CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A001600280001-3
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 8
• Document Creation Date: December 15, 2016
• Document Release Date: May 11, 2004
• Sequence Number: 1
• Publication Date: June 26, 1954
• Content Type: REPORT

P OF r 000r,
26 June 1954
80
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. 26
NO CHANGE IN CLASS.
[I DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE: r20/('_
AUTH: HR 70-2
DATE:,2LLLtg,QREVIEWER:
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
J
State Dept. review completed
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SUMMARY
GENERAL
1. Chou En-lai said to have agreed to "two-stage" settlement in
Vietnam (page 3).
2. Dutch fear Indonesia may abrogate union and provoke inter-
national crisis (page 4).
SOUTHEAST ASIA
4. French reported implementing plan to abandon southern delta
area (page 5).
Ablest Cambodian general may be dismissed (page 6).
SOUTH ASIA
7. Pakistan faces foreign exchange crisis (page 7).
WESTERN EUROPE
8. Oslo formally rejects plan for stationing American air units in
Norway (page 8).
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GENERAL
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Chou En-tai said to have agreed to "two-stage" settlement in Vietnam:
In a two-hour conversation at Bern on
23 June, Chou En-lat told Mendes-France
a settlement in Vietnam should be reached
in two stages, according to the acting chief-
Vietnamese and the Viet Minh.
of the French delegation at Geneva. Chou said an armistice should be
reached in Vietnam as soon as possible, and a final political settle-
ment should be reached thereafter by direct negotiations between-the
In regard to Laos and Cambodia, Chou said
the immediate problem was to obtain the withdrawal of all foreign
forces, including the Viet Minh, after which the Laotian and Cambodian
governments should arrange political settlements based on majority
will. Chou insisted there must be no American bases in either state.
Mendes-France complained to Chou that the
Tilitary staff talks between the French and the Viet Minh at Geneva
lead been stalled for several clays. Chou agreed to intervene with the
Viet Minh to speed the talks.
Comment. The Communists have previously
maintained that "at least some" political questions must be settled as a
condition for the truce. Chou's statement suggests the Communists may
now be thinking in terms of an early military settlement amounting to
partition, postponing a political agreement.
The Communists have recently arranged
direct talks between the Viet Minh and the Laotian and Cambodian
delegations at Geneva, and have urged further such talks. A bid may.
soon be made for direct Vietnamese-Viet Minh talks as well.
The Communists have recently been proposing
a Viet Minh withdrawal from Laos and Cambodia in exchange for neu-
tralization of those states, but have insisted that native "resistance
movements" will remain and must be recognized.
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2. Dutch fear Indonesia may abrogate union and provoke international
cr sis:
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Foreign Minister Luns believes that Dutch
public opinion may force an appeal to the UN
if, as he now fears, Indonesia unilaterally
abrogates its union with the Netherlands and
repudiates the financial agreement between the two governments. Luns
doubts the UN would take any helpful action and consequently expects
Dutch confidence in the UN, NATO, EDC, and other postwar institu-
tions to be undermined.
Lurks also complained to Ambassador Matthews
on 24 June that the Indonesians are "counting heavily" on assurances
from American "official sources" that Dutch interests in Southeast
Asia will receive little consideration in Washington.
Comment: While the Dutch have long
regarded the union statute as dead, they are seriously alarmed over
the threat to their extensive economic interests in Southeast Asia.
Discussions to end the union agreement are to start on 29 June.
Both Dutch and Indonesians have contin-
tiously sought American support for their positions, and an unsucces-
ful appeal to the UN would probably revive Dutch resentment over the
United States' role in the establishment of an independent Indonesia.
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SOUTHEAST ASIA
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French reported implementing plan to abandon southern delta area:
An official of the Vietnamese Ministry of
National Defense informed the American
embassy in Saigon on 24 June that three
days previously the French had withdrawn
from much of the southern portion of the Tonkin delta, leaving the
Vietnamese forces there without artillery support and fully exposed
to the Viet Minh. The official said Vietnamese authorities plan to
protest to the French concerning the withdrawal.
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General Salan had informed the embassy the
previous day that the French had had to draw in their delta lines and
might shortly have to evacuate the civilian populace outside those
lines.
Comment: The plan of the French to
withdraw their units from the sout ern delta area and leave its
security to Vietnamese forces was recently reconsidered in the
light of enemy capabilities and Vietnamese weaknesses, but has ap-
parently been revived. Although this regroupment will result in an
increase in French mobile reserves and an enhanced capability to
protect the delta nucleus, it will have a profoundly disturbing effect
on Vietnamese morale throughout the delta.
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5. Ablest Cambodian general may be dismissed:
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Cambodian defense minister Tioulong,
who is also. commanding general of the
Cambodian army, says the government's
resignation,
was intended primarily to relieve him of his portfolio. The imme-
diate cause, he told American charge Goodman, was his failure to
obey royal orders to provide honors recently to General Navarre.
The king was so angered he decided to remove Tioulong from the
Defense Ministry. It is not certain yet if Tioulong will also lose his
position as heac4 of the army.
Goodman comments that it is incredible
the king would at this time discipline his most able lieutenant.
Comment,. Tioulong is generally considered
the only Cambodian capable of holding the army together. Under his
leadership, the Cambodians several days ago defeated one of the two
regular Viet Minh battalions in Cambodia and sent it retreating north-
ward toward Laos.
The success of any plan for American
assistance in training an effective army would be largely dependent
on Tioulong's retention of command.
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SOUTH ASIA
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7. Pakistan faces foreign exchange crisis:
Senior Pakistani officials concerned with
economic development have told American
officials that they believe a critical shortage
of foreign exchange threatens Pakistan's
political and economic s ability. Karachi estimates the gap between
available dollar and sterling resources and requirements for essential
imports during the coming fiscal year at more than $90,000,000.
The officials expressed the hope that the
United States could assist in partially bridging the gap. They also hope
to divert about $15,000,000 worth of American and Colombo plan aid
to pay for industrial imports.
Comment: The Pakistani regime's ability
to re-establish its political prestige now depends large4y on easing
quickly the stringent economic position of consumers-particularly
since the 30 May imposition of governor's rule in East Pakistan and
the concomitant promise of economic relief.
Diversion of present resources to consumer
items would force the abandonment of the country's industrial and agri-
cultural development plans and thus make for recurring financial crises.
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WESTERN EUROPE
Oslo formally rejects plan for stationing American air units in Norway:
policy of not permitting the stationing of foreign troops on its terri-
tory in peacetime. The only "practicable course" he saw for strength-
ening the country's air defenses was for the United States to equip an
additional Norwegian air wing.
Norwegian foreign minister Lange informed
the American embassy on 23 June that his
government cannot agree to the American
proposal to assign air force units to Norway
on a rotation basis., a said that this would conflict with Norway's
comment: Norway has now joined Denmark
in formally rejecting the concept of stationing foreign troops on its
territory during peacetime. Government leaders agree that NATO
requirements demand, greater air strength in northern. Europe than the
two countries can provide, but hold that the stationing of foreign troops
would be politically unacceptable and would be regarded as provocative
by the USSR.