CURRENT INTELLIGENCE WEEKLY SUMMARY

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• Collection: General CIA Records
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• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 42
• Document Creation Date: December 16, 2016
• Document Release Date: February 7, 2005
• Sequence Number: 1
• Publication Date: December 10, 1957
• Content Type: SUMMARY

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CONFIDENTIAL
OCI NO. 6417/57
102December 1957
CURRENT
INTELLIGENCE
WEEKLY
SUMMARY
DOCUMENT NO.
NO CHANGE IN C S? 0
in DEC(ASSIPED
CLASS. CHANGED TO:
NEXT REVIEW DATE:
AUTH:, t f 7G,
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
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CONFIDENTIAL
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State Department review completed
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THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
The Current Intelligence Weekly Summary has been prepared
primarily for the internal use of the Central Intelligence
Agency. It does not represent a complete coverage of all
current situations. Comments and conclusions represent
the immediate appraisal of the Office of Current Intelligence.
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OF IMMEDIATE INTEREST
THE BULGANIN LETTERS . . . . . . . . . . . . . . . . . . . Page 1
Premier Bulganin's letters to the heads of the
NATO governments and to Nehru on the eve of the Paris
NATO conference climax a world-wide propaganda cam-
paign by the Soviet bloc aimed at stimulating suspi-
cion of the motives of Western, particularly American,
government leaders in taking steps to increase NATO's
strength and unity. By formally reaffirming Soviet
willingness to engage in new high-level East-West talks
on outstanding issues and by suggesting a wide variety
of measures to lessen international tension, the let-
ters reinforce hints made privately by top Soviet lead-
ers to Western diplomats during the past two weeks
which bold out the prospect of a general East-West set-
tlement on the basis of the status quo.
THE NATO MEETING . . . . . . . . . . . . . . . . . . . . Page 3
On the eve of the NATO meeting from 16 to 18 Decem-
ber, Continental European members are stepping up their
campaign to impress on the United States their inten-
tion to proceed with closer military cooperation among
themselves, especially if satisfactory NATO-wide meas-
ures fail to develop. British-Continental differences
have been highlighted by the impasse between London and
Bonn over support-cost payments for British troops in
West Germany. Among non-NATO members in the free world,
only Japan has officially indicated a desire to be in-
cluded in any new arrangements for expanded cooperation.
SITUATION IN INDONrkS IA . . . . . . . . . . . . . . . . . . Page 4
The political and economic situation in Indonesia has
deteriorated further, particularly in Java, as the anti-
Dutch campaign has continued unabated. The Soviet bloc
moved quickly to exploit these circumstances and offered
to furnish technical personnel, shipping, and air services
to replace those hitherto provided by the Dutch.
The confused state of affairs has been further com-
plicated by late press reports that a triumvirate composed
of former Vice President Hatta, Premier Djuanda, and Army
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
PART I (continued)
Chief of Staff Nasution has taken over the government
from President Sukarno. These three men may have felt
that, in view of the worsening situation in Java, drastic
measures were called for to avoid a Communist takeover
and the fragmentation of the Indonesian republic.
NOTES AND COMMENTS
SUPREME SOVIET MEETING . . . . . . . . . . . . . . . . . Page 1
The Supreme Soviet session scheduled to begin on
19 December will probably be devoted to the routine
annual approval of the budget and discussing
and approving the 1958 economic plan, but no drastic
alterations in present economic policies are antic-
ipated. The Soviet leaders may also consider the time
ripe for another report on the international situa-
tion and Soviet foreign policy. The proposals in Bul-
ganin's notes to Western leaders o uld probably form
the basis of such a report; possible measures to bol-
ster the Warsaw pact might well follow a decision at
the
Paris conference to strengthen NATO militarily.
I I
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IFNI . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2
Fighting continues between Spanish troops and
Moroccan irregulars in the Spanish African enclave
of Ifni. Madrid apparently still hopes to launch a
successful counteroffensive from selected strong
points but, without substantial reinforcements, may
not be able to re-establish its authority over areas
now being abandoned. Such a development would seri-
ously weaken Spain's bargaining position in any future
territorial negotiations with Morocco. 25X1
MIDDLE EAST DEVELOPMENTS . . . . . . . . . . . . . . . . . Page 3
The prestige of Syrian Defense Minister Azm con-
tinues to grow. His rise and his openly pro-Soviet
policies, plus the gradually increasing influence of
local Communists, are causing more worry for Syria's
radical nationalists. Saudi-Egyptian relations re-
main very cool, with the Saudis complaining about
Egyptian propaganda treatment of King Saud. Iran
continues to be tempted by Soviet offers, including
a reported oil proposal which would give Iran more
than 75 percent of the profits. 25X1
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
PART II (continued)
PAKISTANI GOVERNMENT RESIGNS . . . . . . . . . . . . . . . Page 5
The resignation on 11 December of Prime Minister
Chundrigar's government in Pakistan is a blow to Presi-
dent Mirza's political prestige and constitutes the
most difficult problem he has faced since assuming the
presidency. With the breakup of the uneasy coalition
he promoted between his Republican party and Chundri-
gar's Moslem League in October, Mirza is at present
confronted with the choice of allowing a new coalition
government to be formed by politicians who have repudi-
ated his leadership or of resorting to direct authori-
tarian rule.
SOVIET LEADERS SPARK DOMESTIC CAMPAIGN ON COMMUNIST
CONFERENCES . . . . . . . . . . . . . . . . . . . . . . . Page 6
Most members of the top Soviet leadership have
been engaged in a campaign throughout the country
to present the results of the recent Moscow confer-
ences to the Soviet population as a major achieve-
ment in intrabloc and international diplomacy and
to remove whatever doubts may have arisen since the
20th party congress about bloc unity.
NEW SOVIET LONG-RANGE ATOMIC CANNON . . . . . . . . . . . Page 7
Two new self-propelled guns were displayed at
last month's 40th anniversary parade in Moscow. It
is estimated that one of the weapons could fire a 390-
pound, ram-jet-powered, high-explosive projectile to
a range of some 200 miles and an atomic warhead to a
range of some 30 miles, while the other could fire an
atomic round to about 90 miles. The accuracy of these
weapons is believed to compare favorably ided-
missile delivery systems of similar range.
EAST GERMAN REGIME STEPS UP ATTACKS ON EVANGELICAL
CHURCH . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8
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As part of its renewed policy of repression, the
East German regime has stepped up its program to force
the German Evangelical Church to separate into eastern
and western branches. The regime hopes to reduce the
influence of the church in East Germany as a rallying
point for resistance to communization. Persecution of
the church, however, will probably add to the alread
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
PART II (continued)
PEIPING SETS NEW ECONOMIC GOALS . . . . . . . . . . . . . Page 9
Communist China's long-range planning chief Li Fu-
chun has asserted that China will surpass Great Britain
in the production of steel and other industrial items
by 1972 and that some industrial targets for the Second
Five-Year Plan, beginning in 1958, will be raised. Pei-
ping seems to be proceeding with increased confidence
brought on by the success of the First Five-Year Plan
and, perhaps, by the results of recent talks in Moscow.
In agriculture, however, the confidence is somewhat tem-
pered, and original tar ets for major crops in 1962 have
been lowered.
EXPULSION OF PARTY RIGHTISTS EXPECTED IN COMMUNIST
CHINA . . . . . . . . . . . . . . . . . . . . . . . . . . Page 11
A statement last week by An Tzu-wen, a key figure
in Chinese Communist party personnel matters, strength-
eus previous indications that the party is headed for
a vigorous weeding out. Peiping is expected to an-
nounce plans for punishing rightists and other "undesir-
able" elements--possibly including some central commit-
tee members--at the next party congress, which regime
spokesmen have said will be held soon.
NORTH KOREA MAKES NEW PEACE OVERTURES TO SOUTH .
Premier Kim I1-sung has addressed new peace ap-
peals to South Korean audiences and intimated that he
is eager, pending "peaceful unification," to establish
de facto relations with Seoul. Kim for the first time
explicitly called for the withdrawal from Korea of
Chinese Communist as well as American forces and again
proposed the unsealing of the armistice line to permit
North-South trade. Pyongyang remains adamant against
unification based on UN-supervised elections.
. Page 11
KISHI' S SECOND ASIAN TOUR . . . . . . . . . . . . . . . . Page 12
The results of Japanese Prime Minister Kishi's
visit to seven Asian nations, Australia, and New Zea-
land, while not regarded as major diplomatic triumphs,
have been welcomed by Japan's critical press. Kishi
was greeted cordially in countries where postwar bitter-
ness toward Japan has been strongest and succeeded in
reaching understandings for settlement of disputes with
Indonesia and Australia.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
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PART II (continued)
ELECTIONS IN-THAILAND . . . . . . . . . . . . . . . . . . Page 13
Elections on 15 December to fill 160 seats in Thai-
land's unicameral legislature are intended primarily to
provide the civilian facade behind which Marshal Sarit and
his military group will continue to run the country. The
conservative and pro-Western Democrats are expected to
win the most seats, followed by Sarit's Unionists and
the left-wing Socialist Front. The elections will prob-
ably be relatively clean, partly because the military
group, which controls 123 appointive seats, feels it can
afford free elections.
THE CYPRUS SITUATION . . . . . . . . . . . . . . . . . . . Page 14
Rioting on Cyprus erupted with the opening of the
Cyprus debate in the UN General Assembly on 9 December.
EOKA has warned that "total war" will follow if the de-
bate does not lead to an acceptable resolution, but has
also indicated a willingness to postpone violence for
five or six weeks as requested by the new governor of
Cyprus. Greece continues to insist on British-Cypriot
.iegotiations toward self-determination, while Turkey
remains firm in support of partition. Compromise ef-
forts are likely to succeed in preventing a showdown at
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FRENCH SOCIALIST DIFFERENCES THREATEN GAILLARD COALITION . Page 15
The future of the Gaillard government may hinge
on the French Socialists' National Council meeting on
14-15 December, since many Socialists are increasingly
resentful over continued participation in a conserva.tive-
tinged government. Socialist leader Guy Mollet has been
forced to take a strongly doctrinaire approach in op-
posing some of Gaillard's anti-inflationary proposals,
and he will be under strong pressure to drop support of
the government's present Algerian policy. The Commu-
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LONDON'S MILITARY INTERVENTION IN BRITISH HONDURAS . . . . Page 16
Reinforcement of the British garrison in Belize on
6 December to prevent violence over the ouster of a local
government minister will provide Caribbean Communists
with material for renewed propaganda attacks on British
colonial policy and may adversely affect relations be-
tween the United Kingdom and the member states of the West
Indies Federation, to be inaugurated in April 1958.
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PART II (continued)
THE VENEZUELAN PRESIDENTIAL PLEBISCITE . . . . . . . . . . Page 17
Rumors of military disaffection and recent antigov-
ernment demonstrations by students have increased pub-
lic tension in Venezuela on the eve of President Perez
Jimenez' election plebiscite on 15 December by which he
plans to win a second five-year term. Although the sta-
bility of the government may be threatened, the regime
is believed capable of handling any violence during the
electoral period.
PATTERNS AND PERSPECTIVES
MOSCOW CONFERENCE OF WORLD COMMUNIST LEADERS . . . . . . . Page 1
The primary Soviet objectives at the Moscow con-
ferences of world Communist leaders in November were
to reassert the USSR's leadership of the Communist bloc
and to reinforce bloc unity. These aims required, how-
ever, some formulations in the communique and manifesto
which evaded rather than resolved difficult issues. Mao
Tse-tung's strong endorsement of the USSR's leading
position indicates a marked advance in the reaffirmation
of Soviet primacy, but subsequent statements by Gomulka,
combined with the failure of Yugoslavia to sign the 12-
nation communique, point to the continued existence of
divergencies in the Communist world.
ECONOMIC CONDITIONS IN EGYPT . . . . . . . . . . . . . . . Page 4
Egypt's economy has been able to make up many of
the losses resulting from the Suez crisis, but the past
year has seen a general slowing of economic activity,
a cutback in the Nasir regime's development program,
and increased dependence on the Soviet bloc. Without
greater foreign assistance than the recent Soviet line
of credit provides, Egypt probably cannot maintain even
its present low standard of living. While not irrev-
ocably tied to the Communist bloc, Egypt appears con-
siderably more dependent on it economically than any
other non-Communist nation.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
OF IMMEDIATE INTEREST
THE BULGANIN LETTERS
Premier Bulganin's letters
to the heads of the NATO govern-
ments and to Nehru on the eve
of the Paris meeting climax a
world-wide propaganda campaign
by the Soviet bloc aimed at
stimulating suspicion of the
motives of Western, particularly
American, government leaders in
taking steps to increase NATO's
strength and unity. By formally
reaffirming Soviet willingness
to engage in new high-level
East-West talks on outstanding
issues and by suggesting a wide
variety of measures to reduce
international tension, the let-
ters reinforce hints made pri-
vately by top Soviet leaders to
Western diplomats during the
past two weeks which hold out
the prospect of a general East-
West settlement on the basis of
the status quo.
The 10 December letter to
President Eisenhower recounts
in detail the dangers which "in-
tensifying the arms race" would
hold for the prospects for world
peace, and warns that "cata-
strophic consequences" would re-
sult from any attempt to impose
territorial changes by external
force or to upset the status quo
between the capitalist and com-
munist systems.
The message suggests a num-
ber of measures to increase in-
ternational confidence and slow
down the arms race: a. voluntary
renunciation by the nuclear pow-
ers of the use of nuclear weap-
ons, and a two-to-three-year ban
on nuclear weapons testing as of
1 January 1958; an agreement by
the nuclear powers not to sta-
tion nuclear weapons "of any
kind" on West German or East
German soil, plus an agreement
by those two countries and by
Poland and Czechoslovakia not
to produce or deploy such weap-
ons on their territories; a. non-
aggression pact among members
of NATO and the Warsaw pact; a
treaty of friendship between
the United States and the So-
viet Union plus increased trade,
broadened cultural and scientif-
ic contacts and a. halt in prop-
aganda, and a declaration re-
nouncing interference in Middle
Eastern internal affairs and
the use of force in dealing with
Middle Eastern questions.
Adoption of such measures,
Bulganin claims, would create
an atmosphere of confidence
making further steps possible,
including troop withdrawals from
foreign territories. Finally,
the letter urges a "personal
meeting of state leaders" to
discuss all outstanding problems.
These various suggestions re-
peat standing official Soviet
proposals, with the exception
that the letter falls short of
the Soviet nuclear weapons pro-
posal made to the UN last Sep-
tember by omitting any reference
to control provisions in connec-
tion with nuclear testing or to
a five-year duration for a re-
nunciation of the use of nuclear
weapons.
The letters to the West
European NATO members are couched
in terms designed to stimulate
fears that these countries will
be Soviet targets in case of a
future war if NATO, particularly
American, atomic and missile
bases are established on their
territories.
CONFIDENTIAL
OF IMMEDIATE INTERESTT p~~
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
The message to Chancellor
Adenauer refers to the "divi-
sion of labor" in NATO which
alleges that the United States
will supply "money and equip-
ment" and the other NATO mem-
bers will furnish "cannon fod-
der" and expose their territory
to the danger of "the first
blow of retaliation." The let-
ter repeats the proposals for
a "nuclear ban" in Germany, Po-
land, and Czechoslovakia and
for foreign troop withdrawals,
and cites the possibility of
progress in the current West
German - Soviet negotiations
in Moscow.
Bulganin's letter of
10
December to Nehru, made in
re-
ply to India's appeal to the
United States and the USSR to
halt nuclear tests and to dis-
arm, is intended to increase
suspicion of Western moves to
strengthen and unify NATO and
to add to neutralist pressure
on the West for immediate sus-
pension of nuclear tests. The
message, which praises India
and Nehru for their work as
"world peacemaker," like the
note'to Japan on 5 December
asking support for a test ban,
seeks to focus critical Asian
attention on the Soviet proposal
to halt nuclear testing as of
next month.
In other moves timed to
inhibit decision and action at
the NATO meeting, top Soviet
leaders stated privately to
Western ambassadors during the
past two weeks that the USSR
is willing to conclude a general
settlement of East-West prob-
lems on the basis of the status
quo and a guarantee of existing
boundaries and political systems.
On 3 December Khrushchev argued
with a group of ambassadors that
the West should recognize the
status quo in Eastern Europe
and should give up its "hopes"
of changing Communist regimes
in exchange for Soviet agreement
not to attempt to change the
system of"government in capital-
ist countries.
In a conversation with the
Swiss ambassador the next day,
Bulganin stated that Khrushchev
intended to allay Western fears
regarding the contradiction be-
tween the USSR's policy of peace-
ful coexistence, and the 21 No-
vember Communist bloc unity
declaration which urged a broad
front of all "progressive" ele-
ments to overcome the forces of
"aggression and reaction."
Elaborating on Khrushchev's
remarks, Bulganin stated that
the Soviet Union is prepared
to give assurances, on a recip-
rocal basis, against interven-
tion in the affairs of capital-
ist countries and denied that
Moscow is engaging in "sputnik
diplomacy." He claimed that
the USSR is now on a techno-
logical level with the West and
that this should encourage ac-
ceptance of the status quo.
Presidium member Mikoyan took
the same line in a conversation
with the Swiss ambassador on 7
December, stating that Soviet
success in establishing tech-
nological "parity" should facil-
itate political discussion be-
tween the USSR and the West,
inasmuch as the USSR formerly
suffered from an inferiority
complex which impeded negotia-
tions.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
THE NATO MEETING
On the eve of the NATO
meeting, Continental European
members are stepping up their
campaign to impress on the
United States their intention
to proceed with closer military
cooperation among themselves,
especially if satisfactory
NATO-wide measures fail to de-
velop. British-Continental
differences have been high-
lighted by the impasse between
London and Bonn over support-
cost payments for British troops
in West Germany. Among non-
NATO members in the free world,
only Japan has officially indi-
cated a desire to be included
in any new arrangements for ex-
panded cooperation.
There is increasing inter-
est in some measure of military
integration similar to the
abortive European Defense Commu-
nity. Several sources report
that France has formally pre-
sented Germany, Italy, and the
Benelux countries with a spe-
cific plan for six-nation inte-
gration on research, develop-
ment, and production of modern
weapons.
This implies an expansion
of integration along the lines
of EURATOM and the Common Mar-
ket, and a rejection of WEU, of
which Britain is a member. Any
decision by the Continental NATO
members to push any exclusive
arrangement would raise per-
plexing problems for the Euro-
pean integration movement it-
self. Dutch officials, for
example, have said that the
Netherlands could not afford to
remain outside such arrangements,
but are concerned over the emer-
gence of "uncoordinated Euro- 25X1
pean sectionalism."
Ipr oc eed-
ing to develop nuclear weapons.
A succession of recent public
and private statements seem
calculated to stress France's
determination not to accept a
secondary place in the alliance.
German Foreign Minister
Brentano's visit to London on
4 and 5 December failed to over-
come the support-cost impasse
caused by Bonn's refusal to con-
tinue contributing to the local
costs of British forces after
March 1958. London has asked
for $140,000,000 and has already
invoked NATO and WEU provisions
concerning financial distress
connected with stationing of
forces in member countries.
Britain has said that it
intends to maintain a 55,000-man
force in Germany if acceptable
financial arrangements can be
made; otherwise the "whole ques-
tion of the number of troops"
will have to be reconsidered.
This is apparently an attempt
to play on Continental concern
that Britain may withdraw all
its troops from Europe--a con-
cern which London knows indi-
rectly contributes to anxiety
over the continuation of the
American commitment in Europe.
Bonn shows more determina-
tion on the support-cost issue
than in previous years, when it
has compromised. West German
government leaders evidently
believe that British military
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
withdrawal from the Continent
would have its advantages. They
are probably convinced that Ger-
man security is best ensured by
German forces, and by the com-
mon European production of mod-
ern weapons, which would ulti-
mately lead to creation of
stronger "shield" forces armed
with tactical nuclear weapons
under European control.
Turkey approaches the NATO
conference with continuing con-
cern over the situation in Syria,
but confidently anticipating the
early receipt of American guided
missiles and rockets to bolster
the Turkish army. The Turkish
delegation will represent the
interests of friendly Middle
East countries and will seek a
clarification of the relation-
ship between NATO and the Bagh-
dad pact.
Outside of the NATO area,
interest in the forthcoming
meeting has been spotty. The
Japanese government told Ambas-
sador MacArthur in late November
that it hoped means could be
found to associate Japan with
"appropriate" aspects of pro-
grams developed at the meeting--
probably meaning any arrange-
ments for distribution of modern
weapons and exchange of military
information. In Southeast Asia,
Djakarta fears the meeting may
suggest general NATO support
for the Dutch position regarding
New Guinea.
Officials of the Moslem
members of the Baghdad pact met
in Ankara on 10 December for
policy talks concerning the con-
ference, and some of the Arab
countries have apparently sent
memoranda to guide the Turkish
delegation in discussions per-
taining to the Middle East.
Israeli leaders hope for the
formation of some link between
Israel and NATO that could lead
to a guarantee of Israeli fron-
tiers.
Interest in Latin America
has been slight, but Peruvian
President Prado publicly urged
a linking of NATO and OAS, and
the Brazilian foreign minister
has stated that his country
would like to join NATO if in-
vited.
Latest cress reports on the
~zdonesian situation state that
a triumvirate composed of former
Vice President Hatta, Premier
Djuanda, and Army Chief of Staff
Nasution has taken over the gov-
ernment from President Sukarno.
These reports also state that
fighting has broken out in Dja-
karta..
According to earlier in-
formation, army leaves had been
canceled, troops were confined
to barracks, and officers were
wearing battle dress. Premier
Djuanda was also reported to
have told parliament that Sukarno
is taking a "medical leave" and
would go to a "friendly country"
--probably India.
A coup against Sukarno
would have been precipitated for
a number of reasons, chief of
which would be the rapidly de-
teriorating political and eco-
nomic situation in Java result-
ing from the government-sponsored
anti-Dutch campaign which has
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been in progress since 2 Decem-
ber. Hatta, Djuanda, and Nasu-
tion may have felt that unless
drastic measures were taken to
retrieve the situation, the end
result would be Communist domi-
nation of Java and the fragmen-
tation of the Indonesian repub-
lic. In this connection, Suma-
tra is already said to have de-
clared its independence, but any
such action would probably be
rescinded if an effective mod-
erate government should estab-
lish itself in Djakarta.
Previously the military
commander in Central Sumatra
had taken steps to protect for-
eign business in his area and
to retain all revenues which
previously had gone to Djakarta.
The South Sumatran commander
had also assured local business-
men that the Dutch in the prov-
ince would be protected.
Prior to the reported ac-
tion against Sukarno, the anti-
Dutch campaign had continued
unabated. Affiliates of SOBSI,
the Communist-dominated labor
federation, usually seized a
firm, and then the government
took over from SOBSI. SOBSI,
however, had retained consider-
able influence in administering
many of these companies through
"labor assistance teams."
The anti-Dutch drive has
also been expanded to North Su-
matra, the only area in Sumatra
under direct Djakarta control.
The army commander there, how-
ever, has taken the precaution
of placing all Dutch enterprises
under military control, appar-
ently in the hope of preventing
SOBSI activity similar to that
in Java. Isolated and unoff i-
cial seizures of Dutch interests
have been reported from Palem-
bang in South Sumatra and Makas-
sar in Celebes. In both cities,
SOBSI affiliates predominate
among organized labor.
President Sukarno on 11
December made his first public
statement since the initiation
of the harsh measures against
the Dutch, indicated his ap-
proval of the campaign, and
stated there would be no compro-
mise or letup in the pressure
to force the Dutch to surrender
Irian.
Soviet bloc countries, mean-
while, had offered to replace
Dutch personnel. East Germany
volunteered to replace the Dutch
"in all fields," and Poland
offered shipping and technical
personnel.
Dutch reaction to the Indo-
nesian campaign has been moti-
vated by a desire not to pre-
clude all possibility of eventu-
ally retrieving some interests.
Nevertheless, at an emergency
meeting of the North Atlantic
Council on 7 December called by
the Dutch, their representative
declared that Indonesia is an
"acid test of NATO cooperation,"
and warned that the issue would
be raised at the mid-December
NATO meeting if the picture had
not improved by that time.
Dutch Minister of Defense
Staf has told Ambassador Young,
moreover, that if Holland's
NATO partners fail to "rise to
the test" there will be an in-
evitable Dutch revulsion against
NATO,, resulting in defense cut-
backs and the reduction of the
Netherlands' role in NATO to
something like that of Norway's
or Denmark's.
The Hague has been reluc-
tant to place any value on its
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commercial holdings in Indonesia
but accepts unofficial estimates
that they account for 3 percent
of the Netherlands' national in-
come.. Accordingly, the Ministry
of Finance estimates that the
uncompensated loss of their
$1-2 billion investment would
be serious, but not calamitous.
The Dutch may, however, find
difficulty in integrating ref-
ugees into the Dutch economy;
many of them have never lived
in the homeland. Housing is
certain to be a serious problem.
The Dutch are aware that
Indonesian pressure is in part
designed to promote bilateral
negotiations on New Guinea, and
the government has had some
pressure from Dutch business
interests, both in the Nether-
lands and in Indonesia, to
modify its stand. Ambassador
Young, however, believes Prime
Minister Drees has already def-
initely rejected their appeals,
and in view of the participation
in his coalition government of
some parties which think there
should be no sacrifice of prin-
ciple for the sake of "sordid
business interests," there is
little possibility of a revision
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12 December 1957
NOTES AND COMMENTS
SUPREME SOVIET MEETING
The session of the USSR
Supreme Soviet scheduled to be-
gin on 19 December will prob-
ably be devoted to the routine
annual approval of the 1958
budget and, following the prec-
edent set last February of pre-
senting the annual economic
plan to the Supreme Soviet, to
discussing and approving the
1958 economic plan. The Soviet
leaders may also consider the
time ripe for another report on
the international situation and
Soviet foreign policy.
The 1958 budget and plan
will probably refct a continu-
ation of present policies and
trends without any drastic al-
terations, since the new system
of regional administration of
the economy is still being
shaken dowel and Soviet planners
are prepaxling a new seven-year
plan to begin in 1959. However,
in the 1958 budget and plan,
serious attention must again be
devoted to housing and other
consumer programs--important as
incentives for increased pro-
duction--and to improving the
supply of raw materials. Raw
materials extraction problems
have since early 1956 become an
important curb on the speed of
industrial growth.
An appraisal of the first
six months of operation of the
new regional councils of na-
tional economy (sovnarkhozy)
may be made at the Supreme So-
viet. While preliminary esti-
mates of industrial output for
the period indicate moderate
overfulfillment of the modest
1957 plan, they do not appear
to meet the optimistic expecta-
tions voiced by Khrushchev and'
others last spring. The reorgan-
ization itself will probably not
be attacked, however, but there
is some possibility that minor
changes may be made in the
sovnarkhoz system--for example,
an attempt to simplify coordi-
nation problems by reducing the
number of economic-administra-
tive regions.
The timing of the Supreme
Soviet session--just after the
scheduled close of the Paris
NATO conference--may well have
been arranged with a view to
providing the Kremlin with a
suitable occasion for reviewing
recent Soviet foreign policy
developments. The proposals
suggested in the Bulganin let-
ters to President Eisenhower..
and the heads of other princi-
pal NATO governments would prob-
ably form the basis of such a
review (see Part I, page 1).
Moves designed to counter the
effects of any decisions at
Paris may be announced, with
the most likely countermove to
any military strengthening of
NATO being a bolstering of the
Warsaw pact. On 21 November,
Khrushchev warned that specific
measures. to increase the mili-
tary potential of Moscow's War-
saw pact allies would depend on
the outcome of the NATO meeting.
Changes in high-level gov-
ernment personnel assignments,
a function of the Supreme So-
viet, might be made at this
session. However, "westerners
in conversation with Soviet of-
ficials and Supreme Soviet
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12 December 1957
deputies at recent diplomatic
functions have gained the im-
pression that no major personnel
shifts are planned.
prior approval.
Fighting between Spanish
troops and Moroccan irregulars
continues in the Spanish Afri-
can enclave of Ifni. Madrid
apparently still hopes to launch
a successful counteroffensive
from selected strong points
but, without substantial rein-
forcements, may not be able to
re-establish its authority over
areas now being abandoned.
Such a development would seri-
ously weaken Spain's bargaining
position in any future terri-
torial negotiations
with Morocco.
Spain's inabil-
ity to suppress the
guerrillas was in ef-
fect acknowledged
this week by the with-
drawal of Spanish
forces from frontier
outposts to defense
perimeters around
Sidi Ifni, capital of
the enclave, and four
principal centers in
the Southern Morocco
protectorate and
Spanish Sahara.. Span-
ish military leaders
plan to conduct re-
taliatory raids be-
yond these perime-
ters but, apparently,
still within the bor-
ders of the Spanish
territories. Spain
now has some 6,000
to 8,000 troops de-
fending Sidi If ni and
approximately 4,000
Any important economic or
foreign policy decisions or'
personnel changes would probably
necessitate a meeting of the
party central committee for
men in Southern Morocco and
Spanish Sahara.
Spanish officials believe
the Moroccan Army of Liberation
has recently received substan-
tial reinforcements from Moroc-
co and Algeria and may now to-
tal as many as 6,000 guerrillas
in and near Ifni and another
2,500 fighters in the terri-
tories to the south. An early
insurgent attack in force
against Sidi Ifni is anticipated.
* Spanish Defense perimeters
established at these points
ATLANTIC OCEAN
CANARY ISLANDS C _,ep
17 sourHlRN
r7
V
MOROCCO
Villa Bens Spa.. Prot. )
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12 December 1957
Regular Moroccan army troops
stationed near the Spanish pos-
sessions, while avoiding any
formal involvement, are prob-
ably providing important logis-
tical support and may be more
directly engaged in the affair.
Spanish concern over de-
velopments in the Ifni area is
also reflected in a recent re-
quest for French support. The
French embassy in Rabat has
stated, however, that France
would not furnish direct mili-
tary assistance within Morocco
but may cooperate in the Saha-
ran regions outside Morocco and
Ifni. The withdrawals recently
ordered by Spain in this area
probably increase the likeli-
hood of such collaboration by
France, which is concerned about
Moroccan nationalist preten-
sions to Mauritania and the ex-
treme western triangle of Al-
geria.
Spain may attempt to solve
the Ifni problem through early
direct talks with Moroccan King
Mohamed V, who is scheduled to
return from his visit to the
United States this week end.
Madrid is apparently prepared
to negotiate an adjustment of
the enclave's frontiers but
not to surrender the area en-
tirely. Such a surrender, it
is feared, would make it more
difficult for Spain to retain
possession of its other ter-
ritories in the area.
MIDDLE EAST DEVELOPMENTS
Syria
Syria this week announced
it would no longer cooperate
with the chairman of the Is-
raeli-Syrian Mixed Armistice
Commission, a Norwegian officer
assigned to the UN truce team
in Palestine. Part of the prob-
lem in this case seems to have
arisen out of UN Secretary Gen-
eral Hammarskjold's discussions
in Damascus last week, when he
is reported to have told the
Syrians that the question of
Israel's de facto occupation
of the demilitarized zones might
better be taken up by the local
truce machinery than submitted
to the UN Security Council. The
Syrians apparently took the
first opportunity to follow his
advice, but claim to have been
balked by the Norwegian of-
ficer. The real issue involved
may be a Syrian fear that too
?ublicity had accompanied
recent relatively amicable bor-
der talks with the Israelis,
and that this must be countered
by-some unfriendly gesture.
Khalid al-Azm, already
Syria's defense minister, act-
ing finance minister, and chair-
man of the economic development
board, this week became deputy
prime minister as well. He will
probably gain still another
boost to his growing prestige
from his trip to Moscow, where
he arrived on 10 December after
a brief stopover in Hungary.
Azm is heading a 25-man delega-
tion to follow up the Syrian-
Soviet economic accord which
he helped negotiate last August.
In addition to presenting the
Soviet authorities with a list
of the specific projects Syria
wishes to undertake, Azm may
seek to modify the repayment
terms in order to make them con-
form more closely to those
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CURRENT INTELLIGENCE WEEKLY SUMMARY
subsequently obtained by
Egypt.
probably not very well founded,
that Nasir might launch an anti
Saud press campaign. The Saudi
ambassador in Cairo has indi-
cated he is unhappy with the
treatment given his sovereign
by Egyptian propaganda media--
the Egyptians failed to broad-
cast a recording the ambassador
had made for the fourth anni-
versary of King Saud's accession.
According to the ambassador,
"the trguble with Egyptians is
that they have no gratitude."
Meanwhile the meeting between
King Faysal of Iraq and King
Saud in Riyadh seems to have
gone off smoothly, but the only
tangible result known thus far
is a "cultural" agreement.
Iran
Egypt - Saudi Arabia
Nasir's speech on 6 Decem-
ber, touted in the regime's
press as the occasion for major
policy pronouncements, turned
out to be a banal rehearsal of
the standard promises and im-
plied complaints. The American
embassy in Cairo believes Nasir.
has, for most Egyptians, be-
come another "Mr. Big" of a kind
they have seen come and go many
times before. Certainly his
latest effort contained nothing
to capture the imagination; the
mishap in the American earth
satellite project enabled the
Cairo press to turn attention
quickly away from Nasir's speech
to a more congenial theme--the
"failure" of Western "imperial-
ism,"
Saudi-Egyptian relations
appear to. be growing still cool-
er; there is some speculation,
Russian assistance offers
continue to tempt Iran while the
Shah marks time pending an Ameri-
can decision on the extent of
the USSR was
prepared to sign an oil agree-
ment which would give Iran more
than 75 percent of the "profits"
and purchase "all" Iranian oil.
This offer is part of the USSR's
effort to minimize Iran's eco-
nomic, and ultimately its mili-
tary, attachments to the West.
The Shah warns that if such of-
fers are published, he may be
forced to accept them to satisfy
the Iranian people in the ab-
sence of increased American aid.
While the Shah has many
ties with the United States which
would deter him from reorienting
his foreign policy, he could come
under increasing Soviet influence
either inadvertently through a
rapid expansion of economic
relations with the USSR or by
ultimately becoming convinced,
as a result of intensive Soviet
propaganda, that the power of
the USSR is such that he must
do business with it.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
The resignation on 11 De-
cember of Prime Minister Chun-
drigar's government in Pakistan
is a blow to President Mirza's
political prestige and consti-
tutes the most difficult prob-
lem he has faced since assuming
the presidency. With the break-
up of the uneasy coalition he
promoted between his Republican
party and Chundrigar's Moslem
League in October, Mirza is at
present confronted with the
choice of allowing a new coali-
tion government to be formed by
politicians who have repudiated
his leadership or of resorting
to direct authoritarian rule.
The latter meeting re-
sulted in a statement reported-
ly signed by 52 assembly mem-
bers, well over a majority,
declaring they would support
no government formed by Chun-
drigar or any other Moslem
League leader but would accept
a person nominated by Than
Sahib. These developments seem
to indicate that Chundrigar's
current attempt will fail,
leaving Mirza with no parlia-
mentary alternative but to sanc-
tion a new coalition favoring
early elections under the pres-
ent joint system.
Chundrigar;resigned after
being informed by the spokesman
of the Republican party, Dr.
Than Sahib, that the Republicans
could not agree to back the Mos-
lem League's plan to pass a bill
restoring the system of separate
communal electorates during a
special session of the National
Assembly scheduled for 11 Decem-
ber. Mirza then postponed the
assembly session for three weeks,
asked Chundrigar to continue in
office, and commissioned him to
try to form a new government.
Maneuvering which followed
the government's resignation ap-
parently, produced a division of
various political groups into
two opposing camps. The Moslem
League and remnants of the out-
going coalition consulted with
Chundrigar, while Republican,
Awami League, and leftist Na-
tional Awami party assemblymen,
and several splinter and minori-
ty groups met with Than Sahib.
The Republican challenge
to Mirza, who has sponsored
the party since its inception
in 1955, will demonstrate his
present inability to control
his followers in a: showdown
and is likely to weaken sub-
stantially his position in
the political arena. Mirza may
be restrained from resorting
to authoritarian rule by re-
cent evidence of a decline in
the support he has enjoyed
among such elements as the army,
the civil service, and certain
political quarters.
The political instability
in Pakistan has already re-
sulted in a request that
Afghan King Zahir Than post-
pone indefinitely his visit
to Karachi. This postpone-
ment will impede further
progress toward a transit
agreement, an increase in
trade, and settlement of the
Pushtoonistan issue.
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
SOVIET LEADERS SPARK DOMESTIC CAMPAIGN ON COMMUNIST CONFERENCES
Most members of the top
Soviet leadership have been en-
gaged in a campaign throughout
the USSR since 26 November, to
present the results of the re-
cent Moscow conferences to the
Soviet population as a major
achievement in intrabloc and
international diplomacy and to
remove whatever doubts may have
arisen since the 20th party con-
gress about bloc unity. The
success claimed for the con-
ferences is being linked with
assertions of Soviet industrial
achievement and technological
superiority as part of an effort
to elicit popular support and
enthusiasm for the regime.
Since the campaign began,
Khrushchev, Furtseva, and Pos-
pelov have addressed meetings
in Moscow, while several of
their fellow party presidium
members have presided at gather-
ings in their provincial baili-
wicks. Of the full members of
the presidium, Kozlov has spoken
in Leningrad, Ignatov in Gorkiy,
and Kirichenko in Kiev; of the
candidate members, Kirilenko has
spoken in Sverdlovsk, Kalnberzn
in Riga, Mukhitdinov in Tashkent,
and Mzhavanadze in Tbilisi.
Kuusinen and Shvernik, full
members of the presidium, and
candidate member Pospelov were
on hand to do the honors in Es-
tonia, Lithuania, and Novosi-
birsk, respectively, where the
party chiefs are not presidium
members.
Mikhail Suslov discussed
the results of the Moscow con-
ferences in Rostov on 2 December
and in Voronezh on 4 December.
His extended stay suggests that
he may also have been involved
in the administrative changes
resulting from the recent aboli-
tion of two oblasts in this area.
Having attained a higher status
in the party presidium as a re-
sult of the purges in June and
October, Suslov now may be taking
on new responsibilities in inter-
nal affairs in addition to his
duties of supervising relations
with the satellites and other
Communist parties.
Bulganin, Mikoyan, Brezh-
nev, and Belyayev are apparently
occupied with other affairs in
Moscow and have not thus far
participated in the nationwide
campaign. Presidium member Aris-
tov, who returned to Moscow
shortly before the 40th anniver-
sary celebration from a special
Far Eastern trip, has not been
mentioned publicly since 8 No-
vember and did not participate
in the discussions with for-
eign Communist leaders.
The campaign's keynote of
self-confidence and optimism was
sounded in Moscow by Furtseva,
who claimed that the Communist
meetings marked a strengthening
of bloc unity and assured the
international Communist movement
of continued success. Kirichenko,
speaking in Kiev, declared that
"the socialist system has proved
its superiority over capitalism,
not only by the tempo of econom-
ic development and material re-
sources, but also by the level
of science and technology."
To supplement the efforts
of the Soviet leaders, the cam-
paign now is being extended to
lower levels, as local party
officials have begun to report
to meetings organized in raions,
factories, and villages.
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12 December 1957
NEW SOVIET LONG-RANGE ATOMIC CANNON
Two new self-propelled guns
were displayed at last month's
40th anniversary parade in Mos-
cow. It is estimated that one
of the weapons could fire a
390-pound ram-jet-powered, high-
explosive projectile to a range
of some 200 miles and an atomic
warhead to a range of some 30
miles, while the other could
fire an atomic round to about
90 miles. The accuracy of these
weapons is believed to compare
favorably with guided-missile
delivery systems of similar
range. While these weapons may
be experimental models intro-
duced at the parade for propa-
ganda purposes, production costs
lower than those for guided-
that the latter weapon will
probably fire a projectile of
considerable weight. The So-
viet military attache in London
stated on 19 November that "the
unusually large artillery
piece" was a rifled 250-mm.
piece which fired a rocket-type
shell capable of delivering an
atomic warhead. The fact that
both guns are mounted on a
lengthened heavy tank chassis
points up the Soviet emphasis
on mobility even in the field
of superheavy weapons.
uilssilu Systwas acne the rela-
tive simplicity of operation
and auxiliary equipment may in-
duce the USSR to produce them
in quantity.
One of the guns, to the
right in the photo, appears to
be a conventional artillery
piece, while the other lacks
the recoil mechanism, jacket,
trail spades, and tube taper
of a conventional piece and ap-
pears to have thinner tube walls
and a very small and light
breech mechanism. The size of
the loading mechanism indicates
unconventional gun shown in
the parade is believed to fire
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a round which is a further de-
velopment of this project. The
initial thrust of the round is
provided by a rocket motor,
and a self-contained ram-jet
motor gives additional thrust
once the round has reached suf-
ficient velocity.
powered, high-explosive round
to a range of approximately 200
miles. Weight limitations pre-
clude the placing of both an
atomic warhead and a ram-jet
motor in the same projectile
and would limit the range of
an atomic warhead to some 30
miles. (Pre-
pared jointly with OSI
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could fire a 390-pound, ram-jet-
EAST GERMAN REGIME STEPS UP ATTACKS ON EVANGELICAL CHURCH
As part of its renewed
policy of repression, the East
German regime has stepped up
its program to force the German
Evangelical Church to separate
into eastern and western branches.
Recent press attacks, arrests
of church officials, and re-
striction of church functions
have characterized this latest
effort. The regime hopes to
reduce the influence of the
church in East Germany as a
rallying point for resistance
to communization. Persecution
of the church, however, will
probably add to the already
strong resentment of the regime
in East Germany.
Editorials in the Social-
ist Unity (Communist) party
(SED) newspaper Neues Deutsch-
land on 4 and 6 cem ez' set
the tone of the attacks, charg-
ing that the church is in ef-
fect an adjunct of NATO and
supports aggressive measures
against East Germany. The sole
requirement for the relaxation
of tensions was said to be that
church officers stop executing
the orders of the Western "mili-
tary church" and its chief,'
Bishop Dibelius. In other Com-
munist newspapers, the church
has been described as "anti-
socialist," "antidemocratic"
and a "hotbed of reaction."
Several ministers refusing
church burials to nonchurch
members, particularly Communists
and members of their families,
have been subjected to vicious
attacks by the press and by
Communist organizations. Church
officials have been arrested on
such charges as denial of church
burials, currency and goods
smuggling, and "incitement to
antistate activity." Communist-
inspired protest meetings in a
number of areas have demanded
that action be taken against
offending pastors.
The most severe sentence
yet given a churchman was the
five-year prison term recently
imposed on the student pastor
at Leipzig University for al-
leged antistate crimes, includ-
ing opposition to the Communist
youth dedication ceremony, con-
tact with West German church
groups, urging a general strike
during the Hungarian uprising,
and "slander against the state."
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12 December 1957
The puppet eastern Chris-
tian Democratic Union (CDU),
in its strongest opposition to
the church, recently came out
in support of the Communists,
recommending state control of
church finances in order to
avoid "strengthening reaction-
ary circles in the church
leadership." The policy en-
dorsed by the CDU would mean
that state subsidies would be
paid directly to individual
pastors, bypassing the central
church organization, and would
leave pastors open to greater
pressures to conform to regime
demands.
The militant opposition
of the church indicates that it
will remain a strong anti-Commu-
nist factor in East Germany.
The popular will to resist Com-
munist pressures is strong, and
many East Germans, even some who
are not devout Christians, be-
lieve the government is invading
an area of conscience where it
has no right to intrude. Bishop
Dibelius, preaching in East Ber-
lin on 1 December, defied the
regime and called on the people
to reject Communism. The church
synod on 6 December stated that
it is impossible for Christians
to believe in God and Communism
simultaneously, and adopted a
resolution to the effect that
"not even fear must drive us
to acknowled such a concept."
PEIPING SETS NEW ECONOMIC GOALS
Communist China's long-
range planning chief Li Fu-chun
has asserted that China will
surpass Great Britain in the
production of steel and other
industrial items by 1972 and
that some industrial targets
for the Second Five-Year Plan
(1958-62) will be raised. After
a year of relative caution, Pei-
ping seems once again to be pro-
ceeding with increased confi-
dence brought on by the suc-
cess of the First Five-Year
Plan (1953-57) and, perhaps, by
the results of recent talks held
in Moscow. In the case of agri-
culture, however, the confidence
is somewhat tempered,,and the
original ambitious targets for
major crops in 1962 have been
lowered.
Li Fu-chun told a trade
union congress in Peiping that
by 1972 China would be produc-
ing 35,000,000-40,000,000 tons
of steel, an amount, he said,
Great Britain will find diffi-
cult to match even if the "in-
evitable" capitalist depression
is not taken into account. Li
also assured his listeners that
China can in the same period
surpass Britain in the produc-
tion of coal, machine tools,
cement, and chemical fertilizer.
Discussing the Second Five-
Year Plan, Li said the principles
proposed by the party central
committee in September 1956
"remain the principles to which
we must conform." Li reiterated
that heavy industry is the "core"
of economic construction and the
"material basis" of all econom-
ic advance. He acknowledged
that experience gained since the
party congress had increased
Peiping's "understanding of eco-
nomic conditions" and led to
certain adjustments in the "tasks
and targets" proposed. Although
not all targets have yet been
finalized, some industrial goals
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12 December 1957
CHINESE COMMUNIST PRODUCTION
ESTIMATE FOR 1957 - NEW 2ND FIVE-YEAR PLAN GOALS (1958-62) a ORIGINAL 2ND FIVE-YEAR PLAN GOALS
STEEL
COAL
CHEMICAL
FERTILIZERS
CEMENT
MILLION METRIC TONS
MILLION METRIC TONS
MIWON METRIC TONS
MIWON METRIC TONS
12.0
10.0.12.0
230.0
1.2
7.0
12.5-14.5
5.24
il
hI
LI
2
tI
n
n
i
rr
ELECTRIC
POWER
GRAIN
COTTON
HOGS
BILLION K W H
MILLION METRIC TONS
MILLION METRIC TONS
MILLION HEAD
44.0 40
0-430
2400 250.0
2.4
250. 0
20?
II
iiitt
iIiI.
J
have been raised slightly and
major agricultural ones lowered.
Li reviewed the achieve-
ments of the regime's highly
successful First Five-Year Plan.
The total value of industrial
production more than doubled,
and 57 of the vital 156 Soviet-
aid industrial projects were
completed. The industrial base
in the Northeast, centered
around Anshan, was "basically
completed," suggesting that the
bulk of construction activity
in the future will shift else-
where. The only major indus--
trial item which fell short of
programed levels was petroleum,
the output of which will reach
only 1,500,000 tons this year
as compared with the over 2,-
000,000 tons called for in the
plan. In addition, Li announced
that the initial 5,000,000-6,-
000,000-ton petroleum target
for the Second Five-Year Plan
had been lowered.
Li quoted initial estimates
that the 1957 food-grain produc-
tion had reached 185,000,000
tons, 2,500,000 tons over last
year. For the first time since
the Communists came to power,
the percentage increase in food-
grain production was less than
the percentage increase in popu-
lation. Li said, as have Chi-
nese Communist commentators for
the past year, that more atten-
tion must be paid to agriculture.
25X1
Peiping has said it in-
tends to spend more on agricul-
ture and related industry, such
as the chemical fertilizer in-
dustry. In fact,':the most dra-
matic change in targets for the
Second Five-Year Plan is the
doubling of the chemical fer-
tilizer goal. Even so, the
slightly decreased goals for
agricultural output still seem
largely unattainable. If, how-
ever, the Chinese achieve slight-
ly over half the programed ag-
ricultural increases, they should 25X1
be able to squeeze out the funds
needed to pay for scheduled in-
dustrial advances.
(Prepared by ORR)
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EXPULSION OF PARTY RIGHTISTS EXPECTED IN COMMUNIST CHINA
A statement last week by
An Tzu-wen, a key figure in
Chinese Communist party per-
sonnel matters, strengthens
previous indications that the
party is headed for a vigorous
weeding out. Peiping is ex-
pected to announce plans for
punishing rightists and other
"undesirable" elements--pos-'
sibly including some central
committee members--at the next
party congress, which regime
spokesmen have said will be
held soon.
An has recently been iden-
tified as head of the party's
organization department, which
is responsible for recruiting
and assigning most of the par-
ty membership. In a 5 Decem-
ber article in People's Daily,
the organ of the central com-
mittee, An noted that 810,000
party and government workers
have been relieved of their
posts in 1957 and sent to do
"productive" work at lower
levels. He promised that addi-
tional measures would be taken
to "raise the Marxist-Leninist
and vocational levels of offi-
cials."
Persons identified as
rightists will probably be the
first to feel the full weight.
of party displeasure. Writing
in the People's Daily last
September, An said that al-
though rightists within the
party were small in number,
their presence seriously en-
dangered the undertakings of
the party. Teng Hsiao-ping,
secretary general of the party
and An's chief, made the same
point in a major report to the
central committee plenum on
23 September.
Peiping has publicly at-
tacked only about 60 party mem-
bers--all minor figures--as
rightists. However, the re-
gime's admission that more than
100 party rightists have been
uncovered in Peiping and in An-
hwei Province alone shows that
rightist activity in party ranks
has been much more extensive
than the number of named of-
fenders would suggest.
to the campaign.
On 5 December Peiping ended
a lull in publicity concerning
the antirightist campaign with
the announcement that Wang Han,
a middle-level party and gov-
ernment official, had been ex-
posed as a rightist. Wang, a
veteran Communist of 25 years'
service, is a vice minister in
the Ministry of Supervision and
an alternate member of the par-
ty control commission. Higher
level officials than Wang are
likely to be involved before
the campaign ends. The demotion
or expulsion of one or two mem-
bers of the central committee--
several of whom have been un-
explainably out of the news--
would provide a suitable climax
NORTH KOREA MAKES NEW PEACE OVERTURES TO SOUTH
Premier Kim II-sung devoted
a large part of his central
committee report on the Moscow
conferences to peace appeals
addressed to South Korean
audiences and to intimations
that he is eager, pending the
"peaceful unification" of Korea,
to establish de facto relations
with Seoul.
Enlarging on Pyongyang's
standard demand that all for-
eign troops be withdrawn, Kim
for the first time explicitly
called for the withdrawal from
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Korea of Chinese Communist as
well as American forces.
In support of his moderate
position, Kim asked, "Why can-
not one people, living in the
same country, freely travel
north and south and exchange
goods and even letters?" He
proposed unsealing the armi-
stice line to permit North-
South trade, and offered to pro-
vide the South with electricity
and industrial products and to
permit fishing off the North
Korean coast. He avoided men-
tioning, however, the recently
adopted UN resolution for uni-
fication through the holding
of free elections supervised
by the United Nations, and re-
peated Pyongyang's line that
unification should be solved
by the "Korean people them-
selves."
The North Korean leaders
remain adamant against unifica-
tion based on general elections
in which the South, with a popu-
lation of 21,000,000, would
have a marked advantage over
the northern regime governing
only 8,000,000 people. They
are displaying instead a "fra-
ternal" willingness to deal
directly with the authorities
in the South on a de facto "two
Koreas" basis. Their failure
to include candidates represent-
ing southern constituencies in
the elections last August for
the Supreme People's Assembly
indicates a realistic decision
to drop their previous pretense
of speaking for the entire Ko-
rean populace.
To intensify the impact of
his proposals for North-South
contacts, Kim II-sung has cou-
pled them with propaganda ex-
ploitation of recent incidents
between American troops and
Korean civilians. He claimed
that American "imperialist rule"
has resulted in "unbearable
suffering" for the populace and
noted that the situation is now
"ripe" for a unification drive
in the South in the form of a
national united front of various
classes. The American embassy
in Seoul reported last month
that Pyongyang's proposals for
peaceful unification may have a
wider acceptance among various seg-
ments of. the South Korean populace
than previously has been supposed.
Pyongyang apparently is
seeking to exploit this soft
spot in President Rhee's anti-
Communist front by stepping up
its agent activity in the South
to coincide with its propaganda
effort.
The results of Japanese
Prime Minister Kishi's second
Asian tour, which also included
visits to Australia and New Zea-
land, have been welcomed by Ja-
pan's critical press, although
apparently no major diplomatic
triumphs were achieved. There
had been wide speculation he
would attempt to capitalize on
a successful trip by holding
early elections, but Kishi an-
pounced on his return that he
did not have any such plan.
The Asian portion of his
tour took Kishi to South Vietnam,
Laos, Cambodia, Malaya, Singa-
pore, Indonesia, and the Philip-
pines. In addition to being re-
ceived cordially and without any
notable incidents in those coun-
tries where post-World War II
bitterness toward Japan has been
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most pronounced, the Japanese
prime minister achieved agree-
ment in principle on two major
problems of long standing--rep-
arations for Indonesia and Jap-
anese pearl fishing rights off
the Australian continental
shelf. Only in the Philippines,
where Kishi arrived on the anni-
versary of the Japanese inva;
sion and at a time when Japa-
nese nationals there are in-
volved in trade and travel dis-
putes, did any unpleasantness
occur.
Kishi's second tour dif-
fered markedly from his first
trip last May. At that time,
he visited Asian countries with
which Japan's relations were
relatively friendly and di-
rected himself toward rallying
Asian opinion on international
issues such as cessation of nu-
clear tests, Asian cooperation
in the United Nations, and sup-
port for a regional development
fund. On his second trip, Kishi
visited the less friendly coun-
tries and concentrated, first,
on breaking down barriers of
animosity and, second, on seek-
ing solutions to bilateral prob-
lems which have been impeding
the development of closer eco-
nomic relations.
The most important result
of the trip was the understand-
ing reached with Indonesian Pre-
mier Djuanda on reparations.
They agreed that Japan would
pay $223,000,000 in direct
grants over 12 years, would can-
cel Indonesia's $177,000,000
trade debt to Japan, and would
extend $400,000,000 in loans
and investments. Final details
are to be worked out shortly.
The understanding was greeted
with mixed feelings in Japan--
relief that the problem had
been settled but concern about
Japanese ability to pay such a
large amount. Apparently little
progress was made toward a rep-
arations settlement with South
Vietnam.
Although Kishi did not em-
phasize his desire for a re-
gional development fund on this
trip, he did discuss it in gen-
eral terms. Indications are
that he may be altering his
thinking in favor of bilateral,
ro'ect-b - ro'ect assistance.
Elections on 15 December
to fill 160 seats in Thailand's
unicameral legislature are in-
tended primarily to provide the
civilian facade behind which
Marshal Sarit and his military
group will continue to run the
country. Regardless of the out-
come of the elections, the mili-
tary is assured of dominance in
the next government through its
control of the 123 appointed
seats in the National Assembly.
The political orientation of
the civilian elements with which
the regime will have to work,
however, will have some bearing
on the government's policies.
Over 800 candidates repre-
senting 19 parties are contest-
ants in the elections. The con-
servative and pro-Western Demo-
crats have 142 candidates and
Sarit's Unionist party 140.
The left-wing Socialist Front,
dominated by Thep Chotinuchit's
Economist party, has 100 candi-
dates.
Most observers expect the
Democrats to win the largest
number-of seats, followed by
the Unionists and Economists in
that order. The Democrats'
greatest asset is their popular
leader, former Premier Khuang
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CURRENT INTELLIGENCE WEEKLY SUMMARY
Aphaiwong, who is a highly ar-
ticulate and witty campaigner.
The Unionists, who have made a
fumbling attempt to adopt a
middle-of-the-road policy between
the Democrats and the Socialist
Front, suffer from disunity
and weak leadership, but will
profit from the public's knowl-
edge that Sarit backs them. The
Socialist Front is strong in
the relatively underdeveloped
northeast and, according to a
recent report, may make gains
in southern Thailand.
The campaign has been rela-
tively quiet. Foreign policy,
particularly Thailand's member-
ship in SEATO, has been the
principal issue. The Democrats
have strongly defended SEATO;
the Unionists support it, but
with less enthusiasm; and the So-
cialist Front has attacked it,
calling for a neutral foreign
policy. The elections may thus
provide some measure of popular
attitudes toward SEATO. They
may also give some insight in-
to the degree of influence ex-
ercised on public opinion by
Bangkok's largely leftist press.
The elections are a direct
outgrowth of the Sarit-led 16
September coup d'etat resulting
in the ouster of Premier Phibun
and Police Director General
Phao. Almost immediately after
the coup, Sarit asked the King
to dissolve the legislature,
which had been elected amid
charges of fraud last February.
The elections this month
are generally expected to be
relatively free. Because of
his pose as the champion of
government reform, Sarit will
be in a poor position to under-
take illegal actions. Moreover,
the military probably feels it
can afford to permit clean
elections, since it will be
able to forge a workable
coalition with the elements
expected to win at the polls
and the 123 appointed members.
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Coincident with the open-
ing of the Cyprus debate in the
UN General Assembly on 9 Decem-
ber, Greek Cypriots engaged in
the worst rioting of their two-
year campaign for self-determi-
nation. The Greek Cypriot un-
derground organization EOKA has
warned of "total war" against
the British if the UN debate
does not lead to satisfactory
resolution, but has also indi-
cated a willingness to postpone
violence for five or six weeks
as requested by the new governor
of Cyprus, Sir Hugh Foot. In
addition, clashes occurred be-
tween Greek and Turkish Cypriots
which could be forerunners of
large-scale communal violence
on Cyprus and an eventual break
in diplomatic relations between
Athens and Ankara.
Greek Cypriot officials
are refusing to cooperate with
Foot, until Archbishop Makarios
is allowed to return to the
island and all emergency regu-
lations are rescinded. The re-
turn of Makarios, however, would
cause a violent reaction in
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
Turkey and among the Turkish
Cypriots.
The Greek government, fear-
ing exploitation of the Cyprus
issue by the opposition in Ath-
ens, must remain firm on the
issue in its public statements.
Athens insists on an agreement
bated on self-determination,
not specifically prohibiting
union of the island with Greece.
The Greeks continue to hold to
their position that Turkey is
not a party to the Cyprus dis-
pute and has no right to veto
any solution agreed to between
the British and the Cypriots.
In Turkey, public and pri-
vate statements by Turkish lead-
ers show continued aggressive
support for partition as the
only solution to the Cyprus
problem. Ankara also continues
to indicate a desire for an in-
ternational conference to dis-
cuss Cyprus. It is wary, how-
ever, of proposals by NATO Sec-
retary General Spaak, whom it
considers opposed to partition.
The British government
seems principally interested
in retaining maneuverability
so that Governor Foot will have
an opportunity to suggest a
formula for solving the issue.
Britain profe$ses reluctance to
undertake discussions on self-
government directly with the
Cypriots until Greece and Tur-
key agree on the island's ulti-
mate disposition.
At the UN, efforts leading
to a compromise similar to last
year's call for continued nego-
tiations seem likely to succeed.
The Greek foreign minister is
aware that his resolution sup-
porting self-determination can-
not secure the necessary two-
thirds vote. Both he and Brit-
ish representatives have indi-
cated willingness to accept
a compromise. 25X1
FRENCH SOCIALIST DIFFERENCES
The future of the Gaillard
government may hinge on the
French Socialists' National
Council meeting on 14-15 Decem-
ber, since many Socialists are
increasingly resentful over con-
tinued participation in a con-
servative-tinged government.
Socialist leader Guy Mollet has
been forced to take a strongly
doctrinaire approach on approv-
ing some of Gaillard's anti-
inflationary proposals, and he
THREATEN GAILLARD COALITION
will be under strong pressure
to drop support of the govern-
ment's present Algerian policy.
The Communists are in a good
position to exploit these dif-
ferences.
The Socialists' decision
on 3 November to join the Gail-
lard government was approved
by a vote of only 2,087 to 1,-
732. Opposition to participa-
tion has since increased
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12 December 1957
because of the fear that the
Communists were gaining support
as a result of labor unrest.
Opposition to Mollet is
sparked by Gaston Deferre,
head of the powerful Marseille
Socialist federation, who.'is
an able and highly respected
politician. Mollet has moved
to avert the threat to his
leadership by taking a line
closer to Socialist doctrine.
He forced Premier Gaillard to
rescind certain scheduled price
rises and to hike civil service
salaries more than originally
proposed.
Mollet is vulnerable, how-
ever, to attack on his associa-
tion with the present Algerian
policy, and may hope to avoid
open conflict by pushing through
a nebulous resolution support-
ing the basic statute. He may
also feel obliged to dissociate
his party from the pacification
program by working for the
resignation of Robert Lacoste
as minister for Algeria. Such
a move would make it impossible
for Gaillard to resolve differ-
ences between the Socialists
and proponents of a firm Al-
gerian policy.
There is a growing fear
that Socialist-Communist coopera-
tion might develop if Deferre's
wing of the party wins control,
even though he himself is.like-
ly to oppose collaboration with
the Communists. The moderate
tone of a recent assembly
speech by a leading Communist
deputy made a favorable impres-
sion on many Socialists and on
members of the: small center
groups in the assembly. The
Communists have stepped up
their efforts to establish a
common ground with the Social-
ists. They hope to exploit
this line further by supporting
the complaints of French ex-
cesses against due process of
law in Algeria that Mollet is
expected to make at the Social-
ist party meeting. The So-
cialists are still far 'from con-
sidering a "popular front,"
but they may be pushed closer
to the Communists if the gov-
ernment applies stringent eco-
nomic austerit measures.
LONDON'S MILITARY INTERVENTION IN BRITISH HONDURAS
Reinforcement of the Brit-
ish garrison in Belize, capital
of Britain's colony of British
Honduras, on 6 December to pre-
vent violence over the ouster
of a local government minister
will provide Caribbean Commu-
nists with material for renewed
propaganda attacks on British
colonial policy and may adverse-
ly affect relations between the
United Kingdom and the member
states of the West Indies Fed-
eration, to be inaugurated in
April 1958.
Britain sent 700 infantry-
men and a converted frigate to
Belize at approximately the
same time that Minister f or
Natural Resources George Price
was removed from the colony's
Executive Council. Price's
removal was the result of Brit-
ish suspicions that Price
had intrigued with the Guate-
malan minister in London, Garcia
Granados, to end British rule
of the colony in favor of as-
sociation with Guatemala.
On his return from recent
economic and constitutional
talks in London, Price threatened
to turn to Guatemala for aid.
The British moves have suc-
ceeded in forestalling agitation
for now, but Price's position
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CURRENT 'INTELLIGENCE WEEKLY SUMMARY
12 December 1957
as leader of the dom-
inant People's United
party suggests that
London may face grow-
ing unrest over the
long term. Guatemala
promptly recalled its
minister in London
and announced he
would not be replaced.
Although continuing
to claim that Brit-
ain holds British
Honduras illegally,
Guatemala is power-
less to interfere
except through dis-
satisfied politicians
such as Price.
Direct military
intervention puts
Britain in a delicate
position in the Car-
ibbean area just as
final steps are be-
ing made to launch
the largely self -
?San Jose
,RICA
governing West Indies Federa-
tion--comprising all British
Caribbean colonies except Brit-
ish Honduras and British
Guiana. During the forthcoming
elections to the federal legis-
lature, anti-British politicians
presumably will use the'British
action at Belize to claim that
London intends to retain ulti-
mate control of the colonies
indefinitely, and so are likely
to press for more rapid moves
toward complete independence
within the Commonwealth.
This issue should improve
the electoral chances of the
few prominent Communists within
the federation, such as Ebenezer
Joshua in St. Vincent. Similar-
ly, Cheddi Jagan, minister for
trade and industry in British
Guiana who returned to power
in August, nearly four years
after the British removed
him from office, may be
expected to exploit the is-
sue successfully.
I
THE VENEZUELAN PRESIDENTIAL PLEBISCITE
Rumors of military disaffec-
Lion and recent antigovernment
demonstrations by students have
increased public tension in
Venezuela on the eve of Presi-
dent Perez Jimenez' election
by plebiscite on 15 December
by which he plans to win a sec-
ond five-year term. Chile's
break in diplomatic relations
in November has contributed to
the unrest. Although the sta-
bility of the government may be
threatened, the regime is be-
lieved capable of handling any
violence during the electoral
period.
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12 December 1957
The authoritarian Perez
regime, which is generally
friendly toward the United
States and favorable in its
treatment of foreign capital,
postponed decisions on the form
and timing of the election as
long as practicable. The pleb-
iscite will be a vote for or
against Perez and an official
slate of congressional deputies.
Campaign activity is prohib-
ited.
The government has imple-
mented a number of measures
against violence. Rafael Cal-
dera, head of the principal
legal opposition party and con-
sidered Perez' leading opponent
until his arrest last August,
will probably be detained un-
til after 15 December. Other
opposition leaders and the for-
merly powerful national guard
commander, who reportedly har-
bored presidential ambitions,
have been arrested or gone in-
to exile. Perez' reluctance
to risk a free election appar-
ently. stems largely from mili-
tary ;,pressures against such a
contest and his inability to
command a majority of the popu-
lar vote.
Because the armed forces
have remained loyal to Perez
thus far and their interests
are identified with his contin-
uance in power, the largely sup-
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pressed opposition appears in-
capable of threatening the re-
gime. The student demonstra-
tions in late November failed
to spark a broad protest move-
ment. Moreover, the Catholic
hierarchy, at odds with the
government since last May, has
indicated it will not inter-
vene directly in politics.
If Perez survives a second
term ending in 1963, he will
have been in power about 15
years. He will probably not
alter his suppressive tactics
against the opposition or his
control of individual liberties,
continuing to equate "democracy"
with his public works program
and other claimed material bene-
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December.. 1957.
PATTERNS AND PERSPECTIVES
MOSCOW CONFERENCE OF WORLD COMMUNIST LEADERS
The primary Soviet objec-
tives at the Moscow conferences
of world Communist leaders in
November were to reassert the
USSR's leadership of the Com-
munist bloc and to reinforce
bloc unity. These aims_ re-
quired some formulations in
the communiqu6 and manifesto
which evaded rather than re-
solved difficult issues. Mao
Tse-tung's endorsement of the
USSR's leading position indi-
cates a marked advance in the
reaffirmation of Soviet primacy,
but subsequent statements by
Gomulka, combined with the fail-
ure of Yugoslavia to sign the
12-nation communiqu6,'point to
the continued existence of
divergencies in:',the Commu-
nist world.
The Soviet leadership will
continue to be faced with the
problem that has plagued So-
viet policy toward the satel-
lites ever since the summer of
1956; how to restore bloc
stability and at the same time
retain the vitality which pq
Stalin policies were designed
to give to the Communist move-
ment.
ties and populations for
greater liberalization.
Soviet efforts in 1957 to
re-establish bloc stability
were complicated by certain
Chinese Communist actions which
were interpreted by Gomulka and
other Communists in Eastern
Europe as supporting their de-
sires for increased independence
of Moscow.
By the summer of 1957, how-
ever, both Tito and Gomulka,
thoroughly disturbed by the
threat which the Hungarian revo-
lution had posed to all Commu-
nist states, and presumably con-
vinced that the USSR intended
to pursue a gradual policy of
relaxation in Eastern Europe,
appear to have reached agree-
ment with Khrushchev to support
a policy designed to restore
stability ..in, the. bloc and
strengthen the individual satel-
lite parties. The two independ-
ent Ecifmunist leaders apparent-
ly consented :to.. stress the
areas of agreement within the
Communist world and to end pub-
lic discussions of their differ-
ences.
Preconference Developments
For the past year, the
USSR has been striving to re-
store the stability of Eastern
Europe which was seriously
shaken by the Hungarian revolu-
tion and the emergence of Go-
mulka in Poland in October 1956.
These crises had been stimu-
lated by Moscow's post-Stalin-
ist policy of reducing its di-
rect control of the satellites
and making up with Tito. The
20th party congress endorse-
ment of independent paths to
socialism and the subsequent
rehabilitation of "national
Communist" victims throughout
Eastern Europe encouraged de-
mands within the satellite par-
This appearance of Commu-
nist solidarity was punctured,
however, by Tito's failure to
attend the Moscow meetings and
to sign the bloc declaration.
Furthermore, the ambiguities
Contained in the declaration
can be used "by the various
satellites to justify continuing
differences in internal policies.
Intrabloc Relations
By obtaining bloc-wide ac-
ceptance of Moscow's primacy
and of the nine basic laws for
building socialism, the USSR
is trying to regain firmer con-
trol over the direction of
events within the bloc. It al-
so probably intends to bolster
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this control through more numer-
ous multilateral and bilateral
meetings and by a new Communist
ideological journal.
Moscow is still, however,
paying lip service at least to
the principle that each satel-
lite shall have a degree of
autonomy in its internal af-
fairs. This is clearly sug-
gested by the statement that
"national peculiarities" must
be taken into consideration,
but not exaggerated. Outright
imitation of the USSR, more-
over, is specifically ruled out
by the declaration. On the im-
portant question of determining
internal dangers to party unity,
the declaration presents "re-
visionism"--pressures for great-
er liberalization--as the;great-
er danger at present, as opposed
to "dogmatism"--Stalinism--but
permits each party to determine
for itself which is the greater
danger at any particular time.
The failure of the Sino-
Soviet bloc communique to set
forth a less ambiguous line
does not solve the basic prob-
lems of bloc unity. There are
indications that orthodox Com-
munist leaders may be concerned
that the declaration will tend
to weaken their positions, and
they are already endeavoring to
minimize this possibility by
interpreting it along firm,
orthodox lines.
Soviet presidium member
Furtseva emphasized at least
five times in an address on 26
November that the primary ob-
jective of the Communist meet-
ings was to obtain clear re-
acknowledgment of Soviet
leadership of the international
Communist movement. She de-
clared that such recognition
is important "because revi-
sionists in certain foreign Com-
munist parties applied much ef- cially declared that the bloc
fort to discredit the successes communique contains numerous
of the Soviet Union and to un- points with which they cannot
dermine the authority of the ~ agree. They have stated,
party."
SECRET
Top East German leaders,
laim that Gomulka capit-
ulated to all Khrushchev's de-
mands and is now back in the
Gomulka, in his speech to
party activists on 28 November
on the results of the confer-
ence, asserted that his poli-
cies had been accepted "in prin-
ciple" by the other Communist
parties. He asserted that
these policies will not be
altered. Unlike other bloc
leaders, he placed strong em-
phasis on those portions of the
declaration which recognize the
degree of internal independence
already obtained by Poland.
Gomulka's relations with
other bloc leaders may have been
strained by his apparent insist-
ence on inclusion of certain of
his own principles in the docu-
ment. Mao's failure to support
some of Gomulka's more independ-
ent: formulations in the confer-
ence discussions disappointed
the Polish leader.
To obtain concurrence "in
principle," Gomulka probably
felt justified in compromising
on matters not directly impor-
tant to Poland. Gomulka's cur-
rent policy of curbing the press
and his public statements stress-
ing areas of agreement within
the bloc conform to the bloc-
wide effort to play down dif-
ferences.
Yugoslavia's Position
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however, that they will con-
tinue efforts to improve re-
lations with the bloc as well
as the West, and Tito still pro-
fesses to believe that the proc-
ess of liberalization in the
Soviet Union will continue. It
is evident, however, that the
rapid rapprochement between
Moscow and Belgrade following
the Tito-Khrushchev meeting in
Rumania in early August, has
been checked by the Zhukov ous-
ter and the Moscow declaration.
The timing of Yugoslavia's de-
cision to discontinue American
military aid to coincide with
its criticisms of the bloc's
declaration suggests that Bel-
grade is determined to uphold
its appearance of independence
of both East and West. The
USSR, irritated by Tito's re-
fusal to attend the conference
and encouraged by its own
scientific and technical ad-
vances, does not seem especial-
ly interested at present in
making any new gestures to woo
Belgrade. It may believe Yugo-
slavia's policy of independence
between East and West will
eventually become untenable and
will be modified to accept
closer relations with the bloc
on Moscow's terms.
Position
At the conference, Mao
Tse-tung placed the full weight
of his prestige behind Khru-
shchev and the concept of So-
viet leadership of the bloc,
probably in an effort to assure
solidarity of bloc foreign pol-
icy, to strengthen the Sino-
Soviet alliance, and to win com-
mitments from Moscow for greater
Sino-Soviet collaboration in
military and scientific matters.
The Chinese, who regard
adherence to the alliance as
their "supreme international
duty," consider bloc power and
prestige greatly enhanced as a
result of recent Soviet military
and scientific advances.
In the course of Mao's
talks with Russian officials,
Peiping for the first time ex-
tended its profession of the
USSR's national primacy in the
bloc to include Soviet party
primacy. Peiping had previous-
ly stressed equality among par-
ties as a condition for unity.
China's public recognition
of Soviet party leadership in-
cludes the view that "revision-
ism" is the bloc's greatest
danger. A year ago Peiping was
portraying '.'great-nation (So-
viet) chauvinism" as the main
problem in intrabloc relations.
The Mao-Khrushchev accord
sets the stage for greater mili-
tary and scientific collabora-
tion between Moscow and Peiping.
It is reported that Moscow has
agreed to supply the Chinese
with missiles and nuclear weap-
ons, and that the Chinese may
join the Warsaw pact, presuma-
bly as part of the bloc's an
sorer to Western plans to strength-
en NATO.
Possibly in anticipation
of the Chinese endorsement of
Soviet primacy, the USSR
sanctioned the "validity of the
Chinese Communist experience"
as a guide for the parties of
Asia in a Pravda article pub-
lished jus~~r to the 40th
anniversary celebrations. The
article, written by Indonesian
Communist party chief D. N.
Aidit, based its argument for
the Chinese Communists as a
model on a declaration by Lenin
that Communists in Asia must
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
accommodate themselves to con-
ditions not found in Europe.
At the Chinese party con-
gress in September 1:)56, Mikoyan
explained that the USSR is pass-
ing through an entirely new"
stage in the building of Com-
munism, and that its accomplish-
ments would serve at a later
stage as a guide for former
colonial countries. He stressed
the historical importance of
the Soviet experience in build-
ing socialism but emphasized
that the historical condi-
tions applicable to the build-
ing of socialism in the USSR
are no longer applicable.
The Chinese, he said, are mak-
ing their own innovations more
relevant to the present, not
only because of the simple
passage of time, but because
of different'. beginnings.
International Communist Tactics
Although the peace manifesto
of the world Communist leaders
cites revolutionary Communist
action as a "possibility" in gain-
ing control in those cases in
which the "ruling classes resort
to violence against the people,"
it emphasizes peaceful transi-
tion to socialism which would
"win state power without civil
war." It calls for a grand
"united front" of all progressive
forces throughout the world, in-
cluding the bourgeoisie and na-
tionalistic elements as well as
Communists, to struggle for peace
and for the "victory of socialism."
This reaffirms the decision of
the 20th party congress and in-
dicates that Moscow intends that
Communist parties outside the
bloc continue their present tac-
tics of trying to form "popular
fronts" with other leftist par-
ECONOMIC CONDITIONS IN EGYPT
Egypt's economy has been
able to make up many of the
losses resulting from the Suez
crisis, but the past year has
seen a general slowing of
economic activity, a cutback
in the Nasir regime's develop-
ment program, and increased
dependence on the Soviet bloc.
Without greater foreign assist-
ance than the recent Soviet
line of credit provides, Egypt
probably cannot even maintain
its people's present low stand-
ard of living. While not ir-
revocably tied to the Communist
bloc, Egypt appears to be con-
siderably more dependent on it
economically than any other
free-world nation.
Agriculture
Agriculture is the key to
the Egyptian economic picture,
even though only 32 percent of
the national income is derived
from this source, because of the
role of cotton--80 percent of
Egypt's total exports--in pay-
ing for essential imports. The
outlook for marketing the pres-
ent cotton crops remains doubt-
ful. The crop--1,658,000 US
bales--is about 10-percent
larger than last year and Cairo
is faced with a carry-over from,
the 1956-57 marketing season
10-percent larger than a year
earlier. In view of the size
of the present marketable
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CURRENT INTELLIGENCE WEEKLY SUMMARY
12 December 1957
surplus--1,869,000 bales--and
the difficulty encountered in
marketing last year's crop,
together with slow sales thus
far in the current sales year,
it is apparent Cairo will again
depend on the Communist world
to take a major portion of its
cotton exports.
The regime's hopes that
Western buyers will enter the
market in force are ill-founded.
Western buyers who have been
able to obtain their require-
ments of Egyptian cotton from
the Soviet bloc at prices re-
portedly 20 to 30 percent less
than those in the Egyptian mar-
ket are expected to continue
to obtain this cotton principal-
ly from the Soviet bloc.
Despite the dominant role
of agriculture, Egypt does not
grow enough basic food grains
to feed its people. During the
1956-57 season, Egyptian wheat
imports from the Soviet bloc
amounted to about 14,697,480
bushels. This wheat marketing
year--July 1957 through June
1958--Egypt had hoped to import
all of its wheat requirements,
the equivalent of 36,734,700
bushels, from the West but was
forced to purchase about 3,744,-
000 bushels from the bloc when
a cotton-wheat exchange with
France fell through. Cairo
press reports of 10 December
state that another purchase of
a similar amount is being ar-
ranged.
Egypt's long-term agricul-
tural outlook is not good. Popu-
lation pressure on the land is
increasing, so that by 1980, for
example, an estimated 43,000,-
000 Egyptians will be crowded
into an area of about 13,500
square miles. Egypt's present
population, totals about 24,:000,-
000. The agricultural popula-
tion, about 68 percent of total
inhabitants, remains in abject
poverty with less than $50 in-
come per capita per year.
Given modern technology,
Egypt's principal hope of lift-
ing its per capita standard of
living lies in industrialization.
However, the country is poorly
endowed with minerals and other
industrial raw materials.
Industry
In recent years Egyptian
industry employed only about
370,000 persons, almost 70 per-
cent of them in food, textile,
and cotton-ginning plants.
Egyptian industry is very inef-
ficient by Western standards.
For example, the value of the
net output per person in the
chemical industry has been only
11 percent as much as in the
UK and only 6 percent of the
American average. In the case
of textiles, Egypt's largest
industry, the average Egyptian
produces only half as much as
his British counterpart and
less than a quarter as much as
an American worker.
The country's primitive
transport system adds greatly
to the cost of Egyptian manu-
factured goods and makes many
of them noncompetitive with
foreign imports, even in local
Egyptian markets. It has been
cheaper to import chromium
from South Africa for use in
local industries than to use
Egyptian chromium, largely be-
cause of transport costs.
Egyptian management general-
ly is also exceedingly inef-
ficient, even in the highly de-
veloped cotton industry. A
postwar study found, for example,
that cheap, mass-consumption
textiles were being made from
high-quality Egyptian cotton
rather than from the lower
quality Indian and American cot-
tons, as is the case in other
countries.
The major factor limiting
industrialization is the lack
of a local market. Even with
substantial foreign aid, this
would remain a major handicap.
The average Egyptian purchases
only a few yards of cotton tex-
tiles, a few pounds of sugar, and
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12 December 1957
a few gallons of kerosene per
year. An increase in industrial
production without a correspond-
ing increase in local consump-
tion could cause additional
problems in disposing.- of
1957, the surplus since the
arms deal in late 1955 amounted
to about $150,000,000.
Egypt
credit, some was used
to pay for bloc arms
and for the salaries
of military and civil-
ian technicians, as
well as to purchase
hard currencies from
the bloc at a sub-
stantial premium. Ac-
cording to President
Nasir, bloc arms are
being paid for at a
rate of about $29,-
000,000 per year. If
these payments plus
down payments are
subtracted from the
$211,000,000 surplus,
it would still leave
at least $120,000,000
for other noncommercial
payments.
RTS
I.L_ ~Z~
1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
QUARTERS II QUARTERS QUARTERS
11 9 5 5J 1956 ~ ~1 9 57
~
While an export
surplus has been
characteristic of Egypt's bloc
trade, over-all Egyptian trade
has usually shown a substantial
deficit, amounting in 1956 to
the tesultant --high-cost
products.
Foreign Trade
Since 1956
Egypt's foreign trade
pattern has undergone
a substantial change.
In 1955 trade with
the Communist world
accounted for only
6 percent of Egypt's
imports and 14 per-
cent of its exports.
By 1956 this had in-
creased to about 7
percent of total im-
ports and 27 percent
of exports. By con-
trast, during the
first eight months
of 1957, about half
of Egypt's exports
went to the bloc.
While it is not clear how
has disposed of all this
15T 2ND 3RD
Q U A R T E R S
1 9 5 6-
From January 1955 to August
1957, exports to Communist coun-
tries exceeded imports from the
bloc--excluding arms--by a total
of $211,000,000. By August
about $130,000,000. This situa-
tion was reversed, however, for
the first eight months of 1957,
at the end of which Egypt had
an over-all surplus of about
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M RJITIAL SUEZ CLOSIU E
1ST 2ND
Q U A R T E R S
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12 December 1957
$16,000,000. This shift was
brought about in part by a sub-
stantial surplus in trade with
the bloc and in part,-by a sharp
reduction in imports.
Although the Egyptian
press has hailed the achievement
of a "favorable" trade balance
as an improvement in
Egypt's economic posi-
tion, there has been
a substantial reduc-
tion in inventories
of manufactured goods,
including badly need-
ed replacement parts,
because the Commu-
nist world has been
unable to supply all
Egypt's requirements.
This in turn has been
a major factor con-
tributing to the
over-all decline of
economic activity. USSR
Monetary Survey
The financial
sector of Egypt's
economy mirrors the
general decline in
economic activity and
a continuation of the
gradual deterioration
which began in late
1955. In July 1957,
gold and foreign ex-
and the cost of living increased
about 7 percent. Inflationary
pressures generated by the gov-
ernment's borrowing and the
general decrease in the avail-
ability of foreign goods could
lead to la,_isharp..:increase
In'. .-prices. ,tcjuring,t'. coming.
weeks.
EGYPT : TRADE WITH SINO-SOVIET BLOC
By ENTRY
TRADE .ALANCE
IMPORTS
EXPORTS
0
aM
change holdings were down 18
percent from the level of 1
January 1956, foreign assets
down 13 percent, government bor-
rowing from the central bank up
72 percent, and the money sup-
ply up 6 percent. The cash
holdings of commercial banks
were up 20 percent, but this
was largely a result of liquida-
tion of inventories of foreign
goods which could not be re-
placed because of the foreign
exchange shortage. There was
also some seepage of govern-
ment funds into the private
sector as a result of increased
government participation in the
economy.
During this period, whole-
sale prices were up 15 percent
Increased foreign exchange
earnings from the Suez Canal
probably have provided the
government with a welcome meas-
ure of relief but are not like-
ly to make a decisive contribu-
tion to the economy. Prior to
nationalization, the annual re-
turn to Egypt from the old Suez
Canal Company had risen to ap-
proximately $7,000,000. By
setting aside funds for main-
tenance and expansion on a
scale similar to that of the
old company but retaining the
funds formerly paid to company
shareholders andccreditors,
Egypt could expect an..income of
about $37,000,000 next year.
Perhaps as much as $10,000,000
more would be available if the
Egyptians scrimped on maintenance
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12 December 1957
and expansion and failed to
provide a fund to compensate
the canal company shareholders.
Economic Development
Egypt has recently an-
nounced a five-year industrial
development program to cost
about $720,000,000, including
approximately $430,500,000 in
foreign exchange. Since a pro-
gram of this size is considera-
bly beyond Egypt's resources,
even with foreign exchange earn-
ings from the Suez Canal, ex-
tensive foreign assistance will
be needed. The recent Soviet
credit, reported to be about
$178,000,000, and the recently
announced $56,000,000 Czech-
oslovakian credit will provide
about 53 percent of the foreign
should not add an appreciable
burden to Egypt's payments
problem. The reported re-
payment schedule calls for
12 annual installments of
about $14,580,000--plus 2.5-
percent interest--starting five
years after production re-
sulting from the construction
of new industries begins.
Thus each annual payment
would amount to only about
10 percent of Egypt's exports
to the bloc in 1957.
Egypt's economic arrange-
ments with the bloc in the past
several months are not in them-
selves sufficient to commit
Egypt to the Communist camp ir-
revocably. As to the kind of
economy the Nasir regime
seems to wish to see develop
in Egypt, this appears to be
a product of vague "socialist"
notions and of what the re-
gime feels is hard necessity.
It has Egyptianized British
and French assets, bought
into existing private Egyptian
firms, and set up new busi-
nesses owned and operated by
the government. This develop-
ment could in time lead to the
imposition of centralized plan-
ning and control on the hereto-
fore Western-oriented business
community, but it depends on
the creation of a much larger
reservoir of administrative
talent than is now available.
At present, the Economic
Organization--a government agency
--owns outright or holds an in-
terest in more than 40 firms,
including about 30 companies
formerly owned by British and
French nationals. In addition,
the government has formed new
companies with a total capital
in excess of $14,500,000 and
plans to form additional gov-
ernment-owned industries to pro-
duce caustic soda, nitrogenous
fertilizers, sodium carbonates,
suiuric acid, and aspirin and
ether pharmaceuticals. Plans
to set up an automobile
industry also are under
study.
zrr~Tr-rn
exchange required. Since Egypt's
present rate of savings and for-
eign exchange earnings available
for industrial investment fall
far short of the remaining $200,-
000,000, it seems probable that
Cairo will also approach Western
financial sources for substan-
tial loans.
The relatively easy.-repay-
ment terms for the Soviet credit
Industrial development
seems the only hope for expanding
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the Egyptian economy. Plans
for expanding agriculture, even
through such enormous projects
as the proposed Aswan High Dam,
can do little more than add a
maximum of 1,349,000 acres to
the present 6,200,000 acres of
farmland, barely enough to pre-
vent a decline in the already
extremely low standard of living.
Prospects
Whether or not Egypt's
economy muddles through the next
few months depends almost en-
tirely on relations with the
Soviet bloc. Since it appears
quite unlikely that the West
will, without major policy
shifts,, increase its imports f om
Egypt by 50 to 100 percent, Com-
munist purchases will again pro-
vide the margin of success or
failure for Egypt's trade ef-
fort. Although Nasir apparently
recognizes his increasing de-
pendence on Moscow and has ex-
pressed a desire to hold the
Communists'~:'shar.e'.in Egypt's ex-
ports to one third, this may
not be possible. If anything,
the recent Soviet and Czecho-
slovak economic deals will tend
in time to increase trade with
the bloc. Cairo's apparent in-
tention to continue its intru-
sion into the business community
could make the government more
susceptible to Soviet-type eco-
nomic thinking and accelerate
this policy.
curred in by 06
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