OFFICE OF CURRENT INTELLIGENCE DAILY DIGEST OF SIGNIFICANT TRAFFIC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000100070001-4
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 11
• Document Creation Date: December 9, 2016
• Document Release Date: June 12, 2001
• Sequence Number: 1
• Publication Date: March 8, 1951
• Content Type: SUMMARY

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NOTE: 1. This summary of significant reports has been
prepared for the internal use of the Office
of Current Intelligence. It does not
necessarily represent a complete coverage of
all current traffic in CIA or in the Office
of Current Intelligence.
2. Comment represents the preliminary views of
the responsible analysts and not necessarily
the final view of the Office of Current
Intelligence.
3. Marginal letter indications are defined as
follows:
"A" - items indicating Soviet-Communist
intentions or capabilities
"B" - important regional developments
not necessarily related to Soviet
Communist intentions or capabilities
"C" - other information indicating trends
and potential developments
State Dept. declassification & release instructions on file
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SECTION 1 (SOVIET)
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a
USSR. USSR May Ab.ndon wile Kashmir Debate in SC, The US delegation 25X1X
3-h
t Soviet tie I egate,
in tf apan arlu ti ap uir;ot ~ l 4 1I1V 11 b vaav ,?
Mr Dulles by Malik might imply acquiescence to aruc., reb
aTi -one uii -uaz u;-11 ----
Malik, in commenting on the as .. it a.spu , _ the indicated solution
would be independence. He disclosed that he intends to make this point
in his SC statement, and might also suggest that if independence could
not be arranged, that the two parties be left alone to work out a so-
lution. (S New York,, 1234, 6 Mar 51). CO a E}nb Moscow (S Moscow 1611,,
5 Mar 51) in commenting on the silence of the USSR to date on the US-UK
resolutions on Kashmir, pointed out that past behavior of the USSR was to
limit press comment and take a back seat in SC proceedings on Kashmir,
thus soft-pedaling the purely Indo-Pakistan character of the dispute and
letting the onus fall on the US and UK for the almost inevitably unpopular
character in one country or the other of a given territorial decision.
While the Emb felt that the USSR would probably continue to take a back
seat, it suggested that if a move were made at the SC, it would almost
certainly take the form of a pro-GOI position. The stand for independence
that Malik reportedly will take, would be displeasing to both India and
Pakistan. However his additional suggestion that the two countries work
out their own 'solution would come close to Indiats point of view. The
advantages to the USSR arising from such an indefinite prolongation of
Indian-Pakistan tension and possible US-UK disagreement connected there-
with, include opportunities for increased Communist influence anal. pene-
tration in Kashmir under the Abd.ullah regime. Though the USSR would
undoubtedly prefer an independent Kashmir, under the weak leftist regime
of Ab.''vllah where the possibility of effecting a "popular" revolution
might be present, it is more likely that at this time,, they will stress
the 2nd. suggestion which would be favorable to India in providing
opportunities for delaying a settlement.
Cessation of Mall. k-Dulles Javanese ace,
Treaty Tai-73.1 analyzing possible reasons
for cessation al -u es a cs Japanese peace treaty,
places the question in the context of general Soviet desire for non-
settlement of Far Eastern problems and makes the following more specific
comments related to the treaty: (a; The USSR initially approved the
informal conversations in order to gain information on US proposals and
intentions regarding Japan and this objective has been accomplished.
(b) The USSR is committed to the demilitarization of Japan and increasingly
has intensified Soviet propaganda to this end. During and since the visit
of Mr. Tilles to the Far East he referred 'to the establishment of US bases
a the position and propaganda of the USSR
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"B" USSR Links Au rIan and_T.r este T,:,Sufas at CFM Deties Vlee 11t,
the Big Four Deputies meeting 7March, . the Soviet delegate proposed to
include the subject of Austria on. the agenda for a proposed Council of
Foreign PTini_sters meeting provided the Western powers agreed to discuss
the question of Trieste. (U N!, Uar 51)a CCii_ IENTo The Soviet Union has
utilized the completely extraneous Trieste issue as one more stalling
tactic in Austrian treaty negotiations, first linking the two in May 1950.
Both the Yugoslav and Italian Governments prefer to avoid for the present;
an international discussion of the Trieste issue.
"B" So t,et; Reaction to Swiss tttitude Relax?d. wE csrts, of S gar
to the Soviet Foreign Office and told that the USSR had noted and approved
the Swiss attitude regarding increased control over e ports of strategic
materials. In the interview the Soviet official "significantly observed"
that this problem had political aspects, The Emb characterizes this inter-
view as an unsubtle form of intimidation indicating the extent of Soviet
concern with limitations or prospect of limitations on strategic materials.
(s Moscow, 1620, 7 Mar. 51). COIY''' V' The high level conferences recently
held by Swiss officials on future. policy regarding export controls to the
Soviet orbit may have prompted the interview. (See CCI Daily SUMn.ary-,
7 Mar 51 for Swiss-Swedish consultations on this question, )
"A" Statements of Semenov Regarc3.in o~rie Attat +le Tuwarrt Ge_rma..1 The 25X1X
25X1 X a., by- Semenov, Soviet Arnb to East Germany, 25X1 X
quarters in West Germany, ?erlenov stated 'that the USSR would agree to .a
Four Power Conference if it received assurance that all plans for '..rest:
German rearmament had been dropped. The USSR will not -tolerate West German.
rearmament because it views Germany as the only power capable of containing
Soviet expansion. If the West 'unde.r?takes to rearm. West Germany, the ,TF tiR.
will attack prior to the formation of a West German.militairy force, ?enov
stated that the USSR would agree to complete German autonomy provided all
occupation troops were withdrawn and would permit Germany to become a great
power if it promised neutrality in an East-West conflict or signed a treaty
of alliance with the USSR. He said that the USSR did not intend to turn
Germany into a Satellite and was willing to insure German economic inde-
pendence by boundary revisions at the expense of Poland, According to the
Semenov, the USSR would relinquish its demand for reparations following
withdrawal of -the occupation forces and would maintain very close economic
relations with Germany? Semehov proposed that,, prior to the CF"M, a formal
meeting, including prominent ':lest German neutrality advocates, be held in
Berlin to discuss German ?u?ity. his opinion the meeting should recommend:
(1) immediate abolition of zonal, boundaries,- (2) formation of a provisional
all-German Govt whose members would be nominated by the cr-!.cupation powers;
3) elections under the supervision of the UN or neutral observers; and
"4) opposition to German rearmament under forei.g:n, command and on behalf of
foreign powers. Semenov then stated that the USSR would not o t pose the for A
atonal Gerrrzan army under German commando
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EASTERN EUROPE. ALB. N_CA. Nirt?h 'l nim c Communist Party Central Committer;.
The ninth plenum of the Al..ba.ian. Central Committee was held in Tirana from
19-23 Feb in a "spirit of crit clam and self-c lticis n" . The plenum analyzed
the external and internal situation of Alban.a., the realization of the Two
Year plan, and the internal Party situation. The members adopted. a series
of important decisions on the consolidation of the Party and its greater
mobilization for fulfilling the State plan and defending peace. (R FBID,,
6 Mar 51) CC1, 1ENTThe general directions for paying special attention
to local Communist Party organizations, as laid down in the Cominform
Journal of 15 Dec 1950, have provided the theme for recent Party propa-
ganda. A Tirana radio braodcast of 17 Feb admonished party agitators for
being "n:conoton.ous" and failing to express concrete arguments in their
political and ideological work.
FI1dLAKD. Former Cormunist P%,iniste ? of the. of er10r to De: iu?ce Part
Yrjo Leino, former leading Finnish Coimanist and Minister of the Interior,
194,5-194-8, has been reported as thinking of raking -a. public break with
Coramunisxrm. He has not been a member of the Party since the fall of l94ku,
but has held one of the PartyFs Diet seats. Leino plans to publish his
memoirs sometime before 15 April, In them he will present his reasons
for leaving the Party and much of his personal experiences in the Party
and as Minister of the Interior. The time of publication of this book
will be coordinated with the Social Democrats who expect to make political
hay out of it in anticipation of the Parliamentary Elections this coming
July. The US Emb Stockholm comments that an open break by Leino may jar
many of the waveri-nu e men.ts in the Finnish Communist Party. (S Stockholm,
D#782, 25 Jan 51; CO:: TINT: News of
Loino t s planned break may have . een. the mo 2vva i a etor for the reported
reorganization in the Communist front party, the SIML, a few weeks ago.
Leino has been less obnoxious, as a Communist, to anti-Soviet elements
in Finland, than most other Finnish Co:.unists. His action may have a
substantial effect upon the'vatng of Sh'DL m.ermbers ne: t July, causing
many of them to vote for the Social. Democrats.
Sudden Friendlj..ness of Soy .t . iRlomats rted, Soviet repre--
sentatives in Finland are reported to be acting in a more friendly manner
towards the Finns, as well as Western diplomatic representatives, at
various social and official. occasions. Thus sudden change in attitude
has not been reflected in official.. relations between Helsinki and Moscow.,
which are correct but hardly cordial. (U NYT, 8 Mar 51). _COI'' 17-. No
particular signficance can be presently. attached to the sudden change
in the attitude of the Soviet represenrta.tives. In the past the same type
of development has occurred without noteworthy results,,
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"Cn RUMANIA.. Anal Korea.
or informed the US Legation that she and her colleagues are being requirea o
contribute half of one month's pay in three monthly installments to the
Rumanian fund for Korean. relief. Similar reports have been received from
other sources. Also in connection with Korean relief,, the Legation has
heard reports that Rumanian doctors have been asked to volunteer for ser7iee
in Korea,, but those who have done so report that they do not know whether
their service is to be military or civilian. (C Bucharest 629, ? Mar 51).
"A" yUGSLAVTA. Yugoslavs LTx . entl -Rfc nest l~ddtioR .l l20~000,000 to Avert
Economics Crisis, Foreign Minister Kardelj has informed Ai:b Allen that
Yugoslavia is in immediate need of 530 million worth of raw materials to
avert an imminent economic crisis. Yugoslavia is endeavoriigto obtain
4,,000.,000 pounds sterling from the UK., and requests an additional ~',20,,0009000
from the US through MIDAP funds, Kardelj claimed that without this assitanee
Yugoslav ability to resist aggression would, be weakened. Yugoslav light
industry,, particularly textile mills and shoe factories, might have to
begin closing in two weeks and the new price and incentive policy,, recently
instituted to encourage agricultural production,, would be seriously affected.
In response to Amb Allen's statement that it was not feasible for the US
to continue to meet the recurring crisis in the Yugoslav economy through
piecemeal requests,, Kardelj replied that Yugoslavia hoped to find a basic
solution through an agreed formula for substantive collaboration with EPU,
and possibly CEEO in another year., but that the existing emergency could
not be met by this means, Amb Allen feels that there is no alternative
for the present, but to continue to sustain the Yugoslav economy sufficiently
to maintain its military posture. The eventual solution, however, must be
direct cooperation of Yugoslavia,in the Western economic and military
organizations. (S Belgrade,, 1230. .,6 Mar 51).
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SECTION 2 (EASTERN)
"B" THAILAND. Goo erat~ on with US a n~ scored 1L..I' ezt in4? Continuing the
month-old propaganda attack against Thall..andas P hibun regime and American
intervention there, a Viet Minh broadcast of 6 March advised listeners
that they could "expect the situation (in Thailand) to change from one
day to the next." The broadcast claimed that the Thai Communist was
attempting to establish an anti-Phibun "democratic front", while former
Premier Pridi, "who enjoys a high reputation throughout Thailand,"" was
described as reportedly a member of the front, US Minister Heath in
Saigon, comments that a propaganda effort is apparently under way
designed to justify violent Communist action in Thailand and that Pridi
has come to terms with the Thai Communist Party. (C Saigon 1560, 7 Mar 51)0
COMMENT. This Viet Minh propaganda is almost identical to recent Peiping
attacks. Pridi's whereabouts and intentions remain a mystery, and from
the above report it aprears that even the Communists are not sure where.
he stands. Nevertheless, the Chinese-dominated Communists in Thailand,
if so directed, are believed capable of seriously challenging the Thai
Government's authority.
"A" PHILIPPINE-so Mass Huck: surrender. Manila press reports state that 228 Huks
surrendered to President Quirino on 7 March in the biggest mass surrender
reported to date. One paper states 15,000 rounds of ammunition were
given up. According to these reports, President Quirino told the Huks
they may return to their homes unless formal charges have been filed
against them and assured those who might be convicted he would "either
parole or pardon them". (U Manila 2687, 8 Mar 51). COMMENT: It is
believed that the Philippine Government tends to exaggerate Huk surrenders
in order to answer public criticism of its law enforcement efforts.
"B" gJ1kqnese Treaty proNosas to Reflect Concern for Pacific
.Security. Embassy Canberra believes that contributions to the Japanese
peace treaty proposed by the Australians will record the Government's
diligence in seeking protection against Japanese resurgence but that
final decision will depend upon completion of a mutually satisfactory
Pacific security arrangement. (S Canberra 239, 6 Mar 51). CO I-s
This analysis is supported by previous indications of Australian
policy4
CHINA. Whereabouts of MAO Tse=tun .
~WW MAO Tse- tun.g flew to Moscow in January a
LIU Shao-ch?i. Prior to LIU?s departure,
b
nar
y
y
Jo ne ere n
he and CHU Teh reportedl discussed an alleged Soviet desire to replace
MAO with LI Limsan. MAO is still in Moscow and.
is believed to have lost his freedom o movement.
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COM ENT. MAO?s absence from public functions since 26 January has stimu-
lateda flow of rumors as to his whereabouts and physical condition. MAO
is fairly reliably reported to have a heart ailment and to be attended
by Soviet physicians, and a Chinese cardiologist in Hong Kong was recently
requested to dispatch to Peiping medicines for the heart disorder of an
unspecified person; however, there is no reliable information on MAO's
current state of health, Reports of MAO's recent journeys conflict as
to date, means of transportation, destination, and purpose, Although
LI Limsan has been widely rumored as the Kramlin?s Chinese favorite., there
is no evidence that MAO is out of favor or that the USSR is attempting
to replace him with LI or with anyone else,
Chinese Nationalists foci ,f inancia1 crisis this year, The ECA
office in Taipei states that the Chinese Nationalist government on Taiwan
faces a financial crisis between May and September of this year because
of the continuing government deficit and its diminishing gold and foreign
exchange resources. The office states that it is possible to stave off
economic deterioration only by substantially increasing US economic aid.
Otherwise, the office foresees a flight from the Taiwan currency, pre-
cipitating a critical situation, (S TOECA 2019 5 March 51). COMi TENTS
This statement supports. previous CIA intelligence estimates (see ORE 7-50)
that the Nationalist government would face financial insolvency in 1951
unless it is sustained by increased U.S. economic aid,
"C" JAPAN. Socialists ConsideringNon-Agression Pacts.. Socialist Party
Chairman Suzuki revealed today that his party is now studying the possi-
bilities of a non-egression pact between Japan and Soviet Russia, Red China
and other Asiatic nations including Australia, New Zealand and the
Philippines. He scotched ideas that Red China had aggressive designs
against Japan, (R FBIS, 7 Mar 51). COMMENTS This type of statement is
typical of the dominant leftist faction of the Socialist Party, which
is determined to maintain the partyfls position of.neutrality at all
costs, despite converse public opinion trends.
"C" KOREA. Farmland Redistribution P o re sing al_th.ou h Slowly, An ECA
report on the progress of the land redistribution program, whereby an
estimated 1,200,000 tenant farmers will receive the lands of their
absentee landlords, indicates that the program is proceeding although
slowly in the face of an obvious lack of enthusiasm on the part of
many officials, both national and provincial. Local officials with strong
landlord sympathies have even thwarted implementation of the program in
some individual counties, (C ECA TOECA 31, 1 Mar 51).
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SECTION 3 (WESTERN)
"B" G3+RTLUY4 Social Democrats Exploit Restiveness over Economic Deteri-
or on. Tes Genany?s leading opposition paity, the Soci Democrats
rSP7undcr Kurt Schumacher, has shifted its propaganda emphasis from
remilitarization to the deteriorating economic situation. US officials
in Bonn have noted increased public discontent over current economic
problems, particularly the gradual rise in the cost of living. The
Federal Republic has in the past supported Minister of Economics Ludwig
Erhard, a pillar of the free economy school Whose recent "rationing...
only over my dead body" statement has been widely quoted. Adenauer
and various members of the Cabinet, as well as leaders of the Govern-
ment parties in the Bundestag, now favor imposition of greater controls.
Meanwhile the SPD has continued to exploit popular discontent,
especially with an eye to the forthcoming Lower Saxony elections.
(C Bonn Unnumbered, 2 Mar 51; and Bonn 590, 6 Mar 51) COLT dfNT :
Despite a reported Adenauer rebuke to Erhard at a recent Cabinet
meeting, (OCI Daily, 13 Feb 51), it will nevertheless still be some-
time before Government leaders can reach agreement on the necessary
controls. In the meantime, there is grave danger that the economy
will continue further to deteriorate and thus augment public dis-
content.
"B" FRENCH MOROCCO. Situation Continues to Cause Anxiety. Near Eastern
reaction to alse press reports o:# c ashes etween French troops and
Moroccan nationalists is of such serious concern to French officials
that Resident General Juin has again gone to Paris for consultations
with the Foreign Office. Meanwhile, the Moroccan press is intimating
that the US upholds the French in opposing Arab League maneuvers on
the Moroccan question, and that the British support, the Arabs. (U New
York Times, 8 Mar 51; S Rabat 126, 6 Mar 51). C02MVIENT: The sen-
sa,a.ona stories which have been appearing in the ,Arab press, par-
ticularly in Cairo, are believed to have been inspired by telegrams
from. Istiglalls fiery leader in Tangier, El Fassi, whom the French have
long wanted to silence. Tangier officials probably will now comply
with French demands that Fassi be imprisoned or expelled in order that
the explosive situation can be calmed as quickly as possible. Most
nationalist leaders have been taken into custody, and have requested
their followers to refrain from violence. French armed and security
forces in Morocco will be able to control any untoward incident.
"C" UNITED KINGDOM. Stiffer Attitude towards Peiping Indicated. The
Foreign Office has cirec~edt e neu~r UKargean Peiping, Leo H. Lamb,
to bring virorously to the attention of the Chinese Peoples Government
the questions of delay in the issuance of exit permits and of detention
of British nationals, A British official has indicated to US Embassy
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London that stronger representations in behalf of American interests
might also be undertaken if the US so urged. (S London 14793, 6 Mar 51).
COMtENT: This new and more vigorous approach is motivated by two
con. orations: (1) the failure of past conciliatory methods to effect
SVEI)EN. Polish Economic Pressure on Sweden. Poland increased the
price of cos to Swe en on Marc to .21.50 per ton, a figure which
now exceeds US coal, on a CIF basis, by 113. In a year, Polish coal
has increased almost 100 per cent in price. Consequently, Poland is
acquiring a growing credit balance with Sweden, and the Swedish
delegate to the ROE Coal Committee fears that the Poles, who are press-
ing for payment in goods and not dollars or sterling, will demand
increased shipments of Swedish ball bearings, iron ore,, and pulp.
(S Stockholm Woeka #9, 3 Mar 51 & U FBIS 5 Mar 51) . , COKUMENT: The
Swedish delegate may be expressing this view in order to obtain favor-
able consideration for Swedengs efforts to obtain coal elsewhere.
But 'Sweden cannot expect to meet its coal requirements without imports
from Poland, &n d the action of the Swedish delegate may be designed
to justify exports of ball bearings, iron ore, etc. to Poland and the
Soviet orbit.
PAMAIIA. Government Unstable. in view of
-scal gra on the part o President .. rnul:o Arias, Police-Chief
Remo' may act to remove the president if, he feels that he has public
support. CO TENT: Arias-Remdn relations,
the key ? ,na .,, ~1 y since the coup of November 1919, have
deteriorated ~inlrecent lmonths. Although Rem6n is likely to be guided
in any situation only by a desire to retail his present status, rumors
that Arias is attempting to oust him may have provided a compelling
reason to upset the status quo. Written proof of the attempted graft,
reportedly obtained by Rem6n on 5 March, could be used either to
strengthen Rem6n's position as Police-Chief under Arias or to arouse
public support for a Rem6n-led coup in favor of a more complaisant
chief of state.
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(S/S Cable Supplement not for dissemination outside 0/CI)
OFFICE OF CURRENT INTELLIGENCE
DAILY SUMMARY OF SIGNIFICANT S/S CABLE TRAFFIC
8March 1951.
SECTION 1 (WESTERN)
"B'e FRANCE. Niggardly French Concessions Imperial Tariff Agreement with US.
Unless the French representatives at the Torquay conference under the
General Agreement onTrade and Tariffs (GATT) are empowered to offer much
larger concessions, the US delegation fears that a US-French agreement may
be impossible. US officials in Parr have already reminded the French of
ex-Premier Pleven's assurances to President Truman that tariff reductions
at Torquey would replace the present French protectionist policy, and the
French Foreign Office has indicated that additional reduction offers are
in prospect. (S S/S Torquay 493, 2,Mar 51 and Paris 5172, 5 Mar 51).
COMMENT: The entire program for the economic integration of Western Europe
i si s sere. ously hindered by the attitude towards trade liberalization of French
officials at the working level, and no real concessions can be expected at
Torquay without forceful intervention by French Government leaders. No
further progress at Torquay is likely therefore as long as the current
cabinet crisis lasts, and the French trend toward the Right in recent
years, which many political observers consider an indication of a Rightist
swing in the approaching elections, may encourage resistance at French
Government policy levels to a more liberal tariff program, despite infla-
tionary dangers.
"Be French Seek to Del.zV Proposed Foreign Ministers' Meeting. The French dele-
-
t current Big Four deputies' discussions prefers that the
ga ion a
proposed Foreign Ministers' meeting not.be held until May. This may re-
flect a French feeling that, while the Four-Power meeting is pending, no
major action by the USSR is likely and fence no further action by the West
on Germany will be necessary. Any undue delay in holding the proposed
meeting, if exploited by the Soviets, might inhibit the development of a
German will to contribute to Western defense. (S S/S Paris 51118, 5 Mar 51).
C011dMENT: The French, although consistently believing that a Four-Power
Meeting offers some possibility of deferring a further rise in East-West
tension, are also eager especially in this election year-t( avoid
implementation of German rearmament, which they have accepted reluctantly*
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