CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001000040001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 37
• Document Creation Date: December 16, 2016
• Document Release Date: January 27, 2005
• Sequence Number: 1
• Publication Date: October 18, 1956
• Content Type: SUMMARY

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CURRENT
COPY NO. IS
OCI NO. 6116/56
18 October 1956
^
NO CHANGE IN CLAIM
CLASS. {APl~? 8 TO. IS $?
NEXT REVIEW DATE:
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GATE: REVIEwEa:
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
INTELLIGENCE
WEEKLY
SUMMARY
State Department review completed
CONFIDENTIAL
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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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T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
ARAB-ISRAELI SITUATION . . . . . . . . . . . . . . . . . . Page 1
Jordan remains the center of tension in a growing power
struggle in which Iraq, with British encouragement, is
attempting to counter the extension of Egyptian influence.
The entry of Iraqi troops into Jordan has been indefinitely
postponed, primarily because of Israeli opposition. Mean-
while, Jordan is still planning to hold elections on 21 October,
which will be a test of strength between King Hussain and
pro-Egyptian elements. F_ I 25X1
SUEZ DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . Page 2
Agreement by Britain, France, and Egypt on six broad
principles for negotiation of a Suez settlement provides
a starting point for direct talks, which will probably be-
gin within a few weeks. Neither side, however, has modified
its position on international operation of the canal. The
agreement to hold direct talks outside the UN has somewhat
reduced the Soviet Union's opportunity to influence the
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HUNGARIAN EFFORTS TO IMPROVE
RELATIONS WITH YUGOSLAVIA . . . . . . . . . . . . . . Page 1
Since the recent meeting in the Crimea at which
Hungarian party first secretary Gero met President Tito,
the Hungarian regime has intensified efforts to improve
its relations with Yugoslavia. A series of pro-Yugoslav
statements and gestures, culminating in the public rein-
statement of ex-premier Imre Nagy in the party, preceded
the arrival on 15 October of a high-level Hungarian dele-
gation in Belgrade.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
GOMULKA RETURNS
TO POLITICAL SCENE IN POLAND . . . . . . . . . . . . . . Page 2
The Polish United Workers (Communist) Party announced
on 15 October that Wladyslaw Gomulka, former party secre-
tary general purged for nationalist deviation in 1948, was
to take part in the plenary meeting of the central commit-
tee to be held on 19 October. At this meeting Gomulka's
appointment to the central committee and politburo proba-
bly will be announced, and he may also be appointed a dep-
uty premier. Although Gomulka has never fully recanted the
views for which he was purged, Polish and Soviet leaders
probably desire the participation of this popular figure
in the regime in order to enhance its prestige,
DELAYS IN WEST GERMAN
MILITARY BUILD-UP . . . . . . . . . . . . . . . .
West Germany's doubts about its present rearmament
program are reflected in various governmental and legis-
lative actions which will appreciably slow the military
build-up. A cabinet reorganization, largely in prepara-
tion for the 1957 elections, brought Franz Josef Strauss
into the Defense Ministry post but did not name a new and
stronger vice chancellor. Strauss, who favors a small
army equipped with modern weapons, is likely to continue
the rearmament slowdown while awaiting a complete review
of NATO strategy.
., Page 3
FRENCH NATIONAL ASSEMBLY DEBATE . . . . . . . . . . . . . . Page 4
The Mollet government seems assured of continued but
grudging support in the French National Assembly, although
the premier is increasingly threatened by dissension with-
in his own Socialist Party. Attacks on American policy
are highlighting the general policy debate. Dissatisfac-
tion over lack of progress on Suez and Algeria may generate
pressures for a reappraisal of France's ties to the Atlan-
tic alliance.
JAPAN PLANS SPECIAL DIET SESSION . . . . . . . . . . . . Page 5
A special session of the Diet is tentatively sched-
uled for mid-November for the dual purpose of ratifying
.=rime Minister HatoyamA's anticipated' agreement with the
USSR on the normalization of relations and of. selecting
hiq successor as prime minister. The outcome in both in-
stances depends on the nature of the agreement Hatoyama
is able to obtain in Moscow.
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18 October 1956
. Page 6
Prime Minister Suhrawardy's trip to communist
China
comes
at a time when political tension in Pakistan
has
been
temporarily eased. Suhrawardy may enter some
eco-
nomic
agreements and may take up Chinese incursions
along
the northern border of the portion of Kashmir held
by
Pakistan.
IRAN'S OCCUPATION
OF PERSIAN GULF ISLANDS.
. . . . .
. Page 7
The recent occupation by Iranian marines of one--and
probably more--small, uninhabited islands-in the Persian
Gulf is a bid to establish claims for offshore oil explora-
tion. The Iranian action may lead to an international .
controversy islands'
impor-
tance.
NEW SOVIET OVERTURES
TO TURKEY AND IRAN .
Page 8
The Soviet Union is persisting in its attempts to im-
prove relations with Turkey and Iran by combining profes-
sions of Soviet friendship with admissions of past Soviet
errors. Moscow is emphasizing the advantages that would
accrue from increasing trade and accepting economic assist-
ance. To date, Soviet policy has made appreciably more
progress in Iran than in Turkey.
0 . . . . . . . . Page 9
Syrian president Quwatli, who is scheduled to visit
Moscow late in October, is reported willing to accept an
unconditional gift from the USSR, or. long-term loans at
low interest. but does not desire Soviet assistance or
technical aid for specific projects. Bloc offers to Syria
of credits for various development projects have increased
in recent months.
HONG KONG RIOTS. . . . . . . . . . e . . . . . . . . Page 10
The riots in Hong Kong from 10 to 13 October are
believed by British authorities to have been principally
the work of Chinese secret societies and criminal elements.
The riots took on strong anti-Communist overtones. Commu-
nist China will probably follow its-protest to the British
government with renewed pressure to obtain diplomatic repre-
sentation in the colony.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
SINGAPORE . . . . . . . . . . . . . . . . . . . . . . . Page 11
The Singapore government's drive on Communist sub-
version, now in its fifth week, is concentrating on
Chinese middle schools, where concerted resistance to the
campaign has developed. The government has succeeded in
forcing the pro-Communist People's Action Party to shift
from united-front tactics to active political opposition.
SOUTH VIETNAM . . . . . . . . . . . . . . . . . . . . . . Page 12
The promulgation of South Vietnam's constitution on
26 October will mark the final stage in President Diem's
consolidation of power. Despite his past successes, how-
ever, Diem is far from complacent and recognizes that the
Viet Minh can still make trouble.in the south.
CAMBODIAN POLITICAL CRISIS . . . . . . . . . . . . . . . . Page 13
Prince Sihanouk's third resignation this year as
premier has engendered increasing opposition among some of
his closest supportgrs and may eventually lead to the emer-
gence of a new strong man.
PEIPING'S STATEMENT
ON GENEVA TALKS. . . . . . . . . . . ? ? ? . ? ? . . . Page 13
Like Peiping's four previous statements this year on
the Johnson-Wang talks at Geneva, the Foreign Ministry re-
lease of 16 October charges the United States with "deliber-
ately preventing" progress at the meetings. Although it
follows the previous statement by less than three weeks--
suggesting that Peiping is stepping up its propaganda ef-
fort to pin responsibility for a possible breakdown on the
United States--the Communists have avoided any threat to
discontinue the talks and continue to state their case in
moderate terms.
BRITAIN AND CHINA TRADE CONTROLS .
. Page 14
Concern for tripartite unity on Suez has been in part
responsible for the apparent British decision to postpone
calling for a review of China trade controls, at least
until February 1957. Britain has achieved a de facto re-
duction in China trade restrictions over the past four
months by liberal use of the exceptions procedure.
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CURRENT INTELLIGENCE WEEKLY.SUMMAR Y
18 October 1956
HONDURAS a , a .
Page 15
The political machine of Honduran chief of state Julio
Lozano claims to have won all 56 seats in the constituent
assembly in the elections of 7 October, The assembly is
expected to meet on 1 November to "constitutionalize" the
regime. The government is highly unpopular and is weakened
by the conflicting ambitions of some of its leaders. So far,
disturbances have been scattered and minor, but conditions
a
re present which might lead to serious violence,
r- I
PART III-
PATTERNS AND PERSPECTIVES
SATELLITES TAKE STEPS TO IMPROVE RELATIONS
WITH THE UNITED STATES . , e , . . . . . . . Page 1
A number of Eastern European governments have been
seeking to improve relations with the United States. The
softer tone of the Satellite press toward the United States
has been accompanied by semiofficial overtures for closer
relations. Rumania has taken the lead in making some
effort to'remove obstacles to improved relations, and
Czechoslovakia, Hun ar and Pol have also sought to make
some adjustments.
AFGHAN GOVERNMENT. LEADERSHIP e , o . . . . . . . Page 4
Afghan prime minister Daud's success in maintaining
his position and,carrying out his policies rests in large
part on the fact that many educated Afghans sympathize
with his outlook and aspirations. While most of these
Afghan leaders, retain their deep suspicion of the USSR, they
favor Afghanistan's policy of "neutrality" and are convinced
of the benefits to their country of Soviet bloc aid. If
Soviet penetration became obviously threatening, Kabul
would probably be prepared to go to considerable lengths in
order to obtain Western support and protection.
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Jordan remains the center
of tension in a growing power
struggle in which Iraq, with
British encouragement, is at-
tempting to counter the exten-
sion of Egyptian influence.
Israeli opposition has led to
a postponement of the entry of
Iraqi troops into Jordan. The
outcome of events in Jordan will
indicate whether Nasr's influ-
ence over the other Arab States
will continue to grow, or whether
there are prospects for success-
ful development of an alternate
Arai. alignment.
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SYRIA
The delay of the Iraqi
troops' move into Jordan may
cause Jordan's King Hussain to
lose political support, which
would be reflected in the lower
house elections on 21 October.
The government has already taken
limited measures to curb ex-
tremist gains. Barring a new
Israeli raid, or a last minute
decision by King Hussain, the
elections apparently will be
held, and anti-Western strength
considerably increased; virtually
all candidates are committed
against Westernties and favor
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CURRENT INTELLIGENCE WEEKLY SUMMARY
abrogation. of the Anglo-Jorda-
nian treaty. Serious unrest may
be averted if the government
does not attempt major inter-
ference with the elections;
postelection disturbances are
possible, however, if the king
should attempt to dissolve a
legislature unacceptable to
him or if the government should
attempt to rig the ballot count-
ing.,
Iraq's decision to defer
the plan for sending Iraqi
troops into Jordan was primarily
a consequence of Israel's warn-
ing that such a movement could
mean war.
The Israeli government has
continued recalling reserves.
A serious breakdown of stability
in Jordan involving the entry
of sizable Iraqi and Syrian
forces would present Israel with
a direct threat to its most.vul-
nerable flank and invite it to
reconsider a move to the Jordan
River as a more defensible bcrder.
Although Britain is com-
mitted under the 1948 Anglo-
Jordanian Treaty to defend Jor-
dan "in the event of war," the
Foreign Office has reaffirmed
that British intervention would
not be automatic, but would be de-
termined in London "in the light
of circumstances at the time."
Egypt is concerned that
events in Jordan may undermine
its leading position in the
Arab world and promote a new
Arab alignment. Syria, mean-
while, is acting overtly in
Jordan in behalf of Egypt to
counter Iraq; it has recently
sent medium tanks and artillery
to Jordan and has plans to in- 25X1
tervene with a limited force
north of Mafraq if Iraqi forces
enter the country.
No arrangements have yet
been made for direct negotiations
between Britain, France, and
Egypt under the agreed six prin-
ciples for settlement of the
Suez dispute endorsed by the
UN Security Council on 12 Octo-
ber. As a result of having a-
dopted the six principles, the
Security Council remains tech-
nically "seized of" the Suez
question. This precludes re-
ferral to the General Assembly.
There are presently no plans
for further council meetings
on the issue.
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Although Britain and Egypt
believe the principles provide a
useful starting point, their
basic positions on operation
of the canal remain as far apart
as ever. Despite the present
awkward pause as each side in-
sists that the other should make
the first move, direct talks
will probably begin within a
few weeks, possibly after fur-
ther stimulation from Secretary
General Hammarskjold.
London and Paris were
heartened by the support of nine
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Security Council members for
the 18-nation plan for interna-
tional operation. They point
to the second paragraph of the
vetoed resolution to back their
view that Egypt should now, make
counterproposals.
The statement issued by
Prime Ministers Eden and Mollet
following their talks in Paris
on 16-17 October underlined
this position. They still hope
to avoid protracted negotiations
that would enable Nasr further
to consolidate his position,
and are maintaining their mil-
itary build-up in keeping with
statements that the use of
force cannot be entirely ex-
cluded.
To strengthen their hand
in the negotiations with Egypt,
both Britain and France remain
intent on establishing the
users' association (SCUA) as a
functioning body receiving
tolls from all 15 members. The
uncertain long-term prospects
for SCUA continues to handicap
these efforts. Until a suit-
able person is found who will
accept the ill-defined job of
administrator, Britain will
probably provide a temporary
administrator.
The Eden government's rel-
ative freedom of action is as-
sured by moderate public ap-
proval of the agreement reached
in New York, and by endorse-
ment at the recent Conservative
Party conference. However,
the conference also showed an
unprecedented coolness toward
the United States. Instead of
the customary obeisance to the
Anglo-American alliance, Eden
hailed the "growing sense of
partnership" with Western
Europe as a happy consequence
of the crisis.
A generally hostile atti-
tude in France toward Suez de-
velopments continues to inhibit
the Mollet government from eas-
ing its firm stand. Strong
anti-American feeling prevails
even among friends of the
United States.
Egypt
Egypt is reported general-
ly pleased that a basis for ne-
gotiations was achieved at the
UN Security Council delibera-
tions without yielding any bas-
ic principle set forth at the
onset of the Suez crisis. The
events in New York will rein-
force Egypt's determination to
retain control of the canal.
A bitter press campaign against
Britain and France for their
continuing promotion of inter-
national control and their
statements that force has not
been excluded, however, sug-
gest strong suspicions in Cairo
as to Western sincerity.
C
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Pres en
gave e evidence of Egyp-
tian agreement with the advisory
body plan proposed by India's
Krishna Menon. He specifically
pointed out that he wanted an 25X1
expanded users' association to
include the Arab states, India
and possibly others.
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couia not agree t
any percentage of the tolls,
however, small, should be paid
to the users' association.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
Nasr was adamant in refus-
ing any measure of internation-
al operations and stated that
his agreement to have an inter-
national arbitrator of disputes
between the Egyptian canal com-
pany-and the users' association
The canal continues to be
operated smoothly and no back-
log has been reported.
Soviet Influence
The USSR's ability to in-
fluence the terms of a settle-
ment or to receive credit for
a final solution has been some-
what reduced by the turn to di-
rect talks. Moscow will proba-
bly continue to work against
Western attempts to reinstitute
any type of international con-
trol over Suez, in an attempt
to accelerate the diminution of
Western influence in the Middle
East.
.
Except for its use of the
veto on 13 October--the USSR's
seventy-eighth and Foreign Min-
ister Shepilov's first--the
USSR remained in the background
during the Security Council
debate, partly by choice, partly
because of Western maneuvers,
and partly because of Egypt's
reluctance to be identified
openly with the Soviet camp.
From the beginning of the dis-
cussions, the Russians appeared
uneasy over their inability to
influence the means, if not the
terms, of settlement. The Aus-
tralian delegate noted that the
Russians did not appear to be
filled in on developments in
the private three-nation talks
in New York.
The USSR particularly
seemed to fear American efforts
to bring about a settlement.
In contrast to the Egyptian
press, which gave limited credit
to the United States as a medi-
ator, Soviet propaganda attacks
on Secretary Dulles suggested
that the USSR is concerned that
credit for any settlement might
go, to American rather than
Soviet diplomacy.
Despite Mikoyan's advocacy
of the principle of freedom of
passage through the canal for
All ships including Israeli--
the first time this has been
done by a Soviet official--the
USSR will probably not wish to
disturb its relations with
Egypt by implementing Mikoyan's
general statement.
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NOTES AND COMMENTS
HUNGARIAN EFFORTS TO IMPROVE
RELATIONS WITH YUGOSLAVIA
Since the recent meeting
in the Crimea at which Hungar-
ian party first secretary Gero
met President Tito, the Hungar-
ian regime has intensified ef-
forts to improve its relations
with Yugoslavia. A series of
pro-Yugoslav statements and
gestures, culminating in the
public reinstatement of ex-
premier Imre Nagy in the party,
preceded the arrival on 15
October of a high-level Hungar-
ian delegation in Belgrade.
Nagy's Reinstatement
Yugoslav-supported Imre
Nagy was readmitted to the party
on 14 October. He was premier
during the "new course" period
from July 1953 until his ouster
as a "rightist opportunist" in
April 1955. Nagy had written
a letter to the central commit-
tee on 4 October requesting
"clarification" of his party
status and "rectification" of
untrue charges made against him
when he was removed from office.
The letter apparently repre-
sented a compromise with pre-
vious regime demands that he
accept present party policy in
exchange for reinstatement, but
Nagy in no way implied a capit-
ulation to the party. Although
calling for party unity and
stating his willingness to abide
by party decisions, Nagy pointed
out in the letter that he re-
mains in disagreement with some
regime policies.
Nagy's appointment to high
office in the government or in
the popular front appears likely
in the near future in view of
his reacceptance by the party.
In addition, one of his sup-
porters reportedly will be
selected as the new premier
during the National Assembly
session scheduled to convene
on 29 October.
Hungary's executed Titoist,
Laszlo Rajk, was reinterred on
6 October in a mass public
demonstration symbolizing the
"new era" in Hungary. This re-
burial and a later one of five
"falsely accused" Hungarian
general officers were hailed in
Hungary and Yugoslavia as clear
evidence of progress in Hungar-
ian political life.
Treatment of Rakosi
Perhaps even more to Bel-
grade's liking was Budapest
radio's strongly anti-Rakosi
comments on 14 October. The
broadcast admitted that Rakosi
did not resign as party leader
last July because of poor health
but, on the contrary, was forced
out because of his involvement
in "staining and disgracing the
cause of socialism." Rakosi,
the broadcast declared, is as
guilty of illegal actions as
the recently arrested Mihaly
Farkas--onetime politburo mem-
ber and defense minister.
Farkas and others of his ilk
must now "answer to the courts";
Rakosi is now "far away from
our country and our party, and
our people do not wish that it
should be otherwise."
Other Gestures
According to the Hungarian
party daily, Szabad Ne , on 14
October, "there are nations
in the world more dependent on
each other than the peoples of
Hungary and Yugoslavia." Hail-
ing Yugoslavia as a country
which has "never deviated from
the path of building socialism
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CURRENT INTELLIGENCE WEEKLY SUMMARY
and striving for the triumph of
national independence," the
paper indicated that a closer
look at Yugoslav internal prac-
tices must be taken.
Another Hungarian paper
recently paid homage to Yugo-
slavia by publishing an alleged
conversation held in 1949 be-
tween Laszlo Rajk, who was
awaiting execution, and one of
his associates, the recently
rehabilitated Pal Justus. Jus-
tus was quoted as saying Rajk
denied he had conspired against
the party but admitted he had
disagreed with Rakosi on the
question of the popular front
and the Yugoslav issue. Rajk
claimed that Tito was not a
traitor, that it was fatal to
bring about a split in the so-
cialist camp and that he had
wanted to offer the "good of-
fices of the Hungarian party to
the Soviet Union for ironing
out the misunderstandings and
differences with Yugoslavia."
Belgrade Talks
Belgrade radio on 14 Octo-
ber asserted that the conversa-
GOMULKA RETURNS
TO POLITICAL SCENE IN POLAND
The Polish United Workers
(Communist) Party announced on
15 October that Wladyslaw
Gomulka, former party secretary
general purged for nationalist
deviation in 1948, was to take
part in the plenary meeting of
the central committee to be
held on 19 October. At this
meeting,Gomulka's appointment
to the central committee and
politburo probably will be an-
nounced. He may also soon be
appointed a deputy premier.
The stage was set for
Gomulka's reinstatement by the
resignation last week of first
tions between the Hungarian and
Yugoslav leaders will take place
in a "spirit of mutual respect"
and "equality" and that the "posi-
tive process which has embraced
Hungary undoubtedly represents
a good basis for fruitful co-
operation between our two
countries."
Almost certain to be dis-
cussed, in addition to questions
concerning economic relations
and delegation exchanges, are
Nagy's political future and the
status of Hungarian-Soviet re-
lations. The Yugoslavs can be
expected to continue their moral
support of Hungarian trends to-
ward internal liberalization
and increased independence of
the USSR.
According to the American
legation in Budapest, the likeli-
hood of Soviet intervention in
Hungarian affairs has recently
decreased. Moscow apparently
has accepted a further gradual
decline at least in its overt
control over Hungary.
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18 October 1956
deputy premier Hilary Minc from
the government and the polit-
buro. Mine was the remaining
member of the triumvirate of
Bierut, Berman and Mine which
was principally responsible for
the purge of Gomulka in 1948.
Bierut died early this year
and Berman was ousted from the
politburo in April.
The.readmittance of Gomul-
ka to high party councils fol-
lows several months of negotia-
tions between him and party
leaders on the terms of his re-
turn. Although Gomulka has
never fully recanted the views
for which he was purged, Polish
and Soviet leaders probably
hope to exploit his wide popu-
larity to strengthen the re-
gime's prestige, always low,
which has declined even more
since the Poznan riots.
Gomulka is aware that his
popularity is the result of his
previous opposition to Soviet
domination of Poland and to
pressure for collectivization,
and of the general belief that
he could bring about a rapid
increase in the standard of
living. Since the regime has
already demonstrated greater
independence of Moscow and has
suspended the collectivization
drive, Gomulka probably feels
he can co-operate with it on
these matters. Gomulka knows,
DELAYS IN WEST GERMAN
MILITARY BUILD-UP
West Germany's doubts
about its present rearmament
program are reflected in various
governmental and legislative
actions which will appreciably
slow the military build-up.
Ambassador Conant feels that
the newly appointed defense
minister, Franz Josef Strauss,
may continue the rearmament
however, that no rapid improve-
ment in the standard of living
is possible without either a
drastic shift of resources from
heavy to light industry or large-
scale outside aid. 25X1
I IGomulka is con- 25X1
sidering requesting large-scale
American assistance. Gomulka
allegedly has prepared a com-
pletely new economic plan, which
the regime will accept, calling
for large sums for modernizing
Polish industry and purchasin
25X1
25X
It is not clear what Gomul-
ka's relations will be with the
moderate Communists who are
pushing the liberalization drive,
but he has probably agreed to
co-operate with them. The intel-
lectuals comprise a large part
of the moderate group and are
distrusted by Gomulka. However,
they are advocating policies he
has favored in the past, which 25X1
will probably provide sufficient
'basis for co-operation, at least
for the near future.
(Concurred in by ORR)
slowdown while awaiting a com-
plete review of NATO strategy.
According to press sources,
Chancellor Adenauer has urged
Strauss to inform NATO that
West Germany has overcommitted
itself in its goal of a 500, 000-
man force.
When the parliament consid-
ers the conscription bill
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18 October 1956
month, adoption of a service
term of only 12 months for the
regular army is a virtual cer-
tainty and there is consider-
able doubt that a term of 18
months even for technicians
will be adopted.
Although the Defense Minis-
try earlier said it hoped for
70,000 additional volunteers
to compensate for this reduced
service term, it recently
stopped recruiting volunteers,
claiming a shortage of barracks.
The French have already agreed
to turn over accommodations for
35,000, and talks are under
way with the Belgians and Brit-
ish for similar aid, but the
Defense Ministry is reserving
present barracks space for the
first call-up of draftees in
April 1957. The temporary cut-
off of volunteers will hold the
defense force to a maximum of
80,000 by the end of 1956,
16,000 short of the goal. Con-
tinued shortages seem likely,
and there is some press specu-
lation that the first draft
will be postponed until after
the September 1957 elections.
Public pressure for greater
economies in military spending
continues. The defense commit-
tee of the Bundestag planned
the defense procurement program
only to March 1958, apparently
to assure purchase of the latest
equipment. It therefore cut the
procurement budget by $240,000,000,
largely a reduction in tank and
armored car purchases from the
United States. It is concerned
about an eventual shift in the
West from conventional to atomic
weapons and a withdrawal of
allied troops from Western Europe,
and it appears to be waiting for
a restatement of Western defense
strategy in NATO before proceeding
with West German defense plans.
Adenauer believes that "all
European armies" may receive
atomic weapons, and Defense Minis-
ter Strauss is one of the chief
advocates of the view that Ger-
many must be included. The long-
expected cabinet reorganization
which shifted Strauss from atomic
affairs minister into the key
Defense Ministry post was largely
designed to quiet opposition
criticism of the government's
defense policy before next year's
election. A new and stronger
vice chancellor was not appointed,
however, because of Adenauer's re-
luctance to name a successor.
25X1
The Mollet government seems
assured of continued but grudg-
ing support in the French Na-
tional Assembly, although the
premier is increasingly threat-
ened by dissension within his
own Socialist Party. Harsh
attacks on American policy are
highlighting the general policy
debate, and dissatisfaction over
lack of progress on Suez and
Algeria may generate pressures
for a reappraisal of France's
ties to the Atlantic alliance.
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The necessity of Socialist
support for any new government
and continuing willingness in
the assembly to let Mollet
shoulder responsibility on the
Suez and Algerian issues are
still major factors blocking
an adverse vote. Despite
strong Communist hostility on
these issues, the Communist
drive for unity of action with
the Socialists may lead the
party at least to abstain. The
Communist attitude, in turn,
may oblige the right center to
back Mollet to avoid the im-
pression that he is dependent
on Communist support.
The French public regards
the six-point generalized
agreement by Britain, France
and Egypt on Suez as a retreat
by the West, and protracted
and difficult negotiations on
the details will probably in-
tensify pressure for the re-
turn to a strong policy.
Many political leaders
still believe that the Algerian
problem cannot be settled until
a satisfactory solution has
been found for the Suez situa-
tion, but there is growing dis-
sension in the cabinet over
Mollet's pacification program
for Algeria. He is under pres-
sure for an immediate declara-
tion of intent and is report-
Japanese conservative
leaders are tentatively plan-
ning to call a special session
of the Diet in mid-November to
ratify the anticipated agree-
ment with the USSR which Prime
Minister Hatoyama is negotiating
now in Moscow and to approve the
Liberal-Democratic Party's
selection of a prime minister
to succeed him.
edly planning some spectacular
gestures before the UN General
Assembly session opens in the
hope of enticing the Algerian
nationalists into a negotiated
settlement.
The Suez issue and, to a
lesser degree, the Algerian
problem, continue as sources of
extreme anti-Americanism even
among many traditionally friendly
to the United States. The be-
lief that the USSR is making
inroads in the Near East and
Africa is spreading in France,
and, there is growing speculation
that Paris should re-examine
the advantages of closer ties
with Moscow. A major reverse
in Algeria could lead to Mollet's
replacement by someone who would
favor taking France out of NATO.
The overwhelming success
of the loan for Algerian ex-
penses relieves pressure on the
treasury for the rest of 1956,
but the threat of renewed infla-
tion and social agitation con-
tinues. The government will
probably rely on social reforms
to maintain labor's allegiance.
However, the Socialist-led
unions will be increasingly
vulnerable to Communist ap-
peals for united action.
. Japan's inability to pursue
a consistent course in negotia-
tions with the USSR is largely
caused by the struggle among
conservative party factions over
a successor to Hatoyama, whose
early retirement is a generally
acknowledged necessity. Dissi-
dents within the conservative
ranks have put pressure on Hato-
yama to seek an agreement which
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
includes two troublesome de-
mands--the return of Shikotan
and the Habomai Islands and
unconditional Soviet support
for Japan's membership in the
United Nations.
The Soviet position on
these points has not been clari-
fied to the satisfaction of
Japan. Press reports have
quoted Premier Bulganin on the
United Nations issue as saying
that the USSR would not use its
veto but could not guarantee
another nation's similar re-
straint.
Hatoyama may be willing
to settle for less than clear-
cut Soviet commitments on these
questions and attempt to over-
come any adverse Japanese reac-
tion by including in the agree-
ment additional concessions--
such as access to fishing ports
in the disputed islands, pros-
pects for increased trade, and
scientific exchanges. These
factors, supported by relief
that the prolonged negotiations
can be concluded on even par-
tially favorable terms, may be
sufficient to win general
Japanese acceptance of the
agreement.
In such circumstances,
Secretary-General Shinsuke Kishi
of the Liberal-Democratic Party,
who appears to have aligned
himself with the Hatoyama-Kono
"main current" faction after a
long noncommittal role, is re-
garde"d as the most likely suc-
cessor to Hatoyama. There is an
intraparty movement, however,
led by formed education minister
Kenzo Matsumura, which is en-
deavoring to shift conservative
party power away from the "main
current" faction. Such a shift
could result in the selection
of a neutral among conservative
leaders to succeed Hatoyama.
The party's Executive Board
chairman, Mitsujiro Ishii, and
Minister of International Trade
and Industry Tanzan Ishibashi
are most prominently mentioned
in this connection.
Pakistani prime minister
Suhrawardy's trip to Communist
China has been made possible
largely as a result of his gov-
ernment's having temporarily
solved its two most pressing
domestic and international
problems. Without such easing
of tension, Suhrawardy's polit?-
ical position might have been
so shaky as to prevent his leav-
ing-the country. As matters
now stand, it appears that
Suhrawardy can count on relative
political quiet, at least until
December.
Suhrawardy left Pakistan
on 16 October, taking with him
high Foreign Ministry officials,
25X1
25X1
economic experts, and a delega-
tion of Pakistani women. He
reportedly hopes to study Chi-
nese agricultural and industrial
methods and flood control tech-
niques. It is possible he will
make some economic agreements
in Peiping. Among the political
issues discussed may be that of
Chinese incursions along the
northern border of the portion
of Kashmir held by Pakistan.
It is unlikely that any signifi-
cant change in Pakistan's rela-
tions with the Baghdad pact and
SEATO will result from Suhrawardy's
visit.
One of the primary factors
making Suhrawardy's trip possible
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CURRENT INTELLIGENCE WEEKLY SUMMARY
includes two troublesome de-
mands--the return of Shikotan
and the Habomai Islands and
unconditional Soviet support
for Japan's membership in the
United Nations.
The Soviet position on
these points has not been clari-
fied to the satisfaction of
Japan. Press reports have
quoted Premier Bulganin on the
United Nations issue as saying
that the USSR would not use its
veto but could not guarantee
another nation's similar re-
straint.
Hatoyama may be willing
to settle for less than clear-
cut Soviet commitments on these
questions and attempt to over-
come any adverse Japanese reac-
tion by including in the agree-
ment additional concessions--
such as access to fishing ports
in the disputed islands, pros-
pects for increased trade, and-
scientific exchanges. These
factors, supported by relief
that the prolonged negotiations
can be concluded on even par-
tially favorable terms, may be
sufficient to win general
Japanese acceptance of the
agreement.
In such circumstances,
Secretary General Shinsuke Kishi
of the Liberal-Democratic Party,
who appears to have aligned
himself with the Hatoyama-Kono
"main current" faction after a
long noncommittal role, is re-
garded as the most likely suc-
cessor to Hatoyama. There is an
intraparty movement, however,
led by formed education minister
Kenzo Matsumura, which is en-
deavoring to shift conservative
party power away from the "main
current" faction. Such a shift
could result in the selection
of a neutral among conservative
leaders to succeed Hatoyama.
The party's Executive Board
chairman, Mitsujiro Ishii, and
Minister of International Trade
and Industry Tanzan Ishibashi
are most prominently mentioned
in this connection.
25X1
Pakistani prime minister
Suhrawardy's trip to Communist
China has been made possible
largely as a result of his gov-
ernment's having temporarily
solved its two most pressing
domestic and international
problems. Without such easing
of tension, Suhrawardy's polit?-
ical position might have been
so shaky as to prevent his leav-
ing-the country. As matters
now stand, it appears that
Suhrawardy can count on relative
political quiet, at least until
December.
Suhrawardy left Pakistan
on 16 October, taking with him
high Foreign Ministry officials,
25X1
economic experts, and a delega-
tion of Pakistani women. He
reportedly hopes to study Chi-
nese agricultural and industrial
methods and flood control tech-
niques. It is possible he will
make some economic agreements .
in Peiping. Among the political
issues discussed may be that of
Chinese incursions along the
northern border of the portion
of Kashmir held by Pakistan.
It is unlikely that any signifi-
cant change in Pakistan's rela-
tions with the Baghdad pact and
SEATO will result from Suhrawardy's
visit.
One of the primary factors
making Suhrawardy's trip possible
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was passage by the national
assembly on 12 October of a
bill establishing joint elec-
torates for Hindu and Moslem
voters in East Pakistan and
separate electorates in West
Pakistan. This is essentially
an unsatisfactory compromise,
but should give Suhrawardy's
new government time to prepare
for another attack.
Since the Western powers
were willing to let Pakistan
attend the second London con-
ference on the Suez question
merely as. an observer, Suhrawardy
IRAN'S OCCUPATION
OF PERSIAN GULF ISLANDS
The occupation by Iranian
marines of one--and probably
more--small, uninhabited but
strategically located islands
in the Persion Gulf in late
September may lead to an inter-
national controversy out of
all proportion to the islands'
importance.
Sixty Iranian "naval in-
fantrymen" occupied Farsi Is-
land, lying midway
between Saudi Arabia
and Iran, apparent-
ly in an effort to
establish claims for
offshore petroleum
exploitation. The
most persistent
Iranian claim in the
Persion Gulf during
recent years is to
,the oil-rich Bahrein
Island, over which
Britain has consider-
able influence but
where American com-
panies hold the oil
concessions.
In addition,
Iran is apparently
planning to occupy
SECRET
has been relieved of the neces-
sity of making an immediate
decision on membership in the
Suez Canal Users' Association.
Both he and Mirza personally
favor co-operation with the
Western powers, though Suhrawaxdy
to date has opposed actual
association with them. Paki-
S.tatii. public opitiiop,- however,
strongly favors Egypt,and
Suhrawardy probably foresees
considerable danger in un-
necessarily inflaming that
opinion so soon after coming
to office.
25X1
Abu Mus, which has significant
oxide deposits, and possibly
Arabi, Sirri, and Tunb, in
order to establish a median
line in the Persion Gulf as
the international boundary.
There are conflicting
claims to the islands of the
Persian Gulf, The British have
thus far been able to defend
Bahrein's sovereignty and Kuwait's
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
claim to Farsi. Iran has never
relinquished its claims to the
islands, although it has never
been in a position to assert
them forcefully. Its one at-
tempt to lay claim to Farsi in
1948 by placing a plaque on one
of the British-constructed bea-
cons on the island was parried
by the British.
Vested interests in Iran,
probably the National Iranian
Oil Company, have apparently
decided that, in view of Brit-
ain's problems in Egypt and
Cyprus,;the time is ripe to
attempt to extend Iranian
territorial jurisdiction to the
median islands in the Persian
Gulf.
The Saudi government,
however, apparently waived
claims to Farsi in 1955 nego-
tiations with Britain in ex-
change for acknowledged sov-
ereignty over other Persian
Gulf islands, although no for-
mal document was signed. If
Iran occupies Abu Mus, Arabi,
Sirri and Tunb, Saudi Arabia
will probably make strong
protests.
NEW SOVIET OVERTURES
TO TURKEY AND IRAN
The Soviet Union is per-
sisting in its attempts to im-
prove relations with Turkey and
Iran. Moscow has combined pro-
fessions of genuine friendship
with admissions that it was at
fault for past bad relations
with the two countries.
Soviet diplomacy has em-
phasized that peaceful co-exist-
ence makes Turkey and Iran's
commitments to Western defense
pacts obsolete and that the
military build-up involved is
a useless drain on limited
economic resources. The USSR
also stresses the advantages
that would accrue from increas-
ing trade with the Soviet bloc
and accepting technical assist-
ance and large-scale, uncon-
ditional credits for economic
development programs.
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25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
To date the Soviet Union
has made appreciably more prog-
ress in improving its rela-
tions with Iran than with Tur-
key.
difficult for the government
not to consider offers of eco-
nomic aid from the Soviet Union.
Turkey
Iran
No specific offer of
Soviet economic assistance
to Iran was made to the Shah
during his visit to Moscow in
July. A new Soviet ambassador,
N. M. Pegov, was sent to Tehran
in August following the Shah's
return.
The ambassador has renewed
Soviet offers of general eco-
nomic assistance of any kind
and in almost any amount. Re-
cently he proposed to the Shah
the joint construction of a
million-kilowatt hydroelectric
project on Iran's northwest
border with the USSR, plans
for which are to be submitted
to Iran soon. Increased barter
trade and reciprocal air serv-
ice were mentioned as other
fields for possible co-opera-
tion. Iran's internal politi-
cal and economic situation is
such that it is increasingly
Despite repeated Soviet
attempts to convince Turkey
that the Soviet Union genuinely
desires Soviet-Turkish friend-
ship, Turkey's long-standing
suspicion of Soviet motives has
not slackened.
In May 1953 the USSR aban-
doned its territorial claims
on Turkey and indicated that
the existing system for control
of the Turkish Straits is satis-
factory, thus easing the way
for friendlier relations.
Soviet bloc trade has
played an important role in the
Turkish economy, comprising 20
percent of Turkey's foreign
trade in 1955. Although Turkey
has continued to rebuff Mos-
cow's offers of economic assist-
ance, apparently aimed at ex-
ploiting its economic crisis,
several Satellite firms have
obtained important new contracts
in Turkey. Concurred 25X1
in by ORR)
BLOC ECONOMIC CAMPAIGN IN SYRIA
Syrian president Quwatli,
who is scheduled to visit Mos-
cow late in October, is report-
ed willing to accept an uncondi-
tional gift from the USSR, or
long-term loans at low interest,
but does not desire Soviet
assistance or technical aid
for specific projects.
Both Soviet and Satellite
economic efforts in Syria have
been stepped up in recent months.
Existing Syrian credit agree-
ments with the bloc for govern-
ment and military construction
projects are estimated at over
$7,000,000. Bloc offers of
credit for various other Syrian
development projects, including
the oil refinery at Homs, are
estimated at around $25,000,000,
while at least $35,000,000 in
credits are being extended
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CURRENT INTELLIGENCE WEEKLY SUMMARY
19 October 1956
to finance Syrian purchases of
arms.
The bloc has obtained sev-
eral contracts in Syria by
cutting prices below Western
bids and offering low interest
rates.
zec ids for the
Horns of refinery have been re-
duced several times in order to
undercut the bids of Western
firms.
During Shepilov's visit to
Syria in June, various proposed
development projects were re-
portedly discussed, probably
including those listed under
the $31,000,000 extraordinary
development budget approved in
1955. The chief source of
funds for this program was to
be foreign and domestic loans.
In August, an official Soviet
economic mission visited Damas-
cus and discussed the construc-
tion of railways, grain storage
facilities, and the proposed
Jusfu Pasha dam.
(Prepared by ORR)
25X1
25X1
The riots in Hong Kong
from 10 to 13 October are now
believed by British authorities
to have been principally the
work of Chinese "Triad" secret
societies and other criminal
elements. These groups appar-
ently capitalized on a minor
disturbance in the crowded ref-
ugee~ areas of Kowloon in order
,to even their score with the
police and indulge in looting.
No prior planning was apparent;
the anti-Communism theme was
used by the gangsters to stir
up the anti-Communist refugees
and swell the ranks of the
rioters. The disorders appar-
ently were not organized or
spread by either pro-National-
ist or pro-Communist Chinese.
SECRET
government also has a new ap-
preciation of the gangster ele-
ments, and proposes within
the next six weeks to seize
the leaders and break up the
gangs.
25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
Peiping was probably sur-
prised by the strong anti-Com-
munist feeling revealed in the
riots. Its initial reaction
was to accuse the Nationalists
of inspiring the violence and
to charge the British with
laxity in dealing with the mobs.
On 13 October, Premier
Chou En-lai lodged an official
protest with the British chargd
d'affaires in Peiping and, on
14 October, told the press,
"China cannot permit such dis-
orders on her doorstep."
Sir Alexander Grantham,
governor of Hong Kong, announced
on 16 October that the British
charge d'affaires in Peiping
had forwarded a "refutation of
allegations" to Chou En-lai's
protest. Grantham said that
so far as he knew, this would
be London's "only reply."
There have been Chinese
Communist propaganda 'and
diplomatic protests against
Hong Kong authorities before--
notably, the demands for British
action against the colony's
Nationalist sympathizers after
the sabotage of an airplane
carrying part of the Chinese
delegation to Bandung in 1955.
Peiping has refrained from press-
ing for recovery of the terri-
tory, however, presumably be-
cause of, its value as an access
to the outside world and the
international repercussions
which would result.
The damage Communist pres-
tige has suffered in the riots
is of more concern to the
Chinese Communists than any
injury to persons or property.
Peiping will probably renew
its pressure on the British
for diplomatic representation
in the colony and make a more
intensive effort to infiltrate
Hong Kong's Chinese popula-
tion.
25X1
The Singapore government's
drive on Communist subversion,
now in its fifth week, is con-
centrating on Chinese middle
schools, where concerted resist-
ance to the campaign has devel-
oped.
The minister of education
on 12 October temporarily
closed two of the six schools
where 6,000 Communist-led stu-
dents were engaged in a "stay-
in" strike. This strike was
called in protest against the
banning of the Chinese Students'
Union, the arrest of six stu-
dents, and an order for the ex-
pulsion of two teachers and 142
students from Chinese schools.
As a result of the govern-
ment's action, the number of
.striking students dropped to
1,000. Chief Minister Lim and
Minister of Education Chew are
deliberately refraining from
using force to clear the schools
in order to avoid making
"martyrs" for the Communists
to exploit.
The government's antisub -
version drive has also succeed-
ed in forcing the pro-Communist
People's Action Party to shift
from united-front tactics to
active opposition. The People's
Action Party had supported
Chief Minister Lim in his prep-
arations for self-government
talks with Britain and has
generally co-operated in the
government's over-all program.
At a rally on 14 October, how-
ever, a party spokesman demanded
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CURRENT INTELLIGENCE WEEKLY SUMMARY
immediate general elections
and declared that a change in
tactics was necessary to "oust
Lim and his men."
The People's Action Party
and other Communist-front groups
claim their opposition to the
government will be conducted
along peaceful, legalistic lines.
They will probably intensify
their emphasis on civil rights
and continue to label the Lim
The promulgation of a con-
stitution in South Vietnam on
26 October will mark the final
stage in President Diem's con-
solidation of power which be-
gan a year ago with the refer-
endum that removed former em-
peror Bao Dai as chief of state.
Having surmounted the numerous
political and military crises
which have threatened South
Vietnam during its short history,
the Diem government has never
been more self-assured. Diem
nevertheless regards his govern-
ment as entering a crucial
stage of economic development
on which its long-range viabil-
ity as a free nation depends.
Impressive celebrations
lasting three days will begin
on 26 October with the inaugu-
ration of Diem as president for
his first constitutional term.
Parades, a diplomatic reception,
exhibitions and courtesy calls
to Saigon by naval vessels of
friendly foreign governments
will demonstrate the South
Vietnamese government's grow-
ing prestige at home and abroad.
.The proceedings, however,
will be principally an expres-
sion of satisfaction with the
government as fascist and pro-
colonial. Student-labor dis-
orders are possible, however,
in view of the support pledged
to the students on 9 October
by the militant Singapore Fac-
tory and Shop Workers' Union.
The government, aware of this
possibility, has warned that
forceful resistance will in-
vite further punitive action.
O
past and optimism for the future.
Henceforth, the government plans
to give greater publicity to its
goals in construction and eco-
nomic development, instead of
stressing anti-Communism as in
the past.
Diem is known to feel that
the time is psychologically and
politically propitious for South
Vietnam to make important strides
toward agrarian reform and eco-
nomic expansion. Accordingly,
he may take the occasion of his
investiture to spell out at
least the broad outlines of
various development plans.
Despite past successes,
Diem is far from complacent.
In addition to his concern over
South Vietnam's economic prob-
lems, he recognizes that the
Viet Minh's ability to foment
trouble is still significant.
He can be expected to maintain
maximum police and military
pressure on Communist cadres,
and he is alert to, indications
that the increasingly aggressive
attitude of the labor unions
may stem largely from the in-
fluence of infiltrated Viet
Minh agents.
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CAMBODIAN POLITICAL CRISIS
Prince Sihanouk's third
resignation as premier in less
than a year has engendered in-
creasing opposition among some
of his closest supporters and
may eventually lead to the
emergence of a new strong man.
Sihanouk said he resigned
on 15 October because of fa-
tigue and budget difficulties,
but the real reason appears to
have been his conflict with
the two strong men in his cabi-
net--Defense Minister Monireth
and Internal Security Minister
Dap Chhuon. Sihanouk reported-
ly objected to the severity of
anticorruption measures con-
templated by these two men, who
are noted for their ruthless
discipline.
Sihanouk's recognition of
Cambodia's need for a strong
government after nine months
of aimless drifting is indicated
by the competency of the cabi-
net he formed on 15 September.
In particular, the appointments
of Monireth and Dap Chhuon were
attributed to Sihanouk's ap-
preciation that Cambodia's in-
ternal security needs to be
strengthened to meet the threat
of subversion resulting from
the close relations he has pro-
moted with the Sino-Soviet bloc.
Sihanouk may attempt to
resolve the present crisis by
forming a "national union" gov-
ernment, drawing particularly
from the ranks of the hereto-
fore opposition Democratic
Party. The prince is known to
be disgusted with his own or-
ganization, the all-powerful
Sangkum, which he describes
as a "giant with feet of clay."
By forming a "national" gov-
ernment, he might hope to
revitalize the Sangkum's policy
of "making the little man king"
and to eliminate those who are
questioning his capacity for
leadership.
Although the outspoken crit-
icism of Sihanouk indicates that
the prince's prestige is in a
decline, he remains the key
figure in Cambodian politics.
To challenge him successfully,
Sihanouk's opponents would need
the active support of the palace,
which has shown some uneasiness
over the situation. In the event
of a showdown, principal contend-
ers for power would appear to be
Monireth, Dap Chhuon and Nhiek
Tioulong, now ambassador to
Japan. All three are considered
pro-Western and strop 1 anti-
Communist. 25X1
PEIPING' S STATEMENT
ON GENEVA TALKS
Like Peiping's,four
previous statements this year
on the Johnson-Wang talks at
Geneva, the Foreign Ministry
release of 16 October charges
the United States with "de-
liberately preventing" prog-
ress at the meetings. Al-
though it follows the previous
statement by less than three
weeks--suggesting that Peiping
is stepping up its propaganda
effort to pin responsibility for
a possible breakdown on the
United States--the Communists
have avoided any threat to dis-
continue the talks and continue
to state their case in moderate
terms.
Noting that Peiping has
made "many endeavors" to promote
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a cultural exchange between
the United States and Communist
China, the Communists say the
American refusal to discuss the
latest proposal results from
fear of "any improvement in
the relations between China and
the United States." The Chinese
observe that the latest Ameri-
can rebuff follows rejection of
earlier Communist proposals to
lift trade controls.
The Chinese Communists
evidently feel confident
their propaganda position at
Geneva ,is"still strong, despite
their failure to live up to..
the :10 September, 195.5 agree-
ment on repatriation of
nationals and their unwilling-
BRITAIN AND CHINA TRADE
CONTROLS
Concern for tripartite
unity on Suez has been in part
responsible for the apparent
British decision to postpone
calling for a full review of
China trade controls, at least
until February 1957. The re-
view, originally postponed
from August, was expected to
be in December 1956 but, ac-
cording to the COCOM chairman,
the British delegate personally
doubts the wisdom of summoning
the Consultative Group to meet
even in February.
In the past four months,
Britain has essentially achieved
the effect of a formal reduction
in trade restrictions by use of
the exceptions procedure with-
out the unanimity formerly re-
quired, and now may feel less
compulsion for a formal review.
The British began actively
pushing gradual elimination of
ness to sign a meaningful re-
nunciation of force agreement.
Additional Foreign Ministry
statements designed to embarrass
the United States can be expected
as Peiping makes new "reasonable"
proposals unacceptable to the
United States.
The Chinese Communists
are still eager to see the
talks raised to the foreign
minister level, although their
most recent statements have not
stressed this point. Peiping
may feel that renewed pressures
for a Dulles-Chou meeting should
be delayed until after the
American presidential elections.
the differential between con-
trols on trade with China and
that with the Soviet bloc in
December 1955, In May 1956 they
announced plans to make greater
use of the complex exceptions
procedure for items on the
China differential. Since then,
extensive use of the exceptions
procedure, coupled with in-
creasing pressures for defined
reductions in both CHINCOM
and COCOM controls generally,
has been supported almost unan-
imously by the participating
countries.
The Suez crisis ended Anglo-
French plans to press for a.
major relaxation of East-West
trade restrictions at the
August meeting of COCOM and
CHINCOM, according to the French
COCOM delegate. Nevertheless,
the decision taken by Eden, in
consultation with.Pineau, to
avoid irritation of the United
States, was labeled temporary
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
and not expected to last six
months.
Britain apparently has
decided to seek more liberal
export quotas in the COCOM re-
view of quantitative controls
scheduled to begin on 9 Novem-
ber, in return for which it
may agree to a quota control
on copper.
The British continue to
want ultimate revision of COCOM
controls in line with their
"thermonuclear warfare concept"
of strategic controls. Pre-
sumably this would entail a
re-examination of the strategic
value of materials in the light
of advanced weapons developed
since the controls were laid
down. The British, however,
have neither defined this
concept nor produced a list
of possible reductions in
line with it, and there is
no indication as to when the
will do so.
The Honduras regime of
Julio Lozano employed violence,
intimidation and bribery to
assure its victory in the
election of a constituent
assembly on 7 October. It
claims to have won all 56 seats.
The assembly, to be convened on l
November, is expected to name
Lozano constitutional president,
ratify his acts as chief of
state, and approve the draft
of a new constitution.
Lozano assumed control of
the Honduran government as
de facto chief of state in
late 1954 when constitutional
order broke down in the heat
of a bitter presidential cam-
paign. For almost two years
he tried strenuously to create
a stable government in which
the three major parties would
participate. Repeated frus-
trations have led him in the
past few months to adopt in-
creasingly authoritarian
measures, which have led to
steadily growing tensions.
The opposition Liberal
and Nationalist Parties, the
traditional parties in Hon-
duras' long-time two-party
system, will apparently lack
representation in the newly
elected assembly. Though
political enemies, the two
parties have considered act-
ing in common against the regime
on several occasions in the
past four months, and may now
do so. Each party has been
reported independently planning
a revolt. There were indica-
tions early this month that ex-
dictator Tiburcio Carias,
Nationalist Party chieftain,
might be planning a revolt,
while exiled Liberal leader
Villeda Morales has publicly
declared his intention of
inciting Hondurans'to revolt.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
The regime is weakened
by the ambitions of Abraham
Williams, head of the small
and nominally pro-Lozano Re-
formist Party which will
dominate the constituent
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The government probably
will try to strengthen its
position by attempting to make
a deal with Carias, and, as a
step in that direction, named
Carias' son ambassador to the
United States on 11 October.
army's loyalty.'
Top leaders of the 3,000-
man army are believed loyal
to Lozano and, if united,
could probably quash any at-
tempted revolt. However, the
high tension and Lozano's lack
of popular support may weaken the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PATTERNS AND PERSPECTIVES
SATELLITES TAKE STEPS TO IMPROVE RELATIONS WITH THE UNITED STATES
As part of the general
"thaw" in Soviet bloc policies,
a number of Eastern European
governments have been seeking
to improve relations with the
United States, The softer
tone of the Satellite press
toward the United States has
been accompanied by semi-
official overtures for closer
relations. Rumania has taken
the lead in making some effort
to remove obstacles to improve
relations, and Czechoslovakia,
Hungary and Poland have also
sought to make some adjustments.
Formal Negotiations
Several of the Satellite
regimes have approached the
United States with suggestions
for negotiating outstanding
issues to pave the way for ex-
panded trade relations and
technical exchanges.
Czechoslovakia began nego-
tiations on outstanding eco-
nomic problems on 28 November
1955.; Rumania, on 15 October.
The negotiations with Czecho-
slovakia have dragged on
through 26 sessions, and Prague's
reluctance to make concessions
may indicate it has little in-
tention of attempting to over-
come obstacles to.closer rela-
tions at this time.
A high Rumanian official,
commenting on his government's
refusal to release all dual
nationals prior to the con-
ference, stated that the "action
would spoil Rumania's negotia-
ting position." However, long-
denied exit visas have been
granted to several members of
the group. The Rumanians have
also rejected all American
efforts to reopen the USIS'read-
ing room in Bucharest, closed
since 1951.
Rumania may hope in the
negotiations to realize its
previously expressed desire
to exchange Chamber of Commerce
representatives and agricultural
attaches, to open consulate
offices and, above all, to ex-
pand trade with the United
States. A number of American
businessmen and trade dele-
gations have visited Rumania,
but only a few minor trade deals
have been concluded.
Hungary is on record as
desiring closer relations and
both general and specific
economic discussions, but has
followed up its statements
with only a few gestures of
good will, such as the release
of two of the arrested legation
employees and of the former
press stringer Endre Marton
and his wife.
Rumania may be more willing
to make concessions at the con-
ference table in view of its
oft-expressed desire to expand
economic interchange. The
talks, which were first pro-
posed by the Rumanian Foreign
Ministry on 7 March, will cover
economic problems related to the
claims of American citizens--
estimated at $88,000,,000--for
property in Rumania, the prob-
lem of frozen Rumanian assets
in the United States and the
problem of trade exchanges.
The Poles on 8 October
declared their readiness to
enter into discussions with
the United States. There are
apparently advocates of
normalized relations--especial-
ly economic--among Polish of-
ficials who have counted on the
de-Stalinization campaign to
facilitate the process, but
they have been opposed by a
number of party leaders. The
expected return of Wladyslaw
Gomulka to a high office may
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
lead to closer relations with
the United States.
On 28 June, the Poles
agreed to a lend-lease settle-
ment with the United States
following a series of meetings
which began in Washington in
1954. The settlement called
for the payment of a net sum
of $110,000 to the United
States.
During the past few months,
Bulgaria and Albania have re-
iterated their interest in re-
newing diplomatic relations with
the United States.
Conciliatory Gestures
Several Satellites have
eased conditions for American
diplomatic missions.
The Rumanians have reduced
travel restrictions on diplo-
mats and on occasion have even
allowed American officials to
travel in restricted areas.
CHANGING TRAVEL
RESTRICTIONS IN
EASTERN EUROPE
Restricted areas for Westerners
in October 1956
Restricted areas for Westerners
in 1952
Passages through restricted
areas in October 1956
Does not include specific military areas.
0 MILES 200
I 1
18 OCTOBER 1956
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
A Hungarian Foreign Ministry
official is quoted to the effect
that all travel restrictions on
the American legation staff may
be removed. Rumania has granted
a number of exit visas to na-
tionals. The Poles have per-
mitted several hundred persons,
most of them dual nationals,
to leave Poland. The Czech,
Rumanian and Hungarian govern-
ments have lightened their
surveillance of Western, partic-
ularly American, diplomats.
Most Satellites have pushed
tourism., and in many .cases Ameri-
can visitors--businessmen, clergy.
ics, former nationals and plain
tourists--have been given a
virtual carte blanche on travel.
Hungary, Poland and Czechoslovakia..
have arranged for conversion of
Western currencies at a rate more
favorable than the artificially
high official rate of Eastern
European currency.
Although the Satellites
recently have been more factual
than in the past in their re-
porting of developments in the
United States, on foreign policy
questions,they still adhere
closely to the Soviet propaganda
line. They have been very sen-
sitive to Radio Free Europe
activities and assert these are
an obstacle to the development
of healthy relations. Hungary,
Czechoslovakia and Poland have
condemned "American propaganda
balloons" and, in an effort to
implicate RFE and the United
States, have incorporated alle-
gations of Western espionage
activity in several recent spy
trials.
East-West Exchanges
Most Eastern European
countries have demonstrated
considerable interest in es-
tablishing cultural contacts
with the West, and the enthu-
siasm with which American
artists have been received has
been striking.
The Boston Symphony
Orchestra performing in Prague
on 11 September received
tumultuous applause after play-
ing the Czech and American
national anthems. The Ameri-
can embassy in Prague notes
that the concert was an unfor-
gettable evening for the
Czechs in which their intense
appreciation of musical artistry
and their admiration for Ameri-
cans was joined.
Budapest residents reacted
similarly when Yehudi Menuhin
performed there in June. The
visit induced much nostalgic
emotionalism and fanned hopes
for closer cultural ties. A
spokesman for the Hungarian
literati approached the Ameri-
can legation in an effort to
stimulate literary exchanges.
Hungarian officials have ex-
pressed interest in scheduling
concerts by Menuhin, Leopold
Stokowski and Marian Anderson
in 1957. Hungary had denied
visas to some performers in
1955. These increased contacts,
the more objective press treat?-
ment of the United States, and
the recently publicized delivery
of American aid for Hungarian
flood damages have had a
healthy psychological effect
on the Hungarian people, who
have gone out of their way
to be friendly to Americans.
Rumania and Poland have
also demonstrated some interest
in cultural exchanges. American
theatrical producer Billy Rose,
for example, was warmly received
by the Rumanians, who gave
"universal approval to his de-
sire to widen cultural contacts
between the two countries,"
Rumania, following the Soviet
example, has accepted the Ameri-
can invitation to send observers
for the presidential election.
Poland and Czechoslovakia have
rejected the invitation, in a
conciliatory manner, and Hungary
has not responded.
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Afghan prime minister Daudb'
success in maintaining his
position and carrying out his
policies rests in large part
on the fact that many educated
Afghans sympathize with his
outlook and aspirations. While
most Afghan leaders retain
their deep suspicion of the USSR
they favor Afghanistan's policy
of "neutrality" and are con-
vinced of the value to their
country of Soviet bloc aid.
In the 19th century, Afghan
rulers resorted freely to in-
trigue, war, and enforced
isolation to maintain national
independence. The present
leaders realize that this goal
can be achieved only in a
larger framework of world af-
fairs. In addition they are
faced with the necessity of
promoting economic and social
development within the country.
The Royal Triumvirate
The .architect of Afghan
policy is Mohammad Daud Khan,
who has been prime minister
since September. 1953, Daud
is aided by his older brother.
Foreign Minister Naim. 1
25X1
King Zahir Shah, first
cousin of Naim and Daud, has 25X1
played a shadowy role ever since
his accession to the throne in
25;
The three royal cousins
make all the important decisions.
Unlike his predecessors, however,
Daud has allowed nonmembers of
the royal family a significant
role in the government. These
include such officials as Financ
Minister Malik, Interior Ministe 5X1
Hakim, and Public Works Minister
25;
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CURRENT INTELLIGENCE WEEKLY SUMMARY
"The Young Effendis"
Of much greater potential
importance to Daud and Afghan-
istan is a third group of young-
er, Western-educated men who
are sometimes referred to as
"the young effendis.", They,
staff most of the top positions
in the Afghan civil service and
are responsible for any effi-
ciency the Afghan bureaucracy
may possess. They can be
divided into two subgroups.
First are the competent
young careerists, who carry out
orders from above regardless of
their own views. Some have be-
come enthusiastic exponents of
Laud's policies. Notable ex-
amples are Sardar Najibullah
Torwayana, ambassador to London,
Mohammad Hashim Maiwandwal,
deputy minister of foreign af-
fairs, and Abdur Rahman Pashwak,
director of the Office of Polit-
ical. Affairs in the Foreign
Ministry.
The other, potentially more
dynamic, section of the "young
effendis" consists of liberal-
minded men with a desire for
progress. Several of these were
imprisoned by Daud's predecessor
in 1952 for participating too
enthusiastically in an "experi-
ment" under which the government
briefly permitted the establish-
ment of political parties and
uncontrolled newspapers. They
have, been released from jail by
Daud and have been given govern-
ment positions. Abdul Hai Aziz,
who negotiated the June 1956
aviation development agreement
with the United States on behalf
of the Daud government, is a
member of this group.
25X1
Bloc Ties
Afghanistan's greatly
expanded ties with the Soviet
bloc appear practical to these
leaders. In their view, contact
with the bloc has contributed
to internal development and has
focused the attention of the
world on their country. These
developments will certainly
strengthen the modern-minded
group over tribal and religious
elements.
Further, the government
leadership apparently is con-
vinced that the USSR does not
intend any kind of direct attack
on Afghanistan. They base this
conclusion on the theory that
Soviet policy is at present too
dependent on world--especially
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CURRENT INTELLIGENCE WEEKLY SUMMARY
18 October 1956
Asian--opinion to permit an
attempt at a take-over on either
the Baltic or Czech models.
The preservation of Afghan
independence remains, however,
the ultimate policy aim, and
there is no question of Afghan
official awareness of the dan-
gers inherent in Soviet benevo-
lence.
The Soviet bloc, as a
result of an investment of al-
most $150,000,000--including
about $25,000,000 worth of aims--
has been able to exercise some
influence in the economic field
in Afghanistan in the past year.
There has never been any overt
Communist party in Afghanistan
nor any clear-cut evidence of
political penetration.
To date, therefore, the
Afghan leaders have no reason
to regret their decision to turn
to the USSR for the economic
and political support which
they were unable to obtain else-
where. Despite their confidence
in their ability to outmaneuver
the Russians, however, some of
the more astute officials
realize that on their own they
cannot ward off Soviet penetration
indefinitely. Consequently,
they welcome indications of
continuing American interest
in Afghanistan, such as the
$14,500,000 aviation develop-
ment agreement signed last June.
The Afghan leaders.report
edly came to an agreement with
the USSR recently on the amount
of aid they plan to accept from
the United States. They would
probably welcome a similar
understanding with the United
States on the extent of their
commitments to the Soviet bloc.
The purpose of this would be
to enable them better to judge
American intentions in the
event they find their inde-
pendence endangered by Soviet
activities.
If Soviet penetration
becomes obviously threatening
as time goes on, Kabul will
probably be prepared to pay a
considerable price
D:i::I
to obtain
Western support and protection.
At present, however, the Afghan
leaders appear to be content
with their "neutrality" policy,
and will probably follow it
indefinitely. There is a
danger that if subtle but
massive-Soviet activity continues
at its present rate, by the
time Kabul becomes convinced of
a dangerous degree of penetration,
it may be too late for any
Western support to be effective.
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