CURRENT INTELLIGENCE BULLETIN - 1956/06/22

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03015167
• 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 22, 1956

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CURRENT
INTELLIGENCE
BULLETIN
22 June 1956
Copy No. 03
3.3(h)(2) IA
3.5(c)
DOCUMENT NO a/
NO CHANGE IN CLASS. pC
; DECLASSIFIED
CLASS. CHANGED TO: TS S C
NEXT REVIEW DATE:
AUTH: HR 70-2
DATc',.hattiS__ REVIEWER:
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
/0,
-TOP SECRET-
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W.F
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CONTENTS
1. SHEPILOV OFFERS EGYPT LARGE-SCALE ECONOMIC AID
(page 3).
2. INDONESIAN FOREIGN MINISTER REPORTS TO DJAKARTA
ON SUKARNO'S US TRIP (page 5).
3. BURMESE COMMUNISTS REPORTEDLY ADOPT PEACEFUL
TACTICS (page 6).
4. CHINESE COMMUNISTS ANNOUNCE "TRIAL" PRODUCTION
OF JET PLANE ENGINES (page 7).
5. WET MINH ANNOUNCES TROOP REDUCTION
(page 8).
6. SAUDI ARABIA SEEN TURNING AWAY FROM WESTERN TIES
(page 9).
7. USSR OFFERS SCHOLARSHIPS TO PHILIPPINE STUDENTS
(page 10).
22 June 56
* * * *
THE ARAB-ISRAELI SITUATION
(page 11)
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1. SHEPILOV OFFERS EGYPT LARGE-SCALE
ECONOMIC AID
n a mee 1 with Prime Minister Nasr
Soviet foreign minister
Shepi ov made a sweeping offer of eco-
nomic aid.
Moscow offered to grant a
60-yeat credit to build the Aswan High Dam; to buy all of
Egypt's cotton for sterling; to cancel Egypt's indebtedness
for Soviet bloc arms already delivered; and to build a steel
mill and other plants on favorable terms.
Comment Nasr would be unwilling to accept the
entire series of offers, since the USSR
would in effect be given a mortgage on the Egyptian economy.
Western estimates set the foreign ex-
change cost of constructing and equipping the dam at about
$275,500,000 and suggest that construction could be completed
in about ten years. Nasr is unlikely to accept the Soviet of-
fer at this time, but he reportedly has said he would give the
West only until his departure to visit Tito on 18 July to make
a firm offer.
Shepilov's proposal to cancel Cairo's
debt for arms already delivered, which probably amounts
to at least $100,000,000, would be accepted by Nasr if it were
made independent of the other offers.
The proposal to build a steel mill is not
expected to interest the Egyptian government. Egypt will
probably be self-sufficient in steel production when the
265,000-ton capacity plant at Helwan is completed in the mid-
dle of 1957. Cairo, however, is likely to give favorable con-
sideration to Soviet aid offers for construction of other plants.
Shepilov's offer to purchase "all of Egypt's
cotton" is probably exaggerated, although the Kremlin may be
22 June 56
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TOY ,SECKL t
prepared to make substantial purchases. Egyptian cotton
stocks on hand total about 190,000 tons valued at about
$2702000,000. Cancellation of Egypt's arms debt, which
was to be paid for in cotton, would make available addi-
tional cotton which the USSR might offer to purchase for
sterling. (Prepared by ORR)
22 June 56
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2, INDONESIAN FOREIGN MINISTER REPORTS TO
DJAKARTA ON SUICARNO'S US TRIP
Comment
Official and public opinion in Indonesia
reflects pleasure over the reception
accorded President Sukarno on his American trip as well
as a belief that a greater understanding has been reached
regarding Indonesia's policy toward the Netherlands and its
independent foreign policy. However, disappointment has
been expressed over the failure to effect a change in the
United States' neutral position on Indonesia's claim to Neth-
erlands New Guinea.
Sukarno will tour the Soviet Union and
Communist China, probably in August and September. The
Indonesian Foreign Ministry has announced that no decision
on the Soviet offer of economic and technical assistance is
likely until Sukarno returns from those trips.
22 June 56
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Noe 'rage
3. BURMESE COMMUNISTS REPORTEDLY ADOPT
PEACEFUL TACTICS
Comment on:
The Burma Communist Party, which has
been fighting a guerrilla war against the
Burmese government for eight years, has
deci e o pursue its objectives through a "moral offensive,"
according to an Indian press report. The report also alleges
that a party spokesman said the first step in implementing
the new technique was to be an order for the return of all land,
houses and other properties seized by the party.
The military fortunes of the Burmese
Communists have been steadily declining for at least five
years, while the pro-Communist National United Front made
a strong showing in the recent parliamentary elections using
"legitimate" methods. Consequently, the insurgent Commu-
nists are now more aware than ever that much more is to be
gained by peaceful methods than by a continuation of violence.
Recent pronouncements by both the Ceylonese and Indian
Communist Parties deploring the use of force may also have
influenced the Burmese Communists.
Burma's new premier Ba Swe has publicly
stated that he intends to suppress rebellion "once and for all!'
In the past, however, he is reliably reported to have been nego-
tiating with Communist leaders, and his new government may
well be tempted to grant lenient terms to obtain a quick settle-
ment of the long-standing rebellion.
22 June 56
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',mbar
4. CHINESE COMMUNISTS ANNOUNCE "TRIAL"
PRODUCTION OF JET PLANE ENGINES
Communist China has succeeded in a
"trial" production of jet plane engines,
according to a statement to the People's
Congress in Peiping on 21 June by the chairman of the
National Economic Commission.
Comment
since early 1955.
The USSR has lent considerable assist-
ance to the Chinese aircraft industry
22 June 56
(Prepared by ORR)
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Seri 144011
5. WET MINH ANNOUNCES TROOP REDUCTION
Comment on:
The North Vietnam regime's announce-
ment on 21 June that its armed forces
will be reduced by 80,000 men follows
as mon s Soviet and North Korean announcements of
planned troop reductions. The announcement stated, how-
ever, that of this number, 50,000 men had already been
demobilized during the two years since the signing of the
Geneva agreements.
The Viet Minh is engaged in a recruit�
training program and it may be that the demobilized men
will be entirely replaced by recruits. Even if the Viet Minh
carried out its demobilization plan as announced, its troop
strength, would remain double that of South Vietnam. In
any event, the receipt of modern arms from the Soviet bloc
and the continuing reorganization of the army have signifi-
cantly increased Viet Minh military capabilities during the
past two years.
The troop reduction announcement will
probably become part of the Viet Minh propaganda campaign
for the "peaceful unification" of Vietnam. Viet Minh willing-
ness to reduce armed forces will be contrasted with the in-
transigence of the Diem government on such questions as the
holding of unification elections scheduled for July 1956 by the
Geneva agreements.
22 June 56
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6. SAUDI ARABIA SEEN TURNING AWAY FROM
WESTERN TIES
Comment on:
Ambassador Wadsworth believes that
Saudi Arabian policy is all but domi-
nated by Egyptian and anti-foreign na-
tionalist influences opposed to renewal
of the Dhahran air base agreement with the United States.
King Saud is practically alone in resisting these pressures,
but is committed to a program for strengthening Saudi mil-
itary forces for which he wants additional funds.
Both Wadsworth and the British ambassa-
dor are under the impression that top Saudi advisers have
presented the United States and Britain with unreasonable
demands which they hope will be refused, and that the onus
for failure would thus be placed on the Western powers. This
hostile attitude, plus the king's genuine desire to build up his
army, in Wadsworth's opinion, explains the Saudi "suggestion"
that the United States give either $250,0002000 worth of arms
or the money to buy them in return for continued use of the
Dhahran field. King Saud has argued that if this "suggestion"
is refused, he will be "forced" to turn elsewhere--Egypt and
the USSR.
22 June 56
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7. USSR OFFERS SCHOLARSHIPS TO PHILIPPINE STUDENTS
Moscow has offered "one scholarship
each year for five years to Philippine
students for college or postgraduate
study in the USSR beginning 1 Septem-
ber." The offer was made to the Philip-
pine amassactor to fhailand by the Soviet ambassador.
Comment With this approach to the Philippines, -
Moscow has made offers to all the Asian
members of SEATO. Offers of educational training have re-
cently been extended to Thailand and Pakistan, as well as
India, Burma and Egypt.
If the Philippine government rejects this
offer, as is probable, ultranationalist circles, led by Senators
Recto and Laurel,would exploit this to "prove" their contention
that the Philippines is too dependent on the United States. In
any event, the Filipinos are likely to welcome this indication
of Soviet interest as they press for concessions in the forth-
coming negotiations on American bases.
22 June 56
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Now, Nrof
�THE ARAB- IS RAE LI SITUATION
(Information as of 17009 21 June)
Egypt has no intention of risking war
with Israel "at the moment;'
.raining in the use of Soviet bloc
arms has been delayed because of delays in delivery of some
of the equipment, and the state of transport is such that no
nrAsPnt
large- sc7 1Am mtwarrtanfQ ho
The two previously unidentified installa-
tions at Kibbutz Havogrim in the Syrian-Israeli demilitarized
zone are now reported by UN Truce Supervision Organization
observers to be two concrete pillboxes equipped with firing ports.
The chairman of the Israeli-Syrian military armistice commis-
sion expressed the opinion that construction other than the pill-
boxes would be allowed to stand. General Burns, UN truce chief,
will decide after further investigation on the question of a viola-
tion of the armistice agreement and an order to destroy the pill-
boxes.
22 June 56
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