CENTRAL INTELLIGENCE BULLETIN - 1958/09/27

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 02998374
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 19
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: September 27, 1958

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qw.v -MID-SECRET-
3.5(c) /
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27 September 1958
Copy No. C
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59
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411110,
policy toward Western companies.
27 SEPTEMpER 1958
I. THE COMMUNIST BLOC
Moscow renews offer of wheat to Bel-
grade; hopes to weaken Yugoslav nego-
tiating position with US.
USSR offers to construct another steel
mill in India.
Taiwan Strait - Indian. Embassy officer
in Peiping believes Chinese Communists
want to keep Warsaw talks going. 0
II. ASIA-AFRICA
Burmese Army moves to control govern-
ment; U Nu agrees to resign on 28 October
in favor of Commander in Chief Ne Win.
Nasir seeks to develop an over-all Arab oil
0
Saudi Arabia - Differences between Faysal
and Saud apparently sharpening.
yemen - Ability of Imam to control So-
viet influence in Yemen appears doubt-
0 Turkey calls meeting of Baghdad Pact
representatives for 1 October to final-
ize transfer of pact secretariat to An-
kara.
III. THE WEST
For views of Ambassador Lodge on sit-
uation if offshore islands question comes
before UN, see p.
0 British cabinet rejects Spaak's proposal
to delay Cyprus plan beyond 1 October.
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CENTRAL INTELLIGENCE BULLETIN
Ns\ '27 September 1958
I.
L THE COMMUNIST BLOC
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%Lai I
DAILY BRIEF
USSR-Yugoslavia: By renewing an offer of 200,000
tons of wheat to Yugoslavia, delivery of which, according
to the Yugoslays, had been withheld; the USSR probably
hopes to discredit Yugoslav arguments that Moscow's trade
carries political strings and to undermine Belgrade's posi-
tion in its current conotnic negotiations with the US.
(Page 1)
�\\ USSR-India: The USSR apparently has offered to
construct India's fourth government-owned steel mill
provided New Delhi agrees to permit beginning of con-
struction in the near future. Moscow's contingent offer may
be an attempt to preclude Western construction of the plant,
as Soviet construction of the Bhilai steel mill has been
Moscow's most successfully propagandized effort in the
underdeveloped countries. (Page 2)
(MaP)
Taiwan Strait situation: Foreign Secretary Lloyd
told Secretary Dulles on 25 September that the British
charg�n Peiping has reported a conversation with an
Indian Embassy officer from which Lloyd gained theimpres-
sion. that the . Chinese Communists "want to keep the
Warsaw talks going." Communist China's Foreign Ministry
has issued its "14th serious warning" to the US, this one
regardina the .1'intrusion" of six American warships.
(Page 3) (Map)
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IL ASIA-AFRICA
Coup in Burma con-
trol the government. Premier U Nu has agreed to resign in
: The Burmese Army has moved to favor of Commander in Chief We Win on 28 October when
Parliament meets. Ne Win is strongly anti-Communist and �*\\\
inclined to cooperate with the West. He was probably, per-
suaded to take action because, of the threat of widespread
violence prior to national elections previously expected in
November. He nrobablv eaually feared sizable Communist
gains. (Page 5)
Middle East oil: 'Naar's expected drive against West-
ern oil interests in the Middle East apparently has begun.
The relatively amicable atmosphere which had character-
ized recent profit-sharing negotiations between Syria and
the American-owned Tapline carrying Saudi oil to the
Mediterranean changed following orders from Cairo. The
Introduction of unacceptable demands appears designed
ultimately to move the scene of decisive negotiations to
Cairo, where an over-all Arab oil policy toward Western
oil companies probably is being developed.
(Page 6)
Saudi Arabia: Differences of opinion between Crown
Prince Faysal and King Saud over Faysars efforts to limit
expenditures of the King and other members of the royal
family apparently are sharpening. Saudi Commerce Minis-
ter Ali Riza has stated that Faysal is prepared to take "ex-
treme measures" to enforce his new budget decisions. All
Riza states that Saud is striving to convert a considerable
amount of personal and real property into cash, and All
Riza considers that the King may be preparing to leave
the country if future political developments are unfavorable
to him. (Page 7)
Yemen: The Imam of Yemen, who plans to seek medi-
cal treatment abroad in the near future, is becoming more
detached from public affairs, and his continued ability to con-
trol Soviet influence in Yemen appears doubtful. Anti-American
Crown Prince Badr is indifferent to the deterioration within
27 Sept 58
DAILY BRIEF ii
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the government; he appears interested primarily in increas
ing -USSR and UAR influence in the belief support by these
powers will ensure his succession.
Baghdad Pact: Pact representatives will meet in
Ankara on 1 October at Turkey's request in an effort to
finalize the transfer of the secretariat from Baghdad to An-
kara and to discuss problems arising therefrom.
I IL THE WEST
Chinese UN representation: Ambassador Lodge warns
that the Chinese representation issue may again be raised at
e General Assembly in a matter of weeks if the offshore
slands question comes to the United Nations under circum-
tances appearing to threaten war. The ambassador believes
that the United States may then not be able to hold its position.
He fears a weakening of Latin American support, essential to
maintain the third of total v t s whicia is leeded to block
reintroduction of the issue. (Page 9)
Cyprus: The British cabinet has decided not to permit
NATO Secretary General Spaat;.'s proposal to delay implemen- �
talon of Britain's Cyprus plan beyond 1 October. This decision,
together with the Turkish NATO representative's categorical
rejection of Spaak's conference proposal, appears to have de-
feated the Secretary General's last-minute efforts to forestall
the expected violent reaction in 'Greece and Cyprus when the plan
goes into effect. /
27 Sept 58
DAILY BRIEF iii
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Taiwan Strait Situation
Foreign Secretary Lloyd told Secretary Dulles on 25
September that the British charge in Peiping has reported
a conversation with an Indian Embassy officer there, from
which it appeared that the Chinese Communists "want to keep
the Warsaw talks going." The charge report apparently con-
tained a hint that India might undertake mediation between
the Chinese COmmunists and the United States. Peiping is
unlikely, however, to desire at this time such mediation
or a neutralist move to debate the offshore islands dispute in
the UN. Although gratified with gains on the UN representa-
tion issue, Peiping's leaders apparently still hope to derive
political benefits from the Warsaw talks which will further
their campaign to achieve wider international acceptance.
Communist artillery fire was sporadic on 26 Septem-
ber, making it possible for the Nationalists to deliver to
Chinmen approximately 250 tons of supplies by sea and prob-
ably over 50 tons by airdrop. This is the first time anything
near the minimum daily requirement of 309 tons has been
delivered. Despite anticipated bad weather, continuing Com-
munist artillery fire, and ineptness on the part of the Nation-
alists in resupply operations, American officials on Tpiwan
believe Chinmen can hold out until 15 November at the pres-
ent resupply rate, and prospects for the delivery of increased
tonnage appear favorable.
Chinese Communist jet light bombers were engaged in
unusual exercise activity on 25 September. At least 18 IL-28
jet light bombers subordinate to the 8th Air Division--an
element of which deployed to Changshu on 22 Augu 1
from Changshu to Hangchow and back after dark.
The Chinese Communists may be planning to use piston-
engine fighters against Nationalist transports engaged in re-
supply operations. A Nationalist C-46 pilot reported seeing
a single-engine piston aircraft eight miles southwest of Chin-
men on 25 September. The aircraft observed could have been
TOP SECRET
27 Sept 58 e4GAITIN A I IkITCI I IftEkIrC III III CTIkl
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niy1 Communist troop
Strength
Ann Nationalist troop
`�"�"' strength
Piston fighter
)3P- Jet fighter
I-f. Piston light bomber
tJet light bomber
Ground-attack
SELECTED AIRFIELDS INDICATED IN BOLD TYPE
Hengyang.
80806/80927-2
NANCHANG
LI MENG
CHENGHAI
CANTON
� AQ IS.
HUltANG Swato NN
HANGCHOW
Wenchow
SMITU BAY
Foochow. kiKISLI IS.
:23' 000
MANTA
LUNGTI ;
HUIAN
mAcanrA TA1WliAr
STR
NGCHI+
TO iNmEINisU PE.
KAOCHI . 4t --
6,000
A
PENdHOs
16,000
TAIWAN
331,000
ISTATUTE MILES 300
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AT/. US I .1 4114
L THE COMMUNIST BLOC
USSR Renews Offer to Supply Wheat to Yugoslavia
A representative of the Soviet Embassy in Belgrade
has informed the Yugoslav Government that the 200,000
tons of wheat specified by the current trade agreement
are available in Soviet ports, according to Western press
reports on 25 September. Belgrade has been saying for
some time that Moscow was refusing to deliver the wheat,
although Yugoslav officials have admitted privately that
there had been no formal Soviet refusal.
By first stalling and making Belgrade believe the
wheat would not be forthcoming,but later appearing to
reverse its position, Moscow probably hopes to discredit
Yugoslav arguments that Soviet economic aid carries politi-
cal strings. In making the move at this time, Moscow is
probably trying to undermine Belgrade's position in its
current economic negotiations with the US. The Yugo-
slays have made themselves vulnerable to this by ex-
aggerating to the West the seriousness of the bloc's
economic campaign against Yugoslavia and its probable
effects on the Yugoslav economy.
Yugoslavl officials have claimed, that both.the wheat.
and the ,600,000 tons of coking coal covered by the agree-
ment would be withheld by the bloc this year. With respect
to coal, they say they are "in a very bad way," and this
statement appears to be justified. Without the deliveries
the country's two major coking plants would have to close
down before the end of the year.
Despite the USSR's move on wheat, economic harassmeht
will probably continue as an element in the bloc's anti-Yugo-
slav campaign. A complete economic boycott is unlikelyi,
but the bloc can be expected to take an equivocal position on
the delivery of vital commodities to Yugoslavia such as coal.
cotton, and oil.
CONFIDENTIAL
27 Sept 58 (^CkITD A I IkITCI I irtmarcDIIIITIkl
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411.*
AFGHANISTAN
PAKISTAN
DIU
(port.) DAMAO/L H
(Port )
NAGAR-AVELI
(Port.),,
#'BOITI bay
ARA31AN
C A
GO
(Port.
Bhadraviti
5
STATUTE MILES
Pro orate
- .3-, itKISTAN
Bokaro '
npUr
Nrgapur
JannhedPUr0
Calcutta �
Bhilai J111
Rourkela
iCEYLON
� NEW StEEL MILL
0 STEEL *Li BEING EXPANDED
PLANNED STEEL MILL
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USSR Apparently Offers Another Steel Mill to India
The USSR apparently has offered India another million-
ton steel mill, to be built at Bokaro, provided New Delhi
agrees to allow work to begin in the near future. Moscow
may be trying to preclude construction by any Western
country of the mill India is planning at this site. Soviet
assistance in building the steel mill at Bhilai in central
India is Moscow's most successfully propagandized effort
in the underdeveloped countries.
The Second Five-Year Plan calls for completion of the
three government-owned million-ton steel mills now being
built with Soviet, West German, and British assistance and
expansion of three existing mills. This would raise India's
annual production from about 1,500,000 to 6,000,000 tons of
crude steel by 1961. India's steel expansion program calls
for the construction of at least one additional mill during
the third plan period, and preliminary work has been done
at Bokaro. Because of India's stringent financial position�
it is unlikely to agree to begin construction of the Bokaro
mill in the near future. India may accept this offer in
principle, however, provided acceptance does not rule
out Soviet assistance for expansion of the mill at 7ila1
during the third plan.
27 Sept 58 CENTRAI I ICZFKICF RI 11 Wriki Damn 2
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a FANG (LA-11), which has a better capabilitythanietfighters for
intercepting slow, low-flying transports.
An article in the Soviet Army's Red Star on 25 September
contained the first hint since the onset of the Taiwan Strait
crisis of Soviet willingness to support Communist China with
assistance in the form of "volunteers." The article recounted
how Soviet pilot volunteers had fought in China against the Jap-
anese, and concluded that Soviet pilots are "ready, if neces-
sary, to come to the aid of their true Chinese friends and crush
interventionists with all their might of arms." Soviet military
press organs have been consistently less restrained fhaii other
Soviet propaganda media in connection with the Taiwan Strait
crisis. To date, the line on "volunteers" has not appeared in
any other Soviet commentary.
--ToP-sEeRLE-T-
27 Sept 58
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IL ASIA-AFRICA
Army Coup in Burma
The Burmese Army, under Commander in Chief Ne
Win, in a well-coordinated bloodless coup on 26 September
moved to take control of the government. Formally, the
government remains unchanged for the present, but civilian
politicians clearly are no longer in command. Premier Nu,
acting behind the constitutional facade, has asked President
Win Maung to call Parliament for 28 October, the earliest
possible date under Burmese parliamentary custom. He has
announced that he will then resign and has called upon the
country to support General Ne Win as the new premier.
The army action took place following a welter of coup
rumors and severe political tensions. It appears to have been
touched off by alarming evidence of growing Communist po-
litical strength. In addition, Communist insurgents who re-
cently surrendered are known to have cached arms in the
jungle, and the army feared their use for voter intimidation
in the projected November elections. Political fragmenta-
tion among Burma's non-Communists was expected to result
in widespread violence before or during the elections.
General Ne Win, the new leader, is strongly anti-Com-
munit and has long held the power to take over the govern-
ment by force. He has the personal loyalty of the armed
services. However, his distaste for political leadership, fol-
lowing his 1949 tour as deputy premier, has led him to con-
centrate on his military career. Whether he has acted be-
cause of prompting by the opposition AFPFL faction led by
former Deputy Premiers. Ba Swe and Icyaw Nyien or because
of the army's analysis of Burma's political situation, his ac-
tion must have come from a conviction that Burma's prospects
were desperate.
27 Sept 58 0-4r1.1-rn Al 149-,ff n II I
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Middle East Oil Developments
The amicable atmosphere which had characterized recent
profit-sharing negotiations between Syria and the American-
owned Tapline carrying Saudi oil to the Mediterranean has
been changed,apparently on orders from Cairo. Prior to the
return of Syrian Minister of Trade and Economy ICallas from
Cairo, the profit-splitting negotiations were proceeding satis-
factorily from Tapline's point of view.
On his return, .however, Kailas demanded application of a
formula involving a payment of 60 cents a barrel, which
would involve operating at a substantial loss. The unacceptability
of this demand and the take-it-or-leave-it position appearr.'
designed ultimately to move the scene of decisive negotiations
to Cairo, where an over-all Arab oil policy toward Western
oil companies is being developed. Nasir may also be planning
a substantial victory over Western interests prior to the Arab
Petroleum Conference now scheduled for early next year, at
which Cairo hopes to gain firm control over the petroleum
policies of Arab oil-producing countries.
27 sent 58 /"CkITI5 Al Ik1701 I leoftekle`G DI III OTIkl
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Saudi Internal Developments
A potentially serious difference of opinion appears to
have developed between Crown Prince Faysal and King Saud
as a result of Faysars efforts, .in donneCtion with development
of a government budget, to limit the expenditures of the King
and other members of the huge royal family. Although other
items in the budget have been severely curtailed, Faysal has
been unable to persuade many members of the royal family to
accept the strict limitations in their own spending needed to
bring order to the government's finances and appease mounting
popular dissatisfaction. Thus, despite heavy cuts, the royal
family's proposed share remains about a quarter. .of the budget
of over $300,000,000.
Saudi Minister of Commerce Ali Riza has declared that
Faysal will make a final'. effort to convince the King and the
princes to accept a reduced family budget. Ali Riza asserts
that Faysal is preparing to take unspecified "extreme meas-
ures" if persuasion fails.
Saud has continued to intrigue against his brother Faysal
since the "palace revolution" which limited the King's power
last spring. He has apparently gained new support from princes
who oppose curtailment of their income. In addition to attempts
to make personal purchases of arms for distribution to tribal
forces loyal to him, the King is striving to convert a consider-
able amount of personal and real property into foreign exchange.
The heaviest liquidations appear to have been in western Saudi
Arabia, where radical Arab nationalism is strongest, but the
King is also reported to.'have sold property in the Eastern Prov-
ince and the interior, as well as gold and precious stones from
his personal treasury.
While Ali Riza considers that the King may be preparing
to leave the country if future political developments are un-
favorable to him, Saud may also be accumulating funds with
which to rally traditional forces opposed to Faysal's reforms.
SECRET-
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11J.I.J1 *ad a
Baghdad Pact Representatives to Meet in Ankara
On 1 October
Representatives of all the Baghdad Pact countries ex-
cept Iraq will convene in Ankara on 1 October at the in-
vitation of the Turkish Government to finalize the decision
made at London after the Iraqi coup last July to move the
secretariat from Baghdad to Ankara. The meeting will
open as an informal session in order to make Iraqi attend-
ance unnecessary but may evolve into a formal meeting.
It will probably consider matters pertaining to the next
meetings�possibly in January or February at Tehran or
Karachi--of the ministerial council and the Combined
Military Planning Staff.
Pact activities havebeen severely restricted since July
because of the uncertainties surrounding the intentions of the
new regime in Baghdad vis-a-vis the alliance. Popular
opposition in Iraq to the pact alignment precludes continuation
of a bona fide membership, but the new government may
delay formal withdrawal in the hope of retaining access to�
confidential decisions and documents. No effort is being
made by the other members to force Iraq to withdraw, but
they have no intention of allowing Iraq, by its lack of decision,
to frustrate efforts to go ahead with area defense and other
aspects of regional cooperation.
27 Sept 58 Apt-prcokvieTdnfoAril RenieliTafel:12(0-1201/0(13 rgi2 TIM
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*01
III. THE WEST
Chinese UN Representation
The Chinese representation question may again be
raised at the UN General Assembly in a matter of weeks
if the offshore islands question is brought to the UN under
circumstances appearing to threaten war. Ambassador
Lodge has advised that the United States may then be un-
able to obtain the one-third vote necessary to prevent re-
introduction of the representation issue.
Recent discus8ions in New York have reflected growing
distaste for the moratorium formula. Several Latin
American representatives expressed reluctance to go
along with the United States in the future, while one stated
his country considered the policy humiliating to the Latin
Americans, serving only to give the impression that they
were US satellites. The spokesman for Argentina reported
that a majority of the Latin American delegations person-
ally opposed the US position.
In many of the countries, press and radio criticism
of the government's "subservience" to US "pressure" pro-
vides a stimulus for official restiveness. Most influential
Latin Americans, however--except perhaps in the larger
countries--may at least for the near future continue to
share the opinion of Costa Rican delegate Guido Fernandez,
who stated earlier this month that, even in the case of
"erroneous" US foreign policy decision�, Latin America is
bound to the United States and must of necessity follow
its lead.'
Canada, meanwhile, has made it clear that this was
the last year it could be counted on to back the United
States. Belgium is understood to hold similar views. Dis-
sension was reported within the Pakistani delegation on
the issue, and Japan refused outright to sneakJiilavor of
the US resolution.
27 Sept Sept 58 r.ekrrn Al ikrrri it-�rkir�r, rtiiil r�-rik
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V %et.' � ������ /5..� � 44.
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 Director
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