DAILY SUMMARY - 1948/04-1948/06

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 06749452
• Document Creation Date: November 8, 2018

A r% Approved for Release: 2018/10/18 006749452 TOP aealz T e GENERAL 1. US UK and France to consult on Berlin problem�The Depart- ment of State has notiffirt.lt-Am.-7�sassadotou-FaS in London ' that the US agrees to the French Government's request, en- dorsed by UK Foreign Secretary Bevin, for consultation in London "as soon as practicable" on the Berlin problem, 2. Estimate on US-UK air lift to Berlin�US Ambassador Douglas transmits an estimate that the US-Ilk air lift to Berlin after 1 July will amount to about 1,250 tons a day, or roughly 36,000 tons a month. Douglas warns, however, that this estimated capability may be affected by weather conditions and other factors. The Department of State has informed Douglas that US military authorities believe that it would be difficult to make an estimate at the present time on the air lift and feel that the revelation of such dab to the USSR, as Foreign Secre- tary Bevin proposed to do in a statement before the House of Commons, would perhaps be unwise. (CIA Comment: Although minimum food and coal needs have been estimated at 4,000 tons daily-2,000 food and 2,000 coal�the 100% increase over previous estimates of 600 to 750 tons �strengtheils the possibility that starvation in the city can be further delayed.) 3. tk suspects USSR seeks basis for negotiations --Belgian PrenI'ifSpaak baa pressed to Us Ambassador kirk the view that the recent communique issued by the Soviet-Satellite meet- ing in Warsaw includes some indications that on certain points the USSR Is seeking some basis upon which negotiation might be possible. Spaak feels that the western powers should demand a clarification of the "Warsaw communique," both to verify this possibility and to make clear to the German people the "barren and scanty performance" of the USSR. Spaa.k fears that unless the communique is answered soon, the western powers may appear "too adamant and too unresponsive." Document No. 6lit NO CHANGE in Class. 0 - I-0 DECLA:ja",IFIED Class. TS S RET DDA , 4 �Ppr 77 Auth: DDA 77i1763 Date: 1 4 MAR 1978 By; oal Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOPb AL of possible approach to west by Tito--ne US atKik� Naval Attaches in Belgrade, in raising the cities- ties d possible approaches by Marshal, Tito for US support agebat the USSR, recommend the "boldest possible exploits- tine ot any such defection in "the keystone of the Soviet- Satellite struts:ie." The Attachea believe that in wtthstandiag $oviet paluesure Tito wculd have good prospect of suctems if gives Il support from the west. The Attaches, however, reconeseed that the US take action only through propaganda eatfl wretched by the Yugoslays. ICI& Comment: Although The may extend cahloan feelers te the west, it is more probable that he will postpone any direct request for western support until the Kremlin has deBnitely closed all further avenues for a rapprochement. V the Kremlin denies the implied request for direct coded n3ade in his 29 June answer to the Cominform resolution, Tito may thin be forced to seek western aid against Soviet fatalist- tick.) L US to der N eorw and Danish secnrity.The Depart- me�iiiaBlifts has tru in Oslo and Copenhagen to assure the Norwegian and Danish Governments , thstt the security of those countries will be "much in mind" during 2311 exploratory discussions (which will begin S )ly) pursuaat to the Vandenberg resolution. The Department hopes that no action will be taken to render more difficult Norwegian - and Danish --and eventually Swedish-- participation in western European security arrangements In association with the US. S. US UN deletion estimate of Palestine situation--The US delegation to the UN, in ancextento.me an the Palestine situation, reports that key UN delegates are agreed that sooner or later UN Mediator Bernadotte will be confronted with basically extreme and irreconcilable Jewish and Arab positions and that at this point US-UK influence will be essential to bring the Jews and Arabs together. The delegation feels that: (a) prolongation of the truce--preferably a six-2nonth extension--is essential to Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOPS working out a settle ent; (b) full sovereignty for Israel is a minimum requirement for peaceful adjustment; (c) Abdullah Is the chief bargaining factor on the Arab side and consequently Tranajordan should receive US recognition; and (d) the boundaries et Israel recommended in the UN partition resolution should be revised and guaranteed internationally. of truce considered unlike -The Saudi Arabian tF�reIg�IiAter 1t US1i?niatsr Childs at Jidda that he is "under the impression" that the Arab states will not accept a prolongation of the UN Palestine truce. Mean- while, US Charge Patterson in Cairo reports that Arab League officials, including Secretary General Assam Pasha, are pessi- � natio dm the prospects of the acceptance by either Arabs or Jews of the "peace proposals" drawn up by UN Mediator Bernadotte. EUROPE 7. GERMANY: Aliened 'plans for east Ger man Et�overnment (a) an east German government, to be called an "All German Government," will be announced in the near fubire; (b) Otto Nuschke, member of the Christian Democratic Union and co-chairman of the Volksrat (People's Council), will be the Prime Minister; (c) indications are that the USSR intends to have the Volksrat emerge as a ready-made government; and (d) the co-secretary of the Volksrat Is working on a draft peace treaty which must be ready for sOmission to the People's Congress in September. (CIA Comment: CIA believes that the USSR has drawn up plans for an east German state which., in its provisional nature and approximate timing, will ostensibly parallel the scheduled west German government. The implementation of the Soviet plan, however, probably will be delayed until the USSR can "justify" its action by riaiming that the western powers have ignored the plea for German unification in the Warsaw communique.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 - TO GENERAL 29 JUN 194EMI 724 1. oisalgattim_wes non-/withdrawal from Berlin�Foreign Secretary Bevin has informed US Ambassador Douglas in London that the British Cabinet has approved unanimously and without qualifications "a policy ofclear and unquestioned determination to remain in Berlin." Douglas reports Sevin's view that the US and UK should mobilize their air transport strength to the greatest possible extent in order to supply the civilian population of Berlin. According to Douglas, Bevin feels strongly that such an exhibition of power would greatly reinforce the morale of the Germans in Berlin and effectively demonstrate to the USSR and the Satellites the power of the US and the UK. Bevin believes the Kremlin would shortly reopen the lines of communication to Berlin when it learned that such a spectacular performance" was possible. 2.lila or Soviet offen2.1yxwithin two ears held unlike --The US Military and Naval Attaches in Bucharest express the view that although there are unmistakable signs that the USSR is making long-range preparations for war, the Kremlin will not launch a major offensive within the next two years. The Attaches base their time estimate upon the following consi- derations: (a) Soviet reconstruction in Rumania is not yet completed; (b) Satellite armed forces will have matured within two years; (c) supply of vital technical industrial equipment cannot be accomplished before 1951, or even later; and -(d) the construction of projected air bases and facilities, particularly for strategic bombardment, will require several years. (CIA Comment: CIA concurs in these views. Recent estimates by other US observers in eastern Europe are in fundamental agreement with the analysis of the Military and Naval Attaches in Bucharest.) Document No. 81 (0 NO CHANGE in Class. Ej El DECLASSIFIED � 4- . Class. CHANGED TO: TS S DDA Memo, 4 Apr 77 h: DDA REG. 77 1763 Approved for Release: 2018/10/18 006749452 By; 1 fl Approved for Release: 2018/10/18 006749452 ts-v` TOP .61UROPE "3. GERMANY: USSR ared to exuloit "revolutionary situationv-:- 3.3(h)(2) .1373-1 Communist-dominated Socialist Unity Party is secretly Aiming to set up action committees in Berlin for activation upon pre- 3.3(h)(2) - arranged signals. the Communists main- tain that the currency reform in Berlin is creating a "revolu- tionary situation" which must be utilized to bring about the 3.3(h)(2) withdrawal of the western allies from the city the Co munists Intend that the "German revolutionary masses" carry out strikes and demonstrations about 1 July, in order to give the impression that the position of the western powers has been made untenable through the will of the German population. Commanding General Clay transmits from an".un-. impeachable source" a report that the Communists 3.3(h)(2) to seize key points i the webtern sectors of Berlin the Communists believe capitulation oit the western powers must be forced .promptly, lest western propaganda compel the USSR to abandon the blockade on food . and electricity and thereby damage Soviet prestige. (CIA Comment: CIA believes that until the determina- tion of the German population is weakened by hunger as a direct consequence of a prolonged blockade of food shipments, the anti-Soviet attitude of the western sector populadon- will render ineffective Communist attempts to exploit the present situation.) 4. FRANCE: Communist ress moderate on Berlin�US Am- bassador Caffery interp-rets the fact that French Communist publications have taken a comparatively moderate view of the present situation in Berlin as an indication beet the 1..remlin Is not yet prepared to adopt a completely uncompromising atti- tude toward the Berlin issue. Caffery reports that the more "extreme elements" among French and Soviet Coeemunists in Paris believe that the efforts of the USSR in Germany should . be directed primarily toward forcing a withdrawal of the western powers from Berlin. Caffery believes that the mod- erate views, as exneessed in the Frena Communist press, may reflect more accurately the attitude of the Kremlin. - 2 - TO RET V.� Approved for Release: 2018/10/18 006749452 Approved for Release: 2016/10/18 006749452 TOP (CIA Comment: CIA, believes that the USSR is not yet prepared to force a definite "showdown" in Berlin and that current Soviet measures there may be designed to force the western powers into negotiations which would give the Soviet Union another opportunity to raise the questions of quadri- partite control for all Germany and Soviet participation in the Ruhr.) FAR EAST 5. MALAYA: Britisherious ccerned over situation-- US Consulate General Singapore reports that serious concern Is being privately expressed by British officials in the Malay Federation over the terrorist methods being used in the current disturbances and the extent of the areas affected. The US Consul at Kuala Lumpur indicates that a British mili- tary spokesman believes widesp-read military operations will be necessary to quell the disturbances. The local police at !Kuala Lumpur have suggested that the US be approached in oreer to obtain weapons and ammunition. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 .to TOP EUROPE 1. GERMANY: US to maintain firm stand in Berlin--The Depart- ment of State has informed /US Ambassador Douglas that the US is prepared to continue its unprovocative but firm stand in Berlin, utilizing to the utmost the propaganda advantages of the situation. The Department agrees to Foreign Secretary Bevies proposal to maintain a complete exchange of informa- tion on the German situation through US Embassy London. Douglas is authorized to inform Sevin that the US may wish to send several B-29 bombes groups to the United Kingdom. Douglas reports from London that Bevin has expressed a personal view that withdrawal s/ the western powers would have serious, if not disastrous, consequences in Germany and throughout Europe. Douglas has learned that Bevil!' will address the Rouse of Commons on 29 jUne and take a line of "complete firnmess" toward the situation in Berlin. US Ambassador Caffery reports that a high official of the French Foreign Office has stated his strong belief that withdrawal from Berlin could be considered only if. some "very important" counter concession were�granted by the USSR to offset the "tremendous loss" of prestige such a with- drawal would imply. Berlin economic ties with West seriously weakened-- US Ambassador Murphy points out that one more serious problems" in the present Situation in Berlin is that Soviet inter- ference with freight shipments to the West has piled up in Berlin so large an amount of manufactured goods that many Berlin firms may be forced within-the nett two or three weeks to suspend production, thus creating unemployment. Murphy Indicates that Soviet Zone authorities are approaching firms in � the Berlin western sector with offers to buy their production. Murphy says that unless a break in the traffic situation occurs soon, western Berlin industry will be geared into Soviet zonal production; consequently, the western powers will lose not only the industrial output they now obtain from Berlin but also e ec- tive control and influence over industries and workers/ Document No. 01 air\ i94' 723 NO CHANGE in Class. 0 - 1 - o DECLASSIFIED Class'. CHANCED TO: TS S RET.DDA Memo , 4 Apr 77 � �.?) Auth : DDA REG. 77/1763 NC Date: 4 MAR ipa �13 y : fdsi Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 (CIA Comment: CIA concurs in the view that the feeding of Berlin by the western powers will. not in itself be sufficient to offset the threatened Soviet control of the eco- nomic life of the city and that a solution must be found to the traffic and unemployment deadlock.) FAR EAST 2. CHINA: Rapid deterioration in Nationalist osition--The US Military Attache in Nanking reports that recent events in China indicate a "rapid deterioration and loss of control by the National Government." The MA cites the following events: (a) the soaring of the black market exchange rate to over five million Chinese dollars for one US dollar (an 100% increase in 48 boars); (b) the temporary loss of Kaifeng (capital of Ronan province) to the Communists; (c) rice riots in Chung- king; (d) the resignation of all police officers in Peiping follow- ing an attack upon the police commissioner there; and (e) clashes between Nationalist soldiers and civil police in Tientsin. The MA connects the rapid rise of the black market exchange rate to an "unconfirmed rumor" in Shanghai that Chiang Kai-shek is in custody in Sian. In reporting the existence of such a rumor9 US Embassy Nanking declares that it is "highly skeptical" that the rumor has any basis in fact. - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/143.506749452 GENERAL telL ili cnfe in P The IJ$ Military Attache in Prague rep4eentatives from the USSR, Yugoslavia, Rumania, and Igaria concluded a secret conference in Prague on 20 June. the IAA believes that, in view of the forthcoming Danubian Conference, the main topics of discussion may have been; (a) plans for defense of the Danube and its use as a milibr supply route; and (b) "general mutual defense measures. (CIA Comment In view of the recent Warsaw meeting, such an overall military conference of the Satellites would seem logical at this time. The fact that Poland and Hungary were apparently not represented suggests, however' that the meeting may have been called primarily to discuss plans for the allocation of Czechoslovak arms production to the Balkan Satellites.) igke JUN r 722 EUROPE 2. GERMANY: Tension Berlin tion�US Ambassador M 21/0S RA cress among the population and allied personnel in Berlin. Murphy says that a casual remark by General Clay to the effect that the VIISR will not be able to drive the US out .of Berlin by arqf act short of war is being interpreted in Berlin as an ultimatum. Ifinrphy indicates that the city a population is feverishly en- groomed _with two questions: (a) "will the western allies stay and try"; and (b) "will the food supply be assured?" Murphy reports that the western sectors of the city now have stored aistticient food to meet minimum ration requirements for about six weeks and that the fuel supply necessary for light, power, and water will last approximately three weeks. . (CIA Comment: CIA considers that: (a) the Berlin populaticn is basically anti-Soviet; and (b) the people of Berlin /grill, from the point of view of self-interest, support the tand of the western powers against Soviet pressure unless it be- comes obvious that the VS can no longer feed the Germans of the rjerlin sector and that a US wittetwalafvitabie.) cift ,No CHANGE in Class. -1 DECLASE�77TED . TO DDA Menlo, 4 Apr 77 Auth: ycyx 77Z1763 Date: � ; 6eA -A;nr Release: 2018/10/18 C06749452 Approved for Release: 2018/10/18 006749452 CRET 3. USSR: Trainloa.d of Grynan officers near Moscow�The US Military Attache in Moscow transmits a report that a special twin carrying between 300 and zacan wearing German officer uniforms was seen near Z2escow di 24 pane . The MA comments on the unusualky high Tracrity given to the "rapid movement of these officers." He opactdates that the officers "may be destined for Germany rassible use in a separate government in the Soviet Zone." =ESTE: New Communist stra --US Political Adviser Joyce repor ommunist-Party in Trieste, following a period of considerable comfusion since May Day, has issued new directives for Party strategy and indica in the US-UK Zone. Iroyce states that the nem line calls for: (a) explei tion of serious d. terences which it is asserted have arisen between the US and UK; (b) makimum sabotage ed the European recovery program; (c) coatinued demand for popular elections in an attempt to demonstrate the failure of the US and UK to respect the provisions CA the Italian peace treaty; and (d) propaganda emphasis on a promise that Yugoslavia will demand UN approval ier the incorporation of the !Tree Territory of Trieste into the tsoslav republic. -2 - Approved for Release: 2018/10/18 006749452 AC' 0)) Approved for Release: 2018/10/18 006749452 EUROPE ioO JUN 1948 I. GERMANY: French view on Berlin crisis--A high official of the French Foreign Office has epred to US Ambassador Caffery his personal views that: (a) the western powers erred seriously when the Berlin crisis first arose by overstressing the importance of remaining in the city and announcing that they would remain at all costs; (b) Berlin is not in fact "any more quadripartite" than western Germany, in which quadri- parttte control has long been abandoned; and (c) in the face aggressive Soviet action, the western powers would en- counter almost insuperable difficulties in Berlin and, even if able to maintain mill .x7 and governmental forces, they could not avoid a decline in prestige through remaining there. (CIA Comment: CIA believes t even though a slight decline in prestige sf the western powers would result from their remaining in Berlin in the face of Soviet aggressive action, such a loss would be far less than that they would suffer through a withdrawal. Moreover, a y apparent weakening of tripartite solidarity on the Berlin situation would greatly reinforce Soviet determination to drive the western powers frov. the city.) * 721 2. GREECE: UNSCOB concern over Greek-liul rian negotiations-- A member of the US delegation to the UN Special Comnifftee on the Balkans (UNSCOB) expresses the view that the UN Secretary General gave at least tacit concurrence to Satellite on-recogni- tion of UNSCOD, by failing to consult UNSCOB before accepting ulgaria's announcement of its willingness to negotiate with the Greek Government for the resumption of diplomatic relations. The representative feels that if the present Greek Army offensive is successful, )ce USSR will be able at the September General Assembly meeting to advocate the complete suppression of UNSCO on the grounds that "a UN watchdog" is unnecessary because: (a) the army's victory proves that ie Satellites are not aiding the guerrillas; (b) the initiative taken by 1: garia In proposing negotiations Itvi t the Greek Governmei.t is indicative of its peaceful intentions; (c) the Greek Army itself is in a posi- tion to seal the northern border; and gintilgotiations are already61 being conducted wi'dmout UNSCOt ass Fit No. NO CHANGE in Class. 0 -*** 0 DECLASSIFIED Class. CHAI\IC:D TO TS S SECRET DDA Memo, 4 Apr 77 Auth; DDA REG. 77/1763 Date: 1 4 MAR 1978 By; Cgt , 44% Approved for Release: 2018/10/18 006749452 Approved for Release: 2618/10/18 006749452 ET - NEAR EAST-AFRICA 3. PALESTINE: Jewish extremists increas I active�US Consulate General Jerusalem reports that during the past few days !rpm Zvai Leumi and the Stern Gang (Jewish extremist groups) have become increasingly active in Jerusalem. Both groups have, in contravention of the UN truce terms, brought reinforcements, arms, and supplies Into the city and have taken over strategic areas which they are converting into fortified enclaves. The Consulate Gen- eral has learned from various sources that the USSR is providing the Stern Gang with arms and money through the Satellites, particularly Poland. These sources also believe that the USSR will make every effort to increase its support as an effective Means of gaining a foothold for subversive activities in Israel. The Consulate General feels that the Jewish extremists may become increasingly embarrassing to the Israeli authorities and may attempt to thwart any effort to settle in a reasonable way the present Jewish- Arab impasse. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ~wA.R.L.J., %LAB SECRET." GENERAL JUN WO 720 1. bplIcatlons of Sovlet.Satellite conference--US Embassy War- saw believes that the current Soviet atellite meeting in Warsaw may have been called primarily to enable the eastern European powers to present a united answer to the London Conference on Germany. The Embassy concludes that the conference will be used as a major propaganda device to prove that the peoples of Europe overwhelmingly desire a "peaceful, democratic" solu- tion of the Cern= problem. (CIA Comment: CIA concurs with the Embassy's esti- mate and also considers it probable that an "Eastern Unice' will be formedoavowedly to protect the USSR and its Satellites against aggression from a resurgent Germany sponsored by the West. CIA also believes that at this conference the USSR may inform the Satellites of its intention: (a) to establish a provi- sional government for eastern Germany to coincide with the one contemplated for western Germany; or (b) to attempt to neutralize Germany's contribution to the European recovery program by expressing a desire, possibly couched in face-saving terms, to reach agreement on Germany with the West.) 2. Viznagg eia2m_.;...kericu --The Department of State has advised the British, French, Canadian, Belgian, and Netherlands Governments of its willingness to begin joint exploratory talks on 29 June pursuant to the Vandenberg Resolution. The US contemplates an exchange of views on: (a) the situation In Europe as it affects security, including estimates of Soviet Intentions; (b) security measures taken and to be taken by the signatceries of the Brussels Pact; (c) security relations with other western European countries; and (d) the nature of the US association with European security arrangements under Vandenberg Resolution. 3. Re or.....2_10.:_triews and plans of Mediator Bernadotte--The US dele- gation to the UN has been conficlen. ally iifoiie by Secretary General Lie that Palestine Mediator Bernadotte views the situa- tion as follows: (a) although the belligerents have unwillingly Document.No. If-1 - 1 -NO CHANGE in Class� DECLAS CRET .,lasse TS ???.7 77. Authe A RD] - :1763. MARIg8 r2t2 � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 accepted the truce, they will be careful not to break it; and (b) because both parties remain hopeful concerning their pros- pects, it will be impossible to obtain an agreed solution before the expiration cl the truce. Bernadotte indicates that he_will therefore endeavor to gain time by making vague proposals calculated to prolong the truce rather than firm and precise proposals which, if rejected, would mean that the recalcitrant party would refuse to extend the truce. The UN Mediator will also strive to I Alain agreement for the demilitarization of Jerusalem and the Holy Places; he regards a minimum of 1,000 UN armed guards to be essential for the protection of Jerusalem. EUROPE 4. GERMANY: Soviet solution for Berlin roblems su ested� US Ambassador Murphy reports o cc Berlin the oviet chief of liaison and protocol has suggested informally to the US liaison officer, that possibly an adjustment of present zonal lines in Germany could be made in order to eliminate the fric- tion caused by US-Soviet contact in Berlin. Murphy indicates that this sug,gestion came daring a general conversationtin the course of which the Soviet officer asked whether the US was not "skating on very thin ice" in relation to the danger of war. The Soviet officer evaded any specific answer as to whether the suggested "readjustment" would involve US withdrawal from Berlin in exchange for parts of Saxcny and Thuringia. Murphy attaches significance to this suggestion because the Soviet officer is known to be an intimate of Marshal Sokolovsky. Murphy believes that the suggestion may indicate a Soviet desire to bargain rather than force the present issue. (CIA Comment: CIA believes that the conversation is a feeler to test US determinsMon to: (a) continue its present policies in Europe in the face itt Soviet threats; and (b) remain � in Berlin even if offered a face-saving chance to get out.) Approved for Release: 2018/10/18 006749452 'Vt.\ Approved for Release: 2018/10/18 006749452 TOP SET ire 5. FRANCE: Disnute between Foreign Office and milit_m_covevnor-- US Embassy Paris has learned from a "reliable and friendly official" that a serious dispute between Foreign Minister Bid.ault and the French Military Governor in Germany has resulted from the request of the Governor that he be sent instructions at variance with the terms of the London agreements. According to the Em- bassy's informant, the Foreign Office is insisting upai compliance with the terms of the Loudon agreements, even if it means the replacement of the Military Governor who is known to be a strong supporter of General De Gaulle and may therefore share De Gaulle's hostility to the London agreements. (CIA Comment: CIA believes that the Government will con- tinue to take a strong stand with respect to compliance with the principles of the London agreements.) Approved for Release: 2018/10/18 006749452 � 4 tD Approved for Release: 2018/10/18 006749452 ET GENERAL I. US inclined to favor compact Israeli state�The Department of State has informed US Ambassador Douglas in London of its preliminary and tentative inclination toward a solution of the Palestine problem through re-drawing the Israeli frontiers in order to form a compact and homogeneous state. The De- partment also envisages the possibilities of: (a) setting up Jerusalem as an international city; (b) transferring most of the remainder of Palestine to Transjordan with population exchanges where necessary; and (c) establishbig a customs union between Israel and Transjordan, with a mutual guarantee of frontiers underwritten by the UN. Meanwhile, the Depart- ment has instructed Douglas to inform the UK Foreign Office that the US welcomes the British desire to concert the views of both governments on Palestine and hopes that a common policy may be evolved. Douglas is to say that the US shares the reluctance of the UK to resort to sanctions in achieving a settlement and agrees to the necessity for extending the present four-week truce if a solution is ,cot found before its expiration. 2. Haifa oil refinem--The Department of State has also informed Douglas that it shares UK Foreign Minister Bevin's coracer over the closing of the important oil refinery at Haifa. The Department sees no impropriety in placing the matter before UN Mediator Bernadotte but feels that,in accord with the truce, the refinery output should not be used to increase the military potential of the belligerents. EUROPE 3. ITALY: USSR Dresses issue of ship contracts in Hal --US Ambassador Dunn has lean* tha e o e ommercial Attache in Rome has accused the Italian Foreign Office of preventing the conclusion of Soviet contracts with Italian ship- builders. The Italian Foreign Office expects the Italian Com- munists to bring this question to public attention within 26 II Document No. - 1 - 719 NO CHANGE in Class. 0 XDECLASSIFIED Class, CHANCED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: 14 MAR 1978 By: 116_ Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 few days. The Foreign Ministry is planning to request that the Cabinet approve Rait-:in shipbuilding contracts amounting to about 25% of the program which the USSR has suggested. (CIA Comment: The Italian shipbuilding firm, Ansaldo, has reportedly set exorbitant prices for such construction. Acceptance of these figures by the USSR would be motivated by one or more of the following factors: (a) the urgency of Soviet shipping needs; or (b) the importance to the USSR of pro-Soviet propaganda in Italy; or (c) Soviet hopes for apply- ing shipbuilding payments to the Italian reparations account of the USSR.) FAR EAST 4. CHINA: Communists may face severe food shorta es--US Consul General Mukden reports that the Chinese Communists in Manchuria will be faced with severe food shortages during the coming winter. The Consul declares that a US observer who recently flew over the rich central Manchurian plains between Mukden and Changehim saw no cultivation there. He further indicates that even if the Communists have large grain stores, the failure to cultivate available farm land will indirectly place a great strain upon Communist transportation and will slow down Communist military operations, thus affording the Nationalists a breathing spell. (CIA Comment: Although reported food shortages may possibly slow down Communist military onerati Is, CIA be- lieves that the supply difficulties facing the Nationalists are at least as serious as those confronting the Communists and that there will be no immediate change in the course of the civil conflict in Manchuria.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 RET THE AMERICAS 5. ARGENTINA: Government may face a crisis--US Ambassador Bruce reports that the Peron administration is aware that it may soon be facing a crisis resulting from the acute dollar shortage and chaotic financial and economic situation. Bruce believes that if Peron were overthrown, such action would probably be taken by the army. (C/A Comment: CIA believes that the atmosphere of crisis precipitated by Argentine disappointment over failure to receive expected dollars from ECA purchases will not re- sult in an overthrow of the present Government. Peron will probably be forced to rely more heavily on army support, and it is probable that propaganda will be increasingly directed against the US as the scapegoat for Argentirri's present diffi- culties.) -s Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 22 JUN 1948 GENERAL 1. French move o '; I 14 llementin London eements--The UK Foreign Office `: -orm; � o. zsao oriIo � as, of its receipt of a note from the French Government which: (a) accepts the London recommendations on Germany; (b) calls attention to the reservations attached by the French Assembly; and (c) declares that France will continue to press for solutions to German problems in accordance with the views expressed by the French Assembly. The French Am- bassador in London has told the UK Foreign Office that the Assembly's reservation do not impede the immediate appli- cation of the London agreements. Douglas reports that the Foreign Office has also received a French communication which suggests that further discussions be held as soon as possible on making more precise the security principles of the London agreements. The communication states that the French Government regards international ownership of the Ruhr mines and basic industries as the best solution to the Ruhr problem. (CIA Comment: CIA believes that if the French re- main adamant on international ownership of the Ruhr mines and industries, German cooperation in a provisional western German government will be further reamed and industrial production in western Germany will be adversely affected with serious consequences to the European recovery program.) EUROPE 2. FRANCE: Discord on French strate�ac plan--The US Military _ � Attache in arm s ear. .rom -r.,. evers (French � ,Chief of Staff) that Premier Schulman recently issued a mill- bury directive ordering that the French motional strategic con- cept be oriented toward a defense of North Africa rather than a defense of the Rhine and the area east of the Rhine-. Accord- ing to the MA, this decision .1,':153 created consternation In French military circles, and top French Army and Navy leaders are threatening to resign ff Schuman insists on implementing the directive. The MA reports that Schuman is expected tperse his decision. Document No. 0iv NO CHANGE in Class. [] [.] DECLASSIFIED COM REllass. CHANGED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: 4 MAR IS'1t3 By: OrLa -18 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 3. GERMANY: Vaziaga _Ater cZone drolut.- US Commanding General Clay expresses the emphatic view that the French Zone in Germany is dangerously lacking In raw materials with which to provide employment during the initial period of currency reform and that German social unrest is certain to clevelop,which "will have adverse political effects In all et western Germany and hence on European recovery." Clay believes that the French occupation policy has so exhausted the economy of the Zone that little remains to tide the inhabit- ants over the difficult initial period of the currency reform. Clay urges, therefore, that every effort be made to get materials quickly into the French Zone under the European recovery pro- gram. (CIA Comment: CIA believes that even if the immediate crisis is resolved, the French Zone will continue to be a burden upon the US, a source of trouble in western Germany, and an excuse for further French demands as a consequence of western German fusion.) 4. AUSTRIA: Implications of Marek arrest--US Legation Vienna believes that the Soviet arrest orgErre high official at the Austrian police, may be the opening of a major Soviet attack against the Austrian Ministry of Interior, possibly for the pur- pose of crippling the Minb3try and terrorizing the Government. The Legation reports that Mare* was a key official who was charged with special investigations of Communists in the Aus- trhm police, Soviet factory guards in oil installations, and Com- munist subversive activities; that he lean in military and poli- tical intelligence from Satellite countries, but that he could in no way be considered an agent of a western power. The Lega- tion believes that the possible implications of Marak's arrest are so serious that the Austrian Ctonevlarteilt should be given Wiest support and that the Austrian protest should be pressed In the Allied Council. (CIA Comment: CIA concurs in the view that the Soviet move has serious implicatirms. CIA believes that this Soviet move is directed not only tward fralting the purge of, Communists Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 aol from the federal police and weahaning the Interior Ministry bat is calculated to tress upon the Austrians the capabill- -ties et the Soviet occupation authorities and thereby cut short the anTent barrage of Austrian protest notes,sad anti4oviet speeches and articles.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 SECRET 717 Li Widen rrts ,-11f)k 16 vels of: t21:1 British W011 flj 10,4g Br-itish . Arab el..--pertaz ryastfie t .e3,4 that the ostrayAsh. ment of "a email, o:ic rci Jewish 'I. In Palestine wetuld be in the best inter e;.-,Ls t'he kra.bs. -Din),s attributes this shift in British 01: te t4 c,..-:tntv,st ',,ici:rftFeu Jewish efficiency in setting '1p in ut:":',:!ntking '`I't.(.71 the Arvb counter - performance. Dengla it 1':;oly that Anis i.iew attitue.a may bctorne the D.:Molt ",x,..:1.7:--;1 sorly? pl.tctr 5L IA developments, possibly wilen the Areb governments seek British advice in the mediation ta3.-,.s.: under Count Bernadotte. (CIA Comment: Even :12 the Arabs could be !)ersuaded to accept the principle of; a Jewish state in Palestine, it is doubt- ful whether agreement could be reached between them and the Jews on the area to be included in such a state.) 2 � satisfied with Telrench ,Iction on Ger ---1.ccording to TF mbessa Kirk Gig n r I/ later Sinalc feels that � .1, the action of the lerench Ascembly thaccepting the Lendce recommendations on C-orirany u very satisfactory. :ipaak believes that the French resemttions, which he regArds as "completely face-saying," aze =Moly to crigole fro imple- mentatica of the agreersrants. '7 'I , � k 4,F 4��.�,. � ,".� 3. FRANCE:ea.LILma._n cawlieved critical ior Government-- US Embassy Paris reitta majority of political fen'Eir and qualified observers bolisrn the Schuman Government has . little chance to survive the ne..:t thme months unless the Cabinet Is soon reshuffled. Forein Ministr Biciault expects to be forced out of office within a '1:1-7 cinyc as a result of his position on the London recontmenthtin3, although the Embassy believes Document No, 6 NO CHANGE in Class. 0 ci DECLASC:FIED Class. CITALLI.T.. TO : TS S ECRET DDA ieo, 4 Apr 77 Auth: DDA RI:G. 77/1763 Date:Mil_ By: 0,1 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 that Premier Schuman will fry to prevent this. The Embassy observes that of the various hurdles which the Government must surmount between now and August, the most serious is the problem of wages and prices, particularly in relation to the price of cool. The Embassy says that the Cabinet is split on how to handle this question. The Embassy reports a general belief that if the Schuman Government can remain in power until Parliament adjourns in the latter part of August, the Gov- ernment will probably b* able to last until after the October elections. (CIA Comment: Although Bktult's prestige has un- doubtedly been damaged by the widespread censure, both public and parliamentary, of his sponsorship of the Loudon recommendations, there is as yet no concrete evidence to Indicate that steps are being taken to replace him.) 4. YUGOSLAVIA: Cheliene to Charge Reams in Belgrade believes that Yugoslav insistence upon Belgrade as the site of the Danubian Conference, instead of some other Satellite capital as proposed by the UM, represents the first direct and irrevocable challenge by a Satellite to the Kremlin's supreme authority. According to Reams, Soviet acceptance of Tfto's request reflects the Kremlin's belief that Tito's position is strong enough to re- quire the "traditional gradual undermining." (CIA Comment' : Clik agrees that the Kremlin will not take any drastic steps immediately to "discipline" Tito. However, this incident Ms highlighted for the Kremlin the need for reconciling within the Satellite states the conflict between national interests and international Communism. Consequently, the ussxt may either tighten its controls over the Satellites by expanding direct Soviet participation in Satellite governments or attempt to ease the "nationalist" upposition among Satellite Communists by making some economic concessions.) ET Approved for Release: 2018/10/18 006749452 fl rimerrn�;Cs--_�e".. - Approved for Release: 2018/10/18 006749452 SECRET EUROPE 1. FRANCE: Strikes jaIconaraunist test--US Ambassador Caffery has been told by Premier SWIM= that the French. Government believes the recent strikes at Clermont Ferrand to be a "try-orat� by the Commutate to see whether the Gov- erment would react vigorously. Caffery comments that the Government did react vigorously and Schuman expects "no particularly disagreeable aftermath." Communist; not to undertake trial of force--The US Military Attache has learned from a reliable source that the French Communist Party Politburo has decided that the Party should not at this time undertake a trial of force against the Government. The Politburo is reported therefore to have given General Confederation of Labor (CGT) leaders at Cler- mont Ferra.nd full latitude in present negotiations, but with the understanding that they will obtain a CGT prestige victory. The Politburo is also reported to have decided that Movements in support of wage demands should be accelerated and should be accompanied by strikes of attrition. (The MA's informant reported that the Communist leaders decided on a one-hour general strike on 19 June as a test of the willingness of the entire working class to support CGT action.) 92y_e_j_Lt_...x.prn.ra ma ut on end to sit-down strikes--US Embassy Paris has been reliably informed that French Interior Minister Moch is determined to nut an end to the practice of sit-down strikes. The Embassy's informant, a high official of the Ministry of Interior, observed that such action would constitute a fundamental alteration of French policy and might prove extremely embarrassing to non- Communist labor leaders. (CIA Comment: The Government will probably defer action on Moch's decision until the attitude of the Communists becomes clarified. Government action at present, before dis- cussion of revision of the present wage scale, would probably cause sympathetic strikes by non-Communist labor.) 'Document No. 6Ga 19 11114 104k, le NO CHANGE in Class. 0 DECLASS.T.FIED Class. CHAN:LD TO; TS CO ifitIRET DDA 1io, 4 Apr 77 Auth: DDA 1;1G. 7711763 � Date: 1 4 MAR 1978 By: 6'g) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 2. AUSTRIA: Government wants continued firmness toward USSR-- US Minister Erhardorts romfirma-tan repre- sentatives there are e,c.ressing apprehension lest the boldness of the Austrian Government in its relations with the USSR might lead the latter to take retaliatory measures and abandon co- operation with toes othor occupying powers. Austrian Foreign Minister Gruber is distressed by this British attitude and holds that the Austrian Government and the representatives of the western powers in Austria must show a firm front to the USSR and leave no possibility tr: Soviet 111%101.021S as to the resistance that would be offered to aggressive Soviet action. Erhardt con- siders this Austrian view more realistic than that of ,i,e British and believes that the_Austrian Ministers, who are showing con- siderable courage in a very exposed situation, deserve better than vacillating support in their attlinde toward the USSR in Austria. - 2 - Approved for Release: 2018/10/18 006749452 Act Approved for Release: 2018/10/18 006749452 46 EckET GENERAL �0 JUN 1948 715 . Pc11 asks that Berlin Allied Control Council be reconvened-- US Political Adviser Murphy in Berlin reports that the chief of the Polish Military Mission in Berlin has requested the French Military Governor to convene immediately the Allied Control Council for a discussion of the six-power recommen- dations on Germany. The Polish request alleges that the recommendations impair the authority of the Council and constitute an infringement of existing quadripartite obliga- tions and the Potsdam agreements. (CIA Comment: This request is undoubtedly prompted by the USSR. If a new session should be held, it would give the USSR opportunity for: (a) attacks on the London recom- mendations; (b) proposals for quadripartite currency reform or other `conciliatory" suggestions; and (c) a formal request for dissolutio,, of the Control Council and withdrawal of the allies from zerlin ff Soviet "conciliation" is rejected.) EUROPE 2. FRANCE: French reservations not to &u nag LondolasmaTement-- US Ambassador Caffery reports that although he cannot make . an authoritative comment on implications of the French As- sembly resolution on the London agreements until he has had a frank talk with French leaders, the resolution contains no reservations sufficiently specific to prevent implementation of the London recommendations. Caffery adds that every- thing depends on the spirit in which the negotiations imple- menting the London agreement are carried out. 3. GERMANY: Threate ed food crisis in western Germany�US Political Adviser Murphy reports that bread grain stocks in the US-UK Zone are dangerously low and that maintenance of the bread ration during the next two months will depend on the prompt arrival of US food imports scheduled for June and July. Murphy indicates that the full bread ration seems assured Document No. 0 CT NO CHANGE in. C.: ass Class. CH)-L. ,3 TS S C DDA L 77 Auth: DDA REG '77/1763 Date: .14 MAN 078 By: etz Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 for the Ruhr but that the other western German laender face the possibility of cuts of 500 to 1000 grams per month. " (CIA Comment: CIA believes that if such cuts are made following recent promises to raise the normal consumer ration in western Germany, very serious labor unrest will follow, particularly in view of the present German uneasiness over the effects of currency reform and the establishment of a provisional western German government.) Currny reform may bring new Soviet controls- US Commanding General Clay believes that the tightening of Soviet controls about n June resulted from Soviet appre- hensions that currency reform in the western zones might take place at that time. Clay is inclined to think "this is more likely than a further tightening at the moment to force us from Berlin." Clay comments, 4'that move will come when we install separate currency, if it comes at all." FAR EAST 4. MALAYA: 1.4,32atsmeiches serious rportions--Ac cording to the US Naval Liaison Officer and US Ciii1 General Singapore, genera/ lawlessness in Malaya has reached such serious proportions that the UK High Com- missioner of the Malaya Federation has proclaimed emer- gency special police power in the states of Perak and Jahore and has given estate managers permission to carry arms. The US representatives believe that with the granting of extra legal and police powers, the British can deal with the situation. However, the Naval Liaison Officer, who indicates that much of the Lawlessness is politically inspired, believes that internal security can be maintained only along the main line of communications on the west coast if serious clashes develop between Chinese Kuomintang r-Ind Communist ele- ments. (CIA Comment: In view of the confirmed existence of an underground Kuomintang "army" in northern Malaya, CIA believes there is a distinct possibility of clashes between the Chinese Nationalist and Communist elements. In any case, the present situation is a further indication of growing Corn- znunist activity designed to create maximum political unrest and economic dislocation in Southeast Asia.) - 2 - 1%e9fS.E"F Approved for Release: 2018/10/18 006749452 At?' Approved for Release: 2018/10/18 006749452 Virr CRET GENERAL 1. Views of Satellite diplomats on US-USSR relations--US Ambassador Smith in Moscow transmits from the Italian Ambaimador the following informally-expressed views of the Rumanian and Polish envoys to the USSR: (a) hostilities between the US and the USSR are inevitable; (b) such con- flict will probably not occur for a period of 5 to 25 years but unforeseen developments might precipitate it sooner; and (c) the present Soviet trend toward "a softer line" is a tactical maneuver that will be followed by a resumption of the "cold war" following the US presidential elections. Smith comments that both the Rumanian and the Polish ambassadors are Communists and are accurate observers "within the limits imposed by the party line." EUROPE 2. GREECE: Griswold warns against "peace pr 4MAG Chief Griswold reports that the Greek Army will soon launch an offensive designed to defeat the guerrillas decisively during 1948. He believes that, in the light of recent guerrilla peace feelers, the army offensive will pro- voke sensational Communist charges that "American im- perialists and the Athens Monarcho-Fascists want war and bloodshed" while Markos' followers are actively seeking peace. Griswold warns that the objective of such propaganda will be to divide and cal:dime the supporters of US aid to Greece at the very moment of the greatest chance of success. He emphasizes that an offer to negotiate a peace between the Greek Government and Markos on an international level should be rejected because "it is essential that the liquida- tion of this problem be found within the framework of the authority of the Greek sovereign state." Document No. o 11, icoc 714 NO CHANGE in Class. 0 0 DECLASSIFIED Class. CHA:2D 1-3: TS DDA A-Tar-2J , 4 Ppr 77 Auth: DDA RLC, 77/1763 CRETat e By: 0) '5 14 MAR 1978 Approved for Release: 2018/10/18 006749452 **. A rt Approved for Release: 2018/10/18 006749452 T 4) � ET GENERAL 1. French military views on Soviet strategy�The US Military Attache in Paris reports that the Chief of French Army Intelli- gence does not anticipate any Soviet military reaction to current efforts by the western powers to solidify western European de- fense and promote economic recovery. At a 14 June conference attended by French military leaders and the MA, the Intelligence Chief indicated he expects a continuation of the Soviet "cold war" and a further exertion of pressure in Berlin with the object of ejecting the western powers without precipitating war with the US. Armed Forces Minister Teitgen expressed his special fear of a centralized Germany under Communist control. Teitgen believes that "hostilities" might result from: (a) the formation of an eastern German Government by the USSR subsequent to the creation of a western German Government by the western powers; and (b) the lack of a common German currency as a basis of exchange, particularly in Berlin, subsequent to currency reform in the western zones. The MA says that Army Chief of Staff General Revers and Armed Forces Inspector General de Lattre, who also participated in the conference, were not explicit on the anticipated military reaction of the USSR. De Lattre indicated, however, that the prime French fear was not of the USSR, but of a resurgent Germany. 713 Document No; 0 Co� NO CHANGE in Class. [] [] DECLASSIFIED Class. CHANCED TO: TS S DDA /Lm0,. 4 Apr 77 DaAuth: DDA RI.J. 77/1763 -7�14R-91 78�By te : Approved for Release: 2018/10/18 006749452 1. J A r, Approved for Release: 2018/10/18 006749452 GENERAL de. to %wig 1.,74.1.6 sh leaders re ect res � nsibili for Stern and Ir forces-- A high official of the Jewish Agency has informed UN M- 6 Bernadotte that Jewish leaders are unable to assume responsi- bility for "dissident" elements in Jerusalem. The official pointed out that Jewish authorities are unable to control the Starn and Tronart fnrrom offartivalo FAR EAST 2. DIDONESIA: Netherlands embarrassed by US proposal�US Ambassador Baruch in The Hague reports that the Netherlands Government is embarrassed over the latest proposals submitted by the US delegation in Batavia for a settlement of the Dutch- Indonesian dispute. According to Baruch, the Dutch Prime Minis- ter feels that his Government is not in a position to make any important decision until after 1 August when a new Dutch govern- ment will be formed. Baruch reports also the view of a Nether- lands Foreign Office official that cooperation between members of the UN Good Offices Committee 'GOC) is now impossible. The Dutch Government reportedly hopes that Republican Prime Minister Hatta and Acting Governor General Van Moak of the Netherlands Indies Government will confer outside the GOC and clarify the major differences between the Dutch and the Indonesian Republic. Document No. 0 (lc NO CHANGE in Class. [] [] DECLASSIFIED Class. CHANGED TO: TS S 0 DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Data: a 4 MAR 1978 By: ET Approved for Release: 2018/10/18 006749452 a..tu Approved for Release: 2018/10/18 006749452 EUROPE 711 1. GERMANY: SciNriet reaction to eements on Germy n. US Political. Adviser Murphy in Berlin observes that the most positive reaction by Soviet authorities to the London communique" has been in the field of transport and travel. Murphy comments that the action of Soviet officials in delaying freight movement across the frontier of the Soviet Zone may well indicate that the USSR Is now preparing to cut Berlin off compleOly from supplies originating in the west. Murphy observes, however, that it is also possible that Soviet authorities are attempting to create a situation in which they can declare that emergency conditions prevail In Berlin, thus hoping to convoke a meeting of the Allied Control Council in order to discuss the situation. Meanwhile, Headquarters European Command Heidelberg reports that Soviet officials have closed at a number of points the highway between Berlin and Magdeburg, allegedly for road repairs, and that the Berlin-Helmstedt highway may be similarly closed within the next few weeks. (CIA Comment: CIA considers that Ambassador Murphy's alternative suggestion that the USSR may be trying to create an "emergency situation is more likely to represent Soviet inten- tions.) 2. GREECE: Rankin warns against Soviet-Satellite blandishments-- US Charge Rankin fully endorses the view that the Greek military situation constitutes the key to the Balkan situation. Rankin be- lieves that rece t Soviet-Satellite gestures of conciliation may be an effort to settle the Greek affair by conciliation through the UN, thus by-passing the UN Special Committee on the Balkans (UNSCOB), and leaving the Communists "unbroken" to resume their campaign at a more propitious time. In Rankins" opinion, It is essential that the military phase of the Greek campaign end with a "crushing defeat" of the guerrillas and not through appease- ment or conciliation. Rankin emphasizes that US officials in Greece feel genuinely confident that the Greek Army can bring its current campaign to a successful conclusion. () Document No. NO CHANGE in Class. 0 DECLASSIFIED Class. CHANCED TO: TS S C DDA M5mo, 4 fipr 77 Auth: DDA R:G. 77/1763 Date: 14 MAR 1978 By: � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 46 FAR EAST I. CHINA: C � Kai-shek th. a.O owe senill .:US Embassy 7,7:1,. trans ir iz . � - :rya on r � ,A � dor Stuart's personal adviser that Chiang ICa,i-shek has become a tired old man, "incapable of !posting effectively the re- sponsibilities he has assumed." Stuart's adviser, who has observed Chian closely during the past two years, reports that recently he has noticed a decided approach to senility. The adviser, who believes that Ctdang is losing prestige Ally and "inevitably" will be removed from authority sooner or later, takes the view that without the General- issimo at the head of the state China might relapse into regionalism. He suggests that some way might be found to persuade Chiang to renounce the emergency powers he now possesses and to seek a strong prime minister who would provide the requisite leadership. The Embassy comments that Chiang has dominated the scene in China for so long that no other person of the caliber necessary to assume such leadership has appeared. ' 12 JUN 1948 710 Document No. NO CHANGE in Class. 0 )(DECLASSIFIED Class. CHAU:ED TO: TS S C DDA Mamo, 4 Apr 77 Auth: DDA REG. 77/1763 Date:1 4 MAR 1978 By ; d 2 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4 tDAS.7 EUROPE 11 JON 1948 709 I. FRANCE: Assembly may ask further talks an Ruhr management-- US Ambassador Caffery believes that the French Assembly will probably give the Government's German policy only a conditional approval and will request the Government to negotiate further In order to obtain greater recognition of French views on the management of the Ruhr, on French security, and an German federalism. Andre Philip, leader of the Socialists in the For- eign Affairs Committee, has expressed to Caffery the belief that the recommendations will not be approved unless the Gov- ernment can announce that the extension of international control of the Ruhr to include actual management of the coal mines is a question still open for international discussion. 'I'M Depart- ment of State has informed Caffery that the US answer to this particular suggestion Is "no," although the London agreements as a whole are not regarded as immutable. Concerning the Assembly vote on the London agreements, Caffery believes: (a) the Communists and the Gaullist parlia- mentary group will vote against; (b) a majority of the Popular Republican Movement and Socialists will probably vote for; and Cc) the outcome will depend largely on the position taken by the rightist Republican Party of Liberty and the Independent Republi- cans. Ex-Premier Reynaud believes that the Schuman Govern- ment would be helped by publication of an official US statement declaring that if the French Assembly does not approve the agree- ment, the US will reluctantly go ahead with the other signatories, without France. Caffery believes some move along these lines would be useful in the situation. (CIA Comment: CIA believes that when the vote is taken In the Assembly, a narrow majority will support the Government.) THE AMERICAS 2. CHILE: Reaction to US sale of arms to --US Ambas- sador emphasizes r e arms to Argentina has had an exceedingly bad effect on US prestige t in Document No. Ohl NO CHANGE in Class. 0 [] DECLASSIFIED Class. CHAYC2D TO: TS TO CRET DDA Memo, 4 Apr 77 Auth: DDA 77/1763 5.4 MAR Ibio Date: Br . � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP military circles in Chile. Bowers believes that in reaction to the arms sale, the Chileans may hasten purchase of the British cruiser AJAX and other ships as well as all types at military equipment In the open market, unless the inter- American military cooperation act is passed during the present session of the US Congress. 3. COSTA RICA: incursion M.- ti''WM. The Minister 177; , ; ii 7"rrrra a a 0 via that in taidng up defensive positions against Possible attacks from Costa Rican revolutionaries, Nicaraguan troops have crossed the San Juan River into Costa Rican territory. Davis believes that no attack on the Nicaraguan troops will be made by Costa Rican forces in the foreseeable future. (CIA Comment: CIA estimates that this reported maneuver by Nicaraguan General Somoza represents another dramatic attempt to bring attention to recent reports of immi- nent revolutionary moves against Nicaragua from Costa Rican territory. General Somoza thus hopes to force the Costa Rican Government to repress the anti-Somoza revolutionary brigade that he apparently believes is being organized on Costa Rican territory and also to prevent Costa Rica from directly assisting such revolutionaries. It its unlikely that the move- ment of Nicaraguan troops into northern Costa Rica will pre- cipitate open warfare.) -2-- TOP ET c(0 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ,t3r SECRET GENERAL LU JUN 19 708 , 1. New Soviet appoacIi for ved" relatio s with S--US Ambassador Stuart in Nanldng reports that the new Soviet Ana- bassador, Roschin, opened his introductory call by asking what could be done to improve conditions between the US and USSR. Roschin spoke of Soviet hopes arising from the Smith-Molotov exchange and "the desire of all people for peace." Stuart re- plied that the US people desire peace, fear the outbreak of another war, and are harassed by fears and suspicions of Soviet aggression; he described the problem as involving "two great nations, each respecting the right the other to maintain its own form a governm t and ideologies without interference, while avoiding aggressive designs against smaller countries which wottki disturb confidence." Roschin concurred and asked what could be done. Stuart suggested an approach to the Department of State through the Soviet Embassy in Washing- ton or, as a "wise Chinese method for reaching a solution," the good offices-of some neutral country as middle-man. Stuart added that in any eve'. t he was certain the US Government "would welcome any such proposal" which it was convinced was not being made for propaganda purposes. In a discussion of the China. situation,the Soviet Ambassador (former military attache in Nanking) asked if Chiang were aware of the real military conditions, and he volunteered the comment that the Generalissimo's field officers were perhaps misleading him. EUROPE 2. FRANCE:V.Incondidonal_woval of London agreement unlikely-- US Ambassador Celery reports that it is now unlikely that the Government could obtain a majority vote in the Assembly for out- right support of the Londo L agreement. Caffery says that the wording of the necessary "order of the day" on which the final vote will be made will probably avoid complete approval of the Governments German policy and may even call on the Government to seek "supplementary guarantees" in connectio) with the agree- ment. Caffery says the Assembly debate on the London agreement 4 . ';e0;\ II 17.a cams. C.TAIT1LT TO: TS S NA DDA Memo , 4 Apr 77 le. Auth: DDA ELG. 77 1763 Date: 441_20.191.1 By: Document No. 40 ...NO .CHANGE in Class., DECLASZIFIED Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP CoV may be delayed* the critical school issue, Which has taken a "sharp turn for the worse." (CIA Comment: In the event that the approval of the order. of the day contains reservations regarding the Governments foreign policy, CIA believes that these conditions will be so form- ulated as to permit the Government to approve thca, London agree- ment.) . S. ITALY:MUlasiatens position_oj._Italian Government-- Premier be Gasperi has emphasized to Am sadobas r Dunn the. delicacy of his Government's position because of the action of the US Rouse of Representatives in reducing the appropriation of the Economic Cooperation Administration (ECA). De Gasperi points out that the Government's whole policy during the April electoral campaign was based publicly on full commitment to the European recovery program and that he has publicly reiterated since-the election that Italian recovery and social and agrarian reform were dependent on this program. 4. YUGOSLAVIA: Regime thought for new -.tic --US Am- bassador Cannon reports his belief the co:.' -.ace of the Tito regime in its ability to move forward boldly is faltering and that the Government is groping for a policy which will make it once again the Balkan "spearhead of evangelical and expansion- ist Communism." Cannon points out that in making its reappraisals the Yugoslav Government finds little comfort at home or abroad in the face of: (a) the recent firm and vigorous US policy which has blocked Yugoslav designs on Austria, Trieste, and Greece; (b) increasing internal economic difficulties; and (c) political deviationism which is affecting even the top structure of the Communist Party. Cannon believes that Greece is still the foremost Yugoslav problem and that events in Greece will pro- foundly influence all Yugoslav campaigns and policies. (CIA Comment: The recent Communist purges in Yugo- slavia and the tightening of police controls will enable the Tito regime to survive the present period of indecision. Despite these measures, economic and political conditions will probably further deteriorate. Consequently, preoccupation with these in- ternal difficulties will force the Tito regime for some time to play a less aggressive role in international affairs.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 DLL FAR EAST 5. KOREA: Delay of recognithm recommended--US Political Adviser Jac ee-';1.a".?"'"s on ol-raut;`"r of US recog- nition of the anticipated Korean Government should be delayed. Jacobs believes that prior to making such a decision it is necessary to know: (a) the kind of government the National Assembly will form; (b) the UN Commission's attitude toward that government; (c) the arrangements for the establishment of native security forces and for the withdrawal of occupation troops; and (d) the general attitude of the new government toward the transfer of authority. Jacobs adds that early US recognition would "almost certainly" lead to formal recog- nition of the North Korean People's Committee by the USSR accompanied by the accusation that precipitate US action had prevented Korean unification. Jacobs feels that both Korean and UN opinion might thus be alienated and that the US might "find itself alone with a very difficult new state without UN support." THE AIVECRIC.AS Q. PERU: Cabinet resignation threatened esident Bustamants s in) n 7 ^ ven r r un noon of 10 June to decide whether Congress will meet as scheduled on 28 July. The Cabinet threatens to resign if Congress is allowed to meet because it fears that Apra, Peru's largest party, will have a strong enough representation to deal a major blow to military dominance in the government. (CIA Comment: Although Bustamante reportedly desires Congress to open 28 July as required by the Constitu- tion, he will probably accede to the Cabinet's demand because he cannot afford to alienate his military support.) - 3 - icro.k? TOP .;.1� Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 GENERAL - 1. Trans ordan th. _ht to want end of Palestine war--An officer Consulate General at `e ---Ttirus gain the impression from recent conversations that many Transjordan Government officials and their British advisers, desire an end to the Pales- tine.war if an honorable way out, involving no loss of prestige, can be found for Transjordan. These 'officials believe that: (a) the reappearance of rivalries among the Arab states will weaken the Arab War effort; (b) time favors the sews; (c) the war cannot possibly end in victory for the Arabs; and (d) King Abdullah does not wirsh to risk Wing his army and thereby forfeit his present strong position Vis-a-vis the other Arab ' states. JW '1 1U610 707 EUROPE 2. FRANCEr Strong oppositiOn to London agreements on Germany-- US Ambassador fery repo conversa ions with various French political leaders he has encountered strong opposition to the London recommendations on Germany. Caffery comments that much of the opposition stems from personal dis- like of Foreign Minister Bidanit and the "high handed" way he is running foreign policy; Caffery remarks that Bidault is the only man in the French Government who would have sponsored the London agreements. The chairman of the Assembly Foreign Affairs Committee has told Caffery that he does not believe he "will dare" to vote for the London- agreements in the face of the almost unanimous opposition of the French people, whO, he claims were inhdequately prepared for a major change in French policy. Caffery reports that Cabinet discussions of the agreements "did not go well" and are being continued. Concerning De Gaulle's present stand on the London agreements, Caffery does not believe that the US Embassy has effectively modified De Gaulle's attitude. Caffery says that De Gaulle's hatred of Bidault is entreme, and he believes that the Gaullists are "increasingly determined", to overthrow the Document No. C NO CHANGE in Class. -1( DECLASSIFIED ass. CHAX:ED T34 TS DDA Ycmo, Apr 77 Auth: DDA REG. 77/1763 Date: .44 MAR 1978 By: OM - \ Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 _Loegrr Schuman Government on the German issue. A leader of the rightist Republican Party of Liberty has informed Caffery that there is strong opposition in his pal* to the London agreements and that this 0PPOotticm may be bereased by De Gaulle's expend condemnation of the Government. (CIA Comment: CUL believes that the French Assembly accept the recommendations on Germany; see attached Annex for an analysis of the probable action , of the Assembly.). . . 3. GREECE: Griswold and Van Meet vrarn lust aid reduction' AMAG Chief GriswoiWti�dGanerai an est epr� thMf. "Imeclaivccar belief that any reduction of tIS military ad to Greece (as contemplated by the VS Rouse of Representatives) would Seriously jeopardize &WAG objectives by curtailing the Greek Array'is operations and by encouraging the guerrillas. to husband their resources for a new effort next winter. Gris- wold points out that failure of the Greek Army to establish Security in Most of Greece this summer Would: fill the Greek people AVith despair and thus destroy economic recovery; Magnify � the refugee probleni, nullify reowstruction accomplished ib date, and require Greece to wage_ another military campa of the present Scope nest summer "which it simply cannot - d." Griswold adds that reduced at:pro/Ablations would also curtail the intensive seCurity Measures which must be carried out even if major rebel cbikentrations are defeated this year. EAST 4. CHINA: Unlimited US milita.y adVice recommended�The Air DiviEiiim Direc or of the Arigire Grail* in Nanking believes that the military sitnation Of the .Nationtil Gov- ernment has reached a critical stage where any efforts to rie.� verse the present trend "met be made immediately, else the situation will become impossible." According to the Air Division Director, the Communists presently appear ca.pable of dominating - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Manchuria and all of.China north of the Yangtze River; he points cut that such domination would probably result in the collapse of the National Government. The Director recom- meats, with the concurrence of the Chief of the AAG, that present US policy be reviewed with a view to the authorita- don of "unlimited military advice and staff assistance to the Ohlnese armed:forces, coupled with authority to monitor any US logistical support planned for the future to promote acceptance ci operational advice." The Director emphasizes that the granting of this authority will not assure the halting of further deterioration of the situation. 6. INDONESIA: US deleia.; lion views Dutch .ilan--Chairman , Duboia of the i .s ,17,T ges Comralttee believes that no teal comprimise is Possible between the current plans of the US delegation and the Netherlands .for the creation of a United States of hidonesia. Dubdis believes that the US delegation plan,would result in an orderl* Indonealin Government atrongly disposed to cooperate with the Dutch and the West, While the Dutch plan Would lead to long-range political and ecanomicinstability. Meanwhile; US Embassy The Hague repotts that within the at two or three days the Netherlands Government ion probably issue a statement re- questing clarification of the RepUblic's relent= with the 'USSR and pressing for unilateral discussions with Republican leaders. (CIA Comment: cxti: believes that the Dutch will make every effort to prevent the presentation to the Good Offices - ComMittee of the US delegation plan and will accelerate their attempts to minimize the Influence of the Republic in the pro- jected United States of Indonesia.) -.3.. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ET A kI N E X 9 June 1 8 PROBABLE RESULT OF FRENC'.z ASSEUBLY DEBATE ON THE 1.801i1001.4? AGREEMENTS ON GERMANE Faced with the VS and WC decision to establish a provisional German government in the US-UK Zone, if France refuses to accept the London agreements, the French Government will make every (Mort to obtah! Aisembly approval of the progi�am prepared in the British capital. Debate in the Assembly is scheduled to begin on. 11 lune. Although Premier Schuman may be compelled to demand a tote of confidence in order to carry his policy through the legis- lative body, he will probably receive final approval after what promises to be a prolonged and heated discussion. Assembly acceptance of the agreements is believed assured. The delegate's will realise that: (a) the concessions made to France are real and advantageous; (b) the US has done everything possible at the pre.;- sent time to guarantee French -security against a revived Germany; and (c) French economic and�security requirements would have to be renegotiated on a less favorable kiasis, if France fails to rat* the London agreements and the 'US and UK proceed With independent reorganisation of their zone without !flaking provision for the inter- natimatalization of the Ruhr or the establishment of other French security guarantees. .In additiOn to the above considerations, Schuman is believed to possess enough strength in the Assembly to in his vote of confidence even if the Gaullis' ts and the Communists attempt to � effect the fall of the Government at this time. Approved for Release: 2018/10/18 006749452 W 0 JU iyqb Approved for Release: 2018/10/18 006749452 't SY � TOP GENERAL 1. Soviet views on London talks on Ge -US Ambassador Douglas in London transmits t I�owing account of an inter- view between the chairman of the UK delegation to the talks on Germany and the Soviet Ambassador in London: (a) when Informed of the terms of the sir-power agreement on western Germany, the Soviet Ambassador immediately replied on the basis of prepared notes that the USSR could not regard as legal any decisions reached on Germany without Soviet parti- cipation; and (b) the Soviet Ambassador declared that as a result of this action the US, the UK, and France would "bear the whole responsibility for splitting Germany, for wrecking the agreement on the Control Council, for the elimination of the Council of Foreign Ministers, as well as for the conse- quences of such a policy." According to Douglas, the French representative in London recommended that the USSR be promptly advised that "the door remains open" for the Soviet Zone to join the western German organization. The French representative believes that such a reply would'assist the Schuman Government in the forthcoming Assembly debate on German policy. Douglas indicates that he agrees with the British Foreign Office view that no direct reply should be made at this time. 2. US to urge De Gaulle to support London agreement--The De- partment of State has suggested that a member of US Embassy Paris Impress upon one of De Gaulle's close advisers the international importance of French approval of the London agreements on western Germany. The Department doubts that De Gaulle is aware of the implications for over-all French security of continued resolute and united action by the three western powers. The Department suggests that De Gaulle be advised that the failure of France to approve the agreements would have serious repercussions on US public opinion, offer dangerous encouragement to the USSR, and benefit only the Communists. Document No. OSii NO CHANGE in Class. 0 DECLASSIFIED Class. CHAN= TOg 0 TS DDA Mcmo, 4 Apr 77 � RETAuth: DDA REG. 77)1763 Date :1444R.4978__ By; _IA_ a Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TO V� co FAR EAST 3. PHILIPPINES: Stronger of US militarssistal_ls_e sought- world situation: (a) the Philippines should demand from the US a stronger guarantee of military assistance in the event of war; and (b) because of the "Inadequate" size of US forces and bases now in the Philippines, the Government should make some friendly overtures to the USSR in order to reduce the "coldness of the present situation." (The proposal of a customs agreement would be a probable first step.) - 2 RET Approved for Release: 2018/10/18 006749452 3.3(h)(2) - Approved for Release: 2018/10/18 006749452 Ttiri 3Ut\ Mkt T RET GENERAL 1. mic willing to furnish naval vessels to Palestine Mediator-- US Ambassador Douglas in London has been informed by Foreign Secretary Bevin that UN Mediator Bernadotte is agreeable to an Egyptian proposal to use the British Navy and Air Force in securing observance of the Palestine truce terms. Douglas learned from.a high Foreign Office official that the Foreign Office intends, following the receipt of a formal request from Bernadotte, to recommend to the Cabinet that British aircraft and vessels be used solely for observation and not for enforcement. 2. Australian view_p_m_Korean elections--The Department of State has informed the US Political Adviser in Seoul of the following views expressed by an official of the Australian Embassy in Washington: (a) Australia is "far from satis- fied" with the handling of the Korean elections; (b) there is "considerable evidence" of police pressure in connection with the elections; (c) at least a minority of the UN Com- mission will take the position that the elections were only provisional and not national in scope. (CIA Comment: There are indications that the Canadian and Syrian representatives on the 7-member com- mission may share Australia's views. Actually, the South Koreans appear to have conducted the elections with a minimum of police intimidation. Because of the reluctance some members of the commission feel toward associating the prestige of the UN with the precarious existence of the new South Korean regime, a minority report along the above lines might be a diplomatic Maneuver designed to elicit a US guarantee of the regime's future security.) 3. �_paak samontinued firm policy toward USSR necessary--. Belgian Premier Speak has expressed to US Ambassador Kirk his satisfaction with the apparent results of current US policy toward the USSR. Spaak feels that a firm policy must be Document No, 05 410 CHANGE in Class. - 1 0 DECLASSIFIED TO lass. CI-IIINC:SD TO g TS S ;721.t ' ET DDA Memo , 4 Apr 77 Auth: DDA REG. 71/1763 Date; 14 MAR 1918 705 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 continued by the US and the five countries of the Brussels Pact despite obvious maneuvers of the USSR "to play down the seriousness Of the situation." Spank expressed the hope that the US will not slow down its rearmament plans but will continue to reinforce its announced policies with evi- dence of the necessary power. Spaak feels that although Molotov is at present retreating in the face el western stead- fastness, he would quickly resume aggressive tactics if the western powers should display any softness. EUROPE 4. FRANCE:. Next ten daps believed critical for Government-- US Ambassador Caffery reports the view oiqualifietfobservers In Paris that the next ten days will be the most crucial the Schuman Government has yet faced, in view �the critical character of the German problem and the Catholic school issue. 'Caffery says that Bidault is somewhat more optimistic concern- ing the prospects of Socialist action on the German question but is very apprehensive over the Gaullist reaction. Caffery says that De Gaulle plans to make a strong statement against the Government's Germ= policy about the middle of this week. (CIA Comment: CIA believes that, although De Gaulle will attack Bidault's policy on Germany in the hope of Improv- ing the electoral position of the Gaullists for the fall elections, De Gaulle will not at present make an all-out effort to cause the fall of the Schuman Government.) � 5. SOVIET UNION: Note concerning Einbassyjiouslng suggested-- US Ambassador Smith proposes that the US submit a notere- garding Embassy housing and customs difficulties to the USSR. Smith suggests that the note request that the USSR reduce its staff in the US to conform to US representation in the Soviet Union. Smith indicates the imperative need for a satisfactory solution of the problems confronting Embassy Moscow but expresses his awareness of the possibilities of: (a) an un- favorable public reaction in the US; and (b) a retaliatory reduc- tion of US representation in the Satellite states. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TO 6. CZECHOSLOVAKIA: Gottwald may succeed Benes--US Ambassador Steinhardt has been "reliably" informed that Premier Gottwald will succeed President Benes and that Antonin Zapotocky (powerful Chairman of the Central Trade Union Council) will replace Gottwald as premier. (CIA Comment: Assignment of the two top positions to Communists would indicate that the Czechoslovak regime feels strong enough to dispense with non-party fellow tr&vel- lers or "moderate" Communists. This feeling of strength would also be indicated by the action of the Communists in making the extreme radical Zapotocky premier and putting the more moderate Gottwald in a higher but less effective position.) NEAR EAST -AFRICA 7. PALESTINE: Jews in Cyprus cammitilaliW_M_sto a m breakout-- US Consul Porter in Nicosia (Cyprus) has been informed by the British military commander in Cyprus that 24,000 lews in local detention camps are becoming "extremely agitated and are likely to attempt a breakout. The British commander says that his troops will oppose such an attempted departure with force, pointing out that "the only British limitations on departure will be in accordance with UN decisions." FAR EAST 8. INDONESIA: Netherlands aures no mintery.aoti 'armed-- The Department of State has informed the US delegation to the UN Good Offices Committee that the Netherlands Ambassador In Washington has assured the Department that his Government Is determined to reach an agreement with the Republic of In- donesia and plans no military action. The Dutch Ambassador Indicated that the Netherlands Government is prepared to com- promise on the issues of Republican foreign representation now abroad and demobilizatiam of the Republican Army, if the Dutch are convinced that the Republic is acting in good faith. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 46 TOPS GENERAL 1. Bevinbs views on US-UK policy regarding Germany�Foreign Secretary Bevin, in discussing the scheduled program for Germany with Ambassador Douglas on 4 June, stated that, while the UK is prepared to proceed with the US regardless of the French attitude, some of his colleagues are a "little uneasy" lest Britain find itself alone in the event that the US-UK policies proved to be more provocative to the USSR than now appears to be the case. Bevin made it clear to Douglas that the UK is determined to go ahead with the pro- gram for western Germany and that he was merely expre�s- ing an apprehension that congressional action might not sustain the firmness of the US executive branch. tio 5 JUN 1948 704 2. Reaction to noosed cut in ECA funds�Available reports from US diplomatic missions indicate that the action of the House Appropriations Committee in recommending a reduc- tion in appropriations for European recovery has produced an initial reaction of dismay in the participating countries and has raised doubts as to the extent to which US long-range support of European recovery can be depended upon. A sum- mary of principal reactions and comments by US missions follows: Hub,: US Embassy Rome reports a widespread feeling of disappointment and confusion at what appears to be a US retreat from support of its tommitments for Italian and European recovery. The Italian Minister Foreign Affairs, Count Sforza, has expressed his concern to US Am- bassador Dunn and has declared that "the whole machinery of recovery might be substantially decreased, if the global amount needed for the goal is reduced." Government officials are disturbed by the prospect of attacks from the extreme Left and the effect such attacks might have in Parliament at a time when the new Cabinet needs a vote of confidence by a large majoritY- Document No. 66-6 NO CHANGE in Class. El 0 DECLASSIKTED Class. CHAr:Ei T33 TS DDA MeTo Ap7 RAIrth: DDA REG.'77 171E3 .7 Date: 4.4.14WLAM_ BY: - 1 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP to, Fran.ce: US awbassy Paris 'vaints out that any stab- stantial cut in the appropriation will: (a) greatly strengthen Communist propaganda, which will exploit the action as evi� dence of uncertain US Interest in European recovery and of the *consequent necessity that France should also cooperate with the USSR.; (b)" Seriously dislocate :144 jeopardize the Govern- ment's internal economic stabilization program and eyipose the Government to charges of�gullibllity and incompetence; and (c) weaken the essentially democratic forces of the center represented in the present "third-force" coalition. alki a US Legation Vienna reports that Communist and Soviet newspapers are juabilantly featuring the recommended appropriation cut on their front pages as heralding the "collapse of the present plan." The Legation believes thmt the proposed reduction would make it impossible to maintain in Ausfria even the present inadequate standard of living and that it will almost certainly be interpreted, even by the friendly Austrian popula- tion, as demcinstrating the failure of the European recovery plan. � Denmark: The Foreign Office his informed US Em- bassy Copenhagen that the Danish Government "cannot but take a very serioug View of such a reduction." The Embassy is7 con- vinced that the House CoMmittee's action at this juncture will seriously damage Dayaish confidence in US intentions and per- formasuce. Switzerland: � US. Legation Bern believes that the projected redactions will have a serious political effect, bol- stering the cause of the important Swiss political element which favors the traditional Swiss policy of neutrality rather than soli- darity with"western European countries. The Legation believes that alteration of the US programat this time will lead to charges of US "capriciousness.' Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Greece: US Embassy Athens comments that the Greeks can be expected to take a pessimistic and even alarm- ist view of the proposed cut in European recovery and military allocations to Greece. The Embassy believes that such action is likely: (a) to undermine efforts previously made to hold the line against Communism; and (b) to furnish ammunition to those who declare that the US is at heart isolationist and can not be relied upon to carry through its foreign affairs program. Turkey: US Embassy Ankara comments that a sub- stantial appropriations cut would result in a "feiling of utter frustration and confusion on the part of the Turks as to US policy regarding European recovery and Turkey's position therein." THE AMERICAS 3. PARAGUAY: Extremists apparentlyictorious in co-- US Ambassador Warren in Asuncion reports, concerning the 3 June coup which caused the resignation of President Morinigo, that President-elect Gonzalez has expressed regret over the occurence, and has implied that he was not the instigator of the plot. Warren adds that the coup appears to be a victory for the Guion Rojo (the extremist faction of Paraguay's only active political party) which has sponsored Gonzalez. (CIA Comment: Other reports indicate the possibility that a moderate group, opposed to both Morinigo and Gonzalez and striving for party unity, may have gained control. It seems unlikely that any group which emerges victorious either (a) will bring a moderate and truly representative government to Paraguay; or (b) will deviate from the Morinigo government's policy of seeking US friendship and financial and diplomatic aid as a counter to Argentine influence.) - 3 - Approved for Release: 2018/10/18 006749452 .9. Oft. Approved for Release: 2018/10/18 006749452 �--Go ET 4.4 GENERAL 1. Wi2a1101121119,fttaagingtagalt --US Embassy. London has learned from a UK Foreign Office official that UN Mediator Bernadotte requested the Soviet Embassy in Cairo to supply him with military observers. The UK official stated that the Foreign Office prefers to have observers drawn from small neutral states but is receptive to the US idea of drawing on member states of the Truce Commission. The Department of State has instructed US Embassy Cairo to inform Bernadotte in strictest confidence that the US "would not be pleased" to furnish observers if the USSR or Its Satellites were invited to do so. 2. 4rabs thought willing to end Palestine Was--An officer of the US Consulate General in Jerusalem has gained the impression from conversations with King Abdullah of Transjordan and his Prime Minister that the Arabs would be glad to call.off the fl war ff they could do so without losing face in theh� own coun- tries and abroad. The consulate officer feels that the Prime - Minister did not appear particularly optimistic over future negotiations; but that the Prime Minister, the King, and other Transjordan officials strongly desire an end to hostilities. The consulate officer was told that in the recent Anunan talks of the Arab states, the Prime Minister joined with the Egyptian Foreign Minister in urging acceptance of the UN cease-fire proposal despite vigorous opposition from Syria, Lebanon, and Saudi Arabia, which evidently were suspicious of Transjordan's Intentions. EUROPE 3. FRANCE: eliumalmagotSamilmntamscridgaljagnik-- Socialist Leader Leon Blum has informed US Ambassador Caffery that he will try to prevent an overthrow of the Govern- ment on the controversial issues of religious schools and French participation in the London agreements on Germany. Blum sayi Document No. 5-6 - NO CHANGE in Class. CI - 1 LJ DECLASSIFIED Class. CH.1-Z:.,ILD T0,3 TS SECRET DDA Memo, 4 Apr 77 le' Date: Aut h : 4D DmAA' RREI9G78. 77B l 7: 63 y Approved for Release: 2018/10/18 006749452 ( 03 61), Approved for Release: 2018/10/18 006749452 CRET he would make this effort despite his lack of complete agree- ment with the Government's position on these matters. (CIA Comment: CIA believes that the Socialists will L not press their dissatisfaction to the point of causing the over- throw of the Government.) , FAR EAST 4. INDONESIA: Soviet move precipitates serious crisis--Chair- man Du Bois of the US aelegation in the UN Good Com- mittee reports that Soviet recognition of the Republic of Indo- nesia has precipitated a serious crisis between the Dutch and the Indonesians. The US delegation considers that the Republic has gone as far as it can be expected to go at this time in dis- avowing any relationship with the USSR and that Dutch suspension of negotiations over this issue would be disastrous. Du Bois points out that there is increasing evidence that Vredenburch, chairman of the Dutch delegation, has no interest in reaching a reasonable political agreement with the Republic. Du Bois considers that Vredenburch's attitude makes it impossible for the Republic to extricate itself from the dilemma resulting from the Soviet move and may even enhance, in Republican minds, the value of the Soviet connection. THE AMERICAS 5. VENEZUEL et: pritish arms offer- the British have offered to sell a cruiser, five meteor jet planes, and armaments to Venezuela, but that the Venezuelan Minister of Defense prefers to buy 3 destroyer � escorts and other equipment from the US. If this is not possible, believes the Minister may close the deal shortly with the British. 0\ 0 - 2 - TO RET 4 Approved for Release: 2018/10/18 006749452 . 3.3(h)(2) 3.3(h)(2) Approved for Release: 2018/10/18 006749452 46 GENERAL 1 D � s -lets US halt e tion of Jewish DP's--US ca --- a -" on� British - as: � . or � decision to retain Jewish refugees in Cyprus during the Pales- tine cease-fire period and suggests that parallel US action with respect to Jewish displaced persons in the US Zone in Germany might be desirable. Douglas points out that because the US has agreed to the British construction of the cease-fire resolution with respect to the immigration of military man- . power, any other action would be inconsistent with this interpre- tation. a 3 JUN 1948 702 . EUROPE 2. FRANCE: Government may fall on Gerinait issue--US Ambassa- dor Caffery reports that the chances of the .Government's sur- viving the Assembly debate on the German agreements "do not look very good" at present and that Foreign Minister Bidault Is most unhappy because he agreed to go along with the US and the UK. Caffery says that the root of the French opposition to the agreements is a fear that the establishment of a government In western Germany will result in an aggressive Soviet attempt to force the western powers out of Berlin, followed by conflict with the US in which the USSR might over-run France. Caffery has also learned from a French parliamentary leader that, be- cause of the traditional French fear of Germany, there is wide- spread hostility among French parliamentary groups to "Bidauit's German policy." Caffery also notes that: (a) some Socialists believe a final approach shad have been made to the USSR be- fore proceeding with the talk el on Germany; and (b) almost all of the French press has blasted Bidault in particular and the Gov- ernment in general for the agreements reached at London. NEAR EAST-AFRICA 3. INDIA: Indian ArmIit1ng Pakistan regulars in Kashmir-- The US affitar�y�A�Wtta arac iepiWt a vane Indian Army troops are now actavely englIcsethatt gcRakistan O NO CHANGE in Cl ass. 0 0,DECLAz.- TE'D TS SJ CC DDA 2,:31.--o, 4 Apr 77 Auth: DDA REG. 77 1763 1 Dgtej By;. g' Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Army battalion in western itlishmir. The MA says that both India and Pakistan have refused to take official cognisance of the action in order to avoid being forced into open and de- clared war. He adds, however, that continuation of the present Indian Army offensive will automatically result in a large- scale conflict between the forces of the two dominions. The MA considers it "absolutely essential" that the UN Ekshmir Commission proceed directly to India without delay. FAR EAST 4. KOREA: Wash on Moscow ower n otiations - �IN US Pon. SIMI' Co's sugges � may Val consider taking up with Moscow the issue of the North Korean power cut-off. Jacobs suggests this action because he regards the cut-off of power to South Korea as an act of economic war- fare. He points out that the Soviet commander in North Korea still adheres to the position that all requests concerning power must be addressed to the People's Committee. Jacobs has little hope that a high-level approach will be successful but � feels that for propaganda purposes It may be helpful by elicit- ing a Soviet statement regarding occupation responsibility. � � - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 46 EUROPE IP 2 JUN 1948 701 1. FRANCE: Cabinet crisis ma dela debate on Germane Foreign SP Foreign Minister aI. t :s to A ....4ssa � or ery that he will do his best to bring the German question to de- bate in the Assembly before 10 June but can make no prom- ises now. Bida.ult pointed out that the Government faces an Imminent crisis on the issue of subsidies for Catholic schools and that there is general opposition on�the German question, Including opposition from his own Popular Republican Party (MRP), the Socialists, and the Foreign Office. Caffery re- ports that Maurice Schumann (leader of the MRP) fears that the question of Catholic school subsidies may bring about a parliamentary crisis which the Government may not survive and believes that until this issue has been settled there is no possibility that the Assembly will be able to debate the Ger- man question. Caffery has learned from Premier Schuman's "right hand man" that the Government hopes to forestall the crisis and sfrengthen its position by requesting the Assembly to postpone debate on the school subsidy bill until its legality can be passed upon by the Council of State. FAR EAST 2. KOREA: Firm US-UN_policy recommended--US Political Adviser Jacobs expresses the view that it is desirable for the US to try to secure active participation by the United Nations Temporary Commission on Korea (UNTCOK) in the formative stages of the new Korean Government. Jacobs favors this course because of his conviction that: (a) the Koreans are more likely to take advice from the UN than from US officials; (b) less fuel will be provided for Soviet propaganda charges that the US is "running the Korean show" for its selfish inter- ests; and (c) an influential segment of the US public will support a "Korea program" if the UN participates. Jacobs believes that although there may be difficulties in dealing with the new Korean National Assembly, the failure of the US and the UN in Korea will mean either war or the abandonment of Korea to the USSR. Jacobs declares that this latter event "could only make a mockery" of US policy in other theaters of the world. Document No. NO CHA1TGE in C.1 ass � DE Class. S ET � 7 Auth: LL'A Date :1 4 MAR 1918 it-17 62 $ Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 THE AMERICAS 3. CHILE: Government may turn to UK for naval vessels 'US Ambassador Bowers reports tErWieriffiriMirrn- ment will be forced to acquire badly needed naval vessels from the trK unless the necessary legislation making US vessels available is passed during the present session: of Congress. Bowers fears that if US vessels are not made available, the US Naval Mission will lose all prestige in Chile. (The British have been most insistent in their efforts to sell the cruiser AJAX and other naval vessels to the Chileafts at a very reasonable figure.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 46 ET GENERAL P1 JUN 1948 TOO 111/11 1. Possible militaryobservers in Palestine--The Department of State is informing UN Med1atOiCountBernadotte that the US is actively considering his suggestion that military ob- servers supervise the observance of the 29 May UN cease- fire resolution following its acceptance by the belligerents. � Bernadotte is being advised that although no final decision has � been reached, the Department believes that the UN Balkan Commission and the Indonesian Goad Offices Committee furnish precedent; for such an arrangement and that any mili- tary observers sent should be recruited from the three mem- bers of the Truce Commission (the US, rielgiiim, and France). 2. US and UK to roceed on German program--LUS Ambassador Douglas reports that the FeRig e n t ti v e s to the London talks on Germany have informed the French repre- sentative that if the French Government, either because of the debate in the French Assembly or for any other reason, finds the scheduled program for Germany unacceptable, the US and UK will nevertheless have to proceed promptly with the program in the bizonal area. The US representatives recommend that before the French Assembly begins its de- bate, official US-UK approval be given to the agreement on Germany in order to strengthen the position of French For- eign Minister Bidault and make it more difficult for the � French Chamber to reject or amend the agreement. The French representative has informed US and UK representa- tives of Bidault's estimate that tht debate in the French Assembly could now be held about 11 June and that French approval might not be forthcoming until 15 June. EUROPE 3. C ZEC HOS LOVAICIA : BeneslEa_....ns I.2.Leaa. -P res Went Benes has informed US Ambassador Steinhardt that he will not sign the new Czechoslovak Constituticgt and % resin "in about ten days." Steinhaidt added that alth:7:j.h - .e 1 s physical and :.-. ; mental condition has deteriorated E L., ,. f ' . ccup, gt-----_______5 he has by no means lost PrIstaBIGDoSa ies 2 NO CHANGEin Class. 0 ,%,'S.211 _ 0 DECLASSIZIED . �- P ss. CHANGI:JD TO: TS DDA Memo, 4 Apr 77 Auth: DDA,REG. 77/1763 Date: 44 Aq1R.1978 By: 02, Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 . EGRET NEAR EAST-AFREA 4. IRAN: Soviet activity in northwest thought diversionarr�US Ambassr eirTs-co on reports ci Increased Soviet-Inspired activity in northwest Iran, expresses concern over the possibility that this "ostentatious" activity may be a diversionary tactic and that the next Soviet move against Iran may come from the northeast. Wiley suggests the immeli- ate establishment of a US consulate at Meshed in northeast Iran so that the US will not "be caught completely off guard" in the event of such a Soviet move. -2 - TO RET .� Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 CRET ANNEX . 1 June 1948 Approved for Release: 2018/10/18 006749452 3.3(h)(2) Approved for Release: 2018/10/18 006749452 '033\ CRET Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ? Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP "Ya RET Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ' TOP - 5 - TOP S c Approved for Release: 2018/10/18 006749452 3.3(h)(2) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 0 � Approved for Release: 2018/10/18 006749452 ET Co GENERAL 1 UK presses Sweden on neutral issue--US Ambassador Matthews inStockholm s Iearnedthflrit1ah Ambassador of a UK Foreign Office "warning" to Sweden that if the Swedes per- sist in following their present neutrality policy the British "might have to reconsider their policy" vis-a-vis Sweden. According to the British Ambassador, the UK Foreign Office rejected Swed- tell arguments for neutrality by stating that (a) no part of Europe could escape participation in a future war; Op Scandinavia would not be merely a "subsidiary theater of war; (c) the Swedish conclusion is "premature' that help would not reach Scandinavia In time to be effective; and (d) prior strategic preparations are emphatically important. 2. BrItish view of Italy's strategicposition--According to US nibassy London, th�sh arth�services chiefs consider that the strategic advantages resulting from Italy's adherence to the Brussels Pact would outweigh the disadvantages. The British believe that although Italy would be a military liability, the availability of Italian bases to the western European union powers and their denial to a potential enemy are of "prime Importance." 3 US osition US-UK c � � ration on Palestine--The Department of 'tate L., s Mor � ssa Or 1-1 as, in response to his recent reports concerning Bevin's hopes for Increasing US-UK collaboration on the Palestine question, that the US is fully aware of the need to work with and not against the UK, although the mutual task would have been easier if the British had not been "extremely -1aFgard in dealing with a crisis largely of their own making." Douglas is authorized to tell Bevin that the US will not lift the arms embargo ex- cept in conjunction'with Security Council "action or inaction." The Department indicates that the US is prepared: (a) to sup- port the,UK cease-fire resolution with-certain modifications, after having first voted affirmatively on the USSR rsolUtan Document No. 0 NO CHANGE in Class.; p DECLASSIFIED' '3::`; as � CHANGED TO: TS S TO RET DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 0 e � Date :1 4 MAR 1978 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 because - because of its close similarity to the US resolution of 17 May; and 0)) to suggest officially to the Provisional Government of Israel the wisdom of accepting a new cease-fire resolution at this tithe. 4. .ankak fears possible Communist brklgehead in Middle East-- Premier Spaak of Belgium has expressO to US Ambassador Kirk his serious concern over the Palestine situation. %mak feels certain that Jews going to Palestine from eastern Europe must include a large percentage of Communist agents. He voiced his anxiety that a Communist bridgehead may be estab- lished in the eastern Mediterranean. NEAR EAST-AFRICA - 5. PAKISTAN: Mounting antagonism against US Palestine policy-- US Ambassador Ailing in lCarach1 has learned of plans for a mass demonstration to be held before the US Embassy in con- demnation of US policy in Palestine. Ailing reports that feeling against the US is running high and several incidents against US personnel have occurred. FAR EAST 6. BURMA: Communistic proepram announced--US Ambassador Huddle in Rangoon reports that Prime Minister Thakin Nu, in a final bid for national unity preceding his retirement on 20 July, has announced a me-party "leftist unity" program which is frankly Communistic. Huddle declares that the pro- gram offers substantial proof that Communism has prevailed In Burma. Huddle believes, however, that Thakin Nu has over- looked the inevitability that any state receiving Kremlin bless- ing must subordinate itself to Moscow and that the realization of this should shock Burman3 who at present have real inde- pendence. AL _ Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 (CIA C =newt: CIA concurs with this estimate and believes that if the Prime Minister's program should become governmental policy, which is probable, the likelihood of similar developments in French Indochina, .Indonesia, and other Southeast Asia countries will be greatly increased.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Teri beR T GENERAL 1. US polIc on Palestine--The Department of State, with the approval . President Truman, has Instructed the US delega- tion to the UN that: (a) the US will continue to urge the Security Coun-ell to issue a cease-fire order under the UN Charter; (b) If such an order is not complied with, following Its issuance, the US will adjust its embargo policy to support any action taken by the SC; (c) the US will support SC action banning all shipments of arms and military assistance to any party to the hostilities so long as all participants comply with the cease-fire order; (d) the US will retain its present arms embargo if the SC succeeds in effecting a cease -fire and places fin embargo awe all parties to the' hostilities; and (e) if the UN is unable to accomplish either of these two moves, the US will resume its freedom of action respecting arms shipments. X MAY 698 2. Didault to discuss looake talk@ with French Assembly--US Ambassador Caffery reportrLfrom Paris that Foreign Minister Bidault plans to discuss with leaders of the French Assembly the results of the London talks before submitting the London recommendations-to debate in the Assembly. Caffery believes that there is no possible way for the French Government to escape this debate. Calory also reports that Bidault is now willing to accept the US position that there should be no OS- UR-French ministerial meeting at this time. EUROPE i; 3. USSR: Kremlin re irtedjIdng tures to Arab governments The US Military Attachein Cairo c �1r-----Fonveys a report from a fa y reliable source to the effect that the USSR has cffered to supply Egypt with military assistance and to use the 30 volition Soviet Moslems to promote King Farouk's candidacy for the palpitate of Islam. The report suggests that in return, Farouk is to per- suade Ibn Saud to accept Soviet technice2cesears4IVO aid so 6 SO NO CHANGE . in Class X DECLASSIED � Class . CHANGED TO TS S DDA Mf/110 , 4 Apr 77 T Auth : DDA REG. 77 1763 Date: 1.4 MAR ivici By; 61. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 that the Sandi Arabian oilfields can be operated independently of the US. The source indicated that the USSR had also made an offer to Iraq. � (CIA. Comment Ms probable that the USSR will aplott . Arab antagonism toward the US by seeking deals with the Arab governments. CIA believes, however, that the USSR is more Molly to increase its influence in the Near Nast through Cera- mist exploitation of the social disorders throughoat the Arab world which would follow any significant Arab reverses in Palestrae.) 4. YUGOSLAVIA: Implications of Communist Party Congress� ' US Ambassador Cqnnon reports that the Yugoslav Communist Party, contrary to its former policy of secrecy concerning Party activities, has publicly announced the agenda of the Party Congress to be held on 31 July. Cannon believes that this action implies that: (a) some Party adherents are losing confidence In the ability of the regime to advance world communism; and (b) intra-party conflict and diversionism have reached greater proportions than previously estimated. Cannon also think� that the current Party purge may be intensified prior to the congress in order to unify the Party's leadership firmly under Ttto's control. In view of the regime's preoccupation with these internal difficulties, Cannon considers it unlikely that The will be in a position to risk any external adventures until �after the congress. - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 127 MAY 1948 CO " es, , T - P ET 697 GENERAL 1. US representatives in Middle East omose rais mbar o US representatives in Cairo, Beirut, Drarascus, an em I! unanimously agree that lifting of the US arms embargo would irreparably damage US interest in the Middle East and would also endanger the lives of US citizens and Jewish nationals in the Arab countries. Memminger in Damascus and Burdett in Jerusalem feel that the Arabs would consider the US action tantamount to a declaration of war. Tuck in Cairo expresses the opinion that lifting of the embargo would prolong the hostili- ties in Palestine and increase the possibilities of anti-Christian and anti-Jewish violence throughout Islam. Pinkerton in Beirut believes that the Lebanese would regard raising the embargo as deliberate encouragement to both Jews and Arabs to do every- thing possible to increase their destructive powers. 2. UK view of the stra � -ic position of the Middle East--Top British Ca inet ��� cia s ve on e.t ma. -sador Douglas present British thinking concerning strategic ques- tions in the Middle East. The British consider that Palestine is strategically not a problem of Arab-Jewish opposition but one of geography, "since Palestine is part of the Middle East bridge between not only the east and west but also between Asia and Africa." The British leaders maintain that the Middle East is vital to the defense of the US, the UK, and western Europe,against the USSR. According to Douglas, the British believe that the Moslem ideology is capable of being "worked up along anti-western lines" because of Palestine and that such a development would bring about an "almost Insuperable" military problem. The British consider the military criteria for a Palestine solution to be that Palestine must not be opened to Soviet influence and Moslem good will toward the US and the UK must not be alienated. Document' No.: b 4q NO CHANGE in Classc 0 0 DECLASSIFIED - �: � . - 1 - Class. CHAFGED TO: TS .............. , 'DAAIA-mo. 4 Apr 77 RETuth: DDA 1763 Date: L4111:11_,_2 By: Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 uivp SECAY 3. UK estimate of Arab political stability�The Permanent Under secretary of the UK Foreign Office has informed US Ambassador Douglas al the British estimate, in connection with the Palestine question, at the stability of Middle East Governments. The British view is that with the exception of Saudi Arabia, the "chances are" that all the governments would very easily col- lapse if discredited and humiliated in the eyes of their people and of Moslem public opinion, generally. 'These governmental collapses, in the judgment of the British, would be followed by the emergence of the Communist Party as the one "strong and co - hermit" force, or more probably, by a series of local dictators carried to power on a wave of anti-British and anti-US fanati- cism. In the latter event it is thought that the final result would be a series of "Czechoslovakia" coups carried out by the Communists. (CIA Comment: CIA concurs in this British estimate) 4. yrintch to continue in talks on Germany--IIS Ambassador Caffery in Paris reports that the French Government has In- structed tin delegate to the London talks an Germany to "go ahead with the German program," with the understanding that Foreign Minister Bklault will have to submit the matter to debate in the French Assembly before final French acceptance can be given. Bidault is reportedly convinced that failure to do this would result in the fall of the Schuman Government. US Ambassador Douglas reports from London that the French delegate to the talks believes that the assembly debate could take place about one week after conclusion of the work in London and could be ended in one day. The French representa- tive believes that the detate could be limited to the terms of a communique announcing the London decisions, if the com- munique were sufficiently full and informative. The Department of State has informed Ambassador Douglas that the US is agreeable to consultations on the con- sequences of the US-UK-French action on Germany, as re- quested by the French on 24 May, and had considered that this was sufficiently implicit in the maintenance of a joint front on the German question. -2- TOERET 44; Approved for Release: 2018/10/18 006749452 (-) Approved for Release: 2018/10/18 006749452 ET .44 � (CIA Comment: In view of the relative firmness of the French stand and the number of concessions already obtained, It is likely that U the assembly debate is conducted slang the lines indicated, the assembly will uphold Bidault's conduct of foreign policy.) NEAR EAST-AFRICA 5. PAKISTAN: Clash of regular troops In Kahmtr feared--The British Commander biexpressed to the US Military Attache in Karachi the opinion that advancing Indian troops in Kashmir may soon clash with Pakistan Army units there, thus precipitating open war between the two dominions. The MA comments that many persons in Karachi, believing that a clash between the two armies is bound to occur, would prefer It to take place before the Indian Army completely overruns Kashmir. The MA feels it to be "vitally necessary" that the UN Kashmir commission arrive promptly. ' FAR EAST 6. CHINA: Embas s evacuation-Pei. I 4 -Tientsin area-- US Embassy �anking r.,... a rap � ..- r-r ora on I' :r�4: ational- 1st military situation in the jehol-Ropeh area of North China. _The Embassy therefore requests that it be given authorisation as soon as possible to warn Americans in the Peiping-Tientsin area to consider seriously evacuation, unless they are prepared to live under Communist occupation or to be completely isolated in those cities. Approved for Release: 2018/10/18 006749452 ; Z6 MAY 1948 Approved for Release: 2018/10/18 006749452 ET GENERAL 1. French mg postpone agreement on German --The French delegate to the -London Wks on Germany 1s informed US � Ambassador Douglas that the French Government considers it necessary to postpone final agreement on the projected program for western Germany until the subject can be de-�� � bated in the French Assembly. Douglas regards this plan as exceedingly dangerous, in view of the capital which French Communists could make of such a discussion. US Ambassador Caffery in Paris reports that French Foreign Minister Bidault insists that France does not want to break off the discussions on Germany and wishes to go along with the US. Bidault remarked, however, that there was deep concern in France lest the USSR take aggressive action in Berlin and possibly overrun France itself. The Department of State has instructed Ambassador Caffery to. express to Bidault the earnest hope that the French Government will be able to approve the program for western Germany now being formulated in London. Caffery is in- structed to state that the US does not favor a high-level meet- ing of the US, the UK, and France at this time but does Intend-- In accordance with the pending resolution of the US Senate and President Truman's recent declaration�to strengthen the ability of the free nations of Europe to resist aggression to an extent equal to their will to defend themselves. . (CIA Comment: The French delegate's suggestion and Bidault's reiteration of French fears apparently represent another attempt to persuade the US to give France military guarantees sufficiently strong to avert public criticism of the Government's concessions on the issue of French security.) EUROPE 2. AUSTRIA: 112miz problems may be submitted to UN--The Austrian Minister iLonc1on 1a tOld the TJ representative at the Austrian treaty taw that the Austrian Government is Document No. 0L4 NO CHANGE in Class. 0 DECLASSIFIED C SECRi+ass CHANGED 'TO: TS DDA Memo, 4 Apr 77 Auth : DDA REG. 77 1763 Date: 14 111141 1978 By: Approved for Release: 2018/10/18 006749452 66. Approved for Release: 2018/10/18 006749452 -0 CRET studying the possibility of placing the treaty problem before the autumn session of the UN and wishes to know the US and UK views on this question. The US representative "under,. stands" that the UK is reluctant to commit itself at ihis time. He adds that the Austrian Government is preparing concrete proposals for changes in the occupation regime and plans to discuss them with the three western powers. (CIA Comment: The greatest benefit Austria could probably receive from requesting UN action would derive from its propaganda value. However, Mowing such action, the USSR might suggest the withdrawal of all occupation forces before a treaty had been concluded, and this with- drawal could deprive Austria of military safeguards now provided by the presence of the western occupation troops.) NEAR EAST-AFRICA 3. SAUDI ARABIA: lbn Saud firm agtinst wUtion--US Minister Childs believes that ibn fand will now Wow the fa weight d his Influence and strength against the partition of Palestine, despite the great moderation he has exhibited in the pest. Childs thinks that the King is prepared to commit Saudi Arabia to any measure which the Arab League agrees will best further the Arab cause. Approved for Release: 2018/10/18 006749452 d Approved for Release: 2018/10/18 006749452 T GENERAL 1. Status of discisesions on Germany--The Department of State has informed US Ambassador Douglas that the Department con- siders it essential to proceed with the completion of the pro- jected agreement on Gernsany, including adherence to the time schedule for the formation of a provisional German govern- ment The Department therefore instructs Douglas to ascertain British willingness to proceed, without the French If necessary, with the establishment ci aprovisional government for the bi- zonal area. Douglas is to continue to impress upon the French that any defection on their part is likely to provoke a strong US congressional reaction and that any rift among the western powers will be exploited by the USSR to the detriment of the US-UK position in Berlin. Ambassador Douglas reports that in discussions in It London on 24 May, the French delegate indicated that the Ruhr paper was satisfactory, that discussions on security were pro- ceeding satisfactorily, and that if the question of German elec- tions could be settled, the only real issue is the timing. Douglas says the French profess to believe that the Soviet reaction to the US program for Germany will be to make an effort to force the western powers out of Berlin. Douglas made it clear to the French delegate that if the USSR should use force for this pur- pose, the US would reply with force. US Ambassador Caffery in Paris Aransmits a. report that French Foreign Minister Bidault is in a "panic" because of the unfrZndly reaction of the French non-Communist press to the London talks and is especially concerned over the Social- ist attitude. Caffery remarks that Bklault seems to fear he has gone too far in meeting the US-UK position and is trying to find a way to crawl out. UK Foreign Secretary Bevin has told Ambassador Douglas of his plans to send Bidault a personal note saying that Bevin hopes the French will not place him in t. position requiring him to proceed with the US alone in the bbonal area. Bevil' Informed , Douglas that the UK would not agree to � Bidault's proposal of a US- UK-French meeting on the ministerial level at this time and that the present discussions in London siscrfacoluirenstivli to a success- GA ful conclusion. ii HT !Ulla 695 NO CHANGE in Class. 0 0 DECLASSIFIED 4tS Class. CHANCit: TO':� . TS CRET DDA Memo, 4 Apr 77 Auth: DDA�REG..77/1763 Date:14 MAR 1978 By: 02 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 YL RET 2. Reactions of diplomats in Mosco MI 06 US Embassy Moscow reports that most western uropean plo- mats in Moscow have expressed disappointment and disapproval of the "reversal of US policy" represented by US recognition of Israel. According to the Embassy, these diplomats feel that the inconclusive outcome of the special meeting of the General Assembly resulted from a failure in US leadership and consti- tutes a major diplomatic defeat for the US. The Embassy Indicates that the Scandinaviim representatives, in particular, have interpreted US action with regard to Palestine as indicative of the "undependable" and "irresolute" character of US policy, capable of similar "shifts" in commitments to western Europe and Scandinavia. The Embassy adds that most of the western representatives are convinced that Communist infiltration of the government and armed forces of Israel is already well ad- vanced and that eventual Communist control of the Jewish state Is inevitable. 3. pit Gaulle demands French& general for western defense s A French Cabinet minister has informed US Ambassadorts:;fenlry that De Gaulle is threatening Premier Schuman with a bitter attack upon the Government if a British general, such as Mont- gomery, is selected as over-all commander of the ground forces In the western European defense system. According to Caffery's Informant, De Gaulle believes that a French general, preferably General Juin, should command the combined ground forces be- cause of the key strategic position of France on the continent. De Gaulle is reportedly willing that a UK leader should have top command of the naval and air forces. NEAR EAST-AFRICA 4. LEBANON: caudinsualzglumatiMaknignarassi--US Minister Pinkerton has been informed by the Lebanese Foreign Minister that the Lebanese Government is prepared to release the forty US citizens interned from the MARINE CARP provided arrangements can be made for their direct repatriation to the Us. The Foreign Minister told Pinkerton that the internees could not be released if they intend to go to Palestine to join the Jewish forces, "which are making constant commando aids Into Lebanon." Pinkerton reports that the internees will be asked whether they are prepared to accept this arrangement. � 2 TOPS 05) a : Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10118 006749452 TOP s FAR EAST 5, CHINA: Major political crisis in Kuomintang�US Embassy Nanking comments that the recent struggle within the Kuomin- tang over the forming of a new cabinet appears to be a major rebellion against the leadership of Chiang Kai-shek. The Embassy says that the naming of Wong Wen-hao to the premier- ship (following unsuccessful attempts by Chiang to appoint a more prominent individual) signifies that no basic solution has been found for the crisis within the Party. The Embassy further comments that because the present intra-party rebellion has occurred within the inner circle on which Chiang has for years based his strength, it is undoubtedly a more serious revolt than the one Chiang faced in the election of Li Tsung-jen to the vice presidency. 8. INDONESIA: Dutch "police action" considered robable�The US Naval Liaison Officer In Batavia reports that tens on is Increasing between the Dutch and Indonesians and considers that Dutch resumption of "police action" in the near future is much more probable than the reaching of any political agree.. meat. The Naval Liaison Officer comments that the Dutch believe they can now safely put a stop to this "nonsense" be- cause world attention is centered on Palestine. (CIA Comment: CIA concurs with this estimate. In recent negotiations the Dutch have redoubled their efforts to by-pass the Indonesian Republic, thereby creating the impres- sion in Republican territory that Dutch "police action" is a definite possibility and leading to preparations for guerrilla rfare. The Dutch have consistently underestimated the eco- nomic, political, and physical risks of extended operations against the Republic.) -3.. 6). TOP C^r PAleasel 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Lf GENERAL S-UK relation; believed deteriora over Paleatine--US in worst , shock" to US-'UK collaboration during the past year was the sadden US recognition of Israel without Previous notice to the UK. Douglas adds that if the US raises the arms embargo to favor the Jews "it will be only a short step" until the UK !nay lift itstrestrictions on arms to the Arabs, thus placing "the two great democratic partners" indirectly on opposite sides of a battle line. Douglas is convinced exit the US-UK rift over Palestina can not be confined to Palestine and the Middle East b; an interview on 22 May, Foreign Secretary Bevin told Douglas that: (a) If the US lifts the arms embargo, it will be impossible for the UK to resist Arab pressure for arms; (b) if the UN declares the Palestine situation to be "a breach of the peace," Sevin believes it probable that the USSR will ultimately Interfere in Palestine and the Middle East; and (c) Bevin is personally prepared to examine the position from a "fresh vantage point," Douglas feels that the US should try to relies the pressure on the UK Govern- ment by meeting Bevin'S suggestions that the US support the substance oi the British resolution on Palestine in the UN, retain the arms embargo, and refrain from taking other action until there Das been opportunity to make a joint ap- praisal of the respective US and UK positions. 24 MAY 1948 694 2. 1rinc 8ee p,rtlteconference--French Foreign Minis- ter Bideuli has preieMed tobtxeaador Caffery in Paris a note which urgently recommends direct consultation by the US, the UK. and France. In connection with the recent Smith- Molotov conversations, the note expresses the view that, although an eventual lessening of tension between the USSR and the western world is desirable, it is of primary importance to maintain a unity of policy and action by the US, the UK, and France. This unity, the French maintain, should be based upon: # (a) close association of the three powegbkfitiffuggions and 4 LI VP NO CHANGE in Class.; 0 DECLASSIIIIED -,;'" Class. CHANGED TO: TS S DDA Memo, 4 Apr 77 RET Auth: DDA REG. 77/1763 Data 14 MAR 1978 BY: 02I� Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 decisions in preference to separate negotiations; (b) an un- changed policy of opposition to Soviet attempts to dominate ltozope; (c) continued rehabilitation of western Europe; (d) continued organization of the defense of the western world, wtth US assistance; and (e) an avoidance of any appearance of giving provocation to the USSR. S. S French view on western Ger 00 40 re to the London tripartite conference on western Germany tmani- raously believes that although the Trench opposition to the establishment of a western German government may be in- spired by real apprehension of Soviet reaction, French leaders are using the occasion as an opportunity to bargain for armament from the US and to obtain other concessions. Douglas recommends that if the French persist in their atti- tude the US should persuade the UK to establish jointly a pro- visional German government in the US-UK zone as scheduled, and to reserve action on the Ruhr and French security guaran- tees pending clarification of the French position. Douglas also recommends that attempts be made in Washington and Paris to persuade the French to apee to the time schedule. Douglas suggests further that if the UK is not prepared to proceed with- out the French, the present talks be recessed until the situation .can be reappraised. - 2 - � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 CENIT, AL 15 rnmi la&tu 693 1. US 1.2.:21041232 asnitiE2aim t,eti on s -The Depart- ment of State has instructed US -T,mbassy Ca o to deliver a note to the Egyptian Government v...:,ratesting Egypt's proposed action with respect to shirrping approaching the Palestine calst, as outlined in a 17 May memorandum The memorandum stated that merchantmen or transports "would be ezpoeed to the measures" that the Egyptian Government is "obliged to take in order to Insure the security of its troops in Palestine." The US note declares that the Egypitm Government la attempt- ing to prohibit the freedom of navigation in the Mediterranean and, to entend its control to water; beyond the jurisdiction of Egypt. � ECRET Document No.: No CHANGE in Class., DECLASSIFIED TO: TS S DDA Memo, 4 Apr 77 Authi. 'DDA REG. 77 1763 Date: 14 MAR 1978 By; " Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 GENERAL --ACCardttig to VS Ansaudor Douglas, the UK Foreign Ic. believes that Arab and Jewish forces are so evenly matched in Pales- tine that a stalemate is is proepoct. Tbe British therefor* feel that the "surest way" to prolong the Palestine fighting is tor an outside power to disturb tbe balance by supplying arms and equipment to one side. Dangles adds that British dad& hold these views so strongly that the Government is Wady to counterbalance the dispatch of material aid to one side with comparable aid to the c$her aide. S. myik=itla orb tab t9 be saimneded--The US delegation to treaty discussions reports that delegates of the US, the UK, and France have agreed upon a formula for a suspension of these discussions witb3ut formal adjournment. Sae the UK and France prefer to leave tbe door open for resumption of negodations at a later date if the USSR shows itself willing to give satisfactory assurances conceridng the Austrian frontiers and reparations Issues. 3. Zarb bread Wig" to be kinromed--110 Department of State has informed US Embassy PRAM that the US is prepared to Ned an advance shipment of three cargoes of wheat within the first ten days of July to enable the French to increase the bread ration to 250 grains on I June. The Department con- siders that an Increase in rations so soon after US enactment of European recovery legislation will be excellent evidence of effective international cooperation. (CIA Comment: An early announcement by Premier Schuman of tbe new ration, coming at a time of seasonal food scarcity, will result in a considerable increase of public con- fidence in the Government.) Document. No. 041;i NO CHANCE in Class") fl 0 DECITIAS:Tf.-.ED - Class. 0:1":.7-:: TO: TS S 4 ;pr 77 - � z _7';',,`1 C`3 RETat 4 174 MAR-1978 B 1 MAY 1948 692 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP EUROPE 4. UM: iinild.Drociutqdit . , � -438 Ilbgbasay Moscow believes that t f.1 ed Petulant tons" us lasst TABS communion on the Smith-Molotov exchange is a "tribute to the firm Mane' of the Department ol State and "the quick adopt handlkig of the Stalin letter." 'The Em- bassy thinks that Soviet silence on Secretary Marshall's re- marks and the Department's "notated analysis" ci the lames Involved in the exchange art likely to raise some esstion as minds at the more Intalligsat Soviet citizens. Ms limbasey *tram believes that US willingness to fight back may have brought to an end the high level portion of the Soviet propspada campaign following the Smith-MolcA:ov conversations. . - 2 - Approved for Release: 2018/10/18 006749452 S Approved for Release: 2018/10/18 006749452 0 MAY 1948 uOjv,z. if 0 TO ET 691 GEIWA 1. 1911111.19tilittiligiallgailliMLEINMIketintin&�The Department of State has informed US Ambaseador Douglas el its view that plane for tbe establishment of a proviskaal government In western Germany should not be delayed, despite the recently expressed French view that delay might be desirable in view of the apparent softening of Soviet policy. The US does not believe that the "apparent softening" of Soviet policy means that the UM will cooperate in the farm- ing of a German policy essential to the needs of western lhabope. The Department considers that delay on this *na- tion would be construed by the USSR as evidence of weakness and would have an unfortunate effect on German morale. 2. US desires &lax owning treaty talks--The Department tate State has a � 'J., US delegation at the kustrian treaty negotiations in London that if the USSR does not Indicate within the next few days its readiness to accept Austria's 1937 frontiers and to abandon claims for repara- tions, the negotiations should be adjourned. S. USSR: US Ambassador Caffery in Paris has been tol by a trustwurthy Informant" that an important conference of political police, in- cluding Soviet and Satellite representatives, will be held in War- saw next July. The agenda reportedly includeu discussion on: frontier controls aimed at preventing the re-entrance of political refugees; measures for the penetration of refugee organization; and uniform surveillance of the officials of all govern:3mb; who have signed the Brussels Treaty. 49/0 Document No. 0143 NO CHANGE in Class. 0 DECLASSIFIED Class. CHANGED TO: TS S DDA kenio, 4 Apr 77 Auth* .[DDA REG. 77/1763 Date -1 4M44R 1970 By: 611 0 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 On (CIA Comment: While no confirmation of the above report is as yet available, CIA believes that such a caderence may be planned in order to strengthen the security of the Soviet orbit) NEAR EAST-AFRICA Israel considered to need outside support--US Consul General Wasson in Jerusalem expresses the opinion that although the Jew q have a better than even chance of maintaining military control over a large portion of the area allotted to the Jews by the UN partition plan, the Jewish state will be unable to survive long in the midst of hostile Arab states without "generous and Immediate" support from abroad. Wasson adds that a favorable atmosphere for the growth Of Israel may be created by the con- tinuance of moral and material support from the outside and the adoption of a "reasonable" Zionist policy toward the Arabs (particularly Abdullah). - 2 - cob� TO CRET � "ZV Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 sy a o League that the matter of applying sanctions against US oil interests In the Middle Bast is now a major item on the Arab League agenda. The attache col:pressed the opinion that sanc- tions will not be applied unless the US takes further steps to assist the Jews and serious reversals are suffered by the Arab armies. In such an eventuality, the attache anticipates that Arab leaders will have no choice but "to use oil as a weapon to assist the Arab cause." RET (041 GENERAL 19 MAY 1948 690 2. US cease-fire moposal for Palestine lacks supporta�The US delegation to the-UN has learned that the US cease-fire pro- posal for Palestine would not have obtained the seven Security Council votes necessary for its approval if it bad been brought to a vote on 18 May. The delegation gathers that Belgium, Canada, China, Syria, the UK, and possibly Argentina would have either voted against the US resolution or abstained. that no move be made at this time to suspend the Austrian treaty talks in London. Sevin explained that in a 20 May speech be plans to dwell at length on Soviet delaying tactics In Austria and to indicate at the same time that the machinery still exists for a prompt settlement. In view of Bevinin re- quest, Douglas will await further instructions before making any proposal for adjournment of the treaty discussions. The US delegation to the Austrian treaty discussions reports, however, that because there is no indication that the Soviet delegate has received new instructions which would make possible the resumption of negotiations, the US, the UK, and French deputies agree that continuation of the talks would be futile. Document No.t_ NO CHANGE in Class. Q 0 DECLASSIFIED Class TO CRETAuth: Date: . CHANCED. TO TS S DDA M-Ano, 4 Apr 77 DDA REG. 77 1763 4 MAR 1978 By ; Approved for Release: 2018/10/18 006749452 18 MAY .1948 Approved for Release: 2018/10/18 006749452 T'�i 689 4 GENERAL 1. British policy tom'diew MI state--US Embassy London has earned Informally from a higIiothcial of the British Foreign Office that the UK has no intention of according recognition at this time to the Jewish state. The Embassy infers that the British position is based principally on the idea that recogni- tion now of any particular frontier for the Jewish state will decrease the chances of an Arab-Jewish compromise at some future date. The Foreign Office apparently believes that when both sides tire of the "profitless conflict," the Arabs and Jews may reach an agreement on a frontier somewhat different from one which had been drawn up artificially. Concerning the shipments of arms to the Middle East, the official ex- pressed the view that if the US lifts its embargo the UK will be subjected to "intolerable" Arab pressure to modify the present limitations on British arms shipments. Document No, NO CHANGE in Class. Q 0 DECLASSIFIED y Class. CHANGED TO: TS Siro DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: -4-4444R-4976,BY: 62 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 � 1 7 MAY. 194P 688 GENERAL 1. Arab reaction to US reco Mon of elvish state--US Minister Chl1ds in Jidda reports that the an Arabis are "profoundly shocked" by the announcement of US recognition of the new Jewish state. Childs considers it possible that Saudi Arabia may sever relations with the US and that it may be necessary to evacuate the several thousand Americans living in Saudi Arabia. (Reports from other Arab countries indicate appre- hension on the part of US representatives over the possibility of anti-US demonstrations and pogroms againstthe Jews.) FAR EAST 2. KOREA: Soviet motives incu ower to US Zone--US Eccnomic�Raviser unce believes that Soviet motives in cutting off the electric power to South Korea were almost entirely political. Bunce interprets this action as an attempt to: (a) impede preparations for the establishment of the new government in South Korea; (b) support the propaganda theme that Korean problems can best be settled by Koreans; (c) force de facto recognition by the US of the North Korean People's Committee; and (d) assist Communist agitators in South Korea by forcing factory shut-downs and curtailment of normal services. Bunce declares that the Soviet action will not force the US to negotiate an agreement, because the South Korean electric power potential hasetIrerdriEVITIV creased to 60% of capacity prior to 14 May and can be boosted to 80 or 90% during the July-August rains. Bunce suggests that if General Hodge is unsuccessful in settling the power Issue with Ms Soviet colleague, it may be desirable to try' to reach a settlement on "the Washington4Aoscow level. (CIA Comment: CIA concurs with Bunce's estimate of Soviet intentions.) Document, No.; NO CHANGE in Class.] DECLASSIFIED Class. CHATCED TO: TS S DDA Mamo, 4. Apr 77 :j!AjleFfig4107 . uth: DDA' R.V2-1..' 77 1763 Date: 11rMARIVIV� BY: ��21 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 u � GENERAL 1 5 MAY 1948 687 1. figkilitmacti,--The US Mili- tary iittache in Saila reports that the Bulgarian public has interpreted the Smith-Molotov exchange as a US ultimatum to the USSR to cease interfering in such countries as Bulgaria, and as the first indication of definite action by the US to lib- erate eastern Europe. The MA adds that failure of the US action to produce definite relief from Communist cppression In Bulgaria will result in almost complete disilbudonment concerning US world Influence. US' Minister Beath in Buda- pest also reports that the US-Soviet exchange has added to a feeling of optimism which has been growing in Hungary since the Italian elections. According to Heath, many Hun- garians now feel that Hungary's political life may be sub- stantially changed even if there is no war, and that the Soviet tide will now begin to recede. EUROPE 2. TRIESTE: Se prate ERPUS-UK Zone-- one-- General Airey, US-UK Commander in Trieste, recommends that the US-UK Zone be granted individual membership in the European recovery program instead of receiving aid as "a part of Italy." General ktrey points out that failure to grant the Zone individual membership (a) might result In AMG being forced to take part in a form of economic warfare with Yugoslavia which would result in increased political tension; (b) would make it impossible for AMO to maintain the existing political balance in the US-UK Zone; and (c) would retard economic development in Trieste. and severely limit Trieste's contribution to western European recovery. � - 1 TOP Document No. 63 NO CHANGE in Class. 0 DECL4SSIF:ED Class, C:WIND TD3 TS DDA :1:-,11":;, 4 Apr 77 Auth: 1 MAR 1978 By : 0 Approved for Release: 2018/10/18 006749452 fl Approved for Release: 2018/10/18 006749452 TOPS 3. AUSTRIA: VSSR regimes travel restrictim�According to US Commanding General Keyes, the Soviet deputy commis- sioner has told a US official in Viemsa that there Is no longer reason to continue the present prohibitions on US travel through the Soviet Zone. Concerning the Soviet official's indication that the Soviet repatriation mission has been well pleased with its treatment in the US Zone, Keyes points out that the Soviet travel restrictions had been imposed as alleged reprisals for discourtesies to a previous Soviet mission. (CIA Comment Within the past two weeks, the Soviet attitude toward the US in Austria has been increasingly con- ciliatory. The readmission of the Soviet repatriation mission has afforded the USSR an opportunity, without losing face, to discontinue the remaining restrictions on US travel through the Soviet Zone.) St_Aigewejks Ion of frea talks--The Department of State has atvised thelif representative at the Austrian treaty talks in London that while the US can consider no concessions on the issues of frontier revisions and repus- tions, the US wishes (a) to avoid "closing the door" on future treaty discussions; and (b) to be in a position to resume nego- tiations if circumstances make early conclusion a a treaty desirable. The Department suggests that negotiations be sus- pended for a week to permit the Soviet delegates to obtain in- structions from Moscow; if the USSR then makes no acceptable proposals, the US delegation might consult with the British and French on the advisability of adjourning the talks for a definite period of perhaps four months. FAR EAST 4. CHINA: PoaIb1eeJmItdtof �uLKat-shek--US Embassy Nanking reports that Chiang Kai-shek 's recent military, appoint- ments and prospective Cabinet reshuffling indicate that be is incapable of comprehending recent developments in China or of adapting himself to them. The Embassy believes that the TOP Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 Ti CRET cpc, reform movement, centering around the new vice president Li Thing -Jen, has reached such proportions that "it can no longer be denied." The Embassy also considers tiat (a) Ching Vai-shek, because of his inilealbtlity and blindness, will be re- moved from Us political scene by those forces he is saddle to smother; and (b) "the Sewer this happens, then the greabr will be the prospects ibtt the ref forces can rally the wintry to check the Communist tide." (CIA Comment: WNW the fall of Chiang lral-shek may � not be Imndnent, Cit mews in the Embassy's aphdon that Us preemies for his removal are steadily gathering strength. However, Chiang's departute from the political scene wonld likely be accompanied at first by further disintegration in Nationalist China; under these condttions, the Chinese Com- � m:nista would gain some bind advantages.) TUX '�IIZEIC412 5. VPMEEITELA: ftenortes1 clans for oil-field sabqtage--US Con- sulate Aruba reports that the Governor of the Dutch islands ce !rein and Curacao has received "reliable information" of plans to sabotage the Lae Maracaibo oil fields in Venezuela at 15 May and to sink a ship In -the Lake's outlet channel to Us Caribbean. (During the last month, US and Venezuelan authorities and the local oil companies have received several marts of intended sabotage. Both production facilities in Venezuela and rdining facilities in the neighboring Dutch Wands of Aruba and Curacao are highly vulnerable to sabo- tage; one ship am* in the Maracaibo channel would effectively cat off a large proportion of the cid e oil going to the refin- eries on the islands.) S T CRET Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 RET GENERAL PtSii,21...kii of Arab-Jewish truce in Palestine--US Ambassador Iglas has been 'informed by. e Jewish Agency (JA).represen- tative in. London that in a recent conversation, Bettor McNeil of the UK Foreign Office expressed the view that King Abdullahl will 'Occupy Oly the Ar4b.a.reap, a Palestine and a truce between the jeits afitt Abdullah therefore a possibility. The JA repre- 7sexitative..said that the Jews would welcome Abdullah as a neigh- bor but the JA would have to "protest loudly" if he invaded. palestina The representative expressed the opinion that U Abdullah hats hts�-iningitinit the Jewish frontier, the Jews ought. to begin immediate negotiations with him for a trace. . US A.mbaSSador.Tuek reports front CaiiO that: It th "IllAdually becoming appariint" that the Arabs wolild no9Y wel- come "almost any face-saving device" which would prevent open war. Tuck expects that, as a result of British pressure� � Abdullah's forces will move only as far as the Jewish frontier. Tuck adds that British Minister Clayton is continuing to urge the Arabs to accept partition and to confine their future action to economic and guerrilla warfare. (CIA Comment: Although CIA agrees that Arab leaders themselves would welcome a lace-saving" device which would avoid the necessity of full-scale warfare against Baganah, Arab- Jewish hostilities will almost certainly increase and continue for some time When the Arab governments--compelled by public opinion--send their armies into Palestine.) 2. Spaak favorable to direct US-Soviet talks--Ex-Prime Minister Spaak of Belgium has expressed to US Ambassador Kirk in Brussels his approval of the recent US approach to the USSR and of Ambassador Smith's "excellent" statement. Spaak feels that Molotov's reply reflects an increased concern by the USSR over the coalescence of anti-Soviet world opinion and may also signify an actual desire for discussions with the US. Spaak suggested that the US should give careful con- sideration to plans for carrying on such discussions. with the Soviet Unions Spaak added that he saw no necessity that these conversations should include the UK and fama No. 0-3 NO CHANGE in Class. 0 DEpLAssiFIED ClasS. ,CHANGED, TO TS S � TOP DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: 1 4 MAR 1978 By: 02 V 0 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 /OA `1. 0 EUROPE ET S. CZECHOSLOVAKIA: Benes pians resignation In June--US Ambassador Steinhardt has been reliably informed that Presi- dent Benes plans to resign "early in June." According to the chief of the president's chancellery, Benes recently informed Premier Gottwald that he would not approve the new constitu- tion and planned to resign immediately. Gottwald reportedly was able to persuade Benes to delay his resignation until June. Benes doubts that the Communist Government will consent to his departure from Czechoslovakia and is unwilling either to make an issue of it or to depart clandestinely except in case of war. FAR EAST 4. CHINA: Plan to reduce power of Ch Kai-shek--US Embassy Nanking has learned from the principafadviser to Vice-President Li Tsung-jen that Li and his followers plan to present 'within a few weeks a reform program to Chiang Kai-shek. Source adds that unless this program is accepted In its entirety, Li will provoke a political crisis, following which Chiang will be permitted to retain only limited presi- dential powers and a new cabinet will be named by Li. Source is optimistic that Liss group will be enabled by its overwhelm- ing popular support to obtain its objectives peacefully. (CIA Comment: Until the preponderance of the mili- tary forces in Nationalist China have shifted their support from Chiang Kai-shek to Li Tsung-jen, it is unlikely that Chiang would acquiesce in such a reform program and gov- ernment reorganization or that Li would risk a political crisis.) THE AMERICAS 5. PUERTO RICO: Possible Communist disturbances--The secretary to the Governor of Puerto Rico has communicated to the US Department of the Interior his conviction that - 2 - TOP Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP S 4 Nationalist and Communist agitators will cause trouble if the Caribbean Commission holds its 24 May conference in San Juan. (CIA Comment: CIA believes that such disturbances are quite potsible. Recent ultra-Nationalist and Communiit activities on the part of the students have forced the closing of the University for the remainder of the current term. Furthermore, presence in Puerto Rico of the violent National- ist leader, Albizu Campos, after ten years incarceration foi sedition, encourages anti-US excesses.) 6. CHILE: Concern over Argentine militaff mission to US-- Foreign Minister Vergara has asked US-Ambassagr-M7wers for US reassurances concerning the visit of an Argentine military mission to Washington and the US attitude toward the mission's purposes. Vergara declared that, if the Argentine mission succeeds in obtaining large amounts of military equip- ment and arms production facilities, the Chilean Army would demand heavy appropriations to meet the resulting danger, with consequent serious effects on the Chilean economy. Ver- gara believes that most Latin American countries would be deeply concerned by any such US action int.i.ding Peron to build up a powerful military machine. TOP Approved for Release: 2018/10/18 006749452 : Approved for Release: 2018/10/18 006749452 13 MAY 1948 4 � o. TI.'9,; T 685 GENERAL 1. Further views on US-Soviet exchange--US Embassy Moscow expresses the view that in the U -Soviet exchange of notes the Kremlin's aims included a desire to cover recent Soviet setbacks in the west by implying that the US now desires to appease the USSR. The Embassy further believes that the Kremlin's note has served to reassure pro-Soviet elements at home and abroad and to weaken the growing western resist- ance to Soviet expanitionism. The Embassy suggests the proba- bility of further Soviet moves with similar aims, coupled with Increasing pressure on the Middle East. US Minister Erhardt in Vienna reports that Austrian officials are skeptical concerning the significance of the Soviet reply to the recent US note. The Austrians reportedly feel that although this reply demonstrates that US and west- ern power policies are beginning to take effect, western strength is not yet sufficient to induce the USSR to make really important concessions. The Austrian officials sug- gest that Soviet action on the Austrian treaty may provide an immediate index as to the sincerity of Soviet conciliatory gestures. 2. UK views on Greek situation--Foreign Secretary Bevin has expressed to US Ambassador Douglas in London the conviction that unless the Greek querriLlas are liquidated "during the next six months or so, the Greek situation may become irre- trievable. Bevin suggested the following steps: (a) the estab- lishment of an intelligence organization to disseminate per- suasive propaganda among the guerrillas and to offer "bribes" to guerrilla leaders to surrender with their followers under a new amnesty; (b) the continued arming of the Greek Rome Guard; and (c) the dispatch to Greece of "a few US troops" as a morale-boosting demonstration of US-UK support. (CIA Comment: Although Bevin's first suggestion might result in the surrender of many guerrillas, CIA believes that non-Communist Greeks would be outraged by any attem t Document No. /la NO CHANGE in Class.. 0 IS.*) 0 DECLASSIFIED /;cv� Class. CHANGED TO: TS S CRET DDA Memo, 4 Apr 77 Auth: DDA _REG. 77/�l763 Date: 1-4-M-1979- By: Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ET to bribe the guerrillas or even by the suggestion of a new amnesty. Most responsible Greek leaders are now con- vinced that the guerrilla problem cannot be solved without the active intervention of US or UN troops.) 3. US position on security guarantees--The Department of State has informed US Ambassador Douglas in London of its view that any tripartite agreement on German disarmament and demilitarization would be inadvisable because such an agree- ment might be construed as vitiating existing quadripartite agreements on the subject. The Department doubts that Germany could, under the Ruhr control agreement, prepare for modern total/ warfare, but recognizes the depth of French feeling concerning security against German aggression and is prepared to give the French "reasonable satisfaction." NEAR EAST-AFRICA 4. PALESTINE: British ho ful. that "blood bath" will be averted-- US Ambassador Douglas in L repor� an atmosp re � relief" in the UK Foreign Office over Palestine and a feeling that the situation is less dire on the eve of 15 May than was once feared. According to Douglas, the Foreign Office feels that King Abdullah of Transjordan will halt his advance into Palestine substantially at the frontiers of the Jewish state and that if Abdullah attacks the Jews he will confine himself to token forays. Douglas indicates that Foreign Office officials appear to be in agreement that even though the long-range re- percussions of the Palestine situation are incalculable there is at last hope for a Palestine settlement "without a blood bath involving the entire Middle East." - 2 - CRET Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 SI�1 - FAR EAST 5. KOREA: North Koreans threaten power cat-off--US Economic Adviser Bunce, in summarizing recenrarr-e opments in the US-USSR dispute regarding North Korean hydroelectric power supplied to the US Zone, reports that in a 10 May radio broad- cast the North Korean People's Committee declared that if its request that the iwe be settled among the Koreans them- selves is not met by 14 May, the Committee "will be forced to cut off definitely the electric supply to South Korea." (CIA Comment: CIA does not believe that the USSR will authorize a power cut-off at present. However, if the Kremlin does decide to take this step, it would b6 for the purpose of producing economic chaos in South Korea and a resulting insurrectionary situation extremely hazardous to continued US occupation. Such action would mark the inception of a campaign to force US withdrawal by every direct means short of military action.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 V34te CRET GENERAL 1. vaLsmisi-. mei sgiisa _gran e e -- US Embassy Moscow reports that the TASS release of the US-Soviet exchange of notes has been effective from the Soviet point of view in relieving public apprehension in the USSR. According to the Embassy, the population apparently feels that the Soviet Government was "strong enough" to make the US ask for the settlement of outstanding differences. The Embassy suggests that this reaction may be typical of world public opinion and that the US should "straighten the record" by the release of appro- priate official declarations and background material designed to clarify the reasons prompting the US aide-memoire. U,S Ambassador Douglas in London reports that Foreign Secretary Bevin has expressed the view that the US-Soviet exchange of notes will have a demoralizing effect In western Europe, may create difficulties for the present government in France, and will probably raise the Greek Issue again in a form difficult to meet. Bevin interprets the "unexpected move" by the US as a softening, if not a reversal, of US policy at an inopportune moment, and he fears that the note may therefore have "an unfortunate effect on the implementation of the Brussels pact." US Ambassador C^ffeary reports that French Foreign Minister Bidault expressed surprise upon hearing of the US-Soviet exchange of notes and wishes urgently to know what effect the notes will have on the discussions on Ger- many and on US conversations concerning the possibility of military cooperation and implementation of the Brussels pact. Ex-Premier Spaak of Belgium has expressed the view to Caffery that although Molotov's note is not at all satisfactory, its radio publication indicates that the recent US policy of firmness is bearing fruit Spaak believes that several months ago Molotov would either have replied much more objectionably or not at all. Spaak fears, how- ever, that the democratic powers will now believe that the USSR has chanrd its methods, and that they can accordingly "take it easy.' Document No. 636 - 1 � NO CHANGE in Class. 0 - MAY 1948 684. 0 DECLASSIFIED Class. CHANGED TO r TS S DDA Memo, 4 Apr 77 CRET Auth DDA REG. 77/1763 Date 14 MAR 1978 By: OV6 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ET The Department, ;e instructed US Embassies Paris and London to infoVis both idault and Bevin that the US note to the USSR was in no way an invitation or a pro- posal for meetings or discussions and that its only purpose was to set the record straight and to make clear that the US had never closed the door to any direct discussions. The Department adds that this exchange of notes has no bearing on the German talks in London or on US support for the Brussels pact countries. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4 f kit? Co GENERAL 11 MAY 1948 683 1. Ambassador Smith's comments on Soviet note--US Ambas- sador In Moscow th�y Soviet note in reply to the US note of 4 May as being in effect "our state- ment in reverse." Smith comments that dating an interview with Foreign Minister Molotov, foLlowing transmission of the Soviet note, "no proposals or feelers of a more definite nature were made." Smith believes that the Soviet statement means that the USSR has taken note of the US declaration of intent, appreciates the determination of the US to proceed as indicated, and wishes the US to know that the Soviet Union is not going to change its policy_ for the time being. Smith believee that the Soviet leaders "are not ready to talk yet, but have not closed the door. just as we have made a statement for the record, so have they." 2. Bevin foresees natural "sortin out" in Palestine�US Embassy London reports that Foreign n1�en orses efforts to secure a Palestine truce and believes the truce proposals to be generally sound. Bevin adds his belief that although King Abdullah's exaet intentions are not known, if the Transjordan Legion should move into Palestine at all, it would only occupy legitimate and clearly recognized Arab portions. Bevin ex- � presses the hope that both Arabs and Jews will keep out of each other's areas and thereby prepare for a natural "sorting out of Palestine" and an effective truce, under which the Arabs and Jews might provide separate militias for the maintenance of order and administration. � UK instructs UN deletion on Palestine�The US dele- gation to the UN has learned the UK de egailon has received the following instructions: (a) the legal basis for the proclama- tion of a Jewish state should be removed; (b) entry into Palestine of additional war materiel and personnel should be stopped or restricted, particularly from Soviet sources; (c) a legal basis. should be provided to permit the establishment of a small group Document No. 0)5 NO Clitnt...n Class, . 0 DE6iASSIFIED Class.. d,HANCED TO: TS treino , EGRET Auth 4 Apr 77 : DDA REG. 77 1763 Date; 1 4 MAR 1978 By: Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 of states, excluding the USSR, to ensure observance of the fore- going. The UK favors implementation of these objectives through a simple mediatory agency created by a General Assembly reso- lution, although it does not reject the alternative of trusteeship. THE AMERICAS 3. PANAMA: Post-election tenseness�US Embassy Panama re- ports that: ti!t'lwiMlitial candidates claim a "clear-cut victory" in the 9 May elections; (b) the situation is "tense"; and (c) it is doubtful that the presidential succes- sion will be settled on the basis of the election returns. � (CIA Comment: A suklen overthrow of the Panamanian GoVernment might be precipitated when the results of the elec- tions are known in the next few days. U Arnulfo Arias received more votes than any of the other contestants, and if the Jimenez Administration seeks to deny Arias the presidency, it is likely that Arias and his followers will instigate an early coup. 'if such a coup is attempted, it may occur between midnight and dawn and will probably be accomplished with extreme rapidity, with a minimum of violence and bloodshed, and without causing serials jeopardy to American propertsr and citizens.) kj0., Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 T RET GENERAL 10 MAY 1948 682 , 1. Spaak doubts imminence of world conflict�According to US Ambassador Kirk in Brussels, ex-Premier Spaak of Belgium continues to believe that the Soviet Union does not wish to provoke a general war because it realizes the USSR could �not in the long run defeat the US. Spaak recommends that a formal statement be issued declaring that US military forces will remain in Germany until a satisfactcry state of peace has been restored and _that any attack on these troops will be con- sidered an act of war. Spaak believes that such a statement would not only clarify relations with the USSR but would allay anxiety in western Europe over the possible military capabi- lities and intentions of a restored German political state. 2. Swedish views on Scandinavian alliance�According to US kmbassador Matthews; Swedish officials at present feel that Sweden's objective in any future Scandinavian military alliance should be to insure the adherence of Norway and Denmark to the Swedish policy of strict neutrality. Matthews comments that a Nordic alliance at a price of combined neutrality would not be advantageous to the US or the other free western nations and, in his opinion, should be discouraged. (CIA Comment: It is unlikely that Norway would agree to an alliance which would call for strict neutrality.) 3. Danger of Italian dominance in Trieste--US Political Adviser � Joyce expresses the view that to give the Italians "practical hegemony" over the Allied Zone in Trieste, prior to the re- turn of Trieste through a revision of the peace treaty, would be to stimulate Yugoslav intransigence. Joyce further believes that because the USSR is apparently disinclined to accept the US-UK recommendation for a treaty revision, the AMG in Trieste will be for the foreseeable future, "facing a bitter, sullen, truculent Yugoslavia." Joyce thinks that the treaty must be strictly observed in order not to provide Yugoslavia with any excuses for "adventures." Document No. 0 NO CHANGE in Class.. 0 - 1 - 0 DECLASSIFIED 'S> Class. CH4G-R.,,T.0: � TS TS CRET DDA4Merno, 4 Apr 77 Auth: DDA Date: alimR1978_ By: (Ur _ Approved for Release: 2018/10/18 006749452 � Approved for Release: 2018/10/18 006749452 NE AR EAST -AFRICA 4. PALESTINE: Abdullah expected to occupy Arab sections-- The US Military Attache in Damascus transmits the opinion of the ex-Prime Minister of Transjordalt that: (a) King Abdullah's Arab Legion will invade Palestine after 15 May, "practically alone" and without any substantial help from Syria, Lebanon, or Egypt; and (b) owing to difficulties of supply, the Arab Legion is capable of no more than a 30- day campaign. The MA adds that the general impression of Informed observers is that Abdullah will in effect implement partition by occupzing only the Arab sections of Palestine and 'restoring order. 5. INDIA: Possibil4y war Pakistan--The US Military Attache In Karachi has received completely reliable informa- tion indicating the possibility of imminent armed conflict be- tween India and Pakistan. According to source, Pakistan now has three Regular Army battalions in Kashmir ready to sup- port the Azad Free Kashmir forces if the present positions of the Azad forces are seriously threatened by the Indian Army. The MA indicates that the strategic location of other units would permit the Government of Pakistan immediately to utilize forces against India amounting to one army corps. The MA comments that because of Pakistan's lack of supplies and re- serves, India would be the victor in a short though bloody en- gagement. (CIA Comment: If Pakistan troops are already in Kashmir (where, unlike Indian troops, they have no legal right to be), the Governme t of Pakistan has probably decided to re- sist by force further efforts of the Government of India to estab- lish the authority of Sheikh Abdulla over all of Kashmir. Although a peaceful settlement of the Kashmir dispute is still possible by means of direct negotiations between the two dominions which would result in the partitioning of the State; CIA agrees that a serious possibility of war now exists as a result either of: (a) further successful action by Indian troops against the Azad Kashnair forces; or (b) the Government of India's reaction to Pakistan's illegal occupation of Kashmir territory.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 FAR EAST 6 KOREA: Anti-us stand of south Korean leaders-- US PoliticiTAIVISefs Jacobs reportsft:luting ailt�tha May conversation Kimm Kiusic tried to minimize his 6 May attack on the US Military Government at a press conference. Jacobs is convinced, however, that lqman opposes US and UN policy in Korea and is "definitely leaning" toward the North Korean regime. Jacobs also believes that the present anti-US attitude of Kimm Kiusic and Kim Koo, as evidenced In their participation in the Pyongyang conference, is moti- vated by bitterness over their inability to attain political supremacy in South Korea. (CIA Comment: CIA concurs with Jacobs' estimate as a partial explanation of Nimm Kiusic's actions. In addi- tion, CIA believes that Kimm has been convinced by his fail- ure to obtain a categorical US guarantee of the independence of the future South Korean Government that Soviet domination of all Korea is inevitable as a result of this US "betrayal.") - 3 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 T1 FAR EAST 1. CHINA: Chiang not inclined to institute reforms--US Ambas- sador Stuart (following a 6 May conversation with Chiang Kai- Shek) expresses the opinion that: (a) Chiang is no longer capable of instilling a new spirit into the Chinese people; or (b) despite an apparent recognition that a program of reform Is the Government's only hope of maintaining its hold on the Chinese people, Chiang, is not inclined to undertake such a program. (CIA Comment: CIA concurs with Ambassador Stuart. CIA believes that if any program of reform is to be instituted, It will be put into effect through Vice President Les efforts, over Chiang's objections.) 0 IvIHT I y4b 681 . Document No. 65 PO CHANGE in Class. Ej DECLASSIFIED Class._ CHANCED TO: TS S C DDA Memo, 4 Apr 77 Aufht DDA REG. 77 1763 Date; 14MAR1978 By; Approved for Release: 2018/10/18 006749452 NI I MAI J340 Approved for Release: 2018/10/18 006749452 I+ TOP GENERAL 1. d Poland ma rec ize ewish state--US Ambassador Douglas in London transmits the opiniono e British Foreign Office that the USSR and Poland "will lose no tiene" in recog- nizing the Jewish state (to be prOclaimed in Palestine on 16 May), and that Soviet and Polish consulates will be established in Tel Aviv shortly after 16 May. (CIA Comment: Such recognition appears probable unless the General Assembly takes positive action before 16 May to abrogate its partition recommendation of 29 November 1947.) 2. US I uzifionmffn European defense--The Department of State has Informed US representatives In the five countries of the western European union that the US considers the possible Inclusion of Italy in the western European defense system to be a question for those countries to decide, although the US feels that Italy's inclusion would be natural and desirable. The De- partment believes that the increased liability to the Brussels- pact countries which would be con.sequent.to Italy's inclusion would be offset by US support of those countries and by the establishment of a united front to prevent any part of western Europe from being attacked and overrun. The Department is inclined to question the practicability of a separate Mediter- ranean defense system and doubts that such a system would lessen the problem of Italian military restrictions under the peace treaty. EUROPE 3. FRANCE: Dollar shorta e threatens res.aelmits,--US Embassy Paris reports that the French Ministry of Finance has expressed grave concern over a critical absence either of dollar funds or of any procedure for the interim financing of Imports to France under the European recovery program. The Embassy was told that additional dolar-tesouttes are in sight. � r , � az.t. 0 � erf-', � SECR "&h _ � � = = En 1) 680 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 for later in May, but they are not immediately available. The Ministry fears that this condition will cause a serious inter- ruption this week of deliveries to France of petroleum products, cotton, and the non-ferrous metals. Ministry officials believe that suspension of these imports can be avoided only by rapid assistance from the US, possibly in the form of a "pump- priming" arrangement by the US Treasury. 4. GERMANY: Soviet attempt to Interrupt US air traffic--A.ccord- ing to Acting US�P-OlificalChase, US officials received Soviet notification on 4 May that no flying would be permitted that night over the greater Berlin area. Chase reports that the US representative, in accordance with his instructions, informed his Soviet colleague that the US did not recognize such unilateral action. Chase adds that US airplanes from the Templehal Air- drome carried out a previously scheduled night operation, con- sisting of a normal training flight over the greater Berlin area. (CIA Comment: CIA believes the Soviet action is an attempt to probe US reaction to Soviet-imposed regulations on air traffic between Berlin and the west and may be followed by more determined moves to restrict the air traffic of the west- ern powers.) NEAR EAST-AFRICA 5. PALESTINE: Jewish US citizens reportedly forbidden to leave-- Jewish US citizens of military age living in Palestine are being prevented from leaving the country, on the ground that their first loyalty is to the Jewish state. (CIA Comment: US citizens are known to have experienced great difficulties in attempting to leave Palestine. Such difficulties, including the use of physical restraint, may be expected to increase.) TOP ET Approved for Release: 2018/10/18 006749452 � 3.3(h)(2) 3.3(h)(2) 'f 7 _ Approved for Release: 2018/10/18 006749452 6. IRAN: Receipt of :if A rill note from USSR confirmed--US Ambas- sador Wiley reports that he has now seen the latest Soviet note to Iran, as well as the Iranian reply. (Delivery of the Soviet note to Iran was reported by US representatives on 24 April.) According to Wiley, the latest exchange of views is a reitera- tion of those expressed in March, when the USSR alleged that the sibilance in Iran threatened the security of the USSR. Wiley adds that the Soviet attitude is menacing. -3- -. Approved for Release: 2018/10/18 006749452 ti MAY-N4 Approved for Release: 2018/10/18 006749452 4 r 679 4147 GENERAL 1.. British volt toward Greece ma be reviewed--US Embassy London has been inform y a gh oreign ice official that Bevin expects a sharp reaction in Great Britain to the reported executions or intended executions by the Greek Gov- ernment of 1,000 individuals who participated in the 1944 uprising. Bevin feels the reaction may force a reassessment of British policy toward Greece. (Until late 1947, the UK Gov- ernment MB under severe pressure from within the Labor Party for its retention of troops in Greece in support of a "reactionary" goveniment. The majority of the condemned' Greeks were sentenced for murder.committed during the 1944 revolt. The cases have gone through all the courts of appeal and guilt has been established beyond doubt. The political implications of the executions, however, are obviously un- fortunate for the Greek Government; furthermore, the guer- rillas can be expected to start a program of retaliatory executions.) 2. Possible branch offices of Cominform�The US Military Attache in Paris has-grtairfWgri'aTfriAusu table source that a Soviet decision has been made to set up Comirdorm branch offices in Brussels and Bari (Italy). Source indicates that the branch offices will serve primarily as Intelligence agencies. He adds. that the Brussels organizational meeting has been set for the end of May. (CIA Comment: It is entirely probable that some de- centralization of functions, including intelligence, will eventually take place and will be substantially as indicated in the report. Previous information, however, has placed the contemplated Italian branch office in Milan.) 3. Yugoslav ships reportedly alerted for movement to Palestine-- TSSNavaI -le in CaMiMes. 17-giiinformecrIFFRITigie source that all Yugoslav merchant ships have been ordered to return to Yugoslav ports by 15 May, liallwally tip trans ort (3 I No CHANGE in Class. 0 0 DECLASSIFIED - I - Class. CHANGED TO: TS S � DDA Memo,. .Apr 77 uth: DDA REG. 7711763 Dat :144AR:4378._ By: 0 2 Approved for Release: 2018/10/18 006749452 3.3(h)(2) Approved for Release: 2018/10/18 006749452 TO ET persTmel and material to Palestine. (The Yugoslav merchant marine is estimated to consist of 5 passenger shins of 5000 tons or more and 26 smaller ocean going vessels, mostly freighters.) (CIA Comment: CIA has received no other information concerning plans for such a movement by Yugoslav or other Satellite shins. EUROPE 4. FRANCE: Communists to give Schuman temporar support-- The US Military Attache in Paris has learned through a usually reliable informant that Communist leaders have decided for the present to avoid putting the present Schuman Government In difficulty. Communist Party leader Duclos reportedly be- � lieves that an understanding now between the Schuman coalition and the Gaullists in the National Assembly would be very harm- ful to the Communist Party. Ducks maintains that because a Gaullist-dominated government would enact electoral legisla- � tion unfavorable to the Communists, care must be taken to avoid a Government crisis until after the Assembly has decided upon methods of elections for the General Councils and the Council of the Republic. NEAR EAST-AFRICA 5. PALESTINE: ..krai League lev_i_s on truce...2-The Secretary General of the Arab League has informed US officials In Damascus and Cairo that the Arabs cannot accept any trace terms for Palestine which provide for continued Jewish immigra- tion. The Secretary General indicated, however, that in practice % 2 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TO � %(:-:" RET ���\.. the Arabs might tacitly agree to continuation of the present arrangement (under which 1,500 immigran a month are per- mitted) provided that: (a) the immigrants represent a cross- section of displaced persons and not only fighting men; and (b) the US and the UK accept responsibility for supervising the immigration. (CI& Comment: There is still such wide disagreement between A.ratrs and Jews on the major issue of immigration that the possibility of a truce appears remote.) Approved for Release: 2018/10/18 006749452 Jur V Rill I 1040 Approved for Release: 2018/10/18 006749452 46 GENERAL. 1. Possible extension of UK mandate in Palestine�The US delegation to tiliett'WM�ir-'-arWm.7Y-Ir�narna representative Beeley that the UK Foreign Office views unfavorably the US proposal for a ten-day extension of the Palestine man- date. Beeley indicated that, aside from the difficulties in amending existing legislation and dealing with British public opinion, the UK contends that: (a) only the 15 May deadline has brought the parties to the "point of even con- sidering a truce": and (b) an extension of the mandate might be misinterpreted in the light of recent British troop reinforcements in Palestin.e. According to Beeley, the For Office believes that the Jews are now more intransigent on the subject of a possible truce than the Arabs and there is greater need for pressure on the Jews. US Ambassador Douglas in London interprets For- eign Minister Bevin's 4 May statement to the souse of Commons as indicative of the UK Government's willingness to consider a short term continuation of i responsibilities In Palestine provided that: (a) the UN General Assembly approves the US proposal; (b) an unconditional cease-fire Is effected; and (c) a truce is accepted. Douglas is con- vinced that the UK will not assume a position which would Involve the continuation of undivided responsibility. EUROPE 2. FRANCE:22p,iLsjg_kon Gaullist-Schuman "deal"--US Am- bassador Caffery has been informed by a leader of the Radical- Socialist Party that Radical-Socialist circles are cool toward the idea of cooperation between De Gaulle and Schuman. � a serious crisis and the fall of the Schuman Government. The Radical-Socialist leader feels that such a development would Caffery wii told that such a "deal" wog: cause the Socialists to withdraw their support from Schuman and thus precipitate be foolish:lick view of the present and its chances of succeeding." TgoVernoN0 CiW GE i q - !e. � nt� No. 1,.4Class. CHA D:LAs Esrs iv::: Eit DEc7Taoosr:sot: itcs. ..�,� .0.0.4 m.tro Ts s � 344: DD21:..., 4 Apr 77 TOP REID/0es w. 77 1703 If BY; 02 678 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP .00 (CIA Comment: Because the Radical-Socialists are probably the government elements most susceptible to Gaullist Influence, their coolness toward Gaullist maneuverings will eliminate a threat to cabinet solidarity during the next few weeks.) 3. GERMANY: Food protest strikes s ea. --Acting Political tdviser Chase reports from Berlin that 40,000 Hannover metal and rubber workers have gone out on food strikes, and that the trade unions of transport, chemical, ceramics, paper, agricul- tural, and public service workers in the ritish Zone have de- clared solidarity with the aims of the strikers and are consider Ing whether to call a general strike without a time limit for all of lower Saxony. Chase adds that 25,000 metal workers in Augsburg, Nureiaburg, and Munich, who went on strike on 3 May in protest against food cuts, are continuing their strike despite union opposition. (CIA Comment: CIA believes that strikes protesting against the food situation will continue to spread despite trade union opposition.) NEAR E AST -AFRIC 4. PALESTINE: Difficulties faced by Arabs and Jews--US Consul General Wasson in Jerusalem transmits the opinion of General McMillan (the British commander in Palestine) that the Pales- tinian Arab forces "are in bad,shape and need a breathing space." McMillan believes that the Arabs would accept a truce if they are "handled firmly" and given terms for acceptance without an opportunity for endless discussions. McMillan considers it "not unlikely that Transjordan troops will move into the Arab areas of Palestine after the mandate ends but believes that King Abdullah will avoid risking his army in battle with the Jews. The British Colonial Office has informed US Embassy London that, although the Jews have had successes in Palestine, the Jewish Agency is concerned over its limited supply of gasoline _ 2 - TOP RET �-.� Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 and the terrific economic burden which the fighting is imposing on the Jewish state. The Colonial Office also reports that the "Nazi-like controls" over all phases of Jewish life are causing resentment among the Jews. FAR EAST 5. CHINA: offensive in I churia--US Consul General Ward in Mukden has been orme by e Nationalist Commander in Manchuria that a general coordinated Commu- nist offensive in Manchuria and China will commence in the near future. The Nationalist Commander estimates that the offensive in Manchuria will move southwestward toward North. China with the aim of destroying the Government's remaining railroad communications. The Consul General adds that the Nationalist Commander is now optimistic that the Nationalists can successfully defend either Mukden or Changchun against Communist attack. (CIA Comment: The impending Communist offensive In Manchuria is expected to be more powerful and broader in scope than previous efforts because newly developed rear area rail support has given the Communists greater mobility, and striking power. Nationalist optimism concerning their ability to hold Mtikden and Changchun may prove Ul-founded if the Communists launch a determined assault on these points.) -S - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4 MAY 1948 46 tts.w � 677 TOP GENERAL 1. Proposed discussions of German transport deadlock--According to Acting Political cser Chase in Berlin,UniFiesentatives have arranged to discuss with Soviet representatives on 6 May the current deadlock over transportation between the eastern and western zones of Germany. Chase reports that General Clay will permit US participation in these discussions only if the Soviet representatives approach US representatives directly and agree to discuss military traffic as the first item on the agenda. (CIA Comment: CA doubts that the USSR will agree to discuss first the lifting of the recent restrictions on western military traffic.) 2. Italian en in western defense s stein held inadvisable-- Accor ing to U rnbassa or mi in ()scow, xan Am- bassador there believes that it would be a mistake for Italy to enter the western defense system at present because no western state has adequate power to assist Italy in the event of a direct attack. The Italian Ambassador reportedly feels that the Italian objective should be the attainment of sufficient strength to dis- courage Soviet military action against Italy. Smith comments that these remarks apparently reveal a "forlorn hope" of pre- serving neutrality in the event of another European conflict, combined with a oractical realization by the Italians that 1fli117 tary strength is the basis of all their hopes. (Italian Premier De Gasperi has previously indicated that Italy is anxious to join a western union provided a revision of the Italian peace treaty will permit Italian armed forces to become effective for defense purposes.) 3. US ur es British to extend Palestine mandate 10 da s--The Department of State has informed US Ambassa or Douglas in London that the US delegation to the UN will propose the follow- ing plan for Palestine: (a) uncotiditioyial cessation of hostilities Document No. 42A NO CHANGE in Class. 0 DELA::::IED CJ TS S Auth: Date: 1 A t1crn�4 - ; Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4 b GENERAL 04 MAX 1948 677 1. Proposed discussions of German transport deadlock�According to Acting Politie3rTifirs-eTr�e in U thas 75-Fiesentatives have arranged to discuss with Soviet representatives on 6 May the current deadlock over transportation between the eastern and western zones of Germany. Chase reports that General Clay will permit US participation in these discussions only if the Soviet representatives approach US representatives directly and agree to discuss military traffic as the first item on the agenda. (CIA Comment: CIA doubts that the USSR will agree to discuss first the lifting of the recent restrictions on western military traffic.) 2. Italian entryjn western defense s stem held inadvisable� Accor ing to US kmbassa or nuirEngfeW;Eggiarrow an Am- bassador there believes that it would be a mistake for Italy to enter the western defense system at present because no western state has adequate power to assist Italy in the event of a direct attack. The Italian Ambassador reportedly feels that the Italian objective should be the attainment of sufficient strength to dis- courage Soviet military action against Italy. Smith comments that these remarks apparently reveal a "forlorn hope" of pre- serving neutrality in the event of another European conflict, combined with a oractical realization by the Italians that mili7 tary strength is the basis of all their hopes. (Italian Premier De Gasperi has previously indicated that Italy is anxious to join a western union provided a revision of the Italian peace treaty will permit Italian armed forces to become effective for defense purposes.) 3. USIsms British to extend Palestine mandate 10 da s--The Department of State has informed US Ambassador Douglas in _ London that the US delegation to the UN will propose the follow- ' tag plan for Palestine: (a) unconditional cessation of hostilities Document No. etZti NO CHARGE in Class. D DECLASSIFIED , L.ass, nt,`11_17`.7t TO: TS S Da/J.1 Y---TaD, 4 Apr 77 Auths 7.7/1763 By; 013 Date: 1 A MAP ler" Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 fccr 10 days beginning 5 May; (b) recess of the General Assembly for a 10-day period; (c) immediate air movement to Jerusalem of a commission (composed of representatives of the Arab Higher Committee and the Arab states; the Jewish Agency; and the US, France, and Belgium) to negotiate a truce; and (d) extension of the British mandate for 10 days beyond 15 May. Douglas is in- structed to request of Bevin that the British agree to extend the mandate, in order to permit the General Assembly to recom- mend some "more enduring, even though temporary, form of government for Palestine." 4. UK differs with US and France on German re rations--US Am- bassador Douglas reports that in the London discussions on Geimany the British are taking the position that four-way alloca- tions of German reparations should be resumed and that repara.i ticins deliveries to the USSR should be continued on some basis In order to reduce the number of measures distasteful to the Soviet Government. Douglas, with full concurrence of General Clay, has emphasized that the three western powers should make - no attempt at present to reconvene the Allied Control COURC11 for this purpose, recommending instead that the western . powers undertake allocations on a three-way basis, post- poning indefinitely any deliveries of the Soviet share. The French delegate fully supported Douglas' position. EUROPE 5. CZECHOSLOVAKIA,: Benes reportedly plaang to rest --1.10 Legation Bern has been Informed by a. very reliable source". that President Benes has prepared his resignation. Source re- ceived his information from the counselor in the president's chancery who reportedly had seen the document, signed but Un- dated. Source believes Beams may announce his resignation near the time of the elections (30 May). Approved for Release: 2018/10/18 006749452 r Approved for Release: 2018/10/18 006749452 TOPS 0'03 NEAR EAST-AFRICA O. PALESTINE: Hagana. offensive after 25 May predicted--US Consul General Wa.sson in Jerusalem reporrse-arMi.na operations will probably remain "defensively offensive" until 15 May, after which Hagana will launch an all-out offen- sive to secure the frontiers of the new Jewish stats and to improve the Jewish lines of communications. Wasson adds that Arab resistance so far has been ineffective and trans- mits the opinion of the British commander in Palestine that the Jews will be able "to sweep all before them" unless regular Arab armies intervene. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP GENERAL 6 MAT 1U4d 676 1. Arab invasion of Palestine unlikely before 15 Ma --US Ambas- i:�/r Widswor sbee�1iormed1y the Trans- Jordan Minister to Iraq that at the recent conference at Amman,' 5 May was not set as D-day for the Arab invasion of Palestine. (This statement corrects information previously reported in Daily Summary of 1 May, item 6.) According to the Transjordan Minister, it was agreed at Amman that: (a) the Transjorcian Arab Legion would not invade Palestine "in force" until after 15 May; and (b) other Arab states would maintain contingents along the frontiers but would not invade Palestine unless the Arab Legion failed or unless "there should be intervention by a foreign power." (CIA Comment: CIA belie...Jos, on the basis of the latest reports from US and Brittsh representatives in the Arab capitals, that no Arab army will invade Palestine in force before 15 May.) EUROPE 2. GERMANY: Social Democrat views on Berlin situation--Accord- ing to Acting Political Adviser Chase, leaders of the Social Demo- cratic Party (SPD) believe most emphatically that it is important for the western powers to remain in Berlin and also feel that if matters get any worse in Berlin it will be necessary to evacuat6 SPD leaders from the Soviet sector. The SPD reportedly plans, if the party is dissolved IA the Soviet sector of Berlin, to begin the organization of an underground, using previously inconspicuous personnel. The SPD office in Berlin has emergency plans for evacuation of key personnel from the Soviet sector if the Kommanda- tura breaks up. 3. USSR: MA's views on immediate Soviet intentions--The US Military Attache in Moscow expresses the opinion that the Soviet regime is temporarily curbing its expansionist policy in order to Induce the US to curtail a realistic war preparation program. He therefore believes that the Kremlin does not desire war at present, Document No. (313 NO CHANGE in Class. E] -47- DECLASSIFIED �S, Class. CHANGED TO: TS RET DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: 1 4 MAR 1978 By: oil. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP vot. and is apprehensive lest it precipitate an immediate armed conflict. He adds that, while awaiting more propitious condi- tions for overt westward expansion in Europe, the Soviet Union will strengthen its internal capabilities to wage war and attempt to consolidate further its present holdings in Europe. He expects additional Soviet efforts to expel the western powers from Berlin and Vienna. The MA also be- lieves that the Kremlin will probably turn its immediate ex- pansionist efforts toward the Near and Middle East and that Iran--because of its strategic position, oil reserves, and Soviet proclaimed treaty obligations--is the probable immedi- ate objective. (CIA Comment: These conclusions are substantially in agreement with those stated by CIA in the Weekly Summary of 30 April.) 4. GREECE: Guerrillas may foster peace rumors--US Charge Rankin considers that, al oitE-16ru guerrilla peace offer have been officially denied, the Communists may have initiated such an offer (or rumors of it) in order to: (a) arouse liberal sentiment for an end of the war in Greece; or (b) determine the Greek Government's attitude toward such a settlement. Rankin believes that the prospects for continu- ing military success of the Greek National Army may impel the Communists to prepare the ground for an eventual "poli- tical solution" but warns against the feeling that there is an "easy way" out of the present struggle. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 GENERAL � J. MAY 1948M 675 1. UK ore1 Office views on Soviet alms--US Embassy London transmits the followbW3171EFINTie-Tfi Office estimate of immediate Soviet aims and how the western powers can best meet them. The Foreign Office constders that war is not Imminent; the USSR has little to gain from making war in Western Europe and would not wish to assume the responsi- bility of feeding 40 minim Germans and millions of other Europeans. The western policy of firmness is bearing fruit and should be continued; the success gained in the Italian elections should be followed up by every effort to strengthen the Western European Union and to assure the maximum effectiveness of the European recovery program. The Foreign Office considers that the USSR really fears the dollar which offers the best way of meeting the Communist threat. The Foreign Office concludes that the "trend of events in Western Europe would no doubt deflect Soviet attention and intrigue in the first instance to the Middle East, and secondarily to the Far East; in the Far East the first point of intensification would no doubt be Korea." 2. FencIidubiousongian nclusionindefensystern-.. US Ambassador Caffery reports that the French Foreign Office. is undecided on the questions of including Italy in a western defense system based on the Brussels Pact and of reconsidering the military clauses of the Ralian treaty. A reliable Foreign Office official has expressed the view to Caffery that while France desires Italian inclusion in the Brussels Pact, (a) the Dutch and Belgians aTe reluctant because of the possibility that they might thus become auto- matically involved in hostilities in the Mediterranean area, and (b) the French Would prefer to find some formula which would permit them to "wink at" the expansion of Italian armament beyond treaty limits without presenting the appearance of abrogating officially the military clauses of the Italian treaty. Caffery says the Foreign Office is considering the possibility of setting up two regional defense Document No. NO CHANGE in Class.: 0 frj] DECLASSIFIED. Laass, CHANCED TO: TS S DDA Memo, 4 Apr 77 Auth.: DDA R - 77 1763 -_. /44 v41.' T CRET 1-0FA Approved for Release: 2018/10/18 006749452 By: oti? Approved for Release: 2018/10/18 006749452 systems: (1) composed of present signatories of the Brussels Pact and (2) including France, the UK, andly, and at a later date, Greece and Turkey. Caffery adds that the .Foreign Office believes that Spain must eventually be included in any European defense system, Mediterranean or otherwise, because Of its strategic value. EUROPE 3. kUSTRIA:St...2=c mmAggtjagelnileLLecomettended-- US Commanding General Keyes recommends that the European Cooperation administrator esinb/ish emergency 90-day re- serves of critical items, particularly oil, as soon as possible and hold them in readiness in or near Austria for immediate supply to Austria in case of actual or threatened failure of the USSR to continue deliveries of these items from sources under its control. Keyes explains that this would minimize Soviet capabilities of exerting economic pressure on Austria - and jeopardizing the recovery program in Austria. Keyes emphasizes that these reserves should be over and above any regular ECA allocations. 4. ITALY: USSR willing to discuss commercial met�US Embassy Rome has been informed by the Italian Foreign Office that the USSR is willing to proceed with negotiation of a commercial agreement, a commercial treaty, and with a discussion of re- parafions, including Balkan assets. The Foreign Office adds that the USSR will not demand that these negotiations include an Italian commitment at this time as to the production for reparation payments. (CM Comment: Soviet withdrawal from its previous insistence that Italy agree now on reparations from current production (to begin a:?ter a 2-year period) may indicate that the Kremlin has decided that the development of trade with Italy is more important than an immediate solution to the reparations problem.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 5. FRANCE: 2:�timism re r. Schuman's ros cts--US Ambassador Caffery re' ,4 Sc man vernmenes refusal to accept recent Gaullist peace offers has infuriated the Gaullists who wish to lake over power now; the Gaullists fear that "there will be no reason for De Gaulle," if the Schuman Government succeeds in effecting economic stabili- zation. Caffery notes increased general optimism that Schuman (a) may succeed in solving the problems which con- front him; and (b) may get threigh the summer months without too much difficulty. NEAR EAST-AFRICA 6. PALESTINE: Aral) sta_tel!..,2,Lci.to be 5 gm-- According to US Ambassador Wadsworth in Baghdad, the Transjordan Minister to Iraq has informed his Lebanese colleague that, under an agreement reached at Amman (Transjordan), 5 May has been set as the date for Arab invasion of Palestine. (CIA Comment: Invasion of Palestine by the Arab states in the near future appears to be virtually assured. This report is one of several indications that the Arab gov- ernments, under pressure of aroused public opinion, may be acting precipitantly, disregarding the fact that they would avoid clashes with the UK forces by waiting until 15 May.) TOP Approved for Release: 2018/10/18 006749452 3.3(h)(2) Approved for Release: 2018/10/18 006749452 4b GENERAL 80 APR 1948 674 1. Developments in Palestine situation--Foreign Secretary Sevin has assuredThS Anissador Douglas in London that the UK is using "all influence possible" to deter King Abdullah of Transjordan from invading Palestine. The UK has also sent messages to Syria, Egypt, and Iraq urging that no aggressive acts be undertaken. Douglas says that the re- plies of the Arab governments indicate that if the Jewish forces desist from provocative attacks and aggressive action against Arab areas in Palestine, the Arab states will not en- gage in offensive military operations. Several of the govern- ments point out, however, that because the Jews are on the offensive everywhere, it will be difficult for the Arab forces to refrain from engaging in "retaliatory action." Douglas also transmits the estimate of the British High Commissioner in Palestine that the Jewish Agency is fearful lest the US should attempt to impose trusteeship and therefore believes the Agency's only course is to establish a Jewish state and launch an all-out offensive against the krabs, thereby demonstrating Jewish military strength. Douglas says that the UK delegation at the UN believes that the prospects of a truce in Palestine are generally negligible. US Ambassador Wadsworth in Baghdad reports that "elements of the Iraqi Army" have left for Transjordan. , the force is composed of approxi- mately 1500 men and contains armored cars and light field artillery. (The US Military Attache in Baghdad had previously reported that two mix' ed brigades �of which this is apparently one--were available for immerliate employment.) Wadsworth also expresses the fear that "fanaticism Is In the saddle" throughout the Arab world and that Arab leaders who are personally open to suasion must conform to the "surging popular demand" for direct military action or be forced out of office. Document No. 11 NO CHANGE in Class. 0 0 DECLASSIFIED ulass. CHANGED/TO: TS S DDA Memo, 4 Apr 17''T Auth:DDA_ELG. 77 1763 4 MAP9T/3_ By: Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 2. Soviet proteof US air activity rejected--The Department of State has instructed IME---s,�17i--Y--Moicovi to reject Soviet protests concerning US surveillance of Soviet shipping in waters adjacent to Japan. The Embassy is to declare that the US considers such activities essential to the effective occupation and control of the Japanese islands. EUROPE ITNLY: Inclusion of moderate leftists in cabinet -- US Embassy Rome considers there is every reason to be- lieve that Premier De Gasperi will succeed in forming a government containing representatives from the independent Leftists--the Saragat-Lombardo Socialists and Republicans. The Embassy believes that a face.saving formula will have to be found in order to prevent the public from considering these independent elements as "mere Christian Democrat appendages." The Embassy reports that De Gasperi has reiterated his intention to undertake agrarian reform. (CIA Comment: CIA believes that the face-saving formula would require active participation of the independent Leftists in the administration of the European recovery pro- gram and the implementation of a government program clearly incorporating moderate Socialist economic and social reforms.) 1?assalt.lmveami tion of Italian-lium_slav border d -- US Ambassador Dunn has learned from an Italian Foreign Office official that Italy may refer investigation of the current series at incidents on the Italian-Yugoslav border to the US, British, French, and Soviet ambassadors in Rome if a joint Italo-Yugoslav Investigating COMIllissiCtil fails to reach an agreement. Dunn be- lieves that if the Italians present a good case to the ambassadors, the US should firmly support it. He points out that the US might thereby have an opportunity to consider the whole question of the Italian-Yugoslav border. (US Embassy Belgrade reports that the Italian Legation in Be/grade has since the elections given evidence of a "sharp change in attitude" toward the Yugoslav Government.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TOP SE 4. GERMANY: Wave of food strikes may follow ration cuts-- Acting US Pollarl Adviser Chase reports that a new wave of food strikes in various parts Of Germany may threaten as a consequence of recent drastic cuts in the meat and bread rations. Chase reports that US Military Government officials believe that further strikes and demonstrations � will probably result from the additional redaction in the meat ration expected in May. Chase believes that Commu- nists in western Germany may attempt to cripple industrial recovery and the European recovery program by utilizing such food strikes to foment a "large-scale strike:" (CIA Comment: CIA concurs in this estimate.) NE AR EAST -AFRICA 5. TURKEY: Pact with USSR appears improbable--According to US Ambassador &son, Foreign Minister Sadak thinks that it is "not unlikely" that Soviet Ambassador Lavrishchev may at some future date propose a-new Soviet Turkish pact of, friendship and non-aggression but doubts that the USSR would be willing to accept the conditions which the Turks would insist on. Sadak said Turkey would sign such a pact only if: (a) Soviet demands affecting Turkish territory and sovereignty were officially withdrawn; and (b) the pact specifically recognized Turkey's alliance with the UK and Its friendly relations with the US. THE AMER/CAS 6. PANAMA: Pmagragysgutimarmarayitigs--Genetal Crittenberger, Commander-in-chief in the Caribbean, notes that his command is now in the midst of revolutionary and Communist activities. He reports that supporters of one of the three leading contenders in the impending presidential elections in Panama have threatened to use force to win and that the Communists may "attempt to follow the Bogota -3 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 pattern" in the event of election disorders. Crittenberger adds that "some of the same elements which were factors In the Bogota situation are now present in this area." For these reasons, Criftenberger believes that Panama may "become the focal point for a serious outbreak In the near future." In such event, he foresees the possibility that US troms "may have to move into the Republic of Panama" promptly in order to provide protection and security to the Panama Canal and several thousand US citizens residing in the Republic. Crittenberger suggests that the State Depart- ment be so informed. The Department of State has concurrently informed US Embassy Panama of its view that armed intervention in Panama "could have extremely serious repercussions through- out the hemisphere" and consequently that the Department should be consulted before such action is taken. The Depart- ment asks that only "purely defensive measures" be taken in the event that prior consultation is impossible. (CIA Comment: CIA estimates that although a coup by the followers of Arnulfo Arias is a possibility near the time of the elections, no protracted general disorders are likely as a result. CIA does not believe that the Communists themselves will be able to create serious disorders at present.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 CRET GENERAL 29 APR 1948 $13 1. Arab plans for invasion of Palestine�US Ambassador Tuck In Cairo believes, on the basis of information from the Secre- tary General of the Arab League and other informed sources, that the Arab states will probably not implement a reported "overall agreements' regarding the dispatch of their armies to Palestine until: (a) the detailed plan of action has been approved by Saudi Arabia, Syria, and Lebanon; (b) a further effort has been made by the Arab volunteers in Palestine, who are to be supplied with all arms available; and (c) essen- tial steps have been taken to mobilize the official Arab armies and coordinate their efforts. Tuck adds that Transjordan, Iraq, and Syria are expected to provide the major forces, and Lebanon the minor units. Tuck believes that the initial ccmtzi- button from Egypt will consist principally of funds. Meanwhile, the British commander in Palestine has expressed to US Consul General Wasson in Jerusalem the belief that King Abdullah of Transjordan will not send any troops to Palestine before 15 May. (CIA Comment: Unless further full-scale Jewish attacks develop in the near future, it appears unlikely that the Arab armies will invade Palestine in force before British withdrawal, scheduled for 15 May.) 2. France favors defense ystem of re kmal ou --Secretary General Chauvel of the French Foreign Mfice has told US kmba.ssador Caffery that France strongly favors the inclusion of Italy in a "defense system." Chativel indicated, however, that France desires the establishment of several coordinated ' defense groups, one around Brussels, one in the "eastern ittiediterranean"(to include Italy, Greece, Turkey, Iran, and the Arab states), and possibly one in northern Europe. Chauvel said that the Netherlands is showing a certain "diffidence" toward the entrance of Italy into the union of western European powers. Document No. 02t( NO CHANGE in Class.; o DECLASSIFIED Class:: CHANGED TO: TS S DDA Memo, 4 Ain. 77 Auth: DDA REG. 77 1763 Date: By: Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 S. USSR suggests discnssions on German transport deadlock-- kccording to Acting US Political Adviser Chase, the Soviet Director of Transport in Berlin has informed UK representa- tives that he desires to hold a tripartite "working party" con- ference to discuss surface transportation difficulties between the Soviet zonal authorities and the western powers. The Soviet Director indicated a willingness to relax somewhat the Soviet position in the current dispute with the UK on the barge problem. Chase emphasizes, however, that no arrange- ments for programming traffic between the Soviet and western zones have been made since the breakdown of the Allied Con- trol Authority, and all rail entry points from the west to Berlin have been closed with the exception of Helmstedt. (CIA Comment: CIA believes that in any discussion the USSR would attempt to: (a) secure at least partial western acquiescence in the restrictions which have been imposed on traffic; and (b) eliminate delays in barge shipments consigned to the Soviet Zone.) EUROPE 4. GERMANY: "German unit?' petitions to be banned--Acting US Political Adviser Chase reports that the US Military Gov- ernment intends to notify Communist parties in the US Zone that the People's Congress movement is an illegal organization and therefore its circulation of any petitions for a referendum on German unity will be illegal. The Military Government will not oppose the campaign of the Bavarian Communists for an amendment of the Bavarian constitution providing for Bavarian participation in a unified German republic. (CIk Comment: CIA believes that the German unity campaign will be carried on in other fields besides the purely political and may be accompanied by popular disturbances. The degree to which the new German unity campaign is effec- tive will largely depend upon the extent to which the Commu- nists can exert influence on the ostensibly anti-Communist nationalist groups now developing in western Germany.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 5. SPAIN: Reaction to Italian elections--US Charge Culbertson believes that some degree of political and economic liberaliza- tion in Spain may possibly result from Franco's realization that the democratic victory in Italy has weakened Spain's inter- national strategic position. The Spanish Government had ex- pected Spain's inclusion in the European program to result from a Communist victory in the Italian elections. (CIA Comment: CIA agrees that the setback to Com- munism in Italy will impair Franco's domestic propaganda position. Franco probably will not, however, risk the political consequences of modifying his economic policies until-he is convinced that economic disaster is imminent. Such a crisis is in formation but will be retarded by the Argentine loan and by possible indirect benefits from the European recovery pro- gram.) NEAR EAST-AFRICA 6. GREECE: Tsalda.ris urges extension of parliamentar recess-- US Charge ankth reports ree 'oreign Minister Tsa o ris has proposed to Prime Minister Sophoulis that: (a) the King exercise his authority to prolong the present parliamentary re- cess until /0 June; and (b) four Populist and four Liberal minis- ters be replaced at once. (CIA Comment: An extension of the present recess-- scheduled to end 10 May--would have the beneficial effect of continuing a period relatively free of dangerous political bicker- ing. The replacement of certain ministers might check the growing popular discontent with the Government.) THE AMERICAS PANAMA: Possibilities of disorder--US Embassy Panama City reports that election-timeWiders in Panama may re- sult from: (a) an armed coup by the followers of Arnulfo Arias, (b) assassination of prominent political leaders, and (c) provoca- tion by Communist groups. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 606749452 (CIA. Comment: CIA estimates that: (a) a coup by the foLlowers of Arnulfo Arias is a possibility at the election time but would probably be so quickly accomplished that no general disorders will result; (b) any political assassinations are un- likely unless general political disturbances break out; and (c) the Communists will be unable to create serious disorders in Panama during or after the presidential elections scheduled for 9 May.) -4 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4 0 GENERAL 2 8 APR 1948 1. UK informed of US concern over ossible Arab invasion-- The Department of State has instructed US Ambassador Douglas in London to inform ,:evin and Attlee of the con- cern of the US over reports that King Abdullah of Trans- Jordan is planning to invade Palestine in the near future. The Department-states that if the armed forces of any Arab country should invade Palestine, the US -would be forced to: (a) take a strong position in the UN; (b) point out that such invasion was in violation of the UN Charter; and (c) insist that appropriate steps be taken to eject the invaders, includ- ing if necessary the despatch of forces under UN auspices. The Department adds that if Abdullah invades Palestine, it would be difficult to dispel the impression, not only in the US but throughout the world, of British complicity in the matter in view of the close military and economic relations between the UK and Transjordan. 2. Ingiss_e_ppsropJorwa --US Embassy Oslo has been informed by a high Norwegian official that the Nor- wegian Foreign Office has received a violent Soviet protest concerning the showing of the "anti-Soviet" film, "Ninotchka." Because of the abrupt and formal manner in which the protest was delivered, the Foreign Office is concerned whether the protest should be interpreted as the beginning of a Soviet war of nerves against Norway. (CIA Comment: The Soviet protest, coming so soon after Foreign Minister Lange's public statement on 19 April that Norway would positively reject any Soviet offer of a pact, may be intended as a counter-measure to the Norwegian Gov- ernment's anti-Communist campaign.) EUROPE 672 NO CHANGE in Class. 0 0 DECLASSIFIED Class. CHANGED TO: TS S Dttk Memo , 4 Apr 77 Auth: DDA REG. 77 1763 Birt : 14 MAR Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 4. GERMANY: USSR faits US metal shipment from Berlin-- General Clay reports that Soviet authorities have halted and unloaded four barges loaded with steel scrap in transit from the US sector of Berlin to the US. The US Military Govern- ment in Germany has threatened the Soviet Military Adminis- tration with a retaliatory stoppage of the loading at Bremen � of reparation equipMent for delivery to the USSR. NEAR EAST-AFRICA L SAUDI ARABIA: King repeats request for US military aid-- US Minister Childs reports that King thn Saud has eern2A1 reiterated his request for US military assistance. Ibn Saud said that, in return for this aid, he would grant the DS any Saudi Arabian facilities it desired to defend US strategic interests against the USSR. The King farther requested that the US either make him a specific offer of assistance or in- form him now that it will not provide the aid he desires. THE AMERICAS 6. MEXICO: Possible serious May Da disturbances--US Em- bassy Mexico reports that, despite the I�n Government's � precautionary actions, serious May Day disorders may refitift Approved for Release: 2018/10/18 006749452 3.3(h)(2) Approved for Release: 2018/10/18 006749452 from the following: (a) the inaugural meeting of the Latin Americsm Youth Congress on 30 April; (b) the Electricians' strike scheduled for I May; (c) the National University student strike now in progress; and (d) the four separate parades to ' be conducted by rival labor groups in Mexico City on I May. (CIA Comment: CIA pointed out in the Weekly Summary of 23 April, page 51 the possibility of major disturbances in Mexico on May Day. li a serious crisis does occur, it may threaten the stability of the Aleman Government whose prestige. has recently declined.) 7. COLOMBIA: Possibility of Conservative coup discounted-- a group of retfred Army officers and Conser-vAtive office-holders, claiming to have the support of President Ospina Perez, is endeavoring to win Army support for a coup. (CIA Comment: CIA considers it unlikely that the Army would support any armed overthrow of the Government, because for more than a decade the Colombian Army has been 3.3(h)(2) notably. scrupulous in refraining from interference in political �develmments. NOTE: In Item 4 (page 2) of the Daily Summary for 27 April the sentence reading, "CIA estimates that there are no more than 30,000 Rumanian nationals in Greece," should be changed as follows: "CIA believes that there are fewer than 20,000 ethnic Rumanians in Greece. This semiautonomous group of so-called `Vlachs' has never been a conscious 'minority'." � � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 b TO GENERAL I. Possible future Communist line in western Euro, : -US Embassy Pails report*--.7�tig1TWItha issue.' "i in (French Communist Party newspaper) contained"ajoint mani- festo of the Communist parties of France, the UK, Belgium, Netherlands, and Luxembourg," which describes the European recovery program as a "war plan" and states that peace can be secured only "through the solidarity of the (Communist) peoples" of these five countries. The Embassy has been in- formed by a "trustworthy source" that upon instructions from the Kremlin, Communists in France are preparing to hold International congresses which would coordinate Communist action against the "US menace." (CIA Comment: Although there has not as yet been any outright indication from Moscow of the post-Italian elec- tion party line, this manifesto may well reflect future Soviet and Communist intentions in western Europe and may therefore indicate a continuation of the intense Communist militant attitude toward all facets of US foreign policy.) AWN 14f3 . 671 EUROPE 2. ITALY: Italian Government wishes to retain battleships-- According to US Ambassador Dunn, the Italian Governmed has given several recent indications of wishing to avoid the scrapping of the ':wo battleships, the ITALIA and the VITTORIO VENETO, which were assigned to the US and the UK under the Italian treaty and reassigned to Italy for conversion into scrap. Dunn is convinced that France, the UK, and the USSR will not agree to a revision of the plans for the scrapping of these ships and that it would be inadvisable for the US to consider favorably such a revision. Dunn believes that a preferable modification of the naval clauses of the treaty would be one permitting the Italian navy to have more modern types of war vessels and to � use modern defensive weapons. DOQUMent No. - - NO CHANGE.in.Class. 0 [] DECLASSIFIED Classl CHANGED TO: TS S ET ' DDA. Memo, 4 Apr 77 Auth: DDA R:G. 77 1763 Date:1414.0701 _ By! Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 3. TRIESTE: Suppression of Communist press considered-- US Political Adviser Joyce reportsThat ti pro inist press campaign in Trieste against AMG "is close to crossing the line between hysterical abuse and positive incitement to violence." Joyce indicates that General Airey, although re- luctant to interfere with the press, believes it may be neces- sary in the interest of public security to suppress pro- Communist newspapers in the area during the May Day period. 4. RUMANIA: Protest to Greek Government--US Minister Schoen- feld transmits published reports that Rumania has sent an offi- cial protest to Greece, charging wholesale persecution of the alleged 500,000 Rumanian nationals in Greece. (CIA estimates that there are no more than 30,000 Rumanian nationals in Greece.) Schoenfeld believes that the suddenness of this action without the usual press build-up indicates the receipt of new instructions from the Kremlin and suggests -"possible larger and more serious motivations." (CIA Comment: The Rumanian protest is probably de- signed primarily as an intensification of the Soviet war of nerves against Greece. Although it is possible that the Kremlin may be providing Rumania, as it has other Satellites, with a legal excuse for subsequent recognition of the Mar'kos govern- ment,.CIA has received no evidence that such recognition is imminent) 5. FINLAND: Plan to oust Communists from Government--US Minister Warren has been informed that politicians are still actively considering maneuvers to overthrow the Gov- ernment in order to establish a regime which would: (a) elimi- nate Communist control of the Ministry of the Interior and thus guarantee a free election; and (b) inform the west that Finland still retains freedom of action. According to Warren's informant, these politicians plan that, following ratification of the Soviet pact, the present Cabinet would resign upon failure to obtain a vote of confidence and a Social Democratic government would 2 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 subsequently be formed. Warren adds that Rightists and Social Democrats are not unanimous in favor of the project and the Government may thwart this scheme by not insisting upon a vote of confidence. (CIA Comment: CIA believes that elimination of the Communists from the Finnish Government, while reducing the chances of electoral abuses, would incite the USSR to adopt a more aggressive and coercive policy in an attempt to reduce Finland to complete Satellite status) NEAR EAST-AFRICA 6. PALESTINE: 1012_21.2ELf i,TAe1:17�mEmor Mon develo Reports from US and UK diplomatic representatives in Aib capitals indicate that despite tremendous public pressure for intervention, responsible Arab leaders are apprehensive of committing their regular armies in Palestine. The King of fl Transjordan and the Regent of Iraq are said to have insisted that before they move their troops assurances must be given by all Arab states of full support with men, money, and ma- terials. The Egyptian Government is reluctant to participate In such a campaign because of probable international reper- cussions and the need of retaining all its forces in Egypt for reasons of internal security. IA Comment: Arab leaders, distrustful of one another's motives, are reluctant to commit their armies to � an all-out effort in Palestine. It is increasingly probable, however, that they will be forced into direct military inter- vention by public opinion, which has been further aroused by the arrival of Arab refugees from Palestine. Except for the Transjordan Arab Legion and some Syrian units, no effective forces are immediately available for such an operation.) Approved for Release: 2018/10/18 006749452 .� Approved for Release: 2018/10/18 006749452 7. CHINA: Weakened ttsition of Ch Kai-shek--US Embassy' Nanking reports that developments connecte with the vice presidential elections in the National Assembly have seriously split the Kuomintang. The Embassy adds that a large group of civil and military officials, as well as the vast majority of politically articulate Chinese. Lot intimately associated with the Kuomintang machine, are now convinced that Chiang Kai- shek cannot provide the liberal, effective, and vigorous leader- ship which the present situation requires. The Embassy states further that the election of Li Tsung-jen to the vice presidency (which it considers likely) would in effect be a rejection of Chiang's leadership and might cause Chiang to refuse to accept the presidency. The Embassy comments, however, that despite the disturbing features in this situation, it is encouraging to note that "democratic forces are now making themselves felt in protest against autocracy and reaction." Return of Soviet Ambassador --US Embassy Nanking also reports that General Roschin (former Soviet Military Attache in Nanking who was named Soviet Ambassador to China last February) is expected to return to Nanking in early May. (CIA Comment: Roschin may be expected on his return to kesume conversations with Nationalist officisis concerning the possibilities of a compromise settlement with the Chinese Communists. Growing defeatism in Nationalist China and open dissatisfaction with the ineffectiveness of Chiang Kai-shek's Government probably will make Nationalist officials increas- ingly receptive to discussions of a compromise.) THE AMERICAS 8. ECUADOR: LeftistsAL evolt- the 3.3(h)(2) followers of General Alberto Enriquez Liam (presmenuai candi- date of left-wing Liberals and Socialists) have perfected plans for a revolt to be started in Guayaquil sometime before the � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 SEggah <43 elections on 6 June 1948, The Communists are reported to: (a) be prepared to support the Enriquez group if it makes the Initial attack; and (b) desire to follow the same pattern of destruction which was used in Bogota. (CIA Comment: CIA believes that Enriquez will resort to revolution if he is convinced that he cannot win the election and estimates that he has sufficient military support to justify such a move. The Guardia Civil (national police force) is pro- Enriquez. Enriquez is known to have some support among army enlisted personnel and junior officers; but his position with the army as a whole is uncertain.) 9. ARGENTINA: US INattations for food surpluses urged-- US Ambassador Bruce strongly'recomorized to negotiate with the argentine Government for an agreement providing for the sale of grains and other products to the US and to European recovery program participants. 'zruce suggests that such an agreement include the following terms: (a) Argentina to make such products available at "world market prices"; (b) US assurances that Argentina will receive at least $300 million from such sales during the first year; and (c) an Argentine guarantee that a "reasonable Percentage" of US dollars be reserved to enable private Argentine business to pay for US purchases. � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TLJ GENERAL 1. USSR reported' delivez_y_ryiote to Tran--The US Mili- tary Attache in Tehran has been informed by Chief of Staff Razmara that the USSR has delivered another note to Iran rejecting the last Iranian note (1 April). The Soviet note is said to state that the Allies occupied Iran in 1941 because Soviet security was jeopardized and that a similar situation exists now. EUROPE 2. FRANCE: Communist discontent with Partax2LickA--US Embassy Paris reports increasing signs of discontent among rank and file members of the French Communist Party with respect to Communist policies, especially the frontal attack against the European recovery program. The Embassy has been told by "a trustworthy informant" that the Communists are increasingly worried over the growing feeling among trade unionists that the attitude toward US aid taken by the French Confederation of Labor and the World Federation of Trade Unions (WFTU) has been too uncompromising. Several Communist labor leaders have reportedly expressed the be- lief that the WFTU Executive Committee will seek, at its 30 April meeting in Rome, some compromise formula which might prevent a WFTU split over the European recovery pro- gram issue. (CIA Comment: The Soviet Trade Union Council recently indicated that it would uphold the right of each national affiliate in the WFTU to determine its own attitude toward the European recovery program. CIA believes that any split in the WFTU is less likely to occur at Rome than at the Brussels Congress next fall.) 26 APR 1946 670 3. TMESTE: 12i_aPa Ma demonstration-- US Political Adviser 'Joyce reports that the Communists are proceeding with their plans for a mass demonstration in_Trieste . Document No. - 1 - NO CHANGE in Class. 0 0 DECLASSIFIED ass. CHANCED TO: - TS S 1:41 Auth: La e: DD4 Memo, 4 Apr 77 r . , 77/1763 E 4 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 on May Day in defiance of AMG regulations. Joyce indicates that the Communists are attempting to bring demonstrators Into Trieste from Yugoslavia and adds that pro-Italian activist groups are proving difficult to control. (CIA Comment: Although Communist-sponsored demonstrations on May Day may lead to sharp clashes be- tween Conununists and Italians, control measures being taken by AMG and the Trieste police will prevent such clashes from developing into large-scale 3nob.violence.) 4. CZECHOSLOVAKIA: Benes a "physical and mental wreck"� According to US Ambassador Steinhardt, the remarks recently made to US Ambassador Smith in Moscow by Czechoslovak Ambassador Horak "should be treated with the utmost reserve." (Horak told Smith that Benes intends to veto the new Commu- nist constitution; see Daily Summary of 21 April, item 1.) Stein- hardt points out that certain of Horak's statements to Smith are inconsistent with those he made recently to Steinhardt. Stein- hardt adds that Benes has been "a physical and mental wreck for two months." NEAR EAST-AFRICA. 5. IRAQ: Report of troop movements to Palestine denied--The US Military Attache in Baghdad has been informed by the Director of Operations of the Iraqi General Staff that there Is no intention "at present" of sending Iraqi troops to Palestine. (CIA Comment: Despite such official denials, CIA con- siders it distinctly possible that troops of the Arab national armies will enter Palestine not later than 15 May. Such troops, however, are more likely to come initially from Transjordan and Syria than from Iraq.) Approved for Release: 2018/10/18 006749452 II Approved for Release: 2018/10/18 006749452 C A ET THE AMERICAS 6. VENEZUELA: Government to take anti measures-- US Embassy Bogtireparts sBcouEf (bead of the Venezuelan delegation to the Bogota Conference) feels that his government should install anti-aircraft equip- ment at Venezuelan oil fields. Betancourt will recommend that the Venezuelan Government send a mission to the US to purchase such equipment Betancourt percetves no objection ff the US-awned oil companies send civilian anti-sabotage ex- perts to Venezuela. US Embassy Caracas reports that the Venezuelan Government is preparing to send Army units to the ca fields on 30 April in anticipation of possible May Day disturbances. Approved for Release: 2018/10/18 006749452 3.3(h)(2) 3.3(h)(2) Approved for Release: 2018/10/18 006749452 �-� GENERAL 2 4 APR 1948 669 1. IN a_Lasilx_la_i ozsLan troojs reportedly will be sent to Palestine- - it was decided that Iraq would despatch regular troops, artillery, and planes to assist the Arabs in Pales- tine. similar action would be taken by Trans- jorda.n (CIA Comment: The Arab debacle at Haifa increases the probability that the Arab governments will be forced by public pressure to commit their regular armies in Palestine. Although organizational, transport, and supply problems would probably prevent the arrival of Iraqi forces in effective numbers for sev- eral weeks, Transjordan and Syrian troops are available immedi- ately.) EUROPE 2. ITALY: Direct action by Italian Communists believed improbable-- US Embassy Rome reports that its most reliable information points to a Communist policy of strikes and minor disturbances for the present and not direct action. The Embassy believes that immedi- ate Communist policy will be to make every effort to hold the Italian General Confederation of Labor (CGIL) together under Com- munist domination and to press for representation in the new gov- ernment through the CGU on the grounds that labor must be repre- sented. The Embassy also transmits "responsible reports" that several large groups of Communist partisans have been demobilized. The Military Attache in Moscow reports that the results of the Italian elections have elicited no strong Soviet reaction. The MA comments that the weak propaganda reaction, coupled with the failure to take any dramatic action prior to the electionsmests that the Kremlin (a) has written off Italy temporarily; an may lessen its overt expansionist effort in western Europe in order to permit aroused anti-Communist sentiment to subside. US Document No. ea,1 NO CHANGE in Class. 0 1 0 DECLASSIFIED Class. CHAU= TO: TS S RET DDA nom�, 4 Ppr 77 *Ire Auth: DDA EL-. 77/1763 Date: I. MAR 197a By; ari Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 COP 7:144 Embassy Belgrade reports that the tone of the Yugoslav press indicates pained disappointment and bitterness but that the -- articles do not appear to be those which might have been ex- pected "if the Yugoslav Government were planning, or condi- tioning the people for, some form of direct intervention." 3. GERMANY: Reported Soviet .lans for eastern German regime-- Headquarters of the European Comm= in Frankxurt be ieves that if the Kremlin resorts to positive action in Germany about 1 May, the USSR will probably establish an eastern German gov- ernment with the four powers remaining in Berlin but inopera- tive as a controlling or governing element. The Headquarters has received reports substantiating this conclusion. one such report suggests that Soviet officials have decided to unify the Soviet Zone on 1 May 1948 under a central government which will be composed of prominent individuals in the Peoples' Coun- cil of the Peoples' Congress. The Headquarters expects the . USSR to give greater recognition and additional support to the Peoples' Council as a passible replacement for existing political parties in the Soviet Zone. � (CIA Comment: CIA believes that the USSR may utilize "May Day" as an occasion for accelerating its efforts to estab- lish a provisional government in the Soviet Zone, and that such action would be accompanied or preceded by increased Soviet pressure on the western powers in Berlin.) FAR EAST 4. KOREA: Anticipated election disorders--General Hodge expects that Communist-led disorders imme iatedly prior to and during the 10 May South Korean elections will equal or surpass those during February. Hodge estimates that there will in some vio- lence on 1 May and an all out uprising during 8-10 May. He be- lieves that the police will be able to control situation. -2 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 CbIPP ET at. 5. FRENCH INDOCHINA: French position weakening�The US Assistant Naval Attache in Bangkok quotes the tF&ich Chief of General Staff in Indochina as declaring that a minimum of fifty additional battalions is required for further effective military action. The Naval Attache notes that the departure from Indochina of the Chief of Staff and certain troop com- manders leaves the French Army in Indochina "virtually directionless." He adds that the projected return to France of two able civil officials will increase the existing shortage of experienced personnel in key civil positions. US Consul General Saigon reports that High Commissioner Bollaert apparently has so far been unable to bring together Ho Chi Mtah and Bao Dai representatives in Hongkong. (CIA Comment: CIA believes that the cumulative effect of these developments will strengthen Ho CM Minh and may enable the Viet Mirth further to consolidate its mili- tary and political position, The French might consequently feel justified in requesting US or UN mediation.) THE AMERICAS 6. COLOMBIA: Possibility of post-conference instability�US Embassy Santiago has learned that the Chilean Ministry of Foreign Affairs has received "disquieting reports as to the stability of conditions in Bogota, with the possibility of further trouble as soon as the conference adjourns." US Embassy Bogota has been informed that oil workers In the Barranca Bermeja area (near Bogota) have returned to workancilhat oil production is now approaching two-thirds nornfal and the present deficiency is caused by mechanical difficulties, not sabotage. � co*46- TO catl rge Approved for Release: 2018/10/18 006749452 1. Approved for Release: 2018/10/18 006749452 GENERAL SI A I : US Ambassa I � P 4 L. : - inon re Firm II il 4 Ore ter Sevin, after discussing the US Palestine proposals with Prime Minister Attlee and his colleagues, expressed the follow- ing views: (a) an agreed Arab-Jewish truce is most unlikely; (b) trusteeship will call for substantial force; (c) the UK will not participate in the use of force to impose any regime un- � acceptable to the Jews and the Arabs. Douglas comments that Sevin is deeply concerned with the dangerous possibilities of the situation for both the UK and the US, and that Sevin's present attitude is not inspired by an unwillingness to cooperate. z 6 APR 1948 668 2. Proposed western European military conversations--US Ambas- sador clattery las advised Secretary General cnauvel of the French Foreign Office that the five members of the western European union should complete a thorough evaluation of their own military capabilities before asking US views on military cooperation. According to Caffery, Chaim' replied that the five interested powers are in agreement now that this should be done. Chauvel added, however, that it is extremely inipor- tent to the five powers to know what line is to be defended in case of "a Russian Invasion," and declared that if it is not feasible to defend a line in rope, "the sooner we know it the better because then we must make arrangements to Move our government to North Africa." (CIA Comment: Chauvel's statement regarding the line to be defended is probably an effort to learn US thinking an this strategic problem. Moreover, it reflects the growing French concern both over the possibility of war and the extent. to which the US is willing to support western Europe in case of war.) 1 Document No. 20 NO CHANGE in Class. 0 DECLASSIFIED Class. CL::.�:-.C.t.1) T0, TS s Dpp. Mo, 4 Apr 77 A 1-1: DDA-R7 77 1763 Fea.te: 0 Approved for Release: 2018/10/18 006749452 _ Approved for Release: 2018/10/18 006749452 0AffbJ3 ECET 11/7444 EUROPE 3. USSR: 'Rossi& sigt in Soviet Incfics--US Ambassador Smith reports that a lull in Soviet political comment during the past two weeks may indicate an impending shift in Soviet tactics designed to reassure the west of the "peaceful" intentions 'of the USSR. Smith refers, in this connection, to reports from Parts of a new Kremlin directive to the French Communist Party calling for a strategy of non-violence in western Europe. (US Ambassador Stetnhardt in Prague reports tint the Czecho- slovak press has abruptly discontinued its strong anti-US propapnda campaign.) Smith warns that the US should not be lulled into a false sense of security but should vigorously m- ate its firm policy, build up US strength, and remind the public of the deceptive Soviet maneuvers which have been used in the past 112 order to permit the Kremlin to regroup its forces for further aggression. NEAR EAST-AFRICA 4. PALESTINE: tlf122611LAKAILEMSOLthrjOkE220311-438 Charge Menuninger in Damascus reports that pressure from the Arab press and public for the active intervention ci the Arab state armies in the Palestine fighting is growing stronger daily. (CIA Comment: Jewish military successes, particularly the recent victory at Haifa, will hasten the direct intervention In Palestine of the Arab states. Without active aid from out- side, the Jewish forces will be unable to defend themselves Indefinitely against the Arab armies.) 5. IRAQ: Utfews Govgramenfe fall--According to US Ambas- sador Donglaa in London, the British Foreign Office seriously doubts that the present Iraqi Government will last long enough to hold new elections. A Foreign Office spokesman informed Douglas that the Iraqi Government has virtually demanded financial assistance from the UK with the statement that it camtot meet even its 30 April civil and military payrolls. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 oYiE The Foreign Office spokesman added, however, that a British loan is unlikely so long as the present "hopeless" Govern- ment remains in office. (The Department of State has mean- while instructed US Ambassador Wadsworth to indicate to the Iraqi Government, in response to its informal request, that It would be difficult for the US to consider assistance for Iraq so long as the Palestine question remains unsettled.) (CIA Comment: CIA concurs in the view that the situ- ation in Iraq is extremely serious and believes that there is a possibility that civil strife will break out following the proba- ble fall of the Government) FAR EAST 6. SIAM: Difficulties for Phibul Government cted--US Embassy Bangkok reports that while the P Government has received a vote of confidence (70 affirmative, 26 negative, and at least 64 abstentions) the vote indicates that future support in the Parliament Is une.ertain. � The Embassy be- lieves that the Government may be defeated on legislation which must be presented to and passed by Parliament within the next few weeks. (CIA Comment: CIA concurs with the Embassy's estimate and believes that a legislative defeat may cause Phibul either to dissolve Parliament or to by-pass it and govern by edict through the Supreme State Council.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 b � GENERAL 22 APR 1948 I. Soviet troops ed to be fighting in Palestine�According to US Charge Memminger In cus, the Syrian Govern- ment has received military reports from Palestine to the effect that "Russian troops, not Jews" were advancing against Arab forces in Palestine. The Russian troops" were re- portedly supported by ten 2-engine US-type bombers. (CIA Comment: Although CIA does not believe that actual Soviet military units are engaged in Palestine, many Russian-speaking Communists have infiltrated the Jewish forces. It is very likely that Arab military leaders are exploiting the rumored presence of Soviet troops in order tO excuse the recent poor showing of the Arab forces and to alienate US opinion from the Zionist cause.) EUROPE 667 2. AUSTRIA:Ijszation's views on Austrian treaty�US Legation Vienna considers that, in recognition of the apparent desire of the USSR to conclude an Austrian treaty, the most advan- tageous course for the western powers is to: (a) sign a treaty after forcing all possible concessions from the USSR; (b) delay ratification of a treaty as long as justifiable, meanwhile knitting Austria into the structure of western European cooperation; (c) strengthen Austrian military capabilities; and (d) give Aus- tria a public guarantee of security. (CIA Comment: CIA believes that the USSR is now anxious to conclude an Austrian treaty, probably because Soviet pressure on the entire country can be more effectively applied following quadripartite troop withdrawal.). Document No. 0 I NO CHANGE in Class. 0 y. DECLASSIFIED Class. Cal= TO: TS S C , 4 Dr 77 Auth: DDA 77/17E3 Date � 1 I MU 1978 13:Y.: T Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 if 0 EUROPE 1. CZECTIOSLOVAKIA: Benes may oppose Communists--US Ambassador Smith in Moscow has been told by the Czecho- slovak Ambassador (who has just returned from Czecho- slovakia where he talked with President Benes) that Benes intends to veto the new Communist constitution, even though it may result in Benes" forced resignation. According to the Czechoslovak Ambassador, Benes declared, "My position Is not as weak as it might appear on the surface. I can still veto the new constitution, and while I will be forced to re- sign afterwards the effect will be =mistakably to show the world again the ruthlessness of the dictatorship which has now been imposed on Czechoslovakia by the Communist minority." (CIA Comment: Despite Benes' apparent intention to veto the constitution, he may be unable, in view of his status as a virtual prisoner of the Communists, to make such an action known to the Czechoslovak public and the world.) THE AMERICAS 2. NICARAGUA: Possibility of Somoza overthrow--The US Naval Attache in Guatemala City has been informed that uprisings against General Somoza are scnemea snortly in Nicaragua: The NA estimates that the chances are good that the uprisings will be successful. (CIA Comment: Despite Somoza's awareness that such uprisings are planned, his ability to suppress them will be reduced by the presence of armed Nicaraguan revo- lutionaries and hostile Guatemalans along the southern frontier of Nicaragua and by his considerable loss of pres- tige for having supported the lasing side in the Costa Rican civil war. Although Somoza will probably receive 'aid from the Dominican Republic, such help may not be sufficient to prevent his overthrow.) Document No, NO CHANGE in Class. DECLASSIFIED Class. 01.-NIGT:6:10:. , 4 Apr 77 Auth: DD 1763 Date: q otAAA' 523 2 1 APR 1948 666 0 TS Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 EUROPE 1. CZECHOSLOVAKIA: B_g_i_es. not to relgn a .--US Ambassador Steinhardt has been told by a reliable inform- ant (who recently talked with President Banes) that Banes has no desire to leave Czechoslovakia at this time even if his "escape" could be arranged. Benes told source that: (a) be had no intention of resigning the presidency "for the present"; and (b) the Communists are moving "much too lase and the Czechoslovak people cannot be held "in bond- � age" for more than two years. Source added that Benes" views reflected the prevalent opinion in Prague that the future of democracy in Czechoslovakia depends entirely upon US-Soviet relations. 2. GERMANY: Plebiscite on German.--The Department of State concurs with US Ambassador Murphy's view that the western powers can best minimize the effectiveness of a plebiscite on German unity(proposed by the Soviet- sponsored Peoples' Congress) by not interfering with it and by conducting aypublicit� campaign to reveal the plebiscite as a Communist maneuver. Murphy believes that the Peoples' Congress promises to be the most successful Communist "popular front" move in Germany up to the present time and that its appeal to German nationalist sentiments is likely to attract considerable support even in the Western Zones. (C/A Comment: CIA believes that the proposed plebi- scite will be a major reinforcement of the Communist "unity" propaganda Line and will be much more effective in western Germany than the previous Communist efforts.) NEAR EAST-AFRICA 3,, IRAQ: Unrest reported at all-tinielakk--US Ambassador Wadsworth, characterizing the internal situation in Iraq as "seriously disturbing," reports that politico-social unrest is at an all-time high. Wadsworth indicates that reliable Document No. 0 I1 2 0 APR 1948 6 G 5 -1 - NO CHANGE in Class. 26ECLASSIFIED lass. CHANGED TO: TS DELI LO.DO, 4 Apr 77 Anti-1r r-A 7,7. 77/1763 AI [11' r3gr, Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 reports of extensive crop failures have accentuated existing =rest over the bread shortage, soaring food prices (now at a new high), market inactivity, and unemployment, fie adds that recent strikes and agitation suggest the possibility that "a well-directed subversive force has been feeling mit its sfarength in anticipation of an all-out effort," 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 .to TOPS T CO PiTIAL GENERAL 19 APR 1948 664 1. UK maxi?e more cooperative on Palestine--In a recent dis- cussion with the US delegation to the UN, UK representative Creech-Jones, while stressing overwhelming British public opinion against further UK participation in Palestinian affairs, Indicated that the UK Government does not want to continue Indefinitely in a negative position on Palestine but wants to follow a positive and constructive policy. Creech-Jones ex- pressed a desire to cooperate with the US in working out terms of a possible trusteeship agreement. EUROPE 2. YUGOSLAVIA: Estimate of ps1blepolitico-military action-- US Ambassador Cannon believes that recent internal develop- ments in Yugoslavia suggest the possibility that the Yugoslav Government is preparing for politico-military action following a Communist defeat in Italy. Cannon suggests that one reason for Yugoslav failure up to the present to pursue a more aggres- sive policy in Greece may be that Yugoslavia is expected to act elsewhere. 3. GREECE: Likelihood of Cabinet reshuffle increasing--US Charge Rankin reports an increase of political maneuvering for changes in the present Greek coalition Cabinet together with further evidence of public and press dissatisfaction with the Government. According to Rankin; Sophocles Venizelos (a leader in Prime Minister Sophoulis Liberal Party) main- tains that the present Cabinet must make at least a few changes In order to survive the reconvening of Parliament on 10 May. Rankin expressed concern to Venizelos lest anything resem- bling a "crisis" develop as a result of efforts to obtain Cabi- . net revision. Document No. o (11". NO CHANGE in Class. 0 DECLASSITIP,D Class. CI-LINCED '23: TS s- LD �Zl3 Anr 77 Auth: DDA '1763 lb: By: 02 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 NEAR EAST-AFRICA 4. IRAN: Government eapected to fall�US Ambassador Tehran reports that the Hakim' Government, which is under heavy attack in the Majlis, may fall. (CIA Comment: CIA believes that the weak Hakim' Government, which is now facing a vote of confidence, will fall in the near future and will be replaced by a stop-gap government of similar conservative tendencies. It is possible that this interim government will be replaced in turn by a gov- ernment headed by Qavam.) THE AMERICAS 5. COSTA RICA: Latest compromise solution rejected�US Embassy San Jose reports that the rebel leader, Figueres, has found "unacceptable" the most recent compromise solution of the civil war. The Embassy transmits a state- ment from the diplomatic commission in San Jose suggest- ing the desirability of putting pressure on Nicaragua to cease intervening in Costa Rica. (The diplomatic commission, which includes the US, Chile, Mexico, and Panama, has been attempting to assist in finding a solution ending the civil war.) - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 1 7 PR 1948 46 663 GENERAL 1. PS yiewp conctrning Austria tv nettothitlpos--The US delegation to the Austrian treaty negotiations In London has been informed by the Department of State that it is not fully convinoed that the USSR is vpared to negotiate a treaty which will insure adequate guarantees of Austrian political and economic independence. The delegation is advised, in recognition of the apparent Soviet desire to conclude an Austrian treaty, to negotiate for a treaty of ma3c1mum advan- tage to Austria. The Department indicates that the US posi- tion is based-upon the considerations that: (a) troop with- drawals would not take place for a year atter the conclusion of a treaty; (b) ratification of such a treaty could be delayed If a critical deterioration of the European situation should occur; and (c) the continued lack of a treaty could lead to Austrian partition, increased pressure to force the US out of Vienna, and the probable decline of US influence in Austria. Document No. Otc DO CHANGE in Class. DECLASSIFIED Class. CHA;n:27.1) TO: TS S C DD! 1 7L.lo, 4 Apr 77 luth: DDA 1,2G. 77/1763 Date: 1,4t1 MAR 1978 By: 02S � Approved for Release: 2018/10/18 006749452 vic Approved for Release: 2018/10/18 006749452 1 A 1948 4b 662 ET GENERAL 1. British and French views on Palestinian trusteeshiE--US Ambassador Caffery in Paris has learned that UK Foreign. Minister Bevin has informed the French that the UK will neither follow the US on its 15 point proposal for a Pales- tinian trusteeship nor support the US suggestion that the US, the UK, and France jointly sponsor trusteeship and gtarantee Palestinian security. The French, however, will support the US in any proposals in the UN General Assembly but will take no initiative in the matter. ILtEEn.leA_SovietoEn.I. on Palestine--The US dele- gation to the UN has learned that Soviet Delegate k Gromyko informally told a US newspaper correspondent that: (a) the USSR will offer no proposals at the special General Assembly session; (b) if any security force in which the US and UK are to participate is established, the USSR will insist on inclusion; and (c) if the security force does not include US-UK forces, the Soviet Union will not seek participation. 2. Anti-Cominforrn police ed--A high official of the FT:�ezfdi-FOieigii-O-ffke-&-'.6�ifffofr-Eea'l-U-g Ambassador Caffery of a French note proposing to the western European union countries the coordination of anti-Cominform activities and the reciprocal exchange of secret service and counter-, intelligence Information among these countries. The French official expressed a hope that the US might later join in this exchange of information. EUROPE 3. YUGOSLAVIA: Si_is.pension_14.s.iyilai_Lipr eralions--US Ambas- sador Cannon in Belgrade reports that the complete suspension of Yugoslav civil aviation operations on 7 April has not been explained by the Government. Pointing to the possibility that the Government may be mobilizing Yugoslav air transport for 06-2.a Document No. Ng NO CHANGE in Class. 0 - 1 - D DECLASSIFIED 90E/"... Class. CHANCL'D TO: TS S T SK5RET DDA. M-L7to, 4 Apr 77 7 le Auth: DDA l'_"... 77/1763 A Da' e�. 1_ 3 _mu. Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TO an Italian or a Greek thtthgency, Cannon urges "most strongly" that the US oppose the reported arrangement under which the Dutch airline KLM is now preparing to deliver six Douglas C -47 aircraft to the Yugoslav Govern- ment. (CIA Comment: Yugoslavia has given nonnerous Indications recently that it is actively planning expansion of Its civil air operations ovitskle of Yugoslavia. At the same time, there are indications that even the Satellite airlines of Czechoslovalda and Rumania are being excluded from the area west of Belgrade. CIA believes that, although there are no indications of an impending act of .aggression by Yugo- slavia, it is possible that the Government is planning an operation involving the use ot its transport aircraft and is determined to allmv no air observation of critical areas.) � I. 4. GERMANY: Schumacher unable to return to public life-- US Political Adviser Murphy has been informed that Kurt Sclatmacher, leader of the German Social Democratic Party (3PD), is so seriously ill that he will not be able to return to public life. According to Murphy, German political ob- servers believe that if Schumacher is forced to retire, he will probably be replaced provisionally by Erich 011enhauer, present SPD second chairman, who is considered "colorless but an able organizer." (CIA Comment: The removal of Scluunacher's strong leadership will weaken and divide the Social Democratic Party and may even break the solid anti-Communist stand on which Schumacher has insisted.) THE AMERICAS 5. NICARAGUA: Somoza threatens intervention in Costa Rica-- US Embassy Managua transmits the request of ItieneMl'omoza that the US prevent Guatemala from fomenting revolutionary r , TOP CRET - 2 - Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 TO T � A 0"4 L., attempts against Nicaragua. Somoza told the Embassy that If Nicaraguan opposition forces in Costa Rica approach the Nicaraguan fronthsr, be will be forced to "cross and destroy them." (CIA Comment The imminent Coista Rican rebel victory, to which Guatemalan Government cdfictals and Nicaraguan revolutionaries have contributed, would destroy the balance of power in Central America. Consequently, Somoza can be expected to take all possible diplomatic and conspiratorial measures to redress it.) Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 it a CRET EUROPE 15 APR 1948 (9C I 1. ITALY: at:IlljggitemegkinytatSeggaWseplAggejel-- US Ambassador Dunn has learned from the British Embassy in Rome that the Italian Minister of Interior has predicted a Com- munist attempt to seize power by force immediately following the defeat of the Communists in the 18 April elections. The Minister suggested to the British Ambassador that the US and the UK make an immediate statement declaring "they would not remain in- different" if such an attempt were made. Dunn comments that Premier De Gasper' Ms not made a direct request to this effect and that the US Embassy is inclined to agree with the British Ambassador that such a statement would be an unwise pre-election 1110Ve. (CIA Comment: CIA believes that Communist capabilities for successful insurrection have diminished and that the Commu- nists are likely to launch a post-election campaign of strikes and violence which will fall short of revolution. CIA concurs in the estimate that the proposed statement before the elections might have adverse political effects.) 2. TRIESTE: Possibility of violence�US Political Adviser Joyce believes that the Communists will probably not incite disorders during pro-Italian mass demonstrations to be held in Trieste on 15 and 17 April, but that Italian demonstrators may get out of hand and commit acts of violence against the Communists. Joyce adds that the situation is outwardly calm but the underlying ten- sions are "very real and potentially dangerous." fr 3. AUSTRIA- USSR belimLto desire Austrian treaty�The US delegation to the London conference on an Austrfin treaty be thatibecause of recent clear indications that the USSR may now desire a treaty, it can no longer be readily assumed that the USSR will not accept US stipulations for Austrian inde- pendence, and therefore the US may be faced with the possibility of rejecting the treaty on strategic grounds after an agreement TO RET Document No. 0 IS NO CHANGE in Class. E] DECLASSIFIED Class. CHCf.iED ;TO , TS S (.97 Db:A M2M0, 4 Apr 77 Auth: DDA F:i. 77L1763 Date : 8 Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 In principle has been reached. British delegates believe that the Soviet desire for a treaty should be utilized to get the "best bargain" for Austria, but the French consider the con- . tinned presence of troops in Austria to be important to the "general European interest" and do not now wish to conclude a treaty. The US delegation believes that the matter should bE considered by the US National Security Council. NEAR EAST-AFRICA 4, IRAN: ILSiLipaloi_l_ppment of arms--The Department of State has informed US Embassy Tehran that credits to cover packing and shipping charges for the surplus US arms to be acquired by the Iranian Government will be included in the general appropriation request for the next fiscal year. (CIA Comment: Implementation of the $10 million US arms credit, ratified by the Iranian Majlis on 17 February, has been held up by the inability of Iran to cover packing and shipping costs for the arms,) � Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 b GENEItikL tics to Austrian treaty negotiations in �re poria that the Soviet delegate has indicated his willingness to cider other =agreed articles of the treaty in order to avoid an impasse on the question of German assets. Accaid- ing to US representatives In Austria, Soviet Commissioner Kurassow has told Chancellor Ftgl that the USSR is prepared to agree that an Austrian army should be in existence at the time of the withdrawal of the occupation troops and that such an arm may be equipped with either "national or international arms." � (ClA. Comment: The willingness cd the USSR to by-pass economic issues in order to discuss security clauses and the Soviet stal0 concerning an Austrian army suggest strongly that the USSR is anxious to conclude an Austrian treaty. CIA does not EC believe, however, thi Austria into the Satellite system.) ti the USSR has renounced its ultimate in- ,tention d incoroora L UK-Benelux Oeal for kest/PIC nests renojted--US observers at the Paris raeeting of the Committee of European Economic Cooperation (CEEC) report that the representatia3 of the UK and Benelux countries have made a deal to give UK the .chairmanship of boil the CEEC council and the key executive committee and to give Belgium the secretary-generalship. The US observers believe that such an arrangement may cause some difficulties with the French who feel that they should have one of the key jobs in the CEEC organization. (CIA Contment: British domination of the CEEC would be assured through control of these two key posts. In view of the relatively lukewarm attitude of the UK toward all-out European economic cooperation, British leadership of the CEEC would probably be lacking in aggressiveness.) 14 APR 1948 660 _ 1 - Document No. NO CHANGE in Class. 0 DECLASSIFIED Class. CILA_NC2D TO: TS DDA iCimo, 4 Aibi'.77 uth: DDA Ral. 77 1763 Date; 1.3 MAR 15V8 By; Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 FAB EAST 3. SIAM: Moves by anti �4:elnen --According to US Ambasszitofi,Commande-the in-Chief of the Siamese Navy and the former Col:Inlander -in-Chief of the Siamese Army have made tentative plans to prevent a parliamentary vote of confidence in the Phibul Cabinet when its policies are presented to Parliament on 16 or 18 April. The military leaders hope that Phibul will then resign and make way for a civilian coalition government. Stanton believes that this plan marks the beginning of efforts to unite all elements opposed to Phibul and that the success of these efforts will be dependent upon the withholding of recognition by foreign powers. (CIA Comment: It is doubtful that the disparate and disunited elements opposed to Phibul can at this time have very much effect upon the Phibul Government) UK views on recogulUon of Phibul Government--US EmbassyLcnd�has -been informed that the UK Foreign Office is considering a statement of disapproval of the change of government in Siam but fears that, unless other countries join in such a step, it will be regarded as "merely a feeble, empty gesture." The Foreign Office has not finally decided what steps to take in the Siamese situation but has instructed the UK Embassy in Bangkok not to reply to any note received from the Phibul Government TEE .4.340RIC,AS rto Vieira White, the leader of the larger of Colombia's two Communist parties, stated shortly after Gaitan's death that his party was not involved In the assassination, but that he had issued coders for party members to exploit the situation by pillaging stores and com- mitting acts designed to disrupt the Bogota Conference. (CIA. Comment: Cl& believes that previous reports re- garding relations betv,Teen Gaitan and the Communists indicate that White's reported atatemezt rez.17 be aetepted as substantially true.) TIA Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 C9 5. VENEZUELA: Alleged.plans for sabota e of Venezuelan oil fields-- 1 upon the termination of the Bogota Conference the Communists plan the immediate sabotage of the Venezuelan oil fields. Such a plan is reportedly held in the Soviet Embassy in Caracas, Approved for Release: 2018/10/18 006749452 Approved for Release: 2018/10/18 006749452 ifrA, TO ICRET t, -'44/ GENERAL 13 APR 1948 659 � 1. US to continue Austrian treaty talks�The Department of State has instructed US delegates at the London Conference on the Austrian treaty to endeavor to reach maximum agreement with the USSR on outstanding economic issues and then to pro- ceed to the discussion of the other disputed articles of the treaty. The Department has advised the delegation that Soviet intentions may be either to execute a tactical maneuver for propaganda purposes or to "reach an agreement on reasonable terms." The Department believes, therefore, that it is essential to con- tinue the negotiations until the Soviet purposes are revealed. The US delegation at London reports that both the Brit- ish and French delegations are apparently convinced that the USSR wants a treaty and the Soviet delegates will for that reason make every effort to prevent a break in the negotiations. 2. No German representation at CEEC weas�The Department of State considers that in view of previously stated objections to the presence of German representatives at the plenary session of the Committee on European Economic Cooperation (CEEC), no Germans should be present at the session and the agreement should be signed on behalf of the US-UK Zone Germany by the military governors. The Department believes, however, that bizonal participation in the European recovery program should not be limited by the agreement. The Department adds that the agreement should provide single membership for the three zones if there is a fusion of the French Zone with the bizonal area. EUROPE 3. FRANCE: Cpxkraunists aiming attacks on Gaullists�US Embassy Paris has been told by the Interior Ministry that the French Communist Central Committee, at its session col 14-15 April, will instruct Communist militants to intensify attacks on Gaullist para-military groups. The Communists reportedly Document No. 40// tzv NO CHANGE in Class. - -