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SECURITY INFORMATION
US OFFICIALS ONLY
26 March 1952
OCI No. 5145
Copy No.
CURRENT INTELLIGENCE 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.
SECRET
SECURITY INFORMATIOT
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THIS MATERIAL CONTAINS INFORMATION AFFECTING THE NATIONAL
DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE
ESPIONAGE LAWS, TITLE 18, USC, S=L 793 AND 794, THE
TRANSMISSION OR REVELATION OF WHICH IN ANY MANNER TO AN
UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
SOVIET UNION
1. Soviet positior on German elections and frontiers reaffirmed:
Upon rec:eini-OT the Wes ern answer to the oviet proposa or
a German peace treaty, Soviet Foreign Minister Vishinsky re-
affirmed Soviet opposition to a UN-sponsored investigation of
electoral conditions in East Germany.
The Soviet Foreign Minister reiterated to the American
Charge that the USSR considered membership in the North
Atlantic Organization incompatible with the principles of the
UN, but maintained that it was not unnatural for a sovereign
state to have its own defense-forces.
With regard to the question of German frontiers, Vish-
insky said teat contrary to the interpretation contained in
the United States' note, the Potsdam Conference had finally
defined the Polish and German frontiers. (S Moscow 1529,
25 Mar 5,2)
2. Soviet Ambassador to East Germany outlines Soviet policy:
ccor ng o an unconfirmed report, in early March, Soviet
Ambassador Pushkin informed three leading East German Com-
munists that the Soviet Union was going to make a new bid
for peace with Germany and that it wanted to create a pol-
itically independent, unified Germany Which would be econ-
omically dependent upon the Soviet Union. Finland was cited
as an example of what was intended.
Commenting on the internal German situation, Pushkin
demanded that the East German leaders regain the confidence
of the people, take advantage of the pro-Soviet feelings of
the West Germans, and win the support of the Social Demo-
crats. (R FBIS Cologne-Bruehi, 24 Mar 52)
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Comment: Reports suggesting Soviet willingness to make
concessions are not unusual when a German peace treaty proposal
is being discussed.
A recent unconfirmed report stated that in January Soviet
Political Adviser Semenov told East German Communists that the
Soviet Union was preparing a new plan for Germany, and as-
sured the Communists that their position would not be
jeopardized in the long run.
3. Indivisible fund allocations increased on Soviet collective
arms Col ec i.ve farms will hence fort i `-,fie v-bliga cato ap-
propriate a sum ranging from a 15 percent minimum to a 20
percent maximum of their total monetary income for allocation
to the collective farm indivisible fund. The US Embassy in
Moscow speculates that the increases may help solve old prob-
lems involving inadequate livestock shelters and equipment,
and new problems arising from the concentration of economic
centers on the consolidated farms. Additional capital financing
to facilitate farm diversification will also become available.
(S Moscow Weeka 12, 21 Mar 52)
Comment: The indivisible or capital fund of a collective
farm is iced to finance capital reconstruction and repair.
In the future the farms will have to rely to a greater extent
than in the past on savings for capital expenditures. In turn,
this measure will limit the purchasing power of the peasants
for consumer goods.
4. Probable new division located in southwestern Bulgaria:
has iocated a new Bulgarian aivision in Canaan
Pew -Nevokrop area of southwestern Bulgaria.
this division appears to be part of the Bulgarian
First Army, ree divisions of which Yugoslav intelligence has
reviousl identified in western Bulgaria.
25X1A
Comment: This report tends to support indications de-
rivedTrom'various field reports that a new Bulgarian division
has been organized opposite the Greek border in the strategic
Struma Valley. Interrogations of Bulgarian defectors and ref-
ugees have suggested the presence of new elements in this area
replacing units of the Bulgarian 7th Division, which is be-
lieved to have moved last year up the Struma Valley to the
Stanke Dimitrov if not farther north.
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5. Finnish Premier faces dissidence in his party: In a move.gen-
era y -cons ea` Fe-Z - o`Tiaveseen motivate .. ,_ a desire to bring
his Agrarian Party into line over the question of economic
stabilization, Finnish Prime Minister Kekkonen offered his
resignation to President Paasikivi on 21 March. The President
requested Kekkonen to stay on in office through 2 April when
the Agrarian Party has been scheduled to meet in order to
clarify its stand on the economic stabilization issue.
The US Legation in Helsinki believes that the Premier
will succeed in regaining control of his party. (R Helsinki
383, 22 Mar 52)
Comment: Prime Minister Kekkonen has experienced con-
sidera6Te Tfficulty in recent months in obtaining strong
support from his party for government policies concerning
the economic stabilization program. The immediate issue
over which he offered his resignation concerned the fixing
of a lower price.for butter.
6. Dismissed Rumanian Finance Minister reported still in evidence:
`fie me r ci an Le ae ion- in Bucharest hi Been in 'orme3--- Fy-TTie
that former Rumanian Finance Minister
si a Luca 's limousine moves to and from his home as usual.
The Legation concludes that Luca apparently is not under ar-
rest, although rumors of unpublicized purges still persist.
(C Bucharest 373, 21 Mar 52)
Comment: Luca's standing as Vice Premier and Party Sec-
retary'& es not seem to have been affected by his dismissal
as Minister of Finance. The shake-up in the Ministry appears
to have been occasioned primarily by unsatisfactory handling
of the currency reform and financial policy.
7. Tito's party revitalization campaign analyzed by American
rmfiassy ofT ciaTs __ th respect fo tEi Curren at emp' t to
revitalize t e C5mmunist Party of Yugoslavia, American Embassy
officials believe that although Tito has denied the intention
of instituting a "Moscow-type purge," there is no doubt that a
selective purge of party members is underway. The Marshal's
reference to "no regret" at the possible loss of 100,000 party
members must be causing extensive Communist soul-searching,
according to these observers.
In noting Tito's identification of Western petty-bour-
geoise ideas as the principal disruptive influence on the party,
Embassy officials suggest that Yugoslav leaders apparently be-
lieve it possible to attack and limit Western influence without
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jeopardizing;, the continuance of Western aid. These observers
conclude that while the revitalization campaign may produce a
hardened party corps, it will probably be unsettling to the
populace ana to the party itself. However, they saw no indica-
tions that the party's control has been threatened. (S Belgrade
1148, 20 Mar 52 )
that tfe-_1 -"al e o many party members has been un-
dermined by a combination of Cominform propaganda and closer
ties with the West. Yet under present circumstances the Yugo-
slav leaders are limited in the means available for combatting
party laxi tg; and foreign influences.
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FAR EAST
25X1 C
read epidemics in China reported: Serious epidemics
s
'id
te C
p
e
in Mane urea anc ina Proper are repor smallpox and y
25X1C In Manchuria, 25X1C
the Korean
are occurring the a en area and plague near
border. Railroad traffic from Mukden has been restricted.
At Tientsin in North China, anti-epidemic units in early
March were conducting inspections of health condtions inpox,
opulace against typhoid,
the
p
homes and inoculating
25X1A and diphtheria. Vegetables and fruits from Manchuria are no
th China
longer being shipped to Nor
An epidemic of bubonic plague in Canton is said to have
caused 876 deaths between ld January and 15 March.
Comment: Peiping's BW propaganda charges have given rise
to numerous reports of epidemics throughout China. There is
no firm evidence as yet, however, that epidemics this year
have reached proportions that could be considered unusual for
China, although the Communist authorities are stressing pre-
blic health measures. The
entive inoculation and other pu
has reported that
for example
,
ulating residents against bubonic
local au on i
plague in mid-March, and that particular attention was being
given to travelers from Manchuria.
9. French High Commissioner disturbed over situation in
Camp bo a: ct ng Hig omm ss oner au er as to American
Minister Heath that he is extremely disturbed over what he
considers a deteriorating political and security situation in
Cambodia. The French official cited the anti-French attitude
of the Democratic Party cabinet, the King's "timidity,"
the recent defection to the rebels of two widely popular and
politically influential Cambodian leaders.
Heath considers the situation "disquieting but not imme-
diately dangerous" and attributes most of the French troubles
in Cambodia to lack of a friendly approach and the persistence
of "a martinet old-line colonial" attitude on the part of
French officialdom. (S Saigon 1855, 24 Mar 52)
Comment: Opposition to French hegemony among Cambodian
leaders, eretofore relatively quiescent, has become increasingly
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active as the authority and competence of the Cambodian 25X1C
Government has been strengthened.
10.
Viet Mi strata outlined: Viet Minh strategy,
calls for attacks in over-
t
25X1C
nch posts in order. to exhaus
w e ers on
effect desertion
t
nd
25X1
C
French reserves, to capturrearms,a
o
e few ns in
t
of Vietnamese troops. Thee
which are not vulnerable to such attacks, tbe sandethe Vietltiih
is confident that this strategy c fearing this
opposed to the intervention of Chinese troop,
this would mean loss of control to. the Chinese Communists.
The Viet Minh is making a strong bid to gain the good will
the "Bao Dai zone" by a policy of
l
of the population in
l bthe ehaviar
clemency toward prisoners andccontrastetavthe btoward
population. This is in marked 25X1A
of French Union troops.
Comment: The Preponderance of evidence supports this
te
t
-
25X1C
gy.
ra
Viet Minh s
analysis
11
Change of Premiers in Thailand predicted: Premier Phibun,
25X1A 7-srrequeted Genera
25X1A
.
,_-.+ to nominate Police D rector eneral+phaonto,be isPremier
be
for two months. During this pe --
taken, after which Phi bun will return to office
Comment: The Thai King on 24 March appointed Phibun to
g
succee amself as Premier.. Although pollitical-maneuvering
will undoubtedly contihaf1Ah~bun would ease the
indicated that a reappointment the immediate future.
recently developed tensions during
k
another is expected to tau p presumably also
Government, 'Karen, and Communist agreement, _-
s
t
l
Burmese Government to consider a prop Nat
i
north joining frc. to hineseof thisameeting are unkna'29x1A
easstern Burma. While the
lace soon to obtain a joint
12. Burmese Communists propose faint action ?mamint Chinese 4, +1
Natiana is s:epresen atives o
ical of the
have met with an oftheiparty for
are r y reported to by
.sal
.
is
directed at the tationa
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Comment: Another source recently reported a Communist
decision to propose such joint action to Premier Nu, but indi-
cated that Nu would reject it and continue his insistence upon
a complete Communist surrender.
On the other hand, the inclusion of a number of extreme
leftists in the reorganized Burme cabinet indicates that such
approaches would at least be carefully 13. Burmese delegate comments on Moscow Economic Conference:
U Kya ?tin, principa owner o ur ma s ea ung
newspaper and a violent anti-Communist, has accepted an invi-
tation to the Moscow Eigurmaf '/orkersra,nd1~ea sathr nts~I~arty.
leader of the pro-Communist o Hong Kong
Kyaw Min has stated that he is to pay his own all way to
subsequent
but that he believes that the USSR will pay
expenses.
In his newspaper column, Kyaw Min wrote that the Russians
were being given a "great opportunity" to explain their way
successf
of fe to him, they even Russia
he e would "tetrab
and seriously take Communism to heart." (C Rangoon 923, 24
Mar 52 )
Comment: The BWPP has close connections with the Soviet
Embassyn Rangoon.
Kyaw Min is a member Parliament an oS"Thenf inhtheost
influential conservatives in
United. States last year he caused
diconsiderabletatncennsinsome
Rangoon because of his strong
of which were slyly directed at the Burmese Government.
NEAR EAST - AFRICA
14. Greek. Deputy may attend Moscow Economic Conference: The
ermit a -ar iamentary Deputy to
Greek Government inten s to p
attend the Moscow Economic Conference if the United~esoloes
not object. The Greek Undersecretary of ForeignsAf ffairs t
of
the American Ambassador that.the Deputy,Parlia representative
o would
the Greek Rally, the opposition Party ,r ~,
to Moscow in a private capacity to facilitatecGree
bed thviDeputy
tobacco negotiations. The Undersecree~~nt confirmed by the
ad "definitely non,-Communist, a judg
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Embassy, and declared that he would not propagandize upon his
return to Greece. (C Athens 4129, 15 Mar.52)
Comment: There has been an increasing interest in Greece
recently concerning trade with the USSR. This is the first
report, however, of any Greek delegate attending the conference
from Greece, although the Greek guerrilla government may be
expected to be represented. The Free Greek Radio has announced
that a "Cypriot economist" plans to attend..
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WESTERN EUROPE
15. Schuman Plan may become operative in two months: Although
the Sc uman an has surmounts its biggest urdle, ratifi-
cation by West Germany,much remains to be done before the Plan
can get under way. Only one other nation, the Netherlands,
has completed ratification of the Plan thus far; the other sign-
atory members have either only partly approved or not yet con-
sidered it. None, however, has rejected it.
In France, the Plan has already been approved by the Na-
tional Assembly, which will consider it again after the Council
of the Republic has acted on, it. Both the Belgian and the
Italian Senates have sanctioned the Plan, but the lower houses
of these countries have not deliberated on the matter. Luxem-
bourg has'taken no action; it is presumably awaiting complete
Belgian ratification.
Mutual Security officials in Paris believe that the last
member will have approved the Plan sometime in may, and the
project for pooling Europe's coal and steel can then begin
to function. As the various organs become operative, the Ruhr
Authority will be dissolved.
A British proposal that the Schuman Plan be tied to the
Council of Europe by having its top policy body a subcommittee
of the Council is currently receiving wide consideration in
Europe. (Factual data from: S London 4124, 19 Mar 52; R Paris
MSA Repto 27, 7 Mar 52)
16. Right-wing factions encourage political opportunism in
Austria: Since1iis expu Sion from the sop e's Party last
year, rnst von Strachwitz, leader of a once noisy party
fraction, has joined the increasing number of malcontents
seeking control over political dissidents of rightist in-
clinations. While this is a highly competitive field, Strach-
witz profits from the sympathy of some People's Party mem-
bers and allegedly still considers himself close to Foreign
Minister Gruber. As a co-leader of the Action for Political
Renewal, he continues his efforts to raid the local organi-
zation of the Union of Independents. He receives support from
a number ofindustrialists in Austria and reputedly hopes
for contacts with similar elements in West Germany.
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25X1A
Despite the conservative and even monarchist aspects of
his organization, Strachwitz himself allegedly professes
great admiration for the Russians. Recent friendly over-
tures from Communist spokesmen have been interpreted by him
as portending an "approach" from this quarter.
Strachwitz's activities suggest the ferment among
Austria's political factions, their doctrinal opportunism,
and the poverty of their leadership. In the absence of
some unifying formula, these groups pose only a potential
threat to US interests; but meanwhile they continue to pro-
vide political finagling and instability on the ri ht. (Fac-
C Vienna Desp. 1158, 30 Jan 52;
17. Belgium may lead opposition to European agricultural
pool. T e Net er ands has formally requested Be gium's
support for the European agricultural pool in the hope of at
least forestalling that country from heading the opposition
at the "green pool" conference which opened in Paris on 25
March. The Dutch expect France and Italy to give the plan
strong support, West Germany to "straddle the fence," and
Belgium to be covertly opposed at the least. The current
talks are expected to clarify country positions and prepare
the groundwork for a later conference to negotiate the terms
of the agreement. (C The Hague 998, 24 Mar 52) 1
Comment. Both Belgium and Denmark have indicated their
opposTrion to the agricultural pool, Denmark expressing
fear of the Netherlands as a low-cost competitor. The pre-
sent British government, contrary to the position of its
predecessor, is anxious to be "closely associated" with
the pool, but definitely will not join at the beginning.
18. New wave of Communist-promoted strikes damaging Italian
economy.-- new wave of strikes throughout taly promoted by
the Communist-dominated General Confederation of Labor is
having serious economic repercussions.. American Embassy
officials in Rome believe that the non-Communist labor unions
are having difficulty restraining their members from supporting
these work stoppages.
Most of the current trouble is in the mechanical, metal-
lurgical, mining, chemical, and ceramics industries. The
strikes seem to be following a careful pattern, taking place
in different industries on different days. (S USARMA Rome
Joint Weeka 12, 21 Mar 52)
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Comment: Labor unrest in Italy, besides slowing down
the de ease production program, is also likely to jeopardize
the chances of the present government parties in the. coming
spring elections in the south.
The Communist-promoted "chain-reaction" pattern of
strikes began over a month ago after the Fiat factory in
Turin fired a number of employees for engaging a.n poli-
ical activity while at work. The rising dissatisfaction
among factory workers over th,:discrepancy between wages and
prices has made it easy for,Communist agitators to in-
duce many non-Communists to join in the strikes.
19. Italy's EPU surplus with France the result of non-
trade factors: During t e past eig t months-Italy's sur
p us with the French in the European Payments Union on trade
account has been much less than its surplus on payments
account. This latter includes such non-trade items as
payments for "invisible transaction." On 1 January, after
the first eighteen months of EPU's operations, Italy's trade
surplus with the French area was 34 million dollars whereas
its payments surplus was 113 million dollars. The greater
proportion of this payments surplus was accumulated in the
second half of 1951. (S Paris MSA 1340, 21.Mar 52)
Comment: This information tends to confirm other re-
ports t at t ere has been a substantial flight of French
and British capital to Italy via the European Payments
Union. Italy defends its requests for more American econ-
omic aid on the grounds that much of its current EPU sur-
plus is of little practical benefit to its economy.
20, Italian Christian Democratic labor organization hostile
to Socxa s a or group: orts o talian meta workers
affiliated wi t e Ito ian Union of Labor (UIL) to join the
International Metal Workers Federation have been blocked by
the rival non-Communist Italian Confederation of Labor (CISL),
which bases its action on allegations that UIL is extremely
small and has left-wing connections "which are not clear."
The American Embassy in Rome comments that Konrad Ilg,
President of the. International Secretariat, and Victor Reuther,
CIO European representative, went to Turin to try to establish
a working agreement between UIL and CISL, but were unable to
do so, (S USARMA Rome Joint Weeka 12, 21 Mar 52)
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Comment: Many American officials and labor represent-
atives have---hoped that in the interests of anti-Communist
solidarity, the CISL and UIL might work out a program of
friendly collaboration. Such an understanding appears dis-
tant; despite the fact that both CISL and UIL are members
of the International Confederation of Free Trade Unions.
CISL, which has been aided by many American labor groups,
is largely dominated by the Christian Democrats and conse-
quently has been accused of being too close to the Italian
Government and to the Vatican. During the past year CISL's
membership has remained stationary, whereas that of the anti-
clerical and socialist-oriented UIL has increased. consider-
ably, largely at the expense of the Communist General Con-
federation of Labor (CGIL).
22. British Army increase in prospect for October: Three
new infantry br ga a headquarters are to be orme in mid-
July to command the seven new infantry battalions ordered
by Churchill last January (see OCI Daily Digest, 9 Jan 52)
plus two older infantry battalions. The brigades are to be
in operational status by October, but further build-up to
divisional strength is not contemplated this year. (S London
Joint Weeka 12, 21 Mar 52)
Comment: These brigades will form the basis for a
strategic reserve and will permit rotation of infantry units
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between home and overseas stations. Although increasing the
strength, the
strai tactical
strain n
LATIN AMERICA
23. Secretary-general of Inter-American Organization of
Labor ti, en ers resignation. rant sco gu rte, secretary-
genera o t e nter- met can Organization of Labor (ORIT),
has offered his resignation to the executive board in a
letter whose contents reflect the dissatisfaction.of Latin
American affiliates with the financial support they are re-
ceiving from unions in the United States. Angel Bravo, ORIT the office mandgCIO toldonatetfundshisraalackf of confidenceeinf
the AFL and C
Aguirre.
The American Embassy in Havana believes that Aguirre
is sincere and considers that unless care is observedy -the
US unions in handling the matter, ORIT may break up, ful-
filling the fondest wishes of both the Peronistas and Com-
munists. It also feels that if his resignation is accepted,
it should be done in such a way as to hold his friendship.
The Embassy observes that finding a successor on whom AFL
and CIO leaders can. depend and.who will be acceptable to
Latin American labor leaders will be a "thorny problem."
(C Havana Desp> 1384 and 1409, 21 and 29 Feb 52)
24. Argentine Government attempts to conceal arrests of
plotters: The Argentine Government is trying to conceal
t He details of recent arrests for plotting, because of the
involvement of military personnel. A delicate situation
has been created for Peron in view of the new law which de-
mands the death penalty for all military personnel arrested
for anti-government plotting. Many of the arrests have re-
sulted from routine precautions and from the recommendations
of a security 'committee composed of two federal police of-
25X1C ficers and three army. officers.
25X1 C
apparently there
is no well-organ ze m t to oust Peron, but there are
several small groups which are independently plotting to
assassinate him and his wife (see OCI Daily Digest, 5 and25X1A
8 Feb 52).
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SECURITY INFORMATION
26 March 1952
US OFFICIALS ONLY CIA Noe 49593
Copy No. 46
TOP SECRET SUPPLEMENT
TO THE CURRENT INTELLIGENCE DIGEST
(including S/S Cables)
Not for dissemination outside O/CI and O/NE.
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.
TOP SECRET
SECURITY INFORMATION
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TOP SECRET
THIS MATERIAL CONTAINS INFORMATION AFFECTING THE NATIONAL
DEFENSE OF THE UNITED STATES WITHIN THE MEANING OF THE
ESPIONAGE LAWS, TITLE 18, USC, SECSO 793 AND 794, THE
TRANSMISSION OR REVELATION OF WHICH IN ANY MANNER TO AN
UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
WESTERN EUROPE
1. Russians protest Western evasion of Allied travel controls in
sienna: .lit a recent meeting o"'F`"iEe Qua ripart e-'crvntier on-
roTr'orking Party, the Soviet delegate strongly protested the
travel from American- and British-controlled Viennese airports
of West Germans without quadripartite documentation. The
Soviet warning that "necessary control measures" might be in-
stituted remains unclarified, but could involve Soviet check-
points on roads leading from these airports to Vienna. (TS CG
USFA Salzburg P 0560, 20 Mar 52; C to Vienna 2396, 24 Mar 52)
Comment: To avoid long delays and whimsical Soviet re-
jection individual entry applications, Western-controlled
airports have been used in special cases to admit German
nationals to the Austrian capital. American officials fear
out safety
that Soviet ewrefugee threaten
flights the
of t Vienna.
Germans as well as jeopardize
Since neither the Western powers nor the Austrian Govern-
ment can control the entry into the Soviet Zone of foreign
nationals favored by the Soviet Headquarters, the inequity of
this latest protest is obvious. It is, however, a further
indication of Russian sensitiveness on such matters, and a
warning that the prospective establishment of West German
representation in Vienna is likely to encounter Soviet ob-
struction.
2. British seen opposed to reducing rubber exports to Soviet
rbi :"~i~nxted`States mTassy o icia~s in Londoixie ieve
that in present circumstances any American proposals for re-
duction of natural rubber exports to the Soviet bloc would
elicit a "negative and hostile" British reaction. The British
officials concerned are convinced that recent US rubber policy
decisions will increase the already serious difficulties they
believe face the "producing areas" this year.
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,The Embassy suggests that the United States take haction
to help the natural rubber producers, preferably by
moval of restrictions on the domestic use of natural rubber,
and thus, incidentally foster a more favorable atmosphere for
the discussion of the Soviet quota problem. (S, S/S London
4205, 24 Mar 52)
Comment: Rubber traders in London and Malaya reportedly
anticipaTEe a large unabsorbed natural rubber surplus this
es-
year. the tritish Government has recently s?oanlitself es
pecially sensitive to pressure from them, probably b
of the crippling effects a recession in the rubber trade
would have upon Commonwealth efforts to improve the sterling
area's payment position.
TOP SECRET
2
Approved For Release 2001/04/10': CIA-RDP79TO1146A000800290001-3
26 Mar 52
TOP SECRET
FIED IIOT ~ pt yl d QT ~t l~ r ~ i 6%go'ngraded or declassi-
UNCLASSI ~
#ied when fille I orm is detache rom con roq,e ocumen
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