DAILY DIGEST

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01146A000500090001-8
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 15, 2016
• Document Release Date: September 18, 2002
• Sequence Number: 1
• Publication Date: October 23, 1951
• Content Type: REPORT

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2:3--October 1951
CLA No. .49394
Copy No.
143
DAILY DIGEST
Office of Current Intelligence
CENTRAL INTELLIGENCE AGENCY
. This summary of significant reports has been prepared primarily
for the internal use of the Office of Current Intelligence. It does
not represent a complete coverage of all current reports in CIA
or in the Office of Current Intelligence. Comments represent the
immediate views of the Office of Current Intelligence.
DIA, DOS, OSD and USAF review(s) completed.
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SECTION 1 (SOVIET)
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USSR. Moscow comments on the assassination of Liaquat Ali Khans The
first Soviet press comment on the assassination of Pakistan's Prime
Minister, Liaquat Ali Khan, obliquely hinted at US complicity. Stress-
ing that "disputes among the imperialists are daily becoming more
acute," the article explained this comment by saying "it is sufficient
to recall that in recent years the following persons have been killed
in the Near Eastand listing them all. The Russian's clandestine
Azerbaijan radio, meanwhile., stated that "it is now abundantly clear
that the US-UK imperialists are responsible for these murders,," in-
eluding that of the Liaquat,
I
Comments Following the assassination of Iran's Prime Minister
Razmara in March, Soviet commentary issued strong and scurrilous hints
that the US was the instigator of the murder and was, moreover,, motivated
by rivalry with the UK. Propaganda will possibly develop the same line
on the Liaquat's assassination,, as part of Moscow's current effort to
highlight Western "aggression" and arouse Moslem nationalism against
it.
2. CZECHOSLOVAKIA/HUNGARY. Specialists replacing incompetent party re-
liables in industry There have been recent indications that Czech and
Hungarian officials hate recognized that uneducated Communist Party
members in managerial positioqs are partially responsible for the
present production failures. 1 -1
25X1 President Gottwald has ordered a arge-scale re
of professional personnel and specialists, including non-Party members
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heretofore frequently barred from government posts. In a speech at the
Foundry Conference in mid-October, Erno Gero, economic boss of Hungary,
emphasized the necessity for competent managers who were qualified
specialists. Managers must be industrial commanders, Gero said; they
must, (Hrect the ho instead of indulging in political agitation.
Comment. Since the Communists gained. control of the Eastern
European countries they have alternated between emphasizing political
reliability and technical proficiency in their industrial managers.
The current economic difficulties in Czechoslovakia and Hungary have
forced the Communist leaders to seek out all possible ways to improve
production.
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3, HUNGARY. Soviet economist Varga in Budapests
25X1 that Eugene Varga., the Soviet economist, is in Budapest. He
Is reported to be directing Hungarian foreign trade and perhaps other
branches of the economy.
Commen s Varga, who was born in Hungary, spent several months
there during the summer of 1950. His visit coincided with increased
Soviet demands on the Hungarian economy and the beginning of a period of
austerity for the people.
4. YUGOSLAVIA. Yugoslavia read- to sign bilateral arms agreements
Assistant Foreign Minister Mates has assured Ambassador Allen that the
Yugoslav Government now has a clear conception of the cooperative
character of US military assistance and that he is certain that the bi-
lateral arms aid agreement can be carried out in this spirit.
The Yugoslav Government therefore proposes that the, agreement be
signed as soon as possible and that the chief of the US military group,
General Harmony, and an initial staff of six or seven officers, come
to Yugoslavia at his earliest convenience to work out details. Mates
explained that the Yugoslav Government now appreciates that the US
Government needs to furnish satisfactory reports to Congress on use of
the military equipment. He added that the discussions with General
Collins had also brought out the Yugoslav reasons for avoiding any re-
currence of the interference and domination which it experienced with
the Soviet military mission.
Comments Signature of the agreement as the Yugoslavs propose
will not settle the US-Yugoslav differences over the size and functions
of the US?arms aid group. This problem will remain to be negotiated
after the agreement is signed, and the Yugoslav Government will probably
continue to insist that the group?s size and functions be limited.
5. $mplementation of the new economic program Dostponeds Yugoslav
Minister of Finance Popovic,announced yesterday that the threat of in-
flation had forced the government to delay the introduction of the new
economic policy from 1 November to 1 January 1952, and to freeze wages
at their present level.
A shortage of consumer goods and heavy defense expenditures were
given as the principal reasons for this postponement.
As a deflationary device, the Finance Minister announced the in-
troduction of increased electricity, transportation, amusements., and
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postal rates- He insisted, however, that these increases would be
compensated for through stabilized prices of foodstuffs and consumer
goods brought about by reduced purchasing power-
Prices of food products in state shops and prices of industrial
prices
products are to be lowered in proportion to the "fall in the
of farm produce on the free market. However, the regime has already
announced the ,of sugar., lard, flour and tobacco prices in
state stores.
Comme t$ The postponement of the wage increases indicates that
and
unpopular
the regime is willing institute
partially abandon its economic plan
to save its ambitious investment program.
However, by forcing down the prices of staples in the state stores..
prices
through the employment of subsidies oorareduced preserve
onhforcedti de-
liveries of grains, the regime may be able
economic position of the worker.
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SECTION 2 (EASTERN)
1. EGYPT. PPQ i le fut e Egyptian action in its dispute with Britain:
A leftist Parliamentary deputy in Cairo states that the Egyptian Ministry
of Foreign Affairs has sent a draft of a non-agression pact with the USSR
to the Council of state for final review.
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Commenta There is no confirmation that an Egyptian-Soviet non-aggression
pact is being considered. Some Egyptian and other Arab leaders have on
occasion suggested that Soviet aid might be srught if the West refused
to yield to Arai) demands.
It is more likely that Arab extremists, rather than the Egyptian Army,
25X1 will become involved in incidents in the Canal Zone.
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3.
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50
BURMA. Increased insurgent activity reported-. Increasing activity is
reported n nor eas ern Burma a aoen o C inao A customs official in
Bhamo has been attacked, and others have requested transfer on the grounds
of insecurity in the area. A sundown curfew has been imposed upon
Sagang9 across the Irrawaddy River from Mandala as a result of the
concentration of insurgents in the hinterland.
Comment-. A large-scale Communist offensive scheduled for November
to gain control of northern Burma, including Mandalay, has been pre-
dicted Communist activity in central and northern
Burma as been mounting for the past several months.
Indonesia will initiate bilateral negotiations with Japan-.
Sudjono9 chief of the Indonesian mission to Japan? told a press confer-
ence in Tokyo that an Indonesian delegation would visit Tokyo within
the coming month to negotiate bilateral treaties on re arations and
25X1 fisheries.
Comments The Indonesian Government does not plan to submit the
general Japanese Peace Treaty to Parliament for ratification until after
negotiation of the bilateral treaties It hopes that forms of the bi-
lateral treaties will satisfy the current objections of various political
groups to the general agreement.
Japan plans soon to engage in negotiations of fisheries with the
United States and Canada and will prefer to complete them before beginning
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discussions with Indonesian Indonesia therefore may have to postpone
the dispatch of its mission*
Shanghai authorities jail 374 but announce no death sentences:
The Shang.ai press reports a more Shang a ras dents gave- 'Been
sentenced to slave-labor camps as "counter- vo -utionaries" but gives
no figures for persons sentenced to death.
Comments At least 25,000 alleged `oomter-revolutionariest' are
believe o ve been arrested in Shanghai: since April0 The Communist
press has thus far admitted the execution of about 600 and the imprisons
meet of about 10000 Of those arrested, the number admittedly executed
has declined from a peak of 70 percent in June0
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9. Communists ?rder manufa burg of unif rm s The Chinese Communists
have orde-red-the manufacture by the end of November of 150,000 army
uniforms at a factor in South China,
Purchasing a ents of the factory have gone to
Hong Kong to purchase the cloth.
being bought for the armed forces.
CA=,D&$ The Chinese Communists have been buying heavily in cotton
and woo]. items, as well as shoes. It is probable that these items are
lqn Soviet air writs renortedlv move to Manehurias
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the 8th Soviet Air Division was transferred from
Khabarovsk in the Soviet Far East to the Man urian cities of Mukden and 25X1
Dairen in late September. In early October,
?
the Soviet 12th Air Division moved from Komsomolsh to Harbin an .ang
chun.- The mission of both divisions is to protect the Chinese Chan chun
RAilwav and other installations against possible US-UN bombing.
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Yuan,
Cent-. There are no Soviet air forca units known to be in
M churia outside of the Port Arthur area.
ll. asidonrfN ,t _Lea~?~ res nso: The resignation
on 19 October of Liu Chien=chun, President of the Nationalist Legislative
C y n~a Charges of corruption and the use of dictatorial methods
while in office, were brought against Liu by the Yuan in its opening
meeting in early September. Subsequently, a fifteen-man committee of
Yuan members investigated the charges, which resulted in the call for
Liu?s resignation.
Chiang Kai-shek reportedly has been quite disturbed over the Legis-
lative Yuan's unprecedented freedom of'action, which he considers an
obstacle to his personal attempts to establish certain reforms recently
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requested by the US.
12. K E . In a 16 October conver-
sation President Rhee "hinted" to Ambassador Muccio, as he had
admdonening
before, that he would not run for re-election in May 1952
that "it was time someone else shouldered the heavy Muccio burdens,"Rhee s tatedon
that he would feel no obligation to serve again,
that Rhee hoped Muccio would urge him to run. The Ambassador comments
that he has "`invariably remained noncommittal."
Muccio also states that Rhee has urged the State Council (his
cabinet) to "take action" on the constitutional4amen~Ants providing ass.
for a popular Vres1aen-c,TaL. U.LVU V~~gffi
Passage of the former would greatly enhance Rhe& ~a?didate opportunities for
Rh
?
ee
p
rp-alection or for the election of a
C n a Under the constitutions, the President is elected by the
National Assembly, and in view of the friction between the President aannd
theAssembly it is doubtful whether he would be given another term.
the other hand, it is equally doubtful whether.Assembly actiondonecontained.
atitutional amendments,, which requires a two-thirds vote,
~sImbly nr3s recall of R.OKMinister 12
130 0 h Korn National A.. ?a?mme
In the 17 October National Assembly session, it was recommended
that Sihn Sung Mo, ex Minister of War and present Ambassador to Japan,
be recalled from his diplomatic post. Although Sihn?s recall ostensibly
was requested so that he might testify in the Kochang massacre court-
martial., the chairman of the opposition political party=-the Democratic
Nationalist--stated that Sihn was "unfit" to be chief of the ROK mission
in Japan, and a member of the ROK delegation to the Korean-Japanese talks
that began on 22 October. Ambassador Sihn was criticized by the ROK
Foreign Minister during the course of the Assembly session for failing
comply with ROK Defense Ministry orders to return to Korea.
Cgmrner_s The court-martial trying military personnel charged with
the Kochang massacre has been recessed for a considerable period to await
Sihn?s testimony. Although the degree of his involvement in the case is
not believed great, he has aroused the ire of the National Assembly by
refusing to obey "requests" to return to Korea.
&,^ply.a JAPAN. Jananese Krea,~~ tats of to bad star a The US Political Adviser in `T
that the forme., Korean statement at the opening session
in Tokyo reports
of the Korea-Japan conference was so offensive to the Japanese that the
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latter are considering withdrawing from the conference. The statement
such referento the Japanese ces Japanese mightoccupation
a
contained several "ill-advised"
of Korea, the tone of which was
lengthy recess to reconsider the purpose of the conference and to s on preven t
serious attacks against the Government dTrh~nPoliticalydvisex?aurged thee
peace treaty ratification in the Diet. Japan to serious charges
Japanese not to withdraw, since to do so would open
of breach of good faith from Korea and Asiatic nations who antici-
pate bilateral negotiations in the near future. The tendency of the Korean minority inJapan to demand atus9
a privileged position, in retaliation for their previous ainfnfe for asntatue
has been a continuing source of friction
Since Japanedo s?notpintend to grant
and. the Koreans in postwar Japans
Korea the status of a victor nation in the preettnegotgations,ia~yhe
attempt of the Koreans to gain concessions beyond
peace treaty will lead to further illll between the two nations.
The current negotiations were arranged primarily for the purpose
of Koreans resident in
of settling the question of the nationality the scope df the confer-
ence but the Koreans evidently hope to enlarge scopems?
to include the settlement of other out6tanding p
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SECTION 3 (WESTERN)
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ITALY. Italian surplus in European Payments Union inhibits industrial
expo~__r__tsF- 1~ as & result
of -Italy8s "heavy" European Payments Union surplus,the Italian Government's
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present licensing policy is to restrict the export of items not in the normal
trade pattern with the country in question. RIV, the Italian manufacturer of
ball bearings, reported, for instance, that it foresaw a possibility of
25X1 further large increases nin sales to the United Kingdom and France, but that
to these countries.
Corimient: Italy finds itself in an anomalous position, complaining of
insufficient raw materials and orders to keep its large industrial establish-
ment going, while at the same time enjoying a surplus in the European
Payments Union.
ECA in Paris has requested a study of this situation to ascertain
whether the Italian Government will take advantage of its creditor position
to increase imports of raw materials and capital goods from the EPU monetary
area or will continue to maintain that it cannot expand investments and
defense programs because the "so-called raw materials shortage" would lead
to an inflationary threat,,
4. Government examines its defense potential against possible Communist
uprising: Recent threats of insurrection made in Parliament by Communist
leader Togliatti to the effect that NDAP arms in Italy may one day be used
against the US have caused the Italian Government to examine its internal
defense forces. According to competent observers, a Communist revolt could
succeed only if it were accompanied by the appearance of a hostile army at
the border, Even in such an event it is believed that government forces
25X1 could hold central and southern Italy until NATO aid arrived. These opinions
are based on the size and efficiency of the police, the loyalty of the armed
forces and the unwillingness of most Italians to support an uprising..
Comment: US observers have long agreed that a Communist-inspired revolt
could not succeed unless actively aided by outside intervention. They have
also agreed that Italian defense against an invading force would consist
mainly of delaying action. No official estimates are. available to indicate
to what extent Italy's defensive capabilities have improved during the past
year,
SPAIN. Details of European fascist meeting re orted:
I the members of the fascist European Social
Movement reel tnat e movement is making unsatisfactory progress. At the
recent meeting in Spain they explored the ground for future action but
.arrived at no decisions. Among the twenty-two delegates present were two
Spaniards, one a Falangist journalist, allegedly pro-Nazi during World War II,
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and the other an unidentified military ficer The next meeting., scheduled
for 1952, may be held in Paris.
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Comments This is the first report on the European Social Movement
since e September meeting in Spain. According to earlier reports, leaders
of the movement had hoped to secure at that meeting a pledge of Falange
cooperation from Franco. General Moscardo, hero of the Alcazar and a Falange
National Delegate, was to have addressed the meeting.
6, UNITED KINGDOM. Conservative victory foreseen in general elections The US
Em ash sy in London repor s a "opinion still strongly favors a Conservative
victory with a working majority" in the 25 October general election,
Nevertheless, the latest Gallup.poll shows that the Conservative margin
over labor has fallen from 11 percent in late September to 4,5 percent in
mid-October, with 10 percent of the people still undecided.
Observers agree that the election campaign has been relatively quiet,
and attribute this to "a serious British electorate thinking hard about the
issues,"' If the total vote is not high, the Embassy estimates that the
Conservatives will benefit.
The cost of living and foreign affairs continue to be the main campaign
issues. The adverse effect upon the Labor Party of the Iranian evacuation
appears to have been. partly offset by the goverment's firm stand on the
Egyptian problem. Neither party has made the rearmament program or TJS-UK
r- I
relations a vital campaign issue.
Comment: The figures of the generally reliable British Gallup poll
at leas slow that, with the margin between the two major parties narrowing
and with a substantial proportion of the electorate still claiming
indecision,the outcome is far from certain.
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