CENTRAL INTELLIGENCE BULLETIN - 1958/06/11

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02985835
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 16
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: June 11, 1958

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11 June 1958
3.5(c) 3.3(h)(2) Copy No. 14 0
CENTRAL
INTELLIGENCE
BULLETIN
DOCUMENT NO .
C IN C!.A.J.
NEXT REVIEW DATE: topt
I-fAED TO: TS ) Oh /4114.�
,D,11
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REVIEWER: _
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11 JUNE 1958
I. THE COMMUNIST BLOC
USSR willing to earmark some gold
reserves as backing for Indonesian
�currency.
II. ASIA-AFRICA
Rebels resume offensive in Lebanon;
government still expects major attack
on Tripoli.
Indonesia - Central government
announces its troops have landed.
near Menado.
Arab Union - Nun i Said, ,in offer-
ing resignation, urges American
aid and adherence of Kuwait to
Union.
United Arab Republic - Renewed
attacks on Syrian leader Hawrani
indicate he may be purged shortly
by Nasir.
-,�
Cyprus - Uneasy calm exists on
island; Turks seen going all-out to
force partition.
0 Japanese Socialists planning cam-
paign to force Kishi into closer re-
lations with Communist China.
0 Burma - Premier Nu's parliamentary
victory with aid of pro-Communist
votes raises possibility of elections
and further Communist gains.
TOP SECRET
III. THE WEST
Adenauer and De Gaulle may meet
soon with French seeking financial
aid and West Germans trying to tie
Paris more closely to European
community.
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CENTRAL INTELLIGENCE BULLETIN
11 June 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
USSR-Indonesia: The Soviet Union, at the request of
Indonesia, is willing to earmark gold reserves in Moscow
for use by the Bank of Indonesia as backing for its cur-
rency. (Page 1)
II. ASIA-AFRICA
*Lebanon: Rebel forces have resumed the offensive
in northern and southern Lebanon. Government sources
continue to expect a major attack on Tripoli soon. Army
Commander General Shihab claims that a call for West-
ern intervention is becoming more imminent. The Brit-
ish ambassador in Beirut has warned that his country's
new Cyprus policy may tie up forces "earmarked for
possible deployment in Lebanon."
(Page 3) (Map)
*Indonesia,: Central government forces landed on 9
Tune at Bitung, the principal port for the dissident capi-
tal of Menado, and met no rebel resistance, according to
a Djakarta announcement. 7 itung is about 35 miles from
Menado.
Arab Union: Prime Minister Nun i Said has submitted
his resignation because of the financial difficulties facing
the Arab Union government. Nun i contends that additional
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� Western aid and the adherence of oil-rich Kuwait are
essential conditions for the Union's future existence.
His action is aimed at spurring American considera-
tion of the aid question as well as British action in
trying to force the Ruler of Kuwait to join the Union.
(Page 5)
United Arab Republic: Press attacks are again be-
ing made on Akram Hawrani, UAR vice president and
leader of the Arab Socialist party. This may indicate
that Nasir is preparing to purge him. Damascus news-
papers are denouncing Hawrani's followers among the
Syrian regional ministers for their handling of a petro-
leum shortage caused by Lebanese developments and
are criticizing new customs tariffs. At the same time,
the press is praising Minister of Interior Sarraj, Nasir's
hatchet man in Syria, and suggesting that exper s f o
Evnt may be needed to govern Syria 'directly.
(Page 6)
Cyprus: Except for isolated incidents, an uneasy
calm exists on the island after four days of communal
violence. The Turkish Cypriots, who apparently staged
the Nicosia bombing incident on 7 June, are probably
forcing the issue in an all-out bid to force partition.
London still intends to announce its 'new proposals on
17 June, but under present conditions, this effort to
promote a settlement also seems destined to fail. As
a last resort, the British may reach the conclusion
that partition of the island is the only Plausible solu-
tion.
DAILY BRIEF ii
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Japan-Communist China: The Japan Socialist party is
planning to undertake action in an effort to force the Liberal
Democratic administration to recognize Communist China.
Socialist efforts probably will gain support among many con-
servative elements and will put added pressure on Prime
Minister Kishi to resolve the impasse on Japanese,Commu-
nist Chinese trade. Peiping's interference in the recent
Japanese election campaign temporarily dampened hopes
for a satisfactory settlement. (Page 7)
Burma: Premier Nu's 127-119 parliamentary victory
over I3a Swe and Kyaw Nyein was achieved with the help of
46 votes from the Communist-dominated National Unity
Front, and adds to peculation among Burmese leaders that
Nu may grant the insurgent Burmese Communist party legal
status. If national elections are held in October, as now
seems likely, and the Communists make gains, there may
be disruptive tribal secessibnist movements �
(Page 8)
III. THE WEST
France-West Germany: In view, of France's financial
plight, De Gaulle can be expected to be receptive to West
German proposals for an early meeting with Chancellor
Adenauer in order to push for German financial assistance.
Bonn may try to use any loan to the French in an effort to
tie Paris more closry to European economic organizations.
(Page 9)
11 June 58
DAILY BRIEF lii
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Nave 4
L THE COMMUNIST BLOC1401
USSR Backs Indonesian Currency
The USSR has complied with an Indonesian request of
early June to earmark gold reserves in Moscow to raise do-
mestic confidence in Indonesia's currency,
The value of this gold loan may be $25, -
000,000, the amount the USSR reportedly was offering Indo-
nesia in April.
In late May, Foreign Minister Suba,ndrio suggested to
the American ambassador in Djakarta that the United States
should establish a gold reserve of $25,000,000 to Support
Indonesian currency.
Indonesia's gold and foreign exchange reserves have
dwindled to such a criti cal point :that Prirne Minister
Djuanda has publicly mentioned the seriousness of the coun-
try's economic condition. Indonesia's chronic difficulties
have been aggravated during the past 18 months by decreased
production, the disruption of normal trade channels, and the
Increased government expenditures imposed by the Sumatran
and Celebes revolts.
This loan could make it possible for Indonesia to use
Its dwindling gold and hard currency resources in trade
with the West. Anticipating this, the Soviet deputy foreign
minister reminded the ambassador that the Soviet Union is
ready to supply "vital goods to Indonesia on the basis of a
credit agreement," which would eliminate any need to use
these resources in free-world markets. The USSR, by re-
taining physical possession of the earmarked gold reserves,
will be in a position to exert additional pressure on Indonesia.
While Indonesia's trade remains largely oriented to free-
world markets, the Sino-Soviet bloc is increasing the impact
of its relatively small rubber purchases by dealing directly
with Indonesian producers rather than with brokers in West
Europe, and has met Indonesian food shortages by emergency
rice shipments on long-term credits. The bloc also is sup-
plying military equipment anct under a $100,000,000 credit,
ves� necessary for interisland shipping on credit.
�-F9P-SECREF
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Arose
MAP ON REVERSE OF PAGE
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AN%
LEBANESE SITUATION
AS OF 9 JUNE 1958
Army Organization and Strengths
uminn
� Horns
Infantry Battalions 6
Tall Kal
Artillery Battalions 3
�������
Reconnaissance Battalions �� 2
Tank Battalions 1
Total Army Strength 9800
"' � Hawn(
400
NORTH
Gendarmerie
Total Strength 2800
Tripoli LEBANON
SECTOR
/
/
/
Loyalist Partisans Approx. 3500
600
Air Force
Total Aircraft 38(inc1.10 jets)
Total Personnel 332
Lebanese Armed Opposition (Estimated)
Total Strength Approx. 10,200
lunyah
MEDITERRANEAN
cc
80609-2 80610-6
Beiru
Sidon
500
SOUTH
LEBANON
SECTOR
ISRAEL
MT.
--------S.
4
05(-)
2,200
BIQA SECTOR
Arsaal.
IBalabakke
egv., �
PR g /
eAblah
1"Riyacr"
11,0001
Qatana.,
Chebaali
le:;)
Qunaytirah
Damascus
000 1
�
C.:
YR I A
Lebanese Army
Lebanese Gendarmerie
Syrian Army
Lebanese Armed Opposition
Main Rebel Supply Point
Military Sector.
Pipeline
Selected Road
This is a tentative statement as of 9 June and is based
on reports of varying reliability.
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a Oaf LIVA Uri
Neel
II. ASIA -AFRICA
Situation in Lebanon
Rebel units have resumed the offensive against govern-
ment security forces in both northern and southern Lebanon,
according to reports reaching Beirut. In Tripoli, security
forces utilizing artillery claim to have destroyed the citadel
which has been used by rebel forces as a command post, and
the opposing forces have clashed outside the city. Govern-
ment sources continue to expect a major rebel attack on the
city in the near future. Druze forces estimated at 400 men
led by Kamal Xiimblatt have attacked gendarmerie and pro-
government partisans in the Mount Lebanon sector and are
proceeding northward in a move to cut the main Beirut-
Damascus highway. The harassment of rebel bands by the
Lebanese Air Force brought about a night attack on the Riyaq
air base by rebels on the night of 9-10 Sune, which was re-
pulsed.
it is beyond the ar-
my b capability to prevent increasing infiltration of armed
bands from Syria and that policing of the Lebanese frontier
by a UN-type police force would not be effective.
the possibility of a call for foreign interven-
tion is becoming more imminent, then predicted that foreign
troops could not be withdrawn "for 25 years." On the other
hand, the gendarmerie commandant has stated that the gen-
eral will prolong the Lebahese' Army's vacillating .posture
until the political situation has deteriorated to the point
where Shihab, "a la General de Gaulle," would be sum-
moned unanimously -to take control of the country.
Britain's forthcoming new Cyprus
policy would probably tie up forces "earmarked for possi-
ment in Lebanon." However,
LJ the British Mediterranean fleet could provide
about 2,000 troops for such a venture.
The political crisis shows some additional signs of be-
ing transformed into a confessional struggle. In an unprece-
dented action, the Grand Mufti of Lebanon--the nation's highest
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Neve Noe
Moslem dignitary--and the �Ulemas:-the juridical, leaders
of the Sunni Moslem faith--"excot.ximunicated" Prime Min-
ister Sulh from their sect. Deyaring "May the-curse of
Allalffall upon him," the Ulenlotsc.a.11edupon Moslems to
ostracize and disown Sulh. lof retaliation, the government
has suspended four of the Ages of the supreme Moslem
religious court who signed the decree, charging them with
engaging in political matters and demonstrating against
the government, This action will be interpreted by the
Moslem masses as meaning that the struggle in Lebanon
has assumed religious proportions, and will lessen Sulhis
influence in Moslem circles, while increasing his popu-
larity among the Christians.
The Christian Maronite community meanwhile is hav-
ing second thoughts concerning the pro-opposition attitude
of its Patriarch, who has openly criticized the government
and praised the opposition during a recent press conference.
His statement that many of his bishops had been bribed by
the government has aroused the'ire of the higher clergy, who
are reported to have petitioned the Vatican against the Patri-
arch's stand. A majority of th to be
fur us at the Patriarch.
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(1.4 1
NW'
Arab Union Prime Minister Submits Resignation
Arab Union (AU) Prime Minister Nun i Said is attempt-
ing to increase pressure for a larger amount of Western
financial aid to the new union and for stronger action by
Britain to bring oil-rich Kuwait into the AU. The AU
Treasury Ministry has drawn up a budget for presentation
to the AU Parliament On 12 June showing an estimated deficit
of $18,592,000 for the nine months ending 31 March 1959,
and the prime minister has submitted his resignation rather
than present such a budget. He is reported to have told
King Faysal that he would insist that the question of Kuwait's
joining the AU also be resolved at once. Faysal has not ac-
cepted the resignation, however, and Nun i probably does
not expect him to do so.
AU financial officials envisage that the union will normal-
ly have a deficit of about $21,000,000 annually. According to
the American Embassy in Baghdad, the Iraqis clearly expect
this shortfall to be made up,by Kuwait. Nun i stated on 9 June
that he had recently given the British ambassador in Baghdad
a "memorandum" asserting that only two courses of action
were open to Iraq: either demarcation of the Iraq-Kuwait
boundary so that a considerable part of � Kuwaiti oil-pro-
ducing area would become Iraqi territory, or incorporation
of Kuwait in the AU. Since Britain probably cannot bring
Kuwait to accept either of these courses, Nun i can be ex-
pected to make even stronger appeals for direct American
a7 British assistance.
SECRET
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AJL:A.�1VILA I
Igoe
Nasir May Institute Purge in Syrian Region of UAR
Resumption of attacks on UAR Vice President Hawrani
and his followers by the semicontrolled Damascus press
may presage a purge by Nasir of the Syrian regional gov-
ernment. The attacks are accompanied by a suggestion
that Egyptians--"statesmen from the southern :region"--
be brought in.
Similar attacks, centering on an agrarian labor reform
which Hawrani was sponsoring, occurred during Nasir's
visit to the USSR. In the present instance, Hawrani's sup-
porters among the regional government ministers are be-
ing criticized for their handling of the petroleum shortage
which has developed since the fighting in Lebanon cut the
normal supply routes for refined POL. A recent change
in the Syrian customs tariff, which had been interpreted
as aimed at bringing Syria's customs duties into line with
those of Egypt, has also been criticized in Damascus and
cited in press reports from Cairo as having irritated Nasir.
At the same time, Nasir's hatchet man in Syria, In-
terior Minister Sarraj, is being praised by the Damascus
press for his statements urging further efforts to solve
the POL situation. Sarraj and Hawrani, a demagogic po-
litical leader and theorist, have not gotten on well to-
gether in the Syrian regional government. Hawrani has
been especially suspect since it appears that his Arab
Socialist ()Math) party has not dissolved itself as was
agreed when the UAR was formed last winter. Nasir
almost certainly would like to eliminate any vestiges of
independent followings which Syrian politicians have car-
ried over into the UAR, and there have been several re-
ports that he is concerned about the situation in Syria
and has intended to take action since his return from Mos-
cow. In addition to the political situation, Nasir may be
concerned by reports of friction--possibly involving a
s
shooting affray�between E7ptian and Syrian army of-
fic,
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Niue' Noe
Japanese Socialists Plan Campaign for Recognition of
Communist aria
-
The Japan Socialist party has adopted a new policy
designed to revitalize Japanese elements advocating re-
lations with Communist China and to force the ruling
Liberal-Democratic administration into early recogni.
tion of the Peiping regime,
The Socialists will hold nationwide rallies to gain
support for their policy and are planning to send a dele-
gation to Peiping to sound out the attitude of Chinese
Communist leaders toward Japan.
� Although Peiping's efforts to influence the recent
Diet elections in Japan caused considerable resentment
among the Japanese and its suspension of trade rela-
tions dampened Japanese business hopes for expanded
trade, there remains widespread sentiment for closer
relations with the China mainland, both for trade and
cultural development. The Socialist campaign, there-
fore, probably will gain support among many conserva-
tives and result in pressure on the Kishi government
to solve at least the trade impasse. The mandate which
Kishi received in the recent elections, however, should
enable him for the present to resist Peiping's demands
for rapid political concessions.
441 -
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Nap,
Burma
The Communist-dominated National Unity Front, which
provided Premier U Nu with 46 votes in his 12'7-to-119 par-
liamentary victory on 9 Tune, and the insurgent Burma Com-
munist party are probably the main beneficiaries of the po-
litical crisis in Burma.
U Nu has been in correspondence with insurgent lead-
ers since January searching for an acceptable formula for
their mass surrender. They speculate that Nu must have
promised the legalization of the Communist party in re-
turn for NUF parliamentary support.
NUF leaders are already reported making substantial
gains by urging war-weary rural voters that the combina-
tion of ."Nu and NUF" would mean peace. Although U Nu
is expected to disown both the NUF and the Burmese Com-
munists prior to the general elections, it appears that the
NUF hai. already established a firm grip on his political
coattails.
after the budgetary session of Parliament in August, Pre-
mier Nu will call for general elections to_take place 60
days later. Primary interest will center on Communist
gains,as there is fear that, if the Burma Communist party
is legalized and the split between Nu and his former col-
leagues continues, the Communists and their allies, who
won about 34 percent of the vote in the last election, could
win a parliamentary majority.
Shan States nationalists, led by the secessionist Mahadevi
of Yawnghwe, wife of Burma's first president, are already
organizing a new Shan party which is prepared to secede if
Communists make a strong election showing. As the govern-
ment is pledged to fight to preserve the Union, this could lead
to civil war. In addition, General Ne Win, army commander,
has warned that the army will take action if Communists are
included in the government.
J-3
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II. L.1116.1111.4
Nei
I I L THE WEST
De Gaulle Pressing Bonn for Finaricial Assistance
West German suggestions that Chancellor Adenauer
would welcome an early meeting with French Premier de
Gaulle will probably be taken up by De Gaulle in order to
push negotiations for German financial assistance to
France. French
Foreign Minister Couve de Murville has continued, on
De Gaulle's behalf, consultations started under the Gaillard
government looking to a large West German credit to
France, estimated by the source at $240-480,000,000.
Further discussion concerning the credit, which would
be covered by French Saharan oil production, is expected
to be entrusted to "one of nr, pingpr rolleagues."
unofficial
talks between French and German nationals on the Com-
mon-Market Commission on the possibility of a $100,000,-
000 German credit. The latter figure seems a more real-
istic estimate of the amount which might be negotiated.
Meanwhile, Paris has been pressing for German per-
mission to draw on $34,0'00,000 in deutschmark credits
in the International Monetary Fund, in advance of the
scheduled release date and without satisfying the condi-
tions under which the funds were earmarked for France
last winter, in order to apply them to the French deficit
in the European Payments Union for May. Thus far Bonn
has been reluctant to accede to this request.
� A 9 June statement by Couve de Murville reaffirming
French treaty commitments noted that implementation of
France's Common-Market obligations would depend on a
rapid iffirrovemient in the deteriorating French economic
picture. This suggests that De Gaulle, whose personal
views on continued French participation in European eco-
nomic integration are not known but have been reported
as unfavorable, may play on Bonn's desire to ensure con-
tinued French participation.
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