CURRENT INTELLIGENCE BULLETIN - 1954/06/11

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03001357
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 10
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: June 11, 1954

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CURRENT INTELLIGENCE BULLETIN
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DOCUMENT NO. 1:5.
g . NO CHANGE IN CLASS.
LI DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE: 20/0
MYTH: MR 70-2
DATE: --/-450, REVIEWER:
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I CENTRAL INTELLIGENCE AGENCY ///
Office of Current Intelligence
TOP SECRET
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SUMMARY
GENERAL
1. France offers to transfer Pondicherry to India (page 3).
2.
SOVIET UNION
3. Soviet bloc reported considering establishment of steel and
oil pool (page 4).
FAR EAST
4. American proposal on exchange rate likely to inflame Rhee (page 5
SOUTHEAST ASIA
5. French fear their build-up in Tonkin is insufficient (page 5).
6. French alleged planning to release misleading figures on
Indochina reinforcements (page 6).
NEAR EAST - AFRICA
7. Pro-British group reported plotting coup in Iran (page 7).
WESTERN EUROPE
8.
LATIN AMERICA
9. Argentine foreign minister expresses reservations on OAS
meeting (page 8).
10. Argentine government blames Communists for iabor strife (page 9).
11. Comment on Bogota disturbances (page 10).
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GENERAL
1. France offers to transfer Pondicherry to India
France is willing to withdraw completely
from _Pondicherry, its principal remaining
possession in India, four months after the
institution of an Indo-French condominium
an e ol mg of "some sort of pro forma vote," according to a
French embassy officer in New Delhi. He believes Nehru will ac-
cept the French offer, recognizing it is to India's advantage not to
continue strained relations with France over a long period.
2.
The official comments that the Portuguese
legation in New Delhi is increasingly disturbed by these developments
and is constantly urging the French not to succumb to Indian pressure.
Comment: It is unlikely that India will
accept any suggestion which entails even a pro forma vote or a tempo-
rary condominium which leaves control of the police in French hands.
Portugal is staunchly opposed to any sug-
gestion of compromise on its possessions in India, and holds that any
surrender of "national territory" would be unconstitutional and there-
fore not open to discussion or negotiation.
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SOVIET UNION
3. Soviet bloc reported considering establishment of steel and oil pool:
The Yugoslav ambassador in Moscow told
American officials on 7 June he has
learned that the Soviet bloc countries
discussed the possibility of organizing a
steel and oil pool along the lines of the Schuman Plan at a meeting
of the Council of Mutual Economic Assistance (CEMA) last March.
The ambassador saw in this an indication
of a Soviet attempt to organize economic relations with the Satellites
to give the appearance of greater equality, and to furnish a more
stable and enduring base for Soviet-Satellite relations.
Comment: A petroleum pool would be
little more than a showpiece, because the USSR already controls
almost all Satellite oil production and distribution. While a steel
pool would not result in equality it would have definite economic
advantages,since it would facilitate the standardization of metallurgi-
cal products and ultimately reduce production and maintenance costs,
negotiations between Czechoslovakia, Hungary, and
Poland on adopting "common standards for rolled material and
pipes," indicates that some planning along these lines has already
begun. Such co-ordination would be part of the announced purpose
of dovetailing the five-year plans of the Satellites with that of the USSR
beginning in 1956.
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FAR EAST
4. American proposal on exchange rate likely to inflame Rhee:
Ambassador Briggs is far from optimistic
over the probable outcome of the proposed
negotiations with President Rhee for a
change in the exchange rate from 180 to 300
hwan per dollar. He reports this is an issue capable of inflaming Rhee
probably more than any other except that of South Korean-Japanese
relations, and the United States can expect to encounter "angry, indig-
nant, and irrational opposition." He believes Rhee will once again
threaten to terminate hwan advances to the UN Command and forego
all further American aid.
Comment: Rhee argues that frequent changes
in the rate in the past have been a major cause of inflation, which he be-
lieves can be controlled )3y maintaining a permanent rate. This miscon-
ception delayed implementation of the economic aid program for several
months, and caused him to announce last December that the 180-to-one
rate was "unchangeable forever."
' The South Korean government is now engaging
in an excited press campaign to discredit the aid program and force the
removal of Economic Co-ordinator Wood. The aid program is only one
of several unsettled issues which Rhee is using to maintain constant
pressure on the United States in the hope of maintaining his bargaining
initiative.
SOUTHEAST ASIA
5. French fear their build-up in Tonkin is insufficient:
t e renc ig com-
mand feels its current build-up of mobile
strength to 11 or 12 mobile groups will not
be ufficient to stop the iet Minh battle corps and at the same time
prevent enemy forces within the delta from gaining control of Hanoi's
lines of communication.
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if Viet Minh troops can overwhelm the French strong point of Phu Ly,
in the southern delta, they should be able to advance rapidly toward
Hanoi and through the southeastern provinces. Although their tacti-
cal gain might be limited, the psychological effect on the populace
would be tremendous.
Comment:
Viet Minh activity in
the Phu Ly sector might be a diversion to distract attention from the
Vinh Yen-Phuc Yen region just north of Hanoi, where the
major action is more likely to occur.
6. French alleged planning to release misleading figures on Indochina
reinforcements:
A French briefing officer has indicated to
the American army attach�n Saigon that
there is a definite French plan to mislead
the press with respect to the strength of
the reinforcements from France. The
rie e a vise tache to disregard press references to reinforce-
ments, strength in the delta and French intentions as "deliberately
misleading." He believed the troops reaching Indochina from over-
seas would be comparatively few.
The attach�omments that if such a plan
exists, its purpose probably is to confuse the Viet Minh's estimate
of the Tonkin delta situation and to boost Vietnamese morale.
Reinforcements numbering about 10,000
troops have been scheduled to arrive in Indochina since the fall of
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Dien Bien Phu. Only about one third of these have arrived up to
now. A decision to send additional forces was to be made in Paris
after General Ely returned from Indochina late in May, but no re-
port of such a decision has been received thus far.
NEAR EAST - AFRICA
7. Pro-British group reported plotting coup in Iran:
A pro-British clique headed by
is informing the
Iranian public that the Zahedi government
is about to be replaced by an American-
sponsored military dictatorship with
as prime minister,
Comment: Intrigues aimed at undermin-
ing the Zahedi government iie been growing increasingly bold.
Conspirators have at various times claimed American sponsorship--
as the present group is doing--in order to make themselves more
acceptable to the Iranian public.
The current rumors in Tehran accusing
Zahedi's regime of corruption have apparently been accepted by the
shah as a basis for considering Zahedi's replacement. Nevertheless,
the shah has assured the American and British ambassadors he will
support Zahedi, at least until the oil negotiations are completed.
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8.
WESTERN EUROPE
LATIN AMERICA
9. Argentine foreign minister expresses reservations on OAS meeting:
Argentine foreign minister Remorino told
Ambassador Nufer on 8 June that "other
means of solution" should be exhausted
before calling an Organization of American
States meeting on the Guatemalan situation. If a meeting is called,
he said, it should be called under the OAS charter rather than under
the 1947 Inter-American Treaty of Reciprocal Assistance or the
Caracas anti-Communist resolution. He said Argentina's final posi-
tion will take account of the anti-intervention declaration also adopted
at Caracas.
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Rernorino disclaimed any knowledge of
President Peron's agreement on 1 rune to an OAS meeting on
Guatemala, but said Peron would "of course" not break his word.
� Comment: Remorino's statements do
not necessarily indicate a reversal of Peron's earlier expression
of support for an OAS meeting, but may foreshadow new difficulties
on tactics and timing.
10. Argentine -government blames Communists for labor strife:
The Argentine government is publicly
charging that Communists provoked the
recent labor disturbances in the metal-
lurgical industry which resulted in
several ea s. e press has headlined the accusation and pub-
lished the text of a Communist directive on strike strategy.
Ambassador Nufer sees this development
as further evidence of President Peron's growing concern with
Communist infiltration. Previously the government tended to blame
any internal strife on "capitalist imperialism."
Comment: The government has been
reported increasingly concerned over stepped-up Communist agita-
tion to exploit labor unrest and to complicate current wage negotia-
tions in various industries.
The controlled press is also denouncing
the WFTU as a Moscow weapon and commenting on Communist
objectives in Latin America.
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These developments may bring the Commu-
nist threat into sharper focus for the Argentines.
11. Comment on Bogota disturbances:
Reports from Bogota indicate the student
rioting which began there on 8 June has been
brought under control but tension remains
high.
The cause of the disturbances is not known.
A government spokesman has blamed anti-,
regime elements including the Communists.
There are indications the rioting was prolonged, if not provoked, by
the archconservative followers of ousted president Laureano Gomez.
The government is apparently exerting
every effort to bring the capital back to normal before the sched-
uled celebrations on the anniversary of President Rojas' bloodless
coup of 13 June 1953. Continued disorders could interfere with con-
vocation this month of the constituent assembly, which has generally
been expected to elect Rojas for a full four-year term. Should the
political tension sparked by the rioting continue for long, Colombia's
recovery from the four-year civil war which ended only last fall
would be seriously jeopardized.
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