WEEKLY SUMMARY #21

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002000210001-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 23, 2016
• Document Release Date: April 12, 2013
• Sequence Number: 1
• Publication Date: October 8, 1948
• Content Type: REPORT

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Copy No. b
?5;EsElt&T---
WEEKLY SUMMARY
Number 21
8 OCT 1948
Document No.
Oc) I
NO CHANGE in Class. 0
DECLASSIFIED
Class. CHANGED TO: TS
DDA Memo, 4 Apr 77
DDA REG. 77/1763
Auth:
Date:
CENTRAL INTELLIGENCE AGENCY
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1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force.
2. This copy may be either retained, or destroyed by burning
in accordance with applicable security regulations, or
returned to the Central Intelligence Agency.
WARNING
This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
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CONTENTS
Page
HIGHLIGHTS
-UNITED NATIONS ....... ....?....2
WESTERN ElUltovs 4
E ASTERN EUROPE 6
NE AR EAST - AFRIC A 8
FAR EkST 10
WESTERN HEMISPHERE 14
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HIGHLIGH TS
The cleavage between the East and the West became
more sharply defined than ever before at the UN sessions in
Paris during this past week when the Berlin dispute was placed
before the Security Council. Soviet representative Vishinsky's
refusal to participate in the SC discussion of the Berlin problem
made it plain that the USSR is unlikely to change its present
stand on Berlin (see page 2). Other Soviet tactics at the UN
sessions, such as the "conciliatory" proposal on atomic
energy, merely represent the desire of the USSR to camou-
flage its basic obstructionism on all the major issues.
While the UN representatives of the western powers were
debating with the representatives of the Soviet bloc, the French
Government was engaged in an all-out battle with labor forces
under the direction of the Communist-dominated General Con-
federation of Labor (see page 4). If the present coal strike
leads to the fall of the Queuille Government, the succeeding
government will probably be a rightist coalition headed by a
Gaullist sympathizer, or possibly by De Gaulle himself.
In China, the forces of Communism have been achieving
such success that the military situation of the Chinese National
Government now appears irretrievable (see page 11). New mili-
tary reverses and consequent economic and political disintegra-
tion may reduce the Chiang Kai-shek government to an impotent
and bankrupt regime in the Yangtze valley and South China by the
end of 1948. Elsewhere in the Far East, the Indonesian-Dutch
dispute remains a stalemate as a result of Dutch reluctance
to accept the basic provisions of a US plan for the resumption
of negotiations (see page 10).
Restlessness and tension have increased in Palestine
during the past week as a consequence of the UN General
Assembly's decision to place the Palestine problem in third
place on its agenda. In an increase of military preparations by
both sides,the Jews have been more active than the Arabs, but
Jewish renewal of the military offensive is not likely at present
(see page 8).
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UNITED NATIONS
Vaporlin dispute dwarfed all oiler issues at the UN
this week. The Soviet Union's surprise conciliatory" pro-
posal for atomic energy control failed to disguise its basically
unchanged obstructionist attitude toward all major issues,
With the East-West cleavage more clearly defined than at any
previous General Assembly meeting, it is becoming increas-
ingly apparent that Soviet tactics at the UN are designed: (I)
to de/ay or soften Assembly censure of the USSR sufficiently
to prevent complete isolation of the Soviet bloc; and (2) to per-
mit continued negotiation of major issues despite the absence
of any real Soviet concessions. The Soviet proposal on atomic
energy was one such tactical and propaganda move, and it
appears likely that the USSR may also assume an attitude of
reasonableness by advocating blanket admission of all new
applicants to the UN. On the other hand, Vishinsky's dramatic
announcement that the USSR would not participate in the SC
debate on Berlin reflects the Soviet Union's refusal to change
Its basic stand toward the German question.
Soviet refusal to partictinite in the SC debate on Berlin
further emphasizes the difficulties faced by the UN in taking
any concrete action which would lead to a solution of the entire
German question. This Soviet refusal, coupled with increasing
indications that the USSR may be planning more direct
measures against the Allied airlift, has reaffirmed the Soviet
refusal to lift the Berlin blockade without substantial compensa-
tion from the western powers. Despite the Soviet boycott of
the SC debate, Soviet realization of the appeal which any
atcompromise,* proposal would have to UN members may
induce the USSR to undertake additional tactical or propaganda
maneuvers (perhaps outside the UN) in? an effort to pave the
way for SC recommendation that direct negotiations on Germany
be renewed. One such maneuver might be a Soviet offer to lift
the Berlin blockade, provided the Western powers simultaneously
suspend implementation of plans for a western German government.
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UNITED NATIONS
Failure of the UN to reach some solution which will permit
continued East-West negotiations on Germany will remove one
more means for peaceful settlement of the German question
and thus increase the possibility of miscalculations of incidents
which might lead to war.
The Soviet ' co .. . omise" . ? 0 0 . al on atomic ener
Ialthough unlikely to preven Use 4i sly appro
already done by the Atomic Energy Commission (AEC)Iwas
I to almost certain agreement by the western powers for continued
successful from the Kremlin viewpoint insofar as it contributed
AEC discussions. The proposal reflected Soviet anxiety to
I avoid blame for a complete breakdown of atomic energy dis-
cussions rather than any real Soviet desire to reach agreement.
By making the proposal, the USSR hoped to gain other propa-
Iganda and tactical advantages. On the one hand, Soviet repre-
sentatives hoped to portray the Kremlin as the foremost exponent
I of peace and to represent the western powers as unwilling to
negotiate further on this vital subject. Tactically, the USSR
hoped to seize the initiative in Assembly discussions of atomic
I energy, to distract UN attention from the intransigent Soviet
policy in Berlin, and to confuse the requirements for effective
atomic control. Although the USSR may advance additional pro-
posals camouflaged as concessions to the western point of view
on atomic control, the present Soviet regime will never permit
I inspection within the Soviet Union by a commission which is
outside the control of a Soviet veto.
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WESTERN EUROPE
FRANCE
The Oven'lle Government bas no more than a 50-50
chance of surviving an all-out battle with labor which may be
precipitated by the spreading coal strike called by the Com-
munist-dominated General Confederation of Labor (CGT).
Apparently the Communists feel that their decisive action in
calling the coal strike will swing large blocks of non-Com-
=mist laborers to the support of the CGT, particularly
because the present wage-price disparity has created many
hardship for these workers. E the coal strike is successful,
the Communists plan a series of other strikes involving dock,
transit, and metal workers, in the hope of: (1) promoting
further economic and political chaos with consequent damage
to the European recovery program; and (2) re-establishing
the CGT as leader of organized French labor. if the Queuille
Government falls as a result of these strikes it will most
likely be succeeded by a Rightist coalition beaded by a GaulliSt
sympathizer, or possibly by DeGtaulle himself if civil chaos
should appear imminent. Attempts to form a popular front
government including the Communists would have no chance
of success.
ITALY
A breakdown of Italian -Soviet trade negotiations may
result if the Italian government continues to delay delivery of
naval vessels due the USSR under the terms of the peace treaty
and if the USSR consequently refuses to soften the industrial
reparations terms of the treaty. The USSR is apparently intent
upon obtaining these ships as soon as possible and may even,
without further negotiations, publicly accuse the De Gasperi
Government of failure to live up to the terms of the peace treaty.
The USSR would probably claim such a failure was grounds for
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ITALY
refusing to reduce the treaty's industrial reparations terms,
thereby virtually forcing the breakdown of negotiations for an
Italian -Soviet trade agreement. These developments would
be extremely embarrassing to the Italian Government because
the Italian Communists would then have an effective propaganda
issue and both labor and manufacturing groups would have
grounds for complaint against the De Gasperi Government. By
delivering the ships promptly, however, the Italian Govern-
ment could point to the USSR as :he only power refusing to
soften the "harsh" naval terms of the peace treaty and could
blame any failure in the present Italian-Soviet trade negotia -
tions upon the '`uncooperative? attitude of the Soviet Union.
UNITED KINGDOM
111_11.11;hhird World Wax is pushing the UK
more rapidly toward western. European cooperation, as is seen
from: (1) Foreign Secretary Bevin's admission to the UN Gen-
eral Assembly that the UK plans to rely heavily on regional
arrangements for its future security; and (2) the announcement
of a western union Permanent. Defense Organization looking
to the US for material and moral support. Previous British
reluctance to join a tight regional grouping arose largely from
the hope of preserving diplomatic flexibility and the fear of
alienating the USSR. The precarious British economic posi-
tion also tended to discourage increased military commitments,
Policy makers of the UK are now prepared to sacriiice these
considerations for Increasing solidarity with the western union
countries.
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EASTERN EUROPE
SOVIET UNION
The Soviet press is discussing an eventual US
depression for the first time since the public reversal
of the Varga thesis that capitalism might be able to
avoid a serious economic crisis by increased state planning.
Although the articles in the Soviet press carefully avoid pre
-
dieting an imminent depression, the economic situation in
the US is reported to be steadily deteriorating and to be
causing serious anxiety among influential business circles.
This "depression" theme is designed primarily to weaken
western European enthusiasm for the European recovery
program through claims that the nations of western Europe
? will be in serious danger if they tie their economies too
closely with the "unhealthy" structure of the US. Although
the Kremlin apparently no longer expects an immediate
depression, the reappearance of this theme indicates that
an eventual crisis in the US economy is still a basic factor
In Soviet long-range plstnning
Soviet propaganda during the past week concentrated
Its attacks upon the legality of UN consideration of the
Berlin crisis. The increasingly frequent mention of the
London agreement for a western German state indicates that
the Kremlin will probably continue to attempt to use the
Berlin blockade to force the western nations to give up their
plan for a western German government. The Soviet press
also made propaganda capital of Vishinsky's proposals be-
fore the UN for international control of atomic energy by
claiming that these proposals had enabled the USSR to
regain the initiative in the UN.
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SOVIET UNI ?N
litasipszat transfer of a lar e art of the Soviet dollar
balances from New York to London may indicate an intensified
Soviet interest in British domestic and colonial markets. The
denial of the US market is forcing the USSR to turn to other
western markets to supply its needs for machine tools, machin-
ery, and other critical items. The transfer of dollar exchange
may be an attempt to strengthen the hands of the Soviet bar-
gainers currently engaged in trade negotiations with the UK.
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NEAR EAST-AFRICA
PALESTINE
The UN General Assembly's decision to place the
Palestine question in third place on its agenda, where it will
not be formally considered for several weeks, has increased
the atmosphere of restlessness and tension in Palestine itself.
Although both sides have increased military preparations and
have expressed new suspicions of each other, the Jews have
been much more active than the Arabs. Now that the initial
shock of Bernadotte's assassination has worn off, Israel
appears to be using a double-barrelled strategy: while For-
eign Minister Shertok in Paris is urging that the Bernadotte
plan be revised to give Israel the Negeb, the Israeli authorities
in Palestine are doing everything possible to demonstrate to
the UN the difficulties involved in attempting to internationalize
Jerusalem. Israeli officials have persistently resisted UN
attempts to demilitarize Jerusalem, and they have been officially
charged by the UN Truce Commission with holding the truce in
contempt and hampering the work of 'UN personnel. Although
the Jews have apparently increased their military strength in
the Lake Hula region and have maintained their forces in Jeru-
salem, there is little present justification for new Arab fears
that the Jews plan to provoke an attack by the Arabs as a pre-
text for denouncing the truce and taking the offensive. Such a
move would be likely only if Israel were to conclude that: (I)
no satisfactory solution could be obtained through the UN; and
(2) the UN control machinery in Palestine could not function
effectively against a renewal of hostilities.
Haifa to western Europe soon, without waiting for an over-all
French hopes that crude oil might be shipped from
Palestine solution, are not likely to be fulfilled. Because Iraq's
refusal to allow oil to be shipped through its pipeline to Jewish-
held Haifa is the crux of the problem, the French have informally
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PALESTINE
suggested to the US and UK that both Jews and Arabs might
consent to the passage of crude oil through the pipeline if
It were marked for export only. The US has pointed out,
however, that although it is willing to explore the question
with France and the UK, Israeli control of Haifa may make
It impossible to ignore Israel's oil needs in any proposal
that is drawn up. A draft agreement which provided oil for
Israel, even from non-Iraqi sources, would immediately
encounter Iraq's opposition, although the Iraqis might be
willing to ship oil on a transit basis under adequate controls.
INDIA -PAKISTAN
India is not expected to invade Pakistan in the near
future, despite the tension existing between the two dominions.
The Government of India is still involved in Hyderabad, where
10,000 or more Indian troops are engaged in "cleaning out"
Communists and other extremists. These troops are not likely
to be available for action elsewhere for several months. The
recent incendiary statements of Prime Minister Nehru and
other Indian leaders probably represent an attempt to intimi-
date Pakistan Into withdrawing its troops from Kashmir.
Pakistan, still fearful of Indian invasion, is taking steps to
increase its military potential, and the possibility remains
that an unforeseen incident may touch off large-scale hostilities.
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FAR EAST
INDONESIA
A,Ithough_ both the Netherlands Government and
the Indonesian Republic have formally accepted the US
delegation's draft agreement on Indonesia, the possibility
of a resumption of negotiations under the UN Good Offices
Committee (GOC) is reduced by the stiffened Dutch
attitude. Dutch revisions of the original plan have in
effect turned it into a new Netherlands draft agreement
which is tantamount to rejection of the US plan. The
rigorous terms of the Netherlands Government include
demands that the Republicans: (1) conclude discussions
within three weeks after the Netherlands reply has been
received by the Republic; (2) declare publicly that there
will be no more anti-Dutch propaganda by Indonesia; (3)
guarantee to restore law and order within three weeks; and
(4) categorically outlaw Communism. If the Netherlands'
reply is presented to the Republic in this form, the US
delegation on the GOC believes that Republican Premier
Hatta may be prompted to refer the case to the UN Securtty
Council. US representatives have informed the Netherlands
Government that unless the Dutch modify their position, the
US is prepared to withdraw from the GOC in order to regain
freedom of action in dealing with the Indonesian problem.
Despite the Indonesian Republic's success in suppressing
the military operations of ae Insurgent Communist forces,
left-wing extremists in the Republic will probably continue
their efforts to capitalize on the Republic '13 serious economic
difficulties. Twelve days after the announced formation of a
Communist government at Madioen, the Republican Army
recaptured Madloen and several small neighboring cities. The
main Communist forces have withdrawn to the mountain, and
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CHINA
COMMUNIST CONTROLLED AREAS
1 OCTOBER 1948
47:2/
tqa
NATIONALIST CONCENTRATION
COMMUNIST CONCENTRATION
COMMUNIST CONTROLLED AREA
COMMUNIST MOVEMENT
4.11. COMMUNIST DRIVE
The international boundaries shown on this map do not
necessarily correspond in all cases to the boundaries recog-
nised by the U.S. Government
CONFIDENTIAL
SCALE 116.400000
0 100 200 300
400
MILES
0 100 200 300 400
KILOMETERS
125
45
40
35
30
25
20
10988 man Branch. CIA. 10-48
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INDONESIA
Republican officials estimate that in about two months the
remnants of Communist forces will be eliminated. The
Netherlands economic blockade and the lack of communi-
cations between Republican areas will, however, provide
extremists with opportunities for continuing action against
the Republican Government.
CHINA
Ihr nreseat military siOidjap of the Chinese National
Government appears irretrievable. The well-coordinated
Communist military offensive from Manchuria to Central
China is in striking contrast to Chiang Kai-shek's inability
to adequately reinforce any threatened position without
seriously weakening the defenses of other areas. The Nation-
alist position is extremely critical in the ccrridor leading into
Manchuria where there is a major Communist drive to capture
Chinhsien. In order to protect this sector, Chiang's forces
may be forced to withdraw completely from Manchuria. In
an effort to isolate lisuchou, Communist forces are now moving
against the Nationalist armies along the Lunghai railway (the
last important line of defense north of Nanking). Major mili-
tary reverses in this sector would virtually eliminate the re-
maining Nationalist forces north of the Yangtze. The Commu-
nists desire to consolidate their political and economic posi-
tion in occupied areas, together with the problems of military
supply, may postpone, temporarily, a Communist advance into
Central China.
S!l: ? - ,t .1 f I . . .
may be forthcoming. Replacement of the strongly anti-Soviet
Sinkiang garrison commander by a conciliatory "politician-
general'' suggests that the National Government may be laying
the groundwork for agreement with the USSR. Developments
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CHINA,
In the Soviet-dominated 11i area of Sinkiang also suggest that
the USSR may be preparing for Soviet "mediation" between
Chinese officials and pro-Soviet Ili dissidents and for renego-
tiation of the Chinese-Soviet Aviation Agreement.
KaaEA
TheUS.JA,m,Lamma jarsag_sgatioC fed to the
UN General Assembly as its solution to the problem of separate
north and south Korean governments. Such a proposal might
be regarded as a compromise by many member nations and
would delay a GA decision on the Korean problem. If the pro-
posal is adopted, the UN will: (1) accord equal recognition to
a government created in defiance of its resolutions and to one
created under its auspices; (2) provide the USSR with limitless
opportunities for Soviet obstructionism in any subsequent nego-
tiations leading to the formation of a federated government;
and (3) damage severely the prestige of the newly-formed
Republic of South Korea.
Korean President Rime's drastic cotmter-measures
against opposition forces in Korea may precipitate a domestic
showdown before Korea's case is disposed of by the UN. A
rightist plot to overthrow the Government has apparently been
forestalled by the arrest of the reputed ringleaders in Seoul.
Repressive measures have been taken against leftist news-
papers and against journalists in Seoul accused of fomenting
revolution. These actions, coupled with Rhee's veto of the
Assembly's rice collection bill, are expected to unite opposi-
tion groups within the Assembly who favor an anti-Rhee coali-
tion and who plan constitutional changes to limit his presidential
powers.
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JAPAN
The 7 Octqber resignation of thq Ashicia Government
over a bribery scandal is likely to remove the possibility of a
middle-of-the-road coalition government in Japan for the time
being. A conservative coalition, under the leadership of
Democratic-Liberal Party President Yoshida, will probably
take control of the government. The Socialists, who were
members of the last coalition government_ will become part
of the opposition. This move has been motivated largely by
Socialist objection to the proposed revision ndorsed by
SCAP)of the National Public Service Law which contains re-
strictions on trade union rights of government employees.
The selection of a conservative premier will probably facili-
tate the passing of the National Public Service Law in a form
acceptable to SCAP. Accession to power of a full-fledged
conservative government promises relief from the frequent
Cabinet crises which have characterized governments in
Japan during the past year and a half middle-of-the road
period. How long the conservatives can maintain political
stability in Japan, however, depends on their ability to solve
pressing economic difficulties, many of which are beyond
the capacity of any Japanese Government to solve.
?
INDOCHINA
The French may launch a fall offensive in Indochina
despite circumstances even more unfavorable than those
preceding a similar, Ill-fated campaign last October. Re-
placements and reinforcements numbering in the "low
thousands" are to arrive this month, but low morale and
deterioration of equipment argue against any successful
large-scale operation. It is expected that the Viet Minh
forces in the Tonkin area will be the main object of attack.
Lack of success in this expected operation may result in
French withdrawal to Cochin China and Cambodia.
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WESTERN HE
BRAZIL
Communists and eXtreme nationals have been attacking
US interests in Brazil through anti-US propaganda in the Brazilian
press. Those segments of the Brazilian press which are usually
pro-US have produced no effective vaunter-propaganda to the
charge that the US-Brazilian Technical Mission is trying to hand
over Brazilian oil and iron ore to the US. Moreover, the attack
on the US has been so telling that US Embassy Rio believes that
the scheduled November meeting of economic personnel from US
Embassies should be postponed because it would provide material
for more anti-US propaganda. ,
PERU
Suppression ty the Bustamnante administration of Peru's
second armed revolt within three months does not provide an
accurate gauge of the strength of the regime, which is almost
wholly dependent upon the armed forces for its support. The
Peruvian Government has charged that armed civilian Apristas
(members of the non-Communist left) participated in the revolt
and has issued a decree outlawing APRA as a legal party and
calling for the prosecution of its leaders. Such measures are?
not likely to remove the threat posed by APRA, however, unless
the Government finds some means of ensuring complete loyalty
of all branches of the Peruvian armed forces.
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Get
I DISTRIBUTION
I 1
The President
2
Secretary of State
3 Chief of Staff to Commander in Chief
I4 Secretary of Defense
5. ? , . . . . . . Secretary of the Army
I 6
7 Secretary of the Navy
Secretary of the Air Force
8 Chairman, National Security Resources Board
I 9.
10 6 A ? V ? 0 ? 4 Executive Secretary, National Security Council
Assistant Secretary of Navy for Air
I
11 .. . . Chief of Staff, U.S. Army
12,13,14 ' ' . Chief of Naval Operations
15,16,17. . . . . Chief of Staff, U.S. Air Force
I 18
19 Director of Plans and Operations,General Staff,U.S.Army
Deputy Chief of Staff (Operations) U.S.Air Force
20 .... . . Deputy Chief of Naval Operations (Operations)
. .
I 21
22,23,24 Director of Plans and Operations, U.S. Air Force
Special Assistant to Secretary of State, Research &
'
intelligence
IIntelligence
25,26,27,28,29. Director of Intelligence, General Staff, U.S. Army
30,31,32,33,34. Chief of Naval Intelligence
I 35,36,37,38,39. Director of Intelligence, U.S. Air Force
40. . . . ..... Director of Security and Intelligence,Atomic Energy Comm.
41. . . ..... 'Executive Secretary,Military Liaison Committee,Atomic
1 I Energy Commission
42,43,44,45,46. Chief,Acquisition & Distribution Division,01CD,Dept.State
I 47
48 Director, Federal Bureau of Investigation
Secretary, Joint Chiefs of Staff
49. . . . .... Chief, Policy Planning Staff, Dept. State
I 50 . .
51 .. . ? . . Secretary of State (Attention: Chief,Policy Reports Staff)
Deputy Director, Joint Intelligence Group, Joint Staff
I52,53 Secretary, joint Intelligence Group, Joint Staff
54. . . . . ? . . . U.S. Mr Force Representative on Joint Strategic
Survey Committee
I55,56. . .. . Secretary,State-Army-Navy-Air Coordinating Committee
Declassified and Approved For Release 2013/04/12 : CIA-RDP78-01617A002000210001-5
U S. GOVERNMENT PRINTING OFFICE
2631-S--1948
Declassified and Approved For Release 2013/04/12 : CIA-RDP78-01617A002000210001-5