CURRENT INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000300140001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 15, 2016
• Document Release Date: May 14, 2004
• Sequence Number: 1
• Publication Date: July 30, 1954
• Content Type: REPORT

ET - 1-ur T
J
SDENtiA I OCI NO.8262
30 July 1954
CURRENT
INTELLIGENCE
WEEKLY
AUl F iDATE ?I
ELLIGENCE AGENCY
CENTRAL INT
NEX I F1LVIEW DATE:
DOCUMENT NO.
III NO CHANGE IN CLASS.
I DECLASSIFIED
OFFICE OF CURRENT INTELLIGENCE
ET
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,gFiggginAL
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly has been prepared prima-
rily for the internal use of the Central Intelligene Agency.
(It does not represent a complete coverage of current
situation!. Commentsmod.-.sonekusionjrepresent the im-
mediate appraisal of the Office Of Current Intelligence.
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SUMMARY OF CONTENTS CONFIDENTIAL
THE SOVIET WORLD . . . . . . . . . . . . . . . . . . . Page 4
SOVIET STRATEGY OF NEGOTIATIONS SWINGS TO EUROPE . . . Page 6
The Soviet proposal of 24 July for an all-European
conference represents the latest move in the USSR's
strategy aimed at undermining the Western coalition.
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THE SITUATION IN CENTRAL AMERICA FOLLOWING THE Page 10
OVERTHROW OF ARBENZ . . . . . . . . . . . . . . . .
The overthrow of the Arbenz regime in Guatemala
and settlement of the crippling strikes in Honduras
have reduced but not eliminated tension in Central
America. Stability is still threatened by an explosive
pre-election situation in Honduras and by a "war of
nerves" between Costa Rica and the rightist regimes in
Nicaragua and Venezuela.
WEST GERMANY BIDS FOR ECONOMIC PREDOMINANCE . . . . . . Page 12
At a time when West Germany's future political
course remains in doubt because of the impasse over
integration, the country is demonstrating its intention
to gain first rank as an economic power in Europe, and
to acquire the political influence that goes with such
a position.
PEIPING'S RUBBER PURCHASES HAVE POLITICAL OBJECTIVES. . Page 14
Extensive rubber buying by the Chinese Communists
during the past year and a half has apparently been a
political move to incite Asian governments to ignore
the United Nations embargo and thus damage their rela-
tions with the United States.
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HUNGARIAN REGIME FACES CONTROL PROBLEMS UNDER "LIBERAL"
DOMESTIC POLICY . . . . . . . . . . . . . . . . . . . . Page 18
The advantage taken by many Hungarians of the
relaxation of political pressures which characterizes
current Orbit policy has forced the Budapest regime to
renew its pressure on certain elements of the popula-
tion, particularly "kulaks." Recent speeches by Commu-
nist leaders indicate, however, that the present basic
reliance on incentives and persuasion will continue,
possibly until the end of the second Five-Year Plan in
1960.
SPECIAL ARTICLE. SOVIET PLAN REPORT SHOWS CONSIDERABLE
ECONOMIC SUCCESS . . . . . . . . . . . . . . . . . . . Page 19
The mid-1954 report on Soviet plan fulfillment
shows that the initial phases of the new programs in
agriculture, consumer goods, and trade are being im-
plemented with considerable success and without detri-
ment to progress in heavy industry.
30 July 54 CURRENT INTELLIGENCE WEEKLY
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Immediately following the shooting down of a British air-
liner off Hainan Island on 23 July, Soviet and Chinese Commu-
nist propaganda was on the defensive. The Chinese apology to
Britain was unprecedented, and both Moscow and Peiping showed
some anxiety lest their gains from the Geneva conference be
jeopardized by the incident.
However, following the 26 July clash between Chinese and
American fighter planes off Hainan Island, in which two Chinese
aircraft were shot down, Communist propaganda resumed the offen-
sive. Peiping described American sea and air activity in the
area as "flagrant and savage acts of aggression" for which the
United States will have to "suffer the consequences." Moscow
described the clash as a "provocative attack" aimed at "main-
taining the state of tension" in the Far East which had been
noticeably eased by the Geneva conference.
The Communists have been proclaiming the Geneva conference
as a great victory for their policy of "relaxing international
tensions through negotiations" and as a major defeat for the
United States. Official comment on the conference and the
quick follow-up for-a new European conference suggest that
Moscow hopes to capitalize on the psychological momentum gained
at Geneva to undermine defense policies in Asia and Europe.
Besides achieving general acceptance of Communist China
as a great power and recognition of Ho Chi Minh's "liberation"
movement, the Indochina settlement, according to Moscow and
Peiping, fulfilled at least one of their other major objectives
by obstructing the establishment of foreign bases and the con-
clusion of military alliances in Indochina. A Pravda editorial
of 22 July emphasized that the area will not be permitted to
join in any "aggressive groupings." While Ho Chi Minh's state-
ment calling for "unification and complete independence" of
Indochina had belligerent overtones, it endorsed the Geneva
settlement and pointed to a Communist strategy of relying on
political rather than military means to achieve these objectives
in Indochina.
There are further indications that the Communists are
planning to counter American efforts for a Southeast Asian de-
fense pact. On two different occasions since the conclusion
of the conference Chou En-lai has publicly stated that Asian
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states should work out their own security arrangements. He
has suggested that these be bilateral agreements, along the
lines of his "five principles" for friendly relations.
In an apparent attempt to impress the non-Communist world
with their avowed "good will" and desire for normalizing re-
lations, the Communists have been paying marked attention to
Western diplomats and non-Orbit delegations visiting Moscow.
In the most specific high-level Soviet pronouncement of Moscow's
intentions to improve relations with Japan, Soviet foreign min-
ister Vyshinsky told a group of visiting Japanese Diet members
that the USSR hopes to establish formal diplomatic relations
with Japan "as soon as possible."
The infamous doctors' plot, long dead in Soviet propaganda,
was resurrected on 23 July with the announcement that M. D.
Ryumin, former chief of the investigation section of the Soviet
Ministry of State Security who was denounced and arrested in
April 195.3 at the time of the repudiation of the plot, has been
tried and executed. Ryumin, who was earlier accused of being
behind the doctors' plot and leading the minister, Ignatiev,
"around by the nose," had disappeared from view, and according
to an article by the minister of state control of the RSFSR,
published on 22 May 1953, had been "punished for his crimes."
While the motivations for this latest action are as un-
clear as the motivations behind the doctors' plot itself, it
is possible that the regime is using the case as part of the
current line on "socialist legality" and the rights of citizens
against arbitrary arrest and extortion of confession. It may
also be intended to offset any unfavorable popular reaction to
the reinstitution of the death penalty for murder and the re-
establishment of a separate security organ. It may further be
a warning to Soviet police officials that the methods permissible
under Stalin and Beria, as exemplified in Ryumin's case, are no
longer permissible.
On the other hand, it is possible that Ryumin was. shot as
a move against or a warning to some group within the Party
Presidium--the same group that was most intimately associated
with the original doctors' plot in January 1953. Since the
original doctors' plot seemed aimed at Beria, this apparent
repudiation of it would not be aimed at any surviving members
of the Beria group. Of the present rulers, Malenkov was per-
haps most closely identified with the original plot, and he
may be the ultimate target of this latest action.
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SOVIET STRATEGY OF NEGOTIATIONS SWINGS TO EUROPE
The Soviet proposal of 24 July for an all-European con-
ference represents the latest move in the USSR's strategy
aimed at undermining the Western coalition. Having achieved
at Geneva a major objective in eliminating a "hot" war that
threatened to make mockery of its peace campaign, the Soviet
Union is now turning toward other international problems, in
the hope of demonstrating Soviet "peaceful" intentions and
further isolating the United States.
Moscow's. interest in. pressing its :security .scheme .was fore-
shadowed by the attempt to force Finland to issue a declaration
in support of the plan as a condition for concluding a trade
agreement. Similarly, a "Russian hour" broadcast in Vienna on
22 July said that to "pave the way" for a state treaty, "all
the Austrian government needs to do is support the Soviet pro-
posal regarding the establishment of an all-European security
system." A post-Geneva editorial in Hungary's Magyar Nemzet
frankly states that the "next task of the world peace camp is
to thwart EDC."
The Soviet security plan, originally proposed at the Berlin
conference, calls for an "organization of 32 states" pledged to
aid any member who is attacked. This would, of course, represent
an alternative to EDC. While the Western powers rejected this
scheme in a note of 7 May, the Kremlin may estimate that pro-
posing another conference at this crucial time is all that is
necessary to cause a further postponement of French parliamen-
tary action on EDC. This would, in turn, stimulate American
and British efforts to seek alternative solutions.
German rearmament in some form unquestionably would be
an alternative, and this raises the question as to which the
USSR is most eager to prevent--EDC or a rearmed Germany. The
Kremlin's sustained effort to defeat EDC would suggest that
it regards it as the cement of the Western alliance. Soviet
propaganda indicates that any US-led coalition is viewed more
seriously than German rearmament outside a Western coalition.
The USSR probably believes that any attempt to devise an al-
ternative to EDC would result in Western difficulties at least
as troublesome as those manifested in the past few months. A
France that looks with suspicious disfavor upon a rearmed Germany
under EDC is not likely to regard with glee a rearmed Germany
as a relatively free agent.
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That the USSR would not stop-its campaign for negotiations
on a European security plan was suggested by the 22 July state-
ment of the Soviet government regarding the Geneva conference.
It maintained that the settlement created "favorable conditions
for the settlement of other important unsolved international
questions, which bear not only on Asia, but also on Europe, and
first of all on such questions as stopping the arms drive and
banning the atomic weapon, safeguarding collective security in
Europe and settling the German problem on a peaceful and demo-
cratic basis."
While the German question is not specifically included on
the agenda of the proposed conference, it unquestionably will
be a target of Soviet strategy. The shift of Soviet ambassadors
in East Germany and the presence of Deputy Premier Ulbricht in
Moscow suggest that policy decisions regarding Germany are being
framed. The Kremlin is not, however, in a position to make a
major compromise on Germany. Perhaps the primary Soviet aim is
to split France from its allies by winning its support of a
European security program implying the continued division and
neutralization of Germany. Another likely purpose would be to
win a conference voice for East Germany and to establish com-
mittees of East and West Germans to continue the debate on unity.
While the USSR cannot compromise, it can make a debate on
Germany embarrassing for the West. Thus, in May 1952, the Western
powers implied that a united Germany would be bound to EDC. At
the prodding of Mblot.ov at Berlin, however, the Western ministers
were forced to admit that a united Germany would be free to accept
or reject EDC. France obviously is the nation most concerned
over whether a rearmed Germany will be a free agent.
The Soviet statement on Geneva, together with the new pro-
posal's emphasis on the arms race, suggests that disarmament too
will be pushed as a pertinent peg for an international conference.
The USSR probably does not envisage breaking the disarmament
deadlock, but may believe that holding out the possibility of
abandoning the arms race will effectively mask Soviet intentions
and facilitate the campaign for negotiations.
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THE SITUATION IN CENTRAL AMERICA
FOLLOWING THE OVERTHROW OF ARBENZ
The overthrow of the Arbenz regime in Guatemala and
settlement of the crippling strikes in Honduras have reduced
but not eliminated tension in Central America. Stability is
still-threatened by an explosive pre-election atmosphere in
Honduras and by a "war of nerves" between Costa-Rica and the
rightist regimes in-Nicaragua and Venezuela. Only El
Salvador is enjoying domestic quiet and friendly foreign
relations.
In Guatemala, Castillo Armas became president of the new
junta on 7 July amid popular acclaim. In a bid for labor
support he promised to consolidate the social and economic
advances made since 1944, but his program remains unclear.
His government may be increasingly hampered by disunity among
its supporters, who range from moderates to extreme
conservatives. Current plans call for rule by decree for up
to three years until the basis for sound constitutional
government can be laid and Communist influence eradicated.
Although the Communist Party's overt organization
collapsed with Arbenz, not one top Communist leader has been
arrested. Five of the 11 members of the party's political
committee have found asylum in foreign embassies; the others
are unaccounted for. Of the 4,000 "Communists" jailed, most
are peasants and few can be considered indoctrinated party
members.
Underground Communists may still be able to incite rural
workers to violence, particularly in the Communist stronghold
around Escuintla on the Pacific slopes. Police seized a
sporadically operating clandestine radio transmitter in this
area in mid-July, but failed to capture those using it.
The Guatemalan army continues to be the ultimate locus
of power, despite its humiliating defeat in the rebellion.
Castillo quickly moved to consolidate his control by removing
officers in key posts and exiling others.
Castillo's government has now been recognized by all
Latin American countries except Ecuador and Uruguay, despite
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the aostile reception hemisphere opinion gave him in late June.
Popular attention in Latin America moved away from Guatemala
as the situation stabilized. Furthermore, as the atrocities
of the previous regime and the wide Guatemalan support of
Castillo were publicized, and the propaganda carried on by
Arbenz diplomats abroad largely ceased, press comment became
considerably less unfavorable to the United States.
In Honduras, organized labor emerged as an important
political factor from the two months of strikes which ended
on 12 July after affecting nearly 40,000 workers and virtually
paralyzing the north coast region. Communist agitators played
an important organizing role but now appear to have lost control.
of the workers. They may be able to stage a comeback, however,
unless the inexperienced non-Communist labor leadership shows
exceptional ability.
None of the three major parties campaigning for next
October's presidential and congressional elections in Honduras
is believed capable of securing the required majority. The
balance of power is held by the moderate Reformist Party, which
has nominated General Abraham Williams for president. As
political passions rise, however, this party will be less able
to form a coalition with either the conservative Nationalist
Party, led by ex-dictator Carias, or the leftist Liberal
Party, which supports Dr. Ramon Villeda Morales. The
constitution provides that if election returns are
inconclusive, the contest is to be decided in congress, but
the traditional partisanship of the politically divided army
could well lead to violence.
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WEST GERMANY BIDS FOR ECONOMIC PREDOMINANCE
At a time when West Germany's future political course
remains in doubt because of the impasse over integration, the
country is demonstrating its intention to gain first rank as
an economic power in Europe, and to acquire the political
influence that goes with such a position.
So far, the Germans have done well, considering their
standing start in 1945. Their gross national product in 1953
was $31 billion, almost $14 billion above Italy's and $10
billion under Britain's. West Germany's steel production in
1953 was 15,400,000 tons, about 21 percent higher than that
of France and the Saar, and 2,200,000 tons below that of
Britain.
The effort to capitalize on its remarkable postwar
recovery is most apparent in West Germany's drive for free
world markets. The percentage increase, by both value and
volume, of Germany's exports in 1953 was greater than that of
Britain's. Since 1950, the Federal Republic has increased
the volume of its exports 75 percent, giving stiff competition
to other European countries and provoking expressions of alarm
from their diplomats.
In trade with its European neighbors, West Germany has
built up an EPU surplus of over a billion dollars--and has
incurred considerable disfavor by its policy of "exporting
at any price" and restricting imports at the cost of under-
consumption at home. In May, Britain's Chancellor of the
Exchequer Butler obtained Economics Minister Erhard's agreement
that export subsidies would be dropped; but West Germany's
debtors would also like to see Bonn practice what it preaches
by reducing import restrictions, particularly on farm products.
The West Germans are also showing a growing interest in
trade with the Orbit. On 11 July, German industry asked the
government to conclude a trade agreement with Communist China,
and Chancellor Adenauer himself has endorsed "normal Eastern
trade relations," Year-long efforts of the semiofficial
Eastern trade group, Ostausschuss, have failed to produce a
commercial pact with the Soviet Union, but the group was able
to conclude the republic's first agreement with Rumania this
spring. Though the Bonn government seems determined to abide
by COCOM regulations, and the prospects for large Orbit trade
seem poor, demands for expanding this commerce to the limit will
continue, especially if EDC and European integration plans fall
through.
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Germany apparently has set its trade-goals well beyond
recovery of prewar markets. Awareness of the difficulties
involved was indicated when Fritz Berg, president of the
Federation of German Industries, warned a group of industri-
alists in May that "our present satisfactory position can by
no means be considered as secure." The previous month, Erhard
had been doing what he could to make it secure by a long pro-
motional swing through Latin America, where Germany's trade
was already near prewar levels. Moreover, Erhard continues to
work tirelessly for currency convertibility, which he expects
will work to Germany's trade advantage.
The success of the expansionist drive thus far is due in
large part to the Germany's willingness to grant more favorable
credit terms than its rivals. As a result, it is winning con-
racts for such projects as the construction. of steel plants in
Argentina and Burma, a tin smelter in Thailand, an oil refinery
in Greece. The large reparations shipments to Israel, widely
expected to be a handicap for Bonn, have resulted in Germany's
supplying 23 percent of Israel's imports.
Of considerable assistance to Bonn in the promotion of
trade are the German assets--which include valuable patents--
seized by other countries during and immediately after World
War II. In defiance of Allied policy, Germany has successfully
negotiated with Greece, Chile, and several other countries for
the return of these external assets, presumably.using as lever-
age the desire of these countries for favorable trade agreements.
The Allies recognize the German interest in recovery of the
properties, but to protect smaller countries from this sort of
pressure they have decided to authorize such negotiations only
if Bonn will admit at the outset that it has no legal claim
to the assets.
Berg has cautioned his countrymen. that they are throwing
their entire economic forces into "the front line" (foreign
trade) "while our reserves are weak." He and many other Ruhr
industrialists-consider that the first objective should be the
reinforcement of economic foundations to improve German in-
dustry's international competitive position. They have there-
fore been trying to restore the old industrial combines, which
the Allies have opposed since 1945. Economics Minister Erhard,
who has also opposed cartels, has lately been conceding some-
thing to industry's viewpoint; his. draft anticartel law permits
combinations in a variety of "special cases."
Berg has declared that the Federal Republic is not striving
for economic objectives which would serve exclusively its own
interests, and Vice Chancellor Bluecher is promoting a broad
concept of European economic integration. Yet German activities
suggest that, with integration or without it, the Federal
Republic is intent on achieving an economic position, and con-
sequent political influence, second to none in Europe.
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PEIPING'S RUBBER PURCHASES HAVE POLITICAL OBJECTIVES
Extensive rubber buying by the Chinese Communists during
the past year and a half, partly on behalf of other Orbit
countries and at higher than world prices, apparently has been
a political move to incite Asian governments to ignore the
United Nations embargo and thus damage their relations with
the United States.
China's rubber buying more than satisfies its total
annual requirements, which have been estimated at from 30,000
to 50,000 metric tons, with the lower figure being more likely
in view of the domestic austerity program. Most of the rubber
used in the expanding rubber industry has gone toward the
manufacture of shoes, while at most 7,000 tons are used in the
manufacture of 400,000 motor vehicle tires. Stockpiles are
probably large, since China purchased 140,000 tons between the
outbreak of the Korean war in mid-1950 and May 1951 when the
UN-sponsored embargo temporarily cut off supplies.
Peiping concluded a five-year trade agreement with Ceylon
in late 1952 for the purchase of 50,000 tons of rubber a year,
and actually received 65,700 tons last year from this source.
In the spring of 1953, Peiping purchased 3,500 tons of rubber
from Burma, at a time when American-Burmese relations were
strained over the Chinese Nationalist problem.
A Polish ship has been loading rubber at Djakarta, Indo-
nesia, since 1 July; the cargo is said to be the first shipment
of 60,000 tons contracted for by China. The view is general
in Indonesia that the United States manipulates the rubber
market for its own purposes, and a press report that the United
States was pressing Indonesia to stop this shipment brought
forth a spate of charges against American "economic imperialism."
Peiping's buying activities thus appear to be part of a
calculated policy to disrupt the friendship of Asian nations
with the United States. The rest of the Orbit countries
apparently co-operate with this policy and even support it.
Communist China could have bought rubber last year through
the USSR, which failed to purchase the quota allowed it by the
West. Instead, Peiping bought heavily at prices 50 percent
higher than those paid by the USSR--a premium estimated at
$15,000,000--and for over a year has been buying not only for
its own needs but for the USSR and some Satellites as well.
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A substantial quantity of Communist China's purchases
of natural rubber from Ceylon and Burma may have been re-
exported to other Orbit countries. Some shipments to the
European Satellites have appeared in ship manifests. China's
exports to the USSR may in part explain why the USSR's direct
purchases from the West have been negligible since May 1953.
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HUNGARIAN REGIME FACES CONTROL PROBLEMS
UNDER "LIBERAL" DOMESTIC POLICY
The license taken by many Hungarians as a result of a re-
laxation of political pressures--originally more liberal in.
Hungary than in the other Satellites--has forced the Budapest
regime to renew its pressure on certain elements of the popula-
.tion, particularly ""kulaks."" Recent speeches by Communist lead-
ers indicate, however, that the present.basic dependence on in-
centives and persuasion will continue, possibly until the end
of the second Five-Year Plan in 1960.
The major step the regime has taken to prevent distortion
of the new course policy by "an opportunist right-wingtrend"
among party and government officials and to regain full control
over the population has been to renew the antikulak campaign,
which had been de-emphasized since the inauguration of the new
economic policy. During this period, the acreage of collective
farms has decreased from 26 to 18 percent of total arable land.
Since late April, the government has sentenced as "kulaks" sev-
eral peasants who tried to get back their land when they left
the co-operatives. More recently, private lawyers who defended
the ""kulaks" in court have been disbarred and sentenced for "in-
citing the disruption of the co-operatives."
In addition, the American legation in Budapest reports
"persistent rumors" that the security police are quietly round-
ing up old-regime bourgeoisie, dissident',priests and ministers,
and politically unreliable army officers.
Actually, the regime has not so far rescinded or funda-
mentally altered any of the basic new course policies. Criti-
cism of the government is-still permitted and has become more
frequent and bolder. Peasants are still allowed to leave the
collectives despite strong "persuasion" to stay in.. Fines
for "labor indiscipline" have not been restored and industrial
managers have been forced to resort to unauthorized incentive
pay to induce workers to fulfill norms. Steps are still being
taken to "consolidate Socialist legality."
.As long as the new course remains in effect, the Satellite
regimes are committed to a policy of easing tensions as a
means of increasing labor productivity and gaining popular sup-
port for the Communist program. Considerable attention will be
paid to "legality" and "persuasion," and appeals will be aimed
at the broad masses of the population rather than strictly at
the proletariani'.!class,~ h" ,~;
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The mid-1954 report on Soviet plan fulfillment shows that
the initial phases of the new programs in agriculture, con-
sumer goods, and trade are being implemented with considerable
success and without detriment to progress in heavy industry.
Continued progress toward planned, goals was achieved, however,
largely by increasing above original plans the area under crops
.and the size of the labor force, which have compensated for
failures to meet targets for higher crop yields, increased labor
productivity, and reduced costs (see table, p. 23).
Industry: Gross industrial output in the first half of
1954 was 14 percent higher than in the same period of 1953, and
the annual and five-year goals appear certain of fulfillment.
The 3-percent reduction in production costs was, however, the
lowest reported in recent years. Maintenance of the half-year
growth rates in production during all of 1954 would indicate
probable fulfillment of the five-year goals for steel, coal, and
electric energy. The targets for pig iron, oil, and cement are
less likely to be achieved, while those for zinc and mineral
fertilizers are seriously endangered.
Agriculture: Production of basic foodstuffs such as meat,
fish, daairy prop ucts and canned goods is behind schedule. Out-
put of sugar and butter was not even reported. Except for a
lag in cotton fabric, planned increases are being achieved in
textiles and clothing, accompanied by marked gains in quality.
Large percentage increases were reported in the output of a
number of consumer durables for which increased tasks were
assigned to heavy industrial plants in the last half of 1953.
These gains relate, however, to output levels which are low in
absolute terms.
In agriculture, substantial preparations for increased
food supplies are revealed by the data on sown areas, machine
deliveries, and livestock numbers. Expansion of sown area,
undertaken largely.to compensate for the failure to raise crop
yields, has resulted in a 9,500,000 hectare increase (6 percent)
over 1953, the largest annual increase in the Fifth Five-Year
*Prepared by the Office of Research and Reports.
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Plan. However, this increase may incorporate the resowing
of fall-sown, winter-killed grain crops,. the area of which is
believed to have been extensive due to a severe winter. The
published plan for sowing grain crops on virgin and reclaimed
lands was considerably overfulfilled in 1954, and progress
toward the 1955 goal of 13,000,000 hectares is indicated by
extensive fallow plowing. It remains to be seen whether pro-
duction increases comparable to those acreage gains will be
achieved.
Tractor deliveries to agriculture totaled 92,000 (in
15-horsepower units) in the first half of 1954, and were 17
percent above the 1953 rate. Two thirds of the machines were
dispatched to new areas. The 11-percent increase in mineral
fertilizer output indicates, however, that the five-year target
for this key agricultural input may not be met.
Total numbers of cows, swine and sheep increased over
1 July 1953, but figures are not comparable to those in pre-
vious reports. Figures on private livestock owned by collective
farmers were reported for the first time in recent years and
showed increases of 7 percent in cows, 15 percent in calves
and heifers, 26 percent in pigs, and 25 percent in sheep, re-
flecting the success of incentive measures introduced in the
fall of 1953. The build-up of herds occurred at the expense
of current meat availabilities.
While the decline in the rate of growth of labor pro-
ductivity was reversed in the first half of 1954, the increases
of 7.5 percent in output per industrial worker and 7 percent
in output per construction worker in the first half of 1954
are based on the poor performance record of the first half of
1953. In April planned goals for 1954 were announced as 8.3
and 8.6 percent respectively; and the fact that these rates
are far below those necessary to meet the five-year targets
implies abandonment of the original 1955 goals.
The successful fulfillment of the goal for gross in-
dustrial output is due in large measure to increases in the
labor force. As in the previous Five-Year Plan, the targets
for numbers of workers are being considerably overfulfilled;
the 1955 goal for the industrial labor force was in fact passed
in 1953.
The shift of workers to agriculture required by the new
economic policy is being successfully carried out.. Present
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estimates indicate that total agricultural employment is
now about 5 percent greater than at the end of 1951. The
most significant feature of this increment has been the
sending of more than a million workers in the past year from
other sectors of the economy to state farms and'machine-
tractor stations, where many of them will bring advanced skills
to such key problems as agronomic techniques, mechanization,
and animal husbandry. In an innovation in Soviet labor policy,
two thirds of the 1954 graduates of trade schools have been
assigned to agriculture.
Capital Investment
The volume of capital investment rose by 14 percent in
the first half of 1954 compared to the same period in 1953,
when the investment increase was unusually low. If this rate
of growth can be maintained throughout the year, most of the
ground lost in 1953 will be recovered and the five-year target
of a 60-percent increase in investment will probably be achieved.
Soviet capital investment plans for 1951-1955 call for not
only a 60-percent increase in expenditures, however, but also
for a further 30-percent gain in investment, to be derived from
reductions in material and overhead costs and increases in
labor productivity. Continued failure to meet these cost re-
duction targets, most particularly those dependent upon pro-
ductivity gains, indicates that this additional goal will be
missed by a consideraule margin.
The greatest increases in capital investment were achieved
in trade (130 percent higher than the first half of 1953),
agriculture (53 percent higher), and light and food industry
(48 percent higher). Housing investments rose by 20 percent
as opposed to an 11-percent gain in 1953. In absolute terms,
however, the bulk of investment funds continued to be devoted
to heavy industry.
Transport
In transport, despite a 6-percent increase in railway
freight car loading over the first half of 1953, the rate of
increase was well below the 1954-1955 requirement needed to
fulfill the Fifth Five-Year Plan goal. A program of heavy
freight car and locomotive building has begun, but this is
not expected to ease the load on the Soviet rail system
until 1956. Freight turnover in river and sea transport in-
creased 4 percent in the first half of 1954 over the same
period in 1953, but the plan was fulfilled by only 91 percent.
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Despite candid admission that the demand for certain
consumer goods is not being met satisfactorily, state and
co-operative retail trade increased 21 percent in comparative
prices over the first half of 1953, an appreciable gain. Main-
tenance-of this annual rate of increase will easily assure
fulfillment of the revised retail trade goal for 1955. Soviet
attempts to extend the rural trade network are also meeting
with success, despite noted shortcomings. Retail goods turn-
over of the Consumer Co-operatives, which handle rural trade,
increased 32 percent over the first half of 1953.
The lack of any reference to sales on the free kolkhoz
market is significant. Since prices here are usually reported
as decreasing, the omission is a further indication that these
prices have not fallen in 1954 due to increased consumer pur-
chasing power, stable food prices in state stores, and temporary
meat shortages resulting from decreased slaughterings.
It is difficult to correlate the increased production and
sales of foodstuffs and consumer goods. For example, meat
and sausage production rose 2 percent whereas meat produce
sales increased 30 percent, fish production by 13 percent and
fish sales by 24 percent. Factors such as overgrading of prod-
ucts and reduction of nonmarket allocations could account,
in part, for an increase in the value of state and co-operative
turnover without increasing total consumption. Deficits in
some commodities may have been made up of by imports and re-
leases from State Reserves.
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cooigFIDENTIA
SOVIET OFFICIAL PLAN GOALS AND ACCOMPLISHMENTS
(percentage increases over comparable periods
of preceding years)
1951
1952
1953
1954-1955
Annual
Requirement-.
First Half
1954
Industrial Output
16
11
12
9
14
Industrial Labor
Productivity 10
7
6
10
7.5
Industrial Labor
Force b/ 5
4
6
--
6
Construction Labor
Productivity 9
7
4
13
7
Capital Investment 13
10
4
11
14
Retail Trade 15
10
21
15
21
Rail Transport 12
9
7
16
6
Pig Iron 14
14
9
11
6
Steel 15
10
10
8
9
Zinc 15
24
13
24
7
Coal 6
8
6
9
8
Oil 12
13
12
14
10
Electrical Energy 14
13
13
12
11
Mineral Fertilizers 7
8
9
22
11
Prefabricated Housing 16
27
9
--
2
Cement 19
15
15
18
15
Paper 12
9
10
5
9
Radio Sets 16
6
27
44
107
Bicycles 78
43
15
37
30
Cotton Fabrics 22
6
5
10
3
Woolen Fabrics 13
8
9
13
19
Meat 12
15
12
18
2
Vegetable Oil 12
9
16
17
17
Canned Food 18
11
14
22
5
Sugard/ 18
3
12
20
--
a/ Revised official goals have been included.
b/ Derived from industrial output and industrial productivity
figures which indicated that by the end of 1953 the Fifth
.Five-Year Plan goal was achieved.
c/ Plan goal unknown.
d/ First half 1954 not reported.
30 'July .54 CURRENT INTELLIGENCE WEEKLY Page 23
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