WEEKLY INTELLIGENCE SUMMARY NO. 88

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300060024-7
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 9, 2016
• Document Release Date: January 29, 1999
• Sequence Number: 24
• Publication Date: November 15, 1949
• Content Type: SUMMARY

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OFFICE OF REPORTS AND ESTIMATES
Weekly Intelligence Summary No. 88
SECTION I. SUMMARY OF TRENDS AND DEVELOPMENTS
Recent rumors that Metalimport, a Bulgarian trading company, is
placing a $1 million order for air brakes with the Munich plant of Korr
Company are being investigated by US authorities in Europe. Acquisition
of this critical railway equipment would substantially increase Bulgaria's
railway transport capabilities. (Item No. 1, 8)
Some progress toward the integration of transportation development
plans for the African continent has been made by ECA's Overseas Terri-
tories Committee, which has recently recommended to the Governments of
the UK, Belgium, France and Portugal that an overall study and survey be
made of the transportation projects contemplated for their respective
dependencies in Africa. (Item No. 2, B)
The defection of ten transport aircraft of China National Aviation
Corporation (CNAC) and two transport aircraft of Central Air Transport
Corporation (CATC) to the Communists on 9 November places in Communist
hands the equipment and spare parts necessary to reactivate an extensive
network of air routes throughout Communist-held China, and to effect its
integration with those of the USSR. The Communists, meanwhile, have
appointed two defected CNAC officials as directors of that airline and
have declared that the company assets at Hong Kong belong to the new
People's Government. (Item No. 3, A)
A survey of postwar expansion by Latin American scheduled airlines
is included as an annex to this week's issue.
o DECLASS
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SURFACE TRANSPORTATION
1. Recent rumors that Metals ort, a lul arian tradin company is
placing a million order for air rakes t the !unic pan of Korr
Company are being investigated by US authorities in Europe. Acquisition
of this critical railway equipment Would substantially increase
Bulgaria's railway transport capabilities.
In June 1949, Metalimport ordered a large number of air brakes from
this plant, but cancelled the order when the USSR promised immediate
delivery from the former Karr plant in the Soviet Zone of Germany. How-
ever, no air brakes were actually delivered to Bulgaria under this agree-
ment.
Freight traffic in Bulgaria is slow and undependable because of the
shortage, poor condition and inefficient use of the company's rolling
stock. This situation, aggravated by the lack of air brakes,
requires both reduced speeds of operation and restricted loads. More-
over, Bulgaria must rent Hungarian rolling stock for its international
traffic, because existing freight oar exchange regulations prohibit the
use in such traffic of cars which are not equipped with air brakes.
Freight car parts are classified lB on the US list of security items
under export uontrol and the quantity of such items sent to the USSR and
its Satellites is carefully limited. For this reason, potential markets
in non-Satellite areas are now being explored by US representatives in
the hope of providing the Munich factory with other outlets for its
products. (Confidential)
Some progress toward the integration of transportation develo ment
plans for the African continent has been made by E CA's Overseas Terri-
tories Committee. This group, which is composed of all ECA participating
countries having overseas possessions, has recently recommended to the
Governments of the UK, Belgium, France and Portugal that an overall
study and survey be made of the transportation projects contemplated for
their respective dependencies in Africa. The extensive nature of the
transportation development plans under consideration by these Governments
is indicated by their estimated cost of from $1 to 41.5 billion, toward
which substantial US assistance will almost certainly be requested.
Co
IDENTIAL
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Integration under ECA sponsorship'of these plans into a coordinated
program for the gradual development of the African transport network will
serve the principal strategic interests of the US in this area; (a)
elimination of the strategic weakness inherent in the present inadequacy
for an emergency of African transport facilities; (b) assurance of con.
tinued and improved access to critical strategic materials throughout
Africa; and (a) promotion of greater stability in Africa through the
economic development of its relatively backward areas, (Confidential)
CIVIL AVIATION
3., The defection of ten transport aircraft of China National Aviation
Corporation CNAC anti two transport aircra t of Central Air Transport
Corporation (CATC) to the Communists on 9 November places in Communist
hands the equipment and spare parts necessary to reactivate an extensive
network of air routes throughout ,Communist-hold China, and . -o effect its
integration with those of the USSR?. The principal limiting factor for
maintenance of Communist air operations is the future availability of
aviation fuel. Ample stocks of 100 octane gasoline for. immediate require-
ments are known to be on hand. The simultaneous defection of a number of
top executives, as well as trained administrative and technical personnel.
has enabled the Communists to establish a CNAC component under their con-
trol.
There appears to be little doubt that most of the 89 other aircraft
belonging to CNAC and CATC, which are now being held at Hong Kong under
guard by the Chinese Air Force, would also have defected had not the
carefully prepared plans of the Communists and certain top executives of
the airlines becomip known to Nationalist authorities. Since the defection,
the Nationalists have appointed new, directors and general managers for
both airlines and the Governor .at long Kong has offered the protection of
British law for "the Chinese Government's assets" in the two companies.
The Commuxniats, meanwhile, have appointed two defected CNAC officlala as
directors of that airline and have declared that the company assets at
Hong Kong belong to the now People's Government.
In connection with their known desire to re-establish international
air services in defiance of the Nationalist "blockade", the Communists
have an additional motive for attempting to retain CNAC's identity under
their own control. In accordance with air agreements previously negotia-
ted by the Nationalists, CNAC remains China's designated international
air carrier, with commercial traffto rights in the ITS, Philippines, Hong
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Kong, 'flhailand, Burna, India and Pakistan. Presumably, recognition of
the Chinese Communist regime by the governments of any of these terri-
tories would confer these rights upon the Communist CNAC organization.
British recognition, furthermore, might also sanction the Communists'
claim to the aircraft described by the Governor of Hong Kong as the
"Chinese Government's assets."
The situation is further complicated by the fact that a 20 percent
interest in CNAC is held by the US airline, Pan American Airways (I'AA),
which has already held prolonged negotiations with Shanghai Communist
interests with a view to restoring PAA services to China. Acquiescence
by PAA in a Communist reorganization of CNAC would presumably establish
the US airline in a favored commercial position in Communist China.
(Secret)
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A?as~
POSTWAR EXPANSION OF LATIN MEMO
CIS EM 775 ENE oPP Dols
Although Latin American civil, sviation has experienced a pronounced
expansion in the postwar period, it has .boon prevented from making even
greater strides by the general lack of"publio funds throughout the area,
and by the severe dollar shortages which have affected most Latin Aner&oan
countries, Government plans for badly-needed development and improvement
of airports, radio aids to navigation, and meteorological and comimanica-.
tions facilities have had to bey adjusted to the generally very limited
amount of public funds which have been available for such purposes. The
Governments of Brazil, Chile, Peru, Mexico and most of the smaller
countries have been able to carry out only the most urgent improvements
to existing facilities. Many airlines, therefore, have been fcroed to
develop air installations at iheir own expense. In the past few years,
moreover, a shortage of dollar exchange has limited the purchase of desired
new equipment by Latin American airlines.
Despite the financial difficulties encountered, considerable W+ r ins
expansion has taken place. South American scheduled airlines were oper-
ating in 1947 about five -times more mileage per week than in 1940. In
1949 this 'mileage had increased to over one million miles per week or
almost seven times that scheduled in 1940. The principal increases in
scheduled weekly mileages from 1940 to 1949 were made by airlines of
Argentina (an increase of about 140,000 miles or 1,400 percent), Brazil
(about 460,000 miles or over 700 percent) and Venezuela (about 170,000
miles or over 1,600 percent), which have established extensive interconti-
nental operations.
The mileage scheduled per week by Middle Aracrican airlines has also
shown a marked increase, amounting in 1949 to over three times that of
1940. For example, since 1940 the airlines of Mexico and Cuba have in-
creased their scheduled operations per week by over 220,000 miles (300 per-
cent) and over 70,000 miles (500 percent) respectively. On the other hand,
there has been a slight decrease in total fiddle American scheduled mileage
per weak since 1947, in spite of continued expansion by many Middle Americo
can airlines. This fact may be attributed to a drastic reduction since
1947 in the operations of the TACA System throughout Cen?t;ral Aknerica?
All
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Latin American scheduled weekly mileage in 1949 amounted to slily
less than 20 percent of the wookl, mileage flow by all US scheduled
domestic and international carriers and about 11 percent of the world
total of scheduled operations; exclusive of the USSR.,
Comparative. Weekly Scheduled IileaAe of Airlines
1940
1947
1949
Latin American Airlines, Total
323,602
1,381,279
1,650,827
South. American Airlines
178,416
867,962
1,140,454
Middle Aznerioan Airlines
11446,186
513,317
510,373
US Airlines in Latin America
>-.
827,796
843,097
US Airlines, Total
.??.
7,607,000
8,409,000
World Airlines, Total
(excluding USSR)
-W
12,424,000
16,066,000
VgAla
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