CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000300150001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 15, 2016
• Document Release Date: May 14, 2004
• Sequence Number: 1
• Publication Date: August 6, 1954
• Content Type: REPORT

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OCI NO. 8846
CONFIDENTIAL
6 August 1954
CURRENT
INTELLIGENCE
WEEKLY
DOCUMENTNO. ___-
NO CHANGE IN CLASS.
DECLASSIFIED
NLXT REVIEW DATE: ------
AUT 11 10-M
DATE"E ? EVIEWER:.--~ 25X1
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
State Dept. review completed
COURT ,TIAL
3-,22952
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligence Agency.
It does not represent a complete coverage of all current
situations. Comments and conclusions represent the im-
mediate appraisal of the Office of Current Intelligence.
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TRIESTE PARTIES OPPOSED TO PARTITION, BUT
VIOLENCE UNLIKELY . . . . . . . . . . . . . . . . . . . . Page 10
Prospects do not appear strong that partition of
Trieste along present zone lines would set off dangerous
rioting, despite the basic opposition of practically all
political elements to such a solution.
CYPRUS ISSUE SEEMS HEADED FOR UNITED NATIONS . . . . . . Page 12
As a result of recent British administrative moves
in Cyprus, Greece will place the issue of enosis--the
union of Cyprus with Greece--on the agenda of the UN
General Assembly on 22 August. Serious administrative
problems in Cyprus and some damage to NATO solidarity
are likely to ensue.
INDIA ACTIVATES CAMPAIGN AGAINST PORTUGUESE
POSSESSIONS . . . . . . . . . . . . . . . . . . . . . . Page 14
The invasion on 22 July of part of the Portuguese
enclave of Damao on India's west coast by "volunteers"
marked the opening of a new activist phase in New Delhi's
long-standing campaign to eliminate all remnants of
foreign rule from the subcontinent.
6 Aug 54 CURRENT INTELLIGENCE WEEKLY Page 2
THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . . Page 4
FORMATION OF SEATO FACES SERIOUS OBSTACLES . . . . . . . Page 6
Prospects for creating an effective anti-Communist
defense system in South and Southeast Asia have been re-
duced as a result of the Indochina settlement at Geneva.
IRAN'S POLITICAL AND ECONOMIC PROBLEMS REMAIN
AFTER OIL SETTLEMENT . . . . . . . . . . . . . . . . . . Page 8
The provisional oil settlement announced on
4 August is only the first step toward the solution of
Iran's long-standing political and economic problems.
The Zahedi government is presently capable of maintain-
ing internal security, but it is facing immediate pres-
sure for social reform and economic development.
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OVERHAULING COCOM FOR THE "LONG HAUL". . . . . . . . . . Page 17
Major adjustments in the Western system of controls
over trade with the USSR and the European Satellites
will take place on 16 August. The most important of
these will be the decontrol of a large number of items
previously under COCOM embargo.
SPECIAL ARTICLE. FRANCE'S GLOBAL POSITION UNDER
. . . . . Page 23
The Indochina agreement and the new Tunisian pro-
posals highlight the emerging adjustment of France's
view of its global position and point to a reassess-
ment of the French Union concept. France desires to
develop its African dependencies as the basis for the
.claim to great-power status, but intensified unrest
in Tunisia and Morocco poses a threat to such plans.
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rte. THE SOVIET WORLD
In the wake of Geneva, the Communists have continued
their-campaign to present themselves as the "defenders of
the peace" seeking a real "detente," while the United States
is deliberately trying to maintain international tensions by
taking steps to violate the Geneva agreements, build military
pacts, and instigate international incidents.
Communist propaganda in Europe has described the renewed
collective security proposal as facilitating the settlement of
the German and Austrian problems. For the Asian audience, the
Communists continue to call for Asia for the Asians and laud
Communist China as the leader of Asian solidarity. Praise
for Chou En-lai by Communist leaders in Moscow, Berlin, and
Warsaw is a further indication of Communist China's enhanced
position and Chou's enhanced role in Communist diplomacy.
Meanwhile, the Communists wasted no time in advancing
their interests in Southeast Asia through political and psy-
chological warfare. An editorial of 29 July in Peiping's
People's Daily, allegedly written by former Thai premier
Pridi anomyong, denounced the United States and called on
the Thai people to overthrow the Phibun regime.
In Indochina, the Viet Minh was taking steps to bolster
its political strength by trying to prevent refugees from
fleeing to the south and to induce Vietnamese in French-
.controlled areas to move into Viet Minh territory. 25X1
the Viet Minh had sent more than
800 of its most experienced political agents into southern
Vietnam to prepare the way for early elections.
The Communist Chinese protest on the shooting down of
two Chinese aircraft by American planes, transmitted to the
UN on 29 July, charged the United States with trying to pre-
vent the easing of tensions and to promote its policy of
strength by encouraging increased Chinese Nationalist harass-
ment and "piratical activities" along the China coast.
Simultaneously, a renewed propaganda campaign for the
"liberation" of Formosa, under way since early July, was
charging the United States with responsibility for maintain-
ing international tension by planning to increase its support
of Nationalist China and supporting aggression against the
mainland.
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The Polish note of 31 July to the United States, protesting
an alleged attack by American aircraft on two Polish merchant
ships off Hainan, also charged that this act had as its aim the
"obstruction of further relaxation of the international situa-
tion." The Polish note, relatively moderate in tone, omitted
any reference to American support of the Chinese Nationalist
government and any claim that the ships were within Chinese
territorial waters.
Within the Soviet bloc, an antireligious campaign of
major proportions has been rapidly developing. The climax of
a two-month campaign in the USSR came in a lead editorial in
the 24 July issue of Pravda, "Increase Scientific-Atheistic
Propaganda," which described religious prejudices as one of
the most persistent and harmful remnants of capitalism.
I t is significant that after thirty years of "scientific
atheism," the government still finds it necessary to fulminate
against religious "remnants." The American embassy believes
the campaign at this time may indicate that religion has made
headway in the USSR since Stalin's death. It seems likely
that the more liberal policies of the present regime resulted
in a general atmosphere of relaxation in which a slackening
of antireligious pressures led to increased religious activity.
In the past months, some of the earlier concessions, par-
ticularly those in cultural affairs, have been rescinded and
a more stringent line firmly imposed. The regime may have
found it necessary to make a gradual definition of the limita-
tions on concessions, and the recent propaganda may be intended
to demonstrate that relaxation of the antireligious fight is
outside this limit.
In Poland an analagous situation exists. Recent trials
of Catholic leaders and a 30 July article in a collaborating
Catholic weekly, containing a lightly veiled threat that
Catholics must change their attitude, suggest that the re-
laxation of church-state tension prevailing since the arrest
of Cardinal Wyszinski last September is merely an armistice.
Further evidence of a stronger anti-Vatican campaign is seen
in a move to reduce the number of senior seminaries in Poland
and in a revived demand by the regime for appointment of bish-
ops in the former German territories. Such appointments have
been opposed by the Vatican because of its policy that the
dioceses in these territories cannot be changed until a peace
treaty has defined a final territorial settlement.
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FORMATION OF SEATO FACES SERIOUS OBSTACLES
Prospects for creating an effective anti-Communist defense
system in South and Southeast Asia have been reduced as a result
of the Indochina settlement at Geneva. India is openly hostile
to any Western-inspired arrangement, while other countries
remain neutral. A potentially major obstacle is the consider-
able appeal throughout the area of the concept of an exclusively
Asian nonaggression pact.
The settlement reached at Geneva may forestall Western
plans to develop a regional defense system because it appeals
to the Asian hope for peace and encourages a belief that prob-
lems can be negotiated. Throughout southern Asia there were
expressions of relief that the fighting had stopped and that a
feared world war had been avoided. There has been considerable
acceptance of the view that the Communists desire a long period
of peace for internal development. There is much hope that the
Geneva settlement is a first step toward peaceful settlements
of all major differences between the two power blocs. It has
also been generally recognized that the West suffered a defeat
at the hands of the Communists.
These attitudes unquestionably dampen enthusiasm for a
regional defense arrangement with Western support. Even Thai-
land and the Philippines, the only two Asian countries that
have agreed to join a Southeast Asian treaty organization, have
indicated their participation may be contingent on new military
commitments from the United States. Moreover, the emergence on
22 July of former Thai premier Pridi Phanomyong as a Communist
puppet and his subsequent call for the overthrow of the Phibun
regime undoubtedly were intended by Peiping to stimulate Thai
doubts as to the wisdom of joining a Western-sponsored agreement.
Of the Colombo powers, only Pakistan would accept an invi-
tation to join a regional defensive grouping. Top leaders in
Ceylon have been favorably inclined but are apparently unwilling
to take a position opposed to India's. Ceylon's prime minister
has proposed a: new meeting of the Colombo powers to align policy
on SEATO.
India, Burma and Indonesia, all of which recognize Peiping,
have clearly stated they want no involvement. While Rangoon and
Djakarta have intimated they will not oppose the organization of
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a regional defense system, Delhi is apparently trying to block
such a development.
The situation seems propitious also for a dramatic. Communist
proposal, such as an offer by Peiping to negotiate an all-Asian
nonaggression pact or bilateral treaties. Such a proposal would
strike a responsive chord; a clause "guaranteeing" Southeast
Asian countries against Peiping's interference in their inter-
nal affairs would be especially attractive. Even before the
Geneva conference, the Indonesians advocated just such a course.
Soviet and Chinese spokesmen have referred to the need for
maintaining peace through "mutual obligations" assumed by Asian
countries. More specifically, Chou En-lai has been stressing
the "five principles" for friendly relations between Asian
powers--mutual respect for each other's territorial integrity,
mutual nonaggression, mutual noninterference in each other's
internal affairs, equality and mutual benefit, and peaceful
coexistence.
The Chinese Communists have taken several steps to create
a receptive atmosphere in southern Asia. They are conducting
a trade promotion campaign which pictures China as an unlimited
market for the area's surplus commodities. They have recently
supported Indonesia's claim to Dutch New Guinea.
.The most significant development in this connection has
been Peiping's hints that it is preparing to revise Chinese
policy regarding the nationality of Overseas Chinese, 10,000,000
of whom reside in Southeast Asia, and who heretofore have been
regarded as Chinese citizens. Recently, however, there have
been suggestions that Peiping will soon confront these persons
with the choice of relinquishing Chinese citizenship or of
"ultimately" returning to China.
The Indonesians, who are soon to begin negotiating this
matter in Peiping, claim the Chinese have already given them
a commitment to this effect. A modification of the adamant
Chinese attitude would materially enhance Peiping's standing
in Southeast Asia.
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IRAN'S POLITICAL AND ECONOMIC PROBLEMS
REMAIN AFTER OIL SETTLEMENT
The provisional oil settlement scheduled to be announced
on 5 August is only the first step toward the solution of Iran's
long-standing political and economic problems. The Zahedi gov,
ernment is presently capable of maintaining internal security,
but it is facing immediate pressure for social reform and eco-
nomic development.
Political stability is not assured even though a mutually
acceptable final oil agreement may be drawn up under the prin-
ciples already provisionally agreed upon. The Majlis appears
likely to approve a final settlement with the consortium, but
deep political wounds may be inflicted in the prior debates.
The heart of the provisional agreement, the formula giving the
consortium effective control over the production and marketing
of Iranian oil, is almost certain to come under.strong nation-
alist attack as violating the oil nationalization law.
The Iranian parliament is scheduled to reconvene on 24
August. In the interim its members will assess public reaction
to the provisional settlement. The Shah will probably give it
his full support. Court and government pressure now appear
likely to be decisive in the Majlis.
A small but growing band of nationalist deputies can be
expected to oppose any agreement to the end, however. Aided by
xenophobic activities of the Tudeh, the National Resistance Move-
ment, and influential antigovernment demagogues, the national-
ists pose a constant threat to political stability. Their ef-
forts presumably will be directed toward an eventual repudiation
of the agreement.
The danger of repudiation will probably be greatest during
the first few months after ratification of the final agreement,
while the consortium's operating companies are engaged in imple-
menting it. A 'change of government during that crucial period
might imperil the settlement.
Zahedi's lack of substantial domestic support and the Shah's
expressed inclination to discard him suggest that Zahedi's ten-
ure in office is likely to be short. On the assumption that
Zahedi's mission has been accomplished, the Iranian parliament
may seek an early opportunity to dissolve his government as a
price for approving the oil settlement..
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The oil settlement promises no'.immediate relief for eco-
nomic problems which are entering a critical stage. Iranian
finance minister Amini has asserted that Iran will realize
$400,000,000 in the consortium's first three years of operation,
but little if any of that amount will be available soon to meet
the clamor for economic development. The best available esti-
mates indicate that Iran's oil revenues in the first year will
be at a rate of less than $5,000,000 a month. Despite an Iran-
ian law requiring that all oil income be devoted to develop-
ment projects, the government will almost certainly have to di-
vert much of it to ordinary operating expenses.
The government recently obtained authority from the Majlis
to issue the equivalent of $1,100,000 in new rials to meet a
serious currency deficiency. In July, Iran's uncommitted for-
eign exchange reserves totaled only $9,000,000, and the rate
of foreign exchange sales for the previous three months was
$10,200,000 monthly. The recent American grant of $10,000,000
will not permit the expansion of import trade which many Iran-
ians may expect.
A provisional oil agreement, therefore, should not be re-
garded as a panacea for all of Iran's ills.
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TRIESTE PARTIES OPPOSED TO PARTITION, BUT VIOLENCE UNLIKELY
Practically all political elements in Trieste are basically
opposed to a settlement that would involve partition of the Free
Territory roughly along present zone lines, but the prospects do
not appear strong for dangerous rioting over such a solution.
The possibility always remains, however, that a series of fortui-
tous events could bring on disturbances, either at the time of
the announcement of a solution or any time thereafter until Italy
is in full control of Zone A.
The only major group so far committed to protest publicly is
the pro-Cominform Communist Party (PCTLT) which organized a 24-hour
general strike in Muggia on 12 July. Leaders of the center parties
appear to be grudgingly tolerating a partition solution, although
earlier they had considered public protest action. 25X1
The 12 July strike was 80-percent effective despite the re-
fusal of the non-Communist union to lend official support,
Although the Communists in Trieste have continued to incite
minor strikes and to hold meetings to keep the question of parti-
tion before the public, there has been no recent indication that
they are going to go through with a general strike throughout
Zone A, which they were reportedly planning a few weeks ago.
The independentists and the four center parties in Trieste
are strongly opposed to a partition settlement, although for
different reasons. The independentists fear the effects, par-
ticularly economic, of Italian administration of Zone A, while
the pro-Italian center parties are convinced that a partition
means Italy's permanent loss of Zone B, even if the solution is
announced as "provisional." The center parties have limited
their activity to issuing strong statements and have not en-
couraged public protests, but they are still trying to secure
assurances from the Italian center parties that Zone A will be
administered in a manner favorable to the local population and
that Italians in Zone B would enjoy full civil rights.
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The largest independentist group, however, approved a
resolution on 10 July favoring common action against partition
with all economic and labor organizations in the zone, but the
extent to which it will do so is not-known, The neo-Fascist
Italian Social Movement (MSI), a markedly Irredentist group and
organizer of Trieste riots in the past, has engaged iii very little
overt activity or even public discussion of a settlement, very
possibly a result of schisms within the group,
While the Communists could presumably initiate violence in
Trieste without assistance, any really successful demonstration
would probably require the co-operation of the pro-Italian center
parties as well as the acquiescence of the Italian government
itself. Up to this time Italian government representatives in
Trieste have made a concerted effort to moderate the views and
actions of the center parties. Late in June they were instrumental
in softening a resolution opposing partition which was passed by
the Trieste Communal Council, They have apparently been successful
in tempering the stand taken by the pro-Italian press in Trieste.
At present the populace is reported as generally resigned to
a partition solution, an attitude which, if it persists, would
make it difficult for any political party to incite effective
demonstrations.
As regards Yugoslav activities, a recent influx of a large
number of robust young men posing as political refugees from Istria
has been interpreted as an effort to infiltrate strong-arm men into
Zone A of Trieste. Such an action probably constitutes part of
a long-range program to promote Yugoslav influence in Zone A fol-
lowing partition. Rumors of increases in troop strength in Zone
B have not been verified, and there is no other evidence of Yugo-
slav intention to foment disturbances at the time of a settlement.
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CYPRUS ISSUE SEEMS HEADED FOR UNITED NATIONS
The issue of enosis--the union of Cyprus with Greece--appears
definitely to be headed for official consideration by the UN Gener-
al Assembly. It is unlikely that Anglo-American pressure can pre-
vent Greece from placing the matter on the agenda on 22 August,
the last date for submission of items. Serious administrative
problems in Cyprus and some damage to NATO solidarity are likely
to ensue.
The large majority of both Greeks and Cypriots ardently sup-
port union. Previous Greek efforts to take the matter to the
United Nations failed as a result of Anglo-American pressure. Pop-
ular feeling is running high at present, however, and Britain's.
flat declaration on 27 July that it has no intention of giving up
sovereignty over Cyprus touched off a new wave of agitation.
Athens has in the past officially insisted on a constitution
for Cyprus specifically providing'for a plebiscite on enosis with-
in two or three years. On 28 July 1954, Greek foreign minister
Stephanopoulos attacked a limited constitution offered by Britain
the day before, stating that it ignored the question of self-
determination and was "much less democratic" than that rejected
in 1948. This, together with the British attitude on sovereignty,
probably led to Greece's decision to take the matter to the United
Nations.
In addition, the British apparently face increasing adminis-
trative problems in Cyprus as a result of the firm stand they have
taken. Archbishop Makarios, Cypriot leader of the union movement,
apparently foresaw the nature of the new British constitutional
offer and convened a "Pan-Cyprian National Assembly" on 24 July to
smother any receptiveness on the part of his followers to such a
proposal. Although he supposedly espouses the principle of non-
violence, he has since referred to the Anglo-Egyptian Suez settle-
ment and hinted that violence may be the only way to solve the
Cypriot problem.
Cypriot newspapers, unanimously attacking the British policy
statement of 27 July, comment that it is "absolutely clear" that
violence played an important part in obtaining British concessions
in Egypt, and some papers openly advocate violence on the part of
the Cypriots. Publication on 2 August of a new antisedition law
entailing suspension, jail sentences, loss of citizenship, or de-
portation for any paper or individual advocating a change in the
island's sovereignty or otherwise acting disloyally will probably
inflame both the press and public still further.
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The Communists in Cyprus are the island's second largest
party and control half of the important municipal councils and
most of organized labor. They are seeking a united front to op-
pose British plans?for "enslaving the island." Whether or not a
united front is achieved, the Communists in collaboration with
the Nationalists are likely to foment disorder and sponsor crip-
pling strikes.
In Greece, too, the government, already under fire for
allegedly following the dictates of the United States, faces em-
barrassing charges by the outlawed Communist Party if it weakens
before the British.
The trend of events and the new emphasis on violence also
increases security problems connected with the British base in
Cyprus. Archbishop Makarios has repeatedly asserted that a trans-
fer of the British Middle East Headquarters from Suez to Cyprus
would find that headquarters amongst a population as hostile as
the Egyptians. Although this claim is exaggerated, the currently
widespread and organized opposition to such a move suggests that
the British could not rely on Cypriot co-operation in an emergency.
Greek political activity also creates friction within the
Balkan Alliance by rousing Turkish criticism. The Turkish press
has warned Greece that action disregarding Ankara's interest in
Cyprus--where a fifth of the population is Turkish--might destroy
Greek-Turkish friendship and wreck the alliance. Turkey is also
concerned because of the island's importance in eastern Mediter-
ranean defense plans. . While it is unlikely that the matter
would go to extremes, Ankara favors the status quo and reserves
the right to review its position if the situation in Cyprus
changes.
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INDIA ACTIVATES CAMPAIGN AGAINST PORTUGUESE POSSESSIONS
The invasion on 22 July of part of the Portuguese enclave
of Damao on India's west coast by "volunteers" marked the open-
ing of a new activist phase in New Delhi's long-standing cam-
paign to eliminate all remnants of foreign rule from the sub-
continent (see map, p. 16). Lisbon's attitude remains adamant
against any diplomatic surrender.
Portugal's interest in its Indian territories--Goa, Damao
and Diu and their satellite enclaves--is mainly of a sentimental
and historical nature. The three enclaves have been under Por-
tuguese rule for more than four hundred years and remain as sym-
bols of a once-great empire. They are of little economic value
except for some iron and manganese mines in Goa.
Two more important concerns for Lisbon are the interests
of the Catholic Church in the territories--where most native in-
habitants are Catholic--and the fear of arousing nationalist
movements'in Portugal's holdings in Africa. These, Angola and
Mozambique are of considerable economic importance to Portugal
and an easy surrender of the Indian enclaves might encourage
dissidents among African elements. Portugal has consistently
taken refuge in the constitutional fiction that its Indian
possessions are integral parts of the mother country and that
their alienation is therefore not subject even to discussion.
The Indian government also insists that it does not inspire
the operations of the "volunteers," although it stationed troops 25X1
around Damao after the "liberation" of an outlying village there.25X1
There is no doubt, however, that the "volunteers" have New Delhi's
There are only about 3,000 Portuguese troops in India, al-
though about 2,000 reinforcements are reported to be on the
way from Europe. This military weakness has so far prevented
the Portuguese from taking more than local police action and
delivering formal protests to New Delhi. The Foreign Ministry
in Lisbon informed the American embassy on 23 July that only
the immediate environs of the port areas would be defended
forcefully, and that outlying enclaves would be left to shift
for themselves.
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Portugal has considered invoking the North Atlantic Treaty
and the Anglo-Portuguese alliance to counter Indian pressure.
Following the attack on Damao and Indian press reports of a
march on Goa scheduled for 15 August, Portugal brought up the
subject in a private meeting of the North Atlantic Council on
26 July, but requested no action at that time.
Britain and the United States admit, and have so informed
New Delhi, that Article 4 of the North Atlantic Treaty--which
calls for consultation when the territory of one of the parties
is threatened--is applicable to the Portuguese-Indian dispute,
but both have discouraged Lisbon from invoking it. Britain is
more directly involved through its ancient alliance with Portu-
gal, and is reported to be trying to moderate the Indian attitude.
The parallel history of India's harassment of the French
possessions suggests that New Delhi will continue to deny direct,
overt physical support to the "volunteers," but will instigate
a gradual picking off of isolated pieces of territory where
Portuguese have little or no strength to resist.
The promised march against Goa on 15 August may be a
special case, however, by which India hopes to provoke the Por-
tuguese into a violent reaction which might swing world opinion
to the anticolonial side and justify "defensive" Indian action.
Should this event take place and result in violence, Portugal
may invoke the North Atlantic Treaty. This would place the
United States and Britain in an embarrassing position at a time
when India may be taking important decisions on the Indochina
truce supervisory commission.
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64 , U. S. S. R. 68
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As a result of-the three-month COCOAS review completed on
22 July, major adjustments in the Western system of controls
over trade with the USSR and its European Satellites--but
not with Communist China--will take place on 16 August.
These adjustments are generally in keeping with the objectives
set by the COCOM Consultative Group in April of establishing
the control lists on a "long-haul" basis and giving "appropri-
ate recognition" to the domestic problems of the individual
COCOM countries. No specific agreements were reached, however,
which guarantee an improvement in the effectiveness of the con-
trols system, and several issues remain for later resolution.
The most important result of the COCOM review is the
.sharp reduction in the number of items on the international
lists of items subject to export controls (see table, p. 20).
In purely numerical terms, the number of items on the embargo,
quantitative, and surveillance control lists will be reduced
respectively by 37 percent, 77 percent, and 40 percent. If
the redefinition of items and their downgrading from the em-
bargo to the quantitative and surveillance lists are taken
into consideration, actual "decontrol" is even greater than
these figures indicate. Its effect is suggested by the
authoritative estimate that the United Kingdom, for example,
will be free on 16 August to export to the Orbit $14,000,000
worth of items already on order but thus far prohibited by
COCOM's controls.
The United States had hoped a year ago that the review
would result in only moderate adjustments in the international
lists from their 1953 level, but most of the other countries
insisted that changed international political conditions
dictated some compromise with purely strategic considerations.
In interpreting the agreed strategic criteria, the British, in
particular, argued that items which had both industrial and
military usage were ineligible for control under the criterion.
"designed specially or used principally" for the production of
war materiel--despite the fact that some of the items involved,
are used in the Orbit exclusively for military production.
They also argued that a critical Orbit deficiency in any given
item of military significance must be considered only in rela-
tion to current military capabilities and not some future
*This article prepared in collaboration with ORR.
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capability. Until the very end of the COCOM review, more-
over, they stressed the "political necessity" of a short
embargo list and'their opposition to any form of control
other than embargo.
Since each of the other COCOM countries took little
part in the negotiations except on items in which it had
some special interest, the final list inevitably reflected
in large part an accommodation of Anglo-American views. The
control status of some 60 items was settled toward the end
of the review on the basis of a "package" agreement reached
in early July between FOA director Stassen and British Board
of Trade president Thorneycroft. This "package" left only
one item--rolling mills--in disagreement between the United
States and Britain.
On the problem of sales of merchant vessels to the Orbit,
however, the gradual reconciliation of British and American
views has thus far failed to eventuate in COCOM agreement.
The British agreed during the Stassen-Thorneycroft talks to
push for acceptance of a compromise proposal under which COCOM
countries could export 55 fishing vessels to the Orbit during
the next year, and 550,000 tons of nonembargoed merchant ships
during the next three years.
American COCOM officials in Paris, however, believe that
agreement on a formula along these lines will depend on
further concessions to Denmark, and perhaps to the Netherlands
and Italy. The United States has in the past held, however,
that the export of cargo ships to the Orbit in excess of
88,000 tons per year would exceed the annual replacement rate
of the Soviet merchant fleet and that ships of 16 knots can
be converted to surface raiders.
The COCOM discussions on other matters were in many re-
spects indecisive. In the matter of implementing the new quota
and watch lists, both of which now contain items of substanti-
ally greater strategic significance than before, serious dis-
agreements will probably arise from efforts to establish new
national allocations and simplify existing quota control pro-
cedures. American attempts to obtain COCOM agreement to pre-
shipment licensing of items on the new watch list were blocked
by the British. A study of surveillance techniques, however,
has been directed, and member governments have agreed to
"maintain adequate means" of checking shipments of watch list
items.
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The results of the American drive to improve enforce-
ment procedures as a means of increasing the over-all effec-
tiveness of the COCOM program are likewise uncertain. Al-
though a formal British commitment to institute transactions
controls and the agreement of other COCOM countries to adopt
transit trade controls appear to have broken the long-standing
impasse over these companion enforcement procedures, they have
not resulted in final agreement.
Legislative uncertainties in various member countries
prevented the fixing of a definite deadline for implementing
the new transit authorization certificate scheme, and several
participants are unwilling.to introduce this procedure unless
all do. There. are, moreover, several technical difficulties
in both transaction and transit trade controls which still
remain to be worked out in future discussions.
The relaxation of controls on trade with the USSR and its
Satellites is almost certain to weaken controls on trade with
Communist China. Both Japan and Portugal attempted to obtain
COCOM support for a review of the China controls, threatening
otherwise to oppose any European decontrol. While no agreement
was reached on this proposal, the China controls will be the
subject of further discussion at the next regular meeting of
COCOM's Consultative Group sometime in the fall. Should no
increase in tensions in the Far East have occurred by that
time, it is probable that other COCOM countries will join the
Japanese and Portuguese in favor of reassessment. In the mean-
time, since items have been decontrolled only for Eastern
European destinations, COCOM faces the enlarged task of trying
to prevent large-scale transshipment to the Far East.
On balance, it would appear that the mere maintenance of
a voluntary, informal, multilateral system of controlling
strategic trade has required far greater concessions than had
originally been envisaged by the United States. According to
Ambassador Hughes in Paris, "previous refusals of the United
States to conform with what other participating countries con-
sidered the realities of the situation gradually built up
reservoirs of ill will which lately had been in, a state of
almost continuous overflow" and which, if it had continued,
would have "permanently impaired" COCOM's usefulness.
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APPROXIMATE INTERNATIONAL EXPORT CONTROL LISTS AS
MODIFIED I COM REVIEW--APRIL-JULY, 1954
LISTS AS OF APRIL CHANGES RESULTING
LISTS AS OF
1954
LEVEL OF
CONTROL
FROM REVIEW
Number Items New Items
of Items deleted added
16 August
Number of
Items
I/L I (Embargo)
266 118*
19**
167***
I/L II (Quota)
92 80
9
21
I/L III (Surveil-
lance)
102 88
48
62
460 286
76
250
*Decontrolled, downgraded to List II or III, or
included in another item.
**Including items upgraded from List II or III.
***Including items substantially redefined.
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Next 1 Page(s) In Document Exempt
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FRANCE'S GLOBAL POSITION UNDER REVIEW
The Indochina agreement of 21 July and Premier Mendes-
France's proposals for Tunisian reform highlight the emerging
adjustment of France's view of its global position and point
to a reassessment of the French Union concept. France desires
to counterbalance a resurgent Germany by developing its African
dependencies as the basis for the claim to great-power status,
but intensified unrest in Tunisia and Morocco poses a threat to
such plans.
Former foreign minister Bidault's efforts to maintain
the facade of France's prewar prestige finally crumbled in
the face of Mendes-France's persistent demand that the govern-
ment adjust its commitments to national capabilities. French
acceptance of a diminished role in Asia had commenced with the
withdrawal from Syria and Lebanon after World War II and con-
tinued with the cession in 1950 of one of the five French
enclaves in India. Two more have since been relinquished, and
negotiations looking toward early withdrawal from the others
have been undertaken. French concessions in Indochina in the
past few months have been so sweeping, however, that France is
being forced to reassess not only its claim to global power
status, but also the whole concept of the French Union.
The French Union formula as devised after World War II
represented an effort at accommodation to postwar attitudes
on colonialism. Several administrative categories were estab-
lished. Departments of metropolitan France were recognized in
northern Algeria, Reunion Island, French Guiana, and the West
Indian islands of Martinique and Guadeloupe. The constitution
of 1946 made provision for theoretically independent "associated
states," and after four years of negotiations this status was
conferred on Vietnam, Laos and Cambodia. The UN trusteeships
of Togoland and the Cameroons were designated "associated terri-
tories." With the exception of the protectorates of Tunisia and
Morocco, which remain technically outside the Union, all other
posessions were classed as overseas territories.
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All parts of the Union were given representation in the
Assembly of the French Union, a body of no real power, half
of whose members are elected by the French parliament to
speak for metropolitan France, and half by local assemblies
for the rest of the Union. The associated and overseas
territories also send to the French National Assembly a few
representatives chosen on the basis of a limited franchise.
Though French spokesmen frequently drew a parallel
between the Union and the British Commonwealth, at least three
important differences existed. First, much more emphasis was
placed on close cultural and political ties with the mother
country: the ideal envisaged was the assimilation of overseas
peoples to French civilization ..nd political representation in
Paris rather than separate development along their own national
lines. Second, though the Associated States were proclaimed
to be "independent within the French Union," they were refused
the right to withdraw. Third, though the constitution of 1946
makes provision for evolution for overseas territories to the
status of associated state, change in the administrative setup
of the territories has actually been slight.
In the less advanced territories with no strong nation-
alist movements of their own and where independence was clearly
impracticable--such as French West Africa and French Equatorial
Africa--this system worked fairly well. In Madagascar the
French were able to crush the nationalist uprising of 1947
by force.
In the more advanced dependencies, however, the Union
concept proved less satisfactory, and in Indochina it broke
down completely. The French had never been fully accepted in
Vietnam and their replacement by the Japanese during the war
gave a powerful boost to Vietnamese nationalism. Despite the
uneasy control re-established by Paris after the war, the
Vietnamese were unwilling to settle for "independence within
the French Union" and Paris was finally forced to promise them
the right to secede.
A similar pattern is already apparent in North Africa.
The French had long excused their refusal to grant independence
to Vietnam on the grounds that the North African nationalists
would demand like concessions. The grant of full independence
to the comparatively backward territory of Libya has been an
even more direct stimulus to the growing political unrest in
Tunisia and Morocco. An additional complicating factor in
.both protectorates is the existence of large French settler
groups exercising strong political pressure in Paris. Conse-
quently, despite sporadic efforts at "reform," local French
administration has turned increasingly to repressive measures.
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The Growing French Concentration on Africa
' TIAl
Frustrated by the dissipation of its hopes in Indochina
and by the specter of German predominance in Europe, France
is now focusing its attention increasingly on Africa--most
immediately,-North Africa. Francois Mitterrand, minister of
the interior, is the spokesman for a growing group which
emphasizes that France is primarily a Mediterranean power.
This group argues that Africa provides a large reservoir of
economic strength which will permit France to compete on equal
terms with a resurgent Germany in a European common market.
On the military side, this group looks to Africa for the
manpower to maintain a semblance of big-power status.
Mendes-France, in offering sweeping concessions to
Tunisian nationalism, is trying to reverse the shortsighted
policies which generated the wave of terrorism in Tunisia and
Morocco following the deposition of the Moroccan sultan in
August 1953, He won cabinet approval for his Tunisian
proposals, however, only after a heated five-hour meeting, and
violent Assembly opposition is certain to ensue. Current
terrorism has tended to strengthen the French settler influence
in Paris, and Mendes-France, himself, made plain in his inter-
view with the bey of Tunis on 31 July that France will brook
no attempts to sever the ties with North Africa..
An early truce with moderate nationalists like Habib
Bourghiba could gain for France a breathing spell to deal with
Mendes-France's economic and political problems in Europe.
The re-establishment of harmonious relations between Frenchmen
and North African nationalists is essential not only to,make
these areas political and military bastions for France and
the West but also to mobilize North African resources in
support of France's economic position in Europe.
cc1 TIA1?-
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