CURRENT INTELLIGENCE BULLETIN - 1954/05/09

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02058867
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 9
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: May 9, 1954

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9 May 1954:
Copy No,
76
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. ..1/
NO CHANGE IN CLASS.
..- GI(
:I DECLASSIFIED
CLASS. CHANGED TO: IS S C
NEXT REVIEW DATE. �QC 9
AUTH: HR 70-2
DATE://// REVIEWER
REVIEWER:
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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IA-Ls A.
SUMMARY
GENERAL
. Molotov favors armistice negotiations between French and
"Indochinese" (page 3).
2.
3. Copper cargo may be en route to Communist China (page 4).
SOUTHEAST ASIA
4. Viet Minh expanding organization inside Hanoi (page 5).
NEAR EAST - AFRICA
5. American and British relations with Iran threatened if oil settle-
ment violates nationalization law (page 5).
EASTERN EUROPE
6. East German youth rally planners disturbed by unreliability of
participants (page 6).
LATIN AMERICA
7. Honduran strike continues to spread (page 7).
LATE ITEMS
8. Comment on new Paraguayan Government (page 7).
9, Comment on the Laniel Government's prospects (page 8).
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GENERAL
I. Molotov favors armistice negotiations between French and "Indochinese":
_ _
2.
In a conversation with British Foreign
Secretary Eden on 5 May, Molotov agreed
that the Indochina situation was inflammable
and that an armistice should be sought. He
reiterated that the important thing was for the French and "Indochinese"
to work it out themselves and did not dissent from Eden's suggestion
that political and economic problems should not be discussed until after
an armistice with satisfactory safeguards had been arranged. At no time
did he use the words "cease-fire."
Molotov indicated agreement when Eden ob-
served that a continuation of the status quo in Korea was "not too bad."
Comment It is believed that the Communists
desire to arrange an armistice or a cease-fire in order to remove the
danger of American or United Nations intervention. They also appear to
prefer to keep a cease-fire or armistice separate from the question of a
political settlement.
Molotov's reference to the "Indochinese"
strengthens the expectation that a demand may be made to include the
"resistance governments" of Laos and Cambodia in the Geneva talks.
The Peiping and Viet Minh radios have broadcast statements by the heads
of these two "governments" demanding that they be allowed to send dele-
gations to Geneva.
The Communist position on Korea supports
earlier indications that the bloc's principal aim is to confirm and sta-
bilize the status quo.
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3. Copper cargo may be en route to Communist China:
A cargo of 6,000 tons of copper i.ngots may
be en route to Communist China, according
to a "reliable report." The copper-is re-
ported to be of Belgian Congo origin and is
being shipped from Europe under a validated export license to Ceylon
for diversion at sea to Communist China, A Swiss bank is acting for
the consignor.
Comment: This shipment may be the culmi-
nation of one of several copper transactionsi
between December and March. .Ouring that period
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at least three Western European copper offers of 79500 tons
or more to Communist China without confirming that deliveries actually
followed. The quoted prices were substantially higher than world market
prices, reflecting the fact that all non-Communist copper producers and
most non-Communist countries embargo the export of copper to Commu-
nist China.
Peiping's import re uirements for copper are
now believed to exceed 209000 tons a year.
SOUTHEAST ASIA
4. Viet Minh expanding organization inside Hanoi:
The Viet Minh is continuing to expand its
organization inside Hanoi.
All Viet
Minh units in the city have a sabotage section.
but considerable quantities
VI weapons ana explosives have been smuggled into the city during the
past two months.
Comment: The Viet Minh has succeeded in
keeping its organization inside Hanoi well concealed and estimates of
its strength are not reliable. The general deterioration of the French
position will considerably enhance the Viet Minh's recruiting capabili-
ties.
French forces in and near Hanoi now total
about ten battalions. It is therefore unlikely that the Viet Minh could
capture Hanoi at the present time.
NEAR EAST - AFRICA
5. American and British relations with Iran threatened if oil settlement
violates nationalization law:
Any Iranian oil settlement which does not at
least appear to fit into the framework of the
nationalization law would cause a wave of
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anti-foreign sentiment and possibly lead to the rupture of diplomatic
relations with the Un4ed States and Britain,
Such a settlement wouia aiso matt to tne collapse
of Prime Minister Zahedi's governmenk and would weaken the shah's
position.
Comment: Zahedi has made it clear that
the nine-point oil nationalization of 1951 cannot be set aside in
order to reach an oil agreement. He might accept a settlement that does
not obviously violate the law, hoping that it can be sold to Iranian public
opinion.
Nevertheless, as any agreement probably
must have Majlis approval, there will be ample opportunity for deputies
opposing a settlement to examine it closely for any real or imagined
violation of the nationalization law.
EASTERN EUROPE
6. East German youth rally planners disturbed by unreliability of par-
ticipants:
Evidence is mounting that only East German
youth carefully selected for political reliabil-
ity will be allowed to participate in the second
all-German youth rally to be held in East
Berlin on 6-7 June, Certain Free German Youth (FIN) groups have been
told that because of the unreliability of their membership few, if any,
delegates will be sent to the rally.
Comment: Apparently as a result of a
Socialist Unity Party report of serious political shortcomings in the
youth movement, FM' leaders have been forced to change earlier plans
to send 400,000 members to Berlin. It has also been disclosed that
FIN morale has dropped dangerously low, with large numbers of youth
leaving the organization.
Planners for the forthcoming youth rally un-
doubtedly desire to prevent a repetition of unforeseen events which took
place during the first all-German youth rally in 1950. At that time,
thousands of the participants swarmed into West Berlin. Control of this
year's rally would be simplified by limiting attendance to a relatively
small number of hard-core members.
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LATIN AMERICA
7. Honduran strike continues to spread:
With the sending of Honduran troops from
Tegucigalpa, the capital, to the strike-
bound north coast region, order has been
restored in two cities. Violence is reported,
however, in the port of Tela and the number
of strikers has reached a reported 25,000.
The strike is spreading to other north coast
cities and students in Tegucigalpa are said
to be planning a demonstration of sympathy for the strikers.
The government believes that the disturb-
ances are Communist-inspired and has ordered troops to patrol the
Guatemalan border. The cabinet appears divided on whether to declare
martial law; the foreign minister believes Guatemala would provoke
disturbances and "profit from the ensuing bloodshed."
Comment: The strike is evidently the
result of effective planning by undercover agitators to exploit local
grievances. It appears to be a strong opening move by Guatemalan
Communists in connection with next October's presidential elections
in Honduras.
Ex-dictator Carias will be encouraged to
seize the government if the Galvez administration does not take deci-
sive action. Such a coup would probably provoke counter action by
strongly anti-Carias military leaders.
LATE ITEMS
8. Comment on new Paraguayan Government:
The Paraguayan national assembly on
8 May elected Tomas Romero Pereira,
head of the ruling Colorado Party, as
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provisional president to succeed ousted
President Chaves.
His election, and agreement on a compromise
cabinet, are steps toward resolving the personal rivalries within the
governing party which were largely responsible for the rebellion of
5 May. The ten-man cabinet includes two ministers retained from the
Chaves cabinet and three close military associates of General Alfredo
Stroessner, commander in chief of the armed forces. In the American
embassy's view, it cannot be considered a strong cabinet; no signifi-
cant change in domestic or foreign policy is indicated.
$: elections are to be held on 15 August with Stroessner the only presi en-
tial candidate. Stroessner's position is however, still somewhat
delicate, since various army officers backed him, not to establish a
government dominated by the military, but only for the purpose of put-
ting down the rebellion in the cavalry division.
9. Comment on the Laniel Government's prctspects
French reactions to the fall of Dien Bien Phu
further emphasize that Premier Laniel's
tenure of office probably depends on the speed
with which Foreign Minister Bida.ult reaches
an arrangement at Geneva to satisfy the
National Assembly's overwhelming desire
to end hostilities in Indochina. The assembly
is, however, unlikely to overthrow Laniel
when it returns on 11 May, since the problem
remains essentially the same as on 6 May
when it gave him a vote of confidence as the
best way of getting out of Indochina through
negotiations at Geneva. In addition, the
patriotic appeal to reject enemy pressure may strengthen Laniel's hand.
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De Gaulle's one-man parade on 9 May is
unlikely to bring any startling change in the current political situation.
Anti-Laniel demonstrations in Paris on 8 May were counterbalanced
by anti-Communist disturbances elsewhere. Even spokesmen for the
opposition Socialists have stated that this is not the time to bring on a
government crisis.
Nevertheless, anti-American feeling in
France seems to be growing as a result of the Dien Bien Phu campaign,
and any suggestion of American pressure on Laniel might not only hasten
his downfall, but also have serious consequences for EDC�
At Geneva, Bidault's freedom of maneuver has
been considerably narrowed as a result of Dien Bien Phu's fall. Under
Secretary Smith reported on 9 May his concern over the vagueness of
Bidault's 8 May proposal on Indochina. Smith fears that the French may
accept a simple cease-fire without insisting on adequate supervision.
He sees a danger that the United States might be put in the position of
underwriting a settlement which at best would be highly unstable.
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