CENTRAL INTELLIGENCE BULLETIN - 1958/01/17

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03015196
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 18
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: January 17, 1958

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17 January 1958
Copy No. 137
CEN' RAL
IVIELLIGENCE
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CENTRAL INTELLIGENCE BULLETIN
17 January 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
The USSR, as well as certain Western nations includ-
ing the US, will probably be approached by Ceylon for a
total of $60,000,000 in loans at 2-percent interest to re-
habilitate flood-damaged areas. Moscow normally grants
loans at this low interest rate and currently has a large
economic mission visiting Ceylon. The USSR has already
offered to aid the Ceylonese rubber industry and to pur-
chase rubber at premium prices.
iv The Czech regime is having increasing difficulty in
controlling opposition among local party and government
c,10 officials in the Slovak region. Slovak nationalists are at-
tempting to use Prague's economic decentralization pro-
gram for their own local benefit at the expense of nation-
wide goals.
(Page 1) (MAP)
The initial Sino-Soviet bloc reaction to President
Eisenhower's reply to Bulganin% letter of 10 December
repeats the Soviet line that the United States Government
is not interested in negotiations and stands alore in op-
posing a summit meeting.
The USSR has refused an Afghan request for aid on
a grant basis. Moscow insists that the $15,000,000 al-
lotted to Afghanistan for oil exploration and development
be treated as a loan, due in five annual installments
starting in 1962. (Page 2) (MAP)
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II. ASIA-AFRICA
A showdown between the Indonesian central govern-
ment and dissident leaders may be precipitated if Dja-
karta agrees to deliveries of extensive military equip-
ment from the Soviet bloc. An Indonesian military pur-
chasing mission is now seeking arms in Eastern Europe.
Debate on the $100,000,000 Soviet economic loan agree-
ment, including a provision for cooperation on peaceful
uses of nuclear energy, is about to commence in the In-
donesian parliament. (Page 3)
� Political tension in Syria remains high. Foreign
Minister Bitar, a leader of the civilian socialist-na-
tionalist;group, has gone to Cairo, probably to counter
arguments for a military coup advanced by the group
headed by Syrian Chief of Staff Bizri, who talked to Nasir
on 15 January. Vice Premier Azm, the leading pro-Com-
munist civilian, has been meeting with Deputy Chief of
Staff Nafuri and chief of army intelligence, Sarraj. Azm
has announced a new "progressive?' party will be formed.
Syria appears to be expanding its support of the Al-
gerian rebels. Damascus has apparently agreed to fur-
nish military instructors and will probably agree to a
rebel request for Syrian passports to facilitate the trans-
it of Algerian scientific students to bloc countries.
(Page 4)
Turkey's rejection of the latest British proposals
for a Cyprus solution demonstrates that Turkey's Cyprus
policy has hardened. Greek Turkish tension on Cyprus
has increased and any misstep might result in outbreaks.
(Page 5)
DAILY BRIEF ii
--rap-SECRET-
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17 Jan 58
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The Shah has reiterated to both the British ambas-
sador and General Maxwell Taylor that� Iran's future policy
toward the West will be dependent on decisions taken at the
Baghdad Pact Ministerial Meeting on 27-31 January. The
Shah's warning is in line with his repeated attempts to ob-
tain more American military aid and his recent threats to
leave the pact.
� The appointment of a provisional Cambodian govern-
ment headed by conservative Penn Nouth on 16 January has
ended the administrative crisis following Prince Sihanouk's
dissolution of the national assembly on 8 Janu.ary. The po-
litical orientation of this cabinet, which presumably is in-
tended to last until new general elections are hbld within
two months, is consistAnt with Sihanolkt recent anti-Com-
munist statements�
III. THE WEST
Guatemalan President Flores seems determined to pre-
serve order during and after the bitterly contested elections
of 19 January, and has announced that army leaders are pre-
paring to back him up with force if necessary. There is some
question, however, of the army's willingness to use force
against the sustained mob violence threatened by both the
rightist presidential candidate Ydigoras and by extreme left-
ist leaders if Cruz Salazar is declared the winner. It re-
fused to act decisively in similar circumstances last October.
� The French, German, and Italian defense ministers are
to meet on 21 January to work out details of a tripartite agree-
ment for the production of jet planes, missiles, and nuclear
warheadss--the last to be manufactured in France with German
t, and Italian tedmical assistance. Earlier details of such an
c9 /5 agreement, which will be extended to the Benelux countries
but exclude Britain, omitted the nuclear warhead proposal.
(Page 6)
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West German Foreign Ministry officials favor of-
fering India new credits of $72,000,000 for economic de-
velopment programs, besides postponing payments on the
principal of India's $144,000,000 debt. For political rea,.;.:
sonslionnwould like to encourage further private invest-
ment in India by German firms. Bonn states that German
firms are short of funds, and urges joint Western financial
aid. (Page 7)
Britain will resume financial negotiations with Egypt
on 30 January in Rome. Although the British representa-
tives have considerable flexibility in their proposals, the
negotiations will take some time, and the British are going
to insist on prior concessions. Egypt appears ready for an
agreement, and the British are looking forward to an even-
tual resumption of diplomatic relations with Cairo, which
they believe will improve their relations with other Arab
states. (Page 8)
IV, SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
Watch Committee Conclusions.
17 Jan 58
(Page 9)
DAILY BRIEF iN
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N. M.A....ill AL MAW
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L 1�E COMMUNIST BLOC
Slovak Nationalism Increasing Pr,oblem for
Czechoslovak Regime '
Nationalist elements in Slovakia apparently are at-
tempting to use the Czechoslovak regime's economic
decentralization program to benefit their own regional
interests at the expense of nationwide goals.
In a strongly worded speech to the Slovak party cen-
tral committee plenum meeting of 9-10 January, Slovak
Party First Secretary Bacilek complained that there were
separatist tendencies in various sectors of cultural, po-
litical, and scientific life, and even in some of the central
offices. The dismissal on 13 January of Slovak Deputy
Premier Stefan Sebesta, responsible for industrial and
urban construction, probably is the first step to remove
officials with nationalistic tendencies, who, according to
Bacilek, have appeared at the highest levels of the Slovak
government.
The resurgence of separatism within Slovakia since
the Soviet 20th party congress in February 1956 has been
of mounting concern to the Prague regime, and since the
Slovak party congress in April 1957 has been condemned in
increasingly stronger terms by Czech party boss Antonin
Novotny. The tone of Bacileles speech indicates that the
situation now demands the ruthless stamping out of "bour-
geois nationalist" elements promised by Novotny last April
when he first publicly warned the Slovak dissidents to con-
form or suffer the consequences.
CONFIDENTIAL
17 Jan 58
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USSR Refuses to Change Payment Terms of Afghan
Oil Exploration Agreement
The USSR has turned down an Afghan request that
financing of the joint Soviet-Afghan agreement for ex-
ploration and development of oil resources be changed
from a loan to a grant basis,
The Afghan Embassy in Moscow reported on
January that in accordance with the original proposal
the $15,000,000 cost of the project must be treated as a
loan repayable in five annual installments starting in
1962, probably at 2.5-percent interest.
The agreement, announced last summer and signed
in Kabul on 7 January 1958, stipulates that Moscow is to
furnish technicians and equipment from the USSR, Czecho-
slovakia, and Rumania to explore oil resources in northern
Afghanistan.
Afghanistan had informed the USSR and the US in Decem-
ber that economic difficulties forced it to seek grant aid in-
stead of loans, excepting projects already agreed upon.
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II. ASIA-AFRICA
Indonesia
A final break between Indonesia's dissident leaders and
the central government may be precipitated if Djakarta con-
cludes an agreement for the delivery of arms from the So-
viet bloc.
such an acquisition, even through Egypt, could be the signal
for the declaration of a rival Indonesian government by the
dissidents. I the dissidents feel that the arrival of
Soviet arms would upset the existing "balance of forces" be-
tween Djakarta and the regions and that a showdown should
be precipitated before the dissidents are placed on the de-
fensive. The Indonesian arms purchasing mission has just
arrived in Prague, after talks in Belgrade, and will proceed
next to Warsaw.
A further factor in this situation may be the Indonesian
parliamentary debate, beginning about 18 January, on ratifi-
cation of the $100,000,000 Soviet economic loan agreement,
which includes a provision for cooperation on peaceful uses
of nuclear energy. Ratification would open the way for the
arrival of Soviet technicians and probably would be viewed
by the dissidents in much the same light as an arms deal.
CONFIDENTIAL
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New Syrian Support for Algerian Rebels Indicated
Syria appears to be furnishing increased support to
the Algerian rebels in their struggle against France.
the Syrian Embassy
was expecting the arrival of
three Syrian officer-instructors Damascus had agreed to
send to Tunis�presumably to train rebel troops at bases
in Tunisia or Algeria. the instructors were ur-
gently needed and asked that they be sent as soon as pos-
sible. appreciation "for all
Syria was doing to further the cause of Algerian liberation,"
also requested twenty Syrian passports to enable Algerian
students to go to scientific institutes "in Czechoslovakia,
China, or some other country."
Syria, which has in the past been an important source
of military, financial, and diplomatic assistance to the Al-
gerians, is also reported to have made new supplies of arms
available, the first of two
shipments of good quality heavy weapons, including mortars
and bazookas, was due to reach Alexandria by ship this week
en route to Algeria via Tunisia
TOP SECRET
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Turks Reject British Proposal for Cyprus Solution
Turkey's abrupt rejection of Britain's latest proposals
for a Cyprus solution, emphasizes the stiffening of the gov-
ernment's Cyprus policy since the return of Fatin Rustu
Zorlu as foreign minister.
Ankara insists that the offer of self-determination "on
absolutely equal terms" for both Greek and Turkish Cypriots
be implemented immediately.
The British offer, delivered to the Turkish Foreign Min-
istry for its informal comments, had provided for a seven-
year period of self-government, after which the Greek and
Turkish Cypriots could determine separately their own future
status.
On Cyprus, Turkish Cypriot support has solidified around
Fazil Kutchuk, who plays on the fears and prejudices of his
followers and who appears to have the full support of Ankara.
Increasing tension has heightened the probability that the Turk-
ish. Cypriots now will develop an efficient underground organi-
zation, thus increasing the seriousness of any outbreak of vio-
lence. Seventy-nine percent of the local police are Turkish
Cypriots whose loyalty to the British Government mighLciuickiv
i e face of serious intercommunal warfare.
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III. THE WEST
Italy. France, and, Germany May Produce Nuclear
Warheads Jointly
The French, German, and Italian defense ministers
will meet on 21 January to work out details of the tri-
partite arrangement for production of jet planes, missiles,
and nuclear warheads to which they agreed during the
Paris NATO meeting.
According to Italian Defense Minister Taviani, the
agreement calls for all three countries to produce jet
planes and one type of missile body under an American
license. Nuclear warheads, however, are to be manu-
factured only in France, with German and Italian techni-
cal assistance, and tested in the Colomb-Bechar proving
ground in the Sahara. Early December reports of such an
agreement failed to mention the nuclear warhead proposal,
which was apparently added on French initiative during the
NATO talks.
Present plans call for the tripartite agreement to be
extended eventually to the Benelux countries, but to exclude
Britain. It therefore appears that Western European think-
ing on common defense production has not been clarified, as
the Netherlands still supports NATO sponsorship of such a
program and the British favor proposals "in a WEU context."
-SECRET_
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Bonn to Offer Additional Economic Aid to India
The West German Foreign Ministry, in negotiations
with India scheduled to begin on 20 January in Bonn, is
prepared to offer new credits up to $72,000,000 to finance
the purchases of priority items for India's five-year plan.
Bonn will also grant India's previous request to defer un-
til after 1961 payments on the principal of its present
$144,000,000 loan. The new credits would be handled by
a special organization or trust fund, with 10 percent of
the burden carried by private German firms and the rest
by the government.
West German Foreign Ministry officials emphasize
the political importance of providing assistance to India,
and would like even further investments by private German
firms in India. They stress Germany's shortage of invest-
ment capital, however, and suggest association with the
United States in a Joint economic aid program for India.
The new German financial offers would strengthen the
political prestige of Indian Finance Minister Krishnamachari,
who toured Western Europe and the United States last fall
seeking foreign aid.
-CONFIDE:NMI-
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Anglo-Egyptian Financial Talks to Resume
0n30 January
Britain will resume negotiations with Egypt in
Rome on 30 January on releasing blocked sterling funds
in return for Egyptian compensation for property seized
during the Suez hostilities.
Although Egypt appears ready for a financial agree-
ment now, negotiations will probably take some time. The
British cabinet has authorized its negotiators to work out
an agreement
Egypt has agreed to begin negotiations in Febru-
ary with a committee representing the company stockholders.
Britain is probably motivated by the belief that resump-
tion of diplomatic relations with Egypt will induce Saudi
Arabia and Syria to restore relations also, thus permitting
Britain to become more active politically in the Middle East.
London's independent efforts for a rapprochement with King
Saud have been unsuccessful so far.
the absence of Anglo-
Egyptian diplomatic relations makes it difficult for any Arab
leaders to cooperate openly with Britain.
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W. SIGNIFICANT INTELLIGENCE
REPORTS AND ESTIMATES
Watch Report 389, 16 January 1958
of the
Intelligence Advisory Committee
Conclusions on Indications of Hostilities
On the basis of findings by its Watch Committee, the In-
telligence Advisory Committee concludes that:
A. No Sino-Soviet bloc country intends to initiate hostilities
against the continental US or its possessions in the im-
mediate future.
B. No Sino-Soviet bloc country intends to initiate hostilities
against US forces abroad, US allies or areas peripheral
to the orbit in the immediate future.
C. 1. A deliberate initiation of hostilities in the Middle East
is unlikely in the immediate future. However, ten-
sions in the Middle East continue to create possibil-
ities for serious incidents.
2. There is no evidence of Sino-Soviet intention to become
militarily involved in the Indonesian situation. How-
ever, there are continuing opportunities for an expan-
sion of Sino-Soviet bloc influence in Indonesia as evi-
denced by Indonesian purchasing missions still nego-
tiating for bloc military equipment. Although Indo-
nesian Communists are exploiting political instability
and economic deterioration, which continue to provide
opportunities for a Communist take-over on Java, there
is no evidence that this is likely to take place in the im-
mediate future.
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DISTRIBUTION
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 Mobilization
Operations Coordinating Board
Board of Consultants on Foreign Intelligence Activities
Special Assistant for Foreign Economic Policy
The Treasury Department
The Secretary of the Treasury
The Department of State
The Secretary of State
The Under-Secretary of State
The Counselor
The Deputy Under-Secretary for Political Affairs
The Deputy Under-Secretary for Economic Affairs
The Deputy Under-Secretary for Administration
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, 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
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
I Ifiti ITAMMITT A
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