CURRENT INTELLIGENCE BULLETIN - 1957/02/22

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03161999
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 13
• Document Creation Date: December 12, 2019
• Document Release Date: December 20, 2019
• Publication Date: February 22, 1957

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for Release: 2019/12/04
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CURRENT
INTELLIGENCE
BULLETIN
�%bi 9 97, 0747/71M
3.5(c)
22
February
1957
Copy No. :131
DOCUMENT NO. NO CHANGE IN CLASS'. /-#4
DECLASSIMED
CLASS. CHANGED TO: TS 3 Idol
NEXT REVIEW DATE:
AUTH
REVIEWER:
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
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V V
CONTENTS
1. FRENCH MAY C STEPS TO AVERT ECO-
NOMIC CRISIS (page 3).
'2. COMMUNIST INFILTRATION OF INDONESIAN ARMY
(page 5).
3. SUKARNO ANNOUNCES "CONCEPT" OF NEW INDO-
NESIAN GOVERNMENT (page 6).
4. NEW ARMS SHIPMENT TO YEMEN
(page 8).
5. RENEWED OPPOSITION TO CHINA DIFFERENTIAL
(page 9).
(", 1 f)6. INDIA MAY ENCOURAGE MORE PRIVATE FOREIGN
INVESTMENT (page 10).
. HANOI ADMITS CONTINUED POPULAR DISCONTENT
(page 11).
ANNEX--Conclusions of the Watch Report of the Intelligence
Advisory Committee -(--Terp-ffec-ret)-
(page 12).
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L FRENCH MAY TAKE DRASTIC STEPS TO AVERT
ECONOMIC CRISIS
Comment on:
French finance minister Paul Ramadier's
plan to cut the 1957 budget by $744,300,000
may be the beginning of a serious effort
to stave off an economic crisis. Ramadier
is reported to have proposed that$286,000, -
000 be cut from military expenses by an
immediate demobilization of 100,000 troops
from the forces now in Algeria. Such a cut,
however, would be strongly opposed by the
minister of defense and Resident Minister
in Algeria Lacoste on the grounds that it
would endanger France's pacification ef-
fort in Algeria.
The Mollet government has attempted to
cope with inflation by substantial increases in imports, but at
the costof bringing France's gold and dollar reserves down to
a minimum working level. France's trade deficit for January
was about $174,000,000 and the director of the Treasury be-
lieves the French economy faces a "complete collapse" if this
rate of loss continues. A reduction of imports, which might
rectify this situation, would at the same time be contrary to
the proposed liberalization of trade under the Common Market.
Stringent economies in expenditures would
also force a cutback in proposed plans for revamping the army
and development of North Africa. Moreover, an airing of
France's financial difficulties may offer the right center an op-
portunity to launch an attack on the Mollet government.
While the French disclaim any intention of
launching aid discussions during Mollet's visit to Washington
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on 26-27 February, Ramadier may be trying to underline
France's problem and to dramatize its willingness to econo-
mize in the hope that serious aid discussions will arise in
the course of talks on European defense, the Middle East
and Eurafrican investments.
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2. COMMUNIST INFILTRATION OF INDONESIAN ARMY
Comment on:
Indonesian Communists appear to be
making progress in penetrating army
units in Java, particularly in the highly
strateaic Djakarta and West Java corn-
mands. the chief of staff
in the Djakarta command is pro-Communist, and a Commu-
nist regimental commander in West Java is said to be exert-
ing considerable influence on the territorial commander.
Although right-wing officers in West Java still outnumber
the Communists, the daily arrest or reassignment of anti-
Communist officers for involvement in the "Lubis plot" is
giving the Communists additional opportunities.
Control of the army has been a priority
Communist goal in Indonesia having equal importance with the
subversion of the peasant and laboring classes. Until 1956,
the army�and particularly the West Java and North Sumatra
commands--provided the principal brake on Communist influ-
ence in Indonesia.
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3. SUKARNO ANNOUNCES "CONCEPT" OF NEW
INDONESIAN GOVERNMENT
Comment on:
President Sukarno's 21 February an-
nouncement of his "concept" for more
effective government in Indonesia is a
blow to parliamentary government and
an important gain for the Communists.
u rno, calling for an entirely new system of government,
said that Indonesia's problems were the result of its adher-
ence to Western-style democracy and its toleration of oppo-
sition.
He proposed the establishment of an
"advisory council" to direct the activities of a "mutual aid"
cabinet, and participation by the Communist Party in both
organizations. According to Sukarno, the council is to be
a "reflection of the community," representing such groups as
labor, women, youth and the armed forces, while the cabi-
net would be composed of representatives of all parties in
parliament. This system, Sukarno claims, would create
conditions in which all Indonesians could live as "one big
family" in an "atmosphere of national peace:'
The successful implementation of Sukarno's
"concept" rests largely on the reaction of the army, the polit-
ical parties, and the non-Javanese areas. Chances of general
army support--at least in Java--seem good. Recent changes
in army leadership have rendered major elements more amen-
able to Sukarno's policies, and his offer of army representation
on the council may meet the objections of anti-Communist ele-
ments. The adherence of several important political parties,
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1
particularly the two largest Moslem parties, the Masjumi
and the Nandlatul mama (NU), is in doubt. The Masjumi
has consistently refused to participate in a regime that
included Communists, and the NU is reportedly divided on
the issue of Communist participation in government. Un-
less it develops that former vice president Hatta is given
an important position and greater autonomy is guaranteed
to the provinces, the presently disaffected areas are not
likely to accept the president's proposals.
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4. NEW ARMS SHIPMENT TO YEMEN
Comment on:
Difficulties in moving other than
small quantities of Arab and Soviet
bloc arms to Yemen following closure
of the Suez Canal appear to have been
overcome, and arms deliveries to
Yemen will soon increase.
the new Yemeni
ship Muizz had left Egypt, probably
from Suez, for Yemen with 5,590
cases of "goods"--presumably arms--
from Egypt and the Soviet bloc.
the Syrian gov-
ernment would send "weapons, gre-
nades and explosives in Syrian
vehicles- to Tebuk in northwest Saudi Arabia for trans-
shipment to Yemen. Saudi crown prince Faisal agreed to
transship the materiel in Saudi vehicles, but instructed
that the matter be kept secret.
3yrian Airways would
"soon" have scheduled flights for delivery of Czech arms
from Damascus to Yemen.
The increasing flow of arms will give
Yemen an effective bargaining asset in its expanding pro-
gram of subversion among the sheiks of Aden Protectorate.
Yemeni arms offers have attracted increasing numbers of
protectorate tribesmen, and the sheik of the Alawi tribe
has defected to Yemen with many of his tribesmen--the
third such defection in as many months.
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5. RENEWED OPPOSITION TO CHINA DIFFERENTIAL
Comment on:
Statements made to the Japanese CHIN-
COM representative In Paris by the
representatives of Britain, France,
and Norway indicate that these powers
plan to give strongly negative replies
to the American proposal of 27 December for maintaining
the China trade control differential and for further restrict-
ing strategic trade with East Europe.
Britain's representative is quoted as
saying London will strongly oppose measures for imple-
menting the US recommendation. The French representa-
tive stated that "France will insist that there is no reason
to impose stricter control on trade with China than with
Russia and that the levels of controls should be equalized:'
The Norwegian representative likewise indicated opposition.
Parallel intimations of growing opposi-
tion from other countries include consideration of trade
missions by West Germany and Japan, which have in the
past been relatively co-operative in supporting the China
differential.
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6. INDIA MAY ENCOURAGE MORE PRIVATE
FOREIGN INVESTMENT
Comment on:
Indian finance minister Krishnamachari
has admitted that the Second Five-Year
Plan (1956-61) may have to be extended
to seven years. Rather than extend the
period of the plan, India may modify its
policies in favor of private foreign invest-
ment.
Krishnamachari recently told Sir Jehangir
Ghandy, director of Tata Iron and Steel Co., that the Five-
Year Plan could be met only if approximately $2 billion were
made available from foreign sourbes in the next four years,
and added that he doubted such funds would be made available
by foreign governments. Krishnamachari had tentatively
agreed that after the elections Tata and the Kaiser interests
would be permitted to construct a large jointly owned shipyard
despite the fact that shipbuilding is reserved for the public sec-
tor of the economy.
While Prime Minister Nehru and the Con-
gress Party have committed their prestige to developing a
socialistic pattern of society as well as to the successful ful-
fillment of the plan in five years, they might be willing to re-
duce the emphasis on socialization if convinced that such a
policy would attract the foreign capital needed to fulfill the plan
goals.
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7. HANOI ADMITS CONTINUED POPULAR DISCONTENT
Comment on:
Although there have apparently been no
outbreaks in North Vietnam on a scale
comparable to last November's upris-
ings, which were suppressed by the ar-
my, the population continues restive in
certain areas. The party organ Nhan
Dan. in late January admitted hew dem-
onstrations against the authorities in
some villages of Ha Tinh -Province, not
ar trom tne scene of the 1956 disorders. The article states
that dissatisfied peasants, demanding return of their prop-
erty confiscated during land reform, rioted and surrounded
the homes of Communist cadres.
Hanoi has sought to conciliate the popu-
lation by pushing a "mistake-correction" campaign. Many
landlords have been "reclassified" and some of their prop-
erty has been restored. Hanoi is also reinstating party
personnel who had been purged and reorganizing party cells
which had been "wrongly dissolved."
The populace is impatient of delays in
implementing "mistake-correction," and the Communists
are finding it necessary to appeal for calm and understand-
ing. Concurrently, the regime is giving notice of its determi-
nation to act forcefully against any new demonstrations. The
Nhan Dan article warns that "energetic measures" must be
taken against those "who aim to rise up against the party and
government."
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ANNEX
Watch Report 342, 20 February
of the
Intelligence Advisory Committee
Conclusions on Indications of Hostilities
On the basis of findings by its Watch Committee the Intel-
ligence Advisory Committee concludes that:
A. No Sino-Soviet Bloc country intends to initiate hostilities
against the continental US or its possessions in the imme-
diate 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. A deliberate initiation of hostilities in the Middle East is
improbable in the immediate future. The crucial issues
of Israeli withdrawal and Suez Canal control, as well as
continuing tensions in the area, constitute possibilities for
violence.
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