This Summary of Significant Reports Has Been Prepared

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8 August 1951 CIA No. 49296 sesz Copy No.

DAILY DIGEST

Office of Current Intelligence

CENTRAL INTELLIGENCE AGENCY

This summary of significantreports has been prepared primarily for the internal use of the Officeof Current Intelligence.It does not represent a completecoverage of all current reports in CIA or in the Office of Current Intelligence.Comments represent the immediate views of the Officeof Current Intelligence.

State Department review completed

DIAand PACOM review(s) completed.

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SECTION 1 (901/IET)

1 USSR. Propaganda reflects increased Soviet interest in East-West trade: An Irvestia article and a Mbscow home service broadcast attacked the proposed US bill for cutting off add to countries Shipping strategic materials to the Soviet bloc as "dangerous to East-West peaee." The bill was branded a °weapon in the hands of US imperialitts, directed toward-pre- paration of a new war," and °constituting openpressureby the US monop- olists on their Western European vassals." The broadcast added a plug for the World Peace Congress resolution calling for an international economic conference in Moscow before the end of the year. 25X1 25X1

Comment: Soviet phraseology attemptrto conceal the Kremlinle con, cern over economic bans against the Soviet bloc while placing emphasis on the so-called encroachment on Western Europels sovereignty.

2. Second quarter results of 1951 State Plan:Results of the Staie Economic Plan for the second quarter of 1951 were published in the Soviet press on 4 August. Compared with the same period last year, gross value of output rose 16 percent, and productivity of labor increased ten per- dent. The spring crop sowing plan was described as having been overful- filled,, with the total 1951 sown area augmented by six million hectares over that of 1950. The wheat area was expanded by more than four million hectares, and cotton by almost 400,000. It is claimed that in state and cooperative trade, the population of the country sold 14 percent more at comparable prices than in the second quarter of 1950.Iblkhos market sales are alsosaidtohaverisen in the second quarter of 1951 compared with thesameperiod in 1950. 25X1 Yield Comment:Embassy Moscow observed that in format, timing and content, second quarter results parallel their first quarter predecessors and are similarly devoid of practically all °meaningful" data.The Em. bassy feels, however, that the trade data may have smile iignificance in that the 14 percent increase in state and cooperative sales appears to be the lowest gain on record in the postwar period (1948 data lacking). The gain of 16 percent in gross industrial output may have been caused by reconversion, but the Embassy eve that it is impossible to know whether the second quarter increase is doe to rising military or civilian production.

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4. 30th Annizene,aocli_ans Penile's Republic: A. celebration commemorating the 30th anniversary of the Mongolian revolution was held in Ulan Bator on 9 July. In addition to the Soviet Ambassador Y. K. Prikhodov, the USSR was represented by an official delegation headed by M. P. Tarasov, (Deputy Chairman of the Presidium of the USSR Supreme Soviet and Chairman of the Presidium of the RSFSR Supreme Soviet). The group also included G. I. Tunkin, head of the first Far Eastern Section of the USSR Ministry of Foreign Affairs, and Tsyrempilon, the Chairman of the Council of Ministers of the Buryat-Mongolian ASSR. Other got- ernmental delegations at the festivities included those from Communist China, Korth Korea, the German Democratic Republic, the Polish Republic, the Bulgarian People's Republic, and the People's Republic of Albania.

Commentt The fact that two such prominent officials as Tarasov and Tunkin were sent to attend the Mongolian festivities reflects the desire of the Soviet Government to lendan aura of prestige to one of ite lesser known, but strategically located Satellites.

5. EASTERN EUROPE.'CZECHOSLOVAKIA. Foreign Office protests Sudeten re- iieionist activity in West Germany The Czechoslovak Government has protested to US Embassy Prague against the alleged toleration of "hos- tile" ex-SUdeten activities in the USzone of Germany. The note re- views previous exchanges on the same subject dating back to 1947 which stress that US occupation authorities have condoned the formation of "independent organizations, whose principalpurpose is political activ ity directed against the Czechoslovak Republic." The note refers to a revival of "Bitlerite, Pen-Germen aggressive nationalism", DB support of "German chauvinist militarism". and US promotion of "revisionist

25X1 activities." I

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Comment: Nearly two million Czechoslovakia Sudeten Germane have beenexpelled from since the end of World have held War II. These transferred Sudetens numerous meetings in WestGermany during which pirations were revisionist as- expressed.Such expressions of irredentism assisted the Czeohoslovak have greatly Communist regime in capitalizingon popular fear of West Germanrearmament and have provided to rally otherwise it with an issue around which divergent Czechoslovak elements. US Ambassador Briggs in Prague suggestedin May 1951 that in of such propaganda, order to reduce the effectiveness the US Righ Commissionerin Germany officially die- claim US supportof Sudeten aspirations,

6. Italy to close consulate in Bratielava: The Italian Minister to Czechoslovakiahas notified US Embassy the Italian Consulate-General Prague that effective 15August in Bratislava wi/1 beclosed. This step is the direct resultof a "determined buttwauccessful effort" by Czech- oslovak border officialsto force the Italian diplomatic pouch. Consul-General toopen his Czechoslovakia will10 required to close 25X1 in Milan, Italy, its Consulate

Comment: Austria will bethe only Western country sulate in Bratislava, to retain a Con- a useful observation poston the Danube.

ALBANIA, 7. Catholic Churchnationalized: Government The Presidium of theAlbanian recently issueda decree which, in effect, Albanian Catholic nationalized the Church. Under the terms of Church in Albania the measure the Catholic no longer hal any tieswith the Vatican The Albanian Catholic Churchhenceforth will submit to the Canoniccode of Rome only insofar as thecodeos provisions ian Peopleos Republic. do not contradict thelaws of the Alban- A/banian Catholic clergywill be trainedaccor- ding to the dictatesof the Government. will be conducted Relations with the Churchabroad through official channels. In commenting on the tionalization decree,the Tirana press na.. stated that at last theAlbanian Catholic clergyhas thrown off the yoke of the Vatican "whichhag religion in theservice of American imperialism." 25X1 Comment: Persecution ofreligious elements the advent of Communist in Albania started with power in 1946. The head of the Albanian Church, ArchbishopPrennushi Catholic was sentenced to twentyyears imprisonment in 1948 andwas reported to have died in prison in February1949. latest measureagainst the Albanian The 100,000, formalizes Catholics, who totalapproximately the break with theVatican.

8. YUGOSLAVIA. Embassy Belgraft_favorp lifting US visa restrictions Ingoelav nationals: Embassy Belgrade on considers that the USprogram of

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assistance to Yugoslaviacould be much iMprOved a program of technical if it were combinedwith goats that training of Yugoelavein the US. a clause be added The Embassysug- temporary to the current visits to the aid bill whichwould permit aid programs. US by the subjectsof nations participating In thismanner Yugoslav in out weakening nationals couldbe admitted with- existing visaregulations against states. The Embassy feels nationals of Cominform that the US should nese to exposeits citizens encourage Yugoslavwilling recent requests to Western life f or on-the-job as evidenced by theregime es Embassy points training andscholars:hips in out that therei 8 very little the US. The selected bythe regime likelihood thatany trainee anti-Cominform would be empatheticto the Comdnform screeni cees in Yugoslavia since the 25)0 is extremelysevere.

__Comments A would program of technical mateilallyand politically training for Yugoslav nationals assistance enhance the US programs. Because economic and military trance ofall Communists, present US legielation those Yugoslav restricts theen, sent for suchtraining nationals mostlikely to be are not eligiblefor visas.

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SECTION 2(EASTERN) 1. INDONESIA. Bandits andIslamic Approximately200 men fanatics described by attack Djakartaport area: fanaticsand leftist an Indonesian on 5 August. banditsnattacked officialas nIslamic The attackers Tandjong Priok,the port of decoratedwith both earried redflags and Djakarta, pose of the Islamdc wore red attack is emblems andthe hammer headbands believed to and sickle. equipment.Four have beenthe The pur- fled ts were procurement of 25X1 eastward. killed andfly captured; arms and MO the remainder Comment: The Indonesials proximity ofthis attack serioussecurity to thecapital city Islam which problem.In addition emphasizes seeks to setup a Moslem to the numerous armed state by fanatical Darul been gangs operatingin West force of arme,there ate exploitedby the Java, some also Tandjong Communists. of which Priok isnot yet The identityof the bandundoubtedly have known. which attaaked 2. Cabinetadopts five Indonesian point proposalon Japanese Governmenthas adopted peace treaty: Japanesepeace treaty a five-point The which includes proposal expression of a demand for regatding the supportfor Soviet the treaty. and Communist reparationsand an Indonesiawill not Chinese San Francisco decide whether participationin on 13 August.until itsees the final to senda delegation 25X1 text of the to draft treatynow expected Comment: Indonesia has Japanesetreaty, and displayedrelatively seriously. the current littleinterest in The government proposalprobably need the reparations had previously not be takenvery would notbe large indicated that included inthe treaty and thateven if its demandfor majority. negotiations, CommunistChina were Indonesiawould go not along withthe

INDOCHINA. VietnamGovernment nam Suretein Hanoi bans exit received of men ofmilitary National on 3 August egetThe Viet- SecurityService in an official aged 20 to Saigon directive fromthe 45 wouldbe issued that'henceforth Consulate exit visas. no Vietnamesemales confirmedthat this A checkwith the to Vietnamese directive Surete bythe who have will resultin the persons receivedgrants under denial of legislation. On 5 August the visas Catholic Smith-Mundtexchange of diocese ofBuiehu two Vietnamese bound for were stopped seminariansfrom the the US. I from boarding an Air Franceplane 25X1

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Comment: Thisis the latest in Viethamese authorities a series of steps by theFrench- designed to stepup the military effort Viet Minh) andstems directly from against the for the "mobilization Bao Bails dedreeof 15 July providing of all nationalresources." threatens to befar more explosive This step, however, politically thanany heretofore taken. The absoluteauthority of the the French-sanctioned French High Commissariatfor Indochina and Vietnam Government by the opportunity has, in the past, beentempered which has beenaccorded Vietnamese political viewsat least to the to express their extent of refusingto cooperate with unrepresentativeand unpopular an government or of leaving gether.Compulsory military the country-alto- service undera government which is widely regarded by the Vietnameseas French-dominated, go abroad, particularly and denial of the for educational right to feeling. This will be purposes, will cause intenseill - particularly truein the case of to the US, whoseeducational projeeted travel opportunitiesare regarded by many Vietnamese as the key to releasefrom subordination toward the US to the French. This attitude is held in virtuallyall political circles Vietnam? and itis extremely of non-Communist doubtful that theVietnam Government have curtailedcontacts between would strong pressure its nationalsand the US except under from the Frenchauthorities. French have On numerous occasionsthe manifiested theiralarm at signs and have taken of closer US-Vietnamrelations steps to thwartsuch a trend. 25X1

5. Ezia2h_hint_attruce with Viet Vietnamese circlesirM,risreactedMinh alarms Vietnamese:Official by Minister for "with some emotion"to the hint dropped Associated StatesLetourneau that "civil war" in negotiations to endthe Vietnammight followthe Korean truce a French Press Agency(AFP) broadcast talks, according to from Saigon.French political circles in Saigonwere quoted by the AFP hint, givenin an interview as stating that the Letourneau with a Dutchcorrespondent 25X1 I I 1 25X1 should be regardedas " ust a periodical 1 should not betaken seriously." solnding-out attemptwhich 25X1 Comment: Although there is probablyno serious intent the French Governmentto negotiate with on the part of Ho Chi Minh andalthough such

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intent has been denied by De Lattre, the recollectionof French-Viet Minh negotiations in 1946 is still fresh in the mindsof the Vietnamese, and even the remotest hint that the Frenchmay "sell them out" to the Viet Minh creates painful uncertainty in Vietnam.

6. CHINA. Soviet and Chinese Communist influencein Inner Mongolia assessed: 25X1

(a) the Ministers of the Inner Mongolian regimewere all Moscow- trained Mongols who spoke excellent Russian; however,

(b) the Vice-Ministers were all Chinese, and itwas the Chinese who exercised "actual control" over thearea;

(c) there was no official Soviet representativein Wangyehmiao, nor were any Soviet troops or railway guards observed; however,

(d) the study of Russian was compulsory inthe area (for officials?), and many young Russians had been importedas teachers;

(0) the Mongols wished to establish better rail connectionswith the USSR hy extending the railway from Aershanto Manchuli or Hailer, but the Chinese Communists wouldnot permit work to be begun on the proposed line; and

(f) the border with Outer Mongoliawas "tightly closed," with no travel except for occasional official delegationsfrom Ulan Bator (the capital of Outer Mongolia). I 25X1 25X1 1 1

Comment: The Inner Nbngolian AutonomousRegion, a creation of the Peiping regime, adjoins Outer Mongoliaand Communist China2s Northeast, occupying a large slice of thearea formerly known as Mhnchuria. Little information has come out of thearea; I 25X1 25X1 There has long been speculationas to whether the Peiping regime wouldprove willing and able to prevent Outer Mongolian (and hence Soviet) annexation of Inner Mongolia 25X1 25X1 25X1 las ol 1949, the Peiping regime retained the superiorposition ! in the area.However, in the past twoyears there have been fragmentary reports of increased Soviet and OuterMongolian activity in Inner Mongolia, and it is possible that the USSR hasbeen steadily increasing its influence in the region.

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7. Communist advance into Tibet reported: The Indian press reports that

(a) Chinese Communist forcesare now only 150 miles east of Lhasa and have been identifiednear the Indian border;

(b) Chinese Communist officials who havearrived at principal Ti- betan trading centersare "virtually in control" of adminis- trative machinery; and

Comment: Chinese Commanist forces and officialsare known to be moving into Tibet, but the extent of theiradvance is not clear. The Dalai Lama's apparent decision to accept Peiping'stermswhich leave him with no sig-. nificant authority- -will facilitatethe Commmnist advance.The Peiping regime is expected to be in effectivecontrol of Tibet by the end of 1952.

8. Political:labor camps proposed for Central-South China: Labor camps for political prisoners willsoon be in operation!throughout the Central- South China administrativeregion as a result of plans drawnup at a recent regional conference on "reform through labor," according to a 27 Julycommu- nist newspaper in Hong Kong.The system, which will be decentralizedet first with prisoners workingon local projects, will lay the groundwork for the later use of prisonerson large-scale engineering projects.

The US Consul general in Hong Kongremarks that the establishment of a system creating a continuousdemand for this type of labor would providean additional motive foran unendin2 series of ',arraigns to arrest counter- revolutionaries. 25X1 I

Comment: Indications of Chinese Cammutist intent to implement a labor . program of this sort have been observedin an increasing number of reports alluding to a decrease inthe number of death sentences anda concurrent increase in commutations ofsentences to servitude for varying periods. This is among the firstobservations of intent to employ prisoners in South China; other.reports concerned shipments of corvees northwards. The present development has long beenexpected.

9. US objects to Chinese Nationalistconscription plans: The reported Chinese Nationalist intention to begin the conscription of 15,000men on 10 August is diametricallyopposed to the recommendations of the US Mili- tary Aid and Advisory Group (MAAG)and was announced without prior consul- tation with officials of thatorganization. General Chase, head of MAAG,

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told Chinese officials on several occasions that heopposed any increase in the armed forcesat this time. The ECA mission to Formosahas con- tinuously stressedthat the island's gravely strained economycannot bear this burden.As a compromise, US officials hope for a defermentor only a oartial imnipmnwtationof this conscription. I 25X1 I 25X1

Comment: This incident pointsup the neceasity for establishing fective US political, ef- economic, and militarycontrol over the supported by US aid. programs Chinese Nationalistpreoccupation with sovereign rights wakes the solution of this particular problemdifficult. ations of "faxen further Consider- complicate the problah,since the conscription program has already receivedthe Generalissimo's signature publicity. and nation-wide

10. KOREA. Communists take action against disease threat: A 3 August Pyongyang broadcast relates that...over 1136,00lo persons.haveteen vaccinatedor inocu- lated against smallpox,cholera and-typhus in ary, 1951. one province alone since Janu- These disease prevention.measures reportedly reducing the incidence are credited with of smallpox hi 23.9per cent. I I 25X1 Comment: During the past winter and hemorraghic smallpox the high incidence oferuptive typhus among Communist troops and civilianswas a matter of considerable toncernto North Korean authorities.

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SECTION 3 (WESTERN)

1. GERMANY.West German press expresses concern about Camnunist influence iiirarnst Oerman youfhs In reportingtherm-tinier WiTrt75uthFestival now going on in East Berlin, many West German newspapers warn that the Communist youth rally should be viewed by the Westasa "significant warning signal", and express graveconcern lest the Communists win German youth to their cause while West Germany doesvery little to arouse enthusiasm among its,o7In youth for Western democratic ideals. Several newspapers publish the remark of a well-knownnews camnentator that the influence the Communist regime is exertingon youth is "more damaging to German reun fi - 25X1 cation than the entire People'sPolice", I 25X6

. . 2. FRANCE. French fear aviation gasoline shortageis imminent:Asevere aviation gas shortage is expected in France by Oetbberif the Abadan refinery shutdown continues.- The Frenchare trying to borrow from SHAPE enough gas to tide them over, but they fearthat they will not be successful after the freight airlift from-Berlinis started. They believe that the new Soviet blockade of Berlin's exports is timed totake the greatest possible advantage of the growing WesternEuropean shortage of aviation gas resulting from the Iranian dispute, I 25X1

Comment: The Abadan shutdown has deprived WesternEurope of 31 per cent of its processed petroleum imports, Iran supplied only a slight portion of total French petroleum imports, buta relatively high proportion of this ISMBaviationgasoline, and current stocks cannot be entirelyreplenished from domestic plants. There is no direct evidence ofa connection between Soviet-inspired economic trouble in Berlinand developnents in the Iranian oil dispute,

3. Further progress is made on export controls: Recent meetings of Western Powers participating in East-Westtrade-Eaarolshave, in the opinion of the US delegation, led to "significantfurther progress toward parallel action" among all countries represented. More than 60 per cent of the critical items on vhich the US hadpreviously beenunableto obtain agreement for a strict embargo (US ListIA) have now been accepted, bringing to 90 per cent the total number ofitems so far agreed to for embargo (US List I). In addition, "advantageous"-proposals forhandling quantitative controls and exceptions have been adopted,and further progress is likely

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to be made by obtaining at leastpartial control over the remaining US List IA items.

The US delegateswere impressed, however, with the "very firm position", particularly of the UK and France,against a further extension of the embargo on basic industrial exports.These countries showed "grate condern" with their domestic political problemsand rejected what they probably viewed as a US effart to impose its will for completeacceptance of List IA.

Comment:Substantial further progresp towarda general embargo on US LietTrafelisis not indicated. Furthermore, the other participating countries have accepted less than 40per cent of the 250 items on US Lists II and ITS, whichwere proposed for quantitative restrictione.only although in practice the US denies them totallyto the Soviet Orbit,

The Western European countriesare increasingly apprehensive over inflationary pressures, which some leadersare determined to coMbat in part .by encouraging imports. These countries insist that theycan obtain urgently needed Eastern products,such as coal, only by offering some critical items in exchange. Furthermore, the Western EuropeanCountriesare increasingly sensitive to USleadership and resentful of exceptions approved for individual nations. 25X1

5. BELGIUM. Decline in export trade anticipated: BelgiumLuxembourg had a favorable balance of trade in June for the first timein 1951, due to a fall in the value 6f importsanda rise in the export level to a postwar high.

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Although the Belgian press welcomes thefavorable balanceof trade, it does not consider it a good sign.It believes the drop in imports foreshadows a decline in exports, and a general slackeningof over-all-economic activity. The embassy comments that although no details are available onthe sectors affected by the drop in imports, it seems that the decline occurredprimarily in imports of textile materials and vegetable prodicte. Imports of mineral roducts articularly coal, shawed an increase. 25Xi

Comment: Belgiam-Luxembourg has had a slight yearly balance of trade deficit.As usual, both before and since World:War II, some declinein over- all economic activity probably will be evident during the summer. Activity in the secondary industries, such as textiles, has fallen off considerably since the first of the year because of the lack of world demand. No improve- ment is likely-Untildefenee orders are under wsy and inventories-are depleted.In view of.the continued high value of mineral importS, no decline in the steel and metallurgical industries is foreseen at present.

6. 'FOtITUGAL. Reavy Vote points up Salazarss nation-wide prestige: The Supreme Court today handed down the official returns on the 22 July general elections, which confirmed the choice of General Francisco Craveiro Lopes as the eighth President of the Portuguese Republic. Although the number of abstentions and voided ballots was not published, the unopposed official candidate is estimated to have polled 80 per cent of the total national vote, 25X1 25X1 Comment: The real victor in the elections was Premier Salazar. Previotm succegginf the polls had been generally attributed to the vote-getting appeal of the late President Carmona. The 80 per cent vote polled by the regire which, according to a pro-government newspaper, surprised even-the most optimistic observers, indicates that Salazar's party still enjoys a broad base of popular support.With his personal control of the party es- tablished beyond dispute, it is believed that Salazar may decide to deal severely mdth corrupt office-holders whose scandalous activities, widely publicized by the opposition during the presidential campaign, are said to have caused him considerable embarrassment. Lopes, who will take office on 9 August, visited Washington in 1943.Reportedly favorably disposed toward the US, he recently saiA that the strengthening of relations with the US will continue to be a basic aim of Portugal's foreign policy,

7. UNITED KINGDOM. US-UK disagreement over Far East policy seen as probable after Korean armistice: US Embassy London predicts that British differences

with the US over Far East policy, nomr held in check in order to preserve . a united front in Korea, will probably revive if a Korean armistice is achieved,-..The embassy indicates that the British see an armistice as the first phase in "step-by-step" negotiations leading eventually to a general

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settlement in the FarEast, and expect the Chinese admission to the UN Communiets to demand as a prerequisite toan over-all Korean settlement. The eebassy estimatesthat the present government would find greatdiffi- culty.in trying to dodgesuch a demand in the on the issue. face of UK public opinion

On the Formosa issuethe embassy reports many senior military and an increasing conviction of civil officials, includingForeign Secretary Morrison, that theisland would possess high strategic utilityto a hoptile power, but estimates thatthe cabinet nevertheless Foreign Office might be led to over-rule support of Formosauscontinued neutralization appear expedient to should it promote a general FarEast settlement. Regarding the future of Korea oncea cease-fire had been negotiated, the embassy estimatesthat Britain might total withdrawal for,a time resistpressure for a of UN forces, but probablywould eventually to acceptsome face-saving solution. prove willing This would relievethe UK of unWelcome 25X1 responsibi/ities inKorea and though it to eventual political might leave SouthKorea vulnerable absorption by:theNorth Korean Communist Foreign Officecircles repar regime, such a developmentas in any event probable.

I r

8. British still push The British Army adoption of their .28calibre rifIet will conducton 10 August a demonstration rifle lit the British of the .20 clalibre Sehool of Infantry. US ArmyAttache determined'effortto "sell" the London notes a including other new rifle to all interestedparties, NATO members. Be believes the demonstration political aspect,as the invitations for has a definite through the NATO American personnelwere handled Council of Deputiesand the political Midir; rather than by hisoffice. I nf the embassy 25X1 Comment: UK Defonse Minister Shinmell, the smail on his return to London from arms standardization talksinWashington, present" he hadfailed to get the reported that "for the as standard NATO new British rifle andannunition adopted equipment, that thewhole standardization referred to thesupreme NATO military matter had been organization, and thathe hoped a report could be draftedin time for the October the British Government Council meeting. Meanwhile, has decided not torequest at this time US of any machinetools for production financing of .28 calibreweapons or ammunition.

9. DENMARK. UK and German coalshortage keeps Denmark crCUS oflicialsin acprihagen estimate dependent upon Polish that ECA efforts toreduce Mash dependenceupon Polish coal hy financing will have little coal imports from theUS effects unlessDenmark can substantially imports of coal increase its present from the UK and WesternGermany. The UK, for example,has

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million exported committed only 1.1 million tonsfor 1951 as against 2.9 the Failing a marked rise in importsfrom Britain and Germany, in 1950. quantity from only alternative to Polish coalwould be a vaitly increased 25X1 the US. / of the UK and West Germany Comment: Since the present coal situation makes-ariittrease in their shipments toDenmark unlikely withoutspecial exert consider- pressure from. the US, it appearsthat Poland will be able to coal when able pressure on Denmark to exportstrategic goods as payment for Reduced UK coal deliveries the current trade agreement expiresin October, have also diminished Norway'sbargaining position with Poland.

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Office of Current Intelligence

CENTRAL INTELLIGENCE AGENCY

This summary of significant reports has been preparedprimarily for the internal use of the Office of Current Intelligence.It does not represent a complete coverage of all currentreports in CIA or in the Office of Current Intelligence.

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SECTION 1 (SOVIET)

1. TRIESTE. State Department consideriqg postponement of Trieste elections: The Department of State is exploring the possibility of postponingthe Trieste elections, as Premier De Gasperi has requested, on the understandingthat the Italian Government will seriously try to reach agreement withYugoslavia on the settlement of the Trieste problem.If this plan is implemented, the Allied Military Government will issue a carefully timed statement thatthe elections have been deferred in order to facilitate a mutually satisfactory Trieste settlement in connection with the larger problem of the revisionof the Italian Peade Treaty. Before seeking the concurrence of the UK and France for such a step, the Department has requested the comments of US ambassadors in Belgrade and Rome and the US political adviser in Trieste. 25X1 25X1

SECTION 2 (EASTERN)

2. JAPAN. Japan desires peace treaty provision for repatriation: Japan, con, cerned over the unrepatriated Japanese for whom the Soviet Union or Communist China have failed to account, desires the inclusion of a provision in Article 26 of the peace treaty for the return of prisoners of war and civilian detainees, according to a letter from Premier Yoshida to Ambassador Dulles. The Japanese are apprehensive that, without such a clause, if either Communist nation proposed a bilateral treaty identical with the present treaty Japan might be obligated to accept the proposal unconditionally. If the inclusion of such a repatriation provision proves impractical, Yoshida suggests a proto col joined in by the Allied Powers which would specify that the treaty does not prohibit repatriation provisions in subsequent bilateral treaties* 25X1

Comments Article 26 providesthat for a period of three years after the peace treaty Japan will not make a bilateral peace treaty with any statewhich grants the latter greater advantages than those offered the signatories of the

San Francisco treaty. c

Yoshida very likeli feels that a small concession of this nature from the Allied Powers, on a Matter as close to Japanese hearts as the subject of repatriation, will strengthen public support for the peace treaty in Japan,

3. Japanese promise to establish-overseas agency on Formosa after pease treaty is consummated:: The US Political AdvisorPOLADin Tokyo received categorical assurance on 4 August that the Japanese Government will open an overseas agency at Taipei after the peace treaty is signed.

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POIAD states time would that tobind Japan discourage pnblicly to ists from India andothers who NationalistChina at joiningus in signing have severed this opposed tothe Japanese the treaty. ties withthe National- Chinese Government Since theBritish Nationalists, taking are adamantly the US any overtaction in the Japanese representative favor of in thisrespect warns that the US-UK Chinapolicyd wouthoav furtherpressure on 25X1 ore todisplgy the disunity of r

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Approved For Release 2007103107 : CIA-RDP79T01146A000300350001-1

To learn more about OCR and PDF Compression go to ThePaperlessOffice.org