WEEKLY SUMMARY NUMBER 36

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Document Number (FOIA) /ESDN (CREST): 
CIA-RDP78-01617A002100150001-1
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RIPPUB
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S
Document Page Count: 
20
Document Creation Date: 
December 23, 2016
Document Release Date: 
April 25, 2013
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1
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Publication Date: 
February 4, 1949
Content Type: 
REPORT
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~- ,, Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 WEEKLY SUMMARY a i Number 3 ~? ~~ 4 FED ?~4~ i i i Document No. NO CHt~NGE in Class. DECJASSI~'?ED Class. C:3A~VG.cD T0: TS g C DDA R2emo, a Apr 77 Auth: D"A zG. 77 1763 Date: ~"~ BY: Of/ CENTRAL. INTELLIGENCE AGENCY Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 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. 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. i Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 t t Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 sECRET C O N T E N T S Page HIGHLIGHTS ............. ~ .......... 1 WESTERN EUROPE ,,,,,,,,,,,,,,,o, 2 EASTERN EUROPE ,,,,,,,,,,,,,,,,, 4 NEAR EAST -AFRICA .............. 8 FAR EAST ..........................10 'WESTERAT $EMI3PHERE............14 SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ^ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 1 H I G H L I G H T S The Soviet propa~. "peace offensive" was sharply intensified during the past week by Premier Stalin's oblique proposal in press interviews that President Truman meet him in eastern Europe for peace talks to end the cold war. The timing od the Stalin interviews appareatly es- - presses the Kremlin's grave and increasing anxiety over the progress made by the westera powers in defensive planning and ecoanomic recovery for western Europe; the intent of the interviews was to create confusion and dis - unity among the western powers (see page ~4). Although it is clear that the Kremlin would welcoffie a Truman- Stalin meeting oa Soviet terms, there is mmo evidence that Soviet policy torevard the West has changed or that Soviet efforts to e~.nd world Commu~aism have relaxed. The current deadlock to the Israeli-Egyptian negotiations at Rhodes provides fresh evidence of the serious and fundamental difficulties which still obstruct a settlemeat in Palestine (see na.ge 8). Unless the pres- ent trend toward stalemate at the Rhodes Conference is reversed, a renewal of Arab-Israeli hostilities seems likely. Failure at Rhodes will also have an inhibiting effect upon further Israeli negotiations wath Traasiordan and Lebanon, which have been suspended during the Rhodes talks. SECRET SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ^ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 3ECR T 'tip' E S ~' ~~ l~. I~` ~ l7 l~ ~} ~ E I~ Trade ~ol~cy The ~'cYiii~g eC~E7CI0Il'l~i~'S Of ~~'F"~3.3FL~ 3P1a:3 ~~.~d.Il. ~~.*~d i.h~.~ resu3t~g increa,seci e;oraz~? riic~~ ~cyr woad ~xx~or#: inarl~e~:s are caus~~g serious ca&YCern to i~~e $rS?- ish Go?~era:xre:at, ~a~?adoxically, the British progr~s~ ftrr U~- te~nal reerover~y at~d sta.~lity, ~x~t!icii teas been Keyed. fe3 ~~:~pand- i?~g ex~soi~f:s, i:: threatened by tt~e re-er~~erf;a~nce as poteaziial export,~rs of 1~}iese tiro countries whose industrial restoration thr ~E has cor~~mitted itself to suppori:. ~Ivr:~y*s oaf pos~w~.r c;onC~Xn ~C ~ri~:i5a~ iu:~~ustrial olio?les, '~.h~s ris~g ~carnpetit~ion m~.y ce;m~~l ~~ie ~:; itish. Goverrarie~af: t o formu.lai:e an offacial policy desig,~ed to safeguard ~~ifiish ~,r~dustry~ `the GoE~erta- ment riay wds:i~ tQ l~a.ve lf~gftiiz~nate eco~aorr.ic restract%ons ir~posc~d ova Gf?rrnan.y and japan, inc.ludi~-a su~tz measure^s as reran-subsicli~a.~:~nn of exports, a tan on du~rp#.ng, fair labor standards, anal :Cau~d f~s,ne;ial practipes. Taa additioia, ttae l~~?itish wi"1 1:e~3d ~o ~~~.erpret n~.A?ro~rly- the ~restern poarprs' agreement on g~rotluetion lixnita~txnr-s in cer~..at~. strai:egiL fie=lds, a,s ~-lney have a.I: early do;~e ire sl~ipbuilc~ing. faespite such r~stric;~.i~~e devices, however, the l:3ritash desire to expand t.lie tot~.l ~rorld ma.rkef sufficiently tea provice reasc~ta- ably a~~~sured wrutle4;s f?r all ex1--orters wall. preclude tike adoptic>n of a lzoliry which wou1~1 seriously retard the develop- ment c:f peacet iaxbn industry .ln Gerrnang a~td japan , GE~il~S~]~Y Inflaticmary P4~es~~ure Inflatioaaary pressures in west Ger- many t~Jil.i gain anew impetus if inc~.reased prices raecessary to elirninate the ope::ratine; losses of a anal, steel, ar~d triuisport~~tio~7 industries arse passed along to consumer products.. Sue h a developznez~t zs likely becawse the hard-pressed Laende~r g~over. nments cannot afford ?ror~ gresemt revenue to -2- SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 i Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET ~GrER1UtANY continue subsidies to cover industrial operating losses. The coal industry is in #inancial difficulty because 3??Jo of the mines are sub-marginal and machinery and equipment are obsolete. As a result, the Ruhr coal industry is operating at a loss of about 1 a million dollars a azonth and must be sustained by subsidies from the German government. In an effort to relieve the Bizone of this burden, AMG officials are urging_an increase in the export price of Ruhr coke and coal. France and the ]~enelux nations have already registered strenr!ous objections to any increase in prices. 13izonal authorities are ciao considering increases in the price of gas and electric power produced at the mines. The steel industry refuses to pay the increase in the price o? cope that went into effect in August 1948 unless it is permitted to increase its own prices accordingly. The railroads, operating at a loss of 10 million dollar s a month, have recently received a subsidy of 35 miuioa~ dollars in lieu of increased freight and passenger rates. This subsidy is in- sufficient, however, to pay for the heavy reconstruction program which will be necessary during 1949 to keep pace with. the expansion of industrial production projected under the European recovery program. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ? Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET EASTERN EUROPE Stalin's IntervieWS ~ The dramatic and unprecedented in- tensification of the current Soviet propaganda "peace offensive," as revealed by Stalin's action in proposing a meeting with President Truman, reflects the. grave and increasing anxiety ~ the Sremlin over the progress of western defensive planning and economic recovery in western Europe. 3fialin's inter - views also reveal the continued determi~tian of the Krem- lin to prevent the containment of the USSR by an increas - ingly strong western bloc. Atlantic Poet In its timing, Stalin's interview appears to have been motivated primarily by the rapid development of the Atlantic Pact and r~.~flects Soviet determination to pretreat, delay, or at least mini- mize the entire western defense effort. Soviet concern aver the Pact had already been ezpressea fn the Krem- lin's blunt note to Norway and in the recent Soviet "White Paper" on the Pact. Owing to the proxioQity of Norway, the USSR is unquestionably disturbed over possible Nor - wegian adherence to the Pact and, despite the peaceful tone of Stalin's pronouncements, can be ea>;pected to ia- tenaify its efforts to prevent Scandinavian participation in western defense plans. Although Soviet aggression is unlikely, the U35R will probably increase ifs pressure on the Scandinavian countries through propaganda, Com- munist Party activity, and possibly economic pressure. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ', Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 sECRET STF,LIi1T'S 1?RIr~S II"~TER`?I1E~~'S Insincerity By presenting his prop~isal ft~r a Truman-Stalin meeting tiiraugh tine press rather than through official channels, Stalin has not coann~itted the liSSR to any specific action and has been able to exploit the hope ~ the w?rld for peace. The insincerity c~ Stalin's propasal is re- vealed ~y his refusal. to n3eet I?resident Trunnan outside the Soviet orbit, which is actually an attempt t? create the im- pression that the +3'est must go t~; Staliaa. Although Stalinps health might i:eep hint from ma:~ing t:~e loam jcug?ney to ~.'ash- ington, it presumably would not prevent hian fg?orn going tc a, nearby country outside the Soviet or&~it. i~xoreover, if the Kremlin were sincere in its desire t?~ t~ieet the ~~~Test halfway, 8ta.lin would not have nnade his prcpi~sa; t?- ~e ljS alone. This approac~a was undoubtedly desigrneCl to crc~~.~te disunity among the western powers nand to aroaase the susg~icions cf the non-Cor~amunist world concernin the good faith and re- liability of tEie i1~`. No l:'c;licy Cina~,nge Although the Kremlin would welcon3e a Truman-Stalin aneeting cn Soviet terms, Stalin's recent stateanea~ts offer no evidence cf any . change in basic Soviet policy tc~ard the i~'est or of any re- laxation c? Soviet effUrts toward the eXpansic~n of world C ornanuanism. For example, Sta.lin's rerniarks concerning Germany, cc}upled with his failure to refer to the currency issue, reveal continued Soviet deterynination tc, prevent the estaJOlishment of a west German sta~~e. Stalin reiterated the Soviet deanand made during ttie neg~~tiations ~ last . August and ofFered no immediate prospect for the lifting of the Berlin 1~lockade. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET S~O~7' U13It.~N Foreign Trade The Soviet decision to participate in the current lnternationa.l Wheat Con#erence was probably prompted by the desire to perpetuate existing Soviet trade agreements with the nations of westera Europe. Grain-producing rations -- especially the US, Canada, and Argentina -- have large exportable surpluses of wheat. Thus, a.n international agreement undert~.ken vvit}:out Soviet pa.rtieipa- tion might havE led cei?tain western European zaations tc- shiFt their wheat pux~cba.ses from the USSRR to the western wheat Export- ing countries, ~erebq making more difficult the fulfillment of Soviet import requirements. The USull is undoubtedly eager to Peep its frade agreements with such countries as Belgium, A1orw~,y, Switzerland, and the rtetherlands, which are supplying the USSR with ships, diesel genetors, power equipment, tin, rubber, chemicals, drilling installations, industrial diamonds, tungsten, and other items in short supply in the Soviet orbit. The loss of these essential strategic imports would be a considerable blow to Soviet plans for expanding heavy industry and also would retard the development of the Soviet-Satellite war potential. East German Economy Soviet pIaa~s for orienting the east Gerxma.n economy toward the Soviet orbit economies were indicated a# the recent Socialist Unity Congress in Berlin which was attended by delegates from all countries in the Soviet bloc, excepting Finland and Yugo- slavia. Yn the ~seynote address for the Satellite cleiegations, Czechoslova.I~ I3eguty Premier Fierliuger exhorted the east Germans to co~~perate in establishing increased economic ties with the Soviet empire. Fierlinger added his convic- tion that political and economic developments in east Ger- many would inevitably lead to greater economic exchange with Czechosiava.kia. This emphasis upon the coordination SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ^ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET SOVIET UNION of the east German economy with the economfes ~ Poland and Czechoslovakia reflects the Kremlin's concern with both the deterioration ~ the east Germaa economy and the unsatisfactory rate of improvement in the Satellite econo- mies, especially that og Caechoslovakia. YUGQSLAVIA Dialectical Battle In the continuing dialectical battle be- tween Tito and $ialin, Tito now appears to have won the first round. In drawicg upon the works ad Mara to prove that Stalin, not Tito, is guilty of nationalism, Tito has uncovered the one notable disparity between Marxist theory and Soviet practice. Tito and his lieutenants have accused Stalin of abandoning the "Marxist principle of equality between small and great" and his leading theoreti- cian has asserted that Soviet Communism "unilateara.lly takes into consideration the duties... of other countries toward the Soviet Union and not the duties of the first country a? Social- ism (USSR) toward the proletariat off other countries and toward the new Socialist countries." These charges, which preceded the announcement that Bulgaria, Rumania, Hungary, and Poland had become "dictatorships of the proletariat," were shrewdly calculated to upset the Politburo and to strike at the right oaf the USSR to exploit its eastern European empire. In addition, the assertion of the Tito Communists that Yugoslavia alone of all the Socialist countries upholds Marxist-Leninist prin- ciples is obviously aimed at arousing discontent among sub- servient Satellite leaders. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ^ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET l+i I' A Ft E ~ ~ T - ~,. ~' .~. I C .F~ ~ALE~TII~TE ::Modes Impasse The current deadlocl~ at the Fhc~des ~ 4n- ference is iA tine familiar pattern ~ pre- vious efforts to bring peace to Palestine. ~~n th~?ee occasions during tie past year there has been a brief flareLp of hovti- lities, followed &~y a CN-decreed cease-?ir~e and Mien a fruitless e~Cfort by tt~e ~I~ to persuade the belligerents to compose their differences. The imsx~inent completion of this cycle for a fuurti: tune is indicative ~ the seriousness of the difficulties which still c3bstruct a seltlex~leaat cif the Palestine prc~i~lem. although the Rhodes fial~~s between Israel and Egypt have aut yet brol~en up, tiie prc;babfle failure tc+ achieve an arx~stice is lil~eiy to inhibit gs~.?ael's negotiations with Transjr~rdan and Lebanon, which have been held up pend- ing the outcome of tine talus. Tra.nsjurdan a~td lLebanon, which are snore interested in a final settlement tian the Egyptians, will probably engage in new tall~s with the $sraelis at Jerusalem if not at Iitzodes. Nevertheless, Guc~~ talus will be hampered by considerations similar ti- tic,se v~hich have thus far blc~ct~ed an Israeli-Egyptian deal. ~lthcuxg~a the de- cision of the Y3x~ and fine major t~iestern uropean countries to recognize ~israel map impress the 1~rabs, it will nut ne- cessarily dissuade them from believing that ccnt~xaued stale- anate, even at the risi~ cif further Jewish aggression, is pref - erable tc open abandunaneat cf their claims. ~~ing ~,bdullah t~? Transjordan, who has stressed his desu-e tc~ bsxgain, may gG further fiiian the others. tu~~ard cornpron~ising with the Israelis, partic~~larly nc3w that lie has received tine moral support of ~S rQCOgniticn. Even if ~bdullah ignores the mare extreme claims ~ tye ot?ier ~.rab states, however, his desire to obtain the best possible terms may eArell impede a prompt settlement even fur his limited sphere of ~~alesfiine. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ? Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET I~1A-PA~T.AI~T C$echoslovak ReZatio~n$ Caechoslo~vakis6t is replacing ibs representative an the i3i~T C om - mission for India and Pakistaa 3>In a meaner which leaves no doubt that the new appoffitee will be a trrusbed Gommu- niat. Because the present Czechoslovak representative is an old-line democrat who cooperated freely With his Sour western colleagues, the shift will providc3 the Soviet bloc width ite first real opportunity four i~luencing the hand].hl~ ad the delicate I~shmir problem. ~ Cr~echoslovakia. had mer~~Iy been making a routine change in diplomatic appoint- 3nenffi, it world scarcely ha~+e informed India that: (1) the C$echoslovak representative was being replaced 'because ~ was "pro-Pakistan and pro-13ritfsh ' (Yndia, would have been the first to oppose him on those grounds); and (~) India. would strain Indo-Czecho?lovat~ia.~e relations if it V~@n'~t3red t0 Object t0 the neW representativE. SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 i i i SECRET -FAIL EAST CRIl+tA Peace Talgs The probability of Chfnese Communist insist- ence an unconditional surrender of the lYatian- alist Governrae~tt became more certain this week as a result of Communist demands for compliance with Nlao Tse-tuug's eight-points ~s a prerequisite to the start of peace "nego- tiatioa~s." The Communists also called upon Aeting President Li Tsang=den to arrest and deliver to them President Chie.ng Sai-shek and all o#hex "war crimu>~ls." Li could not possi- bly comply with all t1~se demands, even if he wished. Yn ffict, there is no single authority, including Chiang Kai-shek, who can deliver intact to the Communists the remaining anti- Communist forces in Ghina.. The Communists, therefore, regard the Naa~g Government as a mere regional regime, which coaatrols only ane or two of the principal centers od resistance. Whey have announced that the pati~rn established by the surrender of Peiping (gradual Communist occupations of the city as Nationalist forces withdraw and lay dorovn their arms will apply to the 2.6 other mayor centers of non-Commu- nist China. ~'he Peipi~ formula gives the Conlnaunists the double advantage of peaceful occupation of the areas of res~t- ance and sufficient Time to organize and staff Communist administrations for fihese areas. 7.'be profected Communist "coalition" government for all China. will still seclude Chiang Kai-shek and his associates, although the door remains open for the inclusion of Nati~alist leaders who facilitate Commu- nist occupation of the remaining centers of resistance. The Communist "coalition" government Diu probably be pro- claimed sometime after more than half the territory and people of Ghina fall under Communist control. This "casA.li- tion" government will then seek international recognition as i:he legal government for all of China. -10- SECRET .~ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ^ Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 ' '~'AIti'~r"-N ~,llilitary Retreat As the Chinese C otr.munist armies con- tinued moving into position along. the north bang of the Xangt2e, the Nationalist Nigh Cona.nd started withdrawing troops southward from its "is~pregaable" Yangtze defense line and began preparing a new general east- west line running from'~Juchang to l~anchang and thence along the Chientang River. This defense plan, reportedly to be irnplementea. if current peace negotiations fail, presumes the complete abandonment of Shs,nghai, I~Tan'~.ing, and I~.nl~ow. Therefore, these cities will probably come antler Communist control within the next 3~ ds.y5. Thies latest defensive tactic is apparentlg~ a Nationalist attempt to lrreserve their remain- ing men and equipment while awaiting tine renewa:i of ~S aid. The planned withdra,~ral probably sets the ~.ttern for future Nationalist action in the face of superior Communist =~. -. forces. :is ~, further preparation for such a program, fhe Nationalist capital has been moved to Canton where the Gov- ernment announced it Would be open for business on 5 1~`ebruary. The abandonment of Nanking, however, is a heavy blow to 1~Iation- alist prestige. In moving south, the Nationalist Government gives up its political stronghold of the past tram generations and enters an area where local political elements are either unfriendly or ants,gonistic. Econor~a.ic mistress ~opula.r resentment by the Taiwanese against ernigrees from the Chinese ma.inlancfl may result inn acts of violence and sabotage within the next few weeks, but such outioreaks are unlil~ely to threaten T~atioa~.list control of the island. The major prob- lem facing the Idationa.list administa~.tion on Taiwan is the economic distress caused boy the influ ; of at least several hundred thousanol people from the mainland. This influx has SECRET CHINA SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET i TAIWAN created inflationary conditions, a rice shortage, and an almost complete diversion of shipping from normal Taiwa,aese trade to evacuating refugees and supporting the Chinese administration. Arsenal equipment shipped from the mainland, if put in. operation, will lower Taiwan's normal industrial production by stra.iniug the island's limited power and other resources. Although Nationalist gold supplies in Taiwan. could be used to stabilize the currency, they will be more likely held in reserve for future use by the National Government in combatting the Chinese Communists, Irmor~slA Dutch Plans C ontiaued Indonesian resistance will probably foil current Dutch plans to circumvent a con ; siderable portion od the recent Security Council resolution oa Indonesia. The Dutch apparently hope that they can effect a quick settlement between non Republican Indonesians and interned Republican leaders on the terms ~ Republican participation in a [Inited States of Indonesia. The Dutch could then argue that agreement by responsible Republican leaders to take part in such consnltatioms makes unnecessary both the re -creation of the Republic and negotiations under the supervision of the new UN Committee for Indonesia.. Acquiescence to such a plan by interned Republicans, how- ever, is unlikely. Republican Premier Rana. will probably be quick to recognize the disadvantages of aDutch-sponsored Federalist plan compared to the advantages offered by nego- tiations under UN auspices. In addition, the effectiveness of the Republican resistance, which could be continued for several years, enhances the bargaining position of the Republicans. Contrary to batch reports, guerrilla activity is reportedly having a serious effect upon the Indonesian -42- SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 '? Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET lNDOrlES~i economy. Raiding Republican bands, operating from well- established concentrations and areas where they have un- disputed control, have been successful in disrupting the essential transportation and communication facilities upon which profitable operation ad the economy by the Dutch de- pends. In some areas, where the Republican resistance is especially well-organized, the guerrill~i bands have taken the initiative in local harassing operations. BURMA Racial Strife The Karen-Burman conflict, which has spread throughout lower. Burma and now appears to have become full-scale warfare, is by far the most acute problem facing the seriously-weakened Burmese Government. The Karens are fighting for possession of several important toR-ns, including the Port of Bassein; many Karen and Burman villages have been destroyed; and Karen troops are reportedly deserting the armed forces. Although ;,peace talks are in progress between the Burmese Government and Karen leaders, there seems little likelihood of a lasting settlement. A major obstacle to such a settlement will be the probable refusal of Prime Minister Thakin. Nu to agree to :wren demands for the formation of an autonomous Karen state that would include areas where Burmans outnumber Kare:~as by as much as three to one. -13- SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET WESTERN TriE1VIiSPRERE. ARGENTINA Economic Changes Argentina is apparently endeavoring to adjust its economy and trade policies to the graving iaternationa.l b$.~yers' market in the hope of improving its financial and tra.c~e relations with the US and other countries, Miguel Miranda, postwar economic czar and spon ,or of Argentina's "hard bar~,ining'y trade methods, has been removed from the National Economic Council and many of h-Is former powers will probably be assigned to the more internn,tionally-minded secretaries of Economy and Finance. There are indications that the exchange rate of the peso ma.y be changed in an attempt to increase Argen- tina's international trade, l~toreover, Argentine participa - tion in the International Wheat C o~erence suggests a. relaxa - tion of Argentina's former unilateral attempts to use its wheat surpluses to gain economic advantages. At home, strong emphasis is currently being placed upon increased production. Peron probably hopes that these changes will improve Argentine pr. aspects fog particip;ttion in E'.~rQpear_ dollar trade and will facilitate closer cooperation with the US which might lead to some US assistance to alleviate Ar~e~2 tine`s present ffnancin.l difficulties. ~I`he adoption of these reform, measures, however, may have tseen delayed too I?ng to avert a major economic crisis and a reorganization of the Argentine Go~rernment. VENEZUELA Regime Threatened Growing disaffection witfiin the Vene- zuelan Army and increasing opposi#ion from political parties and former government leaders are threatening the military junln now governing Venezuela. -14- SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 i~ ', Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 sECRET vExEZUELA Opposition groups are as yet uncoordinated but the regime is becoming increasingly insecure in view of the possibility that opportunists, particularly in the armed forces, can capitalize on the growing unrest and rally support from hitherto disunited groups. PARAGUAY New Government The sudden change on 30 January fn the Government of Paraguay differs in two respects from recent upsets in EI Salvador, Venezuela, and Peru and may therefore raise new considerations in the application ad the Bogota Coffierence resolution regarding the continuity of diplomatic relations. Unlike the previous coups, the use of military power in forcing President Gonzalez to band over the Government to opposing members of his awn Cabinet and political party was indirect rather than open. Moreover, the new regime, in attempting to establish its legality, carefully adhered to the Paraguayan constitution a#ter President Gonzalez resignation, and has promised a truly democratic election. Regardless of the "legality" of the new regime, its continuance in power will depend upon its ability to retain the support of the army and police. 2Uieamvhile, there is no reason to believe that the present Paraguayan Government will be less friendly to the US than the Gonzalez Government. STAT -15- SECRET 1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 SECRET n~s~Rt~v~Iar~ x.. ....... The I~resid+sr~t 2......... Secretary of :ItaEe 3.. ....... Chief of Staff to Cornxrsanasr is Chie# ~, ........ Secre~a.z~y of C~ef?~~ase 5.. , ...... Sec~,etarir cf the army 6......... Secre>ra.ry of t~ Pinvg ?.. ...... Secreeax~y_of the Air Force 8,'IG....... Chalr?man, Netia~! Securifiy Resr~aarces l3oar~ 9... , ..... Executive Secret~xy, hTatic~al .'~ecur9ty Council 1~... .. .. .. ~4.ssl~taxa~ SecreraYy of the ?d~av~ ffor .~lr 11,69.... ~ .. ~,'hief of Staff, U, S. P~rr~r~y 12,13,44. .... Chiei cd Nava.! gperaticxas 15,16,1?..... Chief crf Staff, U.S. Air :~'o~rce 18. ........ Director of Plans a.nd C>ger~tions,General Staff,~,~.S,Army lg..... .... Deputy C;hieft ~ S~,if (operations) U.S. Air Force 20, ........ Deputy Chief of Naval Q~pe~.t2on~ ;Cy~erations} 2I........ , Director of Plans and C~perationsy U.S,Air Force 22,23,24..... Special A-~ss~lstant tQ Secretary of Smote for Research and Intelligence 25,26,27,28,29, Director of Tntelli-gence, General Staff, T3.S.Azmy 30,31,32,33,34. 35,3~6,3'd,38,39, Chief og Naval Intelligence 40,41,42,!3,44. 45,48,47,48,49. Direc#or of fntelligencey U.S. A.ir Force 50......... Director of Securit~r and IntelligenGe,Atomic Energy Comm. 52......... Eg~~~tive Secretary, Military Liaison Committee, Atomic Energy Commi.5slan 52,53,54,55,56. Chief,r'~cquisitic+t~. & Distritnation 17ivision,t7ICJD4Dept.State 57. , .... , . , Director, Federal Huraau of Investl~ation 58......... Secretary, Joint Chiefs of S 59......... Chief, Polfcy l~ianning S~.ff,Departn2ent of State 60......... Secretary of State (~1t:tention: Chief, Policy Reports Staff) 61......... Delrsty Iiireetor, Joint Intelligence Group, Joint Staff 62,63....... Secretary, joust Ye~telligence Group, Zoint Staff 84. , ....... Director, jQirst Planning Group, JaiaAt Chiefs of Staff 65......... U.S. Air Force Representative oz~ Joust Strategic Survey Co~.nffiittee QF,67. , . ,.... Secretary, Sfia.:.e--Array?Navp Air Coord:aaa:ting Committee 68. , ....... Adn~fnistrator, Economic C oopera~ti?~n Administration SECRET Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1 --seeRer~ I V. $. GOVERNMENT PRINTING OFFICE 2831-8-1948 Declassified in Part -Sanitized Copy Approved for Release 2013/04/25 :CIA-RDP78-01617A002100150001-1