DAILY SUMMARY - 1947/04

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 02996867
• Document Creation Date: October 8, 2018

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30 APR 19e7
1. Embass Moscow o.. ises icultural aid to USSR--In view of the
Soviet failure to permi �e renewa 0 con.: c .e een the US Agri-
cultural Attache and Soviet agricultural experts; US Embassy Mos-
cow "strongly urges" that the US Department of Agriculture discon-
tinue all agricultural assistance to the USSR. The Embassy suggests
that all USDA field directors be instructed not to extend help to
Soviet representatives without prior approval.
The Embassy believes that Soviet reluctance to allow freedom
of movement to American agriculturalists in the USSR will never be
overcome, if "large loopholes exist in the US wherein the Soviets can
move freely.li
2. British failure to produce suitable trans rt aircraft--US Embassy
London reports that the British Cabinet has reversed its former posi-
tion favoring the purchase of US transport aircraft for British airlines.
A strong effort will now be made to maintain the prestige of British
aircraft manufacturers and increase orders for current production
types. British airlines, accordingly, will have to "get along as best
they can on makeshifts and conversions" for the next 3 or 4 years.
According to the Embassy, the general consensus is that BOAC
(British Overseas Airways Corporation) old BSAA (British South
American Airways) "can be written off as serious competitors on
long-range transportation."
(CIG Comment: It is believed that this conclusion is too broad.
The high standard of British operating efficiency and consideration for
passenger comfort will partially offset the handicap of obsolescent air-
craft for long-range operations. The British can still make a strong
bid for passenger traffic which is less concerned with speed than with
comfort.)
EUROPE
3. RUMANIA: Disagreement at CFM depresses OlnagiLon--US Repre-
sentative Berry reports that, as a result of the failure to agree at
Moscow on the Austrian Treaty: (a) the Rumanian public is "more
depressed" than at any time in the past two years, while the Commu-
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nists within the Government are "jubilant"; and (b) Soviet Military
occupation is inevitable for at least another year, during which the
Communist program will be consolidated, He adds that during the
CFM meeting the Communists completed detailed plans for "framing
mass arrests" of nearly 5,000 Anglo-American sympathizers and
key Oppositionists; however, the lack of an Austrian agreement has
lessened the urgency for a total roundup and the arrests may now be
extended over a period of time.
Armed Communist underground�According to US Delegate
ACC Bucharest, "it is now definitely known" that the Soviets and the
Rumanian Communists are forming an armed underground organiza-
tion in Rumania in order to maintain the Groza Government. The
Delegate adds that the organization has from 20,000 to 25,000 mem-
bers, about half of whom are Soviet nationals especially imported for
the purpose, and that its membership is expected to increase to 40,000.
4 GREECE: Ethridge favors Greek political amnesty--Mark Ethridge
reports from Geneva that the US delegation to the Security Council
Investigating Commission believes that a generous and equitable
Greek political amnesty, "which could never be effected" by the pres-
ent Greek Government, would: (a) greatly reduce the guerrillas forces;
(b) tend to restore some measure of tranquillity in Greece; and (c) re-
move the US from the position of financing a brutal civil war. Ethridge
feels that US policy in Greece "can fall on its face," unless the US is
able to end the civil war quickly and start the reconstruction necessary
to prevent Greece from falling into Communist hands. He suggests
that, if the US Government prefers to take the initiative in pressing
for an amnesty, it should do so before the Investigating Commission
draws up its own recommendations.
5, AUSTRIA: Government adheres to US policy on Treaty--US Legation
Vienna reports that, although the Government continues "altogether
friendly" toward the US point of view, the failure of the Moscow Con-
ference to form an Austrian Treaty has caused Government circles
"to blame, at least publicly, all the big Powers." Krauland, Minister
of Economic Planning, has privately expressed the beliefs that:
(a) the USSR will never accept the US formula in regard to the trans-
fer of German assets; and (b) the Western Powers showed inadequate
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confidence in the Austrian will to resist Soviet economic penetration,
and should have compromised with the USSR on the assets question
In order to obtain a treaty. Chancellor Figl, on the other hand, while
agreeing in general with Krauland, believes that, in view of the over-
all strategy, it was wise not to compromise with the USSR. The Lega-
tion adds that Figes position "appears secure" as the Socialists will
not question the Government's basic foreign policy.
6. FRANCE: Cooling period seen delaying_Cabinet crisis--US Ambassa-
dor Caffery reports that it frnOW appears possibleirthat the Assembly
,nay not "really get down to brass tacks" in its discussion of Mada-
gascar and colonial policy until next week. He adds that perhaps the
Nap' most important reason for this "cooling of the political atmosphere"
is the reluctance of any single party to take the responsibility for
causing a crisis.
t UK: Press urged to indicate prpxress of the Military Staff Committee--
The Foreign Office has informed US Embassy London that the British
press is being urged to stress the "progress" indicated in the report
of the UN Military Staff Committee, and not the failure to reach full
.3greement.
THE AMERICAS
8. PARAGUAY: Government accepts Brazilian mediation--US Embassy
Rio reports that, according to the Brazilian Foreign Office, the Gov-
ernment of Paraguay has accepted Brazil's offer to mediate the
Paraguayan civil conflict, and the Brazilian Government is now
attempting to determine whether rebel leaders will also accept.
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EUROPE
2 9 APR it
367
I. GERMANY: British seek lanned econom for the US UK Zones--
General Clay has reported from Berlin that the program which the
British have proposed for the operation of the economically-merged
TIS-UK Zones would develop a fully-planned economy under the
rigid control of the bi-zonal Germany agency. In General Clay's
view, this program would call for a detailed regimentation of the
German economy and appears to be a direct effort to introduce so-
cialistic controls to pave the way for socialization of the bi-zonal
area. Clay adds that (a) the bi-zonal German agency has so far been
a failure because it has concentrated on planning an over-all economy,
rather than on developing the export program; and (b) the British
proposal would be unacceptable to the American public and would
require a long time to develop. Clay believes that the matter should
be passed to the governmental level because the UK proposal is con-
trary to US political objectives.
2. SPAIN: adviser adviser proposes economic sanctions against Franco--
US Ambassador Caffery has been told by Foreign Affairs Secretary-
General Chauvel that, according to Lopez Olivan (one of the Pretend-
er's principal advisers), Franco cannot be ousted as long as he has
the support of the Army, and that the generals, who enjoy special
privileges under his regime, will continue to support him as long as
he is able to point to certain commercial agreements with the US and
UK as proof of the stability of his regime. Lopez Olivan is convinced
that, if the US, UK, and France put economic pressure on Spain, the
generals will consider Franco's position untenable and will make a
deal with the anti-Franco forces, particularly if the Monarchists and
Republican elements reach agreement, which he believes "very
possible." Chauvel said that the French believe there is something
in Lopez's argument but he added that unless the US, UK, and France
take concerted action, Franco will play off one against the other and
nothing can be accomplished. Chauvel stated that the UK has let the
French know informally that, if possible, they wish the Spanish prob-
lem solved before it comes before the UN next fall.
3. FRANCE: Communist urges azasses--US Ambas-
sador Caffery points out that a recent speech by the Communist Min-
ister of National Defense reflects the purest Bolshevik doctrine of
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"arming the working class" under the leadership of the Communist
Party, and thus reverts to the traditional military policy of the Com-
munists. Caffery links this with the stronger stand which the Commu-
nists have recently taken on such questions as the French colonies
and US "reactionary imperialism."
Communist Madagascar position versus the_bread_ration--
Anxbassador Caffery has protested to Acting Foreign Minister Teitgen
the Go7ernment's effort to blame the US for the reduction of the
bread :ration. Popular disappointment at the reduction is traceable,
ccording to Caffery, in large part to overly-optimistic statements
wade ty the Minister of Agriculture after his return from the US in
7ebruary. The Minister has admitted to Caffery that his statements
at that time were designed to discourage French farmers from
hoarding their wheat.
Cafferv believes that any public rebuttal of charges that the
T7S is responsible for the reduction should come from Washington.
Lie recommends that this should be deferred, in view of the reconven-
f,ag on 29 April of the National Assembly in which the Madagascar
situation will undoubtedly come up for discussion. Caffery adds that
the Communist position on this issue is shaky and unpopular and that
no US utterance should distract French popular attention from what
he believes will become a situation that will prove disadvantageous
to the Communists.
Prmatcipeforms aimed at Sultan of Morocco--A high Foreign
Ministry official has told Caffery that the Foreign Ministry has pro-
posed for the Government's approval a program calling for further
democratic reforms in Morocco. Caffery understands that the object
of this proposal is to place the Sultan of Morocco in a position where
he must either (a) approve the reforms which the French do not be-
lieve he favors at heart; or (b) oppose the reforms, "which will not
help him with the Moroccan masses."
ITALY: Left elements press for es--US Military
Attache Rome reports that the possibility exists that Left elements
may force a reorganization of the Government on the basis of the
evident fact that the strength of the Christian Democrats in the Cabi-
net no longer reflects the political complexion of the Italian people.
The MA believes that if such a reorganization (recurs, active partici-
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pation by parties of the Right would be mandatory or control of the
Government would unquestionably pass to the Socialist-Communist
bloc. The MA adds that the maintenance of the center position of
the Christian Democrat Party is a "strong safeguard against
civil war."
NEAR EAST-AFRICA
5. GREECE: Criticism of SC Investigating Commission--Dendramis,
Greek delegate to the UN, has delivered to the US delegation an aide-
memoire calling attention to tendencies in the SC Balkan Investigating
Commission: (a) to refrain from fixing responsibility for border
violations in Greece "lest displeasure be caused to the Slav bloc";
and (b) to recommend that the Greek Government grant a political
amnesty and adopt measures to combat alleged rightist excesses.
Dendramis feels that these "attempts at a compromise" would not
ease Greece's position in the Balkans, but would encourage subver-
sive elements and lead the USSR to feel that US policy still left room
for hopes of a development favorable to the USSR's purposes in
Greece.
6. USSR protests and pro-US policy"--US
Ambassador Allen has been informed by Prime Minister Qavam that
the Soviet Ambassador has recently made strong complaints to mem-
bers of the Iranian Cabinet against the "anti-Soviet and pro-American
policy of the present Iranian Government." The Soviet Ambassador
stated that Iran had rejected offers of Soviet aid and had refused to
consider an air agreement with the USSR. He also said that Iranian
plans for internal economic development through dollar loans would
result in full US economic and military control. Qavam asked Allen
whether the US considered that the Soviet Ambassador's representa-
tions indicated a new Soviet campaign against Iran, now that the USSR's
"way is blocked in Greece and Turkey."
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THE AMERICAS
7. HAITI: Dissolution of the Communist-US Ambassador
Tatman reports that the self-styled Communist Party of Haiti
has dissolved itself, and that the Government intends to take police
action against the Popular Socialist (Communist) Party. President
Estime expresses the hope that this would "please the US." (The
Communist Party of Haiti was composed of pro-government Marx-
ists and was not recognized by US and Cuban Communists. The
Popular Socialist Party consists of Marxists in opposition to the
Government and receives cooperation from other Communist
Parties.)
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GENERAL
k 8 APR 194
366
. Turkey, will conform to US, and UK.poLicies in GA s...cial_session,--
General Erkin of the Turkish Foreign Office has informed US Embassy
Ankara that at the special session of the UN General Assembly on
Palestine the Turkish delegation will "in general" endeavor to conform
to US and UK policies (see Weekly Summary of 25 April, page 2). Erkin
stated that the delegation: (a) will yote against Arab demands for termi-
nation of the Palestine mandate and for independence, as these matters
should be considered by the special committee to be created at this
session and at the fall session of the GA; but (b) will have to vote af-
firmatively on the question of including an Arab representative on the
committee, so as not to encourage those elements in the Arab countries
which lean toward the USSR.
2. US and UK reach tentative accord on Greek labor problem--US Charge
Keeley in Athens reports that British labor expert Braine has agreed
to "relax pressure" on the Greek Government and trade union leaders
for immediate implementation of the Braine-Tsaldaris proposal on the
Greek labor situation (see Weekly Summary of 25 April, page 5). Keeley
adds that the "British and ourselves" agree that there should be no evi-
dence of a US-UK conflict of views on this problem. Keeley also states
that US and UK representatives are considering a suggestion designed:
(a) to meet US insistence on more democratic conditions in the Greek
General Confederation of Trade Unions before elections are held; and
(b) to protect Bevin from criticism by British labor circles that the UK
is not attempting to solve the Greek labor problem.
3. IlLEggye_g_t_s elajjs in Hungary�The State Department, with
War Department concurrence, has authorized "strong representations"
to the Soviet Chairman ACC Budapest "demanding an immediate and
detailed" explanation of the Chairman's apparent unilateral decision
to authorize the Hungarian Government (or the Soviet-controlled
Maszovlet airline) to negotiate civil air agreements. The Department
also authorizes US Legation Budapest to inform the Hungarian Govern-
ment that: (a) civil air transport rights granted to foreign carriers
prior be the peace treaty must be on a non-discriminatory basis; and
(b) the US expects as favorable treatment as that accorded to others.
(CIG Comment: The USSR apparently is urging the Hungarian
Government to negotiate air agreements with other countries, while
specifically denying the Government the right to negotiate with the US.)
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,t!',UROPE
4. ITALY: He-equipment of the Italian Air Force�US General Lee,
Acting Supreme Allied Commander in Italy, has requested authoriza-
tion to suggest to the Italians that "in their own best interests" they
accept the British plan for re-equipment of the Italian Air Force,
primarily with British equipment. According to US Ambassador Dunn,
General Lee believes that continued delay is damaging the Italian Air
Force program, whereas acceptance of the British plan will permit
the resumption of a full training program.
5. FRANCE: Communists may leave Cabinet at once--US Ambassador
Caffery has been told by Acting Foreign Minister�Teitgen that he had
proof "beyond a shadow of a doubt that the Madagascan uprisings
were instigated by the two Madagascan Deputies and the two Council-
lors now under arrest. When the question of parliamentary immunity
Aar the Deputies and Councillors was put to the vote by the Cabinet
on 16 April, the Communists were alone in opposing their arrest and
Teitgen declared that he "lost his temper" and stated that he was
scandalized and surprised"; the Communist Ministers arose and
withdrew when Teitgen said, "If you are not with the Government it
is better for you to leave the Government."
Tettgen added to Caffery: "It is very possible that, as we
mean to stand firm, the Communists will leave the Government on Tuesday
(29 April). 11 they do, we will of course be faced with CGT strikes and
troubles and we will face them. We are convinced that we must
eventually get the Communists out of the Government. However, this
Is not a propitious moment to do so in view of the fact that we must cut
bread rations 50 grams on May 1 and another 50 grams onjtme 1."
Increasing Communist agitation in colonies reported--US Am-
bassador Caffery reports that 'qualified observers" are increasingly
inclined to believe that the French Communists are being directed to
accelerate their agitation in the French colonies "to the extent even
that they may not be able to remain in the Government" Caffery adds
that the Resident General of Tunisia is "gravely concerned" over the
mounting native agitation backed by Communists in Tunis and "expects
trouble there in the near future."
.AntieDe Gaulle efforts of Communists--US Ambassador Caffery
reports that the Communists are making strong efforts to use the Com-
mittees of Liberation (which they were largely responsible for creating
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following France's liberation) as the basis for the vigilance commit-
tees now being formed to combat Gaullism. According to militant
Socialists, the Socialist directing committee, in order to prevent the
Communists from leading the anti-De Gaulle movement, has sent
confidential orders to departmental and local Socialist committees
forbidding them to support the vigilance committees. Simultaneously,
the Socialists have informed the Communists and. nll other parties,
except the extreme right, that they are ready to discuss ways and
means for joint opposition to the General's "dictatorial tendencies."
6. USSR: Scheduled air service inIsliggkanistan reported--US Military
Attache Moscow reports that Soviet authorities have announced the
opening of several new air routes including regular service to Kabul,
Afghanistan (see Daily Summary of 14 April, item 3).
(CIG Comment: There has been no confirmation from Afghan-
istan of any air agreement with the USSR. The USSR has listed Kabul
previously in announced air operations, although it has not made
regularly scheduled civil flights into Afghanistan since the beginning
of World War
FAR EAST
7. CHINA: Government plans to document its appeals for US aid--US
Ambassador Stuart has learned that the Central Government intends
shortly to present to the US Government a "considered analysis" of
Chines economic situation showing the need for US assistance. The
analysis will comment on the over-all political importance of a stable
China, and may possibly touch on the need for military assistance.
While the report will recommend several developmental projects in
the field of transportation, power, mining, industry, agriculture, and
utilization of Japanese reparations, Stuart notes that Chiang Kai-shek
and some of China's leading financial officials greatly favor US
commodity loans because of their deflationary effects.
KuomintaRgsetains firm control over Executive Yuan�Com-
menting on Chines newly-reorganized Executive Yuan (the Central
Government's administrative arm), Ambassador Stuart notes that
"actual administration of the Government ... remains firmly in the
control of the Kuomintang." Stuart adds that the political authority of
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the Executive Yuan's new Premier, Chang Chun (leader of the
Kuomintang's relatively liberal Political Science Group) will still
depend upon the extent to which Chiang Kai-shek gives his support
to Chang rather than to the less progressive KMT elements.
THE AMERICAS
8, PARAGUAY: Rebels unlikely to accept Morinigo terms--US Em-
bassy Rio reports that Brazil is now apparently aware that its
offer of mediation in Paraguay has not Leen accepted, and that the
impression that Paraguay had accepted the offer "in principle"
rested upon a misconstruction of a memorandum from the Morintio
Government.
US Charge Asuncion reports that (a) acceptance by the rebels
of the Governments demand for unconditional surrender as a con-
dition for the mediation is unlikely; and (b) the rebels' refusal might
cause the Brazilian Government to reconsider its present position
of neutrality and to extend aid to Morinigo.
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THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
26 APR 1947
EUROPE
NO.
L FRANCE: Wallace embarrasses Communists--US Ambassador Caffery
reports that Wallace's visit to France has proved "embarrassing" to
the Communists. Caffery notes that (a) Wallace's remarks have been
extremely mild at compared to those he made in London; (b) Wallace
"has not stayed strictly on the Moscow beam" and particularly embar-
rassed the Communists by his allusion to the absence of political democ-
racy in the USSR; (c) the Communist newspaper .HUMAN1TE has not
quoted to an appreciable extent any speech he has made in France and
has limited itself largely to describing him as Roosevelt's "right-hand
man and enumerating receptions given in his honor.
NEAR EAST-AFRICA
1. IRAN: 1Npssition to US credit for militatt,smlies--US Ambassador
Allen reports that the considerable agitation in de Leftist press against
the proposed $30,000,000 US credit for military supplies cannot be
entirely dismissed as Soviet-inspired. Although the Shah and Qa.vam
have expressed confidence that the Parliament will approve of the project,
Allen points out that a number of Iranians feel that their country, which
needs schools, health projects and roads, is too poor to spend this amount
on the Army. (Opposition to the credit may also be expected from Rightist
deputies representing the tribes; see Daily Summary of 16 April, item 7.)
FAR EAST
3. CHINA: Evidence of Soviet aid to Communists--US Naval Attache Nanking
reports that the Soviet Ambassador recently asked the Chinese Foreign
Minister for information concerning the whereabouts of five Soviet fishing
boats which have failed to return to Dairen during the past few months.
According to the Naval Attache, high Chinese naval and military sources
have stated categorically that the missing Soviet fishing boats were carry-
ing arms and ammunition for Chinese Communists, were captured by the
Chinese Navy, and would not be returned. The NA comments that the
above evidence represents the "most factual" confirmation of many rumors
and reports of Soviet aid to Chinese Communists in the Shantung-Hopei
coastal area.
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25 APR 1947
394
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OV
KHIS DOCUMENT.
NO.
will re � .rtedl assume control of Palestine--A Jewish
has informe U ons enera erusa em I at the High
has told the Agency that the British military "would very
complete control of Palestine."
EUROPE
2. YUGOSLAV/A: Grain relief ended for Yugoslavia--The Director General
of UNRRA, on his return from Yugoslavia, has informed the State Depart-
ment that, on the basis of results achieved, the UNRRA program in Yugo-
slavia was "one of the best." Although persons in certain areas may
suffer from malnutrition, he believes that the country can subsist without
relief until the next harvest. (The International Emergency Food Control
Committee has informed the Yugoslav Government that it will not ship
17,500 tons of grain previously allocated to Yugoslavia because the US
and Canada do not consider Yugoslavia's need "of comparable urgency
with that of some other countries.")
1.2:m2sl_msorn shipped to USSR--US Military Attache Belgrade
has learned from a foreign Ambassador, believed entirely reliable by
the US Embassy, that Yugoslavia recently has shipped an unknown quan-
tity of corn to the USSR and that another shipment of 26,000 tons is
scheduled.
3. GREECE: Increases isArmy and Gendarmerie authorized--US Charge
Keeley reports that the Greek Government has authorized an increase
in the total strength of the Army from 110,000 to 140,000, and of the
Gendarmerie from 30,000 to 36,000. According to Keeley, the US Mili-
tary Attache feels that the increases are Justified for the reasons ad-
vanced by the Greeks: (a) the necessity of solving a chronic problem by
relieving older age-groups in the Army; and (b) the need for a Gendar-
merie capable of policing areas liberated from guerrilla control. Keeley
adds, however, that the proposed increase in the Gendarmerie may repre-
nt a further effort by Minister of Public Order Zervas to form a "pri-
vate army" to advance his own political aims and policies (see Daily
Summary of 20 March, item 2).
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THE AMERICAS
4. PARAGUAY: tJugi President hopes US will not aid Mozbinig_sa--US
Embassy Montevideo reports that President Berreta has expressed the
hope that the US will not give military aid to Morinigo.
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24 APR 1947
3E 3
1. ITALY: Financial breakdown threatens De Gas! ..eli--Treasury Minister
Cainpilli haErilloriiied US Treasury Representative Tasca in Rome that
(a) the Government has "lost control over the lira" and is desperately
seeking some extraordinary remedy to restore popular confidence in the
lira; and (b) Italy's critical financial situation may lead the Christian
Democrats (who are blamed by the other Parties for the crisis) either
to go over to the opposition or `more probably" to take a minor role in
a new government.
Pasquinelli case threatens US prestWe--US Ambassador Dunn
recommends that the US "fully weigh the political considerations" in-
volved in the trial by the Allied Military Court of Maria Pasquinelli who
las been sentenced to hang for the murder of British Brigadier de Winton.
Dunn points out that capital punishment is not used in Italy and that the
sentence Ms provoked severe criticism in the Italian press, especially
the press of extreme Right and Left. Dunn believes that it is "most
desirable" on political grounds that the US and UK should not be exposed
to general disapproval throughout Italy by violating Italian concepts of
humanity and justice.
2. FRANCE: _caltsmt recommends US send additional wheat--Under Secre-
tary Clayton repoiii7iiiiiii-teneva that grave social, economic and politi-
cal consequences will almost certainly' result in France, if the US fails
to assist France in its present, "rather desperate position regarding
grain supplies." Clayton recommends that the US Department of Agri-
culture be requested to renew procurement of wheat in the US, "in spite
of the inflationary aspect" which had caused the Agriculture Department
to discontinue such Government purchases.
Communists plan giant rally of CGT for 1 May�US Ambassador
Caffery :has been told by a nvery anti-CommuniiirWocialist, who is
closely associated with the French Trade Union movement, that the giant
demonstration planned for 1 May by the Communist-directed CGT (Gen-
eral Confederation of Labor) has two objectives: (a) to Intimidate anti-
Communist forces arki demonstrate the hostility of the working classes
to any attempt by De Gaulle to overthrow the Republic; and 00 to divert
the attention of the working classes from the anti-French character of,
the Communist stand on Colonial policy by posing as the only effective
champions of the workers in their demand for increased wages and 'better
working conditions./
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LeClerc my becomtaubeme French Commander in North Africa--
US Military Attache Paris has been t�o-lrby Orieliable army source that
In the event of general native uprisings throughout North Africa, General
LeClerc will become Supreme Commander French Armed Forces North
Africa.
THE AMERICAS
3. COLOMBIA: Followers of Gaitan enter cabinet--US Ambassador Wiley
reports that the reorganized Colombian Cabinet includes four Liberals
who are followers of Eleazar Gaitan, rising leader of the left-wing faction
of the major opposition party. Conservative President Ospina has told
Wiley that he believes that these appointments will strengthen his admin-
istration vis-a-vis the legislature, in which Gaitan's sympathizers have
substantial representation.
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362
PORTUGAL: Franco revesti of Dor_thaua --US Charge Lis-
bon reports that the Spanish Government has requested the expulsion
from Portugal of the Pretender, Don Juan, and his political entourage, �
but that the Portuguese Government will not comply with the request.
The Charge adds, however, that when the Foreign Office gave this in-
formation to Don Juan, it told the Pretender that his Monarchist activi-
ties "must be curtailed" and certain of his political advisers should
"take up residence outside of Lisbon and Estoril."
(CIG Comment: While overtly refusing Franco's request for
Don Juan's expulsion, the Portuguese Government will actually serve
Franco's purpose in cutting down the Pretender's political activity.
Nov' The separation of the Pretender from his political advisers will break
up his organization and diminish the influence of Gil Robles, the lead-
R.Ig Catholic rightist politician in Spain prior to the Civil War, and of
Salm Rodriguez, a former member of Franco's cabinet who fled Spain
to escape arrest for Monarchist activities. These men are the politi-
cal brains of the Monarchist opposition to Franco.)
FAR EAST
2. CHINA: Chinese Hess unanimous' as 'roves Wallace mission--US
Embassy Nanking, in a summary o .inese press repo or the week
ending 12 April, notes that (a) Chinese editorial comment showed an ,
"extraordinary unanimity of approval for the stand Wallace had taken ';
and (b) while it was obvious that liberal and left-wing papers would en-
dorse Wallace's opposition to current US policy, it was surprising that
Kuomintang-controlled papers gave their approval. The Embassy adds
that the KMT's right-wing CC Clique, in one of its papers, termed Wal-
lace the "100% exponent of democratic government" and commended
his efforts to avert the threat of a new war.
(CIG Comment: CC Clique endorsement of Wallace's stand is
in marked contrast to the Clique's traditional hatred of Chinese Com-
munists, and to its recent violent attacks on China's own Central Govern-
ment for the latter's "weak-kneed policy of appeasement" toward the
USSR. Kuomintang endorsement of Wallace may stem from a belief that
the Truman Doctrine implies that the US will concentrate its efforts in
those areas where Soviet aggression is most evident, thereby reducing
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the likelihood of renewed aid to China. Even the MT's extreme right-
ists, therefore, might logically, though short-sightedly, endorse any
program advocating that the US abandon the Truman Doctrine.)
New Premier voices need for US assistance--General Chang
Chun, newly-appointed President of China's Executive Yuan, has ex-
pressed to the US Minister-Counselor in Nanking his conviction that
China must have US assistance. Chang described China as "a sick man
who needs a blood transfusion," and made it clear that "the transfusion
had to come from the US." Chang admitted that civil conflict was at the
root of China's troubles and indicated his preference for a peacefully-
negotiated settlement, but added that such a settlement was "for the
moment out of the question." Chang believes that all that could be hoped
for now was "speedy and successful military action" by Government
forces, and that the next three months would determine the outcome.
amtch_of Nati9nalist troops to pair_mmkgped7-The Chinese
Foreign Minister has confidentially informed US Embassy Nanking that
Nationalist troops will not be dispatched to Dairen pending a Soviet reply
to the latest Chinese note (dated 16 April), even though the note itself
states that the Central Government "has now decided" to dispatch about
two brigades.
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22 APR 1947
361
1. USSR: ALUSNA M_p_s_c_93/_cc__)mn_e_pts on Soviet, eanc at CFM--
According to US Naval Attache Moscow, the UM s failure to make con-
cessions at the CFM indicates: (a) that conditions within the USSR are
better than generally supposed; (b) a Kremlin belief that realization of
its long-range objectives will be facilitated by "congenital American
Inability to cope with the peculiar type of Communist penetration"
abroad and by an early US depression; and (c) that the USSR anticipates
a successful solution of its atomic effort.
2. FRANCE: Monick sees no _.cpemis._sAFLysno this ear--Emanuel Monick,
Governor of the Bank of France, has told US Ambassador Caffery of his
belief that: (a) De Gaulle will not return to power; and (b) there will
"very definitely" not be an economic crisis in France this year. How-
ever, Monick expressed himself as "pleased" with De Gaulle's re-entry
Into politics, because Monick believes that De Gaulle's move is forcing
the Government, in self-defense, to "do something about prices and the
budget."
According to Monick, the Communists must soon leave the Gov-
ernment. He believes, however, that it would be a mistake to break with
the Communists on an economic issue; the break should be made instead
on the question of the French Union. "The French Communists," Monick
noted, 'are extremely depressed over being forced by Moscow to support
movements in Indochina, Madagascar, and North Africa designed to break
up the French Empire because they know that their attitude on that sub-
ject is losing them votes every day."
FAR EAST
3. CHINA: Means of continuingKMT cnraent re � rted--US
Embassy Nanking has received a "reliable report" that the new Political
Committee of the Kuomintang Party, headed by the right-wing Chen Li-fu,
"shall have authority to issue binding instructions to all KMT members
of the Government."
(CIG Comment: Such authority would permit continued domination
of the Government by the KMT, despite published announcements that the
National Government Organic Law is being revised to eliminate statutory
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control by the KlVIT's Central Executive Committee over the President
of the National Government (Chiang Kai-shek) and, through the latter,
over the Presidents of the five governmental Yuans.)
THE AMERICAS
4. COLOMBIA: Asgentina offers military scholarships--The Colombian
Minister of War has informed US Ambassador Wiley that he is "appre-
tkensive" about an Argentine offer of an unlimited number of military
scholarships for Colombian officers with all expenses included. The
Minister observed that officer training in US Army schools involves
dollar expenditures and places considerable strain on the Colombian
litilitary budget. Wiley comments that training of the officers (who
'Average 25 years of age) by Argentina would result in their indoctrina-
tion with Argentine ideas.
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21 APR 1947
0
1. Icelandic Communists threatenpg_mpent Government--According to
US Legation Reykjavik, Iceland s protracted trade negotiations in London
and Moscow have resulted in a tentative agreement with the UK under
which the UK would purchase almost half of Iceland's estimated produc-
tion of frozen fillets and herring oil. When the USSR learned of this agree-
ment, it offered to buy most of the remaining fillets and an unspecified
quantity of herring oil, at lower prices than the British offered, but re-
fused to implement its previous offer to purchase wet salted fish.
US Minister Trimble considers that (a) the USSR has been
"stalling" in its negotiations with Iceland in order to foster economic
deterioration that would result in the formation of a new Icelandic Gov-
ernment with Communist participation; (b) the foregoing offer merely
reflected a fear that the British would acquire herring oil which the
USSR apparently needa;and (c) the offer did not represent an abandon-
ment of the USSR's stalling tactics.
Trimble proposes that the US buy Iceland's wet salted fish (which
neither the UK nor the USSR will take) to bolster the present Icelandic
Government.
EUROPE
2. FRANCE: Bidault..tecimaktures to De Gaulle--US Ambassa-
dor Caffery reports that, according to a 'trustworthy source," Bidault in
a recent personal letter to Acting Foreign Minister Teitgen made it clear
that he desired to maintain friendly relations with General de Gaulle and
hoped to see him upon his return from Moscow. Caffery adds that politi-
cal circles are talking of the possibility that Premier Ramadier will re-
sign after the Moscow Conference and that Bidault will be requested to
form a new cabinet, possibly without the Communists.
Possible Government crisis about 1 May.--US Military Attache
Paris cites three issues that might precipitate a crisis in the Govern-
ment about 1 May: (a) results of the Moscow Conference; (b) failure of
the Monnet Plan; and (c) dissension on colonial policy.
Bidault does not Intend to sign treaty_Eit--US Ambassador
Caffery has been informed by ``French authorities that the Poles have
been pressing Mann to sign a treaty of alliance with Poland similar to
the French-Soviet Treaty; but Bidault has "no intention of doing so."
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Ma weaken home forces for stre overseas--The US Military
Attache Paris reports that the French may well e forced" (by budgetary
and political considerations which limit the size of the Army) to weaken
metropolitan France and occupation forces in order to bolster colonial
garrisons.
Air agreement with Poland sought--US Embassy Warsaw reports
that the French Government has instructed its Embassy to approach the
Polish Government for an agreement to permit Air France to schedule
regular air service into Warsaw. The French Embassy believes that,
if this permission is not granted, France may cancel the present informal
arrangement by which the Polish Airline LOT makes commercial flights
to Paris.
Now 3. BELGIUM: Spank believes De Gaulle's timing "most unfoitunate"--
Prime Minister Speak has told US Ambassador Kirk that in his opinion
the timing of De Gaulle's emergence into politics is "most unfortunate,"
as non-Communist and anti-Gaullist forces will tend to gather round the
Communist pole, whereas, if De Gaulle had waited "until the situation
became more acute," these forces would have rallied to De Gaulle.
4. YUGOSLAVIA: Obstacles to US-Yugoslav economic relations--US Charge
Nimov
Cabot, commenting on Yugoslav Vice Premier Kardelj s recent plea to
Secretary Marshall for improved US-Yugoslav economic relations, states
that he sees "no reason why the TJS should help Yugoslavia to fulfill its
needs until good progress has been made toward clearing up our specific
grievances." Cabot points out that obstacles to US trade with Yugoslavia
include, "the absurd exchange rate, the bilateral and discriminatory
Yugoslav trade agreements, and the government red tape and secretive-
__
risr" ness."
NEAR EAST-AFRICA
5. ETHIOPIA: Possibility of cop d'etat discounted--US Minister Cole be-
lieves that the report of an imminent coup d'etat in Ethiopia is "greatly
exaggerated" (see Daily Summary of 16 April, item 6). Cole adds that
while much discontent exists against the Emperor and his clique, he has
heard of no plot and does not believe that discontent has reached "any
such pitch."
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6. INDIA: Nehru speech emDected to antagonize Princes--US Charge Merrell
reports that Nehru, in a recent speech, reportedly said that any Princely
State not entering the Constituent Assembly would be treated as "a hostile
state of the country." Merrell feels that Nehru's statement will: (a)
widen the breach between the Congress Party and those Princely States
which have not yet decided to join the Assembly; and (b) tend to nullify
"any possible effect" of Patel's recent assurance that the Princes need
not fear the Congress Party because it has "no desire to destroy dynasties
or their rule."
7.
FAR EAST
CHINA: Government reorganization shows some promise--US Ambassa-
dor Stuart notes some encouraging signs in the latest steps taken to re-
organize China's Central Government. In the appointment of Kuomintang
members to the new State Council (scheduled to be the highest policy-
making body of the Government), Stuart considers as "promising" the
notable exclusion of right-wing CC Clique adherents and the predominance
of Political Science representatives and other relatively liberal KMT mem-
bers. Whether the State Council will really assert itself in carryinF out
reorganization of the Executive Yuan (the administrative "Cabinet' of
the Government) and in promoting social and economic reform depends
on many complicating factors, Stuart believes, one of the most important
of which is Chiang Kai-shek's own attitude and "his ability to control the
KMT as the still dominant party in China." Within the Kuomintang, Stuart
reports, the CC Clique's control has increased with the formation of a new,
CC-dominated Political Committee, and Chiang can be expected to make
concessions to this clique as governmental reorganization proceeds.
THE AMERICAS
8. PARAGUAY: Uruguay may break diplomatic relations--US Embassy
Asuncion has been told by the Uruguayan Charge that relations between
his Government and Paraguay are deteriorating and that his Government
may break relations with Paraguay (a step that could shut off most of
Paraguay's gasoline supplies).
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9. COLOMBIA: .,Amitipa offers economic aid--US Ambassador Wiley has
been told by President Ospina that the Argentine Government (a) is be-
coming extremely active in Colombian economic matters; (b) has offered
to sell Colombia 14,000 tons of wheat; (c) is seeking to invest capital in
Colombian banks; and (d) has hinted that it is willing to extend "generous
commercial credits of all kinds."
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GENERAL
359
19 APR 1947
,19stiti,,recommendsSinowassrivilegs.stikrINA91.e ations--UN
_legate Austin recommends that serious consideration be given
to granting: to UN resident delegations immunities and privileges
t=ai)stantially equivalent to those now accorded to accredited diplo-
matic missions in Washington. He states that permanent UN delega-
ttens attach more importance to this matter than to many substantive
issues. He adds that, in return for such a concession, the US may
find it easier to achieve the deportation of undesirable employees of
the Secretariat.
EUROPE
UtnEt: Swiet tropp moverfaents pleria--US Delegate ACC Sofia
reports evidence that Soviet forces are concentrating in southeastern
tgaria.
(CM Comment: These movements are believed to foreshadow
eterly large-scale nenneuvers alorag the Turkish and Greek frontiers;
se Weekly Summary of 18 April, page 7)
3. FRANCE: Possible Cabinet crisis over Madagascar problem--A high
Werior Ministry official has t&dbTXaoraThis
belief that the Commtuaists, prior to the Madagascar revolt, urged
the Malgache (Madagascar) deputies in the French National Assembly
"3 resort to illegal insurrectionary action." Caffery's informant
commented that when the Malgache deputies were arrested a few days
a4ect, the Communist Cabinet Ministers did not protest, "pending instruc-
tions from Moscow:" when they received orders to attack the Govern-
ment's stand openly, they loyally obeyed, even though they knew it
would "hurt them with the French public." Caffery adds that the
Madagascar problem has become an issue which could lead to the fall
of the Ramadier Government.
tismtlations r_smclimIndochina--US Ambassador Caffery has
been told by a high Foreign Office oiffclai that the French have not yet
discovered elements in Indochina with which they can negotiate. Caf-
fery's informant added that the Government has definitely accepted the
Foreign Office view that the Indochinese Federation should have no
political functions and that even the name of "Indochinese Federation"
should no longer be used.
(CIG Comment: The abandonment of French insistence upon the
Indochinese Federation should improve the prospects t for successful
successful
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Franco-Vietnam negotiations. Vietnam has insisted upon direct
participation In the French Union without prior participation in the
Indochinese Federation.)
NEAR EAST-AFRICA
4. IRAN: Barzanitroubl s i.,..L.LemLetell,ly_l_imicialtd--The Iranian Chief
of Staff has informed US Ambassador Allen that the Barzani troubles
have been "completely liquidated" with the passage over the Iraqi
border of 2,000 to 3,000 Barzani riflemen, together with their families
and a number of renegade Iranian Kurds.
5. INDIA:Ev d ce 11)....1.1.4Lopi_�ehenskas in ..C.9 .141.0.4.6y --US Charge
Merrell reports that current apprehension in Congress circles is
Indicated by the note of "humility" evident in a recent speech by
Patel, a Congress Party leader. Patel reportedly praised the British
offer of independence, condemned hull behavior, and confessed that
unle.ss Congress-League difficulties are amicably settled, India might
not be ready to receive power from the UK in 1948. He also mentioned
the possibility of submitting the Congress-League issue to a "third
free power." Merrell adds, however, that there was little in Patel's
speech calculated to win the confidence of the Moslem League.
FAR EAST
G. CHINA: agile tzmayjl_o Chiltepe Communists doubted--Despite
persistent rumors that the USSR is sending military supplies from
North Korea to the Chinese Com nunists in Manchuria, US Consul
General Mukden believes that "such commerce has been more in the
nature of ordinary trade than of military aid." US Embassy Nankhig,
likewise, has thus far received "no dependable evidence of physical
Soviet assistance of a military character" to Chinese Communist
forces.
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GENERAL
APR 1947
358
1. kanian Airway...p..11W TWA reach "supplemental �rt'--US Civil
Pik. Attache Curren reports froi Tehran that a supplemental agree-
ment" has been reached by Iranian Airways and TWA. Curren believes
that Iranian Airways will fail under present management within a few
roonths, but that another group will be willing to reorganize the com-
pany "on a strong . basis" with TWA assistance.
EUROPE
2. FRANCE: Official help in arrangements for Wallace's visit refused--
US Ambassador Caffery reports that fellow traveller Pierre Cot (Air
Minister in 1939) has informed him that the Goverment has refused
cooperation "all along the line" in negard to the preparations Cot is
raiding f r WalLace'r
Geerrilia. forces inleascar still uncontrolled�US Military
Alache Paris reports that the situation in Madagascar now appears
"more serious"; French military forces reportedly are having troubl
�controlliny, guerrillas in the southwest as well as in the north, and have
not yet cleaned out other errilla forces "scattered over the whole
island." 4
NEAR EAST-AFRICA
3. INDIA: Increased trouble in North West Frontier Province�The Vice-
rey has confidentially informed US Charge Merrell that the North West
Frontier Province has "blown up" as the result of communal trouble
worse than that recently prevailing in the Punjab. The Viceroy added
that news of the seriousn ss of the situation is being suppressed, and
that he has arr ed to hold a conference immediately with Ms civil
and military advisers. Merrell comments that Moslem League civil
disobedience movements have thus created serious disruption in two
"Pakistan" provinces and threaten to produce similar troubles in Assam.
(Non-Moslem League governments are in power in the North West Fron-
tier Province and in Assam. The Non-League Punjab Government re-
cently resigned because of local disorders instigated by the League.)
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'y APR 1947
3 5 7
1. US concern over Greek dtl_a_y_p_i ing_lementirig_tc2i12tnis_piam--The
State Department has informed US Embassy Athens of its concern over
the Greek Government's apparent lack of progress in carrying out the
proposals of the Porter Economic Mission "to minimize the possibility
of economic deterioration pending implementation of the US aid program.''
The Department, accordingly, has instructed the Embassy to inform
Prime Minister Maximos that (a) the bill now before Congress authoriz-
fng $350,000,000 for relief to various countries, including Greece, pro-
vides that relief shall not be given to any country which fails to take the
economic measures necessary to reduce relief needs and provide for
its own reconstruction; and (b) economic deterioration resulting from
%we failure to act may seriously diminish the effectiveness of whatever US
comes available.
US suggestions for continuance of Iranian Airv--The State Depart-
ment has sent detailed suggestions to the Foreign Liquidation Commis
:toils representative in Cairo for aiding the rehabilitation of Iranian
Airways. The Department states that its policy is to do "everything
possible" to insure the continuance of operations by Iranian Airways
with US technical and operating assistance.
US opposed to Soviet p_E2mal on UN aite_rvision in Greece--The State
Department has informed UN Delegate Austin that: raTITTs. essential
to defeat the Soviet proposal for UN supervision of US aid to Greece;
(b) it is equally essential that the US should not exercise veto in this
matter, but instead should abstain from voting; and (c) the US should
be certain, prior to the vote in the Security Council, that the Soviet pro-
posal will not receive seven votes (with the US abstaining). Austin esti-
mates that the Soviet proposal would receive only two supporting votes
in the Security Council.
In Austin's opinion, the US proposal that an SC investigating team
be left along the Greek border is favored by all SC members except
Poland and the USSR.
EUROPE
4. USSR: Soviet de facto censorship of news--The Moscow corre-
spondent of the Associated Press has reported to Embassy Moscow that,
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despite Soviet assurances that news copy designated as conference mate-
rid would not be scrutinized, the Soviet censor has assumed the func-
tion of reviewing news stories filed by US correspondents and of deciding
what is and what is not CFM copy. The correspondent reports that his
attempt to report this procedure, which apparently was instituted on 15
April, was censored in its entirety.
5. HUNGARY: Nep9UtIcairtaIs forecast�President Tildy has told US
Minister Schoenfeld that he expects the Communists "to find some pre-
text" to create a new political crisis within the next month or two.
Tildy believes that Hungary's position, as the only Eastern European
country not "fully coordinated to the Soviet pattern," has intensified
the USSR's determination to achieve its goal in that country. Tildy
added that the recent US notes had thwarted Communist plans for gener-
al elections this spring.
Premier Nagy, in an earlier conversation with Schoenfeld, had
stated that the recent, clearer definition of "great power interests" had
strengthened the will of the Moderates not to surrender to the Commu-
nists. Nagy added that, if the peace treaty is ratified soon and Hungary
admitted to the UN at the earliest possible opportunity, Hungary would
remain "a factor which could be counted upon in every respect."
6. FRANCE: Communists may continue policy of "moderation"--A high
official of the Ministry of the Interior has expressed to tilt Ambassador
Caffery the opinions that: (a) the political parties which De Gaulle is
trying to destroy will be successful in opposing his efforts; (b) De
Oaulle's recent political activity tends to bolster the Communist posi-
tion, because it serves to divide anti-Communist elements; (c) the Com-
munists will continue to pursue their present policy of "moderation"
because they cannot openly oppose the Government (which is essentially
Socialist) without alienating the Socialists and risking the formation of
an anti-Communist bloc behind De Gaulle. and (d) by continuing their
present policy and be appearing to act within accepted constitutional
practice, the Communist Party can pose as "the defender of democratic
and republic institutions" and can continue to call for $ta union of all
republican forces to save the republic."
7. AUSTRIA: Drop in coal imports reported critical�According to US
Legation Vienna, the Austrian Commerce Minister believes that a new
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industrial crisis will result from current decreases in coal imports.
The Commerce Minister urges that his Government seek a special six-
Alonths' credit of 6-9 million dollars "from whatever source obtain-
Ade" to finance the import of Polish coal.
:EAR EAST
TENCH INDOCHINA: Evidence of weakening Vietnam resistance--
:IS Consul Hanoi reports that a speech by Vietnam War Minister Giap,
Is intercepted by the French monitoring service, (a) indicates some
leterioration in Vietnam morale and a munitions shortage, and (b) pro-
votes "conclusive evidence" that the Vietnam Government can no longer
,a, orce evacuation of territory before the French advance.
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EUROPE
356
1. FRANCE: 1.2acji_ty_ppoar su rt feared--US Ambassador Caffery
has been told by Acting Foreign Minister Teitgen that Premier Ramadier
has cited the belief of French military authorities that the US, in the event
of war with the USSR, would not attempt in the early days to prevent an
occupation of France by Soviet forces. On the subject of Socialist "ap-
peasement" of the Communists, Teitgen attempted to defend the non-Com-
munist French attitude by saying to Caffery, "If we were only sure that
we could count on your early and effective aid, our whole point'of view
would be changed." Caffery adds that in his opinion Teitgen's remarks
raveal a certain state of mind in Western Europe."
Bidault "disillusioned" concerning USSR�Caffery also has been
told by Teitgen that Bidault is completely disillusioned' about the possi-
bilities of "doing business" with the USSR "in any field," but he will
keep on trying. Teitgen also stated that Bidault had sent "enthusiastic"
reports in regard to Secretary Marshall's attitude at Moscow on the
Saar.
2. BELGIUM: USSR claims Baltic DP miners as Soviet citizens�US Embassy
Brussels has been told by a Foreir Office official that the Soviet Embassy
has delivered a "very strong note to the Belgian Foreign Office which
states that the USSR considers the Baltic DP miners now arriving in Bel-
gium (from the US Zone Germany) as "Soviet cftizens," and will demand
their repatriation in accordance with the Soviet-Belgian repatriation
agreement. The official stated that his Government would not permit
forced repatriation but that, before replying to the Soviet note, Foreign
Ambassadors.
Minister Spaak would officially request the opinion of the US and UK 111111
3. ITALY: Covert Communist opposition reported--A "reliable ranking
official" has told US Embassy Rome in confidence that Communist Cabi-
net Minister Sereni has privately admitted that the Communist Party is
opposed to post-UNRRA aid to Italy from the US because such aid would
create friendship and strengthen the ties between the two countries. Com-
munist leader Togliatti, according to the same source, prefers that the
Party "exert no outright opposition" to US aidlas such action might "en-
courage the US to give even more relief."
(CIG Comment: It is very unlikely that a Communist Minister
would make any such admission to a Christian Democrat Minister.
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'Moreover, there are indications that the Christian Democrats are en-
couraging reports of Communist anti-US activities in order to accelerate
concrete application of the Truman Doctrine to Italy. It is, therefore,
possible that the above report is a plant designed to stimulate US aid to
4. CZECHOSLOVAKIA: Communist conciliation toward Moderates--US
Embassy Prague reports that the Communists and National Socialists
(President Benes' middle-of-the-road party) are seeking a temporary
rapprochement. According to the Embassy, the National Socialist press
has been advised to "take it easy for a while on the Communist Party"
and Communist leaders have been "extremely conciliatory" toward the
National Socialists. The Embassy adds that the Communists, "recently
isolated and under strong attack," are interested in neutralizing some
of the opposition and in frightening the Social Democrats into abandoning
heir recent anti-Communist attacks.
(CIG Comment: The three parties mentioned are campaigning
;3itterlv for trade union support. The Communist Party, having more to
fear from the Social Democrats, is probably attempting to play its oppo-
nents off against each other in the hope of retaining the Party's position
as the largest single political element in the trade union movement.
These Communist tactics also tend to discount the possibility of an immi-
dent Communist coup; see Daily Summary of 11 April, item 1.)
PORTUGAL: Return to "normal" after unrest--US Military Attache
Lisbon reports that the situation "in Lisbon and probably all of Portugal"
has returned to "normal" after the recent unrest (see Daily Summary
of 14 April, item 5).
NEAR EAST-AFRICA
8. ETHIOPIA: giNE.L.f etat re�inzAc.11 imminent--US Military Attache Cairo
transmits information from an "unquestionable source," which the MA
evaluates as "probably true," that an Ethiopian coup is imminent, in-
volving assassination of the Emperor and the enthronement of the Crown
Prince. The MA adds that there are reports indicating British complicity
in the plot.
(CIG Comment: Although a coup d'etat is always possible in
Ethiopia, CIG doubts that the British are involved in such a plot.)
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7. IRAN: a o situa on in Fars P vin --US Ambassador Allen
reports that the Qashqais �� � -erful anti-Soviet tribe in Southern Iran) have
accused the Shah and the Iranian Army of interfering in the elections in
Fars Province. Allen adds that Premier Qavarn, who is supporting the
Qashqais at present as a counterbalance to the Army, reportedly is plan-
ning to replace the present Governor General of Fars with a pro-Qashqai
official.
Leading Qasimai chieftains have informed the US Embassy that (a)
they will still try through parliamentary means to obtain protection
against the Army; (b) if forced to fight, the Qashqais in coalition with other
tribes will attempt to break the power of the Army and overthrow the pres-
ent dynasty, if necessary; and (c) the Qashol bloc in parliament will be
forced, as a matter of self-protection, to oppose strenuously approval of
the US credit for military supplies.
Firuz urges discontinuance of policy" --Allen has been
informed Tir' a high Iranian authority"-that MuzaffarFiruz (the pro-
Soviet Iranian Ambassador in Moscow) has recommended to Qavam that
Iran discontinue Its "pro-American policy." According to Allen, Firuz
probably assured the Soviet authorities before he went to Moscow that
he would obtain the removal of US military missions and advisers from
Iran, and "is evidently still working at it."
B. P ern r osesz,t_.j1.AptItion to deadlock with UK--US
Embassy Cairo has been unofficially informed that Premier Nokrashy
Pasha will not consider the recent proposals for breaking the Anglo-
Egyptian deadlock (see Daily Summary of 11 April, item 5). The Embassy's
Informant has also seen the draft text of the appeal which Egypt is prepar-
ing for the Security Councilsand comments that Nokrashy is "asking for
the moon." The Premier reportedly is "greatly embittered" by Bevin's
reference to the Nokrashy Cabinet as a minority government, and is con-
vinced that the British Embassy is working for his removal.
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GENERAL
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00,9
1. Reactions to Wallace in UK--US AMbassador Douglas considers that
ilenry Wallace has (a) cod-Used the thinking in the UK; (b) given support
to present (left-wing) criticism of US policy; and (c) converted some
people, "probably temporarily," to be critical of US foreign policy.
Douglas believes that, although a Washington statement would unduly
dignify Wallace's utterances and might inspire him to go even further"
In France and the Scandinavian countries, it would be advisable in
Douglas' forthcoming Pilgrim's speech (traditionally the first public
address of a new Ambassador to the UK) to answer in general terms
but not specifically some of Wallace's "misrepresentations."
The UK Minister of State, Hector McNeil, considers that Wallace
has not had a profound effect in Britain and that his influence will soon
begin to wane. Conservative, Liberal, and independent UK press com-
ment has been mostly critical, according to US Embassy London, while
he Left or Labor press has contained 'almost no counter-balancing
Praise" (although it has played Wallace heavily in the news columns).
2. UK Missions in Greece--The UK Minister of State has agreed, accord-
iing to US Embassy London, to "use his influence to persuade'? the UK
Treasury to withdraw its proposal (that the Greek Government pay in
liollars for the maintenance of the British Military Mission in Greece)
and to attempt to arrange that the Greeks and the British, respectively,
assume the drachma and sterling costs of the Mission (see Daily Sum-
mary of 14 April, item 1).
The Minister has recommended that the US take advantage of
the experience of the British Economic Mission in Greece in order to
"prevent the many tricks" which the Greek administration employs to
"divert and to frustrate the proper use of funds."
3. Soviet candidate for TriesteGovernorship table to US--The State
Department has informed the US delegation to the UN Security Council
that George Branting, whom the USSR proposed as Governor of Trieste,
is unacceptable to the US as the evidence shows him to be a fellow tray-
-,11er (see Daily Summary of 14 April, item 2).
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P:UROPE
USSR: Soviet strate relies on US economic crisis �Embassy Moscow
reports that Stalin, in his recent conversation with Stassen, inquired on
it least three occasions concerning economic conditions and the possi-
bility of a depression in the US. The Embassy comments that this curi-
osity, coupled with the repeated Soviet press predictions of a US crisis,
l.pparently reveals a "fundamental basis of present Soviet policy and
tactics regarding Germany, Austria, Korea, and other friction points."
The Kremlin evidently believes, the Embassy adds, that by tactics of
delay and obstruction the USSR can force such extensive US expenditures
11. support of weak economic systems that eventually the US public, faced
with a severe depression, will insist on the withdrawal of US economic
aid and the curtailment of US military expenditures.
tiL FRANCE: Reapiiment of troops in Colonies--The US Military Attache
Paris reports that indications point toward a general reassi ment of
4:roops throughout the French Union in order to bolster troop strength
in such danger spots as Indochina, Algeria, Morocco, and Madagascar.
(CIG Comment: In the light of its current military strength and
Internal political and economic condition, France is hardly in a position
io bolster its forces effectively in a number of colonial areas at the
.;ame time.)
6. GERMANY: Communists increase in trade unions�US Acting Political
Adviser Heath reports that the Communists have made "further progress"
in their attempt to achieve control of the entire German Trade Union
lnovement and seem to be gaining strength among the workers. Heath
cites the following points in support of his opinion: (a) the Soviet-led
SED party has consolidated its control over Berlin's Trade Union mem-
bers; (b) Communists have obtained almost all leading positions in the
French Zone unions; (c) Communists now control 40% of the British
zone miners' union; (d) metal workers unions throughout Germany are
for all practical purposes under Communist control; and (e) penetration
of the US Zone unions has been substantial.
7.
GREECE: Difficulty of controlling retigAii9Listiii a ainst leftists�Prime
Minister Maximos has informed US Embassy Athens that excesses by
Greek leftists make it difficult to control rightist retaliation (see Daily
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Summary of 14 April, item 11), but adds that he has ordered all security
agencies "to proceed with equal vigilance and severity against all law-
lessness whether of the right or left."
NEAR EAST-AFRICA
8. SYRIA: Hatay isltslion will not be raised in UN at present�The Syrian
Prime Minister has inform-id-lig-Charge Moose that Syria realizes the
gravity of the situation facing Turkey and "for that reason only" will
refrain from raising the Hatay question in the UN at this time. The
Prime Minister added, however, that such forbearance should not be
misconstrued as "Syria is not abating its claims and will present them
:It the proper moment."
_�:m9st for policy on and Greece in SC --US Charge
Moose also reports that the Syrian member of the Security Council has
been instructed to support the US on Greece and Turkey and to follow
US and UK policy vis-a-vis the Soviet Union in all matters not directly
affecting the Arab states.
9. 'INDIA: Politicians expected to blame UK for their failure to agree�US
Charge Merrell reports that the tendency of the London press to view
the Indian situation with "increasing optimism" does not accord with
the Embassy's information that nothing new or encouraging has resulted
from the Viceroy's talks with Indian politicans. Merrell believes that
the latter are preparing once more to place the blame on the UK for
their own failure to agree. He adds that this tendency is evident in re-
cent public utterances by Gandhi and jinnah.
FAR EAST
10. CHINA: Government unable to carry out widespread relief program--
US Ambassador Stuart believes that the Chinese Government is request-
ing post-UNRRA relief funds from the US primarily to conserve its own
foreign exchange reserves, and that there is no assurance that the Gov-
ornment can carry out "a program of direct relief where it is really
heeded." Stuart adds, however, that China obviously needs to continue
to import food, and he would therefore favor allocation of post-UNRRA
relief funds to that country.
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1. UK Mtlltary Mission in Greece�Bevin has informed Secretary Marshall
tiTat the IlK GovernmenegFagreed to leave the British Military Mission
In Greece "until its task is completed," on the understanding that the
Greek Government will pay for its maintenance in dollars from the US
.� `loan. "
in response to Secretary Marshall's request for a basis for a re-
ply to Bevin, Acting Secretary Acheson states that (a) the terms of the
Greece-Turkey Bill in Congress will probably prevent dollar payment
for such purposes; (b) "the amount would be too trifling to warrant the
serious embarrassment . . . which such picayune haggling would cause;"
and (c) there is no apparent reason why the Greek Government should
not provide food and quarters for the British Mission. Acheson adds
that he is asking US Ambassador Douglas in London to attempt to per-
suade the UK Treasury (which he considers the source of the proposal)
to withdraw the provision for dollar payment.
2. Grom ko advances Bran � for Governor of Trieste�US Delegate Austin
'Now reports that Gromyko has propose Pu e egate Johnson the name
of George Branting of Sweden as the USSR's candidate for the Governor
of Trieste. Austin adds that Groinyko "seems prepared to make prog-
ress on this matter." (Branting is a left-wing member of the prominent
Swedish Social Democratic Party founded by his father, who was Prime
Minister dining 1921-25.)
3. Soviet "concern" over TWA-Af han a reement--US Minister Palmer
reports that the Soviet Ambassador a) has asked the Afghan Govern-
ment why it has sought US (TWA) rather than Soviet assistance in de-
veloping its air service; (b) has expressed concern that the USSR was
being "encircled;" and (c) has declared that the USSR viewed with
concern the development of any alien interests in areas close to Soviet
territory.
EUROPE
4. FRANCE: Wallace's visit "alarms" Government--US Ambassador
Caffery reports that Acting Foreign Minister Tietgen has told him that
the Government is "distressed" about Wallace's coming visit to France
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"Ala is even alarmed. 'in view of his speeches in England. Tietgen
� �a,..d that Wallace would not be officially entertained by the Government
;, any manner and will not be allowed to hold a press conference in any
eaernment building. Caffery understands that no Cabinet Minister will
� end a private banquet being given for Wallace, The Communist Presi-
et at the Foreign Affairs Committee of the Assembly has invited
iallaee to address the Committee; Cafferv declined to support Tietgen's
r to arrange for non-Communist members to stay away from such a
feting. Tietgen observed that "no Frenchman, not even Maurice Thorez
cretary General of the Communist Party) would dare to attack the
een Government in the US as Wallace has attacked your Government
eegll'UGAL: Shipyard strike leads to "grave" situation--The US Military
cne Lisbon reported on 11 April that, according to "experienced
eel-vers." a shipyard strike had created the "most tense situation" in
years. The MA reported on 12 April that the arrest of "several
� attired strikers had somewhat eased the situation but that unrest re-
t-Ledly continued in the provinces, A representative of the War Minis
as informed the Attache that the Army was involved to an "uncertain"
eteent (two Army officers were arrested) and there was "some sabotage,"
eedieg incapacitation of all airplanes at Sintra Airfield.
azar may be _"embarrassed" by Dtah_Lian--Embassy Lisbon
res that "'official circles "are Showing signs of "mild annoyance"
e Spanish Pretender's manifesto issued in rejoinder to Franco's
env of succession, The Embassy believes that the Government fears it
;lay face an awkward dilemma if Franco suddenly requests that the Pre-
der cease political activities from a neighboring friendly territory;
� e! a move would greatly embarrass the Salazar regime, which seeks
enease those countries interested in an orderly restoration in Spain,
e covertly giving full support to Franco.
e Soyiets_uhusuallyirindly to FJKL.--US Legation Vienna re-
!is that Soviet Deputy Commander Zheltov has made some unusually
c JndiV gestures toward Chancellor Figl, including: withdrawal of de-
-ids for the appointment of nine Communists to key positions in the
lenenna police force, personal gifts, suggestions that Figl attend the
Moscow Conference, and an offer to expedite his journey and to accom-
k-any him should he decide to make the trip. Another gesture of a similar
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ii.o:ure was the release in good health of Senator Josef Mayer, who was
arrested on 23 March in violation of his parliamentary immunity (see
Summary of 3 April, item 5).
ITA.LY: US troop withdrawal considered da s--US Deputy Political
Adviser Allied Force Headquarters, with concurrence of Ambassador
!trintot, has expressed the belief that any substantial reduction of US forces
make it difficult to assure maintenance of law and order up to the
argan Line until the Peace Treaty becomes fully effective. If Yugo-
avIa to ratify the Treaty, and US Forces in Italy are reduced by
0 Tune to merely 5,000 troops in Trieste, the Deputy Adviser believes
;4,�,.1,1at it would be virtually impossible to maintain the status quo in Venezia
Genie.. The Deputy Adviser also declares that a "most unfortunate im-
ression'' would be created in Italy and abroad, if "at this juncture we
ave the British holding the bag."
Views on US financial aid--US Ambassador Dunn reports that
oreigpn Ministry officials, in an informal talk with a member of the
:=F:rabassy,- indicated that -- on the basis of proposed US financial aid to
!,i7;bilize Austria, Greece, and Turkey -- a US loan of $800,000,000
--..goeld be required to obtain similar stability for Italy. Dunn believes
/lilt the Italian Government, faced with a grave financial crisis, will
every opportunity during the next few months to point out the simi-
-j,arity of Italian, Greek and Turkish problems.
USSR: ps. Embassy favors reply In kind to Soviet attacks�US Embassy
Moscow characterizes the Soviet proposal for UN supervision of US aid
to Greece as "a particular piece of effrontery," and points out that -- if
.1:S aid to Greece and Turkey is to be thus supervised -- Soviet loans,
...olitary assistance, etc., to Eastern Europe should be subjected to simi-
UN control. The Embassy feels that the "best way to deal with Soviet
-:-)Aiistry and sabotage of this sort is to counterattack rather than to re-
Qpviin on the defensive with appeals to reason and logic."
POLAND: US Embassy advLses alainst food rplief�US Charge Keith, in
comment on the Polish Government's assertion that, without food im-
rts the food situation will become serious, reports that opinions of
Aost reliable sources" confirm his belief that "there will be no starva-
tion here this year." Keith emphasizes that US food relief to Poland (a)
not needed to prevent serious malnutrition or starvation, but would
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"alleviate distress which can be endured;" (b) would discourage the
Polish people by "our readiness to assist" the unpopular Polish Govern-
ment; and (c) would, in effect, increase Poland's economic contributions
to the USSR. Keith recommends that, if the US aids Poland for humani-
tarian reasons, such aid should be (a) given through the American Red
Cross; (b) confined to 10 million dollars worth of food and medicine; and
(c) delivered within four months, subject to curtailment or discontinuance
at any time if US conditions are not satisfactorily met.
10. RUMANIA: Instructions to dipistmatic representatives--US Representa-
tive Berry reports that the Rumanian Government has instructed Minis-
ters recently appointed to posts abroad that: (a) they should keep in close
touch with their Soviet colleagues for "supplementary instructions;" (b)
their sole job is to act as propagandists for the Groza regime; and (c) the
Rumanian Government is "completely uninterested" in analyses of politi-
cal and social conditions in the countries to which they are accredited.
NEAR EAST-AFRICA
11. GREECE: MacVeagh urgesimpartiality--US Ambassador MacVeagh has
sent a personal message to Prime Minister Maximos pointing out that
favorable US action on President Truman's proposal for aid to Greece is
being imperiled by continuing reports that the Greek Government is
tolerating rightist excesses and applying security measures to non-sub-
versive political opponents. MacVeagh urgently recommends that the
Greek Government demonstrate its "political tolerance and broad national
character" by acting with equal vigilance and severity against all lawless-
ness on the part of either the Right or the Left.
FAR EAST
12, CHINA: Formal request for US financial aid contemplated--The Chinese
Foreign Minister has informed Minister-Counsellor Butterworth that the
Central Government intends to make a formal request for US financial
assistance about the time it makes an announcement regarding govern-
mental reorganization. (The Foreign Minister indicated that this announce-
ment would be made "in a few days.") Butterworth believes that the Foreign
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Minister was not personally disposed to raise the issue of financial aid
at this time, but was being "pressed for action."
Ambassador Stuart feels that it would not be difficult to induce
the Chinese to postpone their formal request for aid, but also believes
that a "judiciously timed" and moderate EximBank cotton loan would be
of "considerable short-run psychological value." Stuart adds that there
has been no basic change in China's unfavorable economic situation;
although the Government's foreign exchange position has temporarily
Improved, the fiscal situation continues to deteriorate under the burden
of military expenditures, and the pressure on prices is accordingly in-
creasing.
Soviet reily on Dairen unsatisflactory--The Chinese Foreign
Minister has also told Butterworth that the USSR, in a "vague and equivo-
cal" reply to a recent Chinese note, disclaimed any responsibility for the
delay in reestablishing Chinese administrative control in Dairen and Port
Arthur. The USSR reiterated its stand that no Chinese Nationalist troops
could enter the area "until the state of war had been terminated by a
treaty of peace with Japan." Pending a formal reply to the Soviet note,
the Foreign Minister said he had orally informed the Soviet Ambassador
Nanking that the Soviet stand was inadmissible and that the Chinese Gov-
ernment, while prepared fully to observe the Sino-Soviet treaty provisions,
could not accept "ill-founded interpretations arrived at unilaterally." He
also told the Soviet official that "it lay with the Soviet Government as to
whether. . it would augment or diminish the friendly character" of
Sino -Soviet relations.
13. JAPAN: Atcheson's comments on SoyittpLotts2t--In reply to a State
Department inquiry concerning Premier Yoshida's alleged anti-Soviet
remark (see Daily Summary of 11 April, item 6), US Political Adviser
Atcheson has declared that the alleged remark was reported by only one
correspondent who has been noted for his unreliability in the past. The
remark has not appeared in the Japanese press, as SCAP effectively
prohibits all criticism of the Allied Nations by the Japanese press. Atche-
Len suggests that the Soviet complaint be taken as the occasion to protest
the dissemination of anti-US propaganda by Japanese-language newspapers
imported from Sovietareas, and by the daily broadcasts beamed to Japan
from Siberia.
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14. KOREA: KOREA: _pipposed administratza on�Acting Secretary
Acheson has informed Secretary Marshall that the State and War Depart-
ments have now agreed on a program of financial aid and administrative
reorganization for the US zone in Korea. Contemplated action includes
(a) a request for Congressional authorization for expenditures not to
exceed 540 million dollars for the next three fiscal years to be followed
by a request for a 215 million dollar appropriation for the fiscal year
1948; (b) termination of General MacArthur's political -- but not military --
responsibilities in Korea; (c) gradual replacement of military personnel
In Military Government by civilians; (d) election of a new legislative
assembly based on a broader suffrage, and the establishment of a Korean
provisional government with substantial autonomy in domestic affairs; and
( ) appointment of a Political Adviser of ambassadorial rank who in a
few months would assume the position of Civil Commissioner and have
over-all direction of civil affairs, while the Commanding General of the
US Forces in Korea would retain only strictly military responsibilities.
Acheson adds that Seeretary Patterson's approval of the assumption
of responsibility by a Civil Commissioner is contingent upon Secretary
Marshall's willingness to have this Commissioner report directly to and
come under the State Department's direction.
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353
1. FRANCE: Effects of De Gaulle's political activity�Embassy Paris
reports that De Gaulle s recent political activity has created acute un-
easiness in all French centrist and leftist political parties, largely be-
cause every party (except the Communists) realizes that De Gaulle
represents a powerful attraction to a substantial part of its member-
�3hin and is out te divide and destroy the individual parties as they are
now constituted.
The Embassy adds that be Gaulle apparently believes that in the
ruins of the present political party system he can rally a substantial
laajority and construct a strong coalition grouping all anti-Communist
forces. The Embassy doubts, however, the feasibility of De Gaulle's
plan at this juncture,because only the Socialists can provide De Gaulle
the worker and trade union support requisite to a broad and successful
anti-Communist coalition, and the Socialists have been "forced back
into the Communist embrace" by De Gaulle's current efforts to destroy
the present Government. According to the Embassy, some Socialist and
centrist leaders, who have already sought an anti-Communist coalition,
fear De Gaulle's action may divide anti-Communist opinion and put an
end to the present "moderation" line of the Communists.
Possibility of secret French-Vietnam negotiations--Embassy
Paris also reports that, although the son of the French Overseas Minis-
ter insists that no negotiations are now in progress in Indochina, he has
expressed the belief that "a suitable approach would shortly be made
by the Viet Minh. The Embassy speculates that secret negotiations may
now be taking place concerning the designation of a Vietnam plenipotenti-
ary and the acceptance of France's armistice terms.
9
e.. SPAIN: Eranco seen as "wooing" US--A UK Foreign Office official has
informed US Embassy London of the Foreign Office's belief that the Fran-
co regime is "wooing the US." The official declared that, while US Em-
bassy Madrid was given advance notice of the announcement of Franco's
law of succession, the UK Embassy was not. The official added that the
UK Foreign Office is giving "considerable thought" to the Spanish situa-
tion, because it feels that the Spanish question may be raised in the Secu-
rity Council in June.
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TOP-SECRET Date: ,..11-41-7-52- By:
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EUROPE
J.iAIK 1941
352
1. CZECHOSLOVAKIA: Communist coup predicted--The Czechoslovak
Minister to Turkey has told US Military Attache Ankara of his "strong
hunch" that the Communists will stage a "coup" in Czechoslovakia
soon after the Moscow Conference. The Czechoslovak Minister fears
that all non-Communist former members of the Czech underground
will be arrested and bases his reasoning on his belief that (a) the
logtcal Soviet reaction to the Truman Doctrine is to extend the iron
curtain westward; and (b) the Communists must act quickly to preserve
their position in view of the fast developing anti-Communist feeling in
Czechoslovakia.
(CIG Comment: The Minister's predictions appear to be un-
justified. No reliable evidence has been received either from Czech-
oslovakia or from the USSR in support of his fears, which have probably
been magnified by the intense rumor-ridden atmosphere presently pre-
vailing in Ankara.)
2, RUMANIA: Complete currency.s211gpsi_tear--US Representative Berry
reports that, in the opinion of most observers, inflation is "now out of
hand" and the Rumanian currency is "about to collapse completely."
Since 1 April the free dollar rate has risen from 415,000 to 900,000 lei.
According to Berry, the immediate causes of the sudden collapse appear
to be (a) legislation calling for sharp wage and price increases; (b) gold
shipments to Switzerland; (c) indications of another crop failure;
(d) sweeping powers granted the Communist-controlled Ministry of
National Economy; (e) increased budget proposals envisaging far greater
taxation; and (f) realization that the peace treaty will have no immediate
beneficial effects on the Rumanian economy.
3. FRANCE: Mad scan outbreaks of "real ..litical concern"--US Am-
bassador Caffery reports that he has been privately informed by the
Chief of the Cabinet of the French Overseas Ministry that, although
the situation in Madagascar is "under control" in the military sense,
politically It a matter of "real concern". Caffery's informant said
that the Ministry was "in the dark over present Madagascan intentions.
While he was "reluctant" to attribute the blame for the outbreaks to
the Communists, the official declared that Vietnam leader Ho Chl Mh;th
had "frequent conversations" with the Madagascan deputies in Parts
last summer.
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'8P-SECREI DDA Memo, 4 Apr 77
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NEAR EAST-AFRICA
4. TURKEY: Turks would devote US financial aid to military needs--US
Charge Bursley reports that the Turkish Foreign Office has informed
Ambassador Baydur in Washington that the $100 million earmarked
for Turkey in the US-aid proposal should be devoted entirely to mili-
tary needs. The Foreign Office view is that, as this sum is not enough
oven for military needs, none of it would be allocated to economic
projects.
5. EGYPT: Proposed solution to the Anglo-Egyptian deadlock--US Am-
bassador Tuck in Cairo reports that Premier Nokrashy and British
officials in Cairo are considering informally a proposal designed to
break the present Anglo-Egyptian deadlock. Tuck states that the new
plan, which is called an agreement and not a treaty, is designed to
diminish Anglo-Egyptian differences through face-saving language
and concessions to the Egyptians. According to the plan, British
troops would evacuate Egypt 18 months after ratification of the agree-
ment, the Egyptians would obtain a greater share in the condominium
administration of the Sudan, and the true wishes of the Sudanese would
be determined by the UN General Assembly.
FAR EAST
8. JAPAN: Soviets_p_rotest Premier Yoshida's ged remarks--Acting
Secretary Acheson has informed General MacArthur that the State
Department has received a formal protest from the Soviet Embassy
concerning Premier Yoshida's press interview of 20 March in which
the Premier is alleged to have said: "We have a very dangerous
enemy to the north.'
THE AMERICAS
7, ARGENTINA: Messersmftl suggests g. ne otiations�US Ambassador
MtIssersmith reports that Argentine officials now feel that Argentina
must modify its restrictive policies to meet US principles of freedom
of the air, and that it should conclude a bilateral commercial air agree-
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meat with the US before the May meeting of the International Civil
Air Organization. Messersmith recommends that a US delegation
be sent "immediately" to Buenos Aires to resume negotiations.
8. BOLIVIA: Possibility of attack by subversive groups--US Ambassa-
dor Flack has been informed by President Hertzog that the Boltvian
Army and Police would be "almost useless" in combating a revolt
by either the MNR (National Revolutionary Movement) or PM (Left-
ist Revolutionary Party). Hertzog considers a revolt by either
group likely "at the first favorable opportunity." Hertzog, there-
fore, wishes to obtain US equipment, under "an extension of lend-
lease," for a mobile force of 1,000 carabineros.
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GENERAL
10 APR 1947
351
1. �2Z2Ltaspsp in CF --The US Military Attache Moscow reports that the
purpose of the USSR s "blocking methods" in the Council of Foreign
Ministers may be to postpone as low as possible the final German settle-
ment while pursuing its activities in Germany directed at "bending Ger-
many eastward," in the meantime, the USSR apparently permits only
enough progress in the CFM to justify further conferences.
EUROPE
2. FRANCE: De Gaulle lans return to wer--General de Gaulle has in-
formed US Ambassador Calfery that he believes that economic conditions
will become so bad "around the latter part of this year" that the people
will beeome completely disillusioned with existing political parties and,
with the exception of the Communists, will call upon him to save the
nation. Although De Gaulle stated that his return to power would be by
legal means, in Caffery's opinion his plans are still "somewhat nebulous."
Cabinet ma reduce bread ration�US Embassy Paris has been
confidentially informed by the Ministry of Agriculture that the French
Cabinet has decided to reduce the bread ration as of I May, unless
additional grain imports are made available immediately.
3. ITALY: Fiscal crisis seen threateni_w C,21::_e_Lesynnen --US Ambassador
Dunn reports that there is a 'general feeling that the Italian Govern-
ment has been "weak and procrastinating" in dealing with conditions
which have led to the present financial situation and has been "led around"
by the Communists. Some of Dunn's informants predict that attacks upon
the Government's fiscal program may lead to changes in the Cabinet, if
not a defeat of the present Government.
FAR EAST
4. CHINA: Alliance between Soong,. and the CC Clique rumored--US Ambassa-
dor Stuart reports that TNT Soong recently remake a "OS Embassy
official that, within the Kuomintang Party, the Political Science Group (the
most liberal KMT faction) has little strength and is regarded as an inter-
loper. Stuart considers Soo Is remarks significant in view of a rumor
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that Soong and the Kuomintang's right-wing CC Clique are contemplating
a "temporary alliance of convenience" which would result in Soong's
appointment as President of the National Economic Council. This would
provide the CC Clique with 4'facade" behind which they could expand
their economic and financial control.
Private cotton loan ainted with US bank--The US Assistant
Treasury Attache Shanghai reports thatthe National City Bank of New
York has completed arrangements with the Central Bank of China to
provide US$ 40,000,000 for the financing of current shipments of raw
cotton from the US to China. (Although details are not completely settled,
earlier negotiations indicated that this would be a short-term loan, secured
by a lien on China's official foreign exchange assets.)
*US re tstel 11_2. j.s.fk...cla_Lrelease of US officers--US
Ambassador Stuart has requested the Soviet Ambassador in Nanking to
relay, via the Soviet Consul General in Harbin, a request to Chinese
Communists in Manchuria that they "establish some new channel of
communication" to carry out their commitment for the release of the
two US officers � Rigg and Collins -- recently captured by the Chinese
Government. Stuart made this request because all other efforts of com-
munication had failed and because only the USSR maintains representa-
tion in Communist Manchuria. The Soviet Ambassador replied that the
question was "a delicate one" and that his office was not in direct contact
with Manchuria. He agreed, however, to send the US request to Moscow
for retransmission to Harbin. (The US Consul General in Changchun,
Manchuria has recently received reports of "uncertain reliability" that
Rigg and Collins had been "handed over to the Russians" and sent to the
USSR.)
5, FRENCH INDOCHINA: Views of Vietnam representative--US Ambassador
Stanton reports that a representative of the Vietnam Foreign Ministry,
who arrived recently in Bangkok, has told the US Military Attache Bangkok
that the Vietnam Government Is disillusioned with the French Communist
Party because of its support of the French military campaign against Viet-
nam. The Vietnam representative expressed doubts as to the ability of
the new French High Commissioner, Bollaert, to change French policies
and stated that Vietnam possesses both the arms and the resources for a
six-year war which would paralyze French economy in Indochina.
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GENERAL
1 APR 1947
350
1. UK may Ein_psepp_Qt revision German 'dust lan--Bevin has
informed Secretary Marshall that a new level-of-industry for the US-
UK Zones in Germany should be determined immediately. Sevin sug-
gests ten million tons of steel as the "basis of departure" and stipulates
that no additional costs for the British taxpayer be permitted. This pro-
cedure, according to Sevin, would entail reconsideration of the plants
which could be dismantled and released for reparations payments. Secre-
tary Marshall and Bevin have agreed that US and UK representatives
should try to work out a joint proposal to present to the Council of For-
eign Ministers.
EUROPE
2. CZECHOSLOVAKIA: Transit issue hinders anti-Communist swing--
US Ambassador Steinhardt reports that the US position on transit charges
for Czechoslovak freight through the US Zone Germany "tends to ob-
struct the present gradual swing of Czechoslovak public opinion away
from the Communists." Although accurate figures are lacking, Stein-
hardt reports that there is evidence of considerable diversion of Czecho-
slovak traffic from German to Polish ports.
3. ITALY: UK-US troops on Morgan Line--US Ambassador
Dunn reportst, at the Supreme Commander
Mediterranean, Premier De Gasperi has been confidentially informed
that if Yugoslavia fails to ratify the Italian Peace Treaty, "Anglo-Ameri-
can forces will remain in Pola and on the Morgan Line.
NEAR EAST-AFRICA
4. PALESTINE: Increased tension between Jewish Agency and terrorists--
US Consul General Macatee in Jerusalem reports a rising tension be-
tween the Jewish Agency and Irgun (see Daily Summary of 29 March,
item 3). Although the Agency has achieved partial success in restrict-
ing terrorist activities, Macatee notes a prevailing nervousness in Agency
circles over the possibility of violent Irgun and Stern Gang reaction. An
Agency source, probably connected with Haganah (the Jewish Agency's
military arm), recently told Macatee: "We are in a hell of a fix. We
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DDA Memo, 4 Apr 77
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must get terrorists under control while avoiding bloodshed and any
appearance of cooperation with the British."
FAR EAST
b. CHINA: Nationalists ma,Ldela...Lentainto Dairen�According to US
Ambassador-ituart,ihe Chinese ForeignOffice has indicated that, in
the absence of a reply from the USSR to the Chinese note of 31 March
on the re-entry into Dairen, Nationalist plans to take over Dairen may
be deferred. A Chinese intelligence official has told US Naval Attache
Nanking that the operation "would not be carried out this month."
THE AMERICAS
PARAGUAY: Plans for MoriniLeLvluster discussed�US Military At-.
'lathe Asuncion has been told by a usually reliable source" that the
Colorado Party (which in the past has helped maintain President Mori-
nigo in power) decided two weeks ago to oust him, but has postponed
the ouster pending an agreement with the Liberal Party (which is anti-
Morinigo but has not officially supported or opposed the Concepcion
rebels). Source believes that such an agreement is "probably close at
hand,' and that the two Parties will form an interim government, oust
Morinigo, and restore peace.
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APR 1947
GENERAL
1. R.,_r_ts of Soviet atomic bomb tests�US Military Attache Nanking re-
ports information from tiro-nairly -reliable" sources that an explosion
of earthquake proportions accompanied by a blinding flash occurred in
mid-March at a Soviet military reservation near Wu Shih, in Sinkiang.
The Assistant US Naval Attache Peiping has transmitted a Chinese mili-
tary intelligence report of "doubtful accuracy" concerning a Soviet
atomic bomb test on naval vessels, presumably held in Shelekhova Bay
(Sea of Okhotsk).
(CIG Comment: These reports are similar in content and origin
to several received since July 1946, none of them confirmatory. In
general such reports are not supported by other intelligence, factual
evidence, or expert estimates of Soviet atomic energy potential.)
2,. Reported Soviet delimitation of Chinese occupation of Dairen--A high-
ranking Chinese Nationalist officer has informed the US Coiu1 General
Mukden that the USSR intends to limit the Central Government's control
of Dairen to the southern section of the city (thus excluding the Chinese
from the harbor front) and to a narrow corridor along the railroad lead-
ing out of Dairen.
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TrU, C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
EUROPE
Ivo. 009
1. USSR: Soviets Eriemed to dtscuss lend-lease settlement�Molotov has
repiiee to Embassy Moscow's aide inemoire urging prompt negottatien
for lend-lease settlement (see Daily Summary of 31 March, item fl)
iciaUy statist': that the Soviet Government is prepared to open discus-
SiOnS immediately. The Soviet representatives will be designated at
once and will be headed by Mikoyan (Soviet Minister of Foreign Trade
arr.; renutedly ale of the USSEes shrewdest negotiators).
EAST
2. KOREA: pfa alz to, g eynivdp r ameint of electricer daires�
(4ceera.1 Hodge as replied to the recent demand offEe Chairman oTthe
Pceplels Committee in North Korea for prompt payment te