WEEKLY SUMMARY NUMBER 37

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002100160001-0
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 27
• Document Creation Date: December 23, 2016
• Document Release Date: March 15, 2013
• Sequence Number: 1
• Publication Date: February 11, 1949
• Content Type: REPORT

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COPY NO. 8/
I WEEKLY SUMMARY
I.
Number 37
1 FEB 1949
440'
Document No.
NO CHANGE in Class,
DECLASSIFIED
Class.. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DD EG. 77 1763
Date: L1 By:
CENTRAL INTELLIGENCE AGENCY
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1P%, asseo.
1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance with applicable -security regulations, or
returned to the Central Intelligence Agency.
WARNING
iefie
-(-1
S-Ce
2o-21,22?
I.
Il
This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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CONTENTS
HIGHLIGHTS_
GENERAL._
4 0 4 P P
Page
1
? OOOOOOOOO a OOOOO 2
WESTERN EUROPE 5
EASTERN EUROPE 9
NEAR EAST AFRICA 13
FAR EAST 15
WESTERN HEMISPHERE 17
ARTICLES
Israeli Tactics in Jerusalem 19
Implications of Sinkiang Agreement 20
Efforts by the WFTU to Control World Labor.. 22
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HIGHLIGHTS
One of the consequences of the Soviet propaganda
"peace offensive," which reached a climax last week in
Premier Stalin's press interviews, has been to focus the
attention of the world upon the line to be taken by the Soviet
representatives at the Austrian peace treaty negotiations
which began in London on 9 February. This attention may
be one of the considerations that has motivated the Kremlin
to make the prospects for an Austrian settlement look
brighter by seeming to be willing to accept Austria as a
"neutral" in the east-west division (see page 7). More
material considerations, including the possibility of exploit-
ing Austria as a channel for east-west trade, are also bear-
ing upon the apparent Soviet desire to modify the status quo
In Austria. Meanwhile, reports continue to indicate that
the USSR Is forming an eastern European military organiza-
tion in order to tighten its control over Satellite military
establishments (see page 9).
The Egyptian-Israeli negotiations at Rhodes remain
deadlocked over general principles. Confronted with basic
disagreement, the representatives have turned their attention
to technical details, apparently in the hope that a comprehen-
sive armistice can be built up piece by piece (see page 13).
In general, Arab-Israeli relations continue to follow the well-
established pattern: the Arabs, divided and vacillating; the
Israelis, orpnized and determined (see "Israeli Tactics in
Jerusalem," page 19).
The Chinese situation is still confused and unresolved.
While the uncoordinated moves of the Nationalists give every
sign of indecision and disintegrated leadership, the Communists
continue to mass forces above Nanking (see page 15). Mean-
while Nationalist efforts to build a bastion on Taiwan are
threatened by a growing native resentment against Chinese
"police state" methods (see page 15).
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GENERAL
Asian Developments Postwar political and economic develop-
ment in Asia appears to be entering a
new phase that promises to raise serious problems for the UN
as well as for the western powers which are already engaged
in curbing Soviet expansion in Europe. In addition to the effect
on the world balance-of-power resulting from the Communist
victories in China, the Indonesian dispute has already forced
the UN to intervene actively in the explosive colonial question
the Asian nations in the recent New Delhi Conference have
taken the first tentative steps toward the creation of an Asian
bloc; and the USSR apparently is taking further steps to exploit
its potentialities in Asia for the expansion of world Communism.
UN Colonial Problem Although the Security Council action
on the Indonesian question is the first
Instance of active political intervention by the UN in a colonial
dispute, equally thorny colonial problems will plague the UN
as a result of rapid strides toward independence in other co-
lonial areas of Asia and Africa. UN involvement in colonial
affairs will increase as: (1) open conflicts between European
states and their dependencies create threats to the peace;
(2) colonial peoples turn to the UN for aid in their struggle
for independence; and (3) the western powers utilize the UN
both to prevent anti-colonial powers from by-passing the
UN and to reduce Soviet potentialities for exploiting colonial
? unrest. The UN, however, If called upon to deal with areas
? In which the major powers have colonial interests, may not
have even the limited success achieved in the case of Indo-
nesia. France and the UK may use their veto power to cur-
tail effective UN action and the USSR may likewise obstruct
constructive efforts to achieve amicable, effective solutions.
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Asian Bloc Greater regional cooperation among the Asian
nations, as forecast by the January Asian Con-
ference on Indonesia, will also increase the pressure on the
UN to intervene in the colonial problem. Because states
represented ax the New Delhi Conference comprise almost
one-third of the 'UN membership. the UN is already under
considerable pressure in meeting Asian demands for Indo-
nesian independence. Failure of the SC to follow through in
the Indonesian case will result in loss of prestige for the
UN throughout Asia and in renewed agitation for independent
action by the nations which participated in the recent Asian
Conference. Such a development, which would be accom-
panied by a rise in anti-colonial feeling, would seriously
affect US security interests because Asian leaders will
almost inevitably associate the US with the western colonial
powers. Although the Kremlin is opposed to the develop-
ment of an Asian bloc which it cannot control, any increase
In anti-colonial agitation in Asia would be energetically
exploited by the USSR
Communist Labor Meanwhile, the USSR is intensifying
Its efforts toward the expansion of the
world Communist movement, in Asia and the Middle East
through the more "reliable" tactics of organizing Com-
munist-dominated labor and youth movements. The World
Federation of Trade Unions, now operating without US,
British, or Dutch national representation, has called for an
All-Asiatic Labor Conference to be held in Peiping in May
(see Article, page22 ). Reported adoption of a $1,500,000
budget to finance travel and propaganda expenses of the
Conference highlights the importance attached to it by the
WFTU Communist leadership. In its timing, this Confer-
ence may be designed to offset the forthcoming Indore con-
ference scheduled by the India National Trade Union Congress
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in an attempt to organize a non-Communist Asian labor
group. In a simultaneous move, the WFTU has authorized
immediate affiliation of Japanese trade unions. The WFTU's
organizing drive in the Orient will be paralleled by those
of the Communist-controlled World Federation of Demo-
cratic Youth and the International Student Union. These two
organizations have increased their membership in South-
east Asia to seven million and are likely to make additional
gains at the forthcoming Asian Youth Conference in Calcutta.
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WESTERN EUROPE
The current Soviet "peace offensive" against the
Atlantic Pact is causing varied reactions among the
nations interested in such a pact. In virtually all western
nations, there was considerable relief when the US did not
fall into the Soviet trap for US-USSR talks which could have
led to bilateral decisions.
Norwegian Reaction Norway became the "whipping boy" for
the Soviet propagandists with the delivery
of the Kremlin's protest against Norway's participation in the
Atlantic Pact, although the threat was intended for all of Scandi-
navia. Despite the continuing Soviet charges against Norway
for its consideration of the pact, Norwegian public opinion con-
tinues to support the present line of the Government. Norway
has not yet replied to the Soviet offer for a non-aggression
pact. Norway could offer to sign such an agreement, provided
it remained free to join the Atlantic Pact, although such an
offer would probably be unacceptable to the USSR.
Soviet Intentions If the Kremlin is unsuccessful in frighten-
ing Norway into avoiding the Atlantic Pact,
the next Soviet step may be to bring the entire matter of the
Pact before the United Nations as a threat to world peace.
Much of the Soviet propaganda and maneuverings is apparently
designed to create the impression that: (1) the west is re-
sponsible for current tension in the world; (2) the Atlantic
Pact is an aggressive alliance; and (3) Soviet counteraction
is therefore justified. Although the USSR can hardly hope for
favorable UN action on such a charge against the west, the
Kremlin may feel that UN consideration might: (1) delay imple-
mentation of the pact; (2) discourage prospective members;
(3) force modification of the pact terms; and (4) detract world
attention from unfavorable UN action on the Berlin issue, If
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the UN threw out the Soviet charges as groundless, the
USSR could renew its charges that the UN is nothing more
than a tool for the US Department of State.
Irish Attitude Although Ireland's leaders are becoming
more and more aware that in a future
conflict Ireland's lot must be cast with the west, they have
said that the partition issue will make it impossible for
the government to Join any military alliance with the UK.
Sometime in the near future, however, perhaps with the
formal signing of the Atlantic Pact, the Irish Government
may proclaim its ideological alignment with the west.
Icelandic Views The tenure of Iceland's coalition Cabinet,
which has been constantly threatened by
inter-party disagreement over deflationary policy, is now
further jeopardized by the intra-party divisions on the con-
duct of foreign affairs. Left-wing and isolationist elements
in the various parties, heretofore relatively quiet, have
joined forces with the Communists in vigorous opposition
to the Atlantic Pact. The formation of the present non-
Communist government in 1947 was made possible only by
voluntary quiescence of the left-wing factions of the Cabinet
parties; an end to this arrangement could easily bring
. about the downfall of the Government.
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FRANCE
Election Prospects If the present political truce between
government parties, as well as favor-
able economic? trends, continues in France, the Queuille coali-
tion Government not only may last until the cantonal elections
In March but may profit by them. Although political coopera-
tion between the third-force parties is not completely assured,
recent Socialist and Popular Republican decisions indicate
that these parties may agree on election tactics in an attempt
to defeat the Communists and De Gaulle's Rally of the French
People in the coming elections. In addition, apparently favor-
able response by the French to the latest government loan
Indicates that the public has begun to believe the inflation has
about run its course. Continued success of the Government
In overcoming its economic and political problems and in
presenting a united front to the extremes of Right and Left
will tend to keep submerged the basic differences among its
constituent parties on such issues as French Indochina, sub-
sidies to church schools, and a planned economy.
AUSTRIA
Austrian Peace Treaty Prospects for agreement on an
Austrian peace treaty during the
current London negotiations have improved as a result of ap-
parent Soviet willingness to accept Austria as a neutral in the
east-west lineup. The peace treaty terms, however, would
have to meet the soviet definition of neutrality: namely, an
Austria impotent to threaten Soviet security and incapable
of contributing substantially to western economic and defen-
sive planning. Soviet policy toward Austria during the past
six months has been marked by comparative restraint and
moderation, suggesting that the USSR has abandoned any
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AUSTRIA
hope of obtaining control over Austria by the aggressive
tactics currently being employed in Germany. Moreover,
the USSR probably realizes that continuation of the status
quo in Austria will prevent further Soviet gains there. Con-
sequently, the Kremlin may calculate that a weak Austria--
even though non-Communist?would not threaten the Soviet
security position and would provide the USSR with unique
opportunities for using Austria as a means of promoting
east-west trade. During the London negotiations, however,
the USSR will strive to gain every possible advantage and
will not hesitate to break off negotiations if the western
powers insist on terms which, in the Soviet view, will enable
an independent Austria to contribute materially to western
economic and defensive strength.
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EASTERN EUROPE
Soviet Military Bloc Although the USSR has already estab-
lished a military alliance with the
Satellite states through an interlocking network of mutual
assistance pacts, persistent reports emanating from eastern
Europe indicate the formation of an eastern European military
bloc to counter the establishment of the North Atlantic Pact
Speculation regarding such a move by the Kremlin has been in-
tensified by the mysterious visit of Vishinsky to Czechoslovakia,
as well as by the reported presence there of Gromyko, Zorin,
the Polish Communists Berman and Zawadzki, and Soviet Am-
bassadors from the Satellites. Other reports place the Hungarian
Minister of War aid high-ranking Czechoslovak and Polish
military officials in Moscow for planning of n similar nature.
The formation of such an east European military organization
would enable the USSR to exert more direct control of "un-
reliable" Satellite military establishments and would improve
the morale of the Satellite Communist regimes which are be-
coming increasingly concerned over growing economic stability,
political cooperation, and defensive preparations in western
Europe.
HUNGARY
Nationalized Church Formation of a so-called "independent"
Catholic Church will probably be the
next Communist step in divesting the Church of its power in
Hungary. Communist domination of the Church is already
virtually assured. Cardinal Mindszenty and nine of thieteen
members of the Bench of Bishops are either under arrest or
about to be arrested; all Church officials, including village
priests, are on the state payroll; Catholic schools are nation-
alized, The Government will probably use Minclszenty's
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HUNGARY
letter urging an agreement between the Roman Catholic
Church and the state to force concessions from the four
remaining bishops and, eventually, to produce a national
church without contact with Rome.
TRIESTE
Soviet Intentions Communist tactics to acquire control
of Trieste may be undergoing revision.
Recent statements by pro-Cominform Communists suggest
that the USSR has abandoned its previous support of an
Independent Trieste and no longer is pressing for the appoint-
ment of a governor by the UN. Such a reversal in tactics
may have been prompted by the belief that the USSR can
ttter accomplish both its immediate and long-range objec -
es in Trieste by: (1) eliminating US-UK military govern-
ment and occupation troops; and (2) agreeing with the
western-power proposal for the return of Trieste to Italy.
Lacking any present incentive to support Tito's claims to
Trieste, the Kremlin also may believe that if Trieste were
Italian, the Communists could gain more effective control
,of the city by penetration of local governmental machinery.
GREECE
Markos Dismissal The purge of General Markos by the
Politburo of the Greek Communist
Party (KKE) should have the principal effect of assisting
the internationalist, or pro-Cominformlwing of the party
under Zachariades in completing its domination over the
guerrilla movement. Markos has been virtually the only
important leader of the nationalist clique in KKE since
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GREECE
the spring of 1947, when his most prominent fellow-national-
ists, Siantos and Zevgos, died mysteriously; particularly in
his role of military spokesman for the guerrillas, Markos may
have resisted the growing Kremlin pressure to steer clear of
commitments to Tito. Marko& relief from command will
probably have little immediate effect on guerrilla tactics or
capabilities in the field. Markos has reportedly never had
much more than a symbolic role as a military leader and,
in any event, there are indications that he has been in virtual
retirement since last summer's Grammos campaign. More-
over, Yugoslav support for the guerrillas, particularly by
the pro-Tito Greek Slavo-Macedonian irregulars, has already
lessened. The fact that Markos was dropped on grounds of
illness, rather than for failure or deviationism, suggests
that Zachariades hopes to effect a reduction in anti-Comirkform
influence among the guerrillas quietly, without antagonizing
Tito into ceasing all cooperation with the Greek rebels. One
remaining possibility, however, is that the Markos dismissal,
while immediately effecting a closing of ranks within 101E,
may in the end react against it by giving Tito cause for cutting
off support of the guerrillas and sealing the Yugoslav border
against them.
YUGOSLAVIA
Economic Sanctions Moscow-dictated economic sanctions
against the Tito regime will seriously
curtail Polish and Hungarian trade with Yugoslavia during
1949. As a consequence, Yugoslavia's trade with Poland
will be cut by 73% below the 3948 figure, and trade with Hun-
gary will be cut by an estimated 40%. Because Poland still
needs to exchange its coal for Yugoslav raw materials, the
cut has clearly been made at Kremlin direction. Similarly,
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YUGOSLAVIA
the Hungarian Trade Mission to Moscow returned with
instructions to reduce its trade with Yugoslavia. The
mission also received orders for re-routing all Hun-
garian rail traffic in such a way as to avoid Yugoslavia.
In its efforts to compensate for the loss pf considerable
eastern European trade and as a measure for reestab-
lishing closer economic relations with the west, Yugo-
slavia has just appointed a top-flight economic official
(Assistant Minister al Foreign Trade and former Minis-
ter of Heavy Industry) to the US with the rank of Minister.
Yugoslavia has thus indicated its eagerness to obtain
US industrial equipment. The routine character of the
announcement, however, suggests that Yugoslavia is
attempting to disguise its eagerness and to avoid having
to make political concessions in order to receive US
economic assistance.
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NEAR EAST-AFRICA
Rhodes Deadlock The Egyptian and Israeli representatives
at Rhodes, unable to agree on any general
armistice principles, appear to be concentrating on technical
details, presumably in the hope that agreement on details
will add up to a comprehensive armistice. It is unlikely that
this inverted procedure will lead to a satisfactory solution.
Moreover, the other Arab states have reached no decision
on how to deal with Israel in the present uncertain situation.
Despite Transjordan's announced eagerness to negotiate, it
is waiting to see how the Egyptians make out at Rhodes.
Lebanon is reluctant to institute negotiations so long as
Israeli forces remain in southern Lebanon. Syria seems
unwilling to negotiate under any conditions. Iraq has asked
Transjordan to represent it in whatever negotiations take
place, but it probably will not feel bound by commitments
made on its behalf. Saudi Arabia and Yemen are silent on
the question, and Israel declares that it has no differences
with either of them. Meanwhile, Israel's extension of its
civil administration to Jewish Jerusalem and its announced
intention of holding the Constituent Assembly there are re-
garded as preliminary to incorporation of certain sections
of the city into the Jewish state, notwithstanding the UN's
resolution that Jerusalem be internationalized (see Article,
? page /9). Thus the old picture of Israeli determination and
Arab vacillation has not changed.
IRAN ?
Effects of Shooting The attempt to assassinate the Shah
has provided his supporters with an
opportunity to clamp down on troublesome leftist and rightist
opponents of the court and the government. The pro-Soviet
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IRAN
Tudeh Party, to which officials claim the assassin belonged,
has been outlawed and the politically ambitious religious
leader, Mullah Kashani, and some of his henchmen have been
arrested, although neither has been clearly implicated in
the attack. Altogether some 500 persons have been reportedly
arrested and 60 newspapers suppressed, and the army will
probably further tighten security controls throughout Iran.
The attempted assassination will also affect the Majlis, which
almost certainly will now be confronted with renewed attempts
by the Shah to obtain constitutional reforms granting him
greater powers.
ISRAEL
Jewish Immigration Increasing control by Satellite govern-
ments of Jewish immigration from
Soviet-controlled areas will probably result in a substantial
reduction in Jewish immigration into Israel. After the war,
the Zionist movement was able to draw upon all Europe for
resettlement of DP's in Palestine; since the end of the British
Mandate, the new Israeli Governme4t has had to rely chiefly
on Satellite countries to increase the Jewish population in
Palestine. Until recently, Zionist agencies controlled emigra-
tion from the Satellite states. By the close of 1948, however,
the Satellite governments had started to take over supervision
of emigration. In Rumania, emigration has been restricted
to Communist-indoctrinated Jews and the Polish Government
has severely restricted all emigration. In the other Satellites,
Zionist organisations are being subjected to increasing gov-
ernmental interference. The net effect of these restrictions
will be to reduce Jewish emigration to Israel. Trusted Satel-
lite Communists, moreover, will not wish to emigrate from
lands where they are in favor, and the majority of those who
are permitted to depart will be more pro-Israel than pro-Soviet,
despite their alleged Soviet indoctrination.
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FAR EAST
CHINA
Nationalist Confusion During a week marked by various
Nationalist attempts to alen peace
negotiations with the Communists, the Communists continued
to mass their columns in an area above Nanking :ram which
they can easily cross the river to occupy the major cities
of the Yangtze delta as soon as the Nationalists I omplete their
withdrawal... Nationalist intents and purposes in I heir conduct
of the civil war were made even more hazy by th dispatch
of Chang Chih-chung td China's Northwest, repo] tedly to
approve a "local agreement" of 40 to 50 years ciration be-
tween the USSR and the Sinkiang government (see Article,
page 20). Meanwhile, conflicting reports of wir t various
local Nationalist commanders will do in the face of superior
Communist forces provide an accurate measure of the
indecision and confusion existing in various ley' is of the
Nationalist command hierarchy. It is evident, t owever, that
the majority of Nationalists, military and civilian alike,
agree that Li Tsung-jen's present peace overt ires will
accomplish little toward ending the civil t onf tot.
Taiwan Unrest- Although Nationalist ek Ira?nts are becoming
more firmly established a Taiwan, growing
native resentment against the recently-apy; Anted Nationalist
governor and his use of "police state .Taq thods may lead to
either a popular revolt or damaging sab Ykage against Nation-
alist efforts to build a bastion on the isl Ind. Increased
Taiwanese discontent under Nationalist .ule? barring effective
countermeasures by the US, would lead lie natives to turn to
the mainland Communists as their last z sort in their fight
against Nationalist oppression. So long,s b.; Taiwan's status
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CHINA
remains in doubt, anti-US sentiment will continue to grow
both among the Taiwanese and the Nationalist elements.
Chinese Nationalists are already beginning to resent the
US delay in providing aid in the preparation for a last-stand
fight against the Communists,and the native Taiwanese are
finding fault with the US for doing nothing to block what
they consider to be an abortive Nationalist attempt to survive
a little longer at the expense of Taiwanese freedom and
property.
INDONESIA
New Dutch Proposal Exploratory talks concerning a new
Dutch plan for the transfer of Nether-
lands sovereignty to an Indonesian Federation are being
conducted at an all-Indonesian meeting on the island of
Bangka. Acceptance of the Dutch proposal by the conferees
(both Republican and Federalists were represented) would
greatly accelerate Dutch and Security Council ametables
for elections and for the transfer of authority to a new
Federation. Republican leaders remain skeptical, however,
and regard the plan as a Dutch device to circumvent the
28 January SC resolution calling for the reestablishment of
Republican sovereignty in Indonesia. They have declined
to participate in formal negotiations with the Federalists
until they have been granted recognition as representatives
of a reconstituted Republican government and unless the UN
supervises the negotiations. The Federalists, moreover,
hesitate to commit themselves to a specific course of action
until it becomes clear whether the Dutch or the Republicans
are gaining the upper hand in Indonesia.
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WESTERN HEMISPHERE
CANADA
Newfoundland Bases Although Canadian policy , as a rule,
requires that all US military forces
stationed in Canada be commanded by Canadian officers, an
exception will probably be made in the case of US bases in
Newfoundland. Certain Canadian officials have indicated
Informally that they would prefer to see no change in the
operation of US bases there alter Newfoundland becomes
a Canadian Province on 1 April. However, the Government
may feel it necessary to establish some nominal Canadian
control over the bases, if only to satisfy the demands of
the opposition for assurance of Canadian sovereignty.
CARIBBEAN
Caribbean Bloc Current Cuban efforts to form a
"spiritual and intellectual" bloc of
Caribbean "democracies" to oppose the area's "dictator-
ships" will not directly affect US security interests but
may have a divisive effect on attempts to solve certain
Western Hemisphere problems by joint inter-American
action. Sparked by President Prio of Cuba, the proposal
was favorably received in Costa Rica, Guatemala, Mexico,
and by the former Venezuelan government and has the
support of the Committee for Democratic Union of the
Caribbean and of a militant Cuban veterans' organization,
which have demanded a "general spiritual mobilization"
against the Dominican Republic to be expressed in sever-
ing Cuban-Dominican diplomatic relations. In sponsoring
such a bloc, President Prio is probably attempting to:
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CARIBBEAN
(1) give propaganda support to the Caribbean Legion in
its struggle against the Somoza regime in Nicaragua; and
(2) emphasize Caribbean problems as distinguished from
South American problems.
BRAZIL
Coffee Production The continued reduction in Brazilian
coffee production, which provides
one-third of Brazil's foreign exchange, will seriously dis-
locate the nation's economy. Curtailed by the Government
in the 1930's to avoid overproduction, the coffee plantations
are now suffering from a widespread coffee-plant disease.
Coffee planters will seek aid from the Government, whose
rigidly constricted finances will be further burdened to
save the country's chief industry.
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ISRAELI TACTICS IN JERUSALEM
Current Israeli tactics to achieve the incorporation
of the Jewish sections of Jerusalem into the new Jewish state
are apparently designed to forestall implementation of the
UN proposal to internationalize the city. While Jerusalem
was isolated by Arab forces from the rest of Israel, the
majority of Jews in Jerusalem reportedly favored the UN
proposal. Only the independent Irgun and Stern Gang fighters
insisted that the city must become the capital, and hence an
integral part, of Israel. As Israel's strength increased follow-
ing the first UN truce, however, the incorporation of Jerusalem
within Israel became increasingly popular among Jews generally.
A Jewish Military Governorship was established and improve-
ments were made in the communications between Jerusalem
and Tel Aviv, including the building of the "Burma Road" to
bypass Arab-held Latrun. Subsequently the Jews were re-
ported to have began the construction of new settlements
in the connecting corridor, and Jewish immigrants from
Europe have been housed in such areas as Ra.mle and Lydda,
which had been inhabited by Arabs. An offensive to gain con-
trol of the entire city was prevented primarily by the cost in
time and effort that clearing the Old City would impose on
the embryonic Jewish state and by the fact that the UN had
consistently favored internationalizing the entire Jerusalem
area.
Now, however, the Israelis are strengthening their
claims in Jerusalem by the simple expedient of building up
their vested interests in the area. Recently, the Provisional
Government of Israel announced that the Israeli civil adminis-
tration would replace the Military Governorship of Jerusalem.
Moreover, government offices are gradually being transferred
from Tel Aviv to Jerusalem, and the forthcoming Constituent
Assembly will be held there. These tactics seem designed to
prepare the ground for the eventual annexation of at least
Jewish-held Jerusalem and thus to present the UN with a fait
accompli.
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IMPLICATIONS OF SINKIANG AGREEMENT
Two seemingly unrelated diplomatic maneuvers In
China suggest that the Kremlin is attempting to create a buffer
area between the USSR and Communist China and that the
Itittonalist Government is seeking to exploit this Soviet aim
as a means to obtain Soviet mediation in the civil war. The
Nationalists have sent an emissary to Sinkiang to negotiate
a long-term treaty which would greatly strengthen the Soviet
position in Sinkiang. Simultaneously, Soviet Ambassador
Roshddn followed the Nationalist Government to Canton and
thus strengthened the Nationalists' hope that the USSR would
mediate the civil war in return for favorable concessions
from the Nationalists in Sinkiang.
Conclusion of the reported Sinkiang agreement would
be a further step in the establishment of a Soviet Satellite
belt along the Sinb-Soviet border. The USSR under the Sino-
Soviet treaty of 1945 gained a strong position in Manchuria;
Outer Mongolia has become a Soviet Satellite and may draw
Inner Mongolia into its orbit; and the agreement now being
negotiated in Sinkiang would probably lay the groundwork for
eventually making that province a Soviet Satellite as well.
Under the proposed terms of the agreement, Sinkiang
would grant the USSR mining, trade, and aviation monopolies
for the next 40 to 50 years. The mining monopoly would give
the USSR full rights to exploit Sinkiang's little-known re-
sources of oil, wolfram, and gold. The oil deposits in Sin-
ldang are reported to be large enough to supply eventually
the entire Soviet Far East and, in addition, the USSR would
be in a position to check unconfirmed reports of uranium
deposits in Sinkiang. The trade monopoly, under which
Sinkiang wool and raw materials would be exchanged for
Soviet manufactured goods, would reestablish the natural
economic link between Sinkiang and the USSR.
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Concision of an agreement which genuinely excluded
the Chinese Communists would present them with a serious
dilemma. Acquiescence would involve a major loss of prestige
as well as substantial territorial and economic reductions.
On the other hand, any attempt by the Chinese Communists
Ito denounce the agreement or to wrest control of Sinkiang
from the USSR would jeopardize their relations with their
one important international ally. Although Soviet action in
denying the Northwest to the Communists will increase the
possibility of Tito-like defections in China, effective Soviet
control of this buffer area will reduce the security risk to
the USSR if such Communist defection in China does occur.
Meanwhile, the Nationalist Government stands to gain
little from concluding the proposed Sinkiang agreement with
the USSR. The life expectancy of the present Chinese Gov-
111 ernment is certainly not 40 or 50 years and signing the agree-
ment will have little effect on Soviet intentions to mediate
the civil war. Acting President Li Tsung, however, may be
sufficiently naive and desperate to carry through with the
negotiations in the hope that the USSR in return will actually
attempt to obtain more favorable peace terms for the Nation-
alists.
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EFFORTS BY THE WFTU TO CONTROL WORLD LABOR
Recent decisions of the Soviet reconstituted World
Federation of Trade Unions (wrru) indicate that it is seek-
ing to extend Communist control of the world's labor forces
before US, British, and Dutch union leaders can organize
a western-oriented labor international. In swift succession,
the WFTU has: (1) issued a call for an All-Asiatic Trade
Union Conference at Peiping; (2) established 16 "trade
departments' which the international craft unions are in-
vited toloin on their own terms; and (3) approved immediate
admission of German trade unions "zone by zone," The
anticipated inclusion of left-wing US and British unions in
the new trade departments and the announced WFTU intention
of maintaining relations "with trade unions in all countries,
with no exceptions" suggest that the USSR will attempt to
go over the head of the dissident national organizations and
appeal directly to rank-end-file western labor.
Simultaneously, in an attempt to delay early forma-
tion of a western labor federation, Soviet labor leaders are
seeking to maintain liaison with the British Trades Union
Congress "on practically any terms" and, in a similar
divisive tactic, are playing up the difficulty of aligning a
'reactionary" AFL with any new International, To offset
the withdrawal of the three western national organizations,
WFTU's Communist leadership will exploit fully both the
recent admission at Communist-approved labor groups in
Chile, the Philippines, Siam, Southern Rhodesia, Tunisia,
and Malta and the continued adherence of the labor move-
ments of Australia, the Far East, and the colonial areas..
Such moves will be relied on to reinforce the fiction that
the WFTU is the only broadly based and genuinely repre-
sentative international workers organization.
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II
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DISTRIBUTION
1. ? ? The President
2 Secretary of State
3 ...... . Chief of Staff to Commander in Chief
4.. ? Secretary of Defense
5 Secretary of the Army
6 Secretary of the Navy
Secretary of the Air Force
8,70 Chairman, National Security Resources Board
9 Executive Secretary, National Security Council
10 Assistant Secretary of the Navy for Air
11,69 Chief of Staff, U.S. Army
12,13,14 Chief of Naval Operations
15,16,17 Chief of Staff, U.S. Air Force
18 Director of Plans and Operations, General Staff,U.S.Army
19 Deputy Chief of Staff (Operations) U.S. Air Force
20 Deputy Chief of Naval Operations (Operations)
21 Director of Plans and Operations, U.S. Air Force
22,23,24 Special Assistant to Secretary of State for Research
and Intelligence
25,26,27,28,29, Director of Intelligence, General Staff, U.S. Army
30,31,32,33,34.
35,36,37,38,39, Chief of Naval Intelligence
40,41,42,43,44.
45,46,47,48,49. Director of Intelligence, U.S. Air Force
50 Director of Security and Intelligence,Atomic Energy Comm.
5/ Executive Secretary, Military Liaison Committee,
Atomic Energy Commission
52,53,54,55,56. Chief,Acquisftion & Distribution Division,OICD,Dept.State
57. ? ? ? . . . Director, Federal Bureau of Investigation
58 Secretary, joint Chiefs of Staff
59 Chief, Policy Planning Staff ,Department of State
60.. Secretary of State (Attention: Chief, Policy Reports Staff)
61 Deputy Director, joint Intelligence Group, Joint Staff
62,63 Secretary, joint Intelligence Group, Joint Staff
64 Director, joint Planning Group, joint Chiefs of Staff
65. ...... US Air Force Representative on joint Strategic
Survey Committee
66,67 Secretary, State-Army-Navy-Air Coordinating Committee
68 Administrator, Economic Cooperation Administration
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U. S. GOVERNMENT PRINTING OFFICE
2631-8--I94L
ilimmoni Declassified and Approved For Release 2013103/15: CIA-RDP78-01617A002100160001-0 mor--11