BRANCH WEEKLY CHECKLIST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01090A000500020004-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 12
• Document Creation Date: December 12, 2016
• Document Release Date: November 1, 1999
• Sequence Number: 4
• Content Type: LIST

r e r Release 2002/01/03: CIA-RDP79-
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 Approved For Release 2002/01/03 : CIA-RDP79-0109OA000500020004-1
F.R. 'BAST/ ACIFIC BRANCH
O CE OF RSPOR Tom; l M ES TIMAT5 S
CFN IRAL INTFLLIGIGE AGENCY
NOTICE s Thin doe u at ist a working papa r, NOT
an 7 iaial CIA issuanoe, and has not neoesaarily
been ooordina",?P4 with other ORE produr,ing; ocna-
ponente. It represents current thinking by one
group of specialists in CIA., and is dt i #d for
use by others ensg d an similar or overlapping
stidieera The opinions nxprreessed hereto nay be,
revised before final and of'f, 1oia1 publi?oationa
It is intended solely for the imformation of the
addr'aaaee and not for further diase i .ti s
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 Approved lEorjRelease 2002/01/0RDP79-01 9A000500020004-1
OFFICE OF .REPORTS AND ESTIMATES, CIA
FAR EAST/PACIFIC BRANCH
INTELLIGENCE HIGHLIGHTS NO. 57
22 June - 28 June 1949
SECTION I. SUMMARY OF FAR EAST TRENDS APRD DEVELOPMENTS
While French and Indochinese reaction to the US statement in
,upport of Vietnam has been mostly favorable, as was expected, the
lack of response from other Asian areas reflects the general doubt
felt regarding; 1-o4i French intentions and Rao Dai's chances of
success (p. 2).
Jananess Communist strategy appears to be increasingly aggressive
and the.JCP's autumn "offensive" may well be marked by violence (p. 3).
The arrest of alleged Commuxnist-sympathisers among Republican
Assemblyne.rr in Forea is expected to result in a test of President
fhee's strength when the Assembly reconvenes on 1 July (p. 4).
The National Government's "blockade" of Shanghai threatens that
major Chinese port with industrial paralysis (p. 5). Meanwhile labor
aritation among the employees of foreign firms in that city appears
to be without the support of Communist administration authorities (p.C).
Recent Burmese Government moves towards better relations with the
West have received the acquiescence, if not hearty approval, of the
Socialists who constitute a majority in Parliament (p. 8).
Progressive steps towards a solution of the problems in Indonesia
seem to be continuing smoothly, with Republican restoration to Jop;-
jakarta as the next move scheduled (p. 9).
The Australian Labor Government is facing a major political and
economic crisis as a result of a severe midwinter coal shortage9
capped this week by a strike on the part of 249000 miners (p. 9).
The marginal notations used in succeeding sections of this Weekly
("A"A "B", "C") indicate the inportance of the items in I3/FE opinion
with "A" representing the most i-portant.
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007
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SECTION II. TANELOPMENTS IN SPECIFIED AREAS
Reaotion to the US statement on Vietnam--The Department of State's 21
Tune press release approving t}-:e new unified state of 'Vietnam recently
establishers by Emperor Bao Dai has received little support or publicity
outside of France and Indochina. In. both Hanoi and Saigon, favorable
full covcrane was given, with the exception of one anti-US French Journal
in Saigon. French High Commissioner Pigeon stated in response that 44-
Is comforting for us to know that this great country understands our
reasons and intentions," The inriue:atial editor of "Bello du Vietx:am
himself apparently slated for a : =,ao Dai cabinet post, deduced that the
US approval meant recognition of the future government, support of '75 tat-
i's admission to the UN, and a favorable future attitude towards the
change of ambassadors between the US and Vietnam. The editor predicts
a brilliant and prosperous future for a unified and "independent"
Vietnari,, "over whose cradle the US leans with friendly sympathy.' Bao
Dai's spokesman, Prince Buu Loa, expressed thanks to the IS Goverment
for the in-barest shown in the new unified state and indicated that Ban
Dai found real encouragement in the support from the 1M, As yet there
has been no comment on the statement from the He Chi Uinh-controlled
areas of Vietnam.
The statement was given wide press publicity in Paris, where it was
interpreted as not only favoring Bas Dat against He Chi Minh but as the
first US endorsement of French policy in Indochina in four years.
In contrast to this favorable reception in both Indochina and Paris,
issuance of the US statement attracted practically no attention in Great
lh itain, where only the ':"anchester Guardian carried a short news dispatch
from Washington.. There has been no editorial comment on the subject and
the news section of the Foreign Office has issued no statement of any kind.
In India, the press gave very little attention to the statement and so far
the Indian Goverment has made no comment.
The Burmese, Thai, and Philippine Governments have thus far expressed
no opinion on the question of US support for Bao Bai, While this oaatious
attitude by Par Eastern countries was anticipated,, the general lack of
approval for the US position obviously does not improve Baa Dails chances
for success* This international reaction is an indication of the wide
spread lack of faith in both French intentions and the flea Daa.i experiment,
S6
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Comp-1un.iat policy now favors violence--Japan Gorrntunis t Party (Jul') s trateg;,y g
based on the concept of peacef ul revolution" since the 1947 party congreus,
apncars to have been altered recently in favor of violence. A recent
Politburo directive stated "All strup-gies are now meaningless unless they
are struggles against the regime in Dower,." - "Each struggle," said the
directive,, "will emphasize that the oho ice' is between a democratic people g
gov rnmont (in other words,, seizure of power by the people) and annih ilati )-n,"
in the light of this directive, statements during the last fortnight
by two JCF I aders are of interest. ?TOZAXA Sanzo, second-ranking Japanese
Corroninist, has expressed confidenr'e that the Yoshida Cabinet will collapse
this sunner because of intensified labor offensi', s and economic difficulties,
while J(F Secretary-General TOKTrI).A l('~?eicri has demanded Comnunict 1)articipa-
tion in the "demoorn.tir," coalition Cabinet that he elaiis will succeed the
Yoshida government:,
.TCP efforts to entice the Socialists into ""democratic racial front"
action. has not been succero, ?ul tos date ex e r, under isolated and local
conditions. Although the mass firings, provided for by the Wo economic
stabilization programs may out the Socialists hetvieen the upper and nether
mil.lRtones of Government zaolicv sing Labor-JCP pressure .and force Socialist
action parallel to the JCP, the "democratic" coalition go-ernment, envi-
sioned by 'IUMA, is by no means an immediate prospect.
It may be expected that coming; Communist "struggle" activities will
entail considerably more violence than has been the case during the list
18-o2o months, It is anticipated, however, that the JCP will not push its
autumn "offensive" to such extents as to risk strong suppressive action by
Occu-,ation forces, The Jt.p's demand for an e"early" peace treaty, with its
implied evacuation of US Occupation forces, may therefore be considered
from two vicwpoin.ts. Besides having wide popular appeal, since most
Japan;,-so believe that a peace treaty is a magic panacea, for all present
rational ills, such an action would remove the major obstacle to JcP
violence.
Exports in Serious Sl: -A SC7/., drop in new exhort contracts since April
is c7?FSing serious concern in Japan. At a time when the effects of eco-
noma.u retrenclvnent as a result of the t-sponsored nine-point economic
reh&? 11i Cation pro(^ram are already severe, the implications of reduced
fares; mtrade are ex ;ensive.
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Various factors are contributing to the slump.. The establishment
of a single exchange rate last April caused many foreign buyers either
to cancel contracts or to "sit and see",, in the hope that prices of
Yepanese exports favored by the exchange rate would be reduced. Japanese
manufacturers who were not favored by the now rate, in turn, have f~x,.i.,sed
their attentions to dcstestio rather than export markets? Depressed world
prices, recent import restrictions by dollar-short countries, unsettled
political conditions in Southeast Asia, rumors of sterling devaluation
and increased competition from the reviving ERP countries are also con-
tri`mtinp factors.
Japan's fiscal 1949-50 export goal is sot at $511 million.. Exports
un.de: much more favorable conditions during; the last fiscal year came to
rn+.gt_tiy $400 million, Hence, unless external political and economic con-
ditions imnrove, Japan is destined to face even more stringent austerity
than had been anticipated as a result of the CTS rehabilitation program
D creased foreign trade, together with increased unemployment and weakened
recovery prospects will provide additional sources of insecurity and disc
content in Japan which the JCP can exploit in the autumn "offensive".
KOR A
Vice-chair--ian of National Assembly -%rrested--Kim Yak goo, vice-Chairman
3f the Republics Na.tiorxal Assemb y was arrested by Seoul pollee on 25
June. With his arrest, it appears that the round-up of Assemblymen allege ily
cooperating with the Communists has been completed for the time being
President Rhee contends that the police have evidence linking Kim yak Soo
and his followers with northern Korean Communist agents and he says the
arrests were'neeessary to nip Communist plots in the bud. Assemblymen
may feel, however, that Rhee is simply attempting to break Kim's organized
Assembly opposition to the Government, which has developed sufficient
strength to threaten Rhee's power seriously
The arrest of 10 Assemblymen, including the vice -speaker,, within a
period of s. few weeks can be expected to precipitate another severe crisis
in Assembly-Executive relations, The first test will come when the Assembly
convenes for a special session on 1 July. If R.hee is able to convince the
Assembly that he has a real case against Kim Yak Soo,, the inevitable motion
to release the arrested men for the duration of the special session may be
defeated, allowing Rhee to emerge in a strong position, with much of his
effective opposition silenced. If Moe loses on this first tests, hover,
the Asaemful;r may then. proceed to take drastic action to ourtaii the Presi-
dent's no.vora
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SECRET
Kim Koo Assassinated-The former President of the Provisional Korean "C"
*overnment in China, Kim Koo, an almost legendary figure in Korea for
his acts of terrorise: against the Japanese, was shot to death in his
home in Seoul on 26 June. It appears that Kim was assassinated by a
member of his own Korean Independence Party, one Lieutenant An D.uhi.
The motive is obscure, but the killing probably arose from differences
of opinion within Kim Koo's awn following as to the proper policy to-
ward unification and support of the Republic of Korea.
Kim Koo, who alienated much of his popular following through sus-
pected complicity in the assassination of ri htist politician Chang
Duk Soo in.Decenber 1947, lost additional suanort from close followers
by his refusal to support the government of the Republic of Korea, Kim
had maintained that the establishment of the Republic only served to
pr along thu division of Korea. Even after the fiasco of his trip to
the northern puppet capital of Pyongyang in tAhe spring of 1948, he main-
tained that unification must be achieved by sincere consulation of leaders
from north and south. It is possible that Kim dreamed of a military oovp?
using his followers in the Republic's Army to gain power in the south as
a preliminary step toward unification, and that his killing was the result
of Lt. An's objection to such an attempt.
Kim's assassination could rewnlt in violent reprisals against members
of the Republic's c:overi nen.t if there were any hint that Rhee or other
officials were irrplioated. The "national f,.xreral" ordered by the Cabinet
for Kim may be the occasion for some demonstrations against the government,
It annenrs, hovrever,, that Phee is in the clear and, in the long run, Kim's
death may serve to unify the Republic further in its stand ar*ainst ',ommunist
pressure.
0111 NA
Shanghai faces paralysis--As a result of 'ya'ionalist naval and air activity. "A"
as well as a. rumor that the entrance to the Yangtze River had been. mind,,
foreign shipping activities in Shangai have come to a virtual halt. The
Nsationalists, observing that "hysteria" over the alleged mining had effect-
ively closed the port of Shanghai., evidently s tumbled on a legally "eo:rrect"
method of strangling Shanghai without instituting an of 'iaial blockade.
The Canton Government announced all ports from Foochow north to Llanchuria
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would be "temporarily closed" to foreign air and sea traaffices
While the Nationalists are incapable of effectively blockading
the entire "closed" area,, their naval and air forces are adequate
for limited patrol action and probably will be able to isolate Sham*haai
effectively. Few foreign vessels are likely to risk the danger of
entering, the port under threat of Nationalist attack and the Communists
themselves possess few vessels canable of running the "blockade."
American ships already have dropped Shanghai as a nor- of call and all
foreip i vessels in port left before Canton's a.rnounced. closure de idlir..e.
Except for some avaricious Ho*ag Kong shippers who will run blockades teal
for anyone, as well as a few sr all Communist vessels the port of g
probably will remain closed for some tire,,
Although th.e Communists ca.i supply Shanghai with enough food for its
6000?000 pE,ople, an effective blockade of the port will seriously reduce
the output of the city's industries within a month. Shanghai*s Baal
impor.;s--normally 125,000 of
inl?~n dn~oa.l?
i.nadequat? trickle affuel
month--will be suspended exceF
This will force utilities to curtail their services or close down.
Chemicals, rubber,, metal and other raw materials vital to Shanghai's
industries, moreover, are not available for domestic sources. It is
probable therefore, that Shanghai will be economically paralyzed by a
continued blockadc4
F{srei Afirm employees ar'itate--iabnr agitation. directed at several
f .reign firris, has been evident in Shanghai scene since the Communist
takeover. A dispute involving Caltex appears typical. After locking
the front doors of the building, Chinese employees marched up and down
the office corridors while the executives barricaded themselves in their
offices. By the end of the day,, the company yielded to substantially
all the workers' demands,
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Other foreign. A irr+as V hjo;:d 11a.ve been the viotime of labor agitation
include China Edison,, flutter:field and S Biro, and Shaanghai T ram~mysm
The Ame31can- crinxed 3hanghas.i E-zvening Poet andi f eroury submit d to pay
demands after an invasion by worka as and confinement of officials to
their offices but suspended publication when the workere refused to
allow editor Gould to print his version vaf the incident.
Although the attitude of the wo keru has been menaoi :g F ,..t times,
the incidents thus far ha ge not been mar?r-ed by personal Violenoe or
serious property darnal;e, it is quite likely that the unroof wi.li sab
side as the Communist authorities impre? *,~ on labor unions their inorQased
"responsibilities `t under the new regime,., Recent devrel.opkrtents in as d aM-
pute involving Standard ilacut;m offer an indication of the cffieia,l CCl
attitude in this connection. JVf b r the ?tusual siege of the company o: f?icea :
a Coxnmut2.7,t army officer appeared and - 1r::spemsed. the workers,.; stating that
they wtasr::s making their demands in the ,-~ng ;gay and aihould romplai Y lus ad
to the ?.aa,bar? Bureau of the Military Con rcl Co s a .ssior ? '.Ila~:-z ma ger of the
company was assured that ~.a w?a',~idin.g; ford i z ors would be pr,? Aeetvd pfd tbaf;
company ae;;icsst:ivv need have no fear of mob ;riolence
Edi.scats"r a. and the 'New De-irooraoZ--(XP =kufhori.ti.es in recent months have
been se? si:nr opportunities to use edu.caaticual media for the propagation
of 'New ; mocracy'. CC? leasers, addro.xcin.g the Congress of the Chinese
New Domo(srati=.; youth Leagwie in April, stated that youth must be mobilized
to take part in the rehabilitation of industry and agricult: