CURRENT INTELLIGENCE BULLETIN - 1954/08/13

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03000927
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 11
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: August 13, 1954

13 August 1954
Copy No.
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. 61*
NO CHANGE IN CLASS X,
E.) DECLASSIFIED
CLASS, CHANGED TO: TS S C
NEXT REVIEW DATE: 1010
AUTH: HR 70-2
DATE: 1777:140 REVIEWER:
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
3.3(h)(2)
3.5(c)
4.0
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SUMMARY
GENERAL
1. Comment on appointment of Soviet ambassador to Viet Minh (page 3).
FAR EAST
2. Communists speed restoration of Kunming-Haiphong railway (page 3).
SOUTHEAST ASIA
3. Skirmishes between Chinese Communist and Viet Minh units reported
(page 5).
4. Chou En-lai said to favor mutual security pact with South Asian coun-
tries (page 6).
SOUTH ASIA
5. Portuguese see tension in India easing (page 7).
NEAR EAST - AFRICA
6. Comment on European offers of substantial credits to Iran (page 7).
7. Cyprus Nationalist leader accepts Communist support (page 8).
EASTERN EUROPE
8. Hungarians demonstrate contempt for Soviet sportsmen (page 9).
WESTERN EUROPE
9. Churchill increasingly obsessed with desire to meet Soviet leaders
(page 9).
LATIN AMERICA
10. Castillo Armas supporters in Guatemala reported growing "disillu-
sioned" (page 10).
Army pressure for ousting Brazilian president seen easing (page 11).
11.
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GENERAL
1. Comment on appointment of Soviet ambassador to Viet Minh:
The appointment of a Soviet ambassador,
Alexander Lavrishchev, to the Wet Minh
is a move to enhance the prestige and inter-
national status of the Ho Chi Minh regime.
Lavrischev's appointment, before a diplomat
from Peiping is accredited to the Viet Minh, would also indicate that
with a truce achieved Moscow is now moving to assert openly its
primacy with the Viet Minh. In 1950, the USSR followed Communist
China in recognizing the Ho Chi Minh government. The Viet Minh
has had diplomatic representation in Peiping since 1951 and in Moscow
since 1952.
Lavrishchev, a specialist in Balkan affairs,
has been ambassador to Turkey since 1948.
FAR EAST
2. Communists speed restoration of Kunming-Haiphong railway:
materials are being moved from Yunnan
Province through Lao Kay, on the China-
Vietnam border, for restoration of the
Tonkin sector of' the Kunming-Haiphong railway (see map. p.4).
work on restora-
tion of the Yunnan sector from the present railhead, some 75 miles
from the Indochina border, has been in progress for some months,
and that the Communists intend to complete the entire line as soon
as possible. The speed with which they have begun work in Tonkin
is noteworthy.
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CHINESE -VIETMINH TRANSPORTATION SYSTEMS
AUGUST 1954
SCORDErNT-IAL
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Comment: Most of the rail line south
from the Tonkin border to the delta has been inoperable for years,
although isolated segments have been used by the Viet Minh; its
complete restoration presents no great difficulties. Restoration
of the long-destroyed Yunnan section of the line, however, will
involve major engineering work through mountains.
The Yunnan-Indochina railway was
originally built by the French to carry minerals from Yunnan
Province to the sea, and Peiping has the same long-range interest
in restoring this line, because China's largest tin and copper de-
posits are in Yunnan.
The major rail line between China and
the Vietnam border area is through Kwangsi Province and lies con-
siderably to the east of the one from Kunming. This line, which
ends just north of the border, has been the major military transport
link during the Indochina war.
SOUTHEAST ASIA
3. Skirmishes between Chinese Communist and Viet Minh units reported:
an engagement has taken place be-
tween Chinese Communist troops and two
Viet Minh battalions near Lang Son, just south of the China border,
refugees from the
Moncay area, in extreme northeastern Tonkin, report Chinese Commu-
nist troops have occupied that area and "incidents" have occurred be-
tween them and Viet Minh units
a two-hour skirmish bet it a. %.01.1.111COG CLIILL d V le L. 11,111111. uuuipculy LU LUC
southern part of the delta on 5 August was settled by local Viet Minh
authorities.
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Comment: Despite occasional rumors
of the entrance of Chinese troops into the Viet Minh area, it has
not been established that Chinese military other than advisers and
technicians have crossed the border. Accounts of any incidents in-
volving Chinese attached to Viet Minh units could be expected to be
considerably exaggerated as word of them was passed on.
The Vietnamese population has a basic and
longstanding distrust of the Chinese that was reinforced by the
Chinese Nationalist occupation of Tonkin immediately after the war.
4. Chou En-lai said to favor mutual security pact with South Asian
countries:
Comment: This is the first report that
Chou favors an Asian security pact of the kind discussed by Indonesia.
Although Chou spoke at Geneva of the need for Asian consultations to
seek "common measures" on regional security, he has since talked
in terms of bilateral pacts between Asian governments based on his
"five principles" of mutual respect, nonaggression, noninterference,
equality and peaceful coexistence. Chou has proved to be expert in
leading diplomats to a false belief that he favors courses of action
which they themselves favor.
A Communist proposal for a regional pact
doubtless would have greater dramatic impact than would overtures
for vague bilateral agreements, and some such proposal may be forth-
coming. India, however, is also apparently working on a proposal of
its own.
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SOUTH ASIA
5. Portuguese see tension in India easing:
Comment: The representations made by
several nations, especially by Britain, seem to have given India
pause. It now appears less likely that the "volunteer" march on
Portuguese territories scheduled for 15 August will produce vio-
lence and bloodshed.
NEAR. EAST - AFRICA
6. Comment on European offers of substantial credits to Iran:
13 Aug 54
Recent offers of substantial credits to
Iran from Western European countries
foreshadow a gradual easing of Tehran's
foreign exchange difficulties in the next
year. German, French and British con-
cerns are already seeking to re-establish
their Iranian markets, and an increase in
international commercial competition may
result as assured oil revenues improve
Iran's credit.
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West German firms recently offered Iran a
total of $100,000,000 in credits for industrial expansion; French com-
panies have extended sizable credits for the same purpose; and Britain
Is considering a $14,000,000-loan for the purchase of British products.
In addition, French and British firms have recently granted generous
credit terms for railroad equipment. American firms have been re-
luctant to invest in Iran and to trade on the same credit terms as their
European competitors.
Commercial credits, however, cannot solve
Iran's budgetary problems. According to Ambassador Henderson,
Iran needs an additional $22,000,000 in American grant aid in 1954
for its domestic requirements. Without additional dollar grants or
loans for the purchase of American merchandise, American trade is
unlikely to maintain its present high position in Iran.
7. Cyprus Nationalist leader accepts Communist support:
Archbishop Makarios, leader of the Cypriot
movement for union with Greece, has ac-
cepted an offer of Communist support and
has recently conferred with local Communist
leaders in Cyprus, according to the American
consul.
Makarios says that recent British actions--
presumably London's statement barring any change in the colony's
sovereignty and the announcement of rigid enforcement of the anti-
sedition law�made rejection of the Communist offer impossible.
Reports from Athens and Nicosia indicate
that the 12 August strike called by Cypriot Nationalist and Communist
leaders has virtually paralyzed the island.
Comment: Communists control most of the
labor force in Cyprus and can cripple most economic activity. The
formation of a united front of Nationalists and Communists increases
the British problem of preventing disorders.
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EASTERN EUROPE
8. Hungarians demonstrate contempt for Soviet sportsmen:
The American legation in Budapest reports
that the International University Summer
Games last week not only failed to fulfill
their intended propaganda function, but
even produced some embarrassing political repercussions for the
regime.
Hungarian spectators showed their contempt
of Soviet sportsmen by receiving their entrance with silence, and
loudly applauding their errors and the teams competing against them.
The current defiant mood of the Hungarian
public has also been evident from a high rate of labor absenteeism
and a slackening in work discipline in factories.
Comment: This openly anti-Russian activity
may reflect the Hungarian population's response to the emphasis the
regime has recently placed on nationalism. Following the defeat of
the Hungarian soccer team by the West German team on 4 July, an
estimated 15,000 Budapest residents stormed the sports authorities'
headquarters, attacked intervening police, and voiced their economic
grievances.
The willingness of the population to demon-
strate open hostility to the regime and its sponsors has probably been
encouraged by the "new course" relaxation of police controls.
WESTERN EUROPE
9. Churchill increasingly obsessed with desire to meet Soviet leaders:
Ambassador Aldrich reports that members
of the British cabinet, most of whom oppose
further conferences with the USSR at this
time, are greatly disturbed by Churchill's
continued obsession with the idea of a meeting with the Soviet leaders.
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On the basis of conversations with various cabinet members,
Aldrich states that apparently Churchill has even threatened to
form a coalition government with the Labor Party should his
present colleagues fail to support him.
Minister of State Selwyn Lloyd states that
the latest Soviet notes have played into the hands of those who op-
pose Churchill's desire, but that the danger of a "lonely pilgrimage"
will recur should the Soviet leaders agree to meet Churchill outside
the USSR.
Comment: The strength of Churchill's pre-
occupation is shown by his evident abandonment of the view that such
a meeting would have to be arranged in closest co-operation with the
United States. His almost total isolation on this question is reflected
in the suggestion that he might be willing to wreck the Conservative
government and precipitate a constitutional crisis.
Although Churchill has frequently proclaimed
his desire for a meeting "at the summit," Soviet leaders have shown no
willingness to meet him outside the USSR.
LATIN AMERICA
10. Castillo Armas supporters in Guatemala reported growing "disillusioned":
Ca0
now nign puune umee.
Leaders of the Committee of Anti-Communist
University Students threatened on 10 August
to withdraw their group's support from junta
president Castillo ArmaE.
They claim that many known Communists still
Castillo is still a public hero, but his followers
reportedly are "rapidly becoming disillusioned" because of his failure
to satisfy them on the Communist question.
Comment: Although government efforts to
apprehend top Communist leaders have thus far failed, the overt
Communist organization has collapsed and no Communist or pro-Commu-
nist is known to be currently holding public office. Many of Castillo's
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followers, however, were subject to severe persecution under the
Arbenz regime, fought with the Army of Liberation, and now feel en-
titled to revenge and a place on the public payroll. Repudiation of
Castillo by the Committee of Anti-Communist students could have an
important effect on public opinion.
.Castillo is also running into trouble on the
labor front. On 11 August, the junta, in the name of anti-Communism,
dissolved four major unions. The result was a storm of protest from
anti-Communist labor elements and criticism of the junta for "sell-
ing out" to foreign capital.
11. Army pressure for ousting Brazilian president seen easing:
Meanwhile, the War Ministry announced
on 12 August that all army generals on duty in the Rio de Janeiro area
have reaffirmed their desire to investigate in an orderly fashion the
circumstances surrounding the attempted assassination of a prominent
antiatIministration newspaper publisher. The statement added, how-
ever, that they will remain prepared for any eventuality.
Comment: Any indecisiveness in the
ranks of the generals would increase Vargas' chances of weathering
the current crisis which was set off by the attempted assassination.
The final position of the military, however, will probably hinge to a
large extent on the validity of current rumors that close relatives of
the president were involved in the incident.
Even if Vargas survives this crisis, his
party can be expected to suffer heavily in the October congressional
elections--involving all seats in the lower house and two-thirds of
the Senate. It is also likely that the military will keep a closer eye
on his conduct of affairs.
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