DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000400080001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 22
• Document Creation Date: December 12, 2016
• Document Release Date: February 19, 2002
• Sequence Number: 1
• Publication Date: September 5, 1951
• Content Type: SUMMARY

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5 September 1951
CIA No. 49332
Copy No.
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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. Comments represent the
immediate views of the Office of Current Intelligence.
*Army, DIA and State Dept reviews
completed*
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SECTION 1 (SOVIET)
1o USSR. Electricity shortage reported in Central Volga regions A 24 August
Red Star article -states that the central industrial region comprising seven
oblasts, ten percent of the Soviet population, and a "considerable" propor-
tion of heavy industry is short of electricity. This shortage, said to be.
delaying the industrial development of the Volga area as well as of the en-
tire central industrial region, will theoretically end upon completion of
the new Volga hydro-electric stations, (S Moscow Weeka, MA-1216, 31 Aug 51)
-Comments "Shortage" of electricity may possibly be serving a dual
purpose in that it excuses lagging industrial production, while at the same
time acting to stimulate speedy completion of the postwar Volga hydroelectric
program.
2? EASTERN EUROPE. GENERAL. Satellites reportedly preparing to shift labor to
high priority industries: A recent report from Germany points to a compre-
hensive program of labor resettlement in the Satellite states aimed at rais-
ing the productivity of heavy industry. The whole program is aimed at build-
ing an economy under the centralized direction of Soviet economic experts
that will counter-balance that of Western Europe. Soviet recruiting teams
are reportedly visiting Satellite industrial installations on a survey of
technicians in order to allocate them to high priority industries, includ-
ing shipbuilding, mining and heavy automotive manufacture. The program in
East Germany contemplates the eventual transfer of about 150,000 workers to
Poland., Czechoslovakia and Hungary, (U New York Times, 2 Sep 51)
Comments The transfer of skilled technicians between countries of the
Soviet Orbit to high priority jobs has been evident for some time. The
movement of industrial labor, however, is a possible new development in the
Satellites,
No evidence is available to confirm the contemplated transfer of 150,000
Germans to neighboring Satellites, This development would reverse a trend
of expelling Germans from the Satellites since the end of the ware While
there is some unemployment in East Germany at present,, the East German Five
Year Plan requirements make the transfer of this number of German workers
unlikely,
3b
CZECHOSLOVAKIA, Worldwide publicity on Oatis case disturbs Communists:
The US Embassy Prague reports that the worldwide interest in the Oatis case
may be disturbing the Czechoslovak Communists as is evidenced by the resump-
tion of publicity regarding Oatis for the first time since the trial ended
on 4 July. Czechoslovak propaganda is seeking to belittle Western efforts
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to free Oatis.and goes considerably beyond the indictment in describing his
alleged crime and guilt. (C Prague 165, 31 Aug 51)
Comment: The theme of current Czechoslovak propaganda regarding the
Oatis case is the contrast between legitimate and even critical reporting
of Czechoslovak events and espionage which Oatis was allegedly engaged in.
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SECTION 2 (EASTERN)
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la IRAN. Comment on Palish and Czech bid far Iranian oil: Iran, according
to its official spokesmen, is considering a bid from Poland and Czecho-
slovakia for the purchase of 700,000 and 500,000 tons of oil respectively.
It was also stated that companies in the US, Italy and Sweden had offered
to supply tankers.
Poland owns four tankers with a combined tonnage of 22,044 and char-
ters three totaling 179378 tons. The Czechs have no ocean-going tankers
under their control. Using its entire tanker facilities, Poland could
move the 19200,000 tons of oil under consideration in approximately three
years. There is no indication that any sizeable number of tankers will
be available for charter anywhere in the free world.
build-up of the war threat, reports that the Moslem League supports Indian
Communists can no longer be categorically rejected.
25X1
Comm n s Similar information was furnished in mid-July
In view of the
3. P..XIST,~U. Chinese emboss dor arrives. The first Chinese Ambassador to
Pakistan., Han Nien'Lung, arrived in Karachi on 2 September. Pakistan's
first ambassador to China plans to leave for Peiping about 22 September.
(R FBID9 London, 2 Sep 51)
4. BURMA.. Increasing Communist militarv cagabilities reported: The US
Embassy in Rangoon reports that insurgents have recently become more
active in the vital Irrawaddy Deltas, while maintaining a high level of
activity farther north. The embassy has noted increasing evidence of
Communist ability to concentrate larger forces than heretofore for op-
erations in strategic areas. (C Rangoon 2489 1 Sep 51)
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5. Gro w n an i-Communist n im re rte on o l G in s A
neutralism in the local hinese c?mmRaingoonsinformed the US Embassy that
He pointed to the formation of anti-Communistgstudentaandoteacheroorganiza-
tions which were primarily responsible for denouncing recent Communist dis-
paragement of traditional Chinese concepts. claimed to be par- 25X1
titularly encouraged by the enthusiasm of the students who have also or-
ganized. a new non-Communist school and have launched a campaign to recruit
other students attending pro-Communist schools. As further evidence of this
trend, the embassy reports that there have been several instances during the
past few days of local Chinese leaders initiating social contacts with mem-
bers of the embassy, whereas previously they had tended to consort exclus-
ively with the Communists. (C Rangoon 2489 1 Sep 51)
C en o Growing antagonism among the Chinese in Burma toward the
Communists has been noted for some time.
Chinese, however, is still handicapped by thelabsencelof oorrganizationeand a
popular leader or cause to rally about.
6. ins ~~?om Burma o Chinw cons inueso
Embassy in Rangoon, recently returned from Namkham9 near the
China-Burma
border, reports that the area is relatively peaceful but that smuggling
continues on a "considerable scale" over the Burma Road. This smuggling,,
averaging 20 truck loads of contrabands a day, is largely under the con-
trol of the Burmese Army, which collects over 400 dollars for each truck.
reported that during a 10 day visit in Wanting on the China Ksidenofathe
border he observed truck convoys, loaded with tires and petroleum, leaving
for Kunming every few nights. He further confirmed the complete absence
of Burmese military authority in the village of Kyukok, which Ss directly
across the border from Wanting, and claimed that it was controlled by
Chinese Communist agents. (C Rangoon 248, 1 Sep 51)
s The smuggling of tires and petroleum products over the
Burma Road into China has been reported by a number of sources. Although
the Burmese Government is aware of this problem, it is both unwilling
and unable to take effective action to suppress smuggling, especially in
the absence of strong outside pressure.
?~. KALLY-A. Dato Orman bids for or d Ugg pD its Dato Onn, dean of
Malay politicians, opened the annual Malayan Trade Union Council confer-
ence with a speech stating that self-government will be attained "before
many years." He urged that the trade unions stick to their proper activ-
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sties, allowing their political interests to be represented by a "national
organization," This is apparently a reference to Dato Onn's recently-
con-ceived "Independence of Malaya Party," the non-communal rival of the United
Malay National Organization (UMNO) whose presidency Dato Onn recently re-
linquished. The UMNO, lacking Onn?s leadership, has already retrogressed
toward a narrowly racist, Malaya-for-the-Malays policy, Dato Onn predicts
that UMNO will intrigue with the Sultans but that he will get the support
of the villages. (C Kuala Lumpur 41, 31 Aug 51)
8. INDOCHINA. Viet Minh army.morale retorted declininao Viet Minh: forces are
reported by French Gm2 in Saigon to be undergoing increasing hardship from
lack of food and medicine. Thirty to sixty percent of the troops in large
units are unable to fight due to sickness. The result has been a decline
in troop morale, increased desertion, and failure to fill recruitment quotas.
Because of the condition of Viet Minh troops and the prevailing flood condi-
tions in the Tonkin delta, no major action is expected before October. (S
USARMA Saigon, MC 227, 2 Sep 51)
99a n o Cumulative evidence from several sources has strongly indi-
cated that the Viet Minh is increasingly hard-pressed to meet the material
needs of the population within its zone, and that civilian morale has con-
sequently declined,, This is the first report, however, that Viet Minh armed
forces are suffering a-similar lowering of morale.
9. Economic and psvcholoaical deterioration in Viet Minh zoned The
Viet Minh-held rice?producing region of Thanh Hoa in northern Annan is suf-
fering from near famine conditions as a result of bad weather and Viet Minh
requisitioning.1 1.
Malaria is endemic and there is a total lack of quinine and other 2 5X1 C
forms of medicine. Textiles are unobtainable. According to an eyewitness,
there has been a noticeable decline in the morale of the civilian popula-
Comm ns This information is several months old,, but there is ample
evidence that the trends described above continue to afflict the Viet Minh,
10. Fxench weigh disposition of Chinese_Jnterneeso The chief of
the Far East division of the French Foreign Office told US Ambassador
Bruce in Paris that the French Government is considering the possibility of
repatriating, through the agency of some international organization such as
the Red Cross, the 30,000 Chinese Nationalist troops interned in Indochina.
The official indicated that some decision on this question might be taken
"before long." (S Paris 1368, 31 Aug 51)
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tion in the last few months. I I 25X1 A
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Comments Although constantly pressed by Chinese Nationalist officials
to repatriate these troops., the French authorities have postponed making
any decision for more than a year and a half.
11. F~?en, ochina het against nromAmerican" Vietm
nameses The hand of the French Surete was evident in the invalidation of
the passport of Tran Van An9 semi-6fficial Vietnamese press representative
to the San Francisco conference. Although known to be on very poor terms
with General De Lattre and regarded by the French as suspiciously pro-US,
Tran Van An had been personally invited to attend the conference by Premier
Huu. The US Charge comments that this episode,, following closely upon other
cases of French intolerance of even the Oloyal opposition,," will have con-
siderable repercussions. (S Saigon 551, 1 Sep 51)
12. Chinese send aid and a ag g,ut not troonso Chinese Com-
munist material aid to the Viet Minh is increasing,, according to French G?2?
The number of Chinese advisers in North Vietnam reportedly is unchanged,
but new."propaganda units" are arriving. Reports received by French Gm2
from agents in the area of Langson9 the traditional "China Gate,," indicates
no evidence of Chinese troops on the Indochina side of the frontier. This
is verified by French Air Force reports. (S Saigon OARMA MC 227?51,, 2 Sep
51; S Saigon Weeka 35, 1 Sep 51)
25X1 C
Chinese Commun s s in late February 19519
SOBSI,, Communist=controlled Indonesian labor a era ion,, was receiving a
monthly subsidy of about 159000 dollars from Chinese Communists for use in
instigating strikes. Chinese Communists were spending approximately the
same amount for propaganda purposes., including individual subsidies ranging
from 300 to 1,500 dollars to leftist newspapers in Indonesia.
Indonesian police have been unable to apprehend 242 Chinese Communists
who secretly entered Sumatra and southwestern Borneo in late 1950. Early
in February., three of these Chinese were arrested in Pontianak but escaped
three days later. 25X1 A
C mmen a Both infiltration of Chinese Communist agents and Chinese
financial support of Indonesian and Chinese Communist activity in Indonesia
are frequently reported and undoubtedly exist. The full extent of such
activity., however., is impossible to assess.
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14. Gov r ent grgpares fob or eful ac ion i Ce best In a radio
address on 30 August, Prime Minister Sukiman offered Celebes guerrillas five
days to surrender at the end of which time he said the government will take
punitive action, troops are being 25X1
drawn from South Sumatra, Java and parts of East Indonesia in readiness for
a government offensive,
The US Army Attache comments that the guerrillas, now numbering 4,000,
could swell to 8,000 or 10,000, and that the affair could become equal in
significance to the Makassar "rebellion" of 1950. Rumors persist that the
Chinese Communists may have had a hand in fomenting the trouble. C'Djakarta
357, 1 Sep 51; S USARMA Djakarta L 136, 1 Sep 51)
C mm n s On 17 August, Kahar Muzakar ordered his 4,000 guerrillas back
into the Jungle in the South Celebes and by so doing cancelled them expected
incorporation into the Republican Army, The Makassar "rebellion" of August
1950 occurred when a guerrilla attack on demobilized troops resulted in the
involvement of government forces. Five days of heavy fighting followed,
with some 900 casualties reported,
15. PHILIPPINES, Ogposition senatorial candidates seen capable of winnion
quality basis: Observing that the senatorial candidates chosen by the op-
position party (Nationalista) are much more impressive than those put up
by the Liberal Party, the US Embassy in Manila comments that if Voting were
on the basis of quality and if.(as is "unlikely") the November elections
were to be free and honest, the Nationalistas would probably win a substantial
majority, (C-Manila 867, 31 Aug 51)
Comments Nine out of 24 senate seats will be contested in November,
The Nationalistas-oppose Philippine acceptance of the Japanese peace treaty
and accuse the administration of subservience to the US.
Although there has been considerable public demand that the fraud and
coercion which accompanied the 1949 elections not be repeated, the adminis-
tration has not seen fit to dismiss numerous special and temporary police
who have been used to influence past elections. 2 5X1 C
16. CHINA. Chinese Communistroeram for Kachins reported.
(a) the formation of a "Kachin National Congress (China)" in Yunnan
Province in November 19509
(b) Chinese Communist orders to the Kachin National Congress to use
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in Kachin schools, Communist texts rather than books imported from
Burma; and
(c) instructions to the head of the Congress to recruit and train
Kachin.- for use as a "vanguard" in the event of an invasion of Burma.
25X1A
25X1
25X1
comments The Kachin.- in Communist China are doubtless under the same
firm control of Peiping as are other ethnic minorities, but the precise
form of the minority front organization has not been established; Peiping
could be expected to devise an organization and program designed to appeal
to. Kachins in Burma as well. The use of Communist textbooks in Kachin
schools is to be expected. recruitment
of Kachins in Communist China to swell the ranks of Naw Seng, the renegade
Burmese Kachin, who has been receiving support and indoctrination from the
Chinese Communists for more than a year.
17. u marines sighted in SouthChina Seas Two submarines were sighted
on 29 August south of Macao off the South China coast
25X1
Z5X1
The submarines, on a southerly course, submerged as the
25X1
plane passed overhead. After interrogation of flight crew members,
I lassesses the report of sighting as probably true. (S Astalusna
ngapore, 311072, 31 Aug 51)
C en -: No US submarines were in the area on this date. Since no
other Western submarines are believed to have been in these waters at
the time, this appears to be the first reliable sighting of a Communist
submarine in South China waters, Previous reported sightings of submarines
in these waters have been assessed as possibly true. Numerous unconfirmed
reports have stated that Russian submarines are smuggling agents and arms
into Southeast Asian countries and the Philippines.
lg. Radar controlled anti-aircraft~uns renorteA in E st Central Chines.
I Ireport the existence of radar-controlled ant
aircraft artillery at a ,s ng and Shanghai. (S Alusna Taipei, Weeka 35,
31 Aug 51)
25X1 C I as of 21 August, Soviet forces in the Port
Arthur Naval Base Area (PANBA) were as follows-
G mm s: Radar-controlled anti-aircraft guns have been identified in
Manchuria and North China for some time. Their installation in East Central
China is new information.
19. Soviet strength in Port Arthur area in reassessed.-
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20.
(a) Army ?m three infantry divisions, two armored divisions, one
artillery regiment, one anti-aircraft brigade, and one paratroop brigade;
(b) Air mm 350 naval and airforce aircraft; and
(c)Navy ?? a squadron of 10 destroyers of a German type.
1Sep51)
QjLmment
ss,
0
The 4ilY Di est of 13 August reported the unconfirmed
assertion hat Soviet ground forces in the Port
Arthur area were e ng increased to a total of about 100,000 men; the
present report, also unconfirmed, indicates a ground force strength more
nearly in accord with the figure (61,000) accepted by US Army G?2.
The figure of 350 aircraft is also unconfirmed but also cred i:.b1a, and
may even be law. There is Soviet naval activity of various kinds in the
PANBA, but the presence of a destroyer squadron (at least six DDs) cannot
be confirmed.
~{a~ Kangso ~~~ ~c~rra~ti?gn~ and "bureaucrac,y" in Manchuria,
Mukden radio states that the Northeast Bureau of the Chinese Communist
Party met with 2,000 of its top cadres on 31 August to discuss "bad prac-
tices and bureaucracy" in various unspecified Manchurian organizations,
Kao Kang, the leading Party and governmental functionary in the Northeast,
is reported to have "severely criticized corruption and bureaucratic methods
in management,"' Kao is further quoted as citing this "trend" as evidence
that the Party has been affected by "reactionary capitalism." (R FBID
Flimsy, 1 Sep 51)
22mment& Kao?s remarks clearly point to a more serious problem than
the moral failings of the cadres, but this brief release suggests only the
nature and not the magnitude of the problem. If it is true that corruption
and incompetence are widespread among the managerial personnel of state
enterprises iniManchuria ?- the area longest and most firmly under Communist
control ?- it is reasonable to assume that this problem is much greater
throughout China than the Communists have admitted.
Stalin moderately for "great help" ainst Jao A
I C:
elsagrarnl;dated: September% from Mao Tse-tung to Stalin conveys "profound
thanks" for the USSR?s "great help" during the war against Japan. Mao
states that this help, as well as the Sino-Soviet alliance, has provided
"boundless inspiration" to the Chinese people. In reply, Stalin thanks
Mao for his "high evaluation" of the Soviet role, and concedes that China
"played an important part" in defeating Japan. (R FBID Flimsy, 3 Sep 51)
25X1A
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C mmen x It is worth noting that Mao?s "high evaluation" of the Soviet
role is confined to appreciation for "help" and "inspiration.," and does not
credit the USSR with the leading or even a major part in the fight. Peiping
apparently feels., with truth, that the Chinese contribution both National-
jet': and Communist mo was considerably greater than the Soviet. Nevertheless,,
this exchange of messages,, on the occasion of Sino'Soviet observance of
V-9 Day, draws attention to the unity of Sino-Soviet purpose as expressed
in the Sino Soviet treaty of February 1950 namely, that of preventing the
resurgence of Japanese aggression.
22. NOo Rhea Maims ROK can muster additionay 5.~a In a 2 September speech
broadcast over Radio Pusan, President Rhea stated that South Korea can
muster 250,000 new troops but that "arms and training are needed"' for them.
He cautioned against a new Communist offensive or a limited offensive in
connection with Communist arguments at the San Francisco conference, His
statement closed on the note that the sooner the RO.'K strengthens its forces
with additional troops, the earlier democratic nations will be able to
attain their ultimate aims. (R FBID Ticker, 3 Sep 51)
mn no- Following close on a recent interview in which the ROK
Minister of Defense stated that the ROK.Army will be a "first class fight-
ing machine,"'Rhea?s speech gives the appearance of another campaign for
US arms to equip a large army. The motivation of the campaign'is not clear
but may stem from Rheees apprehension that the UN is going to pull its 25X6
troops out of Korea.
23.
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SECTION 3 (WESTERN)
1. GENERAL. Smaller NATO countries may check power of military: US NATO
Deputy pofford warns that it would be a mistake to underestimate the
resentment caused by the three power Standing Group's refusal to present
a report or to be represented at the Ottawa meeting-of NATO Finance and
Foreign Ministers. He expects that some of the minor NATO countries will
now press strongly for greater control over the deliberations of the Standing
Group, (S London, Depto 298, 30 Aug 51)
Comment: The Standing Group argues that the Ottawa meeting is primarily
non-mil, Several NATO nations, however, claim that a military progress
report is needed, and that a Standing Group representative should be present
to answer questions. The NATO governments not represented on the Standing
Group are jealous of the power they have delegated, and, unless the Standing
Group takes steps to keep them better informed of its deliberations, they
will undoubtedly demand a share in decisions now made by the tripartite body,
2. GERMANY. New Soviet move tightens economic noose in Berlin: On 31 August
Soviet and as German authorities further tig ene he economic squeeze
on West Berlin by imposing a toll on all West German traffic between Berlin,
and Western Germany, Exempting Allied and East German traffic, they levied
the tax-for "maintenance of the road"-on each one-way trip made by both
cars and trucks-, West German truckers reacted sharply by blocking the highway
at the Helmstedt border point, in an attempt to prevent compliance and force
action by West German authorities to alleviate the situation.
Local US officials see no chance for immediate relief to the shippers,
who carry most of West Berlin's imports of perishable foods. The thirteen
freight trains now running daily to Berlin are the limit permitted the Allies
and are already fully utilized, although some unused capacity is available
on the Elbe water=way, These officials estimate that the new tax, if absorbed
by shippers and consignees, would increase shipping costs at least 20 percents
constitute a 1+palpable increase" in the cost of food and other imports, and
measurably affect the competitive position of West Berlin's industry.
The Allied commandants in Berlin met on 3 September with West Berlin
officials to discuss possible countermeasures, including the taxing of all
East German barges passing through West Berlin locks, an effective measure
in the past. (C Berlin 3399 1 Sep 51)
Comment: This latest Soviet move, apparently under consideration
since at least last June, represents another in a series of measures designed
to harass West Berlin, and a possible further step to force resumption of
interzonal German trade. The step, which will greatly increase the general
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may also be intended to give the USSR
in int Berlin, should Four power talks on the trade impasse
uncertainty and alarm
po
additional- bargaining
be resumed,&
25X6
vienna: Soviet
t
to
e
B USSR proposes amended air -corridor roua
approval of a USSR
AUSTRIA ressing for ~uadrip n over the Soviet
authorities are vigorous ly p
initiated proposal. to redirect British air traffic g
t corridor Cioo a more cir-
from the present 20 kilometer u
zone to Vienna The Soviet dep y
cuitous route to the northwest- paths of Soviet oc-
crosses the flight p
ostensibly that the present route oth
cupation troops, and endangers flights of b powers
_MP .. RET
25X6
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British and US officials, however, believe that the Russians are much
more concerned that the corridor permits observation of Soviet military
airfields at Zadvoeslau and Wiener Neustadt and of Soviet-Hungarian
maneuver and training areas. In bilateral negotiations the British are
making counterproposals involving traffic control and variable-altitude
flights. The US Legation is examining what advantageous concessions can
be won from a strong bargaining position... (S Vienna 840, 30 Aug 51)
Comment: ?et airfield at Wiener Neustadt is subject I
As of 15 August, reconnaissance indicate hhaa.
least eig a squadrons may be stationed at this fields Any safety
considerations in the Soviet move seem to be ruled out by the fact that the
corridor now objected to has been in use since19t6s
---- i - Uoo L v.L- _Lur-cner U b aid: A delegation
of Austrian Dank a n inancia of zci s a Was in on mee i
International Bank for Reconstruction and Development and theg International
Monetary Fund will impress upon US agencies the urgency of Austria's cur-
rent economic problems. Finance Minister Margaretha has informed the US
Legation he will tell the US Government that a cut in ECA allotments below
115 million dollars would be "tragics"
Margaretha will' try to convince US officials that an additional release
of counterpart funds for 1951 is essential., that present exchange rates must
be maintained if further price advances in imported raw materials and food
items are to be avoided, and that Austria should be granted additional
latitude in exports to Czechoslovakia and Poland in return for their rela-
tively cheaper coals As an example of Austriaes efforts to achieve economic
stability, the minister will cite current measures to hold the line on meat
prices, even though such anti-inflationary controls have resulted in serious
shortages of meats (C Vienna 841, 30 Aug 51)
Comment: Rising costs of essential raw materials, deterioration of
trade wit Western Germany subsequent to.Germanyos own balance-of-payments
difficulties, a continuation of controlled inflation under the system of
periodic wage-price increases, and vulnerability to economic pressures
exerted by Poland and Czechoslovakia have all contributed to the current
economic difficulties in which Austria finds itself and to fears that the
situation may become acute this falls While retention of price controls
for meat is no doubt politically essential and has avoided importation of
expensive animal feeds, imports of animal products have in consequence
further burdened Austrians limited supply of foreign exchange,
6, ITALY. Communists claim large delegation at Berlin Youth Festival. Enrico
er inguer, lea er o t Its ian ommunist a ega ion o e er in Youth
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Festival, stated that about 1,500 Italian delegates attended the festival,
according to the Communist Unitas Berlinguer?s passport was confiscated
by the authorities at the It ian frontier upon his return. The press reports
that his speeches at Berlin were "harmful to'the good name of Italy abroaddt'
(S Rome Joint Weeka 35, 31 Aug 51;; R Rome 966, 29 Aug 51)
Comment: Berlinguer8s statement may be greatly exaggerated. On
14 Julyl99'1 the Italian Government suspended the issuance of passports to
individuals wishing to visit iron curtain countries, and ordered the pro-
vincial prefects to refer requests for the same to Rome," However, groups of
Italian Communists have been able to circumvent this ban,presumably by
securing necessary travel documents from secondary-level government officials 2 5X6
who are either inefficient or corrupt.
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5 September 1951
CIA No. 49332-A
Copy No,
S/S CABLE SUPPLEMENT
TO THE DAILY DIGEST
Not for dissemination outside O/CI and O/NE0
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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. Comments represent the
immediate views of the Office of Current Intelligence.
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SECTION 2 (EASTERN)
1. ;M. More delays over Iraq Petroleum Company agreement foreseens The Iraqi
Prime Minister has proposed that the negotiators begin drafting the final
text of the oil agreement, which will then be submitted to Parliament for
consideration. Both the British Charge and IPC officials foresee that the
drafting of the agreement will produce long tough wrangles and probably new
Iraqi demands. (C, S/S Baghdad 188, 2 Sep 51),
cowmen s The Prime Minister is reluctant to come to a final agreement
with the oil company because he fears the reaction of the Iraqi opposition
parties. Prime Minister Nuri Said has refused to sign the letters covering
the oil agreement unless the company promises a basic minimum,annual royalty
payment. A company official has recommended that the IFC make a private
pledge to include a provision on a minimum annual royalty payment in the final
draft of the agreement.
IRAN. Economic situation in Irans The US Embassy in Tehran, in a statement
o Iran's economic prospects, concludes that economic collapse could be
averted for several months and possibly longer by resorting to various ex-
pedients, such as reducing note-cover reserve or simply printing more money.
Moreover, the primarily agricultural economy of the country can stand consider-
able deterioration in non-agricultural sectors before breakiown would occur.
(S, S/S Tehran 891,.1 Sep 51).
3. INDONESIA. Indonesia likely to sign Japanese peace treaty: Despite impor-
tant political and press opposition in Indonesia to signature-of the Japanese
peace treaty, the US Ambassador in Djakarta expects the government to author-
ize its delegation at San Francisco to sign the treaty and to obtain majority
support in Parliament when the question of ratification subsequently arises.
The Indonesian Prime Minister is currently demonstrating exceptional
firmness in his determination to have Indonesia sign the treaty, Both Presi--
dent Sukarno and Vice President Hatta support him strongly in this policy,
(C, S/S Djakarta 348, 4 Sep 51; C, S/S Djakarta 365, 3 Sep 51).
omm n ; The Indonesian delegation at San Francisco was not given ad-
vance authority by its government to sign the treaty.
CHINA. UK Charge to protest Peiping's treatment of foreign nationals: The
UK Charge in Peiping is scheduled to-make representations regarding Peiping's
treatment of foreign nationals to the Chinese Communist Ministry in early
September. (C$ S/S London 1177, 31 Aug 51).
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Comments The Department of State has requested 12 governments recogniz-
ing the Peiping regime to instruct their representatives in Peiping to dis cuss
with the Foreign Ministry, inter alia, the cases of at least 20 US nationals
imprisoned in Communist China, some 30 others under house arrest, and a number
of others unable to obtain exit permits. The nationals of governments recog-
nizing the Peiping regime have generally fared much better than those of non-
recognizing governments, particularly the US. It is conjectural whether
Lamb's representations or those of the other recognizing governments will
significantly improve the status of US nationals.
25X1
ONfn ew k of
SFCTION 3 (WESTERN)
Irish request US assistance in military purchases:
Affairs Minister Aiken has approached [Irish External
one of General Eisenhower's American
political advisers in Paris with an informal request for assistance in pur-
chasing American military equipment, promising in return a very limited
cooperation with NATO in military staff talks on defense plans. Aiken indi-
cated that the new Irish Government was much concerned about the problem of
defense, and wanted a small amount of up-to-date military equipment for train-
ing purposes now, in order to initiate a modernization and expansion program?
He; mentioned specifically aircraft and heavy infantry anti-tank weapons,
Reminded of the tight US military supply situation
of th
NATO
'
,
e
powers
prior claim, and of Ireland's own refusal to join NAM in 19499. Aiken urged
that a rewarmed Ireland would contribut directly to Western Europe's de-
fense against Communist aggression; butte gave his personal.viewhtUat there
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was no possibility of Irel 's joining NATO or other collective defense
arrangements at this time? (S, S/S Paris 1377, 31 Aug 51),
Cos This is the first reported approach to the US for military
assistance on the part of the DeValera government which came to power in June,
Early in 1950 the previous government had indicated to the US Ambassador that
it needed US equipment for defense against a possible airborne invasion, and
very indirectly hinted that it might be prepared in return to forget about
the Partition issue which had kept it out of NATO, and to enter instead into
a formal alliance with the US alone on much the same terms as NATO membership,
Though introducing a military budget about 25 percent higher than its pre-
decessor0e, the DeValera government had publicly reaffirmed Irish neutrality,
and has given no countenance to any suggestions that Ireland might in effect
be willing tq trade bases for military assistance, The form of the present
approach, which easily lends itself to official denials, further suggests
that DeValera is not yet ready to challenge Irish neutrality sentiment to ob-
tain US military equipment,
NWAY6 Nation will not lead opposition to Greek Turkish NATO admission at
O t t a w a s s Foreign Minister Lange stated to US AMnbassador Bay that although
r;;;7- remains opposed to NATO membership for Greece and Turkey, his country
does not intend to lead the opposition to such membership at the Ottawa meet-
ing. Norway, he said, will make known its position that Greek Turkish security
needs can be adequately safeguarded by a Mediterranean Pact,, and that such a
pact is preferable since Greek Turkish membership would dilute NATOAs Western
European character and lend substance to the view that the treaty is merely a
military alliance? Lange added that he expected some support for this posI
tiOn at Ottawa, (TS, S/S Oslo 235, 3 Sep 51)0
Comments Norway will tenaciously oppose the extension of membership ut
til it becomes clear that the majority of other NATO members are prepared to
endorse Greek-Turkish admission, However, since Norway is not preparing to
lead the opposition, as it has in the London discussions, and the Netherlands
Government has indicated its reluctant'acquiescence, concerted opposition at
Ottawa is not expected to be strong or protracted.
CH. LE, Forei n Minister comments on recent coup attempt to US Amb assadors
Foreign Minister Yrarrazaval Concha told US Ambassador Bowers that the recent
conspiracy (see OCI Daily Digest, 29 Aug 51) "cannot be underestimated in
significance since its purpose was to overthrow the regime," It is positively
known, the minister siad, that the conspiracy had its inspiration in Buenos
Aires, He admitted that some minor Chilean army officers were involved, The
minister also pointed out that he had warned the president that another at-
tempt would come later.
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Bowers comments that "Yrarrazaval is a very high grade man of large
means and a spotless reputation as an able and honest man. He impressed me
as worthy of confidence,, , ,We know enough of the situation not to find any-
thing he said at all improbable," (S, S/S Santiago 131, 31 Aug 51).,
Commen There is evidence tending to support the foreign minister's
remarks-.-Me-
emarks. a inability of the government combination to modify the inflation-
ary spiral, pre-election year confusion, and growing and demonstrative labor
unrest continue to contribute to the present government's unpopularity, and
may be grounds for another attempted coup. On the other hand, the government
has been at.least temporarily strengthened by the recent attempt,
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