CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001100050001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: December 23, 2016
• Document Release Date: May 30, 2012
• Sequence Number: 1
• Publication Date: January 17, 1957
• Content Type: SUMMARY

Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
CONFIDENTIAL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 18
OCI NO. 0054/57
17 January 1957
00CAl t4T NO.
NO CKV&E W CL14'S9.
0 !?ECLASWISO
CLASS. Ci4ANCE0 T?j
NEXT REVIEW DATE:
AUTM: Tp~ 125X1
FATE: REVIEWER Z::
CENTRAL INTELLIGENCE AGENCY
CONFIDENTIAL
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
VV111 IUL-11 1 1/ t&,
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
POLAND'S FORTHCOMING ELECTIONS . . . . . . . . . . . . . Page 1
Opposition to the regime in Poland has gained
momentum and the party leadership apparently now fears
what would amount to public repudiation at the polls on
20 January if the trend continues unchecked. Opposition
within the party comes both from embittered pro-Soviet
elements and from the anti-Stalinist 'ank and file, who
are pressing for more sweeping changes. Popular atti-
tudes, stemming in large part from dissatisfaction with
economic conditions, have become negative and cynical.
In these circumstances antiregime elements may attempt to
. . . . . . . . . . . . . . . . . .
ALGERIA . . . . . Page 2
Widespread disorders and bloodshed on a large scale
may occur in Algeria in connection With the UN discussion
of the Algerian situation later this month. Tension be-
tween Europeans and Moslems is so high that either the
settlers, the rebels, or the French military might take
action that would set off an explosion. Premier Mollet
has warned that a General Assembly resolution condemning
French policy would cause France w permanently
from the United Nations.
25X1
7 -
EGYPT-ISRAEL . . . . . . . . . . . . . Page 3
Conflicting Egyptian and Israeli views on the future
status of the Gaza strip and Tiran Straits foreshadow a
long diplomatic battle. Israel is using its plans for 25X1
constructing oil pipelines bypassing the Suez Canal to
promote greater Western interest in, securing and main- tainin transit in the Gulf of Aqaba. 25X1
internal pressures are mount g 25X1
sign of willingness to modify his stand. emu' '1"""GwGl" riv 25X1
INDONESIA . . . . . . . Page 5
Indonesia's political crisis is the most far-reaching
in its short history of independence and seems likely to
result in a radical alteration of the basic governmental
structure of the republic. President Sukarno's announce-
ment on 17 January that he hopes to set up an "advisory
council" indicates his intention to carr through with his
CONFIDENTIAL
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
17 January 1957
proposal for an authoritarian regime. If Sukarno's pro-
posal is put into effect, he would have direct control
over the government, and Communist influence would in-
crease. The present coalition cabinet appears near col-
lapse, and efforts to resume normal relations with the
three Sumatran provinces continue to be ineffective. If
non-Javanese areas reject Sukarno's dictatorship and are
supported by important army elements, Djakarta's authori-
ty would probably be further reduced in the outlying
ratist tendencies would increase.
.,'NOTES, AND', COMMENTS
SOVIET CONCERN OVER STUDENT UNREST . . . . . . . . . . . . Page 1
Official concern over expressions of "harmful and
unhealthy ideas" among Soviet university students has
continued to mount in the last several weeks. Party and
Komsomol conferences devoted to this problem are being
held throughout the Soviet Union, and the press is filled
with ideological appeals and veiled threats. The regime
may be preparing to resort to repressive measures to
correct the situation.
CHOU EN-LAI'S MISSION IN POLAND . . . . . . . . . . . . . Page 2
Chou En-lai has made clear that Communist China is
still sympathetic toward the Polish desire for freedom
from Soviet domination but remains insistent on the vital
importance of bloc unity--under Kremlin leadership--in the
face of "imperialist aggression." Chou's statements prob-
ably reflect Sino-Soviet agreement to grant Warsaw a
special position in the as long as the Poles are co-
operative. 25X1
HUNGARIAN REGIME STEPS UP REPRESSION . . . . . . . . . . .. Page 3
The Kadar regime in Hungary has stepped up its cam-
paign of terror against all forms of resistance, vowing
a "merciless" campaign to exterminate its enemies and
threatening the death 'penalty for almost any form of "anti-
state activity." Government and party officials are them-
selves, however, thoroughly disorganized, and Kadar
apparently is constantly watched by a cordon of Soviet body 25X1
guards ..
SECRET
ii
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
for their independence" in the Middle East. 25X1
YEMEN-ADEN BORDER HOSTILITIES . . . . . . . . . . . . . Page 5
Prospects for settling the Yemen-Aden border dis-
pute by direct negotiation or under UN auspices appear
very slim in view of the Yemeni imam's inclination for
troublemaking and Egyptian, Soviet and Saudi encourage- 25X1
The USSR has launched a full-scale propaganda re-
buttal to the American proposals--including an official
statement released ty TASS on 12 January--that is
primarily aimed at encouraging Arab rejection of any
American offers under the plan. Moscow is trying to
arouse Arab suspicions that the United States intends to
reimpose "colonial domination" on Arab countries "fi h in
SOVIET RESPONSE TO US MIDEAST PROPOSALS . . . . . . . Page 5
JORDAN . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
The Jordanian delegation seeking Arab aid to replace
the British subsidy departed Cairo for Saudi Arabia on
15 January. Although Cairo press reports termed the talks
"very successful," no further information has been made
public. It appears that some assurances of Arab a
been obtained by the Jordanian delegation. 25X1
between Communist countries.
NORTH VIETNAM . . . . . . . . . . . . . . . . . . . . . Page 8
The sixth session of North Vietnam's National As-
sembly, which opened in Hanoi on 29 December, provided
a platform for pronouncements on the main lines of Viet
Minh policy. Premier Pham Van Dong promised a speed-up
in the "mistake-correction campaign" to rectify abuses
in land reform, which had led to recent uprisings. In
his remarks on foreign policy, Dong affirmed the
regime's dual allegiance to the Soviet Union and Communist
China and stressed the need for equality in relations
have reservations about the agreement.
SITUATION IN LAOS . . . . . . . . . . . . . . . . . . . Page 8
The Laotian assembly will probably soon approve
the government's agreement of 28 December for a coali-
tion with the Pathet Lao. It may insist on some re-
visions, however, since a number of deputies reportedly
SECRET
iii
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
SOUTH KOREA'S INFLATION . . . . . . . . . . . . . . . . Page 9
Prices in South Korea have reached a level which,
under the terms of the US-Korean agreement of August
1955, may require an upward revision of the hwan-dollar
exchange rate at the end of the first quarter of 1957.
In an attempt to avoid such a contingency, South Korea
has instituted emergency measures to stabilize prices.
The success of these measures, however, appears doubtful. 25X1
NEW BRITISH CABINET LOOKS TO CLOSER TIES WITH EUROPE . .
The new British government will probably pay more
attention to strengthening Britain's ties with the
Continent and to improving Britain's position in world
trade. The small number of cabinet changes so far
emphasizes continuity with the preceding cabinet, but
there is speculation, centering around the retention of
Foreign Secretary Ll at there may be further
changes.
ADENAUER AND EUROPEAN SECURITY PLANS . . . . . . . . .
The West German government is increasingly respon-
sive to election-year pressures on it to explore every
means of promoting the reunification of Germany. These
pressures probably led to Adenauer's statement on
11 January that he remains interested in a European
security system to be agreed on between the Western
powers and the USSR.
Page 11
Page 12
NEW SIGNS OF UNREST IN SPAIN . . . . . . . . . . . . . . Page 13
Mounting dissatisfaction among the supporters of
the Franco regime is reflected in reports of recent
resignations from the cabinet. The Madrid government
has been ineffectual in dealing with its serious in-
flation problem, and Falangist leaders are disturbed
over their failure to secure permanent predominance for
their party. The present transportation boycott in
Barcelona in protest over the rising cost of living may
lead to further strikes and demonstrations.
SOVIET PRESSURE ON GREECE . . . . . . . . . . . . . . . Page 14
Moscow is exploiting the Cyprus issue to pressure
the Greek government for closer relations with the USSR,
threatening to withdraw Soviet support of the Greek
position when the Cyprus issue is discussed in the UN
General Assembly.
SECRET
iv
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
STALEMATE IN US-BRAZILIAN BASE NEGOTIATIONS . . . . . . Page 14
Brazil's insistence on economic aid in exchange for
a US missile base has created a new impasse which Presi-
dent Kubitschek has warned must be solved before the Bra-
zilian congress reconvenes on 1 February. Kubitschek
said agreement would probably be impossible after that
date, but Brazil has a high stake in preventing collapse
PATTERNS AND PERSPECTIVES
Page 4
SECRET
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
17 January 1957
The level of the Caspian Sea has dropped sharply
since 1929, resulting in Soviet economic losses, partic-
ularly in the oil transport and fishing industries,
estimated at $250,000,000 a year. Soviet scientists
and engineers recently met in Astrakhan to study the
problem and advanced a plan of restoration, which, like
previous plans, would be ewtremely costly.
SECRET
vi
Page 7
Page 9
THE WEEK IN BRIEF
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
L?I Y 1 U'1 UI ____
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
OF IMMEDIATE INTEREST
25X1
25X1
POLAND'S FORTHCOMING ELECTIONS
Opposition to the regime
in Poland has gained momentum
and the party leadership appar-
ently now fears what would
amount to public repudiation
at the polls on 20 January if
the trend continues unchecked.
Opposition within the party
comes both from embittered pro-
Soviet elements and from the
anti-Stalinist rank and file,
who are pressing for more sweep-
ing changes. Popular attitudes,
stemming in large part from
dissatisfaction with economic
conditions, have become nega-
tive and cynical. In these
circumstances, antiregime ele-
ments may attempt to provoke
disorders on election day.
The Polish regime last
week took two remedial steps
to avert a setback at the polls.
Local election committees were
instructed under provisions of
the election law to remove from
the electoral lists the names
of candidates who had "demon-
strated a weak character" and
an unwillingness to defend or
support the nat
onal fro
program.
IGomulka is-
sued a memorandum to all Polish
United Workers' Party (PZPR)
members calling for total
mobilization of the party in
this last phase of the campaign.
The party was criticized for
being altogether too passive,
with the result that the cam-
paign was going badly. All
party members were being called
on to make a last-ditch effort
to rekindle in the minds of the
people the hopes of the "Polish
October."
Popular Opposition
At the time the new elec-
tion law was written, Gomulka
apparently expected that the
liberalization platform of the
October revolution would bring
about a ringing endorsement of
a regenerated PZPR in the elec-
tions. Since that time, how-
ever, he has failed to trans-
late his personal popularity
into support for the PZPR,
which remains an anathema to
the people.
Internal and external
pressures have forced Gomulka
to exercise maximum caution in
the initiation of new, more
liberal internal policies. In
these circumstances, the popu-
lation, already dissatisfied
with economic conditions, has
become cynical and negativist,
readily susceptible to the
black propaganda generated by
the pro-Soviet Natolin group,
which is covertly encouraging
the populace to abstain from
voting or to scratch candidates'
names from the lists in an
effort to discredit the regime.
Of particular danger to
Gomulka is the disaffection. of
workers and students.
___]labor has little
hear or work; workers' coun-
cils are not fulfilling expecta-
tions; the regime has stead-
fastly refused to pay the work-
ers money due them as premiums
and other arrears; and the
threat of unemployment hangs
heavily in consequence of the
regime's efforts to conserve
COMIROPIAL
PART I OF IMMEDIATE INTEREST Page 1 of 6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
raw materials, particularly
coal,. Worker anxiety over not
earning enough money has now
reportedly been transformed
into fear of losing one's job
altogether. This fear extends
to white-collar workers and
state employees, many of whom
have already been dismissed
in reorganizations designed to
pare the bureaucracy.
Students, dissatisfied
with the slow progress of
liberalization, are generally
found in the forefront of
sporadic local disorders.
Party Opposition
The most active opposition
to Gomulka is within the party
itself, where anti-Stalinist
feeling among the rank and file
is reported to be very strong.
Although not attacking Gomulka
and those few individuals most
closely identified with him,
this group is dissatisfied with
the continued presence in high
positions-of those who held
party and mass organization
posts before the October
revolution. Their dissatis-
faction has focused on the
Jewish element within the
party and on the liberal
intellectual wing which has
supported Gomulka. These
people are being attacked by
the rank and file as oppor-
tunists and, frequently, as
"agents of international re-
action.." As a result, a wide-
spread sense of pessimism has
reportedly supplanted the feel-
ing of optimism prevalent in
the liberal group last fall.
The party rank and file
is being encouraged by the
"Natolin" dissidents to press
these attacks and to agitate
for a "housecleaning" within
the party as well as in the
Sejm. In those cases where
local party elections have al-
ready been held, well-known
candidates have often been
repudiated in favor of young
"new blood" with uncertain
loyalties. These developments
have doubtless given the party
leadership pause to consider
its position within the nation
as a whole, and to use whatever
remedies it can, but the pros-
pect for the immediate future
seems to be that Gomulka will
find it increasingly difficult
to implement his program. While
he will continue to receive
homage personally, his hands
will become more and more tied
by the subversive efforts of
party dissidents.
Widespread disorders and
bloodshed may occur in Algeria
in connection with the UN dis-
cussion of the Algerian situa-
tion later this month. Tension
between Europeans and Moslems
is such that either the set-
tlers, the rebels, or the
French military might take
action that would set off an
explosion.
The rebels have rejected
French premier Mollet's renewed
bid on 9 January for a cease-
fire without prior political
commitments and have called on
Moslems in Algeria and France
for an "immense national mani-
festation" in the form of a
week-long general strike coin-
cident with the UN debate. The
French general in charge of
SECRET
PART I OF IMMEDIATE INTEREST Page 2 of 6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
`' SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
security for the Algiers area
has warned, however, that the
military will break open the
doors of any Moslem shops that
participate in the strike.
The rebels have stepped
up their terrorism. Bazooka
rockets fired into French
military headquarters in Al-
giers during the night of 16
January killed the aide to
France's commanding general in
Algeria.
Tension is reported mount-
ing
among European Al
gerians
who
fear abandonment
by Paris
and
they are talking
more fre-
quently of forming a
"white
25X1
republic."
25X1
Mollet has acknowledged
that direct action by the
UN for
ces con
tinu
e to move
forward in
Sinai,
but
the con-
flicting Eg
yptian
and
Israeli
views on th
e futur
e status of
the Gaza st
rip and
the
Tiran
settlers would probably lead to
a blood bath in which casualties
in Algiers alone might reach
40,000 or 50,000 within 24 to
48 hours. Such violence would
almost certainly spread to
Morocco and Tunisia.
France apparently still
hopes to prevent action on the
Algerian question by the UN
General Assembly, before which
Paris.intends to defend its
policy vigorously. The French
might settle, however, for a
mild resolution. Their UN del-
egation, now soliciting the
support of other delegations,
has apparently dropped its plan
to insist on a vote in the
assembly on the UN's competence
to discuss the Algerian issue.
Mollet's warning of 8 January
still stands that a resolution
condemning French policy would
cause France to withdraw perma-
nently from the United Nations.
Mollet's freedom to vary
Algerian policy is narrowly
circumscribed by his need for
rightist support in the Nation-
al Assembly. The by-election
in France on 13 January sup-
ported the conservative Algeri-
an policy rather than that of
the Mendes-France faction,
which is charged with favoring
"abandonment" of Algeria. Dur-
ing the election campaign, the
right showed its willingness to
back up its stand on Algeria
by resorting to violence to in-
fluence election results.
Straits foreshadow a long dip-
lomatic battle over these is-
sues. Israel has announced its
forces will be out of all'of
Sinai excer' Sharm al Shaikh by
SECRET
PART I OF IMMEDIATE INTEREST Page 3 of 6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
t , ti.. .)L LI C 1 tir __
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1956
22 January. The Is
raelis are making a
determined effort to
obtain free-passage
guarantees for the
Straits of Tiran
leading into the Gulf
of Aqaba. The Is-
raeli ambassador to
the United States
has said Israeli
forces would not
withdraw from Sharm
al Shaikh until
such
guarantees are
ob-
tained..
Israel
is
using its
plans
for
construction of
oil
pipelines
from
Eilat
to Haifa, bypassing
the Suez Canal, to
promote greater West-
ern interest in se-
curing and maintain-
ing freedom of trans-
it in the Gulf of
Aqaba.
Discussions of
the future status of
the Gaza strip have
been deferred, but
Israeli officials
are promoting a plan
for Israeli police
control under UN
supervision.
rtk~
line
Approximate area
under Israeli control
SIN.A '
An Na fi1 ' Al KuntiTlih'"
PENINSULA
Egypt maintains that no
negotiations on these issues
can be undertaken until Israel
withdraws behind the 1949 armi-
stice lines. Cairo has
threatened to deny Suez passage
to British and French vessels
unless the status quo ante bel-
lum is restored. Nasr told
Ambassador Hare on 10 January
that the canal issue must soon
be solved, but he foresaw a
"serious problem" if Israeli
evacuation is not completed be-
fore the canal is cleared. He
reiterated his unwillingness
to negotiate directly with
' Aqaba
Britain and France and stated
that tolls could be paid only
to the Egyptian canal author-
ity.
General Wheeler, in charge
of canal clearance operations,
estimates that the canal will
be open by late February or
early March to medium-draft
ships of about 10,000 tons.
Clearance of the channel per-
mitting ships of 35-foot draft
is not expected before April.
Reports from Egypt that
pressures on the Nasr regime
are mounting suggest that Nasr
may be in trouble. He shows,
SECRET
PART I OF IMMEDIATE INTEREST. Page 4 of 6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
C, V JL LF\L I
CURT :NT INTELLIGENCE: WEEKLY SUMMARY
17 January 1957
however, no sign of willingness
to modify his stand.
The economic situation has
become critical. Cairo's total
foreign exchange holdings are
now only about 10 percent of
the normal working balance.
Reserves of oil, spare parts,
and raw materials are about ex-
hausted. Kerosene has been
severely rationed, and rice
and gasoline are slated for
rationing soon. Nasr, probably
in an effort to halt public
dissatisfaction, announced on
14 January he would head a new
supreme economic planning
committee to alleviate Egyptian
economic problems. Cairo's
enactment on 15 January of four
_iew laws designed to "Egyptian-
iee" economic activities in
Egypt will have no immediate
economic benefits and may only
wipe out the remaining confidence.
of the Egyptian business
community in~ the Nasr govern-
ment's ability to keep the
country from bankruptcy.
The Sinai debacle and the
present purges of army officers
are increasing dissatisfaction
with the Nasr regime. Although
there is as yet no good evi-
dence that any group in Egypt
is capable of seriously
threatening Nasr's control,
dissatisfaction caused by
military defeat and the con-
tinuing purge of army officers
suggests increased trouble for
Nasr. Widespread rumors of an
imminent revolt led by dissident
army elements were recently
circulating in Alexandria.
INDONESIA
Indonesia's political
crisis is the most far-reaching.
in its short history of independ
ence, and seems likely to re-
sult in a radical alteration of
the basic governmental structure
of the republic. President
Sukarno apparently intends to
set up an authoritarian regime,
aid if non-Javanese areas re-
ject Sukarno's dictatorship and
are supported by important army
elements, Djakarta's authority
would probably be further re-
duced in the outlying islands
and separatist tendencies would
increase.
Sukarno announced to for-
ei;n correspondents on 17 Janu-
ary that he hopes to set up an
"advisory council" to solve the
national crisis precipitated
by army coups in Sumatra in
December. is statement ILol-
lows reports in the Indonesian
press during the past week,
probably published to elicit
political and regional reactions,
that the council would be under
Sukarno's personal leadership,
would have a membership of 14?,
and would include representatives
of major Indonesian political
thought--religious, nationalist,
and Marxist.
In addition, it would have
members drawn from the military,
youth groups and "mass organiza-
tions." In operation, the coun-
cil reportedly would both origi-
nate policy and issue implement-
ing regulations. The cabinet
would be responsible to the
council, acting as its executive
SECRET
PART I OF IMMEDIATE INTEREST Page 5 of 6
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
SECRET
CURRENT INTELLIGVNCE WEEKLY SUMMARY
17 January 1057
agent, and parliament's role
would be restricted to legisla-
tion in the field of "recon-
struction.""
The council would be the
agency for Sukarno's proposed
"guided democracy," as opposed
to what he terms a "Western-
tope democracy" which, he says,
permits "unfettered" activities
otfi political parties to the
detriment of the nation. The
neiiv government structure would
give Sukarno direct control
over the government. He would
undoubtedly propose Communist
participation in the council in
thi..e interests of "national
un'ty" and probably would sup-
Communists in their
demand for representation in a
ndf cabinet if Prime Minister
Al'b's cabinet should fall.
'M;Sukarno's success in carry-
ing'tJout his plan will depend
on,lthe support given him by
the''army, the National Party,
afiid the Nahdlatul Ulama (NU),
a?.,tIoslein party whose cO-o -bra-
ticyn with the Nationalists has
provided the basis for Indo-
nesian .government since the
1055 elections. Success will
also depend on the extent of
resistance offered the plan
in non-Javanese areas, where
federalist sentiment is high
and where the council would be
regarded as an effort to per-
petuate strongly centralized
control.
The coalition cabinet ap-
pears near collapse with the
reported decision of the NU
"to persuade the government to
resign." The NU, which pre-
viously had announced it would
stand with the National Party
to preserve the cabinet, ap-
parently reversed its position
following the defection of
PERTI, a small Moslem party, on
15 January, Presumably it
also considered as unsatis-
factory National Party conces-
sions to keep it in the cabinet.
The NU may wait to take action,
however, until parliament con-
venes on 21 January.
Djakarta's efforts to re-
sume normal relations with the
three Sumatran provinces con-
tinue to be ineffective. The
Central Sumatran government,
under army rule since December,
on 11 January called again for
the resignation of the Ali
cabinet. President Sukarno has
announced he will send a personal
emissary to meet Colonel Siaiibolon,
the rebel commander in North
Sumatra, but Simbolon reported-
ly has said he will surrender
only to a new cabinet under
former vice president- Matta,
South Sumatra continues to
withhold revenues from the
central government. Two sub-
provincial areas in Central
Sumatra have demanded provin-
cial status of their own, and
an area in the Celebes is re-
orted About to do 1 k wise.
SECRET
PART = OF IMMEDIATE INTEREST Page 'T of G
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
C011D,,T IAL'
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
NOTES AND COMMENTS
SOVIET CONCERN OVER STUDENT UNREST
Official concern over ex-
pressions of "harmful and un-
healthy ideas" among Soviet uni-
versity students has continued
to mount in the last several
weeks. Party and Komsomol con-
ferences devoted to this problem
are being held throughout the
Societ Union, and the press is
filled with ideological appeals
and veiled threats. The youth
paper, Komsomolskaya Pravda,
in a recent article warnea`of
"hostile anti-Soviet elements"
among the youth. The use of
this ominous epithet from the
Stalin era suggests that the
previously more moderate ap-
proach has had little effect
and that the regime may be pre-
paring to resort to repressive
measures.
Judging from reports in
the Soviet press, questioning
of Soviet policy and Communist
dogma and demands for greater
freedom on the part of students
have taken many forms and appear
in many cases to be the product
of serious reflection and con-
certed action.
In Leningrad, students of
a railway institute issued a
handwritten manuscript called
"Fresh Voices" which, according
to the Soviet press, "nihilisti-
cally defamed socialist realism."
In another institute, students
have put out a journal called
Heresy containing "decadent"
poems, and Moscow university
students tacked on the bulletin
board BBC news items containing
"slanderous attacks against the
Soviet press," In addition,
according to numerous reports,
students have been asking embar-
rassing questions about the
situation in Hungary, demanding
more truthful news in Soviet
papers, calling for a two-party
system and generally demanding
wider freedom and questioning
basic aspects of the Communist
system.
While most of the official
criticism is directed at uni-
versities in Leningrad and
Moscow, there is considerable
evidence that the problem exists
throughout the Soviet Union,
Official complaints against
students have been voiced in
numerous areas including the
Soviet Far East.
Despite the Soviet claim
that "unhealthy" attitudes are
isolated manifestations, the
fact that on several occasions
as many as 100 students have
walked out on political lecturers
who failed to answer their ques-
tions suggests that the "infec-
tion" is fairly widespread.
One of the most disturbing
aspects of this problem from the
regime's point of view is that
the individuals guilty of these
"harmful" attitudes do not ap-
pear to be misfits or people
unable to conform to or be con-
'tented in any social order. On
the contrary, these students
are members of the elite on
which the regime depends for
future technicians, administra-
tors and cultural leaders. They
include students of the humani-
ties, engineers, scientists
and even naval cadets. Such
students in the past normally
were content to leave "contri-
butions" to Marxist-Leninist
theory to Stalin and the agita-
tion and propaganda department
of the central committee.
Another element disturbing
to the regime is that many of
the students who are voicing
unorthodox views are members of
CONFIDENTIAL
PART II NOTES AND COMMENTS
Page 1 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
the Komsomol, the Soviet youth
auxiliary of the Communist
Party, The overwhelming ma-
jority, in some cases as high
as 90 percent, of the students
in Soviet universities are
Komsomol members. Not only
have these members failed to
provide models of correct
political thinking in the
colleges but in many cases they
have been among the first to
overstep the bounds of accept-
able behavior, The complaint
that the party has failed to
lead and direct the Komsomol
is frequently voiced in the
press and on several occasions
it has been admitted that some
Komsomols oppose the party and
take an independent attitude.
This revolt among students
is a phenomenon unparalled in
SECRET
CHOU EN-LAI's MISSION IN POLAND
Chou En-lai's speeches
during his recent Polish visit
made clear that Communist China
is still sympathetic toward
the Polish desire for freedom
from Soviet domination and will
support the Gomulka regime in
a position of relative independ-
ence: within the bloc. At the
same time, however, Chou evident-
ly tried to impress Polish
leaders with the vital impor-..
tance of bloc unity--under
Kremlin leadership--in the face
of "imperialist aggression,"
and to warn them of the neces
eity of preventing or suppressing
anti-Soviet actions inside
Poland which might result in
a forceful reimposition of
tight Russian control.
Chou arrived in Warsaw
on 11 January after a four-day
stopover in Moscow, and his
views probably reflect Sino-
Soviet agreement that the
Gomulka regime should be
accorded a special position
in the bloc as long as the
Poles are co-operative. The
Soviet history since the 1920's.
Probably the primary explanation
lies in the growth of free
discussions among individuals,
stimulated by the relaxation
of police controls and the
de-Stalinization campaign.
Soviet citizens, particularly
students, are no longer afraid
to discuss unorthodox beliefs
with each other. Being no
longer isolated intellectually,
the students have gained
courage as well as new idea
Chinese have previously in-
dicated that the Poles have
gone beyond the permissible
limits of independence and
stressed that all bloc members
must remain faithful to the
Soviet model in essentials and
closely aligned with the Kremlin
on foreign affairs.
The economic effects of
recent developments in Eastern
Europe undoubtedly added to
the Chinese Communist politi-
cal interest behind Chou's
efforts to dissuade the Poles
from following a divisive
the failure of the
Satellites to deliver promised
machinery and manufactured goods
has caused Peiping to re-examine
its situation and scale down
the industrial section of the
NOTES AND COMMENTS Page 2 of 15
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
Second Five-Year Plan, The
Satellites have been providing
$400,000,000 worth of industrial
and transportation equipment to
China annually--in addition to
the $800,000,000 worth of mate-
rial sent by the Soviet Union.
There have been some indi-
cations since Chou arrived in
Warsaw that the Poles have been
brought around.to partial ac-
ceptance of the Sino-Soviet
compromise by the combined force
of Chinese persuasion and Soviet
pressure. In an election speech
of 14 January, Gomulka acknowl-
edged Soviet leadership of the
bloc in foreign relations, justi-
fied once again the presence of
Soviet troops in Poland,and
emphasized the improvement of
relations with Moscow since
last October.
Reports from Poland say
the government has moved to
silence elements openly hostile
to the Soviet Union,and the
press has become increasingly
critical of Western policy
while giving greater emphasis
to solidarity with the bloc.
The final communique issued on
16 January suggests Sino-Soviet
ratification o-F Poland's recently
won independence within the bloc
with respect to matters of
internal policy--in exchange
for Polish fidelity to the
main lines of bloc foreign
policy. Con- 25X1
curred in by R
HUNGARIAN REGIME STEPS UP REPRESSION
The Kadar regime in Hungary
has stepped up its campaign of
terror against all forms of
resistance, vowing a "merciless"
campaign to exterminate its
enemies and threatening the
death penalty for almost any
form of "antistate activity,"
Many government and party of-
ficials, however, are thoroughly
disorganized and Premier Kadar
apparently is constantly watched
by a cordon of Soviet bodyguards,
Worker reaction to the
regime's 6 January reassertion
of the "proletarian dictator-
ship" was "furious," according
to the American legation in
Budapest. The end of the brief
"undeclared truce" between the
regime and the people on 11
January was signaled by walk-
outs in several key industrial
plants in the city and on Csepel
Island. Some members of plant
workers' councils simultaneously
resigned, protesting government
moves to place regime front
men in top factory management
spots and to lay off thousands of
workers. Many workers apparent-
ly feel the regime has deliber-
ately fostered widespread un-
employment in order to gain
recruits for the mines, to get
rid of political undesirables
and as a general weapon to
brandish in time of need.
This open defiance was met
by the regime on 11 and 12
January with a sweeping exten-
sion of the martial-law decree
and a reassertion of the ban
on public meetings and proces-
sions. Martial-law procedures
now cover virtually all forms
of alleged "antistate" activity,
with death the normal penalty
for violating the decree. Minis-
ter of State Marosan, whose
speeches have been even more
pro-Soviet than those of Kadar,
frankly revealed the regime's
general intentions on 14 Janu-
ary when he promised that the
government would be "both
SECRET
PART II NOTES AND COMMENTS Page 3 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET'
CURRENT INTELLIGENCE WEEKLY SU
17 January 1957
25X1
25X1
25X1
25X1
Regime attempts to carry
out this "merciless" line have
been hamstrung, however, by
government and party disorgani-
consistent and merciless" in
its fight against all "enemies."
zation and disloyalty.
the government is
almost totally disorganized,
with virtually no contact be-
tween cabinet ministers and
their staffs. Complicating the
situation is the basic hostility,
even within the party, toward
the USSR; there are no pro-
Soviet Communists left in
Hun-
gary now,
n even remier
a ar is surrounded by Soviet
bodyguards.
J
Kad n bona ommun st
who intends to retain the
strictly economic gains of the
revolution but who feels that
any political concessions could
lead only to a new blood bath
and complete chaos.
Kadar's national Communism
has, of course, been completely
compromised as a result of both
Soviet orders and the pressure
of events. He is unlikely to
assert any of his previously
held national Communist tenets
so long as disorder prevails in
Hungary, but a return to normal-
ity might lead him to press for
a new relationship with the
USSR.
Economic Troubles
Worker reluctance to get
production going is only one
of several reasons why the
regime is--in the legation's
words--"whistling in the dark"
in trying to formulate a work-
able economic program. Infla-
tionary pressures pose a con-
stant threat to the economy,
and the government has admitted
that signs of inflation are
becoming apparent. To forestall
this, the regime plans to cut
the 1957 budget, especially in
government administrative ex-
penses, national defense and
capital investments, completing
only those capital projects
which require "very little ex-
pense" and which help to in-
crease stocks of consumer goods.
The government has also pledged
itself to curtail the export
of consumer goods and to em-
phasize consumer goods produc-
tion for home use.
cuai production--the most
critical problem--probably can-
not reach normal levels before
the end of this year. The out-
look for urban food supply is
also unfavorable, although basic
foods are presently available.
The procurement and distribution
system is not functioning
properly and this, coupled with
low stocks, could lead to
critical food shortages by late
spring if supplies are not
obtainable from the Soviet Union
or elsewhere.
ed by the Kadar regime.
The regime hopes many of
its problems will be solved with
aid from both the Communist
and non-Communist world. It
was granted a rehabilitation
loan of $50,000,000 from the
USSR on 30 December and a like
amount was offered by the Chi-
nese Communists in early Janu-
ary. Lesser amounts of aid have
been offered by other Satellites
and Yugoslavia. Reaction to
Hungarian requests for Western
aid, other than in the form of
immediate relief supplies, has
been equivocal. Some United
Nations officials, however, ap-
parently seeing no alternative,
intend to press Western govern-
ments for aid to be given through
the United Nations but distribut 25X1
(Concurred in by 25X1
SECRETr
PART II NOTES AND COMMENTS Page 4 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
SOVIET RESPONSE TO US MIDEAST PROPOSALS
The USSR has launched a
full-scale propaganda rebuttal
to the American Middle East pro-
posals--including an official
statement released by TASS on
12 January--that is primarily
aimed at encouraging Arab re-
jection of any American offers
under the plan. Moscow is try-
ing to arouse Arab suspicions
that the United States intends
to reimpose "colonial domina-
tion" on Arab countries "fight-
ing for their independence" in
the Middle East.
Khrushchev asserted on
13 January that the trend of
history supports the socialist
and national liberation forces.
He told his Uzbek audience
that American "imperialists"
are attempting to replace
"French imperialism" and the
"British lion," which "lost
his tail in Egypt," but that
the "Eisenhower doctrine" will
be "thrown onto the garbage
heap of history."
An official TASS state-
ment was issued on 12 January,
giving a point-by-point rebu t-
tal of the proposals. It por-
traved the USSR as a benevo-
lent observer of the Arabs'
''liberation struggle," and de-
scribed the American propos-
als as anti-Arab as well as
anti-Soviet. Moscow's hope that
the proposals will be rejected
throughout the Asian-African
area was reflected in several
allusions to the principles of
Bandung.
The statement attempted to
disparage the economic aid pro-
visions of the program, alleg-
ing that American and British
"Oil monopoliSts...made a net
profit of $1.9 billion" on
Middle East oil during 1955,
and warned of the dangers of
new Israeli "predatory plans"
which would follow from the
American proposals.
TASS termed President
Eisenhower's message the "voice
of war and not the voice of
peace." This theme was en-
larged on by other Soviet prop-
aganda media. Moscow radio on
12.January spoke of the "swag-
gering statements" in the State
of the Union address, and Prav-
da on 14 January spoke of the
"false assertions" being made
to Congress as Supported by
only a "few reactionary public
figures of the capitalist world."
25X1
YEMEN-ADEN BOLDER HOSTILITIES
Incursions into the wes-
tern Aden Protectorate by Ye-
meni irregulars and dissident
tribesmen formerly from the
protectorate have continued,
and skirmishes in the Beihan
valley area have involved in-
creasing numbers of men. In
addition to protectorate tribes-
men and tribal guards, British-
led levies have been engaged,
and a company of British in-
fantry has moved into the town
of Beihan. Hostilities have
therefore shifted eastward from
the Dhala-Qataba sector, which
SECRET
PART I I NOTES f..F P COMMENTS Page 5 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
MECCA
17 January 1957
was the center of trouble during
December. Another company of
British infantry has been in
Dhala for several months.
New outbreaks are possible
in the eastern Aden Protectorate
in the Thamut area, where a
subsidiary of the Iraq Petrole-
um Company is prospecting for
oil. A prominent member of
the Arab community in Aden
Colony has warned that southern
Arabia may become "another
Algeria."
In addition to reinforcing
their positions in the Aden-
Principal roads
and settlements
f Airf ield
.
(UK) Sa[if ?SANA , % -
111
..SECRET.
CURRENT INTELLIGENCE WEEKLY SUMMARY
L. YEMEN
KAMARAtd I
,.
WESTERN ADENi
XD. EpkdLONY 6 _
SECRET
Hari t yBeihan
JU~
C
O
BuraitTi
basis
RMUSCAT
y/ Jv
Thamut* 's
EASTERN ADEN
PROTECTORAL
Yemen frontier area, the British
have undertaken limited military
operations against Yemeni-oc-
cupied positions in areas
claimed by protectorate sheiks
in an effort to halt Yemeni
border incursions and subver-
sion of protectorate tribes.
A British naval vessel is
reported to have been sent to
disputed Kamaran Island, which
is controlled by Britain and
lies within Yemen's territorial
waters off the main port town
of Salif.
Britain is promoting a
joint inspection of the
`< F
.?Protectorate boundary
~Indefinite boundary
17 JANUARY 1957
PART II NOTES AND COMMENTS Page 6 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET'
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
Yemen-Aden frontier area, but
Yemeni raids have taken place
even while preliminary talks
were in progress. The Foreign
Office is also considering
asking for a United Nations
fact-finding or boundary demar-
cation mission, but fears that
submitting the question to the
UN might benefit only the Asian-
African bloc or lead to
unworkable procedures for adjudi-
cating the border dispute,
While the prospects are-very
slim for settling the dispute
by these efforts, the British
evidently believe they must
make some public gesture toward
such negotiations to offset the 25X1
and Soviet propaganda,
The Jordanian delegation
seeking Arab aid to replace the
British subsidy departed Cairo
for Saudi Arabia on 15 January
after nearly a week of discus-
sions in Egypt. Although Cairo
press reports termed the talks
"very successful," no further
information has been made pub-
lic. Jordan's King Hussain,
meanwhile, departed on 16 Janu-
ary for consultations with King
Saud in Medina in an attempt to
obtain precise information on
Arab aid and to discuss the pos-
sibility of reaching a bilateral
agreement with Saudi Arabia.
It appears that some as-
surances of Arab aid have been
obtained by the Jordanian del-
egation. Reports from Amman
meanwhile indicate that King
Hussain welcomed the American
Mideast proposals as offering
the prospect of American aid
to replace the British subsidy.
25X1
SECRET
NOTES AND COMMENTS Page 7 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
- n ' JGLI[G l
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
SITUATION IN LAOS
The Laotian assembly's
debate on the government's
agreement of 28 December for
a coalition with the Pathet Lao
is.imminent, and approval, per-
haps with some modification,
appears probable. A number of
deputies reportedly have mis-
givings about the agreement and
intend to seek clarification of
the clauses relating to the
integration of the Pathet forces
into the army and control of
the two disputed northern prov-
inces. There is therefore
some possibility that the as-
sembly will insist on revisions
designed to strengthen the
government's position. The
Pathet Lao would probably be
most reluctant to accept any
significant revision.
The prospect that the
agreement will receive a criti-
cal examination in the assembly
has been enhanced by the return
from a trip abroad of Deputy
Premier Katay, who has pre-
viously indicated opposition
to it. Several other prominent
Laotian leaders have indicated
they would seek to set some
time limit for the Pathets to
carry out the terms of the
agreement--noncompliance would
be justification for the over-
throw of the government. Crown
Prince Savang told the British
ambassador that he was adamantly
opposed to the agreement, and he
will presumably convey his views
to the cabinet prior to the
assembly vote.
Meanwhile, Premier Souvanna
Phouma, fearing the United
States might withdraw its eco-
nomic aid following assembly
approval of his Pathet Lao
settlement, is reportedly seek-
ing aid from India and France.
He is also reportedly willing to
receive aid from Communist China.
NORTH VIETNAM
The sixth session of North
Vietnam's National Assembly--
scheduled to last 20 days--
opened on 29 December in Hanoi
with 229 deputies in attendance,
including 73 allegedly from
South Vietnam. Premier Pham
Van Dong's report on domestic
and foreign policy was the high-
light of the session. Although
Hanoi has declared its inten-
tion to strengthen the assembly's
powers as the nation's supreme
legislative organ, the assembly
is largely a platform for pro-
nouncements on the main lines
of Viet Minh policy.
Domestic Policy
The Viet Minh leadership
apparently felt called on to
declare its attitudes with
respect to the widespread dis-
affection in North Vietnam
which had recently culminated
in popular disorders requiring
suppression by Communist troops.
Dong admitted that serious
errors in the land reform pro-
gram had caused "suffering to
the people," He promised that
the "mistake-correction"
campaign to rectify these
abuses will be speeded up and
completed in 1957. The regime
appears to be making some
headway in this campaign. Ac-
cording to Hanoi radio broad-
casts, peasants who had been
unlawfully dispossessed of
land are receiving some form
of compensation, and innocent
party members who had been
SECRET
PART II NOTES AND COMMENTS Page 8 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
17 January 1957
mistakenly accused are being
reinstated.
The regime has recently
warned, however, against any
"excess of democracy" and a
mid-December government decree
cautioned the press against
antiregime articles.
Foreign Policy
In his remarks on foreign
policy, Dong strongly reaf-
firmed the regime's allegiance
to the Communist bloc and its
support for Soviet policy to-
ward Hungary. He stated that
the "just" assistance of the
Soviet army had "stopped in
time the bloody hands of the
counterrevolutionaries" and
enabled Hungary to remain in
the bloc. Repeating a theme
which has received strong em'-
phasis in Peiping, Dong
stressed, however, the need
for equality in relations be-
tween Communist countries. A
further intimation of Peiping's
stature in North Vietnam was
Dong's insistence on the neces-
sity for closer relations
"first of all with the Soviet
Union and China," a phrasing
now being used only by the
Viet Minh.
Paralleling Peiping's in-
vitations for unofficial con-.
tacts with countries which have
not formally recognized the
Chinese Communist regime, Dong
affirmed that North Vietnam
also is "longing to develop
friendly relations" with all
Asian-African countries. North
Vietnam's first trade negotia-
tions with a nonbloc govern-
ment since the French-Vietnamese
agreement last year were suc-
cessfully concluded on 8 Janu-
ary with the Indonesian govern-
ment. The agreement, however,
will probably result only in
an insignificant amount of
trade between the two countries,
The recent uprisings in
North Vietnam and the increas-
ing viability of the Diem govern-
ment apparently have set back
Hanoi's efforts to discredit
the South. Reflecting the re-
gime's desire to recoup its
losses, Dong attacked the
"dictatorial rule" of the
South Vietnamese authorities,
who were said to have placed
their government under the
"colonialist rule" of the
United States. He avoided
throats against the South, how-
ever, and reaffirmed North Viet-
nam's desire for a peaceful re-
unification of the country and
called for normal relations in
all fields between the North
and South,
Prices in South Korea
have reached a level which,
under the terms of the US-Ko-
rean agreement of August 1955,.
may require an upward revision
of the official hwan-dollar ex-
change rate at the end of the
first quarter of 1957, In an
attempt to avoid such action,
South Korea has instituted
emergency measures to stabilize
prices. The success-of these
measures, however, appears
doubtful.
Although running well above
the level of 1955, Seoul whole-
sale prices followed a normal
seasonal pattern in 1956 until
November and December. During
these months, the effect of a
small rice crop--14 percent
below average--caused a serious
price rise, The degree of in-
flation may be judged by the
fact that the "open market"
hwan-dollar exchange is now
about 1000 to 1 while the of-
ficial rate remains at 500 to 1.
The pressure behind the
drive to hold prices down stems
largely from President Rhee's
obsession with maintaining a
SECRET
NOTES AND COMMENTS Page 9 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
INDEX OF SEOUL WHOLESALE PRICES
MONTHLY AVERAGE
10,000
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
17 JANUARY 1957
fixed exchange rate. Under
the 1955 agreement, if Seoul
wholesale prices in the last
month of a quarter exceed the
September 1955 level by more
than 25 percent, then negotia-
tions are to be held to revise
the exchange rate. Any attempt
to implement the agreement is
certain to enrage Rhee, who
has indicated he will resist
any such move.
On 4 January 1557, the
weekly price index reached 26.3
percent above the September
1955 level and was still ris-
ir-nn. Rhee has asked the public
to hro.ld prices down and to
eliminate hoarding. A ministe-
rial-level Price stabilization
committee was formed and ac-
celerated American aid was re-
quested, "Emergency" counter- 11i
.inflationary measures have
been undertaken, in-
cluding a Ministry of
Finance announcement
that an emergency re-
ductic,n of government
financial operations
in the first quarter
of 1957 "has become
unavoidable,"
It is doubtful
that these measures
will succeed in hold-
ing prices down suf-
ficiently. March and
April, preceding the
winter wheat and bar-
ley harvests, are tra-
ditionally months of
high grain prices, and
the government has
yet to demonstrate
Its determination to
control its deficits--
a major cause of in-
flationary pressure.
Should these meas-
ures fail to bring
prices down by March
and if the United
States insists on re-
vision of the exchange
7015 rate, President Rhee
may try to blame the inflation
on the slow arrival of aid
'goods. He may also cite Ameri-
can pressure on South Korea to
use currency instead of "in
kind" transactions in more of
the government's financial
operations, to increase prices
on government monopoly goods
and services, and to raise Ko-
rean government and military
pay scales.
The American embassy re-
ports that the Ministry of
Finance directed the Bank of
Korea to withhold the 4 Janu-
ary price index figures, but
they had already been made
public. This suggests that
political xressure may be
brought tL- bear on the Bank of
Korea to manipulate the next
price index.
SECRET
PART I I NOTES AND Co.,,&s1E T
Page 10 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
NEW BRITISH CABINET LOOKS
The new cabinet announced
by Prime Minister Macmillan on
13 January emphasizes conti-
nuity with the preceding Con-
servative government but sug-
gests a greater effort toward
strengthening Britain's ties
with Europe and toward making
more strenuous moves to im-
prove the British position in
world trade,
The. note of continuity
evident in the relatively
small number of cabinet changes
appears most markedly in the
retention of Selwyn Lloyd as
foreign secretary. There is
some speculation, however,
that Lloyd may have been re-
tained only temporarily in
view of the scheduled retire-
ment at the end of January of
the Foreign Office's perma-
nent under secretary, Sir
Ivone Kirkpatrick, His re-
placement, Sir Frederick Hoyer
Millar, is the present British
ambassador to West Germany,
Increasing emphasis on
ties with the Continent is
indicated not only by some of
Macmillan's appointments but
by his own statement in a
briefing of correspondents on
TO CLOSER TIES WITH EUROPE
11 January. As an immediate
goal, he spoke of the need
for a stronger European bloc
in the UN--a reflection of
mounting British sensitivity
to the Asian-African voting
strength. Macmillan himself
has a long record of official
and private Support for closer
European ties.
Peter Thorneycroft, Mac-
millan's successor as chancel-
lor of the exchequer, is the
foremost proponent of British
participation in a European
free trade area, As president
of the Board of Trade in the
Eden government, he was given
the main credit for initially
persuading Macmillan and the
cabinet of the desirability of
this significant change in
Britis'.h policy, and also for
gaining the endorsement for
the idea by a majority of Brit-
ish industrialists and trade
union leaders.
Duncan Sandys, the new
minister of defense, has for
at least the last dozen years
held that a much greater degree
of co-operation between Britain
SECRET
PART II NOTES AND COMMENTS
Page ll of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
17 January 1957
and the Continent is essential
for long-term European stabil-
ity. He was an active pro-
moter of the 1948 congress
which gave birth to the Council
of Europe and instrumental in
interesting his father-in-
law, Sir Winston Churchill,
in the project.
Sandys, who was notably
successful as minister of
housing, is the sixth incum-
bent of the Defense Ministry
in the past two and a half
years. These frequent shifts
at the top have come at a
time when the government has
been endeavoring to reconcile
the increasing need for im-
proving Britain's economic
position as an exporting na-
tion with the increasing costs
of a defense establishment pre-
pared for nuclear warfare.
In an apparent attempt to
bring new thinking and energy`
to the industrial power prob-
lem, Macmillan went outside
parliament to pick a prominent
industralialist, Sir Percy
Mills, as minister of power
and elevated that post to.
cabinet rank, The American
embassy in London notes that
this is in line with Macmillan's
conviction that increasing
British productivity and in-
dustrial resourcefulness is
the only way to maintain Brit-
ain's 1 position.
ADENAUER AND EUROPEAN SECURITY PLANS
The West German govern-
ment is increasingly respon-
sive to election-year pres-
sures on it to explore every
means of promoting the re-
unification of Germany. This
pressure probably led to Ade
nauer's statement at his 11 Jan-
uary press conference that he
remains interested in a Euro-
pean security system to be
agreed on between the Western
powers and the USSR.
Adenauer has come under
increasing oppoqition attack
for failure to achieve German
unification. He recognizes
that the unification problem
cannot be solved in isolation,
but must be accompanied by a
broader East-West understand-
ing on European security. In
the German view, any solution
must satisfy Moscow's security
requirements. Adenauer and
other Bonn officials are think-
ing in terms of a buffer zone
with reduced forces between
the USSR and Western Europe.
Adenauer is anxious for Bonn
to take the lead on proposals
of this kind, since his fear
of a Western-Soviet agreement
based on a continuous division
of Germany has not been
dispelled.
In his press interview on
11 January, Adenauer stated that
the West German government
has been continuously studying
the merits of a "thinned out"
armament zone since the plan
was first proposed at the 1955
foreign ministers' conference.
Bonn's reunification note of.
7 September 1956 to Moscow
proposed consideration of the
1955 Eden plan, which called
for a zone of controlled arma-
ments after Germany is reunified.
Bonn may refer to the Eden
plan again in the new reunifica-
tion note being prepared for
delivery to Moscow in February
in an effort to keep up a bi-
lateral exchange of ideas on
reunification, Meanwhile,
Bonn is pressing its three
main Western allies for talks
on a joint position regarding
European security plans.
In the more publicized
part of his press interview,
Adenauer called for a ban on
:SECRET
PART II
NOTES AND COMMENTS Page 12 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
thermonuclear weapons without
mentioning a control system,
although a government spokes-
man commented later that this
condition was implicit in
the suggestion. Bonn has con-
tinuously stressed the need
for an international disarma-
ment agreement with an effec-
tive control system and has
opposed Soviet schemes without
such provisions.
NEW SIGNS OF UNREST IN SPAIN
Reports of recent resignations from Generalissimo
Franco's cabinet reflect mount-
ing dissatisfaction among the
regime's supporters over its
ineffectual approach to Spain's
increasingly serious inflation
as well as Falangist leaders'
irritation over their inability
to secure permanent predomi-
nance for their party. The pres-
ent transportation boycott in
Barcelona in ?nrotest over the
rising cost of living may lead
to further strikes and demon-
strations.
Minister-Secretary General
of the Falange Arrese and Agri-
culture Minister Cavestany, were
reported in the press as sub-
mitting their resignationA on
8 and 9 January, but Arrese
announced on 17 January that
he was withdrawing his. Arreso
has encountered strong opposi-
tion in the cabinet in his
efforts to give the Falange
constitutional permanence and
a predominant role in Spanish
politics through enactment
of "fundamental laws."
of the Falange reportedly
e -mem er po ca oar
resigned en masse on 10 Jan-
uary as a protest against the
government's foot-dragging on
this legislation. The with-
drawal of Arrese's resignation
does not necessarily mean that
he has overcome the-very strong
opposition to his program on
the part of the army, the
monarchists and the church.
within the ne w weeks.
Cavestany, who reportedly
resigned in support of Arrese,
is at the same time involved
in the difficulties over econom-
ic policy. He has been a leader
of cabinet opposition to Com-
merce Minister Arburua's pro-
posals for effective anti-
inflationary measures, which
include a reduction of govern-
ment expenditures in various
sectors of the economy, selec-
tive credit controls, and new
excise and luxury taxes.
Arburua is also reported to
have offered his resignation.
The 14 January public boy-
cott of Barcelona's transporta-
tion system as a protest against
a fare boost is a repetition of
events in the same city in March
1951. At that time the boycott
was followed by a general strike
which spread to industrial
plants in Bilbao, San Sebastian
and Pamplona. Several weeks
later Franco carried out a major
cabinet shake-up. Madrid has
been full of rumors that he
may undertake a similar shake-up
SECRET
PART II NOTES AND COMMENTS Page 13 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
Moscow is exploiting the
Cyprus issue to pressure the
Greek government for closer re-
lations with the USSR, threaten-
ing to withdraw Soviet support
of the Greek position when the
Cyprus issue is discussed in
the UN General Assembly early
next month. The policy of the
Karamanlis government has been
to avoid antagonizing the USSR
lest it qualify or withdraw its
support on Cyprus, at the
same time stalling Soviet ef-
forts to effect a Soviet-Greek
rapprochement.
By abstaining on the
order-of-debate motion on Cy-
prus in the UN, the USSR
warned Greece that Soviet
interest does not necessarily
guarantee Moscow's continuing
or unconditional support of a
Greek solution.
Moscow also is exploiting
Greece's critical shortage of
petroleum products to bring
about closer economic relations.
A delegation is in Moscow to
negotiate a new general trade
agreement, the result of an in-
formal agreement reached with
Soviet minister of trade Pavlov
in September 1956. Local Greek
reactions to Soviet actions in
Hungary and in the Middle East-
ern crisis delayed the delega-
tion's departure, which. was
first scheduled for late Octo-
ber. A developing shortage of
petroleum products forced the
Greek government to give serious
consideration to Soviet offers
of "sympathetic" consideration
for Greek needs and prompted
the dispatch of the delegation
on 13 December.
Much to the irritation of
the Greek delegation, the
negotiations have been drawn
out, with the Soviet Union
making maximum propaganda use
of the presence of a Greek
trade mission in Moscow. The
USSR reportedly has made no real
economic concessions and is re-
quiring Greece to meet world
market prices for the petroleum
products it receives and to
arrange transport. Throughout
the negotiations, Moscow has
insisted that a person of minis-
terial rank head the delegation,
reluctantly accepting Under
Secretary of Commerce Martis.
Brazil's insistence on
United States economic aid as
the price for permitting estab-
lishment of a missile-tracking
base apparently stems in part
from a conviction that the
United States will be forced
to give in and that Washington's
"preoccupation" with the
Middle East will seriously
undermine chances of aid to
Brazil once the base question
SECRET
PART II NOTES AND COMMENTS Page 14 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
- .7Gt.1ZG
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
is settled. Nationalist politi-
cians and newspapers, appar-
ently goaded by the Communists'
flat rejection of negotiations
on any basis, have increasingly
pressed the government to drive
a tough economic bargain.
Brazil's insistence has
created a new impasse which
President Kubitschek has warned
US ambassador Briggs must be
solved before the Brazilian
congress reconvenes on 1 Febru-
ary. He said congressional
pressure for a voice in the
matter, backed by nationalist
and Communist agitation, would
probably make agreement im-
possible after that date.
The mounting insistence
on economic aid was formalized
on 11 January when Brazil
amended the terms of its 17
December acceptance of the
American request. The amend-
ment would commit the United
States to sign separate agree-
ments promising "accelerated"
economic and military aid.
Originally, this portion
of the Brazilian note was
vaguely worded but appeared to
ask only for increased mili-
tary aid. Delays in finaliz-
ing the agreement--occasioned
by attempts to clarify the
wording--allowed time for the
snowballing of public and of-
ficial pressure for economic
commitments. The statement
on "accelerated" economic aid
probably refers in part to
Brazil's inability to draw as
rapidly as it wishes on the
substantial development credits
granted by the US Export-Im-
port Bank in 1956.
Although most of the re-
sponsible press has deplored
the idea of "bargaining" over
the missile base, public de-
mand for developmental as-
sistance has been voiced strong-
ly by congressional spokesmen
in a so-called revolt against
the administration's announce-
ment that agreement would be
reached without a congressional
review. A Foreign Ministry
propaganda campaign at that
time helped avert the antici-
pated public crisis over the
"sovereignty" issue but failed
to prevent powerful national-
ists--both inside and outside
the government--from transform-
ing the question into one of
"reciprocity." The two pro-
Communists on the staff of the
Brazilian National Security
Council are probably trying
to cause a complete breakdown
in the negotiations.
Although the Brazilian
government now appears deeply
committed to forcing American
economic concessions, its
stake in avoiding public col-
lapse of the negotiations is
high. This stake, plus Presi-
dent Kubitschek's decision to
take over the negotiations
from the Foreign Ministry,
could result in some modifica-
tion of Brazil's position.
The present impasse, however,
is analagous to the stalemate
in mid-December, when a combi-
nation of American concessions
on "sovereignty" and a personal
letter from President Eisen-
hower were required to force
Kubitschek into demanding
realistic and favorable cabinet
action on a preliminary reply
to the base request.
PART II
SECRET
NOTES AND COMMENTS Page 15 of 15
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
Iq
Next 5 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
THE FALLING LEVEL OF
The level of the Caspian
Sea has dropped sharply since
1929, causing significant changes
in the configuration of the
shore line. Dry land of poor
quality has replaced many acres
of valuable fishing grounds,
and the problem of shoaling in
both oil and fishing ports is
becoming increasingly serious.
Soviet scientists and.engineers
met in September. in Astrakhan
to reconsider the problem and
advanced a plan of restoration,
which,like previous ones,would
be extremely costly.
Annual Loss
The level of
the Caspian Sea has
never been stable
for any long period.
Records, which date
back to the middle
of the 16th century,
show that until 1929
the level of the
sea fluctuated
between a high of
72.2 feet below sea
level and a low of
85,3 feet below.
Since 1929 the level
of the sea has
dropped continuously,
standing now at
approximately 91.9
feet below sea level.
The Caspian Sea
loses in excess of
412 cubic kilometers
of water a year.
Evaporation from the
surface accounts for
some 400 cubic kilo-
meters of the loss.
The flow into Kara
Bogaz Gol, which is
lower than the sea
because of its faster
rate of evaporation,
accounts for a loss
of between 12 and 22
cubic kilometers.
Yearly flow
into the Caspian from
Suggested dam s
Shoreline before
1930
Present shoreline
Sea canal
x Roadstead
26 Depth in feet
the rivers of its drainage
basin and subterranean water
amounts to 329 cubic kilometers,
and rainfall, another 72 cubic
kilometers. This total gain of
401 cubic kilometers falls
short of the annual loss by
at least 11 cubic kilometers.
Causes
Two basic factors are in-
volved: a gradually warmer
climate and the retention of
water along the basins of
rivers that flow into the sea.
The higher temperature affects
1S
Lenkaraa
o -~- oo xicorcrcae ~~e.
SECRET
A he n
\IPi,ala
Sh akhov
Wpl~
Xrasnovodsk'
Bay /7
PATTERNS AND PERSPECTIVES Page 7 of 11
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
~.... SECRET
17 January 1957
the evaporation rate not only
on the sea but also throughout
its entire drainage basin.
During the last hundred years,
the mean annual temperature of
the Caspian basin has increased
more than 1 degree, enough to
decrease by an estimated 10 to
15 percent the flow of the
Volga River, which provides well
over half of the Caspian's
yearly inflow.
During the last 20 years,
the Volga's contribution has
dropped to between 200 and 220
cubic kilometers from a pre-
vious yearly average of 253
cubic kilometers. Hydroelectric
projects built on the Volga in
recent years are retaining an
increasing amount of water in'
the river basin. Rybinsk
reservoir on the upper Volga,
completed in 1941, is filled.
Huge dams at Gorodets, Kuybyshev
and Stalingrad are in various
stages of completion. A num-
ber of other dams on the Volga
are plannned or are in initial
stages of construction. The
Kama reservoir on the upper
Kama River holds back an enormous
quantity of water that would
normally flow into the Volga.
The shore line of the
Caspian Sea has been significant-
ly altered in the process, par-
ticularly in the shallow
northern basin. In 1930, the
area of the sea was 424,300
square kilometers. By 1952,
it had shrunk to 392,300 square
kilometers. The most noticeable
change in the outline of the
sea is in the northeastern
corner, where the former shallow
bays of Kaydak and Mertvyy
Kaltuk have dried up. All
along the northern shores, the
water has receded and many
islands have been uncovered--
some of them now inhabited.
The southern shore line has also
been altered: the tip of the
Apsheron Peninsula, which was
once Shakhov Island, is now
Cape Shakhov. The former
Cheleken Island is now Cheleken
Peninsula.
Economic Results
Economic losses as a result
of shrinkage have been estimated
in the Soviet press at $250,000,-
000 a year. The northern Caspian
fishing industry, which in
1953 supplied 12 percent of the
USSR's fish catch, is being
seriously affected. Already
some 11,000,000 acres of
shallow warm water have dried
up, and, according to a Soviet
official, the fish catch has
been cut in half.
The area's oil industry has
also been affected, chiefly in
the transport phase. Azerbaijan
oilfields4 though of decreasing
importance, produce a litte
over one fifth of Soviet oil.
Eighty percent of this amount
leaves the area by tanker.
Although exploitation of
petroleum deposits under the
sea will not be significantly
affected by the lowering of the
water, the shoaling of ports
is already a serious problem
for the tankers. At Baku, the
major oil port, constant dredging
is necessary to maintain
sufficient depth. Astrakhan,
shown as a port on old charts,
is now 60 miles inland on the
Volga. A 116-mile sea canal,
which also must be continually
dredged, connects it with a
roadstead out in deep water
where Caspian tankers must
transfer their cargo to vessels
of lighter draft. Newly designed
tankers of light draft can go
up the canal when carrying only
about two-thirds capacity.
Guryev maintains a canal
and roadstead system like that
of Astrakhan. Dredging is also
necessary at Krasnovodsk.
Transport problems have con-
tributed significantly to the
over 300-percent increase of
capital investment per ton of
oil in the area since 1946.
Reconstruction Projects
Several ambitious proposals
have been advanced to halt the
SECRET
PART III PATTERNS AND PERSPECTIVES Page 8 of 11
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
CURRENT INTELLIGENCE WEEKLY SUMMARY
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
17 January 1957
shrinking of the sea and restore
its former outline, but most of
them have been abandoned as
impracticable. The Chief Turk-
men Canal was to have carried
water 700 miles to the Caspian
from the Amu Darya River, a
project abandoned since Stalin's
death. Another proposal called
for the diversion into the
Caspian of certain north-flowing
rivers,such as the Onega,
Northern Dvina and the Pechora.
A project still under consider-
ation, would impound the waters
of the upper Pechora by a series
of dams and divert the waters
into the Kama. This plan would
provide the desired water level
only after 15-20 years and has
the added disadvantage of
diverting the comparatively
warm water important to shipping
conditions on the Norther Sea
Route,
The latest plan, proposed
at a meeting of Soviet scien-
tists and engineers in Astra-
khan in September, is to build
a 450-kilometer dam across the
SECRET
northern end of the sea from
Kulaly Island southwest to a
point, as yet undesignated, on
the western shore. According
to this plan, which would also
be expensive and time-consuming,
the level of the sea would be
raised in its northern basin
to a depth of 16.7 feet, there-
by restoring the failing fish-
ing industry and reviving the
northern ports.
The shoaling of southern
oil ports, however, would
undoubtedly be increased, since
the effects of the sea's inflow
deficit would be concentrated
in the southern basin, where
an expensive program of dams
and locks would have to be
devised. Moreover, the south-
ern shore of the Caspian is
Iranian territory. It is
likely the aggravated shoaling
of Iranian ports would be pro-
tested unless the USSR agreed
to bear resultant dredging and
other expenses.
(Prepared by ORR)
PART III PATTERNS AND PERSPECTIVES Page 9 of 11
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927A001100050001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6
Next 2 Page(s) In Document Denied
Declassified in Part - Sanitized Copy Approved for Release 2012/05/30: CIA-RDP79-00927AO01100050001-6