CRITICAL SITUATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000300170002-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 21, 2016
• Document Release Date: July 20, 2006
• Sequence Number: 2
• Publication Date: April 17, 1999
• Content Type: REPORT

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This report is divided into
two parts:
The first consists of items
on situations where developments
may occur in the near future.
The second part consists of
status reports on other impor-
tant situations where critical
developments are not expected
immediately.
State Dept. review completed
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C 0 N T E N T S
PART I
USSR TAKING TOUGH LINE
AGAINST PARIS AMMIff . . . . . . . . . . . Page 6
All signs point to a continuation of
Moscow's tough line on the Paris agreements.
OVERTHROW OF MENDES-FRANCE
. . . . . . . . . Page 8
Premier Mendes-France's government is
likely to fall early next year. The French
assembly will probably approve the Paris
agreements but make their implementation
contingent on a solution of the Saar problem.
DIEM'S POSITION
EXTREMELY-S= . . . . . . . . . . . . . . Page 9
New friction between South Vietnam's
Premier Diem and the sects is almost certain
in the next few weeks. Diem's position is
extremely shaky.
COMMUNISTS GAINING
IN INDONESIA . . . . . . . . . . . . . . . . Page 10
New gains by the Indonesian Communists
seem certain. They are threatening to call a
general strike against foreign estates early
in 1955.
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EGYPTIAN REGIME SUFFERS
SUDAN* SETBACK - IN . . . . . . . . . . . . . Page 11
Egyptian efforts to achieve political
union with the Sudan have suffered a serious
setback and grave repercussions are possible
in Egypt.
US OIL COMPANIES INVOLVED
IN NEW BRITISH-ARAB D15 TE . . . . . . . . Page 12
American oil companies are involved
in new differences between Britain and
Saudi Arabia over operations in disputed
territory along Saudi Arabia's frontier.
VIET MINH MAY MOVE
AGAINST HAN01 CONSULATE . . . . . . . . . . Page 13
The Viet Minh may soon take action
to force the closing of the American
consulate in Hanoi.
ROK THREATENS COMMUNIST
MEMBERS OF TRUCY, TRIM9 . . . . . . . . . . Page 14
President Rhee may soon order violent
action against Polish and Czech members of
the UN armistice inspection teams in South
Korea.
PEIPING EXPECTED TO ASK
HIGH PRICE FOR US AIRMEN . . . . . . . . . Page 16
UN secretary general Hammarskjold is
due in Peiping early next month. Chou En-lai
is expected to ask a high price for the
release of the American airmen.
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STATUS REPORTS
TI ONS . . . . . . . . . . . . Page 17
Chinese Offshore Islands
Viet Minh "Refugee" Movement
Japan
French North Africa
Finland
Anti-Soviet Emigres
North Korean Conference
Greek Crisis
Satellite Security Shake-ups
Subversion on Formosa
Guatemala
Chile
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USSR TAKING TOUGH LINE
AGAINST PARIS RD
All signs point to a continuation of Moscow's
tough line in dealing with the Paris agreements.
Orbit diplomacy and propaganda are expected to con-
tinue to work overtime in attempts to convince the
West that ratification will force Moscow to take
the countermeasures outlined during the recent Or-
bit security conference.
Even conditional ratification by France will
probably be the signal for putting some of these
countermeasures into effect. Likely developments
include the following:
Calling of a new Orbit security conference.
Announcement that a unified Satellite command
had been formed.
Announcements implying a build-up of Orbit
military strength and further deployment of Soviet
divisions to the Satellites.
Announcement that for every West German divi-
sion formed, a counterpart division will be formed
in East Germany.
Bellicose declarations of Soviet capabilities,
including greater emphasis on nuclear strength.
In an effort to use both hard and soft measures
to influence Western opinion, the Kremlin may be
considering the proper timing for a soft overture.
Among such possible overtures would be a renewal of
previous proposals that all occupying powers in Ger-
many withdraw their troops. An announcement of this
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sort would, however, have almost no propaganda value
in Germany.
In Berlin, the most likely place for the USSR
to apply concrete pressure, harassing action may oc-
cur before West German ratification in an effort to
.lend weight to Soviet threats.
There are some signsthatprogress toward German
rearmament is causing some strain among the Soviet
leaders as they approach the point where a critical
review of their policies since Stalin's death may
be necessary.
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OVERTHROW OF MENDES-FRANCE
LIKELY EARLY NEXT
While it is our best guess that the French
assembly will approve the Paris agreements, it is
probable that implementation of the accords will
be made contingent on solution of the Saar problem.
Premier Mendes-France's government is likely
to fall early next year, however. Many deputies
who have long been hostile to the premier have
wanted to wait until the accords were ratified be-
fore overthrowing his cabinet.
The premier's regular supporters continue to
have about 25 votes fewer than a parliamentary ma-
jority, and the opposition has shown increasing
strength in recent votes.
Mendes-France's projected economic reforms
make him particularly vulnerable. A cut in the
subsidy to alcohol distillers will cost him sup-
port on the right; cuts in the social welfare
program and reforms in the nationalized industries
will probably cost votes on the left and center.
Further deterioration of the French position in
Indochina or North Africa would have enough emo-
tional impact to cause his overthrow.
The premier may try to save his government
by again seeking inclusion of the Socialists--
who avoided a similar bid just before Mendes-France
visited the United States in November. If the pre-
mier makes another such attempt, fails, and is
overthrown, another prolonged cabinet crisis is
likely.
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DIEM'S POSITION
'EXTREMELY SHAKY
Renewed friction between Premier Diem and the
sects appears an almost certain prospect in the next
few weeks. Diem achieved a degree of harmony with
the sects by taking their advice on the appointment
of a defense minister--at the expense of a more able
man--but he aims to transform the army into an
effective arm of his government and this would
reduce the sects' autonomy.
Diem is faced with the need to establish new
national economic institutions (banking, customs,
etc.) following the abandonment on 1 January of the
French-dominated, Indochina-wide economic system.
He can publicize this nationalization process as
evidence of his government's independence, but
Vietnamese performance will almost certainly pro-
vide the French new opportunities to point to Diem's
ineptitude. They continue to propose alternatives
to Diem. Their firm opposition to him, combined
with his own failures, leave his position extremely
shaky.
The Vietnamese government plans a campaign in
France to convince the French government and people
that South Vietnam is not prepared to accept general
elections in 1956. The campaign will probably
stress the "illegality" of elections while attempt-
ing to disguise a fear of their result.
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COMMUNISTS GAINING
IN INDONESIA
New gains by the Indonesian Communists seem
certain.
They are threatening a general strike against
foreign estates after 31 December. The government
is aware of the threat to the nation's economy,
but is in no position to deny support to the
laborers' demands, since it needs Communist votes
in parliament.
The Communists also are attempting to win the
present government's sanction for the establishment
of their own paramilitary force.
President Sukarno recently assured our ambas-
sador the elections would be held next summer, as
scheduled, but has failed to go on record publicly
to that effect. He likes the present government
and may support a postponement of the elections
rather than face a change.
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EGYPTIAN REGIME SUFFERS
SETBACK IN SUDAN
Egyptian efforts to achieve political union
with the Sudan have suffered a serious setback as
a result of the present cabinet crisis in Khartoum,
which threatens the existence of Premier Azhari's
prounion government.
Recent events in Cairo, particularly the re-
moval of President Nagib by Premier Nasr, have
lessened Sudanese sentiment for union. Serious
disorders are likely if the Azhari government adopts
highhanded measures to suppress popular demand,
reported to be growing, for complete independence
of the Sudan.
The Nasr regime in Cairo is politically com-
mitted to obtaining union of the two countries
es in the Sudan are the only generally popular
achievement of the regime. Accordingly, a reversal
there can be expected to have severe political re-
percussions in Egypt.
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US OIL COMPANIES INVOLVED
IS NEW BRITISH-ARAB DISPUTE
A new dispute between Saudi Arabia and Britain
threatens to break out along the undefined border
between Saudi Arabia and British-ruled Dhofar in the
southern part of the Arabian Peninsula.
The Saudi government recently protested to Lon-
don against the presence of oil company parties,
with British authorization, in northern Hadhramut,
where the Iraq Petroleum Company has a concession,
and in northern Dhofar, location of.Cities Service-
Richfield explorations.
? A, British Foreign office official warned on 20
December that London would take strong exception to
any Saudi move into the area and expressed the hope
that ARAMCO would not become involved.
If ARAMCO should refuse a request by the king
to enter this region, the Saudis might denounce the
? company for failure to fulfill its contract. ARAMCO
entry into the area, however, would probably precipi-
tate a crisis with Britain similar to that of last
May when ARAMCO--under Saudi pressure--entered British-
claimed Trucial Coast territory in connection with
the old Buraimi dispute.
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VIET MINH MAY MOVE
AGAINST TIANOI ULATE
The Viet Minh's anti-American propaganda,
which now fills half the Hanoi press, may soon
develop into something more concrete. A mass
demonstration against "American imperialism" is
reported being organized to take place in Hanoi
before the end of December. A direct move to
close the Hanoi consulate is a possibility
although more subtle measures against it appear
probable. The consulate has no legal access to
Viet Minh currency and its present supply will
last only until early January.
The Viet Minh may also make a new request
that the truce commission investigate the numbers
and activities of MAAG personnel in the south.
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ROK THREATENS COMMUNIST
MEMBERS OF TRUCE
There is an increasing possibility that
President Rhee will order violent action soon
against the Polish and Czech members of the
Neutral Nations Inspection Teams in South Korea.
The likelihood of such action in the near future
has been increased by the ROK provost marshal
general's statement on 22 December that the time
for warnings had come to an end and that the
Korean people insisted on positive action to remove
the Communist "spies" now serving on the teams.
Renewal of the threat of action, postponed in
late November, is a reaction to the failure of
American diplomatic efforts to induce the Swiss
and Swedish governments to terminate the teams'
activities.
Any official South Korean move would immedi-
ately precipitate a crisis with the UN Command,
which has repeatedly warned Rhee of its obligation
under the armistice to protect the teams. For this
reason, any incidents are likely to be carried out
by groups of "patriotic youths" or "disabled
veterans" as "expressions of outraged popular will,"
for which Rhee could disclaim responsibility. Inci-
dents last summer, involving shootings and homemade
bombs, led General Taylor to emphasize the impossi-
bility of ensuring the absolute security of the teams.
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It is possible that the renewed Korean threats
represent only an attempt to pressure the UN Command
into removing the teams. However, the possibility
that Rhee may order action against them is enhanced
by his need to divert attention from his current
domestic political difficulties.
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PEIPING EXPECTED TO ASK
HIGH PRICE FOR US AIRMEN
UN secretary general Hammarskjold plans to
arrive in Peiping in early January after confer-
ences with British and Indian officials in London
and New Delhi.
Hammarskjold's request for an audience with
Chou En-lai has already raised Peiping's prestige,
and there seems some chance that the UN official
will come to believe that Peiping has a good case
against the American airmen. Peiping has publicly
boasted that it will persuade Hammarskjold "beyond
the shadow of a doubt" that the airmen are guilty.
Peiping's propaganda, while denying UN compe-
tence in the case, has apparently left room for a
negotiated settlement. The Chinese Communists may
make an opening bid, through Hammarskjold, to
settle the case if the United-States makes con-
cessions on other issues.
Peiping has indicated it will discuss with
Hammarskjold such matters as China's seat in the
UN, the American-Chinese Nationalist security pact,
American overflights of the mainland, Nationalist
air and naval harassment of the coast and acts of
"piracy" against merchant shipping, the disposition
of Chinese prisoners in the Korean war and American
detention of Chinese students.
Peiping's price for the airmen is expected to
be high. Under the best of circumstances, the
prospects appear poor for an early release of the
airmen.
* *
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STATUS REPORTS
ON OTHER SITUATIONS
Chinese Offshore Islands: Peiping is expected
to resume its pressure on the Chinese offshore islands
during stretches of clear weather this winter, and a
Communist invasion of one or more of the major island
groups is a continuing possibility.
The Nationalists began rotation of the Tachen
garrison on 19 December and the Communists may seek
to disrupt the operation by sea and air attacks. A
reported Communist bombing raid on shipping near
Lower Tachen on 21 December could be the opening move
in such a plan.
Viet Minh "Refugee" Movement: The Viet Minh
may soon stage, for reasons of ace, a token "refugee
movement" from South Vietnam to the north. Seriously
embarrassed by the sizable movement of refugees from
the north, the Viet Minh has requested the truce
commission to investigate the plight of pro-Viet Minh
elements in the south. The Viet Minh deliberately
left its troops' dependents in the south and some of
these could stage a token south-to-north movement.
Japan: Prime Minister Hatoyama's government
is reported planning to seek a relaxation of COCOM
restrictions on trade with the Orbit. The government
has already eased limitations on travel to Communist
countries for trade purposes.
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Hatoyama is, however, a figurehead
not expected
to s ay in power ong. is government will be unable
to deviate far from former prime minister Yoshida's
foreign policy.
French North Africa: Sporadic terrorism
continues in the Borth rican area, but the situation
appears to be generally one of watchful waiting.
Broadcasts from Radio Cairo and from Spanish Morocco
by Radio Tetuan, after temporarily responding to
French representations, have resumed much of their
strong pronationalist tack. Radio Budapest continues
its inflammatory broadcasts emphasizing French use
of American military equipment.
Finland: Prospects for stable majority
government in Finland are poor despite the temporary
solution of the recent cabinet crisis. A majority
is possible in parliament only when the Agrarians
and Social Democrats vote together and the two parties
will have difficulty reaching a lasting agreement
which would resolve their basic differences on economic
policy. There is no immediate danger of an increase
in Communist strength, but prolonged failure to cope
with the wage-price problem could cause an economic
deterioration which the Communists could exploit.
Anti-Soviet Emigres: There is good reason to
believe a e is making a concerted attempt
to break the back of the anti-Soviet emigre movement
in an effort to eliminate its value to the West.
The campaign has included assassinations--for example,
that of a Radio Liberation employee recently in
Munich--a marked increase in Soviet efforts to induce
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re-defections, and spreading of rumors that Moscow
is preparing a conference of re-defectors and is
considering a general amnesty of emigres.
An effort of this kind might be particularly
effective at this time. Emigre morale is low and
the United States is accused of "indifference" to
the dangers emigres undergo in serving its cause.
New violence against emigres might develop
as an outgrowth of the recent exchange of notes
between Washington and Budapest on the use of
balloons.
North Korean Conference: Pyongyang radio
announced on 17 December that no South Koreans
appeared at Kaesong on that date for the meeting
North Korea had proposed to discuss the restoration
of postal and other communications.
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Greek Crisis: Strong resentment against the
United States exists in Greece because of American
opposition in the United Nations to the Greek
resolution on Cyprus. This attitude may further
impair the position of Prime Minister Papagos'
Rally government, which is popularly identified
with American policies.
Public dissatisfaction with the government
has reached its highest point since Papagos assumed
office in 1952. His regime is also threatened by
defections from the Rally, palace intrigues, and
the development of a unified opposition.
Satellite Security Shake-ups: Further personnel
shake-ups and reorganizations, similar to those which
recently were announced in Poland, are anticipated
for other Satellite security organizations, bringing
them into close' conformity with the current Soviet
form. Concurrent with such steps, there will probably
be additional releases of political prisoners.
Czechoslovakia is the Satellite most likely to undergo
such changes. Some minor figures in the Slansky trial,
including the former editor of the party organ Rude
Pravo, have been released, but the security officals
who arranged for their trials still remain in office.
Subversion on Formosa: The recently concluded
mutual security pact wi the United States may
depress the morale of some Nationalist leaders and
make them more vulnerable to Communist subversion,
some Chinese Nationalists think. Such leaders would
be those whose morale had been buoyed up by a belief
in the possibility of an early American-supported
return to the mainland, and who interpret the current
pact as dimming or eliminating that hope.
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Guatemala: Alarmist. reports from Guatemala
can be discounted. They emanate chiefly from
disappointed job-seekers. The Castillo regime is
not threatened and there is no reason to expect
serious disorders.
Chile: Both houses of Congress have now
reject resident Ibanez' request for endorsement
of the state of siege which he declared on 20
September in order to combat Communism. According
to a 23 December press report, Ibanez has ordered
the state of siege maintained and has reinforced
his palace guard. He will probably remain in control
of the situation.
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TOP SECRET
01
23 December 1954
Copy No.1 2
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
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