CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001100060001-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 23, 2016
• Document Release Date: May 29, 2012
• Sequence Number: 1
• Publication Date: January 24, 1957
• Content Type: SUMMARY

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CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 18
OCR NO. 0055/57
24 January 1957
} CECt A-SSIFIED 25X1
CUES. ANGtCi 1
Y'1
)Cr REVIEW DACE:
DATE. L AaMEWER~
CENTRAL INTELLIGENCE AGENCY
I I I OFFICE OF CURRENT INTELLIGENCE
CONFIDENT, IA
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 s
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments- and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
MIDDLE EAST DEVELOPMENTS .
. . . . . . . . . .
The Israeli government and public seem resigned to
face another UN condemnation and even economic sanctions,
rather than withdraw farther from Egyptian territory.
Egypt's position is supported by the Asian-African bloc
and bolstered by the Arab "solidarity agreement" signed
last week in Cairo. There are indications that Cairo
may be preparing for the demand that
the
UNEF itself depart.
TENSION OVER ALGERIA . . . . . .
The opening of the UN discussion of the Algerian
problem is expected to signal the start of a Moslem
general strike in Algeria and perhaps a co-ordinated
rebel military offensive as well. In France there are
fears that such developments may lead to a settler up-
rising in Algeria which could _ieorardize the existence
of th
F
e
ourth Republic.
KASHMIR ISSUE . . . .
. ? . . . . . . ? . . . . . .
Tension is building up in India and Pakistan over
Kashmir while the UN Security Council debates the future
of the di
sputed state. New Delhi and Karachi are ex-
changing charges of aggressive intentions, but rAnnrtQ
of troop movements are not confirmed.
NOTES AND COMMENTS
Page 1
Page 3
Page 4
KING SAUD'S PROBLEMS . . . Page 1
The visit of King Saud, who is scheduled to arrive
in the United States on 29 January, follows his signing
of a "solidarity agreement" with Egypt, Syria and Jordan.
While Saud's position is more secure than that of any
other Arab chief of state, he has reason to be on guard
against Nasr because of the growing influence of the
Egyptian y regime among Saudi army officers.
CONFIDENTIAL
THE WEEK IN BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
INDONESIA . . . . . . . . . . . . . . . . . . . . . Page 2
President Sukarno's intention to set up an all-
powerful "advisory council" has caused the Nahdlatul
Ulama to reverse its plan to withdraw from the cabinet.
This large Moslem party and other parties participating
in the government coalition feel that preservation of
the All cabinet is essential to resist Sukarno's threat
to their existence. Sukarno, the political parties, and
the army are likely to engage in intense bargaining.
Major army elements probably will support the president's
efforts to form the advisory council and curtail party
power but will join most of the parties in resisting his
proposal for Communist participation in the council.
CYPRUS . . . . . . . . . . . . . . . . . . . . . . Page 3
Athens now is reported ready to accept a UN General
Assembly resolution establishing a commission to in-
vestigate the Cyprus problem, but Britain and Turkey may
oppose such a move. The Cyprus question is scheduled for
discussion in the UN in early February. Greece may
ultimately feel that its best course is to support a pro-
posed Indian resolution for an independent and demili-
tarized Cyprus under UN auspices--a resolution which
Britain and Turkey would certainly oppose.
CHOU EN-LAI CONCLUDES MISSION TO MOSCOW . . . . . . . . Page 4
The Sino-Soviet communique issued in Moscow on
18 January adds to the evidence that Chou's principal
mission there and in Eastern Europe was to help develop
a common strategy aimed at halting deterioration of
intrabloc relations. His immediate task was to act as
moderator between the Soviet Union and Poland, where
bloc ties are'under the greatest strain. Chou's prominent
role in these negotiations is a further indication of
China's growing stature in the Sino-Soviet bloc.
POLISH ELECTIONS . . . . . . . . . . . . . . . . . . . . Page 5
The Polish people gave overwhelming support to
Wladislaw Gomulka in the parliamentary elections on
20 January, apparently accepting his argument that "to
cross out Communist candidates is to cross Poland off the
map of the European states." The support Gomulka re-
ceived probably exceeded regime expectations and would
seem to give him the strength needed to consolidate his
position within the party and to neutralize disruptive
elements- nartir.,,larly the pro-Soviet Natolin faction.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
HUNGARIAN REGIME PUSHES PROGRAM TO EXTEND CONTROL .
Page 6
The Kadar regime in Hungary has instituted a program
of placing government "commissioners" in top management
spots in factories, in youth and cultural organizations
and in charge of the affairs of writers and intellectuals.
This is part of an effort by the regime and the Soviet
Union to wear the population down and to convince the
people that further sistanceis both futile and danger-
ous.
AUSTRIA'S REFUGEE PROBLEMS
The Vienna government, which has been facing a
mounting refugee burden for more than a year, is showing
increased concern over the financial. and political
problem of coping with the 70,000 refugees who remain in
Austria of the 170,000 who fled there as a result of the
Hungarian revolt.. There is growing unrest among these
refugees, who are the target of a
THE NEW SOVIET ECONOMIC AGREEMENTS WITH THE.SATELLITES . Page 8
The agreements of the Soviet Union with its European
Satellites in 1956 and with East Germany early in 1957
will cost Moscow an estimated $900,000,000 in 1957, and
about $600,000,000 in 1958. The added cost to the USSR of
these agreements is small in terms of Soviet. gross nation-
al product
ti
, es
mated at $155 billion in 1956..
ECONOMIC OUTLOOK IN NORTH VIETNAM . . . _
Page 9
After two years of bad crops, the good harvest in
North Vietnam in 1956 will ease the considerable economic
problems which have beset the Hanoi regime and improve its
chances of reduc pread disaffection in the
countryside.
FINLAND'S ECONOMIC DIFFICULTIES
. . Page 10
Finnish premier Fagerhoim's visit to the USSR starting
on 30 January comes at a time when Finland's export in-
dustries are in increasing trouble and its reserves of
Western currencies have declined 25 percent.
reflected in an 18-percent price rise during Inflation,
Fagerholm's weak coalition government underconsiderableut
domestic political pressure. A recent cut in coal com-
mitments from Poland and oil commitments from Rumania
threatens to '
serious s economic situation even more
-
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THE WEEK IN BRIEF
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
JAPANESE SOCIALISTS MOVE LEFT . . .
The Japanese Socialist Party moved further toward
the left during its 17-19 January national convention.
Extremists gained greater control of top posts and
exerted a dominant influence in formulating the party
policy for 1957. Intraparty friction has erupted into
the most serious dispute since the Right and Left
Socialists merged to form the party in October 1955, and
Page 11
DETERIORATION IN SOUTH KOREAN ARMED FORCES . . .. . . . . Page 12
Draft evasion on a mass scale, a sharp increase in
desertions, and corruption and political factionalism
are undermining the morale and effectiveness of the
South Korean army. Continued deterioration could seri-
ously impair its fighting capability.
NICARAGUAN NATIONAL ELECTIONS . . .
The Nicaraguan presidential and congressional
elections of 3 February will be carefully controlled by
the government to ensure the election of President Luis
Somoza for a ,full six-year term in the presidency.
Opposition elements are boycotting the election, many in
the belief that revolution is the only way to remove the
Somoza regime. There is no evidence, however, of Plans
for a revolutionary attempt before the election.
EURATOM AND THE COMMON MARKET . . . . . . . . . . . Page 14
Prospects are fair that the 26-27 January meeting of
the foreign ministers of Belgium, France, West Germany,
Italy, Luxembourg and the Netherlands will give the
EURATOM and common market treaties their finishing touches,
with signing and ratification debates following a few
weeks thereafter. The increasingly friendly attitude of
Britain toward the proposals is proving particularly help-
ful in the final negotiations. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
PATTERNS AND PERSPECTIVES
INDIAN NATIONAL ELECTION PROSPECTS . . . . . . . . . Page 1
Prospects for. the Indian national elections begin-
ning in late February are that Prime Minister Nehru's
.Congress Party will retain control of the national
parliament and of the governments of all states, ex-
cept possibly Kerala. The Congress Party seems likely
to obtain less than the 45 percent of the popular vote
it won in India's first national elections in 1952,
however, and to have a weaker hold both in parliament
and at the state level than a.t present. If the present
trend toward increasing unity among both rightist and
leftist elements in the opposition continues, the Con-
gress will face a stiff fight in several states and may
12e orced to agree to some coalition
governments.
SOVIET INTELLECTUALS IN CULTURAL FERMENT .? . 4 . . . . Page 8
Relaxation of police terror in the USSR and attacks
on the Stalin myth have stimulated outspoken demands
for greater cultural freedom and heated controversies
over Soviet cultural principles, Soviet belles-:.1ettres
have given greater weight to human values, and have
treated the evils of bureaucracy as representative prod-
ucts of the Soviet social system. Increasing numbers
of Soviet intellectuals are showing remarkable unanimity
in striving for further liberalization of controls over
creative activit gime is probably unwilling
to grant..
concerns itself with their territories.
t
a empts to limit the extent to which the TIN
COLONIAL ISSUES IN THE 11TH UN GENERAL ASSEMBLY Page 5
Besides the headlined disputes on Algeria, Cyprus
and West New Guinea, the 11th UN General Assembly will
consider a large number of items on trusteeship and non-
self-governing territories generally--items which
collectively do much to determine the attitudes of
Asian, African and Latin American members on other is-
sues involving the Western European-countries. The
accession of 20 new UN members since last year has
further weakened the position of. the Western powers in
their t
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
POLITICAL SITUATION ON TAIWAN . . . . . . . . . . . . . Page 11
The political situation on Taiwan remains fairly
stable, but disillusionment concerning prospects for re-
gaining the mainland and dissatisfaction among the na-
tive Taiwanese are potential threats to the Chinese Na-
tionalist government. Within the Kuomintang, moderate
and authoritarian elements continue to compete for
secondary power under Chiang Kai-shek. Although Vice
President Chen Cheng would probably succeed to the presi-
dency in the event of Chiang's death, the second most
powerful person on the island is the generalissimo's
elder son, Chiang Ching-kuo, who is today strongly
entrenched in the Nationalist security services.
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CONQ14M ALL
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
OF IMMEDIATE INTEREST
MIDDLE EAST
With the UN secretary
general scheduled to report
again on the progress of
Israel's evacuation, the Israe-
li public appears to accept as
inevitable another condemnation
by the UN and even the applica-
tion of economic sanctions by
UN members against Israel. The
official stand was set forth
by Prime Minister Ben-Gurion on
23 January that a further re-
treat from Gaza or Sharm al
Shaikh and its supply line is
E D I T E R R A N E A
S E A
Israel-Egypt Armistice
- - fine
Approximate area
under Israeli control
O R E D
GO&DOTIA
DEVELOPMENTS
impossible without ironclad
guarantees for Israel's secu-
rity and free access to the
Gulf of Aqaba.
The Israeli offer to with-
draw its "military forces" from
Gaza while retaining a civil
administration there with
"police" powers was played up
by Israel as a concession.
However, a UN official stated
that in talks preceding the
formal offer, the Israelis made
Gaz
GAZA STRIP
EI Auja
I RNEUTRAL
Al Qusayp~ah `) ZONE
r 6'
I - /
.Beersheba
ISRAEL
PART I OF IMMEDIATE INTEREST Page 1 of 5
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~ GRFT
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
it clear they intend to "annex"
the territory. Prime Minister
Ben-Gurion had indicated even
earlier that any proposal for
UN participation in the govern-
ment of the strip would be
made merely to try to satisfy
world opinion.
The Jerusalem Post, which
frequently speaks for he For-
eign Ministry, was quoted by
the Israeli radio last week
as seeing the country in the
throes of cutting loose from
an "undefined but extremely
far-reaching reliance on the
benevolent friendship of the
United States and on the sup-
port of the United Nations."
The newspaper said this action
would be an assertion of Is-
rael's "economic independence,"
for which Israelis might be
"as grateful a decade hence...
as we are for our political
independence today."
The Egyptian position
has continued to harden. Specu-
lation that the UN Emergency
Force might be transformed into
an army of "occupation" on
Egyptian territory was noted by
the officially.-guided Cairo
press, which ?ihsists ?tkiat the
UN force's sole .purpose,is to
secure the Complete,*ithdk4Wai
of the Israelis, thdian ttg
delegate Krishna Menorl reported-
ly threatened that thdian t 'oopb
would be taken out of the fordo
if its functions are inter-
preted more b?oadlyx
These obser'tatiohhl are
indicative that the original
Egyptian suspicions Cbticerhing
the object and use of the UNEI'
have been reawakened, and Cairo
is probably preparing for the
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OF IMMEDIATE INTEREST Page 2 of 5
time when it may demand the
evacuation of this force as
well.
Nasr's diplomatic hand
was strengthened last week
by the "solidarity agreement"
concluded among Egypt, Syria,
Saudi Arabia and Jordan.
While this agreement ostensibly
provides for Arab aid to re-
place the British subsidy to
Jordan's army, it appears in
fact to be primarily a politi-
cal gesture signifying Arab
confidence in Nasr's leader-
ship.
Neither Egypt nor Syria
has cash resources to contrib-
ute, ,
The test for addi-
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long meaning in the agreement
will come after 31 March, when,
according to the British ambas-
sador in Amman, Britain intends
to halt subsidy payments. Pre-
sumably the Anglo-Jordanian
treaty will have been terminated
by that date; Jordan's prime
minister has announced negotia-
tions to that end will be opened
next month, and the Jordanian
parliament has already unanimous-
ly ratified the new-Arab agree-
mentr
Nasr's growing intransi-
gence may also be founded in
part, on assurances of Soviet
ecohomic suDDort.
it does ap-
pear lily that the USSR will
increase economic support while
continuing to shin arms to Egypt.__
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. ECRL T
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
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The opening of the UN dis-
cussion of the Algerian prob-
lem is expected to signal the
start of a Moslem general
strike in Algeria and perhaps
a co-ordinated rebel military
offensive as well. Europeans
and Moslems, both considering
the American position the
critical factor in the politi-
cal committee discussions, are
publicly playing up this theme
--probably in order to blame
the United States for any un-
favorable developments. In
France, there are fears that a
settler uprising in Algeria
could jeopardize the Fourth
Republic.
The National Liberation
11 . Front (FLN) has 'reiterated its
call for a Moslem general
strike coincident with the UN
debate and threatened repris-
als against shopkeepers who are
swayed by the French counter-
threat to break open any Moslem
shops which close.
In an
effort to forestall the strike
or minimize its effects, the
French authorities in Algiers
are making a strong show of
military force, giving the city
the appearance of an armed camp.
Both Europeans and Moslems have
been reported stocking pro-
visions.
The rebels reportedly al-
so plan to launch their larg-
est military offensive to date
SECRET
when the UN debate starts.
Such action co-ordinated with
an effective general strike
would probably provoke the
European community into taking
direct steps against the Mos-
lems.
In Paris, there has been
a relaxation of fears over the
outcome of the UN debate. At
the outset, the French delega-
tion proposes to make a state-
ment denying UN competence, to
attack vigorously interference
in Algeria by other countries,
particularly the USSR and Egypt,
and to show the progress being
made by the Algerians under
the French. The French dis-
count the possibility of a
resolution critical of French
policy but will walk out of the
UN if the assembly asserts its
competence on the question.
The growing danger of a
European settler uprising in
Algeria is also causing con-
cern. The Mollet government
has doubts as to whether the
French army in Algeria would
act against such an uprising.
Ambassador Dillon believes
that the Fourth Republic would
be endangered if Paris is un-
able to control the armed forces
in the event of an uprising.
Dillon fears that right-
wing groups may attempt to
overthrow the regime if the
Algerian situation oes very
sour. it 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
Tension is building up in
India and Pakistan over Kashmir
while the UN Security Council
debates the future of the dis-
puted state. No significant
troop movements by either coun-
try have been confirmed, and
violence appears unlikely as
long as the UN remains actively
interested in the problem,..
However, the dispute continues
to pose a long-terns threat to
the peace and stability of
South Asia.
introduction of a
UN force into Kash-
mir and the imple-
mentation of the
long-standing UN
plebiscite agreement.
Pakistan, in presenting
its case on 16 January,
stressed the need for prompt
action by the Security Council
on the grounds that the Kashmir
state constitution which is
to be promulgated on 26 January
makes the state an integral
part of India in defiance of a
UN resolution denying the state
assembly the power to deter-
mine the disposition of the
state. Pakistani foreign min-
ister Noon also called for the
India has made
it clear that the
latter proposals ale
completely unaccept-
able. New Delhi to
also attempting to
undercut the Paki-
stani argument for
swift UN action by
insisting that the
provisions of the
new Kashmir consti-
tution concerning
the relationship of
the state to India
actually went into
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OF IMMEDIATE INTEREST Page 4 of 5
effect on 17 November 1956,
and that the integration of
Kashmir was legally completed
even earlier, in a presidential
proclamation of 14 May 1954.
Prime Minister Nehru told the
American charge on 20 January
that the question was settled
in 1947 when the maharaja of
the state decided to join India,
and that even the 17 November
1956 date was merely the com-
pletion of the legal formali-
ties.
While the UN is attempting
to unscramble the legal tangle,25X1
New Delhi and Karachi are ex-
changing charges of aggressive
intentions.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
t e lack
o any in .cation of major
troop movements suggests that
an armed clash is unlikely at
the moment. Pakistan has re-
portedly obtained considerable
support for its UN proposals,
both from Security Council and
General Assembly members, and
will probably be satisfied for
the time being with no more
than reaffirmation of the
plebiscite principle and an-
other denial?of the Kashmir
state assembly's right to deter-
mine the future of the state.
However, the present Paki-
stani government, in asking for
a UN force and offering to
withdraw its troops, has deep-
ly committed its prestige to
finding a satisfactory solution
to the Kashmir problem. Should
it become evident after several
months that no such solution
is forthcoming, Karachi may
eventually allow militant trib-
al and Kashmiri refugee ele-
ments the free hand they have
been demanding.
Soviet support of the
Indian position, Pakistani de-
mands for unequivocal American
support, and intensified com-
petition between both countries
for Chinese Communist backing
make the situation potentially
inflammable. Additionally,
Pakistan's frustration over the
UN's inability to prevent In-
dia's complete de facto inte-
gration of the state is intens-
ified by the fear than any out-
break of hostilities on the
Kashmir border might tempt
Afghanistan to begin large-
scale armed agitation on behalf
of Pushtoonistan on Pakistan's
western border.
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24 January 1957
NOTES AND COMMENTS
King Saud, who arrives in
the United States on 29 January,
is the absolute ruler of over
6,500,000 subjects in the King-
dom of Saudi Arabia. Although
his position is relatively more
secure than that of any other
Arab chief of state, he belongs
to an old order that is passing.
Saud sees himself increasingly
as the senior statesman of
Islam and in his dynasty's
puritanical Wa.hhabi sect has
a conservative institution to
resist the revolutionary re-
publican nationalism
of Nasr's Egypt.
Opposition from
Saud's brothers,
which many observers
had expected following
his succession to the
throne in 1953, has
not developed. A
longer term threat to
the Saudi monarchy
comes from groups in-
fluenced by modern
social and political
ideas from abroad--
especially the Saudi
military and the new
social class of oil
workers and coastal merchants
antagonistic to the puritanical
Saudi dynasty from the interior.
The general Arab inability
to accept the state of Israel
constitutes one of Saud's main
international problems. In at
least.two respects, Saud is
likely to become more directly
involved with Israel. A Saudi
infantry brigade of about 2,100
men was deployed in Jordan near
the Jordan River in late 1956.
Additionally the two islands at
the entrance to the Gulf of
Aqaba, although garrisoned by
Egyptians at the start of the
Sinai fighting, are actually
Saudi islands. They have been
li farces
r
d b
I
r
ll
. ~~~~
s
ae
y
e
cont
o
cow _---
CURRENT INTELLIGENCE WEEKLY SUMMARY
since November, and the Saudis
have charged that Israeli air-
craft and naval craft have
fired on and otherwise harassed
the ill-armed Saudi garrisons
on the eastern shore of the
entrance to the Gulf of Aqaba.
Relations with Britain were
fairly good under Saud's father,
but have deteriorated since
1953. British ejection of Saudi
authorities from the disputed
Buraimi Oasis in late 1955 re-
mains a major unsettled is-
tiers between Saudi
Arabia and British-
protected coastal
shiekdoms.
Although the agreement for
use by the United States of
Dhahran airfield expired in
June 1956, King Saud has, as a
"gesture of friendship," ex-
tended it pending a new settle-
ment.
Saud is also continu--_
ing.to_press: the..:United
States-~...for...' ,military as-
sistance:..and.for permission
to..,purchase.'.further military.
equipment. He.has.reiter-
ated:that he needs agreement
sue--representative
of the whole problem
of undefined fron-
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SECRET IWANNOW
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
25X6
25X6
to demonstrate to his people
the correctness of his refusal
to deal with the USSR, in the
face of growing Egyptian in-
fluence among his officers,
Egyptian president Nasr
on many important moves af-
fecting Saudi interests--most
notably the nationalization of
the Suez Canal. Saud has rea-
son to fear Nasr, both for
Egypt's rash actions and for
the threat the example of a
revolutionary regime poses to
Saud's own absolute position.
has failed to consult Saud
Since the Anglo-French at-
tack on Egypt, Saud has moved
to broaden his country's inter-
national contacts and thus ob-
tain greater leverage in in-
ternational negotiations. West
German influence is increasing.
Saud has stood firm, however,
against accepting- Soviet bloc
diplomatic representation
arms offers
25X6
25X6
The Nahdlatul Ulama (NU),
a large Moslem party which is
the key to the survival of the
Indonesian cabinet, has re-
versed its decision to with-
draw from the cabinet. The
NU and small parties which
were following i.ts lead now
feel that. the preservation pf
the Ali cabinet is essential
to resist President Sukarno in
his intention to set up an
"advisory council." The coun-
cil, under Sukarno's personal
leadership, would be the most
powerful organ in the Indonesian
government and would severely
curtail the powers of the polit-
ical parties, the cabinet, and
parliament.
Intense bargaining among
the nation's three major polit-
ical factors--Sukarno, the
political parties, and the
army--appears likely. Sukarno
can probably count on major
army elements for support in
forming the council and reduc-
ing the power of the parties,
but the army can be expected
to join most of the parties in
resisting the president's pro-
posal for Communist participa-
tion in the council.
Army support is essential
for the success of Sukarno's
plan. Chief of staff General
Nasution, in an effort to as-
sess his subordinates' loyalty
to himself and to Sukarno, has
been holding conferences with
those Sumatran commanders who
are willing to see him and with
commanders in other outlying
areas. According to the Djakarta
press, he has gone to Central
Sumatra for talks with the
dissident commanders, Colonel
Simbolon and Lt, Cola Hussein.
Prime Minister Ali of the
National Party went before
parliament on 21 January to
explain his handling of the
bloodless revolts in Sumatra.
Parliament may take a vote of
confidence on 7 or 8 February,
and if there are no further
withdrawals from the cabinet,
Ali should win the vote and
stay in office.
No solution to the mili-
tary and political problems
in the three Sumatran provinces
appears in sight. The prestige
of Colonel Simbolon, rebel
leader and former territorial
commander in North Sumatra,
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PART II
NOTES AND COMMENTS Page 2 of 15
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
appears to be rising, and Lt.
Col. Hussein shows no indication
of relinquishing control in
Central Sumatra. South Sumatra
reportedly declared its pro-
vincial autonomy on 20 January.
The Greek government now
appears to believe that the
best it can expect from the
forthcoming Cyprus debate in
the UN is some mechanism which
will keep its appeal alive. The
Cyprus question is scheduled for
discussion early in February,
upon completion of debate on
Algeria. Prime Minister Kara-
manlis and Foreign Minister
Averoff say they will accept a
resolution of the General Assem-
bly establishing a UN commission
to investigate the problem.
Such a resolution may be
opposed by Turkey, which fears
Soviet participation in any UN
involvement over Cyprus and
now favors partitioning the
island. Britain, whose policy
is based on eliminating Cypriot
resistance and instituting the
Radcliffe constitutional pro-
gram, may also oppose a UN res-
olution. Greece may ultimately
feel obliged to support a pro-
posed Indian resolution for an
independent and demilitarized
Cyprus under UN auspices--a
resolution which Britain and
Turkey would certainly oppose.
The Greek government is
seeking to prepare public opin-
ion for some compromise on
Cyprus in the UN. Averoff has
told American ambassador Allen
that official talk of insisting
and set up a government council
composed of "army officers, war
veterans, and business leaders,"
thereby formalizing its earlier
de facto break with Djakarta.
on self-determination for Cyprus
is purely for local consumption.
Greek opposition leaders of all
political shades have based
their plans on a clear Greek
defeat in the UN and the re-
sulting overthrow of Karainanlis.
Britain and Turkey would
probably not be concerred over
Karamanlis' replacement by an
unstable coalition government.
Some British officials have
long expressed dissatisfaction
with the present regime, and
Ambassador Warren reports from
Ankara that the Turks are "deep-
ly disgusted" with it. Although
the British say they hope for
a moderate debate in the UN
without any substantive resolu-
tion, they appear determined "to
hit the Greeks as hard if not
harder than the Greeks hit them."
Ankara "has its heart set"
on the partition of Cyprus, in
the belief that only this solu-
tion would not raise more prob-?
lems than it solves. It fears
that any postponement of a
definitive solution would accel-
erate the drift toward enosis--
the union of Cyprus with Greece.
London apparently believes
Ankara would oppose the Rad-
cliffe proposals if Athens ac-
cepted them, believing that
they co-~.zld be used to place
Cyprus oti the "slinnerv sl_one"
to enosis.
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PART II NOTES AND COMMENTS Page 3 of 15
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SECRET
24 January 1957
The Sino-Soviet communique
issued in Moscow on 18 January
adds to the evidence that Chou's
principal mission there and in
Eastern Europe was to help work
out a common strategy aimed
at halting deterioration of
intrabloc relations. His im-'
mediate task was to act as
moderator between the Soviet
Union and Poland, where bloc
ties are under the greatest
strain. Chou's prominent
role in these negotiations is
a further indication of China's
growing stature in the Sino-
Soviet bloc.
Earlier, Chinese comment
on unrest in the Satellites had
indicated that Chou would pri-
vately urge the Kremlin not to
push Gomulka further toward
Titoism by premature or unneces-
sary harshness, while advising
the Polish leaders to move
closer to the Soviet Union.
Accordingly, the Sino-Soviet
communique reflected previous
Chinese admonitions to the USSR
to avoid "chauvinism," and the
Sino-Polish communique professed
Gomulka's fidelity to "proletar-
ian internationalism" and the
"basic principles of Marxism-
Leninism"--concepts which were
not included in the Soviet-
Polish statement of mid-November.
The Moscow communique con-
tained the recently elaborated
Chinese formula for the achieve-
ment of "unity" through genuine
consultation among bloc states.
There may, however, prove to
be disagreement between Moscow
and Peiping in applying the
formula to intrabloc relations.
conditions permit, and adhering
firmly to the Sino-Soviet line
in foreign affairs.
The Chinese had previously
indicated that their support
for Poland's freedom from Russian
control was contingent on Go-
mulka's ability and willingness,
first, to keep Poland inside the
bloc; and second, to move toward
an orthodox Communist domestic
program.
The failure of either
communique to reiterate the
second requirement does not con-
stitute endorsement of Polish
deviations, but seems instead
to indicate a Sino-Soviet esti-
mate that the Gomulka regime
is the least of possible evils
in Poland at this time and must
therefore be granted a period
of probation to work out its
problems. There may be some
difference between Moscow and
Peiping on this point, as the
Chinese have publicly demon-
strated more friendliness to-
ward Gomulka than the Russians
have and may be somewhat more
willing to allow him latitude
for experiment in his domestic
program,
Moscow and Peiping have left
no doubt that they stand to-
gether solidly on the vital im-
portance of bloc unity at this
time against the West. The
Moscow communique contained an
indirect warning that an attempt
by any state to leave the bloc
would be met by military inter-
vention. A Pravda editorial on
20 January made the threat
explicit.
In Peiping's view, the
bloc should be made up of will-
ing allies, each ruled by native
Communist leaders, following the
Soviet model on domestic poli-
cies as closely as local
The Chinese have taken
care to reaffirm their recogni-
tion of Soviet primacy within
the bloc. At the same time
Peiping's stature in the al-
liance?has grown during recent
SECRET
PART II NOTES AND COMMENTS Page 4 of 15
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SECRET '-y'
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
weeks. Soviet leaders have at
least formally accepted the
Chinese Communist criticism of
Stalinist policies in Eastern.
Europe, and have welcomed Chi-
nese efforts to help them out.
Resuming his South Asian
tour, Chou arrived in Afghan-
istan on 19 January. He arrived
in New Delhi on 24 January en
route to Nepal and is to be in
Ceylon a week later,
25X1
25X1
The Polish people gave
overwhelming support to Wladi-
slaw Gomulka in the parliamen-
tary elections on 20 January,
apparently accepting his argu-
ment that "to cross out Com-
munist candidates is to cross
Poland off the map of the Euro-
pean states." The support
Gomulka received probably ex-
ceeded regime expectations and
would seem to give him the
strength needed to consolidate
his position within the party
and to neutralize disruptive
elements, particularly the pro-
Soviet Natolin faction.
Much of the party rank and
file, who have remained largely
uncommitted,' will probably now
swing into line behind Gomulka's
leadership,
ress reports that the par y
congress has been postponed
from late March or early April
until next year indicate that
consolidation of the party will
be a long arduous task despite
Gomulka's new strength.
Over 70 percent of the
vc,'.ers heeded Gomulka's last-
minute plea to vote the straight
ticket without deleting the
names of candidates favored by
the regime, ?.;;h the result
that the composition of the Sejm
will be as originally planned:
51.5 percent will be Communist
Party representatives, 33.9
percent will represent the two
collaborating front parties
and the remaining 14.6 percent
will be nonparty and Catholic
delegates.
All of the party leaders
and other individuals of signif-
icance who were candidates were
elected. In many cases, these
candidates failed to receive as
many voteF, as some lesser known
figures, but in no case did a
prominent candidate fail to make
the grade. In only one minor
case did a candidate favored by
the regime not obtain the re-
quired 50 percent of the votes.
The prevailing popular at-
titude apparently was that only
the Russians stood to gain if
the elections were boycotted.
The large turnout was also due
to efforts of the Catholic
Church, whose support for Gomul-
ka greatly aided his cause.
Personal visits by regime acti-
Vists to those who had failed
to register injected the only
form of intimidation noted in
the elections.
The regime can be expected
to play on the theme of popular
support in its bid for credit
from the West. A Warsaw paper,
on the eve of the elections,
stated that strong support for
the regime would increase the
possibility of American aid and
credits from other capitalist
countries.
Reflecting their long ex-
perience with regimentation, few
SECRET
PART II NOTES AND COMMENTS Page 5 of 15
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SECRET
24 January 1957
of the electorate other than
students took advantage of the
oportunity to cast their ballot
secretly, although the election
law theoretically made this
mandatory.
The elections themselves
were orderly and quiet. Worker
and student militia were in
evidence at polling places to
assist regular police forces
if necessary, but no significant
unrest was reported, even in
the troublesome Lublin area.,
where antiregime agitation has
been especially--strong.
The Kadar regime in Hungary
has instituted a program, under
the economic, interior and armed
forces ministries, of placing
government "commissioners" in
top management spots in the
factories, in youth and cultural
organizations, and in charge of
the affairs of writers and
intellectuals.
Resorting in some cases to
the dissolution of some organi-
zations such as the Writers'
Union, the regime has also ar-
rested key troublemakers as well
as virtually anyone who has
continued to exhibit an inde-
pendent attitude. Kadar has
warned state prosecutors that
he will not tolerate their
"liberalism" toward arrested
"enemies," an apparent response
to the protest of 30 chief
prosecutors who openly opposed
the recent extension of martial
law. Kadae, who complained on
16 January that the Communist
daily was illustrating articles
on Communist theory with pic-
tures of "half-naked dancers,"
has warned that such Westernized
concepts are "unworthy" and
must cease.
The regime is also continu-
ing to take action against "anti-
state" and "counterrevolution-
ary" activities. Several lead-
ers of the uprising have been
tried, convicted and executed
during the past week, but re-
ports that ex-premier Nagy's
defense minister, General Pal
Maleter, a hero of the fighting
in Budapest, has been sentenced
to die apparently are not true.
The regime is adopting
various expedients to prevent
mass unemployment from complete-
ly demoralizing the workers.
Aware that some restive workers
were accusing the regime of
deliberately fostering mass
unemployment, the government
has attempted to cut down on the
number of jobless by shortening
work hours, thus permitting the
retention of more workers on the
job, although at reduced wages.
The regime and the USSR
seem to be engaged in a process
designed to wear the population
down, and convince it of the
danger and futility of further
resistance. At the same time,
by strongly reasserting the
tenets of the "proletarian
dictatorship" and stressing
close ties with Moscow--simul-
taneously purging the party and
front groups of Nagyists and
nationalists--they hope to build
a disciplined party machine
along traditional, Moscow-
oriented lines.
SECRET
PART II NOTES AND COMMENTS Page 6 of 15
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is now at the "limit of its
resources."
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
AUSTRIA'S REFUGEE PROBLEMS
Vienna is increasingly ap-
prehensive over the magnitude
of the refugee burden resulting
from unrest in the Soviet Sat-
ellites. Austrian demands for
foreign assistance. have become
progressively more strident,
and while there is as yet no
evidence of any weakening of
official or popular resolve to
grant unlimited asylum, there
is some likelihood of this
eventually occurring.
The unexpected problems
brought on by.the Hungarian
revolt are in addition to those
posed by the "normal" flow of
refugees from Austria's Commu-
nist neighbors--Yugoslavia in
particular--which, before Oc-
tober, had already exceeded the
1,000-a-month rate. Since then,
about 170,000 Hungarians have
crossed Austria's eastern fron-
tiers. Nearly 100,000 of these
have been moved elsewhere, but
the continued influx and the
gradual exhaustion of refugee
quotas set up by other countries
leave Austria with the pros-
pect of having to accept on a
more or less permanent basis
some 70,000 to 100,000 desti-
tute expatriates.
The financial problem is
particularly serious.
While the economy is
relatively prosper-
ous, the budget situ-
ation is tight. In
a statement to the
cabinet on 15 Jan-
uary, Minister of
the Interior Helmer
declared that, de-
spite generous aid
from other countries,
the UN, and the Red
Cross, Austria has
proportionate share
of the refugee costs
and the government
From a long-range economic
point of view, the government
has been remiss from the be-
ginning in failing to devise
plans to integrate refugees into
the population. The economical-
ly productive elements, which
are most attractive to other
countries, have tended there-
fore. to em.grate elsewhere.
The government is worried
about such a large foreign
element remaining in the country
for any long period. This con-
cern was reflected in Helmer's
recent plea to the.Intergovern-
mental Committee on European
Migration to accelerate the
movement of Hungarians out of
Austria.
There is growing unrest in
refugee camps, possibly fomented
by Hungarian Communist provoca-
teurs. Recent Budapest charges
of "mistreatment" of refugees
moreover are the beginning of a
campaign to reclaim expatriates.
The Kadar government stated on
29 November that criminal pro-
ceedings would not be instituted
against those who illegally
crossed the country's borders
SECRET
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SECRET
APR MAY JUN JUL AUG SEP OCT NOV DEC
1 Or,G I
PART II NOTES AND COMMENTS Page 7 of 15
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24 January 1957
between 23 October and that date
if they voluntarily 'return to
Hungary before 31 March 1957.
Vienna may have some diffi-
culty in keeping the new Hun-
garian repatriation mission
within bounds. Anticipating
that Austrian restrictions on
such a campaign may bring new
Communist charges that Austria
is not neutral, Helmer has taken
the precaution of warning ref-
ugees that "political activi-
ties" on their part might lead
to forfeiture of individual
asylum rights.
The agreements which the
Soviet Union entered into
with its European Satellites in
1956 and with East Germany early
in 1957 will cost Moscow an
estimated $900,000,000 in 1957.
The Soviet Union's imports from
the Eastern European. Satellites
will decrease by $285,000,000
over 1956 and exports wil in-
crease by $627,000,000 over 1956
under these agreements. In
comparison with the USSR's total
foreign trade of $3 billion each
way annually, imports will de-
cline by about 10 percent and
exports will rise by 20 percent.
About one half of the total
$900,000,000 cost is
accounted for by re-
duction of occupation
costs assessed on
East Germany and can-
cellation of Polish
and Rumanian debts.
Although collection
of these debts may
have been impractical
in any case in view
of the Satellites'
continuing economic
difficulties, their
cancellation results
in reducIed imports by
the USSR, since pay-
ments were to be made
in goods.
The remaining
half of the cost to
the USSR is in loan
commitments to the
Satellites negotiated
in 1956 and early 1957
Recipient
- Bulgaria
East Germany
and will result in increased
Soviet exports to fulfill the
agreements prior to repayment
by the Satellites. Although
the maximum impact of the 1956
Soviet commitment will occur in
1957, the agreements will cost
the USSR about %600,000,000 in
1958.
While the cost of Moscow's
commitments is less than one per-
cent of the Soviet gross national
product, it is over tnree and a
half times Moscow's existing
annual aid commitments to under-
developed areas, estimated at
about $250,000,000 in 1.957, in-
cluding deliveries of arms.
$10,000,000 1957
(foreign exchange)
Amount To Be Drawn On To Be Repaid
$32,500,000 1956-59 10 years/2%
Estimated at 1357-60 10 years
$440,000,000
$4,000,000 (oil 1957 Hungarian goods
and coke) in 1957
1960-65/20,0
$15,000,000 1957 1960-65/2%
(raw materials)
$67,500,000
$50,000,000 1357 No terms known
(hard currency)
$25,000,000 1956 1957-60/2%
(goods & gold) ( now canceled)
$175,000,000 1358-59 1963-65
(goods)
$100,000,000 1357 1361-62
(grain)
$33,000,000 (wheat) 1357 1953-61
$3,300,000 (fodder) 1957 1959-61
SECRET
`--~' SECRET `'--
CURRENT INTELLIGENCE WEEKLY SUMMARY
10 years
(from drawing)
PART II NOTES AND COMMENTS Page .8 of 15
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--- SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
2.4 January 1957
Hungary 60
East Germany 85
Polish debt cancellation
Rumanian debt cancellation
Foreign Exchange Pransfer (minimum)
Bulgarian loan 23
East German agreement 25
Hungarian loans 15
Polish loans 100
Rumanian loans (maximum) 104
East German Occupation Cost Adjustment 360
s
212
presently a storage problem in
the USSR because of the record
1956 harvest, and hard cur-
rencies, available to the So-
viet Union at small additional
real cost through gold sales
to the West.
Consequently, present
Eastern European commitments
will not prove an economic bar
to Soviet foreign economic
programs in the Middle East
and Asia. Complete assumption
of even such a major project
as the Aswan Dam, probably the
largest single request received
by the USSR, would require not
more than 2 to 3 percent of the
1955 Soviet output of cement
and steel and furthermore would
be spread over at least a 10-
year period.
Effect on USSR
The added cost to the USSR
of the recent agreements equals
only about 5 percent of planned
1956 investments in the USSR.
The Eastern European aid program
will not, however, require a
? 5-percent reduction in 1957 in-
vestment--or a comparable cut
in other priority parts of the
Soviet economy--since much of
the obligation to the Satellites
is in the form of food grains,
The maximum effect of the
recently assumed commitments
to Eastern Europe and of
foreseeable added requirements
at home and abroad is a tem-
porary decline of less than
1 percent in the rate of Soviet
economic growth.
(Prepared by ORR)
ECONOMIC OUTLOOK IN NORTH VIETNAM
After two bad years, a good
crop was harvested in North Viet
Vietnam in 1956. Together with
other advances in the North
Vietnamese economy, the good
harvest will ease the consider-
able economic problems which
have beset the Hanoi regime and
improve its chances for reducing
the widespread disaffection in
the countryside.
Economic plans for 1957,
specific targets for which
have not been released, place
emphasis first on increased
agricultural production, second
on light industry. Scant men
tion is made of heavy industry.
Rehabilitation of the economy,
which was devastated in the
Indochinese fighting, is to be
completed in 1957.
According to Hanoi's pre-
liminary estimates, production
of paddy and other crops in 1956
was slightly above the prewar
peak. Even if the claim is not
exaggerated, North Vietnam would
still need to import food. In
the past two years, these im-
ports have come primarily from
Burma, and have been paid for
by the Soviet Union.
The 1956 increases in agri-
cultural outpi't were achieved
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PART II NOTES AND COMMENTS Pave 9 of 15
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
despite the demonstrably dis-
ruptive eifects of the land re-
form program. This first step
toward the eventual socializa-
tion of agriculture was "basic-
ally zompleted" during the year.
Some progress was also made on
the second step--the introduction
of mutual aid teams, groups of
individual peasants banded to-
gether to help each other.
Progress has also been made
in other sectors of the economy.
Developments in transportation
and communication were largely
made possible by the 1955 Chi-
nese Communist grant of $325,-
000,000. Scheduled air service
between China and North Vietnam
was begun early in 1956. North
Vietnam is re-establishing port
facilities at Haiphong and C&m-
pha, near Hongay, with the aid of
harbor equipment supplied by the
USSR, Poland and China in 1956.
Rehabilitation of the large
?longay anthracite mines enabled
Viet Minh coal production to
reach about 1,000,000 tons in
195.n as compared with about
2,600,000 tons before the war.
Exports of coal rose from about
300,000 tons in 1955 to 600,000
tons in 1956, Shipments to China
probably amounted to about 60,-
000 tons while those to Japan,
Hong Kong and France accounted
for most of the remainder. Bloc
deliveries of modern mining
equipment will enable North Viet-
nam to exploit its coal deposits
further. Cement production
reached over 300,000 tons, of
which about 60,000 tons were
exported to China.
Despite these achievements,
the Hanoi regime admits being
faced with a number of economic
difficulties, in addition to
the continuing need to import
food. The regime has admitted
that discontent has been caused
by mistakes made during the land
reform program, high tax rates,
both rural and urban, and short-
ages of consumer goods. The re-
gime has condemned the failure
of local cadres to generate suf-
ficient production enthusiasm .n
handicraft and subsidiary family
occupations and among private in-
dustrialists And traders.
(Prepared by ORR)
Finland's growing economic
problems leave it vulnerable
to possible Soviet proposals
on the occasion of Prime Min-
ister Fagerholm's visit to the
USSR starting,30 January. The
inclusion of Minister of Trade
and Industry Kleemola in the
delegation suggests Finland's
readiness to enga ;e in general
ccoaomic discussioas.
Kleemola's presence could
also be accounted for by Fin-
land's perennial hope of obtain-
ing some concessions regarding
the lower half of the Saimaa
;anal and adjacent territory,
This canal was formerly an im-
portant transportation link
between Finland's eastern lake
system and the Gulf of Finland,
but the cession of the port
city of Vyborg (Viipuri) and
other Karelian territory to the
USSR following World War II
largely destroyed its economic
value to the Finns.
Finland's present economic
difficulties stem largely from
inflation and a decline in the
export of some wood products,
which are one of the chief
sources of foreign exchange.
Domestic prices rose by 18 per-
cent during 1953, and the effort
-to combat inflation by maintain-
ing a high level of imports, in
-Lhc face of falling exports,
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PART II NOTES AND COMMENTS Page 10 of 15
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SECRET
24 January 1357
resulted in a drop of some 25
percent in Finland's holdings
of dollars and Western European
currencies.
In addition the recent
termination of triangular trade
arrangements with Poland, East
Germany and possibly Czechoslo-
vakia will reduce Finland's pre-
vious trade with the bloc.
Particularly serious is the re-
duction in coal commitments from
Poland and oil commitments from
Rumania. This will force Fin-
land in 1957 to make extraordi-
nary purchases of these commodi-
ties from Western sources at an
estimated cost of $45,000,000.
The cutback in bloc com-
mitments, coupled with the
steady increase in Finland's
petroleum requirements, means
that Finland must reel. 40 to 50
percent of its oil from Western
sources--as contrasted with 20
percent in 1956--at a time when
Western European petroleum sup-
plies are being allocated by
the Organization for European
Economic Co-operation, of which
Finland is not a member.
It is not easy to foresee
what economic concession--beyond
increased oil supplies--the
Finns might seek in Moscow. In
the fall of 1956, Finland
vainly requested a third gold
loan from the USSR, which was
only willing to grant a ruble
credit for the purchase of So-
viet-made equipment. This Fin-
land rejected. Presumably, Mos-
cow would be interested only in
concessions which would be like-
ly to increase Finland's
long-term dependence on the
USSR.
S W E D E N f
aNP
,Turku
BARENTS
SEA
r. ;
: J` Pechanv
L. Pr.war
eownd ry
i USSR
F I N L A NDE) Boundary
HELSINKI
GUL
Fagerhoim's government--an
uneasy coalition of the Social
Democratic, Agrarian and Lib-
eral Parties--remains, however,
under strong domestic political
pressure to make some move to
arrest inflation. The govern-
ment has been unable to end
the "escalator" tie-in between
industrial wages and farm in-
come, which promotes inflation.
The Finnish Confederation of
Labor is insisting on full com-
pensation for the workers, and
the government may have to re-
sort to devaluation of the cur-
rency to keep Finnish export
industries competitive.
(Concurred in,. by ORR) 25X1
Developments at the na-
tional convention of the _7ap-
anese Socialist Party on 17-19
January demonstrated a move
toward the left, as extremist,
gained control of top posts
and exerted a dominant info lue:ice
in formulating the party policy
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SAIMAA LAKE
CAN v,bprQ LADOGA
PART II NOTES AND COMMENTS Page 11 of 15
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. . . a - ``-?' .....
SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January,1957
for 1957. Intraparty friction
has erupted into the most seri-
ous dispute since the Right and
Left Socialists merged to form
the party in October 1955, and
an open split is possible.
Five of the seven top of-
ficials, including Chairman
Mosaburo Suzuki and Secretary
General Inejiro Asanuma, were
re-elected, but extreme leftists
Hiroo Wada and Kanemitsu Hoso-
sako replaced more moderate
leaders in the key positions of
policy board chairman and of
Diet policy committee chairman.
The leftists also gained a ma-
jority on the Central Executive
Committee..
The party policy was based
on a draft which had been pre-
pared by the left wing and
pushed through the policy com-
mittee by a.vote 41 to 27. The
draft included a justification
for the Soviet intervention in
Hungary, referred to American "op-
pression" on Okinawa, and called
for the breaking of free world
ties (a reference to US-Japan
security arrangements), recogni-
tion of Communist China, repudi-
ation of Nationalist China, and
rejection of the American-spon-
sored program for increasing in-
dustrial productivity. Although
the pro-Soviet,anti-American
phraseology was toned down in
the plenary session before the
policy was adopted formally,
the sharp shift to the left was
unmistakable.
The dispute which erupted
between the Socialist right
and left involved not only the
issue of policy extremes, but
more important whether the So-
cialist Party is to be a class
or popular party. The shift to
the left is evidence of labor's
dominance-of the party. The
leftists are determined to
create a class party oriented
around strong left-wing labor
union support and including
other so-called "economic have-
nots.11 The right wing desires
to expand the popular base of
the party, particularly to in-
clude farmers and small business-
men, in order to win an early
parliamentary majority. The
left wing believes such a
victory impossible.
The Japanese press is in
general agreement that an
extreme Socialist program
would not win popular acceptance
outside labor ranks. Within
the party, Chairman Suzuki's
abandonment of a somewhat
middle position in favor
of the left-wing attitude
has dissatisfied right-wing
leaders and an open party
split may develop. A So-
cialist split would reduce
the pressures holding con-
servative factions together.
Draft evasion on a mass
scale, a sharp increase in de-
sertions, and abundant evidence
of graft, corruption and politi-
cal factionalism are undermining
the morale and effectiveness of
the South Korean armed forces.
During the past few months,
the armed forces have been
KOREAN ARMED FORCES
attempting to apprehend draft
evaders and deserters, believed
to total between 19,000 and 25,-
000 men. The number of de-
fectors to North Korea has also
increased. The principal rea-
sons appear to be insufficient
food, harsh discipline, unfair
furlough policies, unfair ad-
ministration of the draft and
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PART II NOTES AND COMMENTS Page 12 of 15
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SECRET
CURRENT INTELLIGENCE WEEKLY SUMMARY
24 January 1957
discharges, and discontent with
the conduct of the elections
held in May and August 1956.
A rampant inflation since
1950 has caused army pay to lag
behind skyrocketing prices,
making it impossible for either
officers or enlisted men to
live on their salaries. As a
result, all of the services
have set up "welfare funds"
which are supported by graft,
black-market activity, and in
some cases by the hiring out
of entire military units to
civilian contractors. A poor
rice harvest in 1956, coupled
with an upturn in prices, in-
dicates that the purchasing
power of the soldier's hwan will
deteriorate still further, and
the temptation to engage in
illegal activities will increase.
Factionalism and political
activity within the armed forces
rose sharply during 1956.
Discontent has also been
furthered by the assassination
of CIC chief "Snake" Kim, at-
tempts to swing the soldier vote
to President Rhee during the 15
May elections, interference by
politicians in army discharge
planning, and the transfer of
some 75 percent of the army's
general officers.'
The South Korean armed
forces are believed ca-
pable of fulfilling their
assigned combat role at this
time. Continued deteriora-
tion, however, could seri-
ously impair their fighting
capability.
The presidential and con-
gressional elections scheduled
for 3 February in Nicaragua will
be carefully controlled by the
government to ensure the elec-
tion of President Luis Somoza.
for a full six-year term in the
presidency. Somoza became p