CURRENT INTELLIGENCE BULLETIN - 1952/03/13

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02623673
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 8
• Document Creation Date: May 24, 2019
• Document Release Date: May 30, 2019
• Publication Date: March 13, 1952

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SEC UBPrfORMATtON
13 March 1952
Copy No. 4,
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO.
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Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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SECU NFORMATION
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SUMMARY
FAR EAST
L Indian Ambassador fears Peiping is considering extension of
Korean war (page 3).
2. Inflation in South Korea threatens government (page 3).
NEAR EAST - AFRICA
3. Saudi Arabian King fears British Middle East activities (page 4).
4. Egyptian Government to press for settlement of dispute with
Britain (page 5).
5. Greek King considers dissolving Parliament (page 5).
WESTERN EUROPE
6. Italy's attitude stiffens in trade negotiations with Czechoslovakia
and the USSR (page 6).
7� Soviet peace treaty proposal will not affect Adenauer's policies
(page 6).
8. Eden urges careful consideration of Soviet note on German peace
treaty (page 7).
9. Pleven fears French crisis may disrupt NATO (page 8).
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FAR EAST
1, Indian Ambassador fears Peiping is considering extension of Korean war:
that Indian Ambassador Panikkar is deeply
concerned over Premier Chou En-lai's
statement of 8 March accusing the United
States of extending bacteriological warfare to China and threatening to
treat captured American airmen as war criminals.
Panikkar intends to warn Chou of the serious
consequences of action against US pilots and to urge him to accept the
American proposal for international investigation of Chou's charges.
He fears that the Chinese Communists may be considering extension of
the war, provided that they can "carry the Soviet Union with them."
ithe Chinese Communists, unable to admit their responsibility for
e 'disaster" of epidemics in Korea and China and their inability to
cope with the situation, are attempting to find a scapegoat.
Comment: Chinese and Soviet propaganda
in the past four weeks has deVoted considerable attention to the possi-
bility of expanded hostilities. This propaganda has not provided any
reliable indication as to whether Moscow. and Peiping have decided to
enlarge the Korean war.
There is no evidence of an unusual epidemic
among the Communist troops in Korea. Chinese Communist news
dispatches have reported that seasonal illnesses are prevalent in North
China.
2. Inflation in South Korea threatens government:
ment.
Ambassador Muccio believes that the 34 per
cent increase in rice prices in South Korea
from 1 to 8 March brings runaway inflation
closer and may lead to the fall of the govern-
Rice has risen 114 per cent in the past two months, and other
food prices have also increased.
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The Ambassador observes that inflationary
pressure, characterized by a rise of a thousand per cent in note issue
since the beginning of the Korean war, is principally due to South Korea's
inability to finance war costs. Hoarding, political uncertainty, poor
publicity about the recent rice harvest and lack of transportation are
contributing factors to the inordinate price advances.
Comment: The sharp rise in South Korean
food prices during 1952 has resulted in the resignation of the Minister
of Agriculture, and the press has warned that rice riots are probable
if prices continue to skyrocket.
NEAR EAST - AFRICA
3. Saudi Arabian King fears British Middle East activities:
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British activity in Arabian peninsula affairs
has so alarmed King Ibn Saud of Saudi Arabia
that he has asked the United States to inter-
vene with London. According to Ibn Saud,
the British have been evidencing their irritation over increasingly close
Saudi Arabian-American relations by indulging in political maneuvers
on the Iraqi border and in the Persian Gull area, The King believes
that Iraqi political intrigue in Kuwait and tribal difficulties along the
Saudi Arabian border are British-instigated, He is also alarmed bywhat
he believes to be British bad faith in the Persian Gulf border negotiations.
Comment: Ibn Saud has long suspected
British intentions in Arabian peninsula affairs. The recent failure of
negotiations with the British over the Persian Gulf boundaries will increase
the King's apprehensions, making negotiations with him more difficult,
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4. Egyptian Government to press for settlement of dispute with Britain:
The new Egyptian Foreign Minister has
indicated to the French Ambassador in Cairo
that the Hilali government will not permit its
domestic program to divert it from pressing
for negotiations on the Anglo-Egyptian treaty
dispute.
The Foreign Minister emphasized that Egypt
would immediately start discussions with the British where former
Prime Minister Ali Maher had left off. He added that the presentgovern-
ment would like to achieve success before new elections are held.
Comment:
that, in spite of the need for internal reforms and the government's
interest in pursuing them, success in dealing with domestic problems
depends largely on a settlement of the Canal zone and Sudan issues.
5. Greek Xing considers dissolving Parliament:
As a result of Prime Minister Plastiras'
Illness, the King of Greece reportedly is
considering dissolution of Parliament and
the establishment of an interim government.
Such a easure would require elections within 45 days.
Comment: Earlier press reports announced
that the King had appointed DepUty Prime Minister Venizelos as Acting
Prime Minister for the three months Plastiras was expected to be
incapacitated.
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New elections would favor opposition leader
Papagos, who has been pressing steadily for elections on the majority
system. An outgoing government has the right, however, of designating
the system to be used in the following election, and the current one will
possibly choose the proportional system, favored by Venizelos. Such
a system would reduce Papagos' chances of victory and might result in
the re-emergence of various small, ineffectual political parties.
WESTERN EUROPE
6. Italy's attitude stiffens in trade negotiations with Czechoslovakia and
the USSR:
the Italian Ministries of Foreign Trade and
Foreign Affairs have ordered "a stricter
attitude" toward Czechoslovakia in trade
negotiations. He indicated that the USSR is experiencing similar diffi-
culties with Italy.
The Czech representative attributes Italy's
change of attitude mainly to the Lisbon conference and to Czechoslovakia's
reply to the request for a revision of the Italian peace treaty.
Comment: The stronger stand taken by Italy
concerning trade with most of the Orbit stems primarily from efforts
to carry out the increasing restrictions of the Coordinating Committee
on East-West Trade.
7. Soviet peace treaty proposal will not affect Adenauer's policies:
Chancellor Adenauer has informed the Allied
High Commissioners that the new Soviet note
on a German peace treaty will have no effect
on the Federal Republic's policies. Adenauer,
who had already discussed the note with his cabinet expressed the hope
that there would be no four-power conference on the issue.
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The French High Commissioner said that the
Soviet Union was employing "merely another delaying tactic" designed
to tie up discussion just as it has done in the Austrian treaty and Korean
truce negotiations.
Comment: A member of the Bonn cabinet has
meanwhile suggested that the opposition Social Democrats might try to
use the Soviet note in their own campaign to block rearmament and the
contractual agreements. A leading Social Democrat has stated that his
party might publicly urge Allied acceptance of the offer to negotiate, but
it is apparently delaying any official stand until after consultations with
ailing party chief Schumacher.
Eden urges careful consideration of Soviet note on German peace treaty:
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Foreign Secretary Eden has told US Ambassador
Gifford that he considers it of utmost importance
to give careful consideration to the Soviet note
calling for a four-power conference on a German
peace treaty.
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The American Embassy in London believes
that Eden is anxious to retain opposition support for his policies in view
of increasing British misgivings about rearming Germany. There is a
widespread belief in Britain that the United States tends to reject Soviet
proposals out of hand.
Meanwhile, the Foreign Office emphasizes
that the Soviet note should not be allowed to delay negotiations on con-
tractual relations and the European Defense Community,
Comment: Although Britain recognizes the
need for rearming West Germany, it has consistently maintained that
channels of negotiation with the USSR should be kept open. The foreign
Ministers Deputies' talks at Paris last spring were prolonged partly
because the British Government tried to convince the public that no
possible approach to agreement with the USSR was being left unexplored.
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9. Pleven fears French crisis may disrupt NATO:
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Defense Minister Pleven is very doubtful that
France can avoid abandoning a large portion of
its military production program.
Pleven agreed to replace the ailing Bidault as
Defense Minister only because he felt that someone familiar with the
situation might be able to prevent a "blowup affecting the whole NATO
program." He insists that even with a four-billion dollar budget for
calendar year 1952, France will need a total of one-billion dollars of
American aid to meet 1952 defense commitments.
Comment: France's prospective four-billion
dollar budget actually exceeds by 15 per cent NATO's estimate of the
country's financial and economic capabilities.
Bidault had warned US officials in early Febru-
ary, however, that five billion dollars would have to be budgeted in order
to meet NATO military requirements. The new French Government is
making no attempt to secure a tax increase, which its predecessor con-
sidered indispensable for even the four-billion-dollar budget.
In order to meet French commitments to NATO,
Pleven is in effect asking that 500 million dollars of additional US aid be
promised and applied against this year's budget, whereas US officials have
hitherto considered that any further aid should be applied against the
1953 budget.
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