SUPPLEMENT TO THE DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000700190001-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 21
• Document Creation Date: December 16, 2016
• Document Release Date: November 12, 2004
• Sequence Number: 1
• Publication Date: January 28, 1952
• Content Type: SUMMARY

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TOP SECRET
25X1
2.8 January 1952
CIA No. 451?
Copy No.
4E
TOP SECRET SUPPLEMENT
TO THE DAILY DIGES'T'
Not for dissemination outside O/CI and O/NE.
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
DIA & DOS REVIEWS COMPLETED
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
immediate views of the Office of Current Intelligence.
TOP SECRET
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TOP SECRET
SECTION 1 (SOVIET)
1. HUNGARY. Hwnffarian Government assails US note: The Hungarian Government in
a note of January state that t e tenor o the American note of 29
December 1951 "is not susceptible for the maintenance of normal relations
between sovere:'~gn states."
1Nhhen the American Minister refused to accept the note, because of its
offensive language, an official of the Hungary Ministry of Foreign Affairs
informed him that the language accurately represented the views of his
Government and could not be changed.
In commenting upon the return of the Hungarian note, the US Minister
states that his action ma result in his bein declared persona non grata.
25X1
Comment: The American note of 29 December 1951 had replied to Hungarian
charges against the Mutual Security Act. The stress in the current Hungarian
note is upon the unsatisfactory terms of the American reply. This is in
contrast to a similar Soviet note of 9 January 1952 which emphasized the
hostile nature of the Mutual Security Act.
SECTION 2 (EASTERN)
JAPAN. Opposition and press comment on Yoshida's policy speech: Prime
Minister Yoshida~s policy speech before the Diet on 23 January was attacked
by the opposition as "too abstract" and perfunctory. `Democratic~Party
.chieftain NLiki criticized as "secret diplomacy" Yoshida-s failure to explain
his selection of Nationalist China, while left-wing Socialist leader Suzuki
claimed the selection will leave Japan the "orphan of Asia." Asanuma,
right wing Socialist spokesman, claimed the defense appropriations will
lower living standards.
?
Editorial comment was generally unfavorable on the ounds that the
speech was lacki.n in enthusiasm and frankness. 25
25X1
Comment: Yoshida's policy speeches are generally criticized in this
vein. As a former diplomat, the Prime Minister's predilection for keeping
his diplomatic negotiations to himself have earned him the nickname of
"Mr. One Man" with the Japanese public.
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SECTION 3 (tiNESTERN)
3 ? AUSTRTA. Soviet boycott of Austrian treaty talks clears way for new
proposals: The refusal of the Soviet representative to attend the 59th
meeting of the Austrian deputies in London has probably terminated the first ,
phase of renewed tiiTestern efforts to secure an Austrian settlement. By
making further treaty talks contingent upon? the discuss ion of Austrian
demilitarization and denazification and the Trieste issue, the USSR has made
apparent its unwillingness to give up its pos ition an Austria on any terms
.the West is willing to offer.
Since the possibility of achieving an agreement through further V~''estern
concessions appears for the time being to have been eliminated, future
negotiations with the British and French for the introduction of an abbrevi.-
aced treaty draft are likely now to be less difficult. The Austrian Govern-
ment and the general public are deeply pessimistic over current developments,
and Austrian officials have already intimated their desire that their
country~s case be submitted to the United Nations.
Three days before the scheduled meeting of the treaty deputies in
London, the Soviet Union asked the Austrian Government when a delegation
could be expected in Moscow to negotiate reimbursement for Soviet repatriation
of Austrian citizens after World War II. This latest Soviet move may be
merely a gesture toward Austrian public opinion, holding out the prospect of
ultimate agreement on the treaty. Since this particular question of
compensation has not been regarded as current, however, it is possible that
the Russians, while spurning negotiations in London, may be prepared
bilaterally to inform the Austrians of It~oscow~s Brice for a treaty.
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SECRET
28 January 1952
-OCI No. 3860
Copy No.
183
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
This summary of significant reports has been prepared prirr~arily
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
immediate views of the Office of Current Intelligence.
IP~~~i~~DiA tELY A~'~i ~~ ~1~E
JD~ 60X ,.
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SECTION 1 (SOVI:~Tj
1. USSR. Soviet f ishin~ ttrawlers enroute to Vladivostok: Thirty-three
Russian fishing trawlers of approximately 300 tons each and one tanker
of 1100 tons enroute to Uladiv;~stbk arrived in Pcrt Said for a short
st,npover during the ~-econd week of January. A demonstration planned,
to greet the arrival of the Soviet fishing fleet was somewhat deflated,
because the canal strike caused the fleet to remain outside the harbor.
until nightfall.
Comment: These trawlers are. believed to have been built in Sweden
for tYie account of the Soviet Government, and are destined as replace-
ments for the somewhat ~.ntiquated Soviet Pacific fishing fleet. Since
the trawlers are being built abroad, Soviet shipyards are left free
to concentrate on purely military and naval .construction.
2. Low cash income curbs kolkhoz progress: A number of collective
farms, after having fulf filled their obligations toward the state,
have been accustomed to distribute most of their remaining products
among their members as remunera~;ion. This .has caused a scarcity of
produce left over for sale, collectives have had low cash incomes,
and opportunities for co~itributing to the ~~non-uistributed funds~~
are decreased.
Izvestia complains that this situation has slowed down the public
economy. ,As to financial revenues, the experience of leading collective
farms is said to show that they must be 'spent first of all on the
construction of buildings for livestock, on such items as irrigation
installations, reservoirs, agrict~].tural machiner and on the devel-
opment of ancillary branches of production. 2 5X
Comment: UnsymY~athetic kolkhozniks possibly feel constrained
not to spend their surpluses on capital improvements. They may feel
that they prof it more by consuming their own a.gricultiiral surpluses
rather than by having to submit to financial '~contributionsr~ to the
.non-distributed funds.
3. Armenian SSR obtains three new Okru~s; A recent decree of the
Presidium of the Supreme Soviet of the Armenian 5SR announced the
formation within the Republic of three Okrugs: Yerevan, Kirovakan
and Leninakan. The decree- also included a prevision for maintaining
the town of Yerevan under the direct jurisdiction of Republic organs.
Comment: The formation of three Okrugs in the Armenian SSR is
believed to be part of a gradual program of administrative change
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that are announced from time to time. The last such change was the
announcement on 5 November 1951 of the formation of the Kutaisi Oblast
in the Georgian SSR.
FINLAND. Soviet Union believed iammin~ VOA and BBC broadcasts to
Finland: The American Legation in Helsinki reports that following four
days of intensive jamming of BBC Finnish-language programs by uniden~
tified transmitters (presumably Russian), interference with VOA Finnish-
langizage programs started 11 January. The Legation states that this
is the first time that jamming stations located outside Finland have
deliberately interfered T:vith external broadcasts in Finnish.
The Legation believes that the irregular nature of the jamming
indicates it is being done on an experimental or irritational basis
rather than in an attempt to block out all reception of Finnish
25X1
broadcasts from the United States and Britain.
Comment: At present there are no signs of Soviet pressure on
Finland z.ahich would aid in accounting .f_or tree jamming, but it is a
reasonably safe assumption that Russi a is responsible.
It is possible that these broadcasts can be received by the pbpu-
lation in the Karelo-Finnish Republic of the Soviet Union, which lies
along Finland's eastern border, and that the USSR desires to block
reception there.
5. HUIVG~i.Y-YUGOSLAVIA, Hunf;arv re i acts Yugoslav of.'fer to establish border
commission; The Yugoslav Charge in Budapest has informed American
officials that on the occasion of .his presentation of Yugoslavia's
rejection of the latest Hungarian note, he was informed that Hungary,,
had refused Yugoslavia's proposal to establish a Joint Commissio~i to
investigate the incident. Moreover, the Hungarians ref Used to explain
why, if Hungary is so sure of its case, they were unwilling to have
experts discuss it.
The Yugoslav Charge added that on the same day the Hungarians had
accused him of insulting a policeman and warned that a repetition would
involve consequences. He contends that this accusation is a complete
fabrication and pzobabl~ forecasts a Hun~arian intention to declare him
25X1 persona non grata.
Comment: The Hungarian press characterizes the Mora Island `dispute
as a typical Tito provocation supported by the West. The Yugoslav
rejection of the latest Hungarian note, on the grounds that it is
offensive, has been greeted in Budapest as proof of its veracity.-
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There are indications of Yugoslav reluctance to take effective
counter-measures against Hungary; however, a Yugoslav appeal to the
UN remains a distinct possibility. The present Yugoslav Charge has
been at his station only a few months His predecessor was ousted
last spring following a series of mutual recriminations sparked by
Hungarian accusations that its Charge in Belgrade had been molested
by Yugoslav police.
6;. YUGOSLAVIA. Yugoslav Army strategists concentrate on defensive tactics;
Admiral Jerkcvic, Commander in Chief of the Yuboslav~Navy, stated in
private conversation with a US official that Yugoslav army strate-
gists were giving primary consideration to the tactical problems of
defense against encirclement.
In addition, the Admiral commented that the ,Soviet Army, despite
its ~iorld War II experience, gives extended stucy to the tactics of
encirclement while virtually ibnoring the problems of breaking out of
traps. This he interpreted as a definite indication of the aggressive
nature of the Soviet Army, in contrast to tre Yu osl v stres on
defense against encirclement.
Comment: Yugoslav staff emphasis on the tactics involved in a
defense against encirclement is consistent with announced plans to
defend the border regions. Concentration on the problems of avoiding
or breaking encirclements may illustrate an understanding on the part
of Yugosla~r planners of the vulnerability of any defensive force in
eastern Serbia and the need for a feasible evacuation plan designed
to save the major portion of this force for mountain warfare.
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SECTI?N 2 (EASTERN).
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1, EGYPT. Egyptian stubbornness allegedly reinforced by Soviet contacts:
Charles Malik, Ie anese UN Delegate and Minister to the United States,
is greatly alarmea over the degree of Soviet influence entering s'into
the highest Egyptian circles" at. the UN General Assembly in Paris and
in Egypt. He believes that Every fruitful contacts" have been es-
tablished between Egyptians and Russians and that this might partially
explain Egypt's inflexible attitude in the UN meetings. Malik also
charged that an effective unholy alliance existed between E is
fanatical nationalist leaders and the Communists.
Comment: The increasing troubles in Egypt in the past three months
have promo ed closer relations between Egypt and the USSR. Frequent
Egyptian abstentions on East 11Pest issues in the General.l~ssembly meetings
seem to confirm a November report that the two countries had reached
a tacit understanding to aid each other's objectives in the United
Nations.
25X1
2. SYRIA. Syria again 'presses for Atiierican military aid: Army thief of
~af`~` Shis a recen y o e it ac a in amascus that
deliveries of American arms were urgently needed by Syria. He
warned that Syria could nat maintain a pro Tl~estern course of action on
promises alone, even though Syrians could recognize the value of .cooperating
with the ~est,~ He added his hope that any arrangements for US arms
would not be subject to either British. or French approval.
High-rarikinr~ Syrian officials hive also conts.cted the Turkish
Military Attache in Damascus in an effort to obtain Turkey's,ass~.stance
in romotin US su ort for the present Syrian Government.
Coommento Recent internal troubles in Syria, arising from the.
government s ban on IVIoslem Brotherhood activities, may have spurred the
Syrian request for US arms .....France is the only nation which supplied
$yria_with a substantial amount of military equipment during the past year.
Shishakli, while insisting that he is interested in aid for Syria, has
been consistently seeking military equipment to strengthen his~ovrn
posi-tion.
3. INDIA. Soviet cinema workers to participate in International Film
eF~ivala A group of Sovie cinema workers and directors, led.by the
Deputy, Minister of Cinematography, Nikolai Semenov, left Moscow on lb
January to take part in the International Film Festival at Bombay from
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Comments Soviet interest in India has become more apparent in
recent months; Over 80 Soviet citizens arrived in India in l~ovember
and December 1951 to attend the International Statistical, Conference and
to set up the IISSR pavilion for the Int~rnati.onal Industries Fair.
At that time, it was reported that 1L~. more -Rassiahs were expected in
.India for the Film Festival. ._
~#. NEPAL. Government outlaws the Communist Part On 25 January the
Nepalese Government outlawed the~unist Party of Nepal, accusing it of
reactively supporting and participatiri in the revo,l.t'~ which occurred on
the night of 22 January.
25X1
Comments During the last few months the Communist Party has been
increasingly active in Nepal. It recently began to operate overtly.
The fact that it has now been banned indicates that its connection
with abortive revolt has been established to the satisfaction of the
Nepalese Government.
5?
25X1
Ne alese army re orted immobilized b aa.ture of arsenals. Reports
received by the overnment of India state that Nepalese army ur~ts.in
Katmandu were immobilized when insurgents tem oraril ca tured their
two e:rmories during the night of 22 January.
Comments This strongly suggests that mils.tary units in Katmandu,and
probably a~smaller posts throughout the country, ordinarily keep the
bul'~ of their weapons in storage. Nepal thus app?ars +..o be extremely
vulnerable to surprise attack from local insurgents or Tibetan forces.
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7, Leftists continue attacks on MS~Ix In an open letter to the US Embassy
in Rangoon the pro-Communist Peoples and Workers Party accused the US of
using the Mutual Security .Act to undermine ffurma's neutral foreign policy
by obliging it to accept terms v~hich ~rould bind it to the :American
'"power bloc"` against the Communist "'democracies." The Embassy comments
that this letter, v~hich is devoid of the usual Communist epithets,
reflects the doubts of many non-Communist Burmese; it believes that
the BWPP deliberately used a restrained tone in order to pose as the
,.~`? defender of Burmese neutrality rather than as the spokesman of international
Comment: The effect.,veness of this approach is indicated by the state-
ment made by the Acting Foreign Minister that this letter Baas an example
of the difficulties the political opposition can make over the MSA
requirements. Meanv~~hile, the government's delegate to the ECAFE Committee
on Industry and Trade, ~+rhich is currently meeting in R~angoon~ expressed
dissatisfaction vrith the terms imposed by countries offering technical
assistance to underdeveloped areas.
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officers known to the Consulate,
g. INDOCHINA. Morale of French troops in Tonkin declines: Several
French officers in Tonkin who are on close personal terms with US
consulate officers have expressed concern at current heavy French
casualties which they believe are double +.hA official figures.
They are also disturbed at the growing unreliability of ~ietnamesg
troops, and at the increasingly effective artillery of the Viet Minh.
The.CorLLsulate comments that the Viet Minh appear at least for the time
being to have assumed the initiative, and that continued Viet Minh
pressure has, taken on a quality of "'endlessness"` in the minds of F:i^~nch
Comments The "'endlessness" of Viet Minh military pressure depends
on two conditions: material and technical aid from Communist Ghina, and
the raising of troop replacements and food supplies fox the Viet Minh
army from y~aithin the delta perimeter nominally held by French-Vietnamese
forces. The French are making a maximum effort by air strikes to
check the flow of Chinese Communist aid to the Viet Minh. Their failure
hovuever, to create a strong, self-governing Vietnamese government has
apparently permitted infiltrating ~Tiet Minh units successfully to recruit
soldiers and obtain food in the heavily-populated, rice-rich T-onkin
delta.
25X
11. Eve witness reports groduce no evidence of mm~'n t Chi i
The US Consu G
125X1
e movemen o roops an supp ies in the direction of
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been small, During becember, most of the troops 2 5X1
were moving away from Indochina. diver freight movement was below the
pre-Communist level, Local Chinese Communist propaganda regardin
Indochina has been almost nil durin the ast several months. 2 5X
Comments .Although concentra+?ions of Chinese Communist troops have
increased in specific areas near the Indochina border during the past
month,_there does not appear to have been any over-all build-up in
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12. Freneh may re-examine auestion of Chinese Nationalists interned
in Indochina: The French Foreign Office, according to its Far Eastern
division chief, has sent a note to Associated States Minister Letourneau
asking him to look into the matter of the Chinese Nationalists interned
in Indochina. The same official states that Indochina Commander in Chief.
Salan is inclined to favor the release of the internees but will not su -
gest any procedure to achieve this end. 2 5X
Cowmen : The French authorities have long hesitated to release or
repatriate to Formosa the 30,000 Nationalist internees for fear of pro-
voking the Chinese Communists.
13. Resbonsibilit for r cent Sai on bombin s un er ain: 2 5X
1 the 25X
an - ommunis guerre a ea er olonel Trinh Minh The was responsible
for terrorist explosions which took place in Saigon on 9 July. However,
the Viet Minh in a 22 Januar broadcast took-credit for the explosions.
25X1
Comment: Assignment of responsibility for these latest acts of
terrorism is further complicated by claims broadcast by Colonel The on
his radio that he was responsible. Colonel The is the leader of a
"Third Force" which is both anti-French and anti-Viet Minh.
1/r? CHINA. Plan to enlarge Chinese Communist armored force reported: As of
mid-1951 the Chinese Communists had a plan to enlarge their ,armored Force
Command to ten divisions of "'modern armored force troops" by the end of
2 5X1 1953, Five armored divisions
and our in epen en armored regiments were to have been organized by the
end of 1951, and five more divisions by the end of 1952 '-- four of the
last organized around the independent regiments. During 1953 the combat
2 5X1 strength of each division is to be increased each re invent receivin
three additional tank companies.
Comment: Since the establishment in the summer of 1950 of a Chi-
nese Communist Armored Force Command, intensive efforts reportedly have
been under way to establish a modern armored force. Equipment, instruc-
tors, and advisers are believed to be supplied by the Soviet Union.
By the end of 1951 three armored divisions were known to exist in the
Communist forces and a fourth reportedly ryas being organized.
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16.
5X1?
during the first half of December the
pu ~.c secur y an a or min series sent L~3,000 unemplo ed ersons and
political prisoners to forced labor Damps in Sinkiang.
Commen : Soon after the Chinese Communist occupation of the strategic
border areas of Sinkiang and Tibet, improvement of communications there
received priority, Probably the plentiful supply of Chinese slave-labor
resulting from the continuing purge of "counter-revolutionaries" has been
utilized for road-work in outlying areas, though such a program v~aould be
limited by food supplies. Over a period of time a forced Chinese migration
to Sinkiang would have the effect of creating a closer and more genuine
connection that has heretofore existed between that province and China
proper.
17. Macao announces export control r?~ulations: Regulations announced
by Macao on 2? January provide for a system of permits governing imports
and exports, A Commercial, Statistics Committee is set up to control the
import afid export of strategic goods. Businessmen whose applications to
import or ex ort Dods are disc roved b the Committee may appeal to the
25X1 Governor.
Comment: Portuguese measures to control Macao's trade with Communist
China have come in response to pressure from other Western European govern-
ments, The imposition of increasingly effective trade controls by other
areas, particularly Hong Aong, has diverted considerable commerce to Macao.
The long experience of Macao businessmen in carrying on covert commerce and
the widespread participation of Macao officials in this clandestine trade
are important factors which will tend to neutralize the effectiveness of the
Portuguese controls on exports to China,
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18. Communists on border use loud-sneakers. to denounce Hone Kong Govern-
. went: The Political Adviser to the Hong Kong Government states that,. since
the deportation a week ago of eight pro-Communist film workers, the Chinese
Communists on the Kwangtung side of the border have directed a stream of ac-
cusations against the Hong Kong Government for several hours daily through
loud-speakers aimed at the Hong Kong side of the border. The American Con-
, sul General confirms an earlier press account of the statements of five de- 2 5
portees, heard over the Canton radios that Hong Kong is an integral part of
Chine and that the de ortees would return in the "not distant" future.
25X1
Comm s These developments are consistent with earlier and otherwise
unsubstantiated reports that the Peiping regime, following the Truman-
. Churchill talks, would adopt a harder line toward the UK, including action
against Hong Kong. The statements of the deportees are the most menacing,
so far as is known, ever to have been publicly attributed to Chinese
personages. Nevertheless, no important Chinese Communist official or organ
has yet made such statements directly, and there are no indications of an
imminent assault on the colony.
19. S vi t advisers i Canton re ort dl un o ars 25X
25X1 Soviet advisers in a ci y,
now estimated at ,000, are extremely unpo ular" throu hout Kwan tung as
a result of their high standard of living. at 2 5X
least 2 Russians were murdered in Canton during 1951. 2 5X
25X1
Comment: Soviet advisers and technicians in the South China area have
been more reliably estimated to total perhaps 1500, of whom some hundreds
have been located in Canton, Many sources have reported the unpopularity
of the Russians, which was indirectly admitted by Peiping in its recent
campaign to induce the Chinese to "love" the advisory-technical personnel.
2 5X1 It is im ossible to confirm rumors of Russians murdered in China, as
he Communist press
cannot a expected to admit such occurrences,
20. JAPAN. ~4Y~ officiate de~,v authorizing_,coal exports to Japan: According
to Jiji press service, the Soviet Mission in Tokyo on 25 January denied
reports that the Soviet Government had authorized the export of Sakhalin
coal to two Japanese trading firms. K. Tanaka, President of the Japan-
. Soviet Trading ('ompany, visited the Soviet Mission to discuss the reported
coal deal, and the Communist officials said further that no commitment had
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Comment: Soviet representatives have been following for the past
several months the pattern of dropping negotiations before they can be
consummated. A recent Japanese press report states that Japanese Indus
trial representatives will confer informally with the Soviet Mission on
29 January regarding trade between the two countries.
25X1
21. Japanese Government perturbed over ROK proclama ion of sovereignty
over seas surrounding Korea.: Political Adviser Sebald avers that the
Japanese Foreign Office is "greatly disturbed" over Syngman Rhee's procla-
mation of sovereignty over seas adjacent to the Korean Peninsula. A
conference of Japanese vice-ministers was to be convened on 23 January
to discuss possibilities of Japanese action against this proclamation "which
is obviousl directed a ainst Japanese fishing activity."
Comments This unilateral declaration by Rhee, which encompasses an
overlarge area of water adjacent to Korea, was taken despite the fact
t-,hat the fisheries problem is included on the agenda of the Japanese-
Korean talks currently in progress, The Japanese view Rhee's claim as
being not only contrary to international law but also as prejudicing the
pending fishery negotiations with Indonesia and the Philippines in vahich
the principle of freedom of high seas fisheries will be demanded by Japan.
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1. GERMANY.. Chancellor Adenauer rejects contractual security controls:
Chancellor Adenauer toid.the.Allied High.Commissioners.on.22 January.that
Germany is willing to accept security controls in the form of restrictions
on arms productions but did not grant. this written into an annexed convention
to the General Agreement, Adenauer stated this in response to the French
High Commission's query as to trhen the Federal Republic tirould submit its.
promised proposal on security controls, In reply' the French High Com-
missioner accused Adenauer of trying to~renounce the proposed convention
on security controls and of thus endan erin the whole s stem of con-
tractual arrangements
Comment: During the past few weeks the French and West German re-
presentatives had been conducting bilateral negotiations without success
in an attempt to resolve the question of security controls Allied dip-
lomats in general regard the current German stalling as an effort to secure
further concessions.
2. East Germans call rejection of Berlin trade permits a "mistaken;
East German off icials.have.informed.the.West.German_Government.that.the
recent return of large numbers of unstamped West Berlin export permits was
a "mistake" on the part of the Soviet and East German authorities. The
Communist officials maintained that the "rejections" z~rere merely an attempt
to clear up the entire backlog of export permits held by theme prior to the
establishment of the planned joint East West German procedure for handling
the permits,
US .officials now do not regard the Communist action as causing a new
crisis US High Commissioner McCloy states that if further evaluation
supports the Communists' explanations the Allied High Commission may soon
permit the West Germans to resume interzonal trades
3e FR.ANCE, French irked at US position on Saar issue: The French Foreign
Office is "not only adamant but apparently impatientn to give diplomatic
status to its representative in the Saari despite American requests for a
delay. The French do not agree that this is a particularly bad time for
such a moves and probably sus ect that the US sition may be evolving in
favor of the Germans
Comment: Although replacement of the French High Commission by an
embassy would have no practical effect on its relations with the Saar9
France wants to establish the basis for a permanent political separation
of the Saar from Germany bef ore the German contractual arrangements are
completed. The French fear that the Saar9s return to German political
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control would deprive France of the Saarts economic assets, and they have
been trilling to risk immediate political difficulties with Germany in
order to avoid this long-term economic loss.
AUSTRIA. Chancellor sees no drastic change in Soviet occupation polic~r:
Chancellor Fig1 and Minister of the.Interior Helmer.received a chilly
reception at their latest conference with the Soviet Acting High Com-
missioner and his new political adviser. The latter berated the Austrian
?Goverrunent for "provocative, untrue, and dee~itful" press announcements,
alleged the beginning of a neEa anti-Soviet campaign, and then refused to
discuss the matters furthere The Chancellor, hotiaever, insisted on his
privilege as "chief of government of a free country" to debate these
points, and after some moments, the Soviet general yieldede The interview
then proceeded, despite a number of Soviet warnings, to an amicable ending.
The Chancellor sees no signs of a drastic change in Soviet occupation
policy, but believes that the Soviet Headquarters desires to reduce tensions
as a cover for sub rosa activities in Austrian
Comments Figl~s periodic meetings ~,aith the Soviet High Commissioner
are closely watched for indications of Soviet attitude toward the Austrian
Government. Since these discussions are usually confined to specific
instances of Soviet displeasure or Austrian protests over Soviet, unilateral
interference, probably unwarranted attention is devoted to the prevailing
atmosphere in which such meetings take place. Figl has a reputation for
"knowing how to deal" with the Russians -- and is no doubt not averse to
acquainting foreign observers with his skill in this respect.
5. 1'I'ALY. Government approves record defense budgets The Italian Government
has approved a record .defense .budget for 1953 of 9S0 million dollars, a
200-million-dollar increase over the previous year's expenditures.. This
budget, however, does not meet fully the TCC?s recommendations for the ,
1953 Italian defense effort, Furthermore, Italy i;s making the implementation
of its defense effort for 1953 conditional on further US aid. Full com-
pliance trith the recommendations has been .prevented by the unexpected ex-
penditures due to the recent floods9 the government's awareness of its de-
teriorating political position, and pressure from the democratic Socialists
and leftwing Christian Democrats,. as well as Communists, for greater social
expenditures.
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Tlie Italians notir ? say that implementation of the 1953 defense budget
depends upon a level of economic aid adequate to meet the balance of pay-
ments deficit, an increased flow of items for military end use, assurances
of the supply of necessary raw materials9 and assistance in the solution
of manpower problems through emigratione
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7. ICELAtv'D. Death of President .~rithout imrr~ediate political repercussions;
Sveinr~. B j brnsson, .President . of . Iceland .since .1gL~L{,, .died . on . 25 January.
He eras elected relent in 19L,,1, beca-~e tine first President of the in-
depeizdent republic of Iceland in 1g1~,L,, and bras elected without o ositi on
for tiro four-year ter?;ls in 1~~.5 and 1919,
Conmients Sveinn Bjornsson wad a non-political president rho si~illfully
handled the party leaders 'out consistently rerna.ined aloof from all sub-
s ~a~nt~_vo political issues, Since the _l_aw does not reciuire an isn~snecli ate
election to fill the vacancy, no political crisis is imminent. 1r~hile
several political party leaGers G~'e i.notan to have a.spirr.~tions for the
presidency9 no evidence of actual candidates is yet available.
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l0d PANAMA.. Panama-registered vessel sold to Czechoslovakia;. The Panaznanian-
flag Evanthia 6/.1.9 GT y ~~rhich bras previously owned by Union Maritime and
Shipping Coo of London has been sold to Czechoslovakia and renamed Re blikao
This is the first and onl Czechoslovak merchant ship, 2 5X
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Comments The Panamanian Government has taken no apparent action on a
la~?r or decree to prohibit the sale to the Orbit of Panama-registered vessels9
as was suggested by the US State Department last Octobero
11o End of student strike eases tensions The educators strike committee
issued a statement on 22 January calling.an end to the school strike in Panama. 2 5X
The strike had failed to attain its announced aim of precipitating changes in
the Panamanian Cabinete Its end should for the present at least lessen
the likelihood of disorders and reduce agitationo
Comment: The student strike' in Grhich Communist participation was obvious
began last Octobero It was the chief basis for the Foreign Minister's.ex-
pressed fears that international Com~m~n-ist strategy was centering on Panamao
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12. NICA~AGUAe Government bars cotton sale to Czechoslovakia; Czechoslovakia
has offered to buy %dicaragua~s entire.current.cotton crop, The Nicaraguan
Government has re'ected the offer and has ohibited all cotton exports to
Czechoslovakia.
Comment: The above restriction on the export of cotton is in con-
f ormance tirith a law adopted by Nicaragua last ?etober in harmony tirith the
Item Amendment.
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