DAILY DIGEST JUN 13 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200390001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 9, 2016
• Document Release Date: June 12, 2001
• Sequence Number: 1
• Publication Date: June 13, 1951
• Content Type: SUMMARY

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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
XV J:
Date:
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
Tepokta in-CIA or iny,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.
"B" - important regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
NT4 - other information indieeting trends
and potential development's
DIA, EMS, USAF= Declassification/Release Instructions on File
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Section 1 (Soviet)
"En USSR, Bureaucratic PracWes in Soviet Industry Condemned. According to
Pravda, correspondence published on 5 June indicates that faulty leadership
in competition has become Pentrenched" on a number of mines belonging to
the Voroshilov Trust in the Donbas, Apparently, the Director and chief en-
gineer talk a great deal about competition but do little about organizing
competition in a practical manner, and consequently, in certain mines,
projects announced in various competitions are completely unknown to some
of the workers. Furthermore, according to Pravda, individual competition
is not organized and the fUlfillnent of pledges is not systematically
cheCked. As a result, the mines of the Voroshilov Trust have so far this
year nunderdelivered" tons of thousands of tons of coal. In this connection
the Voroshilovgrad Provincial Party Committee is accused of "complacency"
in that it took no action after hearing reports concerning the low output
of the Trust. Pravda warns that such *bureaucratic" practice is intoler-
able, and recalls that success in socialist competition lies in its *mass
character" and in its development of the *creative initiative" of the
millions. (B-FBIS, 6 June 51). COMMENT: This is another example of the
constant watch maintained by the Party over the managerial groups. Of
particular interest is the fact that the criticism in this case includes
the Provincial Party Committee as well.
11311 S viet aison Burea Re .o ed Established in South China.
25X1C at the end of 1950
a ?vie aison eau was es a is e In ou Ina (Canton) which in
effect increases Soviet control *throughout the area." The functions of
the Bureau are to consider all important decisions affecting South China
before transmittal to Moscow and to direct the activities of all Soviet
military and civilian personnel in the area. RenortinE Officer Comment:
Doubtful Soviets have such control over a part of China so far removed
from the USSR and believes purpose of Bureau is to control Soviet personnel
25X1A in South China only. COMMENT:
Increased Soviet activity in South China in 1951 might well warrant the
creation of such a bureau, probably subordinate to Peiping. In addition
to numerous reports of Soviet assistance in the military training of Viet
Minh Chinese Communist personnel in South China, Soviet advisers reportedly
also aid in minelaying and in the construction of railroads, airfields,
submarine bases, coastal defenses and in inspecting the Indo-China and Hong
Kong frontiers. It is probably true as Reporting Officer suggests that
the Soviets do not exercise control over the area in the same sense as con-
trol is exercised in border region such as Outer Mongolia or even in Man-
churia. However, the Soviet advisory technical program is designed to
seem* control of key points throughout the Chinese Communist governmental
apperat04
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EASTERN EUROPE:
PC" CZECHOSLOVAKIA. Effort Made to Increase Number of Jnylior Officers, The
Czechoslovakia Minister of National Defense has issued instructions that
all healthy unmarried Czechoslovak citizens of working class of peasant
origin who are graduates of lower secondary schools may apply for admission
to officer candidate schools. The US Military Attache in Praha comments
that the Czechoslovak Army is believed to be seriously handicapped at
present because of a lack of adequate senior NCO's and junior officers.
25X1A
0
"B" HUNGARY. Austerity Campaign Reveals Shortcomings of Hungarian Economy.
A recent Hungarian Cabinet resolution calling for intensification and ex-
pansion of the austerity movement blamed the economic Ministries for fail-
ing to carry out the initial austerity resolution of December 1950. Better
control of the individual worker and closer contact between factory man-
agers and Ministry personnel are called for. The resolution added that
economy must be practiced not only with materials but also with manpower.
The US Legation in Budapest comments that the recent scrap collection
drive was not a success, a fact which probably influenced the Cabinet to
issue the resolution. The Legation also believes that the austerity cam-
-paign testifies to the seriousness of continuing Hungarian shortages in vir-
tually all commodities, especially manpower and metals. 25X1A
25X1A COMMENT: On 5 June, Radio Budapest reported that only
u,uuu or e bO,000 workers scheduled for recruitment by the first of July
had been recruited. Numerous reports reveal the despOrateness with which
the Hungarian Government is attempting to secure needed metals from sources
outside of the Soviet orbit.
"A" YUGOSLAVIA. Yugoslays Encouraging Development of National Communist Party.
in Greece. US Ambassador Peurifoy reports that there is evidence that Yugo-
slav representatives in Greece are interested in the development of a nation-
al Communist Party in Greece, but there is no indication of any 'Yugoslav
success in this effort. The Ambassador states that the Yugoslav Legation
in Athens and Consulate in Salonika have intimate contact with certain Greek
leftists who are seeking to found such a party, but there is no evidence to
date of Yugoslav financial backing. Ambassador Peurifoy is of the opinion
that Yugoslav interest in the creation of a Greek Titoist movement has been
limited, and is not likely to unduly disturb relations between the two coun-
tries in the near future. (C-Athens 4407, 12 June 51), COMNENT: The Yugo-
slays, whose. prestige in Greek Communist circles was appreciable before the
Cominform break, have sought to retain their influence and challenge the
position of the USSR and Bulgaria among Greek Communists and Leftist groups.
Any appreciable Yugoalav efforts to encourage a pro-Yugoslav Communpt Party
or to champion the rights of the Macedonian minority in Greece, however, will
arouse the Greek suspicions and hamper the development of any mutual defense
understanding.
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SECTION 2 (EASTERN)
"B" ARAB STATES. Bahrein Sheikh to Receive Increased Oil Revenues.
According to information received from the British Foreign Office,
the Bahrein Petroleum Company is planning to increase its payments
to the Sheikh of Bahrein. The Company decided to offer larger
payments because: (1) it recognized Bahrein's need for increased
revenues now, (2) the islandls oil reserves are less than anticipated,
and increased payments will ease the company's relation with the
Sheikh, (3) increased payments would serve to protect the company's
investment in refinery facilities on the island, and (4) events in
neighboring oil-producing countries make it desirable to grant the
Sheikh an increase now. (C London 6503, 12 June 51), COMMENT: The
fourth point listed is undoubtedly the motivating factor in the Oil
Company's interest in enlarging its payments to the Sheikh of Bahrein.
The .Bahrein refinery, with a daily capacity of 185,000 barrels, is
second in the Near East only to the Abadan refinery (approximately
550,000 barrels daily), and is already being in part supplied with
Saudi Arabian oil. Bahrein's importance increases as clouds of
uncertainty continue o envelope the Iranian oil situation.
"A" INDOCHINA. Rebels Said to be Planning Fiveopronged Attack.
25X1C
the main forces of the Democratic Republic of Vietnam
25X1C DRV are being divided into five task units, four of which will
attack French forces at separate points both to the north and to
the south of the Tonkin Delta while a fifth force rebuilds resist-
ance zones within the Delta which were recently dispersed by the
Frencn. The alleged objective of the DRV is to retain the initiative,
to divide and destroy French forces, and to avoid large concentra-
tions of its own troops.
25X1A
COMMENTg Although current information on DRV order of battle is
lacking or tentative, the above report is supported by the follow-
ing reliable informations (a) the DRV is now attempting to rein-
filtrate areas within the Delta recently cleared by the French
(b) the declared objective of the DRV is destroy French forces
25X1C rather than to "liberate" new territory. 25X1C
an all-out DRV attack during the rainy season May
ep em is unlikely. The flooding of rice fields, the generally
good flying weather, and the reduced usability of the roads linking
DRV zones with Communist China are factors which favor the defend-
ing forces
"Bo BURMA. Dissension Reported in Nationalists' General LI Mils Burmese-
generally recogAPPRIIIMPWRIttang (KMT) Nrces
Yunnan Command. Gen LI MI, 25X1C
in the Sino-Burmese border area, actually has no more than 1000 men.
1144100041";', '.,.,n1IllPail wtAo,:oontgolsAsbe,Anti4..Qommunjw?orces
untian, has been, 101110.as:causin; LI Mi eoncernt and this:has-re-
sulted in LIMiv a blockadifig the flow of supplies,-?frompTh4rma into lannen. A
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conflict with HUANG Chieh, commander of KMT troops interned in
Indochina, is also credited to LI Mi who reportedly has been attempt-
ing to induce HUANG's troops to enter his command.
COMMENT; This is the first report of upper- 25X1A
25X1A
eve dissension in the KMT ranks along the Sino-Burmese border.
Trouble has not been unexpected, however, considering the hetero-
geneous nature of tht combined regular and guerrilla-type forces
involved. Reports from other sources indicate that two-thirds of
the estimated 3-5000 KMT troops are under LI Mils control, that
they are well equipped and trained, that their morale is high, and
that all essential elements have entered Yunnan. It is believed
that Nationalist control over LI Mi is not absolute and that the
above report is biased as a result of a Nationalist desire to
deprecate his importance.
"B" CHINA. Kuomintang Forces Seize Five Towns in Yunnan. According to
a Burma War Office report the majority of Kuomintang (KMT) troops
in Burma have crossed into Southwestern Yunnan, and, with little
resistance, occupied five villages. This report states further that
airfields have been reliably reported at three of the above loca-
tions seized by the KMT forces. (S Rangoon, 8979 8 June 51)
COMMENT; KMT troop movements into Yunnan have been reported from
a variety of sources as having commenced on an observable scale dur-
ing the latter part of May. Chinese Communist troop deployment along
that section of the Yunnan-Burmese border has generally been considered
light with fairly strong concentrations reported some 80-100 miles
north and south of this sector. Some 3-4,000 Nationalist soldiers
are believed to have taken part in this operation. Airfields service-
able to 0-47 type aircraft are known to exist at Meng Sa and Kong Ma.
In light of the isolated location of these KMT operations the desir-
ability of air supply is generally recognized for anything greater
than small guerrilla forays. The support of guerrillas native to
the area is problematical since rumors have been received of a
personal conflict between LI Mi, commander of the EXT units from
Burma, and LI Yuan-klai9 reportedly leader of the guerrilla forces
in Yunnan, (See item above).
"A" Estimate of Aircraft Strength in China. The US Far East
Air Force Intelligence Staff estimates that combat air strength in
China (including Manchuria) no0 totals 1050 planes. Exact subordina-
tion of these aircraft is not known, but it is believed that 300-
350 are Soviet Air Force planes, 100-150 are North Korean and the
remainder Chinese Communist. Jet fighter strength which includes
320 MIG?151s, is believed to be 445. More than half the planes
(690) are believed based in Manchuria. The revision in strength
from 900 (estimated by FEAF on 19 May) does not reflect any influx
of aircraft, but is based on additional information, (S FEAF,
Tokyo, AK 8562, 10 June 51). COMMENT; The latest official US Air
Force Headquarters estimate (as of 31 May) was that 1000 combat
planes were based in China; of these 400 were jet fighters.
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"B" KOREA. COAF/NIOFGa)oalb_,ilitigItg... The Far East Command
estimates that a fallescele Chinese Communist-North Korean air
forces attack on UN ground units in Korea in an initial assault
could include 350 at !rid 45 conventional fighter sorties. An
operation of thie gaze would disrupt UN interdiction and ground
support activity and greatly curtail UN resupply by air of ground
units in the battle area. Due to the distance of enemy bases from
the front lines and the proximity of UN air bases, the enemy probably
would sustain severe losses realization of this is believed to be
a significant deterrent to this type of attack. FECOM notes, how--
ever, that the repair and construction of North Korean airfields,
the improvement and expansion of radar warning and control facilities,
and an increase in enemy anti-aircraft artillery strength in North
Korea has given the enemy the capability of expanding his defensive
air opraticns eouthward from the Yalu River at any time. (s, DA
FECOM Telecon 48189 13 jtrez Si).
"C" JAPAY.Commun'iet Youth Or
ne s ortedl Selectin Dele ates
for Berlin Conferenes. 25X1C
three Japanese Commemiet youth orgaa ve rece
tions to partieeipate in a conference of the World Federation of
Democratic Youth to Tee ,held in erlin, and are now selecting delegates,
Political Adelecor Sebald eolments that it is unlikely that the Japanese
Government wcula permit the departure of such a delegation, but points
to the poeeilility that the delegates could be smuggled out of Japan
to join the Chineee ,;1017.11111.LiSt delegation. (S Tokyo 2123, 11 June 51).
CONT 8 Presuaally the coat's-re:we referred to is the 3rd World
Festival of Youth in ,mle.mt3 feT Peace tveneduled for August 1951. .
Although the Cemmaelet crganioatiens are aware of their inability
to attend the ooilferenc,,,a legally, past practice indicated that they
undoubtedly will Ee though the motions of selecting delegates and
raising travel; fulda In aleieT to propagandize the Governments
"oppression t% Szeggling of Cemmaelet personnel into and out of
Japan does 6nUt0 Currently there is some suepieion that NOZAKA
Sarno, seeone! rael6irg leader of the IC? aJed underground for the
past year, may have been eiveggled emt andx...ea27 even have attended the
World Peace Co Ii meetinge held in Berlin in February 1951 under the
pseudonym of KAWAYERA ta6uvo
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SECTION 3 (WESTERN)
"B" GERMANY. Possible Communist Proposal to Send International Commission
to Investigate Remilitarizaion in Both East and Vest Germany. US
representatives in Frankfort are discussing Allied counteraction should
Communist spokesmen propose that an international commission be sent to
both East and lest Germany to investigate remilitarization. An indication
of this possibility is given in a letter from Walter Ulbricht, Deputy
Premier of the East German Democratic Republic, to the German Peace Com-
mittee (Communist), supporting a proposal of the World Peace Council to
send a commission of "prominent persons from abroad to investigate what,is
being done in both parts of Germany for establishing the peace idea or for
remilitarization." The US representatives believe that if this maneuver
is executed it will be executed quickly, and they recommend that the three
Allied occupation powers be prepared to counter in a manner designed to
expose the insincerity of the Soviet proposal. (S Frankfort 9990, 11 June sa)
CCUMENT: No such proposal by the World Peace Council (the directing body
of the Communist peace movement) is known to have been made, nor is there
any further evidence of the reported Ulbricht letter. The purpose behind
such a Soviet maneuver mould be purely propagandistic.
"A" 0?inions of East German Foreign Ministry on East-West Relations.
In recent discussions of reports submitted by the East German (GDR)
Ambassador to Communist China, officialsof the GDR Foreign. Ministry
expressed the following opinions: (1) the "critical period" in the Korean
mar will come in the autumn of 1951 at which time the USSR may join China
in support of the North Koreans; (2) Chinese policy is to keep the forces
of the UN tied down and to buy time for the USSR to study the weapons with
which it will have to reckon in the coming war; (3) the GDR will obtain
a peace treaty and will be fully incorporated into the Eastern bloc as
soon as airiest German peace treaty has been concluded* (4) "things will
breal?oose in the lest in the spring of 1952".
COMMENT: Although it is entirely credible that these opinions were
25X1A fact-V6EFOT by officials of the GDR Foreign Ministry, there is no
evidence-that these opinions are based on inside information. It is also
possible that these theories have been fed the East German's to provide an
explanation for the USSR's failure to come to the aid of its Far Eastern'
satellites.
"C" C041 Strike-PoSsible. In a special conference of the west German
- mine-workers' union convention, a.resolution unanimously rejected a wage
counter-offer of the industry spokesmen. The union had demanded an average
14% wage increase for mine-workers. Communist delegates, attempting to
color the question with politics, attacked the Schuman Plan, the Ruhr
Authority, and rearmament, and introduced two resolutions calling for im-
mediate strike action. These resolutions were defeated, and further meetings
25X1A
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' between union and industry spokesmen are expected. Nevertheless, the gap
between the two groups is still large, and many top unionists believe that
a strike is antfrely possible* (P Duesseldorf 128, 11 June 51) COMMENT:
Although Communist membership in the miners' union is large, they do
have representation in-the leadership of the union. The relatively
conservative union leaders aTe'likely to attempt to continue negotiations
as long as possible in order to avoid a strike which would be exploited
by the Communists,for political ends*
"A" FRANCE. Non-Communists Replace Communist Extremists on Union Committee.
A shake-up in the personnel of the 35-4nan Administrative Commission of
the Cbmmunist-controlled General Labor Confederation (CGT) following the
recent CGT congress resulted in the appointment of 21 new members, including
Catholics, Socialistsk and "pure" unionists. These men were added to promote
the "unity of action" campaign, but it is notable that they replace a number
of former members of the National Strike Committee which practically took
over the condtct of the-1947 strike, and which was then considered the
direct arm of the French Communist Party (PCF). (C Paris 7659, 10 June 5l).
COMMENT: Communist domination of the CGT is not endangered by this move
which, on the surface, is an attempt to gain support among non-Communist
unionists for concerted labor agitation at the plant level* In view of
CGT Secretary General Frachon's implied criticism of PCF labor policy in
his speech at the CGT congress, however, the removal of Communist extremist
elements from the Administrative Committee may indicate a policy of greater
concentration on labor's legitimate economic demands.
"C" NETHERLANDS* Deterioration of balance of Payments Situation* During May,
the Dutch debit in EPU Was $33 million, the cumulative total to 31 May
$256.5 million* In addition, Dutch foreign exchange reserves have dropped
to $255.4 million in comparison to $380.2 million in the early part of 1951.
Although April exports covered 71% of imports as compared to 64% in March,
the trade deficit had reached $260 million by the end of April. (C Hague
Joint lbeka No. 230 8 June 51) COMMENT: The EPU deficit is largely due
to the stalemate in Dutch-German trade relations, in which the Netherlands
normally has a surplus that is paid to its other European debtors. The
Dutch balance of payments situation, however, probably willworsen as the
tempo of the defense program increases and the extent of the Dutch loss
of economic influence in Indonesia becomes apparent*
?"8" ITALY. Communist Gains Increase in Second Series of Local Elections,
Complete returns ceir the election of provincial councils in 'Chit*
Italian provinces for which voting took place on the week-end of 10 June
showed gains for the Communist bloc and decreased strength for the Govern-
ment bloc over the 1948 national elections. Although the Communist bloc
lost control of administration in eight major cities, including Florence
and Turin, they retained control in Italy's main naval bases, Taranto and
La Spezia, as well as in the ports of Leghorn and Brindisi. In the pro-
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vincial elections the Communist bloc won 38.5% of the vote, coMpared with
36% in the same area in 1948. The pro-Government bloc, led by the
Christian Democrats, polled 50.3%, compared with 59.5% in 1948. The
Christian Democratic vote alone declined to 36% from 46% in 1948. The
neo-Fascist Italian Social Movement rose to 4.3% from 1.4% in 1948.
Partial results for the municipal elections showed the same trend. To
Italian non-Communist political leaders the election results showed the
need for a stronger anti-Communist policy, on the part of the Government
to curb left-wing propaganda and for more vigorous social reforms in order
to better the conditions of large numbers of Italians who are either un-
employed or living on near starvation wages. (U IslY Times Rome, 13 June 51)
COMMENT: It is not clear what is meant by "a stronger anti-Communist
FATETOn the part of the Government to curb left-wing propaganda". The
strongest and only effectual curb to Communist propaganda mould be the'
vigorous social reforms recommended surprisingly as point two.
"B" SPAIN. UK Edbassy Estimate of Francots Position, US Embassy London has
been informed by the UK- Foreign Office that the 13ritish Embassy in Madrid
has estimated that Franco mould remain in power much longer, than his
enemies predicted and that if he were overthrown it would more likely be
by a Military Junta than by "ineffective political opponents". The
Foreign Office concurs in this estimate. (S London 6515, 12 June 51)
COMMENT; Army support will enable Franco to remain in power indefinitely.
The principal non-Communist opposition forces are aware that the peaceful
change of regime which they desire can only be effected by the Army and
that the Army will act only when it is convinced that Franco can no longer
control the political situation. They expect that the current strike move-
ment will weaken Franco, and hope that it can be made sufficiently effective
to convince the Army that a change of regime is essential to internal order.
11B" UNITED KINGDOM. British Considering Boycott of Iranian Oil if Negotiations
break Down. US Embassy London reports that a temporary cessation of the
exportation of Iranian oil in case negotiations between the Anglo-Iranian
Pil Company and Iran should be broken off is very probably under consider-
ation by the Company and the UK Foreign Office. A study recently made at
Government request reportedly reveals that less than 5 per cent of present
Iranian oil eXports could prdbably continue to be exported if the AICC
boycotted Iran, since the AICC would expect the cooperation of the major
US oil companies and the lack of tankers mould limit the ability of other
purchasers to move the oil* In addition, the AICC is understood to be
cpnsidering the possibility of taking legal action, in case of its with-
4drawal, against any purchasers of Iranian oil on the ground that the sup-
plies vmuld be "stolen oil". The Embassy emphasizes that it has no reason
to believe that .the AICC would resort to an interruption of Iranian oil
exports as part of the tactics of negotiation; but that if the negotiations
broke down, the Company might well adopt this course of action. (S London
6495, 12 June 51) COMMENT: This report adds to other indications that
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neither the AIOC representatives nor the Iranians are approaching the
forthcoming negiotations in as conciliatory a frame of mind as public
statements suggest.
CHILE. President Mai Request Permission to Leave'His Pdet, According
YO-Frimors, President Goneales Videla--following the solution of ministerial
difficulties--will request permission to leave his post due to ill health
and appoint the President of the Supreme Court to his post. The President,
reportedly has been suffering from uremia for approximately a month. While
the President's attending physician has recommended that he undergo "strict
treatment", the Minister of Interior reportedly has stated that the
President's illness is not serious. (1/ FBIS, 13 June Si) CCNNENT: This
information tends to confirm an earlier report of the PI7gragEt's 25X1C
illness and the "probability" of the appointment of a Vice President.
(Secret/Control, US OFFICIALS ONLY) Also, US Embassy Santiago has com-
mented that the President's recent "State of the Nation" speech lacked
"its usual fire". There is no Vice President in Chile. If the President
cannot exercise his office, the Minister of Interior who heads the
established order of succession within the cabinet may assume the presidential
office--after congressional approval-with the title of Vice President.
The President of the Supreme Court is last in the established order. Alfonso
Quintana Burgos, ex-cabinet officer and an influential member of the
President's Radical Party, is presently Minister of Interior.
ECHADOR, Comments on Socialist Cabinet Members.
Chilean Communist Juan Esteban Gardla Moreno remarked to a Communis s-
sembly in Guayaquil that Ecuador is one of the few countries where the Com-
munist Party has complete freedom of action and with "so many Socialists in
the cabinet and ministerial positions" it would be easier in the future
for the Communist Party to implement its plane. Embassy Quito comments
that the observation by the Chilean Communist coincides with the Embassy's
evaluation of the situation created by the recent cabinet change. (S Joint
Weeka No. 23, Quito, 11 June 51) COMMENT: The recent appointment of
Socialists (one of whom is reportea-Mave had some connections with the
Communist Party) to two of the eight cabinet posts during the recent cabin't
reorganization was motivated by a desire to reduce some of the opposition
to the Government and improve the present administration's chances of
?erving out its term until 1952. Since President Plaza is a:president who
does not delegate broad authority to his cabinet ministers without keeping
closely in touch with their official actions and policies, and since he t
is strongly pro-US, it is believed that this should serve as a sufficient
check to prevent the Communist Party from gaining any notable advantage
through any influence it may have with the two Socialist ministers. In
view of the many cabinet changes which have occurred since Plaza took office
in 1948 (he has had five different Ministers of Government, for example) he
would probably not hesitate to remove these men from the cabinet if convinced
that they are at any time seeking to further Communist objectives.
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CENTRAL INTFILTGENCE AGENCY
OFFICE OF CURRENT INTELLTGENCE
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13 June 1951
SECTION 2 (EASTERN)
"B" CHINA. UK Considers Restriction of Shipping in China Trade. UK officials
are giving consideration to prohibiting British ships from carrying to
China cargoes which are embargoed by the UN resolution. A UK foreign
officer states, however, that no consideration has been given this pro-
posal above working levels in the government andArongly cautions against
the assumption that the proposal mould be approved. In this connection,
the UK official has expressed concern that traffic by Panamanian flag
vessels might nullify the shipping restrictions -which might be adopted by
other countries. (SI S/S London 6410, 7 Jun 51). COMMENT: Although other
sources indicate that the eventuality of an embargo on goods to China has
been discussed at the cabinet level, the proposed shipping restrictions do bot
contemplate following the US lead in withdrawing all vessels from the
China trade, but simply the carrying of the specific items covered by the
UN resolution. The proposed measure would therefore not deprive the Chinese
Communists of British shipping, but it would help give effective implementa-
tion to the UN resolution? Norway and Panama are also reported to be contem-
plating measures similar to those being considered by the British.
"B" JAPAN. UK Cabinet Accepts US Formula for Chinese Accession to the Peace
Treaty, The British Cabinet on 11 June agreed to the US proposal_thatg.
(1) neither Chinese Government, sign the original multilateral peace pact
with Japan; and (2) the Japanese Government be permitted to determine with
which regime it will: conclude a bilateral treaty. (Sp S/S London 640/
11 Jun 51), COMMENT: Agreement on the Chinese accession .problem removes
the most serious Obstacle to US-UK accord on the Japanese treaty. The sud-
den shift in the UK Cabinets attitude toward the US proposal probably rep-
resents a desire to improveUS-UK relations with regard to Far Eastern
issues, rather than a reversal of the fundamental UK policy toward Communist
China,
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