CURRENT INTELLIGENCE BULLETIN - 1954/06/27

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03001371
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 6
• Document Creation Date: August 20, 2019
• Document Release Date: August 30, 2019
• Publication Date: June 27, 1954

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27 June 1954
Copy No.
CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. 2.9 7'
NO CHANGE IN CLASS. r
r:1 DECLASSIFIED
CLASS. CHANGED TO: TS S
NEXT REVIEW DATE: i�C /0
AUTH: HR 70-2
- DATE: 8.11451.0..., REVIEWER:
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
E /
3.5(c)
3.3(h)(2) or
/4/
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SUMMARY
SOUTHEAST ASIA
I. Bao Dai extends authority of quasi-gangster group (page 3).
2. Two Wet Minh divisions alleged alerted for possible move
against delta (page 3).
WESTERN EUROPE
3. Widening American-British rift over trade controls foreseen
(page 4).
LATIN AMERICA
4. Demoralization reported in Guatemalan government and army
(page 5).
LATE ITEM
5. Guatemalan Army takes over Government from Arbenz
(page 6).
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SOUTHEAST ASIA
1. Bao Dai extends authority of quasi-gangster group:
An examination of Bao Dal's recently
published decrees of 30 May on municipal
reorganization in Vietnam reveals that the
underworld Binh Xuyen organization al-
ready in control of the national police, has been given a tight grip on
the administration of the major urban centers of Vietnam, according
to the American charg�n Saigon.
The net effect of these decrees is to vitiate
the so-called "full powers" which Bao Dai is reported to have given
his premier-designate, Ngo Dinh Diem. The honest but naive Diem,
the charg�tates, will be helpless against corruption which he cannot
touch, since the Binh Xuyen will be beyond his control. He suggests
that Bao Daits motive may have been the familiar one of discrediting
the prime minister in order to demonstrate his own indispensability.
Comment: Bao Daiis authorization for
overt manipulation by the Binh Xuyen of all municipal affairs is cer-
tain to further the disillusionment and embitterment of capable Viet-
namese whose support the Vietnamese regime so sorely needs.
2. Two Viet Minh divisions alleged alerted for possible move against
delta:
The American army attach�n Saigon states
the French have information from what they
term a very poor source that the Viet Minh
308th and 312th Divisions, located to the
north and west of the Tonkin delta perimeter,
have been alerted for a possible move against the delta.
The attach�lso reports that "important"
Chinese aid is now entering Tonkin, according to the French, and
border depots are at a high level. In addition to the shipments of re-
coilless guns and rocket launchers previously reported, recent aid
has included mortar ammunition in quantities termed "enormous."
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Comment: While the Viet Minh battle
corps' capability to mount attacks on the delta with virtually no
notice is generally accepted, elements of its 304th Division appear
to be the only units being introduced into the delta. The major rea-
son for committing the battle corps at this time would be to threaten
the French expeditionary force, thereby hastening French capitulation
at Geneva. The delta, except for the Haiphong beachhead, may well
fall into Viet Minh hands within a relatively short period through a
process of piecemeal strangulation abetted by French withdrawals.
WESTERN EUROPE
3. Widening American-British rift over trade controls foreseen:
Ambassador Hughes in Paris concludes
from the negative results of the American-
British-French strategic controls review
of the past week that "we seem to be head-
ing for failure at the 8-9 July Consultative Group meeting.' He
comments that, regardless of how such failure may be glossed over,
the British-American rift will have a "demoralizing impact" on the
COCOM working level, already shaken by its own inability to reach
agreement in the important fields of shipping and transit trade con-
trols. ,
.The British delegates have revealed
privately to the American delegation that, in view of the rigidity
of the United States position, the full flexibility of their own instruc-
tions had been nowhere near disclosed. London had finally instructed
them in effect to discontinue the review. The American delegation
reports its position was received with some bitterness by the British,
though with sympathy by the French.
Comment: The United States delegation
reported on 23 June that the British had entered the talks on 21 June
with confidence that Washington wished to negotiate a "package" set-
tlement, but had reacted sharply against the American "freeze" on
further relaxation of trade controls.
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LATIN AMERICA
4. Demoralization reported in Guatemalan government and army:
Foreign Minister Tortello and other
government officials were reported on
24 June by businessmen in Guatemala
City to be losing confidence in the govern-
ment's ability to defeat Castillo Armas.
In contrast to their previous attitudes,
they were showing fear and nervousness.
Colonel Carlos Aldana Sandoval, minister
of communications, spoke despairingly of
the situation
He said the government was
rapidly disintegrating into mutually hostile
factions, each attempting to absolve itself before the government
collapsed. The American embassy comments that Aldana is not
among Arbenz' close advisers, may be embittered, and obviously
fears designs on his life from both Communists and anti-Communists.
Guatemalan army officers are reported by
other sources to be "slowly realizing" the extreme gravity of the
situation and are becoming convinced that getting rids of Ptesident.
Arbenz and the Communists would be "an easy way out." A group of
high-ranking officers are said to be waiting orders from their unidenti-
fied leader to oust Arbenz. The American air and army attaches in
Guatemala report, however� they could see no evidence of defections
from the Guatemalan army up to 25 June, although reports of high-
level personal frictions are increasing.
Comment: Refusal of the United Nations
on 25 June to consider the Guatemalan appeal until the OAS makes
its own report will probably further weaken the confidence of govern-
ment and army leaders.
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LATE ITEM
5. Guatemalan Army takes over Government from Arbenz:
On 27 June pressure from Guatemalan
army leaders forced President Arbenz'
resignation and Chief of the Armed Forces
Colonel Carlos Enrique Diaz assumed con-
trol of the government.
�
During the afternoon of 27 June Colonel
Diaz requested two meetings with Ambassador Peurifoy. In the
first meeting, Diaz informed the ambassador that in order to
bring the fighting to an end he was prepared to take over the
presidency and clean out the Communists from the government.
He asked that the United States use its good offices to stop the
fighting. In the second meeting, Diaz informed the ambassador
that he had just told President Arbenz of the army's unanimous
desire for Arbenz' removal from office. Arbenz had replied
that he would not try to continue without army support. Diaz
gave his word of honor, at Arbenz' demand, not to enter into
negotiations with the rebel leader Castillo Armas.
In a ten minute radio speech that even-
ing, Arbenz announced 'the transfer of power. to :Diat. He
condemned the United Fruit Company and "U. S. ruling circles"
for unleashing the " cruel war against Guatemala" on the "pre-
text of Communism," but declared that "unless we do away
with our powerful enemies' pretext, Guatemala might be de-
stroyed." He promised, however, that under Colonel Diaz
"all social conquests will be kept" and asked "all democratic
political and popular" organizations to give Diaz their full
support. He then expressed the opinion that "the military
situation is not difficult, not at all," and that the "enemy,
commanding barbarous mercenaries, is incompetent, coward-
Following Arbenz on the radio, Diaz
appealed for popular support while assuring his Guatemalan
listeners that the "struggle against the invaders will continue
implacably" and that the "acquisitions of democracy" will be
maintained.
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