CRITICAL SITUATIONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91T01172R000300170003-9
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 18
• Document Creation Date: December 21, 2016
• Document Release Date: February 26, 2008
• Sequence Number: 3
• Publication Date: December 30, 1954
• Content Type: REPORT

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This report is divided into
two parts:
The first consists of items
on situations where developments
may occur in the near future.
The second part consists of
status reports on other impor-
tant situations where critical
developments are not expected
immediately.
State Dept. review completed
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C O N T E N T
USSR READY TO MOVE
ING . . . . . . . . . Page 5
Moscow is ready to move promptly to
counter the French National Assembly's vote
approving ratification of the Paris agree-
ments.
FRENCH COUNCIL EXPECTED
fiOAPPRUVE PARIS ORDS. . . . . . . . . . Page 7
Following approvallof the Paris agreements
by the National Assembly, the French Council of
the Republic will also probably vote for rati-
fication even if--as seems likely--Premier
Mendes-France's cabinet falls before the council
acts on the accords.
GERMAN RATIFICATION
R PROBABLE . . . . . . .. . Page 8
Both houses of the West German legislature
are expected to vote for ratification of the
Paris accords,
HAMMARSKJOLD DUE
PEIPING NEXT WEEK.
. . . . . . Page 9
Difficulties beset Hammarskjold's mission
to Communist China despite Peiping's deportation
of a missionary charged with having plotted to
assassinate Mao Tse-tung--a possible precedent
for release of the US airmen.
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NEW ARAB-ISRAELI .
INCIDENTS LrKga . . . . . . . . . Page 10
The Israeli government is permitting press
criticism of the United States and demands for
a tough policy against the Arabs which may lead
to serious border incidents.
STATUS REPORTS
ON QTHER--ST=. IONS
Page 11
Chinese Offshore Islands
"Liberation" of Formosa Plans
US-South Korean Aid Agreement
Possible ROK Action Against NNIT
Diem's Position Shaky
Laotian Talks with Pathet Lao
USSR-Japan Relations
Japan-C000M
Burma
Communist Gains in Indonesia
Syria
French North Africa
Greek Crisis
Chile
Finland
Egypt and the Sudan
British-Arab Oil Dispute
Anti-Soviet Emigrds
30 Dec 54 CRITICAL SITUATIONS
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USSR READY TO MOVE
GERMAN ING
Moscow is ready to move promptly to counter
the French National Assembly's vote approving rati-
fication of the Paris agreements.
Measures the USSR may now adopt include the
following:
(1) A new Orbit security conference.
(2) Establishment of a unified Orbit military
command.
(3) Measures implying a build-up of Orbit
military strength and further deployment of
Soviet units to the Satellites.
(4) Announcement of the creation of East
German national armed forces.
(5) Bellicose statements concerning the
strength and readiness of Orbit armed forces,
including greater stress on Soviet nuclear
capabilities.
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(6) Refusal to take part--at least for the
present--in further four-power talks on the grounds
that the Paris accords make such talks "void of
substance and will exclude the possibility of (Soviet
achieving agreement on the German question."
note of 9 December).
(7) Annulment of the Anglo-Soviet and French-
Soviet treaties, as threatened in recent notes.
(8) Threats to break off disarmament negoti-
ations, on the grounds that the "establishment of
militarism in West Germany... cannot be reconciled
with the plan for a general reduction in armaments."
(Soviet note of 9 December).
(9) Harassing action in Berlin.
The placing of East Berlin under East German
jurisdiction may lead to new attempts to force
the West to deal with the German Communist regime.
(10) Possible--but least likely--shows of
force by Orbit military forces, particularly in the
northern Satellites opposite West Germany.
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FRENCH COUNCIL EXPECTED
TO APPROVE PARIg-TC O DS
Following approval of the Paris agreements by
the National Assembly, the French Council of the
Republic will also probably vote for ratification
even if--as seems likely--Premier Mendes-France's
cabinet falls before the council acts on the
accords,
The American embassy in Paris believes that
the council will vote promptly--probably toward
the end of February--and favorably on the agree-
ments. The embassy reported on 28 December, more-
over, that the council will consider the accords
in a dignified manner, in order to offset the
"shameful impression" made by the National Assembly
in its debate.
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NOW" I
GERMAN RATIFICATION
OF PARIS OBABLE
r'avorable action by the French assembly will
facilitate handling of the treaties in the West
German legislature. Undoubtedly the critics will
maintain that pacts acceptable to Paris must--ipso
facto--be bad for Bonn. Nevertheless, the vast
majority of West Germans appreciate that their future
progress depends on these accords, and for that
reason are even willing to swallow the pill of the
Saar agreement.
A healthy majority for the bills on sover-
eignty, rearmament, and troop stationing should be
forthcoming when the Bundestag holds its second and
third readings of them in late January. Unless the
Germans become convinced that the Saar agreement is
provisional, however, the.Saar bill will have a
slim majority.
No difficulties are foreseen in the later
Bundesrat action.
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HAMMARSKJOLD DUE
WEEK
UN secretary general Hammarskjold plans to talk
with Eden in London and with Nehru in New Delhi on
his way to Peiping, where he is due to arrive about
4 January. Hammarskjold expects to remain in Peiping
for a week or ten days.
Meanwhile, the Chinese Communists have offered
a ray of hope in the case of the American airmen im-
prisoned as spies. On 26 December an elderly Roman
Catholic missionary, sentenced in 1951 to life im-
prisonment on charges of conspiring with an American
officer to assassinate Mao Tse-tung, was released and
expelled from Communist China.
Peiping had previously deported a number of for-
eigners after sentencing them, but none of those re-
leased had been regarded as a major political pris-
oner. It thus seems possible that this missionary
was released to establish a precedent for the even-
tual freeing of the airmen.
Chinese Communist propaganda on the airmen's
case continues to suggest, however, that Peiping's
asking price for a settlement will be high and other
difficulties may be encountered in these meetings.
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NEW ARAB-ISRAELI
INCIDENT3 LIKELY
Israel's frustration over what it regards as a
deterioration of its international position is re-
sulting in a press campaign increasingly critical
of the United States and urging a tougher approach
to the Arabs. The resultant internal build-up of
pressure is likely to cause serious border incidents,
but war between Israel and the Arab states is not
anticipated.
American officials in Tel Aviv have noted re-
cently that the local press is voicing "increasing
uneasiness and tense frustration." Both the con-
servative and radical press have issued veiled
threats of action ever since the first American mili-
tary grant aid equipment reached Iraq in mid-December.
The press has also been greatly exercised over the
Egyptian trial of alleged Israeli spies and Egypt's
refusal to let Israeli ships pass through the Suez
Canal.
This campaign has tacit government approval.
The American embassy has reported conversations with
top Israeli officials who have adopted an uncompro-
mising line on arms for Arabs and on the right of
passage through the canal.
The current Israeli campaign appears aimed
largely at alerting international opinion to force
the Arabs to negotiate settlements with Israel.
The Tel Aviv government is apparently willing to
risk border incidents and is ready to take actions
similar to the interception of the Syrian air liner
in mid-December.
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STATUS REPORTS
O. OTHER SIT TIONS
Chinese Offshore Islands: There has been no
significant Communist military activity against
Nationalist-held offshore islands in the past week.
"Liberation" of Formosa Plans: The Chinese
Communists are exploring political means of
"liberating" Formosa while continuing their prepa-
rations for an eventual military assault on the
island.
Chou En-lai recently told the Burmese premier
that a withdrawal of American forces from the For-
mosa area would offer the possibility of "peace-
fully liberating" the island. Chou referred to
the relatively bloodless transfer to the Communists
of major cities and entire provinces in 1949 and
1950, when many Nationalist and local leaders
chose to protect themselves by assisting in a
peaceful turnover.
Chou may be right in suggesting that many or
most Chinese from the mainland now on Formosa, if
they were to believe themselves abandoned by the
United States, would try to deliver the island to
the Communists.
The recent move to establish a 2400 to 0500
curfew in Taipei may reflect Chinese Nationalist
concern over possible subversive activity on
Formosa. Although the order was withdrawn after
one night, it was announced that reimposition
might be necessary.
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US-South Korean Aid Agreement: In what may
be a move to undermine another pertinent provision
of the United States-South Korean aid agreement,
the South Korean defense minister recently
announced his country's desire, in the absence of
hostilities, to withdraw its forces from operational
control of the US Eighth Army.
Possible ROK Action Against NNIT: Direct
action by the ee government against the Commu-
nist members of the Neutral Nations Inspection
Teams has been made less likely by an American
diplomatic approach warning Rhee of the conse-
quences of such action and by a UN Command decision
to discontinue use of three airfields in South
Korea, which would thus limit the movements of the
Communist inspectors. The UN decision should
placate Rhee for the time being, although public
threats will undoubtedly continue to be made
periodically.
. Diem's Position Shaky: Despite the critical
problems face y the Diem government, an atmos-
phere of inaction and stagnation is becoming
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increasingly dominant in Saigon. Diem's success in
getting rid of General Hinh has apparently con-
vinced him that most of his troubles are over. The
fact is that the revamped General Staff remains
weak and the lack of a competent full-time interior
minister--Diem himself still holds this position--
is delaying action necessary to counter Viet Minh
subversion.
At the same time, clashes between armed units
of the sects and the army have become more fre-
quent. Diem has cited the power of the sects as
justification for his opposition to General
Collins' plan for reducing the size of the army.
Laotian Talks With Pathet Lao: The Viet Minh
intends to use the discussions between the royal
government and the Communist-backed Laotian rebels
as a means of propagating anti-American sentiment.
The Laotian prime minister insists that he
has no intention of taking any rebel leaders into
his government, but shows little awareness of the
Viet Minh's potential for subversive action through
an ostensibly indigenous front group.
USSR-Japan Relations: The USSR may make a
diplomatic overture to Japan during the New Year
holidays.
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Asahi, the leading independent Japanese news-
paper,=as submitted five questions to President
Eisenhower and may well have sent some to Malenkov.
If it has done so, it has provided the Soviet
premier with an opportunity to appeal directly to
the Japanese people for a normalization of rela-
tions.
Moscow has adopted two courses of action
recently which suggest the possibility of a new
bid of this sort:
(1) The Kremlin has said repeatedly--most
recently on 23 December--that the initiative for
a resumption of relations must come from Japan,
but has argued this point in terms calculated to
make resumption appear inevitable and add to public
pressures in Japan in favor of such action.
Overtures from the Orbit to Japan have not
been specific enough thus far to cause the
Hatoyama government to consider seriously the
possibility of renewing relations in the foresee-
able future, but Tokyo would be faced with a real
dilemma if Malenkov should make a specific pro-
posal, for example, calling a peace conference
in which Communist China would participate.
Failure to accept such a proposal would risk
alienating a large bloc of public opinion and
improve Socialist chances in the March elections.
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On the other hand, Japan would be. wary of making
any move toward recognition of Red China which
would jeopardize its relations with Washington
and its trade with Formosa.
Japan-COCOM: American efforts to get COCOM
agreement for stricter controls on copper will be.
handicapped as the result of large recent ship-
ments of Japanese copper to the Orbit. In pursuing
its announced policy of expanding trade with
Communist nations, Japan has licensed 7,300 tons
of copper wire for export to the USSR, Czecho-
slovakia and Poland. Japan believes it unfair to.
expect it to ban trade which other nations have
found profitable, and against which there is no
prohibition.
Burma: The United States faces new difficul-
ties omits relations with Burma as a consequence
of Premier Nu's visit to China and a significant
increase in Peiping's prestige in Burma which has
resulted.
Nu became convinced on his trip that the
Communists want a long period of peace in which to
build a "new China," and is prepared to accept at
face value their pledge not to interfere in Burma's
internal affairs if Burma "does not turn stooge of
any power or play tricks in international politics."
Nu would probably regard the acceptance of
American arms--which the Burmese army has long
been interested in obtaining--as falling into one
or the other of these categories of policies.
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At the same time, Nu also wants to remain on
good terms with the United States and would like
to visit Washington as a follow-up to his trip to
Peiping in the hope of reducing tensions between
the United States and Communist China. According
to the British ambassador in Rangoon, however, Nu
has postponed efforts to arrange such a trip for
about two months on advice of the Burmese ambas-
sador in Washington because of the high feeling
created by Peiping's imprisonment of the American
airmen.
Communist Gains in Indonesia: Vigorous and.
skillful leadership is winning greater popular
support for the Indonesian Communist Party.
The Communists have won their greatest success
thus far in infiltrating intellectual circles.
With the possibility of nationwide elections in
view, the party is now broadening its popular base.
In this effort the Communists benefit from a gen-
eral ignorance of Communism throughout the country-
side which permits organizers to equate party
principles with those of Islam. The leadership of
the principal anti-Communist party, the Masjumi--
or Moslem Council--has been ineffective in the face
of this threat to its popular appeal.
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Peiping is devoting greater attention to
Indonesia. It has reached an agreement with
Indonesian negotiators on the citizenship status
of Chinese residents there and Chou En-lai plans
to go to Djakarta to sign it in March.
Syria: The situation continues to be "the
most worrisome" in "the confused Middle East,"
in the words of responsible British observers as
reported in this publication on 16 December.
French North Africa: The situation remains
quiet except for isolated acts of terrorism. A
breakdown of the stalled negotiations in Paris
over limited self-government for Tunisia would,
however, probably lead to a resumption of local
nationalist agitation.
The French and the Libyans have apparently
agreed to negotiate on the Fezzan but the terms
of reference are still vague.
Greek Crisis: Public demonstrations against
the -ni a ates and Britain because of the UN's
postponement of consideration of the Cyprus issue
have ceased. The riots have damaged the popu-
larity of the Papagos government and its position
will probably continue to deteriorate.
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Chile: President Ibanez has lifted the state
of siege and the Chamber of Deputies has withdrawn
its charges against Minister of Interior Olavarria.
These actions will not, however, assure smooth
executive-legislative relationships or solve
Chile's critical economic problems.
Finland: The Finnish government crisis was
resolved at least temporarily on 23 December, when
Parliament gave its approval to the economic powers
bill submitted by the government.
Note: There are no significant new develop-
ments to-report this week on the following
situations:
Egypt and the Sudan
British-Arab Oil Dispute
Anti-Soviet Emigrds
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CRITICAL SITUATIO
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]'OP SECRET
Copy No. 17
NS
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
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