CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001000060001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 16, 2016
• Document Release Date: February 1, 2005
• Sequence Number: 1
• Publication Date: November 1, 1956
• Content Type: SUMMARY

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COPY N0. 18
OC~ NQ, 7259/56
1 November 1956
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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State Department review completed
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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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CQNFIDEI~~L
CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1955
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
HOSTILITIES IN EGYPT . ? . ? . ? ? ? . ? . . Page 1
The basic ob?yective of the British and French action
against Egypt is t?~ reverse the deteri?rction of their
position throughout the Middle East and North Africa.
The advantages the Israe'~.is may hope for are a lifting of
the Egyptian blockade of Suez and the Gulf of Aqaba,
territorial gains, and the neutralization of Egyptian
strength.
THE SITUATION IN HUNGARY e e . . . . s e Page 5
The fighting ended in Budapest and Soviet troaps
withdrew from the city on 3U and 31 October. The Soviet
Union virtually capitulated to the demands of the
Hungarians rather than use f?rce to crush them. The
provisional govei?n~aent of Premier Irore Nagy, yielding
to the principal insurgent demands, has promised free
elections and has asked for Hungary's wit~adrawal from
the Warsaw pact.
The Gomulka national Communist regime has followed
up its "revolt" with additional meves to strengthen
its internal position. The Pu~l~,sh pe?ple.appear to
feel that the crisis has been successfully weathered.
Further liberalizati?n and greater independence from
the Kremlin are implicit in the continuing purge of
Stalinist elements in the party and the ~vr?mpt res-
tbration tc~ Pu~lish primate, Cardinal
Wyszynski~
CONFIDENTIAL
Page. 9
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 THE SATELLITE SITUATION AND
THE SOVIET LEADERSHIP Page 10
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The Soviet declaration of 30 October on relations
with the Satellites is intended to regain the initiative
and recoup the serious loss of prestige and leadership
which the USSR bas suffered from the events of the past
two weeks in Hungary and Poland. It promises concessions
but stresses "close fraternal co-operation and mutual
aid between the countries of the socialist commonwealth."
The situation is producing considerable confusion among
the Soviet leaders and is probably causing strain on the
unity of the collective leadership, although the initial
reaction will most likely be to close ranks to deal
with the crisis.
NOTES AND COMMENTS
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EAST GERMANY . . . . . Page 1
The East German regime is becoming increasingly
nervous over the situation created by the political
upheavals in Poland and Hungary and widespread dis-
satisfaction over conditions within East Germany. The.
regime's show of determination to suppress the first
evidence of resistance, the significant improvement
in the capabilities of police, military, and security
forces since the riots of June 1953, and the presence
of approximately 400,000 Soviet troops in East
Germany serve as strong deterrents to any mayor out-
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NORTH AFRICA Page
France's position in North Africa continues
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THE WEEK IN BRITsF
 CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1956
SINGAPORE Page 3
The Singapore government has used the Communist-led
riots of 25 to 28 October to ,justify the arrest of
approximately ?OO persons and to proscribe four more
Communist-front organizations. For the time being,
Communist subversive organizations and activities have
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been disrupted.
SHIFTS IN VIET MINH LEADERSHIP . . Page 4
Widespread peasant discontent with the North
Vietnamese land reform program is an important factor in
the ousting of Communist Party secretary general Truong
Chink and at least two other party leaders. The as-
sumption of Chink's post by Ho Chi Minh, party chairman
and president of the regime, suggests an effort to throw
his prestige behind the program, A temporary slowdown
in the land reform program may be in the offing.
PRESSURE MOUNTING IN JAPAN
FOR CLOSER
I
T
ES WITH PEIPING Page 5
The Japanese want to establish diplomatic relations
with Communist China but, fearing American and Chinese
Nationalist reaction, will probably press for de facto
relations. Peiping can be expected to increase its
efforts to neutralize Japan.
NEW CAMBODIAN GOVERNMENT . Page 6
The new Cambodian government headed by San Yun, a
former royal councilor, is essentially the same as that
organized by Prince Sihanouk prior to his resignation on
15 October. The prince will rule from behind the scenes.
The retention of Minister of Internal Security Dap
Chhuon underscores Sihanouk's desire to strengthen
'
Cambodia
s defenses against Communist subversion.
INDIAN-NEPALESE RELATIONS ~ Page 7
The Indian government, which apparently has not
been fully informed by the Nepalese regarding their
recent contacts with Communist China, is disturbed at
developments in Nepal and seems likely to take ste s to
increase its influence in Katmandu.
~C
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THS WEEK IN BRIEF
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UNESCO GENERAL CONFERENCE Page 8
The ninth general conference of UNESCO, which opens
in New Delhi on 5 November, may bring East -West rivalry
in the cultural and propaganda fields into open- contest,
with both sides bidding for the support of the Arab,
Asian, African and Latin American countries. The USSR
will attempt to develop UNESCO into a sounding board
for "peaceful coexistence" and "cultural exchanges"
and will make a major effort to admit Peiping to the
organization.
EURATOM AND THE COMMON MARKET , Page 9
The treaties for EURATOM and the European common
market are "hanging in the air" as a result of the
failure of the foreign ministers of the six CSC countries
to bridge outstanding Freneh-German differences at the
20-21 October conference in Paris. Proponents of the
projects differ in their opinions on the prospects for
salvaging the treaties, but they agree that the personal
intervention of Chancellor Adenauer is now crucial.
REACTIONS TO THE HUNGARIAN
AND POLISH DEVELOPMENTS . Page
Eastern Europe: Poland and Yugoslavia have declared
in favor o 't e. ungarian insurgents--the Albanian,
Bulgarian, Czech, and East German regimes having condemned
them as counterrevolutionaries, Popular sympathy with
the insurgents, coupled with unrest, is reported in East
Germany, Czechoslovakia, Rumania, and Albania.
Peiping: Communist China has taken no public
position in the evolution of new Soviet-Eastern European
relationships. Although Chinese Communist leaders
probably sympathize with the efforts to achieve a larger
degree of independence, Peiping will almost certainly
support Soviet efforts to maintain the bloc.
Asia and the Middle East: The-non-Communist press
has we corned t e upra.sings as a victory for the farces
of anticolonialism and independence, and as a forerunner
to similar developments in the other Satellites. Nehru
interprets them as steps in the "wholesome process of
liberalization and democratization." Except for Taiwan
and South Korea, both of which called for strong free -
world action, official comment has been guarded.
SE~C'RE ~'
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TliE WEEK I N BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Western Europe: The revolt in Hungary is almost
universa y regar ed in Western Europe as symptomatic of
a fundamental, and perhaps enduring, change in the USSR-
Satellite relationship. The Communists' reaction re-
fleets the continuing stresses on national party unity
in almost every country.
PATTERNS AND PERSPECTIVES
POLAND'S ECONOMY: GOMULKA'S PROBLEAiS AND PLANS Page 1
The economic policies proposed by party first
secretary Gomulka on 20 October will result in the rapid
increase in Polish living standards necessary to reduce
worker discontent only if substantial foreign aid is
received. Regardless of whether such aid is received
from the Soviet Union or from the West, however, Gomulka's
plans imply that the Polish economy will remain partially
dependent on trade with other bloc nations for some time
CHINESE COMMUNIST ECONOMIC GROWTH . Page 4
A general air of satisfaction with the economic
situation prevailed at the eighth congress of the Chinese
Communist Party, which met in Peiping in late September.
Progress under the First Five-Year Plan (1953 ~5?) met
with approval, and the same rates of growth were pro-
jected into the Second Five -Year Plan (1958-62). The
emphasis was on realistic planning.
THE REORGANIZATION OF THE STATES OF INDIA Page 7
Reduction of the number of Indian states from 27
to 14 on 1 November is intended by Nehru as a move toward
greater national unity. The government has conceded,
however, to demands by provincial linguistic groups to
.make certain changes along linguistic lines, raising
doubts as to whether national unity actually will be
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THE WEEK IN BRI$F
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1956
ARGENTINE POLITICAL SITUATION . ~ Page 9
The problems of the Argentine provisional govern-
ment are being increased by the conflicting views of
politicians on constitutional reform and on prepara-
tions for the elections scheduled for late 195?. The
Aramburu regime appears determined to transfer authority
to a duly elected civilian government. It is appre-
hensive, however, over the dissidence among its supporters
and the apparently well-financed subversive activity of
the Peronistas. 25X1
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THE WEEK IN BRIEF
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HOSTILITIES IN EGYPT
(As of 1200, 1 November)
Military Situation
British and French mili-
tary operations against Egypt
began on 31 October following
Egypt's rejection of the Anglo-
French cease-fire ultimatum.
The joint headquarters on Cyprus
announced air attacks on Egyptian
military airfields in the delta
and the canal zone on both 31
October and 1 November.
The rent ore gn
n s ry announced on 1 November
that Anglo-French naval forces
were already moving toward the
Suez Canal zone in both .the
Mediterranean and the Red Sea.
The Egyptian LST Akka,
which Cairo .declared to have
been sunk in the Suez. Canal
near Lake Timsah by Anglo-
French air action, is believed
to ,have been scuttled by the
Egyptians in order to block the
Suez Canal. An Egyptian LST
loaded with rocks had been re-
ported held in readiness in
this area for such a purpose.
Israeli Objectives
Israel, enjoying an unusual
sense of security as the tacit
ally of two major powers, has
taken little trouble to offer
convincing justification for its
invasion of Egypt. Tel Aviv
has asserted that the objective
of its operations is not the
Suez Canal, but the occupation
of territory from which it
alleges Egypt has launched feda-
yeen terrorist operations. The
Israelis, almost certainly by
prearrangement with the British
and French, "accepted" the Anglo-
French ultimatum of 30 October
and said they would halt their
troops ten miles from the canal
as specified in the ultimatum.
However, the Israeli government
made its compliance conditional
on Egyptian acceptance, and
Tel Aviv radio broadcast the
Israeli stand after it had re-
broadcast Egypt's refusal.
The advantages Israel may
hope for, in addition to the
defeat of Egypt or the neutrali-
zation of Egypt's new military
strength, almost certainly in-
clude freedom of transit for
Israeli ships through Suez and 25X1
in the Gulf of Aqaba, both of
against Israeli shipping.
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CURRENT INTELLIGENCE ZNEEKLY SUMMARY
there is considerable private
satisfaction over Egypt's trou-
bles.
Mar a ,aw as
een ec are in Baghdad and
The initial attitude of
Egyptian leaders in the face of
,~ CYPRUS
(U. K.1
REPORTED ISRAELI AIRBORNE LANDING
~ii///////~ ISRAELI MOVES 29-31 OCT.
SELECTED ROAD
~Is((~6;:;;~{~~~" EGYPTIAN MOVES 310CT.
~ AIR ATTACK
~~k~dxaridria
0 20 40 60 80 100
N UTICAL MILES
~cu~F
S OF
/ApA9A~
S~~RE ~"
0ri[ish
'Maan
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the Israeli mobilization and
the announcement of American
evacuation plans was one of
puzzlement--President Nasr asked
Ambassador Hare what all the
stir was about. Immediately
following the Israeli attack,
Egyptian officials sought pub-
licly to minimize the serious-
ness of the situatio
President Quwatli of Syria
saw fit to continue with his
scheduled visit to the USSR,
remains
to be seen whether
Syrian,
Jordanian or Saudi
Arabian
forces will intervene
to aid
Egypt.
British-French Pu~poseS
The purposes of the British
and French in acting against
Egypt appear to be threefold:
to bring about the overthrow
of Nasr, to ensure their long-
term interests in the vital
Suez waterway, and especially
to reverse the deterioration of
their position throughout the
Middle East and North Africa.
Statements in both London
and Paris are heavily weighted
with references to a crisis of
national survival. Eden as-
serted an .obligation "to dis-
charge our national duty'.' and
said safe passage through the
canal is a matter of survival
"for us and all of Europe."
His statements display his
recognition that the govern-
ment's course involves. a funda-
mental departure in Britain's
foreign policy and strategic
posture.
Bath the British and French
parliaments split on support of
the action--the British along
straight party lines, and the
French with same 40 deputies
,joining the Communists against
the government. The Communists
alone had opposed Mollet's
Algerian policy in August.
Dormer premier Mendes-France
:Ls reputed to oppose the govern-
ment policy.
Although the news of
British-French intervention
was received in France with
much the same. nationalistic
satisfaction as greeted the re-
cent seizure of the five
Algerian leaders, some mis-
givings have already been ex-
pressed on passible adverse re-
percussions on France's North
African position and relations
with the United States. The
conservative Parislen Liber~
notes that the move makes sense
only if it strengthens France
in North Africa.
Large sections of the
British press condemn the
government. Most independent
and Labor ;papers deplore the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
actian, and misgivings have ap-
peared in same of the Tory press
and in the influential inde-
pendent Times.
Labor Party leader Hugh
Gaitskell has asserted that the.
"fantastic" intervention repre-
sents an assault on the basic
principles of British foreign
policy: solidarity with the
Commonwealth, the Anglo-Ameri-
can alliance, and adherence to
the United Nations charter
The depth of the split is shown
by Gaitskell's statement that
his party would use "every con-
stitutional means" to oppose
military operations.
Soviet Reaction
The official Soviet state-
ment of 31 October charged that
the Israeli attack was designed
as a pretext for Western inter-
vention, particularly by Brit-
ain and France, to re-establish
control over Suez. The state-
ment called for immediate
Security Council actian.
At the same time, Soviet
propaganda has tried to involve
the United States as an a,coomp3'iice
of Britain and France. Pravda
on 31 October asserted t a ie
United States had a direct hand
in the Israeli military action
and charged that the order far
evacuation of Americans from
the Middle East issued one day
prior to Israeli action was evi-
dence of prior American knowledge
of Israeli intentions.
According to a press report
from London on 31 October, Com-
munist diplomats who have ac-
curately reflected the thinking
of Soviet leaders stated that
"volunteers from the Soviet
Union and other countries" could
be expected to pour into the
Middle East to aid Egypt in the
event of any Anglo-French attack.
At the same time, they suggested
that the USSR and the West should
guarantee Israel's existence, in-
sisting tl~at the seriousness of
the situation makes it "imperative
to accept facts and realities,
one of which is the existence
of the state of Israel." These
.diplomats also expressed the
hope that the United States
would "exert its influence" on
Britain and France against the
use of force.
During the Suez crisis,
Moscow limited itself to prom-
ises of equipment and volun-
teers in the event of Western
military action. There is~no
indication. that the USSR will
make any further commitment
at this time.
United Nations
The support of more than
two thirds of the 76-member
General Assembly seems assured
for the American resolution
.vetoed by Britain and France
on 30 October in a Security
Council meeting. It will prob-
ably be voted on during the
emergency special session con-
vening on 1 November. The res-
olution calls for a cease-fire
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CURRENT INTELLIGENCE WEEKLY SUMMARY
I November 195+6
and the withdrawal of all forces,
and enjoins all members to re-
frain from the use of force or
threat of force in the area.
Overwhelming support for the
American position has been
voiced by the Arab-Asian, Latin
American, and Scandinavian blocs
in the UN. French-British in-
tervention has been denounced.
Secretary General Hammar-
skjold has put the full weight
of his office behind any General
Assembly action to restore peace
in the area.. While the General
Assembly is expected to pass a
resolution along the lines of
THE SITUATION IN HUNGARY
(as of 4904, 1 November)
The fighting ended in Buda-
pest and Soviet troops withdrew
from the city on 34 and 31 Octo-
ber. The Soviet Union on that
date had virtually capitulated.
to the de~uarr~ds of the Hungarians
rather than use force to crush
them. The provisional govern-
ment of Premier Imre Nagy, suc-
cumbing to many of the principal
rebel demands, has promised free
elections, agreed to form a new
army from insurgent units, and
has asked for Hungary's with-
drawal from the Warsaw pact.
Military Situation
There are conflicting re-
ports concerning the withdrawal
of certain Soviet troops from
the country as a whole. Soviet
troops, did, however--after
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the United States draft, any at-
tempt to incorporate a condem-
nation of Britain and France as
aggressors would probably fail
to muster two-thirds majority 25X1
support at this time.
O
several days of threats, counter-
threats and promises by Moscow,
the Hungarian government and
the insurgents--complete their
withdrawal from the beleaguered
Hungarian capital on 31 Octo-
ber. These troops are reportedly
camped on the Budapest outskirts;
there are no firm indications
that any Soviet forces have as
yet returned to their garrisons.
Hungarian army, police, youth
and worker brigades have taken
over the task of maintaining
order within the capital.
Various Soviet units remained
deployed in the provinces, but
these forces are not interven-
ing in local affairs.
Major elements of at
least four Soviet divisions
totaling approximately 40,000
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men were within the borders of
Hungary as of 27 October.
In a speech the afternoon
of 30 October, Nagy repeated
his earlier statement that he
was negotiating with the USSR
concerning the question of Soviet
troop withdrawal from the coun-
try. Mosco~-'s announcement on
30 October that it is "ready to
enter into relevant negotia-
tions...on the question of Soviet
troops in Hungary" suggests that
agreement may be reached soon
concerning this question.
The Soviet Union apparent-
ly realized that it faced a
clear choice in Hungary: either
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a cease-fire--allowing Nagy to
try to salvage whatever Commu-
nism he could--or a full-scale
war against the entire Hungarian
nation.
Hungarian Army
The formation of a Revo-
lutionary Military Council of
the Hungarian Army was announced
on 30 October. This council,
consisting of representatives
from the army, air force, police
and insurgent groups, has been
recognized by the Nagy regime.
It has announced approval of
demands mane on the government
by workers': councils and dis-
missed a number of high military
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CURRENT INTELLIGENCE WEEKLY S~I~~M~AR,Y
1 Nov~emlaer :19.56
officers, including General
Toth, the armed forces chief.of
staff. Colonel Pal Malater,
-hero of the Kilian barracks
stand against the Soviet troops,
was named first deputy minister
of defense
Subsequently it was indi-
cated that ~ the cocx~ciT would be
responsible fbr maintaining
order t.hrough~uiv the country
until a new popularly elected
government takes office.. The
council--or.organs now subordi-
nate to it--has probably gained
wide .popular support by threaten-
ing on 30 .October to attack
Soviet units if they did not
withdraw from Budapest "within
12 hours," and from the entire
country by 31 December.
Nagy Regime's Concessions
The key concession from
the Nagy regime game-late in
the evening of 30 October when
it announced free and secret
elections, t~ithc~e~t;, however,
specifying a date. Earlier in
the day Nagy had stated that he
specifically recognized the
regional governments and asked
them to assist iz~ maintaining
order, thus implying that they
should remain armed. In the'
same speech he announced that
the one-party system in Hungary
has been abolished and a coali-
tion government would be formed
consisting of representatives
from the Communist Party and
from the other parties existing
in 1945--presumably including
the Smallholders (57 percent of
popular vote in 1945), the
Social Democratic (17 percent),
and the National Peasant (6
percent).
Nagy announced that the
presidium of this new coalition
cabinet will include national
Communists Nagy, Kadar (party
first secretary), and Losonczy;
Smallholders leaders Bela
Kovacs and Tildy; Peasant Party
representative Erdei (a 3aold-
over from previous Communist
governments)9 and one or more
persons,: as yet unnamed, from
the Social Democratic Party.
The Nagy regime has hailed
the events of the past week as
"a national revolution" and
classified the insurgent workers
and .youths as "patriots, " and a
sp.o&esman proclaimed that the
da+~? of the Budapest uprising
world be a national holiday,
Szabad Nep, the Communist party
organ, on 30 October condemned
as an insult to the Hungarian
people Fravda's branding of the
uprising as an ''unpopular
adventure."
On 31 October Nagy made
a speech in Kossuth Square,
blaming ousted party boss Gero
and former premier Hegedus-for
calling in-the Soviet troops.
Nagy also repeated his call
for Soviet troops to leave the
country and announced his in-
tention to ask for Hungary's
withdr~.wal from the Warsaw pact,
apparently in answer to demands
by the 7iu~~ga~rian Army Revolu-
tionary Committee.
On the same day, the Nagy
government restored all civil
and ecclesiastical rights to
Cardinal Mindszenty, who had
been freed by ,a rebel army
unit the night before.
Nagy appears to be trying
to reach an accommodation with
sufficient elements of the
.insurgents to end the chaos
in Hungary. He presumably is
counting on the Communists
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CURRENT INTELLIGENCE WEEKLY SUMMARY
being a prominent element in
the present coalition and hop-
ing that organizational
strength of his party will give
it an advantage over the newly
organized parties, enabling it
to thus retain some position
in the government even after an
election.
The Insurgents
Virtually all of the in-
surgent demands on which there
was fairly unanimous agreement
have now been promised. The
question of timing and a guar-
antee of these promises, how-
ever--particularly regarding
the Soviet troop withdrawal
'and free elections--will be the
governing factor in the extent
of co-operation with the Nagy
regime by the insurgent groups
and the non-Communist parties.
Since actual fighting--
the major unifyi~ag factor--has
now ceased and since the present
moves of the Nagy regime may
be causing some coaifu~ion .among
rebel groups, political maneu-~
vering's already under way be-
tween the various insurgent fac-
tions. The Communists seem to
retain some confidence in Nagy, -
but insist that he implement his
~Sromised deeds before..they~will
actively support him--but the
non-Communist rebels probably
continue to regard him as sus-
pect and tainted.
At least one major regional
government--that centered at
Gyor--is attempting to line up
support from insurgents else-
where to withhold recognition
from the Nagy regime until
their demands are met. This
group .calls itself the Trans-
Danubian National Council and
was established on the night of
30-31 October, It claimed the
support of the national councils
of several western.. counties and
military units in the area, in-
cluding the Hungarian army's
9th Division, and is apparently
now supported by the insurgents
at Miskolc. The council is
negotiating with Nagy for an
official proclamation of Hun-
garian neutrality at the UN, a
guarantee that general secret
elections be held by the end
of January 1957, and greater
representation of ''freedom
fighters" in .the interim
government.
Political Parties
The National-Peasant, the
Smallholders and the Social
Democratic parties have all re-
established their national
organizations, according to
Budapest announcements. The
Social Democratic Party, which
reopened its headquarters on
3Q October, has taken over
publication of the trade union
journal, Nepszava. It elected
Ana Kethe~ -w~never compro-
mised with_the Communists--as
provisional president, and ex-
cluded from high posts those
members who had favored fusion
with the Communists in 1948.
The Social Democrats made no
statement in support of Nagy's
coalition attempt, and the
attitude of the other parties
remains obscure. It is evident
that for active co-operation
and a realistic coalition, Nagy
will not only have to guarantee
a date for free elections: but
will have to include genuine
minority party leaders in-the
temporary coalition which will
steer the government until a
new one is formed after the
general election.
s~c,RET
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The Gomulka national Com-
munist regime has followed up
its "revolt" with additional
moves to strengthen its inter-
nal position. The Polish -,
people appear to feel that the
crisis has been successfully
weathered, Further liberali-
zation and greater independence
from the Kremlin are implicit -=
in the continuing purge of
Stalinist elements in the party
and the prompt restoration to
office of the Polish primate,
Cardinal Wyszynski.
The optimistic outlook
among Polish Liberals is, how-
ever, somewhat tempered by
concern over Poland?s ailing
economy. The Polish press
continues to stress the soli-
darity of ..the Polish-Soviet al-
liance.
Gomulka's Moves
Party first secretary
Gomulka has continued to con-
solidate his position by re-
moving the members of the ex-
ecutive bodies of the party
organizations in 11 provinces.
Polish press reports indicate
that purges of the central
boards of the youth organiza-
tion and trade union federation
and the army?s officer corps are
to take place soon.
In addition, the establish-
ment of a "committee for ascer-
taining party responsibility
of persons who supervised the
activity of security organs in
recent years" suggests that
high Communist officials who
had a part in'past police ex-
cesses, including farmer se-
curity minister Radkiewicz,
may face trial or punishment.
The departure "on leave"
of Marshal ~okossowski and
.p~~i.
Polish radio attacks on members
of the antiliberalization fac-
tion of the party suggest that
further purges of the party and
armed forces are likely. Press
reports indicate that General
Turkiel, Russian commander of
the Polish air force, and Gen-
eral Andre~ewski, Russian com-
mander of the Warsaw garrison,
have been replaced by Poles.
As a further move to win
popular support, the regime
announced that Cardinal Wys-
zynski, the Polish primate, has
been freed to take up his office
again in Warsaw and that con-
fiscated church properties would
be restored. In addition, a
,point church-state commission
was formed to consider outstand-
ing problems, presumably the
church's demands for greater
latitude in educational matters
and the right to issue inde-
pendent publications, the re-
gime's insistence on prohibi-
tion of political activity by
religious institutions and on
the appointment by the Vatican
of Polish bishops for new dio-
ceses farmed in the western
territories.
The regime took another
step to meet popular demands
when it announced on 26 Qctober
the establishment of a workers'
council in the Gdansk shipyards,
the first to be established in
Poland. The announcement sug-
gested that the council ,will
have a voice in the selection
of managerial personnel and
formulation of policy in re-
spect to efficiency and safety
measures.
While a few popular dem-
onstrations occurred in Warsaw
and other Palish cities iix the
last week, no serious dis-
~~turbaneds develaped. The
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CURRENT INTELLIGENCE S'VEEKLY SU~tl~~d~'
1 November 1956
comparatively calm situation
is probably due in part to
Gomulka?s appeal for order, as
well as to a growing "wait-
'and-see" attitude on the part
of the people.
At the .same time, the prob-
lem of solving Poland's eco-
nomic ills looms ominously as
.the Gomulka leadership debates
whether to seek aid from the
Soviet Union or the West, or
both. (See Part III, page 1)
Foreign Policy
Some press comment indi-
cates that, regardless of future
arrangements made with the West,
Poland has not choice but to con-
tinue its alliance with the
Soviet Union. "tiYho," asks
Glos Pracy, the trade union
puF~'Iica~ on, on Z6 October,
"but the Soviet Union...is de-
fending. this (Oder-Neisse)
frontier together with Poland?"
However, on 2$ October, Zycie
Warzawy, Warsaw Communist
da3Z'y,-'called for an independent
Polish foreign policy based on
national interest and historic
traditions, rather than solely
on the country's alliance with
the Soviet Union.
The Polish move toward
independence of the Soviet
THE SATELLITE SITUATION
AND THE SOVIET LEADERSHIP
The Sov3.et declaration of
3U October on relations wi-th
the Satellites is intended to
regain the initiative and re-
coup the serious loss o~f pres-
tige and leadership which the
USSR has suffered from the
events of the past two weeks
in Hungary and Poland. It
Union may include the removal
of many, if not all, f~ussian
technicians, advisers and
specialists in the police, se-
curity forces and army, accord-
ing to various sources of the
American embassy in Warsaw.
These sources consider it
likely that in view of
recent Polish and Hungarian
developments, the Warsaw pact
will be revised and Soviet
troops in Poland will be
withdrawn.
Two-Party System
A "two-party" system
could develop in Poland,~~
evolving
from the election of "progres-
sive" elements in the elec-
tions in January when voters
will choose among several
national-front candidates.
In subsequent elections,
various deputies will become
increasingly identified with
the voters as "progressives,"
25X1
25X1
25X1
in this way, 25X1
w ou necessarily affixing 25X1
political labels, a "two-party"
system will be in to t ke
sha e.
25X1
promises concessions but stress-
es;"close fraternal co-
operation and mutual aid be-
tween the countries of the
socialist commonwealth."
In reacting to the fast-
moving developments in the Sat-
ellites, the Soviet leaders
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CURRENT INTELLI~CrENCE WEEKLY SUMMARY
1 November 1956
seem to be confused in the
face of the growing threat to
their hegemony in Eastern
Europe,
Khrushchev reflected this
confusion when, in replying to
a direct question on the fight-
ing in Hungary, he said that
while the military situation
appeared to be under control,
the political situation was
completely unclear. In another
recent conversation, Khrushchev
blamed the difficulties in
Poland and Hungary on their ex-
cessive rate. of industrializa-
tion, claiming that the USSR
had. warned the leaders of these
+countries they should slow down.
The Soviet leaders have
been quiet, subdued and even
glum at recent receptions.'
While these surface signs of
strain have appeared only re-
cently, the series of unsuc-
cessful stopgap, actions taken
in Eastern Europe by the Soviet
leaders since the summer have
reflected increasing concern
and weakness. The latest ac-
tion--in response to the Eastern
European events--was the gov-
ernment declaration of 30 Octo-
ber on relations with the Satel-
lites. Great emphasis was
placed on the Warsaw pact as a
unifying agency necessary to
protect and maintain the Com-
munist system. East Germany
was pointedly omitted from the
listing of countries where
Soviet troops are stationed
under the authority of the War-
saw pact, whereas, in the case
of Poland, it was carefully
established that Soviet troops
were there under the Warsaw
pact and the Potsdam four-power
agreement as well.
The Soviet leadership is
faced with a powerful and
triumphant nationalism in Poland
and Hungary, which is likely
to be communicated to the other
Satellites. This prospect must
be producing considerable strain
on the unity of the collective
leadership, although the initial
reaction will probably be to
close ranks to deal with the
crisis.
Khrushchev and Bulganin
are probably more subject to
criticism for recent events in
Eastern Europe than ll~lotov,
who opposed that policy, or
Kaganovich, who has not been
closely associated with Soviet
policy toward the Satellites.
Any opposition in the
party presidium might win sup-
port for the military leader-
ship, which probably would put
first priority on maintaining
firm control of the Soviet bor-
der areas; from important mem-
bers of the economic bureacracy,
who are basing future bloc
economic development in part on
a closer integration of the
Soviet. and Satellite economies;
and from Stalinist elements.
Much depends on whether
Khrushchev, with his strength
in the central committee and
among provincial party leaders,
and Bulganin and Miko an re-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1956
NOTES AND COMMENTS
-EAST GERMANY
The East German regime is
becoming increasingly nervous
over the situation created by
the political upheavals in
Poland and Hungary and the la-
tentunrest and widespread dis-
satisfaction over conditions
within East Germanyo Although
the situation appears calm on
the surface, the regime has
alerted army units, the police,
internal security troops, and
the Kampfgruppen--armed factory
militia.
A tense situation,. caused
by extensive popular opposition
to work-norm increases which re-
sulted in wage reductions,ex-
isted in several industrial
areas, particularly in Magde-
burg, prior to the Polish
government shake-up.
High party- and government of-
fcials appearing at the meet-
ings have promised some liberal-
i2atian of-the regime's polit-
ical and economic policies.
All have taken the line that
conditions in-Poland were much
worse-than in East Germany, im-
plying that the East Germans
have. no grounds for discontent
or revolt.
Propaganda organs con-
stantly warn against demon-
strations against the state and
call for "people's vigilance"
against what party first secre-
tary Walter Ulbricht described
as "seditious work carried out
by bourgeois and fascist ele-
ments under the slogan of
'freedom. "'
The East German press and
radio withheld or distorted the
details of Poland's defiaaace
of Moscow, and wiaespread
speculation increased the
tension among the populace.
Excerpts of Gomulka's and
Cyrankiewicz' speeches practi-
cally eliminated all mention of
national independence and con-
demnation of the personality
cult. Th~? Soviet line has been
followed-carefully, with East
GermanX reaffirming its soli-
darity' With': the 'USSR and-the
"People's Democracies,"
The Communists have staged
rallies and mass meetings to
give workers the "correct" i~-
terpretatian of recent Pvents
and permit them to air griev-
ances user co~atx~olled Conditions a
Little if any significant
liberalization of the East
German government and its poli-
cies is likely to occur, Leaders
know that concessions. on a few
specific issues would probably
be ,interpreted as evidence of
weakness and would give rise to
further demands which might ul-
timately lead to an untenable
situation. In a "round.-table
discussion" with workers, Pre-
mier Otto Grotewohl charged
that those who are now demanding
liberalization actually want a
restoration of capitalism.
"Such a policy," he asserted,
"we will .not .pursue."
While-East Germany has its
oven exponents of national Com-
munism in farmer politburo mem-
ber Franz Dahlem and ex-deputy
foreign minister Anton Ackermann,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
neither has a following suf-
ficiently strong to enable him
to oust the widely hated
Ulbricb,t. Obviously referring
to demands for Ulbricht's
removal, Premier Otto Grote-
wohl in a nationwide radio-and
television broadcast warned,
"We are~?not going ~o change
the government because it is
the fashionable thing to do.
We are quite immune to fash-
ionable diseases.?'
While there will probably
be some passive resistance to
NORTH AFRICA
France's position in Al-
geria, Tunisia and Morocco con-
tinues to deteriorate, the
seizure pn 22 October of the
five Algerian nationalists has
given strong impetus to North
African solidarity and dis-
solution of remaining ties with
France.
France is trying to make .
an effort to stem the tide of
resentment in Tunisia and
Morocco. Its "extraordinary
missions" to Tunis and Rabat
may prevent a complete rupture
of relations, bast right-wing
critics in Paris of a concilia-
tory policy toward Bourghiba
and the sultan will probably
increase pressure on Mullet to
reimpose French military con-
trol aver Morocco and Tunisia.
Bourghiba and the sultan are
the regime, serious and wide-
spread outbreaks of violence
appear unlikely. The knowledge
of the regime's-determination
to suppress ruthlessly the
first evidence of resistance,
the significant improvement in
the capabilities of police,
military, and, security forces
since the riots of June 1953,
and the presence of approxi-
mately 400,000 Soviet troops
in East Germany will serve as
strong deterrents to any mayor
fearful of this and are taking
strong measures to prevent dis-
orders which might provoke such
a development.
The Algerian rebels now
seem determined to accept
nothing less than complete in-
dependence as well as the re-
lease of the five captives.
Paris has reiterated appeals
far a cease-fire, has promised
early elections, equality be-
tween Europeans and Moslems,
and negotiation of a new A1-
gerian status when peace is
restored.
The Algerian Front of
National Liberation (FLN) has
called a nationwide strike on
1 November--which may also be
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observed in Tunisia and Moroc-
co--to commemorate the second
anniversary of the outbreak
of the Algerian rebellion.
Despite French security meas-
ures, this strike may set off
additional terrorism.
The seizure of the Algeri-
~.ns has sharply heightened
Tunisian and Moroccan sensi-
tivities re ardin their sover-
ei nt
The Communist-led riots
in Singapore ended on 28 Octo-
ber, but during the four days
they were in progress the
government took advantage of
the situation to arrest ap-
proximately ?00 persons and
to proscribe four mare Com-
munist-front organizations.
Although there is a possibil-
ity of labor unrest and a re-
sumption of the disorders, the
government is fully in command
of the situation and will con-
tinue its firm measures against
Communist subversion.
25X1
The new predominantly
Istiglal government formed in
Rabat on 2? October immediately
endorsed Algerian demands for
independence, denounced France's
seizure of the Algerians, and
announced it would attempt to
"liberate" the economy from
French control.
in Cairo:
25X1
Despite this hardening of
attitude toward France, both
governments are loath to become
too intimately linked to the
Middle East, and refused to
participate in the general
strike called for 28 October
by the Arab People's Congress
Among those arrested
is Lim Chin-siong, widely be-
lieved to be the colony's
25X1
25X1
leading Communist, who is also
a member of the Legislative
Assembly, an official of the
People's Action Party, and
secretary of the militant Singa-
pore Factory and Shop Workers
Union,
For the time bein~9 -Commu-
nist subversive organiza~ians
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and activities have been dis-
rupted, Fear of further govern-
ment action probably will ham-
per the People ? s Actica~;. Party
in regrouping its forceso
Deportation of China-born
subversives. has been an im-
portant weapon against Com-
munism in bath Singapore and
~Salaya, and thus far there has
been little difficulty in
sending them back o
homeland
SHIFTS IN VIET MINH LEADERSHIP
Truong Chinh has resigned
as secretary general of the
Vietnamese Lao Dong (Communist)
Party because of his responsi-
bility "for mistakes committed
in the land .reform," He prob-
ably ranked second only to Ho
Chi Minh in the Viet-Minh hier-
archy, -More drastic action is
apparently not contemplated, as
Hanoi has announced that Chinh
will retain his positions as
member of the politburo and
secretariats Already chairman
of the party and president of
the North Vietnam government,
Ho has assumed Chinh's party
position, further illustrating
the limited degree to which the
Viet Minh is fallowing the So-
viet line on "collective leader-
ship."
'Shortly after ChinhPs
resignation, Hanoi announced
that'two other high-ranking
party members have been disci-
plined for "grave mistakes in
the guidance of land reform and
the readjustment of organiza-
tiond" Le Van Luong, vice
minister of interior, has been
relieved of his position on the
politburo and other party posi-
tions, while Ho Yiet Thong, vice
minister of agriculture and
forestry9 has been dropped from
the central committee, The of-
ficial party newspaper,-Khan Ddn,
appears to have left the~oor
open far further high-level,
shiftso A 23 September edi-
torial stated that the mistakes
committed on agrarian reform
were not the fault of the lower
party members, "but stemmed from
the high executive committees...."
Peasant discoxx~ent over the
land reform pragr~m has been
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1956
heightened as a result of
famine conditions resulting
from poor craps since 1954.
Several t~.mes this year the
Viet Minh leas admitted scat-
tered ~~~~~s of arson and murder
and only last week Hanoi radio
spoke of further open violence
against the program.
Ho's acceptance of his
new post probably indicates an
effort to use his great popu-
larity to gain wider peasant
support for the land reform
program. Chinh's dismissal
may mark a slowing down and
modification of the regime's
land reform program in view of
recent criticisms of the "thou-
sands of leftist errors" which
have been committed.
Recent Viet Minh state-
ments continue to reflect con-
siderable Communist concern and
frustration with the steady
progress of the Diem regime in
South Vietnam. The growing
viability of the Saigon govern-
ment may also be a factor in
the Viet Minh effort to make
its n.,~n, internal ro ram more
palatably. (Concurred 25X1
in qy ortR)
PRESSURE MOUNTING IN JAPAN
FOR CLOSER TIES WITH PEIPING
The desire of the Japanese
to establish diplomatic rela-
tions with Communist China is
at a new peak of intensity fol-
lowing the agreement on 19
October normalizing relations
with the Soviet Union. Both
the ruling conservative party
and the Socialist Forty agree
that a rapprochement with the
Chinese mainland is now a pri-
mary foreign policy goal.
Japan's Socialist Party
has called tl~e Soviet-Japanese
agreement a "steppin? stone'F
to normalized relations with
Peiping and on 23 October de-
cided to send a mission of So-
cialist Diet members to China
before the end of the year to
promote the early restoration
of diplomatic relations. The
party also is considering chang-
ing its "two Chinas" policy to
one advocating recognition of
Peiping only.
to consider the restoration of
relations with all Communist
countries, particularly Commu-
nist China. While implying
that Japan's relations with the
United States and Taiwan would
make a settlement with Peiping
"extremely difficult," his
statement and other information
suggests Japan will probably
press for de facto relations in
the coming months.
Peiping apparent]:v antic-
patdd the Japanese _reaction
and man be expected to increase
its efforts to "neutralize"
Japan. The Chinese Communist
press and radio called the So-
viet-Japanese agreement a
victory for "independence and
peace"--won despite American
efforts to "undermine" the
negotiations--and expressed
hope that normal relations be-
tween Peiping and Tokyo would
be restored soon.
Conservative attitudes are
indicated by .Foreign Minister
Shigemitsu's recent statement
that the time has come for Japan
The Chinese Communist cam-
paign to woo Japan has featured
an "invitation offensive."
More than half of Japan's Diet
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CURRENT INTELLLIGENCE WEEKLY SUMMARY
1 November 1956
members and many other individ-
u a l s have been invited to
visit China, and carefully
selected trade and cultural
delegations, have been sent to
Japan. Offers of "practical
co-operation" on an informal
basis between the governments
have been made informally.
In addition, Japan's lead-
ing physicist has been invited
to China to provide scientific
.assistance and guidance in the
use of atomic energy, a Japanese
medical team is in China ad-
vising on special problems, and
interest has been expressed in
Japanese industrial technicians.
These are Peiping's first
widely publicized moves to use
NEW CAMDODIAN GOVERNMENT
C~.mbodia's new government
headed by San Yun, a former
royal councilor, is essentially
the same as that which held of -
fice under Prince Sihanouk prior
to his resignation on 15 October.
The most important change in-
volved the dropping of defense
minister Monireth, whose sweep-
ing anticorruption plans touched
of f the feud with 5i hanouk
which resulted in the latter's
resignation. Sak Suth Sakhan,
a competent young army officer,
has been appointed to the new
post of secretary of state for
defense.
San Yun, in addition to
the premiership, has assumed
the posts of interior, foreign
affairs, defense and general
reform--positions previously
held by Sihanouk and Monireth--
on the understanding that Si-
hanouk will assist him in dis-
charging this heavy responsi-
bility. Thus, the prince con-
tinues to be the real power in
Cambodia, ruling from a posi-
tion protected from public
non-Communist scientists
and technicians.
The promise of accelerated
trade is another potent weapon
in Peiping's campaign. Trade
between the two countries is
estimated this year at about
$57,000,000 in Japanese ex-
ports and $81,000,000 in im-
ports--less than 3 percent of
the nation's total trade. This
low level of trade only spurs
Japanese trade promotion groups
and, in agreeing with Peiping
recently to extend the "pri-
vate" trade pact, both sides
promised continued efforts to
place the agreement on a gov-
ernment-to-government basis.
criticism and devoid of the
routine activities which he
dislikes.
Sihanouk will probably seek
to implement his plans to strength-
en Cambodia economically, mili-
tarily and socially as a counter-
weight to the country's closer
relations with the Communist bloc.
The details of this program will
probably be announced at the na-
tional conference of the S~angkum,
his political organization, which
is to convene on 8 December.
.Among other items on the
conference agenda are consid-
eration of neutralism, the
Geneva accords, the continued
presence of the International
Control Commission, financial
stability and corruption. The
December date for the conference
will enable Sihanouk to deal
with the issues that may arise
from Chou En-tai's visit to
Cambodia in late November.
The retention of the force-
ful Dap Chhuon as internal
s~ctz~'r
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security minister underscores
Sihanouk's continuing desire
to strengthen Cambodia?s de-
fenses against Communist sub -
version. In this connection,
the strongly anti-Communist
Prince Monireth is being re-
tained as military adviser to
the king and inspector general
of the armed forces, and he will
undoubtedly continue to exert
strong influence in Cambodian 25X1
military circles.
The Indian government,
which apparently has not been
fully informed by the Nepalese
regarding their recent con-
tacts with Communist China, is
disturbed at developments in
Nepal and seems likely to take
steps to increase its influence
in Katmandu.
The American embassy in
New Delhi has heard that the
Nepalese rather than the Chi-
nese sought the exchange of
consulates and trade missions
provided far in the agreements
signed on 20 September.
Indian government offi-
cials have said they are seri-
ously concerned over the Chi-
nese moves in Nepal. The In-
dian press has also shown dis-
pleasure with the Nepalese.
'.Che British high commissioner
in New Delhi has the definite
impression that India was sur-
prised and disturbed by the Chi-
nese offer of about $12,600,000
in cash and economic aid for
Nepal?s five-year plan,
That India is planning
some form of direct action in
Nepal is suggested by the treat-
ment given to Nepalese rebel
leader K. I, Singh during his
visit to New Delhi in mid-Oc-
tober. Singh saw President
Prasad, Nehru, Horae Minister
Pant, and P111ai, the secretary
general of the Ministry of Ex-
ternal Affairs. He held a press
conference in which he criti-
cited Nepalese prime minister
Tanka Prasad and his cabinet
members, Singh commented that
the power politics displayed in
the exchange of consulates.
should have been avoided and
questioned the value of Chinese
economic aid given without
specific projects in mind. He
praised India?s attitude to-
ward Nepal and its relations
with Katmandu,
The American embassy in
New Delhi has interpreted
Singh?s treatment by the In-
dians as an effort on their part
to build up a possible rival to
Tanka Prasad. Singh?s press
interview suggests that he is
prepared to co-operate, despite
the fact that he returned to
Nepal from Communist China in
September 1955 after three and
one-half years? exile, during
which, according to some reports,
he had become pro-Communist,
Whether he would be more friendly
to India than Tanka Prasad is
questionable, however.
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1
Nehru is almost certainly
determined to keep Nepal within
India's sphere of direct in-
fluence. His government long
ago announced it would meet anq
aggression in Nepal with force.
India also supported the Nepa-
lese revolution which overthrew
the hereditary government of the
Ranas in 1951 and instituted sa-
UNESCO GENERAL CONFERENCE
The ninth general confer-
ence of the UN Educational,
Scientific and Cultural Organi-
zation (UNESCO), which opens in
New Delhi on 5 November, may
bring East-West rivalry in the
cultural and propaganda fields
into open contest, with both
sides bidding for the support of
the Asian, African-and Latin
American countries. Increased
Soviet interest and activity
over the past year indicate that
the USSR will attempt to develop
UNESCO into a sounding board for
?'peaceful coexistencef? and
':?cultural exchanges.`? The Arab
and Asian nations have actively
participated in UNESCO affairs
in the past and, since the
biennial conference is being
held in Asia for the first time,
they probably regard this meet-
ing as the most significant in
UNESCO's history.
A major effort to admit
Communist China to UNESCO will
take place at this conference,
and, while not expected to be
successful, such a drive will
probably result in a large num-
ber of pro-Peiping speeches
from the uncommitted countries.
called t?democratic rule" in
the country, It might support
another revolution if it felt
that was the only way to prevent
Nepal from falling into Chinese
hands. In any case, India will
probably try hard in the near fu- 25X1
tore to ensure that Nepal does
not drift gradually into Commu-
nist China's orbit.
This drive will also carry over
into the UN General Assembly,
which openr~ ~on 12 November. .
After the USSR entered
UNESCO in April 1954, its early
activity was devoted primarily
to .playing a conciliatory role
in an attempt to make a favor-
able impression. A definite
change in the Soviet attitude
was noted'i.n early 1956 with
the assignment of V, A. Kemenov,
a deputy minister of culture,
as permanent representative to
UNESCO and the USSR's member of
the executive board, Kemenov's
tactics at the July board meet-
ing may forecast Soviet maneu-
vers at New Delhi. He intro-
duced tendentious subjects such
as t?peaceful coexistence," ex-
horted UNESCO to sponsor "world
youth festivals,"' and pressed
for admission of Communist
countries,
In addition to the sched-
uled discussion of the 1956-5?
program and budget, the confer-
ence may be asked by the USSR
or a group of ineutral countries
to recommend that UNESCO play a
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CURRENT INTELLIGENCE WEEKLY' SUMMARY
1 November 1956
greater role as mediator between
East and West by promoting con-
tacts in the cultural and in-
formational fields. The Arab,
Asian and Latin American mem-
bers, carnprising well over two
thirds of the membership of the
UN as well as UNESCO, will prob-
ably dominate the conference.
The smaller underdeveloped coun-
tries may also press for greater
UNESCO participation in the peace-
ful uses of atomic energy in the
hope of exerting greater control
over the grogram than has been
accorded them by the statute
of the International Atomic
Energy Agency.
EURATOM AND THE COMMON MARKET
The treaties for EURATOM
and the European common market
are. "hanging in the air" as a
result of the failure of the
foreign ministers of the six
CSC countries to bridge out-
standing French-German differ-
ences at the 20-21 October oon-
ference in Paris. Officials
differ in their opinion on 'the
progress made and on prospects
for the. treaties but are vir-
tually unanimous in the belief
that the personal intervention
of Chancellor Adenauer is now
crucial.
Consequently, little prog-
ress was made on the crucial
issue of EURATOM's "perfection-
ist" monopoly over the owner-
ship and supply of nuclear mate-
rials. The Germans .are not con-
v~nced of the need for direct
EURATOM ownership of fuels anti
still insist on exceptions and
a time limit to EURATOM's ab-
solute control over supply.
This position evidently reflects
a persistent. belief among some
Bonn officials that West Ger-
man industrialists will be
-able to purchase nuclear fuels
abroad under more favorable
terms and without the interven-
tion of EURATOM.
Greater progress seems to
have, been made on the common
market. The other powers ac-
cepted in principle France's
claim to a special position
because of-the burdens of A1-
geria, and--with-the notable
exception of hours of work and
overtime pay--agreement was.
also reached on the gradual
equalization of "social charges"
in the six countries. The
French also made a major con-
cession by relinquishing the
veto over the progression of
the common market .from one stage
to another.
Proponents of the two
projects are disappointed over
the lack of decisive results,
and some of them believe that
another failure by the foreign
ministers-would be fatal. An
attempt to.salve these problems
on a "political" basis may be
made at a meeting between.
Chancellor Adenauer and Premier
Mullet on 6 November.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
REACTIONS TO POLISH
AND HUNGARIAN DEVELOPMENTS
Eastern Europe
Poland and Yugoslavia have
declared in favor of .the demands
of the Hungarian insurgents--
~the Albanian, Bulgarian, Czech
and East German regimes having
condemned them as counterrevo-
lutionaries, Popular sympathy
with the insurgents, coupled
with unrest, is reported in
order of magnitude in East
Germany, Czechoslovakia, Ru-
mania., and Albania.
The Palish central com-
mittee has publicly proclaimed
the legitimacy of the demands
of the Hungarian insurgents,
insisting that they are neither
anti- socidlist nor inspired by
Western elements. It has also
openly urged the removal. of
Soviet troops from Hungary,
Public demonstrations in Poland
on behalf of the Hungarian
workers came close to violence,
and the Polish press has criti-
cized the misleading Czech press
treatment of events in Poland.
Officials in Rumania have
revealed privately a lack of
agreement with the Soviet analy-
sis of the situation in Hungary
but in the press have followed
the Saviet line. Rumanian lead-
There are reliable reports
that Rumanian public opinion
favors the Hungarian workers,
and unconfirmed reports of
isolated demonstrations. 25X1
s a n o sagreemen among
the tap leaders. Publicly,
the Czech leaders have been unan-
imous.- in castigating the in-
surgents and have declared that
no such developments will be
tolerated in Czechoslovakia.
The Czech regime is the only
Satellite to have publicly
condemned the new Hungarian
coalition government.
A propaganda.. barrage con-
demning the Hungarian develop-
ments, frequent public meetings
called for the purpose of
pledging loyalty to the party,'
and quick denials of rumored
demonstrations, indicate of -
ficial concern with a restive
citizenry, which has expressed
widespread sympathy for the
Hungarian insurgents. The Czech
party reportedly plans to raise
wages in deference to worker
demands. According to press
reports, Czechoslovakia has
alerted army units and moved
droops to the Hungarian border.
cony nce o e
necessity of internal reform and
they have already announced a
new wage and pension scale,
Popular unrest, coupled wiRi
widespread sympathy for the
Hungarian insurgents, is also
evident in East Germany. Party
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CURRENT I NTELLI GENCE WEEKLY SUMMARY
leaders have made clear that
disorders will not be tolerated.
Albania and Bulgaria have
published only limited and
derogatory news of Hungary.
There have been unconfirmed
reports of isolated demonstra-
tions in Albania.
Bulgarian diplomats abroad
have reportedly expressed the
belief that the Hungarian events
prove Stalin?s policies were
correct.
Yu~gosla~~ officials ha-ve made
both public and pY?ivate state-
ments of sympathy for the
Hungarian rebels. Tito has de-
clared in favor of Hungary's
present policies of broad
liberalization and democratiza-
tion and, privately, favors the
removal of Soviet troops from
the country. A public appeal
made by the Yugoslav League of
Communists to the Hungarian
people on 29 October urged them
to halt the bloodshed and to
support the new government and
party. Although the declara-
tion contained the admission
that it constituted an inter-
vention in Hungary's internal
affairs, Yugoslavia justified
its action on the grounds that
the revolt threatens socialism
in Eastern Europe.
Tito probably fears that
if the fighting continues,
the Nagy-Kadar regime will be
overthrown by one with Western
democratic views, or that So-
viet forces will engage in
large-scale repression and re-
place the present government
with .one of Stalinist color-
ing.
Peiping
Communist China has taken
no public position--in support
of either the USSR on the one
hand, or Poland and Hungary on
the other--in the evolution of
new Soviet-Eastern European re-
lationships. Although Chinese
Communist leaders probably
sympathize with Polish and
Hungarian efforts to achieve
a larger degree of independence,
Peiping will almost certainly
support Soviet efforts to keep
Poland and Hungary in the bloc.
Peiping's news reports
have minimized the scale of
the "excitement" in Pol
subject thus far denounced
American and British statements
as designed to "aggravate"
Soviet-Polish relations, and
emphasized Western speculation
that changes in bloc relation-
ships will not be "dramatic."
Peiping's broadcasts to the
Chinese people have suggested
that the eventual relationship
it would like to see between the
USSR and the European Satellites
is approximately the one the
Peiping regime itself enjoys.
These broadcasts, far example,
have noted Polish "concern"
over the Khrushchev delega-
tion's visit during the Polish
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party central committee's
plenary session and Polish de-
mands for the defense of Po-
land's "national sovereignty."
At the, same time, they have
reported in detail alleged
popular demands that the Polish-
Soviet "alliance" be the "founda-
tion" or "fundamental principle"
of Polish policies.
Regardless of developments
in Eastern Europe, the Chinese.
Communists themselves will al-
most certainly try to avoid
moves which would harm their
own relationship with Moscow.
Despite Chinese sympathy with
the Eastern European states,
the Chinese Communist leader-
ship can be expected to continue
to act on the principle that--
as Liu Shao-chi said in Septem-
ber--the maintenance of the
Sino-Soviet alliance is the
Chinese party's "supreme inter-
national duty."
Asia. and the Middle East
The non-Communist press in
Asia and the Middle East has
welcomed the uprisings in
Eastern Europe as a victory for
the forces of anticolonialism
and independence, and as a
forerunner to similar develop-
ments in other Satellites. Ex-
cept for South Korea and Tai-
wan, both of which called for
strong action by the free world,
official comment has been
guarded.
Scuth Korea?s President
Rhee expressed the hope that. the
free world would "launch a great
crusade" to overthrow Communist
strongholds in Poland, Hungary
and other enslaved countries,
and called on the United States
to appose any Soviet attempt
to suppress the uprisings.
Demonstrations, probably of-
ficially inspired, have been
organized to urge an uprising
in North Korea. Seoul radio
is broadcasting similar appeals
to the North. Chinese National-
ist foreign minister George Yeh
announced that his government
"stands ready to give support
to any movement or action in
or outside the United Nations
in condemnation of the Soviet
violation of the principles o.f
national independence and human
rights."
The important Tokyo daily,
Asahi,stated that Moscow's at-
t t~uTe will afford an excellent
opportunity to judge the USSR's
respect for national sovereignty.
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1 November 1956
A nationalist paper in
Indonesia,-which sometimes re-
flects National Party thinking,
interpreted the East European
developments as a victory for
Tito. It hailed him as a Com-
monist leader who had charted
a new way to socialism, permit-
ting every Communist country
to develop according to its
respective methods and national
interest. The same paper
claimed demonsttation in the
revolts of the USSR?s oppres-
sion of its allies was food
for Indonesian thought. Two
anti-Communist dailies saw the
revolts largely as liberation
movements aimed ~t Soviet co-
lonialism.
Indian prime minister
Nehru?s public reaction to
events in Hungary and Poland
has been guarded.- Both he and
the Indian press, however, seem
to interpret them as steps in
the "wholesome process of liber-
alization" and '?democratization."
Nehru, particularly, seems
likely to take these events as
proof of his contention that
Communist China and other Com-
munist nations are not bound
irrevocably to the USSR.
India?s largest opposition
group, the Pra,ja Socialist Party,
has exploited the opportunity
to embarrass the Communists by
reminding the USSR of its ad-
herence to the ''five principles"
of peace and coexistence and
by deploring its "flagrant
intervention" in the internal
affairs of Hungary and Poland.
The smaller Southeast Asian
nations have given considerable
press attention to the events,
but have made little editorial
or-official comment. The Bur-
mese'press has expressed strong
support for the rebel forces in
Hungary, and forcefully condemned
Soviet military intervention
there.
Only the Communist daily
in Indonesia has so far echoed
the Soviet line that the re-
volts resulted from US-financed
subversive activity. Japan?s
Communist Party paper, Akahata,
attempted to refute reports
that there exists `'an insoluble
factional struggle in .the Pol-
~sh' Communist Party and that
the party has a fundamental an-
tagonism against F~hrushchev."
The only anti-American
comment in the non-Communist
press was noted in Yomiuri,
Tokyo's third largest~a33y.
It dep3ored the American move
to place the Hungarian issue
before the UN. It asserted
that the uprising was a domestic
issue, adding that the United
States was attempting to cover
up the "disadvantageous situa-
tion brought on by Bulganin's
message on nuclear tdsts."
The Turkish press xegards
the uprisings as a favorable
sign that Moscow?s "formidable
power has started disis~tegrat-
ii~g.!t" It recommends all pos-
sible help to those revolting
against Soviet domination and
cautions the hest not to "lose
the initiative to the USSR in
facing up to the Polish develop-
ments." Greek comment stresses
the theme that the USSR is un-
able to suppress the forces
working for greater freedom in
its empire, and most papers add
that this situation demonstrates
the correctness of the Greek
view concerning self-determina-
tion for Cyprus.
The attention of Arab
officialdom to the uprisings
has been diverted by develop-
ments in Egypt and Algeria.
The Egyptian government-financed
press has played down the Euro-
pean developments, and press
reaction has been generally mild
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CURRENT INTELLIGENCE WEEKLY SUMMARY
1 November 1956
and hesitant. Anti-Soviet edi-
torial comment appear in the
Lebanese and Ethiopian press,
with the ''Voice of Ethiopiat?
seeing the events as the'be-
ginning of the end of Russian
influence in the Satellites and
East Germany,
Western`Eurape
The revolt in Hungary is
almost universally regarded in
Western Europe as symptomatic
of a fundamental, and perhaps
enduring, change in the rela -
tionship of the Soviet Union
with its Eastern European
Satellites, Most influential
press organs and politicians
urge, however, that no hasty
or drastic action be taken by
the West that might work to
cancel the advances toward
freedom achieved by the Hun-
garian rebels.
The British Foreign Office
stated on 30 October that it
does not believe Nagy can con-
tinue to rule in Hungary.
British Labor Party leader Gait-
skell has publicly expressed
the hope that the other Satel-
lites will follow the example
of Poland and Hungary.
In West Germany, Chancel-
lor Adenauer has expressed the
belief that the uprisings in
Hungary and Poland may ultimately
promote a more compromising at-
titude on the part of the So-
viet Union toward negotiations
on German unification. He
pledged that no military action
would be taken against Poland
to settle differences over the
Oder-Neisse boundary. The 'West
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German Socialist opposition has
called for diplomatic relations
with Poland and Hungary and in-
creased West German trade with
the Eastern bloc.
The Austrian cabinet has
appealed directly to MOSCOW to
stop its inter vention and ''re-
store freedom+' in Hungary.
Anti-Communist demonstrations
have occurred in Rome and other
Italian cities to protest against
the Soviet farces in Hungary.
The West European Commu-
nist reaction to the violence
in Hungary reflects the con-
tinuing stresses on national
party unity in almost every
country. The Italian Communist
newspaper has abandoned its
support of the Soviet line
blaming counterrevolutionaries
for the violence. On 29 October
par~y leader Togliatti cited
Hungary's failure to develop
Communism on an adequate national
base and to make reforms quickly
enough.
In contrast, the French
Communists have adopted a
rigidly Stalinist public at-
titude. The American embassy
in Paris reports that on 29
October, the French Communist
press surpassed itself in de-
fending the Soviet Union and
gloating over the "defeat?' of
the insurgents.
The London Daily Worker
continues to equ~vocate~he
issue, bath abhorring the "neces-
sity1t for Soviet military inter-
vention, and referring to the
Hungarian workers? "just demands."
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CURRENT INTELLIGENCE WEEKLY ~.U~+III~If,`Y
1 November 1956
PATTERNS AND PERSPECTIVES
POLAND'S ECONOMY: GOMULKA'S PROBLEMS AND PLANS
The economic policies pro-
posed by party first secretary
Gomulka on 20 October call for
a revised but still basically
socialist economic system in
Poland. Gomulka's policies will
not raise living standards suf-
ficiently in the immediate fu-
ture to reduce worker discon-
tent unless substantial foreign
aid is received. Gomulka.. has
emphasized that improvement in
economic conditions must come
primarily from increased worker
productivity and better econom-
ic planning.. Poland report-
edly desires a loan of $250,-
000,000 to $300,000,000 from.
either the USSR or the West with
no political strings attached.
The most serious problems
now facing the Polish economy
are shortages of faod, con-
sumer goods, and industrial raw
materials. In addition, there
are serious shortages of agri-
cultural machinery and techni-
eians, and the. government lacks
funds for capital investments
necessary to modernize Poland's
most important industry--coal
mining-wand to increase consumer
goods output,
Previous Economic Policies
condemned the concentration
of investment, and the result-
ant excess capacity, in the
engineering industry, while
investment in agriculture,
mining and housing had been
allowed to lag. These im-
balances were aggravated after
the Korean wax started when
defense production was in-
creased sharply.
Other information confirms
Gomulka's statements. During
the Six-Year Plan, an esti-
mated 51 percent of state in-
vestment went to industry .and
only 9 percent to agriculture.
Heavy industrial output in-
creased 10? percent during this
period compared with 51 percent
for light industry.
The forced-draft develop-
ment of Polish heavy industry
is also revealed by the fact
that four fifths of the $640,-
000,000 in loans granted to Po-
land by the Soviet Union be-
tween 194$ and the present was
allocated for heavy industrial
expansion, including the con-
struction of such installa-
tions as the Lenin iron and
steel works at Nowa. Huta and
the copper works at Legnica,
In his 20 October speech,
Gomulka severely criticized
Poland's previous economic pol-
icies. Heavy industry, he
implied, had been developed too
xapidly and at the expense of
consumer goods production,
While recognizing the accom-
plishments of the Polish Six-
Year Plan (1950-1955), Gomulka
Some moderation of the
emphasis on heavy industry had
occurred prior to Gomulka's
assumption of leadership. To-
tal investments scheduled for
the new Five-Year Plan (1956-
60) were reduced 13 percent
and most of the reduction is
probably in heavy industry.
In addition, some defense plants
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1 November 1956
reportedly shifted to civilian
production during the summer.
The industrial committee of
the Polish parliament on 8 Oc-
tober called for changes in
industrial policy and publicly
revealed that machines and
equipment worth a billion dol-
lars in foreign currencies were
in storage and not operating be-
cause of overemphasis on heavy
industry. Duch of this machin-
ery would "have to be scrapped."
Prospects for Improvement
Gomulka. held out little
promise of any speedy increase
in living standards., a.nd stated
the "hard truth" that no more
wage increases would be pos-
sible until labor productivity
had increased and the manage-
went of industry improved.
Citing the coal mining indus-
try as an example, he found that
throughout the industry, labor
productivity had declined 12.4
percent since 1949. Although
production increased 20,000,000
tons since 1949, four fifths of
the increase resulted from over-
time work. Other official ad-
missions reveal that average
output per worker throughout
the Polish economy is less than
in either Czechoslovakia or
East Germany,
To stop the decline in
agricultural output, Gomulka
promised that future collectivi-
zation ~vvould be voluntary and
that compulsory deliveries of
produce would eventually be
eliminated.. Agricultural taxes,
however, would assuredly con-
tinue to be collected. 'Admit-
ting that previous Polish propa-
ganda had been falsified, he
revealed that private farms,
although receiving less state
assistance, were ou-t-producing
state farms and that collec-
tives were deeply in debt, hav-
ing borrowed to pay wages,
Far the future, he advo-
cated self-government in col-
lective farms, and said that
those with little chance of
development should be dis-
banded, Even these concessions
to the private farmer are not
likely to improve agricultural
output immediately, since agri-
cultural machinery and ferti-"
liter are in short supply.
Although the food situa-
tion in Fola.nd is by no means
critical, the average consumer.
has ample reason for complaint.
Agricultural production3 rose
only 18 percent from 1949 to
1955, although a 50-percent in-
crease was planned. While total
crops in 1955 were about equal
to the pre-World War II level,
food output was only 85 percent
of the prewar level because of
greater concentration on in-
dustrial crops. Grain imports
in recent years have averaged
over a million tons annually,
whereas prior to World War II,
Poland had exported this much
annually,
Foreign Aid
Gomulka's economic program
will receive enthusiastic sup-
port from the population only
if it ca.n achieve a rapid im-
provement in living standards,
In his public statements, Gomul-
ka. has emphasized.tha.t living
conditions can only improve
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slowly, .and progress must come
primarily from increases in
worker productivity. Polish
officials realize that foreign
aid could provide the means
for more rapid economic improve-
ment, however, and numerous re-
ports during the past half
year suggested even before
Gomulka returned to power that
elements of the Polish leader-
ship were interested in a loan
from the West. In September
the USSR made a token loan of
$25,000,000 to Poland to al-
leviate economic difficulties,
and probably to bolster the
regime then in power. This
loan was too small, however,
to provide any real improvement
in living standards.
the amount which Poland believes
it needs immediately is $250,-
000,000 to $300,000,000. tiYhile
this amount would improve
moderately the Living condi-
tions of the workers and thus
gain their support, it would be
sufficient only for a relative-
ly short time and considerably
mare aid would be required for
further improvement of -the Pol-
ish economy.
Dependence on Bloc
In 1955 Poland received
Pram the USSR 60 percent of
its iron ore irnports, 75 per-
cent of its manganese imports,
and 82 percent of its cotton
imports. Of Poland's total
foreign trade last year, 63
percent wa.s with the bloc and
32 percent was with the So-
viet Union> l~oland will
not volunt~~rily and hastily
overturn the whole pattern
of foreign trade which
has developed with the Soviet
bloc since the war, because
this would seriously dis-
rupt Poland's awn economy.
The USSR also will
probably not on its own
initiative cut Poland's ties
with the bloc, after its
experience with such tactics
against Yugoslavia. from
1948 t~ 1953. The Polish
economy will therefore prob-
ably remain partially depend-
ent on trade with other bloc
nations for some time. As
Poland develops policies more
independent of the USSR, how-
~ ever, trade with the West will
'~ probably expand, and the de-
! gree of Polish economic inte-
gratton in the framework of
the "bloc's Council of
Economic mutual Assistance
should gradually decrease.
(Prepared by 25X1
I
i
SE'CFt~' T
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,, _
CURRENT YNT~,,LIGTsNCE WEEKLY SU~[YARY
,CHINESE COMMUNIST ECONOMIC GROWTH
A general air of satisfac-
tion with the economic situation
prevailed at the eighth congress
of the Chinese Communist ratty,
which met in Peiping in late
September. Progress under the
First Five-Year Plan (1953-57)
met with approval, and the same
rates of growth were projected
into the Second Five-Year Plan
(1958-62).
The philosophy of economic
planning was developed at great
length with a recital of the
evils of "leftist adventurism"
and "tightest conservatism"
and with unusual emphasis on
the importance of state reserves
to meet exigencies in the eeon-
omy.
1 November 1956
SECRET
The emphasis was on realis-
tic planning. Every reference
to First Five-Year Plan goals
at the. congress was to the origi-
nal levels of the draft plan
released in mid-1953, not to
the upward revisions announced
since then. Furthermore, goals
for the Second Five-Year Plan
were related to the original
1957 plan goals,. Goals were
given in terms of upper axed
lower limits for the first time,
following a practice started
this year by some of the Eura-
pgan Satellites. The antici-
pated overfulfillment of many
First Five-Year Plan goals will
count toward fulfillment of
thane of the second plan.
1957
lot 5?yr Plan
COMMODITY
(Millions of. MT
except as noted)
Electric Power Output
(Billions KWH)
CHEMICAL
iERTIIIZER
PRE-
COMMUNIST
PEAK
5.96
1941
61.875
1942
0.32
1943
0.923
1943
0.227
1941
2.293
1942
62.52
1937
78.53
1934
7.26 15.9 18.0 ~ 40 - 43
63.528- 112.985 120 ; 190 - 210
2.SG I 6 ~ j12.5 - 14.5
0.656 0.907 1.016 1.45 - 1.63
(less than
_,,,_, 3.1 - 3.2
9.52 I 11.22
est. perform.
less than
plan)
250 __._.
- -~-- ---
Approx.
2.4
(less than Approx.
plan) ~ 12.5
< Approx.
( certain L_ 90
livestock" Approx.
less than ~ 170 _
plan) ~ Approx.
250
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Industry
Complete econo-
mic self-sufficiency
for China was set
forth as a goal at
the congress, although -- i11'`~
no target date was
mentioned. As the
first step in this
direction, China is
"to engage ih indus-
trial construction
centered around heavy
industry,. ~. 4" The'
value of industri-
al production. over
the or. igina 1 1957
goal is an increase
of 100 percent, or
about 74 percent over
the expected 1957
achievement. Of the
total value of indus-
TOTAL
VALUE OF
PRODUCTION
VALUE OF
INDUSTRIAL
PRODUCTION
VALUE OF
AGRICULTURAL
PRODUCTION
trial production in 1957, capital
goods were scheduled to account
for 38 percent and consumer
goods 62 percent. In 1962,
capital goads, which are now
expected to account for 40 per-
cent in 1957, are scheduled to
account for 50 percent, Ex-
penditures on capital construc-
tion are cxpeeted to rise from
35 percent of total government
spending under the first plan to
40 percent under the second plan.
Agriculture
The Chinese recognize
agriculture's importance as the
source of capital for indus-
trialization and are making
strong efforts to prevent any
decline in agricultural pro-
duction during the process of
socialization. The vital in-
terdependence of agriculture
and industry in planning the
expansion of an economy is a
lesson which the Chinese have
apparently learned well from
their Russian tutors.
The USSR has tacitly ac-
knowledged many mistakes both
in the way socialization of
agriculture was brought about
in the USSR and in the atten-
tion subsequently devoted to
ox Planned figures
ox Est. production figures
agricultural production. At
the congress, Chou En-lai said,
"To delay the development of
agriculture will not only di-
rectly jeopardize the develop-
ment of light industry and the
improvement of the people's
livelihood, but will also great-
ly affect the development of
heavy industry and even the
development of the entire nation-
al economy."
Agricultural goals-for 1956-
57 and for the second plan peri-
od are considerably more modest
than the figures previously
released by the Chinese, and
are especially low when compared
with the Twelve-Year Plan
(1956-1987) for agriculture
released last February. To
meet the goals, Peiping will
continue to rely on increased
use by the new agricultural
co-operatives and collectives
of the relatively inexpensive
measures of better farming
practices, more natural ferti-
lizer, better seeds, insecti-
cides, selective stock breeding,
and small-scale irrigation and
flood control.
Scheduled production of
chemical fertilizers in 1962 is
five times as great as that
SECRET
5 Yff-PCAfJT,6AC L1953 571
~~~~7 Achiev~amrit ~.
m---~5s=----~,~ n 5"V~:'Isi71R'GiSAL
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expected in 1957. Tlie increased
use of chemical fertilizers is
believed to be the only one of
these measures that is fairly
certain to produce positive
results. Clnly a small fraction
of China's optimum requirement
far chemical fertilizer would
be met by this planned increase.
Extensive water conservancy work
ncsw under way should help al-
leviate natural calamities such
as the floods of 1954.
The scheduled 35-percent
increase in agricultural pro-
duction in the second plan
period would require an in-
crease of more than 6 percent
per year, The measures proposed
for accomplishing this increase
are inadequate and only a dras-
tic increase in the use of
chemical fertilizer could bring
success, An increase of only
3 percent apparently would be
adequate to support fulfill-
ment of the industrial goals.
An increase of 3 percent ger?.
year rather than 6 percent is
an optimistic but not unrealis-
tic forecast of what may be ex-
pected from agriculture.
Technical crops--cotton,
tobacco, oil seeds--will prob-
ably be favored as in the past
in the efforts to increase :~.
production. The somewhat great-
er increases in these crops
will help light industry. It
was acknowledged at the congress
that unless the lot of the
worker and peasant were improved
there wa - kittle likelihood
of achieving increased produc-
tivity..
The attainment of a 3-per-
cent annual increase in agri-
cultural production would still
provide for some improvement in
the standard of living,;allow-~
ing for the increase in popu-
lation.--However,. because of
planned increases in the in-
dustrial labor force, improve-
ment in the standard of living
for the peasant would be slight.
Transportation
During the Second Five-
Year Plan, approximately 5,500
miles of new railways are
scheduled to be built and
10,000 miles of main highways
built or improved. Opening
of new areas in the west will
be emphasized in this construc-
tion, Inability to handle in-
creased traffic demands in some
areas was acknowledged at the
congress, but no plans for in-
creasing rolling stock and
other facilities or for in-
creasing haulage were announced.
Reserves
Another lesson the Chinese
have learned from the USSR is
the importance of having under
central state control stock-~
piles of food and
~, ~~~/~~t~~ . ,.,.~ ~ ~.~~GOVT ,,~ ~,~~~~INVESTMEEJ,T
CURRENT INTELLIGENCE WEEKLY ~U~YAI~~'
1 November 1956
`:~~.~f52~...
(plooned)
~~ '1~-62.:. ..
(iE only hcl4 of Agri plan
ii. met?pr~or flr.(~1JIna~,.,.,
s%
2%
72%
8%
67%
4%
9%
z%
industrial materials.
They acknowledge that
the planning process
can never be per-
fected; thus the.
ability to allocate
existing reserves of
all kinds to lagging
sectors of the econ-
omy may be crucial
to fulfillment of
the plan.
Re-tail Trade
SECRET
To meet com-
plaints regarding
the quality, variety,
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C,LTRR~ENT INTELLIGRNCE WEEKLY 15t/MMARY
1 ~ November 1956
and suitability of consumer
goods, another major economic
pronouncement was made at the
congress: about one fourth of
all c;ousumer goods are to be
removed from controlled markets
and channeled into free markets.
Most types of consumer goods
will be affected; grains-and
cotton cloth, however, which
make up the bulk of sales, will
not be.
In a reversal of distribu-
tion procedures, retailers will
order from wholesalers--who in
turn will order from manufac-
turers--only those items at
prices and in quantities they
believe will find ready sale.
Previously manufacturers al-
located to wholesalers and re-
tailers according to a set
plan4 It was acknowledged
that prices of many items would
rise-under the new system, but
it is hoped that the increased
price will be compensated for
THE REORGANIZATION OF
In reorganizing the states
of India on 1 November, New
Delhi is undertaking a major
experiment, the outcome of which
is not readily foreseeable, By
reducing the number of states
from 27 to 14, Prime Minister
Nehru's goal of less provincial-
ism and greater national unity
among the Indians should come
closer to achievement. At the
same time, the fact that the
government was forced to make
changes along linguistic lines,
a concession to strong provin-
cial linguistic movements,
leaves doubt as to whether na-
tional unity actually will be
increased.
Nehru has always opposed
linguistic states on the ground
by improved quality. Almost
all retail, wholesale, and
manufacturing establishments
have been socialized and thus
remain under economic control.
This new plan is probably
attractive to the regime for
another reason. An increase
of 25 to 30 percent both in
workers' wages and in peasants'
income is scheduled. This
could result in serious infla-
tion if an equivalent increase
in consumer goods were not made
available. By retaining price
controls and rationing for
essential foods and cotton cloth,
while permitting prices of
special Toads, quality cloths
and other consumer items to
inflate with market demand,
the excess purchasing power
can be ,channeled back into the
hands of the government through
increased prof its of state-
awned enterprises.
(Prepared by ORR)
THE STATES OF INDIA
that they would put provincial
loyalty above loyalty to India.
By accentuating the differences
among the Indian peoples, they
would tend to divide rather than
unify the country. With the
formation of Andhra State in
1953 following violent agitation
by Telegu linguistic groups,
however, the Indian government
was committed to a revision of
other state boundaries along
linguistic lines. This commit-
ment was officially recognized
when the States Reorganization
Commission published its report.
Since October, the govern-
ment s main problem has been how
to please the majority of lin-
guistic groups without violently
antagonizing others. The
s~~c.~ r
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CURRENT INTELLIGENCE WEEKLY ~T~~NIAR~Y
1 November ~ 1956
government's original inability
to do so was illustrated by the
violent riots in Bombay State
and some other parts of India
last November and January.
Continued talks with provin-
cial leaders leading finally
to settlement in August of the
most hotly debated question--
that of Bombay--have led to ar-
rangements sufficiently accept-
able fio all sides to permit
the formation of the new states.
Despite agreement on the
plan,. the reorganized states
will not necessarily function
smoothly. Controversy has al-
ready delayed their formation
from 1 October, the beginning
of the third quarter of the
fiscal year, to 1 November.
Mayor reorganizations of
boundaries in the cases of
Bombay, Mysore, Andhra, and
Kerala States--each of which
has acquired considerable new
territory--will presumably cause
some administrative difficulties
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difficult. In Kerala, which
will remain under direct ad-
ministration from New Delhi
until election tune, both Con-
gress Party members and the
opposition are critical of the
way the state is being adminis-
tered. Since this is the most
likely of all Indian states to
escape from Congress control as
a result of the elections, dis-
satisfaction within the party's
own organization may bedome a
serious weakness.
CURRENT INTELLIGENCE WEEKLY 'SZ~~RY
if nothing more. Satisfactory
integration or dismissal of
state government personnel, the
reorganization of state politi-
cal party groupings and the
establishment of new financial
and ad~iinis.tratave bool~kee~ping
procedures a1Z have to be
achieved. The residual dissat-
isfaction of linguistic minor=
sties whose desires were not
granted also remains..
The fact that since August
the inhabitants of the new state
of Bombay have continued to
display dissatisfaction suggests
that one effect of the reorgani-
zation here may be to weaken the
Gongress Party's support in the
forthcoming elections. Early
in the year, for instance, nine
Congress Party men resigned
from the state legislature and
sought re-election as independ-
ents. In Mysore, intense ri-
valry between Congress factions
will be complicated by the addi-
tion to the struggle of a new
group of individuals from dis-
membered Hyderabad State.
In :Andhra? both in regard
to government ,procedures and in
regard to'Congress Party organ-
ization., the elements from the
Telengana area of eastern Hyder-
abad State have won such a
series of safeguards against
extinction of their influence
that smooth operation may be
ARGENTINE POLITICAL SITUATION
The problem of the provi-
sional Aramburu regime in
Argentina of governing the
country by a military junta
with the counsel of political
leaders of conflicting views has
been. complicated by its efforts
to prepare for constitutional
In all these states, incum-
bent Congress officials will have
to make the choice between re-
maining at their posts to ensure
efficient administration or of
conducting active election cam-
paigns at the risk of losing
their seats because of criticism
for their failure to attend to
the state's business.
If the reorganization pro-
ceeds smoothly in the major
Indian states, the activities of
residual linguistic groups in
these and other areas may gradu-
ally decrease in importance,
If, however, dissension continues
and becomes linked with an ef-
fective united-front movement on
the part of the opposition, the
unrest created by the states'
reorganization may play an im-
portant part in the national
election outcome in certain
areas of India.
reforms and elections in 195?.
The regime remains apprehensive
over the apparently well-financed
Peronista activity and over dis-
sidence among its supporterso
The Aramburu regime appears
determined to transfer authority
SECI-~ET
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CURRENT INTELLIGENCE WEEKLY SUMMARY.
1 November-1956
to a duly elected civilian
government. There are, however,
sharp differences within the
military ,junta and; among polit-
ical parties over/electoral
measures. Same critics believe
the parties are still too badly
split to form a democratic base.
Others frankly wish to take
measures to reduce the politi-
cal advantage of Artoro Fron-
dizi, leading presidential
candidate of the Radical Civic
Union, by far the largest legal
party.
In the last national elec-
tion of congressmen in April
1954, the Peronistas won same
68 percent of the total vats
and the Radicals about 30 per-
cent. The Peronsta Party was
outlawed in November 1955 and
other parties have been trying
to attract the crucial Peron-
.+ista vote . Thus far the Pero~a-
istas have shown no strong dis-
position toward joining any of
them. A11 groups seem to feel
that among the presently or-
ganized political .parties, the
Radicals stand the best chance
of winning free elections.
Parties other than the
Radicals appear to be seeking
some means to reduce the ex-
tent of a Radical victory and,
if possible, to encourage the
displacement of Arturo Frondizi
as the official Radical candii
date for president. Opinion
regarding Frondizi varies, but
strong criticism is centered
an the left-wing Radical fac-
tion, which is important among
his supporters.
The government's announce-
ment on 27 October that cansti-
tutiona.l reform would precede
the national elections seems
to be another effort to reduce
the impact of a future Radical
regime. Some observers believe
this may delay the elections,
now scheduled for late 195?.
Electoral Measures
A decree on political
parties--long delayed by sharp
controversy--was finally issued
on 17 October. Parties publicly
active on 16 September 1955--
including the Communist Party--
are in effect recognized and
required to comply with fewer
formalities than those pre-
scribed in the decree for new
parties. The decree stresses
limitations on government in-
terference in the activities
of political parties and spec
ically rules out any require-
ment far the generally split
parties to undertake internal
reorganization, as desired in
some quarters.
The minister of interior
announced on 18 October that
the government was studying a
"complementary" decree which
would establish an open pri-
mary system for the selection
of candidates for president,
vice president and the chamber
of deputies. The proposed de-
cree reportedly would permit
any person who could obtain
2,000 signatures to be a candi-
date for president. This would
prevent those in control of
party machinery from blocking
certain candidacies.
Internal Party Divisions
The Radical Forty is split
into three main sections and is
controlled by the Frondizi-led
Intransigents faction. Except
for the more conservative views
of the Unionist section, the
main quarrel among the Radicals
concerns personalities--espe-
cially Frondizi--rather than
principles. The party platform
advocates complete nationaliza-
tion of public service and the
petr~olseum and meat-packing
industries. The party's tradi-
tional neutralism is reflected
in opposition to bilateral mili-
tary pacts with the United States
and to the Inter-American treaty
of Reciprocal Assistance--the
1947 Rio treaty.
The National Democratic
Party, also known as the Con-
servative Party, has strong
influence in the regime which
,~~CRET
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CURRENT INTELLIGENCE WEEKLY ~DMffiARY
disproportionate to its small
size. Its effectiveness, how-
ever, is also reduced by a
split over the efforts of one
faction to gain support from
former Peronistas.
The most important of the
four very small Catholic-
oriented parties are the lib-
eral Christian Democratic
Party and the rightist Federal
Union. The Federal Union
claims the support of the re-
tired General Bengoa, who re-
tains considerable behind-the-
scenes influence in the army
and political circles. The
ambits?us Bengoa.,.-however, has
not committed himself.
Perotiista Activities
The Peronistas have in-
creased their use of rumors
and pamphlets in tactics similar
to.:,those which helped under-
mine Peron. The government
has continued its precautions
against Peronista subversive
activity and has included in
its pre-electoral measures
special antitotalitarian
clauses banning formal politi-
cal activity by the Peronistas
or by rightist groups seeking
advantage from an alliance
with them. ThE government.'~s
decree of 11 October establishing
a board to investigate and
publicly identify Communist-
infiltrated and "totalitarian''
groups, however, has been
strongly criticized by all
political sectors as a possible
instrument far persecution of
any political enemy of the
regime.
Communist Party
Overtures by the Communist
Party to the Peronistas were
reiterated on 20 October by
Communist leader Codovilla,
who stated that if Peron re-
turned to Argentina, there
would be civil war; therefore,
the Peronistas were urged to
loin the Communist Party. Ise
said the party had grown to
63,000 members. Other estimates
place party strength at between
50,000 and 60,000 as of 1
August.
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