CENTRAL INTELLIGENCE BULLETIN - 1958/09/26

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02992199
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 22
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: September 26, 1958

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26 September 1958
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CENTRAL
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26 SEPTEMBER 1958
I. THE COMMUNIST BLOC
Taiwan Strait - Situation on Tatan and
Erhtan becoming critical.
0
Peiping suggests readiness to renounce
use of force in Taiwan Strait area tem-
porarily if offshore islands are "re-
covered."
GM1C statement on
23 September
Tyura Tam missile launching.
IL ASIA-AFRICA
Lebanon - Phalange leader says new
Karame cabinet is unacceptable to
Christians; will seek to block parlia-
mentary confirmation.
Cyprus - Spank seeks postponement of
British plan, new talks, in effort to
forestall repercussions in NATO.
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Kuwait official announces readiness to
join Arab League.
India seeks additional Soviet help
for oil industry.
Burma - Rumors of army coup are
growing.
IIL THE WEST
UK advises it may attempt to defend
British ships entering Amoy, Foochow
if attacked.
France - Soustelle bent on outlawing
Communist party.
Cuba - Castro seeks formation of
rebel provisional government.
Peru reacts strongly to US lead and
zinc import quotas.
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CENTRAL INTELLIGENCE BULLETIN
26 September 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
*Taiwan Strait: Communist shelling and resupply dif-
ficulties have made the situation on 'ratan and Erhtan critiaal,
and American officials are of the opinion that all positions on
both islands will be destroyed eventually. The Nationalists
can be expected to press American authorities for effo7ts
to relieve the islands.
Military activity in the strait centers around air ac-
tion, with another clash reported in the ICinmen area on 25
September. (Page 1) (Map)
Communist China: A memorandum issued to foreign
diplomats in Peiping on 20 September strongly suggests a
illingness to consider "recovery" of the offshore islands
as the price for a temporary renunciation of force in the
Taiwan Strait area. The memorandum states that Commu-
nist China has "every right and necessity" to take "military
measures" against the offshore islands and implies that
other territories--Taiwan and the Penghus--could be
"liberated" by peaceful means. This approach is in line
with repeated commentaries which have distinguished be-
tween the immediate "recovery"( 'of the offshore islands and
the eventual acauisition of Taiwan.
GMIC statement on
Tyura Tam missile' lauucking.
(Page 3)
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IL ASIA-AFRICA
,Lebanon: The leader of the Christian Phalange has
stated that the Karame cabinet is unacceptable and'indicated
that efforts would be made to block its confirmation by par-
liament on 30 September. Lebanese army headquarters states
It intends to remove all barricades on 27 September. Army
suppression of forays by Moslem extremists on 25 September
has reduced tension in Christian quarters.
Cyprus-NATO: NATO Secretary General Spaak is mak-
ing an 11th hour effort to forestall a possible sharp deteriora-
tion of relations within the alliance over the Cyprus dispute.
He is pressing for postponement of the 1 October date for
implementation of the new British� plan for Cyprus and for an
early conference of representatives of Greece, Turkey,
Britain, and the Greek and Turkish Cypriots under the aegis
of NATO. As a result of Spaak's surprtse visit to Athens,
Greece, probably with the approval of Archbishop Makarios,
has accepted the proposal of a conference.
Kuwait: Kuwait's deputy ruler, Abdulla Mubarak, said
in Cairo on 24 September that Kuwait is prepared to join the
Arab League and contribute to an Arab Development Bank in
the "very near future." This action may take place at the
Cairo meeting of the league's political committee scheduled
for 1 October. Britain is formally empowered to handle
Kuwait's foreign relations, but in Arab affairs the Rifler,
who feels that an accommodation with Nasir is necessary,
has recently assumed an increasingly independent viewpoirit_
(Page 5)
India-USSR: The Indian minister of state for mines and
oil left on 25 September for Moscow to seek additional oil-
drilling equipment, presumably for exploiting a new Indian oil
strike near Bombay. He may also explore the possibility of
Soviet assistance for construction of a refinery in Bihar and
26 Sept 58
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will visit Bucharest to sign an agreement on Rumanian fi-
nancial assistance for a smaller refinery in Assam.
(Page 7)
Burma: Rumors of an imminent coup by the army are
snowballing in Rangoonnd tension among the people is mount-
ing. While the American ambassador has no firm evidence
which gives credence to these reports, he points to the dan-
ger that a grab for power might be touched off by some minor
Incidents in the highly charged atmosphere.
ILL THE WEST
Britain - Taiwan Strait: Britain has advised the US
that it will inform the Chinese Nationalists it might be obliged
to protect any British ships which are attacked while entering
Amoy or Foochow. While London has advised British shipping
to stay clear of the Taiwan Strait, the British say some ships
insist on continuing to enter the two ports, and London is un-
willing to abandon the principle of freedom of the seas.
(Page 8)
France:
the Frenchvernmen is
cumulate evidence of Communist party collaboration in Al-
gerian rebel activities, with the aim of outlawing the party
after the November parliamentary elections. De Gaulle in-
tends to restrict Communist influence in the future French
government by a new electoral law, but probably would not
favor actual outlawing unless the Communists appeared to
nose a direct threat to his government.
26 Sept 58
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Cuba: Members of a Cuban united front, which is as-
sociated with Fidel Castro's 26th of July movement, plan to
meet in the rebel-held Sierra Maestra of eastern Cuba dur-
ing the coming week to establish a provisional government.
Castro has been considering the establishment of such a
government, either in exile or in the "Free Territory of
Cuba." (Page 10)
Peru: The bitterness of Peruvian reaction to the new
US import quotas for lead and zinc marks the lowest point
In many years in US-Peruvian relations. The cabinet's state-
ment that if quotas are maintained it will seek "new interna-
tional markets," and congressional demands for diplomatic
relations with iron curtain countries, mark departure from
Peru's long-standing policies in regard to the Soviet bloc.
(Page 11)
IV. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
(Available during the preceding week)
National Intelligence Estimate No. 89-58. The
IVenezuelan Situation and Prospects. 9 September 1958.
Special National Intelligence Estimate No. 100-11-58.
if Probable Chinese Communist and Soviet Intentions in the
'Taiwan Strait Area. 16 September 1958.
National Intelligence Estimate No. 12:6-58. The
!Outlook in Poland. 16 September 1958.
26 Sept 58
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I. THE COMMUNIST BLOC
Taiwan Strait Situation
American officials on Kinmen report that the situation
on Tatan and Erhtan now is critical and are of the opinion
that all positions on both islands eventually will be destroyed.
Resupply operations have been ineffective, and the troops
are spending most of their time in shelters to escape the
heavy shelling. Evacuation of wounded and shipment of
small critical supply items are being carried out by frog-
men in small craft. The Communists have increased their
fire and now are using delay fuzes which result in deeper
penetration.
The Nationalists can be expected to press American au-
thorities for action to relieve the islands. Chiang Kai-shek
has stated all resources will be used for their defense if an
invasion attempt is made.
There is evidence that politically active indigenous
Taiwanese, including several members of the Provincial
Assembly, are privately opposed to the Nationalist Govern-
ment's position that the offshore islands must be held at all
costs. These individuals believe that as long as the United
States remains committed to the defense of Taiwan, the
islands could be abandoned with safety and they hope that the
Warsaw talks will prevent further bloodshed.
Because of this feeling, Nationalist Premier Chen
Cheng was forced to use pressure tactics to obtain passage
on 16 September of a resolution supporting government policy.
Kuomintang secretary Chang Li-sheng stated that "if criti-
cism continued" then all powers would be used, including
antipress laws and martial law, to suppress the Taiwanese
until the present crisis is over.
Reliable information on the attitude of the Taiwanese
public is lacking. Taiwanese make up over 50 percent of the
offshore island garrison, and Nationalist authorities have ex-
pressed concern over Taiwanese popular reaction if casualties
become heavy or the islands should fall.
The Chinese Nationalists report that an air engagement
took place about 30 nautical miles southeast of Kinmen on 25
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26 Sept 58
CFKITRAI INITFI I ICZFNCF 111111 FTIN
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September. Preliminary Preliminary information indicates that four Na-
tionalist fighters engaged two stragglers from a 16-plane Com-
munist formation and that one MIG was shot down. This re-
port has not been confirmed.
Further information on the widespread air engagements of
24 September now is available. Taiwan Defense Command re-
ports that 10 M1G's were shot down, two others probably, and
three were damaged. It is evident that the Nationalists em-
ployed their fighters aggressively. Several flights penetrated
as far inland as 25 nautical miles and one flight as far as 50
nautical miles.
Chinese Nationalist Air Force officials report that dur-
ing one of the engagements six Sidewinders were successfully
launched; four scored kills and two missed. American of-
ficials report that as a result of these victories, the Nation-
alists are jubilant and are apparently more satisfied with
their present equipment. Demonstrated Nationalist superior-
ity in tactics and training over the Communists may warrant
re-evaluation of relative Nationalist and Communist air
strength. The American advisers also point out, however, that
the logical Communist reply to the use of Sidewinders is the
provision of similar Soviet equipment for use against the Na-
tionalists.
Communist China's Foreign Ministry on 25 September is-
sued its "13th serious warning" to the US regarding the "intru-
sion" of American warships and eight fighter planes in the
Amoy area.
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GMIC Statement of 16001 25 September 1958
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IL ASIA-AFRICA
Kuwait Developments
Kuwait, the largest Middle East oil producer, appears
headed toward closer relations with Nasir. The statement
by Kuwait's deputy ruler SheikAbduila Mubarak, in Cairo
on 24 September that Kuwait was prepared to join the Arab
League and contribute to an Arab Development Bank in the
"very near future," suggests that Kuwait may join the
Egyptian-dominated league at the Cairo meeting of the league's
political committee scheduled for 1 October.
The Arab League has been attempting to promote an
Arab Bank for Economic Development, to which each mem-
ber state would contribute funds on the basis of an assessment
proportional to its income. Such a bank, in association with
a strengthened Arab League, would also afford a means by
which independent Arab states could be forced to acknowledge
Nasir's foreign policy leadership and to contribute from oil
revenues to UAR economic development without the need to
change their political institutions. On 10 September,: ,Lebanese
politician Emile Bustani declared that the Ruler of Kuwait had
expressed willingness to invest 5 percent of his annual oil
revenues of about $300,000,000 in an Arab Development Bank,
although he was reluctant to be the first to do so. Other re-
ports suggest that the Ruler has agreed in principle to invest
a portion of his income in Cairo.
Although Britain is empowered by treaty to handle Kuwait's
foreign relations, the Ruler, who considers that an understanding
with Nasir would protect his interests, has in recent months
conducted relations with the Arab states in an increasingly in-
dependent manner. After the Iraqi revolution in mid-July, the
Ruler advised the British that he considered it necessary to
appease radical Arab nationalism by joining the league. He
is reported to have changed his mind subsequently. There is
no available information to suggest that the British were con-
sulted in connection with Abdulla Mubarak's recent Cairo state-
ment.
26 Sept 58 CENTRAL INTFI I InFkIrP RI III PTIKI
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The Kuwait! nationalist press has
also tor the first time been permitted to direct sharp
criticism against the Kuwait Oil Company which is jointly
owned by British and American interests.1
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India Seeks Additional Soviet Bloc Aid for Its Oil Industry
Soviet bloc participation in India's expanding oil industry
will probably be increased. India's Minister of State for Mines
and Oil IC D. Malaviya left on 25 September to explore in
Moscow the possibility of obtaining more oil-drilling equip-
ment and Soviet aid for a government-owned oil refinery to
be built in Bihar State in eastern India. He plans also to
visit Bucharest, to sign an agreement for about $18,000,000
In Rumanian financial assistance for a 750,000-ton refinery
to be constructed at Gauhati, Assam State, in easternmost
India.
The Indian Government now has four large drilling rigs
of Soviet and Rumanian origin. A promising oil strike made in
early September at Cambay, near Bombay city, is probably
responsible for increased Indian interest in drilling rigs. A
total of 110 Soviet and 10 Rumanian technicians are in India
assisting in exploration and drilling operations.
New Delhi is also considering construction of a 2,000,-
000-ton crude oil refinery at Barauni, Bihar State, to process
oil produced in Assam State. Total cost is estimated at $82,-
000,000. The USSR has expressed interest in aiding the
project, and New Delhi has requested that a study be made
by Soviet experts. Malaviya presumably will explore Soviet
willingness to finance foreign exchange costs of the refinery.
Western countries have as yet shown no firm interest.
India on 28 August announced formation of a government-
owned company with an authorized capital of $63,000,000 to
manage the two petroleum refineries.
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III. THE WEST
British Say They Will Protect Their Shipping in
Taiwan Strait
Britain plans to informille Chinese Nationalist Govern-
ment that the British Navy might be obliged to protect British
ships attacked in the Taiwan Strait area.
London has warned British shipping to keep clear of
the strait and particularly Amoy and Foochow, but states that
a few ships insist on asserting their right to enter the ports.
While some British vessels have continued to enter Foochow
since mid-August, none is known to have been in Amoy since
8 August.
The British demarche appears designed to warn the
Chinese Nationalists to continue to avoid molesting British
vessels, and to avoid Labor party charges that the govern-
ment is less diligent in protecting traditional rights on the
high seas against the Chinese Nationalists than against Ice-
land.
London has little evident desire to provide actual pro-
tection, and has only one frigate and three mine sweepers
based at Hong Kong. A Foreign Office official stated on 19
September that all naval vessels had been ordered to stay out
of the Taiwan Strait area unless needed to protect British
ships in distress. Recent Chinese Communist threatening
gestures in waters off Hong Kong would also make the British
reluctant to move any naval vessels from there.
-SECRET
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French Communist Party May Be Outlawed After
November Elections
The French Government is trying to accumulate evi-
dence that the French Communist party (PCF) is master-
minding the activities of the Algerian rebels
This
data would be used to support the outlawing of the party after
the November parliamentary elections.
De Gaulle has no illusions about the Communists and in-
tends to restrict their influence in the future through a change
in the electoral law, but he probably would not favor actually
outlawing the party unless it seemed to pose a direct threat
to his government.
Only a small percentage of the Algerian rebel organiza-
tion is believed to be Communist influenced, although the
PCF has probably given at least tacit encouragement to FLN
terrorists. The PCF is aware from various public state-
ments that rightist political leaders are interested in sup-
pressing it and that the new Article 4 in the proposed constitu-
tion, which says all parties must respect "the principles of
national sovereignty and of democracy," could provide the
legal basis for such action. Consequently, the party has
been careful to avoid overt encouragement of violence, either
electoral or terrorist, at this time.
Soustelle appears to be sponsoring the incipient cam-
paign to outlaw the Communists as a part of his personal
bid for the premiership. His own rightist party could draw
support from:the reservoir of anti-Communist voters in
France, and he could perhaps assure himself the support
of the army by using the Communist threat to sabotage any
compromise solution in Algeria.
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41.1
Cuban Opposition Plans to Establish Provisional Government
Representatives of the Cuban opposition groups which
subscribe to the Caracas unity pact, signed last July, plan
to meet with rebel leader Fidel Castro in the Sierra Maestra
of eastern Cuba during the next week and establish a pro-
visional government under Manuel Urrutia, Castro's personal
choice for president. Castro, who in practice dominates the
opposition unity front, has long desired recognition as a
belligerent and has previously considered establishing such
a provisional government, either in exile or in the "Free
Territory of Cuba"--the name applied by the rebels to the
areas in Oriente Province under their control.
The move is being made primarily for propaganda pur-
poses. The rebels are incapable of defending a permanent,
stationary government against air attacks by Cuban Army
Air Force planes, and any government they might, establish
would have to be loosely organized. The rebels have recently
made efforts to set up civil government in some areas in
Oriente Province and have established schools and hospitals,
levied taxes--against US as well as Cuban enterprises--and
set up some "government ministries."
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Bitter Peruvian Reaction to New US Lead and Zinc Quotas
Peruvian political parties and all shades of press opinion
are in agreement in bitterly criticizing the new US quotas for
lead and zinc, and the cabinet has decided to seek "new inter-
national markets" in the Soviet bloc if the quotas are main-
tained. Many congressmen endorse the search for markets
and are also demanding diplomatic relations with the bloc.
The American Embassy in Lima comments that US-Peruvian
relations are at the lowest point in many years, and Ambas-
sador Achilles has canceled a week's leave in the interior be-
cause of reports that the Communists plan to use his visit as
a take-off for anti-US demonstrations.
The cabinet's action may be attributed in part to the
political instability which has repeatedly threatened the ad-
ministration's tenure during the past nine months. While the
search for bloc markets is likely to mean little economically,
it will be an abrupt departure from Peru's long-standing
policies of opposition to the Soviet bloc.
The other major lead and zinc producers-- Australia,,
Mexico, and Canada--were also critical of the quotas. The
restrictions threaten a further loss of work in Australia's big
lead and zinc mining centers, already affected by declining
prices. Referring to the quotas, cabinet minister Spooner
told the Senate on 24 September: "It will be a long time before
Australia forgets."
Official Mexican reaction was mild, but the politically
influential leader of the miners' union said that traditional
inter-American friendship is being destroyed, and producing
countries will be forced to find alternative and more profit-
able markets in nations with more understanding and firmer
policies.
In Canada, Trade .Minister. Churchill.. reportedly_tpld a
Dress cpnference that .CanAd4 will protest restrictions _: as an
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Nrof
iniringement of GATT and seek US reconsideration of the
move.
-CONFIDENTIAL
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`INS
THE PRESIDENT
The Vice President
Executive Offices of the White House
Special Assistant for National Security Affairs
Scientific Adviser to the President
Director of the Budget
Office of Defense and Civilian Mobilization
Special Assistant for Security Operations Coordination
Board of Consultants on Foreign Intelligence Activities
Special Assistant for Foreign Economic Policy
Special Adviser to the President
The Treasury Department
The Secretary of the Treasury
The Department of State
The Secretary of State
The Under Secretary of State
The Under Secretary of State for Economic Affairs
The Deputy Under Secretary for Political Affairs
The Deputy Under Secretary for Administration
The Counselor
Director, International Cooperation Administration
The Director of Intelligence and Research
The Department of Defense
The Secretary of Defense
The Deputy Secretary of Defense
The Secretary of the Army
The Secretary of the Navy
The Secretary of the Air Force
The Chairman, The Joint Chiefs of Staff
Commandant, United States Marine Corps
The Director, The Joint Staff
Chief of Staff, United States Army
Chief of Naval Operations, United States Navy
Chief of Staff, United States Air Force
Assistant to Secretary of Defense for Special Operations
Deputy Director for Intelligence, The Joint Staff
Assistant Chief of Staff for Intelligence, Department of the Army
Director of Naval Intelligence, Department of the Navy
Assistant Chief of Staff, Intelligence, Department of the Air Force
Supreme Allied Commander, Europe
Commander in Chief, Pacific
The Department of the Interior
The Secretary of the Interior
Federal Bureau of Investigation
The Director
Atomic Energy Commission
.The Chairman
National Security Agency
The Director
National Indications Center
The Director
United States Information Agency
The Dirqctor
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