OFFICE OF CURRENT INTELLIGENCE DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300260001-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 14
• Document Creation Date: December 22, 2016
• Document Release Date: July 17, 2012
• Sequence Number: 1
• Publication Date: July 26, 1951
• Content Type: REPORT

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COPY NO.
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DAItY/DinST
JUL 26 1951
Date:
NOTE: 1. This summary 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 ih 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
1113* ? important regional developments
not necessarily related tp Soviet/
Communist intentions or capabilities
? ? other imformation indicating trends
and potential developments
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SECTION 1 (SOVIET)
USSR. Comment on Appointment of New Soviet Minister of the Navy.. The
appointment as Soviet Navy Minister of Vice Admiral N. G. fUznetsov, as
in the case of the recent reappearance of Marshal Zhukov, marks the
return from semi-retirement not only of a competent professional military
man but also one previously known to be favorably disposed toward the
West. In 1948 Kuznetsov was one of four high-ranking naval officers
eourtmaa-tialed on charges of divulging military secrets during wartime.
Kuznetsov was very cooperative in his wartime relations with the Allies,
and the officers on trial were significantly accused of permitting infor-
mation on German weapons to be passed to the British and Americans.
Prior to 1948 the new Navy Minister enjoyed a distinguished career. He
was Peoplevs Commisar of the Navy from 1939 until the unification of the
defense ministries in 1946, when he became Deputy Minister of the Armed
For es. Daring the period 1939-47 he was also Commander-in-Chief of the
Soviet Navy. His demotion in January 1947 to Chief of Naval Training
Establishments preceded his subsequent disgrace.
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several reasons may be advanced to ex- 25X1
plain Kumetsov's previous dishonorable retirement and his present re-
turn to active duty:
(1) He may have been brought back to fill the need for competent
prefassional as opposed to political leadership of the Navy.
He was believed to be an opponent of the conception of unifi-
cation at the time that the Ministry- of Armed Forces was
created
(2)
( )
(4)?
Although possibly a victim of high-level personal frictions,
Kurnetsov may have been purged by the Party to serve as an
example to other budding professional "independents".
His appointment could bear some relationship to the recently
launched Soviet policy of friendship and understanding with
the English-speaking world.
EASTERN EUROPE. HUNGARY. Establishment of NEW Cooperatives Again
Permitted. The Hungarian Ministry of Agriculture has lifted the ban of
frYWFW17tary which temporarily limited the establishment of agricultural
cooperatives. As of 22 July licenses for setting up producer groups will
again be issued. COMMENT: The five month suspen-
sion of the establishment of agricultural cooperatives was apparently.
undertaken to free rural party leaders and peasants for the tasks of
planting and harvesting the crops and to encourage the productivity of
small hand holdings. It did not mean, however, a relaxation of the
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drive to socialize agriculture since efforts to increase the membership
of existing cooperatives and the campaign to eliminate the kufaks were
not halted. There have been indications that the agricultural social-
ization program will be accelerated after the harvest.
POLAND. Second Quarter of Economic Plan for 1951 Reported Fulfilled.
Poland's State Economic Planning Commission has announced that the second
quarter goals of the 1951 economic plan have been fulfilled. All indus-
tries noted in the announcement showed higher production than in the
second quarter of 1950. However, for the second consecutive quarter pro-
duction targets for crude oil, machine tools, locomotives and railway
rolling stock were not attained. Overall industrial production was an-
nounced as having overfulfilled the plan by 2.3 percent. Construction
targets in the Ministry of Road and Air Transport were specifically men-
tioned as not achieved for the second quarter. The announcement also
noted that although the percentages of various available consumer goods
had increased during the second quarter, the plan for increased consumer
goods sales had not been completely fulfilled. US Embassy Warsaw com-
monts that this report reveals no sensational developments when compared
to that of the first quarter. COMMENT: This
announcement by the State Economic Planning Commission seems to bear out
previous reports of continued Polish emphasis on long-range development
of basic industries.
YUGOSLAVIA. Molotov SReech Alarms Yugoslav Leaders. High Yugoslav of-
1771=?Are concerned over the Molotov speech in Warsaw because they feel
that it is the type of soundoff which may be expected if the USSR decides
to attack Yugoslavia. In a conversation with Ambassador Allen on 23 July;
Tito alluded to this speech and emphasized his concern that the USSR
would seek compensation elsewhere for its undoubted defeat in Korea.
COMMENT: The Satellites are currently
capable of launching a major attack on Yugoslavia with little or no
warning and Soviet propaganda attacks on 'Yugoslavia have recently
reached an all time peak. There is no new evidence, hawever, that a
Satellite attack is imminent. Molotov's brief reference to Yugoslavia
in his Warsaw speech, in which he stated that the Tito regime "cannot
last long," appears to be more of a warning to Poland as to the course
that a Satellite cannot take than a threat to Yugoslavia.
Peasants Withdraw from Cooperative Farms. Peasants throughout
Yugoslavia are reportedly planning to leave cooperative farms on the
expiration of their three year contracts, principally because the
government has failed to raise the standard of living on the cooper-
atives. The movement to resign from the cooperatives was attaoked at
a reoent meeting in Skoplje by two leading Yugoslav officials who
sought to placate the peasants with additional promises of reforms in-
cluding a reduction in the prices of consumer goods.
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COMMENT: Many peasants who joined cooperatives during the
governmental drive of 1948 and 1949 will soon be eligible to withdraw
under a law which permits optional withdrawal after three years.
peasants in many cooperatives are planning
mass resignations. Over 20% of the Yugoslav farm land is currently
organized into cooperatives but their number will diminish rapidly with-
in the next year unless the government succeeds in discouraging these
mass resignations.
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SECTION 2 (EASTERN)
ggyIm?Attladange at J se Peace Tr .a Co fs n e Probeekle. The
Permanent Spereteey of the Ceylonese Ministry of EXternal Affairs says
that his Government expects to name Ambassador to the US Corea as its
delegate to the Sen Francisco conference an that he believes there will
.be no difficulty over eey a signing the Japanese Peace Treaty.
COMMENTs Pakistan and Ceylon are both expected
to participate in the conference. India has not yet indicated its
deeisien on the matter, but it will probably also attend.
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93" AVTOW NejlaAtaleMAIton 4.2=1.14. 25X1
CinC Ne Win has submitted his resignation to the Defense 25X1
Minister. COMMENTs There is no 25X1
doubt that NO Sin's resignation will be accepted. The Government will heere
groat difficulty in selecting a suitable replacemonto
Karsng glePgrtedl3kellge-Ita..1429.1ALL..1sColiniswl. A well-
informed Karen source has told the US EMbassy in Rangoon that Thakin Than
Tun, leader of the Burma Communist Party, arranged for the training in
C mmunist China that some Karens are now receiving. The source claims that
Shortages of medicines and ammuuiti naea factor in forcin he Kar4meo
to cooperate with the Communists. PANED 25X1
There are still, no indications of growing ideological compatibility between
Karens and Communists. The Karens, however, in their present plight are
not likely to resist forever the temptation to accept assistance from any
source that is willing to aid them. At effective Karen-Communist coalition,
supported by Communist China, would conetitute a grave threat to the
Burmese Go ernment.
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The Secretary General of the BWPP recently declar d that the Burmese Govern-
ment's nrepressive police would drive his party underground. The state-
ment grew out of a protest Against the Government's action against BWPP
leaders who had been orgawieing a program of forced plowing? The BWPP Alpe
e!
complained of discrimination against its members in he distribution of
agricultur loans.
CONT 8 The BWPP-
:els nothing more or less than at aboveground Communist Party. It is
eencouraging that the Government is teking steps to re trict BWPP activities.
Although this extremely vocal Communist front has some following, its
? decision t* move underground would probably not enhance greatly the capa-
bilities of the Communists who are already in open insurrection.
4
wee INDOCHINA. FrenaAkSnicious eLNG6aAi?g_Ilet Min M n Off0 A
reported Viet Minh broadcast suggesting mediation by India and China
of the conflict in Indochina has been received by the French with utmost
r1srve0 The French point tr a continuation of Viet Minh broadcasts
deianding the with awal from Iudochina by all French military forces before e
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peac be discussed. Such broadcasts, the French feel, contradict
the "peace offer." COMMENTs Rumors of
possible peace negotiations have been fi quent in Indochina since the
Korean truce 'talks began. Last week the Viet Minh broadcast without c mment
a pro-Communist French Aewspaper?s proposal of negotiations between the
French and Viet Minh.
tI gowInrdct14 c s fujudgcttu? Decisions
to increase Chinese Communist aid to Viet Minh to 109000 ton per m nth,
beginning in August, and to organise three Chinese armies to be infiltrated
into Viet Minh territory for "voluntary service," were reportedly made at a
July conference of Viet Minh, Soviet, and Chinese representatives presided
YEH Chien-ying9 Governor of Kwangtung.
com1EIT8 Reliable figures on the socOnt of Chir se Communist
to the Viet Minh forces in Indochina are lacking, but the total *f
,0Q0 tone referred to aboveis considered suspect, when compared with
a Hong Kong press report of the same meeting which stated that 19000 tons
wouldobe forthcoming on a monthly basis. The urgency ascribed to the
oomplithea of railand road connections with Indochina suggests the probe-
13=tr:bf intentions to augment considerabiy the flow of supplies into that
area, The infiltration of unknown numbers of Chinese Communist troops
across the border is now accepted. To date, however, none of them have
been identified in combat operations. While the potential to commit three
armies of "volunteers" is generally conceded, there are no reliable indi-
cations of Chinese intentions to implement such a plan at this time.
aC"
giliSoP,OitatIQM.1.124.1LaagotolTAYLSOlizzato.Plissitboxcialskad-QM*
1114?. A concentration of eight gunboats, four steamers, and 40 motor
junk in the Halmen area of the Chekiang coast is believed, by Chinese
Netiopaliat military officials, to indicate the probability of a Communist
attack on the Tachen Islands in the near future.
CO TJ Predictions of Chinese Communist invasions of -does
and other off-Shore islands have been frequently received over the pest
pix months. The ability of the Red foroe in the area t ;else the Tachon
Islands (20 maesofrom Haimen)9 prOsently held by 19000 Nationalist marines
arid. a "guerrilla column," is generally conceded.
Nationalist reauttance to strengthen their defenses on the Islands, held
valuable as bass for guerrilla and intelligenoe operations, for fear of
provokiAg a Communist assault.
ALIgat of TINP_MPIDAMOTALIDAso the arrest
of a US businessman in Tientsin in mid-June and of another US busine man
in Shanghai in midojaly. The latter is the fir.t case known to US ConGen
Hong Kong of the erre t of an American for failure to discharge alleged
obligations to Chinese employee '0 ConGen believes 19 Americans to be
und r arrest in Communist China.,
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COMM T8 Both Americans are likely to be detained for
"C" JAPAN. Socialists Refuse to Participat4 in Trpaty Conference. The Cantrell
Committee of the Socialist Party has decided that the party will not be
represented in the Japanese delegation to the ' ace conference on the
grounds that the signing of the treaty shmi1t 1e done by the Government
at its own responsibility. . COMMENT: The Socialist
Party has continuously maintained its opposition to a peace treaty which
did not include the Communist powers. Its decision not to participate in
the delegation at San Francisco would be consiStent with its past polity.
At the same time the party is left free to capitalize on any unfavorable
consequences of the separate peace, including reaction 1007those terms of
the present treaty which the Japanese consider'unsatisfactOry.
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SECTION 3 (WES1LaN)
GERMANY* West German Lower House Ad ourns after Productive Session* US
officials in Bonn characterize the recently completed session of the West
German Parliamentgs Lower House as "decidedly productive", They feel
that the new federal Parliament has developed rather well in its first
two years, having acquired considerable experience, stature, and ability
as a legislative body, Extremist parties of both Left and Right have been
held very well in check, Contrary to original fears, the Parliament has
refused to act as a rubber stamp for the government, Relations with the
government, however. still 1
wilin72 to be desired, because of the
manner in -which Chancellor Adenauer
operates, Despite its good record of legislation, the Lower House has
fallen behind in its budgetary work, and has a backlog of some important
unfinished business, such as equalization of burdens lerp1q1A-hinn
ratification of the Schuman Plan*
COWENT: The first postwar West Cerman Lower House, elected in
August i949, has often been under fire because of excessively rigid and
stodgy procedure and dull sessions. In recent months, however, a change
in floor leadership has produced some improvement. A new set of standing
rules may also help to streamline procedures in the next session, which
opens in September. A legislative "question hour", similar to the British
House of Commons procedure, will be included.
"B" FRANCE. Gaullists Unlikel
Following Ra
to Profit Immediately fran Cabinet Crisis.
Soci is Rene Mayer 3 S tONd e
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invested by the Assembly as Premier, President Auriol turned next to
Popular Republican Georges Bidault and then Rightist Independent Paul
Reynaud. Foreign Minister Schuman, another leader of the Catholic-
oriented Popular Republicans, had previously declined to attempt to
form a government, and most of this partygs deputies abstained in the
vote on Mayer. The Gaullists f strength in the Assembly will enable them
to continue to use the now critical question of aid to church schools in
an effort to divide the middle-of-the-road parties of the old coalition
and prove that a new majority built around the Gaullists is required.
Reynaud recently stated that the only majority possible at present would
be one based on those favoring aid to church schools and hence including
the Gaullists, but in the debate on Mayers investiture there was no sign
of a favorable response to the Gaullists f invitations to rally to them.
Logically, the remaining candidates who could succeed in forming a govern-
ment are the moderate leaders Pleven and Quauille.
COMMENT: All cabinet crises in the past three years were
aggravated by the Socialists demanding wage increases, and hence the
Popular Republicansg intransigence on the church school issue points up
a further serious weakening of the old majority. The Gaullists are not
likely to be included in any Government receiving Assembly approval in
the near future?
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"B" Government Will Im ede Travel of Youth Festival Delegates.
The Minis er o In erior as arrange o .elay he rave of renc
delegates to the Berlin Youth Festival (5-19 August) even though he cannot
refuse passports outright. The French have informally arranged for the
West German consulate in Paris to "drag its feet" in the issuance of transit
visas. Arrangements also are being made to refuse French transit visas
to known' Communists. The French Foreign Office, however, fears that
Austria may become a loophole for those Communists whose transit visas
through Germany have been held up, and has suggested that authorities in
Innsbruck and Salzburrt refuse to issue the grey cards required for entrance
into Berlin. I COMMENT: In 25X1
spite of these efforts, several thousand French delegates to this Congress
will probably reach Berlin. At the most, travel of only the least
important of the delegates will be impeded, since the hard-core leaders,
aware of French inclinations, have probably already arranged for transit
documents, or will by-pass France?
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11B1B
Workers Win Concessions in Strategic Sul hur Indurt_ry, Two labor
disputes, one of monthsgauration, the other o wee in the sulphur
industry which produces one of Italygs few strategic raw materials, were
recently settled to the advantage of workers in central Italian and
Sicilian mines. Meanwhile, a strike was reported at another mine in Sicily.
COMMENT: Strikes in the sulphur
industry are a part of the Communist campaign to hamper Italian defense
production. The Italian Government is putting pressure on management to
grant concessions in order to minimize time lost in the production of a
strategic commodity*
UNITED KINGDOM. Cabinet 'Against Shaw of Force in Middle East at This
Time. The Cabinet has rejean-TETrecommendation o he Bri is iefs
of naff to place British troops in Basra and Kuwait, deciding instead
to "wait and see", and to avoid provocative action at this time. The
Chiefs of Staff themselves had previously rejected sUch a recommendation
from the British Middle Eastern Commanders-in-Chief, but following the
assassination of Abdullah, they reportedly came to the conclusion that
a show of force in Iran was now required as a deterrent to new incidents
and further deterioration in the Middle Rast-
Attitude on. East-West Trade Meetings. A high UK Foreign
con rary o previous indications 25X1
the British Government is planning to 25X1
participate fully in the preliminary Economic Commission for Europe meting
on East-West trade, scheduled for 20 August. The UK expects that this will
deal mainly with grain deliveries by the Soviet bloc, a matter on which
the UK still seeks satisfaction. Should a general conference on East-
West trade take place, however, the government would. have to review its
position. The British official explained that his colleague in Paris
who had so strongly apposed the meetings "had not read his papers". 7)(1
COMMENT: Gradual UK agreement to the tightening 25X1
of Allied controls on exports of strategic goods to the Soviet bloc
Office official has insis
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threatens the floor of raw materials to the UK from Eastern Europe. The
UK is now concentrating its efforts on maintaining imports Of certain
key commodities, such as grain, in the face Of this handicap, and in
so doing finds itself to some extent opposed to the US.
"0" CUBA. New Legislation 1111 Prohibit Shi mont of US Embargo -List Items to
Soviet UME7--The Cuban Minis er o a e vises that legislation is now
being drafted which will prohibit the export and re-export from Cuba of
materials considered essential to national security interests. An effort
is being made to cover the entire US embargo list. Pending the promulgation
of this legislation, Commerce Minister Zaydin on 19 July issued a decree
prohibiting the export or re-export of any products to Soviet Russia,
satellite countries, and Red China. 25X1
COMMENT: Since 1 January, an increasing effort has 25X1
been made by Soviet satellites, notably Hungary and Czechoslovakia, to
obtain items such as steel scrap, henequen fiber and hides. Prior to the
Kern Amendment, in the absence of a statement of US policy pertaining to
the trade of Latin American nations with the Soviet satellites, the US
Embassy, whenever contacted by Cuban firms requesting its views on such
transactions, could only point out that the US itself did not export
strategic items to the Soviet Bloc. The Embassy has been unable to obtain
any information indicating that there has been any considerable amount of ship-
trons.ohiptieietrfArategic commodities destined for the Soviet Bloc.
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"C" URUGUAY. Communists Claim Credit for Defeating Raise in Bus Fare. -
In the referendum on acceptance or rejection of the raise in
municipal bus fares in Montevideo on 22 July, 65,792 votes were cast for
rejection and 44;747 for acceptance. The defeat of the increase in fares
represents a resounding victory for the Communist Party." 25X1
COMMENT: It was expected that if the raise in bus fare 25X1
were defeated by the referendum3the Communists mould claim the credit.
It is true that the Communists initiated the campaign to defeat the fare
raise, but the campaign-was successful only because they were quickly
joined by almost all of the other political elements which oppose the
present Colorado administration.
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CENTRAL INTELLIGENCE AGC!
OFFICE OF CURRENT INTELLIGENCE
26 July 1951
SECTION 1 ':i:SCV:LET,
"AP 77.1Eq7q. jS litioa2 Ad7iser Reck_t_ ands US Pc sHftest US
Political Adviser Unger believes that th. oir possible solution of th,-,
Trieste is is the definitive diAsion of the Territory ou. ethnic. linea
whereby Italy would receive pract1al1y all of Zona A and a substantial
coastal strip in Zone B. Siwe neither Italy or Yugoslavia woald
EL:Aept such a solutionp Unger recommends that the US radially change
its -,,,arirre6t policy toward Trieste and exert pressure for an early Itali9n?
Yugosiav ageemento The US Political Acbristvs' points out tat? if an early
defanitive solution is not reached, th,-, US must be prepared to a()%?epi,
timid and probably inreasingly hostile agitation in Trieste and Italy and
h daiic YUg) lay attitude toward Italy. 25X1
COMMENTs The US has officially supported the return of all 25X1
ct o Ita34. since March 1948? with therei,ommendati;n that Yug4)?
slaTia and Italy settle the issue bilaterally. Wile Yugoslav leaders
have stated that they would be willing to reach a bilateral settlamen;i. with
some slight rectifications of the Zone B border in ItaIyls favorn it id
most an"ikely that these concessims would be suffir-ient to satisfy Italia
demaads. Ambassado7T Allen, noting the inereased seriousness with whi;h
the TvalaYGoverumea has viewed ye,'Jent Italian agitation has urgA US
avoidan of farther involvement in the Trieste issue whi',41 (;an be settled
by solution. 4Iien further reJalmehds that the US emphase to Italy ao'
Ylgoslavia that oommcn se,urity against So-J,iet aggression is t!')eir py
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SECTION (EASTERN)
"AY Fg; DanWIAAIPTIJA: JAT4.ne,ss l!eAct TrItNatItgjr1412RAR Wn
islatorIv Precludejahiliooiglatms,. The TS' Ambassaaor in Manila
states that the 24 July speek of the Speaker of the Philfippi.Le House of
Repr,esentati.7ee is taatamount to assuan:-3e that the Philippies wr;1 Lot
sigu the lapanese peace treaty? SpeakeTp whL, is :"Ioser to .5he "g'rase
r,2As thar af-27 other admiaist7f't n1dr Iasmbalklug on a touo of 'Me
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iSlands to popularize his opposition to the treaty. Although his motives
are Mainly political? his stand will have a widespread effect and will
heighten the intense emotions generated by the treatye, The Ambassador
feels that Ithe situational progressively worsen,
COMMENTt The Speaker of the House is the most powerful
political figure in the Philippines 3 he is also chairman of the incumbent
Liberal Party and -a probable contender for the presidency in 1953. While
his speech waS focussed on the reparations and eaCnrity clauses of the
Japanese treaty, he also directed a bitter diatribe-against.US foreign
policy, Its pnrpese, and that of his proposed tours presumably is to
augment his Own political prestige and to steal the initiative from the
opposition party before the November electoral campaign begins in earnest.
The effect Of the speech and those scheduled to follow undoubtedly will
make compromise on the treaty far more difficult*
2kIpaINI4
Cbi& iP .aton Ja anese Peace Trea The
Cabinet_has approved Indonesials.participationdn,the.Japanes -peace treaty
conference, and will transit its observations on the draft treaty by
5 August, A Foreign' Office spokesman intimated to US Ambassador Cochran
that these observations would include a request forwarations pat?s
.,ticulaay for money and property which the Japanese actually seized &rim
the occupation of IndOnesigli He stated however that the request would
not be of any great dimension.
93" ? ba sa o Wishes ave Pe A French doctor recently
returned.fromTeiping states that Ian Ambassador Panikkar is no longer
able-to:see Foreign Minister and Premier CHOU En-lai and wishes to leave
Peiping. CO4INVT2 Panikkar arrived in
Peiping With great fanfare-, and throughout 1950 had. better contacts with
top-level Chinese Communist officials than any other non-Communist repre-
sentative. In recent months Psnikkaros contacts have been greatly reduced,
and disillusioned with Peiping.
It is not clear whether Panikkaes loss of contact has been re ponsible
for his disillusions-or his disillusion responsible for his loss of contact*
In 'either cases. if Perrtkkar is genvirlay dlecouraged9 he may be in an
excellent position to correctcertain naive views regarding un at China
which are held by Indian Prime Minister Nehru,
MOTET
2
Declassified in Part - Sanitized Copy Approved for Release 2012/08/20: CIA-RDP79T01146A000300260001-1
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Declassified in Part - Sanitized Copy Approved for Release 2012/08/20: CIA-RDP79T01146A000300260001-1
Declassified in Part - Sanitized Copy Approved for Release 2012/08/20: CIA-RDP79T01146A000300260001-1
25X1