DAILY SUMMARY - 1946/02/28

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 03164662
• Document Creation Date: August 3, 2018

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. GENERAL
L Slemareetress in draltzEIta,11/0�.2=9 eeety--Dunn reports
that the committee drafting the Italian peace'treaty at the
Council of Foreign Ministers has so far agreed only on the
preamble ar.t1 two articles. Both of those articles relate to
Italian prisoners of war, and the. Soviet delegation has re-
served the right to challenge one of them later,.
The State Department considers that a treaty drawn up
on the basis of the present dixergent views among the powers
concerned would be harsher than any one of those powers wishes
imposed upon Italy,. To avoid further delays and to insure a just
arid lasting settlement, the Department .has instructed Dunn to.
propose to the Allied delegations that "each power recede from
the demands and restrictions Etvhich] it wants imposed on Italy,
in, order that through compromise there may be a settlement to
the best interest of
EUROPE -AFRICA
2. AUSTRIA: Eavieteetley--Erhardt and General Clark in separate
reports have commented at length on concerted Soviet efforts to
bring Austria completely within the Soviet commercial orbit by
weakening the country's economy and blocking all attempts to
foster Austrian trade with the West, '
Erhardt reports that the following fundamentals of Soviet
policy jn Austria have been consistently apparent in all. recent �
inter-Allied meetings: (a) exclusive Soviet control of the Danube;
(b) outright seizure of German property in eastern Austria with
no regulation by the Austrian Government or the Allied Council;
and (c) exclusive Soviet control of trade and other relations with
Soviet-occupied or dominated countries. He points out that in all
three instances time is working on the side of the Soviets. Erhardt
concludes that only action between the Allied Governments
affecting the disposition of former German assets, reduction of
Soviet occupation forces, and Soviet. penetration into Austria's
economy and Danubian trade can decide whether Austria is to ber
Dogument No. /..S
NO CHANGE in Class. Ej
0 DECLASSIFIED
Class. CHANGED TO: TS S
DDA Memo, 4 Apr 77
Auth: DipA REG, 77/1763
Date:� "-tfiglik-r : it
19,
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an independent democracy or a Soviet satellite.
General Clark agrees with Erhardt's survey and states
that his ()vim efforts in the Allied Council to facilitate Austria's
economic recovery have been blocked by veto action on the part
of the Soviet representative. In addition, he reports that Soviet
occupation forces in Austria are estimated at 130,000, while US
troops number only 32,000 and by 1 April will be reduced to
12,000. The Soviets have refused to discuss any reduction of
their forces, the support of which imposes a heavy financial
burden on Austria
3, HUNGARY: USSR industrialfrizreements--Schoenfeld reports
increasing Soviet pressure to force Hungary to accept joint
USSR-Hungarian-owned corporations so as to facilitate Soviet
control of the Hungarian economy. Despite opposition by business
interests, Schoenfeld expects early Hungarian acceptance of most
of the Soviet proposals in the hope of appeasing Voroshilov and
thereby obtaining authority to issue million pengo denomination
currency and Soviet consideration of the Government's repara-
tions proposals. Schoenfeld believes that favorable non-communist
press reaction to the US offer of a $10,000,000 loan may have
influenced the Prime Minister to ask the press to avoid a pro-
Anglo-Saxon slant in view of the important economic discussions
now pending with the Soviets.
4,, YUGOSLAVIA: aolwja,atLotagiaSitilia troop movements--
AFHO. discounts Marshal Tito's explanation to the British Ambas-
sador at Belgrade that recent Yugoslav troop movements into
Venezia Giulia were merely to bring the four divisions in Zone B
up to full strength. AFHQ points out that: (a) the speed and orga-
nization of the movements give the impression of a carefully
planned operational move; (b) the new forces do not appear to be
merging into the framework of units already in Zone B; and (c)
the new forces include an armored division and a tank brigade,
which AFHQ does not believe will be disbanded simply to furnish
replacements.
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TIZI.4?--ggrenET
5, SPAIN: Emu /LtaLesls_2NO action--Embassy, Paris has
received a note from Bicla.ult requesting that the US associate
itself with France in submitting the Spanish situation to the
Security Council. A similar approach has been made to the
British and Soviet Governments. Embassy London reports
that the British Foreign Office regrets France's decision,
fearing that Fra.nco's position within Spain will be strengthened
by Moscow's entry into the picture.
G. LEVANT STATES: Withdrawal of UK troops promised--
Embassy London reports that the UK has delivered a note to
the Syrian and Lebanese Governments stating that in view of
British acceptance of the majority opinion of the Security
Council, the UK no longer considers itself bound by its 15
December assurance that British troops would not be with-
drawn from Syria and Lebanon as long as French tr,00ps
remained. The British will send a representative to Paris,
however, to urge simultaneous action with the French If
unsuccessful, British forces will still be withdrawn.
FR EAST
7, JAPAN: 0.2, orders Japanese warshiiassiattatd--JCS has
directed General MacArthur to destroy all Japanese combat
vessels, with the exception of destroyers and surface vessels
of lesser tonnage. However, JCS has authorized General
MacArthur to use temporarily for repatriation and other duties
the vessels to be destroyed and has directed him to transfer
vessels to be used for experiments or as targets to the US ser-
'ices requiring them.
8. CHINA: ChinaTheater inactivation date u tioned--General
Eisenhower requests more information from General Wedemeyer
in order to assure the War, State and Navy Departments that I
May is not a premature date for inactivating the China Theater.
He asks whether operational functions to be carried out subse-
quent to an announced date of inactivation would nullify the
benefits to be derived from inactivation. The State Department
has concurred in setting up the military Advisory Group with
--cottpti..Thv
T.Q.P-4343eftET
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the understanding that it would confine itsel o vice to the
Chinese military and assistance in training matters,,
9� CHINA: Limited initial reogcmation.of Mauhp.ria--Embassy
Chungking reports that Chinese reoccupation of Manchuria
will be confined to those areas in Manchuria not under Soviet
control, pending further Sino-Soviet negotiations.,
10. INDIA: British view on Bom.. .1_2,LLAcits--The War Office, in
reply to an inquiry by the US Military Attache in London as to
its views on the Bombay riots, has stated that the leaders of
both the Congress Party and Moslem League cooperated in con-
demning and attempting to stop civil disturbances, while the
Communist Party thanked the public for its support. Individual
British officials have told the MA privately of their belief that
the Indian Communists receive orders from Moscow., The MA
comments that Soviet policy apparently aims to foment discord
and native violence in British-controlled areas as a means of
extending Soviet influence.
11. N.E.I.: Clark Kerr essimistio over lesollati_a.on --Consul
General Foote reports that Clark Kerr is most pessimistic
with regard to the Dutch-Indonesian negotiations.. Clark Kerr
fears that the Indonesian National Committee will refuse to con-
tinue discussions unless the Dutch proposals are malified and
that Sjahrir will be. replaced by Seebardjo, with whom the Dutch
say they will not negotiate. In Clark Kerr's opinion, the Indonesians
will gain by stalling, since the British will not fight them and the
Dutch cannot.
12� SEVENTH FLEET: Merchant shft regtested for mission to
Dairen--At the instruction of General Marshall, the Consul gen-
eral Shanghai has requested that Admiral Cooke provide a merchant
-
type vessel for transporting Consul General Sturgeon to Dairen,
(See Summary of 26 February)
1,44A--fiLaefte'r
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THE AMERICAS
13. BRAZIL: Domestic and prospects--Prior to relinquish-
ing his post in Rio on 2'T February, Ambassador Berle set forth
his estimate of the probable course of Brazilian developments
during the coming months, EIe reported that the political situa-
tion is stable for the time being, and the political outlook is
promising. Dutra's Government party and Gomes" opposition
party are working well together in the Government, and both
will cooperate against obstructionist tactics by the Communist
group, whose influence seems to be waning because of its foreign
policy. Vargas' importance diminishes daily. The Army is out
of politics and enjoying the prestige gained by its decision not to
intervene except to guarantee elections.
In foreign affairs, Brazil's first concern is with the
struggle between the USSR and the US and UK. Any Brazilian
Government, other than a communist one, will do everything it
can to strengthen cooperation with the US. Of secondary concern
Is the Argentine question; Brazil's bread basket is being cut off
by Argentine tactics, and Brazil fears that Argentina may become
a bridgehead for Soviet maneuvers.,
14. URUGUAY: Status of Graf Sv_t_t_nterratl--The State Department
has advised Embassy Montevideo that it still regards the Graf
Spee internees legally as prisoners df war whom Uruguay is
obligated to return to Germany.
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