WEEKLY INTELLIGENCE SUMMARY NO. 82

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300060018-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 9, 2016
• Document Release Date: January 29, 1999
• Sequence Number: 18
• Publication Date: October 4, 1949
• Content Type: SUMMARY

Approved For Rele se 2000/08/29 : CIA-RDP79-0109 000300060018-4
OFFICE OF REPORTS AND E TIII':AT1S
Weekly Intelligence Summary No. 82
The action of a US ship operator in defying the Nationalist
"closure" of Shanghai may provide an advantage to either the Chinese
Nationalists or the Chinese Gonmcunists, and has already resulted in a
loss of US prestige. The Chinese Nationalists have enforced their
declared closure of the port of Shanghai by intercepting two US-flag
vessels departing from the port and a third US ship attempting to
enter Shanghai. This incident illustrates the potential danger of
uncontrolled action by US nationals engaged in international commerce,
miio can create circumstances in which the US Government may be forced
to take premature action before final US policy has crystallized.
(Item No. 1, A)
The US irregular air carrier, Transocoan Air Lines, which operates
the Pakistan airline, Pakair, under contract, and which recently became
associated on a similar basis with Iran's Iranair, is now considering
the possibility of establishing an air service in Afghanistan.
(Item No. 2, C)
The US, UK and France are now considering some form of joint or
concurrent resistance to certain conditions inserted by Iraq in newly
extended temporary operating permits for non-Arab international air
carriers transiting the country. (Item No. 3, B)
o DECLASS
NEXT REVIEW OAT
AUTH: H, 70.2
Approved For Release 2000/081 A-RDP79-01090A000300060018-4
 Approved For F ease 20@NN&T1 179-09.90A000300060018-4
SECTION II. CURRENT DEVEtopMi NTS
SURFACE TRANSPORTATION
1. The action of a US ship operator in defying the Nationalist
f9closure of Shanghai may provide an advantage to either the Chinese.
Nationalists or the Chinese Communists, and has already resulted in a
loss of US prestige. This incident illustrates the potential danger
of uncontrolled action by US nationals engaged in international com-
xaerce, who can create circumstances in which the US Government may be
forced to take premature action before final US policy has crystallized.
The Chinese Nationalists have enforced their declared closure of
the port of Shanghai by, intercepting two US-flag vessels departing from
the port and a third US ship attempting to enter Shanghai. The Flying
Independent and the Flying Clipper, both Isbrandtsen Line cargo vessol.s,
sailed from Shanghai 29 September with a reported combined cargo of
10,000 tons and passenger lists consisting principally of about 120
South Korean refugees. This action was taken in spite of a previous
Nationalist notice that the vessels, then in Shanghai, would be per-
mitted to depart only if they carried neither passengers nor cargo and
that they-would be subject to "appropriate action" by the Chinese Navy
if they left port under any other circumstances (see D/Tr Weekly Noe
81). The vessels were intercepted at the entrance to the Yangtze by
Nationalist warships which threatened to fire if the US ships were not
anchored immediately. While refusing requests that the Flying Inde-
pendent be permitted to proceed to Korea with the refugees, and that
both vessels. be permitted to move to safer waters, the Nationalist naval
units reportedly ordered all Chinese passengers transferred to a Chinese
vessel and the cargo either dumped overboard at once or retunxted to
Shanghai for discharge.
The two vessels have been escorted, under threat of fire, to a
Nationalist port in the Chusan Archipelago, about 100 miles southeast
of Shanghai. Following the report to Isbrandtsenrs New York office of
a further refusal by the Masters either to return to Shanghai or dump
their cargo overboard, the, vessels have been instructed by New York to
proceed on their scheduled voyage without further delay "barring actual
physical violence or actual shooting across bow." In any case, there
is to be no cooperation. whatever with the Chinese navel forces, who may
therefore be compelled, for example, to provide the physical means to
unload the cargo or to move the vessels without use of their engines,
The third Isbrandtsen vessel, the Flying Trader, which had been denied
Approved For Release 2pffff ?1 F }A ,P79-01090A000300060018-4
 Approved For Rele a 200Q-
-0109000300060018-4
'utrance to Shanghai by the intercepting Nationalist warships, remained
at anchor until the naval craft escorted the other vessels southward
.ind. then slipped unobtrusively into Shanghai without incident. It
reportedly carried about 3,00O toes of cargo for Shanghai.
By demonstrating their ability to enforce the closure, the
Nationalists have countered, in efVoot, any contention that the closure
is nWz legal because it is not effective. fho Comfanists, for their
part, have expedited the movement of the Tsbrandtsen vessels in the
belief that any resolution of the blockade issue would probably redound
to their advantage. Successful defiance of the Nationalists by the
sbrsndtsen vessels, for example, would have opened the way for further
blockade running and the virtual collapse of the Nationalist closure,
thus providing Communist China with an outlet for vitally needed trade
with the outside world. Interception of the vessels, on the other hand,
could be hoped by the Communists to produce a serious incident in-
volving the US which might, in turn, result in use of the US Navy to
break the blockade. The Comnunists probably hope that the incident
will in any case lessen sympathy in the US for the Nationalist cause.
` I-te USmeanvrhile. which does not recognize the Nationalist blockade,
as not protested the incident, but has requested the Chinese Foreign
Office to state the basis for its action and its intention with respect
to an early release of the vessels. Repeated requests from the
-sbrandtsen Line .for US naval intervention have been denied.
The UK has been involved in similar incidents, and is following
this situation closely. In recent weeks two British-flag vessels have
been detained by the Nationalists and the cargo of at least one of
theca confiscated. This action, which the UK presumably regards as a
violation of international law, led to a relatively mild official pro-
test to the Nationalists, demandinf; compensation for the confiscated
property. A patrolling British frigate, which escorted one of the
intercepted British vessels out of Chinese Nationalist waters, is now
reported to have been in contact with the Isbrandtsen vessels under
"British instructions to take no measures to obtain release of the US
vessels if detained by "non-violent" measures. The frigate, hoivover,
was authorized to intervene if necessary. on "humanitarian grounds" and
to act in accord with standing instructions if "violent measures" were
attempted "'clearly outside territorial waters."
The tactics thus far employed by the Isbrandtsen Line in the entire
incident suggost a carefully premeditated attempt to force the issue of
the Shanghai blockade under the most favorable possible circumstances,
Approved For Release 2000/08/2~RDP79-01090A000300060018-4
CONFIDENTIA
 Approved For Rele`ke 2000/0
ru
M"~9-0109000300060018-4
with a view to opening up ct highly lucrative trading area. The
decision to enter Shanghai and thence to defy threatened action upon
departure was taken by the vessels' owner without the sanction of the
US Government. Entry into Shanghai, moreover, was allegedly obtained by
misleading information given the Nationalists, it has been revealed
that the vessels are carrying, in addition to the Korean refugees,
nationals of both the US and UK, as well as almost 3,000 tons of US
Army "through cargo" consigned to Korea. The company's radio messages,
telegrams and press releases, moreover, have obviously been designed
to exert pressure for US Government intervention. The entire sequence
of events has clearly demonstrated that private US citizens operating
US-flag vessels in foreign waters can play into the hands of foreign
interests desiring to precipitate favorable action in matters conearn-
ing US foreign policy. Such couduct can lead to consequences unfavor-
able to the US, which may seriously affect US prestige abroad and
commit the US Government to an undesireable course of action, unneces-
sary under other circumstances. (Secret)
Approved For Release 2000 4fl , tNYrA 01090A000300060018-4
 Approved For Relea* 2000/08ffif 1TJAk0907460300060018-4
The US irregular air carrier, 'cansocean Air Lines, which operates
pie Pakistan airline,, .kair, unde'r contras ; a~~n "rrhieli recently became
ua: ooiated on a si-nilar basis with Iran's Iranair, is now considering
the possibility of es tablishing an air service in Afghanistan.
=though the Afv.;hons have a small air force equipped ,,iith six passenger
3'ritish Avro Anson XIX aircraft, no civil air connections with the West
have existed since the German Lufthansa caused operating from Tehran in
s_-J89. (A Soviet 0C courier blight, howevver, is made to Kabul twice
A US-operated air cargo line would be of great advantage to
Afghanistan as a means for expediting the export and reducing the trans-
portation costs of karakul skins (Afghanistan's principal source of
foreign exchange). This new Transocean venture, moreover, should be
{ acilitated by reason of the technical staff and maintenance resources
available at Karachi. While serious reaction by the USSR to an
extension of US aviation interests into Afghanistan is not likely, the
undertaking, if it materializes, will be fully-exploited for the pur-
pose of anti-US propaganda. (Secret)
The US, UK and France are now considerin some form of joint or
concurrent resistance to certain conditions inserted by Iraq in newly
extended temporary operating permits for non-Aral) international air
'.arriers transiting the country. Strong
opposition will certainly be
registered to Iraq's revival of the long discarded Arab League reserve-
on of air traffic between Arab States to Arab airlines.
Acquiescence by non-Arab countries in Iraq's limitations of "fifth
freedom" rights :would: (1) give impetus to the trend toward restriction
of rights for foreign carriers, successfully initiated recently by
India in regard to air traffic between India and Pakistan (See A/Tr
Weekly No. S1), and (2) result in c iabliahment of restrictions on
revenue traffic in contiguous areas extending from Cairo to Calcutta,
thus seriously affecting the ability of foreign carriers to pay their
way en route between Europe and they Far East. (Secret)
Approved For Release 2000;fry ,1090A000300060018-4