DAILY SUMMARY - 1948/07-1948/09

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 06749451
• Document Creation Date: November 8, 2018

Approved for Release: 2018/10/19 006749451 ET EUROPE 1. FRANCE: Conmumist tactics against Gaullist units�US Embassy Paris reports that the French Communist Party has apparently directed its militants to attempt to break up every Gaullist meeting. The Embassy conjectures that the Communists hope to provoke gunfire from the strong-arm groups of De Gaulle's Rally of the French People (RPF). Comnamist propaganda has reportedly portrayed such inci- dents as attempts to bring about the dissolution of the armed groups of the RPF. An RPF representative has informed the Embassy, however, that De Gaulle's firm order against Gaullist interruptions of Communist meetings still stands. (CIA Comment: CIA believes that the Communists would welcome further provocation by RPF groups as an Incentive for the Government to outlaw these groups. It is unlikely, however, that the Government could effectively disband these semi-clandestine units, although stronger gov- ernmental measures against further encounters between Communist and Gaullist militants can be expected.) TILE AMERICAS 3 0 SEP 1948 802 2. Document No. NO CHANGE in Class. 0 DECLASSIFIED Class. CHANCED TO: TS DDA Memo, 4 Apr 77 CRELth: DDA R": . 774_1763 Date; Approved for Release: 2018/10/19 006749451 Cm- eonF. 1111 VAR - 5 - C.flp S 3.3(h)(2) Approved for Release: 2018/10/19 006749451 ANNEX 30 September 1948 THE BERLIN IMPUTE IN THE UN As a result of the breakdown of direct negotiations on Berlin, the western powers have been forced to refer the key Issue dividing East and West to the UN, an organization not designed to cope with such problems. Because of the Soviet veto in the Security Council and the limitations upon General Assembly action, the UN will be unable to take complete action on the Berlin dispute unless the USSR modifies its present adamant stand. Although a Security Council demand upon the USSR to lift the blockade prior to resumption of negotiations, perhaps followed by a similar Assembly recommendation, would mobilize world opinion behind the West and provide moral justification for further action, such a demand could not, in the face of the Soviet veto, have anything more than a moral effect. Moreover, public UN debate, if so skillfully handled by the USSR that doubt is cast on the legal posi- tion of the western powers, can weaken the western case. The real- ization that recourse to the UN removes one more means of peace- ful settlement and brings nearer a possible resort to force may shake the resolution of France and the UK as well as the smaller nations for the strongest possible UN action. The Kremlin may, in recognition of the critical stage reached in Berlin, make some surprise conciliatory proposal which will be designed, if not to settle the issue, at least to pave the way for further negotiations. However, unless the Kremlin makes some such offer before the UN has taken what action it can on the case, the western powers will still be faced with these three choices: (1) withdrawal from Berlin; (2) maintenance of the increasingly difficult air lift; and (3) a resort to force. Moreover, UN inability to resolve the issue will result in a catastrophic loss of UN prestige. Although the Kremlin may utilize the UN deliberations as an opportunity to compromise gracefully, it seems more likely that the USSR will stand firm, confident that the western position in Berlin is basically untenable and that Soviet UN representatives can make a good case. Initially, the Soviet Union will probably contest the right of the SC to deal with the issue, contending that matters concerning the peace settlements are the province of the Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 Big Four. The USSR may furthermore seek to forestall SC con- sideration by maintaining that the question of whether the Berlin dispute is a threat to the peace is nota procedural but a sub- stantive matter, hence subject to veto. It seems unlikely, however, that the USSR can succeed in barring Council consideration. If the Security Council should handle the dispute, the USSR has two basic choices: to fight the Issue in the SC, or to boycott the discussions, claiming that SC consideration is illegal. How- ever, the Kremlin probably will contest the issue because a walk- out would prejudice the world agaInst the USSR and because Soviet representatives can build a fairly strong case by alleging that western violation of the Potsdam agreements in building up west- ern Germany has forced the USSR to retaliate. Besides continuing to deny that the Berlin dispute is a matter for the UN, the USSR probably will seek to blame the West for the whole dispute and for breaking off negotiations and will try to widen the area of discussion to cover the whole German question. In its efforts to broaden the issue and facilitate resumption of direct negotiations, the USSR may introduce some surprise proposal, such as immediate four- power withdrawal of troops from Berlin and eventual withdrawal from all Germany. Because the Soviet case is in many respects a strong one, the western powers may have some difficulty in convincing a SC majority of the necessity for strong action. Syria is likely to abstain in protest against UN handling of Palestine; China may hesitate to antagonize the USSR too strongly; and Argentina may seek to play an independent role. These nations, holding the voting balance-of-power and conscious of the critical nature of the Berlin crisis, may seek the role of mediators and will be quick to seize upon any conciliatory Soviet gesture as a basis for urging renewed negotiations. However, the western pow,ors will probably procure at least a bare majority for a strong resolution, thus forcing the USSR to use its veto. In such event, the West must seek outside means of settling the dispute, or carry the case to the General Assembly whose powers are limited to recommendation and media- tion. Moreover, a number of smaller states in the General Assembly may be fearful of taking sides in the East-West conflict and will likely abstain, thus limiting the possibility of a clear-cut stand against the USSR. It - Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 � Although Soviet propaganda has already hinted that un- favorable action on Berlin might lead to the withdrawal of the USSR from the UN, such action seems highly unlikely at present because: (1) the UN Is tremendously useful to the USSR as a propaganda forum; (2) UN membership permits Soviet participa- tion in the settlement of global issues and provides a means of obstructing the development of international cooperation; (3) the Soviet veto prevents any concrete anti-Soviet action; and (4) withdrawal would permit the western states to develop the UN as a strong anti-Soviet organization, thus isolating the east- ern bloc. Consequently, veiled Soviet threats to withdraw appear more of a propaganda maneuver toweaken the resolution of the western powers for the strongetit possible UN action and to Intimidate smaller nations. 11 the UN should strongly condemn the Soviet Union, however, and If it should appear that world opinion were united against the USSR, Soviet withdrawal would become an increased possibility. Even then, only an overwhelm- ing vote to modify the veto, which would deny to the Kremlin its main defensive weapon, would seem likely to induce the USSR to consider withdrawal seriously. - Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 GENERAL 1. UK pleased with spects for Palestine settlement--A high UK 'Foreign to cc Ofiltial has informed 13s Embassy London of his belief that the UN General Assembly has made a "splendid start" on the Bernadotte plan and that preliminary soundings of some non-Arab delegations show "a strong disposition to go along with the US and UK." The British official believes that strong Arab and Jewish opposition is inevitable throughout the UN discussion but considers this a necessary prelude to acquiescence. EUROPE 29 SEP 1948 801 2. SPAIN: Socialists announce agreement with Monarchists-- US Embassy Paris has been informed by the exiled "Prieto group" that an agreement has been reached between the Spanish Monarchists and the exiled Spanish Socialist Party (representing various non-Communist groups in exile) for political collaboration designed to replace Franco with a 'caretaker regime" preparatory to the creation of a new Spanish constitution. The Embassyps informants state that both the Socialists and the Monarchists will present copies of this agreement to the US and western European govern- ments on 6 October. According to the informants, this new coalition intends by grouping all Republicans and Monarchists and excluding the Communists and the Falange to comply with US-British-French demands for a broadly-based sub- stitute government. (CIA Comment: This agreement is the first concrete step taken jointly by the opposition groups inside and out- side Spain to produce a workable formula for replacing Franco. The effectiveness of the agreement will depend largely on the approbation of the US and western European nations and on the active support of Spanish financiers and industrialists.) Document No./A' NO CHANGE in Class. 0 - 1 - y< DECLASSIFIED� CHANGED TO: TS s C Auth: DDA Memo, 4 Apr 77 Tuii57 '8711_1763 Date: By: 02/ sec, - sec.. Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 GENERAL 28 SEP 1948 800 I. Dutch conditions for Indonesian discussions�US Ambassador Baruch reports that the Netherlands Cabinet has approved a reply to the US proposals for an Indonesian settlement. Baruch has been informed the Dutch will insist, as conditions for a resumption a negotiations with the Indonesian Republic, that the US plan be modified in order to: (a) ensure that Dutch and Indonesian foreign policy be in harmony; and (b) provide that Indonesian elections will be held only after a restoration of law and order. According to the Dutch Foreign Office, Foreign Minister Stikker regards these terms as indispensable both to the negotiations and his own participation in the Dutch Cabinet. EUROPE CIA - C 2. AUSTRIA: US position on renewil_lzA_ustrian treatusrotiations� e_ A - The Department of State has informed US Legation Vienna of Its view that a reopening of Austrian treaty negotiations will not be feasible until the Berlin situation is further clarified. The Department indicates, however, that the US is prepared to renew these negotiations at the first favorable moment and that the UK and France agree in principle with this view. Document No. 77 NO CHANGE in Class. 0 ----- [44DECLASSIFIED Class. CHANCED TO: TS S C DDA Momo, 4 Apr 77 Auth: DCA R_C. 77/1763 Date: 5 MAR 1978 By: 02B Approved for Release: 2018/10/19 006749451 Approved for Reles9e: 2018/10/19 006749451 GENERAL 27 SEP 1948 799 1111 I. Possible reopening of Austrian treaty negotiations--According to US Minister Erhardt in Vienna, Austrian Foreign Minister Gruber has informed the Soviet Political Representative that Austria is prepared to request the western powers to reopen negotiations toward an Austrian treaty immediately after the USSR has indicated that a change in Austrian frontiers is not an indispensable condition of Soviet agreement in such a treaty. (CIA Comment: CM believes that the Kremlin may be willing to resume four-power negotiations on these terms. The USSR is unlikely to allow the Yugoslav claims on the Austrian frontiers, which it never seriously sponsored in the past, to block a reopening of treaty discussions now.) FAR EAST 2. CHINA: Serious repercussions from fall of Tsinan expected-- US Embassy Nanking believes that the fall of Tsinan on 24 Sep- tember will have serious repercussions on the National Gov- ernment. The Embassy observes that public confidence in the ability of the Government to survive will reach a new low and that this loss of confidence will almost certainly have immediate and severe economic effects. (CIA Comment: CIA concurs with Embassy Nanking's view and believes that the National Government is now entering a military, economic, and political crisls of unprecedented severity.) Document No. 7 �� NO CHANGE in Class. 44a, DECLASSIFIED Class. CHANCED TO: Auth: Date: TS S C DDA IVVILio, 4 Apr 77 DDA PEG. 77/1763 15 MAR 1978 By; isaL_ Approved for Release: 2018/10/19 006749451 S- See. , - Approved for Release: 2018/10/19 006749451 4J GENERAL 1. Possible Soviet boycott of UN discussion of Berlin�US Embassy Moscow believes it possible that the Soviet bloc may boycott all "unpalatable issues" in the UN General Assembly. The Embassy further believes that the Soviet and Ukrainian delegations may refuse to discuss Berlin or German problems in the Security Council. The Embassy considers, however, that a formal withdrawal of the Soviet bloc from the UN is unlikely because the UN could then develop into an alliance of non-Soviet nations. (CIA Comment: CIA concurs in Embassy Moscow's analysis of Kremlin intentions regarding the UN. With- drawal from the UN would deprive the Soviet bloc of an excellent propaganda sounding board and would place the guilt for splitting the UN on the USSR.) EUROPE 25 SEP 1948 798 � 2. ITALY: ftalianyosition on colonial problem�US Embassy tome has learned from the Italian foreign Office that the Italian Government is proposing to each UN member that the UN General Assembly should return Italian Somaliland to Italian trusteeship now and postpone decision on the disposition of the other former Italian colonies. The Italian Government reportedly believes this course of action is desirable because four-power agreement had previously been reached on Somaliland's return to Italy and because such action is the most favorable that Italy could expect at the present time. (CIA Comment: CIA believes that Italy's position is influenced especially by fear of adverse Italian public reaction to: (a) the loss of all its former colonies, possibly qc Document No. NO CHANGE in Class. 0 arDECLASSIFIED - - CHANCED TO: TS S C DDA M.o, 4 Apr 77 : DDA FIT.:1! 77/1763 Date: 5 Pr 1978 By: at .5- See_ 5- See._ Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 through General Assembly approval of a direct UN trustee- ship ( as proposed by the USSR), or (b) postponement of UN decision on all three colonies.) THE AMERICAS 3. ARGENTINA: "Threat" against Peron thourdat hoax-- the recently publicized ei C Se,e. "threat" to the lives of President and Mrs. Peron was em- a hoax contrived by Peron to frighten the opposition. i se Source also reports that the 24-hour work stoppage of 24 September was engineered by the Government to permit a mass solidarity demonstration. US Embassy Buenos Aires concurs in this version of the affair. (CIA Comment: These tactics by Peron may be designed to bring about a situation which would appear to justify the use of authoritarian controls recently en- acted by the Peronista-dominated Congress.) 2 - Approved for Release: 2018/10/19 006749451 3.3(h)(2) Approved for Release: 2018/10/19 006749451 GENERAL 24 SEP 1948 797 1. Israeli representatives comment on Bernadotte plan--US Embassy London reports that Israeli representatives in London and at the UN have expressed the feeling that Count Bernadotte's plan represents a great advance over his previous proposals for Palestine. Both representatives, however, stressed Israel's "strong sentimental attachment" for the Negeb (awarded to the Arabs under the Bernadotte plan). Embassy London received the impression from the Israeli representative that Israel was confident of obtaining sufficient backing in the UN to modify the plan with respect to the Negeb and to provide the Jews with a corridor to Jerusalem or at least "an enforced guarantee of access." The representative appeared optimistic about gaining US support, hintinq broadly that because of "its political reper- cussions in the US Secretary of State Marshall's statement in support of the plan might not be the fhial US word on the subject. 2. Possib2e Communist coup in Paris reported--US Minister Chapin In Budapest has been informally told by the Hungarian Acting Minister of Finance that the Communists are planning a "Bogota" coup to take place in Paris during the UN General Assembly sessions. Chapin points out that the Acting Minister is not a Communist but is "on close terms with Communist members of the Government." (CIA Comment: According to all information available, the French army and secret pollee have been alerted to the possi- bility of a Communist coup during the UN sessions but have no information suggesting such an event. CIA believes that large- scale Communist uprisings are possible but distinctly improbable, and concurs with an estimate made by the Chief of Staff of the French Army that French forces could suppress such a coup.) - 1 - Document No. 7et C,/- 5 - TS 5-75 NO CHANGE in Class. 0 DECLASSIFIZD lass. C11,11:: TO: TS S DDA Mo, 4 Apr 77 Auth:DDA rlf:C% 77/175 iitS:Watt e : By: A Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 FAR EAST 3. CHINA: New US dollar black market in Shanghai�US Consul General Shanghai has confirmed the reappearance (since the recent Chinese currency reform) of a US dollar black market in Shanghai. The Consul General reports that trading reached sufficient strength during the week to get beyond police control. (CIA Comment: This break in the currency is a serious threat to the National Government's economic reform. program and may set off the predicted collapse of the new currency. Further development of currency weakness, combined with the deteriorating military situation, may shortly result in the most severe crisis the Government has yet experienced.) Fall of Tsinan appears imminent--Commander US Naval Forces West Pacific reports that the Nationalist-held Shantung canital of Tsbian will probably fall to the Communist attacking force in a "few days." The naval officer indicates that ob- servers are divided as to whether the Communists will then move east toward Tsingtao or south toward the Government stronghold of Hsuchou. The US officer believes a Communist attack on Tsingtao is a distinct possibility and may be preceded by internal disorders and incidents in that city. (CIA Comment: Although the eventual capture of Tsinan appears inevitable, Nationalist General Wang Tao-vu will _ undoubtedly make a determined stand and may be able to hold out for some time if he can prevent the defection of his ill- trained, provincial troops. 'CIA believes that the most likely Com- munist objective, following the fall of Tsinan, is lisuchou rather than Tsingtao.) - 2 - ET Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 TOP GENERAL 23 SEP 1948 796 1. US and UK urge acceptance of UN Mediator's plan--The Depart- ment of State has instructed US representatives in Tel Aviv and the Arab capitals to urge acceptance of Count Berna.dotte's recommendations for Palestine. The Department instructs the representatives that even though acquiescence in the recommenda- tions may be all that the US can hope for, it would be a tactical mistake to urge less than acceptance to the Near East countries. US Ambassador Douglas in London transmits a message sent by the UK Foreign Office to British representatives in the Arab capitals strongly urging Arab acceptance of UN Mediator Bernadotte's recommendations for Palestine. The Foreign Office endorses the Mediator's proposal that Arab Palestine be Incorporated in Transjordan because of the British view that Arab Palestine: (a) could not maintain itself as a separate state militarily, economically; or politically; (b) would be "a most uncomfortable neighbor for the other Arab states because of the irresponsible elements who adhere to the Mufti and who would have prominent positions in the new state; and (c) would be so weak and inefficient that it would very shortly be subject to Jewish penetration. The Foreign Office declares that existing British guarantees to Iraq, Transjordan, and Egypt will be valid against any unprovoked aggression by the Jewish state. UN officials press demilitarization of erusalem--US Consul -General Macdonald in erusalem reporIhat Acting UN Mediator Bunche and the UN Truce Commission will attempt to negotiate the demilitarization of Jerusalem as soon as possible, on the ground that the conciliatory attitude displayed by Israeli officials following the assassination of Count Bernadotte may be only temporary. Macdonald suggests that the Department of State might find it helpful to express informally to the Israeli representative in Washington its interest in the Jerusalem situ- ation. Document No. 73 NO CHANGE in Class. 0 1 D DECLASSIFIED Class. CHANCED TO: TS S DDA M.io, 4 Apr 77 CREitb.: DDA 77 '1763 Date: I 5 MARV By: o2 14" Approved for Release: 2018/10/19 006749451 e / A - c J4- S e A - 5 Approved for Release: 2018/10/19 006749451 10047,7 TOP RET .144 EUROPE 2. GERMANY: Soviet move apinst Berlin leaders feared�US Poli- tical Adviser Murphy in Berlin reports that observers there fear that recent Soviet propaganda attacking Berlin's democratic leaders as instigators of�4`fascist� violence means that the USSR will either: (a) arrest these leaders; or (10) defer their arrest while building up a Soviet case before the UN, possibly even for demanding their extradition from the western sectors of the city. Murphy believes that, although the immediate consequence of such arrests would be acts of violence by Berlin's population rather than a weakening of the city's resistance, the loss of leaders might in the long run cripple this resistance. (CIA Comment: CIA believes that because of the Soviet desire to weaken the Allied position in Berlin, the USSR will not be deterred from further acts of provocation by a regard for the Soviet position in the UN or the reaction of Berliners. CIA believes, therefore, that the arrest of these leaders is a definite possibility.) FAR EAST S. CHINA: Possible collapse of new currensy--US Embassy Nanking believes that China's new currency may "collapse with spectacular and explosive suddenness within the next month or two." The Em- bassy reports that superficial price stability has been achieved during the past month largely by means of a stringent enforce- ment campaign, particularly in Shanghai. The Embassy points out that underlying inflationary forces have continued at work and no progress has been made in reducing the budget deficit. The Embassy observes that the reliability of the Government's armies will be questionable if the currency again becomes worth- less paper. - 2 - Approved for Release: 2018/10/19 006749451 e 1/4- 5 d/4- Approved for Release: 2018/10/19 006749451 Copy No. _58 6 CENTRAL INTELLIGENCE AGENCY Special Evaluates No. 34 Document No. �i? IVO CHANGE in Class. o------ /ieDECLASSIFIED Class. CHANCED TO: TS S DDA M=3, 4 Apr 77 Auth: DDA RLO. 77 1763 Date: -1-41400iRJaaL BY: Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 SE 23 September 1948 THE COMMUNIST THREAT IN INDONESIA The strategic interests of the United States are seri- ously jeopardized as the result of the emergence in Indonesia of a militant Communist movement, the announced intention of which is the overthrow of the present Republican Govern- ment. The impasse in the United Nations Good Offices Com- mittee (UNGOC) negotiations, resulting from the inability and unwillingness of the Dutch and Republican governments to come to terms, has had the effect of strengthening the Com- munist movement The Dutch Government, which emphasizes the Communist threat as proof that the Republic is unable to cope with its internal difficulties, now appears prepared to undertake a settlement by military action directed against both the Republic and its Communist opposition. The US Delegation of the Good Offices Committee has formulated a draft agreement which is now opposed only by the Dutch. This draft agreement represents an attempt to recognize the minimum requirements of the Republic, which are shaped by its strong national aspirations, and to protect Dutch interests in the area to as great a degree as is feasible. If UNGOC fails to obtain Dutch acceptance to the US compromise proposal, or if the Dutch take advantage of the situation within the Republic and resume police action, the present moderate Republican Government will not be able to stay in power and the Indonesian nationalist movement will be vulnerable to seizure by the Communist extremists. Be- cause the Communists have taken the initiative and precipitated this crisis, a majority of the Republic's armed forces and its population are backing the Government. The Communist threat, however, has serious potentialities; the Republic has already lost control of two seaports and an oil refinery which supply the Republican capital. The gravest threat to the Republic at this time would develop from the movement of Dutch military Document No. 12- _ NO CHANGE in Class. 0 j,c1 DECLASSIFIED Class. CHANGED TO: TS S DDA Wimp, 4 Apr 77 Date: MAR h: iDDA REG'. 77 1763 �1978-1y, Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 49 TOP ET EUROPE 1. FRANCE: Increased Socialist pressure ex cted--US Embassy Pans believes that the Socialists will probably demand further concessions from the Government in return for their support in the Assembly of the unpopular taxes of the Queuille economic program. Concerning the attitude of French labor toward this program, the Em- bassy considers the action taken. by the non-Communist labor unions in ordering a general strike on 24 September to be "only the most serious of many indications' of strong working-class dissatisfaction with the program. (CIA Comment: CIA believes that because the Socialists are fearful of facing the electorate next month with a record of support of various unpopular govern- ment policies, they will either obtain from the Govern- ment a general wage increase or will, by working against Queuille s economic program, risk the downfall of the cabinet.) 22 SEP 1948 795 2. GREECE: Reduction in armed forces considered im ossible-- US General Van Fleet reports from Athens that in the Vitsi area inorth of Grammos) the guerrilla forces have been built up to a strength of 6000-7500 by replacements from training camps in Yugoslavia, by forced recruiting in Greece, and by remnants from Grammos. Van Fleet says that Vitsi has taken on the aspects of a second Grammos, with the added disadvantage that the guerrillas can withdraw into Yugoslavia as well as Albania. He adds that these factors and guerrilla terror raids throughout Greece have decreased the likelihood of an "early suppression of banditry': and that it is according- ly impossible at present to reduce the size of the Greek armed forces. Document No. sl NO CHANGE in Class. ty( DECLASSIFIED Class. CHLff�ED TO: 'Eht TS S C DDA Menlo, 4 'Apr 77 DDA RLG. 77/.17.a3 BY : 1 Approved for Release: 2018/10/19 006749451 C14 -71s. Approved for Release: 2018/10/19 006749451 49 t GENERAL I. Vatican thinks outlook in Spain is encouraging-- Acting Vatican Secretary o State Tardini 1as ex- pressed the view to the US representative at the Vatican that the general outlook in Spain is more encouraging following the recent meeting between B ranco and Don Juan. Tardini feels that this meeting brought together the only two people whose collaboration is "necessary and essential" to effect a peaceful evolutionary change in the present Spanish regime. Tardini believes that a republican government in Spain would cause another revolution and considers that the recent meeting will allay the fears of the Spanish people of grave internal disorders. Tardini expressed the view, however, that "Franco's ultimate fate is still unpredictable." (CIA Comment: CIA is inclined to accept the Vatican's impression that there has been fear among the Spanish people of internal disorders. Concerning the meeting between Don Juan and Franco, CIA reports indicate that the meeting took place on Franco's initiative and that Don Juan made no concessions.) Document No. 10 21 SEP 1948 794 NO CHANGE in Class. 0 Oi� DECLASSIFIED Class. CHAITCED TO: TS S C DDA M-31no 9 4 Apr 77 Auth: DDA 77/1763 Date: 1 5 MAR 1978 By:611 Tb4 Approved for Release: 2018/10/19 006749451 5- . 20 SEP 1948 Approved for Release: 2018/10/19 006749451 CO 0 793 RET 1:44) GENERAL I. US opposes removing Hyderabad from SC agenda--The Depart- ment of State has advised the US delegation to the UN meeting In Paris of its view that, despite the ending of hostilities in Hyderabad, it would be a mistake to drop the case from the Security Council agenda. The Department feels that to drop the case would encourage aggressive states to use force in in- ducing recalcitrant states to negotiate. The Department favors SC retention of the case until both parties report the outcome of their negotiations. 2. Satellite leaders reported to be meeting in USSR--According to US missions in Bucharest, Budapest, Prague, and Sofia, re- ports of unknown reliability are current in eastern Europe of a meeting within the Soviet Union of leading Satellite Commu- nists. Czechoslovak President Gottwald, Bulgarian Premier Dimitrov, Hungarian Vice Premier Ra.kosi, and Rumanian For- eign Minister Pauker are reportedly present in the USSR. EUROPE 3. FRANCE: C t unlikely Ing.Liggeak UN se 8s1-- -- US Ambassador Caffery has been informed that General Revers, Chief of Staff of the French Army, has had no information to indicate that the Communists mean to create disturbances during the UN meetings Paris and feels that the army "has the sitnatinn 1111PM (CIA Comment: Although the critical labor unrest and unstable political situation in France could be rapidly exploited by the Comnumists to create disturbances during the UN General Assembly meetings, CIA does not believe that the Communists plan to disrupt the meetings. CIA believes, moreover, that the French security forces would be capable of swift suppression of any distur- bances.) Document No. NO CHANGE in Class. 0 DECLASSIFIED Class. SECRET -4,4? Auth: Date: cHAY,Em TO TS S DDA MO, 4 Apr 77 DDA 7 '7 1763 1 5 MAR 1978 By: Approved for Release: 2018/10/19 006749451 Go, 3.3(h)(2) fl Approved for Release: 2018/10/19 006749451 FAR EAST 4. INDONESIA: Dutch believed to be increasing unrest--The US delegation of the UN Good Offices Committee reports its belief that recent provocative actions by Dutch officials in Indonesia strongly suggest that the Dutch are purposely aggravating the political situation within the Republic of Indonesia in order to make it harder for Premier Ratta's goverment to negotiate or even to survive. (The US delegation also reports that the Republican delegation has voted 7 to 1 in favor of the US draft agreement for settlement of the Dutch-Indonesian dispute.) (CIA Comment: The Communist-led insurrection against the Republic in central Java, the development of which has been strengthened by the Dutch attitude, may now very likely be the excuse for Dutch military action against both the Republic and its Communist opponents.) Approved for Release: 2018/10/19 006749451 fl Approved for Release: 2018/10/19 006749451 at GENERAL 18 SEP 1948 I. 'Imported Cominfarm strategy a dinic_tsUli12--US Embassy Paris has been informed by a reliable source that an Important meeidng of Cominform agents and trade union leaders recently took place in Prague for the purpose of deciding upon tactics to be used in undermining the European recovery program. According to source, the Coinmunist group decided to instigate strikes in ports and tbe European transport system, in accord with the Kremlin view that transport is the most vulnerable point of the European recovery program. (CIA Comment: CIA coasiders it highly probable that such a meeting has taken place. Port and trans- portation facilities offer logical targets for Communist efforts to interfere with the European recovery program.) 2. gaimuagg in..,.sefUmssmar dirjurdsr_aLigt.sirprait--us Ambassador Matthews in Stockholm urges the "strongest possible line of action be taken immediately with the British Ambassador" with a view toward cancelling the recent Swedish order for Vampire jet fighters. Matthews be- lieves that this sale will dissipate Swedish anxiety about beim isolated and that chances of eventually" `abetting Sweden into the western camp" are being sacrificed to the short-run interests of the British aviation industry. The British Foreign Office has informed US Embaw;:�,- London that it considers the sale of jet aircraft to Sweden justified on the following grounds: (a) if attacked, Sweden would defend itself, and it is desirable for Swedish defenses to be strong; (b) British aircraft contracts contain escape clauses to cover higher priority requirements; (c) de- liveries will not begin until mid-1950; (d) orders of this kind are beneficial to the British aviation industry; and (e) the Swedish order is for airframes ?Arament No. r 792 NO CHANGE in Class. - 1 - PeDECLASSIKED Class. C::=3 ;T3: TS S C DDA M0, 4 Apr 77 DDA REG. 77/1763 � Date; tir �Wt1. By: 0 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 ( CIA Comment: CIA believes that the ability of Sweden to purchase modern aircraft abroad will tend to strengthen Swedish adherence to neutrality. Moreover, present indica- tions are slight that the Swedes would soon abandon neutrality in any event.) Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 ANNEX 18 September 1948 THE ASSASSINATION OF COUNT BERNADOTTE The assassination of Count Bernadotte, allegedly perpe- trated by Stern Gang terrorists in the all Katamon district of Jerusalem, increases the likelihood that a settlement will be achieved in Palestine. The revulsion of feeling throughout the world and the loss of prestige the UN would incur by failing to act may well galvanize the Security Council and the General Assembly into taking action which would not only strengthen its peace machinery in Palestine but also bring about a definitive solution of the entire Arab-Zionist issue. The Provisional Gov- ernment of Israel (PG!), fearful of further antagonizing world opinion and of losing the decisive support which it has received from the US, will probably be more willing to keep the peace and to accept UN recommendations than in the past. Moreover, it will probably be compelled to attempt the immediate liquidation of the Stern Gang, and possibly Irgun Zvai Leumi as well, In order to ward off full responsibility for the crime. Such liquidations will cost the PGI the military and political strength which the Stern Gang and the Irgun Zvai Leumi have contributed to the Zionist cause and will also confront Israel with a serious internal secur- ity problem. Thus, Jewish military strength, which has motivated Jewish opposition to a genuine compromise settlement with the Arabs, will be sharply reduced. Despite the strong temptation to seize Jerusalem while the Jews are embroiled in internal difficulties, the Arabs are not likely to take military action at this time. The reorganization of the Arab armies has apparently not advanced sufficiently to per- mit them to take immedtate advantage of the situation. Moreover, the Arab governments are not likely to jeopardize the abundant propaganda benefits which will naturally accrue to the Arab cause as a consequence of Jewish responsibility for Bernadotte's murder. Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 Because of these considerations, Count Bernadotte's official report to the Security Council, which will inevitably be endowed with greater significance because of its author tragic death, may well constitute a basis for a definitive solu- tion of the Palestine issue. - ET Approved for Release: 2018/10/19 006749451 . _ , Approved for Release: 2018/10/19 006749451 791. EUROPE 1 SEP 1948 1. FRANCE: Communist comeback held possible--US Embassy Paris reports that highly qualified labor observers in Paris are convinced that unless the Government immediately under- takes measures to pacify "legitimate working-class anger" over the increasing cost of living, the Communist Party is very likely to make a rapid comeback as a result of unified action "from below" within the labor movement. The Embassy reports the belief of a "trustworthy smirce" that the Commu- nists are now likely to try to provoke police violence in order to intensify the class struggle. (CIA Comment: CIA concurs with these views.) FAR EAST 2. CHINA: Growing Nationalist sentiment for neutrality--US Embassy Nanking has been informed by 'a usually reliable source' that a new clique in the Nationalist Government has the objective of keeping China neutral in the event of an "inevitable" US-USSR war. The Embassy suggests that this information, combined with information that the Chinese Foreign Minister and the Soviet Ambassador have recently held several secret conferences, indicates that a Foreign Office group desires neutrality and is willing to appease the USSR considerably. The Embassy believes, however, that Chiang Kai-shek is basically pro-US in his orientation. The Embassy continues to believe that the USSR is seeking con- trol of all of China via a Communist-Nationalist coalition. (CIA Comment: Although current reports from Chinese sources concerning the growth of pro-Soviet sentiment in the National Government probably have a basis of truth, they may be designed primarily to exert pressure for more US aid. CIA believes that the USSR favors a Communist-Nationalist coalition in China, and will attempt to mediate in the Chinese civil war and to establish such a coalition at a time when Chiang Kai-shek has suffered major nliiitft,nragmrw or is Lolled with a new political-economic crisis.) NO CHANCE in Class. El DE:Lk:7:7:71:D Class. C_.' J TS S - 4 Apr 77 Auth: D. 77/17e3 F5 MAR-19178 Date: By: (2D 5- TS e/A Approved for Release: 2018/10/19 006749451 Q Approved for Release: 2018/10/19 006749451 GENERAL .143 SEP 1$48 790 1. British attitude on Korean problem�US Embassy London has been informed by the UK Foreign Office that the British can not accept the government of South Korea as the national gov- ernment, but will oppose any Soviet attempts to put the North Korean government before the General Assembly as the national government The UK would support the admission of South Korea Into the UN but would oppose admission of the government of North Korea which it regards as not a "true government in any sense." EUROPE 2. GERMANY: Disturbances expected over Soviet riot sentences-- US Political Adviser Murphy in Berlin expects further violent protests from Berlin non-Communists as a consequence of the severe Soviet sentences meted to alleged participants in recent anti-Soviet rioting. Murphy reports that at a 14 September meet- ing of non-Communist German leader% great indignation was expressed following the presentation iyf a sworn statement that indicated the innocence of one of the Men condemned and cast doubt on the guilt of the others. (CIA Comment: CIA agrees with Ambassador Murphy's estimate of the consequences of the sentences.) e/R- SeC 3. ITALY: Premier affirms western orientation--Prime Minister De Gasperi has assured US Ambassador Dunn that because the Italian people indicated in the rational elections that their ideology and objectives are the same as those of the western powers3there need be no question of Italian neutrality under present circum- stances. De Gasperi added, however, that some educational work would be necessary to show the Italian people the need of aligning their future with that of the West. De Gasperi believes that Italy could best be integrated with the western powers through the Paris Organization for European Economic Cooperation (OEEC) .uocument No. (bio s-Ts NO CHANCE in Class. 0 ECLAL73.17D Class. 10: TS S C DD.A '.:o, 4 Apr 77 th: Di.)A 77/1763 Date: tvIAR 1978 By: 02t Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 and suggested that consideration be given to developing that organization from a purely economic to a political and defen- sive group. (CIA Comment: Despite the anti-Soviet attitude ex- pressed in the national elections, a majority of Italians are strongly attached to neutrality, as indicated by De Gasperi's admission that Italy needs a pro-western educational campaign.. Because Italians are interested primarily in the economic ad- vantages of Western cooperation, an expanded OEEC would attract them more than a purely political and military align- ment.) 4. BULGARIA:.. war--The US Military - Attache in Sofia concludes that all evidence in Bulgaria points to a systematic military, economic, andpsychological prepara- tion for the possibility of war in the near but not necessarily the immediate future. The MA indicates that the Bulgarian army will be in a position to effect a rapid mobilization after early October. (CIA Comment: Even though the Bulgarian Government is strengthening its military and economic potential, CIA con- siders these measures to be part of a long-range program and seriously doubts that Bulgaria--or any of the Satellites--is pre- paring for war in the near future.) 5. YUGOSLAVIA: M. . ifi d US � Tito ecommended-- , US Embassy Belgrade believes that Tito s present firm position requires a more active US policy toward Yugoslavia. The Em- bassy has concluded that: (a) Tito is now in full control, and will continue in power for six more months at least; (b) the USSR will probably not take overt action against Tito this year; and (c) a Soviet-Satellite economic boycott would probably not seriously weaken Yugoslavia.. The Embassy believes that the US should now discard a policy of watchful waiting and adopt a more affirmative attitude, especially along economic lines. (CIA Comment: CIA concurs with Charge Reams/ analysis.) Approved for Release: 2018/10/19 006749451 T5 e - See_ . Approved for Release: 2018/10/19 006749451 8. CZECHOSLOVAKIA: Mo_legLEIERnons may indicate ur e/R- 5e e_ US Ambassador Steinhardt observes that the hasty departure of President Gottwald for Moscow has produced "extreme nervousness' among the highest Czechoslovak Communist officials. Steinhardt reports that these officials apparently fear an imminent purge of Communist leadership or possible Instructions from Moscow to prepare for the incorporation of Czechoslovakia into the Soviet Union. Although he does not anticipate outward signs of unrest in the immediate future, Steinhardt thinks that the situation requires careful watching because of the steadily increasing tensions within the Com- munist Party and signs of unrest among the people. (CIA Comment: Gottwald's visit to Moscow will probably be followed by far-reaching purges in the Commu- nist Party and the Czechoslovak Government. However, C/A considers it improbable that the Kremlin contemplates an incorporation of Czechoslovakia into the USSR at this time.) -3 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 d GENERAL 15 SEP 1948 1. jjalluggpat&thatjadjajalatajlEActio0AHiderabact-- The Department of State has instructed US Embassy New Delhi to suggest informally to the Indian Goverment that significant advantages might be obtained by making propos- als which would enable the UN to help solve the Hyderabad problem without passing on Hyderabad's legal states. The Department indicates that the US does not intend to sponsor Hyderabad's case before the UN, but points out that military events may encourage other UN members to do soothereby orolonging the uncertainty over Hyderabad's status. The Department suggests that India might anticipate such a development by showing a willingness to subject itself to the "moral scrutiny of the world" through the proposal of a UN-supervised plebiscite in Hyderabad, or a com- parable step. 2. US visit of Dutch Fore : . Minister thought inadvisable.-- The Depa en ta as NmS4 e, 4 t_ssy The Hague to suggest to the Dutch Government that the proposed US visit of the Dutch Foreign Minister to discuss the Indo- nesian problem might be inadvisable at this time. The De- partment points out: (a) it is necessary that Batavia remain the place of negotiations; and (b) the Republic of Indo- nesia might view such a visit as evidence of US-Dutch com- plicity. IThrokunent No. NO CHANGE in Class. 0 DECLASSIFIED Class. CHANGED TO: TS S C DEA Wo, 4 fipr 77 Auth: DDA F4 77L1763 Date: j.j tMX NIL. By: 789 e IA - Sec .5 - Sec Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 49 NEAR EAST-AFRICA 14 SEP 1948 I. PALESTINE: Arabs demand return of refuste22--Secretary General Pasha of Ar---1-61:,'League recently told an official of US Embassy Cairo that the Arab countries would refuse to discuss a Palestine settlement until the right of the Arab refugees to return to their homes had been acknowledged by the UN and accepted by Israel. Azzara Pasha added that he had proposed to UN Mediator Bernadotte that the UN undertake to resettle 100,000 refugees in Haifa and Jaffa, which would become neutral zones under UN control. Azzam Pasha also mentioned to Bernadotte the passibility of achieving a settle- ment through the cantonization of Palestine into Jewish and Arab districts according to population. (CIA Comment: it is extremely unlikely that the Provisional Government of Israel would agree to any of these proposals.) Document No. 441 NO CHANGE in Class. kr DECLASSIFIED Class. ClifiEjED TO: TS S C , 4 fipr 77 Auth: DLA 77/.17,G3 Date: i_a_mAR,44 Approved for Release: 2018/10/19 006749451 788 a//4-- 4eo. Approved for Release: 2018/10/19 006749451 49 13 SEP 1948 787 GENERAL I. New Chinese-Soviet agreement held distinctpossibility--US Embassy Moscow agrees with the view held by UEbassy Nauaking that a new Chinese-Soviet agreement is a distinct possibility. Embassy Moscow believes that the Kremlin may threaten to recognize the Chinese Communists and to give them positive aid in order to force the Chinese National Gov- ernment into an acceptable Chinese-Soviet agreement, includ- ing a National Government policy of benevolent neutrality toward the USSR. However, the Embassy is inclined to dis- count a report that Soviet recognition of the Communists is imminent. 1$68� 61g, CIeos � .,ASS-151ED ditiOe C110q1LD TO% tak V.oao, 4 tkIlir ql MOO 1163 VatOS BY% rgs Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 49 EUROPE 11 SEA' 1948 786 1. GERMANY: Berlin leaders im tient with western powers-- Following the recent anti-Communist demonstrations in Berlin, US Political Adviser Murphy declares it is "far from impossible" that further incidents may bring "serious results" if the present Indeterminate status of affairs in Berlin is prolonged and Soviet- Communist terror tactics continue. Murphy observes no signs that German leaders in Berlin are losing their heads as yet, but he notes indications that their mounting anger at the USSR is combined with increasing impatience with the western powers. Doeuraernt /fa yAT0 czfutz' C2asa. ozer4sg.r.F.IED A .Cletsz. CaiR,;�::,D 2'0 : , 4 Ap:�,.- 77 kath: :(3. 77717;33 Date: 1 5 MAR-1978 13Y: Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 49 GENERAL 10 SEP 1948 785 ma 1. French believe Austrian treaty issue should be kept alive-- According to US Embassy Parts, the French Foreign Office agrees with the Department of State that the Austrian treaty Issue should be kept alive but prefers that the matter be held over pending the outcome of the present discussions on Berlin. The French feel that the treaty question might be placed on the agenda of any quadripartite meeting that results from the Moscow talks. 2. UK to seek Cyrenaican trusteeship at September UNGA --The British Foreign Office has informed US Embassy London of Its determination to seek trusteeship over Cyrenaica in the UN General Assembly this year. The Foreign Office reportedly considers that British chances of success would not be better next year than now. The Foreign Office suggested to the Embassy that a US-British campaign be worked out to ensure a marLmum of GA votes. FAR EAST 3. INDONESIA: US to support Republic ma.. tast Communists-- The Department in answer t��uery '1"--afrom Premier Bath of the Indonesian Republic, has authorized US Consul General in Batavia to reply that the US: (a) will assist In every practical way a democratic, non-Communist govern- ment of Indonesia to resist Communist tyranny; (b) will support the extension of financial assistance in which all the states of a peaceful Indonesian federation would share; and (c) believes that the stability of the Indonesian regime can best be assured through the acceptance by both the Dutch and the Republic of a just and practical settlement of their dispute. Document No. 5-.s 5 - S c//) -eonF NO CHANGE CHANGE in Class. El C1 DECLASSIFIED Class, CHM.= TO: TS S ED.A. 4 Apr 77 DA Pu_,G. 77/1763 1 5 ICAK 10 d By: 02! � Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 GENERAL I. Norway would acceg.jm_s_st--US Ambassador Bay in Oslo has learned from the Norwegian Foreign Office that Norway would accept a seat an the UN Security Council despite its reluctance to assume the added burden and personnel diffi- culties. Bay adds that Foreign Minister Lange will probably inform Sweden and Denmark of Norway's decision but that objection from those countries is apparently not anticipated. (CIA Comment: The Scandinavian countries rarely accept international responsibility without first consulting each other.) EUROPE a 9 SEP 1948 784 11011 2. FRANCE: Possible dissolution of French Assembly--Accord- ing to US Embassy Paris, French business and financial circles are deeply skeptical that any government deriving authority from the present Assembly will have sufficient will and energy to achieve economic stabilization. The Embassy reports that following the most recent crisis there has been renewed talk of a possible dissolution of the Assembly. The Embassy points out, however, that dissolution cannot take place without voluntary action by the Assembly and that this would be difficult at present because a majority over the dissolution party is still held by the Communists and those deputies who fear for their seats in new elections. (CIA Comment: CIA believes that if the crisis is pro- longed and social tension mounts, a majority favoring new national elections will gradually be (iormed. Even though at present the group opposed to dissolution holds a majority, there is little likelihood that it will be able to form an effective government without the support of those favoring dissolution.) Document No. 40� No Cii;VGE in Class. Ei S C - Class. 1 - , , 77 � I: 77/1'76:5 (1/4- See. IA- See � ker_pd18-- By: AA�. Approved for Release: 2018/10/19 006749451 - Approved for Release: 2018/10/19 006749451 NEAR EAST-AFRICA 3. INDIA: US will order nationals to leave Hyderabad�US Charge Donovan in New Delhi has decided to order the evacua- tion of US nationals from Hyderabad. According to Donovan, similar action is being taken simultaneously by the High Com- missioners for the UK, Canada, and Australia. Donovan adds that a high Indian official promised to facilitate the evacuation but Indicated that the movement must be competed by the evening of 10 September. Donovan points out that this stipula- tion may indicate that Indian troops are scheduled to invade Hyderabad on 11 September. FAR EAST 4. INDONESIA: US plan to be eresented in neptlations --The Department of State has informed the US delegation of the Good Offices Committee (USGOC) in Batavia of its general approval of the new plan formulated by USGOC for settlement of the Indonesian problem. The Department has requested that the plan be presented as soon as possible to the Dutch and the Republicans and to the Australian and Belgian GOC delega- tions. The Department believes that the time factor is now of the greatest importance and intends to ask the Dutch to with- hold their new plan and give full support to the US proposal. - 2 - Approved for Release: 2018/10/19 006749451 C/A- See. Approved for Release: 2018/10/19 006749451 49 TOPS 111 GENERAL 783 tV 194� 1. Western powers willing to convene CFM--The Department of State intends to inform the Soviet Government on 8 September that the US is willing to participate, through a qualified repre- sentative of the Secretary of State, in a Council of Foreign Ministers' (CFM) meeting on the Italian colonies. The Depart- ment's communication will express the view, however, that because of the wide four-power disagreement on the colonies, such a meeting Will be useless unless the USSR substantially modifies its position. The French Embassy in Washington has informed the Department that France is willing to participate in a CFM meeting. According to US Embassy London, Foreign Secretary Bevin has decided that the UK should express its willingness to participate also sind has instructed that a note be sent to the Soviet Government. 2. British do ect to review of German slant re ations policy-- S - .Se The Departmen I, � rmed t assy . tlag that a note has been received which expresses Foreign Secre- tary Bevin's "profound disturbance" over the ECA proposal to investigate further the German plants scheduled for repa- rations. The British consider that reduction or interruption of the present dismantling operations would: (a) jeopardize the whole reparations program; and (b) "most seriously" affect nations which are expecting German plants as repara- tions. The British note declares that the Soviet Government would assume the measure to be directed against them, thus making the hope of reaching general agreement more remote. The British believe that the necessity to remove war potential from German industry is increased by the possibility that Germany may eventually be allied to or occupied by the USSR. Bevin considers security to be the overriding consideration in reparations and believes that the Combined Chiefs of Staff and the French Government should be consulted before present policy is changed. Document No. NO CHANGE in Class. 0 DECLASS2VED ClaSS.. T3 0 TS 4_ r':Apr 77 PE: L:.:21 77 1763 Date; .1 5 him By; a Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 GENERAL IA 7 SEP 1948 782 1. US considering resumption of Austrian treaty talks--The I3epartment of State has requested US Embassies London and Paris to solicit the views of the British and French govern- ments concerning the advisability of proposing that negotia- tions on an Austrian peace treaty be resumed. The Department considers that the issue of an Austrian treaty should be kept alive both for political reasons in Austria and in order to avert a Soviet squeeze on Austria. The Department further believes that Yugoslav difficulties with the Cominform may have created a situation which could be used to advantage in negotiations. Austrians desire reopening_ of treaty . egotiations-- According to US Legation Vienna, Austrian Foreign Minister Gruber is willing to refrain from bilateral negotiations (with the USSR) if there is a reasonable prospect that quadripartite negotiations may be resumed soon. Gruber advised the Lega- tion of the Austrlan Government's deep concern that Austrian treaty negotiations be resumed concurrently with any future quadripartite discussions on a German treaty. Gruber em- phasized that failure to discuss Austria concurrently with Ger- many would cause the Austrian people "great disquiet" and create grave difficulties for the coalition Government. (CIA Comment: CIA agrees with Gruber's analysis of the effect resulting from a failure to discuss Austria and Germany simultaneously.) 2. US and UK oppose CFM me2fts.I.Italian colonies--US Embassy London has learned that the British Foreign Office proposes to reply to the Soviet note concerning a Council of Foreign Ministers meeting on the Italian colonies that the UK is ready to participate but doubts the usefulness of such a meeting in view of previous four-power disagreeme t on the subject. The Department of State proposes to reply to the Soviet note that a CFM meeting is unnecessary and would serve no useful purpose because of existing differences. The Department suggests that the four powers inform the UN, either individually or collec- tively, of their recommendations. Document No. NO CHANGE in Class. Class, TD,; T. ET S S C A.,-.3r 77 Auth: DIA REG. 77/1763 . Da+ 1_5_MAR_19.78 By: 02 se.e. 5- T.S. d/A- See. Cii4- See.: Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 EUROPE 3. GERMANY: Demonstrations cost western powers res rs. US Ambassador Murphy observes that from the demonstrations In the Berlin Assembly two facts have become apparent: (a) the fixed Soviet intention to destroy the present city govern- ment; and (b) the inability of the city government to continue functioning at its present location and on a city-wide basis. � Murphy remarks that the ineffectiveness of the non-Communist Assembly leaders in handling the situation has lost them prestige. � He believes, however, that the prestige of the western powers may have been more importantly affected by toleration of disorderly and illegal interruption of Berlin's city government during the course of the present four-power negotiations in Berlin. (C/A Comment: CIA agrees with Murphy's estimate of Soviet intentions in Berlin and believes that the Kremlin may hope to confront the western powers with a fait accompli in Berlin before the current East-West discussions are concluded.) 4. FRANCE: Serious strikes unlikelg--US Embassy Paris trans- e/A- mits the views of qualified labor observers that, in the absence of a large Communist strike fund, the Communists will not be able to promote strikes similar in proportions to those of Novem- ber and December 1947. The observers stressed the fact that despite the dissatisfaction of workers over the wage-price situa- tion, they are reluctant to engage in more than "warning strikes" limited to a few hours. (CIA Comment: CIA concurs in this estimate of the current labor situation in France.) 5. YUGOSLAVIA: Eims2212MgavissItml rawchement--US Consu- e/Ak - s late Zagreb has learned from a reliable source that Marshal Tito e/h-s recently conferred In Zagreb with Ivan Subasic (former Prime Minister of the Royal Yugoslav Government in Exile and leader Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 xa-ftEt of the Croatian Peasant Party). According to source, Tito refused Subasic's request that the Croatian Peasant Party be legalized but insisted that Subasic enter the Tito Government Immediately. (CIA Comment: The participation af Subasic in the Government, even on Tito's terms, would substantially improve the regime's position with the Croatian peasants and might fore- shadow a rapprochement with other Yugoslav peasant groups. Through such a rapprochement, Tito would materially strengthen his internal position but would render even more remote his chances for a compromise with Moscow.) FAR EAST 6. CHINA: Possibility of Chinese-Soviet understanding�US Embassy Nanking believes thafthinese-Soviet conversations now in progress could develop in the�predictable future into a new general understanding between China and the USSR. The Embassy reports that high Chinese officials are largely con- vinced of the inevitability of a US-Soviet war and that an in- creasing number of Chinese hope to see China remain neutral in such a conflict. The Embassy believes that in order to obtain Chinese neutrality in the event of war the USSR might make fairly liberal concessions, including pressure to end the civil war on terms acceptable to the National Government. The Embassy believes it probable that most Chinese would look with less disfavor on an alliance with the USSR than with any other nation. Approved for Release: 2018/10/19 006749451 elm- 5 Approved for Release: 2018/10/19 006749451 GENERAL 1. UK-Transiordan concern over activities of Mufti--The Liaison Officer in Amman for the US member of the UN Truce Com- mission has been informed by King Abdullah that the former Grand Mufti of Jerusalem is now organizing an irregular "Palestine Army" with active financial and material support from the Arab League. The King stated that because such an army would "seriously hamper" the regular Arab armies In Palestine as well as the administration of the Arab areas, the Transjorclan Government has called on the League in strong terms to cease its support of the Mufti. US Embassy London reports that the UK Foreign Office is seeking the views of all ritish diplomatic missions In the Middle East on "what might be done about the Mufti who appears likely to be a major obstacle to settling the problem of the Arab part of Palestine." The Foreign Office is considering the advisability of pointing out to the rulers of the Arab states the dangers which would arise from breaches of the truce by the Mufti irregulars and from the existence of a Mufti-controlled administration. EUROPE OL1' 781 2. UNITED KINGDOM: Re4101liza, tion sus ndettiaree months-- The US Military Attache in London reports that the Cabinet has now decided to stop all releases from the armed forces for a three-month period, starting probably on 14 September. During this period, further study of the National Service Act (conscrip- tion), which becomes effective 1 January, will be made with a view to changing its provisions. (CIA Comment: The National Service Act, which was passed by Parliament in 1947, presentlymkcip, one year's 5-7 service. The Government will probalk,,Iv ask. Pavq{kmtent---W..s fall to extend the term of draft servieWbit4lAokh,4)riss 0 Auth: L. . � 77 '1733 Date: ...1,1_11Anil_2t2L. By: Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 -r GENERAL its8 SEP 1948 780 1. 32E2Lapt tz_1:.Lie a reement on Italian colonies sought-- The UK Foreign Office has informed US Ambassador Douglas of the British-French belief that prompt three-power agree- ment on the Italian colonies is desirable in order to secure Italian consent and cooperation in securing favorable votes In the UN. The UK and France favor: (a) Italian trusteeship for Somaliland; (b) cession of the Danakil coast to Ethiopia and postponement on the rest of Eritrea; (c) British trustee- ship for Cyrenaica and French trusteeship for the Fezzari; and (d) postponement on Tripolitania, during which period the UK would work toward eventual Italian trusteeship. Douglas comments that the British, who fear an unfavorable UN vote concerning retention of Cyrenaica by the UK, hope by this policy to obtain any votes the Italians and French can swing. (CIA Comment: 'Although the Italian Government would be receptive to this proposal, it would fear possible adverse public reaction on the score that the Government was helping the British without advantage to Italy.) 2. US prefers NorwazioLIC vHaBsy--The Department of State has informed US Embassy Oslo that the US considers Norway the best choice to succeed elsi,ium in the Security Council. The Department considers it desirable for the Belgium seat to pass to a western or northwestern European nation. US Embassy Oslo is instructed, if Norwegian officials are re- luctant to accept the responsibility, to stress the duty of states such as Norway to undertake UN obligations. Do e lqo t:',4,ANC;F, in Class 0 A " - 1_11 By a � 3 11: ) /17a3 C/A- Sec Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 � EUROPE 3. FRANCE: Oenerat strike fe.a.red--US Consul Christensen at Marseille has been reliably informed that a Communist- inspired strike of port and dock workers is scheduled to begin 6 September. Re expresses the fear that this may be a prelude to a general strike. Meanwhile, US Ambassador Caffery ob- serves that the increasing number of work stoppages and demon- strations for higher wages have sometimes been joint affairs staged by the Cntholic labor groups, the Communist-led General Confederation of Labor, and the non-Communist "Force Ouvriere" (PO). Caffery adds that because of the "widespread drive" for higher wages FO leadership is frequently unable to control local unions. (CIA Comment: CIA believes that substantial wage Increases will have to be granted In order to stave off nation- wide strikes; even though any French government which grants labors demands will face defection by its Rightist support and will weaken its own financial stabilization plan.) FAR EAST 4. DIDONESIA:Posslbje act.=. J.W..........mminent--The US Naval Liaison Officer in Batavia considers that because the Indonesians have lost faith in the power of the UN to pro- cure a just settlement with the Dutch, large scale guerrilla action by the Republic is "almost a certainty" in the near future. Re believes that in this event, the Dutch military force would be given carte blanche to suppress it. (CIA Comment: CIA believes that although this danger must be considered, the Indonesian Republic will not initiate guerrilla action until current negotiations have definitely failed.) ea-) - Se(.. Approved for Release: 2018/10/19 006749451 � Approved for Release: 2018/10/19 006749451 GENERAL SEP 1948 779 1. USSR seeks CFM meet1n on Italian colonies--According to ti -5 US Embassy London, the Soviet representative at the meetings of the Deputy Foreign Ministers has expressed the firm view of his government that, in accordance with the Italian Peace Treaty, the Italian colonies question must go to the Council of Foreign Ministers (CFM) before 15 September. (By the terms of the treaty, the question is automatically referred on this date to the UN General Assembly.) In answer to a query whether the USSR would initiate steps to convene the CFM, the Soviet Deputy replied that further steps "are up to the Soviet Government.'7 (CIA Comment: CIA believes that the USSR will seek a CFM meeting on the Italian colonies if only for the propa- ganda potential of a possible western power refusal to meet.) 2. quick decision on German reparations urged--US Ambassador Douglas in London strongly urges that there be no further post- ponement of a final decision on the question of the German plants to be made available for reparations. Douglas believes that such postponement, by accentuating suspicions regarding US intentions to honor obligations concerning reparations, might very seriously and adversely affect US ability to establish a united front among the western powers and might have very unfortunate consequences in France and Germany. British relations with OEEC --Ambassador Douglas observes that although the British may have given the impres - sicm of "dragging their feet" in the Organization for European Economic Cooperation (OEEC), it woad be a mistake to conclude that British disagreement with US proposals indicates obstruc- tionism. Douglas reports that ECA relations with the British in London are conducted in an atmosphere of mutual coliaboratIon and confidence. However, Douglas considers that: (a) the deve 1 - c7ment by the UK of a four-year economic program to achieve basic OEEC objectives has been striyuMathp,RK Government No , diA- 5 5 - 7-5 4411: / C . J C' 021'1" Dat 5 MAR 1978 By ; Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 should exert more pressure on "timid and vacillating" British labor leaders to collaborate with US and European labor groups In a common program for Europe; and (c) the British representa- tive at the OEEC in Paris should be replaced because of the friction he causes. The Ambassador expresses concern that US objectives in Europe may not have been clearly worked out so as "to take into account economic and other complexities of the European picture." .5. US favors simultaneous roc ition of Israel Trans ordan-- Ts Departmen of tate has requested U nabassa r ouglas In London to solicit Foreign Secretary Bevhi's comments on the following position, as approved by the President,regarding recognition of Israel and Transjordan: (a) the US should plan for simultaneous de jure recognition of the two countries; (b) recognition should follow the election of a permanent govern- ment in Israel, which is scheduled to take place about 1 October; and (c) the intervening time should be utilized in discussing the question of recognition with the Provisional Government of Israel and with Transjordan. The Department expresses the view that US recognition of Transjordan might induce the UK to give favorable consideration to recognition of Israel. NEAR EAST-AFRICA 4. IRAN: Shah ina " of US aid--US Ambas- sador Wiley reports that the Shah is extremely discontented over what he regards as the inadequacies of the US arms credit program. In a long conversation with Wiley, the Shah repeatedly contrasted US military assistance to Turkey with that provided Iran and asserted that the US had apparently completely ignored the strategic importance of his country. The Shah added that he considered US aid so inadequate that he was seriously con- sidering abandoning his plans for organized resistance in the event of Soviet agression. Wiley comments that the Shah's state of mind is clearly something that should be taken seriously." - 2 - Approved for Release: 2018/10/19 006749451 � .r,s Approved for Release: 2018/10/19 006749451 TOP fi-) F-AR�B*ST 5. CHINA: Increased aid to North China armEas--US Ambassador Stuart reports that Chiang Kai-shek has indicated both his de- sire and intention of supplying increased military aid to National- ist armies in North China. Stuart indicates that Chiang hopes arrangements can be made for additional US aid or that at least saving& can be made in transportation and initial costs under the China aid program. Stuart is sufficiently convinced by the argument that North China can be held with relatively small Increase in expenditure to feel that the US should explore the possibilities of shipping supplies in unused naval vessels. (CIA Comment: CIA believes that Chiang's apparent reversal of his previous attitude of withholding aid from North China is largely explained by his realization that: (a) the posi- tion of the North China forces is so precarious that without further material assistance, these forces will probably be unable to continue effective resistance for any length of time against the Communists; (b) US aid to North China may be a cheap way of forestalling a potential separatist movement in that area; and (c) if North China is lost to the Communists, the US may become more reluctant to continue assistance to the disintegrating Nanking regime.) Approved for Release: 2018/10/19 006749451 1 SEP 1948 Approved for Release: 2018/10/19 006749451 GENERAL 1. US els:slat= Italian colonies proposal--The Department of State has Informed US Embassy London of its view that Brit- ish criticism of the US proposal for the return of Italian resi- dents to the colonies would be dispelled by a frank explanation of US thinking on the subject. The Department explains that the US proposals were introduced because of a growing con- cern over unfavorable repercussions from Italian public opinion as a consequence of US failure to support Italian trusteeship of the colonies. The Department does not, however, wish to make more difficult British administration of these colonies and therefore suggests that the UK join the US in a joint recom- mendation which would be designed to meet British require- ments concerning the return of the Italian residents. 2. US concerned by Dutch attitude in GOC negotiations--The Department of State has expressed to US representatives in Batavia its concern over recent actions by the Netherlands Government which have not been conducive to the resumption of negotiations by the UN Good Offices Committee. The De- partment feels that the Dutch attitude, whether intentional or unintentional, appears to be hastening the fall of the present Republican Government as well as increasing the possibility that a successor regime will be strongly left-wing, if not Communist controlled. The Department desires to take all practicable steps to hasten the resumption of negotiations between the Republic and the Dutch and has asked for sug- gestions from the Batavia representatives before taking action. Document.No. NO CHANGE in Class. 0 14 DECLASSIFIED Class. CF1AN::ED TO: TS S C DDA nrio , 4 Apr 77 Auth: DDA Ra4. 77/1763 Date: 1 5 MAR 1918 By: 02 If Approved for Release: 2018/10/19 006749451 778 S C/A- S 3.3 Approved for Release: 2018/10/19 006749451 GENERAL 31 AUG 1948 777 - I. US advises Greeks not to fire on:guerrillas in Albania--The Department of State has instructed US Embassy Athens to advise the Greek Government that the US considers it impor- tant for the Greeks to continue their policy of withholding fire on guerrillas who have crossed the border into Albania. The Department believes that although the Greeks might be morally justified in returning guerrilla fire from foreign territory, such action could have extremely serious consequences, and could possibly create a situation where the UN or the western powers would have to intervene by force or "admit complete Inability to control matters." 2. c/A - S EUROPE 3. FRANCE: Formation of new Government increas 1 complex-- US Ambassa or a ery reports e s of orm a gov- ernment in France at present is more complex than ever because recent increases in intra-party cleavages have further fraction- alized "a National Assembly already divided into numerous poli- tical parties." In addition, Caffery points out, extra-parliamen- tary formations such as farmers' and employers' groups, as well as labor organizations, are increasing in power. (CIA Comment: CIA believes that despite the complexity of former Premier Schuman's task�The_ lei - uZar chang&of form- ingI, 0 u a government.) 4 - 1 - NO CHANGE in Class. 5WIDECLASSIFIED ass. CHANGED TO: TS S C DDA Memo, 4 Apr' 77 Auth: DDA REG. 77/1763 Date: r; MAR 1978 By: 02 r (h)(2) Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 4. UNITED KINGDOM: Cabinet decides to retard demobilization-- The US Military Attache in London has reported that the British Cabinet has approved: (a) slowing down army demobilization; and (b) increasing production of certain critical military items, such as anti-aircraft ammunition. (CIA Comment: In view of the British economic situation, this cabinet decision to divert men and materials to non-productive use was undoubtedly reached most reluctantly and indicates an Increasing concern over British military preparedness.) 2 Approved for Release: 2018/10/19 006749451 ftrny. TS. Approved for Release: 2018/10/19 006749451 GENERAL DU Ai H.() 776 1. US missions to encourage integration of Europe--The Depart- ment of State has instructed US diplomatic missions in western Europe to press in all appropriate ways for: (a) the encourage- ment of European unity, and (b) the forming and carrying cut of practicable proposals to bring about European integration. The Department has advised the missions that although the US will , avoid premature endorsement of any specific proposals for the unification of Europe, it intends to encourage both publicly and privately the progressively closer integration first of free Europe and eventually of as much of Europe as possible. S- e onF. 2. US to join France and UK in demarche to Albania--The Depart- Cm - Sec ment of Slate has informed US Embassy Paris of its willingness to participate with the British and French Foreign Offices in a demarche to the Albanian Government concerning the Greek guerrillas who seek refuge in Albania. EUROPE 3. FRANCE: Prospects for a stable ':..c.vermnent seem remote-- WA - Concerning�t�hi political tua on in France, the US Military Attache in Paris reports that the possibility of forming a stable government at present appears remote and that General De Gaulle's chances are tremendously strengthened. The MA adds that unless unforeseen changes occur in present national trends, a definite possibility exists that be Gaulle may be called to power within the next few months. Finance Minister Reynaud has advised US Ambassador Caffery that the "Socialists were the only cause of the Government's resignation." (CIA Comment: CIA believes that: (a) a new centrist gov- ernment will be formed to deal with the present crisis; and (b) although De Gaulle's cause has been strengthened, he will not re- turn to power in the near future.) Document No. 5-2. NO CHANGE in Class. 0 --- XDECLASSIFIED - 1 - Class. CHANCED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA 77 /763 Date: 041m44.4_ By: AL__ Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 3.3( -2 - Approved for Release: 2018/10/19 006749451 )(2) Approved for Release: 2018/10/19 006749451 GENERAL 28 AUG 1948 775 1. France and UK conside demarche to Albania�US Ambas- Moir Celery reports that the rieiich eign ice has drafted instructions to the French representative in Tirana to make a demarche to the Albanian Government on behalf of France and the UK concerning the importance of disarming and interning Greek guerrillas seeking refuge in Albania. According to Caffery, the French "understand" that the US is cool toward making representations on the ground that they would have no practical effect. The French and British, however, are inclined to make the gesture because of the importance attached to the matter by the Greeks. Caffery says that the French Foreign Office would be glad to speak In the name of the US also and will hold up its instructions until appraised of the US views. Caffery understands that, If the French representative in Tirana considers a demarche inopportune, the Foreign Office will not press the matter further. Document No. 6-1 NO CHANGE in Class. � g DECLASSIFIED Class. CHANGED TO: TS S C DDA Memo, 4 Apr 77 Auth DDA REG. 77/1763 Date; A 0 itiAtt ts By O2� Approved for Release: 2018/10/19 006749451 0- Approved for Release: 2018/10/19 006749451 CRET GENERAL 27 AUG 1948 774 1. Bernadotte feels Palestine must come before General Assembly-- e/P1 - UN Mediator Bernadotte has informed US Embassy Stockholm that he believes the Palestine problem must come before the next UN General Assembly. Bernadotte is convinced that the Arabs will never recognize the Jewish state voluntarily because of public opinion in their countries, and he therefore feels that if the Gen- eral Assembly passes some resolution similar to that of last November, the Arab leaders will be able to accept the Jewish state after pointing out to their people that world opinion is against them. Bernadotte prefers not to make his recommendations to the Security Council because the Jews seeking greater territorial gains than his proposals provide, might oppose them and he fears the USSR would then use its veto. Meanwhile, an Arab representa- tive has informed US Embassy London of his belief that Arab "acquiescence" in a Jewish state is the most that can be obtained from the Arab states for at least a year. The representative be- lieves that the Israeli frontier will have to be defined by some UN agency and drawn up on the ground as an imposed boundary to which the agreement of both sides is demanded. EUROPE 2. FRANCE: De Gaulle annoyed._N,...q'xtl..1_R..2mzl--US Ambassador Caffery reports that General De Gaulle and his supporters are concerned because they believe Finance Minister Reynaud's - program to stabilize the French economy is an attempt to do for the Marie Government what the Gaullists had hoped he would do for them when they came to power. Caffery points out that If Reynaud succeeds, many voters may say "we don't need De Gaulle," and that Reynaud will be useless to De Gaulle if he fails. Gaullist irritation is mitigated, Caffery adds, by the possi- bility that failure of the Reynaud stabilization program could cause the downfall of the French Government and De Gaulle would then have a good chance of taking power. Document No. c0 See. ConF NO CHANGE in Class. -I - XE!CLASSIFIED Class. Auth: Date: 0 CHANGED TO: � TS S C DDA Memo, 4 Apr 77 DDA REG. 77/1763 15 MAR 1978 By: 02 (1 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 m E T 3. GREECE: Early re-entry of guerrillas considered possible-- C/A - 6 US Ambassador Grady, in transmitting US and British estimates that the guerrilla forces have capabilities for early re-entry Into Greece from Albania, recommends strong US representa- tions to the Satellites in order to prevent such action. Grady points out that several thousand members of the guerrilla Grammos force have apparently withdrawn into Albania in good order and generally good condition. Grady comments that a large-scale return of guerrillas would severely lessen the value. of the Greek Army's Grammos victory and would have serious adverse affects on Greek morale and on the effective- ness of US aid. According to Grady, the Greeks are already discouraged over the prospect of having one Greek offensive after another nullified by temporary guerrilla withdrawals to Satellite soil. FAR EAST 4. INDONESIA: Fall of Republican Government considered imminent-- ern. $ The US Delegation to the tJN Good Offices Committee doubts thaF do the present Republican Government can last more than a few weeks unless it is presented an opportunity to resume negotiations with the Dutch on the basis of the Renville Agreement. The US delega- tion has been informed by a ranking member of the Dutch delega- tion that the next few weeks might bring a "nastier surprise" than the US delegation has yet experienced. Meanwhile, the Chief of the US Military Group in Batavia believes that a sudden and severe stiffening of the Dutch attitude probably means further provocative actions and greater estrangement; he considers that increased violence is likely and a complete break a distinct possibility. - 2 - Approved for Release: 2018/10/19 006749451 3.3(h)(2) ' Approved for Re-le-ase: 2018/10/19 006749451 ET GENERAL 26 AUG 1948 773 1. UK favors ponement on Eritrea�UK Foreign Secretary BevinIs informed US Ambassador Douglas that he is most anxious that a common US-UK-French policy be worked out before the September General Assembly meeting. Sevin prefers a two or three-year postponement of a decision on Libya and Northern Eritrea but believes that agreement can be reached on giving the Danakil coast to Ethiopia immedi- ately. Sevin indicates that daring this postponement the UK would expect to be released from the restrictive obligations of The Rages Convention in order that a civil administration could be installed and internal reforms instituted. Although Bevin � still hopes that at the end of this period the US would accept trusteeship over Tripolitania, he would not in principle oppose Italian trusteeship if he were satisfied by then that the return of the Italians would not cause serious distobances which might involve British troops. US Ambassador Douglas agrees on the desirability of three-power accord but believes it Improbable that the GA would agree to a long postponement EUROPE 2. GREECE: US observer says effective Satellite aid is can -"e1A- � tv7 US Embassy Athens transmits an estimate by the US military adviser to the Balkan Commission that General Markos is still receiving sufficient aid from Albania, Yugoslavia, and Bulgaria to maintain his present scale of operations. The US observer considers it significant that Yugoslavia has continued to co- operate with the guerrillas even after the Tito-Cominform break. Governmealsgoide.-- The Department of State has informed US Embassy Athens of the receipt of a note from the Greek Ambassador referring to alleged Instances of the use of Albanian territory by the guerrillas and of firing from Albania into Greece. The Department indicates that Document No. ill - 1 - NO CHANGE in Class. 0 K. DECLASSIFIED Class. CHANCED TO: TS S C ." DDA Limo, 4 Apr 77 ET Auth DDA REG. 77/1763 Date: 1 5 Mit Tan By 02 I' Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 ET In the note the Greek Government declared it has found it necessary to consider firing from Greece into Albania in order to prevent the repetition of such incidents. The Department - Informally advised the Ambassador that the Greek Government should continue to submit to the UN Balkan Committee all avail- able evidence of Albania's cooperation with the guerrillas but should avoid any precipitate action which might compromise the previous excellent record of Greek forbearance and ad- versely affect the Greek case before the UN. NEAR EAST-AFRICA 3. PALESTINE: Re concern over Israeli UN membership.-- a/A - s Concerning possible '1 supportorr-S--ra"--eli membership in the UN, US Minister Keeley in Damascus comments that recent Israeli expansionist statements seem to Indicate that Israel Is neither peace-loving nor disposed to carry cut the obligations of the UN Charter. Keeley relays the opinion of some of his diplomatic colleagues that such encouragement of Israel by the US will only further antagonize the Arabs and thus make more difficult any eventual compromise. - 2 - Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 �,Eetr GENERAL 25 AUG 1948 1. USSR reported not preparing for hostilities--eplying to a Department of Army query, certain US military attaches abroad report no indication in their areas of pass 1. le Soviet intentions to open hostilities. Military attaches at The Hague, Bern, Stockholm Copenhagen, Warsaw, Athens, Ankara, Tehran, and Nanking concur in this opinion. The Mk in Moscow, after considering available evidence, expresses the belief that the Kremlin is preparing for eventual rather than immediate war. The MA in Warsaw points out that Poland should be a good barometer of Soviet intentions to wage war in Europe tt that no evidence is available of such intentions. The MA Tehran states that the USSR seems to be interested-inclurthering its Iranian aims by covert means, w)11(no apparent intention to open immediate hostili- ties. The MA in Nanking indicates that aligns of aggressive Soviet policy in China are lacking but concludes that the Krem- lin might easily devote its main attention to Europe and bypass the Far East. 772 Agm y Ts 2. Iran and Trans ordan discuss unification of command in Palestine-- ena- 3 WRepresentative Stabler in nunan reports that the Regenro-f� Iraq and other Iraqi officials have arrived in Amman to discuss with /ring Abdullah of Transjordan the implementation of a unified command of Iraqi and Transjordan forces in Palestine. Accord- ing to Stabler, Abdallah's principal aims in the current talks are: (a) to put Iraq in the position of having to assume at least some of the blame in the event future adverse developments; (b) to give the Transjordan Arab Legion a freer hand in the defense of Jeru- salem by persuading Iraq to take over some of the Legion's gm- mitments elsewhere; and (c) to obtain additional financial aid from Iraq. Stabler feels that Abdullah will have difficulty accom- plishing these aims because the Iraqis are aware of the trap he is setting and realize that they will gain nothing by accepting his plan. Document No. 9/ NO CHANGE in Class. E] - - igt.DECLASSIFIED Class. CIU_KED TO: TS S C DDA Mmo, 4 Apr 77 futh: DDA , 77/1763 Date: ,V_NALI-,-", By: Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 THE AMERICAS 3. CHILE: Arl itina may retain Soviet d lomats�US Embassy Santiago s earned rom the ChI1eii1oreign Office that the Argentine Government has agreed to retaln Soviet diplomatic representatives (who are scheduled bsr mutual agreement to be returned from Chile to Russia through Argentina.) if the Soviet Government fails to return Chilean diplomatic person- nel via Finland. - 2 - Approved for Release: 2018/10/19 006749451 CIF.- eon". Approved for Release: 2018/10/19 006749451 ET GENERAL 24 AUG Igo; 771 1. EUROPE C/A- Sec 2. GERMANY: Germans believed carmIN out London a (ma/ants-- US Abassad pyp1ith�developments e pas week have encouraged the US Military Government in Germany to feel that German implementation of the London agreements is proceeding in a gener2.11y satisfactory manner. Murphy notes, however, that a slight hitch has occurred on the question of territorial reorganization. Document No. NO CHANGE in Class. 0 g DECLASSIFIED TS S C Class. CHANGED TO: DDA Memo, 4 Apr 77 Auth DDA EEG. 77 1763 Date: ALlAtis78_ By: DO__ 41 Approved for Release: 2018/10/19 006749451 3.3(h)(2) _ ga AU(1949 Approved for Release: 2018/10/19 006749451 GENERAL 1. Iran advised to air Soviet threats in UN--The Department of State has expressed to US Embassy Tehran its concern that the current Moscow conversations, whatever their outcome, may be followed by an immediate focusing of Soviet attention upon Iran. The Department accordingly believes that Iran should be prepared to "publicize through the UN at the earliest appropriate moment the Soviet threat to Iranian independence." (The Department has particular reference to the threatening notes recently delivered to the Iranian Government by the Soviet Ambassador.) NEAR EAST-AFRICA 770 s- TS 2. PALESTINE: Is_LaA.sasEted increasinglumtive under truce-- CIA - Following conversations with Premier Ben-Gurion and Foreipl Minister Shertok, US Special Representative Mcdonald in Tel Aviv estimates that: (a) Israel is not about to take deliberate overt action in violation of the truce; and (b) if an increasingly tense situation is to be relieved, there must be evidence of a "measurable progress toward peace" in the near future. Accord- ing to McDonald, Shertok categorically denied reported Jewish plans for general military action in Jerusalem or northern Gali- � lee but asserted that the indefinite continuation of the truce, with- out any move toward a final peace settlement, was creating an Intolerable financial and manpower situation for Israel. Document. No. '14 NO CHANGE in Class. 0 DECLASSIFIED Class . CHANGED TO: TS S C DDA blemo, 4 Apr 77 Auth: DDA REG. 77 1763 Byg Date: ,d 5 61 AR 191 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 GENERAL g 1 AUG 1948 769 1. Jews ported influenced by economic factors�According to US Consul Lippincott in Haifa, many observers believe that both the current drain on the Provisional Government's finan- cial resources and the economic disruption of the country caused by the maintenance of a large body of armed forces have created an impossible situation for the Israeli regime, necessitating immediate action despite the truce. Lippincott also reports the unanimous conviction of neutral observers that the Jews are about to make a determined attempt to take all of Jerusalem and may succeed within a week. �IfactlfA6-0.6 gde vo CHANGE in Class�. XDECLASSIFIED Glas.s. CHANGED TO: TS S 1Aemo, 4 Apr 77 AtItaisA 77 1763 DD - 31tp 0 Vgivw* 5 PAR 19718 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 ET GENERAL 2 0 AUG 1948 768 1, USSR US ffirta Vienna�General Keyes, tAJA Commanding General US Forces Austria, reports that he intends to permit Pan American Airways to make eight flights directly hts to from Prague to Vienna, although the Soviet Air Division in Vienna has disapproved four of these flights. Keyes will invoke the 1946 quadripartite agreement permitting "urgent flights" Into Vienna. (CIA Comment: The Soviet occupational authorities have repeatedly contended that the 1946 agreement does not cover flights by civil air lines. The USSR, therefore, is likely to exert pressure in Prague to block the disapproved flight schedule. Failing this, it may use these increased "violations" as an excuse for attempting to impede all US air access to the Vienna area.) EUROPE 2. AUSTRIA: IniglAari _ping_ of Austrian �Wallis�US Legation (/A - Sec. Vienna notes that US officials in Austria have no effective means to prevent the kidnaping of Austrian officials in the Soviet Zone, or in the international zone during those months when the USSR has the chairmanship of the Allied Control Council (ACC). The Legation believes, therefore, that if western protests to the Council on this subject prove fruitless and if there are further Soviet kidnapings of important Austrian officials, the matter should be presented to the UN. The Legation points out that further kiolnapings would so undermine the morale of the Aus- trian administrators in the Soviet Zone that all of their power would pass to the Soviet authorities--a development which in effect would establish a partition of Austria. (CIA Comment: Further Soviet seizure of Important Austrian officials would also reduce the effectiveness and the prestige of the Austrian Government and the ACC.) Document No. clY - 1 - NO CHANGE in Class. 0 V DECLASSIFIED ass. CHANGED TO: TS S C DDA Memo, 4 Apr 77 DDA REG, 77/1763 Auth: Date: ri � . By: or Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 NEAR EAST-AFRICA 3. PALESTINE: ews believed attem � 'a to irovoke hostilities-- US Consul General c onald reports om Jerusalem t the Jews have made every effort to build up a case against the Arabs as violators of the present truce. He considers that the Jews are actually attempting to provoke an incident which would per- mit the resumption of hostilities but which could not be conclu- sively attributed to them. Macdonald believes that because of the current East-West division in the Security Council and in view of "past fluctuations in US policy," the Jews discount the possibility of punitive action by the UN, particularly against the state of Israel. FAR EAST 4. CHINA: Chlang makes new plea for US aid--US Ambassador Stuart, in summarizing several recent talks with Chiang Kai- shek, reports that Chiang reaffirmed his determination to fight Communism to the last with or without US aid. Chiang also told Stuart that the USSR is "more realistic in appraising Chinese conditions" than Americans who predict that his Gov- ernment "will fall in three or six months"; Chiang believes that the Kremlin therefore favors a peaceful settlement on terms which would advance Communist infiltration. The Gen- eralissimo admitted that his Government was corrupt and Inefficient and declared that it was for this very reason that he had repeatedly requested US aid, especially in the form of civil and military advisors. Chiang maintained that such help is essential to undertaking the reforms which alone would Justify material assistance. Chiang added that he could not believe that US leaders are fully aware of what he is trying to achieve or what "the US interest in this struggle really is," and he proposed that Stuart go to Washington to present China's "real case." Approved for Release: 2018/10/19 006749451 CIA- Set Approved for Release: 2018/10/19 006749451 r") (CIA Comment: Chiang's latest approaches to Stuart concerning US aid are indicative of the precarious position of Ms Government which probably would disintegrate withoat US support. CIA doubts that the present National Government would ever give more than lip-service to US advice concern- ing reforms.) 3 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 Ito GENERAL 1. US requests use of French North African airfields--The Department of State has instructed the US Embassy in Paris to ask the French Government to permit unrestricted use of French naval airfields at Bizerta, Oran, and Port Lyautey by planes from US aircraft carriers. In return, the US Navy Is prepared to consider favorably the expansion, moderniza- tion, and rehabilitation of these installations. 19 AUG 1948 767 2. Inc offer disappoints Norway's Defense Minister--A high UK Foreign Office official has lthimed asy London that the Norwegian Defense Minister is "very disappointed" that the UK can supply so little equipment to Norway for mili- tary needs. The official observed that the UK recognizes the importance of meeting Norwegian defense requirements, but that: (a) practically no surplus of the desired equipment exists; (b) the Norwegian request competes with Britain's own defense needs; and (c) increased production of military equipment would interfere with the export drive. The official expressed the hope that the US woald "let the Norwegians down as easily as meal:del:because it would be "unfortunate" if Norway should conclude that the US and the UK are unable or unwilling to supply its military needs. 's-Ys - T S 413 Document No. NO CHANGE in Class. 0 olgQ.CLASSIFIED Class.. CHANGED TO: TS S C DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 a Date: oisugAR un By: 02t Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 Document No. n110 HANGE in Class. DECLASSIFIED lass. CHANGED TO: TS S C GENERAL DDA Memo, 4 Apr 77 Auth: DDA FC:C. 77 1763 Late: L Iran arms deal with USSR--US orme! Soviet Ambassador Sadclukov� in a recent interview with Prime Minister Hajir, complained about the American arms credit program, Hajir remarked that if the Soviet Government could offer similar arms on the same terms, Iran would cancel its agreement with the US and buy from the USSR. Hajir also is alleged to have made a commitment to Sadchikov that, while prime minis- ter, he Would sign no further agreements with the US or UK. Ambassador Wiley comments that while this account og the Sadchikov-Hajir interview sounds "pretty accurate," it probably reflects nothing more than Hajir's worried eager- ness to be all things to al/ people simultaneously. (CIA Comment: CIA is inclined to doubt that Hajir. made the bald commitments attributed to him in the account given above. However, it is probable that, in an effort "to be all things to all people simultanecusly," Hajir implied that in the futare Iran would be more amenable to Soviet suggestions. It is also probable that Hajir will attempt to use this new "attitude" toward the USSR as a means of obtaining more aid from the US.) 0 Hul3 Iwo 766 2. US and UK concerned over Palestine nituation--The Depart- ment of State has expressed to US Consul General Macdonald in Jerusalem its "Increasing concern over evidences of new and potentially aggressive' Israeli intentions and has in- structed Macdonald to obtain the private views of US General Riley (now serving as Military Observer to the UW Mediator) regarding the military situation in Palestine. Macdonald has concurrently reported his conclusion that, for all practical purposes, the truce in Jerusalem has already broken down, at least temporarily. Citing the "large and organised scale" of� recent fighting as a basis for this view, Macdonald adds that the UN observers are being obstructed by Jewish restric- tions on their movements and that their moral authority has - 1 - Approved for Release: 2018/10/19 006749451 C/A- Sec. 3.3(h)(2) :1/1A-- outriv S _ T S � Approved for Release: 2018/10/1,9 006749451 ET "practically evaporated." Meanwhile, US Ambassador Douglas reports Foreign Secretary 13evin's concern over the "grave possibilities" suggested by the latest Jewish military actios. Bevin urges that the US consider "Immediate and forceful steps" to halt the "Jewish mailed fist," lest .a determined Jewish attack completely change the balance in Palestine and bring about the ultimate disintegration of Transjordan. 3. US pX delegationurges_ab refume relief --The US delegation to the UN has advised the State Department of its belief that "as a matter of cold-blooded, political realism" In terms of US short- and long-range relations with the Arab states, the US should take the promptest and most vigorous steps, regardless of difficulties, to comply with the UN Mediator s request for Arab relief supplies. The US delega- tion also believes that the US should promptly take all other possible action to alleviate the desperate situation of the Arab refugees. EUROPE 4. USSR: Soviet trend toward economic Mattlo.31--US Em- bassy Moscow reports trend toward greater centralization of economic control in the USSR as indicated by recent integra- tions in several ministries. The Embassy considers that un- satisfactory Soviet progress in meeting current Five Year Plan production goals in certain important industrles, plus the need for increased industrial and strategic reserves, has probably influenced the Kremlin to move toward greater centralization of economic control in the USSR. (CIA Comment: CIA concurs with the Embassy's analysis.) -2 Approved for Release: 2018/10/19 006749451 C/A - see_ 5 - CONF Approved for Release: 2018/10/19 006749451 5. DENMARK: Views on mi,..11...c.(Loneration--The Danish Ambas- sador to Washington, temporarily in Copenhagen for official discussions, has informed US Ambassador Marvel that: (a) the Danish Government is satisfied with the present arrangement regarding the Greenland bases; (b) the Danes are "most dis- appointed and discouraged with the small amount of arms offered by the US"; and (c) he believes that the majority of Danes and the Government favor alliance with the western European union but that no action will be taken before the Swedish elections (12 September) nor before the west produces a "tangible" pro- gram of assistance. FAR EAST S. TS 6. KOREA: UN Commission to consult with new government-- e -Resta. US Political Adviser e s rep t � ons Temporary CO21123110SiCEI on Korea (UNTCOK) has informed President Rhee Syngrnan that It is now ready to consult with the government of the Rert4lic of Korea pursuant to the terms of the UN General Assembly (UNGA) resolution on Korea of 14 November 1947. (CIA. Comment: This move will enhance the prestige of the new government and increase its chances for obtain- ing official UNGA recognition, since UNTCOK has now, in effect, tacitly recognized the Republic of Korea as the "national government" envisaged in the UNGA resolution.) Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 46 EUROPE 17 AUG--1948 765 1. FRANCE: Special powers bill vs c change-- constitutional c s - Sec. Premier Marie has expressed to USAthbassador C2ffery his personal view that the Government's special powers bill now being debated by the French Assembly in fact constitutes an amendment to "the constitution of the fourth republic where it was weakest." (CIA Comment: Marie's special powers bill would strengthen the executive without causing a drastic clangs in the present structure of the French Government. Granting of increased powers to the executive long has been a major plank in De Gaulle's platform. If Marie succeeds In putting through such a measure, he will have reduced the effective- ness of one of De Gaulle's main arguments.) 2. GREECE: US policy on military_ a_p_Lista_ns..e--Tile Department of State has informed US Embassy Athens that US policy: (a) � contemplates assistance to the Greek armed forces sufficient to eliminate the guerrilla threat to internal security and to provide reasonable assurance against its reappearance; but (b) does not aim at building up Greece's military strenigth to resist an armed invasion "or for any other purposes.' The Department points out that, in determining the reduction in future US military assistance to Greece, care yauat be taken that neither the Greeks nor the rest of the world gain the impression that the US has weakened in its determination to assist Greece in maintaining its independence and territorial Integrity. Document No. (4( NO CHANGE in Class. 0 Lg DECLASSIFIED Class. CHANGED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REG. 77 1763 Date: By: 6 Nis Approved for Release: 2018/10/19 006749451 e - s Dodqument No. (10 Approved for Release: 2018/10/19 006749451 b tiO CHANGE in Class. "...Dr DECLASSIFIED CHANGED TO: TS S DDA MF:rno, 4 Apr 77 Auth: DDA RJ, 77/1763 EUROPE 1 6 AUG 1948 764 Date: iia By: 2 1. METED KINGDOM: Cenera1 election forecast for late 1949-- US Embassy London j.redtcts that the UK Labor Government will call the next general election (which must be held by July 1950) sometime following May 1949, possibly between June and December when the Embassy believes that domestic economic conditions will be most favorable to Labor. Leaders of both Parties believe that, while Labor has lost popular support, there is iO strong trend to the Conservatives. The Embassy considers that an election today would return a Labor majority but adds that the Conservative Party machine is now in excel- lent condition. '2/A- S 2. FRANCE: Views on Moscow talks--US Ambassador Caffery reports that officials in the French Foreign Office are currently confident that the Moscow talks will result in an accord, but doubt that an agreement for four-power control of Germany will follow. According to Caffery, the French Foreign Office believes that the USSR woad be satisfied to reach an agreement on the basis of a Germany divided in two parts. The Foreign Office, therefore, considers that any future four-power c tem erence should not be allowed to break down if no agreement is ifilt sight but that the western sowers should instead try to bring about an agreement for maintaining orderly relations between eastern and western Germany until an arrangement embracing all Germany appears feasible. The Foreign Office does not consider that such a limited agreemelt would exclude the western powers from Berlin, but believes that they would remain in the city with powers restricted to their cern sectors and without any instrument of four-power control. NEAR EAST-AFRICA 3. PALESTINE: US favors return of some Arab refuge--The Department of State has informed the US delegation to the UN of its belief that a substantial number of Arab refugees could - 1 - Approved for Release: 2018/10/19 006749451 5 - See. Approved for Release: 2018/-1-0/19 006749451 be permitted to return gradually to their homes, under the supervision of the UN Mediator, without prejudicing the main- tenance of Israel's internal security. Although the Department considers that an over-all solution of the refugee pr f).lem must be sought as an intrinsic part of a final settlement of the entire Palestine issue, it believes that the increasingly critical nature of the refugee situation makes some prior repatriation of refu- gees essential. The De,v, rtment adds that Israeli assistance in alleviating the refugee situation would facilitate a peaceful solution of the Palestine problem as a whole, while yewish refusal to accept any refugees might adversely affect "the 700,000 Jews permanently residing in the Arab states." Tat: ADMICICAS 3.3(h)(2) -2 Approved for Release: 2018/10/19 006749451 Approved for Release: 2018/10/19 006749451 46 14 AUG 1948 ET 763 GENERAL 1. Two Benelux leaders suis ort.....vestern_s_dtan elgian Premier Systak�Tiiiiii�pressed to US Ambassador Kirk his approval of we US handling of the Moscow negotiations. Speak feels that the western powers hold two trump cards: the Ruhr and the West German Government; Speak hopes that the West realizes the necessity of hanging cm to these trumps. Spaak believes that pesetration into control of the Ruhr is the major �sjective of Soviet diplomacy and that de- feat or delay of the formation of a west German state is a close second. Kirk reports that Luxembourg Foreign Minister Bech has expressed a similar view of Soviet slectives. Bech advises the western powers to be cautious and not let con- siderations of prestige in Berlin or COrapaSSiCil toward the Berliners to lead them to make even Blight concessions on the Ruhr or a west German state in order to obtain a tempo raring easing of tension. Beth's view is that "continued Allied firmness" will eventually result in a shifting of Soviet pressure toward a different weak point, probably eastward. 2. US expresses its onon tcr,k1 a).iten --The Depa.rtm7notoUState hasoiGovernment that after. consideration of Italtas, views as to the disposition of former Italia.n colo ies and in recognition of the importance which the Italian people attach to this question, the US is now prepared to take a final decision only as regards Italian Somalia' la and the smothers] portion of Eritrea. The US will support Italian trusteeship for Italian Somaliland and will support the cession of southern Eritrea to Ethiopia. Because of the com- plex factors involved in the disposition of Northern 'Eritrea. and Tripolitania, the US has concluded that decision on these colonies should be postponed to permit further study by the UN. In the case of Cyrenaica, the US feels obliged to respect the British pledge to the Senussi and to support the MK in carrying mit this pledge. TO Document No. 11 5 - 5 gist- 5 0 ilk- ts - NO CHANGE in Class. JR!DECLASSIFIED ss. CHANGED TO: LJ TS S C DDA Memo, 4 Apr 77 Auth: DDA R17C4 77/1763 I Date :_ 5 11" By: N Approved for Release: 2018/10/19 006749451 . Approved for Release: 2018/10/19 006749451 NE AR EAST-AFRICA 3. PALESTINE: Immediate aid urged Axel v.....e_tq--US Consul General Macdonald in Jerusalem expresses the opinion that the Palestine Arab refugees currently constitute the most important political question in Arab Palestine; he considers Immediate attion to alleviate their plight essential. Macdonald says that the UN and the US are widely blamed for the situation. Be suggests that effective assistance would be the best means of demonstrating continued US friendship for the Arabs and would also tend to arrest the deterioration of the US position in the Middle East. THE AMERICAS 4. NICARAGUA: Inv.....agoly:� revolutionaries-: a band of guerilla-revolutionaries, "apparently" ' anc from Guatemala, have crossed the Honduran � 'i� caragua and sacked a nearby town. General Somoza of Nicaragua has already flown reinforcements to the area and believes the invasion 'can easily be contained." (CIA Comment: CIA concurs with General Somoza's estimate. However, the Presidents of the Dominican Republic, Nicaragua and Honduras--the "dictator" countries--on the one side and Cuba, Haiti, Venezuela, Costa Rica and Guatemala on the other are informally committed to support one another in the event of revolutionary attack. The invasion will further embitter the relations between these opposing groups. In the unlikely event that it touches off a formal conflict, with Guate- mala and Nicaragua as the principal contestants, the superior air strength of the 'dictator" countries will be a decisive factor.) -2 - Approved for Release: 2018/10/19 006749451 3.3(h)(2) Approved for Release: 2018/10/19 006749451 0 TOP ET GENERAL 3 AUG 1948 762 1. US will neither mediate nor encourage coalition in China-- gecretary Marshall has instructed A � ssa or tuar i� t the US: (a) must not give any indication of support or en- couragement for a coalition government in China with Com- munist participation; and (b) has no intention of again offering its good offices as mediator in China. At the same time/ Ambassador Stuart is directed to avoid overt or even secretly expressed opposition to a compromise settlement, because this might: (a) provide ammunition in China for propaganda allegations that the US is prolonging and encouraging the war; and (b) mislead the National Government to anticipate un- limited aid, which cannot be forthcoming under the existing world situation and, in any event, would require action by Congress. 2. US delevation to remain until final Bel de vote taken--The pa men o �as a egation al e current Belgrade Conference that a firm US decision has been taken to remain at the  Danube Corderence ,regardless of British and French actions, until the final vote in plenary session has been taken on the Soviet draft for a new Danube Convention. The US wishes to demonstrate its willingness to continue negotiations, even when it is In a minority position, in order that it may not be compared to the USSR in connection with Soviet tactics in walking out of UN and other conferences. The US delegation is instructed to hasten, as far as possible, final action in plenary session, and is directed to make blunt statements on basic issues but to avoid detailed discussions. The US delegation is also instructed to support British and French claims regarding the continuing validity of the previous treaties. Document No. 31 NO CHANGE in Class. �0 '"DECLASSIFIED Class. CHANCED TO: TS DDA MDmq, 4 Apr 77 Auth: DDA R.,;G, 77 17e3 Date: -.S