FAR EAST/PACIFIC DIVISION OFFICE OF REPORTS AND ESTIMATES CENTRAL INTELLIGENCE AGENCY WORKING PAPER WEEKLY INTELLIGENCE HIGHLIGHTS NO. 84

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500040019-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 19, 2016
• Document Release Date: July 7, 2005
• Sequence Number: 19
• Publication Date: January 24, 1950
• Content Type: PERRPT

Approveor Release 2005 Po . CIA-RDP7990A000500040019-3
FAR EAST/PACIFIC DIVISION
OFFICE OF REPORTS AND ESTIMATES
CENTRAL INTELLIGENCE AGENCY
yVMLY IMTE .LICENCE H,XGHLIGIfS
NO. 84
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DATE: ~-14 January lyx ~. 1 1 DECLASSIHED
CLASS. CHANGED TG: l 5
NEXT REVIEW DATE:
AUf
-, 1I REVfEWER:
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NOTICE: This document is a working paper, not an official CIA
document. It has been coordinated within ORE, but
not with the IAG agencies. It represents current
thinking by apecialists in CIA, and is designed for
use by others engaged in similar or overlapping studies.
The opinions exp eased herein may be revised before
final and official publication. It is intended solely
for the information of the addressee and not for further
di ss eminat ion .
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OFFICE OF WORTS AND ESTIMATES, CIA
FAR EAST/PACIFIC DIVISION
INTELLIGENCE HIGHLIGHTS NO. 84
18 JANUARY to 24 JANUARY 1950
SECTION I. SUMMARY OF FAR EAST TRENDS AND DEVELOPMENTS
Recognition of Ho Chi Minh's "Democratic Republic of Vietnam" by
the Chinese Communists has further clouded the future of the French-
sponsored Bao Dai Government in Indochina (p. 2)
A split in the Japanese Socialist Party, which appears irrecon-
cilable, will serve to strengthen the conservatives' control of the
Government (p. 2).
While most Koreans do not believe that US aid has ended for good,
the shock of the recent Congressional defeat may force a more realistic
attitude toward economic affairs in Government circles (p. 3). Mean-
while, the northern puppet Republic has taken strong measures to re-
cruit additional insbtstrial, manpower (P. 4).
The Chinese Coirinunists have become Increasingly critical of inepti-
tude on the part of their rural political organizers in newly.-"liberated"
areas (p. 4). Meanwhile, in the Nationalist camp,, Governor WU's woes
are increasing and foreign exchange is apparently being squandered for
unneeded rice (p. 5).
25X6
The insurrectionist activities of "Turk" Westerling, which climaxed
with the temporary occupation of Bandung this weer, my, lead to outbreaks
of serious proportions in Indonesia (p. 7).
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.
MAKE"
=MTS
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S EC It E T
3Ei TION IL DEVELOPMENTS IN SPECIFIED ARFAS
G1 AL
Chinese Communists recognt ernment~--Comanunis t China's recent "A"
de ure recognition of the "Democratic Republic of Vietnam" (the
Communist-led Ho Chi Minh regime), has complicated the already con-
fused local and international aspects of the Indochina situation.
The alacrity and cordiality with which Chinese Communist leaders re-
sponded to Ho's 15 January extension of recognition to the People's
Republic of China, in contrast to the very cool reply to Burma's
similar gesture,, is indicative of the special importance which the
Chinese Communists attach to Ho's future success,;
The Ho regime's recognition of the Peiping goverment followed
by one day a Resistance statement proclaiming the "Democratic Republic
of Vietnam," the only legal gqvernment in Vietnam and asked for world
recognition. dhile these moves rare clearly define the Communist
alignment of Ho's government, they are not expected to improve s3ao
Dai's chances for success.. In fact, these moves have given Ho an
Initiative and a status in the Far East which will minimize the pos-
sibility that Southeast Asia nations can be induced to follow anti-
cipated Western recognition of the French-sponsored Bao Dai regime
JAPAN
-4iinority right wing Social fists, under the leader-
=iocialis t Faith spit
ship of former Party Chairman KATAYAMA Tetsu, walked out of the
:~ocialiat Party Convention last week,' announced their Intention of
establishing an orthodox Socialist party, convened separately and
elected officers. The rump Socialist delegation, meanwhile, continued
In session and reaffirmed leftist leadership, Center-of-the -roadere
are reported working to end the split but prospects of Socialist re-
unification are sl.i ,
The break-up came as a consequence of right wing refusal to
accept left. wing occupancy of an increasing number of Important Party
poets? Behind the issue of leadership was the problem of Party policy,
in which the right wing refused to support the Party's shift to
;working class" interests, as instituted by the left wings
In view of the history of factionalism which has hobbled Japanese
Socialism both before and after the war, the split is not surprising.
aver since its reconstruction shortly after the surrender, the Socialist
Party has exhibited such tendencies. A complete split had been avoided
to date, however, although extreme right wing and left wing elements
have left the Party in the past, either through purge or withdrawal
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S ECR ET
The right wing leadership that controlled the Party until the last
national election was discredited by public scandal and by a will-
ingnese to compromise Party principles in order to retain working
relationships with moderate conservative politicans. Under left
wing leadership, after a crushing election defeat, the socialists
made significant gains in recovering trade union support. The left
wing Socialists successfully promoted the anti-Communist trade union
"Democratization Leagues", captured majority control of the General
Federation of Labor and laid the foundation in the National Council
of Trade Union Federations for the merger of these two anti-Communist
labor groups.
The Socialist split has severely weakened "respectable" politi-
cal opposition to the YOSHIDA Government. Unification of non-Commu-
nist trade unions, moreover, will be postponed? As both wings of the
Socialist Party move to merge with fringe elements --= the leftists
seeking to win over non-Communist Labor-Farmer members and the right-
ists attempting to revive a middle-of-the-road coalition with the
People's Cooperatives and the anti-YOSHIDA Democrats --.Japan's po-
tential "Third Force" will be further fragmented, thus enhancing con-
servative domination of the Japanese Government.
KOREA
Reaction to Aid Bill fall q--Reaction to the defeat of the Korean "B"
Aid Bill in the US House of Representatives has been restrained and
general comment reflects the belief that the action is not final and
that the United States will continue economic support for the Republic
of Korea.
President Rhee's initial response to the news was one of shock
and. disbelief. Rhee later issued a press release recount+ing Korea's
contributions in the fight against Communism and drawing an analogy
from Berlin. Although National Assembly mere s showed dismay and
demanded explanations, Prime Minister Lee assured them that commodities
in the pipeline would continue and that the 1951, appropriation was not
jeopardized. There was no indication in any of the Korean press that
any quarter of the Korean people consider that the Bill's defeat means
an end to US economic aid.
Although Koreans generally appear to believe that the US will con-
tinue economic aid despite the House action, the official Korean
attitude that continuing US economic aid is a foregone conclusion has
probably been badly shaken. Increased fear that Korea. is not included
in US long-range defense plans might also result in a lessening of
public support of the Rhee Government. The sha4ting of the Republic's
complacent belief in the inevitability of US aid, however, may result
in a more determined attempt on the part of the Government to put its
economic house In order,
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S E C K E T
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Labor problem-in-North--In the wake of puppet Premier KIM U Sung's "B"
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cizing shortcomings in the "People's Democracy", the northern Korean
Cabinet has "adopted" a number of "Decisions" (laws) designed to
rectify these errors. Laws calling for a more rigid implementation
of the "Contract (piece-work) System" and establishment of an elab-
orate system of prizes and awards for increasing "Socialist" compe-
tition have been enacted. The most important of the "Decisions" pro-
vides for the recruitment of "migrant" farmers into industrial es-
tablishments. Although cloaked in terms solicitous for the plight
of the landless farmer, this law is a straightforward authorization
of the drafting of labor into industry.
In view of the present inability of the northern Korean manpower
pool to supply simultaneously the minimum demands of industry, the
armed forces, and agriculture, this series of laws is obviously de-
signed to tighten the present regimentation of northern Koreans in
an attempt somehow to fulfill the steep industrial and agricultural
export quotas set by the USSR,
CHIN
"Cadres" criticized-The Chinese Communist press is engaged in a sur- "A"
prisingly violent attack on the performance of their political organ-
izers, particularly those now working in the newly "liberated" areas
of East and Central China. The Communist "cadres" are being charged
with complacency, lack of confidence, failure to promote the interests
of the peasants, and failure to break the power of the landlord class.
Some of the press comment attacks the other extreme of "unnecessary
brutality" and the alienation of "middle peasants" whose support the
Communists need. Significantly, Communist directives have begun to
list "quality of cadres" as one of the factors which will determine
the pacing of the "overturn" program in newly-occupied areas'.
The rapid seizure of Central, South, and West China has left the
Communists acutely short of seasoned political workers, capable of
mobilizing mass support for the "now order". These areas are being
turned over to inexperienced students who, ignorant of the particular
local situation and untrained in Communist methods, are committing
serious blunders in the name of the new regime. In addition to the
inexperience of the "cadres", the Communist's problem has been Compli-
cated by the decrease in "revolutionary" incentive resulting from the
fact that Nationalist power has been all but eliminated from the main-
land. It is no longer a military necessity for the Communists to lead
the peasantry in a rapid overthrow of existing property relationships
and, in this way, give them a vested interest in defending the new si-
tuation against a return of the pro-landlord Nationalists. Sine the
Communists now enjoy a virtual monopoly of political and military power
in China, there is apparently a temptation to let the work of local
consolidation slide,
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Contrasted with the North China countryside, which was consoli-
dated politically by the Communists under "struggle" conditions daring
and after the Japanese war, the remainder of "liberated" rural China
is likely to remain unstable for a long time. chile the lack of
skilled organizers is only one of several factors contributing to
this instability, it is probably the principal one operating at the
present. The Communists are busily engaged in training political
workers and in retraining those who are considered "politically im-
mature", but the areas to be organized are so vast and the problems
so complex that it may be years before "grass-root" support for the
Communists can be developed. Reduced incentive is an even more
serious problem, and one which raises the question of whether the
Communists, having emerged victorious from the civil war and shifted
the emphasis of their program to urban industrialization, will ever
really accomplish their promised revolutionary peasant program
throughout all of "liberated" China.
WU' swoes--The reported dismissal of two of Governor K0C, WV's appoin-
tees to high administrative posts in Taiwan indicates that his entire
reform program in endangered by the "old guard" opposition within
Nationalist ranks. WU is trying to place two other Taiwanese leaders,
one of whom has been associated recently with the native independence
movement, in these offices.
During his month's tenure as Governor, WU has sincerely sought to
arrest Nationalist deterioration in Taiwan, (1) by making his adminis-
tration representative of the Taiwanese and (2) by launching a pro-
gram of budgetary, administrative, and social reforms. Opposition to
WU's reforms is being fomented by ex Governor CHEN Cizeng, many right
wing officials and generals, and leaders of the Provincial People's
Political Council, all of whom are concerned over their personal and
political interests. The present success of the "old Lpard", together
with the rapidly fading Nationalist hopes for further US military aid,
probably will lead to more sabotage of WU's reform program.
WU may soon offer his resignation? Even if he remains in office,
however, Nationalist failure to carry out his announced policies will
aggravate administrative difficulties, stimulate new Taiwanese resent-
ment and diminish the effectiveness of the ECA program in Taiwan.
Unless CHIANG Kai-shek is persuaded to support WU decisively, the
Nationalists will forfeit their last chance for continued survival in
Taiwan, probably within two months.
Nationalist rice "shorts.-The Chinese Nationalists' announced plan "B"
to import 5O,OO0 tons of Thai rice to Taiwan cannot be motivated by
an impending rice shortage on that island, since Taiwan produces a
substantial surplus of rice. Although these imports are presumably
intended for troops on Hainan, the Chou-shun Islands and Quemoy, the
question of the need for such imports arises,
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With the favorable 1949 rice harvest on Taiwan (some 1. 25 million
tons), the Nationalists should be able to meet all their civilian and
military requirements without resort to imports. Apparently, however,
the low "controlled" government purchase price for rice has created
an artificial scarcity on the island. This low price -- coupled with
an expectation of future rises -- has resulted in rice being withheld
from the market. It has also encouraged smuggling of Taiwanese rice,
to other areas where more favorable prices are obtainable.
Although rice stocks now held by the Taiwan Food Bureau are ample,
the Bureau apparently is unwilling to release supplies for bases out-
side the island. The spending of over US$5 million by the Nationalists
for the purchase of an item already in ample supply points up the dis-
organized state of Taiwan's administration and gives a hint of the
panicky atmosphere there.
NEWS NOTE
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The current rumor that the light cruiser, Chun___. king, has been re-
floated by the Chinese Communists is considered to be "unfounded." A
fear that the Chan king may make a sadden appearance with the "People's
Navy" nevertheless continues to plague Nationalist naval leaders, who
do not unanimously credit the claim of the Nationalist Air Force to
have sunk the vessel.
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S E C R E T
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INDONESI&
Westerl ,'s uorisiru- -The attack on the West Java city of Bandung by
the forces of Ray "The Turk" West erling, former Dutch Army officer.,
may lead to further outbreaks of violence of serious proportions, al-
though Westerling's troops were subsequently withdrawn, It is believed
that the core of "The Turk"is following consists of 3,000 men, mostly
well-trained and battle-hardened deserters from the Royal Netherlands
Indies Army.
The Netherlands High Commissioner Hirschfeld has openly -and ap-
parently sincerely - denounced Westerl3ng's insurrectionist activities
Potentially more serious than Westerling's putative collaboration
with the Dutch military is the strong possibility of his cooperation
with other dissident groups in Indonesia. Foremost of these is the
fanatical Darul Islam movement,, which in striving to set up an Islamic
state on Java with a force of perhaps 50,000 wen-armed but ill-trained
troops. In addition to Darul Islam., there are indications that some
10,000 followers of Tan l6alakka, a "Titoist" Communist, may be allied
with 'Yeeterling0 While activities of orthodox Communists at the moment
do not seem aimed at open revolt, they have armed bands of smaller totasl
strength scattered throughout Java, which might cooperate with both
Darin]. Islam and Tan Malakkaa
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There is little doubt that the Federal Army -:- if possessed of
the equipment which the Dutch have promised to deliver - could defeat
all these forces in a few months, provided the fighting, were localized.
FIowever, the forces of ~Jestsrling and Darul Islam are mainly in ,lest
Java, those of Tan Malakka in Bantam In the western tip of Java, and
those of the orthodox Communists are in East Java, Consequently, the
dissidents, if they should cooperate, are in an excellent potential
position to carry on guerrilla warfare, by coordinating attacks on
first one area and then another without ever engaging the main strength
of the Federal Army.
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PART III. Funny Coincidences Department
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cer a an nations are exhibiting re uc ance to
accord recognition, to the Bao Dal regime in Indochina, on the grounds
that the sincerity of French intentions to grant genuine Vietnamese
independence is in doubt. In this light, it is of possible interest
to compare the following parallel extracts from the Treaty of Hue -
6 June 1884 - with the as yet unratified Agreement of 8 March 1949.)
Excerpts from the Treaty of
Hue (6 June 1884), between
the Third French Republic and
the moire of Annam.
"Article 1--Annam recognizes
and accepts the protectorate
of France. France will re-
present Annam in all its for-
eign relations. Annamites
living in other countries will
be placed under the protection
of France."
"Article 3 -Annamite funs--
tionaries will continue to
administer the provinces..
except in matters concern-
ing customs, public works,
and, in general, all ser-
vices which require unified
direction or the employment
of European engineers or
agents."
"Article 7---Native function-
aries of every grade will
continue to govern and to
administer the territory
under their control but
they must be removed on the
de.i-mrid of the French author-
ities."
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Excerpts from the Bao Dai-Auriol Agree-
ment (8 March 1949).
"Section II--The foreign policy of the
Trench Union,... will be examined and co-
ordinated under the direction of the
Government of the French Republic... The
unity of the international policy of the
French Union ...will be assured at once
by the general directives laid down...
and transmitted by the Government of the
Republic to the Government of Vietnam.,
as well as by the direct contacts main-
tained by French and Vietnamese diplomats."
"Section VII-It has appeared advisable
to reserve... to the competence of the
French-Viet-Lao-Cambodian conference
the following mnatters: (1) Transport,
and cofununications, (2) Immigration
(3) Foreign commerce and customs, (45
Treasury, (5) Plans for economic devel-
opment.,,
"Section IV--The Government of Vietnam
will exercise in fall the attributes and
prerogatives which stem from its internal.
sovereignty u ..bat, a . no national of the
French Union may take part in the Vietna-
mese administration without the prior
authorization or accord of the represen-
tatives of the French Union...,"
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SEC 3 E T
P-Article 1O-foreigners of
every nationality will be
placed under French Juris-
diction. The French author-
ity will rule on disputes
of whatever nature which
arise between Annamites and
foreigners, as well as be-
tween foreigners."
"Article 13-.French citi-
zens may, throughout Ton-
xin and in the open ports
of Annam, circulate freely,
carry an trade, acquire
moveable goods and real
property, and dispose of,
them.."
"Article 15-France engages
to guarantee henceforward the
integrity of the domains of
His Majesty, the King of
Annani, to defend this sover-
eign against aggressions from
without and against rebellions
from Within."
"Section V_.- ommercial, civil, ancn penal
cases Livolvin nationals a the French
Union other than Vietnamese or nationals
of states with which France has conventions
implying jurisdictional rivilege, . ,wil:
be submitted to mixed each-Vietnanese7
courts, ti
"Section VII-n 4 .French nationals and na-
tionals of the French Union enjoy the
same freedom of establishment as L,Yietna--
mes7 nationals.. .They will enjoy freedom
of circulation, trade, and, more generally,
all democratic freedoms within this
sphere."
"Section III-in time of war,.. all meads
of defense will be put in common, and
the Military Committee will constitute
the nucleus of a mixed Gere ral Staff
under the direction of a French general
officer.. , 11
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