TOP SECRET SUPPLEMENT TO THE DAILY DIGEST (SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000700100001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 22, 2016
• Document Release Date: March 15, 2012
• Sequence Number: 1
• Publication Date: January 15, 1952
• Content Type: SUMMARY

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TOPsEeRET
15 January 1952
CIA No. 49502
Copy No. 43
TOP SECRET SUPPLEMENT
TO THE DAILY DIGEST
Not for dissemination outside O/CI and O/NE.
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 C- rrent Intelligence. Comments represent the
immediate views of the Office of Current Intelligence.
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SECTION 2 (EASTERN)
1. INDIA. India continues to raise problems regarding Kashmir: Shortly before
15 Jan 52
Ambassador Bowles' departure for Washington, Prime Minister Nehru and the
Secretary General of the Indian Ministry of External Affairs again indicated
to him a willingness to expedite a settlement of-the Kashmir dispute.
The Secretary General hinted at the possibility of an Indian compromise
on demilitarization, but at the same time brought up the explosive subject
of partition, which has not yet been openly. discussed in the UN Security
Council. He also questioned how former residents of Kashmir could be
repatriated and establish their eligibility to vote prior to a plebiscite.
Comment: The Indian technique of raising tangential questions or of
accompanying propositions with conditions impossible for Pakistan or the
Security Council to accept has successfully delayed a settlement of the
Kashmir dispute for over three years. Even if the Indian Government makes
certain concessions in the near future on such matters as demilitarization,
there is still no reason to believe that a final solution is anywhere in
sight.
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15 January 1952
OCI No. 3851
Copy No. 16 9
DAILY DIGEST
Office of Current Intelligence
SECRET
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.
SECRET
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SECRET
SECTION 1 (SOVIET)
2. Economic data on Soviet machine. building industry: The US Embassy
in Moscow has recently interpreted_L.-P. Beriya's statement of 6 Nov-
ember 1951 as signifying that the output of Soviet "machine-building"
rose 21 percent above 1950,-which represented a monetary value of 139.4
billion rubles. Beriya also said-that total gross industrial production
during 1951 rose 15 percent over 1950, to a total of approximately 276
billion rubles.
coming treaty talks.
1. USSR. Soviet official in Austria-refers to State Treaty: In a propa-
ganda-laden New Year's message, Soviet-DeputylHigh Commissioner Kraske-
vich expressed the hope that Austria would prevent the lack of a state
treaty from being exploited as a pr_etext.for'remilitarization and cause
for slanderous propaganda by "reactionary" powers. The reference to
the treaty conceivably foreshadows. Soviet intransigence in the forth-
The Embassy observes that this. comparison-is striking because of
the fact that of the approximately 36 billion ruble gain in gross.in-
dustrial production in 1951, over 24 billion. came from the engineering
industries, leaving a 12 billion ruble gain_.for the rest of the indus-
trial economy. According to the Embassy,'"machine-building" continued
to gain at a very rapid rate (21 percent), whereas the rate of pro-
ductive expansion for other Soviet industry was under 10 percent.
The Embassy adds that in this connection it is well to recall
that expansion of Soviet engineering-industries (including armaments)
was apparently planned at an even higher rate for'1951. This conclusion
is based on the results of the plan for. the third quarter of 1951, which
showed that several of the major machine-building. ministries failed to
meet their quarterly goals for the first . time. this year.
ployees.
3. Purchase terms for private houses in the Soviet Union.: The news-
paper Evening Moscow carried an item on 11 November concerning the pro-
jected construction of houses in the Soviet Union. This item stated
that Communal banks are authorized to advance credit to enterprises and
institutions for the construction of houses to be resold to their em
1 15 Jan 52
25X1
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imately 2.287 rubles per square meter of floor space.
The cost of finished houses was reported to be between ten and
thirty thousand rubles. Up to the present time most transactions have
been conducted on a cash basis, with installment terms spread over two
or 4hree years in certain exceptional cases. The Evening Moscow article
stated, however, that henceforth-payment over a ten-year period would be
permitted. Formerly, down payments of 20 percent of. the purchase price
were required, whereas this amount is now reduced to 10 percent,
The Embassy comments that it is difficult to imagine what kind
of house could be built in the Soviet Union for ten thousand rubles,
since current housing construction in Moscow involves costs of approx-
A buying panic is sweeping Prague, provoked, according to the American
Embassy, by speculations of a currency reform.broadcast over Radio Free
Europe. Purchases are so far selective and. people have concentrated on
_4. CZECHOSLOVAKIA. Buying wave sparked by-Radio Free Europe sweeps Prague:
textiles. Bold and diamonds sold on the free market.
Comment: Rumors of impending currency reform have circulated for
several months in Czechoslovakia. The US Embassy feels that the RFE
broadcasts- are ill-timed and provide the regime with scapegoats on which
to pin the'necessity for more stringent economic. measures against the
population. The similar currency panic in Budapest this month,which was
not inspired by RFE, is apparently-related to the Prague panic only
insofar as economic conditions in both countries make a future currency
reform probable.
5. Premier Zapotocky rebukes trade unions and defines industrial sab-
otage: Premier Zapotocky, speaking to the Central Committee of the Mine.
Workers Union,accused the trade unions of failure to do-their part in
implementing government policies and of-clinging to "old methods" in
working for planned output.
Since it is difficult to determine where irresponsibility and
slovenliness end and deliberate sabotage begins, Zapotocky said, the
25X1 government will proceed against slackers as they would against convicted
Comment: Zapotocky?s rebuke to the trade unions and his view of
sabotage echoes recent government statements made in connection with
the new 1952 planned targets that increased labor discipline is the order
of the day. It may indicate new penalties for absenteeism and "econ-
omic crimes against the state." "Old methods" of trade unions presumably
refers to incorrect wage policy, and a lack of interest in Stakhanovism.
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Government spokesmen call-for new-labor recruitment: Prague Radio
has announced that "tens of thousands".of_.permanerit workers are needed
in mines, foundries and key plants now under construction, and has asked
mass organizations to help recruit them.. The Minister of Manpower told
labor heads in Prague that the government-had a new recruiting system
based on Soviet methods which will put an end_to-arbitrary movement of
labor and organize recruitment. In another meeting the Minister of Fuel
and Power commented upon the-unsatisfactory output last year and added
that temporary labor arrangements..: in the mines must be
permanent cadres.
replaced with
Comment: This new recruiting drive which the government intends
to launch is a logical development from the recently inflated planned
targets for heavy industry. Possible new manpower measures are re-
cruitment of pensioners, clerical personnel, and soldiers, establishment
of a State labor reserve program for training Czech youth, and institu-
tion of a labor-pass system. The comment on unsatisfactory output of
oil and coal directly contradicts the statement of the Minister of State
Planning that successes in these areas made possible an increase in
planned targets for 1952.
be completed in prison.
8. HUNGARY. Absentee workers subject to punishment: In accordance with a
Supreme Court ruling of 3 January 1952, four Hungarian workers were
sentenced last week to terms of four to five months of "educational
correction work" at wage reductions up to 25 percent for being absent
from work a few days without permission. The press account of the sen-
tencing stated that if the worker further infringes labor discipline
during his sentence, which is served at his regular job, the term will
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Comment: The Hungarian Government's concern with absenteeism has
been evident for months.- Threats and cajolery have apparently failed
to bring satisfactory results, so the above-disciplinary measures have
been introduced. Corrective labor entailing a 25 percent wage reduction
is the punishment used in the USSR for similar infringements. The threat
of such' wage reduction will be an effective weapon against passive re-
sistance, since the workers are already on near starvation' wages.
9. New US Minister cordially received: An aura of friendship ar~d ,nl.
good feeling surrounded the presentation-of credentials by Minister
Ravndal to President Ronai on 11 January.-- Guards of honor and a band
playing the US and Hungarian national anthems participated in the pres-
entation. The third ranking official of the Foreign Office was the high-
est foreign service representative present.
10. POLAND. Large shipment of-rubber from Ceylon and Malaya consigned to
Polan : A total of 1150 tons of rubber-consigned for Gdynia, Poland have
been reportedly loaded aboard the-Danish vessel Meonia. Of this consign-
ment, 350 tons are from.Ce lon and 800 from Malaya..
Comment: During the first-eleven months of 1951, approximately
700 tons of rubber were shipped-directly from Ceylon-to Poland. This
present large shipment is of interest in view of reports of Chinese
Communist intentions to obtain Ceylonese rubber via Poland. They could
obtain it by this procedure more cheaply than by direct purchase at pre-
mium prices-. Additional unusually large rubber shipments to Poland from
Ceylon and Malaya would lend substance to the view this procedure was 25X1
being followed.
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SECTION 2 (EASTERN)
2. IRAN. Troops receive part pay in government bonds: The US Army Attache
nin Tehran reports that army officers and some en sted men of the Iranian
Army were paid partly in government bonds for the month of December. Dis-
satisfaction is not yet serious, although it may become so later.
Comment: The government is attempting by this maneuver to keep the
troops paid, conserve its rapidly dwindling cash reserve, and stimulate
the lagging sale of government bonds.
INDDNESIA. South Celebes guerrillas attack five towns simultaneousl:
Guerrillas, probably followers of Kahar Atuz r, attacked simultaneously
five towns in the South Celebes on New Year's eve. The Army Attache
comments that the attacks were probably a reaction to an announcement by
Vice Premier Suwirjo that the Kahar Muzakkar affair was "virtually finished."
Comment: Few reports are received on the government's South Celebes
campaign, which has been in progress since last September. As far as is
known, approximately 4,000 guerrilla troops are operating in the mountainous
areas of the South Celebes but have largely avoided contact with government
forces.
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THAILAND, Influential Chinese paper reportedly fires"pro-Communist editors:
The largest Chinese newspaper in Bangkok is reported to have fired its two
most=pro-Communist editors and to-have adopted a more neutral policy. The
US Embassy in Bangkok comments that if this report is true it would reflect
a shift in sentiment among the Chinese in Thailand.
Comment: Periodic reports have been rec'eivedduring the past several
months indicating growing, but leaderless,anti-Communist sentiment among
the Chinese in Thailand.
5e
BURMA. Official foresees agreement on Mutual Security: The Permanent
Secretary of the Burmese Foreign O? rice informed S Charge in Rangoon
of his belief that the latest wording proposed by the US with regard to
the terms of the Mutual Security Act would be accepted. He warned, how-
ever, that the final decision rested with the Cabinet and. would not be
rendered until after the Premier returned to Rangoon on ]6 January.
Comment: The Burmese Government has indicated extreme sensitivity
to lei criticism of the ECA program. In renegotiating the bilateral
treaty to conform with the Mutual Security Act, the Burmese appear to
have been mostly concerned over the substitution of "mutual security" for
"economic assistanceo" This reluctance can be traced to the desire to
avoid antagonizing Communist China.
6.
Insurgent assault foreseen in Mandalay area:
the US Military Attache Rangoon that the recent lull in
insurgent activity around Mandalay has resulted from regrouping and con-
solidating activities. The insurgents, nevertheless, are reportedly pre-
paring a large scale assault in the area with a view to confiscating and
destroying the rice Grope They do not plan to hold Mandalay itself at
this tines. The attache comments that the Burmese Government is alert to
this move and has-moved additional troops into the area during the past
Comment: the insurgents plan to
reduce th`e amonn o rice ava a e e government. While the main
rice producing area in Burma is the Irrawaddy Delta, the insurgents can
hinder the harvest and movements of rice in Shwebo and Kyaukse Districts,
the second most productive area in Burma.
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7. Anti-Communist sentiment in Rangoon embarrasses Peiping envoy:
The Chinese Communist Ambassador in Rangoon refused to appear on the
reviewing stand during Burma's Independence Day parade because of the
participation of the anti-Communist Union Chinese League. He also failed
to appear at a reception given at the President's residence. Meanwhile,
over 2,000 Chinese welcomed the Nationalist delegation to the ECAFE
Conference in Ran goon, which constituted the biggest anti-Communist demon-
stration by Chinese yet seen in Rangoon.
The US Embassy it Rangoon comments that the Chinese Ambassador's
action has caused more amusement than anger among Burmese officials and
that the demonstration of welcome to the representatives of Taipei was
probably designed to offset the effects of the recent visit of a
Chinese Communist cultural mission.
Comments Anti-Communist Chinese in Rangoon have recently been
increasingly bold. However, they are badly
divided among themselves.
infield construction program in Korea:
The Far East Command reports that-photographs taken of enemy airfields
at Uiju, S'inanju, and Pyongyang during December and oarly January
indicate the continued construction of new facilities and the repair
of bomb-damaged runways. The three-field complex of Namsi?Taechonm
Saamcham in the Chongchon river area, however, has had no work done
on it since early November.
Commeal: Jet aircraft operated from UIju airfield, on the Manchurian
border, during November and December. While no operational aircraft
have been sighted on the fields in the Pyongyang and Sinanju area, it is
possible that they we bases for night interceptor or harassing flights.
10. KOREA. ROK Cabinet changes announced:. On 12 January two major changes
were effected by President Rhee in his Cabinet. Ho C2?ong. Minister
of Social Affairs and Acting Prime Minister,(vice.John Chang, now in
Paris), Was relieved of his ministerial post, but continuesiin his
capacity as acting Prime Minister. Yi S unyong, the controversial
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Minister of Communications.
Home Minister, was transferred to the politically unimportant post of
Commen : Yi Sun-yong's ouster was forced on Rhee by extremely
strong National :assembly pressure and reflects a partial victory for
that body. There is reportedly considerable speculation as to what
will happen to Ho Chong -- shorn of his permanent cabinet post -- when
John Chang, the Prime Minister, returns from Paris. It is worth notin#,
further, that relations between Chang and Rhee have not been overly cordial
recently.
11. JAPAN. Soviet batrol vessels off Hokkaido adopt politeness policy:
Japanese fishermen report that following Stalin's message to the Japanese
people, fishing vessels Apprehended by S.,viet patrol craft on the USSR
side of the "Mac:Arthur line"' off Hokkaido have merely been warned that
they were in Soviet territorial waters and released. The fishermen
report. that the Russians were very polite
CINCFE comments that this represents a significant change in the
former Soviet policy of seizing these errant fishing craft and indicates
a possible change in attitude towards the Japanese.
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SECTION 3 (WESTERN)
2. NETHERLANDS.' Eisenhower reassures Dutch on European Defense Community: In
his talks with General Eisenhower, Dutch Foreign Minister Stikker stated
his belief that a solution to the European Defense Community problems could
be reached, and conceded that the need for agreement was urgent. He,believes
that if the French crisis could be solved quickly, agreement on the EDC
might still be achieved before the NATO meeting at Lisbon. Eisenhower as-
suaged Stikkerts fears that the EDC might not evolve within the NATO frame-
work and that the US might lose interest, pointing out that Europe.must now
show the US that it was able to face-up to a situation and take the necessary
measures. Stikker also stated that the handling of the EDC conference was
"`atrocious" and that, no Benelux representative was able to have his views
25X1 seriously discussed.
Comment: The Netherlands has considerably modified its formerly adamant
position on the Defense Community, and Dutch support of the plan now seems
assured.
3. ITALY. Italy and Iran to conclude barter agreement. An Italian-Iranian
barter agreement probably will be signed in Tehran this week, according to
available information. The agreement will provide for an exchange of
traditional Iranian exports, including cotton, wool, and some carpets, for
25X1
Italian textiles, industrial machinery, plant equipment, and chemicals.
Comment: Italy in the past obtained one third of its oil supply from
Iran, but has already made up such supplies from other sources. The crisis
in the Iranian oil industry has stimulated interest in oil refinery
construction in Italy. Economic restrictions imposed by the British and
loss of oil revenues have turned the Iranians to barter agreements.
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4. Italians chafe at recent US' restrictions on Italian imports.- Recent
conversations between Italian and US officials in Rome reveal that the
former are "chafing in principle" at the allegedly growing series of
restrictive US measures on trade. Speculations as to whether the US will
restrict Italian olive oil imports in-response to the demands of US
producers have caused strong criticism of US economic policy. The Italian
Government would undoubtedly react strongly to such an eventuality, which
would make it difficult for the US to persuade the Italians further to
liberalize their trade.
Comment: The Italians have been annoyed with US restriction of certain
categories of agricultural products. Such restrictions will cause Italy to
lose from 2.0 to 2.5.million dollars annually. In addition, US restriction
of Italian olive oil imports would be a serious matter; olive oil production
is expected to be from 65 to 75 percent greater than last year.
6. SWEDEN. Pending trade agreement with USSR includes few strategic items:
e wedish-Sovie 1952 trade agreement, now in the final stage of negoti-
ation, is believed to call for no Swedish exports,of strategic items on the
International List I. Strategic List II items for Swedish-delivery include
386 thousand dollars worth of tungsten and molybdenum wire. The export
quota for bearings remains the same as last year, about one million dollars
worth, but Sweden has offered to deliver only List II size bearings this
year.
The USSR has not yet submitted its specifications for bearings and may
be troubled to find that the Swedish bearing manufacturing combine will not
accept orders for bearings of List I sizes.
In return for exports worth about 17 million dollars Sweden would
receive from the-USSR about 19 million dollars worth of goods, including
the 100,000 tons of wheat Sweden desired. Other projected imports from
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the USSR include manganese and chrome ore, apatite, asbestos and ferro-
25X1 manganese.
Comment: Although the 1951 trade agreement provided for exchanges
worth only out 8 million dollars, the difference can be attributed
largely to the expiration of the six year Swedish credit to the USSR in
December 1951. For the first time since 1915 Sweden will be receiving
from the USSR goods approximately equivalent to Swedish deliveries.
7. Sweden adopts equivocal position towards Acheson Plan: Sweden
informed the UN political committee on 5 January that we en would, subject
to certain reservations expressed on 2 January, vote for the US-sponsored
collective security proposal.
Comment: In order to preserve its reputation among the Western countries
as well as t o pay lip service to the ideal of collective security, Sweden has
finally indicated its support for the Acheson Plan. Initially, Swedish
Foreign Minister Oesten Unden had vigorously supported UN collective security
measures in Korea, but reversed himself when the Korean hostilities seemed
likely to spread into a larger conflict. Sweden is still, however, seeking
to escape the responsibilities of collective security by reserving the right
to refuse to apply sanctions in any conflict which threatens to become
global.
8. MOROCCO. Personal liberty restored in Spanish Morocco: The Spanish High
Commissioner in Morocco has informed nationalist leaders that political
exiles may return to the Spanish zone and that the nationalist party may,
resume overt political activity. After a period of "political normality,"
a series of conversations between the administration and the nationalists.
will determine future policy.
French officials in Morocco fear that the Spanish will not be able
to cope with events which may result from this leniency. The French Moroccan
nationalists, however, have urged moderation, and the Nationalist Front has
released the Spanish,zone party from its pledge of non-negotiation with the
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protectorate powers prior to assurances of independence.
Comment: The Franco regime is undoubtedly attempting to promote
Spanish influence and prestige in the Arab world and to ensure the
diplomatic success of the Spanish Foreign Minister's forthcoming tour of
the Arab States. French-Spanish relations are likely to worsen as Spanish
Moroccan nationalists avail themselves of their restored freedoms.
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9. LATIN A!'ERICA. Plots to assassinate presidents believed to be test of
police: According to the chief of the Bolivian Federal Police, he and
Chilean colleagues have concluded that Communists planted the reports that
the Chilean and Bolivian presidents would be assassinated last November,
in order to test police efficiency in the two countries. The'Communists
would exploit any revealed weaknesses towards increasing penetration and
paving the way for eventual seizure of power.
The US Embassy comments that the Bolivian police chief has made an
intensive study of Communist activities and may not be far wrong. F 125X1
10. BOLIVIA, US air attache's estimate confirms probable change in junta:
Public quarreling in the press indicates that military leaders are, at an
impasse over continuance of the junta, and replacement of some or all junta
members is imminent. President Ballivian may be made scapegoat for the
junta's "do-nothingness" and replaced by. Minister of Government Seleme.
This would be only an interlude, however, before control would probably
return to the Nationalist Revolutionary Movement.
Violence is not expected unless labor leaders seize this opportunity
to accelerate the Nationalist Revolutionary Movement's assumption of
power. Such action may be determined by whether the-junta agrees to
assure the Movement's victory in the orderly elections demanded by General
situated troops have anti-Torres commanders.
Torres, chief of staff and supreme military commander, No. strategically
Comment: Pressure for a change in the junta is increasing. There
are in capons that at least one faction of the Nationalist Revolutionary
Movement would obtain increased influence, if not control, through such a
change. Torres, who is pro-Movement, is on friendly terms with Seleme
the Movement polled the largest popular vote.
In the last elections
11. 'BRAZIL. US Embassy comments on political stability: US Ambassador Johnson
comments ha i e the Brazilian Government is faced with serious nation-
wide social, economic and political problems, none now appear grave enough
to threaten an overthrow of the administration. President Vargas' failure
so far to win firm control of.the majority of political groups, both inside
and outside Congress, has caused an inconsistent and often uncoordinated
policy. Vargas "for whatever reason is not giving forceful leadership."
There is a widespread suspicion that Vargas is deliberately maneuvering
to create conditions warranting a state of siege or other means to discard
the constitution and return to his former dictatorial powers. The powerful
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Generals Canrobert and Goes Monteiro have denied this,'and C anrobert has
stated that if Vargas tries to become a dictator again, the armed forces
would oust him, and that Vargas knows this.
Meanwhile, Vargas has been busily mending his political fences. He
has rebuffed his Minister of War, whom many regard as pro-Communist,. by
proclaiming the Communist danger as well as Brazilian support for the US
and the-UN. By promising pay raises for all the armed forces he has won
the approval of most of the military. A controversial decree on foreign
exchange appears intended to regain lost prestige among the masses and at
the same time to gain support of the nationalistic industrialists.
Ambassador Johnson concludes that there is constant intriguing among
both pro- and anti Vargas groups. "However," he adds, "under present
conditions, the President-appears secure unless he attempts to dump the
constitution or unless social-economic crisis aggravated by Communist and
ultranationalistic agitation becomes sufficiently acute to cause a popular
uprising." Vargas
he conti
,
nues, is using nationalism to gain time while
seeking means to all
i
t
ev
a
e the social and economic problems.
13 15 Jan 52
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/03/15: CIA-RDP79TO1146A000700100001-0