CENTRAL INTELLIGENCE BULLETIN - 1959/01/15

• Document Type: SPECIALCOLLECTION
• Keywords: 2018 Sanitization
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03000022
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 13
• Document Creation Date: February 25, 2020
• Document Release Date: February 27, 2020
• Publication Date: January 15, 1959

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15 January 1959
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15 JANUARY 1959
L THE COMMUNIST BLOC
Ex-KGB chief Serov reported head
of Soviet Military Intelligence.
IL ASIA-AFRICA
Laos - Premier receives extraor-
dinary powers; French oppose US
plan to train army.
UAR First Army chief scheduled to
arrive in Kuwait on 17 January on a
special mission.
Tunisia to withdraw from French franc
zone. Bourguiba asks US help in find-
ing markets and pegging dinar to
dollar.
III. THE WEST
0 Implementation of Belgium's new Congo
policy may be impeded by differences
among major parties.
0 Argentina - President's opponents at-
tempting to foster popular dissatisfac-
tion with his new US-backed stabiliza-
tion program.
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CENTRAL INTELLIGENCE BULLETIN
ei9g
15 January 1959
DAILY BRIEF
I. THE COMMUNIST BLOC
USSR: (Former Soviet Secret Police (KGB) chief Serov
has been appinted head of the
(GRU),
rumors circulating in the General Staff that Serov will over-
see the work of both the KGB and the GRU. Mikoyan has
implied, however, that Serov was in some disfavor when he
was relieved of his KGB po,s_Lti. Page 1)
Watch Committee conclusion�Berlin: The Berlin sit-
uation remains potentially dangerous but will probably not
develop into a crisis in the immediate uture.
IL ASIA-AFRICA
Laos: D.remier Phoui Sananikone received extraordi-
nary, powers from the assembly on 14 January. His reform
program will involve heavy dependence on the army. The US
plan to assume a direct role in training the army is being op-
posed by the French, who were granted exclusive control over
such training by the 1954 Geneva Agreements3
(Page 2)
Watch Committee conclusion--Southeast Asia: In Cam-
bodia, Premier Sihanouk's awareness of political plots
against him, abetted by Thailand and South Vietnam, may
Impel him to seek increased Communist support. This de-
velopment, and Viet Minh pressures on Laos, may presa e
increased Communist penetration of Southeast Asia.
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Watch Committee conclusion�Middle East: Although the
situation in the Middle East remains precarious, a deliberate
initiation of large-scale hostilities is unlikely in the immediate
future. Communist influence and activity in Iraq continue to
pose the threat of Communist control of the government.
Kuwait-UAR: The commander of the UAR First Army is
scheduled to arrive in Kuwait on 17 January on a special mis-
sion,
The visit
may be intended to demonstrate UAR solidarity with Kuwait,
and thus constitute a warning to Iraq. Baghdad's intentions
have aroused the apprehensions of many Kuwaitis.
Tunisia: ie government has decided to withdraw from
the French ham zone despite inevitable serious economic con-
sequences. President Bourguiba is expected to announce this
decision on 15 January and has inquired whether the US would
consider pegging the Tunisian dinar to the dollar and assist-
ing Tunisia to find alternative markets to France
(Page 3)
III. THE WEST
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Belgium's Congo policy: Despite a desire to maintain a
united front, differences among the major Belgian parties may
Impede implementation of the new policy announced in Brussels
on 13 January. In the Congo, the announcement will probably be
received with skepticism by impatient African nationalists and
may evoke opposition among European settlers.
(Page 4)
Argentina: President Frondizi's political opponents, in-
cluding the Peronistas and Communists, are attempting to
exploit the sharp rise in prices and other features of the US-
15 Jan 59
DAILY BRIEF ii
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backed austerity and stabilization program initiated on
1 January. Frondizi, who will visit the United States from
19 January to 1 February, has warned his opponents that he
will move energetically against efforts to obstruct the plan,
which is essential to economic recovery. The state of siege
impose ember to quell labor disorders is still in
effect. (Page 5)
15 Jan 59
DAILY BRIEF iii
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I. THE COMMUNIST BLOC
Serov May Be Chief of Soviet Military Intelligence
General Ivan Serov has been appointed head of the USSR's
Military Intelligence Service (GRU)
This
report toilows closely Moscow rumors linking Serov to a mil-
itary assignment with intelligence responsibilities. Serov
has recently been appearing in the capital in a general's uni-
form`]
A
statement by Mikoyan, however, suggests that Serov was
relegated to the GRU post in some disfavor. At a recent lunch-
eon, Mikoyan is reported to have linked Serov with Molotov,
Bulganin, and Shepilov as examples of individuals dropped
from high posts for unsatisfactory work]
The assignment of Serov to the GRU would be consistent
with Ichrushchev's practice of demoting rather than purging of-
ficials whom he no longer wants in top-level posts. The GRU
position is several levels below that of KGB chief in general
importance, and it presents few opportunities for sell-aggran-
dizement or for exercising political influence. It is a post,
however, in which Serov's long experience in intelligence work
could be utilized effective15-ij
15 Jan 59 rCkITI5 Al IlkITCI I 1"01�149�E Bill. 1E1'1\1 Page 1
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II. ASIA-AFRICA
France Cool Toward Joint US-French Training
Of Laotian Army
Wrench opposition may be developing against US plans to
assume a direct role in training the Laotian Army, on which
Prime Minister Phoui Sananikone will have to lean heavily to
implement his reform program. The army has suffered a
steady decline in efficiency as a result of drastic reductions
in the French training mission. US military personnel in
Laos were to function ostensibly as members of the French
training missioni
Lille director of Asian affairs in the French Foreign Minis-
try told US Embassy officials on 12 January that while he
agreed with the urgency of increasing Laotian Army capabil-
ities, the introduction of additional US military personnel into
Laos was "probably undesirable" because of the sensitivity of
the Laotian situation. Hinting that the use of French personnel
financed by the United States might be preferable, he said Paris
feared additional US personnel would contravene the Geneva
Agreements of 1954 and might revive the International Control
Commission. He suggested the subject might appropriately be
taken up at tripartite French-British-US discussions on global
policy coordination proposed by De Gaulle and scheduled to take
place in two week]
This negative attitude partially reflects long-standing sus-
picion that the United States desires to supplant France in its
former overseas possessions. It suggests an effort to retain
as much French influence as possible in order to draw these
areas into some form of association with the new French
Community.
SECRET
15 Jan 59 CENTRAL INTELLIGENCE BULLETIN Page 2
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No,
Tunisia Moves to Loosen Economic Ties witn trance
ale Tunisian Government has decided to break its economic
ties with France by withdrawing from the franc zone. The gov-
ernment was irritated by Paris' devaluation of the franc with-
out consultation with other franc-zone participants and feared
future franc devaluations. A strong nationalist faction within
the Tunisian Government had long advocated the break despite
the inevitable serious economic consequences.
Both Tunisia and Morocco decided after France's devalu-
ation (in 27 December not ta follow suit even though failure
to devalue would price Tunisian and Moroccan exports--largely
absorbed by France at premium prices--off the French market.
Morocco, in an effort to stem a flight of capital, imposed a
10-percent tax on currency transfers within the franc zone, and
now may consider following Tunisia's coursq
[Tunisian President Bourguiba, who is expected to announce
the rupture on 15 January, has approached the United States
for assistance in securing alternative markets to France. Con-
sidering devaluation inevitable, he has offered to revalue the
Tunisian dinar created last fall, provided his government can
negotiate with the United States a "temporary" agreement of
convertibility of the dinar with the dollar at a rate to be nego-
tiated. He suggested that the dinar, officially valued at ap-
proximately $2.38 be pegged at $2.00, a devaluation slightly
greater than that of the franc. He also would like American
assistance in obtaining dollar credits and in securing Tunisian
reserves in France, which he estimated to amount to about
$400,000,00e
Le spite a rupture of financial ties with France, Bourguiba
is considering an eventual association with the European Com-
mon Market, a move in line with Bourguiba's well-known pro-
Western orientation and his recently reiterated desire for a
close association of North Africa�including an independent
Algeria--with Francg
SECRET
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Nose
III. THE WEST
Belgium Divided on New Policy for the Congo
Differences among the major Belgian parties over policy
toward the Congo may impede implementation of the govern-
ment declaration of 13 January.
While the opposition Socialists agree with the essence of
the government's political program, they refuse to give their
unequivocal support to the declaration because they think that
it insufficiently stresses economic and social reforms. Pre-
mier Eyskens therefore has not called for the vote which he
had hoped would give the declaration the character of a clear-
cut national policy. Furthermore, the Liberals, who are in
the coalition, presented counterproposals to the declaration
before its announcement. The Liberals' objections, which re-
flect the views of powerful economic interests in the Congo de-
siring a slower political evolution there, were overruled, but
may arise again.
In the Congo, the Belgian pronouncement will probably be
received with skepticism, if not outright distrust, by increas-
ingly impatient African nationalists. This will be especially
true of those still smarting under the vigorous Belgian sup-
pression of the rioting in Leopoldville last week and subsequent
arrest of African leaders and proscription of the most impor-
tant nationalist organization. Some attempt may be made to
organize hostile demonstrations, although probably not in the
capital, where Belgian security precautions remain tight.
Among less aroused and more thoughtful Congolese, criti-
cism may focus less on the failure of Brussels to provide
"independence now" than on the apparent absence of assur-
ances with respect to such considerations as the powers the
projected councils are to enjoy during the indefinite period of
tutelage.
Among the approximately 25,000 permanent European set-
tlers in the Congo,the government's statement is likely to evoke
vociferous opposition and possibly some agitation for the gr nt-
ing of autonomy, at least to regions in the eastern Congo where
most of these Europeans are concentrated.
15 Jan 59
CONF
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,ftwe
Argentine Stabilization Program Draws Opposition Fire
Various Argentine opposition groups are trying to under-
mine President Frondizi's economic and political policies by
exploiting the hardships imposed by the US-backed austerity
and stabilization program initiated on 1 January. The strong-
est blasts have been issued by the Peronistas and by the ma-
jor opposition group, the People's Radical Civic Union
(UCRP). The Communists have organized neighborhood com-
mittees to protest high living costs.
Despite Frondizi's call for subordinating partisan politics
to a joint effort at economic recovery, the Peronistas have de-
nounced the program as "condemning the nation to the yoke of
foreign capitalism" and creating unnecessary hardship for
workers. They are seeking to regain control of organized la-
bor in the current union elections. Because their party is still
outlawed, the Peronistas are reorganizing under the name
Justicialista party in order to participate in several provincial
elections early this spring. The UCRP has severely attacked
Frondizi's policies, especially those concerning stabilization
and the use of foreign companies to develop petroleum.
Nonpolitical business and labor elements have also ex-
pressed alarm over sharp price rises in both consumer goods
and raw materials for local industry, since now there will be
stiffer competition from imports.
� Frondizi has stated that he is prepared to correct errors,
but under no circumstance will the government modify the plan's
basic structure or hesitate to move against obstacles to its
success. In this he reportedly has strong military support.
The state of siege, imposed on 11 November to quell labor dis-
turbances, will probably be retained during the initial stages
of the program.
15 Jan 59 CENTRAL INTELLIGENCE BULLETIN Page 5
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'Novi
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
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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