CURRENT INTELLIGENCE BULLETIN - 1954/07/07

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03001377
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 9
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: July 7, 1954

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7 July 1954
Copy No. ci
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. -7 7
NO CHANGE IN CLASS.
Cl DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE: 2 0/ 0
AUTH: HR 70-2
DATE: Z,44450_ REVIEWER�
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
/ 7)CFR-ET
A
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SUMMARY
GENERAL
1. USSR and Iran soon may settle financial and border disputes
(page 3).
2. Compromise apparently reached in Balkan military alliance
negotiations (page 3).
3. Soviet ambassador ostensibly seeks improved Soviet-Yugoslav
relations (page 4).
FAR EAST
4. Rhee demands renewal of war or increased aid before coming
to Washington (page 5).
SOUTHEAST ASIA
5. France willing to concede Tonkin to the Viet Minh (page 5).
6. Viet Minh force in south Annam plans drive to Cochinchina
border (page 6).
7. Comment on Chou En-lai meeting with Ho Chi Minh (page 6).
8. Indonesian prime minister implies approval of rubber shipment
to China (page 8).
LATIN AMERICA
9. Costa Rica fears invasion from Nicaragua (page 9).
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GENERAL
1. USSR and Iran soon may settle financial and border disputes:
It appears that the USSR will release
Iranian gold and credits now held in
Moscow, according to Ambassador
Henderson. On border problems, the
USSR will probably retain a salient north of Firezeh east of the
Caspian in return for minor concessions to Iran on the Azerbaijan
frontier. Henderson does not consider, however, that Soviet policy
toward Iran has necessarily "entered a soft period."
The Iranian Foreign Ministry is pleased
with the Soviet attitude in the negotiations thus far, but is aware
that the Kremlin may attempt to introduce unacceptable political
conditions before any agreement is signed.
Comment: The unconditional release
of the $21,000,000 in gold and credits held by the USSR since the
end of World War II would probably reflect a serious reappraisal
in Moscow of Western influence in the area,. It might foreshadow
offers of economic and technical assistance, such as Moscow re-
cently off r" ft' A ferfinrtiQtan,, in an effort to woo Iran away from
the West.
2. Compromise apparently reached in Balkan military alliance nego-
tiations:
Greece, Turkey and Yugoslavia have
agreed in principle that the Balkan mili-
tary alliance should provide for imme-
diate discussion of any threat to the
security of any of the three arising from prior international commit-
ments. Only action to be taken in the area covered by the military
alliance would be considered in such discussions.
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"we
Director General Kyrou of the Greek
Foreign Ministry, in reporting this to Ambassador Cannon, ex-
pressed his belief that Yugoslav reluctance to agree to a strong
reciprocal commitment with NATO stems from disinclination at
present to risk disclosure of military information to the Italians
or to subject Yugoslav troops to possible service under an Italian
commander.
Comment: The compromise would
evidently limit Yugoslav measures to the Balkan pact area, whereas
the draft text presented by Greece apparently did not limit the area.
A compromise on this issue would remove a major stumbling block
to the formation of an alliance.
3. Soviet ambassador ostensibly seeks improved Soviet-Yugoslav
relations:
In the 30 rune interview with Marshal Tito,
Soviet ambassador Valkov discussed only
the slow pace of "normalization" of Yugoslav-
Soviet relations and expressed hope that they
might be improved, according to Yugoslav foreign secretary Popovic.
Popovic says that Valkov's insistence on the urgent nature of his visit
has been the cause of considerable amusement in top circles.
Tito took the opportunity to complain about
the treatment of Yugoslav diplomats in Moscow and anti-Yugoslav
propaganda in the Satellites.
Popovic believes the timing of the visit was
related to Balkan alliance developments, which were not, however,
mentioned. Another Yugoslav official has termed the interview purely
another Soviet attempt to arouse speculation at the possibility of a
Soviet-Yugoslav rapprochement.
Comment: The Yugoslav attitude toward
Valkov may have arisen from a desire to show the Soviets that Belgrade
was interested only in concrete and meaningful actions in the "normali-
zation" efforts, but Popovic may have colored his report somewhat in
order to impress upon the American embassy Yugoslavia's present orien-
tation.
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FAR EAST
4. Rhee demands renewal of war or increased aid before coming to
Washington:
President Rhee wrote Secretary Dulles on
1 July that he would be unable to visit
Washington without definite prior assurance
of American agreement to resume the Korean
war or immediately increase South Korean armed strength, according
to the American embassy in Seoul.
Comment: The requested increase in mili-
tary strength would not substantially alter South Korea's security
against an attack from Communist China. It would, however, further
Rhee's objective of increasing the United States' stake in Korea.
South Korean officials tre show-
ing an increased interest in American logistics policies. Rhee's de-
mands suggest that an increased level of supply may be his major
objective, thus overcoming the major block to unilateral military action.
SOUTHEAST ASIA
5. France willing to concede Tonkin to the Viet Minh,
The chief of the French delegation at Geneva
told an American representative he had in-
formed the Viet Minh representative on
2 Ally that France has accepted the proposal
LnaL Lne v let mum reL.eive the "Tonkin area, including the capital."
He told the American official that France would, however, have to
hold the Haiphong area for a considerable period.
The French spokesman added that he made
It clear the Viet Minh demand for the 13th parallel as a line of parti-
tion was unacceptable and France would insist on a line north of Dong
Hoi, at about the 18th parallel.
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*NY
6. Viet Minh force in south Annam plans drive to Cochinchina border:
the French commander
in south Abnam, has information that Viet
Minh forces in the area, totaling some 13
battalions, have received orders to drive to the Cochinchina border by
15 Slily (see map, p. 7). French forces are outnumbered and Beaufort
is greatly concerned since the Viet Minh units are armed with Soviet
or Czech automatic weapons and flares for night fighting.
The American charg�n Saigon comments
that it is fairly obvious the Viet Minh intends "to gain the 13th
parallel either by force or by negotiation."
Comment: A division at the 13th parallel
would give the Communists almost all of Annam. The Viet Minh may
also be attempting to place large forces in or near south Vietnam in
order to increase French difficulties in retaining control after any
"cease-fire" is reached. Similar attempts apparently are under way
in Laos and Cambodia.
In Laos, the Viet Minh is actively conducting
reconnaissance of all main trails leading to Xieng Khouang, Vientiane,
and Luang Prabang, and is building a new road from Phu Tho and Sam
Neua to Ban Ban,
In Cambodia, the Viet Minh 436th Battalion,
which was recently defeated by Royal Army troops near Kratie, ap-
parently will remain in Cambodia and not withdraw into Laos as the
French had expected.
7. Comment on Chou En-lai meeting with Ho Chi Minh:
Peiping radio announced on 6 July that
Premier Chou En-lai had held talks with
Viet Minh president Ho Chi Minh on the
The meeting may have taken place in Nanning;
China-Vietnam border.
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Chou probably made this detour, on his
return from India and Burma, to brief Ho on his conversations with
Mendes- France and other French Union representatives and to dis-
cuss terms for an Indochina settlement. Peiping's purpose in pub-
licizing the talks was presumably to confer international prestige on
Ho.
In recent months the USSR and Communist
China have increasingly committed their own prestige to the fortunes
of the Viet Minh, and on several occasions the Chinese have implied
willingness to intervene in Indochina if necessary to support Ho. In
the past few weeks Communist comment has suggested a belief that
no such intervention will be necessary.
8. Indonesian prime minister implies approval of rubber shipment to
China:
Prime Minister Ali told the American
ambassador on 5 July that he had to
balance his desire to improve US-Indonesian
relations against his duty to small rubber
pro ucers, who are having difficulty finding markets for their low-grade
rubber.
Ali did not directly admit that Indonesia
planned to send rubber to China, but said he hoped it would be possible
to find an area for the exercise of executive discretion in application
of the Battle Act should some shipment take place. He added that the
volume of American assistance is so small that its withdrawal under
the Battle Act would not be missed.
Comment: A Polish ship at Djakarta is
currently loading low-grade rubber marked for New York nd Boston,
but
for Lommunist China.
this shipment is actually destined
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LATIN AMERICA
Costa Rica fears invasion from Nicaragua:
Costa Rican foreign minister Esquivel
informed Ambassador Hill and three
Latin American ambassadors on 3 July
that a "large armed group" is preparing
o invade Uosta Rica from Nicaragua. He said the group, which in-
cludes Costa Ricans who fought with the Guatemalan rebel forces of�
Castillo Armas, has aircraft and is being aided by the Nicaraguan
and Venezuelan governments.
Ambassador Hill believes that Costa
Ricans would "resist with their lives" such an attempt against their
government.
Comment: It has been apparent for some
months that the Venezuelan and Nicaraguan governments have been
giving serious consideration to ousting the Figueres administration in
Costa Rica. They may now be attempting to organize and equip a
force of mercenaries and supporters of the discredited former Costa
Rican president Calderon Guardia for an invasion of the country.
Costa Rica enjoys considerable prestige
among democratic elements throughout Latin America. Neighboring
governments feel threatened by the Figueres administration's sym-
pathetic reception of political refugees from their countries.
9
TrID D E' 7'
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