OFFICE OF REPORTS AND ESTIMATES, CIA FAR EAST/PACIFIC BRANCH INTELLIGENCE HIGHLIGHTS NO. 44 16 MARCH - 27 MARCH 1949

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500020025-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 12, 2016
• Document Release Date: June 19, 2001
• Sequence Number: 25
• Content Type: PERRPT

Approved For Release 2002/0 /03 CIA-RDP79-01 90A000500020025-8
Imw
X) mmaprut-sk
Can Cow "A C c
3 : CIA-RDP79-01090A11 5O'0020025-8
 Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
FAR EAST/PACIFIC BRANCH
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
NOTICES This document is a working paper 8 NOT
i offioia& CIA issuance, and his not necessarily
been coordinated with other ORE producing coin-,
ponents? It represents current thinking by one
group of specialists in CIA, and is designed for
::use by others en;ared on similar or overlapping
studies. The opinions expressed herein may be
revised before final and official publication,,
It is intended solely for the information of the
addresses and not for further dissemination.
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approveor Release 2002/01/03: CIA-RDP79 90A000500020025-8
OFFICE OF RE,P{ ' AND BSl'IA4 `ES CIA
?Art i AS TfrAC IF IC BRAIF2I
44
1NTELLIGE`I;E IIIGNLIGIJTS NO.
16 March - 22 March 1949
SECTION I. SIII'_%W.Y OF FAR FAST TRENDS AND :JE;'ELOPI:IBIM
The [RSR is apparently obtaininp strategic materials from Southeast
Asia through alandentine channels of trade
Although YOSBIDA can be expected to oormly with occupation wishes in
fiscal matters, it appears that the Jai anese Goverment will attempt to
increase Executive Branch authority at the expense of the SOAP-favored
Diet (p. 2).
The Republic of Korea will continue to press for increased i15
military aid, possibly with offensive action in mind (p. 4).
Although Acting President LI has been able to bring further major
Nationalist fibres into his camp, there has been no real improvement in
the prospects for peace in China (p. 5), bieamvhile, the Communiste. have
shown increased interest in the future of Taiwan, while Nationalist elements
there continue to work at erosa-purposes and Taiwanese disgruntlement
increases (p. 6).
French and Viettoamese observers in Indochina express cautious optimism
regarding Sao Pai's prospects for success in the face of severe problems (p. 7).
Continued degeneration of goner ntal authority in Burma increases
.the possibility of a major shakeup or even collapse (p. 8).
Republican officials' control over their guerrilla forces in being
weakened by Dutch delaying tactics in Indonesia (p. 9).
NOTE, A study of "Point Four" in Southeast Asia appears in Section III.
The marg notations used in succeeding sections of this Weekly
("A", *B" ar "C") indicate the importance of the items in B/FE opinion
with "A" representing; the most important,
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved For lease 2002/01/03 : CIA-RDP79-0109040130500020025-8
SECRET
SUCTION IT, DEVELOPMENTS IN SPECIFIED AREAS
GE TERhL
Clandestine movements of strategic raw materials to MR. It is believed
t Rassia is covertly acquiring undetermined quanties of Southeast Asian
tin, antimony, wolfram, rubber, palm oil and other products. The Soviet
Legation in Sian is reportedly active in arranjing the purchase of tin
concentrates with 1 dollars through small Chinese firms, Shipments of
raw materials are made through southern Siamese and northern Malayan ports
and probably include not only materials from these countries but also
products smuggled in from Java. Sumatra and western Rorneoo Falsified
shipping documents and export permits can be supplied by bribed port
officials and cargos are often shipped under misleading labels* By adding
small amount of lead to tin concentrate, for example, the shipment may be
listed as lead-tin solder? The shipping pattern for Siamese material
probably follows that reportedly used for oladestine shipments of rubber
from Singapore-for ssrding to Hong Kong or Shanghai and transshipment
from there to other ports, possibly including Vladivostok,
TAPAN
SOAP statement designed to rq ssw'e JgWuzeag, General, theArthiu"s recent *Be
statement that he mould remain at his post until the signing of a peace
treaty unless assigned elseehhere and that reports of civilian control for
Japan are rumors, a'pears to be a SCAP attempt to reassure the Japanese
public crhich is still perturbed over 'nithdraval-from-Japan" reports and
is eager for any comforting statement. the Japanese prose headlined
? icArthursa cornente, rt3ile a Govornrwnt spokesman Maniected "utmost jay"
over a continuation of SCAP's "enlightened guidance." Sipco the possibil-
ity of an early peace treaty bas boon largely discounted in the Japanese
mind, MacArthur.s statement has been interpreted as indicating that he
mill remain indefinitely. In viev of its respected origin, tdacArthur f a
statement will help quiet current rithdrava fears, but the suspicion
that the US may leave Japan defenseless oil1 still remain and Ja
Commudets may be expected to play on this lip r ponces
~ ing rear.
YOSHIDA Grnrnr Despite its favorable majority position in "B*
the Diet, the YOSIiIDA Government is not finding the going smooth. Satis-
faction of conservative intoresto and fu fillmont of YOSIIIDA's personal
ambitions have dominated the administration's attempts to develop a
legislative program. In its outlined farm, the administrations s program
contained measures objectionable both to the opposition parties and to
SCAP. Opening of the Diet vas Bela od to permit modification of the
budget, certain features of vhith are reported to be contrary to the n
economic rehabilitation directive. Despite the govornment's desire to
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved For Release 2002/01/03 : CIA-RDP79-Q 1090A000500020025-8
'AFI (Cant. )
assert increasing indopcndonce from SC,WP direction and despite aucpeatod
opposition of dapanoec a cutives to the Occvlaatiaa'e anti-inflation
program, Japan's continued dependence on US aid vrill tend to force
TOSHIfA's gmrnnent to shag. grater compliance crith SCAP dorarrds regard-
ing fiscal policy.
Such deference to occupation wishes, horrevcr, may not be farthea n ng
in connection viith two political pro$oots close to T(X HIUA's heart. The
first of these is the establ3s nt of a Ccrzcittee for the Invoetigatioa
of tan-Japoneso Activities patterned after the simflsr i15 -Congressional
Committee. IOSIIIDA plans to organize his caaxdttee under 'the Cabinet,
houevmr, in a nova to avoid its use as a sounding board by the Ccumsunists,
whose 35 seats would be sufficient to assure them a voice in the opera-
tions of any Diet Caxiittee. The second project is the dissolution of
the Diet Committee for the Investigation of Illegal Property Transactions,
which uncovered the black market and bribery scandals that contributed to
the collapse of preceding administrations, TOCHIDA comp2alne that the
committee's operations have increased Communist Party influence and
proposes that the Attorney General's office assume all responsibilities.
Neither of these propositions is favored by SOAP which has endeavored to
strengthen the Legislative Branch of the Government rather than the
Executive.
Re]dadm gg F? ' rUg Aoetuoned. A single yen exchange rate probably "C8
will not be established by 1 April., in accord with the US economic
recovery directive of December,* 1948s, which envisioned ostablishment of a
single exchange rate within three nonths0 SOAP now indicates that the
exabange rate in to be established within three months after fulfillment
of most of the objectives of the directive rather than three months after
the date of its issuance.
The problem of the establishment of a single yen exchange rate is
particularly acute at the present time because it is expected to be
raised at the April General Agroement on Tariffs and Trade Conference
(GATT) where most-favored-nation treatment for Japan gill be considered.
Opposition, especially from parts of the British Conmonrerlth, is expected
to center on alleged subsidies being given Japanese products thorough
continuation of the multiple exchange rate system. IIot,ever, this specific
objection may be overcome through assurance that the single rate will. be
established in 1949.
Am,
USSR-P gMJ pact a aMd. As expected, a 10-year agreement providing for
Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
 Approved Felease 2002/01/03 : CTA-RDP79-010 OA000500020025-8
S:CM
a ,ccncrde and cultural cooparfltion' bet en the = 11 and the puppet
s n cr atic People's Republic ran concluded on 1? Tk rch just before
Prer ter Kim U Stmg?a departure from 'Uoacoty. The pact did not mention
military assistance but the U`~SR indicated that credit terms and technical
aid will be available to the northern Koreans in order to encourage trade,
US wdefwwV* Ghou Pyung CS, recently
dispatched to represent Korea at lake Success, probably will devote con-
s iderable effort to soliciting additional military. aid i"ram the US. The
US ras agreed to equip a Korean Armir cit 50,000 men, but the Korean Arzr
now totals over 68,000 men and recruitment to attain the statutory limit
equip is
of 100,000 is progressing. In addition to em and ~Ligt~~tw
Chough probably x371 ask for F-51# 8-25, , and
Sutpport of such a large military establishment Mould be dependent
compl eteiy on large scale foreign aid., Even if such aid caore available,
it would still constitute a severe strain on Korea's deficit econo r.
President Rhos believes., hovevor, that a strong military forco is
essential to deter invasion from Worth Korea and will continue to exert
all possible pressure an the US for additional military equipment,
From the hang range point of view, hoer, the thinking of Rhoc and
some of his advisors probably goes beyond consideration of the purely
defensive values of the military establishment. Rhee has become convinced
that a majority of the troops serving in the northern Korean Peoples'
Arty are actually sympathetic to the South and that they would revolt if
southern Korean forces moved north to *libcratea the area from Soviet
puppet control, If Rhee is suec?osf' l in develoLAng an efficient ArV
of 100,000, in addition to a sr al Navy and Air Force, he might take
aggrei~aive action that would precipitate a full-scale vor between
northern and southern Korea.
A122 r..Q I roc . Effective I Alri, the State Council of the
Korean Republic has voted to reduce the number of people eligible for
rationed rice from more than 7,000,000 to 3,000,000 and to reduce the
iiarltvidual rice ration from .1 lb. to 15 ors. per day. On this reduced
overn nt. will have sufficient grain available on 1 April
schedule, the Government .
to continue rationing for about five months. Its in.additiotn, the Govern-
ment receives further imports of 45,000 tons of grains and collects 105,
000 tons of summer grains as projected, ratag could be continued to
the and of the ration year on I Decanter when the fall crops again
become available.
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 %NO
Approved For Release 2002/01/03: CIA-RIB
. (cont. )
The removal, of aver 4,fl00sppp People from tho ration rolls sdU
in a car tho free msrIzet rioe price
relatively stable ~aut the rirrter. ahieh line rGmalned
liaTe It is possible that there are
Carded rice nhfch mill a,,)oar an the I rket in
h
the total of rice hoard higher i ? It is nas ;xi obable,
del*M ove verp that
,he
of the U atias3ed Pvl itian and that a s2 t
troy food
Prime trill Cause considerable ~p and tamest dUring,
UAY? April and
Peace roe acts unit rovdd des ite LI'e efforts.
week A tinC g President 'suagujen has continued to euprog ess inst
obtaining the support of various Nationalist elementsaregardedeas adherents
of QUANG Kai-shek. On 16 March the Governors of Taiwwan, Pukien and
Ssechuan arrived in Banking to discuss peace preparations. USUH Yueh,
Governor of Hwangtung, has reportedly been persuaded to attend the
Nanking discussions uy IHANG Chun CdIANG a
Commander who reportedly is cooperating withpLIATd~ j~ n~aootheeration
important South China leaders, CHANG ft-kwei and YU &n-moue have also
arrived in Nanking, LIs ability to line up the support of Nationalist
regiore.l leaders has undoubtedly been enhanced by the considerable
influence which the new Premier &) Ying-chin exercises in the Whampoa
military clique.
While LI Tsung..jen apparently has thus increased his bargaining
Power, there has been no real progress toward peace., It is possible
that CHIANG Kai-shek has instructed his supporters to give nominal support
to LI'e peace policy while preparing for continued and united resis-
tance in the likely event of a break-dawn of peace negotiations, There
are indications that CIU.&NG is sti ll stronger than LI, For instance
CHANG Chun, addressing Legislative and Control Yuan and Kuomintang
Central Executive Cormraittee members i.n Canton last Week. said that the
Government was continuing war preparations in order toaohieve peace,,
and he and other Nanking officials have condeaed a Peiping-pattern
Peace as tantamount to surrender.
The Chinese Communists are on record as favoring a regional Peiping-
pattern pease, and may be expected to treat LI Tsung-jen?s Government as
a local regime and not as a National Government, unless they a re convinced
that LI is the bona fide leader of all non.Conmuunist China,; Last week
the Communist Radio blasted Ho Ying,-chin's appointment as the work of
CH.IANG.Kai.ahek, describing it as evidence that CHU G retains control
over the LI Government and is using it to counteract the true peace"
" He
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved Forfease 2002/01/03 : CIA-RDP79-010900500020025-8
SECRET
of the CCP. The Communists are undoubtedly making military preparations
for crossing the Yangtze and their forces north of that river have been
reportedly reinforced by Communist Manchurian armies, If and when the
Communists feel that there is nothing to be gained by further negotiations,
they will cross the Yangtze and resume the military offensive.
Taiwan - center of intrigue.. Increasing Chinese Communist Party
(CCP) interest in Taiwan and the prospect that control over the island
may become a major issue in peace negotiations have been indicated
in at least five COP broadcasts sinca 1 March,; In these broadcasts
the Communists have bitterly flayed US "imperialistic designs" on Taiwan
and have promised the early liberation of the ialand.~ The USSR has
,..ong been interested in the island fortress? particularly in US
activities thereon, and has in the past year greatly increased its
intelligence activities in Taiwan.
The Nationalist Governor. CAAEN Cheng, a trusted confidant of CHIANG
Kai-ehek,; did not have', until a recent Cabinet ruling, control of the
Nationalist troops (approximately 20',OOO) in training on thu island,
These troops have been under the command of pro-American General SUN
LU-jen, who concurrently holds the post of vice-Commander in Chief of
the Nationalist Army, SUN has informed US officials that he is conducting
a "back stage ware' against CM14 Cheng and is no way aligned with him.
In addition Acting President LI Tsung-jen informed a US official that
hena:s considering the appointment of SUN as Governor of Taiwan. The
removal of GkiEN and the appointment of SUN would constitute a very
strong bid for continued US support of the Nationalist Government in
Taiwan and would consideraoly strengthen Li's bargaining position with
the Communists by ensurin6 the Acting President's "de jure" control of
the island,
On the other hand, the Taiwanese do not want either. the Chinese
Nationalists or the Communists but they may be forced to turn to the
Communists as their- only means of ousting the hated Nationalist rule,
It appears likely that the Communists may seize the opportunity offered
by the present schizaphren1e condition and set the stage for occupation
of Taiwan by means of extensive CGP infiltration of the Nationalist
Navy and Air Force now stationed on the island, widespread acts of
sabotage and possible arming of some of the native Taiwanese, when
the Communists occup~r Shanghai and the Yangtze valley cities they will
gain control of a large mount of commercial shipping. If COP sabotage
and infiltration of the Nationalist Navy and Air Force is successful
to the extent of causing defections and/or disruption of defensive
operations it will then be a comparatively simple task to move to
Taiwan by means of these ships and occupy the islands Such strategy
appears most advantageous to both the Communists and the USSR and would
most'certainly effectively block the establishment of any anti-.Gom=
monist Ch-nese or Taiwanese Government on Taiwan. (See ORE 39-49,
"Probable Developments in Taiwan," 14 March 1949)
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved ForrIease 2002/01/03 : CIA-RDP79-01090500020025-8
SECRET
Communists denounce Atlantic Pact, The Chinese Communist Party
CCP) responded as anticipated to the am ounoement of the provisions of
the Atlantic Pact, denouncing the pact as another "plot of the war
provcateurs" led by "the American imperialist government." The Com-
mu gists used the occasion to endorse, for the first time, the Sinn'
Soviet Treaty of August 1945, and to reaffirm the unity of the CCP
with the USSR.
The lengthy CCP broadcast also condemns the US for refusing to
recognize the sincerity of Stalin's "peace" overtures, and for rejecting
the proposals of the Soviet Union regarding disarmament,; atomic weapons,
r'ad control of atomic energy, The broadcast attributesthis recalcitrance,
;:,s always,; to the "economic and political crisis (which).,.. grows ever
,wEver,.,.within the entire imperialist-camp,," compelling "the inter-.
na4ional reactionaries;,..to find a way out of this crisis through war,."
Th3 broadcast finds hope,however, in "the organized strength to win
peace; the nucleus of this strength lies in the Soviet Union," rein-
forced by Soviet satellites, Communist parties, pro--Soviet and com-
munist front groups everywhere?
The broadcast notes approvingly the statements of the leaders of
14 other Communist parties, "responding to the call of Thorez and
Togliatti," and states that "we, the Chinese people, will surely, with-
out question ...support this call." China is especially impelled to do
so, the broadcast alleges, as China has suffered directly from armed
invasion and from foreign support of the Kuomintang in the civil con-
flict., In short, "the Chinese people..,..cannot but regard,.,the American
imperialist elements as their mortal foe,... and the leaders of the world
anti-imperialist front--the great socialist state, the Soviet Union-
as their comrades in arms from first to last,,"
The above remarks were not ascribed? as have been important state-
ments of policy in the past, to MAO Tse-tung, or to any other Party
leader, or even to the Central Corrmittee, but merely to a Communist
news agency "editorial," a vehicle which the CCP has sometimes employed
for positions which were subsequently reversed. There is little chances
however,, that this particular position will be reversed in the foreseeable
future; until the USSR's aggression in China becomes manifest to the
CCP, or even thereafter (as in Yugoslavia),, the CCP can be expected to
continue to support the Soviet position on international affairs.:
TNDCC NINA
Bao Daife chances of success, Reaction from certain prominent
Vietnamese and respons ble French officials in Saigon, following the
Pao Dai4Auriol agreement, indicates their belief that ex-emperor Bao
Dal upon his return to Indochina may be successful in establishing an
effective government, This attitude apparently is based upon signs of
public interest in the Bao Dal agreement, a belief that non-Communist
'T
ace!m
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved Release 2002/01/03 : CIA-RDP79-01A000500020025-8
SECRET
TNDOC HTNA (continued)
resistance elements will cooperate with Baa Dai under certain conditions
(i.e.. a face-saving arrangement to avoid surrender of arms to the French),
and an apparent confidence in Bao Dail s ability to pacify the country.
On the other hand, these observers acknowledge the deep mutual suspicion
which may prevent a practical solution as long as the French remain in
Indochina,
'?'hila the actions of the non-Conanunist resistance element in Indochina
are hard to predict, it is improbable that ranid shifts to support of
'Pao Dai will occur, Only if it becomes apparent that a reasonably Lade-
pendent regime may succeed will there be any significant realignment which
would add strength to a'government headed by Bao Dai. Further, it is quite
doubtful that a Vietnamese army under Pao Dai would be successful where
the French have found a program of military suppression infeasible,.
Although the Bao Dai agreement grants wider concessions to the ea-
emneror than were offered to iio Chi "3nh, the partly successful Viet "I nh
effort to drive France from Indochina will enc,-~tarage the non-C ammunists to
continue their present opposition to the French? Also, a campaign has
already been launched by die-hard French colonial officials and residents
to undermine the new experiment at the working level.
PTTT.TA
!Fa or governmental shakeu possible, The present Burmese Government
may undergo a major revision or even collapse in the near future as the
multi-faction civil war continues to weaken its already tenuous authority,,
Karen forces in central Burma have captured several important towns, con-
siderable amounts of money and supplies and have liberated large numbers
of Karen military personnel from Government internment. Furthermore,
Kaohin and Chin Government troops are showing little enthusiasm for fight-
ing Karens and are reported to be deserting or remaining neutral If the
Karen forces move southward as expected, they will be augmented by in-
creasing numbers of irregulars and will probably overrun the weak Govern-
ment forces defending the approaches to Rangoon. Under these favorable
circumstances, the Karens have ignored a recent Government offer of
amnesty, which was largely without substance, and are probably more deter-
mined than ever to press their demands for an autonomous or independent
state
To avert military defeat at the hands bf the Karens, the Government
is apparently seeking an accommodation with the insurgent Peoples' Volun-
teer Organization (PVO). Although there has been no official confirmation,
it has been reliably reported that Prime '4inister Thakin Nil has agreed to
give the PTO three seats in the cabinet and accept 13 PVO den.-Inds. Among
Approved For Release 2 /03 : CIA-RDP79-01090A000500020025-8
 Approved orRelease 2002/01/03 : CIA-RDP79-01 9A000500020025-8
BB (continued)
other things, these demands include a general amnesty for PVOs, recogni-
tion of F'V? authority over the areas it controls,?and the inclusion of
all Wfs now bearing arms against the Government into the regular Army.
A Government-M) settlement is not likely to alter the existing military
situation materially in the near future, or establish a more stable and
popular regime. Such a coalition would inherit the unsolved problems
of its predecessor, and probably be confronted by many now ones. The
redistribution of political and military patronage could be a particular-
ly thorny issue. Furthermore, there are those in the Government who
would vigorously oppose cooperating with the PVO, while on the other
`land many Me, possibly with the support of Supreme Commander Ne M n.,
desire to form a purely PVC-appointed cabinets Therefore, although a
superficial agreement may endure temporarily, personal feuds, factional-
ism and confusion will continue.
Dutch delay weakens Republican control over errillas, The few
Republican leaders now at liberty in Indonesia are concerned over the
absence of a centralized, leadership over Republican adherents. They
feel that while the Dutch hold the moderate leaders as -political prison-
ers, more radical military leaders will assume effective authority..
This development is a strong probability in view of the fact that mili-
tary units operating in pockets : n isolated areas will be forced to rely
more and more on their own initVitivec' Aside from the growing independence
of regular TNI (Republican Arny) units, Tan Malakka (often characterized
as a Trotskyite) is supported by militaristic groups of the extreme left
wing and will undoubtedly make a bid for leadership. Tan 'falakka's forces
may find a possible source of added strength in remnants of the former
Communist Party (PKI) army which took refuge in the hills of Central and
Fast Java when its coup against the Republic failed last September. Dutch
forces have recently-YiLunched a drive against certain pro-Tan Malakka
groups located in Central Java, but initial airdrops failed to make con-
tact with these guerrilla forces.
Regular Republican and independent guerrilla resistance to the Dutch
has accelerated to such an extent,in recent months that even a centralized
government at Jogjakarta would encounter difficulties in enforcing a cease-
fire order. !'Yell-informed Republican officials have estimated that if
President Soakarno were to be restored immediately to authority at Jog-
jakarta (this is a crucial point in Dutch-Indonesian relation, his commands
to military units would be only 60 per cent effective. It is believed that
the longer he remains in detention, the less effective would be his in-
fluence when restored to power, a'fact which the Dutch may well be exploiting
in their present delaying tactics,.
Approved'For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
 25X6 Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
 Approved For Re a 2002/01/03 : CIA-RDP79-0109OA0 00020025-8
SECRET
SECTION III. AE ESTIMATE
"Point Four" in Southeast Asia
President Truman's inaugural address contained the declaration that
"we must embark on a bold new program for making the benefits of our
scientific advances and industrial progress available for the improvement
and growth of'undeveloped areas." In explanation of this fourth point in
the President's foreign policy statement, Truman said that while US
material resources were limited, US technical knowledge was not and was
therefore exportable without restrictions The President stated that the
export of technical proficiency was not intended to be a US monopoly but
should include other nations and international organizations as partners.
Private enterprise in both the US and other nations, in the President's
opinion, should be encouraged to invest capital in undeveloped countries
under guarantees both to the investor and to the indigenous peoples.
Since technological aid is being given to many nations by a number of
US departments and agencies, by special UN commissions and by TCA, while
private dapital is active in colonial areas as well, the originality of
"Point Four" lies less in the granting of a new sort of assistance to
undeveloped foreign countries than in a new concept of implementation. It
is planned that "Point Four" aid will be better coordinated both on a
national and international level; that the various categories of exported
skills will be expanded; that the quantity of help will be considerably
augmented; that the number of participating countries will be increased
and finally that the program will be sustained on a long-range basis.
Designed as a measure to raise living standards of the depressed
millions in undeveloped areas, "Point Four" will nerve to promote US
security interests and blunt the spearheads of Soviet propaganda by so
doing. Further, American technical, mechanical and organizational talents.
exhibited abroad, should increase US prestige and influence. In all,
"Point Four" may well develop into a major instrument for the advancement
of US foreign policy,
On 3 March 1949, the State Department requested specific overseas
missions to report on local reactions to "Point Four", including comments
on local interest manifested, cooperation that might be expected and such
recommendations as could be offered immediately as to kinds of activities
needed and channels or agencies best suited for conducting them. Replies
from all State Department addressees in Southeast Asia have now been
received and are analyzed, below. country by country0
000
Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
 Approved For Rjase 2002/01/03: CIA-RDP79-01090AgW500020025-8
S. II ET
Unsettled political, military and economic conditions here make
prediction of the degree of cooperation to be expected difficult and even
raise the question of with whom negotiation's may be conducted. A Bao Dai
government will unquestionably desire and request all possible US or other
friendly foreign aid. The French will in all likelihood only agree if the
program is conducted solely under their auspices and integrated with their,
own unrealistic "ten year" plan. A Viet Minh-controlled government would
probably oppose US assistance as a "threat to sovereignty,
In view of this,, M. Consul General, Saigon, recommends that the 'inder4
taking be temporarily restricted to the following;
(1)
Instruction in improved methods of agriculture and animal
husbandry through k:CAFF.
(2) Organisation of a health program through WHO0
(3) Immediate financing by the'US of a program sponsoring admission
of substantial numbers of Vietnamese to US universities for the
study of engineering; and other professions, as well as financing
of groups for technical "on the job" training in the US a
(4) Possible loans or grants for the purchase of urgently needed
machinery and equipment to restore'normal Production and, in this
connection, utilization of a small number of US specialists for
installation of equipment.
(5)
Possible encouragement of private American capital to participate
in mixed companies to develop untapped mineral and industrial
resources,
Although for many years the most politically stable area in Southeast
Asia, Siam is not superior to her neighbors in economic development and
may even lag behind some of them Historically, Siam has evinced a serious
interest in developing her resources but the government has been handicapped
by a lack of qualified technical personnel to direct or execute plans,
Siam, therefore, would welcome "Point Four".
US embassy,, Bangkok,, suggested the following courses of actions
(1)
Comprehensive economic survey,,to determine definitely Siam's
mineral, agricultural, industrial, and financial assets to
preceed selection and assignment of advisers.
Approved For Release 2002/01/03 : CIA-RDP79-01090A000500020025-8
 Approved ForOlease 2002/01/03: CIA-RDP79-010904PO500020025-8
SECRET
(2)
Siam's economy being largely based on rice export, aid in
rehabilitating railways, highways, waterways and; harbors should
be given high priority,
(3) Organization of an effective public health program and training
in the prevention and cure of human and animal diseases
(4) Encouragement of private financing for hydroelectric pro cots?
both to improve irrigation and to provide power for railways and
industry,
(5)
Dstablishment of a US training program for some 20 Siamese
annually in the fields of medicine, public health, engineering?
agriculture, transportation, mining, geology, land conservation,
forestry and general eoonomiosa In each of these fields, one
American should come to teach and train pupils in Siam as well.
Exchange of students and professors in non-technical fields is
also desirable,,
The UK is presently implementing its own economic and social
rehabilitation program in Malays.,, The effort is being handicanped, however,
by widespread banditry under Communist direction. This handicap, as well
as a limited reserve of funds. makes it probable that British authorities
would be well disposed toward "Point Four" technical aid and financial
investment patterned to fit their undertakings,
USS Consul General,, Singapore, suggests that such assistance could beet
be implemented as follows:
(1)
(2)
(3)
Expansion of food production through increased. acreage,, improved
irrigation and mechanized cultivation of rice as well as develop-
ment of offshore and river fisheries.
Institution of mass elementary education, including adult classes,,
Broad revision of Malayans present economy, including introduction
of more household industries, development and introduction of
disease-resistant rubber plants, more diversification of crops,,
more effective utilization of labor, surveying of geological
and forest resources prior to development of mining. sawing and
milling operations and the expansion of electric power for
processing exports and local goods, %
(4) Institution of a health program both to teach methods of combat-
ing the many virulent local diseases and to increase local
production of medicines,
Approved For Release 2002/ :CIA-RDP79-01090A000500020025-8
 Approved For Npl6ase 2002/01/03 : CIA-RDP79-01090AQ,500020025-8
Current conditions of near anarchy in Burma (see po 8) will probably
prohibit any early application of "Point Four" there. The Burmese, more-
over, are almost pathologically suspicious of any form of foreign aid at
present, believing all such acts to be attempts at "imperialist" control.
Eventually? however, Burma will need considerable technical advice and
foreign capital.
US Charg6, Rangoon, reports that a program of assistance to Burma
:night include :
(1) Possible development of light industry and assistance in
production of minerals, oil, and hardwoods.
(2) Establishment of resident advisory rroups for improvement of
agriculture and health.
(3) Increased fellowships to Burmese graduate students in the US.
INDONESIA
Netherlands officials have implied that, in general, the Dutch them.
selves possess all the skills necessary to direct the rehabilitation of,
Indonesia and therefore do not need outside advice., Republican represent-
atives, on the other hand, have exhibited much enthusiasm for "Point
Four". US Consul General, Batavia, reports that opportunities for develop-
ment are unlimited in the fields of conservation, forestation, transporta-
tion, communications, electrification, apprioulture, public health, govern-
ment administration and education. Recent and current warfare in Indonesia,
in his opinion, will intensify Indonesia's needs?
In accordance with the April 1946 Philippine Rehabilitation Act,
reconstruction aid is now being given by the US in a wide variety of fields.
Since this program is scheduled to end on June 30,q 1950, the Philippines
may be expected to welcome "Point Four" in the future.
US Charge, Manila, has outlined a very extensive program which is
briefly summarized as follows:
(1) Assignment of a large group of scientific and professional
specialists to advise in the maintenance and development of
almost all technical facilities in the Islands.
Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8
 Approved For 1140ase 2002/01/03: CIA- 01090500020025-8
(2) Survey of the tax structure in order to establish a new over-all
tax program adequate for the nation's needs and development of
home and community industries as well as industrial expansion
based on new hydroelectric developments in Luton and Mindanao,
(3) Advice in the latest methods of forest management, reforestation,,
and forest products utilization, as.well as in soil conservation,,
processing and marketing of plant crops and crop diversification.
(4) CS training of Filipino personnel in highway engineering, civil
and military enf-ineering,, fishery techniques and fishery science,
(5)
Continuation of US Public Health Service assistance,
Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020025-8