CENTRAL INTELLIGENCE AGENCY OFFICE OF CURRENT INTELLIGENCE DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300070001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 20
• Document Creation Date: December 12, 2016
• Document Release Date: February 19, 2002
• Sequence Number: 1
• Publication Date: July 3, 1951
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
JUL 3 1951
Datez
NOTE: 1. This summary of significant reports has been
prepared 'primarily for. the internal use of the
Office of Current Intelligence. It does not
represent a? complete coverage of all current
reports in CIA or in the Office of Current
Intelligence.
*Army, DIA and State Dept
reviews completed*
2,, Comments represent the preliMinary views of
the Office of Current Intelligence.
3. Marginal letter indications are defined as
follows:
? ? items indicating Soviet?Conmunist
intentions or capabilities
? ? important regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
? ? other information indicating trends
and potential developments
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SECTION 1 (SOVIET)
"A" USSR. Ealsgy Moscow Believes Communist Cease-Fire Terms Dictated
Presti e Rather thanlitau Considerations. In commenting on the terms
of the Communist cease-fire proposals, Embassy Moscow believes that both
the choice of Kaesong at the 38th parallel and the delay preceding
negotiations are primarily for prestige and propaganda considerations.
The Embassy points out that while the delay could be designed to enable
the Communist forces to improve their military situation, launching an
offensive would boomerang against their alleged peaceful intentions.
The Embassy farther questions whether the Communist military forces could
now expect to improve their position materially before cease-fire negoti-
ations, except in the unlikely event that the Communists are dtermined to
conclude the Korean war with a large-scale air offensive against UN rear
bases and naval vessels. (C Moscow 5, 2 July 51). COMMENT: In addition
to possible prestige and propaganda advantages, the Communists probably
consider a delay necessary in order to prepare their negotiating position
for a conference that has developed quite rapidly. With regard to mil-
itary considerations, there ie evidence that Communist forces in Korea
will be capable prior to mid-July of resuming the offensive if they so
desire.
"B"
nip
USSR Industries Must Eliminate Waste. According to a recent Pravda
editorial, managers and Party organizations of many Soviet enterprises
tolerate over-expenditures of raw materials and natural resources,
infringement of technological processes, and the productive losses result-
ing from such abuses. The Krasnoye Sormova Works are singled out in this
connection because of the many locomotive and ships? parts produced that
turn out to be heavier than planned. As a result, this factory is "over-
expending" tens of hundreds of tons of materials, and stocks of unfinished
goods held there in excess of norms "have still not been eliminated."
Pravda cautions the Works Party Committee and the Gorki Town Party
Committee to pay attention to these uneconomic and spendthrift activities,
and warns that Party organizations must intensify the struggle for the
strictest economy and thrift "against wastage and uneconomic conduct."
(R FBIS? 28 June 51). COMMENT2 This is a further indication of the
apparent metal shortage in the USSR that has been reflected in this yearls
scrap metal program.
Possibility_tkt Lenin rad Port Now Closed_k_fagspers. Embassy
Moscow considers that the port of Leningrad may now be closed to
foreigners. While the Soviets have not yet given a categoric answer to
queries on this matter, requests for ship reservations have been recently
turned down, once for the reason that "no space was available" and again
that no foreigners would be given space on the two boats concerned from
now on. Furthermore, foreigners visiting Leningrad during the past two
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weeks have been refused permission to take the boat trip down the Neva ?
to Peterhof. The situation is still 1 rgely in the rumor stage and the
Embassy indleates that it will co?tinie to collect pertinent info--
STAT nation.J This may well be another step in cutting down
the opporteesity for observation in that area. (0 Moscow 22009 29 June 51).
stay Cao.t' es o be Harassed tr Nationalist Problemt. The
Soviet historical periodicals Iroprosi Istoriis has changed the previously
aecepted theory that since small countries could not long maintain an
existence independent of other predatory capitalist powers, Tsarist
annexations of Georgia and the Ukraine could be considered the "lesser
evil". The magazine claimed that the introduction of the higher Russian
culture and economy to these peoples was not "evil but good". This 1 te
twist will undonbtedly necessitate further changes in the "facts" of
history and significantly the periodical also criticised the history
textbook eurrently in. use. (S Moscow Weeka 269 22 June 51). COMMENTs
National minorities in the USSR are certainly cognizant of the differences
between the theory of "national equality" and "cultural autonomy" as pro-
peanded by the Moseow ideologues and the practice of discrimination in
favor of the Russian "elder brother" by the Government and Partyr PrIvda
of 2 July takes the Central Committee of the Ukrainian Communist Party
to task for permitting the encouragement of nationalist tendencies. A
poem entitled "Love Ukraine" which was written seven years ago and
recently reputlished provides with with the point of departure for a
general warning against nationalist emotions which are the most dangerous
and elusive "survivals of capitalist mores in the peoplels minds".
fpyiet ?aratroonsauprent from Rumania to Transcaucug
Militau,District, Approximately 2250 men of a Soviet parachute brigade
reportedly with complete war equipment embarked on 28-29 May from Galati.?
Rumania bound for Poti and Batumi. On 2 Junes 600 paratroopers and 90
female nurses were allegedly transported over the same route. I.
25X1A I
ICOMEENTE There is no evidence of any paratroop
units in the Transcaucausus Military District north of the IranianTarkieh borders nor is there evidence that there are Sosiet par troops
in_ &mania. Closest airborne units in the USSR are believed to be north
of the Black Sea in the Kiev and Tauric Military Distriets, If troop
movement has actually taken, places it is questionable
25X1 able to distinguish paratroops from regular mil-
itary units. There nes been no confirmation of a report from
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that paratroop equipment had been identified on ships unioacing
i and Batumi. (See 0/0I Daily Digests 23 June 51).
25X1 "B" yggpm EUROPE, BUJGARTA.
25X1C srOgosal
no indication of any aggressive action in Bulgaria
Denies_hayeadiness for Aggoesive
) there i
tension and rumors in Sofia.
despite general
no confirmation is
available of Soviet troop movements into Bulgarias although the size of
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25X1CIthe arAy is not on ai war footing, morale is poor, az l
the Balgarlan army has increased during the past three months,
increase in the size of the army is as much because of the internal
situation as from external reatonee
POMENTe Although there is no firm indication of immediate aggressive 25X1A
intent on the part of the Bulgarian ArmYe recent estimates indioate that
the Bulgarian army has attained combat readiness. The fact that specialiste are not only being retained in the army but are even being recalled
to duty tends to detract from the foregoing estimate that recent increases
are for internal control purposes
CZECHOSLOVAKIA. WeeeeejelemedatisTriae According to US Ambassador
Briggs in Nave the Oatis trial is a propaganda operation designed to
smear the US in general and the US press and diplomacy in particulare
He accordingly stresses the need for the US press and VOA broadcasts to
emphasize the "worthlessness of aAy confessions, orevslations', etces
obtained from Oatis after he has been held incommunicado for seventy days.
Briggs also cautions against CoMmunist references to Oati0 good physical
condition, since, in his opinions the Communists have probably deliberately
built 'up Oati ' physical condition after having extracted the confession.
(C Prague 3, 2 Jul 51)0
_,DetailsofdaircAnnounced.0 According
to a Czechoslovak aide-memoire, the US jet pilot who inadvertently landed
in Czechoslovakia will be delivered to US authorities at the German border
on 4 July. The jet airoraft are to be shipped on 5 July to any German
border point selected by the US authorities (C Prague 59 2 Jul 51)0
comm. The US Air Attache Prague had previously requested permission totake custody of the pilot in Prague and return him personally to the US
Zone of Germany and had asked that 'a US Air Force team be allowed to come
to Prague to take delivery of the two aircraft
ABWV
RIBN
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7INLAM. Commentenegeielfttlejasatleee. The nationwide elections
being held on 2-3 Yuly for the 200 seats of the Finnish Diet are not
expected to produce any striking developments. It is most likely that
the Communists will gain three or'four seats in the northern provinces,
where they have done much organizational work during recent months. The
Social Democrats are also like/y to gain a few seats due to their
improved organizational techniques among Finnish labor. Such gains as
the Communists and Social Democrats make will probably be at the expense
of the Agrarian and Liberal Parties of the center. As a result of such
changes, a coalition government would probably be formed similar to the
present one, but with a slightly stronger labor representation. Present
party strengths in the Diet are as follows Left -e Communists 37p
Social Democrats 55; Center -- Agrarians 560 Co lition Party 33; and
Right -- Swedish Peoples Party lie, and 'Progressive 5.
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"Bn POLAND. atmlit2.19.111E1R8 Reveal No Unusual Milita, Activit Zn Recent
field trips by personnel of the US Embassy Warsaw Army and Naval Attaches'
Offices during the latter part of June revealed no unusual militarY
activity in central, southwest and northwest Poland. The Naval Attache on
22 June observed a total of about 28 small craft near Swinoujscie at the
mouth of the Oder Riier, but saw no unusual activity. The Assistant
Army Attache on a trip through central and southwest Poland 25-27 June
observed Polish troops engaged in normal training, some Soviet military
activity in the Trzebian area of southwest Poland indicating a possible
build-up, but otherwise nothing that he considered to be of an unusual
nature. (S ALUSNA Warsaw 261600Z, 28 June 51; S USARMA Wars=w MA-128-51,
29 June 51)0
"A" RUMANIA. Mhos Evao_ationsTeleiertaxe of "NationalL SeemEitz.
The US Legation in BuchareetLreports mounting evidence that the large
scale evacuation of minority populationgeoups and "unreliables", possibly
totaling 50-759000 since 15 June extends along the whole length of
Rumania's frontier with Yugoslavia to a possible depth of 30 to 40 miles.
The "general feeling among western representatines" in Bucharest is that
the move is pro's=bly for long-term security purposes related to both
border control and military considerations." Although concurring that
these are the major motivating factors, the Legation states it i= "at
a loss to understand" why the evacuation is being effected (a) immedi-
ately prior to the harvest season in an important agricultural areas
an (b) with such rapidity that transportation facilities are so over that serious accidents have resulted. As a possibl; reasons
the Legation suggests that the Rumanian Government may eileh to complete
resettlement of the evacuees before winter. The Yugoslav Government in
a protest note delivered to the Rumanian Legation in Belgrade on 28 June
alleges that the evacuation is principally directed against the large
Yugoslav minority in the border area and constitutes na warmongering
action" to increase war psychosis and international tension. (S Bucharest
7815, 27 June 51; S Bucharest 7859 29 June 51; FED, 28 June 51). MOD
Although large-scale evacuation of peasants from the important Banat
agricultural area will undoubtedly necessitate emergency harvesting
measures, such as use of military personnels the Rumanian Government
probably considers "national" security a more important censideration.
, The Rumanian Communists are entioubtedly anxious to avoid a repetition
In, Rumania of wholesale defections to Yugoslavia and increasing Yugo-
slav subversive activities, which have already occurred in Bulgaria.
Previous information indicates that the evacuees are being sent into
the agriculturally important Rumanian Danube plains, where the
Government ha e complained of a lag in harvesting operation
nir EgNINvi4. gftIlAmolta_gametmaanita2gardinn_Albania. The Btate
Department has advised AMbassador Allen in Belgrade that it is
essential for the Yugoslav Government to be informed of US concern
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regarding possible pro-Yugoslav activity in Albania. The Department notes
that an indication of VS concern over the discrepancy between the Yugo-
slav public position and recent Yugoslav action regarding Albanian refugees
in Yugoslavia should dissuade Tito from engaging in any unilateral action
in Albania* (TS SD To Belgrade 1478, 30 June 51). CONNENT: Despite previous
contrary reports, Ambassador Allen can find no signs that the Tito Govern-
ment is currently planning to instigate an anti-Roxha coup in Albania.
YUGOSLAVIAF-RVMANIA-BUIGARIA. Counter Yu oaiav
est of
ORM:60260.*
Rumani Border Evacuation. On 29juneBulgaria and Rumania delivered
notes to Yugoslavia alleging numerous violations of their respective bor-
ders during the past two months. The Rumanian note charges that Yugoslavia
despite previous protests, continues to engage in "provocative and aggressive
activity through numerous violations of Rumanian territory, territorial
waters, and airspace". Bulgaria similarly accuses Yugoslavia of failing
to heed previous Bulgarian protests and lists 18 new "provocations" by
Yugoslav frontier troops and aircraft* ( R FBID? 2 Jul 51). CONMENTz The
simultaneous Bulgarian-Rumanian presentation of these notes is undoubtedly
a joint maneuver to draw attention away from the Yugoslav protest of the
previous day against Rumania's ruthless evacuation of Serbs from its
Yugoslav border*
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SECTION 2 (EASTERN)
"BR GREECE. Kin Calls For New Government Or Elections. According to press
11;5751Ts? ? g aul intervened in th-e7'Canr-TerFf"--r-isis today and declared
he would dissolve Parliament and call new elections if political leaders
did not form a strong coalition government. CU Wash Post 3 Jul Si).
COMMENT: The present crisis was precipitated by (1) the unwillingness of
PFIErVinister Venizelos and ex-Vice Pretier Papandreou to support the US
backed wheat pricing program, and (2) the expressed opposition of Papan-
dreou?mho resigned on 2 Jule-from the coalition--to the electoral law
proposed and supported by Venizelos and other leading Greek political
parties. The US Embassy in .Athens is stressing the necessity of a stable
interim government which mould facilitate the adoption of vitally- neces-
sae'er economic measures without which the whole rationing program in Greece
might have to be abandoned with severe financial loss to Greece.
gIBIg IRAN. Iran Has Stren hened Its Milita Forces in Oil Field Area: The
Military Attache in Tehran reports that, as of 1 uly, the total Iran-
ian ground force at Abadan is estimated to be 21500. Its equipment con-
sists of small arms, mortars, machine guns and 11 tanks mounting 77mm
guns. Naval strength ip placed at 500 men with several small vessels,
whose largest guns are four inch. The bulk of the Tenth Iranian Division
ia 1ccated at Abwae? some 80 miles away from Abadan (three hours distant
in time). The Military Attache believes the troops now in Abadan ere
completely adequate to preserve order. The Iranians are apparently now
awed by British cruiser with its six inch guns off Abadan and would
resist any British efforts to land military forces. Personnel from the
British cruiser have already been denied landing permission. There is no
doubt, according to the Military Attache, that any British effort to land
mould result in Iranian military-action that mould cease only suf-
ficient British forces were brought in to defeat Iranian units. (S
US Army At Tehran, 1 Jul Si). COMMENT: This latest US military es-
timate of Iranian deployment and Iranian determinationto resist is fully
corroborated by all available reports. Irangs moves to strengthen its
military forces in Abadan and elsewhere are, however, probably also aimed
at preventing internal disorder's.
TIBm AFGHANISTAN. Pakistan Sto s ort of Diesel Oil t2t4thanistan. On 27
Juno, thrtbvernment of akis an stoppe t export-617Efgh speed diesel
.oil to Afghanistan's presuably in order to ensure maintenance of adequate
stocks in Pakistan until the Iranian oil altuation becomes more clear. A
permanent stoppage of diesel oil shipments to Afghanistan could result in
cancellation of the contract of Morrison-Knudsen Afghanistan, an American
firm currently employed on large-scale development projects in that country.
(B: Karachi Jt Yika 26, 29 Jun 51; C Kabul 1, 1 Jul 51). COMMENT: Afghanis-
tan is entirely dependent upon Pakistan and the USSR for its petroleum sup-
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plies. Since the Soviets have delivered to Afghanistan only 800,000
of the 3,000,000 gallons of gasoline and kerosene supposed to be dis-
patched in /950-51 under the terms of the 1950 Afghan-Soviet trade
agreement (see OCI Dtils-rigesto 27 Jun 51), the cessation of any
petroleum exports from Pakistan mill seriously-affect the Afghan trans-
portation System as well as the Morrison-Knudsen construction company.
"B" INDIA. Prot et to United Nations about Pakistani Border Violations
in Kashmir. ndia announced today that it has protested to the United
Nations Security Council against a series of violations by Pakistan
along the cease-fire line in Kashmir during the past fortnight. Prime
Minister Nehru warned that if these violations were not checked, they
might, flare into open war. CR FBIS Ticker, 3 Jul 51). COMMENT: Minor
border violations by both India and Pakistan are a relatively common
occurrence along the cease-fire line in Kashmir, and they are custom-
arily treated by both sides as routine matters. It is probably not
coincidence that India's present attempt to call attention to Pakistan's
aggressive tendencies COMBS just one day after the arrival in India of
Dr. Frank Graham, UN Representative for India and Pakistan
"C" BURN,BermesseC-ina0caeredelliii_iin2__D---2Y_rseita, Lt. Gen,
Be Win the Burmese C-in-C, recently admjtte to the eMilitary
Attache in Rangoon that he was disappointed with the meager results of
military operations against the various insurgents, He also expres-
sed concern over Burmese Communist infiltration in the Sino-Burma
border area which he claims cannot be controlled with present avail-
able forces. (S Rangoon 969, 29 June 51), COMMENT: Ne Win now joins
the Burmese Foreign Minister in acknowledging the increasingly serious
problem of Communist forces moving towards the China border, although
they both still maintain the fiction that the Communists are not receiv-
ing assistance from the Chinese.
"C" INDONESIA. Continui Strikes Diminish Grove nment Presti e. Wide-
spread strikes, largely the result of a general demand to celebrate a
Mohammedan holiday, continue in defiance of the Governmdnt's arbitra-
tion policy and its ban on strikes in vital industries, The Govern-
ment has attempted to counter its relultant diminished prestige by
demanding that employers grant a one and a half month's wage bonus
in most mediation proceedings and by announcing the release of 10000
political prisoners on 5 July, Keng Po, a leading non-Communist
RGH 1
- Chinese daily in Djakarta, in editorializing on the
CPY Government's
weakness, stated that coordination among cabinet ministers is lack-
Woner,ing that they act individually and sometimes recklessly.
e cone u e , ere are ever more voices pea g
,t e n ta ta 6
J e 1
The present cabinet undeniably is composed of a less capable group
of men than its predecessor, and lack of coordination frequently has
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been apparent. However s although it has received little or not sup-
port from the Indonesian press since its formations the Government's
majority in Parliament remains firm and there are no indications
that any immediate issues will cause its fall.
"B" French ChtsUignpApre of US-Tet ECA Pact. The US Lega-
tion was informed by a Viet official on 28 June that word had just
been received from the French Ministry for Associated States that
the US-Viet bilateral agreement on economic aid could not be signed
without the prior approval of the High Council of the French Union.
Minister Heaths while conceding that the French are by this move
acting within legal rights as prescribed by the 8 March 1949 agree-
ment with Vietnams observes that French authorities have been con-
stantly and full consulted during the course of US-Viet negotia-
tions. He adds that the French Economic Counselor in Indochina had
given written approval of the bilateral procedures that the French
did not require High Council approval' of the pentalateral agreement
on military aid, and that the High Council of the French Union is
not yet in existence. On 30 June, General De Lattre made the further
announcement that the French Government had now proposed certain
changes in the text of the agreement. Minister Heath finds the
French action "astonishing" and is at loss to explain its but he
urges that every effort be made to secure speedy signature of the
agreement without exacerbating the feelings of either the French or
the Viets. (R Saigon 2346, 29 June 514 S Saigon 2364s 30 June 51;
S Saigon 53 1 July 51).
"B" CHINA. Re orted Movement 4_20,000 2nd Field Amy_Implulalte
rwangtungfAmsgpi Are . Two armies, totaling over 30s000 men, of
the Communist 2nd Field Army recently moved into the provinces of
Kwangtung and Kwanngei from Yunnan according to a, Hong Kong press
report. This movement was allegedly to aid in the clean-up of
gerrrillas in these provinces and to move into positions on the
Indochinese border. (U Hong Kong ROuters Tickers 2 July 51).
COMMENTs The location of elements of the 18th Army 2nd Field
Army has been recently confirmed in the Canton area
Reasons for this change in the long standing allot-
ment of area reeponsibility--Kwangtung being a 4th Field Army sector
arestill unknown. Other reports suggest the 19th Army and Field
Army s as the econd unit involved in this movement. The figure of
30,000, however indicates only one full army. There has been no
reliable evidence to indicate that the internal situation in these
two provinces necessitates employment of additional troops, or that
any further build-up is planned at the Indochinese border at this
time. The 2nd Field Armys
has been charged with the responsibility of "liberating" Indochina.
Activities towards that objective are reportedly under the direction
of CH'EN Kengs deputy commander of the 2nd Field Army.
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"C" CHINA. Alle ed Sino-Soviet Conference.
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10 top Chinese Communist leaders met with
two Soviet representatives in Peiping on 4 June. Cl-IOU En-lai reportedly
demanded that the USSR "do something" about excessively heavy Chinese
losses in men and materiel in the Korean conflict, and complained
that Peiping was being distracted from its major objective of Taiwan.
The Chinese are said to have been told that Soviep troops are moving
into Northeast Manchuria and building up in Siberia, and to have
been promised (a) Soviet aid if the mainland were invaded and (b)
training and equipment for Chinese troops (for unspecified purposes).
25X1 I 'the conferees agreed to attempt to
"split the solidarity of the UN and to create diversions elsewhere,"
to attempt to prevent the conclusion of a Japanese peace treaty,
and to improve transport and road-building in China to facilitate
trOop movements, L
COMMENT: Developments in China are often preceded, or followed
by reports giving details of the proceedings of alleged top-level
meetings concerned with such developments. In general, it has
proved difficult to distinguish the possibly valid material in
such reports from plausible rumors or embroidery of newspaper
reports. The degree of validity of the above report is unknown.
Although available evidence suggests that Peiping is prepared to
continue with its Korean commitment, it is possible that Peiping has
been concerned over the magnitude of its losses in Korea, as well
as its inability to assault Taiwan, and that Chinese pressure on
the USSR contributed to Malik's cease-fire proposal. There have
been many reports, prior, to the alleged meeting, of the movement of
Soviet troops into Manchuria and of a Soviet program of training
and equipping Chinese forces in Manchuria; the latter development
might explain the former. The USSR has been bound by treaty since
February 1950 to come to Chinas aid if the mainland is attacked.
The final three alleged agreements of the conference relate to known
Sino-Soviet objectives.
Nationalists a d Pirates Harass Shi During June Chinese
Nationalist naval patrols intercepted four small merchant vessels
between Swatow and Foochowo Pirates in the same general area attacked
two vebsels and sank the Panamanian ship BUST. (U Far East Trader,
27 June 51 and R FBIS Daily Report, BBB 5, 27 June 51). COMMENT:
As a result of such incidents many vessels destined for North China
ports are being diverted to Whampoa, the port for Canton. Another
result may be a hastening of Chinese Communist plans to occupy
offshore islands from which the Nationalists and pirates operate.
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"B!, CHINA. Morale Problem of Chinese Nationalist Forces. Suicide and
desertion among members of the Chinese Nationalist armed forces
has become a problem, according to a senior Chinese Nationalist
general. The causes: (1) homesickness, heightened by the backfir-
ing of propaganda promising an early return to the mainland;
(2) physical sickness?tuberculosis is increasing; (3) assignment
to ucoolie jobs"; and (4) fear of being repotted to CHIANG Ching-kuo
by his Soviet style political officers. The omnipresence of these
political overseers, is shown by
four of them being placea aboard a Chinese Navy tanker running from
Japan to Taiwan, che'bEdng onalutyat the ships compass at all times.
An "understudy" captain has been aboard this tanker, in addition to
the regular captain for over four months.
25X1 I I this practice appears to be inconsistent with another
aval practice of sending the regular captain to school for political
indoctrination for three to four months. These political commissars
of CHIANWs were put aboard ships about three months ago over the
strenuous objections of Admiral KWEI Yung-ching, Commander of the
Chinese Nationalist Navy. (S ALUSNA Taipei Weeka 26, 29 June 51).
COMMENT: A morale problem has always existed in the Chinese Nationalist
forces. It is generally understood that their contained position
on Taiwan has brought about a further deterioration of morale. Any
increase in the high 1950 average daily sick rate of 150 per thousand
among only those ill enough for hospitilization would seriously affect
the combat potential of the Nationalist forces.
While the institution of political officers serving with
the armed forces is not new, they had not been accorded as much
power--and corresponding fear--prior to CHIANG Ching-kuoDs direction.
CHIANG, who is the Gimogs eldest son, spent some 10 years training
in Russia and is reportedly attempting to emulate the Soviet methods
of insuring control over potential defectees in military service,
and, in the process, is arousing increasing resentment from all
military elements concerned.
KOREA. Increased Guerrilla Activity,. Far East Command reports that
enemy guerrilla bands, quiescent for several months, have become
noticeably more active during the past few weeks with over 1400
engaged between 23 June and 1 July. According to a recent 8th Army
report cited by FECOM, the enemy retains the capability of increas-
ing guerrilla activity in coordination with future offenses. FECOM
adds that continued friendly control measures, low guerrilla strength?
,
struggle for survival and recent decrease of control and coordination,
however, may be expected to confine guerrillas to minor harassing
actions. (S FECOM Telecon 41899 3 July 51). COMMENT: Indications
of enemy intnetions to expand guerrilla activities also have been
derived from recent guerrilla POWs as well as fromwho have
reported the formation of new guerrilla units and LI;;;ibilation
of the North Korean 10th Division committed early this year in a
deep infiltration mission against the UN's main supply routes in
South Korea.
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"A" KOREA. wieTtation, of Enemylmes in Korea. According to Far East
Command numerous recent reports, confirmed and unconfirmed, strongly
indicate that the enemy is continuing to provide reinforcements and
replacements for both North Korean and Chinese Communist forces
in Korea. Front line Korean Corps have been strengthened by replace-
ments drawn from units in the Pyongyang and Wonsan areas. The strength
of these units in turn, has been maintained by the consolidation
of units assigned to rear area security missions? the reactivation
of units dissipated in the defeats'of last autumn, and the continuance
of 'recruitment and training at a relatively high level. Recent
reports have mentioned the activation in Manchuria of new
North Korean divisions and their movement into Korea.
Numerous sources have referred to the arrival in Korea of
additional Chinese Communist units to replace those recently withdrawn
as a consequence of combat losses. POWs have confirmed the presence
in Korea of the 140th Army. Other POWs have reported that other
units of the Fourth Field Army are in Korea in a relief role.
tend to confirm the movement of sizeable CCF forcesaogte
enemy main supply route back of the northwest front in the Sibyon area.
(S FECOM Telecon 4893 and 48993 1 and 3 July 51), COMMENT: There is
ample evidence of a long range program to build-up the North Korean
armed forces. The extent to which the Chinese Communists have
instituted a rotation of forces to replace unite withdrawn remains
uncertain. The influence of the cease-fire negotiations on such
long term manpower commitment's have not as yet been reflected in
available information.
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SECTION 3 (WESTERN)
"B" FRANCE. Po ular Distrust of US Business H
UgiTirn dirc ors o the power renc
US "econamic imperialism!' is a serious dan
and economic future'-of France. The same a
French commercial and industrial circles*1
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an ers Closer Relations*
ank o n oc Ina e .ieve that
ger for. the political, military,
ttitude exists in numerous
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',COMMENT: _Apprehensions of a growing influence of US business
are widesprearrin-Cance, even in non-Communist circles. These fears and
a widespread antipathy for any signs of US diplomatic dictation appear to
be the principal threats to a closer popular support of current US-French
undertakings. Guy Mollet, Secretary-0eneral of the French Socialist Party.,
25X1 has expressed' 'his concern lest US business take undue advantage
of its opportunities for Influence in Europe, under both the NATO arrange-
ments and the Sahuman Plan. While this French distrust of US economic
Influence is grist for the Communistst propaganda mill, there are no indi-
cations that they could induce "great_violence" from this situation in the
near future*
"B" ITALY* Pro osed 1952 Defense Budget. The proposed defense budget for
FIEF51 year o a s * 1 ion lire, or almost $700 million. This
amount includes the approximately $160 million chargeable to 1952 of the
$400 million supplementary defense appropriation approved earlier this
year as well as unspecified advances chargeable to fiscal year 1953 from
this WO million appropriation* Parliament is not expected to take up
the defense budget, which represents-roughly 24% of the national budget,
until autumn. (S Rome Joint Weeka 26, 30 June 51) COMMENT: The proposed
Italian defense budget for fiscal 1952 is a,pproximatehe same proportion
of the total budget as was the case in fiscal 1951. This comparison would
appear to reflect unfaftrably on the scope of the Italian defense effort.
HONOVer, it is believed that within the next year the Italians will actually
place contracts for the entire $400 million extra-military budgetary ap-
propriation, which was originally supposed to be spent over a three-year
period. The Italians can be expected to pass another extraordinary defense
appropriation within the next year and a half.
"B" SWITZERLAND. Swiss Urgently Seek Tanks. The Chief of the Swiss Light
_ _ fic773F?Egrsta e it is imperativat a Switzerland obtain tanks. He
said that the Swiss were dependent upon foreign countries for this military
Item. He also declared that once tanks are obtained, the technical and
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training problems in the use of-these vehicles could be solved by the
Swiss. (R Bern, Joint Weeka 26, 29 June 51) COMMENT: The Swiss have
apparently decided the manufacture of Centurion tanks, for which they
have obtained licensing rights, is impracticable at this time. The
appeal of the Chief of the Swiss Light Troops is probably designed to
bring this problem to the attention of the West. Without the 550 tanks
they need, the Swiss will not be able to defend their lowland area--a
corridor from Germany into France.
"an Swiss Reaction to World Bank Bonds Issue Reflects Anxiet
Over Inflation0 e wiss press as announce e p ans of the International
Bank for Reconstruction and Development (IBRD) to float a 12-year 3.5%
interest-bearing loan on the Swiss market on 3 July. This is the first time
that the IBRD has publicly floated a loan in Switzerland ; previously such
loans have been handled privately. Swiss bankers reportedly informed the
IBRD that on its present terms the loan would fail because Swiss investors
are shoving increasing reluctance to acquire any long-term obligations.
The US Legation Bern comments, however, that the 3.5% rate coupled with
medium terms and low risk factor would ensure the success of the loan.
OR Bern Joint Weeka NO 26, 29 June 51; NY Times, 3 July 51) COMMENT: The
Swiss bankers objections to the IBRD are no doubt conditioned-77E61r
desire to get the best terms possible. It is true, nevertheless, that
Swiss investors are becoming increasingly concerned over the prospects of
inflation in Switzerland and that therefore they are hesitant to purchase
fixed-return securities.
"C" SCANDINAVIL Korean Peace Pros cts Delay Decision on Sending Troo s to
Korea. The prospect of an armistiji-iinforea is delaying a decision by
the Norwegian and Swedish Governments with respect to the Ws request of
22 June for troops. At the moment neither the Norwegian nor?the Swedish.
Foreign Ministers find advisable the meeting of Scandinavian Foreign
Ministers proposed by Denmark (see OCI Daily Digest?29 June 51). (R
Stockholm 10 1 July 51; P Oslo 1289, 29 June 51) CONNENT: Undoubtedly,
all three Scandinavian Governments are pleased at ERW-573'spects of a
cessation of hostilities in Korea, The Norwegian Foreign Minister, never-
Iheless, indicated the sympathetic attitude of Norway to an equitable sharing
of the burden in Korea. The Swedish Foreign Minister, on the other hand,
is undoubtedly greatly relieved at being able to avoid serious consideration
of Swedenfs responsibilities military-wise to the UN, and another public
discussion of Sweden2s foreign policy,
fiC it
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BRAZIL. Council Refuses to send Troo s to Korea, The Brazilian National
Security ounci 9 on 0 une, s a e a razi does not have, at this
moment, "military forces other than those required for the defense of its
national territory", The Council has decided to recommend to the Chief
of Staff of the Armed Farces the study of preliminary methods of technical
collaboration and planning which will permit the implementation "in good
time" of Brazils obligations under the UNs (U Rio de Janeiro 1, 1 July 51)
CONT: The Council met to discuss the appeal of Secretary General Lie
to the UN members for additional troops for the Korean war. The Brazilian
public remains overwhelmingly opposed to sending troops overseas? Only
during the past two weeks has the Vargas administration begun its campaign
to overcome this public attitude. It is generally accepted that it will
take several months even to prepare the Brazilian public politically to
favor active participation in UN military actions. As a follow-up of the
NSC meeting, General Gois Monteiro, presently Chief of Staff of the Armed
Forces, is coming to the US to consult with military officials on the
practical ways in which Brazil may participate in the UN actions General
Gois? however, has recently remarked that Brazil's efforts "should be
preferentially utilized in the Atlantic area", and that the "defense of
the Western Hemisphere might begin in Berlin or more to the East".
GUATEMALA, Government May Request Withdrawal of US Air Mission,. The
US Air Attache in Guatemala hab been informed-TEE-5esident-Erenz is
seriously considering requesting the withdrawal of the USAF Mission on
the grounds that the Mission will serve no useful purpose if the US is"
unable to provide the Guatemalan Air Force with equipment and materiel?
The Attache comments that, "Such action seem well within the realm of
possibility and mould probably be concurred in by the Chief of the Air
Force and many of. his officers an purely professional grounds rather than
any anti-US sentiment." (C Guatemala; IR-57-51 USAIRA? A-35 28 May 51)
COMMENT: The Guatemalan Government permitted the morale and equipment of
the Air Force to deteriorate largely because the Air Force was regarded
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as a questionable asset to krbenz during the presidential campaign of
1950. A desire to rehabilitate the Aix Force may be indicated by a
recent plan to purchase surplus Spitfire ;aircraft from Italy. US
representations to Italy, however, prevented? this transaction, and
there are no indications that Cruatemala will soon obtain aircraft.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST OF SIGNIFICANT S/S GABLES
3 July 1951
SECTION 2 (EASTERN)
"B" fRAN. Tanker Receiut_a212122,11.91ftE Consideration. The US Ambassador
in Tehran reports that he caw Prime Minieter Moesadeq on 2 July, amd
euggested acceptance by the National Oil Company of the receipt
propoeed by AIOC (Anglo-Iranian Oil Company) which acknowledges
the amount of oil removed, but would not prejudice the eventual
outcome of the dimpute. Mossadeq stated that hevould accept
euch a reservation only if given an absolute guarantee that this
endorsement will not be used by the AIOC or any other company
lifting the oil as an excuse to avoid payment. (S, S/S Tehran 13, 2 July
51), COMMENT: The receipt problem goes considerably further than
agreement between the AIOC and Iran on acceptable wording. If a method
is not devised to remove the oil from the areas where storage facilities
are becoming increasingly tight, the oil industry will be forced to
shut down, whether or not AIOC personnel is available. Since Mossadeq
has maintained an intransigent position heretofore, it will be
surprising if he does accept a new 4pe of receipt.
TIB" US Co a Offere 2 500 US technicians to Iran to e ate Oil Indust
The US Ambassador in Tehran reports that Lee-Factors Inc. of Los Angelee
has sent a letter to Iranian Prime Minister Mossadeq and to the Chairman
of the Iranian National Oil Board offering immediately to negotiate a
contract to supply up to 2,500 US technicians. to manage and operate the
oil industry In Iran. (Cs, S/S Tehran 10, 2 July 51). COMMIT: The
major US oil companiee have a tacit understanding not to offer their
services to Iran at the present time, inasmuch as the repercussions
would far outweigh any advantages which might accrue to them. Smaller
companies, however, have not made any such decision. The US Department
of State was not informed of this move by Lee-Factors.
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"C"
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INDOCHINA.?Llr2_Iac2gt.USMinistexnasred policiy in tlytt,
country. US Minister Heath in Saigon, observing that the decisive battle
for Indochina has yet to be fought and that pressure for this larger
battle may COMB to a head bt this fall, asks the State Department to
review its policy toward Indochina. In this connection Heath points
out (a) that the French are and will continue to be during the foreseeable
future the sole effective barrier to Communist expansion in Indochina,
and, therefore, (b) it is of the greatest importance that harmonious
US-French relationsbemaintained. He aska that the Department direct
him to request General De Lattre to take steps to stop anti-American
reports emanating from the Generalva entourage, and to inform the
General of our belief that it is necessary for him to issue specific
inatructions to certain key officials of his staff to enter into closer
relationships with designated political and economic officers of the
Legation. Heath also asks authority to inform De Lattre that ECA will
discuss its projects and their publicity with designated members of the
Generalvs staff, that there are and will be no US operations in Indochina
beyond those of which the French are informed and that the officer and
clerical staffs of all US missions in Indochina have been personally
briefed by the Minister to insure that they fully understand the importance
of the French contribution to the free world being made in Indochina,
and to insure that they not listen to or give encouragement to improper
criticism of French sacrifices and intentions.
Subsequently, Heath reported that he gained the impression from a
conversation with De Lattre that the General was in correspondence with
Paris regarding changes in the status of ECA operations in Indochina.
(S, S/S 2355 Saigon 29 Jun 5ly S, S/S 2365 Saigon, 30 Jun 5l).
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