WEEKLY INTELLIGENCE SUMMARY NO.76

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300060011-1
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 9, 2016
• Document Release Date: January 29, 1999
• Sequence Number: 11
• Publication Date: August 16, 1949
• Content Type: SUMMARY

lr Approved For Relbe
OFFICE OF REPORTS AND ESTIMATES
010000300060011-1
TRUSPORTATION GROUP
Weekly Intelligence Summary No. 75
SECTION I. 66MMARY OF TRENDS AND DEVELOPMENTS
16 August 1949
The DS has decided to relax its opposition somewhat to requests
from Eastern European air carriers for commercial flights over US
occupation zones during consideration of the British contention that
Western European sedurity no longer requires a defensive posture vis.a0
vis Satellite civil gviation. This step has been taken in the interest
of re-establishing a united front toward the Soviet bloc in this respect.
(Item No. 1, A)
Recent French Cabinet decrees establishing special financial con-
trols over the expenditures of the French National Railways (SNCF) indi-
cate a growing Government concern over the burden imposed on the national
budget by continuing railway deficits. All proposals relating to oper-
ating and investment budgets and other important fiscal matters mast now
be submitted to a oontrol mission at SNCF headquarters reporting directly
to the Minister of Finance. The Government will probably support
eeonomies in the railway budget that maybe indicated by the findings
and recommendations of the control mission. For reasons of political
expediency, however, the Assembly may not be willing to approve any
drastic implementation of railway economy proposals when the subject of
deficits in the nationalized industries is debated in :October.
(Item No. 2, B)
A, US steamship agent in Shanghai has been approached by a Chinese
group, including the President of Aurora University, with a plan for
Operation or US vesaela to Shanghai. The group taserts that a National.
1st safe conduot guarantee can be obtained for mevament to Shanghai of
two US-flag vessels per month for three months. (Item No. S,
Approved For Release 2000/
90A000300060011-1
Approved For Reuse 2000/08/
2 -
ITIVW-011:0A000300060011-1
A major improvement in the Communist oil situation in the Far East
is being implemented with direct participation of US-flag tankers,
several of which are effectively controlled by foreign interests. A
number of US and foreign-flag. tankers have been chartered by Chinese or
Soviet interests to transport gasoline and kerosene from Constants,
Rumania,to Shanghai and Dairen, and some of the vessels are already
engaged in this traffic. The combined capacity of these vessels is
sufficient to sustain a movement of oil_products which would be of con-
siderable military significance. (Item No. 4, A)
Approved For Release 200t
OMB -01090A000300060011-1
Approved For Release 20M
?Mafte79-01up000300060011-1
3 e
SECTION II. CURRENT DEVIZOPISMTS
CIVIL AVIATION
1. The US has decided to relax its ot2211ILT1 somewhat to requests
from Eastern European air carriers for commercial flights over US
occupation zones during consideration of the British contention that
Western European security no longer requires a defensive posture visa
vis Satellite civil aviation. This step has been taken in the interest
of re-establishing a united front toward the Soviet bloc in this respeet.
Difficulty in enforcing strictly the US-UK ban on any increase in
Satellite commercial air penetration of Western Europe has been
accentuated, not only by the UPs_willingness to approve special flights
from time to time, but also by a similar attitude on the part of various
Western European countries not formally party to the US-UK agreement.
Increased trade relations between Eastern and Western Europe have induced
these countries to admit chartered or irregular aircraft flights from the
Satellite States and have tended to generate pressure on the US for a
change of policy.
In addition to diplomatic flights, requests for air transit of US
occupation zones by Satellite carriers have included the movement of:
(1) delegations to trade expositions and comnercial conferences; (2)
competitors in international sporting events; and (3) perishable food-
stuffs. Frequent rejection by the US of such applications, particularly
of foodatuffs, has caused irritation in the consignee countries.
Eastern and Western European airlines are ready to take immediate
advantage of the relaxation of US policy. The new director of the Czecho-
slovak Airline (CSA) has recently announced that reorganization plans in-
clude an increase in non-scheduled special flights to foreign countries.
A number of applications from the Yugoslays for flights over the US Zone
Austria, furthermore, are pending.
An increase of East-West flights, on the other hand, may carry some
disadvantage,because it will present recurring opportunities for expand-
ing the clandestine importation of aircraft parts and other coods barred
to the Satellites under embargoes imposed by the OEEC countries, and will
accentuate the problem of enforcement of export controls by these
countries. Reports indicate that CSA is continuing to surreptitiously
accumulate spare parts from Western Europe for its DC-31s and that the
Poles, who are seeking to increase scheduled flights to Paris, are also
attempting to set up undercover agents: in Switzerland and France for pro..
ourement of aviation equipment and instruments urgently needed by the
civil airline LOT and the Polish Air Force. (Secret)
Approved For Release 20,to
79-01090A000300060011-1
Approved For Reisese 2
- 4 -
IAP79-01094A000300060011-1
SURFACE TRANSPORTATION
2. Recent French Cabinet decrees establishing special financial eon-
trols-75-6711-7-iiRERtures 677076. French National Railways (SNCF) indi-
cate a growing Government concern over the burden imposed on the
national budget by continuing railway deficits. All proposals relating
to operating and investment budgets and other important fiscal matters
must now be submitted to a control mission at SNCF headquarters report-
ing directly to the Minister of Finance, While the mission does not
have veto authority over the decisions of the SNCF Board of Directore,
its recommendations will certainly carry considerable weight.
The National Railways' prospective deficit for 1949, variously eeti-
mcted between $80,000,000 and $150,000,000, results not only from loss
of traffic to highway transport, but also from increased expenditures
caused by higher prices, wages, and taxes, and from the top-heavy
organizetional structure of the railways. As revealed by reports of a
Commission of Inquiry appointed last year, an excessive number of pen-
sonnel, especially administrative, and heavy charges for social security
payments and pensions to a large number of retired personnel also con-
tribute to the deficit. (Engineers retire at 50 and other railwaymen
at 65, ten years earlier than corresponding personnel in the US. For
every ten railwaymen in active service in France, there are seven more
drawing pensions.) The Commission's report, moreover, criticized the
SNCF for its practice of making operational decisions on technical
greends without due regard for economic considerations and cited the
existence of a large number of unprofitable branch lines.
One of the first items on the agenda of the French Assembly when it
reconvenes in October will be the problem of recurring deficits in the
nationalized industries. The Government will probably support economies
in the railway budget that may be indicated by the findings and recom-
mendations of the control mission. For reasons of political expediency,
however, the Assembly may not be willing to approve any drastic imple-
mentation of railway economy proposals. (Confidential)
Approved For Release 200
N11141.
A-RDP79-01090A000300060011-1
Approved For Releasi 200ItttitittiVIT-010984t000300060011-1
"
.51
6
3. A Ile steamship a.ont iL lihanghal has been approached by a Chinese
group, including the. .'-'-e317.1cn' of Aerera Unlvq-eity, with a plae for
operation of US veseele be Shenghai. The group asserts that a
Nationalist safe corAect guarentee ror movorrnt to Shanghai of levo US-
flag vessels per moeee fer three meeths can tu obtained. Subject to
gationaList approval ee the commode/di s tra!sportod, the vessel:: reuld
be permitted to car] r etree l'rom Heng Kong eo Shan;hal, returniue to
Hong Kone with carer.", te, Geed t. Hatienallet ieftorests. Ths
it Mirleter of Co:i e;.ritine is ',teed to 1,* imelicated in te
If the report eree, aed if *e le not ?erele a scheme P)r pt--
sonal advantage, it ee,fi: irdicate ehat the Netionaliets are ere:aved to
give tl-fer Communists eetain merchaneiea and at least a limited cit. et
to Huri;_ (on g in order ,e extrIcate eruJecirfee eareoce from SharveAl.
Althoe,h the awnere ecrefele ere Ite-elly free to engaee eeeh u
transaction, their eee eetion ceCld invo]vc the J$ flag -la J
(Confidential)
. /2.21,12.21.12112.Evc,a,,?i in the CoieueLet situ-le:lea in Lilo elr East
is bei re implemente, 'I ltrect peredolpatice a ;JS-flag tnahlrs,
seeeral ef which art' e-feetively controlled ty for gr intereet':. A
number of US and form-flag tankeru 'lava leen chartered by 0e:finest) or
Sovxae interests to tree' oort gasoline and kerosene from Constie4s,
Rumania, to Shanhai eee Jelren, ana eerie of the vessels are atresiy
en,wee in this trae'le.
3 p---tels in trede to Sevist or Clinese Ceimuest
ire" and iens centrary to no clearly expreisee US
eenvt, thet the delivery of oil prodeoev to
ee! pt or Chinese Ceranunist centrol is deee-lental
iee. The circueseaneos surroundirg the aelvie:.y
ineere3ts an centeol and opor JS
? ane ',Nut te,e le Covernment,
en Jr /aw, eay ep ulable to restrain tto eeve-
v, Jsole, even ebeueh -thee are eneaged in trafic
titerests.
Chartering of 0-
ports violates no Uf!
policy. It is obvi:r
areas unier complete
to US national secue
suegest, moreover, T
vessels ey deliberae
absence ef a violate
meet of such US-flee
opeosed to its seour
The background the trensactioe is 2tseure uad many deeelle are
subject to confllotee reeorte. Net eeen .he ownership of Ai; VS
veasels is entirely ,near. .The US veescls appear to have been aeLegned
to their present acteteete after a peseibly deliberate series c) qo711)11-
sated transactions 'tnviAlin 1,srebot, time, and eolaee chartev. In
teese trensactions, eeveral CeineEe corporations have successevely
controlled the moveeceti of ths vef,sels and at least one of bee taekers
Is new under outriele j.4,-17t,cr to the -ovtet Remenian Transport ee.
Approved For Release 20
RDEttlq
At79_01090A000300060011-1
Approved For Rele?aer4e 2000
- 6 -
WiNi01091k000300060011-1
The USSR has had difficteity in satisfyirg Its petroleum require-
ments in the Far East in view of the limited production of Sakhalin,
inadequate capacity of the Tmns-Siberien Rsilroad, shortik!es of tank
oars, and the small fleet of Soviet tankers. Severe 1.oca1 shortages
have induced the 113ii to move some oii by barker from the Black Sea to
the Maritisle Provinces. It new appoarst moreover, tht the US3R is
attempLihr throuch :!oint Rumanian cor,parci tka alleeiate the petroleum
shortage of the Chinese ',om:aunists.
The tankers krini to hew been chartered in the Communist trade
represent the toenae ,e'alvalent of a qtajor pert of the entire rioviet-
flag tanker fleet ar:a tAiey prcvide the UCOR 1,;:th the nervices of modern
units which are sie.sntly uneeualled for speed and ofriciency in its owh
fleet. The combined caracity of those yessels is suiTicient to sustain
a movement of oil products which woulci be of lonsiderable military sig-
nificance. A concentration of first o1aN1 tankers In Communist hArbors,
moreover, might well An invitation to seizure. (Secret)
Approved For Release 2000/0t
1090A000300060011-1