CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000200040001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 18
• Document Creation Date: December 15, 2016
• Document Release Date: April 15, 2004
• Sequence Number: 1
• Publication Date: December 18, 1953
• Content Type: REPORT

25X1
OCI NO. 1863
18 December 1953
CURRENT
INTELLIGENCE
WEEKLY
25X1
CL
iTh
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SE
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CIA-RDP79-00927A"I fT020gg6W1RO.
e ease 2004:
STATE review(s) completed.
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3KC
SUMMARY OF CONTENTS
THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . Page 4
VIET MINH STRATEGY SEEMS DIRECTED TOWARD PROLONGING
THE WAR . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Viet Minh troop movements strongly suggest that
northwest Tonkin rather than the delta will be the
major scene of activity this winter.
USSR RENEWS PRESSURE AGAINST A MIDDLE EAST ALIGNMENT
WITH THE WEST . . . . . . . . . . . . . . . . . . . . . Page 9
Recent Soviet efforts to influence Middle Eastern
states against any alliance with the West are highlighted
by Soviet propaganda attacks on alleged. American attempts
to create a "Middle East Command," the note to Pakistan
asking for "clarification" of reported American-Pakistani
negotiations for military bases, and representations to
gran.
ITALIAN GOVERNMENT FACES CRISIS OVER LABOR SITUATION. . Page 11
The recent wave of strikes in Italy, the first since
1947 to be supported by both the Communist and non-
Communist labor organizations, is symptomatic of the
rising social discontent and foreshadows serious parlia-
mentary difficulties for the already shaky Pella government.
MOROCCAN SITUATION CONTINUES TO DETERIORATE . . . . Page 13
The French government, faced with a steadily deteri-
orating situation in Morocco and forced to give priority
to maintaining order, is making relatively little progress
in its reform program.
RECENT DEVELOPMENTS IN SOVIET-FINNISH RELATIONS . . . . Page 15
Recent moves indicate that for the present the USSF
intends to pursue a conciliatory policy toward Finland,
possibly in an attempt to influence the forthcoming
parliamentary elections.
SE/ ET
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ASIAN RICE SURPLUSES. CREATE NEW TRADE PROBLEMS . . . . .=age 17
The accumulation in 1953 of large rice surpluses in
Thailand and Burma is tending to undermine the high pros-
perity that Thailand has enjoyed since the end of World
War II and has led Burma to use the threat of expanded
trade relations with the Orbit as a means of obtaining
American assistance with this problem.
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Moscow comment on President Eisenhower's atomic energy
speech has ranged from initial radio criticism, through
cautious press treatment, to a Foreign Ministry announcement
that serious attention would be given the proposals. Tha
Kremlin in effect has avoided any advance commitment as to
the nature of its official response.
Bot}, Pravda and chief Soviet delegate to the UN Vysainsky,
however, have made note of the omission of any proposal for
the banning and control of atomic weapons, without commenting
on the plan itself. Such criticism suggests that the UUS3R
will maintain its propaganda position calling for outlawing
the atomic bomb but may avoid a flat rejection of the pres-
ident's proposal.
On 12 December, Malenkov, Molotov, and Khrushchev
attended a reception at the Czech embassy in Moscow in honor
of the tenth anniversary of the Czech-Soviet Treaty of
Friendship. At the reception, both Malenkov and Molotov,
according to two diplomats, made speeches entirely devoted
to the theme of peace, and the premier included a statement
that the Soviet government would give serious considerat.on to
any proposals directed toward peace from any government.
Khrushchev at first emphasized the ability of the Czech and
Soviet armed forces to repel would-be aggressors, but at this
point, Malenkov, visibly annoyed, whispered loudly "peace. for
peace," and Khrushchev immediately changed his tune and fell
into line.
This exchange points up the importance of the peace i:heme
to the present Soviet leadership, and it suggests that Khrush-
chev is not in a position to deviate from the established line.
Every East European Satellite Communist Party except the
Albanian has scheduled some form of party congress or confer-
ence for the first half of 1954. The Polish party meeting will
be in January, the Bulgarian in February; East Germany and
Rumania will have theirs in March, Hungary in April, and Czech-
oslovakia in June. Inclusion of the question of economic, policy
in the proposed agendas for the Polish, Rumanian, and Czc?ch
congresses indicates the stress to be placed on problems
arising from the new course.
As part of the announcement of its congress agenda, the
Czech regime revealed that its next Five-Year Plan will be
initiated in 1956, two years after the completion of the current
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one. This announcement appears to confirm the belief that
long-range Soviet and European Satellite economic plans will
be coordinated starting in 1956.
Supporting this thesis is the fact that the Soviet,
East German, Polish, Rumanian, and Albanian plans terminate
at the end of 1955, and that although Hungary has announced
a second Five-Year Plan to follow the completion of the current
one, which ends in 1954, no date has yet been given for its
inception. Since most of the goals for the "new course,"
both in the USSR and the Satellites, are stated in terms of
1954 and 1955, it seems probable that the Communist regimes
are attempting to create a better economic balance in prepa-
ration for further socialization and industrialization ad-
vances under a new and coordinated Five-Year Plan in 1956.
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VIET MINH STRATEGY SEEMS DIRECTED TOWARD
PROLONGING THE WAR
Ho Chi Minh's repeated statements on the possibility of
peace negotiations and Viet Minh efforts to pursue a war of
attrition seem designed to capitalize on war-weariness in
France and Vietnam. Knowing of the French desire to force an
early decision, Viet Minh leaders apparently believe time favors
their cause.
The enemy divisions in Tonkin are now so disposed
as to permit, with some redeployment, attacks against northwest
Tonkin, against the northwest corner of the delta, or against
Laos (see map, p. 8). The initiative, despite recent displays of
French aggressiveness, appears to remain with the Viet Mina.
Enemy troop movements strongly suggest that northwest Tonkin
rather than the delta will be the scene of the most important
activity this winter. The Viet Minh probably estimates that by
consolidating its hold on the hinterland it can avoid undue risk
and cause the French to disperse considerable forces to the area.
The bulk of the Viet Minh 316th Division is now within
striking distance of Dien Bien Phu, and elements of this force
have occupied Lai Chau. Two regiments of the 304th Division,
which began moving northwest from Thanh Hoa during the fi ;t
week of December, were last reported in the vicinity of V3Ln
Yen, on the Black River. The French reported indications on
9 December that elements of the 308th and 312th Divisions were
moving westward toward the 316th, thus further diminishin;, the
likelihood of a large-scale assault on the delta.
The French command has made a strongpoint of Dien Vin Phu,
which until recently was in enemy hands. French Union units now
there total about one division, including the garrison th>tt evac-
uated Lai Chau last week.
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The enemy, however, is not neglecting the Tonkin del-,-a.
Some 63,000 regulars and auxiliaries are there and infiltration
by elements of the 320th Division, now located north of Thanh
Hoa, may also have taken place. At the same time, the French
reinforcing of Dien Bien Phu has reduced the recently augmented
French reserves in the delta.
The Viet Minh, which takes a long-term view of the struggle,
may have inferred from French emphasis on an early victory that
failure to meet this schedule might bring about lessened support
for the war, both from France and the United States. Action in
the northwest would lend itself to the important objectives of
carving out additional territory and disrupting French guerrilla
operations; but more importantly, the deployment of Frenca forces
to that area, which has already begun to take place, would delay
Navarre's offensive plans.
The victories hoped for by the French depend on their being
able to force the enemy into battle. This might be done ov an
attempt to occupy Thanh Hoa, the center of the Viet Minh's major
food-producing area. But if the Viet Minh can develop a secure
base area in the hinterland, supplies from China together vith
the rice it is able to obtain from the delta might enable the
army to avoid decisive contact almost indefinitely and thus place
great strain on French willingness to continue the fight.
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N O R T H
I N D O C H I N A
f V! PA!
fthanh
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USSR RENEWS PRESSURE AGAINST A MIDDLE EAST ALIGNMENT
WITH THE WEST
Recent Soviet efforts to influence Middle Eastern states
against any alignment with the Nest are highlighted by propa-
ganda attacks on alleged American attempts to create a
"Middle East Command," the note to Pakistan asking for "clar-
ification" of reported American-Pakistani negotiations for
military bases, and diplomatic representations to Iran.
Moscow appears to desire particularly to prevent the estab-
lishment of any Western bases in Iran and Pakistan.
Recent visits of prominent Americans to the Middle East
and statements by Middle Eastern leaders suggesting that these
visits are connected with military planning are probably the
immediate cause for increased Soviet attention to the area. Mos-
cow has interpreted these visits as confirmation of its
assertion that American military planning calls for the con-
clusion of a series of bilateral pacts with states along the
Soviet border, with the ultimate aim of welding them into
a "Northern Middle East Command."
Similarly, the visits of prominent Pakistanis to Turkey
and the United States have been interpreted in Soviet propaganda
as further proof that these leaders are conniving with the
United States in an attempt to impose American domination on
the area through "aid" and to establish Western bases within
bombing range of the Ural industrial complex.
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Moscow has consistently exerted pressure against Middle
Eastern states in the past when there was increased Western
activity in the area. In the fall of 1951, when plans were
announced for establishing a Middle East defense organization
under Western aegis, the Kremlin delivered notes to the Arab
states, Israel, Turkey, Great Britain, France, and the United
States.
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Moscow has been alert to point out the "threat" of ar.
American-Pakistani agreement to other states in the area,
such as India, Afghanistan, Burma, and Indonesia. In an
obvious allusion to India's dispute with Pakistan over Kash-
mir, Soviet propaganda has taken advantage of Prime Minister
Nehru's opposition to an American-Pakistani alliance by
stating that such an alignment would "threaten Asian peace."
With respect to Afghanistan, Moscow, recalling its
success in deterring Afghanistan's plan to develop its oil
resources with French aid in 1952 and the outstanding Afghan-
Pakistan dispute over Pushtoonistan, may make a demarche to
Kabul in the hope of promoting stronger opposition to a
possible alignment of Pakistan with the West.
With respect to Iran, Moscow has repeatedly warned Tehran
against tolerating Western "interference." Soviet delegate
Vyshinsky asserted in the UN on 6 November that the Unites
States was pressing for bases on Iranian soil. This allega-
tion was categorically denied by Iranian diplomats at the UN,
but Soviet propaganda has ignored these denials. Soviet rep-
resentatives may use the Soviet-Iranian financial and border
talks, shortly to begin in Tehran, to remind Iran that a
military commitment with the West is unacceptable to the LSSR
and is a violation of the 1921 Soviet-Iranian treaty.
Soviet propaganda has also claimed that the Middle Eastern
states are attempting to revive the 1937 Saadabad pact amcng
Turkey, Iraq, and Afghanistan and to enlarge it by the in-
clusion of Pakistan. This charge reflects Moscow's sensitivity
to the formation of any bloc on its border which might lir,it
the effectiveness of Soviet pressure against individual states.
There is no evidence that these Soviet efforts will deter
Pakistan, Iran, and Turkey from defensive planning with tt,e
West or among themselves. Moscow may devise a counterplar5 and
request a reaffirmation or renewal of its treaties of fricnd-
ship and nonaggression with Iran and Afghanistan. It may also
offer bilateral treaties of nonaggression to other Middle
Eastern states with the aim of encouraging neutralist sentiments
and denying the area to the West.
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ITALIAN GOVERNMENT FACES CRISIS OVER LABOR SITUATION
The recent wave of strikes in Italy, the first since
1947 to be supported by both the Communist and non-Communist
labor organizations, is symptomatic of the rising social dis-
content and foreshadows serious parliamentary difficulties
for the already shaky Pella government, The nationwide
industrial strike on 15 December followed generally success-
ful one-day railroad, industrial, and government workers=
strikes in the past few weeks involving over 1,000,000
workers each.
Chronic high unemployment, inadequate wages, large--scale
factory layoffs, and differences over fringe contract bene-
fits are responsible for the current unrest. Although the
non-Communist unions have generally refused to cooperate with
the Communists, they were virtually forced into unity of
action by the refusal of Confindustria, the industrialists'
association, to deal with them.
On 24 September the Communist and non-Communist unPons
jointly supported an industrial strike for the first tine
in six years. Larger joint strikes which were planned at
that time were headed off when the government put pressure
on Confindustria to resume bargaining over wage and contract
issues. This "bargaining," however, appears to have been
limited to talks with government representatives.
Since the September strike Confindustria has refused. to
negotiate with any of the labor federations, although pve-
viously it had shown a tendency to deal at least with the
Communists, who have the best-organized union. Certain firms
such as Fiat have also aroused additional resentment by cut-
ting down on the operations of labor-management committees,
elections for which have in several recent cases resulted in
gains for the Communist unions.
Thus far the government has done little to meet th:_.
situation. Should it ask parliament to pass in its ent:"_rety
the labor bill now reportedly in preparation, the government
faces opposition not only from the moderate and extreme
leftist parties, but also from representatives of the Chris-
tian Democratic labor union, which has increased its parlia-
mentary strength since the June elections. The bill, a
revised version of a three-year-old' bill which never reached
the floor ~if parliament under De Gasperi, would severe:_y re-
strict the right to strike and require all labor organizations
to register with the government.
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This latter provision, according to the bill's non---
Communist opponents, would in effect not only legalize the
neo-Fascist labor union, but also establish as labor's accredi-
ted bargaining agent the Communist confederation, inasmuch
as this is the country's largest. Both Communist and non-
Communist labor federations have already expressed bitter re-
sentment at the government's recent decision to recognize the
neo-Fascist union's bargaining rights. This decision, they
charge, is another indication that the government is moving
to the right.
The government's apparent reliance on the support of
right-wing groups also makes it unlikely that much official
pressure will be brought to bear on management, which in any
case considers itself in a strong position in view of Italy's
desperate unemployment situation. The government itsels' has
failed to arrive at a compromise with its civil servants, and
has threatened to apply once again certain sanctions in the
form of wage withholding. Statements Pella has made to Ameri-
can officials suggest.a serious unawareness on his part of
the strength of feeling behind labor's demands.
Continued failure to cope with the labor situation, even
if it should not bring about the fall of the Pella government,
can be expected to give rise to further crippling strikes.
More serious, however, is the possible return to Communist-
dominated labor unity, which could cost the government its
only hold on labor through the non-Communist unions, and thus
increase the already formidable political potential of the
Italian Communists,
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MOROCCAN SITUATION CONTINUES TO DETERIORATE
The French government, forced to give priority to main-
taining order in Morocco, is making relatively little progress
in its widely heralded reform program. The new sultan report-
edly is dissatisfied and wants to abdicate. Spain is attempting
to exploit the situation to build up good will among the Arab
states, and possibly to enlarge its protectorate in Morocco at
France's expense.
Acts of violence have not decreased in spite of widespread
mass arrests of all known nationalists and the self-imposed
exile of most of their leaders. The situation is further com-
plicated by the emergence of a French settlers' counter-terrorist
organization which threatens associates of the former sultan and
poses a serious threat to public order.
The previous sultan's government was in theory an autocracy,
dominated in fact by the French. After deposing him in mid-
August, the French ostensibly set up a constitutional monarchy
and established separate executive, legislative, and judicial
branches of government. The extensive power wielded by French
officials in the Residency General, however, has been consider-
ably increased and primary emphasis is placed on consolidating
the French position and minimizing Moroccan capabilities for
interfering with any program France may wish to implement.
No progress has been made toward effecting promised civil
rights guarantees or enacting legislation permitting Moroccan-
organized trade unions--the two most important reforms desired
by the nationalists and essential for the development of the
democratic state which France is pledged to create in Morocco.
Opinion in the French community in Morocco is divided on
the subject of reforms already instituted. Colonists and in-
dustrialists strongly criticize them as being too generous to
the natives, while professional men, merchants, and civil ser-
vants feel they are insufficient. Powerful settler lobbies con-
tinue to operate in both Rabat and Paris.
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Tolerated but not accepted by most Moroccans, the new sul-
tan is keenly aware of his unpopularity and desires to abdicate.
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Even though the French refuse to let him retire, he apparently
has not yet resorted to his sole prerogative--to delay leis-
lation for 30 days.
Meanwhile, French relations with Spain over Morocco have
deteriorated markedly, although early Spanish fears that France
might unilaterally abrogate the bilateral treaty of 1912 under
which Spain occupies northern Morocco have apparently dis-
appeared. The French are irritated because Spain has not recog-
nized the new sultan and has used the controlled press in Spain,
Spanish Morocco, and Tangier to keep the question of the former
sultan's deposition alive. However, while providing sanctuary
for nationalist refugees, Spanish authorities keep a tight rein
on their activities and are not likely to permit them to estab-
lish bases for physical assault on French Morocco.
Spain's policy is aimed toward improving relations with
the Moslem world. It also may be aimed toward enlarging its
protectorate in northern Morocco as a price for eventual recog-
nition of the new sultan or toward establishing a separate king-
dom, thus dividing Morocco permanently. An early rapprochement
between France and Spain is not likely.
American recognition of the new sultan on 8 September has
not alleviated the undercurrent of hostility toward the United
States among French officials. Moroccan nationalists who had
counted on the United States to prevent dethronement of the
monarch have been disappointed. The native population is now
particularly susceptible to Communist anti-American propaganda
which is being circulated despite a ban on Communist activity.
The nationalist press in Tetuan in Spanish Morocco is also
sharply critical of the United States. Its circulation is now
so restricted, however, that its influence is minor.
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RECENT DEVELOPMENTS IN SOVIET-FINNISH RELATIONS
Recent Soviet moves indicate that for the present the
USSR intends to pursue a conciliatory policy toward Finland,
possibly in an attempt to influence the parliamentary elec-
tions scheduled for 7-8 March. While official Finnish circles
tend to regard the USSR's diplomatic and economic moves
favorably, there is some uneasiness over its possible intent.
On 18 November ex-premier Kekkonen disclosed that while
still in office he had approached Soviet officials concerning
possible economic aid to Finland and that secret talks had been
in progress between himself and Soviet minister Lebedev for
several weeks. The specific Soviet offers under consideration
were: (1) payment in Western currencies for from 10 to 15 per-
cent of Finland's total exports to the Soviet Union; (2) the
use by Finland of the Saimaa Canal, part of which now lies in
Soviet territory; (3) a substantial loan; and (4) increased
trade in some commodities. In return the USSR reportedly was
asking "for a practical policy on the part of Finland in
accordance with the Soviet-Finnish Mutual Aid Pact." Although
this latter condition has not as yet been elaborated, it is
certain that no elected Finnish government would agree to the
Soviet offers if acceptance would compromise Finnish inde-
pendence in any way.
Official Finnish reaction to the Soviet offers of eco-
nomic assistance generally has been favorable. The new
caretaker government under Premier Tuomioja, which assumed
office on 17 November subsequent to the fall of Kekkonen's
cabinet, has already approached Soviet officials about coa-
tinuing the negotiations. Premier Tuomioja has indicated that
he desires a loan in gold or free currency, since this would
permit increased capital investment in Finnish industry.
The reported Soviet offer to pay for a portion of
imports in free currency would also be favorable to Finla:ad.
While this is provided for in the basic trade agreement of 1950,
the USSR has never actually made such payments.
Another recent development in Finnish-Soviet relations
has been the sale of a number of Soviet-owned companies in
Finland. Most of the firms sold, however, are of little eco-
nomic importance and several reportedly are in financial
difficulty.
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The Soviet offers may be interpreted as a counter to any
possible Western offers of aid to Finland during its present
economic difficulties. They may also be an indirect warning
that the Soviet Union maintains an interest in assuring that
Finland remains outside any economic or political agreements
which might tie it more closely to the West. These actions
are in line with the USSR's recent policy of appearing con-
ciliatory and of offering concessions which cost little, but
have political or propaganda value.
In this connection, the 1954 Finnish-Soviet trade protocol,
which was signed on 25 November after only two months of negotia-
tions, is generally favorable to Finland. It enables Finland
to import most of its requirements of such basic commodities
as grain and fodder, petroleum products, sugar, and cotton
without using sterling or dollars. Although it provides for
a ten-percent decrease in Finnish exports as compared to the
current year, the USSR will remain Finland's principal trading
partner during 1954. In the long run, the reduction of these
exports may cause some hardship in the metalworking industries,
but at the present time it is believed that most of their out-
put can be absorbed by the domestic market.
The USSR also has probably given tacit approval for
Finnish re-export of Soviet grain, a practice which it forbade
a year ago. Recently Finland negotiated the re-export of
some 100,000 tons of Soviet wheat to Brazil.
One of the factors behind the present Soviet moves way
be the forthcoming parliamentary elections. In the local
elections last October the Finnish Communist Party made r.?o
significant gains, and the USSR may believe that a more con-
ciliatory policy at this time will strengthen the party's
position. Since most Finns have interpreted the Soviet
gestures as an attempt to influence internal Finnish political
developments, however, it is unlikely that they will have any
important effect on next spring's elections.
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ASIAN RICE SURPLUSES CREATE NEW TRADE PROBLEMS
In the years since World War II there have been no over-
all rice surpluses in Asia, but unusual circumstances in 1953
have led to large accumulations in Thailand and Burma. This
situation tends to undermine the high prosperity Thailand has
enjoyed since the end of World War II and has led to a weaken-
ing of the economy in Burma
During the past year, Thailand and Burma have accumulated
carry-overstocks of around 400,000 tons and 600,000 to 800,000
tons respectively. Almost all of the normal importers enjoyed
favorable rice crops; demands fell off because of the poor
quality of Thai and Burmese rice; and both these countries
refused to lower their export prices in order to stimulat?
additional sales.
Certain basic changes in the world rice picture con-
tributed to the problem. The spur of extreme wartime and post-
war rice shortages accelerated efforts to expand domestic
production in importing countries, stimulated production and
exports from areas which previously were not significant
producers, and hastened a shift in consumption from rice to
wheat and barley. Japan and India, the two largest prewar
rice importers, have cut their imports by almost one half
Communist China, which formerly imported around 500,000 tons
of rice annually, is planning this year to export around
300,000 tons to the free world, mostly to Ceylon. It has
already shipped at least 50,000 tons to the USSR and will prob-
ably export similar quantities in 1954.
If the new crops now being harvested in Thailand and Burma
are larger than last year's, as expected, around 4,000,000 tons
of rice will be available for export in 1953-54 as compared
with 1952-53 sales of about 2,700,000 tons. Both countries are
confronted with a serious storage problem and Burma faces the
possibility of farm unrest if the new crop is not marketed
rapidly. On the other hand, importing countries, with th-
exception of Japan, again anticipate unusually good domestic
crops and generally are in a position to await a favorable
market.
Thailand has enjoyed unprecedented prosperity in the post-
war period, but prospective declines in rice prices foreshadow
increased economic difficulties. American officials in Bangkok
have pointed out that if economic deterioration is not checked,
Thailand will be unable to maintain its current level of
military expenditures for more than two or three years.
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Burma's problems are more immediate than those of Thai-
land because of larger carry-over stocks and the greater
dependence of the postwar Burmese economy on rice. Japan was
able to use the promise of a long-term purchase agreement with
Burma not only to secure favorable terms but also to reverse
Rangoon's stand against Japan's accession to the General
Agreement on Trade and Tariffs. India, whose rice purchases
fell 600,000 tons short of Burmese expectations this year,
may have been seeking to improve its relations, and at the
same time secure favorable terms, when it announced that it
might buy 1,000,000 tons for stockpiling if the price were right.
Recently Ceylon
was
able to conclude a rice purchase agree-
ment with Burma which
not
only permits a wide variation it the
quantity to be bought
but
also stipulates 1954 prices which
are $27 per ton below
the
previous 3urmese government price.
Burma has been using the threat of expanded trade relations
with the Orbit as a means of pressing the United States to assist
in finding a solution for this problem. The United States is
currently the world's third largest rice exporter and chief
competitor to Burma and Thailand. The 1954 exportable surplus
of American rice is expected to be above that of this year, and
surplus wheat exports are also being promoted. The Burmese
press has already accused the United States of "invading"
Burma's Far Eastern markets, and increasingly keen competition
for grain markets in Asia may result in further exploitation
of this anti-American theme by rice exporters.
CCNIA ENTIAL
Approved For Release 2004/06/24: CIA-RDP79-00927A000200040001-7