CENTRAL INTELLIGENCE BULLETIN - 1958/02/17

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03169409
• 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 17, 1958

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17 February 1958
Copy No.
CENTRAL
IYTELLIGENCE
BULLETIN
DOCUMENT NO.
NO CHANGE IN CLASS.
I I DECLASSIFIED
CLASS. CHANGED TO: Tzsoi 6
NEXT REVIEW DATE.
AUTHi HR 7 2
DATE/
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1 v." 16. Li I
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17 FEBRUARY 1958
I. THE COMMUNIST BLOC
Soviet leaders may be engaged in in-
ternal policy dispute.
II. ASIA-AFRICA
Proclamation of rival government
dims prospects for peaceful settle-
ment of Indonesian issues.
Tension in Tunisia subsides; both
sides hold to basic positions.
Moroccan officials fear repercus-
sions of Tunisian situation.
Syrian military continues apprehen-
sive over intervention and inter
opposition to union with Egypt.
Japanese prime minister under busi-
ness pressure to cede diplomatic
privileges to Peiping.
Chinese Nationalist cabinet resigna-
tion may lead to drive against cor-
ruption.
III. THE WEST
West German budget deficit will prob-
ably increase popular interest in dis-
armament proposals.
Legalization of Venezuelan Communist
party can lead to serious military-
civilian friction.
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CENTRAL INTELLIGENCE BULLETIN
17 February 1958
DAILY BRIEF
USSR: The Soviet leaders may be currently embroiled
in an internal policy dispute. The proceedings of a high-
level economic conference which met early in February
have not been publicized, suggesting that disagreements
arose which are still unresolved. Ithrushchev's machine
tractor station proposals have also not received the ex-
ected propaganda build-up in the Soviet press.
(Page 1)
LI
I. THE COMMUNIST BLOC
IL ASIA-AFRICA
Indonesia; The 15 February proclamation of a rival
Indonesian government by Lt. Col. Hussein in Central Su-
matra seems to preclude a peaceful solution of the dissident
problem unless President Sukarno replaces the Djuanda cabi-
net with a new, strongly anti-Communist government. The
prospects are that Djakarta will declare the new government
illegal and try to suppress it by whatever means are avail-
;
10��able, including economic sanctions, political subversion
g"
and perhaps military action. The viability of the dissident
movement will depend on its making satisfactory economic
arrangements with foreign commercial interests in Suma-
tra and obtaining support from other areas of Indonesia.
(Page 2)
Tunisian situation: Tension in Tunisia has subsided
IIj somewhat FranTers�announcement that it will accept Amer-
ican good offices probably will have a further moderating
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effect, but Bourguiba continues to demand total French
evacuation.
Morocco: At an emergency cabinet meeting bf_the
Moroccan Government, fear was expressed that Tunisian
developments may incite popular demands for the evacua-
tion of French troops from Morocco. Several ministers
also criticized the United States for a "deliberate policy
of forcing North African countries" to accept French
pre-eminence in the area, (Page 3)
Syrian internal situation: The Syrian Army command
remains apprehensive over Possible Western military inter-
vention coordinated with antire ime activities of internal
opponents to union with Egypt.
There are no indications that any such action is like-
ly to occur. Some civilians and army officers are reported
to have been arrested, and the authorities are attempting
to recall arms issued to certain reserves and public resist-
ance forces which now are regarded as of doubtful loyalty.
(Page 4)
Japan - Communist China: Strong domestic pressure
In Japan for increased trade with Communist China is forc-
ing Prime Minister Kishi to give ground in the face of de-
mands by Peiping that diplomatic privileges be accorded
a prospective Communist Chinese trade mission in Japan.
Peiping has refused to conclude a new unofficial trade agree-
ment until concessions are made on this issue.
(Page 5)
Taiwan: The resignation of Chinese Nationalist Pre-
mier O. K. Yui and his cabinet on 15 February may be fol-
lowed by further efforts by Chiang Kai-shek to eliminate
corruption. YuPs resignation resulted from a reprimand
reluctantly delivered by Chiang for "dereliction of duty"
and misuse of government funds. Chiang, who had strongly
supported Yui, however. probably will cipiay accepting Yuic's
resignation. (Page 6)
17 Feb 58
DAILY BRIEF ii
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III. THE WEST
West Germany: The Bonn government faces deficit
financing for the first time since 1952. The sizable deficit
expected at the end of this fiscal year on 31 March will be
increased in subsequent years by the schedule of rising
military expenditures unless taxes are substantially raised.
The German taxpayer is expected to show growing interest
in disarmament proposals as offering an easier alternative.
Page 7)
Venezuela: The legalization of the Venezuelan Commu-
nist party�now under consideration by the governing junta--
could lead to serious friction between the military, who oppose
the move, and the non-Communist party leaders, who seem to
favor it. The political situation has remained outwardly calm
since late January, but a representative group of officers ad-
vised the junta at that time that the military would withdraw its
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4. .11�..4.1. I AL AL .MA14
I. THE COMMUNIST BLOC
Possible Soviet Policy Dispute
The unusual reticence of the Soviet press concerning
recent high-level economic meetings and policy proposals
suggests that the Kremlin leaders are again in disagree-
ment over their domestic economic policy. The work of a
recent nationwide conference of sovnarkhozy chairmen and
oblast party secretaries has been treated with noticeable
reserve. Speeches made at the conference by Khrushchev
and planning boss Kuzmin have not been published or com-
mented on. Discussions of the proper apportionment of
resources and investment funds and the problem of cen-
tralized political control may have revived old disagree,
ments.
Although there have been isolated moves to implement
Khrushchevis proposal to transfer Soviet agricultural ma-
chinery from the machine tractor stations to the collective
farms, this radical step has been largely neglected in So-
viet propaganda.
The fact that most Soviet leaders have been out of pub..
lic view since 8 February suggests that economic problems
are currently being scrutinized at the highest level.
CONFIDENTIAL
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*110
II. ASIA-AFRICA
Djakarta Likely to Take Strong Measures Against
Dissidents in Sumatra
The Indonesian Government in Djakarta will almost
certainly resort to strong measures in an effort to sup-
press the rival regime proclaimed in Central Sumatra on
15 February. Such measures would include economic
sanctions, political subversion, and perhaps military
force. Army Chief of Staff Nasution and a majority of
the cabinet are in favor of quick
military action which could involve air strikes, a limited
naval blockade, and commando raids.
President Sukarno's 16 February statement following
his return to Djakarta ignored the Sumatran problem, but
it seems likely he will advocate a strong policy against
the dissidents. In this he will be strongly supported by
the Indonesian Communist party.
Sumatra has in its favor the reluctance of large ele-
ments of both the army and civilian groups to take up arms
against fellow Indonesians. Lt. Col. Barlian in South Suma-
tra, for instance, has so far refused to support the rival
government, but has indicated he would refuse to permit
central government forces access to Central Sumatra through
his own command. Two of the three army territorial com-
manders in Java reportedly would order their troops not to
participate in a civil war.
The viability of the rebel government depends on its
ability to counter Djakarta's and the Communist party's ef-
forts at subversion and to win economic and political sup-
port. The dissidents hope to make business arrangements
with foreign economic interests in Sumatra and are counting
on support from/other areas of': Indonesia and, if possible,
from foreign countries./
17 Feb 58
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NSW
Morocco_ Anticipates Deterioration in Relations
With France
At an emergency cabinet meeting in Rabat on 11
February to assess the repercussions of the French
bombing of a Tunisian border village three days ear-
lier, the Moroccan Government recognized that Tuni-
sian developments were likely to incite popular de-
mands for the evacuation of French troops from Moroc-
co. This would probably also involve agitation for the
withdrawal of Spanish and American forces.
The cabinet formally decided to give all possible
political support to Tunisia. It recognized that the No-
vember offer by Morocco and Tunisia of their good of-
fices for an Algerian settlement was no longer useful
and that Morocco's moderating influence with the Al-
gerian rebels would decline because rebel headquarters
reportedly had moved to Cairo.
Several ministers criticized the United States for a
"deliberate policy of forcing North ,African countries"
to accept French pre-eminence there. Probably at the
instance of Minister of National Economy Bouabid, who
has been particularly resentful over the language of the
American economic aid agreement now being negotiated
and has been irritated over recent economic aid to
France, the cabinet unanimously agreed that American
enndi firms fnr riPfPrme support were wholly unacceptable.
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The Syrian Internal Situation
Syrian security authorities are taking great precau-
tions to prevent any trouble before the 21 February pleb-
iscite over union with Egypt. The press announced that
some army reserves have been called up and the public
resistance organization has been ordered on the alert. At
the same time certain reserves and resistance forces re-
garded as unreliable by the regime are being disarmed.
While the government has not officially released details,
the press has been allowed free reign to speculate on the
number and character of individuals arrested following
the uncovering of a "plot" against the regime. In con-
trast to the ostensible external peril, security precautions
within Damascus are relaxed and tourists are being al-
lowed to circulate freely.
The present crisis appears to stem from the active
opposition of certain civilian and military elements to
union with Egypt and has been heightened further by rumors
of intervention by external forces. Publicizing the alleged
conspiracy at this time appears to be a device to whip up
support for the plebiscite.
17 Feb 58
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Japan to Compromise on Trade Mission Exchange
With Peiping
Japanese Prime Minister Kishi is moving toward de
facto recognition of Communist China in order to satisfy
strong domestic pressures for increased trade with the
China mainland. Kishi informed Ambassador MacArthur
on 14 February that these pressures, which are wide-
spread and represent all political elements, were forc-
ing him to compromise on terms for an exchange of
permanent trade missions.
Behind this pressure is Peiping's refusal to conclude
a new private trade agreement unless the trade mission
issue is settled. Communist China has insisted that mem-
bers of its proposed mission in Japan be accorded full
diplomatic privileges and not be fingerprinted as required
by present Japanese law.
Kishi plans to relax the fingerprint requirement and
to extend certain diplomatic privileges which presumably
would include guarantees of personal safety and immunity
against arrest, use of communication codes, and freedom
to travel throughout Japan. He has insisted, however, that
the number of Chinese representatives be limited to 15 and
that these measures should not be interpreted as an indica-
tion of Tokyo's willingness to grant formal diplomatic recog-
nition.
Japanese economic interests believe that the drop in
Sino-Japanese trade to $126,000,000 in 1957, or 16 percent
less than the previous year, is due to the absence of a new
trade agreement. Meanwhile, Peiping has consistehtly in-
serted new issues with political overtones into the trade
picture and Indicated that, unless they are re SO lved,, the Sino-
Japanese trade trade potential cannot be realized.
CONFWENTIJI
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Noir
Chinese Nationalist Cabinet Offers Resignation
President Chiang Kai-shek of Nationalist China may
feel compelled to take stronger measures against official
corruption as the result of the resignation of Premier 0.
K. Yui and his cabinet on 15 February. Yuits resignation
resulted from a reprimand reluctantly delivered by Chiang
for "dereliction of duty" and misuse of government funds,
for which Yui was impeached last December by the Control
Yuan, the inspectorate branch of the government. Chiang
had strongly opposed Ytii's impeachment.
While Yuits resignation probably does not foreshadow
any change in Nationalist policy, it appears symptomatic
of weakening Kuomintang party discipline and increased
harassment of the administration by the inspectorate and
legislative branches of the government.
Yui has long desired to give up the premiership, but
heretofore President Chiang has always refused his re-
quest. This time the President will be likely to accept
Yui's resignation, but probably not until sufficient time
has elapsed to cushion the administration's loss of prestige.
Chiang may have trouble, however, finding an acceptable
successor to the premiership, a post subject to strong
harassment from the Legislative and Control Yuans.
-CONFIDENTIAL
17 Feb 58
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Notv
III. THE WEST
West Germany's Budgetary Deficit
The West German Government, largely because of
rising defense expenditures, faces deficit financing for
the first time since 1952. It will end the current fiscal
year on 31 March with a deficit which American officials
feel may reach $960,000,000. The American Embassy in
Bonn feels that, with defense costs expected to rise from -
$3 billion this year to $3.8 billion in fiscal 1959-60 and
$4.7 billion in fiscal 1960-61, the deficit will continue to
rise substantially unless "politically unacceptable" meas-
ures such as high taxes are adopted.
The 1958-59 budget has been approved in principle by
the Bonn cabinet and will be debated by the Bundestag in
early March. It makes no provision for payment of sup-
port costs to foreign troops. The West German Govern-
ment plans a loan to compensate for the deficit in this
bdget and one top official in Bonn has indicated
next year will see a sharp increase in German taxes
to meet rising military costs. The American EMbassy fee's,
however, that the German taxpayer is likely, to be increas-
ingly interested in limited disarmament as an easier al-
ternative to the defense burden.
SECRET
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N...011.11 V E. JULA".4.4.L V41. ./Ia ALMA
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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
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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