FAR EAST/PACIFIC DIVISION OFFICE OF REPORTS AND ESTIMATES CENTRAL INTELLIGENCE AGENCY WORKING PAPER WEEKLY INTELLIGENCE HIGHLIGHTS NO. 83

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500040018-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 20, 2016
• Document Release Date: May 18, 2006
• Sequence Number: 18
• Publication Date: January 17, 1950
• Content Type: PERRPT

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DOCUMENT NO.
NO CHANGE IN CLA .i. ^
TS S C
NEXT F'tEVIEV) Dl 3: ---
FAR EAST/PACIFIC DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
A
25X1 UT! ? ~ ~
rTI ___+' "REVIEVJEfi;
~4 LY INTELLIGENCE HIGHLIGHTS
PTO. 83
State Dept. review completed
NOTICE: This document is a working paper, not an official CIA
document. It has been co-ordinated within 01E, but
not with the IAC Agencies. It represents current
thinking by specialists in CIA, and is designed for
use by others engaged in 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 addressee and not for further
dissemination.
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S E C R E T
OFFICE OF REPORTS AND ESTIMATES, CIA
FAR EAST/PACIFIC DIVISION
INTELLIGENCE HIThHLIGHTS NO. 83
11 JANUARY to 17 JANUARY 1950
SECTION I. SUMMARY OF FAR EAST TRENDS AND DEVELOPMQ+ITS
Despite general Western pressures, the nations of Southeast
Asia continue to be reluctant to extend recognition to Bao Dal (p. 2).
The Japanese Communists have politely refused to accept Cominform
criticism and have expelled one high-ranking mamber who boarded the
Kremlin bandwagon (p. 2).
Cabinet shifts in the Republic of Korea reflect the growing
seriousness of economic conditions under the defense-minded Rhse
regime (p. 3 ).
Chinese Communist seizure of the Marine Barracks in Peiping,
after US warnings, seem to imply a present absence of concern over
Sine-American relations (p. 4 ). Meanwhile, the failure of attempts
to shift surplus urban population to the Yangtze countryside may
bring about accelerated Communist efforts to break the Shanghai
blockade (p. 5 ).
25X1
Two top Philippine Communists have left Manila to join dissident
Hukbalahop forces in the field (p. 6 ).
The marginal notations used in succeeding sections of this
Weekly ("A", "B", or "C") indicate the importance of the items in
D/FE opinion with "A" representing the most important.
SEC
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SECTION II. DEVELOPMENTS IN SPECIFIED AREAS
G12 ERAi.
Asian views on Bao UaI# Notwithstanding the Western view that Bao Dei "A"
represents the only alternative to Communism In Indochina, Southeast
Asian countries continue to manifest considerable reluctance to con-
sider the ex-Emperor's regime as anything but an instrument to perpe-
tuate French control of Vietnam. Although the Thai government claims
full awareness of the gravity of the Indochina situation, it does not
intend to recognize Bao Dai, until France gives actual independence to
Vietnam and Bao Dal receives a large measure of popular support. The
Indonesian government also appreciates the regional danger in Communist
control of Indochina, but lacks sufficient confidence in the Bao Dai
regime to decide on recognition in the foreseeable future. While the
Philippine government is torn between a desire to oppose Communist ex-
pansion and a strong wish to champion independence movements in South-
east Asia, it does not consider the Baa Dal regime advanced enough to
enable the Philippines to take a public stand on the Indochina question
at present. Although the question of recognition of Baa Dai is still
open in Rangoon, widespread Burmese public sympaU for He Chi Minh,
together with a belief that Bao Dai is an instrument for continued
French power in Indochina, diminishes hope for Bumeee recognition un-
less other Asian countries also take that step. Finally, Indian doubts
on the question of whether the Bao Dai regime satisfies the national-
ist aspirations of the Vietnamese remain a major deterent to Western
efforts aimed at persuading other Asian governments to extend recogni-
tion.
Meanwhile, the Indochina picture has been further complicated by
reports of Vietnamese resistance broadcasts stating that No Chi
Minh has "recognized" the Chinese Communist regime. It is not yet
known what effect this act will have in Vietnam and in Southeast Asia
generally.
Communist Party rejects Cominform attack--The Japan Communist Party's "A"
initial reply to the Cominform denunciation of NOZAKA Sanso, while con-
ciliatory and even abject in tone, has nonetheless requested that the
Cominform "reconsider" its criticism in view of Japan's "peculiar posi-
tion." The Party leadership, moreover, has expelled NAKANISHI Ko, a
Communist member of the Diet's upper house who had boarded the Cowin-
form bandwagon. NAKANISHI has now issued a statement, accusing Party
leadership of being bureaucratic and of attempting to "Titoize" the
Japanese Communists.
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S E C R E T
-3-
The Japan Communist Party faces a dilemma. If the Party sub-
mits to USSR discipline, it will have to adopt "struggle" tactics
which have already proved distasteful to the Japanese "masses." If,
on the other hand, the Japanese Communists defy the USSR, the Party
probably will be read out of the international communist brotherhood.
The Japanese Communist "Yenan clique," of which NOZAKA is the leader,
has close acquaintance with the Chinese Communist history of modify-
ing doctrine in order to meet local problem, often in the face of
Moscow disapproval, and Japanese defiance of the Cominform is a
strong possibility.
Sven If the Party finally "accepts" the Cominform criticier:, its
delay in so doing has already been unprecedented in the history of
national communist parties. If the Japanese Communists break away,
the Party may split, with a minority of leaders and membership re-
maining to be endorsed by the USSR as the "orthodox" Party. Thus,
NAKANISHI's defiant attack on present Party leadership may be an
opportunistic bid for the leadership of such an "orthodox" group In
the event of a split.
.KOREA
Cabinet shakeup--Although President Rhea has demanded and received
the r isenation$ of the Ministers of Commerce, Home Affairs, and
Agriculture, he apparently intends no immediate changes, with the
possible exception of Minister of Agriculture. Rumors of a general
cabinet shuffle still persist, however. While there probably are
many motives behind the projected shifts, in the case of the Minis-
ter of Agriculture, it appears that Rhea is attempting to provide
an administration scapegoat in response to public concern over soar-
ing prices and increasing inflation.
Despite an excellent rice harvest, the open-market price of
rice in major cities has skyrocketed to a poet-war high of 2000 won
per small mal (16.5 lbs). The average worker with a salary of
15,000 won monthly is caught in an intolerable squeeze. Inflation
is a large factor in this situation, but other factors are impor-
tent. Reduction of the ration rolls has added over 3 million com-
peting purchasers to the free-market, local officials have restric-
ted the flow of rice to cities until collection quotas are filled,
and Government plans to export rice to Japan has prompted specula-
tors to hold rice off the market in anticipation of further price
increases. At the same time, the Republic's prospect of obtaining
critically-needed foreign exchange through rice exports is jeapor-
dized by the Government's indecision and vacillation in concluding
a contract with Japan.
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S E C R E T
On 15 January, President ithee was presented detailed recommen-
dations for inflation control by Ambassador Muccio, who called to
discuss the alarming condition of the Seoul rice market and the de-
lay in rice export negotiations. Although the sudden increase in
rice prices is a serious problem that could result in considerable
unrest and loss of support for the Government unless immediate
action is taken to insure minimum food requirements for non self-
suppliers, a more permanent solution of the problem involves the
larger issue of inflation, which now threatens to get completely
out of hand. In the past, Rhee has concentrated on military pre-
paredness, feeling that the Republic's economy was of secondary
importance and that FGA would supply basic requirements. The next
month will determine whether Rhee has been convinced of the signil
ficance to his government's long range s tab ility of the present
serious economic situation. His current approach to the problem
through another Cabinet shuffle gives no indication that he is
yet prepared to attack basic economic problems by accepting and
vigorously. carrying through recommendations for economic reform.
CHINA
Communists reared to "do without" US rec. nition?-The Chinese "A"
omnnuniat announcement of intent to occupy the former US Marine
Barracks in Peiping -- the latest stop in a program of harassment
of non-recognizing governments -- probably was designed to force
action on recognition. However, the fact that the action was
carried out after an explicit US warning that all US officials
would be withdrawn in consequence, indicates that the Stalinist
leadership of the Chinese Communist Party no long regards early
US recognition as essential. This Communist vice probably was
influenced by the fact of UK recognition, accorded immediately
prior to the move against the US Consulate-General, as well as by
possible progress in MAO Tse-tung's negotiations in Moscow. The
prospect of profitable relations with the UK, and. a. possible pro-
mise of extensive trade and credit relations with the USSR, may
have convinced the Communists that their program for China can
succeed independently of the US.
The possibility that the Communist action was taken without
Chairman MMAO's knowledge seems very slight. It is more likely that
this latest move is another example of Chinese fealty to the Krem-
lin and that it was encouraged by the USSR in order to capitalize
on US-UK differences and to consolidate USSR gains in China. The
absence of US officials, who would otherwise by occupied in explor-
ing and perhaps furthering the Chinese Communists' capability for
asserting independence of Moscow, will probably facilitate Soviet
x..
evrcooft E T -~ss
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SECRET
-5-
efforts to gain a tighter grip on the Chinese Party apparatus. The
Kremlin may estimate that, if and when it appears desirable for the
Peiping regime again to-invite relations with the US, the USSR will
have installed itself so solidly in China, especially in the border
regions, as to make Chinese "Titoism" almost impossible.
If US personnel can be successfully withdrawn from Communist
China, the US would be able to adopt severe counter-measures against
the Peiping regime. It is probable, however, that the CCP will pre-
vent a complete withdrawal of US personnel. The Communists are
likely to hold US private citizens as hostages, and may also retain
certain US officials
Failure of population dispersal drive--Chinese Communist efforts in "g"
the Yangtze valley to evacuate urban "excess population" to rural
areas are failing and the deputy mayor of Nanking has admitted that
the experience of the past three months has demonstrated the impossi-
bility of large-scale population shifts. Extensive crop disasters
in 1949 have engendered a refugee tide to the Yangtze cities which
has more than counterbalanced Communist efforts to induce migration
from the cities. In northern Anhwei, flood devastation has made
refugees of a reported 8 million people, with many seeking shelter
in Nanking, Shanghai and other Yangtze cities.
With the failure of planned population dispersal, the Communists
can be expected to press more vigorously to break the Nationalist
blockade. A commonly expressed opinion among the Communists some
months ago was that foreign iimoerialism in China had fostered the
growth of Shanghai and other coastal cities at the expense of the
country as a whole and the unemployment created by the blockade
had been seized upon as an opportunity to attain a more balanced
National economic structure by induced migration. With such resettle-
ment a demonstrated failure, the Communists may be more impressed
with the need for commercial revival in the port cities and be more
inclined than heretofore to take measures to break the Nationalist
blockade.
RET
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SECRET
PHILIPPINES
Top Communists rejoin the Huks--Mariano Balgos and Guillermo Capa-
docia, both top Philippine Communist Party leaders and formerly
active in the Hukbalahap, have rejoined the Huks in the field.
Balgos Is Secretary-General of the Philippine Communist Party,
a vice-president of the Communist-led Congress of Labor Organiza-
tions (CIA) and former acting commander-in-chief of the Hukbalahap.
Capadocia is a former Philippine Communist Secretary-General and is
currently a CIA vice-president.
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-7--
CIA headquarters released letters on 15 January explaining
the two men's move. Balgos stated that the fraudulent November
elections and the Government's refusal to allow the Commtud to
to hold public rallies in Manila had led him to rejoin the "People's
Liberation Army." Capadocia listed familiar party-line grievances
and concluded that, by rejoining the Huks, "I believe I can now
reader more efficient service to the working class and to the Fili-
pino people-,,
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