DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000300380001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: May 11, 2009
• Sequence Number: 1
• Publication Date: August 13, 1951
• Content Type: SUMMARY

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12_ August 1951
CIA No. 49304
Copy No.
39
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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 in CIA
or in the Office of Current Intelligence. Comments represent the
Immediate views of the Office of Current Intelligence.
JCS, DOS and PACOM
review(s) completed.
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SECTION 1 (SOVIET)
.1. USSR. Soviet economic aid frustrates US embargo on Communist China:
Radio Moscow, extolling the benefits of Sino-Soviet economic and cultural
cooperation, has asserted that Soviet economic aid frustrates US efforts
to starve the Chinese. Pravdaee Peiping correspondent also quoted the
Chinese Communists to the effect that the Chinese. people are aware of
their economic dependence on the USSR and realize that they "must express
sincere gratitude to the Soviet Union for its great brotherly help."
Comments During the past year there has been a noticeable dearth
of Moscow comment regarding Soviet economic aid to Communist China. Re-
cent Moscow comments appear designed to counter reported Chinese dissat-
isfaction with the extent of Soviet deliveries,
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SECTION 2 (F ,STERN)
Britain and Iran take first step toward settling oil disputes The
British an avian negotiators have .appointe a corrsriittee to wor out a
t
f
sys
em o
receipts to be aimed by tanker captains upon loading of oil.
Co : The refusal of -the -captains to sign Iranian National Oil
Coiany receipts has prevented Iran from moving her oil and has caused
a virtual shut-down in oil production because of lack of storage space.
'While this is no assurance that the negotiations will be a success, the
agreement on a committee. to solve this problem is at least one step to-
ward the solution of the oil dispute,
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questing his relief from membership in two top policy-making:. coninittees
of the Congress Party may reflect Nehru s desire to emphasise formally
that he is above party politics. On' the ,other handy New has been in-
creasingly subjected to dictation from Congress President Tandon and the
rightist partyma jority since September 1950. His position may now have
become so intolerable that he has teen the first step toward eventual
resignation from the party, In.any case., it appears that Nehru is about
to lose whatever power he has. held in the Congress Party leadership.
Should Nehru resign, he may be expected to assume the leadership of
-a new "Peasants., Workers, Peoples Party"" movement, which has been gaining
strength in India _ since the fall. of 1950, Nehru s s great popular appeal
should give this movement a fighting chance to defeat the Congress Party
in the forthcoming national elections,
INflE&. Comment on a o Bible crisis in the Indian Congress :Peat Prime
Miter Ne Qs letter .the., es:i en o'tan . ngress .Party,, re-
Paced with such a possibility., the rightist Congress' group, which
now controls the Government of India., may move to prevent the holding of
national elections in January 1952, These elections have already been
postponed twice., and further delay would raise an immediate outcry from
all non Congress groups. Nevertheless, the Congress rightists,,. in co-
operation with militantly nationalist organizations such as,, the Hindu
Mahasabha and the .Rashtriya Swayamsevak Sangh, probably' could assume
dictatorial powers and continue to rule with police and military. support,
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. 25X1
25X1
25X1
BU MA. B t A r m t.&anssh: J a e s~ tine to Connurdsts$ The US Embassy in
ngoon is receiving numerous requests .from local tire dealers to clear
their applications for tire imports from Japans. This clearance-is neces-
sary before SOAP will grant an export license., T ho Embassy notes that
over 20,000 tires were recently ordered from Japan, compared with past
imports of only 200 to 300 monthly. The tires , - it is reported, are to
be smuggled to Communist China,
Comment.- The increasing use of the - Burma 'Road to move these tires
and o er products into China is well documented. The traffic continues
on a substantial stale despite the declarations of Wiese officials that
customs personnel an the Sino-Burmese border have been increased.
INDONESIA. Cabinet discusses security condjtionsz The Cabinet met in
specia session on August to discuss security conditions in Indonesia,
Following the meeting. Information Minister Mononutu told the press that
.it was the govermentfs. duty to take rigorous action against anti-
rational movements which might impair the government a8 authority and
tend to disturb society, All government authorities ..therefore have. re-
ceived orders to take drastic action within the bounds of existing lama 25X1
and regulations, Mononutu concluded that he believes there is a con-
nection between the irregularities in East and West Java.:
Governm oncern over security conditions and its suspicion?of a co-
ordinated anti-goverment movement are hopeful signs,, particu-letly since
the Cabinet has in the past displayed.. a reluctance to take drastic action,
Comment: Internal lawlessness remains Indonesia4s primary problem.
There is no evidence that the current wave of insecurity is coordi-
nated. However, the armed gangs throughout Java, some of which are
thrown into a . crow . a . gpr in es ava' on e evening of S August
is estimated to have killed six people and-wounded 50 others. The cul-
prig belied to be a member of a fanatical Moslem e - ca d in the
ensuing panic,
Con nunist-led and influenced'. probably could .be induced with little ef-
fort to undertake generally simultaneous activity.
Grenade thrown into crowd at Bo or fair: A' hand grenade
Comment: The incident at Bogor occurred on the same evening as the
at?tac u Tandlong priok about SO miles to the northF-
- the two outbreaks were connected. During the past two weeks,, there has
been a general resurgence of lawlessness throughout Java, although the
a coincidence which has prompted the suspicion
at
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western part the s1aad. continues to be the lea. ;t t$ecu e area.
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12. KOREA. ROK cease-fire representative instructed to remain at Kaeson
negotiations: Ambassador Muccio reports the contents of >a 3 August letter
received by General Ridgeway from General Paik, ROK cease-fire representative,
in which Paik notes his instructions from President Rhee.to be present at
all meetings, General Paik makes it clear in his letter,, however, that
attendance is against his personal convictions and that his presence does
not signify the ROK Government?s approval of any outcome of the negotiations.
Comment: While the adamant stand of the ROK in viewing the cease-fire
negotiations as condoning partition of Korea is recognized, the presence
at the Kaesong negotiations of General Paik, representing the Korean Army,
at least preserves the semblance of UN unanimity of action.
13. Unification sentiment continues in the ROK:. Ambassador Muccio, comment-
ing on the demonstrations within the ROK against the cease-fire without
unification, notes no basic change in the line of action advocated in speeches
delivered at frequent meetings. While the Ambassador observes that meetings
are generally small in size and not indicative of a "strong organizational
effort.," he believes that the celebration of "Liberation Day" (15 August)
will be . exploited to "Produce a hi h emotional pitch" on the theme of
unification. 25X1
Comment: While it is believed that President Rhee and his followers.
will limit their disapproval of the cease-fire negoitations to such meetings
and speeches as have been described, the possibility always exists that Rhee
will withdraw his military representative from the Kaesong meeting, thus
prejudicing the UN position,
14. C?maunyi.st_ armored potential discussed: The US Far Eastern Command,, in
a discussion of the enemy9s armored potential in Korea., concludes that while
recent tank sightings do not indicate an intention to employ armor exten?
siuely, a number of recent reports suggest an increased armored potential
(above the 150 tanks currently accepted) for future offensive operations.
Reports referred to by FECOM are those concerning the movement of Chinese
Communist armored units into Korea from Manchuria. Other reports received
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.in July have mentioned movement of armored units into the combat area-
particularly in the western sector.
15 J a labor-Farmer Party decides to disapprove San Francisco Conference
The Labor Farmer Party at a 4 to 5 August meeting of its Central Committee
u
nanimously voted to continue its policy for an "overall' treaty (including
+.h= TTAPP
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USSR reportedly offering oil to Anglo-Iranian Oil Company:
A London broker has offered to sell 10 ,000 tons o Russian fuel oil to
the Anglo-Iranian Oil Company, according to a representative of the UK
Ministry of Fuel and Power. The company, though highly skeptical about
the availability of this quantity, is nevertheless requesting information
on financial terms and the port of loading, The British official informally
commathat he perceived no objection to the transaction.
Commerit: The petroleum product in question is comparatively low grade
but n surplus supply in the Soviet Union. The USSR, nevertheless,
could probably provide the amount specified out of domestic industrial.
allocations by temporarily substituting coal, The AIOC could readily
dispose of the oil to customers ordinarily supplied with Iranian oil.
Soviet motives in initiating the alleged offer are,, however, not clear.
It might be designed to reinforce the several overtures for increased British
trade. which the Soviets have made during the past two'months.
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BRITISH HONDURAS. Governor dissolves Belize City. Council: Sir Ronald Garvey,
Governor o ri ish Hon uras, as isso1ved 11 t e Be Zze City Council because
of its "disloyal attitude" in voting against the display. ofa portrait of
.King George VIA. This action was taken on the recommendation of the Legis-
lative Council, and in spite of a petition circulated by the PeopleBs United
Party protesting the.proposed action. The Governor stated that.the . dis--
solution of the Council (the Golony's only fully elected political body)
would not hamper constitutional advance, and that a nominated council would
take over the city administration until a new election is held. 25X1
Comment: Opposition to the British administration has increased in
recan-. years..: Native anti-British leaders, representing emergent labor
and political organizations, have often sought to defy. or annoy the colonial
officials in order to publicize their grievances and their political
objectives. These leaders ask revaluation of the British Honduran dollar
to its old parity with the - 1JS dollar and greater popular participation in
colonial government than is recommended'in the report, now being considered.,
of the Constitutional . RefozmCommission, Their major objection to the
Commission's-report is that it puts elected members in the minority on the
Executive Council, which is defined as "the chief instrument of policyl.
Anti-British sentiment has also been encouraged in propaganda broadcasts
from Guatemala which appear to have increased recently, though it is unlikely
that such propaganda has contributed substantially to the existing political
unrest,
10 killing two,soldiers and wounding two others.. The Peruvian Government,
on the other hand, claims that the trouble was started>by Ecuadoran border
ECUADOR PERU:. Border incident : The Ecuadoran Defense Minist?'y has charged
t P an troops sta Toned in the frontier garrisons of Cl.imara and
La Victoria launched a series of attacks on Ecuadoran troops. on August 9 and
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troops who, "drunk in celebration of their national holiday", opened fire
Comment:: It is possible that there is some foundation for the Peruvian
claim. cuadoran Independence Day, celebrated on August 10, is usually the
occasion for heavy drinking and celebration among the military in frontier.
posts, and a few inebriated'soldiers may well have become "trigger-happy".
Border incidents of this type have occurred before and will undoubtedly
flare up from time to time in the future, given the ever-present tension
which exists between Ecuador and Peru (slightly heightened recently by dis-
sension within the Ecuadoran-Peruvian boundary commission trying to delimit
the Santiago-Zamora sector of the frontier) and the monotonous routine life
of soldiers stationed in isolated frontier garrisons
It is unlikely that the incident represents a premeditated action on
the part of either government, and although a great storm of protests will
undoubtedly be made by both countries, serious deterioration of the
situation is not expected,
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13 August 1951
CIA No. 49304-A
Copy No. 33
TO THE DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
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 in CIA
or in the Office of Current Intelligence. Comments represent the
immediate views of the Office of Current Intelligence.
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SECTION 2 (EASTERN).
CEY LON. Ce longs Government
fea
i
rs
nternal re ercussions over rubber shi
meats to Chinao
. The Prime Mi
i
t
n
s
er of Ceylon has told US Embassy officials
National Party, which controls the present government, cannot
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SECTION I (SOVIET)
1. I SR0 Soviet IIubassy in Washington requests lend-lease meetings. The Soviet
Embaassy in Washington on 10 August requested a lend-lease meetin dear2.,~
week With D5 nffir+iaia j__ _ - . - - g y next
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Co,~ mmenta The State Department has been considering means of bringing
additional pressure to bear on Moscow in connection with the USSR's past
reluctance to settle its lend-lease accounts with the US, The Soviet request
for a lend-lease meeting may only reflect the Soviet Governmentes feeling that
it is at a propaganda disadvantage on this issue. The last round of talks broke
down in February 1951 over the monetary settlement and the return of naval and
merchant ships. The ships are important to both the civilian and military
economy of the USSR,, with the lend-lease ships, for example., representing about
1/4 of the gross tonnage of Soviet merchant shipping. However, an ostensibly
reasonable proposal for settlement may be planned by the USSR in order to give
U UninnnEnSome substance to the currently i nt
if
#*__ -
en
ie
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risk "political suicide" by preventing shipments of rubber from Ceylon to China.
He has stated repeatedly that increasingly successful Communist efforts to
develop trade in rubber with Ceylon are unfortunate, but that nothing can be
done about it. The implication is that Ceylon w L11 not certify under the Kem
amendment nor request an exception in its case, despite the foreknowledge that
thisfil
a
i
ire m
ght xrreiudiee the ~rantin of Point IV and other assistanceb
Comments There is a possibility that the United National Party would lose
control f the government if it reversed its widely publicized policy of per-
mitting rubber exports to all destinations. There is also a possibility, how
ever, that by conveying the impression that they.cannot reverse this stand, the
Ceylonese are hoping to speed negotiations for a US contract for a large part
of Ceylon's annual rubber output.
4. BUR. Burma specifies its objections to the Japanese peace treaty The US
Ambassador in -Rangoon has received Burma's. objections to the Japanese peace
treaty. The Burmese recommend that Article 3 (providing for UK trusteeship of
the,Ryukyus) and Article 6a (providing for the stationing of foreign troops in
Japan) be eliminated, because these articles might be construed by the USSR and
Communist Chinese as directed against them. Seoondily, they refuse to accept
Fthe tatement in Article l4 that Japan lacks the capacity to pay reparations.
Cot: Burma is not so much concerned with the reparations issue as
it is with the prospect of antagonizing Communist China by signing the treaty.
5. PHILIPPINES. Philippines now appear willing to sign Japanese peace treatys
The Philippines will probably accept the most recent draft of the Japanese
peace treaty, according to Ambassador Cowen in Manila. The principal modifica-
tion provides that instead of "recognizing that Japan lacks the capability..,
to make adequate reparations," the Allied Powers shall recognize that "the
resources of Ja an are not esently sufficient... to make complete reparations,"
Comments The Filipinos mad? strong efforts until the last moment to leave
the door open for reparations to be paid in money, goods and services, whereas
the reparations envisioned above are to be supplied from Japanese services
alone..,'
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SECTION 3 (WESTERN)
WESTERN EUROPE, General Eisenhower would serve as European Defense Minister to
speed into ration.- General Eisenhower is
re
ared
t
d
t
k
p
p
-
o un
er
a
e on.a.temporary
basis the functions of European Defense Minister, provided he can get "satis-
factory commitments" from the five governments-principally France and Germany-
taking part in the European Defense Forces talks in Paris. His motive is "to
get the practical business of the recruiting, training, and. formation of the
force started," He believes that the European army.-plan presents the only
feasible means of bringing the Germans into Western defenses and that the prin-
cipal reason for delay will be the difficulty of areein on the functions of
a Euro
ean D
f
'
p
e
ense Minister
=M& French Sri csse condition to their reluctant acceptance of Greece
And a in NA Os France prefers a regional pact associating. Greece and Turkey
with NATO, and will oppose granting full, membership to these two countries un-
less they are directly. subordinated to the tripartite NATO Standing Group. The
French reject the idea of a-separate command body composed of the present
Standing Group members and Turkey. The US NATO Deputy suspects that the French
have long wanted to extend the Standing Group's authority beyond the NATO area.
In his view,, the French fear that a further diminution of Franceas authority
within the Standing Group would relegate-Frame to a mincr continental-European
role while UK and US interests be edominant in the Middle Eastern
theater as well as in Europe.
Comment: The three-power Standing Group is the executive arm of the NATO
milit committee, and as such has direct control of all NATO forces.
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France has consistently pushed the alternate idea of a regional
Mediterranean pact embracing Greece and Turkey. French reluctance to include
Greece and Turkey in NATO has been due partly to fear that growing Western
European integration would be hindered and probably also to a firm determination
not to open the door for a later admission of Spain.
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