WEEKLY SUMMARY #1

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Document Number (FOIA) /ESDN (CREST): 
CIA-RDP78-01617A002000010001-7
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RIPPUB
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S
Document Page Count: 
23
Document Creation Date: 
December 27, 2016
Document Release Date: 
February 19, 2013
Sequence Number: 
1
Case Number: 
Publication Date: 
May 21, 1948
Content Type: 
REPORT
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PDF icon CIA-RDP78-01617A002000010001-7.pdf1.34 MB
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Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Copy No. 0 E WEEKLY SUMMARY Number 1 21 MAY 1948 Document No. AO / NO CHANGE in "E;;;77------""'"' gDECTASSIF/I'D CI4AT:D TO: TS 4 77 111:A Date: 3/ By: CENTRAL INTELLIGENCE AGENCY Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78:01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 71-0003 PRoi it b'OB # BOX # FOLDER # TOTAL # CIA LOCS, 1. This publication contains current intelligence exclusively and therefore has not been coordinated with the intelli- gence organizations of the departments of State, Army, Navy, and Air Force. - 2. This copy may be either retained, or destroyed by burning in accordance with applicable security regulations, or returned to the Central Intelligence Agency. WARNING This document contains information affecting the na- tional defense of the United States within the meaning of the Espionage Act, 50 U.S.C., 31 and 32, as amended. Its transmission or the revelation of its contents in any manner to an unauthorized person is prohibited by law. Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 fl Li fl fl 7 Li 7 LJ 711 fl La Li Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 a cL SECRET In a week :narked otherwise by only slight changes in the international situation, the most striking developments anincr to be (1) tke recent indications that the Kremlin may have decided upon a significant tactical shift in its relations with the US and the West, (2) the outbreak of large-scale violence in Palestine following the termination of the British mandate, and (3) the con- tinned increase of opposition to Chiang Kal-shek in Nationnlist China. ? The USSR appears to have decided that present circum- stances call for less aggressive tactics than those hitherto em- ployed in purimit of its objectives (see page (3). In reaction to recent Communist setbacks in Europe and the firm stand of the US, the Kremlin apparently plans for the present to weaken the US position by encouraging a friFie sense of security among western peoples and to maneuver the US into bilateral negotia- tions. There is no indication of z:ny modification in the Soviet lo -range objectives, nor does the USSR appear ready at this _ point to mike any important concessions to the West. The USSR, for example, was unwilling at the London discussions regarding an Austrian treaty to give satisfactory assurances concerning the maintenance' of Austria's 1937 frontiers or of Soviet willing- ness to accept the principle. that Austria should not be requi:ed to pay reparations. The four western powers concerned there- fore agreed on 20 May to suspend the talks. The attitude of Soviet and Satellite representatives in the field has in several instances become more cooperative. (A notable exception is the Soviet decision to deprive South Korea of power from North Korea.) 7,'he tone of Soviet propaganda has been generally less aggressive and most recently has became noticeably defen- sive. Following the termination of the UK mandate on 15 May, forces from most of the Arab states moved into Palestine. Arab forces so far have pushed into little of the territory given the Jewish state under the partition plan. Their agvessiveneas, - 1 - SECRET 11 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7 ????? 0 0 n . Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET however, indicates that they propose to occupy more than Arab areas. The UN has so far taken no decisive action to end the fighting. The possibility of a truce appears more remote in the face of US recopition of Israel (see page 8). Chiang_Kai-shek, whose National Government is confronted with intensified Communist military activities and growing economic deterioration, is himself faced with mounting ? opposition (see page 13). Chiang shows no dispositiort to cope effectively either with China's problems or his own opposition. His ultimate removal as head of the Government consequently becomes increasingly probable. The Soviet-insilgated power cut-off is expected to increase personal hardship in South Korea but at least during the summer months is not likely to cripple essential services or industries. The USSR may also decide to shut off water supplies, thereby aggravating the power shor- tage and curtailing farm output in the US Zone. , Elsewhere, French public concern that German indus- trial growth under the European recovery prOgram -may eventually lead to secret German disarmament is complicating the efforts of the Schuman Government to negotiate international agreements on the control of the Ruhr (see page 4). Concurrently, anxiety on the part of three British Commonwealth dominions concerning the future of Japanese industry may create an issue between themselves, the US, and the UK (see page 14). In Latin America, certain of the Republics are showing increased concern over Argentine rearmament (see page 16). - 2 - SECRET ? Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7 SECRET ka WESTERN EURCPE 1. UNITED XThIGDOl'il: 7ilimlementation of the Eu7sEsn recovm proam and the Brussels "western union treaty are held by the UK Foreign (Mice to be the !test traps of consolidztIng the West at present. The 17orelr_ao Mice still believes that the ussa COCIS not 21an to go to war at this time but will, go as near war as it dares. The Bi-itisa therefore feel that the western governments should continue tho.ir present policy of firmness nitot provoca- tiOn. Foreign Secretary Bevin recently expressed the view that what is required for stabilization of the international situation is closer coeperation and ccrtsolidation of the western powers. fiunria,?ditadi2n and unexpected rection of a final draft of the US-Hungary air agreement may have impressed upon western European countries the need for a unified aviation policy vis-a-vis the Satellites. In keeping with Foreign Secretary Bevin's view that closer cooperation between the western powers may forestall future Soviet aggression, the British Ministry of Civil Aviation has urged' that the US and the western Eukopeazi countries adopt a common aviation policy toward the countries In the Soviet sphere. The Air Ministry fears that without a co- ordinated policy, the Belgians or Dutch may grant entry to Satellite airlines withpvt securing fully reciprocal rights. This would weaken air control of western Europe without strengthen- ing operating rights in eastern Europe. The French are also concerned over this possibility, and the Italians have sought US guidance in their air negotiations with the eastern European states. TutieJac_c_oxesjunentrke_s_ c - have obtained overwhelming (Indorsement at the annual conference ? of the Labor Party. Among the indications of future UK intentions given by the discussion and the voting at the conference are these: (1) Party leaders will slow down the pace of industrial nationali- zations if the Labor Party is returned to power in the 1950 elec- tions, but the decision whether or not to nationaliP:e iron and steel during the present term appears not yet final; and (2) the Governments cautious and &liberate step-by-step approach to western European fedeeation will continue while it seeks at the same time to expand intra-Ce mmonwealth connections. It also became clear at the conferem.e that the influence of the Partys extreme left-wing is at an all-time low. SECRET 11 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET a a a a 2. FRANCE: The Frenchman's concern that German industrial growth under the European recovery program may eventual y lead to secret German rearmament continues to plague the Schuman Government. The hypersensitivity of the French people on this subject makes it extremely difficult for the ? Schuman Government to negotiate international agreements on future control of the Ruhr. The French, as after World War I, insist upon elimination of all possibilities for German rearmament. Although French officials recognize that the success of the European recovery program and French long- term security depend upon economic rehabilitation of west- ern Germany, they are reluctant to agree to any proposal which may be interpreted by the French public as an encourage- ment for German resurgence. This implicit contradiction be- tween political survival of Schuman's Government and the long- term welfare of the French nation has plagued Schuman's repre- sentatives during the three-power talks in London. The? fear of disastrous political reaction to any concessions on rebuilding Germany caused the demand that the proposed International Control Commission for the Ruhr be considerably strengthened. The French probably will accept a compromise arrangement undei which they will have an equal voice with the US and UK in enforcing German disarmament and suppressing banned industries in the Ruhr. 3. BELGIUM: Tjatts.9n......splidatior_242famtlen Eux_:2ffaivq..en_As plans continues with the signing of the Belgium-Dutch military pact. The pact does little more than formalize and extend the cooperation and planning of the past year, but its timing indicates a desire on the part of Belgium and the Netherlands to accelerate the implementation of western European defense arrangements. 4. GERMANY: Reduction of industrial production tar ets for. western Germany or the thir ? quarter may be cause by the failure of Ruhr coal production to keep pace with German 4 SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET incitstrial development under the European recovery prcgram. Domestic coal requirements for that period of 1948 are esti- mated at 17 million tam, with only 13.5 millions tons expected to be available. Unless this discrepancy can be corrected, coal allocation for the same period to essential inOntrfea must be reduced 'inland allocations to general in.dizotry must be reduced by 20%. 5. , SWEDEN: Norwad Denmarkpossibly could jolt Sweden, out of Us policy of complete nzatrality by deciding to abanan Scandinavian solidarity for open westward orientation. Be- cause of Swedish superiority in military and industrial cam- bilities, Sweden is in a strong position to bargain for the solidarity of a neutral Scandinavian bloc. Conversely, the weaker positions of Norway and Denmark and their enperience with the failure of a neutrality policy during World War 11 cause those countries to consider close alignment with the western European union, especially if such an alignment can be backed by US military commitments. There is little prospect that Sweden will abandon its neutrality policy until after the general election in September and then only if Norway and Denmark have "isolated" Sweden by moving "westward" themselves. - 5 SECRET Fl Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ? Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET EASTERN EUROPE I. USSR: The recent series of conciliatory gestures on the part of the USSR, culminating in Molotov 's reply to mhassador Smith and Stalin's letter to Wallace, suggest that the Kremlin has been induced by Communist setbacks in Europe and an Increasingly firm US stand to adopt a substantial shift in tac- tics. The USSR now seems to be pursuing its objectives by methods less aggressive than hitherto employed and apparen4y Is determined to maneuver the US into direct bilateral nego- tiations. This effort at present is being conducted largely through propaganda but may later involve token concessions, The fact that Stalin has lent his personal prestige to the effort Indicates the importance which the Kremlin attaches to its success. The Soviet Union apparently considers that it will profit whether such negotiations materialize or not. The Kremlin presumably reasons that such a conference, if held, could be used to obtain certain real advantages for the USSR or at least delay realization of major western objectives by serving as a medium for obstruction, confusion, and recrimination. On the other hand, the Kremlin probably assumes that US rejection of such a conference could afford the USSR a favorable opportunity to proclaim itself the true and sole advocate of peace. 2. BULGARIA: bternational inoection of the Greek-Bulgarian border along which the Bulgarians may be building fortifications, is still being blocked by the Bulgarian Government and, indirectly, by the USSR. The building of military installations would be a violation of the Bulgarian peace treaty, the enforcement of which is the joint responsibility of the US, the UK, and the Soviet Union. All US and UK attempts to inspect the border have been blocked by Soviet refusal to participate and by Bulgarian legal quibbles. The possibility that the border might be sealed by international troops seems, however, to cause the Bulgarian Foreign Ministry considerable apprehension. - 6 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 m Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET 3. YUGOSLAVIA: Th9_, first ..a?or_mtas Yugoslav Communist officials since the establishment of the Tit; regime appears to be under way. The Minister of Finance and the Min- ister of Light Industry, two long-time Communists and members of the seven-man Yugoslav Polifouro, were recently dismissed and reportedly have been placed under arrest and charged with "diversionism." In Slovenia, the Assistant Minister of Light Industry (federal) and the Secretary General of the Foreign Ministry (Slovenia) were condemned to death after being tried for espionage. The fact that top-ranking officials of the Min- istries of Industry and Foreign Affairs alone were involved suggests that one of the purposes of the current purge is to meet Kremlin criticism of the Yugoslav Government's conduct of foreign affairs and the domestic economy. Also,, Tito may have been restricted in his choice of "scapegoats by the fact that only these two members of the Politburo had no direct connection with Moscow. SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET NEAR EAST-AYRICA 1. PALESTINE: US de facto recognition of Israel has made more remote the chance of an Arab-Jewish truce. The Jews can be expected to interpret US recognition as a guarantee of Israel's independence and the diplomatic preface to US assistance in materiel and possibly in troops. The Arab governments, al- ready committed to the destruction of Zionism, may out of desperation launch full-scale attacks before the Jews can reap the benefits of outside military aid. The aggressiveness of the Arab forces committed to Invasion leads to the conclusion that they plan more than an occupation of the Arab areas of Palestine. The 10,000 Egyptian troops near the Palestine-Egyptian border (Some of which have already entered Palestine) are probably sufficient to seal off the whole of southern Palestine. Some of these troops together with the volunteer Arab Liberation Army and the Arab Legion, also are probably capable of blockading Jerusalem. The 8,000 'Iraqi, Syrian, and Lebanese troops, supported by additional volunteers, will attempt to clear Galilee of the Jews. It is too early to predict whether the Arab armies will attack the Jews in their remaining corridor along the coast between Tel Aviv and Haifa. The outcome of these various campaigns will vitally affect all the Arab states. The fortunes of the present Arab governments are intimately interwoven with the fortunes of their respective armies. The Arab armies 'are in Palestine today because there would have been serious civil disturbances In the Arab states if they had not been sent. So long as Israel exists, they presumably cannot be withdrawn; and if they are, defeated, the Arab governments will fall. The political up- heavals wl7lch would almost certainly result from Arab mili- tary defeats in Palestine would vitally affect US interests in the Near East. Whatever power relationships develop from the chaos, US political, educational, oil, and transportation interests will be seriously jeopardized. 8 SECRET 111 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 0 0 0 0 0 0 so SECRET The Britis havin5 relinquished their mandate in Palestine on 15 May, have subsequently withheld recognition of the new Jewish state. The Arab Legiot, following British ordars for its Withdrawal from Palestine, has re-entered the country and gone into action against Jewish units. The Lezion continues to operate under British officers. Except to reaffirm that the UK will not abandon its treaty obligations with the Arab states until the UN declares the Arabs aggressors, the British have given no official clarification of their ultimate Intentions. It has been suggested that the British have agreed to the occupation of the Arab areas of Palestine by Abdullah and the establishment of a Jewish state in the Jewish areas. The British therefore will probably defer recognition of the state of Israel until its permanent existence seems assured. tThe jakasp....paimat .0a ly follow the Kremlinss lead in recognizing the new Government of Israel and are likely to , extend significant aid to the Jewish forces. A large number of Balkan Jews are presently gathering at the Yugoslav port of Dubrovnik where they await water transportation to Palestine. Most of these Jews are presumed to be young men and a good percentage Communi.st-trainad. They will probably bring with them substantial quantities of guns and ammunition and likely will serve as Hagana reinforcements. A portion, at least,?of the military supplies which have been accumulated for the guerrilla offensive int Greece will probably be diverted to Palestine; major support of the Greek guerrillas may even be withdrawn temporarily to permit maximum support for the Jews. - 9 - SECRET STAT ? STAT TAT 11 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 MILITARY SITUATION - 18 MAY 1948 PALESTINE 'Border of strongly-held Jewish area --- Border of tenuously-held Jewish area Arab troop concentration Arab advance r."=, Jewish advance Partition Boundary las accepted by the United Nations General Assembly, Nov, 19471 International Boundary District Boundary ? Standard Gauge Railroad 14810 - Narrow Gauge Railroad 1350,9 First Class Road - Second Class Road Oil Pipe Line - Intermittent Stream Jewish Communal Area En Nagura Res en Napurs zrniyas ,SYRIAN FORcES ? 1 ?-? Rama ?Binva GAL IL 20 30 Mites 10 20 30 Kilometers HAIFA Nehe ? it 'Z'; djsh HA lttuialE w is, so. Hustin Natanya Nur as '"\Shams TEL AVIV JAFFA AAA( Rah's. ' P4asmiya4 /---../ \ .-- , ) f ?A---' Solomon's / .-......, f ER u ..--.' Beit Jib n._- Mar Etzion --- `, ...)''' '-'"--.., --''' / l \ ' Njes6ne Pots ARAB ? 80.E ?N FO ?. \ A ZN. Souren. 1:S00.000. Geo. Philip end Sen. 1942 Moo Msg., 1:500,000. 1939 1:250.000. M.O.R. 1509/12375, 1946 Beersh ? -e 34.3V EGYPt IAN FORCES JEWISH 10981 Map Branch, CIA,4 -48 356 3530 U. S. GPO-S STAT STAT Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET Meanwhile the forces of the Arab states lost little time alter 15 May in moving into Palestine. Egyptian troops are advancing northward from Gaza and Beersheba after crossing a section of south Palestine allocated to the Jews. The Transjor- dan Arab Legion has advanced into the Arab areas of central Palestine, while Iraqi forces have gained a foothold in the Jewish Lake Tiberias sector. Syrian troops are also reported to have crossed the Palestine border. The Jews have meanwhile captured Acre and moved north along the coast to the Lebanese border. Thus far the outstanding Arab-Jewish clashes have been over the city of Jerusalem. The Transjordan Arab Legion has already captured sizeable sectors of the city from Hagana forces, and the Jews have been unable to reopen their supply road from Tel Aviv. The invasion of the newwo the Eyfl forces and Israel s subsequent appeal to the Security Council furnish the UN with an opportunity to advance new legal conten- tions as a basis for action to end the fighting in Palestine. The UN, however, appears frustrated by what it regards as US policy shifts and bewildered regarding US motives; US prestige in the UN has suffered accordingly. It appears unlikely, therefore, that the UN will take any immediate decisive action. The cease-fire proposal introduced by the US on 18 May is at present receiving active support only from the Soviet and Ukrainian representatives. and lacks sufficient support to be passed. The Security Council, however, has accepted the US proposal to send questionnaires to the provisional Jewish government, the Arab Higher Committee, and the heads of governments in the Arab League. The resolution stipulates that replies shall be received by noon of 21 May. 2. GREECE: Thp_unautaled reaction of the guerriliq to the current Greek Army offensive leaves guerrilla intentions for. the near future obscure. Although the guerrillas have continued to make scattered foraging and terrorist attacks throughout Greece, they have failed to strike in such a way as to keep the Greek Arnay from effectively concentrating. Instead, the guer- rillas have generally withdrawn north and west toward the Gran-Amos area (where strong defensive positions are apparently in preparation). These tactics can scarcely be the result of the - 10 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET recently reported disagreement among Communist leaders inas- much as there has been insufficient time for the dissension to make itself felt on the operational level. Moreover, the guer- rillas have plenty of arms and ammunition. The most likely ? explanation is that for the first time Markos is faced with a manpower shortage and thus has found it advisable to withdraw to more advantageous territory near the northern borders.. 3. INDIA: Increasing tension betweenIndia anciladerabad sumests the possibility that India may have decided to let the Kashmir ? question slide while it forces Hyderabad into the Union of India,. . Hyderabad's refusal to accede to India is backed by atandstilI" agreement signed by the two governments, but India is now re- ported to have issued an ultimatum to the Nizam of Hyderabad implying that Indian troops will occupy his territory if he does not check border raids by 24 May. (These raids, for the most part; have been made in retaliation for similar raids instigated by India's ruling Congress Party.) The Indian Army is believed capable of occupying Hyderabad Without effective opposition. The great danger is that the ensuing communal rioting might spread, starting a disastrous cycle of retaliation throughout the subcontinent. A seconda:ry danger is that forcible overthrow of the Nizam's government might enable the Communists (who are strong in southern India) to gain control of the state. TkeAaAt_mit,.,cjl?p2tpn.2.LsmL_Ise, with the Security Council proposals still rejected by both sides. Despite bellicose activities on the part of both dominions, neither govern- ment is believed to want war, and a compromise may yet be possible. The US is _urging that the Security Councils Kashmir Commission proceed to In.dia without delay. 4. IRAN: Tjie_mtk.tl situior in ir is confused as the struggle for power between the Shah and former Prime Minister Qavam continues. Although Qavam is reportedly planning an extended -rest on his country estate and therefore may not immediately SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 1 I Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET make a definitive bid for power, his political strength seems to be increasing. While he is aligning support in the Majlis, the Shah is attempting to increase his own control over the govern- ment. Although Qavam reportedly declared in a recent talk with the Shah that, if he were returned to office, he would implement any legislative program which the Shah might draw up, lasting cooperation between the two men can hardly be expected because of strong personal and political differences. Despite the Shales opposition, however, Qavam would probably be swept into office if a crisis should develop in Iran's domestic or foreign affairs. 5. SOUTH AFRICA: aimjjail WarAgautE is virtually certain to win the South African general elections on 26 May. The size of his majority will have importance in the future, however, because it will determine the degree to which the completely isolationist opposition will be able to alter the present pro- Commonwealth policy of Smuts following the 78-year-old leader's retirement. -12 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19 : CIA-RDP78-01617A002000010001-7 SECRET 1 FAR EAST I. CHINA: Internalssmatti2a19C ek is clearlysm-Au In strength. Demands for new leadership in Nationalist China are increasing. This trend is now accelerated both by Chiang 's failure to deal effectively with the continuing military, economic; and pol- itical crisis and by his do-nothing attitude on internal reform. The Generalissimo seems-to lack both the ability and the will to take any steps which will relieve Chinas problems or stop the tide of popular opposition. There is little prospect that he will - give his Government a more liberal conipleaion. Instead, he is ? trying to blanket the opposition by retaining in top positions poli- tical figures he has relied on in the past; despite their ineffectve recOrds. Meanwhile; General Li Tsung-jen, the new vice presi- ? dent, is drawing up his own reform program to present to Chiang. If Chiang turns it down, Li reportedly intends to push Chiang aside and take over the actual leadership of the Government. Another opposition group, Marshal Li Chi-shen's Rev- olutionary Committee in Hong Kong, is admittedly plotting to overthrow Chiang and negotiate a peace with the Communists. This group reasons that stability can be achieved and Commu- nism checked only under conditions of peace and that any National Government which ends civil strife can be assured of wide popular support. If, as seems possible, these two groups combine forces, they may be able to force Chiang out. Chiang's departure would clear the way for the formation of a new National Government .under progressive leadership, bit it is doubtful whether such a government could muster sufficient strength to check-the ad- vance of Communism in China. The immediate effect of such a change in the National Government would be to accelerate present disintegration and thus favor the Communists, 2., KOREA: The Soviet action in shutting off North Korean power to South Korea will not immediately produce chaotic economirFon- ditions in the US Zone, but it has already made living conditions more difficult for South Koreans. ,Unless there is a summer drought, essential services and industrial production prObably SECRET 1 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 a Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ?1 SECRET can be maintained through August by severe rationing, careful use of existing coal stocks, and certain imports of coal. Present estimates are that such a program will produce 60% of South Korea's. power needs in June and 80-90% in July and August. These figures are based, however, on the assumption that the largest power-producing plant in South Korea, a hydroelectric plant, will still get its water from North Korea. It remains to be seen whether the USSR will cut off the water as well. The USSR obviously will follow the course which it considerE most likely to force a US withdrawal and facilitate assimilation of South Korea. The USSR might even decide to restore the power, and as a propaganda gambit have the North Koreans tell the South Koreans that the cut-off was directed only against the US occupation authorities and thus aimed to better, not worsen, the plight of their fellow countrymen. 3. PHILIPPINES: The Quirino Government is reversing the policy of pacification by force which the Roxa,s regime adopted in its attempts to solve the trying problem of restoring law and order in the Philippines. In a dramatic effort to gain pres- tige and power, the new regime is attempting to win over the two major dissident groups (the Hukbalahap and the National Peasants' Union) which have been engaged in widespread vio- lence. Roxas finally outlawed both groups. Quirino, however, Is attempting to negotiate the surrender of Hukbalahap leaders and their followers and has reportedly prepared. a, amnesty proclamation acceptable to the Congress. Difficulties may still arise over the surrender or the amnesty proclama- tion. A surrender which sharply reduces the firearms in dissident bands and a reasonable amnesty obviously would contribute greatly to domestic stability. 4. JAPAN: Anxiety_oyez_Lks_fult 2fa...1.:riese industry on the part of Australia, Canada, and New Zealand may create an issue between the US, the UK, and the dominions. The - 14 - SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 a Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET AustralIan and Canadian Governments have expressed the "ear that Japanese industry may be permitted to recover to a degree that will make it potentially able to support aggression. The UK has already begun talks with Australia on the question and would undoubteray try to mediate ths conaicting views which would result from the adoption of a "strong Japan" policy by the US and demands from the dominions for a re- stricted Japanese industry. SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 M - Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ?1 1 SECRET ViS`ArERN ELPVIMPIIERI3 1. ARC-171-721NA: Certain Latin American countries especially Iia expreseed alarm concerning the possibilitythat a US-1,krgentine agreement might tiisturb the triance of power in Eolith America. A IlrarAlian military leader has warned the US that Argent:Lin is lrying to separate the interests of North and South America, and Uruguay has constantly eagwessed its apprehension concerning the Argentine policy of political 'expansionism through economic penetration. Uruguay has re- esaixIdly requested US political and economic support in order to keep from "following Paraguay and Bolivia into the Argentine orbit," although the present Paraguayan Government (which has also sought closer economic and military ties with the US) sup- ports its request for aid by expressing fear of Argentine inten- tions. Chile, whose economy-would be endangered by large armament expenditures, has requested assurance that the US contemplates no special arrangement for supplying Argentina with military equipment and arms production facilities. 2. COLOMBIA: The state of siege declared in Colombia following the Bogota riots al April has comp??theColomian Gov- ernment to reorganize the disloyal and inefficient national police force. Although the army and navy have assumed police duties, the governmental role of compulsory arbitration is proving difficult and the ccatinuation of abnormal controls on civil liberties in Colombia may result in widespread discontent. In an effort to stem mounting labor agitation, the Government has ordered a wage freeze .zniqi has imposed restrictions on labor meetings and on the requirements for and participation in labor meeting panels. Meairshile, the Ministry of Labor is attempting to halt the strikes already in progress and has outlawed further strikes during the state of siege. 3. NICARAGUA: .Asliz?o, may now ow butokting, a land,?sea, and air operation (similar to last summer's ill-fated Dominican invasion atterrIpt) against the existing regime in - 16-- SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 n Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 fl Li fl LJ Li fl Li Li Li Li L-0 Li Li Li fl Li fl Li Li fl SECRET Li SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 SECRET influence is weak. rite Government laas also attenvtec2, nu- staecoosfully, to ft General Lara Alba, Chic.4 o staff, to the poet of rnilitaw attache in Santiago, Chile; and -has more. recently suggezted hici retirement in, an effort to remove a presence which the authoritiez ecaskier 4elight prove disrup- tive within the army, theyeby playing into t1'7.9 110.1ktb o2 sub- versive slements and contributing to the further instability of the GM-ET:Meat. - 0 SECRET Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Fl Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ,51tUltitttl -0 D'3RI2UTION i Ti1,2 President ? 2 Secret.ry of State ce Stan to Commander tn ChM C:Jerettry ol Dz.,fmne 3 j'etrotary of the Army G Eearotnry a tke Vavy 7 Sccs'ory of the Air Force 3 L'Intirrr,m, National Security Ileccarees Beard 0.171z.ser,ave Seeretary, National Security Ccruncil ticatet.lot Secretary of Miry for Air nliscillsi cf Staff, U.S.Army rAt 0CY:2 cr. Na.rAl Oporationz , I,70,10Chlof of Staff, U.S. Air Force , 20 Director of Plans and Operations, General Staff, U.S.Army 21 Deputy Chief of Staff (Operations) U.S.Air Force 22 Deraty Chief of Naval Operations (Operations) 23 Director of Pbns and Operations, U.S.Air Force 24,26,263pecial Assistant to Secretary of Statelliesearch E., Intelligence 27,28,29Director of Intelligence, General Staff, U.S.Army 30,31,32Chief of Naval Intelligence , 33,3,C,S6Director of Intelligence, U.S.Air Force 36,27 Director of Security and Intelligence,Atornic Energy Comm. Sa Ezecutive Secretary, Military Liaison Committee, , Atomic Energy Commission 39,1.0,41). 42.63 .5Chief, Acquisition & Distribution Division, OICD,Dept.State 4.a4 Director, Federal Bureau of Investigation 45,41t.3,47Socretary, Joint Chiefs of Staff 48,49 'ExecutivelSecretariat, Office of the Secretary of State 50 Ilzputy Director, Joint Intelligence Group, Joint Staff 51, 3ecre1at7, joint Intelligence Group, Joint Staff 53 U.S. Air Force Representative on Joint Strategic Survey Committe 64,65 Secretary, State-Army-Navy-Air Coordinating Committee CR ? Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 PH I I , I , II U. S. GOVERNMENT PRINTING OFFICE GAO Declassified in Part - Sanitized Copy Approved for Release 2013/02/19: CIA-RDP78-01617A002000010001-7 ;