OFFICE OF REPORTS AND ESTIMATES, CIA FAR EAST/PACIFIC BRANCH INTELLIGENCE HIGHLIGHTS NO. 49 20 APRIL - 26 APRIL 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500020008-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 12, 2016
• Document Release Date: June 13, 2001
• Sequence Number: 8
• Content Type: PERRPT

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tbaditsa~, Th opini cn, ?~ pz a std. herein may be
.revit~red ,ofo-, fl.na1 aid or:`fi.cial publication.
it is ix *c-tnded aoie]v for the information of the
ree$es said not for furrthc-r die, ominatirn?
FOR
Editor
2/01/03 CIA-RDP79-0109OA000500020008-7
 Approved For Release 2002/01/03 :?F~DP79-01090A0500020008-7
V'SE vRET
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O nCS OF REPORTS AM S8` 1Th' a,
PAR EA-sT 'AC TP iC muwH
INTELLIGENCE HIGH ,IGHTS NO 49
20 April .. 25 April 1849
',~BCTIOX l SL %AARY OF FAR b ST TRENDS AND T PME S
A dispute between extreme and moderate fae.otiona has ba=sed a split in
,; leftist Japan Farmers Com (pa 2). Establishment of a single ex*,;--han
rate for the yen this week presents many Japanese industries squarely with
problem of rationalisation or collapse (p. 2).
Reorganization of Eorea0s Ministry of Defense has resulted in a -bear
at for Japanese-trained Major Gene Chat (p 3) Meanwhile. Governrrant
oalleotione of spa eer grain fame legislative opposition (p? $)
Dasil's 3sap.~nding return, meanwhile, has inspired ostensible acceptance
Vietn 'Unity by the newly eleoted Corshlnchina Assembly (p,, 4)
A new plan for the raising of additional Go r nt forces from they
border peoples of Burma seems to offer little hope for restored order (po 5) *
While preliminary discussions between they Outch and Republicans at
Eaatav:.a still leave complex problems unsolved, the atmosphere is not hostile
-v-nd both sides agree that delay in settlement 1s dangerous (pa 6)
The Chinese Canmunists have met little opposition to their reaneied
offensive and the long-awaited crossing of the Yangtze has brought them
controll, not only of wing but of most of the eastern Yaane-tze valley (p., 6)
Nhi.le the now advances have resulted in at least temporary solidarity in
the badlyyshaa cen Nationalist ranks, there in reason to believe that the
Communist-9, despite serious economic problems, will bring temporary eac+
tL prosperity to the newly- liberated' area (p 8-9).
re r g rota t craw uia Use ts~o e ix ` a is
(NAS4,, "Bu or 9C5)indicate the : mpoataance of the Items in BAR opinion
with "e representing, the most importaiat:,
..,tee
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AN
Laa kt'araer Union split--As a result of conflict during preparatory m:~et-
ir the long-delayed convention of the leftist Japan Farmers Union, (JFU),
which began on 22 April, has been split into two camps - Com moist and
r rmer-Laborite delegates on the left and left-wing Socialists on the r?i.gh
Tho division came when minority rightist members of the left-controlled : 'U
Ceawtra1 Committee walked out after being overruled in their opposition to
leftist delegates whose qualifications they had challenged.
Although JFU Chairman KUURODA Hisao, Farmer-Laborite boss, will attempt
a _? utral course, departure of the pr?edoininently Socialist members of the
J?`[3 through this right-wing bolt can be expected to result i n the develop-
ment of a definite pro-Comp nanzst union orientation, parti eularl_y since
Far%ler-Labnrite policies are susceptible to Communist exploitation. Depart-
uro of the left-wing Socialists farther implies an end to Socialist attempts
to maintain ties with URODAts groups themselves former extreme left-wing
Socialists ? Unless the self-exiled rightists can reach an agreement with
the National Farmers Union, organized by former right-wing Socialist leader,
HZ ' .NO Riki.zo, they may establish still a third farmers ? union.
e Exclz nge x:ate pert--: f' irther step in the shock treatment of Janana s
economy occurred with SCAP establishment of a single exchange rate of Yen
360 to the dollar on 25 April. Replacement of the cumbersome multiple-
exchange rate ''y the new single rate will force many r rg_ina , industries to
rationalize or expire. Hardest hit will be raw silk producers, who have
been operating at a loss despite indirect subsidization through as exchange
rate of 420 Yen to the dollar. The shiphuild,.ng industry may be forced to
close down 30% of its yards while staple food importers will. need a direct
subsidy of a reported 32 billion Yen to continue the present level of ins'
ports .
Fr Producers that will continue to enjoy profits under the now exchange
rape are the metal (machine tools and rolling stock), chemical and light
industries (watches, cameras, and bicycles). The single rate, long expected
by Japanese business and government circles, not only wi'11. aid in long-r?ange
reostablish'nent of foreign trade on a sound basis but also will be usetu
in forcing a desirable rationalization of the Japanese internal economy.
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n/A'1~9 4
EWA
Defense Ministry reorga,-n.ized-..Presidert Rhea has signed an executive order
abolishing t'ae txositions o 71ice Minister of National Defense and the Su-
preme Chief of Staff. A Joint Chiefs of Staff organization is to be sub-
stituted and Army and Navy Chiefs of Staff will report directly to the Dem-
fense Minister. Although Defense Minister Shin stages the move is designed
toy implify Ministry operations, it also permits assignments to the field
of superfluous officers now at Defense Headquarters. Further, the action
enables Rhee to effect quietly a long desired removal of the former Supreme
Chief of Staff, Chai Byung Duk, a member of the aggressive Japanese-trained
Arm;- officer clique. Ma j . Gen. Chaff will be given the ordnance comma n _? ., a
posy. t.~.on in l-. ino with his Japanese Array experience.
Grain collection--The National Assembly has posed a measure which
suspends the present grain purchase law until 31. October 1949 and estab'
its iaes a free -market in rice o Penalties are provided for hoarding or pro-
fiteering. Although President Rhee probably will veto this billy the Assem-
bly will continue to oppose any form of government rice collection. A suc-
cessful summer grain collection, therefore,, appears extremely doubtful.
Failure to collect suui- r grains will further . ag avate the government l s
sha" food position and impair the effectiveness of A' s capital develop
merit program.
Troop withdrawal--On lB April President Rhea announced that discussions
were underway between the Republic of Korea and the US to establish a date
for withdrawal of US forces from southern. Korea. To date, the northern
Korean propaganda outlet, Radio Pyrongyangr, has not commented directly upon
Rheo s annouttcemment, although nearly every broadcast beamed to the south
continues to call for concerted Korean efforts to drive US forces out of
the country. It is probabl2i that Radio Pyongyang Is awaiting instructions
from Moscow on what new line is to be taken in the light of Rhee,s an-
nouncement. It is to be expected that the Communist puppet regime will take
complete creel. i; for having forced th eventual US withdrawal and will Jubilantly announce that Korea, through 'scam tmist efforts, has been brought one
step closer to "unification."
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