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January 29, 1952
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r Approved For R&se 2003/03/05 : CIA-RDP79T01146AA700200001-3 TOP SECRET 29 January 1952 25X1 CIA No. 49518 Copy No. 46 TOP SECRET SUPPLEMENT TO THE DAILY DIGEST 25X1 25X1 Office of Current Intelligence CENTRAL INTELLIGENCE AGENCY OSD AND DOS review(s) completed. 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. Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For R&se 2003/03/05 : CIA-RDP79T01146A?700200001-3 SECTION 3 (WESTERN) GERMANY. West German hearings before NATO body scheduled: The Allied High Commissioners have indicated that the West German-Government will place its estimates concerning the West German defense contribution before th 25X1 Temporary Council Committee on 4 February. Comment: The TCC hearings which have been arranged for the West German Government will be informal in.character and be mainly intended to convince' Bonn that the Allied estimates of Germany's capacity to finance its share of Western defense programs are well-grounded. The Allies feel that West Germany can pay thirteen billion Deutsche marls, whereas the Germans feel they can only pay seven billion. 29 Jan 52 Approved For Release 2003/03/05 CIA-RDP79TO1146A000700200001-3 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 / Approved For ease 2003/03/05: CIA-RDP79T01146 0700200001-3 SECRET 25X1 29 January 1952 25X1 OC I No. 3 861 Copy No. 183 DAILY DIGEST Office of Current Intelligence CENTRAL INTELLIGENCE AGENCY This summary of significant reports has been prepared pr imarily 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 25X1 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05: CIA-RDP79T01146Al700200001-3 .-~ SECRET SECTION 1 (SOVIET) 1. USSR. USSR restates its position on Italian question; In a note of 25 January to the Italian Government, the Soviet Union restated its position on revision of the Italian peace treaty and Italy's admission to the United Nations. . Again attacking the "aggressive" intentions of NATO, the Soviet Union makes revision conditional upon Italy's withdrawal from the Atlantic bloc. 2 5X1 In regard to the UN, the Soviet Government again maintained it would not object to Italy's admission "on equal terms with other states." 25X1 Comment: The USSR has consistently maintained that the Satellite nations be considered for UN membership simultaneously with Italy. A Soviet resolution for reconsidering admittance of 14 nations, including Italy and the Satellites, won approval in the UN's Political and Security Committee on 25 January, but so far lacks the two-thirds majority required before the General Assembly can send a recommendation to the Security Council. 2. Pravda announces filling of Tsimlyansk Reservoir: Pravda has recent- ly announced that the closing of the Tsimlyansk Dam sluice gates, begun on 15 January, is now complete and that the reservoir is starting to fill. Pravda also announced that "work tempo" on the Stalingrad and Kuibyshev 25X1 dams will be more than doubled in 1952? Comment: Pravda announced in September 1951 that the collective on the Tsimlyansk construction site was entering "the final period of con- struction." The 12.8 kilometer earth dam was scheduled to be completed up to the 38 meter water level mark by January 1952, making it theoretic- ally possible to fill the Tsimlyansk Reservoir during the spring. If the Pravda information is correct, it would appear that the filling of the re- servoir, a necessary adjunct of the Volga-Don Canal, is taking place on or ahead of schedule. 3. Latvian Party selects new Secretariat: Immediately following the 11th Congress of the Latvian Communist Party, which convened on 27 Decem- ber 1951, a plenum of the Central Committee selected the following Secre- tariat: Ya. E. Kalnberzin and F. E. Titov as first and'second secretaries respectively A. Ya. Pelshe P. Ya. Litvinov V K. Kruminsh and A. P. 25X1 Chernyshev. . Comment: The Secretariat remains the same except for the dismissal of one member, K. P. Plessums. SECRET 1 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05 : CIA-RDP79T01146Ai700200001-3 4. Death of Choi Balsan, Premier of Mongolian People's Republic in Mos- cow: On 28 January Radio Moscow announced the death of Marshal Choi Bal- san, Premier of the Mongolian People's Republic, in Moscow on 26 January. A special TASS release stated that Choi Balsan had been ill for a "number 25X1 of years." Choi Balsan had asked to be relieved of his concurrent offices as Foreign Minister and Minister of National Defense. succeeded him as Defense Minister. A Lieutenant General Zhanchiv 5. RUMANIA. Government revalues currency and lowers prices: The Rumanian Government has decreed a monetary reform pegging the leu to the ruble at the rate of 2.80 to one.. It is also calling in the old currency for ex- change at rates, ranging-from,100-1 to 400-1. ' At the same time a slight reduction of consumer prices is to be ef- fected. rani from to 20 ercent Comment: The value of the leu in relation to the ruble in inter- Orbit trade is not seriously affected, since all the Satellites have had in fact a fixed and arbitrary exchange rate with the Soviet ruble, How- ever the calling in of old currency for new at the announced rates will reduce consumer purchasing power and virtually wipe out private savings, particularly among those peasants in non-cooperative endeavor and the en- trepreneurs in retail trade. Although prices have been reduced, workers' real wages will suffer, since the reduction will apply to consumer goods which are still virtually unobtainable. 6. CZECHOSLOVAKIA. Economic officials reported under arrest: According to unconfirmed reports, Rudolf Margolius, Deputy Minister of Foreign Trade, and Ludvik Frejka, economic adviser to President Gottwald, have been arrested. The US Embassy in Prague says that Margolius is one of the few capable economists remaining in the Ministry and that his reported arrest comes as a surprise to those who expected emphasis on technical competence following?Slansky's disgrace. Reports reaching Vienna state that Frejka was caught in a roundup of "'cosmopolitan elements" after Slansky's arrest. 25X1 Comment: Arrests being made in connection with the Slansky affair have so far been selective and secret. Frejka'has never been in the pub- lic eye, although he is alleged to be a power in determing basic economic policy in Czechoslovakia. SECRET 2 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Comment: In January 1950, Moscow announced that because of overwork, approved For Rose 2003/03/05: CIA-RDP79T01146AI0700200001-3 SECRET 7. Prague buying wave slackens: Although the demand for non-perishable free market items continues above normal, the buying wave has slackened from the critical situation existing a week ago, according to the US Em- bassy in Prague. The Embassy says that this decrease in the face of re- valuation rumors tends to confirm the impression that excess purchasing power in itself is not a great enough problem to require revaluation. 25X1 Comment: The buying wave has been selective throughout and never reached panic proportions. The Embassy noted on 11 January that it had been set off by speculations broadcast by Radio Free Europe. 8. HUNGARY. 1951 plan fulfillment results announced: The Office for Sta- tistics recently issued a report on production results for 1951 in which it was claimed that that year's part of the Five Year Plan was overful- filled in most cases. Heavy industry achieved 104.3 percent of its goal, light industry 102.4 percent and food industry 101.1 percent. Coal pro- duction, however, was 5 percent below the plan and crude oil and building material production also lagged. Boasts of plan fulfillment were accom- panied by severe criticism of the quality of the manufactured goods and of the uneven production rate (goods requiring little labor were stated to have been overproduced while those necessitating more time and effort were ignored). Among the problems to be faced in 1952 are improvement in labor discipline, lower production costs, further recruitment of manpower, im- roved management, and a better utilization of the means of production. Comment: Deputy Prime Minister Rakosi has explained Hungary's ful- fillment of the 1951 plan in sections of the economy which had failed to meet second and third quarter quotas (heavy industry, food industry) as being the result of an all-out last minute push,.the necessity for which should be avoided in 1952. Blame for year-end failures is laid on the managers as well as the workers. New measures have already been under- taken to ensure the labor discipline required to fulfill the 1952 plan. A dozen workers have been sentenced to "educational corrective work" during the past few days for absenteeism and changing jobs. 9. FINLAND. Communists accuse Finnish Telegraph Agency of being US'propaganda organ: A communist newspaper has charged in Helsinki that the Finnish Tele- graph Agency is one of several organizations which perform American propa- ganda-tasks. To point up this charge the article reported that a "repre- sentative of the psychological warfare administration" in the US was seek- 25X1 ing additional funds from the Senate to "finance various propaganda activ- ities and foreign organizations engaging in such propaganda." 25X1 SECRET 3 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05 : CIA-RDP79TO1146A00200001-3 Comment: The Finnish Telegraph Agency is a semi-official news agency. This charge is a somewhat unusual line for the Finnish Communist press to Adopt and is similar in some respects to that used by the Soviet Orbit in attacking the Mutual Security Act. 10. TRIESTE. Trieste pro-Cominformists propagandize for early communal elec- tions: The leader of the pro-Cominform Communist Party in Trieste, Vittor- io Vidali, has sent an open letter to the British-US Zone Commander re- questing an immediate election. In addition, the pro-Cominform newspaper L'Unita contends that since the weather is mild and the census completed, no other excuse for postponement could be advanced. American observers in Trieste believe that Vidali's persistence will enable the part to 25X1 claim a moral victory when the elections are announced. 25X1 Comment: The Allied Military Government has recommended the holding of communal elections to coincide with the remaining Italian administra- tive elections, which will probably take place this spring. Although the pro-Cominformists will undoubtedly attempt to exploit the election announcement, they are not in a position to monopolize the credit for its appearance, since all parties in Trieste which are not pro-Italian have campaigned vigorously for communal elections since their postponement last fall. 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79TO1146AO00700200001-3 pproved For Rase 2003/03/05 : CIA-RDP79T01146A00200001-3 SECTION 2 (EASTERN) 1. INDIA. Kashmiri Prime Minister departs for Paris: Kashmiri Prime Minister 25X1 2. 25X1 Sheikh Abdullah departed for Paris on 26 January to be available for con- sultations during forthcomina UN Security ncil debates on Kashmir. Comment: The Prime Minister's departure suggests that the Indian Government is finding it more and more difficult to control him. His presence there may complicate the forthcoming UN Security Council debates on Kashmir. Sheikh Abdullah, reputedly a persuasive orator with considerable influence over Indian Prime Minister Nehru, had planned on eaflier occasions to attend UN meetings on Kashmir. In each case his departure from India was postponed at the last moment. Available evidence suggests that the Indian Government, knowing his predilection for Kashmiri autonomy, prevented his attendance for fear it could not control his statements. In recent months, however, the Kashmiri drive for autonomy has become stronger. On 17 January the USSR openly espoused Kashmir's contention that it should be allowed to decide its own future without outside inter- ference. The Indian press has given serious consideration to that suggestion and-in some cases has acclaimed it. The Indian Government may therefore feel that it can no longer keep Kashmir from having a voice in the settle- ment of its own affairs. Sheikh Abdullah publicly stated on 26 January that he was under no obligation to accept United Nations directives on the Kashmir issue. Final election results in Travancore-Cochin:, The final election results for the 108 seats in the Travancore-Cochin state assembly are as follows: Congress Party, 44; United Front Leftists, 32; Socialist Party, 12; Independents, 11 (of whom four were reportedly supported by United Front Leftists); Cochin Party, one; Travancore Tamilnad Congress, eight. Of the 24,known Communists elected, three are underground, five are in detention, one woman is on parole, seven ran as Revolutionary Socialists, and one as a Kerala Socialist. Results for the 12 seats in the House of the People (National Parliament) are: Congress Party, six; United Front Leftists, four (including two Communists and two Revolutionary 'Socialists ; Travancore Tamilnad Congress, one; Independents, one. 5 29Jan52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05 CIA-RDP79T01146AI0700200001-3 Comment: The Travancore-Cochin leftists have successfully prevented the Congress Party from obtaining an absolute majority in the state assembly. According to the US Embassy in New Delhi, neither the Congress Party nor the leftist front is likely to form a stable coalition govern- ment. However, South Indian Communists will be greatly encouraged, while the Congress Party will find it hard to re-establish its former hold in the area. 3. Final election results in Delhi State: The final election results for the 48 seats in the Delhi State elections are as follows: Congress Party, 39; Independents, four; Socialist Party, two; Jan Sangh, two; Hindu Mahasabha, one. Final results for the four seats in the House of the Peo le are: 25X1 Congress Party, three; Kisan Mazdoor Praja Party, one. 4. BUR1A. Burmese Commander in Chief proposes withdrawal of Chinese Nationalists: In a recent conversation with the acting US Army Attache in Rangoon, Burmese Commander in Chief Ne Win proposed a plan, subject to cabinet approval, for the evacuation of Chinese Nationalist troops now in northeastern Burma. He suggested a US request to Taipei for written orders instructing its troops to leave, and a similar approach to Thailand for assurance of their safe passage through that country. Ne Win said that Burma would use its air force to deliver the order by leaflet and would permit the entry into Burma of six responsible officers from Formosa to direct the withdrawal. The Burmese military leader asserted that his plan offered the only possible solution, and added that removal of the Nationalists would relieve pressure from Peiping and would free Burmese troops to "clear u Communist 25X1 insurgent areas." Comment: There are no indications that the Chinese Nationalists would agree to this proposal, even if it were approved by the Burmese Cabinet and acceptable to all other interested parties. Only a small number of Burmese troops are deployed against the Nationalists. The freeing of these forces would not greatly aid the government's efforts against the Communists. 5. Nationalist issue damaging US-Burma relations: Stories about fresh, .American-equipped Chinese Nationalist troops arriving in Burma have been increasing in Burmese newspapers, according to the US Embassy in Rangoon. 6 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For R*e 2003/03/05: CIA-RDP79T01146A'00200001-3 The general reaction, both among Burmans and foreigners, is one of "where there is smoke there is fire," and the Embassy states that the matter is casting a cloud over MSA negotiations. Pro-Communists link the National- 25X1 ist problem to MSA and the expansion of Mingaladon airport and describes 25Y,11them as the three greatest to Burmese sovereignty. Comment: The pro-Communists have always alleged US involvement in Burmese affairs, but with particular insistence during the past few weeks .of negotiations for MSA assistance. The effectiveness of this campaign may be judged, in part, by the fact that these negotiations were to have been concluded by 10 January. 6. US aid program remains in jeePardv: The US Embassy in Rangoon reports that the Burmese Government considers the phraseology of the Mutual Security Act to be inconsistent with its conception of a neutral foreign policy. The required declaration affirming compliance with the Battle Bill has created an additional obstacle. The Embassy comments that Burmese acceptance of MSA is still in doubt. Rejection of American aid, according to the Embassy, would not be the result of growing ill will. It would, however, temporarily enhance the prestige of the pro-Communist Burma ers and Peasants Party. 25X1 Comment: Burmese reluctance to accept US aid under the MSA has been apparent for several weeks. Although some Burmans are genuinely concerned over a breach of their neutral foreign policy, many have been swayed more by fear of China and the intense leftist propaganda campaign which has developed during the period of negotiation. Rejection of MS.A would be a major victory for the B?VPP and mark a distinct reversal of the Burmese Government's slow progress towards cooperation with the 'Western democracies, which can be exploited with increasing effectiveness by the pro-Communists . 7. THAILAND. USSR raises political issues at EC:GFE conference: On 24 January the Soviet delegate to the ECAFE Committee on Trade and Industry meeting in Bangkok interjected a political note into the proceedings by attribut- ing poverty in Southeast Asia to capitalist machinations. The following day the American, British, and French-delegates pointed out the benefits of foreign investments, while delegates from several Asian countries stated that the countries considered foreign capital as an important factor in the development of their economies. The Soviet spokesman 25X1 reserved the right to return to the subi ect for further comment. 25X1 7 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Fuse 2003/03/05: CIA-RDP79T01146A*700200001-3 Comments This approach conforms with the current Communist line regarding Southeast Asia, and there is no reason to believe that the Soviet delegate will deviate when he resumes the argument. 8. CHINA. Chiang Kai-shek annoy ed\at "limited" extent of US assistance Chiang Kai-shek is annoyed at the "limited" extent of American aid to Formosa and is fearful that the US and Britain still may "sell out" 25X1 Nationalist China 25X1 F_ J Chiang expected a large number o 25X1 American officers and troops to be sent to Formosa and is disappointed that thus far only 350 Americans have arrived, and that none of these are combat troops. Chiang also feels that American military supplies have been coming too slowly and are not of the right kind. He believes heavy armament, such'as artillery and antiaircraft guns, is absolutely necessary if the Nationalist armies are to return to the mainland. Furthermore, Chiang reportedly contends that Britain has not withdrawn recognition of the Chinese Communists because the US has not applied enough pressure on London. Chiang says he is still afraid the US may use Formosa as a b ainin point in a political deal with Britain or Communist China. 9. British merchant ship attacked in Formosa Strait:. The British-flag vessel Somali (9,080 GT), while traveling through the Formosa Strait on 14 January, was attacked by a three-masted junk which hoisted the Nationalist flag. The merchant ship suffered only slight damage before the junk retired. It was observed that the crew of the junk wore khaki. 25X1 Comment: In late October another British vessel, the Hupeh, was attacked in the East China Sea by a motor junk but was rescued by a New Zealand warship. All shipping in China coastal waters risks attacks by pirates or seaborne Nationalist guerrillas. 10. Peiping claims Sino-Soviet treaty prevents US attack on China mainland: Peiping radio, commenting on the Sino-Soviet Friendship Week which begins on 14 February, claims that the Sino-Soviet treaty of February 1950 has been instrumental in preventing US military action against the China mainland. The broadcast alleges that MacArthur's proposal to bomb the mainland, blockade the coast, and employ Chinese .Nationalist troops was favored by American leaders but that the US was "afraid of the strength of the Chinese people on the one hand and the existence of the Sino-Soviet...Pact on the other; they feared that the 25X1 Soviet Union might help China...." SECRET 8 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05: CIA-RDP79T01146Ac'00200001-3 Comments This is the first time that Peiping's propaganda has been known to credit. explicitly the Sino-Soviet treaty with this achievement, although Peiping has implied as much on other occasions. This latest statement may have been stimulated by press reports of US preparations for retaliation against the-mainland in the event of a breakdown of the Korean talks or a Chinese Communist invasion of Southeast Asia. The published terms of the Sino-Soviet treaty, in point of fact, are so phrased as to permit the USSR either to provide or to withhold direct assistance in the event of enemy action against Communist China. 11. Minister of Justice regards anti-corruption campaign as class struggles Shih Liang, the Peiping regimes Minister of Justice, has pub- licly stated that the current campaign against corruption, waste, and bureaucracy is a severe class struggle and represents the counter-attack 25X1 of the working class' on the bourgeoisie. F Comments This statement supports the speculation that the "national bourgeoisie" -- frequently denounced in recent weeks for tempting and, corrupting Party cadres -- may find itself removed from the "four friendly classes" in the fairly near future. 25X1 13. 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 ,..Approved For Rose 2003/03/05 : CIA-RDP79T01146A 00200001-3 25X1 14. Rhee?s political difficulties deepen: The past week found Presi- dent Rhee?s hopes of securing re-election to the presidency at the vanishing point. His predicament has arisen through his abandonment of the National Assembly wing of his new "Liberal Party" and his failure to secure passage .of a constitutional amendment providing.-for popular election of the presi- dent (rather than the present system of legislative election). Piqued by his failure, Rhee is reported to have'been "muttering vague threats about recalling the legislature" because they "ignored the popular will and would pursue their private interest." The ROY constitution has no provisions for a legislative recall. The reporting officer observes that Rhee's irrational statements reflect his "growing irritation and frustration with his political difficulties." Comment: These latest developments would seem to climax the lon,;- standin g feud between Rhee and the National Assembly. Under a strict .interpretation of the constitution, all,Rhee's channels for legal re- election seem to be blocked, unless his party is able to win a majority of the Assembly seats in coming elections. 15. JAPAN. Japanese attitude toward Moscow Economic Conference revealed. CINCFE reports that while Japanese newspapers now recognize the propa- ganda motives of the Moscow Ewnomic'conference to some extent, the press, like many businessmen, takes the attitude that the Japanese have nothing to lose by their attendance. Furthermore, there is.a feeling that the re- opening of trade with Communist China may be facilitated. Sponsorship of Japanese participation by a Communist Party front group is becoming less obvious as increasing interest is being shown by Japanese businessmen and financiers. Of a total of 18 Japanese who are known to have received invitations, eight have indicated a desire to at- tend. Of the eight, four are fellow-travelers, two are leftist-inclined economists, and two are businessmen. The Japanese Government will dis- 25X1 courage representation. 29-Jan 52. Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05: CIA-RDP79T01146AI700200001-3 16. Russians may permit Japanese fishin .activity in waters adjacent to USSR. French news agency in Tokyo reports that the UUSH recently notified a private Japanese enterprise-that Russia ''would be inclined to permit" the Japanese to renew fishing activity in waters adjacent, to Soviet territories. The Russians are said to have indicated that they are poorly equipped and would lease the fishing grounds -- in the Sea of Okhotsk and the Bering Sea -- on a reciprocal basis. The Soviet mission in Tokyo will communicate with Moscow and make official pro osals as soon 25X1 as the Japanese concerned give their answers Comments This appears. to be another in the series of Soviet gestures of friendship toward Japan which started Sri late 1951, and which may be designed either to create discontent over Japan's alignment with the free nations or to create a favorable attitude for future, more concrete pro- posals. 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 -pproved For RSse 2003/03/05 CIA-RDP79T01146A 700200001-3 SECRET SECTION 3 (WESTERN) 1. GERMANY. Saar question threatens Schuman Plan and European Army: West German officials have urgently requested High Commissioner McC oy to make representations to France against the creation of an embassy to the Saar, another step toward giving the Saar an independent status. Chancellor Adenauer, described as "gravely upset,"`and as dissatisfied with French Foreign Minister Schumants explanation, has, instructed his chief delegate at the European Army discussions in Paris to make no more agreements there and to file another protest. Adenauer believes that under the present .circumstances it will be impossible to get the German Upper House to approve the Schuman Plan this week as. scheduled. As a possible solution to this "most dangerous threat to the Schuman Plan and the European Defense Community," McCloy endorses a formula reportedly 2 5X1 advanced by Adenauer, that the Saar be "internationalized" and made the seat of both the Schuman Plan Authority and the European'Defense Community. 25X1 2. Six thousand complete service with East German paramilitary police: EUCOM reports an exchange of personnel between the East German Alert (para- military) Police (HVA) and the civil police necessitated by the release of an estimated 6,000 men from the HVA. Although 7,000 were eligible for release, critical personnel were earmarked for retention. Reorganization, reported ,as a possibility last December, has not occurred, but a survey is being conducted to determine the number and type of persons who will be available for military training during 1952. Alert Police are now required to carry special identity cards and to 25X1 wear their uniforms when off duty. Comment: The limitation of the recruitment effort to the acquisition of replacements suggests that no early large-scale expansion of the HVA is planned; also, the East Germans are unlikely to enlarge the HVA while there is still a chance of slowing West German rearmament through political action. A failure of the program of recruitment from civil life is suggested by the acquisition of replacements from the civil police. The new identity requirements will make defection difficulty thus restricting one of the West's best sources of information on the'.RVA. 3, AUSTRIA. Failure of treaty talks evokes signs of neutralist sentiment: Commenting on Western claims that the USSR has willfully obstructed the conclusion of an Austrian state treaty, the respected coalition newspaper, SECRET 12 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For- RRse 2003/03/05 : CIA-RDP79T01146A.700200001-3 SECRET Neues Oesterreich, asserted last week that the "basic reason" for the failure of the treaty talks is one power bloc's belief that Austria will use her newly won freedom to join the other bloc. The editorial asserts that it would be politically unrealistic to expect "one of the calculating statesmen to consent to a decision which would undoubtedly expand the sphere of power of his political opponent." The Austrian concept of freedom must be "isolated and neutralized" as in Switzerland and Sweden, the paper advises, even though 2 5X1 this may be difficult. 25X1 ~ Comment: Failing to distinguish between the differing motives of "calculating statesmen," this editorial is a notable exception to the almost uniform condemnation among non-Communist and independent press of Soviet tactics on the Austrian treaty. The paper's views, then, are not widely held in Austria. The editorial is, however, a warning of the "neutralist" pressures to which the Austrian Government may be subjected by a continued stalemate on the Austrian treaty, and an indication of the necessity for close consideration of Austrian public opinion in future moves to end the 25X1 stalemate. 13 29 Jan 52. Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 25X1 Approved For Rose 2003/03/05 : CIA-RDP79T01146AID700206001-3 4- SECRET 6. DENMARK. Foreign Minister sees EDF as vitally lE ortant for his country:: Foreign Minister Kraft has informed General Eisenhower that since Denmark cannot be defended without German participation, his country is much interested in seeing an early agreement reached on the European Defense Force. Eisenhower's political adviser gained the impression from a previous conversation that Kraft is "at least turning over in his mind the possibility of Denmark's eventually joining the European Defense Community if it succeeds,"'. In his conversation with Eisenhower, Kraft also went out of his way to stress Denmark's dependence on Polish coal and its consequent need to obtain COCOM agreement to the transfer of a. 10,000-ton tanker to Poland in 25X1 return for essential coal shipments. Comment:: This is the most decided indication to date of Denmark's interest in the EDF. While Kraft's statement should be read in the context of his evident desire to gain Eisenhower's sympathy for Denmark's position .in East-West trade-as well as for his government's recent refusal to accept completely the TCC's recommendation for increased Danish military expenditures, it nevertheless reflects the basic opinion of most Danes regarding Germany and European security. 7. ICELAND. Government asks US aid to alleviate unemployment:: The Icelandic Government is ex reile y concerned over increasing unemployment in the Reykjavik area. The Foreign Office has accordingly asked that the US Defense Force in Iceland immediately start certain construction activities currently scheduled for later in the year, The American Legation endorses this request, 25X 1 agreeing that the Communists will have an excellent opportunity to make, .Political capital of the unemployment if the situation is not remedied. 25X1 Comment: Press reports since early December indicate that the labor unions-and--political parties have been concerned over the unemployment which reportedly is seasonal, aggravated by a severe winter. The government is always extremely sensitive to any situation which could conceivably give the Communists an opportunity to regain control of the labor movement. 8. ARGENTINA, Peron calls for Latin American confederation to resist imperialism: In his weekly newspaper column Peron has again called for the prompt esta is SECRET 14 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For Rose 2003/03/05 : CIA-RDP79T01146AI0700200001-3 ment of a confederation of Latin American states to resist "imperialist, conquest and exploitation." He emphasizes that the US has sought to exploit the rich resources of Latin America, which, like Canada,""constitutes the most coveted objective of imperialism." He warns that when the war is aver, 25X1 it will be too late to confront this danger. Comment: This appeal is part of Argentina's intensive propaganda campaign designed to displace US influence within the hemisphere. Currently the main propaganda theme concerns charges that the US arbitrarily sets low prices for Latin American raw materials. This type of propaganda is more appealing than a direct bid for political leadership, since other Latin American countries are generally suspicious of Argentina's political ambitions. 9. CUBA. Labor leader proposes world labor conference: Eusebio Mujal, Secretary General o the non-Communist Confederation of Cuban Workers (CTC), has an- nounced that it is planned to call a world Labor Congress in-Havana for 1 May. The CTC leader said that it was hoped that delegations of agricultural workers, particularly those growing sugar, as well as seamen and dock workers from a number of countries could be brought together. The conference would strive to improve conditions for workers of colonial countries who earn very low wages and whose products compete with those of other regions where 25X1 workers enjoy a higher standard of living. Comment: The ICFTU Interim Committee which met in London last October allocated funds for numerous regional projects including organizational work in several world regions. Representatives were also to be sent to various underdeveloped regions on an industrial basis in collaboration with appropriate international trade secretariats, in order to help forward organization in such fields as mining, textiles, plantations, and public services. 10, PANAMA. Action against local shipping representative suggested: The US Stye Department suggests that the Embassy in Panama bring the fact of the present Polish registry of the Montesa, the Modena, and the Morella to the attention of the Panamanian Government for possible action against the local company responsible for the fraudulent transfer application. The Panamanian Government had approved the transfer of these vessels from Panamanian to Portuguese registry. The Panamanian Government had stated as early as 4 October that it would not approve transfer of a vessel to Polish regist 25X1 because it did not recognize the Government of Poland. 7 25X1 Comment: Arias, Fabrega y,Fabrega is believed to be the local firm representing the former owners of the Montesa, the Modena, and the Morella. SECRET 15 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3 Approved For *se 2003/03/05 : CIA-RDP79T01146A?700200001-3 Any action against this firm will be motivated primarily by domestic political considerations. The principal partner id~ex-president.Harmodio Arias, a man of considerable power who is aligned against the forces now controlling the government. SECRET 16 29 Jan 52 Approved For Release 2003/03/05 : CIA-RDP79T01146A000700200001-3