DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300170001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 23, 2016
• Document Release Date: August 2, 2012
• Sequence Number: 1
• Publication Date: July 16, 1951
• Content Type: REPORT

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OFFICE OF CURRENT INTELLIGENCE
pre ,reed primarily for the L it e s . use of he
Office of Current a7,tei1igers?caa It does not
represent a complete coverage of all current
reports CIA or in the 0 f ice of Current
rn tell .gene e o
NOTE-. Ia This d' Mary Of aignif1o o t reports has be
2 Co e cte represent the prel.iraiia views of
the Off toe of Current Intel ...ge ,, e 0
3e. Marg.MM.al letter indications are defined as
folio* s
itoms indicating Soviet.-Conmuniat
intentions or capabilities
WR - important regional do-vsIo araen'ta
not necessarily :vela dd to Soviet/
Co aul,ist intentions or capabilities
-m other in.foi'matim). indiccaatisng trends
and potential develop ent?s
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SECTION 1. (SOVIET)
USSR.. Comment on Sovie~?~~??m,a Although the breakdown of
four-power negotiations for a CFM conference and Soviet restrict.o on
Berlin trade reopen the question of future Soviet moves in Germany, Soviet
courses of action appear confined largely to the USSR?s occupation zone
and the Satellite regime created there, West Berlin affords a continuing
target for Communist harassment and probing operations, and the West is
vulnerable in its communication and transportation lines to Berlin. But
short of using armed force the Soviet Union cannot expect to accomplisk
any decisive gains in Berlin or In Western Germany.
With respect to the Soviet Zone, there have been recurring report
since the establishment of the German Democratic Republic (GDR) in October
1949 that the USSR was contemplating such measures as the withdrawal of
occupation forces, a peace treaty, a mutual assistance pact and termination
of the state of warp
Soviet activities in East Germany and Eastern Europe indicate the in-
tention of the Soviet Government to retain its occupation forces in Germany
indefinitely. The USSR has established and is expanding permanent military
installations, such as airfields and naval bases, in its. gone of Germany
and is modernizing the equipment of Soviet occupation forces, for example,
replacing conventional aircraft with jet fighters and bombers. In addition,
the USSR has been prepari rg for some time to use Poland as a communications
and supply area for its advanced forces in Germany. There is little evi-
dence that if sizeable Soviet forces were withdrawn from Germany they would
be billeted in Poland, and it seems improbable that the USSR would return
the major part of its forces to the borders of the Soviet Union.
Action by the US and its allies to terminate the state of war with
Germany may evoke a similar move by the USSR vis-a-vis the East German
regime. However, unless the USSR were prepared to withdraw its occupation
forces, there would appear to be little advantage in initiating other "papern
measures such as a peace treaty which. might restrict Soviet intervention in
German affairs or a mutual assistance pact, Present GDR agreements with
the various Satellite governments are limited to economic or cultural
matters and the existing mutual assistance pacts between the USSR and
Satellites are aimed directly at Germany. So long as Germany remains under
four-power occupation, it appears unlikely that the East German regime will
be accepted as a full partner in the complex of Soviet-dominated. Communist
states.
The formal organization of an East German army will probably be de-
layed until a West German military contribution to the North Atlantic defense
organization has materialized. The reported plan to reorganize the East
German Bereitschaften (Alert Police) this fall with the creation of di-
visional staffs over a number of Bersitscbaften, each of which would be
equivalent to a regiment, is a further step toward eventual expansion of
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the Alert Police into an East German army. The delay in expanding the
Bereitschaften from the level of about 50,000 reached in mid-1950 may have
resulted from a desire to make an East German army more palatable to the
Eastern European Satellites by giving- priority to their extensive rearma-
ment during the past year.
Rumored Traini of Oil Refiner E erte in Rumanie for Work in Iran?
approximately 1,200 oil refinery experts are
collected at Ploesti, Rumania, and are being trained in refinery problems
based on plans from Abadan, reportedly given the USSR by the Iranian
Government. These engineers, who are Rumanian, German and Soviet, are
'being trained by a former German expert-with prewar experience at Abadan,
CONINTs While the USSR would be remiss
It the most, Soviet efforts have probably been directed only at possibl
recruitment of technicians for future work in Iran
an AICC withdrawal from Abadan, it is extremely unlikely that present
Soviet efforts have involved any training of experts specifically for Iran.
In not anticipating an Iranian need for refinery experts in the event of
by promoting popular dissatisfactic ,with Western governmental policie
rather than by negotiating agreementp with the West,
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as an ideal propaganda forum for a renewed and intensified "peace offensive",
with Soviet leadership as Be eacemakereg in a Korean armistice being used as
a springboard? 90N s The USSR has used past 25X1
sessions of the GA, which this year is scheduled to open the last of October,
for pushing general themese such as disarmament, a five-power peace pact,
and condemnation of war-mongering. Embassy Moscow considers that the USSR
is attempting to achieve its political objectives against the West mainly
The figure of 1,200 technicians,
moreover, seems particularly doubtful in view of the size of refinery
operations in Rumania, No credence can be given the allegation that Iran
handed over plans of Abadan&s installations to the USSR.
USSR Continues Peace Themes to Prqm~ote Political 0ectives~
Representatives at the UN of the UK, France,Turkey, Yugoslavia, and the US
anticipate that the USSR will seize upof the Sixth General Assembly meeting
US Charge Mokma, on 13 July suggested that the continuing publicity of the
90 Te The State Department 25X1
gar an p ovate os Nam and Peter Varkoz3 i persona non
grata in an unofficial retaliation for the expulsion last week from Hun Ear
of two US Legation Budapest staff members, 25X1
EASTERN EUBCPE. HtJNGIRYO Buda est May Retaliate uls .on, of
gIun ,Tin DinlomaA. Hun Tian Deputy 25X1
Foreign Minister Bere has unofficially threatened that his government
would immediately retaliate against the expulsion of two Hungarian diplo-
mats from Washington. The Hun, aria, a on can be expected by 20 July.
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testimony delivered during the trial of Archbishop Grosz by former US Legation
employee Pongracz may be deliberately designed to worsen US-Hungarian rela-
tions. A 13 July article in a Budapest daily newspaper recapitulates the
alleged espionage activities of the US Legation as uncovered by the Grosz
trial and its predecessors. According to Mokma this article may be setting
the stage for a military trial of Pongracs in which 'other Legation personnel
are likely to be implicated. The expected Hungarian retaliation could thus
take the form of additional persona non grata labels pinned on to members
of the already small US Legation staff,
POLAND- GoyernmentConcerned Ever Ecoxiomic Sabot o The Polish Goverhment?s
concern with the major problem of economic sabotage is revealed by reports
of various trials taking place throughout Poland. The crimes include specu-
lation, illegal trading, thievery, forgery, enibezslement, irregularities on
state farms and the ng of production standards for personal gain,.
COMMENT. Signs of popular discontent with the
standard of li*ing,r the high work norms, And lack of the essential necessi-
ties.have been repeatedly reported from various reliable sources during recent
months, Actual strikes attributable to these causes have been report in certain
key industries,
HBO' 'Yt7GOSI,iVIA, Tito Wa.rz of Kremlin Gesturer , In an important speech in
Montenegro on 13 July, Tito warned against any false optimism regarding Korean
armistice negotiations, stating that the situation on Yugoslavia@s borders
had grown worse while the Kremlin was making peace gestures in Korea. He
expressed gratitude to the West, particularly the US, for the substantial
economic assistance which the West had granted. Tito admitted that Yugoslavia
had also received arms and technical assistance from the West, but no conces-
sions had been sought or given for this aide He castigated the Soviet Union
and Stalin personally, declaring that Stalina.s policies were responsible for
the present hostile campaign of.Yugoslaviahs neighbors, and declared that the
Satellites were not peoples democracies since they could not change their
internal social order by their own strength and were not masters of their
countries, but were occupied by a foreign state, The Yugoslav leader se-
verely chastised Italian demands for a revision of the Peace Treaty and the
return of the whole of the Free Territory of Trieste. He reiterated that
-Yugoslavia would never give up territory where Yugoslavs lived, and repeated
the Yugoslav position that a settlement he Trieste issue can be obtained
if calm heads prevail. COMMFNTa Probably the most im-
portant aspect of Titous speech was the choice of Titograd, Montenegro as
the locale for the address. Since the Cominform break a greater number of
Cominformists have appeared among Montenegrin Communist Party members than
any other region.l group. The two governmental officers most.recently ar-
rested on charges of Cominformism were both Montenegrins. The choice of
Titograd suggests that the regime is concerned over this problem in Monte-
negro and probably believes that Tito's appearance in the republic would
bolster Party strength there.
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SECTION 2 (EASTERN)
ea't' FAST. NEAR Greek Patriarch in Jerusalem Resigns in Opposition to ' i'ussian
tuluva, o ee anti Russian, again submitted his resignation on 12 July over
the offer of L1000 in gold by the Metropolitan of Moscow to the Greek
Orthodox Churches throughout the Near East, No action on the resignation
will be taken until 16 July., but it is reported that internal strife with-
in the Synon over the advantages of ac * stance has
increased, the Patri-
archate has'over ,. in bonds. the interest of which is in the Jerusalem
branch of Barciay's Bank and cannot be collected because Israel's absentee
property law prevents the transfer of funds to Jordan-held Jerusalem., where
the Patriarchate is located. The possibility of transferring the interest
to a branch bank in Arab territory is under investigation
C? NENT: The Jerusalem Patriarchate is badly in need of funds
but has recently turned down an Israeli offer to buy three of thenrch's
properties, reportedly for L700,000, because the price was insufficient, At
that time the Israelis also offered to unfreeze the interest on the Church's
bonds which has been accumulating in Barclays Bank in Jerusalem. When +hp
Russian financial offer was made in June
it was stated that the Near Eastern Patriarchs would be invited to Moscow in
early July to discuss the question.. The Patriarch of Antioch is reported
to have been leaving for Moscow on l5 July, .although the Patriarch of
Antioch is a known Soviet sympathizer.. Archbishop ,thanagoras in Istanbul
feels the visit has no significance and has assured the US Consul in Istan-
bul that Antioch would not "stray from the fold,,R"
"C" GREECE. lit in National Progressive Union, Embassy Athens reports that
ua1 Tsou eras, com eader ` 1 y i"ras of the National Progressive
Union of the Center (I~F'EK), has split openly with the latter taking pos-
sibly 16 or 17 deputies with hire? Commenting that while a dispute over
control of party organization is the ostensible reason for the split,, the
Embassy states that Tsouderos probably hopes to capitalize on the desire of
a considerably number of deputies of all ties to avoid or at least post-
pone elections, COMMENT: Tsouderos'.split
with Plastiras may wel-L result in postponement o Postponement elections beyond the
fall deadline now set,, since it will weaken EPEK which has been the only
party really eager that elections be held in the near future..
"A" IRAN
. Barzani Kurds Again .Alle ed To Be Receiving Military Trainin In
=Te
USSR, TheIranian Army has receive reports to the effect that 3000
Barzani Kurds are currently receiving military training in the USSR, on
the Iranian frontier. The Army expects the movement of couriers used by
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Barzani leader Mulla Mustafa in the USSR to communicate with his followers
in Iraq to increase as soon as the ,razes river slows and crossing becomes
easier. COMMENT: .nnors concerning Soviet 25X1
training of t h e Barzani Kurds w h o f lithe' .USSR after the collapse of
the abortive Kurdish republic in Iran i1947, crop up from time to time and
J cannot be used iz assessing Soviet 25X1
intentions. The USSR is sponsoring Kurdish hopes for an independent Kurds--
tan and may be training those Barzanis in thp USSR fnr eventual use in I-ran-
"C " INDONESIA. Minister of Economics Re suns . Dr. Su ono Hadinoto Minister
of Economics is expected to resign on 16 July. 25X1
COST: Hadinoto is the second minister who has been forced 2bAl
to resign since April on the grounds of an incapable performance of his
duties? His administration of the Economics portfolio has been so inept
and has inspired so much criticism that his own party National, Party has
urged his resignation from the coalition cabinet, Hadinoto will be succeeded
by Wilopoq also a Nationalist and apparently also unqualified for the post.
"At. BURMA. Commander-in-Chief and Socialists in Conflict, Serious friction
and general deterioration within the Burmese Army is reported by the US
Embassy in Rangoon. These developments are the result of mounting tension
between the Burmese CinC Ne Win, and leaders of the Socialist Party, The
situation is rapidly reaching the point at which Ne Win must retire (he
is reported as contemplating a trip to London) or force a showdown for
power with Socialist armed forces,, which are considerable. With regard
to future developments,, the Embassy is concerned over the fact that No Win
this week was closeted with ?.ese Communist Ambassador for over an
hours COMMENT: Previous reports have been
received of socialist dissatisfaction with the armyVs poor showing against
the Communist and Karen insurgents and with Ne Wines independent actions.
A clash between the Socialists' forces and army elements loyal to No Win
could have grave consequences .particularly at a time when Chinese
and claimed that his staff would continue to run the army as usual in his'
absence. Ne Win explained that his recent hour-andma-half conference with
the Chinese Communist Ambassador and Military Attache concerned some US
Communist aid to the Burmese Communists is increasing. Although We Win
has been considered as anti-Communist., he is completely opportunistic and
might seek Communist support to maintain, his position.
I asse with the Socialists se CinC During an
interview with confirmed an earlier
report that he was taking a mon s save? e apparently plans to remain
in Rangoon with the possible exception of a brief visit to India, Although
admitting that the Socialists were attempting to gain control of the armed
forces he denied he was "fighting" them or that he was planning to resign
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boats which were reported to have parted their moorings at Chittagong'in
East Pakistan. US Ambassador-Key comments that this explanation is
absurd and expresses his belief that it is "entirely within Ne Win's
capacity to sell out to the Commies?" 25X1
00MENTTA A period of tension is clearly developing in Rangoon. No Wints
opportunism is well-known and Ambassador Keyes apprehension is well
founded. A violent clash between the general and the Socialists,, however,,
would not necessarily result in the immediate emergence of a pro-Communist
regime. More probably chaotic conditions worse-than those of 1948 would
result. On the other hand, it is possible that,, in a showdown, No Win
would prefer a pleasurable retirement to risking his ]life in a struggle
for absolute power..
Karen; Reportedly Allied with the Comr IU .sts, US L sassy London
reports that the UK Foreign Office is "mach disturbed" over information,,
received from a reliable source in Burma, that an announcement had been
broadcast over the Karen radio to the effect that the wrens had thrown in
their lot with the Communists. COST: Any 25X1
such statement would not be binding upon all Karens,, even those actively
fighting the Government. However,, some Karens have been cooperating with
the Burmese Communists on the tactical level? Furthermore,, it is possible
that disappointment over not receiving aid from the US and.UK9 coupled
with removal or decline of Christian leadershipi. may now be reflected
in the tendency to cooperate with any group offering to support Karen
aspirations. The Cowmnisth.are known to have offered such aid.
"Cra Burmese Continue to Allow Shipment of Tires to China, US Embassy
Rangoon reports that it now questions the Burmese Governments sincerity
in implementing its policy of preventing the shipment of tires to
Conanunist China. On four occasions in recent weeks the Burmese have
stated that no reexport licenses for tires had been issued, yet on 10 July
the official Burmese export list showed that 428 tires received from the
UK were shipped to China. As a result, the Embassy states that it will
not recommend approval of any further tire exports from the US or Japan
pending investigation and clarification of the Burmese Government's
position on the matters COM'MT: This 25X1
report is indicative of 6. the laxness of mese trade controls;
(2) Burmese indifference to efforts to restrict the flow of strategic
commodities to Commist China; (3) Burmese fears of offending China;
and (4) Chinese Commzanist interest in developing new routes for the
importation of scarce materiels.
"B"
Nationalist Troops ngSouthwest China Defeated.) 25X1
the Chinese 25X1
Nationalist forces which recently returned to Yunnan from Burma have
suffered a number of defeats at the hands of Comirnist forces. Large
elements of the Nationalist forces are said to have been forced to retreat
with one group of 1200 troops being reduced to 400. The Nationalists,,
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however, are reportedly regrouping for further operations against the
Communists e COMbdENT:
the Nationalists have been attracting additional support
among scattered anti-Communists elements in Yunnan. Nationalist efforts,
however, are likely to be largely dissipated and their forces may disinte-
grate if they continue to rely on conventional military tactics against,
the larger and more heavily armored Communist forces in the area. Serious
international complications may be expected to arise should these Nationa-
lists be forced again to retreat into Burma,
"B" THAILAND. Future Political Picture Still Uncertain. The Thai Army has
completely occupied all naval stations and order has been restored "for
the time being." US Embassy Bangkok reports, however, that there is
reliable evidence that Premier Phibun is meeting some difficulties in
reasserting his authority. Nevertheless, the military leaders who are
most capable of challenging Phibun&s leadership still need his guidance
in foreign affairs and depend upon.his maintaining a balance of power
between various cliques, The Embassy feels that the extent to which
Phibun will be able to regain his former position will be determined by
events within the next few weeks. He is not expected, however, to make
a full recovery as long as the powerful Director General of Police and
the Dei)uty CinG of Amy continue to coo-oerate.,
"A"" INDOCHINA. De Lattre Says Viet Dd~nh is TNeake General De Lattre, stating
that Viet Minh losses in late May have been found to be much higher than
originally estimated, estimates that the Viet Minh needs one year to
recuperate from losses suffered during the recent Tonkin delta engage-
tents
De lattre estimates , t h a t in any event he Viet
cannot organize an attack of any consequence within the next six
months, and is faced with the following alternatives: (1) "Cease-fire,"
(2) a .request, for large-scale troop support from the Chinese Communists,,
(this is believed to be contrary to the desires of Viet M i n h leaders
or (3) exclusively guerrilla warfare,
CHINA. Hong Kong Police Interfere with Anti~Communist fou~ps~ US Consul
General in Hong Kong reports that a special branch of the Hong Kong police
has recently shown an increased interest in anti-Comrma.nist groups in the
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Colony, interrogating and raiding the headquarters of ationalist., Ut,hir d
CO ENT Anti-Coira.nist activity iza }Iong ona has la o di ?'bl
c
W
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effect on the Peiping regime, and has apparently consisted,, for the most
part, in maneuvering for os es o
aids
OMA edi.R 90iti n, o CCU' i Fast Central Sector Po s", Thx^e
According to F s? Cor nd r?e:cerat P end agent reports indicate a
redisposi,tion. CC3F forces in the east cenatral see~tor d F? believes
that the rehabilitated CC ' 27th Axzq is in the process of r lieving the
C Z )th AMY whaich has been defending stubbornly in the K cng- ukban
AX r area.. F ?thermor?es..rWOM has tentatively acepeted the eastward
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displacement of the COF 12th Army from the area ,.northwest of Chorwori to
a location l2-15 miles northe&, `of K ong, FECOM warns that this
movement of forces may indicate the positioning of a mass of fresh troops
in re aration for, another offensive.
t?C" JAFANo Subversive Activities in Hokkaido,
a liaison offid?e of the Japanese-People
Revolution ?y Cozmittee has been established in Ch.idhi3as, on the southern
tip of Sakh4linn for the purpose of carrying out special activities against
Japan.
COMM. Recent increased Soviet interest in Hokkaido
possibly has been caused by the deployment q.~ a US National Gird Division
to that island, -So kiet authorities who went {to Hokkaido to "observe the
April elections".may have alid the ground work for increased surveillance
of. US fo ces `
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SECTION 3 (=STERN)
"C" GERMANY. Uneasiness Continues in SPD Membershi over Party's
tEo-si'Vion-t-o-Te-tLr-ma-me-nT.- 11 e e IN
posi ion en by ur
c er, reader of e Opposition Social Democrats (SFD),
against a West German defense contribution continues-to cause
uneasiness in the rank and file of the party. 25X1
GJ/~
a. majority of the SPD faction in. the Parliament
silently disapproves of Schumaccher's stand and might break
ranks to support Adenauer if ratification of the proposed de-
fense contribution were iri'danger. US officials in Bonn comment
that Schrxma,cher might conceivably be forced by internal SPD pres-
sure either to modify his extreme negative position
or fa,
possible open revolt in his party.. 25X1
any possible modification of Schumacher a-s and can best be ob-
tained if Adenauer and others, refrain from any frontal attack
on Schumacher and contin o make conciliatory gestures. Q 25X1
COIIJINT; Schumacher has long fol?
owe Us :policy of opposing hest German rearmament until a list
of conditions-are met, 'including the assignment of much larger
Allied forces to the defense of West Germany and, absolute
equality for any'German contribution. There have been many pre-
vious indications of uneasiness in the SPD on Schumacher's stand,
which is of a piece with his general policy of firm opposition
to the government on most major issues. As yet, however, there
is nobsufficient evidence to lead-to the conclusion that Schumacher
will be forced to change his view., or that his followers will re-
ject his lead.
West Berlin Decides Notto`Ban the FDJ. The West Berlin
Senates decided not to follow the action of the Federal Govern-,
went in banning the Communist Free German Youth (FDJ). Although
West Berlin generally avoids diverging from the practice of the
Federal Government, the Senate reasons that a ban of the FDJ
would reduce the value of 'C "est Berlin as a western "show wrdowwe
since it would make youths from East Berlin (where FDJ membership
is bractieall7r
eacuuVt,F, duu oe expose..
to democratic in luences. A large influx of FDJ visitors is ex-
pected during the August World Youth Festival in East Berlin.
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USSR At eiTts to Divide Allies on Berlin Trade Issue. US
off icialsals Beex?lin,commenting on the latest developments in
the Soviet restrictions on Berlin's trade- state that the impres-
sion isinescapable that the Soviet representatives are "working
on the French," with some success., in order to divide the Western
Allies. They also cite the view of the British Commandant., who
felt that. the Russians and French "have been playing with us now
for six weeks" and that the time had come for decisive action,
i.e. countermeasures, againstthe'TJSSR. The British also implied
that the. French. might have "leaked" information from Allied dis-
cussions on the issue to Soviet representatives-0 US officials
again discuss possible firm countermeasures and, in view of the
apparent defeatist attitude of the French, suggest that the State
Department place further press ? on the French Embassy in Wash-
ington. COMONT; The prolongation of
Allied discussions concerning
Berlin's exhorts has,
apparently resulted in dividing both the Allies
and the West Berliners on this issue. The French representatives
vyQuIcL Jeopardize to i ity of Italian Government. In view oft The
recent.furor in Italy over the attitude of`.G and the US and UK
Governments regarding Trieste, US Embassy Rome believes that the
It has been expected that the Germans will not sign any agreement
relating to their armed forces until substantial progress has been
made toward political equality for West Germany.
"B" ITALY. Use of Trieste As Center for Yugoslav Military Aid. Program
are using the occasion vigorously to push the objective of German
equality. They insist that changes must be made in Germany's
political status before the Federal Republic can sign the projected
European defense treaty, and Chancellor Adenauer's security adviser.,
Theodor B.lan1g apparently wishes the conference itself "to put steam
behind German equality aspirations". Furthermore.,the_French and
Germans disagree over the conditions under which initial recruiting
for the European Array will take place in their respective countries.
The Germans feel that if they arerequired to recruit under super-
vision, they will be discriminated against. The French, on the
other hand, argue that this procedure is fair for Germany but not
for France because France already has-an ax. and, moreover., has
overseas commitments. COI NT-.
a sa Wile "appreciable-progress continues to be made at the
pa?is European-Army talks-and the delegations are confident that
an agreed report will be ready next week., the German delegates
"B" GERMANY-FRANCE. Germans Seek Equal Status Through European
have all along shown a desire to reach a compromise with the USSR.,
and to avoid any major dispute over the current restrictions.
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use of Zone A as an assembly and processing center for the Yugo-
slav military aid program would cause profound repercussions in
Italy. Italian public opinion and government circles would re-
act violently to what they would interpret as the establishment
of a Yugoslav military base in Trieste. The Embassy agrees there
should be no objection to the use of Trieste's industrial facili-
ties for the production of non-military supplies for Yugoslavia.
It points out., however., that inviting substantial numbers of Yugo-
slav military personnel into Zone A would produce disastrous re-
actions in Italy and on relations between the US and-Italian-'Govern-
cr
L; srn_ of his financial nelicies has' been imminent for some time
uneasiness in Italy that the West's proposed military aid program
for Yugoslavia might enable the latter to replace Italy as the key-
stone in NATO Mediterranean defense., and that the US and UK are
favoring Tito's claims to Trieste in preference to their own. The
use of Zone A-for the assembly of US military aid to Yugoslavia
would be interpreted by the Italians as confirmation of their fears.
De Gasperi to anize New Italian Government. Premier
De Gasperri and. his cabinet are expected to resign 16 July as a
result of De Gasperi's decision completely to reorganize the cabi-
net to accord with the results of the recent local elections.
President Einaudi will probably entrust De Gasperi with the forma-
tion, of anew government by 18 July. The Republicans will probably
continue in the cabinet. but both the democratic Socialists and
Liberals have definitely refused participation in the government
for the time being. It appears that Treasury Minister Pella's
precipitate offer to resign., caused by widespread Christian Demo-
cratic criticism of his financial policies was the catalytic fac-
tor in De Gasperi's decision. -U NY Times$
16 Jul 51) Comm. Pella1s,resign., ion as a result of widesp d
44-4
g
e
r
0
the Treasury portfolio. The reorganization is expected to reflect
the trend among the Christian Democrats to a one party government.
It is probable that De Gasperi will include greater representation
from the progressive.Dossetti leftist wing of the Christian Demoo.-
crats$ which has been.clamoring for more emphasis on socio-economic
reforms. No change in Italy's western orientation is expected from
the cabinet reorganization.
epu y o ino who has been rumored as a successor el]a9 recently
resigned from the Liberal Party
presumably to be ava31abl
f
vi vVa.vc$ u11G S VL"uUgUe.`ie
Supreme Court has ruled favorably on the political "fitness" of
opposition leader Vice Admiral Quintao Meireles to run as a_candidate
Pt~RP TUGAL. Su. reri Court A roves Candidate of Opposition Leader.
25X1.1
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in the presidential elections that are scheduled for 22 July.
Professor Rui Luis Go toriaus fellow tr has been
rejected. COlaM. 25X1
The disqualification of Gomes was e ~v..
xpected, The popular strength
of the Salazar regime will be tested in the 22 July elections
for the first time without the tremendous vote getting appeal of
of the late Marshal Carmona.' Although Quintao Meireles has hardly
a chance of defeating the government candidate, General Craveiro
Lopes, he could be the source of considerable embarrassment by
causing a noticeable drop in the total vote cast of the Salazar
administration. The 71 year old admiral., reportedly a Catholic
and a moderate Liberal, is avowedly in favor of even ' closer ties
between Portugal and the US. A participant in the 1926 military
coup that overthrew the republic, he quit in 1928 as Foreign Minis-
ter after a clash with Salazar, who had just been made financial
dictator with powers to cope with Portugal 75 bankrupt economy.
The admiral is, therefore in a position to rally to his cause
all persons who either (1) simply oppose Salazar?s dictatorial
policies., (2) are out of 'sympathy with the principles of Salazar'
corporative state, or (3) are chiefly interested in undermining
the political strength of the re#
UNITED ICMDOM. Government Cr4.ticised on Japanese Trea Position.
?oreiggn ecrett. dorr?isonfls explanatory statement in'Commmons on
the draft Japanese peace treaty text brought virtually unanimous
Labor rank-and-file accusations that the UKhad permitted the US
to dictate the peace settlement, and that the treaty ignores 25X1
China, the first country to *=off' under Japanese aggression.
Conservative questionin 25X1
' wily on procedural aspects
of the treat
25X1
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CENTRAL INTELLIGENCE AGENCY
DAILY DIGEST SUPPLEMENT
JUL 16 1951
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT TNTRTT.TC.F"l1(-R
16 J 1951
SECTION 1 (SOVIET)
25X1
25X1
"B" RUMANIA Further Harassment of Western Missions Report-Rd
a
r ve to -pose further restrictions on Western diplomatic missions. Mea-
sures allegedly to be implemented in the immediate future include (a) establish-
ment of an office similar to the Soviet "Burobin" to control the supply of
all commodities., services and local personnel of the Western missions$
(b) large scale arrests of non-diplomatic and Rumanian personnel of Western
missions, and (c) enforcement of rigid control over Western diplomatic
i
cour
er service which will be limited to one courier per country r week
h
w
ose Touches cannot exeeer7 6 kilograms (approximately 35 lbs), ;~-^
Is like -1,7. A replica of the Soviet.lBurobin" was established in Bulgaria a
few months before the severance of M -Bulgarian diplomatic relat in
A
s.
n
Italian non diplomatic employee of the Italian mission in Bucharest has
already been arrested, During the latter part of 1950,, the Rumanian Govern.
ment attempted to control the frequency of US courier service and sub-
sequently imposed such obstacles that a regular courier schedule coin not
be maintained,
SECTION 2 (EASTERN)
"B" A T?, . zranians Continue Efforts to Secure Oil Personnel, The TE Ambassador
in-Tehran states that despite the negative in ormation.he has given the Chair-
man of the Iranian Joint Oil Coo asion on Lee Factors Inc.,,, Los Angeles'con-
sultant firm which offered to supply 2500 wens, the Oil Commission intends to
exploit the offer to the utmost. The Ambassador suggests that the Department
might discuss this matter with tee-Factors with a view to persuading them,
that in the present very delicate situation their prejudice US policy in Iran,, are likely to
CO Iran
has given wide publicity in a andn Europe to its readiness to employ
personnel for the Iranian oil industry, Such action has already resulted
in attracting an assortment of individuals and firms,, many with dubio
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qualifications. No established US oil company has made an. offer,, nor has Iran
as yet reported success in finding any sizeable number of qualified tech-
nicians.
"H0 KO EA, South Korean Prime Minister Su gists President Truman Reassime Korean
Pe " In a conversation with . Ambassado' Mucccio - summarizing the 'attitude f
the South Korean peoples the ROY, Prime Minister stated that it was not enough
for the US to reiterate its exemplary past record; Korean worries stemmed
from its intentions in the future. He said that the . Korean paopje belie* the
US is "calling the whole thing off with victory within its grasp," and that
they are particularly worried over'the concessions which will have tobe made
in order to obtain a cease-fire. and political agreem nt.
The Prime Minister stated that his people, regardless of the past
record,, simply do not believe that the US continues to have Korean interests
at heart, and further .ore believe that for reasons of global strategy the
TB now plans to abandon the Republic of Korea, He feels that the situation
is deteriorating and suggests that a statement ,of rea atvance from a high
US official,, preferably the President., meeting these Korean suspicions head-
one would have a salut effe believes the aiggestion
merits consideration.
CO 8 Despite the plausibility of the Prime Minister 1 s aa.alysis
of the South Korean sit .tiono there is evidence that the. govern nt itself,
through inspired demonstrations and press agitation, Is largely responsible
nu d
+i i`^' V coal V.Fa
3
strances by US officials have had any appreciable effect upon President Met
whose actions contin
t
e
ue
o b
irresponsible and unpredictable. There is'" he
possibilitye however,, that a statement from a high US off vial would give
the ROK Government a face-saving excuse for reversing the timcease ire
agitation which it has so far kept in motion,
SECTION 3 (WESTERN)
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Al orea,, :f
U.7
putting this battalion at the UNQ s disposal it can fulfill its obligation
to collective security without depleting its own strength or that of
European defense.
so far has not contr ou-ted an v
y militarv forces to the TINT i
ORTad &Lttalion Strength Unit to be Put at UN Dial, In a reply to
the UN endorsing the General Assembly "uniting for peaceT' resolution,, the
Norwegian Government is stating that it will designate a unit of battalion
strength as Norwaygs contribution to the forces at the disposal of the
UN on call by the General Assembly or Security Council, Thar battalion
will probably be a part of the forces also at the disposal of NATO, end
its utilization by the UN would be subject to the approval of the NATO
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