DAILY DIGEST MAY 9 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200120001-7
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 15, 2016
• Document Release Date: August 11, 2003
• Sequence Number: 1
• Publication Date: May 9, 1951
• Content Type: SUMMARY

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CENTRAL INTELLiGEWON, A0,l1 CCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
Date: MAY 9 1951
49189-
COPY NO. 33
NOTE: 1. This summary of significant reports has been
prepared primarily for the internal use of the
Office of Current Intelligence. it does not
represent a complete coverage of all current
reports in CIA or in the Office of Current
Intelligence.
2. Comments represent the preliminary views of
the Office of Current Intelligence.
3? Marginal letter indications are defined as
follows:
"A" - items indicating Soviet-Communist
intentions or capabilities
important regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
"C" - other information indicating trends
and potential developments c
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SECTION 1 (SOVIET)
5X1
5X1
5X1
"B" USSR. Marshal Konev in Pra e for Celebratio . As head of a Soviet dele-
gation, Soviet Marshal van-S..Konev delivered an address in Prague on
5 May on the occasion of the celebration of the Sixth Anniversary of that
city's liberation? COMMENT,. Koriev'has been the sub=-
-
His recent appearance in
- - -- - ---
Prague, however, cannot construed as confirmation. There is no evidence
that he is still not Commander in Chief of the Ground Forces of the USSR.
He also attended this year?s May Day celebration in Moscow, although for
the first time since 1949.
"B" Abbreviated Results First tarter 191 Plan Published. These very
abbreviated results published in the Soviet Press, 8 May, claimed an 18%
rise in gross value for the total output over last year's same period,
and a fulfilling of the plan by 100.2%. Ministries not completing their-
quotas included ferrous (99%) and non-ferrous (98%), oil (99%) heavy
machine building (99.7%), building material (99%), timber (89%5, meat
and dairy (98%);, cotton cultivation (97%) and railroads (95%). No
commodity data was given, and the usual sections on capital construction,
national income, rtation and welfare of people were nom-
pletely omitted.
"A" EASTERN EUROPE. CZECHOSLOVAKIA. Soviet Liberation of Cze-jhosloyakia Ce-le..--
brated. The sixth anniversary of the "liberation" of Czechoslovakia. by
the Soviet Red Army was celebrated on 6 May in Praha with a military
parade, an air show, and a series of speeches 'by Soviet Marshal Konev and
Czechoslovak Party and Government leaders. The oratory can be, summarized
into four significantly emphasized subjects- (a) the fixm alliance
between Czechoslovakia and the USSR, a country which has."always honored
its international obligations"; (b) !-he development of the Czechoslovak
Army in the image of the Soviet Army; (c) the military readiness and
political preparedness of the Czechoslovak Army; and (d) warnings to the
armed forces to maintain vigilance against the enemy, i.e., the Anglo-
American imperialists. The military parade, as reported by the US Embassy,,
included Czechoslovak soldiers in Soviet-style uniforms and basic equip-
ment, Security Corps and People's Militia troops, as well as Soviet-type
artillery and tanks. The US Military Attache concludes that the war '
potential of the Czechoslovak Army has improved in the last year; but
definitely places the
the lack of modern equipment and esprit de c.or
Czechoslovak Army in a secondar category. The US Air Attache describes
the Czechoslovak Air Force (CAF) demonstration as "disgraceful." The
fly-pass was led by US-made C--47''s and did not include the Soviet-typejet
aircraft which had been witnessed rehearsing for the occasion. The Air
Attache attributes the poor air showing to lack of pilot skill. and staff
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inexperience. He concludes that the air show was additional evidence that
the CAF is incapable of surviving'more than one or two days in a modern
war, an opinion which was shared . all-of er Western Air. Attaches,
25X1
"B" HNGARY?.Expanded Amy Estimated at 10 0.000. On the basis of a progressive
build up in the Hungarian armed forces since last fall,'the Military
Attache Budapest now estimates that the Army contains 100,000 men. The MA
estimate had been 559000 since November 1950. These figures exclude naval
and security forces, but include frontier guards. Personnel 25X short term or refresher training are not included.
CONNT: The Hungarian Army has been officially es 7ma e a ,
view of the registration of, older personnel and the call-ups without a
corresponding release since last fall, it has been estimated that the an-ay
would reach 90-100,000 by this spring.
"C" Radio Budapest Exploits Vogeler Statements., In its first mention
of Vogeler since the brief official statement of the facts connected with
his release, the Budapest radio has broadcast a commentary exploiting some
statements made by Vogeler after his release, Vogeler's admission that
there was some truth in his confession has been coupled with the allegation
that he did not deny a single charge brought against him by the Hungarian
court to imply that he admitted to having been engaged in gathering mil-
itary and economic intelligence and in carrying out economic sabotage.
In connection with Vogeler's alleged complaint that he was forced to read
Dickens, the Hungarian radio pointed out that if he had read some of Dickens'
remarks on Americans he would have found them most enlightening and
instructive. In answer to Vogeler's statement that "what happened to me
could happen to anyone", Budapest Radio said that if Vogeler were just any-
one "he would far more likely be fightin it out in Korea than enjoying
the hospitality of a Hungarian prison". 25X1
"A" POLAND. Government Desires American Scantic Lane to Continue Operations.
According to a US Embassy Warsaw official who has consulted with an
officer of the American Scantic Line branch in Gdynia, Polish officials
have expressed a desire that the line continue its operations. Polish
officials representing the Ministries of Shipping, Finance, and Foreign
Trade have assured the American Scantic representative that they had no
intention of liquidating the line in Poland. Developments indicative of
the Polish Government's anxiety are: (1) official concern over the
,departure from the country of the company's two American officials in
Gdynia, (2) an official inquiry concerning the cancellation of the
scheduled arrival of the American Scantic vessel, Mormacpinec and
(3) the apparent. cancellation of the prohibitive tax levied against the
company and the refund of the portion already paid. The fact that con-
siderable freight and mail is now on the pier at Gdynia awaiting ship-
ment on the Morma cti,ne may partially explain the government's immediate
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concern, C NT; These friendly overtures by
the Polish Government co conceivably.be a device to lure American
Scantic vessels back to Polish harbors, where they could be seized as pay-
ment for the claimed damages sustained by the cessation of the Polish
vessel Batorv!s service to New York, It is more likely., however, that the
Polish Government requires for the immediate future the facilities for
shipping that have been provided heretofore by American Scantic,
"C" YUGOSLAVIA. Protest Note to Moscow. The Yugoslav Government on 4 May
addressed a note to the USSR protesting the rude treatment of a
secretary in the Yugoslav Embassy in Moscow. The Yugoslav press in
announcing the note explains that this incident is but a reflection of
the Soviet bureaucratic system which at home tramples upon the rights
of its citizens and in international life violates the basic principles
of civilized relations, CONMEVTt This 25X1
note represents an extension o e o T,hP recent Yugoslav-Satellite
charges and counter-charges of maltreatment of diplomatic personnel.
The Yugoslav Government recently closed the Soviet consulates at Zagreb
and Split reducing Soviet representation in Yugoslavia to the Embassy in
Belgrade.
"C" CURRENT COMMUNISM. World Peace Council Meet' Issues Innocuous Resolution..,
The executive committee of the World Peace Council closed its three day
session in Copenhagen with a resolution urging support of the Peace
Partisan ' s' ature drive for a five power peace pact, 2 5X1
25X1 COMA2ENTt Aside from this resolution and e speeches made
L
a a large pu is meeting on 6 May sponsored by Danish Peace Partisans,
no propaganda or information emanated from this session. World Communist
media gave the meeting little or no publicity; and Radio Moscow offered
only very limited continent. Thus the reason for the meeting was probably
largely administrative.
"C" Communist Women's Grou to Investigate "US War Crimes in. Korea .,n
A TASS despatch announces the arrival in Moscow on 8 May of a commission
of the Women's International Democratic Federation (WIDF) on its way to
Korea to "establish the facts of crimes perpetrated by the American
interventionists with respect to the Korean civilian population," TASS
said that the commission was travelling at the invitation of "Korean
25X1 women," and included representatives from Algeria, Austria Belgium, 25X1
C ada Denmark, France., Holland, Tunisia, and the USSR,
CO,, NT: The WIDF is one of the major Communis international
organizations. Its headquarters are in East Berlin. The "findings" of
the commission will be used as raw material for pro- Communist "peace"
propaganda.
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SECTION 2 (EASTERN)
"A" IRAN. Tudeh Sends Open Letter to Prime Minister Mossadeq. ThP
outlawed pro-Soviet Tudeh Party had, sent an open lette-? to the Prime
Minister, according to the US presss, demanding the followings
(1) Legalization of the party, (2) Expulsion of the US Military
Mission to Iran, (3) Rejection of foreign arms aid, (ii.) Release of
political prisoners, (5) Recognition of (Communist China, (6) End
to martial law in the oi' fields and (7) nationalization
the Bahrein Island oil fields. 25X1
COMMENT: The Tudeh Party was banned in e ruary following an
assassination attempt on the Shah, in which it was implicated. Since
that time it has contined its activities clandestinely. The Tudeh
letter puts Mossadeq in a difficult position, for he is an advocate of
the free expression of political beliefs and many of the points in
the letter are not in conflict with his own stand. He is rumored to
be considering legalizing the Tudeh on the grounds that it might be
easier to control if its activities were brought out into the open.
Nevertheless the Tudeh has attacked him, and now that he has become
Prime Minister he may be inclined to consider the Tudeh too danger-
ous to be permitted to express itself openly and freely.
"B" IRAN. US Ambassador's Estimate of Mossadeq's Strategy. The US
Ambassador in Tehran on 7 May made the following appraisal of Prime
Minister Mossadeq's strategy and program: (1) Mossadeq will concen-
trate on a solution of the oil issue and will not push such projects
as electoral and budget reforms if opposition to them develops in
Parliament (Majlis). He will avoid friction with the Majlis, (2)
Selection of members of the proposed joint Oil Commission will
probably occur promptly and will be controlled largely by Mossadeq,
(3) Once the Commission is formed, Mossadeq will probably move
cautiously, particularly since he seems to have as yet no clear idea
as to how he will proceed, (4) Mossadeq's policy as outlined may
succeed for some three months, o:L until the Oil Commission submits
its settlement proposals to the Majlis, at which time Mossadeq will
have to assume responsibility. The US Ambassador concluded that
Mossadeq's precarious health, or popular, possibly Tudeh-stimulated,
imnatience over the delays might hasten a showdown for Mossadeq.
25X1 COMMENT: While Mossadeq stands to retain
Majlis support on the oil issue as long as popular feeling on the
problem continues at its present high level, it is difficult to see
how he can avoid friction with the Majlis. Mossadeq's National Front
has wide popular appeal in many of its issues, but it has few repre-
sentatives in the Majlis and the old line non-Party politicians in
Mossadeq's cabinet are not likely to support issues opposed to their
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support for other
own interests. Unless Mossadeq can obtain popular it is
measures equal to that which he has on o long loAtt the moment, it
doubtful that he can remain in power
seems unlikely that he will do so.
US Ambassador Davis in
8
Situation Still Serious. still(
>g> SYRIA -ISRAEL. Border S (as of
Sation
sfrom
that despite the corael and Sf ho yria stiliti
Tel Aviv reports tween I ill sta
tates
May) the borde
Ben-
encouraging"- o is c lug rune ulster while Ben-
that Foreign within Israel
Minister Sharett, increasing difficulities
Gurion is in the US,. is for for Sharett in cooperating th the UN
because: (1) popular supp has been weakened as result of
Truce Supervision Organization (TSO) the border incidents,
ointment over foreign reaction to
public dwhil apparently wishes to avoid hostilities, Army
and (2) while Sharett indicated his lack of confidence in
Chief of Staff Yadin has bluntly Because the Israeli military
the UN Mixed Amistice Commission (MAC) ?
the MAC, they apparently feel thatto sitouuadi.scretio etori-
distrust b e necessary Meanwhile
orate to a point where it may to secure -the border. here with-
the grinds" and use the Israeli r ort that the tense atanosp
US Minister Cannon in l3r tt rep de consideration
itutn are
in is and the popular b bitterness toward the border r Syria an goverment in
causing difficulties for the warns of the danger of a settlement of the dispute. Cannon Israe since colonization of
annexation of the demilitarized area by
re ion would serve to release the ressure on the 25X1
the small fertile g centerse rian-
Israeli immii ant sta ing a seriousness o
25X1 CORM reports of addition-
Councii
Israeli border dispute is further emphasized by
fighting in the frontier regionsbeta da UN anger that Security the Israel
Arabs - hooestille e toward There the MAC, continues take and the matters local into its ain
hands
own hands
y - h
demilitarized area - may suddenly ly resenting the UN
and occupy part or all of the demilitarized zones, p
" which would be difficult to change.
with a "fait accompli
ace as Scheduled. On
?B" INDIA. Government Announces Elections to Take eneral elections in
1951- to February -
the Indian press headlined a x that general
India were to be'postPoned from November - Indian Law Minister Ambedkar,
2 This was denied a day later by Madras had suggested
India intended to corn late the 2 5X1
March 195 the State of Mwho announced to t1 e Goverment only the
postponement and ominated GOI
25X1 elections by December of this year. E ongress- ar y
COMWT
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apparently does not dare postpone the elections _ the first since
Indian independence - though it has several good reasons for ossibly
wishing to do so
Opposition groups nave already issue election mini es os an are
actively campaigning. An attempt by the GOI to postpone the elections
would raise a tremendous outcry from these groups who would seize upon
it as public admission of Congress' inability to win the elections.
"C" INDIA. Reported Indian Stand on Issue of Japanese Peace Treatsy.
According to Reuters,, informed Indian sources said that India was sure
to support the Soviet de,ari.d for Communist China's participation in
the drawing up of - a Japanese Peace Treaty. 25X1
COMMENT: US Embassy New Delhi reported a 2 April
article stating that India would shortly communicate to the US-UK its
view that while favoring an early peace treaty, India feels a treaty
could be "enduring" only if Communist China and the USSR are invited to
participate in the drafting. This reported Indian stand on Chingos
participation is not surprising in view of the GOI's consistent support
for recognition of Communist, China and its admission to the UN.
"C" INDONESIA. President Sukarno Admits Increased Communism in Indonesia.
During a co-Qrsatior -ith President Sukarno, US Ambassador Cochran
referred to enthusiastic May Day celebrations as evidence of
Communist growth in Indonesia. Sukarno quickly admitted the situa- 25X1
tion and said measures must be taken to oppose Communism.
25X1 COMMENT: The Republic of Indonesia to
date has rerused to take a firm stand against Communism either as
regards domestic problems or external policy. In spite of Sl .zkarno's
ready reply, there are no indications of any change in the govern.-
ment's attitude.
"B" Foreign Minister Emphasizes Indonesian "Neutralise". The
Indonesian press quotes Subardjo, new Foreign Minister, as saying,
when questioned on the world peace movement, that "Indonesia has
no need of either a Moscow or Washington peace dove. The only peace
dove that is wanted here is the Indonesian one." With regard to
the export of vital raw materials to Communist China, Subardjo said
Indonesia is planning to sell materials "even to the devil" if the
interests of the Indonesian people are served thereby.
25X1 COMMENT: Foreign Minister Subardjo is considerably
less capable an his predecessor, Mohammed Rum, and pursued an
opportunistic career which has included cooperation with "national
Communists." Although Indonesiags external policy of "independence"
(i.e., a refusal to take sides in the "cold war") is unlikely to
change under Subardjo, he undoubtedly will adopt a far less coopera-
tive attitude toward the Netherlands, the US, and the West than
did his predecessor.
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"A" BURMA. Imminent Overthrow of Burmese Government by Pro-Communists
Predicted
in Burma has told officers of the US Embassy in Rangoon that he is
convinced the present Burmese Government will be replaced this
summer by a pro-Communist government. His opinion, which is not
shared by the US Embassy, is apparently derived from the follow-
ing reports he has received: (1) the Chinese Communists have been
sending "25 guns per week" into Burma, (2) 5,000 insurgent troops
in northern Burma are being trained by the Chinese Communists,
(3) Sino-Burmese Communists have infiltrated the Karen rebels'
leadership, (4) the Burmese Communist chief, Than Tun, has been,
promised supplies and direction from Peiping, and (5) all pro-
Communist groups in Burma are receiving aid and direction from the
Chinese Communist Embassy in Rangoon.
COMMENT: The preponderance of report , issuing from Burma in genera
25X1 p xalleled chose Although his conclu-
sion that the collapse of the present Burmese Government is imminent
is overly pessimistic, the forces arrayed against the Government
represent a long-range threat to its existence and, at the very
25X1 least, will seriously increase instability in the country.
"C" Hong Kong Consul General Disapproves "Ranscm Payments" for
Americans in China. The US Consul General in Hong Kong disapproves
of the special license granted by the US Treasury permitting the
Bank of America to remit $53,500 to the American President Lines
office in Shanghai; so that the APL agent there may have enough
funds to pay off his staff and obtain an exit permit. The Consul
General urges that the license be withdrawn, pointing out that
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the payment will establish a precedent which the Communists will
apply to other Americans stranded in Shanghai. The great majority
of other Americans, says the Consul General are opposed to such
"ransom payments.10 COMMENT: The 25X1
State Department, in order to facilitate the exit of American
missionaries and business men from China, has approved authorizing
the payment of outstandinZ Communist claims which "have some color
of validity and represent more than the bare effort to extort funds."
The US Treasury has been asked, however, not to grant licenses for
payments in excess of $100,000 without prior discussion with the
State Department.
25
"B?t KOREA. Qgmma e Propaganda Capital o Serious Health Condi-
tions in North Korea. Following a two week buildup in the Soviet
Orbit press; an -S May North Korean radio broadcast addressed to
the UN, but broadcast in the Korean language, accuses US and ROK
forces of employing biological warfare against the North Korean
population, The broadcast, in addition to referring to documents
concerning plans for the use of BW, allegedly captured from the ROK,
stated that "American Armed Forces had contaminated with smallpox
the inhabitants in the areas of North Korea temporarily occupied
by them". The North Korean broadcast, claiming that no smallpox
had occurred in North Korea for the past 4 years, reported a wide-
spread outbreak "7 to g days after liberation of the areas from
American Occupation". CO1tM4ENT: In 25X1
addition to providing Communist forces in Korea with an excellent
propaganda device for internal and international consumption, these
claims may be an attempt to conceal the failure of North Korean
public health authorities to prevent the outbreak of communicable
diseases. While the incidence of smallpox to'date in North Korea
25X1 is unknown, reported the
outbreak of smallpox earlier this years
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"C" KOREA. Rhee Alleged to Have Berated UK. US Embassy London cables
that the SUNDAY CHRONICLE of 6 May in a story, datelined Tokyo,
quoted President Rhee as telling an Australian official of the UN:
"British troops have outstayed their welcome in my country. Tell
that to your Government. Australian, Canadian, New Zealand and
British troops all represent Governments:now sabotaging brave
American efforts to liberate and unify my unhappy nation." Another
paper on the 7 May carried ROK statements that the story was
"Communist inspired and completely untrue." The denial quoted Rhee
as "grateful" for UK help. The UK Foreign Office is reported to
be quite upset in view of recent severe casualties. The British
Minister in Pusan has been queried and if he confirms the story,
the Foreign Office feels it will be obliged to register a protest.
25X1 COMMENT- President Rhee, now in his
eighties, is reputed to be sufficiently irascible and physically
exhausted at the end of a responsibility-burdened day to make
such-a hotheaded and irresponsible statement. The UK Government
was probably not greatly surprised at his action but simply concerned
as to the propaganda use that could be made of the story by British
Communists who have frequently campaigned for the withdrawal of
British troops from Korea.
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"B" FRANCE, French uce Offer of Critical Materials to Polai do In
scus i, yns Zvi !!. T LL officials regarding t1d r - o s rade
negoti ions, Fr D c;h of:;` stated that, although ferro-molybdenum
probably would not be included in the final trade, agreements small
gaantiti` s of ferro-nickel and possibly alumina i may be hecessary.
The.,Fren&h added that it would be -to their interest to continue
obtaimt,- g coal fram- Polar rather than accept the US coal offer,
in order to liquidate million Polish debt owed France* If
the Current negotiation- . -rd:lq t1r French fear that the Poles may
not abide by the debt sett?lerent~ wh ,-.h would cause. "repercussions"
in Frances- The Franch seam confident of obtaining about 1-1/2 to
.2 million tons of Polish coal for 1951 under various`agreemaiits,
but added that no final trade co-mitments would be made vnithout
prior consultation with the US and other COCOM members*.
25X1 C NTe The commitment not to include ferro-molybdemmi
in the trade agreement probably is the result of US and COCCM.
pressure, since . the. French originally believed that a small quantity
would have to be programmed to meet Polish demands,' The French seem
overly optimistic in their hope of obtaining the amount of Polish
coal mentioned ove ^ in view of their receipt of only about 3/1.
of a million tons in 1950 tn.1:: ;. 1/2 million tons less than was
expected.
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25X6
"B" ITALY. Prospects for New Democratic Socialist Party. The new
Socialist Party PS-S IIS formed by the merger of the Saragat
Socialists (PSLI) and Romita,s Unitary Socialists (PSU) has agreed
upon a program calling for a fairer distribution of the products
of industry and agriculture among all Italians and a struggle
against totalitarianism to achieve peace in cooperation with all
free nations. The party does not, however, command the whole-
hearted participation of some PSLI right wingers aid the PSU left'
wing. The latter, under Silone,is opposed to-any attempt by the
PS to force provincial PSU federations to follow the new party's
policy of linked lists in the forthcoming local elections. It
also favors close ties with the workers, movement headed by Com-
munist defectors Magnani and Cucchi-a policy repugnant to the
PSLI component 25X1
COIDENT: Democratic Socialism in Italy has taken, at least for
the present, a new lease on life as a result of this merger,
The PS's representation in Parliament, though modest (33 deputies
and 22 senators), probably exceeds that of all rightist groups
and could be the determining factor in a close vote between the
Communists and De Gasperi's Christian Democrats. Its program
should appeal to many elements in the country, particularly workers
and reformists who are dissatisfied with the failure of the
Christian Democrats to carry out nation--viri.de socio-economic reforms.
5X6
Don Juan on Current Situation. The special as-
sistant To the US Ambassador in Lisbon has reported that in a
long conversation on 7 May with the Spanish Pretender, Don Juan
~he Pretender regards the 25X6
statement of the CIC that it instigated the Barcelona strike as
5X1 an exaggeration. He confirmed
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. CIC plans for a general sit-down strike in Madrid on 22 May,
He denied knowledge of the manifesto which the CIC secretary
had told US Emb Madrid, the Monarchists would issue at the time
of the strike calling on Franco to give way to Don Juan, Further-
more, he stated that he would not associate himself with such a
manifesto at this time, as its effects might well be disastrous
for his cause. He intimated that he was still considering a
meeting with Franco. In the
Pretender's opinion no solution of Sp ish economic problems is
possible unless the preset policies of the regimes are drastically
changed -and this, he believes Franco will not do, 25X1
25X1 COMJ 1ENT : Franco is evident ly
making a serious effort to in uce on Juan to assume the throne
5X6
under his auspices as one way of protecting his own position should
the international situation continue to deteriorate, Don Juan
still appears determined to take such a step only under conditions
which would lead to political and economic stability, i,e., on his
own terms and in response to an invitation of truly national
proportions,
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25X1
UNION OF SOUTH AFRICA. Other Non European Groups Fail to Join
Coloreds in Protest Strike, A one-day strike by Coloreds mixed
breeds in protest against the bill now before the House of Assembly
to restrict their voting rights, took place without, incident on
7 May. Capetown and Port Elizabeth, where the Colored population
is concentrated were the only areas tly affectedd
C OM VLENT : Failure
of other non-European groups except,for a few Indians,to join in
the protest, though urged to do so by some of their leaders, indicates
that the increasing anti--bite feeling in the. Union has not yet
reached the stage where the various non European groups are prepared
to risk joining in united action against the Governments racial
program when their own immediate interests are not directly involved,
BOLIVIA. Government Seeking US Approval of-Disqualifying Paz
stenssoro. The Bolivian Government is seeking to learn the S
attitude-on the results of the 6 May presidential election in which.
the Movimiento Nacionalista Revolu.cionari.o P.JIR candidate -polled
the greatest number of votes,
At the same time it is stressing a the s having accepted
Communist support and being supported largely by workers, will
seek to nationalize industry and even offer tin and other minerals
outside the democracies; also there will be unfortunate repercus-
sions in Chile and Peru, "where the Communists will become enboldened,
if the MNR is allowed to come to power", Embassy La Paz is convinced
that "if we fail to come up with something by which to eliminate
the P1R, the Bolivian Government will declare Paz legally ineligible,
after which anything might happen"? The Embassy also feels that
"somehow" the Bolivian Government "is hoping to put the onus on
us". The Embassy, however, informed Bolivia that the elections are
strictly a domestic affair. Embassy La Paz further reports that
MNR candidates disavow anti-US sentiments and, while they have
proposed nationalization of`the mines, this sentiment is also held
by the government candidate.
CHILE. Agreement with US on Copper. An agreement has been reached
Fe-tween the US and Chile on copper. Main points in the agreement
are: (1) an increase of 3 cents per pound in the price of Chilean
copper sold to the US; (2) a quota of not higher than 20% of the
large US-owned companies' copper production will be utilized by
Chile for export to countries other than the US and for manufacture;
(3) Chile will take measures to assure that copper exported by
Chile will not be re-exported, and that no sales will be made to.
countries which are potential enemies, or for non-essential needs;
(14) the US and Chile agree on the importance of maintaining and
increasing copper production. The US will assist "to the fullest
extent that the emergency permits in the export of essential equipment
13
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and supplies to carry outs' expansion programs, and in the case
of smaller mining properties, the US is reared to consider
grantinecr loans and providin_- engineers,
COMMENT: Two impor an points or
25X1 wide Chilean concern (a higher pricor Chilean copper and more
effective control of copper production and distribution) have at
least in part been satisfied and the difficult position of President
Gonzales Videla and his administration will be made more tenable.
The specific production quota for Chile's use will increase that
country's bargaining lever-,age in foreign trade. Early publicity
in Chile regarding the copper negotiations may, however, have opened
the way for Communist criticism of the government and the US for
Chilean failure to obtain definite commitments on production
increases, provisions for maintenance of purchasing power of
copper, and specific assurance of essential imports.
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CENTRAL INTELLIGENCE AGENCY
DAILY DIGEST SUPPLEMENT
MAY 9 1951
49180x_
Not for dissemination outside O/CI and ONE.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
25X1
9 May 1951
SECTION 2 (EASTERN)
'B" CHINA. Communist China Offers Ceylon Rice for Rubber. According to the
UK Colonial Office, in early May Communist China approached Ceylon with
a proposal to barter 50,000 tons of rice for an equivalent value of rub-
ber. The UK Government has expressed to Ceylon its,strong disapproval
of such an arrangement COMMENT 25X1
Malaya's restriction on ru er exports to China, adopted in early April,
has forced the Communists to look to other sources of supply, The Com-
munists have already agreed to export 100,000 tons of rice to India in
1951, half of which has to be exchanged 'for gunny bags. Although China
is not believed to have a surplus of rice over domestic requirements,
the Communists could probably export several hundred thousand tons of
rice in 1951 without critically reducing stocks available to the regime.
"C" Hong Kong Perturbed by General MacArthurts Charges. Hong Kong government
officials, as well as businessmen in the-Colony., are disturbed by General
MacArthur's statement that Hong Kong exports to the China mainland have
been of "substantial assistance" to the Communists in Korea. The Hong
Kong government is particularly-concerned over General MacArthur's charge
that petroleum supplies -- which he called "the very essence" of an army's
movement -- had passed through the Colony to Red China. In conversations
with the US Consul General, Hong Kong officials have labeled this charge a
"gross and malicious distortion of fact" in view of their campaign to e-
vent the illicit export of petroleum products to China. 25X1
25X1 COMMENT: A wide range of strategic items continues to
flow through Hong Kong to Communist China, although the Colony has added
from time to time to. its list of forbidden exports. In March, for example,
rubber tires, terne plate, aluminum, and brass were a few of the items which
Hong Kong added to its list of forbidden exports. An export ban on petrol-
eum products was initiated just after the outbreak of the Korean conflict
and although illicit shipments from the Colony are frequently reported, the
US Consul General and oil men in Hong Kong are of the opinion that the per-
centage of China's petroleum needs obtained through Hong Kong is not large,
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"B" IRAN. Shah and Senators, Discuss Mossadeg with US Ambassador. On 5 May
the Shah reiterated to the US.Ambassador that he did not think Prime
Minister Mossadeq would last long, and stated that he was pessimistic
about the outcome of the oil question. A group of senators later assured
the Ambassador that Mossadeq would not move precipitously on the oil mat-
ter. All agree that the oil question is.a symbol for the expression of
intense nationalist drive. Ex-Prime Minister Ala told the Ambassador
that Mossadeq had offered him the post of Foreign Minister but that be-
cause he was firmly pro-',Test and could not agree with Mossadeq's
"neutrality policy" and th latter's belief that Iran must "appease"
the USSR, he turned down the offer. The senators agreed that Mossade
COMMENT: These statements reflect the impotence
and scouragemen' which many Iranians, including the Shah, feel in the
25X1 face of the current surge of emotion on the oil issue. Realizing that
Mossadeq is an idealist with little appreciation of the main problem which
is Iran's economic plight, many Iranians fear that he will lead Iran into
economic chaos with consequent gain for the Communists. Although Mossadeq
has told Ambassador Grady that he would like to discuss the Ex-Im bank loan
with him, there is considerable doubt, in view of Mossadeq's attitude, how
fruitful such a discussion would be..
25X6
SECRET
16
would not be sympathetic to the U S Export-Import Bank Loan. II 25X1
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