DAILY REPORT MAY 26 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200270001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 13
• Document Creation Date: December 9, 2016
• Document Release Date: June 8, 2001
• Sequence Number: 1
• Publication Date: May 26, 1951
• Content Type: SUMMARY

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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTRTITGENCE
DAILY DIGEST
Date: MAY 2 6 1951
49204
COPY NO. 39
VOTE: 1. This saamary of significant reports has been
prepared primarily for the internal use of the
Office of Current Intelligence. It does not
represent a complete coverage of all current
reports in CIA or in the Office of Current
Intelligence.
2. Comments represent the preliminary views of
the Office of Current Intelligence.
3. Marginal letter indications are defined as
follows:
? items indicating Soviet?Communist
intentions or capabilities
importamt regional developments
not necessarily related to Soviet/
Communist intentions or capabilities
? other information indicating trends
and potential developments
DIA, DOS Declassification/Release Instructions on File
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SECTION 1 (SOVIET)
"V USSR. Etazdokilonomic Diffieulties in the USSR Resulting from the Korean
ELLE_Entninj11_111-27:312=0 An analysis of the impact cIt the Korean War an
the internal situation of the USSR, particularly the econamy and trans-
portation system has been made 4Soviet refagee in Munich. The report finds
nserioug economic dislocations in the USSR owing to the unplanned for
protraction of the war. This has aused the exhaustion of those supplies
in the Far East accuinelated for the specific: purpose of a short war. This
exhaustion, together with the slat unenvisaged burden of supplying the
Chinese armies now engaged has produced critical shortages as far West as
the Moscow area. The report concludes that Is a profound crisis embrac-
ing the entiee economy is net now reflected, there are at present indi-
cations of difficulties in the internal economy as a result of the war.
25X1A ). COMMENT: Some of the shortages and critical
situatiems mentioned are contradicted by available evideneen while others
seem attributable more to the present state of the ezonomy rather than
the Korean war in nartieular. Ho ver should the extent of USSR aid to
the Chinese and North Koreans significantly inenease? a situation such as
the report envisages might well result. In sueh a case, ?some evidence will
probably he available to the Embassy personnel in their day-to-day obser-
vation or the Moscow area.
?BR' Iternennedjisenenet en. Scviet Intent:ons Towards Iran. Authoritative, sources
in BerIln, according to AP, have reported that the Soviet Ambassador to
East Germeny, Gregory Paehkin? advised German lommunists at a top secret
meeting that the usaft will resist ectien of foreign troops into the
Iranian oil eriais. NYT, (AP), 25 May 51). COMMENT: During the past
week, rumors have eeepped up ating that the USSR had offered to inter-
vene in Northenn Inan in case of UK troop laadings in the southern oil
area, whine ether ramors have been eireulated that Moscow would give Iran
all possible eepport in keeping its independenee shcuid UK troops land,
short of sen5ing Soviet troops into Northern Iran. At the end of April,
the SOTILA Ambassador to Iran reportedly Intimated to interested countries
(the UK and Iran) that the USSR wax hardly likely to intervene shoulel UK
troops be lerned to maintain order. See 0/CI Daily Digest, 26 Apr 51).
The reported statement by Pushkin merely continues Moseowls equivocal
policy concerning Soviet intentions model- the terms of the 1921 Soviet-
Iranian Teeety.
Enepoet on Pr enaarAyiet eparagons fog Oil Tecb-
25X1C picians to Trann the Soviet
oil administration SMV he Austria is recruiting interested SMV tech-
nicians for use in the Iranian oil fields. The plan is reportedly to send
about 30 such teehnizians, who ender the scheme would sign 2 or 3 year
contracts and receive high salaries. Questionnaires are now on tile in
SMV offices for those interested. (S
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COMMENT Thera is ne eonfirmation that the USSR has taken any such steps,
nor any confirmation of recent rumors that they have offered technical
aid to the Irania!1 G vernment. Howewer, the USSR would be remiss in not
preparing for any sgentuality that would lead them nearer to their aim
in Iran including a pessible Iranian request for technical aid in the
future. It ?not unlikely, therefore, that Moscow may have ordered some
such preliminary preparations, while closely watching the lat;st develop-
ments in Iran.
"A" EASTERN EUROPE. =AND, Iptpg2;x6.made Radar_ WarlastetnnedtoAivet
Soviet Allo A recant reliable report from Finland reveals that the Finniah
Government is planning the installation of a Finnish-manufactured radar
early waming system in order to preclude "any further* Soviet request to
install r;lich a systpm. There will be at least eight stations along the
western border ot Finland in the radar network. A Fiunish-manufaetured
emperimeataZ model of the radar is already under productiaep although
certain complicated parts are still being obtainnd from Holland. (6 Air A
Helsinki 7E-85-51? 19 Apr 51). OONMEETE This report tends to eonfirm
earlier intelligetP?e that the USSR had approaead Finland regarding the
installation of EC early 'warning radar system in Finland (0/CT Daily Digest,
7 Mar 51) ani that tlx, Finnish Government had censequently decided to
establish such a net to avoid Soviet pressure (0/CI Daily Digest 19 Mar 51)0
Available information concerning the Fineish radar indicates that it will
have an eff4.1.Iv.. range of 11425 miles. The first set is expected to be
completed
in the fall of 1951 or early 1952.
HUNGARY. & iiV4es. It has been reliably reported
from Budpip!,st that C=Aholic Archbishop Grosz and three of his assistants
have been under house ar2est since 19 May. (S Budapest 544p 24 May 51;
S Budapest !,',8p Hay 51). COMMENT: As acting head of the Bench of Bishops
since MindezsntTigs ikerisormentp Arehbishop Grosz has been one of the
strongest Catholi opponents to the Cremmunist regime. He has been under
Common-1st attack da'7_ng the past few weeks for refusing to sign the rrent
peace appeal0 kle hao also been charged with violating the 1950 Chureh-
State Agreuent which etipulated that the Chureh hierarchy weld support
the Commutist peace program. According to recent reports other Hungarian
Bishops who had withheld their signatureskom the peace appeal have
finally been forced to sign.
nC4 RUMANIA PT,..SS on Danube-Black Sea Canal
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25X1C rsporta that the project is still in it initial stages and
estimates that at the preeent rate of progress it canuet be completed in
less than 10 years. He estimates that about 4000 laborers are currently
working OD the project, excavating by hand in what is described as a hap-
hazard manner,
25X1A p 22 Nay 51). CCENENTs The Rumanian Five
sear Flan, ivitiated in 1951, calls for operation of the Canal by the
end of the period. Werk on the project has been under way since the spring
*Bgv
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ace
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of 1949e Other reports have alsoididated that progress .on the Canal
was .poor. It is probable that -the thousands of white-coilar workers
currently being dismissed'frdm.goternment and ether jobs will be.
forced to work on this and similar government construction projects.
TRIESTE. Pro-Tite Par2-1112222142.4-221SILMELtY-Et1U-AgIo 25X1C
has reported that a Yugoslav agent was recently instructed to
investigate the publication in Trieste of a local pro-Tito Communist
Party resolution whieh had not been cleared with Belgrade. The resoln-
tion, ecntaining the local Titoist party program for the fortheoming
Trieste eleetions, sapported the gradual unification of Zones A and B. An
extraordinary meeting of the Trieste Pro=Tito Party central committee to
discuss the resolutien was said to have been scheduled for 22-23 Nay.
According to on the above report, a subsequent editorial
written by Babie, head of the Trieste Titoist party, retreated from the
firm stn i of the previously published resolution. The editorial merely
stated that the Itale-aav Popular Front had only a general policy, sib.
ject to criticism by all before adoption of a final electoral program.
It stressed the importance of creating a Trieste democratic front to
oppose efforts to annex Trieste to Italy. The also indi- 25X1A
cates that remora are prevalent in Trieste that Babic may soon be
replaced. (6). COMMENTe It is imprebable that
Tito will appreee any modification of his contistent stand for settle-
ment of the Trieste iSSUE On the basis of Yugoslavia2s Annexation of
Zone E. Babi'32s overly-enthusiastic sponsorship of unification of the
Zones may, tefOrep bring about his removal as the Pro-Tito Party
heal in Trieste.
'Tv YUGOSLAVIA,. Ti,tanaantalnaant Discusses Cuitailmen_g_Befnnee
a7ato_lnieste. In a discussion with US Ambassador Allen regarding the
problems created in Trieste by the Yugoslav expulsion of refugees, a
Yagoslav foretgl off!-Al official has stated that the whole Yugoslav
refugee problem WaS receiving high1.4.evel attention in Belgrade. The
possibi1ity of direct Yugoslav arreegements with the West German
government regarding German refugees was discussed. The Yagoslav
official implied that if groups such as the White Russians now In,
Yugoslavia -Jali no longer be eIrpelled to Trieste, the Belgrade govern-
ment would be forced to take other action in their regard. Ambassador
Allen is of thi, cpillom that the Yugoslav government will probably approach
the Internetional Refugee Crganization regardiag its refugee problem.
(C SD Belgrade 1744, 24 May 5l) C(NTf As of 9 April 191 there were
4p445 refuges in Trieste IRO camps inclUding Germans? Ruseians, Yago-
slava, Hungarians, Be_lgarians and Rumanians. Since a large part of
these are persons expelled from Yugoslavia? the cooperation of the Tito
Government in dealing directly with its refugee pro/slam would diminish
US and IRO refugee problems in Trieste.
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"B" YUGOSLAVIA. Federation of Albanian Po.'tical Emigrants Founded in MRCS.
slavlic. The Belgrade Radio .has announced the .establishment of a Federation
of Albanian Political Emigrants in Yugoslavia. According to the announce.
ment the federation's first meeting IfEtS held On 10 May in Prizren (on the
Yugoslav.Albanian border) and vas 'attended by about 300 refugees from
Albania. (R .FBLS, 24 May 51). CONANT: This ainioimeement appears to confirm
previous reports of Albanian refugee .committees in Yugoslavia ((AI Daily.
Digest* 5 May 514 These committees are reported to be Organized under
the direction of the Yugoslav Communist Party and Security Police in
order to give the Yugoslays greater control over the anti...Zomba activities
' of the Albanian refugees.
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SECTION 2 (EASTERN)
GREECE* National Elections Under Discussion* The US EMbasgy reports
that IheadoTeri7=zo a ina,7,37'-`'-ity sysigirEFilections is most unlikely
as long as there le ay possibility that Commander-in-Chief Papagos
might enter politios. Papagos has not recently displayed agy indica,
tiene that he intends to be a candidates, but the, threat of this devel-
opment is sufficient to block the adoption of the majority system.
Howeeersi the rove to avoid elections altogether is by np means dead,
although the balanee of probability still leans in favor of elections
under the modifisd preportional systsm. (S Athens )026s 22 May Si),
COMMENTg Despite previous cpposition ta the holding of national elections,
Prdelinistr Verizelos announced on 3 May that because the composition
of paitias it the Chamber of Deputies made it impossible to produce a
strong goverinments national electiona would have to be held in the autumn.
The vagaries of Oeeek polities, hewevers are sueh that a laet minute re-
versal is otill poesible. Greek political leadera may deeide that yet
another coalitien gceeereeeent, temporary and unstable though it would be,
moald still be preferable to an open teat of etrength.
SR/ISRAEL. Jordan Wate: R1s It ortant tc)(qzrila ,:ordan and Israel.
VIAsizman ;Y-TEi ON'erace ap siorganizatio7E-Mor,--
informed US Cherge cli.ok in Damasels that an atainistrative division of
the demilitarized zone on the Syrian-Israeli borders following the
*water linesw mould be aa ideal method of eettling the border dispute (see
OI Daily Digeets 25 May 51). Riley peiuted out, howeeers that this type
of agreeleee.; ceuld only be reached if both paeties concerned agreed to
amend the armistice and that since Israel regards the Jordan River as its
life-lines it mvuld resist any effort to chazge the boundaries of the
farmer Palestine gez,?date. Clark expressee the Embassy's view that the
*water rights of the Jordan and Yarmuk rivers are questions involving
Syria and Jordam as well as Israel. Olaek adds that he was infommed
by the Free:area 7,egatioe, (a) that the Syrian Prime Minister is agreeable to
an admilliaMve division cf the demilitarized zore and (b) that euch a
decall2ts.TLzed Vaae =I-At pave the way for a permenent
terltoria2 setUeireats eliminating the minority ifF6U69 since the Pyrian
adminietcative zeee created by the plan mould absorb those Palestinian
Arabs remeved frem their villagee by the Ieraelie. (S Demaezus 657,
23 May COMM% While Syria -Awed probably agree to an administra-
tiee dieloicn o? the disputed demlliteeeized area, Ierael would undoubtedly
sty,.ongly oppu.se the pl&n. Lexael claims Telt:mate sovereignty over the
entire demilitsrieed area on the basis of the formr Mandate boundary
line and the 1.9.7 Paetition Plans even though Israel aceuired parts of
the former Mandate which the UN Partition Plan had allottedto the APabs.
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ago INDIA. Indian Cabinet Members RABi ? On 24 WIFD a usually well-informed
source toldlEa? US tMbssay in Nem Delhi that on the night of 23 May Indian
Hdme Minister Rajappalachari and L Minister Ambedkar had submitted to
Prima Minister Nehra their resigmatione from hie C!abinet. The same source
also reported that Food Minister Munati would resigi as soon as negotia-
tions for US food aid to India were .completed. The issue causing the
resignations was said to be the smantment to article 19 of the Indian Con-
stitutiong which vas introduced in Parliament by Nehru on 12 May. This
amendment proposed a curb on the freedom of speech in India and modified
provisions ehabllIng the goverment to abolish feudal estates. CC Ne
Delli 334i,l, 24 M4F 51).
COMET Inasmuch az Rslagepalachari and Ambedkar
Loth eapported Nehras stand on the constitutional amendment:, it is dife.
fivalt to mderstarmd lag-they' should resign over a matter concerning it.
It appesars mcre likely that the tnrse resignations, it actually submitted
vre broueit sitoat by internia Congress Party politics which are apparently
?resting a ..d,refinite spUt in te pa,rty and are restfiting in the resignation
of manimebiters .1,rm V. It seems almost oertain that a rightist Congress
ftrt-Tfleill be opposed in, the neitiona2,, elections (NcTedher or December of
this year) by, a nem laftist-reformist All-India Party composed of ex
-
Congressmen and WilXiOUT antl-Covernavot eau:Li-Congress ftetion. It ?un-
certain at the moment Ttherce Pri,aMirister Nehru will stand at the time of
the elcctiohe.
9321 AKHANTST/PLKI$TA. tetary ra To Restore Peace On It &ntheri
;IS,,--tftrSarg7i- -133,7617'1WA-eTri;577-iSrP- ZaTaiirge
Kabul ti&i InaAfgraL, Cseerment has proposed to Pakistan that both govern-
meats Altaneoasly itharaw their tt.000pe froz, the Kaudatar-Quetta area.
iLe theAfghan Acting Prime Minister has apologised to the Pakistani
Chaloge Pri:.7ce 'r in the op2nion of the US Charger probably helped
engineer 1.h,t, receat'ircidems inth Kandahar ar'eap C011:ti-inle3 to
hold hio '"*M-clu-af42-1 an-Vtude.? The US Charge ant the UK Ambassador considers
It pmssit%e tn.at, the Dand fa-tilm Islay at off farther inAdents. (S Kabul
373D 24 Me751). (i0MMENTg TtLe Voul Ge?7erosentus suggestion of simultan-
eous vithdrawa of tevope ?.3,1wAs ease the texeizu. :5,.meTierp an long se
inflnentlsa members of V.?,e. Mg an 3o7ernment oohtlime to hold a coopletely
intransigent vlempoiat on thia subje'..,nt ro setlement can be mac;e:, and
armed ?laehes elich as have recently been reported vill recur? 25X1C
"V ;pooh , ,I, ==
25X1C reports that
Vis'l Mih, tncoo In tn.,. ...-TV'. , tjheast oZ Hanoi nave been instruct-
ed to "prepare foz a frost and av;e1 further ozdere.(* 25X1C
25X1A belie-5ts this order may indicate a rebel attmck In the e between
27 May and I Jane. S 1CEMENT?
25X1C This report supgemeut ordering
troops 'north of Hanoi to te in e , ci reedinec by 2 My end
alerting emits in Gentzal and South. Vietnam for possible action?
variouoly, on nba 25th and at tce ,.1.6 of May.n The recently declared.
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military policy of the Viet Minh is to return to guerrilla warfare
for an indefinit period. This policy is consistent with the low
capabilities of the rebel forces in relation to the French and
the beginning of the rainy season (which limits major operations
by either side). It is not probable that the Viet Minh would
attempt a large-scale coordinated attack except as an extreme
measure designed to prepare the way for or screen the entry of
Chines Communist tr.ops. The Chinese Communists retain the
capability to inv de but there have been no reliable indications
that they intend to do so.
Conditions in Cambodia Outlined by King. The King of CaMbodielin
Saigon while an route to France, outlined the situation in Cambodia
for US Legation officials as follows: (a) the anti-rebel campaign
has notably improved in the past year, (b) Cambodia badly needed
trained and experi ne d military officers and civil administra-
tion, (0 the people were clamoring for a constitution, and (d)
he would not appoint any members to an Assembly as was the
practice in Vietnam: members would all be elected. (S Saigon
20719 25 y 1951).
Cambodian Kin Ma Want to Visit U. The Cambodian Foreign
Minister asked a State Department official visiti the country
whether a visit from the King would be well received in the US
mat this tfautzl." The official replied the King would always be
welcome but a royal visit should be arranged for in advance;
approximetely a year's prier notice was mentioned as necas ary
for expecting proper arrangement. (S Saigon 20729 25 May 1951).
COMMENT& Thera has been some mention that Bac Dal also wishes
to viiit the US.
nAgl CHINA. Agneemenfe between Tibetan le t o and PeintngeL
Expected Scone The UK High Commissioner in New Delhi, quoting
Indian Foreign Office sources, reports that an agr ement between
the Tibetan delegation and the Peiping regime is expected in the
mnext few day. m These sources anticipat that Peiping will
assume responsibility for Tibetus defense and foreign relations.
Sources state that India had advised the Tibetan delegation that
Tibet mwould not be justified in-resisting such terms, m but had
also encouraged the delegates to seek an agreement that Chin se
Communist troops would not be stationed in southern Tibet in
the absence of a mthreat from Nepal or India," (S London 6144,
25 y 1951). COMMENT& The head of the Tibetan delegation to
l'elping-ewhieh alriTad in Peiping in late April-publicly stated
that it was his parpos to negotiate a successful liberation"
of.Tibete While Ind i has hoped for a semi-auton'mou Tibet
under Chinese suzerainty, Tibetes status is not expected to
differ essentially from that of any other ?liberated? area
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populated by an ethnic minorityl the Communists will exercise
-
!festive zontrol, Peipingoe propaganda has already perdeiVed -
a "threat" from territory bordering Tibet, and Chinese Communist
troops will doubtless appear in the area.
Soviet t?te in Sinkiang. reports
that, as of Mach 1951, approximately 41,000 Soviet troops were
depleyed throughout Sinkiang Province, about 4000 of whom were
billeted in Tihea (the eapital), ( S
e COMMENTs The above is the most recent information
on Soviet foreee in Sinkiang. As of late 1950,
alleged that up_te2_2(22L222_2aviet_IEeeps were deployed in the
Previnee, while estimated, on the basis
?f hearsay, that perhaps' 30-40,000 were present, Although the
presenee ef Soviet foreea in Sinkiang is still unconfirmed, it
is prebablt that some thousands of Soviet troops are attaehed
to varieue Seviet advieory-teehnical missions (including military)
in the Provines.?
KOREA. ROE Le4elatiee Leaeeele?mmenrteeeTemeggee Rearmament?
Aeovrding to a pe es teeount from. Tokyo, Shim abl, speaker of
the ROK Natieeal Aesembly, reeently stated that norea should
atazdoe its reparatien claims against Japan and support Japanese
rearmament, shin, aseeently returned from cenfereneee with the
OhiD6ES Natiezelfete, faether suggests that Japan, Korea, and
tiit Ca:na ehould loin forces in Asia to fight the
ccemom eems, ( R IS Ticker (PANA), 26 May 51), COMMENTs
Shines stat ents in referen?@ to Japanese rearmament are a
signal &epaet_re from. the general run of Korean commentary on
this eu'r*ee. WM1 some alleviation of anti-Japanese feeling
has takes ?laze in Korea, the majority of Korean leaders still
fear end diatreet the eencept of a resurgent Japan,
JAPAN. Geeee.nentCeneiderine Ajeesurit Mieletres JUT SHIMPO
reports th; although Premier Yoshida is now trying to c'soft
pedal the yeeereeem ef rearmameet,both because Japan has not yet
recovered ifes eeeemie power and for fear of arousing misunder-
standieeg on tee part ef the Allied Natio,a prier to the peace
treaty, 'empstent authorities" have started an examination
of Japans reermamert preblem, Consideration is now being given
to a pseeesel "Seeuely Ministry" into which would be ineorporated
the present National Policy Reserve, the National Rural PoliCe,
local pollee forces and the Maritime Safety Board. At some
future deee, depending upon International develonmente, the
Security Mieietry eeuldte transformed into a,Defense Minietry. JIJI
also adds that after the treaty is ratified, a preparatory committee
for Japange reaemament will be established, (R FBIS, 20 May 1951).
COMMENTs jijI SHIMPO is usually regarded as a semiofficial Govern-
ment mouthpiece and its artialt may be looked upon as a trial
ballozea This appears to be the first time that a reputable Japanese
paper has openly admitted the possibility of previously rumored
Security Ministry ikernizeg into a Defense Ministry,
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SECTION 3 (RME N)
FRANCE. French Fear Interests in S a Would be Jeciardize
PR7-63ed r117---TheMagenr of he renc gation in Damascus has
s a ed that-he could foresee no difficulties regarding arms aid to Syria
but wondered haw economic aid could be extended without jeopardizing
the positionccf the French Banque de S is and other French interests.
(S Damascus 6639 ?24 MV 51) Oii _State Department has proposed
that a grant of $25 million be iWaied by similar amounts from the UK
and France to extend military, economic2 and social aid to the Arab States.
Because the alignment of Middle Eastern sympathies with the West supersedes
the particular interest of any one nation in that areas, the-French will
probably suberdinate their interests to the larger issue reluntantly and
,go along with the proposed plan.
AUSTRIA. KPOe Reported to Establish Own Police Force,
25X1C
c organiza ions of the Austrian
Communist Part KPOe have been directed to establish a party police
'Ito maintain order and protect party meetings against opposition elements
in the event of disturbances." Local branches in Upper Austria (US zone)
have also been told to create Roll?Kommandos (raiding parties), which
will comprise about 10% of the branch memberships. The Central Committee,
furthermore, has ordered KPOe branches throughout the Western zones to
take precautions against confiscations of property by liquidating all
their bank accounts and transferring funds to the Vienna account? and to
sell all property (including furniture2 typewriters 2 and automobiles) or
transfer title to irivate Dersons, who would then lend the it
PPrtra 05,
C0MNT It is typical for.centralEhropean extremist political partiea
Wilintain party police, If Austrian Communists are organizing one
now2 they probably hope to attract, and indoctrinate, ex?Nazis who take
pleasure in belonging to strong:earm squads, and who are more numerous
in Upper Austria than elsewhere.
,
"BP -SPAIN. Government Threatens to Banish Striking Basque Workers. The
iia7E7Stofirta.th an: S-ix near.y amag-in-iHe province OfGuipuzcoa
ended today, No violence has been reported, .but the Civil Governor.,
who ordered the arrest of a number of Basque Nationalists, has threatened
.to banish striking workers from the region. According to the US Consulate
in Bilbao, province ofIfizcaya, the bullring quarters in this city have
been readied to serve as a prison in case of further trouble. (C Bilbao
572 25 May 51) COMMENT: The strike at Mbar, an arms production center,
is believed to he beenplanned to coincide with the 22 May Madrid
transportation boycott. The incident points up the rebellious Spirit
which exists among workers in the Basque province of Guipuzcoa, The Civil
Governors inept handling of the strikes transformed what began as well?
.
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disciplined and non-violent protests against the high cost of living
into open hostility between the people and the authorities. (See OCT
' Daily Digest, 74May 51),
SWEDEN. Inflationary Pressures Increase. With the relaxation in
November 197407-Jrae-tm-year wage freeze and the cessation in last
December of certain import subsidies which had cushioned the impact of
price increases abroad, Sweden has experienced since January a general
price increase of 15%. An additional 10-15% rise is possible during
the next few months. However, the Social Democratic Government, With
its program of fu/I employment and social welfare, is reluctant to
institute comprehensive control measures until the outcome of the foreign
inflationary spiral(becomes more apparent, and believes that its program
of budgetary eurpluses and taxation to absorb excess purchasing power
is still. adequate, The government vigorously opposes an increase in
interest rates because this would adversely affect the housing program.
The noneCammaniat opposition parties charge that the government is under-
estimating the situation but offer no alternative program, Although
political tempers have sharpened and some government taxation measures
have recently passed the Rdksdag by extremely narrow votes, the stability
of the government is not -6F17611:61y endangered for the government would
probably choose not to regard a defeat on such an issue as a no-confidence
vote. A run-away inflation is extremely unlikely because the Swedish
economy is basically' well-balanced and strong. Should the economic
situation become really threatening, all non-communist political parties,
together with such large economic organizations as the Confederation
of Labors, the Employers? Association and the various large farmer
organization, would cooperate with the government in drafting and
instituting more cemprehensive anti-inflationary measures,
"Be UNITED KINGDOM, Anglo-Iranian Oil Company Continuing to Demand
EV=.617--;.-11he-Hiro7rillaians-"Te-a-The International
CkiiifE-3f7atiGe to appoint an arbitrator to help settle its dispute
with Iran over oil nationalization. (U AP Ticker, 26 May 51) COMMENT:
The Anglo-Iranian Oil Company and the British Government have iEFFEEFIT
that Iran cannot unilaterally cancel the companys concession agreement
which would not expire until 1993, but the Iranian Government on 20 May
turned down the companygs a May request for arbitration on the ground
that arbitration would be repugnant to Irangs sovereign right to
nationalize industries within its borders. _Under these conditio
there can be no arbitration and this latest Company action is probably
a technical move designed to make clear its legal position before
agreeing to enter Into any discussions which start from the premise
that the principle of nationalization is now accepted by the British.
This latest British move may somewhat improve their position in inter-
national public opinion but will contribute little directly to reaching
a settlement with ti*. Iranians,
TOP SECRET
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Approved For Release 2001/09/04: CIA-RDP79T01146A000200270001-1
)11
Approved Fefelease 2001/09/04: CIA-RDP79T01404000200270001-1
TOP SECRET
tt ft MOROCCO Sultan Allegedly Seeks to Transfer Sis Personal Wealth to
the DS, The Sultan of Morocco reportedly is negotiating for the
Surreptitious. transfer of all his personal holdings from Morocco to
the US. French permission for this transfer carries the condition
that the Sultan agree to support General Juin and to oppose Moroccan
independence,which the Sultan refuses to do. (S US Officials Only
25X1A COMAENt: This is the first report
that the Sultan is seeking to transfer his personal wealth. Because
the tense atmosphere in Morocco has not been completely dissipated,
the Sultan may be attempting to ;nake substantial foreign investments
in the event he should be forced to flee?in all likelihood he already
has substantial wealth outside his country.
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TOP SECRET
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