CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A000900070001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 16, 2016
• Document Release Date: January 26, 2005
• Sequence Number: 1
• Publication Date: August 9, 1956
• Content Type: SUMMARY

CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 16
OCR NO. 4649/56
9 August 1956
OCUMENT NO.
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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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
9 August 1956
T H E W E E K I N B R I E F
PART I
OF IMMEDIATE INTEREST
SUEZ CRISIS . . . . . . . . . . . . . . . . . . . . . . Page 1
,A week before the opening of the London conference
on the Suez Canal on 16 August, Egypt is unlikely to
accept the Western invitation but still appears unde-
cided on the exact nature of its reply, which probably
will be made on 12 August. President Nasr has been con-
sulting closely with the Soviet ambassador in Cairo.
The nature of the Soviet acceptance shows that the USSR's
immediate concern is to try to prevent any early action
by the conference.
ARAB-ISRAELI SITUATION . . . . . . . . . . . . . . . . . Page 3
Syria and Jordan have remained nervous about the
possibility of Israeli action while Egypt is preoccu-
pied with the Suez crisis. The Israeli radio announced
on 5 August that construction of a dam to divert Jordan
River headwaters into a new canal would begin in a few
days. This construction, however, would be entirely
within Israeli territory and is part of a larger Israeli
project not directly related to the Banat Yacov ques-
LAOS . .
In its negotiations with the Pathet Lao, the royal
government has agreed to adopt a policy of "peaceful co-
existence," to promote "friendly contacts" with Commu-
nist China and North Vietnam, and to abstain from mili-
tary commitments with foreign nations. It is also re-
ported to have agreed to the formation of a coalition
government and to hold supplementary general elections,
in which the Pathet Lao will participate, for the pur-
pose of filling additional seats in an enlarged national
assembly. In return the Pathet Lao has agreed to liqui-
date its control over the disputed northern provinces.
Premier Souvanna Phouma's reportedly imminent departure
for Peiping suggests that he feels a final settlement is
all but concluded. C
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9 August 1956
NOTES AND COMMENTS
YUGOSLAV ECONOMIC TIES TO EAST
GREATLY INCRE SE . . . . Page 1
Yugoslavia's recent acceptance of a large credit from
the USSR and East Germany for the development of aluminum
production facilities indicates that President Tito is now
willing to accept a.major share of his financing from the
Soviet bloc, if sufficiently favorable terms are offered.
This action runs~.cOunter to repeated official Yugoslav
statements that Western credits for new industrial develop-
meat are preferred and casts some doubt on'Yugoslavia's ex-
pressed preference for Western arms aid,
EAST GERMANY BELATEDLY ADOPTS
DE-STALINIZATION LINE . . . . . . . . . . . . . . . . Page 3
East Germany's. Socialist, Unity (Communist) Party,
after dragging its feet for several months, has finally
come around to the Kremlin line on de-Stalinization. The
party central committee, meeting from 27 to 29 July, re-
scinded.the sentences against former high-ranking party
functionaries purged for deviations from. the party line,
promised liberalization of party policies, and called for
improved working conditions and increased productivity in
industry and agriculture.
POLISH COMMUNISTS' LIBERALIZATION
PROGRAM REAFFIRMED . . . . . . . . . . . . . . Page 4
The seventh plenum of the central committee of the
Polish United Workers (Communist) Party, which met in War-
saw from 18 to 28 July,.,formally launched a program of
liberalization. This step marks a further gain for the
moderate elements in the party. The closing resolution
outlined ,a, number of. economic and political concessions
designed to win popular support for the regime.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
SOVIET MIDYEAR
ECONOMIC REPORT . . . . . . . . . . . . . . . . . . Page 5
The report on plan fulfillment for the first half
of 1956 shows that the Soviet economy is off to a mod-
erately good start in the first half year of the Sixth
Five-Year Plan. Industry and transport met or almost met
most major targets, but investment in new capacity lagged.
Achievements in producing materials and equipment for
agriculture, together with the favorable weather so far
this year, should enable the USSR to harvest a good crop.
The standard of living of most consumers apparently in-
creased slightly and will probably improve more sharply
the latter halt of this year.
SOVIET-JAPANESE NEGOTIATIONS .
. . . Page 8
Soviet and Japanese negotiators have reached a com-
plete deadlock on the territorial issue, which is the
major obstacle to conclusion of the peace treaty, but
both sides say they will continue to work for a treaty.
The USSR is confident it can push Japan into normaliza-
tion of relations by an exchange of ambassadors without
further concessions, deferring a final territorial set-
THE SINC)-BURMESE BORDER PROBLEM . . . . . . . . . . . . . Page
Peiping's statement on 3 August ridiculing reports
of troop encroachments on Burmese territory as "absurd"
is designed to minimize damage to Communist China's
peaceful posture in international affairs. The Chinese,
who have refused repeated Burmese offers to negotiate on
the border problem, give no indication of abandoning
their claims to the disputed areas. The Rangoon govern-
ment has sought to play down the seriousness of news re-
ports of border clashes but has recalled its ambassador
to Peiping "for consultation."
SOUTH KOREA ADOPTING
IMPROVED ECONOMIC MEASURES . . . . . . . . . . . . . . . . Page
The appointment by President Rhee of new economic
officials has resulted in more realistic efforts to com-
bat inflation and to co-operate in the administration of
the American aid program, which amounts to over $300,000,-
000 annually. Despite these efforts, it is still un-
certain whether the Koreans will give greater immediate
emphasis to the fight against inflation rather than to an
industrial build-up and whether President Rhee can be
persuaded to moderate his opposition to procurement of
aid goods in Japan.
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9 August 1956
COMMUNISTS DOMINATE
SINGAPORE'S MOST VIGOROUS PARTY . . . . . . . . . . . Page 11
At the third annual congress of the People's Action
Party in July, the party's Communist faction led by Lim
Chin Siong succeeded in dominating the left-wing social-
ist faction and gained control of the key party posts.
The popularity of the Lim group's leaders among the pre-
ponderantly Chinese population makes probable the fur-
trier development of the party along C.ommu,n:ist lines.
ARGENTINA TAKES INITIATIVE IN
SOUTH ATLANTIC DEFENSE PLANNING
Argentina on 31 July invited Brazil and Uruguay to
join it in planning the defense of the South Atlantic
area. Brazil disapproves of the proposal but probably
will not reject it outright lest this weaken the domes-
tic position of President Aramburu of Argentina. The
Argentine action probably stems in part from a desire
to obtain military equipment from the US and to commit
a future elected Argentine government to inter-American
military cooperation.
MOLLET'S PRESTIGE HIGH
AS RESULT OF SUEZ CRISIS'. . . .
Overwhelming support of Premier Mollet's strong
. Page 13
. Page 15
position against the Egyptian seizure of the Suez Canal
has temporarily rallied to him even those non-Communists
who had refused to support his government on the Alge-
rian issue. Nevertheless, France's economic problems
continue and, when the National Assembly reconvenes on
2 October,. Mollet will face increasing labor unrest, a
mounting threat of inflation, and stopped-up Communist
unity-of-action appeals.
NEW DEVELOPMENTS
IN THE ITALIAN LABOR MOVEMENT . . . . . . . . . . . . . Page 16
The announcement on 1 August by the secretary gen-
eral of the Italian General Labor Confederation that it
is independent of Communist Party control may signal a
major re-orientation in Italian labor developments. The
confederation has been declining in membership and in-
fluence and is threatened by disaffection of its Social-
ist following. The assertion in the Communist press
that the confederation is "independent" appears to be
aimed at exploiting the renewed hope of labor for legit-
imate economic objectives, and at pushing for a "broad
social front" to include Democratic Soci list and
Catholic workers.
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9 August 1956
CEYLONESE MINORITY GROUP
PLANS DEMONSTRATION-MARCH . . . . . . . . . . . . . Page 17
Violence may break out in Ceylon after 10 August,
when Tamil-speaking members of the Federalist Party and
their sympathizers begin a long-scheduled march from all
parts of the island toward the naval base of Trincomalee
in protest against the government's decision to make
Sinhalese the sole official language of the country.
r- I
POLITICAL STRUGGLE RENEWED
IN PAKISTAN . . . . . . . .. . . . . . . . . . . . . . Page 18
The scheduled meeting of the East Pakistan assembly
on 13 August has renewed the domestic political struggle
in Pakistan which reached crisis proportions last May.
A change in the national leadership or imposition of
executive control by President Mirza may result.
PATTERNS AND PERSPECTIVES
USSR MOVES TOWARD NEW RELATIONSHIP WITH WESTERN
COMMUNIST PARTIES . . . . . . . . . . . . . . . . . . . Page 3
The Soviet Union is moving to change its technique
of control over the Communist parties outside the Orbit.
Moscow seems to be permitting these parties, particu-
larly those in the West, greater latitude for maneuver
within the general framework of Soviet policy guidance,
and is seeking to create the impression that they are
now independent national political movements. The
USSR has made it clear, however, that these parties
must adhere to basic Communist objectives as inter-
preted by Moscow.
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THE OUTLOOK FOR EURATOM AND THE EUROPEAN COMMON MARKET . . Page 7
When negotiations between the six Coal-Steel Com-
munity nations are resumed in September on EURATOM and
the European common market, efforts will. be renewed to
whittle away the obstacles which still remain, particu-
larly those concerning institutions, national weapons
programs, and the role of the common market. The
Mallet government has made a gesture of stronger sup-
port for EURATOM and the French assembly gave it a
favorable vote on 12 July. Moscow promptly responded
by criticizing EURATOM as "a closed community."
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9 August 1956
QF f ED1 A -E T Tt, '
SUEZ CRISIS
President Nasr is evidently
still formulating his reply to
the invitation to confer in Lon-
don on 16 August with 23 other
nations on the Suez Canal situa-
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Nasr will in a ec refuse
the invitation by suggesting a
change of location for the talks
and increased participation to
include more Arab states.
Nasr is also reported
likely to assert that Egypt
cannot discuss the issue while
under duress from Western mill-,
tary measures,and may urge that
the subject be taken up in the
United Nations. It was been
announced that Nas C will make
a statement on 12 August aid
this presumably will contain
Egypt's-answer.
Soviet Stand
In its statement of accept-
ance on 9 August, the USSR made
several,reservations concerning
the conference. Moscow urged a
postponement of the conference
until the end of August and
asked that 22 additional coun-
tries be invited, including eight
Arab states,-six Satellites. and
Yugoslavia. The statement added
that it is "indispensible for
such a great powerk" as Communist
China to take part in the con-
ference.
The statement supported
Egypt's right of nationalization,
dissociated the USSR from pre-
vious Western measures on the
Suez, and described military
measures being carried out by
Britain ' and.France as "utterly
inadmissible" and a "'challenge
to peace." It also hinted that
the USSR 'may introduce at the
conference the status of other
waterways, such as the Panama
Canal.. The nature of the Soviet
acceptance shows that the USSR's
.immediate,concern is to try to
prevent any early action by the
conference'.
The USSR has been working
closely with Cairo, possibly to
develop a co-ordinated approach
to the West. Soviet ambassador
Kiselev was the first foreign
diplomat to be received by Nasr
after the London declaration and
met daily with Nasr from 3
through 7 August and on 9 August.
All the other nations in-
vited to the conference have
accepted except Spain and Greece,
from whom nothing has been heard.
Spain, anxious to bolster its,
position.in the Arab world, can
be expected to support Egypt's
cause.
In announcing India's
acceptance. on 8 August, Nehru
said he"could support no effort
to impose an international
solution opposing Egypt's
sovereign'-rights. He also de-
plored-Britain's public display
of force'as unlikely to help
resolve the crisis. An indica-
tion of further possible sym-
pathy for Egypt among conference
participants appeared in the
observation on 1 August by the
semiofficial Esteri of Rome
that Italy intense 'to remember
its friendship for Egypt.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
Among those not invited,
Panama on 6 August publicly
protested being left out de
spite its own great canal and
shipping interests, and affirmed
that it would not be bound by
the conference results.
Near East SuSpport
In the uninvited states
of the Near East, there is wide-
spread popular support of Nasr's
move. Even the pro-Western
Iraqi government announced its
support of Egypt's "dignity"
and "sovereignty." In private,
however, other Arab governments
are, for the most part, indicat-
ing some fears of the possible
repercussions of the Suez
nationalization. The Saudi
Arabians reportedly fear the
Western reaction, and the
Jordanians fear an Israeli attack
while Egypt Is involved in Suez.
Actually the Israelis'have
been relatively quiet, while
hoping for eventual benefits,
such as more arms. In French
North Africa, both French and
moderate nationalist leaders
fear that the crisis has already
stiffened the backs of extremists
in Cairo and virtually eliminated
prospects for early negotiations
between France and the Algerian
rebels.
British and French Moves
After a week of extensive
military preparations, Britain
on 9 August announced a halt
"for at least 24 hours" to its
measures to bolster its forces
in the Mediterranean. This
followed Prime Minister Edents
public reaffirmation that Brit-
ain sought a peaceful solution.
Military steps taken in
the past week included sending
three aircraft. carriers--two
of them as troopships--from
Britain to join the one carrier
already in the Mediterranean,
placing in readiness one light
cruiser and three destroyers,
taking out of reserve several
landing craft, dispatching
twin-jet Canberra bombers to
Malta, and sending 1,000 more
troops to augment the 38,000
already in'the area. Press
reports indicate that an
infantry division will be sent
from Britain to Cyprus.
This deployment has caused
adverse repercussions on
European defense. Britain
informed the North Atlantic
Council on 3 August it planned
to withdraw "certain individuals
and units" from its NATO-com-
mitted forces in Britain and
Germany, although only those
absolutely essential to its
new plans would be taken
from Germany. The British
representative's statement
implied that restoration of
these forces would depend on
the forthcoming reappraisal of
defense requirements.
France's military gestures
have been limited to making
ready its Mediterranean fleet
at Toulon. The battleship,
three carriers and other ships
based there could readily be
released for Suez duty. With
the equivalent of approximately
13 divisions tied down in
Algeria, however, the personnel
for no more than an infantry
division--normally about 18,000
men--could probably be made
available without additional
mobilization.
In both Britain and France,
public support for the govern-
ments' approach remains high.
The British press, however,
while endorsing the effort to
ensure international control
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9 August 1956
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of the canal, has increasingly
questioned the Eden government's
apparent intention. to use force
if necessary to guarantee the
"unfettered" passage on which
the prime minister insists.
Labor Party leader Hugh Gaitskell
has urged that the London con-
ference seek to put any inter-
national control of the canal
under the United Nations.
Egyptian Measures
In Egypt, the military,
the public, and Nasr have begun
.to show some anxiety over the
stiff Western reaction. Cairo's
military leaders recognize they
would have no hope of keeping
Britain and France from
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ARAB ISRAELI SITUATION
Syria and Jordan have re-
mained extremely nervous about
the possibility that Israel
might take some action against
them while Egypt is preoccu-
pied with the Suez crisis. On
7 and 8 August, the Syrian gov-
ernment announced mobilization
--the first time in support of
Moscow probably doubts
that the West will take military
action against Egypt. However,
it is unlikely that Moscow has
committed itself to direct mil-
itary support of Egypt in the
event military action is taken
by. the West.
Egypt, the second time as a
response to an alleged resump-
tion of Israeli work on divert-
ing Jordan River waters. The
Jordanians, jittery over reports
of Israeli troop movements and
a test mobilizati.on--one that
failed to materialize--sought
assurances that Britain would
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9 August 1956
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come to their aid under the
Anglo-Jordanian treaty,
There seems to be some fac-
tual basis for Syria's reaction.
The Israeli radio announced on
5 August that construction of
a dam above Lake Hula to divert
.,water from the upper Jordan Riv-
er into a new drainage canal
would begin in a few days and
probably would be completed with-
in two months. This construc-
tion, however, would be entirely
inside Israeli territory and
outside the demilitarized zone,
and is part of an Israeli proj-
ect not directly related to
the Banat Yacov issue,
Tel Aviv appears to
ave adhered to Foreign Minister
Meir's statement to the parlia-
mentary foreign affairs com-`
mittee on 1 August that Israel
would maintain a "wait-and-see"
attitude during
crisis,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
Present negotiations in
Vientiane between the Laotian
government and the Pathet Lao
appear to be moving toward an
early settlement. Thus far the
Pathet Lao appears to have ob
tained important concessions
from the government as the
.price of liquidating its con-
trol of the disputed provinces
of Sam Neua and Phong Saly,
In a joint communiqu6 of
5 August,both sides formally
endorsed a policy of "peaceful
coexistence" for Laos, estab-
lishment of friendly relations
with neighboring countries and
repudiation of foreign military
commitments. Three days later,
according to press releases,
they agreed to the formation of
a coalition government and to
supplementary general elections
in which the Pathets would freely
participate.' Political and
military subcommittees, however,
are still working out the de-
tails for the restoration of
Vientiane's authority in the
two provinces, and the reinte-
gration of the Pathet Lao into
the national community.
P ouma
peatedly assured them he can
"handle" his half-brother,
Souphannouvong, and that he
plans to be tough in the settle-
ment of the "details."
The Laotian government's
endorsement of a policy of co-
existence is the culmination
of several months of drifting
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aos' sense of isolation in
the face. of heavy Communist
pressure, Souvanna Phouma
has indicated that following
final settlement of the Pathet
issue, Laos will probably enter
into formal relations with`Com--
munist bloc nations, especially
Communist China, the USSR and
North Vietnam.
The Chinese Communists may
be afforded an early opportunity
to propose such relations.
Souvanna Phouma, who in May was
invited to make a state visit
to Peiping, reportedly now plans
to depart about 19 August, His
early scheduling of this visit,
which he has consistently main-
tained would not be made before
the Pathet issue was resolved,
is a further indication that he
anticipates no difficulties over
a final settlement,
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9 August 1956
YUGOSLAV ECONOMIC TIES TO EAST
GREATLY INCREASED
Yugoslavia's recent ac-
ceptance of a large credit from
the USSR and East Germany for
the development of aluminum
facilities indicates that Presi-
dent Tito is now willing to
satisfy a major share of his
country's financing needs from
the Soviet bloc, if sufficiently
favorable terms are offered.-
The action runs counter to re-
peated official Yugoslav state-
ments that Western credits for
new industrial development are
preferred and casts some doubt
on Yugoslavia's expressed pref-
erence for Western arms aide
Terms-of the Agreement
Under the agreement an-
nounced on 3 August, East Ger-
many and the USSR are to share
equally in a long-term 700,000-
000-ruble ($175,000,000) credit
for the development of Yugoslav
aluminum facilities, with an
eventual capacity of 100,000
tons annually. The present sum
is to finance only half of this
ultimate capacity, and a future
credit for developing the full.
capacity has been promised. All
the credits are to be repaid by
aluminum exports, which are to
start not later than 1961.
The entire Soviet share of
the credit is apparently to be
in the form of wheat, which
will be sold in Yugoslavia to
meet internal construction
costs. Yugoslav officials claim
that they anticipate getting
this wheat in five equal annual
installments of 200,000 tons
beginning in 1957. They there-
fore say this does not affect
their request for 300,000 tons
of American wheat immediately
to meet food needs this fall
and they still want another
PART II
1,050,000 tons by the end of
1957. These requests are basi-
cally part of a previously
stated request for 1,000,000
tons of surplus American wheat
annually for the next five
years to be sold on long-term
credit.
With the present agreement,
Tito is approaching the half-
billion-dollar mark in obliga-
tions to the East, which is
YUGOSLAV MEDIUM- AND LONG-TERM
FINANCIAL OBLIGATIONS
APPROXIMATE, IN MILLIONS OF DOLLARS AT OFFICIAL RATE
WEST
Portions of previous obligations still
to be drawn on as of January 1956 .......... 61
West German unratified "credit"............... 57
TOTAL 118
EAST
USSR (Negotiated in 1955. Allocated,
but only small proportion drawn.)......... 194
Czech (negotiated February 1956) .............. 75
Polish (negotiated Feb 1956) ..................... 20
USSR-East German, "in equal parts';......... 175
TOTAL 464
Also available are $15,000,000 of Italian war
reparations, $14,500,000 of an unratified German
war claims settlement, and $85,000,000 of
Hungarian war reparations.
far more than his total credits
and loans from the West.
Approach to West
Intermittently since last
March, Belgrade officials have
said they preferred to finance
plants for the export produc-
tion of aluminum and electric
power through West European
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credi'ts; f'or' the' foreign exchange
costs and American surplus, wheat,
on long-term credit for the in-
ternal costs. Although Belgrade
has consistently said that the
USSR was willing to finance
these projects, Vice President
Vukmanovic-Tempo said he did
not want to deal on the terms
the USSR had offered, although
he would do so "if necessary."
He publicly expressed his desire
for Western financing as late
as 14 July, and detailed nego-
tiations were started with the
West soon thereafter.
East German Role
Soviet first deputy premier
Mikoyan, on his hurriedly sched-
uled visit to Tito on 21-22
July, may have clinched the
deal by saying that-the East
German half of the credit would
count as war reparations and
not have to be repaid. In mid-
June it was reported that an
East German Chamber of Foreign
Trade representative in Bel-
grade was negotiating on repara-
tions claims, and that the Yugo-
slavs were asking for $80,000,-
000, while the East Germans were
then offering only $20,000,000.
the
aluminum agreement was not in-
tended to constitute de jure
recognition of East Germany,
but this is the first time
Yugoslavia has signed an offi-
cial agreement with the East
German government. Trade agree-
ments, even including one signed
on 4 August, one day after the
credit agreement was announced,
have been between the nongovern-
mental Chambers of Foreign Trade.
It is still possible that
Tito will hold off recognition
at least until after the West
German Bundestag reconvenes in
late September. The Yugoslavs
negotiated a settlement last
March with West Germany on war
reparations, whereby the Yugo-
slavs were to receive a $57,-
100,000 90-year "credit," but
this agreement is subject to
ratification by a Bundestag
which has already adopted a
balky attitude over Tito's
statements in Moscow about the
existence of "two sovereign
states" in Germany.
Future Aid
The Yugoslav counselor
also said the way was still
open for the West to finance
two thirds of Yugoslavia's total
projected aluminum production
capacity. He reasoned that the
plans submitted to the Western
countries in mid-July called for
a total projected capacity of
165,000 tons annually, and the
present Soviet-East German
credit will provide for 50,000
tons, aside from promises of
further credits later.
In addition to this demon-
stration of willingness to sup-
ply economic development credit,
Moscow may be willing to fill
Yugoslav requests for arms.
Yugoslav officials claim they
want American arms but say that
the present American military
aid in the pipeline--over
$100,000,000 worth of arms, in-
cluding jet planes--would sat-
isfy most of their present needs.
(Concurred in
by ORR)
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9 August 1956
EAST GERMANY BELATEDLY ADOPTS
DE-STALINIZATION LINE
East Germany's Socialist
Unity (Communist) Party, after
dragging its feet for several
months, has finally come around
to the Kremlin line on de-
Stalinization. The party cen-
tral committee, meeting from
27 to 29 July, rescinded the
sentences against former high-
ranking party functionaries
purged for deviations from the
party line, promised liberaliza-
tion of party policies, and
called for improved working
conditions and increased pro-
ductivity in industry and agri-
culture. The party admitted
that its slavish adherence to
Stalinist policies had led to
a paralysis of personal initia-
tive and prevented an objective
study of social and political
problems in East Germany.
Like other Satellite Com-
munist parties, the East German
central committee apologized
for "false charges made against
the Communist Federation of
Yugoslavia" in 1948, and ex-
pressed hope for the restora-
tion of friendly relations.
politburo member Paul Merker,
purged in 1950 for alleged
contacts with Noel field, would
be dropped since they were
largely of a political nature
not warranting criminal pro-
ceedings.
All except Merker were
purged in 1953. All had op-
posed the policy of blind
obedience to Moscow pursued by
party first secretary Walter
Ulbricht, and had stood for a
policy which would achieve Com-
munist aims but adapt them to
local needs. Dahlem and Acker-
mann, the principal exponents
of a "German road to Socialism,"
have ideas of their own. The
Kremlin, even now, probably
could not depend on them to fol-
low every shift in its policies
as Ulbricht does. Since his
rehabilitation, however, Dahlem
has been given a second-level
government post.
No.hint has been made of a
possible rehabilitation of the
two men who most openly chal-
lenged Ulbricht's control of
the party: former state security
minister Wilhelm Zaisser and
the former editor of the party
newspaper, Rudolf Herrnstadt.
Rehabilitations
In a grudging acknowledg-
ment, probably dintated by Mos-
cow, of the need for the recti-
fication of "the individual
errors and mistakes by Stalin,"
East Germany followed Poland,
Hungary, Czechoslovakia., and
Bulgaria in correcting past
injustices to purge victims.
It rehabilitated former polit-
buro member Franz Dahlem, and
annulled the punishments of
former deputy foreign minister
Anton Ackermann, his wife, Elli
Srh*nidt, who was a former candi-
date member of the politburo,
and former Berlin party boss
Hans Jendretzky, The central
committee also decided that
the charges against former
Improvements Promised
In sharp contrast to pre-
vious statements blaming Western
agents and enticements for lur-
ing East Germans to the West,
Ulbricht's report on the party
meeting charged that "the
bureaucratic and.soulless at-
titude of state officials which
violated the private interests
of.citizens" was at least par-
tially responsible for the
flights of large numbers of
technicians, skilled workers,
and young men of military age.
Ulbright called for a "reso-
lute struggle against callous
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9 August 1956
bureaucracy" to remedy the
situation, and promised that
the party would concentrate
on measures to improve supplies
of food and consumer goods that
would permit the end of ration-
ing by the end of 1957. He
also promised higher pensions,
.shorter working hours, and in-
creased construction of.housing.
POLISH COMMUNISTS' LIBERALIZATION
PROGRAM REAFFIRMED
The seventh plenum of the
central committee of the Polish
United Workers (Communist)
Party (PZPR), which met in War-
saw from 18 to 28 July, formally
launched a program of liberal-
ization which represents a fur-
ther gain for the moderate ele-
ments in the party.* The clos-
ing resolution outlined a num-
ber of additional economic and
political concessions designed
to win popular support for the
regime.
Economic Concessions
Much of the plenum was
taken up with economic problems,
indicating the serious concern
felt by the top leaders over
the unsatisfactory internal
25X1 situation.
t e workers
are surly and grumbling, factors
which are undoubtedly causing
the regime concern in the wake
of the Poznan riots.
*The term "moderate ele-
ments" refers to the party
figures who oppose certain
practices of the present leader-
ship on grounds ranging from
conviction that greater liberal-
ization is required in all sec-
tors of domestic policy to a
mere difference as to the best
tactical approach in implementing
current policies.
Ulbricht's statement that
the new policies mean "demo-
cracy for the workers and for
the. people, and not for hostile
elements" indicates that the
promised liberalization of
party policies is to be confined
within strict limits.
25X1
Recognizing that even a
moderate increase in the stand-
ard of living will be unattain-
able if agricultural production
does not increase 25 percent as
scheduled, the party made a num-
ber of concessions to the peas-
ants. Compulsory milk delivery
quotas will be abolished on 1
January, increased credits are
to be allocated to the agri-
cultural sector, the definition
of the term "kulak" was con-
siderably narrowed, and those
peasants who remain classified
as kulaks will be given access
to machine tractor stations and
additional supplies of agri-
cultural machinery.
While these concessions
will be welcomed by the peas-
ants, they are unlikely to re-
sult in a significant increase
in production as long as the
regime pursues its policy of
rapid collectivization. The
lack of emphasis on collec-
tivization in the resolution
and the subsequently announced
Five-Year plan may indicate that
the regime realizes this and will
not push for rapid collectiviza-
tion in the next five years.
Party Democracy
Several measures will be
adopted to further the party's
25X1
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9 August 1956
aim of increased "democratiza-
tion." One widely publicized
statement in the resolution
called for the party to cease,
interfering. with the administra-
tion of the government and the
economy and to turn its energies
toward educating and inspiring
the masses in the manner needed
to carry out the basic policies
adopted by the party. However,
similar statements made in the
past have not resulted in any
relaxation of party control
over the administration.
Of greater significance is
the call for elected party
bodies to reassert their con-
trol over the party apparatus.
In recent years, the apparatus
has grown in importance while
the elected bodies-have been
reduced to little more than
rubber stamps. While the call
for such a change will be wel-
comed by many members, they
are likely to reserve judgment
on its importance until they
see actual results. The ap-
paratus has long existed in-
dependently of the elected
party bodies in the USSR, but
there has been no similar criti-
cism of the Soviet apparatus.
Gomulka'S Rehabilitation
Shortly after the closing
session, it was announced that
the plenum had annulled the
November 1949 resolution which
accused former secretary
SOVIET MIDYEAR ECONOMIC REPORT
The report on plan ful-
fillment for the first half of
1956 shows that the Soviet
economy is off to a moderately
good start in the first half
year of the Sixth-Five-Year
Plan. Industry and transport
met or almost met most major
targets.
general Wladyslaw Gomulka, for-
mer politburo member and deputy
minister of defense Marian Spy-
cha.iski, and former head of the
cadres department of the party
Zenon Kliszko of national devia-
tionism or Titoism. In addition,
Gomulka had been accused of being
unwilling to implement a Comin-
form directive calling for rapid
collectivization of agriculture.
The announcement added that
Gomulka's rights as a party mem-
ber would be restored. IC _-1 25X1
the
party planned to bring him back,
but balked at his demand for a
seat on the politburo.
the central committee
25X1
own the motion of a trade
union leader that Gomulka be
invited to attend the plenum.
On the following day,Zenon
Kliszko was reappointed under
secretary of state in the Minis-
try of Justice, the post he held
when purged in 1949, suggesting
that Gomulka, and possibly Spy-
chaiski, may also be offered
official positions in the near
future. If such a position for
Gomulka should ultimately serve
as a steppingstone to the polit-
buro, it would not only be a
significant gain for the moder-
ates but might also threaten
the position of First Secretary
25X1
Shortages in certain types
of construction materials and
equipment continue to retard
the investment program.. The
standard of living of most
consumers apparently increased
somewhat, and will probably im-
prove more sharply the latter
half of this year.
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9 August 1956
Labor productivity rose as
planned in industry, 8 percent,
and in construction, 10 percent,
though other efficiency indica-
tors did not. The midyear re-
port announced that
the labor force - gained
by 1,200,000 in the
year ending 1 July
against a gain of
1,000,000 the preced-
ing 12 months.
Industry
Industry exceeded
by 2 percent the plan
for gross production
and continued to grow
at roughly the same
rate--12 percent--as
during the final years
of the Fifth Five-
Year Plan. It suc-
cessfully fulfilled
output targets for
leading nonferrous
metals, petroleum
products, chemicals,
foodstuffs, and hard
consumer goods. Fail-
ures, in some cases
only nominal, included
underfulfillment of
targets for iron and
steel, coal, machine
tools, metallurgical
and chemical equip-
ment, and cement.
While the report
contains no breakdown
of total production
into heavy and light
industrial categories,
data on specific com-
modities suggest a
small shift in favor
of the latter. In-
creases in the output
of leading producer
goods were generally
smaller than those
registered in mid-
CREASE { OVER
F_P$ECEDING YEAR
FIRST HALF 1955 M _ FIRST . F
TES - 14
RIM
1955, while the re- N
verse was true of con-
sumer goods other
GOODS
(111C 'POWER
-T f
> tERTILIZERS
lE -GOODS
Agriculture
Data on agriculture reflect
the policy of intensifying its
development through allocation
,... f MIC D-~y,,(~
ffirf.aft r -x E R v
.PRODUCTIVITY
CAP~AL If VEST MIENT
-MADE
~N FABRICS
FABRICS
SHIIG MACHINES
IIMACHIN
#T.
E-A RYMPDUCTS
CANNED GOODS
21
15
138
121
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
of a larger share of resources
--a policy inaugurated in 1953
and embodied in the Sixth Five-
Year Plan. Sown acreage now
stands at over 480,000,000
acres, or'4 percent more than
in 1955, and includes a higher
proportion of high-yielding
crops. The plan for spring sow-
ing was overfulfilled. Deliv
eries of tractors and other
machinery were generally above
those for the, corresponding
period last year and use of
fertilizers was considerably
above. These developments,
coupled with favorable weather,
augur good harvests and further
improvement of the livestock
situation. The numbers of var-
ious livestock on 1 July were
above those of 1 July 1955, and
production of'milk has increased
substantially.
Investments
The investment program con-
tinued to have its troubles.
State investments during the
half year amounted to only 86
percent of plan. The plan, how-
ever, called for a 15-percent
increase this year, considerably
above the annual rate required
to meet the 1960 goal. It is
doubtful that the 1956 goal will
be achieved.
Failure was reflected in
both major elements of invest-
ment: construction-assembly
work fell short-by about 10
percent, and machinery and
equipment deliveries by at
least 15 percent. Construc-
tion work was plagued by its
usual difficulties, including
the scattering of resources
among too many projects, and
inadequate utilization of con-
struction machinery. Produc-
tion of metallurgical and
chemical equipment was con-
siderably below target, the
latter even falling below
the corresponding 1955 figure.
Consumer Welfare
From the report it ap-
pears that consumer welfare
has not improved as much as
planned. Retail trade turn-
over increased by only 5 per-
cent over the first half of
1955, against a planned. in-
crease of 7 percent and an
achieved increase of 8 percent
in the first half .of 1955.
. However, the mass of
consumers, for whom food is
the major item of expenditure,
fared better than is suggested
by this rise, since food, es-
pecially dairy products, con-
tributed the major portion of
the increase. Prices in com-
mission stores and on the col-
lective-farm market reportedly
dropped appreciably, the
former falling 12 percent.
Moreover, 'increases in the
production of consumer goods
and the prospect of good
harvests suggest that all con-
sumers can look forward to a
sharper improvement in the
second half of the year.
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9 August 1956
The abrupt and unequivo-
cal Soviet refusal to compro-
mise on the problem of sover-
eignty over South Sakhalin and
the Kuril Islands highlighted
the first week of the Soviet-
Japanese treaty talks in Mos-
cow. Since the territorial
issue is the major remaining
obstacle to conclusion of a
peace treaty, the Soviet re-
fusal is probably intended to
force an early denouement in
the talks.
Japanese foreign minister
Shigemitsu rejected the Soviet
position on 8 August following
a special meeting with Soviet
foreign minister Shepilov, thus
making the territorial deadlock
complete. However, both sides
are reportedly agreed that a
peace treaty must be concluded
and have ruled out an interim
normalization through an ex-
change of ambassadors. Special
committees have been set up to
work out lesser unsettled is-
sues as the negotiations con-
tinue. Shigemitsu, who remarked
on 6 August that the negotia-
tions made him "acutely realize
how weak one could be without
strength," will appeal to Kremlin
leaders in an effort to break
the impasse.
For the first time since
talks on a treaty began in
January 1955, Soviet propaganda
organs are making a concerted
call for a rapid conclusion of
the negotiations, suggesting
that the USSR is confident it
can push. Japan into a normali-
zation of relations now with-
out making further concessions.
Soviet foreign minister
Shepilov's strong reiteration
that "Japan has no right to
raise any claim to any territory
which was occupied by the Soviet
Union" was-forcefully backed by
the Soviet press and radio.
Shepilov tried to balance
this firm stand by presenting
in some detail an alluring pic-
ture of trade possibilities
which would follow the normali-
zation of relations. He pre-
dicted a rise in five years of
the total annual volume of
trade to one billion rubles or
more--about 50 times the negli-
gible amount now being carried
on. The Japanese will be skep-
tical of this possibility.
Japan has been dissatisfied in
the past with the price and
quality of Soviet goods, par-
ticularly coal and lumber,
which it most desires,and the
probability is that Japan will
continue to honor COCOM embargo
lists, reducing the scope of
its exports. However, the
Japanese delegation might ac-
cept trade overtures in Moscow
to offset to some extent its
failure to regain the lost
territories.
Conclusion of a final
treaty or simply a normaliza-
tion of relations through an
exchange of ambassadors would
bring into effect a number of
Soviet concessions, including
the return of Japanese prisoners
of war, long-term fishery and
sea rescue pacts, some measure
of Soviet support for Japan's
admission to the United Na-
tions. It is questionable,
however, whether the USSR would
return Shikotan and the Habomai
Islands for an thin short of a
final treaty. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
THE SINO-BURMESE BORDER PROBLEM
Peiping's first public
reaction to Burmese publicity
on the Sino-Burmese border
problem was a broadcast on 3
August of a statement by the
authoritative "Observer" of
People's Daily in which charges
that Chinese troops had en-
croached on Burmese territory
were ridiculed as "groundless"
and "absurd." The broadcast
explained that Communist forces
were in disputed areas along
the border to "preserve the
status quo" pending a settlement
by diplomatic negotiations.
Although the Communist
statement of 3 August is clearly
designed to minimize damage to
Peiping's pose as a peaceful
and reasonable power, it con-
tains no indication that the
Chinese intend to abandon the
unyielding position they have
Existing Under con
so-ecuen Road, selected Pack trail, selected
9 AUGUST 1956
O MU ES TO
24272
thus far taken on the border
question. It appears likely
that Communist military out-
posts will not be withdrawn at
this time and that Peiping will
insist strongly on its own ter-
ritorial claims in any talks
with the Burmese.
Meanwhile, the Burmese
government has sought to play
down press stories of friction;
along the border. In a care-
fully-worded communique of 31
July, it stated that these re-
ports were overly sensational.
Prime Minister Ba Swe subsequent-
ly stated in public that Sino-
Burmese relations were "cordial"
and that he had "every hope" the
frontier problem would be settled
amicably.
There is growing evidence,
however, that Rangoon has for
C H
siakua
Paoshan ~
Yunsihtfl
Chenkang S
Nengma
Possi6~e r gmeng
__,~ 4mengyun
ien Tayakou-1
-jMengman
Ningerh
1.Ssumao
a long time been
deeply disturbed by
Chinese activities in
the border areas. In
addition to Chinese
military incursions,
Rangoon has been aware
of a continuing fairly
large-scale flow of'
illegal immigration
from Yunnan. At the
same time, the Chinese
have built new roads
in the border-region
which will progres-
sively integrate that
region with Communist
China. Most points
along the frontier
south of the Burma
Road are now accessible
by road from China.
There are some indica-
tions that pack trails
from main routes to
other border points
are being made motoxable.
A railroad is now
under construction
which will connect
Kunming with the Burma
border, possibly at
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
Kunlong, northeast of Lashio.
According to one report, approx-
imately 150 miles of track have
already been laid.
The Burmese government,
has asked
Peiping to withdraw its troops
from the Wa States and to ne-
gotiate a final'demarcation of
the border. In this connection,
the Burmese ambassador to Pei-
ping has been recalled "for
consultation."
SOUTH KOREA ADOPTING IMPROVED
ECONOMIC MEASURES
President Rhee's removal
of Paek Tu-chin as South Korea's
top economic official and his
appointment of new officials
in late May have resulted in
the adoption of stronger fiscal
measures to combat inflation
and. in an unpredecented degree
of co-operation with American
aid officials.
appointment of Kim Hyon-chol
in Paek's place and the addi-
tion of a new economic team
have installed economists who
may be.less accomplished, but
who appear more genuinely con-
cerned with Korea's economic
development.. Although President
Rhee still makes the decisions
on all policy, the new Korean
Peiping prove futile.
(Concurred in by ORR)
The paper that published
the "invasion" story has ad-
vised Burma to seek interna-
tional support, and Deputy Pre-
mier Kyaw Nyein has inquired
about the American position.
He intimated, however, that
there was little likelihood that
Burma would refer the matter to
the UN, inasmuch as Communist
China is not a member. Never-
theless, Rangoon probably re-
gards referral to the UN as
its trump card to be used in
the event negotiations with
officials appear more inclined
than their predecessors to risk
incurring Rhee's displeasure
for the sake of gaining his en-
dorsement of an economically
sound program.
Korean co-operation has
stemmed from the fact that Korean
officials have recognized the
need for implementing certain
steps to achieve intermediate
goals before additional Ameri-
can.help could be expected,
either in total appropriations
or in specific projects. Korean
officials still continue, how-
ever, to sign agreements and then
try to circumvent them if they
later prove to be unpalatable.
South Korea's more construc-
tive approach to its economic
problems has been reflected in
several developments, such as
the government's announcement
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
in early August that $10,000,000
worth of fertilizer would be
sold for cash through commercial
channels. The move is designed
to counter inflation by lowering
fertilizer prices and contract-
ing the money supply; fertilizer
prices have been reduced by more
than half since this announcement.
Earlier the Commerce and
Industry Ministry reportedly
submitted to President Rhee a
plan to increase electricity
rates and coal prices in order
to eliminate deficit financing
of these government-owned enter-
prises. This resulted from an
American stipulation that the
government make this move be-
fore an additional $25,000,000
aid would be added to the $297,-
000,000 provided in fiscal 1956.
The minister of reconstruc-
tion also announced that, con-
trary to earlier reports, South
Korea would not seek to remove
grains and fertilizer from the
Seoul wholesale price index.
The price of fertilizer has now
turned downward, but the rising
prices of grains have been dxeat-
ening to push the index to the
point at which an upward revi-
sion of the hwan-dollar exchange
rate may have to be made in
September. Korea has consistently
opposed any increase in the ex-
change rate, now set at 500 hwan
to the dollar.
Finally, after nearly a
year of American demands, South
COMMUNISTS DOMINATE SINGAPORE'S
MOST VIGOROUS PARTY
Singapore's most rapidly
growing party, the People's .
Action Party, is reportedly now
dominated by its Communist-led
Korea has agreed to refund over
an extended period $6,236,000,
representing extra profit it
made by procuring rebuilt en-
gines with American aid funds
and selling them to Korean im-
porters as new manufactures.
Several very important dif-
ferences nevertheless remain
between Korean and American
officials over the choice of
methods to stabilize the econ-
omy and, with the country's
limited resources, to create
an industrially productive eco-
nomic system as nearly self-
sustaining as possible. Prob-
ably the most basic of these
differences has been whether
greater immediate emphasis is
to be given to an industrial
build-up, as Korea desires, or
to combating the runaway in-
flation with more consumer
goods and a tighter fiscal
policy, as the United States
desires. A second major prob-
lem involves President Rhee's
opposition to the purchase of
aid goods in Japan because of
his political differences with
Tokyo.
The present extent of in-
flation in Korea is represented
by a Seoul wholesale price in-
dex of more than 20,000--based
on a 1947 standard of 100. A
test of the new Korean attitude
on economic measures may occur
in September if the index reach-
es the point calling for a rise
in the exchange rate as mutu-
ally agreed on in August 1955.
faction. The growing split
between the party's two fac-
tions, both Communist-inclined,
has resulted in the control of
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9 August 1956
key party posts by the extreme
group. The popularity of this
group's leaders among,the pre-
ponderantly Chinese population
makes probable the further
development of the party along
Communist lines.
The party has been regard-
ed as Communist-manipulated since
its inception in November 1954.
There have been growing indica-
tions, however,,of the develop-
ment of two factions: the Lim
Chin Siong group, led by Commu-
nists and determined to carry
out international Communist
directives, and the Lee Kuan
Yew group, led by left-wing
socialists who have knowingly
co-operated with the Communists
but are now anxious about their
personal future as they note
Lim's increasing influence.
At the party's third annual
congress in July, followers,of
the Lee faction were re-elected
to prestige offices, but their
deputies--all members of the Lim
faction--reportedly control
these offices. Lim received the
highest single number of votes
among party officers.
The ascendancy of the Lim
faction will probably continue,
since Lee is handicapped in
working among Singapore's Chi-
nese, 78 percent of the popula-
tion, by the fact that neither.
he nor many of his followers
speak Chinese. He and his as-
sociates are largely English-
educated, whereas Lim is Chinese-
educated and makes most of his
public addresses in Chinese.
Lim and his Communist followers,
who are believed to be'the best
trained members of the People's
Action Party, are particularly
active among Chinese students
and in peasants' and women's
groups and cultural societies.
Although Lee is legal adviser
to most left-wing labor unions
in Singapore, these unions are
chiefly under the organizational
control of the Lim faction.
Other political parties
in Singapore are encouraging
Lee to defect from the party
in the hope of utilizing his
political talent to their own
advantage and to weaken the
People's Action Party. There
is little indication that he
will do so in the immediate
future. He is still a leader
in the best organized and most
rapidly growing party in Singa-
pore and, despite ideological
and personal differences with
Lim, will probably choose to
remain as long as it appears to
be politically worthwhile.
Apparently in line with
the international Communist
directive for united-front tac-
tics, the party has joined the
general demand for the peaceful
achievement of self-government
in Singapore. Under the direc-
tion of Lim Chin Siong, the
party's policy may reflect in-
ternational Communist tactics
even more closely than in the
past. The party is expected to
be generally co-operative with
the Labor Front government in
its preparations for renewed
self-government talks in 1957.
Thereafter it will probably
press for early elections since
it believes by that time its
popular support will have signif-
icantly increased.
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The party was included in
the unsuccessful 1956 self-
government talks in London and
will expect to participate in
those next year. Should it be
excluded, as the present chief
ARGENTINA TAKES INITIATIVE IN
SOUTH ATLANTIC DEFENSE PLANNING
Argentina's proposal on
31 July that Brazil and Uruguay
join it in planning the defense
of the South Atlantic was de-
clared to be based on "recom-
mendations of the Inter American
Defense Board" (IADB), It prob-
ably stems in part from a desire
to obtain American military
equipment and to commit a future
elected Argentine government to
inter-American military co-op-
eration. Domestic political
considerations also may have
prompted the announcement at
this time.
Brazil, though noncommittal
to the press, privately disap-
proves of the proposal. Uruguay
finds it confused, and other .
countries wonder whether Argen-
tina and Brazil, traditional
rivals for South American leader-
ship, are forming a bloc.
Argentina's Proposal
The confusion stems from
the vagueness and abruptness of
Argentina's proposal.
minister has hinted, the party
would probably resort to more
obstructive tactics than it
otherwise apparently plans.
The proposal suggests that
representatives of the three
countries meet in Buenos Aires
to discuss plans for organizing
the defense of the South Atlan-
tic and that a "permanent seat
for the organization" be located
in Montevj.deo. Observers from
other American countries were
declared welcome.
The General Military Plan
for the Defense of the American
Continent, drafted in 1951 by
the IADB, provides for regional
planning within.each of three
maritime sectors. One of these
is the South Atlantic, including
Argentina, Brazil and Uruguay,
supported by landlocked Paraguay.
The Argentine proposal is intend-
ed to implement the IADB plan,
and is the first major initia-
tive in this direction. The
IADB plan has been approved by
the United States and all Latin
American republics except Mexico,
Venezuela having approved with
reservations.
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Argentine Motives
Domestic political and
logistical considerations may
outweigh other motivations be-
hind the proposal. Since Peron's
ouster in September 1955, the
navy, under the command of Vice
President Rojas, has been trying
to increase its power position
relative to the traditionally
dominant army. It may believe
this initiative will expand its
importance in the inter American
defense system and result in
priority treatment over other
Argentine services with regard
to American military aide
At the same time, Argentine
military leaders may be testing
the reaction of the somewhat
isolationist Argentine public
to inter American defense col-
laboration--gilded by Argentine
sponsorship--to determine whether
or not closer military co-oper-
ation with the United States may
be feasible. They also evidently
hope to conclude any new military
negotiations prior to the na-
tional elections scheduled for
late 1957. The largest pro-
government party, the Radical
Civic Union, cast a minority
vote against Argentine ratifi-
cation of the Inter American
Treaty of Reciprocal Assistance
of 1947, which has been ratified
by all Latin American countries.
Brazilian Reaction
Brazil, considerably irri-
tated by Argentina's precipitous
announcement, does not favor the
establishment of regional de-
fense arrangements within the
hemisphere and considers that
defense of the North and South
Atlantic cannot be separated,
according to the secretary gen-
eral of the Brazilian Foreign
Ministry. Brazil also suspects
Argentina of trying to offset
recently increased Brazilian
influence in Uruguay and Paraguay.
Nevertheless, Brazil may
suggest that the proposal be
referred to a joint commission
for further study, since it
believes outright rejection
might be prejudicial to Aram-
buru's position.
Other Reactions
Uruguay's acting foreign
minister told the press on 5
August that in regard to the
"Argentine naval initiative,"
no new legal instrument defining
military obligations would result,
only the fulfillment of measures
determined by the 1947 Rio treaty.
The Paraguayan ambassador in
Montevideo commented that the
Argentine proposal looked al-
most like a revival of the
triple alliance against Paraguay
during the last century. Chile,
piqued at being uninvited,
officially opposes the proposed
Buenos Aires meeting, stating
that the Rio pact is sufficient
for defense purposes. Chile
will not go as an observer, but
would "consider" attending if _
invited as a full participant,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
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according to the Foreign Minis-
try. The consensus of Latin
American diplomats in Montevideo
is that the proposal will get
nowhere.
A Moscow Red Star article
of 5 August charged that the
MOLLET'S PRESTIGE HIGH
AS RESULT OF SUEZ CRISIS
Overwhelming support of
Premier Mollet's strong posi-
tion against the Egyptian sei-
zure of the Suez Canal has
temporarily rallied to him even
those non-Communists who had
refused to support his govern-
ment on the Algerian issue.
Nevertheless, France's economic
problems continue and, when
the National Assembly reconvenes
on 2 October, Mollet will face
increasing labor unrest, a
mounting threat of inflation,
and stepped-up Communist unity-
of-action appeals.
By a 422 to 140 vote on 2
August, the assembly approved
the government resolution nam-
ing Egypt's President Nasr a
"permanent threat to peace."
The non-Communist press has al-
so given nearly unanimous sup-
port to the government's posi-
tion on the Egyptian seizure.
France has long considered Presi-
dent Nasr guilty of fomenting
agitation in Algeria, and the
canal nationalization has
aroused profound apprehension
that Algerian nationalism will
be encouraged beyond contain-
ment. In addition, the poten-
tial threat to France's oil
sources has helped shore up
French unity.
As the initial shock of
the Suez seizure abates, however,
proposal is a new case of
"pactomania" initiated during
the "US-dominated" July meet-
ing of American presidents in
Panama and that the "pact would
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opposition to Mollet's Algerian
policy is bound to spread, par-
ticularly if the government
continues to enlarge the area
of local autonomy in Algeria
and pacification seems remote.
As the government steps up
implementation of administra-
tive and land reforms, strong
conservative resistance is
expected.
Communist Position
The Communists, who alone
voted against the Suez resolu-
tion, appear to be in a more
isolated position than at any
time in the present assembly.
Earlier Communist-sponsored
attempts to disrupt the recall
of reservists for Algeria ap-
pear to have been checked, and
their unity-of-action campaign
seems to have been dealt a
severe blow as a result of
French public support for Mol-
let's Algerian policy. They
can be expected, however, to
continue to appeal to the strong
minority within the Socialist
Party, which is dissatisfied
with Mollet's handling of the
Algerian campaign as contrary
to Socialist doctrine.
In addition, a mounting
inflationary threat and the
need to find new funds to fi-
nance the Algerian campaign
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continue to pose crucial prob-
lems, which may be intensified
in the fall. France's European
Payments Union deficit rose to
$70,600,000 in July compared to
a surplus in July 1955, and
some price increases in basic
commodities such as wheat have
been granted. Mollet's finan-
cial policy--particularly re-
stricted investment--has been
under fire from ex-premier
Mendes-France.
At the same time, opponents
of increased taxes are expected
to increase their efforts to
prevent Mollet from applying
any new tax measures if the
bond issue just voted fails to
produce adequate revenue to
finance the Algerian campaign.
Mollet is seeking a law to
permit publication of all tax
returns in an apparent effort
to mollify labor, which feels
NEW DEVELOPMENTS
IN THE ITALIAN LABOR-MOVEMENT
The announcement in the
Communist press on 1 August-
that the Italian General Con-
federation of Labor (CGIL) is
independent of Communist Party
control may signal a major re-
orientation in Italian labor
developments.. The move was
probably sparked by a decline
in membership and influence
and by the threat of Socialist
disaffection; it appears to be
aimed at exploiting the renewed
hope of labor for legitimate
economic objectives.
For the past year and a
half the CGIL, which controls
over half of the country's
organized workers, has been
declining markedly in strength
in relation to other unions.
It has lost control of the shop
steward committees in most major
industrial enterprises, at
PART II
that it is carrying an undue
share of the tax burden.
Labor is increasingly
restive over government manipu-
lation of the cost-of-living
index to avoid mandatory wage
hikes. The Socialist-led
labor confederation, Workers
Force, issued a resolution on
30 July opposing a freeze on
wages in any form. The Com-
munists, who abstained on the
sixth reading of the civil budg-
et ostensibly because of Pre-
mier Mollet's statement against
a general wage increase, hope
to exploit this growing unrest.
Despite non-Communist labor
warnings against Communist
unity-of-action attempts, the
rank and file will be increas-
ingly vulnerable to these ap-
.least partially because of
management and government pres-
sure on the workers over the
issue of CGIL's Communist domi-
nation.
Its membership is predom-
inantly oriented toward the
Communist and Nenni Socialist
Parties, although some members
support the center parties.
Leadership is shared by Com-
munists and Nenni Socialists,
but the latter have recently
shown signs that they might
challenge the Communist monop
oly of key positions.
Recent labor agitation in.
Italy has been more and more
concentrated on such purely
economic questions as wages,
bonuses, and seniority rights.
For several years workers have
shown no interest in politically
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inspired strikes, except for a
few Communist-led demonstrations
to protest unrelieved hardship
conditions during last winter's
severe weather. At the CGIL
congress in February 1956, the
Nenni Socialist elements spear-
headed an unsuccessful move to
emphasize action at the plant
level rather than continue the
policy of nationwide bargain-
ing.
Among the possible motives
behind CGIL secretary general
Di Vittorio's 1 August announce-
ment may have been a desire to
block a possible move by the
Nenni Socialists to walk out
unless the CGIL were granted
the greater autonomy which a
separate meeting of its Nenni
Socialist membership in late
July had requested. Conversely,
the Communists may hope to en-
tice members of the non-Com-
munist unions to come back in.
The theme of "trade union.
unity," which was played up at
the February congress, has. re-
cently reappeared in reports
CEYLONESE MINORITY GROUP
PLANS DEMONSTRATION MARCH
Violence may break out
in Ceylon after. 10 August,
when Tamil-speaking members of
the Federalist Party and their
sympathizers begin a long-
scheduled march from all parts
of the island toward the naval
base of Trincomalee in protest
against the government's deci-
sion to make Sinhalese the
sole official language of the
country.
As early as May, the Fed-
eralist Party, which repre-
sents many of the Tamil-speak-
ing persons of Indian descent,
who form a large proportion
of the population of northern
PART II
from Genoa which state that
the CGIL there planned to
push for a "broad social front"
to include Democratic Social-
ists and Catholics and to pro-
pose.the presentation of single
lists in forthcoming shop
steward elections.
The new emphasis on the
"nonpolitical" position of the
CGIL may be aimed at extending
this tactic to a national
scale. This would be in line
with the Communist Party's
attempts to extend its con-
tacts with Italian Socialists
and Catholics. Since Di Vit-
torio's "declaration of in-
dependence" was announced in
the official Communist Party
daily L'Unita, the move ap-
pears to have the party's full
support. Di Vittorio, who is
also president of the Com-
munist World Federation of
Trade Unions, presumably will
retain his position as a member
of the Communist Party central
committee and his seat as a
Communist deputy in the Italian
parliament.
Ceylon, planned the march to
focus attention on the contro-
versial naval base at Trincoma-
lee and on the 7,000 or more
Tamils employed there. The
purpose,was to emphasize Tamil
opposition to ousting the Brit-
ish'from the base and to call
attention to the unemployment
problem that would arise from
doing so.
Some Tamils are reported
to be in an ugly mood, as a re-
?sult of attacks. made on their
comrades by. Sinhalese during
the rioting in Colombo and
eastern Ceylon in June. They.
are allegedly willing to spill
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9 August 1956
Sinhalese blood if their march
is opposed as it passes through
predominantly Sinhalese regions.
According to the American
embassy in Colombo, a Sinhalese
extremist group is now threat-
ening a rival march on Trincoma-
lee. The Ceylonese police fear
that the Trotskyite Viplavikara
Lanka Sama Samaja party--an
element of Bandaranaike's united
front--may have agitators at
Trincomalee and may start
trouble simultaneously at the
port of Colombo with worker
unions under its control. Prime
Minister Bandaranaike's an-
nouncement. on 30 May that he
did not .intend to allow a mass
demonstration at Trincomalee is
apparently being disregarded,
as are his subsequent attempts
POLITICAL STRUGGLE RENEWED
IN PAKISTAN
The scheduled meeting of
the East Pakistan assembly on
13 August has renewed the po-
litical struggle which reached
crisis proportions in Pakistan
last May. A change in the na-
tional leadership or imposition
of executive control by President
Mirza may result.
East Pakistani. Struggle
While there is still op-
position to the provincial and
central governments in the West
Pakistan assembly, which-began
its session on 1 August,'the
challenge to the national leader-
ship will come from the East
Pakistan assembly, where the
United Front government may not
be able to muster a majority.
The test of strength will proba-
bly come when approval is sought
for the provincial budget and
on the question of whether or
not separate constituencies for
non-Moslems are to be established
to obtain promises of modera-
tion from Tamil leaders.
The government is alive
to the dangers of the situa-
tion, and army units and police
reinforcements have been moved
to Trincomalee and other poten-
tial trouble spots. However,
the firmness of their actions
will depend on whether or not
they get strong backing from
Prime Minister Bandaranaike,
who delayed for some days be-
fore making up his mind during
the Colombo rioting in June.
The question also arises as
.to whether Tamil and Sinhal-
ese. members of the army and
police will display impartiality
in dealing with large-scale
Tamil-Sinhalese disturbances if
they should occur.
in the province.
The opposition Awami League,
whose national leader is H. S.
Suhrawardy, seems to have the
best chance to gain control of
the East Pakistan assembly as
a result of its success in
attracting some Hindus and re-
gaining the support of some
of its dissident members. How-
ever, the political "horsetrading"
now going on makes the results
of the struggle uncertain until
an assembly vote is actually
taken.
.National Repercussions
Displacement of the United
Front government in East Paki-
stan would have reflections in
the national assembly, which is
expected to meet in September.
These in turn would make likely
a rearrangement of the central
leadership.
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In anticipation of this-
possibility, Prime Minister
Chaudhri Mohammad All apparently
has attempted to assert himself
politically. He reportedly has
threatened to found a new party
and has charged that Pakistan's
political instability has weak-
ened its prestige international-
ly. He has also stated that he
is not going to allow national
policy to become the sport of
provincial politics.
President Mirza's Role
In the absence of any po-
litical support of his own,
however, the prime minister is
dependent for his position on
President Mirza, who through
his control of the army and
PART II
civil service remains the ulti-
mate source of power.
IMirza will probably
support Chaudhri unless the
prime minister attempts to
carry out his threat of estab-
lishing a new party,.
Since Mirza is determined
to remain in power, he is ca-
pable of making a deal with
Subrawardy if the latter demon-
strates unusual political
strength. In addition, he might
resort to executive power and
dispense entirely with parlia-
mentary rule.
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9 August 1956
USSR MOVES TOWARD NEW,. RELATIONSHIP WITH WESTERN COMMUNIST PARTIES
The Soviet Union is moving
to change its technique of co-
ordination and control over the
Communist parties outside the
Orbit, particularly in the West.
Moscow seems to be permitting
these parties greater latitude
for maneuver within the general
framework of Soviet policy
guidance, and is seeking to
create the impression that they
are now independent national
political movements. The USSR
has made it clear, however,
that these parties must adhere
to basic Communist objectives
as interpreted by Moscow, Al-
though Moscow has also begun'
to demand somewhat less con-
formity from the Satellites,
it can permit greater flexi-
bility in the Communist parties
outside the Orbit because it
has less to lose from differ-
ences among these parties,
which are out of power and, in
most cases, relatively inef-
fective.
Implementation of these
new techniques, which received
their doctrinal foundation at
the 20th party congress, seems
to have been marked by some
vacillation in Moscow and by
considerable confusion among
parties abroad since the de-
Stalinization campaign.
Reappraisal of Policy
Probably the most impor-
tant factor behind Soviet en-
dorsement at the party congress
of "different roads to Social-
ism" was the realization that
the situation following the
death of Stalin required a
modification in the Soviet re-
lationship with the Satellite
states, Communist China, Yugo-
slavia and the Communist par-
ties in other countries.
Stalin had demanded that
all Communist parties be docile
instruments of Soviet policy
and condemned as "nationalist
deviation" any departure from
this rule. He did not tolerate
any independent initiative or
spontaneity which might imply
a denial of his total control.
The Bulganin-Khrushchev regime
is not driven by such heavy-
handed insistence on iron con-
formity and slavish idolatry
of the Soviet model.
A year and a half before
the. 20th party, congress. en-
dorsed the "different roads
to Socialism" doctrine, Bul-
ganin and Khrushchev took a
major step toward modifying
Soviet relations with foreign
Communist parties when they
went to Peiping and elevated
the Chinese Communist regime
to a position of equality with
the USSR at the head of the
"peace camp." A second major
step was the trip to Belgrade
in May 1955, when the Soviet
leaders accepted the Titoist
doctrine of the fraternal
solidarity between independent
equals, a concept proclaimed
by the Yugoslavs soon after
the break in 1948.
USSR's Favorable Position
Behind the USSR's new
approach to world Communism
was a favorable estimate of
the Soviet Union's military
and economic position.vis-a-
vis the Western powers. The
.20th party congress declared
that the "main feature of our
epoch" is the "emergence of
Socialism from within the
bounds of a single country
and its transformation into a
world system." The logical
corollary of the end of the
USSR's isolation and the So-
viet government's greatly in-
creased use of traditional
methods of diplomacy and power
politics was a diminished need
to rely on foreign Communists
for slavish support of every
detail of Soviet foreign
policy.
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New International Atmosphere
Another factor underlying
the change in techniques proba-
bly was the opening of a new
phase in East-West relations,
marked by the final entry of a
sovereign West Germany into
NATO in May 1955 and by the
relaxation of international
tension after the summit con-
ference at Geneva the following
July.
Throughout the long Soviet
campaign to block German re-
armament, many Western European
Communist parties, particularly
the French, were forced to sub-
ordinate their internal in-
terests to wage Moscow's battles
against the EDC and later the
Paris accords, Following rati-
fication of the Paris agree-
ments, these Western European
Communists were permitted to
redirect their attention to
domestic problems.
"Unitg'.of Action" Sought
The major advantage Moscow
seeks from a loosening of the
reins is the "elimination of
the split in the workers' move-
ment" and "unity of action" be-
tween Communists and Socialists.
The doctrines promulgated
at the Soviet party congress
of "different roads to Social-
ism," nonviolent transition to
Socialism by parliamentary means,
and noninevitability of war
were all intended, among other
things, to remove the obstacles
to co-operation between Com-
munists and Socialists. Like-
wise, the current tactic of
Western European Communist par-
ties of concentrating on local
political and economic instead
of foreign policy issues is
designed to prove that they are
legitimate, independent, na-
tional parties ready to join
in election alliances and popu-
lar-front governments with So-
cialists and other leftist
groups.
Party presidium member Sus-
lov, while calling for inter-
national solidarity, told the
French Communist Party congress
in July that today the "success
of every Communist party is
measured primarily by the degree
to which it expresses and up-
holds the interests of the work-
ing class and all laboring people,
its country's national interests,
and the degree to which its
political line accords with
concrete national peculiarities
and traditions,"
The Communists hope by
these tactics to build a leftist
movement powerful enough to
force the democratic Socialist
parties, particularly in France,
into active collaboration with
them. Eventually the Communists
probably plan to use collabora-
tion with the Socialists and
other leftists as a bridge to
the center parties. The aim
of this policy is to dissolve
the military and political ties
of the Western European coun-
tries with the United States
and to draw them into the neu-
tralist "zone of peace."
The Role of Yugoslavia
The Yugoslav Communists
are acting as intermediaries
between Moscow and Western Com-
munists and Socialists. The
Yugoslavs' good contacts with
Western European Socialist par-
ties are being.put to use.
Italian Communist leader Tog-
liatti visited Tito in late May,
and the French Communists will
hold talks With the Yugoslavs
in the fall. Togliatti proba-
bly intended his trip to Belgrade
to have the symbolic significance
of identifying him with the head
of an independent Communist
government whose insistence on
an independent road to Socialism
and equality with the USSR had
been recognized by the Soviet
leaders.
The New Techniques of Control
Moscow itself has not
spelled out what the nature of
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its relationship with foreign
Communists. should be, and may
still be,in the process of
determining this. It has
neithe.r'a.pproved nor disapproved
publicly the description pro-
vided by Togliatti in his state-
ments on 16 and 24 June.
Togliatti coined the term
"polycentrism" to describe a
Communist movement in which
there are "'different centers
of orientation and development"
and in which the.Soviet model
of Communism "cannot and must
not any longer.be obligatory."
This new situation, said Tog-
liatti, requires "full autonomy
of the various Communist parties.
and movements and bilateral re-
lations between them." Be
observed that such a system is
best for extending the relations
between the Communists and.
"movements with a Socialist,
non-Communist orientation--So-
cialists, Social Democrats,
and national liberation move-
ments.;"
It is unlikely that Mos-
cow would be willing to em-
phasize the autonomy of the
foreign parties as strongly as
Togliatti did. The CPSU central
committee resolution of 3b June
.and subsequent Soviet editorials
and speeches demanded strict
ideological unity throughout
the international Communist
movement. They denounced at-
tempts by the "ideologists of
imperialism" to introduce''
"dissension and confusion"
within the movement. They em-
phasized, as they did when. the
Cominform was dissolved, that
the foreign parties must main--
tain close contacts with Moscow.
The Soviet party remains
the political and ideological
leader of world. Communism, and
for that reason, together with
its control of such instruments
of pressure. as financial sub-
sidies, it apparently expects
its influence on the Communist
parties to.remain strong. Many
Communist parties are likely
to continue to rely on Moscow
to settle local factional dis-
putes. The leaders of the two
major parties in.W'estern Europe,
Thorez and Togliatti, will proba-
bly not soon forget that they
owe their eminence to Soviet
support in the early years of
their party history.
The Soviet Communist Party,
however, will probably refrain
from rude intervention in the
policies of the national par-
ties. Soviet leaders will make
a point of listening attentively
to the problems of foreign Com-
munist leaders and may, on sec-
ondary matters, adjust their
propaganda and tactics to the
needs of the national parties..
The publicity and communiquds
connected with the visits of
the French, British, Italian,
and Belgian Communist Party
delegations to Moscow in late
June and early July were an
example of the Soviet attempt
to show that relations are con-
ducted on a basis of equality
and friendship. The foreign
Communist parties are likely
to be free to indulge in mild
criticism of certain Soviet
policies, when it serves the
purpose of improving their
domestic political. position.
De-Stalinization
The de-Stalinization con-
troversy has'provided the first
example of the greater flexi-
bility allowed the national
Communist parties, and has
shown what limits"Moscow places
on this,freedom.,
The Soviet decision to
launch an attack on Stalin was
evidently taken for internal
reasons, although Moscow proba-
bly also expected that it would
eventually have a favorable.ef-
fect abroad. The'Soviet leaders
must have realized that it would
produce serious shock and con-
fusion among.the rank-and-file
members of the foreign parties.
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later. The Soviet leaders may
have underestimated the serious-
ness of repercussions in for-
eign Communist parties, They
seem to have believed that any
minor losses of fringe followers
suffered by the foreign parties
as a result of de-Stalinization
would be more than offset by
the improved prospects of at-
tracting other leftist forces
into participating in popular
fronts. The Soviet leaders
took a risk, however,-in in
'itiating the new techniques
in relations with the par-
ties at the. same time the de-
Stalinization drive was launched.
Reaction of Western Parties
Most of the Western Euro-
pean Communist parties issued
statements in March giving
cautious support to the Soviet
de-Stalinization campaign but
were reluctant to go even as
far as the Soviet leaders had
gone in publicly criticizing
Stalin.
The anti-Stalin campaign
appears to have caused con-
siderable confusion among the
rank and file and some of the
leadership in. most Western
Communist parties. Western
party criticism was directed
at both Soviet leaders and
leaders of the national par-
ties. The obvious questions
were asked about how Stalinism
could have arisen in the USSR
and why the other Soviet leaders
failed to curb Staling
On 16 June Togliatti raised
even More fundamental questions
in a lengthy interview,that was
reprinted in part in some of
the Satellite press and re-
printed, or commented on favor-
ably throughout most of the
Western Communist movement. In
quick succession, briefer but.-
similar statements were issued
by the French, British, American,
and several other Western par-
ties.
These statements were
notable for the similarity of
the points made. All of them
called for a "Marxist analysis"
which did not simply place the
blame on Stalin, and several
raised the question of the co-
responsibility of other Soviet
leaders. Nearly all the party
statements, however, praised
the Soviet attack on Stalinism,
asserted that Stalinism was not
inherent In the Socialist sys-
tem, and provided explanations
for its growth,
Soviet Reply
Pn 27 June the Soviet press
published an article by American
party secretary Dennis,, which,
though reflecting most of the
questions raised by other par-
ties, was generally laudatory
of the Soviet leaders. This
set the stage for the "Marxist
analysis" in the form of the
central committee resolution
"On Overcoming the Personality
Cult and Its Consequences" on
30 June. The explanation it
provided of the historical
causes of'Stalin?s errors and
the failure of Soviet leaders
to replace him was striking be-
cause it added nothing which
had not been suggested by one
or the other of the foreign
Communist parties themselves,
or by previous Soviet state-
ments. It also asserted firmly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
9 August 1956
that Stalinism was not Implicit
in the Soviet social order nor
had it changed the Soviet order.
A number of the Western
Communist parties have issued
statements welcoming the Soviet
resolution. While the French
party viewed it as a definitive
answer to all questions, the
British and Italian parties im-
plied that the de-Stalinization
question might continue, and
the American and Canadian
parties said that certain ques-
tions still remained unanswered.
Recent Soviet statements
have stressed the need for unity
in the Communist movement under
Moscow's ideological leadership
and have limited the scope of
discussions on de-Stalinization
by the foreign Communist par-
ties. The Soviet leaders have
devised a standard "Marxist
analysis" of Stalinism which
can be used by national party
leaders trying to keep their
rank and file in line. They
have not imposed complete con-
formity on the foreign parties,
however, but have continued to
permit discussion by those
parties which find it necessary
to prove their independent na-
tional status or to control
dissension among the rank and
file.
It is not yet clear how
much further discussion of
Stalinism Moscow will tolerate.
It is clear that the Soviet
leaders are giving their fol-
lowers abroad license and en-
couragement to tailor their
activities to the local scene
with the objective of achieving
a major expansion of Communist
influence, particularly in the
West, where Communism has been
THE OUTLOOK FOR EURATOM AND THE EUROPEAN COMMON MARKET
The adjournment for the
month of August of the Brussels
treaty conference on EURATOM
and the proposed European
common market marks completion
of the first phase of the dip-
lomatic effort to advance these
two projects for the further
integration of Western Europe.
There are still serious obsta-
cles ahead but, when formal
negotiations are resumed in
September, an effort will be
made to reach agreement while
parliamentary conditions still
seem favorable in France. The
objectives continue to be joint
development of atomic energy,
co-ordination of national atomic
programs, and the gradual in-
tegration of economic policies
in a general European customs
union. While initially con-
fined to the six Coal-Steel
Community countries, there is
hope for the participation or
association in these objectives
by other Western European
countries.
Increased Faith in Mollet
Proponents of these goals
regard as encouraging the re-
sult of the French debate of
6-12 July, which recorded an
unexpectedly large majority in
favor of continuing the EURATOM
negotiations. They admit that
the vote hinged on several
factors--particularly the depu-
ties" reluctance to overthrow
Mollet during the Algerian prob-
lem--but they hope that the
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9 August 1956
assurances expressed in the am-
biguous resolution the assem-
bly approved will. satisfy op-
ponents and that ratification
can be sought while Mollet is
still in power.
Following a meeting of
the conference on 26 July called
by the French, a spokesman for
Belgian foreign minister Spaak
observed that for the first
time "French attitudes had been
completely satisfactory." He
added, moreover, that he saw
no insoluble problems result-
ing from the conditions Mollet
accepted regarding French free-
dom in the nuclear weapons
field and the divorce of CSC
and EURATOM institutions.
This interpretation was
apparently shared to some ex-
tent by the other delegations,
and the conviction has grown
that Mollet and Under Secretary
Maurice Faure, his principal
lieutenant at Brussels, are
determined to fight and that
thus far they have done so ef-
fectively. Accordingly, in an
effort to get the treaties as
far forward as possible while
this favorable situation lasts,
some work will go ahead during.
the interim period, a heavy
work schedule has been set up
for the conference when it for
malty.reconvenes on 3 Septem-
ber, and another meeting of the
six foreign ministers has been
scheduled for late September.
EURATOM Negotiations
An intensive effort will
be required if a EURATOM treaty
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UNITED KINGDOM
(Linked to the CSC
through the Council
of Association)
is to be ready for French Na-
tional Assembly consideration
this autumn. A draft treaty--
a legal version of the original
Spaak report--is still in the
process of revision; it re-
flects some of the weaknesses
of that report on such basic
issues as institutions and
national weapons programs.
Although the Brussels
conferees have generally been
mystified by Foreign Minister
Pineau's "illogical and incom-
prehensible" commitment to
the French assembly that EURA-
TOM's institutions would be
kept separate from those of
the Coal-Steel Community, the
Belgians consider the creation
of still another "European as-
sembly" a price worth paying
for French ratification.
Amalgamation of only the
limited "legislative" and "ju-
dicial" functions of the two
organizations had been envis-
aged by the Spaak report in
the first place. French of-
ficials have explained, more-
over, that the Pineau commit-
ment does not necessarily im-
ply a complete duplication of
organizations, but only that
it should be made clear that
EURATOM is not subordinate to
the CSC and that, while both
organizations may "use" the
same institutions, they are
in fact separate.
French insistence that at
the end of four'years France
must not be fettered in under-
taking the manufacture of nu-
clear weapons is obviously
AUGUST 1956
24160
Seat of the High
Seat of the CSC
THE EUROPEAN COAL-STEEL CO/ UNITY
("Community of Six")
Prospective Members of EURATOM and the E can Common Market
PART III
more complicating.
Tt is not clear,
however, how; far
beyond the widely
discussed Spaak
moratorium proposal
the other countries
will have to go to
meet French-needs
in this respect.:
TheSpaak-proposed
moratorium--presumably
acceptable outside
France--applies only
to production of
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9 August 1956
"explosive devices," thus ex-
cluding other nuclear devices
of military significance such
as'submarine-,engines. Under
it, moreover, France would be
free after five years to under-
take the-manufacture even of
explosive devices provided it
has the consent of two other
members of EURATOM..,
While the Mollet govern-
ment stated in the EURATOM de-
bate that France must retain
unilateral freedom after merely
consulting with its partners,
Faure has since declared at
Brussels that "it would not
intend to evade either neces-
sary consultation with its
partners or community controls,
nor do the French seek to evade
the. rule of free communication
of research and free access to
patents in the'military sector."
West Germany and Controls
Aside from the political
problem of writing a formula
acceptable to France as well
as to West Germany--which will
remain bound in the nuclear
weapons field by its WEU com-
mitments--the weapons issue in
any case is essentially one
aspect of the general problem
of maintaining EURATOM's con-
trols over the purchase and
utilization of nuclear fuels.
To "unfetter" France in the
weapons field threatens some
departure from the principle
of EURATOM's monopoly controls
--a principle which has been
somewhat. watered down already
in the Spaak report and which
has had hard going in West
Germany.
The EURATOM negotiators
have already conceded to the
German position the possibility
that in a period of shortage a
member state might obtain nu-
clear fuels outside EURATOM,
although the organization's
security controls would con-
tinue to apply. However, the
treaty negotiations of the
past month have been marked by
continued German insistence
that adherence to "liberal eco-
nomic policies" by the Bonn
government still makes the ac-
ceptance of EURATOM's "perfec-
tionist monopoly" extremely
difficult. The other powers
have not challenged the Germans
to produce by September the de-
tails of their alternative plan
and to prove that it would of-
fer comparable security.
This problem points to
the possibility of potential
political difficulties in West
Germany comparable to those
faced by Mollet in Paris. The
position taken by the German.
negotiators is in large part
a reflection of the personal
views of Minister of Atomic
Affairs Strauss backed up by
the German industrialists.
Because of the importance of
this group to Adenauer in the
1957 elections, this attitude
may constitute a serious ob-
stacle. Adenauer is certain,
however, to be subjected to
strong pressure from the other
EURATOM members to reverse his
minister, for the principle of
EURATOM's monopoly is the fea-
ture which recommends it over
all other schemes for nuclear
co-operation and which is its
special claim to US support.
Role of the Common Market
The progress on EURATOM
has continued to be complicated
to date by,the slower progress
on the common market scheme,
which would extend basic fea-
tures of the CSC not only to
atomic energy, but to all West
European economic activity in
general.
The decisions taken by the
foreign ministers at their late
May meeting in Venice to pro-
ceed simultaneously on both
projects reflected the prevail-
ing view that while a "package"
EURATOM-common market is almost
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9 August 1956
Adenauer's,position with
respect to EURATOM would be
greatly improved by more spe-
cific signs of.a favorable
evolution of French thinking
on the common market. During
the course of the French as-
sembly debate in July, Under
Secretary Faure stated that
in principle the French govern-
ment favors the common market,
provided safeguards are ade-
quate and the French Union is
permitted to participate. The
inclusion of overseas terri-
tories in the common market
is now believed acceptable to
the other members of the proj-
ect, and a six-nation report
on its ramifications is ex-
pected to be submitted to the
Brussels conference in September.
Reactions Elsewhere
In the meantime, these de-
velopments in the integration
certain of approval in West
Germany, Italy, and the Bene-
lux countries, it is almost
equally certain of rejection
in France. Nevertheless, there
is reported an increasing dis-
position on the part of the
other powers--West Germany ex-
cepted--to accept in good faith
Mollet's claims that he is pre-
pared to fight for European
integration and that French ap-
proval of EURATOM would set the
stage for a strong effort later
to obtain approval of the com-
mon market.
program have evidently made an
impression on countries out-
side the "Community of Six"-.
particularly on the Soviet
Union and on the member coun-
tries of the OEEC, notably the
United Kingdom. Following the
favorable vote of the French
assembly on 12 July, Moscow
suddenly revived its proposal
for an all-European atomic
energy agency, accompanying it
with a blast at EURATOM as a
"closed community." This in-
tervention has not greatly dis-
turbed EURATOM's supporters and
a reply is being drawn up. It
could, however, have some effect
on French opponents of a six-
nation organization who have
wavered on the strength of
Mollet's assurances.
In the OEEC, where 17 West-
ern European. countries, includ-
ing the six CSC members, have
been conducting parallel nego-
tiationsulookin: toward. a
looser form of co-operation in
the atomic energy field, there
has been increased recognition
that "the six" have shown a de-
termination to go ahead as a..
unit and that the EURATOM and
the OEEC efforts are not'neces-
sarily in conflict. Moreover,
recent British "eagerness" to
survey the possibility of some
link between a common market of
"the six" and an OEEC free trade
area--while possibly diversion-
ary--may also represent a re-
treat from initial British ske -
ticism and hostility... 25X1
(Concurred in by OSI
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*
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