DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300300001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 12, 2016
• Document Release Date: January 3, 2002
• Sequence Number: 1
• Publication Date: August 1, 1951
• Content Type: SUMMARY

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1 August 1951
CIA No. 49291
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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. ? Comments represent the
preliminary views of the Office of Current Intelligence. Marginal
letter indications.aredefined as follows:
"A" - items indicating Soviet-Communist intentions or capabilities
"B" - important reional. developments not necessarily related to
Soviet/Communist intentions
"C" - other information indicating trends and potential developments
DOS AND DIA Declassification/Release
Instructions on File
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SECTION 1, (SOVIET)
ren
. Patriarch.Alexandros of Antioch arrived in
Moscow on.20 Tu. avowedly to discuss compensation for confiscated church
'',property, The Soviet Union is apparently seeking to delay any decision
on compensation in order to influence the Patriarch. Meanwhile it is
taking propaganda advantage of his visits Izvest a played up his approval
of the Stockholm Appeal., and the US:& bassy.in Moscow considers that more
use will be made of his peace pact support in propaganda to the Near East,
(C Moscow 150, 27 July 51)o
C., ;s The USSRBs stepped-up efforts to utilize the Near East
Orthodox Ch r? h as a means of spreading Soviet influence and power in that
area have been noted for over a year, but the USSR has apparently not yet
succeeded-in achieving control of any group,, Most Orthodox Near East
communities appear to oppose Communism and view Soviet activities with s.s-
picion.,, with the possible exception of the Patriarch of Antioch. Acc6rd.iig
to several sources, however., he act ly travelled to Moscow to seek compensation' for the loss of revenue, The Archbishop of Istanbul, firmly anti-
Communist and believed to be a top figure in the Near East Orthodox hier.
archy$ recently assured US officials that Antioch would not "stray from
the folds,"
ftB% Neva. tradition Applauded at Nay y Darr raffia In a lecture oom
memorating Navy Sys Major General.Korniyenko recalled what he termed the
rich revolutionary tradition of the Russian Navy. According to hung from
the very beginning of the October revolution.Russian sailors were counted
among its shock detachments.
General Korniyenko also that no other navy in the world has
made such great contributions to the development of science and vulture,
He cited as examples the 85 expeditions undertaken in the Pacific alone
during the last half o? the eighteenth centu$ and assetted that more .
than 30,000 kilometers of Arctic and Pacific coastline., islands and
archipelagoes, a Be considerable" part of the American continent's coasts
and many areas of Asia, a% ,the Antarctic continents were discov .edp
.surveyed and described by Russian. navigators!, (R FBIS, 30 July 51),,
C e tt_ The recent appointment of Vice Admiral Ruznetsov as Naval
Minister,, along with the new emphasis on the real and imagined contributions
,of the Russian Navy., indicates the increasing importance the USSR now
.;;attaches to the navy?
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The Embassy in Moscow
considers that the cordial treatment received by,the Quaker delegation
from the UK shows that the Soviets attached some seriousness to their visit.
Such attention to a Western,, not Commit ist,, nonofficial delegation has
been unprecedented since the immediate postwar years? Second-hand reports
indicate that the Quakers were impressed by Soviet reasonableness in disc-
cussing the possibilities of reconciling East-West difficulties. The
Quakers blamed the West for intransigence at Paris and felt that advantage
should now be taken of the present change in Soviet tactics, as exemplified
by the new publication New and by Nalik?s talk with the Quakers., to die-
cuss current tensions with-the USSR,
The embassy comments that the visit was successful from the Soviet
viewpoint and that the Kremlin incidentally gained good advice on how to
lake its propaganda more convincing to the West.- The embassy noted that
the Quakers. convinced as they are that good cannot result from force,,
will not see the relation between any gent change in Soviet attitude
and UN military success in Korea. (C Moscow 158, 28 July' 51)
"B" EASTERN-EM. BU ARIA- - &d ali zation fails to read Ix its
report ofi the . second. quarter of .1951, , the . Bulgarian. State. Planning Com-
mission claims a considerable increase in industrial production, but
admits that implementation of the overall plan failed by 2.4 per cent.
The commission specifically criticizes the following organizations for
their failure to reach plan gc.s in the fields listed o (a) the Ministry
of Industry - steel., metal processing and agricultural maohineryj (b) the
Ministry of Electrification electric power and metal processing-
(e) the Ministry of Supplies food and chemical industries and (d) the
Central Cooperative Union - food industry. With respect to certain cow
modities Bulgarian industry failed to reach its goals by significant
amounts, e.g., electric power (7.2 per cent)., electric bulbs (202 per gent ,
household utensils and china (13.3 per cent), shoes (33,2 per cent)., cheese
(11.9 per-cent) and meat (3.9 per cent). (R FBIS, 30 Jul 51).
In order to meet the industrial goals set by the Five Year
Plan' Bulga-r a needs considerable outside assistance in procuring machinery
and skilled personnel ~ which the USSR is either unable or unwilling to
furnish, The chiefs of the ministries listed above and the chief of the
industrial division of the Central Cooperative Union have been sufficiently
criticized by the regime during the past two years to justify their purge.
It is probable, however, that they continue to remain in office as perennial
scapegoats for failures that the USSR cannot or will not remedy.
o the ] 951 al anb
"B" CZECHCSIAVAKIA . Progress ret2rt 2% tY e first six months
According to a 28 Jul communique of the Czechoslovak State Planning
Office, the increased goals of the Five-Year Plan have been fuifilbd for
the first half of 1951. Industry as a whole exceeded its targets by
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1.3 per cent, and, its volume of production rose by 12.5 per cent compared
with the corresponding period of 1950.
The various sectors of industry over-fulfilled the plan during this
period as follows heavy industry, 100.7 per cent; light industry, 102.6
per cent; food industry 100.3 per cent. The heavy engineering industry,.
despite a reported rise in the volume of production over 1950, did not
fulfill its plan. Shortages of raw materials, especially non-ferrous
metals and rolled steel, as well as poor management, were cited as con-
tributing causes.
In comparison with the first half of 1950, coal production increased
505 per cent, The production of lignite and coke surpassed the planned
quotas# but that of hard coal did not. The production plan for elec-
tricity also was not fulfilled.
The communique reports that the volume of Czechoslovak foreign trade
during the period was 30.1 per cent greater than in the first half of 1950.
The Soviet Orbit's share of this trade rose to 56.8 per cent of the totals
as against 52 per dent in 1950. The communique eulogized the aid of the
Soviet Union in providing Czechoslovakia with grain!, industrial raw
materials, machinery, and food. (R FBIS.9 30 July 51).
C- t.- Despite the impressive figures representing general ful-
fillmerit, the failure of engineering production hard coal production and
electricity output to meet planned goals means that Czechoslovakia is not
meeting the increased Soviet demands for heavy industrial products. The
State Planning Office's admission that a shortage of non-ferrous metals
exists does not jibe with the eulogistic aDmments about Soviet aid, but does
correspond to mown Czech efforts to obtain these very materials clan-
destinely from the West. Some of the failures can be attributed to increas-
ing labor discontent,, increased absenteeism and sporadic passive economic
sabotage.
"B" Rid Goyerrpant bezilds un Justification for frontier evacuation? The
arrest of "an important number . of . spies . and provocateurs" employed by the
Yugoslav Security Police" in the interest of the American espionage ser-
vice" has been announced by the Rumanian Government. The accused were
allegedly instructed to propagate chauvinism among the ranks of the Ser-
bian population in the Banat region on the Yugoslav border, to agitate for
the union of the Rumanian Banat with Yugoslavia, and to penetrate the ranks
of Yugoslav emigres in Rumania. Rumania further charges that many of the
accused have relatives in the Banat whom they were sent in to incite.
(R FBIS, 30 July 51).
Co a tS This is the first group of alleged Yugoslav agents'slated
for public trial in Rumania during the past year.. Undoubtedly resulting
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from strong Western reaction to Rumania's eviction of.thousands-of.Banat
residents, (see 0/CI Daily Digests, 3 and 27 June, 17 July 51),, the
announcement of the arrests sets the stage for the usual Communist propa-
ganda campaign to justify police state measures.
"B" YUGOSLAVIA. Tntelligence Chief expects no Satellite attack ia, immediate
,.t,, :Yugoslavia does not expect a Soviet. Satellite attack in the
immediate ftture, according to Admiral Manola, the Yugoslav Deputy Chief
of Staff and reportedly also the Chief of Intelligence. In a conversation
with the US Military Attache on 2/. July, Manola stated that border incidents
remained on a small scale and the only indication of danger was an uncon-
firmed report of-a pontoon bridge installed over the Danube on the Rumanian
Bulgarian. border,. The US Military Attache reports that Yugoslav military
activities are completely normal; it is his impression that Yugoslav leaders
are basically unconcerned over the possibility of a general war..
Comment: This report points up the frequent disparity in Yugoslav
statements,, In his Titograd speech on 13 July Tito declared that the bor-
der situation was becoming worse, and more recently Yugoslav leaders
expressed some concern that Molotov's Warsaw speech might be the prelude
to Satellite aggression against Yugoslavia. There is no evidence that
border incidents have become more frequent or serious, and available
Intelligence appears to support Manola's statement.
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SECTION 2 (EASTER
"C" SYRIA. Cabinet resigns: Prime Minister Kalid al-Azm and his cabinet
have tendered their resignations to the President of Syria. One of the
first ministers to resign was a "Hawrani man," indicating, in the view of
the US Minister,, a deliberate move by Hawrani.and the army to bring about
the fall of the Cabinet,, Although Azm might be asked to form another govern-
ment, Maruf Dawalibi has been mentioned by many as a.likely successor.
Any government headed by Dawalibi would include some Populists who would
permit Parliament to continue with its work. (R FBID Brazzaville, 30 Jul 51;
C Damascus 55, 30 Jul 51).
Comment: This report indicates that Colonel Shishakli, the Chief of
Staff, continues to be the real power in Syria. Akrim Hawrani, leader of
the Arab Socialist Party and a recent critic of the government, is his close
friend. Although a coalition government containing some members of the
Populist Party - currently in opposition - might be able to progress with
the business of government, Maruf Dawalibi, who has stated that Syria should
ally with the USSR rather than with the US, would as prime minister foster
anti-Western sentiment in Syria.
"B" AFGHANISTAN. Commission to attem t to obtain oil direct from Iran: The
project manager for Morrison Knudson Afghanistan (a US construction firm)
has been told by the Acting Prime Minister of Afghanistan that a commission
headed by the Afghan Minister of Mines will proceed shortly to Iran to attempt
to arrange for oil shipments directly from Iran to Afghanistan. Morrison-
Knudsen Afghanistan has been asked to investigate the feasibility of sending
Afghan tank trucks to the Iranian border if the Iranians are able to deliver
oil products there. Such an arrangement would eliminate present transship-
ment through Pakistani territory. (C Kabul 71, 27 Jul 51).
o is Since Iran?s oil storage facilities are full and its export
outlets by sea are closed,. Iran probably will welcome the Afghan suggestion.
However, difficulties likely to be encountered in diverting Iranian oil
carriers from their present internal distribution duties may-prevent effective
implementation of any agreement reached by the two countries.
"B" BURMA. Situation in central Burma deteriorating.' A US Embassy officer who
recently spent a week in Mandalay reports that the town is virtually
surrounded by Communist insurgents and that attacks on communication
facilities have increased in number and intensity. Although there is much
speculation that the well-armed insurgents are being supplied from China,
the Communists are also receiving arms through sales from government forces.
There are no indications that the government is taking steps to halt the
deterioration of law and order in the area, and the army apparently is
unable to do more than defend the towns,, leaving the initiative in the hands
of the Communists. (S Rangoon 115, 27 Jul 51).
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Comment; The situation in central Burma has obviously taken a turn
for the worse. Little improvement can be expected so long as friction be-
tween C-in-C Ne Win and the Socialists continues and the reportedly alarm-
ing deterioration of morale is unchecked. The Communists can look forward
to increasing Chinese encouragement and support.
"B" BURMA/CHINA. Communist-KUT forces clash in Yunnan: Chinese Communist and
Nationalist units have been engaged in heavy but indecisive fighting in
southwest Yunnan, according to a spokesman of the Burmese War Office. One
highly reliable report mentioned the disarming of a battalion of Chinese
Communist troops in Mangshih after the defection of 200 of its members to
the KMT forces. (S Rangoon 115, 27 Jul 51).
Comment: This report appears to be overly optimistic regarding K UT
successes. Reliable evidence indicates that the KMT forces have suffered
severe defeats at the hands of the Chinese Communists and have retreated
n.to Burma.
"B" INDOCHINA. French considering repatriation of Chinese Nationalist internees
in Indochina: The French Foreign Office appears to have receded from its
former opposition to the repatriation to Formosa of Chinese Nationalist
troops interned in Indochina, according to the Chinese Nationalist Minister
in Parise -Although emphasizing that General De`ia.ttre and the next French
cabinet must approve any such decision, a Foreign Office official hinted
that it. might be possible to repatriate a few groups and then await Chinese
Communist reaction. (C Paris 652, 30 Jul 51).
Comment: The Chinese Nationalist Government has been attempting period-
ically during the past two years to obtain permission for the internees to
leave Indochina for Formosa. The French, however, have firmly refused all
requests, fearing that the proposed action might provide the Chinese,Com
munists with a pretext for intervening in Indochina.
This is the second report during the past week that the French position
in this matter has been relaxed,
"B" Vietnam to draft 60,000: The Vietnam Government supplemented
its recently assumed authority to conscript doctors by issuing a decree
calling up a contingent of 60,000 menftr a two month military instruction
period. US Minister Heath describes the Vietnam Government's series of
mobilization measures beginning 15 July as "the key to De Lattre's policy"
since the joint French-Vietnamese declaration of "total war" against the
Viet Minh on 19 April. Heath does not believe there will be any great
difficulty in drafting 60,000 men? (S Saigon 258, 30 Jul 51).
Comment: The fact that the mobilization measures represent "De Lattre's
policy," and will be executed by Vietnamese who have distinguished themselves
by their loyalty to De Lattre rather then by their devotion to the cause of
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Vietnamese independence, will tend to limit the effectiveness of the
mobilization policy. Previous French refusal to turn over 4,000 rifles
to the hard-pressed Vietnamese regional security forces in North Vietnam
contrasts with their apparent ability to arm 60,000 Vietnamese under the
Francophile central government of Tran Van Huu,
"C'? French general and Vietnamese official slain. Thai Lap Thanh,
Governor of South Vietnam, and General Charles Chanson, Commander of French
Forces in South Vietnam, were killed by the grenade of a.Viet Minh terrorist
in the province of Sadec, west of Saigon, .(R Press Ticker Paris, 31 Jul 51).
Count: This incident is a striking exception to the generally
declining trend of terrorism in South Vietnam. It is the first time that
a high ranking French officer has been killed by a terrorist. Governor Thai
Iap Thaw was, despite his title, a relatively uninfluential figure in the
Vietnam administration.
!B'? INDONESIA/CHINA. Communist China claims Indonesia violated international
practi~eo A Peiping release by the New China News Agency on 25 July states
that Indonesia's refusal to admit 16 new staff members of the Chinese
Embassy in Djakarta is contrary to international practice. The release
claims that all sixteen had obtained entry visas from the Indonesian
Embassy in China. The Chinese. Government has expressed deep regret over
the affair and is taking up the muter with the Indonesian Government,
(U Hong Kong 3$$, 28 Jul 51).
Comment: Although it is true that the Indonesian Charge d'Affaires in
Peiping issued visas to the Chinese, the Chinese Embassy in Djakarta made no
effort to inform the Indonesian Foreign Office of the pending arrival of
additional staff members until three days before their ship docked, Even
then the Embassy failed to provide names and positions, Indonesia, there-
fore, considers that the Chinese Government has deliberately ignored diplo-
matic procedures., and to date has refused to reconsider its decision
refusing entry to the 16 Chinese.
AC"' INDONESIA, Oil workers' trade unions decide to affiliate with SOBSI. A
congress of oil trade unions decided on 27 July to affiliate with Communist-
dominated SQBSI, Indonesia's largest trade union federation, (R FBID Ticker
Djakarta, 29 Jul 51).
Comment: It is not clear what unions participated in the congress. A
loose federation of the four Indonesian oil unions - the Oil Workers Committee
for Joint Action - has been non-SOBSI, although one of the participating
unions was a SOBSI affiliate and another was pro-SOBSI. It is probable that
these two latter unions and possibly a third, having been unsuccessful in
forcing the Committee to join.SOBSI, have formed their own organization and
have established connections with the Communist federation.
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"C" CHINA. Hong Kong shipowner seeks reinstatement-of-Panamanian registry: The
Hong Kong firm of Wallem & Co., Ltd., owner of the vessel Marion 3,,317 gross
tons), has cabled its Calcutta agents that "we undertake never to trade with
Chinese ports again during the present emergency." These assurances were
given in order to regain Panamanian registry, cancelled after the vessel
loaded cargo in Calcutta for Communist China. In view of the owner's
assurances, the US Consul General in Calcutta has no objection to restora-
tion of the vessel's Panamanian registry. (C Calcutta 86, 27 Jul 51).
Comment: Wallem & Co., Ltd.,. has a long record of dealing with the
Chinese Communists. The company's assurances that the vessel will not
again call at Chinese ports are probably designed merely to achieve restora-
tion of the ship's papers, so that it may clear Calcutta. If the policy of
the Panamanian government continues to hamper Wallem's dealings with
Communist China, the company can transfer the vessel to other registry. 25X1 C
"A" Chinese Communists concerned over losses in Korea;
25X1 C
25X1A
the statement of Gen. Yeh Chien-ying, Chairman of the Kwangtung
provincial government and Secretary of the CCP's South China Sub-Bureau, that
China should "take advantage of the (Kaesong) peace negotiations to preserve
the core of the Army," and that a continuation of the Korean conflict would
have "catastrophic" effects on the Chinese Communist forces.
25X1A
Comment: It is ironic that this same Gen.. Yeh, several months ago,
publicly stated that it was international Communist strategy to employ the
manpower resources of Asian 'liberation' movements to force the Western
powers to engage in costly attritional warfare which the latter could not
long afford. Chinese Communist casualties in Korea are estimated to approach
600,000. Although intensive recruiting has restored Chinese Communist field
forces to their pre-Korea numerical level of approximately 2,000,000, the
Chinese have lost a significant proportion - possibly as high as 25 percent -
of their best-trained and best-indoctrinated troops.
"B" Chiang Ching kuo gains control of Nationalist press and propaganda:
Chiang Ching-kuo, the Generalissimo's elder son, reportedly became dissatis-
fied with the efforts of Nationalist press and propaganda spokesman, Tao Hsi-
25X1A
shing, during the current anti-American campaign.
He charged that Tao failed to carry out the Generalissimo's wishes and
that his subordinates did not denounce the Americans strongly enough. Tao
offered his resignation, and it was accepted promptly. Chiang Ching-kuo's
immediate subordinate in the political bureau was appointed to replace him.
Comment: This is another-indication of Chiang Ching-kuo's anti-
American attitude and his growing strength within the Nationalist government.
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"B" Chinese Nationalists react to US memoranda on aid controls. Chiang
Kai-shek was "considerably upset" by the Department of State memoranda
requesting effective supervision;-and control of US aid. The memoranda, after
some delay, were sent to the cabinet by Chiang on 27 July. Meanwhile, on
25 July the cabinet learned of the US memoranda and held a secret meeting
at which Chiang Ching-kuo, the Generalissimo's elder son, opposed the US
recommendations.
Foreign Minister George Yeh' heretofore considered pro US, stated,
"the- US is forcing the Nationalists to the edge of surrender." This stand
obviously was taken in an attempt to regain the Generalissimo!s favor, since
the Foreign Minister has been blamed for the exclusion of the-Nationalists
from the signing of the Japanese Peace Treaty.
Among those favoring the US suggestions are Premier Chen Cheng and the
Governor of Formosa, K. C. Wu. Chang Chun, a former premier and close
associate of the Generalissimo, was entrusted with the job of making him
realize the consequences of losing US aid. Chang Chun will also attempt to
convince the Generalissimo that the anti-American campaign begun over the
the exclusion of the Nationalists from the signing of the Japanese Peace
Treaty should not be overdone and might result in the re lacing of the
present US Embassy staff by others less sympathetic. 25X1A
25X1A
Comments Despite the realization that American aid is essential to
their existence, the Chinese Nationalists apparently are determined to
advance their contention that US controls would be an infringement of the
sovereignty of a free nation.
If the US remains firm,,, the Nationalists will be forced to yield to
the controls requested. They will, nevertheless, make every effort to
free themselves of US supervision.
"Bit. Non-Communists in the Peiping regime reportedly disillusioned:
25X1 C
25X1 C I members of non-Communist
parties invited to join the "coalition" government set up by the Chinese
Communist Party (CCP) in the..fall of 1949 are "very disillusioned with their
lot." These persons feel that no non-Communist is informed of major
decisions before they become public, that none occupies an important office,
and that they have little authority in the posts they do hold. Further,
non-Communist officials receive less real pay than their Communist colleagues
and are subject to more severe punishment for malfeasance. Finally, non-
Communist officials must unconditionally obey their Communist superiors,
cannot express themselves as can the Communists, and are regarded by
the Communists as inferior beings. The consensus is that non-Communist
officials "have become slaves" and that their parties "are only puppets"
25X1A of the CCP.
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' by Comment: This account has in general been confirmed
theirl sours ss and
is a good summary of the status of the puppet parties
New blow at US missions. The Peiping regime has ordered all Chinese
ediately (to) sever relations"
im
within the United States, or beyond the borders o
out the express permission of the releasing office).
.Comment: Conferences of this nature have been reported frequently
since November, but no confirmation of the decisions allegedly taken has.
been received. The Communist potential to enlarge their present aid
program by implementing any or all of the above points is generally con-
ceded. Recently intensified efforts to complete road and rail contacts
be increased in the near future.
of supplies per:month to the DRV. 25X1 A
For critical security reasons this report is not totbe United States, with-
m
Christian churches and organizations supported b US funds, and has
with American missions and other missions supp y
further ordered "a" such missions (to) cease their activities in China."
The decree of 27 July provides for the departure of all US missionaries
other than those who are still useful to the regime or are accused of crimes
against the regime. (R FBID Peiping, 30 Jul 51).
Comment: This step in Peipingte frank campaign to eliminate US
influence from China and to transform Chinese religious groups into puppets
of the regime.. has been anticipated. It has long been apparent most
missionaries that they had no future in Communist China.
comprise the majority of the 25 to 30 US nationals now imprisoned in
Communist China, and other arrests are expected.
Communists Ian to continue aid to Indochina at present level: A
coof Vietna
decision to withhold overt support from the Democratic Republic
name
(DRV), but to continue the "secret infiltration" policy was reportedly
at a 28 to 30 June meeting of Chinese, Soviet and DRV representatives in
Canton. Other plans allegedly reached at this conference include:
the use, if necessary, of Chinese troops concentrated in the border area,
up to a maximum of two regiments at one time to be infiltrated nb the
"old method" - i.e., use of DRV uniforms; (b5 the doubling,
of the number of Chinese and Soviet advisors on duty with the DRV forces;
and (c) the designation by the Soviet Union and China of 1.000 tons each 2 5X1A
with. Indochina indicates that such aid may
KOREA. Communist troops dissatisfied with USSRQs role in Korean war. A
mid-June psychological warfare summary from Korea reveals that several
reports have been received which indicate dissatisfaction among Communist
troops over the Soviet role in Korea. This discontent centers on $oyiet
failure~.'tb - a) send much-propagandized material support for Communist
offensives, and (b) support Chinese Communist troops, sent to Korea on
Soviet orders, with Russian troops. (S Psychological Warfare Operations,
13-19 Jun 51).
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Comment: While the evidence is inconclusive, any awakening among
Communist troops to the actual Soviet position in Korea would be significant.
"C" South Korea wants foreign troops to stay a years The ROK Director
of Public Information announced on 30 July that South Korea will require
foreign troops for defense and. to train ROK forces. He estimates that it
will be a year before the South Koreans will be in a position to defend
themselves. (R FBID Ticker Reuters, 30 Jul 51).
Comment: This expression of need for external military assistance
stands out in sharp contrast to recent bombastic statements of several rank-
ing South Korean officials, including President Rhee. The general tenor of
those remarks was that the South Koreans could go on to the Yalu alone if
necessary.
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SECTION 3 (WESTERN)
"A" WESTERN EUROPE. Western European Communists coordinate efforts towards
la or ag ta? icon. ro members of the Italian Communist Party Ulrectorate
are expected to meet with French Communist leaders in Paris during August
to coordinate a large-scale program for a peace propaganda campaign and
labor agitation in both countries in September.
French and Italian Communist port workers reportedly met recently in
Marseille to plan strikes and sabotage for the entire Mediterranean basin
at an unspecified time. Communist seamen and dockers are also reported to
have met in Amsterdam on 3 July to schedule a "big offensive" for early-fall
in all Northern European ports, 25X1 A
_
25X1A
25X1A
I
F
Comment:. Such plans would be consistent with known Communist intentions
to exploit rising living. costs in order to sabotage the Western defense ef-
fort. Should the Communists stress laborts economic grievances, as they
did with considerable success in France last spring, they would have a good
chance of touching off a serious wave of strikes.
In the past two years, however, Communist efforts to foment port
strikes in Western Europe for ideological reasons have generally failed,
and the current intensity of shipping activity in France and the Benelux
countries further reduces the Communistst appeal to the dockers. Despite
considerable unemployment in Italian ports, the Communists have also been
unable to win significant support for politically motivated strikes,
"A" FRANCE-ITALY. Prominent Communists visit USSR and Satellites. Jacques
cos, Acing Secretary Gener o e French ommunis Party (PCF), is
reported to be on "vacation", possibly in the USSR visiting Maurice Thorez.
During his absence, Francoip Billoux, PCF politburo member, will direct
Communist activities. The Secretary General of the Italian Communist Party
(PCI), Palmiro Togliatti, is also reported to be planning an early trip to 25X1A
the USSR. Other prominent Italian Communists have recently left Italy for
Central Europe with Prague as a possible destination,
Comore itx Inasmuch as an official Cominforn meeting is reportedly
schedules r the near future,. both Duclos and Togliatti may have been
asked to present official.reports on Communist activities. Duclost
absence from recent sessions of the National Assembly previously led to
the assumption that he had gone to the USSR,
"B" SWITZERLAND. Export controls to be effected largely through "gentlemants
agreeme n-E, The Swiss Governmen 's xport controls, which will
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be communicated to the 1 August meeting of the Coordinating Committee's
control group, is as follows:
(1)
The government will put into effect early in August
measures agreed upon recently in Bern by the US and
the Swiss, such measures to be retroactive to 25 June,
(2) The government cannot compel cancellation of old
contracts, but in practice many companies will cancel
or delay execution.
(3). The government cannot make a commitment in situations
where Eastern and Western buyers are competing, but
Swiss industry has a gentleman's agreement to give priority
to Western orders.
(S Bern 163, 30 July 51)
Comment: The government's admission that it cannot in general bring
pressure o "bear on Swiss industry is in line with the laissez-faire policy
dominating the Swiss economy. Gentleman's agreements will not prevent many
Swiss industrialists from acting in accordance with their own interests,
even if the East is benefitted thereby.
"C" SPAI1. UK rejects Madrid note on USA anish defense talks, The British
Ore gn Office as officially rejected the Spanish note o 21 July which
complained about UK-"meddling with Spanish sovereignty" in the matter of
US-Spanish mutual defense talks. The Spanish Ambassador in London accepted
the British Foreign Secretary's oral rejection which was couched in "mild
terms" in preference to a more caustic written answer drafted by the Foreign
Office. (S London 593, 30 July 51)
Comment: The Spanish note reflects the Madrid government's bitterness
at UK objections to a-Spanish-US agreement upon which Franco is pinning his
hopes for survival. The controlled Spanish press has recently adopted a
stern attitude toward,critics of US-Spanish defense talks, and asserts that
it is a sign of weakness to appease such "tools of the Kremlin" as the
Socialist governments of Europe. The newspapers present Spain!s willingness
to cooperate-in Western defense as a recognition of its responsibilities
for protecting civilization and peace and they label the British and French
governments as unreliable mercenaries.
DENMARK-6WEDEN. Suggest Hague Court ruling on Soviet claim to 12 mile
territoria waters. The Danish an Swedish ambassadors atMoscow sub-
m! ted notes to the Soviet Foreign Office on 18 July suggesting that
Denmark, Sweden, and the USSR agree to submit to the International Court
at The Hague the question of whether the Soviet Union is entitled by
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international law to exercise jurisdiction over territorial waters
extending 12 nautical miles off its Baltic Sea coasts, (U Copenhagen
FDIS-Danish radio, 28 July 51)
Comment: Since 1946 Russian patrol boats have seized a number of
Swedisshan1Danish fishing vessels for allegedly violating the 12-mile
demarcation of territorial waters. On 31 August 1950, the USSR rejected
a joint Swedish Danish protest and reiterated its contention that the
delineation of territorial waters is the sole right of the littoral state.
The Danes and Swedes have been unwilling to adopt any retaliatory measures,
and in fact have advised their fishermen to remain safely distant from
Soviet shores with the result that actual seizures have been much fewer this
year. But they (particularly the Swedes) do not wish silently to acquiesce
in the Soviet claim, which they therefore continue to reject largely for
the record.
GERMANY. Soviet motive for. Berlin trade restrictions: may.. have shifted.
Ua officials in Berlin be ieve that e , having pose restric ions
on Berlin exports for such limited objectives as speeding the conclusion
of an interzonal trade agreement, may now use these restrictions for
broader economic and political purposes. The officials foresee a tenacious
Soviet campaign to retain and develop these restrictions (centering around
.the demand for certificates of origin), The officials estimate that the
USSR could withstand the present and proposed Allied economic counter-
measures for another two months, and even longer, if Soviet objectives were,
on the whole, being served.
Present countermeasures now include Western refusal to approve the
interzonal trade agreement, and a partial embargo on goods to east Germany?
More stringent measures have not been adopted because of French reluctance
to provoke Soviet retaliation. A limited airlift with commercial planes
has already begun to move the huge backlog of Berlin exports bottled up
by the Soviet refusal to let them move overland through east Germany,
(S Frankfurt Unnumbered, 29 July 51, S Paris 612, 28 July 51)
Comment: The USSR may have imposed the restrictions on Berlin's exports
to specl`c?nclusion of the interzonal trade agreement, which is not-only
valuable in itself, but serves as a cover for illegal trade. Failing in
this purpose, the Soviets nevertheless observed that the restrictions could
.play hob with West Berlin's economy, a desirable result in the Soviet view.
The Kremlin might well be-willing to continue the restrictions for some time,
for though they would result in depriving the Soviet zone of some valuable
West German goods, the damage inflicted upon the West Berlin economy would
be proportionately much greater. If, however, the West is able to move
West Berlin exports by commercial or military airlift, the Soviet restrictions
would be stripped of their economic effect,
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FORM
8.73 26 -46E PREVIOUS EDITIONS. TOP SECRET (40)
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1 August 1951
CIA No.. 49291-A
Copy No.
'9
DAILY DIGEST
S/S CABLE SUPPLEMENT
Not for dissemination outside O/CI and O/NE.
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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. Comments represent the
preliminary views of the Office of Current Intelligence. 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
"C" - other information indicating trends and potential developments
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SECTION 1 (SOVIET)
USSR. Soviet "eaceful coexistence" olicy considered likel , The US
massy in London suggests the possibility at the will now seek
to re-enter a period of "peaceful coexistence" during which it will attempt
to increase its on strength while calculating that the West may be weakened
by unpreparedness, complacency, or economic crises. As reasons for such a
Kremlin choice, the embassy points to the USSR's provocation of Western
rearmament, some other serious failures of Soviet policy over the past three
years' and the apparent Soviet unreadiness to challenge the West in a full-
scale war,
Recalling the precedent of Soviet policies in the 1920's and 1930's,
the embassy characterizes the coexistence policy as a middle road between
a "genuine general retreat" and an imminent showdown with the West, The
USSR may even, for the time being, refrain from further local aggressions
on the part of the Satellites, since the risk of thereby precipitating a
general conflict may be greater than the USSR cares to incur. The embassy
speculates that the "cautious" nature of Soviet policy has been upset in
the Far East by the "revolutionary fervor" of the Chinese Communists but
that the USSR can be more conciliatory in Europe because the Satellites
are more malleable. In the embassy's opinion, a renewed attempt to achieve
an Austrian.Treaty should be used to test the new Soviet protestations of
a desire to cooperate, (S S/S London 562, 27 Jul 51)
Comment: The only evidence of a possible change in Soviet foreign
policiesT aside from a professed willingness to settle the Korean War, lies
in the trade and cultural fields, but activities in these fields have not
so far involved any real concessions on the part of the Soviet Government,
They have coincided with a rather sharp shift in the propaganda line, ap-
parently designed to persuade susceptible non-Communist governments that
a costly Western alliance against the Soviet Union is no longer necessary.
SECTION 2 (EASTERN)
EGYPT. Kind unwilling to break off Anglo-Egyptian negotiations, The
British Ambassador is to be in on King Farout's orders., that.
Salaheddin, the Egyptian Foreign Minister, had not been authorized to
state that the Anglo-Egyptian treaty of 1936 would be denounced unless
there were tangible evidence.of progress in the negotiations by mid August,
The Egyptian Prime Minister has been informed of the King's opinion and is
expected to respect it, The Royal Press Counselor is not disturbed by the
possibility of S alaheddin's resignation from the Cabinet, which already has
two vacancies, because he-feels that Salaheddin's following is overrated.
(TS S/S Cairo 119, 28 July .51)
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Com1:ment: Egypt's poor showing in the Palestine campaigns convinced
:sxE of the necessity for Anglo-Egyptian defense cooperation. He has
previously warned government officials against breaking off negotiations
with the British. Specifically, he has informed Salaheddin that he would
never be forgiven should he resign over this issue? Regardless of the
present strength of Salaheddints political following, should he resign from
the government he would become the focal point for those forces opposed to
continuing ties with the British,.
SECTION 3 (WESTERN)
ATJ TRI.A, Gruber looks with favor upon reopening of treaty talks. Austrian
Fore Minister Gruber has welcomed the US suggestion on that negotiations
be resumed on the Austrian treaty, as he considers it important that the
continuity of treaty efforts should not be interrupted altogether. Gruber
does not feel that there is any present urgency for a meeting of the deputies,
although he indicates that another attempt at a treaty could loom more
important in the autumn, depending on developments of the next few weeks.
Gruber considers that there is A general utility in preserving four power
contact through the Council of Foreign Ministers or the deputies, (S S/S
Vienna 362, 27 July 51)
Co,: In June of this year Gruber hoped for agreement on the
Austrian treaty at a Big Four meeting, and therefore regarded the deputies'
sessions as unnecessary, (See 001 Daily Digest, 5 June 51!) Now., with no,
prospect of a Big Four meeting, Gruber has changed his attitude toward the
efforts of the deputies,
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