DAILY DIGEST MAY 10 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200130001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 16
• Document Creation Date: December 16, 2016
• Document Release Date: August 23, 2004
• Sequence Number: 1
• Publication Date: May 10, 1951
• Content Type: SUMMARY

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CENTRAL I N GRE 0 :SI Ac;: .()Y
OFFICE OF CURRENT INTELLIGENCE
DAILY DIGEST
Date: MAY 10 1951
00200130001-6 ?
49181
39
COPY NO.
NOTE: 1. This summary of significant reports has been
prepared primarily for the internal use of the
Office of Current Intelligence. It does no
represent a complete coverage of all current
report ct in CIA or in the Office of Current
Intelligence.
2. Comments represent the preliminary views of
the Office of Current Intelligence.
3. Marginal letter indications are defined as
follows:
"A" - items indicating Soviet-Communist
intentions or capabilities
- important regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
"C" - other information indicating trends
and potential developments
Army, USAF, ONI and State ?
Dept. review(s) completed.
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SECTION 1 (SOVIET)
USSR VE-Day Propaganda Stresses USSR's Postwar Peace Policy - But
Maintains Significant Silence on Support of Red Forces in Korea.
PRAVDA editorialized on the USSR's postwar program of peaceful con-
struction and the growth of the peace camp, as opposed to "Anglo-
American preparations of a new war for super profits." Stalin's recent
assertion that "the people are taking the peace fight into their own
hands," was again quoted. Marshal Sokolovsky claimed that the Soviet
Union conducted broad demobilization (33 age groups) while the US, DK
and French armed forces remained "more than double those of the USSR
and are increasing." Major General Alexandrov, while hailing the
"Soviet victory" over Hitlerite Germany, again charged that the Western
Powers did not try to smash the Fascist aggressor but impeded the open-
ing of a second front, "hoping that the USSR would become exhausted."
The most widely circulated radio commentary cited the WPC demand for a
Five-Power peace pact, quoting Lenin and Stalin on the possibility of
peaceful coexistence.
COMMENTg Embassy Moscow noted that PRAVDA carefully followed the of-
ficial line of refraining from any reference to Soviet armed might be-
yond its role as defender of the USSR. This line has been particularly
noticeable since the beginning of Korean hostilities. So far, Moscow
has significantly avoided mention of actual Soviet support for the
Korean war while continuing to prod the Peace Partisan and Company to
action in the name of "peace, " Their silence on military aid, a
technique well used by them, is simply a cover for the material assist-
ance they are in fact rendering to the Communist forces in Korea.
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HUNGARY. Communists Seek Nazi War Loot Prom US. In fulfilling the US
agreement to restitute Hungarian property in Germany, the US Legation
Budapest agrees with HICOG Frankfort that careful consideration be even
to any documented Hungarian claims not previously considered as resti..
tutable by the US. The Hungarians have repeatedly spoken of large quan-
tities of machinery seized by the Nazis, although US authorities have
never been able to locate such machinery. 1 1
COMMENT: One of the conditions for the release of Vogeler was US re-
sumption of negotiations for the return of property from the US zone of
Germany. These had been suspended after Vogelerls arrest as a retaliatory
measure. The Hungarians have always considered the return of this property
at a major issue. Although estimated at only about $50,000 worth of
miscellaneous items by US officials in Germany, the Hungarians have al-
ready claimed $3509000 in such property and are apparently preparing to.
present additional claims. In view of the difficulties of obtaining
Western machinery through normal trade channels, the Hungarians probably
hope to satisfy part of their desperate needs with the machinery which
they allege is located in the US zone of Germany.
YUGOSLAVIA, Yugoslays Seeking US Radio Transmitters. The Yugoslav
Government has requested the assistance of the US State Department in
obtaining a reasonable priority for the delivery of two US-manufactured
radio transmitters. US Ambassador Allen notes that the transmitters will
be important items in Yugoslav broadcasts to Eastern Europe in which the
Yugoslays regard US interests as parallel to theirs. Ambassador Allen
recommendq that such assistance be given the Yugoslav order as may be
feasible.
the Yugo-
slays have been able to point up in effective broadcasts the conditions
existing in the Satellites under Soviet domination. The Yugoslav propa-
ganda serves as a highly useful adjunct to VOL and other Western broad-
casts beamed at the Soviet orbit.
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SECTION 2 (EASTERN)
BP IRAN, Mossadeq Rejects UK Request for Arbitration on Oil. The Iranian
Ambassador to London: in reply to the UK request, served notice on 8 May
that Iran will proceed with the oil nationalization program, and will
not submit to international arbitration. Meanwhile, according to the UK
Embassy in T hran: the AIOC demand for arbitration was made as a result
of a message from the Shah which indicated MOssadeq would welcome such a
demand because it would enable him to stall for time. Mossadeq, however,
is understood to 12AVR Trahseauentiv expressed astonishment at the demand
for arbitration.
COMMENT: Mossadegus rejection of the UK demand for arbitration is con-
sistent with hi previous stand. It was probably conditioned by the
consideration that Iran could not accept arbitration under the terms of
the 1933 concession, and still maintains that the concession was invalid.
Metter the UK action was taken at the Shah's instigation or not, it will
probably have the effect of forcing Mossadeq to delineate his plans on
the oil issue more clearly* To date he has indicated that he will not
take drastic action immediately and that he intends to replace AIOC
technicians eventually with Iranians, In any discussion of the oil prob-
lem, two facts remain outstanding: (1) that the UK will not relinquish
lightly its hold on Iranian, oil, and (2) that Iran cannot manage success-
fully the oil industry without foreign assistance.
12All
00)340
INDIA. First Soviet Meat Leaves for India, On 10 May, according to
the New Delhi radio, Prime Minister Nehru told an applauding Parliament
that Soviet vessels were already on their way to India with the first
shipments of a total of 50,000 tons of wheat recently bought from the
USSR for cash* This purchase was subsequently described in an Indian
government news releas as the "first result" of negotiations begun last
meek:with the Soviet Embassy in New Delhi regarding the Soviet offer to
supply 500:000 tons of wheat to India. Deliveries of the 50,000 tons are
expected to. be completed by the end of June 1951.
INDIA* Prime Minister Nehru Says US 'Pleat Offer Has No Political Strings.,
On 10 May: according to the New Delhi radio, Prime lanister Nehru
announced to Parliament that in his view the two food bills now before the
US C ngresa had no political or discriminatory conditions attached to them
and that on these grounds" there should be no objection to accepting
either of en. He ded that he preferred the terms of the House bill
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because they were simpler. COMMENT:
On 3 May, Sir Girja Shankar BaIai of the Indian Ministry of E5tternal
Affairs told US Ambassador Henderson that Nehru could not make such a
statement as that reported above without making himself look foolish.
Strong US representations have apparently led him to do so anyway. It
is notsworthy. howeirer that he maintains his independence of US favors
by favoring the House bills which
prnvides that the Ahole US wheat offer shall be on a loan basis,
PAKISTAN. First ist_Chje
According to the Karachi radio ofTMay, Ahmad All, Pakistanis first
diplomat representative to Communist Chinas has presented his creden-
tials to the Ohinse Deputy Forsigr Minister in Peiping.
OOMMENTs Gmmunist China has not yet displayed any Interest
in establishingdiplomatic representation in Karachi.
"B" INDONESIA. Forp.ign Mininter Defr.nds Trade with Communist China.
DUring a conversation with Subardjo, the new Foreign Ministers US
Ambassador Cochran referred to the formerns press statement that
Indonesia uhaa no need of either a Moscow or a Washington peace
dove and would be willing to sell such material as rubber to
CcrirIst China or elsewhere if the Interests of the Indonesian
people are served thereby. STAardjo said that the "peace" statement
was for domestic consumpAon only, and defended his trade statement
on the basis of/LE:donee:tans independent foreign policy whereunder
Indonesia will make goods available to any country which will
provide Indonesia with the goods it requires. Cochran, pointing
out the extent of past US assistance to Indonesia and current
Indonesian requests for items now in sh4rt supply in US stated he
could not guarantee whet US reaction would be to Indonesian
willingness to sell to anyone serving Indonesians interests.
25X1 COMMENTs Subardjons statements
indicate that he firmly supports Indonesiaos frequently affirmed
policy of uneutralie ,u So fzr as the sale of rubber is 'concerned,
the Indonesian Government has contracted to sell to the US the
small output of Government-owned estates (1200 tons monthly)
and whatever its policy the Government lacks the administrative
machinery to control the destination of privately-owned rubber,
the overwhelming bulk of Indonesian output.
.),At
"Bn PHILIPPINES. Firm Demand for Ja a ese R arations. Foreign
Secretary Romnio told the US Charg4 on 9 May that the Philippines
will remain'absolutely firm on the demand for Japanese repara-
tions,although the amount and period of payment remain unsettled.
Romulu mentioned a statement made 2 April in Japan by Horikoshi
of the Federation of Economic Agencies (a private aesociati*n
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of business executives) in which he stated that Japan is willing
and able to pay reparations especially to the Philippines.
Horikoshi suggested, for example, that Japan could pay processing
expenses on raw materials and provide technicians. Romulo noted
that Indonesia would also take a firm stand for reparations.
COMMENTg There is some indication
that the Philippine Government does not, in fact, expect to re-
ceive reparations 'but hopes to use the issue to extract additional
US aid. According to the Indonesian press, Foreign Office sources
have stated that Indonesia would demand reparations from Japan.
"C"
INDOCHINAs Communist Chief Bids Peasants Be Patient, Truong
Chinh, SYG of the Vietnam Workers u (Communist) Party in a
broadcast outlining internal policies of the Democratic Republic
of Vietnam (DRV) made the following assertiones The peasantry
of Vietnam constitutes over 90% of the population and its support
is easential to the success of the liberation struggle; however,
emancipation of the peasants must take place under the leader-
ship of the "'working class." The needs of the peasant must be
met, but no thorough-going reforms can be undertaken until a
situation of "stability" within the country is reached. The
Workerso Party slogan is "the land to those who till it," but
conditions are not rips for the application of this slogan. The
long-run aim of the Party is the establishment of mechanized,
collective farming. COMMENTs The recent
prominence of Truong Chinh and the laudatory references made
to him in DRV propegand strongly suggest that he may be emerging
as the successor to Ho Chi Minh. Truong oninias uncompromisingly
Stalinist career and the tenor of his remarks is indication of
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the more doctrinaire wing of the Vietnamese Communists, now in
the ascendancy, which aims to force acceptance of the Communist
dogma of "working class" leadership despite obstacles posed by
the concrete situation.
CHINA. Communist China SAeys Rubber From Indonesia. The Govern-
ment of Indonesia is considering Communist China's offer to
purchase 50,000 tone of rubber. In conversations with the US
Ambassador, Foreign Minister Subardjo stated that the Chinese
were offering rice and tungsten in payment for the rubber,
COMMENTs This approach to
Indonesia is testimony to the strong efforts of the Communists
to find new sources of rubber supplies following Malaya's
imposition of export restrictions.
FurtheinnaanQrts on Expngngionatngainspse Communiet
Airforce. The Chinese Communist airforce in Manchuria reportedly,
has been recently increased by approximately 300 MIG-15 jet air-
craft, 200 other jet fighter aircraft (possibly Yak Type 15s
and 16s), and 100 light bombers (possibly
COMMENTs If this
report were true; chinese communist air strength in Manchuria would
be more than doubled, It is very doubtful, however, that
have
access to such information. While there has been considerable
speculation as to the possibilities of an "International
Volunteer Air Force", no confirming information has been received.
"B" Chinese Communist Terms for TIbe'.
Chinese Communist terms
for peaceful settlement of the Tibetan dispute would concede
Tibetan control of internal affairs with the Tibetan religious
hierarchy remaining in power, but would demand Chinese control .
of Tibet's foreign relations and the stationing of Chinese troops
along the Indo-Tibetan border.
COMMENTs This report is in line with previous information on the
Chinese CommUnist terms. A Tibetan delegation is now in Peiping
for negotiation of a settlement and is prepared to accept
Peiping's terms, but no formal agreement has been announced,
net
punglAtIhreatens oommunist Cotton Program. Emergency
Instructions on the fighting of drought and cultivation of cotton,
issued 1 May by the Committee of Finance and Economies, state that
the drought, particularly in North China, has been a "maJor
hindrance" to the cotton planting program,
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COMMENTS. Probably 30-44 of Chinags cotton acreage is affected
by the current drought. The 1951 cotton goals were designed by
the Communists to eliminate the need for imports in 1952. Raw
cotton has been one of Communist Chinags major imports, and if
this drought continues a few weeks longer, there will be again
a deficit .f raw cotton next year.
1======a_k_se..01I-al_alWiorel-oistttacl. Elements of the
Communist 63d Division of the 21st Army, totaling 300 men, on
3 May sailed from &Ahem (off the Chekiang coast) and attacked
Tgou Men-shan Island (15 Lies east of Haimen).
1
1 Alleged
have "not yet withdeawn."
GOMMENTs Action against various guerrilla-held islands off the
Chekiang-Fukien coasts have been anticipated for some time.
In March elements of the 21st Army were reported in the &Amen
area as part of a build-up with the above intentions. There
has been no confirmatio of thii report.
60 troops landed successfully and
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"B" KOREA. gAzgamlajleayy Antiaircraft Fire Reported over PyonEyanK.
The US Air Force, commenting on extremely heavy flak received over
Pyongy on 7 wy, reports the loss of one B-29 and the damage
of seven other aircraft from ound fire. While most of the fire
received appeared to be from fader-directed 85mm antiaircraft guns,
several .xplosions four to five times the size of ordinary ex-
plosions were also reported. Fragments from these burst were
reportedly large enough to be seen.
GOMMENTs Reference to antiaircraft burst
'f our to five times larger than 85y[ explosions" suggests the
use of either 1 rger-type antiaircraft weapons (not previously
report d in Kore ) or the remote possibility of some type of ground
to air rockets. Recent field reports have noted a heavy increase
(up to 400%) in antiaircraft fire received throughout Korea.
ROK Vice President Announces Rosi nation Intentio
Ambassador Muccio reports that ROK Vice President II Siyong
announced his intention to resign on 9 May. The Vice President
explained to the National Assembly that he had waited three years
for an improvement in the Government, with particular reference
to the caliber of ministerial appointments, and because of the
Governmentos failure in this respect he wished to resign. It is
rumorei that Yl is dissatisfied with recent Cabinet appointments
because of their npro-Japa esen background,
CO h4pTs The Vice President,who was a high official before
Japan pmexed Korea, is 84 years old and a widely respected figure-
he :d in Korea. His ction may have been motivated by dissatis-
faction with the background of Cabinet appointees or as a gesture
of protest at the c.rruption in ROK official ranks. In any case
the situation is symbolical of the turmoil in ROK political
circles as witnessed by an AFP report that Pusan political circles
feel Premier Chang, who was appointed only three or four months
ago, will shortly tender his resignation,
t1CO
"Cu JAPAN.aeTritoenolKoreenEsionlidaFr. SCAP has
anal. lay announced the ppointment of a Military Commission to
try the first eighteen members of a group of forty-five arrested
in connection with three North Korean espionage rings. The
defendants, including twelve Korean nationalt? four Japanese-
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aturalized Koreans, and two Japanese face charges of acts inimical
to the security of the Occupation, quasi-espionage, and con-
spiracy to commit espionage. The trial will open Friday.
COMMENT: CINCFE reports that the
operation or the espionage ring began on an organized scale in
late 1947 with the establishment of a smuggling ring, which later
was expanded to three interlocking nets. The case was broken with
the defection of one of the agents in July 19506 Wile Communist
element in Japan will attempt to exploit the trial with demonstra-
tions by Japans large Korean minority, it is doubtful that the
Japanese public would react other than favorably to a Pguilty"
verdict*
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SECTION 3 (MESTERN)
GERMANY* Berlin Court Sentences Kaeding for Illegal Shipments
to Soviet Zone of Austria; On 5" May a German court in Berlin
sentenced Erick Kaeding to 18 months in prison and a fine of
DM 50,000 for his part in supplying 8,000 tons of iron and steel
products to the Soviet Zone of Austria. Kaeding is the Berlin
manager of the Duesseldorf Iron and Steel Company. US officials
in Berlin believe that his conviction will set an excellent prece-
dent for other illegal trade prosecutions and will act as a
deterrent to future illegal trading.
COMMENT: The Kaeding case is indirecLy connected with the
Haselgruber cases whichwill shortly be tried by the same court.
Chancellor Adenauer has recently announced that German firms
trading illegally, with Soviet orbit countries will be targets
for legal action.
FRANCE* Communists Prepare New Strike Wave.
25X1 la widespread strike
movement will probably be unleashed iollowing the Congress of the
General Workers t Confederation (CGT) at the end of May. ,Although
this renewed strike activity is planned as part of the electoral
campaign, the Communist Party (PCF) expects to pursue the strikes
primarily within the framework of economic demands, with such
political tie-ins as conditions warrant* The predominance of
economic over political slogans was particularly noticeable at
this yearns PCF May Day demonstration in Paris, which was the
largest and most impressive since 19470 Intensified PCF Propaganda
at the plant level in support of both economic and political
objectives has been making progress since the Easter strikes, and
several well-informed non-Communist labor leaders have affirmed
that a concentrated "unity of action" program on "exclusively
worker demands" would force cooperation of the Socialist and
Christian industrial unions, which otherwise would lose their
25X1 following. COMMENT: A new round of
wage demands is to be expected soon, because the steady rise in
the price level is rapidly nullifying benefits gained by the March
strikes? .The Communists seem, however, to have picked June for
fomenting new strikes with an eye to political rather than to
economic aims since the pre-election government will not be in
a position to commit its successor to a new wage program. Should
the PCF concentrate upon political disturbances, labor's readiness
to cooperate would be sharply checked by its wariness of PCF
exploitation?
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tic
It
MOROCCO. French Again Informed That US Could Not Support French
Policy. The American Consul at Rabat, Morocco, has been instructed,
in F3Frecting a misunderstanding by French Ambassador Bonnet, to
inform the Residency again that the US would find it difficult to
support French policy in Morocco if the question is raised in the UN.
The US is milling to review its estimate of the situation, which is
at variance with the French,, whenever more specific information is
received from the French. COMMENT:
The French Residency was previously informed, in early FebUTO7 1951,
that the US could not support Francets policy in Morocco if the
question were brought up in the UN. The Residency has been requested
for information regarding the reform program which it claims to be
introducing. This information has not been made available, and there
is little indication that any actual administrative reforms, other
than the nominal removal of censorship, will soon be implemented.
In his recent dispute with the Moroccan Sultan, the Resident General
implied that he had the full backing of the US Government.
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SPAIN. Newest Strike Marked by Police Brutality. Press dispatches
report tHaf-The general strike which broke out Tuesday (8 May) in
Pamplona, capital of the province of Navarra, in northern Spain,
continued to paralyze all industry and much of the commercial life
of the city throughout Wednesday, despite the Civil Governor's
threats of "severe sanctions" against all those who failed to return
to work on that day. It marked contrast to the Bilbao and San
Sebastian strikes during the last week Of April, this newest large-
scale popular protest against rising prices and government mis-
management touched off several incidents of violent reaction by
the police?who allegedly fired directly into a parade of demonstrators,
wounding five of the marchers. I
COMMENT: BecaUse Pamplona ooes not rank as a great
industrial center, this newest general protest strikeis not as
significant as either the Barcelona or Bilbao demonstrations.
Nevertheless, it does indicate widespread worker discontent against
rising living costs and a mood of popular defiance against official
maladmihistration and corruption. Navarra is a stronghold of
"traditionalist" Carlists who advocate a return to an extreme
reactionary form of Church-State absolutism under a Catholic
monarchy as the only feasible government for Spain. While-Carlism
is negligible as a positive political force in Spain today, the
Carlist militia, the "RequetS.s"? furnished Franco with some of his
best troops at the beginning of the Civillar.
IT" UNITED KINGDOM, Principle of Grant Aid to Yugoslavia Accepted.
The UK now accepts the principle of grant aid to Yugoslavia,
providing a satisfactory burden-sharing formula is evolved, UK
chief delegate Mudie told the US delegation at the US-UK-France
25X1 talks in London on economic aid to Yugoslavia.
aid
l princi caused the US delegation
COM an
MENT: Long delay in UK acceptance of the grant
considerable concern.
The three countries
25X1 are not far apart on the remaining question of substance--the
actual share of the program for which each shall be responsible.
GUATEMALA. Semi-Official Press Continues to Express Communist Line,
The US Embassy in Guatemala reports tha the attitude of "determining
circles" in Guatemala is apparently reflected in a Communist-line
editorial carried by the semi-official Diario de la Mariana, which
states that a decision to bomb Communist positions in Manchuria
would signify clear and complete aggression and the formal declaration
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of-a third world war. The editorial continues with a denunciation
of the original UN intervention in Korea as a "shameful and grave
prostitution" of the UN charter, and concludes that the UN is
violating its awn principles.
COMMENT: The Diario editorial is indicative of the degree to
which publication of Communist-line material continues to be
permitted by the Arbenz government. The official attitude--not
necessarily attributable to Communist influence--was voiced in
more circumspect language by President Arbenz on 6 April. With
obvious reference to the Korean situation, Arbenz affirmed that
to send Guatemalan troops outside the American continent "would
violate the principle of non-intervention"; that Guatemala respects
the right of all people to self-determination; and that Guatemala
seeks to avoid, within the limits of its capacity, the possibility
of expanding the existing conflicts.
PANAMA. Political Tension. The press reports that President
Arnulfo Arias has bowed to police and public pressure today and
has ordered the restoration of the 1946 Constitution "which he
scrapped last Monday". His decision came after a day and night
of rioting which several were killed -and mounded. I
25X1 I IP0MNT: Arias used the confusion caused by a run
5X1
on the Caja de Ahorros, a savings bank patronized largely by the
working class, as an excuse to abolish the 1946 Constitutiot and
to restore the 19)11 Comstitutinn_
the National Assembly voted to impeach Arias, and the Supreme
Court had declared the decrees of Arias as unconstitutional?
However, should Arias not reverse his other "dictatorial" acts,
opposition elements are likely to continue their attacks, and
unrest and riots may well continue. Remelts control of the National
Police, the only armed force in Panama, and his continued backing
of the President, make it unlikely that Arias will be deposed at
this time. It is doubtful if these disorders will constitute any
immediate threat to the Canal Zone. Qualified observers all agree
that the Communists played no important role in the present crisis--
in spite of Arias a charges to US officials that his firm action
was necessitated because the Communists were getting out of
control,
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transmitted outside of CIA. Access to Top Secret matter is limited to Top Secret Control personnel and those individuals whose official
duties relate to the matter. Top Secret Control Officers who receive and/or release the attached Top Secret material will sign this form
and indicate period of custody in the left-hand columns provided. Each individual who sees the Top Secret document will sign and
indicate the date of handling in the right-hand columns.
REFERRED TO
RECEIVED
RELEASED
SEEN BY
OFF ICE
SIGNATURE
DATE
TIME
DATE
TIME
SIGNATURE
OFF ICE/0 I V.
DATE
f
NOTICE OF DETACHMENT: When this form is detached from Top Secret material it shall be completed in the appropriate spaces below
and transmitted to Central Top Secret Control for record.
DOWNGRADED
DESTROYED
DISPATCHED (OUTSIDE CIA)
TO
By (Signature)
TO
BY (Signature)
WITNESSED BY (Signature)
BY (Signature)
OFFICE DATE
Arrroved For
OFF ICE DATE
Relinca 9nriEuriciol?r_a_PnP7aTn1laRannn9nniinnni
OFF ICE
-A
DATE
FORM 26 UdE PREVIOUS EDITIONS.
8-73
TOP SECRET
(40)
0