DAILY SUMMARY - 1947/05

• Document Type: SPECIALCOLLECTION
• Collection: Daily Summary Collection
• Document Number (FOIA) /ESDN (CREST): 02996866
• Document Creation Date: October 8, 2018

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81 MAY 1947
38
zeta-nom.� 394
THE C.I.A. HAS NO OBJECTION
TO THE DECLASSIFICATION OF
THIS DOCUMENT.
NO. sa0 9
I. HUNGARY: Co_Barmilltscir_p_IL unlikely--The {el --The US Military Repre-
sentative, ACC Hungary, comments that the recent Communist-engineered
political crisis is designed to eliminate Completely leading members of
the Smallholders Party from Hungarian political life. He reports, however,
that the possibility of a seizure of power by the Communists is remote be-
cause of the unpopularity of Communism among the Hungarian peasantry.
He adds that the present Soviet aim apparently is to obtain a more "co-
operative" government than that of Prime Minister Nagy, either a coalition
government with reduced Smallholder representation or one led ostensibly
by the Social Democrats.
IMEIcsoffixtst_aajr_imrztklios--The US Military Representa-
tive, ACC Hungary, has been informed by General Sviridov, Acting Chair-
man of the Allied Control Commission, that the Hungarian Government or
civil air line can conduct air communications negotiations "only with the
permission of the Commanding General of the Soviet Occupational Forces
through the Chairman of the Allied Control Commission or his deputy."
The US Representative on I May had indicated US intentions to initiate
negotiations for an air agreement with the Hungarian Government.
2. BULGARIA: Dimitrov seeks to discredit US--Acting US Representative
Horner reports that Prime Minister Dimitrov's charges -- that a US
officer of the Allied Control Commission and a Bulgarian doctor, em-
ployed by the ITS Mission, engaged in a public argument reflecting on the
� present Bulgarian Government, the USSR, and Dimitrov himself -- appear
to be complete fabrications. Horner believes Dimitrov's action has been
prompted by (a) Dimitrov's personal feelings over alleged discourtesy to
his picture; (b) the unfavorable portrayal of Bulgaria appearing in a recent
issue of LIFE magazine, and (c) a desire to put the US Mission on the
defensive before Bulgarian public opinion. Horner observes that the Bul-
garian doctor involved, now under arrest, may also be charged with
gathering intelligence and engaging in other treasonable activities.
EUROPE
NEAR EAST-AFRICA
3. INDIA: fon_mq_smcs121.2/2E. V iceiff:Emr2Em142 --US Embassy London
reports that the announcement on 21une by the Viceroy will meet Indian
demands for immediate transfer of pd`wer by proposing the establishment
Toia-sEei
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of a Hindustan and a Pakistan on the basis of Dominion status for both
countries. The Embassy emphasizes that because of legal factors de-
mands for early transfer of power can only be met in this fashion and
that both countries will have the right to withdraw from the Common-
wealth at any time. Embassy London and Embassy New Delhi both report
that while the Viceroy's proposals were originally acceptable to Nehru
and Jizmah, both men may refuse to accept them at the last moment and
that in any event widespread disorders are feared. Both jinnah and Nehru
have requested that the Indian Army (but not UK troops) be employed to
suppress all riots promptly and sternly. The Embassies report
that the situation is further complicated by strong sentiment in Beng-al
against partition into Hindustan and Pakistan sections and Met, despite
Congress and Moslem League opposition to a United Bengal as a separate
country, elements within the Province may forcibly attempt the creation
of such an entity.
FAR EAST
4. CHINA: Further Jolitical deterioration antic! ated--US Embassy Nanking
reports that the political situation in Nationalist China is deteriorating at
an accelerated pace, under the influence of economic and military factors.
The outlook for the next few months, in the Embassy's opinion, is for
further weakening of the Central Government's authority, but not for any
spectacular collapse. Economically, China faces continuing food stringency
and inflation. Nationalist military reverses in central Manchuria and
North China, which may necessitate at least a partial Nationalist withdrawal
In those areas, have aggravated general unrest and disillusionment. The
Embassy believes that the student movement will assume larger propor-
tions and notes that students are now agitating for a nation-wide general
strike to begin 2 June. Anti-civil war sentiment is increasing but has not
induced the Government thus far to make a formal offer to negotiate with
the Chinese Communists. If the Government does make such an offer, it
will probably do so with the foreknowledge that the Communists will either
ignore or reject any peace overtures at this time.
5. NET: Dutch doubt acce-tance of their terms--US Embassy The Hague re-
ports that the Netherlands Foreign Office has little hope that the Indonesians
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will accept the terms of the 27 May Dutch note which proposed the estab-
lishment of an interim Dutch-Indonesian regime to govern the NEI pending
the creation of the United States of Indonesia. The Foreign Office suggests
that a solution of current problems might be facilitated, if the US and UK
were to urge the Republic to be reasonable and consider the consequences
of rejection of the Dutch note. The Foreign Office does not support the
referral of the question to the UN because it does not desire "the Soviets
In the picture."
THE AMERICAS
6. NICARAGUA: Opposition hopes to win elections�US Embassy Managua
reports that (a) growing fear of non-recognition and the refusal of the
opposition to participate in the de facto government may force Somoza
to dissolve the Congress and call elections for a Constituent Assembly;
and (b) the Conservative Party, the leading opposition party, has agreed
to particVate in the elections in the hope that it could win an "easy
majority in reasonably free elections (Somoza has admitted rigging the
February 1947 elections). The Conservatives, meanwhile, have refused
to sign a manifesto supporting the restitution of President Arguello,
apparently because they intend to use their expected majority in the
Constituent Assembly to force Somoza to leave the country or to stage
another coup.
The US Naval Attache Managua reports that he has discussed the
Somoza coup with diplomatic representatives of many countries both at
Guatemala City and at Managua and that all urged that the US take the
initiative to obtain joint inter-American action to isolate Somoza's de
facto government and to support the Arguello Government.
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GENERAL
29 NAY 1941
393
1. UK to sell et aircraft to ltJSSR--The British Ministry of Supply has told
the US Military Attache London that the UK Government has approved
"In principle" the sale of Meteor and Vampire jet aircraft to the USSR;
it is contemplated, however, that delivery will not be made for at least
a year.
(CIG Comment: Both Meteors and Vampires have already been
sold to other powers. The UK will undoubtedly ship the same "export,"
or obsolescent, models of these aircraft to the USSR.)
EUROPE
2. ITALY: Dunn ur es US su rt of De Gas j--US Ambassador Dunn
reports that De Gasperl is attempting to form a single-party, Christian
Democratic government. De Gasperi has told Dunn that: (a) the success
of such a government depends upon its ability to deal with the economic
situation; and (b) if it fails, a government of the extreme Left would
follow. De Gasper' added that survival of the proposed Government would
depend upon new and substantial evidence of economic aid which could be
applied to the support of the lira and which would indicate to the Italian
people that the government had sufficient financial strength to achieve
economic recovery.
Dunn believes that "we have come to the point right now" where
the US should, if possible, give economic and financial support to the
government proposed by De Gasper', as this would be an "opportunity
for the US to indicate in bold relief its political support for the first post-
war Italian government formed without the Communists."
3. FRANCE: Communists pleased by strike compromise--US Embassy
Paris reports that, according to sources close to the Communists, the
latter are as pleased as is the Government with the compromise reached
over the threatened gas and electrical strike, because the Communists
realize that the public is not in a mood to tolerate the difficulties which
such a strike would produce. The Embassy believes that, while Commu-
nists leaders for the next month at least will try to confine themselves
to middle-of-the-road tactics, working class discontent over mounting
food difficulties may reach uncontrtglable propoTtions.
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4. GREECE:ES_ssay_to Ma3dmos--Secreta Marshall has informed US
Ambassador MacVeagh that the Secretary's comment on the present
Greek Government, which was reported in the Athens press (see Daily
Summary of 27 May, item 2), was not intended as a criticism of Premier
Maximos' leadership. The Secretary adds, however, that the US: (a)
cannot look with favor on excesses committed by extreme elements of
either the Right or Left "whether represented in the Government or not;"
and (b) has no intention of attempting to change the Greek Cabinet but
considers the continued presence of such irreconcilables as Minister of
Public Order Zervas "not reassuring."
FAR EAST
5. NEI: Foote's views on Dutch-Indonesian relations--US Consul General
Foote in Batavia reports that the Dutch have presented new proposals to
the Indonesian Republic, and that a Dutch mission is en route to the Re-
public's capital to hold broad discussions with President Soekarno and
his Cabinet. Lieutenant-Governor General Van Mook has declared to
Foote that the Dutch have not threatened the Indo esians with the use of
force but have told them that "the Linggadjati agreement would be
carried out with or without the Republic's cooperation." Foote contends
that: (a) the area of mutual distrust between the Indonesians and the
Dutch has not increased; (b) Dutch military elements are not gaining in
Influence over the civilians; (c) the Dutch do not want to use military
force; and (d) the Dutch and Indonesians will probably reach agreement
if they are left alone, but any outside interference will result in complete
Communist or terrorist control of the country.
pataLtasiv US-UK arbitration if conditions deteriorate--US
Embassy London has been told by the UK Foreign Office that the Nether-
lands Foreign Office and the Dutch Commission General at Batavia favor
Us-UK arbitration in the event of a further deterioration of Dutch-Indo-
nesian relations. The Commission General, however, favors arbitration
only if the new Dutch proposals are rejected by the Republic.
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TOP-SECItEr
GENERAL
2 R MAY so
392
1. UNESCO urged to send oziy bservers to Pr e--The Department of
State has instructed the US Embassy Paris to inform the Director-
General and the Deputy Director-General of UNESCO that the Depart-
ment considers it essential that UNESCO should not be indentified with
the forthcoming Prague Youth Festival, or with the conferences in Prague
of the International Organization of journalists and the International Radio
Organization (see Weekly Summary of 16 May, page 1). The Department
believes it would be preferable to designate UNESCO participants in these
conferences as "observers" rather than as delegates and that such ob-
servers should not share in the formation of policies.
EUROPE
2. GREECE: Government wishes to increase size of Arm --Foreign Minis-
ter Tsaldaris has delivered an aide -memoire to US Ambassador Mac-
Veagh reiterating the Greek General Staff's conviction that the size of the
Greek Army must be increased, as the Army "is not at this moment oc-
cupied in suppressing armed rebellion but in fighting an undeclared war."
The aide -memoire states that: (a) the proposed increase will be subject
to US concurrence; and (b), while the Greek Government realizes that
military expenses are non-productive and would not willingly agree to
diversion of funds for this purpose, it feels that the re-establishment of
law and order is an "all-important basis for any future reconstruction
plan." (The State Department had informed MacVeagh that in its opinion
neither the Greek Army nor Gendarmerie should be increased "pending
further study of both military and economic implications.")
NEAR EAST�AFRICA
3. EGYPT: Delejon to SC not coAsideln; strong--US Embassy Cairo
reports that the delegation, selected by Prime Minister Nokrashy to
present Egypt's case against the UK to the Security Council, owes its
composition partially to partisan politics and partially to the lack of
better material and is regarded 4s neither strong nor particularly
competent.
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FAR EAST
4. CHINA: fliameAttsla.lasqejggs need for - -The Chinese
Foreign Minister has told US Embassy Nanking that China is now at
a critical turning point and that a US loan is therefore needed immedi-
ately. He added that two Chinese officials recently departed to present
this matter in Washington. Subsequently, the Embassy was told by
China's Premier that China's immediate ills arise primarily from
economic causes and that, if the economic situation could be saved, the
way would be cleared for gradual settlement of China's political and
social problems.
5. KOREA: ,Rightists maybe Los wer--US Political Adviser Langdon
reports that the coalition of righ st parties headed by Rhee Syngman
has memorialized the Joint Commission along the lines of previous
rightist protests against the Moscow Decision. Langdon adds, however,
that Rhee Syngman's most recent personal statement suggests that "the
non-cooperating rightists may be losing control of the situation."
THE AMERICAS
6. PARAGUAY: President desires elections--US Ambassador Beaulac in
Asuncion reports that President Morinigo has expressed the hopes that
political peace could be achieved by holding free elections after the
revolt is suppressed, and that the Paraguayan Government might extend
an invitation to other American Republics to send observers to assure
themselves that the elections are free.
Brazil and ma agree on 1,....amitprocedure--The Argen-
tine Foreign Minister has told US Ambassador Messersmith in Buenos
Aires that President Peron and President Dutra (Brazil) have agreed
that, if Brazil is unable to mediate the Paraguayan civil conflict, Brazil
will seek the views of the other American Republics on joint mediation
by Argentina, Bolivia, and Brazil.
7. URUGUAY: Berreta-Dutra conversations--US Embassy Montevideo
has been informed by the Uruguayan Foreign Minister, on the basis of
the recent discussions between Presidents Berreta and Dutra, that:
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(a) Brazil would convoke the Rio Conference whenever the situation in
Latin America "gives the most promise of success"; (b) although
Argentina is not really Interested, it would attend the conference; and
(c) Brazil and Uruguay are agreed that the Communist problem in
Latin America should be handled by individual countries rather than
by inter-American action. The Uruguayan Foreign Minister added
his opinion that Argentina's seeming indifference to the conference is
a tactical measure.
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GENERAL
27 No 1947
391
"
1. Prospective delivery by UK of It motors te,AEMSR--Information now
received from the Department of State quotes the UK Foreign Office as
saying that the UK is planning to deliver to the USSR "35 Nene jet
� motors" instead of "359 jet motors" (see Daily Summary of 23 May,
Item 1).
EUROPE
2 GREECE: Maxims feels US $taten esaseLitgAp_e_o_ o r ro s--
US Ambassador MacVeagh has asked the State Department whether it
can give some answer to Prime Minister Maximos' request for clari-
fication of Secretary Marshall's reported comment (which appeared in
the Athens press on 10 May) that the US does not consider the present
Greek Government to be "all that is desired, but. . . hoped it would
develop into what is desired." MacVeagh states that this matter may
be more serious than it appears and may involve the resignation at a
critical time of 1V1aximos, who is the "most non-partisan, moderate,
and cooperative personality in the Government." MacVeagh feels that
Maximo? request is not merely a sign of personal sensitiveness but an
Indication of the Prime Minister's precarious position vis-a-vis
Tsaldaris and other party leaders. The Prime Minister's most likely
successor, according to MacVeagh, would be Tsaldaris, "with conse-
quent difficulties for our mission which anyone who met him in Wash-
ington Will understand."
NEAR EAST-AFRICA
3, EGYPT: Formation of Communist Part to be announced--Prime Min-
ister Nokrashy has informed US Ambassador Tuck that: (a) the exist-
ence in Egypt of a Communist executive organization is now definitely
established; (b) the organization maintains its contacts in Egypt through
a senior member of the Yugoslav Legation in Cairo; (c) the organization
intends to announce within a few months the formation of a Communist
Party in Egypt; and (d) he will not oppose this move as he feels it would
enable him to watch and control Communism r,tiore closely."
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THE AMERICAS
4. NICARAGUA: Somoza in control--US Embassy Managua reports that
ex-President Somoza: (a) is now firmly in control of the country;
(b) has been informed that the US continues to recognize President
Arguello as head of the Nicaraguan Government; (c) apparently has
decided that he can "weather a limited period of international disap-
proval," possibly because of the recent successes achieved by such
dictators as Trujillo and Morinigo; and (d) believes that he can force
President Arguello (now a prisoner without food) to resign in order
that the Somoza-dominated Congress can pick a successor.
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GENERAL
M AY 190
390
I. UK-USSR treaty negotiations--US Embassy London reports that, accord-
ing to the UK Foreign Office, "no progress" was made in the latest UK
USSR discussion over revising the Anglo-Soviet treaty. US Embassy
Moscow, however, reports that some progress was made, in that the
USSR indicated some willingness to modify its insistence on a provision
that each nation should refrain from participating In any direct or in-
direct move against the other. Both Embassy Moscow and Embassy. Lon-
don report that UK negotiators reiterated to the USSR that they could not
go beyond the terms of the Anglo-French Treaty.
A high UK Foreign Office official has told Embassy London that
he cannot believe the Soviets do not want a treaty, but he feels that the
Foreign Office must be prepared for renewed Soviet charges that Bevin
does not want one.
EUROPE
2. NETHERLANDS: Conflict over NEI settlement drawing to a
Embassy The Hague has been told by Dutch conservatives that Holland's
only alternative to becoming a second-rate mercantile world figure is
to reconvert its colonies quickly and ''by force if necessary." The Em-
�
bassy reports further that raw troops are "constantly drilling" every
night in side streets and that the morale of the new men is said to be
high compared to that of the troops who have been returned from the NEI.
"Well-informed authorities" are convinced, according to the Embassy,
that military action designed to restore law and order in Indonesia will,
In effect, be a blow against the further spread of Communism. The Em-
bassy adds that Dutch military and naval commanders have been recom-
mending military action for some time; the atmosphere is tense and the
situation might suddenly get out of hand.
The US Military Attache The Hague believes that upon the return
of the Prime Minister and the Minister of Overseas Territories from
Java on 28 May, the conflict between the Left and the Right over the Gov-
ernment's policy in the NEI will probably come to a head. The MA indi-
cates that the Conservatives and the right-wing Catholics want to use
force to implement the Linggadjati Agreement; Labor and the Communists
want to reduce troop strength. -
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�
Dutch in NEI pessimistic--According to US Consul General Foote
In Batavia, important Dutch representatives in the NEI feel that further
negotiations with the Republic will be fruitless. Foote believes that,
following the return of these officials to the Netherlands, the Dutch will
decide to proceed with the formation of the United States of Indonesia
as rapidly as possible. '
Significance of Soendanese coup in West Java--Foote also reports
that unarmed Soendanese occupied the city of Buitenzorg in West Java on
23 May, taking over all public buildings and seizing Indonesian Republic
officials. Foote believes the Soendanese movement against Javanese
domination (see Weekly Summary of 9 May, page 9) is gaining strength;
if it succeeds, it may encourage Sumatra, Madura, and East Java to
secede from the Republic and become separate states within the United
States of Indonesia. Foote reports widespread local belief that the days
'1410 of the Republic are numbered.
'tor'
3. FRANCE: Talks on Czechoslovak pact to begin soon--US Ambassador
Caffery has been told by a Foreign Office official that conversations
would begin soon on a bilateral Franco-Czechoslovak pact. The official
stated that, while such a pact would afford France little or no protection,
It was useful to help countries like Czechoslovakia to "keep a window
open toward the west."
da s Ra 4ta. w str eat�Foreign Min-
ister Bidault has told US Ambassador Caffery that (a) he is "not unhappy"
about the present crisis caused by the threatened electrical workers'
strike; (b) he is urging Premier Ramadier to stand firm and he believes
that Ramadier will; and (c) the MRP and himself are "heartily behind"
Ramadier.
4. DENMARK: Action to end US-Greenland a reement ssible--Prime
Minister Kristensen of Denmark has informed US Ambassador Marvel
that the Communists plan to introduce a resolution, In the Parliament
calling for action to terminate the US-Greenland defense agreement
and "restore Denmark's sovereignty." He also stated that because the
major parties have indicated support for such a resolution, his party
would be obligated to do likewise; consequently, he believes such a
resolution would be passed this week. The Prime Minister considers
that, although the resolution was Moscow-directed, Denmark's neutral
position must be maintained. The Prime Minister added that the recess
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of Parliament (from 30 May to 1 October) may delay Parliamentary
action, but when such a resolution is adopted he intends to retard its
Implementation. (US Military Attache Copenhagen considers passage
of this resolution "extremely remote.")
NEAR EAST-AFRICA
5. INDIA: Lack of optimism over Viceroy's proposals�Contrary to opti-
mistic information previously received by US Embassy New Delhi (see
Daily Summary of 21 May, item 8), US Charge Merrell now reports that
neither Jinnah nor Congress Party leaders show any inclination "to
create a conciliatory atmosphere" for the conference scheduled for
2 June on the Viceroy's proposals for the transfer of authority in India.
Merrell adds that, during the past few days, he has been unable to dis-
cover any optimism among Indians or the British concerning the out-
come of the conference.
6. IRAN: Reported deterioration in Azerbaijan�US Ambassador Allen has
received information that the situation in Azerbaijan has deteriorated.
The Shah, aware of conditions, is now making a tour of the province.
According to Allen's information, Soviet agents are attempting to incite
the Kurdish tribes to resist with force the Iranian Army's disarmament
demands. Allen believes that if fighting should break out over the ques-
tion of Kurdish disarmament, the Soviets "would very probably" try to
re-establish themselves in the area by assisting the Kurds.
FAR EAST
7. CHINA: Temporary lull in student demonstrations�US Embassy Nanking
expects a temporary lull in Chinese student demonstrations as the result
of police enforcement of the Government's ban on public mass demon-
strations. However, the Embassy believes that the principal motivating
forces behind the student movement � economic deprivation and misery --
probably will lead to greater waves of unrest as the economic situation
deteriorates, and as it becomes plainer that the Government can produce
"only short-lived palliatives." The Embassy also cites as noteworthy the
absence of anti-Americanism In the current demonstrations.
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THE AMERICAS
8. PARAGUAY: Mediation of military phase not desired--US Ambassador
Beaulac has been told by the Foreign Minister that the Paraguayan Gov-
ernment does not intend to accept mediation of the military phase of the
civil conflict, as that would benefit the rebels. The Government, how-
ever, has agreed In principle to accept mediation of the political issues
after the "unconditional surrender" of the rebels.
Army seeks US ammunition--US Military Attache Asuncion
reports that the Paraguayan Chief of Staff has asked the Chief of the
US Army Mission in Paraguay to turn over 5,000 rounds of US .30 cali-
ber ammunition to the Paraguayan Army for "training purposes." The
Attache comments that probably "soma or all" of this ammunition
would be distributed to Government troops and adds that US Ambassador
Beaulac has recommended to the State Department that the ammunition
be made available as requested. (The Paraguayan Government is re-
ported to have no .30 caliber ammunition for the machine guns mounted
on six lend-lease picket boats which it wishes to use for operations in
the Paraguay River along the rebel flank.)
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GENERAL
2b4 MAY 1947
38
ects r- 'nest to divert wheat to Germanz--A UK Foreign Office
Ida as orme
iibouglas that the UK cannot
�� �
agree to divert to Germany five cargoes of UK-bound wheat, because
British food stocks are in a "precarious position" (see Daily Summary
of 22 May, item 1).
EUROPE
2. FRANCE: Bread ration to be_sLa une�Premier Ramadier
has told 'US ery that he is -"TAM terribly concerned"
about the food situation and that the bread ration will have to be cut
again next month. (In discussing the Government's chances of survival,
a "reliable source close to Ramadier" has observed to Caffery that,
"If the food situation gets no worse, Ramadier's chances of survival
appear to be about even; everything depends on the arrival of grain
shipments from the US.")
3. BULGARIA: Re Tm_lec_Mncealment of air force units�US Delegate
ACC Sofia transmits as 'possibly true"Thlort from a "fairly
reliable" source that several regiments of the Soviet-equipped
Bulgarian Air Force are being or will be moved to Yugoslavia in
order to conceal the true size of the Air Force from US and UK author-
ities charged with responsibility for enforcing the Peace Treaty.
FAR EAST
4. NET: UK warns.....DattclicrLuse of f pree�According to US Embassy
London, Bevin has directed the UK Foreign Office: (a) to make it
plain to the Dutch that the British will not support them, if they launch
military operations against the Indonesians; and (b) to explore the pos-
ef joint US -UK mediation. B9vin also expressed the view that
the US, by threatening to withhold economic support from the Dutch
and Indonesians, might induce both sides to be more cooperative.
THE AMERICAS
5. ARGENTINA: Arms ordered from Celchoslovakii�US Military At-
tache Prague has been told by a usually reliabltogamett.kat Argentinad4.7
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has placed an order with the Shoda Works for 200 German-type
88 millimeter guns. The MA considers the report as "probably
true" and adds that Siroda definitely has models of this weapon.
8. PANAMA: El_glentle settlement desired--The Panamanian Minister
of Public Works has told US Embassy Panama that the "entire Cabi-
net" has turned against Foreign Minister Allaro because of his
handling of the negotiations with the US concerning the Panamanian
defense sites (Allaro has been the chief opponent of the US position
in the negotiations), and that President Jimenez is "more worried
than ever" over the defense sites question. The Public Works Minis-
ter added that the question should be settled "at all costs."
Co
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GENERAL
23
388
1. jlEsLe jamojaikagattettia��a--The UK Foreign Office has
denied press reports that the UK is exchanging scientific "secrets"
for USSR grain and timber and has told US Embassy London that:
(a) there is no impending UK-USSR "deal of a surprise nature,"
but (b) the UK is going to deliver to the USSR 394 jet engines (dupli-
cates of which have previously been sold to the USSR as well as to
other countries). The Foreign Office pointed out that these engines
have been superseded by improved models and that the Foreign Office
does not approve of release to the USSR of any "secret materials or
data."
EUROPE
2. USSR: Embassil/loscow ureALTSsif2rts to counter Sovigm2pamsLa--
US Embassy Moscow reports that the Soviet counteroffensive against
the Truman proposals has taken the form of a particularly vicious propa-
ganda attack since the President signed the bill. The proposed economic
aid to Greece and Turkey is depicted as the plan of the "anti-democratic
reactionary monopoly capitalists" -- who control all phases of American
life � to squeeze profits from these countries and to form an anti-Soviet
bloc in preparation for a new war. The Soviets apparently hope: (a) to
frighten countries into refusing US aid by depicting the dire consequences
of accepting such aid; and (b) to prevent US aid from being effective and
thus fix on the US the blame for continued economic unrest.
FAR EAST
3. CHINA: tomninastg_bloglcrlorth China coal supplyto Shanghai--US Con-
sul General Shanghai reports that Chinese Communist attacks on the
coastal rail line running northeast from Tientsin have cut off deliveries
fc---"'"-yi7om the large Kailan coal mines (major supply point for Shanghai,
ientsin,and Peiping) to the coal port of Chinwangtao. As a result, the
coal supply situation in the Shanghai area has become suddenly acute.
Shanghai fuel authorities, the Consul General adds, anticipate that so
long as K.ailan supplies are cut off, 'ether domestic sources will be able
to furnish only about 50% of the coal needed by Shanghai's essential
services alone.
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4. NEI: Dutch Foreln Office views--According to US Embassy The
Hague, the Netherlands Foreign Office feels that the solution of the
NEI problem lies between the extremes of military action and Dutch
withdrawal from the Indies; the Foreign Office denies that the Nether-
lands will resort to arms at this time.
THE AMERICAS
5. COLOMBIA: Strike averted b last-minute settlement--US Charge
Lockett reports, with reference to a last-minute settlement that averted
a petroleum workers' strike set for 22 May, that: (a) the US companies
involved made "no very serious concessions"; and (b) the union's willing-
ness to settle on such terms was the result of the Colombian Government's
"firm attitude" and of labor's loss of face following the recent unsuccess-
ful general work-stoppage.
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GENERAL
fOrfri
387
1. US seeks diversion of UK-Vound wheat to Germany--The State Department
has suggested that Ambassador Douglas make a personal appeal to the UK
Government for the prompt diversion to Germany of five cargoes of wheat
now en route to the UK. The US Government, through the Bizonal Supplies
Committee, and the UK Embassy Washington have already made such a re-
quest. The State Department comments that the situation in Germany un-
doubtedly will become more critical and a possible distribution breakdown
may be unavoidable, unless this wheat is diverted.
2. Poland agrees to French flights to Warsaw--US Embassy Warsaw has
learned from the French Charge that Poland has now provisionally agreed
to "reciprocal" weekly flights by Air France from Paris to Warsaw via
Prague (see Daily Summary of 8 May, item 2).
3. "Kgrjollays reportedly_f)--US Legation Budapest has been
reliably informed that 10,000 - 14,000 fugitives from Yugoslavia have
entered Hungary durimg the past few weeks and that Yugoslavia has re-
quested the Hungarian Government to return them. Source observed that
the Hungarian police rill have difficulty in rounding up the fugitives as
the latter are being sheltered by the Hungarian population.
EUROPE
TUGAL: Plans for revolution seized in raids--US Military Attache
reports that on 15 May the secret police raided two houses in
Lisbon and seized "important documents' which reveal plans for revo-
lution and the formation of a new organization called the Movement of
National Liberation. The MA adds that many of the persons involved are
in "high political and military positions" and the police are "wary" of
arresting those detained in the raids or implicated by the seized records.
5. GREECE: Ruthlessness urged against "irreconcilable" verrillas--US
Embassy Athens reports that the Governor General of Northern Greece,
In a private communication to Premier Maximos regarding the amnesty
proposal, has divided the Greek bandits into three categories: (a) 25%
dynamic Communists absolutely subservient to Moscow; (b) 25% less
Intransigent Communists; and (c) 50% non-Communists, who have been
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lured into bands or recruited by force. The Governor General has urged
Maximos to continue a ruthless military policy until the irreconcilables
of the first category are annihilated or compelled to flee the country, and
immediately thereafter to implement the "broadest measures of leniency."
(CIG Comment: The Governor General does not make clear how
the Greek Army in its actions against the guerrillas is to distinguish be-
tween "reconcilables" and ''irreconcilables.")
FAR EAST
6. KOREA: US statement on trusteeship suggested--US Political Adviser
Langdon reports that, in recent discussions with General Hodge, South
Korean rightist leaders have taken an attitude strongly reminiscent of
their "trusteeship revolt" of December 1945. They are requesting US
authorities to omit the word "trusteeship" from all future discussions
of the Moscow Decision, and to present an "agreed definition of democ".
racy' to the Korean people. Langdon adds that General Hodge sees little
hope of persuading rightist groups to coOperate with the joint Commission,
and Hodge feels that these groups may try to force the US to establish a
separate government for South Korea.
On the chance that a face-saving gesture might induce the rightists
to cooperate with the Joint Commission, Langdon suggests that the State
Department issue or allow Hodge to issue a statement of US views on
trusteeship designed to allay Korean fears of "tutelage."
I. NET: Possible Dutch use of force--According to US Embassy London, the
Dutch Foreign Office has informed the UK Foreign Office that the Dutch
have three alternative courses of action in the Indies: (a) use of force;
(b) withdrawal from Indonesia; or (c) recourse to mediation by the US --
which the Dutch feel would be "ham-fisted" and unproductive of satis-
factory results. The Dutch Foreign Office emphasized that it was not
Dutch policy to use force to achieve a solution, but the UK considers that
Dutch military elements might take the initiative and make impossible any
rectification of the situation by moderate elements.
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8. CENTRAL AMERICA: Secret anti-CommajlEtaastsil--US Military
Attache San Salvador reports that the Presidents of El Salvador, Honduras,
Nicaragua, and Costa Rica recently signed a secret agreement to suppress
Communist activity in Central America.
9. PARAGUAY: President concernedait_kmg-victsmproblems--US Am-
bassador Beaulac Asuncion reports that President Morinigo,Telleving
that victory over the rebels is imminent, is concerned with the probable
post-victory demands of the Government Army and fears that a "man on
horseback" might emerge. Beaulac considers that there is enough opposi-
tion among the Colorados (sole political party supporting Morinigo) to
make such a move possible.
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EUROPE
21 M AY 1947
386
1. BULGARIA: R2ported aid to 22.srpK .n.s--US Military Representa-
tive Sofia has learned from a utisiiillfrie" source that approximately
four trains, containing 30 to 40 cars each loaded with ammunition and
light artillery, passed through Sofia between 12 and 14 May en route to
southern Yugoslavia, where the supplies are reportedly being turned over
to Greek partisans.
From a similar source, the Military Representative has learned
that certain quarters in Sofia recently vacated by the USSR have been oc-
cupied by Greek partisan officials, who are presumably working with the
Bulgarian authorities.
2. YUGOSLAVIA: Possible diplomatic break with Greece--US Military At-
tache Belgrade believes that the Yugoslav request or the recall of the
Greek Military Attache in Belgrade and the recent violent attacks on
Greece in the Yugoslav press may be a "build up" for breaking off rela-
tions with the present Greek Government and possibly for recognizing a
new "democratic" regime in northern Greece. The UK Ambassador Bel-
grade has expressed to the US Embassy his fear that "any firm step" by
the Greek Government may be used by the Yugoslays as an excuse for a
break in relations.
C"Th
3. RUMANIA: ME _Milts in Italy_i_lesired--US Representative Berry has
received from an "inside source" the text of a request from the Rumanian
Civil Aviation Bureau asking for Rumanian Foreign Office assistance in
obtaining new air routes into France, Switzerland, and Italy. Berry under-
stands that as yet no approach has been made to Italy, but he suggests the
desirability of taking steps to block a possible grant by Italy of air rights
to Rumania until the current US-Rumanian air discussions produce satis-
factory results.
(CR) Comment: The Rumanians may anticipate that a circuitous
route through Italy into Switzerland and France will be necessary, if the
US continues to bar overflight of the US Zone Austria.)
4. UK: Financial osition deteriorati more ra kit than expected--High
UK. Treasury officers have told US Embassy London that the Brftish fi-
nancial position has deteriorated beyond the official estimates made last
month. The officers stated that: 4) the February fuel crisis will have
an adverse effect on the export drive for nine months; (b) it is now anti-
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cipated that the 1947 export goal, 140% of the 1938 volume, will not be
reached until the second quarter of 1948; and (c) It will be necessary to
feed the people better (that is, increase imports over the 1946 level of
consumption) in order to reach the required level of productivity.
(CIG Comment: The Labor Government may also have a politi-
cal motive for improving the diet. Early abandonment of the Govern-
ment's recently set 1947 export goal and financial estimates will put it
In a nearly indefensible position for a government committed to "plan-
ning" and will provoke widespread, vigorous, and telling criticism.)
8. GERMANY: French hesita_kmzonagsi--US Consul General Mayer
reports from Baden that it has become apparent that France will not agree
to merge its Zone with the US-UK Zone at the present time, as it fears
that such an action might cause the USSR to set up a satellite "republic"
In the eastern Zone. Mayer adds that, while "responsible French authori-
ties" favor an economic union of the western Zones, they fear that such
a "republic" might remain permanently under Soviet domination.
(CIG Comment: The creation of a separate Soviet satellite republic
In eastern Germany would prejudice Soviet claims for production from
western German economy. This loss, coupled with the fact that the USSR
already has political control of its Zone, makes such a drastic political
step by the USSR improbable.)
6. FRANCE: Egree of economic control becomes ma or issue--US Amba sa-
dor Caffery reports that the question of a controlled versus a more libe al
economy is one of the major factors that might precipitate the collapse of
the Ramadier Government. The Leftist Rally (RGR), which is largely Radi-
cal Socialist, supports the liberal policy; the Socialist Party favors stronger
controls. The Communists, "who wish to return to power at all costs," ac-
cording to Caffery, "know that if the RGR withdraws' from the Cabinet,
there is little possibility of a new Government being formed without Com-
munist participation. They are, therefore, trying to drive the RGR into an
extreme position against controls in order to force the RGR to resign from
the Cabinet.
NEAR EAST-AFRICA
7. TURKEY: Secretary General Erkin to leave Foreign Office--US Ambassa-
dor Wilson reports that Secretary General Erkin of the Turkish Foreign
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Office will shortly be appointed Ambassador to Italy, an appointment
which Erkin requested primarily because of personal differences with
Foreign Minister Saba. Wilson adds that the Turkish Cabinet feels some
concern that Erkin's departure may weaken the Foreign Office "at a criti-
cal period." Wilson also considers it possible that Erkin may be named
Ambassador to Washington after a few months in Rome.
8 INDIA; Possibility of Congress-League agreement�US Charge Merrell
has been informed by a highly confidential source that jbmah has virtually
agreed to the Viceroy's proposals for the transfer of power (see Daily
Summary of 19 May, item 5). Although Merrell feels that Congress and
League leaders now appear closer to complete agreement than at any
time since last June, he &kis that the complexity of the factors involved
Is such that any untoward incident prior to public announcement of the
proposals could easily upset the prevailing delicate balance.
FAR EAST
9. NEI: Dutch-Indonesian relations deteriorate--According to US Embassy
London, the British Foreign Office has been informed by its representa-
tives in Batavia that (a) the Dutch have told representatives of the Indo-
nesian Republic that they are prepared to resort to force, if satisfactory
agreement is not reached in current Dutch-Indonesian negotiations; (b)
Republic Premier Sjahrir replied that the Republic would not be intimi-
dated by such threats; and Kin view of the serious situation, Lt. Governor
General Van Nook has postponed his trip to the US in connection with a re-
habilitation loan for the NEL
Embassy London also reports that the UK Foreign Office intends
to consult with the State Department in the near future concerning possi-
ble joint measures to be undertaken to prevent open hostilities between
the Dutch and the Indonesians.
10. FIC; Attitude of President Ho to negotiations with French--US Consul
Hanoi reports that, according to "a usually reliable source," a repre-
sentative of the French High Commissioner's staff has met with Presi-
dent Ho Chi Minh of the Vietnam Republic. According to source, Ho ap-
peared to have lost all confidence in French authorities and intentions,
was willing to continue the war, and did not wish to negotiate with the
French except as recognized head of the Vietnam Government.
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11. CHINA: Develf ja_itt of student demonstrations--US Embassy Nanking,
in a comment (1 the student demonstrations that have been accompanying
rice riots and ( flier civil disorders in leading Chinese cities, reports
that such demo istrations have reached a point where"practically every
academic centA r in the country is on strike." Originally characterized
by demands for greater appropriations and improvement of university
curricula, the student demonstrations have recently developed more basic
demands, such as immediate termination of China's civil conflict. It is
now apparent, the Embassy adds, that: (a) leadership in the disturbances
is passing from the Kuomintang's CC Clique (see Daily Summary of 19
May, item 10) to the left-wing Democratic League and the Chinese Com-
munists; (b) present student disorders, which are taking place in viola-
tion of the Central Government's 18 May ban on public mass demonstra-
tions, present an important challenge to Government authority; and (c)if
the disorders are not halted soon, they may contribute to "further deteri-
oration of the already parlous political-economic situation."
THE AMERICAS
12. ARGENTINA: Jet planeswd msed from UK--A reliable source has told
US Military Attache Buenos Aires that: (a) six British Gloster "Meteor"
jet aircraft have been sold to Argentina as an inducement for larger fu-
ture orders; (b) Argentina has entered into a "conditional contract" for
future deliveries (possibly six); and (c) Miguel Miranda, head of the Ar-
gentine Central Bank and the Foreign Trade Institute, has disapproved
the larger future orders.
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GENERAL
20 MAY 1947
385
1. USSR curious about US antheCommunist activities in Latin America--US
Embassy Lima has been reliably informed that Moscow through Bogota
has instructed Communist Party headquarters in Lima to find out who in
each US Embassy in Latin America directs anti-Communist activities.
EUROPE
2. USSR: Indications of military shipments to the Balkans--Assistant US
Naval Attache Odessa reports that, except for occasional passenger
veesels, tankers, and UNRRA shipments, the port has been virtually
deserted during the past month. The Assistant NA believes that this
f et lends credence to a report he had previously received that the
greater portion of Black Sea shipping is now engaged in moving military
supplies to the Balkans and is avoiding Odessa to escape observation by
the US.
US consulate at Lenin rtd _aptEroved--The Department of State
has been informed by the Soviet Embassy in Washington that the Soviet
Government has agreed to a US request to open a consulate at Leningrad.
Mee Department of State had previously indicated that it was prepared
to close a Soviet consulate in the US, if the USSR persisted in refusing
to permit additional US consulates in the Soviet Union; see Daily Suransary
of 4 December 1946, item 4.)
3. RUMANIA: Drives to integrate Rama Ian and Soviet economies--US
Representative Berry has been reliably informed that the parallel drives
of the local Communists and the Soviet Government to integrate the Ruma-
nian economy wholly with that of the USSR have been accelerated in an
effort to complete the integration before the Rumanian peace treaty goes
into effect. According to Berry, both the local Communists and the USSR
seek the eventual exclusion of all outside interests and the ultimate de-
sir uction of private initiative.
Berry advises against Chase Bank loans--US Representative
Berry feels that Chase National Bank loans to the nationalised Baltic of
Rumania will have "unfortunate repercussions," as the Rumanian people
will believe that such loans are made with the express approval of the US
Government.
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4. ITALY: Communist cow d'etat rutorlsiplamied and ,cancelled--US
Forces Mediterranean Theater have learned from a T`highly placed
source in the Italian Naval Intelligence" that at a special meeting of
the Communist High Command plans were made for a coup d'etat if
the Communists were excluded from the Government, but that these
plans were subsequently cancelled and orders issued for Party members
to remain calm during the period of governmental crisis. The source
states further that the Party has bee assured "ample funds from Mos-
cow" for use in the coming elections. G-2 Mediterranean Theater adds
the comment (in which CIG concurs) that a Communist attempt at a
coup d'etat at this time would be abortive and Party suicide.
5. FRANCE: "Sti_alw" Eolicy. in Morocs likelyo cause trouble--US Con-
sul General Ailing reports from Tangier that if the French take a strong
line in Morocco (as they appear ready to do in carrying out their pro-
posed reforms) it seems likely that such action will tend to strengthen
the nationalist movement and even lead to outbreaks from which Morocco
has been remarkably free up to now. Ailing adds that, according to the
US Consul in Rabat, the French "appear ready, able, and almost anxious
to put down any disturbance so as to raise their prestige."
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GENERAL
MAY
384
1. USSR emx�esses interest hi US-Rumanian air ne otiations--US Representa-
tive Berry in Bucharest reports that the Soviet Chairman of the Allied Con-
trol Council has approached the US Military Mission for full information
concerning current US-Rumanian discussions for an interim air agreement
(see Daily Summary of 16 May, item 2)...1 Berry also reports that, accord-
ing to a "fairly reliable inside source,' the Soviet Embassy has notified
the Rumanian Ministry of Communications of the USSR's desire to "post-
pone or drag out" the negotiations.
2. British re ort on Y oslav DP's in nal -According to US Embassy Bel-
grade, e prelim ry repo o e acLean Commission (which screened
the British DP camps in Italy) points out that virtually all Yugoslays in
these camps: (a) are former Quislings or collaborationists; (b) have never-
theless been permitted after their arrival in Italy to organize military
formations directed against the Yugoslav Government; and (c) have under-
taken activities inimical to the Yugoslav Government even within territory
under the latter's jurisdiction. According to the Embassy, the report
makes it clear that the "British military have at the very least winked at
what has been going on in these camps." The Embassy adds that it has
reason to believe that conditions are "at least as bad' in the British camps
In Austria and Germany.
EUROPE
3. FRANCE: Llin to effect Moroccan reforms --US Ambassador Caffery has
been told by a friendly Foreign Office official" that General Juin, who
plans to leave about 24 May to assume his new post as Resident General
of Morocco, will fell the Sultan of Morocco that: (a) the French realize
that the old concept of colonial empire is no longer valid; (b) the Moroccans
must have a progressively greater voice in their own destiny; (c) the re-
forms proposed by the French are designed to prepare the Moroccans for
gradual assumption of governmental responsibility; and (d) in view of these
considerations, the Sultan is "expected to approve the proposed reforms
at once."
In Caffery's opinion, there js no doubt that the French "intend to
be firm with the Sultan" and will blast on putting these reforms into effect.
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The French believe, according to Caffery, that while the Sultan objects to
many of the reforms on the grounds that they do not go far enough, he
actually opposes them because they would destroy his argument to the
Moroccans: that no real reforms can be expected from the French and
that, therefore, immediate independence is the only practical solution.
Ramadier views De Gaulle as resent check Communists--
Premier Ramadier has told US Ambassador Gallery that he is not
apprehensive of any serious trouble from the Communists at this junc-
ture" because the Communists fear that, if they attempt a general strike
now, De Gaulle would profit. Ramadier added that, although he regards
De Gaulle's Rally of the French People as a failure, De Gaulle might con-
duct a more successful campaign for power in the future.
4. POLAND: Food supplies adequate until next harvest--US Embassy Warsaw
reports that, on the basis of available information, Poland's supplies of
grain and other food products are adequate until the next harvest. The
Embassy adds that official Polish estimates of the food import needs have
been conflicting and too high, possibly in an attempt to obtain assistance
from the US. The Embassy recommends that, if post-UNRRA relief is
still being contemplated, such relief be distributed gratis primarily by
competent relief agencies under US official direction and to inmates of
Institutions (for the aged and orphans) which are no longer included in
the official Polish ration system.
NEAR EAST-AFRICA
5. INDIA: Viceroy's proposals for transferring power--US Embassy New
Delhi reports that it seems more likely than ever that there will be at
least two `theoretically sovereign governments" in India following the
announcement on 2 June of the Viceroy's proposals for transferring power
from the UK to India. The proposed plan reportedly provides that: (a)
provinces which have elected a majority of Moslem League delegates to
the Constituent Assembly (CA) would decide by vote of their representa-
tives in the central legislative assembly whether to join the present CA;
(b) for purposes of voting, the Punjab and Bengal would be partitioned
tentatively; (c) a referendum would be held in the North West Frontier
Province to ascertain whether new elections are necessary; and (d) prov-
inces, or portions thereof, deciding to stay out of the present CA would
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set up their own CA, and the UK would be prepared to transfer power to
the two resulting provisional governments. The Embassy adds that,
although Nehru agreed to the substance of the original draft of the plan,
he objected to its form; the Viceroy is now endeavoring to obtain accept-
=lee by Nehru, jinnah, and other leaders of a revised draft which appears
to be "essentially" the same as the original.
6. EGYPT: gokrashula_ nwid2mobiadanger..-US Ambassador Tuck
has informed Prime Minister Nokrashy Pasha of his serious concern
over expressions of anti-foreign feeling which are "apparently permitted
freely to appear." Tuck added that during his many years in Egypt he
"had never encountered such feelings of resentment as appeared to exist
today." Tuck warned the Premier further that, if such anti-foreign senti-
ments were not controlled, regrettable Incidents for which Nokrashy would
have to bear the full responsibility might occur at any time.
rAte EAST
'fte 7. NEI: utcb4ndoneslan-US Consul General
Foote reports that Dutch-Indonesian economic negotiations appear near
breakdown following rejection by the Republic Cabinet of the proposals of
the joint Dutch-Indonesian Economic Committee. According to Foote, the
Republic has indicated that it is unwilling to cooperate in the regulation
of trade and financial matters, the return of foreign properties, and the
formation of a joint board for food distribution; the Republic considers
these questions are its own concern.
Consul General Foote believes the Republic is stalling for time
In the hope that the Dutch will be refused a US loan and then will become
"helpless financially." Foote warns that foreign industrial interests in
the Netherlands Indies will be jeopardized, if the Indonesians fail to re-
turn foreign properties and the Dutch fail to enforce the Linggadjati
Agreement.
NS views on Extra Bank loan�The State Department has requested
US Embassy The Hague to inform the Netherlands Foreign Office that the
US desires that the Indonesian Republic and other constituent parts of the
United States of Indonesia participate in Dutch-US negotiations concerning
an Exim Bank credit for the rehabilitation of the NEI. In this connection,
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the nature of any Netherlands-Republic economic agreements will be an
important factor. The State Department believes that re-establishment
of commerce throughout the Netherlands Indies is the first step toward
stabilizing the political and economic conditions in the area and toward
strengthening the moderate elements in the Republic.
8. FRENCH INDOCHINA: French nosition--US Consul Hanoi reports that
High Commissioner Bollaert in a speech on 15 May recognized the na-
tionalist movement of Vietnam but announced that France intends to stay
In Indochina. Bollaert stated that France would negotiate with all parties
in Northern Indochina because no one group was recognized as the sole
representative of the Vietnam people; he offered aid from Cochin China
to avoid a famine If Vietnam "cooperation" were forthcoming.
9. KOREA: �Extreme Right ttempts to sabotag orkofjolnt Commission--
General Hodge reports that Rhee Syng man is apparently "completely off
the reservation again and will use every effort to sabotage the work of the
Joint Commission." As Rhee still controls the extreme Right, General
Hodge believes that revolt may spread until no strong Rightist groups will
be found to cooperate with the Joint Commission. General Hodge therefore
recommends that Assistant Secretary of State Hilldring inform Rhee directly
that US policy calls for the establishment of a provisional government for
all Korea in accordance with the Moscow Decision.
Itta_sesentative Democratic Council demands withdrawal of US forces--
The US Political Adviser reports that the Representative Democratic Coun-
cil is sending a long message to the Secretary of State, "closing with a de-
mand for immediate withdrawal of occupation forces to make way for the
Interim government which is in the process of being created by the Koreans
themselves." (The Representative Democratic Council has lost its quasi-
official character and has become the tool of the extreme Right.) The Ad-
viser recommends that the Council's message be ignored, because the vast
majority of the Korean press and people seem to be jubilant over the news
of the reconvening of the Joint Commission and the prospect of a national
provisional government.
10. CHINA: CC Clime seeks to embarrass resent Government--US Consul
General Da�iiir in S iiii reports pers -Tra rumors fliTrOfie "CC Clique,"
extreme right-wing faction within the Kuomintang Party, has been giving
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encouragement to China's recent rice riots, demonstrations, and other
disorders in an attempt to embarrass the Central Government's present
administration (which is headed by Chang Chun, leader of the KIVIT's
relatively liberal Political Science Group). Davis adds that the CC Clique
appears to be "behind at least some of the troubles."
THE AMERICAS
II. PARAGUAY: gpit_Qat troops advance-.The US Military Attache
Asuncion reports that if two Government columns now advancing reach
their objectives, they will "isolate" the bulk of the rebel forces. He
adds that there is dissension within the ranks of the Colorado party (sole
political party supporting the Government) which "presents possibilities
of a wedge between sectors" of the party.
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GENERAL
17 MAY 1947
383
1. British believe USSR seeks "economic isolation"--US Embassy London
reports that, on the basis of the recent UK-Soviet trade negotiations in
Moscow, the British (a) believe that the USSR is seeking "economic :so-
lation," exporting only in order to acquire essentials not available in-
ternally except by wasting manpower; and (b) were "most surprised" at
the Soviet offer to sell them wheat and coarse grains (when the current
promising" crop is harvested).
EUROPE
1%10 2. BULGARIA: Northern crops reported 80% US Repre-
vntative in Sofia reports that apparently up to 80% of the vegetable,
fruit, and wheat crops of northern Bulgaria have been destroyed by frost
and drought. Without substantial summer rains, near famine conditions
may exist in Bulgaria this summer. In view of the possibility that US
aid will be sought, US Embassy Belgrade is sending its Agricultural At-
tache to Bulgaria to investigate.
3. HUNGARY: New Communist o provoke crisis--US Minister
Schoenfeld reports that the Communists, as a result of their failure to
create a new political crisis out of the inter-party negotiations concern-
ing a proposed three year economic plan, have now demanded the nation-
alization of Hungary's four leading banks. Schoenfeld suggests that the
Communist proposal (a) would place almost all industry under national
control, (b) would affect the entire Hungarian economic and financial
structure, (c) might Jeopardize US credits and long-term loans, and (d)
departs from the previous inter-party agreement expressly limiting
nationalization to underground resources and electric power.
4. CZECHOSLOVAKIA: 1,41�L_Lx k_e SC --Masaryk,
Minis-
ter of Foreign Affairs, told US Ambassador Steinhardt that,when he was
the Czech delegate to the UN in the fall of 1946, he deliberately disobeyed
Prime Minister Gottwald's (Communist) instructions to make every ef-
fort to obtain membership for Czechoslovakia on the Security Council.
Masaryk added that on his return he so informed Gottwald, giving as his
reason that it was not to Czechoslovakia's long-term advantage to have
such membership in the SC now, as it would deepen the prevailing opinion
that Czechoslovakia is acting as a "stooge" for the USSR at international
conferences. Document No. 041
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5. RUMANIA: Commercial flight to Zurich-Paris cancelled--The US Repre-
sentative in Bucharest reports that the TARS (Rumanian Civil Air Fleet)
flight to Zurich and Paris, scheduled for 15 May, was cancelled. Some
of the passenger fares have been refunded, and TARS has informed in-
quirers that the Zurich service has been suspended.
6. BULGARIA: US urged to protest newspapers' suppression�The US Repre-
sentative in Sofia has urged that the US formally protest to the Bulgarian
Government the suppression for the past two weeks of two Opposition news-
papers. The US Representative believes that failure to make such a pro-
test will discourage the Rumanian public and may lead the Bulgarian Gov-
ernment to believe that Article ho! the Peace Treaty, which guarantees
civil liberties including freedom of the press, can be ignored with impunity
In the future.
7. GERMANY: 1.2asAa_.m sees_ US-UKi_onal cooperation--US Ambassador
Douglas reports from London that Lord Pakenham, recently appointed
Chief of the Control Office for Germany, appears to be "determined to
seek a workable solution" for the economic problems of the US-UK Zones.
Douglas adds that Pakenham is "convinced of the cooperative attitude of
the US officials in Germanfand that Pakenham's views "should be effect-
ive in important political and non-political circles where he has much
personal influence."
FAR EAST
kire 8. CHINA: Sinkiang native leader reported new provbicial Governor--The
US Assistant Naval Attache, Shanghai, has learned from the Chinese For-
eign Ministry that Messud Sabri, native Turki leader in Sinkiang Province,
has been appointed to replace General Chang Chih-chung as provincial
Governor, in order to placate the large Turkl minority which resents the
Central Government's failure to undertake reconstruction projects prom-
ised by Chang a year ago. However, a high Kuomintang official has re-
portedly stated that the change is being made because the USSR insisted
on the removal of Chang as a prerequisite to Soviet evacuation of Dairen.
(The Assistant NA adds that Sabri is alleged to be "not pro-Russian"
because the Soviets kidnapped Sabres favorite son.)
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(CIO Comment: Removal of Chang, who is reputed to be an able
administrator with a thorough understanding of Sinkiang's problems,
will probably loosen further the Government's already precarious hold
on that Province. Sabri is not believed to be sympathetic with Govern-
ment interests in Sinkiang, and he might conceivably be forced into the
role of Soviet puppet if his son is in fact being held as hostage by the
USSR.)
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GENERAL
1. USSR reportedly orders immediate repair of Czech-German border--
According to US Military Attache Prague, a usually reliable Govern-
aient official has told a "reliable Embassy source that the USSR re-
portedly has requested the Czech Government to repair at once the
Czech defenses on the German border. Source also stated that this
order is causing consternation as it would require millions of Czech
crowns to carry it out. The MA evaluates the information as possibly
true.
US-Rumanian plr_ne_gotiations--US Representative Berry in Bucharest
reports that in the first conference on the proposed US-Rumanian air
agreement (see Weekly Summary of 16 May, page 7) the Rumanians
pointed out that "thus far" they could not grant either traffic stops in
Rumania on through routes or terminal rights except at Bucharest.
The Rumanians emphasized repeatedly the hope of US assistance with
respect to their admitted inadequate equipment, lack of ground facili-
tles, and need for technical advice.
EUROPE
3. YUGOSLAVIA: Retaliation ed forUS Ecks mbass --US Charge
Cabot reports increasing evidence that the Yugoslays intend to vent on
the US Embassy their bitterness over US policies, and that the Embassy's
position is becoming increasingly untenable. Cabot fears that the Em-
bassy could be put out of business altogether and he is "gravely con-
cerned" about security arrangements as a result of infiltration by Yugo-
slay spies. Cabot points out that "apparently the only wayleft open to
secure normal privileges and immunities is coercion. He therefore
recommends that the US warn the Yugoslav Government that, if the sit-
uation is not promptly remedied, the US will block all private remittances
to Yugoslav citizens except under special licenses.
4. HUNGARY: 141mAir_iews on current situation�In a recent conversation
with US Minister Schoenfeld, Prime Minister Nagy declared that: (a)
the overwhelming majority of Hungarians were especially grateful to
the US for its appreciation of Smallholder efforts to establish a genuine
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democracy in Hungary; (b) after the peace treaty it would be necessary
to make certain changes in constitutional practices, which he hoped
could be "effected peacefully without evoking civil strife"; (c) although
a crisis might develop around two current issues--Hungarian foreign
policy and the nationalization of three large banks--the Communist
offensive on these issues would be repelled, possibly amid considerable
tension; and (d) despite Soviet displeasure, Hungary does not intend to
sever its economic ties with the US.
NEAR EAST-AFRICA
41.01 5. IRAN:lov_islactiv_it.Lemr_ytedl renewed in Azerbaila_n--US Embassy
Tehran has been informed by several sources of the renewal of Inten-
sive Soviet activity in Azerbaijan. The sources also report renewed
activity among elements formerly associated with the pro-Soviet
Democrat Party, lending weight to the possibility that reorganization
of the Party as an underground force may be underway. While the
Embassy does not place "full credence" in these reports, it believes
that: (a) the Soviets have not given up hope of regaining control of
Azerbaijan; and (b) if peaceful political penetration is prevented by
Parliament's rejection of the Soviet oil concession, the Soviets may
resume much more active interference in Azerbaijan and may try to
create "guerrilla warfare situations" similar to those in Greece.
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15 MAY 1947
381
1. UK comment on possible French treaty negotiations�US Embassy Lon-
don reports that Warner, Under Secretary of the UX Foreign Office, has
commented in respect to the possible negotiation of French-Czech and
French-Polish treaties that each nation claims the other took the ini-
tiative. According to Warner, the UK (a) has attempted to discourage
these pacts "on the ground that they are unrealistic" as they "would
be of little if any help against a resurgent Germany"; and (b) has told
the French in London that the German threat could best be met by. the
Byrnes draft-treaty and that "promiscuous bilateral negotiations" les-
sen the likelihood that the Byrnes draft would be adopted. The French,
however, hold that friendly eastern European countries "should not be
discouraged." Warner surmises that this attitude results from a deal
which the French Government may have made with the French Commu-
nists at the time of the signing of the Anglo-French pact.
2. Tactic to replace Needham in UNESCO suggested--US Ambassador
Caffery reports from Paris that Walter Laves, US Deputy Director Gen-
eral of UNESCO, believes that the likelihood of securing the permanent
appointment of an American to replace Joseph Needham, British tempo-
rary head of the Natural Sciences Section, would be strengthened if
Needham's candidates for certain scientific posts were supported by the
US. The selection of these candidates would leave the US unrepresented
by senior. members in the Natural Sciences Section and would strengthen
the US hand in requesting that Needham's successor be a US national.
(Professor Needham is a member of the Cambridge University Commu-
nist group. His efforts to establish relations between Communist front
organizations and UNESCO have made him objectionable to the US.)
3. .116-Rumanlan air --US Representative Berry in Bucharest has
reported that discussions of a US-Rumanian air agreement were scheduled
to begiln on 15 May. Foreign Minister Tatarescu has told Berry that he
would "dissipate" any resistance from sources that have "special in-
terests." Berry believes that within two weeks the US will either obtain
an agreement or learn that the USSR intends to prevent such an.agree-
ment now "at any cost."
Meanwhile, Berry and General Schuyler have decided (a) to deny
authorization for the overflight of US Zone Austria by an aircraft of
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TARS (Soviet-controlled Rumanian air line) on a commercial flight
scheduled for 15 May (see Daily Summary of 13 May, item 5); and
' for the present to grant clearances only for single flights of TARS
craft carrying Rumanian gold to Zurich as security for a US loan.
Derry feels that it may later be possible to gain a bargaining advan-
tage in the air agreement negotiations by offering the advance approval
of several such flights. (Berry suspects that these flights may be
covertly used for carrying pay passengers, freight, and possibly mail,
and he recommends that future clearances require the aircraft to land
tthin the US Zone for control.)
EUROPE
4. HUNGARY: Airline proposal for westward expansion--US Minister
Schoenfeld reports that the joint Hungarian-Soviet airline, MASZOVLET,
has circularized foreign aviation interests, including the British and
Swiss, offering its services and requesting cooperation in "exchanging
facilities" for air traffic. Schoenfeld has learned that the British Min-
ister proposes to ask the Soviet occupation authorities how they recon-
cile the approval of this circular with their previous refusal to permit
British experts to make a technical survey of Hungarian airfields in
preparation for eventual British air operations into Hungary.
� (CIG Comment: By "exchanging facilities" MASZOVLET may
be proposing merely exchange points outside Hungary with certain for-
oltm aviation interests, thus maintaining the exclusion of Western com-
mercial air operations from the satellite states while furthering expan-
sion of Soviet-controlled air operations to the West.)
5. GREECE: New guerrilla regiments reported--US Ambassador MacVeagh
reports that, according to the recent deathbed statement of a captured
bandit chief, three guerrilla regiments have been formed in northern
Greece, near the junction of Greece, Yugoslavia, and Albania. The ban-
dit chief also declared that the regiments are to be reinforced by 1,500
bandits from Yugoslavia with the aim of establishing a rebel government
In northern Greece under Zachariades (leader of the Greek Communist
Party). MacVeagh states that this information "complements": (a) a
reported statement made in Belgrade by a former member a the Yugo-
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slay liaison team with the Security Council's Investigating Commission
that "Russia now intends to give positive assistance to the efforts of
Greece's neighbors to aid the Greek guerrillas"; and (b) rumors of
guerrilla troop concentrations in Bulgaria and Yugoslavia. MacIreagh
believes that it would be most desirable for the US to support the
, Greek Government's request for an on-the-spot investigation by the
Investigating Commission's Salonika subcommittee.
6. RUMANIA: Soviet officers taking US grain to the USSR�According to
US Representative Berry, the French Minister to Rumania has "defi-
nite information" that all Soviet officers leaving for the USSR are
ordered to buy 44 pounds of flour to take with them to Odessa where the
flour is handed over to the Soviet authorities. On 13 May the Rumanian
Foreign Office officially denied that US grain had been diverted to the
USSR; however, it did not deny that, under the terms of the armistice,
domestic stores of food had been allocated for the maintenance of the
Soviet Army. (Soviet troops in Poland are reported to be buying food
on the open market using "freshly printed" zlotys.)
7. BULGARIA: Failure of two-year economic plan predicted�Acting US
Representative Horner reports that, according to a "well-informed and
independent thinking economist," the Bulgarian two-year economic plan
has no chance of being realized. Source believes that the planners are
guilty of "woolly thinking" in planning "on a Soviet scale" without re-
gard for the fact that Bulgaria is a small, primarily-agricultural country
with insufficient trained technicians and inadequate industrial equipment.
NEAR EAST-AFRICA
8. TRANSIORDAN: White Book on Greater Syria--US Ambassador Tuck re-
ports from Cairo that the recently published Transjordan White Book on
the "Natural Unity of Syria" contains "documents from British as well
as Arabic sources." Tuck adds that the White Book, which has confiden-
tially been made available to a member of the US Embassy, is King
Abdullah's definitive documentation of the Greater Syria case.
(CIG Comment: If the British documents in the White Book im-
plicate the UK too closely in Abdullah's plans, the UK Foreign Office may
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be compelled to issue a statement, repeatedly urged by the US, defining
its attitude toward Greater Syria. In the past the UK has been content
to allow Abdullah's schemes to disturb Arab unity, but it is unlikely
that the UK wishes these schemes to be implemented at this time.)
FAR EAST
9. CHINA: Government again Soviet stand on Dairen�According to
US Embassy Nanking, the Chinese Foreign Minister has again informed
the Soviet Ambassador that the Chinese Government regards the war as
actually terminated, as Japan is now under Allied occupation, and be-
lieves that the USSR therefore has no grounds for limiting China's right
to send police and troops to the Dairen-Port Arthur area. The Foreign
Minister also pointed out that the presence of "hostile non-Government
forces" in this area requires that the Chinese Government reinforce its
local administration with Nationalist forces, and he requested the Soviet
Government to reconsider its attitude.
THE AMERICAS
10. VENEZUELA: UK views stabilItvoj UK Foreign Office,
on the basis of data forwarded by the British Embassy in Caracas, has
expressed the views to US Embassy London that (a) the Betancourt Junta
is now "firmly entrenched" and would maintain control even in the event
of an Army-supported revolt; (b) the members of the Junta are "opposed
to Communism"; and (c) the political tendency of the Junta is "towards
liberalism and some socialism."
(CIG Comment: The above conclusions are considered valid.)
11. CHILE: TI7(21919.0t__iozi proposes charter amendment--The US delegation
to the rro Conference in Geneva reports that (a) Chile has proposed an
amendment to the draft trade charter which apparently is designed to
extend "full and permanent recognition" to such restrictive agreements
between adjoining countries as the recent Argentine-Chilean accord;
(b) several delegations, including the US, will oppose the amendment;
and (c) if the amendment is disapproved, Chile must either withdraw from
the conference or scuttle its agreement with Argentina.
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GENERAL
1.4 MAY 1947
3B0
I. Forced landimpf Rumanian aircraft disap,primd--The State Department
has warned US Legation Vienna that under no circumstances should a
Rumanian aircraft be forced to land even though a flight is made over
US Zone Austria without US authorization (see Daily Summary of 13 May,
Aem 5). The Department believes that an "incident" would probably do
more harm than good in the long run. If an unauthorized overflight is
made, the Department will protest vigorously to the Rumanian Government.
2. French view on economic merger of US-UK-French Zones--US Consul
General Mayer in Baden-Baden has been approached by a "close associ-
ate" of Laffon (Military Governor of the French Zone) who discussed the
possibility of an economic merger of the US-UK-French Zones Germany
and suggested that the success of the arrangement would "depend more
on persons carrying it out" than on the terms of the agreement. Mayer
comments that this may be an attempt by French Headquarters to find
grounds for agreement through a channel other than the French repre-
sentative in Berlin, with whom the French Headquarters is "not always
in accord."
3. Vatican denies considering rapprochement with Poland--A high Vatican
official has told the assistant to the Personal Representative of the Presi-
dent at the Vatican that, despite persistent rumors to the contrary, the
"Holy See is not negotiating with Poland for the re-establishment of diplo-
matic relations," or for "a concordat or agreement of any kind." The
official added that the only purpose of Polish Cardinal Sapiehals proposed
trip to Rome is to report on conditions in Poland.
4. Benelux protests US bill on bulb imports,--Under Secretary of State Clay-
ton reports from the Geneva meeting of the International Trade Organi-
zation that on 9 May Benelux (the Belgian-Netherlands-Luxemburg Customs
Union) protested the provision in House Bill 2773 which limits the impor-
tation of nursery stock and bulbs to those needed for propagation purposes.
The protest pointed out that the proposed US limitations are contrary to
the spirit of the ITO charter. Clayton believes that these limitations would
have an "unfortunate general effect" on the present conference.
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EUROPE
5. AUSTRIA: Eraergency_f2od relief requested�General Keyes reports
that "there is no time left in which to obtain new funds and allocations
as part of the relief food which must be on hand here by 20 June,.. It
is imperative," Keyes declares, "that consideration be given immediately
to some quick means of providing relief"; he suggests as possible sources:
the Red Cross, US Army stocks in Europe, or shipments now en route to
other places.
G. GERMANY: Continuance of USLS urg21--US Political Adviser Murphy
reports that in view of an anticipated increase in Soviet propaganda activi-
ties in Germany it is "extremely important" that there be no lessening of
the US informational and cultural affairs program in Germany.
7. FRANCE: Caffirs urges support of nadier�US Ambassador Caffery
believes that the present non-Communist Ramadier Cabinet represents
the "best that could be hoped for" and should receive strong US support,
particularly in the form of wheat and coal, during the next two months.
According to Caffery; "the major disaster attending a collapse of the
present Government would be the division of France into two hostile
camps (the Communists and Gaullists) which would "struggle to the
finish.' Caffery concludes that, if the Ramadier Government receives
prompt and adequate US aid, a basis will be laid for the re-establishment
of a really strong democratic France."
Bidault attacks De Gaulle�Foreign Minister Bidault recently de-
livered a most violent attack against General de Gaulle" during an in-
formal conversation with US Ambassador Caffery. Bidault declared De
Gaulle's "ardent desire" to destroy the MRP in general,and Bidault In
particularois exceeded only by his ambition to return to power.
Communist _comment on US influence-- US Embassy Paris has been
told by CGT (General Confederation of Labor) Secretary Le Brun (ap-
pointed by the Communist wing of the General Confederation of Labor)
that the by
US influence in France" is such that the Communists
believe President Truman seeks to extend "a new Monroe Doctrine to
France and many European countries." Le Brun said "bitterly" that
only the CGT had sincerely supported the Monnet Plan to promote recon-
struction and that "much authority of the CGT over the rank-and-file had
been lost by the strenuous effort" of the labor leaders.
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8. NORWAY: Az_my_A_Itellygence headed by Communist�Headquarters
European Command Frankfurt reports as confirmed that the G-2 Section
of the Norwegian Army is headed by one of the "most powerful Commu-
nists in the Army."
FAR EAST
9. CHINA: Rice crisis azgrated urchases�US Embassy Nan-
king has learned from a reliable source that K. C. Wu, Mayor of
Shanghai, is concerned about the serious rice shortage, which, together
with sharp increases in food prices, has provoked widespread rice riots
in Shanghai and many other Chinese cities. When the Shanghai shortage
materialized, Wu reportedly attempted to obtain from the Central Govern-
ment a promised reserve of about 133,000 tons of rice, but discovered
that the reserve had been turned over to the Army for shipment to the
combat areas farther north. (Unofficial observers also claim that heavy
military purchases of rice have been responsible for shortages in south-
oa.stern China.) Wu saw no clear indication of Chinese Communist inspi-
ration in the riots at Shanghai itself, but detected Communist leadership
in the demonstrations in a neighboring city.
na_15._matatign Sinklaw�US Embassy Nanking agrees
with a report by the US Consul at Tiwha, Sinkiang Province, indicating
that US Information Service educational material "would probably have
considerable influence" if delivered to the northwestern part of the
Province (which borders on the USSR). The Consul notes that native
education in this area, which has been completely neglected by China,
thus far has received little attention from the Soviet Union. He adds,
however, that "if we do not seize this chance, Moscow will, within a
matter of months."
10. FRENCH INDOCHINA: US views on settlement�The Department of
State has expressed to US Embassy Paris growing concern over the slow
progress toward settlement of the Indochina dispute and has advanced
certain considerations for use in any conversations the Embassy may
have with French authorities. The State Department's position is based:
(a) on the realization that setbacks in long-term French interests eventu-
ally affect the US; and (b) on the belief that the best safeguard against
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civil discord, anti-Western tendencies, or Communist domination in
Southeast Asia during this critical period in its development, lies in
continued close association between newly-autonomous peoples and those
Western powers which have hitherto been responsible for their welfare.
The Department advances no solution and disavows any intent to inter-
vene, but expresses the hope that France will be most generous in its
attempts to find an early solution which, by recognizing legitimate Viet-
nam desires, will restore peace and deprive anti-democratic forces of
a powerful weapon.
11. PHILIPPINES: Indicatoit9LQuirine mission to US�According
to US Embassy Manila, a US Army officer has learned from a high
Philippine official that one primary purpose of Philippine Vice President
Quttino's mission to the US is to determine US reaction to amnesty for
those now charged with collaboration with the Japanese. The official
stated that, if Quirino finds the US attitude "interested or unconcerned,"
President Roxas might support Philippine congressional action for
amnesty.
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is MAY 1S117
379
Soviet aims in ECE--The US Delegate to the Economic Commission
Europe reports from Geneva that Soviet strategy in the ECE has been
to frustrate effective economic collaboration and to slow down organiza-
tion while pressing for the earliest termination of such existing organi-
:Lations as the European Coal Organization and the European Central In-
land Transportation Organization. The delegate observes that while US
strategy to date has been to let Soviet intentions become plain and to
avoid US initiative at this stage so as not to give the impression of anti-
Soviet faction, "more affirmative action by the US may be appropriate
l
3oon.
Now' 2. Arabs fear US ee policy is_poz_go_ist--US Ambassador Wads-
worth reports from Baghdad that government officials in Iraq, Syria,
and Lebanon are convinced that US policy concerning Palestine is pro-
Zionist. According to Wadsworth, Prime Minister jabr of Iraq has
stated that "his news from New York was not at all encouraging," and
that he believes the peace and security of the Arab world, as well as
future relations with the UK and US, largely depend on the US taking a
'Noe positive lead in the UN to assure recognition of the justice of the Arab
cause.
EUROPE
,11. USSR: Civil air expansion reminiscent of German rearmament--The
Acting Military Attache Moscow considers the present rapid expansion
of civil air operations in the USSR to be reminiscent of the post-Ver-
sailles civil air activity in Germany which satisfied German military
needs.
(CIG Comment: A further military implication in current Soviet
air transport operations may be found in the apparent Soviet disinclina-
tion to furnish satellite airlines with even small numbers of transport
aircraft. As the USSR has several times as many DC-3 type aircraft
as the entire active domestic US commercial air fleet, this policy could
be explained by either large-scale airborne troop-training operations in
the USSR, or Soviet determination to retain for any military eventuality
the maximum air-lift capacity within the USSR.)
Document No. 4237r
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4. AUSTRIA: Austrians qiiestion_US pumort�General Keyes, Commander
US Forces Austria, reports that increasing Communist pressure has
caused Austrians to reconsider whether "they should maintain resist-
ance to the Soviet Union or endeavor to get along with it by collabora-
tion." Many Austrians, according to the Commanding General, remem-
ber that "previous efforts to maintain their independence ended in con-
centration camps." Keyes adds, however, that the Austrian Government
has accepted General Clark's assurances of continued US support "at
their face value," and Keyes requests "the earliest possible indication"
as to whether credits and food will arrive in time and amount to permit
a continuation of US policy in Austria.
Nur 5. RUMANIA: Berry suggests aircraft interception--US Representative
Berry reports from Bucharest that General Schuyler (US Delegate ACC)
is keeping the Bucharest airpo:d under surveillance in view of the possi-
ble unauthorized departure of a Rumanian aircraft on 15 May on a com-
mercial flight to Paris which would presumably require overflight of
the US Zone Austria. Berry suggests that the State Department may wish
to advise proper Army authorities to intercept the aircraft for identifica-
tion and possible forced landing.
FAR EAST
6. NEL: Dutch views on situation�A high Foreign Office official has told
US Counselor Benton in The Hague that the Indonesians apparently are
stalling for time in the hope that the Dutch eventually would either with-
draw from the Indies or initiate military action which the Indonesians
are convinced would be "most unpopular" with the US and the UK. The
Dutch official observed that, if it is found impossible to implement the
Linggadjati Agreement (which looks to the establishment of the "United
States of Indonesia"), the Dutch may resort to "military action to bring
the Indonesians into line," unless US and UK public opinion should strongly
oppose such coercion. He further observed that an alternative to imple-
menting the Linggadjati Agreement "might be for the Dutch to announce
withdrawal from the Indies effective on a certain date and at the same
time refer the whole matter to UN."
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7. FRENCH INDOCHINA: Adverse French miljy situation--US Consul
Hanoi reports that French forces in northern Indochina lack the strength
to garrison the country and will be unable to pacify the area except by
a campaign of reconquest which would "last for years." Although front-
al resistance is decreasing, the Consul has heard that French troops will
be withdrawn from their advance positions before the rivers rise in June
and July.
8. CHINA: Press shifts criticism from US to USSR--US Embassy Nanking
notes that the Chinese press has reacted favorably to Secretary Marshall's
report on the Moscow Conference, has eased up on its criticism of US
foreign policy (see Daily Summary of 6 May, item 4), and has become in-
creasingly critical of "Soviet obduracy." However, the Embassy notes
that Chinese papers representing widely divergent political views continue
to voice concern over prospects of a resurgent japan supported by the US.
KxvantgAg Province vulner_alllet_po se arat____--Accord-
ing to US Embassi.Nanking, Chiang Kai-shek recently protested to the
British Ambassador Nanking that a Chinese separatist leader, who is
being given political asylum in Hong Kong, has been using the island as
a base for sending agitators into neighboting Kwangtung Province. The
Embassy adds that Chiang's protest can be attributed mainly to the fact
that the Nationalists have drawn so heavily upon Kwanoctung for troops
that the Province is "almost entirely bereft of Government forces."
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GENERAL
L�AY iNT
1378
I. "yekt.oflavrica� causes official Soviet concerne-Commanding Gen-
e al US Forces Austria reports that a Soviet deserter, a Major recently
returned from the Ukraine, describes Ukrainian officials as 'visibly
worried" over the influence of the "Voice of America." The deserter,
a iormer Party member and political propagandist, also stated that the
U$ broadcasts were effective among Soviet officers and that the people
-were "hungry for the truth."
Embassy Moscow reports that the "Voice of America" was re-
cently "given free advertising" by a series of cartoons ridiculing the
brnadeasts which appeared in KROKODIL, the Soviet humor magazine.
The Embassy points out that this publication has a circulation of
"150,000 copies, a high figure for Soviet journals, and reaches just those
lel-eels of Soviet society where our program is likely to be most effective."
On the basis of recently published official figures, the Embassy
ectimates that presently there are 500,000 Soviet radios capable of re-
cetving international broadcasts.
1 Soviets evected to continue cautious sport of Arab-..VS Embassy
Moscow considers that Soviet policy towards Palestine is based upon:
(N.) oppocition to the formation of a Jewish state, which the USSR would
vegard as an anti-Soviet, Zionist tool of the West; and (3) support of an
:Independent Palestine populated, as now, predominantly by Arabs. The
:embassy believes, however, that the Kremlin will continue to avoid any
overt championship of the Arab cause imtil the USSR is in a better posi-
tion to weeand its influence among the Moslems and can afford to alien-
ate world Jewish opinion.
The Embassy feels that Gromyko's support of the proposal to
oermit Jewish representation before the United Nations fits into this pat-
tern and represents a minor concession to Jewish interests "which could
only cause confusion and probable embarrassment" to the UK and the US.
In the Embassy's opinion, however, the Kremlin has been motivated pri-
marily by a desire to establish a precedent for official recoarition of
such non-governmental organizations as the WFTU; a development which
would contribute greatly to the use of the UN as a sounding board for
Soviet propaganda.
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3 U_K-Soviet trade negotiations--The UK Foreign Office has informed US
Embassy London that ii�o-rrcrifinite or final" agreements were reached
tiering recent UK-Soviet trade negotiations in Moscow, although "much
was accomplished in clearing the atmosphere." The Foreign Office
still expects difficulties in future talks; the discussions are to be con-
tinued in London and will be transferred back to Moscow this summer.
(UK-Soviet trade negotiations took place intermittently during most of
A year without substantial result.)
EUROPE
ri7GOSLAVIA: Rumor of attejyated assassination of Tito--US Military
Atmche Belgrade reports a "recurrent"iiiiiiRPT�or an unsuccessful plot
Lrr three Yugoslav Air Force pilots to assassinate Tito by dropping
Itembs on the reviewing stand during the May Day parade. The MA cites
as confirming evidence that: (a) on 27 April 80 aircraft passed over
Belgrade at low altitude in a dry-run for the I May parade; (b) no aerial
review actually took place on l May; and (c) during the 9 May military
parade only GO planes passed in review.
5, CZECHOSLOVANIA: Steinhardt's views on US creditolicy--US Ambas-
sador Steinhardt favoriTrin principrewrrelaxation of US credit policy
toerard Czechoslovakia (the US in September suspended credit negotia-
tions with Czechoslovakia in view of the general pro-Soviet trend of the
country's Communist-dominated Government; see Daily Summary of
lE September, item I), but "doubts the wisdom" of offering credits to
Czechoslovakia until further progress has been made in the settlement
of pending financial negotiations, including US claims for nationalized
properties. Steinhardt believes that prompt and favorable settlement
of these negotiations would be more likely if the US were to inform the
.,zechoslovak Government that the US intends to review its credit policy
after these negotiations are satisfactorily concluded.
� GREECE: Government reacts unfavorably to amnesty suggestion--US
Ambassador MacVeagh reports that the Greek Government has reacted
urOavorably to the US suggestion that it declare an amnesty with provi-
sions for international supervision, and has detailed its objections in an
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aide-memoire. MacVeagh feels that the only objection which has any
real validity is the Greek claim that the US suggestion contains no assur-
ances "against the continuation of the fostering of the guerrilla move-
meat from abroad." MacVeagh also reports that Foreign Minister
Taaldaris has released to the public full information on the US proposal
in such a way as, "intentionally or unintentionally," to stimulate Greek
"hostile nationalist opinion." MacVeagh adds that Greek thinking is
"confused and panicky owing to local political stresses and fears. "
7. GERMANY: Morale lowest since summer 1945--US Political Adviser
Murphy reports that German morale is lower than at any time since the
immediate post-combat period. He states that the lack of agreement
between the US and USSR has caused "universal worry" that economic
conditions will deteriorate and lead to "another terrible winter."
Murphy cites the following as factors exerting such pressure that "Ger-
man determination to survive will undoubtedly be manifest in future
political action": "growing hopelessness" arising from inadequate diet,
acute commodity scarcity, crowded housing conditions, and uncertainty.
8. BELGIUM: Regent wishes Church to back Socialisin--US Ambassador
Kirk has learned from a r'reliable Palace soui:Wcrtat the Regent,
Prince Charles, believes that the best means of combatting Communism
In western Europe is to unite Catholic and Socialist parties along the
lines of the new Belgian Government. Source also reports that: (a) the
Regent has interested the Papal Nuncio in the idea that the Vatican
should accept Socialism as "one form of political expression of Christian
principles"; and (b) the Nuncio has suggested that Premier Spaak go to
Rome and discuss this with the Pope.
9. ITALY: Pr_o_mal to reduce Communist participation in Cabiziet�US Em-
bassy Rome reports that Epicarmo Corbin�, former Liberal Minister of
the Treasury, has been asked by President Di Nicola if he would be will-
ing to head a coalition government which would include only one or two
Communists. Corbin() has indicated to the Embassy that he might accept
token Communist representation temporarily, if there were no other way
for him to become Prime Minister. The Embassy reports further that,
according to a "very reliable source," the Vatican's Assistant Secretary
of State has declared that "Corbin� is the only man who knows how to
fight and defeat the Communists."
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NEAR EAST-AFRICA
10. IRAN: Soviets rsportedly preparing to counter US aid--US Ambassador
Allen reports persistent rumors that the Soviet Embassy in Tehran is
prepared to spend large sums of money, partly in bribes, in an effort:
(a) to prevent Iranian purchase of military supplies from the US; (b) to
bring about the dismissal of US military missions in Iran; and (c) if
possible, to set up an Iranian military dictatorship with Soviet orienta-
tion. According to Allen, Soviet activity is allegedly centered on the
Iranian Chief of Staff, Ali Razmara, "who has played the Russian game
In the past" and is considered to be intensely anti-US. Allen adds that
nazmara has a strong position with the Shah at the moment, and that
both the British Ambassador and Military Attache are convinced that
Razmara is dangerous.
US Military Attache Tehran reports that Minister of War Ahmedi
has submitted his resignation to the Shah, explaining that he will not
remain in office if "Razmara continues to countermand his orders."
(General Ahmedi, who has long had difficulties with Razmara, favors US
aid to Iran.)
11, SOUTH AFRICA: Communistsreported inciting ve riots--US s�US Military
Attache Pretoria reports that native riots occur daily in the outskirts of
Johannesburg, and approximately 1,000 police are attempting to maintain
order. According to the head of South African Counter-Intelligence, the
riots are "clearly Communist-ixispired."
FAR EAST
12. KOREA: Political Adviser's views on Molotov's letter--Commenting on
Molotov's offer of 10 May, US Political Adviser Langdon warns � with
the concurrence of General Hodge -- that no concrete results can be
expected from the Joint Commission "unless and until a simple, clear,
definite, and specific agreement can be reached with the Russians to
accord freedom of opinion to Koreans regardless of their vocal expres-
sion of non-agreement with certain principles of the Moscow Decision."
In view of the narrow construction previously put by the USSR on Gen-
eral Hodge's offer of 24 December and in order to avoid further oppor-
tunity for misunderstanding, the US Political Adviser recommends that
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a specific agreement for the guidance of the Joint Commission be worked
out between the US and USSR on the basis of Secretary Marshall's reply
to Molotov's letter of 19 April.
General MacArthur discounts possibility_pasion"--General
MacArthur places little credence in General Hodge's fear of a possible
invasion of South Korea by a North Korean native army (see Daily Sum-
mary of 2 May, item 3). MacArthur believes that the reported size and
potentialities of the native North Korean army are greatly exaggerated.
MacArthur also doubts that the reduction in Soviet forces in North Korea
will be "as rapid or complete as that envisioned by General Hodge."
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EUROPE
10 MAY 1947
377
1. FRANCE: Communists await US economic crisis--US Embassy Paris
reports that events of the past week strongly suggest that any Commu-
nist move to establish a Government in France requires further domes-
tic and international preparation and apparently rests upon the doctri-
naire Marxist assumption of "the coming economic crisis" In the US
as the necessary background for any major left-wing action.
2. HUNGARY: UK Labor Party warns Social Democrats--The Hungarian
Foreign Office has told US Minister Schoenfeld that the British Labor
Party has threatened to sever its connections with the Hungarian So-
cial Democrat Party if the latter continues to collaborate with the
Communists. Schoenfeld believes that the threat is undoubtedly causing
concern in the Social Democrat Party leadership and that it may re-
duce the influence of the Party's extreme left-wing.
(CIG Comment: Similar interference by the British Labor Party
late in January, although instrumental in preventing an open break be-
tween the left and right wings of the Social Democrat Party, did not
weaken the Party's left-wing leadership.)
3. CZECHOSLOVAKIA: Trade shifting rapidly from East to West--US
Ambassador Steinhardt reports that published statistics for the first
quarter of 1947 indicate that Czechoslovakia's trade is shifting rapidly
from the East to the West. Approximately 85% of Czechoslovakia
exports to its ten largest customers went to the US, UK, and Western
European countries, with only 15% goinF to the USSR and Yugoslavia.
Ninety-three percent of Czechoslovakia s imports from its ten largest
suppliers came from the US, UK, the Middle East and Western Europe,
the remaining 7% coming from Bulgaria.
Steinhardt recommends wheat shipments by US--Steinhardt be-
lieves that Czechoslovakia "very definitely" requires some wheat
during the next six weeks in order to maintain a proper standard of
nutrition. He believes that it would be "highly desirable from a politi-
cal as well as an economic point of view" to ship immediately a mini-
mum of 50,000 tons and a maximum of 100,000 tons. Steinhardt em-
phasizes that any allotment that is made should be publicized and
suggests that the wheat not be shipped until the Embassy reports that
the Communist dominated Ministry of Information has given adequate
publicity in Czechoslovakia to the assistance being rendered by the US.
Document No.
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4. BULGARIA: Soviet trAolp withdrawals--US Delegate ACC Sofia trans-
mits as "possibly true a report from a "fairly reliable" source that
tImall-scale movements of Soviet troops from Bulgaria are already
urderway and that large-scale withdrawals will begin about 20 May
via Rumania and Black Sea ports.
5. POLAND: Government reported dissatisfied with
US Military Attache Warsaw reports that, according to a "reliable
Government source," Polish authorities are dissatisfied with the
results of the recent amnesty (according to press reports 55,000 per-
sons surrendered to the security authorities) because it failed to
bring out the important military and political underground leaders.
The MA comments that although the underground organizations are
disorganized, they certainly have not been dissolved.
FAR EAST
CHINA: Nationalist militar situation slim Kene rioration.--
Ambassador Stuart, who recently transmitted reports of Nationalist
-weakness in Manchuria (see Daily Summary of 6 May, item 4), indi-
cates that the Nationalist military situation has shown general deterio-
ration within recent weeks. Over-extension of Nationalist lines in the
area north of Yenan has necessitated the withdrawal of Nationalist
troops from southern Shansi Province, thereby giving the Chinese Com-
munists a military advantage in the latter area. In Shantung Province,
the most critical theater at present, the Nationalist supply position has
apparently suffered from the Communists' seizure of Taian on 24 April
and the recent ammunition dump explosions at Hsuchow.
THE AMERICAS
PARAGUAY: US Chamelgrmsmlphysical stability.-US Charge
Trueblood reports that (a) the Paraguayan Government appears to have
exaggerated the role played by the Communists in the recent revolt in
Asuncion (see Daily Summary of 6 May, item 5); (b) recent indications
of a probable rebel defeat in the long run should not conceal the "vio-
lence or the extent of the opposition to Morinigo"; (c) the opposition
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"Febrerista" Party, which has provided leadership in the current
uprisings, now appears to enjoy the support of "the majority of the
younger generation" not only over the country but also in Asuncion;
but (d) the steadily-growing `battle-tested' strength of the PNR,
the only Party supporting the Government, "augurs favorably for
at least physical stability."
((MG Comment: This prediction of "physical stability" should
not obscure the fact that the Government's one military success
against the rebels was achieved within the capital itself and that the
available evidence points to a continuance of the weeks-old stalemate
along the "front" between rebel and Government territory.
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EUROPE .
8 MAY 1947
37P
RUMANIA: New wave of mass arrests--US Representative Berry re-
ports that the second wave of mass arrests within two months began on
the night of 4 May ard is still continuing. According to a "qualified
source," a total of 728 were arrested during the first wave in late March
and early April, and already well over 1,000 have been arrested in this
wave. Various reliable sources, according to Berry, believe the arrests
loreshadow prosecution of Opposition members as fascists under Article
5 of the Peace Treaty and are the result of Kremlin charges that the re-
gime is responsible for the strong Opposition because it has permitted
too much freedom.
FAR EAST
2, CHINA: Central Government will seek billion-dollar US loan--The
Chinese Foreign Minister has informed US Ambassador Stuart that the
Central Government will formally approach the US Government for a
loan of US $1,000,000,000, possibly for use over a three-year period.
One-half of this sum would be used to purchase US supplies and equip-
ment, about one-fourth for the utilization of Japanese reparations, and
one-fourth for financing such commodity imports as raw cotton, foods,
and gasoline. The Foreign Minister stated that the US loan would be
used for rehabilitation and the construction of communications, mines
and utilities industry, and agriculture, and not for the reduction of the
national budgetary deficit. He added, however, that imported commodi-
ties would be sold to the public.
In reply, Stuart pointed out "some of the problems from the
American standpoint": (a) widespread feeling in the US that China-es
present Government is controlled largely by reactionary elements and
is rife with corruption and graft; (b) US reluctance to aid one party in
China's civil conflict, thus lengthening the conflict and strengthening
reactionary tendencies; and (c) "purely American issues, such as the
current emphasis on reducing the (US) budget, especially in aid to for-
eign countries."
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GENERAL
'S MAY 1947
1. Bidault says USSR forcing western bloc--US Charge Keith Warsaw re-
ports that,when Bidault passed through Poland on his return from Mos-
cow, Bidault said that "Russia did everything it could to organize the
western bloc and it will get it." Keith adds that views expressed by
"some of the officers of the French Embassy here" have reflected a
growing readiness to be critical of the USSR and an increasing good
will toward the US.
2. French threaten to cancel Polish air service to Paris--US Embassy
Paris has been confidentially informed that the Poles are "attempting
to back down" on their previous informal authorization for Air France
to schedule flights to Warsaw. The French have informed the Poles
that, if the matter is not settled satisfactorily by 31 May, they will
cancel the present arrangement by which the Polish airline LOT lands
at Paris. (The French recently asked the Polish Government for an
agreement which would regularize the current Polish flights to Paris
and give the French clear rights to fly to Warsaw; see Daily Summary
of 21 April, item 2.)
375
3 Italiansmy offer 2.�Itts in Rumania to pay USSR reparations�US Rep-
resentative Berry has learned from the It alian Legation in Bucharest
that the Italian Government is considering offering Italian assets in
Rumania as partial payment of reparations due the USSR. (These assets
reportedly have a total value of about $30,000,000 and include impor-
tant petroleum and lumber enterprises.) Berry adds that "such a
development would be another major step toward completing Soviet
control of the Rumanian economy."
EUROPE
4. UK: Italian Ambassador's views on US aid to Italy--A high Foreign
Office official has told the US Embassy London that in the opinion of
Carandini, the Italian Ambassador, the US should not attach "anti-
Communist strings" to any agreement that might be reached with the
Lombardo Mission now en route to the US. Carandini said that the
Italian political balance could not stand the "bitter agitation" that
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would be precipitated by the Communists in Italy if such a stand should
be taken by the US. The Foreign Office official, the Embassy adds, is
Inclined to agree with Cara.ndini.
5. AUSTRIA: Strike threat temoyartimEm_ioved--US Legation Vienna
reports that the threat of a Communist-instigated strike (see Daily
F;ummary of 7 May, item 3) has apparently passed for the present, as
a result of the Government's promise of "better rationing."
6. HUNGARY: Soviet economic demands --US Minister Schoenfeld reports
that the Hungarian Foreign Office Tgravely concerned" by a recent
:3oviet demand that Hungary pay to the USSR all pre-war Hungarian
debts to Germany. The Foreign Office stated that the payment of this
debt (estimated at approximately $150,000,000) would jeopardize the
entire economic and financial structure of Hungary as well as Hungary's
proposed three-year economic plan.
Government delays answer to US air request--The Hungarian
Foreign Office has also told Schoenfeld that it hopes to defer for a few
weeks an answer to the recent US note requesting non-discriminatory
civil air transport rights in Hungary (see Daily Summary of 28 April,
item 3). The Foreign Office explained that, in view of the "extreme
difficulty" in regard to the Soviet demand for settlement of Hungary's
pre-war German debts, the Government is fearful of pressing the USSR
at this time for its consent to Hungarian compliance with the US avi-
�,t!ea eelnest.
NEAR EAST-AFRICA
7. EGYPT: Nokrashv willin.g to defer Sudan issue--US Ambassador Tuck
has been informed by a reliable source that the Sudanese question has
become of secondary importance to Prime Minister Nokrashy whose
"motivating ambition is to go down in history as the man who got the
British out of Egypt." Source also states that if the British would
announce an intention to evacuate Egypt (the British have already with-
drawn from all of Egypt except for the Canal area) "say by December
1948," Nokrashy would drop the Egyptian case before the UN and pre-
pare the way for a treaty deferring settlement of the Sudanese question.
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(CIG Comment: Nokrashy's attitude may also be influenced by
his realization of the weakness of Egypt's case against the UK with
eespect to the Sudan.)
FAR EAST
aL CHINA: Mincrty members refuse Government posts--US Ambas-
eador Stuart reports that Li Huang and Tso Shen-sheng, members of
the Young China Party who had been nominated as Ministers of Eco-
nomic Affairs and of Agriculture and Forestry respectively, have
formally refused to accept their new positions. (Their refusal leaves
the Executive Yuan, top administrative organ of the Central Govern-
ment, virtually unchanged by the recent "reorganization," except for
some newly-added ministers without portfolio.) Li Huang apparently
recognized that the Economic Affairs Ministry, while lacking decisive
powers, nevertheless could still be made the target for criticism as
a result of the continuing economic deterioration in China. Stuart adds
that the Social Democratic Party -- the only other minor Party taking
part in governmental reorganization -- appears to have been seriously
eplit by the decision of its leader, Carson Chang, not to participate in
the Government with other members of his Party.
FRENCH INDOCHINA: Frenckplans In Indochina--US Consul Saigon
reports that he has been informed by a "usually reliable source" that
the French have no concrete plan for the future of Indochina except to
abandon the idea of political federation and to insist upon an economic
and cultural agreement which will embrace all French Indochina and
will include free ports and transit rights for Laos and Cambodia through
Vietnam territory. Source also believes the French will press the idea
of a Vietnam Federation including Cochin China, with local autonomy
for each of the three components: Tonkin, Alumni, and Cochin China.
Source reports further that the majority of the French in Indochina
;eel that "China is the eventual danger to French and whites in Indochina."
Source predicted that Vietnam eventually would be Chinese-dominated and
That Cambodia and Laos would be forced into a Siamese-dominated
Buddhist bloc.
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10. ARGENTINA: British firm ne otiat to build naval vessels--US
Naval Attache Buenos Aires reports that, according to a very re-
liable source," a representative from Vickers is currently nego-
tiating a contract for the construction of four destroyers, three
submarines, and two auxiliary vessels for the Argentine Navy.
(ALUSNA previously reported that Argentina was negotiating, with
a local firm representing Vickers, for the purchase of a cruiser;
see Daily Summary of 18 March, item 6. The British Ambassador in
Washington subsequently commented to the State Department that the
British contemplated supplying Argentina with a "trivial" amount of
arms replacements.)
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t 7 MAY 1947
374
TritleY: De,pasplrii proposes broaderinsit--US Ambassador
m reports a confidential conversation with De Gasperi in which the
,teernier expressed himself as believing it desirable for him to broaden
composition of the Cabinet in order to include additional parties of
Center. De Gasper' added that Communist leader Togliatti appears
')prove this move under certain conditions while Nenni, leader of the
cert-wing Socialists, appears to be less amenable. The Premier emoha-
eieed the gravity of his country's economic situation and urged that Mr.
:eneton visit Italy at least to talk over the situation.
(MG Comment: A broadening of the Cabinet would not substan-
�a-.Iy allay the widespread popular fear and lack of confidence in the
rent Government so long as the Communists are in a position to
and undermine the Cabinet's efforts.)
,449strigtsp factors sustain Franco--US Charge Bonsai reports
qgtt since the announcement of the vroposed Law of Succession "surface
.tenelopments� have "temporarily' strengthened Franco, largely because
.1?
the latter's skillful handling of the local situation. The Charge considers
'tyre 'len while the "regime looks stable oi,er next few months," its "slow de-
eeeleration" is continuing.
AUSTRIA: �communists, forclx Cabinet action on fooct--US Legation
ehinna reports that as a consequence of a Communist demonstration
ethteh penetrated the Chancellery despite police protection, a special. ses-
eion of the Cabinet has considered the demands of the Trade Union Fed-
eratton (TUF) for better food rations and has decided to make a direct
appeal to the Allied Council. The Cabinet also has decided to give pub-
licity to the fact that Soviet restriction on the movement of potatoes from
loaner Austria to Vienna is the chief reason for the present scarcity.
The Legation retorts that a serious rift has developed between
Socialists and the Communists Within the TUF; the Socialists rejected
,nands for a general strike and threatened to eject the Communists.
'rN1 Legation believes, however, that the agitation for a general strike
25sr win some support from the Socialist rank-and-file and thus gradually
,za the Socialist Party to join 'with the Communists in advocating new
elections. The Legation comments that, as hunger is the central issue,
the Socialists are finding it difficult to condemn the agitations outright.
Document No. SZ
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INDIA: Pakistan seems Embassy New Delhi reports that,
onlle the Viceroy intends to make one last effort to gain acceptance of
2ht:: Cabinet Mission's plan for the establishment of a central Indian f';'0V-
nment, it now seems more likely than ever that "some sort" of Raids-
to will be conceded.
EAST
ENCH INDOCHINA: Possibility of Chinese intervention in Indochina--
'7_N Consul Hanoi reports that, according to a French news agency, the
'nuriese Foreign Office ts protesting to the French over recent losses of
77,1..nese lives and property in the hostilities in Tonkin. The Consul sug-
7.:Is that China may utilize prolonged crises as an excuse to intervene
`n Tonkin; he cites a retort that the Chinese Consul General believes
c7.i-tmese troops may be sent if disorders continue to affect Chinese sub-
:t s in Indochina.
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EUROPE
NO.
1. FRANCE: CGT anticipates no serious strikes atAmbassa-
dor Caffery reports that both Communist and Reformist groups in CGT
headquarters (General Confederation of Labor) are "quite calm about
the political crisis and state that there is no reason at present to
anticipate a serious strike situation."
2. :TALY: Dunn urra.tmurplus US weapons for Army--US Ambassador
Dean supports the proposal of US General Lee, Acting Supreme Allied
Commander Mediterranean, that surplus US artillery, ammunition,
and tanks now in Italy be turned over without charge to the Italian Army.
Dam recommends that this "action be taken urgently" because "it is
rettremely desirable that we leave in Italy an Army capable of defending
ts frontiers and providing for internal security."
3. GREECE: US urges Greek Initiative t.tion--The State
Department has informed US Ambassador MacVeagh of its belief that
Greece should immediately take the initiative in announcing an effec-
tive amnesty for political prisoners and Greek guerrilla bands, in order
to forestall an amnesty recommendation by the Security Council's
nalkan Investigating Commission. The Department feels that this
question is "primarily a Greek internal matter." The Department has
Arastructed MacVeagh to bring up the question with appropriate Greek
�facials, and has suggested that "perhaps a favorable reaction would
result if the new King early in his reign should take such a generous
step by royal decree."
FAR EAST
4. CHINA: Press increalysAtical of US--US Embassy Nanking, in a
summary of recent Chinese press comment, notes that papers reflect-
ing both right-and left-wing political views have become increasingly
and more bitterly critical of US foreign policy, and are blaming the US
as well as the USSR for "the failure at Moscow." A Kuomintang edi-
torial has stated that "no participant at Moscow was willing to make a
concession. . . which might damage special interests," while an in-
dependent paper has accused the US of "attempting to secure world
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domination," Right-and left-wing comment has included accusations
.itqt, the US was "fostering a conservative Japan for its own objectives
to the damage of China"--a strategy attributed to "US fear of the
Seviet Union."
Ngtionalist wealcamm)arent in Manchuria--The US Military
.Attache Nanking, recently returned from Manchuria, believes that
CMnese Communists in that area have "enjoyed substantial success"
�in achieving their stated objective: to eliminate Nationalist military
strength. The high rate of Nationalist combat losses, and a low rate
(of !replacements from China proper, has reduced by 30 to 50% the
actual combat strength of one of the US-trained Nationalist Armies in
"Ainchuria. The Attache describes the Nationalist commander in
aortheast China (Manchuria), Tu Li-ming, as egotistical, profession-
ally incompetent, and very jealous of his comparatively able subor-
ainates. Ambassador Stuart comments that the presence of incompe-
tent officers in positions of high command, to the exclusion of more
able, younger men, is "unfortunately not untypical of the military
hierarchy in China."
THE AMERICAS
5� PARAGUAY: Developments in revolution--US Charge Trueblood re-
ports that: (a) the Communists were largely responsible for the
38 April revolt in Asuncion, in which Communist civilians fought
"kanatically" along with Navy enlisted men; (b) the Government is
lskystified as to the source of the rebels' "plentiful" supplies; (c) the
Morinigo Government, with its home front "solid" for the first time,
Is now free to "strike hard" against the rebels in the north; and
(d) prominent Paraguayan Army officers, hitherto neutral, now be-
lieve that their country's best hope of stability is the Morinigo Gov-
erment.
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5 MAY 1947
372
rry umes re-examination of US objectives in Rumania--US Repre-
aentative Berry has expressed his belief that, in the light of recent for
policy statements by the President and the Secretary of State, the
time is now "riper for a re-examination of Rumania's place in the pat-
tern of US objectives." Berry considers that "our chance of maintaining
a hold in Rumania depends on our success in keeping Opposition parties
in the field, just as the USSR's chance of dominating depends upon elimi-
:Ttting Opposition parties."
The first objective, Berry maintains, is to keep the Rumanian
:,rople informed of events taking place about them -- events which have
I-moralized and frightened them, because of the absence of real informa-
'iten. Achievement of this objective, Berry concludes, will "maintain US
Tititudes fully before the Balkan peoples and will prevent the spread of
Dmmunism which "always withers in the spotlight." Berry, therefore,
commends that the Voice of America programs be completely revamped,
)L7.eferably to include the establishment of a new radio station (either in
Ankara, Athens, or on a Greek island), directed solely to the Balkans,
hich would concentrate on: (a) US attitudes-on vital world problems; and'.
(b) factual and detailed reports on domestic affairs in the Balkan countries.
lowish Agencystficig:_inzes increase in illegal Palestine_immigration--
A UK Colonial Office official has informed US Embassy London of a Brit-
toll intelligence report that David Ben-Gurion (Chairman of the Jewish
Agency Executive), in a recent speech to the JA Executive in Jerusalem,
urged intensification of efforts to increase illegal immigration to Pales-
Ben-Gurion reportedly stated that: (a) if the JA cannot move "size-
able quantities" of immigrants to Palestine during the next few months,
the "marked tendency" among DP's in Europe to give up the idea of going
to Palestine will be "accelerated"; (b) Zionism is appearing increasingly
less attractive to Jewish DP's; and (c) within a year "at least half" of
these DP's will no longer insist on gcing to Palestine unless the JA "pro-
duces results."
3. Dunn urges statement on Italy by President--US Ambassador Dunn is
convinced that no improvement in the condition of Italy can take place
so long as the Communists participate in the Government. ,Dunn believes
that "direct relief and coal" are of real importance in combatting Com-
AiUniSM, but he doubts that any other forms of relief would be effective
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(a) the the Communists are eliminated from the Cabinet; and (b) the
-Els makes clear, by appropriate propaganda, its anti-Communist policy.
lie urges that President Truman make a public statement supporting the
forces of democracy in Italy and expressing confidence that the people
dl reject a totalitarian regime that would break down the close ties
that bind the Italian and US peoples.
EUROPE
4. FRANCE: Bidault anticipates fusion of US-UK-French Zones Germany- -
Foreign Minister Bidault has told US Ambassador Caffery that he "parti-
cularly appreciated" the attitude of the Secretary of State at Moscow in
.eegard to the coal question, because aid was "graciously extended" with
any attempt to bargain. "With that in mind," Bidault said to Caffery,
"I will tell you most confidentially. that I am looking forward to the time
when I hope to be able to bring about a fusion of our Zone in Germany with
y-ours and the British."
Vatican advises MRP to "intensify" anti-Communism�US Ambas-
sador Caffery has been told by a "trustworthy source" that the Pope has
'-fiade it clear" to MRP leader Franctsque Gay that in the Vatlean's opin-
ion the MRP should "intensify its opposition to the Communist movement,
not only with respect to internal but also external affairs; the Pope also
?ecommended that the MRP should "stand aside" from the Gaullist move-
iilent.
5. AUSTRIA: US may be "compromised" bysatn shortagt�Headquarters
US Forces Austria reports that after 1 July 1947 the US position in Austria
may be "seriously compromised" and requests that HQ s responsibilities
-Am? "clarified" with regard to supply and the duration of occupation. HQ
Itates that "Austria will be completely out of bread grains on 1 July unless
shipments are started from the US immediately."
NEAR EAST-AFRICA
3. MAN: US prepared to support Iranian independence�The State Depart-
went has informed US Ambassador Allen, in view of Qavam's concern
over Soviet accusations of Iran's "anti-Soviet and pro-US policy," that:
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(a) the US is prepared to support Iranian independence by acts as well
words "so long as the Iranian Government sincerely desires inde-
pendence and demonstrates its willingness to stand up for Iran's sover-
tfignty"; and (b) the US expects stepped-up Soviet activities In Europe
,t,ad the Middle East in the near future (see Daily Summary of 29 April,
;tem 6). The Department also expresses its willingness to support for-
al application by Iran for a World Bank loan provided it is based on an
mfective plan to benefit all the Iranian people.
FAR EAST
FRENCH INDOCHINA: .Slomp:_g_o ALpacfficatisa--US Consul Hanoi
E-Torts that the French policy of arming local partisans in villages re-
o.-!cupied by the French is a tacit admission that France lacks sufficient
rces to restore order without native aid. The Consul adds that the
French campaign in the Tonkin Delta during the past two months has not
v.tade much progress in pacifying the area or eliminating any large portion
Vietnam forces.
3. JAPAN: ,..SCAP pro ses 1947-48 Antarctic whalinge �
editionIn view
Japans continuing shortage of protein foods and edible oils and the in-
lciequate yield of marine products from presently-authorized Japanese
Lohing areas, SCAP believes that the Japanese should be authorized to
dispatch a SCAP-administered whaling expedition to the Antarctic in the
1947-48 season, patterned after the 1946-47 enpedition. (The State De-
partment last year answered protests from the UK, Australia, New Zea-
land, and Norway by assurances that the 1946-47 expedition was "an
emergency measure for one season only," and that no future expeditions
would be authorized without prior inter-governmental consultation.)
THE AMERICAS
9. ECUADOR: I.ioan_from Argentina disclaimed--The Subsecretary of the
Foreign Office has disclaimed to US Embassy Quito any knowledge of a 600-
million peso loan from Argentina (reported in the local press). The offi-
cial said that a new commercial treaty might be discussed with the Argen-
tine Government, and added that "the mere discussion of a commercial
treaty is always linked in the Ecuadorian mind with financial assistance
to the government."
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8 MAY 1947
371
. HUNGARY: Communists discourage contacts with US officials--Com-
menting on the recent arrest of Hungarian officials, the President of
the National Assembly has told US Minister Schoenfeld that "everyone
in contact with the British or Americans is presently a marked man."
Schoenfeld adds that (a) his British colleague is increasingly conscious
of coolness and obstructionism on the part of Hungarians; and (b) ac-
cording to a "reliable" source, the Communist Minister of Interior
following the Moscow Conference ordered the political police to "dis-
courage by all necessary means contact between Hungarians and
foreigners."
FAR EAST
2. FRENCH INDOCHINA:gisend of negotiations --US Consul Saigon re-
ports that French negotiations in Indochina follow two definite trends:
(a) to recognize Ho Chi Minh as head of the Vietnam Government be-
cause of his "undoubted influence" with most of the natives; and (b)
to deal with Bao Dai (former Emperor of Annam), who "apparently
has Chinese backing and enjoys growing popularity." A source who
"often gives correct information" has expressed to the US Consul
his belief that French-Vietnam negotiations are "proceeding faster
than anticipated," and that Ho Chi Minh will remain in power.
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'Al MAY 1947
UK denies military wil assume control of Palestine--US Ambassador
Douglas reports from London that the UK ColonialOffice has categori-
4:--211y denied that the British military "would very soon take over corn-
Rete control of Palestine" (as previously reported by a Jewish Agency
milcial in Palestine; see Daily Summary of 25 April, item 1).
EUROPE
GREFCE: Communist expisitall..pa of WFTU--US Ambassador MacVeagh
reports that the continued use of the World Federation of Trade Unions
by the USSR to further its Communist objectives is becoming a matter
O. serious international concern. In Greece, the Communists and Com-
munist Trade Union leaders claim CIO and British Trade Union Congress
backing against the present Greek Government because the CIO and TUC
are members of the VITFTU. The continued silence of the CIO in the face
at' Communist exploitation of the WFTU confuses many workers in Greece
and Europe, creating the impression that the US is not generally behind
President Truman's Greek policy, and enabling the Communists to claim
the support of millions of US workers. The AF of L and ILO (Interna-
tional Labor Organization) have recognized the Government-sponsored
arti-Communist Trade Unions Organization in Greece.)
UK fears pze asement of Slav bloc in Border Commission--The
British Foreign Office has expressed concern to e S epartment
over reports from the UK delegate on the SC Border Commission that
a French-led "center bloc" has emerged in the Commission and that this
bloc believes that the Commission's Report should not draw conclusions
from the evidence presented, but should merely present recommendations
(thus avoiding any direct attribution of blame to Greece's northern neigh-
bors). The Foreign Office believes it would be "lamentable" if the French
take any steps which prejudice an agreement by the majority of the Com-
mission, and which, in turn, would "amount to accepting the Soviet thesis
that the frontier situation arises from the Greek internal situation." The
Foreign Office has instructed its Ambassadors in France and Belgium to
express the hope that the delegates of those countries will not "attempt
political maneuvers" to "appease the Slav bloc," and has asked the US to
make a appeal to those countries and to China, Brazil, and Columbia.
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a,
Macifeagh urges new amnesty�Prime Minister Maximos has
ortfed favorable receptionTo7KRFassador MacIfeagh's suggestions
it: (a) continued talk of further increase in army strength, above that
norarily necessary to relieve older classes, would be unwise in the
j. of present "US Congressional and Departmental thinking"' on aid
'Cleeeeee: (0) the Greek Government might declare a new amnesty on
oad lines and Invite the UN to send neutral (neither US, UK,nor Soviet)
,eervers to satisfy world opinion as to its implementation; (c) the Coy-
pent set up a foreign trade administration in advance of the aerival
the US miSSIOn,
(C.�1-G Corota.e6tst: It will be particularly difficult for Maximos to
miernent point (b), as parlimentary leaders have attacked bitterly
ral Party proposals for a new amnesty and have gone to the extreme
'0;14 demanding the execution without delay of all death sentences for crimes
170.ilirnitted during the revolution of December 1944,,)
1-.!:AST
7c-d7z.F,A: Indications of a possible Soviet withdrawal from North Korea-..
cordlne: to General Bodge, the US Liaison Officer with the .vlet orces
.:tently returned from North Korea� reports accelerated reductions of
let temp strength in that area and increased activity of the North
--ean naive army, General Bodge considers it entirely possible that
IrSSIP, may withdraw completely from North Korea in the near future
-Jee may then demand the immediate withdrawal of US Forces or allow the
-ferth Korean native army to start operations for the "liberation" of
;-'eroth Korea.
'llE AMERICAS
TLE: Anti-Communist labor organization to be formed�US Ambassa-
dor Bowers reports that: a) a new Latin American lagForganization is
ec be formed shortly to compete with the Communist-dominated Confedera-
:eon of Latin American Workers; (b) the organization will be formed dur-
a ten-day meeting in Montevideo, Uruguay; and (c) the Chilean delegate
vill be Isodoro Godoy, Socialist Secretary of the Confederation of Chilean
ercirkers. (A recent campaign by Socialist labor leaders to combat Com-
munist influence within the CTAL has been unsuccessful.)
'a
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EUROPE
P�1 MAY 1947 �
3 I- e
I. FRANCE:W. arktUiCag.0 CGT leakre to call Renault strike--US Embassy
Paris reports that a "strong manifestation of worker discontent" with the
(Communist) leadership of the CGT (General Confederation of Labor) is
evident in the Renault plant strike, which began in spite of Communist
opposition and showed such signs of success that the CGT reversed its
policy and ordered all Renault workers to strike. The Embassy states
that this strike "represents the first open surrender of CGT leadership
to the rank and file" in its demands for an increase in the present low
wage scale. The Embassy adds that it "appears almost inevitable" that
this CGT action will encourage further strikes in the Paris region with
possibly serious political and social developments.
Cabinet m_a_y_f_a_g_sm strike issue--A high ranking official of the
Ministry of Interior has informed the Embassy that it is "very possible
that Prime Minister Ramadier will hand in his resignation" on I May,
because Communist support of the Renault strike openly violates minis-
terial solidarity. The Embassy comments that by this action the Commu-
nists would gain the double advantage of not breaking with the Government
over the unpopular colonial issue and, at the same time, of posing as the
champions of the working class.
2. ITALY: SACMED favors external civil air operations--The Supreme
Allied Commander Mediterranean has informed the Combined Chiefs of
Staff in Washington that Italian civil aircraft, from the point of view of
safety and operation, now conform to international standards. He has re-
quested authority to permit the Italian Government "to start external
civil air lines forthwith."
(CIG Comment: If Italy is admitted to ICAO (International Civil
Aviation Organization) at the forthcoming Montreal meeting, as appears
probable, Italy will be prevented from making any air agreements with
its eastern neighbors except on a fully reciprocal basis.
NEAR EAST-AFRICA
3. EGYPT: Nokrashy apparently expects to lose Egyptian.mpeal in SC--US
Ambassador Tuck reports that Premier Nokrashy, although apparently
convinced that Egypt will lose its case against the UK in the Security
Council, will press the appeal in order to air the full facts of Egypt's
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position "before the world." Tuck has been reliably informed that
Nokrashy now realizes that Egypt can frame no case under any specific
article of the UN Charter "which will hold water." Tuck adds that
13 May is suggested as the date for submitting the Egyptian case to the SC.
(CIG Comment: In view of violent anti-British sentiment in Egypt,
Nokrashy undoubtedly feels that he must present the Egyptian case in order
to protect his own position.)
FAR EAST
4. CHINA: Government seeks US military as well as financial aid--T.V.Soong
recently informed US Ambassador Stuart that China's Central Government
is seeking military as well as financial assistance from the US. Requests
for military aid, Soong revealed, would cover ammunition, completion of
the "8-1/3 Air Group program" (strengthening the Chinese Air Force),
and appointment of a US Military Adviser to Chiang Kai-shek.
The Generalissimo reiterated these requests in subsequent con-
versations with Stuart, pointed out that the ammunition shortage was
lowering Nationalist troop morale, but admitted that other factors were
also "too prominent" in their effects on fighting spirit. With respect to
the Air Force, Chiang observed that "the airplanes were old," but de-
clared that he "did not know" about his own Chief of Staff's plans to
utilize 56,000 tons of air supplies and equipment -- half of which were
usable or repairable -- now located in two southern Chinese cities.
(Chiang also indicated that he was "unaware" of the proposed movement
of Nationalist tactical groups from the Nanking-Shanghai area unaccom-
panied by service group support.)
5. KOREA: US defines "exact execution of Moscow Agreement"--In his
reply to Molotos 19 April proposal that the Joint Commission be recon-
vened on the basis of an "exact execution of the Moscow Agreement,"
Secretary Marshall has written Molotov that the US interprets this phrase
to mean that representatives of Korean democratic parties and social
organizations shall not be excluded from consultation with the Joint Com-
mission because of opinions they may hold or may have expressed in the
past concerning the future government of their country, provided that
these representatives are now prepared to cooperate with the Commission.
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Secretary Marshall also indicated his willingness to reconvene the joint
Commission when the Soviet Government has confirmed that it will agree
to this definition.
THE AMERICAS
6. CUBA: Possible revolution in Cuba--The Seventh US Naval District
headquarters reports that it has received from two sources information
considered "reliable" to the effect that a revolution will start in Cuba
within the next two days.
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