DAILY SUMMARY - 1947/08

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 03002612
• Document Creation Date: October 8, 2018

3.3(h)(2)
Approved for Release: 2018/09/26 C03002612
'1414ameargrepiiiim
30 AUG 1947
-471
P, , A, HA.S NO OBJECTION
WO THE, pECIASSIFICATION OF
GENPRAL VW; 00134-4n.
1. Rio Pact not to alter US Antarctic bric ent of State,
commenting oirEFbroposal to Include a part of Antarctica in the
"Ivaaitsphere defense zone," has suggested to the US Delegation at
Rio that because Argentina, Chile, and the UK have conflicting claims
to that part of Antarctica, Great Britain might protest its inclusion
in the. "defense zone, and Argentina and Chile Might later invoke
the treaty provisions against the UK.
The Department has also suggested to the US Delegation that
It n-aa.lice a formal statement reaffirming the US policy of non-recogni-
tion of any claims to Antarctic territory.
EUROPE
3. FRANCE: cabinet c.miltrAgmEtal. to Moscow for wheat--US Am-
13assador Ca.ffery in Paris has been informed bi7.1 �1dependent
and trustworthy sources" that: (a) the Rarna.dier Cabinet is considering
an appeal to Moscow for wheat; (b) the appeal is being urged not only
by Communists but also by certain Socialists who consider that the
USSR should be "put on the spot."
4. RUMANIA: P3sge of Armed Forces undertaken without s rmission--
US Military Representairif-Mnruiiiinia reports that e long-awaited
purge of the Rumanian Armed Forces will begin on 1 September. The
measure has been secretly ordered by the Deputy Chief of Staff, despite
ing Michael's objections, and is viewed by the US Representative as
other example of the King's waning authority.
Document No. 052
NO CHANGE in Class.- 0
0 DECLASSIFIED
Class. CHANGED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date il 0 APR 1.97R BY: 009
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
,IAINAMIA1
wol14ore4otwome
NEAR EAST-AFRICA
5, LAN: USSR_presents threa_tAiLgn note to Qavam--US Ambassador
el :Of n reports that Soviet Ambassador Sadchikoff has delivered to
Minister Qavam a note which: (a) states that Qavam's uncooperative
..littOicle in the oil matter is regarded as a sign of enmity toward the
*USSR; and (b) insists that the Soviet-Iranian oil agreement of 4 April
1943 be Implemented by the Iranian Government without delay.
rile states that neither Qavam nor members of the Majlis
give any indication of wavering in their determination to reject any
r!oviet oil proposals and that Iranian opinion against the USSR has
-;oliclifted.
FAR EAST
a., C conscription program marked by usual _incompetency --US
Co-asWate General Shanghai reports that the Nif.f�iil Government's
conscription program in Shanghai and surrounding provinces is
betrg carried lut with "disgraceful incompetency and corruption."
T1YD Consulate General believes that this development "augurs ill"
Aix the Government's recently announced all out anti-Communist
(CIG Comment: Despite announced plans for sweeping reforms
and the recommendations of the US Army Advisory Group, the Chinese
.Fational Government continues to weaken its current military position
.r.dhering to its age-old conscription system.)
Approved for Release: 2018/09/26 C03002612
g Aut.;
Approved for Release: 2018/09/26 C03002612 1947
4.100140,fferrir"-'
C1[3.:TICAL SITU T I( N 8
470
EUROPEAN RECOVERY
Secretary. Marshall ha.s requested that the US Joint Chiefs of Staff
study the problem of the withdrawal of UK troops from Greece and
Italy (see item 1).
GREECE
As the Cabinet crisis continues, it is becoming increasin.gly evident
that any government which may be formed will retain most of the
Rightists from the old Cabinet and will be unable to inspire the
confidence of the people.
INDONESIA'
It is believed that the Netherlands Cabinet has agreed to accept the
good offices ffereci by the Security Council on 25 August. The
Security Council's offer will probably also be accepted by the Indonesian
Republic in the hope that the good offices will eventually take the form
of arbitration in the Dutch.-Indonesian dispute. The Netherlands is
opposed to settlement by arbitration on the grounds that the problem
Is of an internal constitutional nature and thus not susceptible of out-
side Judgment
KOREA
The US proposal for a conference in Washington on the Korean problem
has been delivered to the UK, the USSR, and China, the other three
signers of the Moscow Agreement. A iassador Smith in Moscow
indicates that the USSR is unlikely to accept the US suggestion of
immediate zonal elections (see item 8).
it
CHINA
Secretary Marshall has directed a letter to the Foreign Minister
indicating US unwillingness to participate in Four Power discussions
preliminary to the Japanese peace conference.. ( see item 2).
WidairAwrorkraprosii6m
Document No.
0.57
NO CHANGE in Class. rl
DECLASSIFIED
Class. CHARGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date:10 APR 19 By:
Approved for Release: 2018/09/26 C03002612
0 09
Approved for Release: 2018/09/26 C03002612
tUn
GENERAL
1. US re uests that the JCS st.ndy_UK trcx) withdrawals�The De-
partment of State has informed US�E-Fba assy on of Secretary
Marshall's request that the US Joint Chiefs of Staff: (a) study the
implications of the intended withdrawals of UK troops from Greece
and Italy (see Daily Summary of 25 August, item 2), exploring the
possibility of the alternative withdrawal of even larger numbe.rs
of UK troops from less sensitive areas; and (b) consult with the
British Chiefs of Staff with a view to formulating positive recom-
mendations on this problem to the US and UK Governments.
(The Department had recently suggested to Secretary Marshal
in Petropolis that the problem of retaining UK troops in Greece
and Italy be approached through military channels, after conclud-
ing that diplomatic representations had failed.)
2. US reply China's China's statement on a ese peace--Secretary Mar-
shall has diiected a1etter1o the ese Foreign Minister pointing
out that the "principle of eleven-power participation" would be
compromised if the Four Powers met separately to reach agree-
ment on a Japanese peace conference as suggested earlier by the
Foreign Minister (see Daily Summaryof 25 August, item 4).
The Secretary's letter: (a) states that the purpose of a Four
Power meeting can be better achieved if China and other interested
governments individually attempt to obtain Soviet participation in
the peace conference; and (b) re-emphasizes the need for an early
start on a peace settlement.
US Ambassador Stuart has been instructed to inform the
Foreign Minister orally of Secretary Marshall's opinion that the
Chinese National Government is overly-concerned about the effect
on the Dairen issue of peace treaty discussions without Soviet par-
ticipation, since there is no prospect that the USSR, even if it taks
part in peace discussions, will make any early change in its policy
of effectively denying Dairen to the Chinese.
(CIG Comment: While Secretary Marshall's reply should
convince the Chinese Government that the US intends to maintain
a firm position toward the USSR on Japanese peace questions,
- 2 -
frierwIrencsm
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
GO
Chinese policy will probably continue to be dominated by fears of:
(a) Soviet reaction to a peace treaty concluded without USSR par-
ticipation; and (b) a new Japanese menace in the Far East.)
3. UK economic difficulties affect civil aiLpplicy--An official of the
Ministry of Civil Aviation has told the US Civil Air Attache in
London that because of the world trend toward "restrictionism"
In international trade, he feels that the October Rio Conference
will offer the last chance for a liberal multilateral air agreement
which will be favorable to the "strong" air transport countries.
The Attache reports that the official indicated that British economic
difficulties are beginning to affect air policy and that a program of
retrenchment for British civil aviation is contemplated. The Civil
Air Attache believes that the UK may lead a movement directed
against US air policy if the Rio negotiations fail.
(CIG Comment: It is unlikely that the UK will make a clear
break with the US on civil air policy so long as there is the pros-
pect of a successful outcome of the European economic recovery
program.)
EUROPE
4. FRANCE: plan r_c_tees"m --US Embassy
Paris reports that according to a "trustworthir informant" the
Communist Party is preparing to set up "committees against
famine and misery" throughout France. According to the inform-
ant, the Communist-led General Confederation of Labor is to call
upon both Socialists and Communists to join committees of this
nature with a view to organizing manifestations, agitations, propa-
ganda, and incidents.
(CIG Comment: Such Communist moves have every pros-
pect of success as long as the French food shortage continues.)
5. GERMANY: Possible demilitarization of the SMA--According to
a CIG report from Berlin, informants of untested reliability have
- 3 -
Approved for Release: 2018/09/26 C03002612
Approved forRelease: 2018/09/26 C03002612
At
stated that the Soviet Military Administration (SMA) is about to
be converted into a civilian administration by placing leading
political officers in a civilian status and sending additional ci-
vilians from the USSR.
(CIG Comment: Such a reorganization of the SMA would:
(a) place under the Soviet Foreign Office those SMA officials who
have reportedly tended to disagree with the policy of the Foreign
Office--see Daily Summary of 20 August, item 6; and (b) ease the
transition of the Soviet Zone Germany from the status of a con-
quered area to that of a Soviet Satellite.)
6. AUSTRIA: Ass.A.s. jtsgaiations with the USSR postponed�US
Legation Vienna reports that the Foreign Ministry has agreed to
postpone bilateral negotiations with the USSR on the German
assets problem (see Daily Summary of 25 August, item 7). The
decision whether to initiate such talks will not be made until
after the Austrian Treaty Commission completes its discussions.
7. YUGOSLAVIA: Existence of International i a.de doubted--Am-
bassador bassador Cannon in Belgrade expresses doubt that an international
brigade is being formed to take part in Greek guerrilla warfare.
Cannon points out that adequate personnel is readily available to
the guerrillas in the border areas of Yugoslavia, Albania, and
Bulgaria and that the use of such personnel instead of an inter-
national brigade does not involve the risk of "serious internation-
al repercussions." Cannon believes that the rumors of recruit-
ing personnel for an international brigade may have originated
from the recruitment of European youth for Yugoslavia labor
projects.
(CIG Comment; The existence or non-existence of an in-
ternational brigade has not yet been definitely established. Am-
bassador Cannon's opinion cannot be accepted as final in view of:
(a) continuing rumors; and (b) some evidence to the contrary
from sources believed to be reliable.)
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
4601aNiSFAIttaiti
FAR EAST
8. KOREA: USSR unlikely to acceg. US prpmsals�Ambassador
Smith in Moscow believes that the USSR is not likely to accept
the US proposals for immediate zonal elections in Korea. Smith
ivarnslhowever, that if the USSR does accept the proposals, such
acceptance will be a clear indication that the USSR is confident
of achieving final control of Korea through the carrying out of
the US program.
I.
uToliMin&Fored
Approved for Release: 2018/09/26 C03002612
gar U 1-14.0 %A ,10-"F
Approved for Release: 2018/09/26 C03002612
C,
CRITICAL sirrup,,TxoNs
EUROPEAN RECOVERY
Departments of State and War have approved the communique
on the London tripartite level-of-industry talks.
GREECE
Prolongation of the Cabinet crisis will lead to further loss of
confidence in the Government and will therefore enable the guer-
rilla forces to operate with increased effectiveness.
INDONESIA
High officials of East Indones:la and West Borneo, whose states
have been denied a voice in UN Security Council discussions on
the Indonesian situation, condemn the present Indonesian Republi-
can Government as unrepresentative and undemocratic.
KOREA
The Department of State has instructed the ITS Delegation to the
Joint Commission not to propose a recess while awaiting a reply
to the proposal of a four-power conference.
CHINA
Wedemeyers departing statements in China have come as a
rude shock to the Chinese National Government and have apparently
made Chiang Kai-shek concerned over the security of his own
position (see item 5).
Document No. 05-0
�
NO CHANGE in Class. 0
Ei DECLASSIFIED
Class. CUANGED TO: TS S
DDA Memo, 4 Apr 77
Auth:
Date:
atiota�sf*foLaiti.
SNIDE
iftlgid1763
By: 003
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1 1
GENERAL
1. Turkey consider declaration of solidari with Greece--The
Turkish overnment has asked US Ambassador ilson for an ex-
pression of US views concerning a possible Turkish declaration of
political and economic solidarity with Greece. Wilson interprets
Turkey's proposed move as an effort to counter Yugoslav-Bulgarian
cooperation directed against Greece. Wilson believes that the Turk-
ish Government should defer its decision on this matter until after
the UN General Assembly has considered the Greek case.
2. USSR rejects US note on Dairen--The USSR, in reply to the US note
on Dairen see Dtly Summary of 13 August, item 7), has categori-
cally rejected "any attempt to burden the USSR with responsibility
for treatment of American interests" in Dairen. The Soviet note
declares that: (a) Dairen must remain under the Port Arthur Naval
Base regime until the Japanese peace treaty is signed; and (b) the
Chinese National Government has failed to fulfill its administrative
functions in Dairen "for reasons beyond Soviet control"'
(CIG Comment: The Soviet line of reasoning indicates clearly
that the USSR intends to retain exclusive control over Dairen as long
as possible.)
3. UK to sell aircraft to new Iranian airline--The Ministry of Civil
Aviation has advised US Ambassador Douglas in London that British
aircraft will be sold to Eagle Airways, a new Iranian airline, and
that British Overseas Airways Corporation (BOAC) will conclude a
management contract with the line.
(CIG Comment: The UK had previously assured the US that
BOAC would not "intervene in Transcontinental and Western Air
(TWA) affairs" in Iran. Although the UK now asserts that Eagle
Airways will not compete with Iranian Airways (Iranair), with which
TWA has a virtually inoperative management contract, Eagle opera-
tions will probably be disadvantageous to Iranair and reduce the
chances that US technical assistance in Iranian air transport will
be maintained; see Daily Summary of 25 August, item 10.)
- 2 -
-14400304sttitiata�
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
tiliNflUtil I IAL
,Jr oncucr
EUROPE
4. USSR: US to answer Soviet note on Petkov case--The Department
of State has instructed US Embassy iirto join with the UK
Embassy Moscow in informing the USSR that its rejection of the
US proposals on the Petkov case (see Daily Summary of 26 August,
item 4) constitutes a violation of the obligations assumed by the
USSR at Yalta and negates the rights of the US as a signatory to
the Bulgarian armistice.
FAR EAST
5. CHINA: Government shocked b Wedeme r statements--US Am-
bassador Stuart reports t epar ng s emen made by
General Wedemeyer unquestionably came as a "rude shock' to the
Chinese National Government, even though most nonpartisan and
liberal Chinese largely endorsed Wedemeyer's views. Stuart adds
that Chiang Kai-shek had tried earlier to persuade Stuart to caution
Wedemeyer against being too critical and is now preoccupied with
the question whether the US may be planning to force the General-
issimo's retirement from office.
6. BURMA: AFL rejects Communist reunion--US Consul
General Rangoon hasb-e-E-11 oi;ii�leariy a member orth-e. Burmese
Cabinet that the re-entry of the White Flag Communist Party into
the Anti-Fascist League (AFL) has been blocked by the refusal of
the Communists to accept the terms of reunion as laid down by the
AFL.
(CIG Comment: The possibility that the White Flag and Red
Flag Communists will join forces is now greater, but the union is
still improbable. However, in view of the mounting political tension
in Burma, widespread violence is likely to increase and may result
in another attempted coup d'etat.)
- 3 -
..T.OP CDOICT
CONFIDENTIAL
Approved for Release: 2018/09/26 C03002612
Atili P14/
Approved for Release: 2018/09/26 C03002612
4 68
CRITICAL SITUATIONS
EUROPEAN RECOVERY
The US, UK, and French delegations to the tripartite talks in London
on German level of industry have reached agreement on a communique
(see item 1).
GREECE
Tsaldaris has apparently abandoned his efforts to secure the coopera-
tion of the Liberal Party in forming a cabinet and now threatens to
form an Extreme Rightist government. It is believed that such a
government could not survive in view of present Parliamentary and
popular opposition.
INDONESIA,
The UN Security Council has again called on the Netherlands and the
Indonesian Republic to comply with the cease-fire order of 1 August.
Meanwhile,- the Netherlands has taken another step toward the forma-
tion of the projected United States of Indonesia by recognizing an
autonomous government in East �ram.
KOREA
In an attempt to reach some decision on the Korean problem, the
Department of State has sent a note to the four signatories to the
Moscow Agreement calling attention to the deadlock in Joint Co
mission negotiations and asking th se governments to send delegates
to a conference beginning 3 September in Washington (see item 3).
CHINA
One of the outstanding obstacles faced by the Chinese National
Government in its efforts to reinforce Manchuria is that senior
Nationalist commanders in North China are reluctant to release a
portion of their owe troops because of the uncertain political situation
within China (see item 4).
- 1 -
Dooument No.
0 4- 9
NO CHANGE in Class. rl
0 DECLASSIFIED
Class. C=ED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
44444.3�6��.146:46 D e: B
R 1978y : 03
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
114itris I ins.
4.144.16�40.1im
GENERAL
1. Con_ugun :2Rosed on level-of -Must': talks-US Ambassador
Douglas reports thTia-e-WrI�TrC, an renc e egations to the Lon-
don talks have agreed on a communique which will be referred to
the respective governments for approval. The communique will
Include a statement that the French delegation cannot withdraw its
objections to the level-of-industry agreement until there is "a satis-
factory outcome" to the forthcoming Berlin discussions of French
proposals on the export of Ruhr coal, The US delegation recommends
US agreement to the communique and recommends further that, even
If the French Government refuses to agree to the communique, the
new level of industry be published on 1 September.
2. UK seeks immediate discussion of bizonal financing-The UK Gov-
falie-ffe-pliiiireiirof State that US-
UK discussions leading to a revision of the present agreement for
the financing of the US and UK Zones Germany be initiated at the
earliest possible moment. The note declared that the UK will be
unable to provide further dollars for German expenditures when the
current appropriation is exhausted (approximately at the end of
December), but is prepared to discuss possible contributions from
non-dollar sources.
FAR EAST
3. KOREA: Sovig.,p,..tl._y�RAItgli contimes dilator tactics-The US Dele-
gation to the joint Commission reports that the present deadlock is
so complete that it will be difficult to agree on even a factual joint
report. General Hodge states that Soviet tactics still consist of un-
acceptable counter-proposals and propaganda against "oppressive"
US policies in South Korea.
(CIG Comment: The complete failure of the Soviet Delegation
to make a plausible case for the continuing of the Joint Commission,
combined with the rather weak USSR propaganda line, indicates the
possibility that a surprise Soviet proposal will be made at a forth-
coming conference in Washington. This might be a suggestion for
the immediate withdrawal of both US and USSR occupation forces.)
- 2 -
14,P=913441WAINi
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
444)n
EllI
4. CHINA: Nationalist commanders unwillinlease troops for Manchuria--
According to UrAnia-FigiiiiTtall7diFtiritish Military Attache in Nan-
king has been reliably informed that Chiang Kai-shek was unable to per-
suade General Hu Tsung-nan in Yenan to release part of his troops for
reinforcement of Manchuria. (General Hu, Nationalist Commander in
the Yenan area, is regarded as one of Chimes most faithful supporters.)
Stuart adds that General Fu Tso-yi, commanding Nationalist forces in
the Kalgan area, may be similarly reluctant to part with any of his troops
during the current political instability in China. Stuart observes that
Chiang's Government is still compelled to effect troop movements "largely
by negotiations rather than by the issuance of orders. '
THE AMERICAS
5. PARAGUAY: Government to hold elections--US Embassy Asuncion re-
ports that President MorinIflis group of foreign diplomats that
he intends to hold elections "in due course," and that he will turn over
the Government to the victorious party.
- 3 -
-*or @DCRET
CO
Approved for Release: 2018/09/26 C03002612
/-U1, Jt4,
Approved for Release: 2018/09/26 C03002612
"UP E�ul1EP
CRITICAL SITUATIONS
EUROPEAN RECOVERY
The Chairman of the CEEC doubts whether Western Europe can be
self-supporting by 1952. Clayton recommends that the US im-
pose certain necessary conditions upon US acceptance of the
� CEEC report (see item 1).
GREECE
Continued resistance on the part of the opposition makes it highly
unlikely that any effective government under Tsaldaris can be
formed (see item 6).
INDONESIA
US Embassy The Hague reports a growing belief in the Nether-
lands that Russia will sabotage any decisions of the UN not favor-
able to the Indonesian Republic.
KOREA
US-USSR negotiations have reached a critical stage and significant
developments are expected within the next few days.
CHINA
A political and economic crisis of record severity is likely to
follow the 24 August statement made by General Wedemeyer on
his departure from China. In reaction to this statement, the
Chinese National Government will probably reiterate that govern-
mental reforms cannot be carried out so long as it is compelled
to prosecute the civil war without foreign aid.
-1-
487
Doaumont No. 0 4c
NO CHANGE in Class. D
El DECLASSIFIED
Class. CHANCED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
A
Date: 10 PR 1974 By: 00.9
r-ID Lim
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
GENERAL
1. Requirements desired in CEEC report--The Department of State
believes that there must be major changes in both the content and
conclusions of the report which is being drawn up by the Com-
mittee for European Economic Cooperation (CEEC). The Depart-
ment feels that the report in its present form does not meet the
following essential standards: (a) achievement of a self-sustain-
ing European economy; (b) maximum realization of mutual aid;
and (c) concentration of aid at points where it will produce the
maximum immediate recovery. While the Department believes
that the US must not create the impression that it is directing the
specific content of the report or delaying its preparation, publi-
cation of a report not meeting the essential requirements of the
recovery program would do irreparable harm by evoking serious
criticism in the US and by further undermining the confidence of
European nations in their ability to help themselves.
Clayton's views on the CEEC port--Under Secretary Clayton
has told Sir Oliver Franks, Chairman of CEEC, that the figure
for US aid of 28.2 billion dollars, tentatively reached by the CEEC,
is "out of the question." Clayton got the impression that: (a)
Franks is very reluctant to initiate discussion in the Conference
of living standards relative to pre-war and post-war conditions;
and (b) the Conference is not likely to arrive at a program which
would bring actual dollar requirements much below the prelimi-
nary summation. Upon being informed of the Department of
State's objections to the report in its present form, Franks ex-
pressed doubt whether Western Europe, under any reasonable
assumptions, can reach a completely self-supporting status by
1952.
Clayton recommends that the US inform the Conference
that it must plan on the annual export of 25 to 30 million tons of
coal by the UK by 1951 and consider that France will again be
practically self-sustaining in bread grains by that date. Clayton
is convinced that the only way for the US to deal with the CEEC
report is to impose necessary conditions.
-2
OEOILIYP�
ApprovedApproved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
2. Australian � osition on a anese peace talks �US Ambassador
Butler reports that the view o Aus r Ian Minister of External
Affairs Evatt concerning possible delay in convening a Japanese
peace conference is that: (a) it is urgently necessary to hold the
peace conference before the UN General Assembly meeting, be-
cause the otherwise crowded program may postpone the con-
ference several months; and (b) the conference must be held
promptly, even if the USSR refuses to attend.
3. Partial Turkish demobilization unlikely to affect USSR policy�US
Ambalia or Smith In Moscow reports his opinion that a partial
demobilization of the Turkish Army (see Daily Summary of 19
August, item 6) would not materially affect Soviet policy toward
Greece, Turkey, and Iran, particularly if accompanied by an of-
ficial Turkish statement which would: (a) reiterate Turkish de-
termination to defend itself against aggression; and (b) point out
that a reduction in the financial burden of maintaining large forces
under arms would improve Turkey's capacity to resist aggression,
should the need arise.
4. USSR rejects US protest on Petkov case--The Soviet Government
has refused the recent Ut proposal that the Bulgarian Government
be directed by the ACC to delay the execution of Nikola Petkov,
pending ACC review of the case. The USSR contends that ACC
Bulgaria has no authority to review decisions of Bulgarian courts,
and that such a review would be an infringement upon Bulgarian
sovereignty. The Soviet note likewise rejects the US proposal
that consultations be undertaken among the three powers repre-
sented at the Yalta Conference in an effort to work out a concerted
policy regarding the Petkov case.
(CIG Comment: A similar Soviet position may be expected
in the September trial of Maniu in Rumania or in any future case
in which the Western Powers seek to check the elimination of non-
Communist elements from Satellite politics.)
- 3 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
EUROPE
5. AUSTRIA: Ryes desires US aid for Soviet zone--US Commanding
General Keyes believes that, in view of the Soviet refusal to admit
US relief into eastern Austria under the control provisions of the
US-Austrian Relief Agreement, it is necessary to protect Austria's
economic unity by supplying eastern Austria with food from US
military relief stocks. Keyes declares that failure to supply this
aid will: (a) result in greater over-all US relief requirements for
Austria; and (b) be a first step toward the division of Austria.
O. GREECE: Government impasse continues�According to US Am-
bassador NraWaih7rff--1.1;nerffirere-rs� Tsaldaris has proposed to
Sophoulis (leader of the Liberal Party) that: (a) Populists and
Liberals unite to form a new government, with Sophoulis presid-
ing over the Council of Ministers and with Tsaldaris functioning
as "active" Prime Minister because of Sophoulis' advanced age;
(b) the portfolios be distributed equally between Populists and
Liberals; and (c) Tsaldaris and Sophoulis each have veto power
over any Cabinet appointment.
Sophoulis replied that: (a) because the Government has
failed, the opposition (Liberal Party) should form the new govern-
ment; and (b) if the Liberals collaborate with the Populists, the
Cabinet's policy must be wholly that of the Liberal Party. Mac
Veagh is not hopeful of an effective coalition between Populists
and Liberals, because he believes that Sophoulis considers
Tsaldaris' proposals a sign of weakness and is therefore pos-
sibly anticipating that, by holding out a little longer, the Liberals
may be able to take over the whole government.
NEAR EAST-AFRICA
7. MAN: Soviet intimidation of Iran continues�US Ambassador Al-
len Tehran has been informed by a confidential representative of
Qavam that the Iranian Government has received reports of 10,000
Barzani (Kurdish) tribesmen concentrated on the Azerbaijan border
by the USSR, for the purpose of creating disturbances in Iran which
- 4 -
Wagelik4. f"'D
Ofi REIM'
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1.1
444400itleitarirm
will serve as a pretext for Soviet military intervention. Allen's
Informant also stated that the Soviet Embassy is endeavoring to
start "a pro-Soviet movement" among Iranian officials on the
ground that "great turmoil" is imminent in Iran.
(MG Comment: The Barzanis now in the USSR are be-
lieved to number not more than 1500. It is considered likely
that the USSR will use them, as well as other tribal elements,
to promote Iranian unrest.)
FAR EAST
O. CHINA: tJSSRpolIcyjowardina--According to the US Naval
Attache Nanking, USSR officials in China have stated that: (a)
Soviet Ambassador Petrov will return to China, probably in
September; and (b) there will be no change in Soviet policy in
China until US policy changes. (Petrov left Nanking for Moscow
in June. At that time Soviet officials in China reportedly inter-
preted his departure as the first step in a new USSR policy of
"getting tough with China.")
(CIG Comment: It is believed likely that the Kremlin
will maintain an outwardly "correct" attitude toward China, at
least until the USSR is in a position to Judge the effectiveness
of any additional US assistance that might be extended to the
Chinese Nationalist Government.)
THE AMERICAS
9. PARAGUAY: Reactivation of US Miss ons recommended--US
Charge Trueblood in Asuncion has recommended that the US Air
and Ground Missions in Paraguay be authorized to resume oper-
ation. (The Missions were suspended in March in view of the pos-
sibility that their activities would be considered military inter-
vention by the US in Paraguay's civil war.)
-5
lUWUflURLT
_SEDDENTIALL--
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
a0461**10**Aama
CRITICAL SITUATIONS
5 AUG 1941
466
EUROPEAN RECOVERY
The French have indicated that unless there is agreement be-
tween France and the US on Ruhr coal and coke, the French
Gov rnment will probably announce that the level-of-industry
agreement is unsatisfactory (see item 1).
GREECE
The fall of the Greek Governraent will not have any immediate
deleterious effect on the general situation in Greece and may even
result in the &rraation of a more representative government if
Tealdaris and Liberal Party leaders can be made to abandon their
present intransigent attitudes. 7.f no satisfactory compromise is
reached shortly, Army and civilian morale will suffer, and the
COMiallniStS will be provideri with an opportunity for executing a
large-scale military and pelitical offensive.
3NDONE,SIA
Fighting has increasedi ity around the Dutch spearheads
aimed at Jogjakarta. The Leanne:elan Republic's representative
at the TAT, former Prere:nn Sjahrir, has declared that he will
state again th0: Dutch tzn,:A must be withdrawn to the positions
occupie.d at the time of the truce of 14 Oeteber 1946 before the
Republic will feel sate to negotiate with a UN body.
KOREA
3ofteign Minister Molotov has assented te Secretary Marshall's
encent suggestion of a oint report. At the same time, however,
MoIotov9s charge that US policy has hindened the Joint Commission's
work indicates that future Soviet propaganda will attempt to cast
the onus for the deadlock upon the US by continuing to stress "oppres-
3ivE.PUS policies in South Korea.
(nit, A
The Chinese Government has indicated that its policy on Japanese
peace treaty questions will be directed toward securing Soviet par-
ticipation in the peace negotiatim�, in order to prevent unilateral
Soviet action on the Dairen issue (spe item 4).Dootunent No.
-1-
1LlCP LT[
0iii
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date:10 PR 19711 By:
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
411U UIIORET
GENERAL
1. Frenchilltrarl_skpi_It in London talks on Ruhr--The French Delegation
to the current London Conference has informally told US Ambassador
Douglas In London that, if there were no agreement between France
and the US regarding Ruhr coal and coke, the French Government
would probably state publicly that the level-of-industry agreement
was unsatisfactory to France. In response, Douglas stated that
French intransigence regarding the level-of-industry agreements
might influence the US Congress to disapprove further aid for West-
ern Europe. The French replied that the US can not refuse such aid
because it is in the US interest to help in the economic recovery of
Western Europe. Douglas believes that it should be stressed in
Paris and elsewhere that French recalcitrance on German recovery
may prejudice the Congress against any program for European re-
covery.
2. UK deadlines for troop withdrawals from Greece and Italy--Bevin
has personally advised Secretary Marshall that it would be im-
possible" to retain UK troops in Greece beyond this autumn or In
Italy beyond the year's end. Bevin recommends that the US approve
Greek requests to increase the size of the Greek Army and suggests
that the US and UK Chiefs of Staff hold consultations on Greek mili-
tary problems.
3. UK to sell six_ht aircraft to the USSR--The UK Foreign Office has
informed US Embassy London that the USSR is being allowed to
purchase three Vampire and three Meteor jet aircraft of the latest
types, but that no engines or aircraft on the secret list have been
or would be" made available to the USSR. The Foreign Office stated
that a recent Soviet request to expedite delivery of the jet aircraft
was refused and that no delivery will be accomplished for 15 months.
(The US recently asked the UK to reconsider its intention to sell jet
aircraft to the USSR.)
4. Chinese National Government policy on Japanese peace talks--in a
letter to Secretary Marshall, handed to US Ambassador Stuart on
21 August, the Chinese Foreign Minister indicated that National
4040n641143%Firr
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
I um
41444/10@ifM19titilog
Government policy on the Japanese peace treaty negotiations will
be directed primarily toward securing Soviet participation in
such negotiations. The Foreign Minister accordingly recommended
that the Four Powers attempt to reach an agreement, at the time
when the UN General Assembly meets, for a Japanese peace con-
ference including the USSR.
The Foreign Minister personally told Stuart that the National
Government was convinced that if a Japanese peace treaty is nego-
� tiated without Soviet participation, the USSR will take the occasion
to entrench itself even deeper and refuse to cooperate with China
on the Dairen issue. (The USSR has repeatedly claimed the right
to extend to Dairen its military jurisdiction over the Port Arthur
Naval Base Area until the Japanese peace treaty is signed.)
(CIG Comment: Fear of the consequences of the USSR's
non-participation in the treaty negotiations reinforces the National
Government conviction that some form of veto power must be per-
mitted in Japanese peace negotiations.)
5 UK...getable to lower tariff references--Under Secretary Clayton
reports from Geneva that Sir Stafford Cripps has stated that it is
"politically impossible" for the UK to take any substantial action
in eliminating imperial tariff preferences. In view of this develop-
ment, the Department of State is considering asking the President
to send a message to Prime Minister Attlee in an effort to avert
an open break in the trade agreement negotiations.
EUROPE
6. FRANCE: USSR may seek to aid Communists with wheat--US
Embassy Paris believes that the USSR may possibly make a token
delivery of "electoral wheat" in order to bolster the Communist
position before the fall municipal elections.
(CIG Comment: Earlier Soviet wheat shipments, which
were timed to arrive immediately before elections and were given
wide publicity, have in the past aided the French Communists. De-
spite the smallness of these deliveries, as compared with US ship-
ments, the propaganda value derived from them has been great.)
- 3 -
44101i0i*E0ItItitimi
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
7. AUSTRIA: Degkeis to re-om_a bilateral talks with USSR--The Depart-
ment of State has informed the US Legation Vienna that the US does
not object in principle to an Austrian approach to the USSR for a bi-
lateral settlement of the German assets problem in Austria. The
Department states, however, that in order for such a bilateral settle-
ment to be acceptable to the US it must: (a) be publicly approved in
Austria; (b) not impair Austrian sovereignty; (c) remove Soviet troops
from Austria; and (d) preserve the property interests of US nationals.
(CIG Comment: It is unlikely that any agreement reached by
the USSR and Austria on the assets question could meet these condi-
tions. The USSR, however, would probably welcome the resumption
of negotiations because such discussions would tend to weaken the
position of the US, the UK, and France during the Austrian Treaty
discussions at the November meeting of the CFM.)
8. BULGARIA: Discussion suddenly begun on ratificatio--US
Political Mission Sofia reports that a discussion of ratification of
the peace treaty has been placed on the 25 August agenda of the Grand
National Assembly. This body was convened in "extraordinary session"
on 24 August.
(CIG Comment: A sudden ratification of the peace treaty by
Rumania on 23 August was the first indication of a change in Soviet
attitude concerning Satellite peace treaties and probably presages
similar action by Bulgaria in the next few days.)
9. GERMANY: USSR 'supports Communist Yout_ Group--Acting US Poli-
tical Adviser Steere in Berlin reports that at a meeting of the Co-
ordinating Committee of the Allied Control Council, the Soviet member
introduced and supported an appeal of the Free German Youth (F14)
to the ACC for German-wide recognition and the authority to organize.
(MG Comment: The Free German Youth is probably the most
dangerous Communist-front organization in Germany. Strongly anti-
US, it has already partially penetrated the Western Zones. Its nation-
wide recognition might readily lead to results diametrically opposed
to US interests.)
- 4 -
e*011ii3134%!1
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
NEAR EAST-AFRICA
10. MAN: Prospects for continued Iranian air trans rt�According to
US Ambassador Allen in Tehran, Wig' slltt1e possibility that the
Iranian Government will purchase the Transcontinental and Western
Air (TWA) interest in Iranian Airways, as suggested by the US. Allen
believes that Iranian Airways can probably continue operations if
mechanics and spare parts are obtained, and that TWA may collect
something on its disputed claim against Iranian Airways if it "pursues
its interest."
Iran desires establishment of US-Iran air service�US Embassy
Tehran further z---�----:if-----ta3orts t�iiiarigrirDEF aEll�ro-Tan Foreign Office
has expressed his belief that Iran should not conclude a US-Iranian
bilateral air agreement without a guarantee that a US carrier will
promptly establish air service between the US and Iran.
(CIG Comment: The operation of Pan American Airways to
Tehran has been delayed, despite the US national interest, by the
failure of the Iranian Government to correct the poor condition of its
Mehratrid airport.)
�
11. IRAQ: Prime Minister threatens to sever relations with US�Accord-
ing to U m assy Bag d, Pr me Min ster abur informed the
British Charge that if the UN decision on Palestine is unfavorable to
the Arabs, Iraq will sever diplomatic and economic relations with
the US and will "prevent any social contact between Americans and
Iraqis."
FAR EAST
12. CHINA: Government subsidizes fl his into Sinkia --US Ambassador
Stuart believes tfi1hiit1iinese National Government "hopes to further
diminish Soviet air transport monopoly in Sinkiang Province" by its
subsidization of Central Air Transport Corporation (CATC) operations
into Tihwa, the provincial capital. Stuart indicates that the Govern-
ment also hopes that scheduled flights into Sinkiang will contribute to
the maintenance of National Government authority.
- 5 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
WUflL
TOIl- fiB 011 CT
(CIG Comment: Soviet domination of the joint Chinese-Soviet
Alma Ata airline has long concerned the Chinese National Govern-
ment which has unsuccessfully proposed to Soviet officials that the
airline be reorganized in order to effect increased Chinese participa-
tion. The subsidized CATC operations may indicate that the National
Government now believes that further protests are futile.)
THE AMERICAS
13. GUATEMALA: Revolutionar plottin --The Department of State has
Instructed US ERFailtirate to convey to the Guatemalan
authorities a report of a projected revolutionary movement supposedly
to take place there this week. (Ex-President Ponce of Guatemala has
informed US Embassy Mexico City that he intends to launch a move-
ment, including the airplane bombing of strategic points.)
-6-
JP
cucavr
CNIDENThir
Approved for Release: 2018/09/26 C03002612
I:1 INI-111U111111--
-Approved for Release: 2018/09/26 C03002612
q.
Tor ODGRET
GENERAL
gi 3 AN MA
48
1..Italians pr9pose Franh,o-Ita.lip custoas,union�US Embassy
Paris reports that a program reading to a Franco-Italian customs
union has been officially proposed to the French Government by
the Italian Government. The Embassy was informed by the
Italian Ambassador that the French Foreign Office has indicated
its sympathy with the general concept of the proposal.
Ambassador Caffery believes that the Italian Government
has not abandoned the view that a general customs union should
evolve out of the Paris Conference, but that the Italians are pessi-
mistic about the tangible results that can be achieved at this time
and wish therefore to complete a bilateral economic union with
the French.
2 Ma believes b.tliaes USSR prepared to folksy/ isolationkttpolitsi�
According to US Charge Prague, Czechoslovak Foreign Minister
Masaryk has expressed his increasing pessimism over the in-
ternational situation. The Charge reports that Masaryk gained
the impression in Moscow last month that the Soviet leaders are
in an intransigently isolationist mood and may be prepared to
sever remaining connections with the West. Masaryk reportedly
does not believe that the USSR wants war or that Soviet isolationism
would necessarily lead to war, but he fears a complete breakdown
between East and West that will be "only a few degrees removed
from open hostilities.'"
3. Wile zea....Lei&rts on Azores conference with Salazar�US Ambassa-
dor Wiley in Lisbon reports concerning his recent conference
with Premier Salazar regarding future US military air rights in
the Azores that: (a) an agreement has been reached in broad
principle and only the technical details remain to be worked out
on a "factual basis" with the Foreign Minister on his return to
Lisbon in September; (b) Salazar, though sympathetic to the US
position, implied that no immediate settlement should be looked
for; and (c) Salazar suggested that the U8 could disregard the ex-
piration date of the current agreement and postpone the evacu-
ation of US service forces in the Azores for several months if
necessary.
- 1 -
41.1�141.4*0114iiiiil
Document No. 04-6
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 10 APR 1978 By:
Approved for Release: 2018/09/26 C03002612
�'-'�771
Approved for Release: 2018/09/26 C03002612
i,firtRULIII I IAL
(CIG Comment: Despite Salazar's cordiality, the discus-
sion of details of the US terms will probably continue to encounter
determined opposition from dissident officials. The Portuguese
are under no compulsion to expedite the final settlement.)
FAR EAST
4. INDONESIA: Further military action feared--The Netherlands
Foreign Office has informed US Ambassador Baruch that it is
cognizant of the grave consequences of further military operations
(see Daily Summary of 22 August, item 8) but is encountering
difficulty in restraining the Dutch Cabinet from taking precipitate
action before the results of UN deliberations are known. Baruch
reports a generil feeling in The Hague that only immediate and
complete military success will satisfy the Dutch people, unless
the position of the UN improves from their point of view.
5. KOREA: _Jacobs indicates USSR maneuver to blame US--US Politi-
cal Adviser Jacobs reports that the charges by Chief Soviet Dele-
gate STatikov concerning the recent arrests by South Korean
authorities are an attempt to provoke the US Commanding General
in Korea to some action which will enable the USSR to blame the
US for a break-up of the joint Commission.
- 2 -
40401aNOWANItiiimi
AL
Approved for Release: 2018/09/26 C03002612
4
ApprovecforRejletsrt:20118/09/26 C03002612 2 2 AUG 194
101L0 ICK L r
464
cR[TCAL '1' T Y. 0 N" S
EITRO.PEAN ROCOVERY
Douglas reports his apprehensiw that the Paris Co ference is
insufficiently conceraed with the analysis of European production
estimates and tends to lean too heavily on US assistance see
item 1).
GREECE
Changes in the Greek Government may be expected following the
return of Foreign Minister Tsaldaris from the US, al.. which time
-Greek political leadeL-s will precipitate a Cabinet c:risis (see
item 6).
DiDONESIA
The US has expressed to he Netherlands Govermaeat its strol;g
hope that no further nallitaxy action wil;t be taken by the Dutch
Indonesia. _However, len in the ELItherbitds Gove.nimeitt.
who advocate furtherpera.i....:�ons may hi,.,.strezAgalened ii the
Security Council fails to act fr,:vorably t.-Al the proposa for a W.-tic--
member comynt.ssion ofgation (see item 8),
KOREA
The US Delegation, in its unilateral report on the work of the
Taut Commission, flatly states that it will be irapossb.ie to reach
any agreement on Korean ix.idependence through thc? medium of
the joint Commission vnles2 tIlare is a real change in Soviet polic.
CHINA
No significant new developmeut.�
- 1 -
111****1444001+01,1411.
Document No.
NO CHANGE in Class. 0 :,0-016M
DECLASSIFIED
0
Class. CHANGED TO: TS s tav
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/176A_________�
Date: 3. APR 0-17* By: a 9 ,
Approved for Release: 2018/09/26 C03002612
� Approved for Release: 2018/10.9/26 C03002612
WWtflR
GENERAL
1. Douglas' views of Paris Economic Conference--US
Ambassador Douglas is apprehensive that: a) the Paris con-
ference on European economic recovery is not "critically analyz-
ing the estimated production and requirements of participating
countries"; and (b) a real danger exists that the final program
may be "unrealistic as to production and inordinately large as to
US assistance." Douglas believes that the US should make clear
its willingness to share in any program which affects all countries
alike, but that the US reserves the right of final decision.
2. Preliminass_a__C views ol_1..cliAposition of c.,u_sIaica--US Embassy
London has been told by a UK Foreign Office official that although
the Foreign Office is undecided on th� method of final disposition
of Cyrenaica, it now tends to regard Cyrenaica, where vital British
strategic interests are centered, as separate from the problem of
Tripolitania and other Italian colonies. The official added that US
views on the problem of securing the CIrenaica base would be "of
the greatest help to the Foreign Offices ; (see Daily Summary of
14 August, item 3).
3. Vatican seeks easy removal of Franco--Acting US Representative
Parsons has been told by Tardini, Vatican Acting Secretary, of
State, that the Vatican policy is to open the way for Franco s de-
parture from the Spanish Government and that the Vatican hopes
to influence developments so that gradually the way will be made
easy for him to do so.
EUROPE
� 4. UK: Sevin reverses intention to visit US--Foreign Minister Bevin
has told US Ambassador Douglas that his intention to visit the US
at the time of the September UN General Assembly meeting has
been "upset by developments." According to Douglas, this possibly
indicates that Attlee will resign in favor of Bevin.
44issolimsogibr-T.
CO
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
5. USSR: Production of naval equipment in Soviet Zone German --i
i1it authorities
have directed the Krupp-Gruson plant in Magdeburg to produce
naval equipment and instruments for the USSR.
that an aircraft plant in Dessau has received an order for aircraft
engines and instruments for Soviet use.
(CIG Comment: It is well-established that a number of
plants in the Soviet Zone Germany are producing military equip-
ment for the USSR. Such production appears to be a clear violation
of the level-of-industry plan agreed upon by the Allied Control
Authority for Germany in March 194e.)
6. GREECE: Cabinet crisi_Aapprsa,.--US Ambassador MacVeagh
reports that the three Centrist kideis in the Greek Cabinet will
threaten to resign soon in an effort to oust Minister of Public
Order Zervas, extreme Rightist, and to gain Liberal Party co-
operation. MacVeagh believes that this plan will bring some im-
provement in the present Government. Both MacVeagh and AMAG
Chief Griswold urge that the US use its prestige at this time by
issuing a strong statement of US hopes for Greek unity.
(CIG Comment: A less intransigent attitude by Liberal
Party Leader Sophoulis toward cooperating with the Government
(see Daily Summary of 22 July, item 3) and a growing sentiment
against Zervas for his recent public criticism of Greek Army
tactics have recently been indicated. These developments in-
crease the likelihood that the Centrist leaders will be success-
ful. A new Government which included the Liberal Party and re-
moved Zervas would receive greater confidence in and out of
Greece, because it would have brought in the only parliamentary
party not now represented in the Cabinet and would have removed
the chief target of the Government's critics.)
-3 -
CO IAL
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
I IAL
Atioiwootometir�
NEAR EAST-AFRICA
7. SYRIA: ArAbiat_24opplIne may spsl_cne2_v route--US Legation
Damascus reports that Trans-Arabian Pipeline Company. (TAPCO),
a subsidiary of the Arabian-American Oil Company, has informed
the Syrian Government that unless Syria signs the pipeline con-
vention on or before 30 August, TAPCO will withdraw its request
for pipeline transit privileges and will proceed immediately with
construction along a route which does not cross any portion of
Syrian territory.
FAR EAST
8. INDONESIA: US warns Dutchagainstmtnewed hostilities�The
Department of State has instructed US Ambassador The Hague to
convey immediately to the Netherlands Government a strong hope
that it will not resort again to military action in Indonesia. The
Ambassador is to warn that the ultimate results of further mili-
tary action are likely to be detrimental to the best interests of
the Netherlands and may entail serious consequences, perhaps
including the proposal of sanctions in the Security Council.
US Embassy The Hague reports that the Netherlands Gov-
ernment is undecided on the resumption of military operations
and indicates that the position of those in the Government who
advocate military action will be strengthened if the Security
Council fails to take positive action.
9. BURMA: 12.19Leaprig olitltmsioq--US Consul General Packer
Rangoon reports that the political situation in Burma is becoming
Increasingly unstable and tense, characterized by nightly shoot-
ing incidents. Packer believes that it is possible that both
Burmese Communist factions are responsible for the disturbances,
their motives being to discredit the AFPFL Government by
demonstrating its weakness.
4
Approved for Release: 2018/09/26 C03002612
Approved for Rease: 2018/09/26 C03002612
10. CHINA: Reaction-in Mukden to Tssle_k_ale pr Mission�US Consul
General Mukden reports that the local Nationalist military and
political clique, which had made elaborate preparations to
monopolize the attention of the Wedemeyer Mission, was obvious-
ly d sappointed at being unable to control the Mission's activities
during Wedemeyer's recent visit to Mukden. Native Manchurians,
however, were cheered by the hope that through Wedemeyer their
views would be brought to the attention of Chiang Kai-shek for
the first time.
THE AMERICAS
11. PARAGUAY: Government vidory confirmed�US Charge True-
blood in Asuncion confirms press reports of the Paraguayan
Government's decisive victory over the rebel forces. He expects
early "peace, if not political tranquility," with no further rebel
threats unless organized from other countries.
- 5 -
14401108WAIMPIN�
CONF
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
TQP CLOirttaitim
CRITIA L, SITUATIONS
Z 1 AUG 1941
4,83
EUROPEAN RECOVERY
The French are expected to agree to a revised level of industry
for the US-UK Zones Germany provided that assurances are given
regarding French security and the European allocation of Ruhr
production. ,
GREECE
No significant new developments.
INDONESIA
Van Monk, Actix_ag Governor General of the Netherlands East
Indies, has iiiined that unless the Wepublic changes its attitude,
Dutch military operations will be resumed. A Dutch offensive
will have as its objective the occupation of the Republican capi-
tal of Jogjakarta in an attempt to bring about the downfall of the
Republican Government.
KOREA.
The Soviet Delegation has refused to issue a joint report and
claims that it is still considering the last US proposal for break-
ing the deadlock. This maneuver is probably designed to embar-
rass the US in any attempt to carry the problem to a higher level
in the face of continued Soviet delay.
CI-11N.A
The Chinese National Government's reported declaration that
Dairen has been closed to foreign shipping is a new legal thrust
at the exclusive Soviet occupation of that area. The USSR, although
believed, willing to face a real test as to China's intention or ability
to enforce the new ban, will probably offer legal counterclaims
either that Dairen is a "free port," or that Soviet shipping is re-
quired for the USSR to carry out defense of the Port Arthur Naval
Base Area.
- 1 -
Document N. 044-
NO CHANGE in Class. El
Li DECLASSIFIED
Class. CHANGED TO: TS . S rer
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 U APR 1978 By: 003
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1.11.__ML4UtIT
GENERAL
-
GENERAL
1. US officials recommend Ruhr talks following. London Conference--
Under Secretary Ci Tand Ug-r--gimba adors CaTery ainaMa---Og as
report from Paris that they have assured Bidault that: (a) he is
at liberty to present French views on the Ruhr at the London Tri-
partite Conference on the revised level of industry for the US-UK
Zones Germany; and (14 at some more appropriate time, discussions
leading to an understanding on the Ruhr will be held. Bidault stated
that no French Government could agree to a revised level of industry
for Germany without assurances of French security and access by
Europe to Ruhr production. The US officials recommend that dis-
cussions of French views on the Ruhr be continued as soon as
possible after the London Conference.
2. Soviet-Swedish relations deteriorating--US Military Attache Stock-
holm reports-thatthe it1-7-iertirionciliatory attitude of the Swedish
Government toward the USSR appears to have cooled. The MA be
that recent incidents, particularly the enforced recall of
Soviet assistant military attaches after their discovery in prohibited
areas, have accentuated this shift. The MA adds that a "bitter"
press war is in progress against the USSR which the Swedish Gov-
ernment has not yet undertaken to curb.
Now 3
Probable breakupp1US-Cuban.ITO x_Lestptiations--The US Delegation
at the International Trade Conference reports from Geneva that: (a)
the break-up of current US-Cuban tariff negotiations is a "strong
possibility"; and (b) the only terms to which the Chilean negotiators
are prepared to agree are "too thin to be worthwhile." The Delega-
tion comments that if the US fails to work out accords with Cuba and
Chile, it will have "agreements with only one Latin American country
out of three," and that this might put the US in a difficult position
vis-a-vis the Latin American bloc in the forthcoming inter-American
conferences at Havana and Bogota.
(CIG Comment: The Cuban attitude at Geneva parallels its
Intransigence at the current Rio Conference.)
- 2 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
tIliati-IWUM MIL
----TOP OCCIRET
4. French to su �ort Bavaria on di slomatic relations with Vatican--
the French Consul-General in Munich has
stated that France would support, as a step toward Bavarian inde-
pendence, a Bavarian request to OMGUS for the establishment of
diplomatic relations with the Vatican.
(CIG Comment: The French might reasonably support such
a request as a means of increasing their influence in western Ger-
many. According to previous information, the French have discussed
with rightist groups in Bavaria the formation of a federal Bavarian
state.)
EUROPE
5. FRANCE: Ramadier's offer to resign reiected--US Embassy Paris
reports that according to an informant who was present at a meet-
ing between Premier Ramadier and the Resolutions Committee of
the Socialist Party Congress, the Committee rejected Ramadier's
offer to resign and assured him of its complete confidence (see
Daily Summary of 20 August, item 5). In discussing the immediate
effect upon the stability of the Government of the resolutions passed
by the Socialist Party Congress, the informant stated that the reso-
lutions should not be taken too seriously as they were a "demagogic
endeavor to win over the working class."
6. ITALY: Probable Soviet reaction to discovery of
US Embassy Rome reports that the USSR may have learned that the
latest geophysical findings indicate the presence of considerable
petroleum in the Po Valley. (A Standard Oil representative has
confidentially stated that the Po Valley may yield eleven million
tons of petroleum annually.) The Embassy comments that because
of the strategic political, economic, and military implications of
this discovery, the USSR will certainly intensify its efforts to bring
Italy into its sphere.
- 3
/1448411101
Ci
Approved for Release: 2018/09/26 C03002612
3.3(h)(2)
Approved for Release: 2018/09/26 603002612
jUUIJN1TAL
7. NETHERLANDS: Cabinet crisis threatened over NEI $ licz--US
Ambassador Baruch reports from The Hague: a t in anticipa-
tion of a Security Council decision adverse to the Dutch position on
the Indonesian dispute, the Catholic Party is urging the Government
to order a march on Jogjakarta, the Indonesian capital; (b) but that
the Labor Party threatens to resign from the Government if military
action is renewed in Java. Baruch believes the US should make
urgent representations to restrain the Dutch from "this last desper-
ate step .... which may come to almost immediate actuality."
FAR EAST
8. CHINA: Nationalist sition in Manchuria--US Ambassador Stuart
reports that it is the consensuifljiiiW1Id observers in China that
the "6th Communist offensive" in Manchuria will probably be
launched in early September and that its most likely objectives will
be: (a) interdiction of ports and rail support from China proper;
(b) capture of Ssupingkai and the establishment of an east-west
corridor between the Nationalist-held cities of Changchun and Mukden;
and (c) capture of Fushun, key point in the defense of Mukden. Stuart
adds that the Communists will be able to shut off reinforcements
from north China by similarly-timed offensives in that area and thus
render constricted Nationalist holdings in the Mukden area untenable.
THE AMERICAS
9. NICARAGUA: StabIlitypf regime--US Embassy Managua reports
that the situation in Nicaragua is riiTotentially explosive" in view of:
(a) the "shakiness" of the new Roman y Reyes regime; and (b) the
certainty that the anti-Somoza leaders will refuse it their support.
The Embassy adds that ex-President Somoza, according to a reliable
informant, intends to take over the presidency himself if the new
Government is not recognized.
(CIG Comment: Somoza, through his control of the National
Guard, could easily take over the presidency if it suited his purposes.)
-4
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
:444/14/04�041t
CRITICAL BITQATXONS
EUIPEAN RECOVERY
in order to avoid breach-of-agreement charge by the US and .
the consemnent freezing of the balance of the US loan, the UK.
has postponed for twenty-four hours unilateral action to end
sterling convertibility (see item 1).
GREECE
Present Soviet propaganda suggests that the USSR may break
diplomatic relations with the Greek Government (see item 7).
INDONESIA
The US offer of good offices has lapsed because of the Indo-
nesian Republic's expressed preference for arbitration by a UN
arbitration cornmissim Meanwhile, fighting in Java is reported
to have increased in intensity, leading the Republic to call for
cluick: action by the UN Security Council.
KOREA
Soviet Delegation will probably attempt to prolong joint Com-
orn negotiations in order to avoid discussion of issues at a
r;H:ivernmental ievel (see item 8). -
CHINA
Present cod is in Manchuria cast doubt on recent rumors
that the T.Y3S'R is likely to attempt a "cow)" in that area in the
near future. rfle Ith:eithood of such a Soviet move, however,
would be increased if lonal Chinese Con-smunist foi.ces were
eventually throlitz on the defensive by US aid to China, by
National Government reform of Rs Manchuriem administration,
and by active Nationalist military efforts to regain control
of the area.
Document No. 0 3
;v41
462
VO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
'.Auth: DDA REG. 77/1763
1 Date: By: 009
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
UUIU4UL4 UI!
GENERAL
1. UK pastpones action to terminate sterling convertibility�The Depart-
lent of grali has iraFfd-Under VerieRiTtraTECE Geneva that
the UK financial mission in Washington has been advised that the US
will have to assert a breach of agreement and freeze the balance of
the credit if the UK implements its intention to end convertibility
unilaterally, (see Daily Summary of 19 August, item I). The UK has
postponed its intended action for 24 hours, during which time alter-
native steps. are being explored.
Now 2. UNSCOP i._:spated to favoryartition for Palestine--US Embassy
London has been informed by a high Jewi�s-Frieni* official closely
associated with the UN Special Committee on Palestine (UNSCOP)
that a majority of UNSCOP now favor the partition of Palestine into
an Arab and a Jewish state. The official added that UNSCOP would
expect the states to have a customs union and a confederation to
handle railways and communications.
(MG Comment: Because partition has been the minimum
demand of the Zionists, such a solution would probably be acceptable
to them; however, it may be expected to provoke a strong Arab re-
action.)
3. Pressure for economic talks at Rio Conference--The US Delegation
at the Rio Conference reports that pressureVincreasing for early
inter-American consideration of economic problems and that Argen-
tina is advocating a special economic conference to be held prior to
the Ninth International Conference of American States at Bogota in
January. The Delegation recommends, in view of the US wish to
minimize economic discussions at Rio, that the US give its support
to the proposal that the Inter-American Economic and Social Council
be instructed to prepare an economic program for consideration at
Bogota.. (The 7.r.ter-Anierican Economic and Social Council is a
subsidiary of the Pan American Union. The Council meets in
Washington pending action on its future by the Bogota Conference.
The proposal referred to is sponsored by Mexico, Colombia, Bra-
zil, Peru, and Chile.)
- 2 -
gri,p-somigNim
CO Ai
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09726 C03002612
IjJ1FttJt
flidieles.6100lierr
4. US-Portu ese 'Azores" conversations enteri critical phase--
� sassador Wiley in Lisbon repor that conversa
Premier Salazar concerning US military rights in the Azores are
"entering the critical phase." With UK support for US demands
already assured, Wiley has asked the Department of State to suggest
to the Brazilian Government that it instruct its Ambassador in Lb-
bon to support the US in the current negotiations. Wiley states that
the Brazilian Ambassador is "entirely disposed to collaborate if
he can receive the green light."
EUROPE
5. FRANCE: Bidault fears Ramadier Government ma fall--US Am-
bassador Caffery has been told by Foreign Minister Bi ult that as
a result of the decisions of the Socialist Party Congress, Premier
Ramadier's position has been seriously weakened and that the Govern-
ment may fall within the next few days. BiclauIt added that he himself
may be asked to form a new government.
(CIG Comment: During several previous governmental crises,
Mama has felt that he might be asked to form a new government.
While !Mama, as leader of the center MRP party, may become
premier upon the fall of Ramadier, it is not yet clear that the fall
of the present Government is likely.)
6. GERMANY: Re ortaision of opinion in SMA--US Political
Adviser Murphy believes thatwithiniThet Military Administra-
tion (SMA) there may be a group favoring compromise with the West
in an attempt to avoid a split of Germany or at least to maintain
for tictical purposes the framework of quadripartite government.
Murphy adds that a hip Soviet military official has admitted to a
US official that he is `terribly worried about current developments."
(CIG Comment: This division within the SMA, see Daily Sum-
mary of 18 July, item 4, is apparently a reflection of a divergence of
opinion within the Kremlin on German policy as the November Con--
ference of Foreign Ministers approaches.)
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
MAN
sikiltiiNFICIOREAP
7. USSR: Possible Sovic t reco ition of Communist vernment in Greece--
US Embassy MoCcow that presen oviet propagan an e
-recent USSR protests over alleged mistreatment of Soviet personnel in
Greece suggest that ie USS II and it s Satellites may break relations
with the Greek Govex iment and recognize the Greek insurgents prior
to the convening of the Gen 121 Assembly. Such a move the Embassy
points out, would facilitate the supplying of overt aid to move,
Greek Com-
munists and would present the General Assembly with a situation so
confused as to make a clear-c at decision most difficult.
FAR EAST
8. KOREA: $oviqt delaying tactics-- The US Delegation to the joint Com-
mission believes that present Soviet tactics are to present counter-
proposals, thus keeping the Joint Commission alive until after the UN
meeting in September. The delegation points out that this would keep
the Korean problem out of the UN for another year.
(CIG Comment: The Soviet Delegation will now probably Issue
a unilateral report which will call US proposals "obstructionist, but
will describe current Soviet dilatory tactics as actually conciliatory.
Thus, any future US attempt to carry the issue to a higher level could
be condemned as sabotage of the joint Commission and of the Moscow
Decision.)
THE AMERICAS
9. NICARAGUA: Reco ition of new Roman y Reyes regime--The Depart-
ment of State has informed Assistant Secretary Armour in Rio that
Nicaragua's new Vice President, ArFuello Vargas, will ask to be
seated at the Rio Conference as the 'representative of the newly elected
Government" in Nicaragua, and that he will, if denied a seat in that
capacity, ask to be seated as "the representative of Nicaragua" on
credentials stating specifically that his acceptance does not imply recog-
nition of the present Nicaraguan regime.
(CIG Comment: The Conference will probably seat Arguello
Vargas and will probably choose to admit him without recognition of
- 4 -
414*PerliFiregiairm
CO AI.
Approved for Release: 2018/09/26 003002612
Approved for Release: 2018/09/26 C03002612
1.14111141�VI 1114,
the present regime. However, early de facto recognition of the regime
Is likely to follow as a matter of course. If it does, General Somoza
will probably make his long-deferred trip to the US, and his departure
will force a political realignment in Nicaragua.)
10. PARAGUAY: Government successes in civil war--US Charge Asuncion
reports, as ofill'Aughe apparently assured" safety of Astm-
don, with present acute food shortages expected to improve rapidly;
(b) the recapture of the civil airport by the Government; and (c) the
absence of rebel planes over the city through the last two days.
(CIG Comment: 3.3(h)(2)
confirms press reports that the remainder of the attacking
rebel forces have split into several groups. If other recent press re-
ports are also confirmed, the military phase of the civil war, except
for possible continuing guerrilla action in localities remote from the
capital, may be considered ended.)
11. URUGUAY: Arms shipments to Paraguayan rebels--The Acting Minis-
ter of Foreign Affairs of Paraguay has ijiformedihe US Embassy in
Asuncion and the diplomatic representatives of the American Republics
that a plane that crashed near Montevideo on 15 August was carrying
Uruguayan Government munitions to the Paraguayan rebels. In this
connection, the US Military Attache Montevideo reports his conviction,
based in part on a document discovered among the effects of the co-
pilot of the plane in question, that high Uruguayan officials have been
sponsoring arms shipments to the Paraguayan rebels.
12. ECUADOR: US comments on ammunition chase�The Department
of State has informed US Embassy Quito in connection with the report
that Ecuador might purchase from Czechoslovakia large quantities of
7.92 calibre ammunition (see Daily Summary of 18 August, item 9),
that: (a) the purchase would commit Ecuador to a rifle that is not
standard US equipment; and (b) Ecuador is still eligible to receive a
small amount of ammunition under the US interim arms program at a
considerably lower price than that quoted by the Czechoslovakian firm.
5 -
Approved for Release: 2018/09/26 C03002612
it 9 AUG 1947
-Approved for Release: 2018/09/26 C03002612
waiiiii-vprootwitiso 481
CRITICAL SITUATIONS
EUROPEAN RECOVERY
UK officials estimate that at the present rate of drain on British
dollar resources the balance of the US loan will last only about two
weeks; the Cabinet has therefore decided to take unilateral stop-gap
action to forestall a break in sterling (see item 1).
GREECE
Intensified guerrilla activity will follow the recent announcement by
General Markos of the establishment of a "free" Greek government.
The guerrillas will attempt to extend their control in northern Greece
before the Greek Army can make effective use of the equipment supplied
by AMAG.
INDONESIA
Despite pressure from liberal elements in the Netherlands to curtail
military action, Dutch forces may soon reopen "police operations,"
possibly with the occupation of the Republican capital of Jogjakarta as
their objective.
KOREA
No significant new development.
CH/NA
A plan currently proposed by the UNRRA office in China, which would
withhold UNRRA supplies from military areas under Nationalist con-
trol (as well as from Chinese Communist areas), would probably in-
tensify Chinese reaction against any foreign demands for the "privilege
of interfering in Chinese affairs" as a condition for extending aid to
China.
- 1 -
. Document No. 04e
NO CHANGE in Class. 0
E] DECLASSIFIED
Class. CHANGED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
iiate : 10 APR 1975 By: Qd.q
.:1A1111
S
"PlEolii403�11.
Pi47",
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
jYJWWtUIAL
IJIILT
GENERAL
1. ry to act unilaterally to protect stez_L...--Bevin has informed
US Ambassador Douglas that, because the run on UK dollar re-
sources has accelerated so greatly that the remainder of the US
loan may be exhausted in two weeks, the Government has decided
to take immediate action unilaterally to protect sterling. Bevin
stated that while he would have opposed such a step if the issue
were purely, monetary, he is convinced that a break in sterling
would: (a) 'impair if not destroy" all US and UK efforts in the
political field over the past two years- (b) lead to increased ag-
gressive action by the USSR; and (c) have a "profound adverse ef-
fect" politically and economically in France and Italy.
Bevin emphasized that this action is to be taken as a stop-
gap to maintain the status quo while the US and the UK are review-
ing the situation and is not to be construed as a repudiation of the
financial agreement In this connection, Douglas feels confident
that Bevin was expressing the UK Government's sincere convictions.
2. US representatives in Moscow discount overt Sovi t move in Iran
The US Military Attache Moscow reports his belief that: (a) the
USSR does net intend to make an overt hostile move against Iran;
and (b) any changee which may have been made in Soviet troop
dispositions in the area were probably for the purpose of intimi-
dating the Iranian Government. US Ambassador Smith reports
that there is neither anything definite to substantiate recent rumors
of increased Soviet strength on the Iranian border nor any concrete
indication that the USSR is preparing to occupy Iranian territory.
EUROPE
3. USSR: Note rejects US view on former Axis assets--US Embassy
Moscow has received a note from the USSR contending that Soviet
acquisition of former Axis assets in Hungary, Bulgaria, Rumania,
and Finland is final. The note rejects the US contention that trans-
fers of such assets thus far have been only provisional, pending the
Implementation of peace treaties.
-2-.
UIHJJIET
fiNfljjjj
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
UUILUJ1U 1111.
Smith expects delay of ratification--US Ambassador Smith
in Moscow believes that the Soviet delay in ratifying the Italian
and Satellite peace treaties reflects a Kremlin estimate that
ratification would not be advantageous to the USSR at present.
Smith points out that through delay the USSR can: (a) avoid the
termination of armistice regimes, thus allowing more time for
the consolidation of Soviet control; (b) disturb the precarious
political balance in Italy; and (c) maintain troops in tulgaria
for continuation of the "war of nerves" on Greece and Turkey.
4. HUNGARY: Secret treaty for retention of Soviet tropis--The US
Military Representative Budapest has learned from "a usually re-
liable source" that the Chief of the Military Committet:i of the
Hungarian Communist Party recently stated that a mutual assist-
ance treaty between the USSR and Hungary is being prepared which
will include provisions for the retention of Soviet troops in Hungary.
(CIG Comment: judging by previous reports, such an agree-
ment is quite possible. It is unlikely, however, that the USSR would
make such a treaty with Hungary without making similar pacts with
Bulgaria and Rumania.)
5. BULGARIA.: Mission suggests direct a_ppeal for Petkgyz-The US
Mission in Sofia states its view that a direct appeal by the US for
clemency for Opposition Leader Petkov should be made to the
Bulgarian Government in addition to the representations already
made to the Allied Control Council.
NEAR EAST-AFRICA
6. TURKEY: Government2exploring lity of reducing armed forces--
US Ambassador Wilson reports that the Turkish Government, in at-
tempting to decide whether a reduction in the Turkish armed forces
should be made, wants to be informed of US views on the international
situation. While Wilson believes that Turkish forces should not be
reduced for at least a year, he suggests that the Government be given
- 3 -
Cj.f AL
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
UUIUlLIll
a frank estimate of the international situation, on the basis of which
it can make its own decision. Wilson feels that Turkey would then
maintain the armed forces at present strength.
THE AMERICAS
7. URUGUAY: US cattle shi ment infected with hoof-and-mouth--US
Charge Montevideo has received a note from the Uruguayan Govern-
ment stating that in a shipment of dairy cows arriving direct from
New Orleans on 17 June: (a) one animal was infected with hoof-and-
mouth disease on arrival; and (b) by 12 July, all but two of twenty-
nine animals had developed the disease.
(CIG Comment: The latest US epidemic of the highly con-
tagious hoof-and-mouth disease occurred in 1929 and was stamped
out by slaughtering all cattle in the infected areas. The US is now
cooperating with the Mexican Government in a similar slaughter
campaign in that country. Reports from Mexico several months
ago referred to a plot looking to a deliberate attempt to cause the
disease to spread to the US.)
- 4 -
"PeliPmliONEIREam.
AL
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
-For 8ECRET"
CRITICAL SITUATIONS THE C.I.A. HAS NO 03TECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
EUROPEAN RECOVERY
No. O _9
French officials favor the establishment of a customs union
through the European ecalomic recovery program (see item 1).
GREECE
The "free" Greek government proclaimed by General Markos
(Greek ifuerrilla leader) is merely provisional and military.
Markos proclamation will probably be followed by the announce-
ment of a more permanent political government which will be
recognized by the Satellites, if not by the USSR. Meanwhile, Satel-
lite representatives are withdrawing from Athens and leaving
Greece in virtual diplomatic isolation from its northern neighbors.
INDONESIA
The Netherlands Reconstruction Minister has been sent to Batavia
with instructions to Van Mook that Dutch forces must cease advances
and take only protective measures.
KOREA
The Soviet delegation on the joint Commission continues to insist
that it has no instructions to meet with US delegates for the purpose
of drawing up a statement on the present deadlock in the negoti-
ations, as,proposed by Secretary Marshall's recent letter to MolotOv.
CHINA
The Central Government's new foreign exchange plan, which recog-
nizes the depreciated open market rate for all exchange transactions
except those covering essential imports, will not succeed in materi-
ally reducing the drain on Government foreign exchange and gold
resources unless the plan is capably administered and is accompa-
nied by a revival of public confidence in the Government and its
currency.
DOCUMent No.
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO; 7$
DDA Memo, 4 Apr 77
Auth; DDA REG. 77 1763
Dale:
By: QZ21.bi
Theolim�01461441.11.0
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
11111.
APO 0 DC11Fir
GENERAL
1. French favor customs union of Western Euro --Under Secretary
Clayton reports that French -Officials strong y -favor provisions within
the European economic recovery program for: (a) financial and mone-
tary reform; and (b) the eventual establishment of a customs union.
Clayton adds, however, that there is general agreement that the UK
empire-preference system is a barrier to taking even preliminary
steps toward a customs union.
2. UK will consult US before making tro_22 withdrawals--US Ambassa-
dor Douglas reports that the UK Foreign Office has assured him that
the UK will undertake no troop withdrawals from Italy or Greece with-
out full, prior consultation with the US.
3. Strom Soviet polici in Iran expected--US Ambassador Smith in Moscow
reports his conviction that the USSR is in a position to follow a strong
policy in Iran. Re believes that the recent demands made by the Soviet
Ambassador on Prime Minister Qavam (see Daily Summary of 15 August,
item 5) create a situation which the USSR may exploit either to gain
an oil concession in northern Iran or to weaken seriously the British
oil position in southern Iran.
(CIG Comment: The USSR will undoubtedly resort to every
means of intimidation short of military force in attempting to procure
a concession. If, as seems certain, the Majlis fails to ratify the original
agreement or to grant a concession comparable to that of the UK, the
USSR will intensify its efforts to secure a government in Iran more
amenable to its objectives.)
EUROPE
4. AUSTRIA: 13(4re urges continuance of ATC talks--US Representative
Dodge at the Austrian Treaty Commission-(A�TC) urges that ATC talks
be continued during his absence in Washington for consultation (see
Daily Summary of 9 August, item 2). Dodge believes that continuance
of the discussions is necessary to: (a) establish the record of untenable
Soviet positions; (b) provide better factual basis for the US position; and
(c) facilitate agreement in the ATC among the US, UK, and France.
- 2 -
4110161431314t4iiiiimmo
CO
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1 IIIL
5. NE iiiERLANDS: 1.2T_PApbo lit averted--US Embassy The Hague
reports that according to the Chairman of the Labor Party the
threatened split within the Party (see Daily Summary of 15 August,
item 3) has been averted by the recognition that: (a) initiative in the
Indonesian dispute is no longer in Dutch hands; and (b) no further
military action would be tolerated by Labor members of the Cabinet.
6. FRANCE: Reduction of bread ration imminent--US Embassy Paris
reports that the French Government is coniffering the reduction of
the bread ration to the lowest ration since the war. The Embassy,
believing that such a reduction would be intolerable during the fall
and winter when other foods are scarce, urges that an effort be made
to expedite grain shipments in order to: (a) maintain the present
ration; (b) facilitate domestic grain collections; and (c) prevent further
unbalance in the general economic situation.
7. RUMANIA: Announcmst_ot_....ouram stabilization creates panic--
US Mission Bucharest states that the recent publication of the Govern-
ment monetary stabilization decree has resulted in panic and almost
complete commercial paralysis. The Mission has been informed by'a
It reliable source" that the Government intends to use the stabilization
program as a means of expropriating certain business and industrial
enterprises.
NEAR EAST-AFRICA
8., PALESTINE: Antk-krish riots cause alarm--US Consul General
Jerusalem reports as "highly disturbinirri�he continuance for six
successive days of Arab anti-Jewish riots in Palestine. He adds that
the riots are similar in pattern to events which in the past have led
to widespread trouble in Palestine.
- 3 -
eifkOPIR9EVINIfflimi
Approved for Release: 2018/09/26 C03002612
%se
Approved for Release: 2018/09/26 C03002612
__NSW1-t=71 UHL
THE AMERICAS
9. ECUADOR: Czechoslovakia offers ammunition to Ecuador--The
Chief of the US Army Mission inE Tuador has told US Ambassador
Simmons that: (a) Czechoslovak salesmen have offered 30 million
7.92 cartridges to the Ecuadoran Government and have promised
delivery of 5 million rounds within 30 days; (b) only an immediate US
offer of comparable materiel at "substantially cheaper prices" can
prevent the purchase by Ecuador; and (c) the Minister of Defense
favors the buying of US ammunition and promises to delay the con-
tract pending new information on US prices. The Chief of the US
Mission believes that the Czechoslovak offer is bona fide.
10. PERU: US-manufactured pints lackthpare Commanding
General Caribbean Air Command reports that many Peruvian Air
Force planes of US manufacture are now grounded for lack of spare
parts. He comments that unless a solution is found to this general
problem the goodwill initially created by making US surplus military
equipment available to Latin American countries will be destroyed.
- 4 -
! P fHOft1T p
Approved for Release: 2018/09/26 C03002612
--
Approved for Release: 2018/09/26 C03002612
4001411*ii0S144,00
GENERAL
16 fiLIG
459
1. AustEgbar..2L.0 212DRto trade engineemists�US
'Naval Attache Melbourne reporTs that Communists have maiivered
the Australian Council of Trade Unions into supporting a blanket
embargo on Dutch trade. The NA believes that the Australian Prime
Minister has disregarded fundamental principles by merely request-
ing the Unions to modify the ban (permitting trade with the Nether-
lands but not with the NEI) instead of questioning the right of private
persons to direct Australian policy. The NA declares that Australia,
having offered to mediate in the Indonesian dispute, has now intervened
in favor of the Indonesian Republic.
2. US still favors settlement of ..Piliglo-Egnignya rene otiaition�
The Department of State has informed the U-rdelegation to t e g�
of its view that the Ang,losEoptian dispute can best be resolved by
an SC recommendation that the two disputants renegotiate and report
later to the SC.
3. UNSCOPITptinhht_edly favors an independent Palestine�The British
PiiCOffibelias ia6FiTea ITST:iiigiFs7Widiiilikt: (a) the UN
Special Committee on Palestine (UNSC OP) apparently favors the
establishment of an independent Palestine, although there is no indi-
cation whether the delegates are considering one or two Palestine
states; and (b) it is increasingly apparent that the Grand Mufti is
determined to test his strength by promoting a campaign of violence
by the Arabs in Palestine, possibly before the end of the year.
EUROPE
4. ITALY: thirn_ithtzir ts increased aid�US Ambassador Dunn urges a
substantial increase in food shipments to Italy, preferably of wheat,
to arrive as soon as possible and to reach a peak in March. Dunn
doubts whether the democratic leaders can defeat the Communists
at the April 1948 national elections if Italian expectations of extensive
US aid have not been fulfilled before that time.
Document No. 040
- -
ftroytims***444-iiiii.
CO 1 NTIAL
NO CHANGE in Class.
DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR 1978 By: 69 9:
�
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
I.H1LflUiL
44013111.****1410
'THE AMERICAS
5. CUBA: US Navy Reconsance locates military stores�According
to the US Naval Base at Guantanamo, Cuba, aerial photographs re-
veal about 400 men, military stores, and camouflaged buildings on
a small island off the northern coast of Cuba. The report also states
that an LCI and three other small vessels were nearby. (The US
Naval Attache Havana had reported previously that Dominican revo-
lutionists were on this island.)
6. PARAGUAY: Relief of CaOlal confirmed�The US Military Attache
Asuncion has reported tharon 14 August loyal troops reached the
city from the north and "relieved the critical situation."
-2
"fiffrudiAttlitNitimm
Approved for Release: 2018/09/26 C03002612
t
UUHLID
Approved for Release: 2018/09/26 C03002612
CRITICAL SITUATIONS
EUROPEAN RECOVERY
US officials believe that new proposals to France will clear the way
for the economic revival c:6 we7Aern Germany (see item 1). The
Department of State .believes that the nations of Western Europe
must adjust themselves to basic changes in their international posi-
tion and must stress self-aid in any economy program to be accept-
able to the US.
5 AUG 1941
458
GREECE
A TRiblic announcement of the. establishment of a "free" Greek gov-
ernment, accompanied by intensified guerrilla activity, is believed
to be foreshadowed by continuipg rumors of the formation of such
a government, by Gromyko'S t4cent outhurst in the Security Council,
and by veiled Soviet threats to sever diplomatic relations with
Greece.
NDONE S
As a means of settling the Indonesian question, the Netherlands
Government now favors arbitration by three representatives, one
each to be appointed by the Republic and e Dutch, and a third to
be chosen by both sides. Firm in its opposition to arbitration by a
� single third party, the Republican Government has broadcast an
appeal to the Security Council to conduct a plebiscite on the future
of Indonesia.
KOREA
No significant new developments.
CHINA.
The Chinese, unable to fill their immediate needs for aircraft
ammunition by purchases from the US Government, are now attempt-
ing to obtain such ammunition from private manufacturers in the
US (see item 6).
TOP OLCLl1-
C L
Document No.
039
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Ark
Date: h pxr Insi By; 0 9
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1111' [1l3IJItILIT
GENERAL
1. US officials' recommendation for eement with France on Ruhr--
Under Secretary Clayton and US Anabass dors Doug as an a
fery recommend, on the basis of French suggestions, that the US
inform the French Government of its willingness to join with France
and the UK in establishing by the German peace settlement an in-
ternational board which would allocate Ruhr coal, coke, and steel
and limit German consumption to peaceful uses. The US officials
recommend further that this board be composed of representatives
from the US, UK, France, Benelux, and Germany. The officials
add that in return the French will be expected to: (a) raise no
objection to the revised level of industry agreement; (b) agree to
its early publication; and (c) take steps net later than the close of
the Nove er meeting of the CFM to merge the French Zone with
the US-U1 Zones Germany. Clayton, Donglas, and Caffery believe
that if action can be taken along these lines, no important pr dems
will arise with the French on the level of industry agreement.
2. Complications in US-Porta: .:ese air ne otiations�US Ambassador
Wiley in falY reports his be e at e oiguese Foreign
Minister has been unable to carry out his intentions to facilitate
the agreement with the US for air rights in the Azores. Wiley
points out thatoalthough the Foreign Minister once asserted that the
Portuguese would henceforth be politically oriented toward the US
and implied that there ould be a complete break with the "Portu-
guese historic affiliation" (presumably the UK alliance), he has
recently absented himself from discussions. Wiley believes that
the ex-Secretary General of the Foreign Ministry, Mathias, and
possibly the Minister of War,
who advises Premier Salazar on
aviation matters, were able to get Salazar's approval of the "oral'
formula" which contained P rtuguese proposals unacceptable to
the US.
(CIG Comment: These developments indicate a continuation
of the tug-of-war between two opposing Portuguese factions. Salazar
has probably not yet made up his mind on the ultimate Portuguese
attitude. Unless definite progress in the Azores negotiations is
achieved almost immediately, it will be necessary to discontinue
US military air operations through the Azores on the existing basis.)
- 2 -
lipeppatim
cU :IM
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
yYJU4ttH I la
TOP ID1JUIIDT
EUROPE
3. NETHERLANDS: Split within Labor Party =Lye imminent--US
Embassy The Hague reports that tension within the Dutch Labor
Party may lead to an open split over the Government's "practical
abrogation" of the Linggadjati Agreement with the Indonesian Re-
public. The Embassy adds that repercussions may affect the make-
up of the present Government.
4. HUNGARY: Recommend US-UK action before elections�US Minis-
ter Chapin 1nBudapest(in greernent vrith his British colleague)
recommends that joint US-UK action be taken before 31 August in
order to provide a basis for non-recognition of the Hungarian
national elections. Chapin suggests: (a) immediate protests to
Hungary concerning reported widespread abuses of disenfranchise-
ment procedures, estimated to affect at least 20% of electorate
(see Daily Summary of 11 August, item 2); 21.ad (b) joint proposals
to the Allied Control Commission for postponement of elections.
NEAR EAST-AFRICA
5. AN USSR a_ltalts.ltagadinASJElet -Iranian oil agreement--
Prime Minister Qavam has informed US Ambassador Allen that
Soviet Ambassador Sadchikoff has formally insisted that the original
proposal for the formation of a joint Soviet-Iranian oil company be
presented to the Majlis promptly for ratification. Qavam replied to
Sadchikoff that the Majlis would unquestionably reject the original
terms and suggested that the USSR enter into further negotiations.
Sadchikoff rejected this suggestion and stated that if Iran refuses to
ratify the original agreement, his Government will immediately
demand a northern concession similar to that held by the British
In the south. (The Anglo-Iranian Oil Company is an all-British
company in which the British Government owns a controlling inter-
est.) Allen expresses his belief that the USSR realizes it will be un-
able to obtain any kind of Iranian oil concession and is consequently
maneuvering to save face and to make more difficult the British oil.
position in Iran.
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
JaUftFWC11 IML
FAR EAST
6. CHINA: Iartion on request for aircraft ammunition--
With reference to Chiang Kai-shek's inquiries about the purchase of
aircraft ammunition from the US (see Daily Summary of 2 August,
item 7), the Department of State has authorized Ambassador Stuart
to state that: (a) no facilities exist for a temporary loan from US
Army stocks; and (b) the Army at present has no surplus stocks
available. The Department, noting that the Chinese are now ne-
gotiating with private ammunition dealers in the US, authorizes
Stuart to inform the Chinese Government that it is at liberty to
procure ammunition through such channels.
7. PHILIPPINES: Transfer of war materiel to Philippine Government--
The Department of State, indicating concern over requests for trans-
fer of large amounts of ammunition, bombs, and military stores to
the Philippine Government, has instructed US Embassy Manila to
determine specifically the use to be made of the materiel. The De-
partment calls attention to the possibility that the falling of war
materiel into undesirable hands in the Philippines and elsewhere
will embarrass the US.
(CIG Comment: The Philippines have been, since the end of
the war, a center for illegal arms traffic which has been effective
in sustaining armed conflicts in southeast Asia.)
THE AMERICAS
8. CHILE: impendinicrisis in Chile--US Ambassador Bowers reports
that Chilean armed forces are trying to operate the country's postal
and telegraph services in the face of a Communist-led strike and
that a presidential spokesman has asked the striking employees to
return to their jobs because a "coup d'etat is being prepared that
will endanger the country's democratic regime." Bowers describes
the situation as chaotic.
- 4 -
CO
j--)T?rn
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
101' OLIUIID'IJ.
1 ill
9. PARAGUAY: Deve ients In Civil War.--US Charge Trueblood
reports that a Rebel break-through into Asuncion in the early
morning of 14 August was checked by the "opportune arrival of
some 1,000 mounted troops in battle trim belonging to Govern-
ment's First Corps." (The First Corps IS the Goverme nt force
that occupied Concepcion in northern Paraguay. Troops of this
corps are reported to have been marching to the relief of
Asuncion.) However, the US Military Attache, reporting the
same day, does not mention the "1,000 mounted troops" and
states that the actual strength of the expected Government re-
lief from the north is unknown.
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
4iiikle*****Ehlem
,11 14Ub W41
457
THE C.I.A. HAS NO OBJECTION
C2ITITCAL SITUATIONS TO THE DECLASSIFICATION OF
THIS DOCUMENT.
EUI/OPEAN RECOVERY
No. t7C9
Bfdault has retreated from his former position concerning inter-
national management of the Ruhr; US officials recommend that the
proposed tripartite talks be suspended until some agreement has
been reached with Bidault (see item 1).
GREECE
No significant new developments
INDONESIA
The Indonesian Republic will prole& to the Security Council against
the admission of delegations from the Dutch-sponsored states of
West Borneo and East Indonesia to Council hearings on the Dutch7
Indonesian dispute. Us Consul General Batavia warns of th.re, diffi-
culties of securing Republic i nplementp.tion of any dectqions pro-
duced through US good. offices (see item 7).,
KOREA
No significant rtew developments,.
CHINA
No significaRt. ziew devoprne.nts
Document No. 018
NO CHANGE in Class. 0 .situoil
0 DECLASSIFIED
Class. CHANGED TO: TS Skr*-
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR Ilia BY: 0_03
JONBfNTi
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
GENERAL
1. Bidault raises new difficulties on Ruhr settlement--Under Secretary
laytr�TtraiinTS�rniai-sadors�raireiTinsinrou�kr�as report from Paris
that French Foreign Minister Bidault has retreated from his former
position on the Ruhr question and has insistedlin an informal con-
versation, that he does not favor international control over Ruhr
management (see Daily Summary of 8 August, item 1). Bidault em-
phasized that French acceptance of the new level of industry agree-
ment is contingent upon: (a) guarantees that the Ruhr industrial
capacity will never again be used for military purposes against
France; and (b) some arrangement assuring that Western Europe's
access to Ruhr production will not depend upon the will of Gprmany.
The US officials fear that unless there is agreement with
Bidault prior to the forthcoming tripartite talks, French opposition
to the level of industry agreement will be so violent as to involve
the possible fall of the present French Government and the loss of
French support and leadership in the European economic program.
The US officials advise therefore that no date be fixed at present
for the London conference.
2. US re ly to Soviet counter proposals r rding Japanese Peace Treaty--
The epa merlriln a repy
22 July regarding the forthcoming Japanese Peace Treaty, has main-
tained that: (a) the agreements reached at Cairo, Yalta, or Potsdam
do not invest the CFM with any authority concerning the Treaty; (b)
the establishment by the Moscow Conference of the Far Eastern
Commission recognized the primary interest of the eleven powers
In the Commission in all Japanese post-surrender policies; (c) since
only an exchange of views on such a conference was desired, any
interoretation of unilateral action by the US is erroneous; and (d) the
proposed conference will decide its own procedure. The Department's
leply expresses the hope that, because the other nine interested gov-
ernments have accepted these proposals, the USSR will also accept.
The Department has indicated to its embassies that if the
USSR does not reply within two weeks, the US will consider dispatching
formal invitations for a Japanese Treaty Conference to the other nine
powers, such a conference to be held in Washington on 8 September.
- 2 -
414Mikirtii0E400+.10
CON
Approved for Release: 2018/09/26 C03002612
Approved foirial6elease: 2018/09/26 C03002612
a, UK desires strategic bases inSissj_iaica--US Embassy London re-
ports that the UK Foreign Office and the War Office are seeking
some means of obtaining strategic bases in the Cyrenaica area. The
Embassy adds that in the opinion of the Foreign Office no satisfactory
solution to the Italian colonies problem will be found by the CFM and
that the problem will eventually have to be placed before the UN.
(The Daily Summary of 5 July, item 5, reported the insistence of the
UK General Staff that Cyrenaica bases were absolutely essential to
their strategy, owing to forthcoming troop withdrawals from Egypt
and very possibly from Palestine.)
4. Debt.sletault holds jp_ptsumption UK-Soviet trade talks--The UK
foreign Office has advised US Embassy London that the USSR has
been firmly informed that trade talks cannot be resumed until the
Soviet debt default of 1 August is cleared up. The British are re-
ported to feel increasingly that the USSR will not have grain avail-
able for export.
(CIG Comment: This information differs from an Embassy
report of 11 August indicating a British move to reopen trade nego-
tiations,. The reported British initiative appears actually to have
consisted only of asking the Soviets to pay the defaulted sum, to
with a proposed commitment that the terms of any new pay-
ments agreement would be retroactive to the date of collapse of the
last Moscow talks.)
5. US objections to pro State Department has
pointed out to US Ambassador Wiley in Lisbon that the text of a
recent Portuguese memorandum regarding US air rights in the
Azores (see Daily Summary of 28 July, item 2) would exclude
US Navy transport aircraft and might exclude all combat aircraft.
The Department proposes that Wiley inform Portuguese officials,
if they cite the US-Icelandic agreement in arguing against the use
of military personnel, that the use of civil personnel in Iceland has
proved most unsatisfactory and that the US hopes for a much more
satisfactory arrangement with Portugal. The Department suggests
that Wiley approach Premier Salazar directly if necessary.
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
011D
_1,04NR-inn
EUROPE
6. USSR: Further delay in ratification of peace treaties�The Soviet
Government has Informed USof its view that
the US, the UK, the USSR, and France cannot deposit ratifications
of the Italian and Balkan peace treaties until the treaties have
been ratified by the ex-enemy states. Smith points out that as
recently as January the USSR supported an opposite view. The
Ambassador believes that the USSR is attempting to delay rati-
fication because it wishes to maintain its armistice regime in
Hungary until the scheduled elections occur in that country.
(See Weekly Summary of 25 July, page 1, for additional consider-
ations prompting Soviet obstruction.)
FAR EAST
7. NEI: Foote warns acce tance of US offices unlikely�US Consul
General Foote in Batavia be eves at e ones an Republic
will not accept the US offer of good offices unless it is endorsed
by the Security Council because it wishes arbitration by repre-
sentatives of countries selected by the Republic. Foote warns
that no decisions produced through US good offices could be
implemented by the Republican Cabinet without the agreement of
Republican military leaders.
THE AMERICAS
8. DOMINICAN REPUBLIC: Government re Js Cubanprotest--
The Cuban Charge in Ciudad Trujillo has informed US Ambassador
Butler that the Dominican Government has rejected a Cuban pro-
test regarding alleged Dominican press attacks on President Grau
of Cuba. The Charge believes the Dominican Government is try-
ing to force a break in relations with the Cuban Government, but
he indicates that the Cuban Government does not intend to permit
such a break.
-4
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
WINKIITIAL
41046-mo@ticiatin
9. PANAMA: Defense sites ne ottations--US Ambassador Hines, in
reply to a request for comments on a War Department draft for a
new US-Panama defense sites agreement, observes that the draft
would entail an "awkward" withdrawal from the US commitment
to "joint authority in some form." Hines believes that such a
withdrawal would "inevitably lead to public charfes of bad faith"
and that delay "can only prejudice our position.'
Approved for Release: 2018/09/26 C03002612
ei* CP t1UU tan.,
Approved for for Release: 2018/09/26 C03002612
CRITICAL SITUATIONS
EUROPEAN RECOVERY
US Ambassador Douglas is pessimistic concerning the effectiveness
of the measures taken by the UK to remedy the present economic
crisis (see item 2).
GREECE
AMAG Chief Griswold reiterates his belief that no increase in the
permanent size of the Greek Army should be permitted (see item *�
458
INDONESIA
Despite vigorous protests from the Netherlands Ambassador and the
British, French, and Belgian delegates, representatives of the Indo-
nesian Republic have been permitted to participate in Security Council
discussions. As a counter-move, Netherlands Ambassador van Kleffens
has proposed that the same privilege be given to delegations from the
Dutch-sponsored states of East Indonesia and West Borneo.
KOREA
In an effort to prolong Joint Commission negotiations until Foreign
Minister Molotov replies to Secretary Marshall's letter, the US dele-
gation has proposed that oral consultations be abandoned and that plans
for a provisional government be evolved from the questionnaires filed
by applicants for oral consultation.
CHINA
The US note protesting Soviet delay in implementing the Sino-Soviet
Treaty of 14 August 1945 will strengthen the Chinese National Govern-
ment in its negotiations with the\USSR on the Dairen issue (see item 7).
- 1 -
.VaoUmOnt No. 0
NO CHANGE in Class. 0 AAggidg
0 DECLASSIFIED
Class. CUNGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA FG. 77/1763
Date: I C APR By: deg
0141".101.11661iiim
IDERDIr
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
.1)11111UU
GENERAL
1. UK seeks common front with US tnn_c_m2.--A high UK Foreign
Office official has told US Embassy London that Bevin has been keenly
disappointed by the lack of clear-cut US support of the UK in the
Egyptian case now before the UN. The Foreign Office fears that fail-
ure of the US and UK to present a common front on the principle of
the sanctity of treaties may result in adverse long-range effects in
the Near East.
EUROPE
2. UK: Douglas' views on economic crisis--US Ambassador Douglas
considers economirgiffairon in the UK must deteriorate
even further before the Government is "forced into adequate remedial
measures"; (b) while the British people were ready for "blunt and
dramatic" remedies, they got a series of "vague expedients"; and
(c) the Government's plans seem to have been hastily conceived, ill-
considered, and unlikely to succeed unless "very material help" is
forthcoming from the US. Despite his pessimism, however, the Am-
bassador feels that the Government's program may possibly succeed
If it is carried out ruthlessly and courageously.
MA's views of effect of troop reductions overseas--US Mili-
tary Attache London reports his conviction tat any appreciable
reduction of UK military forces overseas will require a "softer"
defense policy and foreign policy, despite Attlee's official statement
that the planned reductions (some 40% by 1 April 1948) imply no
policy changes. The MA adds that substantial withdrawals of troops,
unless commitments are assumed by the US, would tend to create
partial vacuums offering opportunities for the USSR to gain the
Initiative.
3. GREECE: AM____A_G_Lvt. oses g Greek Army--AMAG
Chief rei
to in-
crease the permanent size of the Greek Army because: (a) in-
creases made now would not improve the fighting strength of the
-2
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
UUIiUth1iAL
Army for at least three months; and (b) the General Staff is not
making full use of the present strength of the Army and is too
much concerned with political considerations. The military sec-
tion of AMAG believes that "present Army strength properly and
energetically utilized can decisively defeat the present strength
of the bandits."
4. HUNGARY: Sug;estsbr1nginggian case before the UN--
US Minister Chapin in Budapest reportstoi�Wra�he op onTA
Undersecretary of State Pongracz (a member of the Conservative
Smallholders Party), he forthcoming national elections of 31
August represent `the last opportunity for the US to halt the
Soviet-Communist drive in Hungary." Pcmgracz declared that
probably the only effective measure for the US to take in the situ-
ation would be to bring the Hungarian case before the UN.
NEAR EAST-AFRICA
5. IRAN: BritislLEE2pse Iranian air merger--According to US
Ambassador Allen in Tehran, British Overseas Airways Corpo-
ration (BOAC) has proposed that Iranian Airways (Iranair) be
merged with a hitherto inactive Iranian airline, and that BOAC
operate the consolidated concern with British aircraft under a
management contract.
(CIG Comment: US interests in Iranian Airways, which
have consisted of 10% ownership and a management contract
by TWA, would be eliminated by such an agreement.)
FAR EAST
6. FRENCH INDOCHINA: Meaning of Bollaert's departure for --
US Consul O'Sullivan in Hanoi reports his belief that French High
Commissioner Bollaert apparently had planned, before his sud-
den departure for Paris, to present terms to the Vietnam Govern-
ment, the almost certain rejection of which would justify a .
- 3 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
conclusive military campaign during the coming dry season.
Consul O'Sullivan feels that Bollaert desires to defend this plan
personally before officials in Paris who are divided on French
policy in Indochina.
7. CHINA: US protests Soviet dela on Dairen--The State Depart-
ment has Instructed Embassy Moscow to transmit to the
Soviet Foreign Office a note again calling attention to the delay
in opening Dairen to international commerce as a free port in
accordance with terms of the Soviet-Sino Treaty of 14 August
1945. The Department's note reminds the USSR thatalthough
two years have passed since the Japanese surrender, repre-
sentatives of US firms have not yet been allowed to visit their
properties in Dairen. The note also states that until the USSR
and China reach agreement on Dairen, the US holds the USSR
responsible for treatment accorded to US interests there and
requests information on the steps which the Soviet Government
will take to assure equitable treatment to US interests.
- 4 -
dfleOP�Mili�11661400mi
COIBBEHAr
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
TOP
CRITICAL SITUATIONS
1 2 AUG 1947
455
E URSWE AN RE COVE RY
Bevin has agreed to tripartite discussions of the German coal and
steel problems on the condition that there be no implications that
the French will have power of veto.
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION or
GREECE THIS DOCUMENT.
No significant new developments.
INDONESIA
0 0.9
No.
The Dutch have proposed to set up immediately an interim federal
government composed of Dutch-sponsored Indies states and have
invited the Indonesian Republic's cooperation. This government
would administer areas occupied by the Dutch in recent weeks in
addition to the Dutch-sponsored states.
KOREA
Secretary Marshall has addressed a personal letter to Molotov
expressing concern over the stalemate in the joint Commission.
The letter suggests that by 21 August a report be made by the
Commission on the present status of its deliberations..
CHINA
Even if the National Government's military power in north China
Is strengthened, the military advantage in Manchuria will probably
remain with the Chinese Communists unless the National Govern-
ment carries out major reforms and receives substantial mili-
tary assistance from abroad.
- 1 -
Document No.
NO CHANGE in Class. 0
0 DECLASSIFIED CIANGED TO: TS
DDA Memo, 4 Apr 77
Auth: 77J7...._.____�
tu oiato BY: 0.9�.
�1449,1111#1110#1401iiiie
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1 ifiL
gifiieleoleieftrips
EUROPE
1. ITALY: Seeks equali with France in aid pr.: am--US Embassy
Rome repo I e talian ore ice s tructed its dele-
gates at the Paris Conference to insist upon the principle of equality
between France and Italy in the aid that may be sought under the
European recovery program. The Embassy believes that these in-
structions may have been elicited by representations made in Rome
recently by northern Italian industrialists, supported by the General
Confederation of Labor.
(CIG Comment: The support of the Italian industrialists by
the Communist-led General Confederation of Labor prqbably indicates
that the Communists are maneuvering in this way to create disharmony
within the Paris Conference.)
FAR EAST
2. FRENCH INDOCHINA: Postponement of High Commissioner's speech--
US Consulate General Saigon reports the postponement of the presenta- '
tion of new French terms to Vietnam by M. Bcillaert, French High Com-
missioner for Indochina. US Consul Hanoi has been informed by the
International Red Cross there that M. Bollaert proposed returning to
Paris on 13 August, apparently to confer on French policy. US Consul
Saigon believes that contributing factors to French indecision may be
the Indonesian situation and Leon Blum's recent statement on hidochina.
(CIG Comment: Blum, who opposes the current French policy
In Indochina, expressed in a recent editorial his belief that negotiations
must be undertaken with authentic representatives of the Vietnam
people and that Ho Chi Minh remains qualified to speak for the Viet-
namese.)
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
f 041�4*******Withm
CRIT3CAL SITUATIONS
454
EUROPEAN RECOVERY
Bidault has accepted the opportunity to confer with US and UK officials
on the level of industry in the US-UK Zones Germany.
GREECE
Recent reports Indicate increased political activity in the Balkan
Satellite States directed toward the formation and support of an "inde-
pendent" Communist Greek government.
INDONESIA
The Netherlands Government will not consent to the appearance of
Yr.donesian Republican representatives before the Security Council
(see item 3).
KOREA
No sfIgnificant new developments.
CHINA
Chinese Nationalist assertions�that the real strength of the Chinese
Communist Party and its most effective pro-Soviet leaders are in
Manchuria�appear to be part of the current Nationalist effort to
develop political and military objectives in Manchuria which would
warrant US support.
Document No.
NO CHANGE in Class.
0 DECLASSIFIED
CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Class.
Date: 1:11�OR 1978 By: 00.9
- 1 -
Approved for Release: 2018/09/26 C03002612
INS
Approved for Release: 2018/09/26 C03002612
----17U1111 IULII I Mi.
44.10t9112.1
GENERAL
1. No immediate UK troo wftpiIdrawals from Greece or Italy--Bevin
has informed Douglas that the UK Government is
contemplating no troop withdrawals from either Greece or Italy
"In the immediate future," but that he expects pressure from the
left wing of the Labor Party favoring such withdrawals.
EUROPE
2. HUNGARY: 900 000 voters disenfranchised before elections--US
Minister Chapin in Budapest states that a major scandal has deve-
loped over the disenfranchisement of an estimated 900,000 voters.
These persons are "disqualified" from voting in the 31 August
national elections by direction of the Communist Minister of Interior
on the grounds that they are Fascists.
FAR EAST
3. NEI: Dutch o ose appearance of Rsmblican officials before SC--
US Embassy ThTIlague hasbeen informed a Dutch official that
his Government will not consent to the appearance of Republican
Foreign Minister Salim or former Premier Sjahrir before the
Security Council to present the Republic's position. Such repre-
sentation, the Dutch believe, would recognize Republican sovereignty.
THE AMERICAS
4. ARGENTINA: Forel. Minister sromises Argentine support to US--
Argentine Foreign Minister Bramuglia has informed US Charge Ray
that Argentina "must and will" support the US internationally, and
that any indications to the contrary are solely for domestic con-
sumption. Bramuglia adds that the Argentine Government: (a) before
the Rio Conference, would like to discuss with Secretary Marshall
and Assistant Secretary Armour a possible US-Argentine anti-Com-
munist agreement, preferably to be kept secret; (b) favors separate
- 2 -
iftsTs01161136�4101411m.
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
bU
pook-wielmar--
Slo treaties for intra-Hemisphere and extra-Hemisphere aggression;
nd (c) would welcome steps by the US toward a special economic
nTlYerence prior to the Bogota CorVerence.
(CIG Comment: Joint action on aggression by American or
len-American Latirins alike was agreed upon for the first time at
the Chapultepec Conference in 1945. The Argentine position on
paeate treaties if accepted by the Rio Conference, would cancel
progress achieved In this matter at Chapultepec.)
PARAGUAY: ll.,ebels ma occu V Asuncion--US Charge Trueblood
in Asuncion ritpeileclro ugetrit-76rditerioration in the Gov-
ernment's military situation; and (b) Government loss of ground at
a rate that might result in rebel occupation of Asuncion before the
arrival of reinforcemeas from the north.
-3 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
w-,
9 RUG 1947
433
THE�C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
GENERAL
No. O09
1. UAzsmiii,2Liskjautgazolan,.sliat F/EL2dth_mcsjagalSt-- The
Department of State has instructed US Ambassador Caffery to
inform Bidault that the US is prepared to confer jointly with France
and the UK on a possible revision of the level of industry in the US-
UK Zone Germany. Caffery is to assure Bidault that the fullest
consideration will be given to French views, but is to explain that
without a fusion of the French Zone in Germany with the US-UK
Zone, all final decisions regarding German industry in the bizonal
area must remain the responsibility of the US and the UK.
Etraitallialt-PeaLianc.LegrailMaliga2a211-Caffery reports
that technical committees of the Paris Conference have been halted
In their work by the reluctance of the French delegates to participate
In the preparation of reports based on the possibility of an increase
of steel production in the US-UK Zone Germany.
EUROPE
2. AUSTRIA: taItgazwentatiyALQapiled from ATC--The Department
of State has requested US Representative Dodge at the Austrian
Treaty Commission (ATC) to return to Washington at once for
consultation. Dodge is instructed to announce at the next ATC
meeting that because of Soviet unilateral action in seizing Austrian
industrial plants and Soviet indifference to factual material pre-
sented by other ATC delegates, the Department considers it neces-
sary to consult with Dodge about the future work of the ATC.
FAR EAST
3. NEI: Dutch favor US mission -- US Embassy The Hague reports
that the Netherlands Government now regards the Linggadjati
Agreement as abrogated but still considers itself "morally bound"
to maintain the principles of the agreement as a basis for future
dealings with the I donesian Republic. The Netherlands Foreign
1
eitii0+6,1144#11,10416
co iv
Document No. 1'4
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CJANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA BEG. 77/1763
Date: 1 0 APR 173 y; 00.9
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
___.---40111111L11.11 I It%
Office continues to oppose arbitration of the Dutch-Republican
dispute and hopes that the US will send a mediating commission
to Indonesia as soon as possible. The Foreign Office believes
that the Republic would accept this US action despite its request
that US good offices be used only to secure arbitration by an inter-
natiohal commission.
US to repeat offer of good offices to Republic�The State
Department has instructed US Consul General in Batavia to repeat
the US offer of good offices to the Republican authorities. The
Consul General is to point out, however, that the US does not intend
that other nationsparticipate in the exercise of these good offices
which are intended only to bring both parties together to work out
a mutually equitable settlement.
4. CHINA: lessigejmffigsissgarialjauria�US Embassy Nan-
king has been informed by a source "believed reliable" that mili-
tary and political control in Manchuria will shortly be unified under
the overall command of General Chen Cheng, present Chief of Staff
of the Central Government Army. US Embassy comments that while
such a move to eliminate the present inefficient duality of control
would indicate that the Central Government is attempting construc-
tive action in Manchuria, these measures would not solve the pres-
sing military problems M Manchuria or end major criticism of
that Government's political administration there.
-2
Approved for Release: 2018/09/26 C03002612
4,060tlila 11/�06.au a �� �
Approved for Release: 2018/09/26 C03002612
N 1 � Fe EV Li, rilo
CRITICAL SITUATIONS
EU119PEAN RECOVERY
Bidault proposes an international board to allocate the production
of the Ruhr (see item 1).
GREECE
While guerrilla activity continues on a slightly reduced Scale,
unconfirmed reports point to large troop concentrations and
movements along the Greek border in the Satellite States.
IND ONE SIA
The Indonesian Republic has accepted the US offer of good offices
but has requested that those (Allem be used to secure the dispatch
of a UN arbitration commission to Indonesia as soon as possible.
KOREA
The US delegation to the oint Commission reports that further
discussion in the Commission along present lines has become
absurd.
CHINA
No significant new developments.
-1--
452
Document No. 0
NO CHANGE in Class. ri
E] DECLASSIFIED
Class. CHANCED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR iCIM BY: 009 ,
ti 451 11 A** I a lib
CFIDE
Approved for for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
IMEM1AL
TOT' UflCItETL
GENERAL
1. Bidault favors international board to allocate Ruhr products�Under
Secretary Clayton has been told by Foreign Minister Bidault that
France would not object to any US-UK agreement for the level of
industry in western Germany, provided the French had assurance
that the resources of the Ruhr would not again be employed in war
on France. Bidault believes that such assurance could be obtained
by the creation of an international board (composed of representatives
from the US, UK, Benelux, France, and eventually Germany) to allocate
the production of the Ruhr.
Clayton expresses the opinion that Bidault's suggestions
should be accepted by the US as the basis for further conversations.
Clayton believes that "France is the key country of the sixteen par-
ticipating in the Paris Conference,tiP and that French withdrawal or
the fall of the present government, as a consequence of French dis-
satisfaction relating to Germany, would probably gravely jeopardize,
the whole European recovery program.
2. VS believes Greek problem should go to UN General Assembly�The
�4,01 State Department has notified the US delegation to the UN that it is
considering a statement informing the majority members of the
Security Council of the US conviction that: (a) the Greek problem
must be carried to the General Assembly, if the SC is unable to
afford Greece the necessary protection; and (b) the General Assembly,
In the event of the SC's continued failure to act, will exercise its
powers "to the limit" for the protection of Greece (see Daily Sum-
mary of 7 August, item 2).
3. Douglas to stress US views on UK withdrawals�The Department of
State has instructed US Ambassador Douglas to reiterate to Foreign
Secretary Bevin our views concerning the unfortunate effects of an
immediate withdrawal of British troops from Greece and Italy.
4, UK to postpone declaring end of war with Austria--The Department
of State has been informed by the UK Embassy Washington that the
- 2 -
"1684inSigOialtiiirim
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
1 L
1+110010�4101+0141411=
Foreign Office will postpone any statement terminating the "state
of war with Austria (see Daily Summary of 7 August, item 3).
The UK is now waiting for a Soviet reply to the last UK query on
Soviet ratification of the Italian and Balkan Treaties. If the Soviet
reply is unsatisfactory, or if no reply is received within a reason-
able time, the UK will then issue statements simultaneously termi-
nating the state of war with Italy and Austria.
EUROPE
5. CZECHOSLOVAKIA: Soviet 1nfr rnent oi" sovereign criticized �
US Embassy Prague reports that the lea er ot e m eraxe auioie
Peoples Party made a public statement recently declaring that his
Party intends to resist Communist domination as long as circum-
stances permit. The Party ledder is reported also to have made an
"implied but quite obvious criticism of Soviet limitations on Czecho-
slovak sovereignty.'"
NEAR EAST-AFRICA
6. MAN: 9.vam encla ers position as Prime Minister--US Ambassa-
dor Allen reports that Prime Minister vam marifave lost his
chances of remaining Prime Minister by permitting Muzafar Firuz
to continue as Ambassador in Moscow. Allen believes that the Shah
now will almost certainly endeavor to remove Qavara.
(CIG Comment: The Shah is bitterly opposed to Firuz, who
has consistently urged Qavam to appease Moscow. Firuz claims
that the USSR will probably take drastic action if Iran rejects the
Soviet oil proposals.)
d1101141134.16161411.4
Approved for Release: 2018/09/26 C03002612
IJUIVI Ha:
Alin'
Approved for Release: 2018/09/26 C03002612
ECflET
CRITICAL SITUATIONS
f [11114 lug
EUROPEAN RECOVERY
US officials meeting in Paris consider that US objectives in Western
Europe may not be attained without further US aid this year (see
item 1).
GREECE
Dwight Griswold and Greek Government leaders in Athens are
discussing the Government's recent request for greatly increased
US military supplies to meet the growing guerrilla threat.
NT.),ONESIA
The press agency of the Indonesian Republic has released a state-
ment by Premier Sjarifoecklin concerning the Republican attitude
toward setdement of the Oispute. (see item 5). Dutch authorities
accuse the Republic of violating the cease-ftre order, paralleling
earlier Republican charges of new Dutch operations.
:KOREA
The Joint Commission continues deadlocked as the Soviet delega-
tion accuses the US of causing delays and violating joint decisions.'
CHINA
The Chinese Nationalist Command is apparently becoming increas-
ingly concerned over the probability that the Chinese Cpmmunists
will launch strong offensives in Manchuria and north China within
one or two months.
- 1 -
Document No.
451
NO CHANGE in Class. El
.�4
0 DECLASSIFIED
Class. .CHAJ:IGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 10 APR 1978 By: 00.9
114401aersioWISIiiiime
,11A1 BEVIC
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09726 C03002612
tau 111 I 114L
'Frvn 6E41+01#41�
GENERAL
1. US officials recommend further US aid to Euro .e in 1947--Under
Secretary Clayton and Ambassadors Douglas, Caffery, and Murphy
believe that in the absence of additional assistance from the US this
year, conditions in the UK, France, and Italy may so deteriorate
that US objectives in Western Europe and elsewhere may become
unattainable. They suggest, therefore, that every conceivable avenue
of providing interim assistance be carefully reviewed, possibly in-
cluding the calling of a special session of Congress.
These US officials suggest, furthermore that the US inform-
ally present specific recommendations to the Paris Conference on
European economic recovery. They cite maximum coal production,
monetary stabilization, and progressive reduction of trade barriers
between participating countries as essential elements in the recovery
program; and they suggest that failure by any participant to take
effective action in these respects will be ground for reconsideration
of the aid it is receiving.
2. Austin recommends US anticipation of Soviet veto--US Delegate
two' Austin believes that the Department of State, in anticipation of a
second Soviet veto on the Greek case, should make a policy decision
by which the US will press the case in the General Assembly and
will urge the Assembly to take action against Yugoslavia, Bulgaria,
and Albania under Article 41 of the Charter, if developments warrant.
(Article 41 provides for the complete or partial severance of trans-
port communications and economic and diplomatic relations.) Austin
feels that such a decision would bolster the friendly members of the
SC who are now skeptical concerning further action on the Greek
case.
EUROPE
3. ITALY: UK ma declare end of "state of war" with AREWE.--US
Ambassador Dunn has been informed by the UK Ambassador that the
UK may soon declare the "state of war between England and Austria
to be at an end." Dunn recommends that the US should overlook no
- 2 -
CO L
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
JONNUtilliAL
AioFkowstttmroe
opportunity to deter the UK from making such a declaration, in view
of "the devastating blow it would give to Anglo-Italian relations by
placing Austria in a position of official preference over Italy."
NEAR EAST-AFRICA
4. IRAN: Qavam seeks delay in Soviet oil matter--Prime Minister
Qavam has confidentially informed US Ambassador Allen that he has
in mind a plan which would delay decision on the Soviet oil question
for perhaps two years. Qavam would first engage neutral geologists
to determine the areas in which oil exists and then restrict any con-
cession to such areas.
FAR EAST
5. INDONESIA: Republic demands UN arbitration--US Consul General
In Batavia reports that a statement has been issued by Premier
Sjarifoeddin declaring that the Republic will not negotiate with the
Dutch until the arrival of a UN Commission. The statement announces
-that the Republic will reject all mediation and will agree wily to arbi-
tration, stressing in this connection the importance to the Republic of
the demarcation lines between Dutch and Indonesian forces at the com-
mencement of hostilities on 20 July 1947. Consul General Foote warns
that Premier Sjarffoeddin's statement may be for internal consumption
and suggests that the Republic's reply to the US offer of good offices
may differ in tone.
(CIG Comment: The emphasis by the Republic upon the prob-
lem of the demarcation lines indicates that the Republicans will proba-
bly insist on the withdrawal of Dutch forces to the 20 July positions
before entering into any negotiations. Such a stand will seriously de-
lay any moves toward settling the dispute.)
- 3 -
Approved for Release: 2018/09/26 C03002612
Approved foirjiRelease: 2018/04.26 C03002612
lUllitifi4:1�0466110~iffts
6. CHINA: Fear e ressed that US aid will be dela t ,d--A reliable
source, accor. to e I ava e r: , quotes the Deputy
Commander of Chinese Nationalist Ground Forces as saying that
"US aid to China will be overly delayed by the necessity of waiting
for the next session of Congress, unless the US President can be per-
suaded to declassify certain material." The Commander cited as
precedent "a similar method of handling aid to Britain prior to war."
, (He was presumably referring to such transactions as the classifica-
tion of 50 US destroyers as obsolete and their subsequent transfer
to Great Britain.)
(CIG Comment: It is doubted that any such US action would
materially alter the Nationalist military outlook for the near future.
Moreover, there is a real possibility that US military equipment, if
supplied to the presently inadequate and disorganized Nationalist
military administration, would be grossly mis-used and might even
find its way into Chinese Communist hands.)
- 4 -
Approved for Release: 2018/09/26 C03002612
1"
Approved for Release: 2018/09/26 C03002612
k4016,4110#1tellii"
' I" 1947
450
THE C. r. A. HAS NO OBJECTION
CRI1TYCAL SITUATIONS TO THE DECLASSIFICATION 01�,
THIS DOCUMENT.
EUROPEAN RECOVERY No. 0 0_9
The UK Government has informed Parliament that it will immediately
reduce food purchases from hard-currency areas as one means of
slashing dollar expenditures.
GREECE
In an effort to insure the success of the US aid program, Dwight
Griswold has recommended that the US replace .oritish troops in
Greece with US troops (see item 1).
TWDONESIA
Indonesian Republic authwities charge that the Dutch have violated
the agreement to comply with the SC cease-fire request by capturing
two more towns since the truce deadline. The Republic also announces
that it no longer considers fttself bound by the Ling,gadjati Agreement
and desires solution of the conflict by an international commission.
KOREA
Negotiations in the joint Commission are expected to break off within
the next two weeks. Fresh political disorders in Korea will undoubted-
ly ensue.
CiirNA
Deep-rooted fears that Japan, with US backing, will regain a position
of economic supremacy in Asia underlie the frequent outbursts against
the growing Japanese menace from official Chinese sources and broad
sections of the Chinese public. Such fears are likely to be increasingly
reflected in Chinese Government policy toward Japan, especially if
China itself fails to receive US assistance.
Document No. 0.11
NO CHANGE in Class. E]
0 DECLASSIFIED
Class. CHANGED TO: TS
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 10 APR '4,M By:
414900901011011444110
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
GENERAL
1. Griswold recommends US re lace UK troops in Greece--AMAG Chief
Dwight Griswold has recommenderthat if British troops are withdrawn
from Greece, they should be replaced by US troops. He believes, how-
ever, that this plan should be adopted only after Greek political leaders
have agreed to broaden the present Government. US Ambassador Mac-
Veagh questions the wisdom of making the decision to send troops con-
tingent on the willingness of Greek politicians to form a more repre-
sentative Government because: (a) such a decision must rest on con-
siderations far transcending Greek internal problems and involving
US-Near Eastern policy; and (b) Greek politicians, understanding this
situation, will probably delay broadening the Government, "if they do
so at all."
2. US officials approve immediate high-level US-UK discussions--Under
Secretary Clayton and Arabassa or as have recommended ap-
proval of BevinIs proposal for immediate high-level US-UK discussions
of the British financial position and its international implications.
3. Sugar Act and Rio Conference--US Ambassador Pawley reports that:
he feels reasonably certain" that at the forthcoming Rio Confer-
ence Em attempt will be made to force discussion of Clause 202E of
the recent US Sugar Act; (b) Mexico and Uruguay, and perhaps Bolivia
and Colombia, will possibly support such an attempt; and (c) a high
Brazilian official believes that Brazil will support the US "should
a controversy arise." (Clause 202E permits the cancellation of any
increased sugar quotas for any country that in the US view discrimi-
nates against US commercial interests.)
- 2 -
iiiiiiP16016141411101ta
;ONDMITAr
Approved for Release: 2018/09/26 C03002612
fi
Approved for Release: 2018/09/26 C03002612
11.,Vil
CRITICAL SITUATIONS
�or t WS.. 114/.7
EUROPEAN RECOVERY
Under Secretary Clayton reports from Geneva his conviction that
the British, French, and Italian economic situations "are almost
certain to blow up" if US aid is not forthcoming before March 1948.
GREECE
Although recent reports indicate dissension between Communist
leaders sent to Greece from the Satellite states and their Greek
opposite numbers, such disagreement is having no visible effect
on the conduct of the guerrilla war.
INDONESIA
Dutch forces have achieved the principal objectives of their "police
action," but implementation of the cease-fire agreement requested
by the UN Security Council may be impeded by the Republican demand
that Dutch troops be withdrawn behind demarcation lines fixed on
14 October 1946.
KOREA
The Joint Commission remains deadlocked.
CHINA
Recent reports from Manchuria fail to substantiate Chinese Govern-
ment charges that the USSR has supplied the Chinese Communists
with Soviet-made military equipment.
- 1 -
Document No. CYO
449
NO CHANGE in Class. 0
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 10 APR 197r By: 009
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
Plittfill7
wftiotwisitowx*Pie
GENERAL
L USSR reportedly threatens Iran on �-.1il_proposal--The State Department
has been informed by the British ET33.15assy in Washington that Molotov
reportedly told the Iranian Ambassador in Moscow recently that: (a)
the Iranian Parliament's action on the Soviet oil proposal will be the
"acid test" of friendly Soviet-Iranian relations; and (b) should Parlia-
ment fail to ratify the proposals, the "independence of Iran would be
at an end."
2. President of SC reportedly ordered to favor Egyptian case- 3 3(h)(2)
restln�i of Syria has unormed
the Egyptian Government that It may look upon Faris al-Khuri (Syrian
delegate to the UN and currently president of the Security Council)
as an Egyptian delegate. Quwwatli reportedly added that al-Khuri will
carry out Egyptian instructions to the letter during the hearing of the
Egyptian case against the UK.
(CIG Comment: Egypt has timed its appeal to coincide with
al-Khuri's term as president of the SC. Even with the assurance of
his support, however, the success of the Egyptian case is doubtful.)
EUROPE
3. HUNGARY: Socialists protest Communist tt31 August elections--
US Minister Chapin reports from Budapest that the national electoral
camnaign has begun with an angry protest by the Social Democratic
Party against the illegal tactics of the Communists. Despite a previous
joint declaration of unanimity, the Socialists have sent an ultimatum
declaring that unless the Communists stop cheating and intimidating,
the Socialist Democratic Party will withdraw from the elections.
4. BULGART.A: Government prepares Soviet-type "trial" for Petkov--
US Political Representative Horner in Sofia reports that prior to the
trial of Opposition Agrarian Leader Petkov, the Rumanian Govern-
ment: (a) coerced factory and government workers ,to participate in
mass meetings which demanded the death penalty for Petkov; (b) am-
2
441.19�1919fRPMma
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
W4610Filliiilii4S+01141111
rested two attorneys whom Petkov had designated to represent him;
(c) extracted by torture "confessions" from three Agrarian Deputies
known to be faithful Petkov supporters. Horner adds that on the open-
ing day both US and UK Representatives in Sofia were refused admit-
tance to the trial. He also reports that the Government is expected
to impose the death penalty.
FAR EAST
5. CHINA: Soviet assistance to Chinese Communists--According to
Assistant US Military Attache Barrett, twenty Japanese and Koreans
taken prisoner by Chinese Nationalist forces at Ssupingkai stated
that: (a) they were not forced to enter military service but joined
the Communist troops in order to get food and employment; and (b)
they had seen no evidence of Soviet aid to Communists in Manchuria.
(The Acting Commander of the Nationalist forces in Manchuria has
also expressed to Barrett his belief that the USSR is supplying the
Communists with Japanese equipment only, because the supplying of
Soviet equipment "would give away Soviet policy to the US.")
THE AMERICAS
6. DOMINICAN REPUBLIC: Sea and air search yields negative results--
Commander, Caribbean Sea Frontier reports that a 2-41 August sea
and air search of Caribbean waters for Dominican revolutionaries
allegedly en route to Hispaniola from Cuba yielded negative results.
According to the US Military Attache Havana, aircraft belonging to
Dominican revolutionaries have been seized by the Cuban Army Air
Force.
(CIG Comment: The inability of the Commander, Caribbean
Sea Frontier to discover evidence of unusual movement of either
ships or men from Cuba toward the Dominican Republic confirms
earlier CIG analysis regarding the exaggerated character of these
reports.)
- 3 -
Approved for Release: 2018/09/26 C03002612
yowl' viLi!...116.1r14:14.64mrs,
Approved for Release: 2018/09/26 C03002612
CRITICAL SITUATIONS
EUROPEAN RECOVERY-GREECE
Bevin has proposed immediate high-level US-UK discussions on
the UK financial position and its international implications. In
response to US expression of concern over UK intentions, Bevin
insists that no fundamental change in foreign policy is implied in
the sudden UK decision to reduce its troops in Greece and Italy
(see item I). US representatives deplore the disturbing effects
of this "ill-timed" decision on the stability of the Italian and
Greek Governments (see item 2).
INDONESIA
Although both Dutch and Indonesion Republic leaders have agreed
to cease fire in response to the UN request, considerable doubt
exists whether such an order can be enforced by both sides, in view
of the continuing causes for tension between the two parties.
KOREA
The US delegation to the Joint Commission believes it will be able
to spin out negotiations with the USSR for only two more weeks,
barring unexpected developments.
CHINA
Chiang Kai-shek's current all-out effort to improve the Nationalist
military position in Shantung prior to the departure of General
Wederneyer appears designed to justify a request for sufficient
US aid to extend Nationalist offensive operations to Manchuria.
Document No. k.a.
NO CHANGE in Class. 0 4itgimid
0 DECLASSIFIED
Class. CHANGED TO: TS S .74e-
DDA Memo, 4 Apr 77
- Auth: DDA REG. 77 1763
. Date:10 APR rata By: __012.9..
- 1 -
04-
OCOrl
Approved for Release: 2018/09/26 C03002612
fifiG 4947
448
Approved for Release: 2018/09/26 C03002612
aaiwiiii@ottorme
GENERAL
1. Sevin intends no forRimmlis e--In response to Secretary
Marshall s expression of concern over the announced withdrawal of
British troops from Greece and Italy (see Daily Summary of 2 August,
Item 1.), Bevin has assured US Ambassador Douglas that UK foreign
policy changes are not implied in this decision. He added that the
precise extent of UK troop reductions abroad has not definitely been
settled and that the Cabinet's announcement in Commons will proba-
bly be made only in the most general terms. Bevin asked how long
the US desired UK troops to remain in Greece and stated that before
the Cabinet makes any final decision regarding UK troops in Italy,
he will communicate with Douglas.
2. MacVeagh deplores UK decision to withdraw troo s from Gree
US Ambassador MacVeagh reports his opinion that the astonishingly
ill-timed decision" of the British to withdraw their troops from
Greece Is little short of catastrophic. MacVeagh feels (particularly
In view of the recent Soviet veto in the Security Council) that if the
withdrawal takes place, there may be "a Slavic irruption" into the
Salonika area and consequent occupation of the Aegean coast. He
also believes that the unilateral British decision, coming so soon
after the veto, will increase "at least the appearance" of both funda-
mental weakness and lack of unity among the Western democracies.
3. USSR asks Austria for copies of _Ivamic conference document--
US Ambassador Caffery reports that Vollgruber, Austrian delegate
to the Committee of European Economic Cooperation, has been re-
quested by the Soviet Embassy in Paris to make available to the USSR
copies of all Paris conference documents. The Chairman of the Com-
mittee has suggested to Vollgruber that this is a matter which the
USSR should take up with the Austrian Government at a top level.
-2
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
UJUW1UIML
if.041�ISLoffeLogiom
EUROPE
4. UK: sentiment --US Ambassador Douglas reports,
after iiii*ersationorlth-134-11itt anti-US sentiment seems to be
growing within the UK Labor Party and that this sentiment may be
Increased when the impending drastic measures to save dollars are
announced by the Government. As causes for this sentiment, Bevin
laid particular emphasis on US financial contributions to illicit
Palestine activities, criticism in the US of British management of
the Ruhr coal operation, the burdensome conditions of the US loan,
and the 50-50 sharing of German occupation costs.
Douglas adds that Bevin believes a US-UK schism may be
developing. Douglas comments that if the USSR notes a deteriora-
tion in US-UK relations, it may "step up the pattern" of its tactics.
THE AMERICAS
5. PARAGUAY: Rebel force 32 miles from Asuncion--US Charge True-
blood reports that uiertibel fleet,-ri-Zrii-Fea-E consist of some
20 vessels with several thousand troops, reached on 2 August a
point 32 miles north of Asuncion where Government opposition com-
pelled them to turn back upstream.
- 3 -
Approved for Release: 2018/09/26 C03002612
,40toive
Approved for Release: 2018/09/26 C03002612
CRITICAL SITUATIONS
AlJt5 I!/4/
447
EUROPEAN RECOVERY
The Executive Committee at the Paris Conference has demonstrated
a readiness to tackle such basic questions as multilateral elimina-
tion of quota restrictions and progressive reduction of tariff barriers
with a view to reaching a customs union. French representatives
have expressed concern for France's economic and political stability
U US assistance under the European plan is not forthcoming until
March 1948.
GREECE
In view of the Soviet veto in the Security Council, US and UK repre-
sentatives in Athens are re -estimating the military situation. They
agree that the Greek Army, properly deployed; will be able to cope
with present guerrilla strength. UK representatives, however, doubt
that the AMAG program will immediately discourage further guerrilla
recruitment. The US Government has expressed its concern over the
UK decision to withdraw its troops (see item 1).
INDONESIA
The UN resolution calling for cessation of the .1>atch4ndonesian
hostilities and arbitration offers both parties a final opportunity to
reach a settlement prior to any UN decision to claim full jurisdiction
in the controversy.
KOREA
Stalemate in the loint Commission continues.
CHINA
Chiang is seeking to purchase ten million rounds of US aircraft
ammunition (see item 7),
- 1 -
41!)T OEURD1
Document No. 026
NO CHANGE in Class. El
Ei DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DDA REG. 77/1763
Date: 1 0 APR 19 Ity: 009
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
tit!J4U1flAL
16118110@refteermi
GENERAL
1. British decision to withdraw troops causes US concern--Secretary
of State Marshall, in a message to the British Foreign Secretary,
has expressed his concern at the abrupt decision to withdraw British
troops from Greece immediately and to reduce those in Italy to the
5,000 provided for Trieste. Secretary Marshall feels that the
decision was made at a most harmful time and in a manner which
makes cooperation difficult. He has asked for an expression of
Bevin's views, particularly as to the implications of this decision
regarding future British policy.
2. Arztina proposes_pre-Conierence understanding with US--US Em-
bassy Buenos Aires has been assured by Enrique Corominas, one of
the principal Argentine delegates to the Rio Conference, that Argen-
tina will bring up no controversial matters at the Conference, and
that in Argentina's view: (a) a completely united front against
aggression by an extra-continental power, especially the USSR, must
override "all other considerations"; and (b) because Argentina is
the "only nation which counts besides the US," a pre-Conference
understanding between the two countries would eliminate all diffi-
culties. Corominas, whose remarks were in the Embassy's opinion
"inspired" by Foreign Minister Bramuglia, offered to arrange a
conversation between the Embassy and the Foreign Minister to dis-
cuss such a pre-Conference understanding.
3. "Southeast Asia Federation Committee" ppeals to Military
1-.-ir-aorts that a Southeast Asia Federation Committee,
composed of a "local Viet Minh committee, free Laos, free Cambo-
dians, Indonesians, Burmese, and free Thai," has been formed in
Bangkok. The Committee has issued a manifesto appealing to the UN
for aid for the conflict areas and has requested that the problems of
Southeast Asia be considered as a whole.
(CM Comment: Continued efforts by nationalist groups in
Southeast Asia to obtain regional action by the UN may be expected.)
- 2 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
Tor IJDOIIIIT
EUROPE
4. GERMANY: Creation of a German Government for the Soviet Zone--
he Soviet Military Authority (SMA) has re-
newed discussions with German political leaders concerning the
creation of a government for the Soviet Zone, including the Soviet
sector of Berlin. (see Daily Summary of 1 July, item 2). The USSR
reportedly desires that the formation of such a government be com-
pleted by 14 August.
(CIG Comment: The USSR has denounced the union of the US
and British Zones in Germany as political rather than economic.
Having already matched the US-UK bizonal economic administration
with a central economic administration for the Soviet Zone, the SMA
would regard the creation of a zonal Government as a logical devel-
opment. Manifestly such a Government could readily be converted
into a Soviet satellite state in Germany, its nominal independence
exerting considerable attraction upon Germans in the Western Zones.
That further step, however, would compromise the USSR's present
effective pose as the champion of German unity in opposition to
separation and partition. It is not likely to be taken unless and until
the CFM meeting in November proves unification on Soviet terms
to be impossible and partition an accomplished fact perversely
attributable to Western "imperialism:')
5. AUSTRIA: Influx of Jewish DPs into US Zone--US Minister Erhardt
reports that the steady influx of Jewish refugees into the US tone of
Vienna, which is currently caring for '1,000 persons in camps with
a normal total capacity of 2,000, is creating serious problems of
crowding, feeding, and sanitation.
6. BULGARIA: Division in Communist Party rumored--Acting US Rep-
resentative Horner reports a revival of rumors in Sofia that a differ-
ence of opinion exists within the Bulgarian Communist Party. The
"moderates," headed by Provisional President Kolarov and Tsola
Dragoicheva (National Secretary of the Fatherland Front) reportedly
favor a more independent Bulgarian policy in contradistinction to
complete subservience to the USSR. Horner considers that the
existence of such a rift was in part substantiated by Finance Minister
Stephanov, who, Ina conversation with the Acting US Representative,
dismissed the anti-US press campaign as "propaganda for the masses"
and expressed great interest in the revival of Bulgarian-US economic
relations.
- 3 -
44400�1041~Pil
Approved for Release: 2018/09/26 C03002612
3.3(h)(2)
Approved for Release: 2018/09/26 C03002612
FAR EAST
7. CHINA: Chiang request 10 million rounds of aircraft ammunition--
Generalissimo Chiang Kai-shek has indicated to US Ambassador Stuart
his desire to purchase 10 million rounds of M-2 .50 caliber aircraft
machine gun ammunition, with links, from the US for immediate
delivery and use. Stuart has advised Chiang to communicate directly
with the Chinese Embassy in Washington for negotiations with the
War and Navy Departments.
THE AMERICAS
8. DOMINICAN REPUBLIC: Developments in rumored invasion--US
Ambassador Butler reports thatqa) Ciudad Trujillo is quiet and
orderly although a newspaper has now published reports of the sup-
posed imminent invasion; and (b) both Army and Navy air forces are
conducting patrol missions. According to the US Military Attache,
the Dominican Army expects landings to be attempted on the island's
north coast.
US Ambassador Corrigan transmits from the Venezuelan
capital a report from an informant whom he considers trustworthy
that 350 Dominicans and Venezuelans, some of whom are allegedly
Communists, have left Venezuela over the past five days to partici-
pate in the attempted ouster of Dominican President Trujillo.
Corrigan believes high Venezuelan officials are "countenancing" the
movements of men and equipment from Venezuela for use against
Trujillo.
A "fairly reliable" CIG source states that(a) Haiti's Chief
of Staff is apprehensive regarding his army's ability to repel any
large invasion force that might attempt to land in Haiti; and (3) Hai-
tian civil and military officials have a report that large Dominican
forces are ready to cross the border into Haiti to engage any forces
that may attempt to land there.
The State Department has informed US Embassy Ciudad
Trujillo that it will henceforth permit arms exports to the Dominican
Republic on the same basis as those to the other American Republics--
that is, whenever in the Department's view they are "reasonable and
necessary" from the standpoint of internal order, self-defense, or
international obligations vis-a-vis the Security Council.
�
- 4 -
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
CO
wiriiiiiiikaRFARNEAWPM
9. PARAGUAY: Rebels attack Government High Command--US Charge
Trueblood Asuncion reports that:(a) some 1,000 rebels proceeding
from Asuncion in two armed boats have surprised the Government
High Command at Ypapobo (between Concepcion and Asuncion on the
Paraguay River) with an attempted landing operation; (b) conflicting
reports of an imminent rebel attack on Asuncion itself have caused
the Government to adopt precautionary measures there:* and (c) he is
inclined to credit the Government claim that Concepcion has fallen
to its troops.
-.5 -
ofielP10810~Por
Approved for Release: 2018/09/26 C03002612
, �
-Approved for Release: 2018/09/26 C03002612
10T' fJLCfl1YT
CITCCAL 3TUATONS
EUROPEAN RECOVEgy
Further retrenchments in the UK domestic economy are under dis-
eUSFACon by the 10K Government, Prime Minister Attleegs leader-
ship 43-f the Labor Party apparently remains secure (see item 1).
GREECE
Dissension in the Greek Cabinet concerning the organization and
direction of the Army has resulted in the withdrawal from a Cabinet
meeting of General Zci..vas, Minister of Public Order. Interference
by politicians continues to impede the Army's task of suppressing
guerrilla forces.
IT-4.4)0VIESIr A
Continued large-so:1,1c de:,.struction of Chinese property and the loss
of Chinese lives, which have been. the smbia& of official Chinese
Government protest:; to 1.:"1:1 Redtiblioan Government, may result in
Chinese support of the ".1>,,netrti 1 actiipo. taken by the UN. The Dutch
rfnay. revise their triT pLzy,15 to include occupation of the Repub-
lican capital (.Lme item 3).
KOREA
The deadlock le Korean 1oht Commission remains tuibroken.
CHINA
The Chinese Government's new declaration of a policy of non-
611Serimination against foreign interests will probably fail to alter
the present "wait and attitude of. private foreign capital toward
China.
- 1 -
446
Document No. ____Aaar------------'
NO CHANGE in Class. 0 1
'
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
"Auth: DDA REG. 77 1763
Date: LluaLai BY: _1102-1--
llig4fmr-
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
RUCH I
.W4****1401.14wihwia
EUROPE
1. UK: Attige.. secure as ....r me Minister--A reliable informant has
apprised US Embassy London that in a 30 July secret meeting of
the Labor Party members of Parliament, "Attlee was completely
rehabilitated in the eyes of his critics and all talk of replacing him
is dead."
2. FRANCE: Socialists seen as "clearly anti-Communist"--US Em-
bassy Paris reports that, accoraing to Socialist informants, the
dominant attitude at the French Socialist Congress scheduled for
15 August will be clearly anti-Communist and anti-Stalinist.
(CIG Comment: The effect of the Marshall proposals upon
the French political situation has been in part to give strength to
the Ramadier Government by widening the distance between the
French left-wing Socialists and the French Communists, with whom
the former have often collaborated in the past on domestic issues.)
FAR EAST
3. NEI: Reported Dutch military plans--The US Military Liaison
Officer Singapore, who returned from Batavia 30 July, reports that
Lieutenant Governor General Van Mook probably will ask The Hague
for authority to occupy the Republican capital in the event that the
present Republican Government does not dissolve itself within the
next few days. (Dutch authorities hitherto have stated that they had
no intention of occupying Jogjakarta.)
THE AMERICAS
4. CUBA: Reported "feverish". Dominican revolutionary preparations--
US Military Attache Havana reports that "feverish preparations"
point to action by the Dominican revolutionaries on 1 August and to
a possible "coordinated effort" from both Cuba and Venezuela.
US Embassy Port-au-Prince reports that the Haitians are
"anticipating trouble," that an alert has been ordered, and that a
state of siege will be declared in case of landings on Haitian territory.
-.2 -
4911101641104iN1iffin.
JONFWfNT
Approved for Release: 2018/09/26 C03002612
Approved for Release: 2018/09/26 C03002612
spitrEnI IAL
5. BRAZIL: Devellnments in Spylet arms-smstpsi--US
Military Attache Rio reports that, according to a Brazilian War
Ministry informant, certain arms landed in southern Brazil from
a Soviet ship eariy in July have now been delivered to their desti-
nation. According to the US Naval Attache Rio, the Soviet ship
Azov left Santos, Brazil on 1 July and arrived tardily at Buenos
Aires in ballast on 8 July. The MA adds that the recent Brazilian
aerial reconnaissance flights (which produced no evidence of
Soviet arms smuggling; see Daily Summary of 28 July, item 12)
were "improperly executed and inconclusive."
- 3
'Approved for Release: 2018/09/26 C03002612