WEEKLY INTELLIGENCE SUMMARY NO. 90

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000300060026-5
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 9, 2016
• Document Release Date: January 29, 1999
• Sequence Number: 26
• Publication Date: November 29, 1949
• Content Type: SUMMARY

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OFFICE OF RWORTS AND ESTIMATES
TRANSPORTATION DIVISION_
29 November 1949
Weekly Intelligence Summary No. 90
SECTION I. SUMMARY OF TRENDS AND DEVELOPMENTS
The eagerness shown by Yugoslavia to conclude air agreements with the
US, UK and Other Western powers, even though they be of an interim or pro-
visional nature, may be attributed in part to Yugoslavia's desire to in-.
sure direct air outlets to the West in advance of placing new curbs on
transit flights through Yugoslavia by airlines of the USSR and Cominform
'countries. (Item No. 1, A)
The Soviet-built IL-12 air transport, which was designed to replace
the DC-3, is apparently still operationally disappointing. (Item No. 2, B)
A plan to transfer to US-.flag registry the merchant vessels of the
China Merchant Steam Navieation Company has been agreed upon by the
Nationalist Ministers of Foreign Affairs and of Communications, according
to a recent unconfirmed report. In the meantime, a Nationalist repre-
sentative has admitted that Communist authorities have requested company
officials to abstain from defection and to concentrate as many vessels as
possible at Hong Kong in anticipation of early British recognition.
(Item No. 3, B)
The Italian railroads have made a remarkable comeback since their
days of partial paralysis following the war and are now close to prewar
efficiency. As a result of a recently approved program involving the ex-
penditure of 57 billion lire ($91,200,000) from the ERP lire fund, the
system will probably be able to meet the needs of the Italian economy While
handling the several million pilgrims expected during Holy Year, which be-
gins in December 1949. (Item No. 4, C)
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A majority of the General 'Managers of European railways who met in
2russels recently to discuss the question of unification and coordination
uf the international organizations on rail transport were satisfied to
4aintain the status quo of existing organisations and simply moved to
create a committee on coordination. Although a formula for the committee
was agreed upon, the minutes of the meeting have not as yet been released
and the oommitteels exact terms of reference are not known.
(Item No, 6, 0
Chinese Nationalist determination to discourage foreign trade with
Communist ports has led to the shelling of a second US-flag Isbrandtsen
Line vessel engaged in trade with Shanghai in defiance of the Nationalist
'closure" of that port. The vessel, SIR JOHN FRANKLIN, which has now
arrived at Shanghai, was reportedly hit twelve times by Nationalist fire,
although there was no injury to its personnel and damage inflicted on the
vessel itself was apparently superficial. (Item No. 6, A)
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SECTION II. CURRENT DEVELOPMENTS
CIVIL AVIATION
1. The ea erness shown by Y4 oslavia to conclude airligreements with the
US, UK and other Wiern powers, even though they be of an interim or pro-
visional nature, may be attributed in part to Yugoslavia's desire to in-
sure direct air outlets to the Nest in advance of placing new curbs on, or
even prohibiting, transit flights through Yugoslavia by airlines of the
USSR and Cominform countries. Restrictive measures by Yugoslavia against
the airlines of these countries would result in retaliatory action against
JIT, the Yugoslav airline. Czeohoslovekia, for example, could deny JAT
access to Prague, vhich is at presentYugoslavia's only point of direct
contact with Western airlines.
The air traffic from Eastern Europe through Yugoslavia to Albania has
long irked the Yugoslays.; Aeroflot and Masovlet transports, in addition
to their scheduled services, have increased considerably the number of
special flights to Tirana. That the Czechoslovak Airline (CSA) is antici-
pating a move on the part of the Yugoslav Government to limit or prohibit
Eastern European flights beyond Belgrade is possibly evidenced in the
recent unsuccessful attempt by CSA to obtain transit rights for regular
services through Rome or Brindisi en route to Albania.
CSA is the only Eastern European airline with air rights into Italy.
Although it has not served Tirana on a scheduled basis in the past, CSA
now seeks to establish a route to that city, probably because it could
serve Satellite purposes in the event that the shorter route through
Belgrade is closed by the Yugoslavs to Aeroflot and Mazovlet. (Secret)
2. The Soviet-built IL-12 air transport, which was designed to replace
the DC-3, is apparently still operationally disappointing. (The aircraft
is supposed to have a range of 1,240 miles and a cruising speed of 200
m.p.h. carrying 27 passengers and five crew members.)
This estimate may be supported by the fact that Czechoslovak Airlines
(CSA) has been forced to ground its IL-12's lately introduced on Inter-
national routes after manyemonths of testing. During recent Italian-
Czeohoelovak discussions concerning rights for CSA to overfly Italy en
route to Nicosia and Lyddepa CSA official admitted that the IL-12 failed
to measure up to expectations. When asked why CSA, using the IL-12, could
not fly directly through the Balkans to the Middle East, this official is
reported to have indicated that CSA is "not enthusiastic" over IL-12 per
formance compared with that of the DC-3.
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Evidently it is not expected that the reported difficulties connected
with the IL-12 will be soon overcome, as CSA is continuing its efforts to
obtain DC-3 aircraft and parts by either legitimate or illegitimate means.
Following the futile attempt of CSA to involve Swiss Air in a clandestine
deal (see piTt. Weekly No. 800 Greek official sources report that a Soviet
commercial attaohei formerly stationed at Prague is now in Zurich for the
purpose of "supporting" CSAls endeavors to purchase four DO-3 aircraft.
The Greek Government does not suggest how the Soviet representative might
be able to aocomplish hi a purpose, but evidently gives some credence to
the report and has asked the US to investigate.
The reasons motivating the recent withdrawal of II042's utilized by
Aeroflot on the Mosoom.Helsinki route and the re-establishment of services
with the Soviet-type DC-3 are not known* but operational difficulties may
well have been responsible for this decision. (Secret)
SURFACE TRANSPORTATION
3. A .lan to transfer to US-fla re istr the merchant vessels .f the
China ere ant team a ga ion ompany SN) has been agreed upon by the
Nationalist Ministers of Foreign Affairs and of Communications, acoording
to a recent unconfirmed report. (See p/Tr Weekly No. 87.) The Nationalist
objective is to ensure continued operation Of the veisels under their con-
trol, while preventing further amon defections to the Communists.
About half of the CMSN ships are under mortgage to the US Maritime
Commission, to Which the Nationalist Government is heavily indebted. Under
the plan, the vessels mould be turned batik to the Maritime Commission far
transfer under US registry to the commercial organization of William Hunt
and Company in Hong Kong. This company would retain the CON organisation
and properties intact, operating the vessels in return for a fixed fee,
(Hunt performed a similar service for the Nationalist Government during the
war.) Any other revenue in excess of operating costs mould be applied to
the Maritime Commission debt.
Since the logistic capabilities of the Nationalist forces on Taiwan
are heavily dependent upon the oontinued operation of the CNSN vessels,
which constitute the major portion of the ocean-going shipping now avail.
able to the Nationalists, the latter have an urgent interest in acquiring
any added protection which a foreign flag might afford to their shipping,
The Communists, on the other hand, are critically deficient in ocean-going
tonnage. If the Communist regime is recognized by major Western powers,
its claim as the legitimate Chinese Government to the remaining properties
of the Nationalist-owned CM= mould be strengthened. In the meantime, a
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Nationalist representative has admitted that Communist authorities have
requested company officials to abstain from defection and to concentrate
as many vessels as possible at Hong Hong in anticipation of early British
recognition. (Confidential)
4. The Italian railroads have made a remarkable comeback since their
days 0 pa a para ya s o owing the war an are now c ose to prewar
efficiency. As a result of a recently approved program involving the
expenditure of 57 billion lire (#91,200,000) from the ERP lire fund, the
system will probably be able to meet the needs of the Italian economy
while handling the several million pilgrims expected during Holy Year,
which begins in December 1949.
The program calls for the immediate expenditure of 47 billion lire,
including 31.2 billion lire for construction and repair of rolling stook
and 15.7 billion lire for 97 projects involving reconstruction of rail
lines and buildings. The balance consists of projects which are in
course of screening by the Ministry of Transport and the ERP Mission,
Italy.
Although emphasis is placed on freight oars as more essential to
national reconstruction and economic rehabilitations the program will
authorize repairs and new construction providing seating space for an
additional 75,229 passengers per day. As a result, passenger service for
both regular Italian travelers and the anticipated visitors during Holy
Year will be improved. The vast labor requiremsnits for fabrication and
installation in coming months will total more than 14 million work days,
and a considerable permanent increase in employment for the operation and
maintenance of the expanded inventory of plant equipment and rolling
stock will result. (Restricted)
5. A ma on of the General Mans ors of Rtr2peaLrb_ rlwe who met in
Brussels recent y to iscuss the question-Crilnification an coordination
of the international organizations on rail transport were satisfied to
maintain the status quo of existing organizations and simply moved to
create a committee on coordination. Although a formula for the committee
was agreed upon, the minutes of the meeting have not as yet been released
and the committee's exact terms of reference are not known.
Most of the General Managers appeared reluctant to sponsor any
drastic step in the direction of endorsing one overall body to replace
the existing international nonegeveramental rail organizations, and sem
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;;.e look to ECE in Geneva to assume the initiative with respect to this
proposal. Only the representatives of France, Portugal and Italy
expressed support for the formation of a central organization. On the
other hand, while Luxembourg, Switzerland, Germany and Austria concurred
with Belgium, Netherlands, Sweden, Norway and Hungary in favor of the
status quo, it was indicated that the former group of countries would per
,haps have been willing to go further toward unification, if a less drastic
solution of the problem had been presented. (Reetrioted)
Chinese Nationalist determination to disooura foreign trade with
Commuaii7FWErgigi ed to the shel lug of a secon U :Nig Is randtsen
nine vessel engaged in trade with Shanghai in defiance of the Nationalist
"closure" of that port. (See Or Weekly No. 89.) The vessel, SIR JOHN
FRANKLIN, which has now arrived at Shanghai, was reportedly hit twelve
times by Nationalist fire, although there was no injury to its personnel
and damage inflicted on the vessel itself was apparently superflaial.
The following circumstances surrounding the incident have been re-
ported from the vessel to Isbrandtsen's Shanghai agents. The SIR JOHN
FRANKLIN, proceeding up the Yangtze in shallow =tare on 26 November,
replied to a Chinese naval order to stop and anchor by requesting that the
vessel be boarded by the Chinese either under way or at an anchorage in
deeper water. According to the Isbrandtsen version, two Chinese warships
thereupon opened fire without warning from a point-blank, broadside range
of 500 yards, maintaining a "constant barrage" for about an hour. When
the US vessel reached deep water and signaled a pursuing warship that it
was anchoring, the latter continued firing, causing the SIR JOBB FRANKLIN
to proceed further up the river.
This incident entailed several factors wtioh were not involved in
previous instances of Rationalist interception of Isbrandtsen vessels. At
the request of the Isbrandtaen Line, for example, the Department of State
instructed the Consulate at Hong Kong on 26 November to advise the
Nationalist Foreign Minister of the vessel's itinerary. In doing so,
however, the Consulate was to make it clear that the Department assumed no
responsibility for giving similar notification in future cases. It is
not yet clear whether this notification reached either the Foreign Office
or the Nationalist Navy prior to the shelling of the SIR JOHN FRANKLIN.
In contrast to previous instances, the Master of this Isbrandtsen vessel
was reportedly under instructions to "obey all Nationalist signals and
take no chances." In this incident, moreover, according to the Isbrandtsen
report, there ees no varniriz shot fired by the Nationalists across the US
ship's bow.
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Meanwhile. the US is still awaiting a reply from the Nationalist
Foreign Office to official representations regarding the shelling earlier
this month of the FLYING CLOUD, and the consequent endangering of the
lives of US citizens. As in the case of the FLYING CLOUD, however, pre-
liminary information concerning the SIR JOHN FRANKLIN incident indicates
that there was no Chinese intention either to damage seriously the
vessel or to injure its personnel, in view of the ineffective shelling
at extremely close range.
? The circumstances surrounding the naval attacks on US vessels indi-
oate that the Nationalist Navy is prepared to resort to direct military
action in order to terminate foreign shipping movements into Communist
ports. The protestations of the Nationalist Foreign Office that the
closure and subsequent threats of force were directed primarily against
British shipping and that US shipping would be relatively unmolested may
have been sincere. Apparently, however, the Nationalist Navy, controlled
directly from Taiwan by Chiang Kai-shek, is carrying out his policy regard-
less of the nationality of vessels, although it may not desire to go to the
extreme of sinking or seizing ffS-flag vessels. By limited military action,
Chiang Kai-shek may believe, for example, that he can make marine insurance
prohibitive and thus attain his objective without unnecessarily inflaming
US public opinion. (Confidential)
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