CURRENT INTELLIGENCE BULLETIN - 1957/01/17

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03161978
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 11
• Document Creation Date: December 12, 2019
• Document Release Date: December 20, 2019
• Publication Date: January 17, 1957

�4Approved for Release: 2019/12/04 C03161978
-1-11P-61,1Vit-Z1� y
CURRENT
INTELLIGENCE
BULLETIN
3.3(h)(2)
3.5(c)
17 January 1957
t-opy NO.
DOCUMENT NO
NO CHANGE IN CLASS.
I DEC LAS:
CLASS CHANGED TO: TS S
NEXT REVIEW DATE:
AUTFL jR 70-
DAT
REVIEWER:
131
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
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Agw
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CONTENTS
1, LARGER-SC4LE VIOLENCE SEEN IMMINENT IN BUDAPEST
(page 3).
2. POSSIBLE RESIGNATION OF IRAQI PRIME MINISTER
(page 4).
3, FALL OF INDONESIAN GOVERNMENT REPORTED IMMINENT
(page 5),
4, THE SINO-POLISH COMMUNIQUE
5. "EGYPTIANIZATION" OF WESTERN FIRMS
(page 7).
6. ISRAEL PROMOTING EILAT-HAIFA OIL PIPELINE AS
ALTERNATIVE TO SUEZ (page 8).
(page 6).
7. BRITAIN PLANS SHARP REDUCTION IN AID TO LIBYA
(page 10).
17 Jan 57
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//,./14/. II 111414 --
1- LARGER-SCALE VIOLENCE SEEN IMMINENT
IN BUDAPEST
The American legation in Budapest ex-
pects outbreaks of violence in Budapest
this week, larger in scale than the worker
eruptions of last week. The legation sees
no evidence of any impending compromise between the regime
and the population, and notes that labor unrest has grown as
a result of the regime's harsh policies and that the recent ex-
tension of martial law in Hungary is "foreboding!'
Recent reports reaching the legation claim
that Premier Kadar over the week end had informed a delega-
tion of the Peasant Party that the Soviets will remain, Nagy is
not returning, Kadar is not resigning, and the delegation had
better go home and get to work.
Comment Press reports from Vienna allege that post-
ers in Budapest are calling for a new re-
volt on 26 January, urging the people to "stand by" until that
date. Although a full-scale, nationwide uprising appears un-
likely, the regime has admitted its concern about a possible
new and violent phase of the revolution, and intends to crack
down "mercilessly" on all "enemies:'
The labor unrest reached a high point on
Csepel Island on 11 January when demonstrating workers at-
tacked with bare hands Hungarian military forces sent to con-
trol them, resulting in two worker deaths and five or six
wounded. Soviet troops called to Csepel stopped at the main
gate and did not fire. Further outbreaks of violence of this
nature, initiated by defiant workers, appear almost inevitable,
both on Csepel and within Budapest.
17 Jan 57
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2. POSSIBLE RESIGNATION OF IRAQI PRIME MINISTER
Fadhil Jamali, present head of the
Iraqi delegation to the United Nations
and former prime minister, is slated
to replace Nun i Said,
Nun i expected
to continue to influence the government from behind the
scenes. No further cabinet changes are contemplated.
Comment
Despite strong internal and external
pressures for Nun i to step down, this
is the first indication the veteran Iraqi leader may be
seriously considering resigning. Nun i may feel his de-
parture would help to heal Iraq's strained relations with
the other Arab states.
Iraqi policy would be unlikely to change
substantially under Jamali. He is strongly pro-Western,
outspokenly anti-Communist, and represents the liberal
� and reformist trend within the ruling group in Iraq. He
does not have a substantial personal following in Iraq, how-
ever, and would probably be unable to withstand Arab na-
tionalist pressures as successfully as Nun i has done in the
past.
17 Jan 57
Current Intelligence Bulletin Page 4
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1_41 -1 XI:. 1-
3. FALL OF INDONESIAN GOVERNMENT
REPORTED IMMINENT
Comment on:
The deputy chairman of the Nandlatul
Ulama, the second largest party in the
Indonesian cabinet, told the press that
his party has decided "to persuade the
government to resign:' Without the NU
the coalition cabinet led by the National
Party would no longer have a majority
in parliament. The call for the cabinet's
resignation may be delayed until after
Prime Minister Ali addresses parliament, which convenes
on 21 January.
In Djakarta, the press indicates that
President Sukarno is about to announce his plan to impose
a state of war and siege over the entire nation and to set
up a "revolutionary council" under his own leadership.
Merdeka--a Djakarta daily which frequently speaks for
Prime Minister Al's National Party--has published further
details of the proposal, probably to elicit political and re-
gional reactions. According to Merdeka, the council would
have a membership of 14 and would include representatives
of the military, youth and "mass organizations," and re-
ligious, nationalist and Marxist political groupings.
In the face of the Djakarta government's
delaying tactics and political promises, Colonel Simbolon,
the rebel commander in North Sumatra, and Lt. Col. Hussein,
successful coup leader in Central Sumatra, are organizing
and arming a rfnfrrilla force of 1,000 men,
They will resort to force, however, only
if Djakarta continues to refuse their political demands. These
are the resignation of the Ali cabinet, more autonomy for
Sumatra, and the establishment of six provinces there.
17 Jan 57
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()IP
4. THE SINO-POLISH COMMUNIQUE
Comment on:
The joint communiqu�ssued in Poland
on 16 January at the close of Chou En-lai's
visit suggests Sino- Soviet ratification of
Poland's recently won position of greater
independence--at least with respect to
matters of internal policy. The statement reaffirms that the
development of socialism must take into consideration the
conditions prevailing in different countries.
On the question of intra-Orbit relations,
the communiqu�nsists on the principle of equality and respect
for national sovereignty. Soviet leadership of the bloc, empha-
sized in recent Chinese statements, is not mentioned.
At the same time, the communiqu� em-
phasis on bloc solidarity based on a common ideology and a
common view of world affairs reflects Chou's success in his
efforts to obtain closer identification of the Gomulka regime
with the bloc. Standard Communist criticism of Western pol-
icy in Europe and the Middle East is repeated and much of the
communiqu�s devoted to the dangers of Western aggression
and subversion.
Chou failed, however, to obtain open Polish
endorsement for either the Soviet intervention in Hungary or
the standard line that the Hungarian insurrection was the re-
sult of capitalist subversion. The communiqu�tates only that
both countries support the Kadar government and are "resolutely
opposed to all attempts by imli)erialist circles to intervene in the
internal affairs of Hungary."
17 Jan 57
Current Intelligence Bulletin Page 6
CONFIDENTIAL
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5."EGYPTIANIZATION" OF WESTERN FIRMS
Comment on:
Cairo's enactment on 15 January of four
laws designed to "Egyptianize" economic
activities appears aimed at maintaining
the momentum of nationalism and bolster-
ing the regime politically. Egyptianiza-
tion will require most foreign firms to be sold to and com-
pletely managed by native Egyptians in the next five years.
The move will not result in any immediate
economic benefits and may wipe out the remaining confidence
of the Egyptian business community in the Nasr government's
ability to keep the country from bankruptcy. The new laws
will further discourage Western investment in Egypt.
Egyptianization of "enemy" (British and
French) assets is a follow-up to the sequestration decrees
issued soon after the Anglo-French intervention. The broad-
ening of this takeover to include other foreign companies dur-
ing the next five years suggests that Nasr does not plan on
Western private or possibly even governmental economic aid,
hoping instead for Soviet economic assistance.
Egypt obtains virtually no foreign exchange
by this action, since firms operating in Egypt--including banks--
would have few unencumbered monetary assets aside from small
balances in Egyptian pounds. American firms will come under
the five-year grace period.
17 Jan 57
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"illiThILIATsPir--4-1-
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6. ISRAEL PROMOTING EILAT-HAIFA OIL PIPELINE AS
ALTERNATIVE TO SUEZ
Comment on:
Oil pipe-
line con-
struction
across Is-
rael from
Elia to Haim, bypassing
the Suez Canal, not only
will give Israel a source
of additional revenue,
but also is being used by
Israel to promote great-
er Western interest in se-
curing and maintaining
freedom of transit in the
Gulf of Aqaba. Israel
probably also sees polit-
ical advantages flowing
from increased Western
economic interests in
Israel.
According
to Israeli ambassador E--
ban, an 8-inch line from
Aqaba to Haifa will be
open in a matter of weeks.
The capacity of such a
line is about 16,000 bar-
rels per day. Eban said
a 16-inch line is being
discussed, and the "ulti-
mate vision" is a 32-inch
line which would carry
400-500,000 barrels per
day, nearly one fifth of
Western Europe's normal
daily imports.
ISRAEL
UNCLASSIFIED
8 INCH
PIPELINE
� PRESENT
, ISRAELI
BOUNDARY
TEL AVIV
AS H QELON
GAZA
STRIP
EGYPT
GUL
0
A OAB
16 JANUARY 1957
17 Jan 57 Current Intelligence Bulletin
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France has expressed readiness to share
in the cost of construction. The principal obstacle to the
Israeli pipeline projects, however, is an assured source of
crude oil. The Arab states would almost certainly not allow
oil produced in Arab countries to transit Israel. The only
likely source of supply would be Iran. Iran has shipped a-
about 340,000 barrels daily through the Suez Canal and at
least some of this could be diverted to pipelines through
Israel. While the Iranian government itself would have no
objections, it would be subjected to strong Arab pressure,
particularly from Egypt, which would lose sizable canal
revenues.
17 Jan 57 Current Intelligence Bulletin
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7, BRITAIN PLANS SHARP REDUCTION IN AID TO LIBYA
Foreign Office permanent under secretary
Kirkpatrick has informed American rep-
resentatives that Britain intends a drastic
reduction in its military and economic com-
mitments in Libya. Stressing that Britain's present financial
difficulties have made necessary a broad re-examination of its
foreign policy throughout the world, Kirkpatrick said that in
the case of Libya a reduction is indicated because its value as a
British base is steadily diminishing.
Kirkpatrick said London is considering reduc-
ing annual grant aid from the present $11,400,000 to $2,800,000.
British forces in Libya would be reduced from 8,000 to 2,000 by
the end of 1958. A contribution of $7,700,000 toward a build-up
of the Libyan army would be offered in fulfillment of an earlier
promise.
Comment The British have long sought to increase
American interest in Libya but had not pre-
viously indicated that their reduced capabilities dictated such
a sharp drop in their own role. Libyan prime minister Ben
Halim told the American embassy in Tripoli recently that he
wanted the British to stay, but preferred to have the United States
take a primary role. The British claim that their shift in Libya
is dictated both by financial difficulties and the need to concen-
trate on defending their more vital interests in oil-producing Iraq
and the Persian Gulf.
17 Jan 57
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