CURRENT INTELLIGENCE WEEKLY SUMMARY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A001200020001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 36
• Document Creation Date: December 20, 2016
• Document Release Date: August 15, 2005
• Sequence Number: 1
• Publication Date: October 18, 1999
• Content Type: SUMMARY

toNFtDENTIAL
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(CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
COPY NO. 17
OCI NO. 1417/57
28 March 1957
DOCUMENTNo-
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CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
CONFIDENTIAL
9
l4~?`ryM1~'-i ~~+~~~ 25X1
State Department review completed
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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No-or CONL AL
Hammarskjold's Efforts
UN Secretary General Ham-
marskjold apparently obtained
in his talks in Cairo some
small adjustments in Egypt's
position regarding the opera-
tion of the Suez Canal, and
some assurances that Nasr does
not intend to make any sudden,
drastic move on the question
of navigation of the Gulf of
Aqaba. However, he'had little
progress to'show on the Gaza
strip issue.
Egyptian-Israeli relations
were the subject of Hammar-
skjold's early interviews with
Nasr. An agreement appears to
have been reached that the
UNEF should exercise some po
lice powers in the Gaza strip,
if only to protect its own
equipment. On the more basic
question of the future over-
all role of the UNEF, the Egyp-
tian leader seems to be willing
to keep the UNEF as a buffer' force
to protect the strip---and the
Sinai--from possible Israeli
military action, even if the
Israelis refuse to allow UN
troops on their side of the
border.
Nasr reportedly considers
the Gulf of Aqaba .issue as a
secondary question at this
stage, and indicated he would
not seek to replace the small
UNEF contingent at Sharm al-
Shaikh with Egyptian troops.
It appears that Nasr is con-
tent for the time being to let
Saudi Arabia bear the burdeni
of argument against the Israeli
claim to freedom of navigation,
while he gives an appearance
of reasonableness by allowing
CO-YL tD1-
hints that Egypt would abide
by a decision of the Interna-
tional Court of Justice.
The burden of the six- and
eight-hour marathon talks over
last week end, however, was
the future of the canal. Ham-
marskjold reportedly believes
his task was complicated by
Krishna Menon, India's rov-
ing diplomat who had visited
Cairo just before the secretary
general arrived there and who
may well have excited Nasr's
suspicions of the Western pro-
posal on canal tolls. What
Haminarskjold got from Nasr was
essentially an elaboration of
the Egyptian memorandum of the
previous week. Nasr agreed to
set aside 30 percent of the
canal toll income--25 percent
for development work and 5
percent for compensation to
the stockholders of the Suez
Canal Company. Egypt would,
however, deposit the tolls,
which are authorized to be paid
to the account of the Egyptian
authority, either with the
Bank of International Settle-
ments (BIS) in Switzerland or
the National Bank of Egypt.
The use of the BIS, an inter-
national "bankers' bank" which
acts as agent for central banks
in the European Payments Union,
may be designed to appear as a
concession, though it in fact
in no way affects Egypt's ex-
clusive control of the funds.
Nasr reportedly believes
that these proposals will in
fact be the permanent settle-
men?t of the canal issue, rather
than the interim arrangement
which the West has sought be-
fore final settlement. According
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CURRENT INTELLIGENCE WEEKLY SUMMARY
to the memorandum, Egypt ex-
pects to open the canal to all
shipping in mid-April.
The Israelis have assumed
an air of disinterest in Ham-
marskjold's negotiations. Is-
raeli foreign minister Meir .
told Ambassador Lawson that she
doubted the secretary general
would come to Israel, since
he would not have anything
worthwhile to bring, Israeli
spokesmen have continued their
propaganda war against Hammar-
skjold personally, whom they
assert is unfavorably biased
in regard to Israel, and against
the UN generally, which they
now accuse of merely protecting
Egypt and other Arab states
from the consequences of their
folly. .
Hammarskjold did not even
try to visit Israel as he had
planned, reportedly because he
was informed he would not even
be given an interview with
Prime Minister Ben-Gurion.
Jordan
The political scene in
Jordan remains confused. No
significant overt moves have
been made by the king and his
conservative allies or by the
leftist influences which domi-
atmosphere in Amman is such
that Prime Minister Nabulsi has
announced, without contradic-
tion, that his government is
determined to recognize Com-
munist China. In a speech to
a labor union rally, Nabulsi
referred to alleged similari-
ties between the Chinese and
the Arabs, who had both "thrown
off the imperialist yoke."
Saudi Arabia-Lebanon
Saudi Arabia and Lebanon
meanwhile have issued a com-
munique stating among other
aims their determination to
fight the expansion of Communist
influence. This statement was
a product of Lebanese president
Chamoun's visit to Riyadh--one
of a, series of meetings between
King Saud and pro-Western lead-
ers in the Middle East. Saud,
who previously enjoyed a visit
from the Shah of Iran, has also
to Baghdad next month.
recently entertained the
Sudanese prime minister and
will, follow the Sudanese party
THE ATTACK ON THE MOLLET GOVERNMENT
The general policy debate
which started on 14 March in
the French National Assembly
has brought out more and sharper
opposition to the Mollet govern-.
ment than had heretofore been
evident. The debate revealed
a new critical attitude on the
part of the right-center and a
more serious threat to Mollet's
position than any since he took
office in January 1956.
Prior to last week, Mollet's
domestic prestige had.been
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CURRENT INTELLIGENCE WEEKLY SUMMARY
considered to be appreciably
stronger as a result of his
visit to Washington and France's
good showing in the UN debate
on Algeria. His position was
put in a new light by the heavy
attacks on government policies
on a variety of topics ranging
from constitutional revision to
Algeria, but' chiefly on economic
and financial questions.
A broad segment of politi-
cal opinion has been increasing-
ly alarmed over France's dwin-
dling monetary reserves, the
growing inflationary trend, and
the inadequacy of Mollet's
measures to correct these weak-
nesses. The prospect of budget
cuts, particularly in military
appropriations, has split his
cabinet, and Finance Minister
Ramadier's inept defense of
government policy before the
assembly did little to appease
his critics among the Radicals
and conservative Independents.
Moreover, Ramadier's hint of
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new taxes further irritated
this element in the assembly.
The government's North
African program has also en-
countered growing opposition
from right-wing groups, which
want a stronger policy toward
Morocco and Tunisia, as well
as Algeria. Minister Resident
in Algeria Lacoste's lengthy
defense of French policy failed
to win back supporters lost
over economic problems, despite
his efforts to water down the
conciliatory aspects of the
Algerian program announced by
Mol]'.et on 9 January.
During the debate, the
premier was forced to concede
that: the fate of his minority
government of Socialists and
some Radicals and Social Repub-
licans rested largely in the
hands of the conservative Peas-
ant and Independent bloc, which
controls 100 votes. On the two
major issues of Algeria and
FRENCH NATIONAL ASSEMBLY
PARTY STRENGTH IN LEGISLATURE
46' 113 20 13 21
POPULAR
REPUBLICANS
74
596 SEATS
PARTIES REPRESENTED IN GOVERNMENT
OVERSEAS
INDEPENDENTS UNION
AND FRENCH
PEASANTS
FRATERNITY
/(POUJADISTS)
INDEPENDENTS 14
AND SOCIAL 39 UNAFFILIATED
ACTION 13
PEASANTS
87
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finances, this group has made
it clear that its support is
increasingly tenuous. Its
secretary general has implied
that its future position will
be determined more and more by
the extent to which the ground-
work can be laid for an alter-
native government.
Planning for an alternative
right-center government has
hitherto been inhibited by the
reluctance of right-center
elements to provoke a crisis
while such questions as a Suez
settlement and ratification of
ness .
the EURATOM and Common Market
treaties were still pending.
The political arithmetic
of the National Assembly has
also been a major source of
Mol:Let's strength. Since any
successor government would
probably require either the
support or the acquiescence of
the 100 Socialist votes he
controls, Mollet has frequently
been able to use the confidence
vote- in broad policy debates
to win grudging support. Now,
however, these tactics appear
to be, l.osinir their effective-
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CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
NOTES AND COMMENTS
REACTIONS TO THE BERMUDA. CONFERENCE
Most European comment on
the Bermuda conference of Pres-
ident Eisenhower and Prime Min-
ister Macmillan has enthusiasti-
cally endorsed "the restoration"
of Anglo-American harmony, but
in the Middle East and South
Asia, countries not members of
the Baghdad pact have vented
their resentment,
The British press with
rare unan y has applauded
the conference for restoring
"close and friendly relations"
with'the United States. This
contrasts with the cool ad-
vance notices the meeting re-
ceived. Most comments credited
Macmillan with achieving far
more than was expected and
suggested he scored many points.
The only important sour note
appeared in some criticism'of
tue decision to continue tests
of nuclear weapons,
In France official quarters
have expressed "great satisfac-
tion" over the'agreement be-
tween France's two major allies,
but the press has added criti-
cism that their differing views
on methods left the prospect of
joint Western action in the
Near East crisis still pending.
There also appeared some hints
from Paris that Western "Big
Three" relations would not be
restored to their pre-Suez
status until the three meet
together again--thus suggesting
that French eyes will be focused
on the NATO ministerial meetings
in early May. The comparatively
limited reaction to Bermuda re-
ported from other European
countries has been generally
favorable.
In the Middle East, all
Baghdad pact powers welcomed
the American offer to join the
pact's military committee.
King: Saud has not yet mentioned
the matter of the Baghdad pact
to Ambassador Wadsworth, but
one of his principal advisers
has condemned the American of-
fer. Indian press comment has
also attacked the pact announce-
ment.
The Arab press has been
almost universally hostile to
the very holding of the con-
ference, taking it as evidence
that the United States is again
in league with the "arch-
imperialist." Damascus radio
reminded "the two states that
the source of all troubles in
the Middle East is the attempt
of certain big powers to make
decisions on Middle Eastern
affairs without reference to
the Arabs or asking their opin-
ion,;" Behind a similar charge
from Nasr's controlled press--
that Arab problems had been
ignored at Bermuda--lies the
complaint that the United States
and Britain are concerting
together, which has the effect,
of restricting the Arab states
freedom of action.
The central theme of Soviet
propaganda on the conferencee5~s-
been its alleged failure to
overcome acute Anglo-American
disagreements. (For another
aspect of the Soviet treatment,
see the following article.)
Soviet broadcasts to the United
Kingdom have concentrated on the
themes of British concessions to
the:US and American.:domina-
tion of British policy to the
detriment of British interests
Moscow's comments beamed
to the Arabs portray Anglo-
American rivalry as secondary
to the pursuit of common "colo-
nialist" aims in the Middle
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CURRENT INTELLIGENCE WEEKLY SUMMARY
East. The American decision to
adhere to the Baghdad pact mili-
tary committee was described
as further proof of the aggres-
sive aims of the American Middle
East proposals. Pravda com-
mented on 26 Marcftt a "there
is no difference between the
colonizers' Baghdad pact and
the colonialist policy expounded
in the Eisenhower Doctrine" and
Moscow radio charged that Amer-
ican adherence. to the military
committee, following the "proc-
lamation of the Eisenhower
Doctrine," destroys "the myth
of the anticolonialism of the
United States."
USSR PRESSES PROPOSAL FOR
On 26 March Soviet Foreign
Ministry press chief Ilychev
announced that the USSR is pre-
pared to conclude an agreement
for the "temporary" suspension
of nuclear tests. This was
intended to counter the Bermuda
proposal for advance registra-
tion of tests with the UN and
"limited international observa-
tion" of tests. It was also
designed to contrast Moscow's
demand for immediate suspension
with the Anglo-American posi-
tion that "continued nuclear
testing is required" to main-
tain the West's nuclear deter-
rent capability.
This modification of Soviet
demands over the past year for
an agreement to ban nuclear
tests independent of other dis-
armament problems provides
further evidence of Moscow's
determination to focus world
attention on the test issue and
its belief that the United
States and Britain are particu-
larly vulnerable on this point.
The Soviet leaders are seeking
to develop this into a major
Chinese Communist comment
on the con erence o owed the
Soviet line, charging that
alleged American efforts to
"control" and "supplant" the
British will be a source of
continuing conflict between the
two countries. Peiping asserted
that British hopes for any real
concessions were disappointed,
and that MacMillan was compelled
to approve measures which would
increase Washington's domination.
American adherence to the mili-
tary committee,of the Baghdad
pact, according to Peiping, was
a move to edge the British out
"colonialists."
and take over their role as
SUSPENDING NUCLEAR TESTS
international issue and to ex-
ploit growing sentiment among
numerous groups and several
governments for a complete
cessation of nuclear tests.
Ilychev gave special at-
tention to Japan's recent note
to the members of the UN Dis-
armament Subcommittee requesting
a suspension of tests, He said
the Japanese appeal to the USSR
"gives reason to believe that
the Soviet proposals for a per-
manent--or at least temporary
--cessation of atomic and
hydrogen tests will be supported
by the Japanese government."
The Soviet delegate to the
London disarmament talks has
stressed the support of India,
Japan "and a number of other
courtries" for a ban on testing,
He has also proposed that India,
Yugoslavia, Norway and Japan be
invited to appear before the
subcommittee since they are
sponsors of proposals--all re-
lated to banning or limiting
nuclear tests--that the sub-
committee is to consider.
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41row, *Wool
CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
Soviet defense minister
Zhukov recently departed from
the standard Soviet propaganda
line when he described nuclear
weapons as the decisive element
in a future war. In a speech
to the All-Army Conference of
Distinguished Army Men on 16
March, he rejected arguments
that no one would ever use
atomic weapons because of fear
of mutual destruction. He
asserted that atomic weapons
would be the main means for
defeat, and would be introduced
on a wide scale as a standard
weapon.
This is the first time a
Soviet leader has publicly
given such weight to the role
of atomic weapons. In August
1956, in answer to questions
submitted by an American cor-
respondent, Zhukov rejected
the suggestion that air forces
equipped with nuclear weapons
are the dominating aspect of
armed forces, and said that
nuclear weapons cannot, by
themselves, decide the issue
of an armed struggle. Similar
remarks, emphasizing balanced
forces, and conventional weap-
ons. as essential corollaries
to nuclear weapons, have typi-
fied Soviet statements on the
character of future warfare.
Zhukov's latest statement
may be in part a reaction to
President Eisenhower's announce-
ment that the United States
will station atomic support
commands abroad to bolster the
defense forces of other free
world nations. Soviet propa
ganda seems to have been in-
tended primarily to intimidate
the prospective participants
in the American plan.
Zhukov implied in his
speech that the United States,
as well as the other NATO
countries, is vulnerable when
he called American calculations
naive and said that the Soviet
air force is "able to deal
crippling blows to the enemy
wherever he is, wherever he
hides." Furthermore, he added
that the USSR is also subject
to nuclear attack, a point
generally ignored in Soviet
statements.
in by OSI)
Zhukov's speech may have
been released with the idea of
influencing the current disar-
mament negotiations in London.
The USSR has maintained that a
major step in any disarmament
program is the elimination of
nuclear weapons from national
armaments. Concurred 25X1
SOVIET UNION WARNS NORWAY ON' NUCLEAR BASES
Premier Bulganin's letter
of 21 March to Nrwegian pre-
mier Gerhardsen.warned against
any expansion in Norway's mili-
tary commitments to NATO.
The blunt warnings to Nor-
way were contained in an other-
wise moderate note aimed osten-
sibly at exploring ways of con-
tinuing the improvement of
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relations between the two
states. Bulganin warned that
the Norwegian people "might
have to pay dearly" if Norway
became a base for atomic
attack on the Soviet Union,
since the USSR would be forced
to retaliate with a "destructive
blow against the aggressor and
also against the bases which
are located near our borders."
The most immediate purpose
of this letter was probably to
deter Norway from accepting
new missiles and rockets which
can be equipped with atomic
warheads. It also was intended
to warn against any Norwegian
decision to change its policy
of barring foreign troops from
its soil, as applied to Ameri-
can forces equipped with atomic
weapons. Although Bulganin
said he was not asking for early
Norwegian renunciation of NATO,
he warned that as long as Norway
is a member, its territory and
bases will be used by NATO
forces in wartime and it will
therefore be exposed to re-
taliatory attack.
The propaganda campaign
against American plans to.
station atomic-equipped units
abroad has been pressed
strongly in a number of.coun-
tries, beginning with a TASS
statement in January warning
against the risks of Soviet
retaliation. The letter to
Norway is the first formal
communication, but there have
been a number of informal
diplomatic warnings to other
countries.
There have also been re-
ports that the Norwegian and
Danish Communist Parties have
been instructed to step up
their anti-NATO campaign;
these parties have already been
warning against the introduction
of atomic weapons.
Efforts of National Party
chairman Suwirjo to form a "bus-
iness cabinet," in accordance
with President Sukarno's instruc-
tions of 25 March, appear likely
to be undermined by the attitude
of the Nahdlatui Ulama (NU),
Indonesia's third largest party.
A business cabinet, by
Indonesian definition, is formed
of "experts," irrespective of
party affiliation. Formateur
Suwirjo is accordingly approach-
ing possible ministerial candi-
dates as individuals rather than
as party members. The NU, how-
ever, continues to regard cabi-
net negotiations from a partisan
position, and has reportedly
ordered its members not to
accept posts in the cabinet
without the party's approval.
Kasimo have both been quoted
as stating that their parties
wil:L not participate in the new
administration should Suwirjo
invite Communists or even fellow
travelers to join it. There are
other indications that the NU
has aligned itself with the
anti-Communist Masjumi and non-
Javanese areas generally in the
demand that former vice president
Hatta be given important politi-
cal responsibility in the govern-
ment.
President Sukarno resorted
to the idea of a business cabi-
net after Suwirjo had failed in
a :LO-day effort to form a parlia-
mentary cabinet. Suwirjo's
initial failure was also caused
by the NU,which, in opposition
to terms imposed by. Sukarno, had
insisted on including the Masjumi
NU deputy chairman Dachlan in a non-Communist cabinet.
and Catholic Party chairman Sukarno apparently hopes a
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CURRENT INTELLIGENCE WEEKLY SUMMARY
business cabinet can side-step
Moslem demands and permit the
formation of a cabinet which
either includes both Masjumi
and Communist representatives
or excludes them both.
The Communist Party has
threatened a nationwide strike
by Sobsi, the Communist-
controlled and largest labor
federation in Indonesia, if
the Masjumi is included in the
cabinet and the Communists are
barred. Army headquarters and
the territorial commanders,
however, reportedly have agreed
to deal "ruthlessly" with any
strikers.
The army, through the chief
of ,staff, has warned that it
plans to stamp out corruption
in government--one of the basic
causes of the current crisis.
In this connection, several
prominent political leaders
have already been called in for
questioning by military authori-
ties. Despite an army dis-
claimer, concern is growing in
Djakarta over the possibility
of the emergence of y
junta.
POLITICAL SITUATION IN PAKISTAN
President Mirza's action
on 21 March suspending the West
Pakistan legislative assembly
and taking over the functions
of the provincial government
came as the climax to intensive
maneuvering by all major polit-
ical groups. The result may
be a realignment of forces in
both West and East Pakistan
which may favor the present
regime.
Both Mirza and Prime Minis-
ter Suhrawardy have been identi-
fied with moves to reshuffle
various factions of the con-
tending parties into a combina-
tion which would strengthen
their leadership and isolate
dissident leftist elements.
Pressure to form a new
combination resulted from the
growing strength of the Moslem
League in the West Pakistan
assembly. By co-operating
with the left-wing Pakistan
National Party, the Moslem
League was in a position to
bring down the Republican
government in the western
province. Defeat of the
Republicans at the provincial
level would have endangered
the Republican-Awami League
coalition in the national
government. When a considerable
number of Republicans defected
to the opposition on 21 March,
making the overthrow of the
West Pakistan government in-
evitable, Mirza stepped in with
his proclamation of president's
rule on the pretext that the
government was incapable of
passing the provincial budget
before the 31 March deadline.
The, united stand of these
opposition parties as well as
the Republican defections were
made possible by a decision of
the Moslem League to support
the opposition demand for annul-
ment of the single-unit adminis-
trative setup_ in West Pakistan,
an issue on which the league
previously had been sharply
split.
The suspension of repre-
sentative government in West
Pakistan will probably in-
crease popular support for the
opposition parties' demand for
restoration of the six western
provinces as they existed prior
to 1955. Leaders of the coali-
tion, however, are optimistic
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
about retaining their present
strength through the period of
the president's rule, which is
constitutionally limited to
six months.
In East Pakistan, the prof-
fered resignation of Maulana
Bhashani, pro-Communist presi-
dent of the eastern branch of
Suhrawardy's Awami League, has
given new impetus to plans
aimed at realigning government
support in order to cleanse it
of pro-Communist and ian-
influenced elem
Suhrawardy's position at
the national level will remain
insecure as long as the politi-
cal problems in both provinces
are unresolved. To meet the
chaLlenge to his authority, he
will probably continue to co-
operate with Mirza in working
out a compromise coalition of
non:Leftist forces which can
bring stable government to
West Pakistan and at the same
tiie safeguard the national
reg:Lme. This probably can be
accomplished only through an
understanding with the Moslem
League. Consequently, nego-
tiations which reportedly took
place during the past month
are likely to be resumed in an
effort to agree on conditions
under which the Moslem League
might return to the ruling
coalition, dropping its support
of the agitation against the
single-unit system.
In East Pakistan, the
prime minister's fortunes may
hinge on agreement between his
faction of the Awami League
and other nonleftist parties
which would result in an align-
ment strong enough to counter- 25X1
balance the defection of the
Bhashani forces.
NEW CYPRUS NEGOTIATIONS POSSIBLE
New negotiations to resolve
the Cyprus dispute may occur
as a result of Britain's re-
lease of Archbishop Makarios.
The negotiations are likely
to take place in London and
to be based on the Radcliffe
constitutional proposals. The
British are willing to make
minor modifications in these
proposals in an effort to enlist
Makarios' co-operation in get-
ting self-government started.
Makarios was reported will-
ing to call for the cessation of
terrorist activity on the island
after he was released and if the
British suspended military opera-
tions against EOKA. The British
have announced their willingness
to. offer safe conduct to EOKA
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28 March 1957
leader Grivas to leave Cyprus.
If he accepts the offer, or-
ganized terrorist activity will
cease, and London will probably
consider the island pacified.
The Greek press is specu-
lating that Makarios might "in-
duce the Greek government to
give up its opposition to NATO
mediation" if operations
agaLnst the terrorists are
halted. Athens would probably
be willing to talk within the
framework of NATO if parallel
negotiations were going on be-
tween the British and p-
riots. F
ARGENTINA'S ECONOMIC CRISIS
To avert the exhaustion
of Argentina's hard currency
reserves, President Aramburu
announced on 22 March a series
of sweeping economic ref orm
proposals emphasizing austerity
and discarding broad state
economic controls in order to
promote free enterprise. Al-
though politicians share the
government economists' view
that the crisis constitutes a
"national emergency," party
leaders have strongly protested
against the politically unpop-
ular proposals. The proposals
precipitated a cabinet crisis
which has resulted in the re-
placement of Treasury Minister
Verrier, author of the proposals.
Verrier insisted that his
proposals were essential to
stave off "national bankruptcy"
by the end of 1957, commenting
that present gold and dollar
reserves are even inadequate to
cover this year's fuel bill.
Gold and dollar holdings, he
pointed out, fell to $237,000,-
000 at the end of last year and
since then have further declined.
Imports from the United States
alone reduced Argentina's gold
holdings by some $100,000,000
during 1956. The 1956 dollar
payments deficit of $250,000,-
000 is expected. to be repeated
this year, and the government's
1957 budget deficit will amount
to ;crate $777, 000, 000,
Foreign exchange earnings
have! been prejudiced by the
adverse trend in prices for
various agricultural products.
The financial problem is ag-
gravated by the increased need
for dollars for essential items,
particularly fuel, the Suez
crisis having reduced oil sup-
plies reimbursable in sterling
and increased both oil prices
and shipping costs by $40,000,-
000 to $60,000,000. Concomitant-
ly increased petroleum consump-
tion--a rise of 10 percent is
estimated for 1957--is not
snatched by domestic production,
which.now supplies only about
40 percent of Argentina's re-
quirements.
To remedy the situation,
Verrier proposed a free enter-
prise approach. His many sweep-
ing measures were designed to
reduce consumption, increase
exports, eliminate the balance
of payments deficit, attract
foreign investment and provide
larger amounts of foreign ex-
change to purchase the capital
goods needed to. rehabilitate
the Argentine economy after 10
years of deterioration. Specific
proposals included ending state
subsidies of services and com-
modities, freeing prices, con-
tinuing the wage freeze, free-
ing imports of machinery and
other capital goods, and reduc-
ing the trade deficit in the
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
dollar area.
Some steps in
this direction
have already
been taken,
including ending on
28 February
of subsidies
amount-
ing to some
$166,000,000
yearly.
Aramburu, although report-
edly supported by the military
ministers, is faced with strong
objections from five other cab-
inet ministers and many politi-
cal leaders, who are mindful
of the national elections this
year. These objections apparent-
ly center on the proposals to
abolish price controls while
retaining the wage freeze, but
there is also opposition among
ultranationalist, elements to
foreign investment in the fields
of oil and electric power. It
was probably such elements who
were behind the recent move of
the Cordoba provincial govern-
ment in seizing a small Ameri-
can-owned electric light plant
in defiance of present federal
government policy.
The newly appointed treas-
ury minister, whose views are
similar to those of his predeces-
sor, may modify the proposals
sufficiently to meet the objec-
tions on price-wage relation-
ships, but Aramburu seems in-
tent on implementing as much of
the total program as is political-
ly possible. He has already
made the move of asking the
political party leaders to go
on record with their own specific
suggestions for resolving the
economic crisis, offering them
access to government files for
this purpose.
LEFTIST LABOR UNIONS SCORE SUCCESS IN JAPAN
The recent wave of strikes
for higher wages involved 2,600,-
000 workers and was conducted
by the leftist Japan General
Council of Labor Unions (Sohyo).
It resulted in wage increases
for the major unions and in the
government's agreement to arbi-
trate increases for public
workers.
The strikes began on 7
March and. were: spearheaded by
the 160,000-member Coal Miners'
Federation among the private
unions and by the 370,000-mem-
ber Government Railway Workers
and the 545,000-strong Japan
Teachers' Union among public
workers' unions. They were
joined by government communica-
tions workers, private railway
workers, and other miscellaneous
unions.
Wage increases won by the
private unions averaged $3.60
monthly, somewhat short of the
$5.55 they sought, but still
considerably higher than expected.
Government workers probably
will do almost as well when a
settlement is reached by arbi-
tratiLon early in April.
The amount of the wage hike
can be attributed in part to
generally improved economic
conditions, which permitted the
unions to sustain their strikes
longer and placed management in
a better position to afford the
increased labor costs. The gov-
ernment, however, may have to
draft a supplementary budget to
cover the anticipated increases
for public workers. The wide-
spread rise in the wage level,
accompanied by proposed tax re-
ductions, can be expected to
exert further inflationary pres-
sure on the already rising trend
of consumer prices.
Sohyo's success this year
contrasts with its reverses in
1956 when two major wage of-
fensives were regarded as fail-
ures. The slow but steady in-
roads made on Sohyo membership
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
by Zenro, the rightist labor
federation, may be halted tem-
porarily as a result of this
latest Sohyo success, although
Zenro is expected. to win compa,-
rable.wage increases for its
members through negotiations
and without loss of work.
The i Kishi; i . government t t
surrender to Sohyo's forceful
action may encourage the con-
tinuing use of mass strikes
and demonstrations to achieve
union demands; and thereby re-
tard the development of a re-
sponsible labor movement in
Japan. In addition, the of-
fen.sive brought out clearly
the increasing co-operation be-
tween Sohyo and the Socialist
Party, which, as if to empha-
.size its recent swing toward
becoming a labor class party,
madE, strong representations
to the government on behalf
of Sohyo' s wage demands.
GOMULKA'S EFFORTS TO TIGHTEN PARTY DISCIPLINE
During.. fhe. past, :ten days,
the Soviet and Satellite press,
seizing on Gomulka's difficul-
ties in re-establishing dis-
cipline in the party and youth
organizations, has resumed at-
tacks on Polish deviations from
orthodox Communist practice.
This culminated in a blistering
criticism of the lack of dis-
cipline among Polish youth.
The Soviet press has also con-
tinued its "objective criticism"
of various phases of Polish
life, such as the lack of dis-
cipline among liberal journal-
ists and the conflict between
adherents of collectivization
and their opponents in the
villages.
Gomulka continues.,: to..
face the dilemma of meeting
internal and Soviet pressures
without undermining his own
announced program. He is still
installing his supporters in
key posts--notably Witold Jaro-
sinski,a central committee sec-.
retary who has taken over the
Warsaw city party organization--
as well as two other central
committee secretaries who have
been moved to the provinces.
No major internal reform has
yet been rescinded, despite
Polish lip service to the So-
viet line on such matters as
national Communism and the
counterrevolutionary sources of
the Hungarian uprising, and
general endorsement of Soviet
foreign policy.
Gomulka is also continuing
his policy of co-operation with
the Catholic. Church.
In a step which may serious-
ly aiatagonize working-class sup-
port, however, Gomulka announced
on 2:1 March that the government
did not plan to honor its prom-
Ise.: to make... up arrears of pay
promised under earlier work
agreements. In the opinion of
the American embassy in Warsaw,
this abrupt move, which was not
discussed with the workers, will
be viewed by them as a breach of
the regime's policy of "openness"
in its relations with the popula-
tion.
Wage increases granted
since Gomulka came to power,
however, have been popularly at-
tributed to his personal inter-
vention. These increases, as
well as an improvement in the
consumer goods supply, probably
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
will alleviate worker disillu-
sionment with Gomulka.
Gomulka's efforts to es-
tablish a firm party line are
apparently causing disorienta-
tion, doubts and divergencies
among party members, especial-
ly liberals.
GROWING UNEMPLOYMENT IN SATELLITES
Despite Communist claims
of having abolished unemploy-
ment, it has become a serious
problem in all the Satellites
except East Germany and Czech-
oslovakia. Government measures
to economize by reducing the
size of the bureaucracy and
eliminating "featherbedding"
among industrial workers are
increasing the number of un-
employed. Growing unemployment
in Poland, Bulgaria, and Rumania
is adding to popular dissatis-
faction and could result in
localized demonstrations in
those countries.
The ramifications of the
problem are particularly serious
in Poland, where uneasiness
about job tenure has become
general, and where the regime is
especially sensitive to internal
disruptions. Po Prostu, a forth-
right Polish journal, revealed
that in 1956 there may have been
as many as 300,000 unemployed,
about 4.5 percent of the non-
agricultural labor force. This
number will probably double dur-
ing 1957 as a result of further
dismissals of state employees,
new arrivals in the labor force,
and repatriations from the USSR.
Next to Poland, Bulgaria's
stability is most seriously
menaced. Unemployment is re-
ported to number about 380,000
persons, or about 9 percent of
the total labor force. The un-
employment problem is serious
enough for the regime to under-
take widespread "makework"
remedies and to be considering
the dispatch of possibly 15,000
jobless to the USSR for work in
the new lands. A further com-
plication is the plan to reduce
the size of Bulgaria's bureauc-
racy by 50 percent before 1960.
Unemployment in Hungary at
the beginning of 1957 was esti-
mated by the regime to be from
200,000 to 250,000,or about 10
percent of the nonagricultural
labor force. In February, Buda-
pest claimed that figure had
been reduced to 100,000. In
Hungary, too, a reorganization
of the administrative structure
is adding surplus workers to
the ranks of those who have al-
ready been put out of work by
scarcities of fuel and raw ma-
terials. It is probable that
many employees are not working
full time or receiving full
pay,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Unemployment in Rumania,
more serious now than at any-
time since the war, is the re-
sult largely of an economy
drive in 1956 which resulted
in large-scale dismissals from
the administrative apparatus
and state enterprises. A fur-
ther 40,000 persons are re-
ported to be on the verge of
losing their jobs as a result
of the ministerial reorganiza-
tion and staff cutbacks set for
early 1957. A decree was passed
in early March attempting to
reduce unemployment by cancel-
ing work contracts with persons
having more than one source of
income and limiting to one the
number of employed persons in
a family, but the outcry which
greeted the decree caused its
hasty recision.
East Germany is currently
suffering a labor shortage,
largely because of the steady
exodus to West Germany. Highly
industrialized Czechoslovakia
is experiencing a continuing
labor shortage, particularly
in mining, agriculture, con-
struction and transportation.
The shortage results in part
from the expulsion of the
Sudeten Germans after the war
and partly from the high level
of foreign trade.
The Satellites have tried
a variety of measures to combat
unemployment. Poland has set
up "intervention funds" of
300,000,000 zlotys ($75,000,000)
and put them at the disposal of
local councils to expand local
industry and crafts. Local and
co-operative
industries in
1957
are to absorb
workers.
about 50,000
Bulgaria is trying to ex-
pand industrial production as
well as to export those with-
out jobs. The Hungarian problem
probably cannot be met until
production is restored to pre-
revolt levels. Some feeble
measures have been taken by ex-
tending loans to establish
private business, reducing the
pension age, and allowing exit
permits for selected categories
of persons. Rumania seems to
have done little about its un-
employment except to contemplate
sending jobless workers to. the
USSR, and to make exit permits
available to some categories
of persons.
A considerable force of un-
employed will probably exist
for some time in most of the
Satellites, especially, since
the period of radical industrial
expansion has ended. Recognizing
this, a Polish economist re-
cently commented that "we must
rid ourselves of the belief
that unemployment cannot be a
problem in a socialist society."
(Prepared by ORR) 25X1
The recently concluded an-
nual meeting of the national
committee of the Chinese
People's Political Consultative
Conference, an "advisory" group
with representatives from the
Chinese Communist and puppet
parties, was marked by forth-
right criticism of certain re-
gime programs. While the
leaders of the regime received
the usual adulation, lower-
ranking cadres came in for
sharp attack. Peiping apparent-
ly wished to encourage out-
spokenness in order to demon-
strate that it is honoring the
promises held out last year for
democratization.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
The conference, which was
originally constituted with
some of the trappings of a
legislative assembly, was rel-
egated to an advisory role in
the government structure after
the National People's Congress
was established in 1954. How-
ever, its sessions have con-
tinued to provide an important
platform from which to promote
major Chinese Communist'. programs.
Conference delegates were
evidently emboldened by a major
address by Mao Tse-tung shortly
before the session on "contra-
dictions within the ranks of .
the people." The text of Mao's
speech has not been released,
but subsequent speeches sug-
gested that he dwelt on the
distinction that must be made
between "contradictions" among
people united under socialism
and those between the people
and the enemy. Mao apparently
professed that the privilege
of freer discussion could
safely be extended to those
who supported the regime. He
seems to have repeated his
call of last year to "let all
flowers bloom together, let
all schools of thought contend."
At the closing session,
Chou En-lai observed approv-
ingly that 44 percent of the
conference delegates had
spoken out on matters of con-
cern to them, twice the propor-
tion of last year's meeting.
Among the criticisms
voiced by delegates were those
of defective planning in eco-
nomic development programs. A
leading economist attacked fre-
quent revisions of plans and
called for closer ties between
planners and those who execute
the plans. Scientists com-
plained of a poor division of
labor among researchers and a
failure to use the short
supply of scientists in posi-
tions commensurate with their
abilities.
A Christian leader criti-
cized anti-Christian bias in
government organizations and
local interference with reli-
gious freedom. A puppet party
member asserted that the "major
fault" behind difficulties in
relations between Communists
and non-Communists lies in the
"attitude of some of the Com-
munists."
Some criticism was leveled
at specific government policies.
An architect argued that the
ratio of investment between
heavy and light industry should
be lowered to six to one, in
contrast to the ratio of from
seven to eight to one in the
first four years of the present
Five-Year Plan, in order to
permit the allocation of more
funds for the production of
consumer goods.
Lifting of restrictions
on abortions and sterilization,
suggested as a birth control
measure by the minister of
health, was also sharply
criticized.
This freedom of expression
indicates that Peiping; intends
to continue its liberalization
program as first announced a
year ago. Following the East
European disorders last fall,
the Communists in Peiping, like
those elsewhere in the bloc,
were impressed by the need for
caution in carrying out liberal-
izatJLon premises. Peiping now
apparently is convinced. it can
keep its liberalization program
under control.
(Concurred in by ORR)
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Hong Kong's poverty-
stricken and embittered Chinese
refugees pose a serious thres.t
to the colony's security. While
many harbor resentment against:
the Peiping regime, which they
blame for their present hard-
ships, their extreme dissatis-
faction nevertheless could be
exploited by the Chinese Com-
munists. The danger resulting
from their accumulated discon-
tent was demonstrated by the
Kowloon riots of October 1956.
Since January 1949, it is
estimated that almost 1,000,000
Chinese refugees have sought
asylum in the colony,
OLD REFUGEE HOUSING IN KOWLOON
The bulk of Hong Kong's
2,500,000 population is concen-
trated in the 6.5--square-mile
Kowloon-Victoria area, where
population density reaches
2,000 persons per acre, or 14
times as high as Manhattan.
Recent Hong Kong government
surveys reveal that 225,000
Hong Kong children suffer from
malnutrition, and that there
are an estimated 50,000 active
contagious tubercular cases in
the colony. School facilities
are available for little more
than 50 percent of the school-
age children.
Some 600,000 persons are
in need of better housing; of
these, 300,000 have no homes
at all. Approximately 200,000
persons are surplus to Hong
Kong's estimated future man-
power requirements.
To ameliorate housing con-
ditions, the government in 1954
initiated a "vigorous" resettle-
ment, campaign to house Hong
Kong's homeless. To date the
program has successfully housed
200,000 persons. Governor
Grantham, when outlining pro-
spective ameliorative measures
to be taken over the next five
years, however, noted that both
colonial government and private
welfare agency resources were
inadequate for the task remain-
ing, and called for United
Nations assistance.
Government concern over
the refugee problem was in-
tensified by the three-day
October riots, during which
there was an estimated $780,000
worth of property damage, and
59 lives were lost. The ease
with which criminal elements
exploited the riots for purposes
of looting, together with the
inability of the police to
control. the rioters--mostly
refugees--in the labyrinths
of narrow streets, demonstrated
the potentially explosive nature
of the colony's refugee problem.
The vast majority of Hong
Kong's Chinese are reported
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
either anti-Communist or neu-
tral, but there are indications
of growing Communist strength
and influence, mostly in the
economic, cultural, and labor
fields. Also active in the
colony are pro-Nationalist and
Kuomintang elements, whose ac-
tivities extend into labor un-
ion, Press, and criminal
society--Triad--circles.
Friction between these groups
poses a constant threat of
civil disorder.
The demonstrated weakness
of the police suggests the ease
with which Peiping could start
new disorders if it wished to
challenge British rule of Nong
Kongg.
USSR URGES "SOCIALIST COMPETITION`TO RAISE,PRODUCTION
In recent weeks the Soviet
press has begun a campaign rem-
iniscent of the Stalin era.,to
induce the workers to increase
production through "socialist
competition." The campaign
has been accompanied by offi-
cial reassertions of confidence
that the output goals of the
Sixth Five-Year Plan would be
fulfilled.
The campaign, part of the
build-up of this fall's cele-
bration of the 40th anniversary
of the revolution, has succeeded
in persuading millions of work-
ers to join competitions for
increased output, according to
Soviet reports. The worker is
urged to display initiative in
the introduction of new tech-
nology, to muster "internal re-
serves," to organize production
more efficiently and to reduce
waste,
Soviet metallurgical work-
ers have responded by pledging
to smelt hundreds of thousands
of tons of metal over the 1957
plan. Donbas coal miners, have
also pledged overfulfillment
of the 1957 plan and in addi-
tion have urged the support of
all miners in the struggle for
implementation of the decisions
of the 20th party congress.
A Pravda editorial of 6 March
contaied an_ appeal from the
agricultural workers of
Smolensk Oblast to all agri-
cultural workers to develop a
competition for overfulfillment
of the tasks of the Sixth Five-
Year Plan and stressed the
fact that such overfulfillment
depends on the worker, since
the collectives and state farms
"have everything necessary" for
fulfilling the tasks set by
the 20th party congress.
Such statements, along with
various official pronouncements,
including a Pravda editorial
which assumed pre-term fulfill-
ment of the Sixth Five-Year
Plan, contrast with Pervukhin's
announcement on 5 February of
the downward revision of the
1957 plan. The reduction in
1957 goals does indeed increase
the probability of overfulfill-
ment of this year's plan but at
the .same time makes considerably
more difficult, if not impos-
sible in some cases, fulfill-
ment of original 1960 goals.
(Prepared by
Vita)
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28 March 1957
USSR CONTINUES TO FAVOR CULTURAL EXCHANGE
Ilya Ehrenburg's recent
defense of American culture is
part of the USSR's effort to
reassure Soviet intellectuals
that the recent campaign against
"pernicious bourgeois influ=
ences" does not mean a return
to Stalin's policy of cultural
isolationism. The Satellite
upheavals in the fall of 1956
impelled Western nations to
limit their participation in
the cultural exchange program,
and at the same time increased
Soviet sensitivity to the "dan-
ger of contamination" from
Western ideology.
tion of the "Soviet foreign pol-
icy and the deep peaceableness
of our people," He cited Walt
Whitman, Mark Twain and Jack
London as American contributors
to world culture.
Since early this year the
Soviet leaders'have been attempt-
ing to restore cultural rela-
tions while at the same time
maintaining doctrinal purity.
the desire
o soviet in lec-Luais for in-
An article in Literary
Gazette of 28 February by Pro-
fessor Kazem-Bek, a recent re-
turnee to the USSR after 15
years residence in the United
States, prompted Ehrenburg to
speak up. Kazem-Bek had as-
serted that the "United States
has failed to create its own
truly national culture," a
charge which Ehrenburg casti-
gated as "unfair" and a viola-
TRANS-SIBERIAN COMMUNICATIONS CABLE
The Moscow-Novosibirsk
section of a high-capacity
trans-Siberian telecommunica-
tions cable line, scheduled to
be extended ultimately to
Vladivostok, is to be put into
operation in 1957. When com-
pleted to Vladivostok, the line
will increase east-west tele-
communications capacity several
times, and improve greatly the
quality, dependability and se-
curity of the Soviet network.
No early completion to
Vladivostok is expected, how-
ever, since progress has not
been rapid on this ambitious
project, which may cost approx-
imately $150,000,000. The
section from Moscow to Ufa
SECRET
creased contact with Western
culture. With 13 other deputies,
Ehrenburg questioned the Feb-
ruary Supreme Soviet as to the
policy of the government on
cultural exchanges, in view of
the sharpening international
situation. Culture Minister
Mikhailov replied that the
USSR would continue to preserve
and encourage cultural ex-
changes with all states.
25X1
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V.001 NNA0
apparently was completed as
long ago as 1952.
Telecommunications facili-
ties now serving Soviet central
Asia and the Far East consist
of open-wire land lines, sup-
plemented by high-frequency
radio. Both of these relative-
ly low-capacity media are
SECRET
susceptible to the disruptive
atmospheric and weather con-
ditions of these regions. The
addition of a high-capacity
cable line to these facilities
wilL create a "spinal column"
joining the European and Far
Eastern portions of the USSR.
Prepared by ORR) 25X1
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+~6eRE7'~
CONFIDENTIAL
CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
PATTERNS AND PERSPECTIVES
THE NEW PHILIPPINE ADMINISTRATION
The new president of the
Philippines, Carlos P. Garcia,
i's, a lifelong public servant
and stalwart of the ruling Na-
cionAlistaParty,. Because he has
been identified with the "old
guard" faction of the party,
which has been inclined toward
narrow nationalism, there is
concern in Manila that the late
president Magsaysay's programs
and policies might be gradually
shunted aside.
Garcia's Aspirations
The 60-year-old
Garcia is a lawyer
and landowner as well
as a literary figure
in the Philippines.
His long record in
public office in"
cludes the governor-
ship of his native
Visayan Province,
and membership in the
Philippine Congress,
both before and after
independence in 1946.
His record, plus the
pressure of the old-
line Nacionalista
policies remain to be tested.
Within six weeks after Magsay-
say's inauguration on 31 Decem-
ber 1953, Garcia, who was then
also secretary of foreign af-
fairs, joined the ultranational-
ist Senator Recto in advocating
an "Asia-for-Asians" foreign
policy. Shortly thereafter,
the reparations settlement he
agreed to with Japanese nego"
tiators was rejected by Magsay-
' say
Garcia tended to dis-
regard security, and
delicate matters were
frequently leaked to
the press. In addi-
tion, his appoint-
ments were criticized
for failing to improve
the caliber of the
Philippine foreign
service. As a result,
Garcia never won the
confidence of Magsa -
say
conservatives, led to his nom-
ination as Magsaysay's running
mate in the 1953 elections.
One of Garcia's first acts
after succeeding to the presi-
dency on 18 March was to promise
to carry out fully the domestic
reforms and pro-American foreign
policy established by Magsaysay
and to maintain the present
cabinet in office. He declared
that the Philippines would con-
tinue to co-operate with the
United States and would oppose
admission of Communist China
to the UN; he rejected any
notion that trade relations can
be developed with the Communist
bloc.
Garcia's willingness and
ability to carry on Magsaysay's
However much Garcia may
desire to follow the lead of
his predecessor, there are in-
dications that he intends to
make the compromises required
to win the presidential elec-
tion in November. There are
already rumors that he is making
a deal with Senator Recto and
that, to head off the candidacy
of the powerful Senator Laurel,
he will accept the latter's
son, House Speaker Josd, Jr.,
as his running mate. In addi-
tion,, Garcia's statement that
economic development plans
would continue to be studied
raises the possibility that,
in return for the support of
the powerful sugar bloc, he may
adopt ther special-interest
economic policies, which Magsay-
say had opposed.
'
cowTjAL F
As. foreign secretary,
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
Administration Changes
Although Garcia has said
he intends to retain the Mag-
saysay cabinet, changes are.re-
portedly being discussed. The
post of secretary of education
is open, as the previous sec-
retary was also a victim of the
plane..::crash that killed Magsay-
say.
Garcia has already made one
important appointment in des-
ignating Raul Manglapus as
acting foreign affairs secreta.ry-.
Although the president intends
to retain the foreign affairs
portfolio himself, he has for
all practical purposes put the
department in the hands of a
young but extremely capable
appointee. of Magsaysay. Mangla-
pus had been heavily relied on
to counteract the extreme na-
tionalist pressures and anti-
American attacks of Magsaysay's
opponents. Although he is a
member of the..Citizens' Party,
headed by Recto's campaign
manager Senator Tanada, Mangla-
pus remained firmly loyal to
Magsaysay.
ANTI-SEMITISM IN THE SOVIET UNION
The recent linking in the
Soviet press of Russian Jews
with alleged American intelli-
gence activities underlines the
Soviet leaders' condonation of
anti-Semitism even though they
officially deny its existence.
Widespread arrests and dismiss-
als of the so-called "cosmopol-
itan''=-Jewish--intellectuals
ceased with the official dec-
laration in April 1953 that
the "doctors' plot" was a for-
gery. The post-Stalin thaw
ushered in a period of relative
relaxation and general improve-
ment in the treatment of Jews,
but discrimination continued.
Since the fall of 1956,
Soviet Jews have again been
SECRET
that competent officers will
continue in responsible posi-
tions suggest no immediate
change in the emphasis on the
advancement-by-merit .. policy. in
the armed forces which was in-
stituted by Magsaysay.
It is considered probable,
however, that Magsaysay's form-
er army associates, whose prom-
iner.-ce.in civilian roles has
beerk under heavy attack, may
soon be replaced. Defense
Secretary Balao is regarded as
certain to be removed, and
others soon to follow may in-
clude Defense Under Secretary
Crisol, Labor Secretary Adevoso,
and Agriculture Under Secretary
Ferrer. Press Secretary Cruz
reportedly has already resigned.
Rumors of a more extensive
administration reshuffle involve
the Central Bank governor, the
secretaries of commerce, fi-
nance and justice, and the budg-
et commissioner, one of the
ablest officials in the govern-
ment. Removal of aging Justice
Secretary Tuason could pave the
way for the elevation of Under
Secretary Barrera, who is fre-
quently alleged to have pro=
Communist sympathies and,, as.a
member of the-.Philippine nego--
tiating panel; was the principal
opponent of the, si-
..on, ass .
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CURRENT INTELLIGENCE WEEKLY SUMMARY
subjected to more active dis-
crimination focusing on students
and intellectuals and linking
them with Zionist and imperial-
ist subversion. This develop-
ment appears to be primarily a
by-product of the present cam-
paign against internal unrest
and Western influences, rather
than a campaign against Jews
as such.
Policy in Relation to Jews
Since 1917 the Soviet re-
gime has officially sought to
achieve a multinational federa-
tion of brotherly peoples which
together constitute a unified
"Soviet culture." With. regard
to the Russian Jewish community,
however, there has been a di'.
chotomy in policy and propagan-
da, Policy has alternated be-
tween ignoring the Jews as a
homogeneous group and isolating
them as politically unreliable
and contagious in their disaf-
fection. Measures have been
taken to fragment and starve
out Jewish culture: virtually
all Jewish theaters and news-
papers were closed down in 1948;
there was no rabbinical seminary
from the early days of the So-
viet regime until this year;
the opening of synagogues and
maintenance of existing ones
are discouraged; and communi-
cation between Jewish commu:---
Aities has been virtua.l.iy : elimi-
nated.
Since 1952 there have been
persistent reports that a quota
has been imposed on the number
of Jews permitted in intellec-
tual activities. According to
these reports, the number of
Jews in "sensitive" professions,
i.e., scientific research and
development, communications,
transport.and defense, is being
cut down. Recent rumors stress
the dismissal of many Jews oc-
cupying high administrative
positions in the government
bureaucracy, as well as engi-
neers, scientists and techni-'_,
cians employed in strategic
defense and research facilities.
___Jew s youths are discour-
aged from pursuing a higher
education, especially in
scientific fields.
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several of the top Russian
ave expresse
strongly anti-Semitic sentiments
and, told anti-Semitic jokes.
In May 1956, Khrushchev
bluntly asserted to a French
Socialist delegation that re-
strictions on Jews entering
higher educational institutions
and holding white-collar jobs
were justified by the re-creation
of a large Russian intelligentsia
to replace that decimated by the
revolution and civil war. The
obvious implication was that
Jewish intellectuals were used
after 1918 as a :stopgap measure
and can now be discarded.
Kaganovich, himself a Jew, has
insisted that the Jewish minor-
ity is being absorbed culturally
and no longer displays any
interest in Jewish theaters,
schools or press.
Although Soviet propaganda
has not abandoned the line that
the Jews are being assimilated,
it periodically exposes them as
a weak link in Soviet society
which must be isolated for
security reasons. The ill-fated
scheme to develop Birobidzhan
as a Jewish national homeland
in the Far East is a case in
point. After "voluntary settle-
ment" proved a failure, the
Jewish emigration to Birobidzhan
came to consist almost entirely
of prisoners. As recently as
November 1956 there was a ru-
mored mass deportation to
Birobidzhan of Jews and some
Poles from the western border
regions of the USSR. These
deportations, if they occurred,
were probably related to the
crisis in Soviet-Polish rela-
tions.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
Influence of Israel
Russian rulers, both
Tsarist and Soviet, have often
used the smoldering .prejudices
of Great Russians, Ukrainians,
Belorussians and other national-
ities against the Jews in order
to divert popular discontent
from embarrassing matters. 'The
rise of Israel as a viable in-
dependent Jewish state has given
the problem of the Jewish minor-
ity in the USSR new dimensions.
Since September 1948 when Ilya
Ehrenburg flayed the new state
as the creature of bourgeois,
nationalistic Zionist mystics,
the official rationale for anti-
Semitic policies has been the
need for protection against an
unassimilated, influential and
politically unreliable portion
of a minority group with power-
ful international connections.
The nine villains of the
"doctors' plot" in 1953, five
of whom were Jewish, were ac-
cused of having "sold them-
selves for dollars to American
intelligence" through the Am-
erican-Jewish Joint Distribu-
tion Committee, described as a
"Zionist espionage organizaT.'
tion." There is ample evidence
that the Russian people drew an
anti-Semitic inference from
this and that this was the re-
gime'.s intent. The coincidence
of a vigilance campaign with
the doctors' plot indicated
that the attack on the Jews was
only part of a larger target,
namely, the general tightening
of security and discipline.
The parallel to 1953 is
obvious in the present con-
currence of spy-scare vigilance
propaganda with reports of
rising anti-Semitism character-
ized by dismissals of Jews on
a professional and security
basis.
In 1957, however, the
threat of intellectual unrest
to internal security must be
added to the alleged Zionist
threat to bloc security. A
significant number of Jews in
the, Soviet Union are engaged
primarily in intellectual
activity despite. the numerous
measures in the past designed
to disperse them to rural areas
and to farm or factory labor.
Thus, unrest among the intelli-
gentsia and Zionist subversion
of the Jewish minority are
closely linked in official
thinking.
The Moldavian Republic
newspaper Sovetskaya Moldavid
on 2 March reporte the arrest
of three spies, belonging to a
Jewish sect, who had been en-
gaging in "undermining activ
ities" in Moldavia under orders
from an "American center." The
newspaper called for the "un-
mas:king" of the sect because it
was "interested not=-only in
the Bible but in anti-Soviet
affairs in liaison with American
imperialists." Cited as evi-
dente were typewritten letters
in the Russian, Ukrainian and
Rumanian languages, illegal
literature of American origin
and a report on the sect's
activities from 1952 to 1956,
purportedly found at its
"regional office."
Any anti-Semitic movement
in the Soviet Union, whether
officially inspired or not,
runs the risk of getting out
of hand, and it is unlikely,
therefore, that the present
leadership will resort to ac-
tions, resembling the doctors'
plot. Quiet removal of Jews
from positions in which they
might have contact with for-
eigners or--from the point of
view of an oversensitive re-
gime--an opportunity to sabo-
tage science and defense, will
probably continue, however,
along with arrests of Jews as
Zionist spies, paralleling
arrestsc of Great Russians and
other nationals as imperialist
agents.
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had not been a;shortage_of spare
parts and raw materials in recent
years.
-CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
PAKISTAN'S ECONOMIC PROBLEMS
The Pakistani government
has recently instituted its
first Five-Year Plan in an ef-
fort to overcome the country's
basic economic problem--lagging
agricultural production. The
plan, if pushed vigorously by
the government, should lead to
economic progress sufficient to
raise per capita income slight-
ly. Pakistan would still, how-
ever, be heavily dependent on
foreign aid when the plan ended.
When the Indian subconti-
nent was partitioned in 1947,
almost all of its industry and
about 90 percent of the trained
administrators and technicians
fell to India. The areas that
became Pakistan were predominant-
ly agricultural, with rice pro-
duction in East Pakistan and
wheat in West Pakistan just suf-
ficient to feed the people and
permit very small exports. The
economy was heavily dependent
on raw jute and cotton exports
.for its foreign exchange earn-
ings.
Industrial Production
Despite their lack of ex-
perience, the Pakistanis have
made striking industrial prog-
ress;.; since partition. Indus-
trial production began to ex-
pand rapidly after 1950, when
large jute and cotton earnings
made possible the importation
of considerable amounts of in-
dustrial equipment. Pakistan
had no jute mill in 1950; today,
it has 12 and exports jute
manufactures as well as raw
jute. The cotton textile in-
dustry operated 178,000 spindles
at the time of partition; to-
day, it operates over 1,000,000
spindles and exports cotton
textiles.
Production of steel ingots,
cement, paper, electric power,
tires and many types of con-
sumer goods has risen rapidly
since 1948, and output would
have been even higher if there
Industrial production
should continue to rise rapidly
in the future. Large-scale hy-
droelectric resources are avail-
able--chiefly in West Pakistan.
A major natural gas field has
been put into operation to sup-
ply fuel for industry in West
Pakistan, and recent drillings
have indicated that another siz-
able gas field may exist in
East Pakistan. Four foreign
oil companies, confident that
large fields will be found, are
already drilling for oil.
Food 'Grain Production
Pakistan's food production,
however, has failed to keep up
with its population growth of
nearly 1,000,000 a year. The
country needs to increase its
food grain output by about 150,-
000 tons a year just to ensure
its people their present diet
PAKISTAN: PRODUCTION OF FOOD GRAINS
MILLI NS I JULY TO 30JUNE
LONGON5
9 f-
... RICE
iR OODGAINS
'44-49 '49-50 '50-51 '51-52 '52-53 '53-54 '54-55 `55-56
TOTAL - 13,197 13,215 13,301 11,767 11,540 , 14,157 12,724 12,907
of approximately 15 ounces of
grain a day.
The grain harvest, large
enough in the first years after
partition to permit small ex-
ports, fell sharply from 1950
to 1953, chiefly because of
drought in West Pakistan and
the shift of some land to jute
and cotton production during
the Korean war. Most officials
considered the problem temporary,
however.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
PAKISTAN
Total Population 1957
81,000,000 estimated
Oil field
Gas field
* Coal field
? Oil refinery
'Textile mills
Jute mills
IT j I I~ t.= g I ITS(`
WEST PAKISTAN
Population 36,077,400 est.
28 MARCH 1957
0 MILES 200
EAST PAKISTAN
Population 44,922,600 est.
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Since 1954, Pakistani
leaders have gradually come to
recognize that their food prob-
lem is a chronic one. They ex-
pect to import 1,257,000 tons
of grain valued at $129,150,000
in the year ending in June 1957.
While the foreign exchange cost
of this grain will be only $49,-
350,000 since most of the grain
is supplied for rupees by the
United States, even this is a
major drain on Pakistan's for-
eign exchange holdings and a
major burden on its already
overloaded transportation sys-
tem.
In addition, since the
imported grain is more expen-
sive than locally grown grain,
the government has subsidized
it in an"attempt to hoa.d prices
down. This subsidy cost the
government over $40,000,000
last year, a major portion of
the budget deficit. While ag-
ricultural production for the
year ending in June 1957 should
be significantly better than in
th-e, past two years, it will not
be high enough to eliminate the
need for sizable imports.
The major. reason agricul-
ture has failed to stay ahead
of population growth has been
the lack of any comprehensive
agricultural development plan.
Since little has been done in
the -way of land reform, the
peasant has little incentive
to expand production. The
amount of land added to culti-
vation by various irrigation
schemes appears to be less than
the amount that has gone out
of production because of water-_
logging and salinity. The ag-
ricultural extension service
has not been developed to the
point where modern techniques
of farming can be taught to the.
individual farmers, with the
result that yields are extremely
low.
Foreign Trade
While the degree of depend-
ence on raw jute and cotton ex-
ports is falling as Pakistan's
exports become more diversified,
the country continues to derive
near:Ly three fourths of its. for-
eign exchange earnings from
these two products whose price
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
1950 1951
28 MARCH 1957
PAKISTAN EXPORTS
MILLIONS OF DOLLARS
533
60
OTHER
COTTON
JUTE
1952
1953
401
359
1954
19.55-60 Five-Year. Plan
To work toward
a more balanced econ-
omy, the government
set up a planning
board in July 1953
to develop a compre-
hensive plan for the
period 1955-60. Be-
cause of inadequate
statistics, as well
as widespread dis-
agreement regarding
many aspects of the
plan, the board did
not finish its draft
313
39
1955 1956
(11 MOS)
70311 4
f luctuates- Wvidely .on ;world .~mar-
:kets. Earnings from these ex-
ports reached $644,812,000 in
1951 because of the Korean war
boom, but by 1954 they had
fallen to $270,217,000, forcing
Pakistan to cut imports of con-
sumer goods severely.
Following the devaluation
of the Pakistani rupee from
30.5 cents to .21 cents on 31
July 1955, export earnings rose
moderately. By continued re-
striction of imports,
the government built
up its foreign ex-
change reserves from
the dangerously low
figure of $210,147,-
000 in October 1955
to $292,866,000 at
plan until May 1956. As amended
by the National Economic Coun-
cil after considerable contro-
versy over the respective shares
of East and West Pakistan, the
plan now calls for expenditure
of $2,268 billion, of which
the government was to spend
$1.575 billion and private
investors $693,000,000.
The planning board esti-
mates national income will
rise by about 15 percent during
the plan period, which would
PAKISTAN
PLANNED GOVERMENT EXPENDITURES
MILLIONS OF DOLLARS
the end of June 1956.. VILLAGE AID AND
These reserves fell
to $261,005,000 by
the end of 1956, how-
ever, because of a
slowdown in jute and
cotton exports and
large-scale imports
of food grains. The
foreign exchange re-
serves would have
fallen even more
rapidly had it not
been for the delay
in the arrival of
imports caused by
the closing of the
Suez Canal, as let-
ters of credit out-
standing at the end
of 1956 were $46, -
200,000 higher than
at the end of 1955.
WATER AND POWER
INDUSTRY
TRANSPORT AND
COMMUNICATIONS
HOUSING AND
SETTLEMENTS
EDUCATION AND
TRAINING
SOCIAL WELFARE
AND LABOR
SECRET
122
567
TOTAL 1,957
EXPECTED
SHORTFALL
ESTIMATED NET
EXPENDITURE 1,575
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CURRENT INTELLIGENCE WEEKLY SUMMARY
mean a per capita increase of
about 7 percent in view of the
expected population increase.
The plan calls for a 13-percent
increase in food grain produc-
tion and a 71-percent increase
in industrial production by
1960 as compared to 1954, the
last full year before the plan.
The planners estimate that
total public and private sav-
ings during the period of the
plan will amount to about `;6
percent of the country's gross
national product, or $1.386
billion,of which $210,000,000
would be public savings and
$1.176 billion private savings.
This would leave a gap of $882y-
000, 000 to be filled by foreign
assistance, of which $84,000,000
is to come from private foreign
investment, and the remaining
$798,000,000 from foreign loans
and grants.
Outlook for the Plan
Despite the delay in approv-
ing the plan, funds have already
been appropiated for some of its
projects. The government has al-
located $186,690,000 for economic
development in the 1955-56 budg
et, $234,696,000 in the 1956-57
budget, and $337,491,000 in the
budget for the fiscal year begin-
ing on 1 April 1957. While there
probably will be a lag in the
actual expenditure of these
funds., the increased allocations
show the rising tempo of econom-
ic development. Industrial pro-
duction, scheduled to increase
by '71 percent, was 40 percent
above the pre-plan level in 1956
and is likely to be above plan
goals in 1960. Agricultural de-
velopment has been neglected to
date, however, and this neglect
indicates that it will take six
or seven years to reach theagri-
oultural:production target.
The Chinese Communists
have moved with great energy to
improve the 14,000 miles of
badly deteriorated railroad
they took over from the Chinese
Nationalists in 1949 and have
extended the rail system into
parts of the country never be-
fore served by modern means of
transportation.
Construction Program
China's 1949 rail net to-
taled roughly 14,000 miles of
trunk line, concentrated in
the eastern part of the country.
and in Manchuria. Most of this
had been built with foreign
capital to connect ports with
inland markets, or, in the case
of 'Manchuria, as an instrument
of Russian and Japanese penetra-
tion. A great part of the sys-
tem was dismantled or badly
damaged during the Japanese war
and the civil conflict which
followed.
From 1949 to the end of
1952, Peiping's primary effort
was directed to the rehabilita-
tion of this net. Particular
emphasis was put on the north-
south trunk lines and, during
the Korean :war, on rail
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
connections between Manchuria
and the USSR. Three major new
lines were finished by the end
of 1952, including a strategic
line to the Indochina border
which accelerated the movement
of materiel to the Viet Minh
during the Indochina war.
First Five-Year Plan
The original goal for con-
struction during the First Five-
Year Plan (1953-1957) was 2,550
miles. In the first four years
of the plan, however, more than
2,700 miles were completed.
Only 375 miles are scheduled to
be added during the current
year.
The Trans-Mongolian line,
joining Ulan Bator with Chining,
was opened to traffic in late
1955, providing an additional
link with the USSR some 700
B USR MA J VIE _
- `?-i'.flano
'?1 .J' ~,~ LAO S
rTHA1LANDr \..
SECRET
Railroads in Communist China
Railroad, existing in 1949
Railroad, constructed between 1950 and 1956
?????????? Railroad, projected or under construction by 1963
- Railroad, international connection
miles shorter than 'the route
via Manchouli. The new route
extends Soviet broad-gauge
track to the Chinese transload-..
ing point at Chining and is the
only, broad-,gauge line in China.
It forms the northernmost link
in what will eventually become
a north-south trunk system some
600 miles inland and extending
from Outer Mongolia to the Indo-
china border via Paotow, Lanchow,
Chengtu and Kunming. This in-
land axis may be completed by
1960. The line already provides
China with a ready avenue for
increasing its influence in
Outer Mongolia, since the 1920's
a ward exclusively of the USSR.
Two important strategic
links between the existing
Chinese system and southern
coastal areas have been com-
pleted. The first, the Litang-
Chanehiang (also known as Fort
d?: ~.phan~sha
"jginBtao
knyenchian8
T Foochow
1Ia1Pe1
~Am~ :TAIWAN
uchop
'~~Wuchow. Cantgn' ?Swalow ? Raohs~ona
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Bayard or Tsamkong), was fin-
ished in mid-1955. It serves
an important strategic airfield
at Suichi and the port of Chan-
chiang, which is being developed
as an alternate to Canton and
Hong Kong. The second, the
Yingtan-Amoy, was completed in
December 1956 and will be of-
ficially opened to traffic
shortly. This line, together,
with a branch to Foochow which
may be operating within the
next several months, greatly
increases the Chinese Communist
logistic capabilities in the
Taiwan Strait area, and will
aid in the exploitation of
Fukien's economic resources.
Construction
was begun on other
important projects,
the most noteworthy
from a strategic and
economic point of
view being the Trans-
Sinkiang line. This
will extend from
Lanchow through the
Kansu corridor, a-.
cross Sinkiang Prov-
ince to the USSR
border and on to
Aktogay, where it
will connect with'
titularly in the exploitation
of rich oil deposits found
there.
Construction of a double-
deck, rail-highway bridge over
the Yangtze River at Wuhan is
the largest bridge project ever
undertaken in China. Scheduled
for completion late this year,
the bridge will remove the chief
bottleneck to rail movement
between Peiping and Canton.
With over 1,000 miles of
new line completed in 1956,
Peiping is planning to add only
375 miles during 1957. This
includes 200 miles on the Paotow-
Chinese Communist Heavy Crane For Placing Bridge Girders.
the Soviet Turk-Sib line. By
mid-1956 the line had given
China its first rail access to
Yumen, the nation's largest
producing area of natural crude
oil (more'.than 500,000':tons.in
1956). By the end of the year
it was nearly half finished,
having reached almost to the
Sinkiang border. Some track
was
put down
on the Soviet
side.
The 1957
program calls
for
the
laying of only 22 miles
of
track, which amounts to a vir-
tual abandonment of the project
for the year. Since work teams
probably are already active
within Sinkiang, however, it is
likely that this target will be
overfulfilled. The entire line
could be completed in late 1958
or early 1959. It will have a
tremendous impact on the open-.
ing of China's far west, par-
Lanchow line and completion of
the Pisechai-Hokou; and the
Wuhan-Tayeh lines as well as
a number of minor service and
forestry railroads.
Pre-1949 Lines
The notable achievements
of the Chinese Communists in
new line construction and their
ambitious plans for the future
should not obscure the fact
that the pre-1949 lines are
being pressed hard to meet the
sharply increased traffic de-
mands posed by the nation's
rapid industrial growth. Fun-
damental limitations which de-
veloped after 1954 were ones of
track and yard capacity rather
than, shortages of motive power
and rolling stock.
Congestion, which became
quite serious in the second
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
half of 1956, is still local.
Hardest hit were the lines
leading north and west of the
important junction of Chengchow.
While this condition is ex-
pected to continue and perhaps
worsen, the Chinese have recog-
nized the problem and are tak-
ing s:tep8 to remedy it.
The First Five-Year Plan
goal for double-tracking was
increased during 1956 and, by
the end of the year, 500 miles
of line had been double-tracked.
Work was undertaken during the
year on nearly 160 miles of
double-track leading out of
Chengchow.
In 1957, three fifths of
the scheduled investment of
the Ministry of Railways is to
be spent on improving the
freight-carrying capacity of
the older lines. The year's
program includes reconstruc-
tion of some lines, 375 miles
of double-tracking, expansion
of yard facilities, installa-
tion of automatic signaling
devices, and procurement of ad-
ditional engines and freight
cars. During the Second--Five-
Year? Plan, a thorough rehabilita-
tion of existing lines will be
undertaken, highlighted by the
double-tracking of the entire
length of the Peiping-Wuhan
railroad.
Second Five-Year Plan
Proposals presented to the
eighth party congress in Septem-
ber 1956 called for the construc-
--tion, of from 5,000 to
Chinese Communist Machine For Laying Prefabricated Track Sections.
SECRET
5,600 miles of new
track during the Sec-
ond Five-Year Plan
(1958-1967). Among
the projects to be
finished by 1962 are
lines between Chengtu
and Kunming, Hunan
and Kweichow, Lanchow
and Paotow, Neichiang
and Kunming, Lanchow
and the Tsaidam Basin,
as well as two branch
lines designed to
serve potential oil
fields and other
economic installations
in Sinkiang. Work
will also be under-
taken on a connection
between Wuhan and Wuwei
via Sian, and perhaps
on one leading south-
ward from the Tsaidam
Basin to Lhasa, Tibet.
Construction-Equipment
The over-all
quality of construc-
tion has been, and
will probably continue
to be, good. Defects
have occurred; e.g.,
the official opening
of the Paochi-Chengtu
line was delayed more
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CURRENT INTELLIGENCE WEEKLY SUMMARY
28 March 1957
than six months while extensive
sections were reconstructed.
Such difficulties and delays
as have taken place can general-
ly be traced to rugged terrain
and the concomitant engineer-
ing problems, bad weather, and
too much haste in trying to
meet construction targets.
The USSR has given gener-
ously of guidance and advice
and the Chinese have been apt.
pupils. Basically, however,
the tremendous strides taken
by the Chinese in rail construc-
tion can be attributed to Pei-
ping's extremely skillful use
of hundreds of thousands of
corvee laborers, assisted by
a relatively small number of
specialized persons from the
SECRET
railway engineering divisions.
of the army.
Figures released by the
Chinese Communists show that
China in 1956 was producing,
about 65 percent of the net ad-
ditions to its motive power and
rolling stock inventory. Out-
put has consistently run behind
goals, however, and China will
probably have to continue to
rely on other countries to sup-
ply some of its needs. Since
1953, production of rolling
stock has been shifted to the
building of tank cars and 50-ton
freight cars. In 1956, China
produced 184 locomotives and 6,-
687 freight and passenger cars;
(Prepared by ORi"
and 6,800 cars.
goals for 1957 call for the
production of 160 locomotiyeR
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