CURRENT INTELLIGENCE BULLETIN - 1952/08/26

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 05973600
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 10
• Document Creation Date: June 6, 2019
• Document Release Date: June 27, 2019
• Publication Date: August 26, 1952

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SECURITY FORMATION
26 August 1952
Copy NO.57
CURRENT INTELLIGENCE BULLETIN
� DOCUMENT NO 3
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Office of Current IntelligenVietT REVIEW DATE: cklo 7
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CENTRAL INTELLIGENCE AGENCY
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SUMMARY
GENERAL
1. Chiang Kai-shek's views of current Sino-Soviet talks (page 3).
2. New Sino-Soviet trade procedure brings difficulties (page 3).
FAR EAST
3. French official presses for tripartite declaration on Southeast
Asia (page 4).
4. French display lack of agressiveness in Indochina (page 5).
5. Letourneau opposes Philippine attempts to convene a Pacific
defense conference (page 5).
SOUTH ASIA.
6. USSR protests foreign exploitation of Afghan-oil (page 6).
NEAR EAST - AFRICA
7.
8,
9. Libya may demand double compensation from US for air base
(Page 8).
WESTERN EUROPE
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10. Comment on Soviet note on Germany (page 8).
11. Italian demands for Western pressure on Tito increase (page 9).
12. Dutch reassured on NATO defense plans (page 10).
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GENERAL
1. Chiang Kai-shek's views of current Sino-Soviet talks:
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Chiang Kai-shek has told an American Em-
bassy official in Taipei that he believes the
purpose of the present Sino-Soviet confer-
ence in Moscow is to plan a new Communist
"peace offensive" in the Far East and the pooling of economic resources
with a view to integrating the Chinese economy with the new Soviet
five-year plan.
He believes that discussions of military
strategy will be the least important aspect of the conference.
Comment: Any announced Sino-Soviet
agreements are likely to be exploited in the Communist "peace offen-
sive" in Asia which has been under way for several months and is to
culminate in the Pacific "peace" conference in Peiping in September.
The talks are expected to provide both for
increased Soviet economic and military aid to Communist China and
further integration of the Soviet and Chinese economies.
2. New Sino-Soviet trade procedure brings difficulties:
Chinese import organizations refused to
pay about one-fifth of the Soviet bills pre-
sented during June 1952,
Among the reasons given for nonpayment were that the contract was
unknown or that the goods differed from the contract in price and
specifications.
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The Soviet export organizations retaliated
with threats to stop shipments and, in one case, to appeal to the
Soviet State Arbitration Commission for "compulsory penalty."
Comment: On 1 May 1952 the USSR and
China adopted a new trade accounting procedure which replaced the
international letters of credit formerly used. This "inkasso"
system was already in use between the USSR and its European
Satellites and in internal Soviet trade. Apparently most Chinese
refusals to pay in June were caused by unfamiliarity with the new
system.
FAR EAST
3. French official presses for tripartite declaration on Southeast Asia:
A high French official in Saigon has again
approached Ambassador Heath to urge a
reply to a French suggestion for an Anglo-
American-French declaration of a commu-
nity of aims in Southeast Asia. He pointed out the likelihood of a
new Communist peace offensive after the present Moscow meeting
or the September Peace Conference in Peiping and emphasized the
need for immediate counterpropaganda.
Heath approves the French proposal pri-
marily as a vehicle for warning Peiping against aggression in
Southeast Asia. He warns, however, that American adherence to
any joint pronouncement would commit the United States far more
deeply to French and British policies in Southeast Asia than heretofore.
Comment: The French have proposed a
tripartite declaration expressing concern for the independence of
Southeast Asian countries and a desire to aid them economically.
They wish to include only a vague commitment of assistance in case
of an attack.
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4. French display lack of agressiveness in Indochina:
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Ambassador Heath, apparently referring to
a report that Paris is reluctant to endorse
General Salan's plans for airborne operations
in Indochina this fall, has expressed aston-
ishment at the French lack of a sense of urgency, or even of interest,
in developing an offensive in Indochina.
He believes that if "vague future claims" on
available aircraft are allowed to take precedence over combat needs
in Indochina, it will be difficult to justify to the American public the
scale and priority of American material aid to Indochina.
Comment: General Salan's plans for carry-
ing the offensive to the Viet Minh by dropping airborne battalions
behind enemy lines necessitate the loan, from France or the United
States, of a large number of transport aircraft.
Although such an operation would be an im-
portant step away from what has seemed a defensive psychology on
the part of the French, the project's practicality is open to question,
in view of the Viet Minh's usual avoidance of open combat and its abili-
ty at dispersal.
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5. Letourneau opposes Philippine attempts to convene a Pacific defense
conference:
reports that
the Philippines is attempting to convoke a
meeting of Pacific countries which have alli-
ances with the United States. He fears that these reports will create
the impression in Vietnam that the American defense line in the Far
East extends only to Japan, Formosa, and the Philippines. Such an
impression, he emphasizes, would provide the Viet Minh with a signifi-
cant propaganda advantage.
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Comment: President Quirino has recently
suggested a conference of Pacific nations allied with the United States
in order to undercut charges by opposition leaders that the recent
ANZUS meeting in Honolulu proved that the United States intends to
defend only white countries in the Pacific.
SOUTH ASIA
6. USSR protests foreign exploitation of Afghan oil:
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Comment: For some time the Soviet Union
has attempted to persuade Afghanistan to abandon its efforts to enlist
foreign assistance in exploiting its oil resources. Last spring, however,
the Soviet Ambassador assured an Afghan official that the USSR would
have no objections to Afghanistan's development of these resources.
It has long been a Soviet aim to prevent the
growth of Western influence in northern Afghanistan. The current
indecision of the Afghan Government might indefinitely postpone oil
negotiations.
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9. Libya may demand double compensation from US for air base:
The Libyan Government will soon request
the United States for an annual payment of
$2,000,000 for use of the Wheelus Air Base
instead of the $1,000,000 previously agreed
upon. American Minister Villard believes that the Libyan demand
will carry with it the suggestion that ratification of the base agree-
ment will be impossible without the increased compensation.
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Villard believes that Prime Minister
Muntasser has delayed submitting the base agreement to Parliament
because of Libyan indecision on how much additional compensation to
demand. He suspects that the new demands may be due to British
influence rather than to Libyan initiative.
Comment: British influence has long been
strong in Libya; there is no evidence, however, that any new Libyan
demand would be due to British pressure. Libyan officials have
previously indicated their desire to capitalize on the country's stra-
tegic position.
WESTERN EUROPE
10. Comment on Soviet note on Germany:
The Soviet note of 24 August reveals no
basic change in the Kremlin's policy toward Germany and caters to
German nationalism in condemning the "special rights" given to the
Western powers by the Bonn agreement. For the first time in the
series of notes, the proposal is made that parliamentary groups from
both East and West Germany investigate electoral conditions.
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The delivery of the note shortly before the
opening of the Bundestag on 4 September suggests that it is timed to
delay ratification of the contractual agreement.. This aim will be
served also by the proposal to hold the four-power meeting no later
than October.
The USSR can make no substantial conces-
sions to advance its aims in all of Germany without threatening its
control of East Germany and its program of sovietization. It realizes
that its proposals will be unacceptable to the West, but hopes to place
the onus for refusal to confer upon the West.
The lure of unity may cause some West
Germans to press for talks now, but Chancellor Adenauer will prob-
ably be able to override any political pressure on this subject.
11. Italian demands for Western pressure on Tito increase:
The Italian Political Adviser in Trieste
believes that Premier de Gasperi's
Christian Democratic Party will be "in
a most difficult situation" if it does not
obtain an acceptable solution of the Trieste
issue before the 1953 national elections. He said that such a solu-
tion can be reached only if the Western powers put strong pressure
on Tito by threatening to withhold military and economic aid.
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The Italian official stated that for a solution to
be acceptable to the Italian public, Italy must get the entire coast
of Zone B, but that four inland villages in that zone might be
conceded to Yugoslavia. He added that his country's claims to
Dalmatia and that part of Istria outside of Zone BI involved "long-term
problems" which could be settled only after the defeat of the USSR and
Yugoslavia in a third world war.
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Comment: Although the Italian Government
recently indicated to the United States its willingness to reach a com-
promise solution of the Trieste issue, its declining popularity at home
and its need for regaining public support is leading it into a course
which may seriously prejudice British-American attempts to obtain
a solution of the issue.
12. Dutch reassured on NATO defense plans:
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The Dutch Acting Defense Minister has stated
that General Ridgway's letter of 14 August
to the Netherlands Chief of Staff has convinced
the Dutch of the determination of Generals
Ridgway and Juin to defend the Netherlands in case of hostilities.
The Dutch Minister admitted that speculation
among Dutch officials and in the press that the allies would withdraw
from the Netherlands under pressure, had had an "unhelpful" effect on
both the Netherlands and NATCt.
Comment: The Dutch, who have suspected
that the French defense concept was based on withdrawal from large
parts of the Low Countries, had begun to believe that NATO air-base
concentrations did not protect the Netherlands adequately. The Dutch press
had been speculating on discord between France and other NATO
countries over defense of the Elbe as against the Rhine.
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