CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001100120001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 16, 2016
• Document Release Date: February 3, 2005
• Sequence Number: 1
• Publication Date: March 7, 1957
• Content Type: SUMMARY

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CONFIDENTIAL
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 17
OCI NO. 1414/57
7 March 1957
DOCUMENT NO.
NO CHANGE IN CLASS. 0
fJ MULA IrMu
CLASS, CHANGED T g? T~' 25X1
MINT REVIEW DATE: /
AVIrt: n rr
DATE- 4 4 REVIEWER:
CENTRAL INTELLIGENCE AGENCY
I I I OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
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State Department review completed
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s
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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T H E W E E K I N B R I E F
OF IMMEDIATE INTEREST
MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . Page 1
Israel's withdrawal from the Gaza strip and Sharm
al-Shaikh leaves unresolved the basic questions of the
future administration of Gaza and Israeli access to the
Gulf of Aqaba. Israel has indicated plans fQr action to
uphold what it considers its rights in these areas, while
Nasr, supported by the Syrian, Saudi, and Jordanian
leaders, is apparently ready to insist on Egyptian
administration of Gaza and on barring Israeli shipping
from Aqaba. Meanwhile, Nasr has said he will permit re-
sumption of work on clearing the Suez Canal and has in-
dicated willingness to discuss a settlement of the canal
issue. However, there is no basic change in the Egyptian
attitude,and if Nasr feels he is not obtaining his aims,
progress on Suez may again be interrupted. 25X1
INDONESIA . . . . . . . . . . . . . . . . . . . . . . . Page 3
President Sukarno reportedly has agreed,lat least for
the moment, to a compromise which would bar the Communists.
from, the. next ,,Indonesian .cabine:t :but m?uldgpx Vide for, their.
participation..in:his proposed nationalt';advisory"'council.
Moslem party leaders in. Djakarta appear inclined to accept
this modification in Sukarno's c ancept* of government re-
organization. Army leaders in Central Sumatra and East
Indonesia, however, who have been consistent in their
anti-Communist stand, may not agree. Meanwhile,'a special
army mission has gone to East Indonesia to try to settle
by negotiation Indonesia's latest army coup.
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HUNGARIAN GOVERNMENT MOVES TO PREVENT
DEMONSTRATION ON 15 MARCH . . . . . . . . . . . . . . . Page 1
Premier Kadar's Hungarian regime, through blandish-
ments, threats and a show of force, is attempting to
prevent antiregime demonstrations anticipated on
15 March, Hungary's national independence day. In the
presence of Soviet forces, any general uprising would in-
evitably bring violent repression and defeat to the
rebels. Most resistance leaders are apparently seeking
to restrict any demonstrations to a silent show of
GOMULKA MOVES TO CURB POLISH LIBERALS . . . . . . . . Page
solidarity against the regime.
During the past two weeks, party first secretary
Gomulka has taken steps to curb the Polish press while
.easing his pressure on the Stalinist Natolin opposition
group. These actions appear to be the beginning of a
major effort to bring about some balance between the
warring liberal and Natolin factions and to win the
support of uncommitted middle-of-the-road party members.
Gomulka may also feel that the liberalization program has
reached a point beyond which Poland may not safely venture
and beyond which he, as a Communist, does not care-to go.
POLAND'S FOREIGN TRADE POLICIES . . . . . . . . . . Page 3
Poland's foreign trade, which in the past has
stressed imports of capital equipment from Sino-Soviet
bloc countries in exchange for exports of raw materials,
has been shifting toward a more realistic pattern in
terms of Poland's own economic needs. Since last Decem-
ber, Warsaw has been attempting to develop markets in
the West.
YUGOSLAV-SOVIET RELATIONS . . . . . . . . . . . . . . . Page 3
Yugoslav-Soviet relations appear to have settled into
a "coexistence" pattern likely to continue for some time.
Formal diplomatic and commercial relations will be main-
tained, but for all practical purposes, party relation-
ships have been broken off, with each party indulging in
sporadic propaganda attacks on the other's doctrines.
Yugoslav foreign secretary Popovic has stated that the
USSR is wasting its time if it still hopes to see Bel-
grade in its "socialist camp."
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BRITAIN'S TIES WITH IRAQ . . . . . . . . . . . . . . . . Page 4
Britain is trying to strengthen its ties with the
present Iraqi government and seeking means to retain the
country's good will when Nuri Said may no longer be prime
minister. In the past two weeks London has guaranteed
a large oil company loan to Iraq and promised a gift of
five jet aircraft. 25X1
THE CYPRUS ISSUE . . . . . . . . . . . . . . . . . . . Page 5
As a tactical maneuver in the Cyprus dispute, London
now favors some form of NATO consideration. At the same
time, Britain is sufficiently encouraged by recent
successes against EOKA to begin te s toward granting
C rus limited self- overnment s
ALGERIA . . . . . . . . . . . . . . . . . . . . . . . . Page 6
In spite of recent French successes against the
Algerian National Liberation Front, the rebels continue
to ambush French military units in central and eastern
Algeria. In Paris, members of the assembly are urging
Premier Mollet to set a deadline on his re eated offer
of a cease-fire in Algeria.
AFTERMATH OF THE THAI ELECTIONS . . . . . . . . . . . Page 8
Political demonstrations in Bangkok stemming from
opposition charges of irregularities in the 26 February
Thai national elections led the Phibun regime on 2 March
to declare a state of emergency. Thai army chief General
Sarit was placed in command of all armed forces, including
the police. The government is in no danger of being over-
thrown by the opposition, but Premier Phibun may feel
compelled to make Police Director General Phao the scape-
goat.
LAOTIAN CABINET OPPOSES CHINESE COMMUNIST AID . . . . . Page 9
The Laos cabinet has rejected Pathet Lao demands
that it accept Chinese Communist aid as a condition for a
final settlement, and insists on formal Pathet guarantees
to assure government control of the two northern provinces
and the integration of Pathet forces into the Laotian
army. Pathet chief Souphannouvong has indicated these
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CURRENT INTELLIGENCE WEEKLY SUMMARY
terms are unacceptable. In an effort to force the
cabinet to reverse its position, he is attempting to win
the support of assembly deputies for the acceptance of
Chinese Communist aid.
RESUMPTION OF BURMESE PREMIERSHIP BY U NU . . . . . . .
U Nu's return as prime minister of Burma after a
nine-month absence probably foreshadows no major foreign
policy changes, although he is apt to be more susceptible
to Sino-Soviet blandishments than his predecessor. There
is some indication that in domestic affairs, Nu may be
amenable to a new effort to reach a settlement with in-
surgent Communist groups.
Page 10
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POLITICAL MANEUVERING IN CEYLON . . . . . , . . . Page 10
Prime Minister Bandaranaike is apparently alarmed
at a growing threat to his position from the United
National Party (UNP), which the prime minister's coalt--
tion defeated in the Ceylon national elections in April
1956. Having lost most of the municipal elections to
the UNP last December, Bandaranaike now fears the oppo-
sition may bring about the fall of his government and
force new national elections.
PEIPING STEPS UP CAMPAIGN FOR "PEACEFUL LIBERATION"
OF TAIWAN . . . . . . . . . . . . . . . . . . . . . . . Page 11
During the past month. there has been a new spate of
Communist-inspired rumors concerning "negotiations"
between Taipei and Peiping, and Communist propaganda is
giving new prominence to "liberation" themes. Taipei
has denounced the rumors, and there is no evidence that
the stories have any foundation in fact.
POLITICAL CONTROVERSY ON TAIWAN . . . . . . . . . .
Criticism of the Chinese Nationalist government by
Free China, a fortnightly published in Taipei, has under-
scored the political controversy on Taiwan between
liberal and authoritarian elements of the Kuomintang.
Several anti-Communist papers in Hong Kong have denounced
"undemocratic action" taken by the Chiang regime against
Free China, and liberal elements have demanded the es-
taBlishment of a genuine two-party system on Taiwan.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PEIPING BEGINS LARGE-SCALE DEVELOPMENT OF
HYDROELECTRIC RESOURCES . . . . . . . . . . . . . . . . Page 13
Communist China, which claims a hydroelectric power
potential second only to that of the USSR, has under-
taken a large-scale program to develop these resources.
Several large projects are under way and more are sched-
uled to be started during the Second Five-Year Plan
(1958-1962).' Hydroelectric plants, which produced only
20 percent of the total electric power generated in
China in 1956, will be generating 30 percent in 1962
and 40 percent in 1967.
THE ITALIAN GOVERNMENT'S PARLIAMENTARY DIFFICULTIES . . Page 16
Premier Segni's coalition government is entering
a period of intensified political maneuvering and may
face a crisis in the continuing debate over the govern-
ment-sponsored bill regulating farm tenancy contracts.
A breakup of the coalition would almost certainly lead
to early elections, a prospect no party appears willing
to face.
The French Communist Party is staging a drive to
stem its continuing membership losses, which amounted to
70,000 in the past year. The party leadership hopes to
attract the support of :labor: by a new campaign for wage
increases and is making conciliatory gestures to oppo-
sition elements within the party.
Page 16
THE NATIONAL CONGRESS OF THE ECUADORAN COMMUNIST PARTY . Page 17
The national congress of the Ecuadoran Communist
Party, scheduled to convene on 8 March, will possibly
foreshadow some of the international policies which the
Argentine and Brazilian Communist Parties may adopt at
their congresses to be held in the near future. The
Ecuadoran Communist congress--the first in Latin America
since the Hungarian crisis--will meet under the threat
of being outlawed and at a time of considerable dis-
sension within the party.
NEW REVOLUTIONARY PRESSURES IN ARGENTINA . . . . . . . . Page 18
The provisional Argentine government's concern over
plans for another "Peronista" uprising is reflected not
only in its recent arrest of certain Peronista, retired
military and "Nationalist" elements, but also in new
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
concessions to labor and in various reassuring policy
statements. Skepticism over the Aramburu regime's stated
intentions to hold national elections impartially and by
the end of 1957 threatens to alienate military elements,
who remain the key factor in any Argentine government's
stability. F_ I
USSR MINISTRY OF STATE CONTROL STRENGTHENED . . . . . .
The Ministry of State Control under V.M. Molotov
apparently is re-emerging as a powerful instrument of
centralized authority over certain aspects of the Soviet
economy. The regime probably feels a further strengthening
of this ministry is necessary as a counterweight to the
increase of local authority envisaged under the proposed
drastic reorganization of the Soviet economy along regional
?
nes
PATTERNS AND PERSPECTIVES
Page 19
THE HUNGARIAN COMMUNIST PARTY UNDER KADAR . . . . . . . Page 1
The Hungarian Socialist Workers (Communist) Party
led by Janos Kadar, now numbering some 200,000 members,
is a mere shadow of the party once led by Matyas Rakosi,
which numbered more than 800,000, with a nucleus of
Moscow-trained experts. In his efforts to strengthen
this shaky machine, Kadar has been forced to abandon his
original declarations of moderation, and, despite his
regime's continued condemnation of the former "Rakosi
clique," has resorted increasingly to the restoration
of former middle-level "Stalinists" to positions of
authority. He has failed completely in his efforts to
attract the support of the working class, necessary for
any kind of popular base, and there is evidence that
factionalism remains a problem within the existing party
THE UN DISARMAMENT NEGOTIATIONS IN LONDON . . . . . . . Page 5
At the UN Disarmament Subcommittee meeting to be
convened In London on 18 March, Britain and France will
press for their plan of 19 March 1956 as the "best basic
guide" for comprehensive disarmament. The Soviet Union
will push its seven-point statement of 17 November, which
called for an immediate ban on nuclear tests. Under
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discussion also will be five American proposals outlined
to the General Assembly on 14 January. Unless there is
the prospect of some measure of accord, the talks are
likely to recess after about five weeks.
ECONOMIC DEVELOPMENT OF IRAN . . . . . . . . . . . . . . Page
Iran, almost brought to bankruptcy by the economic
policies of former prime minister Mossadeq, now is in a
relatively sound financial position. Oil revenues,
amounting to over $150,000,000 last year, are consider-
ably higher than before nationalization in 1951. With
these revenues assured, Iran is embarking on an ambitious
Seven-Year Development Plan. Oil revenues are more than
adequate to cover all expenditures envisioned, but in-
efficiency and corruption will probably limit the benefits
Iran will receive from the plan.
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CONFIDENTIAL
OF IMMEDIATE INTEREST
Israel and Egypt
sels would be used "if neces-
sary" in this undertaking.
Israel's withdrawal from
the Gaza strip and Sharm al-
Shaikh leaves unresolved the
basic questions of the future
administration of Gaza and Is-
raeli access to the Gulf of
Aqaba. Israel has indicated
plans for action to uphold what
it considers its rights in these
areas, while Nasr, supported by
the Syrian, Saudi, and Jorda-
nian leaders; apparently is ready
to insist on Egyptian adminis-
tration of Gaza and on barring
Israeli shipping from Aqaba.
Meanwhile, Nasr has said he will
permit resumption of work on
clearing the Suez Canal and has
indicated willingness to discuss
a settlement of the canal issue.
However- there is no basic change
in the Egyptian attitude and if
Nasr feels he is not obtaining
his aims, progress on Suez may
again be interrupted.
Israel underscored its de-
termination on the Gaza and
Aqaba issues when Foreign Minis-
ter Meir stated that a return
by Egypt to Gaza "in any way,
shape or form" would bring into
force Israel's "right of return
to Gaza." This applied to the
initial period of take-over by
the UN forces as well as the fu-
ture. As regards the Gulf of
Aqaba, Mrs. Meir said Israel
"next week" intends to exercise
the right to pass shipping
through the Straits of Tiran,
adding that Israeli naval ves-
Indications of French back-
ing of Israel in this forceful
stand led UN secretary general
Hammarskjold to comment that
France might be laying ground-
work for renewed military inter-
vention on Israel's side.
Nasr, apparently to relieve
the expected shift of pressure
from Israel to Egypt, has made
some conciliatory gestures.
Press reports state that Syria--
almost certainly on orders from
Cairo--has given permission for
repair of the Iraq Petroleum
Company pipelines sabotaged last
November, and 25X1
asr has in-
structed his foreign minister
to discuss the settlement of
the Suez: Canal issue. Nasr
said that clearance of the tug
Edgar Bonnet could begin as
soon as the Israelis gave "con-
crete evidence" of withdrawal.
Transit of ships up to 10,000
tons or up to 25-foot draft
would be physically possible
after the removal of the Bonnet.
In seeking to continue to
bar Israeli shipping from the
Gulf of Aqaba, Nasr is supported
by Syria, Jordan and Saudi
Arabia.. Saudi Arabia ap-
parently fears that an Is-
raeli :pipeline from the gulf
to the. Mediterranean might
give a competitive advantage
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CURRENT INTELLIGENCE WEEKLY SUMMARY
to Iranian over Saudi oil,
which would have to continue
to use the Suez Canal. The
next Egyptian objective follow-
ing the Israeli withdrawal will
probably be the evacuation of
the UN force or limitation of
its functions to patrolling
the 1949 Israeli-Egyptian ar-
mistice lines.
Prime Minister Ben-Gurion's
announcement of a withdrawal
based on "assumptions and ex-
pectations" rather than on
firm guarantees precipitated
a political storm in Israel.
Ben-Gurion, however, was able
to achieve Knesset approval of
his policies. The prime minis-
ter reiterated before the
parliament that Israel would
shoot its way through if neces-
sary to maintain freedom of
navigation in the Gulf of Aqaba
and stated that Egypt would
never be allowed to return to
the Gaza strip. Ben-Gurion
said he was keenly aware of
the dangers and drawbacks in-
volved in the settlement Israel
had made. He stated that while
Israel had not obtained the
guarantees it sought, it had
received moral commitments
from the United States and
many other nations.
Syria
Strong Egyptian pressure
has evidently resulted in the
commuting of the death sen-
tences imposed in the recent
treason trials of rightist
leaders in Syria.
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to drift further toward the
Soviet bloc. Syrian officials
have indicated that they have
practically made up their minds 25X1
to give an oil refinery con-
struction contract to the
Czechs
Soviet MIG-17 air-
een observed as-
EMIT
sembled on Syrian fields, al-
though the Syrians have no
pilots qualified to operate
them.
Soviet Activity
Soviet activity over the
last.week was primarily in the
propaganda field and was di-
rected at the Egyptian people.
Soviet broadcasts attempted to
make a modus operandi between
Nasr and the West, particularly
the United States, increasingly
difficult. Egyptians and the
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Arabs in general were told that
Nasr must not weaken in his
determination to maintain his
"national independence" in re-
lation to the West. Radio Mos-
cow claimed on 2 March that
Nasr's stand was primarily re-
sponsible for the Israeli with-
drawal, and encouraged the "unit-
ed Arab world" to continue to
stand by Egypt against Israeli
"intransigence" and the "ham-
pering" actions of the United
States. With the announcement
of Israel's intention to with-
draw, Radio Moscow stated on
4 March its opposition to an
American-Israeli "agreement"
to internationalize Gaza and
the Aqaba waterway.
President Sukarno report-
edly has agreed, at least for
the time being, to a compromise
in his concept of government
reorganization which would bar
the Communists from the next
cabinet. He continues to in-
sist on Communist participation
in the proposed national council,
however, but has acceded to de-
mands of the Moslem parties
that the council's function be
strictly "advisory." Sukarno
has also agreed to offer former
vice president Hatta an "impor-
tant" position in the new setup.
Moslem party leaders in
Djakarta appear inclined to
accept Sukarno's proposal.
They feel he must be permitted
to save face since he and Hatta
are the only men able to re-
unite Indonesia. They have al-
ways advocated restoration of
the duumvirate.
Army leaders in Central
Sumatra and East Indonesia, who
have consistently been strongly
anti-Communist, have not yet
commented on the compromise
proposal and may persist in
all-out opposition. Army chief
.of staff General Nasution, who
heretofore has been equivocal
in his attitude toward the con-
cept, is now reported in
"serious disagreement" with
Sukarno over the whole question
of Communists in the government.
Sukarno has made no an-
nouncement of his latest pro-
posal but has prepared the pub-
lic for it. On 28 February he
told a mass rally he would
"digest" comments of the oppo-
sition before announcing his
own final decision.
The Communist Party has
threatened a national strike
if it is barred from the cabi-
net or if Hatta resumes an im-
portant government post. Al-
though it may stage a token
strike, it is more likely to
limit its actions to vigorous
protests and to settle for par-
ticipation in the council, where
it probably will be able to
exert significant influence on
Sukarno and government policy.
In connection with the in-
creasing demands for autonomy,
from non-Javanese areas, a
special army mission has gone
to Makassar in Celebes to try
to settle by negotiation Indo-
nesia's latest army coup. Lt.
Col. Samual declared a state of
war and siege on 2 March in his
command of East Indonesia. He
has now apparently replaced
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1 March 1957
three of the four civil gover-
nors with army officers and
has appointed two additional
military governors in the prov-
ince of Celebes. His revolt
followed repeated warnings to
the central government of dis-
satisfaction with local condi-
tions and with the administra-
tion of the Ali cabinet in Th a-
the Indo-
nesian government regards the
developments in East Indonesia
to be more serious than the
Sumatra problems. It fears
that what has happened is only
a prelude to a declaration of
independence, and that East
Indonesia is in a better eco-
nomic, military, political and
geographic position to make
such a. declaration stick than
is Sumatra..
Meanwhile, in North Suma-
tra Col. i_achmour, a pro-Commu-
nist regimental Commander, is
reported to have broken with
the government commanders in
the area and is continuing to
organize and arm Communist-
controlled rubber estate work-
ers. By these actions, Mach-
mour appears to be working to
defeat the local move for au-
tonomy as well as to undermine
the strongly anti-Communist,
anti-Djakarta regime in Central
Sumatra. F_ I 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
NOTES AND COMMENTS
HUNGARIAN GOVERNMENT MOVES TO PREVENT DEMONSTRATION ON 15 MARCH
Premier Kadar, through
blandishments, threats-and.a
show of force, is attempting
to prevent antiregime demon-
strations anticipated on 15
March, Hungary's national inde-
pendence day. In the presence
of Soviet forces, any general
uprising would inevitably bring
violent repression and defeat
to the rebels. Most resistance
leaders are apparently seeking
to restrict any demonstrations
to a silent show of solidarity
against the regime.
The populace, however, is
evidently having difficulty in
adopting a unified course of
action for the holiday. Leaf--
lets calling for a stay-at-
home demonstration have been
reported. Any demonstration on
the streets, according to the
American legation in Budapest,
would lead to a "tinderbox"
situation,
The #:adar regime is seek-
ing to convince the Kremlin and
the Hungarian people that it is
firmly in control of the situa-
tion. It has issued threats of
dire punishment for "counter-
revolutionaries" who demonstrate
on 15 March.
Limited celebrations, how-
ever, have been approved for
school children and government
workers, who will be permitted
to take the day off. The regime
will attempt to keep factory
workers on the job, where they
can be more easily controlled
by regular police forces and
workers' militia--estimated to
number 30,000 men. The govern-
ment may begin induction of new
recruits into.the army:before
15 March and thus reduce the
number of men available for an
insurrection.
The Kadar regime is backed
by some six Soviet divisions
dispersed in key positions
throughout the country. More-
over, Soviet MVD troops in Hun-
gary, numbering 1,500 before
the October rebellion, have
reportedly been substantially
reinforced. Officers of the
Hungarian military and police
forces are largely reliable
veterans who probably would not
hesitate to fire on their own
countrymen.
The government is conduct-
ing a propaganda-war on the West
for "inciting" and then "aban-
doning" the Hungarian rebels
last November. It has also
launched a trial balloon;:-sug-
gesting through Western diplo-
matic and journalistic channels
that a status of forces agree-
ment with the USSR may be ar-
ranged in the near future. It
is possible, in the opinion of
the American legation in Buda-
pest, that the Kremlin has made
the successful handling of any
demonstrations on the 15th the
prerequisite for such negotia-
tions. The Austrian minister
has suggested that the regime
may be hoping to head off dem-
onstrations by a "broad hint"
that if all goes well some
favorable result will be forth-
coming.
cotFoE{rIAL
sreesF.
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1 March 1957
GOMULKA MOVES TO CURB POLISH LIBERALS
During the past two weeks,
party first secretary Gomulka
has take. steps to curb the
"irresponsible" Polish press
while easing his pressure on
the Stalinist Natolin opposition
group. These actions appear
to be the beginning of a major
effort to bring about some
balance between the warring
liberal and Nat;olin factions
and to win the support of un-
committed middle-of-the-road
party members. Gomulka may
also feel that the liberaliza-
tion program has reached a point
beyond which Poland may not
safely venture and beyond which
he, as a Communist, does not
care to go.
In a major move against
the press, the regime dismissed
Henryk Koroczynski, editor of
Zycie Warszawy, principal gov-
ornment organ, and Wladyslaw
Matwin, liberal editor of Try-
ouna Ludu;, ::the principal party
organ. In protest, most of the
top editors of the party news-
paper reportedly resigned.
In a riotous meeting of
party leaders with press offi-
cials on 27 February, Gomulka
criticized all of the press by
stating that most of the Polish
journalists and writers had
broken with socialism and had
become the mouthpiece of a
"petit-bourgeois ideology." Al-
so he accused Trybuna Ludu of
having disobeyed a recent polit-
buro letter to all party organi-
zations ordering a fight against
both "revisionism and c:onserv-
atism.'.' He reportedly said
that "revisionism is a great
danger of the moment."
Gomulka appointed as Try-
buna Ludu's new editor Leon
Kasman, who edited the paper
during the Stalinist Bierut
regime, but who is considered
moderate. He can be expected
to bring its editorial policies
more closely into step with
those of Gomulka. The Gomulka
regime now is imposing a much
stricter censorship on the press
and is interfering with the
publication of some papers,
especially the intellectual
journals. Most of the press
had been engaged in open war-
fare against the Natolin group
and in particular had attacked
the use of anti-Semitism to
stir up popular feeling against
the Gomulka regime. Gomulka
may be curbing the press in
part to reciprocate for Soviet
promises to halt the anti-Polish
campaign in the Soviet and
Satellite press.
Gomulka has personally in-
sisted in the face of strong
parliamentary opposition on the
retention in the Cyrankiewicz
cabinet of Deputy Premier Nowak,
a leading Stalinist. In addi-
tion, he has reportedly desig-
nated the unpopular former trade.
union chief, Wiktor Klosiewicz,
as deputy minister of labor and
social welfare. The inclusion
of these men in the government
has probably aroused intense
popular disapproval, as both
are thoroughly discredited in
the eyes of the people as pro-
ponents of Stalinist oppression.
Krakow University students al-
ready have conducted anti-Nowak
demonstrations. Since his
principal power base is popular
support, Gomulka, in his efforts
to restore party unity, may
have weakened his position by
his concessions to the Natol-
inists.
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POLAND ' S FOREIGN T ADE POL I C I E S
Poland's foreign trade,
which in the past has stressed
imports of capital equipment
from Sino-Soviet bloc countries
in exchange for exports of raw
materials, has been shifting to-
ward a more realistic pattern
in terms of Poland's economic
needs. Since last December,
Warsaw has been attempting to
develop markets i a the ;Test,
While Warsaw is maintaining
its contacts with the bloc and
co-operation with such agencies
as CEMA, the Soviet bloc's
Council for Economic
Assistance, the Polish trade
structure is becoming less
rigid. The Poles are looking
to the West for modern effi-
cient machinery with which to
rehabilitate much of their
industry.
Trade with the West will
not be limited to imports of
machinery, however; Poland is
also see:ciug increased supplies
of agricultural products and
raw materials.
Numerous Polish newspaper
articles have called for in-
creased imports of raw ma-
terials from underdeveloped
countries; purchase of machinery
from bloc countries only when t'i8
quality is equal to "the highest
world level"; and a review of
tze West's export controls and
Poland's position in CELIA.
A member of Poland's Foreign
Trade Ministry told an American
embassy officer recently that
the necessary reorientation of
Poland's trade would be hampered
more by Western export control
policy than by Poland's obliga-
tions under CELIA.
Polish commercial attach6s
reportedly have been instructed
to survey the needs of each
market, with a view toward avoid-
ing competition with the United
States, the United Kingdom and
West Germany. The Polish press
is suggesting with increasing
frequency that to enlarge ex-
ports, the Ministry of Foreign
Trade should take steps to
bring manufacturers and foreign
buyers into closer contact. The
American embassy in Warsaw is
receiving a growing number of
foreign trade inquiries from
small-scale producers who are
quietly attempting to develop
trade wi h the United States
outside the government's
centralized foreign trade
framework.
The shift in Warsaw's
trade program will be gradual.
New policies, administrative re-
or a.:ization, and personnel
shift: over a period of time
will tond to bring trade into
closer conformity with Gomulka's
program of increasing Poland's
economic viability.
Prepared by OR R)
25X1
.YUGOSLAV-SO; IET RELATIONS
Yugoslav-Soviet relations
appear to have assumed a pat-
tern which is likely to continue
for some time to come. For all
practical purposes, party re-
lations have been broken off,
each party indulging in
sporadic propaganda attacks
of varying intensity on the
other's doctrines.
In a speech on 26 February,
Yugoslav foreign secretary
Popovic reduced the ideological
controversy to the basic issue
at dispute. He bluntly stated
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that the USSR was wasting its
time if it still hoped to see
Belgrade in its "socialist
camp." He said, "We ask no
one to recognize us as a so-
cialist country; ...practice
and history" would pronounce
a correct judgment. He in-
vited the continuation of the
ideological exchange by charg-
ing that Stalinism had inflicted
"incomparably greater damage
to the cause of socialism than
all of the imperialist con-
spiracies put together."
Clues as to the future of
Soviet-Yugoslav relations will
be provided by the manner in
which the trade agreement signed
on 27 February is carried out.
It calls for approximately the
same level of exchange as in
1956--$110,000,000, with actual
fulfillment about $30,000,000--
but does not list specific com-
modity quotas. Of. the credits
agreed to in early 1956, Mos-
cow will honor its commitment
for an $18,000,000 credit for
commodity purchases in 1957.
It granted a disproportionately
small amount on a credit for
industrial investments, however,
and postponed for five years
the large credit negotiated last
August for a Yugoslav aluminum
combine. This indicates that
Moscow is unwilling to help
the Yugoslav economy ok:. any
long-term basis, but has left
BRITAIN'S TIES
Britain is trying tc
strengthen its ties with the
present Iraqi government and
is seeking means to retain the
country's good will when Nuri
Said may no longer be prime
minister. In the past two
weeks London has guaranteed a
large oil company loan to Iraq
and promised a gift of five
Jet aircraft.
the door open for maintaining
the present level of trade.
The USSR has denied the
Yugoslav charge that withhold-
ing of the aluminum credit is a
form of economic pressure. A
Moscow radio commentator, in
discussing the Soviet loan to
Yugoslavia, said that its post-
ponement was caused by "economic
reasons, concerned with the
changes in the structure and
volume of investments in the
USSR."
Pravda on 6 March reprinted
a Rumanian answer to Popovic.
This answer, unyielding on basic
issues but milder in tone than
previous statements, indicates
that the Kremlin is apparently
trying to keep the dispute from
worsening and is even keeping
the door open for interparty
relations but on its own terms.
It will undoubtedly be willing
to continue correct state rela-
tions with Yugoslavia, which says
it wants to "coexist" with the
USSR. The Kremlin's real views,
however, may have been revealed
in a recent speech by Albanian
party boss Hoxha, who has often
served as the Kremlin's mouth-
piece on Yugoslav relations.
Hoxha declared that the actions
taken against Yugoslavia in 1948,
with the exception of the in-
terruption of governmental rela-
tions, were correct.
I Concurred in by ORR)
WITH IRAQ
Iraq, which normally sup-
plies about 13 percent of the
United Kingdom's crude oil re-
quirements and gets nearly a
third of its imports from
Britain, is banked on heavily
by London as a force against
Egyptian and Communist influence
in the Arab world. Iraq's oil
revenues suffered seriously
from the closure of the Suez
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7 March 1957
Canal and stoppage of the pipe-
lines through Syria, however,
and an upsurge of public opinion
over the Suez intervention en-
dangered the position of pro-
British Nuri Said.
In recent weeks British-
Iraqi relations have improved
considerably. One of London's
most dramatic gestures was its
promise in late February to
guarantee a large loan to Iraq
by the Iraq Petroleum Company
(IPC), which is 33.75 percent
British-owned.
Britain later made a fur-
ther move to bolster its own
prestige and Iraq's military
strength by deciding to give
Iraq five Hunter Mark VI jet
fighters and spare parts, worth
approximately $2,000,000, a
move which followed nearly a
year of unsuccessful negotia-
tions for the sale of Hunters.
Delivery is expected in April
or later and the British wish
to send technical personnel,
in addition to their present
training mission, for mainte-
nance and instruction during
the next two years.
Britain appears to be keep-
ing a hand in Iraq for the time
when Nuri retires. Crown Prince
Abd al-Ilah spent about a week
in London in mid-February on
an unofficial visit 25X6
London is doing its best
to ease Nuri's difficulties
with anti-British public opin-
ion by remaining in the back-
ground, particularly in Baghdad
pact meetings. In area affairs,
Britain has quietly encouraged
Iraq to support President Chamoun
of Lebanon and is presumably in
close consultation over Jorda 's
future. r__ I 25X1
THE CYPRUS ISSUE
As a gesture toward the UN
resolution suggesting negotia-
tions for a Cyprus settlement,
London now favors NATO consid-
eration : of the Cyprus question
but apparently does not intend
to initiate serious negotiations
for a political settlement with
Greece and Turkey on the is-
land's future. The British gov-
ernment also is unwilling to
give in to any pressures to
modify its present Cyprus policy
of eliminating terrorism and
then implementing the Radcliffe
constitution, which provides
for some self-government.
A Foreign Office official
recently characterized NATO
consideration as the most con-
structive proposal now avail-
able but said NATO should not
be permitted "to move too far
into substance." In accordance
with a December resolution of
the ministerial meeting of the
North Atlantic Council, the
secretary general could offer his
good offi.c-es informally to the
NATO representatives of Britain,
Greece and Turkey toward media-
tion. In this he is authorized
to use the assistance of three
permanent NATO representatives
chosen by him.
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If they do not agree, the
secretary general is still
empowered to bring the matter
to the attention of the North
Atlantic Council, as may any
member government which so
desires. Because the council
discussions, unlike "the UN
goldfish bowl," are private
and voting is not obligatory,
Britain may believe this ap-
proach offers some chance
for progress.
London is evidently suf-
ficiently encouraged by recent
successes against EOKA to be-
gin steps toward implementing
the Radcliffe constitutional
proposals. Governor Harding
said on 24 February that re-
organization of the government
machine along the lines rec-
ommended by Radcliffe would
start soon. Some of the strict-
er emergency regulations have
been lifted recently.
In spite of recent French
successes against the Algerian
National Liberation Front (FLN),
the rebels have increased am-
bushes of French military units
in central and eastern Algeria.
of the 34 members and alter-
nates of the FLN's National
Committee of the Algerian Rev-
olution are now under arrest.
25X1
25X1
The latest series of ar-
rests of FLN leaders--in France
as well as in Algeria--appears
to be a heavy blow to the top
echelon of the rebels' organ-
ization. French authorities
allegedly consider the capture
of two members of the five-man
FLN executive committee as im-
portant as the seizure last
October of five leaders while
they were en route from Rabat
to Tunis. In all, one third
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25X1
5PA1
Aflou?
Several clashes have oc-
curred during the past week
between unusually large rebel
bands and French military units,
which may indicate that the reb-
els have obtained new supplies
of arms. French military cas-
ualties totaled 53, the highest
toll since early October, while
rebel casualties reached a
record high of 782 dead. Two
helicopters were downed by rebel
ground fire.
The FLN has Ylot yet re
sponded to Mollet's cease-fire
appeals. The American consul
in Algiers believes that stepped-
up activity by the French army
may lead to local cease-fir.e,s
when individual rebel commanders
surrender rather than a nego-
tiated cease-fire for the entire
area. Negotiations, he believes,
would be a "painful surprise"
to both European settlers and
the army.
The FLN organization is
reportedly unwilling to consid-
er. disarming the rebel bands
before elections are held be-
cause it fears there will be
a settler uprising when elect-
ed Algerian representatives
demand independence. Meanwhile,
in Paris, the demand is grow-
ing for Mollet to impose a
deadline for Algeria: accept-
ance of a cease-fire. A gen-
eral policy debate in the Na-
tional Assembly scheduled for
15-16 March may serve as a
sounding board for new approach-
es to the Algerian problem.
Some 20 members of a French
counterterrorist group involved
in the 16 January attempt to
assassinate General Salan,
commanding general of all French
forces in Algeria, are now on
trial in Algiers. The group,
allegedly formed a year ago,
is charged with printing and
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Dupleix Fort National Sidi Aick
Nelsenbourg0 OSetif
ALGIERS Philippeville
ALGERIA
0
There has also been rebel activity in the }
Coha,an Ailac anA Mamonlrha N(fc
O French Army clashes with rebel units
22 February - 6 March 1957
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
distributing subversive leaf-
lets, Lill-ing a Moslem whom
they had kidnaped,,and faking
police identity cards. r-
25X1
AFTERMATH OF THE
Political demonstrations
in Bangkok stemming from opposi-
tion charges of irregularities
in the 26 February national
elections led the Phibun regime
on 2 March to declare a state
of emergency. The regime's
allegation that the people were
being incited by "foreign na-
tionals," presumably meaning
local Chinese Communist, are
not supported by evidence. Al-
though tension appears to have
eased, the emergency decree is
still in effect.
While winning handily in
the country as a whole, the
ruling Seri Manangkhasila Party
THAI ELECTIONS
(SMP) was closely contested for
Bangkok's nine seats. At one
point, government candidates
barely held leads for five
seats, while the conservative
Democrat Party was leading in
the other four. After an eight-
hour interruption in the an-
nouncement of results, seven
`:MP candidates suddenly emerged
as winners, with only two Demo-
crats, including their leader,
Khuang Aphaiwong, being declared
winners. This development
touched off sharp and widespread
protests by the opposition and
the press, which caused the gov-
ernment to impose a state of
emergency.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
During the emergency, Gen-
eral Sarit, the Thai army chief,
was placed in command of all
of the armed forces, as well as
the police, which heretofore
had been controlled by his po--
litical rival, Police Director
General Phao. Sarit, in exer-
cising his new authority, has
thus far conducted himself with
considerable political finesse.
He successfully brought a
student mob under control on 2
March and subsequently made it
clear at a press conference
that he considered himself to
be fully in charge of the sit-
uation,
The government is in no
danger of being overthrown by
the opposition, but it appar-
LAOTIAN CABINET OPPOSES
The Laotian cabinet has
rejected the Pathet Lao demand
that it request aid from Commu-
nist China as a condition for
a final settlement and negotia-
tions are now deadlocked, Prime
Minister Souvanna Phouma told
Pathet Lao chief Souphannouvong
that a settlement was possible
only on the basis of the commu-
niqud which' they signed on 28
December and Pathet guarantees
that the two northern provinces
and Pathet forces would be
placed under the control of
the royal government simultane-
ously with the formation of a
coalition government. Souphan-
nouvong's initial reaction to
this "final offer" was negative,
and he was reportedly given a
deadline of 10 March within
which to reply.
Failing to win cabinet ac-
ceptance of his counterdemand
for Chinese Communist aid,
Souphannouvong, with the assist-
ance of opposition leader Bong
Souvannavong, is now concen-
ently feels compelled to find
a scapegoat for the electoral
frauds. The logical candidate
would be Phao, who is also the
secretary general of the SMP.
Phao clearly is under a heavy
cloud, and little has been
heard from him during the pres-
ent emergency.
CHINESE COMMUNIST AID
trating on winning support among
assembly deputies in an effort
to generate sufficient pressure
to reverse the cabinet's deci-
sion. Most to the deputies
probably are opposed to the
aid in the view of the American
embassy. In fact, the influen-
tial Independent Party has
already taken a clear-cut stand
against such aid.
In the face of Pathet coun-
terdemands.and.::definite opposi-'
Lion to any more concessions
within his cabinet, Souvanna
Phouma's earlier optimism over
the prospects of a settlement
has turned to pessimism, His
attitude is shared by the gov-
er:iment's chief negotiator and
the president of the National
Assembly, both of whom believe
that the deal is off "at least
until autumn." Their remarks
suggest they do not envision
any final rupture in negotia-
tions but rather that both
sides will remain in contact to
resolve their differences.
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CURRENT INTELLIGENCE WEEKLY SUMMARY,
7 Ma rc h : 19 57
It is quite possible that
Souphannouvong will retreat
from his position on Chinese
Communist :ai.d in order to pro-
tect concessions already won
in negotiations, reasoning that
once the Pathets are in the
cabinet they will be able to-
induce Laos to accept Commu-.
nist'bloc assistance. A more
immediate and critical issue
would appear to be the govern-
ment's demand that Pathet fords
be placed under its control
simultaneously with the formar...
tion of a coalition government.
Rather than break off ne-
gotiations, Souphannouvong may
attempt to work out some for-
mula which will ensure con-
tinued Pathet Lao control over
its forces after they are nomi-
nally integrated into the Lao-
tian army.
RESUMPTION OF BURMESE PREMIERSHIP BY U NU
The Burmese Chamber of
Deputies on 28 February unani-'
mously reappointed U Nu as
prime minister. Nu had turned
over his office to Socialist
Ba Swe last June, citing a de-
sire to devote his full atten-
tion to the reorganization and
"purification" of the Anti-
Fascist People's Freedom League,
the government coalition. For
the past three months, however,
Nu has been maneuvering inten-
sively against a strong Social-
ist faction led by Deputy
Prime Minister IKyaw Nyein to
regain the premiership.
The fact that Nu will keep
Ba Swe's cabinet virtually in-
tact, including Deputy Prime
Minister Kyaw Nyein, indicates
25X1
that he and Kyaw Nyein have,
for the moment at least, patched
up their differences. The out-
going prime minister, Ba Swe,
will still be a powerful figure
in his capacity as deputy prime
minister for defense.
While Nu's return probably
foreshadows no basic changes
in. foreign policy, he has in
the past shown himself to be
more vulnerable to the blandish-
ments of such Communist leaders
as Chou En-lai than Ba Swe. Nu
has said there will be no changes
in government policies, but there
is some indication he may be
amenable to a new effort to
reach a settlement with the in-
surgent Communist groups.
POLITICAL MANEUVERING IN CEYLON
Prime Minister Bandaranaike
is apparently alarmed at a grow-
ing threat to his position from
the United National Party (UNP),
which the prime minister's pop-
ular front soundly defeated in
25X1
the Ceylonese national elections
last April. Having unexpectedly.`,
lost a majority of municipal
elections to the UNP last De-
cember, Bandaranaike now seems
to lack confidence in his ability.',
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to maintain his own strength
in rural areas, which will
vote for village committee
posts between April and June.
Since he was elected in
April 1956, Bandaranaike has
not actively pressed the social-
ist program he advocated during
the campaign. His most solid
achievements domestically to
date have been to reduce the
prices of rice and sugar and
to provide--with some foreign
help--free milk and a bun to.
school children. His decisions
to make Sinhalese a state lan-
guage, to eliminate British
military bases, and to estab-
lish diplomatic relations with
Communist China and the USSR
resulted in no direct benefits
to the Ceylonese citizenry.
Major plans, such as na-
tionalization of bus transport
and of foreign-owned tea and
rubber plantations, have not
,jeen carried out and no prog-
ress has been made in reliev-
iag unemployment, ending labor
disputes in Colombo harbor,
or improving relations with the
Tamil-speaking population of
northern Ceylon. Economically,
1956 was a year of stagnation
or slight decline, in marked
contrast with the two preceding
years.
Having worked hard to re-
vitalize its organization, the
UNP won 13 of 31 municipal
elections in Colombo on 15
December, while Bandaranaike's
coalition won only five. Former
UNP prime minister Sir John
Kotelawala returned to Ceylon
from Britain in January, and
another popular former prince
minister, Dudley Senanayake,
came out of retirement to re-
join the UNP in February. In
early 1957, the party, appar-
ently encouraged by its suc-
cesses, began a whispering
campaign to the effect that
Bandaranaike's leftist govern-
ment should be dissolved and
new elections held.
Bandaranaike apparently
now fears for his government's
stability. In his presidential
address to the annual conven-
tion of his own Sri Lanka Free-
dom Party on 2 and 3 March, he
accused "forces of reaction" of
trying to "hamper the work of
the government and even perhaps
to create some crisis calculated
to secure the downfall of the
government." His party pledged
to speed up social and economic
reforms and to provide for a
"reasonable use" of the Tamil
language. The UNP, which meets
on 9 and 10 March, presumably
will attack Bandaranaike's
program.
The American embassy in
Colombo is concerned lest Ban-
daranaike turn toward the Commu-
nist and Marxist parties for
support in defending himself
against the UNP. Bandaranaike
personally would probably prefer
to continue his moderate social-
ist course, and he reportedly
has refused an offer of co-opera-
tion from the Ceylonese Communist
Party. If the UNP makes a major
comeback in the several hundred
village committee elections
scheduled for this spring, how-
ever, landaranaike may consider
acceptance of additional leftist
support.
PEIPING STEPS Ul:- CAMPAIGN FOR "PEACEFUL LIBEPATION" OF TAIWAN
During the past month, the
Chinese Communists have given
new impetus to their continuing
psychological warfare campaign
to soften Chinese Nationalist
morale and encourage defections
to the mainland. There has been
a new spate of Communist-inspired
rumors concerning "negotiations"
'between Taipei and Peiping. Chou
25X1
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En-lai, in a major policy
speech on 5 March, declared
confidently that "more and
more military and administra-
tive personnel in Taiwan are
willing to bring about peace-
ful liberation." A "Committee
for the Peaceful Liberation
of Taiwan," made up of former
Nationalist officials, has
recently been set up by the
Communists and will probably
play a prominent role in
Peiping's campaign.
On 5 February, a Commu-
nist newspaper in Hong Kong
kicked off the current rumor
campaign by republishing the
Japanese consul general's
statement to the press a week
earlier on the possibility that
both the Communist and Nation-
alist Chinese were "putting
out feelers" for negotiation
of a "peaceful union" between
Taiwan and the mainland. On
the same day, a smiling Chou-
En-lai told reporters in Colorz-
bo that he would gladly go to
Taiwan if asked, and declared
that "Chiang Kai-shek is my
old friend."
On 9 February a Paris
newspaper carried reports, ap-
parently originating in Hong
Kong, that Chiang Ching-kuo was
negotiating with Chinese Commu-
nist politburo member Chen Yi
to make Taiwan an autonomous
territory of the Chinese
People's Republic. Since then,
the Communist press in Hong
Kong has featured almost daily
reports--some purportedly orig-
inating in Taiwan--that negotia-
tions are proceeding in secret.
The pro-Communist Ta Kung
Pao in Hong Kong on 19 I ebruary
repeated previous reports of it
meeting between young Chiang
and Chen Yi, with amplifying
details of a five-point pro-
gram for the integration of
Taiwan into "People's China."
Next day another Communist
daily in Hong Kong publicized
a 10-point proposal for a "uni-
fied China" to be presented
in the UN by Madame Soong
Ching-ling, widow of Sun Yat-
sen, which was allegedly being
drawn up in secret meetings
between representatives of the
two Chinas.
Since mid-February, Pei-
ping's broadcasts have given
special emphasis to the theme
of American unreliability as
an ally. The Communists have
directed Chiang Kai-shek's at-
tention to alleged American
support for liberal elements on
Taiwan critical of the National-
ist government. Chou En-lai
underscored this point in his
5 March address when he formally
charged the United States with
attempting to overthrow the
existing Nationalist authori-
ties in order to turn Taiwan
into an American dependency
"like Honolulu."
Taipei has denounced all
reports of negotiations as
"absurd and ridiculous" and
there is no evidence that these
stories have any foundation in
fact. Ambassador Rankin reported
on 26 February, however, that
the Nationalists are "obviously
disturbed," fearing the Communist
fabrications will be believed in
the United States.
Chiang Kai-shek himself
on 2 March reiterated earlier
promises of a fighting return
to the mainland in what appears
to be an attempt to counter
"peace" rumors. Ambassador
Rankin reported on 5 March that
a high-ranking Nationalist of-
ficial had asked him whether an-
other trip to the United States by
Chiang Ching-kuo might not now
be timely in order to help scotch
reports of a "deal" with the
Chinese Communists.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
POLITICAL CONTROVERSY ON TAIWAN
Criticism of the National-
ist government by Free China,
a fortnightly publis ed 'in
Taipei, has underscored the
political rivalry between liber-
al and authoritarian elements
of the Kuomintang. Several
anti-Communist papers in Hong
Kong have denounced the "un-
democratic action" the Chiang
regime has taken against Free
China. The American consulate
in Hong Kong describes this as
the most serious flare-up among
anti-Communist groups in recent
years.
A call by President ..
Chiang on his birthday last
October for constructive criti-
cism was followed by increased
press criticism of the govern-
ment. Subsequent issues of
Free China included a series of
editorials written from the
United States by its publisher,
Ru Shih, calling for an end to
one-party rule and the aboli-
tion of several security organs.
In December, security boss
Chiang Ching-kuo denounced Hu
in a Kuomintang meeting, and
demanded that the ideology rep-
resented by Free China be
crushed.
The press remains the
principal lever of liberal ele-
ments on Taiwan which favor
the formation of a genuine op-
position party, and reportedly
desire the convening of a
"national salvation conference"
as a step in this direction.
A spokesman for the liberal
group has asked for American
support.
Kuomintang countermeasures--
other than harassment of Free
China--have included the estab-
lishment of a new youth group,
destruction of copies of liberal
periodicals mailed from Hong
Kong, and new emphasis on Sun
Yat-sen as the ultimate source
of Kuomintang ideology. Al-
though the Kuomintang reported-
ly desires an amicable settle-
ment, letters to progovernment
newspapers have called for mob
action against Free China,
President Chiang has been re-
luctant to acknowledge the con-
troversy, observing only that
the people "should refrain
from... destructive attacks"
against the government.
Peiping radio, in an at-
tempt to create dissension be-
tween the United States and the
Nationalists, has alleged that
both Free China and the Hong
Kong papers which have criticized
Taipei are American financed.
PEIPING BEGINS LARGE-SCALE DEVELOPMENT OF HYDROELECTRIC RESOURCES
Communist China, which
claims a hydroelectric power
potential second only to that
of the USSR, has undertaken a
large-scale program to develop
"these resources. Most of its
imposing schemes are still on
the drawing boards, and only
relatively minor projects have
been started. Reports indicate
that work on several large proj-
ects is under way, however, and
more are scheduled to be started
during the Second Five-Year Plan
(1958-1962). Hydroelectric
plants, which produced only 20
percent of the total electric
power generated in China in 1956,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
HYDROELECTRIC POWER PROJECTS
IN COMMUNIST CHINA
Lanch,au
M1ie
izupinedV I a
QrL~canon Il +a ilabl;
t hangt~ ,
Planned Under Operating
construction
O G ? Under 50,000 kw.
o G 0 50,000 to 99,000 kw.
Q Q ? 100,000 to 499,000 kw.
O Q ? 500,000 to 999,000 kw.
O O ?
Major deaeloporent-not delined
(potential or planned capacity)
r~)
f
B U',R M AJ~..i ~` _VIEfiRNAOe?, ,
THAILANCy \.. ,..l i1N\
will be generating 30 percent
in 1962 and 40 percent in 1967.
Of a total of around 1,
700,000 kw. in electric generat-
ing capacity installed since
1949, Peiping has announced
that 450,000 kw. was in hyro-
electric plants and the remain-
der in thermal plants. Some
350,000 kw. was installed at
Fengman, the site of China's
largest hydroelectric plant,
which was stripped ofrmost of
its generating equipment by
the USSR just after.World War
II. Smaller plants have been
built at Kuanting (30,000 kw.)
and Lungchi (24,000 kw.), and
several even smaller plants as
part of the Hwai River conserv-
ancy.scheme..
'FanVuan
~RZt1
IFpA~
(,Poznan \ I
,. N kinK ~. l anAnar
Nanxen? Me sha NOrso~'
~ - - -` Sna nBY~
--n oev P -
~o - no w e a cn n e: ~
x ,9 ~YJti \ w a e
A basin-wide, multipurpose
program has been developed for
the Yellow River, long termed
"China's sorrow." Present plans
call for the construction of 46
dams. Peiping has estimated
that the total theoretical capac-
ity for the entire program is
about 23,000,000 kw., almost
seven times the present national
thermal and hydroelectric total.
The largest installations re-
ported are 1,000,000-kw. plants
for the Sanmen, Liuchia and
Lungyang Gorges. Blueprints
forthe Sanmen project recent-
ly arrived from the Soviet Union,
and preliminary work is under
way at the site. It will be
the first large project on the
Yellow River program to be com-
pleted and will provide power
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7 March 1957
for the industrial
areas around Loyang,
Sian, Taiyuan and
Chengchow.
Joint Sino-So-
viet surveys of the
Amur and Ussuri Riv-
ers, which form part
of the border between
Manchuria and Sibe-
ria, have been made,
and a program for
their joint develop-
ment is being drawn
up in the USSR. A
total of 5-6,000,000
kw. is foreseen to
serve industries on
both sides of the
border.
China's la:
river, the Yangtze,
which rises in a
wild and remote sec-
tion of the Tibetan
plateau, is potence
tially the nation's
Site of hydroelectric station on the Hsinan River in Chekiang Province.
-from China Pictorial, November inn
most important source of hydro-
electric power. Major develop-
ment of the river lies well in
the future, however, and over-
all planning for the river's
development has not yet begun.
Some work has been done on
tributaries of the Yangtze in
Szechwan. Two plants are sched-
uled to be started farther down-
stream during the Second Five-
Year Plan, a 560,000-kw. plant
on the Han River and a.90,000-
kw. one on the Kan. They will
eventually provide power for
industry in the Wuhan area.
Work has begun on a 560,000-kw.
plant on the Hsinan River in
East China. A service railroad
to the dam site is being built
and is expected to be finished
by September. This plant will
supply power to industries in
the Shanghai-Nanking-Hangchow
triangle.
by ORR)
The rapid industrialization
of China led to acute, although
localized, shortages of electric
power last year, and Peiping
has said that investment is to
be concentrated this year in
"lagging" industries, such as
electric power. During 1957 and
in the years following, capital
available for investment in the
electric power industry will be
limited and the cheaper operat-
ing costs of hydroelectric
plants must be weighed against
less costly thermal plants,
which can be put into operation
more quickly. Peiping has
charted a course of investment
in hydroelectric projects, which,
as they begin to produce, will
be of great assistance in creat-
ing new industrial centers
throughout China and in making
possible for the first time a
series of interconnected power
systems. Prepared
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CURRENT INTELLIGENCE WEEKLY S.UMMAR
THE ITALIAN GOVERNMENT'S PARLIAMENTARY DIFFICULTIES
Premier Segni's coalition
government is entering a period
of intensified political maneu-
vering as several of the smaller
coalition parties reconsider
their political alignments.
Although a confidence vote
in the Italian Chamber of Depu-
ties on 1 March reconfirmed
the Segni government by a
285-277 margin, the coalition
may be seriously threatened if
Segni poses additional votes of
confidence on individual arti-
cles of the government's bill
regulating farm contracts.
Segni has insisted on a
compromise bill which gives
landowners the right to dis-
miss farm tenants after a
stated period of years and at
earlier intervals for "just
cause." This has been opposed
by the champions of both "prop-
erty rights" and "workers'
rights," and Segni now appears
willing to permit the Democratic
Socialists and Christian Demo-
cratic labor leaders to amend
the "just cause" provisions.
Conservative elements, however,
profess that they will accept
no further compromise.
The small Republican Party,
which is not represented in the
cabinet and has only five seats
in the Chamber of Deputies,
brought the question of the
government's support to a head
on 24 February when it announced
that it was resuming its free--
dom to vote against the govern-
ment. Without Republican
support, Segni won by only
eight votes.
A key factor in the coali-
tion's future is the position
of the Democratic Socialist
Party, which has four cabinet
posts and 19 seats in the
chamber. Its withdrawal as a
step toward unification with
Nenni's Socialist Party would
automatically cause a crisis.
Although the Democratic Social-
ists are committed to stay in
the government pending further
proof of Nenni's good inten-
tions, their leaders are in-
creasingly concerned about
maintaining a "left-of-center"
posture, which is hampered by
their support of Segni.
Another source of friction
is the 2 March appointment of
right-wing Christian Democrat
Togni as minister of state
participation in business enter-
prise. Togni has been opposed
by left wingers in the cabinet,
and the Democratic Socialists
announced in 1954 that they
would never again serve in the
cabinet with him.
from the scheduled 1958 date.
Segni may still avoid a
showdown by postponing or pro-
longing the debate on agrarian
contracts. All of the center
parties wish to speed ratifica-
tion of the Common Market and
EURATOM treaties. Moreover, a
breakup of the coalition now
would almost certainly lead to
early elections and none of
the parties wishes to take the
blame for provoking a change
FRENCH COMMUNISTS STAGING COMEBACK EFFORT
The French Communist Party
is staging a drive to stem its
continuing membership losses,
which amounted to 70,000 in the
past year. The party leader-
ship hopes to attract the support
of labor by a new campaign for
wage increases and is making
conciliatory gestures to opposi-
tion elements within the party.
On 2 March the party an-
nounced its total membership as
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
287,500, some 70,000 below last
year's figure. The admitted
loss of card-carrying members
was accompanied by a flight of
intellectuals from the party's
front groups over its stand on
Hungary and Suez. A fall in
electoral support was indicated
in the January by-election in
Paris, and a by-election in a
rural department on 10 March
may continue this trend.
Over the past few months
the labor arm of the party, the
General Workers Confederation
(CGT), has suffered losses in
plant elections ranging from 5
percent to 30 percent, while
non-Communist unions have reg-
istered substantial gains.
The Communists' political iso-
lation has also encouraged a
renewal of efforts in the Na-
tional Assembly to ban the
party as a legal organization,
and has led some municipal
councils to cut off various
governmental subsidies to the
party.
The party leadership still
appears to remain firmly in
control--despite faint rumors
in the Socialist Party press
of the replacement of Secretary
General Thorez--and now seems
trying both to conciliate
THE NATIONAL CONGRESS OF THE
The national congress of
the Eduadoran Communist Party
(PCE)--the first in a Latin
American country since the
Hungarian crisis--probably
will convene on 8 March as
scheduled, but in an atmosphere
of political isolation, un-
usual governmental hostility,
and considerable party dis-
sension. Beside the confusion
arising from Soviet policies
on de-Stalinization and the
opposition elements within the
party and to increase its ap-
peal to the French worker.
An important move is the
CGT's new aggressiveness in
pressing for new wage increases
since this line has in the past
proved the party's most effec-
tive issue in maintaining its
position with the workers.
With inflation a growing
threat in France and labor
generally showing an increas-
ing willingness to strike, the
prospects for success in this
Communist effort seem greater
than at any time in the past
year.
tory wkitten by Thorez.
In its conciliatory efforts
Charles Tillon, one of the "hard'
line" group expelled from the
party in 1952, was officially
rehabilitated in February. The
scheduled visit of a party dele-
gation to Yugoslavia appears
to be a compensating concession
to other dissatisfied elements
within the party. The central
committee is also encouraging
increased contact with other
Communist parties and apparently
proposes to complete this year
a round of visits to most of
the Soviet bloc countries. At
the same time, a new party his-
tory is said td be under prepara-
tion to replace the present his-
ECUADOAAN COMMUNIST PARTY
Hungarian revolution, the
party is confronted with a
split in one of its major
front organizations and the
possible loss of its legal
status.
The PCE, which has about
2,000 members and 4,000 sympa-
thizers, maintains its strong
influence in leading labor,
student, and intellectual
organizations in Ecuador. In
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
national elections last June,
its secretary general, Pedro
Saad, was re-elected by direct
union vote as one of the two
senators constitutionally al-
lotted to organized labor.
The party suffered a
serious defeat, however, in
the election of the conserva-
tive Ponce as president over
the candidate of a Communist-
backed coalition of Liberals
and Socialists. The Liberals--
the major element in this coa-
lition--and all the other op-
position parties, except the
Socialist, appear hostile to
the PCE at present. The head
of the Liberals, probably Ecua-
dor's second strongest party,
is organizing an anti-Communist
juridical movement in the hemi-
sphere. The Communists suffered
a further setback in late 1956
when a split developed in the
pro-Communist University Student
Federation. The rightist minor-
ity formed a separate organiza-
tion and withdrew its affilia-
tion with the Communist Inter-
national Union of Students in
Prague.
The Ponce government, how-
ever, is the principal threat
to the party's strength. Ponce,
who demonstrated his stanch
anti-Communist views when he
,was minister of interior, has
stated on several occasions
since taking office last Sep-
tember that he will outlaw the
PCE once his political position
has strengthened, and he re-
portedly plans to exile or im-
prison Saad Ponce also intends
to seek an early pretext for
breaking relations with Czech-
oslovakia--the only bloc nation
with a mission in Quito--an
action with could both damage
the PCE's prestige and sever
its most available direct link
with international Communism.
The party congress--the
first the PCE has held since
1952--will probably center its
fire on Ponce, attacking his
unpopular economic austerity
program and striving to com-
municate to Ponce's sizable
opposition in other parties
the availability of PCE support
in any attempt to overthrow
the government by violence.
The congress may also receive
indoctrination on the present
Soviet line from Saad, who re-
portedly attended conferences
in Prague and Peiping in late
1956. The Ecuadoran congress
may thus foreshadow some of
the new international policies
which may be considered by the
Argentine and Brazilian Com-
munist congresses reportedly
to be held in the near future.
NEW aEVOLUTIONARY PRESSURES IN AaGENTINA
The provisional Argentine
government's concern over plans
for another "Peronista" uprising
is reflected not only in its
recent arrest of certain Peron-
ista, retired military, and
''nationalist" elements, but also
In new concessions to labor and
in various reassuring policy
statements. Skepticism over the
Aramburu regime's stated inten-
tions to hold national elections
impartially and by the end of
1957 threatens to alienate mili-
tary elements, who remain the
key factor in any Argentine
government's stability.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
25X1
A military alert
was decreed on 1 March in the
two northeastern provinces of
Missiones and Corrientes,
which border Paraguay, Brazil
and Uruguay.
tones.
The bulk of the army and
part of the air force are deter-
mined that elections should not
be delayed or influenced by
the regime, and many officers
reportedly remain unconvinced
by official assurances on this
subject. The government's con-
cern over this skepticism is
revealed not only in its re-
peated statements regarding
impartial elections but also
in its evident attempt to con-
ciliate trade union elements.
It has suddenly settled several
labor disputes pending for the
past month and has released a
number of workers arrested for
fomenting labor difficulties
which had strong political over-
USSR MINISTRY OF STATE CONTROL STRENGTHENED
The Ministry of State
Control under Deputy Premier
V. M. Molotov is apparently
re-emerging as a powerful in-
strument of central authority
over certain aspects of the
Soviet economy. This ministry
was one of the government's
economic policemen under Stalin
but had lost importance since
1953.
For the last few years,
the functions of the ministry
:dad apparently been largely
limited to, auditing the finan-
cial records of enterprises.
The reduction of the organiza-
tion's influence was a part of
the Soviet campaign for "So-
cialist legality," designed
to limit the arbitrary power of
control organs of the Soviet
government. Since Molotov's
appointment as minister last
November, however, the organi-
zation apparently has begun
to recover some of its lost
importance.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
An example of the minis-
try's increased activity is its
recent publication of a report
on the pollution of the Caspian
Sea through improper disposal
of industrial wastes.
In addition, an article
in the 28 February issue of the
trade newspaper for the timber
industry suggests that the State
Control Ministry is now exer-
cising certain punitive powers
which it lost in 1948. The
article noted that the ministry
had levied numerous penalties
and had ordered the dismissal
of officials of the Ministry
of Timber and of Kazakh SSR
collective farms for improper
cutting of and accounting for
timber. However, according
to the same article, the
SECRET
Ministry of State Control had
not resumed the practice of
imprisonment; it must still
transfer dossiers to the
public prosecutor for criminal
prosecution.
The decision of the cen-
tral committee plenum last
month called for strengthen-
ing the "organs of state
control," suggesting that the
ministry's functions and powers
may be further enhanced. The
regime probably feels such
strengthening is necessary to
prevent improper use of the
authority which may be dele-
gated to regional officials
under the proposed drastic
reorganization of the Soviet
economy along regional lines
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CONFIDENTIAL
The Hungarian Socialist
Workers (Communist) Party of
Janos Kadar, now numbering
some 200,000 members, is a mere
shadow of the party of Matyas
Rakosi which once numbered more
than 800,000, with its nucleus
of Moscow-trained experts. In
his efforts to build up this
shaky machine, Kadar has been
forced to abandon his original
declarations of moderation and,
despite his regime's condemna-
tion of the former "Rakosi
clique," has resorted increas-
ingly to the restoration of
former middle-level "Stalinists"
to positions of authority. He
has failed completely in his
efforts to attract the support
of the working class necessary
for any kind of a popular base,
and there is evidence that
factionalism remains a problem
within the existing party
organization.
Composition
The hard core of the Com-
munist leadership headed by
Kadar includes a group of "re-
habilitated" former party
leaders who, like Kadar and
Minister of Culture Kallai,
spent long years in prison
under Rakosi. Others, notably
First Deputy Premier Ferenc
Muennich, were excluded for
many years from the top po-
sitions for which their train-
ing in Moscow and previous
services to Communism presum-
ably qualified them.
The leadership is backed
by a group of former Communist
labor leaders of unquestioned
orthodoxy who, however, in the
past apparently favored some-
what more moderate tactics than
those implemented by the Rakosi
regime.
The leadership also in-
cludes certain opportunistic
former left-wing Social Demo-
crats who had collaborated with
the Communists. Their leader,
Gyorgy Marosan, was thrown into
prison on orders of the Rakosi-
Gero clique. These individuals
staff the five-man secretariat
and ten-man executive committee
of the party and hold key gov-
ernment positions. Kadar him-
self is both chairman of the
central committee and premier.
.The major problem con-
fronting the party leadership
is that of finding trained and
experienced individuals of un-
doubted political reliability
to staff the government and
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party apparatus. As a result
of Rakosi's policy of awarding
key positions only to his own
adherents, qualified individuals
are closely associated with
the coercive tactics and dis-
astrous economic policies of
the former regime. Other
technically trained individuals
have fled to the West or are
discredited "Nagyists."
was made president of the sham
People's Patriotic Front, now
being pushed by the regime in
an effort to capitalize on the
popularity the organization
achieved under Nagy's direction.
Finally, former minister
of interior Laszlo Piros
allegedly was brought back to
Hungary to assist Soviet
25X6
Kadar has already placed
reliable Stalinists in key
positions as heads or deputy
heads of ministries. No polit-
buro member eliminated during
the revolution has yet been
restored to the party central
committee, but Jozsef Mekis, a
proponent of heavy industry
who achieved politburo status
security chief Serov in the
interrogation of revolution-
aries captured by the Soviet
forces.
The Opposition
The liberal elements who
supported Nagy, notably the
idealistic writers and
25X6
in April 1955 as a protege of
Gero, now heads the Ministry of
Labor. The ambitious young
Ferenc David, a provincial
party secretary under Rakosi,
journalists who staged the
writers' revolt of 1955 and
inspired the revolution, have
been reduced to impotence.
Their leaders have been
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CURRENT INTELLIGENCE WEEKLY SUMMARY
7 March 1957
arrested or exiled and their
followers denied any forum for
their ideas. Nagy and his
leading supporters--including
Losonczy, Donath and Ferenc
Janosi--are in Rumania, and
the regime is apparently pre-
paring charges of treason
against them. General Pal
Maleter, hero of the revolu-
tionary fighting and now in
prison, has also been accused
of treason by the party press.
Leading intellectuals--notably
Gyula Hay, Tibor Zelk and Tibor
Dery--have been arrested and
may face public trial in the
near future. Exponents of
more liberal agricultural poli-
cies, such as Donath, may be
called to account for jeopard-
izing agricultural collecti-
vization.
Industrial workers--cur-
rently the regime's major ob-
jective of a membership drive
--appear to be resisting in-
clusion in the new party.
Members of the old party, they
are mindful of past Communist
exploitation of labor, insist
that in their Factory Workers'
Councils they already have an
organization, and are reported
particularly resentful over
the dissolution of their revo-
lutionary organization, the
Central Workers' Council. The
regime, is attempting to impose
its own trade union organization
on the dissidents in order to
control them. The anti-Social
Democrat campaign just begin-
ning presumably is also intended
to influence workers to join
the party.
The continued opposition
of youth to the regime is
clearly indicated by recent
arrests and house-to-house
searches for arms in the uni-
versities. Some probably have
turned against "socialism" al-
together as a result of the
Soviet reconquest of Hungary.
Others may still hold national
TOP LEADERSHIP OF THE HUNGARIAN COMMUNIST PARTY
POLITICAL COMMITTEE POLITICAL COMMITTEE LEADERSHIP DURING
17 JULY 1956 18 JULY 1956 REVOLUTION
"STALINISTS" 23 OCT - 4 NOV 1956
RAKOSI
EXECUTIVE COMMITTEE
28 FEBRUARY 1957
GERO GERO (GERO dismissed as first (RAXOSI and GERO in USSR;
HEGEDUS HEGEDUS secretary, 25 October; others under party censure;
HIDAS HIDAS others expelled from the status of REVAI not clear.)
KOVACS- KOVACS politburo, 24 October.)
ACS -ACS
SZALAI SZALAI
BATA BATA
PIROS PIROS
MEKIS MEKIS
REVAI
"MODERATES" (Now Pursuing Stalinist tactics.)
APRO APRO ---APRO APRO
KADAR KADARL- KADAR
KISS -KISS KISS
GASPAR GASPAR
MAROSAN MAROSAN MAROSAN
RONAI -RONAI RONAI
KALLAI KALLAI
KOBOL
MU ENNICH MU ENNICH
BISZKU
FEHER
90MOGYI
NAGY* (Leaders under arrest;
LOSONC ZY* NAGY, LOSONC ZY and
DONATH* DONATH presumably
LUKACS* * still in Rumania.)
SZANTO
KOPACSI"
"Members of committee elected to form new Hungarian Socialist Workers (Communist) Party,
1 November 1956, to replace former Hungarian Workers Party.
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7 March 1957
Communist opinions. The regime
is seeking to force the several
youth groups into line and has
announced its intention of re-
uniting them in a single organ-
ization on the old model.
has influence within the central
committee. No doubt the party
leadership will seek to iron out
such differences prior to the
national party congress which
is promised "within the next
few months."
The government is seeking
to intimidate its opponents by
a show of force but is also at-
tempting to give the appearance
of moderation by emphasizing
such "liberal" institutions as
the Patriotic People's Front
and the workers' councils and
planning for an early convoca-
tion of the national assembly.
In an address to party
members seeking to ascertain
and follow the correct line,
Kadar on 16 January acknowledged
the confusion created when the
regime imitated Rakosi's harsh
tactics and simultaneously con-
demned the party's past overde-
pendence on "state power," i.e.,,
the security police. Party
leaders have been forced re-
peatedly to disavow Rakosi. One
leader, Antal Apro, went so far
as to declare: '"...the dismis-
sal of Rakosi was already timely
in 1953." These attacks on
Rakosi, however, invariably
are combined with much stronger
charges against Nagy and his
adherents for giving support
to "counterrevolution."
One wing of the party is
pressing for measures more ex-
treme than any the Kadar regime
has been willing to take to
suppress opposition. In sharp
criticism of this attitude, the
central committee resolution of
28 February denounced as "'un-
comradely and intrigue-seeking"
attempts to restrict the member-
ship of.,the party, declared
that recruitment of new members
was lagging in Budapest and the
provinces, and directed that
former party members who regis-
tered by 1 May were to be ad-
mitted to the new organization.
On the other hand, Kadar
has found it necessary in press
articles to condemn "revision-
ism," suggesting that a moder-
ate "reformist" element still
Kadar is gradually being
forced to abandon his original
moderate policies in favor of
coercion and suppression. First
Deputy Premier Muennich has de-
clared, for example, that judges
must apply the "utmost severity
of the law" against the "enemy."
To implement these hard policies,
party leaders have organized a
new security force, under Muen-
nich's henchman, Laszlo Matyas,
and founded a workers' militia.
To restore party discipline
and meet the demands of the
Kremlin, the regime may have to
stage trials of Nagy and his
supporters, although such trials
would evoke violent popular re-
sentment among Hungarians. It
might also simultaneously try
such former Rakosi supporters
as ex-minister of defense Mihaly
Farkas and his son for viola-
tions of "socialist legality."
Finally, Kadar's reported ref-
erence to Nagy's alleged con-
nections with Cardinal Mindszenty
suggest that the latter might
also be charged with supporting
counterrevolution, as a warning
to party moderates who have be-
lieved concessions might be made
to the church in the interest
of national unity.
Kadar himself is in an
ironical position: an old Com-
munist labor man, he has evoked
the desperate opposition of the
industrial workers; a bitter
personal enemy of Rakosi, he has
been forced to resort to many of
the same tactics he once excori-
ated: Reportedly hand-picked as
party chief by Mikoyan and Suslov,
Kadar is for all practical pur-
poses the prisoner of the Soviet
occupation forces in Hungary.
He is said to be disillusioned
and dejected by the knowledge
that he is universally hated by
the Hungarian population.
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7 March 1957
THE UN DISARMAMENT NEGOTIATIONS IN LONDON
The UN Disarmament Subcom-
mittee, scheduled to reconvene
on 18 March in London, will
probably give priority atten-
tion to (1) reduction in con-
ventional armaments; (2) re-
solving outstanding differences
on international control, look-
ing for agreed areas where tests
of control and inspection tech-
niques could be made; and (3)
a study of possibilities for
agreement on limitation of nu-
clear test explosions either as
part of a disarmament plan or
separately. In addition, the
subcommittee will probably con-
sider the question of projec-
tiles entering outer space and
the control of long-range sub-
marines.
The subcommittee, consist-
ing of the United States, the
USSR, Great Britain, France,
and Canada, was directed by the
General Assembly to "give prompt
attention" to disarmament pro-
posals submitted by countries
other than the four big powers
represented on the subcommittee.
Unless there is the prospect
of some measure of accord, the
talks are likely to recess after
five weeks, or just prior to
Easter.
Anglo-French Plan
London still believes that
the Anglo-French plan of 19
March 1956 is the "best basic
guide" for a comprehensive dis-
armament plan, However, accord-
ing to a statement made on 15
January by Britain's r.hi.P.f TIN
delegate, London is prepared to
participate in a partial dis-
armament plan provided that
states would not be expected to
"deprive themselves of weapons
on which they relied the most
to deter aggression,"
The Anglo-French plan,
originally designed as a syn-
thesis of Soviet and Western
positions, provides for conven-
tional and nuclear disarmament
in three stages. Initiation of
each stage is conditional on
satisfactory completion of the
preceding stage. The plan in-
corporates President Eisenhower's
proposal for the exchange of
military blueprints, Premier
Bulganin's plan for establish-
ing control posts at key trans-
portation centers, and former
French premier Faure's proposal
to allocate savings from reduced
military expenditures to im-
proving standards of living.
French disarmament delegate
Jules Mach still regards him-
self as the chief moderator
between East and West on dis-
armament. On 25 January he
stated that the latest American
proposals "marked a great step
forward toward rapprochement,
while elements in the 17 November
Soviet proposals gave hope that
between 'all' and 'nothing'
something was becoming possible,"
USSR Proposals
On 17 November, the same
date on which it announced the
successful completion of another
nuclear test, Moscow issued a
new "seven-point" disarmament
statement which again called for
an immediate ban on nuclear
tests. The plan is primarily
a redraft of previous Soviet
disarmament proposals, couched
in language designed for maximum
propaganda benefit but avoiding
the key questions of adequate
control and inspection. The
only new feature of the plan is
the expression of Moscow's read-
iness to "examine" the question
of using aerial photography for
inspection of a zone in Europe
comprising 500 miles on each
side of the line between Soviet
and Western 'orces. Soviet
delegate Kuznetsov, in his UN
disarmament statement of 14
January, stressed the importance
of the USSR's 17 November pro-
posals and accused the Western
powers of reneging on their own
proposals when they were accepted
by the Soviet Union,
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7 March 1957
Although the USSR had .
agreed in December to hold the
March subcommittee meetings on
the ambassadorial level, Kuz-
netsov on 7 February proposed
that the meetings be elevated
to the foreign minister level.
The purpose of this move appar-
ently was to create the impres-
sion that the USSR is continu-
ing its attempts to reach a
disarmament agreement and to
place the onus for rejecting
this proposal on the Western
powers. According to the press,
Soviet spokesmen at the United
Nations have said that Foreign
Minister Gromyko will attend
the meetings in any .event.
US Proposals
On 14 January, Ambassador
Lodge outlined to the UN xen-
eral Assembly in broad terms
five United States proposals,
the specific details of which
are to explained in the sub-
committee meetings. These
proposals are: (1) under inter-
national supervision, to use,
or stockpile, "exclusively for
non-weapons purposes" all fu-
ture production of fissionable
materials both with subsequent
allocations to peaceful pur-
poses of material from past
production; (2) to limit, and
ultimately eliminate all nu-
clear test explosions; (3) to
initiate a first-stage reduc-
tion, under adequate inspection,
of conventional armaments and
armed forces, using as a basis
2,500,000 men for the United
States and the USSR and 750,000
for France and the United King-
dom; (4) to bring under inter-
national control the testing
of outer space objects; and
(5) to install, by progressive
stages, inspection. systems
which will "provide against the
possibility of a great surprise
attack."
Nuclear Test Proposals
The establishment in 1955
of a UN committee to study and
report on radiation effects has
not appreciably diminished the
world-wide apprehension about
nuclear testing. This apprehen-
sion was voiced by a majority
of UN members at this General
Assembly and led to an endorse-
ment by these members of a pro-
posal for advance registration
of nuclear tests. This proposal,
which was put forward in final
form by Canada, Norway and
Japan, was referred to the sub-
committee for further consider-
ation. Most members expressed
the hope that advance registra-
tion would be the first step
toward limitation and eventual
elimination of all nuclear
testing.
During the subcommittee
discussions, Canada will prob-
ably reiterate its proposal
that the nuclear powers agree
not to increase the level of
testing over that of last year,
and that these powers voluntar-
ily set a.specific limit on the
number of tests.
India has.-long been dis-
satisfied with the work of the
disarmament subcommittee and, on
25 January, Krishna Menon urged
that nuclear tests be suspended
and expressed the hope that
the subcommittee would realize
that mere limitation of testing
would only "give the evil a
longer spell of life," The
Indian government, because of
its concern for an armaments
truce and a ban on testing, ex-
pects a specific report on
actual and expected world
radiation "at an early date."
Other Proposals
A Yugoslav suggestion that
the subcommittee adopt the
method of "partial initial
agreement" has been referred to
the subcommittee by the General
Assembly. Yugoslavia proposes
that the subcommittee seek early
agreement on such initial dis-
armament measures as reduction
of conventional armaments and
armed forces, cessation of nu-
clear tests, and reduction of
military expenditures.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
In addition, proposals to
increase the size of the sub-
committee and the Disarmament
Commission have been put forth
by the Soviet bloc and endorsed
by various UN members, particu-
larly the Asian states. Any
increase in the size of these
bodies, however, must be de-
cided by the General Assembly,
and most UN members still seem
agreed that disarmament nego-
tiations should take place among
the powers principally concerned.
Iran, almost brought to
bankruptcy by the economic
policies of former prime minister
Mossadeq, now is in a relatively
sound financial position. Oil
revenues, amounting to over $150,-
000,000 last year, are consider-
ably higher than before nation-
alization in 1951. With these
revenues assured, Iran is em-
barking on an ambitious Seven-
Year Economic Development Pro-
gram. Oil revenues are more
0) BAGHDAD
USSR
3''.,.Y
RAQ,
:eh
TEHRAN
Hamadan Qum
NEW 0IEFIEID1f
Swamp
Salt waste
;r Intermittent lake
7 MARCH 1957
MILES 300
oShiraz
than adequate to cover all ex-
penditures envisioned, but in-
efficiency and corruption will
probably limit the benefits
Iran will receive from the plan.
Iran's Moslem but non-
Arab population of about 19,-
000,000 is adequate to assure
the country's steady economic
growth if technological improve-
ments are carried out in agri-
culture. Because of the coun-
AFGHAN.
SECRET
try's size--628,000
square miles, about
a fifth the size of
the United States--
and the rugged ter-
rain--which includes
large areas of jungles,
deserts, mountains
and swamps--a major
part of the population
is isolated, making
economic progress and
political control dif-
ficult. The substan-
tial planned spending
on the road and rail-
road network in the
near future is appar-
ently an attempt by
the central government
to establish and main-
tain effective control
in these areas.
Persians have no
racial or linguistic
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affinities with the Arabs, and
appeals for Arab unity have
little effect in Iran. Cogni-
zant of their long recorded
history and the high cultural
level reached in ancient times,
Iranians tend to assume un-
consciously a superiority over
the Arabs, whom they regard as
semicultured tribesmen. Even
Islam, the only common link
with the Arabs, was changed
markedly when it was accepted
by the Persians and, although
Tehran often gives lip service
to common Moslem aspirations,
Arab appeals on a religious
basis usually leave Iranian
policy unaffected.
The Iranian government has
little love for most Arab
states, partly because of their
opposition to the Baghdad pact
and their anti-Western policies,
and partly because they offered
only token support in 1951-53
when Iran nationalized its oil
industry. Since the Arab
states took advantage of Iran's
nationalization crisis to
sharply increase their own pro-
duction, Tehran now feels no
obligation to support Arab oil
policies by interfering with
the production and marketing
activities of the consortium
operating the Iranian oil in-
dustry. Despite the Arab boy-
cott of Israel, Iran has con-
sistently supplied about 60
percent of Israel's petroleum
requirements.
The Suez crisis, which
sharply reduced oil revenues
in the Arab countries, actually
increased the income of Iran,
the only major, non-Arab
petroleum-producing country in
the Middle East. When Saudi
Arabia, following the British
invasion of Egypt, cut off oil
supplies to the refinery on
British-controlled Bahrein
Island, Iran readily increased
production to help make up the
deficit.
Before the Suez crisis,
Iran produced about 17 percent
_~
of all Middle East crude oil.
Crude production, however, is
still somewhat below the level
reached before nationalization
and output is not expected to
reach the 1950 high until next
year.
While production has not
yet regained the 1950 peak,
revenues have increased mark-
edly. Total oil revenues in
fiscal 1950-51 were about
$44,500,000 and crude produc-
tion about 32,000,000 tons.
In 1956--as a result of con-
siderably more favorable royalty
payments--revenues were about
$152,400,000, while production
reached only 25,400,000 tons.
Seven-Year Development Plan
The Seven-Year Development
Plan law of 27 February 1956
provided that about 60 percent
of oil revenues for the first
three years and 80 percent
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IRAN
SEVEN-YEAR DEVELOPMENT PLAN 1956-1962
ALLOCATION OF INVESTMENT
HEALTH &
DEVELOPMENT
W A 6,J6
$137,970,000
12.6%
IRRIGATION &
MULTIPURPOSE
123,450,000
TOTAL $1,072,400,000
POPULATION DISTRIBUTION BY
ECONOMIC SECTOR
(ESTIMATED)
I
TRADE
TOTAL 19,000,000
during the last four years of
the plan would be allocated to
economic development. Despite
this relatively assured source
of revenues--totaling about
$1.072. billion--the development
plan will probably become bogged
down because of inexperience,
inefficiency and corruption.
Corruption is a more or less
socially acceptable form of
behavior in Iran. No annual
budget has yet been produced
and funds are expended haphaz-
ardly and without adequate rec-
ords. This has led to the
,epuiar belief--probably
correct--that some development
funds find their way into the
pockets of various officials.
Perhaps the plan's most
serious shortcoming is the lack
of trained person-
nel. Abol Hassan
Ebtehaj, the present
head of the plan,
while apparently
competent, is per-
sonally disliked by
most Iranian politi-
cians, who take
every opportunity to
block his projects.
Roads and Industry
The largest
single category of
planned expenditures--
over $214,000,000--
is allocated for the
expansion of the
country's road net-
work by about 15,525
miles. Despite the
magnitude of this
program, no estimates
of the benefits the
proposed roads would
bring have been made
nor has there been
any recognition of
the differences in
soil mechanics in
various parts of the
country. Main roads
through desert areas
are designed approx-
imately to the same
specifications as
roads cut through the mountain-
ous areas. As a result, a
major portion of the roads
will probably not be completed
during the plan period. Iranian
industry, largely state-owned
and principally textile workers,
is to receive a relatively
small share of development
funds.
Agriculture
The value of Iranian agri-
cultural output is roughly es-
timated to be $813,000,000--
almost 5.5 times oil revenue.
Thus, Iran is unique among
Middle East oil producers in
that it is not exclusively
dependent on oil. Despite its
importance, Iranian agriculture
is primitive, exceedingly
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CURRENT INTELLIGENCE WEEKLY SUMMARY
wasteful, poorly managed and
largely limited to the north-
ern portions of the country.
For the most part, there is
little peasant incentive be-
cause of the land tenure sys-
tem, which permits about 1
percent of the landowners to
own about 60 percent of the
land. The planned direct in-
vestment allocation for agri-
culture in the Seven-
Year Plan is rela-
tively
low--about 12
percent
or approxi-
mately
$123,450,000--
suggesting that there
is a serious im-
balance in the devel-
opment plan.
Despite the
rugged nature of much
of the country, be-
tween 22 and 31 per-
cent of the total
land area is potenti-
ally cultivable--
from 86,000,000 to
124,000,000 acres,
percent of the cultivated area
receives partial irrigation,
but the lack of water has kept
large areas of otherwise fertile
land out of use. The Elburz
and Zagros mountain ranges
roughly divide the country
laterally causing some rivers
to run north to the Caspian
Sea and others to flow south
to the Persian Gulf; still
IRANIAN _$EYEN YEAR__ V_ELopM!NT PLAN
MrL~LisNS oP DDLinRs"" ?TOTAL EXPENDITURES $1,072,400,000
"= PLANNED EXPENDITURE
7 MARCH 1957
but only 11,119,000 acres are
now in crops and about
31,000,000 acres are fallow.
Agricultural production could
thus be substantially increased
without an expansion of the
presently cultivated area.
Irrigation
An expansion of Iranian
agriculture would depend on
better technology and improve-
ment in the land tenure system,
and most of all on an extension
of irrigation. Some 30 to 40
LI EXPECTED REVENUE
others are dissipated in
desert regions.
Except for small local
dams, Iran depends on an
ancient system of underground
conduits called qanats for
nearly 75 percent of its ir-
rigation needs. Qanats, which
vary from a few hundred feet
to 50 miles in length, are
constructed by digging a series
of holes about three feet
wide and from 30 to 300 feet
deep. The holes are connected
by an underground tunnel so
TYPICAL IRANIAN ?QANAT
IRRI ATION SYSTEM
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designed that the water reaches
the surface at the desired
location.
While. there is no provi,
sion in the Seven-Year Plan
for expanding or improving the
network of qanats, some recon-
struction and expansion is go-
ing on under private and Point
IV initiative. Because of the
high cost of maintenance, how-
ever, it would appear that
qanats will eventually have to
be replaced by mechanically
lifted water.
Three major river projects
are embodied in the Seven-Year
Plan. The $47,000,000 Sefid
River project near the Caspian
Sea calls for the construction
of a dam at the confluence of
the Kizil-Ozan and the Shah
Rivers which will create a
reservoir with a gross storage
of 1.5 billion cubic meters.
The waters are expected to
provide irrigation for almost
250,000 acres of rice land,
which could increase Iran's
present rice production of
about 450,000 tons by 40 per-
cent.
SECRET
The Saveh and Doroodzan
River projects are designed
largely for irrigation, although
some electric power will be
produced. These projects, how-
ever, are only in the early
planning stages and construc-
tion is not likely to begin
before 1958. Together the cost
is estimated at about $83,000,-
000.
Construction of the $51,-
000,000 Karaj River project
might begin soon. Preliminary
work has been going on for about
three years but has run into
continual financial difficul-
ties. The expected reservoir
will be relatively small--
about 205,000,000 cubic meters--
and irrigation will be limited
to about 19,000 acres. How-
ever, the project will supply
Tehran with additional drinking
water and electricity.
The successful completion
of the major portion of the
Seven-Year Development Plan is
necessary if the economic and
social conditions of the popu-
lation'are'to be improved notice-
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