DAILY SUMMARY - 1947/01

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 02996864
• Document Creation Date: October 8, 2018

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3.3(h)(2)
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GENERAL
31 JAN 1947
293
1. Dams relutapt to discuss Greenland--US Minister Marvel in Copen-
hagen reports that the Danish Foreign Minister continues reluctant to
discuss Greenland but has remarked to Marvel, when offered an open-
ing, that "while we owe much to America, I do not feel that we owe
them the whole island of Greenland."
2.
3, Soviets abandon Penetration of Finnish induntrv--iis minister Hamilton
3.3(h)(2) reports that,-the danger is
over that the Soviets will acquire German assets owed by Finland in
orthe form of stocks in important Finnish industries, unless unforeseen
developments occur (see Daily Summary of 24 January, item 2). Hamilton
believes that early publicity in the British and Swedish press "had a
salutary effect in causing the Soviets to retreat from their initial plans,"
EUROPE
4. FRANCE: Co ci j_igmlmvases diffigaiss--US
Ambassador Caffery reports that a recent cold wave has (a) blocked
deliveries of food to cities; (b) crippled industrial production; and (c)
Intensified the coal shortage by disrupting both rail and canal transpor-
tation. Caffery adds that the over-all result is to make the task of the
new Government more difficult, and that "public confidence and morale,
which showed signs of definite improvement during the brief interim of
the Blum Government, is slipping again."
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FAR EAST
5, CHINA: Prb_.ss_Lsearts on five:italilan "raizlea "�With reference
to recent press reporrsiErehiang KaThe had approved a five-year
ena,caoraic reconstruction plan for China, US Embassy Nanking reports
that the results of inquiries it has made thus far indicate that these
allegations are "misleading and premature and that implementation of
the plan is now impossible awing to political instability and financial
chaos." Several Government officials were "evasive" in their replies;
others frankly admitted that nothing could be done "until loans from
abroad can be negotiated." Moreover, there are indications that the
plan is incomplete, having been drawn up before V-J Day when account
could not be taken of subsequent developments regarding reparations.
THE AMERICAS
6, BOLIVIA: E � ect ofzcji_.sorders--US Ambassador Flack reports
that ten police officials and an "unknown number" of miners have been
killed and fifty persons wounded in recent disorders in the tin-mining
area of Potosi. He adds that (a) the miners reportedly were incited to
attack the police by elements belonging to the Movimiento Nacional
Revolucionario (the political party which was the chief support of the
Villarroel dictatorship); and (b) this fact may consolidate popular
support behind the present caretaker Government. The US Military
Attache states that "conditions throughout the country are tense."
7. PERU: Status trade _...7,1nAin_a--A Foreign Office
spokesman has told US Embassy Lima that, while no negotiations are
usder way for an Argentine-Peruvian commercial treaty, Argentina
has advised Peru that it is "interested" in negotiating such a treaty.
The Embassy adds that, according to Haya de la Torre, leader of the
powerful Peruvian APRA party, Peru could now obtain an industrial loan
of 100 million pesos front Argentina.
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GENERAL
3 0 JAN 1947
292
1, Oak RidelLrgitum salts reported offered for sale--US Military Attache
Berne reDorte that
Univers o ur c en grams uranium salts were
�ffered1�isale to the University "about three months ago" for one mil-
lion Swiss r was refused because of cost and small quan-
tity. Oak Ridge is the only place where such salts
are maae ana that they were probably stolen; he believes the salts sub-
sequently found their way into Soviet hands, in Switzerland.
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5� US views on r ts in France for Rum irline- he State Depart-
ieniTbas authoriIaTJS Anassar to point out to the French
that if the request of the Rumanian airline TARS to land at Paris were
granted, it would enable the Soviet Government (which controls the air-
line) to exercise air transport rights into France without conceding
reciprocal rights into Soviet territory.,
6. Rumanignmedicts intensified "collisions" of East and West ideal es--
Rumanian Foreign Minister tare&cu1i�to1rtTRepreaenta1lveBerry
In Bucharest of his belief that "within the next six months there will be
a headlopg collision between Western and Eastern ideas that in intensity
will eclipse the argument brought about by preparation of the Balkan
treaties." The Foreign Minister believes that discussion of the Straits
and the Danube questions will precipitate the clash.
EUROPE
7 SPAIN: Factors in resignation of Giral-
Qualified observers in
uantin mat marunez narrao, carat s successor, will be able to
form a new cabinet because the strongest leaders in exile, "who repre-
sent real forces in Sp,aba," believe that (a) any government abroad would
be as "phantom-like' as was Giralss; and (b) 'far more interesting de-
velopments are taking place within Spain" where it is possible that
Franco may be displaced by a combination of generals, monarchists,
and members of the Democratic Alliance.
Stratem9INISR with Spanish exiles--Qualified observers have
also told Embassy Paris that ii Barrio does not yield to pressure from
pro-Soviet exiles for a hand in the formation of a new government-in-
exile, Moscow may sponsor a "government" in Prague headed by pro-
Soviet ex-Premier Juan Negrin. The USSR,
prefers that Franco hold power "at least for another year," be-
cause any change at present would favor anti-Communist groups within
Spain.
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8, NORWAY: Polic toward revision of Svalbard tx--Foreign Minis-
ter Lange has told 'A soayiEniiii-Niiiiiegian Government
expects to inform the USSR that (a) in the light of the UN Charter, the
situationkerding Spitsbergen and the 1920 Svalbard Treaty) "is dif-
ferent today'; (b) in conformity with;the Charter, Norway's policy is
"opposed to bilateral military action" with any other power; and (c)
though satisfied with the status quo, Norway would not oppose in princi-
ple any Soviet request that the treaty be submitted to the signatories.
9. FRANCE: Possible transfer of DP's from US Zone to France �Foreign
Minister Bidault has told US Ambassador yt he e thinks it a
sound idea for France to accept DP's from the US Zone Germany for
permanent resettlement on a large scale. Although the Communists
and the CGT will fight the plan, Bidault believes that with Socialist help
he may be able "to do something about it."
FAR EAST
keel 10. CHINA: �vernm t resists UNRRA distribution to Co st are
According to the State Department s liaison officer to UNRRA in China,
recent discussions between officials of UNRRA, CNRRA, and the Cen-
tral Government indicate that the Government is determined to resist
any substantial distribution of UNRRA supplies to Communist areas.
Chajtmln Sinkilart_g_overnment--US Embassy Nanking has been
reliably informed that the Generalissimo has advised General Chang
Chih-chung that he is to be replaced as governor of Sinkiang. The Em-
bassy comments that (a) Chang, who has been outspokenly critical of
Central Government policy in Sinkiang Province, has won the confidence
of the non-Chinese population, and (b) his removal will only increase
"bitter skepticism' of Chinese intentions even though he may be suc-
ceeded by the leading Chinese Mohammedan, Pal Chung-hsi (now Minis-
ter of Defense).
11. BURMA: Awl...120_0 London talks--US Charge London reports that
til tn
tt e Eurese delegation was highly pleased with the suc-
cess ofa
talks and would not have signed the agreement unless it
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pnw r
Uili
had been confident of obtaining wide support in Burma. One member
believes there is an excellent prospect of Burma's choosing Dominion
status.
THE AMERICAS
12. PANAMA: President modifies defense-sites views�US Ambassador
Hines reports that President Jimenez now favors the transition from
the old defense-sites agreement to a new one without any "interim
arrangement" (see Daily Summary of 18 January, item 9). Hines, quot-
ing a US negotiator to the effect that the Foreign Minister is "the chief
obstacle to progress on the negotiations," expresses doubt as to whether
the President "has the courage and power to bring the Foreign Minister
Into line."
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GENERAL
2 9 JAN 1947
291
2 Sweden re rted refus redit to Poland�US Minister Dreyfus in
Stockholm has learned from a reliable informant" that the Swedish
Government has decided not to grant the 500 million crown credit
"demanded" by the Polish Government in connection with proposed
coal deliveries (see Daily Summary of 22 January, item 6).
EUROPE
3, FRANCE: Bidault to support alliance with UK�Foreign Minister
Bidault has told US Ambassador Caffery that (a) he will conclude the
Angio-French alliance, though he regrets that Blum agreed to the
alliance before the UK agreed to support France regarding Germany;
(b) the French Communists will offer to endorse the alliance provided
they are given "concessions" elsewhere; and (c) he fears that at the
Moscow Conference the USSR will make great strides In its plan for
a central German government under Soviet dominance, (In Caffery's
opinion, however, Bidault is primarily concerned that France may
get nowhere in her own plans for the Ruhr and Rhineland I
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Communist Ministers a threat to new Cabinet�Bidault also
told Caffery that the Communist Ministers in the new Government are
fighting the other Ministers at every step, and that unless the Soviets
change their directives" to the French Communist Party, the present
Government will not "last very long." Bidault said that his efforts to
work with the Communists had been useless, and singled out Billoux
(Minister of National Defense) as an "extremely dangerous Communist
militant" who "bodes no good for the French Army.
Caffery adds that "while Biclaultss principles are basically anti-
Communist, personal ambition may cause him to compromise. He
warns that (a) the Secretary will by no means always be able to count
on Bidault at the Moscow Conference; and (b) it is difficult to know in
advance when Bidault is going to "compromise" on one of his anti-
Communist principles.
4. ITALY: Probable three coalition overnment�According to US
Embassy Rome, present indications are that De Gasperi, Nenni and
Togliatti are composing their differences, and the outlook for a coali-
tion government of at least three of the largest parties has taken a
sudden favorable turn."
Abolition of Allied Commission for Italy�The Allied Forces
Headquarters, Caserta, reports that the Allied Commission for Italy
will be abolished at 2359 hours on 31 January (see Daily Summary of
18 January, item 3).
5. GREECE: US understanding solicited for new Government�The political
adviser to King George has asked US Ambassador MacVeagh for "under-
standing and support for" the new Greek Government. He declared that,
although the Government is unlikely to survive long, because Greek
coalitions "are always unstable," it may "tide the country over a
difficult period and lead to better things.' Later, Prime Minister
Mazimos asked MacVeagh to inform the US Government that his sole
reasons for accepting the Premiership are to compromise as much as
possible with the Opposition and to correct "certain measures taken in
the contrary sense. MacVeagh believes that a statement by the State
Department welcoming the "broad loyal coalition" would be helpful.
Former Jitima2Lt fliscusses Greek problems�In a conversation
with Ambassador MacVeagh and Paul Porter (Chief of the US Economic
Mission to Greece) former Regent Damaskinos has declared that
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(a) Greece's greatest need is a coordinated economic program designed
to utilize available assets augmented by such additional financial assist-
ance as may be required; (b) outside financial assistance should be care-
fully and consistently controlled by the "donors;" (c) economic recovery
depends on the pacification of the country, which can be achieved only
through a policy of amnesty implemented by real tolerance and even
protection for those who lay down their arms; (d) "the existence of organ-
ized subversive elements under international Communist leadership =-
amenable to amnesty necessitates temporary maintenance of an army on
an uneconomic scale; and (e) the new coalition Cabinet is a hopeful step
forward rather than a solution for Greece's troubles.
NEAR EAST-AFRICA
6. IRAN: Views on Soviet oil concession�The Shah has informed US Am-
bassador Allen of rraTiother urgent suggestion" from Ambassador Ala
in Washington that the Government (a) propose international develop-
ment of all Iranian oil (including the UK concession) under UN super-
vision; and (b) avoid a bilateral agreement with the USSR "under any
circumstances." Allen believes that the Iranians would probably
attempt an international settlement, if the US gave them encourage-
ment. He has explained to the Shah that the US could not concur in any
attack against established concessions.
The Shah, who would much prefer not to enter into any oil agree-
ment with the USSR, favors limiting the territory to be specified in the
Soviet agreement to a very small area to be defined after two years of
exploration. The Shah considers it "unthinkable" to allow Soviet tech-
nicians to "wander freely" over the five northern provinces during the
fifty-year life of the agreement.
FAR EAST
7, PHILIPPMES: Reams' nositinn nn entinkinrntinn- Procritionit Rawsin
3.3(h)(2)
He will take no overt action with-
out obtaining prior approval of the Philippine Congress and of the people
as expressed in a plebiscite.
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8. CHINA: Chinese conslderinj offer of sugar to SCAP�US Consul Gen-
eral Shanghai reports that the Chinese contemplate offering SCAP
50,000 tons of Formosan sugar at approximately 184 cents per pound.
As payment for this US$20,000,000 transaction, the Chinese would be
Interested only in readily usable foreign exchange or possibly raw
cotton. Otherwise they indicated the sugar would be disposed of on
the "more profitable" domestic market.
(CIG Comment: This offer' at a price well below the equivalent
price in Chinese markets, reflects China's concern over its badly de-
pleted official foreign exchange resources.)
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GENERAL
28 JAN 1947
290
1. Embassy Moscow sees "ineptitude" in Soviet tactics toward UK--US
Embassy Moscow believes that Stalin s efforts to isolate the US and
"high-pressure" the British into a new treaty with the USSR were
characterized by a "surprising ineptitude." PRAVDA's charge that
Bevin had been unfaithful to the present treaty is viewed by the Em-
bassy as a clumsy and obvious appeal to the opposition in the British
Labor Party to force Bevin out and demand that he be replaced by
someone who would "get along with the USSR." These tactics, accord-
ing to the Embassy, suggest that the Kremlin may be prompted by a
sense of anxious urgency to split Anglo-US solidarity prior to CFM
consideration of the crucial German problem.
2. UK may release Polish gold�The British Foreign Office official charged
with Polish affairs has informed Embassy London that consideration is
now being given to the early release of Polish gold and other assets held
In the UK. According to Embassy London the Foreign Office apparently
feels that, although political reasons for retaining these assets remain
unchanged, the elimination of this issue from Anglo-Polish relations
will strengthen Bevin's general policy in eastern Europe.
3. Soviet attitude on Austrian pace treaty�General Clark reports from
London that Austrian Foreign Minister Gruber has been told by Soviet
Deputy Gusev that (a) "no reference could be made to German assets
in the Austrian Treaty," because the USSR regards the matter as
settled by the Potsdam Agreement; and (b) the USSR refuses to discuss
the "entire question" of German foreign assets in Austria at the meet-
ing of the CFM's Deputies. Clark adds that, in Gruber's opinion, the
Soviets will not withdraw their forces until this question is solved on a
"purely bilateral basis."
EUROPE
4. HUNGARY: Legation's views on US economic and political aid--In
reply to the State Department's request for suggestions regarding
possible US political and economic support of democratic elements in
Hungary (see Daily Summary of 25 January, item 2), US Minister Schoen-
feld observes that (a) a mere expression of US concern is not likely to
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induce permanent resistance to Communist encroachment; (b) economic
aid on a scale large enough to contribute materially to general rehabili-
tation is highly desirable; (c) public announcement of such an offer to
the Hungarian Government would temper any Communist plans for
"taking over" between the signing of the treaty and the withdrawal of
Soviet troops; and (d) issuance by the US of a political statement at this
time might complicate Premier Nagy's task of combatting the current
Communist conspiracy charges.
5. ITALY: Iiftni allegedly refuses to loin new government--US Charge
Key has learned that Pietro
Nem o
' (leader the Italian Socialist Party) will "not participate in the
new government," because he does not wish his Party "to be associated
with the signature of the peace treaty." While Key finds it "difficult to
evaluate the true import of this statement," he suggests that it "may
have been made for bargaining purposes with the Christian Democrats."
nni may scuttle slkio.--US Naval Attache Rome reports a con-
versation between Admiral IViaugert, Chief of Staff of the Italian Navy,
and Captain C.G. Mentz, USN, in which the Admiral expressed the opinion
that the Italian Navy would scuttle its ships regardless of the conse-
quences if the transfer involved a formal ceremony and hauling down
of colors. (On 9 November 1946 US Naval Attache Rome recommended
that the Italian ships should be de-commissioned prior to their transfer
In order to safeguard against this danger; see Daily Summary of 12 No-
vember 1946, item 6.)
6. GERMANY: Possible economic Zones--US
Political Observer Mayer reports from Baden-Baden that the Political
Chief of General Koenig's staff "intimated" on 22 January that the French
would soon take steps to unite their zone economically with the US-UK
zones."
French desire Independent Saar--Acting US Political Adviser
Mucci� reports from Franlc!urt hiS impression that the "belief is grow-
ing" among French officials that the "best solution of the Saar problem
would be to establish the Saar as an independent state linked to France
by ties similar to those between Luxembourg and Belgium." The French
profess a belief that "no serious opposition" to this plan will be offered
at the Moscow Council of Foreign Ministers, and that it will be possible
to carry out their plans immediately thereafter.
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NEAR EAST-AFRICA
7, MAN: Leftists ma favor outside' rotest on elections--US Military
Attache-in-Gil repor s e e st Press continues to complain of
the lack of freedom in the Iranian elections, and that there is an "under-
current of agitation" for an outside power, presumably the USSR, to
protest the elections just as the US protested the Rumanian and Polish
elections.
FAR EAST
8, JAPAN: FEC policy decision on "peaceful needs" of Japan--On 23 Janu-
ary the Var as ern onr�M-iision MOUS y ecide that peaceful needs
of Japanese people should be defined as substantially the standard of liv-
ing prevailing during 1930-1934. This decision, however, does not commit
the FEC to acceptance, in advance, of a specific level for any particular
Industry,
(CIG Comment This determination of the peaceful needs of Japan
clears the way for the adoption of a definitive reparations policy.)
9 INDOCHINA: Policy of French_government--In a conversation with US
Ambassador Ciffiry, French Overseas Minister Moutet revealed that
the Communist Ministers will support the Indochina policy of the new
French Government. He stated that this policy would become more
"supple" and conctliatory and that efforts would be made to find some
meeting ground with Vietnam.
10. PHILIPPINES: gpppish Legation established in Manila--US Ambassador
McNutt reports that vexnment, spite notification
that the Philippine Government would not establish a Legation in Spain,
has decided to maintain a Legation In Manila. (See Daily Summary of
9 January, item 9.)
THE AMERICAS
11. URUGUAY: Vim!. of US-Arientintmlisz--According to US Ambassador
McGurk, the Vice President-elect of Uruguay has asserted that, if pre-
sent US policy toward Argentina is "radically changed and Braden
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removed," Uruguay will have no alternative but "humbly" to seek
Argentine goodwill.. (US Military Attache Montevideo, in a recent
messalge, evaluated as "possibly true" a report from a "usually re-
liable source that a primary purpose of President-elect Berreta's
visit to the US in February is to "sell Peron to the US" because
Berreta needs the political support of the pro-Peron Berrerista
Party.)
12. DOMINICAN REPUBLIC: Effect of visitof e battltin eship--US
Military Attache Ciudad Trujillo reports a "noticeable swing away
from the US and a tendency to publicize Argentine affairs since the
visit of the Argentine battleship Rivadavia.
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GENERAL,
27 JAN 1947
289
1 Erabasety_Moscow warns. of poviett domination of German unions--US
A3ealeassy Moscow regards the current campaign Of the World Federa-
tion of Trade Unions to seize exclusive guardianship of German trade
AinACPS as a Soviet maneuver designed to create one of the conditions
under which the USSR could accept the establishment of a central Ger-
teen 4:11twernrcent. (For the Embassy's views on Soviet objectives in
Germany See Daily Summary of 9 January, item 3.) The Embassy
warns that US failure to resist this "transparent Soviet tactic" would
.�ave "far-reaching implications."
oviet forces in Poland reduced--US Military Attache Warsaw reports
that, accordingTo�"completely reliable's sources, there has been a
I'driter sharp reduction in the number of Soviet troops In Poland. Only
ekeleton garrisons remain in the southern and southeastern parts of
the country; while in eastern, northeastern and central areas, the
reamber of troops Is "small." The greatest concentration is still in
the west and northwest. The MA now estimates total Soviet strength
An Poland at 100-120,000 men. (The previous estimate was 200,000;
r "Strength and Disposition of Soviet Occupation Forces in Europe,"
Weekly Summary of 29 November 1946.)
Sabstantial Imreement in London talks on Burma--US Embassy London
eports that, according to the British Undersecretary for Burma, con-
sederable progress has been made toward a Burmese-British agree-
The British have agreed that the April elections shall be for a
Conotttuent Assembly rather than for a Legislature, while the Burmese
Lave accepted a British proposal that the Executive Council shall be-
come an interim government with full responsibilities regarding de-
fense, finances, and other affairs. The British Governor will have
power of veto� but it will be used only as a last resort.
Repatriation from Southeast Asia Command--SCAP has reviewed the
British request for assistance in repatriating Japanese POW's in the
SEAC, and proposes to furnish necessary shipping to complete repatri-
ation before 1 June 1947, provided the British agree to furnish fuel and
emergency supplies as in the past. (The POW's in SEAC, numbering
about 90,000, constitute the largest group of =repatriated Japanese
7)1-Isoners outside the Soviet areas.)
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EUROPE
5. HUNGARY: Attenyt to involve .pplitical leaders in conspira_u--US
Delegate Allied Control Commission reports that, according to "re-
liable reports and his own observations, the Communists are now
'-zttempting to use the conspiracy case (see Weekly Summary of 17 Janu-
ary, p. 6) te implicate: Bela Kovacs, Secretary General of the Small-
iloidere Party and close political friend of Premier Nagy; Bela Varga,
Presadent of the National Assembly; Karoly Baranyos, Minister of
Agriculture; and Imre Kovacs, leader of a National Peasant Party
faction which advocates fusion with the Smallholders.
(CIG Comment: The Communists have thus far implicated
relatively minor members of the Smallholders' Party in their con-
spiracy investigations. The men mentioned above are among the most
influential in Hungarian politics, and,, if the Communists succeed in
involving them in the plot, disintegration of the Smallholders' Party
raight result.)
Soviet attitude toward conspiracy-
-
te:al 13Vtralov, Duviet acung cuarrman UI ine JtuIeuLontrol a.ommission,
recently reproached Hungarian Communist leaders for exaggerating
the tmportance of the alleged conspiracy.
reafly to take stand against Communists�Prime
Minister Nagy has told US Minister Schoenfeld that his policy of
appe:asement toward the Communists during the past year was "pisti-
l:led because of the opportunity it afforded in the economic field, but
he realizes that such a policy cannot be continued indefinitely. Nagy
tlad that a "stand would have to be made at some point," and it would
probably be against the current Communist attempt to use the con-
spiracy investigation to destroy the Smallholder majority in the Na-
tional Assembly.
4`, RUMANIA: Food situation�Coincident with Rumania's appeal to the
International Emergency Food Council for emergency shipments of
1,000,000 tons of corn, a "well-placed Communist" has told US Re-
presentative BeTry that between 1 September and 1 December the
Rumanian Government exported 50,000 carloads of cereals which were
shipped via Poland to the USSR. Information available to US Delegate
ACC confirms the belief that the Soviets have collected food in Rumania
for use by the Soviet troops outside the country.
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7. CZECHOSLOVAKIA: No indication of arms exports--Embassy Prague
reports that, according to available information Czechoslovakia has
exported no arms since the war, except for small shipments of abandon-
ed German armored vehicles to Sweden and Switzerland. The Embassy
emphasizes that there is no indication of any transactions or plans for
�sale of Czechoslovak arms or munitions to any of the American Republics.
Considerable research is under way aimed at future integration with the
aoviet arms industry, but production plans are still in a "very early
stage.''
. ForpAnt_pressure to sign peace treaty_soc_ht--US Charge Key
reports that Admiral Stone gained the impression during a recent inter-
view with Provisional President Enrico De Nicola that De Nicola was
seeking pressure from abroad which would offer the Italian Government
an excuse to give the Italian people for signing the peace treaty. Key
has nem informed by other sources that De Gasper! is finding it diffi-
cult to form a new government, because the "majority of the political
Parties" are unwilling to participate in a government which will have
to aim the treaty. Key again recommends that any US pressure in this
matter should be exerted only in concert with the other Big Four powers.
See Daily Summary of 23 January, item 8)
NEAR EAST-AFRICA
9, IRAQ: Cabinet agents rights to US airlines�US Charge Baghdad reports
that the Iraq Cabinet has passed a resolution granting to US airlines in
Iraq rights identical with those they enjoy in Lebanon. (In August 1946
the TIS concluded a Bermuda-type air agreement with Lebanon,)
FAR EAST
PBILIPPINES: ktpreme Court decision on collakorationists�The
Commanding General of the Phillipines-ifyukyus Command reports
that the ROXaS administration is attempting to persuade the Philippine
judiciary to make decisions leading to amnesty for Filipinos charged
with collaboration with the Japanese. The General adds that, according
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the Supreme Court will rule this week that
-cottaborators were traitors," because US sovereignty was not suspend-
ed or changed during the Japanese occupation.
U.. NEI: US Consul-Generals views on Indonesian Republic--US Consul
General Foote reports that Re concurs irdiffiri�iews
Member of the Dutch Commission-General in Batavia (see Daily Sum-
� teary a 25 January, item 6) that the Cheribon Agreement cannot be
�earned out unless the present attitude of Republican leaders is reversed
loci military extremists brought under control. Foote asserts that leader-
f;hip in the RepubliC appears to be passing to the extremists, whom he
beltemes responsible for most of the truce violations that have occurred,
Ye view of the increased strength of Dutch forces, Foote believes a
Dutch military victory would be "easy." However, he considers a
Dutch offensive against Republican extremists unlikely except as a
list resort, because of the restraining influence of world optnion now
ttireeted against the French in Indochina, and the presence of at least
190,000 internees in Republican territory.
Foote feels that US attitude on the Indonesian question should be
re-examined in view of the increased terrorism, bad faith, and authori-
tarienism of Republican authorities, A further weakening of European
tefluence in Java and Sumatra, he believes, would facilitate Chinese
A.c:catoraic control of the area with resulting Indonesian reactions capable
of ieopardizing US interests and general security in Southeast Asia.
12. KOREA: Anti-trusteeship resolution passed by Assembly�General
Hodge reports.that the Interim tegislarliTe�Aise Ty�orSouth Korea
has passed, by a vote of 44 to 1, a resolution "on behalf of 30 million
I:people" condemning the trusteeship clause of the Moscow Decision,
The opponents of the resolution walked out of the Assembly rather
than go on record as voting against the measure.
Ternerrallimmm
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EUROPE
25 JAN 1947
288
1. CZECHOSLOVAKIA: csaimuALm_st ulariqs_asipsilm--According to
US Embassy Prague, Czech Communists are gradually but definitely
losing popularity. Slovak Communists, weaker but more militant than
their Czech comrades, are facing a similar loss of support and are
becoming increasingly aggressive and obstructionist in an effort to
forestall this trend.
2� HUNGARY: US concern over Communist tactics--The State Depart-
ment has informed US Legation Bucharest, of its concern over present
Communist tactics, which seem aimed at replacing the present demo-
cratic Government before the Peace Treaty becomes effective and
3oviet troops consequently are withdrawn. The Department therefore
desires to give support to the democratic elements through economic
Aid to Hungary, and requests the Legation's suggestions as to political
3teps which would prevent further deterioration of the situation.
3. FRANCE: New coalition cabinet�Premier Ramadiers' wide Coalition
Ministry includes 9 Socialists, 5 Communists, 5 MRP members,
5 Radical Socialists and 2 Independent Republicans. Billoux, a Commu-
nist, has become Minister of National Defense with the restriction that
he must leave effective measures of control to the Premier and the
three separate service Ministries. US Military Attache Paris comments
that, with the formation of this Cabinettlhe French Government ceases
to be "Provisional" and becomes the Fourth Republic. Although the
general political situation is unstable, the MA points out that no Party
wishes to take responsibility for precipitating a crisis and that the new
Constitution, now operative, provides against hasty decisions likely to
provoke ministerial crises.
US concurs in pr_oposal on POWs--The US State Department has
concurred in the French proposal (see Daily Summary of 18 January,
item 5) that the International Red Cross participate in the plan whereby
prisoners of war (transferred by the US to the French) be given the
opportunity of remaining in France. The US stipulates that (a) those
waiving repatriation do so in writing attested to by representatives of
the French Government and the Red Cross and that true copies of these
waivers be made available to US authorities' and (b) each POW be in-
formed of his exact status (that of a worker) while remaining in France.
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4, ITALY: Lilliefo9viglatiL12:9121, .911st--The Supreme Allied Com-
mander in the Mediterranean reports that uncertainty about the future
has reduced the morale of the Italian population of Pola to a level which
may turn to panic and has necessitated the use of Allied troops to
assist civil police. SACMED adds that the pro-Slavic element is
hindering the removal of property of Italians and the Italian Government
has so far failed to take steps to evacuate its nationals.
FAR EAST
5. CHINA: Soviets still desire Moscow clearance of Dairen courieLAx--
US Embassy Nanking reports that the Soviet Embassy there on 22 Janu-
ary "took the initiative" to recommend orally that future courier trips
to Dairen make use of commercial vessel; and added that it was
"desirable" that US Ambassador Moscow "inform" the Soviet Foreign
Office "from one to two weeks" in advance of departure date. (US Ambas-
sador Moscow recently advised strongly against agreement to this pro-
cedure; see Daily Summary of 22 January, item I.) Embassy Nanking
Informed the Soviet Embassy that, if a change was desired, the matter
should be raised formally in Washington or Moscow.
6 N.E.L: pjak2LfAanmuk.....atsm over ctildbmad--A member of
the Dutch Commission General has told US Consul General Foote in
Batavia that he believes the Cheribon agreement between the Dutch and
Indonesians is doomed to failure, because he is convinced that the
"Indonesian Republicans do not intend to honor it and will "violate it as
flagrantly as they did the truce agreement." Though the official had
initialed the agreement, he declared that he ought not to sign it. Among
other members of the Commissions he said only Van Mook was
"optimistic."
The official added that even the Indonesian leaders who favor an
agreement with the Dutch regard it only as a step towards a successful
-evolution and eventual Republican domination of all of Indonesia. He
expressed the belief that the "influence of Soekarno and moderates like
Sjahrir has greatly declined;' while that of irreconcilable militarist
leaders opposed to any agreement is increasing.
He said he shared with an increasing number of Dutch in Batavia
and in the Netherlands the belief that swift Dutch military action and the
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capture of Djocja (cavital of the Republican territory) would be a more
"honest and effective means of restoring order and prosperity than
an agreement which is "certain to be sabotaged by the Indonesians."
THE AMERICAS
ARGENTINA: ViemiEngutdation of. Gernlan firms�US Embassy
Buenos Aires expresses the opinion thainhe action provided for in"
the Argentine Government's recent decree regarding liquidation of
enemy firms "constitutes reasonable and substantial compliance with
the Act of Chapultepec, insofar as enemy property is concerned."
8, BOLIVIA: Effect of tly_plice on Bolivian eccs2m_15.14514.111L.A...;
US Ambassador Flack reports that the Bolivian junta Government is
depressed at the slim prospect for any increase in the price of tin,
and adds his belief that (a) the question of the tin price is inescapably
tied up with Bolivia's internal economy and public order; and (b) unless
a sufficient increase is granted to offset the increased cost of imported
foodstuffs, the new Bolivian Government (recently elected, to take office
soon) will be faced with a "difficult situation" particularly with regard
to "mining labor." Flack recommends that the tin question be con-
sidered in the light of over-all US relations with Bolivia and the US
desire to stimulate the democratic institutions which have emerged
since the revolution of July 1946.
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GENERAL
2 4 JAN 1947
287
1, .Sotets "cordial", to US courier sktp_At Dairm--The Navy Department
reports that the US courier ship has arrived at Dairen (see Daily Sum-
mary of 22 January, item 1) and has been given permission to remain
48 hours. The Task Group Commander describes the Soviet attitude as
noticeably cordial"
IRcortat mnirtzfn noznettnte Finnish iThitIRfrV-
a Soviet pro-
posal that one-half of the German assets, valued at six billion marks,
which Finland owes the USSR be made available to the USSR in the form
of stocks in Finnish industrial enterprises at their 1944 valuation
(which is much lower than at present). The Finnish Government, accord-
ing to source, will not agree to this proposal,
EUROPE
3. USSR: Apparent stopilimpf*.foodstuffs--US Embassy Moscow reports
that recently released Soviet figures indicate increased commercial pro-
duction of meats, fats, fishiand bakery goods, but show 1946 grain and
sugar beet crops as substantially below those of 1945. Soviet authori-
ties blame this latter condition on the drought, and point to it as justifi-
cation for the continuation of rationing. The Embassy suspects, however,
that the true reason for the continuation of rationing is the Soviet desire
to build up food reserves, and that the official policy of placing the blame
on the drought is designed to offer a satisfactory explanation to the So-
viet people and to support the Kremlin's desire for relief from abroad,
4. FRANCE: havesliKaLtion of thefts from Mini,strv of War US Ambassador Ambassador Caffery reports as "probably significant" that the
Socialist Minister of War Veterans in the recent Blum Cabinet has
taken legal action to investigate the "removal of official documents"
from this Ministry's files. (Caffery previously reported that the War
Veterans' Ministry was a flagrant example of Communist "packing;'
see Daily Summary of 23 January, item 7.)
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FAR EAST .
5 CHINA- Communists believe dela in ne otiations advantamus--The
Secretary-General of the China Democratic League has told US Ambassa-
dor Nanking that the Chinese Communists apparently expect the Govern-
ment's military losses to be so serious within the next few months that
the Government will be forced to seek a renewal of peace talks at which
the Communist Party can make its own terms. They also count on
further economic distress to weaken the Government's popular support,
and they hope to derive some advantage from the Moscow Foreign Minis-
ter's conference.
TE] AMERICAS
BRAZIL: Communists leacrtial election returns-
Tiarly state ifiction returns from Sao Paulo
Indicate that the Communist candidates for Governor, for seats in the
Federal Senate, and for many seats in the State legislature have polled
a large and possibly a winning vote. in recent
cabinet discussions regarding possible post-election legal action against
the Communists (see Daily Summary of 20 January, item 11), it had been
43sumed, on advice from the Minister of Justice, that (a) the Communists
wouid make a poor showing in Sao Paulo, and (b) the Government candi-
date for Governor was certain of victory.
MEXICO: Excha e of milita students witiAllgtstipa--US Military
Attache Mexico ity repor a that Argentina is to send two Army officers
to Mexican military schools in exchange for three Mexican Army officers
who will attend Argentine military colleges.
2
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GENERAL
23 JAN 1947
286
1. South Africa to. dismard GA resolution�US Minister to South. Africa
reports that General SIITU:S, in a public address, announced that South
Africa will continue to administer Southwest Africa and will decline to
filtibmit a teusteeship agreement, notwithstanding the request made by
the General Assembly last December. Smuts expressed himself as
44P. little afraid of the Trusteeship Council." Referring to South Africa -1s
h'oatinerit of. her Indian minority�which the General Assembly con-
demned at the same time�Smuts said that South African legislation re-
stricting Indian land tenure must stand.
C,omment: This open disregard of the opinion of the Gen-
zind. Assembly by a nation closely associated with the Western bloc has
eteejor implications regarding the future effectiveness of the UN, and
might provide a precedent for similar Soviet action.)
ISelelan end Polish views on UK Corfu eomplaint�Nisot, Belgian Repre-
eeettative to the UN Security Council, has informed the US Delegation
that the British complaint against Albania on the matter of mining Corfu
Straits should ise referred to the International Court of Justice, either -
fa) as a whole, or (b) by way of requesting an advisory opinion. Nisot
tadicated that he favored the former alternative as "the only way a SC'
iseto could be avoided." While the Acting Polish Representative did not �
teem:nit himself, it was clear that he favored reference of the whole
matter to the Court, (The US has previously urged the UK to refer the
senses-411st to the ICJ; see Daily Summary of 31 December 1946, item 5.)
.grar.1,5;5-3R410,i1;38,q.citscusgmLattagrelment--Us Ambassador Caffery in
Soviet tnybassy has advised the Foreign Minister
Ciaucklerily and without warning" of Soviet willingness to undertake n.ego-
tlations for an air agre.emeni. As a result, a' Prench Air Mission is now
'is Moscow. Cafitry states that the Foreign Office, which desires, a ,
eeciprocal agreement with the USSR, has inquired what the US attitude
1A-suld be if the Soviets refuse French landing rights in the USSR and pro-
eose a connecting point at Berlin, Warsaw, or Prague,
tees views on French solicy in Indochina�A Chinese Foreign Office
cial recently told. US Embassy Nanking that French authorities in
Walochitm have bounded out Chinese opinion on the possibility of establish-
tss a regime in Vietnam headed by the former Annamese Emperor, Bao
Dote and that a revival of the imperial idea in this area would he unsatis-
factory to China. Document No.
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Soviets approve Austro-Hung_arian diplomatic relations--US Delegate
Allied Control Commission Budapest has learned from a high official
in the Hungarian Foreign Office that the Soviet Chairman ACC, without
informing the US or UK delegates, has notified the Hungarian Foreign
Office that the ACC does not object to the resumption of diplomatic re-
lations between Austria and Hungary. (The Soviets previously had been
reported as opposed to such a step; see Daily Summary of 13 January,
tem 5)
DevelmnentstconcerninstRiotconference--According to US Embassy
Bogota, the ColombianForeignifinister�has asked 'other Latin Ameri-
ean countries" to express an opinion regarding the advisability of hold-
ing the Rio Conference before the Pan American Conference, scheduled
to meet at Bogota in 194'/. The Minister has advised the Embassy that
he only two countries submitting unequivocal replies to date favor
-.holding the Rio Conference.
According to US Embassy La Paz, the Colombian Minister to
:Bolivia has inquired officially whether Bolivia would attend the Rio
Coni:erence "at an early date' if invited to do so by "another power."
The Bolivian Foreign Office has asked for an expression of US views,
US Military Attache Rio de Janeiro reports that the Brazilian
Government has denied a Buenos Aires press report which stated that
the RIO Conference might be held in March (see Daily Summary of
21 January, item 9)..
EUROPE
7: FRANCE: Communist "packipg" in French_ Veterans' Atlmtni.stration,--
US Ambassador tiitery reports that the week-old strike by employees
of the Ministry of War Veterans is a protest against a Socialist attempt
o "purge" Communists holding key positions in various Socialist minis-
tries and to eliminate the very large number of employees performing
no useful work, Caffery adds that the War Veterans' Ministry is a fla-
grant example of Communist "packing" and that the Socialists hope an
airing of this "crying scandal' may produce some beneficial effect and
may embarrass the Communists, (In the new coalition cabinet a Radi-
cal Socialist heads the Veterans' Ministry.)
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8, ITALY: Yugo lays may not sipipeace treaty�According to US Charge
Key, De Gasperi told Admiral Stone that on the basis of all the informa-
tion he has, the Yugoslays will not sign the Italian peace treaty. De
Gasper' also expressed the opinion that Italy will probably not sign the
treaty voluntarily.
(CIG Comment: The Yugoslays, although reluctant, will
probably sign under Soviet pressure. CIG believes that the Italians
will sign because non-signature may jeopardize the continuance of for-
eign (particularly US) aid, may prolong undesirable occupational burdens,
and may prevent Italy's reentry into the family of nations.)
"Irregularity" of Italian note on peace treaty--Key has been in-
formed{ hat the 20 January Italian note
xo representatives of the Big Four regarding possible revision by bi-
lateral negotiation of the Italian peace treaty was drafted "in (the) name
of Foreign Minister and not in (the) name of Italian Government." De
Gasperi expressed the view that the action, coming after Nenni's resig-
nation, was "somewhat irregular."
(CIG Comment: As the desire for revision of the terms of the
Italian peace treaty is general among Italian officials, It is unlikely that
there will be an official disclaimer of the note unless reaction to it
proves seriously embarrassing to the Italian Government.)
UK reactioAto Italian "irinciple" of_peace treaty revision�US
Charge Gellman in London reports that a UK Foreign Office under-
official differentiated between two possible interpretations of the Italian
note, described above, regarding peace treaty revisions. The first of
these interpretations--"the waiving by separate states of certain rights
granted under the treaty,"--would be acceptable to the UK; the other-
"radical changes such as revision of frontiers or of armaments
clauses," --would not.
Significance of Soviet withdrawal from Allied Commission�Key
also reports that the hasty Soviet withdrawal from both the Allied Com-
mission and the Advisory Council for Italy may indicate prior knowledge
of Italian opposition to signing the peace treaty (see Daily Summary Of
18 January, Item 3). It also may mean, Key adds, a Soviet attempt to
avoid the responsibility of compelling Italy to sign the treaty through
pressure on the part of the Advisory Council or the Supreme Allied
Commander. Key therefore recommends that further pressure by the
US on the Italian Government in this matter should be exerted only in
conjunction with the other Big Four powers.
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NEAR EAST-AFRICA
9 AN Soviets seek airline mono_poir. .bit northern Iran�US Ambassador
Allen reports that the Soviet Embassy is again pressing for an exclusive
airline monopoly in northern Iran, where Soviet air traffic has recently
increased.
FAR EAST
10. KOREA: SCAP's suggestions regarcorea--General MacArthur
fears that failure to break the existing deadlock between the US and the
USSR on the Korean question will be disastrous, both for the Korean
people and for US prestige and influence in the Far East. He has
accordingly suggested alternative procedures for arriving at a solution:
(a) to submit the entire Korean problem to the UN; (b) to request the
establishment of a joint commission, possibly including representatives
of disinterested nations, which would make a thorough survey and re-
commend action; (c) to hold a meeting of the US, USSR, Ulcand China
to clarify chapter 3 of the Moscow agreement In so far as it relates to
the reestablishment of Korea as an independent state; and (d) to call
a meeting on the highest level between representatives of the US and
the USSR in order to plan Noreen unification.
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GENERAL
22 JAN 1947
285
Dairen courier shiRAtisl.....stii_dThursday--US Ambassador Smith
In Moscow agrees with Embassy Nanking that courier ship service to
Dairen should remain on a basis of notification (to the Soviet Embassy
Nanking and Consulate General Shanghai; see Daily Summary of 20
January, item 1) and strongly advises against transmission of either
notification or request through Embassy Moscow. Smith points out
that the US "consistently resisted pressure for such a procedure re-
garding the Balkans;" he is convinced that Soviet authorities should
not be allowed to "get away with it" in the Far East where the US
bargaining position is far stronger. Re believes pointed tightening
of restrictions on Soviet traffic into Japan will be far more persua-
sive than argument.
Admiral Cooke reports that he will send the courier ship as
scheduled, and has instructed Commander Yates (a) to make every
effort in a "friendly but firm manner" to complete the mission; but
(b) if local Soviet authorities deny permission to land the diplomatic
courier, the vessel shall remain in Dairen harbor or at the twelve-
mile limit awaiting Cooke's instructions.
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rit
Ziai6EFEteithaT--�
3.3(h)()00' 6. Polish trade "ultimatum" to Sweden-
that the Polish trade delegation in Sweden
has told the Swedes that all Polish coal shipments to Sweden will stop
at the end of March, if Sweden does not grant Poland a 500 million
kroner credit over a period of five years for use in other countries,
7. Sino-French dispute over Paracel Islands�Assistant Naval Attache
Canton reports from a usually reliable source that on 15 and 16 Janu-
ary a French ship called at one of the Paracel Islands (south of Hainan
2nd east of French Indochina) and twice requested the Chinese garrison
to leave, which it refused to do. (China and France both claim sover-
eignty over these islands.)
EUROPE
8. AUSTRIA: Possibilitu_f a_ma_ ja food crisis�Headquarters, US Forces
Austria reports that indigenous wheat reserves are being rapidly ex-
hausted and that continued failure to make "timely delivery" of UNRRA
and WD wheat will create a "major food crisis" about 1 March.
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ENMARK: Mission fails concludeair_ een_._m._2._nt with USSR--
S Legation Copenhagen reports that the Danish Air Mission to Mos-
ow has failed to conclude an air agreement and is returning home.
Danish proposal, with Finnish concurrence, for an exchange of traf-
fic with the USSR at Helsinki was rejected, and permission for Danish
aircraft to fly over Finland was denied by the Soviet Government. The
banes rejected a Soviet proposal for an exchange at Memel for east-
bound traffic, with Copenhagen as the terminus for westbound Soviet
aircraft.
(CIG Comment: The Finnish Peace Treaty, scheduled to be
signed nest month, accords to all UN members the right to fly over
and make non-commercial landings in Finland; it would therefore
permit Danish planes to land at Helsinki.)
10. CZECHOSLOVAKIA.: New elections reportedl scheduled for A --
US Military Attache Prague considers as "jotTly e a repor
from a "completely reliable" source that all parties except the Na-
tional Socialists have formally agreed to now elections in the Spring,
probably in April. The MA adds that, according to the Czech equiva-
lent of the Gallup Poll, if elections were held today, the Communists
would lose 25 of their 114 seats in Parliament. The source believes
that by ApriLthe Communists might fall from first to third place, and
that they agreed to new elections only after the Social Democrats
threatened to oppose all forms of socialization unless new elections
were held.
11. GREECE: UyAews.on coalition Government--The State Department,
In a new effort to bring about political stability in Greece, has elabo-
rated to Ambassador MacVeagh its views as to how a desirable coali-
tion government might be formed, and has empowered him to commu-
nicate these views to Premier Tsalciaris. The Department stresses
that US public opinion will not favor extension of US aid to a Govern-
ment which lacks wide popular support. The Department points out
that, although the US cannot make specific suggestions, the dangerous
situation resulting from extremist Left-Wing efforts to tmdermine
Greek political independence and territorial integrity might be reme-
died by formation of a broad coalition government of patriotic groups
willing to cooperate in face of national danger. Such a Government
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might be formed under the initial leadership of a non-partisan figure
such as the former Regent, Archbishop Damaskinos. The Department's
view is that this coalition should exclude "international totalitarian
Leftists" or groups under their influence, as well as Rightist groups
so reactionary that they reject cooperation with Center and Liberal
elements whose sincere patriotism is not questioned.
NEAR EAST-AFRICA
12., INDIA: Soviet Influence on Interim Government discounted--Embassy
New Delhi, reporting denials by Nehru ana Mrs. Pat-iairalolm Foster
Dulles" allegation that the Mien Interim Government is subject to
strong Soviet Influence, states that it has observed no indication of
such influence. The Embassy further reports that the Interim Govern-
ment is representative primarily of the conservative and propertied
classes and fears Communist infiltration.
FAR EAST
13. CHINA: Soong favorsecial excha e rates for US armed forces-.
US Treasury Attache -N PET78-tiong has agreed in
orinciple to an arrangement whereby the US Army and Navy can pur-
chase, at special exchange rates, CN dollars to meet expenditures in
China (see Daily Summary of 16 January, item 6). Soong insists that
the matter be kept secret.
(CIG Comment: Soong probably fears that this arrangement,
If generally known, will (a) lead to pressure for similar privileges
from all foreign business and governmental interests; (b) provoke
criticism by anti-Government elements; and (c) further undermine
confidence in Chinese cUrrency.)
THE AMERICAS
14. BRAZIL: Government refuses t9mylan....2mtElt_o 0113.--US Ambassa-
dor Pawley reports that Rio de Janeiro newspapers have published the
text of a note reportedly sent by the Brazilian Government to the USSR
regarding the recent incident between Soviet authorities and a Brazilian
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diplomatic official (see Daily Summary of 23 December 1946, item
12). In the note, Brazil (a) admits the USSR's right to demand the
official's removal; (b) refuses to pay damages the USSR had requested;
(c) stresses the "precarious conditions of the Brazilian Embassy in-
stallations in Moscow," and (d) states that, failing improvement of
these conditions, Brazil will not maintain its representation in the USSR
"with the present category and composition."
15. ARGENTINA: Trade agreement s_tedytIth Switzerland�US Embassy
Buenos Aires reports that Argentina and Switzerland have signed an
agreement, subject to ratification, under which Argentina will send
Switzerland stipulated amounts of grain and�if available�oils, hides,
quebracho extract, and fertilizers. The Swiss Government will "pro-
vide all possible facilities" for Argentine purchases of communica-
tions devices and chemical and pharmaceutical products.
Trade wt_seenent with Chile revised--US Embassy Buenos Aires
reports that the Argentine and Chilean Governments have revised their
recent trade agreement to exclude exceptions with regard to the most-
favored-nation clause.
16 VENEZUELA,: Offisfsgio_m_stesitaes ltsnIty to Junta-418 Military
Attache Caracas reports that the Minister of Defense has presented
the caretaker Junta a declaration of loyalty signed by nearly half of
Venezuela's army officers, who promise to obey and exact obedience
to the Junta and the Constituent Assembly and condemn "individuals"
who are "instigating the armed forces to revolt." The MA comments
that signatures to the declaration were "obtained under pressure,"
that some of the signers are known to be opposed to the Government,
and that the declaration "reveals Government concern regarding immi-
nent dangers to stability."
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GENERAL
284.
1. Emb_e_i_ss Nanidniteciej_tr Da_teLea co_ j_irier apswWi Moscow
AmbassadorStuart reports that US Embassy Nanking proposes to take
no action to obtain clearance from Moscow for Dairen courier ships
(see Daily Summary of 20 January, item 1). Stuart believes that Mos-
cow clearance for courier vessels should not be lightly acceded to and
that the isolation of US Consul General Benninghoff "should not again
be tolerated."
2.t_y_42Ealtmd aria, and Rumania unchanged--A UK
Foreign Office official has told US Embassy London that the recent
meeting in London of the Chiefs of its Eastern European missions did
not result in any changes of policy. According to the official, the UK
"will no doubt" inform the Polish Government, as it already has done
in the case of Rumania and Bulgaria, that the UK does not consider it
as "representative." The British will treat all three Governments
"on a day-to-day basis with a close watch being raaintained on their
behavior."
3. Bevin reported 111--US Charge Gellman reports that Bevin became ill
at the end of last week and is still confined to his home. The UK For-
eign Office requests that his illness "be treated most confidentially."
4. USaposed to regional defense scheme for Straits--The State Department
suggests that Ambassaai Wilson inform the Turks that the US does
not believe discussion of a regional defense agreement between the
�
US, UK, USSR, and Turkey for defense of the Straits in time of war
(as suggested by the Turkish Foreign Office) would serve to lessen Sov-
iet pressure on Turkey. The Department feels that any such sugges-
tion would be interpreted by the Soviets as an admission that the system
founded upon the Montreux Convention and the UN does not provide ade-
quate security. The USSR would then insist again that defense of the
Straits should be by the Black Sea Powers only. The Department be
the Soviets would not accept any arrangement which prevents them
from unilaterally assuming control of the Straits Whenever they decide
It is to their advantage to do so.
ILM-SECREW
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EUROPE
5. POLAND: US stand .on_p_s_sible Mikolaisik trial�The State Depart-
ment has instructed US Ambassador Lane to make a vigorous protest
to the Polish Government if it institutes treason charges against Miko-
lejczyk (see Daily Summary of 20 January, item 6). The Department
adds that, although no further financial assistance to Poland is contem-
plated, it would be inadvisable for Lane to make any reference to this
subject in his protest.
UK Ambassador enects to be declared rsona non ata�The
British Atifbaiia-Er to Polaras 4.1WUXinbaisad�fLanelfa, as
a result of hints that have been made to the British Government, he ex-
pecte the Polish Government to declare him persona non grata in the
nee.r future.
a.
USSR: 1946 production ofe riculberal machine disa Intl --US
Embassy Moscow reportsat the-Touncil o M c ers s issued a
decree calling for greatly increased production of agricultural machin-
ery during 1947. The Embassy comments that the order is the result
of unsatisfactory work in several individual factories, poor organiza-
tion of the industry as a whole, and the pressing need of Soviet agri-
culture for tractors and other machinery. The decree also indicates
the Government's great concern over the agricultural situation.
kiefer.Ettly al
_ation of Agriculture Ministr plaimed7-US Agricultural
Attac e
et, 41,7"rMIX cfbrirellirero e �reign Division of
t a study is in preparation with the aim
ce p ac responsibility for food and agriculture, now divided among
"at least seven Ministries," under one Ministry. Minister of Agricul-
ture Benediktov has ordered the preparation of a comprehensive report
on the organization of the US system.
TUMMY: US envoy urges reconsideration of US arpissolicy�US Am-
bassador Wiriiiiii"Fagerfe-cinT;srdeit certg poffey on supplying
maitary equipment to Turkey. He reiterates his belief that Turkish
morale will deteriorate, if the Turkish request for such equipment is
turned down flatly and the US fails to Indicate a willingness to furnish
at least some support either in military equipment or additional econom-
ic credit. Wilson believes that more satisfactory results would be ob-
tained, with regard to both Turkey and the USSR, if the US supplied the
materiel direct to the Turks, instead of passing it to the UK for transfer.
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..T.Q.P.SUGlarT.
Wilson is therefore awaiting further word from the State Department
before informing the Turks of its negative attitude toward their re-
quest for equipment,
THE AMERICAS
8. PANAMA: Embassy views on defense site! --.Pursuant to the re-
cent discussion of a new defense si es plan see Daily Summary of 18
yeanary, item 9), the Panamanian Foreitnt Minister has sent US Am-
bassador Hines an informal memorandum outlining the proposal. Hines
comments that the Foreign Minister "has not departed far from his
criginal point of view," and agrees with General Crittenberger that the
plan is unacceptable.
9. ARGENTINA: Brazilian invitation to Rio ,::_onference rumored�US
-4mbassy Buenos Aires :;advises that the local press has reportegi the
'tior lext Office's receipt of an invitation from Brazil to attend
conference "to be held in the near future. Dossibly in March."
story was not based
on an official release but was "allowed to leak" from the Foreign Office.
,T016r1PForsi4Faims
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GENERAL
20 JAN 1'947
283
1. Soviets stress `.:prmission" for courieilktpilt Dairen�The Soviet
't-ai"�suIWren has told US Consul-General Bermingh-oii that, as Dairen
is "still a closed port," a US "request" for clearance of a courier ship
should be made to the Soviet Foreign Office by US Embassy Moscow
"about a week" before expected date of arrival. Benninghoff notes that
though the_ general situation has not changed in nine months, the emphasis
is now on "permission" rather than "notification." The next courier
ship is scheduled to arrive in Dairen 23 January. Admiral Cooke reports
that US authorities in China are following the previous procedure of
"notifying" the Soviet Embassy Nanking and Consulate General Shanghai
only a few days in advance.
2. Gromiko seeks US 4�y for Soviet atomtpolia�Herschel Johnson,
Acting US representative in the Security Council, reports that Gromyko,
in a surprise move, called in NEW YORK POST correspondent Hohen-
berg in an apparent effort to obtain publicity for official Soviet views on
atomic energy control and disarmament. Gromyko declared that the
USSR desires two conventions on atomic energy: the first to prohibit
the use of atomic weapons, and the second to formulate Molotov's views
as expressed to the General Assembly, including inspection and control.
Grottlyko insisted that veto on punishment was irrelevant because "viola-
tions of this magnitude would mean war anyway." He indicated that
while both conventions might progress simultaneously, "the first con-
vention would and should be concluded first." Gromyko was confident
that "everybody on the SC except the US" supported the Soviet position,
Subsequently the POST correspondent received a telephone call from
Lange. Polish representative to the UN, pressing him for an interview.
3. US view on reestablishment of relations with Bulgaria�The State Depart-
ment has informed the US Mission in Sofia of its (tentative belief" that
the US, for "political and practical reasons," should reestablish diplo-
matic relations with Bulgaria "either (a) without delay and before treaty
ratification or (b) between the date of Senate ratification and exchange of
ratifications, providing the situation in Bulgaria does not deteriorate in
meantime."
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4. Axzentina reported willin to z_g_ipta.s.e.Sq..loans to Mexico�US Embassy
Mexico reports that a US citizen, not likely to have been identified as
such, heard the Argentine Ambassador to Mexico tell a group of "im-
portant" Mexicans at an official luncheon that Mexico need have no
Interest in a US loan, because Argentina would lend the Mexican Gov-
ernment "whatever sums of money it might desire."
EUROPE
5. YUGOSLAVIA: Further withdrawal of US Embassy members to be asked--
According to Embassy Belgrade, the Yugoslav Foreign Office, in a note
rejecting a US protest against the December Belgrade espionage trial
which implicated US Embassy personnel, has informed the US that "the
Yugoslav Government agrees with the Government of the US that the
members of the Embassy staff Involved cannot In future carry on their
functions in Yugoslavia. It will accordingly hand the Embassy a list of
their names at a very early date."
6. POLAND: Embassy_emects treason trial of Mikolajczyk�US Ambassa-
dor Lane reports that the death sentence meted out on 15 January to a
Polish citizen for imparting information to a foreign ambassador has a
"most sinister" aspect, when considered in relation to Mikolajczyk's
personal safety. Lane believes that Mikolajczyk may be tried for
treason�specifically for having imparted information to a foreign Em-
bassy�and that the US "may expect another Mihailovich case." Lane
asserts that, in view of the Important role the US played in urging
Mikolajczyk to join the Provisional Government, the US has far more
than a humanitarian responsibility to endeavor to protect him. In the
event of Mikolajezyk's arrest, Lane recommends that he be instructed
to make a vigorous oral protest to the Polish Government.
Government expected to provoke post-election incidepts�
Mikolajczyk has told US Charge Keith that the Government, in order to
furnish an excuse for "military or police" action, has ordered the "pro-
vocation of incidents" on 20 January, including attacks on Government
supporters. The Opposition will then be charged with ereating these
disturbances.
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7. AUSTRIA: Government plans to send strong delegation to London--US
Minister Erhardt has been informed that a strong delegation, headed by
the Chancellor, Vice Chancellor, and Foreign Minister--and including
representatives of all three political parties--will present Austria's
views before the Council of Foreign Minister's deputies in London.
(CIG Comment: The Government's decision to include Communist
representatives in the delegation indicates a determination on the part
of Liberal leaders to preserve the three-party coalition, primarily in
order to make the Communists politically co-responsible for the final
treaty.)
8, FRANCE: MRP will pro enter gpi_emment--US Ambassa-
dor Caffery reports the "general opiviVniri�hat, although the MRP had
previously hesitated to join with the Communists in a coalition govern-
ment, it will now enter the new cabinet. Caffery adds that Bidault may
have reassured his 11/4/RP colleagues that, with him as Foreign Minister,
there would be "little to fear" regarding a change in French policy re-
garding Germany.
New French Presidm_v-U_S, anti-Communist�US Ambassador
Caffery reports that, while Auriol, the new President of France, is not
a strong character, he is 'very definitely" friendly to the US and strong-
ly anti-Communist. Celery adds that Auiriol is very close to Blum and
"unquestionably" will be greatly influenced by his views.
FAR EAST
9. FRENCH INDOCHINA: Strict censorshipimposed--US Consul Saigon
reports that French authorities now require all official "texts" on Indo-
china to be submitted to the High Commissariat for censorship. The
High Commissariat is reported particularly hostile to the US press.
The chief of the French press section has ordered all Indochina items
cut from monitored Associated Press and other agency reports furnished
to USIS, thus preventing correspondents from checking on censorship
changes or delays in their stories. The French have also ceased furnish-
ing the US Consulate with monitored Vietnam broadcasts.
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10, CHM; Amintina_11p3 ortedly negotiating for Hainan iron ore--US Em-
bassy Nanking reports that an official of the Chinese National Resources
Commission has told a "reliable source" that, as a result of negotiations
about to be concluded in Buenos Aires, Argentina will acquire a stock-
pile of several million tons of iron ore from the Hainan Island mines and
will purchase their total product during the current year.
THE AMERICAS
IL BRAZIL: Decision to outlaw Conirgunist PV_Le. pm_e_dt --US Military
Attache Rio de Janeiro reports that, according to "usually reliable high
Brazilian sources," the Government has decided to declare the Brazil-
ian Communist Party illegal on 22 January, before results of the 19 Janu-
ary elections are announced. The MA points out that the Government
would then be in a position to: (a) find out the number of Communist
votes cast in the elections; (b) keep this information from the public;
and (c) prevent any successful Communist candidates from taking
office.
12, NICARAGUA: US press to report elections�US Ambassador Warren
reports that (a) President Somoza has told him the Government will
arrange for US newspapermen to be present during the Nicaraguan
Ilection set for early February; (b) Somoza, in his opinion, intends to
hold an "apparently free election," but (c) the Opposition, anticipating
possible "fraudulent practices," has plans for 'gathering information"
on election day. Warren adds that President Somoza is `more worried
now than he has been at any time in recent weeks," and would welcome
an attempt by the Embassy to work out a pre-election "agreement"
between himself and the Opposition. However, Warren notes that, in
view of several recent events, including Assistant Secretary Braden's
radio broadcast, the Opposition is "less disposed to conciliate" than
formerly.
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GENERAL
18 JAN 1947
289
I. British views pp Spitzlen controvem--The British Foreign
Office official charged with Norwegian and Soviet affairs has told
US Embassy London that the UK intends to approach the US and
Canada shortly to discuss the Spitsbergen situation. The Foreign
Office understands that while the British military and naval staffs
see no threat to UK security, the "strategic and guided missiles
elements" hold a contrary view. The Foreign Office itself feels
that the "political factor demands firm opposition to Soviet de-
mands; it will proceed along this line irrespective of the military-
naval decision.,
2, Recommendation for sta,KtimUN commission on Greek border--US
Representative Barnes in Sofia reports his belief that ultimate po-
litical and military upheaval" in the Balkans is inevitable unless the
present regimes in Yugoslavia, Bulgaria, Albania, and Greece can
�
be led "toward a common ground of more liberal political concepts."
In order to gain time and in the meanwhile preserve maximum order
along the Greek frontier, Barnes recommends the formation, after
the withdrawal of the SC investigating committee, of some sort of
standing UN commission on the spot as "the best promise in a very
had situation.''
3. Soyiets to withdraw from Allied Commi,?--According to US
Charge Key in Rome, the Soviet representative on the Allied Comis-
sion Italy (ACI) has told Admiral Stone, US chairman ACA, that the
Soviet delegation will be withdrawn immediately. Key recommends
that he US consider taking similar action, possibly after consultation
with ite British who may wish to consider simultaneous withdrawal.
Admiral Stone comments on the possibility that this sudden move may
presage Soviet pressure for US and UK withdrawal from Allied Con-
trol Commissions in Bulgaria, Hungary, and Rumania,
4. British views on Anglo-Soviet andAng2zILL..en ig,ipagk--US Embassy
London reportS a press
1
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article stating that when Bevin informed Molotov last summer of the
possibility of an Anglo-French alliance, Molotov approved of "com-
pleting the union" of the three great European powers against future
German aggression. The British Foreign Office official charged with
Soviet matters has asserted that the UK regards the Anglo-Soviet
alliance as "very much in force," although it is of "no real use" in
Asia and the Near East "where Anglo-Soviet interests now meet."
This official does not appear to feel that the USSR is angling for a
new Anglo-Soviet treaty.
EUROPE
5. FRANCE: cikuLtimtr man risoners -US Ambas-
sador Caffery reports that in the two hours between Blum's return
from London and his departure for Versailles for the presidential
elections he signed a note to the US, in reply to the US note inform-
ing France of the US decision to begin immediately the repatriation
of German prisoners of war remaining in US custody or transferred
by the US to liberated nations (see Daily Summary of 2 December,
Item l). Blura's note asserts that France now intends to offer the
German prisoners,who were transferred to French control by the
US comrnand)the choice of (a) repatriation to Germany ort(b) remain-
ing voluntarily in France with a status similar to that of French
workers. France proposes to invite the International Committee of
the Red Cross to designate representatives on the commission which
will make the offer to these prisoners,
FAR EAST
6. KOREA: Gr unrest ma lead to Korean revolt�In a summary
of conditions in South rea, General Hodge reports that "the rapidly
growing unrest and impatience of all Koreans... may easily bring on
a 7eneral revolution, with participation by both the Right and Left."
The .Koreans are abandoning hopes that US-Soviet negotiations for
a joint Commission will be successful, and the feeling is growing
that Korea is being sacrificed "as a pawn in the international game."
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IGII6SEFreitgpT.,
The economic situation, despite some Improvement in the food out-
look, is growing steadily worse, and any recovery depends on the
importation of necessary raw materials, industrial equipment, con-
sumer goods, food, and fertilizers. An electric power shortage may
develop due to the steadily decreasing supply of power from the Soviet
zone.
Hodge adds that, in the political field, a more moderate middle
group may emerge as a result of US-endorsed efforts to obtain a coa-
lition. The extreme Leftists and extreme Rightists, however, are be-
coming more active and more vocal against the occupation. Hodge
doubts that the Soviets intend to reopen Joint Commission negotiations
and urgently recommends that the US plan "a positive line of action."
7,, CHINA: Split In Communist Par im robable�US Embassy Nanking
reports that aT,411t-ElFetlairese ommtm - -Party is "most improb-
able" at present because failure to maintain a solid front would
Inevitably insure the Party's destruction. Reports of cleavages have
recently been given US correspondents for their "confidential" infor-
mation by Government officials and have appeared in the pro-KNIT
press. The Embassy comments, however, that the Central Govern-
ment can be expected to foster this belief because Nationalist elimina-
tion of heterogeneous factions might be more palatable abroad than
an all-out offensive to eliminate an organized opposition party.
8. INDOCHINA: posstbillq_cd Laos and Cambodian12krIsings--US Con-
sul Saigon reports that Frencii-s-or-trces�irm-Witii possibility of an
uprising by Free Laos and Free Cambodian groupslin view of the
diversion of large numbers of French troops from southern and west-
ern Indochina to the area of fighting in the north. The French have
failed to pursue the conciliatory conversations held with Free Laos
groups last November before Siamese border territories were retro-
ceded to Indochina. The chief French participant in these talks has
said that this neglect may prove to be "disastrous."
THE AMERICAS
9. PANAMA: Ministers ro se new defense sitesplan--US Ambassador
Hines repoiiii-ionversa o iic �re iiMinihr and two other
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CONFIr
cabinet ministers in which they proposed a plan for a new defense
sites agreement which, they believe, would convince the Panamani-
ans that the US does not wish to control Panamanian territory
"unless it is mutually agreed to by the Panamanian Government'
but would "in no way jeopardize the protection of the Canal."
The plan, announcement of which would be accompanied by
a statement that the US "contemplates doing certain things that
will be of assistance to Panama," would involve (a) occupation 9f
the bases for one year wider joint trusteeship of General Critten-
berger and a Panamanian cabinet minister; (b) returning the bases
to Panamai`syrabolically�_" to mark supersession of the old agree-
ment by the new, after a "short interval" during which neither
agreement would be in effect; and (c) protection of US property and
Installations during the interval by "such detachments" as the
Commanding General may deem by
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GENERAL
17 JAN 1947
281
I_ Molotov increased .S.piktzitpmen dema..pcbt.--UIC Ambassador Collier in
Oslo has informed the US Legation that Molotov indicated to Norwegian
Foreign Minister Lange in New York that the USSR now expects more
than jointly controlled Soviet-Norwegian air bases in Spitzbergen.
Lange interprets this to mean that the Soviets expect to gain complete
ownership and control of air bases in the Spitzbergen archipelago.
2. Preliminary steps for transfer of Bulcarian Macedonia�According to
US Representative Barnes in Sofia, the Bulgarian Ministry of Interior
has announced that in the recent census the people of Bulgarian Mace-
donia were given a Choice of declaring their nationality as either Mace-
donian or Bulgarian. An opposition leader has charged that the Govern-
ment seeks to use the census as Justification for eventual transfer of
Bulgarian Macedonia to Yugoslav Macedonia.
(CIG Comment: This report is in line with current indications of
a Soviet-sponsored plan for the creation of a larger Macedonian state
within Federated Yugoslavia; see CIG Special Evaluation No. 9 of
16 January.)
3. A lo-Emptian treaty iotiations stalemated�US Embassy London
reports that the Anglo-Egyptian treaty negotiations are virtually stale-
mated. Prime Minister Nakrashy Pasha informed the British Ambassa-
dor on 12 January that (a) neither of the British alternatives for a solu-
tiCat of the Sudan question is acceptable to Egypt (see Daily Summary of
13 jenuary . item 9). and (b) Bevin `will not budge regarding free-
dom of choice for Sudanese."
EUROPE
4 FRANCE: Effect on North African colonies of troo
shtpments-
US Naval Attache ar
p It Indochina is "scraping
the bottom of the French military manpower barrel," and includes
French, Moroccan, Senegalese, and Algerian troops.
(CIG Comment: The sizeable withdrawals of troops from North
Africa can materially affect the stability of that area, in which national-
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istic unrest is reaching serious proportions. Reduced troop strength
required the shipment of troops from France to put down native riots
In Algeria in May 1945).
5, BULGARIA: Communists worried about Soviet withdrawal--US Repre-
sentative Barnes believes that the current press campaign by the
Communist-dominated Fatherland Front to eject the Opposition from
the Assembly, coupled with strong Government threats to force peasants
to deliver their food quotas, represents an attempt to frighten the people
into submission before Soviet forces leave Bulgaria. According to
Barnes, the Communists, realizing that the people fear Soviet troops
more than they do the Bulgarian security police, have "important mis-
givings" about what will confront them when the Soviets leave. Barnes
therefore expects an increase in political terror.
6. RUMANIA: Food shortages mitzlead to civic disturbances�According
to the US Delegate to the Allied Control Coiiiiis disturbances"
may be anticipated as a result of increasing food shortages unless
"relief is available soon." The Delegate reports that a 65% cut in rail
transportation has restricted the transfer of persons from famine areas
to those with more adequate stocks and has curtailed food shipments to
urban areas. Food and transportation shortages are also causing serious
labor difficulties.
NEAR EAST-AFRICA
7. IRAN: Government disturbed over election situation--US Ambassador
Tehran reports that, in view of mounting public agitation against the
manner in which the elections are being conducted, Qa.vam has presented
three alternative suggestions to the Shah,that (a) opposition leaders be
arrested; (b) the elections be postponed; or (c) the Shah order the gov-
ernment to resign. The Shah declined the first two but is examining the
third which would permit a new, neutral government to conduct the elec-
tiors,
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8. CHINA: Generalissimo seeks to resume peace negotiations--The
Generalissimo has shown US Ambassador Stuart four points agreed to
by Government leaders for reopening negotiations with the Communists:
(a) renewal of negotiations, either bilaterally in Yenan or Nanking, or
at an inter-party conference; (b) an immediate cease-fire order on
both sides with a conference to provide for effective implementation;
(c) discussion of practical plans for reorganization of the Army and
restoration of communications; and (d) an agreement for a "just and
reasonable" solution to the issue of political control of disputed areas.
The Generalissimo requested that Stuart find out whether the
Communist Party would invite a Government delegation to Yenan, but
asked him not to disclose the four points, Stuart was authorized to
reply to possible Communist inquiries that the Government attached
-eio conditions to the peace discussions and hoped thatithrough a dis-
cussion of all outstanding issues, unfettered by terms, a ,settlement
could be reached. Ambassador Stuart conveyed the Generalissimo's
message to the Communist representative in Nanking on 16 January.
THE AMERICAS
9. ECUADOR: GalaRa os lg_aaAtsremislitr...1d hemispheric-defense installation--
The Ecuadoran Foreign Minister, en route to Ecuador from the US,
told the Commanding General Caribbean Defense Command (purportedly
upon instructions from President Velasco) that (a) Galapagos should be
regarded exclusively as a hemispheric-defense installation in any
future negotiations; (b) Ecuador will not seek an economic quid pro quo
from the US; but (c) the US should recognize Ecuador's "urgent require-
ments" for US military equipment and technical advice.
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38
GENERAL
18 JAN 1947
280
1. Stalin hints at Anglo-Soviet alliance outside UN--The British Ambassa-
dor in Moscow has informed US Ambassador Smith that during the recent
TCremlin dinner, Stalin remarked to Montgomery that all that was neces-
sary to cement Anglo-Soviet friendship was an alliance. When it was
pointed out that such an alliance already exists, Stalin replied that this
was not what he meant, because the present alliance is within the frame-
work of the UN.
. Sweden establishes ml_tc_y_tzbergen issue--A Swedish Foreign
Office spokesman has informed US Legation Stockholm that Sweden will
stand "on the letter and spirit" of the Spitzbergen treaty and insist that
any abrogation or revision be effected within the framework of the
United Nations.
(CIG Comment: Sweden is probably concerned not only about
the Spitzbergen matter but also about the possibility of further Soviet
"defense" demands on the Scandinavian mainland. Recent events may
also have led the Swedes to conclude that the USSR will retreat diplo-
matically if faced with concerted international opposition.)
3.
EUROPE
FRANCE: Generillyitia be relieved--US Embassy Paris reports
the belief in official circles that General Juin will be relieved as Chief
of the National Defense Staff (roughly equivalent to the US joint Chiefs
of Staff) should Le Troouer (Socialist) remain as Datonse Minister.
told US
Naval Attache Paris that Le Troquer threatened juin not only with loss
of his present post, but also with dismissal from the Army unless he
"mended his ways." Le Troquer claimed to have
discovered some compromising documents regarding Juin's relation
with certain extreme Right elements that wished an authoritarian de
Gaulle Government.
(Note: A CIG special evaluation of this report is in course
of preparation.)
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French "uny_iyarAlcipants in US-UK arms standardization--
US Military Attache Paris reports that, because the bulk of their Army,
and Air Force equipment is of US origin, the French "out of necessity'
have begun some manufacture of standard US replacement parts, and
"unwittingly" have partially fitted themselves into the US and British
arms standardization program.
urn s opinion t e next government of France will be a coalition
of Socialists and Rassemblement des Gauches (largely Radical Socialists).
Blum feels that the two largest Parties, the Communists and the MRP,
each checked by the other, will prefer to remain outside the Government.
4. TUNISIA: Resident-General to be removed--A high French Foreign
Office official has informed US Ambassador Caffery in Paris that "it
had been decided" to remove GeneraLMast the Resiclant-romnpral in
Tunisia,
5. RUMANIA: Rumor of Co_mmunist withdrawal from Gotesjinkent--US
Minister Berry has been told that the Communist
Party has decided (a) to withdraw from the Government to avoid responsi-
bility for the "tremendous difficulties" caused by successive droughts
and by the hostile attitude of the Rumanian people, and (b) to exploit Its
opposition to a puppet Government by creating public disorders through
the trade unions to prove that only a Communist Government can main-
tain order.
Although Berry does not give "much credence" to a voluntary
withdrawal from power by the Communists, he asserts that the per-
sistence of such rumors is important as evidence of the popular will
and of the increasing passive resistance to the administration. Accord-
ing to Berry, however, "there is some basis for the belief" that the
Communists may be planning a shift of personalities in the Government
without relaxing any of their control over it.
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FAR EAST
6. CHINA: US seek_s_g_tcial rate for official currency purchases--The
State and Treasury Departments have instructed US Ambassador Stuart
and US Treasury Attache Nanking to make an immediate official re-
quest to the Chinese for a special exchange rate, approximating the
current open-market US banknote rate, to apply to US Army and Navy
purchases of CN dollars. (Purchases at the official rate, which greatly
overvalues the CN dollar in terms of both the US dollar and the internal
price structure in China, require abnormal appropriations of US dollars.)
In negotiating for a special rate, the US officials are instructed
not to discuss the US $500,000,000 Eximbank loan or a post-UNRRA
grant, because the "status of these matters does not permit encouraging
Chinese expectations."
Chinese tactics je9karclize UQpyr.Vhts--US Embassy
Nanking believes that the Chinese Government, in sitting time limits
for the registration of real property rights in China by US nationals,
is misinterpreting the Sino-US 1943 treaty which abolishes US extra-
territoriality. Although the Embassy feels that the treaty provides that
existing property rights cannot be rendered void, the Chinese Foreign
Office has indicated informally that land in certain areas not registered
before 31 January will be considered "theoretically ownerless and sub-
ject to nationalization."
7. INDOCHINA: Protracted military 20,tations foreseen�The French
Charge has tolrfr�-1ViElii en7giim that French milftary operations in
Vietnam are likely to be protracted because French reinforcements en
route to Indochina are insufficient to crush Vietnam military strength.
The French Charge further declared that France could not afford to
lose Indochina because that would hasten the loss of other French colo-
nies, particularly in North Africa. The Charge also said that should
Communists gain control of the French Government, they would carry 7
on military operations against Vietnam "with utmost vigor."
THE AMERICAS
8. ARGENTINA: Soviet views on US-Amp...aim situation.--US Military
Attache Buenos Aires reports i&ri press representative of the Soviet
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Embassy has declared that, in view of recent developments, the US
must now choose between (a) loss of prestige in Latin America by com-
ing to terms with Argentina "without further major concessions, or
(b) further delay of the hemisphere defense pact, which would give the
USSR "more time to combat it."
9. PERU: Foreign Minister adrcates US assistance to Peru--The Peru-
vian Foreign Minister has told US Ambassador Cooper that Peruvian
public opinion would welcome a Government effort to obtain credits
from Argentina but that such credits would "tend to place Peru in the
orbit of Argentina's influence." The Foreign Minister concluded that,
in view of Peru's "difficult political situation," the US should support
Peru's "democratic government," which along with Brazil he considers
to be the "best South American friend" of the Hemisphere defense
program.
10. HONDURAS: Foreign Minister favors Rio Conference�US Ambassador
Erwin reports thin& itaid�u�iiiiVoireW17filififerfielieves the Rio
Conference should be held without further delay.
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GENERAL
� 15 JAN 1947
279
, 2.
3.
4. FrenctiprIsAULegAret_Liept of dcga_r_oirmnt--Acting US Tolitical
Adviser Mucci() reports from Berlin that the French member of the
Allied Control Council has criticized the US and UK requirement that
balances on exports from their zones be paid in dollars, and has con-
tended this measure (a) changes natural trade currents between the
Zones; (b) denies the principle of distribution of essential goods; (c)
"disturbs" the German monetary statute; (d) creates a distinct eco-
nomic unit, and (e) puts interzonal trade on the same plane as foreign
trade.
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pmtr,
(CIG Comment: This French opinion appears to reflect not
only the stringency of France's dollar position but also a possible feel-
ing that the above requirement is being employed by the US-UK as a
means of exerting pressure on the French to expedite the unification
of their zone with that of the US-UK)
5
6
7.
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EUROPE
9. USSR: Embasmments on internal conditions--According to US
Embassy Mose-oW,-the 1---iTST is experiencing serious economic and
morale difficulties. The Embassy believes that, in drafting the current
Five-Year Plan, the Kremlin misjudged the temper of the people and
their ability to bear further sacrifice, and now is forced to revise its
program by diverting a larger share of the national effort to the pro-
duction of consumer goods. While this development has been accom-
panied by the adoption of a less aggressive Soviet foreign policy, the
Embassy sees no sign of a change in the Kremlin's long-range exter-
nal objectives.. Recent moves are interpreted rather as a temporary
retreat to gain time for the consolidation of present positions at home
and abroad in order that full advantage may be taken of such future
opportunities as may become available for the extension of Soviet in-
fluence,.
Leviet attitude toward disarmament�In commenting on the Sov-
iet attitude toward armament reduction, US Military Attache Moscow
observes that, although the people of the Soviet Union are more con-
, reened with food than with arms, and although Soviet economic and
manpower resources will be strained to support a large military force,
Kremlin thinking continues to be dominated by a fear of "capitalist
encirclement," For this reason, while Soviet leaders can afford to
press for a general reduction in armaments, it is safe to assume that
they will demand, for the USSR at least, a numerical military superi-
ority over any possible combination of Western Powers.
3.3(h)(2) 10. BULGARIA: -Immigration of Soviet families to Bulgaria-
according to officially registered figures in possession of the Militia
Passport Directorate, more than 65,000 Soviet civilians, the majority
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without passports, have entered Bulgaria. In many cases the Militia
finds billets for the Soviet Immigrants and installs them, forcibly if
necessary, in private homes. More than 15,000 of these persons re-
portedly are registered as applicants for Bulgarian citizenship and
approximately 3,500 have already become naturalized.
11. NORWAY: Lamxt.re_porteAlLeinbarrasse24 1....mLie's commitments--
US Legation Stockholm reports that the SwedislifFsiei Office has
gained the impression that Norwegian Foreign Minister Lange is now
somewhat embarrassed by the extent of the commitments which his
predecessor Trygve Lie may have made to the USSR in April 1945.
The Foreign Office understands that Lange has "gone to the moun-
tains" to try to think up some way out of the resulting impasse. (Nor-
way submitted to the USSR in April 1945 a proposed draft of a joint
Norwegian-Soviet declaration concerning the joint defense of Spitz-
bergen; see Weekly Summary of 6 December 1946.)
THE AMERICAS
12. BOLIVIA: Guachalla favors pluralityiecision�US Ambassador Flack
reports that Guachalla, who is running a close second in the Bolivian
presidential elections, has declared publicly that Congress should
"respect the popular will" by electing the candidate who received the
largest number of votes. (With the count nearly finished, Hartzog,
the conservative candidate, is leading by a few hundred votes, but the
field is split so that no candidate can receive more than 50% of the
votes cast)
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GENERAL
14 JAN 1947
278
1. Soviet reaction to US reparattonsprocedure forIapan--Soviet Ambassa-
dor Nov�r, '--E�kor a recent converatton with denerai McCoy has expressed
concern over the US plan to deal with Japanese reparations by issuing
interim directives unilaterally, Novikov implied that Serious conse-
quences might ensue.
3
4, US Naval personnel to leave Iceland--The State Department has in-
formed US Legatlon fieykjavlk that the Navy is preparing instructions
for the immediate removal of its personnel from Camp ICnox pending
early transportation to the US.
EUROPE
5, GREECE: First 1947 lark --scale bandit raid western Thrace--US
Military Attache Athens reports that in the fir major bandit operation
In weitern Thrace since December 1946, an armed band of 600-1000
captured the town of Firiaki on 9 January. The town was retaken by the
Greek Army after reinforcements had arrived.
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NEAR EAST-AFRICA
6. IRAN: Nomit_icm can 4.tes attempt to force
Ambassador Allen reports that the "real purpose" of---the twenty-
five Opposition candidates who took "bast" (refuge) in the palace .
12 January is to force the Shah to remove Qavam. This group, consist-
ing mostly of reactionaries, realizes that it will not be elected under
existing circumstances and is making a last desperate attempt to alter
the situation. It is reported to be openly accusing Allen of interfering
In Iranian affairs, alleging that Qavam would have been removed ex-
cept for Allen's advice to the Shah.
THE AMERICAS
7. MEXICO: guarantine measures considered ina uate--US Ambassa-
dor Thurston reports thatVeter1nafanibejfevjflue Mexican Govern-
ment's quarantine measures will wit prevent the spread of foot and
mouth disease toward the US (see Daily Summary of 27 December 1946,
Item 4). He asserts that only "immediate and drastic" cooperative
action by the US and Mexico can eradicate the disease.
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GENERAL
18 JAN 70A7
277
�14.1 2.Dairen isffilt _e zmpprtedly_hinges on lVfanciRrikm trade�The Far Eastern
manager of TASS has told a US Embassy Nanking officer that the USSR
will not agree to reopening Dairen to international commerce until
arrangements are made to provide the USSR with controls on Manchu-
rian trade. This attitude reflects Soviet concern lest all eastern Manchu-
rian commerce be channeled through Dairen to the exclusion of Vladi-
vostok. The Embassy adds that this Soviet attitude also is consistent
with the apparent Soviet policy of tying ,Manchuria to the economy of the
Soviet Far East. The Soviet informant indicated that the USSR would
not release Dairen until the Changchun Railway was actually placed
under joint operation and until an effective Sino-Soviet commercial
agreement was arranged.
3 More reasdnable Soviet attitude termed unliy--US Embassy Moscow
reports it does not consider that recent events in Azerbaijan and per
Greece indicate the possibility of a more reasonable Soviet attitude
toward Turkey. Soviet policy toward Turkey is motivated both by con-
siderations of security and by the urge to gain access to the Mediter-
ranean, the Arab world and the Suez Canal. Thus, until it can dominate
Turkey, the USSR cannot feel that it (a) is secure in the southwest or
(b) has made any substantial advance in its policy of Near East aggression.
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Embassy further believes that the USSR would participate with
the US and UK in any regional agreement for defense of the Straits, such
as has recently been under consideration in the Turkish Foreign Office,
only In order to gain an advantage in what it considers the inevitable
forthcoming conflict with the Western Powers. If the US and* UK refuse
to grant such an advantage, the Soviets would probably not agree to
participate, and Turkey would have to depend for its security upon the
wider assurances of the UN guarantee.
4 Franco-British "alliance" may be igyatIgtgitgko--The British Em-
bassy in Washington has informed the State Department that an exchange
of letters between Bevin and Blum is leading to conversations concern-
ing a Franco-British alliance.. The British Ambassador in Paris has
reported that Blum will probably go to London on 13 January.
Blum reportedly is interested "primarily" in a means to obtain
more coal, while the British desire to explore the possibility of closer
economic cooperation as well as an alliance. Caffery believes that Blum
may hope to return with "a little something" for the French before
Thursday's important election for the French Presidency. (Earlier
Franco-British negotiations over an alliance foundered mainly because
of disagreement on the future of the Ruhr; the French had insisted that
the British support their views on the Ruhr issue in return for an alliance�)
5 Soviets obstruct resurcon of Hungarian-Austrian relations--According
to US Minister Schoenfeld, the Soviets have consistently refused to con-
sider a Hungarian request (first made in February 1946) for permission
to resume diplomatic relations with Austria. Schoenfeld recommends
compliance with a request by the Hungarian Foreign Office that the US
Delegate raise the question at the next meeting of the Allied Control
Commission,
EUROPE
6. GERMANY: ElsTitTss toward currency reform--US Political Adviser
Murphy notes that the USSR recently has become genuinely concerned
over possible Western Power tripartite action in the monetary field as
an extension of the US-Ult bi-zonal accord, and has agreed in principle
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rue
Teala�ftErfrElii
to quadripartite control of currency printing. Previously it had been
assumed, Murphy adds, that the USSR, with its strictly controlled zonal
economeehas had time on its side in considering the problem of currency
reform.
(CIG Comment: Unilateral Soviet mass printing of cvxrency at
Leipzig has been reported in the past (see Daily Summary of 18 Decem-
ber 1948, item 4). US representatives therefore have been reluctant to
accept other than a central and readily controlled printing establish-
ment. The above report significantly implies an actual Soviet fear that
the US-UIC zonal merger in effect may "write off" the Soviet Zone,
leaving it stripped by reparations and unable to profit from the rehabili-
tated Western zone economy.)
7. ITALY: E2sti_ILI Elmcjzi_ssions of Allied disposal of DPs--US Charge
Xey recommends that immediate steps be taken to care for the approxi-
mately 105,000 DPs now in Allied camps in Italy (see Daily Summary
of 8 jemmy, item 4). Key points out that "dallying" of DPs on the
Italian Government by the US and UK would lead to most unfavorable
repercussions on US and UK relations with Italy, and the inevitable
return by Italy of these DPs to their countries of origin. The US and
UK, trey adds, would be blamed for this Dalian action and the subsequent
fate of these DPs.
8. AUSTRIA: Soviet view of Austrian roweea_le.--US Minister Erhardt re-
ports that the acting Soviet !olItical Adviser recently characterized
the Austrian proposals for settlement of the German assets question in
Eastern Austria as "very naive" and not deserving "serious consider-
ation".
(CIG Comment: This attitude suggests that the Soviets will press
for a settlement which will permit them to retain a measure e ontrr
over Austrtais- etnroyrty rather than reduce their grip on eastern Austria
by a cash settlement.)
NEAR EAST-AFRICA
9 EGYPT: UX clarld on Sudan--US Embassy London reports
that the UTC Ambassador in Cairo has informed Nokrashy Pasha that
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Cf"
the UK Government stands by the Bevin-Sidky agreement but cannot
accept SidIcy's interpretation of the Sudan protocol (which would pre-
vent the Sudanese from becoming independent of Egypt, if they elected
to do so). The Ambassador offered Nolcrashy two alternatives: (a)
Britain will sign the present treaty text and evacuation protocol, and
will subsequently attend a Sudan Conference with Egyptian and Sudanese
representatives; or (b) Britain will sign the texts on the understanding
that the Sudanese will be permitted to choOse their own form of govern-
ment later but that Egypt's vital interests in the Sudan will be fully
protected. Nokrashy was noncommittal on both proposals and the talks
are continuing.
10. PALESTINE: Arabs ..bmitesl. to London Conferenc_e --US Embassy London
has been informed by the Foreign Office that the British Government
has invited the Arab Higher Committee of Palestine to send a delegation
to the London Conference and join the Arab League delegates there. The
UK and the Committee have tacitly agreed that the Grand Mufti will not
be a delegate.
(CM Comment: The Committee has heretofore refused to attend
the Conference unless the Mufti headed its delegation. The UK rejected
this demand on grounds that the Mufti collaborated with the Nazis.)
11. MAN: Soviet oil concession-4n a comment on the British
position that Iran would run "grave danger" if it refused to grant the
Soviets an oil eencession (see Daily Summary of 10 January, item 8), Allen
asserts that (a) the Iranians would make a serious error if they flatly
refused to grant the USSR petroleum rights under any conditions, but
(b) the US would make an equally grave mistake if it made represent-
ations which could be construed by Iranians as pressure on them to
grant such rights. Allen doubts that Iran can adequately safeguard the
interests of its people, however carefully the agreement is drawn; he
believes that some kind of UN supervision may be necessary.
THE AMER/CAS
12. COLOMBIA: Presidmt2ANItr to collaborate"
against Communists--
President Ospina has told US Ambassador Wiley that he is convinced
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that (a) the Soviet Legation in Bogota has been involved in subversive
activities; (b) Soviet anti-US policy in Colombia will be spearheaded by
direct attacks on US oil companies, and (c) Latin America as a whole
Is now one of the most important areas of Soviet operations. �spina
added that he is "eager to collaborate" with the US Government and US
companies in "anything that might check the Communist menace."
_lies_o_tiations for French military instructors--US Embassy
Bogota reports that the Colombian Government is contemplating the
employment of two French military instructors.
13. BOLIVIA: Hertzi5 probable choice of Congress--US Ambassador
Flack reporti.t, if the presRential election is
on S thrown into Congress,
as provided by Bolivia's electoral law when no candidate wins a popular
majority, the result will be a victory for Hertzog who has polled the
largest popular vote. The Junta has not yet decided whether the electoral
law applies.
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EUROPE
11 JAN 1947
2 7
1. POLAND:gras reluctant to receive n....*,tion --US Ambassa-
dor Lane reports that, when he attempted on 9 January to deliver in
person the US note regarding the Polish elections, he was informed
that the Foreign Minister was ill and that the two Vice-Ministers of
Foreign Affairs, and the Chief of the Anglo-American Division were
all absent from their offices. Lane thereupon had the note delivered
to the acting head of the American section.
Qoununztt.jlnrungxadtgyL AmpriNg_thanijA�Ambassador
Lane also reports that Polish Government officials have informed the
British Ambassador in Warsaw that the Polish Government's "line now
is to be softer to the US than to the tut"
2. BULGARIA: -Sovirmosairman of ACC --US Representative
Barnes reports, without ascribing any authenticity to it, the following
explanation for the continuing absence of General Biryusov, Soviet
chairman of the ACC,
When Marshal Tolbuhkin recently conveyed without objection .
the view of Bulgarian Government leaders that relations with the west-
en', powers should be improved in order to facilitate the economic
rehabilitation of the couttry, Biryusov refused to go along with this
policy. He was then ordered by Tolbuhkin to leave Bulgaria. �
Barnes comments that this story, whether true or not, fits in
with Georgiev's recent emphasis on the necessity for improved
relatfons with the western powers (see Daily Summary of 7 January,
Item 7)..
3. SPAIN: S
Attache
ificance of Aranda's de rtation minimized�US Military
the deportation
01 uenerai Antonio Anima to the Balearic Islands for two months was
mot for political reasons.
(CIG Comment: Aranda, who has been active for several months
as a middleman between Monarchists and elements of the Left, is well
known as an intriguer and gossip. Franco has withheld active military
command from him for several years.) 0 0 C)
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4.
GRPECE: rimier's views on broader Government�Premier Tsaldaris
told US Ambassador MacVeagh in an informal conversation on 11 January
that while he feels the Government should be "broadened again, he fears
that such a move might appear to Moscow as a "sign of weakness."
MacVeagh advised the Prime Minister to disregard outside opinion and
consider only Greece's pressing need for political unity,. Tsaldaris
dared his willingness to resign, if he could aid Greece by so doing,
but paid he would not welcome a goverment headed by the leftist
Sophoulis. As an alternative, MacVeagh suggested that Tsaldaris' own
Populist Party broaden its program and become "a genuinely middle-
of-the-road party,"
In vim of the impending investigation by the Security Council
Commission, MacVeagh also urged that the political amnesty be made
effeative so that the people invited to lay down their arms could do so
with confidence. Tsaldaris countered that the bandit problem is a
complicated one but agreed that only those relatively few people active-
ly seeking to subvert the state "should be liable to Imprisonment or
deportation."
80 POLAND:lAslaptjrtwjllycott ten districts in election --TIS Am-
bassador Lane reports that the Polish Peasant tarty leader, Mikolajczyk,
has declared that his Party will not participate in the ten electoral dis-
tricts where their list of candidates has been invalidated. This move
eliminates Peasant Party candidates from competing for seventy-six
seats. The Party, however, will participate in the other forty-two
districts,
3.3(h)(2) g
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7, HUNGARY: Projected new tritlartite commission�US Minister Schoen-
feld suggests that thi-gtliel5epartmeWiFearfy consideration to the
problems confronting the US in the organization of the proposed tri-
earTite commission, which he assumes will be in operation in Hungary
for 18 months following the signing of the peace treaty and abolition of
the Allied Control Commission. Schoenfeld adds that the British
Minister to Hungary is leaving for London to participate in discussions
concerning the establishment of commissions in Hungary, Bulgaria and
Rumania. �
NEAR EAST-AFRICA
8. INDIA:Moslem__1ve considers participation in Assembly�US .
Charge New Delhi repeals that as a result of the All India Congress
Committee's qualified acceptance of the British-Moslem League
interpretation of the grouping clauses of the British Cabinet Mission's
plan, the Moslem League Council may convene in early February to
discuss possible League participation in the Constituent Assembly.
League participation is regarded as unlikely without further assur-
ances from the Congress regarding Moslem rights, which Congress
leaders will find difficult to give in view of the strong resentment
expressed by the Congress Socialists, Sikhs, and Assam delegates
over action already taken. The Congress and Moslem League, how-
ever, may be compelled, by common concern over the growing restless-
ness of left-wing Congress elements, to cooperate in the framing of a
new constitution for India.
THE AMERICAS
9. CHILE: Difficultigse rdi A entine trade .� ct-US Ambassador
Bowers reports that: a senior ore ice a � viser has expressed
the hope that the US will suspend judgment on the Chilean-Argentine
trade agreement until the final treaty draft is prepared, because it
would be "unfortunate" if the impression were created that the treaty
was being modified as a result of US representations (see Daily
Summary of 10 January, item 11).
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The Chilean Minister of Defense has declared that Communist
members of the Cabinet have cited an apparent break-down of nego-
tiations for twenty-two US tankers desired by Chile as evidence of
"Yankee" pressure resulting from US displeasure over the Chilean-
Argentine treaty.
The Defense Minister, a member of the Liberal Party, has
also asserted that the Chilean-Argentine treaty must undergo consider-
able modification before the Liberal Party would vote to ratify it.
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GENERAL
10 JAN 1947
275
I. Reqmtiftt for UN intervention returned to Indochinese nationalists�The
Ptate Department has instructed US Legation Siam to return to leaders
of the Free Laos and Free Cambodian movements the document request-
ing UN intervention in the situation in Indochina. The Department does
not consider itself the proper channel for transmission of memoranda
from such groups to the Security Council (see Daily Summary of
9 January 1947, item 1).
2. France declines US offer otgLaod offices in Indochina.--The Counselor
of the French Embassy in Wash ngr-rort, has informed the State Depart-
ment that his Government will not avail itself of US "good offices" but
will continue to handle the Indochina situation "singlehandedly." The
state Department has expressed to Embassy Paris the hope that this
does not represent a definitive I rench intention to regard the problem
as purely internal, and notes that "less dangerous situations have been
raised in the SC in the past."
3. Priority for BaruskpropaRal lacks necessary SC support- Herschel
Johnson, US representative to the Security Council. reports that the US
resolution calling for immediate consideration of the Atomic Energy
Conunission report has no chance of obtaining the necessary support.
The five representatives on the Security Council, who have already ex-
pressed their views, have indicated that they will "not oppose the
proposal for a commission to discuss general regulation of armaments
concurrently" with continued discussions in the AEC. The representa-
tives consulted by Johnson unanimously feel that it is "politically im-
possible" to support the US position. The Columbian delegate believes
that the USSR "could probably be brought to accept" the US concept of
atomic priority, if the US yields on concurrent discussion.
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TOP �ECPL
5. cOnSiglation concernin Dominic -Vezgae.g.tan Ian friction ested�US
Embassy Ciudad Trujillo reports that friction between Venezuela and
the Dominican Republic has reached such a point that consultation
among the American states signatory to the Act of Chapultepec appears
justified. and that knowledge of the possibility of such consultation
should deter extreme action by either country.
EUROPE
C. GERMANY: Soviet Industries A.G. roduction tmsatisfacto -US Pol-
itical Adviser Murphy has � en I ormed by a well-placed German
source that the Soviet military administrator is disappointed over the
output of Soviet Industries, A.G. (see Daily Summary of II December
I94?. item 5). Despite vigorous Soviet supervision, production has
declined 5 to lO%in the 200 key industrial plants composing this Soviet
joint stock company. The Soviet managers are under great pressure
and are seriously worried over their failure, according to Murphy's
informant who adds that needs in the USSR itself appear to be desperate
and that the USSR is not in a position generally to supply adequate raw
materials for industry in its Zone.
7. FRANCE: Banker's comments on pricez....h_actiopn--The Gov-
ernor of the Bank of France, commenting on the Blum price-reduction
program, has told US Embassy Paris that, in his opinion, (a) the bene-
fits to date have been "entirely psychological"; (b) they will be "entirely
dissipated" if there is another political crisis; (c) whether wage
stabilization can be maintained depends on the attitude of the Communist
Party; and (d) if the Communists are included in the new cabinet, there
is a "good chance" that they will "go along" on maintenance of the
present wage structure; but, if excluded, they will probably disrupt the
labor situation through the CGT (General Confederation of Labor).
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NEAR EAST-AFRICA
8. IRAN: British cpncern over oppssition to Soviet oil concession--The
State Department has advised Embassy Tehran that the British Ambas-
sador will inform Qavam that it would be dangerous "to prepare" the
Majlis (Parliament) to reject the Soviet oil concession. The Foreign
Office apparently feels that a concession could be devised which would
satisfactorily protect Iran's basic interests.
FAR EAST
9. INDOCHINA: Vietnam may seek Consul
Hanoi reports that the Vietnam Government apparently is working for
Chinese intervention. Vietnam korces are taking every precaution to
protect the lives and property of Chinese and other foreign nationals
in areas of fighting. Moreover, the Chinese Consul General has be-
come critical of the French inability to safeguard Chinese nationals
in Tonkin. The tone of the Vietnam broadcasts has recently become
conciliatory toward China, in marked contrast to the Vietnam resent-
ment of Chinese occupying forces in 1945-46.
10. PHILIPPINES: Roxas reiterates position on US troobs--US Ambassador
McNutt reports that Mr. B.E. Beyster, who is under contract to the
Philippine Covernment, has informed ROXIIS that Fresident Truman and
Secretary Patterson assured him that all US troops would be out of the
Philippines in sixty days. Roxas desires it to be known that Beyster
was not authorized to make any representations on this subject and that
removal of US troops from all the Philippines does not correspond in
any way to his (Ragas?) wishes.
THE AMERICAS
11. CHILE: Acljustments tEggLat_g_tio_study--The Chilean
Finance Minister has informed US Embassy Santiago that discrepancies
between the Chilean-Argentine trade agreement and the US-Chilean
modus vivendi are under study and will be adjusted (see Daily Summary
of 8 January 1947. item 10).
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GENERAL
IF 9 JAN 1947
274
1. Indo_d____Iinessimmutt rgalggicjek_UN tervention�US Minister Stanton
in Bangkok reports that representatives of the Free Laos, Free Cambo-
dians, and Vietnam have drawn up a memorandum setting forth their
hopes for ultimate independence and a federation of Southeast Asia states,
and appealing for immediate intervention by the UN in the situation in
Indochina, Stanton has told the representatives that he will endeavor to
see that this document reaches the Secretary-General of the UN through
the US Legation, Meanwhile, Free Laos and Free Cambodian leaders
have left Bangkok for their respective provinces. Stanton expects that
these leaders will take advantage of the opportunity afforded by French
Involvement in Tonkin to achieve their aspirations by attacking the French
In their respective areas. Stanton feels that, because the sympathies of
all other Southeast Asian countries lie with Vietnam, hostilities in Indo-
china directly affect the peace of Southeast Asia and create a situation
definitely within the purview of the UN and the Security Council.
Crechs in Germany act as cover for Soviet intellimst--US Embassy
Prague recommends as an additional concigion for the proposed esta-
blishment of consulates in US Zone Germany by non-ex-enemy states
that all Missions already operating in the Zone be withdrawn. The Em-
bassy points out that (a) Czechoslovakia maintains a great many heavily
staffed Missions in the US Zone, and (b) "it is no secret in Prague" that
these Missions "have been and are being utilized as a cover for Sotiet
Intelligence activities.'
S. EmbassyIVA:4cm comatvgiLejta.S2_1_viet ob ectives_itrean --In com-
menting on Soviet jectives in Germany, US Emba.sey Moscow notes
that: (a) Germany, which has always loomed large in Communist plans,
has been reduced by the war to a condition most favorable for the Krem-
lin's purposes; (b) Germany represents, for. the USSR, the greatest po-
tential threat or the most useful irt.f.�teritial associate; (c) theme considera-
tiont have convinced the soviet Union that Germany =St be included
.1n,thz Soviet sphere; (d) Soviet control over Eastern Germany already .
has been partially effected; and (e) the USSR, therefore, will seek to main-
tain and strengthen its position in Eastern Germany, and to promote con-
ditions in the western zones most favorable for the development of Com-
)
31111316131 and least favorable for orientation toward the West,
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The Embassy believes that the US (a) must be prepared to ac-
cept further separation of Eastern and Western Germany rather than
agree to a "hollow unification" which would facilitate the accomplish-
ment of Soviet purposes In Germany as a whole, and (b) must actively
support and defend democratic and progressive forces in the US Zone
against Soviet infiltration and subversion. In the Embassy's opinion,
the issues are such that the US delegation should come to the Moscow
CFM meeting prepared for a long and tedious struggle.
4., yirjtlgits_i_g�ene oti_egatr ment--US Embassy London
reports that the British will attempt to obtain an air agreement with
Spain along the lines of the US-UK "Bermuda Agreement' (This is -
In accordance with US representations to the UK that Spain be given
an opportunity to study the liberal Bermuda form of agreement and
that appropriate provisions be incorporated in a revised UK-Spanish
agreement.)
5. AxitiffiiipreiLen Office 4j Soviet to US
Embassy London, British Foreign Office officials have not yet decided
whether the recent, more cooperative attitude of the Soviets is "some-
thing that would endure or merely a maneuver." The British believe,
nevertheless, that for the present, everything possible should be avoided
which would appear to question Soviet good faith or mar the current "bet-
ter atmosphere,._
EUROPE
6. ITALY: Arneilzganranensiatiew_for Peanamal--The Supreme
Allied Commander Mediterranean has informed US Political Adviser
Byington that, as SACMED definitely intends 'to retain troops in Pola
until, but not after, the day when the Italian peace treaty is ratified,
the Italians should begin any contemplated evacuation of Pole now.
SACMED suggests that the Italians might use a Liberty ship acquired
from the US, because the British forces do not have transportation faci-
lities to assist the Italians (see Daily Summary of 2 January, 1947, item
4). He agrees that the Italian Government should be informed immediate-
ly of the extent of assistance available and of the length of time Allied
troops will stay in Pola.
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Communists uneasy about central and southern Italy--US Con-
sul Florence reports that, according to criiithoritative sources,." the
Communists are sanguine of success in the next elections but are un-
easy about the political attitude of central and southern Italy where
their Party is relatively weakest. They are expected to send delegates
w organize Communist propaganda in those areas,
(CIG Comment: The Rightist parties have long been strongest
south of Rome; Communist propaganda probably will not succeed in
ieeakening them.)
d
FRANCE: Communist concern over Blum's anti-inflation sumps--
US Embassy Paris reports that the Communists are becoming 'in-
eteasingly anxious" over the popular success which their "enemy
number one, Blum" is achieving in checking price inflation. As a re-
sult, they seem determined to destroy the equilibrium apparently esta-
blished by Blum between prices and costs, unless their demands regard-
ing participation in the new cabinet are met. They plan to inaugurate
"vigorous campaign" through the CGT (General Confederation of
abor) for a "vital minimum salary."
The Embassy also reports that Duclos, a leading Communist,
%as discussed with Herriot support for the latter's presidential aspira-
Ions in return for his assistance in gaining for the Communists as many
-important ministries as possible.
Sales of US arms to France for use in Indochina refused--The
efitate Department has informed US Embassy Paris that the US cannot
approve resale of surplus US munitions by the Belgians to the French
because the French apparently intend to use them in Indochina. The
Department adds that US policy, which in general approves sales of
'reasonable quantities" of military supplies to France, specifically
Yorbids sales "in cases which appear to relate to Indochina."
FAR EAST
CHINA: Soviet officials in Dairen conciliatoryloward US--US Consul
General Dairen reports that Soviet officials seem inclined to consider
the US courier ship incident of 20 December as closed; at a reception
at his house, they referred "cordially" to the subsequent visit of the
vessel.
3
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giniciam-Soviet trade to be facilitated�The Chinese Commission-
_
� er of Customs for Sinkiang has told US Consul Tihwa that the new Chinese
import restrictions will not apply to Sinkiang, and has implied that China
xiow considers resumption of the trans-border trade with the USSR essen-
kial for Sinkiang's economic life.
`e, PHILIPPINES: Government not to oica Legation in Spain--US Ambassa-
,ior McNutt has been Wormed by President Roxas that the Philippine
Jovernment., in accordance with the UN decision against Franco, will
,Lot establish a Legation in Spain. The Philippine Government will in-
:form the Spanish Minister, upon his arrival in Manila, of its decision
Ind nes.11 give Spain an opportunity to withdraw him or to retain him with
ee; undeTstanding that no reciprocal action will be taken.
THE AMERICAS
VI VENEZUELA: President desires US action azg.inst plotters�US Embassy
Nose Carneas reports that President Betancourt has repeated previous allega-
tion?, that a Venezuelan revolutionary expedition is being organized in the
,omAeican Republic with Dominican aid (see Daily Summary of 18 Decem-
ber. 1946, item 10) and has expressed his belief that the US should take
serts to prevent ex-President Lopez Contreras and his followers (now in.
,ethe )tn the US) from conspiring against the Venezuelan Government
TIC Comment: There Is considerable evidence to support Betan-
eliM71: P, allegations. The Government's ability to put down a revolution
as probably been weakened by unfavorable popular reaction to recent
official revelations that it has been torturing political prisoners.)
IL BOLIVIA: Presidential candidates fail to attain majority�US Embassy
La Paz has been informed by a high official in the Foreign Ministry that
ta) it now seems apparent that neither Hertzog nor Guachalla will receive
fee absolute majority of popular votes required for election and (b) as a
consequence the presidential election will revert to the new congress,
the complexion of which is not certain.
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GENERAL
8 � JAN 194:'
273
1. US mediation urged in French Indochina�Abbot Low Moffat, Chief,
Division of Southeast Asian Affairs of the State Department, has
urged from Singapore prompt US action aimed at terminating the
war in Vietnam so that the position of the US and other democracies
may be protected in Southeast Asia. In his opinion, a hands-off
policy looks like US approval of a French reconquest of Vietnam,
which, even if successful, would engender such hatreds as to defeat
French civil objectives and to threaten all Western interests in
Southeast Asia. Moffat believes that a permanent political solution
can now be based only on an independent Vietnam, and that the al-
ternative would be a "gigantic armed colonial camp." He stresses
the deep need for US moral leadership in this increasingly critical
situation.
2 Dut_ilinent on a common German policy- Ambas-
sador Kirk reports that discussions between the Belgian and Dutch
Foreign Ministers resulted in "substantial agreement" on the basic
policy objective of a "politically federated but economically united"
Germany. The two Governments plan to submit "coordinated memo-
randa" to the CFM deputies.
EUROPE
3. FRANCE: Opinion on Soviet foreign policy�US Ambassador Caffery
reports that, according to informed French opinion, the Soviets have
thtee main foreign policy objectives, and that every action presently
taken is calculated to aid the USSR "in one way or another in reach-
ing these ends.
The first objective is the atomic bomb. The French interpret
even Soviet "concessions" at New York as designed to that end. They .
feel that once the US has divulged its atomic secrets or destroyed its
bombs, not only will the Soviets flout inspection and similar agree-
ments, but will "go to town" on the second objective�Middle East
petroleum--which the Soviets need themselves but also do not want
the US to get.
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The third objective, in French opinion, is Western Europe.
The French, however, are now satisfied that the USSR is not planning
"to move the iron curtain to the Atlantic" until the other two objec-
tives have been accomplished.
Caffery notes that, while the French hold these opinions, they
apparently do not "very often" have sufficient courage of their con-
victions to fight the Communists themselves.
4. ITALY: Possible repercussions of De GasperayipitIQ US.--US Em-
bassy Rome considers as "exaggerated and alarmist" a view expressed
by an official of the Foreign Ministry that the survival of the Christian
Democratic Party depends on having Premier De Gasperi return from
his current visit to the US "with something tangible to offer to the
Italian people." The Foreign Ministry official also declared to an
Embassy officer that Christian Democratic leadership afforded the
best assurance that Italy would develop "along traditional European
lines" (see Daily Summary of 3 January 1947, item 2).
(CIG Comment: The Christian Democrats probably cannot re-
main in power for an appreciable time after the withdrawal of Allied
occupation forces, because the basic movement of Italian politics is
away from the moderate parties. If, however, the Premier returns
without "something tangible," the decline of his Party will be accel-
erated in the immediate future.)
Chetnilaszdjilsraniam_a_piplaminitala--Supreme Allied
Commander Mediterranean reports that, although the disposal of
9,000 Ukranians who were captured in Wehrmacht uniforms and of
11,500 Chetniks in Italy is a British problem (of 18 months stand-
ing), it must be solved prior to Allied evacuation lest Allied prestige
suffer. SACMED urgently recommends that the Chetniks be trans-
ferred to DI" camps, the Ukranians to Germany.
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5. ICELAND: Withdrawal of nava/ "ersonnel a ain recommendsl�US
Legation Re7ikTiecaus� addiflonal incidents involving Ice-
landers and US sailors, has reiterated its recommendation that US
naval personnel be withdrawn (see Daily Summary of 30 December
1946, item 4).
6. BULGARIA: US-Bulgarian relations�Foreign Minister Georgiev
has told US Representative Barnes that "all members of the Cabinet
realize that economic rehabilitation of Bulgaria is absolutely impos-
sible without materials from the US" and that the Bulgarian Govern-
ment is anxious for "re-establishment of normal relations with the
US."
FAR EAST
7. CHINA:Marinedependents�US Ambassador
3tuart concurs with Consul General Smyth, s opinion that sending US
Marine dependents to Tientsin at this time is inadvisable because their
arrival would give local Chinese the impression that US Marines were
to be stationed in Tientsin indefinitely and would thus serve to increase
growing Chinese resentment and hostility.
Re_rat of US good-will mission to Tibet inaccurate--The State
_Department has informed US Embassy Nanking that a United Press
dispatch, reporting the prospective departure of a US good-will mis-
sion to Tibet (see Daily Summary of 3 January, item 4), was inaccurate.
The report was apparently based on the fact that eight Tibetan officials,
visiting New Delhi 3 March, called on the US Commissioner with gifts
and letters for the President. The State Department is disposed to
send an officer to return this visit but has instructed Nanking to inform
the Chinese Foreign Office that the US has no intention of establishing
diplomatic relations with Tibet and would consult Chinese authorities
-before sending a mission to the area.
3. INDOCHINA: Position of Ho Chi Mirth--US Consul Hanoi reports that
French authorities have privately expressed a willingness to negotiate
with Ho Chi Minh who, they believe, was opposed to the Vietnam attack
of 19 December and is now a virtual prisoner of Vietnam extremists.
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The Consul states that Ho has neither made anti-French statements nor
eoztipromised his position regarding future negotiations, and that, if
a Communist-dominated government should be formed in France.
To may wen form a new Vietnam ministry to negotiate with French
:.ttithorities.
French and Vietnam Military strierlik--US Military Attache
Paris now reports that, according to information received from
official French military sources, present French strength in Indochina
eotais 94.000, including 63,000 white troops, 24,000 natives, and 7,000
;lava': and air persel In addition, 9,000 troops are scheduled for
departure from France and 6,000 more when shipping can be obtained.
These reinioreements are reliably reported to comprise the total
eetenar army troops available.
Vietnam forces are estimated at 51,000 well-trained regulars
?ins approximately 100,000 guerrillas.
THE AMERICAS
BRAZIL: Pawkmicomments on US Latin Americar_militcy--US Ambas-
eacior Pawley, reporting on the opinions of high public officials and
eutstanding private citizens in Latin America as expressed to him
through the period since 1945, comments that (a) "overwhelming
sentiment" favors strengthening inter-American relations as opposed
ia "full and complete liquidation of past accounts"; (b) there is a
"iridespread desire" for adjustment of US-Argentine differences as
an "erasential step" towards hemisphere solidarity; (c) the former
pro-Axis individuals within this hemisphere are "no longer considered
generally to constitute a threat," and (d) Brazil and other countries
are unable, "because of political considerations," to "repatriate
their leading German citizens, many of whom have Latin American
wives and children,"
10. CHME: Chilean official comments on new tt,rat_si_e telly�US Ambas-
sador Bowers has been told by Jaime Larrain, head of the Chilean
cominission which negotiated the Argentine-Chilean commerical
treaty now awaiting ratification, that (a) the treaty implies nothing un-
friendly to the US, with which Chile wishes relations "to continue as
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before;" (b) the treaty is without political implications but will
prove "mutually beneficial" to Chile and Argentina because each
needs articles the other can supply, and (c) the US "is understood
to have agreed," ..under the "treaty of Chapultepect" that the Ameri-
can nations should help each other "economically and financially"
when possible.
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GENERAL
JAN 1n47
TIM C.I.A. HAS NO OBJECTIu272m
TO THE DECLASSIFICATION Ple
THIS DOCUMENT.,
0-1
1. USSR_Natts to abolition of ACC_Itaja. --US Embassy Moscow has
received a note from the Soviet Government agreeing to the US
proposal that Allied Control Commission Italy be abolished and its
remaining functions transferred to Allied Forces Headquarters.
2. yiEtiinski satisfied with Polish election preparations�US Embassy
Moscow reports that Soviet Deputy Foreign Minister Vyshinski, upon
receipt of the US note proposing joint representations reminding the
Polish Government of its obligation under the Potsdam Agreement
to conduct "free and unfettered elections" (see Daily Summary of
6 January 1947, item 1), expressed the "personal opinion" that
Poland had fully complied with the Yalta and Potsdam terms and
any such interference in this "purely Polish affair" was unwar-
ranted. Vyshinski promised, however, to inform the Soviet Govern-
ment of the contents of the note.
FAR EAST
3. INDOCRIN.A: Effectalts_e on Vietnam resistance discounted--
US Consul Hanoi reports that the French are explaining the bitter
Vietnam resistance by the presenee of Japanese in the Vietnam
forces. Because the number of Japanese found dead or alive is
insufficient to support this explanation, Consul O'Sullivan feels the
opposition is due principally to the tenacity and courage of Vietnam
forces in defending prepared positions and to French lack of infantry,
and inexperience in handling armored units.
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GENERAL
6 JAN 1947
271
USjiiiik_s_tkes:wyjit action on Polish elections--The State Depart-
ment has instructed Embassy Moscow to notify the Soviet Government
that the US is "especially perturbed" by the repressive pre-election
measures employed by the Polish Provisional Government and
believes that unless these activities cease immediately there is
little likelihood of compliance with the Potsdam agreement for
"free and unfettered elections." The US hopes that the USSR
will join the US in reminding the Polish Government of its obliga-
tion to "enable all democratic and anti-nazi parties to take full
part in the elections." The State Department is addressing a simi-
lar note to the British Government and plans, regardless of Soviet
action, to reiterate to the Polish Government the US views on the
elections.
2. US arms .falittlyAllsged_t_olleyeaching Vietnam forces �US Embas-
sy Paris reports that the official newspaper of the MRP party has
published a story from Hanoi stating that one of the most important
sources of arms now in possession of Vietnam is US surplus materiel
purchased from the US Government in the Pacific by buyers of all
nationalities and sold by the latter to Vietnam. The Embassy has
asked the State Department for the necessary information to refute
the false statement that private buyers could obtain such arms.
EUROPE
BULGARIA: So.71,41.zoops_m_oliantkon, JSELeillsrde,x--US Repare-
sentative Barnes has been informed by a "usually reliable source'
that Soviet troops and material have moved from the Greek frontier
area to camps in the Balkan mountains. Barnes reports that the
Bulgarian Government now publicly welcomes the UN investigation
oi the border situation.
4. YUGOSLAV/A: Cooperation with UN_predicted--Brilej, chief politi-
cal secretary of the Yugoslav Foreign Office, has told US Charge
Hickok of his belief that (a) Yugoslavia will soon join UNESCO; (b) a
"large part of Yugoslav foreign policy will henceforth be produced
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through the UN ;"and (c) the Yurslav Government considers it
"necessary, useful, and its duty to collaborate with all UN
organizations except the Food and Agriculture Organization
which, Brilej explained, seems to conflict with the new Yugoslav
five-year plan.
5. SPAIN: Slegicant c_lislitnsion in the Cortes--US Charge Madrid
reports a "large =expected opposition in the Cortes (Parliament)
0.o tax and budget laws presented by the Government. Because the
members of this parliamentary body were "hand-picked by the
regime," the Charge considers their opposition "significant" and
believes it "may precipitate a cabinet crisis."
6. FRANCE: Future Communist strategy--US Embassy Paris reports
that the French Communist Party has decided to participate in the
.riext Cabinet rather than vigorously oppose it because Moscow
"undoubtedly" desires primarily that as many Communists as possi-
ble hold high Government posts The Embassy believes that the
Soviet intention is to influence French domestic and colonial policy
in its favor, or at least to prevent the adoption of policies that would
be "too unfavorable to Soviet world interest."
FAR EAST
7. CHINA: US position believedjm_ge_dloy.han demonstrations--Com-
mander US Naval Forces Western Pacific believes that the current
anti-US demonstrations in several Chinese cities, touched off by an
alleged rape in Peking, reflect internal political turmoil and are
largely Communist-inspired, but that the US position in China "has
not been changed."
THE AMERICAS
8, CHILE: USp94ion on Ar entine trade pact--Pursuant to a State
Department request for comment on a proposal to inform the Chilean
Government that the US cannot reconcile the provisions of the proposed
Argentine-Chilean trade agreement with prior Chilean commitments,
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US Ambassador Bowers has expressed the opinion that the US
(a) should "make clear that this is a Chilean problem which Chile
mu3t decide; "but 0)) is "frankly opposed to the discriminatory
and exclusive aspects of the agreement," and (c) believes that
Chile should wish to "clear up the aprarent conflict between
certain points and Chile's existing commitments.
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GENERAL
4 JAN 1947
270
1. US re_zsmphasizes need for broadened Greek Government--The State
Department hasormeinf.nib-liisador MacVeagh in Athens that it
would be unfortunate if Prime Minister Tsaldaris should attempt to
distort US promises to "explore urgently possibtlities of immediate
as well as long-term economic assistance" in order to perpetuate his
uneasy position in the Greek political world. The Department feels
that in this critical time all loyal Greek political parties and leaders
should unite to form a broadly based government "dedicated to modera-
tion, all feasible conciliation to loyal opposition, and economic and fis-
cal reforms even though drastic in their nature." MacVeagh has been
authorized to express these views to the King and responsible Greek
leaders both in and out of the Government.
EUROPE
2. FRANCE: Interest in German econgrai_s_tmiq--Alphand, Director Gen-
eral of Economic Affairs in the Ministry of Foreign Affairs, has told
US Ambassador Caffery that France has always been in favor of eco-
nomic unity for Germany and is now enthusiastic about it. In reply to
Caffery's skepticism, Alphand said that France is now preparing sever-
al papers for use in the London conversations on Germany. These papers
will cover suggestions for a short-range and a long-range government
for Germany and for economic unity; according to Alphand, they will be
ready in a "week or so."
3. DENMARK: King's remarks on the Faroes--US Minister Marvel com-
ments that theAtlies�iiTiFir-Ice in Year's Day radio address)
to Greenland and the Faroe Islands as being among those problems
which "will be solved in a way honorable to our country,' while related
primarily to administrative problems, may be significant in the light
of an informal remark made to Marvel by the Foreign Minister during
the Christmas holidays. "Any permanent arrangement with the US with
respect to Greenland," that official said, "might prompt Russia to make
demands on the Faroe Islands."
4. ICELAND: Anti-US,A0Avitiee--Follow1ng a confidential warning given
some time ago that Icelandic Communists intend "to make life as un-
comfortable as possible for (US) soldiers," US Legation reports acts 003
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AL
TAep-aceettEgio---
of apparent sabotage at Keflavik Field and Camp Knox. These include
opening fuel tank valves and removal of critical parts of heating equip-
ment. As a result, weapons have been returned to US military police
in warehouse areas but not at the gates where, as a result of the Decem-
ber shooting incidents, Icelandic police have been increased from three
to only four. The Prime Minister agrees that some provocative inci-
dent may arise but considers possible negotiations to sell "all our fish"
to the USSR of greater importance.
THE AMERICAS
5. BOLIVIA: US Embas -. ';cts liberal electoral victo -US Ambassa-
dor Flack, commenting on Bolivia a imminent 5 January) elections, re-
ports that (a) the Monje Gutierrez caretaker junta has ordered all "poli-
tical prisoners" released from custody, and has reiterated its intention
to "preside over the purest elections ever held in Bolivia," (b) the mod-
erately leftist candidate Luis Guachalla enjoys, in Flack's opinion, the
support of the "liberal elements" and thus of a popular majority, and
(e) victory for Hertzog, candidate of the conservative coalition, would
therefore mean "serious trouble sooner or later."
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GENERAL
8 JAN 194/
269.
1. FrqnsiForc_e_12MMElsec,-The Chief of Intelli-
gence of the French Air Staff has "unequivocally informed US Air
Attache Paris that present plans for the increase of air stations in
North Africa include transfer there of primary pilot training within two
years. The Air Attache has previously reported that the British have
suggested that the French build permanent air bases in Morocco and
"man France only with trained, mobile, tactical units."
(CIG Comment: French plans for air developments in North
Africa are probably concerned primarily with their retraining program
rather than with the transfer of their entire Air Force to that area;
see Daily Summary of 17 December, item 2.)
EUROPE
2. ITALY: Admiral Stone's visy_s_o_n de Gasneri visit--Admiral Stone
Chief of the Allied Commission, has expressed the view to US Charge
Key that Prime Minister de Gasperi's prestige and political position
will be seriously impaired if he returns to Italy empty-banded. Stone
therefore recommends full US support of the following: (a) a strong
and impartial governor in the Free Territory of Trieste; (b) significant
financial assistance for Italy; (c) the release by the British of former
Italian cables and cable terminsift and (d) the French proposal for
Italian trusteeship over Italian colonies.
3. RUMANIA: Government relalre, falLeguictions US visitors�US Dele-
gate ACC Bucharest reports "numerous indications that the Rumanian
Government (with Soviet approval) is relaxing its restrictions against
US visitors. He notes that 80 out 75 requests for entrance visas many
of them pending for months, have been approved since 19 December.
The Delegate believes that this reversal cannot yet be interpreted as a
real change in over-all Government policy, but suggests that the Gov-
ernment may be attempting to remove the "stigma of the November
election" by openly demonstrating its desire to solve its economic
problems by requesting outside aid,
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FAR EAST
4. CHINA: Chinese show concern over status of Tibet�US Embassy Nan-
king reports that the Chinese Foreign Office has shown concern about
a United Press report that a US good-will mission will leave soon from
India to establish diplomatic relations with Tibet. The Foreign Minis-
ter assumes that the report is "erroneous, since Tibet is an integral
part of China."
THE AMERICAS
5. BOLIVIA: election ezp Military Attache La Paz reports
that Hartzog, the Conservative coalition candidate for president, has
been gaining steadily and that in the opinion of Bolivian observers the
count in the election on 5 January will be close.
Argentina reduces pressure on_Bolivia�The MA also reports
that the Bolivian food shortage has passed its peak, that "some supplies"
are now arriving from Argentina, and that "promised US" help has
apparently caused Argentina to abandon its attempt to force economic
concessions from Bolivia.
6, BRAZIL: Brazilian Communist leader attacks Vargas�US Military
Attache Rio de Janeiro reports that the Brazilian Communist leader
Prestes has publicly attacked the former dictator-president Getulio
Vargas as a "despoiler of the people," and that Brazilian press com-
mentators'believe that the rumored rapprochement between Vargas
and Brazilian Communists is consequently out of the question.
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GENERAL
y. 8 JAN 1947
26R
1. US air rights into USSR believed tmlikelx�US Ambassador Smith in
Moscow has proposed to Molotov the reopening of discussions for
reciprocal air traffic between the US and USSR. Smith reports that
while Molotov appeared interested and amenable to the idea of discus-
sions it is very doubtful whether the Soviets will "go further at this
3
time' than an exchange of traffic outside Soviet territory.
2. US cautioned against precipitating action on Baruch proposal--The US
Delegation to the UN reports that the UK Delegate has criticized the US
draft resolution calling upon the SC to act on the Atomic Energy Com-
mission report "as soon as received:" Cadman warned that immediate
pressure might "rush head-on into a veto." The French
and Australian representatives have recommended a three weeks' delay
to afford the USSR full opportunity to consider the implications of the
recent approval of the Baruch plan by the AEC sub-committee.
3.. US uriceiAs9tiations for opening of Dairen--The State Department has
instructed US Embassies Nanking and Moscow to urge the Chinese and
Soviet Governments "promptly" to consider the current unsatisfactory
situation with regard to the status and control of the port of Dairen and
to implement the pertinent provisions of the Soviet-Chinese agreement
of 14 August 1945. The Embassies are to state that this Government
perceives no reason for further delay in reopening the port "under
Chinese administration" to international commerce. They will also ex
--
press the hope that agreement can be reached "soon" for resumption
of traffic on the Chinese Changchun Railway (the major railway system
in Manchuria).
EUROPE
4. ITALY: US aid needed for Pole. evacuation�The Secretary General of
the Foreign Ministry has informed US Charge Key that the Italian Gov-
ernment is deeply concerned over the 'fate of approximately 25,000
Italians in Pola (which will pass to Yugoslav control after ratification
of the Italian peace treaty). Key recommends US assistance in evacuating
Italians from Pola, after the signing of the Italian peace treaty and before
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its ratification, because (a) the Yugoslays can be expected to take "cruel
and repressive measures' against the Italians remaining in Pola once
Allied troops have been withdrawn; and (b) if the Italian Government has
to remove these people in the coming weeks, it will be placed in the
position of accepting the treaty before it is signed and submitted to the
Constituent Assembly.
FAR EAST
5. BURMA: Burmese demands in forthcoming London talks--US Consul
General Rangoon has been told by an influential member of the Executive
Council that the Burmese delegation will go to London for talks in
January and will present three demands: election of a constituent assem-
bly; an interim government, and independence for the "hill areas" con-
current with independence for Burma. The official added that if these
demands are not met, Anti-Fascist League members will resign from
the Executive Council, and Burma will be in such turmoil that "nobody
could govern it."
6 INDOCHINA: Military situation-- US Naval Observer Saigon reports
that the French control the principal towns in the Hanoi area but little
else. South Indochina has been stripped of troops, including some of the
forces in the newly acquired border areas in Cambodia. High Commis-
sioner d'Argenlieu,and the Commanding General of French Military
Forces in Indochina are believed to be conferring in Hanoi on the possibili-
iy of dealing with some native group other than that of Ho Chi Minh,
President of the Vietnam Republic, or of undertaking large-scale mili-
tary action utilizing all French forces in the area.
THE AMERICAS
7. BOLIVIA: Higher tin prices desired--US Embassy La Paz reports that
the Minister of Foreign Affairs has requested US support for a higher
price for Bolivian tin on the grounds that (a) a "strong threat" to
democratic government will develop if the miners do not get wage in-
creases, which the companies cannot pay without higher prices,
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(b) continuance of democratic government in Bolivia is a US interest,
and (c) Bolivia aided the Allied cause during the war at a monetary
loss when it could have sold minerals to Argentina at higher prices.
The Embassy comments that "no other solution is visible."
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