CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000500160001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 16, 2016
• Document Release Date: January 11, 2005
• Sequence Number: 1
• Publication Date: March 31, 1955
• Content Type: SUMMARY

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-iP 1,004,
CONFIDENTIAL
EEEERR?T'
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 12
OCR NO. 2951/55
31 March 1955
DOCUMENT NO.
NO CHANGE IN CLASS, ^
^ DECLASSIFIED
CLASS. CHANGED TO-. IS
NEXT REVIEW DATE:
DAT __ REVIEWER:
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
DIA and DOS review(s)
completed.
CONFIDE
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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 Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
CHINESE COMMUNISTS CONTINUE
FORMOSA STRAITS BUILD-UP. 9-0 . . . . . . . . . . . . . . Page 1
The long-range build-up in military potential in
East China continues.
certain steps, some or all of which may
e eRsential to a successful assault on the major off-
shore islands, have yet to be taken. No observable
preparations are required for assaults on several minor
offshore islands. C
USSR SEEN MOVING
TOWARD BIG-POWER TALKS
Premier Bulganin's cautious statement on President
Eisenhower's remarks concerning a great-power conference
apparently is the initial phase of a maneuver by the
Soviet leaders to extricate themselves from an untenable
position. The USSR had got into a diplomatic blind
alley as a result of a series of statements implying
that ratification of the Paris accords would make fur-
ther international negotiations futile. In view of the
failure of such warnings to prevent ratification, Moscow
is now engaged in preparing the way for a return to its
former line calling for a five-power conference to dis-
cuss all the sources of international tension.
SOVIET UNION REVIVES
AUSTRIAN TREATY ISSUE . . . . . . . . . . . . . . . . . . Page 3
Molotov's invitation to Chancellor Raab to visit
Moscow for talks on treaty problems apparently reflects
Soviet fears that Austria will become linked to NATO
and dominated by West Germany. The USSR probably also
hopes to use the Austrian issue to delay implementation
of West German rearmament and considers that German
neutralist sentiment would be greatly strengthened by
evidence that the USSR is preparing to agree to a
treaty neutralizing Austria.
DIEM RISKS BREAK
WITH BAO DAI . . . . . . . . . . . . . . . . . . . . . . Page
While forces loyal to Premier Diem appear to have
the upper hand in the city, the premier by his action
during the current crisis has challenged the Binh Xuyen
and thereby risked a break with Bao Dai.
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Voroshilov Warns Against Atomic War "Fable": Voroshilov's
warning that the USSR could not be intimidated by
"fables" about nuclear warfare and other recent re-
pudiations by Soviet leaders of Malenkov's thesis
that an atomic war might mean the end of world civili-
zation probably were motivated in part by a desire to
correct any impression that the USSR is weak. The
charges that the former premier was guilty of tamper-
ing with Communist doctrine also might be used in the
future to undermine his position still further.
. Page 1
Soviet Propaganda on London Disarmament Talks: The USSR
seems to believe that the London disarmament talks
will soon break down. Moscow did not hesitate to
violate the secrecy agreement in an attempt to place
the entire blame on the Western delegates if the con-
ference fails. . . . . . . . . . . . Page 2
The Austrian Situation: The decision of the Austrian
cabinet to accep the Soviet invitation to Chan-
cellor Raab to visit Moscow was taken on a rising
tide of optimism in Vienna. Encouraged by an ap-
parent Soviet undertaking to discuss the Austrian
and German problems separately, the Austrians have
been exploring the possibility of guarantees against a
future Anschluss with Germany, and of forms of
neutrality which might be acceptable to the USSR.
. . . . . . . . . . Page
Peiping Diplomats Display Views Differing From Moscow's:
Recent remarks by Chinese Communist diplomats to
Yugoslav officials suggest a Chinese effort to dis-
play some independence of the Soviet Union. The
statements also indicate a possibility that Peiping
is dissatisfied with some aspects of its relations
with Moscow. I I . . . . . . . . . . . Page 3
Soviet Diplomats Comment on Molotov: The manner in which
two Soviet diplomats recently spoke of Foreign Min-
ister Molotov, and the fact that he appears to be
playing his usual role in foreign policy, suggest
that his political stock is not likely to suffer a
spectacular decline in the near future.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
Problems of the Hungarian Leadership: Hungarian party
first secretary a osi is attempt to oust Premier
Nagy, who was censured on 4 March by the,party
central committee for "rightist deviation," has
resulted in increased dissension within the party
and Rakosi is having difficulty asserting his au-
thority. He is not, however, likel to lose con-
trol of the party,. . . . . . . Page 5
Soviet Military Training in East Germany: The winter
training program for Soviet army units in East
Germany is nearing an end. Developments thus far
this year reflect the heavy influx of new weapons
and equipment during 1954 and also suggest greater
emphasis than last year on air-ground operations.
. . . . . . , . . . . . . . Page 6
The New Delhi Conference: The propaganda build-up
Moscow and Peiping are giving the Communist-
sponsored "Asian Conference for the Relaxation
of International Tensions," scheduled to meet in
New Delhi from 6 to 10 April, indicates that con-
siderable effort will be made at the meeting to
influence the Afro-Asian conference in Indonesia
two weeks later. F7 I . . . . . . . Page 6
The Afro-Asian Conference: Chou En-tai and Ho Chi Minh
will lead their -respective delegations to the Afro-
Asian conference. The neutralist sponsors. of the
conference may press for the establishment of a
permanent Afro-Asian organization. F A=P age 7
Laos: In its efforts to reach a settlement with the
Communist-backed Pathets, the Laotian government
has conceded them the right to select a governor
for one of the two disputed northern provinces.
Despite this concession, the Pathets, reversing
an earlier position, have refused to send repre-
sentatives to Vientiane for further negotiations.
1 -1
. . . . . . . . . . . . . . . . Page 8
Japan-USSR Negotiations: Public remarks by Prime Min-
ister a oyama n icate the Japanese will not press
for major territorial concessions in their talks With
the USSR. Tokyo, however, is likely to make a strong
demand for the return of the Habomais and Shikotan,
and this may encourage popular feeling for the return
of the American-held Bonins and Ryukyus. Meanwhile,
Moscow may benefit from its continued silence if
popular pressure for a rapprochement with the USSR
continues to mount in Japan. . . Page 8
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 CURRENT INTELLIGENCE WEEKLY SUMMARY
Japan-Orbit Trade Relations: A Chinese Communist mis-
sion has arrive In Japan to conclude a private
trade agreement with Japanese firms. The dele-
gates will probably exploit the opportunity to en-
gage in confidential discussions of a political
nature with Japanese officials and Diet members.
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. . . . . . . . . . . . . . . . . Page 9
Shake-up in Afghan Government Appears Likely: A major
shift in-Afghan policy may occur soon, probably not
later than mid-May,
Afghanistan is likely to accept less Soviet aia
in future.
. . . . . . . . Page
Syria: Although the Syrian government agreed "in prin-
ciple" on 2 March to sign the Arab pact proposed
by Egypt as an answer to the Turkish-Iraqi defense
agreement, Foreign Minister Azm is now having
second thoughts. I I. . . . . . . . . Page 11
British Adherence to Turkish-Iraqi Pact: Iraq's and
Britain's agreement to replace the Anglo-Iraqi
treaty of 1930 by a new accord, and Britain's
decision to adhere to the Turkish-Iraqi defense
pact, announced on 30 March, strengthen Middle
Eastern stability. F_ I . . . . . . . Page 12
Plotting Against Nicaraguan Government: Plotting
against caraguan president omoza appears to
have intensified in the past two months. Hos-
tile activities among exile groups and the do-
mestic opposition can be expected to increase
further with the approach of the presidential
elections scheduled for late 1956.
Oil Discovery Stirs Optimism in Brazil: The discovery
of oil in Brazil's Amazon valley improves the out-
look for eventual Brazilian self-sufficiency in
oil. Brazil's nationalistic petroleum law, how-
ever, will tend to slow progress toward this goal.
Petroleum imports consume almost half of Brazil's
hard currency earnings.
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SOVIET POLICY DIFFERENCES AND THE FALL OF MALENKOV. . . . Page 1
The circumstances surrounding Malenkov's fall pro-
vide many clues to the general policy orientation of
the present Soviet leadership. The February political
crisis in Moscow involved a number of separate but
closely interrelated chains of cause and effect, no one
of which alone adequately explains the change of leaders
or the accompanying shifts in emphasis in Soviet policy,
The basic elements in this complex pattern of events sug-
gest that Malenkov fell as a result of a many-sided con-
flict between him and Communist Party Secretary
Khrushchev.
PEIPING CAMPAIGNS TO BELITTLE NUCLEAR WARFARE IN EYES OF
CHINESE . . . . . . . . . . . . . . . , . Page 7
Chinese Communist propaganda against the use of
nuclear weapons has increased greatly in the past two
months, and a program for indoctrinating the population
on the effects of such weapons has been launched.
Peiping apparently calculates that its actions could
lead to the employment of nuclear weapons against the
mainland.
PROSPECTS FOR A COMMUNIST-NENNI SOCIALIST SPLIT . . . . . Page 9
The possibility of a break with the Italian Com-
munists may be discussed at the Nenni Socialists'
national congress opening in Turin on 31 March. In
view of the weakness of the Scelba cabinet, the
Christian Democrats might accept Nenni Socialist sup-
port of a new left-of-center government. This would
weaken Italy's co-operation in Western defense policies,
but would put the administration in a position to carry
out long-planned reforms, thereby impairing the princi-
pal source of Communist strength in Italy.
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THE WEEK IN BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
OF IMMEDIATE INTEREST
1
I CHANGTIN4'; _,r
or to test American reactions.
Military activity during
the past week has been limited
to sporadic artillery exchanges
in the Quemoy area. The Matsu
area has remained quiet except
for a Nationalist air attack
on nine small Communist patrol
craft near Foochow on 30 March.
Soviet foreign minister
Molotov told the Indian am-
bassador on 25 March that
there was no change in the
Chinese Communist position
._ . J ...HAIMEI~; `ACHEN9
/IL n7
WENCHOWT_;'
- ,;rt
CHIENOU
refusing to take
part in any con-
ference on the For-
mosa question in
which Nationalist
China was represented.
Molotov reaffirmed
that Moscow supported
Peiping in this stand,
although he expressed
the hope that explor-
atory talks would
continue.
The Communists
may intend to delay
both military and
political moves until
they can assess their
support at the Asian-
African conference
beginning 18 Arpil.
They probably hope
that the conference
will endorse Peiping's
claims to Nationalist-
held territory and
thereby improve the
Chinese Communist
position for either
military or political
operations.
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PART I OF IMMEDIATE INTEREST Page 1 of 5
CHINESE COMMUNISTS CONTINUE
FORMOSA STRAITS BUILD-UP
The long-range build-up
in military potential in East
China continues
certain steps, some
or all o which may be essen-
tial to a successful assault
on the major offshore islands,
have yet to be taken.
No observable preparations
are required for assaults on
several minor offshore islands.
Such attacks might be under-
taken at any time for prestige
and propaganda considerations
EAST CHINA (incl. FORMOSA)
0 Available Airfield (jet)
-Selected Road ------ Selected Railroad
- -- Proposed Railroad
Naut. ? 50 100 "? Mil es
0 50 100 150
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
Peiping's propaganda has
continued to exhort the Chi-
nese people to stand firm
against American threats, in-
cluding the threat, of employ-
USSR SEEN MOVING
TOWARD BIG-POWER TALKS
Premier Bulganin's brief
and carefully worded comment
on President Eisenhower's
statement of 23 March on
negotiations with the USSR
after the Paris agreements
are brought into force sug-
gests that the Soviet leaders
are trying to extricate them-
selves from an untenable po-
sition.
The USSR had got into a
diplomatic blind alley as the
result of a series of state-
ments implying that ratifica-
tion of the Paris accords
would make further interna-
tional negotiations futile.
In view of the failure of
such warnings to prevent rat-
ification, Moscow is now en-
gaged,in preparing the way for
a return to its former line
calling for a five-power con-
ference to discuss all the
sources of international
tension.
Bulganin's declaration
that the USSR takes "a posi-
tive view" toward the idea
of any great-power conference
which would "contribute to
the easing of tension in in-
ternational relations" is
considerably milder than the
Soviet press has been in its
initial reaction to the Presi-
dent's remarks.
ment of nuclear weapons. (See
article on Chinese nuclear
warfare propaganda, Page 7,
PART III)
Moscow wants to maintain
the posture of the champion
of peace and pacific settle-
ment and has claimed that the
Western powers, despite their
public calls for negotiations
with the-USSR, are actually
seeking to avoid and discredit
such talks. The Soviet leaders,
therefore, could hardly ignore
a statement by President Eisen-
hower on the subject of a fu-
ture conference.
Bulganin was careful, how-
ever, to include in his com-
ment safeguards which would
allow the Soviet government
to reject any specific Western
initiative.
Thus, he inserted the
qualifying phrase that any
conference must contribute
to the easing of international
tensions and, aside from a
reference to Austria, he made
no mention of the President's
expressed preference that a
conference be limited to the
four powers.
These safeguards could
provide the basis for insist-
ing at some later date on the
participation of Communist
China and the inclusion of a
whole series of Soviet propa-
ganda topics on the agenda.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
Bulganin's reference to
Soviet proposals to hold a
four-power conference on
Austria "in the nearest fu-
ture" may have been intended
to provide top-level support
for recent Soviet initiatives
on the Austrian question.
It seems more likely, how-
ever, that this was merely
cited as evidence of the USSR's
sincere interest in negotia-
tions as a means of reducing
tensions.
A Soviet commentary broad-
cast to Europe on 27 March
pointed to these proposals on
Austria as evidence that the
Soviet people "are vitally
concerned with maintaining
peace." It cited as further
evidence of this Bulganin's
statement on big-power talks,
Voroshilov's speech to the
RSFSR Supreme Soviet, and
Gromyko's proposals in the
London disarmament conference.
SOVIET UNION REVIVES
AUSTRIAN TREATY ISSUE
Moscow's suddenly renewed
interest in encouraging Aus-
trian hopes for a treaty and
particularly in seeking a firm
neutrality commitment from
Vienna seems to reflect a
real Soviet fear that there
is a serious"danger of Austria
becoming linked to NATO and
being dominated by West Germany.
The Kremlin may expect
that, by inviting Chancellor
Raab to Moscow for bilateral
talks and wringing. public
assurance of neutrality from
Austria, it can interfere
with any shift toward the West.
It may also hope to confront
the Western powers with a
fait accompli on Austria if
and when four-power treaty
.talks are resumed.
The care with which Moscow
continues to maintain the links
between the German and Austrian
issues indicates that it prob-
ably also hopes to use the
Austrian issue to delay im-
plementation of West German
rearmament. Moscow may con-
sider that German neutralist
sentiment would be greatly
strengthened by evidence that
the USSR is preparing to agree
to a treaty neutralizing
Austria.
Until recently, Soviet
.officials had stated publicly
and privately on a number of
occasions that an Austrian
treaty settlement would be
impossible after ratification
of the Paris accords.
Molotov's statements to
the Austrian ambassador and
the latest Soviet note, how-
ever, imply that this is not
the case.
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31 March 1955
DIEM RISKS BREAK
WITH BAO DAI
Armed units of
the Binh Xuyen gang-
ster society, appar-
ently reacting a-
gainst Premier Diem's
decision to strip the
Binh Xuyen of its
control over the Sai-
gon police, launched
attacks against
several government
installations on the
night of 29-30 March
and directed mortar
fire against the
premier's palace.
Government
forces regained con-
trol of the situa-
tion during the night
after blasting the
Binh Xuyen out of
one of its strong-
holds with 37mm
cannon fire, An
informal truce was
arranged on 30
March, but the sit-
uation remains tense.
'..., PHNOM
PENH AREAS OF
CAO DAI
~?~
N~
CONTROL
. ti
CAMBODIA }
( V
II
III
?
. ~'?.,; SAIGON
.. :;+y?r ,?pis, .
~~i 6? :'rr77{iila:r;.'ljk~~~?.r.lrr~1~?r
? 11 r ;.?hi: rr r:r? .r' 7,1~5/ (u~+
+ yrr r .
.?,'!;glrr
AREAS OF
B I.NH XUYEN
AREA OF
CONTROL
HOA HAO
CONTROL
ESTIMATED MILITARY STRENGTHS
HOA HAO 20,000
CAO DAI 16,000
BINH XUYEN 3,500
VIETNAMESE 80.000
FRENCH 60,000
0 40 80 1jO
MILES
Following its
ultimatum of 21 March, the
"United Front" organized by
antigovernment elements of
the sects and sparked by the
Binh Xuyen continued vehe-
mently denouncing the govern-
ment'while rejecting Diem's
offers to discuss the Front's
grievances.
This situation convinced
Diem that the Front had no
object but to destroy him,
and he began to prepare for a
clash with the Binh Xuyen.
The Front reported that
all the Cao Dai and Hoa Hao
members of Diem's government
had resigned, but Diem
meanwhile claimed to have
won the complete loyalty of
Cao Dai general Phuong and
Hoa Hao general Nguyen, two
of the Front's main pillars.
The majority of the
antigovernment.Hoa Hao forces
are located far to the west
of Saigon. With at least
seven battalions in Saigon
and ten more available within
three hours, the government
appears for the time being to
be in command of the situation.
Politically, Diem is on
shakier ground. He has chal-
lenged the authority of Bao
Dai by his action with respect
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
to the police force, and
thereby risked a request for
his resignation. Bao Dai sold
the police force to the Binh
Xuyen and probably regards
that organization as the
guarantee of his continuing
olitical influence in Vietnam.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Voroshilov Warns Against
Atomic War 'Fable"
Soviet party presidium
member Voroshilov has provided
the latest repudiation of the
thesis expounded by Malenkov
in March 1954 that a third
World War would cause civiliza-
tion to perish.
Addressing the RSFSR
Supreme Soviet on 26 March,
Voroshilov stated that the
Soviet Union cannot be in-
timidated by such "fables,"
and reassured his audience
that only capitalism, and not
world civilization, would
perish.
Voroshilov's remarks were
patterned after the statement
made on this subject by Molo-
tov in his speech to the Su-
preme Soviet on 8 February.
caused considerable top-level
displeasure by failing to give
overriding consideration to
the nation's military strength.
Malenkov's colleagues may also
have feared that the Western
powers might regard his thesis
as an indication of Soviet
weakness or uncertainty which
offered opportunities for
exploitation.
In addition, Malenkov's
statement may have caused some
confusion and dissatisfaction
among second-echelon party
leaders, which the regime now
wishes to correct. It is pos-
sible, however, that Soviet
citizens will not in fact be
reassured by a prolonged dis-
cussion of the subject of nu-
clear warfare in their propa-
ganda media.
They also followed closely
a similar pronouncement appear-
ing in the most recent issue of
the party publication, Kom-
munist.
Kommunist declared that
the thesis of the "destruction
of world civilization" is used
by the apologists of imperial-
ism to frighten "weak-nerved
and unstable" elements.
While not discounting the
possibility that a future war
might be more "destructive"
than those of the past, Kom-
munist insisted that however
monstrous the "dying fury of
capitalism" might be, atomic
war would only hasten its. ruin.
Judging from the attention
now being devoted to clarifying
the party line on this subject,
Malenkov's remarks probably
Malenkov's phrase diverged
significantly from the long-
established Bolshevik theory
that the Communist system is
destined to win ultimately
over all others, wars notwith-
standing. The charge of
tampering with Communist dogma
might be used against Malenkov
in the future to undermine his
position still further.
The Soviet leadership
presumably is in basic agree-
ment as to the real hazards
and possible consequences of a
general war fought with nuclear
weapons. The very fact that
Malenkov was moved to make his
March 1954 statement provides
evidence of a keen awareness
in Moscow of the implications
for the Soviet regime of atomic
warfare.
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PART II NOTES AND COMMENTS Page 1 of 14
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Soviet Propaganda
on London Disarmament Talks
Soviet charges that the
Western nations have been sabo-
taging the London disarmament
negotiations reached a climax
at the end of last week.
TASS published a long
interview with Gromyko attack-
ing the Western position in
the negotiations; and Pravda
printed an article whic e-
scribed the "new" Soviet pro-
posals introduced on 18 March
and condemned the Western dele-
gations for "inventing all pos-
sible obstacles to reaching
agreement."
Moscow probably believes
that the London talks will
soon break down as a result of
the favorable vote on the Paris
agreements in the French
Council of the Republic.
The Soviet proposals ap-
pear designed to establish the
final Soviet propaganda posi-
tion and to saddle the Western
powers with responsibility if
the conference fails.
Pravda justified publica-
tion ofthee USSR's proposals
in the secret talks by charg-
ing that the Western press,
while hypocritically proclaim-
ing that the talks were secret,
deliberately misrepresented
the attitude of the Soviet
Union.
Gromyko's interview was
described as "a blow against
misinformation because it
showed the true meaning of the
Soviet proposals and unmasked
the maneuvers" of the Western
representatives aimed at making
the work of the conference more
difficult.
The secrecy agreement ob-
viously handicapped Soviet
attempts to exploit the talks
for propaganda advantage.
Moscow found.that the public
discussion of Vyshinsky's dis-
armament proposals in the United
Nations General Assembly last
fall afforded a much more
effective opportunity for
propaganda.
The Soviet press has also
attacked the appointment of
Harold Stassen as special as-
sistant to the President on
disarmament problems as a
"propaganda maneuver" designed
to screen American preparations
for atomic war.
Pravda characterized
Stassen's nnew title as "quasi-
comic opera" and declared "it
is not by chance that the Amer-
ican press links Stassen's ap-
pointment with the possibility
that the London talks will be
broken off by the United States
in order to prevent the reach-
ing of any agreed decisions."
The decision of the Aus-
trian cabinet to accept the
Soviet invitation to Chancel-
lor Raab to visit Moscow fol-
lows a tide of rising optimism
in Vienna.
Encouraged by an apparent
Soviet undertaking to discuss
the Austrian and German prob-
lems separately, the Austrians
have been exploring the possi-
bility of guarantees against
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CURRENT INTELLIGENCE VEEKLY SUMMARY
a future Anschluss with Germany,
and of forms of neutrality
which might be acceptable to
the USSR.
Western diplomats have
been seriously concerned about
signs of willingness on the
part of some Austrian officials,
particularly Chancellor Raab,
to go considerably further than
heretofore in making conces-
sions to the USSR on'conditions
for a state treaty.
Peiping Diplomats Express Views
Differing From Moscow's
Recent remarks by Chinese
Communist diplomats to Yugoslav
officials suggest a Chinese
effort to display some inde-
pendence of the Soviet Union.
These statements also indicate
a possibility that Peiping is
dissatisfied with some aspects
of its relations with Moscow.
the Chinese charge
iere expressed "great sym-
pathy" for the Yugoslav posi-
tion and said that he "under-
stood" why Yugoslavia had left
the fold.
The charge is said to have
pointed to the similarity be-
tween the Chinese Communist and
Yugoslav positions, "arising
Raab probably will find
it difficult to go back on his
statement of 20 March that
Vienna would be willing to in-
clude a pledge of neutrality in
the state treaty, and there are
indications that Figl and prob-
ably other Austrian leaders
would not be averse to a neu-
trality similar to that main-
tained by Switzerland.
other assets.
Such a position would
leave Austria under the eco-
nomic, if not political, in-
fluence of the USSR. Under
the terms of the draft state
treaty, Austria would shoulder
a $150,000,000 debt to Moscow
and there would be continued
Soviet control over 40 percent
of Austrian oil resources and
from the fact that both coun-
tries achieved their libera-
tion primarily through their
own efforts,"
Belgrade's ambassador in
Moscow has reported that the
Chinese Communists were dis-
gruntled by Molotov's foreign
policy report of 8 February.
Peiping's charge in Moscow is
reported to have commented that
Molotov's remarks on the Far
East were only "Molotov's
personal opinion." Yugoslav
officials were surprised that
the Chinese should disclose
their views to outsiders,
particularly to Yugoslavs.
These remarks would seem
intended to impress the Yugo-
slavs with Peiping' s self-respect.,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
and self-confidence. They also
suggest that the Chinese Com-
munists do not think it neces-
sary always to agree with.
Soviet policy, and that
Peiping's voice has some weight
in the formulation of Sino-
Soviet bloc policy.
Soviet Diplomats
Comment on Molotov
Two Soviet diplomats, in
recent conversations with
Western officials, have taken
what appear to be special pains
to buttress the prestige of
Foreign Minister Molotov, who
had recently seemed to suffer
a loss of authority.
Molotov's recent diplo-
matic activity appears to
indicate, moreover, that his
usual role in Soviet foreign
policy has not been reduced.
Ambassador Lodge reported
on 17 March that a member of
the Soviet delegation to the
United Nations had complained
to him that the American govern-
ment and press constantly uis-
tort normal changes in the
structure of the Soviet govern-
ment.
Another delegate added
that, in describing Molotov as
the third-ranking member of the
Soviet hierarchy, the United
States had greatly underesti-
mated his importance, as would
be proven in the course of time.
The American embassy in
Vienna reported on 28 March
that First Deputy Foreign
Minister Gromyko had recently
this Yugoslav view, and thus
to facilitate a joint Sino-
Soviet effort to lure Yugosla-
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It may also be that Chinese'
Communist officials made such
statements in order to encourage
via back into the bloc.
spoken in a similar vein in a
conversation with an Austrian
Foreign Ministry official. The
Austrian remarked that his
government had been encouraged
by the fact that Molotov was
personally dealing with the
Austrian question, and Gromyko
replied that this was a correct
interpretation, since Molotov
is the second man in the Soviet
government.
These strikingly similar
comments by two Soviet diplo-
mats, apparently offered .
gratuitously, seem more than
a coincidence.
The Soviet government has
shown itself sensitive to
Western reactions to its leader-
ship problems and eager to
forestall conjecture about inter-
necine conflicts. The stress
on Molotov's importance, there-
fore, may be designed to counter-
act recent press speculation
concerning his status.
The diplomats' remarks
seem, however, to have gone
further than this objective
alone would have required, and
it is unlikely that such con-
fident claims would have
been made on Molotov's behalf
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31 March 1955
by normally cautious officials stock was about to suffer
if they felt his political spectacular decline.
Problems of the Hungarian
Leadership
Hungarian party leader
Rakosi's attempt to oust Pre-
mier Nagy, who was condemned
on 4 March by the party cen-
tral committee for "rightist
deviation," has resulted in
increased dissension within
the party. Rakosi is having
difficulty asserting his
authority, but he is not likely
to lose control of the party.
Rakosi reportedly was able
to force an anti-Nagy resolu-
tion through the party central
committee meeting on 4 March
only by throwing his full
weight and the support of
Moscow behind it. He has not
yet been able to oust Nagy,
because the premier has con-
siderable support in the party
and because Moscow wants to
avoid giving the impression
that a struggle for personal
power is being waged.
Nagy reportedly continues
to refuse to resign or recant.
He also would not appear before
the central committee meeting
and sent letters defending his
position to all committee mem-
bers except Rakosi.
The confusion which has
hamstrung the party leadership
throughout the new course
period apparently continues.
The central committee
meeting, which was designed to
firm up party policy, has only
served to accentuate internal
party differences.
In an effort to overcome
this confusion and unite the
party leadership, Rakosi re-
cently spoke to two meetings
of local party leaders and
minimized the economic dif-
ferences between the March
resolutions and the policy
pursued under the Nagy govern-
ment.
Local party committee
elections are being held, and
national conferences of public
prosecutors and of district
party secretaries are being
convened, apparently in an
effort to weed out or intimi-
date Nagy supporters in the
party.
Rakosi and other party
:leaders have also tried to
placate the hostile peasantry,
which took the central committee
resolutions to mean the end of
new course "liberalism."
While specifying that
"voluntary" collectivization
will continue, Rakosi has
emphasized the need for winning
the co-operation of private
farmers, who cultivate approx-
imately 70 percent of the
arable land. Rakosi and other
leaders have also tried to
allay rumors that the free
agricultural market world be
abandoned and that the pro-
duction of consumers' goods
would be shay l curtailed.
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31 March 1955
Soviet Military Training
In East Germany
Soviet army units in East
Germany are in the final phases
of their winter training pro-
gram. Field exercises for
combined arms, primarily in-
volving reinforced regiments,
have been reported in all six
of the Soviet ground armies
beginning in February.
Developments thus far this
year reflect utilization of the
increased mobility and fire
power resulting from the heavy
influx of new weapons.and equip-
ment during 1954. Training has
emphasized loading and movement
problems as in 1954 but with
increased attention to dispersal
and camouflage.
Movement of field and
antiaircraft artillery elements
to firing ranges has been on a
somewhat larger scale than last
year.
The normal training time-
table of the Soviet forces in
Germany apparently has been
The propaganda build-up
Moscow and Peiping are giving
the Communist-sponsored "Asian
Conference for the Relaxation
of International Tensions"--
scheduled to meet in New Delhi
from 6 to 10 April--indicates
that considerable effort will
be made at the meeting to in-
fluence the Afro-Asian. confer-
ence in Indonesia two weeks
later.
Preliminary reports indi-
cate that some 300 delegates,
representing over a dozen
Asian and Arab nations, will
be at the New Delhi meeting.
"People's" representatives
maintained this winter despite
the discharge of nearly 200,000
trained troops last autumn and
their replacement with new con-
scripts. The schedule was
maintained by conducting two
programs simultaneously during
January and February--basic
training for conscripts and
advanced refresher training
for older troops.
The current phase of
Soviet ground force training
in East Germany is normally
followed by a 10-day period of
unit inspection and equipment
maintenance which precedes the
annual move to summer training
grounds beginning about mid-
April.
are expected not only from
India but also from.-Burma,
Ceylon, Communist China, Indo-
nesia, Japan, Jordan, Lebanon,
Mongolia, North Korea, North
Vietnam, Pakistan, Syria, and
the USSR.
The USSR, which will not
be represented at the Afro-
Asian conference, has announced
that its delegation will be
headed.by Nikolai Tikhonov,
chairman of the Soviet Commit-
tee for the Defense of Peace.
Reports indicate that the
Chinese Communist delegation
will number 39 members,
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led by Kuo Mo-jo, chief Chi-
nese "peace" partisan.
Japan is reportedly send-
ing as many as 45, while Burma
is planning to send between 14
and 16.
High on the agenda are the
"five principles" of coexist-
ence formulated by Chou En-lai
and Nehru last spring. Also
scheduled for discussion are
such issues as anticolonialism,
the dangers of military alli-
ances, the control and banning
of atomic weapons, promotion
of Communist China's membership
in the UN, and the peaceful
unification of Korea.
The British Foreign Office
has reported that Nehru was
considerably disturbed when he
The Afro-Asian Conference
The neutralist sponsors
of the Bandung conference may
press for the establishment
of a permanent Afro-Asian
organization. despite their
repeated protestations that
they have no desire to form
a new bloc.
The last item of the pro-
visional agenda drawn up by
the conference secretariat,
which has been under strong
Indian influence, calls for
consideration of the "desira-
bility of holding cultural
festivals in participating
countries on appropriate
occasions."
In Tokyo, Indian represent-
atives at the: current meeting
of the ECAFE- Trade and Industry
Committee have implied that-
more "Afro-Asian conferences"
learned the facts about the
conference recently and that
he has forbidden government
representatives to have any
official contact with the meet-
ing. The Indian government is
also reportedly attempting to
discourage foreign press cov-
erage of the conference though
it has apparently set no re-
strictions for the Indian
press.
The New Delhi meeting is
unlikely to have a substantial
effect on the Afro-Asian con-
ference, particularly since
few, if any, of the Communist
delegates at New Delhi will go
to the Indonesian conference.
It will, however, provide an
opportunity for a tryout of
the line the Communists intend
to take at Bandung.
are being contemplated. There
have also been indications that
the Burmese and Indonesians
are in favor of establishing
a permanent organization.
Meanwhile, it has been
announced that Ho Chi Minh
will head a 15-man group from
North Vietnam. The importance
that the Communists attach to
the Bandung conference is fur-
ther underscored by the large
number of Communist newsmen who
will attend.
According to a list issued
by the Indonesian Information
Ministry, TASS will have 12
representatives, the New China
News Agency will have three and
the London Daily Worker two.
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31 March 1955
The Laotian government is
continuing its efforts to nego-
tiate a settlement with the
Communist-backed Pathets and
has gone so far as to concede
them the right to select a
governor for one of the two
disputed northern provinces.
The latter development
comes in the face of Pathet
attacks on government-held
towns on 20 March, which the
royal authorities publicly de-
nounced as Pathet treachery.
The Pathets have, moreover,
reversed an earlier position
and refused to come to the
capital for negotiations.
Premier Katay, meanwhile, ad-
mits that Pathet propaganda is
effective and that many people
in the provinces believe it.
Japan-USSR Negotiations
In a statement before a
Diet committee on 25 March,
Prime Minister Ichiro Hatoyama
asserted that it would be dif-
ficult for Japan to press the
USSR for the return of southern
Sakhalin and the Kurils "be-
cause of the San Francisco
treaty."
This suggests that the
prime minister may not insist
on a major effort to gain ter-
ritorial concessions and may,
in fact, be laying the ground-
work to blame the former Yo-
shida government and the United
States for the expected failure
to obtain the islands' return.
The Yoshida-Ogata Liberal
Party, for its part, has in-
dicated it will block by
The Laotian government,
even if it were intent on pur-
suing a "strong" policy, prob-
ably lacks the military leader-
ship necessary for a campaign
against the Pathets.
The French have the mili-
tary skill, but are unwilling
to be drawn into fighting which
might involve them with the
Viet Minh.
legislative action any deals
between Japan and the USSR
which would prejudice American-
Japanese relations.
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.J1oscow, meanwhile, has
maintained silence on what
looked a month ago like a
Soviet commitment to undertake
Prewar
boundary
01
ETOROFU
CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
negotiations in the near future.
Since the Japanese elec-
tions on 27 February, there
HABOMAI
AREA
0 50 100
Statute Miles
0 50 100
Nautical Miles
SEA 1~Oc'
0 F 64 \ \,, o
GJ
\?a
has been no official
or propaganda comment
from the Kremlin--
a silence which con-
trasts with Peiping's
recently renewed
campaign of charges
of potential Japa-
nese aggression.
The present
Soviet attitude may
reflect some embar-
rassment or hesita-
tion arising from
respect for Chinese
sensibilities. Since
the Japanese have
from the beginning
taken the initiative
for P?normalized"
relations with the
USSR, the Kremlin
may have decided to
let the Japanese
talk while internal
pressures for a rap-
prochement continue
to mount.
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HANASAKI
PENINSULA -:17
.'KUNASHIRI
1J"SHIKOTAN
0 HABOMAIS
SUISHo
Japan-Orbit Trade Relations
Japanese businessmen,
Diet members, and Communist-
front trade promoters rolled
out the red carpet, as a 38-
man Chinese Communist trade
delegation arrived in Tokyo
on 29 March ostensibly to con-
clude a private trade agreement.
At the same time, Foreign
Minister Shigemitsu warned that
measures would be taken to pre-
vent the group from engaging in
political activities during
their stay in Japan.
25X1
Shozo Murata, former presi-
dent of the OSK shipping line
and head of the International
Trade Promotion Association
which is sponsoring the visit,
hopes to be able to sign a new
trade agreement by 18 April.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
The organization speaks
optimistically of provisions for
$112,000,000 to $140,000,000
trade each way annually. This
contrasts sharply with the
government's maximum estimate
of $40,000,000 to $50,000,000
each way and suggests a plan
to include embargoed trade for
political purposes.
Since the Communists
staged their row in Hong Kong
last week over the wording of
their visas, more and more of
the larger firms are refusing
to associate themselves with
the negotiations or allow
their factories to be "in-
spected" by the delegation.
The firms are becoming more and
more convinced that the prime
purpose of the visit is propa-
ganda, and they are afraid to
endanger their relations with
the United States.
Shake-Up in Afghan Government
Appears Likely
A major shift in
policy may occur soon,
Present prospects are that
the Chinese will stall at the
trade talks and wait for public
pressure to force the government
to rescind travel limitations.
There is also good reason
to suspect that the Chinese
guests may delay their depar-
ture in order to wring the last
drop of propaganda advantage
out of their visit.
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The contest for control
of the government between the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
31 March 1955
elder members of the royal fam-
ily and the group led by Daud
seems likely to be solved by
the middle of May. By that
time, the triennial elections
to a new national assembly,
now scheduled to convene on 4
May, should have been completed
and a legislature satisfactory
to the winning group installed.
By mid-May, too, nomadic
Afghan tribes should be on
their way to relatively inac-
cessible grazing grounds from
which it would be difficult to
recall their leaders for any
policy-making tribal assembly.
Syria
Although the Syrian gov-
ernment agreed "in principle"
on 2 March to sign the Arab
pact proposed by Egypt as an
answer to the Turkish-Iraqi
defense agreement, Foreign
Minister Azm is now having
second thoughts.. Iraqi bland-
ishments, Turkish psychological
warfare, and Western demarches
apparently have led the Syrians
to seek to modify the Egyptian
proposals so as to meet Iraq's
and Turkey's major objections.
The effect of these pres-
sures also has been to weaken
the pro-Egyptian .Azm and to
strengthen Prime Minister
Asali, whom some pro-Iraqi
Syrians are now supporting
for lack of a better leader.
Regardless of shifts
which may occur in the Kabul
power structure, the royal
oligarchy will almost cer-
tainly continue in power. As
a result of the current re-
assessments in Kabul, however,
Afghanistan is likely to be
inclined to accept less Soviet
aid in the future.
Azm is said to have lost
some of his army support to
Asali. Azm and his remaining
army supporters are also re-
ported to be veering away from
the anti-Western, extremist
Arab Socialist-Resurrectionist
Party, which strongly favors
the pact with Egypt.
On the other hand, Asali
has asked Britain and the United
States to support Syria's ef-
forts in Cairo to have the pact
modified to make Iraq's in-
elusion possible.
The Syrian cabinet is un-
likely to last long even if it
survives the immediate crisis.
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31 March 1955
British Adherence
To Turkish-Iraqi Pact
Iraq's and Britain's
agreement to replace the Anglo-
Iraqi treaty of 1930 by a new
accord and Britain's decision
to adhere to the Turkish-
Iraqi defense pact, announced
on 30 March, strengthen Middle
Eastern stability.
This action puts Anglo-
Iraqi relations on a basis
consistent with Iraqi sover-
eignty and therefore takes
much of the force out of the
local nationalists' denuncia-
tion of the 1930 treaty as
"Western imperialism."
British adherence to the
Turkish-Iraqi pact will make
that treaty significantly more
effective. Moreover, Iraq's
alignment with Turkey and
Britain may reduce Israel's
fear of hostile action by
Baghdad.
Plotting Against Nicaraguan
Government
Plotting against Nicaraguan
president Somoza appears to
have intensified in the past
two months. Hostile activities
among exile groups and the
domestic opposition can be ex-
pected to increase further with
the approach of the presidential
elections scheduled for late
1956.
Somoza, strong man in
Nicaragua since 1934, appears
to be preparing to succeed him-
self in office. He enjoys wide-
spread personal popularity and
apparently retains the loyalty
of the National Guard, the
country's only armed force, but
his opposition is bitter and
desperate.
Anti-Somoza Nicaraguan
exiles, now concentrated in
El Salvador, Honduras, and
Mexico, have engaged in several
plots to oust Somoza in re-
cent years.
Some of the Nicaraguan
exiles were subjected to
Communist influence during
their stay in Guatemala under
the pro-Communist Arbenz regime.
Communist influence in Nicara-
gua is at present negligible-I
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CURRENT INTELLIGENCE WEEKLY SUMMARY
It is unlikely that the
exiles will be able to obtain
backing from any other govern-
ment for a move against Somoza.
Even Somoza's bitter en-
emy, Costa Rican president
Figueres, is unlikely to risk
compromising his domestic and
international position by aid-
ing would-be Nicaraguan rebels.
The governments of El
Salvador and Honduras have al-
ready made it clear that they
would dissociate themselves
from any anti-Somoza movement.
Somoza's death or ouster
opposition to Somoza.
would be likely to result in an
intense struggle for power.
The National Guard would prob-
ably be torn by personal rival-
ries, and opposition elements
are now united only by their
Oil Discovery Stirs Optimism
In Brazil
The recent discovery of
oil at Nova Olinda in the
Amazon region of Brazil has
roused Brazilian hopes that
the country will eventually be
relieved of its heavy petroleum
import burden.
Heretofore, Brazil has had
to import almost all its oil.
In 1954, petroleum imports used
up 45 percent of the total
convertible currency earned by
Brazilian exports. This has
been a major factor in the
country's serious economic
difficulties.
The Nova Olinda strike is
in a vast sedimentary basin in
which the existence of oil had
been only conjectured. The
area is believed to contain
sizable reserves. Further
discoveries are expected, and
the head of Petrobras, the
Brazilian government petroleum
monopoly, has even predicted
that Brazil might be self-
sufficient in oil in three
years.
This prediction is overly
optimistic. Brazil's average
daily consumption of petroleum
products in 1954 was at least
155,000 barrels. Even under
the most favorable conditions,
production on this scale could
be reached only with substan-
tial foreign. capital.
Brazil's petroleum leg-
islation is monopolistic,
however, and Petrobras alone
does not have the resources to
produce the petroleum that the
country's expanding economy
demands.
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oLa Paz
'BOLIVIA
Asuncion
2 i
k1
.kalvador
Bahia Oil Field
Sao Paulo o
? Rio de Janeiro
Porto Alegre
Santiago 0 Rosario', 1 U R UGGUA Y
0, 0
o) Buenos Aires Montevideo
The so-called Petrobras
law prohibits the granting of
concessions to foreign companies
or the participation of foreign
equity capital in Brazilian pe-
troleum development. The law
does permit Petrobras to contract
for foreign technical services.
Foreign petroleum companies are
likely to be more interested in
such contracts in view of the
latest discovery.
ma
a~a
r ti?
PANAM
Supporters of the na-
tionalistic concept of Bra-
zilian petroleum development
are jubilant over the new
oil well, and the discovery
further decreases the like-
hood that the Petrobras law
will be modified in the fore-
seeable future.
Caracas TRINIDAD
Bogota
0
COLOM BIA
Quitoo
ECUADOR
Q~C~o -2~-a~? 4slrca r--~
o Statute Miles
ti 1 44 oy
PtQSpective :;.;;
B R A Z I L
PERU
Lima 0
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The circumstances sur-
rounding Malenkov's fall
provide many clues as to the
general policy orientation of
the present Soviet leadership.
The February political
crisis in Moscow involved a
number of separate but closely
interrelated factors, no one
of which alone provides an
adequate explanation of the
change of leaders or the
accompanying shifts in emphasis
in Soviet policy.
The basic elements in this
complex pattern of events sug-
gest that Malenkov's "resig-
nation" on 8 February came as
the result of a many-sided
conflict with Party First
Secretary Khrushchev.
The conflict reached a
critical intensity because
Malenkov and Khrushchev in the
preceding year had pinned their
political fortunes to divergent
policies in a variety of fields
affecting the long-term develop-
ment of Soviet economic and
military strength. These dis-
agreements were resolved in
Khrushchev's favor by the
time of the Communist Party
central committee meeting in
January.
Thus far, however, Khru-
shchev is not exercising
absolute power in the Stalin
tradition. He seems, rather,
to have acquired a primary
position among Soviet policy
makers because his views
reflect the current weight of
opinion in this top circle.
A pervasive aspect of the
conflict between Malenkov and
Khrushchev was the apparent
divergence in their attitudes
toward the international
situation. This applied
particularly to the degree of
danger to the USSR from
"capitalist encirclement" and
the most advantageous posture
for the USSR to assume in
defense and diplomacy in the
next two or three years.
During the period of his
political ascendancy in 1953,
Malenkov became the main
official spokesman for the
view that it was both necessary
and feasible to lessen the
intensity of the cold war with
the West at least for a few
years. This relaxation was
to be achieved by bringing the
Korean war to an end and
moderating the aggressive manner
in which the USSR under Stalin
had conducted diplomatic
relations.
In the long run, Malenkov
must have reasoned, the USSR
would be better off if it
markedly eased the pressure on
the Western coalition, thus
allowing divisive forces to
come into full play in the
West and giving the USSR a
chance to build up Soviet
strength for the long haul.
Malenkov apparently
believed that the country's
most pressing problems were
internal, and that they con-
sisted of the slowdown of
industrial growth since 1950,
the stagnation of agriculture
at pre-World War II levels,
and the general apathy of the
Soviet population. The cam-
paign to relax international
tensions evidently was designed
to allow the Soviet Union to
halt the further growth of
defense expenditures for
several years and to devote
more resources to alleviating
imbalances in the economy.
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The "New Course"
Domestically, the Malenkov
view manifested itself in the
"new course," a program empha-
sizing an "upsurge" in the
production of consumers' goods
and agricultural output. Since
heavy industrial investment and
output were to maintain their
rapid rates of growth, fulfill-
ment of the consumer welfare
aspects of the "new course"
required a sharp leveling off
of defense expenditures, which
actually occurred in 1953 and
1954.
The Malenkov regime
apparently intended no sub-
stantial increase in defense
outlays at least through 1956.
Mikoyan, indeed, strongly
implied in a speech made in
October 1953 that the same
general policy of expansion of
output of consumers' goods and
agricultural products would
continue through the next five-
year plan to 1960.
In 1953 all the Soviet
leaders apparently subscribed
to the view that international
tension could be reduced suffi-
ciently--without major Soviet
concessions--to allow the USSR
safely to sacrifice short-term
increases in military strength
to longer-range economic growth:
In fact, they still adhere to
the more general outlines of
this hypothesis, and some of
them may think of themselves
as merely making certain
modifications or adjustments
within the general framework
of post-Stalin policy.
On the other hand, some
Soviet leaders--particularly
Khrushchev--seem in the past
year to have grown increasingly
out of sympathy with Malenkov's
attitude toward the inter-
national situation.
Khrushchev on several
occasions in the past year
revealed a basic attitude
fundamentally more pessimistic
than Malenkov's concerning
conflict with the Western nations,
and seemed more inclined to
rely on threats instead of
negotiations to protect Soviet
interests in connection with key
international issues such as
German rearmament. In informal
discussions with foreign diplo-
mats, he sometimes displayed a
harsh attitude toward the West,
on some occasions only to have
his comments repudiated by
Malenkov. Khrushchev made a
bellicose speech in Prague in
June 1954, which later appeared
in the Soviet press substantially
modified and softened.
Military Preparedness
Khrushchev evidently found
it increasingly difficult to
reconcile himself to all aspects
of the "relaxation of tensions"
policy. Undoubtedly supported.
.by Soviet military leaders, he
apparently decided that the
USSR must keep its short-term
military preparedness growing
at a reasonably high rate in
.order to support Soviet foreign
policy in the political con-
flicts with the West in the
next year or two.
Bulganin, speaking at the
parade on the anniversary of
the revolution last November,
stated that "no such changes"
had as yet occurred in the
international situation "as
would give us grounds to lessen
in any measure our attention
to questions of strengthening
our defense capability."
Khrushchev's sense of
urgency over the immediacy of
the need for increased military
preparedness may be inferred
from the emphasis which he and
his supporters have placed on
defense, by the appointment of
Bulganin as premier, the advance-
ment of Zhukov and a number of
other professional military
officers, the stress on East
European security measures
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required to counter German re-
armament, and the attention
given at the time of Malenkov's
fall to the need for increasing
state reserves--i.e., stockpiles
of raw materials, industrial
articles, and food.
The new emphasis on mili-
tary strength is discernible
in the Soviet budget for 1955,
which reflects a major departure
from the thinking implicit in
the 1953 "new course" plan revi-
sion.
Malenkov's official views
on the dangers of nuclear war-
fare also have been reversed by
the new regime. Malenkov stated
in a speech in March 1954 that
an atomic war could well mean
the end of modern civilization.
This concept has since been
explicitly rejected in favor of
the dogma that an atomic war
would result only in the de-
struction of the capitalist
world.
The conflict of policies
apparently reached its height
in the period of energetic
East-West diplomacy in the
second half of 1954.
This period began with the
Indochina settlement arranged
at the Geneva conference. The
Communist acquisition of control
over half of Indochina and the
collapse of the European Defense
Community concept about a month
later may have seemed victories
for the Malenkov technique of
conducting foreign affairs.
If so, the fruits of vic-
tory soured somewhat as a re-
sult of the rapid Western re-
covery of the diplomatic initi-
ative in Europe and continued
Western progress toward German
rearmament in another form.
Furthermore, tensions in
the Far East began almost imme-
diately to rise sharply as the
result of Communist China's
"liberate Formosa" campaign.
Chou En-lai went to Moscow in
July 1954 and almost certainly
discussed the Formosan issue
with Soviet leaders.
Both Khrushchev and Bul-
ganin shortly made a ceremonial
visit to Peiping in connection
with the revision of the Sino-
Soviet treaty and must then
have formed a realistic estimate
of the magnitude of the economic
effort involved in the "support"
of China promised on behalf of
the Soviet people.
Khrushchev openly criti-
cized Malenkov on the occasion
of a recent interview with the
Indonesian ambassador, accord-
ing to information received by
Ambassador Bohlen. Among the
major complaints cited against
the former premier, Khrushchev
mentioned that his foreign
policy had not been "firm"
enough on China.
The Dispute over Agriculture
The most protracted open
policy disagreements between
Khrushchev and Malenkov centered
on competing plans for the
improvement of agriculture.
Malenkov emphasized the
need for increasing crop yields
in the traditional agricultural
areas. He embraced the idea of
incentives for the rural popu-
lation, calling for an increase
in delivery prices and a
reduction in procurement norms
and monetary taxes, as well as
increased output of consumers'
goods.
He seemed to regard major
increases in labor productivity
--to be obtained through high
rates of investment in tradi-
tional cultivated areas and
through inducement rather than
coercion of the peasantry--as
the best means of increasing
the contribution of agriculture
to the nation's long-range in-
dustrial and military potential.
When the results of the
1953 harvest were compiled, it
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must have become known that
production of most crops and
most species of livestock had
failed to reach prewar levels.
Acreage sown to food crops had
been less than one percent
larger than in 1940, and yields
of most crops had failed to in-
crease at all. Production of
major food crops, such as grain
and potatoes, fell below the
previous year because of ad-
verse weather conditions, and
livestock numbers increased
only slightly.
At this point, it seems
likely that Khrushchev, and
probably some of his colleagues,
became more convinced than be-
fore that the process of stim-
ulating production through in-
tensive investment in tradi-
tional areas and through con-
cessions and incentives would
be too slow. They probably
persuaded the majority of party
leaders that it would be more
sensible to make major addition-
al efforts to expand the sown
area.
Early in 1954, Khrushchev
introduced the "new lands" pro-
gram which, by 1956, is sup-
posed to result in an increase
in the grain acreage of 70-74
million acres, an area equal to
the total sown acreage of Canada.
This is a risky program aimed
at rapid, short-term benefits,
since most of the new lands are
likely to suffer an almost com-
plete crop failure on the average
of two out of every five years.
Malenkov's resistance to
the "new lands" concept may have
succeeded temporarily. At the
central committee plenum in
June 1954, Khrushchev's partici-
pation was noticeably lacking,
and the plenum decreed new con-
cessions to the grain farmers
along the lines advocated by
Malenkov.
The situation was reversed
when it became evident that a
severe drought would plague the
principal grain-producing
regions, leaving the "new
lands" area to save the day
by bringing 1954 agricultural
production slightly above the
level of 1953. In the face of
a 10-percent rise of population
since 1938, however,agricultural
production was only 3 percent
higher in 1954 than in 1938.
In January 1955, the
cantral committee issued
another major decree on agri-
culture, which may have provided
a final point of argument over
this subject within the leader-
ship. This decree not only
reaffirmed the "new lands"
program to expand wheat pro-
duction, but set forth another
grandiose plan to increase corn
acreage sevenfold in the USSR
by 1960.
Malenkov may well have
opposed this program as ex-
pensive and unfeasible, since
the combination of soil and
weather favorable for corn
growing is simply not available
in most of the USSR.
These two parallel agri-
cultural programs were largely
competitive in terms of ad-
ministrative effort and in-
dustrial resources, and a
choice between them for major
emphasis was bound to have a
substantial effect on other
sectors of the economy.
The 1953 program empha-
sized increased incentives for
intensified cultivation of
already settled lands and was
specifically dependent on
increased production of durable
consumers' goods. If agricul-
tural buying power were to be
increased in this way, con-
sumers' goods must be made
available to absorb that in-
crease, unless it was to be
drawn off through currency
reforms or forced savings pro-
grams, which would defeat the
morale-lifting purpose of the
program.
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31 March 1955
On the other hand, the 1954
virgin lands program required
additional farm machinery and
thus priority emphasis on heavy
industry.
Heavy vs. Consumers' Industry
Both the dispute over
military preparedness and the
dispute over a.+*ri.niilture prob-
ably lay beneath the surface
oz the somewhat cryptic debate
over heavy industry versus con-
sumers' goods--the issue on
which open disagreement appeared
in the Moscow press shortly be-
fore Malenkov's resignation.
It was the principal public
controversy reflecting the
existence of two schools of
thought in the Soviet ruling
group.
At the very time that this
issue was being considered in
Moscow in connection with the
1955 budget and advance planning
for the 1956-1960 five-year
plan, some of the European
Satellites--particularly
Hungary--were providing vivid
examples of the administrative
confusion, industrial slippage,
and political demoralization
that could result from attempts
to implement the "new course"
economic policy.
The appearance of the
light industry-heavy industry
disagreement in the Soviet
press may have reflected a last
attempt by Malenkov to salvage
at least some of his program
by opposing the new military
expenditures and insisting that
increased distribution of con-
sumers' goods to the rural
areas was still essential for
increased agricultural pro-
duction, despite the "new
lands" program. If so, his
continued resistance to the
general Khrushchev line prob-
ably forced the showdown that
resulted in his resignation.
Personal and Political Rivalry
Personal and political
rivalry between Malenkov and
Khrushchev in the course of
the past year became thoroughly
fused with their policy dis-
agreements.
Hints of some sort of
political friction appeared as
far back as the 19th Party
Congress in October 1952. At
that time, Malenkov, in his
major address to the congress,
appeared to go out of his way
to remind his audience that
"certain of our leading offi-
cials" had been wrong in their
efforts to amalgamate small
collective farms into col-
lective farm towns or "agrogo-
rods." This seemingly gratui-
tous remark--made more than a
year after the policy had been
abandoned--must certainly have
been aimed at Khrushchev, the
only top official publicly as-
sociated with this policy.
It is not surprising
therefore, that the sins to
which Khrushchev forced Malen-
kov to confess were agricul-
tural, or that the first count
which he cited to the Indo-
nesian ambassador was Malen-
kov's maladministration of
economic matters--both as to
policy and execution.
Khrushchev may not have
been personally responsible,
but he benefited immensely
from the March 1953 action of
the Soviet leaders--probably
led by "Old Bolsheviks" Molo-
tov, Bulganin, and Kaganovich--
in nipping in the bud Malen-
kov's campaign to succeed to
Stalin's full power and majesty.
Malenkov surrendered his
post as principal Communist
Party secretary, the job that
Stalin had parlayed into ab-
solute authority over the USSR,
but retained the role of chair-
man of the Council of Ministers.
He then attempted to increase
the authority of that body,
which his loss of the party
secretaryship forced him to
rely on as his base of power.
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Khrushchev, confirmed as
first secretary of the party
in September 1953, chose the
central committee and the
party apparatus as his source
of strength. It is of interest
that one of the complaints
against the defeated premier
which he voiced in his out-
spoken conversation with the
Indonesian ambassador was that
Malenkov had attempted to run
the government through bureau-
crats rather than through party
representatives.
Personnel Appointments
The strategies and chang-
ing fortunes of the two rivals
are reflected in the careers
of various members of their
factions.
For example, in March
1953, when Malenkov was pro-
ceeding with his plan for
strengthening the government
as against the party, he ap-
pointed some of his close.as-
sociates--Saburov, Malyshev,
Pervukhin--to head the con-
solidated economic ministries,
and Kozlov was transferred from
the party apparatus to head the
government Ministry of Agri-
culture.
At the central committee
plenum in February 1954, Khru-
shchev criticized the opera-
tions of the Gosplan, over
which Saburov presided, and
personally attacked Kozlov,
who was then minister of state
farms.
At the plenum in June
1954, when Malenkov appeared
to have gained the advantage,
no accusations were leveled at
Kozlov.
The attack against him
was resumed at the plenum in
January 1955, and on 4 March
he was removed from office
for "failure to cope with the
work."
A number of old Khrushchev
associates have been promoted
or reinstated after having
being demoted at the 1952
Party Congress, when Malenkov
appeared to be controlling
personnel appointments. It
also seems likely that the
great increase ii personal
publicity accorded Knrushchev--
sometimes at Malenkov's ex-
pense--since the Beria purge,
must have contributed to
weakening the positions of
Malenkov's followers and to
persuading some of them that
it would be wiser to join the
opposition.
Malenkov's youth in com-
parison to the "Old Bolsheviks"
on the presidium, his rapid
political rise, his role in
the purges of the 1930's, and
his personal influence with
Stalin probably were sources
of antagonism or resentment.
These older members of
the leadership group may also
have felt that Malenkov went
too far in the explicit re-
pudiation by his regime of the
excesses of the Stalin era,
especially in such domestic
political issues as police
terror and rigid control over
the arts, sciences and re-
ligion. The difference here
was almost certainly only a
matter of degree. Neverthe-
less, even a small difference
of opinion in this domestic
field would be likely to arouse
strong feelings, since the
personal security of every
member of the leadership would
be at stake.
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PEIPING CAMPAIGNS TO BELITTLE NUCLEAR WARFARE IN EYES OF CHINESE
Chinese Communist propa-
ganda against the use of nu-
clear weapons has increased
greatly in the past two months,
and a program for indoctrinat-
ing the population on the ef-
fects of such weapons has been
launched.
Peiping apparently calcu-
lates that its action could
lead to the employment of nu-
clear weapons against the main-
land.
The Peiping regime initi-
ated a limited program of
troop indoctrination on the
atom bomb in the fall of 1950
during the Korean war, but
only this year has there been
a mass indoctrination of the
civilian population on this
subject. A series of lectures
to familiarize the Chinese
civilian population with the
effects of nuclear weapons was
begun late in February.
Unlike the earlier troop
indoctrination, recent propa-
ganda has not attempted to
persuade the populace that the
United States will not use nu-
clear weapons. It has tended
instead to minimize the de-
structive power of such
weapons.
The propaganda alleges,
for example, that "China's
population and industries are
not highly concentrated," and
that for China "the destructive
effects of atomic bombs can
hardly create any serious or
practical threat."
Peiping's propaganda con-
cedes that a hydrogen bomb is
more powerful than an atomic
bomb. It asserts, however,
that neither bomb is as power-
ful as the "American imperial-
ists"' laim. A person de-
scribed as "China's foremost
nuclear physicist," who wit-
nessed the test at Bikini
Atoll in 1946 as a Chinese
Nationalist representative,
now claims that he saw "only
two waves rise on the sea near-
by. ,if
The current propaganda
campaign cites an "appeal" of
the Communist World Peace
Council `WPC) issued in Jan-
uary. The appeal" calls for
a ban on the manufacture and
use of nuclear weapons.
Campaign activities have
begun all over the world. A
collection of signatures to
the appeal is under way in the
Sino-Soviet bloc and in sev-
eral countries of the free
world.
The Communists claim that
300,000,000 persons had signed
the appeal by 20 March. This
is 50,000,000 more than the
Communists claimed signed the
"Stockholm Peace Appeal" in
1950.
Apart from Peiping's in-
terest in co-ordinating its
propaganda campaign with the
WPC's effort, the Chinese Com-
munists are showing that the
issue of nuclear warfare is of
immediate concern to them.
In reaffirming Peiping's
intention to "liberate" Na-
tionalist-held territory, Chi-
nese Communist propagandists
have frequently cited American
efforts to "intimidate" the
Chinese and have exhorted the
people to stand firm.
One typical statement is
that "those who seek to occupy
Taiwan...are also the chief
instigators in the preparation
of atomic war." Another is
that "the American imperialists
are clamoring for the use of
atomic weapons against China,
hoping thus to frighten the
Chinese people into submission."
In this connection Chou
En-lai reportedly told
hat he expected war. e
is said to have added that nu-
clear weapons might kill
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100,000,000 Chinese but that
there would still be 500,000,-
000 left.
The objectives of allay-
ing domestic anxiety and de-
terring an American attack
have been pursued primarily
by stressing Soviet strength.
"Explanations" which min-
imize the possible effects of
nuclear weapons have also been
employed to ease popular appre-
hension. The effort to mo-
bilize "international opinion"
has been aimed at making it
politically costly for the
United States to launch a nu-
clear weapons attack.
The signature collection
campaign in Communist China was
begun on 14 February, the fifth
anniversary of the signing of
the Sino-Soviet treaty. The
Chinese Communists clearly
chose the moment when their
propaganda could most easily
exploit the theme of Soviet
strength as a deterrent to
American use of nuclear weap-
ons against the Chinese main-
land.
Peiping's comments on nu-
clear weapons seem appropriate
to a nation which has none.
Whereas Soviet propaganda has
explicitly stated that the
Soviet Union has nuclear weap-
ons with which it would re-
taliate in kind against an
American attack, Chinese Com-
munist commentators have made
no such claims for China. In-
stead, Peiping has stressed
Soviet strength, suggesting
that the USSR's alliance with.
China is acting to deter those
who might wish to attack Peiping.
The most aggressive pub-
lic statement of this kind
came. from Mao Tse-tung himself
at a party given by the Soviet
chargd on 14 February.
Mao declared that, "with
the great co-operation between
China and the Soviet Union,
there are no aggressive plans
of imperialism which cannot
be smashed." He added, "Should
the imperialists. start a war
of aggression, we, together
with the people of the whole
world, will certainly wipe
them from the face of the
earth."
Mao is reported to have
m erica a aiml i nr remark to the
the United States
were o use the "atom bomb,"
then "we will wipe out the
United States and then dispose
of the American leaders."
most certainly used a er-
ately by Mao as a channel to
the West, and similar state-
ments from Chinese Communist
leaders are expected through
other channels.
-Mao's language, and Chi-
nese Communist propaganda along
the same lines, have been in-
terpreted by some observers as
showing that Mao is confident
the USSR would retaliate in
kind in the event of an attack
with nuclear weapons on Com-
munist China.
In this connection, Peng
Te-huai, Peiping's minister of
defense, boasted at the Soviet
army day celebration in Port
Arthur on 23 February that
if Communist China is attacked,
"our countries will support
each other at all times."
Moreover, Ambassador
Bohlen reports Khrushchev has
stated to the Indonesian am-
bassador that if Communist China
were "attacked," the Soviet
Union would honor its 1950
treaty. Khrushchev did not,
however, make it clear what
he meant by "attack."
It is not known whether
Peiping has been given a Soviet
promise to retaliate with nu-
clear weapons. In any case,
the leaders of the Peiping
regime are apparently anxious
to make the United States be-
lieve that such a Soviet com-
mitment exists.
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PROSPECTS FOR A COMMUNIST-NENNI SOCIALIST SPLIT
There are growing signs
of restiveness within the Ital-
ian Nenni Socialist Party (PSI)
over the party's continued
subservience to Communist con-
trol.
The possibility of an
actual break between the Com-
munists and the PSI is attract-
ing increasing interest in
Italy, and the question may
be thrashed out at the PSI
national congress opening in
Turin on 31 March.
Some reports have stated
that any ostensible break be-
tween the PSI and the Communists
would be only a maneuver having
no effect on their unity-of-
action pact. Such a break,
however, whether real or purely
tactical, would increase the
chances of Nenni Socialist sup-
port of, and eventual partici-
pation in, the Italian govern-
ment.
There has been increasing
evidence in recent months that
a substantial number of Nenni
Socialists, at both the national
and local levels, want to get
out from under Communist con-
trol. Party leaders have shown
annoyance as well as apprehen-
sion over the PSI's continued
dependence on the Communist
Party for financial aid.
At least some Nenni Social-
ist leaders also seem to resent
what they consider a subordina-
tion of the workers' interests
to the policy considerations of
their party's stronger ally.
Nenni has never, however,
reversed his public position,
reiterated as recently as
February, that his party's ties
with the Communists through
their unity-of-action pact are
as strong as ever.
,, The PSI, in fact, may _
mer.eliy want to give the
impression of a split from the
Communists in order to attract
greater electoral support for
Nenni or to entice the Christian
Democrats into accepting Nenni
Socialist co-operation in a
new government formula.
On the other hand, the
PSI may be seeking, through a
demonstration of independence,
to develop sufficient electoral
support to justify a real split
with the Communists.
The Communists, if they
attempt to engineer a simulated
break, will run the risk of
actually losing their hold on
the Nenni Socialists. This will
probably cause the Communists
to try to obstruct Socialist
co-operation with the govern-
ment,
Furthermore, in the event
of a Nenni Socialist-Communist
split, the ensuing isolation
forced on the Communists,
particularly if followed by an
increase in the strength of
Nenni's party among the work-
ing classes, would greatly re-
duce the Communists' popular
appeal as advocates of consti-
tutional measures in the fight
for better living standards.
Most leaders of the par-
ties in the present coalition
government are aware that their
domestic objectives are similar
to those long urged by Nenni.
They realize, moreover, that
the shaky Scelba cabinet's days
may be numbered. These factors
might induce the Christian
Democrats to accept Nenni So-
cialist support of a new left-
of-center government provided
Nenni's price is not too high.
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The government received a
substantial vote of confidence
in parliament on 23 March, but
the increasingly frequent
clashes of interests in the
Scelba coalition will make its
road more and more difficult
in the coming months.
A fall of the Scelba cabi-
net might discredit the four-
party formula once and for all
and compel the Christian Demo-
crats to look to either the
left or the right for support
to maintain a parliamentary
majority.
Despite contrary pressure
from the small but influential
right wing of the Christian
Democratic Party, the forma-
tion of a left-center govern-
ment supported by Nenni appears
to be at least a 50-50 possi-
bility.
The Christian Democrats'
national council has voted
against co-operation with the
Monarchists and other rightist
groups, and the party is domi-
nated by its left wing under
party secretary Amintore Fan-
fani, who aspires to be pre-
mier.
A coalition made up of
the Christian Democrats, Demo-
cratic Socialists and Repub-
licans, with Nenni Socialist
support and perhaps eventual
participation, would give the
government a substantially
greater parliamentary majority
than any has enjoyed since.the
end of World War II.
Pronouncements by Nenni
during the past six months
suggest that growing numbers
of Nenni Socialists are pre-
pared to take advantage of the
first opportunity that would
permit them to support the
government.
In October 1954; Nenni
indicated that his party would
fully support a government
"inspired by the Christian
Democratic left wing" which
would combine Christian Demo-
cratic and Socialist demands
for social reform.
On 20 February Nenni de-
clared that the PSI, rather
than see democratic institu-
tions in Italy weakened by a
Christian Democratic surrender
to pressure from the right,
would support the Christian
Democrats even if this meant
losing the votes his party
might gain as a result of a
popular reaction against a
rightist government.
Nenni's own intentions, in
the event he offered to sup-
port a new government, could
be tested only by performance.
Nenni Socialist support would
probably be based on an arrange-
ment under which the party would
agree to modify its opposition
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31 March 1955
to the government's foreign
policy in return for a pledge
by the latter to meet most of
Nenni's demands in the domestic
field.
An indication of what
Nenni's party would expect in
foreign relations was given in
the PSI paper Avanti: in Feb-
ruary. The paper stated that
the Nenni Socialists do not
seek abrogation of existing
alliances, but rather neutrality
for Italy and a policy of de-
tente between East and West.
While Nenni Socialist
support of the government would
probably weaken Italy's role
in Western defense planning,
and might increase Communist
penetration of the bureaucracy,
it would also make it possible
to put into effect the social
and economic reforms which the
government has long planned
but has hitherto been unable
to implement. This in itself
would cut the ground from
under the Communist Party in
Italy.
CONFIDENTIAL
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