DAILY DIGEST JUN 21 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200460001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 9, 2016
• Document Release Date: June 26, 2001
• Sequence Number: 1
• Publication Date: June 21, 1951
• Content Type: SUMMARY

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49233 COPY NO. 9
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
Date: JUN 21 1951
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
"B" - important regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
"C" - other informatipn indicating trends
and potential developments
ARMY, DIA, DOS, USAF Declassification/Release Instructions on File
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DEPUTY FOREIGN MINISTERS? CONFERENCE
"A" USSR-'Continues to Reject Western Terms for a Foreii Ministers' Meeting. In a
20 June. note regarding the Foreign Ministers' meeting the Soviet Union con-
tihued to insist on including an item on the North Atlantic Treaty and American
military basese The note added 'that the USSR had no"objections to discussing
its treaties of mutual assistance with China, Poland, Czechoslovakia, Hungary,
Rumania- Bulgaria,- Finland., aid finally, with France and Britain. (U F.Y. Times,
21 June 51),_ COMMENT Soviet insistence on inclusion of the NAT and US mili-
tar?y bases item continues to indicate that the USSR does not want a Foreign
Ministers' meeting. The Soviet demand, which has been consistently unacceptable
to the West, appears to have been made to establish a suitable propaganda posi-,
tion for Soviet refusal to agree on an agenda0 In this note the USSR has offered
to discuss its treaties with the satellites, which are bilateral and directed
specifically a''inst a resurgent Germany or Japan. In return? the USSR wishes a
the. Western. Prs to agree to discuss the North Atlantic Treaty arrangements
as 'a principal cause of tension in Europe. In order to alleviate the tensiono
the USSR implies that the Western Powers should suspend their defense programo
SECTION1 (SOVIET)
"B" USSR. Air Transport Speeds Canal Projects. A Sakhalin Regional Service broad
cast of -79 June quotes the Deputy Chief of the USSR Civil Air Fleet Pevets ,
as saying that' cargo planes leave Moscow, Leningrad, Kiev and other industrial
centers daily carrying freight for the various construction projects of the
"great Stalin epoch." According to Pevetsky, ever since the start of these
construction projects, civil air transport pilots have been competing for greater
achievements in this field. Airport'workers are described as paying special
attention to. planes carrying this type of freight whichfl according to the broad-
cast merits "first priority" handling. Specific items mentioned in this stra-
tegic category include: geological 'instruments, high precision equipment, food
and mail,, all of which are' said to be shipped, in particular to the main Turkmen
Canal pro feet, (R?FBIS, 20 June 51) . COMOMNT g Although the extent to which
ai:r transport is being used in supplying hte canal projects is unknown, their
strategic importance is indicated by the fact that such priority shipment is
allotted to them.
Panyushkin. Suggests-Peace in Korea by Cease Fire. Soviet Ambassador to
the , Panyus is reported to have stated tha peace in Korea can be
achieved simply by having. ?the. US and the Allied Powers cease. fighting.
(U-FBIS, 18'J a 51). CO+IM NTo' Although ranyushkints remarks were informal,
current Moscow propaganda also continues-to-omit references to the Chinese
Communist terms for settlement in Korea concerning'Formosa and seating in the
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"B" EASTERN EUROPE. ALBANIA. Resistance Plans Reportedly Known to Communists in
25X1 C 19514. report that
at a meeting of the Albanian' security, police officers in February 1950, Minister
of Interior Mehmet Shehu revealed intimate knowledge of emigre efforts to sub-
vert the Hoxha regime. Shehu expressed his conviction that the failure to ex-
ploit the chaotic situation in Albania after the execution of ex-Interior
Minister Koci Xoxe was-due-to disunity among the refugee groups, even in the
Committee-for Free Albania.. Shehulemphasized the need to exploit the US
Albanian colon in.s ite of its pi tocratic ways* 25X1
25X1A ' COMMENT' The reorganization'of the Albanian
security system after e u came Minister of Interior in 1949 resulted in a
vigorous purge of suspected elements in the regime and the establishment of
Special Pursuit Brigades with the function of ferreting out subversive elements.
Propaganda emanating from Albania has indicated for some time that the Albanian
Communists had penetrated the exile organizationse
""B" HUNGARY, Government Demands Resumption of Trade Negotiations for Sanders Release.
In a recent conversation with the British Minister in Budapest, Matyas Rakosi,
Secretary General of the Hungarian Communist Party, implied that adverse public-
ity at the time'of Vogelervs release had stiffened the Hungarian Government's at-
titude toward the release of Sanders, a British citizen who had been imprisoned
along with Vogeler. To the British Ministers suggestion that Sanders be freed
after which trade negotiations could be resumed, Rakosi countered that the re-
lease of Sanders-be discussed concurrently with the resumption of trade negoti-
ations. (S Budapest607, 19 June 1951). C0IMENT: The British Government
suspended trade negotiations with Hungary-in retaliation for the imprisonment of
Sanders." Hungarian trade with the UK amounted to $17,335,000 in imports and
026,320,000 in exports in. 1949. After the suspension of trade negotiations,
Hungarian imports from the TX fell to $5,500,000 and exports to $1,000,000 in
1950. The Hungarian determination to expand its trade with non-orbit areas has
been revealed iia recent reports.
C" POLAND, First StateLoan"To Be Floated. By decree of the Polish Council of
Ministers a National Loan for the Development of Poland's Strength totaling
1,2 billion Zlotys" has been floated, The loan is to be.issued in bearer bonds
inc ,ding single bonds of one hundred zlotys, collective bonds of 200 and 500
zlotys? and Party bonds of 100, 250 and-500 zlotys. The loan which is to be
floated for a 20 year period from 1-October 1951 will be subscribed exclusively
from popu11Ltion, and not from.firmsS institutions or other juridical persons.
(R-FBISa 19JJUne 519_C Warsaw 975, 20 June 51). CON WENT.- The purposesof this
loan seem to be the-creatin-p of greater popular interest and sense of partici-
pation in Poland's industrialization program, and the siphoning off of excess
purchasing power, At the official exchange rate of four zlotys to the dollar,
the loan would total $300,000,000. In comparison the free market rate is
15-60 zlotys per dollar.
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"CU YUGOSLAVIA. Trade Unions Dizx cted to Improve Labors Standard of Living.
The Central Committee of Yugoslav Trade Unions has made it mandatory for
local trade union leaders to concern themselves primarily with raising the
workers' standard of livings Trade Union organizations are directed to
participate in the drafting of legislation, regulations, and measures af-
fecting labor and living conditions, and to insure that workers rights,
guaranteed by law, are enforced. The right, to , ,strike, however, is not
granted. (U N.Y. Times 20 June 51). COMMENT: Heretofore, as in other
Communist states, the Yugoslav trade unions have. emphasized greater produc-
tion as their.primary goal, The encouragement of local trade unions to
help improve the workers? standard of living is evidence of the regime's
recognition that satisfied'workers are the most productive. The decision,
which is in line with other recent governmental innovations and reforms, is
apparently designed to improve morale and increase production by encouraging
local initiative. The decision does not represent any relaxation of control
over the workers, however, since the local trade unions .are closely control-
led by the Communist' Party.
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SECTION 2 (EASTERN)
'B" IRAN. UK Forces in Near East Alerted As Mob Action Takes Place in Iran.
The US Air Attache in Baghdad has information indicating that on 20
June Royal Air Force units in Iraq, Jordan, Suez, and Cyprus had..beonu,,
placed on a one hour alert notice, sad that Iranians were attempting
to take the oil refinery force and were being resisted by the British.
25X1A COMMMs Press reports state that
fice and the destruction of a neon sign. Both the UK and Iran have been
consistent in rejecting the use of force as a method of settling the
dispute; however, in anticipation of trouble, the UK has publicly and
repeatedly stated that it would pro toot the lives of UK subjects if
these were endangered.
UK forces in the Near East are "standing by,?" but there has been no con-
firmation of the alleged attempt by the Iranians to take over the re-
fineries by force. There has, however, been mob action in Tehran which
included the forcible entry of an Anglo-Iranian Oil Company (AIOC) of-
"A" BMA. Burmese Offi?la Expresses Views on Communist Threat to Burma.
recently an officer o the asst' on
that the nese Co sts would rat invade Burma in the near t tui
because of their military commitments in Korea and Yunnan. For the
same reasons, he also doubts that the Chinese are willing to give
materiel or manpower assistance toR Burma Communist Party (BCP)
although admitting that several BCP officers had recently received
training in China and that the Party was attempting to open a corridor
to China through the Shan States in order to obtain such aid. He
indicated that the Chinese Communists will undoubtedly exploit Naw
Song, the Kachin rebel leader, to win the support of Kachins in Burma.
The source also stated {hat, during a visit to India in April,, the
Indian Army Commander in Chief. Cariappa, a haolp the close ties
between India and Burma and promised Indian Army aid in case of a
Chinese Communist invasion despite any opposition from Indian poli*1:
ticians. The Embassy a)mments that source fails to appreciate the
extent of Chinese manpower or th eir large stocks of small arms and
ammunition, and in lsa`i ., ' fi)Slief ?that Chinese aid to the BCP is
already underway. (S Rangoon 932, 20 June 51). COMMENTs The
minimization of the Chinese Communist threat to Burma is typical
of the.. mishful thinking rich afflicts most high Burmese officials.
It is tful that the Government of India would permit the dispatch
of Indian troops to Burma in the event of a Chinese isi~ns ?'d?
Carippaos assurances0
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CIB o Two Defame Lines ~Tnder Construction in Two defense
lines roughly paralleling the Fukien coast are reportedly under
construction by a Sovier=supervised force of 109000 laborers aided by
engineering troops of the 3rd Field Army. According to the Nationalist
Ministry of National Defense, the outer line will ran south through
Chang Lo (10 miles southeast of Foochow) to Tungan (10 miles north of
Amoy),, and the inner line from Pingnan (70 miles north of Foochaw)
south to Tuhua (35 miles north of Tungan). (S ALUSNA Taipei, 20
June 51). COMMENT8 A great variety of reports concerning defensive
neasures in the coastal areas opposite Taiwan have been received
over the past several months. Construction of fixed defenses.,
evacuation of nonessential personnel, stockpiling of supplies, and
extensive military znnaw~s; s..have all been reported as taking place
in these areas.
OitB00 ? rted Establishment of Sim-Soviet Political Liaison Offices
in China. An agreement to establish political liaison offices in
Manchuria, North, Central, South and East China, with Sovta a ae
directors of each office, ` , P 9 i' ?dl . ~ohclud~d by representatives of
the Chinese Communist and Soviet governments during 1951. The funcm
time ? the offices include the followings (1) mobilization of Chinese
manpower and material, (2) establishment of adequate military defenses,
(3) direction of military and political activities of Chinese Com-
munists, (4) increase of the production of war material, and (5)
supervision of the purge gar ogram. 25X1A
25X1A A Cis While the es a s t
of S no-So _e_t political __ son offices with largely advisory
functions is considered pro ble9 it is not believed tat the Chinese
Communists have delegated to these Soviet-directed offices anything
approximating the amount of power described in the above report.
OOA% USSR and China Sign New Trade AareeLants. A Tass dispatch
from Moscow otces the si, on 15 June of two trade protocols:
between the USSR and China taich provide for a coon iderable increase
in trade between the two countries. No informattrn is gi-Ra regard-
ing the commodities or amounts involved. (U Tass Moscow, 21 June 51).
COs These protocn1b represent a further effort by the Communists
to counter the effects of Western trade restrictions by stepping up
intracorbit trade. According to Chinese Communist statements, trade
with the USSR., which has traditionally been comparatively unimportant,
came to about one-fourth of China 9 s total foreign trade in 1950. The
increased commerce resulting from the newly signed trade protocols is
expected to make this proportion considerably higher in 1951. Addi-
tional factors raising the Soviet share of China0s foreign commerce
are- (1) the virtual cessation of US trade with China since the US
embargo of last December and (2) the embargo on selected items e.g.
bber~and petroleum, poeed by We.stems countries honoring the UN
embargo,. resolution. The orientation of Chinas s trade toward the
Soviet Orbit and away from the West is also being promoted as a
result of a series of trade. agreements with the Eastern. European _WzsMaso
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%G" KOFlEk. Increased North Korean Efforte to Replace Battle Losses.
The Far East Command reports that:, the. North Koreans are increasing
their efforts to maintain front=line troop strength. Current replace-
ments are believed drawn from rear'area.units (the IV, VII and VIII
Corps) now believed on coastal security missions, and from a pool of
50,000 recruits in training-in Northeast Korea and along the Korea-
Manchuria border. Fifteen to twenty .thousand of the latter troops
recently have been sent to battle-line units. (S DA-FECOM Telecon
48509 21 June 51).
"C" ROK Chief of Staff Reported Interested in IIS Service School
Assiut. The US Embassy, Pusan, in commenting on rumors, of the
resignation of General Chung Il?an,. Chief ROK General Staff,
considers the reports to be a premature leak and a garbling of the
fact that the General had requested permission to attend the Command
and General Staff School, at Leavenworth. The story may have been
leaked for political reasons. Chung?s motivation is unclear although
it is known that he feels he needs a "change" and has long been
interested in assignment to a US service school. There is no informa-
tion to confirm that he is not acceptable to the new Minister of
Defense who has stated vigorously that he is selecting a temporary
appointee and "in no way naming a new chief of Staff." (C Pusan i04O,
20 June 51). CO -o It would appear unusual for an officer of
General Chung?s position and capabilities to seek a service school
assignment at this tip if resignation were not a distinct possibility,
particularly in view of recent scandals affecting high ROK Government
circles.
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SFCTION? 3 - (FSTF J):
"B" GERMANY. Soviet Officials Indicate Desire- to Reach Settlement of Berlin
er talks wi tE 9. Dengine
aft
ra a itua long ie officials ee g
cKie? So`vief_~_epresentative in Berlinp t' .: tlhe; 2rdcent. Soviet inter.
Terence-vrrith the west Berlin export :trade represented apressure tactic
to obtain a new interzonal trade agreement between East and West Germany,
even at the. risk of serious reteliatOry measures In his talks with the
Deputy French Commandants Dengin tried to`ignore or-play down the Soviet
-restrictions, and-agreed to negotiations an the restrictions between Allied
and Soviet experts- The Allied Commandants-now. desire, in view of the
strong Allied position., to. avoid any, sign .of, over-eagerness in these
negotiations or in permitting resumption. of: trade. talks. They also want
--to -be _ ready to iplement countermeasures as originally planned' if the
-situation -fails "to-develop favorably, (S Berlin 1514 and 1519 19 June 51)
COMMENT a The Soviet restrictions on-trade-had resulted in the stoppage
estimated 75%-of-west Berlins.s vital exports to the Federal Republic,
and might, if continued, have necessitated a limited Allied air-lift,
Soviet interest in concluding ?a trade: agreement. on favorable terms indicates
the weakness of.the east German economy..-and.the continued need for strategic
imports from the West. The USSR$s harassing: measures in Berlin should be
-viewed as a recurring attempt'to.exert'maxiuum pressure on the Allies 25X6
"B"
sur
"B" ITALY.. Rep a Replacement'- of aTr as r yalso appears Expedite Defense Pro ram.
ury gn ppears !wUnent resu f.his
opposition to pay increases for.civi servants.. His probable successor
is Liberal Depu.ty'Corbino, Minister of the Treasury from December 1945
to September 19466 This shift would- ,contr bate . to., progress on the defense
progra} without endangering other objectives of monetary stability and the
development of the depressed sectors of the economy. Meanwhile, the Govern-
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ment has publicly denied Pella's resignation. (S Rome 5799, 20 June 51;
R FBIS.220 June 51) COMMENT: The removal of Pella would make the
Government freer to -arENat. an agreement with the' seriously discontented,
civil servants (who have scheduled another strike for 22 June) and thus
remove a disturbing element contributing toward labor instability, (See
OCI Daily Digest., 18 May 51.). Deputy Corbin: is.noted for his contribution
to the stabilization of the lira, but has .pbjected to Pella's excessive
caution in this regard and could be expected to pursue a more generally
flexible financial policy.
"'B" PORTUGAL: Defense Ministerus Hand in Government to-be- Strengthened' The
government party., Uniao Naeion has publicly announced the nomination
of -General Francisco 'Crraveiro Lopes as its candidate in the. presidential
elections officially 'scheduled:to be.:heid on 22 July. US Embassy Lisbon
comments-that Premier Salazar clearly counts on widespread satisfaction
iiaith the selection of a loyal military supporter of .the regime as a
guarantee of continuing stability. Craveiro Lopes? personal dependence
on Defense Minister Santos Costa was underscored by the latter's answer
-to--an Embassy official0 s remark: "About -Craveiro Lopes for president,
it looks as if you invented him.". ;The Portuguese minister is reported to
have laughingly.'replied. "As-a matter of fact, I did." (C Lisbon 557$
20 June 51) GO k: 'The-choice of Craveiro Lopes points up the spectacular
rise of Santos Cos a-'.in. the government. hierarchy.,' as a man whom Salazar
- trusts implicitly and to whom he is evidently delegating an increasing
number of the burdens of state. 'While Salazar obviously is anxious to
retain the good will of the Army, the nomination of a candidate picked,by
the Administration, also reveals the Arniyfls readiness to meet hialf.*ay'the
civilian?.element in the government's party.
"C" UNITED KINGDOM, UK Approaches US.on Joining Autumn Meeting of Colombo
an ommi ee. On June the UK Embassy Washington indicated to US of-
-fic als the- UK intention' to hold.' an "official level" meeting of the Con-
sultative Committee on Economic Aid to South and Southeast Asia in September
or October, aind'expressed interest in possible US participation. The purpose
of-the"meeting would be to revise details of. the January 1951 Colombo Plan
report. to discuss establishing a small permanent ,secretariat and 'to, lay
plans for a ministerial level meeting toward the end of the year. (C Out-
going State Circ 808, 18 June 51) COMMENT :__ The UK continues the effort
to develop regional South and Southeast Asian.. economic cooperation a~ a
way of strengthening the area to resist Communism, and as the chief means
-presently available to the UK for associating India more closely with the
objectives of Western policy i .-South Asia. The UK is conducting a broad
public. relations program in India and throughout the area and in some cases
has been applying more direct pressure to obtain participation,;-notably
in Thailand where the UK is reported to have tentatively offered a sizeable
Bank of England loan for road construction as a quid pro quo. The approach
to the US is consistent with the UK desire to persuade the US to provide
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as t year7s Suppression of CommunismAA:t by.giving the Minister of Justice
arbitrary power to take action against any suspect organization or individual
without subsequent judicial review,has passed the House of Assembly, The
United Party Opposition., which.is-as anxious as the Government to suppress
Communist activity in .South Africa, has opposed the measure bitterly (though
without success), because it fears such power is inherently dangerous. to
the basic liberties of the.citizenso _TheMinister of justice has disclaimed
any intent to use the power granted, under. the bill against other than Com-
munist organizations, but hasisimtiltaneously branded the Civil Rights League
of Johannesburg.., an organization of-prominent citizens which opposes the
measure, as ".dominated by-Commurxists",n (U Christian Science Monitors
16 June 51) : COM+1=T e Although this _ year Q s bill - represents no change of
Government 'po icysand is intended me I relyto close some loopholes in-last
years Suppression of Communism Act., .t has met with far more vigorous.
opposition from the United Party, This fact illustrates the, new determination
on the part of the United Party tomake a stand on the civil rights issue.,
which they -GVill doubtless include ini their ply platform at the next
general election. Their fears concerning this-bill, which are shared by
labor unions and non European political,"organizations, have some basis, in
facts since the Suppression of Communism .Act includes in its definition
of Communism any doctrine which is considered to encourage. hostile feelings
between European and nonEuropean races,.,..Thus any person who did not
subscribe-to the Governmentes'controversal race policies might legally,
be defined as a-Communist, The mountingoppos.ition from United Party. members
to be attributed largely to their gradual-realization of what denial
of civil rights might mean for their"ownpositiona
25X1C
-
"C" NICARAGUA. Plot to Assassinate President.Somoza,
repo sr at a plo ,gains P e-si en t :Anal t as oo Somoza is developing among
officers and high officials of:the Nicaraguan National Guard, The Plot
"seems to be motivated by hatred for.the. entire Somoza family, especially
Colonel.' Anastasio Somoza Jr,." The plotters are-reputedly seriously consider-
ing assassination, and (although plans are not.-yet complete) "it is probable
that Somoza would be replaced b a milita `unta"o Action-is reputedly
25X1C planned before August., 1951, ' eports considerable dis--
satisfaction among National Guard officers,' mainly because of low salaries.,
and further indicates that Somoza has promised them a twenty per cent in-
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such requestsq
an eventual. .202I.. billions of the external assistance required-under-the
$5004 billions Plan, The. Colombo Plan officially comes into operation
next month, but the Technical Cooperation Board established in Colombo
under the Plan has been receiving technical assistance requests from.
India., Pakistan, and Ceylon since January of .this years and has been using
the #8 millions fund contributed by.Commonwealth members in 1950 to meet
!'C" UNION OF SOUTH AFRICA, Opposition Focuses on Government Anti-Comaiurnist
gill as Threat- to evilbe ie s, government bill which tightens up
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crease, COMMENT.--- President
Somoza's effective zn ern 'in'e igence organization has permitted him'
to frustrate plots against. him.. before the plotters- are pre tired to.act,
In April, for example, he reputedly called iri'. a group of officers, informed
them he was aware of their plotting.,, and indicated that he wouid,treat
their disaffection with "tolerance". It is possible that Somoza, whose
administration has recently been favored with loans from the World Bank,
will be able to deal adequately with the dissatisfaction known to exist
within the National Guards However, it is-possible that individuals dis-
satisfied with Sonozavs arbitrary political and economic policies might,
with extreme care, be able to plan and,,, to:-c?arrsr':out his.assassinatione
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492.30
CENTRAL INTELLIGENCE AGENCY
DAILY DIGEST SUPPLEMENT
JUN 21 1951
Not for dissemination outside 0/CI and O/NE.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGEB'IE
DAILY DIGEST OF SIGNIFICANT S/S CABLES
21 June 1951
SECTION 2 (EASTERN)
"B" ;IRAN. Tribal Leaders Offer Support to UK in Event of Disturbances. The
US Embassy. in Tehran reports, that.two.senior members of the Qashqai tribe
called secretly on the UK Ambassador on 19 June,. They expressed concern
over the trend of events in Iran, and said they foresaw disturbances and
a possible breakdown of authority,, especially in the southern oil area,
They commented that they saw no promise of early improvement in the situa-
tion and added that only the USSR profits from the existing weakness and
confusion in Iran. Accordingly,, they stated that although they have
never been particularly friendly to the UK,, they wanted the UK Ambassador
to know, that the British could count on the Qashquais in the event of
serious disturbances,, (S, S/S Tehran 3351,, 20 Jun 51). COMMENT, The
Qashquaia,, one of the major tribal groups in Iran, are located.in;the
mountainous arealo the east of Abadan, where the oil refinery is located,
The Iranian Government has been concerned over rumors that the UK was
agitating among the tribes, with the result that several tribal leaders
felt it necessary to reaffirm their loyalty to the Shah. Although the
UK has disavowed any such macchinations, it is generally considered that
in the event of a direct conflict between the UK and Iran, the UK would
obtain support from some of the tribes, This is, however, the first firm
indication that such cooperation would be forthcoming,
"C" CHINA. Chinese Nationalists Continue to Reject US UK Japanese Peace Treats
Proposals, Chinese Nationalist Foreign Minister YEH has,informed the US..
Charge in Taipei that "the Chinese Government will only accept simultaneous
participation with the other Allies in a multilateral treaty or a bilateral
treaty to be signed severally by all Allies concerned."' YEH9s statement
was prompted by a Washington report crediting him with committing the
Chinese Nationalists to the US UK decision regarding Chinese accession to
the. Japanese Peace Treaty. (S, S/S Taipei 1735, 1736, 18 Jun 51). COMMENT:
Nationalist sensibilities notwithstanding., current indications suggest that
the US and UK intend to proceed without a.Chinese co-signatu?e, and that:
any bilateral agreement will be left to the discretion of a "sovereign and
independent " Japan itself,
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the first indication from a US source that the European Army is a workable
idea, The original French proposal of a European Army was not viewed favor-
ably by the other nations concerned, but., in the light of French insistence,
the conference on the Army has proceeded, The French are still going to be
extremely reluctant to modify their position on a German general staff and
defense ministry,
"B'8 UNITED KINGDOM, US UK Difference F seen Over Possible Next Move'in Iran.
Tk Embassy London emphasizes that the Anglo-Iranian Oil Company . AIOC .still
has ho definite plans to close down the refinery at Abadan and impose a boy-
cott on Iranian oil following the breakdown of negotiations. 'Nevertheless,
the Embassy agrees with the Department of State that the UK Government
should immediately be informed that the US would question the wisdom of such
moves, The Embassy is disturbed by the Department's suggestion that the US
tell the British thata if forced to choose between. Iranian appropriation of
AIOC installations and an internal revolution in Iran with the possible loss
of that country to the West, t, 'U would favor the former and hopes. the UK
would also. The Embassy, in offers the following observations. (1)
No British government could ord to risk the public. criticism which would
be levelled at it for yielding to Iranian pressure; (2) Owing partly to
differing assessments of the situation to agree on a course of action in
Iran, In particular, there would be a difference of opinion on the'use of
S/S Paris 7856, 18 Jun 51; S, Paris 7875, 19 Jun 51), COT- This i
SECTION 3 . (WESTERN)
"B" GERMANY, French Favor European Arms. Concept for German Force, France is
expected to continue its insistence .that. any. German. defense contribution
.:zed within the framework of a European Armor, rather than directly
und4r NATO, US Ambassador Bruce in Paris, therefore, anticipates that
France will not accept th'e report of the German Allied commission that has
been meeting since January at Petersberg to . consider a German force for
NATO., although an effort will be'made to, reconcile this report with a
forthcoming one on the European Arm talks currently being held in Paris
Bruce believes that the European Army:idea can be carried through so that
a militarily effectively force will result, and both the French secretary
of the conference and the chief of the German delegation have told US
officials they feel that the European Army constitutes the best and per-
haps the only means of obtaining a modification of the French position on
such matters as the size of German units.., a German general staff, and
German defense ministry, One disputed point in Paris is the French demand
that the European Army commissioner have control of the first phase of Ger-
man recruitment., a control which the Germans object to as discriminatory,
The Germans are anxious to keep the Petersberg talks going, in order to
keep alive the NATO alternative to the European Army. The German Chancellery,
therefore, has issued a statement taking exception to French claims that
agreement on all important question has been reached in regard to the
European Army. (C, S/S Bonn 955p 14 Jun 51; S. Paris 7836, 17 Jun 51; S,
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force in the case of a Communist cou , with the UK favoring military
action to protect its interests, (3) Should the British yield to US
pressure on the oil issue, US-UK relations would suffer from a British
belief that they would have obtained more favorable results by following
their own inclinations,
The Embassy suggests initiating talks with the UK to work out an
interim arrangement whereby an international board of trustees would im-
partially administer the industry until such time as a final settlement
could be arranged between the UK and Iran,
"B" UK Official Worried About Oil Shortage if Abadan Refiner,5r Closes The
UK Under- Secretary, Ministry of Fuel and Power, currently in Tehran as
a consultant to the Anglo-Iranian Oil Company delegation, is concerned
over the oil supply problem in case the refinery at Abadan closes. As
soon as arrangements can be completed he is coming to Washington for con-
sultation with oil experts here. At the same time, it is reported that
although plans have been made for the AICC delegation to leave Tehran
do 23 June, the group will not leave if there seems the slightest chance
of resuming negotiations, (P,-S/S Tehran 3359, 20 Jun 51). COMMENT:
The Ministry of Fuel has already conferred with British tail companies
about action necessary to offset the loss of Iranian oil and hoped to
obtain permission of the US Petroleum Administration for Defense for
British companies to consult with US oil companies in efforts to offset
shortages, which would be acute in the initial stages of any stoppage of
Iranian exports,
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