CURRENT INTELLIGENCE BULLETIN - 1956/06/17

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03015164
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 12
• Document Creation Date: October 25, 2019
• Document Release Date: October 31, 2019
• Publication Date: June 17, 1956

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CURRENT
INTELLIGENCE
BULLETIN
TOP SECRET
17,June 1956
Copy No. 103
DOCUMENT NO.
cHAN-,-_-;F. IN CLA,63.
CLASS. CHANGED TO: TS S
NEXT REVIEW DATE:
LAITTEH HoH:A72.-
qi REVIEWER:
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
z
3.5(c)
3.3(h)(2)
//'
TOP SECRET
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A 1. A.4
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CONTENTS
1. THE TOGLIATTI INTERVIEW
(page 3).
2. BRITAIN FORMULATES NEW POLITICAL APPROACH
TO CYPRUS (Page 4).
3. ISRAELI FOREIGN MINISTER ANNOUNCES RESIGNATION
(page 5).
4, CHINESE COMMUNISTS ANNOUNCE RELEASE OF TWO
AMERICAN PRISONERS (page 6).
5. CHINESE 1956 BUDGET DESIGNED TO OVERFULFILL
FIRST FIVE-YEAR PLAN (page 7).
6. FLOODS IN EAST CENTRAL CHINA
(page 8).
7. JAPAN PLANNING EXCHANGE OF STEEL PRODUCTS FOR
CHINESE COMMUNIST IRON ORE (page 9).
8. INDO-NEPALESE DEFENSE TREATY REPORTED
page 10).
17.June 56
THE ARAB-ISRAELI SITUATION
(page 11)
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1. THE TOGLIATTI INTERVIEW
Available excerpts from Italian Commu-
nist leader Togliatti's interview with a
non-Communist Italian journalist on the
question of Ithrushchev's repudiation of
Stalinism point up Togliatti's desire to
emphasize the independence of his party
from foreign control. His statement does
not, however, constitute a repudiation of
his loyalty to Moscow and to the international Communist
movement.
Togliatti's remarks are an accurate reflec-
tion of the new international Communist line admitting differ-
ent roads to state socialism, which received its doctrinal un-
derpinnings at the 20th Soviet Party Congress. His statement
is thus a blueprint for the Italian Communist Party in carry-
ing out this general line and is designed to strengthen Italian
Communist efforts to form a popular front with non-Commu-
nist parties.
The references to the autonomy of the na-
tional Communist parties suggest that Togliatti wanted to re-
assert his leadership of the entire Italian left which had been
called into question by the 27-28 May local elections in which
the Communists lost votes to their Nenni Socialist allies.
Togliatti had laid the ground work for the autonomy theme
by several recent moves, notably his public praise for the
dissolution of the Cominform in April and his dramatic recon-
ciliation with Tito on 29 May. This theme may receive further
emphasis at the long-postponed national congress now sched-
uled for October.
Various reports in recent months have
stated that the repudiation of Stalin at the 20th Party Congress
left many Italian Communists confused and angry but extended
discussion of the subject was postponed until after the 27-28
May elections. Togliatti meanwhile has been under considerable
attack within the party for not having been frank enough with its
members both during the Stalin era and immediately after his
return from the 20th Party Congress.
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2. BRITAIN FORMULATES NEW POLITICAL APPROACH
TO CYPRUS
Comment on:
The new initiative comes as British troops
on the island are preparing a drive de-
signed to break the back of the Cypriot nationalist terrorism
which on 16 June caused the death of an American vice-consul
in Nicosia, and the wounding of several other Americans.
Governor Harding would announce when he returns to Cyprus
from London that Britain is prepared to draft a new Cyprus
constitution immediately. He would also state that after a
"suitable period," perhaps ten years, NATO would be asked
whether the transfer of sovereignty over the island is stra-
tegically feasible. the proposals would be
discussed beforehand with Turkey but not with Greece. He
displayed concern over the possibility of a strong negative re-
action in Ankara.
The British government evidently expects
that the proposals will disarm its critics at home and appeal
to the Cypriots, weary of violence and tension. Both the
Cypriot nationalists and the Greek government, however, are
likely to be incensed over Britain's failure to consult them
and at the idea of waiting ten years for determination of Cyprus'
sovereignty.
The Turks believe Britain has already prom-
ised the Greeks too much, and oppose any suggestion of eventual
- Greek annexation of Cyprus.
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30 ISRAELI FOREIGN MINISTER ANNOUNCES RESIGNATION
The announcement on 17 June by Israeli
foreign minister Moshe Sharett that he
would resign on 18 June suggests a
new and possibly tougher approach in
Israeli foreign policy. Mrs. Golda
Myerson, first Israeli minister to the USSR and now min-
ister of labor, is scheduled to become the new foreign
minister.
Sharett did not explain his reasons for
resigning other than to state that he "considers it impossi-
ble to continue in the post." There have, however, long
been reports of differences between Sharett and Prime Min-
ister Ben-Gurion over foreign policy, particularly toward
the Arab states. Ben-Gurion favors a tough line toward the
Arabs while Sharett has sought to give priority to diplomatic
action.
Sharett's resignation may also be con-
nected with Israel's failure to obtain what it considers an
adequate supply of arms from the West. Furthermore,
Israel was bitterly disappointed over the recent UN Security
Council resolution on the Hammarskjold mission which it
considered "pro-Arab!'
By placing Mrs. Myerson in Sharett's
post, Ben-Gurion will have a trusted exponent of his "ac-
tivist" line in the Foreign Ministry, and will thus be able
to exert close direction of Israeli foreign policy. While she
was in the USSR, Mrs. Myerson reportedly was not in favor
with the Soviet government because she maintained close per-
sonal contacts with members of the Jewish community in
Moscow.
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49 CHINESE COMMUNISTS ANNOUNCE RELEASE OF
TWO AMERICAN PRISONERS
The release from prison on 15 June of
two American priests reduces to 11 the
number of Americans in Chinese Commu-
nist jails. The Chinese Communists re-
leased and deported nearly 30 Americans in late 1955, but
continued to hold the remainder in prison, apparently retain-
ing them as hostages to improve Peiping's bargaining position
in the ambassadorial talks at Geneva.
Peiping's declaration that the prisoners
had "served their terms" is apparently intended to suggest
that their release does not necessarily signify the early re-
lease of all the Americans still in Chinese prisons. At least
one of the prisoners still being held is serving a life sentence;
another is serving a 20-year term. On 1 June, however, Chou
En- lai told a Reuters correspondent that American prisoners
might be released before the expiration of their sentences "if
their behavior was good."
Letters from a number of prisoners, in-
cluding one of the two just released from jail, have indicated
that some of the Americans held by the Chinese have been get-
ting better treatment during the past six months. It has been
common practice for Peiping to improve the lot of prisoners
a few months before their release.
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5. CHINESE 1956 BUDGET DESIGNED TO OVERFULFILL
FIRST FIVE-YEAR PLAN
The new $12� 5 billion Chinese Commu-
nist budget gives primacy to heavy in-
dustry and aims at fulfillment of the First
Five-Year Plan (1953-1957) ahead of
schedule� Describing 1956 as the year of "fastest develop-
ment;' the Chinese are allocating 65 percent of total expend-
itures to economic construction, of which heavy industry
will receive almost 90 percent. Funds for water conservancy,
and for agriculture which is the key to industrial growth and
chief source of state revenue, are to be increased nearly 50
percent� Light industry, which produces a quick return on
investment, has been granted an 86 percent budget increase,
although it will still receive only about 10 percent of economic
construction allocations.
Almost 20 percent of national expenditure
will be for defense but the allocation shows a reduction of
$140,000,000 from last year. Despite this reduction, however,
the defense burden on China itself will be greater than last
year because the 1955 Chinese budget included a Soviet mili-
tary credit of over a half billion dollars, which apparently
will not be repeated in 1956.
Although First Five-Year Plan investment
in the transport sector of the economy has now been largely
fulfilled, transport investment will continue at a high rate.
(Prepared by ORR)
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6. FLOODS IN EAST CENTRAL CHINA
The Peiping press has announced that,
in a number of instances in the past
two weeks, the rivers of East Central
China had exceeded the peak water levels
recorded in 1954 when 10 percent of
China's cultivated lands were inundated.
Floods could seriously disrupt the normal June planting of
the second crop and the harvesting of the first crop, which
provides 30 percent of China's total grain production.
Despite the extensive measures taken to
protect against a recurrence of the 1954 flood, Peiping has
suggested that the current flood situation may become in-
creasingly serious as "conditions exist for the occurrence
of heavy rains" in the Yangtze Valley and along its tributar-
ies during the normal rainy season of July and August.
Continued heavy rains could result in
widespread famine and reduced state revenues from agricul-
ture. The final statistical report on the 1955 budget, an-
nounced on 15 J-une of this year, revealed that Communist
China's first failure to meet planned revenues resulted from
the heavy flood damage of 1954. (Prepared by ORR)
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7. JAPAN PLANNING EXCHANGE OF STEEL PRODUCTS
FOR CHINESE COMMUNIST IRON ORE
Japan is planning fu-
ture exports of steel goods to Commu-
nist Cliina under the exceptions procedure in return for iron
ore0 a current deal for Communist coking
coal, Tokyo desired American approval for the export of
wooden ships instead of steel.
Comment
Japanese steelmakers want additional
iron ore as well as cheaper Chinese
coking coal to meet the expanding needs of their steel indus-
try. In April, Japanese businessmen decided to negotiate
for 3009000 tons of iron ore from Hainan, and they hope even-
tually to obtain 500,000 tons from this source.
The Japanese have noted British use of
CHINCOM exceptions procedures in shipping limited quanti-
ties of steel products to Communist China and London's an-
nouncement that British colonies could relax differential trade
restrictions against Peiping. These moves will increase ex-
isting pressures in Japan for expanding trade with Communist
China in embargoed items. (Concurred in by ORR)
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8. INDO-NEPALESE DEFENSE TREATY REPORTED
India and Nepal signed a secret defense
treaty in May, committing the two coun-
tries to a joint defense of their borders
with Tibet,
No confirma-
tion of this report is available, but the existence of some
firm new agreement might explain India's recent acquiescence
n closer relations between Nepal and Communist China.
India has long been informally committed
to the defense of Nepal, but it has heretofore been in the some-
what anomalous position of maintaining diplomatic relations
with China and urging its admission to the United Nations
while advising Nepal to be wary of increasing contacts with
Communist China. With a formal excuse for intervention in
Nepal in case of trouble, India might feel less concerned over
increased Sino-Nepalese relations. Simultaneously, the Ne-
palese government, whose first ambassador to China presented
his credentials in Peiping on 13 June, might feel more confi-
dent of its ability to control Nepalese Communist and Chinese
activities.
India remains fully aware of the dangers in
the Himalayan border areas, as shown by numerous reports of
Nehru's sensitivity on the subject and the continued Indian de-
fense buildup there.
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THE ARAB-ISRAELI SITUATION
(Information as of 1700, 17 June)
The acting chief of the United Nations
Truce Supervision Organization told American officials in Tel
Aviv on 14 June that, despite previous authorization to make.
an inspection on 12 June, he had been denied entry into the area
of the demilitarized zone near Banat Yacov where Israel was re-
ported on 10 June to be building tactical defensive positions.
The UN official believes that the Israeli army has issued no-
entry orders for UN truce personnel because whatever work they
have undertaken in the area is too extensive to be concealed. The
truce officials had twice previously been forcibly prevented from
approaching the area.
A Syrian foreign ministry official reiterated
to Ambassador Moose on 14 June that Syrian troops in the Banat
Yacov area have standing orders to open fire the moment Israel
resumes work on the diversion of the Jordan river. He said
that while Syria's official position is to refer the matter to the
United Nations before taking military action Syrian authorities
believe that public opinion will demand immediate reaction by
the armed forces. Any Syrian government, the official said,
which failed to react immediately and effectively would be brought
down by mob action.
For another report bearing on the Arab-
Israeli situation, see Item 2, page 4).
17.June 56
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