TOP SECRET SUPPLEMENT TO THE DAILY DIGEST (INCLUDING S/S CABLES)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000700180001-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 19
• Document Creation Date: December 12, 2016
• Document Release Date: June 8, 2001
• Sequence Number: 1
• Publication Date: January 25, 1952
• Content Type: SUMMARY

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25.January 1952
US OFFICIALS ONLY CIA No. 49510
Copy No. - 46
TOP SECRET
TOP SECRET SUPPLEMENT
TO THE DAILY DIGEST
(including S/S Cables)
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 Current Intelligence. Comments represent the
immediate views of the Office of Current Intelligence.
TOP SECRET
State Dept. de aseIfi "c&WI e4h1 'PEI'i@or1*4AAofq"8ooo1-6
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.TOP SECRET
SECTION 1 (SOVIET)
1. FINLAND. Finnish Premier pleads for Scandinavian neutrality: Finnish
Premier Kekkonenos published intervi.ew in his party's newspaper urged
Finland's Scandinavian neighbors to "establish and secure neutrality." He
emphasized the benefit to Finland of having neutrality assured in the-north,
since this would remove even a theoretical threat to the USSR of aggression
being staged across Finland. (C Helsinki 295, 23 Jan 52; U Washington Post,
24 Jan 52)
Comment: Kekkonen's speech follows hints by a Soviet diplomatic
official late last fall that the USSR would view favorably the formation of
an independent Scandinavian defense alliance.
While Prime Minister Kekkonen has not hesitated in the past to use his
ability to deal with the Russians for personal internal political reasons,
his recent successes in the Finnish Parliament would make it unnecessary for
him to make such a statement at this time. It is`possible, therefore, that
Kekkonen put out this feeler at the behest of the USSR.
SECTION 3 (WESTERN)
0 ITALY halo-Yugoslav talks continue stalemate: "Unofficial" Italian and
Yugoslav delegates met in Gorizia early in November to discuss procedure for
talks on Trieste, but made no progress, according to
Italy explains current Yugoslav lack of interest in nego za'ions,
been apparent since De Gasperi's visit to the US in September, on the
grounds that the Yugoslavs resent the anti-Yugoslav campaign of the Italian
press, believe that Italy is under Western pressure to settle the Trieste
question, and/or desire to wait until after the Trieste elections in the
hope that the results will improve their bargaining position.
The Italians:. believe, however, that the Yugoslavs may desire to begin
talks because of their requirements for industrial equipment. The Italian
Ambassador in Belgrade rejected a propos Forei n Office that the US
25X1A be asked to put pressure on Yugoslavia. 25X1A
Comment: Both Italy and Yugoslavia have shown a lack of enthusiasm for
undertaking negotiations over Trieste. Since the end of November high-
ranking representat.Hves of both governments have been meeting in Paris to
explore the possibilities of a settlement; the unwillingness of both parties
to make concessions has prevented any progress.
TOP SECRET
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3? SPAIN. Pretender denies rapport with Franco: The Spanish Pretender Don
Juan has categorically denied reports that he recently sent a conciliatory
letter to Franco. Don Juan has informed a US Embassy official in Lisbon
that he has no intention of making any further approaches to the Caudillo,
saying that they would be futile gestures, since Franco has no intention of
ever voluntarily relinquishing power. (S 3/3 Lisbon 314, 23 Jan 52)
Comment: According to one report, Don Juan allegedly indicated his
recognition of the validity of the Law of Succession, a focal point of
Monarchist opposition to the Franco regime, and acknowledged Franco's
prerogative to determine who should be king. Franco desires to persuade Don
Juan to renounce his rights to the throne in favor of the latter's minor son,
for whom Franco would become regent should he find it expedient to enthrone
a king.
4. UNITED KINGDOM. British not disturbed by Iranian financial outlook: British
Embassy officials in Tehran hope that Iran's financial prospects will not
frighten the US into granting budgetary aid. They cite Iran's past ability
to get along despite its periodic protests of having reached-"the bottom of
the barrel."
According to the British Economic Counselor, the government might run
out of currency next month, but can get along until April by selling gold
and foreign exchange. By that time he feels there might be "either a new
government or new policies that would enable the country to live through its
economic crisis without any severe amount of unrest." (S S/S Tehran 2749,
22 Jan 52)
Comment: British officials, who hope that deteriorating conditions
might compel the government to come to some agreement on the oil question,
have been less worried than the US by the possible political effects of the
Iranian financial situation. Ever since the first difficulties in 1949 over
the ratification of the Anglo-Iranian Oil Company's Supplementary Agreement,
however, the British have consistently maintained that financial considerations
would restrain Iranian actions.
TOP SECRET
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25 Jan 52
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25 January 1952
US OFFICIALS ONLY OCI No. 3859
SECRET
SECURITY INFORMATION
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
183
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
SECURITY INFORMATION
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 SECTION 1 (SOVIET)
1. USSR. Soviet repatriation from_China planned_:.f_or early 1952: Elabor-
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ate plans: are being made to repatriate.all.Soviet citizens, except con-
25X1A
25X1 C
sular, advisory, cultural and.military personnel and probably trade
specialists,to the USSR early in 1952,
Comment: Since World War II it has been Soviet policy to encourage
the return to the USSR of all Soviet citizens abroad,.except for official
personnel.
In China there has been no known repatriation program since.1947-
1945 at which time there was a voluntary program involving only a few
thousand persons. Undoubtedly there. have been involuntary removals of
Soviet citizens, particularly from Manchuria and.-Sinkiang,, but nothing
is reliably known of these cases except for the forcible repatriation
of at least 5,000 Russians from. Harbin after Soviet forces entered the
city in August 1945.
There are probably upwards:-of 60,000 Russian emigres with Soviet
citizenship still residing in.China.- At-least 30,000 are in Manchuria,
possibly 15-20,000 in Sinkiang, and the remainder (probably under 10,000)
in China proper.
It is likely that this latest repatriation plan, supported by other
reports; will be executed along lines, described in the report.
2. CZECHOSLOVAKIA. Status of several high.Ctech officials is in doubt:
Prague Radio has announced the replacement of Ladislav Hopriva, Minister
of National Security,-by Karel Bacilek, recently appointed Minister of
State Control. Rumors reported from Prague in the last week indicate
that the Deputy Minister of Defense, General Hruska, and the prominent
Communist, Gustav Bares, may also be in trouble. (R FBIS, 23 Jan 52;
S Prague Unnumbered, 22 Jan 52; C Vienna 2399, 22 Jan 52)
Comment: Kopriva's removal is undoubtedly in connection with the
Slansky case, since as cadre chief. f"-the Communist Party and later as
Minister of National Security he was directly responsible for the re-
liability of,party members. Bares was appointed a member of the new
. rE=organizatioh- 14stt$bptlsmber.
Czechoslovak:=Orgburo in the party
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3. POLAND. Removal of Jews from-Polish Government reported possible: Four
members of the Polish UN delegation, Wierblowski, Katz-Suchy, Lachs, and
Boratynsky, have devoted attention and interest to the Israeli delega-
tion this year, according to one of the Israeli delegates. The source
believes that these men, who are Jews, have taken this action to try to
improve their chances of political asylum in Israel should their political
position in Poland deteriorate.
4.
The Israeli delegate stated that it was only a matter of time be-
fore pressure began-to be exerted onJews`in the Polish Government and
Communist Party as part of an anti-Semitic campaign under Soviet direction.
(S Paris DELGA-1075, 18 Jan 52).
Comment: Approximately a year-ago, the Polish Government halted
the emigration of Jews to Israel primarily, it is believed, as a measure
to conserve its manpower resources. Since that time the Government and
the Communist Party have endeavored-to force the assimilation into the
Polish nation of the remaining.. members of the once large Jewish community.
While there has been no visible concerted effort ,to to remove Jews from promi-
nent .posetionaaiii ,government such a hmev meat: iaF li abbic~de app Qr dt:ally
during the next few years. At the present time a considerable number of
Jews hold positions of high responsibility in the government.
Second-US firm believed-.shipping_co_pper to Poland: The British Board
of Trade reports firm indications that-the Anaconda Sales Company of New
York has made arrangements-for the shipment of 3,000 tons of copper from
Chile to Poland via Antwerp. (S London 3156, 21 Jan 52).
Comment: 'The British Board of Trade reported early in January that
the National Steel and Eilgineering.Compan-y of Washington, D. C.,-was en-
gaged in similar preparations for the shipment of 1,000 tons of copper
to Poland. Poland is-apparently in real need of. this copper, although
it may be acting as purchasing agent for-the Soviet Orbit. Last December,
Finland was able to obtain 1,000,000 tons of coal from Poland in exchange
for the relatively small amount of 1,350 tons of copper and copper products.
YUGOSLAVIA. Yugoslavs commemorate the anniversary of Lenin'gdeath: Yugo-
slavia's news organs have again seized the anniversary of Lenin's death as
a glorious opportunity to expose the Stalinist betrayal of the Revolution.
Borba charges that "acting in the name of Lenin, Soviet leaders are grad-
ually turning Socialism-into, hegemony." Politika, another party organ,
writes that "it would not be immodest to say that Lenin's thoughts live.
fully in the Yugoslavia of today. In this country ideas of Marx and Lenin
are being put into actual practice." (R FBIS Belgrade, 22 Jan 52)
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Comment: Yugoslav dependence on their interpretation of classical
Marxism and Leninism constitutes a cornerstone of the current Yugoslav
ideological appeal, and a basis for an attack against the "Stalinist
aberration." The significant amount of attention devoted to Lenin il-
lustrates Tito's continued role as the chief ideological rival of Stalin
in the world Communist movement and his ambition to communize Yugoslavia.
6. Kidric outlines objectives of the 1952 Social Plan: Boris Kidric,
chairman of the State Economic Council, outlined three major objectives
of the Yugoslav Social Plan for 1952: the completion of capital equip-
ment construction, the strengthening of Yugoslavia's defense potential,
and the consolidation of Yugoslavia's principles.
According to Kidric, the completion of key capital construction
will enable Yugoslavia to "boost living standards substantially" and
strengthen defense.
Despite the expenditures of nearly one fourth of Yugoslavia's
national income on defense needs, Kidric stated that the current standard
of living will be maintained "with perhaps a certain improvement."
(R FBIS Belgrade, 23 Jan 52)
Comment: Yugoslavia's ability to maintain its present living
standard, while indulging in an ambitious defense and investment program,
undoubtedly assumes a substantial contribution of foreign aid. Approx-
imately 18 percent of the estimated national income for. 1952 will go
toward the completion of key investment projects in 1952; defense and cap-
ital investments will comprise over 40 percent of the national income.
Consequently, should the amount of Western aid be less than expected,
living standards will probably continue to be sacrificed to the "needs"
of defense and socialist development.
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SECTION 2 (EASTERN)
1. ISRAEL/JORDAN. Border situation worsens: UN members on the Jordan-
Israel Mixed Armistice Commission are depressed over the greatly worsened
situation along the Jordan-Israel frontier. The recent Israeli shooting
of five Arabs in a border Arab village near Jerusalem has climaxed a.
series of similar incidents in the past few weeks. According to the Ameri-
can Consul General in Jerusalem, an Israeli official was admittedly em-
barrassed when questioned recently concerning some of these incidents but
remarked that Arab infiltration into Israel had considerably decreased as
aresult of the Israeli actions. (S Jerusalem 100, 22 Jan 52)
Comment: While there is no indication that Jordan will retaliate
against Israel as the result of these serious border incidents, the ill
will caused by the recent killings will only strengthen general Arab de-
termination not to negotiate a peace settlement with the Israelis.
2. INDONESIA. Government may reaauest removal of Netherlands military mission:
Foreign Minister Subardjo told US Ambassador Cochran that he is increasingly
disturbed by evidence that disorders in Central and West Java are instigated
and directed by Netherlands agents on orders from ex-members of the Nether-
lands military mission in Indonesia. Subardjo said that until recently his
government had thought the military mission was conducting itself properly,
but the government is now so convinced of its involvement that the Indo-
nesian delegation now in The Hague has been instructed to seek the removal
of the mission. (S Djakarta 1053, 22 Jan 52)
Comment: The standard suspicion of Indonesian army and police officers--
particularly in especially insecure areas--is Netherlands interference. How-
ever, no reports of Dutch-inspired disorders have been confirmed since the
Westerling affair of January 1950, and Westerling was supported, not by the
Netherlands government, but by private Dutch citizens.
US service attaches have consistently reported during the past year
and a. half that those Indonesians who have worked with the Netherlands mili-
tary mission have been favorably impressed, and that cooperation between
the Indonesians and the Dutch in this field has appeared genuine.
3. PHILIPPINES. Reparations within terms of Japanese Peace Treaty may satisfy
Philippine negg ator : Present indications are that the Philippine dele-
gation on reparations which will meet with a Japanese mission due in Manila
on 25 January will be satisfied if the Japanese accept a liberal interpre-
tation of the pertinent article of the Japanese Peace Treaty. (C Manila.
2569, 22 Jan 52)
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Comment: The Filipinos have drawn up proposals for Japanese consider-
ation asking reparations beyond the treaty terms, which bar the imposition
of a foreign exchange burden on Japan. The Manila press continues to refer
to Japanese liability to the extent of eight billion dollars. Foreign
Minister Elizalde has publicly stated that that figure is useful as a start-
ing point but has indicated to American officials his awareness that such a
demand is fantastic in relationship to Japan's capacity to pay.
4. BURMA. Burmese request for admission to Colombo Plan reported: The British
Ambassador-,informed the Chief of the MSA Mission in Rangoon that Burma had
submitted a written request for admission into the Colombo Plan. The MSA
Chief comments that this Burmese decision may be intended to retain rela-
tions with the West if MSA aid is dropped, or as a financial substitute. (C
TOMUS 83, Rangoon, 22 Jan 52)
Comment: The Burmese Premier publicly mentioned the possibility of
Burma's joining the Colombo Plan before the current impasse over MSA devel-
oped. -Previously, the Burmese had generally maintained that the US assist-
ance program was the more generous and was all that Burma was capable of
handling for the time being. The Burmese are still interested in foreign
aid--with a minimum of obligations--and are not above attempting to play the
US against the UK in the hope of gaining more favorable terms.
6. INDOCHINA. V.1
:at Minh general offensive in south predicted:
25X1 C the Viet Min wi aunt
a general offensive in ou Vietnam aimed at further isolating Saigon.
The attack will begin near the end of February and will be "linked" with
operations in Tonkin.
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Commen : The major task assigned to the Viet Minh forces in South
Vietnam is to prevent by harassing operations the diversion to Tonkin of
any of the 50,000 French troops now in South Vietnam. The over-all posi-
tion of the Viet Minh in South Vietnam, as estimated by French intelligence,
deteriorated somewhat during 1951. While some increase in Viet Minh ac-
tivity in the south is possible, it is hardly likely that a general offen-
sive could be undertaken now.
7. Samson newspaper pleads for peace with Chinese Communists: The
19 January issue of L'Union Francaise, unofficial organ of French business
interests in Indochina, asserted that the US would come to Vietnam's aid in
the event of a Chinese Communist invasion, while at the same time it stressed
the unlikelihood and unwisdom of such an invasion. The editors expressed the
belief that "good sense" would prevail in Peiping, stating that "Our wish is
to entertain correct and profitable relations with Peiping .... All that we
care about is good commercial.relations....A clear aggression on the part of
our Chinese neighbors would be bad business for everybody.". (R FBIS9 23
Jan 52)
Comments The 20,000 or more Frenchmen in Indochina, exclusive of mili-
tary personnel, have shown since the time of Japanese expansion a strong
predilection for "business as usual" in the face of armed aggression and
continue to exert a powerful influence on Indochinese affairs.
Comment: The Vietnam Government has no reason to be suspicious or
hostile toward the US; on the contrary, it has sought to increase its con-
tacts with the US. The French, on the other hand, have been strongly in-
clined to suspect the US of attempting to undermine French influence. It
is possible that the apparently anti-US behavior of the Vietnamese police
results from the considerable influence which the French authorities retain
over that organization.
French High Commissioner favors military action against un-
cooperative nationalists: Acting High Commissioner Gautier told Minister
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g. Pro-US Vietnam= harassed by police: A Vietnamese who recently
was denied an exit visa enabling him to travel to the US states that he and
a friend of his have been warned not to frequent the US Information Service,
and that students in the USIS English language courses had been bothered by
the North Vietnam police. The American Consulate comments that the police
keep a check on those who frequent the USIS reading room, adding that a
USIS employee was asked by officials of the North Vietnam Surete why he
continued to "work for the Americans" when he could earn more with the Surete.
(C Hanoi 499, 22 Jan 52)
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Heath that he was "extremely worried" about the jungle-based Nationa-
list force of several thousand men under "General" Trinh Minh The.
Cautier stated that his own solution in dealing with this group would be
military action, but that Vietnamese Premier Huu would prefer to make
some sort of deal with The. (S Saigon 1464, 22 Jan 52)
Comment: Trinh Minh The established an armed camp along the Viet-
namese-Cambodian border in June 1951, and in November began broadcasting
over-an unaccountably acquired transmitter vehement denunciations of both
the French and the Viet Minh. Apparently fearful of dignifying The with
the status of "Third Force" leader, which he evidently covets, neither
the French nor the Viet Minh have attacked him militarily. Although The's
force remains weak and has undertaken no military action, the slogan of
"No foreign intervention of any kind" which he has hammered home in daily
broadcasts is one which has a high emotional appeal for Vietnamese who
have hesitated between Bao Dai and the Viet Minh.
10. High Commissioner vetoes Vietnamese tax project: Acting High Com-
missioner Gautier told Minister Heath that he has withheld approval of
Premier Tran Van Huu?s projected increase in the income tax. Gautier
states that this tax would fall almost exclusively on French firms and
individuals. (S Saigon 1464, 22 Jan 52)
Comment: French interference in the imposition of an equitable
income tax would constitute a violation of their agreements with Vietnam.
On previous occasions French officials have criticized the Vietnamese
Government for failure to impose heavier taxation,
ll. CHINA. Propaganda attacks on Hong Kong do not indicate imminent aggression:
The US Consul General in Hong Kong notes that Peiping's propaganda attacks
on the Hong Kong authorities for the past five days represent the longest
sustained campaign that-Peiping has conducted against the British for
many months, He thinks, however, that the charges are being made "for the
record" rather than as a preliminary to aggressive action. (C Hong Kong
2246, 22 Jan 52)
Comment: Peiping's recent charges relate to comparatively trifling
matters, and no authoritative Chinese Communist spokesman or organ has
yet given them official attention. There is no evidence that Peiping
intends to assault Hong Kong in the near future.
reports on the operation ere o
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an Institute of Foreign Languages, designed to train Chinese students to-
become government officials. The Institute specialized in two courses:
Russian language and Connnunist.doctrine. It was apparently supervised
by the Soviet Consulate General, had an exclusively Russian teaching-
staff of about 400 persons and was attended by about-20,000 students.
Comment: Other sources have reported the existence of the Institute,
but these figures for teachers and students cannot be confirmed.
13. Peiping comments on Japanese decision to conclude treaty with
Formosa: Chang Han-fu, Deputy Foreign minister of e' eiping regime,
regards Yoshida's letter to Dulles -- stating that his government will
conclude a peace treaty with the Chinese Nationalist' authorities on
Formosa -- as " ironclad evidence" of US-Japanese "colt"sion" and
the "'most serious and flagrant provocation" since the Japanese peace
treaty conference at San Francisco last September. Chang sees the letter
as a further development of a policy which creates a "military threat"
to Communist China. He concludes his lengthy denunciation with a _
reference to the Sino-Soviet treaty of February 1950 as a "guarantee of
peace and security in the Far East" which is increasingly-of "great
significance." (R FBIS, 23 Jan 52)_
Comment: These remarks reflect Peiping's bitter disappointment
over Yoshida's expressed intention todeal with the Nationalists. Both
Moscow and Peiping have referred ominously to the Sino-Soviet treaty --
aimed specifically against a resurgence of Japanese aggression and
against any state allied with Japan in action. regarded by the Uommunists
as aggressive -- on other occasions when developments in Japan
appeared particularly unfavorable to the Communist cause.
iL KOREA. ROK Assembly opposes UN body's observation of by-elections:
A motion in the National Assembly calling upon the South Korean
Government to invite the UN Commission for the Unification and
habilitation of Korea (UNCURK) to observe +he forthcoming by-elections
was defeated on 2]. January, according to Ambassador Muccio. The
motion ran into vigorous opposition on tue ground that UNCURK observation
represented an unwarranted interference in the internal affairs of the
ROK. The Assembly decided., however, to form its own inspection teams
to check on the government's conduct of the elections (C Pusan 7241,
23 Jan 52)
15. KOREA. Precarious financial condition of ROK noted by US Embassy: The
'CTS Embassy in Pusan reports that the++rhole-(ROK) financial structure
is hanging in the precarious balance.",. Although-the Bank of Korea index
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of commodity prices has shown only a slight increase since December,
both wages and the retail price of rice in Seoul have risen-substantially
during the last month. The rice price increase -- some 33 percent --
so alarmed the ROK Government that acting Prime Minister Ho sent a
strongly-worded letter to Ambassador Muccio (see Daily Digest, 22 Jan 52)
outlining the critical financial situation. The unconcluded CINCUNC-ROK
aid agreement and the unresolved problem of recent ROK request for monthly
non-inflationary settlement of won drawings by UN forces are the two
factors, according to Muccio, that prevent stabilization of the South
Korean economy. (S Pusan 720, 23 Jan 52)
16. JAPAN. Japanese-Soviet Trade Agreement suggested by Soviet official:
Kyodo News ervice reports being advised by a Soviet Trade Commissioner
on 2L, January that it would be quite natural for Japan and the USSR
to conclude a formal trade agreement in the near future if the latter
suceeds in its trade negotiations with individual Japanese firms.
The Soviet official indicated that no agreement had been reached
on the method of settlement of transactions, although he hoped it would
be a barter arrangement. The spokesman was non-committal on whether the
Soviet Mission plans to remain aG a trade mission after the peace
treaty becomes effective. (R FBIS Ticker, 24 Jan 52)
Comment: Soviet trade representatives have been dangling the
bait of cheap coking coal before Japanese firms for the past several
months, but they have dropped the negotiations before concrete terms
and methods of payment could be arranged. This suggests that the
Soviets are attempting to create widespread. propaganda interest in
Soviet-Japanese trade prior to making a formal proposal to the Japanese
Government for a trade agreement.
SECRET
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SECTION 3' (WESTERN)
1. GENERAL, COCOM countries reluctantly agree to increased US voice on export
controi$ The Coordinating Committee .on.East-West.tra e. OM .at the
Paris meeting which ended 21 January agreed to the revision of certain pro-
cedures to facilitate compliance with the US Battle Act only after vigorous
objection from European members. Britain and France especially voiced
strenuous opposition to the US proposals for prior consultation with the
US on shipments of strategic materials to Eastern Europe and for the tem-
porary suspension of shipments already scheduled for delivery. They felt
that the Battle Act implied the use of US economic aid to enforce particu-
lar trade policies, thus constituting an infringement of sovereignty and
threatening the multilateral approach to export control.
All the COCOM delegates agreed to prior consultation when assured
that the US had no intention of undercutting COCOM and would give each
case rapid consideration. Although no delegate would assent to the sus-
pension of already scheduled shipments, it was agreed to send to COCOM,
as soon as possible, particulars of outstanding commitments on these items.
The US delegate believes that, despite Britain's being the most
outspoken in its opposition to a unilateral American judgment, the con-
cluding British remarks indicate it will cooperate on the basis of the agree-
ments reached. He considers the meeting resulted in "the genuine improve-
ment in US Western European relationships on problems of export control."
(S Paris 4246, 4247, 4299, and 4362, 17, 19, and 22 Jan 52)
2, Council Deputies in general agreement on NATO reorganization: Pre-
liminary discussion the Council Deputies of the proposal on NATO
reorganization has revealed a substantial measure of agreement. There is
full accord that the In?ncil should be the only formally constituted ci-
vilian body. It would hold several meetings each year attended by the
foreign, finance and defense ,ministers as at present, but during the rest
of the year would be. in continuing session with permanent representatives
from each country heading a UN-type delegation. If Council business re-
quired, ministers could attend any of the regular meetings. The permanent
representatives would have ministerial prestige, but need not be cabinet
members. The Council would be. served by an international staff under a
single secretary-general, who would not bea member of any national dele-
gation. This staff would perform planning, analytical and follow-up
functions for all Council activities, and the presently constituted Council
Deputies, Financial and Economic Board, and Defense Production. Board would
be abolished,
Opinion was divided on the location of a permanent NATO headquarters,
the majority preferring Paris to London. There were also varying views
on the selection and term of office of a chairman and a vice-chairman of
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the Council, with full. agreement only that the secretary-general should
not preside. (S Depto 855 London, 22 Jan 52)
Comment: The large area of agreement in this first discussion
by the Council Deputies indicates that approval will be forthcoming at
the Lisbon meeting for the broad outlines of the reorganization plan
affecting the civilian side of NATO. Lesser changes in the top-level
military structure involving the Military Committee, the Standing Group
and the Military Representatives Committee are being considered by the
Military Committee. These do not include any change in location for these
bodies from their present headquarters in Washington.
3. GERMANY. West Berlin trade permits again rejected by USSR: Soviet
authorities 1n Berlin on ..anuary.once.again.rejected.a.large number of
export permits submitted to them by West Berlin manufacturers for clearance.
United States High Commissioner McCloy states that unless further
investigation reveals a satisfactory explanation, the Allies will probably
drop their plan to permit the West Germans to renew interzonal trade.
(S Bonn 1223, 22 Jan 52)
Comment; This is the first rejection of export permits since
3-November. The renewal of Soviet harassing tactics suggests that the
Communists might risk further restrictions on interzonal trade., provided
the USSR could derive the necessary political benefits, such as division
of the Allies and increased West German sentiment for East-West German
rapprochement.
4. AUSTRIA. People's Party deposes Cabinet members: The resignations of
the Ministers of Trade, Agriculture, Finance, and Education have been
accepted by the Austrian Federal President in a limited shakeup of the
People's Party representation in the Austrian Cabinet.
The former Minister of Trade will become the Minister of Education;
Entering as new ministers are the former president of the Styrian pro-
vincial diet (Agriculture), the vice-president of the Chamber of Commerce
(Finance), and the President of the Union of Industrialists (Commerce).
Further high-level changes are possible; Gruber is reputed to have been
saved only by Chancellor Figi's support, and even Figl may later be suc-
ceeded by Party Chairman Julius Baab. (S Vienna 2391 and 2403, 22` Jan 52;
U UP Vienna, 23 Jan 52)
Comment: There is nothing to suggest that the continuation of
Austria's coa ition government is threatened at present by these changes.
While the new appointees are conservative, their close identification with
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commercial circles may facilitate the imposition of the economic reforms
the US is now urging upon the Austrian Government,
The likelihood of a similar reshuffle on the Socialist side of the
Cabinet has been discounted by Socialist leaders, although People's Party
leaders are known to desire some changes. The failure of the moderate
People's Party to appoint, as previously rumored, a non-party Minister of
Finance may reduce the party's "leverage" in forcing the replacement of
Socialist ministers who have been accused of exercising their duties in a
highly political way,
5, ITALY, Government crisis reported impending; The US Embassy in Rome be-
lieves there is a possibility that the.Italian Parliament will defeat the
government's bill to increase the wages of state employees, and that this
will cause the fall of the present government. The government's usual
supporters, who favor larger increases than the bill would provide, are
divided on this issue.
The fact that a parliamentary crisis is threatened over this rela-
tively minor issue demonstrates the difficulties facing De Gasperi and the
serious opposition to the government's general financial policy. ( S Rome
3300, 23 Jan 52)
Comment: The proposed bill for increased wages, which is considered
inadequate by both Communist and non-Communist labor, points up only one
aspect of this general discontent with the present regime. Both the right
and left wings of the Christian Democratic Party have long been'dissatisfied
with the government's financial program, and both, for different reasons,
object to the deflationary effects of Budget Minister Pella's conservative
policies. In the face of a Cabinet reorganization on this issue last
summer, Pella was retained in his post,
.Other controversial measures likely to cause the government diffi-
culty are a bill regulating labor unions, a civil defense measure, which
is disliked by the moderate left, and the Schuman Plan, which despite the
opposition of certain industrialists will probably be passed.
6. SPAIN. Embass comments on regime's propaganda treatment of US aid:
elf cording to the Embassy in . a ri , the . panish.Government has apparently
tried, through the controlled press, to create the impression that the US
is avidly seeking the friendship of the regime because its past attitude
toward Franco was "wrong", as well as because of Spain's strategic value.
There has been no effort to publicize the US concept of Spain's role. in
European defense, although there has been some publicity regarding MSA
and its objectives.
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The Embassy feels that press treatment of economic aid prospects
may have led Spaniards to expect hundreds of millions of dollars without
any conditions. It does not agree with the thesis, advanced by the Madrid
correspondent of an American paper, that the Spanish Government's princi-
pal problem is to convince the Spanish people to x cept US aid because it
implies abandonment of neutrality. The Embassy points out that Francois
foreign policy is determined by the regime's self-interest and not by
public opinion. (S Madrid .782, 23 Jan 52)
Comment: These comments are in response to concern expressed by
the Departmen7 of State over reports that the Spanish Government was mis-
representing the motives and conditions of proposed American aid-(see OCI
Daily Digest, 17 Jan 52).
7. UNITED KINGDOM. Eden fears parliamentary criticism on Far East policy:
Expecting heavy criticism.from elements of both parties when arliamen
reopens on 29 January, Foreign Secretary Eden is trying to convince
Opposition leader Attlee that no serious additional British commitments
on Far Eastern issues were made during the recent Washington talks, and
that the country's foreign policy remains substantially as it was under
the Labor government. The US Embassy reports that not only Labor Party
leaders, but also important Conservative interests with business connec-
tions in the Far East are deeply concerned. The government will be se-
verely cross-examined regardless of Eden's success or failure in winning
Attlee over to continued support of a bipartisan foreign policy. ( S
London 3198, 23' Jan 52)
8. TUNISIA. Tunisians state willingness to accept gradual reforms; The
Tunisian Cabinet.and.the Bey.are.united.in their determination not to
yield to threats to depose the Bey and other forms of French pressure.
According to an influential member of the Cabinet, the Tunisians would
accept a gradual transfer of authority, They would not, for example,
insist on the immediate replacement of all French department directors
by Tunisian Ministers. (C Tunis 83, 21 Jan 52)
Comments The current riots, an outgrowth of demonstrations staged
by Tunisian nationalists, are an indication of the strong resentment against
France felt by all segments of native opinion. Although North Africans,
generally display little interest in developments in foreign countries,
incidents such as the brutal dispersal of crowds are creating restiveness
in neighboring Algeria and Morocco.
9. BOLIVIA, Official suggests new tin price: Commenting on the new tin
price establis e in the US-British tin contract, an official of the
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Bolivian-Foreign Office stated that the new price is a good starting
point for further talks. If we can get 5 or 10 cents more, everything
will be fine," (C La Paz-275, 23 Jan 52)
Comment: The price of 1.15 dollars a pound was established under
the USBritish tin contract. New US Bolivian tin negotiations are sche-
duled to begin on 26 January,
10. BRAZIL. Government to prohibit "Continental Congress for Peace": The
Chief of o .i1~ ce of the ederraiDDistrict announce on 23 January that the
Communist Continental Congress for Peace, scheduled "for Rio next month,"
is prohibited. A high police official told the US-Embassy that this
action resulted from "a direct order from the President."' He added that
? the Federal Police ban applies only to the federal District, but that
police of other states are expected to comply. ( U Rio de Janeiro 933,
23 Jan 52; C Rio de Janeiro 934, 23 Jan 52)
Comment: The Latin American Communists have been attempting to
hold a regional "Congressccf Peace"' since last September. Meetings sche-
duled for Mexico, Uruguay and Ch;;le failed to materialize due to govern-
ment disapproval. It was reported last November that Brazil probably
would not permit the holding of this international Communist conference
(see OCI Daily Digest, 27 Nov 51),
11. COSTA RICA. New shipping law promulgated; implementing regulations awaited:
A w -new and export contro law.was.prom gated in.San Jose on. 16
January. Implementing regulations are expected to be ready for publication
this week. According to press reports, Mexico has agreed to assist Costa
Rica in enforcing the, law in ports where there are Mexican Consuls but no
Costa Rican representatives. (C San Jose 531, 17 Jan 52)
Comment: In its draft from this new law, an amendment to the "law
for Economic Defense,"" contained extremely broad provisions which could lend
themselves to the control of virtually any shipping activity deemed contrary
to the intent of US and UN defense activities-. How much the implementing
regulations will limit the application of the law is not yet known.
The reported arrangement for Mexican assistance in enforcing the law
may indicate a desire to investigate the activities of the several Costa
Rican ships now trading Orbit and Far East ports; on the other hand, it may
reflect merely an intention to keep closer track of ships like the Orion,
allegedly engaged in arms-smuggling activities in the Caribbean,
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