WEEKLY SUMMARY #1

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A002000010001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 23
• Document Creation Date: December 27, 2016
• Document Release Date: February 19, 2013
• Sequence Number: 1
• Publication Date: May 21, 1948
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Copy No. 0
E WEEKLY SUMMARY
Number 1
21 MAY 1948
Document No. AO /
NO CHANGE in "E;;;77------""'"'
gDECTASSIF/I'D
CI4AT:D TO: TS
4 77
111:A
Date: 3/ By:
CENTRAL INTELLIGENCE AGENCY
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78:01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
71-0003
PRoi it
b'OB #
BOX #
FOLDER #
TOTAL # CIA LOCS,
1. This publication contains current intelligence exclusively
and therefore has not been coordinated with the intelli-
gence organizations of the departments of State, Army,
Navy, and Air Force. -
2. This copy may be either retained, or destroyed by burning
in accordance with applicable security regulations, or
returned to the Central Intelligence Agency.
WARNING
This document contains information affecting the na-
tional defense of the United States within the meaning
of the Espionage Act, 50 U.S.C., 31 and 32, as amended.
Its transmission or the revelation of its contents in any
manner to an unauthorized person is prohibited by law.
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
fl
Li
fl
fl
7
Li
7
LJ
711
fl
La
Li
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
a
cL
SECRET
In a week :narked otherwise by only slight changes in
the international situation, the most striking developments anincr
to be (1) tke recent indications that the Kremlin may have decided
upon a significant tactical shift in its relations with the US and
the West, (2) the outbreak of large-scale violence in Palestine
following the termination of the British mandate, and (3) the con-
tinned increase of opposition to Chiang Kal-shek in Nationnlist
China. ?
The USSR appears to have decided that present circum-
stances call for less aggressive tactics than those hitherto em-
ployed in purimit of its objectives (see page (3). In reaction to
recent Communist setbacks in Europe and the firm stand of the
US, the Kremlin apparently plans for the present to weaken the
US position by encouraging a friFie sense of security among
western peoples and to maneuver the US into bilateral negotia-
tions. There is no indication of z:ny modification in the Soviet
lo -range objectives, nor does the USSR appear ready at this _
point to mike any important concessions to the West. The USSR,
for example, was unwilling at the London discussions regarding
an Austrian treaty to give satisfactory assurances concerning
the maintenance' of Austria's 1937 frontiers or of Soviet willing-
ness to accept the principle. that Austria should not be requi:ed
to pay reparations. The four western powers concerned there-
fore agreed on 20 May to suspend the talks. The attitude of
Soviet and Satellite representatives in the field has in several
instances become more cooperative. (A notable exception is
the Soviet decision to deprive South Korea of power from
North Korea.) 7,'he tone of Soviet propaganda has been generally
less aggressive and most recently has became noticeably defen-
sive.
Following the termination of the UK mandate on 15 May,
forces from most of the Arab states moved into Palestine.
Arab forces so far have pushed into little of the territory given
the Jewish state under the partition plan. Their agvessiveneas,
- 1 -
SECRET
11
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7
?????
0
0
n .
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
however, indicates that they propose to occupy more than Arab
areas. The UN has so far taken no decisive action to end the
fighting. The possibility of a truce appears more remote in
the face of US recopition of Israel (see page 8).
Chiang_Kai-shek, whose National Government is
confronted with intensified Communist military activities and
growing economic deterioration, is himself faced with mounting
? opposition (see page 13). Chiang shows no dispositiort to cope
effectively either with China's problems or his own opposition.
His ultimate removal as head of the Government consequently
becomes increasingly probable. The Soviet-insilgated power
cut-off is expected to increase personal hardship in South Korea
but at least during the summer months is not likely to cripple
essential services or industries. The USSR may also decide
to shut off water supplies, thereby aggravating the power shor-
tage and curtailing farm output in the US Zone.
, Elsewhere, French public concern that German indus-
trial growth under the European recovery prOgram -may eventually
lead to secret German disarmament is complicating the efforts
of the Schuman Government to negotiate international agreements
on the control of the Ruhr (see page 4). Concurrently, anxiety
on the part of three British Commonwealth dominions concerning
the future of Japanese industry may create an issue between
themselves, the US, and the UK (see page 14). In Latin America,
certain of the Republics are showing increased concern over
Argentine rearmament (see page 16).
- 2 -
SECRET
?
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7
SECRET
ka
WESTERN EURCPE
1. UNITED XThIGDOl'il: 7ilimlementation of the Eu7sEsn recovm
proam and the Brussels "western union treaty are held by the
UK Foreign (Mice to be the !test traps of consolidztIng the West
at present. The 17orelr_ao Mice still believes that the ussa COCIS
not 21an to go to war at this time but will, go as near war as it
dares. The Bi-itisa therefore feel that the western governments
should continue tho.ir present policy of firmness nitot provoca-
tiOn. Foreign Secretary Bevin recently expressed the view that
what is required for stabilization of the international situation
is closer coeperation and ccrtsolidation of the western powers.
fiunria,?ditadi2n and unexpected rection of a final
draft of the US-Hungary air agreement may have impressed upon
western European countries the need for a unified aviation policy
vis-a-vis the Satellites. In keeping with Foreign Secretary
Bevin's view that closer cooperation between the western powers
may forestall future Soviet aggression, the British Ministry of
Civil Aviation has urged' that the US and the western Eukopeazi
countries adopt a common aviation policy toward the countries
In the Soviet sphere. The Air Ministry fears that without a co-
ordinated policy, the Belgians or Dutch may grant entry to
Satellite airlines withpvt securing fully reciprocal rights. This
would weaken air control of western Europe without strengthen-
ing operating rights in eastern Europe. The French are also
concerned over this possibility, and the Italians have sought
US guidance in their air negotiations with the eastern European
states.
TutieJac_c_oxesjunentrke_s_ c -
have obtained overwhelming (Indorsement at the annual conference
? of the Labor Party. Among the indications of future UK intentions
given by the discussion and the voting at the conference are these:
(1) Party leaders will slow down the pace of industrial nationali-
zations if the Labor Party is returned to power in the 1950 elec-
tions, but the decision whether or not to nationaliP:e iron and
steel during the present term appears not yet final; and (2) the
Governments cautious and &liberate step-by-step approach to
western European fedeeation will continue while it seeks at the
same time to expand intra-Ce mmonwealth connections. It also
became clear at the conferem.e that the influence of the Partys
extreme left-wing is at an all-time low.
SECRET
11
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
a
a
a
a
2. FRANCE: The Frenchman's concern that German industrial
growth under the European recovery program may eventual y
lead to secret German rearmament continues to plague the
Schuman Government. The hypersensitivity of the French
people on this subject makes it extremely difficult for the
?
Schuman Government to negotiate international agreements
on future control of the Ruhr. The French, as after World
War I, insist upon elimination of all possibilities for German
rearmament. Although French officials recognize that the
success of the European recovery program and French long-
term security depend upon economic rehabilitation of west-
ern Germany, they are reluctant to agree to any proposal
which may be interpreted by the French public as an encourage-
ment for German resurgence. This implicit contradiction be-
tween political survival of Schuman's Government and the long-
term welfare of the French nation has plagued Schuman's repre-
sentatives during the three-power talks in London. The? fear of
disastrous political reaction to any concessions on rebuilding
Germany caused the demand that the proposed International
Control Commission for the Ruhr be considerably strengthened.
The French probably will accept a compromise arrangement
undei which they will have an equal voice with the US and UK
in enforcing German disarmament and suppressing banned
industries in the Ruhr.
3. BELGIUM: Tjatts.9n......splidatior_242famtlen Eux_:2ffaivq..en_As
plans continues with the signing of the Belgium-Dutch military
pact. The pact does little more than formalize and extend the
cooperation and planning of the past year, but its timing indicates
a desire on the part of Belgium and the Netherlands to accelerate
the implementation of western European defense arrangements.
4. GERMANY: Reduction of industrial production tar ets for.
western Germany or the thir ? quarter may be cause by the
failure of Ruhr coal production to keep pace with German
4
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
incitstrial development under the European recovery prcgram.
Domestic coal requirements for that period of 1948 are esti-
mated at 17 million tam, with only 13.5 millions tons expected
to be available. Unless this discrepancy can be corrected,
coal allocation for the same period to essential inOntrfea
must be reduced 'inland allocations to general in.dizotry must
be reduced by 20%.
5. , SWEDEN: Norwad Denmarkpossibly could jolt Sweden,
out of Us policy of complete nzatrality by deciding to abanan
Scandinavian solidarity for open westward orientation. Be-
cause of Swedish superiority in military and industrial cam-
bilities, Sweden is in a strong position to bargain for the
solidarity of a neutral Scandinavian bloc. Conversely, the
weaker positions of Norway and Denmark and their enperience
with the failure of a neutrality policy during World War 11
cause those countries to consider close alignment with the
western European union, especially if such an alignment can
be backed by US military commitments. There is little
prospect that Sweden will abandon its neutrality policy until
after the general election in September and then only if Norway
and Denmark have "isolated" Sweden by moving "westward"
themselves.
- 5
SECRET
Fl
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
?
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
EASTERN EUROPE
I. USSR: The recent series of conciliatory gestures on the part
of the USSR, culminating in Molotov 's reply to mhassador
Smith and Stalin's letter to Wallace, suggest that the Kremlin
has been induced by Communist setbacks in Europe and an
Increasingly firm US stand to adopt a substantial shift in tac-
tics. The USSR now seems to be pursuing its objectives by
methods less aggressive than hitherto employed and apparen4y
Is determined to maneuver the US into direct bilateral nego-
tiations. This effort at present is being conducted largely
through propaganda but may later involve token concessions,
The fact that Stalin has lent his personal prestige to the effort
Indicates the importance which the Kremlin attaches to its
success.
The Soviet Union apparently considers that it will profit
whether such negotiations materialize or not. The Kremlin
presumably reasons that such a conference, if held, could be
used to obtain certain real advantages for the USSR or at least
delay realization of major western objectives by serving as a
medium for obstruction, confusion, and recrimination. On the
other hand, the Kremlin probably assumes that US rejection of
such a conference could afford the USSR a favorable opportunity
to proclaim itself the true and sole advocate of peace.
2. BULGARIA: bternational inoection of the Greek-Bulgarian border
along which the Bulgarians may be building fortifications, is still
being blocked by the Bulgarian Government and, indirectly, by the
USSR. The building of military installations would be a violation
of the Bulgarian peace treaty, the enforcement of which is the
joint responsibility of the US, the UK, and the Soviet Union. All
US and UK attempts to inspect the border have been blocked by
Soviet refusal to participate and by Bulgarian legal quibbles.
The possibility that the border might be sealed by international
troops seems, however, to cause the Bulgarian Foreign Ministry
considerable apprehension.
- 6 -
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
m
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
3. YUGOSLAVIA: Th9_, first ..a?or_mtas Yugoslav
Communist officials since the establishment of the Tit; regime
appears to be under way. The Minister of Finance and the Min-
ister of Light Industry, two long-time Communists and members
of the seven-man Yugoslav Polifouro, were recently dismissed
and reportedly have been placed under arrest and charged with
"diversionism." In Slovenia, the Assistant Minister of Light
Industry (federal) and the Secretary General of the Foreign
Ministry (Slovenia) were condemned to death after being tried
for espionage. The fact that top-ranking officials of the Min-
istries of Industry and Foreign Affairs alone were involved
suggests that one of the purposes of the current purge is to
meet Kremlin criticism of the Yugoslav Government's conduct
of foreign affairs and the domestic economy. Also,, Tito may
have been restricted in his choice of "scapegoats by the fact
that only these two members of the Politburo had no direct
connection with Moscow.
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
NEAR EAST-AYRICA
1. PALESTINE: US de facto recognition of Israel has made more
remote the chance of an Arab-Jewish truce. The Jews can be
expected to interpret US recognition as a guarantee of Israel's
independence and the diplomatic preface to US assistance in
materiel and possibly in troops. The Arab governments, al-
ready committed to the destruction of Zionism, may out of
desperation launch full-scale attacks before the Jews can reap
the benefits of outside military aid.
The aggressiveness of the Arab forces committed to
Invasion leads to the conclusion that they plan more than an
occupation of the Arab areas of Palestine. The 10,000 Egyptian
troops near the Palestine-Egyptian border (Some of which have
already entered Palestine) are probably sufficient to seal off
the whole of southern Palestine. Some of these troops together
with the volunteer Arab Liberation Army and the Arab Legion,
also are probably capable of blockading Jerusalem. The 8,000
'Iraqi, Syrian, and Lebanese troops, supported by additional
volunteers, will attempt to clear Galilee of the Jews. It is
too early to predict whether the Arab armies will attack the
Jews in their remaining corridor along the coast between
Tel Aviv and Haifa.
The outcome of these various campaigns will vitally
affect all the Arab states. The fortunes of the present Arab
governments are intimately interwoven with the fortunes of
their respective armies. The Arab armies 'are in Palestine
today because there would have been serious civil disturbances
In the Arab states if they had not been sent. So long as Israel
exists, they presumably cannot be withdrawn; and if they are,
defeated, the Arab governments will fall. The political up-
heavals wl7lch would almost certainly result from Arab mili-
tary defeats in Palestine would vitally affect US interests in
the Near East. Whatever power relationships develop from
the chaos, US political, educational, oil, and transportation
interests will be seriously jeopardized.
8
SECRET
111
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
0
0
0
0
0
0
so
SECRET
The Britis havin5 relinquished their mandate in
Palestine on 15 May, have subsequently withheld recognition
of the new Jewish state. The Arab Legiot, following British
ordars for its Withdrawal from Palestine, has re-entered
the country and gone into action against Jewish units. The
Lezion continues to operate under British officers. Except
to reaffirm that the UK will not abandon its treaty obligations
with the Arab states until the UN declares the Arabs aggressors,
the British have given no official clarification of their ultimate
Intentions.
It has been suggested that the British have agreed to
the occupation of the Arab areas of Palestine by Abdullah and
the establishment of a Jewish state in the Jewish areas.
The
British therefore will probably defer recognition of the state
of Israel until its permanent existence seems assured.
tThe jakasp....paimat .0a ly follow the Kremlinss lead
in recognizing the new Government of Israel and are likely to
, extend significant aid to the Jewish forces. A large number
of Balkan Jews are presently gathering at the Yugoslav port
of Dubrovnik where they await water transportation to Palestine.
Most of these Jews are presumed to be young men and a good
percentage Communi.st-trainad. They will probably bring
with them substantial quantities of guns and ammunition and
likely will serve as Hagana reinforcements. A portion, at
least,?of the military supplies which have been accumulated
for the guerrilla offensive int Greece will probably be diverted
to Palestine; major support of the Greek guerrillas may even
be withdrawn temporarily to permit maximum support for the
Jews.
- 9 -
SECRET
STAT ?
STAT
TAT
11
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
MILITARY SITUATION - 18 MAY 1948
PALESTINE
'Border of strongly-held Jewish area
--- Border of tenuously-held Jewish area
Arab troop concentration
Arab advance
r."=, Jewish advance
Partition Boundary las accepted by the United
Nations General Assembly, Nov, 19471
International Boundary
District Boundary
? Standard Gauge Railroad 14810
- Narrow Gauge Railroad 1350,9
First Class Road
- Second Class Road
Oil Pipe Line
- Intermittent Stream
Jewish Communal Area
En Nagura
Res en Napurs
zrniyas
,SYRIAN
FORcES
? 1
?-?
Rama
?Binva
GAL IL
20 30 Mites
10 20 30 Kilometers
HAIFA
Nehe
?
it 'Z';
djsh
HA
lttuialE w
is, so. Hustin
Natanya
Nur as
'"\Shams
TEL AVIV
JAFFA
AAA(
Rah's.
'
P4asmiya4
/---../ \ .-- ,
)
f ?A---' Solomon's
/ .-......,
f ER u
..--.' Beit Jib n._- Mar Etzion
--- `,
...)''' '-'"--..,
--'''
/
l
\ '
Njes6ne Pots
ARAB
?
80.E ?N
FO
?.
\
A ZN.
Souren.
1:S00.000. Geo. Philip end Sen. 1942
Moo Msg., 1:500,000. 1939
1:250.000. M.O.R. 1509/12375, 1946
Beersh
?
-e
34.3V
EGYPt IAN
FORCES
JEWISH
10981 Map Branch, CIA,4 -48
356
3530
U. S. GPO-S
STAT
STAT
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
Meanwhile the forces of the Arab states lost little
time alter 15 May in moving into Palestine. Egyptian troops
are advancing northward from Gaza and Beersheba after crossing
a section of south Palestine allocated to the Jews. The Transjor-
dan Arab Legion has advanced into the Arab areas of central
Palestine, while Iraqi forces have gained a foothold in the
Jewish Lake Tiberias sector. Syrian troops are also reported
to have crossed the Palestine border. The Jews have meanwhile
captured Acre and moved north along the coast to the Lebanese
border. Thus far the outstanding Arab-Jewish clashes have been
over the city of Jerusalem. The Transjordan Arab Legion has
already captured sizeable sectors of the city from Hagana forces,
and the Jews have been unable to reopen their supply road from
Tel Aviv.
The invasion of the newwo the Eyfl
forces and Israel s subsequent appeal to the Security Council
furnish the UN with an opportunity to advance new legal conten-
tions as a basis for action to end the fighting in Palestine. The
UN, however, appears frustrated by what it regards as US policy
shifts and bewildered regarding US motives; US prestige in the
UN has suffered accordingly. It appears unlikely, therefore, that
the UN will take any immediate decisive action. The cease-fire
proposal introduced by the US on 18 May is at present receiving
active support only from the Soviet and Ukrainian representatives.
and lacks sufficient support to be passed. The Security Council,
however, has accepted the US proposal to send questionnaires
to the provisional Jewish government, the Arab Higher Committee,
and the heads of governments in the Arab League. The resolution
stipulates that replies shall be received by noon of 21 May.
2. GREECE: Thp_unautaled reaction of the guerriliq to the
current Greek Army offensive leaves guerrilla intentions for.
the near future obscure. Although the guerrillas have continued
to make scattered foraging and terrorist attacks throughout
Greece, they have failed to strike in such a way as to keep the
Greek Arnay from effectively concentrating. Instead, the guer-
rillas have generally withdrawn north and west toward the
Gran-Amos area (where strong defensive positions are apparently
in preparation). These tactics can scarcely be the result of the
- 10 -
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
recently reported disagreement among Communist leaders inas-
much as there has been insufficient time for the dissension to
make itself felt on the operational level. Moreover, the guer-
rillas have plenty of arms and ammunition. The most likely
? explanation is that for the first time Markos is faced with a
manpower shortage and thus has found it advisable to withdraw
to more advantageous territory near the northern borders..
3. INDIA: Increasing tension betweenIndia anciladerabad sumests
the possibility that India may have decided to let the Kashmir ?
question slide while it forces Hyderabad into the Union of India,. .
Hyderabad's refusal to accede to India is backed by atandstilI"
agreement signed by the two governments, but India is now re-
ported to have issued an ultimatum to the Nizam of Hyderabad
implying that Indian troops will occupy his territory if he does
not check border raids by 24 May. (These raids, for the most
part; have been made in retaliation for similar raids instigated
by India's ruling Congress Party.) The Indian Army is believed
capable of occupying Hyderabad Without effective opposition.
The great danger is that the ensuing communal rioting might
spread, starting a disastrous cycle of retaliation throughout
the subcontinent. A seconda:ry danger is that forcible overthrow
of the Nizam's government might enable the Communists (who
are strong in southern India) to gain control of the state.
TkeAaAt_mit,.,cjl?p2tpn.2.LsmL_Ise, with the
Security Council proposals still rejected by both sides. Despite
bellicose activities on the part of both dominions, neither govern-
ment is believed to want war, and a compromise may yet be
possible. The US is _urging that the Security Councils Kashmir
Commission proceed to In.dia without delay.
4. IRAN: Tjie_mtk.tl situior in ir is confused as the struggle
for power between the Shah and former Prime Minister Qavam
continues. Although Qavam is reportedly planning an extended
-rest on his country estate and therefore may not immediately
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
1
I
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
make a definitive bid for power, his political strength seems to
be increasing. While he is aligning support in the Majlis, the
Shah is attempting to increase his own control over the govern-
ment. Although Qavam reportedly declared in a recent talk with
the Shah that, if he were returned to office, he would implement
any legislative program which the Shah might draw up, lasting
cooperation between the two men can hardly be expected because
of strong personal and political differences. Despite the Shales
opposition, however, Qavam would probably be swept into office
if a crisis should develop in Iran's domestic or foreign affairs.
5. SOUTH AFRICA: aimjjail WarAgautE is virtually certain
to win the South African general elections on 26 May. The
size of his majority will have importance in the future, however,
because it will determine the degree to which the completely
isolationist opposition will be able to alter the present pro-
Commonwealth policy of Smuts following the 78-year-old
leader's retirement.
-12 -
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7
SECRET
1
FAR EAST
I. CHINA: Internalssmatti2a19C ek is clearlysm-Au
In strength. Demands for new leadership in Nationalist China are
increasing. This trend is now accelerated both by Chiang 's failure
to deal effectively with the continuing military, economic; and pol-
itical crisis and by his do-nothing attitude on internal reform.
The Generalissimo seems-to lack both the ability and the will to
take any steps which will relieve Chinas problems or stop the
tide of popular opposition. There is little prospect that he will -
give his Government a more liberal conipleaion. Instead, he is
? trying to blanket the opposition by retaining in top positions poli-
tical figures he has relied on in the past; despite their ineffectve
recOrds. Meanwhile; General Li Tsung-jen, the new vice presi-
? dent, is drawing up his own reform program to present to Chiang.
If Chiang turns it down, Li reportedly intends to push Chiang
aside and take over the actual leadership of the Government.
Another opposition group, Marshal Li Chi-shen's Rev-
olutionary Committee in Hong Kong, is admittedly plotting to
overthrow Chiang and negotiate a peace with the Communists.
This group reasons that stability can be achieved and Commu-
nism checked only under conditions of peace and that any National
Government which ends civil strife can be assured of wide popular
support. If, as seems possible, these two groups combine forces,
they may be able to force Chiang out. Chiang's departure would
clear the way for the formation of a new National Government
.under progressive leadership, bit it is doubtful whether such a
government could muster sufficient strength to check-the ad-
vance of Communism in China. The immediate effect of such a
change in the National Government would be to accelerate present
disintegration and thus favor the Communists,
2., KOREA: The Soviet action in shutting off North Korean power to
South Korea will not immediately produce chaotic economirFon-
ditions in the US Zone, but it has already made living conditions
more difficult for South Koreans. ,Unless there is a summer
drought, essential services and industrial production prObably
SECRET
1
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
a
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
?1
SECRET
can be maintained through August by severe rationing, careful
use of existing coal stocks, and certain imports of coal. Present
estimates are that such a program will produce 60% of South
Korea's. power needs in June and 80-90% in July and August.
These figures are based, however, on the assumption that the
largest power-producing plant in South Korea, a hydroelectric
plant, will still get its water from North Korea. It remains to
be seen whether the USSR will cut off the water as well. The
USSR obviously will follow the course which it considerE most
likely to force a US withdrawal and facilitate assimilation of
South Korea. The USSR might even decide to restore the power,
and as a propaganda gambit have the North Koreans tell the
South Koreans that the cut-off was directed only against the
US occupation authorities and thus aimed to better, not worsen,
the plight of their fellow countrymen.
3. PHILIPPINES: The Quirino Government is reversing the
policy of pacification by force which the Roxa,s regime adopted
in its attempts to solve the trying problem of restoring law
and order in the Philippines. In a dramatic effort to gain pres-
tige and power, the new regime is attempting to win over the
two major dissident groups (the Hukbalahap and the National
Peasants' Union) which have been engaged in widespread vio-
lence. Roxas finally outlawed both groups. Quirino, however,
Is attempting to negotiate the surrender of Hukbalahap leaders
and their followers and has reportedly prepared. a, amnesty
proclamation acceptable to the Congress. Difficulties may
still arise over the surrender or the amnesty proclama-
tion. A surrender which sharply reduces the firearms in
dissident bands and a reasonable amnesty obviously would
contribute greatly to domestic stability.
4. JAPAN: Anxiety_oyez_Lks_fult 2fa...1.:riese industry on the
part of Australia, Canada, and New Zealand may create an
issue between the US, the UK, and the dominions. The
- 14 -
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
a
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
AustralIan and Canadian Governments have expressed the "ear
that Japanese industry may be permitted to recover to a
degree that will make it potentially able to support aggression.
The UK has already begun talks with Australia on the question
and would undoubteray try to mediate ths conaicting views
which would result from the adoption of a "strong Japan"
policy by the US and demands from the dominions for a re-
stricted Japanese industry.
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
M -
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
?1
1
SECRET
ViS`ArERN ELPVIMPIIERI3
1. ARC-171-721NA: Certain Latin American countries especially
Iia expreseed alarm concerning the possibilitythat
a US-1,krgentine agreement might tiisturb the triance of power
in Eolith America. A IlrarAlian military leader has warned
the US that Argent:Lin is lrying to separate the interests of
North and South America, and Uruguay has constantly eagwessed
its apprehension concerning the Argentine policy of political
'expansionism through economic penetration. Uruguay has re-
esaixIdly requested US political and economic support in order
to keep from "following Paraguay and Bolivia into the Argentine
orbit," although the present Paraguayan Government (which has
also sought closer economic and military ties with the US) sup-
ports its request for aid by expressing fear of Argentine inten-
tions. Chile, whose economy-would be endangered by large
armament expenditures, has requested assurance that the US
contemplates no special arrangement for supplying Argentina
with military equipment and arms production facilities.
2. COLOMBIA: The state of siege declared in Colombia following
the Bogota riots al April has comp??theColomian Gov-
ernment to reorganize the disloyal and inefficient national police
force. Although the army and navy have assumed police duties,
the governmental role of compulsory arbitration is proving
difficult and the ccatinuation of abnormal controls on civil
liberties in Colombia may result in widespread discontent. In
an effort to stem mounting labor agitation, the Government has
ordered a wage freeze .zniqi has imposed restrictions on labor
meetings and on the requirements for and participation in labor
meeting panels. Meairshile, the Ministry of Labor is attempting
to halt the strikes already in progress and has outlawed further
strikes during the state of siege.
3. NICARAGUA: .Asliz?o, may now ow butokting,
a land,?sea, and air operation (similar to last summer's ill-fated
Dominican invasion atterrIpt) against the existing regime in
- 16--
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
n
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
fl
Li
fl
LJ
Li
fl
Li
Li
Li
Li
L-0
Li
Li
Li
fl
Li
fl
Li
Li
fl
SECRET
Li SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
SECRET
influence is weak. rite Government laas also attenvtec2, nu-
staecoosfully, to ft General Lara Alba, Chic.4 o staff, to
the poet of rnilitaw attache in Santiago, Chile; and -has more.
recently suggezted hici retirement in, an effort to remove a
presence which the authoritiez ecaskier 4elight prove disrup-
tive within the army, theyeby playing into t1'7.9 110.1ktb o2 sub-
versive slements and contributing to the further instability
of the GM-ET:Meat.
-
0
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Fl
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
,51tUltitttl
-0
D'3RI2UTION
i Ti1,2 President ?
2 Secret.ry of State
ce Stan to Commander tn ChM
C:Jerettry ol Dz.,fmne
3 j'etrotary of the Army
G Eearotnry a tke Vavy
7 Sccs'ory of the Air Force
3 L'Intirrr,m, National Security Ileccarees Beard
0.171z.ser,ave Seeretary, National Security Ccruncil
ticatet.lot Secretary of Miry for Air
nliscillsi cf Staff, U.S.Army
rAt 0CY:2 cr. Na.rAl Oporationz ,
I,70,10Chlof of Staff, U.S. Air Force ,
20 Director of Plans and Operations, General Staff, U.S.Army
21 Deputy Chief of Staff (Operations) U.S.Air Force
22 Deraty Chief of Naval Operations (Operations)
23 Director of Pbns and Operations, U.S.Air Force
24,26,263pecial Assistant to Secretary of Statelliesearch E., Intelligence
27,28,29Director of Intelligence, General Staff, U.S.Army
30,31,32Chief of Naval Intelligence ,
33,3,C,S6Director of Intelligence, U.S.Air Force
36,27 Director of Security and Intelligence,Atornic Energy Comm.
Sa Ezecutive Secretary, Military Liaison Committee,
, Atomic Energy Commission
39,1.0,41).
42.63 .5Chief, Acquisition & Distribution Division, OICD,Dept.State
4.a4 Director, Federal Bureau of Investigation
45,41t.3,47Socretary, Joint Chiefs of Staff
48,49 'ExecutivelSecretariat, Office of the Secretary of State
50 Ilzputy Director, Joint Intelligence Group, Joint Staff
51, 3ecre1at7, joint Intelligence Group, Joint Staff
53 U.S. Air Force Representative on Joint Strategic Survey Committe
64,65 Secretary, State-Army-Navy-Air Coordinating Committee
CR
?
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7
PH
I
I ,
I ,
II
U. S. GOVERNMENT PRINTING OFFICE
GAO
Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ;