CRITICAL SITUATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000300170001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 21, 2016
• Document Release Date: September 10, 2007
• Sequence Number: 1
• Publication Date: December 16, 1954
• Content Type: REPORT

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This report consists of two
parts. The first includes items
on situations where serious de-
velopments may occur in the short-
range future.
The second.part consists of
status reports on other critical
areas where adverse developments
are not expected immediately.
16 Dec 54 CRITICAL SITUATIONS Page 2
ARMY review(s) completed.
State Dept. review completed
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r
C O N T E N T S
Door May Be Open
For "Deal" on Airmen . . . . . . . . . Page 5
Chances are Peiping will agree to Ham-
merskjold's visit to discuss the 11 American
airmen. Prospects for an early release of the
airmen are poor. The door apparently remains
open for an eventual settlement, however.
Saar Issue Causes
French-German r sis. . . . . . . . . . . . Page 6
Differing interpretations of the Saar
agreement caused a crisis this week between
Paris and Bonn. The Saar issue continues to
be the principal threat to ratification of
the Paris accords.
New Soviet Moves Possible
Against
aris Agreements . .
. .
.
Pa
e 7
. .
.
g
The
tactics i
USS
n a
R may employ a w
n attempt to blo
ide
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variety of
atificatio
n--
andimplem
ent
ation--of the Pa
ris
agreements
.
Indochina
Way Be
MA
a
AG Personnel
enge . . . . .
. .
. . . . .
. Page 9
The truce supervisory commission may
soon investigate the arrival of American
MAAG personnel to determine whether the new
arrivals increase the American personnel
over the number present when the cease-fire
was signed.
"Reconciliation" Plan
Seen En angering Laos . . . . . . . . . . Page 10
The new Laotian premier plans a recon-
ciliation between the royal government and
the Pathet Lao which might prove to be the
opening wedge for Viet Minh penetration.
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Communists May "Fake"
An "All-Korean'l-Conference . . . . . . . . . Page 11
No official South Korean delegates are
likely to attend the preliminary "unification"
conference which North Korea has scheduled
for 17 December.
Threat of Subversion
Seen on Formosa . . . . . . . . . . . . . . Page 12
There is some reason to question the
general belief that subversion is not a
serious danger in Formosa.
Nasr Regime Alienating
Egyptian Masses . . . . . . . . . . . . . . Page 13
The RCC is relying increasingly on police
measures to maintain itself in power. Tension
is mounting and public disorders are possible.
Status Reports
On OtHer Critical Areas . . . . . . . . . . Page 15
16 Dec 54 CRITICAL SITUATIONS Page 4
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Door May be Open
For "Deal" on USAirmen
Chances are that Peiping will agree to UN
secretary general Hammerskjold's proposed trip to
discuss the fate of the 11 American airmen sen-
tenced as "spies" and other detained UN personnel.
Peiping may be expected to try to exploit the visit
to enhance its prestige, to make a more effective
presentation of the "spy" case, and to air Communist
China's other grievances.
Regardless of whether Hammerskjold goes to
Peiping, all information on the Chinese Communist
position suggests that prospects are poor for an
early release of the airmen.
Peiping's prestige has been heavily committed
in the "spy" case. The Communists have publicly
stated that "the Chinese people are firmly resolved
to punish the American spies regardless of UN action,
At the same time, the door apparently remains
open for an eventual settlement, presumably on a
quid pro quo basis.
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Peiping could be expected to show Hammerskjold
its exhibit of alleged American "espionage" equip-
ment, and some of the airmen may have been suffi-
ciently "brainwashed" for the Communists to risk
displaying them? Should any American overflights
take place during the visit, Peiping could be ex-
pected to make a strong effort to shoot down such
a plane and produce another exhibit.
Saar Issue Causes
French-German r sis
Differing interpretations of the text of the
Saar agreement continue to be the sticking point
for ratification of the Paris accords,which, except
for this essential element, seem basically acceptable
to both parliaments.
The tactics agreed on by Chancellor Adenauer and
Premier Mendes-France on 23 October, according to
which each would interpret the text differently to
his people and parliament, failed to accomplish their
purpose. The "preamble" to the German bill ratifying
the Saar agreement roused too much opposition in the
French Assembly and the corresponding "brief" then
attached to the French bill so incensed Adenauer that
he threatened on 13 December to withdraw the Saar bill
from the general ratification debate scheduled for two
days later.
The main point at issue remained the question of
whether the agreement would be subject to revision in
a peace treaty, as the Germans wish,
Failure of the methods used originally to rally
maximum legislative support does not necessarily mean
the agreement will be defeated.
In any event, the chances for ratification of
the agreement have rested primarily since October on
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the recognition by both parliaments that the
Paris accords, as a matter of practical inter-
national politics, represent a single "package."
New Soviet Moves Possible
Against Paris Agreements
The USSR will intensify its attacks on the
Paris agreements as the date--20 December--approaches
when the French assembly opens its debate on ratifi-
cation. Moscow's principal purpose will be to con-
vince the French that their national interests will
be best served by rejecting the agreements.
Possible Soviet pressure tactics could include
the following courses of action:
1. A note to the Western powers accepting
the "Eden plan" of the Berlin conference as a "basis
for discussion" for a German settlement,
2. A note restating the Soviet position on
Germany, Austria, and European security, but with
the introduction of a new element in the form of a
proposal to conduct German elections on the "Indo-
china formula" provided for in the Geneva agreement.
3. An expression of willingness to resume
negotiations on Austria, possibly with acceptance of
time limits for troop withdrawal as recently suggested
by Mendes-France.
The USSR might also resort to tougher actions--
although this is less likely--such as the following:
1. An announcement that French ratification
of the Paris agreements would be regarded as abrogation
of the French-Soviet treaty of 1944.
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2. Harassment in Berlin designed to generate
Western fear that ratification would lead to a Com-
munist attempt to force a Western withdrawal from
Berlin.
3. Announcement that the USSR and the Satel-
lites are going ahead with the military defense
measures outlined at the recent Moscow conference.
4. East German moves toward establishing
"national armed forces."
5. An all-out drive by French Communists to
upset ratification through an attempt to defeat
Mendes-France by calling a political strike and
demonstrations to produce a state of general chaos
and breakdown of civil order.
6. Increased Soviet support of Chinese Com-
munist belligerent threats and actions in the Far
East to generate Western fears of general war and to
inject a divisive issue within the Western coalition.
7. Threat to break off disarmament nego-
tiations.
8. Heavy increase in "atomic scare" propa-
ganda.
There are no clear signs that the USSR plans
to make any substantial concession or threat in a
last-minute attempt to head off ratification in
Paris.
It is likely that Premier Mendes-France will
make further demarches to Moscow similar to his
recent one on Austria in an attempt to gain some
assurance that further talks on European issues
will be possible after ratification. This is pre-
cisely the assurance that Moscow intends to avoid,
because it realizes Mendes-France would use it to
further his campaign for ratification by the assembly.
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Indochina MAAG Personnel
May be Challenged
The truce supervisory commission in Indochina
may soon investigate the arrival of American MAAG
personnel.
The articles of the cease-fire agreement re-
lating to the rotation of military personnel are
subject to varying interpretations. General Collins
believes they do not restrict American personnel to
the number present on the date the agreement was
signed.
The commission is undertaking closer super-
vision of the China border, however, and to balance
this may strictly interpret the cease-fire as re-
gards American military personnel.
The French, meanwhile, are continuing efforts
to establish relations with the Viet Minh of a
sort to make possible the preservation of French
interests in Indochina, whatever its ultimate
fate. This program includes pressure on the United
States to approve shipment of strategic materials
on behalf of a French-owned transportation company
in Hanoi. One French official is even suggesting
the possibility of French air and naval bases within
a completely Communized Vietnam.
Hopes have drastically declined that Diem will
prove capable of providing the sort of leadership
the situation in Vietnam requires. His frustration
of Phan Huy Quat's desire to head the Defense
Ministry is forestalling army reorganization and an
improved pacification program.
The Viet Minh's freedom to conduct subversive
activity in the south is practically unchallenged
in many areas.
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"Reconciliation" Plan
Seen n anger ng Laos
The new Laotian premier, Katay Sasorith, is
planning to effect a reconciliation between the
royal government and the Communist-backed Pathet
Lao organization. In view of the conviction of
most Laotian officials that the Pathet Lao are
"not really Communists," such a reconciliation
might prove the entering wedge for Viet Minh
penetration of the Laotian government.
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Communists May "Fake"
n "All-Korean'T Conference
No official South Korean delegates are likely
to attend the preliminary "unification" conference
which North Korea has scheduled for 17 December at
Kaesong. It is possible that renegade South
Koreans who have fled to the north will "represent"
the south.
The conference, which has been called to dis-
cuss the restoration of mail and other communica-
tions between the north and south, is part of
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Pyongyang's current intensive drive for new talks
on unification. Pyongyang's objectives are to
capitalize on Korean desires for a unified nation
by demonstrating its willingness to hold talks, to
convince the world that South Korean stubbornness
is responsible for the continued division, and to
open the borders for political subversion.
Rhee has often threatened to hold such talks
with the Communists, as a means of exerting pres-
sure on the United States, but he is not likely to
do so unless his relations with Washington
deteriorate further.
Threat of Subversion
Seen on Formosa
There is some reason to question the general
belief that subversion is not a serious threat in
Nationalist China currently or in the foreseeable
future.
Peiping's propaganda has continued to suggest
that further preparations are necessary before a
full-scale amphibious assault on Formosa can be
launched. In the meantime, there has been a
great increase in propaganda aimed at inducing
defections from the Nationalist ranks.
Factors tending to depress Nationalist morale
include: (1) the dimming of hopes for an early
return to the mainland; (2) continued inaction by
many once important political and military leaders;
(3) prolonged austerity with no prospect of relief;
and (4) a continuing divergence in goals between
the Nationalist government and the native Formosans.
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Certain actions within Communist capabilities,
short of an invasion, might seriously aggravate
Nationalist morale problems. These include:
(1) Communist capture of offshore islands; (2) air
attacks on Formosa; and (3) an assassination
attempt against Chiang Kai-shek or other
Nationalist leaders.
Nasr Regime Alienating
Egyptian Masses
The recent execution of six Moslem Brother-
hood members and the continuing trials of others
are strengthening the opposition to Prime Minister
Nasr and his regime. Although this opposition is
not yet organized, tension has increased with the
dissemination of propaganda attacks on the regime
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by the Brotherhood, by the former Wafd party, and
by the Communists, and public disorders are possible.
The Revolutionary Command Council's reprisals
against the Brotherhood have loft the regime little
choice but to rely increasingly on police measures--
which threaten further to alienate the Egyptian
people.
The American embassy reports that Colonel Nasr
himself has increasingly withdrawn from public
appearances since the attempt to assassinate him on
26 October. This contrasts significantly with the
RCC members' previous practice of making themselves
accessible to an unprecedented number of Egyptians.
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Status Report
On OtherWrITical Areas
Chinese Offshore Islands; The situation in
the Chinese offshore islands has been quiet for the
past three weeks but heavy spellings and bombard-
ments of any or all of the islands and amphibious
assaults on one or more of them are possible at any
time.
There will be a continuing Chinese Communist
submarine threat against the American Seventh
Fleet, and more particularly against the National-
ist navy.
Korea: President Rhee hopes to evade or re-
negotl-a-fe-the provisions of the American-South
Korean aid agreement. Recent statements and
actions by South Korean leaders make it clear that
Rhee signed the agreement merely as a tactic to get
the $700,000,000 aid program under way.
French North Africa: The French program for
inducing the Tunisian ellagha (quasi-military
outlaw bands) to surrender has apparently succeeded
in large measure but has not solved the greater
problem of North African dissident activity.
U.Nu Visit to China: The American embassy in
Rangoon describes Burmese premier U Nu's visit to
Communist China as a propaganda victory for
Peiping. The embassy observes that Nu's praise of
the Mao regime went "far beyond the demands of
either courtesy or coexistence."
The Burmese leader repeatedly assured the
Chinese of his country's good will, stressing
Burma's inability to interfere in China's affairs.
Such action, he said, would be like that of
"a small goat wandering aimlessly among elephants."
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The total effect of Nu's trip will be to
raise hopes for coexistence and to encourage
complacency toward the threat of Communist
aggression--a complacency which the Burmese had
been in the process of shaking off.
Chile: The prolonged government crisis con-
tinues. The press predicts that the Senate will
act on 22 December on the legality of President
Ibanez' decree of 20 September establishing a
state of siege.
Syria: Syria is "the most worrisome spot in
the soused Middle East," in the opinion of re-
sponsible British observers in the area. A Com-
munist takeover is not imminent but the overthrow
of Prime Minister Faris al Khouri's weak govern-
ment might, if it did not provoke a rightist mili-
tary coup, bring to power a coalition in which
the Communists would play a powerful part.
Indonesia: Moscow continues to cultivate
Indonesia as as "neutralist" friend.
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TICAL SITUATIONS
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Ph Chanan In :'nte. Weekly Report
16 December 1954
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Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
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TOP SECRET F/~
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