OFFICE OF REPORTS AND ESTIMATES, CIA FAR EAST/PACIFIC BRANCH INTELLIGENCE HIGHLIGHTS NO. 15 WEEK OF 3 AUGUST - 9 AUGUST 1948

Document Type: 
Collection: 
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP79-01090A000500010005-1
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RIPPUB
Original Classification: 
S
Document Page Count: 
11
Document Creation Date: 
December 12, 2016
Document Release Date: 
October 24, 2000
Sequence Number: 
5
Case Number: 
Publication Date: 
August 9, 1948
Content Type: 
PERRPT
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Approved For Release 2001/08/26 : CIA-RDP79-01090A0005000100p5-1 Nft D-ZINTIA OFFICE OF REPORTS AND-E8TI ATES, CIA FAR EAST/PACIFIC BRANCH NO CHANGE IN CL ^, C ; DECLASStF1C:0 INTELLIGENCE IIIGIiLIGFITS NO. 13 WEEK OF 3 AUGUST - 9 AUGUST 1948 CLASS. CHANGED TO NEXT REVIEW DATE: AI}TH: .0P-&jp P1 11!T-7 PREVIEWER: 372044 SINN RY OF FAR EAST TRENDS AND DE ELOPUKNT8 UK provisional approval of the US proposed schedule of reparations shares of Japanese industrial assets revives hope that a final decision may be reached on allocation of -Japanese reparations (page 2) Japanese Communist are apparently losing ground in their current play for broader labor support (page 3)_9 The formation of the South Korean Goverment has been completed by Rhee Syngman in such a nor as to insure to himself masimtes goverrnental oontrol (page 3) m In China, the civil war continues unfavorably for the National Govern.. ment (page 4) o Rumored eohemes for currency reform to bolster the Govern- ment's finances appear to impracticable (page e), Cooperation betvwen the Commis is and Marshal Li Chi-'shen is revealed in their planning to hold a political consultative conference to establish a coalition government (page 4). The Tibetan Trade Conunission may find the UK not unfavorable toward Tibetan independence aspirations (Page 8), Serious disturbances in the Philippiucs following, the 15 August amnesty registration deadline now appear possible (page 6)0 Intensification of the Comm st.led irsurreotion in Burma has called for precautionary measures by the US Embassy Rangoon (page 8). Section III - Recommendations and summary of important estimate from the papers of a 21-26 June Southeast Asia Regional Conference (page lo), NOTE s In aaxaces dixag sect ions of Y. ee Y, tyre t 1 rnargilia notations are uaedt (1) (2) (3) Double asterisk .(**) -placed at beginning and end of infor. nation based solely on "S/ distribution'" series, Single Asterisk (*) -to flag item containing "S/S distribution" acriee. "A" i "B", or "C" -inrpor oe, in B/ 's opinion, of the item, with "A" representing the most important. ones. State Dept. declassification & r ttructions on file Approved For Release 2001/08/26 CIA-RDA-91b 01HIM-k Approved ForWease 2001/08/26: CIA-RDP79-01090 J0500010005-1 SECRET SECTION 11, DEV2,j OPM .,NTT?S IN SPECIFIED AREAS UE1TRAL UK has indicated acceptance of the US 2`?a coed schedule of Japanese "A" The UK states that it is prepared to accept the schedule of reparations sharea of Japanese industrial assets proposed by the US and presented to the FEC in November 1947, provided that certain changes are made, the effect of which would raise the UK share from 12 percent to 16 percent. This increase would cone from that portion of US and Australian shares which each of these two governments has indicated it is willing to tarn back to the reparations pool" for further distribution, The Ut staters that it will be responsible for k urma s s share and India for that of Pakic tom, In an effort to break a long stalemate on the question of division of Japanese industrial facilities as reparationcg the US proposed a schedule which would give each of the eleven FEC countries concerned (US, UK., USSR, -Australia,, Canada, China, France, India, Netherlands, New Zealand, and Philippines; Bur and Pakistan are seal-Ant, ?admi.ttance) a somewhat smaller percentage than it had hitherto agreed to accept. The US would receive 23 -percent, but of Vila, 18 percent would be held as a "kitty" for subsequent distribution to the other ten nations on any basis mutually agreeable. The proposal was accepted without qualification. by Australia, New Zealand, Canada and China and "approva::d" by France, However, the USSR rejected the proposal. Ih- creupon, the Department of State sought UK acceptance in order to pave the -say for ultimate unanimous acceptance of the US proposal, or at least to make possible a TIS interim directive to effectuate the division of reparations, -backed by 10-member acceptance of the U proposal, The UK provisional approval of the US proposal may lead to a final decision on allocation of shares on either of the two bases contemplated by the Depart.. wwent of Std; e, However, such a decision would still leave open the question of they amourn.t of reparations finally to be made available. Currently, 30 percent of the tentative reparations list is being distributed an an advance >hip mnt to China, the Philippines, US (for Malaya and Burma) and the Nr ther- lsndc (for the N1I)? However, the Inability of the FEC to arrive at a final solution on Japanese reparations has hindered Japanese economic rehabilitation becauze of tha uncertainty as to whether part of the 70 percent still to be made available might not, after all, be left to the Japanese and because of ache rapid deterioration of many of the plants being hold as possible reparations? Approved For Release 2001/08/26: CIA-RDP79-01,.Q! Approved For Release 2001/08/26 : CIA-RDP79-01090A000500010005-1 SECRET ALA G Japanese o oar _s ?R r ? tadka ran the recent occupation-inspired restrictions on the si.ara activitios a governni nt employees may b modified for lack of non - M? fox rrni.s ; st:.pport, llopu lar seepticis of the ;access of any defiance of `fie Occupation ma favor 3Socialist attempts to win labor support by (1) bla .nbg the xxpraas ~,v measures on the Oommt: _is t extremist tactics; (2) coakluag modification of the restrictions through Diet action, With infla- I.wonary conditions continuing, however, 2,500,000 goverment employees who iF9s, lack collective bargaining rights may-feel forced eventually to align - xsm :vivt s vith the Communists. EE f ou Fo C , aikc Lit a ete rolloving the selection x Cetinet officers d other major ga?earnment officials President Rhee ::t native elements. a.:4 carefully selected Labor .ttache should be assigned to i3 gkok for operations throughout Southeast Asia for the purpose o-= awakening the laboring class to the dangers of Stalinism and e icouragi.ng their resistance to it. T VIBU Approved For Release 2001/08/26 : CIA-RDP79-0109OA000500010005-1 Approved For Release 2001/08/26 : CIA-RDP79-0109OA000500010005-1 c , The United 'ates should throughout Southeast d-sia cooperate %ith the Unit ,3d Kingdom in the conduct of political warfare against ,:,ali ai.s L e. Being careful not to make the Filipinos "lose face" or give .A-- opus Justification to charges that the Philippines is 4,.n eri- can tel &.i.te, the United >t tes should seek throughout Southeast ~ s la to caanita lize on our favorable colonial record in the Philip pines and induce the Philippines to cooparate with and in some cases ndeantly to Further United States policy. The United States should La gene~,al favor the development of any suitable an -coammunist regionaai o: ganization in Southeast Asia. 2. Keeping in mind the dangers of becoming involved in internal South- ;,,a k Asian arfrtirs, using the utmost discretion, and when appropriate e t ion preaea is itself, Southeast .; si,an governments should be encouraged t x4 Bassist Chinese minorities to be assimilated and at the same time as- uro their legitimate minority rights. :here appropriate the same a.e e us sh uld be brought to the ?attantion of the Chinese government. ~;dlll:'YII)i1~ S~d1'PI'~`.a`d` .'~SI- ~iiJi`~I;:~,~5 n. Because there appears to b no present Burmese leader of stature who can withstand the ccsraauni sts, It is the tentative opinion of the conference that the United Mates should discreetly support any anti-come list leaders c:h4 show promise of coming to power. 1 No international bank loan should be granted to Burma unless .here is a drastic change in Burmese policy away from communism. the conference attaches t= alternative policy suggestions, each,, ..'or the Indochina and Indonesia probleme which were prepared at the +nference. The conference,, however? did not vote on nor express its opinion on these suggestions end limits itself on the exceedingly complex ?3ubject of United States policy toward Indochina and Indonesia to the following statements An early settlement of the Indochinese and Indonesian problems is In the pol.itie:al and economic interests of the United States, the South- ? a.st Asia region and eetern Europe. Failure to reach such a settle- ment is to play into the hands of the Kremlin and ultimately to jeopar- diz-a the security of the United ?3tates.aa Approved For Release 2001/08/26 : CIA-RDP79-0109OA000500010005-1