DAILY SUMMARY - 1949/07-1949/09

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 06749456
• Document Creation Date: December 3, 2018

Approved for Release: 2018/11/19 006749456 24708 ilffttrintr GENERAL 1. British to take .. z Mon on Euro.. unification--According m ssy on. os e ore o.ce will probably soon make important policy decisions concerning the British attitude toward the unification of Europa. High Foreign Office officials have indicated that the key questions In determining the British position are: (a) how far the UK Is willing to restrict its freedom of action and impair rela- tionships with the Commonwealth; and (b) how far the US actually wants the UK to go in involving itself irrevocably on the Continent. The officials declared that there is no thought of altering British military obligations under the Brussels Treaty but that the UK has no intention of stipulat- ing in advance the number of troops it would commit to a given area. el oc.r jj 2. Estimated effect of atom developments on Soviet aims-- US Embassy Moscow, in making a tentative comment on the probable effect on Soviet policy of recent developments concerning the atom bomb, expresses the view that the basic US estimates concerning Soviet intentions need not be altered. The Embassy considers that even though the unanticipated Soviet progress in the atomic field might advance the date on which the Kremlin would be prepared to begin hostilities, this date would by no means be in the near future, The Embassy estimates, however, that the Kremlin will consider its hand strengthened in current foreign relations, will be inclined toward increased firm- ness in negotiations, and will try to exploit popular fear throughout the world. Concerning the problems of atomic energy control, the Embassy believes that the USSR will try to stampede the West into acceptance of the Soviet proposal. - 1 b40.14.1Rent NI). .0 -lb 0TOP li CHANGE in Class. E] litDECLASSIFIED ass. CHANGED TO: TS S DDA Memo, 4 Apr 77 REG. 77 1763 Auth: DD E Et4ft 4 By: Approved for Release: 2018/11/19 006749456 1104 $-T5 - Approved for Release: 2018/11/19 006749456 TO CRET 3 Bevin to sound out Vishins on Austrian trea --According ega on a 1.e us n ea in New York, the foreign ministers of the three western powers have agreed that British Foreign Secretary Bevin will approach Foreign Minister Vishinsky informally to ascertain whether the Soviet stand on the treaty is as inflexible as it now appears to be. Bevin will reportedly attempt to learn whether the USSR really wants a treaty at this time and what the minimum Soviet position is. Bevin has submitted to the US and French delegations a set of proposals on the outstanding issues which could be used as a basis for a comprehensive settlement, but he will not commit the western powers in his talk with Vishinsky. 4. Chinese Nationalist-Korean milit_Limogotiations--US Ambassador Mucci� at Seoul verifies the recent persistent rumors concerning Chinese Nationalist negotiations for Korean base privileges in exchange for arms aid to Presi- dent Rhee's Government. Mucci� reports that the initiative in these negotiations, which began during the Chiang-Rhee conference in late August, haS been wholly Chinese, and the Korean Government has been reluctant to commit itself to any agreement which would risk involvement in the Chinese civil war. According to Mucci�, the Chinese wanted Korean bases for carrying out the Nationalist air and sea blockade of the north China coast as well as permission to establish Intelligence installations in Korea; they were unwilling to assure Chinese naval assistance in the event of war with the northern Korean regime, offering only a Chinese fighter- bomber group. Rhee is reportedly seeking a means of terminat- ing the discussions and has assured US Embassy Seoul that no concessions will be made. rit Doc nt No. e/f0 - NO CHA in Class. - 2 - DECLAS IED Class. CHANGE DD Auth: Da � emo, A REG. 77 TS Apr 77 63 By; Approved for Release: 2018/11/19 006749456 24707 r n Approved for Release: 2018/11/19 006749456 TOP SE GENERAL 1. Views of four foreign ministers on Austrian trea According to the WS-delegation at ihe Austrian trea talks in New York, Soviet Foreign Minister Vishinsky revealed no change in the Soviet position concerning the treaty in an informal meeting with foreign ministers Acheson, Bevin, and Schuman. Secretary Acheson has advised the Department of State that the meeting with Vishinsky was held in order to review the entire range � of unagreed issues on the Austrian question, thus ena- � bling the western ministers to determine on what points, if any, they might offer to bargain. The Secretary indi- cates that at an earlier meeting of the western ministers Bevin again made a plea for the early conclusion of a treaty, which he believes should not be held up by the present points of disagreement. Schuman, while agree- ing with Bevin concerning the urgency of a treaty, is not prepared at present to agree to all the Soviet demands. The Secretary expressed the view that the USSR is press- ing the western powers as far as possible for the purpose of weakening Austria and eventually establishing a perma- nent hold through control of the Austrian economy. .0.00 2. Snaak re rds British devaluation as divisive ate. --US trahassy russe1s transmits an account of a confidential Interview with ex-Premier Spaak by two US newspaper correspondents in which Spaak described the "precipitant British devaluation" as a disastrous step that will empha- size the divisive forces in Europe. Spaak is reported to be very dubious that devaluation will achieve its goal of narrow- ing the European dollar deficit because he does not believe Europe can produce sufficient extra goods for sale in dollar's to reduce the present deficit. Spaak's general attitude was reportedly one of genuine gloom, although lie "wryly" admitted that "an ex-Prime Minister is by nature inclined to be critical." z ocx icg4 1103 Document No. NO CHANGE in Class. 0 DECLASSIXIED liss. CHANGED TO: DDA Memo, 4 Auth: DDA Era. 77 Date: � e/A- 5 e/A-s e/A S 0 --,; TS Apr 77 1783 Approved for Release: 2018/11/19 006749456 24706 r n , Approved for Release: 2018/11/19 006749456 TOP RET GENERAL g 8 SEP 1949 1102 1. UK-France favor Austrian treaty on Soviet terms--The British and French representatives at the Austrian treaty talks in New York have taken the line with US Representa- tive Reber that the conclusion of an Austrian treaty at the present time, even on Soviet terms, is better than no treaty at all. The British-French view is that if negotia- tions break down now, the treaty will be indefinitely post- poned and the Soviet occupation prolonged, a development which will more effectively wreck the Austrian economy than will the treaty terms which the USSR now demands. The three representatives agreed, after Reber had pointed out that the US approach to the question is basically differ- ent from the British and French, to refer the matter to their respective foreign ministers in order to determine a common approach for the next meeting. US views on Austrian treaty--The Department of State has advised Secretary Acheson in New York that present British and French views regarding the Austrian treaty raise serious questions regarding the whole western position toward the treaty. The Department believes it should be strongly pressed upon Bevin and Schuman that any further concessions to Soviet demands would endanger the basic US objective of creating an Austrian state capable of independent existence. The Department believes that Vishinsky's present position Indicates that the USSR does not at this time want a treaty which would require military withdrawal from Austria, Hun- gary, and Rumania, except on terms which would permit sub- sequent Soviet repossession of all Austria. The Department stresses that to yield to Soviet demands following the atomic announcement would have more serious repercussions in Europe generally than failure to conclude an Austrian treaty. : :11-0 Document No. NO CHANGE in Class. DECLASSIFIED ,Class. CHANGED TO: TS DDA Memo, 4 Apr 77 Auth: DD 'q1G. 77/1763 Date: e/A- 5 el/4- Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOPSET The Department declares it could not ask the US Senate to. ratify a treaty involving greatly increased US aid to an Austria which would at best constitute a definite secur- ity risk. 2. US 'support of Yu t � - lay SC candidacy favored--US Embassy Moscow-believes ...= t the US should give quiet but firm and unwavering support to the Yugoslav candidacy for the UN Security Council, inasmuch as "the promotion of Titoism, and nationalism everywhere, will advance US interests generally." Expressing the view that the Yugoslav candidacy reflects Yugoslavia's firm intention to stand on its own feet In international affairs, the Embassy argues that there is no need for the US to bend over backward to avoid offending Soviet sensibilities in the matter. � II 4 3 -* r t ., N Approved for Release: 2018/11/19 006749456 24705 r- Approved for Release: 2018/11/19 006749456 GENERAL 1. French reject German mark devaluation proposal--VS High Commissioner 1ViceIoy reports from Paris that the "nervous" French political situation was an important factor in the French Government's refusal to agree to a 20% devaluation of the German mark. According to McCloy, the French are insisting that agreement be reached simultaneously on German devaluation and on the establishment, not later than 1 January 1950, of parity between German domestic and export prices, especially for coal. McCloy, on the other hand, con- siders it impractical and unwise to attempt to remedy the consequences of a new mark rate before the results of German devaluation are known. McCloy recommends that the High Commission proceed with a 20% devalua- tion of the mark, even without French concurrence; he points out, however, that if the French then appeal the action of the High Commission, the results in Germany would be most unfortunate, if not disastrous. FAR EAST 2. CHINA: Sinkiang goes over to Chinese Communists-- The US V ceons s been officially informed that the government of the northwest border province of Sinkiang on 26 September severed all connections with the Canton Government and accepted the authority of the Chinese Communists in Peiping. According to the Vice Consul, the question of when Chinese Communist troops will enter Sinkiang has not yet been settled. 119, NO CHANGE ia Class. 13� DECLASSIFIED Fl!isso CHANGED TO: TS DDA Manz?, 4 Apr 77 uth: DDA G. 77 1763 27 SEPi949 1101 - 5 eIA - iC - Approved for Release: 2018/11/19 006749456 24704 n Approved for Release: 2018/11/19 006749456 TOP SEC � GENERAL 1. French attitade on German devaluation--US High Com- missioner McCloy In Berlin reports that the French Gov- ernment has rejected his proposals on devaluation of the German mark. McCloy adds that it is the impression of the French High Comnaissioner that the French Govern- ment desires to take the issue of devaluation out of the hands of the High Commission. McCloy expresses the view that it would constitute a "disaster of the first order" to the administration of Germany lithe High Commission on its first test were forced to refer the matter bach to the three governments. EUROPE 2. YUGOSLAVIA: Cannon favors Ingoslav SC me mbershie.-- US AmbassadorZannon reports that he is inclined td favor Yugoslav membership in the Security Council. Cannon points out that US support for Yugoslavia might adversely affect US-USSR working relationships, but he considers it likely that Yugoslav membership in the SC would contri- bute to the healthy development of the UN as a truly repre- sentative body. Cannon emphasizes that despite the Yugo- slav-Kremlin quarrel, Yugoslavia is still a "Communist, Eastern European and Slavic" nation and thus its election to the SC would be consistent with the existing principle of geographic and political representation. According to Cannon, a US attempt to exclude Yugoslavia would smack suspiciously of power politics and would help maintain the rigidity of two political blocs. Cannon concludes that although Yugoslavia could scarcely be expected to follow the West out of spite to the Kremlin, the middle-of-the-road policy it may follow in the UN would be a salutary influence. ' Pgcusftzt V*. -NQ C123G2 ill Class. EJ D=CIA3SIFIED C:IANGED TO: � TS S DDA Memo, 4 Apr 77 1 Au; DA G. 77 1765 Date: By; 26 SEP 1949 1100 . e/A-S Approved for Release: 2018/11/19 006749456 24703 Approved for Release: 2018/11/19 006749456 GENERAL 1. Queuilleig.rful concerning his Government's position-- Premier Queuille has informed US Ambassador Bruce that his Government's position is less favorable at present than it was even during the crucial period of a year ago.. Quetille indicated that besides the immediate difficulties of the 1950 budget and French worker demands for increased wages, the Present Government has greatly lost prestige because of "political considerations of an international character." Queuille reportedly cited three "major inci- dents" which had caused questioning and bitterness in France: (a) the division of ECA aid, which he believes made the UK "the most favored nation"; (b) the devalua- tion of the British pound, which he feels was handled in such a way as to demonstrate a "complete lack of loyalty" to the continental countries; and (c) recent US moves con- cerning "drastic devaluation" of the German mark, which he regards as "obviously both to the advantage of Germany and the disadvantage of France." The Premier declared that he cannot rely on maintaining his Government in power if France is subjected to further disappointments and shocks. Bruce comments that Queuille unquestionably, regards the situation as being of the utmost seriousness for France and for the position of his Government. 2. British labor reaction to pound devaluati on--US Embassy roadin�vport�s t---7�that vicaiable featurithe recent meeting of the General Council of the British Trade Union Congress, which postponed the decision to endorse the de- valuation of the pound, were: (a) a tendency to blame the US for Britain's difficulties; and (b) the absence of confi- dence in US economic policies. According to the Embassy, g-11 -4 - 1 - Document No. 1 1 '� ot_r laiso 1099 NO CHANGE in Class. ri cj DECLASSIFIED Class. CHANCED TO: TS DDA M3MO, 4 Apr 77 DDA RG. 77 1763 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP ET some Council members strongly pressed the view that the UK should abandon the objective of multilateral trade and seek to create a trading area independent of dollars. The Embassy expresses the opinion that devaluation may repre- sent the last attempt that a considerable number of the British people would be willing to make in cooperation with the US to resolve the problem of unbalance between the dollar and non-dollar world. 3. Removal of Berlin from SC agenda not favored--US High Commissioner McClcry in Frankfurt, in commenting on the possible removal of the Berlin issue from the UN Security Council agenda, points out that the USSR has not lived up to its agreements concerning Berlin and that a "critical situa- tion" exists regarding the payment of western railway workers in West marks. McC lay indicates that the western powers may soon be forced to take definite action to relieve the railway workers and expresses the view that such action, coming simultaneously with the removal of the Berlin issue from the SC agenda, could be "most embarrassing" to the western powers. He therefore requests that a thorough check of the Berlin situation be made before removal of' e issue from the agenda is undertaken and stresses that the US should not be "under any illusions that the situation in Berlin is now normalized. - 2 - Approved for Release: 2018/11/19 006749456 24702 r n 1 Approved for Release: 2018/11/19 006749456 ! EUROPE 23 SEP 1949 1098 1. YUGOSLAVIA: Tito confident of Yugoslav stability-- Marshal Tito has told US Ambassador Cannon in a recent conversation that he is confident of the continued loyalty of the Yugoslav people to his Government. Tito admitted to Cannon that some minor sabotage had occurred in Yugo- slavia but asserted his confidence in the Government's ability to keep it under control. Concerning frontier Incidents, Tito declared "we shall get every one who comes over, but we won't go into reprisal operations; they may try to make us break relations, but we won't take that step either." Cannon reports that Tito's "chief concern" Is that the Greek Government may take precipitate action against Albania, thus creating "a most difficult" situation ?or Yugoslavia. Tito urged Cannon that the Greeks be told to leave Albania alone. .Document No. Op NO CHANGE in Class. 0 0 DECLASSIFIED Class. CHANGED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REC. 77/1763 Date: Approved for Release: 2018/11/19 006749456 24701 : P Approved for Release: 2018/11/19 006749456 22 SE 1949 I. 1097 IFIDETtl , GENERAL 1. US osition on Yu oslav candida for Securi Council-- e pa men s s uc 'ega -.on to the UN to vote for Yugoslavia as successor to the Ukraine in the Security Council so long as there is a strong sentiment In the General Assembly favoring Yugoslavia's election. The Department adds that if a GA majority does not favor Yugo- slavia, the US delegation should vote for the Eastern European state which receives Soviet support. The Department indicates that this position is based in part on the fact that US relations with Yugoslavia would be injured if the Yugoslays knew that their candidacy was not supported by the US. The Department believes, however, that it is of utmost importance to avoid . any impression that the US is sponsoring or is a prime mover In Promoting Yugoslavia's election to the SC. Document No, NO CHANGE in Class. 0 DECLASSIFIED t/ii- 5 Class. CHANGED TO: TS S li DDA Memo, 4 Apr 77 Auth; RG. 77/1763 Dato: BY: Approved for Release: 2018/11/19 006749456 ���������:��=1 24700 r Approved for Release: 2018/11/19 006749456 TOP SE ' , r 1 ; � GENERAL , -a is Y oslavia seeks Securi Council seat--The US delegation repor ugos v representatives have ap- proached a number of delegation's, including the US, seeking support for election to the Security Council. According to the US representatives, the immediate response of other delegations to this overture was mixed, but a general trend toward favoring the Yugoslays appears to be forming. (CIA Comment: CIA estimates that despite the propaganda advantages resulting frem a General Assembly election of Yugoslavia as successor to the Ukraine in the SC, such action would not improve the US position vis-a-vis the USSR in the UN and would diminish chances for Soviet cooperation during the present General Assembly session.) 21 SEP 1949 1096 2.dian ITk17sregrdrecg111-::41ftion of 7s...re.: nes-- U Embagsfivreii-ffilEfh7aiibeen tora bTa-hretiln� that Indies attitude toward establishing relations with new regimes in China and Indochina will be determined primarily by the internal situation rather than the Communist issue. The official expressed the belief that India would in due course have to recognize the authority of the Chinese Com- munist government�which he understands will be proclaimed In early October--because not to do so would strengthen the Chinese Communists who insist that the new regime cooperate only with the USSR. Concerning the Bao Dai-Ho Chi Minh rivalry in 7ndochina, the official implied that India's attitude will be determined more by the degree of genuine popular support each possesses than by evidence that Ho Chi Minh is a Soviet puppet. S Document No. NO CHANGE in Class. 0 - -ED DECLASSIFIED Class: CHANGED TO z . IS S (9 DDA Memo, 4 Apr 77 Auth: DDA REG'. 77 1763 .. Date; B.Y! Approved - Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP JECET EUROPE 3. UNITED KINGDOM: seplitica.1 effects of devaluation-- US Embassy London comments that devaluation of the pound has been well received in most responsible British quarters except the trade unions, explaining that labor leaders fear they will not be able to restrain new wage demands as a result of the higher cost of living. The Embassy estimates that the cost of living will increase by some 5% in the next six months and that general pressure for higher wages will not become serious be- fore next spring. The Embassy considers that devalua- tion has increased the odds in favor of a fall election but points out that Labor Party leaders are at present divided on the question. According to the Embassy, if the Govern- ment does not receive a new mandate this fall, it will have a "very rough time" during the next six months try- ing to impose the unpopular decisions which are necessary if Britain is to benefit fully from devaluation. r -2 Approved for Release: 2018/11/19 006749456 e /14 S Approved for Release: 2018/11/19 006749456 20 SEP 1949 1095 GENERAL 1. oint administrative board favored for Trieste--US Embassy Rome mmen vorably on the Department of State's suggestion concerning the creation of a joint US-British- Yugoslav administrative board for both zones of the Free Territory of Trieste. Expressing the view that Italian parti- cipation in such a board would seem to be essential, the Embassy observes that a joint board could not go beyond consultation because it would not be based on a specific treaty provision. The Embassy further remarks that such a board would suggest a reversal of the trend toward rigid separation of the two zones, which has alarmed the Italians, and would provide Italy and Yugoslavia with a potential means of discussing a final settlement of their differences. � 2. ILS,. concernedby Israeli reaction to internationalization alga-- The Department of State has expressed to US Entassy Tel Aviv its concern over Israel's reaction to the proposals of the Pales- tine Conciliation Commission (PCC) for a permanent inter- national regime in Jerusalem. The Department, observing that the Israelis have apparently rejected these proposals without giving them thorough consideration, instructs the Embassy to point out to the Israeli Foreign Office that the PCC plan repre- sents the Commission's considered views on the most practical approach to the problem of internationalizing Jerusalem. The Department expresses the hope that whatever objections the Israeli Government has will be presented to the General Assembly In a conciliatory spirit. Document No. SI NO CHANGE in Class. 0 ID DECLASSIFIED Class. CHANGED TO: TS S DDA Memo, 4 Any 77 �Auth: DD7G. 77/1763 Date :It' Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 GENERAL 1. Austrian treaty talks to resume in New York--US Ambas- sador Kirk in Moscow reports that Acting Foreign Minister Gromyko has agreed to the resumption of the Austrian treaty negotiations in New York on 22 September. Accord- ing to Kirk, Gromyko was not surprised when the three western ambassadors approached him jointly, and he Immediately accepted the proposal for the meetings of the deputies. Kirk describes the interview as "amicable" and reports that Gromyko expressed the hope that remain- ing unagreed items on the Austrian treaty might be settled in New York. 9 5t.r jUL+0 2. Italian Government reportedly threatened by NAP issue� . &Han Premier De Clasper' has informed 'CM' Anlassador Dunn that a breakup of the Cabinet has been threatened on. � the issue of Italian representation on the regional committees the North Atlantic Pact organization. De Gasper' main- ' tains that because of the strong feelings of the Socialists and Liberals in the Government, he does not see haw anything can be done if acceptance is not given the Cabinet's minimum , formula, which provides for Italian representation on a mili- tary coordination committee in order to assure the cooperation of the regional Atlantic Pact groups. (CIA Comment: CIA believes that Premier De Gasperi Is exaggerating the threat to the coalition for bargaining purposes and considers that this issue alone is not likely to lead to the breakup of the Government. However, CIA estimates that this issue, if combined With unfavorable decisions on the former Italian colonies and on ECA aid, might bring some Cabinet changes.) � . 'LW -1- 1094 Document No. FO C7311:,GE in Class. 0 . � A qr.-- � Ll D2CLASSIFIED C1--- CHANGED TO: TS S C DDA Memo, 4 Apr 77 uth: DDA G. 77 1763 Date: By; TO CRET Approved for Release: 2018/11/19 006749456 S - TS Approved for Release: 2018/11/19 006749456 COi GENERAL 1. Greek fears over coming GA session--US Ambassador Grady reports that, as the General Assembly session approaches, the Greeks are beginning to fear that they have much to lose and little to gain. They are particularly anxious lest any formal conciliation talks sponsored by the Big Four result in a compromise which: (a) might provide an opportunity for the USSR to intervene in such Greek internal affairs as elections and the treatment of the guerrillas; and (b) thus enable the USSR to continue, through political means, to promote unrest and disorder that would require the expenditure of US aid largely for non-productive purposes. Grady feels that any consulta- tions between Greece and its northern neighbors should therefore be under UN rather than Big Four auspices, unless there are concrete indications of a change in the Soviet attitude. Grady also urges that the US concentrate its efforts on the heart of the problem, namely Albania and Bulgaria, and endeavor to secure strong GA recom- mendations which would provide some hope of at least Interfering with the return of the guerrillas to Greece from those countries. 1 7 SEP '1949 1093 rloun'; n). CS � NO CELECL.fcn Li DECLASSI}:ILD 'Class. CHAlgJED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA MG. 77 1763 By: Class.. 0 _A Date: Approved for Release: 2018/11/19 006749456 Approved for linlaLls.e7.150�171/111/19 006749456 . 1.111 Elm la � N.= ...NI 1,�;911--SgERET � ' � EUROPE 16 SF o 1949 1092 1. FRANCE: Pro-Tito rou s re orted break with Communists-- ei..s - US Embassy s -.:ne'� : or y source pro-Tito splinter groups in Paris are beginning to break away from the Communist Party. According to the same source, the Yugoslav Embassy in Paris has become very active In promoting leftist heresy among the working class. The US Embassy attaches considerable importance to these reports because it feels that even though these groups do not as yet have any parti- cular program or organization, the spread of Titoism among workers would constitute a serious threat to the French Com- munist Party. in ;;Lcr:s. 0 L. C.NC.17_D TO: TS DTA Y.sm3, 4 Apr 77 kuth: DDA REG. 77/1763 Date: By,3 Approved for Release: 2018/11/19 006749456 Approved for Release: 201-8/11/19 006749456 ii GENERAL 1. McCloy favors cessation of German ciisraantling--US Hifgh Commissioner McCloy in Frankfurt believes that the western powers should immediately announce the cessation of all dismantling except war plants, possibly making such cessation conditional on speedy German accepiance of the Ruhr agreement. McCloy expresses his opinion that dismantling has little value to the US and has a "great abrasive effect" on the Germans, whereas abandonment of the process might give solid support to the new German Republic and provide a "breathing spell of cooperation." McCloy points out that many aspects of dismantling are economically incongruous: he also ex- presses the conviction that present agiistion against dis- mantling is not Inspired by former Nazi elements. (CIA Comment: CIA considers that although a cessation of the present dismantling program would some- what Improve the prestige of the BOWL Government, such action would probably not increase German cooperation with the western powers.) FAR EAST 2. CHINA: Chia to sus end su ort of Canton Government-- According to , - Ass -tan "* avail A eke in an in, Acting President Li Tsung-Jen has received notification from Chiang Kai-shek that all funds coming from Taiwan for support of the Canton Gove,rnment would cease on 1 October. Li indicated that the cutting off of funds from Taiwan would cause the collapse of the mainland Govern- ment. Li told the Assistant NA that Chiang has again been Intervening in direct military command recently and cites :9. -- 1 talUIE in Clas5, [11 g :DECLASSIFIED CHANGED TO: IS 8 DDA Menlo,, 4 Ur '11 kyz!ipi. 3 b SEP 1949 1091 5 /49y)/- Ts Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TO RET Chiang's withdrawal of air suppott from Pai Chung-hsi and the removal to Taiwan of vitally-needed ammunition and bomb reserves in the Canton area. The Assistant NA comments that although Li did not make threats or demand US aid, he obviously considers immediate financial or military aid "in whatever amount" the only hope for saving the present Government from the Chinese Commu- nists and freeing it of Chaing. (CIA Comment: Although Li may have over- emphasized his own predicament in an effort to obtain direct US aid, Chiang's continued refusal to relinquish funds or stockpiled materiel on Taiwan indicates that Chiang is leaving the Canton Government and the anti- Communist mainland forces to their own resources.) - 2 - Approved for Release: 2018/11/19 006749456 Approved for Relea�se7 2018/11/19 006749456,� TOP SET GENERAL � 1. Vishinsky to be Soviet representative at GA--Soviet Foreign Minister Vishinsky has told US Ambassador Kirk that a last minute decision was taken to send him to New York as head of the Soviet delegation to the UN General Assembly. Kirk suggests that the change in Soviet plans may have been caused by the current impasse in Austrian treaty negotiations and expresses his suspicion that the Kremlin is interested in a Coun- cil of Foreign Ministers meeting during the coming GA session. Kirk further reports that during an informal conversation Vishinsky expressed the hope that the session would be productive, perhaps 'effecting an ex- tension of the Paris CFM meeting, and remarked that he would welcome some private talks because "diplomacy cannot be conduCted under floodlights." (CIA Comment: CIA believes that the USSR may have sent a top-level delegation not only in anticipation of a possible CFM meeting but also for dealing with the Greek problem.. The Kremlin may also wish.to be pre- pared for the possible raising of the Tito dispute during the GA session.) 14 SEP 1949 1090 Document No. NO CHANGE in ClasS. 0 0 DECLASSIFIED Class. CHANCED TO: TS S DDA Memo, 4 Apr 77 Auth: DDA-REG, 77/1763 Date: - TS Approved for Release: 2018/11/19 006749456 ,I�NMS10., By: VO C 11 Approved for Release: 2018/11/19 006749456 TOP GENERAL 13 SEP 1949 1. Western commandants to shift tactics in Berlin�According io US Political Adviser R e ifiE-.g1-7-.-er, the US and French commandants in Berlin have agreed to the suggestion of the British commandant that the three western representa- �tives should adopt a "more receptive attitude" toward Soviet proposals in quadripartite meetings. The western com- mandants reportedly will try to go further than before to meet Soviet suggestions for bringing together German techni- cal experts from both sides of the city but they will not grant even indirect recognition to the illegal Soviet Magistrat. The western commandants indicate that although they see little chance that this change of tactics will result in normalization of Berlin life, they want to present "as good a record of endeavor', as possible to any new meeting of the Council of Foreign Ministers; the military officials express the view that western commandants have formerly been too prone to reject Soviet proposals on procedural grounds. (CIA Comment: CIA agrees there is little chance that Berlin life can really be normalized as a result of local discussions with the Soviet commandant. CIA believes that if the western commandants convene German experts from both sides of the city, the apprehension and pessimism of west Berliners over Allied policy in Berlin will be increased.) DAGuegat No. 04. )( NO CHANCE in -61ass. 0 DECLASSIFIED Class; CHANGED TO: TS S DDA Memo, 4 'Apr 77 Auth: DDA REG, 77/1763 1089 AMR! Approved for Release: 2018/11/19 006749456 " Approved for Release: 2018/-11/19 006749456 TOPSEET GENERAL 1. USSR wants Rumanian troops moved from Yugo border-- US service attaches in Bucharest transmit a report from a "completely reliable" source that the USSR has asked the Rumanian Minister of National Defense to evacuate all � Rumanian troops from the Banat, a Rumanian province adjacent to Yugoslavia. In surveying possible implications of this action, the attaches indicate they consider it "possible" that: (a) Soviet forces require use of the area for maneuvers; or (b) the Kremlin wants to concentrate Soviet troops in the area as an ecouragement for Internal revolt in Yugoslavia. (CIA Comment: CIA believes that the Kremlin intends to move Soviet replacements into this area in order to further the war of nerves against Tito.) NEAR EAST-AFRICA 2., ISRAEL: Plan to move ministries to lied-- The IsraelTkeif�Fn Office has tnf�rmed1JSChargeord In Tel Aviv that rumors indicating Israel's intent to move all government ministries to Jerusalem either prior to or following the fall session of the General Assembly are "utterly without foundation." ocr laqa 1088 S a/A-eons- - 3. IRAN: Return of Soviet-kidna d Iranian soldiers demanded-- e ot-e�NF The Iran Minis r of ar $ orme U Military Attache in Tehran that the Iranian Government has set a 15 September deadlbie for the return of the fifteen Iranian soldiers recently kidnapped by Soviet troops and held as hostages for three Soviet soldiers who escaped to Iran. Accord-. Doeumen. pl. 01,0 NO CHANGE in Class. 0 - 1 - 0 DECLASSIFIED Class, CHANGED TO: TS DDA Memo, 4 Apr 77 Atithl DD G. 77/1763 vq_ By: Approved for Release: 2018/11/19 006749456 4 Approved for Release: 201.8/11/19 006749456 TOP tug to the Minister of War, the Iranian Foreign Minister has Informed the Soviet Embassy in Tehran that unless the deadline Is met, Iran will close.both the Soviet cultural relations soctety and the Soviet hospital in Tehran and will transmit a dossier to the UN on Soviet-Iranian border incidents. The Soviet Attache reportedly indicated that the Iranian soldiers would be returned as requested. 4. INDIA: possioa_lcy approach stgiAs._tloilKa -- US liTeT-leepor ,I.41Com- missioner has impressed upon Prime Minister Nehku the necessity for making some 'constructive suggestions" regard- ing the Kashmir problem now that he has rejected the arbitration proposal of the UN Commission for India and Pakistan. Nehru reportedly agreed that he could not take a negative attitude on the matter and indicated that on two other issues currently disturbing India-Pakistan relations�the refugee property question and the dispute over the use of the Punjab Canal water-- he would probably accept arbitration. Henderson suggests that Nehru's "present trend of thought" may create possibilities for joint US-British cooperation toward settlement of the Kashmir question and points out that simultaneous consideration of the Kashmir dispute, the refugee property issue, and the water rights question might be useful. -2 Approved for Release: 2018/11/19 006749456 1 Approved for Release: 2018/11/19 006749456 0 SEP 1949 ou IND ir 1087 GENERAL 0-lez Document No. NO C=2 in Cia:io. D:C.LA:SIFI=D Class. CliAlIG:D TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 Date: VO BY: V19$ Approved for Release: 2018/11/19 006749456 3.3(h)(2) SEP Approved for Release: 2018/11/19 006749456 T 1086 GENERAL 1. India rejects, Pakistan accepts UNCIP Rroposal�Prime ialnister 'ffeiru has Wormed President/Truman that India cannot accept the Kashmir arbitration proposal as pres- ented by the UN Commission for India and Pakistan (UNCIP). The Secretary General of India's External Affairs Ministry, however, has expressed the personal opinion to US Ambas- sador Henderson that the door is still open to arbitration, although he considers no good purpose could be served by further attempts at arbitration under the auspices of UNCIP. Meanwhile, Prime Minister Liaquat All Khan has informed President Truman of Pakistan's acceptance of the UNCIP arbitration proposal. 2. Us view on Y situation tuation in Trieste--The Department instructed US-Eiba-ssytru Belgrade to express to the Yugoslav Foreign Office the gratification of the US that the Yugoslav Government is taking active steps to investigate reports of recent oppressive actions against Italians by Yugoslav military officials within the Yugoslav Zone. The Em.-tssy is to point out that because of the gravity with which these reports are viewed in Italy, the Italian Government has found it difficult to go further in its efforts to establish cordial relations with Yugoslavia. The Embassy is to urge that the Yugoslav Government find it possible and desirable, in the light of its own investiga- tion, to take corrective measures as soon as possible. Document No. 05? NO .CAGE in Class. 0 0 DECLASSIFIED CTAUGED TO: TS S D-A Memo, 4 Apr 77 Autla. :7/1 TC. 77/17e3 Datc: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SEC GENERAL 1. US views concernin role of Trieste in Tito situation-- The Department oiStt� Informedr�eseita1ives In Trieste of its preliminary views concerning the future of Trieste in relation to the current Soviet-Yugoslav dis- pute. Concerning the possible effect upon Trieste of a swift collapse of the Tito regime, the Department indicates its present estimate to be that even if he is attacked Tito will probably be capable of prolonged resistance in substantial areas of Yugoslavia. The Department declares that the US has no intention of abandoning its support for the eventual return of all the Free Territory of Trleste to Italy, even If a Cominform regime is established in Yugoslavia, The Department indicates that tentative consideration is being given the possibility that the Yugoslav attitude may eventually make possible the establishment of a joint US-Brftish-Yugo- slav board to consider common .problems in the administra- tion of Trieste. The Department advises the representatives that in general the US considers the initiative for solution of problems in Trieste should come from Yugoslavia. 8 SEP 1949 1085 Document No.. U. f NO C:C-] C-2ss. 0 D2C-21lID Ciass. CAA= TO: TS S DDA Memo, 4 Apr 77 Auth: DDA REG. 77/1763 - Date: 1,744 Approved for Release: 2018/11/19 006749456 3-7-s Approved for Release: 2018/11/19 006749456 TOP SEC GENERAL 1, italy asks US action in Trieste situation--US Ambassador Ulla in Rome has received from Italian Foreion Minister Sforza a memorandum calling attention to the "seriously worsening situation!' in the Yugoslav Zone in Trieste and expressing confidence that the US will take corrective action in the situation. The memorandum describes "systematic violations of authority" by Yugoslav officials and cites instances of religious persecution, expulsion of Italians from their homes, arbitrary arrests, and virtual prohibition of interzonal traffic. Sforza informed Dunn that if Yugoslav policy is not changed, he will feel obliged to dispatch a n. to the four powers which negotiated the Italian peace treaty, a move which he would make reluc- tantly because of its possible effect on international rela- tions with the USSR. Dunn indicates that Sforza is giving this memorandum to the UK and France as well. NEAR EAST-AFRICA � 2. ISRAEL: Government re The US delega ion to e ;wales ins Toncil1a. ion (PCC) in Lausanne transmits a report from the PCC repre- sentative in Jerusalem that the Israelis intend to move all their ministries to Jerusalem and establish the government there before the fall session of the General Assembly. The US delegation believes that if the Israelis take this step, the possibility of reaching an Israeli-Arab modus vivendi, based on findings of the Economic Survey Group, will be gravely endangered. 7 SEP 1949 1084 move to Terusalem-- Document No. ro in Cia. 0 D3CY-71FirD CIANO:D TO: DDA Memo, 4 Auth: DDA Date: C10 0 T3 Apr 77 RLG. 77 BY: Approved for Release: 2018/11/19 006749456 CM-et:INF Approved for Release: 2018/11/19 006749456 TOP S6RET �16 StP lUi43 1083 GENERAL 1. US proposes demarche on Austrian treaty--The Department ausi- of State has instructed US Represedtath'e Reber in London to obtain the concurrence of the British and French in a plan to work toward completion of the Austrian treaty. The Department proposes that, following the dispatch to Moscow of parallel diplomatic notes by the western powers, the three western ambassadors make representations at the highest level in Moscow with the purpose of: (a) obtaining Soviet consent to the reconvention Of the deputies in New York on 22 September; (b) presenting proof to the USSR that agree- ment has been prevented by the Soviet demands which go beyond the principles decided upon at Paris; and (c) putting the decision to conclude a reasonable treaty clearly up to the USSR. The Department believes it should be emphasized that the western powers have made their maximum concessions and that conclusion of a treaty in line with the Moscow declara- tion and the Paris agreement requires a modification of the Soviet position. Document No. NO da;17::::1E in C-,a.3:3. 0 Lii DfCLASSIFrD C.LaEs. CT3A7:D T3: TS DDA PAT.7.,o, 4 Apr 77 Auth: P2A -:O. 77/1763 Date: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 C06749456 50 TOP SEC T 3 SEP 1949 1082 EUROPE 1. NORWAY: Foreim Office concerned with proposed NAP grouping-- US Embassy Oslo reports that, in response to a proposal to create a north European planning group composed of Norway and Den- mark, the Norwegian Foreign Office has expressed the strong feeling that full membership by either the US or the UK and pref- erably both is essential because of the manifest weakness of a group composed of only the two Scandinavian countries. The Foreign Office fears that such a small northern unit without complete backing by at least one major power would emphasize Its isolation and draw immediate attention to itself as the weakest link in the Atlantic Pact. The Embassy expresses the view that there is some merit to the Norwegian attitude because of psycho- logical considerations. Document No. OS1 NO C1=2 in Clezs. D-11CUSSIFI-D Class. CHAW:D TO: TS S DDA M-L.o, 4 Apr 77 Auth: D="7711735 Date: By: Approved for Release: 2018/11/19 C06749456 , 4 t. iJ4U Approved for Release: 2018/11/19 006749456 GENERAL 1081 1. USSR .5,;-sibl seeking Berlin reunification�US Political � .,� T. 'tie,. rger :er expresses the view that recent indications suggest the USSR may be on the verge of proposing a reunification of Berlin. Riddleberger points out that unstable conditions in the western sectors may be encoureging,the Kremlin to think favorable terms can now be gotten on a Berlin settlement. iddleberger suggests, on the other hand, that hints at a change in Berlin's status-- all emanating from Soviet sources--may merely be attempts to foster the uneasiness which many west Berliners feel about the city's future. 2. French views on Titoproblem--US Ambassador Bruce Waris trihsmftiThe view the French Foreign Office that France should not take the lead in efforts to deal with the Tito problem. The Foreign Office believes that the Kremlin will not for some moi,ths have to decide whether to engage in open warfare and regards the stand of the US and its willingness to back that stand with the atom bomb as the determining factor in that decision. The Foreign Office recommends that the western powers employ "cautious and supple tactics" during the present period when the USSR is likely to attempt to unseat Tito by all methods short of war. Document No. NO CHANGE in Class. 0 - 0 DECLASSIFin Class. CHAN= TO; TS DDA Mcmo, 4 Apr 77 Auth: DDA 77,176i Date: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SEC GENERAL 1. illwrees to recess Austrian treaty talks in London�The Department of State has advised US Representative Reber In London that the US does not object to the British proposal that the deputies suspend the Austrian treaty balks and re- convene in New York about 21 September. The Department has instructed Reber that when this suspension is proposed, the unreasonable demands of the USSR should be blamed for the lack of agreement at the talks. Reber is to express the hope that future negotiations will enable the terms of the Paris agreement to be carried out. Representative Reber has informed the Department meanwhile that the British are agreeable to the US proposal of a tripartite diplomatic approach to Moscow once it has been decided to reconvene the deputies in New York. Reber believes the French will also accept this suggestion. 1 SEP 1949 1080 2. Etench leased b invitation to Wash" n talk�US Ambassador Bruce in arI reports tfPremlerc uman and the French Cabinet have been greatly relieved by Secretary of State Acheson's recent message inviting the French to consult on financial and strategic matters in advance of the forthcoming US-UK talks in Washington. According to Bruce, French For- eign Minister Schuman had cancelled his previous plan to be in Washington during the US-UK discussions because of increasing British chilliness totvard the idea. Bruce considers the French to be apprehensive that in the Washington talks the British will rely on strategic blackmail" to secure gains for the UK at the expense of the Continent. (CIA Comment: CIA considers that French apprehension V..... ,largely springs from the fear that Britis!k..,gainsoresun fr the ftairthcoraing monetary talks may haircerWdverse pflects upon the intensified French price stabilizatitin_PinimA)D Li c, Ts ,IED 'ID: - r:.1 iketrio , A-1, 77 7 / Date By: - TS Approved for Release: 2018/11/19 006749456 � e n Approved for Release: 2018/11/19 006749456 TOP ET GENERAL 31 AUG 143 1079 mil 1. Estimated effects of US aid for southwest China group--In response to a Department of State query regarding the mili- tary requirements and potentialities of the Nationalist group In southwest China headed by Li Tstmg-jen and Pal Chung- hsi, US Embassy Nanking has replied that the military capabi- lities of this group to organize and continue resistance against the Communists must be considered limited. The Embassy considers that the forces of Pat and Li, if given sufficient US assistance, could maintain themselves against superior Com- munist strength for a maximum period of one year, but that the Comnumis are capable of cutting off Pai's access to coastal ports, thus making an airlift the only channel of supply for these forces. The Embassy- points out that the considerations favor- ing a US plan to bolster this group include: (a) the southward sweep of Communism would be obstructed by continued resist- ance in southwest China, even if only for a year, which would give Southeast Asia more time to strengthen defenses; and (b) effective defense of the southwest would encourage potential resistance groups within the Communist areas of China and generally weaken Communist authority. The Embassy includes among unfavorable considerations that: (a) an openly hostile attitude by the US toward the Communists would unquestionably prevent the establishment of diplomatic relations with the new government of China for some years to come; (b) renewed mili- tary aid to the Nationalists would mean the rapid extinction of all American interests in Communist China; and (c) such action probably would strengthen rather than weaken Chinese Commu- nist ties with Moscow. The Embassy concludes that even by the most optimistic estimate of the benefits to be derived from maintaining Nationalist resistance for a year, the adverse effects would outweigh the advantages. �1-. S Document No. tg-I NO CHANGE in Class. 0 0 DECLASSIFI:D Class. C-A7.7�D TO: TS S T:71 L1c, 4 Apr 77 Auth: 2_% 77/1731 Date: BY: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP S � 2. Possible In Bulgarian with Tito--US Embassy Viiiihat Bulgaria will shortly break off diplomatic relations with Yugoslavia. The British minister in Sofia has observed that such a move would be undertaken as part of a general Cominform plan. (CIA Comment: CIA believes that although the present rapid deterioration of Cominform-Yugoslav relations makes such a Bulgarian move likely, it is probable that some Comin- form diplomatic representation with Yugoslavia would be re- tained in any event in order to provide the Kremlin with con- tinuing channels of intelligence and subversion within Yugoslavia.) 11; c - e0bP. -2 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SECRT� � 30 AUG 14 1078 GENERAL I. No evidence of imeendinj Soviet military activity against Tito.-- S1S In response to requests for evidence regarding Soviet plans to cirm take military action against Yugoslavia, US military attaches in 0 the Soviet orbit countries report that they have found no evidence of Soviet preparations to invade Yugoslavia in the near future. US military authorities in Germany consider that an intensified campaign of Soviet-inspired incidents on the Yugoslav borders will probably be motivated by a Soviet desire to sharpen the war of nerves against Tito and to enhance the chance of success- ful internal Yugoslav disturbances. The US military atiache in Moscow believes that only as a last resort will the Kremlin attempt to remove Tito by Soviet-Satellite military action of a guerrilla nature. (CIA Comment: CIA believes that although the USSR may intensify the current war of nerves against Tito, the Kremlin is unlikely to resort to direct military aggression against Yugoslavia in the near future.) USthinking on referrinav- e uKr mlin dis The Department of State has informed US Embassy London of Its belief that it would be unwise to force Tito's hand either by appealing the Tito-Kremlin problem to the UN or by urging Tito to lodge a complaint. The Department adds that recourse to the UN at this time would have the disadvantage for the Yugoslays of substantiating Soviet charges that Tito is bidding for support from the West; however, should Yugoslavia decide the situation warrants reference to the UN, the US would support appropriate UN action to safeguard Yugoslav independence. Regarding future Yugoslav-Soviet relations the Department expresses the view that if the Soviet campaign against Tito develops into an imminent threat to peace or acts of aggression, referral of the problem to the UN would be both logical and necessary. Document No. 0 c0 NO CHANCE in 'Class. r7 L-J Ei D2CIL:SI717.3 CiaL;s. C L'-;f:.:7) TO: TS S DITA MCDO , 4 Apr 77 Auth: DDA 7EG. 77/1763 Date: By: 401' Approved for Release: 2018/11/19 006749456 � Approved for Release: 2018/11/19 006749456 f TOP S 2. P leink_1411zUK-Frenclich toiaMban --The Department of State has instructed US Embassies Landon. and Paris to determine if the UK and France are willing to Join the US in another communication to Albania expressing the desire that the Albanian Government will not allow its territory to be used as a base for guerrilla attacks on Greece. The Department believes that if the guerrillas could be prevented from reor- ganizing and rearming in Albania and then returning to Greece, the whole problem of the imeriwilla war would be largely solved. The Department also expresses the opinion that, although pre- vious approaches to Albania have had little effect, another attempt is warranted by such changing circumstances as: (a) the isolation of Albania from direct contact with the Corn- inform; (b) the recent successes of the Greek armed forces; and (c) the possibility that the Cominform is becoming dis- couraged over the Greek situation. ' Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SEC GENERAL 1. Bevbes views on joint US-UK problems--US Ambassador Douglas transmits the views of British 1Foreign Secretary Bevin on subjects scheduled for discussion during the forthcoming US -UK conference in Washington. According to Douglas, Bevin feels that a concerted US-UK-French policy should be developed concerning the new West German Government, on domestic German matters, as well as external relations. Bevin reiterated his belief that it would be wise for the western powers to maintain trade relationships and western establishments in China in order to influence the Chinese Communists in favor of the West. Bevin implied that although he would not press for a prompt conclusion of the Austrian treaty if the US disagrees, he considers the quick conclusion of a treaty, even though re- latively unsatisfactory, to be more advantageous for the US and the UK than a return of the question to the Council of Foreign Ministers. 9 AUG 194S 1077 British Foreign Office views on Austrian treaty--US Embassy London reports that the ritish favor the conclusion of an Austrian treaty in the near future because they: (a) have little hope that the Foreign Ministers could arrange better terms; (b) believe that another opportunity for concluding a treaty may be a long way off; and (c) consider it important to get Soviet forces out of Austria before the Yugoslav situation comes to a head, thereby bolstering the Yugoslav will to resist Kremlin pressure. Meanwhile, US Commanding General Keyes in Austria reports the belief of Austrian Foreign Office circles that the USSR will soon have to deal with Tito one way or another and that the Kremlin is vacillating on the Austrian treaty while deciding what to do about Yugoslavia. --9---- Y------ Docuraent-�ESIt-...7.7 NO CHANGE in Class. 0 0 DECLASSIFIED Class. C":,�1,-TED TO: TS S ID DA!4.7...mo, 4 Apr 77 Auth: Date: 2y: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TO RET 2. Soviet militaryAlove against Tito still held unlikely--US Embassy 3elgde reiterates the view that the Kremlin would prefer to accomplish the liquidation of Tito by methods ostensibly internal rather than by the open use of external force. The Embassy believes that the two recent Soviet notes and the rumors of Soviet troop movements fit this pattern. Pointing out that the Kremlin may, however, regard Tito's elimination important enough to justify the risks in- volved in direct action, the Embassy declares that the only way to deal with this possibility is for the US to make un- mistakably clear to the Kremlin that it will not stand idly / by and see the sovereignty of any small country violated by the USSR. The Embassy believes that if it becomes appro- � palate to refer the Tito-Kremlin issue to the Security Council, the matter should be kept to the basic issue of � Soviet determination to replace the Tito regime with one subservient to the USSR and that in any event only Tugosla,via should take the issue before the UN. British views on referring Tito-Kremlin issue to SC -- According to US Embassy London, the British Foreign Office has concluded that,the Tito-Kremlin dispute has reached the point where all possibility of Soviet military intervention cannot be ruled out and where consideration of preventive measures can no longer be deferred. Concerning the possi- bility of referring the dispute to the Security Council, the Foreign Office believes that such action would have the merit of bringing the situation before world opinion and might not only deter Soviet action against Yugoslavia but would also be useful against the Soviet "peace offensive." The ritish Ambassador in Belgrade has reportedly been instructed to sound out Deputy Foreign Minister Bebler concerning the official Yugoslav view on the possibility of referring the dispute to the SC, either by Yugoslavia or some other country. Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TO THE AMERICAS OLIVIA: Bolivian Government asks US aid- Acting President ea Bolivia has: requesthd that fighter and bomber planes be made available from the US immediately; and (b) declared that the ',Telivian armed forces are insufficient to control the entire country in the present revolutionary situation. The US Embassy La Paz reports that violence has broken out between miners and troops in the Catavi area and that US personnel are being evacuated. (CIA Comment: If miners in .ther areas act in support of the National Revolutionary Mo ment (MNR) revolts, the olivian Government will have great difficulty in re-es,n,blish- ing order and its survival will be entirely depende t on the con- tinued loyalty of the army leaders.) - 3 - Approved for Release: 2018/11/19 006749456 CIA so cl-Fi/REsrt. 3.3(h)(2) - n Approved for Release: 2018/11/19 006749456 TOPS EUROPE ULGARIA: Clash re ortreek border�The US Legation in Sofia transmits a report, :hat "a major skirmish occurred D�FtWb'neitiluigarlan frontier 23 August between the Greek National Army and Bulgarftn troops supporthig guerrillas fleeing into Bulgaria. 43 ulgartan soldiers were killed a�o an mastermulavz number were wounded. (ClA Comment: Although the report of this skirmish has not yet been confirmed by Greek Army sources, incidkrts are likely to occur along the Greek- ulgarian border as the guerrilla command attempts to divert the attention of the Greek Army from the current major offensive along the Albanian border.) Document No. NO CHANGE in Class. 0 DECLASSIFIED Class. CHANGED TO: TS DDA Memo, 4 Apr 77 Auth: LTA 52G._77/1763 Date: �(16h1849 � Approved for Release: 2018/11/19 006749456 Approved for for Release: 2018/11/19 006749456 TOP ST GENERAL 1. Britb3h o e takin Berlin case off SC nda--US ttepresen.. ve oss a transm *�= a r h memorandum which opposes withdrawal of the Berlin question from the Security Council agenda at this time and expresses the view that the western powers are under no formal obligation to take such a step. Accord- ing to the memorandum, the UK Government believes it is too early to assume that the western powers will have no further trouble over Berlin. The British believe that Soviet intentions to force the western allies out of Berlin remain as firm as ever, notwithstanding the pres- ent friendly attitude of Soviet authorities there, and suggest that withdrawal of the case would imply western satisfaction with the present state of affairs in Berlin. Document No. 010 -40 MUU 104J 1075 NO CHANGE in Class. El DECLASSIFT= Class. C-iAYCZD TO: TS DA Mesio, 4 Ar 77 Auth: DTA tEC. 77,1731 Date: By:1110 Approved for Release: 2018/11/19 006749456 1, I Approved for Release: 2018/11/19 006749456 TOP GENERAL s, 1. Tito's reply to USSR held ieldin �--US Embassy ugus reply of the Yugo- slav_ Government to the USSR as "dignified and unyield- ing" on the real substance of the Yugoslav-Soviet contro- versy. The Embassy considers that the reply cannot be called conciliatory because it uncompromisingly restates Yugoslav sovereignty and declares concerning the treat- ment of Soviet citizens that such citizens may leave Yugo- slavia if they wish. The Embassy regards the intent of the Soviet note to be an effort to intensify nervous pressure on the Tito Government and particularly to suggest to the western powers that Tito is a poor economic risk. The Embassy expects this campaign to continue and indicates that Yugoslav officials believe their reply will gain them time but not a relaxation of tha pressure. 2. UK considers wa of getting Tito-Kremlin issue before SC-- esy on reports that the British Office Is giving serious consideration to the possibility of getting the Yugoslav-Soviet controversy before the UN Security Council. The Embassy indicates that the Foreign Office, which would hive by such action to thwart possible Soviet intentions to take decisive action against Tito, believes the preferable course would be for Yugoslavia to take the issue to the SC. (CIA Comment: CIA estimates that Tito, fearful that an appeal to the Security Council at this time would be an ad- mission of weakness which might have bad repercussions intetnallq;mould consider such a move premature. In any event, Tito would probably prefer to take the initiative him- self in requesting SC action because he has already been scouted by the Kremlin of being a tool of the West.) 0 Document No. NO CHA=2 in C'S. El DECIAS:I:TIED Class. CA-ZED TO: TS DDA Memo, 4 Apr 77 Auth: DDA REG. 77 1763 Date: 25 AUG1949 1074 5-s Approved for Release: 2018/11/19 006749456 c n � Approved for Release: 2018/11/19 006749456 .TOP ET GENERAL Fd �St r"."-.1 1. US views on_Au_grian_11:_erms --The Department of Stag-has ormirresentative Reber in London that the US does not share the British view concerning the desirability of promptly accepting Soviet terms on the German assets problem in order to reach agreement on the Austrian treaty in the nearfuture. The Department considers the substance of the treaty and. its long-range effect to be more important than its prompt completion and expresses the view that acceptance of the present Soviet terms would greatly increase the possibilities of future Soviet pressure, intensify Austria's need for direct aid, and make US ratification i) the resulting treaty exceed- ingly difficult. The Department suggests that a western . diplomatic approach to the USSR might clarify issues for fuizre settlement, possibly by the Foreign Ministers. � � oole Document No. Otis 1073 NO CHANGE in Class. 0 DECLASSIFIED Clas. C=GED TO: TS S CI 0 DTA Memo, 4 Ap:r 77 Auth! .1%-:' -.7,G, 77 '1::---7, - Al, Approved for Release: 2018/11/19 006749456 137: n Approved for Release: 2018/11/19 006749456 TOP ET GENERAL 1. US proposes new air policy Im1!�_linc Yugoslavia--The Department - � srLondon to inform the UK Government that the US proposes, in view of the breach between Tito and the Kremlin and evidence indicating that Soviet control of Yugoslav air operations has been eliminated, to exempt Yugoslavia from the US-UK restrictive air policy toward the Satellites. The Depart- ment indicates that the US proposes to regard favorably the export to Yugoslavia of aviation equipment and the ex- change of reciprocal air rights between Yugoslavia and nations friendly to the western powers. The Department advises Embassy London that although the US perceives no danger to the interests of the US in dealing with Yugo- slavia on such a basis, it does not desire that friendly states pursue such a policy unless they derive positive benefits from the exchange. 2. Embas Be de's views on Soviet note to Tito--US ssy e commen on e ugust Soviet note to Yugoslavia, points out that the appeal to "healthy elements' in Yugoslavia to revolt against Tito indicates that the Kremlin either: (a) misjudges the Yugoslav character and the internal situation; or (b) estimates that Cominform agents have built a network which justifies a reasonable expectation of a successful revolt. The Embassy Indicates that a re-examination of the evidence has not altered its contrary estimate concerning such a network. The Em- bassy suggests that the note was timed so as to profit by this 'critical moment in Yugoslavia's economic situation and specifi- cally to coincide with the arrival in Belgrade of a survey mission from the International Bank. The Embassy estimates that the Yugoslav Government will use restraint and do nothing to aggravate the situation but will not back down. 23 AUG 1949 1072 - 1 - Document No. NO CHANCT, in ':_ass. 0 D2C_AZ:171 D Class. C:1 :C--) TO: TS S mcmo, 4 Apr 77 Auth: r;(4. 77/1763 Date :04 BY: e/A-s Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP FtET 3. Austrian viewtreaty Foreign r Gruber s expressedo Representative Reber in London his view that despite Austria's strong desire for a treaty without delay, a better settlement might be obtained if the major economic issues were re- served for consideration by the Foreign Ministers at the New York meeting of the General Assembly. Gruber is convinced that the USSR will not permit final agreement by the deputies in London but stresses the importance of clearing up minor questions prior to the 1 September deadline for drafting the treaty. -2 Approved for Release: 2018/11/19 006749456 n Approved for Release: 2018/11/19 006749456 TO CRET GENERAL 2 2 AUG 1949 i 1. Soviet military move against Tito held unlikely�US Ambas- sador Kirk reports that foreign diplomatic observers in Moscow continue to discount the probability of direct Soviet action against Tito at this time despite the ominous tone of the latest Soviet note to Yugoslavia. According to Kirk, the US Embassy is in general agreement with the view of most observers that the Kremlin is counting on the liquidation of Tito as a consequence of the serious Yugoslav economic situ- ation and a Soviet "war of nerves" accompanied by harassing measures short of hostilities. US Embassy Belgrade reports, concerning current rumors of Soviet troop movements along the Yuroslav border, that although the Yugoslav Government is believed fully aware of such rumors, there is no evidence that new security measures are being taken. (CIA Comment: CIA agrees that overt Soviet military action against Yugoslavia remains doubtful. CIA considers the rumors from Hungary and Rumania regarding Soviet troops movements along the Yugoslav border to be a part of the Soviet "war of nerves' rather than an indication of imminent military action by the USSR.) 1071 2. British policy on Italian colonies�The British Foreign Office has informed US Embassy London that as a basis for settling the Italian colonies problem, the UK now favors: (a) independ- ence for Libya within two to five years, with interim administra- tion by present occupying powers; (b) incorporation into Ethiopia of all Eritrea except the western province which would go to the Sudan; and (c) either Italian trusteeship over Somaliland or, if this is not acceptable to the UN General Assembly, postpone- ment el the question to the 1950 GA session. According to the 1 Document No. 0(43 8/A-$ C�.9-5 NO c:::: la a3s. 0 0 D:C21� :7 D Class. C : TO: TS S DA Mcmo, 4 Apr 77 Auth: DD EG. 77/1763 Date: By: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP ET Foreign Office, the UK could not accept trusteeship over Somaliland at this time because of possible repercussions on British-Italian relations. The UK also opposes an inde- pendent Eritrea on the grounds that it would be a weak state and open to undesirable influences. The UK believes that the question of unifying Cyrenaica and Tripolitania should be decided by the Libyans themselves after their independence has been granted and that meanwhile nothing should be done � to prejudice eventual unification. 3. British and French views on future handlin_g of Austrian talks-- US Representative Reber in London expresses the view that the Soviet deputy at the Austrian treaty negotiations is clearly not authorized to accept at this time any compromise on major outstanding issues but that the USSR expects further discussions at the ministerial level later. Reber indicates that the British, who favor the conclusion of a treaty by the 1 September dead- line, believe this can be accomplished by accepting the Soviet terms on the German assets question. Reber explains that both the French and British wish to avoid a meeting of the Council of Foreign Ministers before settlement of the Austrian treaty because they fear that the USSR might insist upon dis- cussing Germany as well as Austria. 4. US views on Southeast Asia unio --In reply to the request of Philippine UN Representative Romulo for active US support of a non-military Southeast Asia union, the Department of State has reiterated that the US will view sympathetically any efforts by the peoples of Asia to cooperate in pursuit of common economic and political objectives but will avoid taking any steps at this tine which could be misinterpreted as US maneuver- ing behind the scenes. The Department believes that the forma- tion of a viable Asian association can come about only through the discovery of common purposes and mutual needs by the Asian nations themselves. � - 2 - Approved for Release: 2018/11/19 006749456 em-s d/I4 foAF � Approved for Release: 2018/11/19 006749456 TOP S211i.ET 3.3(h)(2) EUROPE 5. UNITED KINGDOM: Pound devaluation unlikely before election-- French Foreign Minister Schuman has told US officials In Paris that he does not expect. the British to devalue the pound before holding a general election and that Churchill has indicated he expects an election in October. . (CIA Comment: CIA believes that there is increasing reason to expect a British general election in October or Novem- ber. *However, Prime Minister Attlee will probably not make a decision concerning the election until after the September eco- nomic and financial conference in Washington.) NEAR EAST-AFRICA 6. SYRIA: Skirmishes ro-Zaim boons reoorted7/ (a) the new Syrian Government's forces have been involved in several mincyt skirmishes with troops loyal to the late President Zairil and (b) Kurdish elements have sworn vengeance for the execution of Prime Minister Barazi. US Legation Damascus comments that these reports, the accuracy of which cannot be confirmed at present, reflect the uneasy atmosphere now prevailing in Syria. � ( it 0 f.0 - 3 - Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP GENERAL 1. British favor acceptance of Soviet terms for Austria-- US Representative Reber in London, in replying to Department of State instructions to bring the Austrian treaty discussions to a close without making further concessionE to Soviet demands, reports that the British Foreign Office wants to conclude an Austrian treaty at this time even though it means further concessions to the USSR. According to Reber, the British feel that the importance of completing a treaty by approximately 1 September outweighs the disadva.ntages of accepting present Soviet terms which they believe do not create sufficient hardship to warrant the risk of indefinite post- ponement of the Austrian treaty. British officials con- sider that western failure to reach agreement with the USSR now would have a depressing effect internationally whereas an Austrtan agreement would bring real im- provement and would benefit Austria by freeing the � country from occupation costs and Soviet exploitation of eastern Austria. Reber comments that in reaching this decision the British have certainly been influenced by Austrian pressure for an early agreement. - Document No. 2U .AUG 1943 ' 1070 en?.- S NO C_IA-1C3 in ( fl D=CLASSI111 Class. C lA TO: TS S Tr_mo, 4 Apr 77 Auth: DDA ir G. 7711763 Date: By:JI Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP ET GENERAL 1. US moves to end Austrian tt_iea_ discussions�The Depart- ment of State has instruct-a-TS-Representative Reber in London to bring the Austrian treaty negotiations to a close as near the 1 September deadline as possible, making an effort meanwhile to obtain the maximum agreement. The Department warns that further western concessions are undesirable and that the deputies must not arrive at fisal agreement on points in which the Soviet demands exceed the terms of the Paris agreement and adversely affect Austria or the western occupation powers. The Depart- ment expresses the view that the outstanding issues can be discussed in Moscow by the western ambassadors and the Soviet foreign miraister. The Department advises Reber to seek British and French concurrence on future procedure concerning the treaty. 2. THE AMERICAS CHILE: General strike may cause government fall President Gonzalez Melts s position may become untenable if a general strike culminates the rioting of the past several days. the President might then retire in favor of a junta, probably including the present Minister of National Defense and the Minister of Interior. US Ambassador Bowers in Santiago expresses the view that it is too early to determine whether the present strikes will create a trend toward a general strike. 19 AUG 1949 1069 (CIA Comment: The weakness of Gonzalez' political position is increased by his dependence on a coalition which has already shown signs of disintegration in. the face of the worsening economic situation. Although a junta representing the armed forces could probably control any efforts at uprisings, it could not improve the basically bad situation.) Document No. 0 Vi NO C:1_1_:ME in Class. 0 0 D DI:C=:A17.17D Clas. c.:!... 1D TO: TS S .7:1 D7.11 Memo, 4 Aur 77 Auth: .DDA ,772. Z7/1783 Date : Pit) i i By; Or* Approved for Release: 2018/11/19 006749456 Approved for for Release: 2018/11/19 006749456 TOP CRET GENERAL 1. Soviet Intentions concEirnrito--US Ambassador Kirk f�m1t the vlewtIiTe is shared by his diplomatic colleagues in Moscow, that the USSR does not plan to sever Soviet-Yugoslav relations at this time but may be seeking to goad Tito into making this step. Kirk suggests that the vehemence of recent Soviet propaganda claiming that Tito, not the USSR, abandoned Yugoslav claims on Austria, reveals Soviet embarrassment over the Paris agreement. Kirk indicates that some diplomatic personnel in Moscow believe that the Kremlin has a definite plan for Tito's liquidation but that the US Embassy is not inclined to accept this theory. The Embassy believes the Kremlin may estimate that a combination of subversive guerrilla activities and Yugoslav economic difficulties will bring about Tito's fall at an early date. (CIA Comment: CIA agrees in general with these views but is dubious that the Kremlin is trying to goad Tito into breaking off all diplomatic relations, which the USS probably continues to find useful.) 18 AUG1349 1068 2. Increased Dutch concern over Re blican "infiltration" � US Representative Dow in Batavia reports at Dutc concern over a Republican "concerted plan" for infiltration of Dutch- held areas of East and Central Java has increased within the past few days. The Dutch commander in Indonesia states that his troops could not be restrained much longer in the face of Republican "provocation." (CIA Comment: CIA believes that despite the sincere efforts of Republican leaders to implement the cease-fire agreement, the activities of the numerous Indonesian fighting units�including Communist and dissident forces as well as Republican�may provide an excuse for Dutch military action.) - 1 - Document No. 00 NO CHANCE LI C_a3s. ci DECIAT7:- TO: TS --I "cr:o, 4 Apr 77 Auth; G. 77/1763 Date: By: 110 d/A - S IA - s Approved for Release: 2018/11/19 006749456 Approved for Release: 2018%11/19 006749456 TO CRET 3. China to place Soviet treatyytolations before GA--US Ambassador Austin reports�from New York that the Chinese UN representative has been instructed to place Soviet violations of the 1945 Sino-Soviet treaty on the agenda of the forthcoming General Assembly and has asked whether the US would actively support China's case. According to the Chinese representative, the Nationalist Government will delay filing the item until the opening of the GA in order to avoid tipping off the USSR and the Chinese Communists. (CIA Comment: CIA believes that the long.con- templated Chinese proposal has been hastened by the US white paper and is designed to exert pressure on the US, to support the Nationalist Government in the UN.) Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP S.CT GENERAL j 7 AUG 1949 1067 1. Stalin-Kirk interview--US Ambassador Kirk in Moscow has re-ported that in the 15 August interview Stalin declared the Soviet Union has no intention of failing to fulfill its obligations under the Lend-Lease Agreement, but "would not be dis- criminated against" in comparison with other governments with Lend-Lease obligations. Stalin indicated that the USSR may have counter claims which must be considered; he added that if current negotiations in Washington bog down, he is prepared to intervene. Kirk further reports that neither Stalin nor Vyshinsky challenged his reference to Soviet jamming of the Voice of America as an established fact. Stalin professed slight information on the subject and said he would ask Foreign Minister Vyshinsky to deal with this problem. Kirk indicates that the tone of the interview was cordial throughout and that toward the close of the interview Stalin became more expansive, concluding with an offer to receive irk "without formality" at any time when he may consider it desirable to raise specific matters. 2 Dutch concerned oler re. irts of Indonesian mil acti According to U Representat ve oclwan e, e lands officials have expressed their concern over reports of Indonesian military activities after the effective date of cease- fire and have warned that continued infiltration will undoubtedly precipitate armed clashes. Indonesian Republican Premier Hatta has informed Cochran he is convinced the alleged infiltra- tion was not ordered by the top Republican army command and has urged Republican President Soekarno to avoid any moves In contravention of the cease-fire orders. Cochran has counseled both sides not to lose their heads, expressing the view that the next few days may be critical for the prospects of the Hague Round Table Conference. Document No. 0 51 S-s NO CHANGE in Class. 0 Ij DECLASSIFI7D . Clas. C-TA1C-7:1 TO: TS S DA 4 Apr 77 Auth:, 77 1761 Datel By; Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 At.0 TOP SEC GENERAL 1. Stalin-Kirk interview--In a preliminary report of his ugtn"="ira"----tivei r.sa on with Stalin, US Ambassador Kirk In Moscow indicates that during a courteous interview lasting 35 minutes the only substantive matters discussed were Lend-Lease and the Voice of America. Stalin asserted that the USSR would live up to its responsibilities under Lend-Lease and expressed the desire, regarding VOA, that Kirk take up the matter with Foreign Minister Vishinsky. FAR EAST I ti AUG W4 1066 2. PHILIPPINES: US "sup 'ore' for Southeast Asia union ur -d-- US Embassy Man '11 a report rom ssa or Romulo, Philippine representative to the UN, that he has succeeded in obtaining the support of all Philippine political parties for calling a conference in Baguio to organize a Scuth east Asia union. Romulo adds that he is now "sounding out" the governments of India, Australia, New Zealand, Ceylon, urma, Pakistan and Siam concerning this proposal. ROM:110 requests authorization from the Department of State to indicate to these countries that the US "regards with sympathy the efforts of the free countries of Southeast Asia to cooperate more closely with one another in promoting their common interests" and suggests that agreement to the proposal would be facilitated if the envoys of the interested countries in Washington were given some direct indication of such a US attitude. (CIA Comment: Romulo's proposal, designed to achieve economic, political and cultural cooperation in South- east Asia, represents a limited and regional alternative to the Pacific Union proposal which was advemeed during the recent Quirino-Chlang-Rhee discussions and which anticipated mutual defense commitments.) Document Nc. 0 $1 � 5 � T NO 1:71-IIIN:E � It: T3 S F.�A MO :20, 4 Apr 77. Auth: 77/17E33 Date: 13: -OA> Approved for Release: 2018/11/19 006749456 efilF - 4,1 Approved for Release: 2018/11/19 006749456 TOP RET GENERAL 1. US advises restraint in Middle East--The Department of in s ons various Middle East capitals to emphasize to the governments .concerned the desirability of exercising restraint following the Syrian coup d'etat. (CIA Comment: The latest Syrian coup, the second in four months, is symptomatic of the current instability in the Arab world. Present reports, which are still meager, Indicate that the coup was an Internal affair engineered by dissatisfied officers of the Syrian Army. There is as yet no concrete evidence that elements in neighboring countries were involved in the coup although the governments of both Iraq and Jordan have frequently and openly expressed antagonism toward Zaim's regime. Even if such elements were not involved in Zaim's overthrow, these countries may feel that current dislocations in Syria present an opportunity for realizing Hashimite expansionist ambitions at the expense et Syria. The possibility also exists that other would-be "saviors" in the area may be inspired to imitate the Syrian coup as a direct method of obtaining governmental control. Pending the formation of a new government, the status of international commitments entered into by the Zaim Govern- ment-particularly the Trans-Arabian Pipeline Convention and the Syrian-Israeli Armistice--remains undetermined.) 2. Norway seeks surs excht:,e nati _ons--US �adBay in (51 repoiFtillial-Niiiw-W,-ffiiiok-kig the principle of mutual aid contained in the Atlantic Pact, will soon submit to the Western Union nations a proposal for a limited exchange of surplus war materials. Norway's most urgent need, according to Bay, is for certain types of ammuni- tion which the Norwegians are seeking from the Western Union Documont No, 5 7 0 AUG 1065 /R $-0e1 $ -out 5- rs NO CHANGE in Class. 0 0 D7CLASSIFED Cii.A:7-D T..): TS D7A 77.7.:1?, 4 Apr 77 Auth: D'..7)1 77/17675 Byi 1111 Date: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 C06749456 TOP nations. Bay indicates that in return Norway will offer Certain equipment left by the Germans. The Norwegian Government expresses the view that although the exchange Of military equipment will eventually be taken up by the North Atlantic pact supply organization, a few exchanges Should be undertaken as quickly as possible. NEAR EAST-AFRICA IRAN: Shah's concern overylamted MAP aid--US Ambas- sador Wiley reports that the Shah is "extremely upset" over the proposed US military aid program for Iran and has spoken of cancelling his projected visit to the US. The Ambassador urgently recommends that the possibility of increasing bran's share of aid under the military aid program be considered because he believes the present aid program for Iran will both: (a) fail to maintain Iranian confidence in US support: and (b) strengthen suspicion of Iranian leaders that a "secret US policy" exists designed to "sacrifice Iran In event of a crisis." The Ambassador points out that although there is presently some doubt regarding the will and ability of the Iranian Army to fight, increased US military aid and con- tinued guidance might lead to the development of a military establishment capable of substantially contributing to US security interests in the Middle East. Approved for Release: 2018/11/i - Approved for Release: 2018/1/19 006749456 TOP CRET GENERAL 13 AMP 1949 1064 1. British suggest more attention to Soviet Zone --According m assa or 'bugle in on on, h ritish Foreign Office officials believe that, with the heat off in Berlin, the western powers should take a more active interest in the affairs of the Soviet Zone of Germany in order to: (a) undermine the influence of the pro-Soviet Germans; (b) encourage the pro-western Germans; and (c) worry the USSR. Douglas believes that the Britten intend primarily psychological measures, which involve cultural exchanges, encouragment to Soviet Zone Germans to visit the "show window" west sectors of Berlin, and increased broadcasts � to the Soviet .Zone on the democratic way of life in western Germany. Douglas indicates that the proposal will be pre- sented to the British High Commissioner for Germany and to Foreign Secretary Bevin, upon whose approval it will be taken up with France and the US. (CIA Comment: CIA believes that the limited psycho- logical measures outlined might meet success in (b) and (c) above, but doubts that control by pro-Soviet Germans would be altered appreciably as long as Soviet forces remain. CIA also believes that in its present condition western Berlin could not serve as a "show window" with which to impress Soviet Zone Germans.) Document No. 310 NO C-.1ANCE in Class. 0 r] D:O"JASSIFI:D Class. CiANG:D TO: TS S DDA Memo, 4 Apr 77 Auth: DDA RG. 77/1763 Date: # By: 0 le* Approved for Release: 2018/11/19 006749456 3u Approved for Release: 2018/11/19 006749456 TOP SEC NEAR EAST-AFR1CA 1. PALESTINE: :11p considers :ra.eli refu e offer unsatisfac The Department : .. orme � raessa � or In Washington that the US does not consider the Israeli offer to repatriate 100,000 Arab refugees a satisfactory basis for contri- buting to.an ultimate solution of the refugee problem. Although the US remains unwilling to assume responsibility for naming a final figure, the Department indicated to the Ambassador that 230,000 refugees, as suggested for repatriation under the Gaza strip proposal, would be considered The minimum number acceptable. z IJ-,,J 1063 FAR EAST 2. CHINA: Canton expected to fall in immediate fubire--US Counselor Clark in Canton indicates that the military situation is deteriorating so rapidly that the Embassy may be compelled to leave Canton before 15 August. Clark requests that a decision be expedited on his recent recom- mendation that the Canton consulate be closed, that all consular and diplomatic personnel be withdrawn from Communist-occupied areas, and that mission, business, and professional groups be advised to withdraw their personnel from China. Document No. 6- rs NO CHANGE in Class. 0 0 DECLASSIFIED Class. CHANGED TO: TS S DDA Memo, 4 Anr. 77 Auth: DIA MC. 77/1707) Date:( Zy: at) Approved for Release: 2018/11/19 006749456 AUC Approved for Release: 2018/11/19 006749456 1949 TOP 1062 GENERAL 1 US views on erlin unification�The Department of State has au orize olitical Adviser in Berlin to inform leaders of the western sector Berlin city gov- ernment that the US has no intention of telling the Germans how to treat overtures from Soviet sector representatives. The Department, adhering to the position that the western city government is the only legal regime in Berlin, 'cannot encourage any political rapprochement with the so-called east sector government which would have the effect of weakening the legal or moral position of the western gov- ernment. The Department, while constantly seeking a basis for the reunification of Berlin, can see no other approach than new, free elections, and the elimination of the east sector puppet government. 2. Dutch ECA Commissioner will not visit US --US Representa- in EFTEFue Mi-b�Toc rts u ch ECA Com- missioner Hirschfeld will not come to the US now to discuss the economic policies to be adopted by the Netherlands in the forthcoming Hague round table conference on Indonesia. Although agreeing to cancel Hirschfeld's visit, leading Dutch � officials stressed their concern over the economic problems involved in an Indonesian settlement. Cochran informed the � Dutch Foreign Office that when the propitious mament arrives, he will be happy to recommend the revival of ECA aid to Indonesia and help plan other measures of financial support. 3 Document No. 11.) NO CHANGE in Class. 0 �0 DECLASSIFIED Class. CHANCED TO: TS S DDA Memo, 4 Apr 77 Auth: DD PG. 77 173 Date: Approved for Release: 2018/11/19 006749456 S - 5 - rl Approved for Release: 2018/11/19 006749456 TO94iCRET GENERAL 1. Cochran opposes oses US-Dutch economic _consultation--US Representative c UT'rhe-tll-g�ue-keiiommends that Dutch ECA Commissioner Hirschfeld not visit Washington to discuss proposed Netherlands economic and financial policy at the forthcoming Hague round table conference on Indonesia. Cochran points out that such a move would have "disastrous" consequences, because the discushions could not be kept secret and would be interpreted by the Indo- nesians as US support of the Dutch. Cochran believes that such discussions would lead the Indonesians to feel the US had established a policy which Cochran as a US official would have to follow, thus impairing his usefulness as a completely objective UN representative at the Hague conference. U AUG 1949 1061 2. Ra vievin division oAaki - -The Department of State has instructed-USes in the ECA nations that, In response to pleas for US aid in warding off proposed reductions in ECA allocations, they should point out that: (a) continued emphasis on European initiative and responsi- bility for the success of the European recovery program is of major importance: (b) the recovery program has been based on the principle that the participants themselves must make the initial recommendations for division of US aid: and (c) the success of the program will be prejudiced if individual countries are allowed to bypass the Organization for Euro- pean Economic Cooperation (OEEC) or obtain special treat- ment through representations directly to the US. The Depart- ment adds that the current reductions are in line with the premise that US aid would be gradually reduced and that the US will follow OEEC recommendations to the fullest possible extent. 033 s - s e /14 .reOlIF f;(5.1CC-IA:-.21f:m nJ a:d7LAB17:7IED clay= TO: 2S a mc=0, 4 Apr IT Auth: D 1 ,:c. 1 es Approved for Release: 2018/11/19 006749456 09 Approved for Release: 2018/11/19 006749456 atm 1949 ToPser 1060 GENERAL 1. Berlin ci officials al. oached Communists�Accord- er nterlein several Socialist officials in the city government have been approached by persons presumably in contact with the Com- munist-run Socialist Unity Party (SED). Gantenbein re that some of those approached fear the overtures may lea to a proposal to unite the Soviet and western sector gove meats under the leadership of the SED. Gantenbein reports that the western officials have thus far rebuffed the overtures but fear that they may have the tacit approval of the US. Gantenbein recommends that the US reassure the Berlin city officials by telling them that the US will not encourage any political rapprochement which is opposed by the western sector government and that it is up to the Germans to treat Communist overtures as they see fit. � (CIA Comment: CIA believes that the attitude of the west Berlin officials reflects their growing fear that the US is losing both the political initiative in Berlin and control over the deteriorating economic situation.) : 30 Document No. 03 NO CHANGE in. Class.- 0 0 DECLASSIFIED Class. CHANGED TO: TS DDA Memo, 4 Apr 77 Auth: _pp FG. 77 1763 Date: By: Approved for Release: 2018/11/19 006749456 S - Ts Approved for Release: 2018/11/19 006749456 RET GENERAL 1. Views on Soviet policy regarding Berlin--US Embassy Moscow expresses its belief that the Kremlin remains uninterested in restoring a unified democratic govern- ment in Berlin and intends to continue its Berlin offen- sive designed to discredit and undermine the position of the western powers. The Embassy also expects further harassment of western communications to Berlin, particu- larly next winter if the airlift is deactivated. Embassy Moscow therefore fears that the western powers may play into the Kremlin's hands if they fail to maintain the west- ern Berlin economy adequately and insist on applying the same standards of financial self-sufficiency to western Berlin as to the Western Zones. o MUb Idtit 1059 4/14- 5 2.tLa1ilid AgAtLialnrele ECA cup--Accord- .5- rs Ing to US Embassy Rome, Italian Premier De Gasperi has directed a personal appeal to Secretary Acheson regarding the proposed reduction in the 1949-50 ECA allocation to Italy. The Embassy transmits the view of Italian officials that the extreme danger point would be reached for Italy if its allocation fell below $470 million and that the govern- ment would be forced to resign. De Gasperi further believes that disregard of bay's minimum requirements under ECA would greatly strengthen the Communists in their campaign against the government, ECA, and the Atlantic Pact. Meanwhile, US Legation Vienna views with grave con- cern the possibility that Austria's ECA allocation may be re- duced to $66 million. 'rhe Legation expresses the view that such a cut would threaten existing cooperation between the Austrian political parties and impair the prospects of saving Austr* from Communism and Soviet domination. - 1 - Document No.. 0 154 NO CHANGE in Class. 0 E] DECLASSIFIED Class. CHANGED TO: TS DDA Memo, 4 Apr 77 Auth: il DDjr, 77/9.763 1 4 ate:( 14 By: 15 rr Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TO CRET (CIA Comment: CIA believes tt the Italian Gov- ernment is exaggerating the economic consequences of the proposed ECA cut, but that any substantial reduction would weaken the stability of the government and cause a shift to the right in its composition. CIA concurs in Legation Vienna's analysis of the effects of the proposed reduction In the ECA allocation to Austria and also believes such a cut would: (a) jeopardize Socialist control of labor; (b) precipitate panic conditions; and (c) make it virtually impossible for Austria to fulfill its treaty obligations.) 3. US advises agrainst Greek milita action in Albania--The Departmmfd-Sti�atiTailnkirrit U i''--"Fir�rgins of the receipt of recent reports indicating that the Greeks may still be planning military intervention in Albania. The Department has instructed the Embassy "to make un- mistakably clear once again" to the Greek authorities that the US is opposed to any rash military action, such as attempted encirclement of the guerrillas through Albanian territory or mass pursuit of the guerrillas bito Albania. (CIA. Comment: As the Greek Army's summer offensive develops, guerrilla violations of the frontier, such as artillery fire and attempted counteroffensives from within Albania, will probably increase. CIA believes that under these circumstances the Greek Army may take matters into its own hands and dispatch units across the border in order to neutralize the most immediate sources of irritation.) - 2 - Approved for Release: 2018/11/19 006749456 n Approved for Release: 2018/11/19 006749456 TOPS EUROPE I. BELGIUM: Spaak pessimistic over political situation-- US Charge MillardreporTIRETWaill'e takes a very pessimistic view of the Belgian internal political situation and believes that for a year or more a number of "weak governments" will be formed and will fall every few months. Spaak referred to "little men" in Belgian politics who lack the stamina and courage for real statecraft. Millard believes that Spook desires to "get out from under the impending mess" in Belgium and hopes that after much disorder, uncertainty, and incom- petence in Belgian politics ,he will be able to return re- latively untarnished as the one really big matY. FAR EAST 2. CHINA: Communist problems in Sittlai--US Consul General Shanghai has learne�aTh-Fi.e .ble source that at recent meetings of the Shanghai Planning Committee Communist officials indulged in heated controversial dis- cussion over their inability to solve Shanghai's critical economic situation. The Consul General believes this report substantiates other evidence that the disastrous Communist position in Shanghai and its hinterland is pannicking the Communist leaders and straining their tempers and solidarity. The Consul General describes the atmosphere as one of 'great confusion and desperation" and believes the Communist leaders in Shanghai are in- dulging in increasing recriminations among themselves and with officials in Peiping. 1058 0 56 Document No. NO CHANGE in Class. ri LJ ED DECLASSIFI:D. Class. C-1,-.7.7) TO: TS 4 Apr 77 Aulth: D. JJatel 1374 Approved for Release: 2018/11/19 006749456 . Approved for Release: 2018/11/19 006749456 TOP 81ET Fear of Communist Re risal--US Charm Nanking reports that "'there is consi e le speculation'? among members of the diplomatic corps concerning the possibility of new Communist transgressions against foreign officials and nationals following the departure of US Ambassador Stuart. The Charge points out that Stuart's mere presence In Nanking "undoubtedly extended a certain mantle of pro- tection to all foreigners" in the city. The Charge believes the trend of developments points toward an increase in such Communist persecutions in blanking as radio censorship, arbitary arrests, exorbitant labor demands and arbitaxy taxation maneuvers. - 2 - Approved for Release: 2018/11/19 006749456 rl Approved for Release: 2018/11/19 006749456 . TOPS GENERAL 1 S - anxious to be OEEC director general--Former :e � n rem er - s ca ea co Charge Millard in Brussels that he is anxious to accept a post as director general of the Organization for European Economic Cooperation (OEEC). Spaak said he would rather have the OEEC post than resume his dates as Belgian Foreign Minister, because as Foreign Minister he would be dragged into numerous internal political squabbles with which he has no sym It, thy. Pointing out that the OEEC has made no progress, particularly in the Important matters of foreign investments, tariff reduc- tion, and the establishment of healthy currencies, Spaak believes a good case ea be made for creating the post of director general and that he could do useful work in this post. 5 AUG 1949 1057 Document No. 027 NO CHAFCE in C a.s. 0 DECLA-_::: D Class. C , ED T3: TS S 4 Ar 77 Auth: DDA 'C. 77/1763 By:Ok3 Date: Approved for Release: 2018/11/19 006749456 r- rt Approved for Release: 2018/11/19 006749456 GENERAL 4 AUG 1M 1. French views on Italian colonies--US Ambassador Bruce in Paris, irgiTam7MCIng n�t"1h Prench attitude toward the Italian colonies question, expresses his belief that it is "illusory" to hope for French support in the General Assembly of any formula granting Libya independence within a two or three year pealed. Bruce points out that the French, fearing repercussions in French North Africa: (a) strongly oppose a united Libya u d.er the Senussi� whose religious influence they fear: (b) are only slightly less con- cerned over early independence for Tripolitania; and (c) might "resign" themselves to Cyrenaican independence If Tripolitania could serve as an insulating cushion between Cyrenalca and Tunisia. Bruce stresses the adva.ninges of attempting to delay independence, at least for Tripe/Mania, in return for colcrete French assurances to use the time thus gained In preparing French North Africa for "something approach- ing dominion status," According to Bruce, such a proposal, by permitting a "parallel evolution" of the various compo- nents of North Africa, would provide the best means of solv- ing the area's basic problem of nationalism, Bruce points out, however, that it would be useless to approa:nh the French , with anything less than a te -year transition period. Document No. oa 1056 5 - TS MN NO C?..IINGE in Casn Ell D:C.-:ASSIFIET,' F. 3 C:IANGED T3: TS .DDA Memo, 4 Apr 77 Auth: DDA RE'n 77/1763 Date: 8Y k3 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SE GENERAL 1. US favors remo:Berlin ease from Sc_a_micLa--The !Department of State has instructed the US delegation to the UN to seek British and French agreement to early withdrawal of the Berlin case from the Security Council agenda. Citing a virtual western commitment to the USSR last May to strike the item from the SC agenda once the blockade 'efid been lifted, the Department believes that such action would be helpful as an expression of three- power assumption that Soviet agreement to end the block- ade had been made in good faith and will be carried out. The Department co chades that if the USSR reimposes the blockade, the western powers could bring the matter before the SC a second time with greater political effect than if they merely revived a dormant item. 2. Imminent Rhee-Chiang talks on Pacific pact--Commenting on the imminent arrival of Chiang Kai-shek in Korea, Presi- dent Rhee informed US Ambassador Muccio in Seoul of his belief that a broad grouping of Asian nations, established primarily to oppose Communist aggression, could not fail to win eventual US support. Rhee explained, however, that he would not commit himself to a narrow pact with the Philippines and Nationalist China and would exercise care in his conversatons with Chiang. Mucci� believes that the Rhee-Chiang talks probably will not extend beyond the exploratory stage. THE ARO ICAS 3. BOLIVIA: Union of anti-government factions- The two militant political parties in :olivia (the nationalist MNR and the leftist PIR) - I- Document No. 027 1 j194 1055 sjs sirs "n13 NO CHANGE in Class. 0 DECLASSIFIED Clas2. C11..?7:D TO: TS S 127A M:Ymo, 4 Apr 77 Auth: r :G. 77 176S Date:( Approved for Release: 2018/11/19 006749456 3.3(h)(2) Approved for Release: 2018/11/19 006749456 TOP have signed a formal agreement to join forces and are planning to instigate nation-wide disorders from 4 to 6 August. the PM is not anxious to stage a coup now, but may be forced to accede to MNR's desire to seize the government as soon as possible. (CIA Comment: Effective cooperation between the MNR and PM would represent a real threat to the present government, which has been gatriing strength slowly since the MNR's abortive coup in May. Although it appears unlikely that these extremist parties can stage a successful coup at this time, the disorders planned for 4 August couAd be the first skirmish in an eventually successful effort to over the existing moderate government. Both the MNR ad the PM are strongly anti-US.) Approved for Release: 2018/11/19 006749456 Approved for for Release: 2018/11/19 006749456 � TOP SE GENERAL z AU6 1M9 1054 1. Yg oslav-Italial.licejai zrtionim ve--Italtan Foreign ssr.sr er orza s orme ".mbassy. Rome that he is pleased with Tito's 30 July communique stressing the need to improve relations between the two countries, parti- cularly in the economic field. Sforza added that as a result of the communique Italy is now ready to sign the trade agree- ment with Yugoslavia, negotiations on which had been suspended following Tito's moves toward incorporating the Yugoslav zone of Trieste into Yugoslavia. Meanwhile US Ambassador Cannon in Belgrade reports that in an interview between Tito and the Italian Minister In Belgrade Tito referred to the question of the Yugoslav zone of Trieste as "a little matter if other things could be worked out." Cannon believes that Yugoslavia's economic straits are responsible for Tito's attempt to obtain an immediate Italian trade agreement, while Yugoslav fears of a Soviet sellout on Trieste are impelling Tito to leave the way open for broader negotiations with Italy. EUROPE 2. AUSTRIA: A:IL eement reached on plan for aria t --General Keyes, US r omme.n er i Lus1a, repor. " e two major Austrian political parties have reached agreement on a plan for the future Austrian army. According to Keyes, the army will be based on universal military service and will have an initial strength of 20,000 to 30,000, composed mainly of men with German army experience. (Four-power agreement has been reached to allow Austria an army of 53,000 under the proposed treaty.) Keyes says that the two major parties have agreed to seek permission from the occupation powers to Documont No. 110 C.IMIGIL In C a--.5. C3 V ClaL.s:. 0 -1-C--, O: TS S 0 T pr DTCIAS312-_---) DDA !'omo, 4 A 77 Auth DDA 3 77 1763 , Date: BY: �1110.0. eiA-6 wi.PARIN Aalny - S Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 , TOPS begin the organization of the army as soon as the treaty Is signed, so as to be able to put the full initial force in the field when occupation forces are withdrawn. Keyes adds that the Austrians are now preparing a list of materiel requirements, which will be ready by the time the US joint Chiefs arrive in Austria. - 2 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP SE FAR EAST 1. CHINA: US businessmen in Sha'al wish to leave--US Consul Genera n s orwar e a message from the American Chamber of Commerce which expresses the view of responsible US business leaders in that city that their present difficulties are "incomparably more hazardous and disturbing than those faced on 8 December 1941" and that the time for liquidating their affairs and leaving China is overdue. The US business leaders therefore request the Department of State to: (a) intercede with the home offices of US companies operating in China so that positive instruc- tions for evacuation may be issued; (b) arrange for their evacuation from Shanghai and obtain assurances against Nationalist attack; (c) sever relations with the Nationalists, or in any case withhold further support, until US residents In China are no longer targets for Communist reprisal; and � (d) order the evacuation now of Americans in Nationalist- held areas to avoid the predicament currently faced by US nationals in Shanghai. Document No. NO CHANGE CHANGE in Class. El DEME:STFI=D Ciass. CHAZ=D TO: TS DDA Memo, 4 Apr 77 Auth: D EG 77 1763 Date: � 1 AUG 1949 1053 Approved for Release: 2018/11/19 006749456 e040F Approved for Release: 2018/11/19-006749456 TO RET NEAR EAST-AFRICA' 1. PALESTINE: Developments in Although Foreign Foreign Minister Tharet has informed US Am- basdador McDonald in Tel Aviv that Israel is prepared to receive 100,000 Arab refugees, US representative Porter on the Palestitte Conciliation Commission (PCC) reports from Lausanne that Israel's representative Shiloah, in stating that Tel Aviv would accept a specific number of refugees, failed to mention a specific figure. Porter adds that Shiloah also made it clear that actual repatriation must await (a) preparation of an overall repatriation and resettle- ment plan plus assurance of its implementationland (t) convincing evidence of progress toward a final peace settle- ment between Israel and the Arab states. On the territorial issue, Porter reports that Strilash indicated Israel would stubbornly oppose any PCC plan involving reduction of any territory now held by Israel. Porter comments that he is not eaccouraged by the Shiloah conversations, but that he will press on in his attempts to discover if the passibility of an agreement exists. Meanwhile, the Department of State has Informed Porter at Lausanne of its considered opinion that the PCC should continue in its capacity of a "ge-between" for the disputants and that anything resetnblin "a PCC plan" should be avoided at this time. While urging Porter to avoid committing the US to responsibility for sponsoring a specific number of Arab refugees for repatriation, the Department adds that Israel should absorb 250,000 more refugees than the 150.,000 presently estimated by Israel to be within its boundaries ,I Document No. 02" 80 JUL 1949 ' 1052100 NO CHANGE in Class. 0 0 DECLASSIFIED Class. CHANGED TO: TS. S D DDA Memo, 4 Apr 77 Auth: DA '23. 77/1763 Date: By: bi, � Approved for Release: 2018/11/19 006749456 r- n Approved for Release: 2018/11/19 006749456 FAR ,EAST 29 JUL 194901 1051 I. CHINA: Nationalists may not move to Ch -US �/.4 mdoriX Counselor , TIWEVriln on repo ommunist threat to Skechuan Province has led the National Gov- ernment to reconsider its plans to move to Chungking and that the move may actually be cancelled. Clark points out that most government bureaus are sending files and some personnel to Taiwan. Ile adds that although some ministries still talk of sending a few top personnel to Chungking, none seriously considers setting up an establishment of any size there. Document No. O NO CHANGE in Class. 0 0 DECLASSI7ID Class. CHAI-C:D TO: TS DA Memo, 4 Apr 77 Aath:DD P-G. 77/173 Date: By: Approved for Release: 2018/11/19 006749456 � cc') Approved for Release: 2018/11/19 006749456 TOP SEC "48 JUL 1949� 1050 NEAR EAST-AFRICA 1. PALESTINE: Outlook at Lausanne not hopeful--Paul Porter, SP US representative on the Palestine Conciliation Commission (PCC) at Lausanne, reports that he can find little reason for hoping that the resumed Arab-Israeli negotiations will produce an agreed settlement of the Palestine issue. Pointing out that the delegates are apparently willing to continue "endless and airaless discussions," Porter believes that the PCC should be prepared to make equitable proposals to Arabs and Israelis. Porter therefore requests that. the Depart- ment of State send him specific instructions on such matters as territorial boundaries and the refugee problem. .Document No. NO CHANGE in Class. rl ED DECLASSIFIED LJ C/ass. CHANGED TO: TS DDA Mczo, 4 Apr 77 Awn: Dnfi R70 77 1763 Date: Approved for Release: 2018/11/19 006749456 By: Approved for Release: 2018/11/19 006749456 TOP SE T NEAR EAST-AFRICA . 1. PALESTINE: S PCS -d--US Ambassador .1n-11731 Jcvlv eresseiibe1ief that the three-nation Palestine Conniltstion Commission (PCC), despite US Representative Porter's best efforts, will remain incapable of the "strong affirmative and united actions" needed to induce the Arab states and Israel to move beyond the present armistice agreements. McDonald considers it "vital" that the PCC be replaced by a "single-man authority" and recommends that the US initiate a campaign now to have the UN General Assembly take this step. FAR EAST 27 JUL 1N.4 1049 2. CHINA.: Plans for evacuation of US citizens--The Depart- ment ofSWEM-r�aw ciW-Wireas Intolerable situ- ation confronting US nationals in Shanghai, has recom- mended that the US Consul General take steps to urge US citizens desiring to leave Shanghai to apply for exit permits. The Department states that it will arrange suitable trans- portation facilities after receiving specific information re- garding the nu niter of Americans and other foreigners willing and able to leave. The Department is recommend- ing that similar steps be taken in Nanking and Hankow. a C/A- eirIF '.2L. 0 0 DE c:CA,E, I ED Class, OpINGED TO: 'IS DpA'Aiemo, 4 kpr 77' DDA G� 77 1763 D4t98 Approved for Release: 2018/11/19 006749456 Xt. JUL �IWIS Approved for Release: 2018/11/19 006749456 TOPSEET 1048 GENERAL 1. US initiates tri rtite talks on Austrian Arm -The Depart- _ _ men u . u; 5 m ssy don to raise with the British and the French the question of reaching a firm tripartite agreement on aLl aspects of the establish- ment of The Austrian Army. The Department feels that each western power, to the extent possible, should make physical contributions to the proposed army. Meanwhile, the Depart- ment is initiating tripartite representations to Austria to point out that the Austrians must assume basic responsibility for their own internal security and that any available funds cannot be allocated until the Austrian government has sub- mitted a satisfactory plan for the army, which has been agreed to by both major political parties. The Department also be- lieves that after four-power agreement has been reached on the military clauses of the treaty, an approach can be made to the USSR to secure four-power approval for implementing these clauses prior to the effective date of the treaty. oaP Err.' C: � in ClE:Lsr. �':SIFIED diGED TO g TS s Dail. Memo, 4 .ilpr 77 e g Authg D PEG. 7L13. Dat I' BY Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 ULJ TOP RE T GENERAL 1. Reber's views on Austrian treaty--US Representative Reber n on reporis no real progress in the Austrian treaty talks during the past week because the Soviet representative continues to insist that the wording of the Paris communique be adhered to rigidly and that Soviet proposals be accepted as presented. Reber believes that if the Soviet stand is not relaxed, it will soon be necessary for the western powers to present their minimum treaty requirements and thus indi- cate the point at which the treaty will require further considera- tion by the Foreign Ministers. Reber suggests that while it is important to delimit the area of Soviet control in Austria, additional treaty provisions having this effect can be obtained only by granting new concessions to the USSR. Reber feels it is more material for the US to determine how Austria is to meet its payments obligations to the USSR than to discuss the consequences of Austrian default. Reber concludes, there- fore, that solution of the payments problem, as well as the early establishment of an effective Austrian army, would obviate many difficulties in regard to the wording u the treaty. Meanwhile, the Department of State has asked US Embassy London to approach the British and French regarding the formu- lation of a common policy toward Austria after conclusion of the treaty. 25 JUL 1949 � JO EUROPE 2. GERMANY: US position on location of new capital�The Department of Sate hasi. edUMffflary ernor McCloy In Berlin that the question of the location of the west German capital is a matter for the Germans to decide and that McCloy should maintain an attitude of strict neutrality. The Depart- ment does not consider it necessary to "counterbalance' British efforts to influence the Germans toward establishing the capital at Bonn. DoCUM:3:1': No. NO Cn:i7:721i Class. Li 1.1 7 a/P1- s e/A-S -..:-nno TO3 TS - '0 '-' L-2.mo9 4'- ,�-r 71 LDA77 2;"113:.L5. t Approved for Release: 2018/11/19 006749456 3-6 Approved for Release: 2018/11/19 006749456 23 JUL 1949 1046 GENERAL 1.US s....Lyimi rt for Ly aninpendence ur ed--US Ambassador Douglas in Lo 031 reports that British Foreign Office offi- cials generally favor early independence for Italy's former colony of Libya, but are apprehensive of the effect such a solution would have on Anglo-French relations as well as on French North Africa. Douglas believes the US faces the same dilemma, but points out that: (a) by opposing Libyan aspirations for independence the US might create a situation which would seriously prejudice the continued enjoyment of vitally important strategic facilities there: (b) if the US supports the French in delaying Libyan independence, the large bloc of states stretching from the East Mediterranean to the Philippines would accuse the US of sacrificing principle to political expediency; and (c) there is no assurance that agreement to delay Libyan independence would induce the French to speed the introduction of basic reforms in French North Africa. Douglas points out that the US views on French North Africa are known to the French, while the British have pursued a "hands off" policy. Douglas therefore recommends that the US approach the French emphasizing that early inde- pendence for Libya "represents the reality of the situation" and that the French should take immediate and effective steps leading to greater self-government in French North Africa. 2. Italian views on trade with Yugoslavia- -ForeignMinister Ero-iirargtriii.-FingS-Aunn in Rome that he Is most anxious to conclude the economic agreement with Yugoslavia (negotiations were suspended by Italy following the establishment of the Yugoslav dinar in the Yugoslav Zone of Trieste). Sforsa maintained, however, that in order to allay Italian public opinion and permit him to sign the accord he needed some public declaration from Tito emphas tieing Yugoslavia's friendly intentions toward Italy. Document No. NO CHANGE in Class. rl LJ Ei DECLASSIFILD Class. CHANGED TO: TS S DDA Memo, 4 Apr 77 Aut.: DD G. 77/1763 By: Approved for Release: 2018/11/19 006749456 n - Approved for Release: 2018/11/19 006749456 TOP SEET GENERAL 1. VS views on Pacific union--The Department of State has instructaUS icirnroad to avoid any public state- ments or actions which could be interpreted as support- ing or opposing the recent Chiang-Quirino proposal for a Pacific union. The Department considers that inclusion of the Chinese Nationalist regime as a charter member saddles the embryo union with a hopeless military prob- lem and is likely to alienate India and other south Asian nations. The Department declares, however, that if US officials are approached confidentially regarding an alter- native plan for strengthening economic and political ties between Far Eastern nations, they may express general approval while pointing out that any such plan should have inherent strength in Asia and not appear to be merely an Instrument designed to obtain and channel US aid. EUROPE 2. GERMANY: British want Bonn as new German capital-- US Militaryvernor c ay za---E-M�Teic-WIEirffieare lobbying actively in favor of locating the west German capital at Bonn, while the US and France have maintained a "hands-off attitude." McCloy adds that several German leaders have indicated their belief that one of the first acts of the new west German Government will be to reverse the decision in favor of Bonn and to establish the new capital at Frankfurt instead. (CIA Comment: CIA believes that UK lobbying for the retention of Bonn (in the UK Zone) as the future German capital, despite German preference for Frankfurt, is one aspect of the British drive to obtain paramount influence in west Germany as well as over the west German Government. Document No. 22 Jut_ 1949 j1 1045 5 \- 0 CHANGE in Class. NfiDECLASSIFIED MI Class. CHANGED TO: TS S TO SECRET Auth: Dr G. 77/17E13 DDA. Memo, 4 Apr 77 Date:'i71 By: Approved for Release: 2018/11/19 006749456 c n Approved for Release: 2018%11/19 006749456 TOP SET GENERAL 1. Norw favor stre n Swedish defenses--The Norwegian D ense Minis r has express iral Conolly his belief that the US and UK should "build up" Swedish military strength by selling the Swedes, for cask, any available military equipment, with special emphasis on radar and fighter planes. The Minister considers that such sales would provide air defense in depth for Norway. He does not expect Sweden to join the Atlantic Pact "soon" because of Swedish-Soviet trade commitments and a desire not to provoke the USSR needlessly. The Norwegia.n Minister quoted the Swedish Prime Minister as "authority" for his confident belief that the Swedes would resist any Invasion or "encroachments on her neutrality" from the east. 21 JUL 1S418 1044 Niwy - TS L'o. 0 /___17 NO CILZ: ir C,Lass. 0 ....A 0 DI' CT_ T,7') t, i_I'L7:LD TO: TS S DDA. Memo, 4 Apr 77 ...- -- Math; D J RG. 77 1763 ate; By; Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 EUROE 1. YUGOSLAVIA: Analysis of Yugoslav economic situation-- US Ambassador annon expresses his belief that, largely as a result of tightened economic sanctions by the Soviet bloc without a compensatory increase in Yugoslav trade with the West, the Yugoslav economic situation will be critical for the next year. Cannon adds that without moderate western credits the Tito regime may be weakened to the point where it cannot be effective in the role the US expects it to play. In pointing out that such credits would be insurance against the collapse of Tito's regime, Cannon believes that early conclusion of the British-Yugoslav nego- tia.tions involving a credit of eight to ten million pounds would help counteract the effects both of the reduction in Yugoslav trade with the East and the suspension or slowdown of Italian-Yugoslav economic negotiations. (CIA Comment: CIA has received no information which would indicate that economic conditions in Yugoslavia have reached the critical stage) NEAR EAST-AFRICA 2. PALESTINE: E tians bitter over Gaza strip proposal US Charge Pa Toon n aTy� repo e T gyp n Foreign Minister and o er high Egyptian officials have ex- pressed bitterness2 distrust, and a "very real intellectual and moral disda, ,s," regarding the Israeli proposal that Israel be awarded the Gaza strip in exchange for accepting the Arab refugees in the area. Although Patterson believes that Egypt might take a more conciliatory attitude toward the proposal if the US were actually able to guarantee Egypt a land bridge to yordan as compensation for the Gaza strip, he fears that "continued harping" on the merits of the Gaza plan might cause the Eygptians to regard the US as "an accomplice of an expansionist and aggressive Israel." Docutiont No. 0/S co JUL 1043 NO CHANU in Class. 0 El DECLASSIFIED Class. CHANGED TO: TS DDA MT.mo, 4 Apr 77 Auth: DDA7EG. 77/1763 ET Date: By: tO Approved for Release: 2018/11/19 006749456 - Approved for Release: 2018/11/19 006749456 NEAR EAST-AFRICA 1. PALESTINE: Views on renewed Lausanne talks--US Ambassador de onarmirrEVerXRFirpresses Se belief that Israel's policy on the Palestine question is developing favorably, particularly with regard to the Arab refugee issue. The Israeli delegate to the Palestine Conciliation Commission (PCC), which resumed negotiations at Lausanne on 18 July, has informt.d McDonald that he is taking " a more elastic program" to Lausanne and that Israel's offr on the Arab refugees will be "more definite and larger.7 According to McDonald, Israel evidently feels the need to have the PCC present tangible evidence of progress in solv- ing the Palestine problem to the General Assembly in September. (CIA Comment: CIA believes that little substantial progress toward a final settlement of the Palestine pr ...lem will be made at Lausanne and that such limited concessions as Israel may make will not prove acceptable to the Arabs.) .Dowament NO C7117:73 :1'.n Class. 0.1:5i3.5q17.D C1&,13s. c;:IATICED TO: TS i.f:-A. gomo, 4 Apr 77 Autb: DDA ,2 . 7 1763 e/f)- Conk" A Approved for Release: 2018/11/19 Cns7AaAga r- -���� Approved for Release: 2018/11/19 006749456 TOP S GENERAL 1. Possible Soviet folic re.:4= rd Trieste--US Ambassador Kir in oviet policy toward Trieste will be influenced both by the Kremlin's commit- ment to overthrow Tito and by the effect any action regarding Trieste will have on the advancement of world communism. Kirk points out that over-all Soviet objectives could be achieved if the Kremlin: (a) continued its demands for the appointment by the United Nations of a neutral governor for the Free Terri- tory of Trieste; or (b) suddenly accepted the western proposal of 20 March for restoration of Trieste to Italy. Kirk believes, however, that Soviet acceptance of the western proposal would constitute the greater blow against Tito and that, therefore, there is sufficient danger of the Kremlin's adopting this policy to warrant every effort by the US to promote a compromise agreement on Trieste between Italy and Yugoslavia. 18 JUL 1949 � nal 2 S ia to acce t Israeli compromise armistice--Syrian Prime r araz s omre � � - $ - er eeley in Damascus that the Syrian delegation to the armistice talks " ith Israel has been instructed to accept the armistice agreement as modi- fied by Israel. Barazi said that unless Israel raises new diffi- culties, the armistice agreement would be initialed on 18 July and signed later in the week. � Dociarga.rit 1:;;Oe ..; :71 -1 .1 -;; � S - 1/A- eert r Approved for Release: 2018/11/19 006749456 � 117 7t1 / ZZL-5 Approved for Releash; r21018/11/19 006749456 TOP S FAR EAST 1. CHIlsTA: Stuart instructed to reject Communist demand-- The Department of State has instructed AmbassadoTh�Miart in Nanking to point out to the Communist authorities the unprecedented nature of their request that departing Embassy personnel obtain "shop guarantees' prior to re- ceiving exit permits and to inform the Communist officials that under instructiono of the US Government the Embassy cannot under any circumstances accede. The Department believes that a dangerous precedent would be sels,..if...c:tich guarantees were provided, and informs the Ambsacior that the matter is considered to be of sufficient importance to warrant postponing his departure until the requirements are waived for official US personnel. JUL 19e 1040 cm/s Dooument No. 110 CHANGE 1-,? Class.. 0 C3 DECLASSI72ED Class. cimr:zp TO: TS S , C DDA Eamo, 4 Apr 77 Auth: Lul R20. 77 1V 3 Date: Approved for Release: 2018/11/19 006749456 BY: 3.3(h)(2) � 3.3(h)(2) 3.3(h)(2) Approved for Release: 2018/11/19 006749456 ADaikii6TRATIVE� 1JAL USE ONLY E:;ccuivo, � 23 August 1972 MEMORANDUM FOR: Director, Office of National Estimates SUBJECT: Review of Documents ����,=���� 1. As you know, the Director has expressed his intent to maintain the classification of National Intelligence Estimates in response to queries under either the Freedom of Information Act or Executive Order 11652. In conjunction with the New York TiMOS request of 31 July 1972, the following estimates were identified as responsive to the query: � In accordance with the Director' a intent. the New York Times has been advised that the documents, not identified to the Times, will not be released. 2. The action taken to date relative to these documents constitutes a ten-year review under paragraph D, Section 5, EO 11652, and Part III, These documents should be marked to note the completion of this ten-year review and the continua� tion of the original classifications. The markings should include the date the review was completed, person or persons conducting the review, and any exemptions. , Special atsszstany :or Lnzormauon Control cot Chief, Agency Records Center ADIRNISTEJ .11.L1NAL USE ONLY . Approved for Release: 2018/11/19 006749456 M.) Approved for Release: 2018/11/19 006749456 TOP SE GENERAL 1. US views on Yugoslav-Greek relations --The Department of Ste has suggested that US Embassy Belgrade express to Yugoslav officials the satisfaction of the US Governmeg regard- ing Tito's recent declaration on closing the Greek frontier, as well as the hope that this policy statement will be imple- mented immediately by concrete measures. In order to con- firm the announced cessation of Yugoslav aid to the guerrillas, the Department also suggests that Tito be requested to allow. a "routine" inspection trip of the Greek border by western military attaches in Belgrade. The Embassy may also in- dicate that the immediate advantages to Yugoslavia of a positive rapprochement with Greece include: (a) resumption of normal commercial relations; (b) re-opening of a Yugoslav Free Zone in Salonika; and (c) restoration of Salonika-Belgrade rail communications. The Department, in pointing out that the Greek Government has expressed its willingness to negotiate these matters with Tito, sees no objection to the Embassy's sounding out possible Yugoslav reaction to Greek overtures or to supporting a Greek demarche if and when it is made. 1 5 JUL 1949 1039 ledvit FAR EAST 2. CHINA: Stuart thusfar unable to obtain exit permits--US Ambassador reportirthitlie�tsi encountering difficulties In obtaining exit permits for himself and party and may not be able to depart from China on 18 July as planned. He states that"Communist authorities insist on a guarantee from a local firm specifying that the departing foreigner has left no debts, unpaid taxes, or pending civil or criminal charges. Stuart expresses his growing concern over the difficulty of finding local guarantors for members of his party and fears that even in hie own case the requirement may not be waived. Doelln-Livt Eo. NO CHANGEi Class. DECLAEL7.-4FIED 3 1. 0 Class. CHANGED TO: DDA Yeruo, 4 411th: DDA F Dm TS 6 Apr 77 Approved for Release: 2018/11/19 006749456 r- Approved for Release: 2018/11/19 006749456 TOP SE T EUROPE 1 4 JUL 1949 1038 1. YUGOSLAVIA: Anal is of Tito statements--US Ambassador SiS Cannon transmits is elite t Tito s 10 uly statements on foreign policy reflect the increasing deterioration in Yugoslav-. Soviet relations and Yugoslavia's desire to improve relations with the West. In support of this view, Cannon points out that Tito directed the burden of his attack against the USSR and clothed his criticism of the western powers in "friendly terms." According to Cannon, Tito's speech revealed Yugoslav concern that a four .power agreement on Trieste might sacrifice Yugo- slav interests there and implied that the Trieste question could be solved by Yugoslav-Italian agreement. Cannon attaches great importance to Tito's announcement that the Greek-Yugo- slav border would be closed and believes it indicated a basic change in Yugoslav policy toward Greece. Cannon adds that Tito's more conciliatory attitude regarding Greece may be a bid for sympathetic western treatme t on Trieste. (CIA Comment: CIA agrees with Ambassador Cannon that Tito, in view of his growing isolation from the Soviet bloc, is showing an increasing willingness to cooperate with the US in an attempt to obtain economic and political support.) ta� D Class. �C:111.1SCIED TO g TS DDA Ecalo Auth DDP EFG 0 77 1763 pate 4 Approved for Release: 2018/11/19 006749456 I- Approved for Release: 2018/11/19 006749456 FAR EAST jr, 0 vULforio 1037 1. CHINA: Proposal for re triation sh to Shan i--US Ambassa or Stuart, in concurring with e recommenda- tion of the US Consul General in Shanghai that a means be provided for repatriating US nationals from S nghail, expresses the view that "it is not too early" to take the preliminary steps to arrange for transportation and to obtain the necessary clearances from Chinese authorities In Canton and Shanghai. Stuart points out that the perse- cution of US officials and businessmen in Shanghai under- scores the inability of the US to provide adequate protection for its nationals in Communist China. Stuart believes that the response among US citizens in Shanghai to a repatriation ship might well be enthusiastic. Document No. 007 NO CHANGE in Class. (25 0 DECLIOSIFIED Class. CHANCED TO: TS s DDA Memo, 4 Apr 77 Auth: DD RG 77/1763 Dates Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 EditiET 12 JUtins GENERAL 1. British view of Berlin traffic situation--According to US CIFI IS Ambassador Douglas in London, recent Soviet measures re- stricting truck traffic to Berlin are regarded initially by the British Foreign Office as merely another attempt by the USSR to throw its weight around. The Foreign Office believes once the USSR feels that the West has been "suitably impressed," traffic will be permitted to resume its normal flow. 'Douglas adds that the British consider the current restrictions illustrate the danger of any relaxation in western efforts to build up Ber- lin's stocks for the coming winter. (CIA Comment: CIA believes that the USSR will continue to impose sporadic obstructions on Berlin traffic in order to keep the western position in Berlin as weak as possible and to maintain pressure on the West during the present interzonal �trade talks.) 2. Early four-power agreement on Austrian Army urged--General Keyes, US Commander in Austria, pointing out that the impor- tant question of the establishment of an Austrian Army prior to the withdrawal of occupation forces was not dealt with in the Council of Foreign Ministers, urges that the deputies take up this matter before treaty negotiations proceed too far. Keyes believes that: (a) it would be futile to attempt to secure Soviet approval in the Allied Council granting Austria permis- sion to begin military planning before the treaty is ratified; and (b) the western powers would be inviting disastrous re- prisals if they began organizing an Austrian Army in their zones without prior Soviet approval. Keyes expresses the opinion that in order to avoid grave risks to Austrian indepen- dence, this problem must be satisfactorily solved before the treaty is signed. Meanwhile, Keyes reports that 18 July has been accepted by the British and French as the date on which to commence the training program of the Austrian gendarmerie regiment in the western zones. Doclact re. - 1 - 00/ NO CH= :f.11.Class. 0 TY.T.C:=77:1") 1 =1 TO: TS S IrA 4 Apr 77 Auth: D. :7C.4. 77 1763 Date: By: 4241 Approved for Release: 2018/11/19 006749456 - Approved for Release: 2018/11/19 006749456 TOPSCIT (CIA Comment: CIA believes that the USSR will protest strongly separate western action in establishing the gendar- merie regiment and will attempt the maximum poss le delay on both the Allied Council and deputy CFM levels in agreeing to permit the Austrians to begin military planning prior to ratification of the treaty. Meanwhile, the two major Austrian political parties have been engaged in secret high level dis- cussions on military planning for more than a year.) NEAR EAST - AFRICA S. IRAN: Pro sed US ai_m..cncasiticized--US Ambassador itttley reports that in a second discussion of the proposed US aid to Iran, Governor Ebtehaj of the National Bank of Iran was more vehement than during the first talk. Ebtehaj expressed the view that the US approach to Iran on this matter was not only "Incomprehensible and unacceptable but also dictatorial in nature." He declared that if "this token and measly gesture" represented the final US word, he would most strongly recommend to the Shah that Iran disassociate itself from the US and, without going over to the Soviet side, either try to find help in other countries or stand on its own feet. Wiley believes that the Shah will be greatly influenced by Ebtehaj's reaction to the US offer and will not be satisfied unless US assistance to Iran equals that given to Turkey. DorrIr. r Lj - Auth;- 31s � , , C.; Date: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 I 1 JUL 1949 TOP SECRET 1035 EUROPE 1. FRANCE: Communist action against Atlantic Pact--US 'If E assy Parts has learned from atffrustworthy source" that the Kremlin has ordered the French Communist Party to stage "mass manifestations" against the Atlantic Pact on 14 July (Bastille Day) and on or about 29 July when the Pact comes up for ratification. According to source, Moscow has directed the incidents to be bloody, if necessary. Embassy Paris believe:3 that if large-scale Communist demonstrations occur, they will spur rather than retard ratification of the Pact by the French Assembly. FAR EAST 2. INDOCHINA: Reyteiews on military situation--General Revers, Chiel of Slaff, has S Ambas- sador Bruce in Paris his confidence that current French defensive measures on the Tonkin border in Indochina will enable the Fr3nch to repel any attack except by a "massed and discipl., d army operating as a unit." Although Revers expects guierx ilia warfare to last at least "a couple of years," he believes French and native troops can cope with it. Revers also expressed the belief that the situation in Indochina has Improved considerably in recent months and that ao Dal's government has a good chance of succeeding if its development is not interrupted by the Chinese Gommunists. Bruce was disturbed, however, by Revers' view that the French military should have a predominant voice In Indochinese affatrs. ((CIA Comment: CIA believes that General Revers' fairly optimistic views may encourage Li :e French Government to implement liberally the 8 March agreeme ts with Bao Dal. Consequently Revers' desire for a retUrn to predominance of e military will not be realized.) li c (4/ s CIF/ 3 Docnt ri. mILYzi 1 Class. 0 0 riECLAS.SIFIED Class. CHANGED TOs TS DDA 1.:3Alo, 4 Apr 77 Auths DI) G. 77 1763 ' Date a By8 Approved for Release: 2018/11/19 006749456 U Approved for Release: 2018/11/19 006749456 TOP SEC NEAR EAST-AFRICA 9 JUL 1949 1034 I. IRAN: Reaction to posed US Ambassador Wiley reports that, at the direction of the Shah, Ebtahaj (in- fluential governor of the National Bank of Iry and, in effect, financial adviser to the Iranian Government) called at the Embassy to discuss the matter of US aid to Iran. According to Wiley, Ebtehaj considers the proposed US milbt ry assist- ance to Iran to be totally tha.dequate. e expressed the opinian . that Iran might very well refuse the offer and that the govern- ment might have to consider changing its foreign policy, dis- associating itself from the US and looking elsewhere for support of Iranian interests. Ebtehaj declared that the situa- tion would be incompreheasible to Iranians if the US "gave liberal assistance to Turkey and treated Iran in such a shabby manner.'I, %es Document No. NO CHANGE in Class. o D:C.7..A.Sc.7,7.717D Class. C .:C.7.1) TO: TS 4 Apr 77 Auth: DDL 17-.;G. 77/1763 Date: 0 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 8 JUL 1949 51i TOP SE 1033 FAR EAST 1. CHINA: US pressure recommended to ease Shanghai situation-- S US Consul deneral Cabot in Shanghai, in an anarYsis ot tne disquieting pattern of recent events in Shanghai, reports that: (a) the only law in Shanghai is that of the Communist military authorities; (b) foreigners are often subjected to an invasibn of their fundamental rights; and (c) on the basis of available Information, events in Shanghai are believed part of a normal pattern of revolution rather than a deliberate Communist plan. Cabot points out that foreign firms are currently losing heavily but fears that if they try to close down, foreign nationals may find themselves virtually held for ransom, with the approval or acquiescence of Communist authorities. Cabot believes that if the US is to pursue an antagonistic policy toward the Chinese Communists, it would be better to get all Americans out of Shanghai (and if necessary pay them for their property losses) rather than leave them where they are subject to Communist retaliation and where their continued presence under such circumstances will lead to further incidents. Cabot therefore, in the hope of forcing the Communists to do some- thing about the situation in Shanghai, recommends that the US request permission from Communist authorities in Peiping to evacuate by. commercial ship or planes all Americans desiring to leave Shanghai. (CIA Comment: CIA believes that the Chinese Com- munist Party, while officially committed to the protection of foreign interests, welcomes the opportunity provided in Shanghai for channeling the demonstration of popular dissatisfaction with present conditions toward foreigners rather than the new Com- munist regime. The Communists thus hope indirectly to war the western powers that their future in China depends upon the establishment of friendly diplomatic and commerical relations with the new regime. Because the Communists do not wish US commercial interests to withdraw from China at this time, how- ever, a withdrawal threat might well induce the Communist Party leadership to order local authorities in Shanghai to ease the situation.) Document No. 00k NO CH_A-7: L-1 C-Jass. Class TO: TS 4 Apr 77 AUth: DDA 7711763 Dato By: 0.0 Approved for Release: 2018/11/19 006749456 rr Approved for Release: 2018/11/19 006749456 TOP SE IT GENERAL itn_ 1949 ' 1032 I. Bri. :IL Cabinet possibly split over economic� --US 3/3 Emba--T�asfr�d--.aon. onesseezpr s the view that the failure of Chancellor Cripps to enunciate a definitive policy concerning the British economic situation during his 6 July statement to Parliament may reflect disagreement within the Cabinet over what measures to take. The Embassy comments that it is not in keeping with the Cripps tradition to delay formulation � of a comprehensive program for coping with an economic emergency. The Embassy believes that Cripps' emphasis ' upon the necessity for seeking some long-term solution to the dollar problem was motivated by a desire to thrash out fundamental problems with the US and Canada. The Embassy also interprets this emphasis as an indication of the great � importance the British Government places upon the forth- coming comprehensive talks with the US. 2. British agree to support AuMs._12_71miat bian --US Re- presentative Reber in London has been informed that Foreign Secretary Bevin has agreed to authorize the British High Commissioner in Vienna to participate with the US and French Commissioners in carrying out the Joint plan for equipping an Austrian gendarmerie regiment for the western zones. 3. US counters Israeliv1ewsalalitaing--The Department of State has informed US Embassy Tel Aviv 'regarding views recently eiprossed by Israeli officials that the US: (a) also desires stability in the Near East but cannot agree that this can be achieved on Israeli premises regarding territory and refugees;. (b) does not believe that the Arab states. are cegP Document No. NO. CliA711.73 i.n Class. 0 C T."): 4 Aut,h: DDA .3.2,G. 77 ate: 0 TS S Apr 77 1763 /T3 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TO preparing to resume the conflict in Palestine; (c) has pointed out on numerous occasions the steps Israel might take to facilitate the establishment of peace in the Near East; (d) cannot agree that the repatriation of a substantial number of Arab refugees would accomplish "nothing"; and (e) re- jects the apparent Israeli implication that the solution of the refugee problem is the responsibility of the US. Approved for Release: 2018/11/19 006749456 `)11 Approved for Release: 2018/11/19 006749456 TOP S 0 JUL 1949 1031 GENERAL I. Israel reportedly considering pacts with Arabs�US Am- SirS 'bassador McDonald in Tel Aviv has been told by "a re- sirs liable private American" that Israeli President Weizmann Is calling a conference of top Israeli 414 icials to urge that Israel offer "qualified non-aggression pacts" to the Arab Mates. The Department of State has informed McDonald that it would be pleased to see the Arab states and Israel enter freely into non-aggression pacts, but that the Depart- ment cannot give the matter full consideration without clarification of such details as what is meant by the word "qualified" and whether Weismann envisages the pacts as forming part of an over-all peace settlement. The Department expresses the opinion that the Arab states would hardly be Inclined to take favorable action on such a proposal unless it were connected with an over-all settlement. Document No. 0 0 NO CHANGE in Class. 0 CI .-- 7) TO: TS O,4z _Apr 77 Auth: DDA G. 77/1763 Date: By: Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 P SECRET FAR EAST 1. CHINA: Stuart not to visit Peiping�The Department of State has instructed US Ambassador Sart that he is not under any circumstances to accept the veiled invitation received on 29 June from Communist leaders Mao Tse-tung and Chou En-lai to confer with them at Peiping. The Department indicates that the principal reasons for this negative decision are that � Stuart's acceptance would: (a) constitute a second step toward recognition of the Communist regime; (b) possibly embarrass the Department of State both in China and the US; and (c) cause other western nations to feel the US has broken the diplomatic front concerning China. Document No. NO CHANGE in Class. E] 5 JUL-1949 1030 sts 0 TS -.1 Apr 77 3 () Aut".:1: 77 1763 Date; By: .00 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 U TOP SECRE 2 JUL 1949 1029 GENERAL 1. US views concerning British dollar crisis�The Department 3/i's of Stale has informed US representative Willoughby in Annecy that a US-UK "full dress meeting" to explore the implications of the dollar crisis is being planned for 1 August in Washington. The Department indicates that in his discussions with British officials in London Secretary Snyder will present the following US views: (a) general adjustment of European currency ex- change rates, including the British, appears essential in order to raise European dollar earnings and put European products back on a competitive basis in hard-currency markets; (b) though the US recognizes Britain's necessity to reduce the importation of dollar goods drastically on a short-term basis, such British discrimination against dollar imports will in the long run perpetuate the "uneconomic trade pattern"; and (c) the US cannot realistically object under present circumstances to any reasonable British measures designed to curtail dollar imports but must, however, regard the resulting deviations from the 1948 US-UK financial agreement as emergency measures. I) in Class. 0 ri DECLASEID C C.-7; TO: TS DTA 4.Apr 77 111.1,h; --LZG,_77/176.3 Approved for Release: 2018/11/19 006749456 Approved for Release: 2018/11/19 006749456 TOP RET GENERAL 1. US seeks British support of Austrian refitment plan--The Department of State has asked the US representative at the Austrian treaty negotiations to obtain the concurrence of the British Foreign Office in the plan for the formation of an Austrian gendarmerie regiment now. The Department states that the British oppose the plan for the present on the ground that such action would affect the treaty negotia- tions. The Department concludes that because the US and France feel that delaying the plan until after 1 September would adversely affect western security interests, they are prepared to launch the program in their zones about 15 July, regardless of British participation. FAR EAST � 1 Al 1949 1028 siTs 2. CHINA: Stuart receives veiled invi tion from Mao Tse-tun-- US Ambassador Stuart reports that he has received a veiled Invitation from Communist leaders Mao Tse-tung and Chou En-lai to talk with them while ostensibly visiting Yenching. Stuart received the impression that whatever the motives of the two leaders may be, they are very eager for him to make the trip. Stuart points out that through such a meeting he could gain authoritative information regarding Communist Intentions; make a step toward a better mutual understanding, possibly strengthening thereby the more liberal anti-Soviet element of the Communist Party and describe US policy to Communist leaders. On the other hand, he points out that such action would: (a) constitute a second step toward recog- nition of the Communist regime; (b) possibly embarrass the Department of State both in China and the US; and (c) cause other western nations to feel the US has broken the diplomatic front concerning China. Document No. _00 ����� NO CHANGE in Class. 0 0 DECLASSIFIED Class. C:LA.PGED TO: TS S I MA Maw�, 4 Apr 77 ) Auth: DDA G. 77 1703 Date: By' go Approved for Release: 2018/11/19 006749456