CURRENT INTELLIGENCE BULLETIN - 1956/07/27

• Document Type: SPECIALCOLLECTION
• Collection: Current/Central Intelligence Bulletin Collection
• Document Number (FOIA) /ESDN (CREST): 03185127
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 9
• Document Creation Date: October 25, 2019
• Document Release Date: October 31, 2019
• Publication Date: July 27, 1956

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iceP-SEGRET--
I
CURRENT
INTELLIGENCE
BULLETIN
3.3(h)(2)
3.5(c)
27 July 1956
Copy No. 105
DOCUMENT NO
NO CHANGE IN CLASS./C
I ; DECLASSIFIED
CLASS. CHANGED TO: IS S C
NEXT REVIEW DATE.
AUT H 7
DAT
REVIEWER:
OFFICE OF CURRENT INTELLIGENCE
CENTRAL INTELLIGENCE AGENCY
TOP SECRET
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CONTENTS
1. NASR SEIZES SUEZ CANAL COMPANY
(page 3).
OBABLE ICELANDIC POSITION IN BASE NEGOTIATIONS
(page 4).
3. ISRAELI OFFICIALS REVIEW TALKS WITH HAMMARSKJOLD
(page 5).
40 CAMBODIAN DE FACTO RECOGNITION OF NORTH VIETNAM
SEEN IMMINENT (page 6).
5. MINOR DISORDERS REPORTED IN YUGOSLAVIA
(page 7).
27 July 56
* * * *
THE ARAB-ISRAELI SITUATION
(page '8)
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1. NASR SEIZES SUEZ CANAL COMPANY
Egyptian president Nasr's announcement on
26 July of the nationalization of the Suez Canal
Company is almost certain to produce the
thorniest international legal and political tangle
since Iran's oil nationalization.
Although the company is an Egyptian-registered
concern with administrative offices in Alexandria, the British
government owns 35 per cent of the capital shares and 42 per
cent of the ordinary shares. In addition, there are a number of
international agreements covering the freedom of navigation of
the canal and the responsibility for its defense.
Nasr's assertion that receipts from the canal
will pay for the Aswan High Dam project seems to be unrealistic
unless the Egyptian administration raises the tolls considerably
above their present level. While Nasr claimed the canal would
produce $100, 000, 000 a year, annual gross receipts have been
less than that figure and net income has been in the neighborhood
of $40, 000, 000.
According to press reports, the immediate
reaction in Britain was that the move was illegal and might be
protested to the UN Security Council as well as in the courts.
The balance of Nasr's two and a half hour
speech, of which the canal announcement was the climax, con-
sisted of a diatribe against the "imperialists" and a lengthy
rehearsal of the Egyptian version of the course of negotiations
with the West over the Aswan Dam project. Nasr said Soviet
foreign minister Shepilov had offered to assist Egypt, and
that this offer would be discussed when he visits Moscow in
-August.
27 July 56
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CONFIDENTIAL
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VLI A
2. PROBABLE ICELANDIC POSITION IN BASE NEGOTIATIONS
Following recent talks with Iceland's new
foreign minister, Gudmundur Gudmundsson,
Norwegian foreign minister Lange stated
that Gudmundsson thinks Iceland's position
n1eInipenarrig negotiations with the United States on the
Keflavik air base will be (I) to retain the radar station, pre-
sumably with American technicians not in uniform, and (2) to
have the air base revert to a standby status with sufficient
Americans out of uniform to maintain it until Icelanders are
ready to take over. Gudmundsson believes that 90 percent
of his countrymen will support this policy.
In order to prevent Communist access to
NATO information, Gudmundsson intends to propose the es-
tablishment of a special cabinet committee without Commu-
nist participation to deal with NATO matters. Such a proce-
dure, he said, has the "full support" of the Communist cabinet
members.
Comment Iceland's bargaining position with the
United States is weakened by the fact the
base's dollar earnings are important to the precarious Ice-
landic economy. This factor is, however, somewhat offset
by a recently revealed offer by West Germany on 23 June to
lend Iceland the equivalent of $25,000,000 for a development
program. This offer would provide an alternative source of
foreign exchange to finance imports as well as capital for the
new government's ambitious economic expansion program.
27 July 56
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JL
Nee
3. ISRAELI OFFICIALS REVIEW TALKS WITH HAMMARSKJOLD
Israeli officials, following their recent
talks with UN secretary general Ham-
marskjold, concluded that his visit to
the area had little connection with his
edrlier discussions' in Moscow. They believe he came to the
Near East only because he was concerned that new Israeli
policies might result in large-scale hostilities.
Although Hammarskj old emphasized that
he had Soviet support for his efforts to settle Arab-Israeli
problems, the Israelis said that when they discussed details,
the amount of this support was not clear. When Prime Min-
ister Ben-Gurion reminded Hammarskj old of his promise to
raise the Jordan River waters problem in Moscow, the secre-
tary general said he had done so but that Soviet foreign minis-
ter Shepilov's reply was vague.
The Israelis feel that the only surprising
statement made by Hammarskjold was that he considered
"retaliation" by individual Israeli settlements against Arab
raids less evil than the organized military action Israel has
undertaken in the past.
Comment
Hammarskjold's latest mission to the Near
East has not had even the temporarily calm-
ing effect of his mission last April, since new, more serious in-
cidents were reported within 48 hours of his departure.
27 July 56
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SECRET
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Nrepd
4. CAMBODIAN DE FACTO RECOGNITION OF
NORTH VIETNAM SEEN IMMINENT
Cambodia's early de facto recogni-
tion of North Vietnam, with an
exchange of representatives, is
indicated by Prince Sihanouk's re-
ported statement in Yugoslavia on 20 July that he is
"favorable" to granting the Viet Minh the same non-
political representation accorded to South Vietnam, ac-
cording to Ambassador McClintock. Indian charg�itra,
who has been actively promoting this, predicts an ex-
change of representatives with Hanoi in a "matter of weeks."
Comment Cambodia last May agreed to exchange
"nonpolitical" representatives with
South Vietnam, arguing against full diplomatic relations to
avoid a precedent for recognition of the Viet Minh.
South Vietnam is increasingly concerned
over Cambodia's close relations with the Sino-Soviet bloc.
Cambodia's recognition of North Vietnam might lead Saigon
to break off its relations with Cambodia and reimpose the
trade restrictions lifted in May. This would undoubtedly re-
vive Sihanouk's charges that Saigon's hostility to Phnom Penh
Is inspired by the United States to force Cambodia to abandon
its neutralism.
27 July 56
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Niue
5. MINOR DISORDERS REPORTED IN YUGOSLAVIA
Reports alleging the occurrence of
"bread and freedom riots" of varying
severity in isolated areas of Yugo-
slavia have been circulating in Belgrade
during the past two weeks, according to the American em-
bassy. The embassy is tentatively of the opinion that the
reports refer to minor, localized disturbances which, though
not frequent in past years, have sometimes occurred in
periods prior to the harvests when peasant wheat stocks
are exhausted.
Comment It is unlikely that such disturbances are
politically inspired. Yugoslav officials
have readily admitted serious shortcomings in their eco-
nomic planning, and there is little doubt that grain is in short
supply. The recent purchase of about 150,000 tons of Soviet
wheat was necessary to cover shortages this summer.
27 July 56
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THE ARAB-ISRAELI SITUATION
(Information as of 1700, 26 July)
An Israeli spokesman stated that an
Israeli patrol killed a man who failed to halt as he crossed
from Israel into Jordan territory. No other incidents were
reported on the Israeli-Jordanian border, but tension re-
mains high as a result of the clash on 25 July. UN truce chief
General Burns and secretary general Hammarskj old have ap-
pealed to both sides to abide by the cease-fire agreements.
Hammarskjold broke off his European trip a week early and is
scheduled to arrive in New York on 27 July. (Press)
Ambassador Lawson in Tel Aviv reported
on 24 July, prior to these latest incidents, that the continuation
of the Jordan border incidents in spite of sharp warnings from
Israel, Hammarskjold, and the West has weakened Prime Min=
ister Ben-Gurion's ability to satisfy the Israeli public with verbal
responses.
27 July 56
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-SEfiRLET
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