BRIEFING NOTES FOR THE DIRECTOR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01443R000100320010-6
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 55
• Document Creation Date: December 21, 2016
• Sequence Number: 10
• Content Type: BRIEF

Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
TOP SECRET
COPY NO
ftI
BRIEFING NOTES
FOR
THE DIRECTOR
9 August to 8 September
CENTRAL INTELLIGENCE AGENCY
Office of Current Intelligence
DIA and DOS review(s)
completed.
TOP SECRET
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
TOP SECRET
25X1
CE
R
GENT
INTELLIGENCE
T
AL
A
,
25X1 OFFICE OF CURRENT INTELLIGENCE /~
8 September 1953 A/
THE DIRECTOR
9 August to 8 September
0
oe"
25X1
TOP SECRET
25X1 ~ /
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
USSR
EASTERN EUROPE
FAR EAST
SOUTHEAST ASIA
SOUTH ASIA
NEAR EAST AFRICA
LATIN AMERICA
WESTERN EUROPE
Page 1
Page 9
Page 15
Page 21
Page 25
Page 28
Page 36
Page 39
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Malenkov?s 8 August speech outlines policies of new regime
Soviet premier Georgi Malenkov utilized the meeting of
the Supreme Soviet on 8 August to make the most important and
realistic statement of current Soviet policy since Stalin?s
death, particularly with regard to internal affairs. In Am-
bassador Bohlen?s opinion, the proceedings at the Supreme
Soviet and the attitude of the other Soviet leaders indicated
that Malenkov, an extremely able orator, is unquestionably the
dominant figure in present Soviet leadership. Malenkov partic-
ularly stressed the need for raising the living standard of the
Russian people. He described the material welfare of the popu-
lation as "the main task" of the current Five-Year Plan, and
announced that production of consumer goods would be increased
"at the expense of other sectors" of the economy.
In the field. of agriculture, Malibnkov announced important
concessions to the Soviet peasantry, apparently in order to com-
bat their traditional indifference to the expansion of agricul-
tural production. With regard to the international situation,
Malenkov appeared to be arguing that a, detente in the cold war
was feasible but only if the present power position of the USSR
in Europe and Asia was not challenged. He devoted particular
attention to the menace of revived German militarism in an
evident attempt to convince the French that a bilateral agree-
ment with Moscow might provide a security alternative to EDC.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Mentioning Beria's arrest only in passing, he pointedly warned
that the new Soviet policies do not spring from weakness and
supported this with an implication of Moscow's possession of
the hydrogen bomb.
USSR likely to make new disarmament proposal
Soviet press comment following the USSR's thermonuclear
explosion suggests that a new Soviet disarmament proposal may
be presented in the forthcoming UN General Assembly. The So-
viet government's announcement of its tests on 20 August included
a statement that it had "more than once" proposed disarmament
action under the supervision of the United Nations, and later
comment emphasized selected quotations from the foreign press
to the effect that Soviet possession of the H-bomb will give
"new impetus" for outlawing such weapons.
A new Soviet proposal on disarmament may be similar to
the Russian proposal in the UN in November 1951 for a "world
conference" of all states, which followed Stalin's announce-
ment in October 1951 that the USSR had carried out an A-bomb
test.
Malenkov sets tempo for more positive policy toward Japan
Malenkov's statement on 8 August, attaching special
significance to the normalization of relations with Japan and
welcoming any steps the Japanese might take to throw off Ameri-
can "domination," appeared to mark a turn toward a more posi-
tive Soviet policy regarding Japan. Neither the Soviet Union
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
nor Communist China, however, has yet offered Japan any political,
or economic concession which the Japanese might logically accept
as a quid pro quo for negotiations with the bloc. Present indi-
cations suggest therefore that Soviet policy will be designed
to encourage the Japanese to take the initiative toward an over-
all peace settlement.
Soviet attitude toward new Iranian government
Moscow's attitude toward the new pro-Western regime in
Iran has apparently been guarded, but is still conciliatory. So-
viet ambassador Lavrentiev protested to the new Iranian govern-
ment about anti-Soviet demonstrations on 19 August. Zahedi told
Ambassador Henderson on 1 September that the "Soviet embassy"
had recently inquired about the policy of the new Iranian govern-
ment toward the USSR.
Unconfirmed press reports, however, claim that "well-
informed Iranian sources" state that the Soviet ambassador also
offered Zahedi aid to ease Iran's financial crisis. These re-
ports allege that following several meetings between the Soviet
trade representative and the Iranian minister of national econ-
omy, a trade agreement was signed on 3 September.
While it is doubtful that the Kremlin will give Iran
any extensive aid without a quid pro quo, the USSR may have
made attractive trade offers during the recent Soviet-Iranian
talks in Tehran. Such offers would probably be similar to
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
those included in the 10 June agreement which reportedly doubled
the value of goods to be exchanged over that of previous years.
Moscow may have offered Iran a large trade-credit agreement,
such as the one recently concluded with Argentina. Iran has
commodities for which the USSR may make cash payment --'an
arrangement Tehran would welcome.
Big-four exchanges on Germany
The 15 August Soviet note on Germany again suggests that
the Kremlin continues to bolster the East German regime and
has no interest in meeting Western terms for unifying Germany.
The timing of the note, which resubmits a Russian peace treaty.,
draft of March 1952, points instead to an attempt to upset
Chancellor Adenauer's chance for re-election in September.
However, the Soviet failure to propose more favorable terms
appears to have helped Adenauer's campaign. The USSR's orig-
inal 4 August answer to the West's invitation to talks on
Germany apparently was designed to record Soviet advocacy of
a conference covering a broad agenda for. easing international
tension and including Communist China.
The USSR again serves notice that it intends to main-
tain the East German regime by refusing to compromise on the
crucial. issue of holding free all-German elections prior to
peace treaty discussions and under international supervision.
It proposes to call a peace conference with the participation
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
of representatives of East and West Germany. It calls for a
provisional government which would eventually hold elections
free of outside interference.
The note's emphasis on the provisional government's
role in establishing East-West German contacts indicates So-,
viet anticipation of a divided Germany for an indefinite time.
By proposing elimination of reparations payments and limitation
of occupation costs, the USSR is taking two steps to liberalize
its occupation, probably attempting to decrease German resent-
ment and opposition.
On 2 September the Western powers replied to the Soviet
notes of 4 and 15 August. The West rejected both Soviet sug-
gestions for a general conference with Communist China par-
ticipating and for an East-West German meeting. Instead, the
Western powers proposed that the four foreign ministers meet
in Lugano on 15 October to. consider only the German and Austrian
questions. On the German side, first attention would be given
to free elections and the status of an all-German government.
Big-four exchanges on Austria
The Soviet government's 28 August reply to the Western
invitation to a meeting of the Austrian treaty deputies again
underlines the Soviet desire to discuss the Austrian question
only in connection with the German problem. Moscow repeated
its charge of 25 May that the state treaty discussions are
not within the competence of the deputy foreign ministers,
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
but added that a solution of the German problem could contrib-
ute to an Austrian settlement.
The Kremlin's renewed demand for a complete and uncon-
ditional withdrawal of the abbreviated draft treaty is probably
designed to generate British, French, and Austrian pressure on
the United States for a firm advance commitment of the earlier
long draft treaty, in order to head off any Western move toward
its revision.
Soviet maneuvers in the UN related to Korean Political Conference
Soviet moves during the UN assembly session on Korea
appear aimed primarily at exploiting the divergence of views
between the US and other leading UN members regarding the
character and scope of the political conference. The two
resolutions introduced by Vyshinsky were mainly devices for
undermining support for the US position.
Vyshinsky's affirmative vote on 27 August on the reso-
lution inviting the USSR to participate in the conference, after
his failure in a move to delete the proviso "provided the other
side desires it," reflected Moscow's insistence on a round-table
conference with broad membership. Vyshinsky consistently op-
posed the US concept of a conference limited to the "two sides."
There have been no indications that the Communists will abandon
this position, endorsed by both Communist China and North Korea.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
This attitude toward the UN recommendations probably
foreshadows counterproposals designed to circumvent the UN
endorsement of the US plan for the conference and to reopen
the question during this Fall?s General Assembly session. It
is possible that the Communists will suggest the participation
in the political conference of some or all of the "neutral"
and "neighboring" states mentioned by the two Soviet resolu-
tions rejected by the UN assembly.
The Soviet representatives will probably attempt to
link the question of the admission of Communist China to the
UN, which Vyshinsky has promised to raise in the eighth General
Assembly, with an effort to revive the controversy between
the US and other UN members on Korean issues.
Chou En last?s views on political conference issues
expressed to the Indian and Swedish ambassadors on 17 August
were identical with Vyshinsky's proposal in the UN on 18 August,
suggesting that Moscow and Peiping have reached prior agree-
ment on all important conference issues.
Zhukov and Vasilevsky absent from official Soviet functions
Soviet press reports have failed to mention either Mar-
shal Zhukov or Vasilevsky in connection with several recent
functions attended by the other members of the Soviet hierarchy.
Both apparently were absent from the Supreme Soviet session,
the air show, and recent Moscow receptions in honor of the East
German delegation. The continued absence of these two first
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
deputy ministers of defense may reflect further maneuvering
among the top leadership.
Post-Stalin Soviet economic trends continue
Through curtailment of long-range or uneconomic con-
struction projects and streamlining of other economic opera-
tions and administrative machinery, the USSR apparently is
attempting simultaneously to continue its over-all military
expenditures at approximately the same level as in 1952, to
maintain a high level of heavy industrial output, and to
fulfill its promises for increased output of consumer goods.
The Soviet government has in the past two months given
special emphasis to its announced policy of increasing the
availability to the population, of consumer goods. There are
several indications. that the Kremlin is beginning to carry
out these promisese
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
The Eastern European governments are continuing to ini-
tiate measures designed to improve living conditions. and allay
unrest. All the Satellites except Bulgaria and Czechoslovakia
have issued decrees reducing the agricultural debts of both the
private and collective farmers. Hungary and Rumania have also
announced intentions to curtail their heavy industrialization
plans in order to increase investments in agricultural and
consumer good industries. Two major construction projects in
Rumania and one in Hungary have been suspended, apparently
for this purpose.
The only confirmed instance of serious resistance in
Eastern Europe since the East German riots appeared in Czecho-
slovakia in early August. On 11 August the Czech minister
of national supply ordered extensive special measures to
suppress local uprisings which had broken out against local
party and government officials in eastern Slovakia.
Yugoslav-Satellite border negotiations
Variations in the. approach and attitudes of the neigh-
boring Satellites in their frontier negotiations with Yugo-
slavia suggest the absence of a coordinated policy on the
details of the discussions. Yugoslav-Hungarian talks have
progressed "in a not unpleasant atmosphere," according to
a Yugoslav official, and the negotiators concluded an initial
agreement on 28 August. Rumania and Albania, on the other
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
hand, are delaying and obstructing the course of negotiations.
Although Bulgaria, agreed to negotiate early in July, the talks
have not yet begun. Bulgarian-Greek frontier negotiations
are progressing with no major obstacles.
East Germany
The equilibrium of the East German Communist position
has been seriously threatened by the widespread response of
the populace to the Western food program. In addition, the
unrest and popular discontent germinated during the 17 June
riots have continued as a latently explosive force. As a
result, the primary concern of the government has been to
keep order and to restore some measure of stability.
Internal party reorganizations and purges designed to
strengthen the hard core of the Socialist Unity Party have
continued. The government has reacted to the food program
by imposing intermittent police controls, organizing an
energetic propaganda campaign against food distribution, and
threatening reprisals against individuals receiving packages.
The East German regime has not been able, however, to impose
the controls required to defeat the food program because it
fears a popular uprising and is reluctant to present the West
with a picture of oppression.,.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Attempts are being made to improve the consumer goods
situation in the hope of placating the sullen populace. East
German propaganda media have continually announced generous
food shipments from the Soviet Union, and the granting of
ruble and free currency credits to East Germany on 23 August
will probably bring about an eventual improvement in the
consumer goods supply. At the moment, however, there is
little evidence that the food supply has been substantially
increased,.and it is- possible that continued maladministration
and inefficiency in distribution is negating much of the effort
to improve the consumer goods situation.
The Soviet effort to enhance the prestige of the East
German regime and strengthenthe,position of Ulbricht indicates
that no change in rule is contemplated that would improve the
prospects for talks on unity. Nevertheless, the East Germans
have. continued to call on their Western brethren to engage in
unity discussions and have made several gestures, e. g., liberal-
ization of their policies on interzonal travel and on the transit
through the Soviet zone of West Berlin manufactured goods, moves
which appear to be intended to improve the climate for negotia-
tions between the two Germanys. At the same time, however, the
strengthening of the East German regime in spite of the well-
known West German refusal to deal with this government indicates
the lack of sincerity behind the East German position on unity.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Soviet-East German negotiations
The 22 August statements concluding the Soviet-East
German negotiations in Moscow appear designed immediately to
influence the West German elections and in the longer run to
lessen discontent and build-up the prestige of the regime in
East Germany.
The promised release of some German prisoners being
held for "war crimes" is the only concession affecting more
than East Germany. The promise of economic assistance, the
end-'of reparations, and other economic concessions indicate
recognition of the economic sources of East German discon-
tent highlighted by the 17 June riots. A serious intention
to carry out an assistance program would lessen these eco-
nomic causes but not the political reasons for dissatisfaction.
Ambassador Bohlen believes that the announcements proved
beyond reasonable doubt that the USSR has decided to throw
its full support behind the East German regime for the imme-
diate future. He thinks the unrest since 17 June has forced
a Soviet decision not to negotiate on Germany out of,fear of
leading from weakness.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Sighting of B-47 type plane at Moscow
There have been two separate sightings recently of "large"
Soviet aircraft at Ramenskoye airfield near Moscow. On 6 July.
Canadian and British air attache personnel sighted and photo-
graphed 7 or 8 "large" aircraft with vertical tails higher than
those of surrounding TU-4's. The attaches believed them to be
type-31 heavy bombers. On 30 July a US air attache sighted
and photographed a "large" airplane with a US B-47 type tail,
in addition to the previously sighted "large" aircraft.
Despite the credibility of the observers and the photo-
graphs,,it' is impossible to do more than speculate on the
identity of either of the types of "large" aircraft. The
attaches were over three miles from the aircraft
The aircraft reported as type-31's might be one of the following:
Type-31's as flown in the 1951 air show; TU-4 type aircraft with
13
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
heightened tails similar to the tail of the US B-50; unmodified
TU-4's, erroneously identified as type-31's
port aircraft having high vertical tails (although no windows
were observed).
In order of likelihood, the aircraft with the US B-47
type tail may be?either a, turbo-prop powered type-31 in
which the increased power necessitated installation of a much
enlarged tail with fin sweepback as a substitute for a longer
fuselage; or a new aircraft, possibly utilizing a fuselage
similar to that of the type-31 but having jet engines and
probably swept-back wings.
Comment on the Moscow air show
The display of a considerable number of new fighter air-
craft in the recent Moscow air. show, coupled with the fact that
no new bomber was displayed, may be of possible. significance
with respect to estimates on the status of Soviet medium and
heavy bomber development. A review of air show history reveals
that, while the Soviets have displayed many prototype aircraft
which were never placed into production, those which have reached
production have been publicly exhibited prior to or coincident
with entry into operational use. Thus, while it remains, likely
that new prototype Soviet bombers,exist, the chances are good
that new medium or heavy bombers were not available, at least
in numbers commensurate with the rest of the 1953 show.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
KOREA
The armistice and political conference
President Rhee has taken no further steps to obstruct the
armistice, and it is believed that he will continue to cooperate
at least until after 90 days of political discussions. He is
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
holding firm in his expressed determination to take unilateral
action to unify Korea by force if the conference fails.
At the UN, the United States had the support of only three
nations outside of Latin America (Greece, Nationalist China,
Pakistan) in defeating the resolution for India's participation
in the political conference. On the resolution inviting the USSR,
the United States was successful in retaining the phrase "provid-
ing the other side desires it" in a 55-2-2 vote.
So far, the US, UK, Belgium, Philippines, South Korea,
France, Canada, Thailand, Australia, Colombia and Turkey have
indicated a desire to participate in the conference. The US
has notified Peiping, through the Swedish embassy, that the UN
proposes San Francisco, Honolulu or Geneva as the site for a
conference to be convened on 15 October.
Communist propaganda
calling for a withdrawal of all foreign forces, with unification
to be settled "by the Koreans themselves." This repeats the
standard Communist theme used at the time of the 1946-47 US-USSR
J9int Commission meetings and suggests the Communists may again
put forth their plan for an interim government composed of the
joint North-South legislatures which they would subsequently
hope to dominate.
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
North Korean purges
The recent purges in North Korea were directed at the
"domestic" faction of Communist leaders, most of whom were
influential in the prewar South Korean Communist movement, and
who were prominent in the unsuccessful subversion program.
Although charged with a plot to overthrow the North Korean
regime, it is more likely that they were eliminated because of
their "nationalistic" views on the armistice or on the question
of unification. The purges and a concurrent reshuffling of
party posts has strengthened the Soviet faction's control at
the expense of "domestic" elements, while the Chinese faction
has remained generally in posts of secondary importance.
Soviet espionage incident
A Soviet patrol boat with a crew of four was seized on 8
August by the Japanese coast guard while engaged in an espionage
operation.
Japan has
rejected a delayed demand by Soviet representatives for release
of the crew and boat and have indicted the Soviet captain for
illegal entry.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Campaign against offshore islands abated
The Chinese Communist campaign against Nationalist-held
offshore islands has abated temporarily,. with no significant
developments in the past month. Chiang Kai-shek is still
interested in obtaining further moral and material support from
the United States as a deterrent to Communist attacks on the
islands. The Generalissimo is reported to be depressed by the
failure of the Nationalist raid on Tungshan Island in mid-July.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Possible attempt to improve foreign relations
Certain lines in Peiping's recent propaganda suggest.that
Communist China, in the hope of gaining China's seat in the UN
and inducing a reduction in Western trade restrictions, may
follow the Soviet lead in attempting to improve relations with
certain non-Communist countries without altering its basic
hostility to the non-Communist world. Peiping may encourage
the establishment of full diplomatic relations with seven
countries which have recognized it but with which the Chinese
Communists have not exchanged envoys, and it may make new over-
tures for recognition by certain other governments. However, the
new British charge in Peiping has been there since 23 August
without being received by Premier Chou En-lai or otherwise
encouraged.
Status of Mao Tse-tung
In the two months since the Soviet announcement of Beria's
fall, there has been a marked increase in Chinese Communist
attention to the concept of "collective leadership" and a
marked decline in Peiping's praise of Mao Tse-tung. Although
Mao's position as leader of the Chinese Communist Party and
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
government appears secure, the Chinese have seemed to be
withdrawing an earlier claim to an enhanced stature in the
Soviet bloc for Mao and his regime.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Lai
Cha
Son La",
Na San
ESTIMATED GROUND STRENGTHS
BAC-VIET (TONKIN) AREA
FRENCH-VIETNAMESE
French Regulars 91000
Vietnamese Regulars 27,000
French Auxiliaries 23,000
0
Phone Tho
Ha Giang
JONKINj
Yen Bay
O
Nghia Lo
INDOCHINA - CHINA
BORDER AREA-AUGUST 1953
French Perimeter
Selected road
Cart road
y~+?--i? Railroad
+-+ Railroad, bridges destroyed and some rails removed
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Viet Minh troop concentration
Areas of major Viet Minh guerilla activity within the
Red River Delta
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Indications of direction of Viet Minh fall offensive
There are as yet no positive indications of the direction
in which the Viet Minh will strike in their anticipated fall
offensive.
Extensive operations in Laos I now seem less probable.
than earlier this summer
The French have deduced from these negative indications
regarding Laos that the Tonkin delta area will be the main
theater of enemy operations this fall. Their concern over
this possibility is heightened, moreover, by the marked
deterioration in security conditions there, which resulted
from the necessity during the last campaign season of diverting
mobile reserve elements to northwestern Tonkin and Laos.
Status of negotiations for evacuation of Chinese Nationalists
from Burma
Negotiations for the evacuation of Chinese Nationalist
troops from Burma still have not progressed beyond the stage
of discussion. Although the four-power committee in Bangkok
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
has succeeded in drawing up a new evacuation plan, its
proceedings continue to be marked by the stalling tactics of
the Nationalist representative,
The most recent of his maneuvers involved a
proposal for deleting from the evacuation plan the names of
places in Burma to be turned over to the Burmese army. This
development appears to contradict the Nationalist position that
Li Mi alone is obstructing the evacuation effort, since it
followed closely after the revelation that Li intended to
retain his Mong Hsat headquarters even after the "evacuation."
In addition, indications are accumulating that the Nationalists
are still being supplied by both land and air. These develop-
ments suggest that Taipei at best is contemplating only a token
withdrawal, despite statements by Nationalist
officials to the contrary.
The Burmese have all but given up hope that the Bangkok
talks will result in positive achievement and are considering
at least three courses of action. They plan to raise the issue
again in the UN
The American embassy
in Rangoon, however, recently reported that Burma's presenta-
tion may not be as bitter as had been anticipated. The Burmese
are meanwhile proceeding with preparations for renewed large-
scale operations against the Nationalists if the UN debate
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
should prove fruitless. Finally, if both the UN appeal and
military action fail to obtain satisfactory results, there is
evidence that the Burmese may feel compelled to seek Chinese
Communist assistance in eliminating the Nationalists.
Political developments in Indonesia
The chief political development in Indonesia since the
installation of the new Communist-influenced cabinet on 1
August has been the presentation of the cabinet's policy
statement to parliament. Although individual members of the
cabinet have indulged in highly nationalistic remarks, the
government's policy statement presented by Premier Ali Sastroa-
midjojo on 25 August, was relatively moderate and differed
little from statements of former governments. This approach
indicates that the leftists will try to avoid antagonizing
conservative elements in the cabinet in order to preserve the.
government and thus gain time for infiltration into the govern-
ment, the army, and the police.
So far anti-Communist elements in the army and parliament
appear to have adopted a policy of watchful waiting.
Presidential campaign may endanger Philippine security
negotia-
tions are continuing between President Quirino's brother Tony,
acting on behalf of the Liberal Party, and Huk leader Luis
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
Taruc. The American embassy believes that if these negotiations
result in a Huk "surrender," Philippine security will be endan-
gered. The Huks would be provided an opportunity to further
their current infiltration tactics. The chief objective of
the negotiations is to achieve a political coup before the
'November elections.
An important recent development in the presendential
campaign was Carlos Romulo's withdrawal, of his candidacy on
.21 August and the formation of 'a coalition of his Democratic
Party with the Nacionalistas in support of Magsaysay. Of
almost equal importance is the precariousness of Quirino's
health and the possibility that Vice President Lopez, now
running for the senate on the coalition ticket, may succeed to
the presidency before November. Should he become president,
Lopez might be in a position to reach a compromise with the
Liberals, but it is possible that Liberal stalwarts may resort
to extreme methods to prevent him from controlling the execu-
tive apparatus.
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
U
S
R
t ?
a
.
. J.
.
`., __~ -- ~O
Amu
'"`?~ ~) ~~ C H I N A
Khorog
Khotan
,! ~?? "`~ 2 INDEFINITE -~ ,
v~{^"-- ?
36
~.w.
4
36
AFGHANISTAN ?~SJAMMU ,
Kabul A STANI yf1 D
'AID
lme d ' " tv~iizafire~5i HELD L
h' .~.
ae
,
e
"
. KASI-IMIR L
~
~
.
S
iyiagar
A (.Status in dispute)
'J e ' Jammu r. ~' ? r
32
~
4
32
r Amritsg
Laho7,
1 ~
P U N J A B
a ~aJ /
~ ~
he
?l
f
~
~
t
-
~
-,.
~
~ ?
,
t/ NEPAL
AN?~-.
.
28
New D 1hi f
IN%
va \lL
28
'"Lucknow
Ajmer
S 1 N D ?~-??
?^ KAR e -d ?.` KASHMIR-PUSHTOONISTAN
a
AREAS
~h
24
- - - --~
Kutdi
lea", f
~`- ___ Approximate cease-fire line between
Indian and Pakistani forces
24
Ahmadabad Minimum Pushtoonistan-claimed area
AX,4BIAN\~ r j
~~~~~~~
S'E Maximum Pushtoonistan-claimed area
A
o _J 1:8,760,000
100 200 Miles
0 100 200 Kilometers
DIU
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
The situation in Kashmir
Despite official denials from New Delhi of involvement,
the replacement on 9 August of Sheikh Abdullah as prime minis-
ter of Indian-held Kashmir by pro-Indian Ghulam Mohammad Bakshi
represents a successful Indian attempt to regain control of a
political situation that had been rapidly getting out of hand
because of Abdullah's search for personal power through advo-
cacy of independence of semiautonomy for the state.
Pakistani reaction to the coup was unusually intense, and
Prime Minister Mohammad All requested an.imm.ediate meeting
with Prime Minister Nehru. Talks between the two took place
in New Delhi from 16 to 20 August, but none of the reported
decisions differs materially from those which the two coun-
tries accepted as early as 1948. The minor changes announced
on 19 and 20 August, one of which called for the appointment
of a plebiscite administrator by the end of April 1954, were
presumably made to permit Mohammad All to return to Karachi
with a statement that progress had been achieved.
The Karachi press on 27 August, countering Indian press
implications that the two prime ministers had agreed on ap-
pointing a new plebiscite administrator from a small neutral
nation, announced that Pakistan would insist on the retention
of Admiral Nimitz, who was accepted by both countries in 1950.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
By 4 September, however, both India and Pakistan had learned
that Admiral Nimitz had tendered his resignation, thereby cre-
ating a difficult situation for the Pakistani government and
further complicating Indo-Pakistani relations.
The American embassy in Karachi believes that Mohammad
Ali?s prestige has been considerably lowered by the outcome of
the New Delhi talks. The Indian position seems to have been
strengthened. There is very little Pakistan can do to change
the status quo.
Indian participation in Korean conference
During the week of 17 August a resolution proposing that
India be seated at the postarmistice Korean 'political conference
was introduced in the Political Committee at the special ses-
sion of the seventh UN General Assembly. The ensuing debate
found the United States, which opposed Indian participation,
in opposition with its major European allies, primarily because
of differing concepts as to the most effective size of the con-
ference and whether it should be a "cross-" or "round-" table
meeting. The resolution was passed in Committee I on 27 August
by a vote of 27 for, 21 against, and 11 abstentions. Since it
was obvious that in a succeeding General Assembly plenary ses-
sion India could not gain the required two-thirds majority,
India withdrew'its candidacy on 28 August.
Indian nominee for UNGA presidency
India has announced Madame Pandit's candidacy for the.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
presidency of the eighth UN General Assembly, and the US has
publicly supported.her. The United States will not campaign
on India's behalf.
Prince Wan of Thailand is the only other important candi-
date at present. His strength, relative to Mme. Pandit's is
not yet clearly determined. Pakistan has indicated it will
nominate a candidate for one of the seven assembly vice presi-
dencies instead of competing with India, as had previously been
rumored.
Leftist-inspired unrest in Ceylon
During the week of 12 August, serious leftist-inspired
rioting developed in Ceylon in connection with a protest strike
against the government's reduction of food subsidies. It was
the most successful demonstration to date of cooperation among
the three Ceylonese leftist parties. The government was pre-
pared for the strike and quickly controlled the situation. On
17 August parliament provided the government with more power
than seemed necessary to cope with the situation, passing a bill
enabling the government to enforce emergency regulations in
anticipation of public disorders.
Oppsoition parties indicated that they intended to continue
embarrassing the government on the rice subsidy issue by intro-
ducing a no-confidence motion in parliament on 1 September.
The government's majority defeated this motion easily by a vote
of 59 to 26.
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 LA a
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
IRAN
PRINCIPAL TRIBES
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
NEAR EAST - AFRICA
The situation in Iran
The strong upsurge of popular and military reactions to
Prime Minister Mossadeq's efforts toward limiting, if not
removing, the monarchy in Iran enabled the shah's supporters
on 19 August to take over the government and to place in power
a regime which is moderately nationalist, pro-shah and firmly
pro-US. On 23 August Zahedi announced the appointment of a
slightly right-of-center cabinet, composed in part of old
guard conservatives.
Prime Minister Zahedi moved immediately to consolidate
his control of the country by instituting a, rigorous campaign
against the Communists, starting an extensive purge of Mossadeq's
supporters from the army and the government, and by issuing a
warning to restive tribesmen that the army would tolerate no
attempt to achieve greater autonomy.
Apparently neither the prime minister nor the shah has
made a serious attempt to solve the status of parliament, al-
most two-thirds of whose members had resigned before the coup.
Without plenary powers or a, functioning Majlis, Zahedi cannot
settle the oil dispute or move ahead with a constructive legis-
lative program. The prime minister lacks organized political
support, and there have already been indications of dis-
sension among his varied adherents.
28
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
Recognizing that Iran's most pressing problem is its
empty treasury, both the shah and Zahedi have appealed to
the United States for extensive financial aid.
formed on 3 September of the amount of aid, Zahedi showed
disappointment. Serious Attention is also being given to the
oil problem. There is, however, no indication that the prime
minister is either able or willing to move contrary to the
strong nationalist sentiment which still prevails in Iran on
this issue.
On 3 September Iran negotiated a supplementary trade agree-
ment with the USSR, presently Iran's largest customer. Rumors
arose in Tehran on 1 September that Soviet ambassador Lavrentiev
had attempted to commit suicide, but Ambassador Henderson has
been unable to ascertain the truth.
American bases in Greece
The Greek government on 14 August "accepted unreservedly"-
the United States proposal for establishing military bases in
Greece.
Orbit interest in reopening relations with Greece
Indications since early August that Albania and Bulgaria
wish to resume normal relations with Greece follow Russia's
decision in July to send an ambassador to Athens and may be
part of a new orbit effort to weaken the Yugoslav-Greek-
Turkish defense organizations.
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Greek-Yugoslav relations
Greek reaction to recent Yugoslav press complaints over
new Greek efforts to resettle the Slav-speaking minority in
northern Greece has been firm but essentially friendly. The
protests seem unlikely to jeopardize the newly initiated Greek-
Yugoslav-Turkish defense cooperation.
Greek economic situation
The tight Greek economic situation has been further
strained by the serious earthquakes which struck the Ionian
Islands in late July and early August. Greek pressure for more
American aid or for the transfer of funds now allotted to
military aid to the economic field may be forthcoming.
Change of government in Morocco
The forcible French removal of the sultan of Morocco on
20 August, contrary to information from official French sources,
was the culmination of pressures from French officials and
vested interests unwilling to accept any self-government for
Moroccans. Paris seems to have surrendered to a defiant bureau-
cracy in Morocco rather than to a threat of civil war between
rival Moroccan factions.
Ostensible American approval of this change has dimin-
ished the popularity of the United States among Moroccan natives.
Having looked to the United States for encouragement, Moroccan
nationalists are now embittered and are more likely to accept
Communist assistance. Strict French security measures have
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
thus far maintained order, but have not wiped out the will to
resist. If serious disorders occur, American bases and per-
sonnel will probably be attacked.
French suspicions regarding American intentions in Morocco
have probably increased, because of expressions of American
concern about the effects of dethroning the sultan, as well as
the amendment to the current Foreign Operations Administration
appropriation designed to cut off aid to France unless American
treaty rights in Morocco are strictly observed. The French are
likely to hamper American military and commercial activities
in the area. They will also increase pressure for the renun-
ciation of US extraterritorial rights under which Americans in
Morocco are exempt from local jurisdiction. Since 1912 France
has repeatedly sought to annul these rights, but the World Court
ruled in August 1952 that they were valid.
Despite French declarations that their policy envisages
eventual Moroccan independence, the administrative reforms
now under consideration in Paris represent virtually no change
from direct French control. The only new step is the proposed
creation of seven provincial advisory bodies, a quasi-decentral-
ization of administration. The position of French colonists
and vested interests, however, is for the time being considerably
more secure, because they can exert effective pressure at all
governmental levels.
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Unrest in central Africa
Nyasaland riots demonstrate the basic African hostility
to the federation plan for British central Africa, scheduled
to take effect on 6 September.
South African politics
Prime Minister Malan of South Africa has been temporarily
stymied in the furtherance of his racial segregation program
by his inability to secure the necessary two-thirds majority
to amend the constitution.
Arab States
Anglo-Egyptian talks
British and Egyptian representatives engaged in a series
of informal talks in Cairo between 28 July and 3 September in
an effort to establish a sufficient area of agreement for re-
sumption of formal negotiations on the Suez base.
little progress was made on
the questions of the duration of the agreement and the sched-
ule for the withdrawal of British troops.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
The failure
of the Pakistan and Indian prime ministers to support the
Egyptian position on the Suez case during their visits to
Cairo in June is also considered to have contributed to the
regime's desire to reopen negotiations with the British.
As a result of the informal talks, general agreement
was reached on a formula for future availability of the Suez
.base in the event of an attack against any Arab state. Egypt
refuse, however, to accept the British suggestion that an.
attack on Turkey also be considered cause for a return to
the base.
Colonel Nasr has indicated that the political situation
in Egypt makes it impossible for the military regime to
accept more than a five-year agreement, with technicians to
remian for three years only.
the Egyptians maintain that the duration date must start from
the date of signing the agreement.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Despite narrowing of disagreement on many important issues,
there is a real danger of a break over the "duration" question,
No breakdown in the talks, however, is expected until after
General Robertson, British military delegate, returns to Cairo
about 14 September after holding consultations in London.
Ratification of Anglo-Libyan treaty
The Anglo-Libyan treaty, already previously approved both
by the cabinet in Tripoli and the House of Deputies, en-
countered unexpected difficulties on 31 August when the Senate
indefinitely postponed further consideration of the agreement.
This delay was made ostensibly to await British assurances
than London's annual payment of 1,000,000 pounds for Libyan
economic development as provided by the treaty would be re-
garded as Libya's contribution to the international Libyan
Development Agency, thus assuring Libya rather than Britain
control over the use of the money. There is a danger that,
as a result, Prime Minister Muntasser might resign and the
treaty die.
Rumors of forthcoming change in Iraqi premiership
Reports continue that Prime Minister Midfai will soon
resign, and that his most likely successor is elder statesman
Nuri Said, for many years premier and now defense minister.
Such a cabinet change would again bring into the public eye
the pro-Western rightist group which has long dominated Iraqi
political affairs. Nuri Said has played a prominent role in
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
the Midfai cabinet since it was formed last January following
an election which installed a pro-Nuri parliament. Rumors
last.spring that Midfai would yield the premiership to Nuri
or a Nuri-approved candidate increased after King Faisal II
acceded to the throne on 2 May.
Jordanian-Israeli tension in Jerusalem area
The American embassy in Amman reported on 4, 12, and 17
August that the Arab Legion expected an early attack by Israeli
military forces against Mt. Scopus in the Jerusalem region.
While American observers believed the Jordanian fears were
exaggerated, the reports considerably increased tension in
the area.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
Guatemala
Communist influence in the Guatemalan government has
continued to rise as opposition anti-Communist groups remain
ineffective. Concurrently, the pressure against the three
major private US corporations in Guatemala is being increased.
On 12 August the government initiated expropriation pro-
ceedings against about 70 percent of the United Fruit Company
Atlantic coast lands. A strike by the workers of the US-
owned International Railways of Central America is imminent.
The government representatives currently in control of the
Guatemalan Electric Company, a subsidiary of the Electric
Bond and Share Company of New York, have declared that their
review of that firm's records indicates that the wage demands
of its employees are justified.
Panama
The elaborate send-off given Panama's delegation to the
talks on Canal Zone treaty revision beginning in Washington
on 10 September illustrates the great popular attention
focused on this issue. While President Remon's 28 to 30
September visit to Washington will reinforce his domestic
prestige at least temporarily, a failure to obtain some con-
cessions from the US could seriously weaken his regime in
favor of the ultranationalist opposition.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
Cuba
Since 6 August, when a "public. order law" providing
penalties for defamation of the government went into effect
in Cuba, President Batista has instituted the most severe
repressive moves against opposition elements sincehe
came to power in March 1952. Enforcement of the law has
been directed pointedly against Communists, although per-
sons of all political affiliations have been arrested and
the Communist Party as such has still not been outlawed.
The law is-to be effective until 4 November unless Batista
13uspendS it earlier by further decree, as he has promised.
Its enforcement has undoubtedly increased popular resent-
ment against the regime. In view of their present state
of disorganization, however,, revolutionary groups mayAe
unable to exploit this resentment, at least for.some months
to come.
Chile
Chile's financial crisis has continued to worsen as un-
sold copper stocks continue to accumulate. The 21 August
announcement that Chile had resolved to amplify its political
and commercial relations with the rest of the world, that is,
the Orbit, appears to have been mainly a threat designed.to
influence the copper talks in Washington.
Bolivia
Threats to the stability of the Nationalist Revolutionary
Movement's government have steadily increased. The continued
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
low price of tin, the sale of which must pay for three
fourths of Bolivia's imports,. has accentuated the financial
crisis and even made questionable the country's ability to
go on importing sufficient food. The government's political
stability is increasingly threatened both by growing Commu-
nist influence, now concentrated on the new agrarian reform
program, and by possible landowner defections from the
party to support a rightist coup.
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
WESTERN EUROPE
The stability of the Laniel government
The Laniel government was endangered during August
when the spontaneous strikes in various government services
over prospective economy'decrees developed into a wide-
spread drive for satisfaction of labor's long-standing
grievances.
The actual decrees were less severe than labor had ex-
pected, and Laniel succeeded in gaining a back-to-work call
from the non-Communist union representatives by.promising a,
review of minimum wages. The Communist-led General Labor
Confederation unexpectedly gave in and dropped a general
strike appeal.
The government was then able to forestall a special
session of the National Assembly, where debate would have
threatened Laniel's continued tenure. A new demand for a
special session received almost no non-Communist backing.
At the end of August the government announced 10 percent
reductions in retail prices of meat and an intensified cam-
paign against tax evaders. Early in September the government
announced a four-step program calling for further food price
reductions through elimination of food taxes, additional
budgetary cuts, industrial production expansion through re-
laxation of credit controls, and a reconsideration of wage
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
scales. Working class discontent remains high, however, and
a new and more violent labor outburst is likely unless con-
crete concessions are offered by 12 October, when the National
Assembly reconvenes.
The formation of the Pella provisional government in Italy
Giuseppe Pella, a conservative Christian Democrat noted
for his controversial "defense of the lira" policy while
finance and later budget and treasury minister, was apparently
willing to make greater concessions to the now dominant left
wing of his party than was either De Gasperi or Piccioni.
Pella's cabinet excludes those rightist Christian Democrats
most obnoxious to the two most important of the other center
parties, the Liberals and Social Democrats; it includes three
prominent "left-wing" or reformist Christian Democrats in the
key Ministries of Defense, Interior and Education. Left-wing
control of the latter post is particularly significant, since
it represents a setback for Catholic Action forces whose
prominence in earlier cabinets had irritated the anti-
clericals.
Pella's program as presented to the Italian parliament
appeals to a wider range of political groups. It praised
the Atlantic Pact, demanded a conservative approach to the
budget, and a reform of the bureaucracy, but also advocated
Approved For Release 2008/05/22 : CIA-RDP80R01443R000100320010-6
 \~ ~.?~.y,..lr?` r.,,,~ _ V Figure
Approved For Release 2008/05/22 : CIA-RDP80RO1443R000100320010-6
0. 0 V cyVa Tarvisio o anjska Goya A U S T R
&
___ __, ?Radovljica
0
0 %..,, ,'- Kranj
(0
L