DAILY DIGEST JUN 8 1951

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000200350001-2
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: February 4, 2002
• Sequence Number: 1
• Publication Date: June 8, 1951
• Content Type: SUMMARY

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4322?
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTETLIGENCE
Date: JUN.8 1951
NOTE: , to This s maiy of significant reports has been
prepared primarily for the internal nee of the
Office of Current Intell, genoe0 It does not
represent a oa .plete coverage of all current
reports in CT:h or in the Office of Current
Intelligence.
2. Comments represent the prel minary views of
the Office of Current Tntel.liger.oem
Marginal latter indications are defined a
fall e
'A" items Indicating Soviet-Communist
intentions or capabilities,
IBI Important regional developments
not ne?essar il.y x elited to Soviet/
C,orffAunist intentions or capabilities
other :Lriforraatj,~n indicating trends
and potentl developments
DIA and DOS Reviews Completed
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SECTION I (SOVIET)
"C" USSR. Malik to Broadcast 23, Ju e. According to the USUN delegation,
Soviet delegate Malik departed from his usual practice and accepted
a long-standing invitation to appear on the UN Radio Program "Price
of Peace." Malik was invited to appear on the 16 June program, butt
at his request, it-was changed to the 23 June broadcast. USUN comments
that Malik's 23 June appearance on the program, which receives world-
wide dissemination, could be designed to offset the forthcoming 25 June
anniversary celebration of UN collective action against aggression, and
adds that the broadcast migbt also be related to confidential reports
that Malik is to return to Moscow 29 June. (S NY 1610, 6 Jun 51).
"A" 25X1(? Soviet Personnel in US Rej22rted Bein,Recalled. h
reports
that the USSR is going to recall an of its top evel personnel in the
US by approximately the end of June, 1951, replacing them with lower
level officials. Soviet UN delegate Malik and UN Secretariat member
Peutin are among those scheduled for recall. (S
25X1 A COI NT: Soviet Ambassador Panyu.shkin announced he was sailing
8 June . for a month's vacation - in the USSR. Panyu,shkin made a similar
trip to the USSR in June 1950. Since neither Malik or Peutin has been
in the USSR since 1949, it is possible that their reported return is
simply routine. Peutin is not known to be a high level offidal. If
Malik's "recall", which has been previously raamored, is for the
purpose of replacement, the importance of the new head of the Soviet
delegation may give some indication of the USSR's future attitude
toward UN activities.
25X1 C
25X1A
"B" EASTERN EUROPE. POGO Shits Beier Built for USSR and Albania. Reports
have been received from two sources that the Gdansk 3yni.a shipyards
in Poland are building a series of cargo vessels of-4bout 500 tons
designated as the BUG class. Two are reported to have already been
launched and assigned to the Polish merchant marine, while another
four are under constriction for Albania. At the same time eight to
twelve coal and ore carrying vessels are being built for the USSR in
25X1A these -yards u,,:ander the super-vision of Soviet technicians. (S 0 COM1uT. 25X1 A
7~
These small cargo vessels will be capable of carte on coastal and
European shipping for the Soviet orbit. As a result, some, of the larger
Polish merchant marine vessels, which are at present engaged in such
traffic, could be used for voyages to the Near,, and Far East.
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25X1 C
"A" Communist Chartered Vessels Carrying Strategic Goods to China.
a recent trend whereby ships under Comm-
rust charter, bound for China from Europe with strategicanrgoes, are
declaring Port Said as a destination. From Port Said the vessels declare
for Aden Columbo -S?
a ore and Hong Kong., and then proceed to North
25X1 C
China-
these are precautionary steps taken
in anticipation of a
pass ble
blockade of the China coast. The
25X1 C
should such a blockade eventuate these
vessels could unload in Indian ports for transshipment via a total of
nine Soviet and Satellite vessels presently in Indian waters delivering
25X1 C grain? he opinion that the USSR believes that its
ships would not be stopped or molested by a naval blockade of China.
(S CINGNEIN., 061607Z, 7 Jun 51). CCOAENTo Numerous reliable reports are
available indicating that the cargoes of merchant vessels owned or
chartered by Soviet orbit countries bound for Communist China from
Europe have contained strategic goods. The volume of Satellite-owned
or chartered vessels engaged in traffic with Communist China has been
gradually increasing during recent months.
"A" YUGOSLAVIA. Kardel Announces Popovic Visit to US. The Yugoslav Govern-
ment has-publicly announced that Yugoslav Chief of Staff Koca Popovic
is currently in the US for talks with US representatives regarding the
possibility of acquiring armaments for the Yugoslav Army. Kardelj
explained that the Yugoslav Goverment was seeking arms from the West
solely to emsure_ Yugoslav independence and to contribute to the con-
solidation of peace in the Balkans. He stated that this step had been
necessitated by the rearmament of Yugoslavia's Cominform neighbors in
violation of their peace treaties. (R; FBIS, 8 Jun 51). COMMENT. Popovic
is the first high ranking Yugoslav official to visit the US since the
war., with the exception of Kardelj who has visited the US as the Yugo-
slav representative to the UN. The Popovic visit is evidence of-the
increased Yugoslav interest during recent months in obtaining arms from
the Weat. The Yuagosla announcement of Popovic?s visit was probably
made to demonstrate to the Yugoslav peopl?, as well as the USSR:, the
close working relationship between Yugoslavia and the US.
"Cu . Bel ade Exraels Bulgarian Cha~??e, According to Borba, official
organ. of the Yugoslav Communist Party., the Bulgarian Military Attache
in Belgrade has been asked to leave Yugoslavia because of his pro-
vocative and hostile work. Borba claims that this is the reason that
the Yugoslav Military Attache in Sofia was accused of organizing sub-
'ersive'activities in a recent Sofia trial of alleged Yugoslav agents.
(R FBIS, 7 Jun 51). COM ENT: On 6 June the Bulgarians expelled the
Yugoslav Military Attache O/CI Daily Digest., 7 Jun 5l).
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"A" Embassy Belgrade Views on Yugoslav Sponsorship of Albanian
Exiles. Embassy Belgrade regards Yugoslav sponsorship of an Albanian
refugee organization as a counteraction to the activities inside
Albania of Western-sponsored Albanian exiles rather than an attempt
to upset the Hoxha regime. The Embassy does not believe that Yugoslavia
is likely to precipitate any action that might give the Soviet Union
an excuse for aggression under a guise of defending Albania. Since the
Yugoslav Government hopes eventually to see a friendly national Commu-
nist government established in Albania, the Tito regime is undoubtedly
supporting dissident Albanians in Yugoslavia willing to work toward
this end. In the event of a genuine revolution in Albania, the Embassy
is of the opinion that the group favoring national communism would
receive covert Yugoslav assistance as a counterforce to reactionary
elements supported by the West. (S Belgrade 1831, 6 Jun 51). COMMENT:
The publicity which the Yugoslav press has given the founding of an
Albanian exile committee in Yugoslavia in May (C/CI Daily Digest,
26 May and 1 June 51) suggests that its immediate purpose is to
challenge western leadership of Albanian resistance groups. 25X1
information regarding the program of the Albanian refugees in Yugo-
slavia (0/CI Daily Digest, 5 May 51) also indicates that its immediate
task is to collect intelligence on Albania while preparing the ground-
work for the eventual overthrow of the Hoxha regime. Because of the
Yugoslav Government's precarious position, as well as its unpreparedness
to upset the Hoxha regime, Tito probably has no immediate intention to
use its Albanian refugee organizations for overt action against Albania.
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SECTION 2 (EASTERN)
"A" BURMA. Chinese Communist Assistance to Burmese Communists
Reported Underway. According to the Chinese Nationalist Defense
Ministry, the Chinese Communists are now furnishing supplies to
the Burmese Communists, with Chu Chia-pi, chief of the Yunnan
Province Public Security Department in charge of the operation,
In mid-May, 20 truckloads of ammunition are said to have been
sent into Burma via Mangshih, Yunnan, a point from which
additional supplies continue to move. (S Taipei 1676, 6 June
1951). COINTs Chinese Communist assistance to the Burmese
Communists has been anticipated and this report maintains the
continuity of intelligence on the subject. Chinese Communist
agreement to provide aid is fairly well established; Chu Chia-
pi's appointment to supervise the program and to direct guerrilla
operations in Burma has been reported by other sources as has
the stockpiling of military supplies in the Mangshih-Paoshan
area.
"C" Taipei of Opinion That Few KMT Troops Have Crossed from
Burma into Yunnan, The Chinese Nationalist Foreign Minister,
asserting that his information on Chinese Nationalist troops in
Burma was fragmentary, reported that of something over 59000
KMT troops in that area, perhaps two-thirds obeyed the
Nationalist General Li Mi, and that, in his opinion, compara-
tively few have entered Yunnan. A small unit which recently
did so was ambushed with serious losses, he reported, the
Chinese Communists apparently having been informed of the
movement, (S Taipei 1681, 7 June 51). COMMENT. Other and
probably more reliable reports state that substantial numbers
of these KMT troops are now in Yunnan.
"B" TNDONESIA,, 'Report of Chinese Offer ` of Large'Amount 6f-Rice
to Indonesia Probably'False. Ambassadd Cochraniin checki on
a: reportnthat; }negotiations are ' conti ,ng'.betw?en' Indonesia and
Communist China-(see OCI Daily,;Digest, 31 Mai, 51; page 5) for
the ,sale ,tc Indonesia of some 500,000 tons:-of rice on?.a credit
basis found: that1the report derived:-from an apparently:anti-
Ameridan'-source's Java Bank officials :,reported no knowledge of
any such~.negotiationso' G6fteral-indications are that the
report is false. (C Djakarta 17022, .6 June 51). C s
Although it Lis known that there were-earlier preliminary Chinese
efforts}to~obtain'.Indonesiin rubber on a cash..basis'and',;it has
been:repoi^ted;that the Chinese have offered rice and:tungsten in
payment, this particular report appears?.)false if ,'only by'reason
of the excessively'-large tonnage oitedd '. -:Indonesia.' has' not yet
made a decision'on its position with respect to including
rubber among the items to be embargoed under the recent UN
resolution against Communist China.
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25X1
"B" CHINA Duster of K.C. Wu Is Not Imminent. Governor K. C. Wu of
Taiwan, in a conservation on 4 June with an American Embassy officer,
stated he had submitted his resignation to the Generalissimo in
March because of his inability to control the Peace Preservation
Headquarters Police, who were interfering in two Taiwan elections.
The Generalissimo supported Wuss censure of the police, and Wu
gave the impression that for the present he had passed through
the ouster crisis. A recent crisis, however, resulted from the
policy and personality differences between Premier Chen Chong
and Wu, who remains in a difficult position because of the
Premieres control of the Peace Preservation Headquarters Police.
C' Taipei 1685, :7 ,June . >51) a ' NEWs ? American-educated K.C . life
ha' rxever?'-..bee , pu ,air with Premier Chen Cheng, who advocates-JA
aL.vrp),conservative internal program for Taiw&t. Although Wu has
tendered histhesignation at . least .o three occasions, ; he 'will, , ,.
probably. be.: tained in some. official position# because of ` ,his
Destination. vessels leaving
Europe with cargoes or Communist China are not declaring for
Chinese ports. The practice is for vessels leaving European
ports to declare for Port Said. From there they declare for Aden,
Colombo, Singapore, and Hong Kong in sequence; then proceed to
China. The example is cited of the British vessel GREYSTOKE
CASTLE, which cleared Suez on 5 June declaring for Aden. The
vessel originally left Poland with a cargo of 7,000 tons of
iron and steel, including steel rails, and is rumored to be
carrying ammunition as well. (S CINCNELM 0616072, 7 June 51).
C0?0 The action by masters in declaring for other than
Chinese ports may be another of the precautions being taken to
avoid interception by the Chinese Nationalist Navy. The
recent Nationalist interception of the German vessel MAI RICKMERS
has impressed shipowners of the danger to ocean vessels which
are known to be headed for Cormunist China. Another of the pre-
cautions now being taken by masters of ocean-going vessels to
avoid interception is to discharge their cargoes onto junks in
South China rather than sail up the coast to North China.
"A" Erpparations for Lehr. Korean and Eventual World War.
According to Chinese Nationalist reports, the Chinese Communists
have embarked on a large-scale mobilization program in accordance
with a secret agreement reached in March 1951 with the USSR.
Under this agreement an army of 10-20 million men is to be pro-
vided by Red China and equipped by Russia for use in the next
world war. Reporting on the implementation of this program in
Kwangtung, the Nationalist Defense Ministry claims that 500,GOO
were being recruited from the 16 to 48 year old males, none of
whom were allowed to leave the province. ( U Taipei, AP, 7 June 51).
excellent reputation with Americans.
"B" V sel S.-ailing forComma,nist China Declare Fal
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COUNTS Indications of large-scale mobilization on Chinass
mainland have long been observed and are considered sympto-
matic not only of Russian desires, expressed in "secret"
agreements or overt understandings, but of a Chinese Communist
organizational program for both internal and external security.
The ability of the Chinese to raise these millions of troops
is generally recognized but the Russian capacity adequately
to equip them has still to be established0
"C" Manchurian Railways to Carry More Freight in 1951. A
Peiping broadcast of 5 June reported that Manchurian railways
are to carry 13% more freight in 1951 than in 1950. This
increase is made possible by greater efficiency of workers,
adoption of Soviet methods, and use of modern railway equip-
ment, the broadcast claims. (U FBIS, AAA=8, 6 June 51).
COMMENTo The Communists are increasing Manchuria?s transport
capabilities at the expense of the rest of China, a situation
which reflects the effect of the Korean war. Previously
reported Communist statistics indicate that little increase in
freight hauled by Chinese railways outside of Manchuria is
planned this year.
25X1A
Airfields Reported Closed for ReR.ira a Five CCAF airfields
were closed for repairs between 21-26 May, according to a
Chinese Nationalist source. Three of these fields ? Kungchuling,
Ssupingchieh, and Mukden - are located in Manchuria. The other
two are at Tsingtao and Hankcpw in China Proper White r1miA
field at Canton is reportedly being expanded ( , 25X1A
COMMEs There have been recent reports of a
Communist program to strengthen and expand runways throughout
China. Few Chinese fields, and none of the ones cited in this
report, are as yet known to be able to handle aircraft the
size of a B-29.
"A" Recently-trained Chinese Communist Pilots Reportedly
Proficient. A Far East Air Force report evaluated B-6 states
that 2,000 Chinese Communist pilots, trained under Soviet and
German tutelage, were to have been graduated 25 May, and that
they would compare favorably with pilots of other countries.
FEAF commented that any such increase in numbers and skill of
CCAF pilots would increase Communist capability to employ its
air strength in Korea. (S FEAF, AX 8293, 3 June 51). COMMERTg
Another recent report has alleged that large numbers of CCAF
personnel who received a year of training in the USSR returned
to China recently. On the other hand, the Nationalist MND has
claimed that USSR-trained pilots are being returned with in-
sufficient training because of the urgent need for them in
Manchuria. None of these reports have been confirmed,
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"B" KOREA. Growing Evidence that Chinese Communist Fourth Field
Army Units are no Longer in Korea. The Intelligence Staff of
the US Far East Command accepts the withdrawal of the Chinese
Communist 50th Army from Korea to an unlocated destination in
China or Manchuria. FECOM comments, further, that a heavy volume
of reports has been received indicating that the Chinese Communist
38th, 39th, 40th and 42nd Armies have also been withdrawn. No
contact, other than isolated deserter prisoners, have been made
with any of these units since before the Communist mid-April
offensive. (S, DA-CINCFE Telecon 4800, 8 June 51). COMMENT.
These 5 crack Chinese Communist Fourth Field Army units were
the first Chinese troops to enter Korea, along with the since-
withdrawn 66th Army from the North China Military Area command..
Having borne the almost continuous brunt of the earlier campaign
their strength and effectiveness is believed to be greatly
reduced.
"C" ROK Government Recruiting Givil Administration for North
Korea. The French Press Association reports that the ROK
Government, as of 8 June, was selecting administrative personnel
for assignments north of the 38th Parallel as that area may be
freed by the advance of the UN Forces. A total of 1200
administrators and 30 ',000 new policemen are sought for the six
provinces north of the Parallel, (R FBIS Advance Ticker, 8 June
51). COs The ROK Government may be expected persistently
to claim its right and intention of uniting and administering
the two Koreas. A further report indicates that the South
Korean Government is organizing for the operation of the North
Korean Railways.
"C" JAPAN. Reestablishment of Zaibatsu Combines Being Planned.
The Tokyo Shimbun reports that former Zaibatsu firms (large family
trusts), foreseeing an early depurge and peace treaty, have begun
making plans for reconcentrating their former affiliates. The
Mitsubishi and Mitsui combines are reportedly planning to merge
more than 300 postwar offshoots into three and five companies
respectively. The paper states that the trend started with the
depurge of Zaibatsu executives last year, and has grown more
pronounced with a further depurge in the offing. (S SCAP Press
Analysis, 29 May 51). COQ Modiation of the Economic
Deconcentration Law and the Trade Association Law reportedly is
high on the list of Occupation-sponsored legislation which is
now being reviewed for possible revision by the "Ordinances
Review Committee." According to Japanese industrialists, the
break-up of the combines was too severe, resulting in financial
weakness, shoddy merchandise, and wasteful competition. Actually,
the wartime executives appear to have continued to exert con-
siderable influence from behind the scenes over the postwar
splinter firms.
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SECTION 3 (WESTERN)
"A" AUSTRIA. US Moves to Expel Soviet Repatriation ' Missions, US Forces'in
Au tria wll take the necessary measures -to ensure a eparture from the-
VS-zone of-the Soviet repatriation mission by -8-June, US High Commissioner
Donnelly has-insisted that the mission be. withdrawn-by this'date, after
the Soviet Commander, General Sviridov, had previously rejected his request
to withdraw. Sviridov contends that the right"of his mission to remain
in the zone is determined "not by an order of the US authorities in Austria.,
but by the agreement of the two governments made ion 11 February 1945"
(Yalta protocol). Donnelly has replied to Sviridov.that the Yalta agreement
has long since been fulfilled and is-unrelated to existing conditions., and
that there is-no longer any necessity for the repatriation missions,
(S Vienna 29.56., 6. June 51) CON &M: The Soviets evidently attach consider-
able importance to these missions ich are used mainly for propaganda and
espinnaoP. nnrnncac _
"A" FIANCE. Further IDecline Seen in Strength of Extremist Parties, it now
appears excee ing y e y that e'combined a is an ommunist seats
in the next Assembly can approach the 314 halfway mark. Although the Com-
munist Party (PCF) may still be the-strongest in the number of votes
received,, the Ministry of the Interior estimates that PCF representation
will be cut to slightly over 100 seats (180 at present),- The,gaullists
themselves have now reduced their confidential' estimate of:the strength of
their Rally of the French People (RPF) from 160 to 140 (now less than 50).
.The major unknown factor is whether the slogan calling for electors to
"vote usefully", i,e for the Centrist-parties allied for the elections,
will be heeded by those independent Rightists who fear the leftist elements
within the electoral alliances. (C Paris 75499 6 J=651). COB NT: This
is the most-encouraging estimate Embassy Paris has made to date on e
17 June elections. If~PCF representation can be so sharply curtailed,.
another middle-of-the-road coalition government will be possib3_e_.despJte
Gaullist gains. The orientation of such a government will be more to the
Right than at present, however, and its stability will be questionable.
"C" DEIM . National Morale Seen as Markedly Improved. The US Embassy at
-Copenhagen esVi aces that Danish ion morale has risen considerably
since January when the Danes feared that the Korean conflict might extend
to Europe. Due in some part to the recent visits-of Montgomery and
Eisenhower., the Danes now seem to feel that the West will become sufficiently
strong in the ensuing years to prevent or to resist successfully Soviet
aggression against Western Europe, The Embassy cites as indications of
improved morale such things as the rise in the number of volunteers for
the Home Guard and for officer training and also the increased publicity
regarding NATO. Although the public still shows some reluctance to sacrifice
its standard of living for defense, there is a general intellectual recog-
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nition, reiterated constantly by political and press leaders, that the
benefits of NATO cannot be obtained without Denmark's assuming the
obligations and . burdens. resulting therefrom. (C Copenhagen 11151,
6.June 51)..COMINT': Because Denmark's scant resources and exposed
strategic position have made any Danish defense effort seem futile, =
latent pacifist and neutral sentiments have persisted. As the military
prospects of preventing an occupation of Denmark become more real, the
spirit to resist increases.
"0" UNIT$D KINGDOM. British-Reported Reinforcing. Iraqi Air Bases against
ars -.arr. Iranian, done repo d 25X1 C
--
'on
ay one RAF-bomber-sq-uadron froar Aden has arrived ~at Shaiba
airfiEl~i n+aar Basra, Iraq, 'a#4--that about one hundred planes have arrived
r bomber 7sl rongandntraansport planestfrom Suez. Thea,e plane and
s are
'to be -'(m -hand 'in event of UK armed intervention in Iran. :.It- is also
25X1
reported that Bahrein may be used as an RAP operational base, and Shaiba
is being prepared for a possible mass evacuation from Abadan Iran,
employees of .the Anglo-Iranian oil company. (S ) 25X1 A
COMMENT.-- Although the British do have available the forces mentioned in
en,. ilta-and Suez, no information has yet been received'on any changes
-in 'RAF `order of battle. in. this area to -confirm this report. Two. earlier
a transient stop on. routes to the_Far East, and both fields are kept in
-ammunition and food, at Shaiba to implement the plan for the protection of
British nationals at Abadan., which is only a few minutes flying time
distant. Also 'reported was an alternative plan to use Kuwait as a base
if the Iraqi Government~protested the use of Shaiba.. In view of.the UK
overranent'?s declared intention of protecting its nationals, preparations
of this sort are to be expected. Although neither Hibbaniya nor Shaiba
have -teen -stations'-for- regular RAF units recently, Habbaniya is used as
mentioned the storage of reserve materials, including gasoline,
,
lists charges of US pressure on Argentina, including: 1) economic. blockade,
boycott, and sabotage, 2) an anti Argentine.campaign throughout South
America financed by US Government funds, and 3) a US organization installed
in'Montevideo to-interfere by radio and publicity in the coming Argentine
elections.:--The article-also-lists a recent fabricated press release--
without reference to its exposure even in DEMOCRACIA-concerning US anti-
Argentine propaganda media and the proposed formation of a Latin American
army which would occupy Argentina and other countries that did not bow to
the -will- of --the US:. Descartes says that his analysis is intended to show
the miserable errors of theNest's political system, and these are pointed
out "in the spirit of cooperation and friendliness" with the hope that
they will be corrected soon, (R Buenos Aires 1095, 7 June 51) COMMENT:
proac Another Descartes icle inn the administration paper
DMZIEACIA
readiness for emergency use. _
ARGENTINA. Sharp Anti-US Press Attack Simultaneous with Diplomatic Ap
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Desoarres,is actually.Per6n, according to. authoritive sources, including
the. Foreign Minister. Thee article appeared on the .same day set for
meeting between US Ambassador Bunker and Foreign Minister Paz that had
been requested by the latter to discuss all points,coveringfUS-Argentine
relations (see CCI Da ly Digests 4 June 51). This double. treatment of
the Ul3 by Peron is noevr, but the contrast is sharper than during the
past few months., By the anti-US press attacks, usually explained as solely
-or internal political consumption, Perlin may be hoping to provoke attacks
front the US in order to.imitate his 1946 anti--Braden campaign,' which Peron
feels contributed substantially to his first electoral victory,
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CENTRAL INTELLIGENCE AGENCY
Not for dissemination outside 0/CI and O/NE,
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CENTRAL INTELLIGENCE AGENCY
OFFICE CF CURRENT INTELLIGENCE
DAILY DIGEST OF SIGNIFICANT S/S CABLES
8 June 1951
SECTION 2 (EASTERN
"C" IRAN. Oil-Board Member Resigns. One member of the three-man board
scheduled-to-1eave-for Abadan td-supervise the oil industry, has re-
fused to join his colleagues on their trip. The recalcitrant member,
Senator Hassibi, Iran's only nuclear phsicist, explained to the Press
that the Board could not function properly since its power was divided
equally between the three members, and that he had resigned because he
felt that one man should have full power "to execute decisions at once".
The other two members of the board have departed for Abadan without
Hassibi. (U NY Times, 8 Jun 51), COMMENT: Whatever Hassabits reasons
for resigning,: his action provides Prime Minister Mossadeq, who has been
accused of procrastinating on oil nationalization, with a valid excuse
for delay in implementing the nationalization law. This should enable
Mossadeq, who has shown an increasing desire for moderation and concilia-
tion in his conversations with US Ambassador Grady on this subject, to
prevent the Iranians from taking any drastic and irrevocable step prior
to the Government's discussions with the Oil Company,
"B" CHINA. Peiping Reported to be in Unreceptive Mood for Peace Feelers.
The Indian Foreign Office has informed US Ambassador Henderson of the
opinions of Indian Ambassador Panikkar in Peiping regarding a possible
"new peace offer" to Communist China, Panikkar reportedly takes the view
that a peace move at this time would not be oppcr tune, as the Chinese "in-
sist that the military situation in Korea is satisfactory and is developing
steadily in their favor." Panikkar is also said to.believe that Peiping
would insist that a Korean settlement include "agreeable " arrangements
regarding Japan. (S, S/S New Delhi 3516, 5 Jun 51). COQ: It is not
known whether Panikkar is basing his opinions upon interviews with Chinese
Communist leaders or upon Peiping's propaganda. Peiping has not altered its
stated demands for a Korean settlement-withdrawal of UN forces from Korea,
US abandonment of "neutralizing" Taiwan, and admission cf Conmun1s t China to
the UN-and the regime-is currently intensifying its program for support of
Chinese forces in Korea. Peiping has not yet publicly suggested that Korean
and Japanese problems are inseparable.
Approved For Release 2002/06/ 3 : CIA-RDP79T01146A000200350001-2
 Approved For Release 2002/06/13 : CIA-RDP79T01146A000200350001-2
Approved For Release 2002/06/13 : CIA-RDP79T01146A000200350001-2