CURRENT INTELLIGENCE BULLETIN - 1954/03/21

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02993996
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 9
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: March 21, 1954

TO1)2019/08/.0171293907ee
21 March 1954
C;opy No. 84
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. .9
NO CHANGE IN CLASS.
0 DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE: _4066 9
AUTH: HR 70-2
DATE..e7M/7.9 REVIEWER: _
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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3.5(c)
3.3(h)(2)
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SUMMARY
GENERAL
1. Soviet Union protests proposed Turkish-Pakistani treaty (page 3
FAR EAST
2. Japanese economic crisis predicted for this summer (page 3).
3. Chinese Nationalist forces clash with Communists near Tachens
(page 4).
4. Chiang Kai-shek's son may become minister of national defense
(page 4).
5. Peiping hints at five-year plan goals; (page 6).
SOUTHEAST ASIA
6. Burmese defense minister reported maneuvering for premiership
(page 6).
SOUTH ASIA
7. Indian ambassador to Peiping may be recalled (page 7).
NEAR EAST - AFRICA
8. Iran offers formal renewal of American military mission contract
(page 7).
9. New Israeli-Syrian border crossing difficulties feared (page 8).
10. Tension mounting in Iraq (page 8).
LATIN AMERICA
11. Chilean cabinet considering disposal of copper surplus to Orbit (page 9).
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GENERAL
1. Soviet Union protests proposed Turkish-Pakistani treaty:
The Soviet Union's protest to Turkey on 18
March against the proposed Turkish-Pakistani
treaty is a standard Soviet reaction to defense
planning in the Middle East. The protest closely parallels the Soviet
notes of November 1951 and January 1952, which strongly attacked
the proposed creation of a Middle East Command, even to the levying
of "responsibility for the consequences."
Turkey's reaction will probably be similar
to its response to the previous Soviet notes protesting Turkey's Western
relationships and orientation. It will probably reiterate the underlying
peaceful presuppositions of Middle East collective security planning.
FAR EAST
2. Japanese economic crisis predicted for this summer:
indicated on 23 February that he believes
a serious economic crisis may develop early
this summer as a result of the 'continuing
deterioration in Japan's foreign exchange position. He believes that
this will intensify the pressures for positive steps to expand trade
with Communist China.
The embassy in Tokyo comments that unless
the trend toward mounting trade deficits is checked, the government
will be unable to resist demands for more trade with China. It also
thinks that the Chinese Communists will exploit this situation by
making offers of large-scale trade on attractive terms.
Comment: The Japanese have become alarmed
over a decline in exports and a substantial drop in American spending
since the armistice in Korea. Japan is expected to suffer a loss of about
$320,000,000 in its foreign exchange holdings for the fiscal year ending
31 March 1954. Such a loss would leave it with approximately $800,000,000
on that date, a sum which could fall to a critical level in a few months at
the current rate of decline.
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3. Chinese Nationalist forces clash with Communists near Tachens:
On 18 March four Chinese Nationalist destroyer
escort-type ships engaged a Chinese Communist
force of two destroyer escort types and 13
smaller craft north of the Tachen Islands off
the Chekiang coast, according to the American
nava at Taipei (see map, p.5). Nationalist fighter planes called
to assist their naval forces were attacked by MIG-15's, which shot down
the flight leader.
Comment: This is the largest engagement
between Nationalist and Communist forces since the Nationalist raid
on Tungshan Island last summer. It marks the first appearance of
Communist jet aircraft in such a clash. This action demonstrates
that the Chinese Communist air force now has sufficient training to
support naval operations.
4. Chiang Kai-shek's son may become minister of national defense:
General Chiang Ching-kuo, Chiang Kai-shek's
elder son, will probably become Tai ei s
minister of national defense,
He is sue
relievea as airector 01 tne armed forces'
political department. The American military attach�elieves that
the younger Chiang would keep a "tight grip" on the political depart-
ment in his new position.
Comment: 1 Chiang Ching-kuo is apparently
being groomed as the eventual successor to his father. He might be
a more effective minister of national defense than the incumbent, who
is generally regarded as an undistinguished officer.
Chiang Ching-kuo is unpopular with many
Chinese leaders, however, both for his growing power and for his
belief in authoritarian methods. The American military advisory
group on Formosa has long been critical of his political department,
modeled on the Soviet political officer system.
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HENGYANG
60
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HANKOW
CHANGT,ING
120
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0
TAIPEI
FO R MO S A
(TAIWAN)
TAKAO
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SOUTH CHINA COAST (incl. FORMOSA)
LOCATION OF AIRFIELDS AND STATUS OF OFF-SHORE ISLANDS
t Communist Airfield
Island garrisoned by Nationalist troops
Railroad Road (selected)
100 200
Statute Miles
100
Kilometers
Sag Men Wan
Area
--SHANG TA CHEN
**1-151A TA C//EN
KEELUNG
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5. Peiping hints at five-year plan goals:
Communist China's Ministry of Fuel Industry
has calculated that 80 percent more coal
"will be needed" in China by 1957.
Comment: Peiping has released very little
information on the goals of the present five-year plan which ends in
1957. Tentative intelligence estimates of the planned industrial ex-
pansion up to now have ranged from 60 to 100 percent.
Expansion of the coal industry can be a rough
indication of plans for industrial expansion as a whole, because coal
Is generally used for fuel in China's industries, power plants and rail-
roads. Therefore, a more nearly precise estimate of 1957 industrial
prospects is now possible.
SOUTHEAST ASIA
6. Burmese defense minister reported maneuvering for premiership:
Burmese defense minister Ba Swe is seeking
the support of a west Burma ethnic minority
group in a bid for the premiership,
Comment: There are numerous indications
that Ba Swe would like to replace Premier 1J Nu in the near future.
Ba Swe, a notorious opportunist, was once
a Communist sympathizer, but over the past two years he has taken
a strong stand against the Burmese Communists.
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SOUTH ASIA
7. Indian ambassador to Peiping may be recalled:
Prime Minister Nehru is considering the
recall of Nedyam Raghavan, Indian ambas-
sador to Communist China since September
1952, because of Chinese inti tions that
Raghavan is "not sufficiently sympathetic" toward Peiping
Nehru has pursued a generally conciliatory
policy toward the Peiping regime since its founding, and he might be
Induced to replace his ambassador.
NEAR EAST - AFRICA
8. Iran offers formal renewal of American military, mission contract:
The Iranian Council of Ministers on 17
March approved a proposal of Minister
of Defense Hedayat that the contract
between Iran and the United States Mill-
ary Mission with e Iranian Army be formally extended. The
renewal, which can be accomplished simply by an exchange of
notes, will extend the agreement until 20 March 1955.
Comment: The American mission has
been functioning without a formal agreement since early 1952, when
former prime -minister Mossadeq consented only to a temporary,
informal renewal. Formalization of the arrangement at this time
coincides with the shah's drive for more American military aid
and the rehabilitation of the Iranian army.
-7.
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9. New Israeli-Syrian border crossing difficulties feared:
The American, British and French ambas-
sadors in Damascus fear that the Israeli-
Syrian border will be plagued by crossing
difficulties similar to those on the Israeli-
e result of a decision on 15 March by the
Israeli-Syrian Mixed Armistice. Commission.
The decision prohibits Syrian civilians from
crossing a ten-meter strip separating Syrian territory from Lake
Tiberias. They are thereby deniedtraditional rights of fishing and
watering cattle in the lake.
Comment: If the decision stands -- and
there are major obstacles to its being changed -- the Israeli-Syrian
border may be the scene of incidents of the kind which culminated in
such acts as the Qibya massacre of October 1953 on the Israeli-
Jordanian border.
10. Tension mounting in Iraq:
�
Some members of Iraq's pro-Western
Nation Socialist Party are advocating
association with extremist, anti-Western
parties to foment disturbances which may
break out at any moment, according to Ambassador Berry in Baghdad.
Many of the rank and file Nation Socialists
are incensed at Prime Minister Jamali's government for allowing ex-
prime minister Nur i Said, foe of their leader Saleh Jabr, to gain
personal prestige by playing an important role in Iraq's current negotia-
tions with the West on defense questions.
The extremist parties, which have been
building up pressure to prevent Iraq from joining Turkey and Pakistan
in a regional security arrangement, are now intensifying their opposi-
tion to the government because of a rumored forthcoming dissolution
of political parties.
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Comment: Any alliance of moderate and
extremist elements would gravely iccentuate the already mounting
tension in Baghdad. It would be a triumph for the Communists, who
have already succeeded in uniting leftist and rightist extremists in a
"national front" against the jamali government.
LATIN AMERICA
11. Chilean cabinet considering disposal of copper surplus to Orbit:
'The Chilean cabinet has decided to seek
markets for Chilean copper behind the iron
curtain, as well as elsewhere, according to
Labor Minister Foncea. The president of the government's Council of
Foreign Trade told a press conference on 18 March that the sale of
copper to Hungary and Poland on a barter basis is being considered.
Comment: Negotiations began last fall
with the United States for the 100,000 tons, but have been
delayed by Chile's failure to pass legislation fedefining the status
of American-owned copper companies. Meanwhile, the total surplus
has grown to 180,000 tons.
Chile faces a finantial aisis because_
copper sales normally provide about 70 percent of the country's
dollar, earnings, and a large share of government revenue.
President Ibanez has consistently,declared
that Chile will make no direct copper sales to the Orbit. Thelinancial
crisis, together with apossible belief that general relaxation of East-
West trade controls is impending, may encourage favorable considera-
tion of recent Orbit offers.
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