CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000100250001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 15, 2016
• Document Release Date: February 4, 2003
• Sequence Number: 1
• Publication Date: November 20, 1953
• Content Type: REPORT

1-1
NO.
; D
OCI NO. 1026
20 November 1953
CURRENT
INTELLIGENCE
WEEKLY
rac CFe:~rJGE r: CLA
CLASS. C Fir :NG - 3 TO: 13
:EXT REV!EW DATE:
AUT -_~
DATE
HEVlEU E. J
CENTRAL INTELLIGENCE AGENCY
III OFFICE OF CURRENT INTELLIGENCE
c
L
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared pri-
marily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of
all current situations. Comments and conclusions rep-
resent the immediate appraisal of the Office of Current
Intelligence.
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THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . Page 3
PROSPECTS FOR THE PELLA GOVERNMENT'S CONTINUANCE . . . Page 5
Premier Pella's "transitional" government, having
accomplished its primary objective of securing parlia-
mentary approval of a budget, may fall at any time.
Its successor would probably be oriented more to the
right.
SIGNIFICANCE OF THE PHILIPPINE ELECTION . . . . . . . . Page 8
The clean election in the Philippines marked a
significant step toward political maturity, but Magsaysay
will face a severe test in his attempts to carry out the
basic reforms necessary to ensure internal stability.
PROSPECTS DIM FOR ANGLO-IRANIAN OIL NEGOTIATIONS . . . Page 9
Reports from Tehran and London
give little hope of an early resumption of oil negotiations.
THE STATUS OF FRANCE'S MILITARY EFFORT . . . . . . . . Page 11
The proposed French military budget for 1954, calling
for an 11-percent cut under this year's expenditures, re-
flects the mounting economic and political difficulties
which impel France, like most other NATO members, to con-
centrate on improving the effectiveness of existing forces
rather than expanding them.
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THE SOVIET WORLD
The inflexible and negative character of recent Soviet
statements and notes concerning East-West negotiations does
not indicate any basic reversal in foreign policy. It merely
suggests that the Soviet leaders have concluded that the
West's constant diplomatic pressure has so reduced their
freedom of maneuver and evasion that they can no longer avoid
making known their unwillingness to settle any major East-
West issue at the cost of concessions involving the present
frontiers of the Orbit.
In an unusual press conference, Molotov made an obvious
effort to counter any unfavorable reaction, but succeeded only
in re-emphasizing his government's refusal to consider any
substantive changes in its unacceptable conditions for holding
a high-level conference with the Western powers. Molotov's
charge.that the forthcoming Bermuda conference would be likely
to increase the difficulty of settling international problems
recalls Pravda's criticism of the conference originally
scheduled for June and more recent charges of Western "collu-
sion" expressed in the Soviet notes of 4 August and 3 November.
The widely circulated TASS denial of the rumor that
Malenkov had informed the British of his willingness to attend
a four-power meeting underscored Moscow's strong opposition
to such a conference, especially on the heads-of-government
level. Molotov carefully emphasized that the five-power con-
ference proposed by the USSR should be on the foreign ministers'
level
The Kremlin's unwillingness to settle European issues
probably also accounts for recent Soviet evasiveness in dealing
with Austrian officials who were seeking to promote a state
treaty. Soviet diplomats. refused to confirm formally their
oral approval of the principle of Austrian participation in
treaty talks, and rebuffed an attempt by the Austrian chancel-
lor to explore treaty possibilities through diplomatic channels.
Abolition of Soviet censorship of the Austrian national radio
was apparently only a reluctant reaction to the initiative of
Austrian officials who took advantage of the recent four-power
abolition of general censorship.
Qualified Soviet interest in joining international organi-
zations is one of the few indications. since last summer that
Moscow will continue its conciliatory gestures in some fields.
The Soviet government indicated an intention to adhere to the UN
Educational, Scientific, and Cultural Organization and the In-
ternational Labor Organization, but with reservations in both
cases,
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It now appears that the USSR's contribution to the
United Nations' 1954 technical assistance program will again
have conditions attached designed to control the expenditure
of these funds. The 1953 pledge, announced last July, has
not been fulfilled because the Kremlin, in addition to demand-
ing the right to earmark it for specific projects, insists that
this fund is not convertible, that it must be utilized in the
USSR for facilities or equipment, and that any equipment pur-
chased for use outside the USSR must be labeled as to its
Soviet origin.
Moscow's denunciation in the United Nations of the estab-
lishment of Western bases on the Orbit's perimeter has been
accompanied by increased emphasis in Soviet propaganda that
Western military plans now call for a "northern Middle East
Defense Command," including Turkey, Iran, Pakistan, and pos-
sibly Iraq and Afghanistan, which is aimed directly at the USSR.
Moscow's sensitivity to any military organization of Middle
Eastern states is probably related to the recent visit of
Pakistani military officials to the United States and Turkey.
Radio Moscow so far has commented only factually on the
current talks between high North Korean and Chinese Communist
officials in Peiping. The official Chinese People's Daily,
observing that the "destiny of the Chinese people closely
tied to that of the Korean people," pledged continued assistance
to the Koreans "until the completion of their work of recon-
struction and a peaceful settlement of the Korean question,"
The talks will probably result in an agreement to formalize
Chinese-North Korean relations along the lines of the recent
Soviet-North Korean economic agreement. In addition to the
treaty's propaganda effect, such negotiation's may.lead to an
expansion-and definition of the Chinese role in North Korean
affairs and tend to heighten the over-all importance of
Peiping as a leader in the Far East,
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PROSPECTS FOR THE PELLA GOVERNMENT'S. CONTINUANCE
With the reopening of the Italian parliament on 17
November, the question of Premier Pella's continued tenure
may be raised at any time. Passage of the budget on 30
October achieved the objective which Pella laid down in
August for his "transitional government." Should his
cabinet fall, a government oriented more to the right seems
likely.
The Trieste question dominates the political horizon...
Thus far it has strengthened Pella's parliamentary position
by diverting attention from domestic issues, but it will
probably cause his overthrow if he fails, within a reasonable
length of time, to obtain a solution regarded by the public
to approximate the Anglo-American decision of 8 October.
Any new government replacing Pella's under these circumstances
would be more nationalistic and less inclined to cooperate
with the United States on such questions as support for Italy's
NATO commitments and EDC ratification.
A Trieste settlement favorable to Italy, however, will
not in itself ward off an eventual cabinet crisis. When
Pella's government of Christian Democrats took office in
August, it was approved by an unstable parliamentary majority
consisting of Christian Democrats,. Republicans, Liberals,
and Monarchists (see chart, p. 7). The Monarchists' support
and the Democratic Socialists' abstention marked a rightward
shift from the center bloc which supported the preceding
De Gasperi regime.
Despite the continuing popular demand for social and
economic reforms, the Pella government managed to avoid
major political controversies during its first two months.
A one-day general strike on 24 September was supported by
both the Communist and non-Communist labor federations, but
plans for more extensive strike action were postponed following
the agreement of Confindustria, the Italian employers' associa-
tion, to negotiate outstanding differences. The budget, which
calls for reduced military appropriations and only slight
increases in social expenditures, was passed without difficulty.
On 31 October, however, in the parliamentary voting to
name five judges for the projected Constitutional Court, the
Christian Democrats supported only their own two candidates
and indicated that they no longer intended to maintain the
old center bloc. This enabled the Nenni Socialists and the
Communists to show solidarity with the small center parties.
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Both the left-center and extreme }_eftist parties now charge
that the government has decided to "collaborate" with the
Monarchists and consequently must "re-qualify" before parlia-
ment under its "true center-right colors." The other parties
are urging Pella to avoid a vote of confidence at this time.
If the present government falls over a domestic issue,
its most likely successor would be more oriented to the right,
with at least the support if not the participation of the
Monarchists, and possible. headed once more by Pella. This
would involve some risk of a split in the Christian
Democratic Party, an influential segment of which could prefer
a government oriented toward the left with a program which
would win the support of the Nenni Socialists. The Monarchists
though not fundamentally opposed to NATO and EDC, would insist
on a conservative economic and social program.
Many observers also believe that a new move to the right
at this time, particularly in view of the electorate's left-
ward shift in last June's election, would further weaken
government stability and enhance t ha popular appeal of the
extreme left.
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PARTY SUPPORT OF THE ITALIAN GOVERNMENT
z
LI VOTED FOR PELLA GOVERNMENT
4. ? O VOTED AGAINST PELLA GOVERNMENT
V Q ABSTAINED
CHAMBER OF DEPUTIES -- 590 SEATS
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I
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The respect shown for the widespread public demand in the
Philippines for honest elections marks a significant step
toward political maturity. Magsaysay has had little political
experience, however, and will face a severe test in his
attempts to carry out the basic reforms necessary to ensure
internal stability.
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The 10 November elections saw the heaviest voting and were
the cleanest since Philippine independence in 1946. In only
two of the country's 52 provinces were there serious disorders.
This can be attributed in large measure to the work of various
civic groups and the official but nonpartisan Philippine Commis-
sion on Elections. The latter provided the machinery necessary
for a free election while the former told the public how to use
it. The wide publicity given by the civic groups to every indi-
cation of dubious intent on the part of Quirino's less savory
adherents also served as a healthy deterrent.
. The "pro-American" label pinned on Magsaysay by the
Liberals proved to be a political asset, although in some parts
of Southeast Asia the victory of the so-called American candidate
may be regarded as confirming the view that the Philippine repub-
lic is an American puppet.
As president, Magsaysay will face economic and social ills
which successive American administrators found virtually insol-
uble. Primary among these is a feudal land tenure system. The
country is predominantly agricultural, but only about half of
the farms are operated by the owners. The appeal of the Huks
has been based on the legitimate grievances of tenant farmers.
As defense secretary, Magsaysay recognized this fact, but was
able to establish only a token program to provide land for
the landless.
Most of the Nacionalista Party leaders surrounding Mag-
saysay are like the spoils-minded politicians who flocked to
Quirino and who resisted reforms in the past. Many of them
probably expect only that they will receive opportunities for
private gain at the public's expense. Magsaysay has given no
indication of his cabinet choices, and the commitments he has
made to these Nacionalista leaders are not known, but they
will certainly influence the appointment of many key officials.
Public interest in politics has been aroused to an unprec-
edented extent in the Philippines,however, and the prospects
for good government are brighter than ever,
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give little hope of
an early resumption of oil negotiations.
Prime Minister Zahedi's government takes a position similar
to that of Mossadeq: the Anglo-Iranian Oil Company must not be
allowed to resume its former position in Iran and the British
cannot hold a controlling interest in any international group,
or consortium, formed to transport and market Iranian oil. 25X1
Iran also insists that it must receive all the profits from
the sale of its oil.
the country is in an unfavorable po- 25X1
sition for regaining its of market, Iranian officials maintain
that any arrangement which provides for a 50-50 split of rof-
its would be absolutely unacceptable to public opinion. the
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rejected any AIOC claims for compensation for
.loss of future profits and suggested that AIOC and the consortium
work out the compensation problem between themselves.
Zahedi and the shah emphasize that the political aspects. of
the oil situation override economic considerations. When Zahedi
took office he promised to find a solution to the dispute. To do
so at the expense of what Iranian public opinion has been led to
believe is the country's sovereign right, however, might place
the government in an untenable position, Zahedi, who is greatly
concerned over public opinion, will be particularly cautious in
dealing with the British because Mossadeq, during the course of
his current trial for treason, has constantly maintained that he
is being prosecuted because he succeeded in removing the British
from Iran.
Government-controlled newspapers in Tehran, in an attempt to
prepare the public, emphasize the necessity for an oil settlement
as well as the difficulties facing Iran's attempts to regain its
international markets. There is no :indication whether the Iranian
public can be convinced that a solution can be reached only
through compromise?
British officials have taken the stand, perhaps for bargain-
ing purposes, that AIOC should have its title to the properties
in Iran recognized before participating in any international con-
sortium to market the oil, and that Britain must have at least a
51 percent share.
PROSPECTS DIM FOR ANGLO-IRANIAN OIL NEGOTIATIONS
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Reports from Tehran and London
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The problem of Iran and Britain resuming relations is also
closely connected with discussions of the )i.L issue. Iran has
insisted that relations, which were broken off at its initiative
in October 1952, can be resumed only after oil negotiations have
made some progress. Britain on the other hand maintains that the
resumption of diplomatic relations would greatly facilitate for-
mal oil negotiations.
Zahedi would probably re-establish relations in advance if.
he could convince the public that oil conversations had actually
started. Opposition elements may be expected to attack him for
resuming relations whenever he takes such action. The success
of the opposition in winning public support on this issue would
probably affect the prime minister's ability to compromise in any
oil settlement.
Britain and Iran probably have taken extreme positions in
order to allow freedom to bargain. Both governments, however,
appear to believe that they have only limited maneuverability on
this issue. Considerable time may therefore elapse before either
party is convinced that there is a chance for successful negotia-
tions.
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THE STATUS OF FRANCE'S MILITARY EFFORT
The proposed French military budget for 1954, calling
for an 11-percent cut under this ;year's expenditures, reflects
the mounting economic and political difficulties which impel
France, like most other NATO members, to concentrate on
improving the effectiveness of existing forces rather than
expanding them Xsee charts 1 and 2, p. 13).
Except for Vietnamese troop expansion financed by
special American aid, the proposed 1954 military outlay will
drastically curtail the planned rate of increase in personnel.
Equivalent to just over three billion dollars, exclusive of
United States aid, the military budget represents about 29
percent of the proposed total 19591. budget, a proportion
second only to that of the United Kingdom among European NATO
countries. The National Assembly, which will probably not
vote the budget before next year, is expected to approve the
expenditures despite the growing sentiment that France is
overextended in its military and economic commitments. .
This overextension was officially recognized early in
1953 when the Mayer government made a three-percent cut in
military expenditures. Support for the Indochina war, which
has been swallowing nearly a third of the annual military
outlay since 1946, was challenged by those who insist that
France must concentrate on its European forces to back its
claims to European leadership, This dilemma has been
partially resolved by supplementary American aid for Indo-
china, which enables France to avoid a drastic reduction in
defense outlays in Europe.
The rearmament program is also threatened bythejrowing
assumption in France thAt world tension has abated sufficiently
to allow reductions in military outlays. The effects of this
sentiment, which is potentially more dangerous than the
perennial undercurrent of opinion which fears provoking
Moscow, are offset by the prospects of German rearmament.
Most Frenchmen still view Germany as a threat to France's
security and insist on maintaining larger standing forces in
Europe. than their traditional foe.
The direct effects of these attitudes on French NATO
policy are already evident. Foreign Minister Bidault's public
intimation in'September that NATO strategic planning should
take more account of atomic weapons,was clearly an attempt to
justify French opposition to further increases in NATO
commitmen-ts a
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Although France met 1952 NATO requirements, it will not
meet SHAPE personnel recommendations for 1953. France's
armed forces now total nearly 1,000,000, with over 1,500,000
reservists trained on modern weapons since 1946 (see chart 3,
p. 13).
The navy is considered the most efficient arm. Old
vessels have been replaced or modernized, war-damaged
facilities repaired, and numerous additional small ships have
been built or ordered. The air force possesses only about
750 jet aircraft, dispersed in 23 of its 44 squadrons, with
enough personnel in training to form the 10 new squadrons
planned for 1954 as equipment is received.
The army's strength is still sapped by Indochina's
absorption of a large proportion of regular troops, leaving
too few professional cadres to train the conscript ranks in
Europe. With "lean" conscript years in prospect, the army is
handicapped by the 18-month draft period and by inadequate
refresher training for reservists. The army has lost its
former attractiveness as a career because of low pay and
other adverse conditions. Communist influence has been
practically eliminated from the regular forces, but it might
present a serious problem were the reservists to be mobilized.
Release from commitments in Indochina would result more
in qualitative than in quantitative advantages for the French
forces in Europe. A few squadrons of badly needed air force
personnel would be brought back. The return of naval personnel
would ease the problem of manning new ships now on order.
Prospects of forming several new infantry divisions with return-
ing army forces are largely discounted, however, since the
bulk of those in Indochina come from elsewhere in the overseas
territories and cannot be stationed in France in peacetime.
Steps have been taken during the past few months to remedy
the loose and conflicting political and military control of
the armed forces provided under the Fourth Republic, thus per-
mitting more effective use of France's military resources.
Improvement is apparent in morale and efficiency, a major
factor being the arrival of new American equipment in quantity.
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STATUS OF THE FRENCH MILITARY EFFORT
DOLLARS
. *Official Indochina portion
26%
1953
(after Mayer reduction)
SPE
INDOCHINA 27%
OVERSEAS
3% FRANCE 3%
1,200,000
1,100,000
( p
eak following Lisbon N
AC meeting)
1,000,000
achiev
ed
900,000
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revised plans
July 1951 plans
0
'0
800,000
at
i em,
.jog
700,000
STANDING FRENCH ARMED FORCES
APPROXIMATF
RACIAL COMPOSITION
NORTH
AFRICANS
13%
FRENCH
66%
NATIVE
COLONIALS
METROPOLITAN
FRANCE
37%
NORTH AFRICA
17% /
INDOCHINA
25%
ARMY
742,000
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BUD
CHART 2
5
4
3
2
1
OTHER
FRENCH
'UNIO
GERMANYS
& AUSTRIA
TOTAL: 936,000
AIR FORCE
124,000
and
EUROPE and
NORTH AFRICA
NAVY
70,000
INDOCHINA
17%
5% OTHER