S/P Files: Lot 64 D 563

Memorandum of Telephone Conversation, Prepared in the Department of State

top secret
Participants: First Party and Second Party
Telephone conversation, 5:00 p.m., February 4, 1951

Second Party stated that he had discussed questions brought up in telephone conversation of February 3 with Third Party. Third Party says position of his group is very delicate and any change in his plans might look suspicious. For this reason it would be impossible for him to proceed to Europe via the Far East.…

Third Party says that it would be no help to have someone in Hong Kong (or elsewhere in FE) at present, as several weeks will be required for Peiking tempers to cool over the aggression resolution and it would not be profitable to initiate any talks now.

As to Formosa, Third Party feels that March and April will be the critical months and that he’s confident that no decision on an attack will be made before he (Third Party) gets back to Peiking. Chou En-lai and others realize that the Formosa attack is a dangerous undertaking which could fail; therefore they will be willing to explore means of settling the problem other than by attack. However, if we use Chiang’s forces against the mainland, all hope of a coup d’etat or a defection from Moscow will be irretrievably lost.

As to the prospect of mutual phasing out of operations in Korea, Third Party feels that this is now complicated by the aggression resolution and that it may have to be a rather long drawn out process, as the Chinese must now save some face and must bear in mind Big Brother looking over their shoulders. However, Third Party feels that the situation is quite static and can be stalled along without too great dangers.

Third Party feels that it will be of continuing importance for Peiking to feel that there are some people here who understand what is politically possible to the regime, and who understand that Big Brother cannot be disposed of over-night.

Questioned as to whether the foregoing views of Third Party might not represent a bit of Oriental price-raising by Second Party [Third [Page 1562] Party], Second Party was inclined to agree. (Note: To counter any such bargaining tendency it might be advisable to allow a few days period without any indication of further interest.)