAL
2$ FEe
,
304
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OV
THIS DOCUMENT.
No. QO
1. Clark's comments on 03.1...s.Lnieeting - -General Clark reports
that he does not recommend continuing the work of the Deputies' Coun-
cil beyond 25 February as "no worthwhile results will be obtained"
(see Daily Summary of 11 February, item 2). He adds that any conces-
sions to be obtained from the USSR "will be more readily forthcoming
In Moscow than here." Clark believes that the Soviets have "sabotaged
progress on the Treaty from the outset" and that they want a treaty
which will "sanction their interference at any time in the internal affairs
of Austria."
NEAR EAST-AFRICA
2. IRAN: Apparent Soviet retrenchment--US Ambassador Allen reports
as significantrea-Ei�es oftwriactics in Iran: (a) the closing of
the Soviet Consulate General at Shiraz, capital of Fars Province; (b)
the apparent discontinuance of activities by the pro-Soviet Tudeh Party
In Fars; and (c) the markedly friendly attitude which Soviet diplomats
have recently adopted towards Iranians and foreigners alike (see Daily
Summary of 6 February, item 5).
(CIG Comment: The Consulate General at Shiraz has long been
the USSR's principal post in southern Iran. Its closing may presage
Soviet withdrawal from the south as a conciliatory gesture to the British
In the hope of obtaining a freer hand in the north.)
FAR EAST
3, CHINA: Embassy stresses gravity of Chinese situation�Commenting
on the Central Government 's request for US economic aid (see Daily
Summary of 8 February, item 7), US Embassy Nanking notes that the
speed of China's economic and political disintegration will increase
with the continuation of hyperinflation. While an UNRRA or Exim Bank
loan would be "of immediate psychological and political assistance,"
the Embassy emphasizes that such loans would give only temporary
support to China's fast-dwindling foreign exchange assets, and would
"not make a significant dent" on internal inflation accompairring the
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Pt;!
civil conflict. In the Embassy's opinion, the "gravest political aspect"
of China's situation is the decline in the power of the Central Govern-
ment which will find it increasingly difficult to command allegiance of
its military forces and government personnel. Moreover, the Embassy
adds, the Communists can force an insoluble economic situation upon
the Government by continuing to disrupt communications and by com-
pelling the Government to make excessive military expenditures.
4. FRENCH INDOCHINA: Im Mations in recall of D'A Con-
sul Saigon believes that L reciaThrgh Commissioner D'Argenlieu
probably means that the French are abandoning a solution by force and
the policy of divide and rule. The new High Commissioner will probably
not have the same powers as D'Argenlieu and will be guided to a greater
degree by policy decisions of the Government in France. D'Argenlieu's
departure will be welcomed by a "great majority" because no real pro-
gress toward a settlement of the Vietnam question was possible under
his administration.
5. N.E.I.: lautnitEr_silver impasse In negotiations--US Consul General
Batavia reports that pessimism is increasing over the impasse in
Dutch-Indonesian negotiations which was brought about by Indonesian
rejection of Dutch interpretations of the Agreement of 15 November
1946. The Commander In Chief of the Indonesian Army has issued
orders to prepare for a campaign of destruction and sabotage, and
the belief is growing that President Soekarno either does not desire
a general agreement or that he cannot control his military command-
ers. Dutch business and governmental circles feel that the signing of
the November Agreement will only mark the beginning of the real trou-
bles.
THE AMERICAS
6. ARGENTINA: State Department's views on Argentine tments--
In reply to US Ambassador Messersmitlie recent comments on Argen-
tina's Chapultepec commitments (see Daily Summary of 10 February,
item 7), the State Department has advised Embassy Buenos Aires that
the Department (a) does not understand that Argentina has "yet met
the test", and (b) will "accordingly await developments."
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7. PANAMA: Secret note rocedure on defense site criticized--Accord-
ing to the US Commanding General Caribbean, Panama' proposal to
embody parts of the new defense sites agreement in secret notes would
lay the US Army open to attack by persons not aware of contents of such
secret notes (see Daily Summary of 5 February, Item 7).
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GENERAL
12 FEB 1947
303
1. US su rt ur ed for Polish claims to Western Territory--US Embassy
Warsaw disagrees wi US mbassy oscow s recommendation that the
US adopt a "firm stand on principle" for the return to Germany of at
least part of the Polish-administered Western Territory (see Daily
Summary of-5 February, item 1). Embassy Warsaw feels that the US
would lose the support of the Polish people (90% of whom are now
pro-US), and that from a long-range view the US must continue to
support them in their struggle against Communism. The Embassy
agrees that the US will fail to prevent retention of this area by Poland,
but with reference to the matter of Embassy Moscow's prediction that
US support of Germany would "cut the ground out from under the Ger-
man Communists" expresses its belief that, on the contrary, apparent
Inability of the US to enforce its views would be interpreted by the
Germans as a sign of weakness.
2. Progress of Sino-Soviet negotiations on Dairen and Changchun RR--
US Consul General Miltden reports evidence
that both Soviets and Chinese in Mukden have received indi-
cations of an early arrival of Soviet personnel for the Chinese C
chun Railway. US Embassy Nanking states, however. tha
deni�hat any
agreement with the USSR concerning the railway has been reached or
is exp ripe] nnrin
negotiations are now in
progre s regarcung !Omen tsee uatiy summary of 2 January, item 3),
rio
but gave the impression that the Chinese Government will attempt to
get the port openbefore settling other questions connected with the
Sino-Soviet treaty of August 1945.
3. China's ppitsy_toward'Indochina�US Ambassador Stuart estimates
that Chinese policy toward Indochina is directed basically toward a
regime under either the influence or direct control of the Chinese
Central Government, and is motivated by the ICuomintang's fear of
encirclement by Communist states and its desire to appear as a
leader of Asiatic peoples. In the implementation of this policy, China
would prefer either a trusteeship in which it would have the ruling
voice, or a regime headed by a Chinese nominee with only formal
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French connections. Reference of the case to the UN might prevent
such Chinese control, though it would discredit France and the Vietnam
Communists.
If the present Chinese Government attains some measure of
Internal stability, Stuart expects a Chinese-inspired campaign for the
protection of "oppressed' Chinese in southern areas, followed by
developments on the 1938 Sudetenland pattern.
4. Remt_ed revo.Litis_aina 1.9.t wt Cuba and Venezuela According
to US Ambassador Norweb,
the US Military Attache Havana of
a plot of Cuban exiles and others, including ex-President Lopez
Contreras of Venezuela, which is allegedly being organized in Miami
against the governments of Cuba and Venezuela. The first action pre-
dicted by the informant would be an invasion of Venezuela by revolution-
ary forces within four to ten days, after which Lopez Contreras would
enter Venezuela from Colombia.
(CIG Comment: A revolutionary movement against the Govern-
ment of Venezuela has been in the organizational stage for several
months.)
EUROPE
5. SPAIN: Troops reduced on Pyrenees frontier--US Embassy Madrid
has learned hat Spanish
troops on the kyrenees rrontier are being reduced from 160-180,000
to 110,000 men. In the Embassy's opinion, this reduction is intended
(a) to reduce the economic burden of the Government, (b) to improve
Army morale, and (c) to justify a request for some reciprocal gesture
by the French.
6. GREECE: flamers involved in case of_filLanslasol_lappis--US Ambassa-
dor MacVeagh reports that the Porter Economic Mission is concerned
with fundamentally the same external threat to Greece as is the SC
Border Commission. The Soviets are completely aware that, even if
the SC Commission thwarts their aims in northern Greece, a financial
collapse would bring about a revolution led or dominated by Commu-
nists. Such a revolution would lead to Soviet control of Greece and
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subsequently of the entire Near East. Ma.cVeagh says that to prevent
a financial collapse "a premium of not only five but of many_ times
five million dollars would seem cheap insurance for the US."
NEAR EAST-AFRICA
8, PALESTINE: Arabs a
Embassy London reports
door on future negotiations
ear will
to continue n otiations�US
rab e egates have not closed the
FAR EAST
9. CHINA: Communist del tion asked to leave N. � -US Embassy
Nanking reports that the Governments notified e ommunist
delegation that its presence is no longer desired in Nanking.
THE AMERICAS
10. PERU:Lreds fears civil war�President Bustama.nte has told US
Ambassador Cooper that (a) rightists and members of Peru's left-wing
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Apra Party (increasingly at odds with each other) are preparing for
a showdown and may provoke at any time an incident which could
develop into civil war; (b) in spite of the increasing influence of both
groups in the Army and Air Corps, top ranking Army officers could
maintain discipline and would be loyal to the Government in the event
of crisis; and (c) in order to obtain needed US credits, he hopes to
submit a debt formula in the near future providing for the liquidation
of Peru's outstanding dollar debt.
Triati4
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GENERAL
11 FEB 1947
302
1. USSR-France wish drastic Ausialans�General Clark
reports that France and the USSR are insisting that military and air
restrictions more drastic than those included in the "satellite" treaties
be written into the Austrian Treaty. These restrictions are intended to
prevent Germany from using Austria as an "experimental laboratory"
for the development of new weapons.
ihe US, which opposes the
French and Soviet proposals, is decidedly in the minority. Clark notes
that "such restrictions will facilitate exertion of Soviet pressure and
war of nerves against future Austria."
2. Slow progress on Austrian Draftylrjaq.�The State Department has
advised General Clark that in view of the shortness of time remaining
before the 25 February deadline when the Austrian Treaty will be due,
and the slow rate of progress being made, it may become desirable to
leave important issues open for discussion by the Foreign Ministers,
or even to postpone the Treaty. The Department states that present
haste should not be allowed to jeopardize Austria's basic independence,
sovereignty, or chance of economic survival.
3. Evidence of lar -scale Soviet withdrawals from Austria�US Military
Attache Prague has received reports, which he has every reason to
believe" are accurate, of large-scale Soviet troop movements from
Vienna toward the USSR via Budapest and the Carpatho-Ukraine. The
scheduled withdrawal reportedly calls for seven passenger express
trains and twenty troop trains between 4 February and 20 February.
A total of 3,000 Soviet military vehicles will travel the highway
paralleling the above route, between 15 February and I May.
EUROPE
4. YUGOSLAVIA: UNRRA extension discouraged�Commenting on its
"understanding" that UNRRA liemay be extended thirty days, US
Embassy Belgrade recommends that no additional rehabilitation
assistance be furnished Yugoslavia, because all regional and branch
offices of UNRRA have been closed and there would, therefore, be no
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wormisitiLigtetririo
adequate system for observation and control of distribution. (The
Embassy previously reported that the Yugoslav Government has not
satisfactorily accounted for profits received from sale of UNRRA
goods, nor for the distribution of UNRRA supplies processed in Yugo-
slav factories; see Daily Summary of 4 February, item 4.)
5. ALBANIA: Withdrawal of tro_om--Former Actin US Renresentative
Henderson, has received a report
t (a) the Albanian Army is rapidly being demobilized;
ulk of troops along the Greek border are being withdrawn;
(c) many troops have been sent home on indefinite leave. Henderson
concludes that these moves are unquestionably in preparation for the
UN investigating commission.
3.3(h)(2) 6
Novi
NEAR EAST-AFRICA
7. BURMA: A_walan's reactions to London Conference--US Consul
General Rangoon reports that in a recent interview Aung San appeared
less confident than he had been before the London Conference, Aung
San regards the conclusion of an agreement with the hill states and
the convening of a Constituent Assembly as the two most important
problems facing the Government of Burma. With reference to the
military provisions in the Burmese-British agreement, Aung San de-
clared that British troops might be stationed in Burma "for a long
time to come."
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10 FEB n4/
301
GENERAL
EUROPE
2. FRANCE: Bidault loom on #ro..sal for German -Foreign Minister
Bidault has to m assa..r a erg, a a iscussion of French
views on a German settlement, that he realized neither the US, UK nor
USSR would approve the French position. Mulct added that France is
a defeated country whose "dream of restoring her power and glory at
this juncture seems far from reality."
3. UK: Effects of coal crisis�US Embassy London considers that (a) coal-
stock exhaustion th� ut the UK is now such that the country can only
"limp through" until mid-April, even with improved weather; and (b)
although rumors of a Government crisis or attempt to form a Coalition
are to be discounted, the Labor Government is facing its "first real
loss" of public support.
4. CZECHOSLOVAKIA: Reported infiltration by Soviets�General McNarney
reports from Frankfurt that, according to "independent sources," Soviet
troops in civilian clothes infiltrated during December "on a consider-
able scale" from Germany into Czechoslovakia. McNarney comments
that "there may be some connection" between this reported infiltration
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and the intense Soviet exploitation of possible sources of uranium-
bearing ores in northern Czechoslovakia. According to US Military
Attache Stockholm, a prominent Slovak geologist recently asserted in
Sweden that the Soviets have "completely excluded" all Czechoslovaks
from the uranium-deposit areas along the German border.
FAR EAST
5. CHINA: ChiAnt " ovemment reorganization-President
Chiang has told US Ambassador Stuart he lth actively exploring the
details of government reorganization. Chiang tends to favor the estab-
lishment of a State Council with "real authority" for the interim period,
together "with changes elsewhere in the Government, except in the
Executive Yuan where considerations of practical administration are
more acute."
The Generalissimo described the financial position as "acute"
and expressed strongly the hope that a loan from the US could be
promptly approved (see Daily Summary of 8 February, item 7).
'Gross inepMtude" shown in announcing elmr..Lsjasiiktel--US
Treasury Attache Nanking reports that the manner in which the Central
Government announced its export subsidy and import surchare pro-
gram on 5 February was "characterized by gross Ineptitude.' In prior
discussions (see Daily Summary of 7 February, item 5), this program
was considered as an alternative to adjusting the official exchange rate,
but when the program was announced, the Government failed to assure
the public that no change in the exchange rate was contemplated. There-
fore, the Chinese people naturally view the new program as a prelude
to exchange adjustment.
(CIG Comment: In the few days since the program was announced,
open market prices for commodities, gold, and foreign currencies in
Shanghai have risen so violently that the bulk of the benefits that might
accrue from the export subsidy plan already have been eliminated.)
6. NEW ZEALAND: Forces 1zJpan Military Attache
Wellington believes that the current drive to recruit 4,000 volunteers
to replace the New Zealand occupation force in japan will fail because
of publicity given poor conditions in Japan and because of the demand
for labor in industry. If it does, the MA adds, New Zealand will seek
a reduction in the size of its occupation force.
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THE AMERICAS
7. ARGENTINA: Messersmith r � PN:: on A tine "tom iliance"--U8
Ambassador Messersm repo tt e Argentine .-rnment has
(a) fully complied with its obligations respecting schools, institutions,
and propaganda tainted with Nazi or Fascist doctrines; (b) taken such
"thoroughgoing" action with regard to enemy property as to cover all
firms of any importance in which the UI( and US "found any reason to
believe there was any enemy interest," and (c) instituted "extraordinary
steps" to apprehend those enemy aliens included in a recent decree who
have not yet been arrested, so that at least the "principal persons"
among them will, "it is hoped," be sent to Germany on "an Argentine
vessel which it is expected will leave within a maximum of several
weeks." With the deportation of this "further group," Messersmith
adds, "the moment will have arrived for the US to recognize that the
Argentine has substantially and reasonably complied with its obligations
respecting enemy aliens," and to etate that "the way is open to the hold-
ire
of the Rio meet:lug."
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EUROPE
8 FEB 1947
300
1. USSR: EmiaatjAto_stat_nts on Soviet demobilization�US Embassy
Moscow believes that one of the reasons for the recently-decreed
fifth phase of Soviet demobilization is the serious manpower shortage
in industry and agriculture.
2. RUMANIA: Food shipments to the USSR--US Representative Berry
has been informe hat during the period 8-28 Janu-
ary !Rumania delivered 21,975 metric tons of cereals to the USSR under
the Armistice agreement (Rumania has appealed to the International
Emergency rood Council for relief shipments of 1,000,000 tons of corn,
and near starvation prevails in many areas of the country; see Daily
Summaries of 27 January, item 6, and of 6 February, item 4.)
3. FRANCE: "Conciliatory" policy toward Indochina�Foreign Minister
Bidault has told US Ambassador Caffery that the trench Government
"would without question be generous and conciliatory" in Indochina
and is "more than anxious to find a peaceful, liberal solution" as soon
as possible.
4. GREECE: Soviet SC Dele_mt. ago_m_intunal_arik--Ambassador
MacVeagh reports that the Soviet delegate on the UN commission
investigating alleged violations of the Greek border is attempting to
focus attention on Greek internal strife. MacVeagh adds that the Greek
Foreign Minister has addressed an "excited protest" to the UN, and
that the Greek press has been erroneously informed that the SC com-
mission has "formally intervened" in asking the Greek Government
to postpone certain executions. Mark Ethridge, the US delegate, notes
an apparent tendency on the part of the UN representative on the com-
mission, Lund, to cooperate with the Soviets.
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NEAR EAST-AFRICA
6. IRAN: Qavam hones for international oil agreement�US Ambassador
Allen reports that � avam his expressed the hope that some kind of
international agreement in the field of petroleum will be reached in
time to furnish a basis for him to insist upon provisions in the Soviet
concession which adequately protect Iranian interests. Qavam also.
told Allen that although he does not wish to retire he realizes the
force of arguments presented to the Shah by his opponents that someone
not personally committed to the Soviet oil agreement, which was
obtained from him under pressure, should be allowed to take over.
(See following pages)
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FAR EAST
7. CHINA: Central Government enters new lea for US aid--On 5 Febru-
ary, T.V.,Soong handed US Ambassador Stuart a memorandum giving
statistical support to the Chinese claim that their economic and finan-
cial situation had abruptly deteriorated in recent weeks (see Daily
Summary of 5 February, item 6). In an accompanying aide-memoire,
Soong stated that, although the Central Government had hoped to re-
organize the State Council and Executive Yuan before asking for US
financial aid, the economic situation has forced its hand. Be therefore
suggested an immediate credit of US $150 million for imports of
cotton (and possibly wheat), and proposed that John Blandford, American
adviser to the Executive Yuan on budget and governmental reorganiza-
tion, visit the United States "before General Marshall leaves for Mos-
cow" to explore the possibilities of further US assistance.
On the previous day, Blandford had discussed the entire pro-
blem with US Embassy Nanking and had pointed out that without US
support, the Central Government's efforts toward democratic reorgan-
ization were jeopardized because (a) "groups and individuals were
afraid to be associated with it;" and (b) "Soong could not carry on his
fight" with Kuomintang reactionaries and militarists. Blandford added
that in its present weakened position, with dwindling foreign exchange
resources, the Government could not plan a reasonable course of eco-
nomic and financial action until it obtained more information on US will-
ingness to offer aid. ,
The Embassy, while not minimizing China's "current acute
difficulties and the eventual gravity of the situation," believes that
"Soong and his entourage are showing all the symptoms of an incipient
and partly self-engendered panic."
Soviet Folic in Manchuria and Daireli--Ambassador Stuart also
reports that Ch nese officials appear pessimistic regarding access to
Dairen because local negotiations between Chinese and Soviet Military
Commanders in Manchuria have achieved no results. In Stuart's opinion,
Soviet looting in Manchuria and the denial of the port of Dairen tc
Chinese National authorities has had the effect of stalling Nationalist
nolitical control and economic rehabilitation, thus perpetuating condi-
tions which discredit the Central Government and further Soviet efforts
to integrate Manchurian economy with that of eastern Siberia. Stuart
believes that the Central Government will probably be unable to reduce
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Soviet economic control over Manchuria and Dairen and that such
control is likely to become more stringent in the immediate future.
Stuart considers that the US should prevent the Soviet Union from
exploiting its position in Manchuria to the disadvantage of both China
and the US.
8. NEI: Dutch im ,ose stri ent trade controls on Re lican ports--
According to US Consul eneral Batavia, it is expected that the Dutch
Navy will be "very strict" in enforcing the recent Netherlands Indies
Government decrees on import and export trade through Republican
ports. Ships bound for such ports will have to stop first at Dutch
ports and the Dutch will seize as contraband (a) all goods of direct or
indirect military use; (b) all transportation, radio and telephone equip-
ment; and (c) gold, silver and currencies. On out-bound ships, the
Dutch may confiscate, as the produce of European-owned estates, such
Important exports as tea, palm oil, Javanese coffee and cane sugar, and
Javanese and North Sumatran rubber, tobacco, and fibers.
THE AMERICAS
9. BOLIVIA: Serious Indian uprate--US Ambassador Flack reports that
an Indian urrising o serious proportions broke out on 5 February, but
that army and rolice troops are believed to have the situation under
control. He adds that the uprising appears to have been (a) instigated
by the MNR party which supported the late rresident Villarroel, and
(b) supported by pro-MNIZ miners who furnished dynamite to the Indians
(see Daily Summaries of 25 January, item 8Iand 31 January, item 6).
T4iP�SEeltfilia
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GENERAL
7 FEB 1947
299
EUROPE
2. USSR: Annual_peacetime inductions to average to --US
Military Attache Moscow has learnec
that Chief of the Soviet General Staff Vassilevsky recently told Field
Marshal Montgomery that peacetime inductions into the Soviet armed
forces would average between 750,000 and 1,000,000 men yearly.
Soviet press blasts conditions in western Germalm--According
to US Embassy Moscow, the Soviet press recently has erupted with a
series of particularly violent attacks on conditions in the Western
Zones of Germany, obviously in preparation for the Moscow Conference.
Chief among the charges are that: (a) the USSR has complied with the
Potsdam Agreement by eradicating the German war potential in the
Soviet one but in the Western Zones the US and UK have not done so;
(b) formation of trade unions has been obstructed in the Western Zones;
(c) the US and the UK have hindered the payment of reparations from
their Zones; (d) the unification of the US and British Zones results in
the splitting up of the German economy, and creates an Anglo-US
monopoly which aims at preventing joint allied management of the
Ruhr; and (e) this unification is connected with Churchill's plan for
a united Europe.
3, BULGARIA: Government moves to eliminate Opposition--US Repre-
sentative Barnes reports cancellation of Parliamentary immunity and
subsequent arrest of an Opposition deputy in the Grand National Assembly
as "evidence of Communist designs that might render early US recog-
nition difficult, if not impossible. Barnes believes that the Communist-
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dominated Government is determined to drive all Opposition leaders
from the Assembly and to impose police sanctions which will eliminate
any effective opposition to the Communist Party (see Weekly Summary
of 7 February, rage 1).
4. ITALY: Ambassador Pleatpotentiamto skn peace tr_Egy--US Ambassa-
dor Dunn has been informed by the Secretary General of the Foreign
Office that an Ambassador Plenipotentiary has been designated to sign
the peace treaty on behalf of Italy.
(CIG Comment: The Cabinet has apparently finally assumed
responsibility for signing the tre, after an unsuccessful effort to
shift the burden to the Constituent Assembly.)
FAR EAST
5 CHINA: Foreign exche bankrupcy_mected in six months�US
Treasury Attache Adler reports that at a 4 February conference
(attended by T.V. Soong, Governor Pet of the Central Hank of China,
their advisers, and himself), concerning the alternatives of either
depreciating the official exchange value of the CN dollar further or
placing subsidies on exports and surcharges on certain imports, the
atmosphere was "one of deep pessimism. The Chinese stated that
their foreign exchange assets would last "only six mnnths nr sn
and ... anything could happen then."
the alternative of depreciation was rejected mainly because of
.!'inevitability of military demand for increased appropriations in
case of a general mark-up of prices." Adler comments that "it is
to be feared that such a demand will ensue in any case."
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GENERAL
6 FEB 1947
798
1. pitjtislyli UN disarmament commission.--US Delegate to the
UN Austin reports thatin a meeting of the Security Council's sub-com-
mittee concerned with armament reduction, Soviet Delegate Gromyko
refused to incorporate in the resolution a statement that the new UN
committee on reduction of armaments "shall not infringe upon the
competence" of the Atomic Energy Commission. As a result, Austin
adds, the other members of the sub-committee have become increas-
ingly suspicious of Gromyko's intentions on the entire proposal for a
disarmament commission.
EUROPE
2. SPAIN: Extremist pressure /or deal with USSR--US Embassy Madrid
believes that "certain extremist Falangists" are urging Franco to
"make a deal with the Kremlin" as the only way to overcome Spain's
present international difficulties. (For at least six months rumors of
secret Soviet-Spanish negotiations have been repeatedly reported and
denied.)
3.
4. RUMANIA: Groza "yearns" to res--According to US Representa-
tive Berry, Prime Minister Groza recently told a former cabinet
member representing the Opposition that "diminishing success" in
impeding Soviet and Rumanian Communist extremism made him "yearn"
to resign, but that he could not do so except by Soviet order. Groza
added that the Communists are making plans to capitalize upon any
popular outbreaks resulting from the food shortage to request the reten-
tion of Soviet troops after the peace treaty becomes effective.
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Food situation deteriorating�According to US Delegate Allied
Control Commission, a recent survey of economic conditions in Bucha-
rest by a group of US welfare experts indicates that (a) starvation in
Bucharest may be expected after 1 March unless food stocks are exten-
sively augmented; (b) the Government's forced collection program is
rapidly transforming a regional problem into a national calamity; and
(c) even if the US makes substantial food shipments, the lack of storage
and transportation facilities will probably prevent any improvement in
the situation.
NEAR EAST-AFRICA
5. IRAN: SAILetatnerosi " towards Iran�US Ambassador Allen reports
that the willingness of the Soviets to return to Iran trucks carried across
the border by retreating Azerbaijanis has surprised the Iranians who are
unable to understand the motive behind this "generosity." Allen adds
that most commentators connect it with Soviet desires to act correctly
during the period prior to discussion of the oil concession In the Majlis.
The US Military Attache Tehran reports further evidence of such
"generosity" in the recall from Iran of certain Soviet consuls who were
closely associated with the Azerbaijan Democrats.
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GENERAL
5 FEB 1947
297
1. US 2pmgit1on urged to Polish claims to reste_ml_aerrito --US Embassy
Moscow, while conceding that there is no way of inducing the Polish and
Soviet Governments to relinquish to Germany the Polish-administered
Western Territory if they decide to remain there, nevertheless favors
a "firm stand on principle" for the return of at least a part of this area
to Germany. The Embassy notes that the Itreralin's main objective is
the domination of Germany through the Socialist Unity Party (SED), and
believes that US counter-strategy should be to support German claims
to this much-needed agricultural area, thereby cutting the ground from
under the German Communists.
2.
EUROPE
3. SPAIN: Possible Monarchlst-.Democrattc Affiance agreement
Charge Madrid has been advised
that Monarchist groups may "possibly" reach
agreemunx witrin a few days with the Democratic Alliance, a
group made up chiefly of non-Communist leftists.
(CIG Comment: Because of many internal conflicts on both sides,
an effective alliance between Monarchists and moderate leftists is un-
likely soon.)
4. AUSTRIA: 12ilecilatrAnns seen as major obstacle to treaty--Gener-
al Clark reports that the Df's in Atiitiiii�e�Far one of the major obstacles
to successful conclusion of the Austrian treaty." Re believes that the
majority will find no asylum anywhere but in Germany.
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5. BULGARIA: Government rem...110 unlike' to can out trea terms--
US Representative Barnes reports that he has yet to hear any person
In Sofia," either Bulgarian or foreign, express a belief that the Bulgar-
ians will carry out any treaty terms that a Soviet-supported government
considers onerous, or that they will diminish their efforts to regain
Western Thrace and to implement creation of a South Slav Federation
which will include Greek Macedonian territory.
FAR EAST
6. CHINA: US economic aid so ht Central Government--T.V. Soong
has expressed to US Embassy Nanking his extreme concern over the
abrupt deterioration in China's economic and financial situation, and
claims that if US aid is not forthcoming very soon, "the organized
Communists, who had armed forces to back them, . . would take power."
By way of constructive political proposals, Soong said that he favored
(a) immediate constitution of the State Council (reserving seats for the
Communists) with very substantial powers and policy responsibilities,
and (b) formation of a coalition Executive Yuan.
The Embassy, however, believes that the main danger in China
is not a "dramatic economic collapse" but an "insidious economic and
political disintegration," which will progressively weaken the de facto
authority of the Central Government, lead to a revival of regionalism
and warlordism, and increase the Communists' activities. The Embassy
considers that the Communists are more likely to spread their influence
and heighten unsettlement in Central Government areas, than to take
over the whole country. The Embassy adds that both Chiang Kai-shek
and Soong seem "unsure as to what the next move should be."
THE AMERICAS
7. PANAMA: "Executive a eement" for sites iro � osed--According to
US AmbassaWms, e anarnan an ore ice now proposes an
"executive agreement" on the defense sites couched in general terms
and designed for public consumption, which would give the impression
that the occupation of the sites would be a joint undertaking of the two
Governments. The legal specifications of the agreement, however, would
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rinpr
taji
be contained in an exchange of notes not to be made public. Hines states
that the President and Cabinet appear to have decided to make no further
Issue of (a) Interpretation of the 1942 agreement; (b) return,or symbolic
return, of sites presently held; or (c) request for an interim agreement.
8. PERU: Reguest for new US loan--The Peruvian Foreign Minister has
appealed to US AMbassador Cooper for aid in obtaining from the Export-
Import Bank a loan without which, the Foreign Minister asserts, the
Bustamante Government "might fall." Cooper replied that (a) no loan
would be forthcoming until a satisfactory settlement of Peru's dollar
debt had been reached,and (b) if President Bustamante would sponsor
such a settlement, the Peruvian Senate would promptly pass it.
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GENERAL
OP 4 FEB 1947
296
EUROPE
3. GERMANY: S_pyletrerermamsIxonomic uni
Soviet Zone Deputy for Economics, has asked the Economic Director
In the US Office of Military Government for US economic-unity pro-
posals "in writing" in order to avoid an "unexpected proposal" at the
Moscow Conference. He stated Soviet prerequisites for economic unifi-
cation to be: (a) satisfaction of Soviet reparations demands; and (b)
settlement of certain political questions involving the creation of a pro-
visional central government.
4. YUGOSLAVIA: Intigi...9Aal i_zIsi.ilt_ht.E9A-UNRALLeltdr-US Charge
Hickok, in a comment on the $68,200,000 Yugoslav relief estimate
approved by the UN Committee on post-UNRRA Relief, states his be-
lief that "on exclusively economic grounds" no further relief grants
to Yugoslavia should be made unless the Yugoslav Government: (a)
Justifies the maintenance of an army which drains 51% of the national
budget and takes relief supplies and men away from reconstruction work;
(b) satisfactorily accounts for profits from sale of UNRRA goods, now
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estimated at over $350,000,000; (c) accounts for the distribution of
all UNRRA supplies processed in Yugoslav factories; and (d) presents
foreign trade data and explains its heavy export balance to the USSR.
THE AMERICAS
6. NICARAGUA: AimeHo "victory" considered rigged--US Embassy
Managua reports its belief that the Somoza administration "has made
effective use of its control over the ballot boxes to have Arguello
declared the victor" in the Presidential elections. The Embassy adds
that, while the populace is sullen, the Opposition apparently is not
ready for violence now.
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GENERAL
FEB 1947
295
3. Possible French deal with USSR on Gernian_y�US Ambassador Caffery
has gained the impression that the French Ambassador to Moscow has
been instructed to tell Stalin that France will agree to Germany's present
eastern frontier with Poland and to the USSR's position on reparations
from current production, if the USSR in return will agree to economic
union of the Saar with France and to a satisfactory internationalization
of the Ruhr.
EUROPE
4. GERMANY: Soviet Intransigence in Kommandatura�Acting US Political
Adviser Mucci� reports from Berlin that in Kommandatura meetings the
Soviet, member has continued his unilateral actions in regard to (a) the
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seating of new members of the Magistrat councillors and (b) the distri-
bution of electrical power in Berlin. Mucci� states that the Soviet mem-
ber remained "obstructive and provocative" until "stopped" by the US
member,who said the Soviet member's remarks were "bordering on the
Insulting and had strained his tolerance"; and that the Kommandatura
had "degenerated into a dog fight."
NEAR EAST-AFRICA
5, INDIA: Situation deteriorates--US Embassy New Delhi reports that
(a) the majority of Congress Party members appear determined to pro-
ceed with the Constituent Assembly regardless of the Moslem League's
refusal to participate, as was decided at the League Working Committee's
recent meeting; (b) champs of the Assembly's materializing as envisaged
in the British Cabinet Mission plan have been further reduced by the
Indian Princes' annoyance over passage by the Assembly of Nehru's
"objectives resolution" (that India shall become a sovereign, independent
republic); and (c) the Viceroy himself is undecided as to what steps can
now be taken to resolve the impasse. �
FAR EAST
PHILIPPINES: �Aps_e_me Court rules on collaborationists--US Ambassa-
dor McNutt reports that on 31 January the Philippine Supreme Court, by
a vote of 9 to 2, rejected the argument that Filipinos, because of "sus-
pended sovereignty," could not have committed treason during the Japa-
nese occupation (see Daily Summary of 29 January, item 7). McNutt
adds that this decision is particularly important because the People's
Court (which is trying the collaboration cases) has been given a "new
lease of life."
1. CHINA: Soviet plans to open Dairen hinted-
a Soviet newspaper publisher, who is
connected with Soviet intelligence, has stated that Dairen will be opened
to foreigners this summer and has tentatively offered jobs there to
Russian detectives in the Shanghai Municipal Police.
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THE AMERICAS
8. MEXICO: possible attepl�ad cattle disease to US--US Ambassa-
dor Thurston reports that although in his opinion there will be no "exten-
sive, organized' effort on Mexico's part to spread foot-and-mouth disease
to the US, "small radical groups," if foot-and-mouth control causes
theta financial loss, might attempt to do so. He declares that a Mexican
news service has implied that Mexico has "been selected to serve as a
springboard" for irdectina US stock so that "all countries would ha nn
the same plane."
U us authorities insist upon the slaughter of pre-
sent fighting-bull stock, Mexican breeders "will insure that the disease
spreads to the US."
9. NICARAGUA: AivelloAci.orill_eclaration exust_ed--According to US
Ambassador Warren, President Somoza has announced that incomplete
returns give Arguello, the Liberal Party (Government) candidate for
president approximately a two-to-one majority in all districts. "Indi-
cations are, Warren adds, that Aguado, the Conservative (Opposition)
candidate, got the larger vote in certain places where official returns
show Arguello leading, Warren comments, however, that Somoza's
statement shows that Arguello will be declared the winner.
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GENERAL
1 FEB 1947
29'4
1. A comment on Communism in French North Africa--US Consul General
Tangier reports that in all three North African countries under French
control (Tunisia, Algeria, Morocco) "one observes" the same pattern
of Communist penetration through flirtation with, and apparent support
of, local Nationalist groups. Re adds, however, that some French, na-
tive, and US officials believe Communist influence in North Africa is
waning. The Consul General "does not entirely discount" the possibi-
lity that if the French hold the Arabs in check "too tightly or too long,"
Nationalists may reluctantly accept Communist aid. He considers that
the best means of preventing Communism in North Africa would be for
the French to accelerate the tempo of "liberalizing" the colonial govern-
ments there.
(CIG Comment: The above views correspond with those elabo-
rated in "Arab Nationalism in North Africa"; Weekly Summary of 31
January.)
2. French consider Peron "serious" about seizing_German assets--US
Embassy Paris has been informed by the Foreign Office that French
Embassy Buenos Aires has wired that Peron "now appears to be serious"
about the business of taking over German external assets there,
3.
EUROPE
4. ITALY: Manner of Pola evacuation responsen_g../...a.lfsst ic; treaty--
According to US Political Adviser Byington, De Gasperi has told the
Supreme Allied Commander that all Italians attach great importance to
the problem of evacuating the inhabitants of Pola prior to Yugoslav
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occupation (see Daily Summary of 25 January, Item 4), and "even went
so far" as to say that the manner in which the evacuation is performed
will affect the Italian people's reaction to the signing of the peace treaty.
FAR EAST
KOREA: Possible Soviet intentions in Korea--General Hodge reports
that recent intelligence confirms previous reports that the Soviets,
while making material reductions in their forces in North Korea, are
arming and training a large Korean force for the eventual purpose of
"liberating" South Korea for "Democracy." Considerable evidence
indicates that Soviet authorities are transferring all governmental
functions to Koreans but are controlling the administration from well
In the background. General Hodge believes that, following a possible
Soviet withdrawal in the spring, the US may be faced with a Korean de-
mand for the evacuation of US forces or even immediate action by the
"armed forces of North Korea" to expel the "reactionary imperialistic
Americans." In this event, the US could be discredited throughout the
Orient, by representing US forces either as an obstacle to "liberation"
or as too weak to protect those who support US policy.
THE AMERICAS
6. CHILE: Bowers comments on Washington "leak"--US Ambassador
Bowers, commenting on a locally published Associated Press dispatch
quoting "US Government officials' in Washington as saying that "ob-
jectionable features" of the Argentine-Chilean trade agreement were
eliminated "as a result of US representation to Chile," observes that
(a) Chile asked the US not to give the impression that representations
had led to modifications of the treaty, and (b) such leaks "seriously
complicate and embarrass" the Embassy's position.
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