CENTRAL INTELLIGENCE BULLETIN - 1958/02/07

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03169391
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 14
• Document Creation Date: January 27, 2020
• Document Release Date: January 30, 2020
• Publication Date: February 7, 1958

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7 February 1958
Copy No.
CENTRAL
0
INTELLIGENCE
BULLETIN
DCCUMF''.--1 NO.
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7 FEBRUARY 1958
I. THE COMMUNIST BLOC
USSR treats proclamation of United
Arab Republic with reserve.
USSR reports 1957 industrial plan
overfulfilled.
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II. ASIA-AFRICA
Sumatra - Moves by dissidents
toward rival Indonesian government.
Indian financial scandal threatens
Finance Minister Khrishnamachari.
Iran - Shah appears satisfied with
Baghdad Pact meeting decisions.
Nasir remains concerned about US
attitude toward United Arab Republic.
III. THE WEST
Guatemala - Peaceful presidential
succession now likely.
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CENTRAL INTELLIGENCE BULLETIN
7 February 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
Egyptian-Syrian union--Soviet view: The Soviet lead-
ers continue to treat the prif-ociamation of Egyptian-Syrian
union with reserve and have failed to take advantage of
several ol000rtunities to endorse the union In a conver-
For-
eign Minister Gromyko confined himself to stating that
union is a question which ,concerns only Syria and Egypt.
(page 1,)
Soviet economic growth: According to Pravda, the
USSRTFiate of industrial growth in 1957 w-asVell above
that of the US and well above plan, although slightly be
the 1956 level� The ambitious housing plan was over-
fulfilled for the first time in Soviet history, reflecting
some shift in priorities more favorable to the consumer�
On the other hand, raw materials difficulties continue.
The disappointing harvest in 1957 makes less likely the
achievement of Ichrushchev's milk and meat goals.
(Page 2) (Chart)
II. ASIA-AFRICA
*Indonesia: The dissidents seem on the verge of decisive
action in view of the speech on 6 February by Lt. Col. Hus-
sein, head of the Banteng Council in Central Sumatra. His
lengthy condemnation of the Djakarta government was apparel-illy
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intended to pave the way for either an ultimatum to Dja-
karta or the proclamatitm of a rival government.
On the basis of findings by its Watch Committee, the
Intelligence Advisory Committee concludes that there is
no evidence of Sino -Soviet intention to become militarily
involved in the Indonesian situation. Continued failure
to resolve the basic differences between the central gov-
ernment and the dissident leaders, who may soon pro-
claim a rival government, could lead to disorders and thus
to a situation even more favorable to the Communists on
Java.
A Watch Committee footnote points out tnat
unconfirmed press reports indicate the rival government
may have been proclaimed on 6 February.
Indian cabinet scandal: Nehru may soon be forced to
dismiss his capable iniance minister, Krishnamachari,
as a result of a widely publicized scandal over malfea-
sance now being officially investigated. The investigation
of Krishnamachari, who has been responsible for nego-
tiating major foreign loans for India's Five-Year Plan,
is a serious embarrassment to Nehru and the Congress
party. (Page 3)
Iran: The Shah's apparent satisfaction with results
of the i.ecent Baghdad Pact meeting in Ankara appears
inconsistent with his desire for massive military aid.
Should he be misinterpreting some of the decisions of
the Ankara meeting, his eventual disillusionment could
induce him to renew his threat to withdraw.
(Page 4)
Egyptian-Syrian union: Nasir apparently remains con-
cerned about the American attitude toward the new United
Arab Republic. He is reported to be anxious to smooth
the way for formal recognition of the union by other coun-
tries, which the Syrian foreign minister states will be
\L&': 7 ,Feb 58
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DAILY BRIEF ii
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21,
expected immediately after the scheduled plebiscite on
21 February. The Iraqis, who intend to withhold recog-
nition for the time being, continue to hope for support,
especially from Saudi Arabia and the United States.
(Page 5)
On the basis of findings by its Watch Committee the
Intelligence Advisory Committee concludes that a delib-
erate initiation of hostilities in the Middle East is unlike-
ly in the immediate future Tensions in the Middle East,
augmented by the proclamation of the Syro-Egyptian
United Arab Republic and by recent Israeli-Syrian border
developments, continue to create possibilities for serious
III. THE WEST
Guatemala: Prospects for a peaceful presidential
succession now appear good. General Ydigoras is be-
lieved to have sufficient support in congress to assure
his selection as president-elect, probably on 15 Feb-
ruary. The government is planning the inauguration
for 2 March. The leftist Revolutionary party will
have only five seats in the new 66-man congress.
7 Feb 58
DAILY BRIEF iii
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I. THE COMIVIUNIST BLOC
Soviet Reaction to Egyptian-Syrian Union
The USSR
continues to
treat the suhiert of wrian-Rovrition iinifm uith yr:saga-rye.
For-
eign Minister Gromyko confined himself to stating that "the
question of union concerned Syria and Egypt alone." Deputy
Premier Mikoyan at a Ceylonese Embassy reception on 5
February declined to discuss the union.
The Soviet press and radio have carried without com-
ment factual reports of the unity proclamation and of the
announcement by the King of Yemen that his country wished
to join the new federation, The TASS Cairo correspondent
continues to send to Moscow the enthusiastic assessments
of the Egyptian press, but Moscow Radio does not transmit
them. Newspapers in Warsaw, Prague, Bucharest, and
Tirana, however, have greeted the new citata th' "fi"c+
step" toward unity of all Arab peoples.
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ANN-UAL PERCINTAGE INCRF.A,SrS IN;91,47 INDUSTRY
REPORTED..
1957
PLAN
1951-55
AVERAGE
.
1956
1957
GROSS INDUSTRIAL PRODUCTION
13.1
10.7
10.0
7.1
. LABOR. PRODUCTiVITY
7.0
6.9
6.5
5.4
COAL
8.4
10.0
7.9
6.3
ELECTRIC POWER
13 .3
1.3-.0
9.1
9.9
ROLLED STEEL
11 .1
7.0
5.8
3.9
CRUDE STFEL
1O.
7.0 7.0 �
4.9
6.0
'CEMENT
141
11.1
16.0
12.4
CRUDE OIL
' 133
18.0
17.3
15.7
6 FEBRUARY 1958..
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Soviet Economic Development in 1957
The USSR's industrial goal for 1957 was overfulfilled,
according to Pravda. The rate of growth was well above
that of the US-aria-TA-Tell above plan, although slightly below
the 1956 level. The housing plan, which was ambitious,
was overfulfilled for the first time in Soviet history, re-
flecting some shift in priorities in favor of the consumer.
At the same time, continued raw material difficulties are
reflected in the small increase in steel output. The 1957
harvest�without the unusually favorable weather of 1956--
was lower, making less likely the achievement by 1961 of
Khrushchev's meat and milk goals.
The announced rate of increase in total industrial pro-
duction fell from 10. 7 percent in 1956 to 10. 0 percent in
1957; in many cases growth rates for major items were
below 1956 rates and below those needed to achieve the
original goals for 1960, now abandoned. The rate of in-
crease of national income, influenced by the fall in agri-
cultural production, dropped from 12 percent in 1956 to
6 percent in 1957. Industrial productivity rose 6.5 per-
cent in comparison with 7 percent in 1956,
Plans for expanding the productive capacity of the coal,
iron ore, cement, and ferrous metallurgical imiu.stries
were underfulfilled, as they were in 1956. This problem
remains a major one for Soviet planners.
-CONFIDENTIAL-
7 Feb 58
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II. ASIA-AFRICA
Nehru May Be Forced to Dismiss Indian Finance Minister
Indian Prime Minister Nehru may lose the services of
able, pro-Western Finance Minister Krishnamachari as a
result of a major scandal over misuse of government funds
which is seriously embarrassing Nehru and the Congress
party.
The government, under heavy pressure from critics
in Parliament, is conducting a judicial inquiry into charges
of malfeasance involving an investment made by the nation-
alized Life Insurance Corporation, under direction of the
Finance Ministry, in an Indian industrial firm, of dubious
standing. Personal responsibility for the investment is
still in doubt, although testimony damaging to both Krish=
namachari and his top aide has created a nationwide sensa-
tion. It is likely that the inquiry's report will implicate
Krishnamachari to some extent, and may force Nehru to
accept the resignation
Nehru will be extremely reluctant to dismiss Krishna-
machari, who has been under heavy fire from the Commu-
nist party for his recent loan negotiations in Washington,
since his resignation would be treated as a Communist propa-
ganda victory. A shake-up in the Finance Ministry could also
disrupt the operation of the Second Five-Year Plan. However,
Nehru may feel compelled to fire Krishnamachari in order
to keep the Congress party recTd clean
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Naio' *ffilf
Shah of Iran SatisfiedWith Recent Baghdad Pact Meeting
Iran's, earlier threat to withdraw from the Baghdad
Pact has been sidetracked, temporarily at least, by the
Shah's apparent satisfaction over the outcome of the re-
cent pact meeting in Ankara. The decisions at the meet-
ing concerning military aviation, air defense, and naval
rmatterl please the Shah,
He is particularly happy that completion of the
first phase of the air force program is limited only by
Iran's capability to provide sufficient pilots. He reasons
that acceleration of the pilot training program could per-
mit a more advanced phase to begin before 1960. The
Shah apparently realizes that the question of ground force
strength is subject to further study by the pact's mili-
tary committee.
The Shah's satisfaction with the Ankara meeting ap-
pears inconsistent with his desire for massive military
aid. Should he be misinterpreting some of the decisions
of the pact meeting, his eventual disillusionment could
induce him to renew his threat to withdraw.
SECRET
7 Feb 58
CPMTDAI IKITCI I inckirc i iiicTIKI Page 4
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Egypt and Syria Bid for US Recognition of United Arab
Republic
President Nasir, apparently anxious about the Ameri-
can attitude toward the new United Arab Republic, sent a
personal emissary to the American Embassy in Cairo on
4 February to sound out the possibility of recognition. The
emissary, Egyptian publisher Mustafa Amin, advised Am-
bassador Hare that he believed Nasir hoped for immediate
recognition, "without either endorsement or criticism."
Syrian Foreign Minister Bitar has queried Ambassador
Yost in Damascus on the same subject. Bitar said recogni-
toil of the new state would be in order soon after comple-
tion of the plebiscite to be held in Syria and Egypt on 21
February, and that new credentials should be presented in
Cairo, where the new capital will be located. He added
that Egyptian and Syrian missions abroad would be merged
and missions in Damascus would be given consular status.
An expression of the American attitude toward the union
is also being eagerly sought by the Iraqi Government, which
now plans not to recognize the new state. Iraqi Prime Minis-
ter Mirjan has requested American assistance in ascertain-
ing the position of Kin7 Saud on this issue.
III. THE WEST
No back-up material
SECRET
7 Feb 58
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1.41LII A. id-A-SA
1.1.11 *MO
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
Special Assistant for Security Operations Coordination
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 Deputy Under Secretary for Political Affairs
The Deputy Under Secretary for Administration
The Deputy Under Secretary for Economic Affairs
The Counselor
Director, International Cooperation 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
'
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CENTRAL INTELLIGENCE BULLETIN
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7 February 1958
DAILY BRIEF
I. THE COMMUNIST BLOC
Egyptian-Syrian union--Soviet view: The Soviet lead-
ers ciptinue to treat the pFra-m�atioliof Egyptian-Syrian
union with reserve and have failed to take advantage of
several opportunities to endorse the union. In a conver-
?age 1)
Soviet economic growth: According to Pravda the
USM's rate OririduscrraT-growth in 1957 was-irat above
that of the US and well above plan, although slightly be-
low the 1956 level, The ambitious housing plan was over-
fulfilled for the first time in Soviet history, reflecting
some shift in priorities more favorable to the consumer.
On the other hand, raw materials difficulties continue.
The disappointing harvest in 1957 makes less likely the
achievement of Khrushchev's milk and meat goals.
(Page 2) (Chart)
II. ASIA-AFRICA
lIndonesia: The dissidents seem on the verge of decisive
action in view of the speech on 6 February by Lt. Col. Hus-
sein, head of the Banteng Council in Central Sumatra. His
lengthy condemn-ail-a-6f the Djakarta -gover�n�thent was apiaarentav
intended td-Tave the way for either an ultimatum to Dja-
karta or the proclamatipn of a rival government.
On the basis of findings by its Watch Committee, the
Intelligence Advisory Committee concludes that there is
no evidence of Sino-Soviet intention to become militarily
involved in the Indonesian situation. Continued failure
to resolve the basic differences between the central gov-
ernment and the dissident leaders, who may soon pro-
claim a rival government, could lead to disorders and thus
to a situation even more favorable to the Communists on
Java.
IA watcn committee iobtnote points out that
unconfirmed press reports indicate the rival government
may have been proclaimed on 6 February.
Indian cabinet scandal: Nehru may soon be forced to
dismiss his capable-in-mike minister, Krishnamachari,
as a result of a widely publicized scandal over malfea-
sance now being officially investigated. The investigation
of Krishnamachari, who has been responsible for nego-
tiating major foreign loans for India's Five-Year Plan,
Is a serious embarrassment to Nehru and the Congress
_party. (Page 3)
On the basis of findings by its Watch Committee the
Intelligence Advisory Committee concludes that a delib-
erate initiation of hostilities in the Middle East is unlike-
ly in the immediate future, Tensions in the Middle East,
augmented by the proclamation of the Syro-Egyptian
United Arab Republic and by recent Israeli-Syrian border
developments, continue to create possibilities for serious
incidents.
III. THE WEST
Guatemala: Prospects for a peaceful presidential
succession now appear good. General Ydigoras is be-
lieved to have sufficient support in congress to assure
his selection as president-elect, probably on 15 Feb-
ruary. The government is planning the inauguration
for 2 March. The leftist Revolutionary party will
have only five seats in the new -man congress.
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