Foreign Relations of the United States, 1964–1968, Volume XXX, China

222. Memorandum for Secretary of State Rusk Prepared in the Central Intelligence Agency¹

Washington, undated.

This memorandum describes the current state of CIA-GRC relations in the context of their historical development, and cites the critical CIA-GRC intelligence activities that deserve special attention.

1. In the early 1950s the fundamental CIA-GRC relationship was established under circumstances in which CIA appeared to be the only U.S. agency in a position to assist the GRC in their ambitions, among other things, to conduct operations against the Mainland. After the Korean War, this assistance shifted from unproductive paramilitary operations to the development of highly productive and valuable technical operations involving communications intelligence and low and high overhead reconnaissance aircraft flights. The development of these very useful programs was facilitated by the position of Chiang Ching-kuo as the chief of all GRC intelligence activities, by CIA’s support to media operations of great interest to the GRC, and by the apparently stable international position of the GRC. Chinese Communist reverses, particularly economic, and the GRC’s belief that the Vietnam war might make possible their involvement in some sort of counterattack, also contributed to the GRC’s motivation in cooperating with CIA in consolidating and expanding the productive comint and overhead reconnaissance activities.

2. In 1964 the growth of CIA-GRC relationships began to level off and then deteriorated slightly as CIA minimized its support to unproductive, infeasible GRC Mainland operations, particularly paramilitary, and reduced the size of its Taipei Station. While both actions were taken essentially for reasons of marginal productivity, tight budgets, and security, the GRC apparently chose to believe that these actions were somehow connected with a larger U.S. intent to “disengage”, which they seem to read as being reinforced by, among other events, reductions in the Military Aid Program, and by the U.S. efforts to prevent Chinese Communist involvement in the Vietnam war. Nevertheless, the GRC maintained good fundamental relationships with CIA by continuing to give full support to the critical comint and high overhead reconnaissance programs and by facilitating the establishment of an over-the-horizon radar site on Taiwan designed to monitor Chinese Communist missile firings.

3. In late 1965, CIA determined that the commercial passenger activities of the Civil Air Transport (CAT) airline should be terminated because CAT was no longer essential to the support of CIA clandestine activities and was not intended to compete commercially with other airlines. Although the intent to terminate CAT was conveyed to the GRC through the CAT organization and was accompanied by reassurances of assistance in establishing the GRC’s own national flag air carrier, the GRC has prolonged the phase-out negotiations partly because they are aware of CIA’s equity in CAT and consider termination of CAT, again, as part of “disengagement.”

4. In mid-1966, the United States Intelligence Board decided the Grosbeak program would be terminated because the product did not justify the risk of crew losses and the men, money, and equipment involved could be better used elsewhere in the context of the Vietnam war. This decision was made after an extensive analysis of the program’s value and was conditioned by the fact that in the preceding two years only two Grosbeak flights had been made. The two flights reflected CIA and GRC concern over crew losses versus the flight’s product. Therefore, it was calculated that, while the GRC might challenge the termination decision as a further example of U.S. “disengagement”, they would eventually accept it because they privately and fundamentally did not want to make any more flights.

5. Contrarily, however, the GRC’s reaction, expressed by Chiang Ching-kuo, was to challenge directly CIA’s right to terminate an established joint project and to demand a letter of termination intent before any phase-out negotiations could be begun. This letter was delivered to the GRC on 17 November and has not been answered. Subsequent unilateral GRC actions have terminated a joint maritime collection team and the Joint Operations Office without explanation. Neither activity is important to CIA-GRC collection interests. To date, the three critical collection activities—comint, high-level reconnaissance, and over-the-horizon radar—have not been seriously threatened by the GRC. At one point, however, the GRC did suggest that the high-level reconnaissance program might be canceled but they have since flown one mission.

6. An analysis of the reasons for the GRC’s adverse reaction to the Grosbeak termination strongly suggests that their reaction was not motivated solely by the Grosbeak decision. Rather their reaction is motivated partly by their strong pique at the U.S., particularly for CIA’s very lukewarm response to their resurrected ambitious paramilitary schemes directed at the Mainland’s turmoil, and partly by their distrust of U.S. intentions in the recent UN Chirep action. The GRC’s adverse reaction has been further conditioned by their recognition that the special relationship with CIA, which they believed existed as a means of facilitating ambitions with or without reference to U.S. policies, was in reality a relationship fully and officially governed on the U.S. side by U.S. interests and needs as determined by the policy-making levels of the government.

7. A forecast of the GRC’s likely further action bearing on its joint activities with CIA is difficult to make because of the variety of the governing factors. It is anticipated, though, that the GRC’s action will be less adverse than might have been expected prior to the UN Chirep vote. On the other hand, should CIA for budgetary reasons have to reduce further its support to non-critical joint operations, particularly the media operations, the GRC may actually respond by moving against one of the three critical activities. In any case, it is unlikely that the GRC will move adversely against any of the three critical activities except as a desperation measure, since they also receive highly useful intelligence benefits from these activities.

8. CIA does not intend to challenge any further adverse GRC unilateral action against non-critical joint activities. The critical programs will continue to receive essential CIA support for their own value and, should the GRC unilaterally act against any of them, CIA will seek to ameliorate the GRC’s action. CIA does not wish to continue non-critical activities solely as the GRC’s price for the critical programs.

9. During your visit to Taipei we suggest that you not raise the subject of CIA-GRC relations with the GRC leaders. Should the GRC raise the topic however, we suggest that you restate U.S. interest in continuing the three critical activities of comint, high-level overhead reconnaissance, and over-the-horizon radar.

10. Mr. [less than 1 line of source text not declassified], CIA Taipei Station Chief, has kept the Ambassador fully informed of the current CIA-GRC relationship.

1. Source: Department of State, INR Files, 1966 FE Weekly Staff Meetings. Secret. The memorandum, unsigned and undated, is attached to an unsigned covering December 1 memorandum to Bundy. Both are attached to a December 5 memorandum from McAfee to Hughes recording a December 1 meeting between Bundy and Colby, at which the memorandum was given to Bundy for his use in briefing the Secretary for his forthcoming trip to Asia.