CENTRAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A001400330001-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 10
• Document Creation Date: December 15, 2016
• Document Release Date: September 22, 2003
• Sequence Number: 1
• Publication Date: January 26, 1954
• Content Type: REPORT

26 January 1954
Copy No. 84
DOS REVIEW
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CURRENT INTELLIGENCE BULLETIN
DOCUMENT NO. -J
NO CHANGE IN CLASS.
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NEXT REVIEW DATE: __2QQ9-.-__ -
AUTH: HR 70-2
DATE: 'iEVIEWER:.I
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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SUMMARY
GENERAL
1. Menon sees need for Indian mediation in Korean political conference
(page 3).
2. Egyptian government reportedly plans to buy Soviet oil products
(page 3).
FAR EAST
3. South Korea seeking 35-division army (page 4).
4. Large new steel center planned by Peiping (page 5).
SOUTHEAST ASIA
5. French official sees possible need for American pilots and specialists
in Indochina (page 5).
6. Eden says situation in Malaya deteriorating (page 6).
7.
NEAR EAST - AFRICA
8. Eden interested in northern Middle East defense arrangements
(page 7).
EASTERN EUROPE
9.
10. Hungarian 1954 plan reveals sharp cut in rate of industrial grow
(page 8).
WESTERN EUROPE
11. Spain presses for over-all settlement of disputes with France (page 9).
LATIN AMERICA
12. Possibility of coup increases in Honduras (page 9).
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GENERAL
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1. Menon sees need for Indian mediation in Korean political conference.
Indian UN delegate Krishna Menon recently
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in New Delhi that India would be willing to
act as a mediator in order to get a Korean
political conference started, 25X1
Menon suggested that the UN Command prepare "minimum
criteria" as a basis for mediation.
talk on 19 January with
He reportedly also hinted at this idea in a
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Comment: This may be the first of the
"compromise" proposals which ndia has been expected, to bring for-
ward to coincide with a possible UN General Assembly meeting.
India's recent difficulties in Korea apparently
have not deterred it from seeking to play a leading role in a Korean
settlement, as it did in connection with the Korean armistice resolution
and the POW question. India presumably feels, however, that any plan
for Indian mediation should appear to come from the UN.
2. Egyptian government reportedly plans to buy Soviet oil products:
which it was negotiating,
The company rejected the proposal and
Egypt thereupon indicated that unless it agrees to distribute Soviet
products, it will invite the Soviet government to form a company for
their sale in Egypt.
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The Egyptian government recently requested
an American oil company with a marketing
organization in Egypt to participate in the
distribution of Orbit petroleum products for
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Comment: Current Egpytian-Soviet trade
negotiations petroleum. The Egyptian-
negotiations reportedly include 3-
Rumanian trade agreement of 18 January also provides for shipment
of petroleum products.
Egyptian petroleum imports, chiefly kerosene,
amounting to less than 1,000,000 tons annually, are relatively insignificant.
Most oil storage and distribution facilities in Egypt are controlled by West-
ern companies. It is unlikely that the USSR would provide such facilities.
FAR EAST
3. South Korea seeking 35-division army:
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South Korean officials on 24 January expressed
a desire for American military aid to expand
the army from 20 to 35 divisions, with corre-
sponding air and naval development. Foreign
Minister Pyun told the American embassy that unless the proposals are
met, South Korea may eventually collapse under Communist infiltration
and pressure.
Ambassador Briggs comments that Pyun's
observations amount to an attempt at blackmail and that Seoul's manpower
and leadership capacities are already being strained by the present 20-
division program.
Comment, Rhee has been seeking additional
air power, primarily jets, r om the United States, and this may be his
opening bargaining tactic.
The Rhee-Dulles agreement of 8 August stipu-
lates that South Korean forces shall remain under UN Command control
until the US-South Korean mutual defense pact, which the United States
Senate will soon consider, is ratified. If Rhee is unsuccessful in this
latest demand, he is capable of renewing his threat to withdraw his troops
from UN control and pressing for increased military aid from the United
States.
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4. Large new steel center planned by Peiping:
center there comparable to China's only large one at Anshan, Manchuria.
Peiping radio reported on 12 January that
"gigantic and unusually rich" iron deposits
have been discovered near Paotou, 300 miles
west of Peiping in Suiyuan Province, which
warrant the construction of another steel
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Comment: Paotou is the planned site of one
of two new steel centers to a ui t with Soviet aid.
Numerous refugees from Suiyuan in the past
year have reported Russian advisers and extensive activity at the
Pailingmiao iron mine, 90 miles north of Paotou, efforts to increase
the capacity of the Peiping-Suiyuan railroad, and extension of the rail-
road from Paotou to the mine.
SOUTHEAST ASIA
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5. French official sees possible need for American pilots and specialists
in Indochina-,
few months or be forced by parliament to negotiate with the Viet Minh.
He sees no possibility of a decisive defeat of the Viet Minh unless there
is eventual American participation, perhaps in the form of a "foreign
legion" consisting of pilots, mechanics, and military technicians.
Secretary for Associated States Jacquet told
Ambassador Heath in Saigon on 21 January
that France must either produce some mili-
tary victories in Indochina within the next
Comment: The French have always opposed
bringing American military personnel into Indochina, but recently re-
quested more than 400 American maintenance specialists.
Although pressure on the French government
for a solution in Indochina will probably increase in the absence of
victories, France would probably seek a settlement in a conference in
which Communist China was included before attempting direct negotia-
tions with the Viet Minh.
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6. Eden says situation in Malaya deteriorating-.
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During a private conversation with Secretary
Dulles on 23 January, Foreign Secretary Eden
said the situation in Malaya is deteriorating
and causing considerable concern. He said
that incidents of open hostilities are diminishing but are being replaced
by more methods of infiltration which are more difficult to control.
Comment-. A change in Communist tactics
in Malaya from terrorism to su version has been apparent since mid-
1952. Indications that the Communists would revert to terrorism after
December 1953 have not yet been borne out.
British counterintelligence has improved con-
siderably but continues unequal to the task of uncovering Communist in-
filtration in the security forces, schools, resettled Chinese villages, and
labor organizations. Officials in Malaya have frequently stated that the
end of the emergency is not in sight, but they have not admitted even
privately that the situation is deteriorating.
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7.
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NEAR EAST - AFRICA
. Eden interested in northern Middle East defense arrangements:
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would be included, apparently to make Egypt realize it was not
essential to a Middle East defense project. He also indicated
that India was annoyed that Britain was not opposing the idea.
Comment: Britain feels it has not been
consulted closely enough on the American proposal for a northern
Middle East defense arrangement. It may hope that the addition of
Iraq, with which it has a treaty lasting until 1957, will result in
closer British association with American plans for the area.
The present Iraqi government strongly
favors improving Middle Eastern defenses, but its precarious
political situation is likely to prevent its active cooperation.
In a conversation with Secretary Dulles
on 23 January, Foreign Secretary Eden
showed considerable interest in the idea
of a "regional grouping" consisting of
Turkey, Iraq, Iran, and Pakistan. He hoped particularly that Iraq
EASTERN EUROPE
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10. Hungarian 1954 plan reveals sharp cut in rate of industrial growth:
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duction is to rise only 4.5 percent, in contrast with increases of 11.8
percent in 1953 and 23.6 percent in 1952.
Hungary's revised economic plan for 1954,
as revealed by the State Planning Office on
22 January, calls for a sharp drop in the
rate of industrial growth. Industrial pro-
Total investment will be cut over 25 percent
and investment in heavy industry will be nearly halved. In contrast to
this general trend, investment in agriculture will be almost 70 percent
larger than last year, and larger sums are allotted to the production of
consumer goods. The portion of the gross national product allotted to
consumers will increase by 21 percent.
Comment: The cutback in Hungary's plan
for the development of industry is the most drastic announced in any
Satellite. The sharp increase in the purchasing power of workers and
peasants already provided for will intensify inflationary pressures and
confront the regime with adverse consequences if it is unable to make
good its promise of more consumer goods.
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WESTERN EUROPE
11. Spain presses for over-all settlement of disputes with France:
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wants a complete change in its relations with France, which have
been "hopeless," as well as a general discussion of all outstanding
problems, including the activities of Spanish exiles in southern
France and France's "bitter opposition" to Spanish membership in
NATO.
-ions. Foreign minister Artajo told him on 20 January that Spain
Ambassador Dunn in Madrid states that
the Spanish government regards the
Moroccan issue mainly as a means of
pressing Paris to consider larger ques-
Artajo stated that Spain would not destroy
,Moroccan unity by promoting the separation of the Spanish zone from
the rest of Morocco, "since this would be throwing stones at our own
glass house."
Comment: The favorable Arab reactions
to recent Spanish moves will encourage Madrid to continue its present
tactics until Paris shows a willingness to discuss outstanding problems.
LATIN AMERICA
12. Possibility of coup increases in Honduras:
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taking sides with the two rival factions of the ruling Nationalist Party.
A crisis may develop on 28 January, when the Honduran congress is
scheduled to set the date for presidential elections.
The American embassy in Tegucigalpa
believes that the possibility of early dis-
orders or a military coup is growing in
Honduras. High army officers are openly
Comment: In control for 20 years, the
Nationalist Party's "old guard," which remains loyal to ex-dictator
Carias, is opposed by a "reformist" faction supporting the moderate
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and popular President Galvez. The presidential and congressional
elections, due in October, are forcing the closely matched factions,
both oriented toward the United States, into an increasingly bitter
struggle for power.
A continued split in the Nationalist Party
would enhance the electoral prospects of the Communist-infiltrated
opposition Liberal Party.
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