SECRET COPY NO. 1

ARMY NAVY AIR FORCE THE PACIFIC COMMAND

WEEKLY INTELLIGENCE

Digest No. 6-50 ·,

DECLASSIFJ

ut110rity 1YN(

4 D_JGEST -#;

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10 February 1950

_ SECRET . ~

FOR .AMERICAN EYES ONLY

The purpoi3e of the Intelligence Digest is the adequate dissemination of significant information pertinent to the Pacific Command. It includes information and int elligence re~ ceived from various Army, Navy and Air Force agencies. It is prepared by G-2, USARPAC an the Intelligence Section CINCPACFLT, and coordinated by the Joint Intelligence Division °~ the Pacific Command. While the best sources available are consulted, consideration ° prompt dissemination prevents the complete evaluation of all reports. Comment with a view toward the improvement of this publication is desired.

This document contains information affecting the national defeose of the United States within the IIW3aning of the Espionage Act 50, Code 31 and 32, as al!lP.nded. Its trans~ mission or the revelation of its contents in any manner. to an unauthorized person is probi ited by law.

Transmission by United Stat es Registered mail or registered guard mail is author• ized in accordance 'With Article 7- 5, United States Navy Security Manual for Classified Matter, and the pertimnt paragraphs of Army Regulations· 380-5.

DISTRIBUTION (1-6-50) Q2JlI Addressee · c Ad 1-JO CNO ~ dressee ~ Addres see, 31-40 D/ I GS US ARMY 131 CCII DESFLor l 171 CG FMFPAC 41-75 D/I US AIR FOOCE 132 CCU DESRON l 172 CG AIRFMFPAC 76-88 CI l33 COM DESRON 3 17.3 CG F?r-'.FGUAll 89 NCPACFLT 134 c'- DESROH 5 174 CG lstMARAIRWING 90 g ~ ~FLT 135 CCM DESRON 7 175 CG lstMARDIVFMF 91 CCU l36 CW DESRON 9 176 CO MARAIRGRP )..2 92 FIRSTASKFLT 137 COM DESRON 11 177 CO MARAIRGRP .3.3 93 -~: ~~:~KFLT l3S CCU DESDIV 12 178 CG TTUPHIBTRAPAC 94 CCU AIRPAC 139 CCJ.1 DESDIV 32 179-185 CINCFE JJ C~ Wf,ie m ~ DJ.Sf lY 52 186 CINCAL

'YV (!~~~~ v.li- ~~\~& °fti 187 CINCCARIB -¥-~ ..,.c~ TMP-:f ~~ cw susnor 1 1.88- 195 cG s.AC

99 11.4 CCli SUBB.OR l 196-203 CG USARPAC CCll llWAB.11.DS ~ SL ~<:II, ~~-OR 3 204 CG PHILCCI!

100-104 CCI\ SEVElttB'.UZl:71:f ....__, c ~ S1Jmi~"!l 5 205 CG RYCOM 105-107 COil NAVFE 14? CO USS VALLEy F~ 206-

2 108 CCU NAVFBIL 148 CO USS BOXER (C~~) (CV45) 208 07 g~ ~~ 109 COO'WESTSEAFROH 149 CO USS BAD(!:~ ST ( 20<)

2 llO CCM HAWSEAFROB 150 CO USS CURTISS ( CVE116) 216

- 15 CG FEAF lll COIi ALSEAFROB 151 CO USS NCltT AV4) CG 6th ARMY 112 CWELEVEN 152 CO USS PINE ON SOUND (AVl.l) 217 CG HQCOMUSAF ll3 COOVIELVE 153 CO USS SAL ISLAND (AVl.2) 218 COM MATS 114 c ovrHIRTEEN 154 co USS SUISlSBtJRy SOUN!) (AVl, 219 cw LANTDIVM.ATS ll5 CCII PHmTRAPAC 155 co USS JUNE: (AVP53) 3) 220 CG lat AIR FCRCE ll6 COIi FAIJ'tAT.ANEP.l 156 CO USS -RC£HF.s (CLAAJ.19) 221 CG 4th AIR FCRCE ll7 CCM P'AIRSE.ATT~ 157 CO USS SAINT iER (C41.2i.) 222-223 CG loth AIR p(RCE 118 COM PACDIVJIATS 158 CO USS HE~]iA {ut (CA73) 224, CG 14th AIR p(RCE

lll290 g~ g~ ;: ~-'i lJJ 9Q l:C.;/f,[)l.11)11 },~«1}) 22265 CG 2oth AIR FCRCE ... .. / JtYY It /1, V V'.d@'.My cc1At33) 2 co 401st CIC 121

C(.11 OfiPl)if J 1, V !188 MAllCHEsTER ( 2'l7 co 6254th ABU av) 122 cw Oitl'JJ!I J l ALUB P4 CJJJJJfilIJAI c L!3 .3 ) 228 co CENAFBUC CIJ (: 123 C(JJ OJ!)!}JY ! j 6g CO 188 BAN ;~GO 229 CG SCHOFIELD BR

121245 CCU FAIRWIOO 1 163 CO FAWI'UPAO 2J0•236 CO 5th RCT ER Cc»,\ F 164 DIO 237 CG FCRT SHAfl'

126 AIRwroo 2 165 DIR 14th NAVAL DI STRICT 238 co 8301st SU 127 ~Cl! FAIRWII; 4 166 or NAVINTEI..SCHOOL 239 co 8302nd SU 128 C ~ FAlRW;nn l4 167 col\'CAERNCS S0N<l,1A, CALIF 240 co 8309th SU 129 CO VC 5 168-16 0CHARTSERV 241 co 8Jlltb SU • 130 0 FASRON l l4 170 9 cc~ ARMFORSTACOL 2''> JP&O DIVPACC~

CQ.! ~I!!GRp l .. '-"'WL MARCill?S -

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SECRET Digest No. 6-60

CONTENTS

U.S.S.R.

The Link Between Peking and Mos cow - ,

CHINA

. . . . . . . . . . . .

Reported Soviet Desire for China Ports . • • • • · • • · · • Communist Attitude Toward Hong Kong • • • : • ,. • • • · · • High-level Organization of the Chinese Communist Government Macao-Indochina Mutual Aid Pact • • • • • • · • · · · • · · ·

TAIWAN

Little Improvement and Some Added Trouble • • • • • · • · • · • · •

INDOCHINA

USSR Recognizes Viet Minh Communists. . Cost of the War to the French . . • • • • · ·

BURMA

Significant Pro-Communist Attitude • • • • Government Plans Major Drive on Karens •

THAILAND

. . . . . . . . .

Political Intrigue Unabated . . . . . . . . . . . . . . . . . . . . . . . MALAYA

British Troop Strength •. . . . . . . . . . . . . . . . . . . . . . INDONESIA

Dutch Move To Isolate New Guinea's Economy· •

SOUTHEAST ASIA

Possible Soviet Financing . • • • • · · • • · • · · SOUTH KOREA

r Coast-watcher System . . • • • · • · • ·

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. . . . . . . . . . . JAPAN

Trade with China Urged, , • • • • · • · ·

PHILIPPINES

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Important Communists Allegedly Join Hules • ·

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SECRET WEEKLY INTELLIGENCE DIGEST No. 6-50

U.S.S.R. - CH IN A

The Link Between Peking and Moscow. In Digest No. 4-50 the military aspects of the Communist Threat to Southeast Asia were discussed, with emphasis on the vulnerabili .. y of this area. Now that Mao Tse-tung is closeted with Stalin in a conference undoubtedly re­garding future policies w_ith respect to Sino-_Soviet relations and a further extension of power to the Sout?, it is worthwhi~e to exam.me_ the link be~een Pek_fng and Moscow. The Chines e Communist leaders certainly are confirmed Marxtst-Lenirust Communists and not simply agrarian reformers.* The Peking leaders probably will try hard to widen the base of

. their popular support and retain their reputation as nationalists while at the same time strengthening the rather unpopular alliance with the USSR. Their success will depend main­ly on the degree of subservience tha~ may be requ~red by the So!iet Politburo, which thus far has guided the Chinese Communists by a relatively loose rem. At best, Chinese Com­munist Party Chairman Mao Tse-Tung has to look forward to many years, probably at least a decade, of industrialization a~d indoc~rinatio_n befo~e he has_ an urban proletariat of suf­ficient size and loyalty to permit ~ffe_ctive ~ocialization of Chm~se eco~omy and society. During this period, in~ustriallzation wi!l depend on exte~sive capital accumulation. Assuming that the bulk of it do~s not_ come_ m the form of Soviet or other foreign investment, which seems likely, mos_t of this capital will have to come from the sc_an~ surpluses of China's small-scale agric~lture. Con~e~uently, long before bas~c so~iahzation can begin, Chinese Communist admims_trativ~ efficiency and peasant_loyalties willbe·severelytestedby the problem of extracting this agricultural surplus and usmg the proceeds as captial for in-dustrialization.

China, in consequence of its size, the primitive _character of its economy, and the d bility of its cultural tradition, always has proved difficult enough for any regime to ura ge let alone remold. It is true, however, that the USSR has developed to new heights

mfana fe'ssional skill the theory and practice of capturing and controlling social institutio 0 pro · · f t P ki dmi · tr ti · · ns. Soviet penetration of key u~its o ?e e ng a rus .. a, on is now m process, and the USSR, capitalizing on the Sino-Soviet alliance and Chma s re~uests ,for assistance, is instal­li itself solidly in China, thus reducin~ the chances for Chinese Titoism" and reducing

ngi ct on the USSR of whatever dissident movements develop. The ultimate Chinese the mpa · · i 'bl t ti t 'th tation in international affairs is mpossi e o es ma e w1 confidence at this stage orien e ti·me at least China will appear an uncertain quantity to Soviet leaders includin. For som · 1i ·th 1i bl Chi · ' g Stalin, whose fingers were burnt m dea ng wi unre a e nese revolutionary nationalists a quarter-century ago.

Mao Tse-tung probably will bring back from Moscow a treaty of Sino-Soviet friend-. teeing Soviet economic and technical assistance to China and arranging for joint

sh1P gu~:t and use of Chinese military facilities. From the Sovi~t point of view all these develop_ China are of long-range strategic value. For the immediate future, the Kremlin links with .11 continue to tighten the -Soviet grip on the increasingly autonomous border a probably wi_ Inner Mongolia ·and Singkiang. In China proper, privileged Soviet banks an~eas of ~~churl~, or joint Sino-So~iet commercial enterprises will serve to influence Chinese Soviet ~wne d t ade into patterns agreeable to general Soviet objectives. The USSR pr production ant ~ sh to become deeply committed in the painful and intricate tasks of rei­bab~Y does ~~a':1 economy to feed its ~ast population. Nevertheless, many Chinese will r-gan1zing Chi d the Peking regime Jointly responsible for the famine and inflation th t hold the USSR :e widespread discontent in the coming year. Resentment is already in ~vi­are bound toaro C mmunist Chinese and apparently among a few Chinese Communist p dence among no;- i

0t privileges and economic exploitation of Manchuria, rumored Sovietrty

members_ ov~r t ov/ and the influx of Soviet political, technical, and military advisers If profiteering m ra e, .

H"gh-level Organization of the Chinese Communist Government e 3 Article on 1

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Authority i✓NI) &>?P-OQ_ -I

SECRET WEEKLY INTELLIGENCE DIGEST No. 6-50

u.s.s.R. - CH IN A (cont'd)

dissatisfaction against Sov_iet penetration of the government and economy grows, the P e k -ing regime will be incre~singly vulnerable to effective criticism from the nationalist point

· 'of view. 1! .

, The existing straj~s in Sino-Soviet relations, however, probably will not become cri-tical in 1950. For ·sever~l years, China probably will be a reliable instrument of Soviet foreign policy, though it will not contribute much to the Soviet military potential. In these years the chief threat China will pose to U.S. interests in Asia will be as a base from which to carry on revolutionary activity elsewhere in Asia.

Beyond China. Whatever else is envisaged in the Politburo's plans for the Peking , Communists, the USSR plainly proposes to use the China base· in its drive to spread Com­munism ·in Asia. As of 1 January 1950 a kind of Cominform of the -orient has been set up in Peking under the· designation of "Liaison Bureau" of the Communist-controlled World Federation of Trade Unions (WFTU) (see Digest 44-49). U will facilitate Soviet control of Asiatic labor groups, among which opposition to Communism is slight and unorganized, and set up new lab.or· federations where they do not exist. The Chinese representative on the Bureau; ·one of the four "responsible" members (with the representatives from the USSR, 4,usq-alia, and India), will be able to exploit the sympathies of overseas Chinese. The func-

--tiob~or-tn~rPeking Liaison Bureau is indicated in recent Chinese Communist propaganda, calling ·for Communist labor cadres to assist in the "armed struggle" for "national. libera­tion~ particularly in the more vulnerable "c.olonial" areas of South Korea, Indochina, and Indonesia. (SECRET)

CHINA

Reported Soviet: Desire for China Ports. The Soviet Union has ~eportedly demanded of_ '4ao Tse-tung full control of seven key ports in north China. In addition to Dairen and Port Ai;thur, which are already entirely supervised by' the Soviets, Russia now wants Chin­wangtao, Haichow, Chefoo, Weihaiwei and Tsingtao. If this information should prove true and Pelpng agrees to the ~emands of Moscow, the possession of these ports would provide the USSR with naval bases from which, with the necessary ships and aircraft, the Yellow Sea could easily be dominated.1 (RESTRICTED)

CHINA

The Communists may, be stepping up· their timetable regarding a precipitation of the-~ question of Bong Kong's status. Concurrently with the development of complications in the British : Comnumist recognition alig;pment~ the Communist press and radio are intervening more and more

4

in Hong Kong policjes. Two tnain points that have been attacked by the Com­rnunists ai;-e th~ ·deportation of undesirables and the way inJvhich local authorities have han­dled labor dispqtes. _This Com~unist aWtude is nothing new, but. in the case of Hong Kong it ~3rY ~~ca.le that the British position is not as secure -as might have been expected. (SECRET)' . ' 1

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CHINA

_ Bi,dt-ievel Orga.irlzation of the Chinese Communist Government. The new Chine~e governixienf ls under the abs~lute control ·of the Chinese Communist Party, even though it is widely public~ed bJ the Communists as b¢ing a "coalition G·overnment",. The Standing. ·com­mittee of f~e Central Executive Committee of tJte Chinese Communist Party ts the Politburo

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SECRET WEEKLY INTELLIGE.NCE DIGEST No. 6-50

CHIN A (cont'd)

of China, and its members are the real rulers of China. They are: ·Mao Tse-tung, Chu Teh, Liu Shao-chi, Jen Pi-shih, Chott En-lai, Kang Sheng (Chao Jung), Lin Tsu-ban (Lin_ Po-chu), Tung Pi-wu, Chen Yun, Peng Te-huai, Dao Kang, and Peng Chen.

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In general, the higher fi~rsonnel in the Government may. be loosely grouped into four main categories: (1) the 'power holders"; (2) the ~'policy ~akers"; (3) the "elder statesmen", and (4) the "sops to coalition".

The "power holders" are those actually. occupying the titular positions of power, such as Mao Tse-tung, Chairman of the Government; Chou En-lat, Premier and Minister · of Foreign Affairs; and Chu Teh, Commandei:-in-Chief of the Communist Armies.

' Prominent among the "policy makers" is Liu Shao-chi, chief formulator of policy,

writer of manifestos, and a rabid stallnist; Li Li-san, who holds the important post of Minister of L~bor; and Kao Kang, w~o is in control of Manchuria •. The last two named are Mo.scow-trained Stalinists. Po Yi-po, Minister or.Finance, is another policy maker. These men, while· holding relatively· important posts in the G,9vernm.ent, exercise their real power behind the scenes. ·

• I - -

T~~re· is also a group of elderly men, Communists of long standing, who enjoy consideral>le prestige in the Party. While they do not have,. for the most part, prominent achninistr,tive positions,· they have the role of "elder statesmen", traditionally a position of influen9e in China. This group includes such pers_ons as Lin Tsu-ban, Kao Kang, and Tung Pi-wu.

I ~e "sop to coalition" group comprises those who control a great1 deal of support

and appeaiJ. among vital segments of the population. Such persons ·as Mac1am.e··9un Yat-sen, LI Cbi-slien, Kuo Mo-jo, Fu Tso-yi, and Shen Chun-ju have been given positions of seeming prominence in the regime,. but actually their influence is prac~cally nil. They are the window-dre,;slng for the real managers of power, and their seemingly important positions are inducements to minority party· members and dissatisfied member~ of the Kuomintang "to climb .on the bandwagon." When the new Governm(!nt resorts to another Party purge, following the classic ·soviet pattern, these people probab~y will be the first to go, if they have out-lived their 'llsefulness. ·

That the men dominating the regime intend- to broQJt no unorthodoxy appeared most clearly in a recent publisher's ·conference in:PekinJ! where the decision was handed down that all writings opposed to communism o~ to the ' New Democracy" are to be banned from publication and from sale on the public m~ket. (SECRET) , .

• I, '"' I I •

CHINA' -

Mocao-Indochina Muhlal Aid Pact The re.cently- coricluded _Hong Kong-Maca.Q: M~tu.i Aid Pact (Digest 3-50) has been ... followed by a roughly sim1:lar Macao-Indochina Pacti signed In Macao on 18 Decembei'. ~Y French and ~ortuguese representatives. The_pacts were · ··· negotiated under Portugu8$8" tnittat1.\ve""a&-a~result of "Instructions from Lisbon to. sign such:_ pacts with all countries h$.ving colQDies in n~arby ueas •. They have been negotiated under tJie ~~S- qt thf3 _ C_plonial~~~llance; of 1938; whJ,c~ was ~lped by. 9reat Srita.ln,. F~Q~' the,. NetherlaJlds, ~ PoriUJ."'l. · · · ·

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i: . SECRET WEEKLY INTELLIGENCE DIGEST No. 6 -50

CHIN A (cont'd)

The pact with F:rance provides for (1) each party to protect the other's sea lanes ~ in~tallations, (2) mutual military assistance, (3) Indochina to provide Macao with 300 tons of food stuffs and 300 kilograms of raw materials monthly in exchange for medical supplies, and (4) an option "for the renewal· of the pact one year from the effective date thereof. 1

1•

Despite the provisions for mutual military assistance in the pacts, Macao officials are bending over backwards. in an effort to appease the Chinese Communists in the hope of warding off the loss of Macao to China. Tbua, despite U.S. protestations, the Macao govern­ment, for example, handed over in January two million dollars worth of U.S.-claimed equip­ment to the Chinese Communists. This equipment in~luded one complete radio manufacturing plant cpnstderec:l an extremely inlportant addition to Communist aviation. (SECRET)

TAIWAN

Little Improvement and Some Added Trouble.· Althc,ugh the military sltuation ls improving ·som.ewhat as a result ·of stresslng quaUty rather than quantity ln troops, there contin'1es t(:> be- many adver~e f~cto:rs •. The co111mand stl'llcture re~lects the influence of

-~----poJiijc~ ln the appointment of Ku Chu-tung as acting Minister of National Defense, an f appotntm~nt cc;,ni;ldered to b~ poo:r, Generalissimo Chiang Kai-shek has completed bis

1 implementation of a policy of liquidating the power of those who might threate~ his supreDJ.acy. He ts sltttng. tight on bi~ island waiting fQr the u.s. to put hlm. back in power and is re­taining_ generals such as Lill A.n-.chi w~o are conaidered imqqalHled.

Tbe Formosan training prog,am bas hit a snag in the attitude of the trainees (Digest 5-50). Theae new men were trained· by the Japanese in middle schools and ftnd tbeir Chtnese instructora...\ln.qua.Ufied and. lncapable to tfa.ln them; They are stncere in

,' thelJ;" de$l:re to ~e:rve, but e1'J)ect at least Japanese standards in food and eq~pinent. They are uaed to cQm.1'lap..<ls ln Japanese and find the la{iguage barrier a difficulty. (SECRET)

INDO'CBINA "" .

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UE Rec9&tJ!zes Viet Minh Communists. The US.SR hft.a tallowed C,;,QUnllnist Chlna. ln re~~tng-fprmallf"ti.e·Viet Nam.Repw,ijc .llilder H<> Cht Mlnb (Pigeflt •~60). The S<>\1ets, to emphfl.slie thelr tntere~ tn the estabUsJunent of a Conununist s~te tn Indo·chlna, re~ · Jeeted ~hM'PlY on 1. Fel>~ry ~ Fre»ch n.ow-of protest agmn.st th~ S<>vlet a.oU<>n~ The-Soviets obvtoutl.Jhope to offaQt-the u.tl~lpated recognition Qf Ba.o Dai by the We$W:rn pc;,wer$ g.d by most Commonwealth nati011a, Open Saviet and Ch~ese Communtst asals~ce .. to JJo l$ n.oW · em,eeted, th.tr~b.y ib'en.gtbeni.nk Vl~t NJUll restata.ice at a tlmf:' wh.en Conununtm p:resmire througb01-t Boutbc,11-Bt Ama. 1~ rapidly mou.ntln.g, ~he cvrent t.lettcs Qf Ho'a. torgea, clearly a.re ;p,e t,q IPag '1J'Oi'q.c,U,.4' a.tta.cb ov,r a1 wide mi ar~a.: ·P poaalble f.n. Qtd~;r to .d.ts.ptr~e. ,m4

.. w.eakeii .tbe Fren.eli gr011nd fprces~ · .:Alr;ady, reports -mdtc.ate , de,wrlo:r11-tlon of tile· French m!Utu)' llt\latlmr-m. Tonklln, wtib.the ffll.UV~ POl)YlaU~ a4gptln.g e~:rem@lf fJWOJJg·a.ntt~ ,,,neh1

--~,-~.,.,.., e.VtH) amq tbOS,~1 T9ffldb~se Wb.O a,p ftQt pJ.Po'~Co,;mmym,.m, . Th~ 1

Freneb ·h•v,r r@fl;U!\kt«.l ·m.pvt-by !JJ.dlstrlm.lMtt n.14$ OP., 1-J.ld .de~t,vct.ln of, DB.UV~ VlllYf$, aoUona whlohJ~Joltabl,~wHH\Jrj)Jp:r- build. up bltterneas ~ tb~ Frt1ieh, ·(Dl~UT). · /:; .

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Authority 1YN() Co~fOo '

SECRET WEEKLY IN'l'ELLIGiNCE DIGEST No. 6-50

INDOCHINA

Cost of the War to the French. The French government has expended considerable of it~ armed personnel strength and financial resources in prosecuting the post-war struggle · in Indochina.

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Since the begpming of ,he armed conflict witlt :Q:o Cbi Minb's resistance movement ill, 1946 until the end of 1948 F~ench militaey expenditures in Indochina have reached an . estiJna:te~ total of $7.1,110,000. Of this amount $590,000,000 h~s been spent on the. Army, $101,360,000 on the Navy, and $49,750,000 on the Air Force. The expendl~es have risen shuPlY in 1949, and another increase is foreseen in the lP.50 budget.

French manpower losses, too, have beJ!n heavy. From 1945·to the end of 1948 an estimated 15,000 army personnel were reported killed or missing. In the same period the Navy lost approximately 250 ~en and the Air Force 400 men. The drain on ,French man­PQW~r resources is consi4erable, for about o~e"'!fourth of the total French Army is at present committed to operations in Indochina. (SECR.lCT) .

BURMA

~ Significant Pro-Communist Attitude. Tbetrend toward closer cooperation of the governme~t with the West, which at the height of the Karen rebellion asserted itself in a · willingnes~ to ac~ept :mtll~ry assistance from jtne Cp~monwealth . co1mtries and to relax

• the rules governlng the exploitation of B1Jrgia's mineral r~SO\lf ces by foreign enterprise, has 1;,een chec~ed lately by Burma's eagerness to ingrattaie itself with CommlUllat Chlna Jllldby the recent inc Just on of three Socialists in the cabinet. The B~mese Socialist Party, from which the prese~t govermnent derives its chief political sup.port, has ~lways sul>cribed wltoleheart­edly to M;µ-xist ideology and has lately revealed stronJ, pro-Russian an.d pro-Chinese Com­munist sypipathies. It is to be expected, tlteretore, that tnqreasecl presaure by the So~laUsts froni within and by Communist China ·1roJJ1 without will. fqrce the 'l'hJUdn Nq government tQ move tc;> the left again, It is doubtful, moreover~ that any program of fin~cial assistance that the Co!Qfflonwealth CO\IJ1trl es may <levtse following their recent meeting at Colopibo will be to reverse thl's trend.

DCJspite the. leftwud tre~ut 'and the pro~Soviet tendencies of the Socialists, Socialist~ tnsptred invitations to. eatablish diplPDJ.atic and other r,1at1on~ with lhe vss~ And Co:pam,.m,.tst Chµla hale been lJJJ.SUQQessful to date. 4 U.S. Qbse"er -,in B1P"P1a J>el.ie.ves that the-' tnte,l'­natlonal Qo~~~sts ~ay be fa411ng to. ~;tplta.Uze on the ijJll.JattQJl because of a. reluctanc~ or

· unwilUngnes~ to. P.and9n tll.e 1'11,m.ese Wblte F~ Cgm~'1Jdm~ wno, though not too J1tropg a Jl'()UJ), afe tn 31"Jiied opposition~. the Gov~;rnm.ent. (gCRBT) ·

BfURMA -. . . . . r .

. Gpv11rl!!.P.!Qs J.lilJ_gr ~r.ne ._giq-misil Tb,e illll'Jlla. War °"l,Pe is p~ a m~j9r opera QJl l»W th.e heAJ't of th@ ~!!P so~ca.. , fJd · '&.wthg1Q;7 ttate ·. from a conq~J)W3tlOJJ. area µ-ow.,.d Pegu~ ·'l'Jlt pJM.1s w ,e.cmr~ li1a.~lt1'ln· 0Ji the ~~n~be.ld tern~), •tben. dr:ive 11,orPt a.10111 tb\t TO\mlOQ r~3d aJJ .far·: .a, ~,awearQP.,· .·d~lkPJPJ8 111· pc>1Jslbl11 Sar~11: dtl!' · ·,

, ~ncfl,nJ tor.oe~,. ··T~qgp,. t~·b, ~•P~pd;,mom~,,r.ql)J,,tbe ~~v~eiit·f11 -~e: ;relnfo,e•- ___ : ·' brlP.~. de ... qt i.w~_· .. '..: ~a, .plv~JlMJ> •~d.ali 1E-1ts •... 1The gperatlOJl-l. a qp~~tedw •·- ~,. -.ve,al mcmtbtJ, 13,en u,ned ,t,,~, .. tst.lm1~d :r~hlJ to cQJlsJErt.of a falr~ w,11 · _

, or,a.mzed ~.Q .. gp.ll@d "T~oo DJvJi.jJ(ffl; .91 MJQ~ 6,000 (~JtlJ ~-"'~ T~®.~. Jt\.mlltbm 110-.); u01Ji, ,~oo to a,DP9 otlltr tro11u1 IA vartcm, wt, tlMwher,, :gg,r;rUJ.a el,menia u4 va.rlws D.ffl)4'1mlfC)ffll torfU!,, a• wtll •11 an 1-ullU.p;rJ eJ.tmeat «milt, the ''Volw.,wet Jo,f.l4t"

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SECRET WEEKLY INTELLIGENCE DIGEST No. 6-50

BURMA (cont'd) ·

varying possibly from 2,000 to 5,000 (largely in the Toungoo-Nyaunglebin area). These latter troops assist and reinforce the "regulars" when necessary. The total of the Karen force is 15,500 to 19,500. , 1

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A factor in the War Qffice's decision to execute .this operation is the fact tliat the Karens apparently are running low on ammunition. No decisive suppression of the Karen insurgency, nevertheless,.is expected. The extent to which the .government actu~lly pro­secutes the operation will depend probably upon the nature of the situation as it develops along the Burma-China border (Digest 5-50) • The crisis created by Chinese Nationalists and Communists entering Burma temporariiy bas eased, according to Burmese Army .. sources, and most of the armed Chinese Communists are believed to have withdrawn. (SECRET) -

THAILAND

Political Intrigue Unabated. In an. effort to head off ~ possible coup d'etat; the possibility of which had arisen as a result of recei,.t- mounting Opposition to Premier Phibul's, regime on the part of military and civilian groups (Digest 1-50), Phibul was re--~rted-:qn-29-January to have countenanced the arrest of Lieutena,nt·Gener.al Luang Kach Songgrain and several other officers. ·Kach subsequently departed for Hong Kong by plane. Corrupt/ Lt. Gen. Kacij, although originally a member of the "Coup Party" which helped put Phibul ih power in the first place, ~eportedly had been seeking to secure the support of the built of ~e army.for himself, possibly in anticipation of an attempt to seize power. Although Kach·, s. c:leparture from the .scene possibly may diminish significant dissension among the ranks of the "Coup Party", the inter-service schism between the Army and the Navy re­mains ,s an unstabilizing factor. Thus Phibul suddenly dismissed the he~d of the Air Force in December because the latter had had close associations with a member of the opposU{ion group and Phibul desired the solid backing of the.Air Force. (The Navy during 1949 sought to swing the- weight and influence of the relatively neutral Air Force to its side.) (CONFIDENTIAL)

MALAYA . '

British Troop Streryrth. United Kingdom and Coloni~ troop strength in Malaya has drop­ped slightlyb~cause ofBritishrelnforcemen~9{Hong Kong. Units in Malaya and Hong Kong are part of the· British Far Eastern Land--Forces·-(F ARELF), the current over-all strength· of which is 48,100. In Malaya there are 3Q,600 men. Of this total 15,200 are British troops and 1~,400 are mainly Gurkhas, ¥alays, and Indians. In Hong Kong, there are 1 '1,500 Army troops, 15,000 of whom are British and 2,500 are Gtirkhas._ (SECRET) ·

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INDONESIA

· · · Progress in Unification. A major development in shaping the future ·of the new -United States of ·lndon~sta1· (U.S.I.) is the gradual dissolution of some of the Federalist states originally ca:rvea out of }Jepublican territory by the· Dutch-as a .result of-Dutch military : -. action. As a·tesult of the"We~er11ng~olt in West Java (Digest 5-50), the U.S.I. regime:,, has taken over direct centrol' of tbe :State of West Jiva. _The South Sumatra Parliament, in '

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addition, nas voted tn ·f~vor ·of ending its sep11:rate. existence. _ T.he ,process of abolition -of · . states i~ we'll a'1vanced also in East and CEl'n~,al Java and. in Madura •. This.development'·,- -· t

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SECRET WEEKLY INTELLIGENCE DIGEST No. 6-50

IN D ON E S I A (cont'd)

represents .a victory for the astute, experienced political leaders of the old Republic who now occupy almost all of the important posts in the central USI Government. These leaders are working for the reduction of the USI to one state, or at most 3 or 4 States, in contrast to the large number- approximately 16 - existent at the time of transfer of sovereignty in December 1949. (SECRET)

INDONESIA

Dutch Move To Isolate New Guinea's Economy. Since the future status of Dutch New Guinea still remains to be settled this year and since both the Dutch and the United States of Indonesia desire the- area, it i s already a bone of contention between the two. The Dutch now appear to be attempting to develop a pattern of economic isolation of New Guinea from Indonesia. The Netherlands Government has appointed the Singapore subsidiary of the

1 Netherlands firm, Hagemeyer Trading Co., as the sole exporter-importer for Netherlands New Guinea. The subsidiary i s to be renamed New Guinea Import and Export Co. and will ship textiles, vehicle~ ~ ~ onstruction material from Singapore. (SECRET)

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- ,__ Poss ble Soviet Financing. Soviet financing of subversive and guerrilla activities in Southeast Asia may be accomplished by means of gold transported to this region from the USSR via Sinkiang (China), Tibet, Bhutan (Northeast of India):, and Burma to Kong Kong for conversion to other currencies. Actual distribution centers reportedly are Bangkok (Thailand), Saigon (Indochina), and Macao (Portuguese colony near Hong Kong). There is no evidence of gold actually being smuggled to the Philippine Islands. The existence of a greater quantity of gold in Hong Kong may be indicated by the fact that the free market price of gold in Hong Kong is only 44 dollars per ounce as compared with 54 dollars in / Manila. (SECRET) / ,. - - ()µtf./ < ~ --1

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Coast-watcher System. As a result of North Korea' s recently intensified efforts to employ the east coast water route to move guerrillas and supplies into South Korea (Digest 5-50), a coas t-watcher system has been initiated along the east coas t of South Korea. Personnel from the Navy, National Police and the Great Korean Youth Corps are being utilized .. At present, a continuous watch il'l being maintained between Poangdong and Wolsong, while a partial watch system is being conducted between Wolsong and the 38th Parallel. Ultimately, it is planned that the entire coast line will be placed under surveillance. (SECRET)

JAPAN

Ttade with China Urged. Despite existing large-scale economic support from the U.S., strong economic pressures continue building up in Japan for a resumption of the large­scale pre-war Japan-China trade. Thus Premier Yoshida Shigeru on 3 February told the Budget Committee of the Lower House that Japan was ready to send trade representatives to Communist China as soon as SCAP would permit. He stated that large-scale smuggling was already in existence and that the Japanese Government believed such exchange should be legalized as soon as possible. Such a policy also has been advocated strongly by Japanese Communists. Official efforts, however, .have been made to redirect the pattern of Japanese trade so as to replace the former Northeast Asia trade with Southeast Asia trade. Many

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SECRET WEEKLY INTELLIGENCE DIGEST No. 6~50

JAPAN (cont'd)

Japanese, nevertheless, apparently believe that this will not suffice when and if large-scale U. S. economic subsidies cease. (RESTRICTED)

PHILIPPINES

Important Communists Allegedly Join Huks. Previous reports of increased activity by Communist-oriented Hukbalahap guerrillas (Digest 3-50) have been followed.by a report of the disappearance from Manila of Mariano Balgos, Secretary General of the Philippine Communist Party, and Guillermo Capadocia, co-founder and former Secretary General of the Party, who are alleged to have joined the Huks. In letters purportedly addressed by them to the left-wing Congress of Labor Organizations, in which they bold offices, they explain their action in terms of the repressive measures of the Philippine Government against labor and the administration's use -of force and fraud to secure President Quirino' s re-election. · There is such a large measure of truqt in these criticisms · against · the Government that most' Filipinos probably will accept the reasons given as representing the true motives of Balgos and Capadocis. However, the real reason is probably the J1eces­sity for them to comply with the Communist Party line laid down at the recent Peking WFTU meeting (Digest 50-49) calling for an armed struggle against established governments in the various countries of Southeast Asia, including the Philippines.

Meanwhile·, the government is endeavoring to improve its defensive capabilities by increasing Constabulary strength from 17,000 to 20,000 men, in order thereby to combat the danger involved in its current dangerously thin spread of troops. (CONFIDENTIAL)

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