CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000100170001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 15, 2016
• Document Release Date: April 14, 2004
• Sequence Number: 1
• Publication Date: September 25, 1953
• Content Type: REPORT

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25 September 1953
CURRENT
1NTELL1GF=NCF=
WEEKLY
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'GCUMENT NO.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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C IFI TIAL
STATE review(s) completed.
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This material contains information affecting the
National Defense of the United States within the
meaning of the espionage laws, Title 18, USG,
Secs. 793 and 794, the transmission or mission or
revelation of which in any manner to an author-
ized person is prohibited by law.
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 SUMMARY OF CONTENTS
THE SOVIET WORLD . . . . . . . . . . . . . . . . . Page 3
NEGOTIATIONS FOR EVACUATING CHINESE NATIONALIST TROOPS
FROM BURMA COLLAPSE . . . . . . . . . . . . . . . . Page 5
The withdrawal of the Burmese delegation from the
four-power committee on 17 September in Bangkok leaves
little possibility for a negotiated evacuation of the
Chinese Nationalist forces.
OUTLOOK FOR RESUMPTION OF FRENCH STRIKE ACTIVITY . . . Page 7
Unless Premier Laniel makes further concessions
within the next few weeks to satisfy labor's grievances,
he can expect an outburst of working-class discontent
even more serious than that which occurred last month.
THE CHINA TRADE ISSUE IN US-JAPANESE RELATIONS . . . . Page 9
The prospective renegotiation. of the US-Japanese
understanding on export controls may result in increased
Japanese exports to Communist China, but probably without
satisfying popular expectations of greatly enlarged trade.
THE NEW BRAZILIAN LABOR. MINISTER AND HIS PRO-COMMUNIST
ALLIES . .
. . . . . . . . . Page it
The recent efforts of Brazilian Labor Minister
Joao Goulart to build a labor-based political machine
have already served to strengthen Communist influence
in organized labor and may in the long run make the
opportunistic Goulart one of the major political forces
in Brazil.
MENT1
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THE SOVIET W OR LD
While Soviet propaganda devoted some coverage to criticism
of US foreign policy, particularly regarding.the United Nations,
Moscow appeared preoccupied this past week with domestic affairs
and pronouncements on Soviet friendship for North Korea and
Communist China.
The recently published report by First Secretary Khrushchev
to the Party Central Committee included a note of caution to
the peasants found neither in the agricultural decree of 7 Sep-
tember nor in Malenkov's 8 August speech to the Supreme Soviet.
While discussing the importance of the previously announced in-
creases in state delivery prices and reductions of compulsory
delivery norms, Khrushchev warned that not only would there be
no further increase in the'prices paid to the farmers for pota-
toes and vegetables but also that the recent increases were
transitory. Khrushchev also appeared to be advancing the clas-
sical but recently soft-pedaled theory that the collective
farmer in time will find it unprofitable and unnecessary to own
livestock individually despite the current program to increase
such holdings.
In addition, Khrushchev described widespread and serious
deficiencies in the political control of agriculture. As a
remedy he suggested that 50,000 party members be permanently
transferred from industrial centers to important positions in
the villages.
The communique issued at the conclusion of the Soviet-
North Korean negotiations in Moscow indicates the USSR's in-
tention to retain control over North Korea's political and
economic development. The Chinese ambassador was included in
the negotiations, possibly to discuss the Korean political con-
ference, to arrange for resumption of power transmission to
Manchuria from the damaged Yalu River hydroelectric plants, and
to keep Peiping advised on North Korean reconstruction.
In Prague, on 15 September Premier Siroky announced a
new economic policy promising increased agricultural and con-
sumer goods production and a reduction in investments for
heavy industry during 1953. The new Czech program, however,
like those recently announced in Bulgaria and Rumania, promises
fewer concessions to the peasants and industrial workers than
did the Hungarian policy described by Premier Nagy on 4 July.
Whine subsequent decrees in Hungary modified the extent of the
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concessions, they also stressed the need to moderate the pace
of socialization.
The Prague concessions appear designed to raise pro-
ductivity by improving labor morale. Benefits offered to the
peasants include the reduction or cancellation of agricultural
debts, the lowering of crop collection quotas in some cases,
and promises of government aid to raise agricultural pro-
duction. Industrial workers are promised lower prices and
more housing and consumer goods. However, the Satellite
regimes in general continue to foster the agricultural col-
lectives and to maintain the high industrial norms which
contribute -to labor unrest.
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NEGOTIATIONS FOR EVACUATING CHINESE NATIONALIST
TROOPS FROM BURMA COLLAPSE
The withdrawal of the Burmese delegation from the four-
power committee in Bangkok on 17 September leaves little
possibility for a negotiated evacuation of the Chinese Nation-
alist forces in Burma. The diplomatic and military measures
the Rangoon government will probably now adopt could weaken
the country's internal security and its anti-Communist orien-
tation.
Burmese impatience with Taipei's procrastination in
reaching a settlement had been mounting ever since the Bangkok
talks began four months ago. The withdrawal finally occurred
after the Chinese rejected a Burmese demand that 5,000 troops
be evacuated within 35 days of the signing of the evacuation
plan and the rest within three months.
Immediately following the Burmese departure, the National-
ists announced their intention of signing the committee's evac-
uation plan and estimated that a maximum of 2,000 troops would
be evacuated. The Burmese, however, are unlikely to resume
negotiations on the basis of this announcement. They regard
it as nothing but a maneuver to place on them the blame for
the conference's failure.
The Burmese belief that the Nationalists have been insin-
cere in their professed desire to cooperate in the evacuation
effort appears to have considerable justification, The Ameri-
can representative on the four-power committee reported that,
in contrast to the Burmese, the Nationalists' cooperation and
staff work had been dilatory throughout the negotiations. He
attributed the breakdown to Taipei's inability or unwillingness
to control General Li Mi and his associates. Throughout the
negotiations there were reports of continued air supply from
Formosa to the Nationalist force.
Out of exasperation and under pressure from left-wing
elements, both in and.out of the government, Burma is plan-
ning to take the strongest possible measures against the
Nationalists. Authoritative sources in Rangoon indicate that
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in reviving its complaint at the General Assembly, Burma will
abandon its policy of moderation and demand that Formosa be
condemned for aggression and expelled from the United Nations.
The Burmese anticipate considerable support for such a posi-
tiono
There is evidence that Burma is contemplating more
drastic alternatives should its UN appeal prove ineffective.
On 16 September, a highly influential cabinet minister told
the American ambassador in Rangoon that his government and
people were rapidly losing faith in the UN's ability to pro-
tect small countries, and that a withdrawal from the UN had
been seriously considered. Despite this statement, such a
step appears unlikely and would certainly not be taken be-
fore the issue is debated in the General Assembly.
Burmese officials have publicly denied that the govern-
ment will seek foreign assistance outside the UN in dealing
with the Nationalists, but several important leaders have
seriously considered an approach to the Chinese Communists
for military aid. Burma has maintained cordial relations
with Peiping,and the latter's "correct" attitude on the
Nationalist problem may lead the Burmese to conclude that
the final elimination of the Nationalists is worth the risks
involved in seeking Peiping's aid,
The Communists in Burma may be expected to redouble
their efforts to exploit the Nationalist issue.
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OUTLOOK FOR RESUMPTION OF FRENCH STRIKE ACTIVITY
'Developments within the French labor movement since the
August strikes, which strengthened Communist influence,
indicate continued dissatisfaction with the government's
measures to satisfy labor's grievances. Unless Premier Laniel
makes further concessions within the next few weeks, he can
expect an outburst of working-class discontent even more
serious than that which occurred last month.
The strikes, which were more widespread than any since
1936, were inconclusive for labor. The working class is
determined to obtain a wage boost, and non-Communist union
leaders insist that the current lull is no more than an
armistice. Spokesmen for the Socialist-oriented Force Ouvriere
have already termed inadequate the wage increase announced on
17 September for the lowest paid government employees, and
all labor leaders will.probably intensify this criticism
,before the meeting later this month of the Collective Agree-
ments Commission, the permanent board of labor, management,
and government representatives charged with deciding pay issues?
The workers have long been skeptical of government
programs to boost real wages by lowering prices. This expedi-
ent has failed repeatedly, and under Pinay did little beyond
stabilizing prices at a level low enough to avoid automatic
wage raises under the 1952 law establishing a sliding-wage
scale. Even before this law was passed, the commission was
unable to agree on increasing wages and its reconvocation now
on labor's demand is unlikely to result in more than. a token
rise.
Fundamentally, labor doubts that the Laniel government is
strong enough to distribute equitably the sacrifices required
to revitalize the French economy. While the government's
current steps toward tax reform and a vigorous prosecution of
tax evaders may demonstrate its siricerity,.neither these steps
nor the projected new impetus in housing construction offers
the workers any immediate satisfaction.
If labor again resorts to a. massive strike effort in
October, it is probable that the Communist-dominated General
Confederation of Labor (CGT) will be able to exert greater
control through its unity-of-action program than it has in
the pasta While the August strikes began as a spontaneous
labor move and the non-Communist unions were the first to take
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control, the Communist-inspired sanity-of-action committees
were dominant in the final days. The CGT carefully avoided
violence and political slogans. Withdrawal'of its general
strike call enabled the CGT to appear to have placed the
workers' economic interests above Communist political
objectives, even though the true reason may have been that
the rank and file had started to return to work.
A renewal of the same Communist strategy in another
strike movement this fall would probably force non-Communist
labor leaders to take an aggressive stand in self-defense,
and thus promote solidarity among the workers. The Communists
could then bring into play their militants in the mining and
metallurgy industries, and the mass of nonunionized labor
would probably come under the influence of CGT directives.
Widespread strikes in the early weeks of the new ses-
sion of the National Assembly would seriously undermine
Laniel's economy program. While this would give a strong
impetus toward a leftist government maintained in power by
Communist parliamentary votes, the American embassy in Paris
believes it is more likely that a left-center coalition will
be formed if Laniel falls. Such a government would almost
certainly be disposed to make budget cuts requiring a major
curtailment of France's NATO contribution.
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THE CHINA TRADE ISSUE IN US-JAPANESE RELATIONS
A threat to existing relations has been posed by wide-
spread Japanese resentment over a policy, supposedly dic-
tated,by the United States, whereby Japan's security controls
on exports to Communist China are stricter than those of its
European competitors. The recent American agreement to
negotiate a relaxation of the bilateral understanding on ex-
port controls will temporarily mollify the Japanese. The
resulting increase in exports to China is not likely, however,
to satisfy popular expectations or recognized needs for for-
eign markets.
Japanese politicians are under great pressure to change
the policy by which the Japanese agreed to security controls
on exports to Communist China more severe than those multi-
laterally agreed to in the Coordinating Committee on Export
Controls (COCOM). Japan's need to expand its normal merchan-
dise exports, to decrease its reliance on dollar sources of
imports, and to rebuild depleted sterling reserves adds force
to the government's appeal to the United States for a relaxa-
tion of the agreement.
More significant, however, are prospective diplomatic
moves. Recent reports indicate that in contrast to a previous
policy of refusing such requests, a Japanese trade delegation
sponsored by a large group of Diet members will be granted
passports to visit China. As previous policy was based on
the absence of diplomatic relations, this change could pre-
sage de facto recognition of the Communist regime by Japan.
Once this impasse is broken, the exchange.of official trade
delegations, negotiations for settlement of commercial dis-
putes, and discussions on the safety of vessels engaged in
this trade might follow.
If Japan reduces its controls on exports to China to the
scale agreed in COCOM, the American embassy expects such ex-
ports to increase from an estimated 195' level of $6,000,000
- $S 000,000 to between $25,000,000 and $50,000,000. The Jap-
anese government, however, believes that the figure will
reach $150,000,000 annually, and optimistic trade promoters
are quoting as high as $250,000,000. The embassy figures are
probably more realistic, since Communist China has shown no
intention of changing its position that coal and iron ore, the
items most desired by Japan, will be forthcoming in volume
only in return for such restricted items as metals and heavy
machinery and equipment.
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With Japan's normal merchandise trade deficit now
running at an annual rate of over one billion dollars, the
increased trade with Communist China could provide a'signifi-
cant but certainly not an adequate offset. Thus, it can be
expected that further steps toward. increased trade with the
China mainland will be taken. Japan has already modified
its regulations which impeded these exports and imports.
Another straw in the wind was Japan's reluctance in
COCOM to agree to the embargo of thin galvanized iron sheets
even though the United States had succeeded in getting others
to acquiesce. As most of the Japanese goods which might
attract a large volume of Chinese iron ore and coking coal
will probably remain under COCOM restrictions even after re-
vision of,the bilateral agreement, Japan will probably add
its voice to those seeking reduced controls on East-West
trade.
So long as Japan is unable to establish its export
trade on a scale sufficient to make it self-sustaining,
and so long as the United States maintains its policy of
security restrictions on East-West trade, the China trade
issue is likely to remain a major source of anti-Americanism
in Japan and to plague US-Japanese relations.
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THE NEW BRAZILIAN LABOR MINISTER AND HIS PRO-COMMUNIST ALLIES
The recent efforts of Brazilian labor minister Joao Goulart
to build a political machine based on the unions have already
strengthened Communist influence in organized labor and may
in the long run make the opportunistic Goulart one of the
major political forces in Brazil.
A protege of 70-year-old President Vargas, Goulart was
appointed in June to head the politically strategic Labor
Ministry and has since made appreciable progress in his efforts
to build up the Brazilian Workers Party with an eye to the
1954 congressional elections and the 1955 presidential cam-
paign. Organized labor, constituting 10 percent of the total
labor force and numbering about 1,700,000, has in the past
always been government-controlled and politically inactive.
During the past year, however, it has gained increased inde-
pendence in the choice of its own officials and now seems on
the verge of becoming an important political force whose support
Goulart is attempting to gain for the Workers Party.
In large measure because of the efforts of the former
labor minister, Jose Vianna, Communist influence in labor
circles has hitherto been proportionately much less than in
the country generally. The Brazilian Communist Party, although
illegal, is one of the wealthiest in Latin America. It
regularly publishes at least 25 periodicals, and has had.at
least moderate success in infiltrating the federal and local
bureaucracies. The Communists are therefore capable of as-
sisting Goulart in his effort to create a strong central labor
confederation, and he apparently has already turned to them
for help in several instances. Last month he appointed three
Communist sympathizers to key positions connected with the
Labor Ministry.
Goulart's own political orientation is by no means clear,
but his record to date demonstrates that he is extremely am-
bitious and generally unscrupulous in his choice of political
alliances. Rich and energetic, he entered national politics
as a member of the federal legislature in 1950 at the age of
32, but soon transferred his main attentions to the Brazilian
Workers Party, Vargas' personal vehicle, and rose rapidly
in its hierarchy. In June 1952 he became its national presi-
dent on Vargas' personal recommendation.
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As president, Goulart continued the party's traditional
emphasis.on mass labor support, and made a special effort
to gain control of the trade unions. For this purpose he
backed dissident elements of all sorts, including Communists
and anti-American trade unionists who favor Peron's Latin
American labor confederation, in attacks on established union
leaders. As labor minister, he apparently hopes to use the
same tactics and allies to build a politically valuable general
labor confederation.
In his first three months in office Goulart has already
scored some successes. His establishment for the first time
of effective mediation machinery has averted strikes in key
industries and public services. He has also won many friends
among the leadership of various local unions, and his demagogic
leftist appeal is attracting significant rank and file support.
His close connection with Vargas has thus far been a major
asset to him, although this advantage may be somewhat lessened
by the president's fluctuating physical and mental condition,
which on occasion leaves him virtually incapacitated.
On the other hand, Goulart's ;program has also met with a
number of setbacks. His publicly avowed plan to replace all
key personnel in his ministry within 24 hours of taking office
was frustrated by the complexity of labor legislation. He
succeeded in ousting the head of the National Maritime
Federation, who was apparently opposed within the federation
primarily by Communists and leftist members of Goulart's
political party, but has been unable as yet to install his
own candidate.
From 4 to 8 August he staged a.First National Congress
for Social Security at which Communists and Workers' Party
delegates were predominant, but only 454 union groups out of
1,687 sent delegates. The demagogic speeches of Communist
labor leaders at the opening session aroused such a storm of
public protest, moreover, that Goulart's own speeches were
apparently drastically toned down. It is also possible that
the public opposition caused aband!:nment of a reported plan
to use the congress to launch his national labor federation.
Nevertheless, Goulart is expected to be at least partially
successful in gaining victories for his proteges in some of
the labor federations. This possibility is strengthened by
indications that police surveillance of Communists in the
unions has been abandoned. Although Goulart will probably
not succeed in making the movement an important influence on
the 1954 congressional elections, he has good long-term
pects of controlling one of the rising political forces nos-
Brazilo- He is y not in
in Argentina hasrmadeaorganized nlaboruthefchieffbulwarktoferon
his power.
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